Lighter’s Token Launch, Erebor Raises $350M & Walmart's Crypto Strategy

I don't know if this will— what this will mean for, you know, your Ethereum or your Solana, but 2026 is going to be a huge year for stablecoin adoption, not just in, um, you know, these, you know, call it treasury management use cases, card use cases, but it's going to be really big and people actually using them domestically as well in everyday lives.

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, everyone, Happy New Year. Very excited about this one. Per usual, we've got two of us, not three of us, unfortunately. Rob, happy New Year. Santi, shame, shame on you. But Rob, happy New Year, man.

You know, happy New Year. Santi was like a last-minute drop too. What is with that?

You know, traffic.

Come on, I can't believe that. That's like the type of thing that somebody says when they just don't want to show up.

At least make up that you're on like a big customer call or something, you know. Traffic, traffic.

Okay, come on, man.

What's going on? How are the holidays? New Year? How's the start start to the year?

The start of the year has been good, right? So, uh, you know, a lot of people are circling back, right? They're, they're trying to, trying to make things happen.

How'd you get to the top?

Yeah, that's right. But, uh, you know, Bitcoin was up till— although it's down back to like 91 today, but, you know, we ran up to 94. We've got some positive market momentum, you know, we got a tiny little alt rally. Nobody's, you know, doing any sort of, um, tax loss harvesting anymore, right? You know, redemptions at the funds are almost over.

Let me ask you this. So do you, you know, every single year for like a decade, it's like you see the, the tweets on like December 29th. It's like, hey, reminder, like crypto doesn't have, uh, wash trading or whatever, whatever the rule is. Um, so if you sell your Bitcoin, you can just buy it right back and book the loss, and then you have, you still have the same Bitcoin. Do you do that?

No, I, I don't actively manage anything, right? Because other than the fund because it just, it, it's the wrong ROI on my time, I think, to be, you know, spending my time thinking about trading or, you know, anything like that. And may— maybe, you know, it'd be better if I, I did that, but, um, I just have things that I don't sell, right? And so I'm not—

I always feel like an idiot around December 30th and everyone's tweeting. I'm like, oh God, I should, should really do this. And I'm just like, I'm not, I'm not doing this. I don't have the time.

So yeah.

Yeah, but hopefully some listeners are smarter than we are and did that. How are you thinking about the year? I mean, we did our predictions, but like any, like, big things you're trying to do right now? Like big— I don't know. I mean, I want to hear about, like, what's happening on the fun side of things. Like, what's— yeah, tell me about— tell me about what's going on on your end.

So I think we're, you know, as we talked about on the prediction side, I think 2026 will be a good year. I think it'll be a year of have and have-nots. I think we'll continue to see dispersion and bifurcation between those who are doing well and those who aren't. Um, that's both on the fund side, that's on the investment side. I don't think we're going to see like a broad alt rally, but I do think we're going to see the things that people that are doing well, that have product-market fit, they're, they're going to do well. I'm not, you know, Santi over here thinking that the whole world is, uh, burning and that we're all going to—

Doomer.

It's on the real doomer right now. Yeah, I know. Um, And you know, we're seeing on the fund side as well. Yeah, we had, we were actually internally looking at our deployment pace and you know, how much money we put to work last year and doing kind of this end of year review. And we realized that we actually put a lot of money to work last year. Uh, and a couple of those things, a couple of the really big checks will be announced this month. Um, and so they were kind of late things that we did late last year, but we, we were really active even though the market wasn't. Not that active. And I think going into '26, our perspective is that we'll probably actually slow down a little bit, where— because there is— we do think there's going to be a lot more interest in, you know, quote unquote, the growth equity stage, and maybe a little bit later than we technically get or normally get involved. Um, and we think the early stage is probably still going to, you know, probably go sideways for a little bit, and we'll probably stay pretty steady there. And so, you know, I'm, I'm really optimistic about this year, but I don't think it's going to be, you know, a banger either way. There's not going to be a lot of downside or a lot of upside. I think it's going to be kind of still and steady, a lot of the same.

Yeah. You guys have, um, how many portfolios do you guys have? Like 150, 160?

It's higher than that. Uh, I couldn't tell you the exact number right now, obviously, but it, we're, you know, we're, we're on our fourth fund right now.

And what, what types of the, the leading question into like what types of companies right now are the hottest in the Dragonfly portfolio?

Hey, so as you can probably tell through a lot of the things that I like to talk about, but I mean, the fastest growing stuff in the portfolio right now has to do with stablecoins or prediction markets. Obviously prediction markets specifically is, um, or at least the most notable one is Polymarket. You know, we do have, um, we're also probably been one of the most active perp DEX investors, uh, in, in crypto. Um, and so our perp DEX investments, a couple of them very notably, LIDR, um, has been doing really, really well, uh, where generally long a lot of DeFi, um, and, you know, DeFi continues to come along and do well. And so we're, you know, actually, I think, more constructive than most in terms of DeFi funding right now. I think then if you look at, like, call it the longer tail, there's a couple of, um, things that are, I would say, you know, kind of don't fit as neatly into a box, like DoubleZero, where the token hasn't performed as well, but where, like, if you actually look at, like, the amount of stake on Solana that is running through DoubleZero, that continues to just, like, drive up. Right? And you look at the— their, you know, what they're launching. And so there's a few things that are— we're seeing do really well from a, you know, KPI perspective that maybe the tokens aren't doing as well, etc. But we're, we're long-term bullish. But I mean, I think, listen, the whole market is like stablecoins, prediction markets, exchanges, you know, like that is what everybody's focused on.

