State of The Market, Monad's ICO & The Stablecoin Gold Rush | Weekly Roundup

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I think all of these corporates who are really, you know, call it, you know, cryptonative or like further along are going to try to pull all of the activity onto the chains that they own. And I think we're going to see more corporates uh launch chains like we are in the early stages, I think, of the corporate chain meta uh at this point. >> This episode is brought to you by Zcash. You'll hear more about them later in today's episode. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Blockworks team may hold positions in

the company's funds or projects discussed. Okay, Rob, we're doing this. We're doing this solo. I guess Jano is no longer part of the picture. Yeah. Well, so listen, I listened to the podcast last week and Yano starts it off with that he's hearing bad things about me and that, you know, he's he's, you know, kicked me off the podcast. And so he didn't know the power that we had. And so now we're here. Yano's gone. He's cut. So podcast, no Yano.

He's out. So if he's really nice, we'll let him back. >> Exactly. Uh, this be a good pod. I guess you were traveling last week. There's there's a lot that's been happening. Where do you want to start? I mean, we can talk about the markets. We can talk about the news. Um, you're in charge now. >> Well, listen, we can talk about the market if you want to. I feel like we've continued to have this conversation over and over and over again around the market is soft, but there are a bunch of things that are doing really well. There is this bifurcation that is existing between the halves and the have nots, the things that are working that are not. you have to have, you know, some sort of use case that says that people want, right? Like you have to have

product market fit and like we're just, you know, all of these altcoins aren't doing well and they continue not to do well and we continue to see softness. I mean, even and then on Bitcoin side, obviously there's a a lot happening in the macroeconomic situation. I don't know if we want to reiterate that again, but like if you want to go into that, like we we can definitely do that. Well, as we're recording the bod, Bitcoin is just just holding 100K uh barely. Um, but I feel like, you know, Bitcoin goes down 5% and people just go out and say, "Oh, this markets topped." There was a comment though that Aby made actually from the thousandx pod that said as it relates to mega east, which we're both investors in, and he said, "We don't need another L2 in the market and there's a lot of infra fatigue." I think

it goes back to what you're saying, which is it has been pretty tough for most of the alt market. Is that more reflective as you guys think about like making investment decisions? Like we have an excess of infrastructure, not enough like demand for it. Um, you know, we've talked about tokenization, we've talked about stable coins. Is that enough to justify all of the infrastructure spend? Like when you guys think about, okay, we're raising a new fund, we're going to allocate to that to continue in infrastructure applications. I mean, you guys are investors in Poly Market. like what is the next thing to support a lot of the plethora of L2s I mean gosh or L1's I mean um I'm curious that I think is more of the interesting

conversation not so much are alts going to go up or down is Bitcoin going to hold 100k I think over a multi-year time frame it's like how do we actually justify these valuations what's the next poly market um do you have a view on that >> yeah I listen we're long-term investors right and and you are as well I I think you probably trade a little bit more than I do, but like we're we're very much around, you know, focused on what happens in the long term. Um, I think it's very clear that, you know, the innovation that happens at the base layer is not done, right? like everyone comes out and they're like, "Oh, like we don't need another Nether L2. We, you know, we have Salana. We don't need Monad. We have Salana. Um we have base.

Like we have all these other things. We we have um and it's very clear that if we're going to bring capital markets on chain that we're going to bring payments on chain, that just because there is call it a surplus of block space today does not mean that that block space one is the best built for what we're talking about." Right? So like it's you know Monad is a one of the most ambitious products in reinventing the way we think about execution and settlement um and uh and bringing forth consensus and like you know they're trying to do something that is fit for a really large future you know pro really a future just

evolution of capital markets happening on chain and I I I I find that conversation to be really shortsighted and mostly coming from like the traders and from like you know the uh anons that are you know on Twitter who are like oh man I like didn't make money in the last like week and so now I'm like you know very upset about it um and very uh it just doesn't really think about what is it we're actually trying to do here right and I I say this all the time like it and so I think there's obviously been a an incentive to put more money into the base layers and the infra because of the fact that that's where a lot of the big returns have come from. I mean Salana is

probably the single biggest you know VC outcome right that has existed in all of crypto. Uh but applications are are are working right like we see it in our portfolio. I was just having this discussion with somebody else. There's a despite all of the price action, we have companies like Poly Market in our portfolio, like Rain Cards in our portfolio on the stable coin side, um that are growing at a rate of like 30, 40, 50% month over month. Poly Market deposits are growing at multiples month over month right now, right? like if Poly Market is going to scale to the size that we were talking about, it's going to take up, you know, basically

all the block space that Polygon even has available, right? Like, and so I I I I strikes me that um, you know, we're starting to see a just an evolution of capital markets. We're starting to see people really excited about what that looks like and we're starting to see like real companies, real asset issuers, uh, want to come on chain. And so the fact that we have like, you know, a lot of unused block space today, it really has no bearing around what we're trying to do over the future and and I I so I I I just find that that conversation to be, you know, really really silly.

>> Yeah, absolutely. Let's talk about some of the news. Um, obviously Coinbase top of mind, you know, I think just came out uh yesterday. They called off the acquisition of BBNK. That was going to be a $2 billion acquisition. Then you saw Mastercard go out and um acquire a competitor. How do you um yeah any thoughts on that and or reading into like why they called it off? Yeah, on the on the Coinbase side, as I understand it, um it really came down to um you know, some concerns around if there you know, the synergies that they thought would be there actually existed and whether or not there was um you know, things like you know, customer

quality and you know, uh things like that. Um you know, maybe there was an attempt to you know, uh you know, change or change the price. This all is sort of uh rumored right now. So I don't know exactly what um what those conversations were looking like. But what I would say is like what is very clear to me is that there are a lot of and we say we so maybe I'll take a very a quick step back. All of the stable coin orchestration companies that are private right now like not you know not bridge because bridge obviously acquired by Stripe. all of the other ones, they were getting hit up today by every single company you can think of, crypto

and non-crypto, uh, for potential M&A. The the M&A fever and stable coins is just extraordinarily high right now. And so, every single public company is doing work, right? Now, the the question these people are asking is, okay, well, is this something I can build or do I need to buy it? Right? And uh some of the infrastructure is really hard to build if you if it's really onchain like it's none of these guys are going to be able to go and hire like a good cryptonative you know blockchain engineer uh an engineering team to really compete right but if there is um you know a lot of this orchestration that is happening which has a large amount of fiat

exposure and is really just you know piecing together like banking rails right with like a stable coin sandwich as quoteunquote as people call it in between that's a lot easier for these guys to potentially replicate themselves right? >> And so >> the and and so they're making that decision. At the same time, they're looking at these companies who have grown really really quickly, but in payments, the history has always been that you grow really quickly based on a customer base that is maybe not well served by, you know, traditional payment providers at this point in time. And so there might not be a lot of synergy between Coinbase's corporate customers and BBNK's corporate customers. Now they talk about, you know, some of these and

they have some really really awesome Fortune 500 companies like um but like they probably also make a lot of money from, you know, like gaming and gambling because a lot of the stable coin companies have made a lot of money from that, right? And that's not something that uh or a sector that a lot of these traditional payment companies want to serve, right? And so you have to think through like, you know, what makes sense for uh from a multiple perspective if some of this revenue is not revenue that I want to uh that that I'm going to keep, right? I'm going to have to cycle this revenue off anyways, right? And so that's a I think the push a lot of these guys are are trying to figure out right now.

