Hivemind: Have We Bottomed, Bitcoin's Quantum Threat & Hyperliquid Unlocks

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 back to another episode of The Hive Mind podcast. No José again today, so we brought on Simon from the DeFi team at Delphi Research. I am, of course, Ceteris, Head of Research at Delphi. We got Jason Yanowitz, Head of Markets, and Yanowitz Ventures partner. So today is Wednesday, December 3rd, 10:30 AM. BTC's back over $92K. We have You know, we've had a day or two of not complete terrible price action. Um, do we think this is like a Santa rally going into year end, or what do we think, Jason Yanowitzitzky?

I mean, it's definitely early to— I'm optimistic that we get some relief, right? Santa rally. I don't know if it's like the whole month, but like, I'm optimistic. We've had like 3 weeks roughly of just pretty much straight down with, um, some pretty big OI wipes at various points. Um, positioning is completely wrecked. Equities are, you know, kind of holding in there, pushing back the all-time highs. Um, we're starting to see, you know, TGA spend after the shutdown pick up again. There's— I, I I'm cautiously optimistic. I mean, I've bought in a couple of the dips that have kept on dipping in the last month and a half, but kind of like that South Park meme, right? Like, I didn't hear no bell. I don't know, 90, like a really key level for me, I guess, like if I was to like pick one would be like this, like 90, like this, like 93.5, it's kind of like 93.5, 94. It's like pretty much like the yearly open, um, it's like the 30-day rolling VWAP, it's like the 30-day— there's just like a bunch of like moving averages. It's just like the yearly open, a very, you know, psychological level for the market. So like, um, we're also kind of breaking back into, you know, the, the, the $90 to like $110K range that we've spent quite a bit of time in. So like if we could, you know kind of hold around here and then start breaking back and going green on the year into year end, I think there's like a decent chance we have a, a good little bit of relief, uh, for Bitcoin. Um, some alts are picking up, right? You've seen some like good moves out of, you know, Pump, which is like one was up like, I don't know, 20-something percent yesterday. Hype is kind of holding up well even with like the unlocks, which we'll probably get into. Um, later on in this conversation. Like, Zcash is kind of, you know, bouncing after being down for a couple— like, I don't know, it looks to me like it's too early to tell, but I'm cautiously optimistic. And I've, I've started adding back on, on a couple things, uh, for, for that kind of trade to manifest. But I will cut that shit so fast if we roll over, uh, and take out daily lows and stuff like that.

So Yeah, there was a good— I thought there was a good piece by Dorman at ARCA, or maybe it wasn't by Dorman, but somebody at ARCA, about just like, it's hard to explain the selling that's been happening, you know? Yeah, um, I guess you can, you can— obviously everybody thinks it's an October, it's an October 10th aftermath thing, which is probably true, and somebody has been— there has been an aggressive seller. But, uh, I don't know, it's been so aggressive for so long, it would make sense to see some relief with that. I would say though that with it being December— yeah, we talked about this on the research call yesterday, right? We're like, stuff that's down a lot this year, it's probably not the time. Maybe like, maybe it will, maybe it will, but you got to think that stuff that's been hammered this year is such an easy like tax loss selling in December. Um, but again, that could also— I remember like SOL in 2022, uh, after FTX blew up, um, the low was like when it traded to $8 was like December 29th or 30th, I think. And that was basically just someone puking before the year end. And then it was back over $20 like the second week of January.

So I think, I think one note too on like the point you made about no one really knowing why we've gone down or gone down so much too. Like, obviously, like, there's this quantum narrative going around which sort of like is just FUD maybe, um, but like makes sense. Um, but I think something like no one on crypto Twitter or like within crypto really talks about is like the Chinese real estate market is like doing so shit right now, like terrible. And like these guys all need to just like—

maybe, maybe that can explain some of it too because all the Chinese whales selling above $100K because the real estate market is—

oh, like, like, I actually like Yeah, like legitimately.

I mean, right, all the selling came from Binance.

Yeah. So I think that is something that like no one has talked about that could maybe be a weight on the market too.

Yeah. My dad asked me yesterday, it's like, why is the market weak? I heard like something to do with Japan. I was like, yeah, I don't know how to explain like the yen carry trade.

But it's more scary too because nobody knows why, which is like kind of weird. But I mean, it's seems like we're maybe, hopefully, knock on wood, moving out of that.

