Coinbase Buys Deribit, Stripe’s Stablecoin Launch, and Ethereum’s Pectra Upgrade | Weekly Roundup

Can we just zoom out for a second and just think about what we're talking about in one week on a roundup? You've got Ramp issuing stablecoin-backed cards. You've got Stripe offering stablecoin accounts in over 100 countries. You've got Superstate launching tokenized equities. You've got Coinbase acquiring Deribit for almost $3 billion in the biggest crypto M&A deal in history. Like, if you're not— I know the prices are— I mean, Bitcoin just hit $100K, so let's go. But like, I know people are kind of like, yeah, it's a bull market, bear market. It doesn't matter what market it is. You've got instant 24/7 financial infrastructure being built in real time in front of our eyes. It's pretty damn cool.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. Explore the gas-free ecosystem at scale.space/ecosystem and follow their journey on X @skale_network. Thanks to SKALE for making today's episode possible. Hey guys, Jason here. Just to let you know, we have Permissionless 4 coming up in June from the 24th to the 26th at Industry City in Brooklyn. This is a conference for the developers and builders where we'll be focusing on the DeFi Renaissance, applications, token design, and much more. Click the link in the show notes to grab your ticket today and use code EMPIRE10 for 10% off.

What's up everybody, welcome back to the Empire Roundup. You've got the man, the myth, me, the back in the seat.

We've got our—

we've got the second— we got the second co-host, Santi.

Yeah, no, I was gonna— the second co-host. Notice that there is rank and priority, ladies and gentlemen. Um, I will point out, you know, you're growing a little bit of a beard. Um, but as I was observing that, I did see what appears to be an injury there. What's going on?

It's an injury. Yes.

I think twice if you're— if there's violence at home.

Well, first of all, my face is super swollen because of these cluster headaches that I get.

I am loaded up on prednisone.

So my face is all puffy. And then it doesn't help that I—

Will told me I need a better story for this.

I dropped an iPad on my face.

And you know how many times this happened to me? Like, I think I'm surprised how I haven't broken my nose.

My friend's dad dropped an iPad on his face and he broke his nose. And this is a couple years ago and I'm obviously laughing at the guy. And now here I am with, look at this, this thing packs a punch.

It's like, it's a real boost.

Yeah. That's crazy. You, you should have a, you know what I'm gonna get you for, for your birthday, Christmas? You know that babies have the iPads in the, with the foam around it? You, yes. I don't basically make them indestructible. It sounds like you need that.

Yeah, I guess clearly I do.

It's just, you know, go pause, you know, anyways. Well, sorry.

What's going on? How's post Dubai?

Oh, very good. Catching up on a lot of work, but wow, what a week, huh? I mean, I mean, we should just jump right in it because let's jump, let's jump right in.

Here's the first thing, here's the first thing. This is— so Teddy Fusaro from Bitwise aptly pointed this out. So you would think, so Bitcoin's back, Bitcoin hit $100K, let's go, things are quiet around here. Look at this, this is, uh, this is the Bitcoin at $100K Look at Google Trends, no interest in Bitcoin. This is an incredibly bullish chart of Google Trends and Google interest over time of Bitcoin.

It feels—

I mean, has it ever felt this quiet with Bitcoin at $100K?

No. Yeah. I mean, it's fairly quiet. And also it's like one of the— this is the classic, you're seeing it in real time. What do you believe in that others don't or overlooking? Like, if I think Google Trends is interesting, maybe, maybe all this interest is now going to like ChatGPT. Perplexity in some of these, the new search engines, so to speak, because Google took a massive hit this week. It was down like 9%. Basically investors are pretty worried that their core business is being chipped away by basically people not searching anymore. This is why they, the only reason, the only reason this chart would not be as bullish as I want it to be is if people are no longer using Google search and this is no longer an interesting barometer, but To be fair, I think it's still pretty accurate.

What do you make of the— I mean, what do you make of the markets right now? Because there are some things like, you know, I've been, I've been very publicly bullish on Robinhood on the pod, and we had a nice beating of earnings. Robinhood's up 9% today, 16% in the last 5 days. I think Coinbase reports after hours. Coinbase is up 6% today.

I'm pretty sure they're—

I think their report just bought Deribit after hours. Yeah, obviously we'll talk, we'll talk about the Deribit deal and talk about M&A in general. Any, like, any thoughts on markets right now? Um, or should we get into the news?

Generally speaking, nothing to comment on other than I've read a bunch of the, uh, like, report— morning reports that I get from banks and research reports. And it's like, you know, there's excitement and reasons to be optimistic about trade deals. I think with the UK, there's a meeting in Switzerland between the US and Chinese delegations. And so it feels like the— you know, markets hate uncertainty, and, and they reacted. You remember when we recorded that Macro Pod with Quinn Um, um, and you know, it was, it was, I think markets reacted to that, but I think the market's feeling optimistic about some trade deals happening and, you know, a lot of that going away. But no, let's get, let's get into the news.

So big, big news week. Um, things, things I want to cover. Ethereum, um, had a PECTRA went live on Ethereum mainnet. There is a lot of M&A obviously being driven by the, the big one is the biggest M&A deal in the history of crypto, Coinbase acquiring Deribit. I'd like to talk about that. Stripe had Stripe Sessions. We'll be talking about stablecoins. I want to talk about their product release. I think it's the most important release in stablecoins, actually, that I've seen. And I think it's actually kind of being underplayed a little bit on crypto Twitter. Robinhood is exploring launching a chain. The Dems have been turning on stables and the Empire listener section. Some folks were asking us about MicroStrategy, Bitcoin's buying— corporates buying Bitcoin. So we'll get to that if we have time. But maybe the first thing is I do want to just give a big shout out to everyone involved in PECTRA. So PECTRA went live. PECTRA went live. What day was it? May 7th. So that would be yesterday on Wednesday. Yeah, we're recording Thursday at 4 PM here. Ethereum PECTRA went live. So that's big, very massive upgrade. I'll talk about it maybe from a more technical point of view, but then I'll talk about it really from the user's point of view and why this is interesting. Um, so first, the upgrade allows the max ETH stake to a node in— to increase from 32 to 2,048 ETH. The goal of redu— is reducing the need for redundant nodes. That's one. Two, the blob transaction capacity doubles the target blob count from 3 to 6. Um, and then in addition to this, the upgrade enables a new transaction type that allows batch transactions and gas sponsorship. So what does that actually mean? There's actually— there's a great thread by Benji shared from the Ethereum handle. So for folks who missed it, I'll kind of walk through some of the highlights. Basically, if you think about the Merge, the Merge was for the protocol. PECTRA is for the people. And PECTRA, as Benji explains it, PECTRA is kind of Ethereum's glow up.

