DAS Takeaways, Crypto’s Largest Liquidation Ever & Have We Peaked? | Weekly Roundup

I think we, we ought to just zoom out as an industry and say, is this the best product that we can offer users? Because by the way, it's not just the people that were 50x or 20x or 10x levered. It's, you know, people that were 1 to 2 times long got liquidated.

The answer is we need better institutional infrastructure at the centralized exchanges, and we need to continue innovation at DeFi, right? And we need those things to exist together side by side.

This episode is brought to you by Blockdaemon. You'll hear more about them later in today's episode. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds or projects discussed.

What's going on, everybody? Welcome back to Empire. We got the roundup. We got Rob. We got Santi. Rob, Santi, how was DAS?

That was great, man. I didn't see you there though. Were you in London?

You guys both shook your head like it wasn't good to the side. You're kind of like, what's—

No, I agree with Rob. I didn't— I saw Mike. I didn't see you.

Yeah, I'm just, you know, puppeteering over here. What'd you think? What'd you think of the event?

Yeah, it was— so listen, it was a, um, what I really liked about DAS, which I like about them all the time, is that you get kind of a different crowd, right? So, you know, we were at Token2049 3 weeks ago at this point, right? I'm losing my time a little bit because I'm traveling too much. But, you know, you get there and, you know, Token's probably the biggest conference in the space, but it's very retail-driven. It's very heavy on the booths. It's very heavy on, you know, trying to get this, you know, excitement for broader universe of what's happening in crypto. DAS is very targeted. It's got a really good set of people who are really focused on institutional use cases, really focused on kind of that, you know, enterprise adoption of crypto. And so I like coming because you get a different flavor, you get a really different type of conversation, and it allows me to really hone in on the types of people I want to see on that side of the world, especially when it comes to stablecoins, especially tokenization, things like that. So, so I really enjoyed it. You guys put on another killer event.

Appreciate you.

Yeah, yeah. I mean, echoing a lot of that. I think what's useful now is gathering a crowd that is not crypto native and it's good to see more and more of them coming and having those conversations. And obviously there's a lot of excitement around stablecoins, tokenization. Rob and I were on a panel talking about tokenization. I was in a panel with Hasib also talking. I think every panel had a different title and it all eventually, like all roads led to some flavor of tokenization, stablecoins. And that was, I think, a reflection of the times. The only thing that was a bit weird was the silent in the room, there was like in the main stage, the silent disco was it was just eerily quiet and you're like, am I saying something?

So exactly, so for people listening, like, like describe exactly what it was like.

So, so we're in a room of probably a couple, like 100 people plus or so, and they all are wearing these headphones with neon lights. And it is, I mean, you could hear a mouse fart in the room.

You know what I mean?

It was too quiet. And you're sitting there, you're like, do people actually like what we're saying or not? And it was, I've never seen it at a conference. You bet.

You know what I mean?

We look, we, uh, we got a great events team. They try a lot of stuff. They, they, we, we try a new thing every conference and you gotta, you gotta try new stuff to make these events.

I, I will say it can work because there was no echo. Sometimes you go to these events and, and the acoustics are totally off, but that was a great event. I mean, Rob, you and I were in a panel. Who else was on that panel?

It was Paul from—

it was like the TVL.

Yeah, it was Paul from Plasma and Simon Taylor, uh, from who's now at, at Tempo. Right. And so ours was, you know, ended up very much being about stablecoins, right? Um, and there's actually— I'm, I'm, I'm gonna take that back. No, you were not.

That was about corporate chains. Yeah, how many, how many panels were you on? 3?

I was on 2. I was on 2.

Yeah, I was on 3. Ours was about corporate chains, and they tried to peg inversion of the corporate chain. I'm like, I brought my pit bull called Rob, and he defended me on stage.

Can you, can you believe what I just did though? And I'm gonna give a little shout out. I just talked about my other panel, which was Diogo Monica and not Santi. And so I was like, it was Diogo, Paul, Simon, and me. And I, you know what it is, it's kind of the, the dark hair, the, the beard. So I, I'll give it to you. But then, so we did the stablecoin one and then, and then Santi and I did the, uh, did the corporate chains one with, um, with Andrew Peel.

Mm. Yeah. Ex-Morgan Stanley.

Ex-Morgan Stanley. We, the panel that I really enjoyed, um, I was actually with Rob's counterpart, Hasib, which was on the first day. We ended up talking a lot about what had happened that Friday. It's always good because we had that Black Friday event, which I think we should talk about on this podcast. There's a lot of really good insights that it was a very heated debate and discussion. We ended up talking about what had actually, what had worked and what hadn't worked, like the difference between Aave and Binance, what actually went on with Athena. Rob, I know you're super involved in Athena, right? Then you had Binance come after.

There was a lot of— go there now. Yeah, let's go there now because it feels like, I mean, the dust has settled a little bit, but you know, we're, we're one week after just the, you know, this really, really large flash crash, um, that liquidated a, a lot of people. Um, a lot of people lost a lot of money. A lot of funds got really, really hit badly. A lot of the exchanges got hit. Um, a lot of, a lot of individuals got hit. And really, if you were— I mean, we already did— I did a solo episode with Doug Colquette, so, you know, if people want to get into the details, we can— you guys should go listen to that. But I'd be curious, just like Robin Santi Now that we're a week removed from it, I'm sure you guys had a lot of conversations about it at DAS. Like, what are your— what, what's your— what are your takeaways, conclusions, thoughts? Like, what's— how do you feel like a week after and like the aftermath?

