Bitwise: Crypto's Massive Opportunity | Matt Hougan, Ryan Rasmussen

Transcript

if you remove Bitcoin the entire space is half a trillion dollars same size as Louis Vuitton the parent company of Louis Vuitton you could own all of eth and all its Alternatives and all of defy and all of stable coins or you could own a manufacturer of purses in Champaign and I think when you think about that comparison and you think about all the things Ryan said about all these incredible things that could happen you see the scale of the opportunity and you're reminded just how early it is all right and welcome back to another episode of zero X research the show is made possible thanks to our incredible sponsors chain Alice's and Flipside we are recording this episode on December 5th and we have a great interview with

Ryan and Matt from bitwise we get into all things uh the recent marketing happenings and it's really interesting because they have this like unique Trad five perspective yet they're still varying the weeds and aware of like what's going on in the depths of defy and the broader crypto markets itself but before we get into that we got a brief little intro section for you guys we're joined here today by Matt and Xerox pibbles from the blockworks research team um I think we should get right into it and so we'll do a little hot seat cool Throne uh Matt I know you got a good one with uh with Maple Finance can you tell us a bit about that one sure so for those that don't know Maple Finance is an uncollateralized lending protocol on ethereum and Solana so what that means is that big hedge funds and market

makers in the crypto space can go on Maple request to take a loan and you know many Traders can put up ether usdc collateral or Solano Lana and in return you know they're they're going to net an APR or a yield on their on their lent out funds this morning they had a 31 million dollar default by orthogonal trading SO orthogonal trading is one of these market makers one of these hedge funds that borrows funds so supposedly they defaulted on 31 million dollars in loans this makes up about 30 percent of the total loans that Maple has ever originated and there's some reports and speculation that the damage might be even worse that there might be an additional 10 to 11 million dollars in defaults that they're kind of uh trying to Maybe cover up or just because they

haven't been due yet aren't included in that 31 million dollar estimate but there's another 10 or 11 million dollars that have been lent out to these firms that have defaulted on their loans so Maple Finance is definitely in the hot seat today it's not the first uncollateralized and undercoateralized lending problem we've seen this year we first saw it with three arrows capital and again with Alameda and it just seems that this is a non-sustainable way of lending especially to crypto firms the risk is just too high there's also a little bit of speculation that orthogonal actually had funds on FTX so they might have been part of the Fallout from the the Sam Beckman for FDX Alameda problems over the last few weeks so yeah just not a great day for Maple Finance or MPL holders which is their token does

uh does MPL act as a backstop to any any losses incurred by the protocol or do they have like a Insurance Fund so cover providers there's a there's multiple parties in the maple ecosystem but cover providers are the first uh the first stop against default so they'll be the main ones that lose money Maple stakers should be okay but the MPL token is down I believe last time I checked about 20 maybe even more so now I'll double check real quick looks like it's about down 27 percent as of Monday December 5th at 1 15 p.m it could go down more from here and there's definitely uh not doing so hot we'll see how how the ecosystem manages to if they manage to rebound and kind of bounce back from this yeah under collateralized lending is

just like a tough problem to solve in crypto for like pretty obvious reasons it's like you don't really have credit scores you need default recourse so that's that's a challenging problem to solve and I come in like Maple for trying to do it but this is like kind of you know we're seeing exactly why it's such a hard problem but hopefully we can get it figured out in the near future yeah I think what's interesting here is that so you have like these credit Underwriters who have been working with different crypto under collateralized or uncollateralized lending projects I think one of them is called like cordera or Cordura but when they're doing a credit check on a fund it makes you wonder like what the hell you're even doing as a credit Checker like we saw the diligence on FTX

