What Liquid Funds Are Buying Featuring Seth Ginns & Cosmo Jiang

Core premise of why, why I'm investing in altcoins is because I think these are secular growth opportunities with massive and expanding addressable markets, really sharp developers and entrepreneurs coming in to lead these businesses. And those should— if you're coming into a seed or Series A stage startup, and, and you pick the right ones, those should massively outperform a fantastic asset in Bitcoin.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. Explore the gas-free ecosystem at scale.space/ecosystem and follow their journey on X @skale_network. Thanks to SKALE for making today's episode possible. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, everyone, welcome back to Empire. I always look forward to a conversation with Seth, and now I also look forward to conversations with Cosmo, two of my favorite people in the space. They both run the Liquid Fund, respectively. Cosmo runs the Liquid Fund at Pantera and Seth runs the Liquid Fund at CoinFund. So, Seth, welcome back. Cosmo, I think first time on Empire, right?

Yeah. Thanks for having me.

Yeah.

Good. Seth, welcome back.

Thanks for having me.

Yeah.

Thanks. Yeah, yeah, yeah. Seth, a lot of books in the background. Have you, have you read all those? Is that for show?

Is that for show or? No, no, I listen to a lot of books now, but when I— mostly on Audible. When I like the book, I buy the hard copy and put it up there. So the percentage that I've actually read going up a lot, but it's more listening than reading them.

Nice, nice, nice. Yeah, I saw you guys just had 10-year anniversary and Cosmo, you guys just had a nice little feature. I didn't realize. So Pantera has been around since 2013, so hats off to both you guys. And Seth, congrats on 10 years.

Oh, thank you. Thank you. Exciting time.

Yeah, yeah.

Like, uh, Pantera, the OG Pantera, actually has been around since 2003, um, and like as a, as a global macro fund. And the, the current iteration, the blockchain-focused, when, you know, we went all in on— or not we, when that Pantera went all in on blockchain, was 2013. So yeah, it's been a long time.

Yeah, well, hats off to both you guys. Um, so I actually— there's a wide-ranging conversation we can have, um, but I actually wanted to just start with the, this idea of a liquid fund. Um, I think that, uh, liquid funds are generally pretty misunderstood. Uh, and it makes sense, right? The industry has been run by venture firms. I'd say probably 98% of the capital that's flowed into the industry historically, uh, from institutions and institutional LPs has been into the venture firms. And now that is, that is changing and it's been changing for a couple of years, but now it's really drastically changing. Um, can you guys walk me through just like, what is, what is a liquid fund? What is the strategy of a liquid fund? Even, you know, there are, there are, questions I'm curious about, like how many tokens are you holding? What is your strategy?

Do you—

are you trading actively? Are you holding these things for 6 months, 9 months? So Seth, maybe I'd start with you and then Cosmo can go to you as well.

Yeah. So I think one of the, one of the really interesting dynamics about crypto is that private companies have a liquid investable vehicle that anyone can invest in relatively early in their lifecycle. And that, that's a token. And, um, you know, they, they say like to a hammer everything's a nail. So I grew up in the public equities world. Cosmo grew up in the public equities world as well. And, and my view was, look, if, if we ever start to see the institutional infrastructure coming together to be able to, to put together a real institutional quality fund for liquid crypto, for this universe of tokens that has been steadily expanding slowly, but then like having this explosion at the ICO boom in 2017. I was like, you know what, if we get the infrastructure, I'd want to do it. And saw that coming together toward the end of last decade, joined Jake and Alex at CoinFund beginning of '20, and, and we launched this fund to really mirror what I was doing in the equities world. So it's underwriting investments on a fundamental basis, and there were a lot fewer tokens that had revenue, that had value capture in the token. I think Blockworks has done a great job of recently laying out kind of the, the checklist of what makes for a great transparent, investable liquid token. Um, but they're starting to look more like equities where you can model out revenue, you can come up with a price target, and you can construct a fundamentally focused portfolio. And look, now that we have an administration that's driving pro-crypto policy, this is actually going to be equities in the future. You're going to see a convergence. We're going to have tokenized equities. Tokens will start to move into that realm as well. So there's this convergence and expansion of that part of the cap table, of that part of the cap stack that's playing out right now in the crypto world.

What is, what is your mandate, Seth?

So our mandate is as an investment firm to find the best fundamentally driven opportunities on the venture and liquid side. And then on the liquid side, we drive absolute return strategies. So we're investing in secular growth, opportunities where we think the addressable market is very large, the team is fantastic, and, um, there's the opportunity to have a, uh, large return based on a fundamental underwrite over, um, a multi-year period. So it's really what you do in a fundamental hedge fund mapped over to crypto investing on the liquid side with the ability to risk manage because these tokens are liquid.

Yeah. Cosmo, how much, um, overlap is there in terms of running a fund on the public equity side and running a liquid token fund?

Yeah, well, I think the— I think from my perspective, it's, it's one and the same because that's like also all I've ever known. Uh, you know, I think maybe it's helpful to first talk about the taxonomy of liquid funds and then help understand where myself and Seth, who were cut from a very similar cloth, come from. I think people like under— realize that there are very different mandates for different types of funds, right? I think at the very highest level, there's your market-neutral funds whose goal is to generate, you know, whose goal is to generate returns without any market directional risk. So no beta. And then there are more absolute return funds where their mandate can be to take some directional risk. And then those that are just, you know, directionally, fundamentally long, whose mandate is to take a lot of directional risk and hopefully add meaningful alpha on top of that. And so that's what, you know, that's what I do, that's what Seth does. It's sort of in that very classic stock picker mentality of pick good stocks, or in this case tokens, and you should be outperforming the broader market on average and over time. I think the confusion nowadays is largely around, well, directional funds have obviously have very volatile performance when it comes to a very volatile market like crypto. Um, market neutral has been— is extremely attractive to do in crypto because things are very volatile, which increases the amount of return and spread that's available in market neutral type funds. And so the differentiation is less clear when market neutral funds are doing these massive returns anyway. Um, and then there's been this huge tidal wave that, that everyone's been fighting for the last 3 years now, which is the Bitcoin dominance run. And, um, And like, you know, in a world where Bitcoin is one of the top decile, top, you know, top 5% best performing assets in all of crypto, uh, and it's by the way also the most well-known, the easiest to access, the, um, and the one that people associate most with crypto as an industry, all of a sudden that becomes the benchmark, uh, or that becomes a thing that you're judged against, even though that's not really, uh, you know, the purpose of the fund to begin with. So there are a lot of different types of funds. And, you know, where we sit is in that very exactly what Seth said, which is fundamental directional long. And so as a result, like, I— the reason I came into digital assets is very similar to Seth, which is I just saw a real opportunity to bring in everything that I'd done over, over a decade plus covering consumer equities into crypto in a world where there's maybe 5 at the time, maybe only 5 people in the world, one of which was Seth, that really knew how to build a model or knew how to do fundamental analysis. Knowing that that's clearly where the world is going.