Yeah. Why did Lido do the token strategy in the way that they did? It felt like they launched it in kind of like a quiet just like calm. I don't know. I feel like Humidify did this too. It was like they just kind of like dropped the token. There wasn't a whole thing leading up to it. I don't know. I'm not sure if that's maybe like a new, a new thing that will actually start playing out is like, just don't, don't build so much hype around the token. But yeah, tell me about— I honestly just love to hear your take on LIDR because you guys are a big shareholder and curious to hear your take on like them versus Hyperliquid, the token strategy. Yeah, I just want to, maybe we can pontificate on that.

Yeah. I mean, token strategy side, I think you saw this with Monad as well. You saw it with, you know, you said you talked about Humidify, um, you know, obviously, you know, Lighter doing this at the end of the year. When you've done these, call it like these big pre-deposit vaults and you've done a, um, you know, kind of a lot of work up to the end to try to get like people like super excited and all this like pre-baked TVL and, you know, a lot of, um, work around. Build into this like momentous moment, right? I think what we've found a lot is that the tokens don't do well, right? And so sometimes maybe you get a little pop, but then they come way down. It's a lot more volatile in, in the beginning. You know, we always tell our portfolio companies, if you build a product that people want to use, the token will follow. It'll do well eventually, right? It doesn't— you know, I think it's, you know, who is it? It's, it's Warren Buffett, or, you know, that talks about, you know, how markets like short-term are a a weighing mechanism. Um, but you know, long-term they're—

I think Buffett likes LIDR.

Yeah. I think he's probably a big LIDR guy, you know, like he's probably like, give me a perp DEX. Right.

Um, but, but I think the balance in the market cap of Hyperliquid at $9 billion and LIDR at $700 million, he's like, ah, this is a valuation fundamentals play.

Fundamentals. Look at the cash flow. I need Santi on here to tell me about the relative value of cash flows of LIDR versus Hyperliquid. No, but, um, So listen, like, LIDR launched and it's had, uh, you know, it had, you know, pretty predictable, you know, price movements within a normal band despite having this airdrop. And it's traded very well to start the year. And so I think we saw the same thing with Monad. People got, you know, traded up and traded down a little bit, but it's been within a range and it's been kind of, you know, up only for the past few weeks. And so, uh, our perspective is that the the markets follow what, you know, your ability to build something that people want. And you shouldn't worry that much about, like, you know, the market cycle or what you're launching into, um, in terms of how you think about, like, long-term value. And so I think Vlad kind of took that to heart as well. And so, you know, he didn't— I mean, and he told people, like, it's probably gonna be the end of the year, and, you know, it's during, you know, the end of season 2, etc. So it wasn't like he didn't, you know, uh, you know, kind of put that out there. And there was a very active, uh, points market for for, uh, for LIDR, where people were buying the points, you know, speculating what the price of the, the TGE would be. But, you know, I, I find this to be a much better way to, uh, to launch. And, you know, yeah, um, I don't know, I mean, you, you're the one who sees all of these projects. You guys have all the data. Like, you know, do you like have any research guys seeing any, you know, correlation about, you know, where the market is and how they, you know, prepare for these in price action?

Uh, the honest answer is like probably yes, but I haven't— I don't know. Um, we've been— we just actually, we launched our new website today, so I've been just had— we're recording this Wednesday night at 8 PM on Wednesday night. And just, yeah, we just launched our new site today. So basically, like, you can think of it as like CoinGecko meets DeFi Llama. You know, we've talked about this a couple times on the show, but we got out of the news business, turning more into a data platform. And we still think owning the distribution is super, super, super important. And we— but we didn't like news as a distribution. Engine, but we do like data as the distribution engine. So yeah, we launched this new site and, um, so yeah, I have not been doing much research on Lighter versus Hyperliquid. Been heads down trying to get this site live.

So, yeah, I mean, listen, we're, um, it's interesting to read everything that's happening on Twitter because I think also Vlad, the founder of Lighter, is like a very polarizing figure. Uh, there's like, people seem to really love him or really hate him. He's, He really is just, you know, kind of building out in public and willing to say whatever, you know, comes to mind and willing to be, you know, very transparent. And, um, for some people, they've, they've taken, I think, uh, kind of offense to the way he just kind of says whatever's on his mind. And for others, I think they, they've enjoyed that.

And so, um, I think that's a smart strategy, by the way, because Jeff is so quiet and behind the scenes that you have to have a, um, Yeah, I mean, you just have, you have to do oftentimes the opposite of what the other competitor is doing. Um, and I think I, I like what Vlad is doing. He's clear. I mean, he's clearly won the hearts and minds of a lot of the right people.

