ParaFi's 10 Crypto Predictions for 2030 | Ben Forman & Kevin Yedid-Botton

Bitcoin will reach parity with gold by the year 2030. So if Bitcoin converges to gold parity, that implies a price of roughly $815K. This is the most important technology for capital markets since we moved from analog to electronic.

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Thanks, Jason Yanowitz.

Yeah. Okay. So yeah, of course. Yeah.

Good.

Good to have you guys back. So I went to the ParaFi LP Summit the other day, and Kevin and Ben gave this beautiful presentation on predictions for 2030. And it was a, you know, I think sometimes as the industry, the industry gets so focused on these little micro things, these little things that are, you know, you know, this meme coin moved 10% this day, or what is this election doing to the stock market today? And I think sometimes we don't really zoom out. And so I want to have Ben and Kevin on, on the podcast to do something different, which is share their presentation from the LP Summit. And the presentation is actually not about what's going to happen this year. It's not about what's going to happen next year. It is actually big predictions for the year 2030, right? Predictions for— what is crypto going to look like? And really, what is the world going to look like about 5 years from now? So Ben and Kevin are going to actually share their screen. So if you guys are listening on, you know, Apple or Spotify or wherever you listen to your podcast, I would recommend— we're going to drop a link in the show notes. I would recommend going to watch this on YouTube or Twitter. We can share a link on both of those. Because you'll get a lot more of the context. You'll be able to actually see the slides if you're watching on those places. So Ben and Kevin, I'm going to hand it over to you guys and we can jump in.

Great. Thanks again, Jason Yanowitz. It's a pleasure to be here. Before we jump into these predictions, I'm just going to quickly go over a couple compliance disclaimers. So one is these are predictions. They should be treated as such. All views expressed are subjective, but they are opinions and belief. They're not legal investment or tax advice. Parafi may be invested in some of the themes that we've discussed, and the views that we express here are our personal views. So just with that out of the way, um, uh, we can now jump into it. And excited to run through really like where we see the future of crypto, and I, I think it's You know, to Jason, to your point, like people are very focused on the short term, the micro in crypto. So it's, it's always great to just zoom out and level set on where we see the biggest themes, the biggest verticals, you know, moving 5 years from now. So let's jump into it. We have 10 predictions. Kevin Yanowitz and I are going to volley back and forth and, you know, please interrupt us with any, with any questions.

Beautiful.

Okay, so let's jump into it. So we wanted to start with a, with a Bitcoin price prediction and just really get it out of the way. So our, our first prediction is that Bitcoin will reach parity with gold by the year 2030. So if Bitcoin converges to gold parity, that implies a price of roughly $815K for Bitcoin on a fully diluted basis. And if you kind of think about what that implies in terms of growth rate, it's about, you know, 45% to 50% compounded annual growth in Bitcoin price for the next 5 years. And candidly, you know, it's probably— this is probably a conservative prediction because similar to the way that Uber didn't just get to the TAM of taxi markets, we think that Bitcoin will ultimately get, you many multiples of, of gold's market cap. So let's kind of like walk through our thought process on this prediction. And we think the best way to really think about, uh, you know, Bitcoin and gold is really from a first principles perspective. So when you think about just the underlying traits of money, right— divisibility, portability, um, ease of transactability, fungibility, We believe that Bitcoin is just a better first principles technology and skin for money than, than gold is. And look, gold has had a great run. It's for 5,000 years. Gold has been a, for a decentralized form of value storage. It's compounded at 7 to 8% since Bretton Woods in 1971 when we went off the gold standard. But from first principles, we think Bitcoin is better than gold on everything, probably except for two things. So one is volatility. Bitcoin is still more volatile, and as well as operating history. Bitcoin's been around for 15 years. Gold's been around for 5,000 years. But most importantly, I think the single property that I think is most powerful with Bitcoin is that— is its scarcity. So there's a hard cap supply of Bitcoin and there's not a hard cap supply of gold. When we then compare Bitcoin in this third column here to the dollar, I think, you know, one could argue the dollar is better as a medium of exchange across almost every property than Bitcoin is today. But the reality is, in our view, is that, you know, Bitcoin is not really competing with the dollar You know, you already have Venmo, which has, you know, doesn't have 10-minute block times. You have stablecoins as an industry that are kind of wrapping dollars. But the— but it is a much better— Bitcoin is a much better, in our view, store of value. And this chart here is really kind of the crux of that point, which is supply-side curves. So if you look at Bitcoin, you know, currently 94% of all Bitcoin is in circulation. The remaining 6% will be released over the next 115 years. In the current halving cycle, the annualized inflation rate is roughly 0.9%. And you kind of compare that to the M2 money supply in the US, and it's grown 4.5x since 2000. So one of these supply-side curves is concave— that's Bitcoin— and the other one is convex. In terms of the US money supply. And so what I find to be like the most powerful property of Bitcoin is just that it has a completely perfectly inelastic supply curve. So it's one of the only commodities in the world where regardless of where price goes, you still get the same exact annual supply increase. And that doesn't hold for gold, that doesn't hold for oil, that doesn't hold for any commodity. And that, I think that mathematical reliability incredibly powerful. Um, this kind of very much feeds into, um, the— what's going on in, uh, with the U.S. fiscal and monetary deficits. So this slide here shows the U.S. debt to GDP, the evolution of it over time, and today we're at 120% debt to GDP. Um, currently the U.S., on its $36 trillion of federal debt, pays $1.2 trillion a year in interest. And we'll see how effective Elon and Vivek are with their cost-cutting initiatives. But I think the reality is that it will be very difficult, just with our debt servicing costs, for the US to run a surplus. And Bitcoin is the escape valve for that. And Bitcoin— And by the way, you show this chart, debt to GDP, for the vast majority of governments and countries globally, and it actually looks even uglier than this. From a supply-side perspective, this is a chart here that shows Bitcoin's on-chain velocity, or kind of what people refer to as HODL waves. And the kind of key message here is that Bitcoin is, is there's a diminishing supply of Bitcoin that sits on exchanges globally, and that is in the free float. 34% of Bitcoin has moved within the past year, but the other 66% has not. And an increasing percentage of Bitcoin, 31% of Bitcoin has not moved in the past 5 years. So back in— okay, so how does this kind of tie into price? So why are we reaching this price prediction? Well, back in 2017, you know, when I was at KKR, I put together this kind of sum of the parts valuation framework for Bitcoin. And I said, okay, like, let's look at store of value markets, let's look at medium of exchange, let's look at kind of like financialization of assets. And I ran, I ran kind of like very back of the envelope math. And I got to a price of $450K to $1 million per per Bitcoin. I think this analysis was in many ways like the wrong framework, or the framework has evolved, but the actual kind of price may end up kind of coming to fruition. So I wanted to like rerun this analysis today, looking kind of strictly at Bitcoin as a store of value asset. So this doesn't reflect, you know, Bitcoin Layer 2s or Bitcoin shared security or Ordinals, Runes, any kind of NFT activity. This is Bitcoin as a finished product. As you know, there's no technology risk. It's just Bitcoin and it doesn't have to change. And if we say, okay, Bitcoin gets to gold parity, that's $815K. So that would reflect roughly 10x increase from today's prices. If you got to gold parity plus M2 parity, you know, you're at roughly $1.8 million per Bitcoin. That's 21x upside from today's level. And then if you kind of want to dream the dream and look at kind of global M2, um, and believe that Bitcoin will start cannibalizing other, you know, non-dollar related currencies, you're looking at roughly $6.1 million per Bitcoin. And, um, look, I, I think like I'll kind of end this prediction with this chart, which is this: we're undergoing the biggest demographic shift that we've seen vis-à-vis wealth transfer. Inflation adjusted, the boomers in the US are passing $38 trillion of wealth to millennials and Gen Z over the next 20 years. And Millennials and Gen Z, two-thirds of millennials and Gen Z prefer Bitcoin to gold, and, uh, about 33% prefer Bitcoin and crypto to stocks. Um, and so this will be a multi-decade kind of secular demand tailwind that we, that we think is going to, you know, inform and very much help like our, our industry. So, okay, that's prediction number 1. And, you know, Kevin, I'll pass it to you for the next one.

