ChatGPT's Breakout Moment, Binance vs Hyperliquid & The Exchange Wars | Weekly Roundup

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All right, everyone, welcome back. Happy Friday. Happy Saturday. Santi, what's happening?

What's going on, man? We are still— we're coming out of DAZS. We're not sick as far as I know. Knock on wood.

I'm sick as a dog right now. Oh, God, I'm sick. Is this—

is this a constant thing?

Like, this— I got this stuff, I got this stuff, I got— I am loaded up on so many espressos and drugs right now.

Geez, you mean like homeopathic remedies from Whole Foods?

Vitamins.

Vitamin C only.

Yeah.

Nice.

Yeah. So you spoke too soon. I am sick as a dog. I actually didn't get sick of Das though. That BlockWorks conference— it's always after BlockWorks conferences. You don't get sick at our events. Yeah, we don't let people get sick at them, right?

Institutional crowd just does not get sick.

No, no, never. We would never allow that to happen. That's more of an ETH Denver phenomenon, right?

There was a— should we do— I mean, there's a lot to talk about.

Should we do— so you missed— so Mike and I did this Dash recap, but I will— we— I, I mean, there's a lot of news this week. Like, uh, there's— I want to talk about M&A stuff, stablecoins, The hyper liquid drama. There's a whole bunch of stuff, but I would just be curious to get your take from, from DAS.

Yeah, look, I mean, at this point I've been to a lot of DAS conferences. London, I was in New York. I've done a few. It's always interesting because you get the institutional crowd. I tweeted before, I mean, I just think this cycle you're in this interesting state where institutions are more excited than crypto natives and you definitely saw it in the room. I mean, shit, even, you know, President of the United States did a stream Didn't he?

He did. Like, wild.

So, I mean, could you have imagined that? Could you have imagined the prior administration going out in Das and like, you know, I mean, that was one of the crazier moments of my life, actually.

Like, the whole story of how that came to be was just ridiculous. But yeah, that was a— yeah. And I mean, I think you were there days 1 and 2, I'm pretty sure. What?

Yeah, I was there. I was there days 1 and 2. Days 1 were a bunch of meetings, like a lot of large funds were there.

Any like good meetings, interesting takeaways, like Would love to hear.

Well, yeah, I mean, I, you know what I'm doing in Inversion. So I met with a lot of the people that are participating in the round were there and it was just good to catch up with the people. A bunch of people that I'm hiring were there as well. So it was just really good, but very well represented that I was spending time in the speaker room and, you know, people that I guess you never thought would be involved in crypto 4 years ago were in the room where they're going to speak, where they're going to participate in panels. It was very, very interesting. And also, you know, a lot of people that continue to build, you know, like folks like Stani that have been around for ages and just those people are like rarer and rarer to find these days.

Yeah, yeah.

But it was a treat. And then obviously day 2, it was sort of— I had the opportunity to talk a little bit more what we were doing at Inversion. And then we had a live panel with the Scale founder and Stani and I felt that that conversation we could have taken it far more and gone much deeper.

But the conversation really hit a wall at one point, which is when you started to shit on people who sponsor conferences at a conference. Yeah, no, I mean, I didn't mean it like that, but I'm kidding.

It was—

I'm kidding.

Yeah, yeah, yeah.

No, it was good to have you there. Yeah, absolutely. Yeah, we did. We might— I won't go into too many deaths. Recaps because there's a bunch of news this week and Mike and I did ours. But actually there's a, a tweet related to this about like institutions being really excited. It was Eric Balkunas. There's just a big survey by, I think it was, who's BBH? Is that Brevin Howard? Brevin Howard.

Brevin Howard Holdings Digital.

BBH.

Oh, not Brevin Howard. No, it's BHD. Brevin Howard Digital is what I was thinking.

Let's see, BBH. Oh, Brown Brothers Harriman, probably.

Oh, Brown Brothers Harriman. Yeah.

Yeah. Eric Balkunas. 95% of investors surveyed by BBH said they plan to increase their allocations to ETFs this year. That's up from 78% last year. I'm old enough to remember when it was below 50%. And then actually the next one is 71% said they aim to increase their allocation to crypto ETFs in the next 12 months. That's higher than I would have thought. I would have guessed 40 to 50%, and I'm pretty bullish on the space, relatively speaking.

So, I mean, those two stats, it's like, you know what I would love if these folks are listening? Because you always see surveys. If, if someone could just extrapolate and like plot survey to actual allocations, you know, like, because a lot of times you're saying, yeah, pre and post.

Yeah.

Um, Obviously we're getting started with ETFs and crypto, but you see all these survey sentiments that JP Morgan does and all the major investment banks do and research desks do. But I've never actually seen like the— I think JP Morgan does a recap of the year and says like, this was our survey respondents. They do it every week. They do these surveys for institutionals, clients, how they're feeling about the market allocation, you know, what have you. And then they, they sort of like, um, correlate that to what actually ended up happening during the year. Yeah.

All right. Before we talk crypto news, I want— have you seen this new OpenAI model 4.0?

We got to see it. It's like everywhere in the timeline.

Have you used it?

No.

Have you actually, like, used it? Okay. It is the most— it is one of the craziest product moments I've ever had in my life. If people should pull up ChatGPT, I don't know if it's for the free model too, but it's a— it is the most— it's probably like I remember there are these moments in time where you have these like crazy feelings like with products. I remember the first time I called an Uber. I remember the first time I used Uniswap. I remember the first time I got on AIM, like AOL Instant Messenger as a kid. Yeah, this was one of those moments for me.

