Are You Bullish or Bearish Onchain RWAs? | Roundup

Transcript

all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-hosts today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode thanks all right everyone welcome back to another Roundup edition of bell crib you got Michael's one and two bands piano welcome fellas give me that what's up see you today Vance I'm always drinking green tea I don't drink coffee anymore so all righty boy why

I just you know I drink so much coffee one time where I like really freaked myself out like one big day yeah really all came to an end at that point so now I do green tea what what day was it I was it was in Venice I forget when but I remember just being at a restaurant being like I need to get out of here immediately I think I'm gonna have a freak out how much coffee do you need to drink to freak yourself out off coffee I mean like seven or eight cups of like strong stuff that'll that'll do that to you Mike used to drink a solid five or six a day yeah I still drink a pretty disgusting amount of coffee I'll drink like I have a French press and I'll drink the whole thing myself I'll drink the whole thing

yeah make a lot of coffee yeah just to the face put a lid on that thing well apparently we are prepared that we're not gonna be able to drink diet coke anymore is rumored to be coming out next month as a potential carcinogen I thought we already knew that I thought it was like that yeah for 20 years it's been like Diet Coke gives you cancer but it's so good so good worth it I'm like leaking aspartame right now all right let's get why don't we get into the the content this week you guys want to start with prime trust I feel like we kind of got to start there yeah you want to give us the rundown um sure here's the rundown um all right so Prime trust is I think we've talked about this

before but Prime trust is a um basically an infrastructure provider for what I'd say are like earlier stage crypto companies so if you're a seed Stage Company just you just raise let's say you're building a consumer app and you let's say You're Building uh like a block by Style app they will give you the ability to have all the middleware and the back end and they take care of all of that so like all the kyc AML that's actually really complicated to do all the onboarding kind of like the separate accounts for your customers that's actually pretty complex to set up and it might take you know 12 to 18 months to set up but Prime trust is like a white labeled solution to be able to set up all that stuff and let's call it 30 to 60 days so you see a lot of seed

in series a companies using prime trust and then once they get to like series b or series C they start kind of chipping away at the back end and usually they they get off of prime trust but the reason this is all relevant um Prime Trust basically just blew up in the last month and here's kind of the timeline that I know of so June 7th uh it starts leaking that Prime so this is we're recording at June 29th so 22 days ago starts to kind of leak that Prime trust is in trouble and specifically got announced or got maybe leaked that they were raising a 25 million emergency round a day later gets announced that bit go is acquiring Prime trust so because one of the longest standing like most reputable custodians they were going to acquire 100 of crime trust a

couple days later June 13th Bank b-a-n-q who's a prime trust subsidiary filed for Bank bankruptcy protection in Nevada and when they dug into their Assets in the filing it showed that they had 17 million assets with liabilities of five and a half million so everyone's like okay that looks fine a week later June 20th Prime trust halted deposits and withdrawals sent out an email saying we're halting withdrawals uh halting deposits of both crypto and Fiat a day later June 21st this is a week ago now they the trust Prime trust sought receivership from the uh from Nevada uh after they got a cease and desist order so then everyone's like oh maybe this is actually pretty bad over there day later June 22nd bitco terminated their plans

to buy Prime trust uh they said they did a bunch of due diligence and came to the hard decision to terminate the acquisition and then June 27th um Nevada asked the court to impound the assets and all related property of prime trust saying that they were short of uh being able to pay back their outstanding crypto based obligations however so that that all basically just seems like kind of the unwind of prime trust however the kicker is uh there's two kickers one is it sounds like it looks like the FDI FID alleged that Prime trust lost access to their legacy wallets in 2021 so if you were a prime I talked to a couple of prime trust customers uh today and

yesterday they could actually see on chain the the assets of prime trust and looks like they had them but it turns out so it wasn't like they were like leaving the system but it turns out you could still see them there because Prime trust couldn't even access them themselves so then what they did and this was back in 2021 so anyone who's onboarded onto Prime trust I know several companies who have since 2021 they've been in solvent basically since then they haven't had access to that money so that's why I think this is like this is going to be whoever was running crime trust at the time should you know that's a that's fraud and then the second thing is uh to try to make I think Michael might know more about this than I do but to try to make back the loss of customer funds

or up funds they basically took the remaining customer funds and yoloaded it on like a couple of Trades to try to make it back and uh you guys have seen how the Market's been the last several months it did uh not go well for them to say the least so today where we stand is prime trust lost access to some of their funds in 2021 they use customer funds to try to make it back they today owe a million dollars of crypto to their customers and about 80 million dollars of Fiat to their customers um and of the crypto that they owe 88 of their crypto assets today are in audience token audio token which is uh Audi assist token so it's not looking good for Prime trust I

will say so they're very bullish on music nfts basically Uber Cooper hasn't got to them yeah he has infiltrated so so I think there's another variable here too which is interesting I don't actually know where the Fiat came from for them to be able to go off and yellow this Prime trust almost exactly a year ago at least the announcement went through raised a hundred million dollars to be a custody solution that was going to expand into IRAs and said they were going to expand into crypto staking like the if they if all of this is true and you know this is all put together in a complaint that was filed I think in the last week if all this is true it looks like they took the investor

capital and tried to be able to use that to to YOLO back into these assets to be able to get them back the tough part is and I don't exactly know how the technology was set up um you kind of touched on it if you're able to see the assets on trade and kind of my understanding of how this would work is they had basically the the wallet addresses that were generated from the public key private key pair but they had lost the private keys so when they were setting up the infrastructure they they it's sort of like you can send to that address but that address doesn't have access to the private key to be able to send from that address and that's the key coin it's like an email right you know you can receive emails but you can't actually send them from

