State of The Market, Polymarket Insider Trading & a16z Raising $2B | Weekly Roundup

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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 Block Works team may hold positions in the companies, funds, or projects discussed. Hello. Hello. We're live, Rob. Bright and early out where you are. You're eating a what I thought was a McDonald's sandwich. You said it was a little bit healthier than that. Was a Starbucks.

So, >> do you think I would put McDonald's in this this temple that I have here? Come on. Starbucks only. >> Are you trying to live forever, Rob? >> Uh, abs. I mean, we're all going to live forever in the A of like, you know, agentic economies, right? We're going to have just breakthroughs. Like, you and I are going to be, you know, 150. We're going to still be doing this podcast. People still be listening to us. Well, we could definitely get to 150. I don't know if people are going to still want to listen to our podcast. Um, but uh yeah, there there's some uh I mean I I studied um well, I I worked at this agent company called Alisium Health and like I saw some stuff in the timeline, David Sinclair, who's like this longevity researcher, a lot of the stuff that Brian Johnson references, he's

making some pretty bold claims around like reversing aging and whatnot. So, I feel like it's that time. We're gonna we have to get in the state of the market. But beyond crypto, I think it's that time where like just anything can stick, you know, because like the world's moving so fast. So any this is a time where you can make the wildest predictions and people will listen probably but more so than any other time, right? I saw David Sinclair speak there. I went to this like event back in October uh in Italy that was just it was like for a big asset manager and it was just like 60 80 of like their biggest LPs and then you know they brought me and and Palo in to talk about crypto and then there were some other people talking about other stuff. It was mostly a non-crypto event and David Sinclair

was one of the speakers and like it it was like wild like he thinks that like you know if you believe his vision of the future that's going to be like utopia it's going to be we're going to be like the most like just healthiest like best looking we're going to live forever like wild stuff. So um I think I came away from that though that if I'm going to live forever I really need to make more money. So I these markets need to go better. So that's what I need. >> Yeah. Well, I mean I I the question is do you really want to live forever? Um because I feel like there is some meaning in life if you you know if there's finality to it. But also health span versus lifespan. You know do you really want to live 150? Like what is

those last 30 years going to look like? Cuz you know what is crazy though is like >> how well you feel. Yeah. >> Yeah. plus plus like the the I mean this is not a podcast about setting longevity but what and what that means but like the strain it has on infrastructure on health care system like you know that like the last mile spent like the the last few years of your life it's like a disproportionate share in terms of medical spend uh and it's crazy crazy crazy it's like >> yeah it's most of the medical like vast vast majority >> it's it's most of it yeah any I know you're a healthy guy right the first time I was at your apartment you know one of the first things you showed me was your plunge. So, you know, I I I know you're working towards that that

future. So, >> well, trying to be healthy. Um, >> let's talk about the markets. What's caught your attention? I mean, we'll give it no more than five minutes where we just spend a minute on the markets and then we'll move on because there's some interesting news happening this week. >> Well, you know, Bitcoin's back up to 72 73K today. So, we've got uh a little bit of a a little bit of a rally. I think um all the alts rallied a little bit. There's you know I think some optimism uh that this Iran conflict will be short and not long. Um it's unclear but over the weekend it was you know I think you know after the first day there was the administration was out saying listen

this will be pretty short. We've killed a lot of the the leadership. Uh you know going into the second and third day I think you started to see some news that maybe that wasn't necessarily going to be true. I think the president himself said this will take at least four weeks uh on Sunday and now you know I think we're the market's kind of settling in and seems to be thinking that maybe this won't be a particularly long conflict which is good and then more broadly um we saw I think over a billion dollars of uh of ETF inflows and Bitcoin uh this week it you know even with all of the volatility in the equity markets earlier this week there Bitcoin kind of stayed ragebound which suggests to you they're like there's not a lot structural sellers uh at the moment and so um I

don't know it feels like a very good setup for markets to you know do better in the um in the medium term. I think I was I was talking to one of the big derivatives traders and they were saying that the uh you know if you were looking at the um the open interest and uh a lot of the options volume like you could tell the market was like bearish uh or or at least they were proing downside in the near term but over the long term uh for the rest of the year uh the market was quite bullish. So you know that's all that's all positive. U you know you saw uh the I think it was NYC uh invested in OKX this morning right they want to provide more you know spot crypto and spot crypto uh asset pricing and they were want to use OKX as their

oracle. So that's like pretty interesting right so like clearly like you know a lot of these big market uh participants continue to see the you know crypto as like important for you know what they want to do in the future. And then you know I think on the Iranian conflict stuff right you saw hyperlquid and poly market have you huge weakens uh and trading volume uh over the weekend while the rest of the markets are down right and that talks to you again about like why these 247 you know permissionless markets are are are quite important for price discovery. So I don't know I think it's all it's all relatively positive uh at a time when people are you know they've been quite quite negative for a you know a period of of weeks if not months.

>> Yeah. Yeah. I was I was uh so I was over the weekend. I think I I tweeted about this, but that's where uh so I was sitting down with the macro guy. We're talking about Iran. It just happened. It was topic around the conversation. It was a launch. They're all speculating, right? They're all looking at their portfolios. Um they're all thinking about, okay, how do we position ourselves like come Monday? And they're just quiet just immediately go to hyperlquid and take a look at and the market was up like 5%. Um and it's now sitting at like 84 bucks. Um that's when you actually truly now begin to understand >> this is oil you're talking about.

>> Yeah, Brent oil. Um they they have two markets, right? Uh but nonetheless, I mean that that's where like it makes you wonder like it's going to look very nonsensical in the next like five years and you look back and like why wasn't finance 247 like 365 and you know people would say look you can hedge it around the margin like it's really not closed but um and the criticisms maybe of hyperl like hey there's not that much volume here so like if you're a large institution you can't really hedge your book or whatnot but you start seeing glimpses of like how um how this infrastructure that has been built initially for just tokens and you know digital assets is now really going to be useful for other stuff and this weekend unfortunate as it was it just

like gave you a glimpse into the future for me like seeing the reaction of these people is the I've only really felt that aha moment when I was describing stable coins back in the day to someone um and they really didn't understand DeFi this was like 2020 20, you know, DeFi wasn't even really a term, but you had some some stable coins. And I went back and I told someone, "Look, go and use a stable coin and then come back to me." And they're raving about it. They're like, "Gosh, wire transfers suck." Um, and and look, I think I think I'm I'm very excited about this. I think like may maybe I know you're close on Hyperlquid

and Osteium and some other protocols that are trying to do this. like what what is the a what is your re like how you think about tokenized like commodities and equities? We've talked about them before in the pod, right? And some of these things haven't gotten as much traction as others. Um but give us your view in terms of where are we in the buildout of this? like how like are we ready to truly be 24/7 365 and or or what are the things that you think still need to be built out to to go in that direction fully?

