How Venture Is Navigating Crypto IPOs Featuring Rob Hadick & Diogo Mónica

I think in my mind, back to meme coins, maybe the speculative activity and all the energy there goes to something that is way more productive, which is real companies in crypto building real businesses. And now you can have whatever AMC-like speculative activity on them, but on-chain and with real business behind. That would be really cool. Instead of meme coins, we'd be trading like crypto low market cap companies. That'd be much, much, much more productive. But it also solves the problem that we currently are talking about, which is can you IPO a company that has under $500 million of run rate?

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Doing great.

It's crazy. Lots of scrolling, trying to keep up.

Yes. Yes. If you want to see a group more egotistical than us, it's tough to find. We were just spending 5 minutes Googling ourselves. So that is how we like to start.

I don't know what you're talking about. I didn't Google myself. I didn't fucking Google myself.

We were showing the worst pictures of each other. So at least that. All right, guys, welcome. Rob is a, Rob is a partner at Dragonfly, if people don't know. Diogo is a partner at Hahn Ventures, also one of the co-founders of Anchorage. We've had his co-founder Nathan on the show. Diogo, what are you doing these days?

Lots of investing, lots of stablecoins, even though I guess my feeling is now that everybody's excited about investing in stables, maybe I shouldn't be investing in it anymore. It's too hot. It's too exciting. But spend the majority of my time deploying capital. My description is not a venture capitalist. I am an engineer that deploys capital. I see Rob shaking his head.

Rob, why are you shaking your head?

Because every time he says that, it's obviously not true. He's a venture capitalist. I don't know why he just wants to hate on our whole industry, of which he is a part of. Diego, just embrace it. We are venture capitalists. It's fine.

Never.

Rob, give me the— let's talk about venture right now. Give me the state of venture because a lot of the firms, Han included, Dragonfly included, raised these massive funds, right? You maybe raised Fund 1 was maybe small, Fund 2 was massive, Fund 3, everyone's raising right now for Fund 3. And where are these things going to shake out right now? What's the fundraising environment like?

Yeah, it's a little bit, and I'll be interested in Diogo's perspective here because I know we're kind of, you know, we're on a later fund than he is, but they had a really big first fund. What we're seeing in the market is that it's become a little bit of like a have and have-nots. Situation. So like in 2021, uh, basically everybody could raise funds if they wanted to. So everybody has said, hey, listen, I've spent a year in crypto, I can go and raise a new fund, I can raise $100 million, $200 million. And there was so much appetite from the LPs, whether it was pensions, high net worth, you know, endowments, etc., that everybody raised in like record times as well, you know, 2, 3, 4 months. That has completely normalized now. And so now what we've seen is similar to a regular venture, not just crypto. The large funds are continuing to raise large funds, not as big as they did in '21. They're coming down because that, you know, makes more sense— makes sense because there's too much capital in '21. But they're still raising relatively large funds. And then there's some, you know, specialists, you know, emerging managers who are raising, but it's much harder. There are a lot less people raising capital. A lot of people who raised too much money in '21 are having much smaller funds this time around, are struggling to raise. And that's caused what I think is a good reset in the amount of capital that's coming into venture more broadly. And I think it's probably right-sizing of the industry. And the same thing we're seeing in Web2 VC.

Yeah. Haves and have-nots. Who's actually outperforming Bitcoin right now? Because that seems to be the struggle. And not to dig into it right away, but like, I feel like a lot of the funds— I mean, Santi's an LP in a lot of these things. I'm an LP in less than he is, but a few of them, like, not many people are actually outperforming Bitcoin. So isn't that the core problem?

Well, I think that's true. I can tell you 2 of our 3 funds are actually outperforming Bitcoin. Um, but, uh, you know, I think the vast majority of people aren't, honestly. And like, it's, it's tough. And we do, when we have conversations with LPs, like there is questions because all of them know crypto now. Like there, it's no longer like, oh, teach me about like what this asset class is. It's, you know, why should I invest in you versus Bitcoin? You know, why is there not just like better ways to get exposure to this asset? I can do the ETF now. I can do liquid funds. Um, there's probably ETFs of longer tail assets coming. And so that is a question that we have to answer a lot more today than like we did, you know, call it 2021.

So I think— go ahead, Santi.

I was gonna say, look, uh, Circle just ripped yesterday. Um, and you know, no one was kind of expecting that. 25 times oversubscribed. Let's see where it checks out. Like Coinbase had this phenomenon as well. Do you think that that changes like the appetite for LPs to say, hey, listen, there is now like crypto-enabled businesses in the public markets like Robinhood and, you know, Coinbase and Circle that I can have exposure to. Like, why would I take the liquidity risk? Uh, you know, I would just rather have exposure to that. Robinhood in particular, like, I know, like, one of your guys, Rob Omar, has been public, public about it. It's like, it's interesting, has distribution, tokenizing stocks, stablecoins. Like, they're going to capture and reap most of those benefits. Like, how do you push back against that?

Well, one thing that I'm going to say is that's actually absolutely the case. And one thing that it happens this year is like we've had 3, 4 over billion-dollar acquisitions, and plus Circle. So to a large extent, these things are sort of diverging. Yes, you can buy Bitcoin, you can use it as a standard and as a measuring stick if you'd like. But the reality is that the private markets are actually putting out— I mean, we had a— we were part of Bridge. Bridge got sold to Stripe. You know, it really was the starting gun for a lot of the stablecoin mania. And you're seeing a lot of markups. And so the reality is that the private market continues to be alive and well. There's lots of markups, lots of big companies. And Circle is just one proof point of that. And I do think LPs see that. And by the way, to come back to the story of LPs, one thing that Rob didn't say is that LPs in general, it's a weighting moving average of whatever has happened the 12 months before or 18 months. And so it's kind of like a slow one. But I have to say that depending on when you started fundraising, if you started fundraising on liberation week versus not, that affects— because there's this denominator effect. And if all of your assets are crashing, which we've had some crazy movements and crazy volatility, then that it affects portfolio decisions too and affects the LPs thinking through deploying specifically into venture capital because it's highly illiquid and it's marked up and it doesn't change with the market. And so percentage-wise, the denominator effect means that you're overallocated to venture. So you start pulling back whenever the market actually has crashes. So that is very much a phenomenon that is alive and well.

Hmm.

Yeah, I think on Circle, like, maybe I think Circle's a bit of its own beast. So, like, you know, if you look at, you know, what has been the only public company for a long period of time in crypto that people have really traded, it's, it's been Coinbase, right? That's been the exposure. If you look at Circle, like, based on where they were, you know, earlier today, you know, they're trading at like 33 times LTM net revs, right? If you look at Coinbase, Coinbase is trading at 9 times LTM net revs. And if you actually were to, uh, apply that 33 times to Coinbase's piece of Circle, so they get about $900 million, LTM for, for revenue from, from Circle, that would imply that the rest of their business is trading at 6x LTM net revs, which is below kind of all the exchanges, below NASDAQ, it's below CME. And so that would imply that people actually aren't that excited about the rest of crypto, but they are excited about stablecoins. So I think that, that might be a very specific thing that's happening there. And, you know, to Diogo's point, we've seen the M&A market pick up. He mentioned Bridge. We were also part of a business called Hidden Road that got acquired. But I do think that we're just seeing a lot of interest in specific parts of the market, but the broader crypto interest is still very much tied to Bitcoin.

On the investor side, so not on the fundraising side, on the investing side, it feels like the evolution of crypto venture was like, all right, we don't want to invest in these kind of scary crypto businesses. Right? So like the ICOs. So, well, there's like these traditional businesses being built in crypto. And Tiago, you built one of the best ones with Anchorage. Anchorage, BitGo, Coinbase, Circle. It was like non-on-chain businesses. It was kind of the businesses that wrapped around crypto. CeFi, right? Fireblocks, Copper, those kind of folks. And then it was like, oh wait, equity is actually really hard to exit in crypto. And a lot of the returns are made on-chain in these tokens. So let's pivot to the chains. L1s, L2 phenomenon. Then it became like more DEXs, things, you know, lend-borrow, things like that. And now I'm curious if you guys think that the venture and the venture money got wiped out of the equity, the equity investments. Do you guys think the money will flow back into equity investments as there's actually finally for the first time in crypto a way for these equity investments to exit?

