Why Is This Cycle Different? | Weekly Roundup

Let me share another snippet from this conversation from this morning with this big asset manager. He's like, 3 things: stablecoins, there's cash-flowing protocols and applications, and Bitcoin has become digital gold. And there's a massive generational wealth transfer down to millennials and then eventually Gen Z, and they're going to buy Bitcoin, not digital gold. And they're going to want— they're not going to invest in the stock market. They're going to invest in crypto tokens. He's like, that's what we care about.

That's a 20-year bet. 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.

All right, everybody, welcome back. Happy Friday. Happy Saturday. Whenever you're listening to this, it is a beautiful day in New York City.

Santi, what's up, sir?

You look like you're in a hotel.

I am in a hotel. I'm traversing my way to DAS, uh, so I'm really excited to be there. Um, you know, it's, uh, I know where people want us to talk about macro prices of all over the place, and the sentiment on crypto Twitter is like terrible. Yeah, it's, it's one of those times where, you know, crypto markets feel like, like a young teenage teenager that is like has zero patience, and if you don't give them candy they just like start, you know, throwing a tantrum. But, you know, I was thinking about this this week, like there's just a lot of things to be excited about. It just feels like— I mean, we're probably going to see it in DAOs, like the amount of institutional interest in crypto is strong. Um, it's just one of those weird moments in the market where everything's going down, not just in crypto. So it's like, you know, drawing conclusions because the NASDAQ and S&P went down based on crypto just feels like a useless exercise.

I mean, okay, not to turn this into a DAS ad, but I will. But, but no, actually, like, I think DAS is very indicative of the discrepancy in the different types of crypto markets. So if you look at crypto Twitter right now, like you said, like, giga bearish. And then I didn't— I don't— neither of us went to ETH Denver, but I heard it was like, you know, very bearish, like very like low vibes. Like, you know, people were like very disparate at side events. Like, I don't know what to build. The investors like, I don't know what to invest in. Das is— again, this isn't actually just an ad for Das, but like, it's a very different type of market at Das. Like, people wear like a suit at Das to give you a sense if you've never been there. And we—

to look at the numbers, usually Das had like 800 to 1,000 people.

A year and a half ago, we had our biggest Das, which was 1,200 people. Then at Das London in March, we had 1,700 people. We just passed 2,100 tickets today. By, by far the biggest DAZN. We've never had over 2,000 people. The last one, DAZN London 1724, was the biggest. We're going to end at like 2,500 attendees, which blows past all projections. We sold out of the VIP tickets like this one, like 3 and a half weeks ago. I just think there's basically two markets developing. There's the crypto native, plays a lot of games, perpetually online, like very internet native.

And they're—

the game they've been playing is not working right now. And meme coins were probably the top of that game. They were the most like perfect example of that game. And the institutional crowd is all in right now. I mean, we had a meeting this morning with like one of the largest asset managers allocating to crypto. They are all in. They are trying to figure out how to value the long tail of tokens because they're just allocated to Bitcoin and ETH right now. And like, they're all in.

And so, I mean, of course, like, you know, we talk about in this podcast about narratives a lot. And I think there is this dynamic where the longer time you spend in crypto and you go through a couple of cycles, you become cynical. And I think you should always be skeptical by default. 'Cause you know, it's something new, it has risk. It's, it's when you're trying to disrupt something in anything that you do, you have to be skeptical. I think it being a curious person, it also hand goes hand in hand with being skeptical. Like you, you ask questions, you question assumptions, like it draws your curiosity, your thirst for knowledge. But being cynical is something that I've observed, like so many people that I've met over the years in this space just eventually grow tired and batter down and just stop believing in the tech because yeah, look, it sucks. Like there's a lot of bad stuff in the industry that we just see it more in the open. The analogy that I draw is like, we talk about how much we love open source, but like, it's like if you saw a building being built, you're going to see like in the open, most of the time you walk around these cities, they have like a protective layer where you don't see it until it's like fully unveiled.

There's a reason for that. Cause if you saw how it was getting built, you'd never step into that building.

You don't want to see the plumbing and you don't want to see the scaffolding and you don't want to see all the inner workings. And, and I think it's like when you're building in the open, um, and when you're especially an open-source system, it's going to get messy, right? Uh, we're not a perfect industry, but yeah, I think, I think we're at that moment in the time where it's just easy to become cynical because prices are not going up, and you know, that, that ultimately gets at people. But you know, I think, um, a lot of the institutional crowd, like if you've been working at BlackRock or some of these players and there's always been, I think, like really young people within those organizations, or just people within those organizations that have taken an interest in crypto. And now they can actually go to senior management and make the bull case for like adopting crypto in some capacity in their business. And a lot of it is tied to the regulatory environment. I mean, like, shit, since November of last year, like, it's a total 180. And I think like I just continue to be really excited about that. There's just so many things that we haven't— we try to learn about them, but so many organizations have been so quiet about their interest in crypto that now it's sort of, sort of starting to come out. That's one of the reasons why I think DAOs is going to be interesting this year, is like having those conversations with those players. They come to DAOs to maybe share it more publicly or learn some insights, but I'm really excited for that reason, like just learning learn. Like, like JPMorgan is an example, right? Most people like look at what Jamie Dimon says publicly and it's like, oh wow, like they, they're really bearish as an organization. And then you go talk to the team within JPMorgan and you're like, whoa, like they employ— it's a massive team that's been working on crypto for many years. And it's sort of one of those things that, um, until you go talk to them, um, it just becomes difficult to appreciate.

