Bell Curve X Empire | Prediction Markets, Crypto’s Mag 7 & Stablecoin Growth | Weekly Roundup

The meta narrative that is forming is— maybe we don't have the Max Seven quite yet, but we will. And that's moving in that direction. But the meta narrative is tokens need to make money. Tokens need to have a business model. There needs to be a value accrual to the token just in the same way that there is to Robinhood and Coinbase or, you know, anything else that's publicly traded.

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How's it going, everybody? Yes, thank you, thank you, thank you, thank you. Can we get some cheers for Santiago's nice outfit today? Yeah.

Fresh off a red-eye.

I've been dusting off my—

Santiago asked us to say that backstage, so you're welcome.

Oh, wait a minute, someone told me the dress code of Permissionless was suit and tie. I ditched the tie, but yeah.

As it's always been, as it's always been. All right, so we've got a really good conversation coming. We've got my better half, we've got the better half of Framework Ventures. I'm hoping to send them to dance after. And, uh, and we've got Santiago, obviously, who I co-host Empire with. A lot of interesting topics to discuss. I thought we could start with prediction markets, actually. Um, prediction markets, obviously one of the— I feel like there are like two hot topics in crypto right now. It's stablecoins, um, stablecoins and prediction markets. Maybe you could throw lend-borrow in there too. Um, prediction markets, there are obviously two players on the scene right now. It's PolyMarket and Kalshi. Kalshi just announced a $2 billion raise yesterday led by Paradigm. I think Multicoin also participated. It's rumored PolyMarket is raising at a billion right now or somewhere a little bit above that.

Raising at—

raising at a billion, not raising a billion, raising at a billion. I would love to hear your guys' views on just where we're at with prediction markets, these new, these new valuations. I would love to get your guys' takes on prediction markets.

Do you want to go first? Well, I— full disclosure, I led the round when I was at ParaFi. We were one of the first investors in Polymarket, and I think we're the largest holder in Polymarket. We've sort of doubled down. This was coming off of— like, people might remember, like, super early on when Ethereum was getting off the ground, like, there's a project called Augur, and prediction markets are one of those categories where, like, It's just fascinating. It can transform media, surface truth, like markets are arbiters of truth. Of course, like it's a classic example of revisiting something that didn't work because Augur didn't work for a variety of reasons. Principally, I think you just didn't have stablecoins and the tech was too— well, yeah, like the team wasn't fully committed. Yeah, but you didn't have a stablecoin. And if you don't have a stablecoin, how do you settle the bet in a volatile currency like ETH? And so it's just a reminder that I always think about, which is like, it pays to revisit an idea that didn't work with a new kind of tech as the tech moves forward. But yeah, look, I mean, prediction markets are fascinating. It's probably, in my opinion, the breakaway app, consumer app in crypto. And, you know, Polymarket now is integrated with X and it's just— it's also— I'm curious to get your perspective, but like Polymarket, if you go talk to Shane, It's deployed on Polygon. And there's a lot of reasons why a crypto native would look at that and say, what? Like, why? But the conclusion that I think you draw is like most normie users don't care about it. They don't have an affiliation for Polygon or your flavor L2 or Solana or whatever it is. They just want to care like, can I use Apple Pay? Can I, you know, the political elections, can I express a view? So it's just a good reminder that like the tech is kind of like commoditized in my opinion.

Yeah.

Could I get you guys to compare and contrast? Can I get a show of hands? How many people know Polymarket? How many people know Kalshi? Okay, so these are sort of the two leading solutions for prediction markets and they have pretty different approaches, both in terms of how they position themselves, their go-to-market, et cetera. It seems like Polymarket has really leaned into being a D2C product. So they got a lot of page views. They said, we're the news. And actually very prominently, they've kind of called some big events like strikes on Iran, pre-futures markets moving, huh?

The election.

The election, yeah, very saliently. And so they have a very, they have a large, you know, kind of relationship with people that are going to their site for content. But they actually don't have as much liquidity as Kalshi, where Kalshi has leaned into being a regulated exchange, so they're open to US users, and they've leveraged the liquidity on with partners like Robinhood. So how would you compare and contrast these two approaches?

