Markets Bounce Back, The Hyperliquid Thesis and Kraken Raises $200M

This is the most interested I've seen traditional, specifically hedge fund managers in crypto since Paul Tudor Jones called Bitcoin the fastest horse in the race. And that was May 2020. So it's been 6 years since then. This is the most interested I've seen these hedge fund managers in crypto and it's in, it's in hyper liquid and these weekend markets are a big reason for that. 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, what's up, folks? Welcome back. Welcome back to the Roundup.

Happy Friday. Happy Saturday.

Santi, what's happening?

Not much, man. Excited. Excited to come back on the pod. Uh, a lot, a lot is happening in the crypto markets and the world in general. It's a good time to be alive, man.

Yeah, good time, good time. Santi's went rogue on us and he's vying for, uh, you know, our producer position. He's coming for Will's job. He's like, you know, apparently put all of the data of Empire into Claude and all of it had it just— Santi's like, I did a bit of analysis, but I know what that means. You exported our Megaphone data and our YouTube data. You he put it into Claude, used the new Opus 4.7 model, and he said, how can we improve Empire?

Not just like that, but that was something I definitely did. Uh, I did. I even went, clicked through every single episode since like 2021, '22, '23, then ran a correlation with crypto prices to see, like a lot of times you hear us say, oh, like the viewership is, the engagement is tied to like crypto asset prices. And you know, that's something that is not as correlated actually. Drop-off rates by episode. No, really fascinating. I mean, honestly, like this type of analysis, I just spend hours and hours.

You found that it's not that correlated, right?

No, not that.

Yeah. Yeah.

Yeah.

So, so there's two types of content in crypto. One is like purely talking about prices and that's what, that's what actually rips on YouTube usually. So like our, our episodes, they don't do very well on YouTube. They do way better on Spotify and Apple.

Um, but we got deprioritized by YouTube.

There's— yeah, there's the retail people do really well on YouTube in bull markets, and they, they are the ones who move with the markets. So yeah, uh, we got no Rob.

Rob— yeah, basically the TL;DR is that we need to make sensationalist titles, which, which is just not on brand.

Ryan and David about that at length, the Bankless guys, because they're— they've got the headshots that are like, you know, and I think my ego is like one notch too big.

There comes a time and you just hold the line on like, I will not cross that line. We will not do like the, you know, Bitboys of the world. Definitely don't want to go full Bitboy. I respect their category and whatnot.

Never go full Bitboy. You never go full Joe McCann either. Too far, too soon? Okay, moving on. Jeez.

All right, let's get straight to business. There's a lot of news happening. There's just so much to talk about. Wait, let's talk about—

let's— I want to get, uh, just take on general markets before getting into the news, because I mean, a week or two ago we were talking about, you know, markets down 10%, and now the NASDAQ just hit its 10th consecutive day of gains. Um, yeah, I mean, that's, that's, that's, uh, historically very rare for two straight weeks of, of gains to happen, right? I think it's, um, I was going back through the data and, uh, I think that's only happened once. It happens once every like 5 years or maybe 4 years on average. Um, and actually, if you look back since, I think it was since the dot-com bubble, like let's call it since 2000, it's like once every like 5 or 6 or 7 years, this, you know, we actually get 10 consecutive days of gains. So it's pretty rare what just happened. I love, yeah, I love your take on just the old stonk market.

It's, it's, it's—

here we go. Thank you, thank you, Will. The last 10 days have been unlike any 10-day period in the market since 1950. Wow. Okay, so the S&P 500 is up 9.8% in 10 days, which is in the 99th point— 99.7th percentile of all 10-day returns in history.

Yeah, I was thinking about that today, and, uh, it goes back to just be optimistic. If you're optimistic, you are positioned well. I don't know where this ends or how it ends or if it will end or if this is a new paradigm, um, but it's, um, hard to overlook. It's trickled, um, the, the hyper liquid piece was very impressive. Colossus, we talked about that last week, I think. Um, macro-wise, I, I, you know I was listening to— so I'm always willing to change my mind. I listened to that, um, Leopold Aschenberg podcast that he did, like a 4-hour podcast. And basically the guy called it, like, like 2 years ago when he was leaving, got fired from OpenAI. In that, like, hour 1 or 2 of the podcast, he goes into this whole discussion around, like, okay, we've— we're gonna reach, or, you know, AGI Faster than most people think. And when that happens, like they all talk about this like doomsday scenario of, uh, if in the hands of like a different regime, it's, it's no different than nuclear arms race kind of thing. Right. He was saying he should like nationalize these AI labs and we should not be open sourcing them because this could be existential. And you could sense a lot of like nervousness in his voice. And he's like, I just get the feeling that there's like a handful of people that really understand how far this is gonna go and how fast. And I don't think there's like enough gravity in the market around it.

This is the piece from 2 years ago, right? Situational Awareness. So look at this. So I tweeted out, I said, I finally read Leopold's essay on AI. Everyone, regardless of your interest in AI, should read this. I took notes. They're sloppy, but figured I'd share. Welcome to the future. Went very viral. Got like 10,000 bookmarks, you know, 1.6 million views and stuff. My foolish, you know, mid-curve thing here is I took notes on the whole essay.

You didn't buy anything?

I didn't buy anything. The guy's up— what's, what's his fund at for people?

So he raised an initial, he's at $5.5 billion now. He rotates his book quite a bit. Now some of his larger positions now are Bloom Energy. He took a very big position on Bloom Energy. I think he put $300 million in it, now worth a billion. Uh, took a big position in SanDisk, so memory chips, right?

Now what, now what people don't talk about is his, his wife or his girlfriend is the chief of staff to Dario at Anthropic. Oh, really? So he's got some nice— yeah, he's funny.