Yeah, so for me, it's something that I'm actually quite concerned about, right? And it's just a broader point around like microstructure within crypto, right? And so You know, some exchanges, I mean, I think we saw Atom. Atom's like $3.35 today. On some exchanges, it hit like a fraction of a penny, right? You saw a lot of the alts were down 80%. You saw basically mass dislocation of pricing and depegging of all of the wrapped assets on Binance, right? Essentially, Binance's oracle setup was not as robust as it should have been. You saw a, You know, even Bitcoin was down, I think, about 15%. It almost about touched $100K or so, had been about $120 beforehand. So, you know, almost 20%. And it— what one of the things that you really realize when you like dug into the data a little bit is you essentially had this mass kind of liquidity vacuum, right? So as these cascading liquidations happened, not only were, you know, the stress of the sell side of the order book creating, you know, kind of these, these continued discount in pricing or decrease in pricing. And it also caused some of these like wrapped assets to have this dislocation in pricing. Um, you saw that also the liquidity got pulled from the market makers. And so it kept coming down and these are like any sort of, or any sort of like filling up the order book, like just didn't happen. Right. And you talk to some of the market makers about it and they'll tell you, well, there was just, um, it seems like there was just an issue for them getting new capital into Binance at the time. And so they, there was latency concerns. There was, there or just concerns of congestion on them being able to get new capital into their account to continue to go ahead and market make, essentially. But it highlighted, I think, a little bit just how fragile the microstructure of crypto is today. It highlighted how fragmented it is when you see these really big dislocations happening between cross exchanges. Because of the way the liquidity dried up and because of the concerns on the market making side, you actually had ARBs cross exchange that didn't— weren't able to actually close particularly quickly. I think there was a $10 ARB on Solana across multiple exchanges that was open for like over 30 minutes, right? And this would never happen in, in, you know, typical, um, you know, equities. And then on top of that, the— I think other biggest concern for me is just how little like real buying pressure there was or liquidity there was for a lot of the alts, right? And so one of the things I've heard from some of the large traditional investors that I've talked to who, you know, were in, you know, Bitcoin and ETH and have been thinking about, you know, uh, they have a real interest in some of these, you know, alternative tokens. Um, some of them have said, listen, like, you know, going down 80%, even if it is temporary— and most of these things have recovered a little bit, but they haven't recovered, um, you know, 100%, they've recovered maybe 50% of the loss— um, they're like, that's not volatility that we are able to stomach, right? Like, that is not the type of thing, the asset that we want to trade. That shows to us that maybe there is a lack of maturation in the structure. And so, you know, that's— we don't want to actually go and end up, you know, trading, you know, that type of token on exchange. And so I have a little bit of concern what that conversation or what this implies about some of the liquidity dynamics and the market structure dynamics. And I will also tell you that this has permeated into some conversations with regulators, has permeated into some conversations with, um, you know, some of the, uh, what I would say, you know, more interested parties outside of crypto, right, as well. And, you know, we we have things that we have to answer. We have to get better, right? We have to have better oracle construction. We have to have better liquidity management. We have to have better collateral management. We have to have more tri-party agreements. Like, we have to continue to get better if we want this space and we want these tokens to be traded by, you know, the largest exchanges in the world.

Yeah. What I'll, I'll add, a lot of that is, is, is very true. I think the, it puts into question my first reaction was like, hey, we're going to bring more real-world assets on chain. Because you saw like two worlds, Aave, flawless performance, another stress test, flying colors, no bad debt. It actually made a bunch of money. I was just stunning. So it was able to absorb and a lot, like that's just one example of more Lindy. So who wins in all of this? I think DeFi proved quite well. You could argue Hyperliquid also performed quite well. The auto deleveraging kind of thing that kicked in for the first time since its, you know, 2 years of operation, I think worked quite well. Some traders probably didn't know the mechanism, didn't read the fine print, but I will say like mechanically, Rob, I don't know if you would disagree, but it worked as intended. And, and, you know, however, Binance and some other exchanges didn't work as well. And that's where I think you have to— the reality is there's an overreliance on centralized exchanges in the industry. And when you think about some protocols, like if you're pulling your oracle price feed from Binance, like if your oracle construction that relies on like centralized exchange price feed, I think you have to really sit there and think twice about How are you going to construct your oracle and what are the, what is an accurate price feed for these assets, right? People should remember just because there's a ticker that says, you know, this particular token is worth $2, the reality is it doesn't mean you can actually execute size at that price. Most people, I think, you know, realize that the order book can be super thin, very dry, really quickly. And so anyways, it's just there's a lot of fragility in the crypto market structure, but, you know, important to highlight the winners here. And I think, you know, a protocol like AAVE was very— performed very, very well.

Yeah, you can actually see we just launched a new dashboard. It was AAVE's biggest week, $85,000 in liquidation fees. Their average is like, you know, what are these numbers? $40,000, $50,000. And AAVE had a Very big week.

And look, the last thing I'll say is people should go listen to that discussion that we had with, it was Hasib, Matt Hogan, I think from Bitwise, and I forget someone else. Oh, Richard Muirhead from, what is it? Ethereum, not Ethereum, Fabric. And I mean, users got liquidated going, because a lot of times we understand if someone gets liquidated, they're going 50x leveraged. Right. And Brian Armstrong, funny enough, had a tweet that Coinbase, you know, was like, Coinbase now supports 50x going long on your shitcoin of the day. It's like, I think we ought to just zoom out as an industry and say, is this the best product that we can offer users? Because by the way, it's not just the people that were 50x or 20x or 10x levered. It's, you know, people that were 1 to 2 times long got liquidated.

Across 30+ networks and 180 endpoints, Blockdaemon Earn Stack unites staking and DeFi into a single institutional toolkit for crypto rewards with multi-layered security, full asset control, and 24/7 support. Blockdaemon Earn Stack is built for scale and regulatory clarity. Non-custodial staking and seamless DeFi access all in one stack. Direct access to DeFi with no intermediate smart contract or vaults. To book a demo, make sure to click the link in the show notes or head over to blockdaemonearnstack.com. To find out more. Thanks to Blockdaemon for making today's episode possible. The machine economy is here. Devices are monetizing data for their users all over the world. Tokenized robots are generating revenue for token holders. The first machine economy free zone is live in the Emirates, and it's all happening on Peak, the machine economy computer. Head to peak.xyz. That's P-E-A-Q.xyz to find out how you can benefit From the Age of Automation, or click the link in the show notes to find out more. As always, investments in blockchain technology involve risk. Terms and conditions apply.

We have a, we have a friend who I won't mention his name, but he messaged me the day after it happened. He said, Hyperliquid failed. I don't care what nonsense they preach. They sold our funds' 8-figure position. Pretty much an existential day for perps, in my opinion. Not sure how anyone can trade on them. We were one, we had 1.2x leverage on and liquidated us fully, which is insane. So yeah, if you're 40x levered, you, you, that's the risk you, you take. But if you're one point, you're levered up 1.2x.

I mean, but I, I was talking with this guy and look, crypto's a volatile asset class. You just sort of assume that even an asset like Bitcoin can go down in 30, 30% in 20 minutes. Like that should be your operating assumption. And it's a, so any leverage is a ticking bomb. The other thing more interesting is, you know, that I don't know if it's actually true, but we should run the math. This guy was basically saying the optimal strategy is to go long the S&P 1 to 2 times levered. He's like, because it's, you know, it's not as volatile, but if you ran that and backtest that, you would've gotten liquidated at some point because, you know, 1929 and 1988 or the savings and loan crisis, and then 2008. So even if like, this is the problem that we have with the industry, the default, like the default leverage on exchanges, on some exchanges is 10x. Now that doesn't mean that everyone's going 10x long, but like imagine if, if that's like the default when you log in, and I appreciate not all users go there, like if it, it then is the anchoring of like 1 and 2 doesn't seem that much. But the reality is if you're going even 1 and 2, you're going to get liquidated at some point.

