Nearing The DAT Peak With Avichal Garg | Weekly Roundup

The fact that we're trying to think about how crazy it's going to get means it's not that crazy yet. And then only in the moment when it's like actually crazy, people are going to say like, I can't believe this. I just like, I can't believe what's happening right now. And nobody's saying that yet. You know, like we're still in the moment of like, hey, this feels pretty crazy. I think it's going to get crazier. Or like, I wonder how crazy this gets. So to me, that suggests that it's actually not that crazy yet. It's only the moment where people are like, what the eff is going on? That's when it's actually gotten crazy. And I don't think we're quite there yet.

This episode is brought to you by Geodnet, the world's largest decentralized RTK network delivering real-time, centimeter-accurate positioning around the globe. You'll hear more about them later in the episode. 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, welcome back to Empire. We have a motley crew today. We've got, uh, Avichal, who's back on the pod from Electric. We've got Rob. Rob is officially joining Empire as co-host number one. He will be leading the show forward.

Santi, co-host number one.

Number one.

Wait, is Santi number two then? What is this?

You're, you've, I mean, you've overtaken, I mean, I read the YouTube comments, I look at the tweets, you've overtaken both of us. People like you more than both of us. So, and we've got Santi back. Santi, new background, my friend. Looking good.

I know, right? Listen, man, I feel like I'm out of, you know, closer to leaving Empire now. Now that Rob is—

You and me both, man. Rob's coming for us.

We're going to be out of a job soon here. Maybe it's a Rob, G2, and I. Yeah, yeah. Well, to be fair, we did a lot of episodes with Hasib, like Avichal Hasib. You remember those episodes?

Some of the best performing Empire apps of all time are Avichal and Hasib.

Little did we know that the other partner of Dragonfly was actually a better, a better one to replace.

He first had to take down Hasib. Yeah, for the, for this position, and then he comes for us.

That's how it goes. Then I'm coming for you guys. So one at a time. Yeah.

Well, look, guys, I wanted to talk about the topic du jour, which is digital asset treasury companies. I mean, I feel like we've just been talking about them nonstop on Empire, but we keep getting new ones and it keeps getting bigger and we keep getting— what I think Santi and I said was going to happen is now happening, which is we're pushing farther out on the risk curve. You know, you had the Bitcoin ones with MicroStrategy, right? And then you got more Bitcoin ones and then you started getting Ethereum ones and then Solana ones. And now you're getting Hyperliquid and Sui and Athena, and there's a whole host of other ones launching. Every coin's getting a digital asset, a DAT now. So I'd love to just maybe, Rob and Avichal, get your guys' take on like the good and the bad and how you guys are viewing this. Is this like, you know, you talk to some people and they say, okay, this is obviously going to blow up, but like, you got to be doing it. You look at other people like I think Nick Carter was saying, like VCs shouldn't be touching this with a 10-foot pole. Avichal, you guys just did one. So ETHZilla, obviously, which, which was successful. So maybe Avichal, if you could, if you could start by just giving your framework for how you're thinking about these things.

Yeah, well, I think that the TL;DR, I think, is what Saylor showed is that there's this giant pool of capital in the debt markets and you can go tap the debt markets and borrow it 0%, 5%, 10% with some duration, and then turn around and buy an asset that goes up a lot more than 5% a year. And if you can make that debt long duration enough and with the right terms, there's a huge arbitrage basically in the capital markets. And you can then turn that flywheel. And then the market started saying, well, if you're going to turn this flywheel and you're just going to keep stacking 2x, 3x, 4x, 5x more Bitcoin per share, I'll just front run you. Even though you have $1 of Bitcoin on the balance sheet, I'll make you worth $2. And so everybody looks at that and says, wait a second, this is just a capital markets arbitrage. And I think these type— setting aside any value judgments, I think these, these things, they are what they are. Like, the capital markets exist the way that they do, and people arbitrage them. And, and like, if this is going to exist, you know, between debt and, and equity markets, and people can turn that crank, people are going to turn the crank. That's— it's just sort of, you know, it is what it is. I think the, the most interesting question here is like, how long does, does it last? And is any of it actually durable? And I think the, the analogies to the ICO markets are very apt. I think this is kind of like the ICO, um, you know, cycle. Um, there's a bunch of capital that comes in, most of it doesn't get anywhere, but, but actually, I mean, we got Ethereum out of the ICO cycle, right? You got a $500 billion asset that, that has had a transformative impact, right? So I don't think it's also— I don't think it's fair to say this is all bad. Like, I think there, there are like— there are going to be implementations of this that I think are really interesting. And so my take is actually, I think probably for Bitcoin, probably for ETH, maybe for Solana, I think there's an argument that these things will persist actually on the other side in a very, very meaningful way. Some of the longer tail assets I think is going to be very hit or miss. Some of them are clearly going to not be around, and some of them I think actually have a shot at being around because the exposure into a new capital market is it sort of like front runs an ETF. And so if you can't get an ETF, this is actually a way for other parts of the capital markets to get exposure to your thing. And if your thing is actually like fundamentally useful, then I think it has a shot. But I think if we restrict it just to the BTC, ETH, SOL, I think what happens is, I mean, our base case is that likely there's a run, right? These things basically behave like levered exposure for a while, and then it pulls back hard. And when the inevitable crypto pullback comes, these things probably end up, you know, it's like, it's like GBTC. It'll, it'll sort of pull back and it very likely pulls back below nav rather than being a 2x. And, uh, and when it pulls back, that's when there's, there's like interesting opportunities actually. And if you're long-term minded, I think some of these guys who are long-term minded and smart, um, you know, like I think we, we did, um, we participated in, uh, SBET with Joe Lubin, for example. And, you know, I think it's entirely possible that Joe goes out and says, I'll just roll up a bunch of other ones, or the, or the EthZilla team could go out and roll up a bunch of other ones in this, in this sort of cycle. And then you get to the other side of that cycle, that's where I think it gets really interesting. So I think if you're able to pull off a Bitcoin treasury or an ETH treasury or a SOL treasury and you have some fundamental yield and you think these assets are actually worth 10x what they're worth today, you play that out. And I think the long game, if you're long-term minded, is do you end up with an asset with, let's say, $30 billion of notional, right? Like if you get $3, $4, $5 billion of ETH today, does it 10x? You end up with $30, $40, $50 billion of notional. That thing's generating staking yield and other yield on, in, uh, DeFi. Could you make a billion dollars a year in free cash flow with basically like 10 people? That's a pretty monster business. That starts to look like a Berkshire-style business, right? It's a really small team that just spins cash. So I don't know, I think there's an argument that in the long term these things are actually very interesting if done right, and it's just going to be, it's going to be messy in the middle for a while.

Yeah. Rob, what would you add?

Yeah, I wouldn't add a lot. I mean, I think all that makes sense. I think reality is, is like these things are going to exist once you put a, you know, a pot of capital into a public vehicle, like, it'll continue to trade, right? It's not going to need to be delisted. It's going to have some sort of nav, right? There's going to be somebody around the table who, like, cares about this thing existing. And so they will exist. This idea that, like, they won't exist, I think, is a bit odd. I think where you run into trouble, obviously, is how you think about, like, you know, what the capital structure looks like. And, you know, if there's a lot of debt on a vehicle that is much more highly volatile than maybe Bitcoin or ETH is, right? And, you know, how does that, you know, play in like a, you know, a really, you know, bear market or down market. I think the, the M&A point is a really good one. Uh, and you know, a lot of people are thinking about M&A in terms of like, okay, well, you know, Saylor can go buy a bunch of other Bitcoin asset, uh, DApps. And I think that is true, but I also expect that Saylor is going to go buy like the 15th BNB one, and he's going to sell a bunch of BNB into the market, and he's going to go and buy like more Bitcoin. Right. Like, I think there's going to be a lot of like activism around these things. I think there's going to be a lot of M&A that's like across assets as well. You clearly don't need 30 of these, right? Like at the end of the day, the amount of copycats that are popping up right now is just astronomical, honestly. And like, you know, we're, I think there's clearly exhaustion in the market, uh, from the investors about like how many of these are coming out. And a lot of them just frankly look like, like, um, money grabs. Yeah, I talked to a team yesterday that, uh, was actually already raising for a fund to go do a roll-up strategy of these treasury companies. So they're— they were raising for a, like, an activist fund for this, right? Which is very obviously is a sign of a lot of froth in this.

When the thought there, Rob, is okay, uh, 6 months from now these things will turn over, market goes down, these things trade below nav, and someone's going to roll these things up.

Yeah, exactly right. And they want to be prepared for, for that. It's unclear to me like why they would have a better ability to buy these vehicles than like Saylor will. He'll have, you know, some sort of premium probably still. He'll have a better asset base. He'll be able to pay more. So I don't know why they would win, but it shows you that there's like a lot of, um, people thinking about like what happens in this market in 6 months and how it's going to change.