Yeah. Talk to me about this idea of like a mandate and how you have to manage LPs in relationship to Bitcoin dominance. And where this question is coming from is maybe, you know, 9 months ago you said Bitcoin is going to be the dominant asset. But if I'm just holding Bitcoin, I'm not— our LPs aren't paying me to just go buy Bitcoin in the open market. Talk to me about that dynamic.

Yeah, it's definitely, uh, it's definitely a dilemma. You have— you go through the, uh, you know, our, our goal is to— our goal at the end of the day is to generate the best returns we can. And so to some extent, like, if you look back and, and you would have known that Bitcoin was going to be the best performing asset, you were supposed to be long Bitcoin. But as a, you know, as a risk manager that's trying to build a process that's repeatable over a multi-year time period, like, that also— like, it's very unlikely that that means that process incorporates you being allowed to do 100% Bitcoin. Right? Chances are you have risk management thresholds that you've stuck to over time that work in quote-unquote run rate regular environments, which maybe means your max concentration on any token is 25, 30, maybe 40%. Um, and, and so in that world, like, if you're only 25% Bitcoin and Bitcoin's the best performing asset, of course you're going to underperform Bitcoin. Uh, like, you just can't by mandate not underperform. And so it becomes a becomes a, you know, and especially as Bitcoin become easier access and again the most recognized asset, it certainly becomes a different conversation. Which is why to a large extent the success of liquid funds is all about, uh, people often say this, but it's about choosing, you know, LPs choose the right fund for them, and hopefully as a manager you choose the, you choose the right LPs who understand what you're trying to achieve. Otherwise you fall into these, you know, these very hard to navigate conflicts.

I think there's a really interesting dynamic with that as well, which is, um, Bitcoin is kind of the— it's like on the COVID of CNBC, right? Like when they're talking about, uh, crypto, it's on the COVID of the Wall Street Journal or the FT. And it's kind of like for mainstream media, like what gets them sucked in so they start reading Blockworks, uh, all the time or listening to Blockworks podcasts. It starts with Bitcoin in mainstream media. And then they, they get pulled over. And when you're going through a period of time where Bitcoin is outperforming a lot of the fundamentally driven tokens, and a lot of the reason why it was outperforming was because you had the Biden administration constantly attacking crypto. I mean, it's interesting, there, there was a lot of positive fundamental momentum across DeFi, across the stablecoin, like really innovative base layers, really innovative companies that were coming out. But like, every time you would get a bid, then you would have the Biden administration come down on the, the space again. And it was like, okay, that's going to come out of altcoins and go into Bitcoin again. So I think having that focus on Bitcoin was a dynamic where it was like the first thing that people were looking at. Now we're actually coming into a period of time where you have an administration that's driven more positive dynamics for crypto more quickly than, than I think just about anyone around the table was expecting. And, and you had obviously broad market concerns around tariffs into, into the end of Q1. But as those concerns started to go away, as those clouds parted, you're now starting to see the market get excited about stablecoins, get excited about access to other parts of the market, understanding that, you know, when you have an administration go from executive orders to actually pushing a legislative agenda and using political capital for crypto advancement, and then not only like being comfortable stopping with the stablecoin bill with Genius Act, but saying like, no, no, no, we're not done. Now we're going to focus on market structure bills. I think it started to become clear to the market more broadly, like, th— this is crypto's real breakout secular growth moment with some very nice cyclical tailwinds as well. And, and that's starting to take a little bit of the conversation, uh, away from, uh, just a maniacal focus on Bitcoin. But, but certainly when you have an environment with the administration attacking and Bitcoin's what's working, it really becomes a, a, a conversation around 'Well, why do I care about these other coins?' Again, I think more recently we've had fewer of those conversations.

Yeah. What I tend to describe is— how do I tend to describe the world? Is I view digital assets as there's Bitcoin and then there's everything else, which is blockchain technology. And Bitcoin can survive, thrive, succeed independently of whether blockchain technology ever takes off. Bitcoin basically has nothing to do with blockchain anymore. Technology, right? Um, other than it runs on it. And then, but there is a world where, and then there's also a world where blockchain technology takes off without Bitcoin ever, you know, succeeding, whatever. And there are real bear cases on Bitcoin. That said, I don't think that world exists, but they, they are two very independent risk factors, fundamental factors. Um, and so when, when LPs ask, it's like, yeah, you should go buy, if you want Bitcoin, you should definitely go buy Bitcoin ETF. Like that is actually the correct decision to make. And then if you want access to blockchain technology, you do have to make a bet that you think blockchain technology will ever turn out large productive use cases. And obviously I fundamentally believe that, otherwise I wouldn't be here. But if you fundamentally believe that, then you should probably get access to that or have exposure to that. And that's why you might, you know, entertain a liquid token fund.

Um, this is the first dare I say, like, cycle, or maybe we're not in cycles anymore, who knows. But this is the first market regime, I'd say, in crypto where it's a token picker's market. Like, Seth, when you joined CoinFund, it's— I mean, you could close your eyes, throw 10 darts at the dartboard, you know, and all 9, 9 of the 10 things go up. Very different market now. Um, you know, you pick 100 tokens today blindly and probably 2 of them go up and 98, 98 don't. Talk to me about market or portfolio construction.

So I think you're totally right. And I think both Cosmo and I love that type of environment.

That's a good market for you guys. It's a very good market for liquid funds.

Yeah, it's, it's an environment where if you do the work, if you have the connectivity, if you're going to the developer conferences, if you can see where the tech is going, you, you can actually drive really good returns. That, that was the biggest frustration over the last few years. You could do the work, but it— you, you weren't seeing those positive fundamentals reflected in the, the token valuations. And there have been some really big changes that, that have happened. So it's not just, it's not just the, the change in administration that's been a catalyst. But, but, and by the way, like, I, I think stepping back, one thing that I'd very quickly add as well is Look, if, if we're wrong and altcoins are never going to outperform Bitcoin, then I don't know why, why you need an altcoin-focused fund. Like, the, the core premise of why, why I'm investing in altcoins, um, is because I think these are secular growth opportunities with massive and expanding addressable markets, really sharp developers, uh, and entrepreneurs coming in to lead these businesses. And those should, if you're coming into a, a seed or Series A stage startup and, and you pick the right ones, those should massively outperform a fantastic asset in Bitcoin, but one that is already in the trillions and, and well along its maturation path, albeit with a lot of upside from there. So when we think about a token picking market, you, you really want to be relatively concentrated. You, you want to do the deep work. You want to, um, have an underwrite that provides for, um, really nice upside. Um, you know, you, you guys at Blockworks put out a, a really helpful transparency framework a few months ago, and, and in my mind, it was almost the consolidation of a lot of discussions that had been happening among portfolio managers and projects where it basically comes down to, listen, and this is for traditional investors, this is going to sound like table stakes, but it's like you need transparency on how management is incentivized. You need transparency on which vehicle is going to be the relevant vehicle. A lot of times these companies have equity and tokens. Well, if you have a token and we're investing in the token, We really want to see you 100% incentivized and 100% focused on the, the token. Um, you want to have obviously strong fundamentals, meaning revenue, um, and you want that revenue or, or user growth if you're a little earlier stage, you want that to accrue value to the tokens. So it all kind of feeds together, accrue value to the tokens, have the management team incentivized on, on the tokens appreciating. And what you're doing is you're, you're creating a structure that is— it looks like equity. You kind of understand what you're investing in. Over time, with some additional legislation, you'll have the legal protections of, of equity as well. Um, and it gives a lot more confidence, not just in underwriting the, the startup-like asymmetric outcomes, but it also gives a lot of confidence for traditional fundamental equities investors to start reaching over into, into the token space when they see businesses that really resonate with them.

