Hivemind: Pump.Fun Sale, Prediction Markets & ETH Comeback?

Yeah, this is probably the biggest news happening right now. Pump just like— there are a lot of whispers about their ICO. They just came out with a tweet where they sort of confirm it. They confirm the date. It's Saturday, July 12th. People are very split on this, right? There's some people on the timeline saying that it's max extraction, max greed. Others are pretty excited about it. Yeah, where is everyone landing on this? 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. Hi 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 our institutional research arm, Jan, who's managing partner at Delphi Ventures, and ventures associate— actually, venture partner Duncan, also known as Flood Capital. And I'm Jose, I lead Delphi Labs, our protocol R&D arm. Focused on incubating and accelerating new Web3 primitives. So, been an interesting two weeks. As always, we want to probably start with markets, and then I think we want to chat about the Pump Fund launch, which has just been announced probably like an hour before we recorded this, and then maybe end with some prediction markets and some other stuff. So, markets. What are we— how's everyone feeling? Maybe, Jan, you want to kick us off?

Yeah, um, so it's been kind of a Bitcoin strength, alts choppy but, but generally not, not doing too hot. Uh, you have like these select alt moves. I think it's just become increasingly hard to, to be a, a longer-term holder in a lot of these. and, and that unfortunately is a self-reinforcing situation. So right now we've seen Bitcoin just continuously retest all-time highs. Um, equities are, are at all-time highs, uh, but Bitcoin seems to be stuck. I know, you know, leading up to, um, beginning of July 4th, there was that big options expiry, and that thought, you know, there was thoughts around that being kind of what was generating a lot of the, uh, artificial supply. So basically people were selling calls, which means market makers need to sell Bitcoin to hedge. And so, um, there was a, you know, a chance for there to be a squeeze as those options expired and, and market makers needed to close their hedge. And we did see a pretty strong pump, but you know, proved to kind of come back down again. I, I'm still in the camp that we're, we're going to see all-time highs soon because it doesn't seem like there's a slowdown in these treasury companies. And, and as more come up and, and they bid, uh, I think it helps the environment for all of them. So I'm still in the camp that we see all-time highs soon. Sailor's been deploying. He's doing another, uh, at the, like, a big at-the-money raise for, I think, $4 billion. He announced on the, on one of the, the preps in the stack, the STRDs, which were trading well after the issuance. So it made sense to kind of tap into the demand there. Um, I think there's going to be— we haven't seen a big one, uh, pop up in the London market, and, and so I, I think that's probably going to be a big source of demand for BTC. We did see that big wallet move, right? That was the scary thing over the past week where, um, basically 80,000 BTC moved.

And, you know, obviously in like 14 years, right? Like, that's—

yeah, it was like, it was 5 figures, uh, to, to nearly like $10 billion. Um, and everyone's trying to speculate what it was or who it was, obviously. Ross Ulbricht was— his name was thrown around just based on the timing of things, but, um, haven't really seen any movement happen there. And then like, yeah, just reading people talk about the wallet that it was stored in and just the insane fact that it was all— it's all been sitting there from day one. And obviously had the jokes around no test transaction, but apparently there was one on BCH, so I think that was kind of the—

Well, I also think people don't understand how Bitcoin's model works. Like when you send from a UTXO, it empties all the coins like it has to.

Right.

So I saw people like, he moved all 10,000 in one transaction. It's like, well, yeah, because like that's how it works. Moves them all.

Wait, on the treasury companies, how much of these like new ones that are popping up are like, you think, in-kind contributions? Like, you know, they're doing a BTC treasury, how many people just like contribute in-kind BTC versus like new money? Or do you think like, is that where the buying's occurring? Or the buying's more occurring on like, you know, when they issue equity at a premium?

I think only the Cantor one, or I don't know if I don't think that was the only one I saw that was in-kind. The rest seemed to be fresh capital from either debt investors or or equity guys. And so I think one interesting kind of, uh, element is thinking about, you know, the, the size of these debt markets in different, uh, countries. And so Japan has a very big one, and I guess it's particularly relative to the equity side. And so there's a lot of appetite there for, um, or a lot of capacity for, for, uh, debt investors to, to participate in the upside of BTCV, the equity markets. And so I think you see a similar dynamic that can happen in London as well. Um, and, and so it, yeah, it seems like those are going to kind of continue. iBit has been like, the numbers that, that the ETFs are putting up are, are nuts. And that's, you know, straight cash that's coming in as, as those shares are created because people are buying, uh, iBit and the APs need to go out and buy the Bitcoin. So that's cash into, into BTC. It seems kind of inevitable. Uh, and then you have, uh, Crypto Week next week as described by the US government, although I think that doesn't really materialize into much. There's like a few bills being passed. Um, I don't know that we'll get any kind of surprises outside of that, but I mean, all of them talked about much.

Yeah, all the tradfi stuff has been doing well, like the, the, the treasury companies like SBIT and some other ones all kind of dumped. Because, you know, after that these things get announced and then they trade at stupid multiples that aren't going to work. And then I think SBIT was trading at like 10x or something or close to it, and then it dumped that big candle in like one day, like 80% or whatever. But like it's been doing well over the past couple of weeks and like ETH has been strong. The other ones that have dumped have like seemed to have come back. The, the ETH ETF is like getting good amount of flows now. This new SOL ETF that launched has honestly been— it's got like $40 mil in the first few days. And this is kind of like a small ETF with like not one of these big names with their big marketing. Like this isn't a BlackRock, Fidelity, Bitwise, whoever ETF, right? So you're seeing like Yeah, you're just seeing good demand on like the whole tradfi side.

What, um, what do you guys—

the reason those things usually sell out, like the pump and sell-off, those are all just very fake because none of the shares have been issued, right? So it's the same tiny pool of capital or of shares being traded around on no liquidity. And so eventually, the way basically the, the best case scenario is it, it pumps, it dumps, it settles, somewhere above, uh, MNAV, um, or MNAV above 1, the shares unlock, and then you kind of have this market clearing event where, okay, these are the investors— the investors that wanted to sell are out, and, and we can— it's, it's at this premium, and now we can kind of begin the flywheel of issuing warrants, which you've had on a bunch of these actually.

Like, you, you've had what you just said play out on like I guess SBAT, I think UPEX that we're investors in had a similar process. Most of these things are settling above mNAV. I agree this game isn't over.

I'm just— I think the ETH one is around 2x now.

Wow.

Which is pretty high because it dumped down to like, I think 1.3 to like 1.4 on that big dump.

Just one. I haven't looked into these as deeply as I want to. It's actually on my list also to read the Accumulators report that Delphi put out. I heard really good things. But what's the— how do these— how does this stuff reverse and these things get sold? Like, I know most of these can't be forced to sell, right?

You need like shareholder takeover or something.

Yeah, it varies. I mean, some have it collateralized by Bitcoin.

Actually. So MicroStrategy could be forced to sell. I think at some point they even said it like $21K, they'd be forced to sell some Bitcoin or whatever.

Um, yeah, but there's no like— it's not uniform, they all have different terms.

Okay. Is it— it'd be interesting to do an analysis on like how many are collateralized by Bitcoin versus the equity. And but I guess even in the case where they're collateralized by the equity, at some point if the company is can't pay its debts, right? The debt holders can appoint new management that will close, assuming these things are trading below NAV at some point, which seems inevitable just given crypto cycles. Like, at some point it feels like all this stuff will be trading below NAV. And it'll be like, even if they can't be made to sell, I feel like once some start selling, it could— I don't know, it seems pretty apparent to me that every cycle we get, the, the, like, the places where leverage build up is also where the blowup happens. I'm just curious, like, how—

yeah, I think the danger here would just be if these were used as collateral for loans, and then that's what would cause, like, a lot of bad stuff.