The, um, the other data point that is important to appreciate is, um, hedge funds can't buy ETFs most of the time. Um, they can't buy into managed strategies. So that is where a lot of the demand is coming from. Like, other than retail, hedge funds that want to express a view on anything, you know, will buy these DApps. And I think that's where you could see this prolong for an extended period of time, where you have a lot of demand coming in that way, right? What I keep hearing is for the competent sponsors, a lot of hedge funds are lining up to get exposure to other assets that they can't or are not willing to touch the token. And so for that reason, I, I've sort of changed my tune a little bit. Like, I understand the distribution, I understand the potential to earn other staking fees or other types of revenues. I can't justify the premium for most of these, which it would suck again to be in a position where you were right about the underlying thesis but you didn't end up making any money. And the sponsor did. And I just would remind people to be cautious, um, yeah, because most of the folks that I've talked to are saying something to the effect of, yeah, we know it's going to blow up at some point, or the premium's going to compress. This is a trade, not an investment. And you're like, okay, just make sure the size of the door is really big on the way out.

Yeah, I agree with that. I, I, I do, I do think it is a relatively small number of people that should be trying to play this game. Like, I think the average retail person could, could get burned, and they should be really careful. And I think people should tell their friends to be really careful.

Um, um, what are your, uh, in terms of the— going back to your point of retail, like, I think MicroStrategy has been able to get really good terms. How, uh, if you were to canvas, like, the, how sophisticated and how— what are the terms looking like for a lot of these dApps? Um, because that's really the biggest risk, right, where, yeah, you basically are a forced seller and you have to liquidate Yeah, I think you're exactly right.

And Rob, I'm kind of curious what you're saying because you guys probably get pitched. We get pitched like 3 of these a day now across all sorts of crazy assets. And a lot of them, you look at the decks and you're like, this is clearly opportunistic. It's like you look at the profiles of the people and you're like, these people came into crypto in like January 2025. It's like there's like nothing here and they want to raise $200 million and it very much looks like a trade. you know, uh, and so the people who are credible, I think, can get more size. The, the debt markets have sort of— it's interesting, I, I, we've seen kind of two things. One is the duration is generally short. Like, Saylor does, I think, have an advantage here in terms of being able to get longer duration debt, and in part because of sort of the assets that he has and kind of how he stacked his capital base. And he's done a lot of stuff. I mean, he's been doing this for years, right? So it's not like he started this 6 months ago. He's been doing this for years. So he has such a head start on everybody. Um, and so he's getting like multi, multi-year debt, which like doesn't convert, or, you know, he's, he's been very sophisticated. Most of what we're seeing is like 2 years, maybe 3 years, uh, convertible, and it has like forced conversion provisions on the upside. Um, you know, you're often talking, you know, 8, 10, 12%. Um, you know, Saylor's able to get better rates often. Um, so almost, almost universally these DApps have worse terms than Saylor. Uh, and I think you're exactly right, Santi. I think if this blows up, this blows up because we go into a bear cycle. All of this debt comes due at exactly the point that the assets are depressed 50 or 60%, and that's, that's like a forced liquidation event. Like, you could end up in, you know, massive— it's like a, it's like a Terra situation, right? You just have to print a bunch of shares at like the worst possible time, or you got to like sell a bunch of assets to, to like try to pay back the debt. Or, you know, who knows where the debt markets are in terms of refinancing. Like, it could get pretty gnarly for a lot of these smaller ones.

Yeah, but I also think that brings about the point we just talked about, which is like, it's possible that like Saylor is just, you know, the buyer of last resort here and nobody wants to actually sell the underlying potentially. And then get, you know, they'll do an all-share deal with Saylor and Saylor will refinance with his banks. And like, all of a sudden, like Saylor's a $100 billion, you know, plus, uh, company then pretty quickly. Right. Like, I think that's like very possible. And I think you might see— go ahead.

Well, how does that work for anything not Bitcoin though? So on Bitcoin, I think that's right, but on everything else, it feels like it really could spiral. Like maybe in ETH, it's like a handful of people get to scale and are able to buy up everybody else, but all the other assets, it feels like it just—

I completely agree with you that the assets are going to have to get sold, and I think that's definitely right. But I also— it's not clear to me that if sailors trade at 1.5 times NAV and, you know, whatever, a SUI vehicle is trading at, you know, 0.9 times NAV, and the shareholders like just want some sort of some sort of value to come out of it, and the management team wants to get paid, right? That, you know, Saylor can't look at that and say, hey, listen, this is, you know, I'm getting $0.90 for— or $1 for $0.90, and I don't care about the underlying, so I'll immediately sell it into the market, and I'll use that as actually essentially additional leverage, right, to increase my Bitcoin per share. I actually expect you'll see a lot of that type of play happen, and you'll see like activism around that. And it's— it'll probably be a, okay, well, do I take that bid from Saylor? Do I sell the underlying, of which a lot of these longer tail ones have like agreements with the foundations where the foundations don't want them to sell, which complicates things? Or do I do something where, call it, a financial sponsor wants to come in and, you know, maybe help me close that gap and save the vehicle? But the financial sponsor will never be able to pay as much as Saylor will. And with that asset base that he has with the refinancing capability and with the premium to NAV he'll be trading at. So I actually think like Sailor should be the highest bidder in all of these cases. And theoretically, he can buy a dollar for 90 cents over and over and over again and just roll a bunch of these up.

But for instance, let's double-click on like Solana, for instance, like where you're— most of the folks and some of the larger vehicles are trading in locked SOL and they're putting that in and they're getting at some sort of discount. What happens there? Because obviously this is not a liquid instrument that's vesting over a multi-year period. Like it's, it's a— it could be really messy. Messy. Like, so how do you think about, about that scenario? I hear you on the Bitcoin side, but I, I'm, I'm struggling to see how that actually— why Sailor would want to get, or, or someone else would actually step in for, uh, some of these vehicles that have a very big duration mismatch.

I think so. What we're seeing, and I mentioned about a mutual thing as well, but so for one of my biggest pet peeves when we get these pitches is that you'll often see people say, hey, you're, you're entering at, you know, whatever, 1.1 times NAV or whatever, but 50% or 30% of that NAV is actually like a locked token. And if 30% of that NAV is a locked token, then, you know, there's actually the market price of that is a bigger discount. So it's not 1.1 times that you're actually getting in, it's 1.3 or 1.4 or something, right? And so people don't— aren't doing the math appropriately when they talk about that on the locked side. Like, listen, those locked SOL vehicles The— I don't believe the lock is actually that much longer. We have, um, another, call it 2 to 3 years, but you know, they're coming— they're actually— it gets less and less over time. And so you have kind of the steady stream of, you know, Solana that is unlocking. So if that trades at a really big discount the way like a closed-end fund would that isn't, you know, fully liquid, and we expect it, it probably would, there is some equilibrium price there where then all of a sudden that you are taking— you're taking some price risk, but you can arbit out and— or hedge it— sorry, hedge it out. In the market, and then you have like basically a, you know, a cash-flowing vehicle that you're using in the future to buy more Bitcoin.

Yeah, that's fair. Yeah, that's an important nuance here, which is, uh, what you should be looking at to appropriately value NAV, not the headline NAV that you see in the deck, is go look at the secondary market if you wanted to fully punch out of your locked SOL and then use that to appropriately value NAV. Uh, and I don't think many people are actually doing that math.

What we see, and I mentioned what Avitriel says, people are trying their best to, um, really kind of hide exactly what some of these like numbers are because I think a lot of people are just trying to, to make money. And I believe there's a real flight to quality now. And so we'll start to see the, you know, the best vehicles are the most straightforward that, you know, have the best terms and that are, you know, more investor-friendly and not just around the sponsors making money, those will be the ones who will be able to raise capital going forward and are more straightforward about it and not, not the others.

Well, and what I would add to that is I think there's still— I mean, Rob, your idea of Saylor buying the other assets and liquidating them is really clever, and they should— and he's totally going to do that. And anybody who is a Bitcoin-only, Bitcoin maxi is going to love that. And so it makes me think that there's actually like a surface area in these things to use the assets strategically and be creative about them that is underexplored as well. And so the really smart people will figure out what to do with these assets in unique and interesting ways. Like, it's a really interesting— if you just look at it as like an intellectual exercise, it's a really interesting combination of an operating business, TradFi tooling, like how do I cut options against this? How do I, you know, like this, the strike stuff that Saylor is doing, um, you know, super interesting. He's like recreated the entire yield curve using different assets, right? It's like super clever, all the stuff he's done. And then you have the DeFi stuff too, right? And so can you take these assets and use them productively on-chain? Which some of these treasuries talk about. And with the eZilla one in particular, that was a key thing that the team leaned into. Just for clarification, we're the asset managers on the backend on that one. So we have a non-exclusive deal with the company to manage those assets. And so I think actually the surface area to generate yield and be creative about these things is still quite underexplored. And I suspect there's going to be a bifurcation. The good guys will figure out how to do all this stuff. And then the people who are in it for just the trade, won't be able to keep up, and that actually I think will suppress the premiums even more. Like, I think those guys start trading at a discount pretty fast.

