Token Vs Equity, Venice AI, Robinhood Chain & Strategy's Recovery

Transcript

Just moving away a bit from like the specifics of BB and the equity. I think just in general the market reaction just tells you that the market is just tired of of this dichotomy and they they I I don't think people would care if if you just had an equity or if you just had a token. Like they just want a clear way to to get exposure to something. >> [snorts] >> Nothing said on ZeroX research is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Luke and our guests may hold positions in the companies, funds, or

projects discussed. >> Hey all, welcome back to another episode of ZeroX research. Joined today by Carlos and Kunal from the Blockworks research team. How are you guys feeling today? Bull or bear? >> Feeling bullish. Feeling bullish for the first >> Luke. >> Oh, wow. Yeah. >> Yeah. Bulls only. Um as to to start the week, uh strategy kind of moved forward on their digital credit capital framework. They sold about $216 million worth of Bitcoin, which uh I believe has been their their largest sale. And we kind of saw this coming when they announced that uh

credit capital framework where they guided to to being open to selling Bitcoin. Um but what I think's particularly interesting is just looking at how the market has reacted to this is you know, since the announcement of that framework and forward guidance and since the sale we've seen stretch and strategy recover. Um and Bitcoin is trading green as well. Um And all of these instruments outperforming the Nasdaq. So, kind of where I think it's interesting is when uh historically when when strategy was buying Bitcoin, that always seemed like

good news to to have a large capitalized buyer with providing positive flows to the market. But kind of during the bear as more and more of those purchases were financed through stretch issuance, uh the good news of his buying almost became bad news and kept kept selling off and and making new lows on Bitcoin, but but now it's almost the reverse where him selling, uh which may have historically been perceived as bad news, is now in fact good news, which to me is a a very favorable sentiment shift where what might have been bad news is treated as good news by the market. Um that that

points to early signs of recovery for me. Uh how do you get you guys read this? >> I mean, I I agree. For me, one positive signal is that on Monday and Tuesday, we saw combined over $500 million in inflows for the ETFs, which to me is the most credible signal for actual appetite uh coming back for Bitcoin. Uh that was the highest inflow figure since probably early May. Uh so I do think the sentiment is shifting, and I think people are recognizing uh Saylor as the main risk like over the past few months, but now it's kind of like a shifting and

and and yeah, as you can see on the chart here, I think institutional demand is not totally back, but it is like positive early signs of just some demand coming back. Uh because we saw record outflows in both, I think, um May and June. >> Yeah, the the way I see it is the market got some clarity on how Saylor was going to bring back stretch to par. And I mean, the the certain risk remains, right? Like he kind of Yeah, he sold Bitcoin last week, but but the market's basically saying that okay, yeah, there's enough cash now to fund like a bunch of preferred dividends moving forward, and he he probably would not do another BTC sale, but who knows, right? It's still very Saylor-driven,

but at least now the market thinks that okay, for now we're in safe hands. Probably uh stretch will get closer to par, like things are fine. You don't have to sell any more BTC, but yeah, like I mean, let's say we get another sell-off in macro markets, and Bitcoin drops like uh 10% for example, and stretch again comes under pressure. Yeah, then how will Saylor react? Then that again brings back that level of uncertainty. So, I don't think we're like completely out of the woods yet with this his Saylor-driven price news. >> Yeah, that the actions certainly bought him a bit of time, but if if Bitcoin continues to post negative returns, like there's there's a hurdle rate on his balance sheet, and there're levered

assumptions there, and if Bitcoin continues to um underperform on a long time horizon, we'll see the same issues come up, uh continue to see stretch trade at a discount, and um likely further sales coming. But what's nice to see, Carlos, as you pointed out, is just like one or two days of positive Bitcoin flows from the ETFs are enough to to take the entirety of the other side of uh strategies outflows.

Um and this is a pretty noticeable shift from um the ETF flows we've seen since uh yeah, really the beginning of May. So, early signs of health there, early signs of recovery, um bad news looking like good news. Uh I I take all that as as a bullish signal. So, >> Yeah. Yeah, totally agree. >> Uh another thing that happened over the past week was a very large equity raise by Venice AI.

Uh Venice is clearly one of the most successful um applications within crypto. Uh metrics are up into the right across the board. And the VVV token was I guess perhaps one of three to to actually be in an uptrend and make new highs during this bear market. Um but there's also been some controversy around uh competing interests between token and equity holders. So, now Kunal's been going deep on Venice and has some has some thoughts there, but uh big picture Kunal, I guess prior to this raise, like how was Venice doing?