A lot of the smaller guys can't really issue debt. They've been issuing equity, so there's, there's less of a blowup risk there. It's just this— it's more potential forced selling of the native asset to buy equity at a discount if MNAV is below 1. Then, then like you have some of the debt-based ones, uh, but they're zero interest converts with very long maturities.

Yeah. I feel like there's still a long way to go before it gets—

for sure.

You think there's going to be, but yeah, obviously this is kind of like—

well, not for sure, actually.

The Grayscale the Grayscale dynamics in a different way. But yeah, we're not nearly as far into the trade.

But yeah, but again, it's because that was used as collateral, right? That was the, like, real problem. Like, GBTC trading at a discount on its own is not really an issue. It's the fact that you had, like, all these, all these loans.

Well, yeah, well, people would borrow against GBTC to buy Bitcoin to mint more GBTC.

Yeah, it was like, this isn't happening with these. It's like they're issuing equity and sure, it can start trading at a pretty big discount. But what are you going to do? Like, you have to do shareholder activism takeover. There's nothing—

I think some management teams will just be like, forced, it will just do it.

It varies by, by, by company. Like, some have control and mandates that don't allow it. Some have the flexibility and it's part of the strategy where trading below MNAV, um, NAV below 1, you sell the asset to buy back shares.

And some— I mean, but in the worst case, if your, if your company can't pay its debts, right, you, you do have to sell assets or the debt holders will take over the company.

Yeah, you sell assets.

You sell assets. So, um, it just seems like there's a lot of— because a lot of this Bitcoin is, is like these people don't actually want like Bitcoin exposure, right? Like, and that's, that's kind of the, the danger.

They just think this is like torque. They think it's leverage on Bitcoin, which like MicroStrategy so far has proved to be true.

It's leverage.

The whole Bitcoin per share thing. Yeah, that like they want— they think this is a better way of owning Bitcoin essentially.

I think they 5x'd that since the beginning, by the way.

No, it is pretty crazy.

It's wild. But just one— so if let's say like this thing was trading at NAV and you redeemed all the Bitcoin to the shareholders at some point, like how many of those guys would want to hold the Bitcoin? That's—

I think, I think it's literally just leverage on Bitcoin. Like, it's just an easier—

I don't know if that's the right question though, because if you think about like the, the holder base of MicroStrategy now, these, these are all people that are Bitcoin aligned for the most part. You know, if you filtered out of the people that are like skeptics, similar like where you have these tribal ownerships, you know, Tesla is similar where a lot of these people are just like mega Elon bulls and everyone who's bearish shorts and stuff. And so Um, that, that being said, MicroStrategy is a unique case where they, they— I think he has controlling rights and, and that won't really be that much of a concern. Yeah, yeah, I think it's the debt side that becomes more—

but he has some— I think he has some loans that are collateralized by the Bitcoin, Bitcoin itself though.

Yeah, nothing matures until like 2030, I think.

Super low liquidation price. Um, yeah, okay.

Although, yeah, it's going—

basically the reason they need Bitcoin to go up though is because, um, so, you know, part of the flywheel is the convertible debt funds, right, which they want the volatility of the underlying assets. So the more volatile that MicroStrategy is, the more attractive the convertible debt is to these, uh, convertible debt arb funds. The tricky part though is they, they do get capped, one on, on, on ownership percentages, but the other on, on, uh like LTV of the entire business. So if they won't issue— they won't buy more debt of MicroStrategy at a certain point if BTC price doesn't really go up, because then LTVs are starting to become risky. Like, these are very savvy investors, and, and, um, they understand kind of the risks here to some extent. And so— or to a great extent. So I think, like, you do need these other guys to come in buy it, raise Bitcoin price, because then now the leverage on MicroStrategy is much smaller and they can get another tranche in. So like, you really need these other guys to come in behind to help just break through this seemingly infinite amount of supply here.

Yeah.

What, um, what do you guys think about ETH? I've seen some bullish takes on like all these ETH treasury, you know, you have S-Beth and, uh, Tom Lee is doing his ETH treasury company. Like, do you think that, like, we could be a little bit back on, on ETH? The chart looks pretty good.

I mean, ETH looks pretty good. I think that it seems like it'll hopefully keep trending well, but like, I don't think ETH is going to go on some idiosyncratic thing where it's like just ETH and everything else does poorly, like a Bitcoin-type rally, right? Mm-hmm.

Yeah, for sure.

Because like, I think ETH going up is good for the rest of crypto, whereas Bitcoin going up is not necessarily good It actually seems like it's bad.

Literally since like December or like even before that, like we've been trashing ETH pretty hard for the past 2, 3 weeks.

I have not, to be clear.

I don't know.

I still like, it's just, I mean, like relative to like other stuff you could buy, we're just like, it's way too expensive. Like, do you think that anything has like really changed or maybe it's just like short-term flows could be pretty good?

I think momentum trade.

Yeah, yeah, yeah.

I don't know, I feel the same way. I still think it's— I still, um, yeah, I feel the same way as when we last discussed it. I still hold my same, same ETH I had before. Um, yeah, I don't know, some, some part of me thinks it's kind of like binary where either ETH is valuable as an L1 and the properties that it has are valuable and we shouldn't price it on cash flows or anything like that in that case. And the whole of crypto is sort of valuable and justified. Or if ETH's properties don't matter, then it's like the most overvalued asset on Earth and the rest of the crypto industry is all comp to that, so it's all overvalued too.

The thing is though, Jose, is that you don't, um, need to hold ETH to get those values though. That's the thing, like, you can use Ethereum.

This is the 2018, uh, like, ETH shorts, Tetris Capital, right, like, and, and John Pfeffer and stuff argument on the, on these things. Like, you don't need ETH to go up for ETH to to—

yeah, but that was after like a 90% drawdown.

Yeah.

Well, it was after like— I think they started posting it at like $500 and the bottom was like $70 or something.

The biggest— I mean, ETH was— ETH has honestly been a victim of its own success. Like the NFT bubble really did kind of like distort expectations and stuff. And I think that's just kind of the reality of it. Like, I don't even know if Ethereum did anything. Super wrong, to be honest. It's just expectations got so high.

I mean, it never scaled well.

Yeah, yeah. I don't know. For me, my opinion hasn't really changed on it. I think Tom Lee is a great spokesperson that they got, and he's pushing this whole like, if you're bullish on stablecoins, you got to be bullish on ETH. It's like not really true, but hey, it's like a good pitch, right? If you can get people to like get on board this, Um, I think he's—

I think Cyberfund wrote a pretty good—

but it's, but it's like, I don't know, I don't think ETH is going to like $10K or something.

Yeah, I think you can get a maybe a move to $3K and change.

I can see it getting back. I think it like, if ETH goes back to $4K, I just think that's good for crypto in general. Like, I don't see a world where ETH gets bid and other assets don't. No, me neither, because you're getting this non-Bitcoin flows, this non-Bitcoin bid.

And ETH holders are just more, or more shitcoiners, right?

