What’s Circle’s End Game, Robinhood Launches A Chain & Venice Raises $65M

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, folks. Welcome back. Happy 4th. Rob, what's happening? How you doing? >> No, I'm just trying to uh trying to relax a little bit before the fourth and this market is not allowing it.

>> It's not allowing it. >> No, >> it's not allowing. >> Just keeps going. Keeps getting worse. Although, we've got a little bit of a reprieve today. It seems like >> I don't know. I think that we bottomed. I think we're It's up only from here. >> I actually don't think that. >> You think it's up? Okay. >> I I actually don't think that, but Santiago is not with us today, so I I feel the need to make this a very bullish episode. C can I tell you I was talking to a a very well-known founder in the space. Uh I had drinks with him uh over the weekend and he was saying, "Hey, I listen to the podcast sometimes." And I was like, "Oh, that's that's great." And he was saying, "I just a little bit of piece of feedback for people who run a crypto podcast.

Santi is so negative all the time. It sort of makes me not want to listen to it." And so like you know maybe he was like you guys could be a little bit more positive sometimes since you run a podcast about this space that you're all working in and that you're invested in that has made you money. So Rob's Rob's like you know people all you know told me that you guys should probably just not show your faces on the episode and you know I should be basically monologue and that I I I don't disagree with them. I've given you know you know I think Santi will listen to this and uh my my feedback for him would be to be more bullish because we're in crypto but I will say Santi is one of the best people I've ever met at um not having emotional

beliefs tied to prior and um I remember at the very bottom of the market after FTX Santi went very long Salana and this was um uh this was after he was like a big ETH investor and ETH person and I remember how much crap he got for that and he ended up being very right and then I remember at the top of the market he said I'm selling a lot of my soul and um you know he would he ended up being right about that too and I do actually I I you know I think he is too bearish on on many things and this is a crypto podcast but I do respect the ability to uh not not be emotional with his lawns.

>> Yeah. Yeah, I mean listen, even the the memory trade, he was like, you know, a week early, too, until everything like blew up, right? He's um he's obviously a very very good trader. So, let's figure out how to get him to uh be very positive and very good at trading this market going up. >> That's the goal. That's the goal. How about that? All right, >> let's uh Okay, here. So, let's make this a fun episode. There's um this this week is like the uh the the tech companies are actually doing really cool things in crypto week. Um we had Robin Hood, we had Stripe, well Stripe and the consortium building uh o O USD I think it's called which we'll we'll talk about detail >> open standard >> the open standard so open standard um which is many companies Stripe Door Dash

you know bunch of folks obviously which we can talk about when we get there we had Robin Hood chain which is uh very interesting stuff around that I'd say and then actually cloudflare is the announcement I think many people probably would have missed um because it went a little bit more under the radar, but I thought it was a very interesting announcement too. Maybe if we get to it, there's a whole conversation around Venice and token versus equity. Um, maybe we could start though with micro strategy. Um, you were at the I think Goldman conference. Whose conference was it? You were at a conference.

>> Sailor conference. They do it every year. Did it this year. The biggest one ever. 1300 people. It was great. >> Sailor presented. So, I have two questions for you. One is what is the reaction at a conference like that to Sailor and his you know Bitcoin is the hardest asset in the world, the perfect collateral. What is what is his um what is the reaction to Sailor in that room? And then two, what is the reaction to just crypto digital assets in that room in general right now? >> So the Goldman conference has been going on I think this was the fifth year might have been the fourth year. the fourth or fifth year and I I've gone to everyone and it's gotten bigger every year. So the first one was like maybe a couple hundred people, a lot of traders, and

then some of Goldman's like high net worth clients. And you could tell it was sort of like it sort of felt like, you know, kind of this this kind of weird like maybe some of like the early Bitcoin uh and early crypto conferences where there was it was sort of like the odd people who were like sort of interested in this thing. Uh even though we at that time we thought we were we were mainstream and it was still a couple hundred people. today or this week it was 1300 people. They were double capacity. I actually ran into somebody outside Goldman's office who was like, "Hey, listen. I I thought I they had registered me and now I can't."

And I'm like, "Can you get me in?" And there was like, you know, people like texting like, "Oh, I want to get in." There was like a lot of FOMO around it this year. the the excitement from people who for like the institutional adoption side of crypto a lot of the you know infrastructure the tokenization the stable coins like that excitement is sort of at all-time highs right now among a lot of these people and then there's a lot of these you know kind of golden clients both on the corporate side the enterprise side and the high net worth side who are still very bullish in the space and so I have never seen a an institutional uh a Goldman conference or not a non you know call it like block works or you know kind of a conference put on by someone who's more crypto native an

institutional conference be as bullish as this as it was and uh there would be as much FOMO around a conference as there was for this and so uh so that was awesome and it was awesome to see I think Sailor specifically is a tougher conversation because I think a lot of people especially post what's happened the last you know month or two have I think a very negative view of some of the things that he said and done and so that was actually quite interesting to see because he kind of kicked off the and might have been the most I think the the worst received conversation that that that happened that day.

>> Sailor was Sailor was the worst received. So people people were actively negative or it's just kind of like yeah maybe a lot of skepticism. I think there's a lot of skepticism about sca about sailor specifically because of all the financial engineering that has happened at micro strategy a year ago had people really excited right and do you remember you know we we had so many months of this podcast that we were talking about dats the you know almost that entire time and there was you know a lot of very smart people going out and saying hey listen like this is why this works this will work forever you had people on your podcast uh on empire otherwise who were actively saying, "Hey, listen, like this is going to ex or could should and could exist for a

long period of time and and now, you know, we go the rut, you know, maybe near the bottom or somewhere on the downswing of the market. You know, we've seen the bad parts of of what Sailor has done and specifically around Stretch and then I think the you know, he talked on Tuesday morning uh at the conference. Monday they came out with sort of their guidelines about how to respond to stretch specifically and stretch trading as badly as it did. And I think there was a belief broadly that he was unwilling to make the hard choices and was kicking the decision that the hard decisions further out into the future and that it was going to continue to create this overhang to the market that um we're we're going to have a hard time

getting past until he makes the hard decisions that he created for himself by launching this product. >> Yeah. Yeah. I um I don't know any any other thoughts on I I like Yeah. Any other thoughts on Sailor? Obviously, the Bitcoin market hangs on a lot of I you know, I think really his decisions here and like what he ends up prioritizing, but I don't know any other any takeaways from it. >> Yeah. I I think my only takeaway is that, you know, Stretch was a bad idea, right? And I think there's it it was very like he got greedy and stretches I think a greedy product and it is they launched this you know sort

of u or they came out with this uh sort of framework on Monday that says okay well you know now we have to keep at least you know 12 months of of cash at the company to pay for these dividends. We also are going to overcolateralize it with a separate bucket of of Bitcoin. We've got I think it's about 20 months of of dividends right now. We can continue to um you know, we've we've we've told you that we can sell up to X amount of Bitcoin in the future without coming back to the market and come back to board approval. Uh and so we've put some like we put it in a box a little bit in a way that we can we'll make decisions around stretch. Um, and he clearly did that because he wants to

preserve the ability to continue to raise more capital and to hopefully go and, you know, buy more Bitcoin, I guess, right? But it it's it's clear that there is going and in times of market stress and there will be more times of market stress that this product is going to continue to be an overhang. And I I think in my mind the the decision that will have to be made at some point in the future is to essentially get rid of stretch or and or to uh just let it trade at a significant discount and not raise net new capital in that way other than in in in the common. And so um I I think there's there are some people who are quite

upset about the current situation that we were in and and believe that the current ways of which they've decided to respond to the market volatility uh is not the best path forward for either Micro Strategy or Bitcoin. >> Yeah, I yeah, I tend to agree with a lot of that. Um where I think I will not agree with you on some things is open standard uh open USD. So that's the meat of this conversation. I want to get there. So, I'll pull up my screen for anyone who's watching. Um, but I'll talk through it, too. So, uh, the website joinopenstandard.com.