Yeah. So for the second prediction, let's talk about stablecoins. And our prediction is that stablecoin supply will reach 10% of M2 money supply in the US. So let's see kind of where the numbers stand. So today, M2 stands around $21 trillion, which we kind of show in the dark green chart. And then stablecoin supply sits around $171 billion. And they've actually gone up a little bit since we plotted this. But what you can see is that basically these two supply charts have moved basically in tandem with one another for the past 4 to 6 years. And, um, Currently, the stablecoin supply is only 80 basis points of the total M2 money supply. So you basically need a 12x increase in stablecoin growth to reach our 10% prediction. So how are we going to get there? And by the way, one thing to note is that when ParaFi started, one of the first things that we kind of looked at was stablecoins. And stablecoins have been this relentless both secular and macro trend in crypto, where whether it's through fintech adoption or macro adoption, they've continued to grow, which is— some people kind of like went out and said, when interest rates rise in the traditional economy, people are going to dump stablecoins. They're not going to hold stablecoins because they can earn yield in the traditional economy. That has not happened. In fact, the contrary has happened. We've seen continued growth. In stablecoin supply. So let's talk about the forces that are actually going to get us there. Let's start with the first one. So this key kind of like first force is stablecoins as new and as an evolution of the payment rails across the world, whether it's for global finance, whether it's for fintech or commerce. To give you a few examples, in fact, there was one very recent one I want to call out. Which is Tether financing 670,000 barrels of oil, roughly $45 million worth of oil between a very sophisticated commodity company and a very sophisticated trader. This is something that would typically be settled either in dollars or some other currency. But this time it actually settled with a stablecoin in a tradition, a completely kind of commodity traditional market. And what that tells you is that market participants across global finance want to move money faster and settle it cheaper. In the traditional analog, this would have actually taken— cost more money and taken a long time, and time is money. So now that people are being accustomed to seeing that stablecoins can move 24/7, 365, they're asking themselves, why can't I move the rest of my operations at that same speed? And by the way, we've actually asked a couple OTC desks in crypto what percentage of their OTC trades are settled in stablecoins. And depending on whether they're very crypto native or more tradfi, their answers have ranged anywhere between 3/4 of trades settled in stablecoins to about a third. So that's actually quite amazing that the major trades, when people are trading Bitcoin, ETH, etc., the majors are settling in stablecoins. The second thing is really fintech. So for the first— no, stay on the slide. So with fintech, what you're really seeing is that for the first time ever, you really have financial technology companies being able to build directly into a software-native platform. So you're not integrating with legacy payment providers that have paywalls or are naturally talking about like different APIs. By running a full fintech stack solution on top of the blockchain, you have a composability across the whole financial stack. And that is very powerful because not only does it create a better user experience for people to do micropayments and transact quicker, but it actually creates a whole new business model for fintech companies where they are able to earn yield under underlying reserves that back those stablecoins. And that's something that you previously hadn't seen. And of course, you have like the normal things for like you want to pay for your coffee with stablecoins, and that slowly but surely is seeing more adoption from the major fintech providers, whether it's PayPal, Venmo, etc., to have this everyday transaction. So that's the first force, which is just an overall stablecoin evolution of payment rails. The second force is the store of value force. So this is not a store of value from fiat debasement, that's what Bitcoin's for, like Ben just talked about. But this is store of value against the inflationary pressures that have emerged across many emerging market currencies, and as a way to really protect the purchasing power of the USD. Like, we complain as Americans that we have 120% debt-to-GDP ratio, but in most of the world, you know, inflation is much more rampant than in the US. So the question is, what are those countries, those emerging countries, actually doing to protect their savings if they don't want to go out and buy Bitcoin, which could be volatile or so on? So they're buying stablecoins. This is a map of the world. And what you can see is a few hotspots on the first— on the left-hand chart. You see, obviously, the US being a top market. But if you kind of just kind of work your way down the map, you see Argentina and Brazil, which have, you know, suffered from inflation-ravaged economies for the past several years. And one anecdote, by the way, is that when we were trading stablecoins, we noticed that one of the regions, some of the exchanges that always had a premium to their stablecoins— so people know that stablecoins are worth $1, but they may not always trade at $1— what we saw is that there was a consistent premium in Brazil from people bidding, willing to bid 5% plus above par to escape the inflation that they were experiencing in their local currencies. So, and of course, this is kind of, you know, I like to say that like inflation-ravaged economies are stablecoins' best friend, because they're driving massive global adoption of stablecoins. And I'm sure some of you that are on Twitter may have seen this, right-hand side chart, which shows the activity of USDT, so Tether, on the Tron network, mapped to Nigeria time zone. And of course, Nigeria intersects other time zones. But what's particularly here is that, which actually, when I kind of looked this up, I kind of struggled to believe it, but 60% of Tether supply actually sits on the Tron network. That's like an astonishing amount. We're talking about $60+ billion roughly of supply that sits on the Tron network. And the question is why? And when you kind of really dig into it, it's because you have all these emerging economies that all they care about is super cheap transaction costs. And I mean, like, super cheap, like almost basically free. So, it's no coincidence that you have a lot of emerging countries adopting payment rails through blockchains like Tron, for their thing. So let's go to the next slide to talk about kind of like what's really the data behind these two forces. Since, well, what I would say is this, for our prediction to become true, we basically need a 50% CAGR over the next 6 years to reach $2.1 trillion. Okay, that would be 10% of M2. And if you were to ask anyone in another industry whether 50% CAGR is high, they would typically say it's, you know, astronomical number. But in crypto, that's not necessarily the case. And let me tell you why. Since 2020, the stablecoin supply growth has actually grown at a CAGR of 115% year over year. So stablecoin growth has just grown 150% CAGR for the past 4 years. Stablecoin holders have grown at an even higher CAGR of 180%. So you only need about less than half of that growth rate to get us to our prediction for the next 6 years. And what's really interesting, though, is that when you look at the number of people that hold crypto, which is around 560 million, so around 7% of the world population hold crypto. Stablecoin holders are only around 2% of the stable— of the global population. So 120 million versus 560 million. When we looked at the average balance of the stablecoin holders, it's around $10. That's the average value of stablecoins in people's accounts. So if everyone that holds crypto would hold— if everyone that holds crypto would hold stablecoins, you would actually have a much higher number of stablecoin holders, and then you would actually only need half the amount of— you would only need around $5 to reach our supply because, you know, $5 times 560 would put you above $2.1 trillion. So it's actually not that out of— kind of like, it's not that out of reach. And for that reason, we actually think that stablecoins are not just going to meet the 10% of M2. We actually think they're going to blow past it, potentially settling around 20 to 25% of M2.

So the third prediction—

before, before moving on to that, Kevin, I've got like one or two questions for you on this. So right now, Tether, I think there's roughly like $170 or $180 billion total supply of stablecoins. Tether is roughly like— let's call— I'm going to, you know, maybe botch these numbers a little bit, but Tether is roughly $130 billion of that. USDC is roughly, you know, $35 to $40 billion of that. And then there's a few small other ones. So one question is on like what this makeup will look like, USDC versus Tether versus maybe something else. And then the other question is, you know, ETH makes up about 50% of, you know, of the stablecoin settlement. Tron is roughly the other, you know, 40 to 50%. And then like, you know, Solana, Binance Smart Chain are like, you know, a couple percentages each. What is your thoughts on like, what are your thoughts on USDC versus Tether and then ETH versus Tron versus other stable settlement networks.

Yeah, stablecoins have gone through a very interesting journey. When, when we started paying attention to stablecoins back in 2018, we, you know, there was Tether, there was USDC, which was very, very small back then. And there was obviously DAI, DAI being this like crypto collateralized MakerDAO stablecoin. And we kind of started from like that small cohort of, let's say, like a handful of stablecoins. We went into the 2020, 2021 DeFi summer. You saw this massive explosion of the number of stablecoins that kind of came to market, algorithmic stablecoins, crypto-collateralized stablecoins, fiat-backed stablecoins, in some cases euro stablecoins. And then, you know, everything kind of came crashing down after the Terra Luna collapse and the FTX collapse. We saw a handful of stablecoins grow to dozens of stablecoins, and we're back down to like a couple stablecoins. And, um, in my, in my opinion, what the market tells you is two things. One is that, um, is, is that first of all, uh, the market has clearly placed, uh, very strong emphasis on resilience of stablecoins. So people don't necessarily want to be holding a stablecoin that has low flow, low supply, and maybe like it's banked kind of like in some shady way because, you know, it doesn't inspire trust that you kind of need for the adoption of things. I mean, Tether suffered for this for a long time where there was a lot of speculation whether they were insolvent or not solvent. But over the years, as you've seen those rumors kind of be put to rest, you saw, you continue to see Tether stablecoin supply growth. So it's very, very difficult, in my opinion, nowadays for a completely kind of like de novo stablecoin to be able to outpace the stablecoin supply growth that you've seen in USDC and Tether. It doesn't mean that it can't happen, but you need a— it certainly can't just be another dollar stablecoin. We saw, for example, with the Gemini dollar, They had a New York Financial Department of Services regulated stablecoin that has struggled to grow despite having, you know, every rail to succeed. And the reason is because at the end of the day, people have not necessarily seen the need to adopt stablecoins that they can't have the same liquidity like in other rails. Like if I'm holding GUSD, and I call an OTC desk and say, hey, can you settle a Bitcoin trade on this? They may say, hey, no, I only care about settling in Tether or USDC. So it's a classic saying of liquidity begets liquidity when it comes to stablecoins. And for that reason, you know, I think we're going to be having— the odds that we have fewer stablecoins versus a large number of stablecoins, I think, is much higher than we have just a handful of them versus more.

Yeah. Like, just to add to Kevin, look, like, I think there's an incredible amount of path dependency in crypto. If the world started from scratch today, like, I don't think Tether would be the largest stablecoin, but that doesn't matter, right? Like, the best designed product doesn't necessarily win. So on like one end of the spectrum, like, we have a stablecoin monopoly, and on the other end of the spectrum, we have like this heterogeneous, like fragmented stablecoin world, I think we end up much closer to the monopolistic world. Like today it's basically a duopolistic environment. And for that reason, I'm personally kind of fairly bearish on, you know, PYUSD or some of the competitors, and they have not gained meaningful traction. So, you know, I would echo kind of what, what Kevin said. This is a network effects technology and product.

So yeah, the big question, and we know we've looked at stablecoins a lot, like what, what do you, what, what do you gain by holding another stablecoin? And, and, and, and the answer is like really not, not much. Like they kind of function similarly, they're integrated to the similar platforms. But even when you kind of do a look-through of where they're custodied, like the actual dollars backing those, there is fairly high concentration in like a handful of banks. And people kind of got the wake-up call when Signature and Silvergate kind of blew up, where people were like, oh, all this stablecoin concentration is actually in a couple of banks. And even though you would have expected that to spark more diversification for stablecoins, it didn't really— it helped Tether significantly, by the way. Like, in the day that Signature was blowing up, the spread between Tether and USDC was like 20%. OK, like people were just bidding Tether, this proverbial stablecoin that was going to always blow up, and the safest stablecoin, USDC, was trading at like a 10% discount. So, you know, you kind of have seen this, this, this, this, this risk appetite to just be concentrated in a couple stablecoins versus being diversified because it doesn't, doesn't offer much at the end of the day.

Cool. All right, let's go on to number 3. Thanks, guys.

