TradFi Embracing Crypto, Private Equity Froth, and Macro Headwinds | Roundup

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and something like reaking will that make that a lot more clear where it's like yeah I got my e staked on L1 but I'm also staking on a bridge and I'm also getting these Oracle tokens like it's money and that is the main thing that I think at some point in time why eth will actually flip Bitcoin is because it's actually us as money like the hard money meme of like you just lock it away I think that's good for some people but over the long term the assets that are used more as money we'll just have a more heavier Supply sync and we'll just trade a lot lighter hey everyone wanted to give a quick shout out to the Wormhole Foundation if you're a bell curve listener you know that transferring across chains can be a massive pain I certainly do I complain about it on this program all the time

that's why we are super pumped to have partnered with the Wormhole Foundation the stewards of the Wormhole protocol the Wormhole protocol connects over 30 blockchains and six different run times including salana soie ethereum layer 2os and more and the coolest part about this particular partnership is that they have made custom bell curve nfts which you can get and mint for free you can claim that by just going down into the show notes and clicking on the link all right guys on with the show all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you

know the deal now let's jump into the episode all right everyone welcome back to another Roundup of bell curve you got Michaels one and two Vance fellas welcome how we doing feeling good feeling good first one back I know I know missed you guys it's been a minute um it's been a wild start to the year we got Bitcoin ETFs that finally got approved um definitely shout out to James safer and Eric balunas who have been the gurus and it's been nice to see them active on crypto Twitter tweeting out some of our memes that's made me smile uh but but you know we were just talking off air before we even get into Bitcoin ETF and flows and that whole discussion what's your guys sense of

going into this year we we're just sort of chatting off air about I mean even if you bring it all the way back to last year everyone was so bearish going into 23 turned out to be quite a good year I feel like at the tail end of this last year uh people got extremely bullish and everyone accepted that was going to be a soft landing and now maybe it looks like it's going to be a bit bumpier than that so how are you guys feeling generally on the more macro side of things feel feel pretty good um you know we were just talking about like we we we all follow Tom Lee um who is like either the most hated person on Wall Street or like the one person who gets it right like there's kind of no in between with Tom Lee um and he works for fun Strat

and you know he's kind of known as this perable and his whole Philosophy for this year is that the S&P is going to 5200 you know it's at 4700 right now so that'd be a new all-time high um but the first half of the year is going to be choppy like you have like a lot of just like uncertainty with the election uncertainty with rate Cuts uncertainty with QT turning into QE but like ultimately if you have like a long-term perspective like it's it's really hard to not be bullish and like what's the bare case for crypto like after the nuclear winter of 2022 the implosion of all the main State characters like we we just kind of randomly stall out and don't hit a new alltime high that just

seems like you know you have to play for the most likely outcome and and that just doesn't feel like the most likely outcome um and so you know there's always things that could happen surprises but I think if if you continue to see Trump election odds rally you're going to see risk rally alongside it because that is just like certainty for the risk markets looking into 2025 and um I've always been surprised of the people who are like we're playing for for the 2024 bull cycle like if we have a new Administration it's like 2024 to 2028 um lower interest rates you know kind of like the nihilistic capitalism that like Trump represents whether you agree with it or not is what's coming what do you think Michael I think

generally you know we're probably gonna have a pretty bumpy ride the first quarter maybe the first two quarters um just as people are starting to figure out what 2024 means um crypto wise I think there's a lot of positive Catalyst macro um there's also a lot of positive asymmetric catalysts you know maybe we get you know resolution in in Ukraine maybe we get you know some of the uh Clarity on where the government is is going um election wise and I think there's a lot of things that could become more clear over time um so that'll help but it does seem like you know it's going to be bumpy for the first couple of months which is fine um you know I think that's just you know part of election Cycles as well is is you know the election year itself is

usually one that's not you know the cleanest and the clearest uh at least from the outset historically yeah do you guys still see macro being in the driver seat for crypto for the most part to a certain extent yeah um I mean you're either dealing with head wins or Tail wins and for what we're um looking at with crypto at least like rate hies turn into rate Cuts QT turns into QE Democrats turn into Republicans like it's always in the background and it's um it's been a long time coming as well like the four consecutive 75 basis point increases relative to like even just

staying like stagnant with where they are is a huge shift just in psychology of Market participant the the one thing I will say on that though is the market is pricing in at least where it currently stands and let's assume you know typical price cuts rate Cuts unless there's some massive a you know endogenous shock like uh you know uh a bank blows up or something where they actually need to cut rates you know hundreds of basis points in in a single meeting the typical rate cycle is is not more than 25 bips per meeting and the way that the markets are pricing current rate cuts for 2024 is that we have one uh meeting coming up in a few weeks probably a 0% chance that they that they

cut rates there um they're expecting that March could be that First Rate cut but then if you know the typical rate process holds they're expecting rate Cuts every single meeting for the rest of the year I I just fundamentally don't believe that that's going to be true and so I think the markets are expecting more rate Cuts than we're actually going to see which in and of itself is a difference of where guidance is versus where you know expectation where expectations are versus where you know things actually land so that I think is is a recognition that the marketers will have to digest probably over the first you know six months as we start to see what March actually turns into what April turns into and then you know June July um so one thing about markets which

is tough is um there's directionality and but there's also guidance and expectations and so you could have positive directionality of you know there are going to be rate Cuts in 2024 but if everybody's expecting it to be 300 basis points it only comes out at like 200 basis points you that's that's a negative it's a negative change in and of itself um even though there's 200 basis point Cuts just because it wasn't what people were expecting it's it's viewed as a negative so that that's the reason why I think it's going to get a little wonky I think that's a really good point I saw this discussion has started to crop up a little bit around even the Bitcoin ETF and I saw I saw a chart or saw someone tweeted out today like hey

we had a a trillion in inflows but the price hasn't moved like makes a lot of sense but price did move it moved over the last six months in anticipation of those flows so it's kind of a meme in crypto because it's an immature Market a lot of retail participants and stuff doesn't get priced in till pretty late but in trafi things do get priced in there is a known set of expectations and performance relative to those expectations end up mattering quite a bit short short term it does short term it's all about how you perform versus expectations longer term it's about the direction of where things are going yeah yeah so I have a question for you guys on maybe zooming more on in on the crypto side of things how are you

viewing like I saw this tweet from Chris berinsky who's talking about private Market valuations um so basically private deals in crypto tripping over themselves to keep up with public market memes valuations and topic DJ unrecognizable from Q3 2023 tipping into borderline excess so I I would be curious what you think I think my mental model which it would which is basically just like in 2023 we saw Rock Bottom you know post FTX and then I think something that confused a lot of people was the salana call it like mini bubble uh or something and I think that was just uh that was mean reversion from like a a massive dislocation in prices and I

think that maybe like got people's Animal Spirits firing a little bit more than they otherwise should have at this point in the cycle and now we're kind of like treading water but it's interesting like you guys obviously do professional investors like I do a little bit of investing and I've noticed like valuations have changed a lot in the last three months and I'm wondering if you guys think that's froy and what do you guys think about that it's it's definitely frothy in the private markets um and and I think like if you break it down what's happening is like something like a say you know which has not unlocked any of the tokens that belong to investors or the team you know they've done the airdrop which is is