So before, before running the hedge fund and before joining, I think, OpenAI, he was at Future Fund, which was FTX Sam's endeavor to do grants. And another part of that podcast that he does with Daresh, or, um, that was— he was coming out of actually leaving OpenAI, and he talks about that episode of working with Sam. And, um, pretty interesting actually, uh, the lessons he learned there and stuff.

So all in all, yeah, here's the stat, here's the stat for you about the FTX book. Their stake— Sam bought a 7.8% stake in Anthropic. I don't know if you saw this week, they're raising at $800 billion. That stake in Anthropic would now be worth more than all of Coinbase. So FTX's stake in Anthropic would be worth more than all of Coinbase today. Yeah.

And that was liquidated by the trustee. Yeah, right.

Yeah. At like 1.5B or something.

Yeah. Crazy. Yeah. Yeah. Talk about the creditors there. All of them have been made whole and then some.

Yeah. So is this market like maybe just to get back in the market, then we can talk news. The— it feels like public market investors are very skittish right now. They like— they're like, they're very jumpy, like looking for something. And there's all this AI-related— I'd call it fear. There's fear. It's two sides of the same coin, right? Like a ton of fear, but also a ton of excitement and optimism. And it creates these pretty like intense— I guess just the word is volatility, right? Pretty intense drawdowns. But the— but it feels like the market also wants to go up, right? The market is realizing that there's no way to, uh, I mean, that this, this thing's a runaway train, it seems like.

Well, on, on one end of the spectrum, you, you're in the thick of people don't really know how to underwrite AI, good and bad, in their models. It— they're still trying to make sense of it on the wake of all these labs coming out with a ton of progress. So like, it's hard to keep up with that, and it's causing a lot of nervousness, to your point, combined with the, this sense of thrill, excitement. When you hear a pod— it doesn't take much to go listen to a podcast like Leopold or Elon or some other— Dario, um, and you have this sense of like, this— we're at a like precipice of human civilization it's dawning upon us. And like, you also have like rockets going out far out in space and coming back. And it's, yeah, it's, the market is definitely skittish, but willing to go higher, right? Um, how are you, how are you like, let's talk personal because we can all pontificate, but how are you positioned? Like, you, you know, you tweeted out situationalawareness24, like I haven't changed anything in the book.

I did not sell my— I did not— I'm just, I'm a bag holder. Like, I just buy things and just sit on— I'm, I'm a bad podcaster, right? Because it's not— I'm not an interesting podcaster because I'm not trading, trading that much, right? I rode, I rode Robinhood up from, you know, whatever it was, $10, $15 to like $125, and I'm still holding Robinhood. And, you know, just buying some more, buying some more Robinhood. I just, you know, I think I told you either here on Twitter or somewhere on text, I bought a bunch of DoorDash. Yeah. Um, I thought your thesis was really smart.

Like looking at the companies that for people that didn't listen to the prior episode, you said something that really resonates, which is I looked at my spend year over year and there's a couple of companies where I've increased that consistently. Amazon was one, and I think you made an investment back then. And then DoorDash is one where you've just continued to buy.

It was, uh, I had a class my freshman year of college. With actually my friend's dad came in and, you know, this guy was, he, yeah, I think his fund at the time, I don't know, you know, multi-billion dollar hedge fund. I don't know the size. So like, you know, $5, $10 billion AUM, whatever it was. And he said all of his best trades in his life have come from looking at what his, either his per, his personal stuff. And then, and then it became his kids, right? So when his kid, you know, came, when she, you know, his daughter came to him and said, I want, I want, I want an iPhone, right? He actually, you know, he bought Apple. Then she said, you know, all my friends are hooked on this app called Snapchat. He did one of the early rounds of Snapchat. And there, you know, there are like 5 examples. I don't remember all of them. And I think that he basically said, he's like, you guys, he's like, there's this term called alpha. You know, we're like 18, 19. He's like, there's this term called alpha and you guys don't realize how much alpha you have being close to the metal by being young. He goes, every year you get older, it's harder and harder to get alpha. And, uh, there's no, he's like, he's like, we're moving to a world where there's no alpha left on the internet. So you have to get alpha from realizing and seeing things, you know, in, in, in person.

And, uh, yeah, before it was like, uh, Reddit, Reddit forums were full of alpha. There was like this hedge fund that just like scoured Reddit forums. He made a fortune because he, he actually went long Mattel. When the Barbie movie was coming out and he was reading the Reddit reviews and discussions, he said, holy shit, this is a great movie. And like Rotten Tomatoes would have told you that it was a terrible movie. And he said, no, no, no, Mattel, who's the maker of Barbie, is going to make an absolute killing. And lo and behold, just— so yeah, go, go whip up Claude and scour Reddit for all kinds of information.

But let's talk about the news.

We've got to talk about the news.

Yeah, so, so there's this Tether, Tether's coming in and backing Drift. Tether came out with a wallet. Two Tether stories. We've got, you know, Rob's big VC manifesto, which maybe we can save that until next week when he's on. Kraken, you know, definitely gearing up for an IPO. They had a $200 million investment from Deutsche Börse. We do have the Hyperliquid Colossus. I don't think we talked about that last week because I think it came out earlier this week. We— it's probably you're thinking of We talked about it on our episode with Logan, which comes out on Monday. But we, you know, I'd love to hear your takes on Hyperliquid so we can start. Maybe we can start there. I mean, this Colossus piece was— by the way, if people don't know Colossus, it's Patrick O'Shaughnessy who runs a podcast called Invest Like the Best and also an asset management firm called Positive Sum. He launched a physical magazine. It also comes out in digital format too, called Colossus. And they do these amazing profiles. I'd say they're the best profiles, you know, on tech and finance people in the world right now. And he did one— they, they did one on, uh, Jeff, the founder of Hyperliquid. Really, really good story. I'd recommend people read it. I'm curious what you thought of the article. I'm curious what you think of Hyperliquid. I'm curious what you think of Jeff. I'm curious what you think of traders running companies. Like, just give me your brain dump on Hyperliquid right now.