>> Yeah. I mean, obviously Bridge got acquired by a billion um earlier this year. You've seen this, you know, higher price like just figures thrown out. I I don't have the access to financials of like I think we talked about what is it the the other company that was acquired by Mastercard Zero uh was it Zero Hash. >> So it's it's the acquisition hasn't happened yet. Um yeah it has been rumored that they are in talks of the acquisition >> rumored. Yeah that's right. >> Yeah. >> But what's a what's a I mean if you're the BD I mean Coinbase has been highly acquisitive. This might be one of the larger acquisitions could have been um other than u derabit um which I think had I don't know if access to financials of BBNK but I god I

think that Darabit was just more of a cash cow than BBNK is >> what if you're the financial >> significantly different profile. Yeah. So, I'm I'm just kind of curious like how do you justify I get that everyone's trying to scramble to build kind of get into this stable coin gold rush of sorts, but at some point you got to go to your board and say, "Hey, we're buying something for two billion, not a small amount. Make it make sense." >> Yeah. I I think I mean, you have to understand and you have to believe there's real synergy value, right? Um I I did actually hear very interestingly there was one there's a public company that was looking at um a stable coin company that I know and uh they were

talking to them about like price and the public company CEO said um I think the announcement alone in what it would do to my share price would pay for the acquisition right and he's very attuned to the fact that the public markets right now want these guys to do something in stable coins >> right like they are very very focused on stable coins. They're very very focused on, you know, how that might disrupt their current business models, right? >> And so I I think that is, you know, something these guys are thinking through and the boards are thinking through, right? Um that said, like to your point, like for some of these guys, like the banks, like how can you go do a big acquisition uh with a big multiple if it's going to, you know, mean that

you have to take like a big capital charge or goodwill, you know, on your balance sheet, right? like they're not going to want to be able to do that. And so I I think that is a bit of a a push pull right now. Um but I listen I I um I I actually I'll reference something else. I I did a call yesterday for one of the big uh one of the big banks. And so the sell aside analyst asked me to to come on and talk to a bunch of his clients, you know, big, you know, the big, you know, takers that you might know of, big big hedge funds about stable coins and tokenization. Um so I did that yesterday and the there was a lot of conversation

around what is going to happen to Visa and Mastercard. what is going to happen to FIS uh and some of the the the merchant processors and some of the acquirers like the analysts uh across the street actively are concerned around what is going to happen to these you know payment companies these these fintexs and so they're the CEOs hear that and so they understand that they have to react in some way >> this episode is brought to you by Zcash the decentralized digital cash that is encrypted To ensure agency and safety with a fixed supply of 21 million and proofof work consensus, Zcash is

encrypted Bitcoin. Buy, store, and spend encrypted Bitcoin using the Zcashpowered mobile wallet, Zashi. To find out more, visit their website or click the link in the show notes. Thanks to Zcash for making today's episode possible. Shout out to today's sponsor, Katana. Katana is a DeFi first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users. Incubated by Polygon Labs and GSR, Katana is launching with notable ecosystem of primitives, assets, and partners like Morpho, Chain Link, and more. Katana's 1 billion CAT campaign is live. Bridge and deposit directly into

vaults in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. As always, investments in blockchain technology involve risk, terms, and conditions apply. >> Yeah, I mean, look, uh, going back to your point, ICE, when they announced the deal with to invest up two billion in Poly Market, the share price went up almost 4% and that was, you know, they gained over three north of three billion in market cap alone. Um, so you know, you could argue immediately you're quote unquote in the money, but um, so I hear you, but when I start seeing that, it just sort of to me is a bit of a a

warning sign of where we are in terms of the frothiness out there in the market. And, um, you know, it reminds me a lot of when companies were putting blockchain in their, you know, earnings calls and, you know, the Long Island iced tea phenomenon 2017, 2018, you know, 18 era. Um, I do think that stable coins obviously are more real. Um, perhaps a more nonacquisitive kind of news was JP Morgan put their JPM deposit token on base this week. You know, talk about a company that's just been doing more of internal work to my knowledge. I mean, it's just they've continued to staff up the team over the years.

They've built Kexus. Interesting. Different to Stripe, they've decided to use public infrastructure and they they've kind of like iterated on this over time. Initially was private, right? I believe like onyx I believe then it was Kexus and now they're using bass. Um so I'm curious uh if you follow that development like how do you think about JP Morgan and their role that they're playing um and how it kind of relates to broader kind of corporate interest in in crypto. >> Yeah I mean the Kexus thing is interesting right? So Kexus still continues to be, you know, basically private infrastructure. That's where they're doing call all the crossber payments that they're doing right now.

Um the deposit token from JP Morgan um you know that existing on base is is a little bit interesting to me because they it's not it's unclear to me and I I don't know did you see in the announcement exactly what like what they're actually going to surface like and will actually be you know onchain that people will be able to understand because like I like you know when I think about a deposit token right like it makes complete sense to me that people will want to and and and banks will want to be able to move money around their, you know, call it their different regional banks and, you know, maybe around their like global corporate entities, um,

within a call it a shared, you know, blockchain ledger. Um, but clearly the like banking regulators are not going to be okay with you, uh, taking like my deposit, tokenizing it, and putting it on public chain uh, today, right? And so it's actually it's it's sort of unclear to me uh what what exactly is is happening uh there. >> Yeah, I'm reading I'm reading the announcement here. JP Morgan put it out um earlier today, eight hours ago. It said um Coinbase and Mastercard have successfully completed test transactions using JPMCoin. Um the ticker is JPMD enabling near instant 24 settlement and real-time liquidity. JP Morgan's institutional clients can now exclusively send and receive money securely on base. the

Ethereum L2 uh enhancing digital payments ecosystem and encouraging further adoption. Since 2015, Kexus by JP Morgan has been a global provider of blockchain based financial infrastructure and now provides USD deposit tokens on public blockchain. Um, and so they continue. I'm kind of assessing this in real time. JBMCoin provides JP Morgan's institutional clients with the option to make onchain native digital payments which serve as a digital representation of a bank deposit on public blockchain.

This will help meet the growing demand from both digitally native and traditional firms that want to engage further in the digital asset space with faster and easier money movements on public blockchains. clients including B TOC uh B TOC2, Coinbase, and Mastercard all successfully completed near instant issuance and redemption of JPMD on base as part of the proof of concept. >> Got it. So, so this kind of sounds like um like Sen or uh so there's like the Silvergate uh network um and uh and Signet um which you know all makes sense. Now those were you know call it like private blockchains. Um this is public Yeah, I think it's super interesting that we're

moving to public and and with bass. Um I my guess is that like there's they're they're probably doing what you're seeing done with like you know figure and some of these others which is that they're just sort of you know call it posting a little bit of data on chain right and like yeah it's this is great that you can send this but there's you know most of the call it like asset work is still being done in traditional systems uh offchain um but listen Great. I'm excited to see it moving that direction. Uh >> what I was in London and I interviewed um this guy was in not JP Morgan but another large financial institution

Swissbased institution and they've been building their own kind of form of Kexus to do a lot of FX settlement within their clients especially he was like look uh on the weekends especially when the bank is quote unquote closed we will utilize payment rails that are you know 24/7 365 and then we'll just kind of create that you know instant settlement trading between our kind of clients and so um different from JP Morgan u I think JP Morgan's probably one of the first ones to issue it on on base which is pretty interesting um so we'll see how it evolves I would say you know fairly interesting um I've really caught up we had um one of the leads of