about one a half billion and then they've got the fully diluted which is like seven or eight and so projects are looking at that and saying you know look um I should be worth you know four to eight billion in the private markets because this thing is um you know trading at8 billion in the public markets and that belies the fact that the unlocks have not happened yet and like what happened in 2022 is like everyone was unlocked and so the valuations reset very quickly because you know the public market comps were affected by just the stream of Supply that was coming to market for the team and the investors and so I think a lot of you know the private markets are are benchmarked to like Chris calls it memes like FTV memes which I think is pretty

accurate you know it's like is that reflective of the real price of this when only 10% of it is unlocked probably not um and so like that's like the danger zone for investors when your comp is off and you know you're already admittedly not investing on fundamental value um like you know if Celestia is making $75 a day and it's 20 billion FTV it's like you can't wireframe it from like the fundamental perspective and you also like if you're using that as a comp you know theoretically you should be willing to pay you know anything up to 20 billion to you know bench to get to the next Celestia competitor so I think it is a little bit off um and like if you roll back the clock to something like defi summer like why did defi

summer not lasts longer than you know the April 21 kind of peak it was because of the unlocks and so you know we're hyper dialed into like what are unlocks going to look like for the major tokens that are coming to Market this year um for for their unlocks arbitrum Celestia um whatever else I think that'll dictate a lot of the private Market valuations but you know other than that if you're a private Market investor um and you got like a four-year unlock schedule and you're investing right now you're holding that thing through the next cycle well so I couple of things first off I think this is why we have Cycles in crypto it's not because of like the haveing and sure like that's a meme that

probably bolsters the the uh the front end of the cycle it doesn't really you know fix the back end the back end is all about liquidity and who's selling and you know go figure that all of these you know tokens that raise at massive valuations have three-year unlock cycles and that you know the unlock cycle for a lot of these these tokens are going to start probably in 12 months eight months 10 months from now you know whenever that first year Cliff is sometimes it's it's 12 months sometimes it's you know 18 24 months but then you start to get like this drip feed of tokens over the next 36 months after that where you know you slowly have like you build a

position and you're you're deciding whether or not you're an investor and you know you have these things marked at I don't know 122 billion fully duded valuation you're like like hm should I take some money off the table and then things start to slide and now it goes down to 10 and you're like oh man I really need to take some money off the table now and then you know your price action because you're selling one or two% of the protocol token from the seed round pushes it down to like eight or six I mean that's the type of cycle that I think happens actually quite frequently with a lot of these new layer ones defi summer so I think of defi summer as being basically like June 2020 to September 2020 and the reason why defi summer didn't persist is because we lost like interesting new you know food

coins to go farm within def5 flatlined throughout fall 2020 but it's that cycle from 2021 where people invested and raised money in the 1920 era and then you had avac you had salana you had you know all the major kind of like alt l1s that were unlocking during that 2021 and 2022 cycle that was the liquidity that I think you know was the Catalyst or or part of the process of bringing things down but I think we're going to start to see a ton more similar examples of this you know anything that's over A5 billion FTV expect that there's going to be some liquidity issues when everybody's trying to get out through the same door and and

just to get more specific so like you can do things like called non-deliverable forwards to effectively like try to hedge your unlocks ahead of time and you can probably do this like three or four months ahead of that unlock and and it kind of like makes the derivatives markets and it's all settled on the derivatives markets sorry go can you can you explain what that is what's an non deliverable forward so what you're basically doing is like you you have the tokens and they're goingon to unlock say in like three or four months you go to an OTC desk and you say hey I want to hedge this and they say okay cool or or maybe you do it yourself um and they say okay we're going to start shorting the per you know for you and when your tokens

become available so like to to close a short you need to deliver the physical tokens that's concept of that but like while you're doing this you're shorting the per you know people know that there's short interest on it you're also paying fees you know like in some of these perss I think in like the first week that Celestia launch it was like people were paying like 300% per year hedge this out and so like you know people see that they'll try to like squeeze the shorts they'll try to like get you add more collateral and like things like mobile coin like remember when that blew up and and you know that was the result of an investor trying to hedge unlocks and so like the volatility that comes with these unlocks is I mean sometimes not just to the downside sometimes it'll be like you know squeeze

up and then like gap down um but it just like creates that environment of like anxiety and volatility and nervousness around General unlocks but keep in mind though anyone who has 2 three 4% of this token is not doing this because frankly they'd only be able to do it with about 5% of the total like the size that you can put on also the spread that these desks are charging is like 10% you know if they're shorting the per uh you know and they're quoting you one price it's like okay the price is trading at $5 right now we're gonna you're going to pay the fees and we're going to quote you like a fill rate of like 425 as you try to sell this so like it it's massive spreads they get to dictate

the market and you can only do this with like single digigit mill dollar of volume like otherwise it it's just too much to put on those those contracts um so any of the major investors I think are just not able to do this or they're doing it over the course of years where they just kind of roll a three-month you know let's call it $5 million deliverable forward and then they do it another you know $5 million three months later and then another five million and you know it's kind of a way of rolling out of it uh but at that point you might as well just t- and just sell a spot generally I think it's a good idea for everyone have a good sense of unlocks and it's like publicly available information token. unlocks I think is a good website and you know it's like one

of the major components what is the supply yeah you know what this reminds me of I think we've mentioned it once or twice on the show before but I don't know if you've ever heard DJ Spartan talk about why he thought that def summer came to an end and he actually put uh Sushi swap as like a massive contributing factor because that's where you had like pool twos and super risky yield farming strategies going on and it was just there was such an incentive for liquidity if you were holding on to this super liquid bag you know the game theory was like this is probably the best time I've ever going to get to sell this stuff so everyone dumped it at the same time and maybe like a mini thing happened like that with blur as well it's like got these liquid jpegs there's

gonna be a massive liquidity event points farming all that stuff so I'm G to dump it it's good long term overall you want more liquid markets but in the short term could be dangerous I mean not to to kind of pull it back to something of we were previously talking about um James hefer AR blumas uh talk about how you know there is an interesting narrative around the inflows into these Bitcoin ETFs the bigger thing and the harder thing to accomplish is to get ETFs with sizable volume and therefore low enough spreads because that's where it becomes an attractive way for uh you know traders to to Arbitrage this eventually you're going to have like options on these ETFs U being able to have you know people who are probably

trading like spot Bitcoin with a balance of you know the reverse on the ETF side and you're you know you're able to trade that that spread um the liquidity here is ultimately what matters the most in in the ETF world and and you know go figure that that's what matters most in these token worlds as well yeah ju like one more thing like the psychology of all this pul pulled together is like like you know say um your average L1 is Raising at you know one to two to maybe even3 billion dollars who knows um and you know you're kind of like doing this calculus of um you know maybe if it it trades like say you know this still