I'm going to steal your thunder because you said something during the Logan podcast which is very true, which is I've never felt this amount of interest from outside non-crypto people in a really long time. And similar to how Polymarket really came to light and is what it is today, because, you know, during the presidential election that was contested, you caught lightning in a bottle. Jeff has now captured the imagination and the interest of Wall Street, and you had to have had, unfortunately, this geopolitical catalyst where people are very interested in trading commodities over the weekend, and Hyperliquid is capturing a lot of the interest and attention. And so finally, like, I, I think it's— I don't like— if you think about bringing blockchain on the NASDAQ, you know, NASDAQ on blockchain, I think if, if for every 100— like, I'm very encouraged what's happening in Hyperliquid, I don't think it stops if there's resolution in, you know, in Iran and the Strait of Hormuz and whatever happens there. I think the train has shipped and I think you're going to see way more volume and activity because right now I believe there's now more volume of non-crypto stuff than crypto stuff. Right. Is that true? I believe there's more non—

yeah, commodities are now the second biggest asset on Hyperliquid behind Bitcoin. Behind Bitcoin.

Yeah, I think, I think if I want to make a prediction and stay accountable, I think that flips later this year.

You think commodities flip Bitcoin?

Commodities will flip later this year, and Hyperliquid can become a top 5 crypto asset. Interesting. Sitting at $25 billion, I think there's a clean path for it to be $100 billion. And I'm looking at Robinhood sitting squarely in that camp, Coinbase going squarely in that camp. I think Hyperliquid If they continue to execute, and I think they will, they have a technical talent, they have won over the minds of crypto traders and now increasingly Wall Street traders.

So here's your data: Bitcoin makes up 25% of hyper-liquid open interest, commodities is 17%, Ethereum is 16%, hype token 10%. The indices, I think that's like levered S&P, is 7%. L1 tokens are 4%. And then, you know, it goes, you know, equities are 4%, Solana is 3.5%, meme coins, privacy coins, DeFi. Um, yeah, I think, I mean, I think it's one of the most interesting stories. Maybe actually the most interesting story in crypto today is, uh, the interest in oil, oil markets on Hyperliquid was really, I guess you could say Trade XYZ, which is I think who's the founder? Shoku, right? Shoku's thing is Trade XYZ. There, when you saw the Iran war or the attack or whatever you want to call it, you had surging volume and open interest and the pricing, you know, because oil markets are closed over the weekends, right? So you have this you now had weekend oil pricing. Um, and it crossed the chasm into the mainstream. So if you look at the daily volume and the daily open interest, it just skyrocketed with the Iran war. And we built this website called, uh, Weekend Markets. I don't know if you saw it, but I can pull it up here. It's, um, it's, uh, it basically shows all of the— here, I can show you this. It's very, very cool. So when traditional markets close, Trade XYZ is the only live venue for price discovery. So Trade XYZ, uh, Trade XYZ, for people who don't know, is, um, when Hyperliquid launched the ability for other people to create perps markets, right? That was HIP3 or HIP4, whatever it was. Uh, Trade XYZ is the only venue for price discovery on the weekends. They now have billions in weekend volume and a 50 bips median error predicting the Monday open. So now, now Trade XYZ, prices are the most informative signal in finance relative to this like sale Friday close. So yeah, we built this whole website called Weekend Markets where you can actually see these are, these are all the equities and commodities that trade. You can see a bunch of charts and, you know, map of everything, analytics. You can look at methodology. So it's pretty, um, Very, very interesting. We— there's probably more traditional capital allocators interested in these hyper-liquid weekend markets than anything else in crypto today, I'd say.

Yeah, yeah, it's interesting. Oil, um, is doing like $500 million of volume, $350 million open interest. That, um, yeah, I'll have to check that dashboard out. But the S&P 500, like, what are, um— I know, I know a lot of folks ping you, like, especially non-crypto folks ping you. So you're actually like a really good first entry for a lot of like, you know, these folks, are they, are they interested squarely in commodities or are they also interested in S&P? Um, you know, I think people are most interested in hyper liquid actually.

So I would, I would say this is the most interested I've seen traditional, specifically hedge fund managers in crypto since Paul Tudor Jones called Bitcoin the fastest horse in the race. And that was May 2020. So it's been 6 years since then. This is the most interested I've seen these hedge fund managers in crypto. And it's in, it's in Hyperliquid. And these weekend markets are a big reason for that. I got a call from a hedge fund manager this week who asked me to explain Hyperliquid to him. He said he found it. He said he spends most of his time on Twitter. This is, you know, massive, massive fund, spends most of his time on Twitter. Most of his team spends most of their time on Twitter. They get most of their trade ideas from Twitter now, which just goes to show the importance of Twitter. The Twitter— he said one of the best traders he knows posted something on Twitter, posted about Hyperliquid. He had never heard of Hyperliquid until a couple of months ago. He went down the Hyperliquid rabbit hole, listened to podcasts that Jeff has been on, and they can't buy hype in the fund, right? So they found the Hyperliquid DAT. Actually, you know, this was kind of the bull case for DATs, right? So he can't actually buy hype. So he bought the Hyperliquid DAT and yeah, it's one of their biggest positions. He's like, look, it's, it's, it's one of the few uncorrelated things I can buy right now is buying Hyperliquids. You know, it's uncorrelated to all these AI trades that we have going on. Yeah.

So I just prompted the AI, I said, explain Hyperliquid to TradFi. So for all our dear listeners, it says what it actually is, is imagine if the CME took its matching engine, order book, clearinghouse, and margin system and rebuilt the entire stack on a single integrated system where every trade, liquidation, and funding payment is written on an immutable public ledger. That's Hyperliquid.