So yeah, yeah, I mean, Hyperliquid obviously has a huge head start and a tremendous business and a tremendous, um, exchange. And, you know, they were— I continue to think they'll do, you know, really well. But, uh, you know, uh, Lido is definitely the, you know, best competitor we've seen so far, uh, and from an infrastructure perspective, from a team perspective. And so we're excited to see, you know, how that continues to evolve. And it's held up really well post-TG in terms of, you know, volume and, and open interest. And so, um, we'll be interested to see how that goes.

Yeah, speaking of, uh, winning hearts and minds, I have a, I have stat for you. This is the stat of the year so far. Did you know the Worldcoin app is the number one wallet in the world? More monthly active users than Base, MetaMask, and Phantom.

So this is using Sensor Tower. So the people who do the, the downloads for, uh, like it's like all the download information and data for iOS. Interesting. Is this MAUs? Oh yeah, it says MAUs.

MAUs. Yeah. So I watched their, um, I watched them roll out their, this new World app, um, a week or two ago. And, uh, yeah, it's pretty impressive. I mean, they had this whole like product integration with Tinder. So I guess if you're on Tinder now, like you have to verify your identity using World. Um, and inside of World, I mean, you can, yeah, you can do, you can convert like a whole bunch of currencies. You can pay with it. So. I don't know, I feel like we haven't heard much about Worldcoin recently, but yeah, it's now the number one wallet, which was, uh, shocking to me.

I'm interested on what, um, Opera MiniPay is doing relative to, uh, to those guys, because they're not on here. But, um, I mean, that's a more of a browser wallet, but, uh, that's been growing tremendously in emerging markets. And obviously my guess is that if you looked at the world data, like, it's mostly emerging markets as well.

What, what is Opera?

Uh, so it's like a, like a browser, but they have this—

oh, Opera Web Browser.

Yeah, yeah, yeah, yeah. But they have this, um, thing called MiniPay, uh, that they launched that was on, on Celo. That was actually like one of the fastest— it was the actually the single fastest growing, uh, stablecoin transaction wallet, um, in all of crypto for the most of the last 2 years. Uh, it's used really heavily in Africa and, and, you know, other parts of— call it MENA and, um, a lot of emerging markets. Yeah.

Okay, so let's, um, let's talk about this then. Speaking of wallets, so do you say Walmart? Um, Walmart just went live with crypto for their— I think they have like 150 million weekly users, uh, and they went live with crypto. So you can actually— you can't pay with Bitcoin at Walmart, but you can buy crypto in the Walmart app. You can sell crypto in the app. Um, you can, uh, like, I don't know, I think you can get rewards in crypto. Um, And I'm curious if you see this and you're like, oh, that's a massive thing. And that's like, you know, they have the ability to take on like a bunch of these apps. Or if you're like, oh, this is a nothing burger.

I think we need to see a little bit of what happens over time. So Walmart's a really interesting business because they have been trying to— and you may or may not know this, but they actually tried to get a banking charter in like 2018, 2019. They've been trying to get into the, um, the financial services business for a very long period of time. Because what is Walmart? Walmart is—

they launched— I was looking at their— I didn't know anything about OnePay. They launched high— they have high-yield savings, they have credit cards, they have buy now pay later, uh, they have unlimited wireless, uh, mobile plan, they have peer-to-peer payments, and now they have crypto trading.

Yeah, well, the thing about Walmart, right, is they are the you know, biggest touchpoint and the first touchpoint for a lot of middle-class rural America, right? And so they have really deep relationships with, um, kind of your average person in, in the US right now. Uh, they— so right now they use third-party providers for all these things. They also were using Green Dot for like a card thing as well.

And, uh, yeah, I think crypto trading is, uh, ZeroHash powers it.

Yeah, it's— well, it's OnePay but ZeroHash underneath, right? OnePay, right? Um, And so they've been wanting to get more and more into the financial services business in the same way you've seen, um, a lot of this happen with telecoms and with, um, uh, you know, kind of these large retail platforms in Latin America. They've seen this play out especially in, you know, call it non-coastal cities, right? And like rural America, um, because people trust Walmart, they do all their shopping there. Um, they've right now used all of these third-party providers. They see this as kind of a, you know, top of funnel to allow them to expand. The way they monetize, but they want to get deeper and deeper into those customers, and they want to monetize more fulsomely without having to use these third-party providers. So I expect we'll see a lot more from them in going non-custodial because it'll be more easy for them to monetize those wallets. Same thing that we've talked about with like Klarna, right? Um, you know, buying Bitcoin is one thing, but we're gonna see stablecoins, you know. I know— so they have a, like, a big, like, gift card business as well. They do a lot of stuff actually where people are sending money all as well overseas, like a, a remittance business. And I expect we'll see a lot of conversation about how crypto plays a role in that, right? And I think anybody who has, you know, a really deep relationship with a consumer base who is not digitally native but is also not being well served by the banks, they trust their telecom, their telecom companies, they trust people like Walmart and who they, you know, do most of their shopping with. And so if you can put together a really slick app that abstracts away some of the crypto, people are going to use it. And, and the people like Walmart, they can do it much more, uh, cost efficiently and with much better unit economics than they could if they continue to use like these banking as a service providers, et cetera.