Well, I think the other element that's really important to note is that Kalshi actually does the full end-to-end. So they have a license with the CFTC. They have their own kind of clearinghouse. Their business model is very different from Polymarket in that they're the ones who are basically the liquidity provider for all of these markets, whereas Polygon is kind of the opposite. They're, they're sort of the front end and they've got, you know, an open market, an order book to be able to trade these markets. And so it's very, very different in their approach. It's sort of the full-stack white label and distribute it as far and wide as you possibly can. We're going to be kind of the infrastructure provider, which is the Calsci approach, whereas Polymarket has the distribution, they have the users, the direct consumer, the brand. But I think the most interesting part is if you look at Bloomberg, if you look at any of the equity research publications, if you look at basically any of the news publications as well, they're actually quoting Polymarket and Polymarket odds for certain situations, whereas they're not doing that with Kalshi. And so it is not just like a business model and a tech difference, but I think it's also a branding difference that is going to be important to note. And people know Polymarket. I was just with a friend, you know, for the primary mayoral election, and his wife came home and It's like, well, what are the polymarket odds? It's not what's the Gaußian odds? And I think that that's, I don't know, something else to note.

Do you have a sense on— so maybe my view on this is prediction markets are kind of where crypto exchanges were in 2013, where you had many different— so 2013, it was like Bitstamp and Kraken were really the two exchanges. And then Coinbase comes onto the scene, a bunch of others, Blockchain.com, a bunch of others come onto the scene. And Coinbase took this super regulated approach and it means they actually went a lot slower in some angles, right? They couldn't do what like maybe a Binance could do or what some of the big Asian exchanges could do. But now you're seeing that those— the slower approach, the regulated approach, the licensed approach ended up being the better approach, I think, in the, in the decade-long time horizon. So you could say, okay, she's taking that approach even though they don't have the mindshare today. Maybe that's a better approach. See Coinbase as an example. The other one's like, look, just own the distribution, own the audience, own the awareness.

Well, well, also there are two interesting examples there too, which is so Gemini took also that approach, but they didn't execute as well and they're not in the same position.

True.

And Binance actually is probably the largest exchange and they were famously the cowboys, maybe like the Ubers, right, of crypto exchanges.

And so totally agree. I have one, one other point is I think when you own the customer experience, Coinbase has always owned the customer experience. Whereas Kalshi maybe is the regulated approach, but they're open to having Robinhood use their powered prediction markets, and Robinhood will be kind of the user experience. So there is a difference there. It's like, are you the user experience and the infra and the regulated approach, or are you just the infra that anybody can use?

I think— well, I mean, Polymarket— I mean, user aggregation theory will continue to be a thing. I'd rather own the distribution. Although I do think your point around like Coinbase now is branding itself as like crypto as a service because it has a regulatory mode. And so I think you're going to start seeing more and more businesses say, I'm interested in leveraging some parts of crypto. Who can I go to to partner? And Coinbase, I think, has all the licenses. And so— but I still think like if obviously I'm biased, but I would much rather own the user experience. Now, that's not to say that like Polymarket has won it or will be a winner-take-all. I actually think prediction markets, most likely in the next 5 years, there will be a larger prediction market that is neither Polymarket or Kalshi. It might be someone that has just more distribution. And you can— because the biggest challenge that I think Polymarket and I think Kalshi has is there's sort of like a tail end of markets that that don't have much liquidity. But what you really need to focus on is what crypto is really good at for prediction markets is the market resolution needs to be transparent and needs to— that's where the regulation meets in. And I think both of them— I think, well, Polymarket's using UMA as a sort of oracle infrastructure. I'm not familiar with—

I don't know who Kalshi uses.

This episode is brought to you by Geodnet, the world's largest decentralized RTK network, delivering real-time, centimeter-accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics, Geodnet shows that blockchain can be a truly transformative force. By delivering real-time centimeter-level accuracy, Geodnet enhances emergency response, boosts construction precision, and enables advanced navigation for drones and surveyors far beyond the limits of standard GPS. To find out more, click the link in the show notes or follow them on X. Hey everyone, Jason Yanowitz here. Earlier in today's episode, you heard me mention the weekly CIO memo from Bitwise. In an industry as hectic, fast, and complex as ours, it's incredibly hard to get an easy, no-nonsense stream of what's actually moving crypto. The memo comes from Matt Hogan, Bitwise's Chief Investment Officer. He's been on the show before, and he has this amazing ability to take the most complex topics and break them down with clarity. Trust me on this one. The Bitwise Weekly CIO Memo is really worth the 5 minutes of your time. Check it out at bitwiseinvestments.com/ciomemo/empire or just hit the link in the description of today's episode to get started. Carefully consider the extreme risks associated with crypto before investing. As always, investments in blockchain technology involve risk. Terms and conditions apply.