>> Yeah. So, we're definitely still not ready for it from a a large infrastructure standpoint, but you know, I I think I've talked about this a little bit in the past, but one of the major issues right now is simply like the accounting systems at the firms, right? So when it comes to per are a little bit easier these derivative projects products because know these are synthetic exposure to these things right um and synthetic exposure you don't necessarily there's still you know accounting concerns there still like back office concerns but the um understanding like a derivative contract and being able to do like the appropriate accounting for that and collateral management for that is actually significantly easier than if

you're doing spot uh in these in these commodities and and in anything that's um you know on in equities etc. The structural cons issues for like the hip 3 markets they still exist very clearly like right now they're trying to figure out well like how much risk can we actually bring on there's I I think the the hip 3 markets are capped at a so you can't move the price can't move more than 3x during like on the 8 hour trailing uh trailing price action. Um there's a uh and if it has like um and that's if it's kind of like a native market. If it has a you know oracle to like a centralized exchange it's something like um I think it's like one to one and a halfx uh that can't it

can't move. >> There's because of this kind of lagging oracle price there's a um it's not necessarily like directly in line with like real price discovery and liquidity is you know quite low. I think um oil, you know, there's a lot of people talking about like, okay, well, you want to be able to trade oil on pers over the weekend, but uh there's actually uh they hyperl keeps putting open interest caps on it because they're worried about there these kind of like really big movements when you know the market reopens and so I think the uh open interest on oil got capped somewhere around 20 million bucks over the weekend and there's a lot of this a lot all of this is really about risk, right? is like how much risk can you take on at a time when you have a price that is

supposed to be tracking something that is off training as is not necessarily a native market right and so I I think the there's clearly a lot of work that continues to be done there and while I believe hyperlquid is a big part of that story it's not a a place where you know call it the large institutions who trade brand can actually go and hedge their risk right and I think this is going this is going to continue to true as we have this dislocation between the really big deep liquid markets that exist in offchain and then and then things like hyperlquid now I think those are going to get solved because I think more and more assets are going to get tokenized more and more assets are going to move on these other markets so whether it's at NY or CME or you know etc are going

to move towards onchain rails and are going to move towards 24/7 and then as you have this becoming more normal that you know market makers and like broader market participants are interacting with these types of products uh 247 or 245 that makes it easier for also products like hyperlquid which are better experiences for a lot of traders maybe not super sophisticated institutional but for but for retail um to also be able to take on more risk and be able to allow for more risk over those periods of times it's easier I think in the commodities markets and the FX markets because easier to dirty hedge easier to move with the sun uh equities markets I think are probably the furthest away from having this really deep 247

liquidity, but but maybe we get we'll continue to get a little bit of 245, which we have already with Citadel and others on on Robin Hood. Uh not not quite 245, but close. Um who are willing to kind of warehouse some risk overnight. >> Yeah. So, what we're seeing here is uh just to put some stuff into perspective, you have hyper liquid markets. Gold, these are commodities. Gold by far has the highest open interest at 163 million u and pretty healthy volume because what you want to look at volume and open interest in that relationship and then you have silver having way more volume actually than gold um less open interest and then oil to your point there's two markets one oil then Brent oil

has I don't you know 8 million of open interest and four million of volume and then you know Brent oil has 9 million of volume and 3 million of open four million of open interest like that's for for any real commodity trader like Glenor or he looks at that and says this is embionic at best like this is a proof of con concept um you know to put I was just kind of looking at to give folks some perspective you know that's you know the entire tokenized stock market is about 800 million to 1.6 6 billion uh like the NY does that in a single session like

before lunch. So yeah, it's >> I mean listen, it's a great embryionic moment, right? Like it's exciting and I don't want to, you know, kind of um underplay like what is happening here. Uh I think it's it's you know, incredible to see like so much interest as well. I mean, you saw Bloomberg and a bunch of others talk about it. >> Uh but it it is very clear that there is a lot of structural issues about how to increase risk parameters uh to be able to bring on people over the weekend, right? you there's uh I I was chatting about this with with somebody else but the uh you know in there's these working sessions that happen at the CFTC. So I I sit at um on the CFTC uh digital asset market subcommittee and a lot of the conversation there uh over the last year

had been around okay well like how do we think about tokenized collateral um relative to other types of you know rappers because tokenized collateral is essentially just rappers and um you know can we use that in you know call it for at prime brokers at um you know maybe clearing houses and then but then if we do that can we enable call that, you know, 24/7 trading. Can we have more like, you know, tokenized trading? What's the infrastructure that's needed? And a lot of these big trading shops were saying, listen, we think this is coming, but we uh we're not set up yet, or we think we will be set up soon to be able to plug in our current systems to uh what is happening here. Those the market makers are furthest along, and I

think they're there now, but they've been working on this for years. A lot of the takers like you know Balazne or you know not to call them out specifically but any of these types of guys that look like that right like you go and you ask them you know okay well um you want to do a trade on a weekend and they'll say well like we can't because like we keyed something in 20 years ago within our our u trade management system and um we don't nobody knows cobalt here anymore and like we can't figure out how to like what type of tech sits on top of that so we don't know how to change it right and this actually exists at a lot of the hedge funds today and so there's um there's a lot of work that needs to continue to be done and people are

trying to to modernize and digitize especially in that the edge of AI but it's um it it continues to be a a you know work in progress. >> Yeah. I mean you made a pretty bold prediction on stable coins. Uh is there an equivalent prediction here around volume? I think tokenized gold is the most advanced uh market and it's like 0.002% 002% of you know real like gold futures and whatnot. I think gold's at three billion like comix gold futures trade 50 to 100 billion a day physical gold market that's 130 billion. Um so what's your outlook and what gets most traction

first? Is it commodities? Is it stocks? And and is it mostly retail or what what is it that really gets more adoption? And and then second to that, like what informs your investment thesis? Like is it just hype? Is it Oium type or is it just more something else? >> Yeah. So the so I think over the weekend hyperlquid did five six billion on each day uh over the weekend in total. About 10 to 12% of that was in these like you know real world asset markets. uh that was actually it had been higher percentage uh earlier in the the month when I think silver it really ran up uh and we had kind of that commodity top uh

that that existed the that 56 billion for hyperlquid was was very high for a weekend. So normally the weekends are you know call it like one to two billion because you know the markets are a lot a lot more dead and then then then they go you know five to seven billion during during the weekdays have been up to 10 you know and maybe more certain days where there's been a lot of interest uh where we've seen you know the ability to increase these risk caps to get uh you know market makers and deep enough liquidity today the easiest place to do that is in commodities right now uh and FX right so those markets are open much longer more globally and you can do um more hedging, you know, much uh in different markets and kind of move with the sun um over like a you can have

broader coverage. Uh stocks is is the toughest market right now. And so that's why we've seen to your point on on hyperlquid the open interest caps being the highest on the commodity side, gold specifically because that's such a a deep uh deep market and FX. I think the that'll continue to be true. These are still definitely very much like retail proumer markets and then maybe like you know what in crypto we might call institutional money but in what uh outside of crypto we would we would not call we would call proumer money right uh and that's the people are primarily trading these things right now but listen there's a lot of interest from a lot of the institutions I I have heard directly from you know big exchanges um you know they're connecting with

hyperlid they want to learn more about the infrastructure they're thinking about you know how this works and so they I believe that we will see um whether it is hyperlquid or you know a current project out or whether it is call it a you know new product that is no call it more form fit for you know nicely and in a NASDAQ we will see more and more of this type of of trading happen on chain I think spot is going to be tough in the near term I think spot spot equity uh is the furthest away from getting adopted >> the Blockworks digital asset summit is back in New York March 24th through 26th we'll have top speakers from leading asset asset managers, financial institutions, DeFi protocols, crypto

companies, and policy makers, all under one roof. Think Black Rockck, Coinbase, Robin Hood, and more. Follow the link in today's show notes to buy tickets, and make sure to use code Empire 200 for $200 off at checkout. >> Yeah. Yeah. Speaking about the weekend, obviously another market that saw a lot of activity was Poly Market. Um you know again there was um uh uh obviously the insider trading allegations come out again uh just to give people some context like uh this isn't like one suspicious trade it's pretty documented like during the Venezuela Madura capture like someone bet 32k that turned into 400k like hours before Trump announced it um on the Iran strikes I think

there's like six brand new wallets funded within 24 hours of operation epic fury uh that netted them 1.2 million combined. Uh there's been a couple cases of like people getting u going to jail, I think, or or I think there was an IDF, like an Israeli Defense Force um reserve member that got indicted in Israel for using classified strike plants to bet on polymer market. Uh that was back in June 2025 conflict. Um there was another account called Alpha Raccoon. He hit 22 out of 23 predictions correctly. He made like a million bucks in 24 hours. Uh there's now insider trading on on um Axiom that is going on

like >> well actually a different story than the market >> different story but I think like >> they were like front running right they're customers basically but on the poly market stuff there's I think two schools of thought one that says look it's insider trading it's unfair um you know you shouldn't be doing it and and clamp down on There's another more controversial stance that says look um there is going to be insider trading on these markets and that that is a good thing like you're getting and converging to the truth faster.