So let me share another snippet from this conversation from this morning with this big asset manager, I said, does, does the—

how—

what is the impact of all these meme coins? And it feels like the industry is kind of like self-immolating and like hurting ourselves and like, you know, just has not been pretty the last couple of months. And the Libra meme coin and Trump meme coin and Melania meme coin, all this stuff. He's like, he's like, we don't pay attention to that because obviously those were scammy things. He's like, we're not— he's like, you guys thought they were real things and you guys made up these stories and you make up these narratives that they're like things. He's like, we look at that. It's like, not to put us on this high horse, but it's like, obviously that was not going to end in a pretty way. He's like, we are very focused on stablecoins and the fact that some of these applications built on top of Ethereum and Solana are making money and that did— and that Bitcoin has become digital gold. He's like, three things: stablecoins, there's cash-flowing protocols and applications, and Bitcoin has become digital gold. And there's a massive generation of generational wealth transfer down to millennials and then eventually Gen Z, and they're going to buy Bitcoin, not digital gold. And they're going to want— they're not going to invest in the stock market. They're going to invest in crypto tokens. He's like, that's what we care about.

That's a 20-year bet.

He's like, I'm not paying attention to like, yeah, this, you know, Solana DEX volume going down week over week. He's like, I don't care. And it actually reminded me there was I thought Dan— I forget Dan's name. He's one of the co-founders of Messari, just real OG in the space.

He had a great tweet.

He said people are getting disillusioned, disillusioned right now for the cycle. He goes, yeah, that's par for the course. He goes, in 2013, it was, quote, all these clone coins are a disaster. This isn't what it used to be. 2017, it was, yeah, all these cash grab ICOs are a disaster. Crypto isn't what it used to be. 2021, NFTs are such a disaster. The metaverse is a disaster. This space isn't what it used to be. 2025, memes are such a disaster. The space isn't what it used to be. And I thought he had the right take on this, which is, guess what? 90% of the activity in crypto, even the Bitcoin-only 2011 cycle, has always been short-term trash. But the 10% sticks around. And we had a new long-term-oriented 10% every cycle. And now, you wake up and Bitcoin is a $2 trillion asset class and a globally relevant macro asset store of value. This is what winning looks like. I'll keep rambling on here for a second. It reminded me of— Mike and I are both big fans of this book called Titan, which is the biography of John Rockefeller. Mike shared a snippet, I think last month, which I've got pulled up here from the book. It's from Rockefeller's book. Drilling for oil seemed less like an industry than a lottery. Rockefeller succeeded because he believed in the long-term prospects of the business and never treated it as a mirage that would soon fade. And I can't help but think about that quote every day when I look out on the timeline and see a bunch of people treating this industry as a mirage that would soon fade. And treating this industry more like a lottery ticket and less like one of the biggest businesses and industries of our lifetime that's getting built in front of us. And I feel, I feel grateful to be a part of this. Just like I think if you work in the AI industry, it's like if you work in AI or crypto right now, you should feel grateful that you are part of like such an insanely big industry that's getting built in real time. And like, please, for the love of God, just zoom out a little bit, you know. Let me, let me share my last thought on the market here and then, and then we can move on because neither of us are traders and we're not, you know, we have no clue what we're talking about. But let me just share that. Like, I think one of the reasons that everything is— that the market is down so much, people would point to what, like tariffs. But the other reason, the main reason is uncertainty. Nobody knows We came out of 4 years where the president was hiding, you know, hiding in his room, not saying anything. Now we immediately have a time when everyone's hinging on the president's tweets. It's like a really stark difference from the Biden administration. Let me just paint a picture for you guys where right now, like, you know, chaos with Ukraine, like we're pulling funding, inflation, like tariffs on the whole world. And prices are going down so much and a remarkable amount of uncertainty. Let me just share, like, okay, imagine you get a peace deal with Ukraine and Russia. Imagine inflation starts to lower. Imagine we pull back on tariffs with Mexico and Canada. Imagine there are some tax cuts. Like, imagine some certainty comes into this market like that is— I just remind people like how much markets can change really quickly and that nobody really knows everything. And it's more exciting and more as someone who works in media, it's much easier to write a headline about how like the world is ending, right? Like, you know, what is it?

Bleed.

If it bleeds, it leads. Like, just, just a reminder for people.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains. With a gas-free, invisible user experience, instant finality, and robust security, SKALE allows for limitless scalability and has already saved its 50 million users over $11 billion in gas fees. SKALE's high throughput, zero transaction costs, and powerful Web3 infrastructure make it the ideal platform for gaming, AI, and other high-throughput apps. To explore the gas-free ecosystem, visit scale.space/ecosystem and follow their journey on X @skale_network. Thanks to SKALE for making today's episode possible. This episode is brought to you by zkSync. In 2024, zkSync took a step toward a multi-chain future by transforming from a single L2 into an ever-expanding network of zkChains, the Elastic Network. To onboard the whole world into crypto, many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose zkSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy-first design. Join over 20 chains including Abstract, Sophon, and Cronos in the Elastic Network today. Behind zkSync is the zkStack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zkSync.io/empire. Thanks to zkSync for making today's episode possible.