You mean the first time you fell in love? Yeah, I wanted to DM a girl.

Nerve-wracking. Every, every, everyone. All right, here, look at— I'm going to share my screen.

I'm going to do a prompt. Like, I just pulled it up. Like, what do you say? Like, hey, create a—

look at this. Look at this. Can you see my screen right now?

Yes.

All right. This is a picture of you at DAS.

Oh, interesting.

Make this— this is the, this is the classic one that everyone was doing this weekend or this week. Make this Studio Ghibli style. Oh, that's nice. And then you wait and I'll, uh, it'll, it takes like, you know, maybe 20 seconds, let's call it. So I'll, I'll, we can, we can talk throughout it, but it is the most amazing, like, you know, Block— okay, Blockworks has 80-some employees right now, probably 40 work in content and creative and stuff like that. The impact of this is so massive across all areas of our business. I can't even— okay, so like, let me just walk you through some of the takeaways, like online ads, like creating an ad online is just, oh, here it goes. Actually, before getting into the takeaways, we can look at your— here, I'll show you this one while we wait.

I saw the one of you and— oh yeah.

So this is our permissionless landing page. I just put in, I was like, create this in Bauhaus style. And it gave me this in like 20 seconds. Then I said, create this in, you know, I think it was Studio Ghibli style. And it created this. Then I said, create a vintage ad. And it gave me this. It's just so— this was another one. I was like, create an old magazine from the '70s with Blockworks Research. It gave me—

that's like Mad Men. That's like Mad Men style.

This is so clean.

It's so Don Draper at his finest.

This one was awesome. So Mike and I posted this like kind of cheesy post, like, you know, my partner in crime, whatever. And then I made this and that's cool. I love this picture. Like, this is an awesome picture. And then the Blockworks team started creating Nice pictures of us. All right, let's go back. Let's see if the image is created.

But, but like, so when you think about like the impact to your business, like, is it, is it that like you don't have to hire as many people and you just, um, you think about it less?

Yeah, I'm less interested in hiring less people. Like, I don't ever think about like, oh, we, we can now lay off our creative people, or we can lay off the designers, or we can It's more, um, the output. Yeah, no, it's the output of a person should 10x, right? It's like if you were, uh, if you're a designer, like the expectation around how the quality of your work and how, how much work you can do and the quality— it's both the quantity and the quality— just, just 10x this week. Um, and it is now—

this is the classic VC term, was it Javon's paradox? Which is like an increase in efficiency actually translates into more overall consumption. It's not to say that you're going to have— you're just going to do more. You're going to have more ads, like you're going to just increase your throughput.

Right, right. It's, uh, yeah, exactly. Increasing the efficiency actually leads to increased consumption.

Consumption. Yeah. Whether it's you hire more people, you have more ads, you have more footprint, like you just do more.

Yeah. So, all right. So let's go back to ChatGPT. Let's see if the image is done. All right. So this is the original image. Of you. Look, it's just like, it's just so fun. Like, it's just, it's just a fun, fun—

I look like some sort of messiah there. I mean, it doesn't look just like me, but it's like yours. I thought it looked better.

This looks weird. Look, it's about the base that you start with, and, you know, I had a stronger base. So, but look, I mean, look at this. This is actually a more real example for Blockwork. So we create all these thumbnails, right? We create publish like, you know, dozens of podcast episodes a week. So I put in this white image that is just a picture of Michael Saylor and this text on Google Slides. This is how Bitcoin hits 1 million. That's all I put in. Then I prompted it with, turn my Bitcoin sketch into a YouTube thumbnail, 1920 by 1080. I added another image for inspiration, but get creative with it. Optimize for virality. Add in background images for virality, but they shouldn't be cartoonish. Add laser eyes to Michael Saylor's face, center the text. Boom. And it gave me this. This would've taken hours for a designer to make. And I was able to create this. Then I said, research everything you can about what makes a viral YouTube thumbnail. Send me the summary here. It sent me the summary. I copy pasted this and said, hey, create a new thumbnail based on all of your learnings. And it gave me this one, which is even better. Like this, you know, it's kind of a cheesy thumbnail. It's—

but like, it works.

It works.

Engagement is higher.

Yeah. This is a damn good thumbnail. And yeah, I don't know. I just think this is going to change everything. Like this changes.

So let me ask you a question. So if everyone levels— if the playing field is now so easy, right? If the paid version is not that more expensive, everyone now has access to this. The skill really is the prompting, right? And then the— what you just did. People just need to have an understanding of how to work the model and what it's sort of like. Focus on the type of question that you ask. But so if everyone now is doing that and is hacking this, so then like your engagement, like you have like a very small gap when it— then it's just—

Yeah, yeah, I get what you're getting at. This is an extension of what's been happening for the last 20 years, which this makes it easier to build a business. And I think if there's one metric that is like so important to the world, it's how many founders are there in the world. Who are able to build the businesses that they want to build. So if we look back throughout history, there was— it was extremely hard to get a business off the ground, right? It's very, very, very tough. And let's, let's maybe focus on the tech industry, for example. Extremely tough. You had to get like spend hundreds of thousands on or maybe even millions on building databases, on-prem databases, and then boom, we get, we get SaaS and we get—

well, yeah, but before— well, people should know, like there were business models like Pets.com and all these things that you had to buy these licenses and it was incredibly expensive. And then software as a service allowed you to buy per seat, meaning you didn't have to— like, you could buy for one employee, not an entire organization. So the deployment—

you used to have to come in and install stuff, everything at your office. And then Salesforce obviously created the SaaS industry as we know it today. So there's things like SaaS. What does SaaS do? It makes it easier for you to start a company in one sense.