that if you don't have the password I think that might be the case of what happened which you know is which is crazy because from the outside looking in I mean every single custody solution says you have to have segregated accounts you have to be able to track them on chain and if anybody hasn't sent from those accounts before there's no way to know whether or not the private key is in Access of you know the solution that they're trusting as the custodian here so I I think ultimately we're gonna get to the bond with this to see what happens the the tough part is we have to get through another what looks to be another fraudulent case of something the good news is you know audios audio token it not you know one of the top tokens that

people are tracking and and I think also the size of this is fortunately relatively small compared to some of the other custodian platforms you know like coinbase Anchorage obviously no comparison here uh to what they do and how they work but um you know the size of this is you know in the tens of millions not the uh not the billions so who who's affected by this small small crypto companies so a lot of companies would have their they just had the USD USD held at Prime trust so they might have an ACH Reserve account with you know half a million or a million Prime trust they might have like an instant settlement or an Omnibus account with you know 500k or a million

or 250 at Prime trust and there were a lot of these kind of smaller companies and if you looked at their customer list if you ever use like archive.org um that you know whatever the way back machine their customers used to be big folks like you know Kraken and like some of some of the big names and now it's a lot of like smaller again like seed series a companies like uh you know that big the what's the Bitcoin company where you can buy and sell Swan it's like yeah the swans of the world yeah that was one of the early indicators back on June 7th there were reports of you know having trouble withdrawing from Prime trust and they eventually I think they transferred ownership of their assets to bitco some mix of Bitcoin and Fortress or something

but that even more Fortress Fortress Is run by Scott Purcell who was the old Prime trust founder so just to putting this out there yeah I have a like hey we got impacted by Prime trust but we're moving off we're going to Fortress and I was like guys same same person different company so uh but it's interesting because actually they were like there aren't other options for us to use right now like we it's you know the word it's the worst of the options but like there are no other options so um yeah like wire shut down you guys remember wire done months ago so I think wire would have been someone

else that people could go use but can't use wire anymore uh all the banks are are like can't barely any banks that you can use anymore so pretty tough situation for new crypto companies getting started today so just just to double click into that specifically what you're talking about is being able to receive Fiat and like mint or create something on chain that represents that correct that's right yeah yeah the the after silver date and Sen and I can't even remember what the signature version of that was there's basically nothing that facilitates that anymore yep is Santiago building that bank feels like that would be a good I talked to him again today about it he said he's doing it he said a lot of people reached

out to him being like look man really like you um let me just save you the headache don't do this he's and he said he's still gonna do it so I mean it seems like a pretty good business mind it's the crime and uh forgetting where the assets are like I mean he might be able to do it because he does he lives offshore he lives uh not in America it's close location maybe they forgot the pin code to The Ledger that's not maybe this is just a case of mistaken you know PIN codes that ever happened to do this no that's no it's probably the first numbers this advances recurring nightmare that he probably gets like once every three weeks iPad diver is that ledgers that's a real

thing yeah and that I'll wallet I mean what else is there to say this is a shame there was some crime involved seems like somebody is at faultier the fact that the founder moved on and started the same business also very sketchy I feel like we need some investigative journalism with a capital J that's fun yeah this is the latest there's actually kind of a rich history of brokerages reappropriating client funds and trying to make it all back in one trade there was a guy John Corzine who is yeah you have you ever heard of him he used to be he's a head-on show at them and sax was it at like MF Global or something Ms Global yeah maybe it was maybe yeah a

map I think yeah yeah but he did the same thing it was a much larger brokerage and he I think the ironies he actually did it he actually placed a good trade that would have eventually paid out he got he got some Regulators you got stopped out by The Regulators but it would really really yeah well let's just make it all back trade like somebody was a trade he bought he'd bought I think it was like like Euro bonds or something I think it was Greek bonds yeah yeah Europe Italian and Greek bonds and they like blew out and like he lost kind of like most of the money and then he got found out and stopped out but like if you just held him he would have made a lot of money for both himself and his clients so what is the lesson there crime doesn't

pay sort of if you get caught unless it does that's the lesson yeah I don't like Jesus I mean it's not obviously the same thing as like holding your clients net worth in ftt maps and oxygen tokens but all of these stories are so similar at this point like even the prime trust like we have no exposure well we have some exposure somebody's gonna buy us all right they're pulling out okay the deal's over and rents all of it who is it do you mean it makes me think you you really do need some regulations and some some like forced audits at the custodian level yeah but like this is why as a regulated investment advisor registered investment advisor

you have to keep all of your assets at a qualified custodian I mean Then There are rules in place for this you know if you get to a certain size obviously this and most of the clients weren't able to have that designation or didn't have that requirement because they don't they're not fund managers they don't have enough assets all the above but this is why you just got to go with big guys I think the other element here which is interesting is like is there a point that D5 should have solved this and if they truly had segregated accounts and they truly had you know they lost a tease at creation like I don't know exactly the details that'll probably come out in the next couple of weeks but there is an element of where you can have control of these Assets in

a defy ecosystem that has a wrapper around it that has all of the stipulations and requirements of a qualified custodian to basically have the best of both worlds where you have the center Edition you have you know the decentralization of these assets that are being held by somebody else and controlled by somebody else but you still have the kyc you have the AML checks and you have all the safeguards that a qualified custodian would have to have if they were doing this themselves so I I think there is actually room for improvement a lot of that would probably have to come with legislation changes and and maybe that you know something that's on the horizon hopefully knock around what um but I I think you know eventually we'll ultimately yeah there because

