State of The Market, Monad's ICO & The Stablecoin Gold Rush | Weekly Roundup

I think all of these corporates who are really, you know, call it, you know, crypto native or like further along, are going to try to pull all of the activity onto the chains that they own. And I think we're going to see more corporates, uh, launch chains. Like, we are in the early stages, I think, of the corporate chain meta, uh, at this point.

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Okay, Rob, we're doing this. We're doing this solo. I guess Jason Yanowitz is no longer part of the picture.

Yeah. Well, so listen, I listened to the podcast last week and Jano starts it off with that he's hearing bad things about me and that, you know, he's, he's, you know, kicked me off the podcast. And so he didn't know the power that we had. And so now we're here. Jano's gone. It's cut. So podcast, no Jano. He's out. If he's really nice, we'll let him back.

Exactly. Uh, this will be a good pod. I guess you were traveling last week. There's, there's a lot that's been happening. Where do you want to start? I mean, we talk about the markets, we can talk about the news. Um, you're in charge now.

Well, listen, we can talk about the market if you want to. I feel like we've continued to have this conversation over and over and over again around the market is soft, but there are a bunch of things that are doing really well. There is this bifurcation that is existing between the haves and the have-nots, the things that are working, that are not. You have to have, you know, some sort of use case that says that people want, right? Like, you have to have product market fit. And like, we're just, you know, all of these altcoins aren't doing well and they continue not to do well. We continue to see softness. I mean, even on— and then on Bitcoin side, obviously there's a lot happening in the macroeconomic situation. I don't know if we want to reiterate that again, but like, if you want to go into that, like, we can definitely do that.

Well, as we're recording the pod, Bitcoin is just, just holding $100K. Barely, but I feel like Bitcoin goes down 5% and people just go out and say, oh, this market's topped. There was a comment though that Avi made actually from the 1000x Pod that said, as it relates to MegaETH, which we're both investors in, and said, we don't need another L2 in the market and there's a lot of infra fatigue. I think it goes back to what you're saying, which is it has been pretty tough for most of the alt market. Is that more reflective as you guys think about making investment decisions? We have an excess of infrastructure, not enough demand for it. We've talked about tokenization, we've talked about stablecoins. Is that enough to justify all of the infrastructure spend? When you guys think about, okay, we're raising a new fund, we're going to allocate to that to continue in infrastructure applications. I mean, you guys are investors in Polymarket. What is the next thing to support a lot of the plethora of L2s? I mean, gosh, or L1s. I mean, I'm curious, that I think is more of the interesting conversation, not so much are alts going to go up or down, is Bitcoin going to hold $100K. I think over a multi-year time frame, it's like, how do we actually justify these valuations? What's the next Polymarket? Do you have a view on that?

Yeah, listen, we're long-term investors, right? And you are as well. I think you probably trade a little bit more than I do, but we're very much around, focused on what happens in the long term. Um, I think it's very clear that, you know, the innovation that happens at the base layer is not done, right? Like, everyone comes out and they're like, oh, like, we don't need another L2, we, you know, we have Solana, we don't need Monad, we have Solana, um, we have Base, like, we have all these other things, we have, um, and it's very clear that if we're going to bring capital markets on-chain, that we're going to bring payments on-chain, that just because there is, call it, a surplus of block space today does not mean that that block space, one, is the best built for what we're talking about, right? So like, it's, you know, Monad is one of the most ambitious products in reinventing the way we think about execution and settlement and bringing forth consensus. And like, you know, they're trying to do something that is fit for a really large future, you know, really a future just evolution of capital markets happening on-chain. And so I, I find that conversation to be merely short-sighted and mostly coming from like the traders and from like, you know, the Anons that are, you know, on Twitter who are like, oh man, I like didn't make money in the last like week, and so now I'm like, you know, very upset about it. Um, and very, uh, it just doesn't really think about what is it we're actually trying to do here, right? And I say this all the time, like, it— and so I think there's obviously been a, uh, an incentive to put more money into the base layers and the infra because of the fact that that's where a lot of the big returns have come from. I mean, Solana is probably the single biggest VC outcome, right, that has existed in all of crypto. Uh, but applications are, are working, right? Like, we see it in our portfolio. I was just having this discussion with somebody else. There's a— despite all of the price action, we have companies like Polymarket in our portfolio, like Raincards in our portfolio on the stablecoin side, um, that are growing at a rate of like 30, 40, 50% month over month. Polymarket deposits are growing at multiples month over month right now, right? Like, if Polymarket is going to scale to the size that we were talking about, it's going to take up, you know, basically all the block space that Polygon even has available, right? Like, and so I, I, it strikes me that, um, you know, we're starting to see a, just an evolution of capital markets. We're starting to see people really excited about what that looks like. And we're starting to see like real companies, real asset issuers, uh, want to come on-chain. And so the fact that we have like, you know, a lot of unused block space today, it really has no bearing around what we're trying to do over the future. And, and I, I, so I, I, I just find that, that conversation to be, you know, really, really silly.

Yeah, absolutely. Let's talk about some of the news. Um, obviously Coinbase, top of mind, you know, I think just came out, uh, yesterday they called off the acquisition of BVNK. That was going to be a $2 billion acquisition. Then you saw Mastercard go out and acquire a competitor. How do you— yeah, any thoughts on that and reading into like why they called it off?

Yeah, on the Coinbase side, as I understand it, it really came down to, you know, some concerns around if they're, you know, the synergies that they thought would be there actually existed and whether or not there was um, you know, things like, you know, customer quality and, you know, things like that. Um, you know, maybe there was an attempt to, you know, uh, you know, change or change the price. This all is sort of rumored right now, so I don't know exactly what, um, what those conversations were looking like. But what I would say is, like, what is very clear to me is that there are a lot of And we say— so maybe I'll take a very quick step back. All of the stablecoin orchestration companies that are private right now, like, not the, you know, not Bridge, because Bridge is obviously acquired by Stripe. All of the other ones, they were getting hit up today by every single company you can think of, crypto and non-crypto, uh, for potential M&A. The, the M&A fever and stablecoins is just extraordinarily high. Right now. And so every single public company is doing work right now. The, the question these people are asking is, okay, well, is this something I can build or do I need to buy it, right? And, uh, some of the infrastructure is really hard to build if you— if it's really on-chain. Like, it's— none of these guys are going to be able to go and hire like a good crypto-native, you know, blockchain engineer, an engineering team to really compete, right? But if there is, you know, a lot of this orchestration that is happening, which has a large amount of fiat exposure and is really just, you know, piecing together like banking rails, right, with like a stablecoin sandwich, as quote unquote, as people call it, in between, that's a lot easier for these guys to potentially replicate themselves, right? And so, they're making that decision. At the same time, they're looking at these companies who have grown really, really quickly But in payments, the history has always been that you grow really quickly based on a customer base that is maybe not well served by, you know, traditional payment providers at this point in time. And so there might not be a lot of synergy between Coinbase's corporate customers and BVNK's corporate customers. Now they talk about, you know, some of these, and they have some really, really awesome Fortune 500 companies, like, um, but like they probably also make a lot of money from, you know, like gaming and gambling, because a lot of the stablecoin companies have made a lot of money from that, right? And that's not something that— or a sector that a lot of these traditional payment companies want to serve, right? And so you have to think through, like, you know, what makes sense for— from a multiple perspective if some of this revenue is not revenue that I want to— uh, that I'm going to keep. Right? I'm going to have to cycle this revenue off anyways, right? And so that's a little bit, I think, the push-pull a lot of these guys are, are trying to figure out right now.

