Hivemind: Finding Crypto's Top, AI Selloff, and Navigating SOL's Unlock

There's the one side of me that is saying maybe it's all over, maybe this is really the top, right? But there's still just that feeling that so many people have not made money and so many people are depressed.

Yeah, but there's also probably like a subset of like the extractors that have gotten ridiculously rich.

I think this is where the whole dilution element comes into play, right? Like there has been— last time a lot of money came into the system, everyone made money, and that was an obvious sign of a top. Here, because of the wide amount of assets that have existed, there's just been a lot of money sunk in and then market caps evaporate.

Yeah.

Right.

And then like the president's just extracting billions.

Nothing said on The Hive Mind is a recommendation to buy or sell securities or tokens. This podcast is strictly for informational purposes only, and any views expressed by anyone on the show are solely our own opinions, not financial advice. Hello everyone and welcome to another episode of the Hive Mind podcast. The goal of the podcast is to provide an inside look into what we like to call the Delphi Hive Mind, bringing together some of our brightest minds from each of the divisions to share insights, alpha, and shitposts. Today with us we have the usual crew: Ceteris from institutional research arm, Jan Lieberman who heads up Delphi Ventures, and Duncan our prodigious shitcoin scavenger and investor. And I'm Jose Mari Macedo. I lead Delphi Labs, our protocol R&D arm. So, been a pretty intense week and generally an intense start to the year in crypto. Probably worth starting with just Deepseek and the effect on the markets, just given that's pretty much top of mind. And by the way, we're recording this on Tuesday, the 28th of January. At about 7 PM UTC, markets are bad currently in its so over phase.

Yeah, we're dumping pretty hard right now. AI coins do not look good.

Deepseek, yeah, like 4 coins look good.

Do you want to introduce Deepseek or who wants to introduce Deepseek? I guess people, everyone's heard about it, right?

I mean, the TL;DR on it is that it can— you can run models like way more efficiently. And so you, you, it's like way cheaper. And so that's like a big hit to NVIDIA's profit margins. And NVIDIA is such a big part of the Qs and like the overall market. And so it's selling off kind of just affects everything. There's the, there's the perspective that like this is bullish for AI in general. Because it's like, you know, whenever you make something cheaper, more people are going to use it, which definitely makes sense to me. I know Pondering, who's like our AI expert, his, his base, his take was basically you just reallocate from like infra to further up the stack, right? This is bullish for like apps, application development, all that. So I generally agree with all that. The thing is, even if that's true, if this still causes Nvidia to sell off so much, it doesn't matter that that stuff is true in like the short term. Even if it could be like bullish in the long term, I think it'll still have like a big effect on everything, right?

The counter though is that, um, you know, if you wanted to point at that as the reason for the continued sell-off, it's harder to do that today. Yesterday it made sense, right? Nvidia dragged everything down. Today equities are bouncing, and if anything, you know, crypto should be least negatively impacted by, uh, Deepseek. And, you know, in theory, like, the cost of GPUs is a bit of a tax on the growth of AI. And so while this comes at the expense of NVIDIA's top line, it should be a benefit to everyone else because they're you know, you can reallocate CapEx or just require less of it potentially.

Um, so, you know, you're getting way higher efficiency on your, on your CapEx spend, right?

On your trainings. Yeah.

But so, but like, the point being that everything is bouncing but crypto is not. So it's hard to point at Deepseek as a reason for why crypto is doing poorly.

Yeah. Well, I feel like for the— I don't know anything about this AI stuff, but if it's better, like if Deepseek is like a better model and like smarter, isn't that just gonna like encourage like more investment in the space? Like what if you did the Deepseek thing with like better GPUs or more GPUs, like, isn't it just like kind of like a further validation that these models can get a lot smarter than we think and it's just gonna be like more investment or is that not the right way to look at it?

Or is it all a CCP scam and they're actually using a bunch of models, which you've had some prominent figureheads in the, in the AI space come out and suggest that.

Really? Have you? Uh, Scale AI guy did.

Oh, he said that they had more GPUs than they said. Yeah. But I mean, the, their breakthroughs have been like independently validated by a bunch of people.

Uh, yeah, I was mostly being facetious.

Yeah. I don't know. It seems like they're really, they really did have some, some big breakthroughs. I think the main thing is China's better at AI and further ahead than, than we thought, which probably puts everyone into a bit of fear, right? They're seen as like a geopolitical enemy. And so it kind of, it's value destroying to some extent. Yeah, NVIDIA, I think it's probably bad for NVIDIA overall, even though, yeah, like you said, there's this Jevons paradox where people just use more compute. But this moves models more towards inference. And like, there's also an interesting point that the the DeepSeq trained, like for inference, they're running on the, on the Chinese chips, the Huawei 910C chips, which is also like pretty bearish NVIDIA. Like it's, it's apparently like a pretty big strategic priority for China to become chip independent, which, you know, obviously it is for everyone and easier said than done, but that's kind of where all the chips made right now in Taiwan. Well, yeah, Taiwan, they're assembled and there's the supply chain goes like all over the world. Um, yeah, there's a Dutch company, ASML, that's a pretty big part of it too. But yeah, Taiwan is the— and like, when you read about, when you read about that as well, like how just, it's, it's crazy. Like apparently the Chinese have had like pretty much the full designs, like they've had spies deep in TSMC for like 10+ years, and even with the full designs, they just can't recreate the chips because Apparently it's just really badly documented. It's just like a bunch of— it's very much like an apprenticeship system. So you have one guy in one department that knows everything about wafers or whatever, and then someone else that knows everything about something else, and they just have this apprenticeship model. So it's just very— no one knows how they actually put it together. So it's an interesting one.

Doesn't that feel like a risk for China-Taiwan stuff. Like, if the AI stuff heats up, they might— yeah, I don't know anything about that, but that's kind of like— people have been talking about that for a couple years now.

