Investing in Crypto's Next App Wave with 6th Man Ventures | Mike Dudas & Carl Vogel

The thing about these agents to me is that the value in them is not that it's built on decentralized infrastructure. These agents have a personality and they may launch a token or trade a portfolio, and that is what is actually attracting a lot of liquidity.

One big area that we're going to continue to focus on is the explosion of tokens, but there's a clear product market fit to attaching tokens to attention and to traditional forms of media like video and audio, and we're just going to see an explosion of that, and it's clear. From, from Pump being an example, that the product market fit is better than just about, you know, anything we've ever seen. That is going to explode. You're seeing it with AI and crypto tokens now and agent tokens over the next 12 months.

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Thanks. Great to be here.

Yeah, I say former enemy because Dudas started The Block around the time that we started Blockworks. Until he got— I don't know what that was, a hostile takeover of The Block or whatever we want to call that. We competed. So, dude, how's— just curious, how is it running a VC compared to running a company?

So in crypto, you know, they're both hectic and crazy. And, you know, me as a pre-boomer, you know, my mid-forties, I'm still working primarily with people in their early 20s, which was the case of The Block, totally globally distributed. And, you know, same thing with, with the group of founders that we work with. Uh, the, the reason I enjoy, you know, running a venture capital firm more than running, you know, media and research organization is that, you know, media research, you're in the middle of the information flow. Um, but we work in a, in a money industry. And obviously when you work in a money industry, you want to be in the, uh, in the middle of the money flow. Uh, so, you know, I think The Block was a fantastic way to get to meet, you know, everybody. The builders who were creating these new financial and non-financial products. And it gave me the opportunity to then go out and, you know, basically because I had seen so many different folks sort of pitch inbound, had a good way to kind of like filter between, you know, what was real and what wasn't. So that, you know, practice that for 3 and a half years and then decided to put some money behind it.

What do you think? We were debating this on the show the other day. Are VCs founders in their own right?

So I would say that Yeah, so absolutely, uh, because, you know, no matter what era of crypto VC you're talking about, uh, the folks who were raising their funds at any given time were largely doing something that's contrarian. I know it doesn't seem that way now, you know, where we have these mega funds, but a lot of these mega funds are mega because the value of their holdings has appreciated due to the early asymmetric risks they took. But if you go way back, you know, Pantera, you know, when they started their Bitcoin fund, massively contrarian, and Dan, you know, put millions into Bitcoin and, you know, brought along a lot of his friends. Uh, you just keep going down the line, you know, the precursors to Dragonfly, um, you did the same, took a lot of money from their friends and deployed it. And then, you know, the best kind of like, call it not mega funds of today, but what I would call like the best pure-play VCs with the biggest brands, and like Framework and Multicoin, you know, they raised their initial funds, you know, sub-$20 million, and, and basically had to beg people in that, you know, 2018-19 period, um, to get that initial capital, and, and it paid off tremendously. So certainly founders in that sense of telling a story that's contrarian and pitching to everybody on Earth. What's really cool about crypto is not only are the folks entrepreneurial in the businesses they run, but a lot do actually have experience. I mentioned Framework, they do a tremendous amount of stuff on-chain, similar to Delphi Digital and Alliance DAO. The best quote-unquote VCs are actually the people who are out there building stuff alongside their portfolio companies or you know, even people are not invested in who they love, uh, you know, and I think Carl can probably add to it, but yeah, he's an engineer himself and obviously has built a lot of stuff before becoming VC.

Yeah. For folks, go ahead, Carl. Yeah.

I was mad. Like, that's one of the reasons I remember when I was, I was a, um, sort of product lead before this. And I was, when I was looking to join Six Man, I was talking to Mike and I said, one of my biggest fears is, you know, going from being a product builder, which right now it's a great time to be a product builder. To investor, uh, I definitely had some concerns there, um, because I love building. And at the end of the day, I, I was a PM for many years. I still get to act as a PM, think as a PM, um, but we're also founders. I mean, we're 4 people, we're an extremely lean team, we operate as a startup, we have almost zero bureaucracy, which allows us to move very quickly. Um, and you know, we're building a generational fund and firm. And so with that, uh, I, I still absolutely feel like a founder every day. Nice.

Yeah. And the last point I'll make is, you know, as we get kind of this— I think it's wonderful, candidly, uh, this anti-VC rhetoric, you know, hyper liquid launch, never raise any VC money, you know, all of the sort of, you know, AI, uh, and crypto, you know, AI agent trenches, uh, these tokens are getting live before, you know, they ever have need for investor capital because there's actually real business, they're generating fees. Uh, so it's a really, really exciting time again where I think the, the the playing field is pretty even and VCs are buying the same market as everybody else and have to be entrepreneurial about our business model. You know, we've historically invested in private rounds. We're actually, you know, Carl and I were talking late last week about whether for AI agents specifically, we should just start, you know, not even considering private, but start, you know, delving in to public tokens because it seems that's where the returns are. Maybe.

I mean, let's go deeper into that because that is an interesting thing to consider. And actually, I think a lot of the mega funds have mandates where they can't do some of that stuff. And I think some some of the more nimble, newer crypto funds are starting to actually win some of those games. So you have all these like, I mean, there's this anti-VC rhetoric. It's always been there. I don't pay much attention to that. However, there are these like anti— I don't know if anti-VC is the right word, but, you know, things like Legion and Echo and Coinless has been around for a while, obviously. Legion and Echo. I had a founder the other day say, should I just do my entire Series A on Echo? You have the meme coins, you have these AI agents. It does seem hyper liquid. It does seem like there are trends that are moving in the direction of, hey, you can just raise capital without VCs. How does this impact Sixth Man's future?

Yeah, so I think we're fortunate, you know, relative to some mega funds in that we're actually perfectly suited. Our fund size right now is $140 million, our second fund. And, you know, we're going to raise a third fund early next year and not that much larger, you know, $200 to $250. Um, but in a world in which the capital requirements are shrinking, at just an astronomical rate, right? Where you can create— you know, Pump raised, I believe, less than $5 million and has generated in 9 months something like $320 million in revenue. Um, you know, the model of deploying $100 million into a crypto business is just like— there's not that many really good opportunities. And the ones from last cycle where that happened— I won't name any specific companies, but most of them didn't pan out. So we think we're really, really well positioned either to do so publicly, you know, like OTC purchase from founders who have light capital requirements. But the things that those founders are looking for, you know, they're not looking anymore for brand names like they are the brand name AI16Z, you know, Zarebra, like they have great brands that like people recognize more than they recognize the brands of a venture capitalist. So you basically, you know, we're kind of working really hard. We have an appropriate fund size for it where we can put $1 to $2 million to work into an idea. But, but yeah, we're in a world where, you know, we kind of have to win the trust of those founding teams to whether it's sell OTC to us or to embrace us if we buy liquid and want to become part of their growth.