But I think that that's usually the case though for something that's not fundamentally tied to something. It's very momentum heavy. Um, you get that meme, it's like, if you ever ask why Bitcoin's pumping on any random day. Um, but yeah, I, I mean, you saw a lot of distribution, uh, higher from, from the long-term whales, right? And so that kind of got absorbed by Saylor, but now he's out of dry powder. I think there was like peak FUD between SAILOR, Tether, and all these other things that, um, spooked the market and the bid just disappears. And I think, um, you basically, you know, signal for market reversals when you get bad news and price doesn't really dip. So, um, kind of waiting on that to see a, a more proper reversal in sentiment, but it feels like we're just massively oversold if you look at you know, our RSIs and, and other just broader trend indicators feels like we're definitely due for a bounce. The, the question is just the, the degree of it. Um, I think a lot of people are kind of reluctant to be overly bullish, right? And that feeds on itself. And so you're going to have profit taking, and if people think others are going to take profit, it, it naturally becomes reinforcing. And so, um, yeah, it seems like bounce here, and then I, I have no idea on a short-term basis. Um, obviously still bullish on, on Bitcoin, the asset class, in the long run, but it's just hard to, to really predict anything on a week-to-week basis. Um, it seems like Saylor's out of the market for quite some time. You've gotten rid of the, the risk of him being insolvent, which I guess we can try transition a bit to that is, is, you know, the recent news came out where, you know, one concern with the, the structure was the fact that he bought preferreds, which are, or raised cash through preferreds, which are effectively debt in the sense that they accrue interest. And, and so the concern was always, you know, if, if he did too much and, and, and how would he service the debt? Would he need to sell Bitcoin because he's been deploying all his free cash into into BTC. And so how is he actually going to be able to do that? And so, uh, recently came out, uh, they created a presentation basically signaling that they have, uh, about 2 years worth of cash in, uh, in, in for, for interest. And so there is no real short-term solvency risk, right? Part of the reason I think we sold off, and it's not— this is just a consensus take— is just he's no longer really able to deploy a bunch of cash. But there's, so there's either sailors buying, right? And then there's, there's sailor, sailor like as a bullish component, neutral or bearish, right? I think it was, he was bullish for a while and then we immediately flipped to bearish rather than being at neutral because the concern was, okay, now the debt's going to come due and he needs cash and he doesn't have it. But I think there was a decent amount of relief that came from that presentation. Because we transition from bearish, from MicroStrategy being bearish to neutral, uh, to the market, right? And so if you have, uh, which basically means I think it's going to be harder to, to move into new highs, um, but it's— we're less likely to create new lows as well. So it just kind of reinforces this range-bound position we're in because he's a bit of a non-factor in the market for some time, you know, unless we get a rally in MicroStrategy, or, uh, right. And so like, how do you get that? It's, it's probably the, the main way is just through S&P, uh, ad, which I think gets announced in, uh, the middle of the month.

That seems so— I don't know, it seems so unlikely right now. Um, I think, I also think this is kind of the part of the market where things go viral that get blown out of proportion. You know, you saw that exactly with the Tether strategy. And there's, there's realistic, like, concerns in both of these scenarios. I'm not saying that there's not, like, it's true that Tether, there is risk with Tether right now. If once you like play the whole thing out and talk about all their other entities and like the amount of USDT that's actually permanently lost and all this stuff, the risk is kind of low. But it is true that it's not like other stablecoins and that they do have volatile assets that are partly backing Tether. But people take that like, what?

Tether FUD is just like, I don't know, I feel like we're at like $90K still. How are people like calling for like the fall of Tether? They just raised $500 billion.

I mean, it is, it is managed not the way you would want a stablecoin to be managed, like in a vacuum. However, once you take the holistic view of everything, and again, the fact that like how much Tether has just been lost, probably that's just free money for Tether for the rest of like any private key with lost Tether. That is free leverage for Tether, right? Because it's never going to be redeemed, right? And they might know internally— they probably— they definitely have internally like metrics around like estimated how much is lost and all this anyways. And then the Saylor thing too, people see like sell Bitcoin, they saw that for the first time, and then it's like, oh, it's all over, right? Um, but it's like, eh, you know, you gotta wait um, a long time in a bad scenario. Like, you got to wait 1 to 2 years in a shitty market the whole time for them to kind of get there. And so if you're like, oh, I'm gonna, I'm gonna buy when Sailor's like liquid, it's like, I don't know, what are you waiting for, right? Like, just stop thinking about crypto, just go like do something else. Um, but yeah, the other one you brought up was Quantum. I don't think quantum is any reason for the weakness recently, although I do think that quantum is something that you'll see more and more people talk about because it is— it does see— quantum was always this thing that was like, um, we don't know if we can do it, and is it like this science fiction thing that will never exist? A lot of people still believe that, but there are you are seeing a lot of smart engineers come out saying that it's moved from a theoretical problem to now the actual hardware side of it. Like, there's a lot of smart people in quantum that are convinced that, yes, quantum computers are possible now, which is a pretty big change over the last even like 2 years. There's a lot of— Nick Carter had this good piece on it, and there's like prediction markets on when the first quantum computer would be released. And I think originally it was like 2050 or something, and now it's gone down to like early 2030s maybe, or like mid-2030s or something. Um, and so you're going to hear about this a lot more. You're also going to see a lot of people shilling other stuff with like this narrative, right? Um, but the thing is, the quantum— why quantum is an interesting problem for Bitcoin is that like, yes, there's a tech problem here where you need to move everybody to post-quantum signatures, um, and so you need to develop that tech, right? And then you need to get all these people to move, and quantum signatures are very expensive, and Bitcoin's throughput— Bitcoin's throughput is low. And so there's like all these operational things with it. But the thing that makes it so different for Bitcoin is that you do have like potentially 20% or so of the supply that could be stolen, right? And there's no, no tech, no tech can fix that problem, right? Like, as soon as Q-Day comes, Bitcoin, the protocol, the, you know, social consensus needs to decide what are we doing with these lost coins? What are we doing with Satoshi's coins, right? Because they're not going to be moved, and so they're just a honeypot. And this is why quantum is— you're just going to hear it more and more every year that goes on. And the closer that quantum gets to becoming a reality, you're going to hear this more and more, right? Um, because a decision needs to be made on what you do with the coins. And from my perspective, there's really just the two options. It's like you burn them all essentially, and maybe you just completely burn them, or maybe you use them for like tail end inflation. To keep the 21 million? I don't know, like, but that's one option. And then the other option is just let whoever steals them steal them, right? Uh, but there's nothing else you can do. You can't move them on behalf of other people, right? And so it's, uh, yeah, this is something you're going to hear more and more. And will it weigh on Bitcoin price action? Like, I don't know, maybe. My— I'm curious what you guys think, but I think that if this day comes that social consensus. There's going to be a lot of people that don't recognize the, the new Bitcoin, but I'm pretty sure the majority of money that's in this thing is going to just render those coins like burnt or not, you know, a part of Bitcoin. Because I don't know if you can deal with like getting 20% of the supply stolen, especially if it depends who the actor is too, right? Like, like, I guess it's different if Microsoft steals it versus the US government versus North Korea, right? There's all these different scenarios of who's the one that steals Satoshi's coins. But yeah, people are talking about it more because it seems like it's realistic now that this day is going to come. But it's funny, like, I had some thread on Quantum and I had some guy just like telling me I was like FUDing and this is not a real thing. It's never going to happen.