JP Morgan way back Tyron um a couple years ago uh this is one I think that most people kind of really don't appreciate because JP Morgan an interesting like if you look at here what Jamie Diamond and they've historically been slower um as a financial institution publicly like they can't really solicit um they can't really offer or advertise like ETF products uh like I you know to to private bank clients but on the other end they have just probably one of the larger teams that have been doing research since 2015 which you know is not a small team right and and they've invested a lot of resources um >> they're doing a bunch of volume on that like cross across border and Kexus, right? It is just kind of like a like a

private ledger thing that they're doing with like some other central banks, some other large banks, but they're actually doing a lot of volume on that. >> Yeah. How do you see the evolution of other financial institutions? Um, from what I understand, this depos token is really just for their institutional clients. Um, it doesn't really like they wouldn't want this to be offered to other folks. like they're really protective of their client base, but they're using public infrastructure. I think this goes back to a debate you and I were having about what makes a public or a private chain in at D in London a couple weeks ago. Um, but how do you think about kind of the fast forward one or two or three years like more banks using public

infrastructure? How are they going to use it? Is it like a Yeah. Like what's your version of the world in a couple years? Well, I mean it obviously today like you're going to have a deposit token, right? Like you have to be a customer and you have to be KYC a of that bank, right? Because it has to represent a deposit that you have and they have to be able to move the deposit within that bank. Interestingly though, like putting it on base does allow for the opportunity for that deposit token to be used uh across assets or other deposits of other types of, you know, other banks, right? And and it seems clear to me that like they wouldn't put it on base if they didn't think that they would try to work with other

counterparties, right? Because otherwise if it was just an intra uh you know bank settlement layer, they would just do it on a private chain because it would give them the same benefits, right? And so I mean when you look at these public chains like there has to be some sort of like trustless coordination uh because or if you're going to interact with others there has to be some sort of trustless coordination. It can't be on a thing that's owned by JP Morgan or it can't be on a thing that's owned by >> um by you know bro Goldman or whoever. And so I actually think that that is a signal that there will be probably you know and that that Coinbase is probably working B is probably working with other

banks to do something similar with an idea that like maybe you can create some sort of like you know interbank network right um yeah >> and you know this is obviously the conversation around Canton right so you know Canton launched their token token finally got listed in a couple places this week um and that's been a big part of their story as well which is that like okay well we have these like private blockchains that are basically just you know um just databases today but like you know we're going to open up their you know interoperability with everyone else and so then like all the banks can work together all the asset managers can work together >> I I think it's pretty clear that like a lot of assets are going to be tokenized they're going to exist on some version of something that can interop right

whether it is a public chain like base or these like kind of like you know siloed like hub and spoke models that we see on like Canton. Um I have an opinion on what works better, but it's very clear to me that I think that's that we're moving in that direction. >> So a couple things before I wrap up this discussion interesting couple related to this announcement. JP Morgan did say that they aim like they they will expand this deposit token to more blockchains. I don't think they were specific as to which ones. Um and then the other announcement was that uh earlier this week they announced Kexus and DBS announced that they're developing this interoperability framework to enable transfers of tokenized deposits AC across public and permission blockchain

environments. So I think at this point um what would you say to like um folks within crypto that you know do you read a lot into Coinbase deploying first on base versus any other um public network Salana Suay um you know uh arbitrum like is is is that a strong signal of how corporates might evaluate um like where to deploy because Bass is backed by you know Coinbase and it has that kind of reputation. It might not be across the you know trillemma or trifecta of blockchains uh decentralization security

you know I'm curious like the world by which corporates might evaluate where to deploy is very different than how cryptonatives have historically thought that that was going to be the case. Um, >> yeah. >> No, I mean I think it's pretty clear, right? The um all of these guys want to own their blockchain now, right? You you saw we had circle earnings this morning and I think I don't know what the socket ended up doing, but right after earnings it was down like 8% pre-market. Um it was, you know, they talked about like, oh now we need a ARC token for like their blockchain, right? Base has been teasing that they're going to have a token, right? Like you got Tempo launching. you haven't talked about a token, but they're definitely going to have a token, right? And basically the incentive for all of these like

corporates has been like, okay, well, I want to do some sort of onchain network. Uh I think I can build a better product if I do if I own the entire stack. Um and like they're just going to be incentivized to force it on their chain, right? Versus like, you know, some other chain as long as there's an ability to, you know, access liquidity elsewhere, right? And as interoperability gets easier, like if you talk about the Ethereum L2s, you know, as you have like more based or native rollups, like the ability to move capital in between or access capital in between is is much easier. Um, and so like I think it's very clear to me that I mean the reason this happened is because Coinbase is the first customer, right? And so Coinbase is like I'm going to be the first customer. You're going to put this on

base. Like that's pretty obviously what the discussion was. um you know the Kexus DBS thing like you know that might be somewhere somewhere different because you know Kexus and J Morgan have been working with DBS and in the Singaporean central bank around like crossber money movements for a long time. Um but I I think all of these corporates who are really you know call it you know cryptonative or like further along are going to try to pull all of the activity onto the chains that they own. I think we're going to see more corporates uh launch chains like we are in the early stages I think of the corporate chain meta uh at this point.

>> Yeah. Yeah. Yeah. Absolutely. Um speaking of I want to remind folks of a bet that we made uh a couple weeks ago, Western Union, Salana. Um in that time frame, Western Union has massively outperformed. Not because the stock has gone up dramatically up, it's just because Salana's gone down quite a bit. crush it. >> Yeah, we'll see how that develops, but um yeah, I think uh you know, I think that covers it well for JP Morgan.

There's a couple other news items that I think you alluded to like that I want to get your take on like Uniswap put a proposal to Hayden had a post around like this fee switch. This is something that you know has been teased and talked about for years, right? The disconnect between uni like equity and the token. It's not specific to unis swap. many other protocols have this kind of issue. Um, but how do you think about that? I mean, obviously the regulatory environment has been changing quite a bit. Um, some of the investors of uni like unis swap have historically kind of resisted this rightfully so, but I'm curious what you're seeing for from other projects specifically about unis swap. Um, I think a project like unis swap doing it carries probably much more

weight than a traditional like some other random protocol just given how important it is. But yeah, I'm curious. um your take on that? >> I I mean this is great, right? Like this is something we've been I think expecting to see for a little bit. I I had ex my I had speculated that they might wait to get like a little further along with like some sort of market structure bill even if we didn't have full um understanding of like you know how people think about security versus not security. Um that said like I We definitely knew we were going to get unis swap and then probably some some others that were going to try to to add this uh you know type of fee switch over

the next you know dur during this like you know initial period of this administration. Um I think for specifically uh you know they basically said they're going to collapse labs in the foundation. Everything that is going to happen from here on on going forward is going to be focused on moni on protocol growth, right? And not just like you know this like you know products that might like sit on top on on the protocol. They're giving they're putting together like a you know the large growth budget of 20 million uni per year which is what 200 million bucks at current prices right. Um they're you know burning 100 million uni from the treasury right now. they're um going to really start to focus on and I think

this also shifts a big focus for them uh on continuing to push forward like the hooks architecture on UN v4 and trying to act as a more of an aggregator uh than just like you know a front end themselves. Um, and so it help it it it's kind of twofold, right? Which is one is like, okay, we're we're trying to to make the token and be one of the first ones to to have the token really acrue value in a way that, you know, equity does, right? But we're also going to stop being or stop focusing on interacting with the end customer in the same way. So they are trying to do something that is I think um you know protecting themselves a little bit right

because like that is where I think when you look at what came out of the ad committee earlier this week that is where people there's a lot of surface area of attack by the regulators it's you know what type of obligation do you have to KYC IML people uh if you own that unc customer and they're interacting with like some sort of front end and that's where I think um unis swap has said okay well like Maybe we if we shift away from that this you know sort of uh this fe switch makes more sense uh and is has less vectors of attack from you know potential regulator in the future.