How do you prevent getting into this cycle that I've seen happen where I'd put Six Man in the third wave of venture firms? So first would be like Pantera, Blockchain Cap. Second would be like Dragonfly, you know, kind of second cycle Dragonfly, maybe Parafi. Framework, etc. And then the third is like, you know, I probably put 6-man in that. And then there's a fourth wave that's happened recently, which is like Modular Cap and those guys. The trend that I've seen play out is you raise a, you know, $10 to $20 million and you have insane performance. And I think you guys had this just, you know, by any expectation, just insane performance. Then you raise another fund. It sounds like you guys raised $140 and you have really good performance, but maybe not as good as the second one. And then the third fund, when you raise this maybe you go out and you raise $300 million or $400 million, and the performance I've seen has been subpar, like, you know, underperforming Bitcoin sometimes. How do you prevent that from happening?

Yeah, so it's a, it's a great question. I think you have to be so as relentless as you were on the day the firm was founded. And I like that you mentioned, you know, Framework and Multicoin again, and Dragonfly. I kind of consider those the true north on how you build, you know, crypto-native brands from scratch. But those folks are out there hustling, winning. They're founder-led. Like Carl said, we just have 4 partners. We don't have big support staff, this, that, and the other thing. We're not waiting for an associate or an analyst to come bring something to IC and tell us why this idea that I have no understanding of is interesting. These folks are just hitting the pavement. You see them everywhere and they understand what's happening. So I do think you can excel. And I think some of those funds I mentioned are going to prove it over the next 3 to 4 years because we can see the deals that they're doing and they're incredible. You know, things like Multicoin, you know, getting into IO.NET, you know, one of the largest GPU compute marketplaces, you know, at a pre-seed valuation. They do not stop hustling. Carl, you have some thoughts?

Yeah. I mean, at the end of the day, I think also the expectations are lower. I mean, if you're operating a sort of $1 billion fund, your returns are going to be lower. A lot of times, you know, when we look at how these very large mega funds underwrite deals, They're underwriting for 2 to 5x of the fund. I mean, that's, that's sort of like a great outcome for their LPs, for them. And so that just the risk-return profile is different.

I think more like growth equity, like what?

Yeah, it's like growth equity. Like if you look at the size of these rounds that are getting done, you would typically put it in a growth equity type business. Um, so I think if you are small and scrappy, you have to be able, or like a smaller fund size, you have to be able to take very large risks. Otherwise it's kind of like, why are you playing the game? Because at that size, especially. You know, you need large returns in order to establish your brand and then go ahead and start to like move up the stack towards bigger opportunities.

Absolutely. A few of our LPs have literally told me, they've basically said something to the effect of, you know, do this. If you're going to 3x, like, I might as well just, you know, put my money into private equity and save myself, you know, the heartache when I'm looking at these market swings. We're underwriting you to a 5x plus.

Huh. Let's talk about the winners that you guys have had so far. So when did— actually, can you give us like a 30-second just on the fund for people who are less familiar with Six Man?

Yeah, so we did start as an entrepreneurial fund in 2021. Me and my longtime friend and a colleague at Google Wallet many years ago, Serge Kassardjian, basically have been buying NFTs in 2020, 2021, doing pretty well with like NBA Top Shot, Art Blocks, early CryptoPunks. So we started an a fund with our buddies from college, 12 of them. They each sent us 12 ETH, and we made them a bunch of money. And then they were like, well, can you invest in big crypto deals? So again, it was a really entrepreneurial, organic story. So we raised, as you mentioned, a small fund, $7.4 million. And our strategy was just, hey, we've got great relationships from The Block and our time in the market. So we wrote $100K checks, follow checks into a tremendous number of businesses in 2021, everything from Stepn to Magic Eden, both of those sub-$30 million valuations. Squads, you know, sub-$15 million valuation, Etherscan. And so we were successful and then we timed it perfectly to where we went to raise our second fund, much larger, sort of right at the peak of euphoria. Crypto is all about timing. So in late 2021, early 2022, raised that second fund. And the tack that we took is we have actually been in traditional tech. Like I worked at Disney for a number of years, I worked at YouTube, and we've actually worked on applications that consumers and businesses use. I do think there is a little bit of a lack of experience amongst investors and founders. It's getting much, much better over the last 12 months in crypto. But when we were— started investing in 2021, 2022, um, there was a great need for people who had built businesses. Uh, so, you know, we were able to get on cap tables, earn trust. Our performance was solid enough, um, that folks gave us another chance, and, and here we are.

Nice. What are the, um, what are the winners so far?

Yeah, so, yeah, it's a Yeah, it's hard to, you know, we're only 3 years into the first fund and 2 years into the second. But, you know, some of the early winners are STEPN, you know, which kind of kicked off this whole, along with Axie Infinity, this whole X2earn phenomenon. So that was a really exciting investment for us. Magic Eden recently launched their token. You know, we invested in them as an NFT marketplace in 2021, but mainly because they were some of the most incredible product builders we'd ever seen. And that's paid off. As you've seen, they've expanded, you know, not just on Solana, but to basically all the large chains where NFTs are traded. And they've introduced a wallet product. So they're, you know, a holistic brand. They've added liquid trading in terms of Ordinals and Runes. So it's just a really exciting company. And then, as I mentioned, you know, one of our— another early one was Squadz, which is kind of the Gnosis Safe of Solana. I hate to actually frame it like that because I think over time they have a chance to be even bigger than SAFE as they expand to multiple chains. Um, you know, they have a fantastic wallet product. Uh, so it's been a lot of fun. And then more recently out of this fund, you know, we've continued— I like to call it like we're doing a barbell strategy where we're investing in kind of really serious things, but then also really fun things. Um, you know, I call it, you know, business in the front, party in the back. I say that, you know, kind of every time I talk publicly because I to have a true economy, you need, you know, the fun apps and then you need the places to kind of like park your money for serious reasons. So, you know, some big winners out of Fund 2 that look like they're going to be winners, you know, Pump.fund is obviously, you know, the number one, you know, revenue-producing, you know, it's basically the fastest to $100 million, $200 million, $300 million, you know, tech company in technology history. And they actually think of themselves as a technology company, not a crypto company, right? And they're going to add social features, uh, and they have been adding social features, uh, and they think of themselves as a consumer-first app company. Uh, so it's really exciting to see that mindset shift. Um, so that's, that's obviously a big one. Um, and Carl can talk about a couple more.

The two, I guess, two other ones, uh, you know, during the bear market, your investment strategy needs to change. And what, what we found is, again, we're, we're mainly application layer consumer investors. But we do work with hundreds of portfolio companies and they do need some sort of infrastructure to be successful. And during the bear market, we invested in two companies that were increasing in market share during the bear in the Solana ecosystem, but was pretty obvious that like once the market returned that they would just be massive winners. So Helios was one of those. We did their seed round and that was, you know, and Mert is also just a, you know, like a 10x founder. Very clearly the guy is maniacal, barely sleeps, is chronically online. And if a founder tells me he's chronically online, that's a very positive signal in crypto. And we've had a chance to know Mert for a long time. Squads also, we doubled down. It's one of the only investments where we actually invested in multiple rounds, even out of multiple funds. And so I think for Fund 2, that's how I would round it off. But again, it was an incredibly simple thesis that has paid off many, many dividends, and we get a chance to partner with these amazing founders. And so now whenever any new Solana app is looking for RPC support or multisig, you know, it's very easy to say, go work with these two portfolio companies. We've known them for years and, uh, you're going to have a great experience.

