VirtualBacon: The Next Bull Market Is Here (Full Thesis)

Transcript

Welcome to the show. Good to have you, man. >> Glad to be here. Thank you for having me. And I guess we're joining live. So, what are we talking about today? >> Yeah, man. Big fan of yours. So, thanks for joining. I've been watching your channel for a long time. And we're sitting here at It's June 30th. Bitcoin's at 58k. Folks are very, very worried about MicroStrategy and stretch. So, why don't we just start here, Dennis? Um give us a bit of your kind of broader holistic view on the major assets in in crypto. And then we'll get into some of our theses on the show around stable coins, tokenization, perps, around this kind of like fundamental analysis of

token economics and more. But, let's just start broad here, get into the nuance. What's your kind of 30,000-ft view on where we're at with the crypto majors? >> I mean, hopefully Bitcoin stays higher than 30,000 ft. But, I think we're looking at maybe 53,000 altitude. Then then I think that's low enough. So, at 58, historically, this is way below the 200-week SMA already. And everybody has already heard those moving average levels. So, I'm not going to over repeat them.

Um yeah, I'm a net buyer here. I'm heavily allocated to Bitcoin, actually. Not not so much alts, but Bitcoin is very very deep value territory now. >> Yeah. Yeah. And I mean, in the context of this kind of like broader AI macro trade, there's been so much happening outside of crypto siphoning attention and capital away. I feel like people are looking for a catalyst to get some attention and capital back into Bitcoin, back into the majors here. Is there anything that you think that that would be the core driver of that attention and liquidity shift? Or you know, are are we just thinking four year cycle here?

>> Um the answer is it's not so much driven by fundamentals, but I think the I'm a technical guy and I wanted to believe that the four year cycle was over, but the fact that it repeated exactly from October 10th and now we are about six months seven months in and we are basically back to the same like deep drawdown levels makes me to believe that four year cycle is what drives it. Um exactly why I don't know. Um You know, I'm a big liquidity guy and liquidity cycles are usually five years.

So uh this cycle should have been a little bit different, but it's not. Um having said that immediately uh you can look at the um correlation between Bitcoin and gold and say that hey the two are moving together post Iran because of the strength in the dollar. I think that's that's a whole um sort of uh a pipeline of events you can you can follow. So starting from the war to inflation and then to the Fed and to rates to yield and then Dixie and now you have gold and Bitcoin going down.

So I think we can see some short term price action come back up once we are past that like high inflation high um potential rate hike for the next few months. But after that I think it is the Bitcoin cycle. >> Yeah, I mean it's just it's been funny how I I'm sure you had this experience late last year. We had a lot of folks come on our show and especially from the institutional crowd and really just say that that the four year cycle is over. You know, they're like it's it's done. It's not happening anymore and it's just it is just it's just funny man, you know?

>> And it to be fair this time around not even that crazy. It's not like anyone saying Bitcoin is going to 1 million right away. They're all they're saying is hey, it's going a little bit more uh subdued cycles now and we're going to have less chop and thus you probably shouldn't try to sell exactly at the same time and hope for a very long bear market. That that was kind of the thesis. Don't hope for under 60k but we're here. So I guess Bitcoin always gives us chances if they are patient.

>> Yeah, I think we'll look back at this time period and feel like it's very like we'll feel gracious for having this opportunity again. So sometimes I mean well, somehow you're able to be very early every bear cycle again to the next kind of macro shift here. So kind of zooming in a bit more. We have this thesis kind of around what I call return of fundamentals and it's essentially thinking about crypto assets as businesses and looking at actual on-chain businesses in crypto assets and thinking about them as uh like a like a profit and loss statement. Like you've got revenue and then you've got emissions, expenses, unlocks, etc. And these are kind of two

sides to the same coin and there's only a handful of crypto assets today that are really like on-chain businesses and like operating in this fashion. And we talk about them a lot on the show. You have hyper liquid lighter things like Aerodrome, um even sometimes pump. And so when when when you're thinking about the future of investing in the token market, you said that you're kind of staying away from tokens right now. Do you think that we've made a material shift into this kind of fundamentals investing based on the institutional flows in the market looking at these, you know, assets as, you know, businesses similar to equities.

