Consensus Bets Pay Off In 2025 | Weekly Roundup

Over the last 6 months, like if you ask someone who's relatively crypto native what's going to outperform this year, they would have said hyper liquid, SUI, fart coin. It's one of the first times that it's actually crazy how well consensus bets have worked out this cycle. As I've seen it, it's never really worked out like that.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. Explore the gas-free ecosystem at scale.space/skale. /ecosystem and follow their journey on X @ScaleNetwork. Thanks to Scale for making today's episode possible. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds or projects discussed.

Boom.

What up?

Happy Friday, folks.

Santi, how we living?

Oh, we're surviving, man. We're just day by day. It's— how about you?

Good, good.

Feeling better.

Needed a couple days after, uh, Santi and I got to hang out in person, which was lovely. Amazing. No doubt.

I mean, uh, you know, there are very few reasons why— as much as I love New York, you know, I do think that, um, for a second there. It was just a very wholesome encounter. And I am excited because I'm going to go to Permissionless in a couple of weeks. I hope I'm going to spend a few days before and after. I hope we can record some killer pods in the studio.

We got some live, yeah, live things coming from Permissionless. That'll be good.

Yeah. Why don't we—

this is the happiest I've seen you starting an episode after our new producer, Jarrett, told you, guessed your age and said you are under 30.

And I've never seen your smile this big.

I mean, you don't make me happy. He was like, how do you run? Like, I'm looking at your times. And I was like, how old do you think I am? And he said under 30. And I'm like, above that.

So yeah, buys him at least a year in the role. At least.

No doubt. No doubt.

All right, before we jump in, there's, um, there's— I, I want to call out, there's a bunch of fake Empire, uh, producers. So Jared is the real producer. Um, if you get a message from someone saying they're Kai or someone else, um, that, that is a scam. There's like probably 5 times a day I get a message saying like, for, you know, it's a screenshot of someone saying they're an Empire producer and they're inviting you on the show. If you click that link, you might get drained. So yeah, beware of those scams. And I guess while we're on it, there's, um, the Coinbase scams have really picked up. So I'm getting it probably a text or two a day right now. So just, uh, don't, don't fall for any of the Coinbase scams.

That's why that's —but it's gone pretty bad. The other scams that I've been seeing going around are the Bitco ones, because of course, like, the FTX, um, distributions are happening, and they're like, they're like, oh, in order to get distribution, you got to update some, like, info, and just, just don't click on any links. Like, my, my simple thing is slow down. Nothing's gonna move. Like, things are not— they're always gonna catch you on, like, move fast, do this now, like, appeal to your fear or your anxiety. Slow down. It always— go to— do not click on links. Just bookmark links. Bookmark sites that you trust. Go to your bookmarks tab. Go directly to the site. Call people. Verify. Simple things. Slow down. You know, have a protocol.

100%. Um, the last thing is, uh, permissionless tickets are going up. Tickets are starting to rip. We're like 2 and a half, 3 and a half weeks out. So Empire 10, get your ticket. Uh, the full agenda, which people have been waiting for a while. Agenda is live on the site. So go to the permission site. Let's talk markets. Let's kick it off with markets. So pretty interesting. Bitcoin's at like— what is Bitcoin at right now? $106,000. It tipped at like $110,000, $109,000, $110,000, $111,000, something like that. There's very— there's actually two weird— there's two market dynamics that I want to get your take on. One is, despite the price surge, there's actually pretty low leverage. So the market leverage remains relatively low. Funding rates turned positive in early May, which kind of showed like this renewed bullish sentiment, but they remain still pretty below the kind of like— if you remember the post-election rally, they remain like far below those overheated levels. And then trade volume is also pretty muted. So spot volume is pretty subdued throughout this whole rally, which I think those two things combined show me that either people are still kind of like sidelined and lingering. There's like lingering macroeconomic uncertainty. It's either that or there's a lack of retail euphoria, which tells me there's maybe like we still got a ways to go. But I'm curious how you read market signals like that.

So I've seen some charts going around on— I have two conflicting views. One is I think retail, you're right, is not like euphoric. Funding rates are not where they are. Like a lot of leverage had been wiped out after Liberation Day. And so, so I think like in Google searches and sentiment are like not at the raging highs that you've seen them. So like point number one, I've seen those charts. I don't think retail has fallen back for us. On the other hand, you had a great LinkedIn link. I check LinkedIn now these days. See, I'm paying attention.

Starts a company, launches a LinkedIn.

Let's go. Ladies and gentlemen, they got me.

They got me. They got me. Reid is just stoked.

Reid, much respect. I mean, I was there thinking I was going to delete my LinkedIn. I have not. I saw your post today, which talks about the MicroStrategy phenomenon, and we're starting to see a lot of the same instruments. Like, you know, you take a public company that is going nowhere, you inject SOL, ETH, Ripple, whatever, Avalanche, and the— I think that's a sentiment of froth. I would characterize more institutional froth. It's the catch-up trade. It's the folks that missed MicroStrategy. It's the folks that might have been underallocated. And so I don't— I guess it's hard for me to explain. Like, I was on the phone with one of the largest issuers today, and I was like, explain to me how this like persists, like NAV. Like, take the— I'm like, I'm a traditionalist. Charlie Munger would like scream and say this goes— compresses at least to NAV. But that's telling you, I think, something that we've talked about in the pod, which is like institutions are more excited this time around. Now, whether it's— look at the— there's a great stablecoin report that came out today with like, I think it was Arkim, uh, Rob from— and has even Dragonfly posted it, uh, and it would think it was like Nick Carter collaborated to that. But it was like talking about the stablecoin market and the composition. The most interesting observation in that was that for, I think, the first time, like, B2B stablecoin transfers are now I think at or above B2C, which is institutions are using stablecoins now. The volume of what— or the share that institutions are using stablecoins is now greater than what retail is using them. However, Tron is still— and Ethereum are still the two largest chains, Tron still being the most retail phenomenon. But I thought that was interesting. Like, so I don't know, it's like a very convoluted answer. To your question, I want you to pull up that great post you had on LinkedIn. I don't know if you posted anywhere else, but like, I thought that was pretty good.