Yeah. And what I'll, one thing I'll add, you know, is basically, you know, because of the composition of our fund and having, you know, not like massive, you know, pension fund and institutional investors, our LPA or our limited partner agreement does give us, you asked earlier, gives us flexibility and latitude on our strategy. Okay. Uh, and so we were able to invest in the entire Solana stack because of that. So, you know, we started buying Solana in the open market in 2023, you know, in the 20s as it was starting to recover, and continue to purchase, you know, through the private FTX sale. And then we've also been able to invest in Jito, both in the private and public markets. So to Carl's point, you know, we just feel like the Solana stack is extremely powerful. It's borne that out over the last 15, 18 months. It's just getting started as more payments things and DePIN projects and social apps and trading and speculative apps move to Solana or are birthed in Solana. Exciting time and, you know, Jito benefits from that.

Yeah. Yeah. Jito is a nice little 30x or something from its last round.

One thing I'll say to add on that is like what I found, and Mike, tell me if you agree with this, as Mike was listing those companies that I was reflecting, the faster we make a decision, the more successful the outcome has been. Like every single one of those DLCs talked to, we've turned around in less than a week.

Do you find that, you know, that you have a good sense of what the winners will be when you're doing the rounds? Or is it a, or do you believe that they're all 100xs and it's it's just a crapshoot?

I mean, I would say we take— we pick top founders and then sometimes the market changes, the sentiment changes. There's a new—

but are you like, okay, Lucas, I forget the pump— what's the pump guy's name? Noah or something. Are you like, Lucas, Noah, and Mert are like A+, and like, some of these founders we've done are like B+? And do you know that at the time of investing?

We, I mean, we try not to work with B+ founders. Like at the end of the day, I'm being genuine. Like we're not going to, we have such limited time to do diligence and dig into deals in our process that if we don't think they're A+, it's disqualifying criteria. And so, you know, what I'd say about all those founders you mentioned is they're all, um, with the exception of no extremely public, like Lucas is very public. Mert is very public. Stepan is very public. And so, um, through that sort of not only do we see their A+, but we have years of data points that prove out their A+. We can kind of get to that point quicker. But if we can't get to the point where we determine someone's an A+ during a process, it's just 9 times out of 10, not worth investing.

The biggest thing we've learned about the people is that we bias towards the folks who have built something. Um, I think that's been a better predictor. So if people have gotten, it's, it really is the Y Combinator model. It's the Alliance DAO model. What I love about Alliance companies, we, we invested in 2 out of this cohort called DataHive and Offramp.xyz. One's a stablecoin company, one's an AI data company. Um, is, you know, they have working products and they're super, super focused. And, and so where we've seen that, um, we've had a lot more success than people who have said, here's my vision, by the way, look at my fantastic background, I'm formidable, I maybe have done great things in the past. What we found is we've had a lower success rate with those folks if they haven't produced something that's almost exactly what they plan to build, you know, over the next 12 to 18 months.

Do you feel like you need to be contrarian to make outsized returns right now? Like, like Pumped Up Fund, like most people pass on that. I think it was like what, you guys, Alliance and Big Brain. And I mean, I'm an idiot. I think, dude, as you showed me that deal, I passed on it. Like, why did you guys do something like that when most other people passed?

Yeah, so, uh, it gets back— I mean, I, I had been doing meme coin-y stuff. I was fortunate enough to be, you know, work and be an early contributor on Bonq, uh, certainly by no means the, the biggest contributor, um, you know, that's Nom and Cadence and a bunch of other folks. But you're just kind of seeing how much people loved at the bottom of the bear, you know, to basically receive this Bonk airdrop, and it was for developers, it was for people who bought the Saga phone, and it just kickstarted so much on-chain activity. That made me start paying attention to meme coins. So through all of 2023, we were kind of looking and saying, well, we're VCs, we can't buy these tokens directly, even though we do have a wide latitude. It's just liquid meme coins. It's definitely not our strategy. So we always had our eyes open for what's next. And so You know, basically we had a magic moment where each one of us was able to launch our own coin, own token on Pump, and just watching this thing get like instant liquidity and start to move up the bonding curve, having been in the trenches ourselves, having watched like the 1-second chart ourselves while trading meme coins, you're like, oh wow, this is magic. It's addictive, you know, the flashing lights, but basically not caring about conventional design mechanisms and making something that's really special. So we definitely have had more success on that stuff than, you know, let's say the thing that is wildly polished, looks like a Web2 product, you know, and, and, you know, has maybe is over product engineered. Yeah.

And to that, I mean, I've had a thesis we all have, I think, around the financialization of everything. And that thesis has played out to a tee this year. I mean, now our elections are financialized, you know, meme coins are financialized, cults and ideas are financialized. And so I think at the end of the day, people say, why are, why are meme coins successful? And it's because you're investing in the idea. And as that idea grows in popularity over time, like that coin and that community grows as well. And so Noah was able to articulate that extremely well, which gave us a high degree of confidence that he's the, you know, the person to carry this out.

Yeah. Uh, let's start to get into how you guys are thinking about next year. And I think maybe the best way to lead into this is I was looking at your portfolio companies and you guys, You guys are probably the only crypto venture firm that segments out your portfolio companies without a segment of infrastructure. So here I can zoom in for anyone watching on YouTube. You have AI, consumer, DePIN, developer, gaming, and money. There's no infrastructure tab. And so I'd just be curious. I'd love to actually break into these different buckets as we think about 2025. But give me your general vision for what next year could look like and how you're thinking about investing in the space?

Do you want to start, Titus?

Yeah, absolutely. So look, we, uh, you know, infrastructure is, is something that we're, we're always going to be investing in. Um, but, but, you know, there has to be an end customer for it. We don't like, like, infrastructure for infrastructure's sake. So I think you could probably call developer, you know, that's the area of infrastructure, things like Helios that make it easier for developers to build an app or set of apps on an underlying blockchain infrastructure like Solana. That's where we're going to invest. But the way that we've categorized it, you know, these 6 categories, we try to keep it consistent. It's really important for, you know, founders to be able to look at your portfolio, how you categorize things and say, wow, like, I really think I can kind of fit into their mental model and they understand what I'm doing and can work with us. So, you know, as we look to next year, there's no question. I'll just start with the last category, money. Okay. Yeah. So historically, and then maybe Carl, you could talk about some of the others. But, you know, if you look at how we define money, you know, Qube is both a money settlement layer across different blockchains. It's an exchange. So people are trading and exchanging, you know, financial assets. Squads is, you know, basically I'll call it almost like a crypto bank or better than a bank. It's not really a bank, but basically you have a wallet, you have your multisig, and you can keep your funds really secure on-chain, and then you can off-ramp them. You know, LiFi is a way to move money, you know, through Jumper, you know, across different chains. And we can go on and on, but, you know, basically money takes so many different forms. We don't have a couple of the exciting logos on here like offramp.xyz, But pay is on here and now we're getting into consumer money. So historically, people have kept their money on exchanges like Binance so they could be US dollar denominated in different parts of the world. We think there's going to be a massive, massive unlock as people move to a self-custody model in money in 2025. The rails are there. You can, you know, basically take your money now off of Binance. You don't have centralized exchange risk. Risk. You could put them into a self-custody account, and with off-ramp and pay, you can basically literally off-ramp your money via debit card wherever debit cards are accepted globally. So it's a really, really exciting, useful change in how things go. Maybe I'll let Carl attack one of the other categories.