Well, didn't Trump just talk about tariffs on the Taiwan semis as well, like today or yesterday or something?

So they're gonna get chips made. He's putting tariffs on us to secure the northern border. What the fuck?

That's the other thing with the market too, is that I think there's still, there's a lot of uncertainty and there's a lot of uncertainty with like how hard these tariffs are gonna go. Like Trump is, Trump said a lot of stuff before he got elected and he's literally doing exactly what he said. And I think that maybe people did not expect that.

No, I mean, I thought the, the, the, the way it played out was everyone is expecting a lot of tariffs on day one. So you saw. Yields ripping, dollar ripping, you know, with the assumption that inflation would kind of come back as a result. But that didn't end up being the case. And then, you know, his plan was mostly use tariffs as like a bargaining chip, more or less, which is— you saw it on a smaller scale with Colombia. But I think, you know, it's not just let's broadly levy tallies.

Um, what does he want to do with Canada? I heard that it was something like secure the northern border, which I don't know, maybe that's a thing. I haven't heard of that before. And something about like not paying enough for military. Did you hear what it was like for Canada?

It's a big border.

We're getting the same thing. I mean, the trade, a trade war with Canada and the US will not really be good. Obviously Canada will be worse off, but like everyone just kind of like loses in that scenario. So, do you know what it is? What he's saying we need to do? He doesn't like fentanyl. He doesn't like fentanyl coming over the border.

Is it coming through Canada?

A lot of it? I think so. Yeah. A lot of fentanyl comes, I think it comes from like China to Vancouver. Yeah. Oh, and then that's bad. I mean, Vancouver is a problem. But yeah. Yeah. I don't know. With that being said, with the Deepseek stuff, that is not the reason for our AI frameworks selling off. If you look at Maybe we can move into this.

I think the larger reason— I was gonna say, just the larger reason is probably, um, digesting how far away, uh, a reserve is, right? You saw at one point kind of Polymarket hit 40% of it happening in, in 100 days. I don't know where it is right now, but that's, you know, come down quite a bit. When the EO was to put together a council to figure out how to get a reserve, like what, how that, what that would even look like, which means, you know, it's still a few steps away. The digital asset stockpile.

Yeah. Um, yeah, it's like 15% right now.

I just, just looked at it. And yeah, maybe we can also, I think the stockpile thing is also pretty bearish. Maybe, I don't know if you want to touch on this.

Yeah, I saw some people were trying to spin it as like, oh, this is bullish for the industry because they're going to own a bunch of different assets. And to me, that is the wrong take, like, because it becomes less serious. A stockpile is very much less serious than a reserve of Bitcoin. And so if they were actually going out, what basically what they're doing is they're keeping the crime coins, right? So anytime they confiscate coins, they're just going to hold on to them. And that's basically all there is to it. That's very different from going out into the open market and running a TWAP on BTC. Right. And so while the strategic reserve, it would send all the ratios like to Hades, it would still be good for like USD prices overall. Right. You got to, you got to imagine that the US actually ran a strategic reserve. Everybody else would kind of start flowing into this through the game theory, kind of forces you to do it. And Bitcoin is really unique as a commodity in that nobody's like born on Bitcoin, right? Like you're born on gold reserves or oil or something. You— the only way to really get it is you have to buy, right? And mining is just another way to buy. And so, yeah, like that would send— if they actually did it in full force, that would send BTC well over like $250K probably, right? And so yeah, like ETH/BTC, SOL/BTC, all these ratios would be down in that scenario, but the USD prices would be way up, right? Versus the alternative of what we have now. And so yeah, that's why I think it's bearish that, uh, I don't know, I wasn't expecting him to come in and actually do an executive order on SPR day one, but I guess to do it. Yeah, yeah, it seems like people kind of expect— I don't know, Bitcoin's still $102K. It's like, yeah, Bitcoin's hanging in. It's not Bitcoin. It's, it's the, it's the same thing we've been talking about forever. Like this, this, this dispersion is never going away. This is what it is now. You're like, when alt season, Cedrus? Okay, so they're like, alt season is not a thing. We had alt season last year, November, December. The alt season was the AI stuff. Like That was alt season. And then like, if you look at— so we have this sector performance dashboard on the Delphi portal. It's free. Uh, if you go to the portal, just go to, uh, the home page and you can actually see a link right to it. Um, but I'm looking at these year-to-date returns, right? It is, it is— BTC is 9% up, ETH is down 6%, SOL's up 22%. Then you have a couple of the sold DeFi coins like JOOP and Ray are both up 40%. And then literally everything else is just down so much. Uh, like Layer 1 average negative 9, gaming in for a negative 25, modular negative 20, meme coins negative 24, ETH DeFi negative 14, uh, platforms frameworks like negative 62. Uh, agents negative. Yeah, it's Jan 1. Like, you know, AI-16Z, 63.5% since then. Jan 1 down. Uh, GAME, 81%. GAME, 81%. Uh, virtually confirmed that one. Zerebro, 85% from Jan 1. Like, that is insane. 85% in 28, 28 days. Like the FriendTech experience.

Yeah. The only stuff that's really finding a bid is something with fundamental value. So it's kind of like trading it.

Jason Yanowitz. None of them really have.

Fii is up 55%. Freya. That agent. Yeah.

Did it get like released around? Like that might be like—

No, it was trading a bit last year. Yeah, but anyways, the point is that like, yeah, things have not been great. Yeah.

When do we think this AI stuff bottoms? Because like Jan said, it's like none of them really make fundamental business case sense. And I feel like the stuff that had done well is like those sold DeFi things. Like, you know, even though they're dupes expensive, like massive market share makes money, has a path to making more money. Radium is like actually, I think, they also recently enabled value.

