The Biggest Winner from Hyperliquid’s USDH | Weekly Roundup

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 Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. And we're back. Take two. Round up baby. Rob Santi, what's up? Excited to be here.

How we doing, Jens? Traveling it a little bit. So, we're recording Friday. We usually record Thursday and we we try to move around because our schedules are hectic and uh Rob's like I 10:30 p.m. That's that's rough. And and I was like, welcome to my life Rob. I know. Rob's Rob's already bitching about the late night recordings. Like Santi's been recording at midnight every every week for four years. Listen, I'm not made like Santi, okay? Just like don't don't make me have to do it. I don't Santi, I don't understand your sleep schedule. It's it's all it's all screwed up. But I I go to bed uh probably around 2 3 in the morning and then I wake up on the later side. Like I I do try to get my seven hours of sleep.

So you're like a three to 10 guy. Yeah, exactly. Well, pretty much everyone in the team is based in New York or West Coast and so I it's good because I sort of wake up, have a couple hours to myself, work out stuff and then they really start to like 1 2 p.m. for me. Nice. Nice. I can't do that. I'm the opposite. I'm like um you know try to be in bed 101 up at 5:00 a.m. like you know hit the gym, get the day going. So like it's the late nights I'm like trying to do work and it becomes like mush to be honest. I I like the late nights because then no one's bothering you. That's why. Or early mornings. Early mornings.

Nobody's bothering me at 5:30 in the morning either. So I'll make a note Rob um to you know ping you at 5 in the morning. Ohio New York time. Yeah. Just test Rob every morning. Yeah. You should like listen when you pick up it's like 11 a.m. in Monaco. You should just shoot me a note and like I'll jump on the phone with you from bed. To be fair I had to like every time I ping Rob it's like within five minutes we get on the phone. Uh it's like uh I don't know a lot of people pride themselves on how quickly they respond. I think Rob and I just have PTSD from like investment banking days where if you didn't respond in five minutes that black the crackberry you would get absolutely whipped by the MD. So you have um funny story. So when I left JP

Morgan like we we still had the work phone thing and so you give up the Blackberry uh and I'm showing a little bit of my age. like you had this like PTSD where you would constantly put your hand in your pocket and and there was like a ghost phone and you would that that reflex just for after two years of banking will do it to you. Um all right I think we should I mean look when when one person on the pod does something impressive I you know I think at some point we we have to mention it but when two people on the pod do something we got to we got to start by talking about it. So big week for the inversion crew, Santi, you you you brought along Rob on this, but no, you guys, I mean, hats off to you guys.

Uh I think this was maybe the public launch is what it seems like it was. Um you announced the uh series A. You guys had an awesome Wall Street Journal article. Um uh yeah, actually a great Yeah, Wall Street Journal article. I'm going to share it on YouTube for anyone who's watching on YouTube, but if you're listening on Spotify or Apple, I can read the beginning of it. It says, "This startup thinks private equity style deals will kickstart crypto adoption. Inversion Labs plan plans to acquire low margin companies and outfit them with blockchain to turbocharge efficiency." Crypto dieards have long said that if only more legacy businesses adopted the technology, its benefits would become clear and adoption would spread. A new startup's private equity style game plans to uh make that a reality. You

guys got a nice Matt Lavine shout out. the always skeptical Matt Lavine, which was which was cool to see. Um, and you uh you got in bed with our friend Rob. So, nicely done. Yeah, thank you. Well, I don't know, Rob, if you want to kick in, but yeah, it's been Look, it was great. We wanted Mark, the the author of the Wall Street Journal, really got it. We spent like an hour with him and it it's rare to find like journalists to really get the story. What we're trying to do at immersion is not super simple or straightforward, but I thought it was a great piece. Shout out to Mark and and then Matt Lavine covered us and it was great because we didn't reach out to him and I I think he's he's skews skeptical of crypto and I think the way he

portrayed something along the lines of I hadn't really thought about this um but this actually makes sense and so it was it was great and then he copied pasta one of my lines there and and used it for uh money stuff u but no more importantly look it's super exciting we obviously closed around earlier this year and um brought on some phenomenal partners. But um yeah, Dragonfly was a clear choice, you know, for for a variety of reasons. Uh not to pump Rob too much, but uh it was it was like I I remember it was uh early this year, reached out to to these guys and within like again couple minutes they respond. That was like a

Sunday. We're on the phone Monday, had a really good call. uh Wednesday had a follow-up and I think like it's just the pace of you know do you find an investor that really gets it and is very vested and you really get that from the very beginning and um so it was it's been a great journey they've been incredibly helpful um I don't there's a lot to say but I'll pause there because Rob has something to say I actually remember Santi after you spoke with Dragonfly you're like you know you were talking to all all all kind of the players you're like oh that's the one dragon they they get it they just they really get it. They see the vision. They see the 10-year vision.

So, Rob, maybe like what what what clicked for you with inversion. Yeah. So, I'm going to say one thing where Yano you said, you know, we have to talk about uh this topic because two people did something great. I just want to make very clear we didn't do anything and I didn't do anything like it is our uh pleasure to be at the service of you know our founders, right? And so, like when founders like Santi decide to work with us like that's extremely exciting. Um, but we, you know, we're providing capital. My job's easy. Santi's job is hard. He's the founder, right? And so, um, I we didn't do anything yet. Um, we're just here and to be helpful and to be along for the ride. I I think in terms of your second question, which is like what what did we see? You know,

obviously known Tanti for a little bit. Yan, you and I have known each other for a little bit. You know, we've talked about how should we bring crypto to the masses, right? that's been a topic of conversation or on the minds of I think all three of us for a long time. The way in which we do that is has been different or the way in which we do that has been unclear at times. But when Santi started talking about I believe there is this opportunity to take traditional businesses and have value creation through blockchain and crypto rails, especially utilizing things like stable coins, especially utilizing things like deepen. That was obvious to me from the get-go just how um ambitious it was, but how if it worked, what the

opportunity could look like and it's massive, right? And so I think he's the right person. I think it's the right time now that we're getting regulatory clarity, that we're getting kind of institutional buyin and I I'm could not be more excited to be along for the ride and to be helping Zanti, you know, kind of uh help build this thing in any way that I can. Yep. and just to kind of um add a little bit more storytelling and behind the scenes. Um look, I wanted to work with people that I've known for for a while. Um, and most of the folks, you included, Yano, like it's people that I've known for many years, and you know, I've known Dragonfly through through Parafi days, and then we've done a lot of investments together, and we just share the same thesis. And it's really that like it it

was it was hard to bring on anyone else that just I think everyone that participated has this idea that enough is enough. Like we don't want to wait another 10 years to get more users on chain. And it really comes from this like passion which is we're doing all these investments in great teams across DeFi, stablecoin infrastructure, settlement layers, more consumerf facing stuff and all of those founders as I look through my portfolio went under because there's just not enough users, active users on chain and you know I come to the I'm at a JP Morgan event here and it's always the same kind of conversation with people.

It's like we get crypto, but it's all speculation. It's all Bitcoin and or memecoins. And I think it's just a great disservice to a lot of the really good technology that's being built. And you know, now is really the time to just bring more usage, more real users on chain. And I think the name of the company just really embodies how we think about doing that of hacking our way to mainstream adoption because god it would really suck if we're five years you know fast forward five years and we still don't have many users beyond just traders and all these teams just flop. And you know sometimes it's sort of like the best technology you can build it but if they don't come it's it's it's it's such

a shame. And so I think the timing is very right and obviously the regulatory piece fits into that really, you know, really nicely. And so it's kind of like now to time to really really accelerate. Yeah, there were two um two tweets that really stood out to me. One was the uh VANC. So Vanak invested. I I always love VANC does these one-page memos on their investments. I really really like them. Um I think they're I think they're great. I think other venture firms should think about doing these. But they said why we're investing. a a founder worth breaking the rules for. B dist distribution first design. I thought this was really interesting. A lot of the other chains compete for developers and they wrote inversion doesn't compete for developers. In a world where blockspace is a commodity, inversion acquires highquality user bases that

benefit from embedded finance applications where crypto can be most competitive. Three, onchain g uh GDP over speculative TVL by acrewing value from cash generating businesses. inversion operates differentiated network activity from day one and four is crypto is infrastructure not ideology. Um so I thought this was interesting. I also thought I don't know who this is. I don't know Fire Streak VC or Walter but yeah Walter's a legend. He's an adviser. He was a a senior managing partner at Summit done a lot of private equity deals and um yeah incredibly incredibly hungry. I mean, he's worth a couple billion and just the guy responds in two minutes and um he's been super helpful um as well.