Carl, before going into the other ones, one thing that's always confused me a little bit about stablecoin slash like money investing is candidly, the lack of a token oftentimes. How do you think about the— yeah, how do you think about that?

Yeah, so, uh, basically many of these, uh, we do look at as equity businesses, um, you know, but, but in some cases a token very well could be necessary. Um, it could be a way that, you know, if I'm effectively transacting in a native token or there's a protocol layer token, it could incentivize even cheaper money moving, money movement. You know, for example, if I'm paying in the native, you know, pay token fee or something like that. Carl, do you want to expand on that a little bit?

Yeah, I mean, at the end of the day, like, our goal is to make crypto mainstream, right? And so not every single business should have a token associated with it. And so if we see a strong equity business, we're long-term investors. Mike and I aren't going anywhere. So we have no problem and we've communicated to our LPs, we have no problem investing in an equity business that can produce substantial cash flows over time. The other thing too is, I mean, look at the Bridge acquisition. I think, you know, what is the exit for a lot of these companies? Sure. I mean, a couple of them may go public, but like realistically, many of them are going to get acquired by large players that felt extremely left behind. You know, we've already seen, you know, one of our portfolio companies, Dakota.xyz, which is the leading business, you know, consumer bank, you know, crypto native neobank. I've already had strategics from multiple large enterprises really wanting to understand how this works because they're growing quickly, have hundreds of customers, are doing hundreds of millions of dollars in monthly volume. And if you're someone like Mercury and you see all these new businesses now starting here with the more secure self-custody solution, that allows you to earn higher yields, you know, a lot of these are going to be looking to tuck in crypto or expand their crypto and having a sort of a flagship acquisition is a very clear way to do it. So that's how we rationalize it.

Exactly. It does, though, make entry point or entry valuation, you know, quite a bit more important. But, you know, what we've found really interesting through 2024 is how many of these tokens like Ondo, for example, I think is trading at like 19 billion FDV. You know, far more, uh, quote unquote valuable than Circle, which, which has a substantially larger business. So, you know, currently the Ondo token's primarily a governance token. It's not clear why it should be worth $19 billion. But at the same time, you know, we don't argue with the market. So if the market's saying we value tokens, then certainly where we have the ability to encourage an equity-based business to, you know, theoretically create a token design that complements their business, even if traditionally it's been equity-only model, we will obviously do that because the market is rewarding it. And it gives these, call it companies that are turning into protocols, a currency that's just so incredibly valuable and cheap. I mean, just think about how much of an advantage it is if Ondo ever starts doing acquisitions or it wants to attract liquidity and how much they can do because they have a token and they own a tremendous amount of it that, you know, their balance sheet is just massive. Another blockchain, you know, or another project that's done exceptionally well with that is SUI, you know, where they've just had a massive, massive war chest and have used that to actually make acquisitions. They haven't announced all of them, but they've done some gaming acquisitions. And they can provide tremendous incentives to increase the activity on their chain.

Do you—

I guess, how do you think about that more broadly for the whole portfolio in terms of just— yeah, I mean, it's funny, the Ondo Circle one is a very interesting comparison, right? Because Circle is a more valuable business than Ondo, like full stop, period. Like that is just a fact. But Ondo trades higher. So one thing there has got— like, that is a very inefficient market. I would say one thing's got to give. Either the tokens have got to come down or the valuations on privates have got to come way up. What do you think budges there?

I mean, this is an irrational market, so I think the token can stay up for a very long time.

That's—

yeah, I think that's a bet that I think it's a really smart bet, candidly, that Ondo is making. So, you know, let's just say that draws down 75%. You know, it's still, I believe, at the same level as the last private valuation of Circle, which has been in business for 10 years. So it's pretty clear that, that the market's saying, you know, in this environment, it really makes a lot of sense to make that quote unquote bet on, you know, launching a token.

XRP is another example of this, you know.

What'd you say, Carl?

XRP itself is another example of this where I, I for— I don't know the current FTV of XRP, but you know, relative to fundamentals and progress, um, any objective, right?

Yeah, Worldcoin, ENA, Athena's token. These are just great examples that, you know, by having that liquid currency, um, it, it's, uh, you know, even hyper liquid, you know, it's a, it's a token where now, I mean, it's just like up only every single day. But, you know, people look at that and it makes their eyes grow, whoa, like super big. And, uh, basically what it's, what's happened is everybody wants to chase that in a bull market, and it's led to $1.5 billion of USDC stablecoin inflow to Hyperliquid since the TGE just a few weeks ago. It's just wild to watch and makes a lot of sense.

I have a— I'm going to get down the rabbit hole and off topic for a second. But Mike, imagine you went down a different road in life and you stayed. You were still running The Block and you'd been running it for several years and you're saying, I'm still, you know, still running The Block. There's, there's no acquisitions in crypto, like there's no acquisitions for crypto. For privates really. I mean, the M&A market just never has really arrived. Would you think about launching a token for The Block?

Yeah, unquestionably. Yes.

Yes, unquestionably. Say more about that.

Yeah. So it would be at the outset, you know, based on US regulatory environment, it would be, you know, what you would call a community token. There's one that was recently launched by Rekt, R-E-K-T, which I thought was really interesting, which just says like it's the intangible value of the community and the goodwill and the people who love the project. Um, you know, The Block has just so much goodwill that effectively the way that I would do it if I was there right now is I would launch a token, a community token. I would, you know, allow anybody who's a subscriber, anybody who's an investor, anybody who's, you know, contributed or been covered by The Block, you know, to claim some portion of the token and create a community where everybody is pulling for me and our media brand. Um, and, you know, Over time, I would add utility to it where you could pay for your block subscription, you know, with your token. So it could be, you know, an airdrop. And there's just, there's just no way to get fully valued as a media company, you know, where you're going to be something like, you know, 2 to 5x revenue. But once you launch a token, people have proven they want to participate. So I think you're going to see, you know, just like you've seen Rekt, you saw Pudgy, where, you know, the value of Pudgy and Pudgy's IP You know, I think the token in pre-market today— it's launching tomorrow— is trading close to $2 billion. Pudgy's never been close to unlocking that much value prior to issuing a token. And for now, they're saying, hey, this is a community token. It's representative of our brand and kind of like all future goodwill attached to it. But again, it gives them a currency to do really, really exciting things. And I do think, you know, I'd be curious how you think about it, but I see Rug Radio and Decrypt And I'd imagine Farouk, you know, who's deeply involved there and one of the senior folks, I got to imagine they're going to launch some sort of a fungible token.