Yeah, I mean, obviously Bridge got acquired by a billion, um, earlier this year. You've seen this, you know, higher price, like, just figures thrown out. I, I don't have the access to financials of, like, I think we talked about, what is it, the, the other company that was acquired by MasterCard? Zero, uh, was it ZeroHash?

So it's, it's, they had the acquisition hasn't happened yet. Um, yeah, it has been rumored that they are in talks of the acquisition. Rumored.

Yeah, that's right.

Yeah.

But what's a, what's a, I mean, if you're the BD, I mean, Coinbase has been highly acquisitive. This might be one of the larger acquisitions, could have been, um, other than, uh, Deribit, um, which I think I don't have access to financials of BVNK, but I got, I think that Deribit was just more of a cash cow than BVNK is. What if you're the board of a financial— significantly different profile. Yeah. So I'm, I'm just kind of curious, like, how do you justify— I get that everyone's trying to scramble to build, to kind of get into this stablecoin gold rush of sorts, but at some point you got to go to your board and say, hey, we're buying some for $2 billion, not a small amount, make it make sense.

Yeah, I, I think I mean, you have to understand and you have to believe there's real synergy value, right? Um, I, I did actually hear, very interestingly, there was one— there's a public company that was looking at a, a stablecoin company that I know, and, uh, they were talking to them about like price, and the public company CEO said, um, I think the announcement alone and what it would do to my share price would pay for the acquisition. Right? And he's very attuned to the fact that the public markets right now want these guys to do something in stablecoins, right? Like, they are very, very focused on stablecoins. They're very, very focused on, you know, how that might disrupt their current business models, right? And so I, I think that is, you know, something these guys are thinking through and the boards are thinking through, right? Um, that said, like, to your point, like, for some of these guys, like the banks, like, how can you go do a big acquisition, uh, with a big multiple if it's gonna, you know, mean that you have to take like a big capital charge or goodwill, you know, on your balance sheet, right? Like, they're not going to want to be able to do that. And so I think that is a bit of a push-pull right now. Um, but listen, I, um, I, I, I'll actually, I'll reference something else. I did a call yesterday for one of the big, uh, one of the big banks. And so the sell-side analyst asked me to, to come on and talk to a bunch of his clients, you know, big, you know, the big, you know, takers that you might know of, big, big hedge funds. Questions about stablecoins and tokenization. Um, so I did that yesterday, and the— there was a lot of conversation around what is going to happen to Visa and MasterCard, what is going to happen to FIS, uh, and some of the, the merchant processors and some of the acquirers. Like, the analysts across the street actively are concerned around what is going to happen to these, you know, payment companies, these, these fintechs. And so they're— the CEOs hear that, and so they understand that they have to react in some way.

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Yeah, I mean, look, uh, going back to your point, ICE, when they announced a deal with— to invest up $2 billion in Polymarket, the share price went up almost 4%, and that was, you know, they gained over $3— north of $3 billion in market cap alone. Um, so, you know, you could argue immediately you're quote-unquote in the money, but, um, so I hear you, but when I start seeing that, it just sort of, to me, the bit of a warning sign of where we are in terms of the frothiness out there in the market. And it reminds me a lot of when companies were putting blockchain in their earnings calls and the Long Island Iced Tea phenomenon, 2017, 2018 era. I do think that stablecoins obviously are more real. Perhaps a more non-acquisitive kind of news was JP Morgan put their JPM deposit token on Base this week. You know, talk about a company that's just been doing more of the internal work. To my knowledge, I mean, it's just they continue to staff up the team over the years. They've built Connexus. Interesting, different to Stripe, they've decided to use public infrastructure and they've kind of like iterated on this over time. Initially it was private, right? I believe like Onyx, I believe, then it was Connexus and now they're using Base. Um, so I'm curious, uh, if you follow that development, like how do you think about JP Morgan and their role that they're playing? And how it kind of relates to broader kind of corporate interest in, in crypto.

Yeah, I mean, the Connexus thing is interesting, right? So Connexus still continues to be, you know, basically private infrastructure. That's where they're doing, call it, all the cross-border payments that they're doing right now. Um, the deposit token from JP Morgan, um, you know, that existing on Base is, is a little bit interesting for me because They— it's not— it's unclear to me, and I don't know, did you see in the announcement exactly what, like, what they're actually going to surface, like, and will actually be, you know, on-chain that people will be able to understand? Because, like, I— like, you know, when I think about a deposit token, right, like, it makes complete sense to me that people will want to— and, and banks will want to be able to move money around their, you know, call it their different regional banks and, you know, maybe around their like global corporate entities, um, within a, call it a shared, you know, blockchain ledger. Um, but clearly the like banking regulators are not going to be okay with you, uh, taking like my deposit, tokenizing and putting it on public chain, uh, today. Right. And so it's actually, it's, it's sort of unclear to me, uh, what, what exactly is happening.

Uh, there, yeah, I'm reading, I'm reading the announcement here. JP Morgan put it out earlier today, 8 hours ago. It said, um, Coinbase and Mastercard have successfully completed test transactions using JPM Coin. Um, the ticker is JPMD, enabling near instant 24-hour settlement and real-time liquidity. JP Morgan's institutional clients can now exclusively send and receive money securely on Base, the Ethereum L2, enhancing digital payments ecosystem and encouraging further adoption. Since 2015, Connexus by JPMorgan has been a global provider of blockchain-based financial infrastructure and now provides USD deposit tokens on public blockchain. And so they continue— I'm kind of assessing this in real time. JPM Coin provides JPMorgan's institutional clients with the option to make on-chain native digital payments, which serve as a digital representation of a bank deposit on public blockchain. This will help meet the growing demand from both digitally native and traditional firms that want to engage further in the digital asset space with faster and easier money movements on public blockchains. Clients including B2C2, Coinbase, and Mastercard all successfully completed near-instant issuance and redemption of JPMD on Base as part of the proof of concept.

Got it. So this kind of sounds like, um, like SEN. Or, uh, uh, so there's like the Silvergate, uh, network, um, and, uh, and Cygnet, um, which, you know, all makes sense. Now those were, you know, call it like private blockchains, um, this is public. And I think it's super interesting that we're moving to public and with Base. Um, my guess is that like there's— they're, they're probably doing what you're seeing done with like, you know, Figura and some of these others, which is that they're just sort of, you know, call it posting a little bit of data on-chain, right? And like, yeah, it's— this is great that you can send this, but there's, you know, most of the, call it like, asset work is still being done in traditional systems, uh, off-chain. Um, but listen, great. I'm excited to see it moving that direction.

Uh, I was in London and I interviewed, um, This guy was in not JP Morgan, but another large financial institution, Swiss-based institution, and they've been building their own kind of form of Connexus to do a lot of FX settlement within their clients. Especially, he was like, look, on the weekends, especially when the bank is quote unquote closed, we will utilize payment rails that are 24/7, 365, and then we'll just kind of create that instant settlement trading between our kind of clients. And so different from JP Morgan, I think JP Morgan is probably one of the first ones to issue it on Base, which is pretty interesting. So we'll see how it evolves. I would say fairly interesting. I haven't really caught up. We had one of the leads of JP Morgan way back, Tyron, a couple years ago. This is one I think that most people kind of really don't appreciate because JP Morgan's an interesting Like if you look at here with Jamie Dimon, and they've historically been slower as a financial institution publicly, they can't really solicit, they can't really offer or advertise ETF products to private bank clients. But on the other end, they have just probably one of the larger teams that have been doing research since 2015, which is not a small team, and they've invested a lot of resources.