Yeah. So, he said, "Over my 40 years of investing, it's rare to encounter a truly radical new approach to private equity." And this was a theme I think that came up over and over again from I think a lot of the people that backed you who are not in crypto, traditional capital allocators, is a new approach to private equity. And um actually someone reached out when they saw the Matt Lavine piece. The guy's probably 65. He's been running a private equity firm for 30 years. Um he he doesn't know you. He's never listened to the podcast, but he said, "Do you know do you know this company?" Um and he runs a private equity firm. And he said, "Look, private equity is at a private equity is at a it's a it's a tough business to be in right now. It was a really amazing

business for the last 40 years, 30 years. Um and now it's really, really tough." He said, "It's never been tougher for me to run my private equity firm." And he said, "This is," he said, "I don't get crypto. I don't get the blockchain, but uh c can you can you explain to me what this business is doing because I'm me as the owner of this private equity firm, I'm in a really tricky position. Yeah. Yeah. Look, again, I'm at this family office event at JP Morgan. They're talking about private equity and asset classes to invest in and it's it to your point, the returns of private equity funds have not been great. Um and you know, they've relied too much on financial engineering. rates are high and the reality is there's very few private equity funds that have really developed te technological expertise to for value creation and you know you have

silver lakes of the world uh and Vista in my mind are some of the the best because they've really gone deep in in the technology side to create value um and and that's really what we try to do here which is there is this thing called blockchain that you we believe that can really be adopted at scale for enterprises and cut costs and dramatically change unit economics and uh that's really the opportunity as we think about more businesses using this technology um and and creating a lot of value that way and it really coincides with as we think about investing over the next 5 10 years um the opportunity set's really interesting you have a lot

of companies that have been bought by private equity funds that you know they're they haven't really made more efficient. I think there's a staggering number of companies in the private markets that are looking for a buyer and we'll be there. We're looking at them. It's just a really exciting time to to um to be thinking about this type of strategy. And I guess for for cryptonative people a lot of times we get asked like why why is it about private equity? Like why do you need this thing? Why can't you just you know you know just do it how the rest of the industry is doing which is trying to convince businesses to adopt the technology. And it's like even though even though you've had regulatory clarity, Rob, this is maybe something that you can comment on, the reality is at the board level, it still moves

incredibly slow and businesses just have have always been slow to adopt technology. Like look at the internet over the last 20 years. That was Silver Lake's really business model which was tech enabled. Let's like transform businesses with technology with software. And they were phenomenally successful. They're still doing finding companies, family-owned businesses that have just been slow to adopt technology, uh, from just standard CRM stuff to AI. What I love about Silverlake is Glenn Hutchkins, Glenn Hutchkins's son runs a crypto.

Yeah. Yeah. Um, and so that's really very interesting, which is boards are going to be slow, management teams are going to be slow for a variety of reasons. When you acquire and have control of the business, you're not asking anyone for permission. And that's really kind of a necessary component here to to drive the the transformation that we see for these businesses. Yeah. One of the things I think is important here though is you're right that boards they're slow, right? Um and you also like the Silver Lake example is a great one because if you look at like the best private equity firms over the last, you know, decade or so, you know, we're talking about Toma, we're talking about Silverlake, we're talking about Vista, right? These are all guys who have been very very focused on tech businesses and how to bring technology

into you know call it traditional types or traditional assets that could theoretically um have a lot of value creation on the top line right so there's been there's a lot of focus in private equity around oh well like let's do some financial engineering let's rip out costs like that'll increase the margin then we have maybe a little bit of multiple enhancement and like that's how we get out right and these guys are doing that as well but they're also very focused on how do we drive new revenue. And I actually think that's a very important thing about what you're doing that we really liked is it's not just like okay well like hey we can you know work out some of the the offload and you know maybe there's you know some deepin uh savings with helium and and gross margin goes up but it's also hey listen

there's this new product set that we can sell to people that is enabled by blockchain that will also increase revenue right and I think those are the the private equity firms that have been the most uh interesting to me and have been the best performers and I think that's a thing that is very exciting about you know the thing that you are trying to do. I think the other point that you said which is the boards moving slowly that's true but I also think the inverse of that is that the boards today for the first time are saying hey one of our top three priorities needs to be crypto and blockchain we need to understand what that is and so you don't want to just say hey I can outrun the boards because if the boards don't care then like it doesn't really matter but

if they're saying I do actually care now there is regulatory clarity there are people like Stripe and Robin Hood who are using this technology and I want to compete there so go figure it out But you can do it better. That's the place where you want to be. Yeah, totally. And look, it's been actually very surprising. Like we've submitted a couple of bids and my initial reaction was they're totally going to puke on it. Like they're just because we were very upfront. It's like none of the there's no hiding here. This is our value creation story. It relies on crypto. You have to be very upfront about it because they'll ask us, right?

We're not a brand name uh when it comes to management teams. We're not Apollo or KKR yet. And so, you know, you got to work through. And when you show them the the plan, I was actually very surprised because one of the larger banks doing a sellside process that has historically been very against this industry had no problem with it. And the management team had no problem with it. And I was that was like a big aha moment for me. It's like, okay, you're you're seeing it in real time. And I think this is something that we've talked about over and over in the podcast, which is I think sometimes people that have been long enough in crypto are a bit jaded and cynical because it's like this time is not going to be different. How many times have we

been sitting here talking about enterprise pilots and Long Island ICT and it's death by a thousand pilots? But um you know it was a total 180 on the regulatory environment. And the nice thing about the state of the industry now is you go talk to traditional executives are probably sometimes more excited about this technology and genuinely want to implement it than crypton natives because they're all just kind of refreshing coin gecko and and it's it's um things move really really quickly, right? And and so it's it's very exciting time. The last thing on inversion and then we'll try to make this not an entire inversion uh conversation is in in the in the politest way like I guess what have you guys done so far other than the raise? I

know you've hired some people but maybe talk about the the bids that you've put out. Have you have you acquired any companies? Have you it sounds like you've tried to acquire two of them. Maybe talk a little bit about the work that's been done so far. Yeah, without obviously disclosing too much because these are competitive processes. um before going into the actual process. He said, "Look, when I met Dragonfly, it was just an idea. It was a pitch deck and and I really appreciate they had great questions." I said, "Listen, I don't have the answers to most of these questions, but you have to believe that I'm going to be good at two things. One, raising capital and and hiring better people." And and that's been one of the most rewarding things.

We're now a team of eight. Um, and across, you know, private equity associates, a great uh uh legal council. Um, we have you hired George. We were we were also I I was trying to hire George and then you said it's George. Good. And then yeah, if you think about what we're trying to do, like we've been very intentional with our hiring of finding really, really competent people that understand what we're doing across a couple of dimensions. And so that's been just obviously private equity skill set and investing skill set, but also a research component to that of really having very defined sectors that we want to go and look at companies such that when we look at an opportunity, we can very quickly determine if it's a good

fit for what we're trying to do. And the objective is over the next 12 months find and do one acquisition and do the proformat, do the transformation. And so we like to think of the world of there's very specific sectors that we've developed a thesis on. We've talked about telco, we've talked about remittance operators, a couple other sectors that we like. And so now it's really just being intentional of reaching out but also getting inbound. And we've looked at 25 different opportunities in a in a serious way. we've gone pretty deep um with two um and so again what we're not trying to do in the classical inverting sense is make a poor acquisition where we can't

really drive value creation in a reasonably short to medium term and so we're there we're hunting um alongside that we've think about like the inversion sandwich we like to think about it so we're having a lot of conversations with um providers like D5 projects, deepen projects like Helium, like we've been active in the Helium community, putting out certain proposals to be a deployer internationally. Um, and so that's the kind of the nature of the conversations folks like George and the team are having, which is we're going to go buy a company and we're going to layer financial services and we do that on chain, who should we work with? Um, you know, it's really resisting the urge of building product.