What was the cost for—

what was the cost? What is, uh, what did cloud do? What did AWS Azure, Alibaba Cloud, like what do these do? It makes it easier to start a company.

It turned CapEx into OpEx and also lowered the cost and it was more flexible in the consumption pattern. Yeah, that allowed many, many different business models that were unviable before that.

I just think about Blockworks, like if we had to go build a database, we had to get like, what do we, what did we do? We just created our first website on Squarespace. Like you just Like these no-code— so no-code was an extension of this. Like, I didn't— I was not good enough engineer to build a bunch of Blockwork stuff.

We had our first—

we had our website on, um, combination of Webflow and Squarespace for the first 5 years of the business. Like, no-code made it much easier. Um, and now these AI tools are just making it even easier.

So yeah, yeah, I think like, I mean, you, you even extend that further to— I mean, certainly like AI, like the, the productivity gains, right? If anyone can now be a good designer, anyone can now create like really good content.

You're just checking off the boxes to make it easier to build companies. That's what, that's what you're saying.

So the question is like, where's the value then? The value is in the idea, the execution. Like you still have emphasis on execution, right? Um, but, but I do wonder like, so, so there's folks like Naval and these folks like, oh, it's going to be, you're going to start seeing unicorn companies with like 1 employee, 2 employees, 5 employees.

Yeah.

Then what is that archetype? Like where, how will you accrue that value, how that value be created is— and in our moats is lower in this state of affairs, which is like, it's just way more competitive.

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Yeah, okay, so I'm seeing a lot on Twitter right now about— and there's this, I think, prevailing idea that ideas used to be worthless and execution was all that mattered. And now I'm seeing a lot of people say, look, the idea is now all that matters when execution becomes so easy. I fundamentally disagree with that. I think building up— I think it's really easy, yeah, to go build these images. But the execution of a company is about how all of these millions of different parts, not just your images and your transcriptions of the podcast come together, but how your people come together and how you hire and how you go to market and your story. Like, all of that actually remains the most important thing. So I think that's—

the thing that is getting harder is for many businesses are valuable because they're able to capture attention. Capturing people's attention is becoming harder.

Yes.

And therefore, and therefore you have to create good content. You have to create good— you might be able to create a good thumbnail, but if the content underlying that thumbnail is not good, then you're still stuck in that state. I go back to this idea like it's a constant debate whether would you rather invest in a big market, subpar team, or a great team, terrible market?

100% a great team, for sure. For sure.

Because you're saying, okay, they're about to pivot, they're going to expand out.

They, you can expand them, you can expand markets and pivot. You can't pivot a team. That's my, that's my take.

Yeah. Although I will say, like, I just, I do think that timing is very important. Meaning if you're at the right place at the right time, say DeFi summer or early crypto, like A lot, like, a lot of protocols that I guess are hard to explain why they're valued what they're valued are sitting still in the top 10 because they were like just early and they were able to create this community. They captured attention and they made money for people. And then, but there's, there's better pro— there's better protocols, there's better tech that has come, you know.

Yeah.

So, so I don't know, like, I, I go through this debate where I think I, I fundamentally, I hear your point. Like, a really good team is going to be able to like out-innovate and like find a good product. But I've seen it time and time again from my perspective. I've invested in phenomenal, like super sharp, high IQ teams that just didn't make it because they were, they were just fundamentally the way they went about the, the way they went about finding product market fit was not great.

And I guess I, I understand what you're talking about, but that's a different thing.

You're, you're—

then I guess that doesn't make them a good team then.

Yeah, I think, yeah, you're talking about high IQ and intelligence, which is overrated for building a company.

Yeah, it's exactly the same two different things. Yeah.

Yeah.

I guess how you qualify a great team by default is, uh, I guess it's a truism, which is a great team will always find a big market.

That's what I think. And solve, and solve a problem that really matters. And be able to talk to the customer and iterate them.

Like, like let's just say it was Instagram, like Instagram in the early days, there was Shutterstock, there were so many other companies they launched at a time where they had these simple filters, but it was— it coincided with Facebook and social media. There's some really good like archives that have surfaced when Zuckerberg is asking one of his engineers like, should they buy like 3 companies? And one of them is Instagram. Instagram. And that is like, it just like highlights so much of like, was Instagram the best photo editing, like sharing app out there? Maybe not, but it was just at the very right time. And they had someone like Facebook really feel threatened that they acquired them for $1 billion. Is Bridge the best API orchestration company out there? There's 5 others, but you know, they were at the right time, they got the right customers and got acquired by Stripe and then they will be king made, you know.

Yeah, I would argue Bridge is the best stablecoin provider because they're the, they're the best, the best engineers. They're the best team. They're the best team. And there's a million—

we had Zach on the pod and he was like, he's not a big organization, but he had like really good talent.