Yeah, well, look, the answer is yes. I think Circle clearly and all the acquisitions that have been happening clearly show that the answer is yes. Um, one thing to say is that we're relatively new in the crypto venture. We've been around for just over 3 years, and we've always had flexibility, right? Equity and tokens, and taking equity position with token warrants. And so the reality is that many of these businesses don't know which path they'll take. Um, and in many cases, not clear, especially at the earlier stages, which path is going to be the highest in terms of value capture. So you kind of like take, take an option of having, of having both. And I do think that there are cycles, and clearly tokens in general have had liquidity much earlier. So you want that profile, and that's one of the exciting advantages of venturing crypto is having earlier liquidity. But I do think that this is cash, like cash going to the pockets of LPs and early investors in a major way after yesterday's debut from Circle. And that's actually going to be— it's great for crypto, it's great for validation of the market, it's great for LPs to also see some liquidity back, which didn't happen in crypto. So I think this year specifically, you saw the acquisitions happen, which hadn't happened before. In one IPO, there is a An IPO, candidly, that I think speaks volumes of stablecoins, just because if you ask anyone in crypto in general about what they think about the Circle business, what you're going to get is they are a money market fund that wants to be a payment business. So they're trading at payment business levels, but they're really a money market fund, right? And so that's what they are. And by the way, one that burns a lot of money at that. Not a very efficient market fund. They're like a very heavyweight money market fund. So that would be the general gist. And by the way, it was candidly my own too here, which is, um, in terms of valuation, I would never expected this to come out to market and reach, uh, the heights of $19 billion market cap. It's not something I expected.

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So naturally, like, like, like, what's next? Like, you're, um, you know, founder Anchorage, uh, there's a number of businesses that, you know, could go public now, which is like Chainalysis, Anchorage's of the world. Um, is, is a key pitch here— look, if you're a traditional investor in like private equity funds, like you have not gotten liquidity and you're not in a good spot. Is the pitch a lot to investors, the, the— do you really emphasize the path to liquidity, which is like, hey, traditionally, if you're a venture fund in crypto, like, you could have— there's a very clear path to liquidity via tokens, um, in your portfolio. Um, so like, what's— I'm just wondering, like, what is a second-order effect of like the Circle IPO? Are we going to see the Chainalysis of the world go public? How, like, in your mind, how does that shake out? And then what does that mean for like— are there other crypto companies that are maybe going to think, hey, maybe I'm not going to launch a token, maybe I'm just going to tap into the public markets?

I really hope that's the case. And I don't know because we'll see, but I really hope that's the case. Look, it's a much better world for everything that you just said from yesterday to today, which is companies like Anchorage and companies like Fireblocks and companies like Chainalysis, which are traditional businesses, they don't have tokens. In the case of Anchorage, highly regulated. They definitely have a better path for IPO today than they had yesterday, even if it's in terms of perception and definitely in the eyes of the underwriters, right? Because in many cases, the underwriters are actually a little bit of the bottleneck because some of these companies haven't reached the threshold of revenue, which right now, depending on who you talk to, they say $300 to $500 million for even, for it to even be interested to some of these underwriters. There's other ways of going public, as we all know, with SPACs and direct listings, et cetera. But $300 to $500 million is, um, there's not a lot of businesses in crypto that are doing over $500 million, right, of, of revenue on a yearly basis. So I think that underwriting maybe changes a little bit. That's, that's my hope for these businesses. On the other end, let me just also focus on something that Rob said, which is I think we're seeing a sliver here which is this is the stablecoin bet. This is a clean stablecoin bet. That is, Circle is a stablecoin bet without all the confusion that Coinbase has. Coinbase has a cloud business, they have the trading business, they have an institutional business, they have institutional trading business. So all of these different components, you're underwriting them as an aggregate. And the story here and narrative is like, how do I get exposure to this thing that crypto people keep talking about called stablecoins? And now you have a ticker that is called Circle that everybody will point to as you can do it. You can't buy Tether. Which is the largest issuer. So you're going to buy the second largest issuer, the second best, right? So you can buy the second best right now out on the markets. So I think that's what's happening here. And in terms of, by the way, your first question of on the LP basis on liquidity, I don't know if we can overemphasize it, but it is a fact that there's early liquidity on tokens. And of course, look, we're venture investors, we're long-term holders, we're not selling these things after we invest. And so we're not doing that. But there is the capability of doing it, especially if you think about things like staking, etc. There's a different profile of investment sense if it's going to a venture.

Rob, what do you think about this?

Yeah, maybe I'll add one thing, and I'll start at the last point that Diego said, which is the LPs are always like 18 months or 24 months behind the market. And so right now what we're seeing is that the, um, the venture capitalists are actually much more interested in equity again. And so starting with Bridge and then all the M&A that we've had, you know, over the last, you know, call it 6 to 8 months, We actually have 3 equity-only businesses that do not have tokens, do not have token warrants, that are getting priced up right now, significant markups.

We've got other, uh, in the private markets, like they'll be able to raise Series D or— okay, okay.

Yeah, Series Bs.

Who's investing late stage? Because that's been one of the problems historically is like there's no late stage growth, like the growth round investors in crypto.

Yeah, there's, there's not a lot of us, to be honest. What I will say, I'll say two things. One is, you know, we'll get involved there sometime. You know, there's Paradigm, there's Andreessen, there's Han, um, there's, you know, maybe, you know, a couple others that will get involved there on the equity side that are crypto native. What we've seen is if it's stablecoins, uh, or maybe an exchange because of Coinbase, we will see traditional like Web2 investors are back in. I was talking to one entrepreneur, I was at Money 2020 this week, I was talking to one entrepreneur, I guess it was yesterday, who raised for a stablecoin business. And he talked to 83 venture capitalists during his raise, which was an outstanding amount to me because in crypto, I don't even know 83 venture capitalists, but all of the traditional VCs wanted to talk to him. And he was telling me, he's like, listen, I talked to all of these venture capitalists and probably like 10 of them had any idea what was going on in our business when we talked about RWAs and tokenization more broadly and what we want to do over, you know, the long run with our business, it was, you know, people looked at us with like a blank stare. But, you know, there was, you know, a middle group of like 50 or 60 who were saying, oh, stablecoins, like, this is really interesting, like, we need to get some exposure to it. And we're seeing a lot of that interest like across the valley. And so again, it's, it's a really a bifurcation between the two. But those people are coming back, but they're coming back for that specific silver.

Yeah. Okay, let's play a game. Who are the— okay, outside, we'll talk about the corporate treasuries. Um, let's get that out of our head for a second. Who are the next 3 to 5 crypto companies that IPO?

It's tough. I, so I agree with Diogo that, um, you're really like— most of the crypto companies today are really smaller than your— than what would be ideal to go.

But there are some, there are some folks that are big. So like, let's, let's— I'll throw out some names to start. It's like you got Kraken, you've got —there's like— who do more than $100 million in revenue. I don't know, like Fireblocks is probably around there. Anchorage, I don't know if you guys are around there. BitGo might be around there. But like, I think historically I've thought these guys are a little too small. But I think talking to people, everyone's looking at this Circle IPO saying, oh my God, there's insatiable demand in the public markets. Maybe we should actually do it in '25 instead of '26. So I want to get your guys' take.