Yeah, right. That's— that really reversed a lot of their—

they ran so hard. They ran like— they ran so insanely hard.

But like, Jupiter and Radium are like more fundamental plays.

Yeah, Jupiter's doing these big buybacks or something. They're like 3 billion tokens or something like that. Um, and they're doing their whole like Jupiter first thing, which I don't know a ton about. They announced it the other day. Um, But yeah, I mean, I still think that when the market gets more speculative, these things are going to be the outperformers. Uh, but obviously trying to like pick that, you know, I thought when they were down 50, 60%, that was probably the bottom on them. And then they've proceeded to go down like another 50% or so since then. Well, yeah.

So I think like typically this stuff, if it's actually gonna come back, probably bottoms around like negative 70 to 80%. Like, is that like negative 70 now? Right? Like what's Virtuals? I feel like it's like the leader. Virtuals is down 63 from the top. So like, yeah, like I feel like it's got a bottom at kind of like the 70-ish, like $0.70 range.

How do you feel about Virtual moving to Solana? Like, they're not, they're not leaving Base, but they're expanding into Solana.

I, I don't understand what Base, what Coinbase listings team does all day. Like, what, what are you doing? I, I don't understand how the one thing that's drawing liquidity, number one driver of activity for weeks to almost like 2 months more or less, uh, and, and zero listing. I, I just don't get it.

Yeah, they literally gave Peanut the Squirrel his final life before they, they get— they got Virtual on the platform and they got the VVV one the day of.

That was the day, the same day, I think.

Yeah, or his name carries weight. Yeah, the Virtual— I've seen some people within Virtual's team start to complain the last like day or so, and it's a big reason why they're moving to Solana, I guess. It does feel at this point, all like, it was based in Solana for the AI stuff, the agent stuff, and BASE is still doing that. But with Virtuel expanding to Solana, and I think the liquidity pools is like first week of Feb that they're really going to get going.

I've never really seen that work. Like, has there been a dApp that pursued like multi-chain expansion where that was like good? Like a net? A net positive. I mean, obviously, especially when you're talking a completely different ecosystem, like you're not just sticking in EVM or whatever, it just generally ends up diluting your community. I mean, yeah, some of the projects we incubated tried to do this. I think it was definitely overwhelmingly a mistake, although the bigger mistake there was probably just Cosmos. But I think the cross-chain thing also just means that you have no real tribe. And like, you know, no, they're on Solana.

Token is the tribe. Yeah.

Like it's not like, I don't, I don't, I think here it like where it, it, where it struggles sometimes is where you have like DeFi and it's incentives oriented DeFi. Cause then you're competing against someone who's solely on that chain with a supply focused on that chain versus one where. Versus you where you're splitting it both ways. It's not like you're relaunching a token. So I think it's more harmful there. But, you know, with virtuals, they're not really doing any kind of flywheel where they're emitting virtual as an incentive. So I think it'll be constructive in this case.

Yeah, yeah, it's like, I think it can just— yeah, like if you do, if you have to expend a lot of money to like get it going on another chain, maybe, but If it's just like added revenue, it could be a flop on Solana, but I don't think it's going to like hurt them on BASE necessarily.

I think one of the issues is that the liquidity is locked on BASE for like something like 30, 60 years. And so you can't— if you could actually cleanly migrate everything from BASE to Solana, then the chances of this working would be way higher. But now, yeah, you're going to like fragment.

But that like there's going to be our bots running like that. It's fine.

Uh, but it's still, I don't know, you have like virtual, you're going to buy it, like you're going to get a worse price. The more chains it's on, the worse price you get.

I know, but like, as long as you're kind of like anyone who's looking to buy in like serious size is probably going to go to where the best liquidity is and be thoughtful.

Well, I don't know. Is the, is the plan to double up liquidity of existing agents in multiple places? I think it's just fresh launches, right? If it's fresh launches, then it doesn't really matter.

I'm talking about liquidity for virtual token, but yeah, for fresh agents, they're just going to be on either Solana or Base, I think.

I mean, like most, there's— they just need one decent liquidity pool on, on SOL for virtual itself. I mean, I think with the fact that it's on a bunch of centralized exchanges helps kind of alleviate the initial issues of getting virtual in size if you really want to.

Yeah, I don't think that's—

Is there an example of a token that has more liquidity on the chain, on a chain other than the one it's issued on? Yeah, I guess there must be, but I can't think of one.

I don't know if that necessarily matters here though.

They have to get some deep liquidity. Like the whole thing is getting deep liquidity for Virtuals, then they compare everything with Virtuals, right? It's part of their token econ and stuff.

Well, the Virtual itself isn't that like— you're pairing each one on its own with the same amount, whatever you're always going to pair it with. So I mean, that only one deep pool for, for, for virtual. Yeah, which isn't hard to do. They, they definitely have enough and they have enough money.

Yeah, like they have the one v2 pool on Base which has 12 million in liquidity.

Like, they can— it will, it will be cool to see, like, if they have— I don't think, I don't think anybody has outgrown where they first launched on another chain. So if Virtual actually gets bigger on Solana, that would be kind of like the first time this has kind of happened like that.

If anyone could do it, it's them, I guess, with the launchpad model. Like, there's just very little, there's very little tie-in to any single chain.

And I think what helps is like their design is very, uh, accretive to the agents, right, with their recent shift in token econ to pass a lot of the fees back to the agents. Um, like, there, there is a lot of incentive for you to, to, to launch there because you do have this kind of bootstrapping mechanism from, from all the fees from people trading.

Does it actually— how much, like, money does accrue to the virtual token? Because I know someone posted some chart like it's down 99%, but that, like, didn't include the new contracts or something. Do you know?

No, all the money It's just, just the listing fee, the launch fee that goes to them, and then everything else is just circular. Like, they take fees from the liquidity pool and then it builds up, and then they just buy that token after.

