Solana's Fastest Growing DeFi App | MacBrennan Peet

Transcript

What's up, guys? Just wanted to give a quick shout out to today's sponsor, Apptos. We'll hear more about how Bitcoin, DeFi, and Apptos is heating up later today. But for now, let's get into the episode. [Music] Nothing said on Zox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Pokio, Ryan, and our guests may hold positions in the company's funds or projects discussed. What's up, guys? Welcome back uh to ZRX Research. I am waiting for Ryan Connor as well, but we're joined by, as you can see, MC Brennan today um to talk about project zero. Maybe my

friend, until um Ryan gets here because I know he wants to talk to you. I don't want to take any any time off. Do you want to do a lot of people ask you about your thoughts on the market? Is this something you do a lot or do you want to chat about? >> No, not really. like I'm not >> not a big markets guy. >> Giving giving directional advice is like the hardest job in the world. So yeah, I stay away from it. >> That makes sense. Um I guess do you want to talk a bit about I don't know how Salana's been going.

Are you happy you guys have been focused there still? >> Yeah, I mean I remain more bullish on I I think actually. So what is Salana's FTD now? something like 80 billion or something, I guess, right? >> Check. Yeah. >> Yeah, probably. >> Yeah, 80 billion. >> All right. So, and it made like 2.5 billion last year or something like that. So, like the multiple is just compressing right now. >> Um so, it's like everyone says you can't do value investing in crypto, but um I beg to differ. And then like obviously like that that sort of is uh not

accounting for application revenue as well. Like I would expect like Salana to just as more capacity opens up for margins to get lower and lower for validators. But um yeah, that two billion number again, it doesn't even account for like apps like Pump Fun or you know these massive massive apps that are just completely destroying it, you know. So yeah. >> Yeah, Ryan, you'll enjoy this. Mcrenan is also a Salana bull based on the valuation. So this will be good for you.

Yeah, it's a good it's a good like uh it's a good multiple right now if if if indeed we're at like an 80 billion FTV with yeah two billion in revenue last year. >> Yeah, >> I'm a little worried about revenue though going forward but damn >> that's what I was just saying. Yeah, I expect uh as more capacity opens up, I expect validators to make less money from the chain itself, but that is not uh including what I was like just saying uh application revenue, which um which will also start to go to validators in in some forms. Uh, so that $2 billion number totally excludes like right when you hopped on I was saying like pump fun

and like these massive applications that are just wrecking. Um, so I expect I expect value capture to happen a little bit there as well. >> Okay. Um, >> Ryan, good to meet you, man. I don't think we've met before. >> Yeah, great to meet you as well. I I often do talk valuation with folks before I introduce myself. So that's right on right on message. >> Sweet. Sweet. >> Um you were you were with Margin FI as well right?

>> Yeah. So I I co-founded uh Margin Fi. Um I co-ounded Margin Research. >> Cool. >> I co-ounded Temporal. Um and founded >> uh projects here. Yeah. >> We just had >> Yeah, you just had Ben on. It's my boy. >> Yeah. Yeah, >> I guess I never put those two. That makes sense because I know I've seen you post about temporal also. Ben is clearly involved. Wow, you're very very deep into Salana. Some might even say part of the cabal on salana like a very very deep state.

>> Yeah, I'm I'm in the weeds for sure. I'm not I I will um uh I'm I'm not involved with the the with temporal like I'm not active there now. very good friends with everyone on that team. Um, and yeah, and I saw it from the start and everything those guys got to work on. But, uh, yeah, I'm uh, like fully behind Project Zero right now. >> Yeah. >> And that's a great way to go into this. So, do you want to give like a quick introduction on what you guys are building over at Project Zero?

>> Yeah. So, um, DeFi has hit this inflection point. There are teams now that have won their or are winning their corners of the market. Um, and risk models have evolved. Program security has evolved. Like I can confidently tell you right now that a isn't going anywhere. Camino isn't going anywhere. Hyperlquid is like really exciting. Isn't going anywhere. And so given this um as a DeFi user, you're naturally going to have your capital across like these these venues um you know for for different reasons like you trade per on a per exchange you do some like credit stuff on credit market maybe

some interest rate derivative stuffs on like exponent you know etc. and that you have capital fragmentation. And so the minute you're using more than one venue, really like the second you're using two plus venues, you actually have inherently a need for a prime broker. You have a need to be able to now borrow your whole portfolio. And especially if you have like these two this like more comp complex portfolio configuration where uh perhaps you're actually like levered long on venue A and leverage short on venue B. Um you'd get better borrowing ability with like the addition of a prime broker. Um so that's what project zero is. uh project zero like

allows you to use the venues you love using for the reasons you're using them and gives you better risk, better rates, better capital efficiency, better UX across them. Um, and the super cool thing here is that like whenever you say prime broker, like in traditional finance, that is exclusively reserved for the big boys. Like that's for the hedge funds. That's for, you know, the super high net worth individuals. That is not for, you know, your typical guy on Robin Hood. Like he's never going to get a prime broker. Um, but in DeFi, that's not the case. Um, in DeFi, anyone can can sort of access PZ, which is sort

of like one of the original cool promises of DeFi, where there's not only this like decentralization, there's also this democratization. And so now, like anyone has access to this tooling that previously was just reserved for um, you know, the the the hedge funds and the rich guys. Uh so I think that that part is that's very fulfilling to me as well like when I'm working on this >> that that sounds cool. Um what is it I guess like the trady comp what does it look like to build a prime brokerage in DeFi versus in in trady like what are some nuances that you have to be very careful with?