Yeah. So anyway, I just like going— people should play. This is a crypto podcast, not here to talk about these AI tools, but like you guys should really, really, really pay the $20. Go use this tool. It is. It's going to change movies. It'll change how you build websites. It'll change how you create decks and slides. I, you know, I really like— people at Blockworks get very frustrated with me because I care so much about good design and good slides. And, you know, should I post—

should I post mine? I mean, I guess the recording is going to come out, but I was thinking about like posting my slides on—

Yeah, you should, you should put your slides, even just 2 or 3 of them into this tool and say, make this Bauhaus style. Make this Studio Ghibli style, make this the style of a Don Draper 1960s Mad Men newspaper ad, or put your slides in. It is amazing what it comes up with. So anyways, I would just recommend people send me that pic. Yeah, yeah. Um, the last thing I'd say is like, there is no excuse not to be able to do something anymore. Like internally at a company, if someone tells me like, I can't do anything, it's like, oh my God, the tools are right in front of you. You just don't have the the, like, I don't know, the, uh, the agency basically to go figure it out. And, uh, no excuse not to be able to do so.

Uh, on this point, just as an anecdote that I love sharing, I think I've shared it in the pod before. So Henry Kissinger used to have this style, and anyone that worked with him is— so they would imagine Henry Kissinger, Secretary of State, he had to have his handle on a million different things. And his staff members would come to him and say, hey, Mr. Kissinger, here's the paper on so-and-so policy matter. And he, he would always look at the staff member and said, is this your best work? Before even touching it. And, and the staff— and the staff member would unequivocally say, no, Mr. Kissinger, I'll come back to you. And he would come back again.

He would just repeat, repeat until like—

until the fourth time, it's like he would respond, be like, this is my best work.

And it was like, all right, then I'll read it.

Yeah.

Do you want to know what the modern-day version of that is? What? Have you put this into an AI yet?

Yeah, exactly.

Literally, I got— someone sent me a I asked someone to do research on a pricing model at Blockworks, and we're doing this new thing and not going to share it publicly yet. But I was like, I need research done on like how to price this out because a new, new thing for me. I don't know. I don't know how to price it. It was like 7 out of 10. I could ask a question, is this your best work? I could also ask a question, have you put this into deep— into OpenAI's deep research yet? Because I can tell it's— it would be much— it would be much better if you did that.

Yeah.

So anyways, why hire?

Why keep that person around?

There is a, there is a 2025 is a transformational year where the— I actually think founders right now are way more obsessed with these AI tools than employees are. And I think it will be— there is this idea that like you should maybe shouldn't use it for your work because it devalues your work, or it's kind of cheating if you use it for your work. And I've noticed at Blockworks, this is kind of— maybe I'm being too public because I'm— maybe people at Blockworks are going to listen to this. There's probably like 25% of people at Blockworks use these tools 30 times a day, and I can tell, man. I can tell in their output. Their output has gone up 10x. I can tell in their efficiency. I can tell in their productivity. I I can tell in like the quality of their work. Then there's like 75% of the company where I'm like, I just know you're not using these things and you would be better if you used them. It doesn't matter if you're in—

it almost reminds me of like, just around the discussion, like, you remember when it was like felt dirty to cite Wikipedia?

Yes.

And then it became like, yeah, like you should get extra information through Wikipedia.

Yeah, yeah. I got a C in my Economics of Brazil class because I cited Wikipedia.

There you go. Stupid professor. I'm sure he's no longer there.

All right, let's get into some of the news. Yeah. IPOs and acquisitions. I think we're going to have to start making this like a normal section of the podcast because this year finally, finally, finally, I think, is the year of M&A in crypto. So, I mean, let me just run through some of the big announcements. First one was eToro. eToro filed to go public. If you remember, a couple of years ago, eToro actually filed to go public. This was maybe 2020 or 2021 in the last, like, hot cycle. Um, they filed to go public at $10 billion. They just filed to go public again at $4.5 billion. Um, eToro, if people don't know them, they're kind of the Robinhood of crypto. They kind of sit in between, like, Coinbase and Robinhood, I would say, but in Europe. Um, and the reason I say in between Coinbase and Robinhood, they're very much like the Robinhood competitor in Europe. But actually 96% of their revenue comes from crypto right now. I think, I think I found— I was looking through their filing and I think I got that stat right. 96% of the revenue comes from crypto assets. Um, but the, the scale and the size of eToro is actually much smaller than some of these players. Again, because they're in Europe, they're an Israeli company. Uh, Yoni, Yoni, their founder, is amazing. Been building eToro for like 15 years, maybe, maybe even longer, 16, 17 years. They They have 3.5 million funded accounts on the platform. So really impressive, but much smaller when you think about, uh, scale.

1/30th of the size of Coinbase.

Yeah, Coinbase has 100 million accounts. I don't know how many are funded.

Okay, got it.

But, but yeah, so anyways, but big, like, the IPO market is definitely loosening and opening back up. Like, we saw outside of just crypto, like Klarna StubHub, eToro, all filed. I think CoreWeave comes this week or next. Google just announced this huge deal of, of Wiz, which is a cloud security provider. By the way, Wiz, crazy deal. People want to dig into it. They started like 4 or 5 years ago. $32 billion acquisition.

Wow.

Yeah.

So I mean, like pre-Trump, obviously a lot of people have been scared away by the FTC and the IPO markets have been pretty closed. And now things have like really opened back up. So I guess later this year, things I'm paying attention to— Circle IPO, this eToro IPO. It'll be interesting to see if they get out, which I think they will get out, but be what the market values them at, I think is really important. The only comp in the market is Coinbase right now for the eToros and Krakens. So I was talking to some of the custodians at DAS, some of the founders of some of the custodians, and they're like, look, it's really tough to get public right now for us because the only comp in the market is Coinbase. We're so, so, so different than them. But like, the bankers don't know how to value us because the sell-side research is so, so crappy. So anyway, Circle, eToro, I think Kraken is looking like maybe not. Yeah, maybe not 2025, maybe early '26. But, but I don't know. They, they had a huge acquisition this week or last week of NinjaTrader, largest crypto acquisition in history.