>> Yeah definitely we we should we should go back to that discussion. There's some stuff on the regulatory front that we should cover but there there's some debate around Michael from curve and then totally kind of corroborated um there's some folks in the industry that were just kind of critical of the the mechanism itself. Um, you know, totally Michael from Curve says, "Really glad that Uni chose an inferior mechanism of revenue distribution. Uh, things are preceding his plan. For those curious, you know, he talks about like the V-locks and the buy and burn." Totally. Then kind of retweeted that and said, you know, on target any form of distribution of revenue to stakers is better than a burn. Um, any any takes there? I mean, I think that we've seen some projects like Helium um do it one

way and um you know um revenue distribution uh better than a burn like do you have an opinion on that? Does it carry regulatory kind of implications if you do it one way or the other? Um, >> listen, I, you know, I think the buyback and burn has been like Eve could, you know, talked about for for a while, right? Um it is definitely more it is definitely easier to from a regulatory perspective to say okay well I am just like you know burning my own my own token than and which is like a buyback than to go and distribute

revenue to a staker which makes it look like you know more of a a dividend right and from a regulator perspective the Most of the you know the large law firms have said uh it is less like it is less likely that you will get or there will be ability for somebody to sue you uh if you're just like buying your own token back and and burning it uh in the open market versus you know issuing a dividend essentially right and so there's a um you know the debate has always been well okay well buy back and burn is like maybe good for price but like you know it's not good for the long-term holders in the same way right

because like the long-term holders the stakers like they should be incentivized through you know getting revenue that makes it you know call it you know uh much more valuable for them relative to like the people who are just speculating on token price right and so you're if you're if you're doing this you know call it revenue stakers or this dividend quality you're just incentivizing you know what we would see in the equity markets are like long-term passive holders as opposed to just um you know trying to solve for like token goes up right um and I think that's a good argument but it is a one that is tougher from a regul regulatory perspective >> yeah I would say I think you

characterize it well I mean I remember synthetics was probably one of the first protocols to actively reward stakers only and because you had to have staked your SNX token to go short effectively balanced the book of a you um um when people are going long you you have to have people that are shorting it and so if you were staking your SNX you would have gotten rewards but you you were effectively short and you had to manage that short I think that required a lot of understanding of how the protocol work and I think people sometimes were surprised of of that mechanism especially when you know there's a lot of volatility in the market um the other thing of course is when you're staking um staking rewards and the treatment the tax treatment of staking rewards in in the US has been a bit unclear they reversed kind of the

treatment of it. I was actively involved in like the proof ofstake alliance way back in the day of like advocating for greater clarity. Um I don't know if you guys are actively staking, but I know of a bunch of funds that just don't want to deal with that complexity because they it's just introduces a whole kind of uh noise uh in their strategy. Uh whereas the burn mechanism is just very clean, right? You're just kind of tracking that. Um I think there's like no my opinion is there's no perfect solution you know a network like synthetics very different than perhaps um you know other protocols like in synthetics you it does make sense to actively reward like just do um u like actively reward participants versus not passively

through a burn. Um but other networks might not require that. Um just kind of depends. But I think as we get more reg like regulatory clarity and we get tax clarity I think we'll you know in a perfect world I think it just makes sense to reward active participants versus just a simple burn. Um but we'll see. >> Yeah I think you have to do that long term. you might also some of these like depending on what the staking looks like. it it very clearly uh it can be certain things like don't work or don't work very well for funds like you know obviously like the withdrawal queue for ETH makes it really hard for funds right um who aren't like really like long-term oriented right or they have to use like liquid staking um which which I can do right but it is a derivative and

theoretically there's other risk involved there right um I think there's you know a lot of these other you know L1s have these sort of like epochs that like you know you have to you know like Avalanche kind of has these epochs you have select for like some period of time, right? And things like that. And so um >> so it's not it's not super straightforward, right? And then obviously for the funds, you have to make sure that you can do it through your, you know, qualified custodian, right? And so for, you know, unis swap is obviously fine. They're they're they're in um, you know, all the qualified custodians. But, you know, as this goes like longer tale, like a lot of tokens are not actually, you know, able to be received and staked through a qualified custodian. Today, >> this episode is brought to you by Zcash,

the decentralized digital cash that is encrypted to ensure agency and safety. With a fixed supply of 21 million and proofof work consensus, Zcash is encrypted Bitcoin. Buy, store, and spend encrypted Bitcoin using the Zcash powered mobile wallet, Zashi. To find out more, visit their website or click the link in the show notes. Thanks to Zcash for making today's episode possible. Shout out to today's sponsor, Katana. Katana is a DeFi first chain built for deep liquidity and high yield. No empty emissions, just real yield and sequencer fees routed back to DeFi users. Incubated by Polygon Labs and GSR, Katana is launching with notable ecosystem of primitives, assets, and

partners like Morpho, Chain Link, and more. Katana's 1 billion CAT campaign is live. bridge and deposit directly into vaults in one simple click and start earning immediately on your Ether, Bitcoin, USDC, and more. Follow the link in today's show notes to get started. As always, investments in blockchain technology involve risk terms and conditions apply. >> Transitioning a little bit into obviously we've talked about Monad here um and we've talked about Coinbase and their acquisition of Echko. they I think are the first project to go through this kind of public sale um offered directly on Coinbase and to their clients. um you know I the the terms of it and if we

can share the screen um yeah so let's go to this uh so monad you know they're announcing that the man public sale first ever token sale on Coinbase sale starts November 17th accessible in like over over 80 countries including the US um you you know not I won't get into all the details of the public sale but this is pretty interesting I mean I think you know historically Coinbase hasn't really you know partic participate in this at all. You had Coin List played a role, Binance certainly played a role, other exchanges played a role, but this is the first time Coinbase does it. Um, yeah, I don't know if you guys were involved in in this, you know, because I know you guys are investors in Monad. I am as well, but curious, um, you know, your your take here.