I'm going to read some of the highlights from this blog post. Introducing OpenUSD, a new stable coin for global money movement. Stable coins are being adopted rapidly, yada yada. OpenUSD introduces three key design principles built for scale. Earn by default. The key here is that partners receive all the earnings from OpenUSD's reserves less a small management fee to cover their operational costs. On the built for scale, it means they can mint and redeem OpenUSD at no cost and with no artificial limits on volumes and govern collaboratively. So you can even so just in right in the outset of the of the blog post, you can see who they're going after here. You can see who they're kind of there's a there's a target on the back of of one company, right? And you

know to no surprise you know C Circle stock opened down I think about 6% right after this blog post. Um and uh >> but it was down 17 and a half% on the day. >> Yeah. Exactly. Exactly. So um yeah I mean a lot of huge companies signed up for OpenUSD right out of the gate. Right. uh Visa, Stripe, Mastercard, MX, Discover Fiserve AON Cloudflare um CLA, Door Dash, Black Rockck, US Bank, Commonwealth, you know, Bank of Australia, Moneygram, the the list goes on, right? It's a it's a huge list.

Google Samsung IBM Shopify crypto companies, right? Anchorage, Ripple, uh, Base, Salana, Tempo, Coinbase. Um I think this is you know it's an an open standard hundreds of companies. It is it is really Stripes initiative is what I would call it. It is um uh it's it's being run by um by Zach Abrams who uh founded Bridge. Bridge was acquired by Stripe. Um I think that's even interesting because Bridge was like anyone should get a stable coin. This is like there should only be one stable coin so we should talk about that. So yeah, I mean Rob, you had I think one of the more thoughtful better takes on this on on Twitter. So yeah, maybe if I'd

just love to hear your take on this. Um there's a lot of angles, right? Is it bearish for circle? Is it a capitulation of the thesis that everyone should have a stable coin, but let's start macro? And then we can go into the specifics. >> Yeah, because I I think there's a couple different things to talk about depending on how you want to, you know, direct this conversation, but there's the competitive dynamic. So what does it mean for Circle, Tether, Paxos, you know, Agora, like all the all these guys? There's the, you know, how likely is this to be successful and what do you think about like, you know, their the way they've constructed it? Um, and then there's, okay, well, what does it mean for, you know, stable coin adoption more broadly? And I think those three, you know, sort of topics are are really

important here. Uh, maybe I'll start on open standard itself. Uh, and just like, you know, what I think are the good the good and the bad of this. and and the good is obviously clearly one Stripe is an incredible product company, engineering company. They um you know they're leading forward a lot of the really I I would actually say they they have probably been the most important company in like enterprise stable coin adoption over the last you know call it year and a half two years and they're taking a leading role and and and trying to distribute stable coins and tokenized assets etc. And so so that's that's great. Um obviously acquiring bridge and acquiring privy have been a big part of

that they're some of the things of which they've done in terms of the structure and there's a lot we don't know by the way. So there there was a there was this you know blog post it's still pretty vague on some of the I think really important things but um some of the things they said like oh well fee uh free mitt and redeem. Well free mitt and redeem is clearly obviously good for payments use cases. Redemption fees have been a problem that people have complained about, especially at payments companies for, you know, a period of time and and getting rid of that allows for the free flow of money that and and better clearing essentially than has existed before. And so that's that's great. Uh mint mint fees are are often non-existent anyway. So mint doesn't matter as much as redemption does. And but the redemption fees sit

there on purpose because of course Tether and Circle and others are incentivized not to have you redeem because they want they make money on the amount of of stable coins outstanding. Um things like yield sharing obviously matters to people. Now this is already something that like USDG has been doing which is also a similar type of collective model um over at Paxos something Agora has been doing from AUSD circle itself um outside of their contract with uh Coinbase has been striking a lot of you know yield sharing sort of distribution deals with a number of different partners and so I think it's important but I don't actually think it's that important because the market was already moving this direction anyways and everyone was already kind of focused on um you know sharing yield

anyways and so I don't it's not really something that I I see as as net new. And so then you get to the, you know, okay, well, we have all these partners around the table and this is about, you know, adoption of something that we can all use for the collective good for a better new rail and that's great and having all those part people around the table are great. It's hard and I think I would never it's hard to bet against Stripe, but I there is no thing nothing you can point me to that's like you know a consortium of this size that has ever been successful.

There's um a number of consortiums that have tried uh in the stable cocoin space before that have have have not worked before. Even Circle itself started as a consortium uh and then they basically cut a bunch of people out of that consortium. Um there are some consortiums in the payment space that have come out of banks that have been successful but you know it's a much smaller set of people and all are clearly aligned on building better rails here. I think there's a lot of actually misaligned incentives among a lot of these um customers or a lot of these you know consortium members. Now that doesn't necessarily matter if you get a few of the really powerful and big ones to go and push list and distribute it.

Uh so it doesn't necessarily matter that Aden and Stripe might be misaligned because like you know Aden doesn't have to you know do anything around this. I also expect that like you know everyone wanted to have their logo and their name on this thing because they knew it would get a lot of play and a lot of coverage and that makes sense like that's the right incentive. How many of those people are going to do anything to actually further the distribution of this versus like strike a deal with USDC or to you know do something else? I think that's very much up in the air and I expect actually the vast majority of these customers won't actually do anything to help further adoption, but maybe a few of the really big ones will and that'll be what matters. And so and and and I think Jeremy came out with a

very long post too around things like oh how hard it is to get their compliance infrastructure, how hard it is to build the, you know, these integrations in a bunch of different places, how hard it is to get liquidity up. And all of those things are true, but these are a lot of the names around the table here are people that can solve those problems if they want to solve those problems. And so I think it's going to be hard. I think they'll probably end up being having some level of success. I don't think it's a death nail to circle the way other people think it it is. And I don't think it's like a foregone conclusion that they'll like run away with some market.

>> Yeah, I uh I thought we were going to disagree more on this. Um but I tend to agree with a lot of that. Like I think the most important thing here is I have never seen a consortium of hundreds of people including hundreds of rivals like you know seven different banks and aon and stripe uh and you know multiple crypto exchanges and custodians like the a consortium of this size kind of has no precedent for working. Maybe you could actually point to Visa would be an example of a consortium work. I've never I haven't actually read uh what's it Dehawk's book on like the founding of Visa and Visa getting started. But my understanding is it was a consortium of a b a bunch of banks and then finally became one thing. So maybe that's like

the counter to all of this is that big payments networks actually can start as a consortium and Visa is a perfect example of that happening. But I tend to be in your boat too where yeah consortiums are um consortiums are very tough because there's no one thing there for a couple reasons. One is there's no one person driving it. So maybe this is solved by Zach driving it forward. But the second is that the second you get regulatory risk, like look, we we have a beautiful environment to build this stuff. Imagine I mean it's 2026, right? The midterms are in four months. Imagine things start to turn. Um better better believe some of these companies are walking away.