Cosmo, I mean, Jason, on your point, like, the, uh, this has been a— the dispersion in the market this year has been like truly crazy. Like, I'm used to a lot of dispersion, and I mean, having been a PM for a long time in the equities world. But like this year, and the reason why there's so many questions of Bitcoin versus everything else this year is Bitcoin's up 24% this year. The average top 100 token through July, end of July or whatever, they're— the average top 100 token is down 30%, right? And so like in a world where the average token is down 30% and Bitcoin's up 24%, and, uh, it's just like the contrast becomes pretty crazy. And in that, you know, it's something like 5% of tokens are positive on the year in the top 100. So it's, it's been quite a, in some ways, yes, a token picker's market. But unless your token is Bitcoin, wow, like, good luck.

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Yeah, I mean, the core of what we do is fundamental underwriting, right? And so what does that mean? You know, we're looking for— and this will sound like table stakes for any equity manager. I probably get like shouted out of the room as saying nothing new, but for some reason this is all very new for a lot of people in digital assets. And that's, you know, part of the opportunity. But we're looking for, you know, like, call me crazy, but protocols that have found product market fit or have a semblance of a product market fit that, you you know, have management teams I can talk to, that I can trust, that I can underwrite, uh, and, uh, ultimately a, a business model that has unique economics that are money-making today, or eventually I can underwrite to some future unique economics that makes sense. Um, and, you know, all that ties into, you know, I, I strongly believe that all assets follow the laws of gravity, which is that the only thing that matters is cash flow. There are some, like, gold has managed to be a special snowflake for a couple millennia, and I think Bitcoin is taking that mantle. But otherwise, if you are not gold or Bitcoin— so literally two assets in what has been obviously trillions of assets over time— you're probably not— you're probably cash flow based. And, uh, and that's, that's, you know, crypto is now learning that lesson right now. And I think, you know, a lot of our criteria fits along that, that path. The—

you know, it's, it's funny, there's— there have been some really cool conversations. So the initial value capture discussion, um, was really around like, if you're generating revenue, you need to put it all into, into a buyback of your token, right? Or, or some other way, like through staking, of, of giving that revenue back to token holders. And, and it was great because you start down that path and then you start to have founders say, well, hold on a sec, I have really interesting reinvestment opportunities. So Like Amazon didn't have to like dividend out or do a buyback with all of their, uh, all of their profit, um, or EBITDA when, when they were in their early stages. Why should I have to do that? And, and it leads to these great conversations of like, awesome, so like start talking about those, those reinvestment opportunities. Start talking about, obviously in a way that doesn't open you to aggressive competitive attacks from your, your peers, but start talking about, uh, ways in a transparent returns-focused framework you want to reinvest that capital rather than giving it back to, to token holders. And again, like, just a fantastic set of conversations to start having with founders that really push you down the path of, um, fundamental investing.

Yeah. How many tokens do you guys hold at any given point in time?

Generally, we're, uh, I'd say like 10, 15-ish names is probably right. The top, top half of the book, or 50% of the book, is 5 names. So pretty concentrated. And then, you know, we tend to have a somewhat longer tail. But yeah, 15, maybe sometimes 20 names. Yeah, we're reaching for that. Really, um, when I think about portfolio construction, even in my prior world, I like— I also had a 20-name book. And I realized over time that that's just because that's the number of ideas I can hold in my head at any given time. Like, any given time, I want to be— try to be the best analyst I can be on any of the names in my book. And I just physically— I think as a lone analyst, I don't think I can physically get above 10, 12. But, you know, fortunate to have the resources and a really strong team that, you know, we can scale to 20.

Well, and also if you think about a market that, um, is pretty narrow— and again, to put another cut on what, what Cosmo was laying out— over the last 90 days— and this is, uh, CoinMarketCap's altcoin index— over the last 90 days, only 37 coins are outperforming Bitcoin. So 37 out of the top 100. Um, so in a narrow market, you want to size up in your winners. In, in the names that have the most compelling fundamental cases. And being able to build that conviction, right? It's great to, to be able to build like memetic conviction, like, yeah, this is like, this has a lot of momentum right now, there's a big community. It is a lot easier to say like, look at that activity, look at that on-chain revenue, Um, like, this, right, this is really seeing momentum, um, from a fundamental perspective. And by the way, it's selling off with everything. So let's lean in and add to that position as it's, um, seeing kind of idiosyncratic activity in its underlying business while the market is getting worried. Um, so having that conviction in larger positions, super helpful.

So how many tokens do you guys hold?

We're relatively concentrated, very similar to Cosmo. So 10 to 15.

Got it.

And so we're on the lower end of that right now.

So you're only holding like 10-ish tokens. How do you— you guys keep mentioning fundamentals, but like, I'm sure you're not just like, oh, their revenue is like more than their revenue. Like, let's buy. Like, what can you— can we double-click on what fundamentals means to you guys?

I mean, growth is the key element. So it's not about absolute levels. It's about where those levels are going, how fast they're growing. And you can also pretty much assume that anything that's on-chain is priced in nearly instantly. That wasn't the case 4 or 5 years ago. That very much has been the case, I'd say, for the last 2 years.

You're saying if metrics move on-chain, like—

If metrics move on-chain, like, so I like to look at revenue multiples, right? And if you pull up like Aave and its revenue multiple, what you'll typically see is that the multiple will stay constant as revenue is going up, which means you're pricing in that revenue growth as it's happening, right? Like, it's in real time being reflected in the, the token. So I'm not going to, to generate any edge by saying, oh look, it's grown 25%, revenue's grown 25% over the last month. That's already priced in. What you need to do is have an understanding of what opportunities are on the horizon and whether that revenue is likely to continue to grow at that pace. Whether it's likely to accelerate, whether it's likely to decelerate. And what's interesting is, just like in equities, you start seeing the multiple price in that acceleration or deceleration in the top line. So if the multiple starts compressing, right, so you're trading below the typical multiple that you trade at, that's typically the token valuation saying, hey, we think this revenue— we think they're over-earning a little bit right now. And the revenue is likely to, to decelerate or maybe even roll over. Maybe we're going into a cyclical downturn. And likewise, if people think we're in the early phases of a really big acceleration, you'll see the multiple trading at a premium to where it normally trades. So you get a lot of information out of how the market is valuing a token.

How do you guys grapple with the idea that the market still moves largely on narratives?

I think equities move on narratives, right? So part of that narrative discussion is, are you going to see revenue accelerate or are you going to see revenue decelerate? Is that narrative going to actually play out in fundamentals getting better? But equities, um, there's a long history of equities, um, trading on narratives where fundamentals then catch up. Tesla being a fantastic example. It was all narrative until it wasn't. And it's like, guess what? Like, the, the narrative was actually right. So that, that I think, like, the more certainty, the more clarity the investment community feels about a narrative, the more it gets priced in quickly.