On that point, like, trying to time markets is not something that I've— I haven't met anyone that has systematically been able to time markets time and time again. It's really hard. I think it just pays to be well positioned in things that you understand well and are monitoring, that might be a particular— it might not be crypto, might be crypto, but, uh, I think the world has just become like— vol is going to be a thing, it just is. Like, the markets are just skittish, they have always been. It's just, it's become— they're becoming more like high frequency, high velocity kind of thing. Like, the average holding period of stocks, uh, let alone crypto, has come down a lot over the course of generations. So like that dynamic is going to persist. I think, uh, it reminds me so much of like poker. Like, if you play every hand you're dealt, you're gonna— it's the surest way to kind of lose all your money. You should not be playing every hand. It's kind of like react to the market constantly, unless you really like— unless you're like an exceptional savant, like, I don't know, like, uh, you know, Ray Dalio or Stan Druckenmiller, or some of these people have also gotten it incredibly wrong, like Go listen to Stan Druckenmiller's like anecdote of when he tried— he was short, uh, the tech, tech in like late 1990s, went really short, flipped bullish, and then like 2 weeks later or something like that, like the market just collapsed. And you're talking about what, like perhaps the most successful investor of all time. Like you just— it's so hard to get the timing right.

Uh, so yeah, like, uh, just remember on that note, there's this famous hedge fund book called Market Wizards by, uh, Jack Schwager. And the book, the book is great. He interviews all these quote unquote market wizards, right? And there's like 10 or 15 wizards. It's like Richard Dennis and Bruce Kovner and Michael Marcus, Mark Weinstein, and every single— since that book was published, I think it's like, I think there's 15, 15 wizards. Every single wizard except I'm pretty sure Paul Tudor Jones has since blown up. These are the smartest of the smartest fund managers who are trying to time the markets. So yeah, just like nobody can time the markets for a full career unless you are maybe like one in, one in hundreds of millions. So yeah, you're not smarter than most of these people. All right, let's talk about the news. There was a sandwich attack on Uniswap. Going to get hopefully all of this correct, but correct me if I'm wrong. A user on Uniswap v3 was just sandwich attacked out of $216K while simply trying to swap 221,000 USDC to USDT. Mind you, this was a pool that had over 35 million of USDC and USDT in it. So how did this happen? An MEV bot front ran the transaction by swapping all of the USDC liquidity out. After the transaction executed, they put back the liquidity. The attacker tipped a block builder, Bob the Builder, who's one of the biggest builders, $200K and profited $8K from the transaction. So I think it starts to— I think a— I think a question arises from this, which is what is the— what is the role? So I think— so I think probably how this happened is like the slippage was maybe set to like 100% or something.

I think he set the slippage tolerance. It must be. It's kind of surprising. He might have like disabled it for maybe like he was trying to trade like a more liquid asset. That, you know, you increase the slippage tolerance. But yeah, it's a very expensive mistake. Make sure that whenever you're trading in a DEX, you, you know, you, you set parameters for slippage. I think by default it's like automatic, but like it will like range.

Yeah.

If you're on the Uniswap interface, it automatically—

and most interfaces, it sets the slippage. And they had probably, I think, set the slippage to 100%. Like every good UI is going to set the slippage. That's many years of crypto UI has gotten to that point.

Who's—

is there a— is this on the user? Is this on—

I mean, it probably is on the user, but you should have like a fat finger mistake most likely. But it should have been like maybe like flashing red. And I do think that the front end will show like, hey, like your slippage is really high, you should consider maybe not doing this. I, I'm not sure if the user saw that when he was swapping, but he probably should have seen that. Um, but yeah, uh, I think it's on the user in this case.

Yeah, yeah, yeah. I, I do think there's a— there's like a bridge that I was on the other day and I was swapping, let's call it, let's call it $10K into something else and it was giving me back $1K, like trying to swap $10,000. And it would have— if I had pressed the button, it would have given me $1,000. And I messaged them. I found who owns it on Twitter and messaged the founder. I was like— and the reason for that was it was a coin with like very low liquidity. I was like, you need to put like big red emergency button here that if I had clicked this button, like I'm losing 90% of my money. Yeah.

And most frontends do that. But if you have a frontend and you're not doing it, you best kind of do it. It's just kind of a best practice. Like, yeah, hey, I'm pretty sure you don't want to lose 90% of your money by doing this.

Yeah.

Transaction simulation is something like I do think that there can be most of the value I think will accrue at user aggregators like wallets. And I think there's a very big like we've come a long way on the frontends, like in the UI/UX, but there is still more room to improve. And, you know, from a security standpoint, like transaction simulations, some of these things that can be, can be, um, improved upon. Like even going back to the, the, um, the Bybit hack, right? Was it Bybit? Like the, the safe execution?

Yeah, yeah, yeah.