So what I would say is, is I think that is people's perspective. I'm not sure that I buy into that perspective. And if the, yeah, the IPO market is definitely open. CoreWeave has done really well. We're seeing a lot more of the traditional fintechs come back to, to the market who had previously shelved. Obviously Circle is incredible. I expect a lot more people to try to IPO more broadly. This is not a crypto-specific point. And to your point, you know, there is the Fireblocks who, who's been, you know, wanting or thinking about an IPO for a long period of time. But, you know, relative to what, you know, if you went and talked to somebody at Goldman, what they would tell you is ideal profile for a public company, they would— Fireblocks is not there, right? And that's true of Chainalysis, which is a great SaaS business. That's true of most of the other people we talked about. Kraken is a different story. And, you know, I expect we'll see them public, maybe not this year, uh, but maybe next year because of— but, you know, I'm, I'm sure that's a moving target. And, and I think some of the exchanges are maybe different stories and some of the brokerages because They scale with the market really quickly. But for the other guys, they might force themselves public. And I actually, I expect that we'll have a number of less than ideal people that we're not even talking about who will just say, I need liquidity. And like, what do you mean force themselves public?

Like, like SPAC or something like that?

Or, or they might SPAC or, or they might, you know, talking to their underwriter and underwriter is like, listen, I don't know if there's, you know, a lot of demand for your business, but like we can get you public. We can do direct listing or we'll just have like a, you know, we'll raise $100 or $200 million instead of the billion dollars that Circle raised in the IPO. I expect we'll see a number of those, um, because again, like, I'm not sure that this Circle story is transferable to the rest of crypto. That's fair.

And one of the things that ends up happening is for you to be public, one of the things that you want— and actually this was very clear with Exodus. So Exodus is, uh, actually maybe a good example because it's a crypto company that has a wallet that went public. And I think the story there is, I think it sits at $800 million market cap, it was just over a billion. but it had what, $50 to $80 million run rate. So clearly under $500 million. And then it's interesting because the price sort of languished post-IPO until they actually got covered by analysts. And then after the analysts, things started picking up a little bit. And so it's just, are you included in the category by the analysts of crypto companies that you can get exposure to? I think it's a little bit of that story. And are you going to be covered by the analysts and are you interested enough? And it turns out if you have under a billion dollars of market cap and really $300 million, which is where the $300 million, like 10x just call it a 10x multiple. That's where the $300 million, $500 million comes from, right? You know, like $3 to $5 billion valuation. If you're much lower than that, analysts are not going to take their time to cover you. And if analysts are not covering you, then people aren't really— the large institutions aren't really going to deploy capital, which means that there's very limited liquidity, and then the price may languish and things— you're not— you're just not getting the price that you deserve. So Exodus Wallet now maybe is a good example of what it actually looks like for you to have a subscale IPO, which, you know, it wasn't a terribly amazing success, but it wasn't a failure either. And so I don't know, maybe that can be emulated. But I think the question is, if you want to go the traditional route, will the underwriters actually like take you out? And maybe this, this multiple on Circle, and I agree with Rob, is not the same thing, but maybe it will kind of like whet their appetite. I would say that there's 3 categories of companies that would be next. Number 1, something that already has an equivalent in terms of trading to a public market and has scale. So Kraken, a great example. We already know how Coinbase works in terms of trading multiples. The second one would be things that actually have recurring revenue. And, you know, look a lot more like a SaaS product. So a Fireblocks, a Chainalysis, recurring revenue, attach rates, churn— you can sort of measure these things, and it's not really dependent on the market. Then the third one are actually businesses that are highly dependent on the, on the price of Bitcoin and on the price of cryptocurrencies, which you have variable revenue, and you really don't want that amount of volatility and not to have been diversified before you go public, because otherwise you're just going to be strictly correlated to Bitcoin. Nobody's going to give you the value that you deserve. And they're just like, you're buying volatility, right? You're just a Bitcoin tracker, publicly listed, and you don't really want that. You don't want to be CEO of publicly traded company that only has like direct exposure to the market volatility.

Yeah. Can you take us into like the board meetings of Anchorage right now and divulge everything? No. And can you tell us everything that happens in them? No. Can you tell us like in the room? Because this must be a conversation. It's like, look, we're maybe a little small to IPO, but we've got a phenomenal business. like great customer set. Do you start making acquisitions right now? Do you wait until the next cycle IPO? Are cycles dead? Are you waiting till '27? Do you go raise a late stage? Like, how do you make a decision like this?

So for Anchorage, it's very different. I think Anchorage— I think we all know that it has this long-term goal of being public. The only thing— what we sell at the end of the day is trust. That's why we're the first and still only federally chartered bank in the US that does crypto custody, etc. But the only thing that is more trusted than a federal bank is a publicly traded federal bank, right? And so the path to trust adds a lot of value to the business. And I think that is the path that we're on. And it's always been the path that we wanted to be on. And so that, that, that to us is slightly different than another company that may stay private for much, much longer, because we do have a goal. And that just benefits the business in general, in terms of trust, which is what we sell, you know, to a lot. And another reason why Anchorage is potentially a great candidate is also being a bank means that already have all of your financials in order, you already have stuff that is audited, you already reporting, you already do a lot of the heavy lifting that's necessary for you to go public. Um, you know, I was at Square when we were preparing to go public and through, um, you know, the IPO and how crazy that setup was. And, you know, it's intense, but getting a bank charter is also very intense. So maybe that, in that sense, we're also, also further ahead. But the questions still maintain, which is, are what, uh, you know, John and, um, and the Collison brothers, um, kind of like talk about, about publicly, which is why, what do we have to gain? And if you have an amazing balance sheet, you have more money than you need, you are growing, you are diversifying your business model, you are becoming more and more attractive each month that goes by, and you can do all the partnerships and you're really like leading the pack on all the areas that you want to lead, you know, what is this going to really get you? Like, what is having access to the public markets really going to get you? Like, do you wanna issue debt? Do you want to have some strategy that the capital markets are required for that? And then at the end of the day, the answer is no, there's no specific strategy there. And yes, the trust would be amazing. But you know, it's something that we're walking towards and making sure we're ready for and think about optionality. We want to be in a situation where if we think it's the right thing at that moment, we're ready and we can immediately do it, but not something that is kind of like a big mandate that we, we must do it. It's how we think about it and how the conversations go. Yeah. And by the way, the other thing is that obviously as part of our board, there's venture investors. Venture investors like liquidity.

And so there's always like, nobody's pushing us, but you know, there's a little bit of like, Anchorage, it'd be great to see this publicly listed.

But like, isn't there also the benefit, like for your business, you talk about trust, there is more trust if you're a public company.

That is exactly right. And that is one of the biggest benefits for Anchorage and one of the biggest reasons why that would be good for us. But that doesn't apply to the general crypto company on its own. I mean, it does, but specifically for our business, trust is really the thing that we sell.

Maybe switching gears a little bit to the other side of the public markets right now, you have all these corporate treasury vehicles. And I've actually noticed you guys have mostly been absent from some of the— it's like I see like ParaFi, Galaxy, Pantera, Electric, like the same name, maybe CoinFund, like showing up on some of these. Rob, I saw your tweet the other day, you said As you can tell, I'm not a fan of these public crypto treasury strategies, which are clearly just point-in-time solutions that have no reason to exist over any reasonably mid-to-long-term time horizon. So maybe you can expand on that thought.

Yeah. So that's why we call him Spicy Rob.

I didn't know.

I didn't know we did call him that, but I can start.

As a matter of fact, I did not know that. I wish I knew that. I didn't either.

We're all learning. You can make that stick, Rob.

We can make that stick.

Yeah, okay. I can't wait for that. Thanks, Diego. Um, no, I— listen, I— they, they make perfect sense for the right pool of capital who wants to trade into these things. And what do I mean by that? I mean, you're, you're very likely to make money because you trade into the— you, you know, you give these people $300 million and they lock you up for 40 days, 30 days, maybe 60 days, very short periods of time. They go out and they say they're going to buy, you know, an asset that you are maybe long that asset anyways. In some cases, they're taking in-kind contributions, so it's almost a way to like monetize like your ETH or your Bitcoin or whatever else, because you can send that to them and then, and then take this, um, you know, lockup. And, you know, they're mostly trading today at, you know, some premium to NAV, anywhere from, you know, a little bit over 1 all the way to— I think S-Bet, when I looked yesterday, was like 10 times premium to NAV. And you— this usually has something to do with, you know, what the exact capital structure looks like, but also, um, you know, who's on top of it, and if there's a lot of excitement around, you know, a specific person or a specific group that is running this thing. Um, but over time, these are going to trade back down to NAV, and in a distressed market, they are probably likely to trade below NAV Many of them are anyways, and you can get yourself into a situation where, you know, it depending on you, how you finance this thing, especially if there's debt involved, where you may need to sell the underlying to pay off your debt. And which means that you may, and because then your value will go down and you may have also people converting into equity and diluting the broader shareholder base, you get into this situation where you're in a death spiral and that's going very likely to happen. For some of these vehicles over, you know, certain types of market cycles. And so I don't think they need to exist, but I understand why people are doing them to make money. I don't think it's right for our pool of capital, which is why we haven't invested in them.

