AI Feels Like Crypto In 2017, Circle Raises $222M and Anthropic Cracks Down On SPVs

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational 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. What's up, everybody? Welcome back to Empire. Sorry we missed you last week.

We were—

I was at Consensus. Santi and Rob, I don't know what they're doing, but we couldn't record. Where are you? Milken? How was Milken?

Yeah, uh, Milken was good, man. It was all the, um, all the suits, right? So, you know, everyone in New York descends on LA to talk about, you know, what's happening in global finance. Uh, I will tell you that the conversation was basically about two things only, and it was AI and tokenization. It's like literally all anybody wants to talk about right now. Um, which, uh, you know, it's good for us, I think.

Yeah, very good for us. Good for us. Yeah. I mean, the suits didn't just descend on Milken, they descended on Miami too. I was at Consensus. It was a, it was crazy. It was like, you know, there was like a State Street booth, a Morgan Stanley booth, the JPMorgan booth, the Visa booth, a MasterCard booth. It was, yeah, it was the most, I mean, it was basically we had, so we had DAS in March and then Consensus in May and they're both just like very, very, very trad fi events. So hats off to the ConsenSys team. And we should— I actually want to bring Tom on the podcast. Tom from Bullish had some interesting announcements there. They actually tokenized the entire cap table of Bullish, which I thought was pretty cool. But yeah, hats off to the whole—

they bought the transfer agent and they bought the transfer agent for $4 billion.

So Santi, what's your excuse? Why weren't you showing up last week?

I don't know. I was waiting on you guys and then, you know, I was like sitting there in my chair waiting for you both to show up, which is rare. I will say most of the time it's me that has to cancel, move it around, but I was just looking at the news and some of the clips on both Milken and Consensus. I got to say, I didn't really feel any FOMO not being at Consensus, especially at the afterparty. That was great video coming out of that. I think we all saw it. The vibes were alive and well.

Yeah. What do you— what are you doing sponsoring a strip club event in 2026? So, yeah, only the AI companies can do that right now. You can't do that if you're in crypto.

Rob, I want to go to you around the Milken Conference. I saw some of the clips. I mean, putting aside what's going on in AI land and, you know, some of these stocks is like going absolutely bananas. And, you know, you had Stan Druckenmiller come out saying like he's buying AI stocks. You know, we talked last, last time on the pod about like Paul Tudor Jones calling it a bubble. I'm curious what the sentiment was, especially around tokenization and crypto. You know, it seems like there's still a lot of apathy around just token prices and Uh, but, but anyways, what was the— what were some of the more interesting conversations that you had out there?

Yeah, I mean, for the tokenization side, it's like a lot of the same conversations that have been happening, right? Like Larry Fink has been saying on stage, and Jamie Dimon has actually been saying on stage recently, that the whole global economy is going to be tokenized. All assets are going to be tokenized. They are going to be put on a blockchain. We have seen this on the we've seen it start to take hold a little bit in terms of a lot of the trading firms also pushing for this. The DTCC obviously doing, um, you know, what they're kind of like a sandbox for, like, you know, tokenized clearing. And, you know, you're now seeing a lot of these companies, these asset managers, etc., go and invest in some of these, like, protocols who enable this, this world. Or, you know, obviously ARK and Circle, they came out with their, um, uh, fundraise on the ARK side. There's obviously, you know, there's been stuff announced around, you know, Ondo recently with, uh, I believe it was JP Morgan, and with the, um, uh, you know, Morpho and, and others. And so like, it's become very clear that people expect that assets will be tokenized, assets will trade on blockchains. How and where that happens, and if there's like a central clearing agent, and if there's a transfer agent still, or there can be more direct access to like a blockchain itself, um, is still very much up for debate. I think it is still very clear to people that the current set of regulation makes them need something like a transfer agent, makes them need, you know, somebody who, um, you know, kind of sits in the middle as an intermediary. But if you're going to trade on the weekends, if you're going to trade overnight, like, you are going to be on-chain. Like, that is the only way to manage risk during those things. And, and so the Every conversation I had was really about those two things, AI or tokenization. I will say that the tokenization efforts and conversation now feels more like, oh, this is happening, we're doing this thing, and, you know, this is great for, for business. Also, we don't care at all about what's happening in token prices. Like, you know, I couldn't barely— like, a lot of these people are like, could barely tell you what exists between beyond Ethereum and Bitcoin, uh, and they don't care about that because that doesn't matter for them because they see this as like underlying, like, settlement infrastructure. The AI piece, I think, you know, it's now become, um, a really hot-button topic because there's all these people who are like, oh, this is a bubble, and there's all these people who are like, this is— we're in, like, a supercycle, and nobody knows anything whatsoever. And so it's, like, very, um, much created this, like, sense of, I think, just need to get smarter.

Right?

And a lot of, um, a lot of people are feeling, uh, some, like, they're kind of unsettled about what the future is going to look like on the AI side, where tokenization feels settled.

Can we start actually, instead of going, starting with tokenization, because I want to go there in a little bit, but can we just, can I just hear your guys' take on these AI stocks and what you guys are doing? Because it feels like, um, we've entered the part of the cycle where it's like, you know, all your friends are getting hilariously rich and you're not. And it feels, it, it, it does really remind me of our, you know, 2017 when You know, it's like, you know, even the most foolish of your friends were just longing Bitcoin and making a 2x in literally a week. Like, you have Micron is up 80% in the last month. Intel is up 85%, right? SanDisk is up, I think, 50% in the last month. And so it's like, I think you've reached the stage of AI mania where so your whole— the whole— at least my whole feed is filled with people who are getting, as it, as they post on, on Twitter, hilariously rich and you're not, right? So I'm very curious, like Santi, maybe starting with you, like what you do right now.

So I put in a big position in some of these names. The shout out to Logan, who's, who's one of the guys that I always go to to understand more of the physics piece, like Logan from Frictionless. And him and I were chatting. It's hard to look at a chart and like want to put in a position, you know, after it. Basically it's been parabolic. Intel was spun, like SanDisk was spun out of Western Digital. And I think it's just in isolation, it's just been in price discovery. But in general, like there is this like memory shortage and the prices of memory has just gone up dramatically. I won't go into the specifics, but the short of it is like memory has historically been extremely cyclical because it, you know, you have these boom and busts. Historically it's been like, you know, smartphones, like anytime there was a smartphone, like you had huge, ramp up in CapEx and then there was a slowdown and then you just get crushed. So memory and these memory names like SanDisk and Intel and Samsung and Micron have all been extremely cyclical, just semis as a category. The narrative now is it's with agentic workflows that require more memory, like anyone that's used AI understands like the context window, what is called KB cache, is like very limited. and there's a lot of issues around that. Like, I think anyone can sympathize with that. And so that requires a lot of memory. You have to— they call it like hot memory. Like, you want to have memory that is easily, uh, cached and like, uh, a lot of the weights, uh, the context window. And so a lot of the run-up and excitement around memory stocks is that what has historically been a cyclical industry is moving away and becoming less cyclical. If you believe that agentic AI is just going to become more prevalent and agentic workloads are going to require more memory, then this starts becoming more interesting. And I think some of the— like Micron reported earnings last week. I think SanDisk also reported earnings. And the more interesting data points there is that a lot of these guys have like 5-year contracts in which is really interesting. And I think if you look at the growth baked into these things, I mean, they're trading at like sub-10 times like forward PE. Um, the things— and you have like everyone coming on board. You have like the Ultimeter, like Brad from Ultimator coming out saying like they own a bunch of these, that memory is no longer going to be as cyclical as it used to be, so it requires a re-rating. You have the Coatue guys coming into the fold. Everyone's talking about it. I do think that it's, it's real. The things that I'm paying attention to are obviously like CapEx historically, like there's been a huge ramp up in CapEx and like building, you know, factories to fulfill orders. And then you hit like an oversupply and then prices collapse. And then I'm also kind of monitoring the price of memory. So there's some really good accounts that I can just post on the chat. But it's certainly, it's interesting. It's just a classic re-rating. Even at this, I think it was like the Ultimator guy came out and said, even if you, you know, if you look at the chart, you would say, yeah, this is a bubble. But even at these prices, these multiples are absurdly cheap.

