AI Feels Like Crypto In 2017, Circle Raises $222M and Anthropic Cracks Down On SPVs

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Block Works team may hold positions in the companies, funds, or projects discussed. What's up everybody? Welcome back to Empire. Um, sorry we missed you last week. We were um I was at Consensus Santi and Rob I don't know what they were doing but we couldn't record.

>> Where? Oh, you're at Milkin. How was Milkin? >> Yeah. >> Uh Milkin was good, man. It was all the um all the suits, right? So, you know, everyone in New York descends on LA to talk about, you know, what's happening in global finance. Uh I will tell you that the conversation was basically about two things only and it was AI and tokenization. It's like literally all anybody wants to talk about right now. Um, which, uh, you know, is good for us, I think. >> Yeah. Very good for us. Good for us. Yeah. I mean, the suits didn't just descend on Milkin, they descended on Miami, too. I was at Consensus. It was a uh, it was crazy. It was like, you know, there was like a State Street booth, a Morgan Stanley booth, the JP Morgan booth, the Visa booth, a Mastercard booth. It was um, yeah, it was the most

I mean, it was basically we had So, we had DS in March and then Consensus in May and they're both just like very, very, very Trafi events. So, hats off to the consensus team and uh we should I I actually want to bring Tom on the podcast. Tom from Bullish had some interesting announcements. They're they actually tokenized the entire cap table of Bullish, which I thought was pretty cool. Um but yeah, hats off to the >> And they bought the transfer agent. Yeah. >> And they bought the a transfer agent for $4 billion. So, Santi, what's your excuse? Why Why weren't you showing up last week? >> I don't know. I was waiting on you guys and then, you know, I was like sitting there in my chair waiting for you to show up, which which is rare. I will say most of the time it's me that has to

cancel move it around. But uh I was I was just looking at the news and some of the clips on both milk and consensus. I got to say I um uh I didn't really feel any FOMO uh not being at Consensus especially at the afterparty. It was great video coming out of that. I think we all saw it. The vibes were alive and well. >> Yeah. What are you What are you doing sponsoring a strip club event in 2026? It's >> only the AI only the AI companies can do that right now. You can't do that if you're in crypto. >> Uh Rob, I want to go to you around the Milking Conference. I saw some of the clips. Um I mean, putting aside the what's going on in AI land and you know, some of these stocks just like going absolutely bananas and um uh you know,

you had Stan Miller come out saying like he's buying AI stocks. You know, uh we talked last last time on the pod about like Paul Tudtor Jones calling it a bubble. Uh I'm curious what the sentiment was especially around tokenization in crypto. Um, you know, it seems like there's still a lot of apathy uh around just token prices and uh but but anyways, what was the what were some of the more interesting conversations that you had out there? >> Yeah, I mean for the tokenization side, it's like a lot of the same conversations that have been happening, right? Like Larry Frink has been saying on stage and Jim Diamond has actually been saying on stage recently that the whole global economy is going to be tokenized. All assets are going to be tokenized. They are going to be put on a blockchain. We have seen this on the

we've seen it start to take hold a little bit in terms of a lot of the trading firms also pushing for this the DTCC obviously doing um you know what they're kind of like sandbox for like you know tokenized clearing and you know you're now seeing a lot of these companies these asset managers etc go and invest in some of these like protocols to enable this this world or you know obviously ARC in and circle they came out with their um uh fund raise on the arc dark side. There's obviously, you know, there's been stuff announced around, you know, and recently with uh I believe it was JP Morgan and with the um uh you know, Morpho and and others. And so like it's become very clear that people expect that assets will be tokenized, assets will trade on

blockchains. how and where that happens and if there's like a central clearing agent and if there's a transfer agent still or there can be more direct access to like a blockchain itself um is still very much up for debate. I think it is still very clear to people that the current set of regulation makes them need something like a transfer agent makes them need you know somebody who um you know kind of sits in the middle as an intermediary but if you're going to trade on the weekends if you're going to trade overnight like you are going to be on chain like that is the only way to manage risk during those things and and so the every conversation I had was really about those two things AI or or tokenization I will say that the tokenization efforts and conversation

now feels more like, oh, this is happening. We're doing this thing and you know, this is great for for business. Also, we don't care at all about what's happening in token prices. Like, you know, I couldn't barely like a lot of these people are like could barely tell you what exists between beyond Ethereum and Bitcoin. Uh, and they don't care about that because that doesn't matter for them because they see this as like underlying like settlement infrastructure. the AI piece, I think, you know, it's now become um a really hot button topic because there's all these people who are like, "Oh, this is a bubble." And there's all these people who are like, "This is we're in like a super cycle." And nobody knows anything whatsoever. And so it's like very um much created this like sense of I think just need to get

smarter, right? And a lot of um a lot of people are feeling uh some like they're kind of unsettled about what the future is going to look like on the AI side where tokenization feels settled. >> Can we start actually instead of going starting with tokenization because I I want to go there in a little bit, but can we just can I just hear your guys' take on these AI stocks and what you guys are doing because it feels like um we've entered the the part of the cycle where it's like, you know, all your friends are getting hilariously rich and you're not. And it feels it it it it it does really remind me of I you know 2017 when you know it's like I you know even the most foolish of your friends were just longing Bitcoin and making a 2x in literally a week. Like you you have m

you know Micron is up 80% in the in the last month. Intel is up 85% right? Uh SanDisk is up I think 50% in the last month. And so it's like I think you've reached the stage of AI mania where so your whole the whole my at least my whole feed is filled with people who are getting as it as they post on on Twitter hilariously rich and you're not right. So I I'm very curious like Santi maybe starting with you like what you do right now. >> So I put in a big position in some of these names. Um the shout out to Logan um who's who's my one of the guys that I always go to to understand more of the physics piece like Logan from Frictionless and him and

I were chatting. It it's hard to look at a chart and like want to put in a position you know after basically it's been parabolic. uh Intel was spun like uh Sandis was spun out of Western Digital and I think it's just in isolation it's just been in price discovery but in general like there is this like memory um um shortage and the prices of memory has just gone up dramatically. I won't go into the specifics but the short of it is like memory has historically been extremely cyclical uh because it you know you have these boom and busts uh historically it's been like you know smartphones like anytime there was a smartphone like you had huge uh ramp up in capex and then there was a slowdown and then you just get crushed uh so memory and these memory names like SanDisk and Intel and

uh Samsung um and Micron have all been extremely cyclical um just semis as a category the narrative now is it's um with agentic workflows that require more memory like anyone that's used AI understands like the context window what is called KB cache is like very limited um and there's a lot of issues around that like I think anyone can sympathize with that and so that requires a lot of memory you have to they call it like hot memory like you want to have memory that is easily uh cached and like uh a lot of the weights uh the context window and so a lot of the runup and excitement around memory stocks is that what has

historically been a cyclical industry is moving away and becoming less cyclical. If you believe that agentic AI is just going to become more prevalent and agentic like workloads are going to require more memory then this starts becoming more interesting. Um and and I think some of the like Micron reported earnings last week. Um I think SanDisk also reported earnings. Um in the more interesting data points there is that a lot of these guys have like five-year contracts. Um in um which is really interesting and I think if you look at the the growth baked into these things I mean they're trading at like sub 10 times like forward PE. um the things and you have