Rob, we could have been sitting here talking about the exact same playbook happening for MicroStrategy 2, 3 years ago, and it didn't. So, so like, that would be the pushback that someone would be like, wait a minute, like, this clearly hasn't played out for MicroStrategy. So what would you say to that? Like, I ascribe to your view, which is like 99% of these vehicles unwind really nastily and trade below NAV in a, in a down scenario. We're not there yet, uh, but what would you say to someone that's pointing at MicroStrategy that has clearly defied gravity?

Listen, I think if you, if you point to a single example and then you abstract that out to what is happening now, which is significant amount of new vehicles that are all capitalized somewhat differently, that are loosening the lockups, that are, you know, in many ways they're usually the offerings are a kind of looser and are more— or they're more punitive on the actual equity holders. Like, it's clearly there's like a mania and people are just trying to monetize. By the way, you know, people had the same conversation about the GBTC trade, uh, you know, way back when, right? And there was many people was like, hey, listen, the premium has existed for 2 years, like, why would it ever not exist, right? And then all of a sudden it blew up Three Arrows and, you know, a couple of other funds, and we know what happened then, right? And so I think it's the wrong conclusion to look at what Saylor has done and incredible, like he deserves all the, everything we could say about him that's good. And then say, okay, well, like all these other people can do it on all these other assets in all these other ways and that we won't have adverse selection. Yeah.

Well, by the way, my view here mimics Rob's, but I think it's simpler, which is it's a trade and I'm a venture investor, even though I'm not really, but I'm a venture capital.

See, there you go. You said it.

Not an engineer, he's a venture investor. But it's a trade.

And so I think we have to tell ourselves the real story is the right holding period for Bitcoin was 15 years. The right holding period for Solana was through FTX all the way to the other side. And so as a venture investor, we're not looking for trades. I do think in crypto you get early liquidity and maybe you have holding periods that are not 10 to 12 as the private markets are kind of like aiming towards maybe like closer to 7 to 10. But still, you're taking a long-term position and you're working with these teams, you're trying to help them out. At least that's like, you know, that's the pink view, rose tinted glasses view of venture that I very much subscribe to. That's what I have fun doing, not really doing trades. I think in crypto, because everything trades, everything becomes a trade. But I do think that there's different vehicles for that. There's people that are going to make money out of it. There's hedge funds, there's all these things. As far as we're concerned, we're venture investors. And yes, we have a liquid portfolio because a lot of the value capture happens in liquid tokens, but we still look at holding periods that are venture holding periods.

So I was like talking to Jan about this in the two last weekly roundups. We're like, hey, listen, look at the NAV on these things and it's telling you like there's clearly appetite in the public markets to get more crypto exposure via traditional methods. How do you like translate that into how you express your views into investing in the private markets? Like what type of companies? Like you mentioned like the stablecoin trade's kind of over. Uh, Rob, I don't know if you agree with that, but like, no, uh, clearly like people want to go long stablecoins. Like the, the left curve was like Circle is synonymous with stablecoins, USDC long the shit out of it. And that's how like the market expressed that view. Like, is that going to hold? TBD. Um, But like, clearly this is like, I don't know if it's the same set of investors that is like punting the, like pushing the NAV of these vehicles higher that is going to, if you have more real crypto businesses that IPO like a Fireblocks or Anchorage or Chainalysis, do you think that it's the same type of investors or is the investor that is like going long SOL strategies in some of these vehicles, like just pure speculators? I'm trying to understand, like, from your perspective, how much demand is there really for more crypto businesses, not crypto trades? Because I think there's a lot of like sophisticated hedge funds that are, you know, doing these trades and like are cleaning up the Jane Streets of the world. I'm trying to understand how much— is it retail? Is it institutional?

So before I answer that, let me just say that both, uh, myself and, uh, Spicy Rob over there, Mid-Curved Circle, um, we were, we were straight up like, no, but it's a money market funds, you know, whatever. So we mid-curved it. Uh, that's absolutely the case.

Um, and either for now, you might, you might be in a year's time be very correct.

So that's right. Uh, either we're wrong or the markets are wrong. I don't know which one is likelier, but we'll see. As far as what you're saying, as venture funds— and I think it's the same for Rob— our LPs are looking for a particular type of product. And in particular, it's kind of interesting because to the prior conversation, they dislike trades and they don't give you tons of benefit for a trade. You might do a trade or might do an investment that they feel like it's a— it was a gamble, it was a trade, and they're not actually giving you that for the next fund in terms of credit. So it's kind of funny because they don't give you credit or as much. Obviously, if you return 100x DPI forevermore, it doesn't really matter what happens. But if you have a trade, you got a lot less credit than if you have a consistent portfolio of hits because they're re-underwriting every new fund. And what they want to know is that there's method to the madness. And these large LPs, we have sovereign wealth funds, we have foundations, we have the largest, highest, biggest LPs. What they're looking for is, I don't understand this market, I want exposure to this market. I know the market plays in two ways. It plays in equity and plays in tokens. I'm going to give it to the professionals that can actually decide which one is the best or both, or at what times and how to actually manage liquidity and manage the portfolio and help these companies get to successful outcome. And what they want is professional managers to kind of come into the space and help them through it. And if they wanted exposure to just liquids, there's those products. And if they wanted a hedge fund that is just taking advantage of the trades and is doing some kind of high-frequency trading or just arbitrage, then those also exist. But our clients, the LPs, um, you know, two sets of clients. You have the LPs and you have the, the founders. But on the LP side, our clients really want this product, which is, um, professional view over the, over the space in a repeatable process that works over multiple funds so they can continue backing you over time, and not really trades.

Yeah, Santi, I'll, I'll answer your part of your question kind of more directly too, which was just like, who's trading these things? And you can see in the filings you know, as they come out, not all of them because they haven't been out long enough, like who's actually buying these things. And it's not the same investors that you would expect to see, or you see in Strategy, or you see in Coinbase, or you see in, I'm sure you'll see in Circle, you know, it's not the T. Rows, it's, you know, not the BlackRocks, it's, you know, people like you're talking about who are, you know, doing some sort of like, you know, arbitrage trade, or there may be, you know, long and short one area or the other that they're trying to figure out, you know, how to make money on this product, but they're not people who have like fundamental view on, you know, where this asset is going over the long run. I think you're probably seeing some of that in maybe like a SOL strategies because there are people who don't want to touch spot and, you know, want to be long SOL. But like the Bitcoin vehicles, I don't think you're seeing any of that. It's entirely people that are, you know, kind of long one, short the other, and that are trying to figure out ways to eke out some sort of, you know, kind of arbitrage trade.

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I mean, I don't know if it does, right? Hyperliquid's incredible.

Well, here, maybe I'll add context to that, which is I think you'll end up seeing even outside of crypto, right? You'll see more and more successful with— I mean, Diogo, you and I talked about this in Dubai. It's like you can kind of— you can just get a startup off the ground now with like very small amounts of capital. Very low amount of human capital, you know, financial capital and human capital. You can get like these 3-person companies live that can get to, you know, tens of millions, hundreds of millions in revenue. How does that impact the venture landscape? And I use Hyperliquid because, I mean, I know— I don't know if you guys tried to throw money at Hyperliquid. Most of the venture firms I've talked to have tried to convince Jeff at one point or another to take a term sheet, and he said no. And they're one of the biggest success stories, arguably the biggest success story of the cycle. So with that context, how do you guys think about it?