Investments or with like Sequoia and FTX so like if I'm working for a Cordero cadora like I see a fund it's like oh they have a lot of money looks good to me a plus and then like something like this happens like there's there's too much stuff going on like it's way too easy for someone to misrepresent themselves as a fund to where like this uh this credit underwriting thing is just not working out I think this is a problem that extends even Beyond crypto and just uncoateralize and under collateralized lending in general it's not you know really a sustainable business uh it requires so much trust in your counterparties and it's just not the way it works today is not how it will function in the future I do have

faith that at some point defy uncollateralized and under collateralized lending will work but I don't think it's really going to be under collateralized I think it's just going to be collateralized with real assets illiquid things so not just liquid you know tokens on chain but maybe things off chain and things that aren't very liquid but there has to be default recourse there has to be a way for the maple lenders to get their funds back in the case of a default like they saw today yeah in any time when you know we've seen C5 collapse it really is a gut shot to see some some defy uh acting a little a little over their reach as well and that kind of leads into the next hot seat we have here with Maxine Waters who is the chairwoman of the U.S House committee on financial services and she

put out a a tweet that said at SBF FDX we appreciate that you've been so willing and candid in your discussions about what really happened at FTX your willingness to talk to the public will help the company's customers investors and others to that end we would welcome you to we welcome your participation in our hearing on the 13th so uh really interesting to see a thank you message going out to SBF at this point but maybe she's I guess the optimistic view here would be she's like baiting him into coming into a hearing into which SPF responded to basically saying that I'm happy to testify but I don't think I'll I'll have all the information by the Third 13th which is really in line with what he's been saying in this uh tirade

of media tour he's doing saying you know I just don't have all the information I don't have all the information so uh I guess at least he's staying consistent but you know to me this is just really frustrating to see uh that we have like a you know an important regulator reaching out and saying thank you for being candid in your discussions that you robbed us all and you're a fraudster essentially um you know really kind of leans into the fact that it does seem like mainstream media really is the ones that are kind of highlighting him and holding his hand throughout all this uh in reality you know CT and the rest of uh people in the depths of crypto really have like 99.9 percent more knowledge than everybody else it's it's

interesting in this one yeah as the second largest Democratic donor it's not really a surprise um I don't really like to steer into politics too often but yeah I mean the truth is in the money behind it so not really surprising but yeah it's a little bit disappointing to see like all the outside people who don't really understand what happened like make their remarks and and kind of put Sam on this pedestal so hopefully like more more truth comes out over the coming weeks and and he gets you know appropriately prosecuted ditto on Sam's take um I forgot who said it on Twitter but that SPF wasn't the biggest donator he was the biggest investor in these uh politicians and I thought that was a really good take and it's just yeah

can't forget that agreed the first thing I thought when I saw that tweet is how much did he just wire her I could take it over for uh the uh cool Throne I've got Circle they uh they announced that they terminated their business proposition with Concord Acquisitions Corporation to take the company public via SPAC at least for the time being not really a huge surprise given the market conditions but you know circle is absolutely printing money they've got like 35 billion dollars of short-term treasuries and a rising interest rate environment they're just they're printing they're they're making like 275 million dollars a quarter or something like that a little bit over a billion dollars annualized and stable coins is one of those things that continues to gain adoption and the amount of reserves that they're going to have is going to

continue to grow more than likely because it really is one of crypto's killer use cases so uh yeah pretty easy cool thrown with with circle yeah one interesting thing for me here is you know the ever circulating tether fund is that it's not backed one to one um and a lot of that stemmed from those low rate environments where you know they had all these deposits they were holding and you know naturally you'd be wanting to try to generate a return off the dollars you're holding uh in in exchange for these usdt tokens um and with this Rising interest rate environment you see like someone like Circle uh who has you know always been a little more transparent into their their Holdings that back their usdc token and

there you can see now the the amount of Revenue that they're generating in this Rising interest rate environment it creates like an incentive to actually be backing uh your your token with one-to-one deposits held in you know the most what's perceived as the most uh risk-free asset or U.S treasuries um so it kind of like is I think it's a net positive for the ecosystem that we're kind of like trending in this direction and you know with the uh continued battle at tethers Peg you know it's good to see uh that you know it probably is a little healthier than everyone seems to think it's kind of crazy to see that you know maker Dow is getting one and a half percent APR on their usdc custodying it with coinbase and meanwhile usdc is