double triple or um you know maybe if it's like near that's like the floor which is like a few billion I think when you look at that and you look at what I would call just like the resounding success of these Co ETFs and like sure the price is not moved but like grayscale is dumping like billions of dollars of of Bitcoin to to resolidify their balance sheet and a lot of the gbtc outflows are are another component like do you think the success of of Bitcoin on with the CTF for things like eth that like you know if these flows continue like the risk reward of that comparable to the private markets is basically the same yeah you effectively the same like way better liquidity you know you're not playing

this like game of like oh maybe in like two or four or six years I'll be able to like actually you know do something with this um like it's no longer clear that the private markets are extremely undervalued whereas a year ago I thought that was the case like you you had amazing project raising at like 30 40 50 million you know fdv for the seed or the a um like the the minimum now is like a 100 I know so yeah it's sort of a losing Dynamic for everyone even those Founders like you you have to grow like the expectations if you're raising at an inflated valuation are so high you have to deliver so much and inevitably when there's some bump in the road or the

next be Market or whatever you you're probably gonna have to raise like it you know best case like a b what's it like not a Down Round but basically same valuation worst case a Down Round that's what most people do and that just sucks it's so brutal just wipes out a whole bunch of employees equity uh morale is terrible I don't know it's kind of a loose loose so I I talked with a couple other fund managers this week and their perspective was like you know like is it the right time to do Venture right now may maybe you sit out for six months and try to let it cool off um I think yes and no I think what else is coming is generally like a crypto fund uh replenishment like it seems like most

LPS are like pretty bullish pretty open you know to investing and you know you're going to have all the major funds we raise and that doesn't do anything for the floor it only increases it I know I mean it's kind of you know what we were talking about the downside of this Trump uh nihilistic low interest rates capitalism is this like valuations that don't make sense and you have to figure out what you want to do about it because I I I agree I don't think it's getting any less crazy from here probably base case maybe is that it's stagnant for a little bit or chop sideways but I don't know I I mean at the end of the day the the law of physics dictate that like you know things are not going to go just like up

only because there's only so much liquidity for for people to like get in and out um I think both Michael and I have just been very impressed by the ETFs relative to to basically everything else like if these flows increase like I think that's annualized you know like 25 to 50 billion of inflows yep like we're talking about real money like let let's talk about the ETFs I'd love to get your guys take so these are the I don't know if you guys can see this from um this is Eric balonus but you can actually see flows split out by the newborn 9 which is what he's been calling these these new ETFs so you know the total net inflows it looks like um is 1.2 billion

it looks like now um xgb TC it would be three billion I they've also Ted both Eric and James have talked quite a bit about the volume like the total volume now is over 11 billion traded which is like a stupendous amount there were analysts before these all launched that were predicting $10 billion doll worth of trading volume in the first year so you know truly like a really record-breaking I mean that was like a very pretty bearish um estimate I would guess but and then I guess you've got probably like many predicted you've got uh black rock that IIT in the lead um over a billion dollars worth of Assets Now so congratulations to Black Rock not a huge surprise there then you've got Fidelity in a close second at

882 and uh bitwise um in third place at 373 million so yeah what do you guys what's your guys take on the performance in sort of week one of the very positive um I think it's no surprise that you see ey shares Fidelity at the top just think about their respective uh sales forces and what they're able to do from a marketing perspect perspective and just like how much access they have um phenomenal to see bitwise in third place and I think that that you know hats off to them they've been charging up the hill for how many years since 2017 and um the recognition I think in this in this respect is like pretty incredible to

have like Fidelity or Black Rock Fidelity and then bitwise as the top three ETFs the thing that kind of boggles my mind is okay let's look at grayscale in terms of net flows per day and then let's look at it volume per day and just keep in mind you know probably going to mess this up but I think bitwise is at 20 basis points or 24 basis points uh Fidelity and black rock are in the like 25 to 30 range and they've got like kickers where there's a certain you know amount of time and assets where there is no fees anyways um all of that's to say grayscale is at 150 basis points and if you have net outflows of 450 but your volume is 1,400

give take on day four that means that people are still buying this which in my mind makes no sense um you know if you're if you're a net new buyer why would you be buying grayscale gbtc right now I I would have imagine like Grays scale is basically playing the game of sure we expect billions to flow out but we expect you know the mass majority of the 28 billion or 29 billion that we had to stay in and we're only reducing our fees 25% down to 150 bips so that we can continue to like make payments on the debt that we owe and maybe we'll have more products eventually but people are going to just kind of be stuck in gbtc and like that's the business game that we're playing but it seems to me like there are new people coming into gbtc I

like I don't know if you guys have a different read but that kind of bogles my mind I mean imagine what this looks like without gbtc net outflows yeah it's crazy for for sure yeah we can yes we can imagine what that would look like and eventually the gbt outflows will stop I I think it'll probably be you know a period of time like weeks to maybe months for it to continue to kind of bleed out and then it'll you know ASM toote towards some number which we'll see but I I just mean like you know imagine what it would look like if gbtc inflows were coming in black rock or Fidelity because there are there must be inflows if there's this much

volume so uh just a couple quick responses there one to just underscore the point about bitwise for folks who don't know one thing that might not even be apparent obviously bitwise is Crypton native they've been working on this for a long time they just have such a great team like they they really are this is like an example of like the good guys winning so shout out to bit wise um but the the other point and uh Michael just in response to why uh gray scale might be doing this just listening to Eric and James volume I mean the amount they they were coming in with such a stupendous Head Start like if you look at GLD which is the primary ETF for gold that's not an inexpensive product there are many better uh ETF products for gold like IOU but once you have that Head Start in AUM

and once volume starts to concentrate around an asset like institutions the primary decision maker for them is going to be liquidity so that's probably what they're banking on here to so yeah totally understand and you know it's not just direct inflows and outflows that create volume it could be existing holders who want to put that up you know as collateral for something you know other people on the other side take that collateral and trade with it so like I I completely understand that volume can come from other sources but there is like a multiple difference in terms of like a basically a 5x difference in terms of you know where these fees are relative to you know the other major players um so it it I I don't know it it it still bottles my

mind that they're that high of fees I agree yeah it's in ironically actually it's so probably you could trace that uh why that is to the to the sec's handling of this right because that's why gbtc was so successful because they didn't allow an ETF and they kind of gave grce scale this Head Start so just another thing to thank G and the you know the whole cash create versus in kind create um yeah there there's going to be a lot of stuff that I mean that's the other thing too was like so uh I can't remember I don't think we've talked about this but um pro shares has come out with uh and and I know oh I think it

was Van act or maybe even somebody Black Rock for Fidelity maybe came out with like a covered call strategy ECF for Bitcoin now I mean we're going to get like inverse strategies we're going to get leopard strategies we're going to get uh in a few months it sounds like you know there's potential that uh the 194 BS for option on you know these ETFs um will will go live which means you can write options in you know traditional financial markets on basically Bitcoin um so I I think the diversity of product is about to explode um and this isn't even counting you know other assets other than BTC and and you know we'll see where that lands too but um yeah I mean there there's going to be a lot of