Um, is there a possibility here where you could see a massive re-rating too of Hyperliquid if they get approved in the US? Which is— I'm like way out of my depth talking about this because, you know, I'm not a lawyer, not a regulator or anything like that, but You know, they did hire Jake Chervinsky to run the Hyperliquid Policy Institute or whatever. I forget the actual name. I think it's Hyperliquid Policy Institute. Imagine, you know, what, like after, after 2008, right? I think futures now have to trade again. I'm talking out of my depth here, but like my understanding is futures have to go through these regulated entities like the CME or CBOE or whatever it is. And the reason for that is transparency. And I think this was— I think it was Dodd-Frank that made this happen. And the reason for this is, yeah, transparency. You have to see all the trades, make sure nothing blows up. If you're hyper liquid or you're Jake, I'm sure your argument to someone like the CFTC is, hey, like, you enforce that. You made this rule happen because you want all the trades to be public and you want it all to be— you want to make sure nothing blows up. Well, we've got this system called DeFi. Nothing, you know, things blow up. But they don't— there's no— like, you can see everything, right? And so it's fully transparent. Um, and, uh, yeah, you know, liquidations work pretty well, and Hyperliquid got tested on 10.10, and it, you know, for the most part, work— worked pretty well. So I would say that should be their argument if they're not already arguing it. And I mean, imagine Hype gets approved in the US, like, boom, instant re-rating.

Yeah, the CME is a $117 billion market cap. So the market always likes to understand comps. So I think, I think there's a possibility, like, yeah, if, um, we'll have to— we had— people should go listen to that episode that we recorded with, um, with Jake. But what probability would you ascribe to that happening, of it, you know, being offered in the US?

I'd give it like a 30 or 40% chance. 30% chance.

When you go talk to hedge fund guys, what is the bear— like, have you heard anything negative around Hyperliquid? Yeah, they're like, yeah, this is just never going to work. Like, they're just learning about it.

They're just learning about Hyperliquid. I don't think they even have necessarily a bull or bear case. I I think many of them are just finding out about it now.

Yeah. Yeah. So, but look, I mean, I think, um, let's not forget Solana at its peak was a $100 billion protocol, maybe more. Um, with a lot of meme coin activity. So like in the podcast with Logan, we talked about volume and I think that peaked in January 2025 or 2024. 24. No. Um, And you had at one point, there was like in January of '24, '25, you had $500 million in, um, REV for Solana, mostly coming from, from meme coin trading. Now let me ask you a question. What— how would you give the same multiple to protocol earnings coming from meme coin activity or commodities trading from TradFi?

Yeah, commodities trading.

Exactly. That's why I think you see a path where Piper Liquid could be much larger than that.

Yeah. So look at this. So this is the top protocols mentioned at DAS, right? So we scraped all of the panels, firesides, keynotes, everything to find the— what was mentioned the most. So Bitcoin and Ethereum, obviously massive outliers here. So Bitcoin was mentioned 742 times. Ethereum was mentioned 143 times. Hyperliquid is number 3 at 66, then Morpho at 59, then Solana, and then Canton, and then surprisingly Espresso, uh, then Circle. You know, I got a lot of love for Espresso, but didn't expect them to be number 7 here. Um, then Circle, Stellar, Avalanche, Jupiter, Tether, Maple, Optimism, Superstate, and the list goes on. ZKSync is the bank stack of Ethereum. ZKSync's Providium is the only Ethereum-secured platform that is purpose-built for institutions that demand privacy, compliance, and full control of their data. ZKSync enables financial institutions to thrive in the digital assets economy by launching and monetizing their own chains, tokenize real-world assets, build programmable markets, and settle cross-border in real time. Visit zkSync.io to learn more about the bank stack of Ethereum and book a demo. What other news are you looking at this week?

There was just a quick— Tether invested in Drift, in this mechanism to make whole the protocol losses. And similar to— was it the Bitfinex token, right? That is basically the affected parties will be paid out as soon as the protocol starts making more fees. And so I thought that was good to see. You know, it's always good to see when people, you know, that have suffered losses to eventually see a path towards, you know, making them whole.

All right. Those $285 million in losses, I think there's a structured recovery plan is up to nearly $150 million in combined support. $127 million of which is Tether, right? I think it looks like instead of a full recovery, refund, you know, recovery or refund, this is closer to a plan where users— I was trying to figure it out— users recover their hacked amounts by trading on Drift. Did you see this?

Yeah, yeah, yeah. So it incentivizes people to use, and I think they have to use USDT basically. So it's a good win-win. Which actually makes sense. Yeah, there was a lot of commentary in the timeline about like USDC. I think this happened— I believe this happened during the time where like people reached out to USDC to freeze the funds and they didn't act as quickly. Um, um, I think obviously Tether also has the ability to freeze funds. Um, and there was some commentary around there of it being actually a pretty interesting deal for— a big win for Tether, a loss for Circle. Um, and USDC. So that's that. I don't know if there's any more commentary.

What do you think of this style of a recovery plan? Like any other thoughts on it?