Okay, so prediction number 3. Our third prediction is that tokenized real-world assets will exceed the value of all digital assets. So this is another way of saying that things other than stablecoins, so tokenized stocks, bonds, currencies, commodities, will exceed, you know, crypto market cap as we view it today when we add up Bitcoin, ETH, and altcoins. Okay, so I like to kind of like ground this prediction in the why, like why are tokenized real-world assets relevant? And you really have to understand our financial system and how it's evolved. So this is This is one of my favorite charts. It shows financial services as a percentage of global GDP. And post-World War II, financial services as an industry was 1.5% of global GDP. Today, financial services is 5% of GDP. So what kind of this chart says is that in real terms, in inflation-adjusted terms, the financial services industry has grown 3x. It's effectively, its aggregate profits are 3x higher. And I think this matters because like finance as an industry is not a productive industry. It's just meant to provide, to be a lubricant to other industries, to move money, to have open capital markets, and so on. And so this chart implies that the financial services sector is extracting meaningfully more rent. And, you know, notwithstanding this chart, like, I don't think anyone feels that finance has gotten 3x better, right? We still don't have, you know, an Amazon-like experience for finance. Um, we, you know, despite all the innovation on the internet, you know, I can order Uber Eats, it shows up at my door, food shows up at my door, you know, 15 minutes later, you know, it's still very difficult to send money, receive money. Get a mortgage, pay your taxes, send money back home. The financial services system does not work very well. And the other thing we've observed here is just entropy. So think about the past, like, 5 years in finance. You've had 2 of the 3 largest bank failures in U.S. history. You've had platform blowups like what you saw with nickel trading getting halted on the LME or Robinhood restricting trading in GameStop. Um, you've had, you know, single, like, dark pool, uh, trades, like with Archegos, kind of like send ripples through the financial system. You know, the bank— the, the financial markets today are chaotic, uh, and opaque, uh, and I think we can agree they don't really function or work very well. Um, and certainly, uh they only serve a very small percentage of the global population. There has been a lot of innovation in fintech, and we're big investors in fintech, but the reality is, is most fintech companies are not zero-to-one innovation. They're creating a glossy kind of digital front end on top of the same opaque, slow, you know, backend that we've been using for the past 50 years in SWIFT. So the question is, and really the answer to this in our view is, is this idea of kind of tokenizing real-world assets and moving them off SWIFT, off DTCC, to a whole new set of rails. And we've seen over the past year, this concept, which we've seen with stablecoins as a starting point, move and spill over into the broader asset stack. So just in the past year, We've seen tokenized real-world assets, you know, this chart's a bit stale at this point, they've almost doubled year-to-date, we're almost at $15 billion of tokenized real-world assets. So our mental model and framework for why an asset should be tokenized comes down to several points. It's, you know, the transferability, one, you know, when you have a tokenized asset, you have atomic settlement, so you don't have T+2, or in the case of some assets, T+30. You have sovereignty, so you can hold assets directly instead of through intermediaries or broker-dealers or custodians. You have efficiency and auditability. So all the fund administration functions can get streamlined. And actually, ParaFi, you know, we're kind of eating our own dog food in this, in the sense that we've tokenized a sleeve of our latest venture fund to really appreciate and use the value of this technology. But you also have like kind of the micropayments that are enabled here that you just don't have in kind of the traditional system. You have composability. So all these assets now, being on a kind of uniform shared ledger, can all speak to one another. And it's not just financial assets, but it's your the title to your vehicle, it's, you know, your, your, you know, the mortgage on your home, it's can be, you know, airline points, it can be your university diploma, like things that we don't traditionally think about as assets can get tokenized. So they're all being on the same ledger is incredibly powerful. And then there's a kind of the programmability of these assets. So we think about, you know, we call kind of PDFs dumb contracts, and then what you have on Ethereum are smart contracts. So You know, many of the world's assets are just encoded in PDFs. And the beauty of tokenization is that when you have assets on a blockchain, you can program logic into the actual asset itself. This reduces the need for lawyers, for administrators, for trustees, and it also opens up a whole host of other you know, AI agent use cases where micropayments can be enabled. So, you know, we could talk about the slide for, you know, an hour, but I think that the crux of it is this just makes more sense. And now the data is starting to follow. And, you know, here, you know, you can see like it's BlackRock, Franklin Templeton, the California DMV, Hamilton Lane, KKR. Everyone is starting to really embrace and use this technology. And, you know, we look at, um, you know, Larry Fink at BlackRock is kind of like a great example of kind of waking up to this. So here are a couple— I mean, uh, back in 2017, he said that, um, you know, in that Bitcoin was an index of money laundering, and he didn't really get past Bitcoin in his analysis of, of the digital asset space. He kind of started and stopped there. Um, but today, um, he kind of calls himself a proud skeptic, and now he comes away saying that this is the most important technology for capital markets since we moved from analog to electronic, um, in the 1970s and '80s. So now, you know, BlackRock has the largest Bitcoin spot ETF, the largest Ethereum spot ETF, the largest tokenized treasury ETF. They're investors in Securitize. This has all happened in the past year, um, and so now you're just seeing this groundswell of activity. In the financial services space. You've also seen it kind of in the long tail of assets. So, you know, tokenized Pokémon cards, tokenized luxury watches, tokenized YouTube royalty streams for creators. You're seeing kind of the longer tail of assets that don't have traditional capital markets coverage start to move on-chain. And there's quite a bit of traction here. Where I actually think similar to the way that China kind of went straight to mobile payments and leapfrogged kind of the legacy payment infrastructure, you're going to see a lot of these long-tail assets just move on-chain. They're never going to be supported by the banks and traditional capital markets. They'll move right on-chain. And what we're looking for, because this is a network effects technology, is which of these subcategories are going to get to that critical penetration rate where if you want to participate in the asset class, you need to be on-chain by default. Like, you're, you know, if you want to participate, well, you, you have to own these assets, uh, in a tokenized format. So, you know, our view here is like, this is, this is a chart we often reference, which is, you know, when will this, when will this play out, right? Because people have been talking about tokenization since the, you know, 2017 ICO era where people were tokenizing, you know, dorms in Charleston, South Carolina. And there was all— all those projects kind of ultimately failed. There wasn't liquidity. So the big question is when. And this is a chart that shows different technology adoption curves in society over the past kind of century. And, um, there are kind of two big takeaways here. So the first is that today technologies are being adopted more quickly than ever before. So kind of the slope of the curve is much steeper. Um, and the second takeaway is that technologies that didn't require hardware rollouts, um, that just are kind of software-based, can get adopted much more quickly by society. So if you look at you know, electricity or the automobile, those took a while because they were constrained by the laws of physics and, you know, physical materials. Whereas if you look at social media, you know, that was adopted much more rapidly. So we kind of think we're at the point of kind of takeoff in the real-world asset tokenization world, and we're gonna see a lot of meaningful growth over the rest of this decade. Nice.

Thanks, Ben.

All right, should we jump into number 4?

Yeah, I've been waiting for this one— prediction markets.

Okay, this one is exciting. Um, so this prediction markets, you know, we believe are going to disrupt traditional media and become the main— the first mainstream consumer application on blockchains. In some ways, this prediction's already played out, um, with what we've seen over the past month, but I think prediction markets are going to grow meaningfully every year for the rest of the decade. It's not just a once every 4-year phenomenon. Okay, so let's just kind of level set. I think most people know what prediction markets are, but, um, or have heard of them this year. But, you know, Polymarket was the number 1 app in the iOS store in news, ahead of CNN, ahead of New York Times. Um, it was one of the top apps in the world. I think it hit number 1 in the entire iOS app store on election day. It had over 30 million visitors to its front end, polymarket.com, in the month of October, which is about 80% of Coinbase.com's website traffic. It's been discussed and referenced in The Wall Street Journal, in The New York Times, tweeted about by Elon, retweeted by Trump. It's kind of hit this mainstream hysteria and One of the fascinating things, like when I talk to my friends outside of crypto, is many reference Polymarket and just have no idea that it's a crypto product. Because actually, for many people, for some people think about Polymarket as like a trading application and betting application. But the vast majority of people think about Polymarket as actually just a news source. So that's very exciting. I think when we think about these prediction markets, and just very high level, these are markets that resolve to 0 or 1 based on whether an event occurs. They can be very, very valuable sources of information. Back before people were focused on polymarket and prediction markets, we were looking at this market that we're showing here, the odds of Biden dropping out of the presidential election. And this was pre the debate with Trump that didn't go well. This was back in late 2023, early 2024. The market on Polymarket was pricing Biden at a 20 to 30% probability to drop out of the race. And this was at a time when he was the presumptive candidate. The Democrats weren't running kind of an open, open market primary. And so this just kind of shows that you know, the market was kind of more accurately discounting the probability of him dropping out. Then what happened is during the debate, this market started to move in real time. And what was fascinating here is this was a direct referendum during the debate on who was winning the debate. And so instead of listening to kind of the talking heads on CNN pontificate about who won, who lost, or on Fox pontificate about who won, who lost, You can just reference markets, and they're a higher fidelity, in my opinion, source of truth relative to, you know, what any single expert says, because there's actual money on the line. Another great use case for these prediction markets is the latency of information. So we go back to kind of the July 13th Trump assassination attempt. This is a chart where we show a time series of Trump's odds to win the Republican nomination, and it was trading at 99.5 cents. So it was, you know, because he was, you know, he had effectively won. He was the presumptive candidate. Shots were fired at the Trump rally at 6:11 PM Eastern Time on July 13th. Before any meaningful account on X tweeted about what was going on, Polymarket moved. Before any mainstream media outlet, you know, tweeted about it, was covering it, Polymarket immediately moved. And you can see here the market corrected down to roughly $0.97 on the dollar. Over the next, call it, hour, the media outlets started to report on it. People were talking about it on Twitter. But Polymarket adjusted before all of those sources. The other really interesting thing here is before, when during a period of time where people did not know, would Trump be okay? What was his— well, what kind of— would he still be the candidate? Was he dead? No one really knew. And Polymarket provided very valuable information that in fact, you know, he appeared to be okay. It never dipped below 97%. And then the last, the last chart here, we show Trump's versus Kamala's odds to win the election during Election Day itself. And what you can see here is like throughout the actual Election Day when the polls were open, the odds didn't really move. But then as the polls started to close, as major news networks started to cover the results of the election, Polly Market odds adjusted well before, you know, the main— the mainstream media outlets. I think that's a function of the mainstream media outlets want to drive ratings, may want to make the race seem closer than it actually is. So, you know, Trump was already trading at 96, 97 cents, um, you know, uh, by, you know, by midnight, um, when the race still wasn't called. So again, very valuable, high-fidelity information. And look, volume has exploded this year. And, you know, we've seen $3 billion of volume on Polymarket over the last month. We've seen roughly 300,000 active wallets on the platform. And notably, these numbers are not materially off in the post-election period. They're off slightly, but not, not materially. This technology of prediction markets isn't just about politics. It extends to sports, it extends to science, it extends to, you know, culture markets. Um, you know, there are markets on whether different venture-backed companies will still be in business at over a certain period of time. So you can think about this as like almost like an insurance marketplace, and One of the fascinating things here, just to close out this prediction, is that we actually think that AI agents are going to be the largest participants on Polymarket over the next couple of years. Because, you know, if you have, as an example, a weather market— how much will the Earth's temperature warm in 2025? No one can really compete with an AI agent that's reading, you know, meteorology publications, taking in alternative data from weather APIs globally and using its natural language processing ability to make markets in real time on Polymarket. So I think AI will compete with AI to make very accurate markets on Polymarket, and that will be a very valuable source of information for, for humanity that we can use. So this is very exciting for us. And just full disclosure, Parify is we're the largest investor in Polymarket, but we've, you know, we've been invested since 2020, but we're huge believers in this, in this category.