So let's say you're listening to this and you don't have a position in these things. And so, yeah, so the memory stocks are ripping because people realize you don't just need the raw GPU processing power, you need massive amounts of physical memory. So let's say you agree with that and you're totally AI-pilled, but you don't have a position, but you do see that the charts look extremely bubbly, but also, but, but also the, the Nvidia chart looked bubbly 3 years ago and it kept going up. So. What do you, what do you do? Like, Santi, let's say you have zero position right now and you're just starting fresh and you're looking at these things. Like, would you— how do you, how do you think about putting on a position right now?

Well, I mean, like, the same was true for Bitcoin too. I mean, like, if you traded crypto or invested in crypto, sometimes it just— it, it's best not to look at a chart. I mean, yeah, you could look at RSI and 50-day moving average, 200 moving average to like scale in your positions, if you want to play cute, the reality is you either believe that this thing is going to persist and memory is going to become a huge persistent, uh, demand, and the demand is there, and so you just wrap your head around the thesis and then you go, you go long, uh, and then baking in. So like, I'll tell you what, I didn't have a position like a month ago, and the way I structure these things, I go long and then I also, you know do other like structured products to clip in a coupon. Um, but I'm never gonna— like, I just don't think you're ever gonna time an entry perfectly. And if you're gonna wait for a perfect entry, you're just gonna be sidelined. There's a huge volatility in these names. One thing about NVIDIA that you said is true, which is the best take I've seen, is, uh, basically NVIDIA went from being highly cyclical to being the most valuable company in the world because the demand for GPUs was very cyclical. And then now It's, you know, it's just up into the right and the demand is really, really strong and they continue to innovate. You have the Cerebras, uh, Cerebras, am I pronouncing that right, IPO coming up, which has been massively—

yeah, yeah, massively oversubscribed.

And I, I had some really good takes or was reading some really good takes about the difference between Cerebras and NVIDIA. Uh, the, the The more nuanced debate that is happening is like, where's the demand of AI gonna be? Is it just for training? Is it for inference? A lot of the memory trade has been around inference. The demand is just gonna continue to go up and to the right because of agentic workflows. But again, like yesterday, the memory, DRAM is this ETF that launched. I think it's been the fastest growing ETF in the history. Like, it, I think it's gone like over $5 billion of inflows. The thing has gone up like 2x in a month. It's a very concentrated industry. But yeah, like clearly everyone has been sidelined because they're nervous around like what happened in the dot-com crash and the cloud computing hyper, like build out and then crash. Like it's been a very cyclical industry. Again, I think it's just, it's tough to look at a chart and then put in a position. Um, but, uh, I don't like to time my entries perfectly. I'd rather just look at it like, what is the fundamental case for supply and demand? Is this going to be cyclical or is it going to persist over the next 5, 10 years? And I think the same is true for crypto. Like, I mean, I'll stop talking, but you know, that's sort of my take.

Are you playing the, um, call it some of the more like decentralized versions of this? And so I think, yeah, like Venice is up, uh, what is it, up like 186% in the last week, something like that. Um, and they, I mean, it's not just like that the token is up because of a meme, like, you know, it's over 2 million users. Yeah. Now, like it's growing very, very quickly. I think they did, they said they did almost 30 million visits. In, uh, Q1, they're doing over, um, they're, I think, doing over 2 million, um, uh, the 2 million number earlier was like daily actives now, I think, at this point, right? Like, and like, it's very clearly there's like a demand for uncensored models. On, on the other side, and I think, which I think is important here, is, um, you maybe you guys saw, but Hermès flipped OpenClaw, uh, as well. Right now, Hermès on OpenRouter. And to the point that you made, Santi, earlier about memory and inference, Hermès today— sorry, it's not, it's Hermes. Sorry, I keep saying Hermès because I, I spent, I spent too much time with Santi, and so I'm thinking about, you know, the, all these luxury brands. But, um, as a lowly commoner, Hermes, uh, the, the, um They, you know, they flipped OpenClaw and, and the, and the main thing, and I've, I've been playing around with it and it is, it is so much better than OpenClaw. But one of the main things is that like they just, it pauses every 15 seconds and it looks back at the context window and it says, what did I do well? What didn't I do well? Do I need to, and how do I self-learn? How do I get better? Right. And it's this, this memory in this context about like working with you, feedback that's gotten, self-reflecting. And it makes it significantly, significantly easier to use for a bunch of different types of skills and workflows. And, but also there's going to be more memory that's needed because of that. And on the Venice side too, like, again, that's, that's demand for uncensored models, but their biggest model, I think, is still actually Opus, even though like there's, there's, there's demand otherwise. And that again is like a bet on inference, right? To your point, Santi, it's a bet that a lot of Americans will continue to want to. And not just— I mean, Venice is mostly America, but, but you're actually seeing, uh, for Hermes, you're seeing a lot of this happen in Asia as well. But it's a bet that more and more and more people are going to be using inference over time. And in that world, I actually think there's a crypto angle, especially on the retail side, that's interesting.

Yeah, I will say Ben from Stratequery had a really good piece, um, and I quote, he says, um, there's two things, but I'll start with the first one, which it talks about memory. He says the most important aspect for answer inference is token speed. The most important aspect for agentic inference, however, is memory. And so I think that is a shift that is happening, which is if you look at the evolution of AI, first it was like GPU build out, then it's now— and it's like prompting, right? Now it's turning over to agentic workflows, and for that you need to have a bigger KB cache. A lot of the conversations I had with Logan, not to get too technical, is like this Deepseek paper that came out, which is they were doing a lot of interesting optimizations that bode well for a company like SanDisk. You have to like look at the different tiers of memory, hot to cold. The pricing is very different. But look, I'm not an expert. What I try to tell you is I do pay attention to when smart people in my network reach out to me and they say, hey, look, we're paying a lot of attention to this, especially in how like Chinese constrained companies like Deepseek have tried to innovate around just like bottlenecks in this, uh, AI supply chain. Um, so yeah, needless to say, I rotated a lot of my cash and just blindly bought, uh, SanDisk and Micron.

And of course, so you didn't do Venice? So you didn't buy Venice?

I don't understand the Venice well enough. I, I'm fairly concentrated. And of course I get a call like, hey, uh, Are you sure you really want to do this? I'm like, just do it, you know.

Dante, when you buy SanDisk and Micron, are you buying just the stock or are you buying some complex?

Yeah, I'm probably doing it wrong, but I did buy spot and scaled into the trade and then I bought like these autocall notes that it's very volatile name. So I get paid like a guaranteed coupon, like 50% on some like SanDisk. And the barrier's like 30%, which means like if it breaches that, if it goes down below 30, which is really possible within 12 months, I basically buy it at that level. So if it goes down 60%, I obviously eat that, but the coupon is so high that, you know, you basically have to go down 40% and I'm happy to own it at that level. But I, in the meantime, I'm getting paid a nice coupon. So I did both, um, but look, that's not my full-time job. So I was very quickly just did that and said, I'm just going to forget it. I think this continues, um, but I may be terribly wrong. So none of this financial advice.