They're doing a bunch of volume on that, like cross, uh, cross-border and Connexus, right? It is just kind of like a, like a private ledger thing that they're doing with like some other central banks, some other large banks, but they're actually doing a lot of volume on that.

Yeah. How do you see the evolution of other financial institutions? Um, from what I understand, this deposit, this token is really just for their institutional clients. Um, it doesn't really like they wouldn't want this to be offered to other folks. Like, they're really protective of their client base, but they're using public infrastructure. I think this goes back to a debate you and I were having about what makes a public or a private chain at DAS in London a couple weeks ago. But how do you think about kind of the fast forward 1 or 2 or 3 years, like more banks using public infrastructure How are they going to use it? Is it like, um, yeah, like what's your version of the world in a couple years?

I mean, it obviously today, like, you're gonna have a deposit token, right? Like, you have to be a customer and you have to be KYC'd of that bank, right? Because it has to represent a deposit that you have and they have to be able to move the deposit within that bank. Interestingly though, like, putting it on Base does allow for the opportunity for that deposit token to be used across assets or other deposits of other types of, you know, other banks, right? And, and it seems clear to me that like they wouldn't put it on Base if they didn't think that they would try to work with other counterparties, right? Because otherwise, if it was just an intra, uh, you know, bank settlement layer, they would just do it on a private chain because it would give them the same benefits, right? And so I mean, when you look at these public chains, like, there has to be some sort of like trustless coordination, uh, because— or if you're going to interact with others, there has to be some sort of trustless coordination. It can't be on a thing that's owned by JP Morgan, or it can't be on a thing that's owned by, um, by, you know, Goldman or whoever. And so I actually think that that is a signal that there will be probably, you know, and that Coinbase is probably working— base is probably working with other banks to do something similar with an idea that like maybe you can create some sort of like, you know, interbank network, right?

Um, yeah.

And you know, this is obviously the conversation around Canton, right? So, you know, Canton launched the token, finally got listed in a couple places this week. Um, and that's been a big part of their story as well, which is that like, okay, well, we have these like private blockchains that are basically just, you know, um, just databases today, but like, you know, we're gonna open up their, you know, interoperability with everyone else. And so then like all the banks can work together, all the asset managers can work together. I think it's pretty clear that like a lot of assets are going to be tokenized. They're going to exist on some version of something that can interop, right? Whether it is a public chain like Base or these like kind of like, you know, siloed like hub and spoke models that we see on like Canton. Um, I have an opinion on what works better, but it's very clear to me that I think that's that we're moving in that direction.

So a couple things before we round up this discussion. Interesting, a couple related to this announcement. JP Morgan did say that they aim— like, they, they will expand this deposit token to more blockchains. I don't think they were specific as to which ones. Um, and then the other announcement was that, uh, earlier this week they announced— Connexus and DBS announced that they're developing this interoperability framework to enable transfers of tokenized deposits across public and permission blockchain environments. So I think on this point, what would you say to folks within crypto that do you read a lot into Coinbase deploying first on base versus any other public network? Solana, Aptos, SuiSei, Arbitrum, Is that a strong signal of how corporates might evaluate where to deploy? Because Base is backed by Coinbase and it has that kind of reputation. It might not be across the trilemma or trifecta of blockchains, decentralization, security. I'm curious, the world by which corporates might evaluate where to deploy is very different than how crypto natives have historically thought that that was going to be the case.

Um, yeah, no, I mean, I think it's pretty clear, right? The, um, all of these guys want to own their blockchain now, right? You saw we had Circle earnings this morning, and I think— I don't know what the stock ended up doing, but right after earnings it was down like 8% pre-market. Um, it was, you know, they talked about like, oh, now we need an ARK token for like their blockchain, right? Base has been teasing that they're going to have a token. Right? Like you've got Tempo launching, they haven't talked about a token, but they're definitely going to have a token. Right? And basically the incentive for all of these like corporates has been like, okay, well, I want to do some sort of on-chain network. Uh, I think I can build a better product if I do, if I own the entire stack. Um, and like, they're just going to be incentivized to force it on their chain. Right. Versus like, you know, some other chain, as long as there's an ability to, you know, access liquidity elsewhere. Right. And as interoperability gets easier. Like, if you're talking about the Ethereum L2s, you know, as you have like more Base or native rollups, like the ability to move capital in between or access capital in between is much easier. Um, and so like, I think it's very clear to me that, I mean, the reason this happened is because Coinbase is the first customer, right? And so Coinbase is like, I'm gonna be the first customer, you're gonna put this on Base. Like, that's pretty obviously what the discussion was. Um, you know, the Connexus DBS thing, like you know, that might be somewhere, somewhere different because, you know, Connexus and JPMorgan have been working with DBS and the Singaporean central bank around like cross-border money movements for a long time. Um, but I, I think all of these corporates who are really, you know, call it, you know, crypto native or like further along, are going to try to pull all of the activity onto the chains that they own. And I think we're going to see more corporates, uh, launch chains. Like, we are in the early stages, I think, of the corporate chain meta. At this point.

Yeah, yeah, absolutely. Um, speaking of, I want to remind folks of a bet that we made, uh, a couple weeks ago. Western Union, Solana. Um, in that time frame, Western Union has massively outperformed, not because the stock has gone up dramatically up, it's just because Solana has gone down quite a bit.

Um, yeah.

We'll see how that develops. But yeah, I think that covers it well for JP Morgan. There's a couple other news items that I think you alluded to that I want to get your take on. Like Uniswap put a proposal to— Hayden had a post around this fee switch. This is something that has been teased and talked about for years, right? The disconnect between uni equity and the token. It's not specific to Uniswap. Many other protocols have this kind of issue, um, but how do you think about that? I mean, obviously the regulatory environment has been changing quite a bit. Um, some of the investors of Uni, like Uniswap, have historically kind of resisted this, rightfully so. But I'm curious what you're seeing for— from other projects, specifically about Uniswap. Um, I think a project like Uniswap doing it carries probably much more weight than a traditional, like, some other random protocol, just given how important it is. But yeah, I'm curious, um, your take on that.