Maybe the one thing I would point out is, you know, our friend, you know, who you mentioned, I know who you're talking about. I will say that, you know, he kind of put a, you know, kind of a list of his positions and they were all like really long tail, right? So even though it was like 1.2x, it wasn't ETH and Bitcoin and Solana and, you know, even things like Hype, right? It was like, you know, very long tail stuff for the most part. And again, I think it highlights the risk of liquidity right now that exists in a lot of, you know, the non-majors. And I think it's really important to understand here, or just, I mean, you know, you, you had the, the podcast with Doug already, but like ADL is very focused on like what your risk is, right? So it is, it is leverage, but it's also about like the exact liquidity, right? And so the, um, you know, at least on some exchanges, there was actually zero ADL for Bitcoin and ETH, and there was only ADL in other tokens, right? And so it, again, it, I think it underlies the major, major issue. It's like, yes, there's too much leverage in the space, but we're not going to stop that. Like, I think to your point, uh, you all know there was a conversation like, oh, maybe like perps are, are done for. They're not done for, right? People are gamblers, right? It's just going to continue to happen. And maybe you'll see less institutional leverage when— that's probably a good thing. But a lot of what we define as institutional in this space anyways is like, you know, basically just semi-rich people and, you know, with small funds. But there will continue to be a lot of retail leverage. They will continue to trade long-tail things because that is just human nature. That is what we're seeing happen. But I think it underscores what we need— something different for, you know, the 90% of volume, right? If I go and look at Coinbase, right, and 80 to 90% of the volume is institutional and 10% is retail, but you kind of flip that on its head when it looks at their revenue. Like that 80 to 90%, like that needs something better, right? Like the— and we need, if we're going to have all of the biggest, you know, takers in the world come into the space, they need something better than what's happened. But I agree with Santi that, you know, it's clear that, you know, many ways DeFi, you know, performed better than CeFi in this case. But I don't think the answer is that we're going entirely DeFi, right? Because I don't think, you know, you talk to the institutional, the institutions that are coming on-chain, they're not there yet. But The answer is we need better institutional infrastructure at the centralized exchanges and we need to continue innovation at DeFi, right? And we need those things to exist together side by side.

Yeah. Do you, um, uh, do you think that anyone has blown up badly from this? This is always the big question, right?

Well, uh, well, you see the leaderboard in Hype, uh, I think in Hyperliquid, I think there's a lot of large whales that got blown out, I would say, and liquidated. But funds, I was going to ask you, Rob, like you guys don't, I don't think you, if anything, like you're not, you don't put any leverage and if it's leverage, you're probably— Yeah, you don't trade, but I'll tell you, look, my first, as much as I love DeFi, it is awesome to get a call from your counterpoint saying, hey, you get that margin call. It's all, it's pretty nice to get a margin call. And I remember like during COVID you know, we got a couple calls that day and it's nice to be able to have some time to refill collateral. It's not so nice you get liquidated by some mechanism that you may or may not agree with and how it went about doing it. And so I think a lot of people—

one of the controversies though, right? Which is like, yeah, you know, so I give a lot of credit to Guy.

I think Guy was extremely smart.

People realize that it sounds like Athena had negotiated some of these like no ADL contracts.

Oh, is that right?

I don't think that's true. No, no, that's a, that's a thing that people, you know, have said on, on Twitter, but, um, I do not believe it.

I think that I was like, that's very savvy of Guy.

Um, but, but, you know, if I think there's a point here to be made, and sorry to interrupt, which is that like, again, it's how ADL works, right? If you're not levered and you're in the most liquid tokens, you are unlikely to get auto deleveraged even in the worst of times. Right? And so like, what is Athena trading? They're just trading basis on ETH and Bitcoin for the most part. There's a little bit of SOL in there, but it's mostly just ETH and Bitcoin, and they're not on leverage, right? And so like, if that's the case, like, the likelihood of you getting auto-deleveraged is like close to zero, right? You're going to be this— the last person in line.

So you guys don't think any of the market makers, like big, you know, big tier 1, like big name market makers or any centralized exchanges, or you're not concerned about that?

So I, I do know of for a fact a few funds that have gone under because of this or closed their funds. All of the ones I know are, you know, names you might not know, sub-$200 million. There's going to be no systemic risk from them. There's a few of them. I have not heard of any real— I've not heard anything credible about anyone of real size that anyone would be particularly concerned about. I, you know, I've talked to a lot of, you know, our friends at the, you know, the biggest market makers, the biggest trading shops who are all like, yeah, it was tough, but actually the rebound has kind of been okay. And we actually made, you know, we were able to trade around it a little bit and we're, we're doing okay. It's not that bad.

Right. Yeah.

Yeah.

Um, anything else on this topic or move on?

I think we can move on. I, I do want, I think maybe it's, it's worth, um, highlighting. Wait, sorry. You wanna go to Santi?

Well, I was just gonna invite, if you're a builder out there, I've had to study it for a while, but like, can someone build like a, a, the, the flow of getting a call from to refill your collateral on-chain. Because like, I could tell you a lot of funds when I was like, it would be a good functionality to express that in some sort of logic where there's a buffer, there's a time period. I think some protocols have like a mechanism where you have like a— NFT protocols had like 15 minutes or like a couple days to kind of refill. I don't know actually if it's possible or not. My brain is not big enough, but like, if you could create a protocol where you have a little bit of buffer in there, or some sort of mechanism, it would be interesting. Like I would actually be interested in investing in something like that.

I mean, even something as simple as, I mean, if you like, right now one of the problems is how do you get in touch with someone? It's just a wallet, right? So there's no email address or phone number connected to it. So even just the ability to opt into connecting a phone number and email to a wallet would Like, I mean, that's—

I can tell you a lot of funds have shied away from putting funds on-chain because they are too afraid that this flow where the oracle fails and you, you get, you, you just, you're wiped out. Yeah.

Yeah.

Well, and I think it's, I think it's important, right? Because like, if you were talking about Athena, right? If a, if an oracle on, on-chain had been referencing the Curve pool, the Curve was never more than 3 to 5 bps off. Right. Resting liquidity on Curve was higher for USD than it was on any single exchange. Right. And the oracle references Binance's order book and the Binance order book, the actual resting liquidity there is actually very small. Right. And because the, you know, USD had just been started to be supported as a collateral asset pretty recently. And so I think it's important that we need to be more thoughtful around, you know, oracle construction. And I think to my point earlier, how do you see DeFi need to exist next to each other? It is actually really important, though, that we have DeFi. And I think the institutions are starting to understand that as well. It's just going to be some hybrid for the interim, but to Santi's point earlier, AAVE performed really well. Hyperliquid performed as expected. I think there's a conversation around, should they be a little bit more sophisticated in the way they think about ADL, right? It's a little bit tougher because you don't exactly know how people are handling like basis or like net leverage. Right. Um, but there's a, I think there's a world where, where you can potentially make some improvements, but, um, it's clear that, you know, when you have this transparent set of rules that is programmatic, like, you just don't have a lot of these, you know, same, uh, you know, kind of like out-of-the-blue microstructure problems that just like completely, you know, take everyone by surprise, right? Like, people are at least more aware often of what that risk looks like.

