Uniswap's Platform Play, Tether FUD & The PE Time Bomb | Roundup

Transcript

[Music] all right everyone welcome back to another Roundup of bell curve you got Michael's one and two bands and miles welcome guys thank you what's up miles is turning into a really solid rotation player here yeah I know I said I was six man but you know I'm kind of I'm working my way into the rotation here might be an upgrade here might be an upgrade yeah just vacation or what's good no blockworks had a charity Wiffle ball game today so pianos you know it's holding down the fort how come you didn't get the invite Mike bro I can't these old phones don't play Wiffle ball anymore

like a clipboard and like like a third Beach coats like smacking people on the ass they run by like we gotta call the bullpen this isn't working out who's more athletic you or Yano it's a low bar I cross both of them yeah yeah okay yeah and I would say Jana would say he is but um of course I think the record would disagree you're the bigger man oh yeah exactly I take the high road exactly um all right let's let's start we got a whole bunch of different things to talk about this week why don't we just jump right in here and talk about you just swap V4 so V4 is kind of the long-awaited upgrade or a new contract that's going to be deployed um and Hayden Hayden gave us a preview of it this week the caveat is that you

know in past times when there's been a new version of uniswap launch uh sort of there's a preview but then at that point the code base is already out there and it's been audited and they sort of finalized Hayden was very careful to say this is you know a very preliminary version we want to be able to take on feedback from the community um and it's going to be a little while before V4 V4 actually gets deployed but there were basically a whole bunch of new uh features that V4 introduced um the main one that sort of got a lot of attention is the introduction of hooks hooks are sort of these uh customizable contracts that enable highly customizable pools and new functionality so a list of things that are now possible with hooks Dynamic fees limit orders t-wap orders Mev internalization uh all sorts of different things uh

pools are moving away we're moving away from the factory model on B3 to a Singleton contract so basically all these pools are going to be on one large contract and that's going to save on gas costs especially for I think the deployment of New Pools Hayden said it could be as much as 99 that you know some enormous amount cheaper um and that's I mean that's largely it I mean I'd be very curious like what do you guys think broadly about before I I can jump in here um I guess my my takeaways I had a couple of big ones um so first I think on just the framing of this upgrade and how it differs from the other ones um that you mentioned I think you know uniswap has done a really

good job over its entire lifetime of aligning itself the lining its brand with that of ethereum um so when people think of ethereum they also think of uniswap um one thing ethereum does obviously is is you know they build in public they've put out ideas on a forum there's a period of discussion um and then the upgrade happens and of course it's not you know token weighted voting to make that upgrade happen um it's you know social consensus I think that's kind of the direction or at least the the sort of message that unit wants to put out with this um in terms of you know building in public and not just flipping the switch so I guess that's number one um number two is just the capabilities

that hooks enable um you know I think this may the decks you know in general way more programmable um and a lot of the things that we've seen you know and and I've been close to in Cosmos is because you know the you can build a lot of these capabilities into the chain so something to say you know logic after every swap that you know is um potentially for like Mev purposes or or checking an oracle um and I think you know they're they found ways to build this into the smart contract level um which is really uh really smart and I think the last takeaway I had is just the general strategy um you know it's been you know swap has

been kind of in between both a user-facing trading tool and sort of a platform for other apps to build upon um and I think this takes them you know one step closer in that that ladder Direction uh the way that you know balancer has always tried to frame itself right it wants a network of independent dependence building on top and I think you know the goal of this is so that the next you know team that comes along thinking that they can build a better decks uh you know instead of starting from scratch and building a competitor they'll just take the ideas and the tooling that's been you know put out there by uniswap tap into the liquidity tap into the existing brand and user base

um and hopefully you know if if unit swap is successful in their eyes they'll have you know all these would-be competitors now building on top of the uniswap protocol um and so I you know I think that's it's a really strong strategy they can retain you know flexibility to build user-facing tools with the wallet and the mobile app um and kind of let the protocol be a little bit more you know I would say unbiased um or a little bit more open for development um so yeah I actually I like it I think we were talking about it a little bit earlier like I don't see this as a move towards a uni chain but you know you could take a version of uniswap and you know build all these hooks you know

fancy bells and whistles in and then launch a uni chain but I think this kind of allows them to get a lot of those benefits without having to make such a dramatic move um and really it helps them accelerate development because all these other teams you know you kind of Outsource it to the market to really experiment with these things can you explain what a hook is yeah I think a hook is basically after every single transaction you have some sort of if then logic um and so you know with with or osmosis uses hooks for you know a tool that or a module that helps it internalize MVP and this hook basically after every single Swap checks for possible Arbitrage uh opportunities that were created by it so

which you know potential imbalances in the pool and then at the end of the block on osmosis it says okay we checked for arbs after every single Swap here's the one that we think is you know most profitable we're going to flash mint you know ourselves osmo capture the ARB and then pay pay back the flashlight um and so you could do something like that with using hooks on ethereum um or with uniswap but that's the general ideas you're basically building a way to add logic you know after every swap or in between you know a block one one way of at least I kind of read through it and thought about it was in in the nice case a limit order is

probably a good example of how a hook would work some price on some amm gets below some threshold or above some threshold and there's some trigger with a hook that says okay sell or buy that asset or swap that asset um in the bad case it enables an entire attack Vector that doesn't exist in uniswap currently and I generally agree with you know everything you said miles and I think that this is a great step forward I agree it's also moving more in the direction of the ethereum open source development process which is really positive development for a protocol in my opinion I do think that historically what we've seen with uniswap is it's really simple to use it's an amm it's a constant function you

know what the price is going to be and you swap and that's V1 V2 V3 added a pretty significant amount of complexity more so on the liquidity provider side it added a lot of user uh benefits with different price points different different functions um there was just a net benefit to users I would say at frankly kind of a cost of LPS because it it didn't make it you know as easy to LP as it was on the first couple of versions um and I see this as a further level of complexity that is added to an otherwise thought of very simple protocol and very easy to use interface that

if used in a malicious way and and frankly for unknown users could be Troublesome could be you know potentially disastrous if you know hosts are like I definitely agree that you can have sort of an MAV bot that stands for opportunities and kind of arbs them away it could also be the opposite where it's a malicious uh mov uh attacker um using hooks where you've got these different vaults of uh with different hooks in them um I'm just kind of thinking here out loud but you know it will be very hard to distinguish between for an end user what is just like a normal pool without any real complications versus something that could have a bunch of hooks in there that you just don't even know

about and get steamrolled or run over without really inspecting the code or inspecting what's happening behind the scenes like it's going to be interesting to see what the user experience looks like from a user perspective to see how they want to transact in what pools um because I think that that's gonna be a pretty huge Divergence from just what most people think of uniswap today will the meme coin still launch on V2 probably probably that's that's another sort of interesting so I want to dive in Michael to what you just said there as well but you know in hearing Hayden talk about this I thought one thing that he emphasized that at least I found interesting and you can see it in the construction of the Singleton contract is there's a lot of focus from the