Ben, how do you think about— maybe two-part question here. You know, Robinhood recently launched Polymarket prediction markets. There's Kalshi. I've probably seen more pitches this year for like new prediction markets than like any other application in crypto. So I'm curious how you think about that. I'm also curious how you think about the relationship between media and prediction markets. Like right now they seem very antagonistic towards each other. You know, Shane is tweeting like, we are the new media. I've always seen it, you know, and I've talked to Shane about this, like less like, you know, one versus the other. It's more like I think they can be very symbiotic towards each other. But I, you know, I'm super biased as a media operator here. So I'm curious how you think about those two questions.

Yeah, so on the first question, I think that decentralized prediction markets have a very tangible advantage over centralized prediction markets like Kalshi because they're global, they're 24/7, all the betting activity on them is transparent, so you can see, you know, exactly what wallet behavior looks like. And actually, one of the observations we have is there were, there there are actually more people, more wallets that owned Kamala shares, but they were smaller size, fewer but larger wallets that had bet on Trump. You can see the cost basis of every participant. Again, they're 24/7, they're global. Kalshi, you can only deposit money on Kalshi during the 35 hours a week that banks are open, right? So they're kind of constrained by banking rails in a sense, right? So I just don't think there's any competition at the end of the day. When all is said and done, um, I think that, uh, you know, these will be— your decentralized prediction markets will end up being much, much bigger. Um, I think the disadvantage is obviously kind of there's blockchains are still difficult to use. You have to bridge assets to Polygon. The UX is not super intuitive. So there is a bit of a trade-off. Um, but look, like PolyMarket's volume was 20x Kalshi's. Um, over the past month. So we'll see how that evolves. But I'm kind of, you know, I'm, I believe this is like a use case that just makes a ton of sense on-chain versus off-chain. And then on your second question, look, I think that like media will start, you know, referencing and embracing kind of the data from Polymarket and incorporating it into their stories and analysis. You know, Bloomberg is now you can access Polymarket data on a Bloomberg terminal. Um, you know, I think Polymarket will get— the Polymarket data and probability will get discussed and debated more, um, on air. Uh, but, um, I think there is a bit of like an innovator's dilemma here. So, uh, you know, whereas like previously the media was the thought of as the source of truth, um, this is a direct threat to you know, that kind of position and credibility. And so, um, you know, I think it's going to be interesting to see how that, how that evolves over time. Maybe the whole nature, fundamental nature of what media and news is may, may evolve and change.

Yeah, I'll add a couple things, which is, um, throughout, throughout this whole election cycle, um, people, you know, prediction markets like Polymarket are actually fairly novel. People say, oh, I used to use prediction markets, uh, for the last election and 2016 election, but those are just incorrect statements because they failed to understand that when they were using those like trading sites, those odds were set by bookies, by centralized bookies, like small number of participants that were deciding the likelihood or probability of something. Prediction markets are, are, are competitive, they're global, and information is, is priced much, much better. And Vitalik actually published this article not too long ago, earlier this month, that he's kind of creating this category as like a derivative of prediction markets called info finance. And this idea that you're going to see all these novel markets, but not about what prices do like a typical financial market, but about the likelihood of certain events, whether it's government, politics, science, you name it, like weather, et cetera, et cetera. And that was going to come up a whole new asset class for what's called info finance that are proxies, financial instruments that are proxies to conveying information from a news standpoint. The second thing that I would say is, Throughout this whole cycle, I mean, you saw there was just constant demonizing from traditional media against prediction markets. Oh, prediction markets are manipulated. They are skewing the odds in Trump's favor. They're skewing the odds in Kamala's favor. And there was this whole misunderstanding about what a prediction market is. And ultimately, a prediction market is just a market— if you believe that prediction markets are efficient, and that they are globally accessible, that people have the ability to express and price information in real time, then logically, you have to kind of have the view that these markets are efficient at pricing that information. If Polymarket was segregated and only accessible to like a very small number of participants in a specific region in the world, maybe you could say, hey, that they're actually not very efficient because they have biases or they're not competitive or like the SKUs are off. But what was really interesting is that when you saw Kalshi launch and IBKR Forecast Trader launch and Robinhood launch, and all of a sudden all these markets that had different populations and different customer segments were all pricing very similar odds, you kind of got rid of that excuse of like, polymarket cannot be possibly manipulated. If every other market is being, is being showing very similar odds. And people were like, oh, well, there's like a 2% spread. And sometimes there was like a technical nuance on like how easy it was to get money in or the exact description of the contract, whether one was expiring on November 5th or on inauguration. So I, you know, I second Ben's views. I think these markets are going to be absolutely massive. The biggest barrier, in my opinion, and we've looked into this a lot because I think there's a lot of actually amazing opportunities from an alpha generation standpoint, is, is how easy is it to move money into this market? I think Polymarket, despite being the most liquid and have the best liquidity and most volume, it's still for the average user incredibly difficult to use. So I'm excited to kind of see how those UXs become even more invisible to use. Because one very interesting thing is Polymarket was the number one news app, but Kalshi was like top 10 finance app. And the question is like, why was one a news and why was the other not— what was the other finance? Is because you couldn't actually trade through Polymarket's app. And put aside the fact that there's US people that are restricted from trading, just a normal user with an iPhone couldn't actually trade through the Polymarket app because the, the UX was not quite integrated. So I'm actually very excited to get to the point where you are able to trade and fund Polymarket, um, um, just in the same way that you would fund Kalki or Robinhood or Interactive Brokers.

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Prediction number 5 is all about AI. And it's— our prediction is that AI will comprise 90% of on-chain activity by dollar value by 2030. So let's kind of like frame that for a second. ChatGPT launched its, you know, kind of like novel model, LLM, in late 2022. Since then, we've really kind of been witnessing one of like the greatest technological and economic transformations of our time through AI. And so this month, for example, if you're like an iPhone user, you now have, you know, Apple Intelligence in your pocket. And by the way, that's going to integrate with ChatGPT. So it's really kind of like expanding the reach of this type of LLM tools and chatbots to most people. And like, I think the average person doesn't really know what even a chatbot is. They've heard about it, but very few people are power users of it. So let's talk about really how crypto is playing a role in the AI revolution. The first thing is infrastructure, and I'll talk about this in a second. The first thing is infrastructure, which is Bitcoin miners are really kind of beginning to repurpose their energy and power data centers for AI capacity and training. You're seeing that a number of across a number of publicly traded Bitcoin miners. But the thing that I really want to talk about in this section is AI on-chain. And I'm talking about AI systems like large language models that are integrating directly with blockchains. And just to clarify something, I'm not talking about training AIs on-chain. You know, I think we saw that in like 2019, 2020 of like the decentralized AI or things like that. Like, this is not our thesis. Our thesis is simply that we're going to see an increasing amount of these intelligent agents active on this block— across blockchains, and consuming a majority of the block space. And so, why do we think so? So, the first thing that I want to clarify is this distinction between bots and AI agents. Obviously, we know there's bots in crypto. We've known them, you know, from many, many, many years ago. It's not unusual to see a liquidator bot or a trading bot or some other bot doing things on-chain. But the main difference between a bot and an AI agent, as we're framing this prediction, is a bot is just a piece of software logic, of business logic. It has classic if-then conditional logic, is deterministic, and it kind of does things like a traditional program. An AI agent obviously has some business logic because it needs to know what it's doing. But at its core, at its nucleus, we have an LLM. And this LLM is able to understand and interpret the language of smart contracts. And one breakthrough that is particularly interesting of LLMs is that they were actually made to interpret written language. They're not like, they're tokenizing words. And loosely typed languages like Python are actually great methods for them to write code. So you've actually seen chatbots have amazing abilities for code writing because they're tokenizing the language. So the key breakthrough here is that you now have this compute substrate where AI can integrate directly with this substrate that's blockchain for computing. And it can do many things. So you're not dealing with, you're not dealing with down websites or authentication pages like you typically would run into in the traditional Web2 world. Like if you're building a chatbot in Web2 world and you try to do an action, you're gonna run into paywalls, you're gonna run into authentication processes, you're going to run into like servers that maybe don't integrate with your software drivers in the way that you want to, and so on and so forth. In crypto, that's not really the case. It's a permissionless and global compute substrate. So these agents are really kind of like meant to run wild. And if you've been following Twitter, I'm sure some of you have, you have seen like this Truth Terminal type of like, you know, sophisticated bot agent. And again, query whether that's actually a person or or an AI, but you've seen this kind of experiments that you have these AI agents kind of just running wild doing financial experiments that are beyond people's imagination. So let's talk about kind of concretely what's happening on AI coming on-chain. There are 3 kind of things. The first is that, you know, you've seen examples of AIs paying other AIs with crypto. You're, you're having, for example, VanEck say that crypto AI revenue by 2030 is actually going to exceed $10 billion in annual revenue from on-chain. And one of my favorite ones is actually Bernstein saying that digital asset micropayments, like traditional digital asset micropayments, are going to unlock AI adoption. And then like when I first read this, I was like, what's the connection between digital asset micropayments and AI. But then it comes back to the topic of you actually cannot have high-frequency micropayments unless you have systematic ways of doing that through AI. And you can't necessarily do that in the traditional finance world if you're having the limitations that I, that I described. But in crypto world, you actually are able to unleash the AIs and able to process a very high throughput of micro financial transactions without getting paywalled. And, and I ultimately think that, you know, you're having the AI agents are going to drive the next wave of crypto adoption. And they're really the perfect medium because it goes back to the question that I was mentioning, like, the average person finds crypto very— the UX of crypto, very difficult to use. And AIs have the perfect opportunity to simplify that because, um, it no longer is about you or a friend trying to navigate smart contracts and sign transactions. You're now interacting with a friendly chatbot that can assist you with those transactions. So, uh, the next slide really kind of talks about this, this, this, this, this, this developments, this software development kits that we're seeing launched by the Coinbases of the world, by Polymarkets. And by the way, this is just a couple of examples. There is many dozens of this that you're seeing in the space where you're having SDKs particularly tailored for LLM adoption because, you know, they're, they're, these companies are realizing the big opportunity. So imagine that I could just prompt my— we were chatting about prediction markets, right? So imagine that I could just prompt my chatbot and say, I want to bet 10,000 USDC on Polymarket that the Federal Reserve will cut rates by a quarter point by year end. And rather than me figuring out how to take money from my Coinbase account into a smart contract and bridge it to Polygon and then to the deposit the Polymarket.' The LLM, because it can interpret the smart contracts, would just compile a list of operations, present it to me in a human-readable format, and I would say, 'Yeah, proceed, this looks good.' And then it would go ahead and do all the operations behind the scenes and then bet on Polymarket. So these are intent-based actions versus having to actually deal with the smart contracts ourselves. And I actually believe that this UX, um, uh, the AIs will actually radically change the UX of crypto, um, and it will actually— has the potential to onboard, um, you know, the next 10, 20 million, uh, users into crypto because of that.