like everyone coming on board. You have like the Ultimate like Brad from Ultim coming out saying like they own a bunch of these that memory is no longer going to be as cyclical as it used to be. So it requires a rerating. You have the code guys coming into the fold. Everyone's talking about it. I do think that it's it's real. the the things that I'm paying attention to are obviously like capex historically like there's been uh a huge ramp up in capex and like building uh you know factories to to fulfill orders and then you hit like an over supply and then prices collapse um and then I'm also kind of monitoring the price of memory so there's some really good accounts that I can just post on the chat um but it's certainly uh It's

interesting. It's just a classic rerating. Um e even at this I think it was like uh the altimter guy came out and said even if you um you know if you look at the chart you would say yeah this is a bubble but uh even at these prices uh these multiplers are absurdly cheap. >> So let's say you're listening to this and you don't have a position in these things. And so yeah, so the memory stocks are ripping because people realize you don't just need the raw GPU processing power, you need massive amounts of physical memory. So let's say you agree with that and you're totally AI pilled, but you don't have a position, but you do see that the charts look extremely bubbly, but also but but

also the the Nvidia chart looked bubbly three years ago and it kept going up. So what do you what do you do like Santi? Let's say you have zero position right now and you're just starting fresh and you're looking at these things like would you how do you how do you think about putting on a position right now? >> Well, I mean like the same was true for Bitcoin too. I mean like if you traded crypto or invested in crypto sometimes it just it it's best not to look at a chart. I mean yeah you could look at RSI and 50day moving average 200 moving average to like scale in your positions if you want to play cute. The reality is you either believe that this thing is going to persist and memory is going to become a huge persistent uh demand and the demand is there and so

you just wrap your head around the thesis and then you go you go long uh and then baking in so like I'll tell you what I I didn't have a position like a month ago and the way I structure these things I go long and then I also you know do other like structural products to to clip in a coupon. Um, but I'm never going to like I just don't think you're ever going to time an entry perfectly. And if you're going to wait for a perfect entry, you're just going to be sidelined. There's a huge volatility in these names. One thing about Nvidia that you said is true, which is the best take I've seen is uh basically Nvidia went from being highly cyclical to being the most valuable company in the world because the demand for GPUs was very

cyclical and then now it's you know it's just up and the right and the demand is really really strong and they continue to innovate. You have the Cerebbras Cerebras, am I pronouncing that right? IPO coming up which has been massively >> Yeah. >> Yeah. Massively overcribed. >> And I I had some really good takes or was reading some really good takes about the difference between Server and Nvidia. Uh the the the more nuance debate that is happening is um like where's the demand of AI going to be? Is it just for training? Is it for inference? Um, a lot of the memory trade has been around inference. The demand is just going to continue to go up to the

right because of a dentic workflows. But again, like yesterday, the memory DRM is this ETF that launched. I think it's been the fastest growing ETF in the history. Like it I think it's gone like over five billion of inflows. The thing has gone up uh like 2x in in in a month. It's a very concentrated industry. Um but yeah, like clearly everyone has been sidelined because it they're they're nervous around like what happened in the dotcom crash and the cloud computing hyper like uh buildout and then crash. Like it's been a very cyclical industry. Again, I think it's just it's tough to look at a chart and then put in a position.

Um but uh I I don't like to time my entries perfectly. I'd rather just look at it like what is the fundamental case for supply and demand? Is this going to be cyclical or is it going to persist over the next 5 10 years? And I think the same is true for crypto. Like I mean I'll stop talking but you know that's sort of my take. >> Are you playing the um call it some of the more like decentralized versions of this and so I think yeah like Venice is up uh what is it up like 186% in the last week something like that. Um, and they I mean it's not just like that the token is up because of a meme like you know it's over two million users. Yeah.

Now like it's growing very very quickly. I think they did they said they did almost 30 million visits in uh Q1. They're doing over um they're I think doing over two million um uh the two million number earlier was like daily activives now I think at this point right like and like it's very clearly there's like a demand for uncensored models on on the other side and I think which I think is important here is um you maybe you guys saw but Hermes flipped openclaw uh as well right now on open router and to the point that you made Santi earlier about memory and inference. Hermes today. Sorry, it's not

it's Hermes. Sorry, I keep saying Hermes because I I I spent I spent too much time with Santi and so I'm thinking about you know the all these luxury brands but um um as a lowly commoner Hermes uh the the um that you know they flipped openclaw and and the and the main thing and I' I've been playing around with it and it is it is so much better than openclaw but one of the main things is that like they just it pauses every 15 seconds and it looks back at the context window and it says what did I do well? what didn't I do well do I need to and how do I self-learn how do I get better right and it's this this memory and this context about like working with you feedback that's gotten self-reflecting and it makes it significantly significantly

easier to use for a bunch of different types of skills and workflows and but also there's going to be more memory that's needed because of that and on the vanish side too like again that's demand for uncensored uh models but their biggest model I think is still actually opus uh even though like there's there's there's demand otherwise and that again is like a bet on inference right to your point Zante it's a bet that a lot of Americans will continue to want to and not just I mean Venice is mostly America but what you're actually seeing uh for Hermes you're seeing a lot of this happen in Asia as well but it's a bet that more and more and more people are going to be using inference over time and in that world I actually think there's a a crypto angle especially on

the retail side that's interesting >> yeah I will say uh Ben from strate had a really good piece um and I quote he says um there's two things but I'll start with the first one which it talks about memory he says the most important aspect for answer inference is token speed the most important aspect for agentic inference however is memory and so I think that is the shift that is happening which is if you look at the evolution of AI first it was like GPU build out then it's now and it's like prompting right now it's turning over to agentic workflows and for that you need to have a bigger KB cache. A lot of the conversations I had with Logan, not to get too technical, is like this DeepSk paper that came out, which is they they

were doing a lot of interesting optimizations that bode well for a company like SanDisk. Uh you have to like look at the different tiers of memory, hot to to cold. Uh the pricing is very different. But look, I'm not an expert. What I try to tell you is I I I do pay attention to when smart people in my network reach out to me and they say, "Hey, look, we're paying a lot of attention to this, especially in how like Chinese constrained companies like DeepSec have tried to innovate around just like bottlenecks in this AI supply chain. Um, so yeah, needless to say, I rotated a lot of my cash and just blindly bought uh SanDisk and Micron and of course my >> So you didn't do Venice. So you didn't

buy Venice? I don't understand the Venice well enough. I I I'm fairly concentrated and of course I get a call like, "Hey, uh, are you sure you really want to do this?" I'm like, "Just just do it." You know, >> Dante, when you buy SanDisk and Micron, are you buying just the stock or are you buying some complex? Yeah, I I I'm probably doing it wrong, but I did buy spot um and scaled into the trade and then I bought like these auto call notes that uh it's very volatile name. So, uh I get paid like a guaranteed coupon like 50% on some like SanDisk uh and the barrier is like 30%.