Um and and and what were the metrics looking like? >> Yeah, so I think you can split the Venice thesis into three parts. Like first is Venice as a product, and then you have uh the VVV token, and then you have the equity layer that now it's been introduced. So, I think each of these three you can view it in their own buckets. And I think to start with like as a product itself, like Venice has been incredibly successful. So, like I mean, how the model works is uh one DM, which is one of like there's two tokens, right? VVV and DM. And one DM gives you $1 of compute tokens in perpetuity. And the only way you can uh access these DM tokens is you not only need to stake your VVV, but you need to

lock your VVV as well, and that allows you to mint these DM tokens. And these metrics have been like, you know, really improving. So, despite like the token has like ongoing emissions to to reward stakers and, you know, despite the circulating supply increasing, if you look at the percentage of like holders who are staking this VVV, that has remained constant despite the inflation. And the percentage of those stakers who are locking their VVV to mint DM has also, you know, been increasing and been steady. So, what this shows is there's a genuine demand for compute. And this it's less speculation driven driven and more like actual people who want to get these compute credits and and build products around it. And so, that's one

way where the the crypto native users can use this method to kind of gain access to compute. And the more like, I guess, the more traditional way which people are used to is just through a subscription model. So, the the other way you can just pay like a flat subscription fee and then you get access to like this uh pro tier, pro plus tier, and the max tier. And like each tier gives you access to to more credits. There's like like less limits on what you can do. And if you look at that, so what's interesting is almost every day they're adding like 1,000 to 1,100 new subscribers.

And that's just subscribers, right? If you look at the free users, that's even like it's it's just like exponential. And yeah, so these subscription numbers have also been going up. And the way the tokenomics model works is the amount of money that's paid for subscriptions is used to to buy and burn the token. But it's just new subscriptions. So, recurring subscriptions for now don't contribute to burns. And there's also like a discretionary burn mechanism. So, when users lock their staked VVV to mint DM, they basically forgo like 20% of the emissions they're supposed to receive. And those forgone emissions could be burned at the discretion of the

team. Yeah, so these are the two sources of burn and how the product links to the VVV token itself. So like the thesis is basically that okay, if demand for private AI increases and there's like a bunch of trends to show that it should then you know, the protocol will generate more like revenue through both subscriptions and users who want to lock the VVV and that will not only make like the supply of VVV scarce, but also like you know, the buy pressure the token will increase. So if you're bullish on the protocol, it makes sense to to be bullish on the token.

But then that's when we get through that the next part, right? Suddenly I wouldn't say suddenly, but last week we got the announcement that you know, Venice raised if I'm not wrong 65 million at like a 1B valuation and that was basically an equity raise, right? And then that's when people started raising questions that hey, you know, up till now like it was very simple. If you're bullish the protocol, you're bullish VVV. But now with this equity element and like you know, is that really as clean and and the token sold off, right? I think it was like $14, $15. Now it's like at $11. So definitely some doubt there and yeah, okay, before we dig into that, you know, do you guys want to dig into some of the metrics or any questions you guys have there?

>> Yeah, one thing I'm curious about is what's unique about Venice is it gives users basically like private access to inference and I'm curious how you'd evaluate how compelling that is to be a differentiator to I don't know, myself just using Claude or chat directly in application. It's like so so what's the edge or mode or value add from private inference and um how large do you expect that demand to grow?

>> Yeah, that's a good question and I think you need to understand the levels of privacy tier Venice offers to you. So firstly, you have like the anonymous tier. So that's basically if you're using like frontier models using Venice. Here it basically it hides your identity, but you know, they still process and retain your prompts. So it's not like your prompts are private. It's still being processed. They just can't tie the prompts to you. So that's one level of privacy you can get. And then there's a second level. So you have like a private level. So this is like the default mode on Venice and here you can access like, you know, open weight models or like Venice specific models. And here you have slightly higher level of privacy.

So here it's you're basically trusting like Venice and his infrastructure providers to, you know, honor their their commitments to to keep your prompts private. And then you have like really higher level of privacy tiers as well. So you have the TEE, which is the trusted execution environment and the and E2EE, which is the end-to-end encryption model. So here you have like higher level of like privacy guarantees on your prompts. But then the the con of it is you cannot access some of the frontier models. So there's levels of privacy that users can select according to what their needs are. But obviously like at each like based on what you choose, there are some pros and cons of like, you know, how like, you know, what the levels of models you can use or what

are the costs going to be or what are the the privacy trade-offs that you have to expect. So from from a user perspective, like I think most of us here like I we don't really put a lot of sensitive information. But then like the more I dug like there's actually a lot of like increasingly users are putting a lot more private info and people are starting to to be more particular like, "Hey, you know, what am I actually revealing?" Like at at certain point like it's too much. Like we need like a more private medium to to to process some of what we're putting. And there's some use cases as well. Like so if I I ducked through the Discord, like one of the most common use cases I saw people were being built is like these uh what do you call like AI companions or

like NSFW AI companions, which is like I mean currently if you want to use these uh model providers, it's blocked, right? So like obviously like the first use case is always these degen I wouldn't I guess you could say weird use cases, but that's currently what like a lot of people like if you duck through Discord, there's a lot of people just talking about these things. And the the other aspect that's interesting. So Claude recently introduced like I think KYC for certain models. So again, that's back to like, you know, our crypto thesis, right? Like, you know, why should I have to be KYC'd if I wanted to just use like a AI model? And like for now, it's just certain models, but imagine if they expand it to like everything, right? And then similar like