Nice, great.

All right, let's keep things, let's keep things moving. Uh, so prediction number 6. We believe that the most lucrative investments in the upcoming cycle will be at the application layer rather than at the infrastructure layer. And just as kind of a sub-prediction, we expect to see 20— over 20 different applications that generate $250 million+ of ARR and $100 million+ of free cash flow. So let me just kind of contextualize this for a second. Most people come into the space in crypto, most institutions, almost all of them enter in through either Bitcoin or maybe stablecoins and RWAs at this point. And when you kind of look and try to value Bitcoin in particular, it's, it's a bit of an esoteric exercise. You kind of price it relative to gold. You kind of lose many fundamental investors. I think what a lot of people miss is that the application layer in crypto is not difficult to value. Most of these applications, um, you know, either collect fees or have the potential to collect fees, and you can run kind of discounted cash flow analysis or look at P/E ratios on these projects and actually value them. Um, and, you know, look, there has been like a surplus of investment into infrastructure over the last 3 to 4 years, the vast majority of venture capital has gone into infrastructure, bridges, MEV, like, you know, wallet as a service, all these, you know, you know, shared security, all these kind of things that are beneath the surface that the reality is like don't really connect to the average consumer or person. And we think that like it's very much time for the application layer to see more investment and to see more growth. I mean, it's already happening. And I think it's just going to only accelerate for the rest of this decade. I think the application layer in particular is poised to capture a lot of value because these are like software plus plus plus business models. So you know, they're very, very high incremental margins, sometimes 100% kind of flow through to EBITDA or free cash flow. These businesses can be launched in a very capital-efficient format. The most— one of the most commonly cited examples of this is Uniswap, which effectively grew to $1 trillion+ of on-chain volume with only $11 million in venture capital, and the product was launched with a team of, you know, less than 20 people. Um, so these are very, very capital efficient from a both financial capital and human capital standpoint to launch. Um, and you have kind of global accessibility from day one. So if you like the business model of software, which I think most people do, um, you're going to like love the business model of crypto applications. I think there's some of the most powerful in the world in terms of the speed that they can scale and the return on invested capital. What we've done on this slide is attempt to kind of apply like a PEG ratio to some of the most well-known projects on the application layer, a PEG ratio being kind of a PE ratio over, over kind of growth rate. And what you can see here is, you know, there are, there are a number of very cash flow generative and high revenue producing applications in the space, which is impressive, but these are also all growing at a very fast rate. And if we were to, you know, superimpose kind of other large public SaaS companies onto this slide, you know, crypto would, would look like materially, materially better. A great example of a top-earning application in the space is MakerDAO, which is now Sky. And, you know, what we've shown here is you can look at something that looks and feels like a GAAP financial statement, an income statement or free cash flow statement, and in real time. So you can look at it on a periodic basis, either weekly, monthly, annually, quarterly, Or you can look at it in real time and you can apply that same kind of underlying bottoms-up fundamental analysis that you would if you're looking at any public company, but apply that same kind of framework to looking at tokens on the application layer. And look, like, we all know that, you know, the market can stay irrational and, you know, people may want to buy meme coins, but I, I'm a believer that over time, over the arc of time, markets converge towards fundamentals. It may take time, but, you know, if there are two projects and one is definitively more earnings on-chain than the other, it should be valued at a higher, at a higher valuation as time, as time goes on. So this to me is very powerful. And the last thing I'll say here is I think that one of the things, like, just from a regulatory standpoint, we may see in this coming cycle, and you kind of saw it last week, is a number of projects that have made the decision to not collect fees and turn on fee switches. We may see fee switches now come on in this cycle with greater regulatory clarity. I think a lot of those fees may go to buyback and burn programs, which I think will be a direct catalyst for many, many of these tokens. I think like that has been a very material change in the last week. If we're talking 6 months or a year ago, maybe the thesis around the application layer wouldn't be what it is today.

Ben, do you think these are, um, does the value end up occurring to the DeFi applications or more like consumer app? I'd call Polymarket more of a consumer application where I know you guys are, I think you said the biggest investor, or, uh, I don't know, like, you know, concert tickets on the blockchain, or, you know, that, that kind of stuff? Like, where do you actually— what kind of applications?

I mean, it's tough to say. Like, I think, I think that, like, there'll be value that accrues to, like, a number of different on-chain categories. I mean, finance, I think, has the most product-market fit and is the most intuitive in terms of how you can extract value. If it's a lending and borrowing marketplace, you can take a cut of the the interest paid by borrowers to lenders. Um, if it's a trading marketplace, you take a, you take a cut of volume. Whereas in the consumer side, maybe it's a little bit less intuitive how you extract value, although I think there, there are typically kind of clear ways to do it. Um, but I, look, I think it will be diverse in terms of that value accrual. Okay, let's go on to prediction number 7.

Oh, I love, I love this one. I'm excited about this one.

Yeah.

All right, so our 7th prediction is that, um, wallets are going to become some of the most valuable business models in crypto and really will evolve to kind of become thought of as bank— what kind of the same way we think of banks today, kind of as diversified financial services hubs or platforms. Um, so there are a lot of, you know, we think there are a lot of good business models in crypto, but I think few can kind of compete with wallets. So it centers around kind of one growth in the space. So if you look here at the average monthly unique active addresses on-chain, we're at roughly 40 million on-chain addresses in a given month today across all blockchains. This has grown every year for the past 6 years, and it's grown at about a 55% CAGR. Whether you're interacting— if you're interacting with any on-chain application, you need a wallet, and that wallet could be known to you. It could be something like MetaMask, or it could be a wallet-as-a-service platform, and it could be abstracted away. But either way, you need kind of that private-public key pair that we kind of call a wallet today. So kind of why do we think that wallets are such valuable businesses? Well, It kind of comes back to what we kind of call like aggregation theory. So there's a great blog, Ben Thompson's Stratequery, where he talks about, you know, why businesses like Facebook and Google have become so valuable and become so dominant. And kind of the crux of that thesis is that they own the user relationship. So they sit at this very critical point in the supply chain between consumers and businesses, and they kind of control where attention goes. And I think the same could be said about wallets. So they're this wedge between kind of the, the user and this ocean of different applications. And candidly, like, we know this firsthand. Large investors in ConsenSys, which operates MetaMask, it's It's a very strategic asset in the space. Every team wants to get in front of MetaMask to form some sort of relationship. So I think many people think about these wallets as like, you know, custodians. That's all wallet is. It's just a crypto kind of custody account. But really, like, if you think about what a wallet is, it's kind of your on-chain passport, your identity, your access key, your credentials, you know, your money, your identity, all kind of rolled up into one. And I think, you know, our view is what we've seen in the wallet space, I think, over even the past year has been pretty incredible with things like account abstraction, gasless transactions, you know, using passkeys for login authentication. All these things are making the UX materially, materially better. And, you know, it's also possible that we kind of do away with the word wallet altogether. Maybe it's called something entirely different. So a few examples of this in our portfolio, and I'll run through these quickly. So one is Gnosis Safe. So Gnosis Safe custodies today about, you know, 2.5 to 3% of all crypto. And you can see here, 6 million safes have been created cumulatively. Since inception. This is kind of the go-to wallet for most DAOs or foundations because these are, these are multisig. And, you know, if one key is compromised, transactions can still be executed by the remainder of a quorum. And what's, what's great about Gnosis Pay is they make things like token vesting simple. They will automated and they also, you can also program in conditional transfers to these underlying tokens. So it's just a very useful product and it's becoming more useful. A second kind of example is Fireblocks. So Fireblocks is like what SAFE is, but for enterprise. So you have compliance, dedicated account managers, And Fireblocks is dedicated, is kind of integrated into all the major exchanges and payment gateways. And one of the super impressive things about Fireblocks, and we blurred out the numbers here to protect the confidentiality, but, you know, this is a business that just like grew through the cycle. Like you almost can't see FTX on this chart. Like they just are, they're printing, you know, they're growing their user base, they're onboarding large banks and institutions. They have very strong network effects, and I think Fireblocks will end up being, you know, one of the most valuable companies in the space and what we believe to be kind of a best-in-class enterprise software company. And then the third and last example is MetaMask. So I think many of these wallets, you know, initially just monetized through kind of like transaction activity. Or swaps, they took a cut of that volume. But one of the fascinating things with wallets is there's so many different ways to monetize. You can monetize the fiat on-ramps or off-ramps. You can monetize and take a cut of staking rewards. You can create kind of social recovery features. You can put in place ways to mitigate kind of MEV. So the wallet is almost like the beachhead. And once you own that customer relationship, there are ways to— there are lots of ways to add value to your customers over time, but also, you know, take some, you know, take some cut of activity from your user base.