Do you see a future where we have much more of an equity-like structure for crypto assets versus what we've previously had governance tokens, narrative-based tokens, utility tokens. How do you think about the evolving landscape of this kind of fundamental investing from like a pure equity perspective? >> Yeah, great question. I think um it boils down to um why we invest in any assets in the first place. Obviously, there's always going to be narrative plays even outside of crypto. There are tons of low caps, penny stocks, whatever. Um even outside of the equity markets, people always invest in things that are just based on supply and demand.

Um but I think in crypto, especially now that cryptos are um getting on the same exchanges with the same types of treatment as equity instruments, um that rails are there. So, um for example, like uh Securitize just went live on uh NYSE. And I look at that today and I all I see is the ticker. I don't really need to know that, hey, it's Is it a token? Is it an equity? Is it trading on this or not? Because it trades on chain as a tokenized equity, but it also trades on NYSE. And the same thing, if I want to um trade any uh I want to trade Ethereum.

Ethereum started as a token first, but now I can trade on every single exchange in the TradFi world. So, um to the first part of that equation is there. All the rails are together, and now all the businesses have this equal playing ground. They're tokenized securities or they're securities being tokenized, same thing. Um and then the second is uh return to fundamentals, like you said. Uh and mainly it's because uh regulation allows us to. So, the classic example of Uniswap. Uniswap is one of the It's one of the first DEXes to launch, and they still keep kept innovating V3, V V4 not so much. Um they are supposed to have high revenue.

And if they wanted to trade as a equity-based company, they they could have had explosive growth a long time ago. >> Yeah. >> But they just never were able to because you were not allowed to treat your product, your token, your DEX as an equity instrument and distribute your your shares. So, um I think after this cycle with the after clarity, um the companies who want to do it can, and then you will start to see a big divide, and people will return to fundamentals because that's um that's what survives long term. Whereas, if you look at something small, right, on chain, it's going to be a while until the narrative runs dry, and then you have to move on.

>> Yeah, I mean, that's the kind of been That was like the defining factor, right? We had this new administration in the states kind of come out and and basically say that whatever previous administration rules that were from the Gensler era, those are less relevant. There's a lot more freedom to to kind of do things. And then obviously hyperliquid launching was kind of like, "Here's what we're going to do. We're we're we're going to make this amount of money, and we're just going to buy back the token." And those two things kind of simultaneously, November 2024, um happened, and they really changed the entire script. And then now, as you're saying, clarity's coming. Genius yield will be implemented. And the plan like the baseline now, and I think we you know, will continue to be is what is my

token holder value? Like, I think investors are starting to ask that question. It's like, "What is the value that I get as a token holder?" And so, you know, when you think about, you know flows buybacks burns um revenues, how like, are you are you seeing a shift in your community with people, you know, who want to invest in like higher-quality assets? Um are you seeing a shift away from things like memes? Like on the maturity side of things, how like with your community, with your friends, like are you actually seeing a change in investor behavior in the industry or do you think we'll just kind of go back to where, you know, where we've been?

>> Um, I do think the alpha is kind of disappearing a bit with the the maturity of equity like tokens. >> Mhm. >> So, in order for you to to even have the equity have the um, equity value to distribute to your to your holders, you have to be relatively mature as a company, as a token in the first place. And usually that means you don't want to go too early on to release your token and then build up the revenue from there. Um, Hyperliquid, great example. Um, people who were in the airdrop, that was a great like wealth generation event for them. And um, but people who came after, uh, it's it was good.

But, um, a lot of it came from the still exponential growth after their TGE. And you can't really even replicate that um with other DEXs even because, I mean, going from top 100 to top 20, top 15 is is a very hard feat to do. So, um, I think most retail participant participants who came in crypto first, um, they still lean towards low caps, um, more asymmetric bets.