I think they'll— yeah, I think they'll launch something. I mean, we're not launching something right now, but maybe that is— maybe that's the wrong decision. I don't know. I mean, we've— yeah, maybe that's the wrong decision.

Better watch out. The community just might launch something for you.

Someone launched Yano Coin and I was like, God, please don't buy this.

Well, I'll give you another example too. Yeah, I did start, you know, a utility project, one of the more utility-specific projects called LynxDao, where we sold a bunch of NFTs, which gave people, golfers, access to a ton of perks and benefits and discounts and the ability to join a golf course that we purchased in Scotland. And we're going to be announcing our US course purchase here in the next couple of weeks, which is really, really exciting. But we are actively and deeply considering, you know, the launch of a liquid token to capture it, basically involve more people, allow more folks to participate in this community. NFTs have historically been limiting. If you're a media company, subscriptions are limiting, you know, in terms of how many people can get involved. But think about it, you know, if you kind of allow people to claim a liquid token, you can allow so many more people to attach you know, themselves, um, a little bit of ownership of some intangible thing, um, to the brand. And, and it's just, it's clearly an unlock, and it's only going to accelerate in my mind.

What does this do for the token of the LinkStab tokens? I guess, yeah, because you guys would have 10,000 or—

yeah, so we have—

I guess you've seen it with Pudgies, right? Pudgies launched— I didn't even realize until this weekend Pudgies had Pudgie, um, they obviously have little, little Pudgies, but they also have Oh my God, what are these things?

Rods.

The Rods, thank you. I didn't even know they had the Rods, yeah.

Yeah, it's wild. So basically, if you talk with their team, they'll say, look, we used to basically, anything we do, we do amazing things. We're gonna have a movie, we're gonna, we have our plushies in Walmart, but the price of the NFT is just too high for the average person to enter in. And so the value of what we're creating, it's just hard for that to get represented in the price of an NFT. And obviously, you know, when you have a token that's purchasable in any amount, it just opens up the ability of people to share in that community upside and all the great things that your project is doing, even if the value doesn't directly correlate. Like, it's not a security. There's— Pengu is not going to be distributing fee revenue to holders. It's closer to something like a BNB, which Binance has, which is kind of like a loyalty token and a platform and a community token that gives you benefits inside the ecosystem. System.

Yeah. Yeah.

One of the things that surprised me this year is that nobody has yet— no project has really figured out the 404 standard, or basically be able to make, you know, fungible assets non-fungible and vice versa. So having, like, we talk about the value of the IP, the brand, the image, but there, you know, it's a completely separate token in order to be part of that ecosystem. I think having— it's a standard that exists today. I'm just waiting for the project that cracks it where now you can have tokens, you can get involved easily, but you can also represent yourself and own IP by swapping a portion of those tokens into, into like rare assets or images associated with the, with the project. I expect somebody is going to figure that out. I just don't— it just hasn't happened yet. And it's surprising. If you said beginning of 2024, I would have said totally. It's incredibly obvious, but it hasn't played out yet.

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Yeah.

All right. We went down the rabbit hole. Should we, should we come back up to We talked money. Carl, do you want to take us into any of the other ones of these, either consumer or DePIN or AI crypto?

Yeah, let's do, let's do DePIN. So I think DePIN is the area I love investing in most, particularly just because I spent years building hardware and then spent years at Google Nest doing IoT and ecosystem development. So from that perspective, it's just been really exciting. I think looking out, I wrote a piece on sort of where, what types of deepened projects accrue value. I think you're going to link it most likely in the show notes. But ultimately, I think as I look out at 2025, I guess backing up to 2023, looking at 2024, we were expecting a large amount of growth in different projects. And sort of like a lot of these projects are going to be more mainstream brands and narratives. And I think, you know, overall, like the industry has experienced marked growth. Uh, if I look about, look at the amount of DePIN deals we looked at in 2024 relative to 2023, I'd say it's 5 or 10x at least higher. I mean, there's an explosion of DePIN now. Every single type of hardware is getting a team building a decentralized permissionless version of it. So I think more of these are going to come to fruition and materialize over time. Um, looking towards 2025, I think areas like, um, mapping are, are particularly, uh, exciting. I think too, as we're looking at all the sort of UAV— is this, you know, kind of like a Tom Baldwin thing— all the UAVs that are appearing everywhere, I think generally we're going to see a growth in, uh, UAV adoption just from personal hobbyists. And we've seen a number of companies enabling users to either get free UAVs or buy these UAVs and then go ahead and earn tokens for mapping certain areas, whether it's for disaster response, whether it's for Um, uh, you're so real estate mapping, whether it's any sort of use case, but being able to say from anywhere in the world, I want to get a real-time image of a particular location and have a network that's able to fulfill that request. Like that is an incredible power that does not exist anywhere. You can even imagine new forms of like hedge funds where they sort of look at satellite mapping data all the time. It's quite expensive having hobbyists be able to go out of real time, scan parking lots, take images. I think there's gonna be a lot of growth in that segment looking forward for 2025. I think DePIN and sort of decentralized CDNs is another area where, you know, when you're a streaming platform, you have high degrees of volatility. And so trying to constantly have a large amount of infrastructure to support that volatility is a very capital-intensive area. And while also making sure during periods of high volatility and high viewership, you actually can get the resources that you need. It's pretty complex to structure an infrastructure network and a contract like that. But I think that's where decentralized networks can come in and outperform centralized solutions. And, uh, what I'm really excited for, if you said, what is one thing that's going to help DePIN go even more mainstream than it is today? I think it's going to be free hardware. So, you know, we've been talking to, uh, the Dawn Wireless team who we invested in, Neil, and, you know, they're able to take, uh, they're basically building decentralized high-speed gigabit internet. And they're able to lower the cost from the average American, the $50 to sub $20. Pretty incredible, uh, network that's being built out. But you know what I was telling Neil is how do you make this internet free? Like how? By basically having a network where you're capturing, providing not just internet, but let's say you're, you're also doing IP web scraping, uh, on the side, or you're also providing other types of signals intelligence, basically aggregating together a couple different networks into one platform. How can you make now give free internet to people? And I think when you have that moment, all of a sudden you're going to see exponential growth on the DePIN adoption side. So free DePIN, if you're building this, I'd love to chat with you. I'm particularly excited. I think we have a chance at achieving this in 2025.

Yeah. Just stop banging the— you're hitting the table with something. Just a heads up.

Okay.

Karl, you guys laid out these like 4 frameworks for evaluating DePINS. Granular geographic importance, supply side overlaps with the demand side, compete on performance, not on cost, and demand scales nonlinearly with supply. Can you take us a little deeper into this framework?