This is where Ethereum starts to feel like more of a user-friendly chain.

Fewer clicks, smarter wallets, cheaper transactions, cleaner staking. So on the fewer clicks side, what this means is no more approve and confirm loop. You know, those kind of loops that you get with approve and confirm, there's no more double signing for every single action. So one of the things that Pectra does is it reduces how many clicks it takes to get to the action that you want. So that's, that's cool. Second is smarter wallets. Right now, wallets are used to I think what Pector does— I need to dig into this a little more. I think what Pector does, it allows normal wallets to start to act like smart contracts where you can start to batch transactions, skip approval pop-ups, pay gas in any token, just a lot less friction. I would imagine folks like Dynamic.xyz, Privy will start to, will start to really benefit from this. And then all the wallet, the wallet experience should just get much better. And then the third is cheaper transactions. So more blobs, better scaling for the L2s, lower costs, especially during high traffic periods.

And then staking.

Yeah, staking is more flexible, more efficient. So you raise the validator cap from 32 to 2048, faster deposit recognition, and then smart contract-enabled withdrawals. So yeah, just, just, I mean, like, I'm not working on the code of Ethereum, obviously, but I think you just have to give a massive recognition that These upgrades are like— it's very, very, very tough to do these upgrades. It is hard for even a company like Blockwork sometimes to upgrade our code. It is orders of magnitude harder for this decentralized network to pull it off. You know, it's kind of— I saw Saigar, who's building Abstract, was like, it's like upgrading an engine, an airplane engine in mid-flight. So just very, very big hats off.

I don't know if you have any other thoughts on on PECTRA, but no, uh, just that, I mean, very impressive that Ethereum has pulled it off yet again with first its transition from proof-of-work and proof-of-stake, and this network upgrade PECTRA is just really impressive. And I think one of the core things about the Ethereum community honestly is this ability to coordinate and do these upgrades. And I mean, it just tells you a lot about how impressive— I don't want to underestimate how difficult this is, and it's The crypto is really good at coordination, but there are networks that have struggled with that. You know, the Bitcoin community particularly is like, but this I think is one of the, uh, brighter things that Ethereum has, which is this ability to coordinate and do upgrades, which is pretty Herculean task. So yeah, congrats to everyone that was involved in it. And, um, yeah, pretty, pretty important stuff.

So ETH, ETH a month ago was $1,500. ETH today, 2073 at the time of recording. Does this make you think— so you've got the kind of ETH pivot, ETH, whatever, whatever we're calling it, ETH pivot or ETH upgrade, we've got PECTRA. Does this start to make you reconsider the ETH investment case?

Well, yes, in the sense that I think the Ethereum community is really kind of galvanized and like rallied. It's kind of gotten its mojo back together because it feels a sense of urgency. So, you know, how much of that's priced in? Is the network worth, you know, $250 billion? I still have concerns around the L1, L2 dynamics and whatnot, but I don't read too much. Like, I wouldn't— I'm not updating my thesis just yet. For other reasons. I do think that this is very impressive, but I do still have concerns, um, around value accruing to the L1.

Okay, so we're not buying ETH yet? No, not buying ETH.

Not, not me personally, but again, none of this is investment advice, so everyone should do their own research and come to their own conclusions. But I, um, we'll talk about in other news segments, but I think it's pretty interesting you have Meta, Robinhood, and other corporates exploring tokenizing stocks, launching their own stablecoin functionalities. And they're in, in these reports, they reference a couple of networks. Solana is one of them. Arbitrum is another. And I think it's just interesting to maybe focus on that because I think that to me, that's like probably more exciting where a lot of these players are deciding to build on. For instance, I believe Robinhood was met. Yeah, exactly. This, this is something that In this particular instance, the comment is that they're evaluating Solana and Arbitrum. Of course, none of them confirmed this, but if it were to be true, I mean, I think you would argue who accrues more value here. Say that Robinhood launches a blockchain and they deploy it on Arbitrum. Obviously bullish from an overall Ethereum ecosystem perspective, but from that standpoint, I mean, Arbitrum stands more to gain as a, as a network than ETH as a, you know, substrate for the overall ecosystem, I would argue.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. With a gas-free, invisible user experience, instant finality, and robust security, SKALE allows for limitless scalability and has already saved its 50 million users over $11 $1 billion in gas fees. SKALE's high throughput, zero transaction costs, and powerful Web3 infrastructure make it the ideal platform for gaming, AI, and other high-throughput apps. To explore the gas-free ecosystem, visit scale.space/ecosystem and follow their journey on X @skale_network. That's SKALE spelled with a K. Thanks to SKALE for making today's episode possible. I wanted to take a moment to tell you about Marinade, the platform connecting Solana holders with the best staking rates on Solana. Marinade unlocks a high-performance staking delegation platform that brings billions in liquidity and security to the Solana market with solutions for both individual traders and global institutions from both DeFi and traditional finance. Use Marinade to earn rewards on your Solana treasuries and holdings. Optimize your Solana staking with Marinade's best-in-market features, including user downside protection through protected staking rewards and optimized delegation via Marinade's automated auction marketplace. To learn more about Marinade, visit marinade.finance or click the link in the show notes.

Yeah. So for folks who missed it, it's interesting. I think, I think this was Bloomberg who reported this. Robinhood is developing a blockchain-based platform that will allow retail investors in Europe to trade US securities such as stocks. The venture will likely be launched through partnership with a digital asset firm. Arbitrum and Solana have both been under consideration for the partnership. Yeah, very interesting. What route, if you're a betting man, what route do you think they go?