All right, maybe pivoting off of prediction markets for a sec. One of the interesting themes of this conference too is people don't know what tokens to buy. There's a lack of just like contrasting with this event with other Blockworks events like DAS and Permissionless. There's always like several narratives and ideas going around and it's like people are shilling different things on stage based on their bags. I mean, just in conversations like onstage and offstage, it feels like the general consensus right now is there's like the Mag Seven of crypto and like it feels like people are basically own like the majors, which I'd call like Bitcoin, Ether, and SOL, hyper liquid Coinbase stock and Robinhood stock and maybe the lending protocols like either Maker or Syrup or AAVE or Euler. I'd bucket those all as That's one kind of big thing. And outside of that, I don't really think people know what to buy. So maybe, Michael, I'm curious how you think about this as—

I mean, first and foremost, disclaimer, not financial advice for all of us.

That's financial advice when you talk to me.

Come on, that's what you said.

What took you so long to say that?

How long do I let you run on this? I mean, look, I think the meta narrative that is forming is maybe we don't have the Mag 7 quite yet, but we will, and that's moving in that direction. But the meta narrative is tokens need to make money. Tokens need to have a business model. There needs to be a value accrual to the token just in the same way that there is to Robinhood and Coinbase or, you know, anything else that's publicly traded. And we don't have GAAP accounting. You guys put out the token transparency report, which is, I think, a huge step in the direction of getting to a deeper understanding of what these assets are, who owns them, how, how are they disclosing information that's important. To anyone who owns it. But the next step is going to be how do we get GAAP accounting so that everybody can look at these things on an apples-to-apples comparison basis? And if you're making money, then you have a shot at being in the Mag Seven. If you're not, you don't have a shot.

And so you think there will be a Mag Seven of crypto and you think the Mag Seven will consist of tokens that figure out some sort of revenue generation and have a, have a real business model?

Fundamentally, yes. I think, you know, the others that I would put in this camp potentially when it launches is Pump. You know, but Pump, you know, as everybody can track on-chain, is making $1 million, $1.5 million a day. Now, the rumor is that they're going to be putting the bulk of that into the token. And so they understand that as well. But if you look at the Mag Seven, what defines the Mag Seven? Well, it's the 7 assets in the S&P 500 that have driven the vast majority of the growth and the vast majority of the earnings per share growth and revenue growth and growth in the economy, CapEx spend, all the above. I think that will start to form, but it all is from a fundamental basis of, you know, business model.

Can I ask—

can I—

want to unite, um, our discussion around prediction markets with, you know, maybe interesting tokens to buy that are overlooked. Um, I would be curious, how would you guys evaluate exchange tokens? Um, and actually, this has been a really difficult time for altcoins in general, and especially if you're a liquid manager, you've been getting slammed. If you were to pull up the price of LEO or OKB or BNB they've actually done surprisingly well. And I think that there's a massive gap here in between investors in the Western Hemisphere versus what's happening in Asia. And, you know, the reason this is— I would connect this to prediction markets is people used to talk a long time ago in crypto about the creation of a super app like they have in China, like Alipay or WeChat or something like that. And maybe with crypto, it hasn't happened in the US for a number of reasons, but Now that there are new rails and you can more easily combine things like payments, a more traditional brokerage experience, prediction markets, stuff like that, do you think that— I feel like at the beginning of new paradigm shifts in technology, people overthink it and try to chase things. But, you know, if there's aggregation theory and that ends up being important here, Binance has 275 million users. Coinbase has over 100. It seems like they've got a really, really— they've got a big lead.

So what are you getting at? Just by Maybe exchange tokens or Coinbase stock is the better play here.

Yeah. And, you know, as one data point, here's a model that's been tried in crypto a lot of times. The original Atom tried this. Ethereum sort of tried this in a number of different ways. Polkadot. But it's basically like, buy my token and you'll get a bunch of airdrops or yield on it. None of them have really worked except for BNB, which quietly has been taking the listing fees that tokens have to pay to list on Binance. And giving it back to BNB users. They've been getting like 50 to 100% APY for 3 years and it's— no one is talking about it.

Best token model that exists and nobody is talking about it because, you know, as US persons, we're not allowed to be Binance customers and therefore nobody knows about it. But that is the fundamental basis of BNB. Not only is it, you know, 20 or 25% of the profits, which I don't think is actually the case anymore. That's how it started. Now BNB is— if you stake BNB within Binance, You get discounted fees, but you also get airdrops of any tokens that are listed on Binance, which you can sell, and they do immediately. And so if you were to sell all of those assets on day one list, I think it's something like 75% or 85% APY over the last—

So here's maybe the counter to this is where does value accrue? The token or the equity? The token or the equity. And I actually think we're at this like line in the sand moment where the industry is saying you got to pick one. I don't know if you guys saw what Morpho did. So you're clearly saying you have to pick, are we accruing value to Labs or to the token? And so if I was thinking about investing in something like Uni, I still don't know, does Hayden want to IPO Uniswap Labs, or does he want to drive the value to the token? And for me to make an investment in either, I need to know that.