It's more so how do we stitch together a set of products in the middle layer, right? We'll own the execution layer through chain. We'll own the user aggregation with the companies that we acquire and then we'll plug in Athena and A and you know uh maybe Maple and a couple of other DeFi and deep deepen projects that have done really good stuff have really good technology and so that's kind of the nature of the conversation that we're having in parallel which is as we look at opportunities and we're doing the modeling we're doing the value creation story we want to then go back and and really understand how viable and how real is a transformation by talking to you know some of these projects to understand how they can plug

in into the chain. One thing I think is interesting here y'all know is in traditional private equity sense there's you know there's often the investor investing side of the business and then there's like an operating group right and the operating group does a lot of this transformation and what I think is interesting with Santi is there's a value acral so normally that operating group is like a cost center and they just go and they like charge you know the portfolio company and like that's actually a hit on IDA and you know so but it's good for I guess the P fund because they're getting, you know, extra revenue, etc. But, um, there's not necessarily there's kind of a push pull on value acrruel there in a in a trade-off. Um, because of what Santi is doing, which is maybe like call it like

full stack private equity. uh in a lot of ways there's actually a lot of value acrruel across everything he's doing product to distribution to the you know the any sort of financial engineering to the acquisition itself a potential exit you know um multiple enhancement but also because the activity itself within his ecosystem that he is building that can serve all of these different companies and all of these different acquisitions that will also have value to them and to the ecosystem and to the broader you know kind of blockchain community that um that he's involved So I I think it's actually really exciting because we're seeing a world where we're kind of flipping a little bit of the value acrule for private equity on its head as well.

Yeah. Look at to comment on that like people might be familiar with like KKR has a KKR capstone which is a large team of consultants and operators. Bane Capital has Bane Consulting and and in this case we you know it's not a cost center as Rob said which is we'll have the execution layer we'll share some of the value with partners like a and stablecoin issuers and we should comment on the hyperlquid dynamic because it's so in line with how I think about the world which is I mean you when you when you have the users and when you have the distribution you can really dictate the terms right and and that's position that I want to get to which is if we acquire really good businesses where we have a lot of

connectivity with the end user will curate the experience and then whichever partners want to be a part of that. It's a very different discussion as opposed to a ghost chain that has no users and you're trying to convince, you know, a stablecoin issuer to deploy on your chain and be charged five or 10 million and which I think that's been really interesting to observe. Um, and that's how exactly how we think about the world, which is um we want to be very intentional and curated. as a kind of an inside story when I when I started when I decided to like launch the chain and figuring out kind of this inversion sandwich model I um I called a couple of top founders in the space and I said

listen if I launch a chain and if I bring this type of user that has never existed on chain would you deploy in the chain and the immediate response like absolutely like you're telling me that you're going to acquire businesses with 10 20 30 million users and those users are not just here because Bitcoin's at 100,000, but are you going to stick around because you're serving them a core service? Like this is the holy grail they've been wanting for a really long time. And and that's really what's most exciting, which is I think the reception as we kind of close out the discussion on inversion. I pay a lot of attention to, you know, how the industry's been perceiving inversion.

And I think I even talked to some of the really skeptical people um the merch of the world so to speak of how they would perceive this. you know, coming from a position where I was been very vocal about certain chains. They're like, "No, this actually makes sense." Like a world where we onboard a billion users is a world where pretty much the entire crypto ecosystem benefits because if you've built a really good product and service, we're just going to route to that application. And you know, like Helium is an example, right? If we buy a telco and we plug in Helium and deploy that, it helps Helium. It might help Salana to some extent. Um, and it helps something like layer zero because there's connectivity between chains and of course it's going to help the inversion chain and the inversion kind

of sandwich and but that's really that's really kind of the primary motivation here which is again it really benefits the entire industry and and it was glad to see kind of the reception of the industry so far. Well, hats off to you man. Congrats. Let's talk uh you mentioned Hyperlid. Let's get into Hyperlid and USDH. So, oh, I think most people I mean I think everyone will know Hyperlquid, so we can skip that. But uh if you look at Hyperlid, there's about 5.5 billion uh dollars in total stable coin deposits and about 95% of the 5.5 billion is actually USDC. So, uh, this this past week, I forget if it was over the maybe it was last Thursday or Friday over the I forget when this originally got

announced, but basically Hyperlid said, uh, we're coming out with a with a stable coin and it's the ticker is going to be USDH and it's going to be Hyperlid first, Hyperlid aligned and compliant asset and, um, uh, unlike a lot of stable coins when people announce their like kind of native stable coin project, the the backing mechanism, the governance structure, the revenue model, how they're doing it, that was not predetermined. So instead, what Hyperliquid did is they said, "We're going to launch this uh competitive bidding process and they invited a bunch of external teams and established stable coin issuers to submit proposals for the right to basically build and manage USDH on their behalf." Um, and I think the

the the reason for doing this is pretty simple, right? You've got 5 a.5 billion of uh five and a half billion of stable coins on Hyperlid. 95% are USDC. There's kind of three main challenges from that. One is you've got major value leakage and Rob you should correct me if you disagree with any of this, but you've got maj major value leakage, right? So this massive pool of USDC on hyperlquid is invested by circle into yieldbearing assets like treasuries and the revenue there flows from the reserves into circle and there's no real economic benefit that goes back to hyperlquid. So that's value leakage. The second would be just sovereignty and risk, right? So you're kind of building like circle has the determination of you know maybe it's freezing assets right they can do that

at the issuer level uh you kind of hyperlid probably wants to have that control and the third would be this kind of bridge stablecoin introduces just bridge security risks so I think USD mitigates uh USDC mitigates that by issuing native USDC on hyperlquid and enabling CCTP um but I think that there's uh just probably you just want to bring it more and more in-house and make it a little more native. So, uh, yeah, they they launched this proposal. Um, actually, Galaxy had a pretty good overview of a bunch of them. I can try to share my screen here. Um, but let's see, I can pull this up.

So, at a high level, you've got um, uh, native markets. So, that would be native markets. I think there's a partnership with Bridge there. uh Paxos, Athena, Agora, Sky, Frack, Curve, Open Eden, and Bitco all kind of vi for this USD USD USDH um proposal. And yeah, we can pause there, but I mean it looks it looks like Nate Native Markets has won it. Um which is Yeah, I don't know. Rob, you maybe let me add some add some context here. So I I think um a lot of what you said is correct. Uh so USDC about 8% of its supply is uh on hyperlquid right now it's about5 half billion dollars it's

something like call it 10 to 12% of the net revenue of circle so there's that side which is that you know this is actually um potentially value destructive for circle itself um most of what you just said too around the USDH process you're right so they launched this governance um you know kind of bidding process they uh native markets was like kind of out right away with their proposal and then you know you saw over the next few days that a number of other proposals came in. Uh proposals were due on the 10th so two days ago or so. Um voting I believe is done on the 14th or the 15th. Um so we'll have voting done pretty quickly here. Um to your point uh there's kind of no doubt

that Native Markets is going to win. a lot of the validators have already pledged that they're going to go and um support native markets that there is this period of time where the the stakers can actually still move their stake to different validators since depending on who the validators you know said that they would vote for if so if they disagree with you know where they're where they've been staked but nobody expects it to be anything but native markets. I think there's a a broader story here which um I'm going to say this at the risk of uh having you know everyone on Twitter um try to to berate me again uh like happened earlier this week but there's a broader story here around um what kind here the reason why they're going

to bate you now is because you're not wearing a shirt underneath your sweater man nothing to do with a proposal I am I'm extraordinarily comfortable so how soft is that how soft Is that thing? What brand are you working with? Uh, it's um it's it's Bloom and Dales for men and I've got this sweater in like seven colors and I wear this all the time. So, um I will send you one, Santi. Don't worry, you can you can go shirtless, but we can keep going. Um, no. So, so there was there was a couple of of posts out there that, you know, essentially suggested that native markets was kind of pre-baked to win and that they were um, you know, there had

been a socialized uh, you know, kind of, you know, pre-discussion around who the validators would vote for and why they would vote for them and a business deal that had happened. I I can say confidently that just about everyone I know who is in the know all agrees that that did happen, right? And that's from all of the founders in across like basically every every space that that matters. Um, everyone in in the stable coin space like that is sort of an accepted fact even though everybody on Twitter uh was very kind of upset about that that allegation. I think the the people took it as oh this is like an anti-hyperlquid uh conversation or people are upset uh uh with hyperlquid or fdding hyperlquid.