ChatGPT follows suit. Like increasingly people are going to question like, hey, is there another medium where I could access these models without giving my privacy? And I think that's where Venice is starting to like build its moat in. Like if you look at like the other other question to ask is, okay, like, you know, is Venice the only way to get private access to these models? No, it's not, but it's one of the more like easier ways for like a consumer. Like similar to how we use like ChatGPT and Claude, it's like almost like a easy front end where we can select different privacy guarantees. Of course, if like you're somewhat tech technical, you could always there's like a bunch of ways you could access like, you know, these private like LLMs. So that's not the the issue there, but

from a consumer point of view, what's the most easy and like way to access this? It's probably Venice. So I think that's the kind of space Venice is trying to be. Like not only private, but like from a consumer-friendly point of view, how could I like, you know, give users privacy? >> Yeah, so if you want to not not safe for work output from your AI, but then this is the place to go. It's what you discovered in the Discord. >> Yeah, I would recommend you follow this big trade. You'll see a lot of like funny things being built. It's entertaining.

>> Yeah, maybe some weekend humor to be found scrolling through that Discord. But so 65 million raised on $1 valuation. First off, I'd say like massive congrats to Eric and team for pulling that off in the depths of the bear. It's like great to see product market fit on something like this and and crypto founders succeed. At the same time, there's there's kind of been some backlash around the the token versus equity debate.

I'd say for for much of Venice's history, perhaps the market was under the perception that VVV was the instrument of value accrual kind of in place of equity or performing the function of what equity would be. But then with the equity raise, it then made it clear no, there's also this competing equity instrument that remains private that is distinct and separate from VVV with distinct and separate claims. So, I'm curious before getting into that like what exactly was the nature of VVV like for for my read from reading the

documentation and how the issuer communicated to the market, seemed like VVV very much functioned as a almost like a um perpetual resource license where you got access to compute in kind into perpetuity. Um and of course the the team used a portion of revenue to buy back and burn the token, which tied tied revenue to the token in some way, but um from your guys's read, like was this was this offered as uh pseudo equity or um was it a distinct financial instrument?

>> I think that's the thing, like when you look at crypto tokens, the habit I wouldn't say it's I think it's a bad habit. You sort of you assume that, okay, it's probably like you have some equity rights or like you have some ownership rights associated with the token. You don't really question that, okay, what's the equity layer behind it? Like where does value really flow? But you're right in saying that So, what the team clarified was that, yeah, VV is more like a compute asset and not really an equity claim. So, you could say that the equity owners are the true owners of like VV, and like the token itself is more like a it it's kind of like the product, right?

It's like the product token, it's the same, but you have like another ownership layer on top. And the way they did it, so the the rationale, like okay, I mean, just to give some context for I think why the raise was needed. Like, so I mean, so the I have a report coming out next week, but I tried to break down some of the costs that would be incurred by VV, and just a simple way to think of it. Like, so the the tokens that people are consuming, like someone has to bear the cost, right? Yeah, sure, you charge like a subscription fee for users. But like at the end of the day, VV incurs some of these costs, and of course, since they're like a they have a business, they probably have better rates on these tokens than like a retail user would have. But yeah, they consume

at least like 100 billion tokens daily, and just some rough maths would tell you that the margins on this product is likely very thin, right? Like you have a lot of free users who are probably consuming a lot of tokens, and you could kind of see it like subsidies to just increase the user base now before you kind of ramp up monetization and charge them like higher subscription revenues. So, I think that's why they had to do a raise where you needed cash to almost I wouldn't say extend the runway, but like to continue like like continuing subsidizing growth. And what they said like so the portion of the capital will be used to like expand GPU capacity, like improve infrastructure.

And like so some of these so let's say let's say for like EER and to EE, you have to rely on like external partners like Falah or like Near Cloud. So, these are costs that you have to pay to them, right? But if you could like you know build out some of these capabilities yourself, it then allows you to lower your your costs and basically improve your margins. So, I think that's the rationale for it like they needed this raise to allow them to build these capabilities. And a lot of it's like so the the way the token was launched is I think it was like there was a big portion of it is airdrop, but you don't really have like a like after you launch a token it's very hard to raise money, right? So, the best way to do it is you have to do it

through this equity channel. Which is why I think that that's how it happened. I think yeah, one thing worth discussing is like when you launch a token like and you need more capital to runway, like how then can you you know structure raise that is beneficial to token holders? Cuz the way I see the only way you can do it is is this mechanism that VVV did, right? >> I I actually disagree with with the last point. I mean we've seen teams raise for the token like with the equity mechanism. The way they could have done it is for instance the way that the right team raised last year, which is they just minted like I don't know how many tokens and they sold those tokens to investors instead of raising to the

equity vehicle. So, you can absolutely raise to the token. It's obviously you're just going to they're just going to have to dilute existing holders to some extent, right? But you would expect that the raise and the amount they they they raise from the from that from that cash is going to be value accretive to the token and it's going to compensate for the tokens that you minted. I I do think you can do it for the for the token in that regard. Um I don't think the the team had like any ill intentions and I think like the benefit diminishes quality, but I do think the market reaction tells you that

the market is just tired of the token equity um dichotomy. And and that they just want to think of like when you underwrite a company like in traditional finance, you never think about like hey, am I buying this equity? Like what does this equity gives me rights to? Like what what what what am I buying here, right? You you just know you're getting a claim on that company and it's valued via DCF, right? Like when you buy in crypto, like half of your time is spent just figuring out what you're buying, right? Like the the actual instrument that you're buying, not like but not the fundamentals of the company and that that to me is just is just stupid, right? It's just

extremely inefficient. And I think more than like just moving away a bit from like the specifics of BBB and the equity, I think just in general the market reaction just tells you that the market is just tired of of this dichotomy and they they I I don't think people would care if if you just had an equity or if you just had a token, like they just want a clear way to to get exposure to something. That being said, obviously that that misses some nuance as you guys were explaining for for the BVB token.