I think like the stars are aligning for a move higher, right? Where sentiment is generally bearish, people are underexposed, and then at the same time you have the stablecoin narrative, you have Tom Lee coming in who's a great, uh, shill. You have these treasury plays popping up which are actually You know, you kind of need someone to kickstart the bid and get momentum going. So the stars are aligning, um, I, but I just don't see there being enough broad-based interest in the asset to carry it too far because it's so big. Like, you, you, you need everyone to think it's going a lot higher for this thing to, to double. Yeah, like a lot higher.

GCR 10K call still intact.

Was there a date on that?

No, he just said eventually. Uh, yeah, Tom Lee's a great— yeah, Tom Lee is honestly a huge win for them. I'm looking at like some of his tweets right now saying some, some bullish things.

And it helps that he's very bullish Bitcoin, right? So as that gets proven right, then, then people lend credence to his other ideas, crypto specifically.

Strategy now holds 600,000 BTC. It's so big it might have a sovereign put. I don't know what that means, it sounds really bullish. He compares the BTC treasury valuation to model to Exxon's premium on oil, on proven oil reserves. All right, keep bull posting.

Do you guys want to talk to Pump sale?

Yeah, let's do it. Um, so yeah, this is probably the biggest news happening right now. Pump just— like, there are a lot of whispers about their ICO. They just came out with a tweet where they sort of confirm it. They confirm the date, it's Saturday, July 12th. Um, it looks like they're raising $1.3 billion, so 33% of the token supply will go out in this ICO. Um, and then 24% reserved for community and ecosystem initiatives, which I assume will be an airdrop. If not, the trenches will be in, in disbelief. At least part of it would, would, should be an airdrop, I guess. Um, yeah, 20% team, 2.4% ecosystem fund, 2% foundation, 30 13% existing investors and then 2.5% for liquidity.

It says airdrop in the announcement. They are doing an airdrop.

Oh, does it?

Yeah.

I didn't see that.

It says airdrop.

All right. Nice. Yeah, this is like, people are very split on this, right? There's some people on the timeline saying that it's max extraction, max greed. Others are pretty excited about it.

Yeah.

Where is everyone landing on this? And maybe I can share my opinion last.

I think, well, first of all, we got a report on this coming out tomorrow. So if you're not a Delphi member, yeah, sign up. I think the original rumors were 25% in the race and now it's 33%. That seems kind of bullish to me. Like there must, there's probably a ton of private and the private side is all sold out. So out of the 33%, it's 18% private, 15% public. So the public ICO is like $600 mil. Um, I personally think that this thing is going to sell out really quick. I'm kind of rattled that I'm blocked from it, to be honest. Um, I think the, the main risk here is just what we've seen over the last week with this bonk. Launchpad, and I'm not really too worried about that. I think people are kind of overreacting to that a bit, and maybe that'll keep the demand for this down a bit less than the public. But I think Pump has like much more broad ambitions than what like Bonk's launchpad is trying to do. Like Pump is trying to go after streamers going after like Web2 general public. It seems like Bonk Launchpad is just trying— it's just a bunch of people that don't like pump. And they're trying just to do the meme coin thing. I think it's really taken off because of this useless coin. And this Bonk guy on Twitter who people follow who made a lot of money on Bonk. His name is literally Bonk Guy. So yeah.

Yeah, the initial raise was, was they were trying to do $200 mil private, which is, uh, yeah, the 5%, and then $800 mil, uh, via public. So I think the $200 mil I know filled up pretty quickly in June, and then they've kind of rejiggered and I guess taken $200 mil out of the public down to $600, and then bumped up the private from added another 520 to the private, um, on top of the original 200, right? So you get the 18% and 15%. It's— and then they've also, right, so the, the— all of the Solana they've accumulated and sold, that's still on their, uh, treasury. Like, they, they still have all that cash. So if you think about how much they— how much money they have, like, it's, it's it's an obscene amount, right?

They—

and, and it— like, if you think that they're not gonna— if they think they're gonna fail, it's gonna take a while for that to happen and a lot of money spent in marketing and growth. And I think, like, you know, there's a world where they can create something very compelling because they are really good at growth, as seen from, from, uh, what they've done with Pump Uh, very ambitious, right? Their, their tweet was, we're going to take down Facebook, Twitch. Um, so they're basically going after the streaming market and thinking about how to capture the, the Zoomer attention. So I think this is going to create a lot of buzz and, and should hopefully, you know, I think there's a world where it can actually bring a decent amount of capital back into the crypto markets if they can start to really appeal to the normie audience. And, and, you know, there are second-order effects of that, right? As, as capital flows in, that means you kind of get into these alt cycles and, and capital flows. And then that means capital that wasn't going to be even related to anything on PumpFun starts to flow in because other stuff comes in. And so, and then once the money is in, you kind of have these ideas and, and use cases that didn't really exist before because they're kind of dependent on some degree of speculation and just risk-taking. And so, you know, we've seen the broader reflexivity there. I think in terms of the impact on markets, we saw, you know, naturally this is a very big drain of liquidity, right? The prime example was kind of what happened with Trump and how everything kind of dumped because everyone's piling money into that. Um, I think that part is behind us because you've already had two instances for that to get priced in. One was the, the June announcement where you saw an alt sell-off, and then more recently earlier this week when the Gate stuff launched and you saw, you know, some assets rapidly sell off. And so I think Gate then took back that announcement, but it was clearly a, a very polished one. Like, the, the site was, was polished, the, the stats were correct, so it seemed like it was more of an early release than an incorrect one. So I think you've had multiple opportunities, and then today as well. So you've had all this stuff get priced in. So I mean, you probably potentially get another, um, liquidity drain when this actually takes place, but I do think a lot of the liquidity has already been set aside for people to participate. So I, I, I do think most of the pain from that is behind us.

Yeah, I also think that the people who are like, why are they raising so much money, you don't need this much money, it's a, it's a wrong comparison, um, to like a normal crypto project because it's not like they're raising this money for engineers. Like, obviously some of it's going to go towards engineers, but the main is just like the amount of money that they're going to be spending on like streamers and marketing and everything. And you've never really had a crypto project that's needed to kind of like do this because they haven't been going after this market, right?

So I'm curious what José thinks. José, you've been pretty vocal about teams that raise too much money typically doesn't work out well. Do you think it's different here?

I mean, it definitely generally doesn't work out well. I don't really ever want to hate on ambition. Especially in crypto. Like, we need more of that. Like, them going after Facebook and Instagram and stuff is pretty dope. But yeah, they have $700 million in the bank. They're raising— well, we can assume based on how much they've made in rough burn, they're raising $1.3. They're literally going to have a $2 billion kind of war chest. And even when you look at it in the context of, like, social media platform raises, it's probably like the third biggest ever, right? I think Snapchat Series F was $1.8 billion. ByteDance raised $3 billion in 2018, but that was a SoftBank round. It was the most valued startup in the world at the time.

SoftBank special.