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Yeah, I think for any of these, I think specifically for like ETH, SOL, maybe SUI, but especially I think for ETH, there's a pretty robust DeFi ecosystem. And we think actually being able to participate in the ecosystem is a kind of win all around. I think it's a win for the company because you can generate outside yield if you do it right. And we've been doing this for some time in our funds. It's a win, obviously, for the ETH ecosystem because you can actually start to create flywheels in places that are strategic for the ecosystem. And I think it's a win for the shareholders, not just because they might get outsized yield, but for a lot of people, they don't want to touch the DeFi stuff. They don't have the expertise to do it. This is just a new vehicle for them to be able to get sort of outsized yield exposure without having to touch any of it. And so I think you could actually create a positive flywheel where everybody benefits. And so, you know, whether— I think you don't want to do, um, uh, super, super risky, risky out there things because I think the loss of funds risk is like a real risk here. Um, but what we've seen is that there are a lot of opportunities where the contracts are, are formally verified. There's bug bounties, there's audits. Um, And if you size your positions appropriately with small chunks, you can move the needle on protocols and actually help them or help bootstrap new things in the ecosystem. And so if you create that sort of relationship here, it's actually really, really positive in our opinion. And I think that can make it so that there's an entirely new pool of capital that can come on-chain. Because I think one of the things we think about here too, just macro with these digital asset treasuries or sort of the broader evolution that's happening with crypto, is I think it would be really sad and unfortunate if what ended up happening was we created all of this amazing decentralized DeFi infrastructure, and then we just piped it through the brokerages. Like, what a— what, like, a waste of 10 years at the end of the day, right? Like, why do we— why did we work so hard, uh, to, like, just allow people to, like, click a button in their Schwab account? That seems like a waste to me. Um, and so I personally think that, like, the right way to— if— to Rob's point, if this is going to happen no matter what, it would be better from a decentralized crypto DeFi, you know, cypherpunk, whatever lens you have. From that perspective, it's better for us to go figure out how to co-opt that liquidity and bring it on-chain. And so I think that's the experiment to run here is, can you do that in a good, secure, safe way and just suck all that liquidity in?

Do lenders allow you to do that, by the way? Are there some sort of restrictive covenants in there that might prevent you from doing that?

Thus far, no. And I don't think they will particularly care, actually. I mean, even if they— A, I don't think most of those guys understand DeFi in the first place, so they don't even I don't even understand kind of what's, you know, how that would even work. But we haven't seen such provisions yet. And, you know, really, in this vehicle in particular, I think they're going to be a little bit more conservative on that debt. And so it's going to be, you know, if you're sitting on a bunch of vanilla ETH, you could stake it or you could do this other stuff. And it's actually from an ecosystem perspective, I think, really good to do it this way. Like, I think what this kind of gets at, a slightly different take on this, I think, is I think one of the things that SAILR got really right, which a lot of these treasury companies don't get right, is that Saylor is a Bitcoiner, like he's of the community, right? And so what that means is the community wants Saylor to win. And so all of the Bitcoiners are pulling for him. And so what's really happening is it's not, it's not just that like Saylor is the interface to TradFi, but he's sort of like the vehicle through which Bitcoiners are expressing their worldview into TradFi to co-opt TradFi. And that's like a big part of why that works. And I think that's like, that's actually how you succeed here. I think what you got to do is take all of the crypto people who truly believe in something and say, wait a second, like, this is the community vehicle. Like, we're of the community and we want this community to win. Let's go co-opt TradFi rather than TradFi co-opting us. And I think if you get that right, I think you'll actually get— you won't, you won't just have one person on CNBC talking about the thing. You'll actually have like 10,000 people saying, okay, well, if you're going to do this thing, go to these guys, because what they're going to do is co-opt TradFi. Like, they're going to suck all the liquidity over and help DeFi win. And so the sort of like scene I have in my head is like, we're going to hit the fall, you're going to have Thanksgiving, and like every family has like one cousin that's like the crypto bro, right? And like for the last 2 years, the crypto bro has been an idiot. And this year, the crypto bro is a genius. And so if everybody's asking the crypto bro like, oh, have you heard about Saylor? And have you heard about like these dApps? And like, you want that person to say, oh, well, if you're going to do it, go to this one, right? Like the way the Bitcoiners are always like, don't go to the other ones, go to Saylor. Like Saylor's just never going to sell the Bitcoin. He's going to do the right thing. He's like, he's one of us. You kind of want to create that, I think, effect.

Is that, is that how you guys are doing it? Because you guys got Leschner and Tarun and all these guys. And, um, is that how you are thinking about it when, as compared to probably Andrew Keys? What's Andrew Keys's Bitminer? I think it's a Bitminer. Uh, no, so Tom, Tom Lee's is, uh, Tom Lee's Bitmine. Yeah, yeah. So there's, so basically there's right now it's S-Bet is Lubin, Tom Lee and is Bitmine, and then Andrew Keys has his, and then ETHZilla Those, those feel like the 4 big players to me. Yes. Ether Machine.

Yeah, yeah, yeah. Yeah, that's right. That was, that was very much the intention. So we have like Constantine from Lido, we have Shriram from Dragon Lair, Robert, Tarun, Danny Ryan, Vivek from Etherealize. Like you look through the list and it's like, oh, it's— these are people. The intention was, and I think it'll take a while for the, for the separation to happen and for people to start realizing what's going on. But the, the intention was these are people who have been in Ethereum for 10 years. From the very beginning. And, and the— if you're going to take this strategy and you think that on the other side you might end up with some $30, $50 billion vehicle that holds all these assets, what you need to do is bet on the people who, who will be around in 10 years. Like, you need to suffer through the next 5 years to get to that end state. And so if you're going to bet on somebody to do it, bet on the people who have been here for the last 10 years. Bet on, bet on the people who haven't left and aren't going to leave. That was sort of the, the sort of vibe that you're going for. And I think the people who are able to pull that off will have a shot. I think everybody else will kind of— it'll be obvious. It's just like every crypto cycle, right? It's like there's people who've been here, there's people who've been here for 2 or 3 cycles now, and there's the tourists. And the tourists come in, they see the, the bubble, they see the ICO bubble, or they see the DeFi summer bubble, or they see the NFT bubble, and they milk it and then they leave. And I think there's a small percentage of these that they're actually true believers. And if you get the true believer ones, I think you'll suffer for a couple years, and then out on the other side will come something actually really interesting.

How far out can we go here? So this, so this past week we had BNB did a big one. Sui did a big one. I'm trying to remember what's public and what's not. Obviously there's Athena, I think. Anyways, I'll stop there.

But I think TON is doing one.

I didn't know if that one was public yet. So like August will be— August will be the month where like we really get farther out on the spectrum. Like a lot of the L1s are now doing them. A lot of the L2s are doing them. How far out can we and should we be going here?

One observation here is with any of these cycles is if you're asking how crazy it's going to get, it's not gotten crazy yet. You know, like it's only crazy when you're like, I can't believe it's this crazy. And so my take is like the fact that we're trying to think about how crazy it's going to get means it's not that crazy yet. And then only in the moment when it's like actually crazy, people are going to say like, I can't believe this. I just like, I can't believe what's happening right now. And we had nobody saying that yet. You know, like we're still in the moment of like, hey, this feels pretty crazy. I think it's going to get crazier. Or like, I wonder how crazy this gets. So to me, that suggests that it's actually not that crazy yet. It's only the moment where people are like, what the fuck is going on? That's when it's actually gotten crazy. And I don't think we're quite there yet. So I think it's got, it's got, it's got some legs to run. I think this momentum will probably carry it for a while. I'm trying to think of like what, what I don't know if you got like an OHM treasury or something, something like totally bananas where you're like, I can't believe this is happening. You know, like a Loot treasury. Remember Loot, the NFT project? If you got like a Loot treasury or something, people like, this is the future. Yeah. Yeah, people are like, oh, this is the future of gaming. Then I would sit back and be like, what the heck is going on right now?

Well, aren't that the future of financial engineering and or curing cancer along with AI?

Yeah, exactly. So once, once we start having that kind of a language, then, then I think we're like out on the risk curve where I don't think we're anywhere close yet. It's like so many of these, it's just like I always am like, I can't— how far are meme coins going to run? Like, how crazy can people possibly get? And then it just like keeps getting crazier and crazier. And so it's just like, I don't think we're anywhere close to the end of this.

What is the, what is the main KPI?