Which one was it? I have a lot of great posts on LinkedIn.

Santi, Jesus Christ. Now we're seeing the whole side of Yana that I never thought existed. I'm questioning everything.

This one?

What about the one about MicroStrategy? I think got a lot of attention. This one? Yeah, yeah, yeah, yeah, exactly.

Yeah. I mean, here's what I wrote. I said, look, here's how it's going to go. So the context is we saw this public— I'm calling them PCVs. I'm coining the term PCVs, public crypto vehicles. So basically, you saw this $425 million private placement, which was a PIPE. ConsenSys led it. Joe Lubin's the chairman. Your guys at Parafi, Electric, Pantera also invested. So there was this— they raised $425 million to buy ETH. And what I wrote was I said, look, here's how it's going to go with these public crypto vehicles. I said MicroStrategy started it. The game is simple: access capital markets to acquire Bitcoin, then use financial leverage, financial engineering to generate a premium on the underlying BTC. And that's all good, right? And they actually nailed this, right? Saylor is a financial genius. He's brilliant. But the problem becomes a bunch of other people have followed that. There's all the— there's probably a dozen Bitcoin treasury vehicles. Also kind of fine, whatever. But in the past few weeks, we're starting to see a bunch of PCVs for ETH and SOL. And so what's going to start to happen is it's going to get really stupid really quickly. In the next few weeks and next few months, we're going to start to see public crypto vehicles for a bunch of assets in the top 50. I think you and I both know probably 5 to 7 different assets that are coming in the next couple of weeks. And that's when things get really stupid, right? So what you do is The playbook for this is you take a holding company, you seed it with like $10 to $20 million, often from your own treasury. You reverse merge that holding company into a public shell company. Then you raise more. Then you buy your own token and you hire a mini Michael Saylor and you market like crazy. And so for Bitcoin, this actually works fine. But obviously for asset number 47 on CoinGecko, that's not the same as BTC. And for so, for so many reasons, A lot of these won't end well. And actually, even for the Bitcoin ones, those are going to get really stupid too, because the only way to differentiate from, you know, 21 or MicroStrategy is really with leverage. And so it starts out fine, but you start to take on more and more and more leverage to differentiate. That's where the house of cards starts to cascade down. And I don't know, have you done any of these deals? I don't know if you've done any of the deals, but actually, from the investor's point of view, they're going to make good money. It's actually nearly impossible to lose money on these deals right now if you're a, you know, ParaFi, Pantera, Electric, Dragonfly, whatever. If you're doing these deals, it's nearly impossible to lose money. But retail eventually gets hosed. And that was my post. I'm curious your thoughts on this. Yeah, I think that's right.

And when you say near impossible is because you, you're buying like at a discount to NAV or at NAV. And so You know, if you deposit the instrument, then theoretically that should not go below NAV, or it's kind of like a soft release.

So basically, so mechanically, the way that they're structured is you subscribe to the crypto-backed securities or like the public equity placements at or near NAV with a kind of call option if the company lists or trades at a premium. But in the downside case, like if the listing conditions aren't met or the anything else like that, you build in these clawback provisions that let you reclaim the spot asset, right? Yeah. So the worst you'll do is you'll maybe lock up some of your liquidity and get, get it back 1 to 1.

Maybe you don't yield on that.

It's a heads, heads you win, you know, tails you break even type of game. Yeah, absolutely.

Yeah, I think you're right. Yeah. Look, I mean, it's— it'll be interesting what that— I don't know how much you read on that, but like, who is— is that Who's bidding these things? Like, have you looked at like who's actually buying like the Sol Strategies of the world? Is it mostly retail? Is it institutional? Is it IRA? Like who— like, I guess it depends on the size, right? MicroStrategy is very different than the smaller ones.

I think it's people who are the same group of people who are— so there are the crypto funds kind of seed these things, right? I mean, it's public who invested in, you know, this new ETH asset. It's like Parafi and Pantera and Electric and stuff like that, the people who are following on, I think it ends up being a lot of the same people who are investing in SPACs in 2021 and 2022. It's kind of this like higher net worth accredited investor, that, that kind of crowd. That's, that's what I think. Actually, this is a good tell. My dad messaged me, shout out pops. He's like, he's like, how can I start buying these like crypto public vehicles? I was like, oh, awesome. Time to sell. Yeah. And actually, I thought Omar from Dragonfly had a good, good tweet here. Let me pull it up. He said, when a leveraged SOL vehicle says you can get— so who's he talking about here? DFDV. He said, when a leveraged SOL vehicle says you can get more Solana with less risk in their investor presentation, you should probably ask how that's possible. Bonus: when executive compensation is tied to SOL, share over a 1-year period but is funded with term debt with plans to issue more debt, you should probably think about alignment. And bonus number 2, if compensation tiers are named LFG and Wagme, you should think through if maybe this sounds a little bit toppy. I tend to agree with that.

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 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. As always, investments in blockchain technology involve risk. Terms and conditions apply.

We've talked about like MicroStrategy. I think it was like over a year ago. We were like talking the same day. It's like day job. We were like, oh, the premium is going to collapse. It's going to hurt a bunch of retail. It might destabilize the cycle, the perception of the industry. And here we are. I mean, what's the premium of MicroStrategy? Yeah.