Which means like if it breaches that, if it goes down below 30, which is really possible within 12 months, I basically buy it at that level. So, if it goes down 60%, I I'm just I obviously eat that, but the coupon is so high that, you know, you basically have to go down 40%. And I'm happy to own it that at that level. Um, but I in the meantime, I'm getting paid a nice coupon. So, I did both. Um, but look, that's not my full-time job. So, I was very quickly just did that and said, I'm just going to forget it. I think this continues. Um, but I may be terribly wrong. So none of this financial advice an interesting point here maybe sorry uh Jason one one last point which is um I was talking to uh Tom Schmidt one one of my partners here

at at Dragonfly and he uh he's been traveling Asia for like a week or two and he went through um through China last week and he was talking about how like he's going to these meetups uh where like people are literally going to Hermes or openclaw meetups I mean like in whatever they're like in parks, they're in like, you know, random places and you just get like 3,000 people to show up and then there's people um helping them set up their own agent there. And it's like he was and and he was talking about how and a lot of people in China were talking about how this feels a lot like you know crypto in 2017 in China where you know everybody was just like meeting up and like

figuring out what they could do and it's like super interesting. And there's so much excitement about it and everybody's talking about it. And if I think about, you know, the stuff I care about, which is a lot of like digital payments, right? Digital payments uh grew so much more quickly initially in uh in the like mostly in in Asia, China being part of it, but then you know more broadly in in Asia and then it went to the rest of the world, right? And it does feel like there's already this excitement around Hermes and and OpenClaw and you know um kind of this agentic future, but it's still very much a you know whales eat up the vast majority of of tokens and then you know kind of everybody else. And

it's Hermes is still even though I thought it was a lot easier than openclaw, it's still way too hard for the vast majority of people to use and and Brian Chesy has been out talking about this a lot. I've really enjoyed his stuff and so it but it does feel like the early days of like man like are we all going to just have a bunch of agents right and then all of the things that are downstream from that to your points on >> Janna you're pretty at the frontier of this stuff and testing it like I'm curious I have been tinkering around with agents but how much do you guys how much do you use them there's a yeah I'm curious how you guys are using agents and to what degree and for what >> so we put together actually a um so what

we realized at the company was uh we so we did this survey internally at block works 81% of block 81% of block works was using cloud code 19% was using chat 96% of block works was heavily using AI 4% were not heavily using AI um that was three months ago I'd guess it's probably 100% now what we realized though was everyone was using most people were just using cloud code or codecs but they they hadn't they they hadn't taken the time to do these setups to make the work really go to the next level so we moved one of our research analysts into this position which is I don't know his title but it's like we can call it head of AI um head of AI excellency or whatever you want to call it and um he's

basically put together a SWAT team where he now looks at every single function the company does and instead of just using I think claude code and codeex are like the V1 inside of companies maybe chat bots are the V1 codeex and cloud code are the V2 he's now doing we're now doing a lot of the V3 stuff which is we've built these agents that now run a lot of sub aents for all of our tasks. So that could be outbound sales, it could be putting together research reports, it could be building dashboards. Um the time that it takes us to build a dashboard has gone down by about 95%. Um the time that it takes us to like add new data to our APIs is it's now nearly fully automated and it's you can't just do that with cloud code and

codecs. have to build these agents that are running sub agents. So that's I think and that's why Her like her Rob you mentioned Hermes like Hermes is the version of this for on the on the personal front which yeah I I think that's where the future goes here is you you know you have these agents that have the sub agents on Hermes I actually haven't set it up but my understanding is it's backed by noose right news noose research which >> which is crypto team >> which is a crypto team and I think paradigm led their series A like last year maybe um so but I'm curious and and I I I was trying to dig into the docs.

It looks like the Hermes language models are trained on I'm pulling the I I pulled this up earlier the Psych network which is a AI training infrastructure on top of Salana. So I'm very confused why the >> So they are so for that piece that I think they're winding that down as I understand it. they now today when you uh set up a Hermes agent, you just pick, you know, whatever model like I just put in my, you know, you I just ended up using um the people that I I I think I'm I'm mostly using Opus uh uh for it um specifically. Um and so like it's there there is the Hermes model, but the uh

the model is not the focus of the business anymore because they've had this like this the agentic framework stuff um grow. so so quickly. I mean, it's still sort of um I think for a lot of these guys that are like agentic infrastructure, they still don't really know how to like monetize their business and so it's not, you know, they're definitely more like frameworks and it's open source and you know, there's a lot of people using it, but like how do you what does that mean for like an actual business? I mean, Open Claw figured this out because they had no business whatsoever and it was like one dude and you know, then they ended up saying for a billion dollars, but just because of you know, what they had built around it.

But there's how this turns into revenue is actually still still very unclear. Did you read Toby from Shopify? His uh he put out like a Twitter post about what they're doing there. And they're not allowing anybody to have any private conversations with AI. All of the AI is done in a public Slack channel and that they he's like we're creating this sort of like context window for everybody and so people are learning internally. Did did you and what did you think of that if you did read it? >> Um I I uh I think that's the right move. Yeah, I did read it and I think that's the right move and I so I'm not we haven't gone that far like it's we people can still have private AI conversations at Blockworks. Um and because it takes actually a lot of time

to do the security of this stuff. It's like you have to provision like theoretically you should give each employee when they onboard an API key that that kind of shows their level of access that they get. Like I don't want you know one of our salespeople having full access to our financials but I want the finance team having full access. So you kind of have to we just we takes time. You got to set that up. We candidly we haven't done that. Um >> proof. >> Yeah, that's the right model. What we have done is um look I think there's this there's this big push after COVID to go back IRL. Like everyone everyone's going back into the office and I think there's a big benefit to that but we we didn't do that. We're still we're still a remote first company and I think

you're starting to see the real benefits again of being a the real benefits of being a remote first company today are that every single thing that Blockworks does is documented. So one thing that we made we made a big push about a year and a half ago to go public channels instead of private in Slack. And the what's happening now is that the AI just has so much more context because it can read it can't read private private Slack channels but it can read public ones. So, I would encourage founders if they're listening to this to just make all your Slack channels open and public by default. Doesn't mean you have to add the whole company into these Slack channels, but make um just just record everything at the company. Um I think that you're seeing this with Facebook.

So Shopify read Facebook I was Facebook is now logging every keystroke of the whole of all employees because as a training method for their AI because there's these RLHF things like SCA they bought they bought they bought scale um there's there is another one but it's like instead of outsourcing your training what if you did it in-house with just employees so you look we're not we're not doing that too we're not like but I think that's that's where a lot of these companies will go is starting to actually do more and more training Right. Right now we everyone outsources their training to the big companies, but I think you'll start to see small like training push more and more and more to the edges. And the way that you can do that is making more documenting more stuff and making more

stuff open. So yeah, that's that's what we're doing. To answer your question, Rob, let's uh let's shift gears. We spent 30 minutes on AI. Um so uh digital asset the company behind Canton it uh came out that they're raising a big round led by Andre. Um and then which we can talk about all the not sure how much is public there and what's not. Um but we can we we can talk about that. Um and then there's uh circle >> I think that was just a rumor and like there was very little that was public around it. So I'm not sure there's like much to say around it um until there more comes out. Well, it sounds like they are is what I'd say. Um, cir circle is uh

No, no, not earnings, but I want to talk about circles raising a raised $222 million for for ARC, the token for their chain. Um, and yeah, I mean the like broad the broad idea I I mentioned last week or two weeks ago that it's a good time. It's a um it's a good time to be a public to be a an enterprise building a chain. That's what I'd I think I said mentioned Canton and Tempo specifically, but if you look at right now, you've got digital asset and Canton, you know, raising at two billion, circle and arc raising at three billion. Stripe, paradigm, and tempo, you know, you know, I'm not sure what's public there and not public, but you know, I I can I'm sure Tempo will have a will have a token at

some point. Um, so yeah, it's a good time to be a suit selling a token for a chain is what I'd say. I'm curious to get your take. >> What's interesting circle raising at three billion tempo last round mostly led by Stripe insiders was that five billion if I recall. Um >> that's right. Uh I don't know how much we want to get into circle arc and I've heard some takes around like it's actually gonna do less good or more harm than good um by being less >> I mean let's let's talk circle specifically because this is you know did like stripe is a private company uh paradigm behind tempo is a venture fund so this is kind of the equity of of

tempo kind of it kind of makes sense or it's like the thing that you can bet on if you want to bet on there digital asset is a private company canton is a public token Sure, that kind of makes sense. Circle is a publicly traded equity. >> Just to be clear, the the digital asset fund raise, but this one and the one before just into the equity, not into the token. And the the way that they've described it is you get token exposure through the tokens on the balance sheet. But the investment the all the investments have been have not included token warrants have just been straight into the into the equity. >> Got it. Um, Circle's interesting though because Circle's a publicly traded stock. If I am a circle shareholder, I am confused why there's now two ways to bet on the company.