Mert, if you're listening, would love for you to comment on this because he might have perspective. But yeah, I think from launching your own blockchain, you've seen a lot of other folks deploy their own chain as an L2, you know, Kraken and a few others, or Avalanche L1. Obviously we're doing that as Inversion, but to me it feels like from launching your own chain, probably Arbitrum from a technical standpoint. But I would actually like to bring someone from the Solana community to understand how it would how this would work with Solana. Like, there's like Eclipses of the world and Neons and like sort of like these other networks that are on the periphery. But yeah, I would kind of really be curious to understand how that would work.

All right, let's talk about the bigger news of the week. Coinbase is acquiring Deribit. It's the largest deal in crypto history. So this, I think folks have known for a while that Deribit has been in market. It's been rumored that some other crypto exchanges were looking at them. For context, Deribit controls roughly 80% of the crypto derivatives and the options market in— so Deribit is a derivatives venue. They control roughly 80% of the market. I think back in March, Bloomberg leaked that they were selling. They've been selling for quite a while before that, I think. Pretty relatively small team. They've done an amazing job. Uh, this is a really interesting deal. So I heard that, I heard that Tencent was looking at the deal. I heard that some of the other big crypto exchanges were looking at it. Um, but yeah, it's a $2.9 billion deal, $700 million in cash, uh, and then another $11 million in shares. Coinbase stock is at $200. That's $2.2 billion. So $2.2 billion of stock. 700 million of cash. So the last numbers that I saw from Deribit from a fundraising deck was from 2023, where they were doing roughly like $85 million in profit and $120 million in revenue. So really, like really high margin company. But the thing that's happening here is the exchange, there's a broader trend of M&A right now happening in crypto. The exchanges are the big buyers in crypto right now, and they want to— they want two things. They want funded accounts, and they want the ability to offer more products to their, to their traders. So, perps, options. I think the next wave of acquisitions that you'll see crypto exchanges make will be in the tokenization RWA space. So the ability to offer, you know, maybe Coinbase can offer tokenized stocks, credit funds on-chain, things like that. So really, really interesting acquisition. The industry needs M&A to thrive. You need the venture investors to do well from their private— from their equity investments. You need the companies to be able to go public. You need companies to be able to sell. So this is a really healthy dynamic. And I don't know, I love to see it. I think it's great.

Yeah, absolutely. I mean, the— what's interesting too is Coinbase is up on the announcement, um, you know, 6%. The entire market's rallying, but, um, we'll see after earnings, uh, what the commentary is. Uh, if I believe they report, uh, after close today, right? Um, Coinbase does. So that, that's going to be interesting, um, what the commentary is from the team, uh, Brian and the team. So yeah, that should be really interesting.

Look at this. So we actually— Blockworks Research just launched M&A and fundraising data on the platform. Look at this. So it only goes back to— it goes back to Q2 of 2018. This is this big green chart bar right here on the right. This is Q1. So here, wait, let me actually get Ripple. Yeah, this is— this one is Ninja Trade, the Kraken Ninja deal. This is Ripple hidden road, right? Or vice versa. Um, but yeah, I mean, look at this. Look at this M&A data by sector just growing. This doesn't even include the Deribit Coinbase deal. Well, this will be, you know, added overnight. So, wow.

Yeah.

So I guess zooming out from this deal, I mean, the thing that maybe a lot— some folks are not privy to that's just really interesting is I've never seen so many crypto companies in market right now. Yeah, every— especially the kind of class of 2017. A lot of the custodians, a lot of the data companies, a lot of the staking folks, like, you know, these are like— the founders have been building for 7, 8 years. A lot of the companies are doing somewhere between like $5 to $30 million in revenue. And a lot of them are selling.

Why would Deribit sell?

Um, because they've— why would they sell?

Do they want like access to the distribution that Coinbase has built? It seems like, look, they command most of the market share. Is your point saying like they have so much market share that it can only go down from here? And if it goes down from here, it starts like they've sold it the right time.

And, and it's a, um, I mean, it's a slightly messy cap table, but it's a heavily founder-owned company. So I think this might just be the founder saying, look, we've been building for like a decade in crypto. It's a multibillion-dollar acquisition. And, you know, this is generational wealth for the founders, I would guess. Also, maybe if you take out— if you take that out of the picture, probably, you know, you could argue the space is getting much more regulated and is moving more onshore. Deribit is more like an offshore venue.

Yeah, yeah. I think I was on another podcast earlier today and you got to think like, I think, and you let me know if this makes sense, there's a lot of signaling Coinbase buying this because they feel that they can integrate Deribit into their core offering, which they've been missing for a while. Like what's made Coinbase product offering is really like this, is this right? Options and perps and, you know, and so offering this I mean, it's probably really interesting from their standpoint justifying the acquisition and how they think about layering it in. It probably tells you everything you need to know about how they believe the regulatory environment is going to unfold, particularly in the US. You also see, I think it was last week, you've seen a lot of the offshore exchanges now start to build a presence in the US, which is really encouraging. I think it was like OKX that is now launching an office in California, I think in San Mateo. Near SF. So yeah, all this to say is like really, really encouraging developments on the regulatory side.