Yeah, but that was what they did before. Like, that they, they did that with accrued fees, then they shifted it. So now the fees just go to the agents themselves. Like, half of it goes to the agent's wallet, and like, then it's like 80 or 50-20-30. I forget the exact pockets, but it's like some to the agent, some to the LP, and then, um, I forget that they're like a—

so they only take the, the listing fee? Yeah, they've reduced—

like, it's basically, you know, trading off the fee for increased supply sink and activity on the platform. And so it's like a smaller slice of a larger pie type of approach.

Yeah. And also another reason, like, I guess a reason a lot of activity shifted from Base to Solana is like that Trump token that's kind of reignited Base. I mean, sorry, Solana.

It's like, yeah, that was a reason for it to really explode that day. But I don't know, I've kind of like memory hold that weekend of Trump and Melania.

Yeah, that was like a few weeks ago.

Double stablecoin supply, right? Yeah, that's one thing. Solana stablecoin supply was like $5 billion at the start of the year and it's over $10 billion now. Wow, already? It doubled it in like a week because of that. Damn. And yeah, it's hard to be too bearish on Solana just like with There's some takes around like massive unlocks coming.

It's like the massive—

the takes on, on, um, I think all the people buying on Moonshot and then not getting involved in the, in like the SOL ecosystem were pretty mid. Like, it's just like not the natural flow of a wallet on Moonshot. It's, it's a standalone— yeah, that made no sense.

Why do you expect a Moonshot wallet to do something else? It's— that's— I forgot, this is the This is a problem with like looking at data. There's a lot of people who look at data in crypto and don't know how to like understand the, like the implications of what they're looking at. And that's like a prime example of that, not understanding the nuances.

Yeah, I don't know. Yeah, every—

Solana is just becoming like the place where you want to, I don't know, launch your app. There's a lot of like new chains coming out this year. There's got like— Bear has got like over $2 billion in pre-deposits. There's, I don't know, Abstract. Their launch didn't go too hot the other day, but it's only like a day or two old. There's still— yeah, there's a lot of stuff coming.

So I see that I'm looking at this, it says like only $3 billion worth of Solana unlocks, but I thought it was a Someone said it, this was like way understated.

No, it's, uh, it's only like 2-3% of the supply.

It's like 2, 2, 2 point something billion. It's like 7.5 million SOL in March and then, uh, 600K SOL a month after that. Right. So 600K times 3 is 180 million.

Yeah. There's definitely a lot of unlocks, but it's like, okay. At some point once the unlocks happen, they're over. And then you also have the chain that is doing 85% of revenue, 85% of like application, like every single application that makes money is on Solana right now. No, for sure. You have the ETF coming. And so it's like, I've never tried to trade personally, like an unlock. I remember in 2023 in September, Do you remember how afraid people were of the FTX estate, like starting the, the process, and SOL traded down to $17 in September of 2023? And that was the perfect time. Obviously it's way different now. I'm not saying buying SOL at $230 is like buying SOL at $17. It's way different. But the most telegraphed unlocks are usually not the worst ones because they're so— like SOL is the— it's the— it is the— outside of Bitcoin, it's like coin of this cycle. It's not—

they get priced in pretty far in advance.

Yeah, yeah. I mean, it's not negligible. The big—

so you have like $2 billion in March depending on what price is. And like that, I think once that gets through, then you're looking at, you know, again, price dependent, $150 to $200 million a month. A month isn't much for them, for like— because then, you know, that's assuming all of it's sold. Some will get held, some get staked, some, um And then it kind of depends on, on the market environment too, right? If everything's dumping, then people are just going to take it and run for the door. But everything's pumping, then it gets very reflexive and people end up holding.

Yeah, with that being said though, it's like, uh, I see what, maybe like a 2x and like a crazy bull market. So I don't believe in these like crazy price targets. It's already pretty rich. Everything is pretty rich. Like Bitcoin, it's funny, Bitcoin at $102K really feels like the safest asset in this industry. Um, which it is. Yes. Like, like the risk-adjusted return of BTC versus anything else. Like, I'm like actually kind of mildly bullish on TIA as like a trade here over the next half year or so. But, uh, it's still like, you know, it still makes zero money. SOL has like a fundamental potential case if they keep scaling the chain.

I like we're talking about this now.

I think people are talking about this.

I know, I've seen it pick up on Twitter. I'm like, fucking finally, my time is here. Fundamental plays.

I really don't think, like, I really don't think, I think you could easily see 0.2 on like ETH/BTC by the end of the year, right? Um, and like SOL, SOL, you look at SOL/ETH, right? And people love to look at SOL/ETH, uh, and you know, it looks good for SOL. If you look at SOL/BTC, it, it, there's a, like, the, the thing I'm trying to answer now is not like where SOL/ETH will go. I do think it'll hit 0.1 and probably go higher. But it's, but it's like, is SOL/BTC going to be the new ETH/BTC, right? It's just hard. You just hit this ceiling and, and like, it's just so hard to outperform BTC. Hype, hype.

Maybe the SOL unlocks come, hype comes in a little bit. Fast chain.

I do think the, the SOL ETF will probably be after the unlocks. Yeah, yeah, I mean, for sure.

They're, they're only doing the futures in mid-Febr and unlocks are March. So it's, yeah, I would be surprised if you get SOL ETF in the first half of the year.

There's some unlocks in Feb too though, no?

I thought they started in Feb. Yeah, okay, so I just looked, it's 6— the, the numbers I'm seeing are 16 million coins, 3.2 in Feb, about 10 in March, another 3 in April, which is like for roughly $4 billion, a bit less than $4 billion. But someone was saying that maybe there is like more stuff. Like, is this— so is this the estate? Is this all that stuff that was going like the OTC deals that were going around like in March or like around that time, a lot earlier in this year? It's the same coins. Yeah, yeah. As far as I know.