>> Yeah. >> And less so on the institutional side. But for, um, institutional investors, they definitely want assets that are that they can actually hold for at least a couple years, um, that are going to given the the stamp on traffic exchanges. And they would prefer for them to have um, revenue first and actually getting a little bit later. So, there's a bit of divide there. >> Mhm. Interesting. And you know what a bit of the sentiment dynamic right now is as well, man, is that people are like very excited about stable coins or tokenization or perps. And like sure, you can express the tokenization bull thesis. Maybe you buy Ethereum. Maybe that's your thesis.

Um but obviously the performance has been very subpar. Obvi- you know, Securitize, as you mentioned, is going on the NYSE I think Thursday. That'll be a very like pure play expression for tokenization bullishness. For stable coins, you could buy Circle. You could buy Athena. You could buy Sky. [clears throat] Maybe you buy Ethereum as well if you think that that's like, you know, uh a tangential expression. But there's like a lot of this growth happening right now in these sectors that are undeniably mega trends. However, we as like normal retail investors we don't really have really clean way to invest into these trends. And it's like the institutions are are, you know, launching this OpenUSD network that was

just announced today. There's no way for us to invest in that. Uh you know, Tempo was launching with Shrapnel. There's no There's been no pre-sale for Tempo. Um Circle's Arc Chain. There's no way to get exposure to that. I mean maybe they do a token sale, but I doubt it. And so there's like this weird sentiment >> [clears throat] >> dynamic where we are very bullish on these mega trends, but we can't get into the ground floor like we used to when we were bullish on Solana at $2 because we were like this is like a highly performing chain. I'm going to buy it at $2. It's not like I can buy Securitize right now at $2. Like no, the thing's going to launch at like a bill- a like $1.5 billion on the NYSE, right? And so that there's that interesting sentiment

dynamic there as well. >> Yeah, absolutely. I think I um you hit the nail on the head on um stable coins because uh stable coins are USD stable coins and in order to be in that position you have to be like a top three top four player. And everyone wants to invest in Tether, but you can't invest in Tether and even this this brought us like plasma and stable which are okay, but but again like we're seeing that they're not so so much pure Tether plays they're more like tangential like infra plays.

And then you have Circle which is pretty pure but that wave has mostly done its course and and everyone already knows Circle. I think you see now is interesting. They just listed on the Nasdaq I think through a a SPAC or something. That was pretty interesting with with with the same ticker but a different entity technically. So I think they're their governance token you see now and then I think they're ticker on the stock market is USDE. This is what I saw so

so definitely people are trying to give exposure to the equity instrument. But we have like space for like five players and so far it's been it's been these and can't really do much. I think stable coins is is a foregone conclusion at this point. >> Yeah, exactly. I mean we're at 300 billion right now. I think we're going to get to 3 trillion 5 trillion total outstanding value and then like the question is how to express that trade and I'm still searching for it. On the perp side it's clear it's like you buy a hype and you buy lighter.

I mean those those tokens are performing extremely well. They've not even had a bear market. What's your read on those? Why are those performing better than the rest of the market right now? Is it just purely a narrative thing? Is it the economics? What's your what's your read on why is you know couple of assets have basically not had a bear market in 2026 when the rest of the market has? >> Well, um I think I'm not so bullish on hype at this price. I think hype um given the bear market rally, it probably should go back down to like 30 to 40 dollars and then it'll be very interesting to me. I think it should go above 100 in the next bull run.

Pretty reasonably. I don't think it's going to just defy gravity of uh of Bitcoin. Um yeah, because most coins don't do that. Um however, I do think it's because they have a very sound business. They have the real revenue and the revenue goes into the token. And it also helps that um they're in an exchange. Like us in crypto, we know that hey, if you have your own coin that uh trades uh with um pretty heavy volume on your own exchange, you can uh stabilize it, let's say. Uh a little bit more um meaningfully.