>> Yeah, that's a This is a good one. That that's a fair point and like I mean with any valuation model, the thing you have to consider is okay, what value is flowing and then you kind of like find the present value of it, right? And the issue with this model is like yeah, okay, let's say VVV's future revenues. Is it clear okay, what is the exact split that goes to equity holders and what is the exact split that goes to token holders? It's it's probably not, right? And because of that, then the market applies like a more hefty discount to like VVV's future growth. And I think the the other issue is that okay, let's say uh tomorrow VVV gets bought out. Like someone's like yeah, open your eyes like this is a great business. I want to buy this. Bam, they buy it.

What happens to the token holders then, right? Like you know, there's a lot of like uncertainty there that I think should be better addressed or like has to be modeled into better. >> Yeah, I I think the other the other thing is it's all about disclosure, right? Like to be honest, I wasn't following Binance that closely before uh this all happened, but if they disclosed that BVB, as Luke mentioned, is just a perpetual claim on the compute of that private inference, then as long as they had disclosed it, I I think it's the fault of the investor who didn't like do their diligence when they when they bought the token.

Um like but but but it's very important uh especially in crypto that you over-communicate to the market. Uh and I it if that's a good thing or not, I don't know, but I think the Binance team should have probably communicated a bit better what BVB was. Um because clearly uh uh a significant portion of the market was not aware that or or was taken by surprise that it he not it had not any claim on the on the company itself.

>> Yeah, I think a lot of this controversy kind of boils down to the need for transparency and disclosure of of the highest standard from the issuer of any token that I think the kind of like token versus equity debate kind of misses. Cuz I think in practice you can actually have tokens sit beside equities and it work can work incredibly well. Like Carlos, we talked offline about perhaps like the most extreme example it's so stupid it's obvious is like Circle. You have Circle registered equity publicly

traded and USDC the token which the market obviously knows USDC is not the equity. You have the USDC outstanding which sits as a liability on the Circle balance sheet. And then you have the underlying reserves cash money market funds sitting as an asset on the Circle balance sheet. Then the Circle equity sits somewhere separately. So where I think like the confusion came in is like the market didn't know where BBB sat precisely on the balance sheet.

Did it sit as a liability in the form of like this perpetual uh compute resource or did it also function as the equity? And so I think like if you're if you're the issuer you in traditional markets you have your S-1 your prospectus for any publicly traded instrument or offering you have you perform you have incredibly detailed comprehensive disclosure and registration requirements that accompany the financial instrument but within crypto it's kind of the wild west and you can issue a an asset that you know has a billion

dollars in market value and um a company the issuance with very little disclosure transparency and what that leads to is miscommunication and then ultimately misalignment between what token holders might expect from their underlying claim and then what the underlying team intends to do with the token. So from my point of view like I don't know looking at the Venice documentation so they say things like VVV is the foundational asset of Venice built to power a programmable AI economy.

They talk about the utility which is the perpetual access to compute. We we need a lot more rigorous disclosure and transparency than like docs and an FAQ if that makes sense. Like ultimately we need we need the balance sheet and we need to see where VVV sits on that whether it sits as a liability or it sits within shareholders equity. Um so granted like I'll give I'll give the Venice team credit where from my perspective most of their communication has been consistent that like the utility and the claim is

is a is perpetual access to compute and and not equity. Um but at the same time like if if you're not communicating to the market thoroughly, you're you're going to leave open room for interpretation and miscommunication. And you know, they they could have sold Venice. You know, they they sat on a ton of VVV on the Venice team's balance sheet. They they could have sold that and in my opinion the the market likely would have dumped a lot more.

But at the same time if if you're selling VVP and VDV outstanding and circulating increases, then basically the Venice's liability or the compute resources that they owe to the market, it grows or existing holders get diluted significantly. So like looking at kind of the the markets reaction to to the raise. Let me share my screen here. It's like I don't know. From my point of view, you can barely see the raise on the chart.

You know, it was selling off kind of more extreme prior to the raise and at large is still pretty up into the right and I will held registered securities before when they perform financing and at times there's a bullish reaction. At times there's a bearish reaction. I wouldn't say across the board that an equity raise is is bullish and whatever the instrument in is should react favorably. So yeah, at large I think there's a lot of nuance within the VVV raise and that the token versus equity debate that ultimately it boils

down to like disclosures and transparency and all this can be avoided in the future with with the highest standards of such. So. >> The Blockworks transparency framework. >> Yeah, we'll get there. We'd love We'd love to see VVV on it. >> Yeah. No, but I I totally agree with your with your takes. I think like for the first example, I agreed something so stupid that it's obvious. But yeah, if you're RWA issuer, you know that you're just getting exposure to an underlying asset that it's hopefully backed one-to-one, right?