things that come out and go live in the next six months hey everyone want to a quick shout out to the Wormhole Foundation if you're a bell curve listener you know that transferring across chains can be a massive pain I certainly do I complain about it on this program all the time that's why we are super pumped to have partnered with the Wormhole Foundation the stewards of the Wormhole protocol the Wormhole protocol connects over 30 blockchains and six different run times including salana soie ethereum layer twos and more and the coolest part about this particular partnership is that they have made custom bell curve nfts which you can get and mint for free you can claim that by just going down into the show notes and clicking on the link all right guys on with the show what do you guys think about I mean it's been interest like

we've been talking about Larry Frink obviously as soon as the ey share is filing for the spot ETF became public he's been talking more positively about crypto post um you know conflict in the Middle East he called Bitcoin or he called crypto a flight to safety asset or something like that but recently he's been really on the war path of about two things which is the EF so he's very very positive about an EF um and he's very posit he loves this idea of tokenization um and actually the direct quote which sort of made me laugh was uh tokenization cures solves all corruption it's like gave that firsthand that is not the

case in the industry yeah me either but you know what do you think is the and I mean even just like this sounds silly but like if you look at the Vanek Twitter account or the Franklin Templeton Twitter account about like they've got laser eyes on the Twitter account they've like given the these were things that they they seem small and stupid but to me it just says this is a gradual attempt from trafi to be more accepting and like lean into crypto um I don't know it doesn't seem like a small thing that a financial institution like that like multiple trillions of dollars in a would just allow laser eyes and the intern take control of the Twitter account but do you guys think

this that this cycle I mean do you think this means anything like is this materially going to change you know what types of Institutions are involved in this cycle or is it just kind of like yeah he's doing the tour and you know they're gonna say stuff like this I I think it's honestly it depends on who wins the uh the Bitcoin ETF race or the other ETFs as well I I think right now it's like the starting gun has has been fired you've got you know Black Rock and Fidelity obviously Off to the Races gbtc competing bitwise competing you know even uh Franklin Templeton you know $1.5 trillion AUM they're still competing I I think eventually and you know Eric and

James have talked about this a lot of people ultimately drop out if the Bitcoin if their ecfs aren't profitable or it's very clear that there are certain winners I don't think you know people like Larry think are going to step out and make these types of claims mostly because if you think about Larry F's track record and we've talked about this before but he has a pretty dark stain of of ESG on his record over the last 10 years and I mean that's falling apart you know and has been falling apart for the last few years um I think that he needs to try to find a new narrative and a new chapter that he's going to push forward it could be tokenization but the like or the uh the Franklin Templeton laser eyes I think

it's just like a at least for the time being a marketing Gambit yeah yeah I I much prefer the Black Rock commercial you know hair neat guy in a suit soft jazz playing in the background he's explaining why Bitcoin is the digital gold that everyone's been looking it's like these products are not bought they're sold and black rock Salesforce and all of the commercials that they're doing I think are hugely positive for the space and like you know we have something for right now you know buy the Bitcoin ETF buy the eth ETF blah blah blah but like there needs to be like a forward-looking what do this become in several years and that's like the tokenization pitch it's

kind of like you know chat gbt is the app for now for people to try and then in the future we're going to be replacing jobs and creating robots like you need something for now and then you need to pitch the long-term vision and and Larry Fink is is dialed in and to Michael's Point like if the political winds are blowing in a different direction and you're the ESG guy that's G to be tough so you know he's a he's a Savvy operator and he's starting to calibrate like um maybe I should reposition this a little bit yeah I've that commercial we can link it in the show notes it's a really good it's like totally different way to Market Bitcoin to a completely different audience and the way I describe it is it's Boomer

juice it it reminds me of all the other ETF commercials I seen like vague safe you kind of know what's going on seems like a nice guy like that that goes so far like I love Franklin Templeton but I don't think the laser eyes are bringing in any new people no it's not I that's what I think is you're pandering yeah it's kind but it's I mean think about the how bureaucratic an institution like Franklin Templeton is to allow that to happen the level of buying that you need and what it tells what it sort of tells me also is like they see a different customer than than uh Black Rock I mean you could infer

that right that's a leap but the the I I will say Jenny Johnson who's the CEO of Franklin tumbleton has come out you know been on stage talking about tokenization talking about how's the future of Finance like institutionally I think Franklin is ahead of the curve in terms of where most financial institutions are are currently looking at the landscape right now I and I know like they've got a crypto Venture arm um we've talked to they're they're very much in the weeds investing in things building things um so not to say that they're not doing anything they definitely are but just the laser eyes to you know to the point it's not like they're bringing in a bunch of new people who are going to buy atfs with laser eyes that's just pandering to the existing audience

you're right I totally agree um all right I want to actually move on to a you know while we've all been very focused on the ETFs and uh markets and stuff like that these last couple weeks there's actually been some pretty sizable movement on the regulatory front and there's like a more immediate case to dial into that's relevant for crypto which is coinbase versus the SEC but actually there's a a much larger extremely important administrative Doctrine uh the Chevron Doctrine which is talking about getting overturned so do we actually start at the Chevron Doctrine level because I think that's going to inform more of the the microcosm of the SEC versus coinbase so um can you guys just kind of give like

an overview of what this Doctrine is and why it's so critical yep uh so Chevron was a case I think from 1984 uh that went to the Supreme Court and is pretty innocuous case that was decided um basically in in favor of the nrdc which is National resource uh defense fund and or defense Coalition I can't remember what the last word is I think it's Council but Council yeah um basically the Chevron Doctrine as it became known afterwards and also I'm not you know a lawyer nor do I you know know very much about this other than what we have read about this Doctrine um but the

doctrine basically says um when there's ambiguity in how the laws are to be uh interpreted the ambiguity is up to the administrators who are in charge of enforcing that law and so this is the executive branch you could think of um the nrdc as looking at um natural resource uh regulations and you know obviously Chevron OB comes up against a number of those things uh in their creation of uh you know oil and gas products but the idea is if there's ambiguity it's kind of like tie goes to the administrator uh in terms of how to look at you know these different rules and regulations um

and in the case of uh overturning it there are a couple of cases actually that are kind of coalescing around whether or not that that is fair or whether or not that is um in the eyes of the of the defense an overreach of the executive branch to have more Powers than the Constitution originally you know sought to give um and overturning the Chevron Doctrine would be something that probably looks to have a court adjudicate whether or not you know these different ambiguities in terms of how rules and laws are are interpreted and and then enforced um have a court system decide you know the interpretation of them as that relates um coincidentally

yesterday there were um oral Arguments for a motion to dismiss the SEC coinbase uh lawsuit which was you know filed last summer um the the basis of the argument is um an interpretation of what is a security using the hoe test and there are a number of other nuances in that case and I I listened to a fair portion of it um and basically it's you know there's the four pron of the Hoy test and um each side is coming to the court and saying there is ambiguity here we're talking about a a 1930s law to regulate 2010s and 2020s Technology um we need clarity