Yeah. Like all the other ones were much smaller. Like even Reddit raised their Series F in '21, peak bubble at like, it was a $700 million raise. So it's kind of interesting. And when you look at just the raises happening right now, even like Figure, probably the most hyped humanoid robotics startup, raised like $1.5 billion, right? So it's a lot. But yeah, I mean, the thing with these big raises is they have the potential to— like, startups have to focus on just one I kind of said this already, but generally they have to focus on just one core thing or like a few priorities to get right. And that's the most important thing. Like you, and that's what the best startup founders do. They're really good at identifying what the best, highest leverage thing they can do is and relentlessly focusing on that. And that's what we really see with the best people in our portfolio, like Guy and stuff. You bring them an idea and they've already thought about it and why it's not a priority right now. Whereas the kind of, lesser founders will like see, oh, that's a good idea. Maybe we'll do that and like add it to the list or like, and when you have $2 billion, suddenly you have too much money to just focus on 3 priorities. You have to do like 10 things at once, right? Because if you don't, you're like, why do you have $2 billion? So that's like the main concern. And just like, it seems like they haven't deployed that much of their $700 million. And so going from sort of a run rate, I don't know what their run rate is going to be, what their plans are for these funds. That's also kind of an interesting part of this. Like, I don't think you've ever had such a big raise with so little, like, transparency. Maybe EOS in crypto was the last one, but so little transparency in terms of what they actually want to do and stuff. I really hope they succeed. I'm like excited for it. I would, I'll be trying to participate at this valuation. I think it makes sense. I do think there's the potential for it to go wildly wrong and bring some bad attention to crypto. And I hope that that doesn't happen, basically.

I don't know if like bad attention to crypto at this point. I feel like we've got a lot of bad attention. I think one thing though, in the big raise, like, yeah, yeah, I agree. One thing on the big raise though, like, did you see today that Monad bought this stablecoin company?

Yeah.

So it's like you're seeing some of these projects that, like, Monad was the— that was the one that raised a ton of money, right? They raised, which actually pales in comparison to this now, I think they raised like $200 or $300 mil or something, and everybody was like, this is so much money for an L1. And now they're straight up doing like M&A with that money. Um, so it is kind of I don't know. It's like a weird kind of like dynamic now. I don't know. Yeah.

I mean, 4 billion FDV with a company that's got— it's going to have like 1.5 to 2 billion of cash on the balance sheet.

Yeah.

Pretty good bet to make.

Yeah, I think, I think they said, what, 25% they're going to send to the token of revenues.

Okay. Yeah. So 25% of the top line revenue.

Yeah, I think basically if you comp it on trailing 3-month fundamentals to some of the majors, it should be in the $8 to $10B range.

Makes sense. Yeah, it says revenue. I'm just on DeFi Llama. It says revenue annualized is $400 mil right now. But then why do they do this fees versus revenue annualized? Uh, they do fees annualized is $700 mil, but revenues $430. I don't know why they do that, but I was just looking at Bonq versus them. Like, what Bonq's numbers are just like going vertical. What, what is— do we think this is kind of like them trying to like write off the attention and maybe plowing some money into their own platform sort of thing, or What do we think's happening? Like, Pump Today has made like $500 grand and Bonk has made $1.3 million. Or sorry, Pump's made $900K, Bonk's made $1.3 million. Anyone have a take on that?

Um, I mean, the Bonk thing, it seems, as I said before, It seems to just be this useless coin really kind of propelled it. It's like one meme coin, and then they've got this Bonk guy who's been chilling it a lot. And then there are a lot of people within Solana that are big like Bonk holders, and they never liked Pump. And so they've been kind of pushing this. It does seem like some token deployers have moved over recently, which is kind of who you want to get. Um, So we'll see. But it's like, I do think that they just have completely different ambitions. Like, I think the Pump team has always had this vision for like, they want to be TikTok, financialization of TikTok, all this stuff. The Bonk guys are just like doing like this launchpad because they didn't like Pump, I think. And it's more like a crypto-only type deal. Versus the Pump thing has a lot bigger ambitions.

Yeah, I think the Bond guys are more SOL aligned, which resonates with the community and holder base.

Yeah, so that's a good thing to go into. I definitely, definitely feel like that as well. So for Pump, what do you think happens to SOL? And do you think, like, I'm not sure they really care about it as much if their ambitions are, you know, much bigger.

Yeah, I mean, I think it makes sense for them to stay on SOL for a while, right? There's liquidity and just building your own chain is a distraction, I think, right now. And so eventually, sure. But the simplistic push and pull is they will bring a lot of capital attention to SOL if they're successful, but they will also be selling SOL on the back end.

So Or do you think leave at some point?

Sorry, say it again.

Or potentially like leave at some point.

Yeah, but like assuming that's, um, probably like a year away or something, um, the, the, the big push and pull is basically attention and capital coming in versus SOL pressure on SOL, um, as they get out. Uh, yeah, it's hard to say what it'll be. I think, um, I think the, the, the positive side happens more quickly than the negative side, right? The, the, the selling of SOL is this kind of drawn-out scenario, whereas if they really take off to a wider audience, that is felt much more acutely. So I think on a short-term basis, it's net bullish SOL. And then maybe longer term, the, the, uh, because all the flows happen up front, the, uh, the selling can, can offset that. But I do think it's net short-term bullish long term.

And what about like SOL, ECO? Like, you know, with the Trump stuff, we saw like basically every single— and obviously that was like a surprise and unannounced, but like literally every single Solana coin just got wrecked. Like just insta-dump to buy Trump.

Obviously that was also on-chain. This is on CEXs and everything too. Yeah, I think it should be bullish for the eco. Yeah, it sells out quickly because that's also, again, sure, there's probably a lot of money that is selling SOL or already sold SOL or sold SOL coins to do this, but there's also bunch of just money that's on centralized exchanges and people would maybe sell some other assets too.

So it's like the people can trade this thing with perps too. Yeah, yeah. That doesn't really require as much selling because of coin margin.

I think any SOL weakness related to this is kind of over now. So if you get SOL weakness, it's like for another reason. It's not because like pump people are prepping for the pump sale or whatever, you know.

Let's see if the ETFs—

yeah, soonish. Well, the Sol ETF that launches, honestly, it's been doing pretty well. Um, and so if you get these big ones that actually come in, again, that should be pretty good. It'd be interesting to see, like, the one that's live now is staking. The ones that are going to be coming aren't going to have staking, but they're with, like, bigger firms.

Wait, so what do you know what the net— because it has a 75 basis point fee, but do you know how much they're giving back in staking?

I don't know. No, I don't know what percent of SOL they stake because with an ETF you need to have available for redemptions and it takes like a day or two to—

and who are they using for staking?

Uh, I think they're using, uh, I don't know 100%. For some reason I thought they were using like Marinade, but maybe that's a different one. That I'm not, uh, look it up. Yeah, it's like the Osprey, right? Um, uh, yeah. Um, do you want to talk this GMX exploit or like the prediction market stuff or I think the, the big thing is going to be how quickly, uh, it sells out, right?

That, that's going to be, um, yeah, I think it's definitely bearish, right, if it doesn't, uh, just as a reflection of capital in the space in general. Um, whereas if it does, I'm, I'm in the, in the camp that it'll happen fairly quickly because you don't have a lockup, so it seems like a pretty easy asset to bid with relatively low downside.

Um, yeah, to be honest, you actually could see on-chain kind of nuke after the TGE because of this, because people bid it on-chain. Yeah, but not sure. It's not— it's different than Trump. Trump thing was, was just like very different.

Yeah, I think it could— there's also the argument where that it it could actually be a bit stimulative to the on-chain stuff because it can be a transfer of assets from on exchange to on-chain, right? Because you can have the centralized exchanges bidding it and then—

well, the fact— yeah, the GMX was a re-entry.

Yeah, re-entrancy, it's a fucking always— and the EVM is the thing that always does it, right? Every time.