Uh but I I think the the markets like apathy to this types of things is just from tokens that are obviously not uh RWAs and and and that they're marketed as governance tokens, utility coins, or whatever. And you know, there's I would say in some cases there's um how do you say the word like there's um ambiguity. And that is to the benefit of the team. Like the team benefits from being ambiguous uh with regards to the value of the token because that way they they kind of you know benefit from people holding

that asset and still kind of benefit from the equity instrument as well. Um so I I do think um it's it's an issue that the industry needs to solve. Probably one of the work like most important problems the industry needs to solve, but there's obviously nuance uh as in the case of VVV. I think VVV is one of the most unique cases because it's such a unique instrument that you get access to compute from a token. I I it's probably the only asset I've ever heard that does that. >> Yeah, absolutely.

More often than not, teams will put a carrot on a stick um associate with the value accrual of the token and never followed up with anything and think within crypto we see uh, so so much, um, optimism and we we value heavily uh, permissionless financial markets and permissionless capital formation. Uh, but at the same time we we continuously learn um, the benefits of regulated uh, regulated capital formation and regulated financial markets.

Um, one component just being mandated disclosures and registrations, which we'll ultimately get with the Clarity Act. Um, definitely uh, definitely eager to see that cross the finish line. Um, but across the board I'm of the mindset that like capital formation is a very sacred process and it should be treated as such. And and any issuer across the board should lean into the responsibilities associated with that. Which includes clear communication um, to the market as to to where the asset sits and what its claims are. Um, increasingly the crypto

market is is self-sorting uh, the opportunities that for the ones that do and the ones that don't. >> I'm just curious like uh, a quick fun question for you guys like so now we know the equity is valued like 1 billion, right? And the tokens at like, you know, 1.2 B. What do you what you guys think about that, right? Like technically the token is just a computer asset. The on the equity side of things you have like, you know, now they're building out like GPU capacity and all. Like do you think the token should be valued more than the equity in that case? >> I'm honestly bullish both. Um, of course I I would have loved to have been a

Venice equity investor at a 100 mil market cap. Um at the at the same time, I on a long-term long-term time horizon, I expect myself to spend more money on AI. Um I expect enterprises to do the same. Um so perpetual access to that, I do see as valuable. And with, you know, 65 million in financing, that's going to uh large largely be used on Correct me if I'm wrong at the data center buildout.

Um I I think that's constructive for both. I was going to ask you that same question Kunal. >> I don't know. I'm thinking about it. It's a tough one. I don't know, in the short term, I feel like a lot of the the growth is coming on the the equity side of things. Like what they're building out is it's pretty valuable. And [snorts] like let's say you approach this from like a traditional like valuation perspective. Like you value all this like data center buildout and things like that. The equity is probably a lot more valuable than the compute asset itself, right? Like I would you but like same thing as you I would rather own the equity at this point than the token.

Like if I was given a choice between two, yeah, I would choose the equity. >> What's your pair trade, Carlos? You long equity over VVB or VVB over equity? >> I mean, I I love crypto, so I would long VVB but I would obviously hope it's just Like I hate that there is an an equity um component that can gain value without mine getting value, if that makes sense.

Like what if VVB goes down and then their equity just goes awful forever? >> [laughter] >> And I can't get access to that. So, yeah, I don't know. I don't know. >> Yeah, even even beyond the token versus equity debate and the disclosure and transparency debate, I think the situation brings up um another case study in I guess giving public market investors equity exposure early in the life cycle of successful companies. Like we talk about a lot with uh SpaceX, Anthropic, OpenAI where um some of these like SPV token wrappers can kind of present a band-aid fix to

let public market investors get access. Um but it seems like people want it earlier than a hundred bill up to a trillion upside. Like they'll the public market want wants access much earlier in the life cycle, down to a billion, down to a hundred million. Um which we think like the crypto form factor can ultimately solve or seek to address. Um but I think this is another example of that where uh people wish they held the equity uh hundred mil market cap.

>> Yeah, I got it. >> Um >> [sighs] >> One one cool thing that I saw recently was like cuz I'm talking to the Pump Kid folks and like for those who followed they did something called an ace round, which I thought was pretty like different to what we've seen in the market so far. So, how it basically worked was uh I mean, launched as a meme coin, right? So, it's like full supply is is circulating from the start. So, then how do you do an equity raise, right? You could I guess you could issue more tokens, but I don't think you can do that for Pump tokens. I'm not sure how that works. But yeah, they basically did an equity raise and I think the market sold off initially, but they structured this A series round such that uh like token holders can convert to