uniswap team in terms of gas optimization and that's definitely well and good but what it implies to me is that unit swap for at least the foreseeable future sees the majority of trading happening on eth main chain and you know a lot of the narrative that you hear is that a lot of activity is going to move up to Layer Two so there's a little bit of a Divergence there and maybe we could speculate do you agree with that that sort of observation and maybe we can speculate a little bit as to why that is I think it I think it will continue to exist on main chain um all the crypto native stuff the hottest money right now is eth that recently staked and is now lsts and we've talked about this before but like we're the most willing to try [ __ ] and

trade stuff and they're always going to be on eath mainnet like bridging that stuff doesn't really make sense functionally um honestly I've had a few conversations this week that a were like you know these are companies pitching us or just like talking to different institutional investors there's a lot of real world assets that are coming to East Main net that are like they're they're never gonna launch on polygon you know they're never gonna launch on the l2s like they don't care about the gas fees they want the you know nuclear grade security of ethyl one and like it really is like a pretty optimistic path forward for eth is just like these are the people who are willing to pay the highest gas fees and put the most sensitive assets on chain and

like at least that's what I think is like the hopeful future of ethereum is it does become this like settlement layer value layer um where all these real world assets come and just hang and just never leave so I do think that the you know the foreseeable future will will be Youth mainnet and on the kind of more nihilistic side of the house it's like Pepes and all of those things those are on youth mainnet for a reason and it's because there's you know 60 70 billion of coins on eth and until that changes I don't see trading moving anywhere I was gonna say I mean the the evidence is there you know these Layer Two Solutions have been out for at this point years or you know close to a year in in the same user experience and capabilities that

they have today generally but why haven't the assets moved over why haven't they bridged why hasn't there been major change or major shift in moving to l2s if it is that much less expensive and and people want to trade there you know it just hasn't happened yet so what's this address what would what would be the Catalyst to force that to move hour in invalidation this thesis would look like the first major meme coin launching on an L2 that would make me think differently um I would also say real world assets launching on a layer two like massive sizable assets launching on a layer two if you assume that you're going to have both of the assets originate from L1 I am I agree that there's a ton of assets that are real world in in

orientation that are coming online in the next couple of years where those originate from it's not you know something that has a security model that's not ethereum yeah I mean we've we've talked about this a little bit before but this concept of like premium block space and that being you know kind of a huge Tailwind for ethereum longer term uh I think I agree with you I I don't know I don't feel as strongly about where the meme coins launch but I do see I can see a future where minting new assets um you know that you that are high value right like rwas as we're talking about um you know never leaves ethyl one huge you know large large transfers of assets between institution never leaves L1 because it's willing to pay up for those

gas prices um but I can totally see you know let's see if base is super successful and ends up having as many daily active users as as you know ethereum L1 itself if I was I mean if I was launching a meme coin you know that's that's kind of where I would probably want to go I just followed the users um but you know Advanced to your point what is the Catalyst to get the users there um I'm of two minds on base like the first one is that you know it's coinbase branded it is connected to the coinbase wallet obviously you know they're gonna have users whatever other thought processes like once upon a time everyone was really bullish on coinbase nft or that nft Marketplace and you know like it really it kind of is like this

binary thing it's either gonna be users getting nothing um and What's the activation energy what is the Catalyst that drives people over to coinbase base um I'm not exactly sure honestly I couldn't come up with something I think it's users because we've talked so I my original sort of concern about base was that it might have the perception of something like a corporate chain which has been pretty negative in the history of crypto but I've done a little bit of poking around and just asked people like do you hear about people being excited about bass and maybe it's because the industry wants to Rally around coinbase right now for I think pretty good reasons but the other thing that coinbase has that's

very attractive is developers want to build things that people are going to use and that is one thing that coinbase really has they've got users and what I was going to say is users okay I didn't understand that perspective just anything that's real world asset that is going to come from a traditional financial institution needs to have the safeguards and and controls in place if you assume that that's out of the box function functionality for bass then it could just be the supply of assets that that maybe is the only place where they can mint these things that obviously is counter to what we're just talking about but I I could see that being a invalidation of the theory do you think it's maybe I'll just throw like an idea that I had out at least you guys can tell me that I'm wrong but I

think one of the reasons why some of the big D5 apps that sort of made their name on eath main chain haven't like really successfully deployed to some of the layer twos or haven't really tried to invest there is that they're not 100 confident yet in the security and there are a lot of big questions about like what does the you know sequencer set gonna look like and uh you know how solid are these things really and there's a question of if it's issued on eth main chain and then bridged or if it's natively issued on the layer two and what is protected from the fork Choice rule so I think if if it were me and I was putting myself in uniswap shoes you've got a Golden Goose you have you know an enormous amount of market share on the place where all the

liquidity and activity is even though you know it's the explicit scaling solution for eth to move users up to layer twos I probably wouldn't take that risk right now to be honest I mean they're on polygon now and polygons getting reords you know pretty much daily at this point like you know I don't think I don't think I couldn't hear that much it's it's small though it's a relatively small amount of volume that happens just a small reorg just uh just you know yeah yeah I I think I'm I I would probably take the under on base you know like if you build it will they actually come why why would they go there

um there's no liquid staking there's no big borrow land markets you have to bridge assets like it's an uphill battle I think one of the reasons why or like just to break down your arguments like you know is the chain itself secure enough like I think we have good evidence to suggest that like maybe that's not the most important thing to like a uni V3 deployment I think the other case of like you know what happens if there's like a bridge that rugs that's still like the through line of of most L2 Dynamics to me it's like we still have not come up with a canonical Bridge and those things are you know pretty sketchy like you know if you think about a bridge what they're doing is they're taking your assets in and they're minting you assets that kind of look or feel a little bit like them on the other

side it's uh it's yeah it's not exactly straightforward I was gonna say Mike out of the things you just listed I'd say the number one hold back that I've you know thought about or seen and felt myself is is lack of native minting once you have the ability to natively Mint assets on a chain and then it becomes a question of composability and what other available applications and functionality is available in that ecosystem liquidity is is one of those components but I do think that it really does come down to Native minting of assets where do those assets natively exist versus the bridge I think the bridge is probably the most crucial component and probably the most fearful for anybody who's who's needing to use a layer two just speaking speaking of like where

these assets are minted in real world assets like we saw a few pitches over the past few weeks that are like wildly ambitious versions of real world assets like not just like minting them on chain but like building out real economies and starting to like bootstrap really like ethereum as like the back end of like traditional Financial infrastructure rails and these pitches were not just like three dudes in a garage it was like you know you know very experienced you know high level former you know Bank employees backed by global institutions and the trading and finance world with like very coherent plans to like both put these assets on chain and then you know increase their circulation and volume and and really use it as a normal course of business practice and like we we get obviously like inspired by