there's a better advantage to doing that yeah maybe maybe that's a good lead-in unless you guys have anything else to say about prime trust to Rob leschner's new venture um so Rob lushner has a new Venture called superstate and I would you know I think maybe even before we get into the weeds and details of what Rob is doing uh it's it's sort of a real world asset play but I think that has the connotation many people think about putting you know commercial real estate on the blockchain and that's not necessarily what real world assets look like today so Michael Advanced could one of you guys kind of give an overview about you know how you think about real world assets and maybe sort of the quality of some of the entrepreneurs that you see coming in and then we could

kind of get into what Rob's actually doing sure yeah I mean I I think real world assets comes with so many different flavors like to your point might it could be historically it's let's put apartment buildings on the on the blockchain and that's uh um I think it has been from let's and there's a number of providers now doing this like let's have representation of treasury bills on chain so the people on chain can get access to the yield that's being generated by T bills um I think the other aspect you know on the other end of the spectrum is let's do something that's native to like the D5 ecosystem let's say it's staking or like uh uh you know a leveraged teeth staking even but it's going to be you

know the 506 B fund that is regulated with the same controls that you would have if you were doing this with like a subscription agreement and paperwork it's going to have the same type of stuff but it's ultimately represented on chain and therefore sort of in this like permission to ecosystem so I think you can kind of have both and call them um you know real world assets on chain I'd be really really curious to see you know kind of where Rob thinks about the product offerings that he's going to be giving with super State at Super State whatever it's called um and uh yeah um but I think that you can kind of think of the the blending of okay we bring something on chain that is represented off chain and historically by you know legal agreements or we

create something new and novel that's a product that really should just be like uh an L people but because we need to go through the same safeguards and attract new potential investors that you know have to go through the same regulated offerings it's going to be something that looks like an LP pool but with the same controls that you would have if you were just subscribing to a fund um so I think it's kind of both it so to get into some of the details of superstate I'm just reading from the the release here um Rob leschner the CEO of decentralized lender compound submitted filings to U.S Securities Regulators for superstate a new company that will create a short-term government bond fund using the ethereum blockchain as a secondary record-keeping tool so basically the

idea is to bring you know we've talked about people in crypto seeking yields that are offered in Trad fund now fed funds is higher than it's been in quite a long time and it was only a matter of time I think before crypto tried to harvest some of those yields I think one of the key things to understand here is that the fund is going to rely on a traditional Wall Street transfer agent to keep ownership records and ethereum will kind of act as an alternative or a secondary record-keeping service so before we get into the details because I actually think it's a a great idea we need to bring more collateral in I think there there's the rub a little bit um so question to you guys I would assume that this is an issue for all real world asset type things but what happens in

the event that the Wall Street transfer agent and the ethereum sort of uh record keeping service they don't necessarily agree I mean that's uh depending on who you ask Let's either benefit or something that makes this you know not permissionless not acceptable as crypto collateral Etc so like in a world where you have a white listed access to this asset and the custodian of the actual t-bills or real world assets determine who actually owns it the only person that can hack you is yourself you know or or the people who are issuing this asset the other side of that coin is like let's just say that um

I put a t-bill real world asset in a uniswap liquidity pool and it gets hacked um all of a sudden you can kind of just say you know what it didn't actually get hacked you know that person still owns that asset we're going to reissue a token it kind of upsets a lot of the Natural Balance that you kind of come to expect with permissionless assets but these aren't permissionless assets these are actually in most case shares of a font and help you fund you know not an LT uniform pool but an actual registered fund either in the Cayman Islands or the US um and so it kind of upsets a little bit of that and that that's like one of the less understood parts of this is that if you are not whitelisted which means you are

not kyc'd you are not signed up for the fund you can actually hold these assets you know imagine you know framework um going and selling Stakes of our fun to people that we didn't know didn't kyc didn't file any documents with us it's the same thing it would be totally legal there is some interesting kind of Middle Ground there where you can put all these t-bills on chain you know you can put all them on chain you can build a lot of them and then you can have a stablecoin protocol and there's a couple of these going around ondo's building one of them where you can issue a stable coin against the t-bill and is that stable coin part of that fund can that stable coin go to other people that are not kyc'd you know a lot of the current you know if you look at USC or

usdt would suggest that that actually could and so you know like the kind of real world asset push is kind of twofold number one is bringing all the collateral on chain that's awesome but we need to get the collateral moving around being used on chain like the the on chain can't just be like the receipt of like what's going on off chain and I think the stable coins are going to be a big part of this and as I'm looking at this I'm just also looking at you know usdc kind of continuing to bleed out like I would be very simple if this wasn't part of their new strategy but um but maybe not just a double just to hammer that home or double click into it in this example of the T bills or framework LP tokens living on chain you gotta have two

options you either make them non-transferable and only the transfer agent like contract on chain can touch the contracts that represent the tokens on chain or you have them live in a permissioned ecosystem where it kind of goes back to what we were talking about with usdc like wherever the native minting happens that's where the canonical example of usdc is if you're using a bridge to get there it's just not the same experience not the same you know representation if every single transaction has to go through the transfer agent let's say you're in a permissioned wall Garden experience of permission D5 you can kyc you've got I don't know framework tokens you've got t-bill tokens you've got like apple

tokens and they all live in the cgo system but every single time you want to make a transaction it has to go through an intermediary contract that is represented by the transfer agent that's not necessarily D5 but that's kind of like the other option the other available option right uh and and so I I we still have to figure out how to do that it's almost like how you can have something live natively on chain and a transaction on chain has the same stature and status as something that is regulated and judicated by the transfer agent like we're not there yet and and I think frankly Like rules will have to change for that to be the case just in the same way that like when you used to sign something online there was a law that was passed for digital signatures