Like are they really going to take risks on stable coins? Even though I know we are lovers of the stable coin here, I I I just don't see them taking risks here. So I think um if it is one of their initiatives, they own it. They're taking the risk. If they're one of 150 companies, they're they're walking back. So yeah, I tend to agree with you. Can we talk about this? Um so I tweeted out, I said, uh you know, it took us five years to realize that not everyone should have a chain. Let's not spend another five years to realize that we don't all need stable coins. And I think you push back saying a lot of people actually are building both chains and they are building stable coins. Um, and so, you know, maybe the data, Jason, would show that you're wrong here. Um,

tell me about here's here's where here's why I said this because look at who's running the open standard, Zack. So, to me, this feels like a capitulation, Bridg's whole business, and you know it better than most. Bridge's whole business is going to people and saying, "We'll build you a stable coin." Now, they also have their own stable coin, right? They're very similar to like some someone like an Agora, I would guess, which I know you guys are an investor in. They have a USD and they go help people build white labelled stable coins. Zach going to run this feels like to me a capitulation of the idea that everyone should have a stable coin and focusing on the bigger idea which is let's make a huge competitor to Tether or USDC. But it sounds like you disagree with me on that.

>> Yeah, I I so a couple things. So one, there are people on this list who have their own stable coin and are actively moving forward with their own stable coin. Coinbase is on the list. Coinbase has USDC. >> Yeah. >> Yeah. Well, that even like you know I think Money Gra and Western Union are both on the list and they're both going to announce their own stable coins, right? Like there's a lot of f there's still a lot of reason for fintex especially um uh within sort of like a a closed loop system to have their own stable coins. I think we're going to see a lot of that. To your point around I wouldn't say that bridge's business is to go give people stable coin. bridges businesses to go give people um stable coin infrastructure which is inclusive of maybe white label inclusive of their

you know developer stable coin inclusive of um on-ramps off ramps inclusive of uh orchestration etc right and one of the things that's happened a lot over the last you know call it year uh year and a half since they got acquired has been that stripe has also gotten really good at going and like hey well here's bridg's product also maybe here's tempo also here's stripe verify like and let's do some sort of like consolidated offering >> the Microsoft pricing. Yeah, we'll give you PowerBI for free. Yeah. If you just use Azure. Yeah, exactly.

>> And and so I think this is sort of just another part of that which is like here's everything you need. Uh and now we have this thing that will hopefully like the the stripe or the the bridge stable coin I think it's called path. Maybe I have that wrong. Maybe it's a tempo one. But the the the bridge developer stable coin like you know it's not big at the moment. it doesn't have a lot of liquidity and so maybe this is a a way in which they can say well like you can do your own thing or you can do this if you do this like you have uh a lot more connectivity a lot more liquidity etc and it serves a different use case because this is more of a payment stable coin versus like oh you're like closed loop white label stable coin and I expect that's actually

what we see is still tons and tons of people do this like closed loop type stable coin and then we see you know a competition on the on the payment side um and I will say that Like I think there's also a little bit of this sort of um you know anytime you do M&A you have to integrate the company or you have to let them operate um independently. The original bridge you know M&A process was hey they're going to operate independently. I think that was also true originally of Privy. It does feel like there's a little bit of a come back into the fold and consolidation and streamlining of like the whole um strategy that's happening here. And that's probably part of also um Zach taking this over.

>> But is that a is that a bad thing? >> You talk about it. >> Okay. Yeah. Yeah. Yeah. Yeah. So does Okay. So the next part of this question turns into an economics question, right? So if you look at circles opex, I think their adjusted opex like if you strip out IPO costs and stuff like that was like 600 million, five or six00 million if I remember correctly. So that's a large amount of money, right? Half a billion dollars. So uh in this case let's say they are let's say um the open standard is getting uh you know I don't know what do you think they get 10 bips or 50 bips or 25 bips like if you have uh 10 billion of supply and you're getting maybe they can get 50 bips I

even that's probably too high 20 10 bips 25 bips you're getting somewhere in the range of 10 to 50 million a year so that is a very let's say It's 50 bips. Let's be generous. 50 bips on 10 billion of supplies, 50 million a year. Circle opex, adjusted opex is 500 million. You got to pay for a whole bunch of things, right? Partnerships and OTC desks and settlement and compliance and BD people. Do you think that's like what do you think happens here? Is this just Stripe is going to fund the bag? Is this part of Stripe's company?

Yeah, I so I've talked to a lot of the different partners, both the crypto ones and the Trafy ones. Um, a lot of people have very different opinions on this. There's uh, you know, a number of people I've talked to who are like, listen, like this is Stripe thing for Stripe to go win. I I think you know, everyone thinks Visa was heavily involved as well. Um, and and so I think within that like and if that continues to be true, they're the definitely the ones who are going to be the most aligned. So they have the most to win and the most to lose if this doesn't go well. And so they're also going to put the most money into it. And I expect that they will also warehouse a lot of the costs because of that, right? One of part of the reason that Circle has such high

OPEX um is because of the fact that they are trying to turn an issuance company into a payments company and they're trying to build all of these other things around the around their ecosystem uh to monetize in different ways to provide you know applications and developer tooling and things to make it easier to use their stable coin. Obviously, Stripe already has a lot of that. And so, it's not that the OPEX is necessarily different between the two of them. It's just simply that Stripe has already built it and or Stripe will will warehouse it and maybe will sit outside of open standard, right? And so, I I expect that they take the most active role here. Obviously, I think my expectation is Tempo also takes an

active role here. I don't know if that's true. Um but like you know that's just an expectation from the outside in and tempo raised a bunch of money and are doing basically a lot of like for deployed engineering already with a lot of the people on this um open standard list right and so I I think that they'll probably quote unquote like subsidize a lot of the opex that's needed by pushing those costs on to you know some of the largest shareholders. >> Yeah. Yeah. What do you think about the impact for Circle? Circle is now down from 125 is trading around at the time of recording around 60 65 bucks right. said, "It's been cut in half in less than two months." Um, yeah. What are your I mean, yeah, Jeremy had the post that you mentioned a little bit, but what are your thoughts on the

impact for Circle? >> Yeah, I mean, I guess they were back up 6% today. Um, they were down 17 and a half% on the announcement. Um, so they're probably net down, you know, call it like 12% since this thing came out. This was also sort of a poorly kept secret and so hopefully people weren't inside a trading net, but like I'm sure that there was some some of that. Um, and so listen, I think the market reaction is justified. I think you know to our point that we talked about earlier there is absolute it's absolutely going to be tougher for them for OSD to take you know circle market share than uh maybe some of the original takes talked about I expect but it it it it's almost a sign of not just this

specific stable coin but just a sign of the fact that like this prize is big and so yes like growth could be great but that also means when a a prize is big that there's going to be a lot of competition and so you and you're going to get competition for people like stripe you're going to get competition from the banks and I think the banks are actually maybe the thing that we should be more worried about for circle than the um than than stripe because okay so maybe stripes wins a payment use case well you know the bigger use case today is treasury management and and capital markets those are the bigger and like clearing those are the the really big use cases and those markets are dominated by the banks and so you know there's I think real concern that the banks take a lot of uh a lot of that