Yeah, sure. So I guess starting with the first one, there's a lot of deep-end networks in the compute space, or they're deep ends, but at the end of the day, the location, the precise location of the infrastructure is, uh, you know, fairly loose. So for example, if I'm querying a data center and it's 30 miles away versus 60 miles away, of course there's a change in latency, but I'd say it's fairly, uh, marginal for— especially for most use cases. And with that, it means that you actually have less of a moat if you're a company, because anybody can acquire and build infrastructure in a wide geographic area and be able to serve you know, very quickly centralize, build all this infrastructure, and then service a wide population. And so with that, it's just harder to build a moat versus if you have street-level, you know, mapping or street-level wireless available, all of a sudden for somebody to replicate that network, it is exponentially harder to do to be able to get that geographic distribution. So that's the first one. Pretty, pretty clear. That's why things like Helium and Hive Mapper in particular are quite powerful. Quite novel. Secondly, is supply side overlaps with the demand side. If you think about a situation where I am an operator in a DePIN network, if the only reason I'm doing this is for tokens, then during a bear market or other situations, I might turn off my network and I might have no qualms doing it. It's a purely economic decision. That means I need to receive a substantial amount of tokens to be— to continue operating this infrastructure. But if we look at something where I am already using this infrastructure regardless, like I need this to operate my business, an RTK network is an example, which basically helps transmit signals to GPS sensors that way they can be much more accurate. Like if I need this already to operate my precision farming equipment, my other robotics and automation, I'm already doing this. And so sure, if you give me a token kicker, I might buy your model versus a competitor's. But like, I need this regardless. And so you actually need much less incentives to bootstrap these networks, token incentives specifically, than ones that are— the supply are completely different people than the demand side. So we always look for those types of networks. And because at the end of the day, they need less token emissions, which means they can reserve those to, let's say, bootstrap the demand side or bootstrap other opportunities. Third, compete on performance, not cost. You know, this is pretty pretty obvious, but at the end of the day, somebody who can do something cheaper, uh, especially if it's only marginally cheaper, like 10%, it's, it's not interesting. Um, but if you can enable net new capabilities not possible in a centralized approach, I think Hive Mapper is a great example of this. Uh, you know, you can't have Google cars driving down, driving around everywhere 24/7, but having a decentralized network makes a ton of sense. Um, so you always want to compete on performance, not cost. Um, even some of the aerial mapping I was talking about, I think that's another very clear example where satellites only have a certain refresh rate of data. You know, they're literally in orbit, but have being able to real-time spin up a network that can be more persistent, obviously a very large opportunity and better performance. And lastly is demand scales non-linearly with supply. And what I mean is in a compute network, you need, if you bring on more demand, you need more supply to match it. Right. But if I, let's say, map or service a particular area with images or data, I can have 1 subscriber to that data or 1,000. At the end of the day, I'm just replicating a stream of data that's coming out. And so that is much more powerful when you're scaling a network than you always need to be constantly balancing demand and supply. And look, I don't, I don't think any project has all 4 of these in its completeness, but these are the types of things that I've looked for. And I've sort of been working on this over time and finally said, you know, I should publish this. Um, these are what we look for, what we see in a lot of the best DPIM networks today.

Nice. So of, so of all of that criteria, you've only found 4 that fit this. Is that, is that right? Andrina, Zeppelin, Livepeer, and IONET?

So here's the thing. I think it's a great, it's a great question because it sort of goes into our firm's age. Like we weren't, we were starting 2021. We only started really leading deals in, in 2022 when we raised the second fund. So, you know, a lot of these OG projects, the Heliums, the Hive Mappers, which I'm talking about, Like they raised in 2018, 2020, like very, very early in their life cycle. And so, you know, I've met with Ariel from Hive Mapper, I've met with the Helium team. I think they're terrific founders and operators, but from our fund strategy, it's just outside the sweet spot. And so now this is sort of the next generation of companies that are coming online and we've been able to invest in them and they've been very successful.

When we were looking, you know, we've definitely looked at dozens of, you know, DPENs over the past 18 to 24 months. Historically, they haven't actually been valued in the same way as some of the tokens we were talking about earlier. I would say that most of the early movers haven't really been terrific at creating sort of memetic value for their tokens. They've been so focused on the rigorous, you know, basically supply demand and network building and real businesses. That, you know, that Carl described, like a real business framework. And so what we've actually noticed over the last 6 months, and what I think we're good at, is we've seen a shift to understand that you both need to build that really powerful underlying business, but also have a really exciting community strategy, branding. Like if we were going to invest in the future in a, you know, trucking logistics platform, you know, D-PEN, Data D-PEN, you know, I would, advise them to call the thing Truck and have some memes that would make like, you know, people in the Midwest want to buy this. And so it's a mixture of those things. And they've been, I think, pretty highly valued in the private markets relative to where tokens have historically traded. DePIN has not been one of those euphoric sectors. I think that changes starting pretty much now. You know, we've seen Grass and some others, IONET, which we're investors in, you know, go out at pretty big numbers.

Yeah, yeah. Carl, do you have something?

No, that's the— that's right. I mean, the only thing I was thinking about adding is also a lot of the deep-end projects that we talked about are still have a large, low market cap relative to FDV. And so we know that there's a lot of, you know, investors out there selling some of these mainstream tokens. And you see it if you look at the chart, because I was, you know, on my PA, I was, I was buying some other different deep-end networks. You sort of see Price go up, you see clip, you know, clip almost like in an hourly form. So I think from that perspective, it's just the question is when is the right time? And look, like risk-return, it still might be great, but there's lots of other opportunities we see, especially in private and deep end where we can get it much earlier than trying to buy some of these liquid opportunities that have many complex dynamics hitting them concurrently.

Yeah. The last one I'm curious to hear about is AI. We can talk consumer too if you want to, but AI, I think it's just this area right now where it feels like there was the first wave was like Akash and Render and BitTensor, and now there's all these AI agents where people just have no clue. I would say most of the industry, including myself, has no clue what's going on. I mean, like Zarebra, like we, you know, we follow the main ones and maybe buy the coins, but like from a venture perspective, I'm very curious what is actually happening on the AI, on the AI scene in the crypto venture world right now.

Yeah, I mean, there's, from our perspective, you know, like, look, Mike and I aren't AI researchers. What we do is we read, we talk to founders, we assess theses. Um, where we started with our AI approach that has proven quite beneficial is starting with very thin layers of the AI stack. So I think IONET is a great example. Great, somebody's going to use this for inference. Uh, they're not using it for data, you know, they're not using a generic platform for data collection and processing and training and, uh, sort of, um, RAG and other types of solutions. And I think a lot of these crypto AI companies are trying to build the entire stack from ground zero. And I just think that's incredibly challenging, not only to deliver a product, but to compete with Web2, where these companies have 10x more funding than even a crypto fund, a project. And so we've tried to focus on narrow areas where crypto can actually outperform existing Web2 solutions. So far that's played out. I think where, what we started to see now is that a lot of the value capture in AI has not gone to the companies themselves. They've gone to these new generation of agents. And like the thing about these agents to me is that the value in them is not that it's built on decentralized infrastructure. Like there's no, I haven't seen much about the decentralized infrastructure providing some sort of massive benefit relative to what could be built in Web2 way. but it's that these agents have a personality and they may launch a token or trade a portfolio. And that is what is actually attracting a lot of liquidity. So that's what we kind of alluded to at the beginning of the show. But right now, unless somebody has an incredible thesis and background, investing in AI agents themselves, uh, it might actually be that with tokens might be a better strategy, at least for the next 3 months, uh, than actually trying to provide fundamental investments into these incredibly overfunded uh, overfunded areas. Um, the last thing I've been focusing on is AI crypto is, is, uh, I actually wrote a memo internally about this last year and we've started to see companies building here, but, um, Balaji only recently was, was tweeting about using the blockchain as a way to provide image, uh, authenticity and potentially even attribution. I think in an age of generative AI, like we're going to see more and more fake content, fake images. How do you actually know if this account was hacked? How do you know? If this is real. And with distrust in the media, distrust in centralized institutions only increasing over time, uh, you know, blockchain is that perfect substrate, uh, where you can upload content and have it be verified towards your, um, identity. Um, also you can actually use that same identity to send and receive payments for attribution. So to me, like, that's an area we've talked to a number of companies. I continue to look very deeply, but an area that I, in 2025, I do hope we start to see a company establishing themselves as a leader in the space and people uploading content there for trust and attribution.