equity. So, like there was like uh I think 2.5 tokens is equal to one equity. So, they're like, "Yeah, okay. Hey, if you think the the token is trading below what the equity is, go ahead. Yeah, convert your tokens, and then now you have both like equity exposure, and and if you keep any tokens, you have token exposure as well." So, that's a I guess a pretty decent way it. And let's say they get bought out in the future, then they could again open like the same A series round, right? Like, "Okay, yes. Again, you can convert your tokens at a X ratio to equity." So, in that case, your token holders can also get equity exposure. And the other thing it does is let's say you know, you're building out a team, so your team probably owns the equity, but like for a meme coin, like

where full like everything is circulating, you don't have tokens, right? Then how can you be aligned with token holders? So, this mechanism allows like you know, when people give their tokens for converting to equity, these tokens can then go to the team members, right? So, it kind of creates an alignment between both token and equity holders, and also the team and the project. So, I think that's a more like positive equity token link I've seen in the the recent weeks. >> Yeah, I agree. I I think Pump is is a cool example, and like an example of a team trying to do the right thing by giving token holders at least the right to get equity exposure. Like, my take on this whole situation is if you can, it's

probably better to just have a equity and just have token. But, if from the beginning or for any other reason you have you have both instruments, like equity and token, then at least you can do the kind of the right thing and and try to give token holders the option to get exposure to the equity instrument. So, I I do think I also agree with Kunal that Pump Kinetic good example of like a team trying to do the right thing for token holders. >> 100% Does um Does MetaDAO and ownership coins Does that fix this problem?

>> I think it's probably the most credible solution that we've seen on the market. Um I saw the tweet by John uh Sharbonneau the other day on on MetaDAO and it was something like Yeah, like MetaDAO ICOs are consistently the easiest and fastest deals for us to underwrite. And I think that's no like I think that speaks volumes to the product. Like MetaDAO has refined the raise process. They have done uh private roadshows and you know, spoken to investors uh when they are doing like new raises. Like the Lasso Finance raise a couple of weeks ago that got like $25 million in commitments.

Uh they're now doing the Credible Finance raise. Uh but more importantly, I think what I love about MetaDAO is that you can actually focus on the company that is raising. Like you can look at their fundamentals. You can look at how much revenue they make. You can look at their growth prospects, etc. And you never have to worry about what instrument you are investing uh if that makes sense. Like you don't have to perform your due diligence on okay, what am I getting with this token? Uh what is the equity component? Um you're you just know that when you buy the token, you're getting exposure to that company's growth. And and that to me is it's a huge unlock, especially for capital formation in crypto markets. I

know Luke, you were speaking about giving the public market the ability to invest in companies at their earliest stage. I think Meta DAO can really achieve that. And you because you you're essentially investing in the company. You're not investing uh in a governance token that is going to be valueless if if that company succeeds. Um So, yeah, I I I I do like obviously I'm I'm biased but I do like Meta DAO. >> Agreed. Few tarded. Lot Lot of few tarded on the the Blockworks research team.

Um at large I think yeah, the the VVV um controversy is it's it's just a good reminder and the problems that need to get solved within crypto, but at least why I'm optimistic is I think we have a pretty clear path for how to solve them and they all are solvable. So. >> Yeah. And yeah, I just one more example like for liquid token investors, I think it's this also applies. Like I was doing a I released a new bank report a couple of weeks ago and I looked at six tokens, right? And so, I look at Ether five, Gnosis,

um Plasma, Abachi, Jupiter, and Ave, right? And for all of them except for Abachi, probably like at least a third of my time researching each protocol was looking at their token, what value it confers to holders, what disclosures the team has made with regards to how value accrues to that instrument. Um you know, like things that you shouldn't have to do as a traditional finance or things that you don't have to do as a traditional finance investors and that you shouldn't have to do as a liquid token investor.

Uh but but unfortunately, the state of things is that you have to do it, right? And you you you often come up with cases where the bull case for a specific token is okay if they add some disclosures to what this instrument confers and if they actually give value back to the token then probably a re-rating is in place, right? You're you're not even like you're saying like this business is probably very strong and it's like it has like very strong growth prospects but you know the token is trading at a discount to what it could trade if you knew that that token conferred like the true value of the of the company. Uh so I I that's one of the things that I think Metal logs that you lose like

Metal tokens fundamentally don't need to trade at a discount to what an equity instrument would would trade. Um unfortunately that's not the case for probably the 90 90 plus percent of tokens out there. >> Yes, increase the transparency, get a higher multiple. Um across the board if you you lower that discount rate uh you can get more out of the instrument. Perhaps pivoting topics here um to find some up into the right charts. We now have just over a week of Robinhood chain uh being live and it's kind of showing some excitement and optimism back in the

market. Uh pretty decent launch. Um TVL is up to 260 mil. Um bunch of different assets, bunch of bridge inflows, and DEX volumes um putting out about half a bill daily. Um one thing that was also really exciting to see is uh we have a runner back on the board. Uh CashCat, which I believe the lore is this was what Robin Hood originally wanted its company name to be. Um so whoever was deep in the lore to uncover that one was

able to print a bit on this this meme coin now. 160 mil market cap. Um pretty pretty impressive. Uh I'm curious have you guys bridged over to Arbitrum chain yet and you're you're punting any memes or um how how do you read the first week of Robin Hood chain's launch? >> I mean it's exciting. It reminds me of Well, I think the obvious comparison is just base and Coinbase, right? Uh it's like very similar situation. I did end up bridging like probably like 3 days ago or something.