um and so on the same day that scotus is hearing oral Arguments for the Chevron Doctrine um we also have in New York you know coinbase SEC uh initial oral Arguments for the first proceeding of that case and you can imagine if the SEC if Chevron Doctrine were to be overturned institutions uh potentially like the SEC would have to go would have the ability to be asked questions in court whether or not you know the ambiguity as it relates to previous laws or rules and regulations should be interpreted one way or another um and so that's that's kind of why this is important and obviously applies not to just the SEC but any sort of

administrative uh agency within the executive branch um as it relates to ambiguity within laws and you know not every single law especially something that was written decades ago uh can be directly applied to something that exists today especially with the speed of technology and so the argument against it is how can we possibly have Clarity and why should we go to the court system every time there's ambiguity for something like how we should regulate AI like obviously Congress isn't moving as fast as technology is for that so there there are arguments to both sides but given you know the 63 nature of of scotus right now it seems like Chevron um and the doctrine uh that it that it represents is is potentially going to be held in

question yeah and in the the chevron case like just to underscore again not a crypto story at all but you know if you if you even just look up the Chevron Doctrine on Wikipedia you know it's cited as one of the most important decisions in US administrative law it's been cited on thousands of cases since its issuance in yeah 1984 was the year and it's it's really incredible to hear like you can look at um if you just Google what's been going on like some of the quotes from from this judge uh who's Katherine pulk uh Fila is you know her name that that that's for coinbase SEC not Che coinbase SEC yeah um but like she what she's reiterating is stuff that you've heard from crypto people for a

really long time basically saying you know I'm concerned that what you're asking for is far too broad H you know basically under you know there's we're just all like the exact quote here is we're all just afraid that you have so few limitations at noting under this logic that collectibles or Commodities could be regulated as Securities yeah the biggest s that came out of yesterday was a mutual agreement that to tokens as themselves are not Securities it is the only it is only the format in which they are sold that is held in question as to whether or not those are investment contracts which is a huge recognition I mean that that's basically what was decided in you know the Ripple summary judgment as well which is that there are ways in which you can sell something

that is an investment contract like if it's a private transaction but if it's happening on secondary markets which is the argument of coinbase those are not considered investment contract trans actions and therefore it's not the sale of Securities um so and that was a mutual agreement with both the SEC and coinbase so some of the philosophical underpinning of of like the arguments to overturn Chevron is that uh it makes Congress lazy and it makes The Regulators lazy so like Congress passes a somewhat ambiguous statute to regulate Securities you know doesn't doesn't speak to any of the Nuance points that Michael mention mention you know is a token Security in which circumstance and then they hand it off to the regulators

and The Regulators have the Chevron Doctrine which allows them to interpret it broadly and so one thing that's interesting about Regulatory Agencies is a lot of them have what they're called administrative courts these are not real courts these are owned and administered courts by the SEC where you know if you can find if there's a civil judgment you know you go to SEC court and and guess what like most of the time you're guilty um because it's run by the SEC but you know the whole thing about coinbase taking the SEC to actual court is like the SEC then needs to go in front of a judge and make the arguments and prove why it's a security or non-security or whatever and obviously a lot of the liberal arguments on this are like you know throwing out this statute would

would throw everything into chaos and it would force every judge to effectively be a policy maker and like imagine you know the uh the district courts in Texas with the unregistered security question probably a lot more favorable than the district courts in like New York City and so like there's also this weird Geographic element to it and and I I do think like if you like really kind of zoom zoom out and think about like where we are in history um I I think that the Jimmy Carter Reagan uh part of history is like pretty relevant here um Jimmy Carter really high inflation really unpopular president pretty old you know pretty unpopular then you have Reagan

come in and you have this you know massive deregulatory boom he basically deregulates everything and you know his famous line from his campaign is like the most dangerous uh sentence that you can ever say is that I'm from the government and I'm here to help and then like you know it like he obviously went he he he actually predated the Chevron Doctrine and so he went kind of Regulation by regulation and cut them he did it pretty quickly this is like if this happens this terraforms a lot of the existing like uh the Food and Drug Administration the FTC the SEC like all of The Regulators that you've ever heard of like this kind of hits them like peanut butter spread it's just like they all

now need to go to court all the time so I think like there's pretty decent parallels here to to what's happened historically and I think you're going to see a lot of growth as a result you're probably also going to see a lot of people take advantage of this and that'll be negative um and depending where you fall in the political Spectrum it's like that's either a huge problem or a huge opportunity I mean the the one kind of argument that they have against this is growth potentially with with you know deregulation the one argument against this is that it actually styes growth because what it does is it puts everything on pause until you can adjudicate this in court I mean and look at how long Ripple took to to play out which is you know two years two and a

half years uh coinbase started in July we are now hearing you know the first oral arguments and a motion to dismiss and it's expected that that decision will happen sometime in June like it'll take years for coinbase to work itself out so you know if we overburden the court system it's also not going to be the best and fastest procedure of making things happen um and so like all I'm saying is that there are arguments on both sides I think um but I I do think you know ultimately the perspective of you know having the tie not go to the executive Branch um is kind of the most important one you have to have a fair you know process for judica things that are

ambiguous it is interesting to think about like if you wanted to get GDP growth to 50% next year what would you do you know you you'd allow fracking in the backyards of every you know home in Oklahoma you know you'd like do all this stuff that like is like kind of arguably like cancerous growth that's caused by deregulation and then there's like a sweet spot where it's like just deregulated enough and the courts are like just slow enough where like you're able to kind of like shoot the or thread the needle um I think this is all against the backdrop of like if you see a different Administration in the White House like a republican one like all of these agencies are also going to be much smaller the courts are going to be slower the agencies are going to be smaller there's going to be less

resources to try things and so like I'm in favor of the Chevron Doctrine being like overturned or like changed but like I'm definitely not in favor of like the uh the free-for-all that also seems like a negative I agree with that not not a legal expert and haven't fully thought through all the implications of it yet but you know speaking purely from someone who works in crypto there there are obviously downsides to you know removing the Chevron Doctrine but it's been pretty bad if you've been subject to the SEC and you know if you believe that crypto is the next big I don't want to use the word Paradigm but Computing platform or or money or technology platform or whatever whatever you want

to use the SEC has been doing its absolute best job to push that out of the US for a pretty long time now and you guys know it from the perspective of funding new entrepreneurs like you can see the activity actually meaningfully moving out of the United States so I don't know I mean it's hard to root against some form of change because it's been it's been pretty tough It's Made it harder for us to operate our business like a lot harder um so yeah I'd be in favor of this for sure unfortunately there's no middle ground it seems in America it's either like we're regulating this thing out of existence or like we're taking the gloves off and and we're just going to go bare knuckle speculating um I think that's also what makes America great it's like it pivots

extraordinarily hard from from Administration to Administration it'd be nice if there was a little bit more consistency you know what else is nice about America is is good governance like checks and balances like this is this was a designing principle of the US is having different branches of the government that balance each other out and have a different set of incentives and it's kind of e theum esque actually it like moves very slowly it's supposed to be neutral and flat and that's been a really good strategy for the most part and I feel like if anything this is the US returning to its roots a little bit care what you wish for that's a good point um all right Michael I know you you've got a hop here