defy and by games and like it just feels like we're really starting to see those like very ambitious True Believers that are like backed by like you guys just uh put out an article that Franklin Templeton is going to use a lot of Youth infrastructure to do these rolled assets I think like yeah it does feel like that's like the Panacea that's starting to present itself and I read a few tweets this week about like you know how 2023 is much worse than 2019 I just like could not disagree with that I could not disagree with that more either like absolutely I remember there was a point in 2019 where Michael and I were sitting at that uh that house we used to live in Culver City and we were sitting by the pool and we were trying to come up with a use case for crypto

we literally couldn't think of anything and I I was just like other than sports collectibles yeah other than sports club building at the time but it was just like you know is this ever gonna work or am I just wasting my time and people are like oh like the original values of crypto were like much more present in 2019 than they are in 2023 like that is entire the thing that I was reading in 2019 to like get me through the day was like Willie Woo's price predictions of like you know we're doing like on-chain ta yeah I was subscribe subscribe to that thumb attack that's what was getting me through like at least this bear market like there's real apps There's real like use cases There's real institutions that care about this stuff BlackRock just announced that they are filing for an ETF for Bitcoin like

I don't know like I just feel like the current generation is so soft I bet no no old generation has ever said that about the new generation I was about to say I'm pretty sure your dad told us the exact same thing in advance oh yeah I mean like when we started framework I was like Hey Dad I'm starting a crypto hedge fund he was like absolutely [ __ ] not you're going to business school dude all right at least you have to like chase your dreams it was like this industry is a scam did you see all of those icos what happened there Vance at least you had a fund in the title there for the first like two years of block works all we got to say was like yeah we like host some crypto meetups

that was a great idea like you went to that OG Chicago block Works conference yeah yeah coin alts yeah did I did I think I would see blockworks again I didn't know at that point I don't know a long way I forget about that I you know the thing that was painful in 2019 it was like is any of this stuff going to be real it just everything was very theoretical and you know when prices are tanking and everything's theoretical it's very hard to you know at least this stuff is like all right are the values right are we going to figure out a business model is the SEC going to outline Outlaw this stuff those are much better arguments than does this even make sense they're much less existential and they don't Jay

Clayton was like remember what Jay Clayton was like all of these are securities and everyone was like all right pack it up like we're just gonna do Bitcoin like remember when Jay got out and Gary got in and we were all like let's go because he had taught this MIT classes I was like we got one in who gets it guys I remember talking to one of our policy friends and we were we were super excited about that exact same transition their response was I don't know if that's necessarily a good thing true like um jokes on us I would say the other thing though just to add on to this it does feel like there's a lot of negative press and negative sentiment right now which feels like we're hitting

the crescendo at least in the last relative period of time right now like this week last week uh but to to your point Mike this doesn't feel existential it's not existential all we have to do now is really just like extend the time Horizon of our expectations of when this stuff is going to happen and you assume over maybe a longer period of time that things like the market structure Bill are going to come through that we're going to have an understanding of you know A playbook for how to do this stuff you know with a regulated perspective in the United States like all this stuff is going to happen it's just now maybe you're going to take a little bit longer but the direction and I I do think that we're all going to be on the right side of regulatory history here like this

stuff is going to happen and once that happens it's going to be game on and there's not going to be like a chance of being at the back of the pack once it happens to be like okay now it's time to jump forward and do this you kind of have to be in the seat right now to get the first shot when we're ready to go yeah yeah I was just gonna say like I mean I totally agree with all this and I can feel like that you know Enterprise blockchain and permissions you know blocked in uh the sentiment I wouldn't write that again um yeah I was I was having a conversation with a lot of a lot of you know traditional folks who are interested in crypto this week and and it does you know like just become clear to me at different points you know in

over the past few years that there's a lot of people that look at this as a way to have like an incremental you know efficiency Improvement basically improve the efficiency of settlement versus the people who are on the ground building who have you know the ideas of enabling permissionless access to financial markets creating new types of money right um and these are very very different objectives um and I think that I'm not really sure where we land uh between them but I think that it kind of like becomes more like it comes to a head every couple of years uh in the you know bariest your resolve gets tested every four years time Michelle time is a flat

circle this is I I found this in my inbox randomly uh this week but I this is the table of contents from a 2016 report about what Goldman thought blockchain would look like and this was the period of time whenever Goldman Sachs was talking about like blockchain not Bitcoin it was like a huge deal and my dad would like send it to me you know and be like maybe this isn't [ __ ] but you know it's accelerating the sharing economy with reputation management building a decentral distributed smart grid with blockchain reducing transaction costs in real estate Title Insurance Capital markets U.S cash equities repo leveraged loan trading AML and kyc I it's just a good reminder of like these very I feel like something that happens time and time

again during this period of time is you know when all these prices and all these new ideas some of them get sort of batted down you fall back on this like well what are we really doing here and then like this whole real world use case and putting stuff on chain sort of comes back into the Vogue and that will probably eventually work and you know to be honest maybe you guys got like a i it sounds like you're hearing some super interesting pitches about real world assets but it does just remind me of the type of stuff that people used to talk about during the last bear cycle as well for sure but like the good pitches are like you can see the like okay and you know like the the Goldman list that you just shared of like you know what blockchain is useful for I think that's

actually right but it's not just like you know we're gonna create this permission blockchain and we're gonna put these assets on there and then we're gonna crank up the snarks and then it's gonna be you know a hundred times better it's like no you need to get everyone to opt in and it happens gradually but like one person has the assets that they put on Shane you have another person who wants to buy them like historically the problem with tokenized Securities is like yeah you can tokenize a bunch of condos and Aspen but like does anybody actually give a [ __ ] like does anybody actually want to buy those like you need to kind of like get a lot of people and build you know it shouldn't be surprising but the network effects like around it and it feels like that is more so what's clearly Happening Now versus

before I was gonna say it might I think every single thing in that list will eventually happen it's just a question of when right you might be absolutely right I think the reason one of the um you know not to be snide but I've always thought one of the problems with real world assets is the people that control the real world assets are all old guys and like it's just very hard to get old guys to get excited about this stuff they don't have much like seriously put yourself in the shoes for a second of someone who's 65 year old they've run their entire career in tradfi it's just a much harder sort of sell and that's why to your point fancy it does take a while and kind of like what did they say about science science progresses one funeral at a time yeah I was just about to say that that's

a great quote yeah I'm with you on that smart people to think about this for enough time generally understand its value prop and a lot of it is also just generational like there was a a great survey put out by grayscale you know whatever you think of them about like the generational dynamics of who holds and likes crypto the math is on our side over time there's only going to be more of us in positions of power at these big Banks and you know it might take a while but it's happening well Francis Suarez is running for president he knows today I don't know if you guys how can we help yeah like who knows who knows stranger things have happened uh but just to book end this conversation on uni before because I want to move on to promethium