I may be more forgiving on that question than Seth. I actually tell my analysts to never use the word narrative ever with me, um, because I think it's like, it, uh, really It's sort of like narrative is this way for humans, in my view, for humans to shortcut the brain and just say, oh, it's something, it's this thing, when in reality it's a much more complex system. And I do think there's a big— so there's a lot of things that go into it, but there's a question of time horizon as well as likely there's truth behind quote unquote narrative that's driving action. And so You know, I actually don't— I think the market in short, and you know, over very short time frames, tends to move on narratives, or it's very easy to use that to backwards explain why things happen. But I do think the reality is that on average and over time, the higher, more fundamental— the more fundamentally sound tokens are very clearly outperforming the not fundamentally sound tokens. We do this, you know, I sort of have this stable of name— I think of my investment universe as everything that I think is fundamentally sound, and it's of the top 400 tokens, maybe 75, 80 tokens that might fit that category. And that 75 to 80 tokens, you know, it's outperformed the not fundamentally sound tokens by on the order of 20 or 30% this year on average. Um, well, that doesn't sound— that sounds like— that's like a massive number in TradFi. It's like an okay number in crypto and sort of says people sometimes get it lost in the wash, but that's like a massive number. And so the true reality is that yes, like quote unquote Narrative storylines drive a lot of short-term price action, but the real data suggests that no, it's actually fundamentals matter a lot.

How do you grapple with the idea that, um, so Seth, you mentioned CoinMarketCap altcoin stuff, so I just pulled up this chart of the top 100 coins performance over the last 90 days on CoinMarketCap. And, you know, some of the names are names that you would think would be in here. It's like Morpho and Aave and Aerodrome and Pendle and Hyperliquid and things like this. But a lot of the names are Pengu, SPX, CFX, Form. Crypto.com's token is the top, top 10. What is Stellar? MNT, Tron.

Like, I'm guessing you're not buying anger from people by calling out some of these.

I mean, I'm going off— I'm going— I'll use the word narrative, Cosmo, even though you don't like it. Like, the crypto narrative is that those are not fundamentally driven tokens.

Yeah, yeah. I think— let me give you the fundamental value case for why SPX is up a lot this quarter. No, I'm kidding. But like, I think this goes back to like, what are we trying to solve for? And what is like— what am I as a manager trying to solve for? And like, what is my domain of expertise? And, uh, my domain of expertise is finding fundamentally sound investments that compound and grow and make money over time. Um, and I think as a manager, over and over time, you realize that a lot— you have to learn to be okay with missing things that don't— that to you don't make sense, because it's just otherwise distracting to your process and not helpful. Uh, because you only have so much time in the world and you got to really refine your process. And so in that world, I'm like, dude, there's plenty of garbage that trades up way more than the S&P in like inequities, but like no one really talks about it because— and I don't really talk about it. Um, but so yeah, anyway, this is the point being like my, my focus is on stuff that, that actually makes sense. And there's always going to be stuff that doesn't make sense that trades higher or trades lower, and your job is to not My job is to not let that borrow bother me.

I mean, I, I tell you, like, first of all, there are plenty of times when meme stocks are the best performing equities, um, within traditional markets. So that, that's not unique to crypto. Second thing I'd say is, um, the ability to drive direct value capture and actually change the, um, the, the fundamentals of a token to be more, uh, tied to, to real, uh, value capture. It's probably, um, more, um, of a dynamic system than, than what you see in the traditional, uh, equities world. And but, but even in the traditional equities world, I mean, Tesla was the most shorted stock back in 2013, 2014. And, and it was because people felt like it was a meme stock and well ahead of where, where it could ever go from a fundamental basis. And obviously it was able to catch up. So I think we have an even greater ability in crypto to have a project start to turn on real fundamental angles of value capture. Bonq being a great example here on this list. And then the last thing that I'd say is this list of coins that are outperforming Bitcoin over the last 90 days, it probably has the highest concentration of projects that actually have revenue and have that revenue going to the token than, than you would have ever seen in history. So I, I think there's a very good forward movement on greater and greater fundamental penetration in, in the tokens and the tokens that are outperforming.

Yeah. Talk to me, guys, about— so one part of your job is getting the token, picking the token, the right token. There are two other parts of your job that are, that are interesting to me. One is when to sell that token and the other is how do you execute the trade. Maybe we can start with how to execute the trade. So I'm curious if you guys are just buying these on spot, if you're going to, you know, you can do treasury deals with tokens obviously and get things at at a discount, but it's locked up. Like, how do you guys— you could do, you could do perps. I don't know if you guys leverage and options. And like, how do you guys think about structuring these trades?

Go ahead, Casper.

Yeah, no, I mean, I think it's like, uh, it's all of the above. You know, the core of— if you think about where— if I were to distill down where our strategy is supposed to generate outperformance, it is primarily in the selection of tokens. The other managers are going to be— other managers' edge is going to be around perhaps the acquisition part of the token, and other managers' strategy might be better around the execution side. That'll be the market-neutral guys, the market makers, and things like that. But on the far end, where I'm on the far end of like, I believe the vast majority of our performance, if I were to do performance attribution, comes from stock selection or token selection. Excuse my, you know, Freudian slip, and, uh, and, uh, and less so like the actual execution. That said, we use a variety of options. We primarily trade spot. We have the unfortunate consequence of being a US domicile fund. I sit here in the US, Dan sits here in the US, so we cannot trade on international exchanges, uh, fortunately. And we believe that all changes and the left— the playing field will be more leveled going forward, uh, for us and international funds. But today we trade primarily spot We do some derivatives, uh, uh, to get access to liquidity elsewhere.

Uh, but yeah, yeah, I, I would say same thing, all of the above from an execution perspective. But we think the alpha really comes from selection. I'd just say though, we, we focus very much on having institutional quality infrastructure. I talked about how that kind of brought me into the, the space, feeling like it was, it was a possibility to be able to launch a fund with all of that infrastructure and Uh, that, that's like tri-parties on, uh, spot execution with OTC desks. Um, it's having, uh, IMVM, uh, in certain situations. So very much, um, looking at, um, institutional counterparty risk management, risk assessment, um, because like the, the token picking is what's going to drive the, the alpha, and then you want to make sure you don't, you don't give up the alpha if you have another 22-type event with counterparty starting to go under.

Yeah. What tokens do you guys hold right now?

Oh, I don't know.

I don't know if we can talk about that. I mean, not financial advice, etc., etc. All the disclaimers we already have that on the podcast.

Are you—

can you not talk about the tokens you hold?

We tend not to, but I can at a high level. The Our largest position as a firm remains in Solana. You know, we're going to be really bullish on Solana being a leading L1 blockchain. We are expressing a lot of our views in the other tokens through digital asset treasuries right now. So, you know, we're the largest investor in Cantor Equity Partners outside of SoftBank and Tether, of course. And so that is a large position that we hold. In lieu of Bitcoin. And then we also, you know, we're one of the largest anchor investors in Bitmine, and so own that in lieu of ETH.