>> Yeah. Uh I mean the other thing here right was that like Bonad um they they announced all of their token economics and so I think it actually the token like the the forward markets or you know the pre pre-listing markets on like hyperlid traded down a decent amount um on on this it seemed like it was mostly around some concern around um you know I think only 3% is going to the airdrop right and a lot of the people who are like hedging on those like pre-markets didn't like the 3% for the air drop um I think the 7 and 12% going to this you know below the last round valuation to the you know potentially participants at on Coinbase. Um I think like that's

actually a very good number like that's super interesting. Uh, I think that should hopefully with with zero lockup too, like you'll definitely see a lot of people selling, but I I think what they'll try to do probably, and I I don't have any insider information here. I just speculate on how this might work, is what they'll probably try to do is they'll try to do, you know, it says up to 100K, but you'll have very, very few people get 100K. You'll have a lot of people get 5 10K, right? And those people people who get 5 10k even if they're unlocked from day one like when you have 5k in you you might not sell it right like you don't there you don't see the real reason to do it even if that 5k has turned into 10k but if you have 100k turned into 200k like you know there's

just like I think much more likely from a um just a psyche perspective that people are going to go sell it u yeah I think on the the coinbased side like >> when they announced the echo uh the echo deal like we knew this is this is what was going to happen right? Like this is where we were going. Like they're going to want to play Coinbase as a bigger role in uh you know all sorts of you know token listings, asset listings, um and just like you know call it capital formation like they've been very clear about that. Uh the fact that Monad is the first one I think is great. I mean obviously we're obviously investors but um I this is clearly a part of a much bigger strategy for them.

>> Yeah. So just help me get this straight. So you have hype pre-market listing monet at like 05 and the sale on Coinbase is roughly half of that like 0.25 025 >> um is that right? Got it. Do you have any sense of like how how the allocation is going to work? Like you know there is this cap of like 100k any details on like like Coinbase is actually is it up to Monet up to Coinbase? Are they going to reward just based on your activity on Coinbase? If you've been a loyal customer like what's the if you have coin stock like what's the criteria and the eligibility as to how much you're going to get? uh or is it just going to be based on how much

simplistically how much demand they get and they're just going to you know allocate that kind of proada or I >> I think I think they're going to they're going to try to make it um how much demand they get and then allocate it proa that's the way most of these things work right um either that or they'll just do it random right so those are the two things that you technically see I don't have a um any inside information on how they're going to do it at Coinbase my expectation is that like you know it would be if you think about the way these things work in traditional markets right um it's typically not up to the asset issuer it's up to the broker right and so like in this case you know the broker being Coinbase they'll probably the ones

that make the decision same thing you see when these things happen on Coin List on Echko on uh you know before on anything else right uh >> and so um my expectation is that's what that's what ends up happening um but Coinbase I don't think has been forthcoming yet with that how that works. I don't think they're going to be they'll they'll they'll get put something out there, but they want they're not going to go, you know, super super deep on that. >> Um but I do think they'll try their best to make it as broad as possible with like smaller sizes, right? And that's the way Coin List has always worked.

>> Yeah. I mean, it makes sense for them as a huge win. I mean, I think um from a retention standpoint, from a I mean, if they're offering it to over 80 countries, it makes you more inclined in a very competitive environment for exchanges from a customer acquisition retention standpoint, like giving folks access to this deal, uh which is probably one of the most anticipated in the year along with me, you know, I think it's um and plasma, I think, you know, it it it'll be interesting how um you know, how they do that mechanism and I'm sure people are going to and complain about the allocation as you know, you can never get tokconomics right? You can never get airdrops, right? You can certainly never get like allocation, right? But, um, we've talked about like IPO markets being highly inefficient. Um, you know, companies

have like Coinbase have done direct listings. Folks like Bill Gurley have advocated for that type of mechanism. Um, you know, some like the Circle IPO you could argue is hugely like you left a lot of value on the table because it priced what is it like sub 10. Uh, it's not like 30ucks. 30 bucks. 30 bucks. Yeah. And then it just kind of like I was thinking of figure but like you know obviously you know how do you think about like the hype pre-market and the kind of commitment of Monad to price it. Um and clearly the market thinks it's worth like 2x that. So like you're still leaving a lot of value on the table.

Why why commit to a level now versus make it sort of like a Dutch auction mechanism or some other way um on the Coinbase sale? I mean the same thing is true of of public markets like people want the investors to make money, right? Like if the investors don't make money like that is when people get really pissed off and then you don't incentivize like long-term holders. you don't you put people in a position where they get like very upset, right? And so, especially when you're doing these retail distributions, like people want retail to have some form of baked in uh kind of upside, right? And so the idea that, you know, there's um these things

are really inefficient. Like that's not totally wrong, but it's also a feature, not a bug, right? Like people actually want there to be these IPO pops. They get people talking about it. They get people to make money. They get people excited, right? Uh, and I think the same thing is true here. Right now, the one thing that's true in preIPO or sorry, in these pre-launch markets on like Hyperlquid is that everybody >> on in those markets is a is a risk taker, right? Um, like because of the fact that like all of the short interest there um for the most part or the vast majority of it is is people hedging, right? So they obviously think that like, you know, they're they're they're they're like long the asset up to some point, but then then they're trying to

hedge out, but they don't actually know what the token will actually be, you know, trading at. So they're like they're risk, right? There is a no call it, you know, quote unquote basis being done here or there's kind of like core types of traders that, you know, form the basis for other markets, >> right? And so um I I think there's and I I say that to mean that like I think everybody is a speculator right uh in those markets in a way that like you know Bitcoin markets not everyone is a speculator right? >> Yeah. And so, uh, there is an interesting dichotomy around how these, you know, pre-launch things work, um, and like how you should think about what that means for the token price in the

near and and long term. I, you know, oftent times these things trade right up to them and then they kind of trade down a little bit. >> You know, a 2x for the retail guys like that sounds like a a good win for everybody in my mind. Monet doesn't need the extra money. >> Yeah. And and I was going to that like I was just reading BitKit actually has a good blog about like dissecting because they were pretty open about kind of all the they had like an 18page document talking about like even the relationship with market makers, the loans that they're giving. Uh just kind of hammering out a couple details here just to round out this discussion. The token sale they're selling up to 7 and a half% of the initial total supply. uh at that level of 0.025 025 uh if they exhaust it

all they'll raise roughly 188 million to your point I mean they don't need that because they the last round the series A they raised 220 million and in the seed and preede collectively they raised close to like 40 million so you know they raised 240 million they definitely don't need that money right so um but you know I think it's at that level the FTV is 2.5 billion the high pre-market it is implying 2x that so like roughly 5 billion. Um in terms of the tokconomics treasury will take category labs treasury will take 4% team will take 27% investors will take roughly 20% the

ecosystem development category is 38% public sale 3 and a half% 7 and a half% airdrop 3.3%. So yeah, pretty interesting. I wouldn't say anything like overly funky there. I think it's typical um for a lot of projects. Um what else is interesting here? >> Maybe one thing that we should call out here is uh the fact that they're allowing you zero lock to the US, right? >> Yeah.