Like, so I moderated this thing with, with the head of Coinbase's derivatives business in Dubai. And they are, I mean, it is an all-out push for them with perps. Like, I think Robinhood and Coinbase are, I mean, they're rolling out perps, like derivatives, options, it's all, it's all coming to the US. So I want to talk about Stripe because I think people missed how important this thing is. So Stripe had their, their annual event called Stripe Sessions. If you— there's a 40-minute presentation from the Collison brothers, from Patrick and John. I would highly, highly, highly recommend going to watch that video. They talk about two things in that video. They talk about AI and stablecoins. And there's actually this amazing image here. I'll share this right here. This is an image of payment volume growth in the first 24 months of Stripe versus Bridge. And for those who are listening, not watching on YouTube, it is just up into the right for Bridge. Bridge just like vastly outnumbers the first 24 months of volume from, from Stripe. The thing to understand with Stripe here, I think, is that so they launched two products. One was stablecoin-backed credit cards or stablecoin-backed cards. But the other product was, was merchants can now store stablecoins. And the reason this is so important is I think it was last year they announced pay-ins, right? So you could pay, you pay in stablecoins. Then they announced earlier this year payouts, right? So you could actually pay people, you could pay like freelancers and contractors and your employees in stablecoins. Now they just rolled out the ability for merchants to store stablecoins. So another way to put this, Stripe would never say it like this because it's for regulatory reasons, but Stripe just launched a stablecoin, a stablecoin bank for merchants. Stripe is in 45 countries today because of stablecoins. They're now in 101 countries. So it just doubled the number of countries that they're able to be in. They completed the, the payment circle, right? Pay-ins, payouts, and a way for merchants to store stablecoins. So this is like, this is really the first complete circle of stablecoin payments in the world by anybody, crypto company or non-crypto company. And I'm just shocked that more PSPs like Adyen and Checkout and folks like that are not just massively pushing into the space because what Stripe just did with stablecoins— they're in 45 countries now, they're in 101. This unlocks global access for them. So Uh, any, any business in the world can now have a US dollar bank account. It's just, it's, it's mass. I think with this alone, Bridge just paid for itself.

So, uh, well, 100%, like, uh, he uses a term that I really like, which is borderless finance. Yeah. Uh, just phenomenal. He has a very good way of crystallizing concepts, um, like room, uh, temperature semiconductors and then borderless finance. But yeah, I mean, the way I think about it is like, just think about for a second, the financial system predates the internet and this is kind of the first time we've been able to kind of take a kind of, as you describe it, a fully complete end-to-end like offering that kind of detaches from that. And the way that how accretive this is to Stripe's business is, and the amount of activity that it unlocks, right? is kind of crazy. I was on a podcast with Cai from Visa. They also just announced an acquisition, or sort of a strategic investment, and in a similar type of offering like Bridge. And I think now every major financial institution is kind of looking at this and saying, yeah, we need to get our act together on stablecoins. And a whole topic for itself. But I would like to do a podcast around with maybe Cai or Simon or other folks talking about what does this actually mean for banks' business model? What are the things that are going to be truly disintermediated, or does this totally unlock like just more flows, right? A lot of these countries, like just to your point, they just are not even digitized and are basically cash-based economies. And with stablecoins like this, really kind of unlocks a way to do business. Um, and it just grows the pie. Um, and so no, it's, it's, it's really powerful. He goes into that present— it starts in minute 24 and it goes for like 4 minutes. Um, but again, in there he talks about like big, big companies using stablecoins to pay vendors internationally, like, you know, uh, SpaceX and Tesla. And these are not small companies that are using stablecoins, just to like, you know, level set the conversation.

Yeah. Well, and so that was, that was the payout from a couple of months ago. Now, so I talked to some folks who, uh, I don't know, I talked to some folks, I talked to some folks who are familiar with the product and the early usage. And they said that they're seeing massive, basically massive usage, B2B usage of stablecoins because of what Stripe just rolled out already for the early beta users. And so like, you know, now you've got someone in, I don't know, maybe Singapore who's able to pay for a SaaS product in Berlin, you know, and they're paying entirely in stablecoins right now. So again, I think that like the Audions and the Checkout.coms of the world really have to move on this right now.

I think like, I'll just make a really quick comment on this, which is like, what has really changed over the last 6 months? So like Stripe acquired Bridge under a year ago, was it 6, 7, 9 months ago? We had Zach on the podcast and we described it as like the Instagram moment. Like they bought it for $1 billion. Facebook bought Instagram for $1 billion. It was like hugely transformational for their business. And October. Yeah, yeah, like 6 months ago or so. Um, and so I think, um, the difference— like, I think the difference between— like, stablecoins have been around for a while, right? My point is stablecoins in your MetaMask or Fantom or exchange don't feel like money, whereas stablecoins integrated in Stripe's, uh, flow with merchants or with pay— or like PayPal, or— it feels like money. And so it's just like, it may feel like a subtle thing, but I think like the whole point of fintech, the name of the game is distribution and being embedded in, in kind of, there's a great example of a demo of how this looks like, like stablecoins are just part of like transferring to your bank account. And it's that flow that just makes it super intuitive for the user to be like conditioning them to use stablecoins. And it's just so, so powerful.

Yeah. So, yeah, yeah, it's amazing. The other thing that this comes on the heels of is the Fed's 20-page report on stablecoins. I don't know, I think we didn't talk about this because, you know, we were at Token, but there's an amazing 20-page report. This is from the Federal Reserve. This isn't from Blockworks Research or anything. This is literally the Fed saying that stablecoins, right, with a market cap of $234 billion are ubiquitous. I'm quoting from the Treasury's report. Is it the Treasury? Who is it? Yes, the Treasury. Excuse me, it's from the Treasury. I'm going to quote from this report: Stablecoins are ubiquitously utilized as cash on-chain, effectively serving as a new payment mechanism. An emergence in tokenized money market funds has recently created an alternative option to stablecoins, primarily given their yield-bearing feature. Evolving market dynamics— and this is the kicker right here— has the potential to accelerate stablecoin trajectory to reach a $2 trillion market cap by 2028. A $2 trillion market cap. That's not coming from some, you know, moon boy, crypto panda on Twitter. This is the US Treasury saying that stablecoins could reach $2 trillion in market cap by 2028. So pretty amazing.

100%. There's another perhaps development. I mean, there's so many, like, I want to talk about Superstate, the Solana paper that came out, like tokenizing stocks is really heating up. Faster than I anticipated. Before we go there, Coinbase just announced the X402 standard for native payments, which really dovetails really nicely into what was central to the Stripe conversation, which was like stablecoins and AI. And it's funny they put them as the two most important things because I think X402 comes in and really enables that, particularly for AI agents.

What is X402?

It's, it's a new standard. Um, so the TL;DR I'm gonna read is Coinbase is launching x402, a payment protocol that enables instant stablecoin payments directly over HTTP. It allows APIs, apps, and AI agents to transact seamlessly, unlocking a faster automated internet economy.

