The biggest crypto narrative shift since Bitcoin ETFs

Transcript

If I look at, okay, stable coins are growing a lot. Who's monetizing stable coins the best? Probably Sky. Bitcoin has been pushing its head up past the top of the range, but it keeps getting knocked back down into it. Everybody is wondering when are we going to break out, break down, or what's going to happen here. Hello and welcome to the Milk Road Show, the daily crypto show that knows that number go up technology is powered by friendship. We are here today to present a new kind of content which is we are calling the Milk Road research meeting. a weekly meeting that we have all been doing internally that we thought would be great to share with all of you. We're going to discuss the latest things that are going on in crypto, what everybody needs to know about, and even some mistakes that we've

made in our own portfolios recently. Uh, so that sounds good to you, make sure you like and subscribe, share this episode with somebody who's going to enjoy it. Today is Thursday, May 5th, and without further ado, welcome to the Milkro Show. Kyle Martin, how are you gentlemen this morning? Kyle, I I wanted to start with you. We had a pro AMA for our community this week. So, I got a lot of Martin's thoughts on that one, but it's been a while since I've talked to you. What's on your mind? What are you focused on right now for crypto at this at this point early in May here? >> Well, John, let me tell you one thing. It's Thursday, May 7th, not Thursday, May 5th. That doesn't exist. So, I think we just need to uh we need to make sure we're off to a good accurate start to

the day. Uh >> I wrote 57 and then I just read fifth in my notes. Um so, thank you. That's a good good catch. Uh, look, I'm actually just going to share screen real quick. I didn't even have the set up, but the the thing that I'm watching in crypto right now is um is Bitcoin. Uh, as you said at the top, um, we are in a range and we've been in it since February and we started to break out yesterday, actually two days ago. Uh, it looked like we were we kind of closed like right on the line, then we smashed through it yesterday and then we came all the way back down. Now we're sitting right back at it. So, we're going to have to see if Bitcoin wants to step up or not. I don't know if it wants to, but uh it it doesn't seem to want to

make that big move through. So, we'll see. It did this once before and then it came back to the bottom and then broke all the way down. Let's just hope that that's not what happens again, but we'll see what happens here. So, that's that's the main thing. So, other than than Bitcoin, I feel like in crypto, there's only a few things that are really interesting to me or at least that are I would say are are growing uh at least right now. And that's I mean stable coins obviously uh I think private credit is sort of having a moment. So, we're starting to bring a lot of credit on chain. This is why you're seeing the success with like Sky and and USDA which we've talked about a bunch. Tokenization which is sort of a combination of both stable coins uh and private credit plus

so much more. This is bringing stocks on chain, bringing US treasuries on chain etc. And then really it's like per which we've talked about a bunch. And then the last thing I would say which really doesn't have a lot of um like actual growth yet but I think will be the next catalyst for stable coin usage and tokenization usage which is AI agents. Uh outside of that I feel like there's not much else interesting in crypto. I don't know if um you guys would agree with that or what are your takes? Is there something else you're looking at outside of those things? >> Uh yeah, I mean I so I did an interview this week with Ali Yaya who is a partner at A16Z crypto and they just completed a fund raise uh their fifth fund um which now brings I think their total committed

capital to just under $10 billion. Um, and the the focus for them on this fund raise is, you know, one of them is definitely that intersection of crypto and AI because I think that there's a lot of prototyping being done at that space and just a lot of rapid growth obviously in capital going into that. But he also talked about um how the need for privacy is really driving a lot of capital and attention right now because that's sort of like the next hurdle for institutional adoption to be able to leverage a lot of this techn technology, deploy capital and transact. And then he thinks that that's going to also unlock the next phase of of what people are going to be able to use stable coins for. Um, so that's one thing I've been looking at a lot and I think there's a lot of projects focused on that.

Obviously Zcash has pumped a ton um on that narrative. But then there's the Midnight Side Chain that's launched and uh there's a project called Aztec Network um which is a privacy layer 2 for the Ethereum network. So there's a lot of of things happening there that I think will unlock use cases for institutions and individuals alike. And then another thing Ali said that I really agreed with was that he thinks that um there's a lot of things in this industry that were great ideas that never really got to be explored because the prior administration basically outlawed a lot of the cool things and uh innovative things for finance that were coming out of crypto and made it so the only thing that was really happening or got any attention was sort of the casino culture of memecoins and so forth. Um

but now he thinks once we get the Clarity Act through, there's going to be an opportunity for innovations that uh previously were not allowed to operate or proliferate um in crypto um to really come into the market in full size and see if they can find product market fit. So I'm I'm kind of interested to see how a lot of those things play out because I think um I I generally tend to agree with him. It's not it's like one of those things where it's like crypto was earlier than in many cases like too early and now it seems like the market and regul regulatory um landscape has shifted to where maybe some of these things can can find some adoption where they couldn't before. So yeah, we'll see.