>> Um it's an extreme test of risk management essentially. So um as it is in in traditional finance as well like some of the biggest prime brokers uh of well in traditional finance it's like these bulge bracket banks it's like Morgan Morgan Stanley Goldman Sachs etc etc. Um, however, like when you go back to like FTX era, um, one one big uh, prime broker was uh, uh, Barry Silbert and Crew essentially and uh, you know, they they ran into some like massive risk issues when uh, a bunch of bad debt was spreading, a bunch

of contagion was h happening post FTX fallout. Um, and so that sort of like exposed a big hole in offchain prime brokerage where you're essentially underwriting the credit uh credit against like these independent third party venues. And when you're doing that offchain, you have no verifiability. Like if the venue tells you it has like a hundred million and it's good for it, maybe you can borrow, you know, 60 million against it, but it's still kind of like a trust me bro when it's offchain. And so the cool thing is is P 0 is completely onchain. So um we can, you know, real time verify that, you

know, each of the venues that we're integrating are solvent. And so that's that's that's like a a big difference as well um with with like our model versus if you were doing this offchain. >> That makes sense. Um one one thing I want to ask is so Salana Okay. primarily will you guys be um marketing or I guess like focusing on per products or any trading venue? >> Yeah. Yeah. We we'll absolutely we'll integrate like I'm excited to integrate drift persp. I'm excited to integrate Hyperlquid Perks. Um I think there's some new purpose players coming on the market soon that I'm very excited about integrating. And what that'll actually

do is for the first time open up this multi-enue basis trade where you can like long the asset, deposit, earn the yield on like Camino, short the per on like drift and then lever that up and you can do that capital efficiently which also has not been possible previously. So right now we're doing like that but for spot. So we have multiple spot credit markets live and so we're opening up these also these trades that were previously impossible. Like something a trade people are doing right now is like they're longing a incentivized asset on Camino that's yielding you know like 10% plus um or last I checked and they're borrowing an asset against that collateral on P 0.

That's like the borrow rate uh is like 6%. And they're levering that up. That was previously impossible, right? Like if you deposit into Camino, you now have a spread. Now you're going to borrow at a higher rate uh just isolated to Camino. Um so, so there's like some really cool flywheels here where we're directing a lot of like liquidity to any integrated venue. Um and then we're opening up these basis trades, radars, carry trades essentially at the start um against all of them. >> Yeah. And I assume like dealing with a lot of these deck um per decks is like across different um chains, you're going to get a lot of funding rate dislocations across them, right? Which >> Yeah. Yeah. Yeah. Yeah. Per is like its own animal. So, and also like from the

POV of like risk management, your risk engine levels up dramatically the minute you start uh having like access to perks and collateral against per or any sort of derivatives. So, um, we're really focused right now on getting first like 100% coverage of credit markets on Salana and like really refining like our our risk engine will never be done, but like really refining our risk engine against these spot products before we start adding on derivative derivative like direct integrations to derivative products on top of that because then we start dealing with like a bunch of like really complex Greek stuff and and uh and I want to be like fully prepared on the spot side before we shift our focus to Yes.

>> Um I'm I'm curious if you take on any risk with these bridges. Um especially if you're like integrating Hyperlid. I'm >> Yeah. Yeah. So if we had Hyperlid live like recently, we would have like taken on a ton of risk essentially when they paused their bridge for however long. Um uh now you can um you can build redundancy around this. So we have no like crosschain integrations live now but if we were to integrate something crosschain like we wouldn't have a single point of failure at the bridge like we would probably build like our own messaging layer uh outside of the bridge that you know is housed on our own infrastructure uh and we take this approach with everything we have you

know massive redundancy with liquidators massive redundancy like oracles and pricing systems etc. So the same would be true for bridging infrastructure. So that's not to say that because hyperl there chain we just wouldn't be able to operate but it would like add definitely a lot of complexity. So um so when we do make um when we do eventually make you know our first crosschain integration it'll definitely be uh on top of extremely robust redundant bridging infrastructure that has been live for you know a while.

>> I presume means some form of layer zero integration but we don't have to chat too much about that. >> Um >> yeah yeah no lay layer zero wormhole I mean kind of all the above. >> Yeah. Um, Ryan, you've recently been increasingly interested in prime brokerages. Do you wanna >> Yeah, I think it's a big gap in the market. We've been talking about it for a bunch of years like why why is the time now, right? Like this has been tried or sorry, there's been like a lot of cold starts.

>> Like why why Yeah. Why is the time now? Yeah, the time is now because um previously risk risk engines were not nearly as sophisticated as they are now across DeFi. Smart contract risk was not to the level it was now across DeFi. And also there was no like there wasn't a lot of winners like it was very like if you were a DeFi team and you lasted more than one year, you were doing great. uh you know historically uh again like those like all all those variables have now changed um there's teams I know that are going to be here next year um there's risk engines across these teams that um have proven to be to to with

withhold uh a host of market conditions and market events um and uh and so now you can sort of make the lever bet on them which is like like what what we're essentially do every integration we make is like essentially we're saying okay we've validated the market risk with this uh particular venue and we're comfortable you know spending two months like building out really you know particular uh uh integration tooling around this to to open up like uh credit against this venue. So um all those all those things were not true like two years ago.

One thing you mentioned the smart contracts. Um I guess like what would happen if one of the lending venues that you guys are using has bad debt? Would that >> um affect project? >> Yeah. So if um if uh if an integrated venue that we have live um were to have some sort of uh socialization event uh that would also impact proportionate to that would impact our our credit proportionate to the amount of collateral we have um on that particular venue essentially. So um and and and uh we we've done this right now what what it would do it was it

would kind of impact the whole credit pool. So like if you know there's $100 million on Camino and Camino has to mark down their assets by you know like 20%. um and there's $100 million on on commino through through P 0, then yeah, that that $20 million socialization would sort of like be spread across the entire credit pool on P 0. Um what we're what we're looking to sort of shift to uh is to focus that socialization per venue. So really to only affect the people that chose to use that venue on P 0 uh disproportionately to all the other like people that are using different

venues on P 0. And that's something we'll we'll definitely do that's very achievable. Um we're just sort of in V1 right now which is where it's equally spread across um the the credit pool. So that's why like we we're very particular on the the venues we we integrate. >> Yeah. So it's just Camino right now, but I assume you're going to integrate essentially every lender in Solon and then add on EVM, right? >> So it's Camino and uh the project zero market itself. Um which which already opens up like a incredible amount of like differentiated trades and the project zero market has like $250 million of liquidity in it and like 100 million of that is borrowed. Uh and we

have like 200 million more across like other systems of ours. So, we're like we're the largest decentralized prime broker in crypto uh right now. And we've also been like the fa one of the fastest, if not the fastest growing uh DeFi app on Salana. We've been averaging over a million per day of inflows since launch, which was in September. Um but uh but yeah, um it's just Camino right now. to your point, we'll uh we'll first get 100% credit coverage of all Salana lending venues. So, Drift and Save are audited and essentially we're just working on and and done and we're just working on the application roll out