getting something like two and a half or two point six percent APR um and that's not even across all their funds obviously they need to keep a huge portion of their phones liquid so that people can redeem their usdc back to back to USD but uh yeah I just think it's kind of crazy to see that disparity between D5 and C5 another cool Throne we're seeing this week is definitely chain link over the past like 30 days it's been doing really well I think it's up like 30 off the bottom and this is because of chain link staking which starts on I think December 6th for Early Access and then it opens to the public December 8th and this is a pretty significant advancement in chain link being that it's so important to crypto

and D5 overall like chain link kind of runs the entire crypto ecosystem and you know keeping track of prices and helping with liquidations Etc so I I think it's a really good a good month for link holders who have been loyal since day one um I I really like the idea of chain link starting to actually benefit a lot more from how much the crypto ecosystem depends on it yeah strong agree there I think this is like pretty huge for the link Marines and and like you said they've been super loyal for for years literally since the very beginning I also saw that they have like a build program where basically projects that are just starting to bootstrap and maybe

can't afford their services they're able to kind of make a long-term service agreement in exchange for node operators providing these Oracle services in exchange for future protocol revenue or even native token payment so I thought that was kind of neat I guess the the one rebuttal I have is just things like eigenlayer where you're you know introducing re-staking staked eth I feel like that makes a lot more sense events for something like a chain link just because I mean one eth is worth more but two it's you know powering the ecosystem so I just feel like there's better Synergy there but maybe I'm not exactly sure on the design of eigenler but maybe it's possible to have like a two token staking model where you could have link

and eth securing securing chain like but that'll be something I'm watching going forward yeah people sometimes forget just how important chain link is dydx GMX so many protocols makered out a lot of these protocols cannot function without having chain link you know having a proper mechanism for working correctly and it's uh it's just super important so it's good to see them decentralizing and kind of maybe even moving away from the link Marine Meme and like they were the biggest probably the biggest winner of D5 summer 2020 so it's nice to see you know actual value curl fundamental Technology Building uh kind of what it's in my opinion a little better than the memes that we saw for the last few years one thing I was thinking about and this

is like totally on the the far end of the spectrum for like speculation but how they had like the uh the partner programs it looks like what would be really cool is if someone built like a bribes model on link staking so like you you stake your link with you know in favor of this project or you help them bootstrap something it'd be really cool if you had like this whole bribe UI set up and everyone could keep track of like what tokens they're getting airdropped that's super interesting I can I know you've been digging into the uh the aura and balancer combo so that that's funny you bring that up but yeah I know that that makes a ton of sense and you know

we kind of see the shift towards making your token more valuable which is something I think we're all a little bit excited about and getting away from these more useless tokens um so yeah even in the even in the depths uh of what was you know a busy week it's things are still come come down a little bit but there's still a lot going on and that's the beauty of crypto even when you expect it to be a boring week it never never does that for you um and actually last week we saw the across Bridge have their their token airdrop so sponsored by flip side here we have a nice little dashboard built to kind of review exactly what it was that that went down and leading into this this token airdrop and then additionally kind of how we've seen Bridge volumes

change in that light and so if we look at these two charts here and I'm mostly focused on the charts on the left and for the listeners rather than the viewers we have a comparison between hop synapse and across Bridges and you can see the total value bridged in dollars as well as the number of bridging transactions and so if we look at this chart on the bottom here the number of bridging transactions you'll see starting in about early October mid-october we see a huge uptick in a cross-bridge transactions uh yet not a massive volume uptick in dollars so that's generally a good sign that users are like sibling transactions in order to simulate usage of the bridge in in hunting an airdrop and then following

the airdrop in early November uh mid-november you see that that's significantly dropped off in the number of transactions and and volume has kind of tapered off as well so you know it is interesting to kind of see that Dynamic play out and if we look at the actual airdrop itself interestingly enough only about four and a half percent of the ACX airdrop has been claimed um and of that claimed portion it looks like about 36 percent of claimers are still holding their tokens um so a pretty high percentage of uh airdrop recipients or claimers are have dumped their token but only a small number has actually claimed that token and they did a pretty interesting