Can we talk an interesting point here? But maybe it's— sorry, uh, Jason Yanowitz, one last point, which is, um, I was talking to, uh, Tom Schmidt, one of my partners here at Dragonfly, and he, uh, he's been traveling Asia for like a week or two And he went through, um, through China last week, and he was talking about how, like, he's going to these meetups, uh, where, like, people are literally going to Hermes or Open Claw meetups. I mean, like, in whatever, they're, like, in parks, they're in, like, you know, random places, and you just get, like, 3,000 people to show up. And then there's people, um, helping them set up their own agent there. And it's like, he was— and he was talking about how And a lot of people in China were talking about how this feels a lot like, you know, crypto in 2017 in China, where, you know, everybody was just like meeting up and like figuring out what they could do. And it's like super interesting, there's so much excitement about it and everybody's talking about it. And if I think about, you know, stuff I care about, which is a lot of like digital payments, right? Digital payments, uh, grew so much more quickly initially in, uh, in the, like, mostly in Asia, China being part of it, but then, you know, more broadly in, in Asia. And then it went to the rest of the world, right? And it does feel like there's already— there's excitement around Hermes and OpenClaw and, you know, um, and kind of this agentic future, but it's still very much a, you know, whales eat up the vast majority of tokens and then, you know, kind of everybody else. And it's Hermes is still, even though I thought it was a lot easier than Opal Claw, it's still way too hard for the vast majority of people to use. And Brian Chesky has been out talking about this a lot. I've really enjoyed his stuff. And so it, but it does feel like the early days of like, man, like, are we all going to just have a bunch of agents? Right. And then all of the things that are downstream from that, to your point, Santi. Yeah.

I know you're pretty at the frontier of this stuff and testing it. Like, I'm curious. I have been tinkering around with agents, but how much do you guys, how much do you use them? There's a, yeah, I'm curious how you guys are using agents and to what degree and for what.

So we put together actually a, um, so what we realized at the company was, uh, we, so we did the survey internally at Blockworks. 81% of Blockworks was using Claude Code. 19% was using chat. 96% of Blockworks was heavily using AI. 4% were not heavily using AI. That was 3 months ago. I guess it's probably 100% now. What we realized though, was everyone was using— most people were just using Claude Code or Codex, but they hadn't taken the time to do these setups to make the work really go to the next level. So we actually moved one of our research analysts into this position, which is— I don't know his title, but it's like, we can call it head of AI, head of AI excellency, or whatever you want to call it. And he's He's basically put together a SWAT team where he now looks at every single function the company does. And instead of just using, I think Claude Code and Codex are like the V1 inside of companies, maybe chatbots are the V1, Codex and Claude Code are the V2. He's now doing, we're now doing a lot of the V3 stuff, which is we've built these agents that now run a lot of sub-agents for all of our tasks. So that could be outbound sales, it could be putting together research reports, it could be building dashboards. The time that it takes us to build a dashboard has gone down by about 95%. The time that it takes us to like add new data to our APIs is— it's now nearly fully automated. And it's— you can't just do that with Claude Code and Codex. You have to build these agents that are running subagents. So that's, I think, and that's why, like, Rob, you mentioned Hermes. Like Hermes is the version of this for on the, on the personal front, which, yeah, I think that's where the future goes here is, you know, you have these agents that have the sub-agents on Hermes. I actually haven't set it up, but my understanding is it's backed by Noose, right? Noose Research, which—

yeah, it is, which is a crypto team, which is a crypto team.

And I think Paradigm led their Series A like last year maybe. So but I'm curious and I was trying to dig into the docs. It looks like the Hermes language models are trained on— I'm pulling the— I, I pulled this up earlier, the Syc Network, which is an AI training infrastructure on top of Solana. So I'm very confused why that—

so they are— so for that piece, they're— I think they're winding that down, as I understand it. They— now today, when you, uh, set up a Hermes agent, you just pick, you know, whatever model. Like, I just put in my, you know, you— I just ended up using the people that I think I'm mostly using Opus for it specifically. And so like, it's— there is the Hermes model, but the model is not the focus of the business anymore, because they've had this like this, the agentic framework stuff grow so quickly. I mean, it's still sort of, I think for a lot of these guys that are like agentic infrastructure, they still don't really know how to like monetize their business. And so it's not, you know, they're definitely more like frameworks and it's open source and, you know, there's a lot of people using it, but like, how do you, what does that mean for like an actual business? I mean, OpenClaw figured this out because they had no business whatsoever and it was like one dude and, you know, then they ended up exiting for a billion dollars, but just because of, you know, what they had built around it. But there's how this turns into revenue is actually still, still very unclear. Did you read Toby from Shopify? His, uh, he put out like a Twitter post about what they're doing there and they're not allowing anybody to have any private conversations with AI. All of the AI is done in a public Slack channel and they, he's like, we're creating this sort of like context window for everybody. And so people are learning internally. Did you, and what did you think of that if you did read it?

Um, I, I, uh, I think that's the right move. Yeah, I did read it and I think that's the right move. And I, so. I'm not— we haven't gone that far. Like, it's— we— people can still have private AI conversations at Blockworks, um, and because it takes actually a lot of time to do the security of this stuff. It's like you have to provision— like, theoretically, you should give each employee when they onboard an API key that, that kind of shows their level of access that they get. Like, I don't want, you know, one of our salespeople having full access to our financials, but I want the finance team having full access. So you you kind of have to, we just, we takes time. You got to set that up. We candidly, we haven't done that. Zero knowledge proof.

Zero knowledge proof.

Yeah, that's the right model. What we have done is, look, I think there's this, there was this big push after COVID to go back IRL. Like everyone, everyone's going back into the office. And I think there's a big benefit to that. But we, we didn't do that. We're still, we're still a remote first company. And I think you're starting to see the real benefits again, of being— the real benefits of being a remote-first company today are that every single thing that Blockworks does is documented. So one thing that we made, we made a big push about a year and a half ago to go public channels instead of private in Slack. And what's happening now is that the AI just has so much more context because it can read— it can't read private, private Slack channels, but it can read public ones. So I would encourage founders, if they're listening to this, to just make all your Slack channels open and public by default. Doesn't mean you have to add the whole company into these Slack channels, but make, um, just, just record everything at the company. Um, I think that you're seeing this with Facebook. So Shopify read Facebook as Facebook is now logging every keystroke of the whole, of all employees because as a training method for their AI, because there's these RLHF things like they bought, they bought, they bought Scale. Um, there's Mercure is another one. But it's like, instead of outsourcing your training, what if you did it in-house with just employees? So look, we're not, we're not doing that too. We're not like, but I think that's, that's where a lot of these companies will go is starting to actually do more and more training. Right now, we are— everyone outsources their training to the big companies. But I think you'll start to see small, like training push more and more and more to the edges. And the way that you can do that is making more, documenting more stuff and making more stuff open. So Yeah, that's, that's what we're doing to answer your question. Let's, let's shift gears. We spent 30 minutes on AI. So Digital Asset, the company behind Canton, it came out that they're raising a big round led by Andreessen. And then which we can talk about all the— not sure how much is public there and what's not. But we can, we can talk about that. And then there's Circle.

I think that was just a rumor. And then like, there was very little that was public around it. So I'm not sure there's like much to say around it until there's more stuff comes out.

Well, it sounds like they are, is what I'd say. Um, Circle is, uh, uh, no, no, not earnings, but I want to talk about Circle's raising a— raised $222 million for ARK, the token for their chain. Um, and yeah, I mean, the like broad, the broad idea I mentioned last week or two weeks ago that it's a good time. It's a, um, it's a good time to be a public— to be an enterprise building a chain. That's what I'd say. I think I said— mentioned Canton and Tempo specifically. But if you look at right now, you've got Digital Asset and Canton, you know, raising at $2 billion, Circle and Arc raising at $3 billion, Stripe, Paradigm, and Tempo, you know, uh, you know, I'm not sure what's public there and not public, but I'm sure Tempo will have a token at some point. So yeah, it's a good time to be a suit selling a token for a chain is what I'd say. I'm curious to get your guys' take.

What's interesting, Circle raising $3 billion, Tempo last round, mostly led by Stripe insiders, was at $5 billion, if I recall.