Yeah. Yeah. So I just pulled this up. So I pulled up the top finance apps. Walmart, Walmart's OnePay is number 12. It's higher than Robinhood, higher than Wells Fargo, higher than Citi, higher than Bank of America, higher than SoFi, higher than American Express, higher than Coinbase, higher than Credit One, Discover, Vanguard, Schwab. Very interesting. Very interesting. It seems like this is kind of like, uh, I don't know, a story of fintech that's not being told right now is some of these. I mean, I feel like everyone talks about the super app in America and in the US and like how it actually can't really work in the US and how that was just kind of a phenomenon in the West, or excuse me, in the East, and it's not really going to work in the, in, in the West. But, um, yeah, maybe this is the start of that actually changing.

Yeah, listen, Walmart, this has been— they've been trying to do this for years, uh, and they, I mean, they had to withdraw their banking application, I think it was in '22, uh, because when the OCC basically shut down allowing people. But, you know, they still have a large financial services team there, and like, this is clearly where they believe the roadmap is going. And by the way, You know, we're hearing that people that look like Walmart that aren't as big but also serve, you know, kind of the same demographic and same geography, both in the US and outside of the US, they're all very actively looking at crypto and stablecoins as a way to provide financial services much more cheaply to their end customer. Because like the— a lot of the banking as a service providers, they were— and the embedded finance providers, like they, they were really costly and they didn't allow allow you to monetize appropriately. They didn't allow you to scale in the same way of some of those customers. And using these blockchain rails, like, it's, it's a much, much better user experience, and it becomes much more easy to monetize them appropriately and to share some of that monetization as well, assuming that, you know, the, you know, Clarity Act doesn't have some sort of, you know, call it, um, uh, basically revision of, of, of, um, the, um, the Genius Act to try to get rid of the, um, the yield, uh, rewards, uh, kind of carve out. Yeah.

Yeah. Uh, speaking of banks, um, did you guys do the Aeroboard deal? Palmer Luckies?

We're not shareholders. No.

No. Why not?

Um, we, uh, by the— we, we, we were close to, you know, kind of one of the original founders early on who, um, raised kind of a, a small seed round. And, you know, by the time, um, Aeroboard became what it is today and Palmer got involved, it was a probably, I would say, outside of our strike zone, a multi-billion-dollar company.

Why is something like this getting valued at $4 billion pre-launch? I know it's— they have some customers already and stuff like that, and they just got their FDIC approval. And, you know, they— I think, I think their launch date is like either next month or the month after, February, March. But like, yeah, is this just like the Peter Thiel, Palmer Luckey, Joe Lonsdale?

Which is fine. I'll say this. I— we have not done a single banking deal, right? Right. So there's a lot of, you know, this is obviously the one that has been most heralded and has done the best from a venture backing perspective. Um, and there is a strong belief by a lot of people that you need a new digitally first, you know, stablecoin first bank to go and serve this market, which is growing tremendously quickly. Right. We, we have not done any of these banking deals. Um, there's been quite a few of them and a lot of amazing investors have invested in them because my general belief has been that banks are not good venture businesses, right? They're very capital inefficient. They require a lot of capital to be put into the company over time. They don't scale with the same reflexivity of other businesses, and they don't get— at maturation, they don't get kind of multiples that you, you tend to pay. Um, Erebor has defied that, obviously, you know, in the kind of their valuations, to your point, because, um, I, I think the people around the table and like how good the team is and expectation that that team can bring um, you know, call it a lot of business early on, right?

Um, so, um, you know, and get the regulatory, uh, you know, approvals in a very fast amount of time.

Listen, I would say this about that, like, the OCC is open for business. It's like very clear they are open for business right now. So I would expect to see, you know, people can debate how many, but I expect to see 30, 40, 50 new OCC charters this year, to be honest, right? And they've been on Um, they've actually been on schedule. So they've been telling people they're going to turn you around in a certain number of weeks, and they've actually been turning everybody around in those number of weeks. And so I, I don't think— they moved really quickly, but I, I don't think, uh, a regulatory moat is the way to win this market at this point.

Yeah, interesting. Um, did we talk about Deal rolling out stablecoin payroll funding? So a couple weeks ago, um, but I'm Yeah, this is another one of the announcements where I'm like, big, big deal or not big deal?