$1.23 billion.

$1.5 billion.

$1.5 billion.

Yeah, $1.5 billion, largest TradFi crypto acquisition in history. Chainalysis probably is a 2026.

You think? I mean, it's kind of, it's kind of pretty down round now.

Yeah, but their revenue, I think, is up to like $150 million now. Probably a lot of that is from services, not subscriptions.

Oh, I see. Non-recurring.

Just—

yeah, I'm sure it's contracted now.

What's that?

With services, you mean like non-contracted services, like one time?

Yeah, exactly. Exactly. Like, uh, you know, they might sell to the US government, hey, this is a million dollar recurring annual, like ARR deal, but we'll add in another million for our team to go in there. And it's almost like consulting.

Consulting. Yeah, yeah, yeah. The, the, you need a, when I was at SageV, we would only be investing in enterprise software. There's something magical about having 70% most of your revenue coming from subscription like ARR and getting $100 million. That was the bogey. $100 million ARR, you could go public.

Yeah, yeah, yeah. So I think some of these guys are close, like Chainalysis maybe is close. I think Galaxy could finally list in the US this year. You know, they've been in Canada for a while.

In Canada for a long time. It's always interesting to track Galaxy in the premium or discount that they trade to book value.

Yeah.

As a sentiment.

Yeah. NYDIG, I think maybe could. I think NYDIG, I think who owns NYDIG? It's a Stone something or another. Mm-hmm. Get the name, but I think they're doing a restructuring. I think NYDIG is trying to maybe get out. Anyone else that you think could? I think ConsenSys will try to IPO this year, probably. Anyways, so IPO markets— Gemini, Gemini, I don't know how they would get out because they're smaller, but I heard they're trying to do something.

So Maybe a combination of Gemini. Well, it's hard to stitch these things together, but yeah.

Yeah. So those are things I'm paying attention to. And then the acquisition side, we just talked about Kraken. Kraken, just two cents on my two cents on that acquisition is, uh, with the market structure bill, every, all these things are going to merge. Like Robinhood will add a bunch of crypto assets. They're already doing this. Coinbase and Kraken will try to add equities. Um, and I think the NinjaTrader acquisition is that for Kraken. Is them just accelerating adding equities. Yeah. Yeah.

Tokenized equities is, is, I think everyone internally is like just trying to scramble on that and they're trying, they're Robinhood. You can just say, you feel it, you feel it's going to come, right?

People should watch their presentation from yesterday that Vlad was presenting. Again, I'm like, I've been buying up Hood stock. I really like Robinhood as a business. I think it'll come down to like probably Robinhood versus Coinbase. Speaking of Coinbase, Deribit deal is very interesting. I'm hearing like $3 billion is the acquisition price. I don't— I don't— this is from like a—

Doesn't Three Arrows own a bunch of Deribit? And so therefore, like, all the creditors are going to be made whole similar to like FTX?

That wouldn't surprise me.

Entropic FTX.

That would be even $2 billion, right? Even, even $1.5 billion. That would be the largest crypto acquisition in history. So that's quite interesting. Deribit owns, I think, still over 80% of the options market.

Options market. Yeah, yeah, yeah.

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Should we transition? Speaking of options, perps.

Yeah. Let's— you want to talk Hyperliquid?

Yeah, let's do that.

Let me give my— I actually didn't pay too close of attention to this, but let me give my quick overview and then correct me where I'm wrong. I just took some notes on this before, so I'm going to Okay, so here's my layman's understanding of this. So a trader basically opened this big— I think it was a $6 million short on Hyperliquid on this token called Jelly Jelly. Jelly Jelly is actually a— it sounds— it was just a meme coin stock or meme coin token. It was actually created by the Venmo co-founder, this guy Akram, and then this investor called Sam Lessin who runs Slow Ventures. His wife, Jessica Lessin, runs The Information. Okay. So the trader got the short position. They then deliberately pumped Jelly Jelly's on-chain, the price of Jelly Jelly, which forced their own liquidation on Hyperliquid. The short gets absorbed by Hyperliquid's vault, which is this communal risk pool backed by the HLP token that inherit, inherits positions when users fail to cover margin. So what happened is this Jelly Jelly price keeps pumping. The vault starts to bleed out and then eventually is sitting on this loss of like, I don't know, $10 to $15 million. So then Hyperliquid goes into like damage control. They delist Jelly Jelly, they pull the chart, they basically take Jelly Jelly off the platform. They hide the vault exposure from the public view. And I think there was that. Then there's this other angle where Binance and OKX went into like, I think it was really Binance because I saw the Binance co-founder like tweeting, tweeting tweeting about like, all right, we got to list Jelly Jelly. Binance kind of goes into like chaos mode. They list 25x levered Jelly Jelly perps. And actually, if you remember back in January, I found this tweet from CZ where he tweeted, hype may win short term, builders will win long term. So Okay. Back to the overview. Basically, then Hyperliquid kind of convenes the validator set, votes to delist Jelly Jelly perps following— I think they said signs of suspicious market activity. And the reason this was so important was if Jelly Jelly had hit like $0.15 or $0.16—

No, $0.15. $0.15374.