with that and then soon after we'll go live with Jupyter Lend and uh Loop Scale. Um, and then we'll we'll kind of be there. Like that's that's pretty much 100% market coverage. And then we'll start to shift to derivative products. Like we'll start to integrate per markets. And I also like I'm I'm massively bullish on like interest rate derivative markets as well. So I'd like to see more direct integrations to to those as well. >> Oh, like rate x exponent maybe pendal. >> Exactly. One um concern I've had is like Solana hasn't been able to come up with this um perpetual protocol yet. Like Drift is good um but it's just like it seems like Hyperlquid and Lighter are kind of doing

very very well. So I'm happy that you guys are like >> not pigeon holing into Solana and you're like we'll just do it like across because it it makes the most sense. >> Yeah, we can go anywhere. That being said, I am um so I've been very close to a lot of like per teams on Salana and a lot of just like market microstructure stuff. Uh and uh I am very optimistic on the state of like Salana per like in 2026 essentially. So, um, yeah, this game isn't one yet, I would say, but, uh, but yeah, we can we can definitely Hyperlid is a fantastic

product. Um, and Lighter is killing it right now. And and so, respect of both those teams, we can definitely uh we can definitely integrate them. It's just like those two the the sad part is is like Hyperlid like I don't even think there is a direct bridge between Salana and Hyperlid. like we'd have to go to Arbitum and then to Hyperlid. Uh and Lighter is also on this like custom ZK rollup thing. So >> that's like the sad part where like it is like that's more risk and more work for us. Um and I would like to just see more uh history with these things first so that we can hedge against things that happened what was it like yesterday with

Hyperlid. Um but yeah, they're great products. So we got to go where there's user demand and there's definitely user demand there >> and I think that makes sense. Um and when you say 2026 you expect a big year for purpose. Is that just with new launches coming up or is it from what I understand is like BAM is meant to help these products out or why? >> Yeah. So there's there's a lot of innovation happening at the um like Salana client level which like BAM um like what the harmonic guys are doing and uh etc. and a lot of competition there as well. Anza as well um uh so the brain power between

team you know the tempo guys and um Anza is is great. like the fact that they're all sort of going after this is just going to end up in a really good outcome. >> Um so and that will give a lot of optionality to applications um which will be great which should like tighten spreads um and if it doesn't it's a failure essentially and then um like we've seen the emergence. So then we got like teams like new teams like Bulk. There's other new teams that haven't been announced. We have like Drift V3 and Drift V3 seems to be as I look prioritizing uh propm uh uh uh makers as well which is really cool. Really really cool. I am uh I am a

big believer in prop amm being applicable to per not just spot as well. Um, so we've seen what propms have done with spot and sort of like just completely changing for the first time ever. You can get better prices on chain than you can get on Binance with prop amms with spot. And so, uh, the combination of like those variables I just threw at you, I think is extremely optimistic for Salana in 2026 with per. So um so yeah I wouldn't I wouldn't um again respect to hyperlquid and lighter but I do think uh I think people might be underestimating how how important this is for Salana.

>> Bitcoin defi is heating up on Apdos with nearly 400 million BTC assets on chain. Apttos users can now earn yield on their Bitcoin via EcoABTC and OKXXBTC without the typical bridge risks and high fees. To explore BTC yield opportunities on APOS, follow the link in today's show notes. Could I ask more about prop amms and your views just given how deep you are in Salana ecosystem? >> Yeah. >> Yeah. Like I mean what do you think about passive liquidity on Salana going forward? Um my you have to assume that these prop AMMs are going to eat more and more of the market just given the success that they've had like >> yes >> is there a place for the old models on Salana?

Uh yeah, that's a great question. Um, so the hedged version of this is like, oh, let's just have a composable order book and prop a mem and we'll have the like these prop amms like fighting close to, you know, the spread and then we'll have like these more passive quotes across the edges of the order book to fill in depth. Um, but saying that and I and this is also on the back of um I'm I'm very good friends with like K over the temporal side and I was I was talking with him about propos recently. So some of this thinking is shared between him

and I. It's not just me exclusively coming up with these ideas. Um I think people underestimate the the depth of uh prop amms and how quickly they can update if like a big order comes in. Um, so everyone keeps saying, uh, we need these order books because, you know, if someone wants to slam a $10 million order, they're going to need to, um, eat into the order book a little bit. But if that in in practice happens with the state of today's, even today's propm on spot, uh, and these propms have access to adequate inventory, they can update so fast that they could just eat that

all up. Um, and uh, and I think people are underestimating that fact. So I I I I I think that like a prop amm alone could potentially just handle 80% 90% plus of like all trading needs. Um, and people can try with order books and and also from like my point of view, so I'm coming at this as someone who is offering credit against multiple, you know, like from the P 0 perspective and and when we're on these permissionless systems, like we're talking about like liquidations, which are automatic permissionless, and like I need a good idea of market depth to manage solveny,

you know, like if if um I'm offering credit against like uh if I'm if I'm offering the ability to borrow $100 million against a particular asset and that asset needs to then be immediately liquidated, I need to be able to sell big chunks of that asset on the market. Um and liquidators need to be able to protect solvency fast. And so, um historically for me, it's been great if you just put that in like a constant product AMM and I can just be like, "Okay, cool. There's like five million bucks of liquidity here. I know exactly how this models if you know a big like sell uh buy or sell comes in."

Um it gets much more harder with prop ammms um because like their depth isn't really representative of how much they could swallow up uh when you're like looking like oh this propm only has like 30k in it like no this it could probably actually eat up like 150k of like sell pressure immediately. Um so that part is going to be more of a headache for me. Um, but hey, that that means like DeFi is evolving. So, uh, so that that that that that's cool. Yeah. Yeah. I'm so I I gave you a really long answer. I'm very bullish on on propM. I think they can be used for per, uh, I think that market structure could just like almost entirely shift to them with um, safety

measures in place across AMMs and order books. Like I think um, Sanctum is really great. Like look at what Sanctum has done for Salana LSTs. They just put this big pot of like soul and LST liquidity in one place. It's easy to model and Camino and PZ and Drift and we can underwrite like tons of credit against LSTs now because of that. Um I'd love to see the same for like Bitcoin products. I'd love to see the same for ETH products. I'd love to see the same for stable coin products. And so that's also totally agnostic to a prop amm or an order book. That's just like kind of like I think AMMs are like really important for those types of products.