Of course people then have issues with that because it's like you're profiting someone else is losing because you have an edge but having a prediction market incentivizes these insiders to dulge this information. And so I guess one, you know, more of a philosophical stance. I'd be curious like where do you stand in that divide? >> Yeah. I mean, I'll put the XM stuff aside. The XM stuff was clearly just crime. Uh, and like those people should not have not have been doing what they were doing. They were accessing uh user data they should not have been accessing. and they were um you know trading on people's uh like wallet information uh and front running you know call it the the the customers. So

um that's obvious like an obvious issue on the prediction market side and what you've seen come out of out of Kalian and poly market um you know it's nuanced right because it really depends on the market when you think about you know these are CFTC regulated so for for the US business for poly market and for the couch US business these are CFTC regulated right and uh and then there's the poly market international business which is more the protocol and um that you can you can access uh you know permissionlessly I mean the same as hyper liquid, right? Like the Hyperliquid had had, you know, quote unquote insider trading allegations for the last year as well. Uh that hasn't come to the forefront, you know, as um aggressively recently because, you know, it there's been the conversation around

the prediction markets, but the same exact conversation was happening, you know, when you saw big trades before announcements coming out of the administration on Hyperlid in in early last year. And um that is a there's a two really main points around that. So one is like, okay, well, what does this mean for permissionless finance, right? Right? What does it mean for Hyperlquid? What does it mean for um any other uh and and Polymark and anybody else who has these, you know, call it, you know, permissionless protocols that they can access? Do we believe that there is a need for, you know, permissionless protocols to be able to police insider trading? And if we believe that's true, then then how do we do that? Right? And this is something that that um you know the the Clarity Act is trying to to solve for a little bit around okay well

what what requirement do these permissionless protocols have in terms of KYC and and I think you and I would agree that if you're going to do if these are things are just law these are they're just code right and code is law right in some sense and code is and there's that's a very spectrum and a very nuance how do we think through what requirement these have for KYC and for transaction monitoring and for um etc. So that's a very tough conversation number one and I think that I'll put that to a side. Then you're there's the next question you ask me which is okay well you know what is insider trading on some of these markets and insider trading is very clearly defined by the CFTC uh and and the SEC but these are these are commodity markets and uh and the and the CFTC you it really depends

on what requirement do I have to an employer or to a centralized entity to not divulge information. But a lot of commodities markets and a lot of uh these really a lot of these derivative markets actually allow for some form of insider trading outside of uh in with like within the CFTC. Right? So it is you're if you're a somebody who buys and sells land there is actually explicit ways of which you can trade on insider information. That's okay. Right? This is true of commodity hedging. This is true of a lot of these different markets.

Right? And so um there's but this is becoming a lot more I think opaque in a world where there is like a market for everything. And so like what is that spectrum? I think very clearly there's the one side of the spectrum which is okay well uh I you know am going to go trade on whether or not somebody is uh whether or not Bad Bunny is going to perform uh at the halftime show of the Super Bowl. very clearly you have uh that's inside information that you have to a company and inside and within that company that information you're divulging to go and u access uh and to to to make money right also the same thing with any of the equity linked markets any of the earnings linked markets etc these are this is very obvious when it comes to anything around like rates or derivatives on commodities

like it's actually much more less less clear that there is actual insider trading that um based on current law right or whether or not there would actually be any insiders um who would not be allowed to trade that, right? We see it all the time with rates uh right now. And so that's that's al that's a very murky side. And then there's the stuff that we have now around like okay well the the you know maybe people from the administration that are trading uh these things. I I actually very clear like you asked like what's I moralistically very clear to me that like that should not happen in the administration. Uh, I think that might actually require an act of Congress though, like I actually think under like the letter of the law today. Uh, they're they may be allowed to do that. They're not allowed to trade

a um actually well this it's interesting, right, because there's uh I think it was Republican Richie Torres introduced the public integrity in financial prediction markets act in 2026 and specifically >> to get in front of this. Yeah. To >> Yeah, exactly. And I think it was a in in the speech I think Trump called out specifically Nancy Pelosi. Um and and and I think look it's one of those things that it's uh uh this would prohibit federal officials, political people, anyone in basically in the government to trade on prediction markets tied to government policy. I think it's one of those things like in my view it's at a high level these markets reveal truth and that's a great

thing. they are news and they are signal. Um, and I think it's fairly clear in how the CFTC treats it, which is like if you're a government official, you have to KYC and if you have KYC and you're you're putting money on the line on something that is confident like this is national security information and and if you're betting whatever the amount that obviously has implications for national security and dulging information to enemies of the state and potentially compromising a very complex coordinated operation and obviously that that is I can understand very clearly.

So I think it's >> I think there's one point that's like very uh important to make there though which is the uh I think we can all agree that like that that you're you're right right and we need to get in front of people in the administration trading on these these protocols but the the nuance around how do we do KYC at a hyperlquid or at a uh on the poly market protocol itself right and what they're required to do has a lot of implications for defi Correct. If if you're if you well, you always identify a wallet. I mean, there there's there's always an on-ramp and off-ramp event. It is at that I've always felt that is at that particular checkpoint that you um identify who controls that wallet. And we have the

workflows. I mean, anyone that has interacted with Coinbase, for instance, like, you know, Coinbase knows, um, Zach, you know, does a wonderful, you know, investigative like >> Coinbase isn't going to share your personal information with Hyperlquid. >> I understand that, but you always if if you're subpoena, like you can always trace back who owns that wallet. So, I'm saying like I I don't think it's Hyperlquid or Poly Markets at the protocol level, they should be um doing this. Now if they if they also host an interface then I guess in that stance I don't know how I feel like if funds are already if if funds are already on board in the financial system you've KYC

that person if they already exist in DeFi I don't think it's incumbent like a hyper liquid apply market to like verify it's more like um one thing I will say like I think a lot of the criticisms like the CFDC has like 1/8 the staff of the SEC to go after these things which is a concern right um I don't think there's been a single enforcement action in the US even though there's been like you know these allegations um so it is >> there is work being done like I I think people >> there's work being done but like these staffs these agencies are under staff what I'm saying is I think and and this is something that I think >> it will serve us well as an industry to

self police and if there is suspicion of some sort of nefarious activity or illegal activity, flag it. And I think the industry's been pretty good at that. Like when there's like hacks and there's stuff like that, you know, people that are not cooperating get called out publicly. And you know, that I guess is um as an industry, I think we've gotten much better at that. But like if if you're if you're Poly Market and you register in your systems a spike in an activity like happened over the weekend and you know the IP address or whatever then and you know those funds were sent to an exchange to offramp well notify the exchange. The exchange keeps a record of that. I think it was Kobe

identified this individual within Coinbase that was trading ahead of exchange listings. obviously insider information and expose them because he looked at onchain what was happening and so you know >> but these are these are different points right because like the the person at Coinbase has they they've signed an agreement with Coinbase that they coin this is Coinbase information that they're not allowed they are violating their agreement with Coinbase when they >> yeah and the same with a government official that is in the Pentagon that has information of classified information to sign a very much >> of it's nuance right like the reason that that Trump calls out Nancy Pelosi right and you see this all the time is that every single one of these people in Congress right now that when they sit on these committees and then all of a

sudden they they hear in this committee that something's going to happen and then they go and they trade uh their equities, they sell, they buy, they whatever like this has been a conversation for years. This is not a poly market or hyper liquid specific point. This is a like how do we expect our elected officials and our government officials to act and this is why the the rich has put the put that piece of legislation out there. Right. >> What I will say is these are event contracts, right? and they're very binary. And so that that's where I think it's just more, you know, if Nancy Pelosi goes and and and you know, full ports uh, you know, defense and aerospace companies because she learned that, you know, there's war coming, then, you know, I understand that and I think that's should be, you know, that's