here that's going to be a fun conversation but the the general idea is yeah I forget who made this point but this is sort of a continuation of a trend that we've actually talked about a couple of times on the show now which is you know there's assuming a greater amount of complexity especially on the supply side of these dexes like unib3 was a big move in that direction and this seems to be even a continuation of that Trend and you see it in other decks architecture and construction as well blend actually explicitly spelled out that they were making that assumption and I guess we'll just have to see if that's the right move in the end um I suppose that the detriment is that you know it allows for much more a much more customizable sort of flexible product that pushes out experimentation

to the edges instead of in the core but you know the flip side is that it's not as it's not as easy for a retail user base to understand so I mean go ahead the the the closing thought that I have on this is is frankly that um they very clearly want to win the entire Dax market and the trading market and and they are also not going away like they're continuing to innovate continuing to build and they have they're not done yet and so I I you know frankly just like hats off to them to continuing to to pound work out and and get stuff done uh and we'll see to your point Mike it's experimental it's we're gonna see what happens and what people build with it but at least you know people are taking shots

agreed miles what do you think yeah I guess the last thought I have is like I think it's a little analogous to how you know ethereum uh ethereum and Roll-Ups basically you know before ethereum makes any decisions about an exact design that it wants to commit to um you know and let's basically a lot of teams experiment with different designs at the roll-up level um and and you can kind of see over time what works best and maybe there is no one thing that works best for everybody and so you want to have a lot of these different implementations um and you know if if they had implemented you know they could have basically said here are the

hooks we want that will make the best version of uni V4 and here you go um but instead they're putting out all these tools and I could be wrong but I believe you can now deploy you know new amm pools permissionlessly with these hooks um which basically takes all the decision power out of governance um and you know that that is to me like de-risking uh from a governance perspective it's making you know Rising governance which I think is always smart um and it's also going to accelerate the experimentation um the rate of experimentation because they're Outsourcing it to a market so yeah that's that's that's the one thing I would want to leave with is you know

it's very very similar to them I agree with that let's move on talk about promethium a little bit so Gotta Give I think the credit belongs here to investigative reporter uh Moonlight extraordinaire Matt Walsh of Castle Island here who sort of blew to top off this story brushed it crushed it on this yeah there was I saw he so he tweeted a little there was actually a Wall Street Journal op-ed that talked about promethium and I saw Matt sort of retweet it and then apparently he dug in and he put together what is a really bizarre frankly story and and series of facts so obviously the the kind of backstory here is and oh can you guys see my screen no

I'm not presenting I'll share it yep all right boom all right so I'm kind of walking along here um Matt's Matt's thread but the you know the back story to this obviously is that the SEC is bringing Enforcement cases on uh coinbase and Gemini and they're sort of giving the stiff arm to Robin Hood it's obviously not a great uh sort of environment and amidst this this sort of uh you know wave of enforcement actions promethium which is a relatively unheard of uh startup in crypto gets approval for its first of a Kind special purpose broker dealer uh license and this has obviously been a gigantic sticking point for coinbase this was the allegation against coinbase that they were operating in unregistered Securities broker so you know one of their their CEO the CEO gets kind of dragged up in

front of Congress and he testifies and Matt and actually one of the other congressmen Mike floods is as well sort of points out that these really sound a lot kind of like the Democratic you know like at secs sort of talking points and uh Matt sort of dug into the the business model of promethium um and finds that actually they are going to launch a Promethean chain in fact the business model doesn't make much sense unless there's a token and as we all know right despite what the SEC says uh public blockchain and token is not you can't really register that as business they're totally incompatible and it actually turns out that there was a pre-sale of a token to actually going to butcher the pronunciation of this

name Wang Wang Chang uh but there's it's a CCP affiliate so a CCP affiliate has basically purchased the pre-sale of this this token um it's just kind of this extremely bizarre there's so much to this like we definitely gotta link to this in the show notes or something because anybody listening who hasn't gone through this thread absolutely should yeah I mean it it goes I I like it starts with the back and forth with with um Congressman I believe flood um and the the tail VR of that is you've got on one end all of The Regulators saying come in and register these have to be traded as security is on ats's and on the flip side there are no ATS as

well suddenly after six years of promethium getting founded and and being worked on not delivering any product but you know suddenly now launching their brochure dealer license for special purpose BD gets turned on which means that ostensibly they're able to trade in such digital asset security tokens um that uh Regulators say are only available to be traded on uh platforms like promethium well as it turns out um there have been no digital asset security tokens designated to date there are unregistered according to you know recent filings assets that are digital assets that are said to be unregistered Securities those can't be traded on an ATS nor can things that are not

considered to be Securities uh and and therefore Commodities like Bitcoin and ostensibly ethereum so you're really at this interesting impasse where this is said to be the only place where these digital assets security tokens can trade but there are none to trade there there are none that exist with any real sort of volume maybe there's you know some Aspen condos that are tokenized that are you know available to trade as Vance was talking about but there are no existing real assets or with real volume assets that can't trade on this so it's this absolute Catch-22 and then you dig into the Bachelor of promethium and and the story just goes absolute ape [ __ ] yeah just to just to clarify so Robin Hood tried to get this ATS as well and they they got denied in March of of this year

they'd been after it for 16 months and then all of a sudden it was pulled back and instead of Robin Hood you know a company with I think over you know probably like 50 or 60 million users in the US they gave it to this literal who company founded by three guys with the same last name that are obviously related two of which went to a law school that is unaccredited that was funded by a special by a broker dealer who went and raised Venture money for them which is extraordinarily unusual and they clearly raised some if not most of this money from China and also the broker dealer yeah yeah also has just tons of they have 18 regulatory actions against them from raising money for sham companies and

doing all this stuff so here's what I think happened like they obviously tried to figure out a way that they could like distract away from the fact that we might need new regulation by saying like look these guys have an ATS you know they'll cop to it in front of Congress even though literally nobody's ever heard of them but they didn't do enough back channeling or at least research to understand that you know a the story is like entirely impossible like Mike flood basically dismantled them right there uh B their backstory is incredibly sketchy and C they have ties to Chinese Communist Party and so like now you have the blockchain association filing a Freedom of Information Act uh against the SEC to find out what exactly you know if any relations they had with prometheanium or whatever it's called before but like in

my mind this is just gonna backfire incredibly hard against them and I just think it's just [ __ ] terrible like like I just am losing more faith in the government every single day my favorite my favorite little kind of like cherry on top of this entire story was somebody snapped a photo of what was going on in the chamber Halls of Congress while they were being interviewed in front of regulators in front of Congressman Congress people and literally the the chaplains were passing notes to each other as they were waiting to answer these questions it's like okay you're literally just reading off of a script and and that's what the foia to Vance's Point hopefully will disclose at something where there there is some some

sort of connection here because it felt too canned and too too pre-rehearsed the charade is getting just patently ridiculous and is falling apart like I think that's actually bullish uh for regulation but it's just like like if you're gonna try to pull one over on people like at least do like you know an hour of leg work to like make it seem a little bit not suspicious this was just a total clown car yeah and it seems it seemed kind of similar to when he was propping up uh you know SPF and an FTX for their special you know uh regulatory classifications and yeah you just really knows how to pick them um as it relates to you know finding these all of these Allied or like Trojan Horse