Like, if you have a dashboard up, and I appreciate some of you guys are not like near-term traders, but you know, you think about downside, like, what is, what are the KPIs that you're measuring to assess? Like, is it the premium? Uh, you know, like, some of these are not holding up fairly well. Um, and, and so does that indicate that, like, at least on the downside, like, is the music, uh, you know, coming to a halt? Um, is it more nuanced than that? It I mean, obviously these vehicles are not all equal, but I'm curious how you guys think about how long does this phenomenon persist?

Well, on our side, I guess. Yes, my side. Go for it. No, Rob, go for it. Sorry about that.

No, listen, I think on my side, Individual is more involved with these than we are. I think that to your point, Santi, the premium is not subsisting. I mean, the premiums are still pretty high. It just is that the premiums were crazy high before, right? These things shouldn't trade at, you know, 4, 5, 6, 7, 8x premium. They should trade at maybe some premium that is, you know, call it somewhere between, you know, 1 and 2, right? And so they are getting to a more reasonable level. I think what Avitro said earlier around, well, if you're asking if it's too crazy, It's not crazy enough yet, or we're not at the top. I think that that's probably true in the public markets, but I think if you, if you're in the know or you're, you know, those of us who are seeing these deals every day, like it does feel like there's a lot of exhaustion on this side and the public markets are, you know, 4 to 6 weeks behind where the rest of us are in terms of seeing all of these deals. And so I do expect, you know, pretty, pretty soon you're going to start to see, you know, call it like. Asset with $1 billion or $2 billion or $3 billion of market cap that's going to come to market, and you're going to be like, how, how does this make sense, right? Like, people are going to raise and they're going to buy 20%, 25% of the float to go and offer this to the public market, and nobody will know what this asset is or, or, you know, why it even is supposed to exist. We see a couple of these right now. There's a, um, that are, are starting to come to market. There's a large VC behind one where, like, there hasn't even been a cliff yet, uh, in the vesting, and that one's just That feels very, very frothy to me. And you're starting to, to see people talk about even like pre-launch projects have digital asset treasuries, and they're talking about that seriously, right? And so that tells you, at least on the side of the people who are putting these things together, that I think we're starting to get towards, you know, near the top. But of course, like, the public announcements are 4 to 6 weeks behind that.

There's a pre-launch project that said, uh, they Actually, I'm not sure if there's any pre-launch project that is doing one of these. And they said, we want to diversify out of our— once the token launches, we want to diversify out and acquire Blockworks so that it would be this token, which is like, it's literally like, I don't know, it'll be like 100 on CoinMarketCap. It's like, yeah. And Blockworks, I was like, I think, I think we'll have to pass on this one. But yeah, it's got—

now we're talking like when that, when that's actually like a real thing, like signs of the froth.

Yeah, yeah, yeah, yeah.

Are we gonna skip actual, like, has all the speculative energy and flows just now sitting on traditional markets and we're gonna totally skip on-chain activity and craziness as we saw in DeFi summer, NFT summer? I mean, the floor of Punks has gone up pretty dramatically, which is, I generally think NFTs, when they catch a bid, it's a sign of the times that we're closer to the end than we are to the beginning. And so certainly, like, there's been interesting activity in the Punks. But I'm curious if you guys think that we'll see some flows, as we have historically in prior cycles, where Bitcoin rally stabilizes, then you have demand in other assets on-chain.

Well, there's two, there's two aspects to that, right? Like, one is the price movement across assets. And I think it's entirely possible that it does behave like it has in prior cycles, which is like Bitcoin moves first, and then other stuff moves. Later. Um, actually, 3 aspects. 2, I think this idea of like tradfi— I think it is very possible that, that the real speculation of this cycle happens on the traditional markets rather than the crypto markets. I mean, obviously there's hyperliquid and perps and, and meme coins and stuff, but I mean, that's like, that's baby money compared to what happens on Wall Street, right? Just the dollar flows that you're talking about, the ability for deep pools of capital to access any kind of instrument is just so much deeper on on the Wall Street side. I mean, I've— we've talked about this for years, and we maybe even talked about this on a prior pod, but like, my operating theory has always been that we've never actually seen a proper crypto bubble. Like, people talk about crypto bubbles, quote unquote, but like, I don't think you can have a proper bubble without Wall Street being involved. Like, bubbles require proper institutional rails and real capital flows from the traditional markets that are, that are truly deep. And this is actually the first cycle that we have those rails established. And so this, to me, sniffs like what, what we've been thinking about for which is like, it's only when Wall Street really gets its hooks in and you get real institutional dollar flow from Wall Street that you can have a proper crypto bubble. Um, and so to me, this is starting to sniff like the beginnings of that. This is starting to sniff like, you know, it's, it's a little bit before my time, but it's like, I have to imagine this is like 1996 or '97 or something felt like, where it's like the Wall Street guys finally kind of figured out, oh, there's an internet and we should like do something about this. And then it got crazy, right? And so I think My read is like, this is the first signal that that might actually be happening. And so if that's true, then, then yeah, like the real speculative cycle happens on the traditional markets. And that in that situation, it's just because the dollar flows are so much bigger in that universe than there are on-chain right now.

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I think the term VC is like, as an overloaded term. And so I think it really depends on your mandate. Like, some, like, we have multiple kinds of funds, we have this like, yield generation stuff that we do that we'll do with the treasuries, we have like an open-ended vehicle that we have from 2018. So it kind of depends on what the strategy is that you're LPs have asked you to, you know, be tasked with. Um, but I also think that, you know, part of, part of being successful in crypto, and I think part of being successful in like the modern investing environment, is, is being thoughtful and understanding what's happening. Like, I think one of the big criticisms you could have of VCs, let's say from 2010 to 2022, like in that window, is they were extremely uncreative, they were unimaginative. So they like bought some stuff they had like macro tailwinds, they sat on it. And the lesson that most traditional VCs learned was like, buy and sit and hold and don't do anything. And really, in retrospect, what you realize is what they should have been doing is harvesting in '21 when things were going crazy and doing secondaries or trying to help companies go IPO. And so I think actually being thoughtful about where the capital markets are and where liquidity is and how to get liquidity for your LPs is well within the mandate of a VC. And if it turns out that this is the best way to get liquidity for investments that you're sitting on, um, and there's a pricing arbitrage, like, your job is to help your LPs make money and be thoughtful about that. And so why, why ignore an entire section of the capital markets that allow you to get liquidity for your investors when your job is to make money for the investors? Um, and so I think actually, like, a lot of VCs would be better served by being thoughtful about understanding these other things. Like, you know, go, like, take something like, um, You know, we, Jason Yanowitz, we were talking about Boom Supersonic, right? And so it's a different domain. It's a different industry, but actually has a lot of parallels to crypto, which is it takes a long time to build a supersonic jet and get it to work. And there's a ton of regulatory risk, right? You got to deal with like the government to actually like build this thing. So it actually turns out a lot of parallels. And one thing I think is really interesting about that, that business is I don't think the public markets— I think the private markets don't understand that business. As well as the public markets. So it's this like bizarre thing where the VCs really struggle to understand a supersonic airplane company, but I bet you if that company was public, it would be like a $5 billion publicly traded company. Um, and, and it's because like the retail market actually understands that better. They want to have a slice of that thing in a way that the privates don't. So if you're an investor and you, you have— you're an investor in such a business, I think it is actually well within your mandate as an investor to say, you know what, Boom Supersonic, maybe you should be a publicly traded company and let me help you get there. Um, because that's actually the right way to capitalize that business. And that's the right way for you to like, as an early investor in that business, make money for your investment. So anyway, I think, I think this idea of like, what is the mandate for a VC is actually the crux of what he's saying. And I actually disagree with his premise. I think actually VCs need to be much more active and much more thoughtful about how to use the capital markets to generate returns.

Yeah, I might, I might push back on one part of what Avichal said and then, and then agree with another part, which is I do agree that this is all about what your mandate is. What type of fund do you have? What is your fund supposed to be doing? What type of returns are you underwriting to? Like, what is the return timeline and threshold? Uh, I think, you know, in Nick's funds specifically, you know, these are closed-end funds, like 8-year life cycles, I believe. You know, they— he's really solving for a different type of investment than these digital asset treasury companies. These, these companies are, are trades in a lot of ways if you are doing the PIPE investments, right? And that's obviously what specifically what he's referring to is, okay, somebody's doing the PIPE or they're doing the convert, they're playing that they're long some underlying token, they're hoping for a little bit of a premium to NAV, and, and then they're getting out of that, right? And these are— it's a trader's mentality, right? And that's what he's trying to say, I think. I also believe that his expectation or his belief is that these are bad for retail, that isn't necessarily true, right? And you have to, you have to assign that sort of like ideological point to, I think, get to where he's getting to. It is possible that's true. It's possible for a lot of these vehicles that's true. But it's also possible that there are ways to put these things together that aren't necessarily bad for the follow-on investors, the retail investors, the people who are there in the public markets. And so, um, I do think it all comes back to the type of fund that you're, you're investing out of and, and what people, you know, um, are expecting to get out of this. The thing I would push back on Avitral on a little bit is this idea that, you know, just because like the private markets and public markets, uh, are, you know, sort of understand different types of assets better. Like, I don't— there are very sophisticated investors on both the public and the private. And the fact that like retail might buy Boom Supersonic and, and, you know, make that a $5 billion company and the private markets won't, that doesn't, that doesn't imply to me that the private markets, uh, don't understand the asset. What it implies to me is that there's a lot of, you know, kind of retail mania that is looking for potential growth. And we saw this, by the way, in the SPAC boom of 2021, when you had a bunch of EV companies, space companies, you know, other kind of like long tail technology companies that went public, immediately traded really, really, uh, well, and they, they had, you know, kind of immediate pops. And then most of them are basically like close to dead companies today. Right? And in that case, you know, it's kind of the same thing. I think you would imply that the public markets actually didn't understand that asset.