>> I don't know. I feel like Martin, I'll let you take over in just a second, but I just on that regulation side of things, like have we really prevented a lot of people from building um like we prevented people from launching a token? Sure. But have we prevented any infrastructure to be built in crypto? I don't really think so. We haven't just haven't had any rules. So, you can kind of build whatever you want, which people have, right? Uh we built tornado cache. We built a million different things. So, I don't know that saying that that's the reason why we don't have a lot of innovation, new things is really it. Um I think we've just built a lot of bad things to be completely honest. Uh we've marketed these things extremely bad. And I I also just think, you know, what blockchain really unlocks is a lot of

things for the financial world and the financial world just hasn't really been ready or willing to like participate in it and use it, which is like a problem of product market fit to be completely honest. Uh and even though we think it's better if if the the financial world doesn't or doesn't want to use it, um then it's technically just not product market fit. So I I don't know if it's necessarily regulation that's holding that back because obviously you could just go outside of the US and build these things other elsewhere. Um but yeah, I don't know. I think we've had a plenty of time to build good things and we're still pretty limited in what we've built that's actually useful. A lot of things have been built that are like why was this ever even built? Uh it doesn't make sense. So I I don't know. I sort of

agree but kind of disagree. >> Yeah, I think I agree. I think we have built a lot of better products than the the current products in traditional world but we were not just able to on board people to make you know usage of those new products and it seems like the people are not really coming in or like the incentives are not good enough for people to you know switch over. So like if you are using some financial services today using like traditional rails you don't have that many incentives to move forward and use crypto for that and like all that user experience and everything.

It still sucks. So let's let's be honest there. I think now Kyle asked about agents. I think yes and now people are coming up with the narratives like hey blockchains were built for agents. We just didn't know that. like I think it's I think it's pretty pretty good and we are just what I just described is that you know if I want to lend my money today I probably find better alternatives or solutions on blockchains when I'm using my traditional bank.

There is some true that agents might be like you know brand agnostic and they will be okay I want to borrow money or something what's the best way to do it and so they might use blockchain rails so I'm bullish on agents coming onchain I'm just not so sure that it will improve our bags so like two weeks ago my report was blockchains win I'm not sure about if tokens win Because >> you know today if someone is using tempo which is a you know blockchain from stride if I send money there it cost me 0.001.

So there needs to be uh 300 million transactions per day to make just 100 million in in fees. So I think we are now like next narrative for crypto is agents are coming. Yes, I think that's true for sure and they're going to explode but it's still not the reason why everything should pump significantly higher. >> Well I think what needs to happen so I I fully agree with that. Um but I think what needs to happen is we have as an industry uh at least the retail people in this industry have focused on like fees is is what matters. It's like blockchains generating fees is what matters. And so when I think about

Stripe or Tempo and you're like, "Okay, well I can't own Tempo, right? Cuz they don't have a token." Uh so it actually doesn't really matter. Uh anyway, and even if it was on Ethereum, like what you're saying is you would need so many transactions to be somewhat relevant amount of fees that like it's kind of not even really possible. But then I think okay, well, what stable coin are they using? Circle. Okay. Which means USDC is uh is involved in this. And so they are generating revenue in a different way, not through transactions, right? But through uh their n their net interest margins of of of the capital going into circle. So okay, you can invest in circle, right? So it's just like you've got to think of the the other ways to capitalize on this. And then it's like, okay, so again, maybe I

can't capitalize on the fees of these stable coins being traded by agents, but where are the agents being used? Is there attention there somewhere? Is it happening on Coinbase? Is it happening through, I don't know, Twitter or something? like can I invest in the platform that these agents are being created on. Maybe there's value created there. It's it's I just think we have to rethink where value is going to be created. Um or maybe the answer is just like Stripe, it's the same product, but Stripe is just now way more profitable. And so, okay, I want to invest in Stripe now. Obviously, they're a private company, so I can't yet, but eventually maybe I will be able to. So, I just think we got to find other ways to figure out where the value occurs as a result of this because one of the things

and and the reasons why I think crypto's not had this crazy adoption yet is it's just infrastructure. It's actually not very sexy what what crypto has built so far because it's not meant to be. It's supposed to be infrastructure to make capital move better. This isn't like things that most retail people should be using or thinking about. Like, it's not like we use, I don't know, Swift network and we know we're using it and we're excited to move off Swift. talk to anyone who's moved capital from one country to another. They don't even know what Swift is. And so it's not like like, oh my god, I can't wait tomorrow to stop using Swift and start using Ethereum. No one's doing that because it's all infrastructure. It's all under the hood. There's like a few companies in the world that are excited to get off