Yeah. All right, shifting gears a little bit.

Um, one last thing here.

Yeah.

One, one other thing to call out. Can you guys hear me?

Yeah.

Yeah. Look, there's a very clear divide between how Solana handled this spike in load and how Ethereum L1 handled this spike in load. And I will say again, it, it just, it is tough when you're interacting the L1 and fees go up to a couple thousand bucks and you can't get you know, so as much as I agree with Rob, like DeFi performed flawlessly. You just can't be in a world where you don't see a viable path going forward of increasing activity in an L1 like Ethereum when you have the congestion and the fee spikes that you have. And Solana, from everything that I saw, just didn't have this problem.

But people aren't even arguing that anymore. Like, I don't think anyone thinks things should happen on the main, on like the main, you know, L1 anymore, right? It's all moving to base. Than L2s.

I agree, but I would say the, if you want to bring RWA, like I'm thinking about RWAs and that type of like onboarding and like 5 years time, like, because I've talked to a lot of folks that's like, hey, I don't want to deploy an L2, we're going to deploy on the L1 because fees have, the average of fees has been low over the, which is true, but it's like how the person drowned in a river that was on average 5 feet deep? Well, no, like in this, in this world, you have to think about that spike in like, what is the worst? And, and I think Hasib made this point in the panel, which is if you have, you just have to bake into your math that there's going to be a spike in load. And if that happens, a couple orders of magnitude fees are going to go up the wazoo. And then you have to work backwards from there and say, hey, maybe we shouldn't be deploying the L1 because if we need to quickly do ADL or do these things, you're not going to be able to do it. And that has a full set of implications.

Yeah, I will just say on that point, and, and not— I'm definitely not arguing for Ethereum mainnet, uh, as a place where we're supposed to be trading perps, right? Um, but I think some of the L2s didn't have this problem either, right? And they were, they were all fine as well. Um, and if you actually look at like volume by protocol, like there's actually like on a relative basis for like Solana owns a lot of the trade and economic activity, but, uh, for perps there's actually not that much happening on Solana on a relative basis, right? It is still very much like a spot market for certain types of tokens. A lot of the largest or basically all of the largest protocols are mostly on other chains.

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Related topic, but I want to keep talking about Binance a little bit, so This was in the— so this guy CJ, who runs Limitless, which is an up-and-coming prediction market on Base, I think it is, posted his offer. So, so Binance has these listing fees, right? And he posted publicly the offer that he got from Binance. And this has kind of been a taboo topic in the industry, I feel like. So I don't know even how much you guys are open to talking about this, but I'll share what CJ said. He said, offer from Binance, 1% of the airdrop on day 1 alpha listing, 3% of further, further airdrops in 6 months, 1% for quote-unquote marketing at Binance, full discretion, provide 100% of the TVL for token pool on PancakeSwap, $250K security deposit, 3% reserved for BNB Hodler program, $200K worth of tokens at MFN price for Binance affiliate marketers, 2 million BNB security deposit for spot listing, offer from Coinbase, build something meaningful on Base. So I think this is what he's really saying is, you know, Binance is asking for like 10% of our listing, 10% of our FDV to get listed on Binance. And, you know, you see Dudas tweeted a similar thing. He said, confirmed with double-digit teams that they've received the same Binance token supply proposal for listing in TGE. Binance wants to take a nearly 10% tax from any innovator in the, in the industry who launches a token. This is 10 times worse than TradFi. Enough is enough. Do you guys have I'm curious, like, you know, Rob, how you advise Portcos to think about, like, the exchange listing process. And Santi, I know you've been through this a million times with other investments that you've made. I'm curious how you guys think about this and will this dynamic change over time?

And yeah, so, so I'll say two things. One is, so the Binance, you know, in my experience, the Binance ask for listing is actually extremely variable. So I know, you know, uh, Mike put that tweet out there that, you know, they're asking for 10%. Um, I, in my experience, that's pretty rare actually. Now they do ask for, I would say, too much in most cases, and they ask for a lot. But, um, the really, really the way to think about, uh, the listing teams at these exchanges, they actually have a lot of leeway, and they want to see the things that they want to trade listed. Right. And so the more that it is a thing that they want to trade, the less the fee is. Right. And I have seen people get on Binance who have paid zero fee. Right. And that happens. And I have seen people who have paid 10%. And so oftentimes when you see these prices that are, call it closer to 10%, it is usually tokens that, you know, these listing agents, at least whether they're right or wrong, feel that there's probably not a ton of demand for necessarily. Within their user base today, right? And they think that Binance adds a lot more value than they— than the token itself adds to them. Now, that's not to say that, you know, there's a lot of in-between between 0 and 10, and we see a lot of people in that in-between. And even, you know, I think even 5% is too much in my, in my opinion. And so, you know, I think it's very clear that people need to be thoughtful about this. We have probably seen more protocols be, I think, um, at least putting it out there that like maybe they're thinking about not listing on Binance if that is the ask, right? And they're, you know, only listing on places that ask for less, right? I think what we see actually is more typical is like 2-ish percent across a lot of the other exchanges, right? Uh, and a lot of that goes back to the ecosystem. A lot of that goes into— some of that goes into market making. Um, and so there are probably more than ever a lot of protocols asking, should I be paying a real rake like this for a, uh, for a listing? And a lot more, I think, than ever are making the decision, if that is the type of offer, not to do it. Now, I will add one thing to that though, which is that Binance is still 35 to 40% of the market volume, right? And so there is still— I don't think it's as clear-cut as like, hey, we just don't pay this and we, you know, hope that we get, you know, volume elsewhere. Now, if you really believe believe in yourself, you don't pay it, and you work overtime, and people show a lot of interest in your token over time, you'll get listed anyways. That's definitely absolutely true. And so there's a, uh, I think a decision around, you know, the sequencing around, you know, if you just list elsewhere first. And we've seen that work. Um, but I think it is still important to, you know, at some point probably listed— be listed at Binance. But it's also important to, you know, not, uh, really screw over your token holders. And so there's, there's definitely more of a discussion today than there ever has been. And we advise people to be thoughtful around that We, we definitely don't advise people to pay 10%.