insider information. She shouldn't be allowed to trade. Um, I think >> allow it right now. That's the point. >> Which is allowed right now. >> Yeah. Um, everyone's following the Nancy tracker and she's phen she's a better trader than she is a politician. Um, and is outperforming pretty much everyone out there. Um, but yeah, I I think with these event things it is it is I think it's going to be nuance. I don't think it's a clearcut thing. It's like it depends on the market, depends on the individual. But if you're if you or Rob have a set of drones and or you're tracking Door Dash activity of like Pizza Huts near the Pentagon and those things spike over the weekend and you go out and basically trade on every market

that is tied to the US, you know, invading a country, that's not insider trading. That's just, you know, you have an edge. you have an edge. You the same way that like hedge funds like have drones o hovering over Walmart and Target and buy for that data. But if you're a politician or you're someone in the CIA or whatever and have access to classified information and you move the market, you know, worst case that gives your enemy insight into what's happening. >> Like that's that that I think we can all agree is probably like that not probably that should definitely be clamped down on. One thing I did, um, I was on I was in DC a couple of weeks ago. We we had

that, um, that episode while I was there, and I was talking to one of the, uh, I was talking to to to one member of Congress who uh, was saying that they they um, yeah, so every time a a member of Congress does a trade or a swap, a derivative, you know, etc., they have to uh, go and they have to fill out a form and says that they did this. So this is part of the reason that we know that you know a lot of these members of politicians are great traders is because they actually go and they fill out these forms every time they do it right and uh this person of member of Congress was saying that he hasn't seen a single one of these forms filled out yet for a event contract right which is obviously the point being is that some of these

people are trading these as derivatives or swaps and so like there's there's also an education thing happening here I think like if you look if you talk to Ky and Poly market they're very much in favor of this like Richie Torres the piece of legislation that go out there and like they would love to get it passed but a lot of people you know including at these at the exchanges at at everywhere have been open to trying to restrict government trading of any sort of security asset etc. But the incentive is not there for the government, right? Like that has been the problem, right? Is how do we get our politicians to agree to that?

>> Yeah. I mean, this really goes to the heart of the issue that is there's a inter agency turf war happening. The SEC wants to govern this. The CFDC said it wants to govern it and it's kind of really in no man's at the moment. I think it will serve us well to just have some sort of resolution. Where I I think it's an interesting direction to kind of round out this chapter of the discussion is what happens with equity linked event contracts. >> Go ahead. >> Yeah. I mean these are that's clearly there's no doubt >> the NASDAQ. Yeah, the NASDAQ just uh you know submitted I think it was an application to have uh equity links contracts um in that case if you have insider information on an equity and you're you you think

this is my opinion if you're betting on a derivative of an equity and you have insider information that should be treated no different than if you bought the underlying in the same way that you can buy options and other derivative contracts to trade on insider information. I candidly don't care if it's under the CFTC or the SEC's purview. It is just uh I think it's in that case is where we talk about being nuanced. Equity link contract should be governed differently than >> if you buy if you buy a call option versus a binary option, it's still your binary option on >> correct. What I'm saying as it relates to prediction markets though.

>> I think that that is still not clearly defined, but it it will in my opinion should be treated no different than other contracts out there. No, but I don't actually agree with that because uh under the CFTC guidance like it's very clear like what they're that you know see chairman Celic has been very clear prediction markets go underneath the CFTC's regulatory framework. The CFTC has clear uh insider trading rules on those types of of contracts or those types of of of markets. Like it's very clear what constitutes in trading and what doesn't. So like that that's very clear. there's a nuance on the protocol side about how you catch those people and like how we do KYCL but um the whether or not this actually constitutes insider trading in those markets that's

not clear that's not nuance at all like that is that is very clear on those markets so so just to clarify because it was not clear for me coming in if you're trading on equity linked contracts and poly market or koshi and you have inside information there's no ambiguity even though the CFTC governs that >> yeah no ambiguity whatsoever >> ambiguity you will go to jail if you get >> you should yeah correct if you get caught >> you should or But there the the question is like there hasn't been any if you get caught. >> The key though is there hasn't been anyone that >> you know not to say that there haven't been cases going on >> these markets these markets have been like like there they've had real liquidity for like six months right yeah I mean the >> and these cases take a while to again we

might be seeing and I think there are some members that have said you should expect to see more enforcement going forward. This is these >> there will be >> absolutely there people expect these things to happen very very quickly. Enforcement typically does not happen very quickly. It it's it's much easier when you already have the robust framework at you know I was at Goldman when uh there was a I think there was an analyst there at the time who you know had given some insider information to a friend and then that friend had told his dad and then his dad had bought some call options about an M&A deal or whatever. That's that case still took eight months to build because they had to go trace back that he had talked to his friend and friend had talked to his dad despite the fact that like there's a

very robust framework on you know seeing these links and these connections between people who trade these things. >> Yeah. Yeah definitely. Um one of the common questions when I've described prediction markets to someone is the assassination piece. Um, and it's like, hey, what happens if you know people are going to be more likely to do certain things? And you're like, well, not really dissimilar from insurance, right? Like there's there's always a risk, uh, but like kidnapping insurance and some of these things like, you know, people might be more induced, if you will, to go out and do certain things, but at the end of the day, you know, these are illegal things and so people should have an understanding of the repercussions.

>> Well, assassination markets don't exist on either cashier or polyark. >> No, I I understand that. >> Yeah. Not not as but but it's like if you have like an event contract is it making it that person that has agency over influencing that event be more likely to do that because they have a financial outcome on the back of that and it's it's just I'm bringing it here because it's a it's a common argument that gets brought up time and time again by skeptics of these like um prediction markets and I think the simple answer is like there's a whole insurance market that you know it hasn't stopped the insurance industry from having you know insuring against certain things. If you're insuring a boat, you know, well, you know, clearly someone might be incentivized to, you know, burn it and and get a reward for it, but ultimately,

you know, >> that that >> ultimately you you could go long oil and have the same exact incentive, right? Because Brent went up from 60 bucks to 84 bucks, right? Yeah. >> Like it's the same exact incentive. So it it's it's a little bit um it lacks I think like real forethought when people are like oh yeah well like now this market exists on poly market so like I'm definitely much more incentivized to do this thing than if I was just long print right or if I was just short rates or whatever you know um it doesn't it doesn't make a ton of a ton of sense in in most cases when people talk about it now in these longer tail markets that have very little liquidity when you're like oh like you know will uh Jason Kelsey propose to Taylor Swift and then somebody like that's like of course like

there's different incentives and stuff like that. So, >> so maybe maybe bring that up. Last point on prediction markets. Um, if you are the best friend of the brother of Kelsey and you know he's going to propose, you go out and full port the market and you know you're what do you think of that? Illegal? Not illegal? >> That's definitely not illegal. You're definitely allowed to do that, right? Under any current iteration of the law. Now, that might feel unfair, right? But like like you these any sort of event contract is a transfer of risk. So it's transfer of risk between you and I if we're on the other side of that. If you think that you have knowledge of whether or not Jason Kelsey will propose to to Taylor Swift and you're like it's

definitely not happening and I know Jason and he's definitely going to do it and or Travis Kelsey I keep saying Jason Travis Kelce I this is how much I follow pop culture. I don't even know which brother it is to do this but >> has this issue no like if you're >> I guess the my mental framework moralistic framework is if you have influence over an event in the same way that like there's been sports rigs like like sports betting there's like a whole mafia I think in Italy that was like trading and bribing referees and I I do think that if you if you have undue and I think undue influence over the outcome of the event. You shouldn't be trading on said event. Trade on everything else.