That fucking sucks for them. This, this has also been around. It was the V1, which is kind of insane.

This goes back to like, you know, they exploited, they stole USDC, $40 mil, and then Circle didn't freeze it. Arbitrum didn't try anything with their centralized sequencer. Um, and this kind of brings us back to like that Sui hack that happened a few weeks ago. And everyone knew, everyone was talking about how like, oh, SUI is not decentralized, all this. They froze this hacker's money and everything. But I mean, credit to SUI, they're not pretending that they're super decentralized, right? And in this case, it's what, like Arbitrum and Circle are just going to pretend like this hack didn't happen?

Yeah, I mean, Arbitrum didn't do something if they had the power. Maybe they're worried about legal stuff, but like GMX literally like Builds them up.

Yeah, it was— GMX was Arbitrum for a long time, right?

Yeah, until Hyperliquid came along.

Now they just care about Robinhood, maybe.

Yeah, that's pretty fucking annoying. That really sucks. $40 million. Yeah, brutal.

Yeah, it's bad because— yeah, because it's been around for so long. It's like, yeah, you can't imagine.

It has to have been upgraded or code updated. I can't imagine there's been a reentrancy bug. Out there in production for 4 years.

I don't know. The Curve exploit and the Balancer exploits from like last year or whenever those happened were like 4 or 5-year-old bugs that were just sitting out there. Like these things are just, it's scary. Um, because these days the, the way you hack is actually not this. Like these days, most of the hacks are social engineering. They're like front end, like hacking a front end is way easier. Than hacking a smart contract now, right? Like, we've learned a lot. They've gone pretty robust. But if you can just change the website of a front end and get people to sign a bad message, it's like way easier, right? So those are most of the hacks you see now. This is what the Bybit hack was, is like they changed the front end.

That was crazy though.

That was crazy. That was crazy. No, I know it was crazy, but it's like, this is where hackers are going now because smart contracts have gone pretty pretty good. So it is, you know, it always is, yeah, kind of, I guess, scary when you see old protocols that have been around for so long and used for so long get, uh, get hacked.

Do we think there's $1.3 billion of demand for Pump? Sorry to go back, but like, do we think there's $1.3 billion of demand to like sell this out?

Well, you need 600. I don't think they've already sold the private.

Yeah, that's the thing is I don't know if the, like, the last— the private was initially 200, and then, um, that got filled up quickly, but they've upsized it quite a bit.

Yeah, like, they—

I don't think— why it seems kind of bullish, like, if they upsized it from— it was going to be 5%, now it's 18%.

Well, like, it would have been way more bullish if they didn't, and then just everyone had to buy Liquid. But like, in terms of like the chart the chart, but they obviously like have taken that into account and like feel there's more than enough demand.

I know they were limiting funds by size to ensure that if you wanted to get your full aloe, you needed to buy on, on just live token.

Yeah, so I, I don't think they would have done it without— like, they would have, wouldn't have upsized it this much without like kind of having a decent pulse on demand.

Yeah.

I'd love a Polymarket, which I know is a good segue to our next topic on whether it sells out in like 15 minutes, an hour, 3 hours. Curious, where do you guys put it?

I think it sells out like pretty quickly, like under an hour.

Under an hour? Oh shit. I was going to say, uh, even in the first 24.

But like, I don't know, they are blocking US.

Expecting it to rip to $10 billion so quickly if you think it takes 24 hours to sell out?

Because it's very different.

Why?

The group of 600 million of— like, if you have 600 million of buyers, that's going to move price. Yeah, 600 million into an order book is, is a lot different than—

I don't know. Definitely. But I mean, like, you have 700 million of private demand gone, and then you take 600 million of this more public demand, and then it's like you're gonna get an incremental how much to like pump this thing up 2, 3x.

Like, it's—

but it's true, if they have 2 bill of cash, who's actually selling it at the 4 bill?

There's so much cash, it's like your max 50.

I think 4 bill is like a pretty good floor for sure. But I think you don't have access to that cash though.

Like, yeah, but it's more like this cash is going to be spent on growth. They're going to put it back.

They also have the most profitable—

the old Hyperliquid—

and $2 billion of cash. Like, it should definitely trade at least double.

Hyperliquid was the most profitable business in crypto.

No, but maybe, maybe they might do the old Hyperliquid playbook. Just, just market ape $100 million into the chart.

Yeah, they do the raising of the chart. Chart, for sure. I would expect some painting. Ah, you definitely care about the chart.

Yeah, these guys are meme coin specialists. You don't think they care about the chart?

So they have your $1.3 billion and they own 75% of the revenue and the equity. I mean, I'm sure they care about the chart, but there's no guarantee that they will. There's been a lot of crypto projects with a lot of money that refuse to bid their token with it, rightly or wrongly. But anyway, prediction market. So we had this Zelensky suit thing. I don't really have a great or interesting take on it, I don't think. But prediction markets generally have been purring. Like the— yeah, like Polymarket has grown a lot.

I mean, Polymarket and Kalshi both just announced those raises a few weeks ago, right? Both at like $1 to $2 billion valuation.

Are they going to do a token, Polymarket?

Like, probably at some point.

Unsure. Is that like, yeah, is that still the best way to go for a successful project?

I think that they're like alluding—

hopefully, man, it's not the best way to go. Then what the fuck is Yeah, I mean, only 28.

You think— I guess that's the question. Do you think Polymarket equity or token trades higher at this point?

Well, it depends with the split.

Like, yeah, they send value to the token. I think it would trade if they do.

This is the biggest fundamental problem that has to get fixed in crypto though, is like we just cannot have dual equity token.

Orgs, is that what that's trying to do?

I think so. Yeah. Yeah.

I mean, I think, I think, I think it's okay to have dual if you have like fixed and transparent value flows. And then ultimately the question becomes, is the sum of the parts greater than what they'd be if it was all focused towards one?

I don't know. I think it's like when you buy a stock, you own the company. Like, yeah.

No, I mean, I prefer it for sure.

The best way now is like all token and then have an equity company that just, um, commits to like putting all the IP and trademarks and stuff there and then going public and, and running a treasury play on itself. Like imagine like Uniswap Labs just like all the front-end fees and stuff using all that to buy UNI tokens and then having a public token that you can ape. A public, sorry, stock that you can ape to get exposure to Uniswap, and that stock is just buying back the token. So everything gets funneled towards the token, but you have like an equity vehicle just as a way to reach the tradfi market. That's my preference, but yeah, that would be nice. Hopefully someone does that. But yeah, prediction markets are doing really well.

Yeah. And everybody like thought they were going to die right after the election.

After the election. Yeah. I mean, Polymarket's done a really good job getting integrated places and partnerships like the All In partnership, but getting integrated into X and stuff like that.

Yeah.

What's going on with the X thing? Like I saw that headline, but I haven't like, not much news since then.

Yeah, I also saw the headline and haven't had news since then. I think the idea is that it was going to be like actually integrated so you could do poly markets bets on X, right?