Um but it also it always amazes me how painful it is to bridge to a new EVM chain. Um how I bridge is I downloaded the the Uniswap wallet. I don't don't ask me why I did that, but I and I did a cross-chain swap from ETH from ETH mainnet to Robin Hood chain. Um that was done via cross, but the problem is that when I did that for some or another reason like a cross was out of ETH >> [laughter] >> on the destination chain. So I had to wait like for like 15 minutes uh for for the ETH to arrive. Um so it was a painful uh bridge experience, but

yeah, uh definitely exciting stuff happening on on on Robin Hood chain. >> Yeah, the I mean I personally haven't bridged over. I'm always like lazy to do this stuff for the new chains, but like I like to always when these things happen I ask ask them stuff like okay, who are the winners and who are probably like the losers or like, you know, like a long shot kind of trade there. And I mean, a lot of the Robinhood chain like eco tokens have pumped quite hard. Like Syrup has done well, Morpho has done well. I think Itena has done okay. Uniswap has done well, Arbitrum has done well. And then you got to ask yourself right okay, like, you know, of these who are the true winners and who are just like hype runners right now? And I think like

Maple is pretty like underlooked there. Uh if you look at its metrics, it's done really well and uh the way it works too, I think a big growth driver for like TVL in that chain itself is the 7% up to 7% yield that's going to be the offer to depositors. And it's a Morpho vault, right? So, the vault kind of allocates to Syrup USDG and Itena's uh USDE. And if you look at the yield between the two or if you look at like stablecoin yields in general, Syrup offers like one of the higher ones at around 5%. So, if these uh deposits like if they need to hit the 7% target, like a decent portion of this probably

has to go through Syrup. So, uh yeah, Syrup stands to benefit a fair bit from this uh this integration. So, I think a long Syrup trade makes sense. I think the the multiples 18x pretty fair if you look at some of the other uh tokens on on Robinhood's chain like the valuation multiple. And I guess on the the other side, right? Flip side, like what pumped that probably is less bullish than it should be. One is Uniswap. I mean, come on, like it's just literally like even with the increase in DEX volumes, it's it's nothing crazy, right? And and again, back to the same value accrual thesis.

Okay, how much of this actually flows to the token? Not a lot. So, I think that's one that has run hard that probably will re-rate downwards over the next few weeks as again, meme coin demand probably cools down and the the other one is Arbitrum. I think people are doing all sorts of moon math. They're like, "Yeah, 8% of the fees go to to Arbitrum. That's great." But, there's a few caveats there. Like, I I think like the the transactions on Robinhood's chain will eventually reach base level activity. But, of course, that will probably like take some time.

It's not as fast as people think. And next, the the average transaction fee on on the chain right now is pretty high. And that's cuz of like, you know, a lot of the bots that trying to like like spam and get them the the the meme coins bids in. So, as the meme coin activity cools, your transaction fee probably comes down as well. So, you will see like, you know, your daily fees kind of come down and like form like a more normal soon enough. And if you do the math there, yeah, the amount of uh uh revenue that flows to Arbitrum, I mean, it's decent, but like it's probably like 1 2% of the FDV. So, I think the market's being like way too optimistic on how bullish this is for like both Uniswap and Arbitrum. So, yeah, a decent pair trade could be like,

yeah, long Syrup, short the other two. >> Yeah, Syrup's a great call out. Looking at my watch list today, Friday, Syrup is uh top of the board up over 11%. And this got really cheap down here. It's I think close to close to 15x. And looking at their metrics, uh this is total outstanding loans for for Maple. Uh it's at all-time highs. You can you can barely see the 50% drawdown in Bitcoin on this chart. So, clearly some strong product market fit and momentum that um likely only grows or accelerates with

the Robinhood chain rollout. >> Yeah, one thing that interested me that I covered in the newsletter this week was USDG growth going forward. USDG is currently around 3 billion in circulating in circulating supply. And I think it's probably going to grow or accelerate from here. If you look at for instance Maple, they released here of USDG like maybe last week and it already has like 220 million dollars on that pool.

So I I do think that USDG being the base asset of Robinhood chain is great like tailwind for USDG growth going forward especially because the D5 protocols have an incentive to make it work and to increase the liquidity of of that stable coin. So that's one of the things I'm looking at. Of the top 10 stable coins, USDG is actually the fastest growing in percentage terms of the past 30 days. So that's one area I'm looking at and then for the Uniswap thing, I'm actually I probably left curved it but I did think it was kind of bullish that Uniswap was the only decks on Robinhood on Robinhood chain at least until now,

right? Like for for Maple, you do have like Maple, you have Morpho, you have Spark, you have a a lot of like lending instruments, you have Athena. But for Uniswap is actually the only decks on Robinhood chain. So maybe I'm left curving it but I do think it's kind of bullish Uni at least in the short term that they're the only decks. And they and they did have the unification proposal, no? To to to have value to the to the Uni token but I I could be wrong. >> Yeah, if I'm not wrong for the proposal, it's it's turning on the fee switch for a certain number of pools and if I'm not wrong, they're going to expand it. But even then like if you do the maths on the amount of like revenue that taking that flows to the token holders, it's