But just something to note here, I think, you know, there's this clear distinction between a wallet that users are consuming directly, like a MetaMask, a Phantom, etc., versus kind of like what Fireblocks has done, which is a wallet as a service business. This is very powerful because I still think there's a general question mark on whether 10 years down the road people are still going to be using the same wallet UX to interact with crypto. I think tough to say, but what's indisputable is that you will always need the underlying cryptography to operate on the blockchain. And you have this really solid cryptography infrastructures like Fireblocks that extend that cryptography via wallet as a service for a number of integrations. So I think that, you know, when you're kind of really looking at the segment, the long-term kind of like compass, the North Star, is how do you use what's a very complicated cryptographic technology and make it as seamless and as invisible as possible. And you're seeing that with you're seeing that with Bridge, you're seeing with many fintechs that, by the way, are like the largest customers of Fireblocks, because they're going to Fireblocks and they're saying, I don't want my customers to even know what, you know, a transaction is, but I'm ultimately dealing in crypto. And I want you to provide that wallet as a service, cryptography service, and extend it to support my operation. So I'm actually very excited to continue to see the UX evolution of wallets. Away from what we kind of know as wallets today into even more seamless things, to the point where you'll be able to use something that's crypto without even knowing that it's crypto because the cryptography operations are fully abstracted from you.

How do you guys think about— if I had to maybe counter this, it's that, you know, there's only a couple of main wallets in the industry today. It's probably Phantom, which kind of dominated Solana. Obviously Backpack's doing well there too. And then MetaMask, and then there's, you know, a bunch of— a couple other players, but it's really dominated by them. But now you're seeing people kind of trying to verticalize the stack. So, you know, Coinbase launched their own wallet, Uniswap launched their own wallet. If you are a big project or application, you want to own the wallet layer too. So there's going to be mass competition in this area. How do you think about that from the investor's lens?

Kevin, you want to—

um, yeah, like my sense is that there is very purpose-built apps that provide specific features. But like, if you are— like, I actually inevitably think that that's going to be more of the case where like you have a particular provider that wants to deliver a particular user experience that's supported by their own application. I think the generalized wallets may kind of have to kind of fade away because it will become more— people will want to go to a UX that has a very specific application of what they're delivering. And And I go back to Fireblocks being a great example of that, where Robinhood, for example, uses Fireblocks on the backend to deliver the user experience. And you would ask yourself the question, like, is that a Robinhood wallet? And in many ways, it is. It is a Robinhood wallet that wants to deliver a particular experience. Same thing in the way that Coinbase, even though they run their own cryptography, they're delivering a very particular experience to their users based on that. So I'm actually not surprised at all that this is the case and I expect it to continue to kind of like, you know, that trend to continue.

Nice.

Nice.

Cool. Back to you guys.

Yeah.

So let's talk about, you know, one of the most interesting questions in the space where like we think Solana will reach parity with Ethereum. So we think yes, we believe that for our prediction that Solana will reach parity with Ethereum as measured by obviously activity.

Oh my God, Kevin, you're killing me with this one. I'm, I'm, uh, I'm getting the Slack message. I'm getting blown up right now because people are saying Blockworks is running a targeted cutthroat campaign against Ethereum funded by Solana. So you're not going to help me out with this right now?

Yeah, well, um, look, look, I think, I think some facts are maybe, you know, indisputable. Um, you know, let the market judge by themselves, but you know, um, I'm sorry, go ahead, go, go, go ahead with your prediction. We believe that Solana will reach parity with, with Ethereum, uh, as measured by activity and market cap. So, and I'll tell you kind of why I think that. So let's kind of first start with like, let's kind of level set for a second. Uh, on Christmas of 2022, after the FTX collapse, uh, and this is what I'm showing on the left-hand side chart, Solana's market cap bottomed at $3.6 billion. On that same day, Ethereum had $146 billion market cap. So, that was around a 40x difference between Solana's market cap and Ethereum's market cap. Since then, and by the way, this was cut before this latest rally post-election, that spread has gone from 40x to only 6x. So, massive outperformance from Solana. It's really a massive comeback. Market cap is a very easy thing to compare. If we actually look at the other metrics, whether it's TVL, yeah, Ethereum is still the king of TVL. It has roughly 10 times the amount of TVL that Solana has, and primarily because of like Ethereum DeFi and stablecoins, which are predominantly still in Ethereum. But if you kind of go down the list, you see that 30-day volume is roughly, you know, two-thirds compared to Solana. And then you kind of go down, you actually start to see the numbers, the story change rapidly, and you start to see Solana put this massive numbers. So what to me, kind of like what I kind of look at this data is, I see two things. One is that Ethereum and Solana, from a pure KPI metrics perspective, they're not apples to apples comparisons. They're hard to compare because they are fundamentally different architectures, Solana. Comparing daily active addresses or number of transactions is not apples to apples. But what you can tell is the growth rate of the KPIs. So let's go to the next slide. And I like to kind of say that maybe Solana is a blockchain with very high velocity of money, fast transaction, and high throughput, whereas Ethereum has really succeeded as this lower throughput, more liveliness type of blockchain that serves great for certain cases. But what's become clear is that there's been an increasing preference for less statefulness in some cases, and higher throughput and higher velocity for many financial and blockchain applications. So let's look at this. So I mentioned in the prior slide, I mentioned that the 30-day trailing DEX volume was about two-thirds. But for the first time ever, earlier this summer, Solana managed to actually eclipse the volume, the DEX volume of Ethereum for the first time ever. So, you know, the other thing that you're seeing is Solana ETH trading volume. This is actually one of my favorite charts. I'm talking about the amount of volume that the native token SOL or ETH trades. Relatively. ETH has an ETF already. And despite having an ETF— and by the way, just to contextualize, like, the ETF creates underlying trading activity on the native token ETH. Solana doesn't have an ETF. And what I find amazing is that on a year-to-date basis, SOL is only one quarter behind ETH's volume. So it's done a quarter of the volume with ETH, that then it has done on crypto exchanges without having an ETF. So, in many ways, like what this is really signifying is the amount of demand, both from retail and institution, that there is behind Solana trading and SOL appetite. And, you know, like if you kind of look across the rest of these charts, whether it's monthly transactions or stablecoin volume, it still has, higher absolute numbers, but the rate of growth of Solana across the KPIs is increasing. It's a higher derivative than Ethereum. So, and if you ask yourself your question, like, why is that the case? Why have we seen a major shift from ETH as the main chain to Solana as a main chain? And if you look at the next slide, really, I think it's you have to zoom out and ask yourself, Solana has really emerged at this more pragmatic, builder-centric blockchain versus Ethereum has been more, you can argue, like more focused on infrastructure and academic research. But it's really about this trend, which is Solana is positioning itself to ride this major secular and macro trends, whether it's AI, whether it's mobile, AR/VR, financial services. Like, for example, like, they launched, you know, some people think it's like, you know, a marketing ploy, some people think that there's actually legs to this, but I actually think it's really interesting that Solana has been one of the few blockchains that's had a mobile strategy. Like, they've launched the Solana Saga phone, which sold out less than a year. It launched Seeker earlier this year, which has 150,000+ reservations. And when you think about how the barriers to entry to interact with crypto directly, having mobile-centric interfaces that allow you to interact with these blockchains is a major breakthrough. So in my view, Solana is differentiating itself as a community that can ship products that can address real use cases across big secular trends. And I obviously don't have time to go into every single reason, but there is very few inherent foundational and architectural differences why Solana cannot deliver the same type of services and applications that Ethereum delivers. And the fact that there is this 4 to 5x spread in market cap just doesn't seem right. So we expect that that spread to continue to converge to one another, whether it's Solana going up at a faster rate than Ethereum or Ethereum kind of coming down to meet Solana somewhere along the way.

Jason, hopefully we're not getting you in trouble.

Now that it's, you know, maybe it's Parafi is running a targeted campaign funded by Solana. No, this is great, guys. This is great. I know, you know, obviously Santi, you guys used to work with Santi and I I know, uh, if you were on here, he would be, uh, falling out of his seat for this. So no, this is great.