>> Well, uh I'm not sure public investors are are are really making that nuance to be honest. Uh it's more like they're going to have some tokens on the balance sheet, so it's uh you still acrew some of that benefit. Um I'm pretty sure that's the way it's structured. Rob, I don't know if if you just >> Yeah. So, it's the same story a little bit as Canton, right? Like 25% of the tokens go directly to the balance sheet, right? And so, okay, well, you get some exposure through you own 25% of the tokens. Um, you know, and then there's a very big piece that goes to all the partners and goes to um, you know, kind of incentivizing economic activity, right? I I I think honestly the most

interesting through line here is what this means for the Coinbase Circle relationship actually because the I don't know for a fact that this is true but the the common thing that people keep saying is that well if it's on well here's what I do know is true um in the circle Coinbase deal if the circle or if USDC sits within in a circle wallet or a circle account uh then or at circle then they don't have to pay the 50% rev share on the net interest margin to coinbase right and so the thesis has been I think for a lot of people and I think that the inrezen article that they put out kind

of says some of this right which is that like oh arc is part of circle and so like you know if they can move a lot of economic activity on arc that is actually an immediate uplift in economics to circle because they see maybe there's you know USDC is the most dominant stable coin in DeFi and you know DeFi currently exists on Ethereum and and base and Salana well let's say a lot of that economic um DeFi economic activity moves to ARC well they get you know if it's if it's you know call it um you know net zero right and it's it's the you're not expanding the pie you're actually just uh vulturing what exists elsewhere well now they've gotten double the revenue because they've gone from

50% market share with Coinbase to 100%. And that's um you know something that if you're a public market investor in the equity you obviously like a lot right because there's a you know huge uplift for you right and you saw that they beat earnings the the the the shares traded up I I forget what it was but I think they they traded up quite a bit um after hours uh and and then and then yesterday and so the bet here is almost certainly that they can take these other things that they have been doing around CPN which you know has been this sort of you know circle payment network that I don't think has had the success that they had hoped it would have but then they can take that they can take more of the work they've done on the crosschain side they

more of these kind of value added services and then they can move a lot of the activity that's happening onchain of which they are giving up a bunch of the economics of USDC onto their own chain and it's good for both the equity and the token and the token is needed to incentivize people to come and uh and come and be part of that ecosystem system. They haven't fully talked about publicly yet like what, you know, use case the token will have, but it is going to have usage that, you know, people uh or at least have hinted at that it's going to have usage that will incentivize people to be holding it and doing things on ARC.

>> Oh, it's so it's a customer acquisition cost. It's a it's a it's a marketing, >> but that's true for a lot of tokens. Tokens are just CAC in a lot of cases. >> True. I it's showing up in the numbers for sure. Like they reported earnings. U I mean their opex line item was up like almost 80% year-over-year. Stockbased compensation's up 4x. I think you know read into that. My take is they're they're obviously spending a lot to get this thing off the ground. Um so shareholders are definitely footing the bill there and they're getting some benefit. I actually don't know. Um, so like this goes back to I think an earlier point I want to get your guys' take on is like ARC on its own

is it going to be like hugely profitable as a traditional L1 because if it's just like stable coin and stable coin transfers there's not in my opinion if it's just that I don't think it's that interesting. Um and and so I'm curious like of course it depends on the valuation but like would you rather own circle the stock or ARC the token if it exists and you know it's nuance right it depends at 3 billion or 10 billion and 40 billion of course it depends but I'm curious what like the correlation between like the stock or the token and what would you rather own and why >> I mean if art is successful and everything I just talked about it has you know a direct economic benefit to

the equity, right? And so I think the the debate that you have to have, which I've been having actually with a bunch of people and and has been, okay, well, what do we think the net new buyer is for a token today? How many buyers of those tokens do we think actually exist? In this round, there were obviously a ton of strategics who said that they did the private sale. Does that mean that there's going to be institutional buyers of the ARC token over time if the ARC network does well? That's the question you have to ask yourself because the amount of capital that could go into the equity over time if the USDC you know continues

to take market share and you know dominate etc. is obviously a much bigger pool of capital and there's much more buyers that you can reach than there is today of people who can hold this token. And so there's a supply demand question around that. Right now the does that mean that the token you know on that supply constraint won't perform just as well or shouldn't perform just as well? I think to date you've seen that correlation break down a little bit right like you know pump funds a really interesting example because you know they did whatever 700 million of revenue last year. They're doing $350 million of revenue this year. They were doing a 100% buyback and burn before they came out and announced that they were going

from 100% buyback and burn to 50% buyback and burn and the token went up 30%. Right? And so like it was like sort of unclear on like if the market even understood what was happening. And the crypto markets have been a lot more cyclical. And so I I think in the equity anyways, you're betting on more call it like the long-term trend of stable coins. And on the ARC token, you're betting on their ability to win, you know, DeFi and this like pie that exists today in the crypto space, which is today smaller. And you know, how you square those two, I think is, you know, any investors um, you know, that's their job. That's how you have to what you have to figure out.

>> The way I like to frame the question, I want to go to Yano is like ARC is the asset, the token itself. USDC is a commodity. It transports. So, um, it depends on what you want to have exposure to, but the the the commentary I've heard is like you obviously saw Hyperlid do an RFP, which is very competitive, that Circle also wanted to compete in. And Hyperlid, which I think is at the forefront of they they've been just very good at thinking about go to market and marketing and just how do they build more modes. They did their own RFP for a stable coin and they issued their own native stable coin.