No, I mean, it's a good mechanism, right? I mean, it incentivizes people to use the protocol. So it's a good way to structure these things. It's quite clever, actually. And actually, it's kind of the only way to do it, in my opinion. Unless you have a massive dilutive event at the— and I don't know if there's probably some of that at the kind of that underlying like Drift entity. Yeah. So that was that that caught my eye. What else? Wasn't there a new SEC guidance coming out that—

So SEC came out this week and said certain self-custodial DeFi interfaces fall outside of broker-dealer rules. So there was a big— I think, you know, one of the main attacks by Gary G, by Gensler and his, you know, regime of terror was, uh, do we— I think they're going to try to make these DeFi protocols register as broker-dealers. You know, you gotta, you know, you gotta get a license and all that kind of stuff. Obviously very against the, you know, permissionless nature of these things. And in a way, not even really possible. So on Tuesday, they— the Division of Trading and Markets came out, issued a staff statement that exempted crypto wallet interfaces from broker-dealer registrations. So the SEC is telling MetaMask and Fantom, and I think basically every DeFi front end, you are not a broker. And that is— yeah, that's really important. You know, for years, like, the biggest— one of the biggest legal questions And I think some people would say the biggest legal question in DeFi was, does building a front end make you a broker? And, uh, you know, for, for many of them, like if it, if it was yes, right? Every browser extension that you use, every DEX interface, Uniswap, MetaMask, everything, they would need like Series 7 license, compliance department, SEC oversight. Um, and yeah, this broker-dealer license. And yeah, now you don't need that. They created a new category called— what is it called— Covered User Interface. And this includes if you help users convert transaction parameters into blockchain commands, you qualify. There's an exception here, which is that custodial wallets are excluded. So it includes, right, self-custodial wallets, Phantom, MetaMask, right, browser extensions, mobile apps, and soft— and then the software embedded in the soft self-custodial wallets. So very, yeah, pretty big update. I'm surprised some of these things didn't re— some of the DeFi tokens didn't re-rate, did they?

Uh, no, no, no. The thing that did re-rate was because of regulation was Robinhood, but it was unrelated to that. They just lowered the $25K minimum equity requirement for like day traders. So obviously Robinhood's—

I mean, a lot of things, you know, things are up, right? AAVE is up 20% on the week. Bitcoin, you know, Bitcoin hit $75K. I think that is because there's a higher likelihood though that, um, that, that clarity comes out. So you think that's, that's my take on why things have rerated. So I think if you went into, you know, this roundup last week, it was 50/50 dead split, right? Would, would clarity pass? 50/50. Everyone, you know, I was in DC last week, everyone was saying 50/50, 50/50. Um, I'd say now it's moved to like probably 60/40 or 65/35. The other big update is you had a couple, you know, well-known crypto people on CNBC kind of, you know, saying that if this— if clarity didn't pass by April 1st, it was completely dead. I don't know why they were saying that, but that kind of got incepted into the minds of people. And now, from my understanding, is that if this thing— if clarity doesn't pass by, you know, what's— you know, we're already past April 1st. If it doesn't pass even by May 1st, like, we've got time. Like, we've got until maybe, maybe it's August, maybe it's even 2027. Obviously, the longer the bill doesn't get passed, the more crappy stuff could get put into it. Yeah. You know, someone said, you know, if this doesn't get passed until mid-2027, this becomes the DEI bill, right? So it's like that, you know, the longer you wait, the more stuff gets pushed into it. But yeah, this, I think, I would guess that's why things are actually rerating.

I mean, this is also goes back to I tend to think that crypto is performing well because macro is performing well and the stock market's performing well, and it's very correlated. Uh, as it relates to Bitcoin, obviously MicroStrategy did a massive purchase funded by, um, you know, the, uh, proceeds from Stretch, STRC, this perpetual preferred stock via an ATM offering. Um, so that was pretty big. Uh, I think they bought 13,000, close to 14,000 Bitcoin. Um, so that's, you know, obviously continues to— I think it's one of the largest purchases, uh, that they've done. Um, so their total holdings, crazy, 780,000, uh, Bitcoin, and they've spent close to $60 billion. Their average cost basis is $75,000. So that's, uh, pretty interesting. I think this is something that we— the market is going to continue to pay attention to. Like, yeah, other than premium or the discount, now it's the— this like, uh, uh, STRC, perpetual preferred stock. There's an interesting protocol called Saturn that has hit, uh, TVL has also gone up quite a lot. It's basically a wrapper on this thing. I think it's paying out like 11.5% yield. Uh, so bringing that STRC on-chain, uh, and, and so that's another— I met those guys at like a Wharton conference and they were like telling me all about this stuff. Um, we should bring—

we should bring Mike— we should bring Saylor on the pod. So I was— I actually was at MicroStrategy's office in, uh, Tysons Corner, Virginia, uh, last— on Thursday, and the whole, the whole meeting was about Stretch. They're going to do some really interesting things with Stretch. STRC.

And yeah, I mean, I mean, it's a lot of discussion. This is something that I think there's— you'll find all kinds of takes on the timeline, but the facts are Stretch is paying 11.5% annual dividend. Yeah, that's a meaningful, meaningful increase and pretty juicy yield at the time. We've been discussing a lot of the DeFi yield, right? When you put that into perspective of how low yields are on-chain, I'm not going to comment on the risk. I will save that for a later conversation. The Saturn guys were giving me some good insights on it, but I do think that it's worth bringing a panel in here or my strategy to talk about like, hey, what is this 11.5%? Like, where's the yield coming from? Yeah, yeah.

Have you dug into Stretch? Like, I'd love to get your take on the 11.5%.

I'll, I'll save it for a more informed view. I do have preliminary thoughts. Most of it is just borrowed thoughts from the Saturn guys that, you know, gave me their own Um, but I need to get smarter on it, to be honest. Yeah. Cool.

Yeah. What else do we have for the week?

So we talked about Kraken. They raised $200 million from the Deutsche Börse. Uh, I don't know if they go public this year.

Uh, you don't think so?