So, that's totally fine and I think lighter is is really sound. I've um I've talked to Vlad quite a bit as well and I was on the airdrop uh pretty early. >> [snorts] >> Um but yeah, the perp narrative is there. Because um like perp itself the perpetual exchange is a great instrument being invented. Um kudos to Arthur Hayes. Uh Yeah uh now that uh like SpaceX, the most liquid market pre-market for SpaceX was hyperliquid by far. Even the pre-IPO markets were not com- compatible uh competing with hyperliquid's uh pre-market on um through Trade XYZ. It was It was a very very good thing to

see. Um so yeah, I I think perps are a big mega trend. But I do think uh so far they are still um token products. And and token products typically follow the Bitcoin cycle, so um staying a little bit, uh, cautious >> Yep. >> against bear market rallies, but I think next cycle perps are going to be huge. >> Yep. Um we're just going we're just going down the list here. So, prediction markets, um Kalshi apparently is filing for an IPO maybe at 40 or is looking to raise at a $40 billion valuation to potentially do an IPO soon.

And people are speculating that Polymarket may not launch a token and may rather actually do an IPO. Um Polymarket revenue is up there, top five on a 24-hour basis consistently, uh, with Hyperliquid and Circle and Tether. Um Do you Do you have any exposure to these via private markets? Do you like what's your what's your read on on Polymarket here? Well, I I think, um with the advent of, um, pre-IPOs on chain and also hype, um Kalshi and Polymarket you could uh there's not much private market deals you can do outside

of just directly buying the pre-IPOs or perps. Um I do see a a big divide because a lot of people don't know this. Kalshi has overtaken Polymarket, um, since beginning of the year to be majority of the prediction market volume. So, the one to bet on is actually Kalshi, and no longer Polymarket. Um at least as the leader. Uh now I think anyone else who comes now is going to be a little bit late in the TradFi angle to to prediction markets. So, if you look at, um Who is that player that wants to do the their own prediction uh Facebook Meta?

>> Yeah. >> Um you are now competing with literally Zuck to do prediction markets uh and unless you go the token route. I I just don't see any other player doing the pure equity route. Um whereas the token route, I do see more token plays in this sector that could come up. Um so Uh I think a a pretty strong example like Predict Fun from Binance. Yeah, they're very strong backing from Binance. Um that's clearly a token play.

And if you ask anyone like a company that's heavily backed by Binance in that caliber, their end game is definitely token. So um that platform is probably not going to tap into like the the traditional finance, you know, cyber gambling crowd, but way more so in the crypto crowd. And I think as as crypto investors probably should be looking to those. Um or just buy the pre-IPO of Kalshi or Polymarket. >> Yeah. I mean, IPOs for those would be insane. I mean, people were waiting for the Polymarket airdrop and I'm not sure if we're ever going to get it. I I don't think we're going to get a Kalshi airdrop. I think that's for sure.

>> Yeah, I know. They they they wouldn't do that. >> Yeah. Yeah. Um >> [laughter] >> You like the sounds of Thinking about um Thinking about the um the current situation here. We're just going down a dark here. I love it. Um Saylor. Okay, so Stretch is sitting at $84, $83. Um MicroStrategy, I mean, let me let me tell you exactly where it's at. It's at uh $85. Um Stretch is at Yeah, 83. And Bitcoin's at 58. 58.

So what's your read here? People are saying in the in the chat here, they're saying that he's going to get liquidated and that's going to be the bottom. I've been kind of saying that I don't think this is all that bad. I've been kind of saying that I don't think that that I think it's a bit over exaggerated. But what what's your read here on Michael Saylor's predicament? >> Um I'm I'm with you on that and not so much um only on feeling but um the liquidation angle is just not there. I mean uh they do have obligations to pay their yield and their dividends, but their actual liquidation price on their leverage uh is below $10,000 price mark for Bitcoin. Uh like 10,400-ish.