But yeah, I think we could see this power law with AMMs and then prop AMMs essentially and then order books are kind of like this weird uh middle child. >> The the one thing is Ben also said this. One thing that was in my mind is then you never let price discovery happen on Solana, right? because you're only getting price from >> Well, that would be that would be like saying that so all these propms are reliant on like this internal oracle, right? that's saying that like you would have no um pricing like pricing alpha with your oracle which which I don't think is I think like a lot of these guys are capable of

>> figuring out where prices should be and updating the their oracle accordingly and then um price discoveries is once again happening. Yeah. And now it's happening onchain instead of on Binance. So we're not just reading off of Binance and updating prices. Now we've actually finally for the first time like this is also like the biggest dream for forever that has never come true now like price discovery is actually happening on like these prop amms fighting on Salana which is which would be in incredible. Yeah >> that makes sense. Um McBurn I have two more questions and then we can wrap things up. The first one is um moving away from margin five into project zero.

I can see a clear like we're doing lending why not do it at a much larger scale and much more >> um ingrained scale but do you have what's the story like over there? Yeah, I mean, so yeah, I was part of the the margin five team. It was like the fastest growing DeFi product of 2023. And then and then, you know, my uh my co-founder had very bad day, crashed out. Um and he destroyed a lot of trust like in a very short amount of time. And um you know, that was really disappointing to me. I was disappointed to like all the people on the team uh that had put in a lot of time and effort into making this like a

really successful product. Um and the easiest thing I could have done in that situation is just be like okay uh I don't want to deal with this anymore. I'm going to you know take this really really talented team and go do something else. Um but I decided you know not to do that. Um and we we we still saw you know this massive problem with uh capital fragmentation on Salana. So I was like okay let's like rebuild this from the ground up um with this like really talented team um and build something like net new uh and so and the the the nature of doing that like I had to do that sort of like behind the

scenes. I couldn't give a lot of like meaningful updates. took like a year about a year to do this to get to that you know the point in essentially September which is two months ago. Um uh to be able to launch it. Um but I I you know I felt a deep like uh I felt a deep respect to our user base, a deep respect to our stakeholders and a deep respect to our team and um and I knew we were very capable of this. So that that sort of marked that transition.

Um in doing so, yeah, I also like Margin was in a rough spot. Um if if we didn't make any any big big changes, the company would have went bankrupt. Um so that's when uh you know with with Ben with with Jacob founded Temporal, Margin Fi and Temporal work very closely together to to like essentially save Margin Fi from bankruptcy. um lots of lot like sleepless nights. Uh but that, you know, all that sort of got us to to the point where we could um take a stab at at Onchain Prime Brokerage. So um I've learned a lot from it. I've grown a lot from it. You know, I deeply love the people I got to work

with during it all, inclusive of Ben, who you had on, inclusive of Jacob, Ky, guys on the temple side, and then a bunch of guys on the margin side as well, you know. Adam and John and Abdul etc. Um and then like our investors which would would be Multicoin and Panta and Salon Adventures. Um you know all that together really really held the held the ship together and and now yeah we're on this like really exciting new chapter and we're one of the fastest growing teams in Salana DeFi and um yeah we we we we know very well what what we're what we're capable of doing. So that was that was the story there.

That's the lore. Yeah, >> it's good lore. >> Yeah, >> it's very good. Um, okay, just to end things off, what what does the next six to 12 months look like for you guys? And what do you think people who listen to the pod, listen to the live stream, um, should be doing with regard to project zero? >> Yeah. So the next 6 months um involves wrapping like we'll we'll be fully wrapped within 6 months. We we'll be hopefully have uh our first like derivative market live at the end of six months. We'll be fully wrapped with credit markets on Salana.

We'll have 100% coverage. So if you're coming to Salana and you're using lending programs, you should get a more capital efficient riskaware experience through project zero. should get better risk, better rates, better capital efficiency, better UX through project zero if you're using lending markets on Salana in in at the end of this six months. And if you're not, we're doing something wrong and you should DM me and I should fix that. Um, and that again is like and what that will do as well, it'll be this really cool um efficiency flywheel to all our integrated venues.

So what should happen also is that rates per asset should adjust to their risk adjusted return um per venue meaning like maybe USDC on Camino it's super safe and it's at you know 5% in on drift there's like a little bit extra risk and so it's up at like 6% and then any all of these different like rate differences across venues can immediately get arbed capital efficiently to their risk adjusted level. So that flywheel should like happen. Salana credit market should become like super efficient. Um I'm excited about that. And then yeah, we should be live or close to within six months certainly. Um we should be live

with like our first derivative integration probably market and then I'd also love to have like some interest rate markets also live. So those two things. Uh also at breakpoint I will be talking. So Breakpoint's next month. break points in like essentially exactly a month from now. I will be talking about the project zero uh token and how we're thinking about like that whole, you know, all that. And we're we're very focused on getting a token live before derivative markets because we see derivative markets being essentially our biggest opportunity for growth. So this way we're not like launching a token at the top and also it's fantastic now like markets are down and so like this is a

great time I think to um to get a token out. So I will be talking about the token uh at breakpoint. I have like a a talk at Breakpoint and I want to get that live before our derivative markets start to go live. Um so that's like that's six months I think that's about as you know those are some big things. So yeah >> that's very exciting. Um, I guess cuz you brought up the token now I feel like I have to ask this kind of in terms of um how does a prime brokerage I guess business model work?