flow. And so I I you know I I think that Circle is going they're sort of have this pushpull happening right now where there's um yes they have a head start and they're definitely have a head start on the institutional side. Yes, it's going to be harder to compete with him than people realize. Yes, they have all of this liquidity. everything that Jeremy said is is is mostly right, but also it's going to get significantly more competitive and um there is going to be it's going to come from people who are probably more well-versed at either product on the tech side, on the payment side, or at capital markets. And that's going to I think create a bit of a

headwind from them in terms of taking that market share. And so, um but listen, as Peter Teal says, uh competition is for losers. How does this impact um well actually one more on circle should be long or short circle here? >> I would not be long or short uh at this point. I think this is a bit of a wait andsee market. I think they need to do they probably do need to do something defensive. I I don't know what it looks like right now, but like you know I've been saying for a while I think they should be inquisitive. Uh obviously the stock has come way down and has come way in. So it's harder now with the current stock price than it was before. But I think they should be acquiring things to expand their capabilities. I think that the issuance itself, the fees that you

can take from it continues to go down and down. I think a lot of the and and you have to build better product, value added services, etc. on top of those rails. Stripe understood that early on in the way that they um expanded their product set. And so I I I think it's it's a buy versus build conversation right now. And I think building is is is going to take too long as this market kind of heats up. >> Yeah. Yeah. I've said this before on the podcast, but I'll say it again now because I think it's relevant, which is the these all end up being moments in time that really it just comes down to how good is the founder? And I think a lot of people have lost a lot of money betting against Jeremy. And um it's very easy to say this is a short circle

moment, right? It's very easy to say like they're cooked, their business model's going to zero. you got to share all your fees like but at the end of the day like everyone saying that is still using USDC as the backbone of every single thing that they do on chain. So until I see open O USD as the backbone of my hyperlquid trades and my uni unis swap trades or you know what whatever it is getting deposited onto a or morpho wherever you do things on chain like yeah I I still um I'm not long or short circle but I I just wouldn't Jeremy's proved a lot of people wrong so >> I I totally agree with that and so I I I agree with you that being it doesn't

make a ton of sense to be short here considering also considering just like the market growth that I expect. There was to your point though about things on chain. One of the things that I believe it was the head of stable coins at RAMP came out and said um and RAMP has a very very close relationship with Stripe. So I I'm certain that they will be a big user here. But they and one of the things that they said was to Jeremy's he was kind of responding to Jeremy's point about liquidity and onchain etc was that I think he thought people were focused on the wrong thing because yes that will be hard to compete but that's also not what OSD is supposed to be the where they believe OSD will win and win quickly will be on um the interoperability and the integrations with PSPs banks payment service

providers different payaxs different um technology ology companies and it was basically like if we're not even focused on that market, we're going to be the most uh the deepest liquidity and we're going to be the deepest and all of the traditional payments uh companies and that is the thing that that matters. And so it's possible too by the way that like if they do that and then Circle has you know the onchain piece um I I think you have to be concerned about Circle's potential growth potential but you know not necessarily losing the market share that they have today. But all that said, if this becomes a very deep Stripe product, right, and Stripe is the one who has the most to win here, to the point I said earlier, like

Adion will support it if they're because they'll if their clients want it, they'll they'll want to be able to support it, but they're not going to push it, right? And that is going to be true for all of the acquirers. That is going to be true for a lot of the banks. Uh it's going to be true for a lot of different people around the table. And so, it's one thing to support something, right? A lot everyone supports USDT, supports USDC, supports a lot of people support AOSD, a lot of people support Paxos USD, etc. But nobody uh but but who people push, who people distribute uh is is different across all of those players even though they support everything.

>> Robots and machines will outnumber humans on chain and peak is how they get there. Peak OS enables any machine to do business on any chain. It turns machines into autonomous actors and liquid assets with ease, giving robots access to capital and the ability to compound their value. That means funds, allocators, and institutions can underwrite, finance, trade, and route capital to machines the same way they handle any other asset. Millions of new potential consumers for any web 3 service, from compute to storage to anything a machine may need, without a human in the loop. Headtop peak.xyz XYZ or click the link in the show notes to find out more.

>> Yeah, 100%. Um, anything else on this before we get to Cloudflare? No, I I think it's I think it's a it's a wait and see moment and I think it's going to take longer than anybody sort of expects and I expect we actually get into a situation where people like, "Oh yeah, this was a bust and uh and maybe that'll be, you know, calling uh calling the death a little bit too quickly." Uh the market's big and a lot of people are going to to to win here. >> Yeah, I agree. Um okay, let's let's talk Cloudflare. So Cloudflare for those who don't know is a cloud networking and I guess you could call them a cyber security company as well. About 20 to 25% I think I think the number is 20 21%

of all HTTP requests uh on on the internet go through Cloudflare. Um about 20% of the whole web is protected or runs through Cloudflare. They have about 100 million HTTP requests per second. 100 million per second. So, it's a it's a massive company. Um, good good founder and CEO, publicly traded. I think I think they started uh 2009 2010. Um, so yeah, really really strong company. They announced a really cool thing which is that uh the monetization gateway. So, going to read their tweet. We're opening the wait list for our monetization gateway which will allow you to charge for any website or excuse me any web

page data set API or MCP tool behind Cloudflare. The charges will settle in stable coins over the X 402 open protocol. So to translate that, a they're supporting X42. Um, and B, but I think the more the cooler thing to maybe translate it is millions of websites can now turn on pay per request stable coins. They don't need uh, you know, any knowledge of stable coins. They don't really need any knowledge of how to do that. Um, very natively built for AI agents. So you know, it's been all this.

The reason I think it's cool is I there's obviously a lot of hype around agents and agentic commerce and um you know X42 and stuff like that that the numbers have actually been really really small. I think this is one of those examples where things just it will clearly happen. It's just things will take longer than people usually think. So yeah, this this was a very interesting product from Cloud Player. Yeah, I I agree that there is going to be a lot of stable coin usage and you know and injecting payments. I think actually you might have seen but it was two weeks ago or three weeks ago that we saw some data that said for the first time the majority of internet traffic

was agentic or >> that was Cloudflare too. I think that >> yeah it was yeah cloudflare talked about it and so clearly I mean they they have a better um sort of vantage point than anybody here in terms of understanding like what is happening on the agentic use case side there's you know they're part of the x402 sort of uh like governance board and I think they're also going to do stuff with MPP you know I think when you talk to them they also do have a belief though that there's going to be you know non stable coin transactions uh in Aenta commerce I think The reality is is that their stable coins are very good for certain types of transactions. They're going to play an important role here. But maybe that role is very much around this agent

to agent, you know, type of of transfer or payment or this agent needing to pay for, you know, a microtransaction versus like a, you know, some of the other stuff that people have talked about where it's um human controlled or, you know, larger transactions, etc. So we've actually started to see I think most people come around to the idea that like actually cards can be modified to be used for most agent transactions where especially when they're user controlled or when they're enterprise especially like enterprise uh harness for an enterprise use cases and maybe in some of these like marketplace uh etc which are in many ways just sort of like really advanced um RPA but for sort of the free flowing some of the free

flowing uh agent transactions that they need to pay for things like obviously stable coins are better but but I also have a belief that like even if cards are good I have this belief that like all of card settlement is going to stable coins over time too personally um and so like I think stable coins are going to play a role in all of this but this was really cool cloudflare I I think I think the stock has been getting quite uh it hasn't been doing particularly well but I actually think they stand to play a very interesting sort of place in the payments ecosystem which is a whole new revenue stream for them and could theoretically be very very good for their business and so um super excited to see them do this. I expect this will continue to be from a volume basis maybe a lot there will be a

lot of transactions but from a volume basis continue to grow very slowly personally. >> Yeah. Yeah. Yeah. That's fair. I I um you know I'll get to the conclusion after we talk about Robin Hood then I think you can tie all three of these together actually into like almost one message for this podcast. Um but let's talk Robin Hood first. So Robin Hood announced um the acceleration of their of their chain basically. So they they launched the public mainet of their L2 which is an arbitrum based L2 chain called Robin Hood chain. Uh bunch of key features that they rolled out right um tokenized stocks. So Nvidia, Apple, Google available in 120 countries onchain DeFi. I think it was a unis swap AMM um and uh Morpho lending uh Agentic