Swift and use Ethereum, but that's like your big banks or whatever. I don't know if they're actually excited, but you know what I mean. Like the client base that actually interacts with the infrastructure is very small and they are huge large companies. It's not most of the world. And so it's like, you know, AI we're all excited about because we actually use chat GPT every day, right? Or or cloud or whatever you use, but you're not really going to use a lot of this infrastructure that's being built in crypto. So I just think it's a we thought it was going to be this mainstream product that we were building with crypto and it's just like we're not. We're building things that are under the hood that don't matter to most people in the world. If you're not seeing this, you're trading blind right now. There are real moves happening

behind the scenes that most people don't see until it's way too late. Inside Milkroad Pro, you can track exactly what our analysts are buying, selling, and what's on their watch list before it moves. You can try it out for just a dollar for seven days. The link is in the description. >> I think that the benefits of a lot of that infrastructure matter to a lot of people in the world. And though they may not be direct users, they will be indirect beneficiaries and and radical beneficiaries because the the legacy systems we're talking about switching away from are what really suck. Like you talk about a bad user experience, it's it's way worse uh with what we have now. I do want to ask a question about um something in DeFi that's gotten some attention and performed well recently, which is Pendle Finance. Um for those

who don't know, this is something that allows people to tokenize yield from yield during products and sort of disagregate them from those assets themselves and then trade that. Uh Martin, I know this is something you've been paying close attention to. What do you what are you seeing for Pendle here and and why do you think that this is getting so much attention at this point in the market? >> Yeah, it's a great question. I I actually had the same question because I saw that Pendle token is pumping like crazy and I was like okay um they might have some new integration or you know new stable coin coming in and so the fundamentals are improving but it's not happening like I was bullish on Pendle couple months ago when their business was still kind of resilient to

everything else that was happening like everything was going down significantly but Pendle's TVL and revenues and fees were holding pretty strong but then they they were started also falling from a cliff and I was like okay um so their business might not be as resilient as I was hoping for and so now when the price was pumping um it's actually plus 88% over the last 30 days which is pretty sick I think but the revenues haven't improved at all and they are still maybe >> hasn't improved like >> yeah nothing improved just the price improved so it it makes me think that

>> scary moment >> we might be again in that era of crypto when there might be some people who are doing you know god's work and just trying to promote that on Twitter or elsewhere in the podcast or there are some YouTubers who are making content about pendal how this is great. how you know when stable coins are becoming a thing then Pendle is going to just explode like yes um I like Pendle I think what they are doing is amazing and I would love to buy their token when I see that the business is growing and it's still not happening so I think that lately I see that people are like not using those two things together like

they like the business so they buy the stock or they buy the token and they don't really care whether it makes sense or not. Like at least in stocks, you don't have all the delusion or incentives or like you know fake numbers that you can do in crypto. But anyway, the point is that even if business is great, you still need to make sure that you understand the price that you are paying for is reasonable because right now if Pendle is making, you know, Pendle is actually I'm pretty sure that they are operating at loss right now. So it's not even a profitable company and I get that there is a potential if like the usage of blockchain and stable coins improves and I think it will but that

will be the point where I want to see that their numbers are also improving and at that point I'm going to re-evaluate whether the price is still interesting to me or not and right now it's not. >> I mean I do think um you know the first two things that I said at the start of the show of stable coins and private credit are two things that are really growing. Same with tokenization actually. So like US treasuries, things like that. Um this is where Pendle actually ties into, right? Because it creates kind of a fixed yield onto any of these things. So the more that we get stable coins, the more that we get um credit on chain, the more that we get tokenization of various forms of of credit as well, um the more Pendle has like kind of surface area to go after.

So um I do think Pendle is sitting in a good spot in terms of like growth coming for them in the future. Um maybe the market is starting to sniff that out and go, "Oh, if all this credit's coming on chain, we're going to have all these stable coins come on chain. Um Pendle is going to be a great way to get fixed yield." Um that that's like kind of the only bull case I can think of right now. But again, it doesn't really show in the charts, but just as an example, Stretch became really big last month or or over the last couple months. This is Micro Strategies um preferred uh shares where you can get like a I don't know what is it say about 11.5% APY or whatever. Um and um you know immediately after that happens we start tokenizing stretch and

putting it on chain. So Pendle had uh two weeks ago when I looked over $und00 million of um of this sort of like tokenized stretch yield in in a fixed way on on Pendle. So it's like as new things happen in this in in on chain Pendle can kind of go after it and and create different forms of yield from it. So I think like it's in a market that is growing. Um, but again, Pendle's TVL was, I don't know, like almost 10x what it what it is today. So, it's it's down. It's down a lot. So, it kind of doesn't make sense for it to go up almost 100% in the last 30 days. So, I think a couple things I've seen in headlines around this is that there's been a $230 million increase in their TVL and a partnership with Athena. Um, I don't

know how recent these are, but I I agree with both of you. I think a lot of it might just be speculation around the future appreciation here. Um, but you know, Kyle, I think, you know, STRC is an interesting example to me because something I've been thinking a lot about is once we have the, you know, we've got the Genius bill passed into law, if Clarity Act becomes a law as well, I'm interested to see what new products and services the financial services industry both from Wall Street and the crypto side come up with to, you know, innovate and find new ways to to meet demand in the market. Um because I think STRC is a really interesting one and the second order consequence of Sailor finding product market fit with that that stretch product is that now a lot of other players on Wall Street are having

to come up with some kind of answer for that um because no one's really been able to offer that kind of return before. So I think you know like you said at the beginning people won't directly interact with this um but indirectly a lot of people benefit and one of those benefits is that it forces a lot of companies both cryptonative and Wall Street native to innovate on the products and services that they're offering and offer more competitive things. So that to me is a really exciting thing too cuz like you know a year and a half from now um a lot of things in the market landscape are going to look very different. Um so I'm just I'm very bullish on all of this right now.