I actually think that that has nothing it has nothing to do with hyperlquid. This is typical DAO governance drama, which is that when you have people trying to operate a business, which is if if there had been a call it uh a private deal with a potential provider of a stable coin, that they had said, "Hey, listen, like we think that you guys are going to operate a great stable coin for us. Like we want them, we think Bridge is a great, you know, back-end provider. Like we think you we want to help you kind of permeate the ecosystem." and they went out and announced it, everyone would have said thumbs up. Like that's great. Like you know MC and Max and and Anishh like they're all like really talented people.

They're talented people who have never operated a stable coin issuer before. They've never operated this type of business before. Right. Um and who Rob who has not hyperlquid you're saying or native markets? Uh sorry the three people I mentioned MC Max and Anish are the three native markets of native markets. Yes. Yes. Yes. Yep. Correct. So um and so what happened over this period of days and and I expect nobody thought that this would pick up so much steam and that this would get as big as it did because as you know one person in the in the hyperlquid ecosystem said to me they said hey it's actually only a ticker like this isn't really anything but a bid for a ticker but what what became really clear is the market did not

believe that it was just a bid for a ticker. They believed it was a bid for the canonical stable coin which everyone would put their weight behind to try to displace USDC. And if that's true, then there's a lot of value to be made. And so every other stable coin issuer is also going to want to make a bid and and be part of that process. And so you saw a number of these um uh you know kind of new proposals come out over the the following few days. Native markets proposal dropped basically the second that the um uh that the the proposal went live. So or that the the governance went live. it was clear that they knew this was coming. Um, and then you saw a proposal come from Paxos and from Athena and from Agora alongside uh, Rain and Moon and Ethfi and a few others. Um, Sky

put out theirs. And as you started to read through the proposals, I mean, Paxos literally was guaranteeing distribution on Venmo, guaranteeing distribution on PayPal. You had you had PayPal, you had Pay the the the corporate PayPal account tweeting out about the bidding for USDH. It was remarkable to see. Remarkable to see. this became such a big bidding war and you had Athena um talking about like how much and and FRA talking or not FRA sorry Sky talking about um sharing basically like all the the revenue and maybe plus some because of their you know kind of ways to to earn additional um additional yield and when you started looking through the proposals it became pretty clear that at least from an infrastructure perspective from a technology perspective from a

distribution perspective and also a potential future of genius compliance um that the native markets proposal from from from just product was probably not the best and and actually I'll just I'll say more definitively even though I'll get dragged online for this it was definitely not the best proposal and was probably you know the third or fourth best proposal from those perspectives but then you saw these validators they went out and they said hey actually we are going to still vote for this thing um and most of the Rob sorry I I didn't I followed everything until you said that why is it what say it again why is it not the best proposal from a product perspective so I think there's a there's a bunch of different like moving parts here right

so one is okay well like who is the actual issuer right so in the native markets uh proposal the issuer is bridge and paxos it's you know paxos right and Athena it's Athena and Agora it's Agora um there's a question around whether or not bridge is call it the right issuer for a stable coin and And and why is that, right? So, one is simply that like bridge is actually not a big issuer of stable coins today. This is not something that is core to their business. Um they have a uh they have a there all of their banking is done primarily at a bank called Lead Bank.

LeadBank is a bank with about uh $3 billion worth of assets. Um you know, Circle has $5.5 billion worth of stable coins already on uh uh on the Hyperlquid. Of course, the reserves are not going to sit at at lead, but the reserves will probably sit at, you know, Black Rockck and um and and and a few other custodians, but there's just sort of like a a counterparty risk perspective that's inherent there that's actually not inherent in in you know, Paxos and not inherent in Gora who's straight using State Street and Vanek. Um then there's a um a revenue split perspective. They were actually saying that they were going to put 50% into Hyperlid Fund, 50% into um like ecosystem growth more broadly. kind of unclear exactly what that means. Um, when you look at, you know, something

like in Athena, um, they were going to basically, and I think Agore as well, they're basically going to give all of their net revenue to the to the assistant fund and and maybe some hype buybacks. And so there was this economic point. Um, then there was a distribution point, which, you know, Paxos, I think, um, almost certainly wins when you had the corporate PayPal uh, account deciding to to tweet about it and guaranteeing, you know, listing. there you have a partnership perspective which is that um there's all of these partners around the table people like Raincard who's by far and away the biggest um and best you know stable coin card issuer who would work with Paxos and Agora and and and probably Athena but they're not going to work with Bridge because Bridge is kind of a competitor to them and they have their own card that doesn't that

nobody really uses but but is you know something that they they decide to try to distribute and so there's there's kind of little pieces and a bunch of different little places um that you know I think make it you in a collective probably you know not the best proposal I think there's this other there's been this debate right now around like genius ready or genius act ready or genius act compliant right so um bridge is a uh they issue their stable coin globally including in the US using a state MTL um it is very clear that a state MTL is not going to be Genius Act compliant um it is also probably true that a state MTL Well, should today not be an allow them to

actually issue the stable coin to to US peoples. They're taking a lot of risk there and um depending on who you ask, some people would say that's downright illegal, some people would say that's taking risk, but you know, there's there's a lot of of of conversation around that. They obviously have great legal counsel, so I'm sure they feel feel comfortable doing that. Um but, you know, people like Paxos who already have their, you know, NYFS charter, like it's clear that they will be, you know, genius um compliant in the future. And so there's a lot of these little points that I'm talking about, but when you bring it all together, um, and then you bring together a a team who, um, I really like and they're and and every time I've talked to all three of them, they're they're really good, but hasn't actually operated this type of business

before. It it's hard to see how in a um, a traditional bidding process where it was entirely around product that they were likely to win unless there was something else that was um, wanting or incentivizing people or at least another reason that people wanted to vote for them. Um it seems like that story has primarily been around hey this is hyperlquid aligned and there we will be we will only do this product on hyperlquid and that absolutely has value that absolutely means something and so you know maybe that was enough to get everybody over the ta over the table but um because of the way the the bidding process worked it turned into a much more dramatic thing and um it

highlighted a lot of I think the constraints uh in of DAO governance itself when people are making business decisions uh and ecosystems are making business decisions but then going through this process of trying to have people vote and where maybe that business decision was already pretty far along before the voting happened right and that's something that's not a hyperlquid specific point it has just been the constraints of Dow governance for you know five years or you know ever since we thought started talking about this yeah I mean that's a that's a dynamic that exists in all businesses right not not just cryptos like I don't know someone internally has got to take but they're like oh I got to do the whole RFP process also Rob I do have to smack the disclaimer on you that you guys are

invested in Rain and Agora and Athena so there's some bias here um absolutely yeah yeah do you have well no I was just really curious I mean I followed it obviously from the lens of something that now feels pretty obvious right maybe the answer is look hyperlink has just been a protocol that has gotten so much traction so much usage but it does leave me wondering and maybe jumping too far ahead if we want to discuss some of the mechanics of this super like stablecoin super bowl RFP but like why haven't why hasn't Salana done this um like why could they do it what does this then mean for other protocols or other type of services like I I do

think it changes the game quite a lot yeah before getting I that was the next I want to get into that definitely because this is it I think a lot of teams are a lot of teams are looking Hyperlid to be like just like teams looked at Salana to say oh you know a year ago to say oh Salana did this we should maybe do this now teams are looking at hyperlquid before getting into that who is um is Rob is this final is this is this like 100% done no it's not 100% done um you can still move your stake to different validators I think all of the validators today and and someone will correct me if I'm wrong have already pledged to somebody um and if you you pulled up the poly market earlier and what is it right now for for native markets

97% Good. Yeah. So, and all the validators I think have all already pledged, but theoretically like all the stakers could still move their stake to somebody who had, you know, pledged to Paxos. It's it's really became at the end it became a two- horse race between the two of them. Um, but like that's that's clearly not going to happen. So, it's all but done. Can Can you Can you pull some of the tweets like legendary tweets like Yan Vanek, love him, tweet it, Yan baby totally going for the jugular. uh PayPal who's been super like shy about PYUSD and I think the Salana team might have their opinion on on that program and now they're like publicly tweeting about Hyperlid like again the total 180 inversion of who's in the driver's seat

now you know yeah I know I I actually know Yan listens to this podcast every every week so we will give him give him some love by showing the tweet but it was crazy to see I mean you know VANX one of the largest uh ETF app providers and ETP and just asset managers out there and you know got the CEO and tweeting about just we are bullish hyperlquid we are owners we'd be thrilled to be part of the ecosystem. Yeah, it's amazing. And right after this they announced a potential hyperlquid ETF. Yes. Yes. Yes. Yes. Um the other one I liked was um did you see Jeremy Lair's uh tweet?