So Yeah, I agree. It definitely feels a lot less like theoretical and more, more, more real, right? I mean, you just see how quickly AI is moving, like just how like things can change so much in a month. And yeah, I wouldn't be surprised to see like the quantum stuff pick up. It doesn't even seem like people are talking about quantum that much, like generally within or outside of crypto.

Like, I do think this is, uh, I mean, quantum stocks this year went ham, right? And like, it's mostly those are scams, but like, people are, people are thinking about this area.

Yeah.

So basically is the, the risk is that, um, or I guess the question is basically in what order do things happen? Is it an event where we find out there's a breakthrough because the coins were stolen? Or, or would there be a breakthrough and someone says, aha, we should steal the coins? Because if it's the former, then there's not really much you can do because you're, you're reacting and, and Okay, you can try and get something through, but like that, it's just going to zero for a little bit, basically.

Well, you can, you can start migrating people, first of all, over the next like 5, 10 years to quantum-resistant addresses. And then I think, yeah, like the one of the risks is that the smart way to steal these coins is you don't steal them all at once if you have a quantum computer. Computer, right? You slow it down.

Yeah, kind of like that, like Enigma machine type shit from World War II. Like if you like use it, like you get it and you use it, then everybody knows you have it. So you get like one good shot, right? And like, are you going to use that on Bitcoin or like nuclear codes or some shit?

I mean, I think you probably, yeah, I guess the math is, is like how long you can get away with it. But the thing is Bitcoin is so liquid that you could snap, zap bid side liquidity and obviously nuke it, but you can extract quite a bit. Whereas, you know, you run the risk of someone discovers that, because basically you have to find lost coins, right? Like how, how would you do it? You'd find lost coins and then you'd take them and hope that no one would notice. You gradually take them. Otherwise, like if you're taking active coins, that's going to get exposed pretty quickly. So you have to, Source lost ones. And the thing is, how do you find lost ones? You look at, you know, really old UTXOs, and those will trigger Twitter alerts in a heartbeat.

Uh, any, you know, the, an interesting, uh, target you could do is Binance, because basically anybody who, uh, has a public key on-chain is, uh, stealable. That's like the distinction that makes it so. A lot of Bitcoin UTXOs, the public key on-chain is hashed. And so you actually can't really steal those with a quantum computer. That's why the old ones are so vulnerable because they were like Satoshi mined a lot of coins to public key. It was like mined to public key. And then, so, so a big exchange is actually one, but I guess like the, like you could take all of, yeah, it's, it's, there's probably some coins that are active, but their public key is on chain. You know, that are more vulnerable, and you start with those. And then you like slowly work through— yeah, you work through the ones that are less likely to out you as having a quantum computer. But there comes— yeah, there, you could even fork before Q-Day, you could even fork before Q-Day. But that's way harder to do, I think, socially, because people won't believe that it's actually coming, right?

Yeah, I mean, the other thing is like, they're, they're, it's not as if you have an immense amount of DEX side liquidity for Bitcoin, right? You need to do it on the SECs, and that's, that's where you probably get boned. Like, the second that gets exposed, exchange just locks the account, and then that's that.