Yeah, I mean, I actually do believe that Saylor is a financial genius in many aspects. Like, I think he's very, very smart, and I don't think that trade will blow up for many, many years, actually. Um, but where it gets dangerous is when people start to try to follow him. And I know some of the people doing these, putting these deals together, they're not financial geniuses, they're marketers. And, um, Saylor's a marketer too, but he's I mean, I mean, yeah, if you ever spent time with the guy, he's a little— he's very smart, is what I'll say. Very smart. Yeah. Little, little odd.

Odd duck. But yeah, there's, there's also a phenomenon of like one company can do it exceptionally well and others definitely not, I think. And I think like, like Ripple, for instance, and what they've been able to accomplish, like it's very— you're in the rarefied field and thinking that you're going to try to copy Ripple and like replicate that is like, it's like pretty hard. And like, there's only like, there's only one Brad, there's only one, you know, Saylor. Yeah, it's like, I'm the Saylor for Soul.

It's like, so the interesting thing, let me see if I can pull this up. So, so Trump Media announced a big buy, I think it was $2.5 billion. Also GameStop announced a buy. The interesting thing is that, so these are meme stocks, right? Like Trump Media, trading at $30 billion is a meme stock. This isn't Trump Token. This was Trump Media. They buy Bitcoin. Their stock actually tanks. Right. So let's see, GameStop was trading at $37, announced a Bitcoin buy, fell to $31. Trump Media trading at— I said $30 billion. I meant $30 a share. Trading at $30, falls to $22. You know, Sharplink, $52. Trades down to $29. So meme stocks are actually dumping on the news that they bought Bitcoin. It's actually not— it's maybe a little counterintuitive, but once you started, it's adding utility, right? You start to get anchored to like the real-world value. So that might actually counteract this trend. Yeah, absolutely.

That's great.

Let me ask you, let me ask you a there's another trend, which is the winners right now are like, let's say, who's outperforming right now? It's— here, let me pull this up. I was just looking at TradingView. It's, you know, Hyperliquid, SUI, folks like that, Fart Coin. And weirdly enough, you laugh, but it's like those were actually the consensus bets over the last 6 months. Like, if you ask someone who's relatively crypto native what's going to outperform this year, they would have said hyper liquid, SUI, fartcoin. And those are actually outperforming.

And one of the runners keep running.

Yeah, it's one of the first times that it's actually crazy how well consensus bets have worked out this cycle. It's never really worked as I've seen it. It's never really worked out like that. Do you— what do you make— how do you think about that?

Yeah, I was talking to someone about this in like Solana, like in the conferences last week. And it's one of those where like Hyperliquid is just a very unique asset, I think, in this amount of traction that they've gotten and like have cracked where others haven't been able to attract a lot of liquidity. And, you know, you know, people have seen the analysis and like run rate revenue and the burn mechanism. I think really is drawn, like people are drawn to that. Like crypto's always been a very financial, is it like financial, like it's all trading stuff. And so, yeah, really impressive. I think a lot of the dynamics around the supply and like the, you know what I mean? Like the community and the way that they did things is very unique. I can't really like explain it.

Do you own hype?

I don't own it in a material way, no. Yeah. Uh, I kind of missed it because one of the guys that I really trust was like, get on this train super early. And I was like, just slow to it. Um, but, uh, Maple, like there's a couple out, like Maple, I think there's, there's been a lot in the timeline about their resurgence. I think it's one of those interesting projects where I don't think it was consensus. I think their TVL like has rebounded a lot. And I think they've, it's almost like you could have caught like that RWAs are a big thing. They're doing something interesting. They just kept at it and then people started to pay it more and more attention. It's funny because a lot of times, like, there are— you got a question, say, like, the relevant exercise is like, what's the next hype or what's the next more interesting, like a Maple? I find Maple interesting to double-click on because it's, uh, or, uh, Euler, right? I think both Euler and Maple are assets that had been kind of like left for dead. In some ways and then have had a resurgence. And, and I think there's like a number of, there's a number of assets in that category that you could probably start thinking about right now. Not to say that like we can't be in an environment where like the things that have ripped hard, like Solana, Sui hype continue to do very well. Probably maybe on a risk-adjusted basis, you're kind of better off allocating to some of these names that have like a lot of liquidity because you always want to think about like, you know, some of these assets are not as liquid or have a lot of vol. And so if you can't stomach vol, then you probably shouldn't like go as far as out on the risk spectrum. But it's really, really interesting. Like, what was the other one that we talked about? Like, like we were talking about like pump and the phenomenon, the SOL like activity. You could have looked at What is it, uh, the DEX that, uh, Jupiter routes to? What is it? Oh yeah, yeah, yeah, I'm blanking on the name. My God, Radium. Radium, yeah, you could have looked at Radium, right, as an example. So I was talking about the second order effects of the second order effects, but also stuff like you're seeing straight in the timeline, like helium for instance, and the amount of like— go look at Ariel from Hive Mapper. I was just on Accelerate with him on a panel, and you know, he's been pretty vocal about like, look, Look at what's going on. Helium, they're adding like a ton of subscribers each day. A lot of supplies out. Like it's one of those projects that deep in as a category doesn't catch a bid as much. It's not as obvious or people don't like it for a variety of reasons. And maybe they've had an impression about the asset, like dual tokens and telco, too complicated, too messy. But, um, I like to like have those monitor those assets.

It feels like there's starting to be a theme in the tokens that are going up and the companies that are doing well. It's actually some of the old school founders like, you know, Sid has been around. Sid and Maple have been around forever. Like, you know, back when we were in our small Brooklyn office with a couple of people, Sid came in and explained, oh my God, I'm blanking on Sid's co-founder, which I feel really bad about because he's the man as well. But they came in and like did an explanation of how Maple worked. This is like 2018 or 2019 or something, maybe 2021. I forget the exact year.