No. And I think the the top of the tweet was don't believe the hype. And I I just I I don't know who wrote that, but I just couldn't believe that that was the top of the tweet. That was the first first sentence. Don't believe the hype. Okay, so this is this gets me into your point about Dow governance, Rob. Oh, yeah. Go go go Santi. No, let's get to that. I I I want to talk about like Circle for a minute. Wait, punt on punt on circle for a sec. This to me was the most amazing. Who Who won? Who won this? Native markets didn't win. Hyperlid won this. This was a even if you already had picked native markets even if let's let's say they had already picked native markets I still think this was so so by the way I'm pretty sure

they reading between the like I think they did pick hype native markets ahead of time like MC MC doesn't leave unis swap anish doesn't leave ritual like to go to go do these things if they didn't know that there was a at least a at least a maybe 90% chance they were going to win this so sure yeah yeah I'm just gonna say this completely I I was at two days ago with like founders of the biggest protocols in in crypto, a bunch of really awesome people everyone respects. Not a single person there pushed back on the idea that this was was preddecided. Everyone said it was obviously it was like I'm pretty sure like u to get better economics or terms like a stalking horse kind of dynamic.

I don't think it was anything about that. I don't think it was about better economics or term. It was a masterclass in marketing and attention from the hyperlquid team. Hyperlid tokens been sitting at like 40 bucks for a couple months like just kind of like I don't know not people weren't forgetting about it but it was like you know you gota you got to do these mass like massive attention things and USDH and the bid for it was a masterclass in getting attention from the hyperlquid team and you saw it reflected in the token and the token right now is just a uh almost a just uh derived from how much attention on crypto Twitter you're getting the price of the token these days and you see it with Athena and you see it with Pump and things like that.

And yeah, you saw I mean Hyperliquid's what trading at like 55 56 bucks today up from 40. So uh this was the this is the this was the biggest debate probably of the year in cryptonative land and um yeah people who have like probably never traded on Hyperliquid were even jumping in. Everyone's got bag bias and all that kind of stuff, but I think it was a brilliant business move and I think other people should learn from it. Like Santi, as you think about, you know, who should be the l the lending platform like don't just go to a and say you should do it. Like you put out an RFP and you say, "Hey, Morpho, hey Oiler, hey I I think it was a very smart move."

Yeah. Look, we'll own the execution layer. We'll own the user aggregation layer. That's a sandwich. Anything in the middle, it's an RFP. Yeah. I also think these teams if you're if you're a chain that doesn't have users that doesn't have traction, you can't you can't really get pull this off. Like no one cares. Yeah, you need to have that. I also think these team and Rob, I really want your take on this is they'll they'll still deploy. I still think Athena and let's if Paxos doesn't win it, Paxos will deploy and Athena will deploy. It's like Yeah. Okay.

Did you Did you see Guy's tweet from yesterday? I was going to say it legendary. Yeah. Yeah, it was Guy Guy's on a run. Guyy's crushing it. Guy's Guy is um I was talking to somebody else this morning and you know, Guy has always been I think one of the best founders in the space. Um I think he's on another level these last, you know, six months or so. He's really been doing an awesome job and and he's always been really aligned with uh Hyperlid. He he loves Hyperlid. I know he's personally a big fan. I know he's personally a holder. Um you know, he's um he wants nothing but the best for the ecosystem.

I think he would have loved to have the USDH ticker, but you know, he said, um, you know, pretty pretty clearly that, hey, listen, like, we're still going to do these things that we said we were going to do. We would have liked to have won this because of what it means symbolically and the support that the ecosystem has. But in short, I think he he actually ends his um his his Twitter or his tweet here with a a sentence that says, "In short, we will do what we have done or what we have always done since day one. Out compete everyone else on product regardless." And like that is what all the best founders are thinking here anyways, right? We're going to come and try to out compete. And so I loved this post. Uh I know he's wants to be a big supporter of the ecosystem. I know

he wants to continue he wants Hyperlquid to do really well no matter who it is. But yeah, he he wants uh USD to be, you know, a canonical stable coin that everybody wants to use on Hyperl and he's going to push that um and and compete for that as hard as he can. Powered by a $4 billion treasury, Mantle is launching You Are, a Swisslicicensed smart money app that simplifies how individuals and businesses move between digital assets and fiat currencies. Underpinned by Swiss regulation, UR offers a multicurrency account with IBN support for euro, Swiss Frank, US dollar, and RMBB and one:1 backed deposits. Its Mastercard principal membership debit card enables global

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more, click the link in the show notes or follow them on X. As always, investments in blockchain technology involve risk, terms, and conditions apply. Okay, two a few second order impacts from this. Now we can now we talk about Salana. Now we talk about circle. Um let's talk let's talk Salana. So um I think it was Mert here. I can pull this up. So Mert had a Mert had a tweet said warming up to the idea that Salana should enshrine a stable coin. 50% of the burn goes back 50% of the yield goes back to burning soul. Then he said, "Actually, this is a perfect use case for a DAT." Uh, no, no, I think that was a joke. Never mind. Um, okay. So, he so

he this was real warming up to the idea that Salana shouldn't try to stable coin. And then he followed up by saying, "Look, this is going to happen. It's the most no most insane no-brainer in Salana history. Stable coins are commodity, etc., etc. Hyperlid just showed us how far these companies are willing to go to win business. They're literally playing the bachelor out for fund managers. Salana can command the same and more. Um yeah and that's basically the idea that you should enshrine and I think Tar said one of the best things about Solana's culture is adopting good things from other ecosystems. Hyperlid's idea is to encourage stable coin issuers to buy hype with USDH interest is a powerful way to drive uh rev should circle keep all the interest revenue from USDC on

Salana. Um and then he said for what it's worth Ethereum should do this too will drive up Ethereum's rev and drive buying pressure on ETH. So what do you guys think of this? Do you want to? Well, I this is what I said earlier, which is it it begs the question, who are the biggest winners? Who are the biggest losers? The cat's out of the bag, right? So, I I just again circle I'm left wondering what their strategy really is with ARC first. Second, as a business when rates go down, you know, what does that do to the P&L of the business? And and third, this idea of not sharing, right? Um you know, interest income is very challenging. And you know, we can talk about Tether and and and you know, Tether does this too, right? But you have Agora, which you

know, obviously, Rob, you guys are big investors there, too. So, I I just maybe open up the discussion around like who's the biggest winner? What does that mean for some of the and and is the public market actually going to really understand this nuance uh or not? It'll show up in the numbers eventually, right? So, like Circle's in a tough spot. And I want I I just messaged Jeremy. I said you should come on the podcast cuz we I feel like we keep talking about it and we should just ask him these tough questions. But right now, uh if you have huge distribution, you're you're hyperlquid or coin or or maybe not Coinbase, but Binance or OKX or anyone else, there's no reason to use USDC unless they share a huge part of the revenue, right? So, you can spin up a stable coin in no time with I think