In everything that I've talked to folks that have been like doing the SPV and all this stuff, I think, I don't know. Well, here's the thing. I think it all depends on how Stripe— how SpaceX, maybe Stripe if it IPOs. But I think the SpaceX IPO will either be a huge detonator, good or bad, for the market. And that is, to me, that is going to be the line— and as you'd like to say, the line in the sand this year of how that IPO performs. Is going to dictate a lot of what else happens after that. So I, I'm not— I wouldn't be surprised if people are lining up saying, look, let's just prepare, because if SpaceX has this massive bid and wealth generation effect, we're gonna— like, the gates will be open, right? And so, uh, after SpaceX, I think you'll see it back to back of like just IPOs. Yeah.

What do you think of Kraken's valuation coming down from $20 billion? In late '25 down to— I don't know if you saw this—

down to $13 billion. I did not see that. Yeah, that was that the valuation of Deutsche that you invested in?

I think so. I'm guessing it's, it's has something to do with them buying secondary. Um, I saw, I saw one, they, there was one line about it being secondary, so I'm guessing it's a 35% discount because Or 35% off that $20 billion mark because they're buying, they're buying common instead of preferred, I would guess, but I'm not entirely sure. Yeah, you're right. It was $13.3 billion.

They bought a 1.5% stake in it. Probably structure, but I mean, uh, speaking of Kraken, they had like a somewhat of a security incident, uh, and they just not related to user funds, just someone in their support group, I think, uh, party, but as a footnote. But this to say, Kraken is a very well-run machine. Like, they are— this, this can grow into Coinbase type of outcome.

Yeah, Arjun's doing a fantastic job, for what it's worth.

So I'm encouraged by that. Actually, I might look in secondary. Uh, last time I looked at their numbers, when I, I got an offer in their SPV, one of the managers was doing it. And I, what I wanted when I evaluate, for instance, I'm an investor in Backpack. So Backpack is also kind of a much smaller scale, but very interesting. Armani, again, very, very good builder. What you want to look at an exchange model is how does, how much, what percentage of their cost base structure is fixed and what is variable, because inherently they're tied to crypto asset prices. So when prices are up, obviously they're very profitable, but So I did an analysis back in the day of like Coinbase, Robinhood, and then Kraken. And of the three, Robinhood was best positioned because they have more diversified like trading volume that is ex-crypto, but also they, they actually were able to cut costs quite a bit. Um, Robinhood number one, then Coinbase, and then, um, um, Kraken. So to me, that was a bit— and I appreciate like this was pre, uh, was it Arjun time? And so there's been a lot of reshuffling and like they brought on more competent operators. So maybe that's like me middle curving it, but I want to see in any business like a lot of operating leverage and not as much fixed costs or the ability to at least flex up or down, right? Because what you don't want is like margins just getting crushed when you have a drawdown. And that is, I underwrite a business through cycle, right? And so that's something that kept me on the fence, but I have heard from a bunch of folks and in recent, like how they built the DeFi team, for instance, and others, like they're really on top of the game, to be honest. Yeah. What is going on with X stocks there? Anything? I mean, we talked about Hyperliquid and like, you know, these perps on the S&P, but, uh, there, there, I've been seeing some commentary in the timeline around like pre-IPO. Yeah, yeah, like Anthropic and a couple others. Um, I think reasonably low volume, to be honest. I haven't seen anything as dramatic as oil, of course, but yeah, we've got, we've got some data on this actually.

Let me pull this up so you can see. Actually, these are the pre-stocks data. It's still small, right? 17 million. Yeah. Yeah, I talked to the xDox team actually at Kraken the other day, and, uh, they're— I think a lot of the exchanges including Kraken are betting that equities will have a— equity on-chain equities will have a massive year. Massive, massive year. So I think that's the bet of not only Kraken but other people. Um, X, so do you see Nikita's post at, uh, so here, let me share this. So Nikita, who's the head of product at Twitter or at X, came out. X has always been the best source of financial news for traders and investors. Billions of dollars are allocated every day based on what people read on the timeline. Today we're launching our new cash tags feature in the US and Canada on iPhone, bringing real-time financial data to X. When you search for it. So here's how it works. So when you search for a post, search for or post a cash tag or contract address, X will automatically suggest matching stocks or crypto tokens. Anyone who taps a cash tag will see a post mentioning it along with its price chart, so you never actually leave X. So yeah, this is X direct— I mean, this is trying to complete Elon's vision, right? This is, uh, this is them trying to let you build, you know, the all-in-one financial platform.

Um, What's going on? Anything interesting going on in Ethereum ecosystem as of late? It's been sort of crickets other than Tom Lee, like, you know, claiming that Ethereum is going to go to 60.

No, I don't— I mean, yes, but I'm not deep enough in to talk about it. Like, there was actually from, you know, I talked to some founders who are at ECC and like low vibes, but actually some cool stuff happening. I just Yeah, I, I don't have—

what, what has been going on on the— is EtherFi migrated from Scroll to Optimism mainnet. Uh, they migrated over 70,000 cards. And I think—

look, I know, I know you're an investor in Scroll, so I don't know how much you're able to talk about this, but it seemed like Scroll did something like maybe kind of shady, which is they, yeah, you know, yanked up the, uh, the fees or when EtherFi was trying to migrate from Scroll to Optimism. So they manually yanked up the fees, which would cost EtherFi way, way, way more money than it should to migrate off. One of the founders of EtherFi tweeted out, said, you know, the situation's even crazier than anyone would ever believe or something like that. So yeah, yeah. What do you— I don't know if you have thoughts on that.

Yeah, well, to put it in context, EtherFi is like carrying the boat at Scroll in terms of TVL. I think they had like without— if you strip away EtherFi, there's practically very little TVL. I don't have insight into what's going on. What I do— putting the— what is happening on-chain is over the like 6 days in early April that the network raised its amount, the amount of charges to publish data on Ethereum mainnet by a factor of 1,000. 2 orders of magnitude, right? And that forced users to pay over $50,000 in excess transaction fees. So that was obviously what— yeah, it's the timing. Again, the timing was suspicious that it so happened to be the exact same time where EtherFi was migrating over. So yeah, obviously, The on-chain data is there. And so it's definitely pretty damning.