That's right.

I don't know how much we want to get into Circle, Arc, and I've heard some takes around like it's actually going to do less good or more harm than good by being less—

well, I mean, let's talk Circle specifically because this is, you know, like Stripe is a private company. Paradigm behind Tempo is a venture fund. So this is kind of the equity of Tempo, kind of. It kind of makes sense. So it's like the thing that you can bet on if you want to bet on their digital asset is a private company. Canton is a public token. Sure, that kind of makes sense. Circle is a publicly traded equity.

To be clear, the digital asset fundraise, but this one and the one before, are just into the equity, not into the token. And the way that they've described it is you get token exposure through the tokens on the balance sheet. But the investment, all the investments have not included token warrants, have just been straight into the equity.

Got it. Circle is interesting though, because Circle is a publicly traded stock. If I am a Circle shareholder, I am confused why there's now two ways to bet on the company.

Well, I'm not sure public investors are, are really making that nuance, to be honest. It's more like they're going to have some tokens on the balance sheet. So it's— you still accrue some of that benefit. I'm pretty sure that's the way it's structured, Rob. I don't know if you just—

but yeah, I mean, so it's the same story a little bit as Canton, right? Like 25% of the tokens go directly to the balance sheet, right? And so, okay, well, you get some exposure through your own 25% of the tokens, um, you know, and then there's a very big piece that goes to all the partners and goes to, um, you know, kind of incentivizing economic activity, right? I, I think honestly the most interesting through line here is what this means for the Coinbase-Circle relationship, actually, because the— I don't know for a fact that this is true, but the, the common thing that people keep saying is that, well, if it's on— well, here's what I do know is true. Um, in the Circle-Coinbase deal, if the Circle— or if USDC sits within a Circle wallet or a Circle account, then, or at Circle, then they don't have to pay the 50% rev share on the net interest margin to Coinbase, right? And so the thesis has been, I think, for a lot of people, and I think that the Andreessen article that they put out kind of says some of this, right, which is that like, oh, ARK is part of Circle, and so like, you know, if they can move a lot of economic activity under ARK, that is actually an immediate uplift in economics to circle because they see maybe there's, you know, USDC is the most dominant stablecoin in DeFi, and, you know, DeFi currently exists on Ethereum and Base and Solana. Well, let's say a lot of that economic, um, DeFi economic activity moves to ARK. Well, they get, you know, if it's, if it's, you know, call it, um, you know, net zero, right? And it's, it's that you're not expanding the pie, you're actually just vulturing what exists elsewhere. Well, Well, now they've gotten double the revenue because they've gone from 50% market share with Coinbase to 100%. And that's, um, you know, something that if you're a public market investor in the equity, you obviously like a lot, right? Because there's a, you know, huge uplift for you, right? And you saw that they beat earnings, the, the, the shares traded up. I, I forget what it was, but I think they traded quite a bit, um, after hours, uh, and then, and then yesterday. And so the bet here is almost certainly that they can take these other things that they have been doing around CPN, which, you know, has been this sort of, you know, Circle payment network that I don't think has had the success that they had hoped it would have. But then they can take that, they can take more of the work they've done on the cross-chain side, they— more of these kind of value-added services, and then they can move a lot of the activity that's happening on-chain, of which they are giving up a bunch of the economics of USDC on, onto their own chain, and it's good for both the equity and the token. And the token is needed to incentivize people to come and, uh, and come and be part of that ecosystem. They haven't fully talked about publicly yet, like, what, you know, use case the token will have, but it is going to have usage that, you know, people, uh, or at least they've hinted at that it's going to have usage that will incentivize people to be holding it and doing things on ARK.

Oh, it's, it's a customer acquisition cost. It's a, it's a, it's a marketing.

But that's true for a lot of tokens. Tokens are just CAC in a lot of cases.

True. Uh, I, it's showing up in the numbers for sure. Like they reported earnings. Uh, I mean, their OpEx line item was up like almost 80% year over year. Stock-based compensation's up 4x. I think, you know, you read into that. My take is they're, they're obviously spending a lot to get this thing off the ground. Um, so shareholders are definitely footing the bill there and they're getting some benefit. I actually don't know, um, so like this goes back to, I think, an earlier point I want to get your guys' take on, is like ARK on its own, is it going to be like hugely profitable as a traditional L1? Because if it's just like stablecoin and stablecoin transfers, there's not in my opinion, if it's just that, I don't think it's that interesting. And so I'm curious, like, of course it depends on the valuation, but like, would you rather own Circle the stock or ARK the token if it exists? And you know, it's nuanced, right? If it depends if at $3 billion or $10 billion and $40 billion, of course it depends. But I'm curious what like the correlation between like the stock or the token and what would you rather own and why?

I mean, if ARK is successful and everything I just talked about, it has, you know, a direct economic benefit to the equity, right? And so I think the, the debate that you have to have, which I've been having actually with a bunch of people, and, and it's been, okay, well, what do we think the net new buyer is for a token today? How many buyers of those tokens do we think actually exist? In this round, there were obviously a ton of strategics who said that they did the private sale. Does that mean that there's going to be institutional buyers of the ARKK token over time if the ARKK network does well? That's the question you have to ask yourself, because the amount of capital that could go into the equity over time, if the USDC, you know, continues to take market share and, you know, dominate, etc., is obviously a much bigger pool of capital, and there's much more buyers that you can reach than there is today of people who can hold this token. And so there's a supply-demand question around that right now.

The—

does that mean that the token, you know, on that supply constraint won't perform just as well, shouldn't perform just as well? I think today you've seen that correlation break down a little bit, right? Like, you know, Pump.fund's a really interesting example because, you know, they did whatever, $700 million of revenue last year, they're doing $350 million of revenue this year. They were doing 100% buyback and burn before. They came out and announced that they were going from 100% buyback and burn to 50% buyback and burn, and the token went up 30%, right? And so like, it was like sort of unclear on like if the market even understood what was happening. And the crypto markets have been a lot more cyclical. And so I, I think in the equity anyways, you're betting on more call it like the long-term trend of stablecoins. And on the ARK token, you're betting on their ability to win, you know, DeFi and this like pie that exists today in the crypto space, which is today smaller. And you know how you square those two, I think, is, you know, any investors, um, you know, that's their job. That's how you have to— what you have to figure out.

The way I like to frame the question, I want to go to you, Jano, is like ARK is the asset, the token itself. USDC is a commodity it transports. So, um, it depends on what you want to have exposure to, but the, the, the commentary I've heard is like, you obviously saw Hyperliquid do an RFP, which is very competitive, that Circle also wanted to compete in. And Hyperliquid, which I think is at the forefront of— they've been just very good at thinking about go-to-market and marketing and just how do they build more moats. They did their own RFP for a stablecoin and they issued their own native stablecoin. That doesn't mean that like USDC is not going to be on the chain, but it, you know, I read into that and I think still the largest, uh, the largest stablecoin on Hyperliquid Core by far. USDC.

Yeah. Yeah.

Yeah. Well, that, that, that, and that, that's what I'm trying to get at, which is, has Jeremy and team gone, come to the conclusion that USDC is sufficiently entrenched in the crypto ecosystem that they can now go and launch ARK? Because I don't think they could have done that. In the earlier days, but they're seeing, okay, we're gaining more market share, especially on the B2B, like on the, on the business side. We sort of have the brand, the trust. We can now go out and launch ARK. And yeah, sure, like some of the other chains like Solana and Ethereum and some of the L2s are going to probably, you know, feel the heat, but we're at a point where we can launch ARK and still dominate. I think that's sort of the calculus that probably went in their minds.