Well, so, OK, going back to what I just said, it all comes down to the business model. What is the business model of Uniswap Labs? Taking a fee on top of all the volume that flows to Uniswap? What's the business model of Uniswap the token? Is it taking a fee in all the swap volume that's happening on Uniswap? If you choose both, you inherently disadvantage one of them. And if you were to choose one and say all the volume, all the value goes to that fee, that's just for swapping. We're going to take no fee in Uniswap Labs. We're going to send all the volume to Uniswap. Uni the token is where all the value accrues. And that's great. The opposite is also true. But if you choose both, then you fundamentally disadvantage one. And I think we are at the crossing point, or we've maybe actually crossed it. You have to choose one valued role.

Mm.

Satya, what do you think about this?

I mean, to your point around what people want to buy in this cycle, I think there is a meta, obviously, where people are looking at Circle stock and saying, God, this thing just like 10x and like don't overthink it. Like the market wants to go along stablecoins and this is— are they reading into the contract? And definitely not. And so you have line of sight into like how many, how many more companies are going to go public like crypto, directly crypto native like a Chainalysis or crypto like adjacent. So the market for a while now has different ways to express a long crypto thesis. You have Coinbase, Circle, then Robinhood, Nubanks of the world that are increasingly talking and earning more revenue from crypto. And then you're going to have at least 5, 10 more companies that are going to go public over the next month, or over the next 6, 12 months. And I think investors— I mean, Michael, you know this from raising capital— investors still don't want to touch tokens. And so they'd much rather invest in an ETF or directly into these businesses. And so From a where's the liquidity going to come from, I would, I would, I'd probably take the bet that more and more liquidity is going to go in the public markets that want to express a long crypto view and maybe some into crypto funds that will do that for them. It's like the Grayscale premium in a different manner now.

This episode is brought to you by Geodnet, the world's largest decentralized RTK network, delivering real-time, centimeter-accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics, Geodnet shows that blockchain can be a truly transformative force. By delivering real-time, centimeter-level accuracy, Geodnet enhances emergency response, boosts construction precision, and enables advanced navigation for drones and surveyors far beyond the limits of standard GPS. To find out more, click the link in the show notes or follow them on X. Hey everyone, Jason Yanowitz here. Earlier in today's episode, you heard me mention the weekly CIO memo from Bitwise. In an industry as hectic, fast, and complex as ours, it's incredibly hard to get an easy, no-nonsense stream of what's actually moving crypto. The memo comes from Matt Hogan, Bitwise's Chief Investment Officer. He's been on the show before and he has this amazing ability to take the most complex topics and break them down with clarity. Trust me on this one. The Bitwise Weekly CIO Memo is really worth the 5 minutes of your time. Check it out at bitwiseinvestments.com/ciomemo/empire or just hit the link in the description of today's episode to get started. Carefully consider the extreme risks associated with crypto before investing. As always, investments in blockchain technology involve risk. Terms and conditions apply.

How do you— Michael, how do you think— so 18 months ago, there was actually probably a premium for having a token, or actually just for the last couple of years, like if you had a token, maybe you could say it was overvalued. Now I would say the opposite. What?

The opposite.

Now it's the opposite, right?

Now, now public markets have the premium. And you can look at Circle stock doing a 10x since the IPO as an example of that, or any of these corporate treasury plays. And there's, I mean, several more IPOs coming in the next couple of months. And they're all— I mean, my guess is that they all rip out of the gate.

So the reason why— so that is definitely the case. But the reason why I think is important too, which is most of the capital that is accessing these public crypto vehicles or these ETFs or these IPOs is capital that's in funds that literally cannot come on-chain or in institutions that you're you know, for whatever reason, regulatory or internal control, um, or risk or audit, whatever purposes, it cannot come on-chain. That's still the case. We are still separated, segregated capital pools. And I think eventually, if we were to get something like the Clarity Act or any sort of market structure bill, we have talked with a number of folks at banks, at institutions that are waiting, ready to go as soon as they have an understanding of, okay, this is Okay for us to invest in. This is not okay. Like, we have the rules of the road. Let's go forward. But the reason why you're seeing such buildup is because you just have latent capital that hasn't been able to access this industry.

Yeah.

And that's, that's what's holding it back. Now, with clarity, I think we can get there. But, but that's the reason. And I think that's important.