Yeah, it's interesting though. I don't know, we're going to hear about this more and more, and you're going to see some crazy proposals. About this. I know there's already a bunch of protocols. Actually, Delphi Consulting— I haven't read it yet, but they released something today on somebody that's kind of working in this, uh, area. And then there's also like, will Bitcoin Core actually implement quantum changes too? Um, you know, so I see some people talk about like, well, we'll save the people that can be saved. And it's like, well 20% of the coins get stolen. I don't care who migrates, like, they're not saved. So that's why it's like a way bigger issue. Um, but yeah, yeah, I definitely got to look more into quantum over the next little while.

Yeah, what happens first, like, quantum or, or economic security becomes an issue for Bitcoin?

I don't think economic security will ever be a really realistic issue for Bitcoin because they'll just move to like proof of authority where like the exchanges and like BlackRock and everybody just, you know, mine at a loss maybe, or— right. Um, it's pretty easy.

I don't know, I feel like that the difficulty of getting that across is being underestimated. There's obviously going to be the people that say like it's no longer a thing, and you have— there's going to be a decent attrition from some of the holder base.

I mean, hey, you can kill two birds with one stone. You can just steal the Satoshi coins and use them as perpetual inflation. Like, and then that fixes the security budget and the quantum thing. I know a lot of people aren't gonna like that, but, uh, it's a, it's an option, you know. The, the, the, the, the argument against, you know, at the end of the day, a theft is taking place, right? Like, either the social consensus burns them, which is theft in a sense, or an actual attacker steals them.

Theft.

So it's like, who do you want? Who do you want to be the beneficiaries of this theft, right? A single entity or the greater good in a sense? And, uh, people will be like, oh, well, you can't fork it because then, you know, that, that ruins the fundamental use case of Bitcoin. It's like you have property rights and your keys, your coins, and this is no longer true anymore. And, uh, I think it's like, it's more nuanced than that. It's like, well, you actually don't— they're not actually your keys anymore because somebody else has them now. So I don't know. I know we can move on from Quanta though, but it's something I keep looking way more into.

Please share more articles as you come across them.

Yeah, we'll go read that Delphi one. Although I don't know if that's— I think that's not a protocol that's related to it.

I think another thing that's like maybe underdiscussed is sort of like a similar vein, but it's like having money on chain seems less and less worth it than it ever has, especially with like, like AI and like smart contracts sort of just like look, looking for like exploits all day long. And especially after like, you just see Yearn just got hacked, uh, Balancer before, like Streamlabs. It's just like, it really, that's scary. And I think as AI gets better, it becomes more and more like, okay, like North Korea is just on like deep, like sending in like smart contracts. It's just like, dude, at what point is it just like, keep my money on like, uh, a centralized exchange?

For sure. There's also like, there's that report by SEAL, and I think they said like North Korean engineers make up like 15-20%, right? And think about all the closed-source protocols that are out there. Like, I have money in closed— like Solana has a lot of— they're getting better, but like Historically, everything on Solana was closed source. Um, again, it's getting better now, but there's still, there's a lot of, there's protocols that have money in that's closed source. And it's entirely possible that like some North Korean dude just has the keys to that protocol and is just gonna drain it one day. And you have to think about these kind of things. Like you, it's like you need multiple addresses, multiple blockchains, multiple assets. It's like You know what I mean? It's, uh, definitely— I agree with you though, like, holding coins on centralized exchanges, um, like, self-custody is good, but not all the time, you know? It's having your— having your assets custodied is actually really nice, and having like time locks on when you're allowed to access them, and not being able to have like one signature send your net worth in one transaction, right? Like, these are not really features to me. Um, but yeah, so what was it? Anthropic has like this—

yeah, really, really cool, uh, report. I think it's probably put in reads. Um, but yeah, agents found like $5 million in smart contract exploits, um, since March, I think. Um, which is kind of insane. Uh, and so like about 5 million, 4.5.

Yeah, yeah.

Uh, which is kind of insane, right? Because these things, like, like, this is the worst they'll ever be at it.

Yeah, that's, yeah, that's what I'm saying. It's like that, and also like how much incremental, like, you should be getting like extra, like, I see like more yield for the risk you're taking, which I think like it's a similar sort of like parity to like the altcoin, like, sort of like, uh, industry as a whole. It's just like you're taking so much risk, and even if it does like play out well, you're probably not getting paid like based on the risk you're taking. It's like, okay, you have these stables on chain, you might like— you're getting XYZ yield, but is that yield justifiable based on like really all the risk? Like, smart.

Yeah, I mean, the counter though is that you can use these to also build more bulletproof designs as well. And so the people that are taking shortcuts on the long tail of these, you're definitely taking risks that you're probably not getting compensated for, but on the more mainstream designs and kind of buildouts, it should be defensible. I mean, that was the idea that existed with Balancer and others that you thought if they haven't been hacked yet, they should be bulletproof. But I don't think those things have been like battle-tested with models. It's mostly been kind of audit firms, which is, yeah, still nuts. Because it's like creative stuff that you just haven't thought of. It's not like this is a very obvious mistake in the code. It's, it's like combining multiple, uh, attack vectors to, to kind of create a, an opening.

That's what like the Yearn one was. But like the lendiness of like an OG DeFi protocol like Balancer, just like getting thrown out the door really makes you question like everything.