Okay, so let's go to prediction number 9. So our prediction number 9 is— I'll just read it and then we can talk about it. So 98% of digital— 98% plus of digital assets, uh, will underperform Bitcoin, uh, less than 2% will outperform, but the ones that do will outperform Bitcoin very meaningfully. And so you may kind of like look at this prediction or hear this prediction and think that, you know, we're bearish or we're Bitcoin maximalists. You know, we're not. Basically, you know, our view is that there's massive return dispersion in crypto, and we think that, you know, this is an alpha-rich asset class. So if you can dig through the data and find the 2% of winners, there is, you know, meaningful alpha that can get created. And this is just a function of the power laws in crypto being more extreme than traditional venture. So you have fewer winners, but those winners are much, much larger in terms of order of magnitude. And this is a function of the fact that it's trivially easy to launch a network or launch a token. You know, at some— I think most days there are like thousands of meme coins that are created, and most of them are spammy and go to zero. But it's actually not too dissimilar in, you know, with utility tokens or at the application layer, infrastructure layer. So we think that, you know, that's— it's a function of that. And then the second thing is the majority of altcoins are just very poorly designed from an incentive standpoint. And most human capital in the space is just not set up to sit and work on one project for a decade plus. Once like a 4-year vesting schedule is over, or by the time it's towards the end, you know, they're launching their next project because it's more easy to just keep on launching things rather than stick with one thing for a prolonged period of time. If you look at all of capitalism in Web2, the biggest companies in the world— Apple, Meta, Amazon, these are companies that were built over decades and where you had investors and founders that partnered in private markets with a long-term view where there was no liquidity in sight until, you know, you went public. And so for us, um, you know, it, it very much like is a matter of incentives as being like one of the most critical problems in the altcoin space and Here we have a quote from Office Space where Peter Gibbons was like asked to come into the office over the weekend to do his TPS reports. If anyone hasn't seen Office Space, please, please watch it. It's probably top, top 10 movie of all time, in my opinion. But this is really like a classic kind of show me the incentives and I'll show you the outcome problem, because in this space, You know, there are no like W-2s or performance reviews, or this isn't Blockworks, like a very well high-functioning run media company with employees and promotions. And this is like the Wild West from a human capital standpoint. And so, you know, on top of that, you don't have boards of directors and you have companies that go public, you know, kind of quote unquote go public much earlier than they actually have users or find product market fit. So imagine if, you know, the restaurant on your corner, the mom-and-pop restaurant, like, had a stock that traded 24/7. Well, that's, that's what most of the tokens that are listed are like today. So we did a little bit of data crunching at ParaFi to tease out this kind of concept or hypothesis. And we looked at— we went back to CoinGecko on January 1st of each of the last 4 years. and we looked at that top 100 token cohort on January 1st of that year, and we stripped out things like stablecoins or staked ETH. Like, we focused on actual tokens that, that move, um, and what we found was that, um, in each of these— in each of the last 4 years, Bitcoin has outperformed the median, uh, top 100 altcoin, uh, in each of the last 4 years. Ethereum— or sorry, in, um, 3 of the last 4 years, excuse me, Ethereum has outperformed the median top 100 altcoin in all 4 of the last 4 years. But there's an important but here. The top 10 median altcoin, so like kind of the 5th best performing altcoin, outperformed Bitcoin and Ethereum every single year. So this is just another way of saying there is alpha in this market, but Bitcoin and Ethereum will still outperform, or have historically outperformed the vast majority of tokens. And again, past performance in, you know, these historical performances of tokens is not reflective, doesn't imply future performance or guarantee it, but this is what we've observed empirically, kind of looking backwards. And, you know, here's another illustration of that same data set, but actually kind of stretching the data out further and examining these cohorts over very— over much kind of longer periods of time. Um, the other kind of, uh, problem, and I think Bell Curve and Empire and Blockworks has done a great job kind of digging into this, is just the idea of low float, high FDV tokens. Um, and it's been a problem. One could argue it's a problem, or maybe it's not a problem, but there— what's undeniable is most tokens launch most venture-backed tokens launch with a very small percentage of their tokens in the float. And once investor cliffs happen and team cliffs, the market gets flooded with supply. And so as we like kind of look at this data, what we've spread here is, um, these 5 projects have raised, um, and we've kind of picked these, you know, out of a cohort. There's nothing special about them in particular, but they raised a billion dollars of venture capital They have anywhere between 4% and 26% of their token supply in the float. So very low percentage. Just these 5 projects alone have $7 billion of unlocks coming in the next year. And I would argue that most of these projects don't have what would be described as kind of strong product market fit. Maybe there's an exception on the page or two. And notwithstanding that, you know, the founders of all these projects are kind of like billionaires on paper. So I think there's like this weird incentive in this industry to kind of have a high token price. And it doesn't— it's unclear if that's the way we kind of really grow as an industry. This unlock problem kind of goes out as far as the eye can see. Here we charted out, you know, roughly 70 tokens, their unlock schedule in the coming month, in the coming quarters. And what you can see here is, you know, there's roughly between $2.5 and $5 billion of unlocks of these VC-backed tokens every quarter. The other issue here is whenever altcoin markets rally, the teams that have not yet had a TGE move to TGE because they look at their comps in the public market and say, oh, we can, you know, we should capitalize on this. This is no different than what happens in late-stage venture and public equity markets. So whenever there is an altcoin rally, there's like a new, a new launch or new launches, and that further adds to this maturity wall of tokens. And so this is, you know, this is supply and demand. And also this is why, candidly, You know, the big question is who is— who will buy these unlocks in a world where most institutions are entering the space through like one of these spot ETFs or through a crypto fund as an LP? Retail has kind of been somewhat absent this cycle. And so really it comes down to who is going to absorb these tokens. And that's why I think, you know, protocols and applications themselves will become like the natural and arguably most important buyer of their own token. Very similar to what we've seen with, you know, like MakerDAO as an example with their token buybacks. So this is a problem, may or may not be the problem depending on how you look at it, but it's just also kind of like cold hard facts and data. Should we go on to number 10?

Yeah, let's go to the last one.

Okay. So if you're still with us, thank you. We're on number 10. We're going to close it out. This has been a marathon. So, you know, we think about blockchains at Parafi kind of very similar to countries. They're these kind of like self-contained kind of sovereign entities. With value flowing between different constituencies and you have different businesses that are built within the— on these blockchains. And so we've kind of thought about this idea of like kind of spent a lot of time thinking about and trying to calculate this idea of blockchain GDP to understand kind of the economic output of different blockchains. And, you know, our prediction here for prediction number 10 is that blockchain GDP will grow to $1 trillion, which is approximately 1% of global GDP. And so kind of let me just take a step back and, and describe kind of how we get there. And I'll be referencing kind of the slides that we have shared here. So if you think about GDP in the traditional kind of macroeconomy in real life, It's a function of a few things. It's consumer spending, investment, government spending, and then net exports, like what you, what you export as a country net of what you import. And that is generally how GDP is defined. So how should GDP kind of be defined in the context of a blockchain? Well, the way we think about it is there are two buckets. There's on-chain GDP and then there's off-chain GDP. So what is on-chain GDP? It's this idea of there are kind of two sources of on-chain GDP. There's what takes place at the protocol layer. So things like gas costs, MEV, transaction fees and tips. And then there's what happens at the application layer. So these are smart contracts or applications that are accruing value. Then there's off-chain GDP, and that's value that doesn't flow on-chain but is indirectly generated through an on-chain product. So you can think about something like Tether, which is generating profits off-chain due to some on-chain activity. So that's our framework, but I want to kind of— we wanted to attempt to quantify what that looks like today for Ethereum in particular. So here's a— I'll kind of skip over this slide, but here's kind of where we see Ethereum protocol GDP. We looked at kind of gas costs, so ETH burned over the last 30 days, transaction fees and tips. So these are like block rewards paid to validators on the network, block builder payments made to validators, as well as consensus rewards, and kind of get to $3.3 billion of kind of protocol GDP. Then at the application layer, we looked at some of the largest earning applications, whether it's, you know, Lido or Aave or Uniswap, and we aggregated the, uh, the revenue of those protocol— of those applications and then looked at things like imports and exports. So the idea of like an import is certain blockchains have to import labor and services from the off-chain world. Like if you think about a subDAO on MakerDAO, that's a great example of that. And then there are things like exports, which is like Layer 2 sequencer revenue or other things that would fit that category. So as we kind of blend those together, we think the— we think that Ethereum's on-chain GDP, and again, these are rough numbers that we've estimated and we would welcome feedback on our framework. We estimate Ethereum GDP on a kind of a run rate basis on-chain is roughly $5 billion. About 65% or two-thirds of that is on-chain, is, is at the protocol layer, and about the remaining one-third is at the application layer. If we think about off-chain GDP, it's very difficult to quantify. I mentioned, you know, Tether, Circle as examples of off-chain GDP. You could also consider kind of Coinbase trading fees or revenue generated by Fireblocks is also kind of fitting this category. It's very, again, very difficult to quantify. I think arguably maybe even larger than on-chain GDP today. So that's our framework for GDP. And I think that, you know, in some ways, like kind of just stepping back for a second, You know, I think as an industry, kind of coalescing around a metric like this as like a North Star is pretty interesting and, and maybe something worthwhile. Because I think what this metric measures is, um, the usefulness of blockchains. Like, if people are building like useful pragmatic applications on-chain where people are paying to use block space, this number will be higher. And if we can kind of like measure the growth over time and see that, you know, the GDP of different blockchains is growing, I think that's a signal that like we're doing something right as an industry. Um, so, and I know Blockworks has like actually like a very similar metric to this, I think total economic value, or Jason Yanowitz.

Yeah, exactly. Yeah, TV. Yeah, TV.

TV. So like, I think that, you know, and, and Yeah, so I think like, and maybe it's like very similarly kind of constructed.

We're thinking about it very, yeah, similarly.

Yeah. So, um, so yeah, like that, I think, and I, uh, so yeah, I mean, that's like kind of the prediction that we have is like, look, if Ethereum's at $5 billion today and maybe we add up all the other blockchains, maybe generously we're at $10 billion, to get to a trillion, that would be 100x growth. Um, so I think that's a, you know, that's a good goal for the industry. Hopefully we're like like, you know, well, well in excess of that.

Yeah.