Agora lets you do that, M0 lets you do that. You can also allocate Yeah. Paxos USD to products like um Athena, right? and capture 100% of the revenue, 95% of the revenue. So, uh, Circle right now is sitting between a rock and a hard place. If they don't share revenue, they're going to lose market share. And if they do share revenue, their margins are going to suffer. So, yeah, does Walsh, it was funny. Cir USDH was happening and then Circle stock pumped like 15%. Which shows it's pretty removed. But eventually, this stuff does start start to show up in the numbers. So, I do think the biggest loser from this whole dynamic I think will be circle. biggest winner um is I I I think Athena will do incredibly well here. Um I think people like Paxos, Agora, Mzero will also do

very well. Well, for Agora like I mean Rob in your proposal like Nick Van had a good post about this which is it's a race to the bottom and and and Sam I think Fra from FRA also commented on that like how do you think about that business model in this competitive dynamic? Yeah. So this is absolutely true, right? So the the yield on the tea bills is clearly not a way in which these stable coin issuers will be able to grow over time, right? So Tether famously still gives away basically zero yield. Everybody else now is giving away the majority of their yield or the vast majority of their yield, right? So you look at um you know even Circle, right? They paid a

bunch of money to Binance to get on Binance, right? right? They've br a bunch they obviously give 50% of all their revenue to Coinbase, right? They're uh they're striking deals with a bunch of the fintexs in the space who are using them to share a bunch of the yield as well. And so it's clear they're going to get that's going to continue to happen. Agora is doing it. You know, Mzero and Paxos and all these guys are are going to be doing a ton of that. And so the question is then how do these stable coin issuers make a lot of money, right? how do they uh or grow not just distribution but grow also like revenue and what we're we're starting to see is that you know there's a kind of a wedge product so everybody's saying like listen I have this product I have this you know thing

that is uh valuable for my customer that I will get in with them maybe it is the stable coin itself maybe it's just call it the infrastructure that includes a wallet that includes you know kind of really easy to use APIs and then I'll try to sell them on other things that's not just, you know, call it me being like a essentially like a money market fund. That's where everyone's trying to to figure out and that's where they're trying to go. That's why I I think you see, you know, Circle launching their own chain and ARC and, you know, launching CPN because they're trying to look a little bit more and monetize like the payments company. So, I think a lot of these guys will start looking like payments companies and and it's kind of like a the bridge from the opposite direction, right? bridge was

orchestration, but then eventually they ended up launching their own stable coin, launching their own card product, launching their own wallets and accounts, right? And it starts to hey, like we're going to sell you a holistic solution versus that we make money on some part of it, even if we don't make money on, you know, call it just the yeah, just the yield itself. And that's that's the focus at the moment. That's that's probably how it ends up playing out. But it means you have to be good product builder in payments. It means you have to be a good product builder and other types of financial services which a lot of these guys I'm pretty dubious of that they're able to do that because they don't they don't come from that world. They don't necessarily know money flows and and I think I want to put one very fine point on what you said

Yano which is who is the biggest loser. Well, USDC is by far and away the biggest stable coin in DeFi. By far and away. Tether dominates CFI. USDC dominates DeFi. Defi is the place I think right now because CFI you've already seen that compression right and you've already seen those deals get done. You hadn't seen it in DeFi before. Hyperlid is the start of that you know revenue share happening in DeFi. And that's going to I think significantly impact USDC and their and and the revenue they make from from all those stables in DeFi.

Yeah. on this point, Rob, the push back that perhaps a traditional analyst might say is look at Wealthfront and Robin Hood and and and relative to like that dynamic, right, where brokers when Robin Hood launched with zero commission trading, you could have sat there and said, "Wow, race to the bottom." Uh they're going to win all of the business and why would you keep your money at a traditional brokerage firm that is charging you something, not zero. But that's not the reality, right? like um in financial service like you've had like more younger generations like putting aside the valuation right but like there you would have expected more see these businesses to go to zero they

haven't my point here is users are fairly sticky like once you have a bank account you rarely move that um and you kind of observe that in crypto too as much as it is more composable you have like validator stake like a lot of the validators in some of these ecosystems just were there early and received the stake and people were not necessarily moving them even though you have validators and launched apper with zero like commission. Um I guess the counterargument to that would be like um Grayscale in the ETF land which obviously their fees were order you know multiples higher than others and I think they've seen a lot of their they resisted kind of uh lowering their fees

and they've you know the value is leaked but I I guess what I'm what I'm trying to get at is if you believe like stable coin circulation goes up orders of magnitude where is that going to come from if it's strictly in DeFi. I think Rihanna, your point is, yeah, definitely USDC suffers. And I was trying to pull up the coin gecko like market like um share of USDC. Uh but you could argue, hey, maybe Tron, which is more emerging markets in the kind of local economies, doesn't take as much of a hit or maybe Tether doesn't take as much of a hit, even though they're not sharing you yield. And it's one of those things where like look, financial literacy or lack of thereof from the end user is not necessarily there there, right? And and sometimes,

you know, distribution is all that matters. And if you already have really good distribution like Tether, maybe your business model doesn't get hit as much. Yeah. I'm I'm going to I'm going to push back on on one thing you said there, which is you um and I was intimately familiar with this in my in my pre uh pre pre-crypto days or when I was doing crypto on the side and and not professionally, but um there was to your point when Robin Hood launched in in the early you know 2010s um and started to get you know some traction people started to get excited about it there was a lot of conversation in all the analyst notes you know call it 2017 2018 like why isn't you know it a race to the bottom when is Schwab and DD Marit trade and you know Erade and all these guys

when are they going to cut commissions to zero are they worried about Robin Hood right and around call it you know 2019ish I think everyone started to expect that maybe that just wasn't going to happen right and that okay well it's too sticky you know people don't want to use Robin Hood it's a a kids app it's not really for like real you know adults who have like real financial needs and then the first domino fell when Schwab dropped equity commissions to zero. And when that happened, every single other broker did as well. And so equity commissions did go to zero eventually. It just took longer than people expected. And why did Schwab do that? I think in part they did that because they started to see what I think we've now seen with Robin Hood.

And I think everyone on this call is like huge Robin Hood bag holders. So obviously very um very bullish. But they started to see that Robin Hood was actually um they I think Schwab had expected people to graduate from Robin Hood to Schwab. and they started to realize that wasn't happening and so they did now have to compete because people were just Robin Hood was going to start offering new product that served those people as they got older as they had more financial needs and that Schwab now actually needed to compete on that product and so I guess to all of that point right is there yes like an account in a bank account is sticky stable coins are money you know especially stable coins that are just you know call it um a money market or T backed, right? Money

is not sticky. Money is something that you have in your account. You can mint money. You can move money. Yeah. Like like the account is sticky. That's why MetaMask and and these wallets continue to to do as well as they do. But I don't think I don't think um USDC is. And so it might be true that like the stable coin market is just going to get so big that everybody wins. And and as you know, like I'm probably one of the if not the most active investor in that theme and category. And so I believe that to be true. But on a relative basis, USDC is, you know, the DeFi uh the DeFi token. And so I I do I am concerned for them um on that aspect.

But you know, these are are competing uh competing things. Yeah. Although to to be fair like MetaMask, you know, has continues to rake in so many fees and it's just that what I've learned is money does move faster uh clicks away here and you can basically create a bank account in a second by spinning up a new wallet. Um but the convenience factor is something that time and time again people want to pay for and so again that's to your point around product right product I think guy's point is we'll continue to build the best product convenience is a derivative of good good product MetaMask is a good product has been there maybe people can argue like it's no longer a

good product but it was just early and sufficiently good product and it has that you know stickiness to it but um Yeah, we'll see. I think I think, you know, we'd love to have Jeremy come on because we we continue to talk about Circle and a lot of the decision. Yeah, he's coming. He's coming. They just hard to explain it, right? I can't explain why he launched Arc. I can't explain why they've been kind of the posture that they've taken. And to be fair, like look, I'm biased, too. I know Guy, I've known him for such a long time. But that model in and of itself is probably one of the few that they benefit from a you could argue that they they're the ones that benefit the most from a lower interest rate environment because they're the way they generate fees is totally different than all the

other kind of more traditional stable coin issuers that just are clipping treasuries. Um you know obviously the Athena model is funding rates and you know that has as as rates come down that has an implication but I think guys one of those founders that is acutely aware of that dynamic and just built around you know a business that is more defensible in that regard. Yeah. You guys want to pivot talk about Figure. Yeah. Yeah. Yeah. So Figure Figure is a company that I probably actually a lot of people on listening will will not know. Figure was started by a guy Mike Kagny. If you guys know SoFi, Mike Kagny also is the founder uh the co-founder and I think ex CEO maybe current CEO of of SoFi. So he started SoFi in 2011. Ran

not the current CEO. He he hasn't been there for a while. He hasn't been there for a while. Okay. So I think he left in 2017. I think maybe he's just on the board or something like that. May maybe not even involved. But so he he left took some time off. He then started Figure in 2021 or 2022 something like that. figure is now the one of the largest providers of uh helilocs um in the world or at least in the US home equity line of credits. Um the interesting thing about figure is they have built their own chain called provenence. And this is uh very uh when I think about inversion and Santi when you originally started bringing up inversion to me it the the company that first actually weirdly came

to mind was figure because I've I've had a couple calls with Kagny now and got to know him over the years a little bit and I spoken to D before and he said look our cost structure is just so much lower than any of our competitors because we process every transaction on ch on chain uh and it's on our own blockchain called provenance And uh yeah, so they they just went public um six or seven $7.3 billion valuation. I think it listed at like 20ish range. It popped to mid30s, 35 3.