My, so I think the, the other analysis that you can look at is the IPO listing process and what traditional investment banks have historically charged and what they charge now. And you know, it's, you can't, it's sometimes hard to analyze, but like, you know, clearly, obviously 10% of your token supply is a lot. And obviously investment banks don't charge— typically investment banks, when they do a roadshow on an IPO, they'll charge you kind of like 1 to 5% of the offering proceeds. So if you're going to raise $1 billion, like, you know, Figure did, they're going to charge you 5% on the total funds raised. Very rarely now will they get some sort of equity comp, like they will get like a, you know, warrants. That's sort of rare now. Typically it's, you know, probably correct me here, but it's mostly for, for most deals, it's, it's just a percentage of the total funds raised. And they'll, you know, you hire them to build a book, to talk to market makers, to leverage their relationships, put their lead left, lead right. You're JP Morgan, Goldman, great. You know, you're, you're going to be successful. So I think that's, um, when you do the calculus, obviously, you know, if you're going to go list in the traditional markets, um, you're going to work, try to want to work with the best. And clearly, you know, there's no disputing here that Binance, to your point, Rob, has the most amount of users and liquidity, and it's important to be listed, right? There's no top 10, 20 token in crypto that is not listed on Binance. It's as simple as that. So navigating that, obviously they're sequencing, like all the meme coins got listed because they just had so much flow that, you know, Bonk didn't pay a fee and, you know, uh, uh, WIF didn't pay a fee to list as far as I know. Um, And so I think like, to me, that's the real comp. Like, let's go look at the fees and the structure that investment banks, merchant banks were charging companies maybe 20, 30 years ago and compare that against Binance. I don't think it would've been like crazily different in my opinion. It's just like in the state of the market. But I will say you could then maybe to take a little bit of leeway, there's this thing called the IPO pop, which is these things for whatever reason, don't seem to be priced efficiently. The average pop of US-based IPOs can be, you know, I think anywhere from like 15 to 25%. That's a lot of inefficiency. Now, it's hard to do the analysis of like what would happen if you didn't list on Binance and what is the average pop or not. But I will say if these terms are correct, the terms that you just put up, there is no pop. There's actually a lot of selling because those tokens are not locked. They can do whatever it is that they want. A lot of the airdrop will be dumped because it's not locked. And so I think, yeah, like my brain just immediately went to that. Like the only reason why you would want to list on Binance, and I think, look, every project can offer whatever it is to market makers and exchanges to board approval and whatever. Make sure if you're going to structure these things, lockups work well to really understand the alignment. And it has never served anyone well to give tokens that don't have as, you know, if they're going to work for providing liquidity and reputa— you know, marketing and all that, you know, create aligned incentives. That structure's not very aligned in my opinion.

Yeah, I would just point out on the IPO side, it's usually typically like 4 to 6% of raised capital, right? And so like, you know, to your point, right, $3 billion company raises $300 million in IPO, it's 46% of the $300. Um, and it's also paid in cash out of the cash proceeds. So it's not like there's like sell pressure on the equity, right? Um, typically now there is like some green shoe and there's, you know, some other things that exist, right? But it's, it's not necessarily a dilution or sell pressure in the same way. I think to your point, like, aligned incentives around lockups are really important. You know, anybody who participates in, you know, an IPO does take equity. And we're seeing also more of these— this equity get put into retail hands these days than we have through Robinhood and other brokers. Right. And technically the way it's structured is that your Robinhood, if you get a— if you do participate in an IPO through like a Robinhood today, technically the way it's structured is like Robinhood is actually a counterparty. So they're the ones who are locked up now, but they do have a lockup. And so if I sell or if the retail person sells their equity, uh, they— Robinhood actually has to warehouse it back, right? Because Robinhood itself is, is, uh, is not able to sell during that period of time. And I think, you know, that is something you can improve here, of course, which is that, like, you know, Binance can kind of distribute whoever they want their ecosystem, but Binance users have some sort of lockup, right? Or they at least contribute that lockup to those users. Um, and so I agree with you totally that that's, that's important. I think, uh, a lot of the token incentives that we see that have, call it, you know, um, you know, they TGE and they immediately have, you know, some amount of the token that's liquid for people who are kind of just speculating on the pre-market price is, is always bad, right? It's always misaligned incentives. It's anyone in my mind who is doing some sort of like, you know, pre-listing you know, buying of a token or airdrop or, maybe not an airdrop, so I'll take that back, but pre-listing buying of the token or pre-listing like sort of, some sort of like lending or, you know, liquidity provisioning or whatever. All of those people should have some lockup. And I think in most cases they do today, but not in all cases, right? And so what you really want is you want to incentivize liquidity. You want to incentivize, getting this token into the hand of as many retail users as possible. And you really want to incentivize this thing hopefully trading well and having good, you know, liquidity market structure, because that gets people excited and that gets people to continue to invest, that gets people to continue to hold. And then you don't have, you know, a lot of this, you know, volatility or, you know, downward price pressure that we've seen. Um, and I mean, if you look at all of the recent, like, high-profile listings, right, you look at Pump, you look at, um, uh, Plasma, you look at uh, DoubleZero, all of these things kind of like, you know, they traded at, you know, multi-billion dollar valuations pre-market, then they kind of went up, um, and then, you know, and then they kind of all like got lost 50%, uh, or more, right, in many cases. Uh, now they're trying to find their footing, but, you know, I, I think, um, does that, you know, kind of price action that way, does it make it harder for them to find their footing now as the market gets more sophisticated and as they start to find some, you know, maybe floor price where people actually want to own that token.

I mean, that's the challenge here that I don't think we're ever going to get rid of this liquid venture asset class that companies are— it's the only asset class where companies are actually going public sooner, way sooner. Whereas in the other part of the tech world, companies are not going public. They're taking too long. They're staying private like OpenAI. I mean, you have companies that are worth $100 billion plus that are still private, and that value creation has stayed mostly concentrated. I don't know what the answer to— look, it ties into the market structure discussion. Like, you know, high— the low float, high FDV— in many ways, like, you sort of— I wouldn't say sympathize, but you understand the, the, the issues that potentially a market maker and an exchange is going to have, right? And, and so they're in the business of protecting their book and their users, right? And so they're clearly going to negotiate because what, you know, Binance in their defense have a very rigorous listing process that they will kind of ask for team wallets and advisor agreements. And a lot of that information in many ways is like what the SEC would do when you're going public. Like, you know, it's thorough, Rob. I don't know if you would disagree with that, but from what I've seen, it is incredibly thorough. So I will say, at least from a consumer protection standpoint, I think it's quite positive. But from a founder perspective, from a team perspective, giving 10% of your supply, I'm not here to tell you that's good or not. That's your decision to make. But it's not good.

10% is not good.

No, no, it's definitely not good. I was like, I am saying, and it tends to be the projects that have the least amount of traction are willing to pay the most because it's more marketing game. However, I guess the point I'm trying to make is if you're a team, you very likely want to go work perhaps with, I mean, I don't know, you guys are invested in other exchanges, Rob. I don't think I haven't seen these terms in a while.