Yeah, maybe I'll take a certain view here that I think is also helpful, which is that if you look at what's happening in AI, that is also true, right? So what is happening with Cursor, what is happening with AI tooling, the amount of companies that are going from 0 to 10 million of ARR with somebody vibe coding and maybe 1 or 2 people, it's incredible right now. I don't think we've ever seen anything like that. Like it, right? And so the same thing is happening in Web2 VC that is happening in Web3 VC, which has always been true in Web3 VC, is it's, it's, it's capital light. It's also light in terms of the amount of, you know, people that you need to build a really good protocol. And that kind of convergence has, I think, what, what's really incentivized people to do is go earlier stage, right? And so more and more people are fighting for seed and pre-seed checks. And, uh, that's also meant that seed and pre-seed have gotten very expensive. And on a relative basis and a historical basis. And that's probably the biggest change we've seen. And we've seen a lot less people, to your question earlier, you all know, be willing to, um, you know, fund people at the, you know, B, C, D, E stage. Um, but I also think that means that there's opportunity there because there's going to continue to be capital needs for companies at that stage who want to accelerate. And, uh, this, I think this, like, getting really early if you're really a big fund You know, the math doesn't really make any sense. You know, you can do a $1 million check on an $800 million fund, but you know, your best result in that thing is probably nowhere near returning that fund. And the math doesn't work and the time spent doesn't make sense. And so it's incentivized people to do this thing that I think is actually somewhat illogical to the way like venture math actually works.

Also, I would say there's, you have to update the model. There's another Decacorn in crypto and one that rose extremely fast at that. And so that actually, is extremely positive to continue investing in these companies. And sure, in this particular one, there wasn't as many venture dollars as the venture community would have liked, but that doesn't mean that you're going to change your strategy. You're going to go earlier, going to have better relationships, and you're going to see whenever you're underwriting your models, you know what the outcomes are, um, are, are higher now. You know, your, your $10 billion outcome was very unlikely, and now it's a little bit more likely. The same thing that Rob is saying in, uh, in, in, in AI. One of the things that is changing is that you can invest in a seed round at a billion-dollar valuation now because there's $100 billion outcomes. And before, there was no credible path to $100 billion outcomes because there was essentially no $100 billion companies, even market cap out there, publicly traded, really. Uh, there were very few of them. There was like 5 or 10, um, 10 years ago. And so now you, now you have them and you have lots of them and you have the, the growth and traction revenue that actually justifies it. And so if the pie, uh, if the, if the, the prize becomes much higher, then the entry valuation—

that's an interesting insight, is that this is going to end up— this dynamic will push seed stage, early stage valuations much higher. That's interesting. What do you guys think about— I mean, Santi and I were talking about this on the Roundup, the Pump.fund, uh, fundraise. I'd be curious to— I don't know if either of you guys participated in that or if you're investors in Pump, but a billion-dollar rumored raise at a $4 billion valuation. Give, give me your thoughts on the deal.

I think it's an interesting fundraising mechanism. Um, my impression of it and the way that it works is that retail actually gets an advantage over institutions in that institutions don't really get a big advantage over retail in this particular one. They kind of come in at the— they come in at same price and everybody is on equal footing here and everything. If I recall correctly, all the unlocks are basically the same for everyone and they barely explain this.

How do they structure it like this?

So institutions come in, you can buy, I believe, from them directly, but you buy this in valuation that they're going to be selling. I think the structure that they have is they went to all the exchanges or they went to many exchanges like Bybit, etc. And Pump.fund, and they can sell directly to the market, to both retail and institutions, um, directly there on the exchange. And you can buy it. And then I think the original plan was there was going to be a little bit of an auction, um, at certain increasing valuations, but then everybody else, uh, every day there's going to be an auction, um, and, um, and you can buy at whatever clearing price. So there's an equal footing of institutions of the original idea. I believe the implementation is actually going to be the same. We'll see. Um, but there's an equal footing here that doesn't exist in the past. One of the criticisms, uh, by the way, the founders of Pump.fund was in many cases, many coins are VC coins. Why? Because Rob and I have advantages of investing at seed and then at Series A and at Series B pre-TGE, right? And so when it comes to market, we already have our positions and hopefully our blended valuation is lower than the valuation that actually the markets give it whenever it comes public. And herein lies the venture investor and holding for the long term and helping the teams. That is, that is the value, right? But then the criticism on the other side is that this is not publicly accessible to every retail investor. Investor. And so they don't have the advantage of investing in the private markets. And so they lose out on the majority of the appreciation because when you TGE, you already have the majority of the multiple. That is the potential criticism and part of the reason why that team has consistently railed against what they call, quote unquote, BC coins. And so it's kind of interesting that they do a mechanism of fundraising that is, in their view, more, more fair to retail and that is equivalent for investors.

Robert, we a fan?

Yeah, I listen, I think it makes sense. And I'm not— I guess I wasn't aware of all the things that Diogo said. I think as I understood, it was basically just one big ICO at a billion. I wasn't clear that there was like an auction happening.

The mechanism may have changed. Um, you know, when I was talking to the team, these mechanisms were the ones that we're talking to. And you see in the team the passion of equalizing the playing field. I think it borders on nihilism of crypto. In many cases. Um, but, uh, but there's, there's this attempt at kind of like having an equal footing, uh, in the equal playing field between retail institutions that has been—

and I think whether there's an auction or not, that the point is the same, which is that if it's a, it's a $1 billion ICO, uh, and as I understand it, like, you know, something like, you know, 80% of that is actually meant to go to retail. And so like in a lot of the institutions who, you know, put out allocation requests actually got like jammed down And so like, if that's the case, right, it's the same thing, which is that they want everybody to be on equal footing. They want a lot of retail exposure. They want people to— everybody's unlocked, uh, as I understand it. Everyone is participating in this ICO. And so like, if that's broadly true, at $4 billion for how much revenue they've done, it doesn't seem crazy to me, especially on, you know, the crazy multiples that, you know, crypto generally trades on. And so, you know, I, I, I, I am not investing personally, but, you know, I think that, um, they've clearly done a— or they've offered a business that people have wanted, and people have been insatiable in using it and, you know, continuing to just trade on top of it and to, you know, launch new tokens. And that service is valuable, and it's probably worth the $4 billion, if not more, considering the way people have used it. So I think it's totally fine, to be honest. Yeah.

Well, let me just say that I think I've discussed this on stage in an Oxford-style debate, but I still maintain that meme coins are net negative for crypto. As an overall. I think all of the attempts at saying that they actually have a positive impact, um, just, you know, fail any kind of rationality. The testing the infrastructure, the— obviously these markets are free and you can do everything, and so you could always do meme coins, and that's nothing that we can do to stop them. And that is part of the, part of the bargain of having a decentralized system. But I just don't see that they have utility. Imagine that you have a funnel of people into crypto in which the first thing you do is punch them in the face. You just like You get a new user, you punch them in the face and that's their first experience.

That's— hasn't that always been the case though? It has.

Not to this negative EV. I think meme coins are even more negative EV. I think when you were investing in whatever was the ICO, governance tokens, I guess. Yeah, but even those, it's kind of like you can say that they're meme coins and then we're back to the same thing. Those were also bad and I would agree that those are also bad, but legitimate.

What I'm saying, something starts as meme coins and then they, I guess, gravitate towards something else.

But, uh, but I, I guess, uh, I think in the purest form, meme coins do not have any goal whatsoever. In its purest form. Yeah, yeah, in its pure form, which is what they trade on. My impression is that there's no, no attempt at ever upgrading a meme coin into something that actually has any kind of underlying governance mechanism or, or any kind of value capture in the future.

What, what is worse, like all of the AI tokens?