And so, yeah, I'm sure it was. But yeah, and, and I think like you could have just simulated that transaction and like alerted people. It's like, hey, yeah, by the way, this smart— you've never— a lot of times you see it, right? It's like, you've never interacted with this contract. Now you typically see that, like, if you're using Phantom, like, hey, you've never sent money to this address, are you sure you want to do this? Um, uh, hey, by the way, this will upgrade the smart contract logic, transfer ownership, like stuff like that. So there's like a big, big opportunity to continue to improve that flow and make sure that, you know, um, you slow down when you make transactions.

MGX, an Abu Dhabi sovereign wealth fund, just invested $2 billion in Binance for a minority stake. The transaction will be 100% in crypto stablecoins, making it the largest investment transaction done in crypto to date. This is also the first institutional investment Binance has taken. All right. So a few interesting things about this. One is that this represents 40% of the basically venture funding that's gone into crypto in Q1. That's not really the most interesting thing. I thought the most interesting part of this is that where did this announcement come from? Came from CZ tweeting it out. So if anyone wants to know who's running Binance these days, I can assure you it is not, you know, someone else.

I mean, if you wanted a clear marker, I mean, he still owns like, uh, the vast majority of the equity, right?

And yeah, he's by far the largest shareholder. And then actually, hour— hours later after that came out, or maybe a day later, there was just a Wall Street Journal article. The Trump family has been in talks. Oh my God, actually two articles. Trump family has been in talks for stake in crypto exchange Binance. Next article: Trump-backed World Liberty Financial could be part of the Binance deal. So if you start reading it, at the same time, CZ, who served 4 months in prison after pleading guilty to a related charge, has been pushing for the Trump administration to grant him a pardon, people familiar with the matter said. CZ remains Binance's largest shareholder. The talks began after Binance reached out to allies of Trump last year, offering to strike a business deal with the family as part of a plan to return the exiled company to the US. Uh, Binance executives saw a potential legal playbook in the saga of Justin Sun, who invested in a Trump crypto venture last fall as he faced civil charges for— from the SEC. Sun invested $30 million in November in World Liberty Financial, becoming its largest investor. I didn't realize that Justin Sun's now the largest investor in World Liberty. Last month, The SEC then asked a court to pause its fraud lawsuit against Sun and 3 of his businesses. After Sun's investment, Binance executives internally debated following the same route, a cash infusion into World Liberty in exchange for a pardon for CZ.

That Wall Street Journal reporting, I've seen a lot of commentary, including from CZ, that it's just like very inaccurate.

Okay.

And it's again, it's just maybe a broader conversation about how bad the media gets these.

I might take the other side. I might take the other side of this. I think that there's some like pretty bad crony capitalism going to— I mean, Justin Sun gave World Liberty $30 million, became their biggest investor, and then like 2 days later gets pardoned by the SEC. I don't think this is just a case of like, you know, shame the mainstream media.

I'm reading an article, I mean, a post by CZ that says it was published actually 1 hour ago. It says, sorry to disappoint, the Wall Street article got facts wrong. More than 20 people told me that they were asked by the Wall Street Journal and other media, can you confirm that CZ made some deal for a pardon? They probably asked hundreds of people to have 20 people reach out to me. In essence, they try to make a story to report. Fact: I have no discussions of a Binance-US deal with, well, anyone. No felon would mind a pardon, especially being the only one in the US history who was ever sentenced to prison for a single BSA charge. Feels like the article is motivated as an attack on the president and crypto. The residual forces of the war on crypto from the last administration are still at work. I'm always happy to make crypto great everywhere, US and the rest of the world. It's good to see that even the Wall Street Journal thinks I should be pardoned. Um, so this was in response to a tweet by this guy Evan Luthra. Says, big breaking, Wall Street Journal reports that Trump's family is in talks to buy a stake in Binance US. Uh, anyways, um, but I, I mean, yeah, like the World Liberty thing is— I'm not disputing that. I'm just said, just giving the other side of CZ. Seems just like some, some factual stuff that article is wrong.

Zooming out from this, I met with the, uh, I met with the CEO of one of the other big Asian crypto exchanges. Their top for ambiguity, I guess we'll call them top 5 Asian crypto exchange. And they are full force pushing into the, into the US this year. They've never, they've never been in the US. They've never played in the US. They've never attempted to be in the US. And they are full force pushing into the US. And as they put it, their words, not mine, they see one player of Coinbase who— all right, we got the rats back in the— rats back in the heating pipes. Yeah, they basically see Coinbase and then they don't see any other competition in the US. And they're like, look, us, other exchange B, other exchange C, and other exchange D, all Asian, big Asian exchanges, we're all about to full force push into the US. So I think it's going to be Binance. I think it's going to be Bybit. I think it's going to be OKX. I think it's going to be— I think it's going to be all of them are going to do a huge push into the US and that's going to change the dynamic, right? We in the US think of it as like there's Coinbase, Kraken, and Crypto.com, which doesn't really get much attention on crypto Twitter, but is one of the biggest exchanges in the US. And it might change the game if those guys come in in a big way.

Yeah, it'd be interesting to see. I mean, it seems like, I mean, there's infinite amount of opportunities to go out, not just in the US but other markets.

Maybe, maybe Catherine Coley comes back. Do you remember?

Yeah, yeah, yeah. She was at Binance US for a while, right?

She ran Binance US and then just one day disappeared and Binance silenced her. Yeah.