The point that he's making around we back operating businesses, I would, I would sort of like, it's a bit of hyperbole. Like, can these stats become operating businesses? Absolutely. Like, again, not all of them are, but, but what I would say is, um, there's also a part of this which is I would sort of agree with Avicii's point, which is you solve for lowest cost of capital and distribution. So if it's going to help your project get more attention, uh, and that's gonna— and you're in the business of, of generating attention because you built a good product. And so Fossil Island invests in a project that at some point has a DAP, uh, you almost start wondering, are you there to support it and, and maybe facilitate introductions to debt capital providers and lower cost of capital and solve for distribution? Possibly, right? I mean, at the end of the day, like, it really just turns all the way down. Like, do you fundamentally believe we're building products in crypto that are valuable or pure, pure speculation vaporware? And that's more of an existential question that you've got to just answer for yourself. Um, I do think that we, a lot of times in crypto and just in traditional markets, we jump to conclusions because price action does one thing and then we throw everything out of the water. It's like, oh, this is a scam. And unfortunately, like, there will come a time where a lot of— most of these dApps probably trade below NAV and we're all going to call them a scam. And I don't think it's a— it's, it's— we've seen this time and time again in cycles. Like, price action unfortunately is the main parameter by which people form an opinion, and it's really challenging. Like, we— as much as the private markets have become very liquid, like secondary markets on, on Boom and Stripe and some of these companies are pretty robust, um, and they have very healthy tender offers. Like, Kraken's raising a huge round. Like, there's, there's a healthy amount of secondary activity, which is the more liquidity, the better the price discovery. To your point of each— as soon as you go public, it's, it's on steroids, right? You just have tapped into a river of flows that you're never gonna get. Um, but it is really hard to do price discovery on, on everything, really. I mean, crypto is trying to it's a challenging industry. So, um, I, I, it's challenging because even, even if it's not an operating business, can you make the argument that by, like Athena's vehicle, we have more distribution for, for ENI? People want to have long stablecoins, and for Athena, that is kind of their business, right? They're just— you need to solve for distribution, and the dApp kind of does that. So I mean, I think Guy had a nuanced take, which I appreciate. Um, so like, I would put it back on Nick, and if he wants to come on the show, I'd say, okay, if you have a portfolio company and they want to do a DAD, would you support then and there? And I almost— I think that's how you force him to probably say, yeah, you would back it if it's gonna— if it's gonna improve the business in any way, shape, or form. As Athena, the amount of flows that have flowed into Athena because they're tapping into traditional markets are important, and that's our core business, is generating more fees as a result.

Yeah, let me— I— one, one thought on this. I want to, I want to push back on Rob on this, um, this, uh, sort of observation a little bit. So what I'm, what I'm asserting is not that something like Boom, just because it could be worth $5 billion on the markets, should go public, um, because I think— I do think you run into like this, the SPAC issues. But like, speaking of SPACs, I think like Joby is an interesting example, right? Joby is now worth $14 billion, uh, after having SPAC'd and having gotten crushed for a little bit. Um, what I'm asserting is I think there's a— all of this, you know, whether you talk about the DApps, whether you talk about the debt markets with Saylor and bridging debt markets into buying Bitcoin, or you're talking about VC markets, if you sort of step back for a second, these are all capital markets. And certain parts of the capital markets understand certain things, and they have mandates to, to generate returns in certain ways. And, um, and what I'm asserting is that the type of return that a VC is looking for and how they think about risk does not map to all ideas. And so if there's a different part of the capital markets that actually is willing to underwrite that risk, then that's actually where you should be. And then your job as a VC is to recognize that. So like with the Boom case or the Joby case, I think what you have is a forward financing risk, which is like, you can't— like, if you're like, hey, look, you need $2 billion to make a VTOL thing, and I don't know if I, if I give you $100, I don't know where your next $300 comes from. If you can't get that next $300, you can't get the next billion. And that's how VC works, then you have a real risk. And so the person that wants to give you $100 can't give you $100, because they're not sure if the next billion shows up. Whereas if you do a SPAC, you get all billion at once, the forward financing risk is now gone. And so the capital markets have like fixed that problem for you. And so all of a sudden, you don't actually have that risk anymore. And so I look at that more as like, there are inefficiencies in the capital markets of what people's mandates are, what their constraints are, and where they can you can put money. And if you find a pocket of the capital markets that is aligned with what you need to do, then you as an investor should help your portco do it. And I think this is exactly right, Santi, in your point, which is like, well, what if you have a business whose job it is to accept as much capital as possible and move that capital around, and you can access the public markets, which are 100x deeper and bigger than the private markets on-chain? Don't you have an obligation as an investor to tell your portco, like, yeah, you should try to figure out how to get 100x more capital into your protocol. Because that's the purpose of your protocol, is to have as much capital flowing through it as possible. Um, and so I think, I think saying like it's not the VC's job is a little too narrow. I sort of agree with his statement, which is like there's a segment of things where this makes a lot of sense. And I think it's specifically when you have these like capital markets holes where a certain segment of the capital market just doesn't understand what you're doing, but a different segment does, then your job as the VC is to get your, your portco over to that segment of the capital markets that actually understands it.

Yeah. Let me, let me ask one more question. Question on that.

I was just gonna say, like, quickly, like, like, I do agree, like, I think with basically most of what you said, and I don't want to seem that I'm like, you know, disagreeing with like the broad strokes.

No, no, dude, channel your inner Steve. Let's go.

But the idea that like, listen, we have porcos too, right? Athena is one of our porcos, and you know, obviously they're out there in the market right now. We have others that are trying to get out in the market right now. And so I broadly agree with that point, but I think it is a little bit simplistic to to be, say, okay, well, they're just this like one part of the capital market that, you know, is able to understand this asset better than the other one. Because there is a lot of, call it, misaligned incentives, right? And the incentives of a lot of these sponsors is different than the incentives that people are buying the equity and they're distant than the portfolio companies themselves and the VCs themselves. And so I think at least being straightforward about what those misaligned incentives are is important. But from a, you're in my perspective and from what Nick Carter is saying perspective, I totally agree that like our job is to be fiduciaries to our, our investors, our LPs, right? And so we're going to go and do the best things possible to make sure that we are fiduciaries to those investors and that we're helping our portfolio companies, of which, you know, every day I wake up to go to war with them, right? And this is also helping them as well. And so I agree with all of that, but I think it is also a little simplistic to say, well, just because, you know, some sponsor is willing to give you $100 million and speculate on some warrant and then also take a 20% fee is willing to give you some money, that it's a, you know, necessarily a part of the market that understands this better is probably also like an incorrect statement.

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We said this was not going to be a DApp-only episode. It is. It is. I just recorded a prior episode with Ryan from Crypto Banter on the exact same thing with Avi. Yeah, I'm tired of it.

2 hours of DApps, maybe. Vitalik, let's say you're right and, you know, we hit this like mega supercycle, whatever, and like Wall Street's got its teeth into crypto. There was a Vance tweet or Vance said something along the lines of like, Vance, I'll just read it. He said, it should be obvious that no one will benefit more from lower interest rates than the corporate entities who issue pref debt converts to buy coins. Wait, actually, that's wrong. The coins being bought will actually benefit more. Incredible technology. Basically what he's saying is, do you buy this? Do you buy the hyper liquid vehicle or do you buy hype? And that hype will do way better than buying the hyper liquid vehicle. What do you guys think about this? What I mean, what does better? If you're an Empire listener and you are long Athena, are you like Athena? Do you buy— do you buy ENA or do you buy the Athena Treasury vehicle?

That's an interesting question. I mean, I think it goes with what Rob was saying before. It's like, what— how do you think about it? If you think about it as a trade, then there are likely capital markets inefficiencies in the public markets where these things get mispriced, and you can probably exploit those. I think if you think about it as a, like, long hold, uh, I think in most cases, you know, there are a lot of advantages to owning the underlying if you can, right? You can use it productively. I mean, that's, that's the point of all this DeFi stuff, right? The point of the DeFi stuff is you can own the thing and use it productively, uh, and you can get rewarded for being a participator in that network. So yeah, it sort of— I think it depends on, on— are you talking about trading in and out of it, or are you talking about I want to long hold the thing because I want that, that thing to exist, I want that product to exist, and I'm a user of that product? So I think it, it could go either way, actually.