Nice. Nice. Any other big themes, guys, that you guys are thinking about for '25 that we didn't, you know, we touched on Deepin, we touched on consumer stuff a bit, AI. Yeah, Deepin, anything else that you guys want to cover on '25?

Yeah, so I think, you know, one big area that we're going to continue to focus on is the explosion of tokens. It's pretty clear as we looked at retail coming in with their first sniff of like maybe since Trump's win in early November. And what did these folks who are coming right back in do immediately? They started bidding the coins that they remembered from 3 years ago. They started speculating. Inflating. If they came on-chain, you know, they were going to pump and, you know, putting a ton of money in there. And that's why, you know, Radium volumes exploded. You know, people are sort of again betting on-chain. Moonshot, which is a gateway to getting on-chain and trading, has been extremely popular. So it's pretty clear what people want to do. Um, you know, for 15-plus years, the number one use case for crypto has been kind of like trading and speculation. Trading and speculation towards long-term bigger goals. And I think that's going to continue. What's really cool about, for example, the AI crypto and the AI agent space right now is you have folks who have been building, you know, AI-related projects and products for sometimes for years with no token, and then they attach a token to it, and all of a sudden they have, you know, literally orders of magnitudes more people interested in their project. We've heard this from numerous founders. They have people contributing, you know, to the GitHub repository and open source repositories, and you're just seeing an explosion of interest. So I think we're really excited about novel token distributions and really an explosion of tokens and then what the implications are for what use cases that enables. So people to speculate on which, you know, AI entertainment character is going to be the most exciting, the most focused on capture mindshare. And, you know, hey, how are people going to keep track? You know, there's a ton of like infrastructure-related things to do and it goes all throughout the stack. But the last thing I'll say on that front is as these tokens come out and you're basically now more and more, you saw Pump had the livestream feature for a while, kind of exploded in popularity, you know, with some adverse issues that arose and, you know, basically stopped that to kind of reset. But there's a clear product market fit to attaching tokens to attention and to traditional forms of media like video and audio. And we're just going to see an explosion of that. And it's clear from, from Pump being an example that the product market fit is better than just about, you know, anything we've ever seen that is going to explode. You're seeing with AI and crypto tokens now and agent tokens over the next 12 months.

Yeah. Do you guys think we'll get a, a real consumer app on your phone that ends up, that is a little bit, that skews more towards what I'd say, like consumption of content or consumer and also is financialized, like Pumped Up Funds, like 98% financialized with some videos in it. Is there going to be something that's mostly like a TikTok competitor or Instagram competitor or something, or who knows what it looks like that also has some financial components?

Is that a cycle thing? Yeah, unquestionably. And you're seeing people are working on this aggressively. You know, we get pitched, hey, once something launches on Radium, How do we create a community and chat and videos and things around that? So there's almost no question in my mind.

Yeah.

What I'd say, though, is I think, you know, you need to be mostly financially driven in order to break through the noise. Like if you're 98% social, 2% crypto, you're not going to be able to compete with TikTok or Instagram.

Yeah.

So I think that's why Pump was growing rapidly, is the live streaming was a way to take TikTok, TikTok, Block meets Robinhood, um, in a solution. And I think over time you start highly financialized and then become more and more just, you know, sort of mainstream over time.

Yeah. Do you guys, uh, there's, there are a couple other like takes or things I'd love to get your guys' takes on just because I think you have good takes about the industry. One is, um, one is just these, you know, it's like kind of like ETH versus SOL versus the L1s versus the L2s. Um, you've got maybe a Solana ETF coming. Next year. It seems like the Move ecosystem is picking up with Aptos and Sui, and Movement just went live at a big valuation, obviously. Um, I'd just be curious to get your guys' general takes on these, like, L1s versus L2s versus, yeah, just like the base blockchains. How, how are you thinking about them right now?

I mean, what I'd say is, as an application developer, I, I think we care less about the base blockchain than, let's say, other firms. That kind of goes to our application layer focus. I think Polymarket has been, other than Pump, the other breakout consumer application this cycle, and that's on Polymarket, it's on Polygon. And I think people sort of written off Polygon and it doesn't matter, but at the end of the day, it has one of the number one apps out there. And so I think we are less concerned about what blockchain it's on, as long as that blockchain can fundamentally support the types of use cases they want to deliver. I do think there's benefits about building on a high performance chain like Solana or even some of the other move ones. In that it allows you to bring more operations on-chain than you would otherwise. You know, for example, a lot of Pi Market, from my understanding, is— I don't know their exact architecture, but a lot of it's off-chain, right? And so I think the more you can bring on-chain, whether it's even through building trustless token distribution systems for Deepin, if you want to pay thousands of people every single block, let's say Deepin rewards Uh, it's going to be hard to do that on some of the other networks versus something like Solana, either at the base level or even having like encryption built in natively, uh, that allows you to scale more. So, um, or compression maybe more specifically. So from that perspective, I do think chain matters in that extent, but we really focus on the top applications.

Yeah. And from the end user perspective, like folks are going to be using applications across numerous chains. Uh, they did. You know, during the NFT— even the normies did during the NFT mania of 2021, '22. You know, you had NFTs, uh, on Ethereum, you had them on Polygon, you had them on Solana. Uh, so I think people are comfortable with it, and the tooling is just so much better. I mean, I saw you having some, some trouble bridging over to Hyperledger the other day, but, uh, but again, what I learned is that was my own user error.

That was skill.

I know.

Because there are these— I mean, I actually think what's happened is there are OG crypto people who've been in the industry for a while, they don't realize the tech's actually gotten so much better.

So they do the—

like, I don't swap inside of wallets, for example, because the— remember the fees used to be like 10%, but now I— but now I learned the fees are minuscule when you swap inside a wallet.

So exactly. And the people coming on board today are literally using Privy or, you know, other methods to just— all they know is they put their email in, they get a code, uh, you know, in their inbox, they input it into the app that they're onboarding to and then basically can onboard money with Apple Pay or other methods. I mean, it's like truly dead simple. So I think it's important for any individual developer to choose a chain that they feel comfortable, but basically there's at least 6 to 8 good options where if you build a really compelling app, people are going to find their way to you.