This episode is brought to you by SKALE, the next evolution in Layer 1 blockchains with a gas-free, invisible user experience instant finality, and robust security, SKALE allows for limitless scalability and has already saved its 50 million users over $11 billion in gas fees. SKALE's high throughput, zero transaction costs, and powerful Web3 infrastructure make it the ideal platform for gaming, AI, and other high-throughput apps. To explore the gas-free ecosystem, visit scale.space. Space slash ecosystem and follow their journey on X at @ScaleNetwork. Thanks to SKALE for making today's episode possible. This episode is brought to you by zkSync. In 2024, zkSync took a step toward a multi-chain future by transforming from a single L2 into an ever-expanding network of zkChains, the Elastic Network. To onboard the whole world into crypto, many specialized chains must be able to coexist, work together, and share liquidity. Institutions and global financial leaders choose zkSync for unmatched security, scalable infrastructure, better onboarding, gasless transactions, and privacy-first design. Join over 20 chains including Abstract, Sofon, and Kronos in the Elastic Network today. Behind zkSync is the zkStack. It is a one-stop platform for building private blockchains on Ethereum. The stack solves all the typical privacy, regulatory, user experience, and deployment concerns of blockchain without compromising performance or security. Join the Elastic Network today at zkSync.io/empire. Thanks to zkSync for making today's episode possible.

Um, I wanted to transition not to a news story, but actually a Travis Kling tweet, which was— there's this guy Bob Lucas who said, uh, I speak to a lot of crypto— he's like a big trader. Said, to speak to a lot of crypto folks IRL, the most common theme I hear is, I'm so tired, I can't wait to get out this cycle. And Travis said, important part of what's going on with crypto right now, we brought very few new entrants into the space this cycle relative to the prior two cycles. The new entrants we did get are mostly the worst kind, like Ansem and Thread guy. Crypto cannot attract new talent right now because our reputation is atrocious and the multi-cycle vets still left are mostly very tired and very jaded. Tough setup, but those are the facts. What do you agree with? Any of these agree with all of them? What do you make of this?

Yeah, very much so. I mean, I retweeted, quote retweeted one of his— Travis has been the, like, uh, over the last couple months is like had sober takes and I appreciate them. Um, the first point I agree. Um, I would qualify that by saying we've had new entrants like, you know, the Trump CoinLaunch had a big onboarding event. I think it was like close to a million people, uh, across Moonshot and other applications, but there's no retention. So, and, and that's really the piece that I'm mostly interested in. It's like, uh, we're not really retaining those users. And why? Because the— you can reference a lot of, um, analysis has been done like that. It's very kind of negative EV to play in, in, you know, meme coins. Like, not most people don't actually end up making money, and that has a detrimental effect on the retention of those users. Um, you know, in terms of the competition of entrants, like, I don't know, um, I think we've all— crypto is that industry that, again, you attract the best and the worst of people. But, you know, that, that's very visible in crypto. It's also the case in other industries. Um, the point around top talent, I would push back on Very much so. I mean, I'll tell you firsthand, I've been building in the open very intentionally. I've been amazed by the level of interest that I've gotten from people, very, very talented people that have never been in crypto wanting to join what I'm doing at Inversion. And that's like, like been one of the most rewarding things I've seen. So firsthand, I would push back on 3, like a lot of people that have been tinkering, interested in crypto, are very motivated. And maybe it's because, like, my mission is just, like, to fix a big problem that we have in the industry that talks about what Travis is talking about. Um, and the fourth point, multi-cycle vets still left are mostly very tired and very jaded. Uh, yeah, I would agree with that. People, the longer that the market chops, the more likely you are to become cynical. And I don't think you ever want to become cynical. And every time it's like tempting to do that. And in moments where I can tell you, there are moments where I've lost conviction marginally on this industry. There's, you know, it hurts, right? When you see FTX, you see Terra, when you see another hack, it's difficult to process because it sets us back. But when that happens, I'm just reminded to go talk to builders. I'm like, all right, I'm going to have 5 calls with 5 people in my portfolio. And see what they're up to. And honestly, like, it brings me back to the core of what I, why I'm here. And, but you know, a lot of people are not doing that. And if you don't do that, you're gonna become cynical. You're gonna become jaded and you know, you're gonna become bitter at some point.

Yeah, that's the key point right there. If you're not actively talking to, I think specifically founders in the industry, it's really easy to get really jaded. That's why I like doing— I give this talk, like, every cohort at Alliance DAO. And it's purely— I think they think that I'm doing it to help the cohort. It's purely a selfish thing. It really energizes me. It's like every quarter, I get to go in, meet all these new founders, there's like 40 new founders. And, and, you know, I give a talk about like media and stuff like that. But like, I get to meet all these super hungry, talented founders. So my assessment of Travis's thing is like, we brought very few new entrants into this, into this. Definitely true. The new entrants we did get are mostly the worst kind. Also probably pretty true. But we are attracting good talent right now. And I think right now there's maybe a lull in, in the top talent because of, yeah, things like meme coins or some stuff like that. But it actually ties to number 4 about the multi-cycle vets are mostly tired. This is how industries grow, I think. Again, I'd really encourage people to read Titan, this Rockefeller book. It talks about— it's about Rockefeller, but it's really about the growth of the oil industry and the oil industry. If you think crypto grows and grows with volatility and cycles, like they had the same exact boom and bust cycle behavior for like 30 years in the oil industry. And it was a period— it was— yeah, they say exactly, they still have it. But like, it was not even seen as an industry. And the number of like grifters and scammy people who came into oil trying to make a quick buck but then left and actually— but like for every 10 people who came in, one person, one talented builder would come in and the grifters would leave. But also the OGs would leave too. There were the OGs of the oil industry and they got replaced by the new founders. And then those new founders make some money and most of them would leave. Some of them would stick around and build empires like Rockefeller. And that's going to keep happening in crypto. Like, yeah, I wouldn't be surprised if some of the OG DeFi founders, some of the like best names in the industry end up leaving, but like some of them will stay and they'll become like the Bezos and, you know, I don't know, Jobs of the world or something like that. And some, and some of them won't.