I don't think there weren't DeFi OG guys. I met them when they were raising their first round, I think, and it was like DeFi Summer was well underway. And guys, maybe this is 2021. Yeah, yeah, they were Australia. As all, as many DeFi founders come from the land of down under, uh, Kane, the, the, the synth, you know, obviously the whole Maple and a bunch of others. Um, Guy, I think it was down at, down there, like, oilers are comeback.

They're kind of like these comeback stories. Like, oiler is a massive comeback story. So I, it actually makes me happy to see folks like oiler and Maple winning.

One of my best investments was Aave, right? I mean, it had a comeback after the 2018, like, ICO. But, um, I, as a bargain hunter, like to just probe around and ask, like, what is that? Like, like, for instance, you could say, like, Maple Syrup, for instance, an example. Market cap is $400 million, fully diluted is $463. So it's like a lot of the supply has been— is out in the market. So, you know, you're not going to worry about people dumping on you because of big unlocks or whatever. It has a 1.2 billion TVL. Um, you know, I appreciate TVL is not the best metric. I'm preempting the comment. Uh, but it's interesting, like, on a, on a, hey, what is the— not, not for the purposes of this podcast, but like, hey, look at what's the velocity, like, what is the fee stream, what is— but on the surface, you know, it's 463 billion, like, how far can this go? Like, uh, what is What is the theme that you're catching? You know, again, like, what is the Family Feud style investing? Like, what is this thing going to be comped at, right? It's a DeFi name. It's in the, you know, in the RWAs. Like, okay, well, look at RWA. How big is— I always like to look at, okay, what is the largest RWA protocol as like the comp, right? What's the upper limit on what the market is telling you they're willing to bid? Well, go look at Ondo, right? And although Ondo has some certain dynamics that, you know, market cap is $2.8 billion, fully diluted it's $9 billion. So again, like very, like a big difference. There's a lot of lock. Ondo, it has $1.3 billion in TVL. I'm not trying to oversimplify the analysis, but like, again, Maple has $1.2 billion in TVL. It trades at $400 million, give or take. It's almost all of the supplies out there. And then Ondo has very similar TVL, but like, you know, what's that, uh, 7 times the valuation market cap, let alone fully diluted.

And folks, like, I mean, look at this announcement here.

And on a fully diluted basis, you're at 22 times. Like, the question is, is Ondo overvalued or is Maple undervalued? Maple on a, on a market cap basis is like 4 times, you know, smaller, or Ondo is 4 times larger on a fully diluted. Ondo is 22 times larger than Maple, but they have the similar TVL. So what's the disconnect? You know, it's like, those are the kind of relationships that I like to look at. Um, and, and I think smart guys on the timeline are talking about, like, more about Maple than about Ondo, you know? Yeah.

I've got one more takeaway here, which is you just need to survive. Like Euler just— I mean, Euler had that massive hack, obviously. I think their TVL ran down to nearly zero. Um, and, and they, and they came back, right? Maple, I mean, like, they got blown up. They got blown up after 2022.

Yeah, they had like a bad creditor there. Yeah, exactly.

And now look at this: Cantor Fitzgerald's financing business announces first transactions. Maple said it closed its first tranche of Bitcoin-backed financing through Canner's new Bitcoin financing business on Tuesday. So, uh, you know, they're running their financing. Canner says it plans to make $2 billion of financing available in its initial phase, and they're running that through, or maybe some of it through Maple. So by the way, I don't, I don't own any Syrup or Maple, um, but it's just—

full disclosure, I don't know any Syrup or Maple, uh, and nor do I own Ondo. I'm, you know, it's just, it's just, um I don't mean to discredit or pump or like commend one. People should go do their analysis. But like, I find those like, if you're going to like look in the crypto space, there's hundreds, thousands of assets and sectors. And so I think as an exercise of like, how do you go about like trying to understand themes and opportunities? This is a type of analysis that you could start making, which is I'm going to pick a category that is I think gonna catch a bid in interesting RWAs, or maybe deepen, but, you know, put that aside. RWAs, go from there. What are the top names? What are names that are, you know, go meet the team. The, the logical next step of this analysis is go join the Discords, go ask the hard questions, go do your independent analysis, then maybe go talk to investors and poke around, you know. And, and I think like you can do a lot of work, right? Yeah, yeah.

But by the way, I mean, yeah, well, let's talk news. I just want to wrap all of this up by— there was actually the best tweet that I saw this week was by— from Shoku. Shoku is building something on Hyperliquid. I said also he was going back and forth with, with Jez. Jez is talking about trading perps and stuff like that. And Shoku said, look, just take your current net worth, put it in a compound calculator and put 30% a year for 10 years. I don't know the details, but I'm sure it's a big number. Point is, you don't need to gamble anymore. Fast money is less relevant. Consistency and compounding is. Note, 30% a year is close to impossible, but it's crypto, so it is actually possible for the time being. And I just want to say, like, yeah, this is like— this was relevant because, you know, I don't know if you're following the James Wynn stuff.

Yeah, this big trader on Hyperliquid, he ran it up to $90 million. You could have just—

brother in Christ, I'm with like a bunch of my friends are trading perps like crazy because they're like, James Wan can do it, I can do it. I'm like, dude, like, you're going to lose money on a long enough time horizon.

You'll lose money. The, the game around leverage and perp trading is one of timing, and I've never met an investor that has been caught on the right side of being running a strategy that depends purely on timing. The best investors are in a position to be patient and act when others are quite literally fearful. There's a In the classical inversion plug, there is, of course, I like to quote two— one quote of Charlie Munger, which references, uh, I think a German philosopher, which is invert, always invert, right? You've heard me say that. The second one that I really like is never interrupt something that is compounding. Never interrupt it because you will— like, this is so, so hard. And you know who reminded me of that, which is my third plug? Suz, which you met, and she officially joined. I've been like biting my tongue to say this because she was like on garden leave and couldn't announce it. She joined from Goldman. She was there running like their digital asset practice. She has a good— you know, she's not as prominent on Twitter. Ladies and gentlemen, go give her a follow because I have a bet with her.