>> Did you guys see Sailor said he's going to sell some Bitcoin? What do you think about that? >> I did. I was going to ask you that. Uh to me, I think it's just him describing the the normal market operations of the the stretch product, right? Like he's got to sell a little bitcoin to pay the interest on that. However, he remains a net buyer of Bitcoin as long as he's taking in more capital to continue adding to the stack. So, I I didn't I think he's kind of a nothing burger, but everyone's really flipping out because it's like, oh, Sailor selling some Bitcoin. Oh, no. Um but that I don't know. I don't think it's actually that big a deal.

>> I think it's very smart. I think he absolutely should be selling some Bitcoin uh so that the wheel can continue, right? He's got a flywheel going. You got to keep that thing going somehow. And so like, hey, if he buys Bitcoin at I don't know, whatever 60,000 and he sells at 100,000 to pay a little bit of of interest, which was allowed him to to to buy more Bitcoin throughout that time, that's a good thing because then he can keep doing it, right? So, I mean, people are there was a lot of people yesterday or two days ago, whenever it was that were getting all scared about that. I was like, imagine being afraid that he's going to take some profits and keep his business alive. Like, no, that's a very, very smart thing to do. So, I'm glad he's actually doing this and having this

conversation. But, um, yeah. Anyway, interesting. We we'll see what he does. It sounds like he might just do like a test sell just to like see how the market reacts, which is kind of funny. Elon actually did that. Do you remember when he bought um was it Tesla bought whatever it was 10,000 Bitcoin or something back in 2021? Uh, and then he like a couple couple months later it doubled in like a month. So he sold like a tranch of it and he's like I just wanted to see if there was like liquidity in it. I was like no way. This guy's hilarious. Um, so yeah, I don't know. I think it's a good thing.

But yeah. >> Yeah. Uh, Martin, I want to go back to DeFi and ask you a question. You know, I think it was a couple weeks ago or maybe last month. You were talking about this long morpho and short a trade and obviously a ran into some problems. But I I think that that that trade the way that's played out has been let's say not what you were expecting. Could you talk to me a little bit about what your updated thoughts are on that? And do you still have that trade on of of long morpho and short a? >> You mean basically how was I was liquidated? I mean, >> that's a nice way of saying it. Yeah.

>> Why was that your thesis? Let's start there. Give me some context, Martin. >> Yeah. Well, I think we all know AA and what's a it's a market leader. Everyone's loves and use AVA. Um, and Moro, they got the latest narrative that, you know, walts are going to be ETF 2.0 or whatever the bit guys from guys from Bitwise are trying to promote this. Um, I just don't understand how ws are going to be better solution because I think people need like liquid assets and not just locking money in some walls or something. Plus, Morpho is still not charging any fees, so they are not

making any revenues out of their product. Um, it's okay for a startup like no issues there, but should that really be valued much more than a when a is having like 60 plus% of that market. So, I wasn't I'm not sure. Um, and I I was thinking that this whole uh market should rerate and AA should go higher or at least >> Oh, wait. So, you're long short Moro, not the other way. >> Oh, okay. Okay. So, John, you had I was like because I'm looking at the charts right now. Morpho's up only all year and a's down only all year.

>> Sorry. I guess I had that backwards. My bad. >> I'm out of this trade. They didn't work. Um, not going to try again. Um >> I don't know fair a had some sort of like extra things that have made it worse. They had the like things that you would not have been able to like nothing to do with their business but like the Dow had all of its issues like two months ago. So that brought the price down a ton. Uh and then obviously you had the exploit with RS ETH. Well the exploit was with layer zero. Uh which ultimately impacted a and so that hurt the price even more. So like >> Yeah. But I bought after business fundamentals.

>> Yes. But I bought after that I I thought that it's already overpriced and way too much. But I don't know. Morpho just keeps going up. I I don't really know why. >> Yeah. $1.3 billion market cap for Morpho, $2.1 billion FTV. Uh which is pretty crazy. I mean, they're like you said, they have almost no revenue. They're valued higher than almost higher than Sky, at least on FTV side of things. Um, Skyriden $160 million last quarter. Morphos's never seen $160 million.