AI trading for uh users uh uh US users specifically uh chain link as the oracle 90 days of zero gas fees. Um and Hood stock went up I think uh I think it was like eight or nine% on the day. I I I have to re repull that up. Um yeah, Hood is up 20% in the last five days. So I Yeah, very interesting. I think it's um it's funny to see like a p you know publicly traded company launch a chain and everyone gets very excited about it. Uh you know I feel like the chain announcements of 2021 in 2022 uh the cryptochain announcements have now turned into the trady chain announcements. So yeah would love to hear your thoughts. Um

for I may maybe I can start with my most interesting observation which is you know for years there have been these kind of pay-to-play games where chains go out and they pay applications and big companies to come launch on them. Uh the Robin Hood chain is the first time now I don't have all the details right I haven't talked to the Robin Hood folks about this um I've only talked to application founders for many years the chains would pay these huge amounts for people to come join their network right so if you see a big trady player coming onto a blockchain there's usually something >> I think it did happen this time too for the for them to build where they built but >> I think yeah I mean it definitely happened here as well right um many chains wanted to be

underlying infrastructure for the Robin Hood chain. Uh, but what I'm getting at is this is the first time I've seen applications now pay or at least try to pay to join the Robin Hood chain. There's a lot of founders I think of Dexes, right? AMMs, lend, you know, lend borrow platforms who don't really understand where the future of their company is going to go. If you're not a or morpho or maybe a spark or chamino or a unis swap or one of the one of the you know aerad drrome like a tier one player is it's a tough it's a it's a dog fight out there right it's it's I think a lot of founders are uncertain and I think a lot of founders see joining the Robin Hood chain as their maybe this is our

comeback story maybe if we can pay if we can pay to get on this chain we you know we or not even get on the chain if we can pay to be present ented front and center inside of the Robin Hood Hood app. You know, maybe that's our that's our comeback story and that saves us. So, again, I actually have no idea of the structures. I don't know. I don't even know if Robin Hood is taking payment. By the way, I'm not sure if Robin Hood is letting people pay them, but I do know that many founders are going to Robin Hood with large amounts of money saying, "Please let my app deploy and please put us front and center in the app."

>> Yeah. So, so anybody can deploy on the chain. what can't happen is that anybody can be uh integrated into the wallet. And so that's what we've seen people be really excited about. If you looked at the um the announcement and that came out uh and if you actually watched it, there was a a bunch of different names of of different types of protocols that were um in that announcement. So Athena was on there doing a kind of a yield vault morpho uh lighter. Um the uh DYDX the new brand I think it's Arculus. uh there's you know a bunch of others like you talked about and so um like any of those people can build on on the and

there's a bunch of other people kind of building on the chain itself but there was three companies that they actually basically highlighted very uh deeply on during the presentation of people who are like building deep integrations into the wallet and that was lighter who I think got the most play Morpho uh and um and Arculus the Dydx uh uh business and those were the three that they kind of like Arculus is Dydx, right? Dydx. >> Yeah, correct. It's it's a new brand and and it's a a little bit of it's a kind of more like a DYDXV2 infrastructure. Um the way they're they're building it. Um and so they've gone back to >> lighter lighter more lighter morpho unis swap 2 or no >> uh unis swap talk about as much on the actual

>> Yeah, I mean they're they're part of the integration. So they're they're listed there, but they I think the three uh the least that I saw that got highlighted the most were those three. Um uh but unis swap >> another one too here if you go down so there's unis swap and then I've actually never heard of this pletes which >> yeah there's rialto and and there's a bunch of others uh that they that that are actually there so I think if you actually go down the list >> lighter arcus 1 in yeah so there's a few there's a few so I get what you're saying they are >> what I'm saying is like when you actually listen to the the actual live presentation they spend a lot more time on like those three right now but yes there's a bunch of different names if

you go up down here and also you know um that's for this the trading experience there's also something else for the um the lending side on on a as well um etc. Right. And so anyways, uh they what what I found very interesting during all this is like if I take lighter for example, um I I don't think any they're taking they're definitely not taking payment or at least I've never not heard they're taking payment, but what they are asking for is can you do something that one works very very specifically for our wallet that make sure that the experience is bestin-class. So lighter for instance, one of the things that they've done right now is they've um they've made it sort of a segmented instance at the

moment specifically for the the wallet. I know they're working to go and um also aggregate liquidity between the two and it's sort of an alpha so it will happen but um at least to get the experience where they want it to be at first they did sort of a segmented um a segmented instance but then they also are adding I believe it's $20 million of lit tokens worth of incentives specifically to the users of the Robin Hood wallet and so it's it's more around like what can you offer to I believe Morpho is offering spec special incentives too I believe there's that the it's the earn product on uh in the wallet is 7% right now and I think a lot of that is coming from uh Morpho token uh token incentives. So

there's a lot of this focus on like can you provide things not to Robin Hood but what would you provide to our end customers to get them really excited to put their full financial lives here right and to put and to trade here and so um that is where I think this is going which is that like Robin Hood doesn't need the money but that what they do want to do is they want to make sure they have the best offering and so how can these people do the work to make sure that they have the best offering. >> Yeah 100%. What do you think any Yeah. I guess where do you think this goes? This feels like the most exciting chain pro announcement since probably Tempo I would say.

>> Yeah. Um I'm interested to see the dichotomy of okay what happens in the wallet which I think will do incredibly well. The wallet's actually a very good product. I don't know if you've used it. They're uh and they're clearly building >> dumb dumb question. Wallet the wallet is inside the app. You're talking about the wallet not a >> Oh, I have not used that. Okay. >> Yeah. So it's like it's sort of a separate app now. I don't know what their plans are for the future and um I I >> it's an app like I can download it on my phone or it's like a Chrome >> Exactly. Yeah. Yeah. So it's it's sort of Do you remember how um Coinbase used to have Coinbase wallet and it was like a separate app?