I, I mean, this is great, right? Like, this is something we've been, I think, expecting to see for a little bit. I, I had ex— my— I had speculated that they might wait to get like a little further along with like some sort of market structure bill, even if we didn't have full, um, understanding of like, you know, how people think about security versus not security. Um, that said, like, I— we definitely knew we were going to get Uniswap and then probably some, some others that were going to try to, to add this, uh, you know, type of fee switch over the next, you know, during, during this, like, you know, initial period of this administration. Um, I think for Uniswap specifically, uh, you know, they basically said they're going to collapse labs in the foundation. Everything that is going to happen from here on, on going forward is going to be focused on money, on protocol growth, right? And not just like, you know, this, like, you know, products that might like sit on top on the protocol. They're giving— they're putting together like a, you know, the large growth budget of 20 million UNI per year, which is what, $200 million at current prices, right? Um, they're, you know, burning 100 million UNI from the treasury right now. They're, um, gonna really start to focus on— and I think this also shifts a big focus for them on continuing to push forward like the hooks architecture on Unity v4 and trying to act as a more of an aggregator, uh, than just like, uh, you know, a front end themselves. Um, and so it helped— it's kind of twofold, right? Which is one is like, okay, we're trying to, to make the token— and we'd be one of the first ones to, to have the token really accrue value in a way that, you know, equity does, right? But we're also going to stop being— or stop focusing on interacting with the end customer in the same way. So they are trying to do something that is, I think, um, you know, protecting themselves a little bit, right? Because like, that is where I think when you look at what came out of the Ag Committee earlier this week, that is where there's a lot of surface area of attack. By the regulators. It's, you know, what type of obligation do you have to KYC AML people, uh, if you own that end customer and they're interacting with like some sort of front end? And that's where I think, um, Uniswap has said, okay, well, like, maybe we— if we shift away from that, this, you know, sort of, uh, this fee switch makes more sense, uh, and has less vectors of attack, yeah, from, you know, potential regulators in the future.

Yeah, definitely. We should go back to that discussion. There's some stuff on the regulatory front that we should cover, but there's some debate around Michael from Curve and then Toly kind of corroborated. There's some folks in the industry that were just kind of critical of the mechanism itself. Toly— Michael from Curve says, really glad that Uni chose an inferior mechanism of revenue distribution. Things are proceeding as planned. For those curious, he talks about the VLOX and the buy and burn. Poli then kind of retweeted that and said, you know, on target, any form of distribution of revenue to stakers is better than a burn. Um, any takes there? I mean, I think that we've seen some projects like Helium, um, do it one way, and, um, you know, revenue distribution, uh, better than a burn. Like, do you have an opinion on that? Does it carry regulatory kind of implications if you do it one way or the other?

Um, listen, I, you know, I think the buyback and burn has been like, you know, talked about for, for a while, right? Um, it is definitely more— it is definitely easier to, from a regulatory perspective, to say, okay, well, I am just like, you know, burning my own, my own token. Then— and which is actually like a buyback— than to go and distribute revenue to a staker, which makes it look like, you know, more of a dividend, right? And from a regulator perspective, the most of the, you know, the large law firms have said, uh, it is less like— it is less likely that you will get— there will be ability for somebody to sue you if you're just like buying your own token back and burning it, uh, in the open market versus, you know, issuing a dividend essentially, right? And so there's a, um, you know, the debate has always been, well, okay, well, buyback and burn is like maybe good for price, but like, you know, it's not good for the long-term holders in the same way, right? Because like the long-term holders, the stakers like they should be incentivized through, you know, getting revenue that makes it, you know, call it, you know, uh, much more valuable for them relative to like the people who are just speculating on token price, right? And so you're— if you're, if you're doing this, you know, call it revenue stakers or this dividend quality, you're just incentivizing, you know, what we would see in the equity markets are like long-term passive holders, uh, as opposed to just, um, you know, trying to solve for like token goes up. Right. Um, and I think that's a good argument, but it is a one that is tougher from a regulated regulatory perspective.

Yeah, I would say, I think you characterize it well. I mean, I remember Synthetix was probably one of the first protocols to actively reward stakers only. And because you had to have staked your SNX token to go short, effectively balance the book of a, you know, um, when people are going long, you have to have people that are shorting it. And so if you were staking your SNX, you would've gotten rewards, but you were effectively short and you had to manage that short. I think that required a lot of understanding of how the protocol worked, and I think people sometimes were surprised of that mechanism, especially when there's a lot of volatility in the market. The other thing, of course, is when you're staking, staking rewards and the treatment, the tax treatment of staking rewards in the US has been a bit unclear. They've reversed kind of the treatment of it. I was actively involved in the proof of stake Alliance way back in the day of like advocating for greater clarity. Um, I don't know if you guys are actively staking, but I know of a bunch of funds that just don't want to deal with that complexity because they— it just introduces a whole kind of, uh, noise, uh, in their strategy, uh, whereas the burn mechanism is just very clean, right? You're just kind of tracking that. Um, I think there's like no— my opinion is there's no perfect solution. You know, a network like Synthetix very different than perhaps, um, you know, other protocols. Like in Synthetix, you— it does make sense to actively reward, like, just do, um, uh, like actively reward participants versus not passively through a burn. Um, but other networks might not require that. Um, just kind of depends. But I think as we get more reg— like regulatory clarity and we get tax clarity, I think we'll— you know, in a perfect world, I think it just makes sense to reward active participants versus just a simple burn. Um, but we'll see.

Yeah, I think you have to do that long term. You might also— some of these, like, depending on what the staking looks like, it very clearly, uh, it can be certain things like don't work or don't work very well for funds. Like, you know, obviously like the withdrawal queue for ETH makes it really hard for funds, right, um, who aren't like really like long-term oriented, right? Or they have to use like liquid staking, um, which they can do, right? But it is a derivative, and theoretically there's other risk involved there, right? Um, I think there's, you know, a lot of these other, you know, L1s have these sort of like epochs that like, you know, you have to, you know, like Avalanche kind of has these epochs that you have to select for like some period of time, right? And things like that. And so, um, so it's not, it's not super straightforward, right? And then obviously for the funds, you have to make sure that you can do it through your, you know, qualified custodian, right? And so for, you know, Uniswap is obviously fine. They're, they're, they're in, um, you know, all the qualified custodians. But, you know, as this goes like longer tail, like a lot of tokens are not actually, you know, able to be received and staked through a qualified custodian today.

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Transitioning a little bit into— obviously we've talked about Monad here, um, and we've talked about Coinbase and their acquisition of ECHO. They, I think, are the first project to go through this kind of public sale, um, offered directly on Coinbase and to their clients. Um, you know, I— the, the terms of it, and if we can share the screen, um, yeah, so let's go to this, uh So Monad, you know, they're announcing that the Mon public sale, first ever token sale on Coinbase. Sale starts November 17th, accessible in like over 80 countries including the US. Um, you can, you know, I don't get into all the details of the public sale, but this is pretty interesting. I mean, I think, you know, historically Coinbase hasn't really, you know, participated in this at all. You had Coinlist played a role, Binance certainly played a role, other exchanges played a role. But this is the first time Coinbase does it. Um, yeah, I don't know if you guys were involved in, in this, you know, because I know you guys are investors in Monad. I am as well, but curious, um, you know, your, your take here.

Yeah, uh, I mean, the other thing here, right, was that like Monad, um, they, they announced all of their token economics. And so I think it actually— the token, like, the, the forward markets, or, you know, the pre-listing markets on like Hyperliquid traded down. A decent amount, um, on, on this. It seemed like it was mostly around some concern around, um, you know, I think only 3% is going to the airdrop, right? And a lot of the people who are like hedging on those like pre-markets didn't like the 3% for the airdrop. Um, I think the 7.5% going to this, you know, below the last round valuation to the, you know, potentially participants on Coinbase. Um, I think like that's actually a very good number. Like, that's super interesting. Uh, I think that should hopefully— with zero lockup too, like, you'll definitely see a lot of people selling. But I think what they'll try to do probably— and I don't have any inside information here, I'm just speculating on how this might work— is what they'll probably try to do is they'll try to do, you know, it says up to $100K, but you'll have very, very few people get $100K. You'll have a lot of people get $5K, $10K, right? And those people, people who get $5K, $10K, even if they're unlocked from day one, like when you have $5K in, you, you might not sell it, right? Like you don't, you don't see the real reason to do it, even if that $5K has turned into $10K. But if you have $100K turned into $200K, like, you know, there's just like, I think much more likely from a, um, just a psyche perspective that people are going to go sell it. Uh, yeah, I think on the Coinbase side, like, when they announced the Echo, uh, the Echo deal, like, we knew this is, this is what was going to happen, right? Like, this is where we were going. Like, they're going to want to play Coinbase as a bigger role in, uh, you know, all sorts of, you know, token listings, asset listings, um, and just like, you know, call it capital formation. Like, they've been very clear about that. Uh, the fact that Monad is the first one, I think is great. I mean, obviously, we're obviously investors. But, um, I, I, this is clearly a part of a much bigger strategy for them.