Like, yeah, I mean, it's definitely kind of— I mean, yeah, it's definitely worrisome. And also like when you read that article, it said like at least half of the attacks this year from humans could have at least been conducted with these agents. Right. So it's just like, I don't know, it's kind of— it's kind of insane. And it's just like an area I have like zero expertise or, or, or like, um, real knowledge. Like, I just don't know how to really underwrite, um, the risks with it. Um, it's, it's like that, that, that article that Jan shared, or I don't know who initially shared it, but like, it was one of those like, like, what the fuck type, type articles. When I read this, I was like, this is actually kind of scary because like, I think like the main takeaway is like, this is the worst that they will ever be at exploiting or, or being used in this way, right? Um, and so yeah, I don't think you can take Lindyness as like a given at any, at any point. I don't think like, yeah, I don't know, it's, it's sobering. It's a sobering kind of like that with Quantum. It's just like, geez, like I'm just getting bombarded by machines and there's nothing I can do about it.

Yeah, I think that what is You know, a few months ago, I think the consensus was kind of changing that smart contract hacks were kind of like over at this point. And it was more so social engineering hacks like front end, like the Bybit hack was a front end attack, right? So it was kind of this understanding that, oh, attackers are moving to more sophisticated front end type stuff, or maybe just like pure infiltration stuff, right, with like employees working at a place. Because smart contracts have been so battle-tested now that they're so good. And then you've seen these two in the last— on OG protocols in the last month. And I think that it just like kind of resets the clock, right? Um, I think that reversible, you know, transactions are 100% going to be a real thing pretty soon.

Um, they are in TradFi, right? Like, it's a very Yeah, there are standards out there that you can do.

I remember when, I don't know if it was like 2020, 21 or something, but these kids from some, you know, some school, I don't know, Stanford or something, came out with reversible ERC-20 and everybody lost their shit. They're like, well, you don't, all these fucking university kids, like they don't understand the point of crypto. And, you know, the use case is that there is no reversibility, all this stuff. But you see more and more people about it now.

Like, not on like main— on ETH mainnet, like, come on, that, that, that should not— yeah, I don't know. I guess it depends how you could roll them out, but that just seems to go against like a lot of principles.

Uh, well, I think you can like opt into it. If you let the user opt into it, then it's good. Like, if somebody— if there's like a reversible USDC— well, USDC is always, I guess, reversible, like, but like DAI was an example. Like, there's a reversible DAI, there's a non-reversible, and you can choose as the user what you want. I think most users are going to choose reversible because they're not worried about getting blacklisted or anything. Right. And then I guess you create a new set of problems there because anybody that's not using the reversible one is like, oh, why aren't you using reversible one? Right. But I don't know. What's the deal with Hype?

Big unlocks. Big unlocks. It's like 9 million. What, a month for the next 9 million hype tokens or 9.9 million hype tokens. Um, a month for the next, what, 24 months or so. Couple billion dollars of, of, of token unlocks. But, um, we're writing about this a little bit in the year ahead. Somebody had like a really good tweet about it, um, that kind of went over what the post-unlock actions were.

Wait, it's 9 million tokens per month?

No, I think I missed—

no, no, no, no, I think so much. That would be a third of a billion a month.

Um, it's like 3— yeah, no, no, no, it is, it's about like $300 million, at least the initial one was. Yeah, so, uh, depending on what day you use price, but so effectively The team sent, or like the, the post-unlock actions are as follows. OTC sales, or what we expect to be OTC sales, were about 600,000 hype tokens, which was about 23%, which was sent to Flowdesk, which is why people assume that they were sold OTC. About 235,000 hype was restaked across 4 wallets. In 15 wallets about 900,000 HYPE, uh, which is held and hasn't, uh, hasn't been moved or, or there's been no actions taken with that. And then the team restaked 850,000 HYPE via HyperLabs. Um, so that's what they did with this initial unlock. And I guess like my playbook, or like the way that I'm thinking about this, is I'm just going to kind of wait and see, um, how the market digests this one and then what they do with the next one or two before I'm like comfortably able to extrapolate out further and what sell pressures, um, and things might look like and, and how much is offset by, um, protocol revenue like builder fees, HIP3, all that stuff. Um, so that's kind of like what I'm looking at over the next like month or two is like what they do next month and the month after. Is it the same? Is it different? Um, and then kind of extrapolate out, look at hype, revenues, fees, buybacks, and just kind of see what the, what the net pressure might look like, all else equal.

But yeah, do you, do you think at all about like a season 2 or any like—

they will, like there's, there's, there, there are— I think they will at least. There's, there's tokens earmarked for it. Um, they're probably still counting like points and stuff in the background. Yeah, I think that's, um, on the cards. I don't think it's like a priority, um, for them, but, uh, I do think that will come out at some point. Um, but my, my initial, my initial thoughts, uh, since, since, uh, November 29th or 30th is like, I don't know, obviously Bitcoin has rallied well, hype has, has moved, um, pretty nicely. As well over the last couple days since the unlock. Um, and I just think it's like, um, I think it's, it's good, right? Because there's a lot of uncertainty around what the team would do, um, heading into these unlocks and what that sell pressure would look like. There's a lot of speculation, uh, and uncertainty on Twitter. And obviously, right, like, it's hard to underwrite that uncertainty. And now that you kind of have some clarity, and then, you know, give it another month or two to kind of cement what that Looks like— I think, um, the— I think, uh, the expectation was probably for, for more net sell pressure than we're currently seeing. So I think it's probably generally, um, not like a bullish unlock, but I think like expectations are probably a little bit more bearish than what the reality is.