Um, oh, this is cool. You can add us. Okay. So you can basically, ah, this is, this is nifty. Okay. So HTTP 4.0.2 is The client error response status code. When the status code was created to enable digital cash or micropayment systems, no standard convention exists. Different systems use it in different contexts. 402 payment required. So you've maybe seen this on a website. So what they just rolled out, that's smart, is you can now add a single line of code into your app, require USDC payment for each incoming request. That's interesting. If a request arrives without payment, The server responds with HTTP 402, prompting the client to pay and retry. X402 allows any web developer to accept crypto payments without the complexity of having to interact with the blockchain.

Very cool. Yeah, yeah. It allows developers, agents to pay for API services and software directly with stablecoins over HTTP. Yeah. With a few lines of code. So again, it's just so transformational. Kai from Visa in the podcast that we just recorded was like, You know, how does, how does, like, is, is the AI agent, like, using stablecoin narrative overblown? Which I thought was, like, an interesting pushback because his whole point was you could just give your AI agent your credit card. And I'm like, and micropayments have really taken off, but I'm just sort of, like, you know, introducing, like, a pushback that I thought was worthy of more conversation. But yeah, nonetheless, like, this is a pretty cool standard and credit to Coinbase because they've been really pushing and have been very good contributors to, you know, codebases across ecosystems and particularly standards like this one, which is, you know, really great to see from Coinbase.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. With a gas-free, invisible user experience, instant finality, and robust security, SKALE allows for limitless scalability and has already saved its 50 million users over $11 billion in gas fees. SKALE's high throughput, zero transaction costs, and powerful Web3 infrastructure make it the ideal platform for gaming, AI, and other high-throughput apps. To explore the gas-free ecosystem, visit scale.space/ecosystem and follow their journey on X at Scale Network. That's scale spelled with a K. Thanks to Scale for making today's episode possible. I wanted to take a moment to tell you about Marinade, the platform connecting Solana holders with the best staking rates on Solana. Marinade unlocks a high-performance staking delegation platform that brings billions in liquidity and security to the Solana market, with solutions for both individual traders and global institutions from both DeFi and traditional finance, use Marinade to earn rewards on your Solana treasuries and holdings. Optimize your Solana staking with Marinade's best-in-market features, including user downside protection through protected staking rewards and optimized delegation via Marinade's automated auction marketplace. To learn more about Marinade, visit marinade.finance or click the link in the show notes.

Jason Yanowitz. All right. Big other shout out, Mr. Leschner. Leschner and his new company, Superstate, recently just launched Opening Bell. They launched this today, actually. So Opening Bell is a product— no, it's a platform from Superstate where companies can issue SEC-registered shares directly on-chain. The first issuer is Sol Strategies. Soul Strategies is basically MicroStrategy, but for Solana. And they are— this allows someone like Soul Strategies to issue their stock, their stock, their SEC-registered stock directly on-chain. They're starting with Solana. I think they'll expand to other chains. So I don't know. I actually don't fully get it. I'm reading it right now. I'm going to read— I'm going to try to understand this in real time. Our first announced issuer, Soul Strategies, because Soul Strategies is public, right? They're a Canadian public company. They've begun the process to list on NASDAQ. They're now exploring the opportunity to bring their shares on-chain via Opening Bell. Okay, so this would mean this platform, Opening Bell, you could trade on— you could trade those shares on Solana. So I think, I think it's cool.

I'm not fully following actually. Leschner, if you're listening, you should come on.

Okay, so the shares, okay, then you can take those shares, move them around in DeFi. Okay. On-chain share issuance. Private companies can register and list their shares directly on-chain, and then those shares can actually trade in DeFi markets 24/7. Interesting. Yeah.

Superstate is an SEC-registered blockchain-enabled transfer agent.

You know, this is similar to what— I was— okay. A lot of folks are working on this. So secured We had a great podcast actually with Tarun, Christine Moy, who's the head of crypto at Apollo, and Carlos, who's the founder of Securitize. That drops on Monday. Securitize, I think, working on something similar. Ondo— I was with the Ondo folks at dinner last night. They're working on something similar. So it does feel like this next wave of tokenization will come via public equities moving on-chain. Yeah.

And basically, for context, like, there's a great article about Superstate that talks about, like, what exactly is a transfer agent. Transfer agents act on behalf of the issuer to track— basically just tracking ownership, issuing, redeeming shares, distributing dividends. Like, they're kind of like the infrastructure between the issuer and security markets, capital markets. And so, um, you know, um, the— you, you're right in pointing out like Securitize, Ondos of the world, like basically RWOs really fit into this, right? Because if you're, if you're an issuer and you're recording this, like in a blockchain, then, then, you know, if you're migrating all of that functionality to a blockchain, that's basically like Superstate and some of these other players are trying to do. This announcement, if I'm reading correctly, is just for, you know, issuers of financial products. Yeah. So yeah, can we—

I mean, can we just zoom out for a second and just think about what we're talking about? In one week on a roundup, you've got Ramp, right? One of the biggest— like Blockworks uses Ramp. You've got Ramp, issuing stablecoin-backed cards. You've got Stripe offering—

especially in Latin America, which is really exciting.

Yeah, you've got Stripe offering stablecoin accounts in over 100 countries. You've got Superstate launching tokenized equities. You've got Coinbase acquiring Deribit for almost $3 billion in the biggest crypto M&A deal in history. Like, if you're not— I know the prices are— I mean, Bitcoin just hit $100K, so let's go. But like, I know people are kind of like, yeah, it's a bull market, bear market. It doesn't matter what market it is. You've got instant 24/7 financial infrastructure being built in real time in front of our eyes. It's pretty damn cool. Yeah.

You extend this further. So like, I'm really now interested in like the super state case, like Sol Strategies does this. That's like the first proof point. And then, you know, I'm— I guess when do we see the first, you know, decently sized public company go through this? Is it Galaxy? Is it someone else? Like, who does it? Like, I guess what is it?