I think the other thing I want to draw attention to is yesterday you saw this, this regulated entity called Republic allow investors like tokenizing private companies like SpaceX and allowing someone to buy the token. I've always felt like, like 2017, I think a large part of why crypto has drawn a lot of liquidity from places outside the US is most people cannot invest in the US stock market. And crypto allows you to take your money in a place where, for instance, if you're in China, you can only invest in like that local market and Chinese government bonds. And that's the case in many other places around the world. So crypto, like, has tapped into, like, trap pools of capital and expressing a view in Ethereum is the closest analog that you have to going long technology. And like, and like, I think for a while crypto has just been that asset class for many people around the world. What happens when you now have tokenized stocks on-chain? I feel like to me that that's where a lot of the capital that has historically invested in meme coins or your next flavor of an L1 I mean, now what's interesting is you have also tokenized stocks on-chain. And so the question is, where does value accrue? Is that going to go to like an Ethereum, like an L1 kind of like thesis? Is it going to go to Uniswap equity? Is it going to go to Uniswap token? So I don't know. I think of it from a flows perspective. It's— I think a lot of the capital that used to invest in funds or on-chain is now going to think more deeply about where they want to express views. Institutional likely stays in traditional markets for now. Crypto-native, degen capital that is a hot ball of money likely will like invest in like some of these new products that are emerging, like tokenized stocks.

So maybe to extend that out a little bit, I think I know what you'd say here, but I'm curious if— so I saw this Republic thing, right, where they give you access to like Under Armour stock or StockX or something like that. But really what you're saying is Now it's— now people internationally can access the secondaries in StockX.

I think that draws so much liquidity.

That's great. But really what you're saying is that's just— that's a right. It's trapped money because of regulatory— because of regulatory reasons. So then are on-chain markets only for this regulatory arbitrage?

Wait, can I add one thing there too? Actually, it might not be regulatory, but the private markets are under strain. This division in between private and public markets in the US is and on the allocated— like VC, like we've talked about this, Michael, a lot on Bell Curve, and Santi, I think we have too on, uh, you know, mashups like this. But, um, VC has really underperformed, and a huge part of that is not due to, you know, venture capitalist fault, but the fact that companies are staying private longer and longer and longer. And so if you just think about that from a return perspective, you literally need to do twice as well to achieve the same result. And so I wonder if this is actually some sort of breakage in— well, maybe it is regulatory, right? Because the onus of being public for whatever reason is too much. But this crypto feels like a way of— between—

where you actually have these— you have these companies now that are like— you might have trillion-dollar private companies with SpaceX and Stripe.

Well, they're pretty soon the first trillion private company.

I mean, SpaceX, OpenAI, and Stripe will all probably be trillion-dollar private companies. And you guys probably get the same emails I do where the secondary in these things trades like a liquid market.

I was going to say the secondary market for these assets is actually pretty robust. Yeah. If you and, you know, if you're a 10% holder of OpenAI stock, you can't sell 10%, but you can probably sell, you know, hundreds of millions of dollars a year if you're accredited though, right? I mean, well, and so that's the thing. There are rules and regs around who can buy this. And so depending on the structure, depending on many things, accredited investors only. There's sometimes limitations on size, sometimes it's infinite. Institutional qualified purchasers only. There's a lot of controls. And I think to kind of combine a little bit of what we were saying, it's going to be interesting how they would structure tokenized equity. Because if it actually is equity, the SEC is not going to let you just run away with that and let people anywhere in the world buy that 24/7. They want to have control over the markets. But if it is just like a representation on-chain and it's Oracle token price feed model, then that's totally different. And I would imagine that it's probably somewhere in between where maybe you have a KYC element where they actually know who the holders are. Like, if you're a shareholder of a company, the company needs to know who you are in the first point. So how do you solve that problem with tokenization? But I do think providing access to what has become this growth equity realm of the capital market structure is is what we should be solving. And I think Kraken has talked about doing this. There's a number of others that— Republic— that want to do this as well. It's interesting.

Michael, can you give us a look behind the scenes at what's the dynamic with the institutions, specifically the endowments and the pensions, maybe? And how this staying private for longer has played out, oversupply of maybe venture. How do you think about this?

Yeah, I mean, just as context, large institution endowment venture portfolio manager told us recently that 60+% of the venture portfolios at US endowments are cash flow negative over the last 5 years, which, I mean, if you think about it, they're committing capital to new successive funds in Sequoia, Founders Fund, Accel, whoever, and those funds are investing in companies, the companies are staying private longer where they expected their 2020 their 2014 vintage would be distributing capital so that they can make commitments for the 2024 funds, those '24 vintage— 2014 vintages are not actually distributing because the companies are staying private. And so what it's created is this denominator effect, as it's called, where the allocations to venture capital within these asset pools is just way too large. And so that's pulling back commitments to new funds. It's pulling back re-ups to the existing funds that they're in, and they're just kind of reevaluating everything. And historically, the Yale Endowment has been the first to kind of move into privates. They're kind of the first to do things on the endowment front. And a couple months ago, they announced that they're selling their entire private equity portfolio, $6 billion. And I— we've talked about this on Bell Curve a bit, but it's, um, I mean, if as soon as they started doing that, everybody else in the endowment world goes, uh-oh, what do they know? And I think that's obviously been an interesting kind of effect throughout the industry. But then also with the current tax bill, there's a new tax. And it goes from 1%, I think, to 21% max. And that is a huge hit to how you manage the endowments. And so we'll see where that lands in terms of what's final. But I do believe that the endowment landscape is in a very troubled position right now because of this effect, no liquidity.