Just don't trade on that because that creates unfair markets. And I think I think that ultimately hurts the overall platform itself. I get that you're trying to surface the truth, but it creates a an unfair market experience that I think in the long run, yeah, I know you're discussing that, hey, look, the the world's going to know before that, you know, they're going to get engaged and that that's a good thing, but I think it hurts the other side of the trade that does not have fair uh it just feels very unfair and in that instance, I think you shouldn't be trading in that particular market. As

simple as that. >> Listen, I I um moralistically like you that like people definitely have that perspective. There are a lot of markets where inside information is a key piece of how these markets are traded, but people having an edge versus another. The idea is that like you know these are actually skill games, right? In the same way like in poker you can have more information than the next person and it can be very unfair for that person and you can go and win. >> Yeah. But it's it's a random game. It's a it's a game of probabilities. Like you can't you can't influ like you don't have influence over the deck of cards. You can you can do certain things. You can count cards. You can you can have an like an edge by like seeing we should ask Cass but like you you can

have an edge on how your opponent like the other person at the table like his mannerisms or like his ticks or whatever. But like for instance a a tech contract Claude 5 released by March 15th, March 31st or March 30th. Super low volume less than a million aggregate. If you're working at Entropic and you have knowledge of this, you shouldn't be trading on this thing. Simple as that. If you're >> But but you're right about entropic, right? So like you're you're you're conflating two points, right? So like for anthropic >> Yeah. Well, the distinction you're saying is you've worked at Entropic, so you have an NDA. You can't divulge information. So you shouldn't be doing that. I get I get it. I get it.

>> What is the difference if like uh uh I'm sure uh Tra like uh you know, Taylor Swift has tight NDAs with her staff. I mean theoretically if there's like if she has some sort of like obligation to you know Taylor Swift after Taylor Swift dink or whatever like there's something there but like in a in a a uh like you asked about sports uh previously right the re Congress went and passed a law in the 60s to combat sports bribery and sports fixing because before that they saw sports as uh there was a lot we saw a lot of fixing happening around betting right there >> it destroyed this the the the purity of the forward, >> right? And so Congress went and passed a law to do that, right? There are a lot of markets today where like for instance

like land markets or even like real estate sales, right? Um there we very explicitly define the things that have to be told to the next per the next buyer and there are a lot of things that negatively affect the price of real estate that you do not have to tell the next person, right? And so when you go and trade a market that is okay well the price of land in XYZ there are a lot of people with inside information that are explicitly doing something that is legal that they know more than the next person right and so the question that you're asking is a moralistic one but then there's also the question about the legal one and it feels unfair to people so they get upset about it that they might be trading against you know somebody who has more information but the reality is all markets are are about

disparate information right >> I mean Look, I I think you're always interacting with imperfect information. And I get your point. If you're going to go buy land, and you Rob, you come to me and say, "Listen, man. I got a great parcel of land you should buy." Like, "Oh, [ __ ] I trust Rob. I'm going to go fly to Ohio, and I'm going to buy this great parcel of land, and it's it's at a discount." Said, "Wow, it's at a 20% discount. Anytime I see a discount, I'm saying, "Surely can't be this good. Too good to be true. So, I'm going to go and do due diligence. So, I'm going to go call an appraiser and he's going to go in there and he's going to tell me, "Hey, look, I kind of get why Rob's going to get rid of this land. It's not

because he wants to buy land in Miami. It's cuz, you know, there's there's pests here and there's a landfill not too far from here. It smells like [ __ ] You should come out and go see it." And, you know, I get it. There's no perfect information in any market. All I'm saying is if you're betting on a market that Elon Musk tweets x amount by March 3rd and you're Elon Musk and you can influence that market, you shouldn't be doing that. >> Let me let me ask you a question. Do you think that people should have the right to trade whatever market they want to trade? Um, and I'm not talking about information. I'm just saying more broadly. And do you think people should take personal responsibility to if they are trading a market of which they do not have perfect information? Right?

Because this is the this is the question that I have for people you right is that uh people think they have an edge and a lot of what we've seen by by the way a lot of the the stuff that people think I've been insider trading too have not been so there was like the the Nobel Peace Prize uh there was a um >> a you know a wallet that got created and traded uh the right person winner of the Nobel Peace Prize like a few hours before it actually got announced everyone said hey that's insert trading turns out what actually was true is that you could actually just scrape the metadata of the website for Nobel Yeah, the Nobel Peace Prize, they the foundation released it and >> Yeah. Right. And so and so there's there's a lot of stuff like that, but but I but I think there's a if you want

to take the other side of a market relative to whether or not Travis Kelce will uh will will propose to Taylor Swift. Like it strikes me that, you know, anybody should be able to take any bet they want and there there shouldn't be some like moralistic handing around whether or not somebody else has better information than me about that market, right? because that is just a a that is not a market efficiency point right with equities it is with with with these other like like but when it comes to these like longtail stuff >> let me ask you a question so so you're an investor in poly market as you know I have exposure to verify great we want it to succeed we want volume you make money if poly market continues to get way more volume right if they assume they start

profiting off of it the moment it's not uh do you what is greater determinant of like the success of the platform and grow seeing volumes grow 100x. There's a reason why public markets have orders of magnitude more liquidity and volume than private markets, right? Because you have a set of standards and disclosures. They're not perfect by any stretch of the imagination. We all know them. And companies report quarterly and they report very cookie cutter stuff. And anytime you want to do like more digging, it's it's but that I think a standard guidance around, you know, certain things that you have

to disclose as a public company is the reason why these markets are way more liquid. All I'm saying is I think I get it. You and I can strike a a trade right now and say the the Taylor Swift thing and you could argue all day long, but all I'm saying is I think if these markets are going to continue to thrive and get orders of magnitude more liquidity, I think it's if if they make a proactive effort, whether the CFDC or the SEC governs them around at least um focusing on making these markets a bit more fair.

And and if and you know I don't think it I don't think the answer is like take down market like certain contracts. I think just if they're going to exist, fine. But I will say maybe maybe the answer is on the KYC side is before it could be something as simple as before you click a trade, it's like if you have privileged information, if you're Elon and you can influence this market, um we strongly advise against doing that because it was in breach of our terms of service and if we figure this out, you will no longer be able to trade on this platform. It's not perfect, but at least it gives a perception of, hey, we're trying to we're trying to create

fairness in these markets. And maybe that's what in the long run leads to the Elon market not having 11 million of volume, but rather 100 million in volume. >> Yeah. Well, I think I think where this gets even more murkier is like the mention markets, right? So, there's been a lot of conversation about these mentioned markets, which is people, you know, >> you got Brian Armstrong in the earnings call like >> Yeah. So, so the there those it becomes a bit more murky there because it's like okay well I can take a bet that like um or someone near me can take a bet that I will say XYZ thing during an earnings call or during you know a speech or whatever and uh my speech writer can tell me to say this thing right and so there's a question there I I think the

one thing that I will agree with you on so I I I you know maybe saying okay well we'll try to self police the platform if you have privilege information maybe that works I think there's a a long tale of stuff that is not illegal today that you know exists with insider information and is meant to exist with insider information. I don't think that needs to change maybe, but there is this long tale of of kind of gray area that like we have to figure out how to um how to how to make people feel like it's fair, right? And because to your point, it increases liquidity, it makes people happier, you want people coming back to the platform, you know, I mean um >> I mean you focus on customer retention and repeat like the the other thing is like what you just said I will

push back on because as an industry we always say look this is a new technology we should craft rules and regulations that meet the technology where it is and not try like we should like really rethink the how we test or really rethink some of these rules and regulations that were just not meant for this technology. And at the same time, I'm hearing you say, "Look, these things, they're insider markets in real estate in these other industries and and and you know, we should just look at that as precedent and, you know, not do anything about it." And all I'm saying here is no, we definitely should. Absolutely, we should because the >> these aren't new markets. There's this is what poly market is is a new form factor how to deliver a derivative >> with 247 digital markets. It is attracting a lot of liquidity.