I think all of these announcements by themselves are— they matter, but they're not, you know, called big deals, right? But if you take them all together, it's just very clear, like, the winds of change, right? You know, um, you know, Deal is, you know, a huge platform, right? And the fact that they're going to continue to do stablecoin— they've been doing payouts on Deal already. They're going to do, you know, you know, payroll funding, uh, as well. Like, this is just— there's a couple startups that do this already. Um, that market has been growing really quickly. Again, it's primarily an outside the US, non-domestic use case, right? But the reality is, is— and we talked about this with the Klarna USD thing— is that the more and more people have stablecoins in their wallets because they're spending at Walmart with a stablecoin, or they're spending at Klarna with a stablecoin, and it's being abstracted away, then like the whole system starts to work together, right? And you start to see this ballooning of adoption that like— I listen, my, my general perspective is that the 2026— I don't know if this will— what this will mean for, you know, your Ethereum or your Solana, but 2026 is going to be a huge year for stablecoin adoption. But not just in, you know, this, you know, cross-border, or not just in, um, you know, these, you know, call it treasury management use cases, card use cases, but it's going to be really big and people actually using them domestically as well in everyday lives.

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Yes.

Yeah.

I get to say to play first.

Yeah. Basically there's a— I think everyone was very optimistic that we would get two pieces of big legislation in 2025, stablecoins and then market structure. As the year went on, it became very clear that we were going to get one of those. And not the other one. So we obviously got Genius, we got stablecoins, we didn't get market structure. I think the Dems— it has been very tough to get a lot of the Dems on board and there's been very strong lobbying against the market structure bill. And so here we are in January. I'm looking at some of the prediction market odds. We've got the chance that we get crypto market structure bill becomes law before April is at 20%, before May is 47%, and before, before 2027. So in 2026, the chance is 74%. I have heard from— I've heard 5 different things from 5 different people this week about Clarity. So I would just— I mean, let's get the 6th source. What are you hearing?

Yeah, I mean, from our side, Um, there was an article that came out from the ABA, the American Banking Association. Yeah, um, I think it was— was it yesterday? Um, that came out, and this has been a long topic of conversation, but, you know, the banking lobby is very concerned around what's happening in the Genius Act in terms of there being a carve-out for rewards that they see as a carve-out to pay yield. I think the banking a lot of the banking administration, um, kind of sector has taken the perspective that the, um, that these are basically like money market funds, and we already have legislation for how to manage money market funds. And so that needs to be carved out of Genius and just be, you know, uh, essentially ruled by money market fund legislation. And so they've been pushing, if they were going to get, you know, some version of clarity or some markup of clarity, whatever that looks like, to have in the Clarity Act essentially a change to Genius, which gets rid of this, um, this, this kind of carve-out for rewards. Um, what we're hearing right now is that, you know, right, essentially right now there's— we're in the Senate Banking Committee, or the Senate Banking Committee is the one who has the next move, right? So the Senate Banking Committee Um, it has to provide a markup by— of Clarity Act that passed the House last year by sometime next week. Um, they— and then they would vote on it, and it would— they would vote to advance it out of committee and then to kind of a full floor, full Senate conversation, right? The Senate Banking Committee has 13 Republicans, has 12 Dems, um, or 11 Dems, I think. The What we, um, understand is that, you know, the Dems still— which, by the way, Elizabeth Warren is the ranking Democrat on, uh, on the Senate Bank Committee— the Dems are very, so very unhappy with the treatment of DeFi and DeFi front ends and the regulatory burden put on DeFi front ends for, you know, whether or not they need to do AML/KYC and to what extent do they need to do that and how do they need to charge fees, how are they going to be regulated. Um, and so where expectation is that the Dems are going to vote entirely no, right? And so you need there to be, you know, almost all of the Republicans to vote to put, you know, a markup out of committee. And what we're hearing is that there are a number of Republicans who are potentially sympathetic to the bank, uh, plight or the bank concern that, you know, this Genius Act allowed for a carve-out of these you know, rewards or these yields that will hurt community banks, right?

Right.

And so what, what we're hearing is there is a potential that, um, there could be a delay in getting this markup out, um, or even it could happen not at all if the banking lobby is able to get enough Republicans on their side related to this specific point. Because then what came— happened yesterday is that there, um, I think it was Tim Scott, or maybe it was somebody else that came out, maybe it was Illumis, who said there's no way that we're changing Genius in this, um, in this, you know, kind of markup. And so you now have this kind of standoff, which is like, okay, do we change Genius and do we get Clarity Act, or do we not change Genius and do we not get Clarity? And that is kind of the current state of play, and we'll see who puts first.

Yeah, it's— look, I read the American Bankers Association letter too, and there's kind of these three main points, right? It's the community banks rely on the deposits, it's the, um, The, the prohibition on yield is being skirted basically, like there are workarounds. And, um, there are, I think they said like $6 trillion in bank deposits that are now at risk. I think the one that is so compelling and wins hearts and minds is the community banks, right? Because they rely on the deposits, which then fund lending for communities, for homes and small businesses and your farmers and students and stuff like that. And so. If you are a senator or, you know, someone who doesn't really know too much about this stuff. Um, and I mean, I'll be honest, like they, they stablecoins probably do hurt community banks, right? I don't think it, I don't think it hurts the homes and small businesses and farms and students. I think the loans still go to them is probably what they're missing. But yeah, it does disrupt a lot of banking. And, um, but I think it's a, I, I do think it's a compelling, I worry that it's a, actually quite a compelling argument.