That doesn't mean that like USDC is not going to be on the chain, but it, you know, I read into that and I think >> still the largest the largest stable coin on hyperlquid core by far. >> USDC. >> Yeah. >> Yeah. Well, that that and that that's what I'm trying to get at, which is has Jeremy and team gone come to the conclusion that USDC is sufficiently entrenched in the crypto ecosystem that they can now go and launch ARC because I don't think they could have done that in the earlier days, but they were seeing, okay, we're gaining more market share, especially on the B2B, like on the on the business side. We've sort of have the brand, the trust. We can now go out and launch ARC. And yeah, sure, like some of the other chains like Salana and Ethereum and some of the L2s are going

to probably, you know, feel the heat, but we're at a point where we can launch ARC and still dominate. I think that's sort of the calculus that probably went in their minds. >> Yeah, I think I think that's right. And I think Rob Rob's point around their relationship with Coinbase, I think Rob, you said this also. Omar from also from Dragonfly had a really good post on this, too. This is the beginning of the end. Actually, probably the beginning of the end was probably a year ago, but you know, this is a continuation of the end of the Coinbase Circle relationship, right? We saw them launch competitive products like the, you know, CB BTC and then Circle launch CIR sir BTC. Um, but this is like, you know, if you look at what Coinbase is trying to do with Coinbase plus Bass,

it's like build the everything exchange. And, um, I think this is Circle saying we're going to take all that activity and instead of flowing it into Coinbase and Bass, USDC balances, tokenized asset, tokenized assets, payments, settlement, eventually FX, which will probably get big in crypto. um that should all go onto RC chain not onto base which was the natural evolution of this was with the circle relation or with the coinbased relationship it would all flow onto base and I think this is circle saying it should flow onto our thing so I like it from that point of I like it from that yeah go ahead >> well no I just wanted to add one point to that but before and then I want you to continue which is that the um there was this anpm uh which is like an advanced notice for rulem that came out

from um from treasury around uh genius act so obviously his part of Genius. um there had to be a bunch of of rulemaking that the OC and Treasury have to do and Coinbase filed a essentially um um sort of a comment letter that when this request comment like here's what we think about the rules and what they should be and one of the things that Coinbase put in their their uh filing and which I think got a little bit under reportported was um a support for one entity that is you know call it in the is able to be a um reach the Genius Act level of an issuer and then other entities doing multi-token or multi-stable coin issuance, right? And

what does that imply to me is that Coinbase believes in the future they will be a multi to a multi-stable coin issuer of uh different types of stable coins, which also implies to you the same thing you just said, Yano, about the relationship with Circle. >> Exactly. They they own the distribution and they can be have multiple stable coins there and just take massive rev shares on on multiple. So in in that case, I like it for circle. It's strategic. Um but I really don't like it from a tokens. What's the value of a token? Um it's like ARC at three billion. Look, they're they're able to get some smart people to do this, right? Um and Rob, I'd be curious why you guys aren't

included in here and why you guys passed, right? you know, but they got Andre, they got Apollo, they got Black Rockck, they got General Catalyst, they got Ice, Janice Henderson, Marshall Waist, Standard Chartered. I have my own takes on why those folks did that, but you know, it was it was a very successful fund raise. I'd say 222 out of three billion vows is like, you know, nothing to turn your head at, but um >> 10% of Circle's market cap give and take. Yeah, it's it's a very successful fund raise and I like the strategy and I will just say so many people in the over the last decade have bet against Jeremy Aair and have said, you know, Jeremy is this or Jeremy is this and and the guy just wins. He just keeps he just keeps

being successful. Everyone said this the IPO was going to be like the worst IPO ever. The thing ripped. So, I'll just say like, you know, I'm not I don't want to bet against him. What I will say is I don't I think the trend of the industry has to be there is one single thing that captures the value of your company. It should it could either be equity or it could be token. So I don't like having those two vehicles and and my vision for this stuff is I I really do believe in tokens but I just think that these things will just converge into one. I think that it's either all equities will trade on chain or tokens will become the new version of equities. But like you can't have two forms of value capture for a company and I feel pretty strongly about that. So that's my that's my take.

>> I'm I'm obviously going to debate this with Hiv tomorrow. I think we're opening up the conference here about are tokens dead or not. Um unfortunately we won't be able to share that because it's you know closed doors but excited to do that. >> You're you're you're arguing for sure that tokens are dead, right? >> Yeah. Yeah. I I'm taking the affirmative. H is taking the negative. Um and and so yeah uh but but in any case would the right analogy here be like an oil like exploration company give or take? Like they have the rails like they own the pipes or the infrastructure and then they have oil in their balance sheet. I don't know if that's the right analogy.

>> No, no, no, no. It would be like what they're I think what they're doing here is like if you're an oil company, you're Exxon and you have Exxon stock that's circle stock, but then Exxon launched another stock just for the oil pipes. And I'm like that doesn't make sense. Just have one. There's what I'll look into this, but like obviously the in the cable like born to be wired book like John Malone experimented a lot with like tracking stocks and the way he did that was like you have liberty A, Liberty B because like investors want to have exposure to different things and so I'm not sure how Jeremy like there is a little bit of financial engineering here >> and again I I think like there is a place a role for a token to serve like you need to have a token like I don't

think tokens will cease to exist. There's a there's a role for a token, especially for an L1 to exist, right? To pay for, you know, settlement transactions and MEV and block inclusion and priority fees. Like you can't have a stock to to do that. >> So like you're still going to have a token. Was that like the primary motivation or was it just Jeremy saying look there's clearly interest looking at Stripe and what they've done and saying okay let's do this ourselves and capture the attention and you know have some of the these new investors like subsidize a lot of the opex like probably maybe the question here is like why didn't Coinbase do this for Bass? Yeah, listen I I think I I um there's obviously a question too around soc you know base is a you know op stack you

know L2 rollup right and you know there's a I think there's also a question around does a you know OP rollup actually need a token whereas and I think to your point like it's much clearer why a L1 needs a token right uh and you know there obviously a bunch of L1s that are trying to pay gas and and and stable coins But um I I think it is obviously it it makes a lot more sense from you know how the econ how to align economic incentives in an L1 than it does in L2. I I think that what's also true here is that, you know, we're sort of in this time where you can be one of the like they're basically the first one to to be a

public company to go and launch a token, right? And you know what is what is Jeremy other than somebody who's wanted to push the edges of what happens, you know, out there in public markets, what happens out there in private markets, of what's happening in technology more broadly. That's has been his whole career. And so for them, you know, I this is like complete speculation, but I have to imagine part of it is just like, hey, like nobody has done this before. Maybe we should do this. >> Well, well, yeah. And by the way, like let's not forget uh Circle Base moved away from the OP stack earlier this year. And and so again, I is this part of like the evolution that they came to the conclusion like, hey, like we don't

necessarily need to be an L2. we'd rather just build an L1 ourselves and just uh you know own our own sovereignty and what have you. Um related to this is a piece of news I wanted to cover related to what you just said about perhaps Jeremy and the willingness to be more on the cutting edge of regulations and doing interesting things. We have here the poly market on the clarity act. When we recorded two weeks ago, it was at a record low of like 30%. But basically, you're now at 60. What is it? 60 almost two/ird like 60% chance Clarity Act gets signed into law this

year. >> Wait, wait, Santi, say that again. What's the percent? 60. Okay, cool. Wow. Listeners could have made some nice money listening to your boy. >> Didn't you say that, Yana? >> Two weeks ago, I said we're getting clarity. I'm, by the way, we should talk about clarity. I still I'm I'm I'm at 98% we're getting clarity. I think there's been a big change in the last week. Rob, I don't know if you're capitulating on that trade. Rob was saying we're not getting it. I'm saying we're getting it. I'm standing by that. >> I did not say we're not getting it. I said the it was mispriced in the market and that the market was which by the way >> Rob, >> we're going to have to do a clip here. I think we said both you have accountability every single insider

>> every single insider had the same the same opinion right now to your to this point there has been a big change in the last week right now so I don't know if we want to move to this right now but like Tillis basically came out and was like we are going we are going to put this out there we're going to and we're happy to do it in a in a partisan vote if that's what it means in the Senate Banking Committee and you know the doesn't matter that the banks are going to continue to throw up a fight because I'm fed up and I believe that we have a a reasonable compromise.