Yeah. So just, uh, help me get this straight. So you have hype pre-market listing Moneta like 0.05, and the sale on Coinbase is roughly half of that, like 0.25, 0.025. Um, is that right? Got it. Do you have any sense of like how, how the allocation is going to work? Like, you know, there is this cap of like $100K. Any details on Coinbase? Actually, is it up to Monat, up to Coinbase? Are they going to reward just based on your activity on Coinbase? Have you been a loyal customer? If you have coin stock, what's the criteria and the eligibility as to how much you're going to get? Or is it just going to be based on how much, simplistically, how much demand they get and they're just going to allocate that kind of pro rata or I think, I think they're gonna, they're gonna try to make it, um, how much demand they get and then allocate it pro rata.

That's the way most of these things work, right? Um, either that or they'll just do it random, right? So those are the two things that you technically see. I don't have any inside information on how they're going to do it at Coinbase. My expectation is that, like, you know, it would be— if you think about the way these things work in traditional markets right? Um, it's typically not up to the asset issuer, it's up to the broker, right? And so like in this case, you know, the broker being Coinbase, they'll probably be the ones that make the decision. Same thing you see when these things happen on CoinList, on Echo, on, uh, you know, before on anything else, right? Um, and so, um, my expectation is that's what, that's what ends up happening. Um, but Coinbase I don't think has been forthcoming yet with that, how that works. I don't think they're going to be they'll, they'll put something out there, but they want— they're not going to go, you know, super, super deep on that. Um, but I do think they'll try their best to make it as broad as possible with like smaller sizes, right? And that's the way Coinlist has always worked.

Yeah, I mean, it makes sense for them as a huge win. I mean, I think, um, from a retention standpoint, from a— I mean, if they're offering it to over 80 countries, it makes you more inclined in a very competitive environment for exchanges from a customer acquisition retention standpoint. Giving folks access to this deal, which is probably one of the most anticipated in the year, along with MegaETH and Plasma, I think it'll be interesting how they do that mechanism. And I'm sure people are going to bitch and complain about the allocation. As you can never get tokenomics right, you can never get airdrops right, you can certainly never get allocation right. But we've talked about IPO markets being highly inefficient. Companies like Coinbase have done direct listings. Folks like Bill Gurley have advocated for that type of mechanism. Something like the Circle IPO, you could argue, is huge. You left a lot of value on the table because it priced— what is it, like sub-10? It's not up—

no, it priced at $30. $30. Yeah.

And then it just kind of like— I was thinking of figure, but obviously How do you think about the hype pre-market and the kind of commitment of Monat to price it? And clearly the market thinks it's worth like 2x that. So you're still leaving a lot of value on the table. Why commit to a level now versus make it sort of like a Dutch auction mechanism or some other way on the Coinbase sale.

I, I mean, the same thing is true of, of public markets. Like, people want the investors to make money, right? Like, if the investors don't make money, like, that is when people get really pissed off, and then you don't incentivize like long-term holders. You don't— you put people in a position where they get very upset, right? And so especially when you're doing these retail distributions like people want retail to have some form of baked-in, uh, kind of upside, right? And so the idea that, you know, there's, um, these things are really inefficient, like that's not totally wrong, but it's also a feature, not a bug, right? Like people actually want there to be these IPO pops that get people talking about it, they get people to make money, they get people excited, right? Uh, and I think the same thing is true here, right? Now the one thing that's true in pre-IPO, or sorry, in these pre-launch markets on like Hyperliquid, is that everybody in those markets is a, is a risk taker, right? Um, like, because of the fact that, like, all of the short interest there, um, for the most part, or the vast majority of it, is people hedging, right? So they obviously think that, like, you know, they're, they're, they're, they're, like, long the asset up to some point, but then they're trying to hedge out, but they don't actually know what the token will actually be, you know, trading at. So they're like, they're risk-on, right? There is a no— call it, you know, like a quote-unquote basis being done here, or then those kind of like core types of traders that, you know, form the basis for other markets, right? And so, um, I, I think there's— and I, I say that to mean that like, I think everybody is a speculator, right? Uh, in those markets in a way that like, you know, Bitcoin markets, not everyone is a speculator, right?

Yeah.

And so Uh, there is an interesting dichotomy around how these, you know, pre-launch things work, um, and like how you should think about what that means for the token price in the near and long term. I, you know, oftentimes these things trade right up to them and then they kind of trade down a little bit, you know, a 2x for the retail guys, like that sounds like a a good win for everybody in my mind. Mana doesn't need the extra money.

Yeah. And I was going to that, like I was just reading Bitget actually has a good blog about like dissecting, because they were pretty open about kind of all the, they had like an 18-page document talking about like even the relationship with market makers, the loans that they're giving. Just kind of hammering out a couple details here just to round out this discussion. The token sale, they're selling up to 7.5% of the initial total supply. At that level of 0.025, if they exhaust it all, they'll raise roughly $188 million. To your point, I mean, they don't need that because the last round, the Series A, they raised $220 million, and then the seed and pre-seed collectively, they raised close to like $40 million. So they raised $240 million. They definitely don't need that money. But I think it's At that level, the FDV is $2.5 billion. The high pre-market is implying 2x that, so like roughly $5 billion. Um, in terms of the tokenomics, treasury will take— Category Labs treasury will take 4%, team will take 27%, investors will take roughly 20%. The ecosystem development category is 38%. Public sale, 3.5%. 7.5%. Airdrop, 3.3%. So yeah, pretty interesting. I wouldn't say anything like overly funky there. I think it's typical, um, for a lot of projects. Um, what else is interesting here?

Maybe one thing that we should call out here is, uh, the fact that they're allowing, you know, zero lock to the US, right?

Yeah.

So the, the one thing that has happened in almost every other one of these types of presales has been that, like, yeah, in other jurisdictions you have no lock whatsoever, but in the US they do this 12-month lock. The reason for that is, um, Rule 144. So it's regulatory, and essentially the fact that, you know, uh, for Rule 144 that if the token is considered a security, um, then that you have to— it's a, it's a non-listed security, um, you have to make sure that you don't allow people to sell for 12 months, otherwise you're violating securities laws, right? So Rule 144 means that you have to lock it up for that period of time if it's a security. And so Monad's taken— there has been the first one, I think, at least the first one of of any major note that I, that I know of that has taken the point of view that like, hey, we're just going to go and treat the US as much as we treat everybody else. Because presumably, because they're— they feel strongly that, you know, the risk of them being deemed as security is a lot lower, uh, or is not very high, um, that they're, they're willing to do this. And so, um, that is, I think, a little bit of an interesting change relative to what we've seen or how we've seen some of these others, um, less. I mean, even like to the MegaETH point, right? Like they did the, that auction at a billion dollar, uh, cap, um, you know, a few weeks ago. And for the US, they had to, uh, the US investors had to do a one-year lock.