There was a, you know, when Genius was going through, um, uh, through Congress, uh, I had a House rep in our office who wanted to come talk, uh, to me about this, basically what we cared about in Genius and what we cared about with stablecoins more broadly. But this was obviously one of the biggest topics of conversation. And, you know, one of the things he said to me is like, well, don't you think this is going to challenge the community banks? And what do you think about— could there be deposit flight? And I told him, I was like, I do think it is competition and challenge to the community banks, but that's a good thing, right? Right now we have an industry that has essentially built bad consumer product that only exists today because of the regulatory moat, right? Like, these banks have not competed on product, they've not competed on— they've They haven't been able to digitize. They haven't been able to offer better rates because of the fact that they are— have had this regulatory moat and they haven't competed in a way in a free market in a long time, right? And so we're starting to see, you know, the push of digitization around stablecoins kind of bring up this idea that maybe they need to be better, right? Like maybe the banks need to serve the interests of their community even more than they already do. There are 5,000 banks in the US. The reality is today that the Jasons are getting bigger and the community banks are getting smaller, and that predates stablecoins because the community banks are not competing. They haven't been able to compete and they're not doing it, right? And so, like, the reality is in my mind is that of the 5,000 banks in the US, we probably only need 500. We don't need 5,000, right? And we are— it is probably inevitable that the 5,000 gets significantly reduced, no, even if stablecoins did not exist. Right, because of the way that digitization and reinvestment, uh, and just innovation is happening in financial markets. And so the community banks, if they're smart— and some of them have started to do this— if they're smart, they should be first adopters of stablecoins because that gives them the ability to actually go and compete against JP Morgan, who is undercutting them on fees anyways and who is doing everything they can to hurt them. And so listen, I, I'm, I'm sympathetic— I'm not sympathetic, is not the right word. I do believe that stablecoins are competition to the community banks, and I think that is a good thing, right? And we're seeing it across not just the community banks, but we're seeing it across credit more broadly, from, you know, alternative credit providers, right? We're seeing it across now this idea that, you know, uh, Governor Waller from the Fed put out a request for comment on, uh, the ability to have these skinny master accounts, or essentially allow tech companies and stablecoin companies to go and go and be able to work with or in some way interact with the Fed's payment, uh, rails. And so like, if you put all of those things together, innovation is coming in payments, in banking. That's just a matter of time. And like, this is just another like last-ditch effort to put some, you know, call it regulatory moat, uh, and stop from treating the customers better and from innovating.

Yeah, yeah, yeah. Well said. Who is the tech company that allows any community bank to just roll out crypto, whether that's offer crypto, you know, buy, sell, or custody, or, you know, help them move on to stablecoins and 24/7 settlement infrastructure? Who is the vendor who's doing that?

So Fiserv announced that they're doing that, uh, and they obviously serve a lot of these community banks. Fiserv's like a core banking provider.

Um, they're really going to do that well?

Like, I don't, I don't think so. Yeah, I do not think so. Um, I don't— Fiserv, these— I'm— listen, anybody who's dealt with banking cores over time, uh, does not bullish on FIS or Fiserv going and like building a brand new like tech-first digitally native banking core. There are a number of startups that are trying to do this as well. Um, uh, there's a, um, one called Stablecore, uh, that is, is trying to do this. Um, there's another one, um, that's called, uh, A+ that is trying to do this. That is, uh, basically it was started by some people from the Ethereum Foundation. Um, there's a few others that have raised capital into it as well. So I think we're starting to see— we're going to see probably a lot of startups try to attack that space in the same way we saw the banking as a service, uh, space kind of, you know, get really competitive as well. A lot of those haven't done particularly well, but, you know, obviously, like, you know, Synapse and others have had you know, kind of big blowups. But like Encino and Q2 and a few others have done okay.

Yeah, interesting. Um, anything else to cover?

It's so weak.

Talk about here being a content creator, isn't it, Rob? It's kind of a— I, I, you know, it's interesting. It's like I was talking to some of the other podcast hosts and, uh, you know, media company people and stuff like that, and, uh, it's, uh, it's, it's light out there right now. It's light.

Yeah, it's— I mean, it's, it's, listen, it's a slow start to the year. I think there's going to be a lot of big funding announcements this month that are going to get people talking about things again.

Funds announcing their new funds, or companies raising money?

Companies raising money, although I think we'll have some, some fund announcements over the next month or two. But I'm, I'm more bullish on funding announcements than I am on new funds raising capital. Um, I think that's a kind going to continue to be a tough market for a lot of people. Um, but, you know, uh, I think we'll, you know, there's been a lot of conversation around the things that are working, right? And there's been, I think, less interest in, you know, the longer tail of crypto, but you have seen, you know, a little bit of life come out there.

Um, uh, maybe the one thing we didn't talk about, you know, I don't know if you have a perspective is on that note, before we get into the last thing is, um, It feels like to me, seeing some of these deals come together, it's the first time that the late-stage markets have actually been pretty hot. I think the earlier stage is less hot right now, and but actually like some of the Series B, Series C, maybe even Series D, like that money is actually coming back into the market.