Yeah, I think, I think that's right. And I think Rob, Rob's point around their relationship with Coinbase, I think, Rob, you said this also. Omar from also from Dragonfly had a really good post on this too. This is the beginning of the end, actually. Probably the beginning of the end was probably a year ago. But, you know, this is a continuation of the end of the Coinbase Circle relationship, right? We saw them launch competitive products like the, you know, CBTC and then Circle launched CIR, CIR BTC. But this is like, you know, if you look at what Coinbase is trying to do with Coinbase Plus Base, it's like build the everything exchange. And I think this is Circle saying we're going to take all that activity and instead of flowing it into Coinbase and Base, USDC balances, tokenized asset, tokenized assets, payments, settlement, eventually FX, which will probably get big in crypto, that should all go on to our chain. Not onto Base, which was the natural evolution of this, was with the Circle relation or with the Coinbase relationship, it would all flow onto Base. And I think this is Circle saying it should flow onto our thing. So I like it from that point of view. I like it from that. Oh yeah, go ahead.

Well, no, I just want to add one point to that. But before— and then I want you to continue, which is that there was this ANRPM, which is like an advanced notice for rulemaking that came out from Treasury. Around, uh, Genius Act. So obviously as part of Genius, um, there had to be a bunch of, of rulemaking that the OCC and Treasury have to do. And Coinbase filed a, essentially a, um, sort of a comment letter that when this request comment, like, here's what we think about the rules and what they should be. And one of the things that Coinbase put in their, their, uh, filing, which I think got a little bit underreported, was, um, a support for one entity that is, you know, call it in the— is able to be a, um, reach the Genius Act level of an issuer, and then other entities doing multi-token or multi-stablecoin issuance, right? And what does that imply to me is that Coinbase believes in the future they will be a multi— a multi-stablecoin issuer of, uh, different types of stablecoins, which also implies to you the same thing you just said, Jano, about the relationship with Circle.

Exactly. They, they own the distribution and they can be— have multiple stablecoins there and just take massive rev shares on, on multiple. So in, in that case, I like it for Circle. It's strategic. Um, but I really don't like it from a tokens— what's the value of a token? Um, it's like ARK at $3 billion. Look, they're able to get some smart people to do this, right? And Rob, I'd be curious why you guys aren't included in here and why you guys passed, right? You know, but they got Andreessen, they got Apollo, they got BlackRock, they got General Catalyst, they got ICE, Janice Henderson, Marshall Wace, Standard Chartered. I have my own takes on why those folks did that. But, you know, it was a very successful fundraise. I'd say $222 to $3 billion val is like You know, nothing to turn your head at, but, um, 10% of Circle's market cap, give and take. Yeah, it's, it's a very successful fundraise. And I like the strategy. And I will just say, so many people in the, over the last decade have bet against Jeremy Allaire and have said, you know, Jeremy is this or Jeremy is this. And the guy just wins. He just keeps, he just keeps being successful. Everyone said this, the IPO was going to be like the worst IPO ever. The thing ripped. So I'll just say like, you know, I'm not— I don't want to bet against him. What I will say is, I don't— I think the trend of the industry has to be there is one single thing that captures the value of your company. It should— it could either be equity or it could be token. So I don't like having those two vehicles. And my vision for this stuff is, I really do believe in tokens, but I just think that these things will just converge into one. I think that it's either all equities will trade on-chain or tokens will become the new version of equities. But like, you can't have two forms of value capture for a company. And I feel pretty strongly about that. So that's my, that's my take.

I'm obviously going to debate this with Hasib tomorrow. I think we're opening up the conference here about, are tokens dead or not? Unfortunately, we won't be able to share that because it's closed doors, but excited to do that.

You're arguing for sure that tokens are dead, right?

Yeah, yeah, I, I'm taking the affirmative. Hasib is taking the negative. Um, and, and so, yeah, uh, but, but in any case, would the right analogy here be like an oil, like, exploration company, give or take? Like, they have the rails, like, they own the pipes or the infrastructure, and then they have oil in their balance sheet. I don't know if that's a right analogy.

No, no, no, it would be like what they're— I think what they're doing here is like, if you're an oil company You're Exxon and you have Exxon stock, that's Circle stock, but then Exxon launched another stock just for the oil pipes. And I'm like, that doesn't make sense. Just have one.

There's, I'll look into this, but like obviously the, in the cable, like Born to Be Wired book, like John Malone experimented a lot with like tracking stocks. And the way he did that was like, you have Liberty A, Liberty B, because like investors want to have exposure to different things. And so I'm not sure how Jeremy, like. There is a little bit of financial engineering here. And again, I think like there is a place, a role for a token to serve. Like you need to have a token. Like, I don't think tokens will cease to exist. There's a, there's a role for a token, especially for an L1 to exist, right? To pay for, you know, settlement transactions and MEV and block inclusion and priority fees. Like you can't have a stock to do that. So like, you're still going to have a token. Was that like the primary motivation, or was it just Jeremy saying, look, there's clearly interest looking at Stripe and what they've done, and saying, okay, let's do this ourselves and capture the attention and, you know, have some of the— these new investors like subsidize a lot of the OpEx? Like, probably, maybe. The question here is like, why didn't Coinbase do this for Base?

Yeah, listen, I, I think I, I, um, there's obviously a question too around— so ARK is an L1, you know, Base is a, you know, OP stack, you know, L2 rollup, right? And, you know, there's a, I think there's also a question around, does a, you know, OP rollup actually need a token? Whereas then I think to your point, like, it's much clearer why a L1 needs a token, right? And, you know, there are obviously a bunch of L1s that are trying to pay gas in stablecoins, but I think it is obviously, it makes a lot more sense from, you know, how the economic, how to align economic incentives. An L1 than it does an L2. I think what's also true here is that, you know, we're sort of in this time where you can be one of the— like, they're basically the first one to be a public company to go and launch a token, right? And, you know, what is— what is Jeremy other than somebody who's wanted to push the edges of what happens, you know, out there in public markets, what happens out there in private markets, of what's happening in technology more broadly? That has been his whole career. And so for them, you know, I— this is like complete speculation, but I have to imagine part of it is just like, hey, like, nobody has done this before. Maybe we should do this.

Well, yeah.

And by the way, like, let's not forget, uh, Circlebase moved away from the OP Stack earlier this year. And so again, I— is this part of like the evolution that they came to the conclusion like, hey, like, we don't necessarily need to be an L2. We'd rather just build an L1 ourselves and just, you know, own our own sovereignty and what have you. Related to this is a piece of news I wanted to cover related to what you just said about perhaps Jeremy and the willingness to be more on the cutting edge of regulations and doing interesting things. We have here the Polymarket on the Clarity Act. When we recorded 2 weeks ago, it was at a record low of like 30%. But basically you're now at 60, what is it? 60, almost 2/3, like 60% chance Clarity Act gets signed into law this year.

Wait, wait, Santi, say that again. What's the percent? 60? Okay, cool. Wow. Listeners could have made some nice money listening to your boy.

Didn't you say that, Yano?

2 weeks ago. I said we're getting clarity. I'm— by the way, we should talk about clarity. I still— I'm, I'm, I'm at 98%. We're getting clarity. I think there's been a big change in the last week. Rob, I don't know if you're capitulating on that trade. Rob was saying we're not getting it. I'm saying we're getting it. I'm standing by that.

I did not say we're not getting it. I said the— it was mispriced in the market and that the market was— which, by the way, Rob, we're going to have to do a clip here.

I think we said Both you and I, accountability was a long time ago.