Yeah. It's not easy. Anytime someone says, oh, it's not meant to be easy. And, you know, hard things are worth Um, you know, smart people want to work on hard problems. Crypto's always been that. I think, like, since my earliest days in the industry, I remember, like, I was just seeing— I was in, I was in Palo Alto in Silicon Valley, and I would just see, like, really, really smart people be interested in crypto. Um, and for a variety of reasons, right? It's just from a cryptography, distributed system standpoint, a lot of people did their PhD on that, were like, oh, this is cool. Or a game theory, like, you can run these experiments in real time. Or people that have deep— like, like right now I'm spending a lot of time talking to like really seasoned veterans that have had experience in the financial system, fintech, telco, and it's almost like a lot of them really appreciate the problems that legacy industries have. Um, and it does just by virtue of like they've been in the industry for so long that they see crypto and like that, that, that hasn't changed. Like, a lot of these people appreciate how crypto can fit into the equation. Is it clear-cut and perfect and super straightforward? No, but, but that's the both the challenge and the opportunity, right? You're not going to know until you kind of do it, right? Um, the exciting thing about crypto is like, you're not like, like meme coins are. And we should talk about like the activity that's happening on chain and like revenue over these chains. I want to go to that next. But like, meme coins are like stress testing a lot of the infra, and the same with it, like the porn industry stress tested, like, you know, internet, you know, connectivity in the early days. Like, you have an opinion on porn, fine. You have an opinion on meme coins, that's okay. But like, at least appreciate that it is putting a stress test on the infrastructure. And I get really excited about the fact that like we've come such a long way in, in, in building infrastructure that can, you know, you see a line of sight into actually like just becoming the, you know, future finance. Like tokenizing stocks, we haven't had that yet. But like, I think if you're a NASDAQ, uh, which by the way, they, they've announced more and more push into like having like markets open 24/7 and all that. Like crypto, at minimum, crypto is putting pressure on traditional players to like innovate, uh, and not be complacent. But also, more importantly, maybe showing them a blueprint into how, like, they could upgrade their systems. Because it's not to say that crypto is going to blow up the traditional financial system. It's more so that they will just complement it and act as an— as a really interesting, like, expansion pack, upgrade pack. And, like, if, if you're at Robinhood, if you're at JP Morgan, like, you, you more likely, like, love crypto because you can see a way of, like, really streamlining operations and saying, oh wow, we can actually credibly do this now because, you know, like Solana processed 20% of all like Nasdaq volume in over the weekend. Like, that's, that's, that's a very, very useful proof point.

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You want to transition into the protocol side and like what's happening on-chain? I'm curious. You sent me this tweet and you said, I want to talk about this Brendan Farmer tweet. I have no context other than the fact that you wanted to talk about it. I can read the tweet, but tell me how you want— tell me where you want to go.

You scroll up. I think it's interesting that he responded to— he had an initial post that I think is worthwhile.

Oh, we love a good Blockworks chart. Let's go.

Yeah, you don't hear as much about Solana REV justifying its market cap. This is because weekly REV is down 90% from all-time high. Um, and he's like, the basic premise of his argument is that the types of activity are great for gener— like, the types of activity that have been flourishing in Solana, a lot of meme coin activity, generates a lot of REV. Uh, but as that has come down, the question is like, how do you supplement that REV? Um, and his point is like, look, meme coins are really value extractive. Like, like a lot of that's been a lot of the composition of fees in a chain like Solana or others is just, you know, when it's like what drives, um, MEV is like the, um, heterogeneous like transactions. When you have like, you know, like an event, like you launch a meme coin, like there's a lot of activity there. And so priority fees go up. That drives a lot of the, the composition of the fees.

REB. So go, sorry, go ahead, go, go.