>> I do remember. >> Yeah. So it's like sort of it sort of started that way, right? And so they um and it's all the it's like DeFi type stuff, right? Um I don't know what their plans are for the future. My guess is for the future they'll probably bring it into the core app when they can from a regulatory perspective, but um at the moment it's separate, but it's actually it's quite a good product. So, uh and that Go ahead, sir. >> Oh, I was just going to say on that note, I think that's where both Robin Hood, Coinbase, um actually OKX, I think that's where all of these exchanges are going for what it's worth is that a lot of more and more trades um are starting to settle on just are actually starting to settle on chain. So if you I think if

you fast forward to what Robin Hood will look like in a couple years, Coinbase will look like in a couple years, a lot of the the the pairs are just gonna and a lot of your trades are actually just going to settle on Chain. So Robin Hood wants to own the wallet and and maybe some ownership in the DEX and maybe some the more of the stack you can own the better obviously. So, I wouldn't be surprised if we see Coinbase maybe incubate a DEX or um Robin Hood incubate a DEX or the more that they can actually own themselves that I think the better because I think that is where things go.

And OKX, >> you know, and maybe not as big in the US, but like OKX is another one has done phenomenally well on chain. They have I think maybe the biggest wallet in the world today, bigger than MetaMask. Um >> I think Binance is still the biggest. >> Uh okay, you might be right. Yeah, that that that might be right. Um, but yeah, they've done a lot on chain and I I think if you go talk to the product teams at any of these exchanges, they'll say and look, we we can see the data to a block works, we can see more and more sex trades not settling on the private the the sex order book that's actually settling on chain. So, >> yeah. No, and you're you're 100% right.

>> Robin wallet. I see it. This looks >> Yeah, got to download it. It's a it's a good product. And and so you're 100% right. And also what uh what all of these guys are doing is to your point about incubating. What it's actually happening is they're all investing right now. So Robin Hood has invested into a bunch of these guys. Um Coinbase has invented invested into some of them and also acquired some. Kraken's doing the same, etc. And so you're seeing them kind of get, you know, that alignment early on and and you know, maybe an investment turns into an acquisition uh in the future. um you know M&A in the with products that have tokens is still a very hard thing to think through today but we'll we'll see more of it but I totally agree with you and but I think to the point I was making

which was that like the wallet product I think is going to do incredibly well and I think you know the people who are integrated and pushed into the wallet are going to be do incredibly well. I don't know if I think that like the things that are not doing well in the wallet will do well on the chain i.e. you know, for the people who aren't getting this preferred position in the wallet and they deploy on the chain, will there be other liquidity that people are are doing things outside of the wallet on the chain, right? A and that's where I would um I would be much more dubious, but I think this is where the whole world is going though, which is this is why I said this, you know, tweet back to your tweet about like, oh,

have we figured out that we don't all need, you know, all these chains? I think we are going to see chains from a lot of the world's fintex, a lot of the world's banks and they're just going to have their own execution, you know, kind of environment for the things that exist on their apps, right? And maybe they'll be open and so other people can interact there, but they want to prioritize the things that they want to prioritize in their applications. Um, and I remember uh it was Kyle Smani and I got in fight about this on on Twitter or back and forth about this on Twitter a couple years ago where I had I I've been saying this was going to happen for a while and he said, "No, you know, it's all going to happen in Salana." And and I I continue to see the signs of this is

what's happening and this is where we're going in in the future. And in fact, I even talked to a founder of a high throughput L1 earlier this week who, you know, it's a high throughput L1 that hasn't had a ton of traction, but, you know, has some good tech and um is a team that came out of, you know, kind of one of the the really good uh kind of L1s. And this founder was telling me, "Oh, I'm actually getting a lot of acquisition offers from corporates right now around uh which is kind of weird because I'm building this thing and I haven't really had the traction yet, but I think I have great tech. Um, but all these corporates are coming to me and saying, "Hey, I actually just want to acquire you." Right? And I think that is where we're gonna what we're going to

see is we're going to see a lot of things like this where someone like Robin Hood is doing all of this, you know, onchain crypto um economic activity and they want to own their own execution environment. And so I think that's where we're going. >> I do too. I do too. Um, to wrap all this up, my summary statement, like what's the takeaway from all this? We're talking about Stripe and Cloudflare and Robin Hood. There's this uh very famous probably overused at this statement which is um it's like you know startups versus incumbents right can startups get distribution before the incumbents can figure out the innovation something like that there maybe there's a third bucket in today's world which are tech companies

right tech companies are many of these companies are 10 to 15 years old but because of the scale and the growth rates of some of these internet businesses and these tech companies, they they're almost the size of many of these incumbents, but they still have the scrainess of a startup. And so this this statement of like there's only this two companies, right? There's the startup versus the incumbent. There's a third company here that crypto companies need a third group that crypto companies need to be um both excited about, but also they're your competitor in many of these cases. And it's it's the it's the tech companies. It's the web two companies. It's it's Stripe and it's Cloudflare and it's Robin Hood. And you know, they're it's opportunity because

they're your customer, right? Like Morpho will do very well. Um Lighter will do very well from integrating with Robin Hood. Both those companies will benefit greatly. Um but they're also in many cases going to be your competitor. So it's a it's an interesting I don't I haven't have I haven't fully formed my thesis or my idea on what the what that means, what the takeaway is, but um I I do think this idea of like startups versus incumbents maybe it might be weirdly an old school idea now that they're the tech companies. >> I do think you know I had a um it's a little bit all about perspective, right?

And so like very clearly, you know, Stripe builds product and has engineering that um is far ahead of a lot of like the people that you and I would consider uh incumbents. But also, I got a call from a reporter yesterday who was sort of, you know, wanting to talk about all of this stuff and had seen my post on X and that reporter's perspective was that Stripe had failed out a bunch of products and they were like not that good of a product organization, right? And this is a reporter like in the bay, right? And and so I think you know in many ways it is just natural that as businesses get bigger they have a harder time doing kind of net new risky things right and so yes is Stripe or Cloudflare

or name your tech company Robin Hood um better at building new tech than uh Charles Schwab and uh you know whatever like you know global payments is like yes absolutely but you know can they are but they are sort of the incumbents now and will they still be able to move as quickly as a startup like and especially in a world of AI like probably not right and so I I think it's just that everything is getting faster everything is going to market quicker but still the startups have advantages on certain things >> yeah I don't know I haven't I I'll I'll update you in two months once uh the thesis is fully formed and look we'll see we'll see if open standard is takes off

>> well open standard's not even not even going to launch until like late this year Oh, two months is too fast. Yeah. Yeah. >> Yeah. >> Problem with consortiums, right? We'll see in five years if open standard takes off. We'll see if Robin Hood chain gets big. We'll see if anyone uses this Cloudflare thing. Um, >> yeah, TVD. >> I mean, I think my takeaway from all of this is is two things. One is that things are coming on chain. It's happening like I could tell it on the Goldman thing. You can tell it on on, you know, all of these announcements. There's no doubt in my mind that fintech, stable coins, tokenization, like the DTCC is going to launch their thing in October. like these things are coming on chain. It is happening. You can't get in front of this strain, right? Um but I think the other point

here is also things are just happening quicker and like it is going the level of uncertainty is higher. The pace of movement is quicker and there's uh just a general I think sort of um almost like manicness or like mania going on uh around like having to ship this stuff uh very quickly. And I I would just broadly say that we are going into with AI and with tokenization and digital money and digital assets. Uh a world of just you know incredible GDP growth and financialization of everything. Uh and people you know should be ready for that

but then should prepare for that and should work towards you know being part of that um you know that future economy. >> Yeah. Venice. Tricky one to talk about because you guys led the round. Um, Venice is uh Vorhees's second act. Um, it is a AI platform that is permissionless and can't be censored and has done very very well. Um, they just raised they announced a fundra series A I think it was $65 million.