but um y uh maybe Vance we can stay on and just cover the ethereum foundation all right see BU so they do these Reddit amas which is actually pretty cool and you know you've got very senior people you know the Don crads and Justin draks and actually balik himself chiming in to just answer questions from the community which I thought was super cool and what it gives you if you're a reader of this and actually I'll link it there's a guy named um wolf gong who uh at Bitcoin s who did a really nice like 30 minute overview of it um so if you don't want to actually read through all the comments yourself uh but basically you get to see what people that are high ranking at the ethereum foundation are thinking this doesn't mean it's 100% going to make it into ethereum's road

map but I'm just like curious to see what they're thinking about so um one of the one of the things that donrad said is you know the There's an actual quote about it but he's very focused on uh scaling data availability um and they talk they get in the Weeds on what 4844 actually means um but I thought this was an interesting way to to sum up his thoughts which was extending ethereum's data capacity is definitely the most critical thing on our mind in 2024 and probably 2025 as well so that that's kind of interesting because it's taken in conjunction with vitalic being broadly supportive of an increase in the gas limit on main chain so Vince I'd be curious like what you think about is

that like the right Focus from from your perspective were you surprised are you kind of in the camp that you know ethereum gas just keep gas where it is it doesn't matter people pay fees on the main chain or you like hey this is low hanging fruit and we should maybe make fees cheaper if we could I mean I'm in favor of more experimentation and like eth transactions just hit uh all-time highs like gas is constantly super expensive like all of the people who said that fees were going to never return to their previous levels have basically been wrong and now I think it's about just you know thinking about what what the future looks like specifically for ethal one it feels like the eal 2 road map you know with L2 contributing 20 to 25% of all gas transactions like that's pretty

solid with 4844 um and we know a ton of rollups that are just waiting for 4844 to launch so like I think the cost roll goes from like a couple million bucks per year for the de developer operating team to like a couple 100,000 and you probably see 10x more of them um and with that in mind like scaling da um is smart I think like I would make the argument that you know the most important market for eth to go after is is money and I know a lot of people probably disagree with like the eths money meme but it is like AR inarguably the biggest Market that you can go after and so like if you're trying to bootstrap the moneyness of an asset it's actually helpful to have fees be more expensive for yields to be

higher for people to want to stake for people to want to borrow against the collateral asset like if if your asset of your blockchain is just like you know cheap there's no fees it's all inflation people don't really want to use it like it's it's hard to bootstrap that moneyness and so I think eel1 has arguably done that very well and now it's about kind of a spreading the asset across all these l2s that are creating Supply syns and B you know figuring out how to either recatalog whether it's dank sharding um

which you know is going to come in the next 18 months or 24 months like we're already at a point where block space is is basically free if if you really want it um and so I think it's frankly like a good idea to keep experimenting raising gas limit is probably like what I'm most in favor in of uh but like scaling da is also you know interesting but like it's good to see the E Foundation responding and they don't respond on Twitter and they don't like talk other projects they just ship stuff um and that's kind of how they roll the EF the EF in my opinion is phenomenal like I just think in terms of what they've done stewarding the protocol the quality of people that are in that organization

is incredibly high and I agree they never stoop down to any crappy level or anything like that so and they're just really really you know brilliant people that work there um I I agree with you on the the money thing I this is where I would disagree with what I think think is the consensus way of thinking about it within the ethereum foundation though which is I'm not a huge fan of the ultrasound money um and the reason I'm not a fan of the ultrasound money is ay it's actually that idea of like hard money is not even that popular within trafi circles like there's this really great quote from Jack Bogle Eric balunis retweeted it this week he's getting a lot of air time on the show you know but this is the jack Bogle quote Commodities are a real losers game uh in the long

run they have no internal rate of return you buy a commodity gold is a good example you're betting you can sell it to somebody for more than you paid for it I don't have an intelligent comment about that it's absolute rank speculation so you know Commodities people people that trade gold and believe in Gold would there are lots of really good fundamentals first principles arguments against that but it's such a pervasive way of how people think about intrinsic value that you can model a stream of return be that a cash flow yeah cash flows for a company a dividend or a payment from fixed income this is why I I just really like the yield narrative for for eth and what I think the EF people would argue correctly is that that's a little bit of a meme it's just you're trading value

between stakers and holders and what the EF Foundation would want to do is favor the holders right it's basically you know if you're paying less issuance to the stakers you're you're implicitly favoring the holders and the returns that would have gone to stakers go to Holders instead and it's more a more tax advantaged way almost of collecting that income I just I just think that the meme is important I think the meme of yield bearing money and the desire for people to to purchase that is so immense it's just a massive so I agree with you and the money is the opportunity for eth but my own personal opinion on this would be to lean into the to the yield narrative and and I think that means leaning into the gas limit increase which is like you know when vitalic passes something down

from on high like usually people get get the message pretty quick um and like the eth foundation does from what we've heard agree that like eth's money is the most compelling narrative and use case and so like stripping all the fees out of eth L1 they're not going to do it is my S um and like you think about all the things that eth has going for it and you know all all all the problems um you know that that they've solved and that they've yet to kind of um deal with like like an interesting thought experiment is um let's just say eth and salana switch places you know and salana got all the fees and eth got all the throughput who would be

in a stronger position I think salana would because you know it has it would have the moneyness of the eth ecosystem it would have the apps it would have all the defi it have all the tvl it's a lot harder to scale and build real economics than it is to just like increase the throughput of your blockchain it's not a slight against salana it's just a it's just a point about the relative positioning and I would just say like no other blockchain has ever gotten to profitability on a on a per block basis where there's more demand for the block space and there is Supply and you think about a lot of these blockchains you know let's say something like soul is worth 50 or 60 billion and there's about 7% inflation you know that's three and a half billion to four billion of selling

per year like that's a lot and so you know like we were just talking about with unlocks you know that slowly grinds on you and like imagine what eth would be trading at if it was still proen work like who knows what eth BTC would be at might be negative you know like who who knows but like what eth has going for it is that eth is money it is lock there's you know 30 40 billion of it locked into def5 people want a stake that's the major narrative like whether it's me or steth or fra or like any of these other competitors like there's a vested interest in acquiring eth and like I posted this meme the earlier or you know the other day it's like what's the best part of about reaking you're going to

need eth for that and like you know like this is I'm I'm going to go off on a little tangent here but like if you think about a blockchain you think about a crypto asset like what is it actually is it it's consensus network is it like the TPS that it has is it like the virtual machine that runs on no yeah it's literally none of those things what a blockchain is is it's its native asset and what is its native asset well there's two components there's supply and demand there's how much of it is being inflated per year there's how much staking activity there is you know Supply sinks there's how much of it is locked into defi contracts and that people are willing to use as a collateral asset and then there's the