Um it was unclear that that would happen and I the a lot of the back and forth by the way was a a belief that the banks were not going to get to a compromise and play in good faith. Right? And what has actually proven out to be true is is that exact thing. The banks have not been in good faith. You see the the ABA put out a um sort of a an email blast to every single member over the weekend trying to get everybody to flood Congress with comments right now that says, "Hey, this is bad for consumers.

This is bad for deposit flight." They're putting up a huge fight and now it does feel a little bit like a death rattle to to Yano's point, but like the banks have essentially been bad faith this entire time. And so what we needed was we needed Tillis to come and say, "Hey, like I I hear you. I think we have a good uh a good compromise and I'm not going to continue to be beholden to the public the the the private interest groups of of the banks." That's what he did. And so that was the big change. The big change was that Congress said, "We think that there is a there is a good agreement in place. We have heard everybody. We understand the the concerns. We are trying to come to a place where we can address those

concerns. And now we're going to put this on the floor. This is not done yet though to Yiana's point about 98% like that's definitely a mispricing as well because we we we have a a uh a we're going to get out of committee probably um almost certainly but it might still very much happen on a partisan basis which means that which is not typically a good sign for what happens on the floor, right? and then you're going to go to the floor and you you know one or two flips on the Republican side could create big issues for this, right? And so like there's going to be a lot of whipping that needs to be done. There's going to be a lot of work that needs to be done. The ABA and the other the other interest groups on the bank side are going to put up a lot of a fight. But I

will say that the the prospects of a uh of Clarity Act now seem much much larger than they did, you know, a week week and a half ago. And it does seem very likely that if not you know close to 98% to point that we at least get a vote in uh on the Senate floor >> which is which is really not being talked enough about enough I think right I mean I don't know >> I think crypto asset prices did kind of rally on that basis I saw a lot of news out there and you saw Bitcoin above 80K some of the other major networks like caught a bid um and and I think people were willing to be a little bit more risk. I heard it from I think Rebecca that said a bill dies like seven times

before it gets passed. I'm actually I'm actually now of the mind that it does get passed in 2026. Maybe not the version that you wanted, but it will get passed in some way, shape, or form, and that's going to be positive. So, I think it's still mispriced at 60%. I would actually go and, you know, I'm I'm operating under the assumption it does get passed. >> Yeah, I um Yeah, I mean, I really I really think it'll get passed. It might be helpful. Maybe you trade it, Yano is what matters. >> You know what's I I didn't trade it. I'm uh unlike unlike most of crypto, I'm terrified of insider trading. It's like the insider trading stuff is not worth the risk. So, could you trade it?

Probably. Is it worth it? Probably not. Um but I think I did say on the podcast I was like, I think we're going to get clarity. People aren't expecting it. I think we're going to get clarity and I think we'll get a pump into uh you know a rerating of some crypto assets into positive news about clarity and I and I think we get we got that. I didn't trade it sadly. Um do do you want to give like an overview of what clarity like the impact of clarity and specifically like the impact of clarity on tokens or or I'm happy to as well. >> Yeah. I mean I I can do what matters to us. I I I think a lot of what is going to end up happening with Clarity and the same thing that we've had happen with Genius is that we're going to punt a lot

of rule making still. So we're not going to know the full effect, right, until the SEC and the CFTC get together and say, well, these are like, you know, taking this bill and then going that layer deeper and saying, okay, well, now here's how we define a commodity versus security, right? But what it does do is it provides us a framework to say this is a separate category and now we're going to go define what is a a commodity versus a a you know a security and there are some guidelines and clarity already but you know we're the devil's in the details right and but what that what was really good about that specifically is that now all of these you know call it banks traditional finance companies you know uh tech companies who have been

saying like I want to be able to do something where I hold different types of crypto assets on chain. They're not going to have this, you know, concern over, you know, what this thing is anymore, right? Which is going to provide them clarity to be able to trade them, be able to hold them, to be able to create new things themselves, to be able to potentially create, you know, um or at least with some certainty create like an onchain security, which you can do today obviously if you go through traditional intermediaries, but like maybe there's going to be a lot more flexibility around that, you know, over over time. or maybe you don't need a transfer agent or you don't need a um you know kind of a central clearing house. The you know stable coin yield point that's been talked through to death. Um you know that again clicks

kicks a bunch of of work back to you know the rulem side. Um you know a big thing that we care a lot about uh is what what comes out of the house what they called about is the BRCA. Um, what this really does is it protects developers from criminal charges if their software is used for nefarious reasons, right? Like we didn't go and say, "Okay, well, like, you know, North Korean hackers are using Google and so we got to go or maybe they're using, you know, call it even whatever they're using Air Table or, you know, whatever your software is." uh and you know say that okay well this was used for a nefarious reason and so we're going to um go and and you know put criminal uh

sanctions uh against the founders and and the company whereas in we've seen in the past like tornado cash being one of them right where there was you know Roman storm is being prosecuted for you know criminal charges uh based on a piece of open source software which he launched out into the open locked and had no idea how it was going to be used right and then it ended up being used in some sense by by North Korea but Not entirely, right? And so that one matters a lot to us because we want and we hear from our developers, our founders that they are concerned about building a DeFi protocol that may end up being used by the wrong actor and what that means for them personally, right? And so that protection I think is uh is really really important. Um, and so there's,

you know, there's a bunch of other things like nuances in there that that matter, but I for this audience like those are the things that I think are probably most important because at the end of the day, what does clarity act really get you? It just gives you comfort and clarity that you can participate in this space and frameworks that will be specifically made to answer the questions that we're asking ourselves every day. >> Yeah. To tie it all back into this circle art conversation, I my one line on clarity is it gives it creates room for tokens to have utility, value creation, and value capture for really the first time in the industry's history. Um, now Rob, you're spot on. I think rulem is where the real details

are going to get decided, right? That's like probably the SEC is going to define like what what that actually looks like. But I I think what we're going to have is for the first time I think clarity is the beginning of a Santi. This is where I'm going to really disagree with I think what the premise of your debate is with Hib. I'll I'm probably more on Hib's camp here because I think clarity is the beginning of a of a beautiful multi-year bull market for for crypto tokens. um for for for a very select few who decide to do it like there are only a few who I think are doing it the right way right now and I'm talking my book a little bit here because you know >> token transparency >> in investor relations and token

disclosures and transparency and I don't care if you use token transparency framework or something else here to do it but like there's a there's a select few tokens who I think will do incredibly well and I didn't I didn't I didn't buy poly market odds on clarity but I am starting to bid tokens for the first time in many many many years. So >> yeah. No, look, I actually don't disagree. The premise of my argument, spoiler alert, I see you if you're listening. Um I guess you'll have a few minutes to catch up, although I go first, is that tokens as we know them are dead. U tokens will end up resembling more like equities in the reasons that we've talked about at length, which is more transparency, uh more value cruel mechanisms that allow token holders to participate and then

there's less value leakage. But the the first point is is the reason why public equities just have way more liquidity behind them. We talked about this in prior episode about prediction markets is you need to have a certain set of ground rules that provide market fairness and integrity to incentivize people to actually bid these things. In the absence of that just becomes a harder to really see much more liquidity entering the space. Um but I I I don't think tokens are dead. tokens as we know them are dead, but we're moving more in the direction of creating certain rules in place like clarity well set in place and and and again we touched on it on ARC there is a time and there there is a need to have tokens I'm not I'm not in the block blockchain not crypto camp I actually strongly believe that you

tokens serve a really good purpose to Rob you said it customer acquisition costs and like go to market um you know providing validation and consensus and incentive alignment all of that like cryptoeconomics design tokens are are essential substrates to spin up and maintain these systems. Without them, it becomes incredibly incredibly hard. Uh right, if you really want to achieve decentralization and distribution, you want to and need to have a token. But I do think like have you guys put out a a correlation and it might be too early because there's a lot of noise into that. But like it would be interesting over a couple years time frame say look the tokens that moved and had a higher

like what is the R squar between token transparency and performance I think there was a blog post by one token fund which is more anecdotal than not like hey look we but I do think certainly think it's true like just you hear from VCs all the time founders that respond really quickly to emails is is a kind of a a thing that people latch on to um teams that send out quarterly investor updates on a regular basis. Like these are all things that give you confidence as an investor that the team is of high like integrity and is operating at the highest level kind of thing. Anyways, we're not necessarily as as serious of an industry as we can be.