Yeah, I, I can tell you right now of two Series Cs that will probably get announced this month, um, both of which we're heavily, heavily involved in, that, um, are you know, just like huge companies growing tremendously quickly that like are gonna have a lot of headline, um, conversation. There's gonna be a lot of talk about them in the market because of the headlines. And we're seeing that kind of across the space where there's like the companies that are really working are, um, really, really working. And we're seeing like traditional, um, investors who do fintech, who do, you know, call it, you know, or generalists, or come to this, into this space and saying we want to be involved in this. And that's the first time that's happened since '21. And, um, but it's happening in a much more sustainable way, honestly, this time around. So, um, you know, maybe the one other thing that we didn't talk about, uh, is MSCI. Did you see this?

Uh, no.

So, you know, MSCI, obviously one of the biggest index providers in the world, um, there, there had been a, um, an expectation that they would decide to exclude DATS. From their indexes. Um, and you know, obviously that was— it's a really big deal for MicroStrategy, which is in all the indices today, right? Uh, and they came out yesterday and said they're actually going to allow DAS to continue to trade, uh, in the indices. They're going to do further review over time to make sure these aren't investment companies. But, um, they— we had a little bit of rally. I mean, obviously Bitcoin was down today, but we had a little bit of rally after after, uh, market, uh, closes.

MicroStrategy up 6% on it. Interesting.

Yeah. And so, and it was really around the ability to continue to have DApps in, um, uh, in, in these indices, right? And so, you know, I think that's, again, like another indication that, like, the traditional financial markets— I mean, we also saw this week, by the way, uh, Morgan Stanley announced their Bitcoin ETF, right? And so, um, we Um, I think we're seeing again, just like day in and day out, institutional acceptance of this asset class and institutional excitement around the asset class. And so like to the point, you know, we had earlier, every single announcement maybe isn't of itself isn't that big, but there's just so much stuff happening and there's like the winds are so obviously blowing in the same direction. So I don't know. I mean, you're probably seeing it with all the, you know, people that you talk to. On the, um, on the more institutional side and the, the larger funds, etc.?

We have more inbound. It's, it's actually very interesting. We have more— I feel like the crypto-native side feels a little quiet right now, like token prices are down, things like that. We have more inbound on the institutional side. And I'd bucket the— I say institutional, there's— we, we actually categorize it in 3 buckets. There's enterprises, institute financial institutions, and fintechs. More, more inbounds than we've ever had in the history of Blockworks. That side. But the crypto-native side is a little quiet. So yeah, it's interesting. Like, we've talked about— so in 2022, we started training the sales team to sell into protocols. And it felt very early, right? Like, we weren't making any money from the protocols then. Like, our big customers were like Fireblocks and BitGo and, you know, BlockFi. It was like the CeFi companies, right? And we started, you know, training the team to sell into protocols. And that went very well. Now, A large amount of our revenue comes from the, you know, the protocols, the DeFi, you know, DeFi and L1s and L2s. Now we are starting to really try to get ahead of the curve on the institutional side of things, enterprises, fintechs, things like that.

Yeah. I mean, and half the conversation on, uh, on Twitter this week has been like, oh, Canton and RWAs and like, what does that mean? I mean, there was also like, um, Barclays made a strategic investment into a thing called Ubix, which is like a stablecoin clearing. Yeah. And I think again, right, like every day there's something new on the institutional side. It just, you know, hasn't meant what people hoped it would mean for token prices. And I think that's continued. We just continue, we talk about this every week. There just continues to be this disconnect between how people feel about markets and then the things we're seeing in terms of like adoption.

Yeah. Yeah. Um, all right, sir. Kind of a quiet up to start the year, but A good one. People should go check out the new Blockworks website. It's great. If you see something that you want changed on it, just DM me or drop in the Empire Telegram channel. I'll read it. Yeah.

Do you read all of your DMs?

No, I can't do that anymore. I actually see all— I have— my Telegram is extremely organized, so I— most groups I'd never see except for a few groups. I have like a custom like folder called Unreads. So I actually see every Telegram, um, every personal Telegram message. Doesn't mean I respond to every one of them, but yeah, Twitter DMs, probably getting like 50 a day right now. I just can't respond to those.

Yeah, I'm getting too many Twitter DMs too. I'm getting a lot of people that are like, hey, can, um, can people come on your podcast? Uh, and I—

oh, welcome to my world.

Yeah, I, I know.

And it's like, maybe like 10 requests a day. I was the best guest for Empire. You know, like, okay. Okay.

Well, and I tell people, um, I, I'm just a guest. I'm just an every week guest, but you want to be on that.

You want to get more involved with the show until people start asking you to come on the show.

That's how it works until I'm on the header. Like I obviously can't decide who's on the show. So we're going to have you do the ad read soon, Rob.