Yeah. Yep.

Yeah.

It's interesting also, of course, Coinbase has, uh, you know, had to have approved that structure and they have obviously, so, so like very strong signal into what regulatory environment we're in today. Um, just the last point on, on the Monad, what was interesting too is they disclosed the market making arrangements, which is something that Historically hasn't been really disclosed. You know, to give people some perspective, I'm sharing the screen here, folks, seeing, you know, you— they're working with, what is it, 5 market makers. Interestingly, the duration of the loan is 1 month for all except Wintermute. The size of the loan is also the smallest for Wintermute. There's a lot of chat on X around, like, just implying, like, just reading into that. Monad kind of goes into the criteria as to why it selected that, why only Wintermute has this 1-year commitment. Any thoughts into that? Wintermute, I guess, historically has gotten some criticism, and as every market maker in that page at some point has gotten. Criticism. I'm curious, um, your thoughts there and, um, how you thought they kind of structured the loans and the arrangements with market makers.

Yeah, I mean, I thought it was interesting that they did this. You know, some other tokens have done it, but, um, not, not a ton. I, I want to give Monad a lot of credit here for just this— all of these, um, just being as transparent as they are and, you know, putting out these, uh, this documentation, right? Obviously on Wintermute's side, like, Wintermute probably just told them that they wouldn't do it with a 1-month contract, and they made the decision that Wintermute was important enough that they would, and that they would give them a longer contract. But they also sized them down to the smallest loan size, right? So Wintermute obviously solved for like, hey, we'll, we'll take the smallest loan size, but we want to be, we'd be there for a year. The way this works, and I think probably everybody knows this that listens to the pod, is that all of these guys have 3, 4, or 5, uh, you know, market makers. And so it's not so much as like that these other market makers are going to go away in a month, it's just that Monad preserved the optionality to fire them and add somebody else, or to fire them, uh, and maybe not, you know, maybe not need 5. Um, and so, uh, I expect that most of these guys, they just continue to get rolled into different contracts regardless. And so Um, not, not that surprising to me. Um, that said, like, you know, I think this is, uh, it's pretty standard the way this looks at the moment. Um, and so this wasn't surprising to me at all.

Yeah. What's also interesting is, so they're allocating in total— what is this? Uh, let me go back here. 160 or so tokens.

Yeah, 160 million of tokens.

160 million of tokens on a $10 billion supply.

Right.

Yeah. Versus they've also allocated this sleeve of 0.2, 200 million tokens for DEX liquidity. But it's interesting also there, right? They're, they're carving out more tokens for DEX liquidity versus market makers. Um, curious how that gets allocated. And there's some folks that were saying, hey, like, obviously this reports it like that might not be enough. Um, typically many projects allocate 2 to 3% for market making quotas. Um, whereas this is much less. So yeah, it's, um, pretty interesting. We'll see how that translates into price discovery. And I would think that there's gonna be a ton of activity just given airdrop and the fact that it's immediately tradable, um, for, for the Coinbase allocation. And so there's healthy amount of supply out there, uh, to yield some decent price discovery combined with like pre-market, um, activity. So we'll see.

Yeah. But, and, and the other thing to note here, right, is so everyone we saw there were like kind of crypto native, like market makers, right? Um, that are— a lot of those guys are working like, you know, longer tail. But, um, you know, who are the biggest market makers on like Coinbase and Binance, right? Like, it's not— it's actually not these guys, you know, maybe it's Wintermute, but, um, it's like right now it's like Tower Research and like Jump and the big traditional guys. Those guys will just go buy in the market, right? Uh, and they like— and so the— I, I think Clearly what Monad is taking the perspective of is they think that their token will be something that people want to trade, that there'll be a lot of volume, and that the traditional market makers on those exchanges will be, you know, willing to go and quote because of the fact that there will be so much volume, and they'll just buy the tokens themselves once they need to hedge out that risk.

Yeah, absolutely.

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We've covered a lot, man. What else, uh, what else is on your mind?

I guess, you know, we started this talking a little bit about the, the market overall, right? Um, I think there's been a ton of discussion recently, uh, just about how, you know, maybe the— a lot of the crypto-native traders are wanting to move to like equities, right? Um, I think the— but then we talk about like, you know, everybody was trading the DApps earlier this year, but now even I think MicroStrategy is below 1 MNAV, uh, at the current time. Should we like have a discussion around, uh, what's happening in the DApp space, right? Like, should we bring that back up?

Definitely, definitely should. Um, yeah, when we go there, I haven't candidly followed as much the MNAV for these guys. I think Blockworks actually might have a dashboard here, but yeah, it's looking pretty ugly.

Yeah, it's looking, it's looking really ugly. And so I, I, I've— one of the things I've started to wonder a little bit is like, how quickly are we going to see, uh, the, the DAT M&A market? I don't know, like, in the conversations that you've had Like, are you starting to hear people continue to talk about DATs? Like, how are they thinking through, um, you know, what they're going to be, you know, how they're going to approach this market going forward? I, I actually, very surprisingly, um, I, you know, the XRP one got launched. There was a, um, uh, you know, there's a, there's one or two other DApps happening right now, but very surprisingly to me, there still continues to be like altcoin for not highly traded altcoin dApps that people are trying to put together. Um, and I, I, I would've thought that they would've, have died by this point.

Emphasis on trying to put together. Uh, I, I continue to see the occasional random project launch a dApp or try to launch a dApp, but it, it hasn't been, uh, as successful, um, in terms of like capital raised. Some have just, it, it, it, I think the capital's really dried up for a lot of these projects. And, and, you know, this is not a Solana dApp, right? It's a, You know, if you're not in the top 10, top 20 of market cap and you're trying to do a DOT, it's just like really, really hard. I've seen terms be changed around much, but of course you're now dealing with the in-kind contribution, which makes it very, very hard to get it actually approved, right? Um, so I think, um, yeah, it's, uh, I haven't heard on, on acquisition stuff. I, I was at the Galaxy event, uh, couple weeks ago, and, you know, you had a couple folks, the Ethereum folks on the EthereumDAD, and then there was a SolanaDAD, and they were— they kind of hinted at this, like there might be opportunities. Um, I wouldn't be surprised. I mean, it's going to be a world of have-nots, but, uh, yeah, I mean, these instruments are highly reflexive. I mean, even if you're MicroStrategy and you're in an environment where like your MNAB is just, you know, getting crushed, like Can you actually do, uh, an acquisition? Um, I don't know. Do you have folks internally with the capacity to do acquisitions? Because a lot of— I don't know from your standpoint, but a lot of these dApps, the management teams are much to be desired, I would say. Like, yeah, okay, you're indexing on like crypto nativeness to sell to the market in a bull environment, that works fantastic, right? You have Someone like Lubin just sell the dream and he's good at that, but who else is on the team to actually operationalize and make these businesses justify the MNAV? You have to produce cash flow. You have to make it a viable business model. Maybe I'm taking too much of a fundamental view. And look, I participate in some of these dApps. I don't know.