And so it just poses an interesting question of like, I mean, hey, how do you value these chains and what is the fee stream associated with that? Um, and I think, uh, I want to make a couple of points. One, and I agree with like Logan and the Frictionless guys have made an interesting response to that, um, which is like meme coins again are stress testing the infrastructure. So like it, it puts strain on the chain and it is a proof point to then, you know, like what comes next and the real opportunities— tokenized stocks. Um, how do you value these chains is like, uh, art more than an art than a science. You can't reasonably apply a multiple and say it's a fair valuation. You need to again believe that like we grow orders of magnitude, bring on 100x more users, and like we tokenize stocks and all this stuff. Like you can't, you can't run a discounted cash flow and say any of these chains are valued like appropriately based on any sort of reasonable assembly, like, valuation methodology. A lot of it is just referential, like, it's like Bitcoin trades at a trillion or two, and then everything else should trade at a— some sort of reference to that. And, you know, Ethereum is at X, Solana should be at Y. And, you know, we still haven't, like, figured out what the best way to do this, but it's all, like, terminal value driven, which is, like, in some sort of future state, crypto is going to take over the world. And But I pinged the Frictionless guys because, you know, we had Logan here on the pod and I think he's a very good thinker. And I think his point is a couple, but I'll share with you like this tweet that I think is interesting and maybe you can just pull it up. He says we should look at the breakdown of our— between low throughput chains and high throughput chains. Meaning if you compare the charts, I think on the left side you have Ethereum and on the right side, if you click in, it's Solana. And one, meaning like something like Ethereum, most of the fees, like the REV, the composition of that is heavy on the base fee. Whereas in Solana, his point he's making is heavy on prioritizing transaction execution. Meaning like you look at the priority fees, the validator commission. Is, is quite high, uh, and then some staking rewards. Um, so anyways, I think it's just, uh, an interesting chart or an interesting picture of compare like the, the amount of revenue and, um, you know, that REV distribution. Um, I wonder though how this will look like when you tokenize stocks and, um, you know, how does that um, REV composition, uh, shape up. Um, the— but it is an interesting question. It's like, um, how do we— had like that episode with Kyle from Multicoin, and I agree with his thesis, which is most of the fees from these chains will be MEV. So you have to believe that there's just more like a diverse stream of activity happening on the chain leads to priority fees going up. And insofar as that continues to happen, you have a very healthy growing, like, fee stream for these chains. But I don't know, I don't have a perfect answer for this. But I do think that, to be fair, like, meme coins were one of those, like, very high MEV activity that is not sustainable. So you have to then think, okay, how do we supplement that in a more organic way? Through other types of activity. Um, and it's a, it's an interesting question. Like, I don't, uh, I don't have a good answer for that, but something that I'm paying attention to, you know, how do these things evolve? How does the revenue and the composition of fees for these chains evolves over time is something that I think whether the market's gonna like appreciate it right now, I don't know.

You know, this market will not appreciate it, but again, like this meeting I had this morning, the person was asking me to show— they're like, all right, like, how much revenue is Jupiter doing? What are the expenses of Jupiter? How does that compare to something like, like they're asking like Radium and Drift and they're like, show me. They're like, they're basically asking for like a P&L essentially. So maybe it doesn't trade on those numbers right now, but the capital that will come into the space and move the space forward, from a like more robust capital markets perspective and like the liquidity and the institutional capital coming in, they do care about that question you're asking. So the current market does not, but they, but they do.

Yeah. Yeah. Look, the argument's always been like Solana, not to pick just on Solana, but like high throughput blockchains like Aptos, Solana, others, should we say, it's that you become like, you know, NASDAQ, you achieve similar performance as like a centralized solution like NASDAQ, and then you can that paves the— becomes a platform to— for tokenized stocks. And, you know, uh, important note, like, again, the Trump meme coin phenomenon, like, accomplished something that is pretty impressive, which is 10 to 20% of all traditional equity market volume happened over the weekend. Like, and you had liveness and you had, like, functioning systems. So that was, like— I, I get very encouraged by that. Um, but, uh, one of the things that we should just think about is, like, topic for a later day. Maybe we should bring on more guests. It's like when you think about, okay, crypto is going to displace X or Y industry, you should then think about how much of that value is actually going to be captured by the, the technology that displaces it. Some of these industries should not exist. Like, like for instance, money remittance businesses like Western Union. If you're doing remittance, it's a wildly profitable business because you're charging 4.5%, 5%, or whatever. If you then say, I'm gonna buy that business and then layer on stablecoin as well, that like fee just goes to zero, right, when you're using CryptoRail. So that doesn't mean like, again, you're displacing an industry, but that value is not going to be captured by strictly like becoming a remittance operator. You have to think about how do I supplement this. Maybe you have a deeper relationship with the customer that you can offer them, you know, uh, banking, more full-fledged financial services. You can monetize that user in other ways. But I think it's like crypto as a whole, I think, is going to just displace and destroy many industries that just have existed because these systems are really antiquated. And once you modernize them, like, that business just goes away. So, um, I, I think it's, um, it's going to be important to just monitor the composition of fees in these chains. It's something that I'm paying— that was just a point I wanted to make. It's going to be important. And maybe we should have— one of the things I'd like to explore down the road is bringing on people that are willing to talk about like tokenizing stocks. Like there's some chains that have like started to roll that out and like I would love to like just have a more deeper discussion, understanding of like, okay, when can we credibly see this? Like, and who's going to do it? Who's going to capture most of that value?

Who? Well, let me ask you this. Why does it matter? Who's the buyer? Who's the buyer of a tokenized stock? Would you buy? No, let me—

Dude, you know that if like if you're not in the US, you can't buy like—

No, no, I know. Okay. That's so— that was— that's what I was getting at.