>> So the the one thing that has happened in almost every other one of these types of pre-sales has been that like Yeah. In other jurisdictions, you have no lock whatsoever. But in the US, they do this 12-month lock. The reason for that is um rule 144. So, it's regulatory. And essentially the fact that you know uh for rule 144 that if the token is considered a security um then that you have to it's a it's a a non-listed security um you have to make sure that you don't allow people to sell for 12 months otherwise you're violating securities laws. Right? So rule 144

means that you have to lock it up for that period of time if it's a security. And so Monad's taken there has been the first one I think at least the first one of of any major note that I that I know of that has taken the point of view that like hey we're just going to go and treat the US as much as we treat everybody else because presumably because they're they feel strongly that you know the risk of them being deemed as security is a lot lower uh or is not very high um that they're they're willing to do this. So um that is I think a little bit of an interesting change relative to what we've seen or how we've seen some of these others >> um less I mean even like to the megith point right like they did the that

auction at a billion dollar uh cap um you know a few weeks ago and for the US they had to the US investors >> they do a one-year lock. >> Yeah. >> Yeah. >> Yeah. It's interesting also of course Coinbase has a you know had to have approved that structure and they have obviously so so like very strong signal into what regulatory environment we're in today. Um just the last point on the monad what was interesting too is they disclose the market making arrangements which is something that historically hasn't been really disclosed. um you know to give people some perspective I'm sharing the screen here folks seeing you know you they're working with what is it five market makers

um interestingly the duration of the loan is one month for all except winter mute the size of the loan is also the smallest for winter mute there's a lot of chat on on X around like just implying like just reading into that um Monad uh kind of um kind of goes into the criteria as to why it's selected that um why only M winter mute has this one-year commitment um any thoughts into that like um is is the you know winter mute I guess historically has gotten some criticism and you know as as every market maker in that page at some point has gotten um criticism I'm curious um your thoughts there and um

how you thought they kind of structured the the loans and the arrangements with market makers Yeah, I mean I thought it was interesting that they did this. You know, some other tokens have done it, but um not not a ton. I I I want to give Monet a lot of credit here for just this all of these um just being as transparent as they are and you know putting out these uh uh this documentation, right? Uh obviously on Wintermute side, like Wintermute probably just told them that they wouldn't do it with a one-mon uh contract. uh and they made the decision that winter mute was important enough that they would and that they would give them a longer contract, but they also sized them down to the smallest loan size, right? So, winter mute obviously

solved for like, hey, we'll we'll take the smallest loan size, but we want to be we be there for a year. >> The way this works, and I I think probably everybody knows this that listens to the pod, is that all of these guys have three, four, five uh you know, market makers. And so it's not so much as like that these other market makers are going to go away in a month. It's just that Monad preserved the optionality to fire them and add somebody else or to fire them uh and maybe not, you know, maybe not need five. >> Um and so uh I expect that the most of these guys, they just continue to get rolled into different contracts regardless. And so um not not that surprising to me. Um >> Mhm.

>> that said, like, you know, I think this is uh it's pretty standard the way this looks at the moment. Um and so this wasn't surprising to me at all. >> Yeah. What's also interesting is so they're allocating in total, what is this? Uh let me go back here. 160 or so tokens. >> Yeah. 160 million of tokens. >> 160 million of tokens on a >> on a 10 billion, right? Yeah. Versus they've also allocated this sleeve of 02 200 million tokens for DEX liquidity.

It's interesting also there right they're they're carving out more tokens for DEX liquidity versus market makers. Um curious how that gets allocated. And there's some folks that were saying hey like obviously this report said like that might not be enough. Um typically many projects allocate 2 to 3% for market making quotas. um whereas this is >> much less. So yeah, uh pretty interesting. We'll see how that translates into price discovery and I would think that there's going to be a ton of activity just given airdrop and the fact that it's immediately tradable um for for the Coinbase allocation and so there's healthy amount of supply out there um to yield some decent price

discovery combined with like pre-market um activity. So we'll see. >> Yeah. And and the other thing to note here, right, is so everyone we saw there were like kind of cryptonative like market makers, right? Um that are a lot of those guys are working like you know longer tail, but um you know who are the biggest market makers on like Coinbase and Binance, right? Like it's not it's actually not these guys, you know, maybe it's Wintermute, but um it's like right now it's like Tower Research and like Jump and the big traditional guys. >> Those guys will just go buy in the market, right? uh and like and so the I I think clearly what Monad is is taking the perspective of is they think that their token will be something that

people want to trade that there'll be a lot of volume and that the uh traditional market makers on on those exchanges will be you know uh willing to go and and quote because of the fact that there will be so much volume and they'll just buy the tokens themselves which they need to to uh to hedge out that risk. >> Yeah, absolutely. This episode is brought to you by Geonet, the world's largest decentralized RTK network, delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics, Geodet shows that blockchain can be a truly transformative force by delivering realtime centimeter level accuracy. Geodet enhances emergency

response, boosts construction precision, and enables advanced navigation for drones and surveyors far beyond the limits of standard GPS. To find out more, click the link in the show notes or follow them on X. This episode of Empire is brought to you by VanX onchain economy ETF, Node. If you feel like you are constantly missing alpha, never have time to scroll through crypto Twitter, Node is for you. Node is actively managed by an experienced team with years in both trady and crypto. That team at Node looks to capture the most powerful trends across all of crypto while actively managing volatility as markets evolve. Super important in today's environment. Check out Node's

track record so far at van.com/mpire/node. That's van.com/mpire/node. You can also little easier just click the link in the show notes. Thanks to Van and Vanex's onchain economy ETF Node for making today's episode of Empire possible. As always, investments in blockchain technology involve risk terms and conditions apply. >> Current law, what else uh what else is on your mind? >> I guess you know, we started this talking a little bit about the the market overall, right? Um I think there's been a ton of discussion recently

uh just about how you know maybe the a lot of the crypto native traders are wanting to move to like equities right um I think the but then we we talk about like you know everybody was trading the DATs earlier this year but now even I think Micro Strategy is below 1 MNAV uh at the current time. Should we like have a discussion around >> uh what's happening in the DAT space, right? Like should we should we bring that back up? >> Uh definitely definitely should. Um yeah, when we go I haven't followed as much now for these guys. I think Block Works actually might have a dashboard here, but yeah, it's looking pretty ugly.

>> Yeah, it's looking it's looking really ugly. And so I I I I one of the things I've started to wonder a little bit is like how quickly are we going to see uh the the DAT M&A market. I don't know like if in the conversations that you've had like are you starting to hear people continue to talk about DATs like how are they thinking through um you know what they're going to be you know how they're going to approach this market going forward. I I actually very surprisingly um I you know the XRP one got launched there was a um uh you know there's a there's one or two other DATs happening right now but very surprisingly to me there still continues to be like altcoin for not highly traded altcoin dats that people are trying to

put together um and I I I would have thought that they would have have died by this point >> emphasis on trying to put together uh I I continue to see the occasional random project launch a dad or try to launch a dad, but it it hasn't been uh as successful um in terms of like capital raised. Some have just it I think the capital's really dried up for a lot of these projects and and you know this is not a salana, right? It's a you know if you're not in the top 10, top 20 of market cap and you're trying to do a DOT, it's just like really really hard.

Uh, I've seen terms be changed around much, but of course you're now dealing with inkind contribution, which makes it very very hard to get it actually approved, right? Um, so I think um yeah, it's a I haven't heard on on acquisition stuff. Uh I was at the Galaxy event uh couple weeks ago and you know you had a couple of folks the Ethereum folks on the Ethereum Dad and then there was a Salana Dad and they were they kind of hinted at this like there might be opportunities. Um I wouldn't be surprised. I mean it's going to be a world of have and have nots but uh yeah I mean these instruments are highly reflexive. I mean even if you're micro strategy and you're

in an environment where like your MNAB is just you know getting crushed like can you actually do uh an acquisition um I don't know do you have folks internally with the capacity to do acquisition because a lot of I don't know from your standpoint but a lot of these dats the management teams are much to be desired I would say like yeah okay you're indexing on like crypton nativeness to sell to the market in a bull environment that works fantastically. You have someone like Luben just, you know, sell the dream and he's good at that. But who else is on the team to actually operationalize and make these businesses like justify the

MNAV? You have to produce cash flow. You have to, you know, make it a viable business model. Maybe I'm taking too much of a fundamental view. And look, I participate in some of these doubts. Uh I don't, you know, uh so I don't know. Yeah, I I think it'll be interesting to see what happens. We um it's still a big topic of conversation. I I know like there was the the Caner conference this week and like there was a lot of that discussion again. >> Um >> did you did you not go to that? >> So I I ended up not going. Uh but I've heard from from others.