Yeah, I, I think it'll be interesting to see what happens. We are, um, it's still a big topic of conversation. I, I know like there was the, the Cantor Conference this week and like there was a lot of that discussion again. Um, so I ended up not going, uh, but I've heard from others. Um, just the—

what happened there?

I've been traveling so much. Yeah, just too much travel.

I was gonna say, like, are you, you worn out there, man?

I, I think I am. You know, I'm trying to stay home. I've had, um, like multiple people be like, hey, you look kind of tired. Uh, and I think that is, um, uh, you know, one, really fucking rude. So, uh, so maybe people should stop telling me that. But, but two, uh, maybe a sign that I need to, uh, travel a little bit less.

So it's, it's so distracting.

Yeah, it really is. What is—

I mean, you participate in some dApps. I have to— how does this end up? Are we going to— we've had discussions around dApps potentially being the thing that really drags the space down. Equity markets have been volatile. How do you— what's your— are you still cautiously or selectively pursuing these conversations? Do you think there's still a place in the world for dApps to persist, or how does this actually end up?

I, I mean, I think that's still like, you know, there's a reason for certain of them to exist, a small number of them. And like, you know, ones that offer certain types of, you know, access or to, you know, maybe an altcoin that they can't get access to right now through an ETF. Maybe, you know, they— somebody can't get access to like staking yield right now. I mean, it's very clear that like an ETF, um, is much more, uh, capital inefficient than some of these like Ethereum dApps in terms of like managing like yield generation specifically. And so that should trade at some premium to the ETF. Um, so I think they mean to exist, but like not in the size and scale and amount of dApps that have existed today. I think we're gonna see a lot of consolidation. We're gonna see a lot of people give up on these things. We're gonna see M&A. Um, and over time, I think we'll, we'll, we'll look back and be like, yeah, that was really frothy in sort of the same way we did in the SPAC market, but like there should be some of them, right? And they would continue to exist. Um, so I— my expectations, we see if the macro market is a lot better next year, which I think it might be, maybe we won't have the reckoning yet, but like that reckoning is coming.

Yeah, absolutely. I mean, it's— it always felt to me like, you know, arbitrage strategies only last so long. And, you know, again, as you said earlier, if you're a long— you should approach this as a long-term investment. Um, most of the folks that have like tried to be traders can do phenomenally well and then sometimes blow up, especially we start using leverage. I've really avoided or tried to avoid instruments that, um, force me to be correct on timing, and I just have always felt that DApps are that type of structure. For the most part, there's always nuance in the structure. I'm not categorically saying that all DApps are bad. I participated in some, as so have you, I think. But on the margin, I mean, I think in an isolated view, if you just hold one, like a DApp or just the underlying, I think for the most part, for most folks, it is just better to hold the underlying and not kind of play the premium or discount. That just like is a trading game, is a timing game, and it's just really hard to get timing right in this industry. Like everyone thinks in a certain part of the cycle you can really get timing right, and they get— and then you get, you know, smacked by the market and says, no, you definitely can't, uh, because it's like highly irrational and you can't really explain why things like Fartcoin just go parabolic, or Zcash just goes parabolic too. Crazy, uh, I was hearing about Zcash. I heard a lot about Zcash token Dubai. I went to a couple of events. It was percolating. It's like, hey, Zcash, Zcash. I'm like, man, I've held Zcash since it was a darling way back in the day, but it's been impressive. Do you guys have a position there? I mean, I know you guys have pursued the privacy thesis, but We don't currently.

I, I would say, um, we've been, I think, cautious on the privacy thesis, especially considering, um, everything that happened, right? Yeah. So on the Tornado side, um, yeah, so we've been cautious. You know, we, we did look, we did try to, try to re-underwrite Zcash, um, you know, call it in the last few weeks. Uh, we probably missed like what we thought was like the major run. And so then it was kind of like less attractive to us. But there are a lot of smart people around it right now. And a lot of people—

I mean, I saw, I saw hackathons like Kobe, Balaji. I mean, Zoco is one of the smartest cryptographers. Eli, who I didn't appreciate, was a co-founder of Zcash too. He was like a co-founder of Starkware, co-founder of Zcash. I met Zoco and I felt he was like the main force and he had been for, for a while, but Then you guys were involved in Near, and so Near is also involved in it. But it's sort of like a— I do have a position in Zcash. I've had for a while. I mean, I was holding a bag way, way back in the day. I did re-underwrite it. I did put in a position, not at like $50, closer to where it is now. But it was interesting. It has sort of the meme characteristic of 21 million Zcash. But yeah, I think it has been interesting to observe and actually paying more attention to what's going on there, especially just today. I saw this hackathon.

I will tell you, like, there's like, to your point about the hackathon, like, there's a bunch of people around who are like, okay, well, like, how do we turn this into an ecosystem right now? And there, there's active, active conversations around that. So, um, I mean, people kept shorting it all the way up and the shorts kept getting blown out. Like, I, I, people never learn in crypto, right? Like, you don't short momentum, right?

Like, you're just gonna get blown out. Yeah, yeah, absolutely. Um, Definitely, man. Before we go to content of the week, anything else?

Did you want to talk about the Hyperliquid, uh, bridge halt today? You have any opinions on that?

I— no, I was— I had not tracked that.

Yeah, okay, well, we don't have to get into it too much. I think I don't understand the full implications yet, um, but essentially there was a, uh, basically it— there looked like, or at least people believe that there was some sort of, you know, manipulation. And I think of the— and in the, um, PopCat, HOP3 vault. Yeah, based on like a PopCat, uh, uh, somebody that was like, you know, going like very levered long on PopCat through a bunch of different wallets and then, um, trying to, I think, make the vault, uh, accrue some, some losses, right? Similar to like what looked like happened in Jelly Jelly, uh, if you don't call it earlier this year. And so for some period of time the, uh, the bridge, Arbitrum bridge, went down and stopped processing, um, uh, withdrawals, uh, at least for, you know, it was over 20 minutes. So people were speculating that this was due to— that this had been done intentionally to be, um, and was due to, you know, trying not to let what people thought was like an attacker, um, you know, be able to take money off a platform. Um, I don't know how much it's— this is still kind of evolving. I don't think we've seen yet a post from Jeff or anybody about it, and so we're still trying to figure out what's going on. But just a, you know, interesting, I think, thing to think about again as, you know, we continue to talk through, you know, what the, um, line is for centralization versus non-decentralization, for applications versus protocols, uh, and like how that might fit into some sort of regulatory thesis. Um, and, uh, I, I think my expectation is Hyperliquid is going to be one of the— along with Uniswap— one of those names where a lot of this debate centers around. And, and in fact, I'll tell you, when I was talking about this thing I did on the sell-side analysts, uh, for one of the big banks yesterday there was actually a lot of talk around like, is Hyper— like, what is Coinbase's market share going to look like over time? Is Coinbase still very interesting in terms of, of a potential buy? Like, what is the competitive pressure going to look like? And like, do we believe that things like Hyperliquid are going to take market share because of this reg arb that they have? And does there need to be, um, Is that— could that regarb close? And if that regarb closed, would Hyperliquid still take market share from something like a Coinbase? And so a lot of people are thinking about that now, uh, with Hyperliquid at the center of that conversation.