Like, when I go talk to people, like, most people in America don't appreciate this. Like, you need to be a high net worth individual, have a private relationship with a private bank outside the US to be able to buy these things. Normal, you know, Joe and Mary can't buy Tesla stock. And I think a lot of what I think like crypto has been is just like allowing people to get like that type of beta exposure. Like equity-like exposure, like crypto projects. Like when you buy Ethereum, you're like, I'm buying kind of Silicon Valley exposure and it's better than like whatever local stuff that I can buy. Like, oh boy. Like I think like in some places like China and whatnot, you can like— the range of investment opportunities is very, very limited, like domestically. And they don't want— like capital flight has been constrained for obvious reasons, but like a lot of, a lot of the people that are punting crypto are because they— it's actually worse back home. They'd rather put money into these things like Ethereum, Solana, BNB, you know, all these tokens, like Bitcoin, um, because they want exposure to something that may closely resemble the NASDAQ. Like crypto as a whole has like very closely resembles the NASDAQ with like higher beta, um, but like when you open up the— when you open up these pipes for people to buy like tokenized stocks, it's like, boy, I mean, when that happens, that's going to be a truly a ground— like a just— I don't know how to describe it other than like it's going to be like a very meaningful like inflection point in the industry where you go vertical in fees, vertical in users. Like whoever is there, the question is probably Robinhood does this. Better than most. And they capture a lot of the value that way. Yeah. But, but, you know, Robinhood needs to have licenses in these places to operate, right? Like, ultimately, like, you need to, you need to still acquire users and like offer them these services in a traditional way. And I think you're going to still have to have the appropriate licenses to operate in a particular jurisdiction. And, and that's something that like crypto companies as a whole have like, probably at a disadvantage relative to traditional, more well-capitalized players. Like a Robinhood, right? That, um, you know, even though Coinbase, like, this week I think announced it's going to India, like, they have some muscle, they've navigated, like, getting licenses, but, but maybe it's just easier for a traditional financial institution that has already connectivity in these places to, like, turn on the tokenized stocks when it happens. And they have the distribution, they have the users, so I wonder who captured more value.

Yeah. Um, Last thing here, I want to get your take on this. Venture funding, still down, still way, way, way down. Is this— we talked about this about a month ago— is this because 2021 was so inflated, and we're never getting back to this number? Or is this because we just haven't seen this? We just haven't seen the venture— like, what is actually happening in the venture fundraising space and the allocating of those funds right now? Like, tell us what's happening behind the scenes.

I think if you adjust the scale here, it's important because there has been an uptick in activity. Like, go 2022, remove that for a bit. And I know it's kind of, but just talk like, you know, it's been fairly, I'd say, increasing a bit since the middle of last year, like July, you know, Q2, Q3, Q4 saw an uptick.

Yeah.

Of course, I think there's a big outlier. What I would like to see is like the median, the median and mean of like average deal sizes across stages. You know, how is that? And I don't know if we can easily see this, but I think there's some interesting reports like the average size for a seed deal versus a Series A, Series B. Because like, if you, if you go back and extend the range, like that huge outlier was like, there was like one or two deals like FTX where they raised just like a massive amount of capital. But if you normalize it by looking at the, like, median transaction size across stages, and I'm, I'm going off of just what I've observed, um, through like what I'm seeing in, in early stage stuff where I mostly invest in, like, there's still like healthy amount of, um, capital deploying into early stage opportunities. I think it's more like the later growth stages that there's only very few players that can actually fund those. Haan Ventures is well capitalized. Maybe someone like 10T or like CoinFund or Brevin, you know, there's, there's only very few, like a16z. Framework just launched a new fund, I think Dragonfly. There's like fewer players in the market now, but Um, what I will say is, from my standpoint, um, follow-on rounds are more challenged because it's always been the case where, like, investors would rather allocate to a new company than an existing company because they're going to be more critical about an existing company if they haven't shown traction. And I think that there's a lot of companies in those vintages that were raised capital, like, the last 24 months probably need a raise soon. And because there's no users, they haven't gotten as much demand, they're likely going to be in a position where they won't raise again. And, and, and you're going to see a lot of that talent just have to move around and find a new home. But that's, that's, that's not, that's not new to this cycle. Like, you had that same problem, like, the cohort of companies that raised in 2018, huge rounds, and then the ones that survived were the ones that were very well capitalized. But if you weren't well capitalized, you went through the winter You didn't raise a round again. You were like, basically. Yeah.

Um, I gotta jump. I will call in 2 minutes with the customer. I can't be too late. I'll see you at DAZN.

See you at DAZN, everyone. If you're there, let us know in the group chat and Empire. We might have some surprise events here and there, but, um, yeah.

We're hosting an Empire meetup. Wait, hold on. What day is it? Yes, there is. Hold on.

Tuesday, right?

Glad to hear no, neither of us know. I don't think it's Tuesday. I don't think it's Tuesday. Hold on. Let's go to our, let's go to our side events page, which you can find on our website. Do a little Command+F for Empire.

Now, very sophisticated. Young man has been a day trader, ladies and gentlemen.

Not there. Oh, there it is. Wednesday, March 19th, 6 to 8 PM. 1000X and Empire, a joint. Together at Dalton's Bar and Grill. Let's go, Dalton.

All right, folks, if you're in New York next week, hit us up. Uh, we'll be there, baby.

Wednesday, 6 to 8.

See you, Des.

All right, guys, thanks for listening.

Have a great weekend. See you, folks.