>> It's the only said fund raise they've ever done. So they, you know, they announced ignore the series part. They announced a race 65 million at a 1 billion valuation I think it was. Um and the you know the first thing to do is congratulate Eric because um he's one of the better he's he's obviously an amazing founder. He's one of um he's one of the he is a um has deep conviction in his values and his ethics and his morals which actually is um I think what led him to build Venice. It's also very relevant to this conversation because the the interesting conversation that I think this sparked is Venice was one of the few usually what you do in building a crypto company

is you go raise a a preede and then a seed and then a series A and then you launch your token and you get this huge valuation on the token and the token's down only. Uh what Venice did is they launched their token from basically day one and the token's done very well over the last several months. They the um the controversy around this round is that they're they raised equity but they they raised an equity round but they already have this token. So there's a dual token equity model now that many would say including you know my co-founder Mike had a video on Twitter that went you know viral in the crypto sense of it um kind of criticizing this dual structure. Um I know many people

who invest who looked at this round and some who invested in it. Obviously you guys led it and I do know that this was a this was a a hot topic in the even in the fundra behind the scenes was how do we even structure this so that the equity holders and the token holders would both benefit. But you know again I don't know what you can actually say about this. Obviously some of this is confidential but um maybe walk me through your thinking on just this dual this dual structure and obviously Venice in general. I'd like to hear your guys' investment thesis. >> Yeah. Yeah. I mean, listen on on Venice specifically, like it I think if we've learned anything over the last, you know, over the Fable 5 uh announcement and over, you know, what we've started

to see in terms of just general like winds of focus on the AI conversation in DC and in um you know, sort of global regulatory bodies. it it's that there is a clear need for uh privacy and there is a clear need for uh continued access to a broad set of of different models. Now, that doesn't mean that, you know, this is Venice is going to be a uh a solve for potentially, you know, like if there's export controls, like you're not obviously we're not nobody's committing crimes here. But there is uh we're going into a world of which your data is a

commodity. Everything you do online, everything you do on these um and these models, they are being used and sold and packaged to everybody else. Uh, and the VPN industry isn't in and of itself a 70 billion dollar industry. The VPN industry has um, and I actually don't know if you saw, but there was a um, uh, a bill that I think passed in Utah to ban VPNs. Uh and one of the most ardent uh you know groups to come out against that was actually the one of the national press uh lobbying groups which is that like you actually put the press uh at risk um for retribution from the government if they don't have VPNs, right? And and so the understanding and the need for privacy um and what we've

seen in terms of government overreach uh that that is going to continue to exist and Venice is going to be a big part of that. And I think uh beyond that like their ability to do you know routing to different models to give you access to different models to be able to um also that token model that uh with DM uh and VVV that allows you to lock in some compute prices like it's all very innovative. Uh it's great business and it's grown incredibly quickly. So, we're very excited about Eric and um and actually his his co-founder, Jesse, who um uh I've known him for a long time, was a fintech founder actually before and I helped him sell his old business to to Betterment. Um and so we're we're really excited about them and and what they're building. Um I think on the, you know, the piece around the token and

the equity split, um listen there, this conversation, >> is it Jesse Crowdman from Mara? Yeah, exactly. >> I never I never put that together. >> Yeah. >> Interesting. Interesting. >> Yeah. And they've got um they've got a super interesting story how they came together too because him and Eric knew each other a long time ago and kind of came together um recently. >> Um but listen on the token are going to be split. I I have a perspective that is gonna would piss a lot of people off, which was that like most of the most of the takes on Twitter were just so ill-informed and like misunderstand

like just generally what business is that like they're not really worth uh my time to respond to. But I I will say about the broader point like there is just a naivity to the situation we are in which is like we do not have a we do not have a clarity act and if you look at at poly market today uh I think the like the it's like 40 to 45% likelihood that clarity act passes. If you talk to people in DC today many of them are are are quite bearish around it. um the ability to go and do you know deep detailed governance and deep detailed uh uh

capital return to token holders globally and in the US for us founders is impaired like that is just the situation we are in today and you have a couple of call it you know global foundations and companies who have done this sort of like collapsing of the equity in the token to try to do keep the token the the best rights possible. These structures are untested. They are uh mostly global not US-based. They have created a situation in where the only way to raise more money to operate their business is actually to dilute current token holders. uh and they've um created a uncertainty about an ability to do

things like enterprise contracts, right? And so um we are in I mean you saw when a cross protocol went you know private uh a number of number of months ago. One of the things Hart basically said in the uh in his announcement was we could not do the enterprise contracts that we needed to do with businesses for B2B contracts with the token. It was a blocker for us. Right. and Eric and and Jesse went out there and they fair launched this token and they allowed for uh a significant amount of price discovery. They have a very interesting model which they've been very clear about which is that with Vernet new and uh subscriptions we buy back the token.

They have never once been anything but incredibly incredibly um uh just transparent about how they return uh uh they return um any sort of value back to that token. And they have also never once said, "Hey, uh you have now, you know, full legal rights to like it's an equity, right?" And if people thought that that was what was what what had happened, um they were stupid, frankly, uh and and were naive. And so the they've never been unclear about that.

And so would we like to be in a situation where there is regulatory clarity and we can collapse these two things? Absolutely. We are not in that situation. We will not be in that situation anytime soon. And so uh I want for a better world like everyone else, right? And I I believe in the future that you know a lot of people are are are hoping to get. Um the fact that people that people say things like, "Oh, there's like no reason for this in 2026." is just a level of naivity that I frankly like do not think is worth like a conversation because it just does not understand the situation we are in. Um and so anyways, uh I'm very excited for these guys. Uh I I believe you know

>> Wait, wait, wait, wait, wait. Rob, why why do you think it doesn't warrant a conversation? Isn't that one of the main conversations to be had? Because tokens are so fun. >> Sorry, go ahead. >> Tokens have been so fun to tokens are such a good idea. Tokens are such an amazingly >> fantastic idea and yet they're so fundamentally broken today. So isn't there a really really really important conversation maybe one of the most important conversations in the industry should be around tokens and equity. >> Yes. But um we cannot so what I am saying is that the naivity exists at with the idea of what is possible and we can't create a new security and then decide that that

security is just going to exist unless you want these founders to go to jail. And so the idea that we are in a situation today where we can in the US in companies that need to do do things like build a data center and do uh and have these enterprise contracts could collapse token and equity uh into a single model that allows them to have full ownership, full rights of the equity owners, full governance, you know, and yet you be able to do have rights to um anything around M&A have rights to any sort of you know capital return policy um is obviously a thing

that cannot exist and it is so obvious to me that I find the the a lot of the discourse to be um incredibly silly frankly do I want that to be the truth in the future absolutely I'm so aligned with that and all of us are that is not the situation we are in today it's a Yeah. Yes. But why would you launch a token then? >> Well, and listen certainly >> on it's it's it's like a public company. Like the way that I think about this when you know someone has a token and you're like oh you should share all these things. They're like why would I ever share that? It's like because you chose to run a public company. The moment you launched your token you, not

me, not the public. You chose to go public. It's like a public company CEO being like, "This is like ridiculous that I have to submit this stuff to the SEC. This is ridiculous I have to do quarterly reporting," which it probably some of that probably is. Like the the requirements on being public are there's way too many requirements. We can all agree with that. Um the costs are way way too high. Um but still you have to do it. It's the cost of being public and lets you access the capital markets. So there's a benefit to having a token, but there's also costs that come with it. So that I don't know. I just feel like it's like yeah, you you don't have you don't get to launch your token if you're not going to do some of this stuff.