Partners basically to kill Krypto from the inside uh and this one yeah definitely a lot less scary than than something like FTX where you know if they hadn't had rods that might have actually worked out um so I don't really know what to make of it it may seem like only frauds are the ones that get through here the the exchange between uh I forget which one Aaron or Adam Kaplan the guy with the bad sideburns and uh Mike flood is just absolutely hilarious yeah it's like can you trade regulated secure or you know tokens on your exchange yes it's like can you trade any of these it's like no it's like why not it's because they would need to register as Securities is there a path to do that no you know it's a fun little callback to

2017 one of the uh that broker that broker dealer is actually behind the uh Long Island Iced Tea Company in 2017. yeah and they got in trouble for it yeah it goes all the way to the top it is just if what it feels sort of to me is like they picked this one sort of company with a whole bunch of dubious ties in history and kind of this weird uh you know clown car of Executives and they're trying to hold it up and say hey see we're not biased we we will let you know properly regulated you know licensed businesses operate in the U.S it's like no so no what I think ultimately the intention is with all of

this is they clearly chose somebody who has no pre-existing business ties or no pre-existing users no pre-existing assets on the platform and that's really I think what their goal is the basically their goal is to say okay great we're going to regulate this industry but what that means is that we're starting from zero right now everything that pre-existed is done it's over it's unregulatable it's not going to exist henceforth and anybody who wants to restart can get going right now under the confines of everything that we approve starting right now which obviously is never going to work you can't just kill industry because you don't like it and and so I think it's going to come to a head at some point but I do truly think like their intention and their way forward and their way there's their scapegoat here

is to basically say we're just going to restart everything right now hard reboot yeah yeah the you know I think we've talked about this on previous shows but I'll just reiterate this and I'll put my hand up and say I'm not some sort of legal strategist or whatever but it does feel like the SEC is picking a lot of fights with they're fighting a battle on a whole bunch of different fronts right now and I'm sure there's probably some strategy here about you know Gary knows his his tenure in the SEC is not going to be indefinite and so he probably wants to open as many actions in the case that like hopefully one of them hits but you know he's now picked a fight with a whole bunch of different entities that some of which many of which frankly have large War chests and

he's kind of made you know you know that old expression politics made odd bedfellows or whatever well we're all we're all kind of bed fellas now you know um so I don't know I if history suggests no number one uh I think binance has already come out and said that they have a billion dollars set aside to fight this but if history suggests these suits that are being raised right now are not gonna get anywhere close to being resolved during the tenure of Gary Dantzler so it's gonna happen you know after he's gone and there's not gonna be any resolution and these things are not going to be like a fold and just give up type situation they're going to be a fight fight tooth and nail between coinbase and binance so it long Arc of storyline here that's gonna happen

the the path to regular regulatory Clarity or regulatory friendliness whatever you want to call it is like there's there's multiple paths and I actually I read this tweet from I think it was Alexander grieve or Justin Slaughter um one of the guys who's the legal counsel of Paradigm which is like you know if you have this bill pass it's probably going to be a little bit more restrictive than if you had just like people win these court cases and like nothing really changed and it just kind of like continued to exist in this amorphous Gray Zone we I don't personally want that I want the regulation but the path to regulatory Clarity is threefold uh you know court cases get one I would put those I would put that odds

at probably like 60 40. um you know like grayscale Ripple coinbase like I think those are kind of winnable cases um new Administration if you look at the betting odds on predicted it's like 50 50 right now um and then this bill passing so like if you have three even things that each have like you know a 50 60 chance of happening like for me that just suggests that like regulatory Clarity is coming maybe not in the timeline that we want but actually maybe sooner than we actually might actually think but there's a lot of different things that can play out there's actually another one that uh um Vance and I have talked about but uh I think Paul from clo at coinbase uh tweeted about which is there's there's

Netgear going to be a Supreme Court case which revisits the decision that happened in 1984. uh I think it's of the main fisheries and Chevron it's Chevron versus natural resources it's natural resources Chevron versus natural resource uh uh defense whatever um basically the premise is who gets to decide when there's ambiguity within the law who gets to decide kind of like tigers to the Runner versus Tito's to the base um and I think generally uh what this could mean is that instead of having what the decision was in 1984 was that when there is sort of ambiguity it goes to the regulator to decide what will happen and what this could potentially uh posit is that now you're going to

have a decision that has to get adjudicated by a court as opposed to this is something that gets decided upon by The Regulators that is sort of a indirect way of getting to some resolution because then you have to start going back to the court system but it would be a major change in how we look at regulators and and everybody knows like the Supreme Court has a lot of conservative justices on it and you know if you look at the five that are conservative they're basically all in favor of you know trimming this case down or or getting or overturning it completely and so like if it got overturned it would basically say like unless it's explicitly authorized by Congress Regulators need to follow like the the exact letter of the law there can't be

like these you know ambiguous interpretations maybe not even rule makings so I mean that would have a lot further reaching consequences than just crypto well like add up those four paths multiply it by the expected value or you know what you think would happen to the crypto markets if if they happened and you get like a pretty high expected value in my mind at least yeah the way that I kind of think about this as well is you know there's if you're putting yourselves in the sec's uh all right so rewind the clock to like two years ago a lot of the argument was hey a lot of wealth gets created in private markets it is BS that the everyday Average Joe's can't get

access to this this is a tool of the elite yada yada that was when people were making money and that was the perception now it's the opposite now it's sort of turned around and everyone is losing money and it's like hey Regulators why didn't you protect us and I think that's generally why Regulators come in and they're they don't try to be preventative um they come in and sort of mop up the mess because only at such a time when everyone is losing money is there actually public demand to come in and do things so that's probably why this all happens like this the other thing frankly that might make the SEC and whoever is chairperson in a couple of years it may make their life harder is that we might enter another bull market

and frankly the the sort of public opinion and the desire to you know restrict people from crypto is that the tides might turn right at the time when um you know they you know what I mean you have a point like the same thing happened with spax like when they were pumping nobody cared right kind of had that first dip uh in the summer of 2021 where they changed the accounting rules of like how you could launch a SPAC and they did it when it was like you know obviously kind of coming down but after that you've seen no new specs so right there's precedent there yeah but bats haven't been regulated the the all the major specs launched after that that

happened because everybody was in the pipeline I think the bigger thing I understand the bull bear Market size of of things the thing that I think is the biggest uh frankly and there is a little bit of news on this this week uh is SPF in all of the intricacies and ties that were generated and and therefore all the issues that were fostered with Regulators or people in Congress uh based off of what happened with with SBF and FTX and I think that one of the best things that can happen to this industry is we get to see his day in court and get to see all the stuff play out eight the eight counts that he was charged with are going to go through and and the court date is set at least supposedly for October 2nd there