Okay, there you go. The vault would have lost their entire $230 million. Vault would have been wiped. Okay, so to kind of TL;DR, TL;DR on this, there's this like whale trader on Hyperliquid. They put on a short position on Jelly Jelly. Jelly Jelly saw that, tried to do what they could to liquidate the short by pumping the price. They then like started tagging Binance on Twitter. Binance listed Jelly Jelly on Binance Futures knowing it would cause a pump, liquidate the whale, and cause harm to Hyperliquid. Hyperliquid delisted it, which caused— which obviously saves them, but calls into question like, hey, if you can just change the oracle price and close the position without really getting wrecked, like, are you really decentralized? Okay, that's my like kind of crappy explanation, but fill in the gaps.

No, I mean, I think I don't want to speculate or anything who this trader was, but the thing I'll add is so Hyperliquid pulled kind of this trump card, which is they liquidated the entire position that they absorbed, the $392 million of GELI, which at the time was valued at like $3.72 million at $0.0095. So they actually made a profit on that of like $700K. So they forced the listed Jelly entirely. But the market price at the time— here's the difference— the market price at the time of Jelly was $0.50. They kind of like, you know, arbitrarily like liquidated this position at a price that they kind of took, which was not the market price. And so that was, I guess, people were, you know, grave dancing and saying, you know, this, this trade exposed everything wrong with quote unquote decentralized protocol, which is a lot of protocols, not just Hyperliquid, have gone into hot water. Even money markets where there's no size limits on especially liquid positions, even like Curve, you know, like there ought to be like parameters of like setting like limits on the amount of size to avoid this type of manipulation. The other thing is like, I'm sure we'll have Omar from Chaos Labs, like we've had him on, right? And just talking about like how Oracle pricing works on-chain is still very much the biggest attack vector here. The way you calculate the price should be weighted, should be some sort of guardrails in place because that always ends up being like, um, the issue in a lot of these, uh, attacks on-chain. You just sort of like manipulate the oracle and there ought to be, even though you're waiting and like the problem is like it's a combination of like it's an illiquid asset so you can manipulate the price, you can manipulate the oracle. And so it just has a cascading effect on things. I don't know, like I ultimately think that the question here is I think you covered it well. The discussion around on Twitter was, hey, listen, is Hyperliquid really decentralized? You know, this is not DeFi, the whole Ethos thing. At the end of the day, like, you know, did they do the right thing or not? You know, I think— I don't know. I don't know if you have a strong opinion on that.

It was clearly an attack.

People, I think like arguing around decentralization is a bit of a moot point. I mean, I think people understand the— I mean, there's this—

did you see this tweet here? This is the tweet. Hey, hi. Hey. Okay, so there's this— what's, what's her name? Yi He, which is— she's the co-founder of Binance. Yi He, please quickly launch the spot of Jelly Jelly. If Jelly Jelly is launched, Hyperliquid will probably be over. To be honest. And then someone goes, to be honest, you can really consider buying Jelly Jelly now. You don't even have to buy it. For example, ye take a look at Jelly Jelly. Hyperliquid may be gone. Don't use innovation as an excuse. Binance and Hyperliquid are rivals, just like FTX back then. At this moment, it is just like that moment. And the Binance co-founder responds, says, okay, got it. And they say, great, let's see what happens next. So Yeah, I mean, for anyone who thinks CZ is not running Binance right now, there's your— there's your, uh, this is a— this has got CZ written all over it, you know.

Uh, yeah, it'll be interesting what the fallout of this is.

Yeah. Um, do you trade on Hyperliquid?

No, I'm— I don't have much time these days to Yeah, to be a DJ.

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Let's talk stablecoins. Uh, 4 stablecoin launches this week, or announcements. One was FYHXX, horrendous stablecoin name. But that's okay. Uh, from, from Fidelity, which— so, okay, so there's the Fidelity stablecoin. There's Wyoming, the, the, the great state of Wyoming announced a stablecoin, Y— no, WYST. Custodia, Caitlin Long's thing, launched or announced AVIT stablecoin. And World Liberty launched or announced USD1 in partnership, I think, with Crypto.com and BitGo, maybe. I might get that wrong. Definitely the most interesting one is Wyoming, right? Wyoming is a— it's the first US state to issue a government-backed crypto like this. Kind of, I feel like kind of got swept under the rug, but like, and just not much attention. But yeah, I mean, we have a US state launching a government-backed cryptocurrency here. So just, just think about that statement for a second. It's going live on 7 different chains: Avalanche, Solana, Ethereum, Arbitrum, Optimism, Polygon, and Base. Uh, LayerZero landed the deal on the interop side. Um, and I, I read the press release. I'll just read one line. Governor, uh, Governor Gordon highlighted the benefits of the stablecoin for both the state and its users. These include a statutory requirement to overcollateralize the stable token's backing with cash and US Treasuries to mitigate the risk of depegging. And then this is interesting. And the deposit of interest derived from those treasuries go into the state's school foundation fund. So I think people are, you know, there's a lot of businesses looking at like Tether, seeing how much money they're printing. I think there are states looking at this too, being like, hey, yeah, we're not doing so well financially. Uh, can we get some of that money? And it goes into the school's foundation fund. There's one argument that says like, why would you need a state stablecoin? This is stupid. There's another that says like, look, I mean, this is a kind of a far out view, but like move all of Wyoming's finances on chain, reduce transparent, uh, increase transparency, reduce fraud, get some interest for the state.