You also just got like the DAT approval, I think, yesterday.

Yeah, true. Um, but I don't— we don't talk about DATs right now. That's right. Yeah, yeah, for sure, for sure. It doesn't hurt. Absolutely.

Well, until, until it does.

Uh, so yeah, I don't know, uh, as a relatively large Hype holder, and it's, you know, probably my biggest position, um, yeah, I'm, I'm comfortable holding. Obviously you have long-term capital gains for a lot of people. Um, it's one of the only tokens that's up relatively significantly over the year, so you, you know, might get profit taking into year-end, kind of like we saw with SOL, um, in 2023 into 2024, I think. Um, so, so, you know, maybe that happens into year-end, but like generally all of the metrics around, around it are, are doing very well. Ecosystem's growing, all of the additional revenue sources and things from like HIP3, builder fees, builder— like all of it is encouraging. So yeah, if I had to— I think I said this on the research call, right? Like if somebody was like, gun to your head, you have to hold a crypto token and it can't be Bitcoin or cash or stables, like what would it be? Like Hype isn't far down the list at all. Um, so yeah, uh, that's kind of my takeaway on it, having briefly looked at it over the last couple days.

Yeah, that's fair. That makes sense. I think, uh, I think what makes this unlock trickier is that it is, uh, it's all the team who have also— some of them have done really well already, and they don't have mandates to like return profit to investors, right? So when you get unlocks, when all the unlocks are going to investors, it's like, yeah, those are probably going to be dumped pretty aggressively. But since, you know, so much is Jeff and like the other founders, and, you know, some of them are for sure going to sell, especially ones that employees that— I mean, they don't have a lot of employees, but like people are going to lock in their, their, you know, they're going to secure the bag. But there's also— you see this with like every billionaire, every really rich person, they still have a ton of equity in their original business, right? Um, so yeah, maybe, maybe if it dumps into year-end, maybe it's actually a good like, like spot if you don't have any yet. Like me, I don't own any. Like maybe if it dumps hard, maybe, uh, I don't know. Maybe it's worth a shot there. We'll see.

Maybe that's why they're doing native lending. They just borrow against their Hive.

Yeah, do the Michael from Curve strat.

What I was just thinking about this, do you guys know when the LIDR TG is? Because I think it will be interesting to see like what the market forces LIDR to do on like a buyback. Like how can you— like Hyperliquid has set the bar so high on that front where it's like if they don't do either way more in fees or a similar level of buyback percent will underwhelm.

Like, I don't know if the percent matters that much. You'll— it'll just adjust, right? If it's 50 versus 97, it'll just trade at, you know, 2x the, the multiple, basically.

Yeah, yeah, yeah. No, but that, that is— will be interesting to see.

But no, I think like every perp exchange has to do buybacks now. Like, you can't do a perp exchange, you're like But like, buybacks.

Yeah, yeah.

Um, Kalshi's been making some big news recently. I don't know if you've seen this. A couple interesting things. One of them is that they're tokenizing all the prediction markets on Solana, which is pretty cool. So I guess if you're a—

what does that exactly like mean?

Like, I think that they're— so they're going to use like prop AMMs, market makers, so you don't have to You don't have to— I mean, Kalshi is like a centralized— yeah, this is like their push on-chain as they're doing. Okay, right. Um, so you can just use like Fantom, and I don't know, maybe you'll have to— I don't know if you'll have to KYC and stuff, maybe. Um, but then I think the more interesting one is today they announced a partnership with CNN. And so this is kind of the thing that people talk about, prediction markets. Like, in 5 years, are there going to be prediction markets on every news site? Right? And, uh, this is kind of— seems like the step towards making that a reality, right? So CNN has like a car— well, CNN doesn't do car chases, but like hypothetically, let's say there's like a car chase, you could have this live prediction market on like how long does this car chase go on for, right? Um, because that's what society needs is betting on car chases live. Um, but yeah, that's like definitely— and they raised a ton, man. They just raised a billion, like $15 billion valuation. Um, so much—

I don't get it.

What do you—

what do you—

wait, what do they need the money for? What are they— are they like building something?

I mean, you take that money where you can get it is basically rule number one.

What do they spend it on? Have you seen all the affiliate badges?

Well, they don't charge fees. Like, it's really expensive to market make these markets. I mean, now that you have two of them, they can kind of use each other, but that was always the issue for Polymarket was they had to just burn a lot of investor capital to, to pay for liquidity because it's not something where it's easy to market make because they can't go and, and put on a, uh, an offsetting position on another platform. Like, there is only one place this market exists, and so it's very expensive to market make. And that's basically what they had to spend a lot of money on.