Every single insider had the same, same opinion, right? Now, to your, to this point, there has been a big change in the last week, right? Now, I don't know if we want to move to this right now, but like Tillis basically came out and was like, we are going to, we are going to put this out there. We're going to, and we're happy to do it in a partisan vote if that's what it means. And the Senate Banking Committee. And, you know, the— doesn't matter that the banks are going to continue to throw up a fight because I'm fed up and I believe that we have a reasonable compromise. It was unclear that would happen. And I— though a lot of the back and forth, by the way, was a belief that the banks were not going to get to a compromise and play in good faith, right? And we What has actually proven out to be true is, is that exact thing. The banks have not been in good faith. You see the ABA put out a sort of an email blast to every single member over the weekend trying to get everybody to flood Congress with comments right now that says, hey, this is bad for consumers, it's bad for deposit flight. They're putting up a huge fight. And now it does feel a little bit like a death rattle to Yano's point. But like the banks have essentially been bad faith this entire time. And so what we needed was we needed Tillis to come and say, hey, like, I, I hear you, I think we have a good, uh, a good compromise, and I'm not going to continue to be beholden to the public— the, the private interest groups of, of the banks. That's what he did. And so that was the big change. The big change was that Congress said, we think that there is, uh, there is a good agreement in place. We have heard everybody, we understand the concerns, we are trying to come to a place where we can address those concerns, and now we're going to put this on the floor. This is not done yet though, to the honest point, about 98%, like, that's definitely a mispricing as well because we, we have a, a, uh, we're gonna get out of committee probably, um, almost certainly, but it might still very much happen on a partisan basis, which means that we're which is not typically a good sign for what happens on the floor, right? And then you're going to go to the floor and you, you know, one or two flips on the Republican side could create big issues for this, right? And so like there's going to be a lot of whipping that needs to be done. There's going to be a lot of work that needs to be done. The ABA and the other, the other interest groups on the bank side are going to put up a lot of a fight. But I will say that the, the prospects of a, uh, of Clarity Act now seem much, much larger than they did, you know, a week, week and a half ago. And it does seem very likely that if not, you know, close to 98%, to be honest, that we at least get a vote in, uh, on the Senate floor, which is, which is really not being talked enough about, enough, I think.

Right. I mean, I don't know.

I think crypto asset prices did kind of rally on that basis. I saw a lot of news out there and I think you saw Bitcoin above $80K. Some of the other major networks like caught a bid. Um, and I think people were willing to be a little bit more risk on. I heard it from, I think Rebecca that said a bill dies like 7 times before it gets passed. I'm actually now of the mind that it does get passed in 2026. Maybe not the version that you wanted, but it will get passed in some way, shape, or form, and that's gonna be positive. So I think it's still mispriced at 60%. I would be actually going, you know, I'm operating under the assumption it does get passed.

Yeah. Yeah, I mean, I really, I really think it'll get passed. It might be helpful. Maybe I can—

Did you trade it, Yano, is what matters.

You know, it's— I didn't trade it. I'm unlike, unlike most of crypto, I'm terrified of insider trading. It's like the insider trading stuff is not worth the risk. So could you trade it? Probably. Is it worth it? Probably not. But I think I did say on the podcast, I was like, I think we're going to get clarity. People aren't expecting it. I think we're going to get clarity. I think we'll get a pump into, uh, you know, a re-rating of some crypto assets into positive news about Clarity. And I think we get— we got that. I didn't trade it, sadly. Um, do you want to give like an overview of what Clarity— like the impact of Clarity, and specifically like the impact of Clarity on tokens? Or I'm happy to as well.

Yeah, I mean, I can do what matters to us. I I think a lot of what is going to end up happening with Clarity, and the same thing that we've had happen with Genius, is that we're going to punt a lot of rulemaking still. So we're not going to know the full effect, right, until the SEC and the CFTC get together and say, well, these are like, you know, taking this bill and then going that layer deeper and saying, okay, well, now here's how we define a commodity versus security, right? But what it does do is it provides us a framework to say this is a separate category, and now we're going to go define what is a commodity versus a, you know, a security. And there are some guidelines and clarity already, but, you know, we're— the devil's in the details, right? And but what that— what was really good about that specifically is that now all of these, you know, call it banks, traditional finance companies, you know, uh, tech companies who have been saying like, I want to be able to do something where I hold different types of crypto assets on-chain, they're not going to have this, you know, concern over, you know, what this thing is anymore, right? Which is going to provide them clarity to be able to trade them, be able to hold them, to be able to create new things themselves, to be able to potentially create, you know, um, or at least with some certainty create like an on-chain security, which you can do today obviously if you go through traditional intermediaries. But like maybe there's gonna be a lot more flexibility around that, you know, over, over time. Or maybe you don't need a transfer agent, right? Or you don't need a, you know, kind of a central clearinghouse. The, you know, stablecoin yield point, that's been talked through to death. You know, that again clicks, kicks a bunch of work back to, you know, the rulemaking side. You know, a big thing that we care a lot about is what comes out of the House, what they called about is the BRCA. What this really does is it protects developers from criminal charges if their software is used for nefarious reasons, right? Like, we didn't go and say, okay, well, like, you know, North Korean hackers are using Google, and so we gotta go— or maybe they're using, you know, call it even whatever, they're using Airtable, or, you know, whatever your software is, uh, and, you know, say that, okay, well, this was used for a nefarious reason, and so we're going to go in and, you know, put criminal, uh, sanctions against the founders and the company. Whereas then we've seen in the past, like Tornado Cash being one of them, right, where there was, you know, Roman Storm is being prosecuted for, you know, criminal charges, uh, based on a piece of open-source software which he launched out into the open, locked, and had no idea how it was going to be used, right? And then it ended up being used in some sense by North Korea, but not entirely. right? And so that one matters a lot to us because we want— and we hear from our developers, our founders, that they are concerned about building a DeFi protocol that may end up being used by the wrong actor and what that means for them personally, right? And so that protection, I think, is, uh, is really, really important. Um, and so there's, you know, there's a bunch of other things like nuances in there that, that matter, but I, for this audience, like those are the things that I think are probably most important because at the end of the day, what does Clarity Act really get you? It just gives you comfort and clarity that you can participate in this space in frameworks that will be specifically made to answer the questions that we're asking ourselves every day.

Yeah. To tie it all back into this Circle conversation, I, my one line on clarity is it gives, it creates room for tokens to have utility. Value creation and value capture for really the first time in the industry's history. Now, Rob, you're spot on. I think rulemaking is where the real details are going to get decided, right? That's like probably the SEC is going to define like what that actually looks like. But I think what we're going to have is for the first time, I think clarity is the beginning of a— Santi, this is where I'm going to really disagree with, I think, what the premise of your debate is with Hasib. I'm probably more in Hasib's camp here because I think clarity is the beginning of a, of a beautiful multi-year bull market for, for crypto tokens, for a very select few who decide to do it. Like, there are only a few who I think are doing it the right way right now. And I'm talking my book a little bit here because, you know, token transparency and investor relations and token disclosures and transparency. And I don't care if you use Token Transparency Framework or something else here to do it. But like, there's a, there's a select few tokens who I think will do incredibly well. And I didn't, I didn't, I didn't buy PolyMarket odds on Clarity, but I am starting to bid tokens for the first time in many, many, many years.

So yeah, no, look, I actually don't disagree. The premise of my argument, spoiler alert, I see you're listening. I guess you have a few minutes to catch up, although I go first. Is that tokens as we know them are dead. Tokens will end up resembling more like equities in the reasons that we've talked about at length, which is more transparency, uh, more value accrual mechanisms that allow token holders to participate, and then there's less value leakage. But the first point is, is the reason why public equities just have way more liquidity behind them— we talked about this in prior episode about prediction markets— is you need to have a certain a set of ground rules that provide market fairness and integrity to incentivize people to actually bid these things. In the absence of that, it just becomes harder to really see much more liquidity entering the space. But I don't think tokens are dead. Tokens as we know them are dead, but we're moving more in the direction of creating certain rules in place like Clarity will set in place. And again, we touched on it on ARK. There is a time and a, there is a need to have tokens. I'm not in the blockchain, not crypto camp. I actually strongly believe that tokens serve a really good purpose to, Rob, you said it, customer acquisition costs and like go-to-market, providing validation and consensus and incentive alignment, all of that, like crypto economic design tokens are essential substrates to spin up and maintain these systems. Without them, it becomes incredibly, incredibly hard. Right. If you really want to achieve decentralization and distribution, you want to and need to have a token. But I do think, like, have you guys put out a correlation? And it might be too early because there's a lot of noise into that. But like, it would be interesting over a couple of years timeframe, say, look, the tokens that moved and had a higher— like, what is the R-squared between token transparency and performance. I think there was a blog post by One Token Fund, which is more anecdotal than not, like, hey, look, we— but I do think, certainly think it's true. Like, just, you hear from VCs all the time, founders that respond really quickly to emails is, is a kind of a, a thing that people latch on to. Um, teams that send out quarterly investor updates on a regular basis, like, these are all things that give you confidence as an investor that the team is of high like integrity and is operating at the highest level kind of thing. Anyways, we're not necessarily as serious of an industry as we can be.