Yeah. Just, it puts in question— what went wrong with Scroll, Santi?

I don't know, man, to be honest. So Scroll was one of the— I was an early investor. They had— this is a time of like ZK rollup, like ZK rollups and the zero-knowledge proof roadmap, which was, I think it's very, you know, it's real, has a lot of merit. And they have, one of the co-founders is just a deep cryptographer and they came with, like, to me, I was interesting enough to put a position. And then, yeah, not just Scroll, but other networks have just faded into No man's land. Uh, like, tell me an L2 that has performed well. This goes back to the post of Vitalik earlier this year, I believe, which talked about the roadmap for L2s and/or lack thereof and putting into question the, the, the need and the role for L2s. And I think, um, it's an admission that I think the market are already woken up to, right? If you look at the performance of Optimism, you look at the performance of Arbitrum, you look at the performance of zkSync and many of the other networks, it's— I think Scroll probably is the most, um, like if I— if you look at just the price, um, I'm just going to pull up here. Scroll, for context, has an $8 million market cap. Fully diluted, $45 million.

Um, that is—

$45 million is below the first round, to put it in perspective how kind of dire it is. Yeah. So does it come back up? What does it need? Like, where's the volume going to come from? I mean, it ties into A lot of the conversations I've had with, call it infrastructure providers, some better than others, is you're at a point where it's like a melting ice cube. Whether you want to see it or not, it's a melting ice cube. Because man, in 2017, there was no users and no traction. So you could sell the dream and you like, that's not a damning comment. It's like you have to any founder, whether you're Elon Musk or Squirrel or anyone else, you have to sell a dream, right? And then you have to back it up. Crypto for so much time was in suspended kind of this, this era of white papers and trying a lot of things, and the market had a lot of patience for that. Today, that is basically non-existent when you have things that I think I went back like 2 years ago or a year ago, I said, look, there's going to be a growing divide of the haves and the have-nots in crypto. Today, that is very wide when you compare the activity that is happening in Hyperliquid and pretty much everything else in crypto. Um, there are some novel attempts. I think this neobank category is pretty trending, like you have Plasma, you have EtherFi, right? You have good attempts, like Aave has its own neobank attempt. Like, 3 theses that I have as an investor that I translate into my personal portfolio and Inversion, which is the demand for stablecoins outside the US is and will continue to be dramatic, and it's unmet, right? Um, the world is only going to become more volatile, and there's a big affordability crisis. Those three pillars have on-chain implications. Position yourself accordingly. Yeah. But it's very tough. Even like Solana's come out of its, like the volume of the REV of Solana, again, in the Frictionless podcast, we talked about this, but it's down from $500 million at its peak to $20 million. So what is going to be the catalyst of that brings Solana? There's good stuff happening under the hood, don't get me wrong. Like Western Union's deploying their pilot there. They have a very competent set of engineers and teams that are genuinely trying to figure out. But it's in my conversations with a lot of these teams, it's like you have to go for the jugular. Like you have to really either use your capital, go out of your way to cement yourself as, as an enduring protocol. And the second last piece I'll say is I think now you're going to see protocols go to zero. Genuinely go to zero, not kind of float around to see, hey, hold on to the dust because dust becomes moon. I don't think that dynamic is going to be as prevalent as it was in prior cycles where you're holding a bag of like LEND, for instance, migrated to AAVE. I think the market would rather just say, look, we're going to rally behind Hyperliquid, and we're going to rally behind Bitcoin, and we're going to rally behind— I don't know, other than Hyperliquid and Bitcoin, what is like in your mind, like, is there anything that when you go talk to your normie friends, they'd be like remotely excited about or have heard of?

Well, Hyperliquid, what did you say? What's the other one? Bitcoin. Yeah, I mean, stablecoins and prediction markets are the hot things, but both prediction markets don't have a token, right?

Yeah, yeah, yeah. I saw— I don't know if this is true or not, but things lag, dude.

Things lag to the normie market. Like we've been saying for a while, what, what are the— what were the 3 hot things last year? Perps, prediction markets, stablecoins. If you were doing one of those, you got funding, a lot of users, a lot of money. If you weren't doing one of those things, 3 things you got crushed and now it flows into the normie market. There'll be 3 new things this year. I don't know what they are, but there probably will be. Will there? I don't know. Equities on like tokenization, equities on chain. Like, yeah, I think like tokenization actually, you know, it feels funny to say because tokenization feels like such a thing that's been around for so long, but it's, uh, and like has, you know, but yeah, I think tokenization is probably one of the 3 big things this year.

I met with, the other day I met with Daniel from Tokeny. He kind of pioneered the ERC-3643, which is becoming more mainstream now for like RWAs. Definitely RWAs. That's something that I should say. Like if I want to talk more about one particular topic in this podcast is what traditional issuers are doing and will be doing on-chain. And where, where will that happen? In their own? I think, I think it will happen in public permissionless networks. Yeah. Wasn't there something I, I saw Jamie Dimon come out saying something more, but I loved like this arc of Jamie Dimon, like going like from totally against crypto to now being way more. It talked about Airborne. Airborne is doing some interesting things. Um, but yeah, he's been way more in the camp of let's, you know, blockchain. I guess Jamie Dimon has gone from— he's closer to Larry Fink than he's ever been, and that gap continues to close, um, every incremental month that goes by. And he's actually on the Clarity Act, he's been very vocal against— I think at one point he like really went after, uh, Brian Brian Armstrong. And, um, but yeah, I think, I think TradFi is trying to buy a little bit more time before this thing passes as they figure out their internal strategy, make sure that their points really get reflected in the bill. Going back to your earlier point, I think it will get passed.