No, but Binance is definitely, yeah, they're definitely the highest. And then some of the, I would say, exchanges that we talk about less. But even of the other kind of like large Asian exchanges, of which we're investors in a couple of them that are, you know, in that top 5, they're not near, uh, you know, these, these types of numbers, um, ever, right? Even on, on the— yeah. And obviously Coinbase and Kraken is it. And so I, I do think, to the point that, you know, maybe to get all the way back to the question that, you know, asked in the beginning, um, I, I do think that this, you know, type of offer is probably going away over time, right? This is not sustainable, and it's definitely going to come down. It's not going to be zero Right. It's not, not everyone's going to go to the Coinbase.

Well, in TradFi it's not zero either. Like NASDAQ and NYSE charge money, right? You've got the upfront initial application fee. You've got the initial listing fee. You have an annual fee that I think you have to pay them. Um, but it's like, you know, hundreds of thousands of dollars. Yeah.

So, and the last point I'll say is it's, it's difficult to do an analysis in isolation, right? And it's unfair to say because of projects, the last 4 projects that were listed, you know, went down 30%. I think that's more of a reflection of the tokenomics more so and the current market. Environment and the high, like, high FDV, low float versus what, what any market maker exchange may or may not do. I mean, the market is just, you're in that state where, you know, most of these projects just, to your point, there's no liquidity for these type of tokens. And you just saw that last Friday. There's no interest.

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Let's shift to a different topic I just saw come up, which is Tom Lee, who's the chairman of the biggest Ethereum dApp, obviously Bitmine, says that, says that the dApp bubble has burst. And I would love your guys' take on this. And Rob, I know you've been involved in a couple of these, uh, and helping. I think you've seen a lot of the structure of many of these different dApps. But yeah, I would love your guys' take on this comment.

I totally agree, right? Like, the, the, the reality was, um, I've been, I've been talking about this for a long time, the vast majority of the dApps had absolutely no reason to exist. They— I mean, I think we saw, um, we started to see the SEC and the, the exchange— the exchanges themselves, um, sorry, not, not the exchanges, but like Um, maybe some of these changes as well, but we started to see people start to push back on, you know, certain types of structures here, right? And so I think it was, uh, last week that, um, the kind of canonical TON debt got delisted, uh, on— maybe it was, maybe it was Tuesday that that happened, right? And it was because they, you know, hadn't gotten the appropriate shareholder approvals, right? You know, this goes back— we talked about before about Heritage Distilling, we've talked before about a lot of these other pipes where they could took the perspective that they kind of do whatever they wanted by stuffing a, you know, public company with as many tokens as possible in kind, as well as, you know, you know, buying or raising, you know, cash into these pipes and buying these, buying these tokens, no matter the liquidity of the token, no matter like who it was from or what the type of the structure was. And you started to see a lot of pushback from the regulators and from the exchanges. Now, that doesn't mean that these aren't going to continue to exist. The regulators are going to continue to allow the ones that have gone through the appropriate approval processes. They're going to continue to allow the ones that are, you know, structured in such a way that makes it so we are clearly taking care of the shareholders, right, and are not doing something that has a lot of contingent liabilities, etc. I think the, the market is going to continue, or the regulators are going to continue to be very open to, and they're probably going to approve the vast majority of them. But they've, they've really started to take notice for a lot of the kind of, I would say, the, the tail end or the shenanigans that were taking place in the DApp market. But then you have, you know, the, the actual, and probably more what Tom is talking about, the actual traders of these things or the, um, the investors. And one of the things that happened is that there were a lot of people that were looking at the premiums that all of these things were trading at, especially after Bitmine happened, um, and they were saying, oh, like, this is structural, right? We can just go and put money into every single dApp that's run by a decent person and that's backed by a decent sponsor, and it'll structurally trade at some sort of premium and we'll make money. And so if we're already long whatever your token is, ETH, and then like, oh, well, structurally this, you know, pipe into this thing will also mean that I get to be, you know, I get to make more than 1x my money. If, if, if Ethereum goes up, I make 1.2 or 1.5 or 2, right? Um, What these people are realizing now is that liquidity also can be a problem in the equity markets, right? And so all of a sudden when these things—

Oh, surprise, surprise!

Yeah, it's like people completely forgot that that was also these kind of highly illiquid micro-cap equities also have that problem, right? And so they're starting to realize that there is actually no demand for the 5th Ethereum DAT or the 17th Ethereum DAT. That there is no demand for, you know, most of the Solana debts. There is no demand for name or altcoin. Most of the altcoin debts have no liquidity whatsoever. You know, maybe like the top one or the canonical one has liquidity, right? And so they're starting to realize that that microstructure actually matters there as well. And then you're starting to see these sponsors get really, um, I think, uh, trying to figure out what's happening and how to kind of save, you know, these premiums, right? I think we saw, um, it was Forward Industries Pipes, um, by shareholder vote, uh, decided to extend their, um, their registration going live. So they were supposed to— all the, uh, PIPE investors were supposed to be unlocked, I think it was end of last week, or maybe it was earlier this week, it was like Monday or Tuesday. And the, uh, the sponsors of that deal decided to extend it for 30 days. Well, why did they decide to extend it? They decided to extend it because they didn't want Citadel and Jane Street and a lot of these other, um, you know, PIPE investors to go and crush the stock at a time when the tokens have all traded down because of what happened last Friday, right? And so you're starting to see a lot of these like kind of games being played because people are concerned about this liquidity problem. And so, I mean, I think completely like this is just a, this is only the beginning of that story.

I mean, look, if it, the phenomenon of shitcoins is not only true in crypto, ladies and gentlemen, go look at some charts in traditional finance and I got pink sheets for you. Go look at those and go look at the, those charts. Not too dissimilar. From your shitcoin du jour. And so look, the thing that I've issues with DAS and Rob, I hear you, DAS are, the structure is different from any, the nuance is different, the terms are different, right? However, it is an arbitrage game. Some people like Saylor can play it very well, can negotiate terms and know how to play in the big boys' table. Most other people, Don't. And when you're playing the big boys' table, you are going to get eaten by a shark called Citadel and called all, most of the— maybe you've been on the front lines more than I have. The vast majority of people that are investing in these dApps are very sophisticated hedge funds.

A lot of retail. No, no.

The vast majority of people investing in these dApps are crypto natives. Yeah. Crypto natives, but retail. But what I'm trying to say is people trading around dApps, in a very systematic way. They're trading around them, not so much investing. 'Cause like the, and that's the issue that I think is happening here, which is there's all these unsuspecting retailers say, I miss MicroStrategy and I missed the first Ethereum DApp. And so I'm going to do the third, fourth, fifth, and I should make a levered return on my, if I'm long Ethereum, I'm going to go this. However, there's just a lot of trading around these DApps and very sophisticated players that are investing in the primary and then they just know how to hedge and lock in a decent profit or whatever. And that I think is, just doesn't bode well. Like the arb eventually goes away and if you're not sophisticated enough, you're like, you're going to get crushed and arbs never persist in perpetuity.