Well, that's like, where do you draw a line? Like, what is worse, something that does not pretend to be anything else other than, uh, you know, fart coin, uh, and, and, you know, people are 100% aware that it's just that, or things that sell themselves and paint a grand vision but have no substance behind them. And, and, and, um, you know, I'm just kind of curious.

So the, the worst are the scams, are the people that promise you one thing, that it will have value, they will have governance rights, that has some amount of value accrual and then obviously does not have it and it's a scam and there's a rug pull. Obviously that's the— that's criminal, right? That's, that's, that's just outright way worse. And I do think meme coins in their iteration are pure in the sense that there's no attempt at telling them or telling people that they're a gambling instrument. There's no attempt at telling you that this is like long-term value and these are trading wars and you're just trying to get out before the next person. So in the ranking, they definitely rank above in terms of clarity. You're telling people that does not mean that they're net positive. they're still net negative. Both of those things are below the line of, uh, of EV. They have negative EV for the, for the user. They have negative EV for the space itself.

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Let's talk about the positive. Like, what do you— I mean, you talk about the stablecoin trade being over. What is the most exciting thing in crypto? Where are you guys spending most amount of time, and where do you see the most amount of opportunities?

So I think, you know, the other one that is, um, still to come to fruition, but it will probably have a stablecoin-like moment, is obviously we've been talking about RWAs for a long time. I hate the term RWAs because, you know, real-world assets— what other world do we have in the real world? But let's talk generally tokenization. And in fact, we would all make the claim that stablecoins are about the success of tokenization. They're tokenizing the US dollar, and so they're an instantiation of the generalized tokenization, and a great one at that. And in fact, if you think about it, there's very little difference between tokenizing a dollar in terms of infrastructure and architecture and, you know, all the routers, than they're tokenizing other things. And so the same structure actually works, the same wallets, the same layer ones, the same principles and architectures and APIs, they kind of work. And so we're actually making progress on stablecoins, making progress on the generalized tokenization overall. We haven't quite seen that How does that happen? The two things that I'm spending a lot of time on are two things. People call it internet capital markets, but I'm calling it also on-chain IPOs. I do think that we've had a big problem with IPOs, coming back to our prior conversation. What if there was a way for us to not lower the bar of quality, but just lower the bar of revenue for a company to go public? And there was something intermediate between a pink slip or an OTC trade and an actual NASDAQ listing. What if there was something in between? Something that you could do on-chain, something that would help you with the compliance. You'd have 2 years of audited financials, and you can list your $50 million run rate company.

This could be like being able to list— um, okay, maybe Anchorage is a bad example. Yeah, like, let's use Anchorage. Instead of Anchorage waiting to go public on NASDAQ or NYSE, Anchorage could go public on, on-chain, directly on-chain.

And by the way, wouldn't it be awesome if by doing so you actually—

this is, this is the future.

That is, that is a very exciting And then, and by the way, these do not have to be one or the other. I think it's, um, I think it's Robert Leschner that says, um, these things can exist in a superposition, right? You could have a token on-chain and listed token, and basically they exist in a superposition where they have both rights and you can interchange for one another. And I think the cooler version of the world is where you start by going on-chain when you have low revenue, and then that allows you to upgrade into NASDAQ on a one-click button. Imagine that, imagine that you can one-click after a few years in an on-chain traded token, and then all of a sudden you're in the NASDAQ because you've already reached whatever threshold and you already have historical views of the, of the business. That would be really cool. I think that's really fun because it solves two problems. It— I think in my mind, back to meme coins, maybe the speculative activity and all the energy there goes to something that is way more productive, which is real companies in crypto building real businesses. And now you can have whatever AMC-like speculative activity on them, but on-chain and with real business behind. That would be really cool. Instead of meme coins, we'd be trading like crypto low market cap companies. That'd be much, much, much more productive. But it also solves the problem that we currently are talking about, which is, can you IPO a company that has under $500 million of run rate? Why don't we just solve our own problem?

That would be amazing. Yeah, yeah. I, I hate when Diego and I agree, but we definitely both agree about like broader tokenization. That is not the spicy Rob I know. I will say that I don't think the stablecoin trade is over. I think like stablecoin infra trade is over, but there is so much more to do in terms of getting stablecoins in people's hands, making them usable, figuring out ways to add value to that end consumer with stablecoin-related finance that there is actually a lot more and a lot more things that we're interested in investing in. In around that space. Am I likely to invest in the, you know, fourth chain that Tether, you know, backed? No, I'm unlikely to do that. But am I likely to invest in things that are using stablecoins as a core piece of providing value to, you know, an end consumer? Like, absolutely.

And we're still 100%, by the way. Right now, the value capture in stablecoins is very much an inverted pyramid, or it's a pyramid, and it's about to be an inverted pyramid. It's a pyramid because the issuers make all the money. Then you have the routers and the infrastructure providers that make some of the money, and then you have the apps that make no money. And eventually that has to invert. The issuers get squeezed, the middle layers that add value continue to have some value capture, then the apps make all the money. And right now we haven't— I mean, there's apps out there. They're now actually like some of them having very exciting markups, equity companies, you know, the Global Vamo, et cetera. They're taking advantage of the fact that stablecoins actually give you something, which we have a shot at the first truly global fintech. FinTechs have generally not been global. Revolut doesn't exist in the United States. The American companies don't exist in Europe. And part of the reason is because if you want to be in 150 countries, you have to go to 150 countries. And stablecoins invert the onus of integration. You already have a shelling point, an integration point for all 150 countries. And in fact, we've all seen these pitches. You have in every single one of these countries some local on-ramp actually doing the FX and local exotic to whatever USDC or USDT trading pair, and then giving you that hook. And so you can truly have a global fintech that integrates with one piece of technology and just operates in all the countries from day one. And I think that's truly exciting as a venture investor. So I totally agree, uh, with Rob. I want to disagree on principle because, um, it's way spicier when I disagree with Rob. But, but I agree with this, the apps are very exciting in the next wave.

I was just like, go ahead, Rob. Well, I was gonna say it sounds like a pitch for, for— I heard invert 3 times in there. And so you paid him to do that, Santi.

I did not. They passed on the round. That's cool. But that's cool. You know, not everyone gets it immediately. I will say, like, you go long stablecoin issuers. I think that's like a tough business to be in. Like, you know, but on this point, I go back to public companies. Like, would you rather— like, user aggregation theory, I think, will continue to be a thing. Like, if you own the end customer relationship, you will dictate terms and you should be capturing more value. And exchanges have proved that in crypto. Anyone that disagrees, I think just doesn't really understand how the world works. So would you rather invest in a startup that is trying to build distribution, or would you rather buy something that already has distribution, i.e., Robinhood? And just you take the view that these guys, if they're sharp, if they're founder-led organizations like Vlad and the Collison brothers, they're going to immediately say, holy shit, I can leverage this thing to go borderless, like basically just cut costs. And, and so Robinhood's like not, not necessarily cheap in the public markets, but it's growing faster. And you could say, you know, the difference between Robinhood and Western Union— Western Union is not founder-led organization. It's a guy that's getting paid $10 million a year, sit on his chair and has his cronies on the board and has no incentive to innovate and just wants to reap $10 million a year versus Robinhood. And it's a very different type of organization. Uh, I know you guys are venture investors, but like I don't know, like, how do you think about like this idea of distribution? Like, would you rather— because crypto I think has struggled with like getting into the mainstream. Like, it's really hard to convince normal users to use this stuff. It's like tough in places like Latin America. Like, people I think oversimplify the stablecoin thesis because there's very few people I think that understand payments really well. Rob, we keep referencing you in the pod. This is why we are having this with you. But I'm curious from your standpoint, like, where is the stablecoin like Where are the things that you see the most amount of disruption happening for like company, like large companies? Because I think people just have this grand statement, so stablecoins are going to rule the world, but that's not necessarily like true on, um, so anyway, there's a lot there, but I'm just kind of curious.