>> Yeah, >> they're worth the same. Uh, it's wild times. >> Your phone carrier knows more about you than your best friend does. Where you go, who you call, when you sleep, and they're selling all of it. AT&T, Verizon, T-Mobile, they've all been caught leaking data or cashing in on it. And your VPN, your encrypted messaging app, they can't fix what's broken at the network level. That's where Cape comes in. Cape is America's privacy first mobile carrier. Same premium coverage you'd expect, built with privacy from day one. Your phone's network identifier rotates every 24 hours, so you look like a different subscriber every day. Call logs are deleted after 24 hours. You get two encrypted secondary numbers for signups and 2FA included in your plan, plus SIM swap protection that puts you in control of your number, so no one,

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They've got a $10 million incubator backing builders who want to make real a reality. Join the Atlantic Ocean test net and start building at milkroad.com/faros network. It is wild times. Okay, so we talked about this great onchain migration, tokenization, AI agents coming to crypto. I I'm curious what you guys think in terms of like which protocols benefit from this because I think that there's a lot of different thesises here and I've talked about this on podcast recently too. Some people think value acrru to layer 1's some people think it accrrews to protocols you know in like DeFi platforms and you know other people think it's just going to acrue to the dollar as you know tokenized dollars continue to to proliferate. Uh how are you guys thinking about this as uh you

know as investors and and where are you focusing your attention around that? >> Martin you want to go first? I want to hear your thoughts. I think this is the question that we all have been like thinking about a lot because like obviously stable coins are going up and like how can I express that I'm bullish on this trend like pendle is also a way to you know express that or circle is another example or I was just looking at western union which is a remittance company and it's global leader with you know uh thousand hundreds of thousands of agents across the world that will let

you withdraw money uh no matter where you are and right now they are pretty distressed. They their market cap right now is like 2.6 billion or something like that and they are paying out dividends which at the current price is over 10% yield. So I think if stable coins get more adoption and like you know they will then at some point we will start to think about okay we got sorted out that the first like on boarding part that's that's pretty easy for everyone but at the other side is how to exit like if I want to go to the shop and pay for my coffee and I cannot

use my phone because I'm in Mexico or you know um Philippines or elsewhere I might need real cash. So the idea is if stable coins grow and we think they will and then who is going to be at the end who is going to satisfy the last mile of customers that are not in US or in Europe but in the rest of the world it could be Western Union and they're huge global network that they have right now. So I think those are sort of players that you are not necessarily seen as you know stable coins play but in a way they are and for for example that western union I think people are

still seeing western union that their business is dying but they are not seeing that they are adopting and pivoting to digital assets and stable coins and leveraging their existing network. So I think those are the best opportunities on the market when people are still mispricing some companies and who didn't really update their reviews because the company also updated their strategy. So this is right this is the company I'm looking at these days and thinking about allocating some capital there because it's not necessarily that I would need like you know uh 3x on on my investment there but I'm quite the downside is quite limited because if I

buy right now I get 10% yield dividend which is pretty decent and I'm still sort of open to the upside because you know if this trend is happening and the digital business is growing then it should be repriced as well. So this is my most recent play on stable coins. >> The the way I think about this space is blockchains at least today are is a technology that that provides financial services and products. Okay. And the question is who's monetizing these financial services and products the best? That's where I want to put my capital. And for a long time we've thought well the value is going to acrue to the blockchains that are allowing it

all to happen. That's actually not true. So to invest in ETH or Salana you are not investing in them monetizing these financial services and products because they monetize them very poorly. They're not making a lot of money. You're investing in it becoming pristine collateral and money. It's a whole different thesis that has not come true necessarily today. Not a lot of people see Ethan Soul as money. Unfortunately, we tried that. Didn't quite work. Bitcoin has has nailed that. Um, sort of not necessarily money, but like store value. So, the hope is can Ethan Soul get there or other blockchains. That's what you're investing. You're not really investing in their ability to monetize, at least not today. Um, I think eventually maybe we can get there where it does monetize. So, okay, if they're

not monetizing this these innovations, who is? Um, okay, there's the circles of the world. They generate revenue, not a lot, not a great diversified business. If I look at okay stable coins are growing a lot who's monetizing stable coins the best probably sky right so the more stable coins grow if you want to put your stable coins to work and earn yield on it in a lowrisk way right now the best way to do that is either put them on Coinbase right which that might go away from the clarity act or put it in sky right those are kind of your two safest ways everything else is basically blown up you had teruna a couple years ago you could put it in earn like 20% that didn't work you had Athena which was like the real winner over the last little bit that didn't work right you

had a that kind of like it's working don't get me wrong they haven't really screwed anything up on stable coins but trust has been lost there there is not a lot of places where where companies are monetizing stable coin yield which is probably the biggest thing that has come out of crypto so far uh is stable coins except for Sky and like kind of circle and and I would say Coinbase but they're sort of like unsure so okay Skye's done a good job with that other than that who else is monetizing I would say Coinbase Coinbase is the one thing that's monetized everything we've talked tokenization, stable coins, um per um agents, you know, the the one thing you think about with with Coinbase that's so interesting is like, okay, agents is going to be the next thing. Let's look on where are agents going right now.