Yeah. Carl, I heard you on the Lightspeed podcast. I forget when this was, several months ago, talking about Aptos versus Sui. Do you have, uh, do you have updated thoughts on that?

It's actually funny because I'm sitting in the Aptos office right now. Um, we're doing a team offsite here and, and we're, we're friends with both teams, um, very, very well. But they, you know, they happen to have an office here that we're working out of. I, I mean, look, I don't know. I think at the end of the day, they're both terrific teams. Um, you know, they obviously have a very similar genesis story, and so I don't have a particular view. I think, you know, SUI has more price action recently than that of Aptos. But, you know, you look at TVL, you look at these numbers, they both just seem to be moving up and to the right. And so it's pretty exciting. One of our investments is in Shinami, which is a sort of— the thesis is quite simply to me, Helios built for the Move ecosystem. And they are— they service both— they're the largest RPC on both, both of those chains. And they're also looking at ways to collaborate with Move as well. And so at the end of the day, they're both good options. That's a situation where picks and shovels is a good approach and infrastructure that serves developers.

Nice, nice. Carl, I'm going to try to pull something spicy out of you this episode. So I will, I will pivot into, into your takes on Coinbase. So you had two takes.

I've had a couple recently.

Two takes on Coinbase recently. You said agreed. We used to stake on Coinbase. We will not be doing so on a go, on a go-forward basis. You also said, I tweeted this before, I'll tweet it again, Solana is the number one threat to Coinbase's future cash cow. They'll suppress Solana for as long as possible. We're still waiting for USDC SPL support on Coinbase Institutional. Give me what is spurring these anti-Coinbase takes.

So what I'll start with is we— there it really is a— especially the account representatives that we work with are really terrific people. For example, the Padel tournament, I was playing with Nico, who's our one of our main counterparts over there. So we do like the Coinbase team. I think at the end of the day though, it's a case of regulatory capture, whereas RIAAs, we are— I think the rules are still not 100% clear, but the, you know, basically the guidance is as an RIAA, you should store assets where possible to qualified custodian. And the frustrating part here is because of that, that we're subjecting our LPs to much higher fees and put in some cases more reduced experiences for governance or participation in crypto-native ecosystems than what we could do when we could self-custody our own assets. And from that perspective, I've, you know, when I was at Paxos, I led custody for $20 billion in assets. I feel more comfortable building our own system out than I do having to necessarily rely on somebody else where we actually don't have the keys to these assets. And, you know, we see with Coinbase them shutting out accounts. It's a frequent occurrence. It's not just Twitter noise. Actually, my brother-in-law was an early Bitcoin investor, and like Coinbase started to lock his account, and they— he bought it 10 years ago, and they wanted him to show proof of where his financial payments came from, like his job payment stubs, to show where the money came from to buy that Bitcoin 10 years ago. And it was an irrelevant amount back then, but now obviously it's grown a large amount. And so now they're digging into it. So I think we see this behavior of shutting down accounts without notice. We see them changing the way staking works. So that specific one, we stake a large amount of our Solana to obviously Helios, our portfolio company, and also Jito. And we saw now that Coinbase made it so you can only stake with Coinbase's validators. And so we used to stake to the third party. It was, it's seamless experience, support our companies. They changed it without telling us at all. And so the only way I found out is I went to go stake more Solana and I was like, wait, I can't choose a third party. And then there was a, there was an update that was pushed and they didn't tell us. And so to me, that's just about value extraction from the ecosystem where they're only going to allow institutions to stake to their validators where they can take a very large spread on the staking rewards. Rather than enabling other founders, even our founders, to be part of this institutional flow. And so I look at these extract, you know, value extractive practices. Their exchange goes down still frequently when in high amounts of trading. That's not the case with other sort of new age exchanges. So I think I see this and it gets kind of frustrating on the value capture side. And the fact we have to use them because of regulatory moat. Now there's, there again, there's great features they have. I like the team. I think Brian Armstrong has been an incredible force for crypto during the past 4 years, but these practices are definitely extractive.

Yeah. So it has more to do with the ethos, the ethos of Coinbase and the ethos of the industry, less of risks or concerns, I would say.

Correct. It's like it's less on the optionality side and it's more about the ethos. I would agree with that.

Yeah. All right, guys, I think as a wrapping place, dude, I'm going to throw this over to you maybe for a— I've been seeing you in the trenches, my friend. So I would, I would love to just see— I'm seeing you tweet the Hyperleg Hyperliquid PIP meme token, whatever this thing even is. I don't even know. I mean, you're out here trading perps, which I've never seen you do in my whole life. So what, what— take us into the trenches. Maybe we could wrap there.

Yeah, so what's been exciting is it feels like 2021 all over again to me. I am having so much fun, you know, on the weekends at night, uh, just exploring new things. Candidly, in many cases I don't completely understand, like the AI agent stuff, and just basically learning by doing, by, you know, making a little money, losing a little money. And, um, you know, not to make it too political, but, you know, with Trump winning and then the change in the regulatory environment that we expect, I also feel like I can talk about this stuff publicly again. I mean, I was like, you know, we're registered investment advisors and, you know, we were made to feel that by being, you know, American citizens and publicly talking about crypto, we were committing a crime. Like, it just really felt like that for most of 2023 and 2024. And so the reason you're seeing this is it's like the real me, like the one who likes to have fun on-chain, loves these products. So anyway, and what's really cool is there's so many different things flourishing. Like to your point earlier on Solana versus Ethereum versus other L2s, like, dude, everybody's winning. Even like there's just incredible financial primitives being built on Bitcoin now where you can potentially earn some yield on your Bitcoin on-chain versus on something like BlockFi that was centralized. There's just so many exciting things. So I love this stuff. It's not a job for me. And so, yeah, I'm just thrilled that I can talk about it. And then you get all kinds of weird stuff. Like I bought this PIP token, no financial advice. I bought it for fun, I YOLO'd. And then they were like, hey, do you want us to make you a Pengu custom PFP? And I was like, I haven't done that in 3 years, let's do it. And so it's fun.

Yeah. Yeah, it is fun. This is the good part of the cycle when all the crypto natives are making money and the new folks haven't come in. And I can see here on my Telegram or on my Twitter screen, there are a lot of copycat dudesses popping up. This is when you know we're at this part of the cycle.

Oh, it's wild. It's— I mean, it's amazing how much time they spend building fake Telegram.

They already got the new— the new thing.

Oh yeah. Dude, dude, dude.

Awesome, guys. Well, it's been Dude, it's been just awesome seeing your ride, like going from the Block to Six Man, just killing it and having very unique takes that have led to outsized returns. And Carl, like, great getting to know you. And this is a— yeah, good podcast.

Thank you.

A lot of fun.

I really appreciate you. And it's obviously been equally fun to see you. And I think, you know, you open this with saying, hey, we were competitors, but I think, you know, you guys were so focused, so mature. Such hard workers. So to see, you know, your empire, as we say, growing, it really is awesome. So congrats.

Means a lot. Thanks, guys.

Thanks for the time.

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