was a discussion as to whether or not uh um the few things that were found uh and he was charged with after the fact once he was already back in the U.S uh whether or not that would have to go through bahamanian Supreme Court decisions or report decisions and that would have delayed potentially the start of this uh legal proceeding by months to years um I generally think that once we get to see some resolution there things will have a much more copacetic perspective yeah you might be right I want to get to two more topics here which is uh one is tether um and then the last one is just sort of like a Divergence in the NASDAQ and what's going on in crypto so yesterday

um actually over the course of the last three days there's been a market shift in curves three pool the three pool has three different assets three stable coins which is usdt tether usdc and die and it's kind of the the on-chain venue for liquidity of the major stable coins and one of the um it's called the fitty indicator which is I think named after one of the the curve devs who first noticed this but there's actually an inverse relationship in between the percentage of tether and the price of ethereum the idea generally being when people are withdrawing tether from the three pool they're going and doing risky things with it and then when they're that the percentage of tether has gone up it means that people are going risk

off and in the past an extremely high percentage of tether has meant um coincided with extreme stress in market conditions so the two previous peaks in terms of percentage of tether in the three pool have been in May of this year uh or last year with uh Terra Luna and then in November of last year with FTX so over the course of the last three days there's been a market shift in I think tether at least at one point today was at almost 80 percent of the three pool which historically would have signaled a lot of stress and sort of indicates that someone would be selling tether now the caveats to all of this are that the three pool has much less volume than it used to so there's a chance that you

know yeah it's just a lower volume pool and it's smaller selling to get to that extreme percentage the signal might be a little bit deluded in that sense uh both binance and tether did put out statements saying something like hey there's going to be a transition here we're converting a bunch of uh you know Tron based uh tether into ethereum bass or vice versa I will say you know you never know how to trust those sort of corporate comms right um especially around you know when there could be potential crises but it does look a little weird um and it caused a good bit of panic and the last thing a little bit of context a lot and then miles I'll let you go here is I think this was an Adam Cochran tweet that um apparently tether's financials have

been leaked to coinbase and there is speculation that that is coin desk coindesk thank you and that's what it could have uh set off the selling so well sorry you look like you're gonna say no no I was just trying to understand that the indicator because I understand one side of it when you know things are when everybody's really nervous about a big blow up they tend to also get nervous about you know tether um and so I can totally see why you know during FTX and Luna their pools skewed together I don't know if I fully understand why people like would go why you would need tether in particular to go speculate um but I I think that you know who knows what the hell is going on here

but this is typically you know we're gonna see this again and again when anything looks sketchy people will get out of tether and you know I think back of my head it's been a worry for years um just about because we don't really know what's going on uh same you know binance can kind of create that same area as well um and so yeah I would just we'll see it sounds like there's more coming out on the story that could be you know attributed to uh you know driving at least what's what's moving around the percentages um but yeah it is it is interesting anytime anybody gets nervous they run out of tether the the d-peg was uh at its lowest level

0.9954 less than half of a lesson less than 50 basis points so it's it's 10 bips to redeem um and we know people who who redeem like that that is working uh the other thing is so you recently had uh binance when binance does withdrawals.com and and Dot us it you can kind of see.com sometimes refill dot Us's balances but the two most popular change to do it on that have the most usdt on it are uh uh Ethan and Tron strangely enough what is going on in Tron I have

literally no clue but like whatever um and recently the eth balances for usdt were running basically at zero and so they did a chain swap they took 750 million from Tron and they put it on East and so like you do have this like endogenous large amount of Supply that was created on chain that like a lot of this is going to go into the curve pool because it's the biggest on-chain venue for this to happen it's like that's the first thing and then the second thing is like the wallets that we have tagged as tether just like bought up all of the you know depegged usdt so you know they're they're buying um I I just think people are susceptible to to getting flooded right now sorry

because when the stable coin flood gets busted out it's like God what the hell like the ufcc fund was actually turned out to be real but for no cause of its own it's just the bank the back to blew up but like this one is uh is classic like you know what freak everybody out a little bit more hey some somebody bought some 92 cents usdc though yeah true I mean that was probably not worth it on a risk-adjusted basis or Silicon Valley Bank bailout like what do you know on chain that like those people don't it doesn't feel good no nothing and it's like eight percent is your upside I just yeah I'm with you on

that pants when you said they're buying I just got like flashbacks to the study Lads tweet um so yeah let's hope it's a little bit different this time we'll see nah I'm sure it'll be fine all right last Last Story here and maybe we can cue this set I think it was Travis cling that that tweeted out this chart um oh am I still sharing my screen yeah one sec uh but basically I'd love to just kind of get um maybe Vance and Michael Kick calling you here to sort of just get your thoughts on where we're at Market cycle wise here

um you know it was kind of an interesting chart I mean there's a you know Travis's uh sort of caption here is not the decoupling we wanted but the decoupling we deserve and the NASDAQ is taking off and crypto's down quite a bit I I will say before I want to Source everyone's opinion here it's always been a little bit of a bug above mine to just take like one cherry pick one very specific period of time and then just look at divergences in between I just I just think that's pretty you know you could this has never happened before you know this is this is just brand new Also let's just like put a you know a backdrop here uh you know unfortunately Travis just got stuck in the FTX debacle I I'd say that the sentiment on crypto for him has completely soured so he's

just looking for any opportunity to to bash on everything that we're talking about here and you know if you were to break apart the components of that NASDAQ growth I bet you know 80 of that is NVIDIA and the rest of it is probably you know well performing Tech assets but it's probably the top 10 at Max that are driving the rest of those returns and on the Bitcoin side it's because we had some structural selling based off of what the SEC just said around not Bitcoin in particular but other digital assets like this is just a structural issue in my mind so uh I was I was watching this podcast with uh with Jeff gunblack who at this point I've just started Outsourcing all of my Mac

reviews to Jeff because he's the absolute goat like he just he's just he's a bond King he's the bomb King he uh the next one there's a couple of funny articles about him where apparently he's asked people who've had lunch with him what's it like to have lunch with a genius he's on one apparently but he's smart he knows it but his whole point is like the s p 493 is negative the s p seven is doing exceptionally well and the things I think about when I see like NASDAQ decoupling from crypto usually it's like a crypto specific issue the regulatory stuff like you have Celsius you have Voyager uh they're going to be you know either Distributing

or selling alts uh you have Robin Hood de-listing three tokens like there's some meat to get through but like all of that's gonna happen probably in June or July at least those three then you have like the mount Cox Bitcoin sales you have like this you know potential further action against binance which is going around on on Twitter and like this doesn't seem like out of the ordinary for me it's not like there's something structurally wrong with crypto there's just like a bunch of negative catalysts right now and that that's fine the thing it reminds me of is uh March 2020 um where everything fell apart crypto more than anything else I think you know we were we were buying ESAT I think it was like 25. no no no no no we started but we started so we we