It's really a time horizon point and like part of the cycle you're in point, right? Because like if you're putting debt on these vehicles and you're taking on you know, some sort of like convert that is like debt-like, right? Like it's going to perform better at times when you're getting leverage and the premium's trading up and the token's trading well, and it's going to perform worse on the downside on, on the other side of the market, right? You're gonna—

sorry, go ahead, Santi. You're gonna get self-liquidated. Like you're gonna get either massively diluted. Again, it is, it is incredible amount of edge that you have if you have a 2, 3, 4, 5-year horizon. So like if you're bullish Bitcoin, okay, maybe go buy MicroStrategy. If you're bullish ETH or SOL or Ripple or whatever flavor of asset, it is gonna— you're gonna feel terrible if you find yourself in a position where that asset actually performed well and you did not because you bought a company. It just introduces a vector that if you don't need it, yeah, why take you? Because again, zoom out, you're investing because you think that you're trading in a lot of risk units for what you think is going to be a venture-like return. Why introduce complexity? You don't know the manager, you don't know how that he's behaved through a cycle, you don't know the— likely don't have the sophistication to go through and read the capital structure and all the different subterms that they have. And so like, there's a— you can just go buy to Coinbase, you like— they're going to be able to buy the ETF, you're likely going to be able to buy it through JP Morgan So like, it just to me feels like there's a big disconnect here where I go back to when I was at ParaFi, we were pitching to large funds and they don't necessarily care if you stake and get the incremental 8% yield. They're like, listen guys, we think this is going to be a 10x. Like, just don't blow it up. It's like, hold it. Come back to me in 10 years. I don't want to hear about you. Just do your thing. And like, have a venture-like return. So if, if you're approaching it like that, I would, I would steer clear from these vehicles because it just introduces a whole layer of complexity that I don't think is—

I think complexity is the right word, Santi. I think if you're, if you are, uh, relatively unsophisticated and don't want to manage the complexity, probably don't deal, don't, don't touch this stuff. And if you're a much more sophisticated investor and you, and you understand and you can actually do a look-through then maybe you should consider it. But I think most people are not sufficiently sophisticated to price these things properly and understand it. And so you got to be really careful. I think as a typical investor, I think it's probably something to steer clear of. I agree.

Look what happens with Sonnet, right? So Sonnet was the, um, the hype vehicle that came out, right? When that vehicle came out, it traded up to $18 on day one, right? It is now today like $3.80. Or something, right? And so it has come down a, you know, significant, significant amount, right? You know, something like 80%. And it's come down at a time when hype has basically been flat, right? And the reason for that was because it was unsophisticated investors who wanted to play, you know, they thought there may be more of a premium. They didn't understand the warrant structure. They didn't understand the dilution. They didn't understand how the, uh, how the capital structure was evolving over time. And they also didn't understand that they weren't actually buying hype right away, and that because they didn't know when it was getting funded. And so there, to all of these points that we're making, there is a lot of sophistication in these vehicles that it seems like most people who are buying them once it's publicly traded do not understand. The PIPE investors understand, the convert investors understand, but the people who are buying the common equity through their brokerage account, they haven't really understood. And that's the tough part about these vehicles, to everything that we're saying, Whereas in like, yeah, if you go on Coinbase and you buy some Bitcoin, you buy some ETH, you know, you just, you can sit and wait and, you know, 10 years from now, like, you will probably be a lot richer than you were when you bought it. Right. And so it is just a very, very different type of vehicle. Yeah.

Avichal, you got to drop. I do have to drop.

I wish I could be here for the rest of this. There's other good stuff to talk about. I appreciate you running long on this stuff.

Thanks for joining. Good to see you, Rob.

Good to see you, Santi. Thanks, Jason.

All right, pivot, pivot from the dat. I'm, I'm datted out.

Is this livestream, by the way? Is this our first livestream?

We're live, Santi. No, we're not live, actually. I thought there was a livestream. No, you did your makeup. Not even live.

All right, man, we can edit you in post, don't worry. The only time I'm doing livestream, you guys did not tell me it was livestream, and we couldn't edit.

I was like, dude, that was a spicy one too.

What was that about?

I don't know. I don't remember. But it was, it was at the beginning that we—

yeah, yeah. Um, what to discuss now? What to discuss now? Let's talk about, um, actually, while we're recording, uh, SEC just announced that they're rolling out something. So actually, this is an interesting week because— so the SEC just announced that they're rolling out a crypto team, a crypto project, Project Crypto, to help make America the crypto capital of the world and specifically to do whatever is necessary to modernize the rules and technology to bring financial markets on-chain. And yesterday, the White House launched their crypto report. So I don't know, Rob, Rob, if you had a chance to dig into the crypto report.

So I haven't dug into it. I did read Rebecca Reddick had a really good post about this where she kind of ran through like some of the main points. I think just super high level, it's just awesome that we're seeing, I think it's 164 pages that has been written about crypto coming out of the administration. And there's stuff in here that like makes it very clear that they actually understand what's happening, right? It's not, I think in the past we've seen some of these things come out and they've been, you know, very high level. They haven't necessarily you know, really dug into the issues of what the administrator— sorry, what all of us seem to care about and what, you know, those in the industry care about. This did that, right? You know, one of the biggest, you know, pieces of discussion in here is around like, what does actually control mean? And control of an asset. And when you write a smart contract and it's sitting in a liquidity pool or it's sitting in, you know, a protocol, Does that make or does that mean that those protocol developers are actually exercising some sort of control over that token? And then what does that mean for regulation? What does that mean for, you know, how these things should be treated in terms of, you know, whether they're, you know, commodities or securities? And so that was really interesting to me. And I think it's really topical. What I really also liked is that it actually went out of its way to say, Hey, listen, the regulators should start forming rules right now and doing, you know, some sort of governance right now, even as we wait for the legislature to come out with, you know, some sort of like market structure acts. So that was actually probably the most interesting thing, uh, to me in, in that report. But I don't know, um, Santi or Yana, if you guys had anything else that stood out to you.

Well, extending on the last point you said, Rob, uh, it was a buy from Helium that actually retweeted this, but it's just this section of the report that that calls out— he tweeted because it calls out specifically Deepin, but I'll read, um, you know, the SEC should consider using its rulemaking and incentive authority under the Securities Act to advance the following initiatives. Um, you know, it talks about, uh, establish a fit-for-purpose exemption, uh, from registration under Section 5 for securities involving digital assets, establishing the safe harbor you talk about. The other one interesting is consider also an exemption for distributions of digital assets by decentralized physical infrastructure, DIPIN providers, and securities transactions for the purposes of rewarding participation in DIPIN networks, as well as distributions of certain NFT holdings. Um, so that's pretty— I mean, you could have just never imagined this coming from the SEC, um, hired in November of last year. I would say this report had it launched in the prior administration, what kind of price action do you think we would have had if this came out last year, this time around last year? Seriously, I mean, like, everything would be massive green candle, but the market sort of like now absorbed that and priced that in, I guess.

Yeah, I, I thought this section was really good. The taxonomy on crypto tokens was, was good. I mean, it's something that people have been asking for, for, for a while. So there's a Page 45 through 61 if anyone wants to take a read. But yeah, just— yeah, I mean, they basically establish a taxonomy for crypto tokens. So you have security tokens, tokenized securities, commodity tokens, network tokens. And I mean, if you have a token or you're investing in tokens, it's worthwhile to read this.

So there's a fun little Easter egg here at the end. I think it's page 164 or something where they put, uh, like a hash, uh, into a, a message. 365 there, um, the next page after this. This just shows you, I think, you know, this is kind of just a fun thing that they did, but it shows you that they're paying attention and like they care about what is happening in the industry. And you, we just couldn't have imagined that level of attention to detail and, you know, focus on this industry, you know, even probably 9 months ago, to be honest.

And so I, I get asked all the time, like, why is this different now? Like, in the context of starting my own company. And I said, we started Inversion specifically October of last year, November when Trump got elected. I was in New York in the Trump Hotel and I was putting like a great, like, play and start to my company. And, and it's just sort of one of those things where it is a total 180 and it does matter. Like, when we go talk to a board about running a playbook it is no longer like this is a scam of an industry. It is, okay, we can actually, we can actually do this. And, and that is like, there's just so much pent-up interest and people that have been sidelined that when they see this report, you can actually send them this report. And it's like, you know, even for fundraising, uh, you know, a lot of these pension funds are like, listen, we— there's this risk that, you know, the SEC is looking at this and And now you can— this report does wonders for, for everything. And so it's, it's, it's almost one of those things where like this report is going to be circled around and it takes— when's the next board meeting for all the large companies? Well, it's going to be staggered over the next 3, 6 months. This report is going to be circulated and then maybe it shows up in the market, in the tape, you know, in 6 months when, when all this happens, right? So it's one of these things where I think this is incredibly historic. And in any other market, you know, this would have had a massive response from the market. But I guess we're getting used to the US government being really pro-crypto.