airdrop mechanism where they actually airdropped You LP tokens and Pebbles I know you uh you were recipient recipient of this I'm curious how your experience went with this yeah it was the worst air dropped experience I've ever had it took me like an hour to figure it out and I had to ask so many people and like across all my chats everyone's like how the hell do I claim this so it was just a ton of work you had to like claim it on a cross then you had to unstake it on a cross because it was in some balancer pool and then I think he had to do like a third transaction somewhere else to like withdraw it from balancer and then you could finally sell it and I mean by the time that happened

you know it's already it's down 50 from when you actually claimed it um I also just think Bridge tokens are like not a good value investment at all because you know Bridge tokens they they represent governance and like cool maybe they can represent fee share in the future but the reality of bridges is everyone wants to be the fastest bridge and everyone wants to have the lowest fee so it's it's kind of a race to the bottom for any Bridge token because they're just going to try to be the cheapest and that means no Revenue to token holders like I don't even know if you're a seed

investor how you actually benefit from investing in any of this yeah this takes me back to my point with eigenlayer too like in terms of infrastructure I just feel like it makes so much more sense to use something like eigenlayer instead of having your own native token but then again that's kind of where the incentives come into play everyone wants to launch their own token and make some money off of what they're building so I guess uh it's no surprise that a cross launched their own token I gotta disagree with the not liking Bridge tokens obviously my opinion but like we've seen synapse make I think something like 18 19 million dollars in protocol Revenue over the last year um don't quote me on that maybe it's more like 16 17 whatever somewhere in that range that's a lot of money in protocol revenue and although the token

has no actual value crew today I think as we see cross-chain narrative um I guess sorry I'm gonna take it back the multi-chain narrative continued to gain momentum that these Bridge tokens as they continue maybe like in the future give real yield back to the Token holders or something like that that they could actually be solid uh a solid place to keep an eye on yeah and you know as a Thor chain bull I'm really excited about the uh the economic design that that team kind of used their token and and how they use it within the economic design and it really plays into uh the security mechanism as well in the proof of bond consensus um people's I saw you laugh and you've heard me say that's just way too many times but um yeah no I guess that just goes back

to kind of what we were talking about with link right like useless tokens I think are going to become quickly outdated um but yeah no that's a good point on the race at the bottom on zero fees as well yeah as we uh transition over to the interview I wanted to take a second to thank our wonderful sponsor chain analysis they're one of the leading crypto analytics providers and are helping bring the tools we need to legitimize our industry they enable investors to track funds on chain with ease and they also offer some awesome research that's available for free on their website we can link that in the show notes they also offer some really cool courses that go really deep into all things crypto and it's definitely worth checking out chain analysis is building the tools that our industry needs so be sure to look at them in the

show notes and as always a special shout out to Flipside who has the most comprehensive on-chain data that really gets the gives you the ability to kind of dive in and work smarter you know the ability to instantly query data for free of course and browse some of these Elite dashboards built by their team a special shout out to Misa ghlb who actually built the across dashboard we were looking at today and you know if getting into dashboarding is something you want to do be sure to check out our show notes because flip side has a special Bounty posted to earn up to 75 dollars in usdc so check out the show notes we'll have that listed there and without further Ado we'll jump straight into the interview with Matt and uh Ryan from

bitwise alrighty we're here with Ryan and Matt from bitwise we're really excited to have them on the the podcast have a conversation we've talked a couple times on uh off the Record so it's it's nice to get a recording here uh thanks for joining us guys thanks for having us we're excited to be here yep happy to be here all right now the question everyone is talking about FTX Alameda what'd you guys take on the whole situation you guys kind of come from a more unique perspective in the in the crypto landscape so I'm sure people would love to hear your thoughts there Matt I can add it to you first sure Sam I mean I'm exhausted by the situation I think most of us are exhausted by the situation I feel like uh this guy stole like six to 12 months of my life uh uh and I I you