Yeah, the, the, the tricky part on the poly market stuff is just like it's expensive, or just prediction markets in general, is that it's very expensive to market make. Uh, this is mostly an issue when there's only one, right? Because market makers can't hedge elsewhere. And so they need to get compensated a lot for this risk. And that's what they were spending quite a bit of their money on, was just getting these markets off the ground. And so that's kind of what you're seeing with some of these other guys raising with novel mechanisms that help bootstrap for the long tail, right? So it's like, I'm not going to try and compete with Polymarket necessarily on who's going to win the election, but I can do a much better job creating an environment for users to generate markets that will have deeper liquidity than, than other platforms. And I think that's kind of been the pitch, uh, with Kalshi. What helps is that they can obviously just tap into some of Polymarket's liquidity. Um, I haven't really tracked how the, the two have done in terms of volume relative to each other. I'd be curious because I know Kalshi raised at a really rich val. Oh, um, not rich because that's implying it's expensive, but just a high val.

Yeah, um, agreed. But yeah, I mean, that, that— and what are the most interesting mechanisms you've seen, I guess, in the private markets for that, or, or just anywhere?

So just like novel mechanisms on AMMs, right? These things need to be decentralized. So we invested in one called Exo, um, where It uses, you know, a modified AMM where rather than when you— with an AMM, it has two assets, you're buying one and selling the other. So you're depositing liquidity of one asset and withdrawing the other. Here, the mechanism basically, when you're buying, you're just creating new— call it YES shares, right? And so the liquidity just goes into the pool and you're creating more shares, but it doesn't necessarily withdraw. And so it gets withdrawn during the redemption process, but it helps that early stage liquidity because in order— like, with each new participant, liquidity actually grows rather than in a scenario where you're just buying and selling and it grows via fees to some extent. Um, so there's that. There's another one, Contra, which we're investors in, which uses something called a gradual limit order book, which uses basically— it's kind of a time-based mechanism to— for price discovery, but Uh, it helps a lot on the, uh, customization of orders and, and basically allowing people to express, um, directional bets and, and have these, these assets sit there and basically allow— it's all for this, this idea of how do you create user-generated markets where a random spat on Twitter can actually be turned into something that everyone can participate in. Um, so there are those. I think like what's been really cool with prediction markets is, is, uh, the fact that this is where some of the, the smartest money ends up going because, yeah, it's like this is where inside info gets, gets, uh, monetized. Monetized, exactly. And so if you know whether something is going to happen, whether you're in Congress or whatever you're doing, this is a great way to, to, to get info. So it's almost just like not, not even trading there, because oftentimes for some of these events you're the dumb money if you're just purely speculating, but using that info to then make other decisions, you know, in a world where that market has enough liquidity that it can be signal.

Yeah, and it's been remarkably accurate, and I feel like right now, and like, it's just harder and harder to figure out what's true, right? I think AI has made this easier if you know how to use it, but in general, like, it's really hard to figure out what's true in the world. And Polymarket's actually a go-to for me, especially when the war was happening and stuff. Like, uh, it's, it's, it's pretty interesting the way that, um, it, it actually like works much better than the news, than like pundits on Twitter. You can, you can just see— again, this was the theory behind it, right? Why academics always loved it so much and why I actually got really excited about it too when I first joined crypto. And read Vitalik's post about it, but it's cool to see it actually play out. Like the way it kind of front ran the election in the Iran war, it had some pretty good, pretty good picks. Yeah, it's, it's been cool to see.

Yeah, I'm trying to get the volume, but Kalshi's website kind of sucks to get the volume. You have to download it. But I think they've done a lot on sports.

Yeah, they kind of like legal loophole. You can do sports betting because it's like, well, you're not betting on sports, you're predicting on sports.

Um, what is that?

They say that's how they ended up betting.

You're predicting?

Well, it's different. It's different. It doesn't count as gambling. It's like prediction market. It's different.

How is it?

They let you like ape the Super Bowl on your— in your brokerage or something? Well, not like how she did, but I think— well, I actually think I think Kelsey did, but like Interactive Brokers even had these too, and they're not like licensed to be gambling, but it was like, no, it's a prediction market.

Is it because it's peer-to-peer instead of peer-to-house? Because I mean, a sports bet is a prediction, right? Like I'm giving, I'm getting certain odds on a team and that's a function of my predicted probability of them winning.

Yeah, there's a bunch of weird rules in gambling. Like the whole thing with DraftKings was like, it's a game of skill. And so it shouldn't be regulated like gambling. And then it's like some states align with that, some don't. I don't know. There's a lot of weird gambling and there's like this new tax code thing that might only make you be able to write off like 90% of your gambling losses, which would kind of ruin that industry of like poker and stuff. Is the— guess—

just be a better gambler, dude.

If you could only write off like You're screwed.

Yeah.

10% haircut.

Yeah, it's an interesting one. Like, what do you guys think of that? It's probably not something.

What, only being able to write off 90% of your gambling?

Just gambling generally. Like how—

Gambling is fucking so bad.

Yeah, gambling I think is very bad, but it's like some people are professional poker players and this is how they make their living.

Yeah, but the vast majority, I mean, poker, I would consider poker is different.

Yeah, I think if you want to get rid of gambling, you shouldn't do it in weird bullshit backdoor tax-like, uh, regulation. You should just actually make it illegal, right?

I don't know, I think, I think it's, I think that's pretty effective. Like, I think making gambling companies able to advertise the way they do now, like the way Stake—

no, no, but this is what I'm saying. I'm saying to do it this way by changing the tax code is bullshit. Like, it's like how the people tried to get rid of the crypto industry by going back toward the banks and everything. It's the same thing, like, because they couldn't make it illegal directly.

It feels like a slippery slope. Like, you can't tell people they can't do something. I don't know, it's not the government's role to stop them from doing that. That's a little like— same way with cigarettes, right? It's just like you put warning labels and you do all this stuff, but Ultimately, people need to have agency.

Yeah, for sure. But it's just like the amount that it gets pushed on and like the promotions and stuff. Like I'm thinking like a lot of people around my age, like university age, just like go and just get fucked. But, and then you learn and you're like, okay, I'm not gambling ever again. It's like they get burnt. It's like you touch the stove, you get burned, and then you don't go back. But like some people can't really help themselves. I agree. You don't want to force people what to do, but it's like just the accessibility.

Yeah, I think the big thing is basically you need to put in, um, you know, people can input like salary, uh, into what they're doing, right? So you can limit the amount that they do based on their earning capacity or, or their assets, right? And so there it's protecting them. It's like, listen, this is— you're gambling more than you, you should be able to. Like, I think stuff like that can help to, to taper you know, the people that ruin themselves completely.

I actually disagree with Setters. I think that is the right way to do it, like tax code, like taxing them more and not letting them advertise.

Think about someone— I just think that they'll just get completely fucked. They won't understand.

Yeah, it's just too— they're just getting double whacked.

I was kind of a capitalism, uh, or like not a capitalist but like a free markets, I guess, or more of a free markets maxi since I've been kind of reading more about the Chinese model and how it works, I actually think there's something to some state direction. Well, for sure. In the sense that like you—

we gotta edit this out.