Yeah, so I think you said two things and I agree with both of them. So the first is, you know, I wrote an article, um, last year about, you know, kind of where like value accrual sits and like the stablecoin payment stack. And I talked specifically about like consumer fintechs. So, you know, these brand new fintechs that were starting, they were saying, okay, well, we have, you know, stablecoins on the backend. We have non-custodial wallet. We have, you know, card issued by Rain. Like these things are, are very easy to put together today because like all of the infrastructure providers, you can piece them together pretty quickly. And then you're really just in a knife fight to go and like win local distribution and geographies that are not monolithic and that are hard to compete in. And so, um, I think it is really, really hard to start a new call it consumer fintech with the pitch being, hey, I have stablecoins, right? And I think that's especially true because you already have people who have distribution, like a Revolut or like a, you know, a Monzo, which is back from the dead, or, you know, like an N26 or, you know, a bunch of others, right? A Nubank, for instance, who are going to probably just whip out some of their infrastructure or going to add a non-custodial wallet on top of that, or as another sort product, which then has the same benefits. And so I would much rather find something that has distribution and rip out the current existing infrastructure and sell them something, which I know Santi is, is the thesis that, that you have. And, and I think it's the right one because it's much easier to put new technology in front of a captive user base than it is to build a new consumer fintech and, uh, in a market that is really all about just distribution. There's everyone kind of has the same, you know, the same tech. There's no, there's no moat there. So I think that's number one. I think to your second question, which is like where we see it affecting like the large companies, you know, we've seen things like, you know, it being used for, you know, payouts for employees and for contractors and that being, you know, really popular. I think maybe one area that we haven't seen pick up yet, but I've started to see some evidence of, is like cross-border treasury management. So like the treasuries at these like large Fortune 1000s, like it's a disaster trying to move money across their subsidiaries and, you know, across maybe their suppliers. Um, and you know, you know, depending on the corridor, it might take 7 days for, you know, something to settle. It's really capital inefficient. Um, and you know, things get lost, right? I was talking to somebody this week at Money 2020 who was saying, I was trying to move $2 million to an African subsidiary to just you know, pay a supplier. And, you know, I'm, you know, it's a really big company, a known company, and I, you've used JP Morgan, and JP Morgan lost my $2 million for 14 days. And like, it was just a, it's, it's a company that is doing this all the time, and that type of thing continues to happen. And so if you have stablecoins and that people can actually use that are in an easy way to manage them, that's not going to happen. It is on a public ledger, you know where it sits. You have the ability to track it really quickly and to go past the corresponding banking system. But beyond that, a lot of those guys, they want yield, they want other products within their treasury, and they want to be able to do things like instantaneous swapping with like Biddle, right? They want to be able to do that with, you know, other type of yield-bearing products, and they can't do any of that if they, um, in their, their current treasuries. And so I think that's probably an area we'll start to see people or we'll start to see like Fortune 100s and Fortune 1000s start to actually adopt stablecoins and tokenized assets broadly.

I've got some breaking news to share. Shoot. What is it, Yana? We got a nice little Twitter post. X is joining forces with Polymarket as the official prediction market partner. Any thoughts on this one?

Nice. I'll chime in as a Polymarket shareholder that this is You know, I think pretty excited, but, but I think more broadly, like, they've just done an incredible job, uh, with being in like the mindshare of, uh, you know, the election, but even outside of the election with things like, you know, the superconductor chip and when Sam Altman was fired and, um, you know, people were speculating on whether or not he was, um, whether or not he was likely to come back. Like, they've been in the forefront of just the conversation and Twitter is at the forefront of the conversation. And bringing those two things together is, you know, a no-brainer in my mind.

Yeah. I mean, I remember meeting Shane way back in the day. I was at Parafi and we led— or we were co-invested with, uh, what is it, Nick Tamayano's fund, One Confirmation. Yeah, we were. And I think, I think Parafi is the largest holder now at this point. Um, and Shane was one of those guys who was like, listen, there is a possibility to, um, change how information gets surfaced. And mind you, this was coming from a point where like Augur didn't go anywhere. And it's— I think it's a classic example of like, you ought to revisit ideas that have been tried before at a point where the infrastructure was not ready. Going back to stablecoins, Augur— like, you cannot have a prediction market when you have— when you're not settling with stablecoins. It just introduces so much noise into the equation. And you could have argued other reasons why the Augur, like, team wasn't, like, you know, maybe the best one. They weren't, like, fully all in. Um, and, and you could have just, like, passed immediately on Polymarket because the prediction market is never going to go anywhere. But I really respect the team because it's one of those like super grand visions and ideas of how prediction markets are like really fascinating. I would encourage anyone to just go read about like just the, the potential to really transform media and how like information gets surfaced. And I mean, it's, it's really amazing what they've done, to be honest. It's like one of the few companies in crypto that it's from the bottom up, like, has like surfaced into the mainstream, has like captured a lot of attention and Yeah, it's really cool to do that. I wonder if the next step is like for Twitter to like get more and more into like stablecoins and payments like natively.

It seems like—

because I mean, it feels like they just rolled out chat, right?

So they wrote— if you roll out chat, like the next thing that inevitably comes is the ability to send payments to someone.

So yeah, what does this look like on the timeline? Like, is it like through there?

They don't have it yet. It's not live yet, but you got to imagine— have you guys seen what they're doing with sports? So you can actually like they have these separate sections for like the NBA and NFL games where you can like watch the games inside of your app with different licensing deals that they have. And then you can comment on the games and you can talk. And I think I've heard they're going to roll out betting inside of the app too. You got to imagine you'll be able to just like bet like, will, will Elon stay with Trump through June? Boom. Prediction markets embedded inside. So, all right, switching gears to another company that has done a good job of penetrating mainstream but is also a little controversial is Ripple. Rob, you guys were, I think, shareholders of Hidden Road, which they sold to. That's right. I would love to hear your guys' take on the Ripple strategy and if you think that they can build a dominant business just on the back of this, like, weird strategy of accumulating a massive treasury and maybe buying their way into a good business.

I would love to hear. Can I, can I just interject and say that I hate talking about Rob's portfolio. I just want to make sure that that's clear, that this should not be a trend. The only thing worse is—

too many of my portfolio companies are doing well. I'm sorry, Diego.

Rob, you could just start copying Dragonfly's investments like that.

It's always a possibility, Diego. I promise.

Diego's like, I'm not having fun anymore.

No, so listen, I think to that point, Yano, I think asking Absolutely right. Like, I think there is no doubt that if you have a lot of capital that you can buy yourself into a, you know, an actual business, right? And like, it's hard, it's not easy. You have to be able to, you know, pick the right businesses, you have to be able to integrate them, you have to have a good vision and understand where distribution comes from and value accrual comes from. But you can absolutely do it. And you know, I think if you, um, if you talk to Brad today, like, they're really focused on RLUSD. They want to become a competitor in the stablecoin space. Hidden Road is a very, I think, savvy buy for them in terms of wanting to distribute RLUSD. It's a business that is very capital intensive, that you have to— it requires a lot of collateral, requires a lot of debt capital. You end up actually distributing a lot to a lot of different counterparties. And so I expect we'll see billions of dollars of new RLUSD issued just through Hidden Road. Now, you know, add in, you know, things like, you know, they bought Medeco. I know that they're looking at a lot of different type of businesses right now. Like, I expect that they'll be able to distribute their stablecoin through those businesses and that all of a sudden we'll be talking about them as, you know, a major player, as a top 3 to 4 stablecoin issuer, potentially, you know, within the relatively near term.

You think Ripple could be a— you think Ripple in the relatively near term would be a top 3 stablecoin issuer?

I think, uh, that is their goal. I think it is certainly possible if they execute really well. I think they'll be a top 5 stablecoin issuer, probably almost certainly, uh, in the next, you know, call it 24 to 36 months, if they are able to execute the things that they are saying that they are doing, the transactions that they've, um, uh, that they've executed so far. And, you know, other ones that, you know, I think they'll probably continue to be, um, pretty active. I think it's very possible that they essentially buy themselves into that business. And I'm a believer, and Diego might disagree with this, and Santi, you might as well, but I'm a believer there will probably be like 5 to 7 stablecoin issuers that actually matter. I don't think it'll be that much less than that. I don't think it'll be 2 like it is today, but I also don't think it'll be 1,000. And so I expect that they will be one of those.