So, unless you think that's happening, I mean it's a possibility, but the possibility of of them getting liquidated is very low. Uh now could they lose a lot of um interest especially on stretch? Yes. >> Yeah. >> Um so stretch could continue to quote unquote D peg, but that's the keyword there. There is no peg. Uh they have no obligation to keep it at 100. So, uh if they don't want to do it anymore, they can just leave it at this at this um state and pay back the pay the yield. All they have to do is pay the yield. They don't have to bring it back up to 100.

Um even having said all that, uh I think this week it's looking pretty good for them. So, they announced a 1.25 billion potential sale of Bitcoin soon. And that accounts for just like 2.5% of their stash. And that number, if you compare it to Bitcoin ETF flows, it's less than a weekly flow of uh outflow [snorts] of Bitcoin ETF on average for the last 2 months. So, even if they sell that within next week, it's not going to be bigger than ETF outflows.

That's one. And two, uh it's 2.5% of their stash. So, they're going to have to do this another 40 times to liquidate their whole stash. So, if they do this one time and the market is already bouncing on stretch a bit, uh let's see. Okay, maybe don't need they don't even need to do any more and if stretch can get back to 100, then we could just keep it there. They they might not get the excitement back on stretch, but I think that bomb could be defused if it just repacks from here.

>> I mean, yeah. My thesis has been that that the bomb would get defused even if we just get it back back up to like 87, 92, 94. Investor confidence rises. I just if it's not Saylor selling right now, then Bitcoin is going to be in trouble. I mean, I don't think he's selling this week. Do you think he's selling this week? >> Uh technically it's like from time to time. Yeah, it's really hard to know. Um it does look like that 1.25 billion is for sure going to happen, but the other two billion from for their buyback is like maybe.

Um so, we we should see that and probably soon cuz they they want to like show the balance sheet right away. Um yeah, I agree with you. Like if all they need to do is like sell 1.25 billion and then stretch recovers to 85, 87, sell another 1.25 billion, it recovers to 100 and then and then we're good. >> Yeah. And um you know, people say that he's kind of got himself into a really hard place because he has like three parties to please, right? He's got the stretch holders, he's got Bitcoin holders, and he's got MicroStrategy holders. And these separate parties, the only way that it really works out for them is if Bitcoin goes up. And the MNAV, you know, stays above one and everybody's happy

then. But in any other scenario, sideways, down, it's nearly impossible to please all three shareholders of those different assets. Do you agree with that? >> Uh yeah, to some extent. I've seen those threads. Um I think it it's mainly because Stretch grew way too quickly, way too fast. And um if [clears throat] it it took like three, four years to grow to this uh 10 billion AUM, uh it would have been fine. All he needed is to show that um the targeted yield of Stretch is quite a bit lower than the annualized growth rate of Bitcoin, and then you'll be it'll be fine.

But because everyone wanted that yield in this time, uh he kind of trapped himself. So, um after Stretch gets stabilized, I think he should not promote Stretch as the main thing anymore. And instead, go back to strategy. Yeah. Then that yeah, that could be better. Yeah. Yeah. All right, shifting gears here into early stage. So, we started a little uh a kind of like angel prop cap fund in 2023. My business partner and I, Robbie, he's out this week. And we probably did like 50 to 60 deals. And a lot of them are like in their unlock phases right now.

And obviously, the token market has been relatively decimated. And we've very you know, we've done very few new venture deals this year, maybe like a handful, four to [snorts] five. Couple small ones, couple little AI adjacent ones, and that's it. Um I know that you've done quite a bit of angel investments as well. I'm curious, you know, just about that arc. You know, what is your kind of like story there? What worked for you? What didn't? You know, what learnings, lessons did you take? And then where are you at right now, mid-2026 angel investments wise? Still doing them? Other sectors, other industries?