Yeah, I'm joking. In the, um, in, in the US, like, you have the, the smartest people in the world can go do whatever they want, right? Like, and you had for, for, I think before AI, like, all the smartest people were just basically trying to get us to click on more ads and spend more time on social media. And it fucking worked, right? They're really smart. They succeeded. Like everyone was fucking addicted to social media, depressed, like especially for kids getting bullied and stuff. And in China, they create subsidies such that if the smartest people go work on solar panels and electric vehicles and chip companies, and it turns out that like works pretty well. Like, and gambling, like porn, OnlyFans, all this stuff is just a tax on society. Like, oh, it's just people losing money or like wasting money on shit that's like really bad for them. Um, and I don't know that— like, I think, I think it's kind of a bug in— it's like similar to how you have like, uh, you know, public goods that, that are underweighted by the market. Um, and then the other one, right, like, uh, pollution and stuff, these negative externalities and positive externalities that aren't accounted for by the market. I think it's the same thing with these gambling and and OnlyFans and like porn and all this stuff. And I really do think the government should try and set an overall direction for where human capital should be focusing on and like have— because like in Europe and in the US, we try these subsidies things and then there's one case of fraud and the newspapers— that's another thing I've kind of changing my mind on is just freedom of the press. Like, I think our press is so poisonous. Like, they just— they just— like, there's very little really good journalism where they're going, doing these deep investigations and presenting facts. It's more just like, look at the— you know, like, this guy is friends with this guy, and like, maybe there was a corruption, and just like slandering people's reputations makes it so that no one smart ever wants to be in politics. And also, like, the fraud— like, when we have these subsidies, but then there's one case of fraud and we remove the whole thing, whereas in China they just accepted Of course there's going to be fraud, and there was a lot of fraud with the like $100 billion plus subsidies they did in EVs, but they got, um, you know, they got one— they got BYD out of it, and that was worth the whole thing. Um, I don't know, I just feel like there's some stuff to learn. I definitely would not want to, uh, make the trade-offs that China made. I would not want to live.

That's the thing is it's all trade-offs, right? Like, if you have—

I'm saying we can shift the trade-offs more towards—

like, if you, if you have like the, the news— the reason news sucks is because it's for profit, and, and so you're just doing whatever gets the most attention, right? So then what's the solution? State-owned media? That's horrible.

No, I don't think that's the solution.

I think— but I think broadly with this stuff is like, you know, with the US, you have these— the, the beauty of democracy is that there isn't really this totalitarian control, but the issue is you're operating on 4-year cycles, and, and so you can't really do any kind of long-term planning. You're just like playing constant short-term games, whereas China gets to play the long-term game. But the big trade-off is it's a dictatorship.

So like, in a world where you can have this like benevolent dictator that, that helps, you also have these lobbyists that like are there all the time that push through rules. Like industry pushes through rules that like stay there throughout the cycles. Like all this, and like maybe, you know, a good example is like maybe it'll change with like a radical administration legislation change, like the RFK and Make America Healthy Again stuff. But like, why the fuck are you allowing like provenly cancerous-causing dyes in like food? Or like the number one item on government-subsidied food support, like, um, food stamps, is like Pepsi or whatever soda. It's soda. It's literally fucking soda. And it's like they have like— industry has captured a certain amount of the regulation. Where that goes through like multi-cycle and then that's just like bad, right? Like you have like, you know, farm, like some farmer stuff that's bad, like some health stuff that's bad. Like though, and that's just crazy. Like the incentives are just completely out of line.

I think, I mean, Jose's original point was about like a lot, letting, like Hasu, remember Hasu had this post a few years ago about like you should be limiting how much like kids should play video games and stuff, and everyone kind of like ripped them a new one for it. It's like, it's, it's a hard discussion because gambling, gambling for instance, is— they've done all these studies in the UK after they like legalized and everything, and it's really bad, right? Um, there's not a lot of good that comes out of it. You see people like Harlebois, who's like this famous gambler in NBA, talk about like how bad it is that it's being legalized and all this stuff. While he is like an outlier, right? And you, you look at this with— you look at this with like crypto too. There's a lot of, you know, I think we're all kind of happy that there weren't laws preventing us, um, from like buying stuff early on, right? Um, because we thought we were like, it's just smart enough to like actually promote it so heavily to like young kids. Yeah, the advertising is crazy. It's always sad when I see like a commercial and it's like Wayne Gretzky shilling gambling and it's like, dude, why are you like— you should be a better role model, I feel like, like than shilling Bet365 or something on TV.

Yeah, it's him so much money, dude.

Like, I know, down your throat. It's like drugs, like, you know, I feel like you can get them, but the— oh God, Canada is like—

there's that one billboard What you see, there's that one billboard, it's like 20% of gamblers go bankrupt. It's like, bro, those are pretty good odds. I'll turn that up to a gambler.

Well, did you see the— so there's a, there's an ad from South Korea or something, and it talks about— it's before the FIFA World Cup, and it sees like kids, a commercial, and these kids are talking. It's like, who do you want to win? Who do you want to win? And the one kid is like, I want Germany. They're like, why Germany? He's like, because my dad bet all my money on it. And then Germany won and it like totally backfired against them. It was like this public service thing.

Yeah, that's funny.

But no, I mean, yeah, I, this is a hard talk. We should probably end this.

I do think one way though is to just limit the downside that people have by putting in earnings requirements, right? Because then you really reduce the chances of people going broke. And so, you know, we have this in Canada.

You have to earn money.

Yeah, I think that makes a lot of sense.

Yeah, or you just, you just can't actually limit advertising.

Why should— yeah, why should they be able to advertise so much?

Yeah, like, it's just like cigarettes can't advertise anymore, right? Like, that's like basically banned.

Yeah, yeah.

And they have like free drug companies can't advertise. I think that makes a lot of sense.

Well, they still, they still the biggest advertisers.

In the US they can, not in like any other country in the world, basically.

Yeah, yeah.

The biggest difference from anybody that's not American, because maybe a lot of people listen to this American, they don't understand. But like, when you visit the US and you watch like cable TV, it's all— it was always like when I was growing up, it was always such a crazy mind-blowers. Like, there's so many ads for drugs. Like, yeah, it's just crazy.

Yeah, like that shit is the stuff that like you shouldn't be— yeah, I fully think anyone should be able to do like, you know, free will, do what you want, but you can't be like pushing it on kids, right? Or pushing this stuff on, on people.

Step 1, get rid of the lottery. Yeah, that's just such a tax on, on the poor.

What pisses me off in, in Canada is like, they— you could play DFS here for a while, and DFS actually requires some skill, um, and you can't do that anymore. And now you just can just do that. Daily Fantasy Sports. And now you can only do like the gambling where you're guaranteed to lose, basically, with like the bookies and you're betting on spreads and all that. And you're never gonna make like money on that. Uh, yeah, that's just like getting rid of the game of skills. And, and so like, that's why I sympathize, going back to the original point, with the poker people who make their living off of this, because they actually— this is their— how they are— they live. And you can say this is like not a a way you should earn a living or whatever.

But, but just such a small—

the issue with a lot of government stuff is like, if, if once they get too involved, there's eventual capture, and then it's, it's perverse and it's not even done the right way, and it's just all the bad parts.

I mean, but there's capture now though, right? Like, the, the reason these drug companies can advertise and the gambling company can advertise is because there was capture. Like, there's no sense in which this is good for society. Oh yeah, it creates jobs for people people at these companies were like, you know, the revenue all comes at the expense of— well, for drugs it depends, obviously, but for gambling it's coming at the expense of a bunch of addicts losing money. I don't know, I just think high level, there's stuff that's not profitable that's clearly good for society, and there's stuff that's really profitable that isn't good, right? And the government, you kind of want to funnel people, you kind of want to correct those two imbalances. And also funnel people towards more long-term, like help people, encourage people to think more long-term about what the country needs. And just one last thing, we can cut all this stuff, by the way, if—

No, I thought this was a good discussion.

I do. I have a question on what you're saying with this.

Oh yeah, sorry, go ahead.