Yeah, here's what I've been thinking about. So originally, crypto companies wanted to IPO, right? Like, let's say you're— let's say you're the class of 2017 and you raised several billion dollars in 2021 or 2022. Who are some companies? Ledger, Kraken, Circle, Blockdaemon, BitGo, Anchor, right? That cohort. The natural evolution was let's go public. Then it became, oh shit, going public, that's actually pretty tough, right? That maybe, maybe that's too tough. So all right, the next, the next wave, if you were a founder, was like, I'm just going to go direct to the users and issue a token. And a lot of those people made a lot of money. Now we're in the wave where actually, hey, issuing a token might not be the best play. Like, that seems pretty tough. Maybe you want to wait a little longer than you originally thought to issue a token. So now we're back in the IPO. Now it's— now we're back to like, hey, if you're— maybe, maybe IPOing is the best move.

There's a lot of SPACs being raised right now.

A lot of people talking about IPOs. That's a side note, by the way. It does feel like SPACs are back, weirdly. But IPO is also really difficult. I do wonder if, like, let's say you're— let's say you're a company like Fantom, Fantom Wallet, right? Fantom raised— what was Fantom's last round at? I don't know if you invested. Couple billion. Phantom, I think it's $3 billion, maybe. So yeah, January, in January, Phantom raises $150 at a $3 billion valuation. Let's do a hypothetical here. Would you, if you're Phantom, would you go public, try to go public? Would you issue a token? Or would you go public but do it natively on Solana where you're, where your customers are? The last, right?

Yeah, absolutely. Like, um, I think the— this comes at a really interesting time of public markets, which is there is a whole slew of privately backed companies that are not going, not IPOing. And there's always concerns around capital markets and, you know, markets being soft and whatnot. But what may be really interesting is, I don't know if it's too far-fetched to say, but if you're a venture-backed company that hasn't exited but do you actually credibly say, hey, maybe if this starts working, maybe Sol Strategies is, no one pays much attention to even though it's interesting, but as more companies do this, can this like basically tapping into crypto capital markets as you've already seen it with RWAs, tokenizing treasuries has been interesting. If this starts working, basically what do you get? In the menu of options, like going through investment banks and listing on NASDAQ, or listing via this process, you're tapping into what, more liquidity, programmability, maybe you're lowering costs to do the actual process end to end. But like the capital formation piece might be actually really interesting, the composability of it, right? You're existing within this DeFi network, which you can use very natively, and composability is a great thing, right? We're finally going to start seeing how like DeFi performs in integrating these, um, assets that have vastly more demand, right? Like, you know, you have, you know, extending into capital markets. So, you know, we've always talked about DeFi like being this infrastructure that has a lot of lindy. It's existed for quite a bit of time. It's like very resilient in, in many ways now. Um, but, you know, you know, said differently, imagine that you have like tokenized equity for Fantom, and then you can deposit that in a money market protocol like Kamino, borrow against that, or earn more of Fantom equity the more you use the platform. So say that you're a power user of Fantom, they go through this process, they are able to, instead of airdropping you the token, they give you this kind of like tokenized stock. And then you get more of that based on your usage.

I've always felt that this reminds me, you know, there is an episode that Marco Santori, who is— I don't even— I think he just took a job as like a venture partner at Galaxy. No, no, Panther. Yeah. But he was chief legal officer of Kraken. He did an episode with Laura Shin in, I want to say, 2016, maybe 2017, where he talks about this idea between that the users of stock, the buyers of stocks, and the users of the product of stocks are two totally different people. But they actually should theoretically, in a perfect world, be the same. Like the consumer of Nike stock, the consumer of Nike products should also be the— is probably the best potential buyer of Nike stock. And I don't know, 8 years later, it's coming true.

I mean, it makes— it almost makes too much sense, right? Which is there is Your users should also be your investors and they reward your users and there's just stronger alignment for a variety of reasons. Like there are companies have tried to do this, but yeah, you know, it's, it's, uh, I think we're going to look back and say, yeah, that was pretty obvious. Like, I wonder what took us so long to do this.

But yeah, I mean, it even makes me think like we were, we've been getting pitched by some bankers to like go do something like, oh, Blockworks should go public or something, or do, you know, do a SPAC or some shit like that. But, and I was just like, we're not going to, you know, it doesn't, doesn't really make sense for us. But it has me thinking like, oh, if we were like, would Block— would I rather go public or would I rather go public on-chain where all of the people who consume Blockworks content are?

Yeah. The argument historically has been, look, there's vastly more money in traditional capital markets, Nasdaq, you know, Um, you know, NYC, all these different capital markets are really, really robust. We should, uh, double-click, maybe not now, but like, you remember there's like attempts to build other exchanges. There's one in Texas for like smaller companies. I wanna like, I think it was David Sachs, I think it was like David Sachs or Chamath Balaji. There was a couple of folks that like try to like get that off the ground. I wanna, I wanna like go back and research that for a later episode because I think it'll be interesting to see like, where did that go? Like, why didn't that take off? Because that's— I don't know, could be an interesting comp to look at.

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One more interesting thing from this week is, um, the stablecoin bill, which I think people thought was just a lock, is no longer a lock.

Um, you had to be a Debbie Downer after this fantastic episode about all this positive stuff.