>> Yeah. Um la last interesting thing from the week is uh anthrop. So there's all these anthropic SPVS that I'm sure you guys get pitched as well. And not just anthropic Replet OpenAI Stripe the the SPV crazes just hit an all-time high. And um yeah, it's people wanting to get pre-IPO shares in a lot of these things. And Anthropic came out this week and said, "No, no, you cannot. We will not recognize any of these SPVS." Um I know I know I I have friends who have put probably 90% of their net worth into these SPVS in the last two years. Like crazy crazy amounts of the the craze that's happening in the SPVS I think are not is not talked about or seen as as as

much as some of the public market stuff, but like it is it is mania in SPVS right now. And uh yeah, Anthropic came out. I think OpenAI might have too and said we will not recognize these. >> Yeah. And I think you're going to see a lot of other folks start to do this. There's a lot of other SPVS that are very hot like Replet SPVS were hot. S uh lovable SPVS were hot. Stripe SPVS are very hot. SpaceX SPVS are extremely hot. So, uh, the the reason that that it's relevant for Empire and for this podcast is because, uh, we talked about this maybe a couple months ago, but a lot all pretty much all of the tokenized equity trading that you see today on, you know, Ono and Hyperliquid and a lot of these things, it's all um, it's not a dig at

Ono or Hyperlquid. It's just, I think, stating the reality is that a lot of these are just trading SPVS. um you're you're throwing a bunch of shares into an SPV and then throwing it onto a blockchain and trading it. And so if the SPV mania blows up with these companies not recognizing them, a lot of people are going to get hurt, but a lot of the token it'll be I'm unsure of how this will play out with the tokenized equities, but it's if you are trading tokenized equities, it's it's definitely a something to be aware of, I'd say. So Rob, I don't know or Santi if you guys have takes or have thought about that. But >> I mean I I tweeted that uh before actually this came out. I tweeted like a week week and a half ago that you know

the fraud in the SPV market was like hadn't really been digested by by people yet. And I got probably 10 pings from reporters after that which is like oh yeah we're like we're talking to a bunch of people and like everyone you know agrees. like it's one of those things where we we've seen a couple things happen which is one there's a lot of like smaller you know sort of VC funds who have you know kind of built their business now on these SPVS because like oh they you know one of two things is true which is that they've struggled to actually like win allocation in deals for um you know being directly on cap table and for you know kind of their own fund and so you know call it sourcing some you know uh shares of an SPV of an SPV, you know,

than sort of like a second or third nested SPV has been much easier to do. I think the TVPN guys uh said it, but we're like we're almost at the phase of the uh of your cab driver shilling you his anthropic SPV. Uh and it does um it does feel that way a little bit. I think there's it's important nuance to note that there's like a couple of way these things happen. So, one is like, okay, well, like, you know, the company is selling primary shares or they're like in an open AI case. There was a Wall Street Journal article that came out about them actively um allowing and facilitating secondary transfers specifically. And sometimes people just have an SPV of this like direct cap table um ownership because, you know, they can't, you know, they don't have

enough money themselves and they want to go and and and um you know, source some some extra capital for it. Um like those are obviously fine. Uh there's I I think a number of nested SPVS into those are also obviously fine. It's just the I think the thing the bad thing that people don't understand about these nested SPVS is oftent times you're getting like two or 3x the fees because you're paying fees on a you know an SPV and then you're paying fees on the you know the the ownership of the other SPV. Um but like those are fine, right? um there's also then like a lot of like you know employee transfers that are happening where they're not actually transferring the tokens but the or the sorry not the tokens the the equity but

they're you know agreeing to like a forward agreement and they're saying like in the future when it's liquid I will give you the the shares um that's where this question I think becomes really really tough uh which is I think Thomas Brazil who runs sort of um a fund that does a lot of like distress stuff. He did a lot of FTX claims. Um has also been tweeting the other side of this which is like listen you know a lot of these companies they really they knew that these SPVS were happening. They maybe even encouraged the some of these SPVS and they didn't stop you know or didn't come out earlier saying that like these were not okay. And you know in Delaware court will Delaware take the point of view

that like they were complicit and so they can't actually go back and not allow for and now now say that oh actually transfer restrictions are in place. Um and so I think depending on what happens there could be a world in which there is I think significant amount of lawsuits around this in Delaware. Um I expect that to be the case in the future. I don't know how this plays out. There's also a world in which like if you're an anthropic employee and you go public this year and then you get your shares six months after and they're unlocked six months after the uh the IPO, there's nothing stopping you from then actually transferring them. And so there's also that dynamic which is like they can say this is true but like you know six

months after the IPO they can do whatever they want with it. And so I I I don't know how this plays out. I do think, listen, I've always I've said this a bunch of times publicly and on on this podcast and on Twitter that these, you know, sort of like onchain, you know, spot exposure to equity that is an SPV of an SPV of a US broker dealer like are not scalable and are very risky and, you know, they're illquid and, you know, buyer beware. Synthetic exposure is much better. That's why pers have actually been doing doing well. And um I think there like buyer beware like we saw it on the on the anthropic um onchain. I don't I think it was the maybe it was on hyperlquid or or um one of the yeah like it was down like to like 400 billion. It

was it was down significantly after this came out despite the fact that they're raising at 900 right now. And so buyer beware. >> I think uh the last point you made Rob is excellent. like I would feel way more comfortable getting synthetic exposure to just whatever the underlying like weighted average price on the secondary is for some of these things. Of course, the implication is less liquidity if transfer restrictions are now enforced. Less liquidity means, you know, it's it's a less price discovery. Omar from Second Lane has really come out with this like the teams in crypto. We've had a lot of this for for many many years.

Um, Omar kind of said it to me and I think he's published like in his newsletter in the second lane is teams that actually allow transfers and have a healthy kind of a pre-TGE market tend to do better. Salana kind of did this. Um, many other teams have done this. You know, the difference between public and private markets is just liquidity. And and I think again the Collison brothers have probably Stripe as a company has been the most like adamant of like we're never going public like transfer like we just don't want people that we don't know on our cap table and I and I get that but at the same time like I hear that argument but also like they have supermajority voting and the structure is like very very in their favor.

um they do a lot of tenders, right? But if you're not like actively doing tendering, like I actually think it's like good for employees and whatnot to get liquidity if they want to. And you know it's you know uh Elon for instance in SpaceX um you know, you know, probably the most soughta u shares now in the secondary market are like SpaceX, Stripe, Anthropic, OpenAI, maybe some of the robotic names here and there. Um but >> it's like it's like data bricks. Um if you look at the top 10 right now, data bricks is there. Poly Mark's actually there. Calc is there. Um there those are like there's like those are the top 10.