demand side you know like how much is used every day how much is you know bought every day how much is you know spent on gas fees and like these crypto networks are just their native assets and something like reaking will that make that a lot more clear where it's like yeah I got my eak on L1 but I'm also staking on a bridge and I'm also getting these Oracle tokens like it's money and that is the main thing that I think at some point in time why eth will actually flip Bitcoin is because it's actually us as money like the hard money meme of like you just lock it away I think that's good for some people but over the long term the assets that are used more as money will just have a more heavier Supply sync and will'll just trade a lot lighter yeah

all right let me run something by you and actually by the way if people want to explore that idea of like what a blockchain is there was a really interesting I want to shout out Chris go uh the founder at enoma wrote a really interesting piece on this on incent uh intense and in inent intent Centric topology of what blockchains might look like so his argument is actually a blockchain is four things there's the actual protocol itself there's a specific security Model A History um which includes the asset and then there's a community of people who identify as members and I actually I'm going to plug the next like narrative season of bell curve and say that's a big idea that is being explored is like what happens when you unbundle those things because I think it's a pretty

interesting idea to think about but here here's I have a question for you on the reaking Vance so one um and I would love to understand how I'm thinking incorrectly about this but my my sense is that there's a direction that eth could go down um which I don't know how actively it's being explored or whatever but that there would be some kind of staking cap or something like that there's a desire to limit the amount of um like the stake staking percentage of ethereum for me what that would do like if you play that out what that what ends up happening is people go further and further into reaking and right now what ethereum at least has control over is

its monetary policy it can adjust its issuance rate if it wants to um and it can regulate how people like there are all these proposals for things like two-tier staking it can sort of it's they're uh pushing like people they're pushing towards being able to regulate the sort of staking environment and its issuance policy but if you were to cap that or you were to severely limit that you push people out into reaking to seek that yield and then that puts enan layer in a position of control I think that's actually really bullish igen layer because then igen layer can depending on the parameters that it sets within its platform it can control you know how risk on or riskof the market is for you know um seeking yields so in a sense you I don't know when I think about when I

tried playing that out it's like you're I feel like that's kind of bullish for Igan layer let me let me let me stop you right there so so what's the bare case what's the opposite of your argument so your argument basically assumes that like this is kind of like a bearish reaking argument but like let's just play it out um reaking is powerful when there's a bunch of abss alternative validator services that want to give tokens to eth rest stakers to go off and you know bootstrap their ecosystem so like you know maybe an oracle provider maybe like a DA provider maybe like um you know a bridge first of all I've not seen any good pitches for abss yet

I'm I'm still waiting for for good pitches and like a lot of it is like if I'm a talented team that's built an amazing Bridge somewhat someone like socket like I got my own tokens and that's my value acru and that's what I want and I don't really want to give those away to other people um just for the honor of being considered like a restake service like Le let's let's just even go simpler Igan da let's assume that Igan da trades at you know whatever Celestia is at like 15 billion not even the igen layer token just like Igan da eth right now is you know what 300 350 billion you know and let's say that the first year inflation of that $15

billion token is 20% so they're going to give away you know three billion of tokens to you know what whatever like you know 120 billion of of Stak eth that's not that much yield that's like not even enough to move the needle and so like the position of control that Igan Lair would be in presupposes that like they have all these amazing ABS Services where the tokens are trading at high fdv and you know the unlocks never come I think there's like a there's like a more uh cogun argument where it's like there's going to be a lot of um like you're gonna have like the barbell you're gonna have a lot of people staking eth because it's like very consistent three and a half

4% and then you're going to have a lot of people farming like 200% apy or like you know it's very small number of people farming like 200% apy like crazy abs like almost like quasi like defi summer ponzu scheme not like Ponzi schemes but like they're just giving away a lot of tokens and like the unlocks are coming like it just doesn't feel like there's like in that middle of that curve like the thing that will give a lot of apy to a lot of people on the reaking layer okay this is a really good point so this was my question as well is what is the demand on the AVS side G to be and I still so we did an episode with shiram and Zaki about how uh a lot of Cosmos chains are exploring Igan layer

reaking as a as a method of security and do you should people should go and listen to the portion where Zaki describes from his perspective as a protocol founder the value proposition because it's like to to summarize basically he was like look here's the myth about recruiting a set of validators it's super easy like really really easy I can you know I could do that in one day and he's like has a reputation in a network but like even for a relatively new founder within Cosmos super easy to get a network of validators what's really hard is to to get a network of validators that will continue to stake with you over bare and bull cycles and so what you end up having to do is like way overpay for he's like I did all these schemes like I

thought about all this stuff where I like how to get these people to basically lock up their Capital with me instead of doing something else so I would frame reaking as lowering the opportunity cost of capital on staking an alternative protocols so instead of being like I can either stake on eth or I can stake in sellier it's like I can lock up my stake in eth and then opt into additional incremental yield in all of these protocols and like look like why wouldn't I keep doing that in a bare Market it's like okay I've still got my e stake here but why would I take this thing out and that was the value proposition from his standpoint but but I agree with you that is the big question and then the other question is is there an adverse selection when it

comes to Shared security so this's a big problem for interchange Security in Cosmos because it's exactly what you said it's like if I'm a cream of the crop new application maybe socket or someone else I don't need it like I am actually really like the sexy nud protocol it's going to be no problem for me to convince like a network of like long-term validators to stake with me if I'm like a shitty product project and maybe I can't convince those people then I need to go to the hub in Cosmos or igen layer in reaking maybe there's an adverse selection problem that shared securities provid end up having adverse adverse selection is is is like I think they're they're they're related it's like adverse selection and then

scale um because like if you have the cream of the crop best projects who you know get E3 staked on them who knows maybe maybe their market cap is you know altogether hundred billion dollars and you're giving out 20 billion of incentives a year and like to the 150 billion of Stak eth that's like another 10% it's like holy like we're cooking with gas now but like you know if it's the other thing where it's like you know you add up all the cosmos ecosystem projects market cap and you're looking at like five billion and they're giving away 10% uh you know and maybe maybe less you know in a year it's like you know you got 500 million of incentives going to 150 billion of you know Stak deth doesn't move the needle and so like I

think what you're going to have is you're going to have like the the vanilla eat stakers that are like you know maybe you know putting it in oven to boost the yield another 1% because like the lending apy actually scales and then you're going to have like the crazy DG's farming 300% maybe adverse selected projects um and I think that will be healthy because like that's kind of what happens on crypto Twitter anyways it's like oh yeah you're making 5% I'm making 500% it's like oh that's bullish eth you know but like again you're going to need eth for that so I I think it's like very hard to game through like what happens here um but I think no matter what like

the assets that are used to restake and that can transcend their consensus layer and their TPS and their in my opinion this that like doesn't matter um I think those are going to be very bullish for those assets I I I actually to maybe sum up the way that I think about it I'm actually I think so bullish on reaking I think it's such an obvious value proposition actually that my my original concern was that it I actually BEC so successful that it co-ops a good amount of ethereum's control over its own monetary policy that was my I I don't know that's my and Shri said on the show that his eventual endgame for igen layer is to be enshrined within the protocol so maybe