Yeah. I don't know what else there would be besides this? This is like a pretty massive chunk. Like the big thing that's been on everybody's— March 25 has been on everybody's calendar for the— everyone's talked about that for the last like year or so. It's yeah, buy SOL, but just, you know, but that's not much out for March.

That much relative to its market cap? 4 billion? I don't get— there's got to be more to this. 4 billion to 110? That's not—

I don't think it's the right way to look at it.

Just like the absolute amount of money needed to buy those if they get sold.

Yeah, like it's, it's, it's, you know, people even looking at volume, right, so much of that is like market making. It's not like there's constantly directional exchanges of that much money every day. This is a one-way flow of cash, right? And, and, and when it's telegraphed, the bid kind of pulls back too, right? So it's not like you're selling into standard market conditions.

Um, we've never seen like I don't know. The unlocks, I feel like we're not bearish so far in crypto.

SUI had a bad one. SUI's unlock this year or last year, it was in like June or something. I thought it wasn't going to be bad. And then it got absolutely— if you look at the chart, it's like a straight line down on the unlocks. Interesting. And I was like, oh, wow. Luckily, I didn't capitulate then. But like, I— that, that shocked me. Uh, I didn't think, uh, the unlocks for that were going to be bad, and it was. That was a brutal unlock.

I still think it's going to be driven by, um, fundamentals to some degree, like, and market conditions, right? If like market's doing well and users activity, stablecoins up into the right on SOL, they'll be a lot less significant and probably mostly priced in. Um, but if it's like a— if it's—

if it unlocked today, um, so back to the, the fundamental coins. So we've been seeing more on the timeline. What, what do we think? Do we think it's finally time for some coins that have some good fundamentals to shine? I feel like so many people have gotten burned on meme coins and stuff that it's like there's a bit of exhaustion in that.

Well, I think WIF is, uh, I think WIF I'm looking at the, uh, dollar. It's almost under a dollar.

I know, it's almost under his Binance listing price, like the all-time low on Binance. But like, I do think that there's pro— and even just these, these, uh, AI coins selling off so hard, obviously they're not quite meme coins, but you know, not super far away from them in some cases, or at least their valuation's super stretched. So I feel like a lot of people have just gotten wrecked on memes. And what do we think? Fundamental rotation inbound, or what? I don't know.

I've never been a big meme guy, but it does just seem like— I don't know, none of these coins look good.

The fundamentals also get a lot worse, like, pretty quickly when, like, volumes dry up.

I know, but volume— but that's the thing, volumes are still high. It's just like dilution across so many, right? Like Hyperliquid, for example, fundamental play I like.

Yeah, activity is still there.

The WIF chart is still there. Yeah, it's cruising.

The WIF chart is like a long-term McDonald's chart. Yeah, yeah, literally. Yeah.

Hold on, I'm pulling up the Hyperliquid.

You don't want to see McDonald's chart.

Um, okay. It's probably a good buy here.

I think Tao's got a bad McDonald's chart too.

Let's do since the start of the year. Okay. I'm going to do some math really quickly.

How are you guys positioned right now? I'm curious. Like, is everyone like Max Long still?

Uh, yeah, I mostly— yeah, like I've mostly taken the drawdown on the chin. I mean, I mean, I sold stuff at the beginning of the year and like some stuff in December. I have, I have some stables. I, but like my overall construction hasn't really changed, you know, like, yeah, the AI stuff is taking a pretty big hit is what it is. I haven't like changed. Yeah, I forgot this. I don't know.

Okay, we can go. What about you? Yeah, that first.

Did you do risk it all? You kind of took it on the chin as well.

Like, I definitely, I definitely de-risked at the beginning of the year. Like, I wish I did more.

Yeah, but yeah, I sold some stuff in the year just like in anticipation of people selling, but, uh, no, definitely not enough. And then I've reallocated since, not, not fully, but, um, yeah, I mean, I've definitely, uh, taken on the chin.

Yeah, and Duncan, you were in cash, right?

Uh, yeah, I had— I was definitely overweight cash into the year. And then I always sold stuff in January because like trying to defer the taxes a bit. So, and the fundamental plays have actually, you know, they're still down, but like, you know, Hyperliquid's basically flat year to date or like since the start of the year, like maybe down a little bit. Banana isn't. No, a year. Well, since, since Jan, it's, it's flat, but yeah, it got, it got crushed in December.

The thing is the AI stuff just ran so hard for 2 months. Yeah. And so they're actually still up more than most things over like a 2, 3 month period. It's just, they just ran so much.

And then, yeah, Metaplex is another fundamental one I like. That was fine. So yeah, definitely down, but like, I feel like I haven't felt like any insane, like 70% type drawdowns. I guess Banana was pretty fucking bad actually, looking at the chart from November. But Hyperliquid is my main bet right now and that's held up well. So that's actually, that and the cash have been decent.

But so yeah, Banana's bad considering that's when everything went parabolic and like, I know, but it's still like its fees also went up.

So I'm a bit confused. It's paying a 50% APR right now.

I saw, I saw Laffinity on Solana who does like their, it's, they're basically like a hedge fund. They use this oracle-based pricing. They are an AMM, but you don't deposit your own assets to it. It's like all protocol owned. They did like $2 million in trading fees. Yeah, they're doing it last month, which is like a 55% APR on their token. Um, would those have all been distributed, or— yeah, they get distributed. Like, you have to lock it. You have to lock it. It's, it's— the token honestly has—

and I owned it in the past, it's like doubled since December, um, or since November, end of November. But it's just like, it's just like, it feels like it could be. I think that the problem with Affinity is like its moat is like ambiguous. It's like they're making markets on Solana, they're plugged into Jupiter and they do a shit ton of volume. But it's like, why couldn't Jump just like plug into like—

Well, Jump doesn't do on-chain trading. Yeah, I know.