to be represented in the same legal stature as physical signatures which is why DocuSign and hello sign and all those things actually started to exist we need the same type of the designation here for blockchain transactions that have the same effect as Financial transactions but just like just to expand on on that even more so um if you if you think about usdc you know in your retail like what do you how are you getting that so you're usually on coinbase you're taking USD you're converting it to usdc and then you're putting it on chain and the big thing there is that you have distribution from coinbase and that's what allowed you know usdc and usdt to go to you know 100 120 billion

plus of stablecoin market cap this is a different sales process what you need in this sales process you need Robert leschner you know in a suit going to these Wall Street institutions saying hey put some of your cash management you know on chain and we'll give you additional yields we'll you know do strangles you know we'll increase the yield in some way um but like you know you're going to have people selling to Wall Street institutions trying to get them to LP or put their their you know LP tokens on chain so that's the first one and you know if you think about like what Lesner won't have is you won't have like coinbase being able to Mint these t-bills to retail so you're not going to have that natural distribution advantage but you're still gonna be able to run an

asset manager at a far lower cost at least we think than the traditional asset managers in the space just because all of your Clearing Your settlement your compliance your tracking you know that's going to be on chain so I think that's like pretty interesting the other side of that coin is we talked to a lot of these real world asset managers and there's probably like 10 of them the the entrepreneurs in these things are super talented the Ando guy he's from Goldman you know hash note has like drw behind them um Robert lessers like very well known you can get in the door with any Wall Street institution he wants we think there's probably like in the next couple of years at least 10 billion of pipeline maybe a hundred billion you know on the table and if you look at all the real world assets on chain today

it's only an order billion and so like there's a lot of growth that you can get um but the business model and what it ends up looking like it's probably somewhere between like what bitwise is today and what circle is today you know it's not quite as Dynamic on the distribution side as Circle you're not going to get that natural flywheel of retail being able to Mint this stuff but it's not quite as slow and cumbersome as like you know a traditional Fund in running that um because there is some reflexivity to having these things on chain and if you can have a stable coin against them you can get cheaper leverage because borrowing on chain is cheaper than off off chain right now like there's certainly interesting things but this is all extremely bullish and frankly it's all happening on ethyl one

the the clear delineation here just a an additional point is stable points have a different designation versus what we're talking about here which are going to be Securities like these are you know represented as they're not going to be misconstrued as they they will be Securities and so they just have to go through different safeguards and I I think you know the answer here to make this as distributed and and um available as possible is some representation of an ATS like product that has a Securities Exchange that lives naturally on chain and I I think there would have to be you know once again rules that have that are changed to be able to enable that fact um but that would be sort of the unit

swap equivalent of how you'd be able to transact and interact with these things on chain I have maybe a a silly question here but how will the payments from interest on the bonds be remitted to owners of the lp shares like is that done on chain or is that not done Unchained so this is actually one of the cooler parts so talking to a lot of these people um you know the the real world asset entrepreneurs they're like the reason asset management is expensive and you can't build a lot of products you know even though they should exist or would be attractive to people is because like you have like a million holders of these you know call it like high yield strategies and you separate them all into their component parts and then you

waterfall them all down which costs money and then the bank takes their feed which costs even more money and by the time you actually do all of this like the expense ratio is super high it's not worth it because you can do all this Sean chain like he's like we can you know these people are like we can actually design new Financial products that would be too expensive to do off-chain and so I think that's actually like one of the really compelling reasons is you know he's like these people are like we'll put Bonds on chain we'll put stocks on chain we'll do all that stuff it's pretty interesting it's a big Market it can be solved and and you know like it'll grow the the crypto ecosystem but being on blockchain Rails allows you to design new real world asset Financial products that you can't off-chain

and like that's kind of the thing that you hear universally when you talk to these people and I think that is just like incredibly awesome the recognition of that fact alone is why so many of these things happen to be popping up right now a lot of times like we have to tell entrepreneurs like here's how this works here's why this would be interesting like having the entrepreneurs tell us like it's way too expensive than Trad five to do like we can actually do this on chain like here's what you don't know I don't know there's a lot of that happening right now we're kind of on the fence if these are like Venture backable opportunities if it's like just an asset manager but I think if you build a winning one you know tether made more money or is on track to make more money than BlackRock

this year so there's something there that's not I guess the what I'm trying to get a sense of is one of the things that's been a big problem for D5 is just the lack of solid collateral in the system so I guess what I'm trying I don't I can't tell if I'm trying to fit a square peg into a round hole here but you know if you had LP shares in a bond fund that just owned like three-month USD bills you know that I could see being super useful in a D5 protocol as collateral and especially if you're getting sort of almost like uh Steve like rebasing type structure you just had on-chain payments that got remitted to you but I now I'm wondering if that's

actually how it would work because I guess the interest we get paid in well so so let me let me this has led me thinking through product wise how that could work let's say you've got one of these asset managers or like a Consortium of asset managers that comes through and builds instead of the like inability to transfer things on chain they go with the wall Garden approach okay great so you have all these things these LP tokens these treasure built t-bill tokens these whatever tokens that represent collateral and things in the real world what if that ecosystem also has its own native uh stablecoin and that own native stablecoin is something that just lives within the four walls of that permission to ecosystem and that is

also being able to be used and they have a lending protocol so then you can also borrow in that native stable coin against the tokens that you have represented in that real world and it's basically like taking all the concepts that we haven't you know existing DFI like representing them in this you know small permissioned ego system but what if one of those is a stable coin swapping mechanism where you can take the native ecosystem stable point that has to deal within those four walls and swap it for something like die or usdc and then you can have the representation in that permission to ecosystem but also something that's transferable outside those four walls yeah and like in this Walled Garden ecosystem you might have your own purpose protocols you might have your own options protocols like think of it