>> Yeah, those are the top 10. Um I don't know. I I feel like uh maybe Anthropic has taken much of a harder line and I I I don't I don't necessarily um yeah, if they don't have an active tender then, you know, allow it, right? And maybe just, you know, play ball to some extent. But in the absence of that I I think the does um what are the risks of like synthetic exposure I guess just a pricing fault and an oracle issue or >> it's an oracle problem right like and that becomes >> but but that's a problem a lot of the a lot of these like you know call it trade XYZ hip three markets right or you know call it for for anybody else who's doing this lighter is doing it a bunch of others are there's there is an there's

an oracle problem and there's a how do you manage risk at times when you know there isn't a publicly open market that you can actually reference and um everyone's trying to trying to figure that out because like you can definitely provide some exposure but how does that scale that becomes really tough and so I think the private equity market even with synthetic exposure there is a real scaling problem and a real scaling question if the demand is really there which it is right and so I think it brings this other point around like you know should we be doing stuff to encourage companies to go public sooner uh and like that is probably almost definitely a yes, but because there's real demand to the point, right? You know, for for every, you know, cab driver that's an anthropic SPV. Now,

>> also, if you're an employee, like would you want to like hedge your exposure if you have like 90% of your net worth? Uh, I think like SpaceX employees, like the Austin economy is about to rebound because they have like 12 people that are going to become billionaires, like over 100 people that are going to become like centmillionaires. like if if you if you want to hedge your massive concentration of wealth like you'd want to maybe like get synthetic exposure and like you know hedge and lock in like uh they they serve a real purpose is what I'm trying to say in the absence of like not every company has a tender program like Stripe you know and and repurchase and so you know >> I mean you there was a journal article and we probably beat this this topic to death but there there was a journal

article uh I think over the weekend that was that open AI allowed employees to sell up to uh to up to 30 million. The average mo almost all employees um participated. The average per employee was $1 million uh at OpenAI. Um I think it was 75 did you know took the entire 30 million off and you know something like 600 and some took over a million, right? And so like people are hedging, right? And so I mean we've seen all the tweets about the San Francisco uh housing market, the high end of it anyways and you know the Austin market and stuff. So, you know, that's going to happen. But there has to this is why all of these companies now have a head of IR and they run these tender programs because they've decided they're going to stay private for longer, but there has

to be a way for, you know, all of these employees who have all this newfound wealth to to, you know, to be able to to hedge out their exposure. So, >> all right, J. It's a beautiful day out there. Let's uh Rob, I know you got to hop >> content of the week. Roberto, you're first. >> All right. I I'm actually not going to do fiction this time. I uh I just caught up to Fred Wilson did like four, you know, basically did like on the this they put out a USV podcast channel and they just did an hourong around like Fred's career uh and like USV's growth.

Uh and I actually found that like super interesting, especially as a um a what I consider like a New York VC. I think there's this like divide happening right now between New York and and and SF. It's always been there, but you know, it's getting even even worse. has been a lot of these debates and so um I I I don't know I love Fred he's he's amazing and so uh I really really enjoyed that and then to your point around um or at least I mentioned I mentioned Brian Chesy earlier but his uh invest like the best uh last week uh was was really good as well. >> Yeah, let me share a 30 secondond Fred Wilson story that'll make you like him even more. Mike and I were hosting the second ever Block Works event. We had just quit our jobs. Um we didn't realize

that you had to sign a contract with a venue. So, we just did a handshake deal with a venue, not realizing that we had to follow up with them. We just thought the date was confirmed. So, it's three days before our second ever event and um we uh call the venue and we're like, "Hey, so like you guys ready for us? Like, we're going to come in like a day early, set some stuff up." They're like, "You don't have the venue. You never signed the contract with us." So, we, you know, we panic. We freak out. We have like, you know, 300 people coming to this thing. I used to read Rob, you probably have read this. Um, AVC, Fred Wilson's blog, which he wrote for many, many, many years was a fair and I think still writes it every day. I don't read it anymore, but I used

>> No, no, he he doesn't write that much anymore. >> He doesn't write it anymore, but it was an amazing blog. He it was like, you know, just a paragraph every single morning. And uh, so I was like, we were living on 18th and Broadway. Union Square Ventures was a block away. And I was like, let's go see if USB I was like, I read this guy's blog. I didn't realize how big of a deal he was. So, we go into their building, tell the door man we have a meeting with this guy, Fred Wilson. He lets us up. We go into USV's office. Mike and I are 23 years old at the time. And uh we're like, "We have a meeting with Fred. We we're here to see Fred." And the USV EA or the person at the door is like, "No, you don't." We're like, "We're

meeting with Fred right now. We have a meeting with Fred. It's confirmed." So Fred comes out and he's like, "Guys, you don't have a meeting with me. What's the deal?" And we're like, "I'm so sorry. We just we need a venue. Can we use your office? I read your blog every morning." And he's like, "No, you can't." But like he connected us with like Nick Gman, like a bunch of Albert who's another partner at USB, Nick Gman. And yeah, so I have a lot of love for the USB people. So anyways, I haven't listen that watched that content, Rob, but um I also have a lot of love for Fred and the USB team.

>> That's a great story. I love that. >> That's a real entrepreneurial story. >> Yeah. Early days. We're grinding. Grinded. >> Yeah. Uh, two for me. One, Founders Podcast, Dana White. Uh, phenomenal. Phenomenal podcast. >> So good. So good. >> Just get you. It's it's electric. I'm just going to leave it at that. The second one is just going back to the memory conversation. If you want to learn more about it, I thought there's a lot of content out there on Substack. Really, really smart folks. There's two pieces. One of them is the circuit. It's actually like two guys that are like very deep in the semis. They put out really good content. There's one with a micron um SVP talks about, you know, the shortages that they're seeing, the

trends, like just a good overview. And the second one is Ben from Stratecy has a his most recent blog post is called um uh what is it? Imp the inference shift is also pretty useful. So, you know, for folks that want to, you know, learn more about that, it's uh it's pretty good content. >> Yeah. Um, I've got a political podcast actually. Uh, Tucker Carlson went on uh a New York Times interview uh podcast called The Interview, which I thought was very interesting because it's pretty, you know, New York Times pretty left-leaning. Um, and it gives a it gives it's the best one-hour podcast.

Maybe it's two hours. It's the best podcast to understand the divide that's happening with the the right, which I don't know if anyone on the podcast Empire cares about. We never talk politics, so we can you guys can skip this recommendation this week, but I did find it pretty interesting to hear um it's I Tucker Carlson was very proTrump rally campaign for him and he's he's very anti-Trump now. It's talks about the impact of like the the the war in the Middle East and what it's done to divide the the right. It's it's relevant because it has implications for what happens in the 20 2026 midterms. The mid the midterms are this year. We haven't talked about it at all. There are implications for crypto. If the House wins, um, you better believe that the

House is going to be investigating a lot of crypto stuff. My fingers crossed that the only thing they'll focus on is world liberty investigations, which are already start. It's probably a content for another podcast, but the House is getting fed a lot of information right now in World Liberty. I would guess that they launch a big investigation if the Dems win. So, that's why I'm bringing up Tucker Carlson interview. Anyways, probably go listen. Dana White one Santi Rob good chat thank you folks let's go enjoy Tokyo >> sayanara have a good weekend guys you