With that one answer, Rob just lost his Spicy Rob moniker. Um, it was too politically correct. I'm sorry, Rob.

All right, go for it, Diego. Hit us.

I mean, in general, look, uh, it is what it is. I, I think they have basically no chance at getting a stablecoin, um, to be successful. It's extremely hard to get in. Um, there's anywhere from obviously like massive distribution advantages already, massive balance sheets. I mean, look at this IPO, right? I think just crossed $20 billion market cap, Circle did, just now, right? And so I mean, the amount of money that they're against, not even Ripple has that much money.

Um, yeah, they do. They've got like $100 billion. I was gonna say, sell it.

The more they start selling it, it's different, right? Uh, they have to sell it once they start selling those amounts into market.

Do they have to sell it or could they like do creative structures behind it?

They can do creative structures, but at the end of the day, it's just like, it's sell pressure. Oh, this is crazy.

110. No, no, I think though, just—

Jeff Dorman is crashing out right now hard. Crashing. Oh my God. Just imagine staring at that all day and be like, fuck.

Just to satiate on your one question about like, can they do creative structures with the XRP? I think there are ways to do it. I think it is tough. I think you probably can't use it as consideration. You have to somehow turn it into cash beforehand for like tax reasons. Um, but you know, they, their whole business for the last, like, you know, call it like 5 years has been actually just selling XRP. They have a defined amount that they can sell every quarter and they put out a, you know, kind of a quarterly report. This is how much we actually sold. Um, and they can continue to do that. And at the prices that XRP is, and you know, it's continued to go up, like they can raise a lot of capital that way, but there's no reason they shouldn't be able to like borrow against it. There's no reason that they shouldn't be able to do like other things that that provide cash, and plus they have equity that they've actually continued to use, um, and some of the transactions that they're doing, and, you know, has a secondary market that is in the billions of dollars. And so I, I don't know why they can't continue to buy things, and if they do a good job, you know, fix that distribution.

So yeah, I mean, I agree with that, but there's a big hypothesis if they continue doing a good job, they need to integrate.

And I think some of the acquisitions already have, um, you Yeah, Rob and Diogo, what is the biggest thing that you guys disagree on?

Do we disagree on anything?

Well, we just disagreed on this.

Yeah, well, I think we agree more than we disagree. You are now a stockholder, so you're no longer an objective, uh, uh, you're a very—

I don't own any Ripple stock, just to be clear.

Um, what do we disagree on?

So I think Diogo and I have a lot of things that we agree on. I think we've been among the most active stablecoin investors. I think we've been among the most active in terms of thinking a lot about fintech, crypto crossover. I think where we probably are a little more constructive than Diogo, and he might disagree here, As you know, he's like very focused on, you know, like regulated assets on chain, which I continue to think is going to happen as well. But I think there will continue to be a really robust, you know, non-custodial, non-KYC financial system that exists on chain as well. I think we're really constructive around that. I think there is going to be, you know, more privacy in the future than there is today. I think we've already seen a bit of a pushback on, you know, broad KYC and there not being like a central repository. You have these points of failure now where every single company has to become basically like an IT company and figure out how to protect PII. And so I think we'll actually see a little bit of deregulation in terms of DeFi in a lot of parts of the world. And so I think we're pretty constructive on things like that. And I don't think that you know, it's necessarily true that like all of crypto is going to become like, you know, a like Web 2.5, like regulated, um, you know, ecosystem that Satoshi would roll over in his grave and, and just completely hate.

Disagreements. You just have to go to our portfolios and see what, what is, uh, what, what, uh, who's, uh, performing better right now, Dragonfly or HON? We don't know each other's performances, uh, But, uh, I mean, it depends. Let's do it in a zero-knowledge way, right?

Well, I mean, it also, it's a kind of a difficult— it is not to like dwell too much into this. Maybe we can start off in the next segment that we do, uh, because we should have you guys on more regularly, is the valuation methodologies are just different. It's, it's actually really hard. Like, how do you like, um, I wonder how—

if we have more equity positions than Dragonfly does. Um, I feel, I feel like we probably do.

Um, overall, what you're saying, strictly equity, they're never going to have a token, or just, uh, that's right, that's right, that's right.

Yeah, I think I would say so. Um, also our funds are differently structured. We have a growth fund which is a billion-dollar growth stage fund, acceleration fund, that's pretty big. So that just meaningfully makes it portfolio very different. But clearly Rob and I have disagreements, uh, but they're usually investment disagreements. You know, there's many investments that we've, uh, obviously both of our funds have looked at it and we passed on, or vice versa. um, that, um, that the other one ended up investing in. Um, so that's, that definitely, like, you can compose it as these agreements, but it's actually like, look, uh, of all the venture investors, Rob is actually one of the ones that I, uh, that I very much prefer debating and investing with. Um, I think part of the reason why I was excited to, to join in is because I actually love teasing Rob and being teased by Rob, and just, uh, we, we have great rapport. And, uh, I do think we have co-investments together that are pretty great. Um, so we could also talk about our shared portfolio, not just the ones that are just on Rob's portfolio.

That would be my preference. Hey, one question. Is the, the fact that you have more equity investments intentional, or is that just by virtue of your fund size? No, you haven't found like a billion dollars to deploy on like token issuers or like companies that are going to—

you could, you could. It's really about flexibility at the end of the day. I think different phases of crypto will require different decisions, right? These, these cycles have not all been the same. There's been cycles in which equity has outperformed. There's been cycles in which tokens outperformed. And overall, as you were actually mentioning, Bitcoin has outperformed basically everybody over the very long term. And so there's, there's different, uh, different takes here. Also remember that the products that we're selling are very, are very different. They're specific products. They're, they're venture products. They have a specific timeline. They have a specific set of investors, uh, and expectations. This is not a one-fund type of investment. It's a multi-fund type of commitment from some of these very large sovereign wealth funds. And so the thing that you're, you're selling is, uh, is a very different product, which then again also means composition of the fund is different. I think if somebody wanted just a liquid portfolio and not a hybrid portfolio, there would be vehicles for that. Yeah, gents, good chat. Yeah, this is fun. We should bring out Spicy Rob more often.

Well, Diogo, here's the problem with that nickname. If you agree with Rob on everything, you're Spicy Diogo. So that's the problem, my friend. I like that. I like that. We should just rate each other's takes. Whenever Rob starts being too political, I should have a button that just, you know, rings like, hey, you're being too politically correct here, you know, to be able to press. So reject it. Rob is just talking about like—

by the way, by the way, not to make a permissionless plug, which I never do plugs. Janno always does a plug. Oh, you guys forgot it again. I forgot. Well, I'm just gonna say, you know, are you guys gonna be at Permissionless?

Yes, I will be there.

So I'm actually not because I'm speaking at—

now we should have the button.

No, no, so, so the specific reason is I agreed to speak at Goldman's Digital Asset Summit, uh, many, many months ago, and I started my career at Goldman. The one in London? Yeah, yeah, the one in London, and it's the same exact week, so I'm actually leaving New York.

Iciest take we've had on this podcast. We put it in Brooklyn for you, Rob. It's like 7-minute walk from my house.

I probably could walk there, and so I'm actually— I'm very bummed out. I, I'm gonna give Hasib my, my apartment so he can walk there because I know he's speaking. Yes, from Seattle.

Well, Rob, we might have to have his Sheeb on, and he might— there's a high prob— I mean, there's a risk that he might—

replacement risk. You went from Spicy Rob to Uninvited Rob.

You don't, you don't want the downgrade, right? You, you got to keep on being—

come on. Finally, Spicy Rob comes back. Okay, I see Rob gets fired after that comment.

I was gonna say, I don't want to get in the mix. To that.

But anyways, gents, thanks for coming on.

We'll have to have you on again. Appreciate the time. Yeah, you're welcome.

Thanks, guys.