>> Um >> just the traveling too much. >> Yeah, just too much travel. >> I was gonna say like are you you worn out there, Matt? I I I think I am, you know, I'm trying to stay home. Well, I've had um like multiple people be like, "Hey, you look kind of tired." Uh and I think that is um uh you know, one really rude. So, uh so maybe people should stop telling me that, but but two, uh maybe a sign that I need to not travel a little bit less. So, >> it's it's so distracting. >> Um it it really is.

>> What What is a I mean, you you participate in some dats. Um I have two How does this end up? Like um are we going to we've had discussions around DATs potentially being like the thing that really drags the space down. Um you know, equity markets have been volatile. Like how do you like what what's your are you are you still cautiously or selectively pursuing these conversations? Do you think there's still a place in a world for DATs to persist or how does this actually end up? I I mean I think dads still like you know there's a reason for certain of them to exist a small number of them and like you know ones that offer certain types of you know access or to you know

maybe an altcoin that they can't get access to right now through an ETF maybe you know they somebody can't get access to like staking yield right now. I mean it's very clear that like an ETF um is much more uh capital efficient than some of these like Ethereum DATs in terms of like managing like yield generation specifically and so the DAT should trade at some premium to the ETF. >> Um so I think they they mean to exist but like not in the size and scale and amount of DATs that have existed today. I think we're going to see a lot of consolidation. We're going to see a lot of people give up on these things. We're going to see M&A. Um, and over time I think we'll we'll we'll look back and be like, "Yeah, that was really frothy and sort of the same way we did in the spa

market, but like there should be some of them, right?" And they would continue to exist. Um, so I my expectations we see if the macro market is a lot better next year, which I think it might be, maybe we won't have the reckoning yet, but like that reckoning is coming. >> Yeah, absolutely. I mean, it's it always felt to me like, you know, arbitrage strategies only last so long. And, you know, again, be as you said earlier, if you're long, you should approach this as a long-term investment. Um, most of the folks that have like tried to be traders can do phenomenally well and then sometimes blow up, especially we start using leverage. I've really avoided or try to avoid instruments that um force

me to be correct on timing and I just have always felt that dats are that type of structure for the most part like there's always nuance in in in in the structure and in the you know I'm not categorically saying that all DATs are bad. I participated in some as as so have you I think and so um but but on the margin I mean I think it it on an isolated view you could just hold one like a DAT or just the underlying I think for the most part for most folks it is just better to hold the underlying and not kind of play the premium or discount that that just like is is a trading game is a timing game and is really hard to get timing right in this industry like everyone thinks in a

certain part of the cycle you can really the timing right and they get and then you get, you know, smacked by the market and says, "No, you definitely can't." Uh because it's like highly irrational and you can't really explain why things like Fartcoin just go parabolic or Zcash just goes parabolic, too. >> Crazy, man. >> Uh which I was hearing about Zcash. Uh I heard a lot about Zcash uh token Dubai. I went to a couple events. It was like percolating. He's like, "Hey, like Zcash, Zcash." I'm like, man, I've I've held Zcash since like so like, you know, like it was it was a darling way back in the day, but it's been it's been impressive. Um, do you guys have a position there? I mean, I know you guys have pursued the privacy thesis. Um, but

>> we we don't currently. I I would say, um, we've been, I think, cautious on the privacy thesis, especially considering um, everything that happened, right? So, >> on the tornado side. Um, >> yeah. So, we've been cautious. You know, we we've we did look we did try to try to re-underwrite Zcash. Um, you know, call it a in the last few weeks. Uh, we probably missed like what we thought was like the major run and so then it was kind of like less attractive to us. >> Um, but there are a lot of smart people around it right now and a lot of people >> I mean I saw I saw a hackathon like Kobe Bye. I mean Zoko is one of the smartest cryptographers. Eli who I didn't appreciate was a co-founder of Zcash 2.

He was like a co-founder of Starkquar, co-founder of Zcash, I met Zoo >> uh and I felt he was like the main force and he has been for for a while but then you guys were involved in Near and so Near's also involved in it but it's like sort of like a you know I do have a position in SEAS I've had for a while I mean I was holding a bag way back in the day I did reunderite it I did put in a position not at like 50 bucks closer to where it is now um but it was interesting you know it has like sort of the meme characteristic 21 million Zcash. Um, and but yeah, I think like uh it has been interesting to observe and actually paying more attention to what's going on there. Especially just today I saw this hackathon and

>> I will tell you like there's like to your point about the hackathon like there's a bunch of people around who are like okay well like how do we turn this into an ecosystem right now and there there was active in active conversations around that. So, um I mean people kept shorting it all the way up and the shorts kept getting blown out. Like I it I I people never learn in crypto, right? Like you don't short momentum, right? Like you're just gonna get blown out. >> Yeah. >> Yeah. Absolutely. Um definitely, man. Before we go to content of the week, anything else? >> Do did you want to talk about the Hyperlid uh bridge halt today? You have any opinions on that?

>> I No, I was I had not tracked that. >> Yeah. Okay. Well, we don't have to get into it too much. I think I I don't understand the full implications yet. Um, but essentially there was a uh basically it there looked like or at least people believe that there was some sort of you know manipulation and I think the in in the um >> Popcat HP3 vault. >> Yeah. based on like a Popcat uh uh somebody that was like, you know, going like very lever long on Popcat through a bunch of different wallets and then um trying to I think make the vault uh acrew some some losses, right? Similar to like what looked like happened in Jelly Jelly uh call it earlier this year. A and so for some period of time

the uh the bridge arbitum bridge went down and stopped processing um uh withdrawals uh at least for you know it was over 20 minutes. So people were speculating that this was due to that this had been done intentionally to be um and was due to you know trying not to let what people thought was like an attacker um you know be able to take money off off a platform. Um, I don't know how much it's this is still kind of evolving. I don't think we've seen yet a post from Jeff or anybody about it. And so we're still trying to to figure out exactly what's going on. But just a you know interesting I think to think about again as you know we

continue to talk through you know what the um line is for decentralization versus non-deentralization for applications versus protocols and like how that might fit into some sort of regulatory thesis. Um and uh I I I I think my expectation is hyperlquid is going to be one of the along with unis swap one of those names where a lot of this debate centers around and and in fact I'll I'll tell you when I was talking about this thing I did on the sellside analysts uh for one of the big banks yesterday there was actually a lot of talk around like is hyperl like what is Coinbase's market share going to look like over time? Is