Do you think there would be blowback? Because like, again, we're going back to that Black Friday event where historically you've had, in moments of stress, exchanges temporarily halt, temporarily, you know, block withdrawals, deposits. Like, they just— it's at the discretion, and you're subject to their terms of service and what have you. In this particular case, the validators made that decision to like the emergency, and it's the first time that has happened. I'm just kind of reading up on it live right now. So do you think there's going to be blowback here of people being a little bit more cautious around, okay, well, like, yeah, we like interacting hyper liquid, but it sets a precedent of maybe this continues, this happens and maybe it's not to dissimilar from an exchange where you are playing and you need to abide by the house rules. And if whoever the house here is, is whether it's 4 validators or the core team or a combination of people that really control the net, the protocol, is that any different from an exchange?

I, I don't, I don't think people care, right? Like, time and again, right, like the ethos in in crypto has been around, you know, the cypherpunk ethos that exists in crypto. The users, as we've gotten bigger and more mature, have continued to tell you they do not care about the ethos of crypto. They care about making money. They care about being protected from losses. They care about good, um, user experience. Uh, like, I, I just think like that everybody— I mean, was it, um, how long ago was it that like SUI basically like rolled back state? So that one of those hacks didn't, uh, uh, essentially weren't able to like, you know, move capital off of, off the Sweet blockchain. Like, we've completely forgotten that happened, right? Like, no, but like, and that is like, you know, we're on a relative basis, even relative to this or anything else we talked about, like one of the most insane, you know, things that have happened in terms of like people just are just showing that like decentralization is often a little bit of a meme. Right. And so like, um, I just think people would much rather not lose money and much rather make money than ever care about like, you know, what the house is doing.

Fair enough. I mean, look, uh, there was another report. We won't get into it now, but I think, uh, Bybit put out a report like looking into the code base of a lot of, um, L1s or L2s, and they had the ability to kind of freeze assets, which is, I believe, what Sui did. I don't think they rolled it back.

I think they just kind of froze the assets, but I remember what they actually did was that they, uh, the validators stopped validating transactions from the addresses that were, uh, affected, uh, or that, that had performed the hack, um, which for, you know, all intents and purposes meant that they essentially like froze his address.

Yeah, so exactly. Um, yeah, look, uh, you're at a room, you're talking about crypto, and these are people that have used USDC. You ask them, hey, Are you aware that like Circle can freeze your USDC? How many people do you actually think in a room of 100 or 1,000 people, you do a survey, how many people do you actually understand that that's possible?

Yeah, outside of like crypto, like I think like not that many actually. Like, yeah, you know, but at the end of the day, like, you know who can also freeze your money? JP Morgan, right?

Like, yeah, I know, absolutely right. I mean, I always take the position like a marginal improvement is still marginal improvement. Sometimes people in crypto just want to reach an end state of perfection that is not possible. But I was just looking at just around— the greatest benefit is just you're introducing more transparency. So you're seeing what Hyperlink would happen. You can discuss it, you can evaluate it, you can make a conscious decision whether you want to interact in the protocol or not based on some precedent. And yes, even though the market or people might have a memory of a goldfish, You have that precedent crystallized in a public record that allows for that discovery and for that at least decision, whether you're the end user or the institution that is going to decide whether to route activity to Hyperliquid. I definitely think that a precedent like today sets on the margin something to point to and say, "Hey, maybe we will not route activity there until we get some resolution from the team." allows certain people— crypto has this dynamic of a vocal minority that probably is going to require people like the Tays of the world to say, wait a minute, what the hell happened here? Give us answers. Right. And oftentimes that may not have happened if you didn't have as much transparency. And so that's a good state. I was looking at First Brands too, right, and Howard Marks, but just transitioning to Content of the Week, he put out a great memo and I love his memos and he was talking about Forge Brands. They actually underwrote and they had lent out a small position and then as they dug more, they were like— He goes into the memo, I won't go into it here, of certain red flags that they started to underwrite that and just people forget crypto does have a lot of issues still. It is a plane being built in flight. There is still need— like, there's still an opportunity to iterate on the consensus algorithm, on the L1, on the broader infrastructure. But we are creating a more transparent system, and that allows us to learn from our mistakes and collectively kind of create more protection in the end state, right? Um, and, and, and even like the FTX recovery process, it took, you know, way faster than, you know, the Murdoch, like, creditors, right? Not Murdoch, Madoff creditors that took like decades are still being paid out. So I'm not saying crypto is perfect, but you're creating at least a public record that you can point to, and at least certain people in the community will require and demand answers. And no one's forcing anyone to interact in Hyperliquid.

Yeah. All right, content of the week anyways.

Yeah, let's do it. What's the content of the week?

So I'm late to the game here on this one, but, um, uh, so I've just started reading Breakneck, which I think was released in August, but, you know, kind of really, um, it was, I think, in a lot of people's minds through September. Um, but it's, it's Breakneck: China's Quest to, to Engineer the Future. Um, a guy, uh, called Dan Wang, who, uh, was the— is the author. Um, you probably know Dan. He's, he's probably one of the most foremost, like, analysts looking at China. Um, and, you know, really just kind of examine— yeah, great blog as well, right? Um, so just really examine China's, um, how they approach technology and, and geopolitics and how different it is relative to the US, where the US has always been kind of run by lawyers and, you know, China has been run by engineers and mathematicians. And so I think it's probably understanding what's happening in China continues to be one of the most important things that we can do, um, as Americans right now, and, and especially as you think through macroeconomic and foreign policy. Um, and so super interesting book, uh, so I would recommend it.

Yeah, I have to pick it up. Um, for me, I'm rereading Against the Gods, uh, it's a remarkable story of risk, just kind of historical evolution of like risk, and, uh, from Pascal to obviously now hedge fund managers. And so Probably good time as ever, as the markets are very volatile. Although I am sitting pretty on my Western Union position, Rob. You know, it's not because it's rallied a lot, it's purely because everything else in crypto—

I'm in the more volatile assets, so that's to be expected. So, you know, maybe Santi, before we go, I just want to say one thing, which is that they really, uh, they did you dirty on the haircut thing last week. I think the haircut looks nice.

Rob, I appreciate you saying that. There's been now 5 or 6 people, including my partner, that have said that this is the worst haircut that I've gotten in 5 years. So you are welcome back in this podcast any day. Jano, you might have to struggle to come back here, but I think this is a good place to end it. My confidence has gone marginally up with this terrible haircut. But yeah, good stuff. A lot of stuff happening. I'm going to be in New York next week. If you're in New York, Jano's in New York. I don't know if he's going to be around or not, but we we should maybe do an in-person recording.

Yes, dude.

Yeah, last shout out, we're going to do an in-person event in New York as well. It's called Office Hours. Um, it's meant to be just kind of a, kind of like an academic discussion. A lot of folks from traditional finance, folks from Citadel and trading firms, and just that have been historically very skeptical of crypto but are interested in like tokenization and some of these, uh, areas that, you know, like stablecoins. So it's going to be a small gathering, I think 30 to 40 people. If you're around, I think it's on the 18th. But anyways, I'll retweet it, uh, and we'd love to have you guys there if, if, you know, come prepared with spicy takes. And, uh, so yeah, open invitation, folks. And we, we have to hold the line, but, you know, we'll try to get everyone in, in the mix there that, that, uh, we think is good for the discussion. Don't miss it. Okay.

All right, Rob, thank you. Thank you, sir. Have a good weekend, guys.