I, um, I, I'd say one of the areas where we've been very out of consensus, um, this year, and it's paid off well, is, um, Ethereum. So we, um, we had built a, an ETH position primarily in, um, the options market going into May. And the thesis was that there was a great hindsight thesis that could play out, which is like everyone was totally down on ETH, but ETH is still— it was still the second largest market cap. It's the place where TradFi was coming on to crypto rails. It's the home to the plurality of stablecoins. It, uh, it is a little bit of an activist play right now. People over the last 6-7 months have been really frustrated with, um, price, uh, price movement relative to Bitcoin being really underwhelming. And, um, you had people from the Ethereum Foundation to project leads trying to do whatever they could to, uh, to get ETH on the right path again, to, to drive a more commercial mindset. You had Etherealize come into being, which is an institutional business development arm. So just seemed like there were a lot of catalysts that people were ignoring. Into— I couldn't say what the, what the big price catalyst would be, but it felt like price itself would be a catalyst for refocusing on ETH. And we started to get that coming together in May And then we start to get the digital asset trend. So the digital asset treasury trend with S-Bet coming initially for ETH, then Bitmine, and those are driving now a sustained flow into ETH, which I think has just— it's added tailwinds and credence to the different components of that hindsight narrative really playing out. So that's been a big counter-consensus positioning for CoinFund this year.

So if I'm listening to this podcast and I'm saying, all right, these guys are really smart, this is great, but there are two things that they hold are Solana and Ethereum. That's not super unique. I'm sure part of that is— sure, part of that is because you guys can't talk about it and, you know, lawyers and all that kind of good stuff. But are there any like Are you able to go a little deeper on anything? Like, are there any sectors that you're excited about or— Yeah, any— I mean, I don't know. I'm sure you can't mention certain tickers, it sounds like, but any deeper that you guys can go.

Dude, that's pretty vicious. You said your pitch on ETH was not interesting.

Yeah, I mean, look, I know that people being like a classic Blockworks, not liking ETH.

Dangerous, man.

Dangerous. I thought you were on board now.

Come on. Well, look, I mean, you know, one token that's done really well recently, and I think it's well known that we own it, is Athena. As the whole world looks at the explosion in stablecoins we're going to see post-Genius Act, I think that's, you know, something that we're really excited about. The post-Genius Act with regard to stablecoins, and then you look at, you know, Paul Atkins' speech on DeFi last week or the week before, like, holy crap, like these guys are really, really leaning into lending in DeFi and where things are really going to open up. And so if I look at Athena, you know, it's growing like a weed. It's very pro-cyclical and we're in a pro-cyclical environment. So it's growing like a weed. You can map out to over, you know, a short period of time them getting to closer to $20 billion of TVL, you know, close to probably, you know, a few hundred million dollars of earnings. You get to— you can get to a really, really interesting price target on Athena in the very short term. Because of all these secular tailwinds and frankly, because they're outcompeting everyone else in decentralized stablecoins.

Yeah. So I completely agree. I think stables are a really interesting theme. Part of the reason why I don't like to talk about specific tokens is because then they're the ones that I haven't named and it's like, you know, talking to the founder when you haven't named their token on Empire. But look, I'd say if you think about that theme, Athena, love what Guy is building as Cosmo noted. Look, I think Aave very well positioned for proliferation of stablecoins, leading BorrowLend protocol. Pendle very much on the, the stablecoin theme as well. And then there's a private— there's an ICO which is going to be launching in early September. They did a really interesting raise. So this is Plasma. Great team there. Paul is the founder. They said, you know what, come and lock your stablecoins with us. And if you lock your stablecoins, whatever percentage of the overall stablecoins that you represent, that will be how much of the ICO you can participate in when we do the ICO. So they ended up getting $1 billion of stables. The first $500 million came in, I think, 2 minutes. It was sold out. And then they came with another 500. It sold out in about 20 minutes. Then they said, we're not going to come with more. So it was only a billion that they took in. And then the ICO was, I think, 7 times oversubscribed. It was 50 million that they sold at a $500 million valuation. I think they're approaching this the right way. It's a stablecoin-focused chain. And the monetization angle is to bring all of the traditional stablecoin players together onto their chain and then have a bunch of services that they monetize. So I think that's one to watch in the post-Labor Day period, so early September. And again, great team, close to Tether. And with the Genius Act, I think that's going to be an area that sees a huge proliferation of activity.

Maybe rounding out this conversation, there's some other stuff I want to cover too on these DApps and other stuff as well, but rounding out this conversation on tokens and portfolio construction, when do you sell?

So we like to let winners run. I think that's super important when you're dealing with strong secular growth, emerging areas with fast-growing addressable markets. You don't want to try to call the top. But we sell on drawdown. So when we have a token that has really strong fundamentals, really fast growth, it's doing well, we'll risk manage that position when it has a decent-sized drawdown. And that's adjusted for the volatility of the token. But in my view, you want to let winners run and then, and then adjust on a risk management basis once they've started to see fundamentals stall out or prices stalling out, either because of something token-specific or something happening in the market?

Yeah, I mean, from my perspective, I mean, a lot of similarities to what Seth does, but maybe starting from how I think about risk management, starting from portfolio construction, there's always a top-down view of where I think we are in the market. How heavy we want to be playing in any given sector or factor, meaning large cap, small cap, you know, DeFi, non-DeFi, uh, L1s. And so that, that plays a lot of role in our portfolio construction and relative sizing. And so that could drive some, uh, not idiosyncratic or not bottoms-up decision-making, um, but from the bottom-up perspective, when we're looking at any position in isolation, it very much is like we have a pretty, uh, I think We're pretty process-oriented, not to say that others aren't necessarily, but our process is, you know, we check KPIs for our tokens at least once a week. A lot of that has been made a lot easier thanks to Blockworks, you know, dashboards. Thank you.

It's a good marketing episode for Blockworks.

Yeah. Otherwise, it used to be a lot of manual work. I used to have all these dashboards created for ourselves in Excel, and now it's like, well, I guess fine, we can use the Blockworks one. It's just as, it's almost as good as doing it ourselves. And it's definitely a lot more time-saving.

Hopefully better, hopefully better than your dashboard soon, Cosmo.

Yeah, yeah, hopefully better for sure. I'd love for that to be case. And so we're catching our KPIs weekly and I agree, like you wanna, when you're invested in high growth stories, you wanna let them run. But I am also, when things are trading at sky-high valuations, the fundamentals have to keep going. Otherwise the second the market sniffs weakness, like it's, it becomes tough. Um, and the more, and so we are, we are hyper-focused on, on how the weeklies are tracking. It's not that if it's down, revenue is down week over week, I'm not going to sell, but it adds to it, especially if it's over a few weeks. Um, and, uh, and then, you know, we go back to our thesis, we re-underwrite our thesis on all our, all our, all our positions every, at least once a week, reviewing them. You know, these are the 3 reasons we own this, these are the reasons why now And if any of that's changed, we ask ourselves why that is and reconsider our sizing as a result.