No, we got to give her a follow on LinkedIn. This is Suz's platform, baby. This is— this is— she's like—

she posted on LinkedIn. I'm like, what are you doing? She's like, This is my audience. Let me, let me— community, quite literally. Like, there's a whole community. I was like, why don't you post on Twitter? I don't think she— I don't think she's posted on Twitter. But anyways, I'm incredibly grateful that she, uh, she's my first hire. And, uh, she, she reminded me of the second quote, uh, of Charlie Munger, which is, never interrupt something that is compounding. And, and I think it's so true. Like, you know, the the math that I like to do is, there's a number of ways, but like the law of 72 is also really good. And you heard me talk about this in this part is like whatever yield your, your return, annual rate of return is, divide 72 by that number. And that's a rough approximation of number of years that it's going to take you to double your money. Yeah. Yeah.

All right. To wrap this segment up, Suz is at 887 followers. Not, not 8,000, 800. We got to get Suz to 1,000.

Pump up those numbers. You listen, if there's a, a lever-long bet that you should take is like that number. If, ladies and gentlemen, if that number is not 10,000—

Suz's Twitter handle is Danheim, D-A-N-N-H-E-I-M. So go follow Suz.

We got, we got to put it in here so people act— there's evidence of the criminal underfollow that what we have going on here, ladies and gentlemen.

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 @skale_network. That's scale 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 stake 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. As always, investments in blockchain technology involve risk. Terms and conditions apply.

Let's move on. So Bitcoin conference this week. I want to shout out the Bitcoin conference, David Bailey and that whole team over there. They crushed it. It is now definitively the largest retail conference in the industry. We had some folks there. The interesting thing about that event is it is squarely positioned as this— I think they'll have 100,000 people one day. It is a retail, retail, retail event. You know, people were meeting firefighters, policemen, you know, folks who worked at Whole Foods who own Bitcoin. And these are just, these are just Bitcoiners. So I thought I just want to give a shout out to them. I think they had 20,000 to 30,000 people. But there are some quotes I want to call out, very bullish quotes. One, David Sachs: We want innovation, crypto innovation to stay and grow in the US. Two, they got JD Vance gave a speech. I thought this was an interesting line. JD Vance said crypto is a hedge against bad policy from Washington, no matter what party is in control. And I thought that was an interesting way to frame crypto. It's, you know, people think of Bitcoin as a a hedge against inflation or whatever it is. He said crypto is a hedge against bad policy from Washington, no matter what party is controlling. I like that a lot. Eric Trump said everyone in the world wants Bitcoin. People allocating billions and billions of dollars to it. 0.1 Bitcoin is going to be worth an absolute fortune. Mayor Eric Adams of New York said let's get rid of the BitLicense for New York. Now, obviously, Adams is on his campaigning crusade, so he's trying to go head to head with Cuomo. And I think one way to do that is to appeal to the crypto crowd, raise some money. But yeah, good, good quotes from the Bitcoin conference. There's a non-news story, but there is a thing I want to get your take on here. So I have a buddy who just moved over from private equity to venture, and he is appalled. He's told me he is appalled by the lack of— I won't use the exact words, but somewhere around the lack of intelligence by the venture folks. Compared to the private equity crowd and the lack of diligence that's being done. And this was interesting.

In crypto or just in general?

No, no, no. He's a trad— yeah, trad fi person. Not crypto. Yeah, one of my best friends. And he moved over from private equity to venture and he just said, it's like, he's like, this is, this is not a real investment firm, is how he put it. And it's one of the best venture firms, by the way. He just— it's not, it's not about the venture firm. And I saw this tweet by this guy, Ed Su. I don't know who this is. But he said, I have a VC friend and a hedge fund friend who shadowed each other at their respective firms, attended IC meetings, diligence sessions, and team meetings. The VC left awed and impressed at how well-run the hedge fund was. In his words, quote, these guys go to a level of detail and sophistication I didn't think was possible. They're way smarter and harder working than anyone at my firm. The hedge fund guy goes to the VC firm And in his words, "It's utter chaos here. They take random meetings all day long with people they're randomly introduced to. They don't even take notes, don't follow up, don't do any research. They claim to know within 5 minutes if they want to invest or not based on the founder's body language. It's crazy. The funny thing is they're both very successful investors." As someone who's worked in banking and JPMorgan stuff, but also has worked at a venture firm, I'm curious just like if this resonates or not with you.