I mean, it just blows my mind that the Dems are turning on this thing. So like, okay, right now we've got like $240 or $250 billion of stablecoins outstanding. 90% of those are fully collateralized. We've got stablecoin transactions doing more than Visa and MasterCard combined. Stripe is rolling this thing out. And we've got this GENIUS Act, right? The Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025, the GENIUS Act. It's on the finish line, right? It's the Senate's Stablecoin Authorization Regulation Bill. And we're just trying to bring some clarity and certainty to this kind of gray area right now. It was introduced— I know a lot of people know this, but just reminding people— it was introduced by Hagerty. It's co-sponsored by both Republicans and Democrats, right? Tim Scott, who's Republican, Kirsten Gillibrand, Democrat, Lummis, Republican, and Angela Alsobrooks, who's a Democrat. So you've got this bipartisan bill, and what this is going to do is it establishes this oversight and regulatory regime for stablecoins and issuers in the US, and it creates pathways for innovation. It creates pathways to enhance the dollar's distribution, grow the dollar's reserve status. And stablecoins issued under this framework would be highly regulated, right? Highly regulated by federal standards. And the Senate Banking Committee voted the bill out of, out of the committee in March with an 18-6 vote that included 5 Democrats. But actually, the other day, an updated draft was released and it included several substantive, substantive updates enhancing language on national security, financial system, financial system safety, and regulatory accountability. And then just the other day, a couple of days ago, 9 Democrats published a statement saying they're opposing— they're going to oppose if any additional— if additional enhancements were not made relating to a bunch of different areas. So right now, I think— I don't want to say it's in crisis, but the stablecoin bill is— you've got some key Democrats backing away. And it's not— I think I was like, all right, the stablecoin bill's locked. Let's move. We're moving on to the market structure bill. It doesn't seem that way anymore. So that would be, that would be a setback. That would be, that would be a big setback because I— so look, this thing's happening no matter what, because look at what's happening in the world.

But that's sort of like, of course it's important. I think, you know more about politics, but maybe we should do another roundup of like, you know, having Rebecca or some of the folks that are, you know, Jake and Rebecca talk about this. But, you know, one of the Other stories that we haven't talked about in the pod is, uh, just came out today. Fortune was covering it, uh, exclusive: Meta in talks to deploy stablecoins 3 years after giving up on a landmark crypto project called Libra. Um, you know, for people that are obviously familiar, like, Meta explored this in 2019, built a Libra consortium, and then kind of like shut it down. Uh, but now it's looking at it again. Um, so, um, Wait, what?

This is not Libra. Libra is coming back.

Meta, Meta is now exploring stablecoins. Didn't I call that?

I called that, called that a couple weeks ago.

I mean, uh, here's the thing, right? If you're Zuck or any major executive, like, you're seeing these companies like Visa and Stripe and, uh, Ramp and all of them, like, really just, uh, adopt stablecoins. Like, embedding payments in your app If you're Facebook, made all the sense in the world in 2019. It was just a very different regulatory environment. Yeah. Like, should Facebook have bought Bridge? Do you think they looked at it? What could Facebook go buy is probably a more interesting question. Like, what is the next acquisition? Because probably Meta makes an acquisition here.

Look, if Zuck is offering, I'd take $5 billion. I'd take $5 billion. Maybe even $4. I'd help him launch a stablecoin.

Um, yeah, look, I mean, I think, um, we'll see. Do— I mean, hypothetical, but does— would Facebook buy Circle? Oh, that's a good—

that's a good one. That's a good prediction. I don't— I'm—

I know, I know you're not saying a prediction, but that's a—

that's an interesting hypothetical.

Well, you remember when Coinbase was in the, like, nadir? Like, it was trading at like $20. It was trading at, uh, 1 5th of the valuation, right? It's $208 now. At the bottom, it was like $26, right? I believe, right? Something like that. So it was like a— basically, you could have got Coinbase at an 87-90% discount to what it trades today. Back— and that was a year, 2 years ago. Would that have been an interesting acquisition if you're a large financial institution? I don't know, it's a $50 billion asset now. Um, I, I, I maybe— I think this is where Meta likely acquires something. I'm gonna call it. I think in the next quarter or two, we're gonna see far more M&A activity of the likes of Meta and potentially other players.

Coinbase earnings are in.

There we go. Yeah, should we take a peek? Yeah, let's take a peek and then we'll close the pod.

Cool. All right. Q1 consumer is down 300— consumer revenues down from $1.3 billion to $1.1 billion. Institutional down by like 33%. Other transactional revenue flat. Stablecoin revenue up bigly. Up. What is that, roughly 30%? Blockchain rewards That must be base down roughly 10%. Interest flat. Subscription revenue up, let's call it 5%. Net revenue down. That looks like— what is that, 20, 10%, 20% down, 10% here. Here's Ben Strack's overview. Total revenue of $2 billion in Q1, down 10% from Q4. Transaction revenue of $1.3 billion, down 19% quarter over quarter. Subscription services revenue up 9% quarter over quarter, driven by USDC market cap hitting a new high.

Yep. There we go. What's the old stonk doing? Uh, it's down aftermarket. Uh, like it's actually flat, down 1%. I mean, it rallied a lot. It was, it was up 5% based on Deribit acquisition that was announced earlier today. Now it's like after hours, it's just kind of like down 1%.

All right. Quick, quick listener session, which is the Empire listener section is a new section that I'm adding today, which is someone in the Empire Telegram chat said, Michael, I want to hear what you guys think of MicroStrategy, Bitcoin corporates. MicroStrategy, the biggest buyers of Bitcoin. What do you think the overall trend of new companies adopting the Saylor playbook? My take on it is mediocre companies will adopt this playbook. I don't love the corporate Bitcoin treasury. I don't think like really amazing companies that have phenomenal EBITDA, revenue, growing products will adopt, like, will move a bunch of their treasury into Bitcoin. I don't actually think it makes sense to do that. I think if you are a subpar company with a shrinking business— I mean, remember, this is what MicroStrategy was. They were, they were the 7th best player in a crowded data and analytics space. You know, they were losing to Power BI, Looker, Sisense, Tableau, et cetera. If you're in that place, maybe going all in on Bitcoin could make sense, but you're— I don't think like incredible companies should be like loading up on Bitcoin.