Well, they go on base. Who's building for agents? Well, mainly Coinbase is doing this, right, with X402 or whatever it's called. Um and they have the agent marketplace that they just launched. I forget what that thing's called. Um, but like so it's like who are the companies that are seeing what's happening on chain and then going and monetizing. Coinbase is doing that the best right now. Uh, Kraken is starting to do that as well with their X stocks. Uh, they're doing some things there. So, it's like I don't know. I'm just looking for who's monetizing the things that are happening on crypto or on chain right now. And it's it's like there's some DeFi products that are doing it, but not many. And then there are some like centralized companies doing it. And then I guess the other way would be who's improving their margins by using crypto.

That's what Martin just pointed out with Western Union, with Stripe potentially. Um I don't know who else would be doing this really if there's any good examples in other like I'm not sure there's a whole lot of good good examples, but um that would be the other area I look for is like who's monetizing well? Micro Strategy. They're monetizing Bitcoin extremely well. So that's been a good place to park capital, right? Um and then I think the next thing is once we get Clarity Act, you're going to see a lot of companies like Western Union start to integrate blockchains and improve their margins. And I think that's a really good opportunity to invest in as well. Um, you know, we've talked about Robin Hood is a is one that's done really well this integrating cryptos really helped improve their profit margins. Martin, you've talked about New Bank. They don't do it a lot

yet, but they probably will. Uh, and so Western Union, same thing. So, that's the other way I think I look at it. Um, yeah, that's kind of my thinking. >> I I want to ask a question about this, Kyle. There's a lot of great points in there. Uh we just talked about how Morpho has been doing really great here. And you know, Martin talked a little bit about vaults as a product. A lot of those I think are are happening on Morpho and it seems to me like a way to monetize some of these things of yield and stable coins and so forth. What is your what are your thoughts on vaults and do you think that's what's driving this run up in in Morpho and what are your thoughts on that product?

>> Well, the problem is Morpho is doing a good job at getting people to use their vaults. They are not doing a good job at monetizing it because they don't make any money from it, right? So there's a clear difference and this is like this is the problem with crypto over the last 10 years literally since 2017 is we are good at launching things and getting people to use things by paying them to do it or giving them like outsized returns but it's not never sustainable because we don't actually make money doing it which is why nothing is ever sustainable in crypto. So Morpho great vaults I do think vaults are actually pretty cool. I think I'm more bullish in vaults than Martin is. Um and and a nice example of it is like so Sky, we'll go back to Sky because they're one that

that um we talk about a lot. So they have their Sky savings rate where they give I think it's 3.65% right now, right? Then they have other forms of yield that they can give. Um STUSDS is another one. It's kind of a higher yield and it basically monetizes um the the borrowing or the lending of Sky. So you can stake your Sky and then you can lend it out and borrow um stable coins. So to get liquidity for that, they have this thing called STUSDS. So they're two separate products. What vaults do though is allow you to combine those two products plus other things if you wanted into one product. And so now I can put my money in I forget what the name of it is. They have a vault that basically combines these two products. And so you get like 80% sky savings rate, 20% of

this like staking rate and you combine it into one thing and you get a certain percentage or certain yield that's higher and it can move between the two and and that exists in a vault. Now, you could tokenize that technically, but it's a lot harder to do. Whereas, it's much safer uh to have that in a vault where people aren't just moving their capital in and out all the time and it's fluctuating. The price of is fluctuating, so it just stays in a vault. And so, you can start to like package different sources of yield into a vault together. And so, that's a really good product. And so, Morpho and Sky have come together to create that that product. So, I really like that idea. I like that use case for vaults.

Again, morph is not monetizing it yet, unfortunately, but I do think that's a great product that you can do and you can start to package many things together. So, I think vaults is is going to be and continue to be a very big thing. This is why Bitwise likes it as well. They have different sources of yield um throughout their sort of like financial products that they have and they can package them together with vaults. The question is how do we monetize that? And probably it's going to be you take a cut, right? Morpho just hasn't done it yet because they're wondering if we start to do that, do people stop using this, right? Because the thing that people like on morpho is they can get higher rates of return by using their morpho vaults right now once they start taking a cut. Maybe that goes

away. For example, cow swap. Another great product we've had in DeFi, which was it's free to trade, right? They undercut unis swap and they had a better product. Then they turned on fees and all of a sudden everyone left and stopped using cow protocol, right? Not left like but their TV went down, right? They had less usage as a result of that. So it's this like yeah if you can if you can just do give your product for free you'll get people to use it but as soon as you want to make money from it do people still and oftentimes in crypto people go yeah soon as you turn off the incentives I'm out of here so it's this um it's tough to find a good product in the financial services world where you can actually make money from it.