Yeah. Not too shabby. Uh, Bridget from Founders Fund had a good blog post about like just stablecoins in general and what the impact is. I mean, we're, we're, don't have to cover it here, but people just go— we'll link it in the show notes. Just a good observation around how people think about stablecoins, what the actual impact is of that. The common argument we hear is obviously it's very bullish for demand for dollars, right? If you open up access to just having digital dollars is bullish. The US has a reserve status. It benefits so many people that want to have access to dollars, but they don't. But anyways, yeah, like, how do you, how do you think about like a world where, okay, there's going to be a proliferation of stablecoins?

We have actually, we have hundreds of stablecoins.

Like, who is the, is it going to be a wrapper on top of a wrapper?

No, no, no. Okay. Monday we're, I forget if Empire released on Monday or Tuesdays now. Oh God, we just changed it. I should know that. I think it's Tuesdays. Tuesday, Tuesday, Tuesday. We keep, we keep changing, but we have an episode with Charlie Noyes, who's a— who's one of the GPs of Paradigm. And they just, they just led this round into Mesh, which is— they led an $82 million round into Mesh, which is kind of this like stablecoin settlement network founded by this guy Bam. And Bam joined the show too, and we talked like all about this. So people should just listen to that episode. Basically what I think will happen is there will be a proliferation of stablecoins. You could own PYUSD, the merchant might only accept USDC. Right now you have to flip your PYUSD into USDC. Now that eventually will like, it'll all just automatically happen, I think. So I think, I think there'll be, I actually think there will be hundreds of stablecoins because I think these stablecoins just kind of become money market wrappers. Yeah, but you just kind of sit in your money market wrappers, but then it— but then like there's something on the back end, like some API that basically just changes it into whatever the merchant accepts. Yeah, I also think it's a good reminder that the majority of these things are just money market wrappers and they don't really resemble money. Like, I think there's— I think there are stablecoins that will resemble money. USDC is obviously one. USDT. I would argue those are the only two right now that resemble money. Maybe PYUSD gets there. And actually PayPal. Yeah. Um, but most of these are just gonna, we'll have hundreds, just like we have hundreds of ETFs. We'll have hundreds of mutual funds, hundreds of money market wrappers. Yeah, you're right. They don't, they don't, they're not money.

They're, they're, they're a money market account. Um, and the fungibility of that, it's like my observation of having invested in so many different stablecoin projects, uh, from like Basecoin, the early, early days to everything. And, um, after that is that distribution always wins. And, and ultimately, like, you have to think about like where, if you have massive distribution, you're gonna launch a stablecoin and then you're gonna roll that out to your user base and that's gonna be the de facto, like PayPal, right? So integrated with all these merchants. Like PYUSD is going to be dominant. If you're JP Morgan, you're going to have probably yours. If you're a retailer, you're going to have yours and you're going to roll that out to your user base and you're maybe going to offer incentives in some other capacity to— you're just in a way better position. So as I think about how this is going to evolve, I think, you know, we talked about in a prior episode, like what is the composition? Like if you were to fast— like right now it's like what, 2, 3, 3/4 of the market cap, like market share of stablecoins is Tether, and that's been fairly stable. Circle is, you know, the second largest, but that share is marginally coming down. I think without— this is one of our predictions like for the year is that that, that probably is the one that is at most risk here. Um, yeah, within the US, right? Because if you have all these different retailers are going to launch your own.

Yeah. Um, actually, I did, I, I I missed this in prep, but the full draft of the STABLE Act was just released. Oh, really? And again, I think people think this is going to get through this year. Much sooner than— Most people think it'll be in August. I'm pretty sure from conversations with Das that it'll be like— Sooner than that. May. I don't know, like next 45 days or something.

I've heard like next couple of months, not like later this year. Yeah, yeah, yeah.

So I think it's a Q2 thing. Let me just, I actually haven't read it, but I will pull up Nick Cannon from Gauntlet's overview. Okay. Full draft of the Stable Act of 2025 was released yesterday. Thread with a few takeaways. One, no yield-bearing stables. So that's, that's very important, right? Because no yield-bearing stables. I think if you look at a lot of the new stablecoins that have been funded, they are actually yield-bearing stables. So who's this bullish for? USDC and Tether. right? Yeah. USDC and Tether. Banks, credit unions, and approved non-banks can issue. That's big. That means we're just going to see a proliferation of these stablecoins. Every credit, every fintech, uh, credit union, small bank, local bank, big bank is now thinking about issuing a stablecoin. Uh, 3, must have 1-to-1 reserves of cash, T-bills, uh, with a maturity of 93 days or less, or other highly liquid safe assets. That's That makes a lot of sense. Interop standards may be required. Hmm. That's interesting. You know, again, we called out that LayerZero won the Wyoming deal. Will be interesting. It feels like there's this like battle right now between actually Chainlink, Wormhole, and LayerZero. And will be very interesting to see who starts winning those deals. States can certify their own stablecoin regimes, but they must meet or exceed federal standards. No algo stables for 2 years. Huh. So during the 2-year period beginning on the date of the enactment of this act, it shall be unlawful to issue an endogenously collateralized stablecoin not in existence on the date of enactment on this act. Okay, that's interesting. And then a 2-year resignation grace period.

Can we look at the comments?