So I haven't read the SEC thing, but because it just dropped like 10 minutes ago, but I'm going to read David Hoffman. David said, the speech from Paul Atkins is the most bullish thing I've ever read out of the SEC. Explicitly states we're going to move America's financial markets on-chain. So.

Well, we'll have to read this. I can tell you for a fact that every single— to Sonny's point— every single large company right now is doing something in and around crypto or talking about it at the board level. At the very least, there are— this is a more of a stablecoin point than just a crypto point, but there are RFPs out in the market right now by, I know of, at least 12 Fortune 100s who are actively looking for service providers to come in and help them implement some sort of crypto or stablecoin strategy. If you go and talk to a lot of the asset managers, you talk to the, you know, kind of companies that enable a lot of the market structure, every single one of them today has had a working group or a team that was working on tokenization for the last few years that is now actively telling you they are expecting to roll out a product or some subset of products over the next 6 to 18 months. And this acceleration of on-chain finance is picking up pace at a speed that I could not have possibly imagined 9 months ago.

Should we talk about— there's a couple really good announcements, like, uh, JP Morgan now is going to allow you to buy crypto with a credit card. I was doing this back in the day, uh, I don't think they ever knew that. They didn't shut my down my accounts.

I did hear— oh, you were allowed to? I was doing this in 2017.

Well, you were allowed to, but then like Again, like not too long ago, they had objections if you were sending money to and from Coinbase. Now you see this, which is huge. So I actually pulled this up.

I pulled up the Google Trends. Look at this. I thought this was interesting. Buy Bitcoin with credit card. So you weren't allowed to do this in the 2021 market. No one got back into this game. But in 2017, it's probably like 20% of people I knew were buying Bitcoin on credit cards. And look at the Google search volume for buy Bitcoin on credit cards. So it's clearly an in-demand thing. I mean, it just skyrocketed. You got it.

You were getting credit card points and you were buying Bitcoin.

It was great. It was great. Yeah. I mean, it's interesting. So Coinbase and JPMorgan Chase join forces to make it even easier to access crypto. So, A, you get to use your— you get— you can transfer your Chase Ultimate Rewards to USDC. B, you can use credit cards to fund the Coinbase account. And C, they have this new like direct bank banking integration. So this also comes right before Jamie Dimon. Here, let me see if I can pull this up because I actually haven't listened to the full speech, but I saw Pete Rizzo or the Bitcoin Historian said, you never know what's real or what's not on this, but I haven't watched the full video. But it sounds like Jamie Dimon in this video today said we will accommodate Bitcoin. It's what the customer wants.

Um, what I can tell you is, uh, they are now— before they couldn't solicit, they couldn't proactively pitch, um, iBid products to their clients. Uh, now you're likely gonna— it's a change of tune. Um, and, and so now that's been also a blocker, right? If a client calls in and say, hey, I want to buy iBid, or I want to get—

they would facilitate— now they can solicit. So they're, so they're calling you saying, do you like to buy some of it?

They're reaching out to me like, hey, you want to like hedge, like further diversify your portfolio? I'm like, I'm okay, guys, but like, thank you very much.

Thank you guys for the sound investment advice.

Uh, but, uh, that's huge, right? That, that has been— I don't know, Rob, do you know of other financial institutions like where that's the policy still? Like that they don't— because a lot of the demand for the ETFs has come from like RIAs, right?

Yeah, so a lot of, a lot of RIAs, a lot of wealth managers, a lot of pensions, endowments. Um, you know, I can tell you one of the biggest sovereign wealth funds in the world who is, uh, usually quite conservative, uh, I learned today that they bought billions of dollars of, of actual like spot Bitcoin, not even IBIT, um, over the last 3 months. And that was the first time they've ever bought an alternative asset. Like that. Um, from the financial institution perspective, I— we started to see pretty much everybody can solicit, but not some of the, call it, like, more conservative guys still. Like, they're still working through that. But what I can tell you is that, like, all of those conversations are happening at the board level now. So they're, you know, you might think they're late, but they think they're early because we finally got— okay, we got Genius, and we'll maybe get Clarity or some version of Clarity in the next couple of months. And every— a lot of these people saw Clarity as the goalpost to then turn on the jets and start, you know, pushing these types of products, right? And so that is when I think you really get, you know, kind of the jet fuel going, and you'll see just an acceleration at a pace that is even quicker than what we're seeing right now.

Yeah. Yeah. Anything else from this week that you guys found interesting?

Um, there were the Robinhood earnings if we want to touch that, or we just referenced a tweet that was pretty good.

Oh, hey, what do you guys think of Zora? Have you guys been following Zora at all?

Are you going to pump us your bag? Are you going to show us your bag here? Yeah, I have.

I have. I have Yano coin. I have $99 of Yano coin. We're doing— so we do our disclosures every, every month.

And I'm here to keep you honest on this.

Well, we only have to disclose it if you own $5,000 of it. So I don't actually have to disclose my Yano coin, of which I own $99 of.

I saw you and Mike poking around there.

What's— Mike is, Mike is like super bulled up. I'd say it's the most— the crypto thesis he is most interested in is, by the way, it's not Zora. It's not that it is Zora. It is that the creator— I would— let me try to summarize Mike's thesis. It is that the creator economy is going to grow 100x, let's call it, over the next 10 years. And right now, the way that these people make money is just sponsorships and ads, which is probably the most broken of all the ways to monetize. As someone who makes— runs a business that does make money with sponsorships and ads, it's the, it's the most broken of all the revenue models. And I think Mike's thesis is you have to enable capital markets around these creators. Like these creators are becoming bigger and bigger and bigger and more important to society. And you have to enable different forms of credit, different forms of like alignment. Like you saw Messi when he came to the US, took an equity stake in the soccer team. You saw an artist like a DJ, I think, take— or a musician take out a line of credit against their records. Like these are all kind of like early hints at what capital markets around creators should look like. So I think— I don't think it's that Mike is like gigalong the Zora token. Zora product. I think it's that he's gigalong, like, really bullish on capital markets forming around creators, I would say.

So maybe— listen, I— this is also true of tokenization. So not to be like, you know, a huge bear here, but I've been hearing that thesis for like probably like, you know, 8 years now. And to be fair, I heard about, you know, tokenization of, of, you know, traditional markets back in 2015. And I was at Goldman when we invested in a thing called Axoni, which was a, uh, kind of a high-yield tokenization platform back then. And so it, it did just take some time for, call it, the market structure and the infrastructure of blockchains to get to a place, and for people to get comfortable with the technology, and for people to have clarity from, from the government. It's not clear to me those same issues exist in, like, creator tokens. And it's just my concern there is that there is a need for capital markets, to your point, Jano, but it might just be that like this isn't the best way to provide capital markets for these creators, right? And you don't necessarily need crypto for everything. And so I would just put that out there a little bit because I see these things and we've had so many of them before and they kind of pump and then they come back down and everybody tries to do this like retro, like, oh, what went wrong? And like, we know what went wrong, right? It's not that complicated.

That's a good astute observation, Rob. Look, we've had— go listen to the podcast with Meltem around the creator economy, tokenization of everything. Like, it's again, like that, it's going to happen. What I will tell you is conversations with large artists that have made it will not do it. Taylor Swift, not going to do it. She has bargaining power with Spotify and platforms. The even, even medium to reasonably successful artists, like, do you— it forces the question. You're opening up a whole can of worms when you introduce price into everything that you do. And it works well when things pump. It works terribly when the market goes down, because then all of a sudden you have to respond to that. And I think the financialization of everything likely will happen. But I don't think it is appropriate for certain pockets. While I fundamentally agree with the thesis on paper that creator economy, the value that these platforms are generating is mostly from user-generated content, there is a lopsided, unfair distribution of earnings that creators make, right? But that doesn't necessarily mean that financialization is the answer to that. Now, do these experiments put pressure on these normal platforms of distribution to rejigger the economics? Maybe on the margin, like maybe Medium or maybe Substack change their model because they feel the pressure. I could see that happening. But yeah, I just don't— I don't know if I were an artist with reasonable success, I wouldn't necessarily launch an NFT collection. Maybe I would collectively as an artist industry like go back to Spotify or go back to some of these, you know, event or event ticketing platforms and try to drive a hard bargain. But it's hard, man. I don't know. Prices, financialization works both ways and it can be really detrimental to your reputation and your hard-earned work as an artist.