>> But but he didn't but what they didn't do and I think people are misunderstanding this a little bit. They didn't launch a token and say here's equity, right? They never said told anybody that, right? What they did is they launched a token that said take this token and if you stake this token you get another token back that is a pre- buying of compute power right that is the reason for these tokens to exist these tokens to exist to allow people to have a uh to to essentially hedge out future compute costs right and so it serves a purpose he and and the company and Eric made this point a bunch of times yesterday.

The company is incredibly it is incredibly incentivized and aligned by having the token because they're the largest holders of it. The company are the largest holders of it by far and they're going to continue to be the largest holders of it and they didn't have to dilute the other token holders to go and raise money to build a data center. Instead they they actually helped the those uh equity holder or they helped those token holders by not having to launch it or to put a lot more tokens into the market to go and build a data center which is what a thing that they need to do. And that token which exists to go and help and to help you hedge out and lock in compute costs has a purpose for you and then the equity has a purpose too so that they can go

and build a big business. to your point around the uh like like do should is this how the should this be the long-term fix like none of us want this to be the long-term solution? We want there to be a more options and more collapsing of tokens and equity. It's just that that thing does not exist today. And so we have to be pragmatic about the situation we are in. >> Yeah. Yeah. I agree with that. I agree I agree with the second half. I also agree. I also believe that Eric is one of again like I started this I'll I'll end it by saying I also think Eric is one of the better not only better founders but also just better people in the industry with better morals and

values that than than most of the industry I'd say. Um he also gave one of the best talks I've ever heard which was at permission list which was a phenomenal keynote which people should listen to as a reminder to why what we are what we're all doing here in crypto in the first place. Um I also don't I I read all of his replies because this is something you know blockworks feel strongly about. Um saying that they are one of the biggest holders of the token. So they're incentivized just like the holders has gone really poorly for the holders of tokens for the last several years. Every chain is the biggest holder of their token. They were all incentivized to have it go up. Um but yet the founders got super super rich while the holders of the token did really really poorly.

So, um, I don't think Eric is I don't think Eric should be concerned with solving this, by the way. He should be consult concerned with building the biggest POS business possible, but I think the industry needs to recognize that this is a problem that should be solved. >> And I I don't think anybody, including Eric, would disagree with you that this is a thing that needs to be solved. Um I it's just Eric understands one he bootstrapped this thing and he you know fair launched this token and you know he got this thing to a very big place before it took in any outside capital right and he created this token with the idea that they were going to do um try to do this interesting compute model

like I talked about and then he ran into the uh you the realities of trying to build an AI business that was scaling exponentially. and that was like unable to pay for compute, right? Uh and he had an option to go and release a bunch of tokens to the market. Uh and do and then try to build, you know, um sort of like a a governance infrastructure and a and a legal infrastructure that like frankly like doesn't really work for most serious in investors. Um or had an option of uh doing what he did. And you know, maybe this is a lesser of two evil situation, but but it is also, by the way, um you can you can disagree with

the whole thing, but one thing that Eric has done to your point about being you having high morals is he's worked really hard to be as transparent as possible. And so there is no hiding the ball here whatsoever. And like people know what is happening. So people want to invest in the token because they believe in the product or they think it's you know there's going to be so many net new signups that the buybacks are going to pay for that then they should do that. If they if they you know don't like the fact that they're um you know that now there is this dual structure and that they don't have you know uh the same rights as the you the equity holders.

Well then they don't have to buy it. Um, you know, I I and I know I'm gonna get it I'm going to use this analogy which I know is not completely fair. So I know people are going to yell at me about it, but like there's also different rights if you're a debt holder or a pref holder or a common holder, right? And like you invest in in different things, you buy different things with the understanding that the rights are different. And so like how you price those things and how they should be priced is going to be different. And so the market will figure that out. Um, do you I I I see where you're coming from on all this. Um, and actually I tend to agree with mo with most of it.

Um, do you think that token holders should know the deal that the deal that was done? Do you think that they like let's say Dragonfly had um or or all the investors in this round have an option to buy VVV tokens? Should the token holders know that somewhere? Does that need to be public? Um, I mean, Eric made the decision to make that public, right? Because for Eric, it was very important for him that he make sure that there was as much transparency as possible with the token holders, right? A and um for not every founder uh decides that like that is, you know, that that is something that they they

want to put out there. Um I think it's a personal uh decision that is going to be contextually different uh depending on the product that you're building the you know consumer versus um you know institutional you know etc right but what I will say is that you know his perspective was that that was the right thing to do and it was also his perspective that it was most likely to allow the token to continue trading well and to your point I mean you guys are very focused on transparency and the tokens and so um he's trying to be as transparent as possible and in hopes that people want to continue to and and you know be a part of the ecosystem and

and you know I I don't think he's like trying to he's not trying to get people to buy the token but he's trying to make sure that if people want to trade it that it trades well. >> Yeah, I agree. Yeah, maybe maybe my summary from this conversation would be one um I I do think this equity token structure is something that really needs to get fixed for the industry because I think that tokens need to we need to make tokens work for crypto. I I really believe that. Uh the second is that it was actually kind of a bummer to see this conversation take away from the success that Eric has had with Venice. And I would I would end this by just saying congrats to Eric and I actually didn't know Jesse. Um but yeah, you know, I didn't realize it was that

Jesse. So yeah, congrats to Jesse and Eric and yeah, the whole team and um it's cool to see Yeah, cool to see them do well. So um that would be that would be my summary. >> Yeah. And it's a great product. Try it out. >> It is a great product. Anything else on the week, Rob? content of the week or are we getting? No, I think I listen I I think the reality right now is like there are a lot of things going well and like that's very clear from this and we I think we say this every week and it hasn't mattered for token prices but you know um I continue to remain very excited about things that are happening here and so I'll I'll and I think I'm I sound like a bit of a broken record uh at this point uh even though the tokens keep

going down but um excited for institutional adoption excited for the fintex excited for you know these cool innovative products of people trying new things like Venice and you know and enjoy the fourth. Have a beer. Eat a hot dog. >> Have a beer. Eat a hot dog. Watch the US win. Indeed. Content of the week. >> That's the content. Watching the US win. >> Watch the US win. Watch the US win. >> I like it. I like it. I do have a good book which is when the heavens went on sale. I'm about halfway through this thing. It's about uh it's about all the space companies like Rocket Labs and Astro and Planet Labs and Firefly except for SpaceX. So, it's about all the um it's Ashley Vance. I don't know if you've read any Ashley Vance. He's a um Yeah, good good reporter, actually. But, uh

>> yeah, he broke all the um all the Open AI stuff, >> right? >> Yeah. Exactly. Exactly. So, >> all right, folks. Hope you >> I will say I will give I will give a real content uh just because it's not just the US, but new season of The Agency with Michael FBender on Amazon Prime. Very good. So, it's a remake of a French show. They did a a first season and a second season. Sort of a spy show. Uh, incredibly good. If you want something on on the holiday weekend with the fam, I'm I'm all about it. >> Nice. All right, Rob. Good to see you, Santi. We missed you. Come back with some bullishness, Santi, if you want to be let back in. Cheers, folks.

>> Thanks. >> Have a good See