But like someone like that, like why couldn't—

Right. When somebody comes in. Yeah. I think it's like regulatory arb. And so I do agree with you that like once these TradFi HFT shops are more comfortable moving on-chain, then it becomes a harder game. So right now they've just been like raking it. Now they do have like HFT background team. I know, but it's an automated—

like it's a— like, I don't know, it's obviously it's, it's cool and they've stayed around and made a lot of money a lot longer than I think a lot of people thought because like these people haven't come in to take their market share.

But yeah, that's the thing. If like if it's a 50% APR on the token, then you actually need the business model to still work for 2 years. Yeah. To get your money back. Right. And so It's kind of sad that like that's how we value the fundamental. I mean, but it makes sense. It makes sense, right? Like, am I going to hold this and lock it up and get the yield? Because it's, it's a very disruptible business because you're— it's just a trading firm and trading firms don't have— they don't trade at like big multiples, right? They don't give you the massive upside. It's, it's like they're market makers, right? Yeah. They're not taking— they're not like a VC firm or even like a liquid fund that's making directional bets on stuff. So yeah, but they've been impressive. Like, don't get— they've been— I've been—

yeah. Uh, but yeah, so like, this is the thing with Banana. It's like, it's always traded between like 30 to 50% APR, depend— like 20 to 50% depending where its price is at. But now it's like kept up its revenues for like a year where you've been earning that for like a year. And it's like, okay, is this— does this continue? Is like the big question on all these businesses that are trading at like such low multiples. And then something like Hyperliquid. So I just did the fees, $47 million so far in January divided by 28. So that's $1.7 million a day in buybacks. So yearly, that's $620 million. That's—

but that's not like— it's not a 1-to-1 to buybacks though, is it? It's like you choose whether you get Ether or Banana and then there's also—

No, no, that's— that was Hyperliquid.

Oh, I thought you're talking about Banana. Sorry.

Uh, so HYPE is 7.7 billion. So yeah, so HYPE is like on circulating cap is like a 13x right now on burn, which is like, uh, feels like that's pretty good. That almost feels like that might be wrong, but I did that. I did the math more closely earlier when the volume was a bit lower and it was like 20x, so I think that actually is right. Yeah, yeah, no, no, 13x is right. So that's like pretty good for like a business like that where it's like the liquidity is really sticky there. Oh, they have like real moats versus like a Laffinity or Banana, a little bit easier to disrupt. Banana has a moat on Ethereum with its sniping. But anyways, but yeah, like Hyperliquid is like a lot more sticky there and people like project that in the future. It also has like the L1 potential. So, and I think that's why it's held up pretty well relative to this other stuff. Like, obviously it's kind of hard because it launched recently and had the crazy run-up and then pulled back. But, you know, 13x on your market cap for a business that's like, you know, the most profitable business in crypto are exchanges, you know, Binance and, uh, growing. It's like pretty feature parity with these SECS, has the L1 like potential tailwind. I think is like, that sort of stuff is what's holding up.

I'm looking at the 7-day returns and XRP is like top performer, only down 2%. It's just so frustrating.

Yeah, the fundamental stuff makes sense. I mean, yeah, like Hype definitely has a moat. That's one of my bigger bags. Uh, I have a decent amount of Banana that I picked up recently just, um, with like how cheap it is. Yeah. It's, it's funny how, how, uh, the difference in multiple, right? Banana basically trades at like a 2 to 4x multiple. This thing's trading at 13. Um, it's like, yeah, moat and growth are really the big ones, but at a certain point some of this stuff is just too cheap not to buy.

Yeah, and Hype was trading at like earlier in the year like at a 20, but like with the Trump listing.

And I mean, if you're using the market cap though then like something like Athena is pretty— looks pretty cheap too. It's just that obviously the unlocks—

but the unlock profile of Athena versus Hyperliquid is drastically different. It shouldn't be market cap though.

It's market cap plus, uh, non—

plus tokens, non-treasury tokens, like, yeah, like any kind of incentive token.

So it's basically market cap plus investor plus team.

Yeah, so Hyperliquid has no investors and then they have team at like 30%, but like that.

Yeah, that's the real market. I think you should use like the CERC as 60% because team is like—

I know, but like that guy, I'm pretty sure that like Jeff was like a billionaire or something before. Someone said that. So it's like, buddy, decentralized. How does he become a billionaire? He was like the head of HFT at Hudson River Trading. He's like a fucking Chad. I've heard billionaires got like, yeah, I don't know if he's a billionaire, but like he's got, yeah, that's what I've heard. Someone said that, but I think it's like a, he's, he's very well off.

Yeah. But still you're gonna use, I think you, you, yeah, you use like a disc—

like a discount, like a discounted version of team.

I mean, you, you can try and write propensity to sell, but yeah, you, you want to use a discounted version of the. Of the team. Like, like, for reference, I think according to DeFi Llama, Athena has done like $37 million in fees in January. Um, does that go back to the token?

Because this is the thing, I was just— yeah, I was including just buyback there, not even total fees, right?

Which is like, that's a pretty big distinction, which I think a lot of CT gets wrong when quoting tokens. It's just like, this is what it generates, like, all right, but what is it actually passing through?

Yeah, that's like Banana's trading at 2x PE, it'd be trading like a 1x revenue less than, which is—

I mean, I think that the revenue in December was definitely $27 million, I believe. We can look at it. We can look at— I think January hasn't been updated yet.

I mean, I think it really boils down to like the whole market is basically pretty binary, right? Reserve or not. And in the event of a reserve, like, what's going to outperform Bitcoin? Do you think it's like—

what do you think if we don't get a reserve, what happens? I don't think it's as like— I don't think it's that— like, still a lot of regulatory tailwinds and stuff. Like, obviously the reserve is like things go nuts, but like, I think there could be a path without the reserve to do decent.