I'm not particularly like do you just clip on fees? Do you clip on interest paid like borrow interest? How does this work out? >> Yeah. Um it's pretty multifaceted. So there there is inherently like these spreads uh associated with offering credit um and and increasingly differentiated spreads per asset based on its riskiness which introduc introduces the ability to capture additional fees essentially. So that's one fee source is just inherently spreads. Another fee source actually that a lot of people disregard is um orderflow as well. Uh so like we should be a big generation generator of

differentiated unique like liquidations. We should be a big uh originator of like collateral swap options and and uh and you know interest rate uh and and like especially as we see the the maturation of interest rate derivative markets um a lot of like the interest rate moves that will happen on P 0 will directly impact them. And so like this order flow is actually very meaningful. Um it's different than orderflow when you think of like Jupiter or like Titan or DFlow.

It's it's completely different. Um so like that's its own sort of orderflow segment and we would be like a very differentiated orderflow segment. But also with liquidations that also is like you know every time someone liquidates on project zero um the program captures a fee on that. Uh and liquidations are open to anyone. any profit motivated actor can come in and liquidate. So those are some bigger areas. Um and then finally like we have a world-class application team at P 0 and we have some differentiated apps that are that will also go live uh one of which before Breakpoint as well. So within the next month um that introduced like its own you know fee capture. So, um, like a

good example of that is like our strategies page that we recently launched where we sort of surface like these differentiated um, interest rate arbs and carry trades that you can only capture on P 0. And many of these, you know, we just show the spread right now. We're about to update it actually, but with leverage, it's like 20% plus yields on assets you're already um, holding. And so any sort of like automation or point-and-click functionality on the application side, that's very valuable to users and users will like pay a few bips uh for interacting with that. So um that's something we want to double down on as well. I I'm very much like of the thought camp that programs like DeFi

programs in any sort of like sufficiently competitive market fees should compress meaningfully. like programs themselves should not be able to capture a ton of fees and a lot of the fee capture should happen at the application side is where you have like this exclusive relationship with the end user and you can offer like really great tooling around what the what the what the DeFi program provides. So that's that's that's how I think about things. I >> I think that's the general Salana thought process and it opens up like how will Solana generate revenue going forward? Is there like a rent thing for you guys for example? Well, it be the same thing like in like an app someone using a perp trading app will like I want my uh order to be prioritized and

so they will pay a fee to the application and the application may share that fee with like a validator for example and so that is something that currently the Salana program isn't set up to to capture um but that will be like inherent value to the soul token itself essentially for using this you know shared >> um uh database essentially. Yeah. >> Yeah, that makes sense. Um Ryan, anything you want to ask or >> No, we're good. Mc Brennan, I thank you for coming on. This was very very >> Yeah.

>> Um do you want to I guess like people should follow Project Zero. We'll put this in the show notes as well as Mcbrandon CC who does not do as many shirtless live streams anymore. Yeah, that was uh that was like peak bare market 22 essentially where I was like, "All right, well, [Laughter] that was a different time. That was when everyone was, you know, considering leaving the industry and I was like, "All right, well, let's What's the worst that can happen?" Yeah. Very good. All right. Have a good day.

>> Yeah, you too. See you guys. It's just you and me now. Ryan, can we talk about the markets a little bit? And then Ian's gonna come on and I'll let you go. But I sold this morning and I think >> I messed up. What do you think? >> I mean, today's the bottom, so it's really that's that really sucks for you. >> Hope you didn't sell too much. >> No, I did I did sell quite a bit. For context, I messaged Ryan this morning, European time, and I presume it was like 4:00 a.m. for him, and he was like, "Why did you why do you always sell the [ __ ] bottom?" So,

I don't know. We're going to see what happens. Um, >> true story. >> This is I'm happy you came on the spot because I I I think it incorporates like three of your favorite things, which is prime brokerages, um, per on Salana, and also how can Salana make revenue going forward. And I didn't know this like applications convey a fee thing was a thing that they're thinking about. Imagine if Mc Brennan's talking about it. This is something they're quite actively thinking about. >> There are a lot of uncertainties I think in Salana land, but there's also a lot of things to be very excited about. Um, you know, I think one of my big failures of 25 was just assuming that it

would look a lot like 24. But things are so rapidly changing in Salana land that it's just it's hard to get a handle on it. Um I think it's 26 is going to be really exciting and I'm looking to forward to seeing how the chips fall. I don't know what's going to happen. Um >> I really don't know but it's the ecosystem has so much momentum. It's like I said in the beginning of the call like I'm a little worried about the monetization thing. Um, but I think Hyperlquid is proof that like and Salana in 23 24 was proof that if you kick the fee low enough, you can really offset in volumes and make up for that. So, you know, I'm I'm optimistic.

Yeah, I um one thing that like kind of has been has put me in the same boat in terms of like I don't know what the hell is going to happen in 2026. There's our Salana guy coming in. I don't know what the hell is going to happen in 2026 is purely because um like in my mind the landscape was very clearly JTO beforehand. It's like okay Jetto controls majority of how Solana value flows through. Um, but if they're bringing in these um like what the temporal guys are building harmonic um as well as like clearly hands is much more competitive than it used to be. Um I don't know what's going to happen with Fire Dancer still. I I have no idea where that like development is going. Um

but like it's going to be kind of a weird 2026. Um Ian, you're a validator a part of the Salana Cabal. Do you What are your thoughts on what's happening in 2026. You need to unmute, by the way. I don't know if you know this. >> Can you hear me? I don't think you can hear me. >> Yeah. Um, yeah, I think you guys are right. I mean, it's kind of anyone's game for the next year. Um, yeah. Yeah, I can hear you. You can't hear me?

You're very delayed. >> Sorry. I think the the audio is messed up on mine. I think the audio is >> That's it. That's it from >> No, >> I removed them up and come back. >> That was the most impressive delay. I've never I've never experienced such a long delay on a call before. He just looked right back at me. I'm going to try him again. Are we ready? Hey, Ian, can you hear us now? >> Yeah. Yeah. Sorry, I can hear you. I had it playing through Twitter and so there was like a delay on my end. I was like I think I was like I didn't have the actually live audio. I had like the Twitter audio. Uh but yeah. No, sorry.