know I come off much better than than other people who we stole money from I think it's a classic uh fraud I know we've been listening to him explain himself away and tried to position it as sort of uh incredible mismanagement uh because that's a a lighter issue but I think if you abstract back he ran an exchange people trust him with his money instead of honoring that trust he took that and gave it to an Affiliated hedge fund that then made terrible bets and lost it all I think it's important to keep the big picture perspective from it in terms of what it means for crypto there are a lot of histrionic takes out there that it's the end of crypto that he'll set it back for decades crypto's only been around for like a decade so that's quite a statement to make I think

it's a six to nine month setback it's definitely objectively bad in the short term I think it'll lead to some cleanup and lead to some regulation that will be positive but it's definitely temporary it doesn't change anything fundamental about most crypto assets I think you could argue it raises some existential questions around Solana that's an interesting thing to debate but for Bitcoin ethereum Cosmos you know the D5 sector it's a blip and will recover but it is an annoying blip uh and a painful blip and one that will be will be dealing with for a while still I think I think one thing that happens in crypto if you look over multiple Cycles is we get these huge bull periods and then we get over our skis and then we don't make

the same mistake twice so like 2011 to 2013 huge bull run up then Mount gox collapsed and we built institutional quality custodians 2015 to 2017 ethereum and a huge run up and then fraudulent icos and then we pivoted away from that after the reset and built real applications defy nft stable coins right this was a huge uh huge bull period where we got into lending and we raised enormous Venture Capital we're going to Pivot from that and have better uh better centralized exchanges better decentralized exchanges and less excess in terms of lending and activity I think you know we do seem as an industry even if it's slower than we wish to learn

from the past issues I think that's what I see when I look at those pullbacks and I think we'll learn from this one as as Ryan was pointing out yeah I strongly agree with all that and this feels like something that's like you know a pain in our side now but in in the end it'll end up being this like healthy um trimming of the fat if you will and we can move on from here and I feel like that's you know I feel like a lot of the people who pay true attention to what's going on in these markets and what's going on in defy kind of like lean towards feeling that way but I'm curious how do people like traditional Finance folks how do they see something like this and you know are they like a little more accustomed to this happening you know we've seen like an MF Global

before we've seen a Bernie Madoff is this something that they can kind of like grasp and understand a little a little easier than something like a say a Terra Luna unwind where you know someone says there was a 40 billion unwind and you know it's pretty hard for them to grasp the concept of like an algorithm algorithmic stable coin just right out of the gates right it's so true it's so funny that you mentioned that because for crypto Twitter this is like this existential blow up we're having trouble reconciling this person that we put on a pedestal with the reality and we're all feeling let down and like why didn't we diligence it when we talk to Financial Advisors and family offices they're like yeah this this 29 year old was running an offshore Exchange in the Bahamas with a hedge fund right next to it like we've

seen the story a million times before of course he's just a fraud of course he blew up it's Bernie Madoff it's John Corzine um they've been faster from my perspective to to contextualize what it really is which is just a fraud it points out things we need to correct to the crypto ecosystem but they didn't have this sort of existential woe is me that I saw on crypto Twitter uh and it's been funny to to see that that doesn't mean they don't want to see it cleaned up they don't worry about contagion they're intelligent but they're they put it more in the Box of what it is which is um which is fraud and as you as you said then they've seen that before in traditional markets so they know that it

doesn't mean the end of stocks or the end of options and in this case it doesn't mean the end of crypto yeah I thought there was an interesting Nuance from my personal life over the Thanksgiving holiday where uh I had the experience like I think we all anticipated that there would be a lot of talk about the FTX uh and everything going on uh since it was being covered so much by the media and because I don't know generally uh when I when we go home for these type of events I think the non-crypto enthusiasts are skeptical of crypto and and often those in the industry find themselves kind of you know back against the fence um I thought it was really interesting however in some of the conversations I had with friends and family who aren't in the space full-time like we are or