And what does this mean? So a lot of the big venture funds in crypto you guys, I mean, a lot of the big ones raised in '22, I think it was.

Yep.

What does this mean for crypto venture fundraising, which then obviously trickles down to, you know, all the founders in this room and the folks fundraising?

It's, it's coming back shorter. You know, when you remove the endowment or pension, I mean, pensions have a similar effect. What is also happening is foundations. And so maybe it's, you know, pensions, foundations, endowments all together. it's called ENFs. But the idea is that if they're not a large participant in this ecosystem or the venture ecosystem writ large, all the funds that were raised in '21, '22 are probably going to be smaller when they come back in '24 and '25. And I think that that will obviously have downstream effects on who's able to raise capital, how much capital, the terms of those deals. And it takes a couple of years for all of this to cycle through because it takes a couple couple years to raise your next fund, and it takes a couple years for the next fundraise to happen with startups. Um, so we're working our way through that process, but I think, you know, we've talked about this on Belkirk, but like belt tightening season is upon us.

Yeah. Can I actually— I would love to get back to Asantia's point that you were making about when there's money moving into the space, people are going to be choosier about where they decide to allocate. I was looking at— I know this is a a little bit of an imperfect metric, but Bitcoin dominance is getting back to about 70%. So it actually, if you were to do a layman's TA on that chart, you know, it's kind of like, you know, higher. It's reversed basically a 7 or 8 year trend and it's looking less and less obvious what is going to reverse that trend. And so historically, I think that's a massive commentary on the major L1s, right? Like ETH is kind of the only thing that has a large enough market cap to really change or turn that ratio around. It's been really struggling, but same with Solana right now. It's being challenged by Hyperliquid. And I'm curious, you know, when you look at that ratio, is it destined to just accrue back with the Bitcoin maxis, right? Or what would change that sort of inexorable rise up?

No, I mean, I think this happens every cycle where Bitcoin dominance rises and then subdues. Like, if flows stay, then naturally people— like, there's a lot of things that don't change in markets. Human psychology and how markets respond will never change. So, and the catch-up trade is very real, where people miss Bitcoin, then they say, I'm going to extend further on the risk curve to go and find gems, because new capital comes in, there's wealth creation in Bitcoin, and then flows into other sectors. Where it flows is, I think, the more interesting thing that will change this cycle, because there are different ways where you can express a thesis for the space, increasingly so in traditional markets, and private markets, and venture funds. So, I think that's where the nuance is. But I think Bitcoin dominance probably comes down over time. That's not to say that Bitcoin can't continue to go. We could be in a place where Bitcoin's at $250,000, and I won't flinch. I mean, it's the best meme, the ultimate meme. And I think that continues to— like, there's a lot of momentum in Bitcoin. But yeah, I think like, what do you need to believe for Ethereum to catch a bid or Solana or Hyperliquid to catch a bid? I mean, the reality of things is like, now think about what's very different this cycle. You have stablecoin bill, you have increasing clarity on the regulatory front, you have a total 180 on the US, like what the US the policy in the US, put Europe aside, the rest of the world will follow. Maybe Singapore is a rare example, but that like just bodes incredibly well. Again, going back to how we open up this panel, it was like, but like Polymarket, you'd be sitting there and saying, I'm going to pass on Polymarket because Augur didn't get off the ground. Now imagine you're sitting here and saying all of these regulatory hurdles have gone away and you're telling me that L1s are not going to catch a bid. Yeah. Maybe go— maybe, maybe this industry is not for you because like we've been in a state of the world where like finally it's going to happen. I want to go back to something Michael said, like from our standpoint, like I think, I think Vance had a good tweet, which is like private equity as an asset class is kind of broken. Venture is kind of broken because pension funds that need to manage like distributions to their bases, like they're really sensitive to that. Financial engineering doesn't work anymore in a world where rates are high. So like, if you're in the mind of an allocator, you're sitting there saying this crypto thing is now more real. You're going to have more and more public companies that legitimize the space, assuming they don't go to zero. But like the incremental crypto company in the public markets is extremely positive to legitimize this asset class. And like, I mean, it doesn't take much liquidity to drive crypto asset prices higher. I mean, we are a drop in the bucket of traditional allocators. It's a big industry when you think about it, but it's actually not in the grand scheme of things. Circle IPO'd at $6 billion. It went to $200 because it doesn't take that much liquidity.