like raised the fun we bought all this 216 average cost base yeah like 216. nice and uh and then it went to 80. and we were like no no not like this and then you know that happened and then stock started to rip after that and I forget what the first ones were but like it was it was basically just like it was Zoom I think was the first one and that was kind of what led everything else but crypto just didn't move at all and that was when a bunch of people were like trying to tokenize stocks because people thought that people would want to trade stocks on chain because like crypto wasn't moving anywhere um and

you know it kind of had this run where it set the stage for crypto outperformance later in the year but but that's what happens like you know people are gonna bid uh the 10-year down to like 370 first from where fed funds is at you know five and a half whatever then they're gonna bid tech stocks because like those have like real business models and that's what everyone over the past 15 years has been trained to buy the dip on um and then you're all probably gonna buy some random stuff after that but like all of this stuff is getting expensive I checked today Nvidia is trading at a 220 times priced earnings meta is at its all-time high in terms of its price earnings ratio and it's tripled since the bottom and so like can the stock market keep going up should you hope for it as a crypto investor a

hundred percent but like things are getting to that point where it's like pretty expensive Kathy Woods hold Nvidia because she said it was in a bubble like you're starting to see people put markers out oh boy I know and when she does that I don't think I've ever like there was nothing in 2021 where she was like this is too expensive but she's putting her foot down now I also listen to the to the um uh Danielle demartino Booth interview with uh I think yeah it was with the Jack Farley and she was like the stock market's about to start falling apart like maybe we're just gonna keep getting bit up and you're just mad that these don't fit

with like your price earnings models historically kind of hard to tell it's tough to predict us I mean we did have an fomc this week and since this is a macro pod we can just give a slight overview but this was this was a this was the this is the first time that we didn't get a hike in quite a long period of time so we got a pause on this one yeah but nobody cared about the height they cared about the dots nobody believe that [ __ ] anymore like hawkish skip or like a dovish 25 basis point hike I feel like I just don't believe anything that this man says yeah I mean so that's that's why people are concerned is the dot blood said there's gonna be two more hikes this year so another 50 basis points but you know we'll see I I sort of think

he's trying to have his lunch and have a cake and eat it too because you know he's pausing to see if there's gonna be something catastrophic that breaks in the financial system between now and then if basically if nothing does then they'll keep hiking but you know I I feel like the fact that we're getting any sort of pause right now tells you that you know I and by the way even what's 25 what's 50 more basis points like that's the peak and then we're rolling off after there so we've been through the meat of the hiking cycle I think yeah a little round of applause for everyone going through the most gnarly tightening cycle basically of all time in terms of like speed and Delta from the base but my my personal Dot Plot I either think it's done or there's one more 25 basis point hike but like I

think inflation is going to go to zero or negative at some point in the next 18 months and it's going to look insane if rates are still at like five and a quarter someone had a really good analogy I can't remember who but who I was watching and basically gave the description of what is happening at the FED right now and they're driving with their hand on the wheel and their head is turned the complete 90 degrees the other way at 180 degrees the other way and and you know they're looking backwards but I think one of the the great points about all of the like financialization of everything whether or not you want to call it accurate or not it's been directionally correct but if you look at things like trueflation or Manheim or any of the shelter index indices like Redfin and

some of the private data points anybody who's following any of that and it's forecasted and it's forward-looking can tell exactly what you just said Advanced which is it's gonna go negative and it's I can't I think it was uh Bank of America or city said that this could be the largest decrease month over month uh two months in a row decrease in inflation that they've ever seen because now we're talking about uh a headline CPI print of 3.2 next month and from 4.0 4.9 4.0 3.2 that would be the largest decrease in two months um all of the stuff is going to happen it's just a question of when I don't know when rates are going to drop I I find it hilarious as well that

everybody's looking at dot plots of also people who vote on this stuff and people who don't vote on this stuff being factored into those dot plots like these are just perspectives of people um and yeah I think it's all gonna it's all gonna happen very quickly and um next month will be a big one the the other thing that I would say as well is this stuff is all very complicated the financial system is this gigantic amalgamation of a whole bunch of different economic activity in different sectors and you know there haven't actually been that many periods of time that we've had inflation within the last 100 years so anyone that points to you know quote unquote precedent here you're really pointing it like two times so it doesn't really tell you that much

and the other thing that people Miss is a lot of this stuff is very relational and what I mean by that is you know people are like well Bitcoin or crypto can't do well if interest rates are at five percent that the.com bubble happened when fed funds was over five percent that you know people don't really remember and the thing about inflation if let's just say Vance it's the opposite of what you just said and there's going to be inflation for a long period of time bonds get smoked in inflation that's like the number one thing that really gets hit um you know because your the fixed income that you're getting out into the future is devalued from inflation so then money will move elsewhere and it's just like people make uh the late decisions based on what they're going to buy relative to other assets so if if

anyone's pointing to oh I think interest rates are going to be here so crypto can't do well I just think that's here's a great data point this week I was reading a report from I think it was Calpers or calstrs I can't remember which one but you're talking you know 100 plus billion dollars worth of assets and they manage a fully Diversified portfolio you know fits income probably like real assets real estate but also private Equity hedge funds and you know of course Venture right now the allocation that they have to venture is about 1.2 percent of their nav which is in the order of about 800 million to a billion per year that they're allocating to new Venture funds the goal that they have for the next two years is to ramp that from 1.2 to percent to six percent

so think about that you know when you have all these story lines of General Catalyst came out this week and they said they're raising a five billion dollar fund um you've got you know multiple billion dollar funds that everybody who was talking about this over the last six months said no possible way to do these happen sure I think some of these don't happen Insight tried to raise 20 and currently is at two but and they're going to cut their their size tcv same thing sizes will get cut but the allocation is not going anywhere and if anything it's getting ramped up and probably just going to be extended over the next period of time so when it comes to Innovation financing I don't think there's anything that's really going to change over the next let's call it three to five years next year this year might

be tough but but you have to extend the timeline as a quick aside on on the FED everyone should watch Jeff gone Black's interviews on CNBC about the FED he has so much contempt for these people he refused to call it he refuses to call it an institution instead he calls it like a program like it's like a children's play and his whole perspective is that we should replace the FED with the two-year Treasury and just never ever print money again I don't think that's really going to happen he's kind of like an anarcho-capitalist at this point but the level of disdain that man has for the FED is absolutely hilarious and it comes through in all these interviews in the funniest way yeah you must watch you know you know I don't know how disdainful he is but the

the other guy that I always like listening to is Stan drunkenmiller he's just gotta you know he's just got such a long sort of career of being he's been wrong a couple times but he's been right obviously quite a lot and pays a lot of attention to this one point that he brought up that resonated and you actually see it all the time in crypto you know because there's a lot of excess during bull markets and then you know you see who's swimming naked but generally it's like you know the to paraphrase his point was you know when interest rates are low for even a short period of time people do really dumb things but they're really low for 11 years people do really dumb things and it kind of made me think like what are the what are the industries that have just been money printers for a really