kind of like Finance versus coinbase versus on game they're kind of like distinct like we can't you know as American citizens get on finance with our kyc but like we exist within the same Continuum of crypto just trading hands like it's just gonna you know be I think very positive for crypto and like think about Michael Howell you know and all of his like you know high quality collateral is basically the driver of liquidity and price asset like if you just get more of these things hot chain it's gonna be really good I think this could have an interesting second order impact of driving the in so of driving institutions to not just like offer crypto products like Bitcoin ZT like the Bitcoin ETF but actually have them push them to start thinking about on chain

products and I think um like when I'm reading about leschner's what they're building it's identical to what Franklin Templeton is building with their on-chain U.S government money fund um it's it's the exact same product is is my understanding of this and I think when so Lester's doing it other events you were naming some other people doing it Franklin Temple Ted is making a big push in you could it doesn't make sense now but like I don't think it happens now but you know Market starts going back up people start seeing D5 being real thing again you could start seeing some of these like huge asset managers and Investment Management firms starting to like tow the line between on chain and off chain products keep keep in mind stable coins also made no sense when

they were first proposed like in the last Bear Mart you're like why would I put my dollar I have a dollar in my bank account is there like what it's like it always kind of you got to squint a little bit to see the future and I don't know like these things coming on chain is just awesome I mean it's also possible just just think about it this way maybe even my example is a little bit too much too many steps What If instead of you minting a native stable coin in that permission DJ says you just meant usdc and you're automatically building a loan position against your real world assets all that lives on chain but the usdc is something that's transferable and basically the substrate to be able to transfer value between you know public and permission D5 yeah it's I think one one thing that's a

little bit different in between uh you know some of these attempts versus maybe some of the scar tissue that formed in 2019 era is that a lot of the uh a lot of big financial institutions have proven that they understand this technology and their understanding is far far ahead of where it was just from my own anecdotal experience at that time I've talked about Visa a lot on this podcast but they've done a lot of really good work they had one of their one guy on their team Mustafa put out this great threat about like modular versus monolithic architectures and you know that was not the kind of thing that you were seeing from some of these larger Chad fight teams back in the day everybody everybody levels up in the bear Market yeah big agree

do you guys want to talk a little and shout out to Rob I mean it's a it's he's a he's a tremendous entrepreneur and he's moved the space forward quite a lot so just excited for him on this one yep um and Shout Out Jason the new CEO oh nice j-hob yeah Hobby yeah it's a fine name I guess all right you guys want to talk a little bit about azuki I mean Mike what happened there I I disclaimer I told I told everyone this before but I just got off a Twitter spaces with Luca from pudgy penguins and I'm all bold up on the Pudgies so maybe take this with a little bit of a grain of salt but there was a there was a new issuance of azuki's this uh you know

there's a new mint basically for azuki's this this past week it's called all Elementals it was very hyped people were very excited about it and it ended up from my looking at it just being azuki's facing a different direction and I think a lot of people were pretty upset you know just in terms of you know what does this actually mean in terms of the fundamentals of the project you know there was an are you kidding me kind of vibe I I'd be curious to to get your guy's sense of of the response I don't even think they're facing a different direction I think they're no I think it's the same same direction they're I mean they're aside from there are a few new traits like a fire bolt or something but yeah you literally can't I was flipping back and forth between them and

blur you literally can't tell the difference and immediately I mean I will say very impressive they were able to Mint out I think it was like 38 or 40 million dollars for yeah that's a lot of money very impressive in this very impressive the counter though is the community absolutely tore them apart the price of azuki's fell basically 40 instantly um uh I don't know it brings into the question a lot of things like a zoo so they were trying to raise was trying to raise at the same time that Ford Apes were trying to raise and board Apes raised that he drowned and um and the zukis wasn't able to get the raise done so imagine like a take nfts out of this imagine you're one

company and your main competitor does a huge raise and now they're doing all these things they're building games and all that kind of stuff and you aren't able to do that you probably are like oh crap we need to go hire the devs and get all these different so we need money you know oh my God that's an ugly chart the devs are dead um I just have no idea about this like I feel like we just talked about everyone leveling up in the bear Market I feel like the FMC Community has not done that I don't even know what the nft community is anymore is it like pfps is it art games is you know taking longer than expected but like that could be a boon to it but it also doesn't feel like it's like relevant to this we have our nft specialist Mike ablito to explain why

nfts are poison toys on Amazon so it this is not um honestly talking yeah this is definitely not Financial advice but do you remember a little while ago where there was this discussion about are nfts Equity are nfts equity in this community and from my perspective I think that's been definitively answered I don't I don't think that's what nfts are definitely not but do you remember Doodles raised at some ludicrous valuation a little while ago and uh that was led by Alexis Ohanian though said this early the Droid count so no but I think there's a there's a compelling there's a compelling there's like if if you think about these

things as IP I I'm not a huge believer of the decentralized Disney thing that gets tossed around but honestly look at what Pudgies have done I mean they sold like five hundred thousand dollars worth of penguins on Amazon within you know the first 24 hours or something like that they've got you know they kind of broke down on the spaces like their monetization strategy and it mince is like a part of it you know secondary sales and royalties are like a very small like ebitda kind of bump it's like the cherry on the cake but they think of it from like uh you know licensing sort of agreements uh they actually make money out the content that they produce on like Snapchat and Instagram and stuff like that they have a very clear road map and I think there is a good way to do this and a not so great way to do

this and the what I walked away thinking is if you're relying on financing your community via new mints you're just diluting the brand value that you have I thought it was a betrayal of the community so that next time next time mizuki's so the other the other aspect here isn't just like oh we're gonna go off and mint some mizukis and I would buy one this is iPod one of those these are cute yeah they're cute yeah so uh it does feel like I think at least from my understanding of what's been going on that the community was left in the dark on this and everybody feels a little bit betrayed obviously with the sell-off but because there isn't much