I feel like Kalshi has like a real competitive threat with Robinhood, like cutting them out of the loop too. That is just like, I don't know, it seems like a big deal given a majority of their volume the past 2 months has come directly through Robinhood's front end. And it's all sports. That's, that's the other thing where I think Polymarket is a bit differentiated, or like some— there's more like unique markets that people are actually trading, where like the Polymarket stuff is all sports. So there is a regulatory risk there still, I think, even if it's like Yeah, we'll see.

Uh, you can effectively get better odds through PolyMarket than you can through a house because the house is taking the other side, and, and so they need to bake in a higher spread because of the risk. Whereas PolyMarket, it's peer-to-peer, and so it's tighter spreads because the counterparty is just another trader.

No, 100%. But that's— at the same time, it's like the sports betting is taxed so heavily, and like the income, like if if you're going after like core government, government revenue, it's kind of just like— and it's like a vice industry. I feel like that will be— I mean, that just kind of hurts the margin, I guess, where right now you've kind of seen that, right?

Like, I think I saw a tweet from like the one of the executives of like the Indian Gaming Association like applauding all these lawsuits against Kalshi and trying to get another one launched in California. So I think that's like Like, obviously, like, it's kind of like lame behavior to just like, you know, go after people with, you know, lobbying regulatory action against them. But at the same time, I probably might do the same if I was, you know, a casino person magnet or something, right?

Like, 100%. This is like big money, not like— yeah, crypto.

So I don't know, I've, I've never used Kalshi actually. I've only ever ever used Polymarket.

Um, have you done like real money?

No, not really. Like a couple thousand dollars on like, uh, just random shit.

Yeah, I've used Kelsey to like live bet sports game through Robinhood, and it was actually like amazing. It's crazy. Yeah, IRA right next to like the college basketball live, like, you know, contract. Uh, yes, it was good.

Yeah, live sports betting, that's one of those things that feels like it's not going to be around for much longer. Just like, why is that? Uh, it's like a little bit too—

what do you mean? Like even more parabolic than it's ever gone?

Yeah, the problem is if you take away sports, like live sports betting or sports betting in general, like sports viewership gets cut by like two-thirds.

It's— yeah, it's really bad that that is like the reality now.

I don't The premier sponsor of all the leagues is like—

you're just like watching sports games and you get like these notifications on your phone. Like, would you like to bet if the next shot is going to be a 3-pointer?

It's like, yeah, I got an edge here.

Yeah. Okay, I'll throw $20 on that. And then just like over and over again. I don't know. I don't know, man. We'll see how this stuff goes. I'm skeptical that the way sports betting is right now, is going to be the form in 5 years. It's not going to— I'm not, I'm not saying it's gonna be like illegal or like decriminalized or anything, or criminalized or anything. I'm just saying the, the access these days and like the in-your-face pushing of it, I don't know, I think it's like realistic risk. And I think politically it's pretty easy to actually get through. I think most people would agree that like sports betting is kind of like a turn-off when you're watching the games. It's kind of a turn-off.

I don't know, it's like The issue is also, if you think about the incentive structure, there are— there's a lot of money and interest in having it continue, and, and there's of course some in, in not, but it's like multiple orders of magnitude more capital and interest in, in maintaining this as a viable thing.

Who— yeah, like, what's the incentive on the other side? Like, who is making money on sports betting not being legal?

Oh, it's not— I mean, no, it's not about making money.

It's about like preventing But that's where, like, the incentive, like John mentioned, it's just like, who—

I know the UK's done some pretty big studies on this and it's pretty bad, like, uh, the, the trajectory of life path.

I mean, Don Jr. is on the board of Kalshi and Polymarket, so like, I think they see the risk too, probably play on both sides.

Smart. Do you think that, uh, Kalshi and Polymarket are gonna stay the two Obviously, like, how much market share do you think a third one can really—

I think Robinhood will probably end up winning in general or something. Like, I— everything I've heard about, like, people who have, like, talked about Polymarket, like, uh, have, like, expressed that they don't— like, they think, uh, it's not as, like, it's incumbency isn't as, like, solidified as as a lot of people would think. Um, I also think like prediction markets, they're super early, right? Like they've just kind of proved it out. Like very rarely is the first one that like to do something ends up being the, the winner at it. Um, and I wouldn't be surprised to see like a Robinhood or even like a Twitter or something eventually come in and implement prediction markets and, and kind of take over most of the pie.

Yeah, it's not insanely technically difficult.

Right?

And so it's just whoever owns the user, I think, is, is most likely to kind of dominate that.

Yeah, that— I, I do think that, yeah, Twitter— we talk about like creating these super apps and everything in crypto. Um, I think that Twitter, even though they have no crypto or even finance angle yet, actually is the easiest path to doing all this because they have like the most important part, which is just like the social distribution and users. So I do think you'll see X— I mean, you can easily build it right into X too, right?