Yeah. Comments are, this basically turns stablecoins into digital cash with none of the upside. Feels like a step backwards. Someone goes, I like the distinction, payment stablecoins, algo stablecoins. Yeah. Um, this can be summarized as the what's good for Tether. I mean, Stablecoin Act will kill a lot of stablecoin projects. This is from, uh, Jin. Uh, here's who will win according to this person. Jen, traditional bank, banking institutions emerge as clear winners. Um, it's going to kill a lot of stablecoin projects. Big win for Tether. I think there's a— yeah, Gabe Shapiro, the USDC/USDT model is now enshrined in regulations. Yield— this is probably the best. Yield-paying stablecoins will be securities and don't qualify. Stables backed by exotic or volatile assets don't qualify. And if neither one of those can be marked and neither one of those can be marketed as payment stablecoins. Okay, so this is what I was talking about earlier. There's going to be like payment stablecoins, then just like money market funds. From a policy POV, they want these things backed by treasuries. They want to prioritize safety.

Yeah, that makes sense.

Honestly, makes a lot of sense. Makes a lot of sense.

Obviously, Figure, Figure is the only one that's like got approval, right? A couple of weeks back for their interest, like it's a security. They filed an S-1. They got like a It's a yield-bearing stablecoin.

Yeah. Yeah. Uh, GameStop adding Bitcoin as a reserve treasury asset.

Uh, massive amount, massive amount of engagement by the way.

Company had cash and cash equivalents of $4.7 billion at the end of Q4. Um, let me just read the press release. GameStop announces proposed private offering of $1.3 billion of convertible senior notes. Very similar to like a Metaplanet, MicroStrategy, SolStrategy. Um, yeah. Uh, so I got dinner with Saylor after DAS on Thursday night, and I was like, do you really believe like this stuff? Like, do you— he gave me the 30-minute pitch for why Blockwork should become like a bit— like move on to the Bitcoin standard. Like, we should— like, everything we're doing, basically in his mind, everything we're doing, useless, useless. All this activity, not as productive as just buying Bitcoin. I was like, damn, you really You really believe that? He's like, yeah, yeah. So as I think it's funny, man, like, I think, I mean, yeah, too much. I like, I like Quinn's. Quinn had a good tweet. With such highly regarded and well-known capital allocators like GameStop, North Korea, Bhutan, El Salvador, and MicroStrategy adopting Bitcoin balance sheets, I'm surprised there isn't a mad rush of more countries and companies racing to do the same.

Oh, that's— I mean, the Bitcoin Strategic Reserve, so they're technically not buying, but they're absorbing it. So yeah, yeah, not much else. I mean, I don't know if there's anything else to cover.

No, I think, I think that's it. We just released the, the industry's most comprehensive dashboard on Pump.fund and PumpSwap. So PumpSwap is the new AMM by Pumped Up Fund. Um, it's really good data. Most of the data providers haven't even indexed Pumped Up Fund or excuse me, PumpSwap data. And we, we've been sprinting, like working 7 days a week to do this. So if anyone cares about this kind of data, Blockworks Research now has it. Um, it's, you can just see a lot of it for free. It's on the Blockworks Research Twitter page. So just go there and we're still hiring for a senior producer. So People want to work with Santi and me. Join us. Yeah, that is true. I was going to say I'm hiring too. Let's go.

What roles are you hiring for? Principal or VP role of like private equity. Someone that can own a deal beginning to end and an associate below him. Head of product and head of engineering.

Nice. Nice.

There's other roles like community and design, maybe design not so much now that we can do this with ChatGPT. But, uh, I, I've had a lot of really interesting, I mean, the pipeline's really interesting and yeah, really strong candidates, um, coming through the pipe, not like outside of crypto. Nice. Uh, companies that have built consumer-facing applications that are like now dabbling in crypto, like, you know, the Robinhoods and Stripes of the world.

Nice. Um, last but not least, permissionless speakers are live. So I can't believe we're shilling another event already. My father. In 90 days we have permissionless. So the way that I think about this is permission— DAS is for the people who invest in the protocols. Permissionless is for the people who build the protocols. So we have really, really good lineup already. We've got Hayden from Uniswap, we've got Shriram, we got Sam from Frax, Ed Felton from Arbitrum, Togrul. We got Alex, who's the founder of Worldcoin, Stani, John Charb, Wei Dai from 1KX. We got Andre talking about Sonic. Zaan from Initia, Mert, Jordy Alexander, Kalsmani. We got Smokey, we got Guy from Athena, Brian Pellegrino, Layer Zero, Keoni from Monad, Jesse from Base, Kane from Infinex. It's a stacked lineup.

So I guess we have our call for speakers is live.

If you are an investor, we don't want you to apply to speak. We're looking for technical founders, engineers, product managers, Is this going to be a what type of format?

Debate? Not debate? Panel?

There'll be a lot of debates. The debates went really well at DAS, so we're just going to keep doubling down on these debates. A lot more individual talks that are shorter, I would say, too. Like, I thought your talk at DAS was good. Dan Smith had a talk. Meltam had a talk. These talks are really nice if people actually prepare for them. And I think less, less panels just because, yeah, Yeah, panels just feels—

yeah, I'm very much bullish debate, controversial debates and presentations. So if you're technical, yeah, hit us up. Very cool. That's in New York.

That's in New York, June 24th through 26th in Brooklyn. Big warehouse vibe. We got like 8 warehouses. It's going to be crazy event. So we'll do June 24th through 26th in, in Brooklyn. And then I think we'll all head out to ETHCC. Oh right, it's in— it's like the first week of July in Cannes. Is this south of France?

He's out of France. That's good. Nice.

Let's go, let's go. That's great. Cool. All right, I think that's it. That's the pod.

Yeah, that's the pod, guys. Well, thanks so much for listening, guys. Uh, we'll see you next week.

See you next week.