So I worked in like 3 different segments, investment banking and Interact, like in the sponsorship. So that's private equity. I've done growth equity, which is kind of a hybrid, which is, it's like an in-between between private equity and venture because you have like, you're investing in companies that are hitting like hyperscale. And so you have a lot of data to underwrite the investment. And I could tell you there's a range of growth equity investors. Some do a lot of work, others don't do as much work. We were very much on the private equity style of diligence work because it was like partners from KKR. We brought in the guy who used to run KKR ops, like consulting arm, and then venture, which is art science. And then you can overlay the crypto dimension, which is, well, fundamental analysis is, uh, you know, um, but I do think that like to your, what I would say to your buddy is like, know what drives value in like in each respective style of investing. I don't think that like, again, like I don't think like a private equity person coming in a venture, of course he's going to react and say, what are you guys investing this out of? Like, like go look at like, how are you, how do you value like OpenAI at whatever valuation? By any stretch of fundamental analysis, it's hard to believe that like maybe not NVIDIA, like some of these private companies, Even public ones are hard to value. So a lot of the venture value driver is like the— I would say the concentration of returns is very much chi-squared, so very clustered in venture, which means it's a relationship game. If you are that guy that people call, you're going to get into the best deals. And if you're not, good luck, you're going to underperform. I think there's a good stat going around and I don't have any— MVCA posts this stuff. The top The top venture funds account for the vast majority of returns in the industry. Every, every other venture fund does not. Private equity funds, it's a bit more distributed, evenly distributed, like, like, you know, 3x, 4x, 5x, 6x. There's not one that does like a massive outlier. In venture, you do see that, um, and, you know, you hear the phenomenons like the PayPal mafias of the world. Like, do you think that like Reed is gonna do like a discounted cash flow and when he gets a call from his buddy that they worked together with PayPal 20 years ago, and they— he's like, that guy's gonna, you know, um, so I don't know, I think your buddy is just gonna have to reassess and level up on certain skills that it's like, you need to be that person people call. Yeah, because you can't— it's, uh, I forget who was it, he said, in venture, it's a game where you can't afford to miss a massive winner. And I think you see that in crypto, like in crypto, if you were, if you're a crypto venture investor and you missed out on like the big winner of the cycle, like a Solana or the DeFi trade or the hyper liquid trade, then well, what's going on? You know? Yeah. Yeah. Has your buddy spent time looking at crypto? Because it's like those two worlds, like I would call it like owns none of it. It's a liquid venture. Asset class. So like, I guess more interesting would be not, not for, not for someone that's come from private equity to venture, more so someone that goes from a hedge fund to crypto venture, because you'd be like, wait a minute, these are super liquid capital markets, public, like, tokens, but venture-like. And so I think like that skill set's—

okay, so speaking of that, speaking of that, there was this tweet. It's funny, I actually bookmarked this tweet and was reading it and just realized this guy works at Blockworks. I just, I just realized his name is Shonda Devens, but I don't know. I'm sure I know his Slack name, but I don't know. Anyways, Shonda Devens, good, good on you. Shout out one of our analysts. Nice. Anyways, good on, good on you, Shonda. 500. All right. So there's this Plasma raise, the financial system of tomorrow owned by you, announcing the XPL public sale. Using Kobe's new platform. Kobe launched an ICO platform called Sonar. This says 10% of XPL will be sold at a $500 million FDV, the same valuation as our latest equity round with Founders Fund. So I want to get your take on this. So what Sean De Devon said, analyst at Blockworks Research, $500 million FDV, same valuation as our latest equity round. Did Founders Fund actually buy tokens or did they buy equity of the company building Plasma similar to Uniswap Labs investors? These two are not the same thing at all. Too many projects are raising equity rounds from VCs and only launching tokens as a go-to-market strategy. Sell VCs equity in your company and sell retail governance tokens, which will accrue zero value. Same FDV, but completely different instruments. Bonus points: airdrop your VCs and Labs entities some tokens so you control governance and use the community treasury to fund yourself. What do you think of this tweet? Agree? Or like, what's your take on this? Uh, okay.

If you go down the thread, I think there's some really good responses because I saw this as well. There we go. This one? Yeah. Yeah. That, that, that exchange I think is where I want to go.

All right. So Serpentext, who, um, runs Ethos Network said, what? Question mark. Equity becomes meaningless when you launch the token. Equity is just the vehicle that gets you to the token launch. Selling a token instead of equity well before your token launch is a no-no in the US. This is pretty normal stuff. Shonda goes, equity does not become meaningless after the token launches? Uniswap Labs raised $165 million at $1.6 billion for equity after the token was already trading and valued at $6 billion.

Yes. So I would say there's nuance there, um, and it depends on the project. Like, Full disclosure, I invested in Uniswap Labs, the entity, when I was at ParaFi. I'm not as close to it now, but just, you know, it's important to disclose that. I guess there is value in Uniswap equity because they have launched— I think they accrue fees on the front end, right? So if you're trading like you could trade You don't have to trade directly on Uniswap's front end, right? If you use the protocol, like their contracts, Uniswap, um, the token accrues value. It's not being distributed, but like the fees that the token— the token is like a governance token. We all know why, because like, you know, all the activity that gets trade it through the protocols, I guess you have governance over, over the entire kind of protocol. Labs, I think, accrues— I'm pretty sure accrues value on the, on all the fees that are charged on top. Think about like MetaMask, right? It's no different than that. It's— they're charging a convenience fee. Um, and so in this case, like, I think they, they capture that and that goes to Lab investors. It does not go to token holders. To my knowledge, right? If you're trading through Uniswap's frontend, which I think a vast majority of the flow goes to, because they have the brand, they have the visibility and whatnot. So in this particular case, Shonda is correct. Like, there is clearly a case where like there is value accruing to the equity and then there is some value attached to the token on governance. Um, I, I would say that's like one example, but there are others where like, uh, when I, when I was investing or I'm still investing, like I generally think it's like most value just the equity is just a structure initially. And then once you launch the protocol, all the value should accrue to the protocol. Um, I, I'm not privy in it and I'm not like sure what the discussions were on like Uniswap and not to pick on them just, but like, let's look at like Maple, for instance, we were just talking about it. What do you think is the like equity value of like— nothing. I don't know if, I don't know if you invested in like Maple, like the equity, the entity. but like all the value I think is like in the, in the token. Right. Um, so sometimes, like, again, you, you have to create like a, uh, uh, entity that touches the real world, I guess, if you're not doing this. And that has to be like some sort of entity that traditional investors invest to initially in the early days. Um, in the case of Plasma, I also, I'm an investor, so like full disclosure. So like, I don't know. I don't know what you, feel about that?