differentiation there's not really anything that's different uh about these two different myths you thought you had one to ten thousand now you have one of twenty thousand uh you'll like they raised 37 million dollars worth of bees how much do you think the girl is next time they do any mint whatsoever zero just destroying your customer relationship is like the death nail in in this entire ecosystem and and so I think you know that's definitely lesson number one lesson number two is like what's the use case where's the utility if it if you're really just gonna come out with the same artwork and the same thing then there's lack of creativity on that front I think artwork is is definitely and has definitely proven to be a

valuable aspect of nfts and people care about that it is sort of like a community uh and a bond that people have with their nfts especially you know ones that are used more as pfps but I do kind of go back to the same fundamental question is like what is the utility of the state and this is what board ax is working out you know there's games you've got like the whole e-dash component um you know maybe there's going to be some content strategies eventually you think the same with OG pain wins like what is the next leveling up uh if you do own you know one of these things in this community I don't think it's Equity but you know you're a part of the community so what does that actually mean it's kind of like the so what question um I think that's kind of the big like

question mark that I have broadly for nfts and I think that that's something that has to get solved before we can have a bath forward foreign there was there was just one more one more note that kind of got me thinking I don't know if you guys have ever dug into like any luxury sort of businesses there's a great acquired episode on lbmh and there's kind of like a lot of the canonical rules of business are sort of flipped upside down when it comes to luxury Luca made a really interest this is the last time I'll Point all reference from him but he made a pretty interesting point it's a double-side kind of a dual-edged sword of nft communities he said when you're building a brand one of the most difficult things actually is kind of in year one and two of getting anyone to care about the

brand that you're building so getting those first like 5 000 people that's that's a big advantage of doing an nft type Community the flip side of that is that after a couple of years when you have those people you have to continuously kind of serve them and not feel like you're abandoning the core community so it's kind of like this early jump start but then it almost feels like there's a ceiling because you don't want to go too mainstream and abandon the 5 000 people that really loved you in the beginning and it's just an interesting interesting there's another aspect of that from from that podcast but also in in just other information scarcity when it comes to luxury is is a poor component so much so that in Italy it is now illegal for

handbag companies to burn their excess product okay they used to that handbags you know the leather handbags that you know coach or Prada was making they would burn them when they wouldn't sell out for the season instead of having access inventory that degrades the brand and and brings sure they should have sold them for 40 50 60 less maybe um and so now what they do with them is there's there's companies that go out and specifically control the supply of those at those products so it'll be like I don't know a random Target in Oklahoma gets one of those luxury brand items per month and they control it and send it out every but the point is it's all

about manufacturing scarcity for this brand because once you have that brand appeal the best way for you to lose it is to dilute the brand and I mean this is a Showcase in that yeah I don't have much else to say I disagree with you I think it was not the best move I'm just looking at ft4 right this this is just a hate crime I just feel bad like that retail was the most into nfts and it just felt like the absolute worst actors were in the nft space maybe not the absolute worst but some of the worst it was the new hype thing you know it

was it had been talked about in previous Cycles but it hadn't really there was like crypto kitties but it hadn't really caught on and it the happiest areas right are always going to attract the most scriptures but there are there are a couple of good you know solid nft entrepreneurs out there so I guess we'll just have to garyvee against Jerry or B or whatever his name is whatever happened that wasn't necessarily thinking about him but yeah hahaha have you got sort of character AI you guys been following this no no oh you got it you got a white list to get us on you got to move Ashley I have I have I have seen some of these have you seen this yeah

you remember when Chad gbt completely took over Twitter and it was the only thing on Twitter for like a like a couple weeks I'm not on Tick Tock are you guys on Tick Tock any of you guys no so Tick Tock has been 100 taken over by this thing character AI let me show you their numbers there look at this they launched a couple months ago oh you can't see this look at it you see this 100 million this is uh this is a similar web 100 million business in March 170 million visits in April 280 million visits in May I'll show you the website

for anyone listening it's not not super impressive so you basically log in and you can talk to these characters so you can get like an AI work study buddy an AI assistant You're No Nonsense assistant you can talk to Elon Musk like hey Elon like why did you buy Twitter you can plan a trip write a story Etc you can talk to famous people so you can like ask Mark Zuckerberg anything and it pulls all this information so how do they have 280 million visits how are they growing at 60 a month crime [Laughter] ooh this crime people are basically just sexting these ai's and they're so I'm not going to describe

some of the content that's being discussed but go on Twitter and type in character Ai and you'll see the conversations that are happening it made me real bearish oh is that bearish I mean I don't know in the beginning people were like people only use the internet for porn I got news for you you know look at the most viewed websites on the internet that's right Ellen Mike [Laughter] while we're doing the uh the chart Corner segment let me share another chart we good now yeah I mean yo you just wait till Chad gbt 5 comes out oh you just wait I'm in a third it's

like I don't really care about that like I kind of wonder how much more this uh this AI hype cycle you see someone raise it you someone raised 1.3 billion dollars today I was watching I was first of all that's insane they raised 1.3 billion on 4 billion and in their press release they announced uh the amount they raised the investors and the amount of gpus that they had bought with the money well yes but that's that's why people are raising this money right now right it's because the gpus are so in demand no no no one got the gpus it doesn't matter if you raise 1.3 billion dollars