One interesting, you know, scenario that we've seen in the past, this year actually, was with Uniswap and Unichain. So Uniswap was the top, the top, the top number one or the top number two gas consumer in Ethereum L1 for the past several years. Now with Unichain, that's moving to an Ethereum L2. So then, and then, and by the way, like all that MEV, all those gas fees were going to validators like Parafy Technologies, for example, and other Ethereum validators that were capturing that revenue. Now the question is, when you move something from L1 that is high revenue generating to an L2, to like what we kind of deem as like this gray area of like off-chain sequences, potentially or other off-chain worlds, like, does the GDP kind of actually being eliminated? Is it being destroyed? Or is it just simply being transferred into another form of GDP? And this is actually a really interesting question that exists that's very unique to crypto, because very, very nuanced business decisions and architectural decisions can make the difference between— even if the function is exactly the same, the user experience is the same, a minor decision of whether you're running on an L1 or L2, whether you have an off-chain sequencer or not, could actually drive orders of magnitude of GDP difference to our metrics because of how it's being quantified. So I think we're in the very early innings of this GDP definition and how it actually is going to continue to evolve. But I ask myself the questions like, where are all the fees that were generated by Uniswap and L1, now that they're now in a Unichain L2, who's really going to be the beneficiary of that? How is that value consumer surplus being transferred from an L1 to an L2 amongst the cohort of user participants from traders, validators, liquidity providers, and Uniswap holders as well?

Hmm.

Yeah. Yeah, it's like, I wonder if like, like, L1 and L2s could be thought of as like, you know, like NAFTA. Like, is it like the US, Canada, Mexico? Or is like, is it like the federal government and the states? Or is it, you know, US and like Puerto Rico, like a protectorate? Like, is it, you know, it is a, it is an interesting, I mean, it is an interesting question that Kevin I suppose.

Yeah. Um, guys, one of the longest Empire Apps we've, we've ever recorded. There's still one question I have that was not covered in these 10 predictions. Be very curious to get your takes on, uh, we've got honorable— will you actually rip through these honorable mentions, just one line for each?

Just quickly, we, we've gone through 10 predictions, but we actually have, you know, many more, and we, we wanted to kind of quickly go through some honorable mentions. We have 10 others, so Kevin and I will just read them. We're not going to like talk about them, uh, but we'll just kind of like read them for your entertainment. Um, okay, so prediction number 11: ZK tech will transform privacy and scalability across the blockchain space, but most of the existing venture-funded teams won't cross the chasm.

Prediction 12: The Bitcoin mining to AI high-performance computing data center conversion story is really just in the first staining.

Prediction number 13: 20% of governments globally will own Bitcoin by the end of this decade.

Um, prediction, uh, number 14: 10% of countries will have adopted CBDCs at scale.

Prediction number 15: permissioned DeFi, permissioned DeFi activity will exceed permissionless DeFi activity by 10x.

Hmm.

Prediction number 16: crypto collateralized lending will come back to 10x the size of the 2021 cycle.

Prediction number 17: on-chain messaging will begin to disrupt email, Telegram, and WhatsApp.

Prediction 18 is one of my favorites: Bitcoin mining would drive the next major wave of renewable energy adoption.

I like that one.

Prediction number 19: the Ethereum 0x000 address will be exploited within our lifetime.

What does that mean, Ben?

So this is like the burn address on Ethereum that people like send.

Oh my God, that would be insane.

Yeah, like there's tens of millions of dollars, billions of dollars more than that. Yeah, yeah, tokens in that, in a single address just sitting there, and you only have 2 to the 256 probability of getting that just in the same way that you get any other address. So I think it's a very bad, um, architectural decision that many tokens adopted.

I never thought about that. That's interesting.

Um, and then the last one is—

wait, why is that a bad— that's almost like a— it's a—

it's because they should really be implementing a token burn. So like the actual token is fully removed.

Yeah, but isn't this kind of like a fun lottery system?

It's like, uh, yeah, the token supplies of all these burns would all of a sudden get like massive. It would be like a massive basement.

Uh, yeah, the Gini coefficient of the space, because one person would get like a massive amount of money.

I know, but that would be so fun and so entertaining, guys. That's what you're not— you're not thinking about the entertainment value, Kevin.

You have the media, you have like the media.

Yeah, I think there's like— I, I, I haven't looked in a little bit, but like MakerDAO used to like burn its Maker tokens to that address versus like fully removing it.

Yeah, no, I know it wouldn't Yeah, it would just—

it would be highly entertaining if you don't have skin in the game, but like highly chaotic and disastrous for those that actually have to figure out what to do with these things.

Okay, so what's the last one here?

And then the last one is that at least one major war will be fought over Bitcoin strategic national reserves.

Can you tell me more about— okay, so 20, at least one major war will be fought over Bitcoin strategic national reserves, and then 20% of governments globally will own BTC. I think the most, you know, we're recording this November 15th and it won't go out for another like probably 10 days, I think. So, you know, we'll see what happens in the next 10 days with the Strategic Bitcoin Reserve. But, you know, I think one thing that is, I think the most important Poly market actually right now is the 32% chance that we create a Strategic Bitcoin Reserve. Like that is the single most important.

I think it's actually jumped since you last looked at it. I think it's close to 50 now.

But yeah, I think it came— it jumped to 50 and then came back down, funny enough. Um, but yeah, I'm just— I mean, I'd love to hear you guys maybe just expand on that because that, that's kind of one combined prediction there, I, I would argue. Like, maybe just expand on that.

Well, I'll like just talk about— yeah, I mean, Kevin could talk about the, the major war part or the other part. We can just—

we can skip the war, but maybe just like tell me your thesis around governments owning Bitcoin.

For me, it's like Look, there are, there are 195 countries globally. So 20% of that is like 40-ish. So, you know, today I would say they're probably, you know, you have El Salvador, you have Bhutan, you have, you know, like German, I mean, Germany and the US government and some governments own Bitcoin, but not by having bought it. I think this prediction, if we're kind of like refining it a bit more, is like we think governments will like proactively own it or want to own it, slash, hold it. And I think in my mind there's a lot of game theory at hand here. If the US adopts a Bitcoin national strategic national reserve, the game theory is that other countries will by definition like kind of almost like need to follow. And, you know, there is a big advantage to being a first mover in that process versus like being like the last country globally to adopt. And so this is why, like, I think the world can change very quickly in a very short period of time with that kind of like a paradigm shifting decision where, you know, where basically people have to be fast followers with the US. But let's say the US doesn't buy, right? If we start getting smaller countries defecting from the dollar, choosing to hold even a low single-digit or mid-single-digit percentage of their reserves in Bitcoin, that starts to compound and create like this waterfall effect. So yeah, I think that it's inevitable. And actually, sorry, last thing I'll say is I, I don't think we end up at 20%. It's almost like either it's like 5% or 100%. It's not going to be in like the middle. It's either going to— I, I think it's more of like an all-or-nothing kind of concept.

But by the way, and there's game theory as you're buying, but also the, the flip side of that game theory is that if you're a country and you, and you want to build a strategic reserve, you should actually tell no one that you're doing that. Uh, you want to be quiet and hush behind the scenes because As soon as it becomes known that a major country is building a strategic reserve, in many ways, I think it kind of puts us back to like the space race. It's an arms race to other countries building that, and you're ultimately fighting and being outcompeted in price. So you actually want to keep kind of like a relatively low profile in that sense. But to the point of like—

Kevin, do you want to hear on that point? So I went on Fox yesterday to get— they asked me to come on Fox Business to talk about the Strategic Bitcoin Reserve. And the producer was talking to me behind the scenes before going on. He's like, what's the, what's the most interesting thing in the markets right now? I said, there is nation-state game theory playing out. This is game theory at the highest levels of asset allocation. The US is being front-run on a Bitcoin strategy because we've essentially telegraphed to the world that we intend to buy this asset that's in scarce supply. But right now we don't have the concrete ability to do so. So the dynamic in the market is that if you're a known, if you're a large holder, you're seeing bids from these even larger holders or even larger non-holders who are anticipating what's coming, and they're basically trying to grab the exposure before you do. It's a super interesting, like, situation happening in the markets.

Absolutely. And by the way, just on prediction number 20, unlike— we believe that at least one major war will be fought over Bitcoin's natural strategic reserves. If you kind of just look at history and you ask yourself, what are the things that nation states and countries fight about. It's— well, in the modern day now, it's chips, right? Like, there's this big political tension between China, Taiwan, and the US, and like where our chip production comes from, and the CHIPS Act that was enacted by the Biden administration to bring US manufacturing of chips into the US. And well, that chips and compute are a massive— a key component of Bitcoin. The second thing, energy. Energy is something that has been, you know, oil in the past has been globally fought over many, many, many, many wars. And what is crypto particularly good at or depend on? Energy, energy infrastructure, energy sources. And then the last thing is, what is Bitcoin? Bitcoin is money. It's a financial asset, a reserve asset. So you combine these three massive geopolitical forces compute chip production, energy infrastructure, and a financial asset that's non-sovereign. And you have like the, the, the, the perfect combination, the fusion of every single kind of scenario to create— what I actually think is it's a potentially war-like geopolitical incentive to control those assets, because if you control those assets, you're in many ways, by definition, a prosperous nation. So I think we're in the very, very early stages of nation states waking up and realizing that they have to own— they have to be energy self-sufficient. They have to be energy independent. They have to have chip manufacturing completely independent from China and Taiwan, and that you ultimately want to be— somewhat decoupled from kind of like global currencies that dominate trade and global trade. And you're seeing that with BRICS already, with like, you know, Asia, China, Russia, Iran launching their kind of decoupling from the dollar. And I think the other asset that's going to play a role there is going to be the dollar, some BRICS currency, and you're going to see Bitcoin up there.

I love—

I love— I could not agree more with you guys. I love this. I mean, it's just a commodity that the world is going to want. And like, it's actually tied in with your— with the power grid one. And like Bitcoin, like our power grid is so screwed right now. And I think— so anyways, we're at 2 hours. I'm going to cut it off. This is great. Kevin, Ben, thank you guys. I know you're doing a similar type of conversation at the Digital Asset Summit. Ben and Kevin will both be there. It's March 18th to 20th. So you guys should get your tickets. That's my marketing plug to make the marketing team happy. So Ben, Kevin, thank you guys so much. I appreciate the time.

Thank you, Jason.

Thanks, Jason.

Hey everyone, thanks for watching today's episode. Just wanted to quickly thank today's title sponsor, SKALE. SKALE really is one of the best chain experiences out there today, and I've used so many different chains. There's a reason they are gaining so much adoption in both gaming and AI use cases. Hit the link in the show notes to explore the SCaLE ecosystem.