And so it's almost $300.

Yeah, exactly. So I think we'll start to see more and more different business businesses that are crypto-enabled. We're going to see more and more, you know, Vlad talking about crypto very publicly. I mean, you got to believe, like, crypto is now a very real industry. And a lot of boards that have been thinking about doing this— like, Michael, how many LPs you talk to in the fundraising trail? And they say, listen, we've been paying attention. I have an analyst who's been pounding the table for crypto for the last 10 years. Come back to me when Gary like just changes his tune. Well, guess what? Now you're raising a fund. Now Gary's not there. Probabilistically, what's that going to do for allocators?

They're more excited.

Of course, it takes time, right? Like an allocator, like you got to warm them up. It takes a quarter or 6 months or a year for them to allocate. But like, you know, maybe we should talk about where we are in the cycle when we have Pomp raising a $700 million vehicle to buy Bitcoin. Like, I'm more concerned about that But assuming the macro doesn't take a shit, in 2, 3 years' time, we're probably going to go higher and way higher.

And just to touch on that, the sales cycles for institutional LPs is not even in months. It's in quarters and years. It takes a really long time for the stuff to change. But I do fundamentally agree. I mean, we are at the start of the process. And maybe if you want to talk about where we are in the cycle, I think we're at the very beginning. I don't think the 4-year cycle exists anymore.

You think no more 4-year cycle? We're at the beginning. This is early stages.

Up only.

I mean, look, the institutionalization, the ETFs, the productization of all of these— just Bitcoin, but now extending into other assets— it's basically like a global TWOP, and that lasts years. And I don't know where the price of Bitcoin will be at the end of this year. I would assume that it'll be higher at the end of next year.

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Can I ask, Santi, I saw you tweet crypto-enabled businesses and I really like that. And maybe this is a little bit of a hot take to end this panel, but I would connect that to another idea, which is I've seen verifiable apps. So they don't necessarily need to be decentralized. They just need to be verifiable. And, you know, I wonder if part of the reason why it's taken so long outside of just the infrastructure and the talent and all those natural reasons why it takes a long time to build stuff is because we've been trying to build businesses with like not one but two hands tied behind our back in terms of how DAOs have historically worked. They don't work. Even the ones that work today are much more centralized. Under the hood, or centralized, maybe a negative connotation. There's more traditional hierarchy and structure that's involved with them than there used to be. And I'm curious if we were to all accept that as an industry, that we can take some components or properties of crypto that we like— it's verifiable, everything is on-chain, it's transparent, it's enforceable— maybe that is part of the reason why, like, the governance of, the governance of companies isn't broken. We don't need to fix it. How much would you attribute how slow it's been to build lasting products to that?

Well, I'll give you a good example. I mean, obviously at Inversion, this is our reason of existence because, like, deep end as a category, broken tokenomics, you have equity in Helium, you have a token. Put that aside for a second. Deep end as a category is fascinating. Why? Because you have networks that are producing— Hive Mappers mapped like a third of the world's roads. With a fraction of the capital. The data is updated in real time because the community has an incentive to update that. Helium again does interesting things for telcos. You have Fortune 500, Fortune 50 companies say this is interesting, we can actually leverage these networks to cut costs in our operation. Now, who benefits there? I would express a view like I'm going to go buy anyone like a telco that all of a sudden is going to save 20%, 30% because they're going to use crypto infrastructure. Does that mean on a relative basis, like what outperforms? Would you rather buy Verizon or AT&T stock or would you rather buy Helium HNT? I don't know. It's a good question. Like a lot of these tokenomics are codified. Could you change them? My framework is super simple, which is a network that catches a lot of demand. Is in a good place to then change the tokenomics and ultimately accrue value. And I think time and time again, investors have made this mistake, which is like they're too focused on that. Like when Facebook went public, how many investors faded Facebook? It was like, oh, we don't really know. Their monetization is not there. I'm like, wait a minute, like how many users are engaged in this app? Like, you best believe that they're like, no amount of financial engineering solves for a crappy product. But like crypto as a category, is really interesting. It's very real. More and more businesses are going to use that. The question is, what's going to accrue value? And my takeaway in all of this is I'm not sure the token will outperform perhaps Robinhood stock. Yeah.

Yeah.

The last thing we haven't talked about is stablecoins. And so Besant just increased their prediction for stablecoins.