I think there's— both of them are kind of right. Like, most people do an equity raise that then converts into a token later on. Right. So I also think the jury's out. Right. We don't, we don't actually know what the equity is going to be worth because there's been so few exits in crypto that equity, equity token or not, has been mostly worthless in crypto. There's so few liquidity events for equity-based companies that no equity is really worth anything in crypto. I mean, that might change. Like, it's starting to change, actually. I wanted to talk about the Circle IPO next.

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Actually, Catherine, Catherine, who writes the Empire newsletter, had a phenomenal piece on the Circle acquisition. So she interviewed this guy, Jay Woods, who is like kind of close to the— very familiar with IPOs and stuff like that. The title is Why an Acquisition of Circle May Be Off the Table as Its IPO Approaches. And there are a few key lines here. She said, I wrote that in the stablecoin issuer that Circle is really close to the finish line. But I hadn't realized just how close until I caught up with Jay Woods, chief global strategist at Freedom Capital Markets. I worked on the New York Stock Exchange floor for many years, and this, this quote was pretty interesting. He said, we're at the point where the bankers have been named, the price has been set, and a timetable has been given. The timetable is for the week of June 2nd. So that's next week. Once you get this far along in the process, I can't think of anything off the top of my head where a company has not made it to the finish line. Basically, the banking teams have done their DD, investors have been talked to, everything is humming along. So to me, unless somebody comes in with a ridiculous offer and wants to stop this thing from happening and buy them before they go public, it looks like a go. And we've got another, say, 10 trading days or less to figure it out. So my guess is, yeah, I mean, looks like we'll get a Circle IPO probably a week from today, maybe next Thursday.

What would be the valuation for that? Like the, like the, like they're selling 600 and change, right? 235 primary and another 300 from insiders.

What I've heard is, um, they're targeting $6.5 billion, I think, roughly. $6.5 billion.

So they're selling like 10% of the company.

Yeah, they're raising— I think it's a $600 million offering.

Yes, $600 million offering, give or take, plus an allotment for like, like the lead underwriters. So like, call it like, I don't know, Uh, so that would be not all primary. It's, I think, like a bit more skewed towards secondary. So like, that means like primary is when the company sells stock, secondary is when investors sell. It's like, uh, as the name implies, no different though. Uh, so not all that goes to the company, but anyways, the— so 10% of the shares are going to be like exchanging hands of sorts. Um, And I think BlackRock committed to buying 10% of the IPO, or I saw it on the—

I didn't know that, but BlackRock and Circle have a very, yeah, very close relationship. Like every time I go to a Circle kind of event, there's, you know, the exec at BlackRock is speaking and stuff like that.

Yeah, I think so. I saw like WatchGuru or something like WhaleGuru or something like that, like Whale Alerts. Anyways. I mean, BlackRock owns like—

so, so here, here's the interesting thing is everyone's focused on like, will they get acquired by Coinbase or Ripple or something like that? And I actually think it's very possible someone like Ripple has been offering them, you know, $4 or $5, $6 billion to buy the company. I think that would be the offensive acquisition. Coinbase buying them would be the defensive acquisition. If it's actually— you can block an acquisition if you're private. But the second you go public, if you— if someone like Ripple comes over the top, let's say they trade around $6 billion, Ripple comes over the top, offers $9-10 billion, you can't block that acquisition anymore. You've got shareholder— you've got shareholders, so you've got— you've got to take that to the shareholders and let them vote on it, you know? Yeah.

So it'll be interesting how this trades. I mean, $6 billion, that's, uh, for context, Coinbase is, uh, at 50, 50, I want to say.

I guess I—

coin— where is this puppy? Yeah, okay, Coinbase is at 50— uh, no, yeah, 63 billion. So, so 10 times larger. Um, That's interesting.

Yeah. What would be— so what's the— they're trading at 4 times revenue. No, no, 5 times revenue. Uh, Circle? Circle. I'm trying to remember what their revenue was.

I don't remember off the top of my head. Yeah. But, um, yeah, we'll see. I mean, I, I think it, um, a lot of times, like, uh, So going back to stablecoins, I feel like everyone, uh, a lot of businesses are like trying to develop a strategy for stablecoins. In the best case scenario, like Circle becomes like the cleanest bet to invest on the, on the theme. So I could see a scenario where like if done correctly, like Circle could just be synonymous with like the, the stablecoin play and, and it could maybe trade disconnected from fundamentals, as you know. And I'm also going to look at like how this, how this trades to understand and overlay that with these other vehicles that we've talked about that are just warehousing like crypto assets in their balance sheet. Clearly, there's like, there's like some sort of euphoric demand for these things because they're trading at like very disconnected from NAV.

For stablecoins, you're saying, or for what?

No, no, for like, so there's like, oh, for the public crypto. There's like two different— like, there's two different markets here happening, which is like, you can look at Coinbase. I, I would bucket like Coinbase, Circle, probably eToro, Robinhood in the camp of like interesting financial, like fintech companies, some with better business models, more defensive than others. But by and large, you know, they're trading on like some, some sort of semblance of like, you know, cash flow. And, and then you have another which is like purely like a holdco structure, to your point, how do you call them? Public company vehicles, PCVs. PCVs. These, these PCVs that are warehousing crypto tokens, which I hear you have like all this asymmetry and whatever, and they're catching a massive bid and are disconnected from like the actual balance sheet fundamentals, meaning NAV. There's like clearly two different, two different like appetites in the market for these instruments or these securities. Could, in a best-case scenario, what I'm like, I'm thinking is Circle, if done correctly, could catch a bid by being like the institutional play on like, we're going to go long stablecoins and like Circle is the only publicly traded company. I mean, like, because, because how many times have you been in a meeting and a dinner and they're all like, oh, wow, Tether, like, you know, they're vastly profitable per employee basis. The company has like the most profitable ever. How do we go long a stablecoin? It's like, well, brother in Christ is not buying USDC or USDT. It's like, how do you express a view on long stables? And I think oftentimes I do get asked that question by a lot of people. It's like, you talk on a panel about stablecoins, you go to a conference, stablecoins are a very important narrative. You haven't had a clean way to express that thesis other than on-chain. You go like long Maker or long Curve or long— pick your flavor— Plasma or whatever, you know, or Tron or what have you. Yeah. In the public markets, Circle will be the first publicly traded— said differently— Circle will be the first publicly traded company with the cleanest slate on only stablecoins. Long stablecoins, left curve thesis, boom.