Yeah. I mean, I think one of the important things here too is like there's two different group of people. There's the people who are like the PIPE investors and there's the people who are buying in the open market. Market, right? The PIPE investors are interesting because you have really two groups of people who have done those deals. The vast majority of those deals have been done by highly crypto-native funds who are like, I am long this asset already, and I think this is some sort of arb, or that will exist and it'll trade at some premium. The vast majority of crypto-native funds— I don't know this to be true, I'm speculating, but I would guess 90% of crypto-native funds who have played these DApps in a real way are actually underwater what they would be if they had lot, right, at this point, because a lot of these things are now trading at a, um, at a discount. And also they've had some illiquidity, so they might have traded out or traded, traded in, etc., right? And the reality is, is, you know, I talked to a lot of these crypto native funds, and some of these guys are the smartest guys in the world when it comes to crypto, have absolutely no idea how to think about warrant dilution, right? Like, they just don't. It's a different market, and they're not as sophisticated in that market. And so, um, we've seen, I think, some people kind of miss certain things about how these things are structured, right? And then you have the, the traditional guys who are investing in these things. And, you know, I've seen this firsthand, and, you know, I think, um, you know, we publicly, um, were, uh, you know, behind and being helpful with the, um, uh, the Avalanche AVAT, uh, debt that got announced a few weeks ago. We, um, helped sponsor it because we're long Avalanche investors. We've been an Avalanche investor in every single round they've ever done. Um, I've also been involved with the Athena one, same thing, We're very involved with Athena. And so I've talked to some of these investors, and when I talk to the traditional guys, there's really two types of traditional guys as well. There's the ones who actually are long-term buy-and-holds. They want to be part of the thesis of institutional financial market structure coming on-chain. They want to be part of stablecoin growth, right? And they see this as a way to play that in a levered way, potentially, right? Then there's the Citadels of the world, and I'm not singling them out purposely, they're just a name that everybody knows, who are clearly playing a short short-term ARP, right? They think they can like, you know, buy this thing, especially if it's coming at a discount to NAV, and then they can, you know, uh, potentially hedge it out on the other side with a perp or something. Um, and all those guys are all sellers on day one of the unlock, right? And what we've seen a lot of the, you know, sponsors or management teams do in these DApps is they've, they've been making trade-offs between, oh, do I want to be bigger, or, uh, do I want to have a more curated investor list. And if you're bigger, that means you're probably taking money from Citadel. And if you're taking money from Citadel, you have to understand that on the day it unlocks, they are dumping all of their shares, right? And that's just who they are. Cause that's, uh, that's the reality. Tom Lee, who's been the most successful DATT CEO and DATT, or Spy Agency, not CEO, he's the, he's the chairman and the sponsor of that. He made the exact opposite choice, which was, I'm only gonna raise $250 million and then I'm going to go raise capital other ways. And then I'm going to do share buybacks to make sure that, you know, this, um, you know, when people are selling into it, that I have some like resting liquidity there. And so he's made the exact opposite choice of which a lot of sponsors have, and he's been the most successful. So I think it gets back again to the idea around this— this is actually a very sophisticated game that, um, I think a lot of people who were playing it were wholly unprepared or just had different incentives. They didn't actually care if these things traded well. They just cared if they were able to get it to market and clip some advisory fee or All right, Rob, to round out this discussion, the tide has gone down.

There's a couple of people that are naked. The music has stopped. Does the music come back? Who actually survives in this game? We talked a lot about M&A in DOTS, right? Like maybe larger DOTS, like, you know, absorbing underperforming DOTS. What's the— do you agree that the bubble has burst and is it over? Or what— in what reformat— because markets have a memory of a goldfish, then they do it again and again and again and again. Um, in what format do we see these evolve and is there a path forward here?

Yeah, and I, I don't think it's over. I think we, in the near term, we will get maybe one more DAT of any real size that comes to market. And when I say real size, I mean like over $500 million, right? I think maybe we'll get one more, maybe two more max. I think for the, there's just just a— there's a lack of liquidity at the investors who are doing these things. People are being more careful, uh, some of them are just completely turned off altogether, right? And so I think the, the raising new capital into new dApps is mostly over for the short term, right? I don't think it's a long-term point. And I'll, I'll kind of, you know, talk a little bit about like the— I think the parallel here is SPACs, right? And we had this like SPAC boom boom in 2021 where all of these like companies who were not public ready ended up getting taken public. Many, many, many of them have completely traded down or gotten delisted and have not done well, right? But we've had kind of a bit of a resurgence of the best SPAC sponsors with, you know, certain types of companies, and they figured out how that market makes sense for certain types of people. I think that'll happen here as well. But I think, you know, to— again, to the SPAC point, a lot of the DApps that have, you know, gone— been listed and that are trading, I think a lot of them will trade down down, you know, until they probably just get bought out. And then, and then I think there'll be just a, a, um, a kind of a thinning of the herd, essentially.

Shocking that you need to have an underlying business model to go public and have a viable business. Um, you can't just list paperware, but okay. Uh, the, the thought that I have here is like, uh, Chamath is back with a SPAC. So you're right about that. Um, is this, is this a greater indication of the sign of the times? Like we, we've talked a lot about like, are we at the second stage of the cycle? How much do we— we were talking about like, do we have 1 month left? Do we have 2 months left?

Do we have 6?

Like, you know, is this more, should we read more into this of like, okay, institutional demand may not be there. You look at Friday, you had these tail end of assets that just didn't have and have not recovered and just have no buying pressure. We talked a lot about institutions. The reality is they're only buying ETFs and the flows are coming into, you know, the majors, Bitcoin and Ethereum. We're going to have more ETFs. How do you think, like, you guys have been out like talking to allocators all the time. Are we over the cycle? Like not just for that, but are we like just coming to an end on just the overall like parade?

I'm going to keep saying no, right? I just like, I just do not, I just don't buy the cycle story.

People who are watching or who aren't watching on YouTube, listening on Spotify or Apple missed Rob's like massive eye roll. I've never, like, I just saw all the whites of your eyes.