Yeah. Um, last interesting thing from the week is, uh, Anthropic. So there's all these Anthropic SPVs that I'm sure you guys get pitched as well. And I'm not just Anthropic, Replit, OpenAI, Stripe. The SPV craze has just hit an all-time high. And, um, yeah, it's people wanting to get free IPO shares in a lot of these things. And Anthropic came out this week and said, no, no, you cannot, we will not recognize any of these SPVs. Um, I know, I know, I have friends who have put probably 90% of their net worth into these SPVs in the last 2 years, like crazy, crazy amounts of the, the craze that's happening in the SPVs, I think are not, is not talked about or seen as much as some of the public market stuff. But like, it is, it is mania in SPVs right now. And yeah, Anthropic came out. I think OpenAI might have too and said we will not recognize these.

Yeah.

And I think you're going to see a lot of other folks start to do this. There's a lot of other SPVs that are very hot, like Replit SPVs were hot, Lovable SPVs were hot, Stripe SPVs are very hot, SpaceX SPVs are extremely hot. So the reason that it's relevant for Empire and for this podcast is because we talked about this maybe a couple of months ago, but a lot of pretty much all of the tokenized equity trading that you see today on, you know, Ondo and Hyperliquid and a lot of these things, it's all— it's not a dig at Ondo or Hyperliquid. It's just, I think, stating the reality is that a lot of these are just trading SPVs. You're throwing a bunch of shares into an SPV and then throwing it onto a blockchain and trading it. And so if the SPV mania blows up with these companies not recognizing them, a lot of people are going to get hurt. But a lot of the token—

it'll be—

I'm unsure of how this will play out with the tokenized equities. But it's— if you are trading tokenized equities, it's, it's definitely something to be aware of. I'd say.

So Rob, I don't know, or Santi, if you guys have takes or have thought about that, but I mean, I tweeted that, uh, before actually this came out, I tweeted like a week, week and a half ago that, you know, the fraud in the SPV market was like, hadn't really been digested by, by people yet. And I got probably 10 pings from reporters after that, which is like, oh yeah, we're like, we're talking to a bunch of people and like everyone, you know, agrees. Like it's one of those things where we've seen a couple of things happen, which is One, there's a lot of like smaller, you know, sort of VC funds who have, you know, kind of built their business now on these SPVs because like, oh, they've, you know, one of two things is true, which is that they've struggled to actually like win allocation and deals for, um, you know, being directly on cap table and for, you know, kind of their own fund. And so, you know, call it sourcing some, you know, uh, shares of an SPV, of an SPV. you know, then sort of like a second or third nested SPV has been much easier to do. I think the TVPN guys, uh, said it, but we're like, we're almost at the phase of the, uh, of your cab driver shilling you his Anthropic SPV. Uh, uh, and it does, um, it does feel that way a little bit. I think there's— it's important nuance to note that there's like a couple of ways these things happen. So one is like, okay, well, like, you know, the company is selling primary shares or they're like in an OpenAI case, there was a Wall Street Journal article that came out about them actively allowing and facilitating secondary transfers specifically. And sometimes people just have an SPV of this like direct cap table ownership because, you know, they can't— you know, they don't have enough money themselves and they want to go and, and, and, um, you know, source some, some extra capital for it. Um, like those are obviously fine. Uh, there's— I, I think a number of nested SPVs into those are also obviously fine. It's just The— I think the thing, the bad thing that people don't understand about these nested SPVs is oftentimes you're getting like 2 or 3x the fees because you're paying fees on a, you know, an SPV, and then you're paying fees on the, you know, the ownership of the other SPV. Um, but like, those are fine, right? Um, there's also then like a lot of like, you know, employee transfers that are happening where they're not actually transferring the tokens, but they're— or that— sorry, not the tokens, the the equity, but they're, you know, agreeing to like a forward agreement and they're saying like, in the future when it's liquid, I will give you the, the shares. Um, that's where this question I think becomes really, really tough, uh, which is I think Thomas Brazil, who runs sort of, um, a fund that does a lot of like distressed stuff, he did a lot of FTX claims, um, has also been retweeting the other side of this, which is like, listen, you know, a lot of these companies they really— they knew that these SPVs were happening. They maybe even encouraged some of these SPVs, and they didn't stop, you know, or didn't come out earlier saying that like these were not okay. And, you know, in Delaware court, will Delaware take the point of view that like they were complicit and so they can't actually go back and not allow for— and now, now say that, oh, actually transfer restrictions are in place? Um, and so I think depending on what happens, there could be a world in which there is, I think, significant amount of lawsuits around this in Delaware. Um, I expect that to be the case in the future. I don't know how this plays out. There's also a world in which, like, if you're an Anthropic employee and you go public this year, and then you get your shares 6 months after, and they're unlocked 6 months after the, uh, the IPO, there's nothing stopping you from then actually transferring them. And so there's also that dynamic, which is like, they can say this is true, but like, you know, 6 months after the IPO, they can do whatever they want with it. And so I, I don't know how this plays out. I do think, listen, I've always— I've said this a bunch of times publicly and on, on this podcast and on Twitter, that these, you know, sort of like on-chain, you know, spot exposure to equity that is an SPV of an SPV of a US broker-dealer like are not scalable and are very risky. And, you know, they're illiquid and, you know, buyer beware. Synthetic exposure is much better. That's why perps have actually been doing, doing well. And, um, I think there's like buyer beware. Like we saw it on the, on the Anthropic, um, on-chain— I, I think it was the— maybe it was on Hyperliquid or, or, um, one of the— what? Yeah, like it was down like not to like $400 billion. It was, it was down significantly after this came out despite the fact that they're raising at $900 right now. And so buyer beware.

I think, uh, the last point you made, Rob, is excellent. Like, I would feel way more comfortable getting synthetic exposure to just whatever the underlying, like, weighted average price on the secondary is for some of these things. Of course, the implication is less liquidity if transfer restrictions are now enforced. Less liquidity means, you know, it's, it's less price discovery. Omar from Second Lane has really come out with this. Like, the teams in crypto, we've had a lot of this for, for many, many years. Omar kind of said it to me, and I think he's published like in his newsletter in the Second Lane, is teams that actually allow transfers and have a healthy kind of a pre-TGE market tend to do better. Solana kind of did this. Many other teams have done this. You know, the difference between public and private markets is just liquidity. And I think again, the Collison brothers have probably— Stripe as a company has been the most like adamant of like, we're never going public, like transfer, like we just don't want people that we don't know on our cap table. And I, and I get that, but at the same time, like I hear that argument, but also like they have super majority voting and the structure is like very, very in their favor. Um, they do a lot of tenders, right? But if you're not like actively doing tendering, like I actually think it's like good for employees and whatnot to get liquidity if they want to. And you know, it's, it, You know, uh, Elon, for instance, in SpaceX, um, you know, all, you know, probably the most sought-after, uh, shares now in the secondary market are like SpaceX, Stripe, Anthropic, OpenAI, maybe some of the robotic names here and there.