Yeah, I think I think it was 25 and it was it closed yesterday at what 30 31 bucks. Yeah. So I obviously have known Mike for for a while at Parfy. We were investors and owned Hash the token. I would say um look if you read the S1 they're very there's a lot of stuff that we could spend an entire segment talking about the S1 and their business model um but you're certainly right when they have roughly 15 billion of RWAS of home equity lines of credit they're by far and away the largest um provide issuer of RWAS um and it's just a really good business model they found a very unique product and wedge to prove this ability to

streamline origination of helocks. Uh most of their business comes from uh partners. Um and they one a couple of things to note uh that caught my eye. They're issuing helocks to ultra prime like super high FICO scores. And so a lot of the faster processing comes as a result of just selecting a very narrow slice of the market, not subprime. Um but you know the the settlement, the reconciliation, the ongoing monitoring, um a lot of that cost savings is very real and material relative to traditional issuance. Um I would say the blockchain kind of chain piece is much to be desired. Um and they kind of

allude to in the S1 they have an interesting line which is something to the effect of quote unquote we were misguided in our blockchain strategy. And I think uh it's been one of those companies that uh we followed for a long time and it's just been the the the heliloc business is super interesting. It works. It's uh and they use provenence but there's it has felt disconnected, disjointed. Um and it's not a welloiled machine in my mind. But look, hats off to them. They are one of the few companies kind of silent that no one really talks about in crypto that have, you know, have a decent nice business model and have proven that you can make a type of business more efficient, you know.

Yeah. I mean I mean the the helac business is incredible business. He's done an incredible job there. I mean Mike having uh founded SoFi and then founded Figure um you know clearly one of the best you know call it you know tech enabled financial services founders of you know call it the last you know few decades right so has got a$ 30 billion market cap I think it's actually trading at an all-time high yeah I mean the the a lot of the fintech has traded up also obviously as the last uh last few quarters um but he and you know it's clearly tech enabled and he understood like early on that blockchain enabled was a better form of tech enabled in a lot of ways, right? And so like um that's been incredible to see.

Um to Santi's point, you know, they have launched a lot of these call like other called blockchain products, launch an exchange. You launched a project called Yields, which is kind of an SEC regulated um I think it's I think that it's kind of firmed as like a like a debt token, but it's trying to simulate something like a yield bearing stable coin um that's actually, you know, compliant. Um, and so they've been doing a lot of these things which are are are awesome to see. I believe they they originally um took those products out of the figure business um and kind of the the hash token out of the figure business in preparation of this IPO and then they decided to feel to to fold it back in actually right before the IPO as

I understand it. Um, and so that's probably a signal to you that they feel that they need, call it the corporate oversight and they still need those resources to try to get this other stuff off the ground. But it's also pretty interesting in so much as there was at least a belief, you know, a year ago uh or maybe more than a year ago that, you know, the hash token and these other crypto products couldn't be in a the shell of a public company. And now with how the world has changed the last nine months, they feel comfortable doing that and they're able to go public with that and they're able to trade well because of that, which is just again another point around where we are in the market and what is happening in global acceptance from regulators and institutions and investors of crypto

enabled business. Yeah, there's a great uh blog post from Kagny on their website that he just published and he said, "Look, I couldn't I couldn't put this in the S1, but here's my personal take on on blockchain." And um yeah, like like you guys mentioned, I mean, they they had a couple false starts with with the chain. Is it the most robust blockchain out there? No. But the it has brought down the cost structure of processing these helocks and processing these loans. So, um, yeah, we can we can link to this or you can just type in like probably figure a letter from Mike Hagy um figure.com or something like that.

So, any minute we should definitely have Mike on. I've had um a couple conversations with him and um we would definitely love to kind of get his inside view and how because I I think it was uh they were gearing up for the IPO uh for for a while and it was just would be interesting to hear his perspective on how that whole process unfolded and uh yeah look another great example more public companies benefits crypto and this one in particular because it it you know so in line with you know just proving absent doubt this is a real business showing real value anyone one out there can read the S1 and say these guys are doing something well understood in finance in a more efficient manner and you can't like you can't argue against that and it's so powerful as a case

study for the industry and can we just can we just put one point here too not figure specific but public markets I'm telling you right now so Gemini is listing is going to start trading in a few hours you know figure earlier this week bullish is still I think trading trading okay corno listed this week right like the the just how excited investors are for growth right now. Like it we're only seeing the beginning of the acceleration of new IPOs and it it's going to feel I think pretty soon maybe not this year, maybe into next year, but it's going to feel pretty soon like maybe we're in 2021 all over again.

Yeah, Coin Shares is going to spack. So Rob, actually the team um someone on the team asked me the other day said, "Hey, who's going to IPO like this year or next year?" Let me tell you what I told them and I'm curious what you what what you think. So I said um uh I said okay we've got figure gemini of course um I said bit uh this is like by end of 26 let's call it. So I said bit go um maybe luben tries to get consensus public said maybe blockchain.com but they got crushed um in the last cycle from being one of the biggest lenders to the miners. Uphold maybe Anchorage maybe um chain analysis maybe firelocks. Fireblocks. Maybe love will will never IPO that thing.

Who? Who will? My the founder. I think he's very against No. No. I didn't hear what you said. Who? Fireblocks. Oh, Firebox. Shallov. I think he will. He just won't be the first one to do it. I think he'll wait for to see what others do. Um I think Ripple tries to do an I think Ripple tries to go public. Um I think the Asian exchanges I think Ripple tries to go public actually. Yeah. Okay. Because it's just too much. You don't just do a debt. They'll go public through the debt. Here's the thing, guys. like no but once they have hidden road and all these other businesses you've got to you you you actually have an IPOable business. I know you were intimately involved with hidden road but one one observation here is let's maybe as a companies that should not go public because you know I think this is

something that people are going to realize like sometimes it's better to stay in the private markets and that is just again private equity there's a reason why you take companies private to execute on a strategy like the market is a voting machine in the near term term and that is very distracting when you want to execute on the long term. And look, go talk to Michael Dell and why he took Dell private. Um, go talk to a number of other operators that have decided to take their business private again because it's just sometimes great to be quiet and in the background and doing and humming along. And so I think um that's perhaps something that in four years time or three years time maybe

some of these DS can be like yeah maybe I shouldn't have like taken this this this thing public and it's not easy running a public company. Yeah. So Rob, who else who did I miss here? Who who do you think tries who do you think goes public and then maybe differently as in the next 12 months? I think you miss a lot of the non US exchanges. So, uh, all of the exchanges in Europe that are decently sized, you know, Kraken um the um Oh, Kraken, of course. Yeah. Like even like Bit Vavvo, like that's a bigger business than half the ones you talked about. Um, you know, hasn't really raised outside capital, but I think is doing like 400 million of topline. Um, you've got even like Bit Panda, which is a more of a brokerage,