Um, all right, we're going to wrap with some YouTube comments because I haven't read these for a while, and I, and, uh, I just pulled up Are you too?

As you do that, here's an interesting tidbit. He told, um, I don't know if you know this, but he, Jamie Dimon, was out in the air, told CBS that, uh, they're, they're considering prediction market services.

What does that even mean? Prediction market services? They're like, let me get my rake, let me get my— so I, well, I, I had a post about this, like, on something. What is that?

Yeah, but you know, everyone's going to want to build a prediction markets. For me, prediction markets are like, you know, another form of a derivative, right? And or insurance product like a CDS, basically. So the lines are increasingly blurred there. Yeah. What's a YouTube comment?

Hit me with that YouTube comment. You want the, you want the good ones or the bad ones?

Always bad ones first. All right. Who—

Santi, who famously completely missed Hyperliquid despite being full-time in the space at the same time Send inversion to zero before launch. Hmm. I like Santi, but it sounds like he doesn't use DeFi at all. He hasn't farmed for years. How can you be qualified to talk about any of this stuff? How are you qualified, dude? How are you not qualified?

Are you qualified? By the way, I've never said I'm qualified.

Just Santi is many things, but definitely not a contrarian. He is skilled at telling us what has already happened, not what will. Damn, you're getting roasted. Thank you. Oh, here you go. Just want you guys to know Empire is my favorite crypto podcast. I live in Bangkok, so I couldn't be at DAS. Fair, fair.

So let me get this straight. All the negative comments are about me. There's no negative comments about you because you haven't been on the show for a while.

There's a lot of talk about how Rob has his entire Dragonflight team censoring comments. My good takes, my good looks. I love it, man. Uh, any content of the week?

I think I mentioned this, but I've been just obsessed about— oh well, the, uh, Leopold Aschenberg podcast. Uh, that's very good. It's 4 hours, still kind of like 2 and a half hours deep. And then, um, I— yeah, no, that, that one, I— there's There's another podcast that I want to listen to about this VP of Amazon. By the way, it's Leopold Aschenbrenner, so anyone's going to roast me on the timeline for being wrong on that, please. There's another podcast about this Amazon VP, um, on Ethan Evans, I believe, um, on— so yeah, I want to listen to that. Apparently it's very good. A couple people recommended them.

All right, I'm saving it. What about you? Um, I'm just doing, you know, the same old. I'm going back and listening. So David Sennett's got all, you know, the Founders Podcast, but I haven't listened to that in a while. I'm listening to his like founder interview one. So I just, I listened to, uh, obviously Tony Xu, I've been talking about that DoorDash one, but I just listened to Evan Spiegel, um, which was decent, I'd say decent. There's a You know, some people are just such good story— some people got the it storytelling, some people kind of got the it, and some people don't. And, uh, Tony Xu from DoorDash, he's got the it. He's got the it. Evan's like, it's kind of got the it.

You know who has the it this week? Me. Other than you, you always have it.

Allbirds has the egg. Allbirds has the it. Long Island Iced Tea. Long Island Iced Tea pivot.

That's the most wild, wild corporate pivot that I've seen.

Allbirds sold to Jason Yanowitz.

I saw a new, a thing.

It was like Allbirds just dropped their AI finally. It's like a ChatGPT rapper. You go to allbirds.ai, you type in any question. It just goes, shoes, shoes, shoes, shoes, shoes, shoes, shoes, shoes. Forget about it.

The stock is up 10x or was up 10x yesterday. It's crazy. On the news, we can all definitely agree that we are closer to the top than we are to the bottom when these things happen.

All right, content of the week. I'm watching Seinfeld for the first time.

This is just, uh, in the, in the 20 minutes of spare time you have to fall asleep.

My brain, I am like, you know, you know, we're working on a few things right now that aren't public yet and just sprinting. And I've got like 20 minutes at the end of the day where I just need to turn, turn the old brain off. And I usually don't even make it through a full Seinfeld ep. But yeah, that's, it's a good, I think, I think this is how culturally disconnected I am.

I think I've seen like 1 or 2 episodes of Seinfeld.

Maybe I've never, I've never seen, I've never seen it. Yeah. I had never, I didn't watch, I didn't watch TV until I, uh, got a TV in your room. No, no, no, I don't, I don't sleep with my phone in my room either.

Yeah, no, no, that's honestly the biggest—

no, I don't have it. I don't have a TV in my room, which I should. Not be— not because of pride or like— I should have a TV. I'd love to have a TV.

Bear markets, uh, donation address here below, uh, accepting USDC, USDT, uh, WIF.

No, it was actually a colossal botch when we, uh, bought this place, like, you know, we, uh, the guy, the guy we bought it from had a huge TV in the corner and we— it was hanging up, beautiful setup. And I was like, I don't want a TV in the bedroom. Botch. Should have just kept it.

So, okay, parting thoughts. I want to— we're going to talk about how to make empire great again. Um, we will, uh, continue to level up. I want to focus on more public companies doing interesting things in with crypto. Um, that includes Better, that That includes Figure, that includes Klarna, obviously Western Union, more of that. I think I want to focus because other than hyper liquid, this might be probably the biggest detonator for the next cycle. If a lot of these traditional companies start implementing, and there's a lot of talk about, I've been just following the kind of going down the rabbit hole of what, uh, with chatting with the Framework guys about positioning better, looking at Figure. It's kind of interesting stuff happening.

Yeah, yeah, we had to call it the Figure guys a couple days ago. It's interesting.

All right, all right, well, let's leave it at that, man. Uh, thanks everyone for listening. Continue to roast us, or me, on the, on the comments and on the Telegram group. Um, and we'll see you next time.

Cool. Cheers, everyone. Have a good weekend.