Yeah, I mean, these things are clearly better and they're products for the people who haven't made it, right? Like, they are not good for the big artists. They're good for the smaller and mid-sized artists who are struggling with ways to monetize and to reach their customers, right? And to broaden that customer base. But also, like, those people have this core set of customers who will find them anywhere. And the, you know, if they end up doing a lot better, like, people will find them. But then when things go badly, right, the people who are kind of on the edge and that price comes down, like, It is, it's negative only, right? And there is like downside only once you've already made it. So the incentive for all of these guys is actually to push for something like this when they're like a mid-size, you know, artist, then to get big and then to try to cut it off and get rid of it. That is the incentive for everybody. And so they're, it's kind of misaligned with, you know, the incentives of the actual token holder themselves or the, their, their, you know, fans.

Yeah. Well, look at like Beeple, for instance, uh, you know, made his name on chain, so to speak, within a small community. And then he ended up selling in Sotheby's and he's paying way higher fees to Sotheby's. But again, distribution wins. And if you have the user relationship, just you command power and whether you want to accept that or not, you know, that's as an artist, but, you know, distribution, you'll pay for distribution and you pay for also the stamp of approval from the institution. I mean, if you're a gallery in West Broadway or West, you know, West Broadway or the best galleries like Gagosian and Sotheby's.

All right. Even in capital markets. So I went to— I like rang the closing bell with Lubin and Dankrad and the S-Bet team on Wednesday. And it's so funny because like New York Stock Exchange, I'm sure you guys have been, it's got the whole floor and stuff like that. Granted, not as many people show up, but NASDAQ, NASDAQ has like nothing. Like there's no— it's just a, it's just a, it's just a room that's like set up as a prop. You would imagine like the Wall Street, like, no, nothing. It's just, it's all marketing and PR. And it, but it's such a good feeling for a company, right, to feel like you're ringing the bell. And it's, um, I don't know, I actually think that there's something that crypto companies can learn from that, like Coinbase or Kraken, like they should, like, there's something about the physical experience. There's something about a Sotheby's auction. There's something about ringing the bell at NASDAQ, like, You know, when someone— I don't know, someone lists on Coinbase or probably— I don't know, there's too many listings, but someone hits like $10 billion market cap. I don't know, Coinbase should like— you should celebrate that in person or you drape the logo on the New York Stock Exchange. There's something very special about that. So I think that's a— we can create better products, but it's hard to take away the value of the institutional stamp of approval. So, Rob, what content are we consuming?

Um, I would say the— I watched Happy Gilmore 2 over the weekend. So as someone who was— I see Santi get very, very upset about that.

I tried to watch it and I just, I punched it. I can't watch a movie anymore. I don't know. My attention span is just—

I will say, I just, it was, you know, very nostalgic for me. You know, I think all of us are in that age group where we grew up with Happy Gilmore and, uh, the— there was something like 70 cameos. There was a lot of, you know, professional golfers. There was a lot of, you know, uh, like Eminem was in it. He ends up getting like eaten by some alligators. Uh, and so I just, I, I, it was nostalgic for me. Okay. It's, I'm not gonna say it's the best movie, but like you wanna feel like a kid again, like every once in a while, like, you know, it was, it was fun.

I'm into that. Be fair.

I, I gotta go watch and finish it. I, I was the first 20 minutes and I was like, I'm over this.

Yeah. What do you have?

Uh, I, I mean, boring as it sounds, I'm rereading Charlie's Almanac. Um, really good. I've been tweeting about it. It's just so good. It's one of those books that every time you can read it 5 times or every year and you'll piece and you'll take away a new learning because you're in a different point in life or you're doing a different project. Uh, it's called Poor Charlie's Almanac.

A classic, obviously.

Honestly, it's such a good book and there's just a lot of gems in there, so I find myself reading that. So yeah, that's really it for me. Nice. You?

I listen to Sam Altman on Theo Von. You guys listen to Theo Von ever? Or you know Theo Von? He's like— No, don't listen. Yeah, I don't listen to him either. I'd never like listened to a Theo Von podcast, but he's blown up. I mean, he's like one of the biggest creators right now, in at least in the US. And I saw Sam Altman on Theo Von, which is very like misaligned, I feel like. And I don't know, I thought it was an interesting episode. What else? I'm rewatching 30 Rock. More importantly, I'm rewatching 30 Rock.

By the way, are you following the whole Cluey thing? The— how— Cluey?

Yeah, yeah. I followed Cluey since like day one. But what's new? What's new with Cluey?

No, just the founder and like, like real-time building it, like how—

Oh yeah, I think that's the future of building. I actually, I like, I, we can hate on it. I don't know how you feel about it, but okay, here, here's, here's an episode. So My First Million did an episode called The Rise of the Cinematic Creator, and it talks about how like Gen Z or whatever the generation after Gen Z is, I forget what that's called. Like let's say like 18 to 22-year-olds right now, They're so good with like short-form video, like so, so, so good. And Santi, if you look at Clue.ly, what they're doing is they're— it's basically a reality TV show built around a startup. So they've got their SaaS product that they're selling, but their marketing and distribution is building a reality TV show using short-form video and in-house influencers, a.k.a. their own employees, to market. They don't do any of the traditional marketing things. They're not spending ads, they're not paying KOLs. It's just they've got employees or influencers, and then they're all so good with short-form video. So there was a line in My First Million in this podcast where Sean, this guy Sean Perry, said, you know, if you go to different countries, they speak different languages. You know, you go to America, they speak English. Then you go to China, they speak Mandarin. The language of the internet is video. It is video. It is video. It is video. And you've got streaming and short-form video. And so I think companies are going to start, need to start figuring out how they lean into that. So that's my takeaway from Clue.ly. They're so good at video. Yeah. Yeah.

I agree with that. Yeah. But, but I will say like, there's from a news perspective and you know, what we talk about, people talk about on the podcast, there's such a focus on, you know, just what is going viral, what is, you know, making, what is funny, like, why are people interested, what type of content. Has existed there, these companies still need to build great products. Right. And what I think often ends up happening is for something like Cluelee, who's selling a product, both a retail product, but I think they're also trying to sell an enterprise product. B2B too. Yeah. Yeah. B2B as well. Right. Like if they don't build a good product, just because they had a great form of distribution, they'll still die. Maybe they'll get somebody at Andreessen to give them $15 million and then they'll just die in the next round. But like, they will, they will still die. And so when you ask me what I think about this, I think it's, it's fun and it's great if they're specifically reaching the audience that they want to sell the product to. It is not clear to me that the Clueless guys are actually reaching the audience that they want to sell the product to. Instead, they're reaching the audience that will make them the most famous. But, uh, it's not— I'm not, I'm not sure that there is actually correlation there between the people that they're actually selling to. And so what I feel is that This is great if you're in the news. And, you know, I think there's the old saying that, like, you know, there's no such thing as bad attention. I don't know if I necessarily agree with that. But, you know, let's see what happens as they actually go and like build a product and see what their sales look like.

Yeah, I agree with that. You know, here, I actually have a really good episode I listened to, which I forgot about, is Invest Like the Best did one with Ramtin Naimi, who is the— who's building Abstract, which is I actually didn't know him or Abstract before this. They're a seed fund. And they've got actually, they almost have $2 billion under management actually already as a seed fund. And just really impressive human being. Like he's got some, actually the first like 30 minutes are all about the art markets. And he's like, collects art as well. Young guy, he's like 34, 35. But that was a really good episode.

So go listen to the, you know, I'm going to plug Founders Podcast. I know you hate Now This Guy, don't you?

No, I like it. I, I just listened to a Founders episode on, um, the guy who created the glasses company.

Yeah, yeah, uh, the, the Luxottica guy, uh, he actually lives in Monaco. But yeah, um, um, no, go listen to the one of David Gagosian, uh, if you want to understand everything in crypto, everything we've talked about on this podcast about attention and memeing things into existence and the signaling he is masterful in how he basically took and, and like, uh, dominated the art market and, and created— like, he would single-handedly make artists famous.

And if you think the NFT market, um, craze was—

go study that and then you'll understand who did it best and who's the absolute GOAT. It's a great episode. So yeah, yeah. Rob, welcome to the official— is this— are we gonna dub this the official one because Vito kind of got in the way and like, shoot, how do we feel about this being like the number one, like July 31st, 2025? I like it, right?

I think that's a perfect one.

Hit all-time high and then we go down only from here.

Yeah, Rob Marks, blame me.

Definitely blame me if that happens. Proper market activity.

Yeah. All right, everyone, thanks for listening.

Um, I was gonna say we have a good episode on Monday. I don't know what's coming. What's on? Oh, we have a great— actually, we're, um, a really interesting episode on Galaxy. Sitting down with Duncan, who is— I forget his Twitter handle— Flood, I think it is. Really good episode on Galaxy stock and like the bull case, the bear case for Galaxy. So listen on Monday. Thanks for listening. Enjoy the weekend. See you, folks. All right.

Take care, guys.