maybe aren't even in traditional Finance um like the financial advisors and investors like Matt was just talking about and they seem to understand pretty quickly that this was just your typical kind of financial fraud or um you know they can relate it more to the Bernie Madoff into the those types of like fraudulent events and can understand that quicker then I feel like they've been able to with some of these other elements like three AC blow ups and all that even though ultimately we are kind of talking about the same thing when we look at 3ac and the implosion of those funds and then the ongoing contagion that ultimately you know probably led to FTX in the implosion here and so I just thought it was interesting that this

even though uh this was a huge company the way that it happened and um it happened so quickly that I think the mains that the traditional public is is following along with that line of thought which is great yeah strong agree there it's unfortunate that they had like such a prominent like brand in terms of advertisements and everything like that because everyone knows about it but strong agree with you there Ryan and Matt like it could have been a lot worse from the perspective of the Thanksgiving conversations where people actually seem to understand it a little bit more than I would have guessed uh going into it but in the same vein you know you can talk about how people from traditional Finance or maybe even just average you know people who are observing the industry are looking

at it but how do you feel Regulators are looking at this do you think this is kind of opening the door for uh kind of blanket regulation where they bundle up defy and C5 together or do you think they're like okay let's get centralized exchanges you know regulated and properly monitored before we dive into the D5 space oh wow what a great question I I think um I think the first thing you're going to see in regulation is regulation around stable coins uh stable coins are like this third rail regulatory Topic in Washington uh because there's so much like money market funds and there's been so much historical regulation and worry about money market funds and their intersection with the 2008 crisis that I think that train was already moving

pre-fdx and I think that'll be the first thing that happens I don't I don't know that we're going to get sort of an Omnibus tan crypto regulation I'd love to know what Ryan thinks I suspect they'll chop it up and try to figure out something for spot crypto exchanges add the D5 stuff I think will be harder uh that's a harder regulatory nut to solve I don't even know um at a nuanced level all the the ways I feel about the different regulatory challenges in the D5 Market but I think it's pretty clear some of the steps we can take on centralized exchanges to improve things segregating customer assets from exchange assets um you know more traditional broker

dealer stuff being more clear about what's a security and what's a commodity I think those are things we can work through I think the D5 stuff will take longer but I don't know what Ryan thinks he's maybe more of an expert here than I am I agree that yeah no I agree with your take on that Matt I think really Regulators are in the same boat as Venture capitalists that we're kind of talking about earlier where they they were getting really comfortable a lot more comfortable with crypto and and um allocating you know resources to crypto or even uh even associating their their brand if you will like with crypto and so obviously we saw that with with a lot of um you know well-known regulators and lawmakers uh having meetings with with SPF and the

FTX team and so I do think that this is like a this is unfortunately like a two steps back one step forward for regulation because there's not like the the uh the lack of risk associated with with embracing crypto as a regulator because you would have the evangelists of the community uh the crypto community and you know all the capital that is in crypto kind of behind supporting your cause I think that is now overshadowed by uh the negativity that they're going to face and the backlash that they're facing with um with the FTX and that's the F debacle right I mean FTX wasn't a uh a us-based company and so there is the whole debate around like what could U.S regulations

have done here to to help or to stop it but I think what it shows is that without proper regulations and without the clarity that like we have all been asking for for uh for a long time that it's letting these Bad actors find their way into the industry and actually flourish in a very very uh negative way and so um I do think that I was I was pretty bullish on the regulatory environment I would say a month ago uh with I was I was looking forward to the midterm terms in for uh politicians to embrace crypto and I definitely don't feel as excited about it now and I'm worried that um it's actually swung in the other direction where now the support goes for those politicians and regulators and lawmakers that are anti-crypto and so