No, but I, I listen, I, it's funny because, you know, we talked to the VC allocators and we talked to some of the liquid allocators, um, and the VC allocators right now are like, I don't know, the conversation is as constructive as it's been since, you know, pre-LUNA, if I'm being honest, right? And so they're really thoughtful again around, you know, what's happening. We just had Polymarket announce a $9 billion deal deal with ICE like, like 2 weeks ago, right? That if you go and talk to the VC allocators, the people who have long-term oriented perspectives are saying, oh, this is, this is the AWS time of crypto, right? We're now starting to get the infrastructure there that we're going to have the applications, right? And now we're starting to see the use cases, right? I'm at a, um, I'm at an event right now. And the reason I'm in a hotel is I'm at an event right now put on by one of the biggest asset managers in the world where, um, the conference, everyone here except for me and, and Paolo from Tether, um, is a non-crypto person. And, and they asked us to come and, and talk about crypto, right? And I went into this room and I had a discussion with— there was probably 60 people in this room. I, I counted probably 20 billionaires in that room, people, the CEOs of the biggest, uh, funds, the biggest, um, banks in the world, the biggest asset managers. And it was probably the most I felt behind enemy lines in a long time in terms of just a lot of skeptics for crypto. I had a long discussion with Paolo around why do stablecoins make sense? How are they going to reinvent financial market infrastructure? What is happening in tokenization? What are we seeing and hearing? I will tell you, after that conversation— well, during the conversation, the moderator, who is the CEO of one of the largest news organizations in the world, said, who here owns what they would say 1% of their net worth in crypto. And a room of 60 people, there was probably 8 hands, right? And so not that many people, right? But a few. And then after that conversation, a bunch of people came up to me who did not have their hand raised and said, listen, I understand what you're saying, and that sounds really promising. I want to see that succeed. We're retaking a look at that. I had a conversation with somebody yesterday who said, They run a multifamily office. And they said, we don't actually right now give any liquid crypto exposure to any of our families. We're now starting to think about doing that. What do you think is the right amount? And I said, OK, well, Morgan Stanley just said 4%. I think it could be as much as 10%. What makes you comfortable? And they got to through the conversation that maybe 4% made sense for them. But it was, I will tell you, very much much Bitcoin, ETH, maybe Solana was where they were at, right? And it's very clear that all of these people at all of these large banks, all of these large asset managers see this now as an investable asset class in a way they hadn't before. But that doesn't mean that alts are going to trade well because that is not what they are focused on. They're focused on the future of financial market infrastructure, the future focused on innovation at the tech layer, and then they're focused on Bitcoin, ETH, and maybe Solana, right? And that is kind of the, the whole focus. But they're coming into the space in droves now with people like me and people like my, my peers who— because they want exposure, they believe in that story. So I don't think it's over when you have those conversations. But I will tell you that they're not going to buy your alts, right? Maybe the VCs will. And then I've talked to several liquid funds over the last, you know, week since what happened on Friday who were actually even maybe dipping their toes into alts. So these are traditional financial firms who had said said, this market structure tells me that maybe I should not actually be trading those alts. And they've kind of regrouped in the majors. And so I think we definitely have these tailwinds, but I don't think it means that the whole market is going to trade up. There is going to be a lot of bifurcation between the haves and the have-nots.

So I, um, I heard it in, uh, one of our panels in DAZN, uh, Matt Hogan, who's, uh, what, CIO or Bitwise? And he says something to the effect of, we're talking about debating the hyper liquid and what had happened on Friday. And he said, listen, most of the people that are putting new money in a crypto can't even pronounce Solana. And I think it's true, right? I mean, you're getting people off zero and they're going to go to, they're now starting to understand Bitcoin because it's above $100,000 and they're maybe starting to understand Ethereum candidly because of someone like Tom Lee, who was at JP Morgan before. And perhaps that's the only benefit of DApps in that regard. Hopefully the blowback of some of the fallen DApps don't really counteract, but sometimes because we're in crypto Twitter all the time listening to podcasts and in our own kind of circle jerk, we forget that like people again are finally now coming around to this idea that crypto's a legitimate asset class and it's regulated. And I think they're, it's going to take maybe more time than what we think for them to really start buying into anything other than Ethereum and Bitcoin. And so going back to that, yeah, it's going to be hard to convince anyone to really have a long-term position in a dApp. And the reality is those dApps will not endure unless you build a viable business model. I'm not saying that Forward or something like that can't build staking revenue. And if you have cash flow, the market is going to wake up to that. The problem is you can't justify a premium today because that's not there. There now. But if you have a dApp that survives that discount and can build meaningful staking revenue and meaningful validator revenue and, you know, have infrastructure or some sort of infrastructure revenue come in, then the market's going to understand that and do a fundamental analysis on it. And so I personally investing would actually look at some of these dApps that have a viable competent team that is going to interact in DeFi and stuff like that. Forward seems to be be perhaps well positioned in that sense. If it trades at a discount, yeah, I'm going to take a hard look at it. Not just because I like Kyle, but I actually think it's a viable, like, hey, yeah, I think these guys can actually pull it off. And you'll look at like validator revenue and that's interesting for sure.

Yeah. All the stories we hear right now from, call it the best performing ones or the ones who want to be the best performing ones are all that, right? So Ford's obviously been talking a lot about DeFi and validators. I think that AVAT, the one that we were involved with on Avalanche side, that's been a big part of their story, right? And I think there's a lot of people starting to come to some sort of realization. There has to be more than just the pocket of tokens. It's an access vehicle, but it's not just that.

Yeah. Yeah. Crypto is going to have less patience from investors on not producing cash flow. You're not Amazon that can, you know, can wait until you launch AWS 20 years later to show profitability and still trade at a premium. If you're a dApp and you're an alt dApp and you don't have cash flow, you are going to get smoked.

Yeah, I agree with that. I'm going to— I have to jump for a client call in a second, but I have to do— yeah, speedrun a little bit of news. Erebor, Palmer Luckey's company, got OCC approval. Kraken acquired CFTC-regulated Small Exchange for $100 million. Coinbase invested in CoinDCX at a $2.45 billion acquisition. And while we were recording, Ripple just announced a new acquisition, which is a billion-dollar acquisition of G-Treasury. This is a 40-year-old debt, right? This is, this is not a debt. This is not that. G-Treasury is a, is a very legit company. They do corporate, they do treasury management actually for— yeah, they do treasury management for big Fortune 500s. Toyota, Subway, Goodyear, American Airlines.

Do you think they're going to do treasury management for, for crypto protocols?

I mean, I think this is— look at, look at what we've been saying. I, I think the, um, look at what they did with the Hidden Road acquisition. Look what— look at what they did with, uh, uh, their stablecoin RLUSD.

They—

what this company does is they do a lot of like risk and hedge, hedge management where they help Fortune 500s manage exposure to foreign exchange risks, interest rates. Uh, they centralize and secure a bunch of corporate payments. Uh, I, I don't know, I, I've been saying this on Empire, it's kind of controversial, but I think Ripple is going to buy their way into a massive business here.

This is clearly a stablecoin play, to your point. And I will tell you, when I have conversations with corporates right now, the number one thing that they're— people are bullish about in stablecoin use cases at large corporates is treasury management. Right now it's cross-border payments, but treasury management is probably the thing that comes up the most at the moment. So this makes complete sense for them. It's like, it sounds like a great acquisition. I'd have to— I don't know the company that well, but I have to learn more.

Yeah, cool. All right, folks.

We're gonna skip content.

Content of the week.

But Rob, you got a couple flights lined up, you better watch something interesting and then let us know next Thursday.

Double content of the week next week.

And I'm gonna bring it, I promise.

All righty, thank you guys. Have a good weekend.

Bye.