And by the way, I mean, we have, uh, just to like— I, I think it's really important to lay out like what fundamental investing looks like in crypto from all of these different angles. We, we also do a weekly portfolio review and risk management meeting, and it's literally like a 60-70 page packet. It varies by week, and It's macro, it's top-down crypto, it's what's outperforming in the top 100, in the top 300, what's underperforming in each of those areas, what's, uh, working and not working in the portfolio, governance proposals, key news, charts of the week. And then we have 2 or 3 KPIs for every name, both in the portfolio as well as names that either under consideration for the portfolio that have recently come out of the portfolio. And it's just so that everyone is level set around the table, whether it's myself or the analysts or the trading team or the venture team, right? So we understand where we're seeing fundamental momentum in, from a top-down perspective, which sectors are seeing that momentum and which are maybe seeing momentum recede.

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So it's super important. I think people have to realize that when you have a liquid token, it's a huge responsibility to do that because you're now in the open market and And so you should be engaging with who your ultimate stakeholders are, which are your token holders. And increasingly, we're seeing as the market starts to focus more on fundamentals and not pure hype or pure narrative, if you will, then the management teams are realizing, oh, shoot, like we actually do have to, like, focus on fostering a healthy investor base. And so we're seeing a lot more engagement on that side. And we think it's just so critical and so important to the long-term health of a token.

Totally agree. And I— what's interesting is under the prior administration, I think a lot of teams were afraid to do that investor relations role because it would make them look less decentralized. So having an administration that is moving in the right direction from a policy perspective, that's encouraging teams to come in and not having teams come into the SEC so that they can get a Wells notice, but encouraging teams to come in to have a real dialogue, I think, is encouraging more teams to think about that investor relations function. We're actually seeing the digital asset treasury serve a big role in that realm as well. If you look at like the Bitmine website, Tom Lee, who's the chairman, um, put out a great video a few weeks ago, a, uh, a detailed presentation. I think some of the key elements of what they're focusing on are the velocity with which they're adding ETH to their, uh, their balance sheet and how that compares to how quickly Strategy added Bitcoin. Um, they're, they're very focused on the, the liquidity of the, the equity as well and how that's opening it up to institutional investors. It's one of the most traded equities on the market writ large. I think it was just behind Uber, uh, when they ran the numbers a few weeks ago. So those types of messages, getting it out to traditional investors and crypto investors, I, I think we're seeing the digital asset treasury serve as a nice bridge to then seeing crypto protocols, uh, lean in in a big way in, uh, in investor relations.

Should every founder with a token, with a reputable token, whatever, fund token with fundamentals, whatever, be thinking about a digital asset treasury right now?

I think you need a certain amount of liquidity. Yeah, um, because the digital asset treasury, what, what's it doing? It's doing a few things. One, it's driving education. So big, big role, right? Educating traditional investors about what the protocol is doing, about what what Bitcoin is doing, what ETH is doing, what Hyperliquid is doing. When these digital asset treasuries come, Ina, they're great education moments. They're also removing some friction. So a lot of traditional equities funds can't own tokens directly. A lot of tokens don't have ETFs. The ETFs often, well, ETFs right now cannot stake, cannot do yield generation. So there are a lot of frictions that are overcome with the digital to Treasuries. But those flows from TradFi, they're massive compared to the flows that, that we have out of crypto-native funds right now. So you need to be able to absorb tens of millions of dollars of demand, um, on a daily basis. And that really limits the opportunity right now to call it the top 50 or top 100 tokens. But Over time, I think you'll see more of these bridges coming across, and then you'll have traditional funds after a market structure bill going directly to tokens.

Yeah, when I think about how this DApp space plays out over time, I think there's two outcomes that are reasonable and possible, or two reasonable possible good outcomes rather. There are plenty of bad outcomes, which maybe we should talk about, but on the good outcomes, One is you, you just have a sustainable, self-sustaining flywheel business, much like MicroStrategy has achieved. And in order to get to that scale, you really need $2-3 billion of public float to get, be able to get the full menu of, uh, of capital markets options available to you, whether it's convertible debt or preferred or things like that. Now, to get to a $2 or $3 billion public float debt, so that public float excluding insider ownership, you probably need to be a $10-15 billion FDV token plus. Otherwise, how on earth are you going to support it? $2 billion debt. Yeah. Um, and so there's only so many tokens where I will factually achieve that self-sustaining financial engineering flywheel. That said, another totally fine option, and something that we are advising, we get a lot of questions about from our portfolio companies, and we do ask them to consider, is that there is a world where you set up a dApp because it's just really good for your ecosystem, right? What these dApps are, they're almost like a third leg of the stool where the other legs are, you know, your Equity Labs entity, your foundation entity. Both of them are hamstrung in a lot of ways, um, from doing certain things. The Equity Labs entity totally can't talk about the token. The foundation kind of can, but it's not supposed to pick favorites, not supposed to be totally independent, neutral body, can't make profit. Uh, but a for-profit public company can pound the pavement and, and on, uh, on your token, which is what Tom Lee is doing out there with Bitmine. And so that is, and it can make very aggressive bets in deploying in DeFi that in a way that the foundation and the Equity Labs entity cannot. And so it really is a third leg of the stool if the capital markets will give you permission to do that. And, and that, that if is a big if, like not every token should or will or should succeed in raising capital to launch a dApp. But if they do, like, God bless, you should.

Yeah, I've seen this with Pavel and Telegram, right? He's, he, he can't be out there pumping the TON token, but once they have a dApp, you can talk about the, the dApp. So. Um, which then got Michael Saylor to talk about Telegram on Fox Business. And it's, it's, uh, yeah, it's, it's weirdly the, the marketing angle of the dApps is almost more important than the financial engineering angle.

That, that's the, the TON one has been a great launch and, and again, a big visibility, um, expanding event for them.

Yeah.

Um, zooming out on dApps, um, there's two frame of minds, I'd say, in terms of like how the industry is viewing these. One is, uh, largely I could bucket it as these are a fad. This is a 6-month play. It'll blow up in January. Fad. Good for you for making money, but this is a fad. There's, uh, maybe the other side of the industry says, uh, look, this is the new reality and you have to position for the new reality. Um, this is not a 6-month fad. Sure, the MNAV might, you know, the— it might collapse or whatever, but like this is These are, these are, these are here to stay. Um, which I'm guessing you guys are both in the latter here.

I, I think this is squarely bringing us down the path of convergence between crypto markets and traditional finance. So this to me is like, this is like capital saying, okay, we get it, the regulatory and policy landscape is opening up. This is like a material change. This is like probably like the second biggest growth opportunity outside of AI. And this is actually the one that is more directly investable. They're like, there's more accessibility. It's clear where you want to be deploying. And I think like what you're seeing with the DApps is that capital flowing before these funds can invest, before traditional funds can come crypto native, before they can do things on-chain. So I think it's like It's, it's capital flowing in a very efficient way to where it sees the biggest opportunity ahead of actually having the full regulatory green light to do that direct engagement. So I think as you get a market structure bill, you start to see the MNAVs come down. You probably see concentration in a few big winners across each ecosystem. Um, and then like it will still take 2 or 3 years for every traditional fund to onboard and be able to engage in tokens directly. So I think these are here to stay, but, but I think they're like, they're a reflection of this, like, of markets saying crypto is real, it's important, we want to deploy now, and we don't quite have the, the regulatory clarity to be able to go direct, so we're going to go through these bridges until we get that clarity.