that ends up being a non issue but um I mean the E foundation and those guys are like coordinated um and I think you're going to see I mean it just depends on how successful the initial launch is but like let's just I mean another thought experiment let's say let's say Celestia was trading at two billion instead of you know 15 or 20 if that was the biggest project that was going to be able to be restak that would be like bearish and so like a lot of it's like you know um chicken and egg but like if the market caps of the tokens that are to be farmed are high it makes it more likely to be successful

but you can also have like this moment where if if it's not a high market cap token it's not driving apy for a lot of people you know reaking could be like me you know it's just for like the degens it's like why institutions don't Farm you know tokens um because they're just like I don't want to get rugged it's not worth my time it's not scalable it's not repeatable um I'm not bearish on Igan layer I'm just like trying to paint the full picture of like what I think the math is totally um I've got another so just maybe in closing here I do think it'll be really interesting to see what happens in terms of liquid stake liquid staking penetration on Celestia so uh

stride has shout out to strride I think what is probably the most comprehensive proposal thus far it's live on the Celestia Forum we can link it in the show notes if anyone wants to take a look but the the stake rate like the overall adop of staking in ethereum and other proof of stake chains is really different and there're very different views on what the optimal amount should be in Cosmos and salana which were proof of stake from day one much higher um and in ethereum it's much lower it's like 80% around in Cosmos and salana but the penetration of liquid staking is extremely low so it's like I mean you know better than me on jeto but I think it's like 4% penetration for liquid staking within salana and it's roughly

the same in Cosmos but it's extremely high in ethereum and one of the the relics for why that is is like the user exper because there was such a long period of the merge where you could stake but there was a lockup it was kind of this weird one-off event which the ux of being able to trade in and out of your stake was very very compelling so there was really high adoption of things like Lio it'll be really interesting to see Celestia um and and whether or not liquid stake ends up Liquid staking ends up getting really adopted or where that sort of percentage overall shakes out because maybe the reality is just that um you know there's a couple reasons to liquid stake and what assets are attractive to be liquid staked but

maybe the desire maybe a lot for enough people it's just good enough to like set it and forget it and stake can get your yield maybe the market for people that want to take that liquid stake and like Loop it in some kind of borrow lend protocol and lever it up is like not that high like I don't do that and it's not because of the risk like I'll buy mem coins and nfds and I have no problem doing any of that but that's easy I can just click it but to me for me I got to go do this active thing where I like Loop it in a protocol like I'm not doing that that's not that hard bro come on what dude I just don't I won't but like maybe I'm a good maybe I'm mid curving the out of this but like for me it feels like something

active I don't understand leverage I think you're mid curving this like had an open maker Vault for probably like the past six years um and it's like just dead simple you Loop it and you just sit there and like your liquidation price is pretty low and like you know do you want to buy a meme coin or do I want to have like two or three x leverne this is like my personal account like you know it's like pretty clear like the meme coin is going to go to zero but like if I'm just sitting here for the next 10 years like I feel pretty good about having something that's looped and the thing that's like super important that's weird about salana and maybe you know other blockchains is like you have these like these like centralized validator companies um so people like figman or

like there's a lot of like salana specific ones and they'll they'll basically take the salana and they'll stake it and that doesn't do anything for the network it's just sitting in a centralized validation you know validator company and it's you know those assets are not liquid they're not moving around on the Chain they're not generating fees they're not bootstrapping D tvl they're not bootstrapping the moneyness of the asset they're not being traded for nfts they're just like locked away and so like that's just like I mean jto is breaking This and like that is I think one of the main reason that Sala is going to be very successful over time is a higher liquid staking rate um as price ramps and as like unlocks happen and as he centralized validator Services kind of like just figure out that they're not going to get as much Mev or they're not

going to be as competitive but like having liquid staking penetration rates be high I'm like bullish on most blockchains that are having high liquid staking um because it just speaks to like people are using the assets on chain and there's a culture of again bootstrapping the moneyness of these things and like most of these networks do not have enough fees to justify their fundamental value and so like you better have some sort of money that's associated with a token to carry your your valuation premium maybe that's like left curving or mid- curving or whatever but like I think that stuff is very important I don't think so uh I would object a lot of people will like the one thing I would maybe like we have an analytics product if you go to our

analytics product the first thing you'll see on eth is block based profitability like it's a it's an incredibly important metric I it's maybe it's a semantic argument but I don't love people being like hey this is the profit and I'm going to do a DCF on eth like I just I think that's relative I think that's a good way of looking at companies where you can the Assumption the reason why there's such a focus on cash flows because that can be reinvested like I just view eth as a commodity I think most of these things are as Commodities and and uh my lar long-term thesis is like a return to things that look more like commodity like money like if you look at the history of money H sometimes money is look more commodity like sometimes it's look more credit likee I think this is a return to more

commodity like money things Bitcoin eth and then um yeah we'll see like salana I think if it wants to go down that route they're gonna have to do their own like 1559 this year and they there will be decisions made um to prioritize uh Soul the asset or the network or whatever and Celestia is going to have to do the same thing so I don't know I'm just very interested to see how it all shakes out I could see it going a bunch of different directions um but my framework for a little while has been this is a digital commodity boom like a commodity boom like the 70s or 80s or the early 2000s yeah and that's what this is so yeah so I'm I mean dude I I I was just thinking about this week

this industry is so Dynamic so fast moving I don't see how you could work anywhere else at this point like tot I I mean it's so Dynamic it's so fast moving I think um an orthogonal point to that is like everyone is always focused on the things that are changing yeah and in my mind at least you know I opened a coinbase account in 2012 um a lot of things don't change a lot of things stay the same and like having an appreciation for that like here we are you know 11 years later we have a Bitcoin ETF like we have Larry fin Shilling the eth ETF like you know as much as things change things like stay the same to me um which is cool cuz like you have the ground always shifting

underneath you it's just annoying um but it's like nice balance of like things that are meant to be permanent and last forever and that are sustainable and like all these amazing new experiments it's great industry um we did a uh our annual kickoff this week and we walked through we did this at the beginning of January uh January 2020 of like the four stages of a bar market and we did it for a bull market as well and it's a lot of fun but it is like there was a macro guy that I was talking to who described like what retail Traders are like in a market which is basically like three-year-olds it's like when you show a three-year-old something like everything's for the first time it's like oh my God that's the best thing ever or like they're crying and like super upset and I don't

know if you've never been through one of these Cycles it is really fun but you definitely want to remind yourself to like keep a cool head and it's not always going to be great forever it's not always going to be shitty forever like you definitely want to but if you've never been through that before it takes you on an emotional roller coaster which is a good experience in and of itself it's also fun in a different way I gotta run all right buddy this later talk to you later hey everyone Mike here if you're a bell curve listener you know that transferring assets across chains can be a massive pain I certainly do I complain about it on this program all the time that is why we are incredibly excited to have teamed up with the Wormhole Foundation the stewards of the Wormhole protocol and the coolest part

about this particular partnership is that they have made custom bell curve nfts which you can get and Min for free click the link at the bottom of this episode take you get your free [Music] nft