Still in crypto? Give us a bit of like like what you've learned, you know, some of your winners, you know, where you're at and then kind of like what's happening now from your side on the angel or early stage venture side. >> Yeah, I mean, I've had at this point like 5 years of angel experience and with a fund and it has always been prop capital. So, we just invest our own money like like you guys do and in the beginning it was it was narrative-driven. It was you get in at the right time, you get in during the Bitcoin bull run and then you hit the right narratives layer one gaming AI later on like memes,

you were fine. But then this last cycle right after Trump it really shifted the whole gears where angel overall like as a someone who has a lot of connections over the last like 5 years, 6 years in this industry like investing you can spot certain deals and I think overall it's still worth doing them. But for people who are going in fresh, I don't think it's it's a great idea because angel investing usually forces you to hold at least year at a time, you know, up to 3, 4 years

which is pretty standard. But the crypto narrative and altcoin season altcoin cycles are getting way shorter. 2025 like the 3 months at a time and you have to rotate, you have to go back to Bitcoin. So, that's my stance for this next cycle as well. Like for me personally, I still do quite a bit because I have access when the time is right when I see them. But I wouldn't recommend for most people. I think if you are mainly looking at like ICO stage or if you're like trying to buy early stage tokens when they're about to go trading live.

It's best that you buy them in a liquid market and then you just hold for 3 months at a time and then if you have any gains you go back into Bitcoin. I think that's that's the best way. >> Yeah. >> Yeah. >> Yeah, I mean I I hear you. It was like like the narratives of 23 and 24 so drastically different than the ones now. It's just it's changed so much. I mean all all of you know, it kind of leads me to some of your thoughts on a lot of these L1s, right? The like it was all about new blockchains, new assets on these blockchains, new L2s coming. It was this kind of like like a lot of the premium in valuations to date in this industry have been for L1s, have been for the underlying blockchains. And

that's been a result of like this fat protocol thesis, um and just kind of this network effect thesis that a lot of people have believed in and invested in. But I think that's changing. I think it's changing quite a bit. I don't like I don't know that blockchains are all like I don't know if a lot or a majority of the blockchains are going to be the most valuable assets in the market. Like I think if there's applications on chain and they're generating a ton of revenue, then these are probably going to be repriced, you know, see hyperliquid as as like sure it's its own blockchain technically, but it's really just a protocol and same thing goes for a lot of these other applications. And so, you know, I I wonder if that era of the fat protocol thesis and the network

effects for L1s, like I wonder if L1s are going to perform ever again like they have in the past. And and I'm not sure. I'm just not sure. >> Well, so I think going to the revenue side is definitely a very easy conversation and you're not going to find most protocols and most tokens having those anywhere close to the ratios of revenue that hype generates, lighter generates, and even like units on top of hype. Like you can look at very very simple layers with very high revenue and if those launch tokens it's going to be very very strong.

Um but I do think the the so-called fat protocol thesis has been um talking about all of the attention and all of the users will be on those layer ones. And ultimately like what drives the value of of tokens, right? It's how many users you have before this revenue faces. How many users you have, how many people are willing to bet on them when the market is good thinking that they can go up and I think in a way how many people can trade it through certain exchanges. So that has always been Ethereum since the beginning because of ICOs. That's the place to tokenize anything and then it became Solana a bit and then different L1s but ultimately

still EVM. So in this upcoming cycle um there's the revenue stuff and then I I think there's going to be a like a digital commodity um narrative to replace kind of the layer one because the way I see layer ones, why were layer ones so popular? They all wanted to copy Ethereum and Solana. >> Yeah. >> In order to be tradeable on the right exchanges and to last one to two cycles. And they are getting to that stage now.

So after clarity, after we have this whole framework of the 16 tokens being digital commodities and more to come through this graduation framework we probably will see more layer ones and it's going to be a race of which layer ones become comparable to the existing basket and then which um memes and which uh digital collectibles become comparable to the CryptoPunks and to the um Doge and Ship and uh WIF. Those are the three in the SEC's rulebook.

Um that's going to be like the old days of um which coins did Binance list as a layer one, and then these are one These are the ones that are going to come next. >> Interesting. So So you're placing a lot of value on that on that um I guess it was like notes that came out of the SEC about which assets are digital commodities, etc. >> Yeah, there are there are some solid alpha in there. Um the SEC specifically named uh those three memes and a bunch of um layer ones.