>> Martin any thoughts on that before I ask another question on this? Yes, I'm not bearish Walts. I mean, they are great, but like a V4 is going to have Walt as well. Plus, it will be able to tap into all that existing liquidity there. So, I think they will have like better product than Moro. And yeah, Cow Swap. I I still love Cow Swap. I think they're still a lot of people are using co swap still and and there was a huge drop in volumes because they were trying to get rid of all the bots that were just spamming the network and it was making a lot of trades unprofitable for cow swap. So yeah, I think it's pretty good. They're still doing quite well. I think like one

one more thing that when we are talking about stable coins and circle because I know that some people in our team are bullish circle. I just don't see that because I hold lighter and you you there is about 500 million of USDC on lighter and they just made a partnership with USDC. They didn't share the numbers but I assume that the partnership is that circle is going to distribute some of the yields with lighter. So circle's issue is that they don't have distribution and if they want to find some distribution partners, it's going to cost them money and you know right today

>> but doesn't that's scale. We're talking dollars here. This can go to trillions and probably will go to trillions. So if they can be the first and they can partner with everyone that's network effects right? >> It's already priced like it's it's going to trillions tomorrow. >> Very true. Yeah, good point. Good point. Uh but but I do think their strategy is the right one. You got to get everyone that has any distribution get your stable coin in their hands and that's what circle's done a really really really good job at that and then being the one that fits regulation, right? Um which is why people will actually take it on and and run their business around USDC, right? It's hard to run your business around USDE because it's so volatile and you don't know what's going

on. It's hard to run on USDT, right? Uh because you're just kind of unsure. Uh but USDC is such an easy one to go I'm gonna bet my business on this which is what Coinbase has done. Lighter has done and many many other companies are doing this as well, right? Stripe even. The way we build wealth is changing. Stocks, savings accounts, real estate, that playbook is getting rewritten in real time. Nexo is the platform built for what's next. It's an all-in-one digital wealth platform where you can earn interest on your crypto, borrow against it without selling, and trade a wide range of assets all in one place with 247 support and institutional grade security. Oh, and by the way, Nexo is back in the US with new US clients getting 30 days of Wealth Club premier access. That means elevated interest

rates, lower borrowing costs, and crypto cash back on trades. Benefits usually reserved for loyalty program members. Get started at milkroad.com/nexo. >> I want to ask one more question here before we run out of time because we're getting towards the end here. Uh, we talked about new products launching. We talked about undercutting competition. Morgan Stanley has been one of the most aggressive firms on Wall Street about pivoting into crypto, launching new products. Their latest move is rolling out crypto trading on Erade, which has 8.6 million users. Um, the kicker of this though is they're trying to undercut the fees. Uh, so they're pricing this lower than Coinbase, then Robin Hood, Charles Schwab. So, it seems like a play to try to take over the spot crypto retail trading market. And I know both of you have been bullish on

Coinbase and Robin Hood for a long time. Uh, Martin, I want to start with you. Do you think that this is going to impact Robin Hood or Coinbase or or what do you make of this move from Morgan Stanley here to to roll out crypto on Erade? >> I think I started today actually this podcast with why I think that what we have built here is better than the alternatives but people are not necessarily like moving over to use it. And I think the same case is here like I'm not going to leaving Robin Hood or Coinbase just because JP Morgan gives me you know I don't know five basis points better fee or something.

And like I actually think that when if I should reflect on my like you know career in crypto it's that I was overexposed and like super bullish on on products because I sort of tried to understand why people should use them and so like I was picking the best leaders in in each of the market but who cares like you know I would probably go and trade on lighter because it's the cheapest place but people still trade on Robin Hood. Why is that? Because it's liquidity there or there is enough liquidity on lighter too. So if I should if I should trade Bitcoin I should go to

lighter because it's just better than hyper liquid but it's not happening. People are still on hyper. Do >> you know why? Do you know why Martin? So actually this is funny. We talked about Morpho you thought was going to do bad and you thought circle should do bad and both of them have pumped in your face. Why? Because they partner with distribution. So Morpho partnered with Coinbase. Circle partner with Coinbase which is where all the users are. And all of a sudden their TVL's exploded, right? Because people don't want to go and interact on chain. They want to go where their money already is and where it's very simple. This is why and and John to answer your question.