If you look historically, like, all the Bitcoin gains have usually been, you know, like catalyst-driven, like one big catalyst, big move, and then kind of chilling.

Yeah, but this is like a catalyst of like complete regulatory overhaul. Like a lot of the TradFi people that I talked to, like the SA— what was it called? SAB 121 or something?

Yeah, yeah, the one where banks can custody.

Yeah, it's actually bullish. Yeah, like people within crypto like didn't give a shit about it. And then I'm talking to these like more like TradFi people and they're like, this is huge. Like that like stuff like that is positive regulatory changes.

That was actually, yeah, we didn't talk that. That is, um, so basically banks and TradFi institutions, when they held crypto on their balance sheets, they'd have to hold them as liabilities in the past. Uh, and now they don't need to do that. So basically it opens them up into the custody business, which is, I guess it's not good for like the cypherpunk ideals, but it seems like a lot of the industry doesn't give a shit about that these days anyways. We're kind of bigger than that now.

Yeah, you need this.

So it definitely will drive if you can just like log into, you know, JP Morgan Chase and it's like deposit your BTC, right? A lot of people are going to do that. Like, let's face it, a lot of people are going to do stuff like that.

So it adds to the constant drip for sure.

Yeah, I think that like that stuff is like where we kind of have a path outside of the Bitcoin Reserve.

Like, you even saw— I mean, because like Saylor dumped a billion in last week and like BTC did well, and then it just kind of shrugs it off. Like, there is a decent amount of exiting happening if you're seeing this guy dumping in size weekly. Yeah, like MicroStrategy is still cooking along.

What's the premium? Yeah, I can't, I can't believe—

well, they just expanded their, like, the, the, the share issuance allotment by like 30x.

I don't know, it just feels like this, like, I feel like we're in a really good spot. Like, I think we're in a really good spot. I feel really good about things. We've, we, we, we nuked the complete vapor dog shit and now like we are building back.

That vapor dog shit's gonna get bit up again.

Yeah, no, probably, but I don't know. I feel like it's like, it's easier to feel bullish here than it is when like stuff that makes no money He's trading at like $5 billion valuations.

There was a good— there was a good pod, the Odd Lots pod with Howard Marks the other day on like how to spot market bubbles and stuff. He's been spotting them for like, yeah, 15 years though.

Not that we're in a position to ever criticize Howard Marks.

No, no. But he doesn't think this is like a bubble because he says a lot of the signs are still not there. Like, like the only thing is valuations have gone up a lot. But he's like, you know, when there's a market bubble, I'm the star of every party and event that I get invited to. And like, there's all these different kind of like—

like qualitative stuff.

Yeah, it's all like behavioral cues. And he's like, so yes, the market is definitely overvalued on valuation metrics, but a lot of things that I would see in a bubble have not appeared yet. And you kind of feel that with crypto too. Like, I want to— there's the one side of me that is saying especially with the Trump thing. I was like, maybe it's all over. Maybe this is really the top, right? But there's still that just like— no, there's still just that feeling that so many people have not made money and so many people are depressed and like—

yeah, but there's also probably like a subset of like the extractors that have gotten ridiculous.

Yeah, for sure, for sure.

I don't think you need a scenario where everyone's making money, uh, to, to, to feel like it's a top. I think this is where the whole dilution element comes into play, right? Like, there has been— like, it's a top because a lot of money's— last time a lot of money came into the system, everyone made money, and that was an obvious sign of a top. Here, because of the wide amount of assets that have existed, there's just been a lot of money sunk in and then market caps evaporate, right?

And then like, the president's just extracting billions from lots of these tokens. But I think that's what— that's who the real winners of this cycle have been so far. It's been like the BTC and SOL bulls, I guess, and like, you know, select folks of outperformance. But then like these people who've just like played the low float, high FTV game, or just launched tokens and just extracted a lot of money. And like, I don't know how much of that is like just a one-way flow. That's just like, we're taking this out forever.

Dude, from FTX's collapse, ETH is not even up 3x. Like, think about that.

Like, I don't know if that's relevant though.

Like, uh, but it's like a big part of the market. It's like a big part of the market that has just been like allocated to that.

Yeah, it's just like, it feels like we need more money coming in, which I think the regulatory stuff could shift in order— and also like a return more to the fundamentals, because like if you keep on bidding up stuff that's valueless then it's going to keep on being created, right? So it's like kind of a— like, you can never get everything.

Your fundamentals are all based on people bidding up valueless shit though.

Like, yeah, there's definitely an element of reflexivity to it for sure. And that's all—

yeah, all the apps that make money trading.

Yeah, but I think that the counter to Zezé's point is that other than stablecoins, you can have the same amount of— like, there's a certain amount of activity, and whether that's split amongst, you know, uh, 100 assets or 10 assets, obviously we're talking like a magnitude difference. It's, it's still going to be, you know, accretive to the, to the fundamental token. So it's like either these 10 assets are doing much more volume or these 100 assets are, are all selectively— are all equally doing less. And so the sum of the parts is not too different. So I mean, like, you could still have a world basically where fundamentals do well without needing the long tail of shit to keep going.

Yeah, it's also like you have to ask yourself the question, okay, like outside of like BTC and SOL, how do you express— and like maybe Coinbase or something— how do you— but that's also an exchange. It's like, how do you express a bullish view on the space? And like the only way to express a bullish view on the space outside of those, as like from like a long-term perspective and some rooted in fundamentals, is like to buy like the pipes of the space, like these exchanges and like you know, maybe Aave or something. Like, yeah, like these are the pipes, uh, the, the stuff—

like, you have to have eventually real applications that do stuff for people to trade, right? For the pipes to, to make money. Because right now the pipes are mainly people trading the stuff that you hate, right? Like, that's— yeah, where a lot of the volume— obviously major is the majority of the volume, but realistically, like, the majority— like, the, the, the pipes make money trading all the stuff that you hate. So you still do need applications to come in and do something.