Yeah, right. Well, because they also have like, you know, they're leaning into like streaming games and stuff too. So like for like the sports betting type bank, like for that they have it. For politics, like, yeah, it's, it seems like a very Seems like I'm like almost like a match made in heaven. Like all of like this, like FinTwit, crypto Twitter, like all of like these huge communities of, of people live on Twitter. And what better way to market kind of prediction markets than directly to the cohort of people who are interested in those types of, you know, events or outcomes? Like it seems very clear. Like that. It's a good match. I don't know if they'll do it or if it's like a priority, but like, it seems— and like, Robinhood, like, obviously I think is just like well positioned.

I read in their earnings it's like the fastest growing business they've ever had. So it's just like, okay, we have to— why are we like giving away this?

Yeah, it's just too much leakage, right? It just—

yeah, yeah. I'd love to hear the thesis for investing in Kalshi and Polymarket at 10, 12, whatever they're each respectively raising at. Like, yeah, you need like, what is the degree of winning you have to do to get, uh, an outcome that justifies the risk of this thing kind of just melting?

I know Paradigm's done a lot of really rich valuations, right? They just have so much money.

The vision is like so easy to like like you sell, I feel like, because you can really, you can sell a pretty crazy dream with like with prediction markets and you can't say that about too, too many things. And you're already seeing like traction even though it's not profitable, but I can sort of wrap my head around it.

I think that's, that's the pitch at the Series A to get to the like 10, maybe 11-figure val. Like now it's like, okay, how does this become a cash-flowing business when you're doing it at these because it's no longer vision.

How do you turn— how does a prediction market be worth over $100 billion?

I mean, yeah, I don't know. Are you, are you buying the Zcash dip?

I, I actually did buy a little bit, uh, of Zcash at $320 or some shit.

I mean, Zcash is just— I'm, uh, every once in a while there's something that I buy that I'm like, I'll ride this to zero. And honestly, a lot of times I do ride it to zero. And, uh, but Zcash is the latest under that bucket where I'm just not— I'm not gonna get like shaken out, you know. I mean, I'm just gonna see what happens.

Monero is, you know, the privacy thing. It's just been grinding up slowly. It's just continuing to grind up. Yeah, it's a chart that's going that way instead of that way. Kind of crazy. I haven't seen anybody talk about it besides like the Monero and Zcash guys just yelling at each other, um, on Twitter.

I don't know, man. Zcash went up from like $30 to $750 in like a month and a half. So, uh, 60— what was this, like a 60% drawdown or so? It's— I don't know.

Yeah, it's perfect.

But you're gonna get the— hopefully the Winklevoss stat soon. That's gonna—

well, isn't it already? Haven't they already been buying?

They did, uh, I think 1.5% of supply at like 250 or 280 and they want 5%.

Yeah, great, I guess. I don't know, I fucking hate that.

Um, and you gotta hopefully a Zcash ETF coming.

I mean, yeah, the Grayscale conversion, maybe that's part of the weakness is people are shorting.

You know, it's going to be called ZODL, right?

What's that? What'd you say?

ZODL is going to be the ticker for it.

Yeah, that's a good one.

Well, it's like, why would you buy Zcash if there's like a 30% like spot when there's— you can get a 30% discount now.

Um, and yeah, the risk is that it doesn't get, um, the risk is that doesn't get converted and there's high fees and now you're just kind of stuck with this thing, right? And then it goes like way bigger discount. So that was the risk with all of them, right? Like buying GBTC at 20% or so discount. The risk was that like crypto is so out of favor and they're never going to let this thing convert, it's just going to rug down to zero over time.

There is a big risk too. It's like one of like the check— the key checkboxes for an ETF approval is like the asset's futures have been trading on like a regulated futures exchange, and Zcash not listed anywhere onshore. So that is maybe— yeah, we'll see.

Yeah, but that was a previous regime where it's, it's different now.

I was just looking at XMR, uh, Monero is at $7.5 billion FDV, uh, Zcash is around $5 billion. Monero doesn't really trade anywhere, like it's, it's doing 1/8 to 1/9 the volume of Zcash despite being 50% higher FDV. And I'm just looking at the markets, it's basically Kraken. I mean, KuCoin is probably the biggest, and then after that it's just nothing.

I mean, Monero is like actually a crime coin, right? Whereas Zcash is trying— Zcash is trying to be like egalitarian thing, like, like compliant privacy in a sense. No, it's not really freedom. It's—

it is on like, on the volume note, like, Zcash is I think still like the third most like highly traded pair on like hyper liquid. Like it's doing like 200 mil a day, which is, you know, even that's—

I mean, maybe in this, maybe in this regime hyper liquid counts. So go approve the ETF, you know?

Yeah.

All right guys, gonna wrap it here. Thought it was a good, uh, good chat. Um, we'll see everybody. I get in a couple weeks and then it's holiday breaks. You know, we got the Delphi year-end reports coming out next week. You've got markets at the end of the week and then we got apps and infrastructure the week after. So will be a lot of fun. And I think we're going to do some stuff around that in the new year too. So yeah, hopefully, you know, I'm going to put some milk and cookies out, hopefully get the Santa rally going stronger. But yes, everybody in a couple of weeks.

See you guys.

See ya. See ya.