You guys are right. >> You can hear me now though, right? >> Keep going. >> Yes, we can hear you. We were Yeah, there was trouble syncing state across nodes. Yeah. Yeah. We we IBRL that though, right? Right, Picatio? Um, so yeah, but anyways, for for next year, I think it's great there's like tons of competition over there now. >> Uh, like I think like one of Mac's points was like it's going to result in just like better outcomes no matter what because you've got like a bunch of smart teams working towards um like you know the actually like the best user outcome which I think is great. So quite happy about that. And yeah, I think if you like start looking at like the judo guys, like they're

definitely like locked back in now. Uh cuz like there's a lot more competition than they've ever faced. Uh and like props to like the Agave team as well because like they stepped it up when Fireman came in. Um but yeah, I mean it's looking really positive. Um so yeah, I think it should be a good next year. >> Have you have you looked into these new per protocols, Ryan? Have you like bulk trade etc.? kind of right. I Ian, did you >> uh I mean we chatted with like bulk earlier this week, but I don't fully understand their architecture yet, but essentially my takeaway is like they're going to be able to be running per on Solana with like 20 20 millisecond

latency. And so like that's that's really good because I mean even on like the fastest like SPM implementation we'll see with Fogo, which is like 40 milliseconds. um they're going to be doing half of that on like a chain with already existing distribution. Um and the guys who are building it themselves like you like they understand uh like trading quite well. Like apparently they were doing like market making prior to this and like now they're building their own platform. So um that's quite cool to see. But yeah, that's like the one thing Salonet has not cracked yet to be fair is like the the purpose trading. Um so obviously like BAM can help uh people build out like a better like purse trading experience over there but I

don't know if BAM can solve like the latency in the same way. Um so it seems like bulk is kind of going after like the timing game there. So um yeah hopefully hopefully it's a great product and hopefully people use it but yeah >> Ian I have a question. Will BAM enable hyperlid like performance or will it not? I mean, for I think C like in terms of ordering and stuff like that, it'll be closer to what you see, but I don't think like you're still going to be subject to uh network latency, right? And so I think hyperl is correct me if I'm wrong, Buck, but I think it's like 80 to 100 millisecond

blocks, right? And so >> it's like being lowered on test net quite drastically. It's at like 50 milliseconds on test net. >> That's Yeah, like that's So that's really good. So, uh, Salana right now is like 400 milliseconds, I believe. Um, and that it's like an existing issue right now in Salana to try to make sure that people are not, uh, like slot lagging either. Like trying to get, uh, blocks to be faster is kind of an issue because a lot of the uh, larger validators realized if you make your blocks go longer, then you can produce more profitable blocks. uh which is like you know it's it's like it was a timing game thing on Ethereum for a while and

kind of got labeled as that like the EF research kal uh and then people realized you can do the same on Salana so uh it's a little hard to crack down on that from like the protocol level itself like obviously if you're a stake pool you can blacklist validators that are doing that uh but I think it's going to come down to like what's really going to make Salana competitive with Hyperlid from like the per trading standpoint is always going to be like that networking latency uh like how fast are the blocks produced uh and like I think naturally you're also seeing the Salana valer count continue to shrink like when we joined the set there was 1300 validators now there's 860 and that probably continues to shrink as the Salana foundation like get uh takes back like

claws back a lot more of their delegation. Um so that will end up with a lot of the validators probably being you know like located in the same data centers. Um but obviously like it's pretty hard to uh drop block times meaningfully to compete with Salana in that way. So I think bulk might be like the most viable solution to compete with like hyperl in that sense. But hyper product also has like a massive lead now in terms of all the distribution they have, all the users. Um like it there's this really crazy dashboard that came out and like one of the things on them was uh how often or like what percent um of users are coming through like the builder

codes and it's like it's some like ridiculous percentage. I think it's like 60% of like all users right now are coming through those builder codes uh which are like the ASXN dashboard. So I can I'll probably share that in on Twitter or something. But um yeah, really really crazy lead that they have over there. But yeah, >> that is insane. I saw that as well. The 60% coming from building I mean that's just I I wonder if bulk is a um a network extension by the way or do you know if they're building directly on Solon? Because to me like 16 milliseconds latency on directly on Solana seems impossible. Yeah, I need to dig into like their docs again. Like I didn't

really get it first time around, but it sounds like it's more some sort of sidecar implementation, but the cool part is like they're also going to have like their own uh like agave fork. Uh and then the validators are paid in stable coins, which is pretty cool. So like um and you like you'll be able to get additional yield there and it'll be in stable coins. So I think like that'll be pretty attractive for uh getting some stake there. But um yeah, I also don't know I don't know what like percentage of stake they would need for the network to function in like a real like the most optimal way. Uh but yeah, I think that's definitely one to like watch.

>> Yeah. Um I guess like my my last thing here is with regard to how you said like perexes have never been figured out. Ryan, I'm I'm curious what you think here as well, but like it feels like every chain has something that they get really really into and it feels like Solana just got really into prop AMMs. Like all of the like really really smart guys are just involved in prop AMMs now. Um and like on Ethereum it's like whatever validators or decentralization or like cipher punk stuff. Um, but I'm wondering if that's kind of removing the the like efforts going towards building out perexes. Although now it seems like

like bulk and stuff is coming up. But on Monday we had Ben from no on Tuesday we had Ben from Harmonic and today McBrren they were both like oh like we can use prop amm to do per products. I was like why not just focus out on building out like a order book for purpose products right? Like that to me feels like something proven, something that's worked before and then like just focusing on building that out to me makes a lot more sense. Any takes here? No takes. Yeah, I mean they were It seems like a lot of the Salana intellectual community is definitely oneshotted by prop amms. Some could say in the same way some people really like trains >> and other other fun things like that.

>> Uh but I thought that was an interesting point. I didn't I I haven't considered anything around that. I think that's more up uh Daniel Daniel Smith's alley. I think he's also quite interested in training props to my understanding. >> He [ __ ] loves prop amms. Carlos as well got oneshotted by prop amm. We do this newsletter every day. If anybody wants to subscribe, it's called the Zerx Research Newsletter. Daily market insights from the analyst team. And every time I read Carlos's piece, it's about prop AMMS. It's insane. like how can you keep writing about propms and you [ __ ] >> I I mean I guess it is kind of like the only kind of new evolution we've seen of like onchain trading on Salana right now

but um yeah I I don't really understand like the per prop amm value prop there. So would like to learn more about that. >> Yeah, Ryan, you unmuted. >> I gotta run. All right. It was fun while it lasted. >> It was fun while it lasted. >> This was great, Ryan. We should do it again sometime. >> It was really good seeing you both. I'll see you in the chat. >> Very good. >> Peace. >> Removed and kicked. My favorite thing is to remove and kick people. Ian, I need you for 15 more minutes, but before that, I want to give a massive shout out to Aptos for sponsoring this stream.