So what, like, what do you think in like, let's say like 50 years from now that China is going to have like some of the biggest companies in the world because like all like the really innovative companies are in the US, right? Like almost.

So that's really interesting. That was a really interesting thing from this report. It was actually linked on the BG Squared podcast. It's like a 100-page, uh, report on, on China and their various like innovation programs. I highly recommend people read it. Uh, it's actually like an easy read. Um, and the conclusion is, is basically that so they've done subsidies for a bunch of different industries. Like we're talking tens to hundreds of billions of subsidies depending on the industries. Like they did chips, they did, um, um, obviously EVs, they did, uh, solar panels and renewable technology, and then they did AI too.

And I think they were doing— they did something on humanoids as well.

Biotech. I think biotech was the robotic. And, and it's really interesting what they found is that the subsidies worked really well when there was no 0 to 1 innovation required, but just 1 to X. So for instance, solar panels, making them more efficient, battery technologies, making them more efficient, EVs, like making them better and cheaper. Like that worked really well because you kind of have, if you think about it, you're giving subsidies and then you have 100 different people competing. And so they have to just be extremely efficient and find the best way to do things. They did not work well for places where you required zero-to-one innovation. So they failed in chips and biotech. Like China, despite all the money spent on chips, doesn't have really leading like chips companies. Chips company, like all their chips initiatives failed. And the same thing with biotech, um, and to some extent the same thing with AI. Like the only one that came out of it was DeepSeq, and they didn't benefit from any of the subsidies. So, but for EVs, you had BYD. For battery technology, they're leading. For the photovoltaic stuff, they're leading. So it's kind of interesting, um, I don't— they don't sort of posit a reason for why that's the case. It might be that zero-to-one innovation just requires like more freedom, right? It comes out of creativity and being able to, to think for yourself and, and have time to, to, to— yeah, I don't know. I don't know exactly what it is, but that all continues to, to— the Zero to One stuff seems to continue to come out of the US more than anywhere else in the world.

Interesting.

Yeah, yeah, I thought it was pretty interesting.

So do you think that, like, back to the question, like, do you think that they'll have like be some massive Chinese companies that are like bigger than US ones in a few years? Or do you think like the head start that these US companies have is like too big?

I don't know. I'm like, I honestly, on China, I'm so— I read, I'm really fascinated by it. I read about it. I listen to the Rohit Kash podcast and I'll flip like bullish to bearish every week pretty much. So I don't really like depending who I listened to last. Like on the plus side, they have insanely good hardware chops and insane power, like, uh, access to power. I think it's like 3x the US, and they're adding it at ridiculous speed.

And they have— yeah, that is the scary thing.

Yeah, yeah, energy stuff is bad because it just— it operates on such a lag too. Like, it's not like—

yeah, that's the thing, that's the thing. And they have the whole supply chain, like all the rare earths, 70%, like on average of the rare earths, like processed rare earths are coming from there. They have like, yeah, 3 times the power and it's growing like, I think 5x faster, something than the, than the US.

No, the US is like going sideways and they're going vertical.

Like on charts. So I think that's, that's pretty scary.

Isn't that like the biggest or like one of the biggest kind of caps on AI is just like access to power and. China's going overcladded and the US is stagnant.

Um, yeah, it is. That's the worry. Um, but the—

we're not there yet, so it's not like a hindrance yet. But the issue is like once you build out all these data centers and, and there's— and it's just ubiquitous, then you start to hit the cap. And, and yeah, it's such a limiting factor because it like takes the, the fastest, I think, is the long— I mean, you have coal and stuff like that, but I think solar is is realistically the fastest to get online in large size.

Yeah, solar relies a lot on batteries and stuff, but I mean, the US is also like deploying, like can deploy partnerships with Saudi and stuff like this. So it's not capped by its own power, although obviously that wouldn't be great. But Saudi seems like a pretty close ally right now. I think China, yeah, those are the advantages. But then there's definitely some really good bear cases for China. And especially when you speak to founders that work there and they got burnt by various shenanigans that happen there. It's a weird place. We know some exchange founders who just got shaken down by local police there. They got put into a room and asked to transfer tens of millions of dollars of crypto to the to the local police. And there's founders I know that took a company public, like an e-learning company public on the Nasdaq. And then one day the Chinese government woke up and said, we don't like e-learning anymore. We want people to learn at schools where we can control it. And the company literally went to zero the next day. And there's all sorts of things that are— yeah, it's tough to have a a strong take on it either way, I think. I'm really excited to go there next year. We're planning a trip there, I think, between us as founders and maybe some other people too, and like actually meet some people on the ground and understand what's going on because it's definitely a cool place.

Right. And so going back to those trade-offs of being able to scale infra and direct it, or whether you're the best place to build, I think the latter is still the harder one to solve. Because yeah, you need so many things to, to align there, right? Between just people, the environment, the, the government, all the stuff. And I don't necessarily see China really see like relaxing their grasp there. And so, um, that, that's probably how, like, going back to your original question of whether China will be the place to, to be, um, if you think that he stays in power for a very long time. And then, you know, it seems like from— again, not my opinion, but just people who are in the know— is just that party has really strong control and the successor will likely just kind of follow that path. It's hard to see how, you know, that's going to be the place where people want to keep building.

Yeah, I think the innovation versus just like ramping the fuck out of existing technologies and making them better is like a pretty key distinction because like, you know, they can just like ramp up manufacturing massively, electric, like everything that exists already that gets invented in America, they could basically just ramp up an insane amount.

I mean, but this is changing. Like they're definitely like there, there's a lot of scientific papers coming out of China now also in biotech, like they've relaxed rules on biotech stuff. I think I've read some stats on this, so it's changing. It hasn't sort of like— there hasn't been, I think, uh, maybe I'm wrong, but a success story, like a zero-to-one real success story there yet. But they're definitely trending in the right direction. Um, yeah, anyway guys, I think we're good on this, on this pod.

Yeah, a little bit long, but Yeah, I thought it was good.

Um, I enjoyed it.

Yeah. Didn't even talk about ECC, but I thought it was good.

Yeah.

I was gonna ask you about that. I thought it was like really good location, really good event. Everybody like ECC was actually packed every day. Um, which hasn't been the case in a while. Like there weren't an overbearing amount of side events. Uh, everything was walkable. I didn't have to take an Uber or taxi once. Uh, the only downside is that it was like literally too hot. It was heat wave. But I mean, you're right by a beach and everything, it's hard to complain. They're doing it again there next year, which I think makes sense. I think it'll probably be bigger next year because I think a lot of people are skeptical this year of the location. But now that they hear that it was like good, um, they'll probably—

so it'll suck next year.

Yes, it'll suck next year. Um, it wasn't— it was cool. I ended up going to Nice and Monaco after too, so pretty cool to check out, but, uh, yeah, I think the vibes were good at ECC and everything too. So yeah, it wasn't like ETH Denver where ETH Denver, I think people were kind of disappointed and ETH Denver was also just a ton of like AI agent stuff. Um, this was more back to like, you know, the Robinhood thing was big. Uh, there's some cool talks on like solvers and stuff, a bunch of like DeFi. Big like institutional, all this stuff, right? So stablecoins. So, um, yeah, I thought overall it was a good ECC. Definitely was like a few orders of magnitude better than Brussels. So, but yeah, anyways, at this point, what kind of awesome, guys?

Yeah, nice.

Well, uh, yes, everybody in a In a couple weeks.

See you in a couple weeks.