like really really tiny. And yeah, I guess it I guess it's bullish now that Uniswap's the only DEX on the chain and likely benefits from all this like meme coin trading. But I mean, it's obviously not durable. Okay, maybe I'm wrong. Meme coins Robinhood's the new meme coin chain. But I mean, I'm guessing. That's my gut that it's probably not and eventually you see this cool down and you see a lot more like yeah yeah yeah tokenized equities, real world assets being traded. And I don't know how much of this will be on on Uniswap. You have like other competitors like our box real though. Shout out to block and real though team. And uh I think lighter as well will I don't know if they do it on

spot, but you have a lot more competitors emerge there. So, I don't know how much. But and even with this rise in volumes, like it's like peanuts compared to like the volume Uniswap processes, right? So, I I mean, from a narrative perspective, it makes sense. Yeah, sure. But like I don't know it doesn't really translate into to the maths. But yeah, again, I'm thinking too much, right? That's the problem. >> To be honest, I think I think I'm going to I'm going to disagree here. I I do think I could be wrong here and like historically you've probably been wrong in that I'm Uniswap, but I I do think it's kind of bullish that they're the only DEX. Like if you look at today's volume, uh highest chain by volume in terms of just Uniswap, Ethereum mainnet,

770 million dollars. Second largest chain by volume for Uniswap is already Robinhood chain, 528 million dollars. So, I I would like I I would wager Robinhood chain is going to be Uniswap's highest volume chain as soon as next week or in two weeks. Uh and so I I don't think that the numbers are insignificant. Like if if you if it's already the second largest chain for Uniswap, uh trailing Ethereum mainnet by just like a couple hundred million dollars in volume. That to me is not is not insignificant and and it can grow from here. I I know that memes are have gotten a bad rap like rightfully so in in the past year or so,

but let's remember how much volume was radiant pulling in the in the peaks of 2025 and 2024. Um I I I'm not saying that that that will happen on on Robinhood chain, but I do think um it's people I I I I just disagree with the fact that that it's insignificant. Like if it's already like the second largest chain by by volume for Uniswap, like if you look at something like Uni chain where they when they launch, I I agree that that was not bullish like at all. Like that that was all incentivized and and it died straight away.

But but for Robinhood chain, I I I think I have a different like growth prospects. >> That's actually a good shot. I was not aware that it's already the the second most volume driver for Uniswap. But yeah, I guess it it it really like comes out of thesis whether like the meme coin volumes continue. And yeah, I guess only time will tell for that. >> Yeah, good good shout on Uni, Carlos. Um I I anything but a mid-curve take. You framed it as left curve, but per- perhaps it's further right than than you expect.

Uh we won't forget about Rialto, though. Uh we'll be we'll be eager to follow their metrics and probably get Paco back on the pod to uh discuss the growth and angle there. Um only once he lets us in the the cedar series, I of course. Um But after that, we'd we'd love to talk with him. >> [laughter] >> All right, guys. Uh as we look to wrap here, uh what are you guys looking forward to into the weekend or into next week. Um Any bullish catalysts to keep our eyes on?

>> I think we would pretty much cover everything in the past 10 minutes, right? Uh Just excited to see some runners and runners hedging. >> You'll spend your weekend back on the Dex Screener trenches? >> Yeah. Long time. >> Yeah. >> No, I'll I'll be glued to the World Cup matches. Yeah, I will not be glued to the Dex Screener. >> I mean I mean that that's that's kind of a given. >> like two screens, yeah. >> The The listeners don't know this, but Kunal's been putting up 30% of the Polymarket sports betting volume over the past few weeks. Uh >> That is not true. Not 30%.

>> [laughter] >> I actually, you know, the other day I was like um I had the HIP4 uh page opened and yeah, I I was betting on I was betting on the Argentina Argentina against Egypt match. Uh and you could see the HIP4 odds for Egypt just falling down. And I was like, oh no, uh they're probably going to score, right? And they scored like a minute uh a minute after on my on my on my stream. So, it is pretty cool to see like the market react way fast like way faster than than you have it on your

stream. >> I I just I just thought that was so so cool. >> The lag there is like firstly, your stream could be lagging and then the other level is there's a there's a quite a significant lag between like the when you watch it like the game in person, right? And then you watch it on the screen, like there is quite a sizable one. So, it's pretty cool that the markets kind of follow. The The other thing I heard is like if let's say when a team takes a shot on goal, right? Before or like say there's a penalty kick, you'll suddenly see the order book thin out cuz no one wants to provide liquidity. So, if like I don't know, I could be Wolf like creating a video, but like the moment you see it thin out like it's either like a shot that's been taken or like a like there's

some key moment in that the match. >> Yeah, but if you don't want your experience ruined, I I recommend you do not have HIV four markets open if you're watching the World Cup. >> [laughter] >> Whatever it is, make sure you're betting on it. All right, guys. Uh thanks for our listeners for tuning in and thanks to Carlos and Kunal for for hopping on. You have a great weekend.