Apptos. Bitcoin DeFi is heating up on Aptos with nearly $400 million in BTC assets onchain. Apptos users can now earn yield on their Bitcoin via Echo ABTC and OKXBTC without the typical bridge risks and high fees. Thanks again to Apptos for sponsoring today's stream. >> Thoughts? Let's not do this. But it was pretty good. I like my >> That was good. That was a really good segway. >> I think so, too. So, Ian, you're not typically known as a trader, but I tried to ask Mc Brennan his market thoughts and he was like, I don't want to talk about this right now. I asked Ryan, I was like, I don't really want to talk about this right now. I'm gonna talk to you. What are your market thoughts right now?

>> That's what people are tuning in for. Yeah. >> I mean, yeah, I think the market's in a bit of a weird place. It's just been hard to actually get any sort of read on it since like 1010. Um, like market has just not really recovered since then. Everyone's just like like cryptically talking about bodies floating to the surface and it's like okay well what exactly happened. We don't really know. Uh apparently like some funds are like I don't know waiting to I I don't I think there's like stuff we maybe shouldn't talk about but I think in general it seems like it's an issue maybe outside of uh crypto's sphere, right? it kind of seems like a broader

macro issue. Uh like the fact that like Nvidia's down is also kind of obviously hurting everything. Um but yeah, I think like Sam Alton has been moving kind of weird. I think the AI people are are moving pretty weird. Uh they're I think people are starting to ask a lot of questions over there around like you know are these companies like appropriately valued? uh how does like OpenAI plan to IPO at like a trillion dollars if they're doing like 1.6 billion ARR? Why is there no monthly economic data for the month of October?

Uh it's like kind of hard for like I guess like investors outside of crypto to really kind of assess what's going on out there because it seems like the law like the US obviously went all in from a financial standpoint on on crypto not crypto AI and like the big idea there is like it's going to bring all these productivity gains and meanwhile like it's just everyone making like sloth with AI for the most part like seems like that's like the largest consumer use of just like you know brain rot maxing. So, >> I don't know. One thing is like, >> yeah, Sam Alman's been moving pretty weird. This is the official term. And he's like, oh, like, you know, the taxpayers will [ __ ] cover it. And it's like, okay, what are the taxpayers

covering? It's like old people looking at their phone for 16 hours a day. And it's like, I swear to God, every time I see somebody in the in the metro, it's like somebody looking at um this like woman jumping into the pool and like getting all the water out of it. and they're like, "Is this [ __ ] real?" It's like, "Yeah, Sam Alman's going to make people pay for this as well. It's insane." >> Um, >> maybe we should raise the prices on that. If like that's like the main outcome, maybe that will solve some of the slop. >> Um, but yeah, >> I also don't really understand how they monetize any of it. It It seems like they want to do it's just a really tough cell, right?

Like you start off AI by saying, "Okay, we're going to essentially solve like human capital problems. we're going to make sure that everybody has um like exceptional tooling and knowledge under their palm at all times at like record speed. And then it's like, okay, how are you going to monetize it? We're going to serve ads, personalized ads to people who are chatting to it. Um and also the main two use cases are slop and people falling in love with their chat bots and using it as like personal diaries essentially. It's Ryan would be so upset if he was here. I'm glad he left before we started.

>> Yeah, >> I think the I mean, yeah, it seems like the real use case there could be like health related things. Uh like all those like I don't know that seems like a harder I have no edge over there either though. I think like if you're trying to do like deep scientific research with it, I'm sure it's like helpful. >> Yeah. But also for like the most part it seems like people are just using it for slop using it for like coding and like some of that also like some of that coding is just like to code like some like slop app like vibe coding obviously is like there's a lot of like just loweffort things that have come to market. Um so yeah I mean maybe they should like raise prices and see like how sticky like the users actually are

and like then maybe you get like some real stuff out of there. But I think back on the crypto side uh despite like prices being down, it seems like directionally a lot of the tokens are moving towards the right thing in terms of actually starting to have like an idea of like this is how that the token makes money. This is like we're going to use like the protocol money to do this like um obviously like unis swap was like the one that everyone's been dogging for just like years now because it's just been like you it was like the first big DeFi coin and it was just like cucked for so long. So, it's nice to kind of actually see uh some progress over there. Uh Lido came out with like their fee switch like that's all cool.

Uh and like meanwhile like the protocols that just started doing buybacks from like day one. I think those will probably be the ones that are going to like actually end up uh outperforming like going forward. So like um whenever we get some sort of recovery, I'm sure like hype probably rebounds pretty fast. Pump probably rebounds pretty fast. Like Pump is like now they bought back like 11% of their circulating supply. >> I sold Pump today in the morning, >> I guess. >> Yeah. I mean, how's their revenue doing by the way? Um like they every time I check it, it's like they're still somehow making like, you know, >> exactly what millions. Yeah.

>> Every time somebody brings up Pump, they're like, "How the [ __ ] is Pump still making a million dollars a day?" And it just like it's one of two things, right? First of all, I think that Pump's revenues are legit, but there's always like two thoughts that pop into your mind. One is like, okay, I have no idea what this market actually wants and looks like. Yeah. >> Like, there's clearly strong demand for this one product that I just generally don't understand. >> And the second thing is like, okay, they're cooking the books, but they they're not cooking the books because if they're cooking the books, it's it's a horrible look for them. like they're using raised cash to buy back which either way is fine because they're just buying back 11% of the token. Clearly these guys are just there's this market

of crypto traders still out there who are trading pump fun coins and I I don't know who they are. Do like James Kristoff sends in one a week. He's like this going to be a cook and then it goes down 80%. That's my like only only relationship with Pump Fun right now. >> Yeah. No, I I agree with that. I've like I checked uh I saw like their Arkham entity or whatever. Like they still have like the billion dollars of cash in there. So uh yeah, like right now they're holding like 889 million of USDC, 299 million USDT, 166 million of Soul, and then one I mean it's like their arch entity, so it's

going to count the pump they have too, but it says like 1.84 billion of pump. Um yeah, it's interesting. I guess like someone's still using it. Uh I do think it's like those things that like there's a lot of like attention tokens, right? Anytime like there's some weird new event like people are launching theaters for it. >> Um >> and I guess there's like people that are still trading these things. Um but yeah, I mean they're I think they're probably doing the right thing of just shoving that all back into the token and seems like they're trying to corner their own supply and uh they're sitting on a billion dollars of cash. So yeah, I think it's I think they're, you know, going to stay on course for this.