if you don't have to order a few arms yeah the company that's selling you those gpus so I was watching the by the way that's why the amount of corporate VC if you also look at these deals the corporate amount of corporate BC is at like an all-time high I I think the high level information is um there's and there's two there's two reasons for that one is like they're all scared about Ai and they want AI in their strategy but the second is because these it's so valuable it's so valuable for a startup to have a uh someone with gpus basically give them the gpus so it's like money is free right now in AI funding but gpus are the are the hottest commodity so you'll take

a lower valuation you'll take less money if you can get a corporate VC who has GPU access on your cap table I mean the corporate VCS have what I would call an unfortunate track record um I know they do you know we work with some you're cool if you know who we are but the rest of you just I I like man there have been some bad Investments historically what seem the best you're an llpn framework I really respect you but if you're anyone else we don't have anything else no no I have I actually almost helped design a corporate uh VC sort of structures like one of the last projects that I did as a consultant I don't think there is a good structure no

there's no good structure it's I mean the number one problem is is purely compensation so I was literally about to say the only model that I've seen that actually works is Google Google adventures because they're completely they're they're basically like a 1lp uh Venture firm and they don't have any real information sharing they're completely separate entity just that the relationship is capital from Google and they incentivize everybody just like regular Bachelor investors that that's like the one model that I've seen work yeah the the the reasons I've seen it not work or like the the price like one just compensation it's like the amount of money you can make as a VC very quickly you start to bump into like what a CEO gets paid and that doesn't exactly

Foot super well in an organization so just right there you have a disadvantage but then your objective as a corporate BC is to do things other than just pure Financial return you're supposed to fit it into the corporate strategy and what if the corporate strategy at the time doesn't necessarily mesh with the financial opportunities that you see as a BC and it's just kind of a brutal cocktail to be honest but or one of the corporate strategies change yeah I would have yeah yeah lots of lots of issues with it it was actually really popular around the the.com bubble there were tons of corporate VCS oh yeah they didn't end super well yeah yeah it didn't didn't end that well spoiler to anybody who hasn't read about that yeah the the other one that I saw on the

corporate BC side was uh databricks bought Mosaic ml for 1.2 billion but if you dig into it they paid with all stock and the stock of data bricks was valued at 38 billion it's uh it just it feels like there's so much like smoke and mirrors out there right now where it's like all the VCS need to raise a new fund all the software companies need to figure out how to slow the pretty serious decline in their revenue and decline specifically in new Revenue um and like AI is this thing that's like amorphous that you can kind of make it seem like it's kind of anything but also just like encompassing of basically everything um it's going to be interesting to see

how this plays out and now you have SoftBank riding to the rescue with even more money Wild awesome there was a I saw an article about him uh did you did you see this it was the financial times maybe or something like that how we had kind of a come to Jesus moment really doubted himself but now he's back on track Maybe yes I too have started talking to God when we had bad investment [Laughter] are you there Jesus be good yes I know uh um last last story I kind of wanted to get your guys opinion on do you want to

talk a little bit about alts and specifically Solana cardano polygon so there was a little while ago I mean we should also talk about Ripple as well so the one of the we talked I think it was last week about just Bitcoin dominance and Bitcoin dominance has been screaming up and everyone was sort of proclaiming the death of alts and how they're just gonna get pummeled into Oblivion a little while ago there was announcement from Robin oat I think it was back in the beginning of June yeah June 9th uh they announced that they're going to stop their support of a couple of alts uh they named Solana cardano and polygon that would be effective June 27th so there were these arguments that were getting constructed that a whole bunch

of that Supply was going to get brought online and those assets were basically just going to get annihilated you know we're standing here on June 29th so a couple of days after this and it kind of turned out that that event was a nothing burger and Nancy were saying before we got on here Ripple's price action is not trading like it's about to be listed as an illegal security so I'm just curious what you guys kind of think about the state of alts in general Ripple is higher today than it was when I got charged with the unregistered Securities lawsuit so that's one thing number two um there used to be when you would and this has really only happen I think once with ripple but like you would get instantly delisted from all important Global exchanges like you know no one

would talk to you or care about you or trade your coin it was assumed that you were dead like being called an unregistered security was a death blow now it's kind of just like Robin Hood and the Normie platforms will probably delist you there's going to be a little bit of overhang which the market makers are going to sell it's like a 20 down price action day but if this is like the worst case scenario for being called like an unregistered security like it really isn't that bad obviously you shouldn't make unregistered Securities or do any of that or not Financial advice whatever but like I don't know gone with the days of like coinbase de-listing you on like just the whiff of a sec lawsuit it's just a different ball game now yeah I think a lot of that will depend on what happens with coinbase and and I

think that that's maybe one of the other pieces of data here is the backdrop I think that was filed this morning maybe it was last night um of coinbase seeking a motion to dismiss the the suit uh with the SEC and I'm I'm definitely no uh lawyer nor legal expert uh it seems like the strategy that they are taking is something that's pretty unique and pretty robust um I don't know what the chances are of that actually getting dismissed or actually you know having any effect on the case but we do know that they're going to be fighting this tooth and nail to the end which I think is why the tides have turned from you know back in the day with a single asset in in the form of Ripple versus now something that

coinbase views as being existential to their entire business so it's going to be a while most likely for any sort of decision but you know it's taken years for all that you can play out but it will be something that I think you know as this stuff gets figured out there's going to be changes but nothing's really going to change in the meantime uh so it'll be interesting to see there's a uh one of the blockworks podcast thousand axis with a guy Avi Feldman and Joda van Borg and it goes live on the Empire feed so shout out shout out Yano but Jonah made a really interesting point on that podcast where the sort of point of Maximum momentum in the sec's favor actually comes out