That is the left curve thesis.

I'm not advocating for that. I'm just saying there is a version of this universe.

That's probably the bull.

Yeah, that's like the most bullish, like, case. Now, of course, we just know that, like— but at the bearish, bearish case is like every major bank, which I think there was a news out there that Paolo Comminen, like, welcome player number 2, which is like when I think that there are rumors that the Circle IPO had been shelved. That they were like, lead underwriters in the Circle IPO have explored— are exploring launching their own stablecoin. And Follow immediately like went for the jugular and said like, oh, welcome player number 2. It's like, yeah, like if you're a bank, you just went under and understood Circle's business model and you said, yeah, we probably do this better, we have more distribution, like nothing is stopping us from launching stablecoin. What I'm saying is the stablecoin issuer business, uh, is probably tough, you know. I think you have to have something on a standalone basis. If you have distribution is I think it always comes down to that. If you have better distribution, you win. Um, and we can— that'll be the thesis for like Plasma, that's thesis for Tron, that's a thesis for why Tether has like this connectivity in the world. Like, you have to build distribution. Athena has distribution on the exchange venues, right? Massive distribution. It is all always, always, always a distribution game.

Yeah, it's always a distribution game. Um, all right, I gotta jump unfortunately, but I've got a content recommendation which is A crypto content recommendation every year. So DBA, John Charbonneau's firm, DBA hosts a thing called— Michael Jordan. And Michael Jordan and MJ. They host a thing called Research Day. And most of the talks end up being too technical for me. I'll still nerd out and I've attended. Just be like, hmm. Yes, yes, yes.

Centralized sequencers.

Totally get all of this. Yeah, definitely. Definitely the talk of the year this year was from Felipe. From Thea. Thea, Thea, I guess I think they call it Thea Research. It's a fund. Yeah, yeah. But there are some of the best up-and-coming fund managers in the industry, very fundamentals-focused. And he gave a talk called Tokens Are Broken. So we will link it in the show notes. Or if we forget to link it in the show notes, you can just type in— wouldn't be the first time, would it? Would not be the first time. You can type in Tokens Are Broken by Felipe and you could probably find it on YouTube. So Any, any content, Rex, on your end? No, I've—

no, not really. Not really. I'm dry. You know, haven't been reading much this week, but just a lot of DD. I'm not, not sleeping, if you can tell.

But yeah, I'm no time for reading this week. It's late out there.

Midnight. It's close to midnight. Yeah. And I'm going to go on a probably another 3, 4 hours, like doing diligence. As this is like, this is like very much my investment banking, private equity days. Just like, okay. Yeah. Which reminds me, I'm gonna plug, I'm gonna plug. I am looking for, uh, we're hiring at Aversion. So go look at our— we launched our website. Go look at it.

I think it's clean. Website's nice. I was just showing it to our head of creative, actually. You got some cool, fun little move— the mouse makes the little things move. It's nice. Nice. I appreciate it.

It's like Easter eggs, you know, just scroll down to the bottom, you might find a present. Uh, And so yeah, we're looking, we're looking for people. Uh, 3 roles in particular. One, uh, CIO. I want like, and we have really good candidates. I'm actually flying to go see one, uh, in the next couple weeks, but like a killer like executive that has done private equity transactions top to bottom. Like we're looking at 6 different acquisitions. Like I can't, we can't do it all. Like we need someone to like really quarterback all of that. And then of course we're going to hire like 2, 3 analysts under that. Yeah. To support the effort. So CIO, I want to hire a CIO first because I want him to like bring— most of the best people like bring their own like unit, you know. So you know, I mean, like when you hire a senior person, like a good hire is always someone says, oh yeah, I need to bring like these two other people and they'll follow them. That's like a really good hire. So CIO, head of product, and I have some really good leads there. A lot of what we're pretending to do is like make crypto invisible and then like just more traditional roles like finance, you know, being counter of sorts that just makes sure that, you know, we don't run out of money. Yeah, that's a good way.

That's a good way to recruit someone for the VPS finance. We need a bean counter.

No, of course not. It is really important here.

Yeah. Official bean counter. Yeah. No, I don't know. Cool. Thanks for listening, folks. It's good. Been a good week. And we've got a good episode. What do we have coming out next week? We have, oh, we have a debate. We've got an REV versus RSOV debate. We actually haven't recorded it yet. We're recording it tomorrow. Um, but a big debate on, on REV. So if you were reading about REV on the timeline, uh, and you're like, I have no idea what this metric actually means or what's the, why is it good? Uh, we will see you on Monday. We got that episode coming out.

And to be fair, we, uh, we did a lot of strategizing over the weekend. Uh, and, and we've thought about some really good guests and the sort of themes that we want to cover in the pod. So we'll—

that's what we're doing, we're strategizing.

We were strategizing, ladies and gentlemen. Yeah, we were. Uh, anyways, I'm excited to see all of you guys in New York if you're there. We're going to record some great podcasts, and, uh, I think it's in Brooklyn, right? So it should be a fun one indeed.

Get your tickets, Empire 10. All right, see you on Monday.