>> Um sure that's like bullish what Morgan Stanley's doing. they're trying to compete. I think this is going to continue just like we talked about fees on blockchains are not huge. Um I've always expected Coinbase's fees from like volumes from trading to go down uh because you know they've always charged like extreme extremely high numbers and so I think one of the beautiful things of crypto is that we create all this competition. Anyone can tap into a blockchain and so fees should go down everywhere. But the key is again, can you find other ways to monetize? And I think the thing that Robin Hood has done really well is they have their Robin Hood Gold, which is what, five bucks a month or something, and you get like basically free trading or very cheap, very cheap trading, even better than what um Morgan Stanley's trying to

offer. But the beautiful thing is Robin Hood can monetize. So they one, they get five bucks per month for everyone that uses this and they have, I don't know, millions of users, whatever. Um but then also they add in all these other additional things that make everyone's lives so easy to manage their finances. So, I can come in with Robin and pay five bucks a month, get basically free trading, but then I also get yield on my on my dollars. I have like a bank account where I can spend with my credit card. Um, I can get like my I don't know if they do this yet, but like my mortgage is like all the different financial services come into that one little spot. So, instead of me having 10 different apps to do all the different things, I can do it all one place. So,

they're making it very very easy and they can find different ways to monetize all that. That's the kind of things that I like and that's exciting is like can I lower the cost for the consumer but then bundle so many services into one thing that I can still find ways to to generate revenue off that and that's what Robin Hood's done really well on and what Coinbase has done really well on too. And so I think yeah I think fees will go lower for for trading volume for sure and that's a benefit to the consumer but the innovative companies uh can find different ways to monetize it which is the key.

>> Gotcha. Okay. >> What do you guys think that >> Yes, sir. >> Go ahead. No, no, please. >> There's Coinbase earnings today. What do you guys are expecting? Also, did you see that they lay off? Like >> I think that says it all. >> Uh I think they're going to be but well, it's guarantee they're going to be We already saw like Robin Hoods was pretty at least specifically the um the crypto side. So, I think Coinbases will be, but I also think that's priced into the that's why Coinbase is like under 200 bucks right now. So, um I don't expect like if they come in pretty bad, at least bad compared like if their expectations are really bad. And so, as long as they come in around those expectations, I don't think we're gonna have a huge dump. If they're even worse than those

expectations, okay, then maybe we'll we'll go lower. But I think the market's already expecting Coinbases to to not be very good. So, >> what's your take on their offs? >> Yeah, I was actually comparing their re their previous revenues to the like size of their team. Um, I don't think this is anything to do with AI very much. Um, I think this is more so just like the revenues are down and have been for the last two quarters. Um, they haven't had very great quarters as a result. And so, you know, you got to lower you got to shrink your team. They've done this every single time we've had uh, you know, an extended period of of crypto prices down. So, I don't think there's anything new. Um, that said, I think maybe they went a little like maybe they're able to push the limits just a

little bit here and try to see if they can get AI to do more for them. Um, but like 14% is not a massive move. They've done this before. Um, they still have thousands of employees. Uh, their revenues are down way more than 14%. So this is kind of I think this happens even if AI didn't exist, they would be doing the same thing. So I don't think this is an AI story yet, but I hope that they try to figure out more ways to use AI and to make it more efficient. To be fair, >> we are coming up on time here. I want to end with one more question. Kyle, earlier this week, we did an AMA for our Milkroad Pro community. For anyone listening, you can join for just a dollar. Want to see what all of our analysts are doing in real time. We went

over a lot of changes that people have made to their portfolios and things that they're watching, but we haven't heard from you on that. So, I just want to hear quickly, what are you doing in your portfolio in the next week or so? Is it changes that you're making or things you're watching? What's your thoughts there? >> How is Kill's portfolio doing by the way? I >> that's classified steady. >> Join Milk Road Pro to find out. >> Slow and steady wins the race, guys. Uh I have not made a lot of moves recently and I I I like the portfolio I have. It's a long-term portfolio for me. So like I'm not trying to trade in and out.

We have some people in in the Milk portfolio that are that are more active. I'm not very active. I'm just looking for undervalued opportunities and I want to hold them for for years. Um so I haven't made a lot of moves recently. I I plan to buy actually some more Bitcoin. Um, I'm just waiting to see if it can break out and hold that. If not, um, then I think we're due for it to go down quite a bit. Uh, just because we're at the top of that range. So, generally, if it can't break through, we're going to go down to the bottom of the range. So, I'm kind of just waiting patiently to see what happens there. Uh, and um, and as long as we can break through, I'm actually going to going to buy some more Bitcoin. Uh, and then kind of waiting to

see what happens with this Clarity Act, too. Um, I already own uh a couple different DeFi projects that I'm excited about that I think can do well as long as um uh if the Clarity goes through. Uh and so, you know, I I'm pretty good there. So, I I don't know. I don't I don't plan to do a whole lot. I might buy some Bitcoin. I might buy some Nvidia. >> Kyle, for those who are listening, has a very diversified and really interesting portfolio that strate straddles energy, AI, crypto. If you want to see what he and all all of our other analysts are doing in their portfolios, join Milkroad Pro for just a dollar. Uh fellas, we are coming up on the hour, so I'm going to end it there. But thank you both for joining, for sharing all your thoughts with us today. And thank you all for

listening. We hope that you learned something today. Until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milk Road Show. Thanks for being here everyone. >> Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel, join the Milkro Daily and Pro Newsletters, and start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.