If I were on their team, I would say just put some sort of terms of service. Just put some sort of notice there. It might be subtle, but in the long term, I think it inspires more confidence in these markets. And in the right in the long term, even in the near term, I think it inspires more confidence in people to come to the platform and and and place bets. And I think that is it might be as simple as that. I I wouldn't wait for the CFTC. I wouldn't wait for the SEC to give you clear guidance. I would just very simply say if you have influence over this market, you shouldn't be trading on this market because it's in breach of our terms of service. And I think if you're like take a position. I I would be in fact I would build a a pred if someone is building a

prediction market right now that wants to take this position. I would love to talk to you because I will fund it. If I mean it depends a lot of nuance. Um both Kos and Poly Market have been very clear that they want to weed out insider trading. They're both working on weeding out insider trading as insider trading is defined by the CFTC. There's a bunch of nuance around uh some of these longtail markets. We've spent a bunch of time talking about markets that have no liquidity. The markets that do have a lot of liquidity are much more clear as a as a rule and um people are working through that. So I I think you know maybe we should just leave it at that that Santi is a man of the people and the >> I'm a I'm not a man of the people. I'm

just saying like let's let's create fair markets because that's what drives more inspires more confidence people to come in and trade and and you want you want these platforms to have way more volume. So I think it's the right business decision. So so I just just as a point of as of now I put in the machine poly markets terms of service and I said is does the toos prohibit insider trading? Short answer no not explicitly. So just because a regulatory picture is murky doesn't mean that you can't take a more proactive business decision because it is the right thing to do for the com for the business is all I'm saying. But a conversation um what else? We've been at it for 52 minutes talking about two things.

>> A lot of poly market. Yeah. >> A lot of poly market. A lot of markets. What else? I mean there's you mentioned the OKX round. >> Yeah. >> You guys are not investors in OKX, right? You're investors in other stuff like uh Bit. >> No, we're investors in Bybit. Yeah. >> What do you think of that? Fair. Good. >> Listen, it's great for the whole industry, right? So, uh, OKX, you know, they've obviously been they were kind of the the OG, right? I think OKX was founded in 2014, maybe it was a little bit before that. Uh, they were kind of the first big, you know, Asian exchange, grew really quickly, you know, lost a little bit of ground, you know, in the last, you know, six, seven years to, uh, to Binance and to buy bit. But um you know I know they've been focused for uh

a lot of the last couple of years on trying to enter the US and find ways to do that and this is obviously a a way to do that and they can also on the other side offer um you know NIC linked you know tokenized equities and so um good for the industry like very exciting to see um you know Jeffreer and the the ICE guys like he's just been incredibly forward thinking in terms of how he you know wants to move his business forward first with the poly market investment and now with with this investment. I have to give him all the credit in the world for really being willing to put, you know, his neck out there on how he thinks through the future of of markets.

And so, um, super bullish for for everybody involved. Congrats to the OKX guys. Uh, and, you know, excited to see, you know, this industry flourish even, um, at a time when people seem bearish on prices. >> I know on the point of bearish in prices, like what's a house for you internally at Dragonfly? like are you guys deploying faster now that you have this fund? You have some liquid positions, right? In residual funds, right? >> So, we don't invest in new like secondary markets. We don't invest in in liquid, but obviously like you know, we're doing an investment in the seed of Athena. We end up owning a lot of the token in the future, right? Uh the we're not like actively trading any markets or anything like that though.

>> Is that always been the case? Like you guys are not necessarily because you had before like some sort of credit fund like a more >> hedge fund in 21 and 22 and then we spun it out in 23 that to Brevin Howard. Yeah. >> Yeah. Yeah. So you're typically not like you're managing risk in the book like if you have a liquid investing position and you're way up and you know your funds coming out to its life like you have to do something with that right but you're >> managing risk is the right way to think about it but we're not trading. >> Yeah. Yeah. Um what else? I mean there's the, you know, the paradigm and treason fund news that's out there. Uh, you know, obviously >> funds.

>> Yeah. Big big targets, which is great. So I um, you know, we we announced our fund obviously what whatever that was a couple of weeks ago. Uh, which which was the biggest one in a while. Um, and uh, and then Paradigm came out I think pretty quickly after said they're trying to raise one and a half billion. And what actually happens is these guys do they have to do filings around it especially when they're going to be one of two things happens which is how the the uh reporters find out about it. Either one is like they're sending out their deck to some LPs and people are leaking it or two once they do first close they actually have to go and do a a filing and then you can you have you know all these reporters are like scraping Edgar. Um I think in both these

cases what these are just leaks so they haven't neither of these funds have done first first close yet but >> it's when it's above 150 you have to disclose it right >> yeah there's some a little bit of nuance there and exemptions etc but basically one year above and so you know for for paradigm uh you know they they went out to to raise one and a half they had raised 850 a couple of years ago uh maybe maybe a year and a half two years ago and uh you know so obviously this is below the 2021 one amount that they raised because they had raised two two and a half then uh but above the 850 that they had raised in uh in 24 and so you know we'll see how that goes for them. I think um you know Matt's obviously got an incredible track record

and you know brand name and they're talking about um you know widening their aperture to do AI and robotics. That's interesting because they had talked about doing that in 24 and the market got really mad at them for it and now it feels like, you know, table stakes, right, which is that okay, well, if they want to do that, you know, if you're going to put, you know, one billion dollars to work, it might make sense. Uh, you know, they've obviously been very focused on on tempo and, you know, I think haven't been quite as active investors in other projects. So, um, I'm not surprised to see that. Uh, and so I'll be interested to see how they think about, you know, evolving the fund over time. And in reason is just a different story because they actually injuries actually buys a lot of liquids.

So it's this you know $2 billion fund is below the I think it was four billion that they had raised in 21. Um >> yeah it was four billion and then they had some turnover and stuff like that. Now they're raising >> yeah they've yeah they've had some turnover and you know so there's now only five or six investors there but they do a lot of like they're just like they'll put money structurally along into intokens and so it's like I guess it's easier to deploy. Um but I'll so I'll be interested to see um I I I sure they I'm sure will be fine because of the you know the the just the business but >> it helps the industry. I mean it's it's it's a good signal to understand how much appetite there is from traditional allocators to deploy uh there's a what

is the right size for for I I appreciate the strategy venture liquid and A16Z does liquid as well but like there's laws of gravity that as soon as you know returns the grade with fund size and and also vintages also matter here like if you're the early private equity vintages of the 80s absolutely killed it um typically first vintages tend to outperform farm smaller managers, you know, at the right size do quite well. These are all kind of generalizations, but by and large the data is pretty compelling. like the the the the bigger the fund size um the you know returns degrade and there's a lot of other confounding like there's a lot of data that goes into

this but like you know macro environment factors in right like if you're a crypto fund like the last five years have been pretty tough like but generally curious like this this data for anyone listen like looking at the screen is like vintage compression and also talks about scale um and and how what that does to returns. We've talked about benchmark being probably a clear outlier here. It's not in this graphic, but they've kept fund size pretty consistent around the 300 number plus 100 million of GP commit, which is very different than pretty much every other venture fund out there. Like walk me through the thought process around raising what you guys raised and how do you rightsize that for the

opportunity setting in crypto? Like I've heard you say, look, fintech, you know, the lines are kind of converging. We're going to want to have like we probably had the opportunity to maybe lead rounds or step up in a bigger way, but we couldn't. So, we're going to raise like reigns of the world and poly markets of the world. Like clearly, you could have deployed way more capital in there and you bumped into your concentration risk. But like maybe paradigm could be a good admission of the opportunity set where they're saying we're going to raise one and a half billion. It's smaller than their last fund and we're going to go invest in these other areas and that's why we need you know but if it were just crypto maybe it would have been like a fraction of that.

>> Yeah it it's interesting. So if you look at the last vintage right so you know we can forward we can look forward and we can look backward. If you look at the last vintage, there are funds including ours in the, you know, 300 to 650 range that performed, you know, top desile, top, you know, uh, and as well as and better than the vast majority of the smaller funds, right? There's maybe one or two of us, I think, that that that did that. Um, and it was clear that, you know, if you had picked right, that there was an ability at that size to still continue to perform really well.