That's, that's where it gets fun. Oh, uh, fun. We're, we're pulling back on the ads this year. Uh, we have too many ads on Empire, so that's the update for people is we're— I think we have like 5 ads in Empire right now, or 4 ads, or 6 ads. Too many ads. We're pulling back on the ads this year. So, um, yeah, that's how you know Blockers is crushing it.

Blockers doesn't need the ads. Crushing it.

No ads. You all get the show for free. Yeah. Um, cool. All right, folks. Uh, good, good to be back with you guys. Hope everyone had a good New Year, good holiday season.

Content of the week. What are we doing here?

Oh my God. I'm rusty right now. I'm rusty.

All right. Tough start today.

Tough start. Oh man. All right. You go first. I got to think of this one.

All right. This one's easy for me because I saw this movie earlier this week and I kind of tweeted about this too, but it's called No Other Choice.

Oh, high on the list. I want to see that. Yes.

Yeah. So Korean movie.

Leo, right?

Uh, no, no, no. Um, it's a Park Chan-wook, uh, Korean movie.

Not what I'm thinking about.

Not what you're thinking of. Yeah. Um, no, no Leo in this movie. So it's entirely Korean. Um, it's based on, uh, um, kind of another, um, like thriller, you know, Korean that, um, uh, or the kind of like an American thriller that existed before, um, and from the '70s. Um, sort of a satirical, like, black comedy, and it's basically about this guy who loses his job. And, you know, he's, he's been, you know, working at this company for, you know, 25+ years. He's been working his way up. He's considered a, you know, great employee, and eventually loses his job because of, um, you know, call it automation. And, uh, they got— they get acquired by kind of a global company, and he gets sort of desperate to find a new gig, um, and it's not working out as well as he'd want to. And he starts thinking about, um, you know, because there's so few jobs left, should he like kill other applicants, uh, and potentially like, you know, basically like, you know, kill his way into a new role.

What's, what's good with Korean films like Parasite, Squid Game? Like there's kind of like a dark, twisted Listen, it was—

it's a kind of a black comedy. It's super funny, it's very sad, it's like, you know, and, you know, very in-your-face like social commentary about the world we're in today. And, you know, because I think a lot of the fears that people have around automation, um, but like, go see it. Like, you know, I'm all on board with all Korean film, uh, today. Like, I'm loving everything. I think, you know, between, um, uh, between Bong Joon-ho, who obviously did Parasite, And Park Chan-wook, who, who did this, and, um, a couple of other, you know, kind of films that I really enjoyed. Um, like, go see it.

Yeah, I was thinking of the Leo— the new Leo movie, One Battle After Another.

Oh, I mean, that's great too, but that's been out for a little bit. But definitely see it.

Yeah, it's like Sean Penn and Leo or something.

Um, that's probably gonna win the Oscar for best film this year, so definitely see it.

Yeah, I gotta see that. Um, I watched Shane Gillis, Shane Gillis's show called Tires or Tire or something. Have you seen this?

I have not. No, I like Shane.

It's on. It's like if you just— it was over the holidays, it was over Christmas, and I was just needed like a little breather and I just watched season 1 of the show called Tires. Shane Gillis. It's, it's friggin hilarious. It's great. So I thoroughly enjoyed that.

All right, I'm gonna check it out.

No pod— oh, okay, here. People want a podcast, non-fiction content. I listen to Lenny's podcast. Do you know this podcast?

No.

It's very good. It's the best product podcast out there. Like, if people are interested in, like, you know, be like head of product, VP of pro— want to hear from like chief product officers and stuff like that. So it was actually, uh, there's a company, Rippling, very well-known like SaaS payroll company, stuff like that. They had the COO of Rippling. He used to be the chief product officer. Now that he's the COO of Rippling, he It was one of the, it's actually one of the best podcasts I've listened to in a very long time about like company leadership, scaling products. So Lenny's podcast with, uh, I think the guy's name was Matt, maybe Rippling COO. Very good.

Okay. Yeah, I did, I did listen to a podcast too as well. The Invest Like the Best, but it was the one with, it's a little bit old, but, um, with, uh, Martín Escobari who runs General Atlantic.

Oh, nice. Yeah.

And I really— if you're an investor, I really like that one because he talks a lot about how, you know, they've made a lot of money in emerging markets, and there are very, very few people have made money in emerging markets. And one of the interesting pieces is that they don't have an emerging market fund. So the point has been that, like, you have to be able to win mindshare, and you have to believe the company is just as good as what could be done in the US or what could be done in Europe, etc. But he talks a lot about how, you know, there's been over time this perspective that you should just keep putting money in the US. The US keeps winning, the US keeps winning, the US keeps winning. And I think in the, um, kind of backdrop of what happened in Venezuela this week, I actually found it even more interesting because he's basically saying like, listen, when you look at it from a multiple perspective, an EPS perspective, the US has never been more expensive than it is today. And internationally has never been cheaper. And so if you were to ask me what happens over the next 10 years, I would tell you that you're going to make more money overseas than you are in the US, which is a very, uh, interesting, I think, not a perspective that a lot of people hold right now.

Yeah, that's great. Um, cool. That's the pod. Thanks, folks. See you next week.