>> Yeah. Um, with regard to your point of like how these tokens are converging and I think this will be the last thing that we do because I need to do an ad read and then the IG layer and layer zero guys are going to be on but very important. I feel like we have now like there's the argument in earlier January, February is there's too many [ __ ] coins that you can't like what are you going to bid not the market isn't going up well enough but now it's like there's really only like 10 tokens that you can bid like realistic maybe 15 and you can like and there's like flavor of the month flavor of the week if you really want to gamble on X42 you can buy that like whatever the Ping token was out there and you could have bought

that. Um, but most of the time it's really like only a few tokens putting in not even particularly like intense moves up. They're going they're just grinding up like 3 4% a day. It's not like the old days where it was like Zcash and or exceptions exceptions like we're in a zodle market. We're in a or kind of not as relevant now but I don't know. Um, but yeah, like there's only 10 15 tokens that you want to bid, right? max. >> Yeah. I mean, also like I'd just be curious in general what percent like of all crypto purchases from buybacks like all like the dollar amount of that and the dollar amount of like liquid capital in the space to actually bid things from

like the fund side. Like how do those two numbers stack up next to each other? Because like how many like dollars of buybacks has like hyped on since it's launched? >> If you know I would assume it's like hundreds and millions, right? Yeah. Probably close to a billion. It's It's closer to a billion than it is to 100 million. I think it's like 7800 mil. >> Yeah. Like that alone is insane. Uh Pump is pro I would say Pump is probably like the second largest in terms of like dollar amount of buybacks. Um I actually don't know who would like come up third though. Like I feel like it kind of trickles off and those are both like trading related apps. Uh I don't really know anyone else who's like making a substantial amount of revenue like that.

I I think there are a few other tokens. I just don't think that there are a few other protocols. I just don't think like Jupiter buys back quite a bit as well. I just don't know what it is compared to their earnings compared to their price like their FTV. Um Radium used to buy back a lot more now like obviously the markets shifted on the AMM side on Salana. Um but a is a big one. Maker perpetually um like undervalued based on a multiple but seems to know despite like them buying back. I think they're the earliest token to implement the biomatic.

>> I think you're right. Yeah, I think they kind of pioneered that whole thing and I think I just saw something that they're moving their buybacks from Uniswap to Hyperlid for Sky. I'm not I'm not entirely sure about that, but I know there was like a big issue for them is like they were just they were doing buybacks, but they're also supplying liquidity and I I think they fixed that a while ago. But like that was like an issue and I think they were just trying to figure out like where can we actually get like better execution and like right now like there's no like flow on chain for like Ethereum L1. Like the majority of like trading over there is like sex arbs. Um so just like retail just getting like rinsed on anytime they try to buy like onchain tokens over there. Um, and like

there's no like new assets over there that people want to trade. Uh, but yeah, I'm pretty sure I saw something about that about um the buybacks moving over to Hyperlid. So that's that's quite cool. But um yeah, they have been doing that forever. I wonder what percent of the supply they own as well. >> Uh I don't know. I also need to check that. I mean like Maker I think all of the old remaining D5 protocols Maker A um I saw Multicoin just published a piece about how they bought I think it's Multicoin I don't want to get in I don't want to be lying on Kyle Sanmani's name but I think they just bought into Ephina um I don't know how is doing in terms of like revenues and

>> price earnings price sales but I imagine that's also in the camp where it's like you see I they're moving into this white labelled stable coin idea which I think is has a much larger and I think much riskier TAM than like um than US which I think it's it's a scary thing people just get scared by it. I don't think it's necessarily at risk ever. >> Let's not say ever. You never know. But like I don't think it's at like this massive risk that people put it in. Um, I'm sure there's people much smarter than me who can explain why it actually is, but um, I think it just gets discounted so heavily, like it it gets sold down so heavily when like any form

of like the market sniffs out just a bit of risk in lending or like in stable coin areas and they're like, "Oh, I got to get out right now." >> Yeah. I think like the best chart to watch there is like the like USDS supply versus like USD supply. It's usually kind of like uh signals like risk on, risk off. Uh I think like what yeah what Athena is doing is pretty smart honestly to expand beyond uh like a yield that's just relying upon like um like funding rates because obviously like they're kind of constrained there in terms of how much they can scale because they also just need like uh market sentiment to be like super bullish for the yield to be great and the need that to also like continue to grow over time as like uh USD deposits like scale too. So I'm

not sure what the the civil coin as a service is backed by. If it's backed by like their like B thing with um securitize >> it is >> I think like okay then that like I think that's quite secure uh and there's good like transparency there. So, I think it's a smart move, honestly. And I hope that we see like like a Athena flip circle in terms of like raw dollar amount that they hold uh within like the next couple years. I think that'd be exciting. Uh because they are like a really like lean driven team, DeFi native cryptonative.

>> Um and if you watch some of their tweets, they it seems like that's like who they're gunning for is circle. So, it's nice to see you like, you know, >> you can't really gun for tether though because >> No, no, you can't. Yeah, you can't. Yeah, there's some things better left unsaid. >> I don't know if you can come for tether, but um >> No. Yeah. Yeah. >> I guess like like Carlos wrote this piece and he was like long met um and then like short other AMM tokens and um I think it played out. Oh, Ian, I'm gonna let you go. the big dogs up have come in. Thank you for coming.

>> Can you Can you segue me out? >> Yeah, Ian, thank you so much for coming on. I really appreciate it. Have a have a fantastic evening. I appreciate you sharing your market thoughts as a renown trader and analyst. >> My pleasure. Thank you for having me on. >> Thank you for coming on. [Music]