And you know, obviously those funds are still, you know, four or five years in and so there's still obviously a lot of long way to go and you know, prices could keep coming down or they could go up. So there's a there's it's unclear exactly where those those funds will end up, but um it looks like you could have been that size in that vintage and been uh and still had great returns. Now, obviously, if you hit the right thing, really out of the ballpark, you know, a sub $50 million fund, you had enough ownership, uh, that is, you know, you were going to be able to to crush it. Um, when you got into the bigger sizes, uh, I think a couple of those funds have done okay, but, you know, there was, uh, you know, I think at the billion dollar plus, it's been much harder for people.

But I do think the opportunity set is getting bigger. It's both getting bigger and narrower, right? which means that there's far less to put money in. There's far less like uh just verticals and and far less like things and ideas to put money in today, but there's far more of those things to put more money into, right? So, you're get seeing the, you know, reigns of the poly markets and the cowies of the world get to scale, right? You're seeing uh a, you know, mesh, another one that we just did. you're seeing a lot of um businesses get quite a bit bigger because you're seeing you know Kraken and OKX these guys because you're seeing them gain scale and users uh and liquidity and volumes in a way that they haven't uh in in prior cycles right and so I think when

you look out into the future people are saying okay well we see that especially with AI and this is what happened in traditional venture there's you know more and more business that is going growing very quickly that and there are more and more um businesses that will be just starting because of AI. So, we'll have like more ability to to put money to work in these things and they're growing much more quickly. >> And so, I I don't know if you know the $2 billion is able to be put to work in crypto and be able to to have good returns. I also and you know this and I know this like certain asset managers have different strategies, right? which is that, you know, if you can return a 1 and a half or 1.7x fund reliably, but you can raise a big fund and have, you

know, a lot of management fees, you'd much rather do that than have a, you know, swing for a two and a half or 3x fund and have less money, right? And so it's it's a it's a it's a, you know, push pull for everybody. >> I want to two things before we wrap. This is in I mean Thrive's been doing a lot of chatter on the timeline of course because there's great podcast um um I think it was invest by the best. I mean this is just going back to um historically like performance here like the first funds delivering a strong return and a lot of these like you know need a harvest and stuff and companies are staying public um like private longer um like I just heard rumors around like Andreal raising a round at 60 billion thrives leading it with A16Z that I'm sure will be a great investment

for them but um yeah I was just interesting like how do you guys think about like DPI when do when do like especially for tokens that vest and are liquid like you have a 10-year fund you have an investment that maybe launch a token in two years and you're investing over the subsequent two years like at what point do you do you start DPIing focusing on the next fund versus holding the position and compounding? >> Yeah. So uh I want to comment one thing on this this slide that you're showing right now which like somebody put this box around these you know five 6x funds and put that's all which is like the most ridiculous comment like it is so hard to return 6x a fund like that is just >> well the the the point was and I'll say like they don't outperform the NASDAQ

during that same time frame and and and it was like I'll pull up the math but they >> is that true 2014 to to now that that the that IR is lower than NASDAQ. >> That's that was a point. I mean, I'll take it at face value, but they said, look, even if even if you factor in for capital calls over that period, you're not really outperforming the benchmark here, which is just being liquid and being exposed to the NASDAQ. Uh, which I ultimately like that that is always the benchmark right? >> Yeah. I mean, the other thing that's true, of course, right, is that the um this idea that we like compare everything to the S&P or the NASDAQ is like obviously not how sophisticated investors think about things, right?

They want diversified exposure to different things, right? Which is that in, you know, maybe the NASDAQ, which is basically all invia for the last couple of years, okay? Well, that performs one way, but Thrive is, you know, very heavily invested in fintech and they that might perform differently, right? And it depends on when you harvest, when you get liquidity, all this different stuff. And so, like, people care a lot about total return. They care a lot about diversified risk. Uh, and so like whenever you see like commentary on Twitter that's like, hey, like, oh, this is the same as the S&P, like you know those people aren't actually real investors, right? because like that's not how anybody who sits in those seats actually thinks about capital allocation right?

>> I I will say like in fairness like yes, I get your point that like you have to build up like correlation risk is something that gets lost in some of this commentary because that's why like the case for investing in hedge funds, even though they're not outperforming the S&P or the NASDAQ, they serve a purpose in your portfolio. It's like buying insurance, right? because they may underperform for many years and then when there's a you know a two standard or two sigma event or like a very fat tail event, they really show up and they show up in a very meaningful way in the same way that you pay insurance because you know for flood insurance and it might take 10 years but when that hurricane hits your house is insured. So that that's I get your point. Uh but I

think there is some truth into like you're you're saying the right thing which is allocators don't think this way. They need to they have 20% of their book that needs to get allocated to alternatives. Go find me the best managers. By and large, Thrive is a good manager within crypto. You know, there's a very handful, you know, very small set of now funds, you guys included, Parfy, A6Z, Paradigm. There's not that many funds out there, right? Um, so you want to get exposure to the best managers com because by the way, having access to maybe Thrive gives you insight into how you invest in the public markets, right?

No, for sure. There's a lot of reasons to do these investments and I think I I was talking to um I was at like a sort of an institution allocators event last week >> and one of the guys on the panel that I was on who was a kind of a large multif family office you know he was saying that oh a lot of people talk about well how like you know venture funds and staying private for longer uh have been sort of like volatility washing right which is that like the volatility is still happening at these companies but the marks don't aren't as volatile on the at least on equity side in crypto tokens is different and uh that's a lot of people talk about that as if it's a bad thing and for us as managers we actually see that as a good thing like

we actually want that volatility washing right like we are excited about that because it it allows us to think about our risk differently and allows us to um have different information right and so it's it it's the allocators actually think about these things much more differently than what whatever the the conversation is on Twitter I I will say to your original question to me which is like oh how do we think about harvesting DPI. Um, you know, my my LPs and and all LPs, they do care about IRRa, but at the end of the day, the main incentive for all of us is to return the best money, the best Moic, right, the best uh multiple of what people invested, right?

And so the way we think about it is we have two clients. We have LPs and we have ARC founders, right? and to do right by both of them. We are going to be long-term investors that are going to have a thesis. We're going to be put our money behind that thesis. We're going to support our companies that um as they try to build out that thesis and when that thesis is no longer true, that's when we think about harvesting, right? And that's the way most managers think about it and to our long-term venture investors. And that is part of the reason that DPI does take a while for a lot of these guys. Even at a time where a third of exits are secondary markets now, then it's much easier than ever to sell a secondary uh position.

>> Yeah. Is that still true in crypto or if you're talking about traditional markets to do secondaries because because I have heard a lot of DPI comes from secondaries, but I think for crypto funds, it's not as true for venture funds like non-crypto. >> It's probably not as true because it's a little bit different because like you have, you know, then you have liquid tokens that you can theoretically sell in the open market versus like equity secondaries. But um that's a a a stat I saw from Carta, I think. So it's like traditional >> veteran >> investor certainly like there's if you have even like some crypto stuff like poly market ton of demand call sheet probably ton of demand >> some of your tokens not so much but um all right well we've been at it for over an hour I do want to get the

content of the week just before we go there sir just a I'm really looking forward to our dinner um we have here Western Union soul since we placed that bet soul is on a barbaric 52% Western Union cruising by plus 6%. Um, what do we make of this Rob? Is it going to correct? Is it over? Like is Soul and all the L1's overly punished or what's going to happen here? >> I do you think the crypto market's going to come back or not? >> Um, I think I do. Look, crypto demand is open to the right. stable coins, certain KPIs are up and to the right. I don't think many tokens are

investable. Um, and I've we've talked about length here. So, this is I think the part of me thinks that a lot of these tokens have been overly corrected, uh, overly punished. Um, even like certain stuff is starting to get interesting at the application layer. We did a great recording with Tushar and uh from Multicoin and Prrena from Vanek and we were talking about like the dashboard like a block works around like revenue of these protocols and you know what seems to be a big the pair trade of the cycle is go long applications that are cranking out revenue and I would characterize hyperlquid as that even though it's technically kind of an L1 but it's you know there's there's a lot

of interesting like a camino uh you know even pump if you feel that meme coins are not going to go away like they're they're actually pretty interesting um they don't have a lot of liquidity and it may you know but but it's it's you know ultimately I'm a view that eventually if you're if you're producing cash flow if you're producing genuine activity and it's either in buybacks or something like that that should be reflected in the price at some point just be patient enough >> um coming up in Dano's not here would be proud for me plugging D from Western Union I think the CEO of Western Union is going to be in DS I'm actually pretty excited to go have a conversation see what they've been up to um and what you know their next earnings like what that

actually shows and CLA is in this bucket too. Stripe is private but in this bucket as well. Yeah, I'm just really excited about what these companies are doing and how it shows up in the P&L like not the narrative, not the Long Island ICT pilot narrative. It's like are you showing margin improvement with stable coins? And I think um that to me is more investable than a token at the moment. >> Yep. Yeah, I I think um you know, a bet's never over till it's over. I I I made a bet with uh Pernob from Van last um last last May on on something else.