Couple—

I mean, this is like a month ago— they came out and said $2 trillion stablecoin market cap by 2028. He just sent a tweet last week calling for, what, $3.7 trillion, I think. So obviously that shows up in the Circle stock. That's one place it shows up. I'm curious to get your guys' take on the second-order impact of this and where else this will show up in the crypto markets. Um, and almost like, for people in this room, like, how to— okay, we We've got the Treasury Secretary calling for a 10x in stablecoins in 5 years, less than 5 years. How do we in this room play that?

Okay, you can buy also houses with crypto now, so you can use fartcoins.

Okay, wait, that's not actually how it works.

Wait, can I add one? Because I haven't— what do you think this does to Stripe equity? So Stripe, uh, about maybe 9 months ago purchased Bridge, and they recently acquired Privy. This is something that doesn't trade publicly, I'm sure, you know, but I'm just curious, have they done enough? I would imagine their stock is ripping.

So there's no—

Stripe's not public.

Yeah, in private market.

Oh, probably.

Yeah. Yeah. Um, so how does this translate into crypto markets? Well, okay, we talked about the future Mag 7. Um, I think the way that at least we break down kind of the world of, uh, coins in terms of stablecoins is you've got payment stablecoins on one end This is USDT, USDC, and then you've got yield coins on the other end. This is USDS created by Sky. This is USDE created by Athena and the SyrupUSD created by Syrup Maple Finance. Now they have fundamentally different use cases. The payment stablecoins are for transacting a medium of exchange. The yield coins are for generating yield and asset allocation. Where this translates directly is the $3.7 trillion that is about to come on-chain is going to go into both of those. Now, how much goes into each? Well, one of the unique aspects of yieldcoins is there's a lot of USDC, there's a lot of USDT in those assets. And so I think you start to see the dispersion. One thing that we talked about a bit, or we have talked about a bit, is in 2021, you could throw a blind dart and hit a 3x minimum. And now, you really have to know which assets are the ones that are now perform, and you have to be in those assets if you want to perform at all. And I think one of the ways of doing that is, OK, assume that there's this massive tidal wave of flows coming on-chain. Well, who's the beneficiary? Anybody that's generating yield. Because going back to it, anything that's generating yield, there's a business model, there's revenue, there's token buybacks. I mean, imagine if every single asset on-chain had 10x, 100x more TVL tomorrow, what would happen? Everything re-rates. And maybe this means that there's more speculation, maybe this means that there's more meme coins, maybe this means, you know, etc., etc. But the best beneficiaries are the ones that are already generating that yield and can 10x that revenue. And, you know, to the, to the point on, um, you know, being able to use assets, you know, for mortgages, I mean, look, we, we all are, we're going to take this back to the traditional markets as well, where you're going to be able to say, OK, now I have these assets on-chain. I can use them as not collateral, but I can use them in asset understandings for a mortgage. I can use them. I can actually have Janus Henderson— and we haven't talked about this— but actually having CLOs, AAA-rated CLOs on-chain in a billion size. That type of real-world activity is where we're going to start to marry both worlds. But it all starts with liquidity. And $3.7 trillion would be a great number to start with.

Michael, I want to get your thoughts. Like, let's use Circle as a comp for Maker, Sky.

Yep.

Or Uniswap, and you comp it against Coinbase, right? Like crypto businesses, like crypto, like a hyper liquid has 10 engineers, it prints.

Yep.

Uniswap has a tenth or one hundredth of the employee cost structure, variable, fixed, of Coinbase. Maker is interesting in the sense of like it's, it's like the backbone of DeFi in many ways. It's not catching a bid. My former partner Ben of ParaFi, we had all this discussion because he loves Maker, now Sky. But, you know, it's helped me understand, like, at what point it's like, like markets can stay irrational longer than you can stay solvent kind of thing. But like, how do you feel about like, how do you explain this dynamic where like if you comp it like left side Coinbase or sorry, Circle and right side Maker, SKY, pound for pound, it's just like a— it's a far better business model, but it's a fraction of the valuation. It's not trading like it should be. What's it going to take for that? Like, what gives?

You've got about 1 minute.

I have a 30-second answer. Look what happened. So Maker, you're still calling it Maker. It's now called SKY. The token is SKY. And this transition is literally like trying to turn a cruise liner. It takes a while. And I think the best comp that we can think about where things re-rate is actually the transition that Maple Finance just did to Syrup. And Maple Finance was MPL token, now it's Syrup token. Once they finally transitioned, I think it's gone up 4 or 5x since. And, you know, Sky trades at, I think, a $2 billion FDV. Circle, who knows what the real number is, but my guess is that the re-rate will happen when the transition is done.

Folks, that's all the time we have. Please, thank you very much.

Thank you all.