happens when the enforcement action is announced because the dynamic there is it's very asymmetric it's kind of a sucker punch you know coinbase isn't they don't know that this enforcement is coming the market doesn't know that the enforcement is coming so that's kind of peak fund and Max fear and I I would actually say it's it's like seven days or like a month before it comes out because I think every single time when you've seen these announce when you see like the actual stuff that comes out it's kind of like oh okay all right well now we know we're up against but the fear and the uncertainty of what that could be is what really drives Margaret at at least from what I've

seen on some of these moments of like the day where it actually gets announced like not that much happens remember what we were talking about like marches were up when when the coinbase suit happened uh was it coinbase or binance one of the two so I I don't know I think you know we I think I've said this before or used this analogy before but it's kind of like in the scary movies or like the horror movies when you finally see like the monster or like the killer at the end you're like oh it's actually not that scary like we're kind of at that point right now yeah yeah you could be right I'm you know I'm not a Trader I don't pay enough attention to like really look at Price action around these things but the the other part of that uh so you might be totally right there

Michael the the second part of the point though is that the company where the enforcement action is like let's say the SEC is Levy's this enforcement action against coinbase they haven't had time to defend themselves yet or Mount Marshall counter arguments and there was it was actually completely unrelated to you know this particular action brought it by the SEC but coinbase won a case of the Supreme Court last week that I think actually moved the market so one thing that we often forget about is that courts are actually needed to decide these sorts of things and yeah I don't want to say like knock on wood here but it seems like there we might get a little bit lumpier you know I was just talking to Jason at this point I can't even say good Mike is now the most yeah

yeah but right I mean that's that's the um I I think there are other like yeah I just I just feel like I don't know I'm getting Good Vibes about it so did you guys see Jake Clayton on CNBC yep Eater of interview love Jay well I think isn't that nice to us when I was about to say do you think you would have said anything of the sort of that in 1780 yeah when he was there he's like we need a new you know our friends like we got to get this guy out we need someone new and then we got Gary gunstars like Jay's our boy Jay's our boy well I mean it's a lot easier to say that when you don't have the role and I think he he has a lot more clarity and and both

sides of the perspective now I mean he also worked inside some crypto companies he he was an advisor at I think fire blocks maybe one other did that interview is is uh is notable because he trashes Gensler and says like it's an abuse of power and all this stuff it's also funny because it's it's a six minute interview it starts with so Jay like how are you feeling about the Ukraine war like do you think the counter offensive is going to succeed he's like yeah like he's like whining on like the counter-offensive and like you know back mud and well take that back and it pivots to crypto like that job of like chief pontificator that's a great gig if you can get it yeah true

um I feel like you'd like to advance man I got a Ukraine asked me about Ukraine yeah let's dig into you dude just give me the John Madden iPad Playbook [Laughter] how are you feeling about RFK guys oh that that honestly was another heater of an interview I don't know if you've seen it uh maybe came out last night well yeah it just it's all this talking points on his perspective on vaccines but it just like sets everybody straight the reason I don't like him is the reason I think a lot of crypto Twitter

does like him which is he he feels like nobody would know him if it wasn't for like chamoth and sax just putting this dude on a pedestal um and and pumping this guy I mean also his name is Kennedy so that's fair but so people will just heard that I mean I like him because he's like the real burn it down candidate I like them you see him his his shirt off flex it yeah dude I mean the weight on that bar that's a little suspect I think that was taking a 25 in the five yeah it was 95 pound bench press but whatever I'm not ready to get into Politics on Belt curve yet we're also we're all right here's the here's the months away from the election we gotta we gotta

we're a long way through it it's game time though I know but you know what I find interesting is so he here's a candidate that has gathered some steam he has kind of these unorthodox beliefs and what does he decide to do he decides to tap into the Bitcoin audience and I just think that's a very interesting development that he views this as large enough that he should take a very Pro positive stance on it that's meaningful that's super meaningful let's say let's um let's use another example let's say Spotify in another world or frankly in the future starts getting a ton of heat for Joe Rogan right they get a lot of heat for this guy being exclusive on the platform they decide to side with Joe Rogan

what else would it make sense for them to do it makes sense for them to tap Bitcoin it's it will become I really think Bitcoin will become this this political sort of movement as much as it is a financial asset like say whatever you want it is as crazy as it is and if you need people to back you up you just go and I like Bitcoin too yeah would be like I've said some crazy but he's Pro Bitcoin you're already the only part of a tweet in this market bullish Bitcoin or if you ever get canceled polish Bitcoin exactly you lost your Bitcoin why do you ask Vance you're hosting an RFK um yes no no I mean I've been donated to RFK

but I think he's interesting yeah I saw Nick Nick tamino from one confirmation had an interesting thread on um on DeSantis so yep hosted some intern too yeah well while we're on the subject of uh non-consensus unorthodox beliefs I'd like to create a petition to turn at least 10 minutes of this podcast into a UFO type podcast did you watch did you watch the documentary I mean this is an old documentary I just watched the I think it was on Hulu did you watch the alien documentary The it was a banger is that the uh Bob Lazar one uh no actually it was on it was like a

three-part three-part series I'll send it to you guys this is a good one three body problem right now at Mike's recommendation that's a good one that's a I like that one yeah I hope you guys want me to read it [Music] I was like I don't think I read that yeah I don't think there's enough content for 10 minutes Mike but uh you know if you ever want to revisit current events on UFOs and I will I've got I've got one down the road before you get one of my buddies sent me this thing apparently this whistleblower came forward on 4chan and just answered all like it just came

forth and it was this massive I read it on the plane it took me like an hour to actually read this thing it's pretty good it's a good read just don't know I'll link I'll link it in the show notes yeah it's on Reddit as well oh boy RFK and 4chan in one episode all right yeah there we go I think that's it I think that's it good rapping place all right later on peace [Music]