>> I'm concerned about counterparty risk. Rob, are you going to be good for this or no? >> You're making bets left and right here. Well, so I this was this is last May and I was right on this bet uh for and we made a yearlong bet 12 month bet and I was right for seven months and now I'm I'm going to lose uh over what's happened this year, right? And so like it feels like you're gloating a little bit early is my own. >> I'm not gloating. I'm just simply looking at the chart. I'm like, you know, Western Union not losing me, you know, money. But uh was this a year-long bet? I forget. We got to go back and report.

>> We bet we talked about it for I think it was a year. Yeah, >> November. Okay. It was a dinner, right? He wanted to put 10K or so, but we I I said, "Look, I'm going to be a friend. I don't want you to lose that much money. I want it was the dinner, right?" And Yano, I think, threw his Yano's in for a bottle of wine or something like that. >> Yeah. I think I I think I asked to bet your PC. Uh which is uh which which you know, I'm glad I'm glad we didn't go that far yet. So, but uh >> Fair enough. Fair enough. >> We'll see. >> All right, man. Well, this is a great discussion. Content of the week. You know, I've been uh I've been a little light on content because I've been uh I' I've been doing a lot of

travel this week, but I did watch the Industry season finale. Still the best show on TV right now. Uh so if you haven't been watching Industry season finale was great on uh on on on Sunday, so uh you know, go back and watch it. >> HBO or >> HBO. Yeah. >> Is it the Billions like or dynasty like or what what's it about? So industries uh you know it's it's evolved a lot over the four seasons that they've been on. Uh but it started off basically the uh as you know kind of the following a couple of analysts uh and you know what happens at an investment bank uh in in London that's evolved now to like now somebody has a hedge fund and kind of a

family office and now they're like a there's this season was all about a um a short only one of the main characters is kind of running a short only strategy at a fund and trying to uncover fraud at a a uh a tech lifeline tech company. >> Is this Muddy Waters or what's that name of that shop that goes on Seeking Alpha? >> Yeah, like stuff like that. And it's um and the you know the the person or the company that um at risk like looks a lot like you know um it looks a lot kind of like the the world pay or was it World Line uh was Yeah. was world world line fraud that happened a few years ago.

Yeah. Um around what they were doing. Yeah. Exactly. So, um there's some some parallels to that. You know, kind of an interesting season. Uh and uh uh so, you know, go go watch industry. Uh definitely the the the one show that I've been watching religiously uh this, you know, the last few months. So, >> nice. That's great. I haven't finished it, but uh Cheeky Pint, the podcast by the I think one of the callers and brothers from Stripe. Um, I don't know if it just came out or not, but it's an interview with Elon talking about space, colonization, energy. Pretty interesting. I mean Elon is just one of those guys that is really you know I think a common theme that we're starting

to hear now is like uh a lot of the software companies are going to come to realization that hard like hardware realization like how hard it is to like um you know build computer and energy like that situational awareness papers circling around now because that fund you know is seems to be up dramatically right started like 200 bill 200 million now like up five billion raised money but like vast outperformance Uh but yeah, know it's I'm halfway through it. Seems pretty interesting. I mean, I I'm nowhere near like physics was like my worst subtake in school. Not my my worst, but like you know, a lot of this stuff is over my head, but it is something that I want to get just I'm reading up on more like this energy and um you know, the the the flywheel that

we've seen more energy, more intelligence, like compute, intelligence, flywheel, right? And the big biggest bottleneck is just energy. >> Yeah. I will tell you being in being in SF this week, uh the the the the fever pitch of like agents and you know what's happening in in AI, you definitely feel it more than you feel it in in New York. Uh which I think is both good and bad because there's a little bit of like collective delusion that happens when you're I think you're here as well. So >> for sure. How AI forward are you? Do you feel very far behind in your how you're using it or do you feel like you hold your ground and you're like properly utilizing it? And I appreciate some of these tools you just can't use, right?

Because of like regulatory. >> Yeah. >> So definitely a little bit behind. Uh I would say I would there's also things that like you know a lot of things that people talk about doing when you you know talk to to people around the around the bay like I would just never do. It wouldn't make any sense, right? Like I'm I'm not giving a you know Open Claw bot like access to my email right now. Like that makes absolutely no sense for me and as the amount of risk people are taking on. But no, if you're someone that's like a bit of a hacker and you can try to put guard rails around these things like you know it's interesting.

Um we it's something we talk we've been talking about a lot internally at the fund too which is like okay well how do we build out the right tooling to make sure that people are as efficient as possible. I think a lot of VC funds are doing this right now which is what is the um what is the right intersection of like okay let's not put ourselves at a lot of risk let's not you know uh put our both regulatory and from just like our systems and especially as a crypto fund too right there's you know >> added layers >> there's added layers of risk there right and so but also how do we make sure that the team is as uh as efficient as possible uh I was talking to um I had a I was in Menllo Park yesterday and I was uh I was going on a walk with um a

really well-known person who runs a very large company in our space and also um uh has been an active investor and this person was saying that you know he they they spun up you know a bunch of um uh agents who you know they you know gave 50 grand to and then kind of put these guardrails around them and are letting them do like a bunch of market making on like centralized exchanges and there's like some cool hacking and stuff that happens around there but and I think we can see the future. But I do think it's it's very hard right now if you u to take as much risk in positions like ours as you're hearing a lot of the conversation and that people are are doing. So >> yeah, read write problematic read less problematic.

>> Yeah. >> Um >> but write is where a lot of the a lot of the >> Yeah, that's where a lot of the but but I I've I've certainly Yeah. topic for a separate conversation. But uh I I do spend most of my time thinking about what is AI resistant to what degree. And I think for primary research for just getting up to speed on certain information like that is like far and away like even sourcing right just identifying like a specific sector that I like give me all the companies within you know in the northeast that are like you know factoring businesses like and give me all the contact information. I'm not going as far of like emailing them and writing personal like I I want to have some supervision. Um where I'm leveling up more is on the skills stuff

because having memory and really focusing more on architecture and then the skills versus just going and prompting. I think that's where like Claude is is really good at like like if you spend a little bit of time up front like like designing the prompt and having like certain checkpoints, it's you get way more output. But uh I mean still crazy by the time we're recording like less than five like three less than 5% of the population has downloaded these things and most of them are using them for like regular chat GBT. They have no understanding of like co-workflows and yeah just just a ver probably a reflection that technology still as as great as it is right it still takes like years and years and years to uh to

permeate into the mainstream. So >> yeah, no, I I agree. And I think there's a uh there's a lot more conversation right now than there is actual like things to to do in some of these areas that people are very excited about, but the world is moving quicker than ever before. And so, you know, I think a lot of that conversation is around the fact that maybe things will just be drastically different in three or or six months. And you kind of see it in the markets, right? The markets are uh moving in ways which it makes it clear that people just don't know what what is going on. >> Yes, sir. We're going to have to bring Josh back on the pod sometime soon. Um, but uh, anyways, goodest place as ever to end it. Uh, thanks for listening, folks. If you made it this far, Rob,

have fun out in the west. We'll see you next week.