Yeah, I mean, dovetailing on Seth's point and not answering, you know, Jason Yanowitz's question, um, the, uh, I do think one of the most and like least, most, uh, less, the least well understood, the least underreported thing, the most underreported thing is the real, is the fact that Coinbase getting added to the S&P 500, I think was a very groundbreaking event because now every single asset manager in the world whose benchmark is the S&P 500, all of a sudden now is required to decide whether they are overweight, underweight, or equal weight crypto. Before this, before April, before that happened, you could choose to ignore it. But now if you manage any money whatsoever in the whole world, all of a sudden you have to care about crypto. I think we're now seeing that reflected in the markets, right? You're seeing that reflected in Coinbase and Robinhood performance and Circle's IPO performance and the emergence of DApps and the strong market reaction that they've gotten. And, uh, and so I, uh, this is all part of a very large trend of equity investors are now required to allocate or make a decision on allocating digital assets. And they're clearly choosing to overweight rather than equal or underweight.

It's funny. I totally agree. And I was talking to a friend in the industry today and he was like, so I said, look, like one of the frictions that gets overcome by DApps is if you're a mutual fund, You can't own an ETF on a commodity. That's just like, that's not in your mandate. But you know what you can own? You can own strategy. You can own an operating company that owns a balance sheet in crypto. You can own Bitmine. You can own S-Bet. And he was like, yeah, but like, is a mutual fund going to want to own Bitmine? And I was like, they're going to want to own it. When their closest competitor just beat them in their annual performance or in their quarterly performance because they had a big position in Bitmain. And we saw that a few years ago, one of my friends who runs a small mid-cap fund was like, "Okay, I just got trounced by my competitors that owned a bunch of the mid-cap miners, Bitcoin miners. Tell me about them." Like, how do I get up to speed on them? So it's when your competition is starting to run circles around your performance because they've owned these names in this sector that you don't quite understand. That's when you say, like, hold on a sec, I need to understand what's happening here.

Mm-hmm.

Yeah. Price is the best marketing. Yeah. What is the— what is the counter for this? Like, what is the— you guys are putting your thinking cap on and you're saying, okay, maybe these could really blow up or like maybe this could end really poorly. What is that argument?

How dare you ask us to put our thinking cap on?

What's the narrative here, Cosmo?

I mean, look, these are clearly reflexive up and down, you know. And so, you know, the reason why they're reflexive is because when their MNAT premiums are positive, they can more aggressively buy the underlying token. and when their mNAV premium is compressed, they can't buy the underlying token. And to the extent that was a persistent bid, uh, leading to positive price reaction, potentially leads to negative price reaction, which, you know, has a negative, uh, negative flywheel effect to it. Um, and so I think the, uh, so that's certainly one way of just that they are, you know, they're, they're not, not factually, but they act like levered bets one way and the other. Um, the other is actual leverage. You know, today we don't see any meaningful leverage on any of these guys. People talk about MicroStrategy's leverage all the time, but If you've ever put together the cap table on it, you realize it's like total non-issue for them. And it is a non-issue for basically every dApp that's been launched so far. But inevitably, you know, we're seeing the genesis of a whole new category of companies. So there's a lot of capital flowing in, excess returns drives incremental competition, which compresses returns, which causes people to reach out on the risk spectrum to drive returns. And that inevitably leads to leverage, right? And so we haven't seen that yet. Presumably someone will do something crazy either on how they manage their treasury or how they, how they put on leverage that might cause things to go under. That would be the bear case. Who knows if that plays out, but that would be reasonable.

And I think that— I think your point, Cosmo, about how— and totally agree, leverage is probably the thing that creates some of these trading— creates the environment where some of these trade under their net asset value at some point. Um, but, but I think you're, you're going to have underlevered, uh, DApps as well, um, that will end up scooping up the, um, the, the DApps that trade under their, uh, NAV. So, and, and all you really need is, um, one or two players to propose an acquisition, and then I think everything goes back above NAV again because it's like, okay, I get it, they're going to be buyers there. I also think right now it's interesting. There are a bunch of investors. I was talking to a friend who's in town from Hong Kong, and she said traditional equities funds in Hong Kong had missed a bunch of the original deals on the digital asset side, but they're waiting and they're coming in as they see net asset value multiples compress. They're stepping in and buying in the secondary market. And we saw that with S-Bet. Its multiple compressed all the way down to like 1.2 times net asset value. And then you saw secondary buyers come in and it expanded all the way back up to 3. So I think there are a lot of protections right now. That's not going to last forever. And I think like, so think of it as being in the early innings here, but eventually it will get long in the tooth and then you'll have some of these early innings for debts. Oh yeah. I think we're, I think we're early innings here. I'd say like third, third inning.

Cosmo, you agree with that?

I think, I hate calling innings because when I remember when we did the first debt deal in the US, DFDV, I was like, man, this is super non-consensus and I don't know, but like, let me structure some downside protection. And we did it. We wrote what we thought was a big check when they couldn't get money from anyone else. And I was like, okay, there's like one and done. This is going to be the only treasury company in the US outside of Microsoft. Strategy. And then, and then the second one approached, Cantor Equity Partners. Okay, fine. Now it's like two and done. This is definitely it for digital asset treasuries. And now we're sitting here like 100 pitches later and everyone's doing them. And so I don't know is the answer, but I think one marker of that is where the incremental capital is coming from. Like for sure, the crypto native capital is getting increasingly tapped out. And so like crypto native capital is maybe nearing the end of its later innings of where it can deploy. But if you look at Sharpling yesterday, Sharpling just raised $200 million in an overnight session. Like, they raised it at $200 million in roughly 2 hours after market yesterday, 2 days ago, from 4 people. That's 4 funds putting in an average of $50 million each. Obviously, zero of them were crypto funds. We are the largest allocator in DApps by far in crypto. And like, I put in a— like, they obviously called me and I asked if I want to participate. I was like, yeah, this is my size. They're like, oh, that's like That's like small potatoes. And so I was just like, oh, wow, okay. And then they obviously print this. So we are now seeing serious big money allocators start to take these DApps seriously. And so for them, this is— if you're T. Rowe or you're a capital group, like $50 million is literally nothing.

That's what I was going to jump on. So you flip it around, then $50 million is a lot for crypto native, but that's what makes me think it's early innings because $50 million is like, that's right.

It's like below their minimum. They had to go out of their way to say, fine, I will maybe put in as small as $50 million because I think it's interesting.

Who are the 4? I haven't seen this announcement yet.

We don't know.

They didn't name them.

Yeah, got it.

Seth, when you see like, you know, a deal like the one we were talking about before we recorded, like, you, you don't think that's like a little toppy?