Uh and they really like like ENS uh NFTs CryptoPunks. >> Yep. >> Um what was it? Chromie Squiggles, I think. And um >> Yeah, and uh some >> is it? >> [laughter] >> I I don't know, man. >> Um okay, so so so clarity for you is going to provide a lot of that, you know, no pun intended clarity for investable assets. How about some of these assets, right, that you know, um have massive institutional adoption use cases, but have tokenomics that are still kind of like um obviously they're just not at the same level of some of these on-chain uh revenue-based protocols, right? You

think of like uh Oracle infrastructure, you think of like uh really important um uh designs for bridging and for cross-chain and for uh designs for security or um you know, things like launchpads, etc. Like there's like this whole cohort of like this like you've got the blockchain layer, like the most bottom layer, the L1, and then And got like the application layer, and you've got all these different types of applications. And then there's like this whole like stack in the middle of all this infrastructure that has been invested anything from ZK to bridging to oracles to cross-chain to anything in that middle stack. And that's all been kind of like re-rated

a lot lower. And people have just kind of like seemingly forgot about those assets and those protocols. Although they're like continuously proving their importance to building this kind of on-chain economy. What's your what's your read on that, you know, stack of middle infrastructure? >> So, I think the one to look at is Chainlink. Uh Chainlink is the only one that's not a layer one or a POW like commodity or meme that's on the list that technically is a token but has enough utility first of all, where it uses the LINK token to pay for gas and pay for transactions and um you have to become a validator by holding

LINK. Um but also it's like core DeFi and now core cross-chain oracle tapping all of it. And they're the oldest to do it. So, technically the TradFi world loves LINK. Um and it has been proven like they will be digital commodity after clarity. So, anyone else who come, you better hope that you can become the Chainlink level of of middleware. Um otherwise it looks like it's pretty difficult. It's easier to to just be an L1.

Uh there are a lot of L1s on the list. It's very hard to be the the dominating middleware layer. >> So, you think a lot of that middleware layers is going to consolidate into like one protocol? Could be Chainlink? >> There's a handful like I think LayerZero is pretty cool. Um very different from Chainlink, very crypto-native um with like um the zero network. Uh I think the cross chain ecosystem is tough. >> Yeah.

>> Basically most things happen exploited now except for chain link even layer zero a little bit it's not like debatable if it's their fault or not with the whole kernel thing. Yeah, I wouldn't I wouldn't look at anything bridge related as a protocol to Yeah, Oracle is interesting. Oracle is less attack vector. >> So thinking about this kind of like tokenization wave it's kind of like the last thing that we haven't really covered. It's happening, right? We're bringing a ton of this tokenized asset infrastructure is being built and it's on of these tokenized assets are coming on chain, right? We've seen the rise of of pre-IPO perps. We've seen obviously perps on tokenized equities commodities.

Now we've seen spot SpaceX really catch fire on Solana and and you know, base and coinbase are going all in on bringing tokenized equities onto onto base and to trade them. And so we're very firmly seeing this and like this is the core thesis that we've been you know, pushing here on the show and just exploring which is there's somewhere in the number of hundreds of trillions of dollars of tokenized assets that are going to come on chain in the next let's call it a decade or two. Let's call them the next five years we get 10 to 20 trillion dollars. So it's a order of magnitude larger than the existing crypto market cap. And so I think the entire crypto market cap is going to look a lot different than what it currently looks like which is like pretty much only

crypto assets in the top 50. You have figures He-Man is up there in the top 15, but we're going to see a lot more of that. You're going to see you know, tokenized versions of equities and other commodities and other kind of financial products in the top 15, 20 assets by market cap. I you know, I think it's almost guaranteed. And so my question to you is if this is right, like if we have tokenized, if stablecoins grow, if tokenized deposits grow, if the if the if we get trillions of dollars of tokenized equities, real estate, etc. on chain bonds T-bills who wins? Which companies, which protocols, which blockchains, which primitives, who is the dominant winner in this tokenized asset universe if a