long time that they're probably just some horrendous practices going on under the hood and one industry especially in finance that's never really had a reckoning is private equity and those guys have those guys have just been a money printer for such a long time there are these weird I don't know if anyone listens to Anthony McLean she's like dug into the industry a little bit there are some weird sets of incentives that happen in private Equity like that I have no evidence for this and I'm purely speculating but I mean that I don't think anybody wants to know what is in the mystery private Equity box like it it may be just and I think that

is one I think the other one is just like these mega growth funds in Tech like I think when you peel back the curtain on that there's gonna be multi-billion dollar holes in all of these Mega funds and like if I had an option between do I LP into a crypto Mega fund like the Andreessen Horowitz you know four and a half five billion one or do I give it to General catalyst man I'm choosing crypto 100 100 of the time like I think there is some serious damage that has been done to those funds and they have not been marked properly and it's just because it's just corporate Equity you know and if you keep these zombie companies live long enough it all comes down to the private marks it all comes down to the private Marts and nobody is nobody's calling

anybody out on the private marks and the the crazy part is to go back to private Equity we talked about commercial real estate obviously that you know as interest rates go up we can see that that will get squeezed it already is getting squeezed we're seeing that reflected in these Bank holdings but the thing that people aren't necessarily talking about is the leverage that gets put onto every single portfolio company of every single private Equity Firm and commercial in many cases that's a fixed term or it has you know all these covenants that enable you to have like uh the ability to like change the terms and re refinance in ways that are limited it like they're so inflation rate heavy dominated that they actually have you know a lot of controls over how

they operate private Equity firms have none all of Leverage Finance is like as rates go up it's Libor plus like 300 bips yeah and the second that rates go up it means that all the companies that they have leveraged are unable to make their Debt Service payments and they're having to take on additional capital and put that onto the balance sheet of these portfolio companies just so that they can be able to make payments for debt servers to out Outlast this higher for launderer or whatever we end up saying with interest rates like I think the decimation of private Equity is is gonna start well you know I've actually got a couple of buddies in private Equity I've asked people this question like hey is there a reason private equities done so well is

because you know the interest rates have been going down so shouldn't it reverse how does this connect the dots for me and I've asked this for like you know miles a bunch of our friends of private equity and everyone's like no it doesn't really matter actually it's like how how how does it not matter you know this because the management fees are flowing I will explain to recurring Revenue business it is the best recurring Revenue business on the face of the Earth it's it's contractually obligated for 10 years so as long as you raise a new fund you know what I'm also sort of biased against private Equity I have a buddy who sent me a meme that cracked me up the other day it was like you ever have something that you used to love but now is [ __ ] you have private Equity to

thank for that and I do have you know what I mean I've seen these miles and I went to school in Atlanta and you know there's a lot of these places down there there's like you go into a restaurant and it like kind of looks nice before you actually look at everything and everything's like cheap and way marked up and you pay like forty five dollars for Brands you know with like a lot of grease and you're like oh my you just feel like you're being extracted you know what I'm talking about there are lots of like restaurants and places like that anything that's too good to be true is you can thank the VCS for that and then anything that's just like gilded and absolutely shitty is that's the best at least at least the VC people like have a claim towards trying to finance

the future private Equity people are just trying oh I agree everything that already exists yeah they're they're asset Harvesters you know and they're asset Harvesters so wait wait let me let me tell this story real quick so my friend is an LP in a big private Equity Fund and uh so they're there's like there's like six funds for this PE fund and fund five had a big liquidity event my friend was like awesome that's great who bought it they were like fun six bought it it's like what who makes money on that transaction is it like fun five it just that's that's like alarming to me when the PE funds

start selling [ __ ] to each other but also like to those to themselves well to themselves is a different story I've never heard of that before that that may be that may be rot with issues but the way that most PE transactions happen is it is not a like oh we're gonna sell this to the public and go IPO it is a sponsor to sponsor transaction which means like it's a smaller private Equity Firm selling to a larger one it's like the small fish big fish bigger fish biggest fish it's like that's a human Human Centipede of private Equity well here's a little here's a little uh you know hypothetical transaction that could occur right you know you like you're running a private Equity Fund a buddy of yours is running a private Equity Fund too you each have a company right you

say hey like I think you should invest in this company in my portfolio company maybe you put 50 million dollars in mark it up a little bit looks good for my books you also got some companies I got actually 15 million dollars here too you know what I'm gonna I'm gonna invest it in one of your portfolio companies whatever valuation you think seems reasonable suddenly both of those companies are marked up and everyone has the same amount of money you know I mean you're trading you're talking about a million dollars back and forth for the last 20 years Mike you're not actually talking about private equity in that instance you're talking about traditional Venture Capital I'm sorry yeah all right whatever but here's the best part but here's the here's the best part you mark up each company we all look like we have good books and then we

go off and raise our next fund and live off the management fees for the next 10 years yeah it's insane what some of these funds have gotten away with over the last 10 years yeah there was some quote about um I forget who said this at one point but it was one of like the big hedge fund guys that shorted uh I think it was like Citibank or something it was one of the big banks in 2008 and he's like looking at the books and like can't figure it out and the conclusion that he came to us ultimately that it would just be too inconvenient to too many people for something to fail and that that I feel like sometimes things can just happen like that also you got to take into account the market structure when do we

stop hearing about people that made money during 2008 and have not done anything since that was 20 years ago I was I was eight yeah you were not eight in two things I was like backing into that I just also doing that math I was like wait a second you were you were you were like 17. yeah no I was in high school but like dude I feel like there was there was some movie that just came out about the great financial crisis who cares honestly what's the it's gonna start getting filmed on History Channel henceforth oh yeah with the the Robert McNamara documentaries with just the

slow Zoom ins on the pictures right after it'll be documentaries about World War II tell me about how they invaded France to the Arden Forest okay great let's transition to the GFC it's like dude I don't care about either of those yeah margin calls a pretty Epic movie though I've I've like that's aged like very well for me and I just love the Jeremy Irons or whatever his name is character you know um I will say I think that is the best Finance movie that exists yeah yeah I think it's better than the big short big short is too long also I don't like Brad Pitt yeah yeah they're gonna do an SPF movie So eventually we'll get to you know the

next God yeah 2020 cycle yeah there's there's like no complexity there it's just like he liquidated himself and stole money yeah yeah exactly yeah I was gonna say I guess we can't have Armie Hammer play the twins anymore do you guys ever watch American Greed that show it's like yeah it's online on CNBC it's like basically like local scams and grips like I feel like that's right BF belongs not in like a a real movie I like that show a lot actually I I didn't realize they were still doing it but yeah it's a good one no they have I feel like they've got a oh God Michael so uh SPF is supposed to go on trial October 2nd give or take Michael Lewis's book is supposed to come out three days

later boy wow it's a pretty perfect timing we all have to look forward to for Thanksgiving [Laughter] yeah all right fellas that seems like a good place to end it later on one guys cheers [Music]