So I think we're going to go through some mini waves. So there is a little bit of exhaustion as Cosmo was laying out from this first wave. But I guess my point is the engagement with digital asset treasuries, the ability of the multiples, the MNAPs to expand again, the wave of M&A activity consolidation. I, I think we've seen very little of that to date. So maybe the first 3 innings were about a lot of launches of new digital asset treasuries. Maybe we're in the 8th inning or 7th inning of brand new launches, certainly for the super majors, where we've already had a bunch of Bitcoin and ETH and Solana, um, digital asset treasuries. But I, I think we're in the early innings of these becoming very big companies and attracting a lot of traditional financial capital. I think, you know, if you look at again the purchases that ARK, that Cathie Wood has done of Bitmine, she's done a few hundred million, which is a great sign of support, but it's small compared to where she could be across her funds. As she builds that into a full position. And she's on the cutting edge typically. And then you're going to have a lot of the fast followers and then the slower followers coming after it. So that, that's why I think we're in the, the early innings here. But I, I mean, just looking at some of the— I'll give you the, the latest volume data here because I pulled it up earlier today and, and it's now stale. But like, it's 1:30 in the afternoon when we're recording this, and Bitmine has traded $2.5 billion. Like, that is wild, right? $2.5 billion today, and it's not like— we're not even an hour before close. We're a few hours before market close. So these are liquid, they're attracting a lot of attention, um, and, and that's where I think it's early days. There, there are going to be a lot of these $200 million plus overnight block trades coming. And it's not going to be in the pipes, it's going to be after they're trading, after they're registered and fully liquid. And but they're attracting those funds that are making a bet on these underlying tokens from a fundamental tech innovation perspective.

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Well, I think the key question that I've been asking a bunch of different players around the space is, look, if you own a— let's say Coinbase does their tokenization of coin equity later this year, early next year, which is what they're planning on. And let's say that that's trading 24/7 and it has plenty of liquidity. If you're a fund that owns Coin stock today and it only trades 9:30 to 4:00 Monday through Friday Eastern time, are you fulfilling your fiduciary responsibility to your investors by holding that traditional equity rather than holding the 24/7 liquid coin tokenized equity? And I think the clear answer, if there's enough liquidity, is going to be no. So that ends up— then you, you end up having that trading, getting people to onboard, come into the crypto space and be able to own equities that are tokenized. Then Robinhood does that, Circle does that. Then, then you get to the traditional brokers like Schwab, you get the banks coming on and it becomes this tsunami of equities, traditional equities that start trading 24/7. And then from there, these digital asset treasuries, right? These are going to be mid and large cap. They're going to go tokenized. And just in a similar way, their holders are going to say, well, obviously— and they're some of the more forward-thinking equities, traditional finance equities holders. So they're going to say, well, hold on a sec. Like, I'm obviously going to own the tokenized version that trades 24/7 because I don't want a basis between the underlying and the equity that I own. So I, I think you're going to see it move very quickly when it starts. It will move very quickly. The market structure bill is probably a key component to getting that to happen, but I, I think everything is 24/7 very quickly. And look, NASDAQ, NYSE, they get it. They filed for 24/5. I think they have to. They're real operational concerns. Like, if you're a 9:30 to 4:00 Monday through Friday operator today, exchange, broker-dealer, anyone on the infrastructure side, you're used to doing your tech upgrades in the evening or over the weekend. You're going to have to switch into a mindset of 24/7 markets where you're going to have to do your upgrades in parallel and then do shifts into the, the new upgraded version. So I think there, there's some inherent advantages to the, the crypto-native players And then there are going to be some real steep learning curves that have to come together to get the rest of it going. But that's where the future is, I think, and it comes really quickly.

Yeah, I agree.

It's pretty simple, I think, like, or sorry, it's not simple. I think it's very complicated. But for me, I like to keep things simple because, as, you know, Janno noted, I don't like to think a lot. But I think in 5 years from now, I'd be shocked if not all the financial applications on your phone were running on blockchain. Chainrails. I'd be shocked.

Let's go.

It's an exciting future. I, I like to— the framework I like to use is like, if you can envision it and you can kind of see the path to get there, it happens way faster than you'd expect in crypto. And, and Cosmo, like, I think you're spot on. Like, it is so clear that you'll have like stablecoins being used to settle these securities. Securities will be trading 24/7 across all different securities markets. So And by the way, securities, also commodities, because a lot of tokens will be straight-up commodities. So like, you can see the path to getting there. Payments, you can see the path to getting there. So I'd say like the next 2 to 4 years, bam, this all comes together.

Yeah, yeah. Last question here before we wrap this up, um, what sectors in crypto will benefit the most from these digital asset treasury companies? And my thought here is, okay, you've got billions of dollars of ETH, then, you know, we had Avichal on, we were talking about ETHZilla and they want to generate yield on the ETH. So then, okay, you got to put that— that ETH has got to move on chain. And who's going to benefit from this? I mean, Seth, you mentioned Aave. Like, I imagine Aave will benefit pretty greatly from this.

Yeah, I think it's all the DeFi players, right? That's right.

Right.

And I think it's all the DeFi players. It's all the large-cap DeFi ecosystem. We're going to see a lot more— like, these are— when you think about what DApps are, they are— they're funds, right? And they will deploy capital as they can to maximize yield. And, you know, you're going to find there are really interesting yield opportunities across DeFi today. So anyone where— anyone that's generating excess yield on reasonable amount of risk is going to find— going to be a huge beneficiary, whether that's Athena with their 10% stable yields, whether that's, you know, whether it's staking providers or loop lending providers, uh, those are all going to be massive beneficiaries of this.

I, I also think one area— it's going to be anything that people can fundamentally underwrite. Um, so totally agree, DeFi is going to be one of the, the key areas, base layers. I, I think one of the hot areas that we haven't seen activity in yet, um, and, and I think it should come soon, is the intersection of AI and, and crypto. Um, I think that's like, it's such a big Mag 7 theme. It's such a big traditional markets theme. Um, and I think there's some really interesting opportunities, um, at that intersection of AI and crypto. So I think that's an area ripe for digital asset treasuries.

Hmm.

Nice. Guys, anything we missed?

That was great.

I, I think, what do you guys—

what do you guys—

Seth and Cosmo, here you guys talk, I mean, you agree on pretty much everything, I think.

But, uh, I don't know, what are you guys on Pump?

What's up?

What are your views on Pump?

I, I think it's hard to bet against, um, a team that has a lot of capital and is, um, very ambitious. Um, but, but look, I think, um, it, it came out fully priced, and you're going to need to see the market kind of absorb that. Um, and, and that's what's been happening since the, the launch. Um, but I, I think they're going to take a lot of shots on goal with the capital that they've raised, and, um, there's going to, to likely be an interesting time to, to deploy there.

All right, I tried. I, it sounds like we agree on that one as well, you know, so I don't know.

But, but there's an obvious disagreement— East Coast, West Coast, come on.

Although I have, you know, Columbus Circle in my background, so—

and I love LA, so—

yeah, there you go. Seth, Cosmo, appreciate you guys.

Awesome, good job.

Awesome. Yeah, thanks for having us.