Coinbase still very interesting in terms of of a potential buy? Like what is the the competitive pressure going to look like? And like do we believe that things like Hyperliquid are going to take market share because of this regard that they have? And does there need to be um is that could that regard close? And if that regard closed, would hyperl still take mark share from something like a Coinbase? And so a lot of people are thinking about that now uh with Hyperlid at the center of the conversation. >> Do you think there will be blowback? Cuz like again, we're going back to that Black Friday event where historically you've had in moments of stress exchanges temporarily halt temporarily, you know, block withdrawals, deposits,

like they just it's at the discretion and you're subject to their terms of service and what have you. Um, in this particular case, the validators made that decision to like like the emergency and it's the first time that has happened. I'm just kind of reading up on it live right now. Um, so do you think there's going to be blowback here of people being a little bit more cautious around okay well like yeah we like interacting hyperlquid but it sets a precedent of maybe this continues you know this happens and it's maybe it's not too dissimilar from an exchange where you are playing and you need to abide by the h rule the house rules and if whoever the house here is is whether it's four

validators or the core team or a combination of people to really control the the protocol. Is that any different from an exchange? >> I I I don't I don't think people care, right? Like time and again, right? Like the ethos in in crypto has been around, you know, the cyber punk ethos that exist in crypto. The users as we've gotten bigger and more mature have continued to tell you they do not care about the ethos of crypto. They care about making money. They care about being protected from losses. They care about good um user experience. Uh like I I just think like the everybody I mean was it um how long ago was it that like SU basically like rolled back state so

that one of those hacks didn't uh uh essentially weren't able to like you know move capital off of off the blockchain. Like >> we've completely forgotten that happened, right? like nobody like and that is like you know on a relative basis even relative to to this or anything else we talked about like one of the most insane you know things that have happened in terms of like people just are just showing that like decentralization is often a little bit of a meme right and so like >> um I just think people would much rather not lose money and much rather make money than ever care about like you know what what the house is doing >> fair enough. I mean, look, there was another report. We won't get into it now, but I think uh Bybit put out a

report like going into the code base of a lot of um L1's or L2s and they had the ability to kind of freeze assets, which is I believe what Suie did. I I don't think they rolled it back. I think they just kind of froze assets. But >> if I remember what they actually did was that they uh the validators stopped validating transactions from the addresses that were uh affected or or that that had had performed the hack. Um, which for, you know, all intents and purposes meant that they essentially like froze his address. So, >> exactly. Um, yeah. Look, you're at a room, you're talking about crypto and these are people that have used USDC.

You asked them, hey, are you aware that like Circle can freeze your USDC? How many people do you actually think in a room of 100 or a thousand people? You do a survey. How many people do you actually understand that that that's possible? >> Yeah. outside of like crypto like I think like not that many actually like >> you know but at the end of the day like you know who can also freeze your money JP Morgan right like >> yeah know I know absolutely right I mean I always take the position like a marginal improvement is still marginal improvement um you just need to think about sometimes people in crypto just want to reach an end state of perfection that is not possible but you know I was just looking at like just a round up this the

greatest benefit is just you're introducing more transparency So like you're seeing what hyperlink would happen like you can discuss it. You can evaluate it. You can make a conscious decision whether you want to interact in the protocol or not based on some precedent and yes even though the market or people might have a memory of a goldfish. You have that precedent like crystallized in a public record that allows for that discovery and for that at least decision whether you're the end user or the institution that is going to decide whether to route activity to hyperlquid. definitely think that a precedent like today sets on the margin, you know, something to point to and say, "Hey, maybe we will not route activity there until we get some resolution from the team." And it allows certain people,

you know, crypto has this dynamic of like a vocal minority that probably is going to like require people like the TAs of the world to say, "Wait a minute, like what the hell happened here? Like give us answers, right?" And and often times that may not have happened if you didn't have as much transparency. Um and so that's a good state like you you know I was looking at first brands too, right? And and Howard Marks but just transitioning to content of the week. Um he put out a great kind of memo and I love his memos and he was talking about first brands. They actually underwrote um and they had lend out a small position and then as they dug more they kind of were like he he's go he goes into the memo. I won't go into it here

of like certain red flags as they started to underwrite um you know that and just people kind of forget like crypto does have a lot of issues still it it is kind of a plane being built in flight there is still need like there's still an opportunity to iterate on the consensus algorithm on on the L1 on the broader infrastructure but we are creating a more transparent system and that allows us to learn from our mistakes and as a collectively kind of create more protection in the end state, right? Um and and and even like the FTX recovery process, it took, you know, way faster than, you know, the Murdoch like creditors, right? Not Murdoch, the maid

off creditors that took like, you know, decades. They're still being paid out. So, we're not saying it's crypto is perfect, but you know, you're creating at least a public record that you can point to and at least certain people in the community will like require and demand answers. And you know, no one's forcing anyone to interact in Hyperlid. >> Yep. Yep. All right. Content of the week. >> Anyways, yeah, let's let's do it. What's the content of the week? >> So, I'm I'm late to the game here on this one, but um uh so I've just started reading Breakneck, which I I think was released in August, but you know, kind of really um it was I think in a lot of people's minds through September. Um but it's it's break neck China's quest to to

engineer the future. Um a guy uh called Dan Wang who uh was the is the author. Um you probably know Dan. He's he's probably one of the most foremost like analysts looking at China. Um and you know really just kind of examine >> Yeah. Great blog as well, right? Um so chi just really examine China's um how they've approached technology and and and geopolitics and how different it is relative to the US where the US has always been kind of run by lawyers and you know China has been run by engineers and and mathematicians and so I think it's probably understanding what's happening in in China continues to be one of the most important things that we can do um as Americans right now and and especially as you think through

macroeconomic and foreign policy. Um and so super interesting book. Uh so I would recommend it. >> Yeah, I'd have to pick it up. Um for me, I'm rereading Against the Gods. Uh it's a the remarkable story of risk just because of historical evolution of like risk and uh from Pascal to obviously now hedge fund managers and so um probably good time as ever as the markets are very volatile. Uh although I am sitting pretty on my Western Union position, Rob. Um, you know, it's not because it's rallied a lot. It's purely because Salana and everything else in crypto.

>> You got to I'm in the more volatile asset, so that's to be expected. So, you know, maybe Santi before we go, I just want to say one thing, which is that they really uh they did you dirty on the haircut thing last week. I think the haircut looks nice. >> Rob, I I I I appreciate I appreciate you saying that. There's been now five or six people, including my partner, that have said that this is the worst haircut that I've gotten in 5 years. So, um, you are welcome back in this podcast any day. Uh, Yano, you might have to struggle to come back here, but like I think this is a good place to end it.

Um, I will my confidence has gone marginally up with this terrible haircut, but uh, yeah, good stuff. You know, a lot a lot of stuff happening. Uh, we I'm going to be in New York next week. If you're in New York, Y's in New York. I don't know if he's going to be around or not, but we should maybe do a inerson recording. Yeah, let's do it. >> Yeah. The last shout out, we're going to do uh inerson event in New York as well. It's called office hours. Um it's meant to be just kind of a kind of like a academic discussion. A lot of folks from traditional finance, uh folks from Citadel and trading firms and just that have been historically very skeptical of crypto but are interested in like tokenization and some of these uh areas that you know like stable coins. So,

it's going to be a small gathering. I think 30 to 40 people if you're around. I think it's on the 18th, but any I'll retweet it. Uh, and we'll love to have you guys there if if you know, come prepared with spicy takes and, uh, so yeah, open invitation to folks and we we have to hold the line, but you know, we'll try to get everyone in in the mix there that that, uh, we think is is good for the discussion. >> Don't miss it. >> Okay. All right, Rob. Thank you. Thank you, sir. Have a good weekend, guys. [Music]