lot of this is trading on chain? Who How do we think from the investor perspective to allocate to certain primitives, protocols, companies if this tokenization thesis is correct? >> Uh so, I think Hype, you you love Hype, and I I love Hype for this. Um I think the the moment that clicked for me was um when they locked down that Vanguard partnership. That was pretty crazy to secure the ticker of SPX, S&P 500, no not even SPX, on Hype as an official license like ticker to trade this on chain. I mean, that's crazy. Uh and think about it fundamentally, like that's uh Perp is what unlocks the 24/7 trading. I think it's less so about

tokenized stocks. Um like a lot of people who haven't traded this don't know, like when you trade, for example, on the tokenized um stocks, uh depending on where you trade it, some markets don't let you trade on weekends still because it has to follow the same um the same playbook. So, uh ultimately, it it will be 24/7, but I think it it's way more the Nasdaq and NYSE than what they say, way less so about these um providers. Uh but I think underneath the provider, uh I still really like Ethereum because unless Solana completely replaces the Ethereum trading stock, um every single one of these tokenization

layers, what where do they issue the tokens? It's some sort of ERC-20 derivative. And where do people trade it? They use EVM wallet. And the network is solidity smart contracts. And you have the same nodes, you have the same infra. So, um the the Ethereum technology adoption is like a foregone conclusion. It's just like they cannot for the life of me figure out how do they get that to accrue to ETH. Um but even if they stop working on ETH, I feel like BlackRock might just take over ETH and just >> [laughter] >> make it their in-house like technology stack. It it's that mature now.

Um so, I I have that, you know, hope for ETH to be uh still around and and powering this layer 10 years down the line. >> Any any other winners that you see in the market that they can, you know, point to? Obviously, perps, underlying blockchain ETH, Ethereum. Who else wins? Who else is a major benefactor of tons of tokenized assets being traded on chain, being borrowed on chain, being used in DeFi, being um collateralized, being available 24/7 to to trade. Who else wins? >> Um I think there will be some dominating players. Like we talked about Andor, um X stocks.

Uh What is it What is that one called? Um the the the other provider uh Tesera. Yeah, uh Tesera for uh they had a pretty big share of the SpaceX pre-IPO. Um I think those are pretty replaceable. To be fair, um it it's really like who's the most liquid, who can provide those shares to be tokenized. X stocks was getting so much traction pre-SpaceX IPO, but all of the players who used X stocks got screwed. So, um I I don't think a lot of exchanges will go through them again for Anduril and OpenAI. They're going to pick someone else.

So, uh and and FTX is a big it's backed by Kraken, so I don't know. I think this space is still a little bit early and needs disruption. Um it's easier to bet on perps and easier to bet on um the smart contract layer, the layer ones. And and actually not any specific layer one, just ETH. Maybe SOL if you think ETH is going to lose to SOL. >> [snorts] >> Virtual Bacon, Dennis Luman, I've been a huge fan. Thank you for your time. I I love your channel. I also appreciate the way that you uh have a very kind of fundamental view on the asset class, but then also just pretty much strictly apply non-emotional

technicals to the way that you invest. It's like a very like interesting way to think about the market, but then when it comes to the charts, it's like, I don't give a what the noise is, who's saying what. This is what the charts are saying, and here's what I'm going to, you know, here's what I'm going to do. And so, I appreciate that kind of like ability to have two separate minds when it comes to investing, man. >> Thank you. And and I've been following you guys since like like DeFi Slate, and you guys were one of the like earliest like sources of DeFi since forever. Like I've been since DeFi summer, so really happy to be here and discussing this with you today.

>> Thanks, Dennis, man. We'll have to get you on again. Best of luck. Let's see what Bitcoin can do. Let's see what Saylor can do. Let's see what the tokenization, stablecoins, and perps markets can do. We got a bullish, optimistic few years ahead. Just a quarter left of this bear market, I think. At the very most, 4 to 5 months. We're going to survive, man. See you soon, all right? >> Thank you. >> Cheers, man.