Well, you basically become a holding company and that's fine if you want to do it. There's two components here. One is taking an asset that is kind of not catching a bid and then taking advantage of the fact that we have continued to have this premium for exposure to crypto. Crypto. Even though you have ETFs, people like to express like leverage long bets on the particular sector. That's what MicroStrategy is, right? They're basically like levering up and have like a levered exposure to Bitcoin, right? And I think like, I believe like that premium goes away as you have more ways to express exposure to the space. You know what I mean? Like, This is the whole premium of like GBTC, the Grayscale products, when there was no ETFs, and then that went away. Well, now you have ETFs, but then you have MicroStrategy that does a, like, a kind of like a levered Bitcoin exposure. But then you're gonna have options, and maybe you're gonna have perps. And so like, as, as more of the products that we've seen as crypto natives are embedded in traditional markets, I think that this strategy kind of starts going away. Um, And that premium kind of goes away because people might— it's probably cheaper for you to kind of express that view with options or other financial instruments. I don't know. That's just my view. That's not to say that other companies are not going to do it. I think you're going to continue to see these basically like this lag and regulatory arb of sorts. Yeah. But I guess the more interesting thing is, are you going to see— it would be actually really interesting Um, are you going to start seeing more and more companies publicly disclose their holdings, or even just like stablecoin as a, as a, as a, as a, like a keyword in financial earnings? Like, uh, you know, if they're holding stablecoins or they're transacting in stablecoins, like as more and more of these financial players like start transacting in stablecoins, um, are they going to disclose that? If they're going to disclose that, is that going to be like, hey, we're able to reduce like a couple basis points or working capital optimizations because we're starting to use this new thing called stablecoins. Like, imagine the commentary on that. Like, um, hey, by the way, um, working capital, like, we've been able to move inventory faster, or accounts receivable went down, uh, because we were able to, you know, optimize that with the thing called stablecoins. Like, you know, if you're a CFO or a finance department in a large multinational corporation and you see your competitor all of a sudden, your— their days receivable goes down because they're using stablecoins. Yeah, yeah, yeah, that's a—

that's like—

I'm sorry for all the corporate nerds out there, that gets that CFO going. Optimizing working capital is the name of the game. In private equity, it's the name of the game for every finance department in a large company. Um, uh, corresponding banking accounts, like pre-funded accounts, like, my God, there's just so much inefficiency in the financial system. And so over the next year Pay attention, Ctrl+F when you see a 10-K, 10-Q, stablecoins.

Let me, let me gloat for a sec. Look at this, uh, because I never get my predictions right. I'm always like 0 for 10. Obviously, you know that.

That's not true. I think you got way more predictions. Look at this.

Look at this prediction at the beginning of the year. Stablecoins become great for crypto's brand. Oh wait, no, no. At least one major bank— what is going on with this? At least one major bank, one major tech company, and one major fintech launches their own stable. Real businesses adopt payments. It's boring, but stablecoin market share goes parabolic. Stablecoins become great for crypto's brand. Banks issue their own stable— banks issuing their own stables increases consumer trust and accelerates global adoption of crypto. Normies and regulators understand stablecoins. Crypto finally has a use case. This leads to stablecoin legislation. Wow.

Yeah, you're, you're finally got something, right? Sure, you either become a delegate or a trade, a high-frequency trader, Polymarket, or you're in the wrong business. You start a hedge fund. There you go.

All right, we are ending it with this. You put the Harry Potter stuff up.

I know, I know, I know. Let's go. These are— this is not my collection, these are just the normal books, but I actually shifted it. Most people see that. Oh, this is always going— by the way, he always had it. Kobe. Kobe and Jordan. Just two— I love athletes. I've learned a lot from them. Go listen to the Founders podcast on Kobe and Jordan. Tells you everything you need to know about hard work and being lucky. Which I will make a book recommendation. I've been reading a lot. Two books, Creative Design by the guy who invented the keyboard for the iPhone and the iPad. Phenomenal. Like just wow. The second one, What I Wish I Knew in My 20s, I think. Phenomenal book. And it talks about— I tweeted about this— a section about the difference between fortune, luck, and chance. And it just helped me think, because I've had another podcast thinking about, like, we talk about being lucky, but most people confuse those three terms. And it was just kind of eye-opening. Really two very, very good books that I would recommend people.

I am, uh, I'm on the last chapter of Chip War. Oh, phenomenal. Great book. Yeah.

You want to read the next one on that? Uh, it's called Commodities, I think. Wait, one second. Interesting. Uh, wait, wait, one sec. I, uh, it's called, sorry, Material World: The Six Raw Materials That Shape Modern Civilization by Ed Conway. There is a section in there, spoiler alert, that talks about— just Google this. Google. Everyone should go Google right now. Uh, um, just Google, uh, what is this? Ah, there's a mine in North Carolina, Bruce Spruce. I don't want to butcher it.

I have no clue what you're about to say.

Spruce Pine. Spruce Pine Mine. It's a high purity quartz mine in North Carolina. Chip Wars says Taiwan is a choke point of the world because like 60% of all chips are made there. Over 90% of the super specialized chips are made in Taiwan. No, no, no, no, no.

Spruce Pine is home to two mines that produce 90% of the world's high purity quartz. Damn, this thing must be guarded, dude.

If, if Spruce Pine goes down, the world comes to a halt. I'm just gonna, I'm just gonna read a second. Ladies and gentlemen, just, just listen to this. In the material world, there are very few such cases where we are so utterly reliant on a single place. He's talking about, uh, this mine. There are a few microproducers in India and Siberia, but nothing to rival consistency and quality of the two mines in Spruce Pine, which raises some unsettling questions. What if something happened to those mines? What if, say, the single road that winds down from them to the rest of the world was destroyed in a landslide. Short answer, it would not be pretty.

Hmm, interesting.

Yeah, I was like blown away by this. Let's— it's like more heavily fortified than Fort Knox, by the way. You can't enter there. It's, it's wild.

All right, good. That's it. We, we got momentum as an industry. We got momentum. Chin up. Head on a swivel. Things are good. Not my chin. Don't look at my chin. Nobody wants to see that chin. Thanks for listening, folks. We have a really, really, really good episode coming on Monday. It's with Tarun and Carlos, Securitizing Gauntlet, who, you know, you maybe have heard them on pods before, but it's, I think, the first podcast Christine Moy has ever done. She's a partner at Apollo. She's the head of Apollo's crypto business. She— you might— AI too. Yeah, and AI and a whole bunch of other stuff. You might know her because she used to run blockchain and crypto at JPMorgan starting back in 2016 after Amber Balday left. So really amazing podcast about Apollo's new credit fund that has moved on-chain. So listen to that and we'll see you next week. Thanks, folks.

Thanks everyone for listening.