Um, but it's like, it's like Databricks. Um, if you look at the top 10 right now, Databricks is there, Polymarkets actually there, Kalshi's there. Um, yeah, there, there's like there's like, those are the top 10.

Yeah, those are the top 10. Um, I don't know, I feel like, uh, maybe Anthropic is taking much of a harder line, and I, I, I don't, I don't necessarily, um, yeah, if they don't have an active tender, then why, you know, allow it, right? And maybe just, you know, play ball to some extent. But in the absence of that, I, I, I think the— does high, um, what are the risks of like synthetic exposure?

I guess just the pricing fault and an oracle issue, or it's an oracle problem, right? Like, and that becomes, but that's a problem. A lot of the, a lot of these, like, you know, call it Trade XYZ, HIP3 Markets, right? Or, you know, call it for anybody else who's doing this, Lighter's doing it, a bunch of others are. There's, there is an oracle problem. And there's a, how do you manage risk at times when, you know, there isn't a publicly open market that you can actually reference? And everyone's trying to, trying to figure that out. Because like you can definitely provide some exposure, but how does that scale? That becomes really tough. And so I think the private equity market, even with synthetic exposure, there is a real scaling problem and a real scaling question if the demand is really there, which it is, right? And so I think it brings this other point around like, you know, should we be doing stuff to encourage companies to go public sooner? Uh, and like that is probably almost definitely a yes. But because there's real demand, to the point, right? You know, for, for every, you know, cab driver that's in Anthropic SPV now.

Also, if you're an employee, like, would you want to like hedge your exposure if you have like 90% of your net worth? Uh, I think like SpaceX employees, like, the Austin economy is about to rebound because they have like 12 people that are going to become billionaires, like over 100 people that are going to become like centimillionaires. Like, if, if you, if you want to hedge your massive concentration of wealth, like, you'd want to maybe like get synthetic exposure and like, you know, hedge or lock in. Like, uh, they serve a real purpose is what I'm trying to say. In the absence of like— not every company has a tender program like Stripe, you know, and repurchase.

And so, you know, I mean, there was a journal article, and we probably beat this topic to death, but there was a journal article, uh, I think over the weekend that was that OpenAI allowed employees to sell up to uh, to up to $30 million. The average— almost all employees participated. The average per employee was $11 million at OpenAI. Um, I think it was 75 did, you know, took the entire $30 million off, and, you know, something like 600 and some took over a million, right? And so, like, people are hedging, right? And so, I mean, we've seen all the tweets about the San Francisco, uh, housing market, the high end of it anyways, and, you know, the Austin market. And stuff. So, you know, that's going to happen. But there has to— this is why all of these companies now have a head of IR and they run these tender programs, because they've decided they're going to stay private for longer. But there has to be a way for, you know, all of these employees who have all this newfound wealth to, to, you know, to be able to hedge out their exposure.

So, all right, gents, it's a beautiful day out there. Let's, uh, Rob, I know you gotta hop.

Let's go. Content of the week.

Roberto, you're first.

All right, I'm actually not going to do fiction this time. I just caught up to Fred Wilson did like 4, you know, basically did like on the— they put out a USV podcast channel and they're just an hour long around like Fred's career and like USV's growth. And I actually found that like super interesting, especially as a, what I consider like a New York VC. I think there's this like divide happening right now between New York and SF. It's always been there, but you know, it's getting even, even worse. There's been a lot of these debates. And so, um, I, I don't know. I love Fred. He's, he's amazing. And so, uh, I really, really enjoyed that. And then to your point around, um, or at least I mentioned, I mentioned Brian Chesky earlier, but his, um, Invest Like the Best, uh, last week, uh, was, was really good as well.

Yeah.

Let me share a 30-second Fred Wilson story that'll make you like him even more. Mike and I were hosting the second ever Blockworks event. We had just quit our jobs. We didn't realize that you had to sign a contract with a venue, so we just did a handshake deal with a venue, not realizing that we had to follow up with them. We just thought the date was confirmed. So it's 3 days before our second ever event and we call the venue and we're like, hey, so like, you guys ready for us? Like, we're going to come in like a day early, set some stuff up. They're like, you don't have the venue. You never signed the contract with us. So we, you know, we panic, we freak out. We have like, you know, 300 people coming to this thing. I used to read, Rob, you probably have read this, um, AVC, Fred Wilson's blog, which he wrote for many, many, many years and was a favorite.

Every day.

I think still writes it every day. I don't read it anymore, but I used to read it.

No, no, no. He doesn't write that much anymore.

He doesn't write it anymore, but it was an amazing blog. He, it was like, you know, just a paragraph every single morning. And, uh, so I was like, we were living on 18th and Broadway. Union Square Ventures was a block away. And I was like, let's go see if USV— I was like, I read this guy's blog. I didn't realize how big of a deal he was. So we go into their building, tell the doorman we have a meeting with this guy, Fred Wilson. He lets us up. We go into USV's office. Mike and I are 23 years old at the time. And, uh, we're like, we have a meeting with Fred. We're here to see Fred. And the USV EA, or the person at the door, is like, no, you don't. We're like, we're meeting with Fred right now. We have a meeting with Fred. It's confirmed. So Fred comes out and he's like, guys, you don't have a meeting with me. What's the deal? And we're like, I'm so sorry. We just, we need a venue. Can we use your office? I read your blog every morning. And he's like, no, you can't. But like, he connected us with like Nick Grossman, like a bunch of Albert, who's another partner at USB, Nick Grossman. And Yeah, so I have a lot of love for the USB people. So anyways, I haven't listened to that, watched that content, Rob, but, um, I also have a lot of love for Fred and the USB team.

That's a great story. Yeah, that's a real entrepreneurial story.

Yeah, early days, we're grinding, grinding.

Yeah, uh, two for me. One, Founders Podcast, Dana White, uh, phenomenal, phenomenal.

So good, so good. It just gets you—

it's electric. I'm just going to leave it at that. The second one is just going back to the memory conversation. If you want to learn more about it, I thought there's a lot of content out there on Substack, really, really smart folks. There's two pieces. One of them is The Circuit. It's actually like two guys that are like very deep in the semi space. They put out really good content. There's one with a Micron SVP talks about, you know, the shortages that they're seeing, the trends, like just a good overview. And the second one is Ben from Stratequery has his most recent blog post that's called, what is it? The Inference Shift is also pretty useful. So, you know, for folks that want to, you know, learn more about that, it's pretty good content.

Yeah. I've got a political podcast actually. Tucker Carlson went on a New York Times podcast called The Interview. Which I thought was very interesting because it's pretty, you know, New York Times, pretty left-leaning. And it gives a— it gives— it's the best 1-hour podcast, maybe 2 hours. It's the best podcast to understand the divide that's happening with the right, which I don't know if anyone on the podcast Empire cares about. We never talk politics, so we can— you guys can skip this recommendation this week. But I did find it pretty interesting to hear. It's— Tucker Carlson was very pro-Trump. Rallied, campaigned for him, and he's, he's very anti-Trump now. It talks about the impact of like the war in the Middle East and what it's done to divide the right. It's relevant because it has implications for what happens in the 2026 midterms. The midterms are this year. We haven't talked about it at all. There are implications for crypto. If the House wins, you better believe that the House is going to be investigating a lot of crypto stuff. My fingers crossed that the only thing they'll focus on is World Liberty FII investigations, which are already start— it's probably content for another podcast, but the House is getting fed a lot of information right now in World Liberty. I would guess that they launch a big investigation if the Dems win. So that's why I'm bringing up Tucker Carlson interview. Anyways, probably go listen. Dana White one. Santi, Rob, good chat. Thank you, folks. Let's go enjoy Tokyo.

Sayonara!

Have a good weekend, guys.

See you guys.