not an exchange, but they also have an institutional business sitting inside that. You've got people like maybe Falcon X will try um you know raised a big round before you know there's you know I I think a lot of the other exchanges you know we'll see if they if they want to look into tapping public markets but you know you've got businesses that are worth you know I mean if you look at what's happening right so Gemini up uh upsized their their IPO they're going to go public today at 3.3 billion dollars I think is the is the rumor now um I forget what bullish is trading at trading at a multi-billion dollar valuation. Gemini is doing I think 150 million of topline, right? Uh Kraken's doing 10 times that and and

yeah, Kraken will definitely I just forgot Kraken. Kraken definitely will, but Bit Vavo, that's an interesting bit. Bit Panda, that's a good one. Yeah. Yeah. So like, you know, so and so you know, uh Bit Vavo is doing more than double the revenue of Gemini, right? And they're going to and Gemini's got all this demand, right? they got this NASDAQ uh investment and then like what if you know Binance is able to enter the US again or the public markets like what do you think you know Binance is able will will be valued at what do you think a buy bit would be valued at OKX will be valued at right and so I think all those guys will get public but maybe not 26 maybe it's 27 is the year the Asian exchanges but point taken yeah but but I I think the point is like

it's hard to for all of these founders and I think for all founders um you know okay actually I'll I'll backtrack Not all founders, but I think it's hard for most founders to look at what's happened in the public markets with the way circle has traded, with the way the IPO um kind of investors have reacted to a Gemini and a bullish and not say I know my business is multiple times bigger than that one. I think my business is better than that one like and I've got this, you know, mark in the in the private market. I should just go public, right? Because a lot of these guys we're talking about are, you know, uh exponentially bigger than the people who are going public. trading really well, right? And so I do think there is a bit of a um um of a forcing function in a

lot of ways. And so I think we'll start to see, you know, a snowball pick up um because of what we've seen happen in the public markets right now. What about uh Uniswap Labs? You know, certainly generating decent amount of revenue. Take that public. It's going to get comped against Coinbase on a per employee headcount basis. Vastly more profitable. like it sort of is there an opportunity for some of these teams to to do that? Would they ever do it? I listen I I think it is on people's minds. I have heard people mention it as potentially something that they could do. It is very unclear to me how that would work at the moment. But maybe

we'll get there and maybe and I will say that um if anybody's able to do it, I actually think unis swap is the one right and I think they'll be they would be call the most forward thinking about it. They obviously raised a big round into the equity a few years ago. You know is very close there and has obviously been um quite involved in policy. So maybe they are the one if it's able to happen or maybe one of these L1 foundations. Um, so, so I think there's there's also a story here around well an application token versus an L1 token and maybe that there's a different way the regulators will see those two things. So maybe a Salana Foundation or or Salana Labs or um, you know, one of the kind of alt L1s um, etc. like maybe those will will be some somebody that

will think about this. But I I don't think it's it's hard to unwind one the just the scar tissue that everybody has from the last few years of their dealings with uh regulators. But also, you know, there are a lot of like tax and like legal implications of what they've set up to date. And trying to rip some of that out and do a um some sort of public listing, I think would be um very involved and would be probably something that was being done for as much as ideological reasons as it had been actually like value accreative to them. due to all of the friction costs.

Yeah. Chance, anything else you guys want to talk through? I'm just dying to know what weird content Rob has lined up this week. All right, content of the week, baby. Rob, what do you got for us? All right. Uh, Buggonia. It's um the new Yorgos Lanthamos film. Um, it's I don't know if anybody, you know, knows Yorgos, but he's uh he's done a lot of like weird movies that have done really well at film festivals. It's kind of um a black comedy. It's primarily about um a couple of like guys who kidnap uh a CEO because or and I think maybe a CEO's

daughter as well um because they believe that she's uh an alien that's like trying to destroy the world. It's kind of like a satarist comedy. Um, uh, I'm a big Yorgos fan. Um, and all of his movies. So, uh, a lot of great buzz coming out of the Venice Film Festival. So, there's your fiction content of the week. There you go. Rob, when do you Is this a like a weekn night movie night or is this like Friday Friday night? When when do you get these movies in? Yeah. So, Friday, Saturday nights, I I'm, you know, like I think as Asanti knows, I'm as Rosie mentioned earlier in the pod, I I do respond a lot to my founders. Um, and so I try to on those Friday and Saturday nights when I know they're out partying like, you know, sit home at my uh on my couch and watch some

films. You I'm gonna light you up on Friday at 9:00 p.m. And I'm gonna I'm gonna do the auto send like scheduled send at like 9:05 p.m. on a on a Friday. Gosh, Lori Lori's not gonna like that, Santi. Oh, okay. Maybe on that basis I won't. Um, but uh, so on the content stuff, I will say a shout out to uh, People Pleaser uh, because she won an Emmy uh, for her I think it was White Rabbit is her company. She's been doing like some pretty funky stuff. Um, and I saw on social that she won an Emmy award for like creative like young creative category. Maybe you can pull it up. I

mean, obviously I was one of the original like group that started Pleaser Dow. We were bidding on people pleasers like Uniswap um NFT and you know got to know her through that work and pretty amazing to see it again you know it's uh it's pretty cool. Yeah. I mean p pinned on the Instagram. Yeah. Yeah. Yeah. Oh yeah. Pretty crazy. Yeah. Honestly pretty I haven't seen it so I kind of want to go see it now. Um, so yeah, it's been pretty cool. Cool to see. And shout out to um to People Pleaser for that.

Yeah, I got to go watch it. Oh man, I have by far the lamest recommendation of all of you guys. Darn, that's that's a bummer. But peruge um I went down a weird NovakJokovic rabbit hole. So I've never I I knew very little about Novak and I was watching the US Open, you know, week or two ago and so I was like I don't really like this guy and I was like I don't really know much about Novak. Went down a Novak rabbit hole. He is uh listen to like four hours of podcast with him. He is incredibly like spiritual and uh just like high vibration and just a very he talks a lot about like how it's tennis at that level is not a physical game anymore. It's entirely a mental game. And um yeah, I just have a lot lot of respect for the

guy after listening to it. And it made me think about just running I think there's a lot of similarities with uh running running a business or being a founder and being a professional athlete sometimes. I'm probably gonna get for that comment, but uh yeah, there's um it's funny you say that because as you know, Matild loves tennis, but they u Yokovic is one of the players that he's 36 or 37. It's impressive that he's performing at that level. Um he is like Tom Brady follows an incredibly regimented diet and cryo like all of these things. Um, but if you look at like Alcarz or even a sinner, they look like they're 30, but they're 21. And tennis, I hadn't really appreciated this, but tennis is not only

an incredibly physically degrading sport. Um, you would have thought that like, you know, these guys like look fairly young, but they all look incredibly old for their age. But it's probably one of the most mentally challenging sports like uh go one of my favorite books is the autobiography Andrea Agassi. you guys haven't like the guy had Agassi I didn't know this had Agassi become his coach in 2019 or 2020 I think it was yeah there's so that one's really good the autobiography and then there's a the commencement I think it's the commencement speech that Roger Federer did one or two years ago where he talks about like his winning rate which is like 51% and he's like you just got to keep at it and you would have thought

that one of the greats had like an 86% win rate and it's just remarkable to to see So yeah, it's a fascinating sport to be honest. I didn't really know much about it, but I've like paid more attention to it over the over the years. Yeah. Cool. That's the pod. Thanks for listening, folks. We will um actually we do I we might be taking Monday off from an episode. Uh if we do, we'll see you next next Friday for the roundup. Uh should we do a crew neck like quarter sip uh like empire sweaters that we can send to folks and and we should have a gear like shop, you know?

Oh, I did. Oh, shoot. I actually forgot something. We got a few things wrong in the story. Uh, a few of the story DAT people. We got a few things wrong in the from the story DAT from our conversation last week. So, I'm going to drop some notes in the uh show notes. So, if people want to I got to revise some of our comments from the DAT conversation from last week's last week. So, people can see that in the show notes. petition petition to to mo less ads more uh swag shop and and maybe we can use some of the proceeds to get Rob an undershirt or just a a regular like you know shirt for his his quarter don't take this man don't take this all right we're going to the weekend this is incredibly comfortable it looks great like you know you guys can't you

can't hurt me so can't hurt me all right folks have a nice weekend thanks for listening we'll see you next week's good