I think, yeah, long, long term. But that's like such a lot. You could have made that at any point. You could have made that bear case at any point over the last 15 years or whatever.

Yeah, I think it depends what pipes though.

If like, if you look at hype, then the bulk of volume is on the majors themselves.

Yeah, it's on BTC and SOL.

And yeah, like you shave off the trash and they're not losing much volume.

Yeah, but the majors themselves, like like SOL and ETH trade based on the traction of their ecosystems, like especially SOL, right? It trades because PumpFund is doing like $300 million a year in revenue and like there's a bunch of meme coins and stuff. Like it all is reflexive down to the shit that Duncan's complaining about.

And so maybe we should do like an episode on like evergreen, like what do we think the actual— because I think we've talked about this before. It's like, okay, Bitcoin's competing as money, you know, stablecoins are competing for like payments. And that sort of stuff. You have like some DePIN stuff actually like makes sense as real businesses. Uh, you have the kind of casino element, uh, that's like just general crypto speculation is a big one. And then, uh, the, the fifth one, like, you know, potentially gaming, like with, with Off the Grid and some of these things could actually add value to gaming in the metaverse stuff. Uh, maybe we should do an episode on, on, on those sort of things. It's like, what could actually like be launched through crypto to take part is like meaningful revenue that makes sense and is long-term sustainable. But yeah, it's obviously right now a lot of like—

I think it is mostly just finance. It's just we need better assets on-chain. Oh, RWA. RWA. It's like I've always felt that, especially when DeFi Summer took off, it was like democratizing like private banking almost. It's obviously not the exact same, but, you know, being able to access these financial products that you otherwise would not be able to. Yeah. And I think the red—

yeah, the positive regulatory environment, I think, is a massive tailwind for that stuff, like the RWA stuff. Did you guys see that quote? The thing is though, with that being—

yeah, with that being said though, I think like at a fundamental core, when you talk about like censorship resistance in crypto, I think there's only like 2 things you really need that for. One of those is being able to like transfer and store value. And so that's just Bitcoin or it is like actually decentralized stablecoins. And so I think the easiest case for that is like Bitcoin-backed CDP. And then—

but the thing is that can never compete on a yield. I got thought about that. It can never compete on a yield basis.

Yeah, yeah. But then like If you think about it, nothing else in crypto really needs like World War III level censorship resistance, you know what I mean? Like, that's the only thing that you really— and like privacy too. Those are the only things that DeFi stuff does, right?

If you want to build a financial system post-World War III, you do it on DeFi rails.

But like, but you, but you need to— what do you need that for? You need to transfer and store value. Like, that's the main 99% of what you need. You don't need to trade perps. In World War III. You don't need to, you know, leverage long on CDP protocols in World War III. Like, you probably need trading on AMMs.

Yeah, you need credit, like prediction markets. I mean, I think like the idea, yeah, in a World War III scenario, I feel like we should cut, cut the, the part that I feel like we're rambling. But I think, I think the idea in a World War III scenario is just that, yeah, you want to rebuild finance in a world with like zero trust. Right. And so everyone just uses crypto primitives. Yeah.

But I think all you need in that is transferring and storing value, like moving money. That's— I don't think you need anything else in that scenario.

Well, I think you need all the things that you— anyway. Yeah, that's, that's— but did you see the Larry Fink RWA thing though?

Like, he had a quote where it was something along the lines of, I want the SEC to rapidly approve the tokenization of stocks and bonds. That's, I think that that's still a narrative to actually—

It's funny every time like someone says something like that, you get everybody from all the different chains and ecosystems coming out like, wonder what chain he's going to put this on, right? Like, you know, you see like the Avalanche guys come out, oh, I know a stack that's perfectly built for this. We got a subnet for this. It's like everybody's just—

Yeah, where do you think they would go?

EtherSol? I think they do both.

Like, they'll just do what people want to— wherever people want to hold these assets, right? Yeah. Like, if you want— if the point of tokenizing it is that you want to be able to borrow against your Vanguard, your BlackRock fund, and you want to do that on Solana, you want to do that on ETH, I think they'll let you, like, issue those on either. Obviously, there's, like, liquidation and considerations, right? And, like, you know, the more you split it up between all these chains, liquidating becomes harder and all this. But yeah, I don't know. I find it hard to believe. And this is my thing with like RWAs where this was always my— a lot of people when I asked them like why ETH was going to like start outperforming, a lot of people start talking about RWAs and it's like, well, for RWAs you don't need any of these censorship-resistant properties and everything to do RWAs. It's like the total antithesis of that. And so I don't know, BlackRock announced their BIDL, their, their— I hate that fucking word too, BIDL. Like, why are we still using that? Like, just say build.

I don't know. Yeah, that thing just killed all the tokenized treasury startups that we saw except Ondo. Ondo is somehow like holding strong. Through their first unlock to like a $14 billion valuation. Like, what the fuck are those guys doing?

I think anywhere that is proven that people want to hold assets on, they'll be more than happy to tokenize there, you know? And like, I just really— it also depends what you're tokenizing. If you're like, if you're tokenizing something that's going to have a lot of turnover, then you're not going to put that on ETH, right? If you're tokenizing something that's just going to like sit there and then go through redemptions and stuff, sure, maybe it goes on ETH, but it kind of depends what asset you're talking about too.

So, oh yeah, we should do this as like an evergreen episode at some point. Yeah. Yeah. All right. Well, this is, this was pretty good. I thought.

Thanks everyone for listening. See you again next week.

Yeah. See you in 2 weeks.