that's where I think the two steps back kind of kind of uh comes comes in yeah I feel like the elephant in the room too is like the still unfolding situation with Genesis and dcg I feel like people were starting to think maybe we're out of the doghouse there and it's not as bad as we thought but now more information came out today saying you know maybe it's not as good as we thought so do you guys have any insight into that perspective and and what kind of backlash would happen there if they did blow up yeah uh I mean I would start by saying the framing is correct because the the way these uh contagions happen is it doesn't matter if the next Domino is smaller right if some third rate exchange buckles tomorrow or some lending platform that we've never heard of buckles tomorrow that doesn't matter

at all it only matters if the if the next Domino is bigger and that's why people are so focused on on Genesis and dcg it's one of the few other dominoes That Could Fall it's like them binance tether then you're out right that's all you have um uh you know I it it I think it's hard it's hard from an outsider to say that they're uh what What's exactly is going to happen in this space what is clear is they have an extremely valuable Core Business right we do know that uh grayscale which is a you know a friendly competitor to bitwise um is a legitimate business and we can all model their revenues because we know what assets they have and we know what

they're earning and that's not that's not going away and that will help cushion any blow um I think they'd have to have made a series of incredible missteps to really get to the point where there's more than like a haircut that we're talking about and I think a haircut is something that crypto can handle um but I don't have any special Insight maybe Ryan has has greater depth um I don't think we're going to see the sort of catastrophic failure there that we saw in FTX or that continues this Domino contagion yeah the contagion story I feel like is kind of calmed down a bit over the past few weeks I it was really interesting this time around uh this time around being like this the second crypto credit crisis that we have faced this year

um where if you look back at 3ac and Luna um in the events that happened there there was like many weeks following the actual uh implosion of those funds before the contagion was fully kind of known and obviously it actually was months until it was fully known because here we are today uh still kind of reeling from the effects of it and so I I thought it was a little strange that um a lot of a lot of the conversation I was I was seeing and and hearing from people was that they thought that the damage was done kind of on you know Day Day Zero or day one or two of of the FTX implosion that would have been I think two to three weeks ago at this point um and it just doesn't a doesn't make

sense because because traditional markets don't unwind at the same speed that crypto markets unwind and so um yes the on-chain the the on chain impact could be felt right away but clearly there's so much going on opting that um that it would likely take a long time for that all to be shaken out so all that to say I guess um here we are a few weeks later and I do feel like a lot of the contagion has story has kind of calmed down and people are are less uh concerned or maybe think it's it's priced in but that's where I start to get weary again and like you were saying with new news coming out I mean um Matt and I were talking about this where everywhere there's been smoke these past few weeks like there has been fire and uh so while yeah Genesis is a

very strong business Galaxy uh is a very profitable business uh with strong cash flows um there's clearly been some Black Swan events uh or or what what however you want to categorize it here and I am a little bit concerned that we haven't seen the end of it yeah I I think that's a reasonable concern you know there are other places that I might raise more like I would think I would be thinking about tether I would be thinking about Finance if I had to go into my dark conspiracy whole Theory uh centralized offshore entities haven't fared particularly well in the Fallout of this but um yeah I think a lot of it is also already priced into the market uh so so um I you know we'll see how it goes yeah and so if we kind of pivot into kind of

like what's left from here and uh you know one of those onshore and regulated entities is coinbase who finds themselves in a pretty exciting position right so with FTX out of the picture that kind of leaves binance in in coinbase floating towards the top of that centralized exchange list and coinbase finds itself with a pretty good relationship with circle and usdc continues to be pushing up the uh the market cap rankings with usdc and so you know Matt you put out a pretty good tweet a while ago kind of look take a look at a coinbase's business model and whether or not you know how tied they are to the commissions that they generate on their on their platform uh so I'd love for you to kind of dive into that that thesis you have around coinbase yeah I think it's one of the most phenomenal

companies in the US and the fact that it's so aggressively on sale right now is is enormously interesting um the point I was making you know Charles Schwab obviously a dominant broker in the U.S launched this business in the 70s by offering discounted transaction fees and one of the classic criticisms of Charles Schwab at the time was that those fees were going to go to zero and so your margins are going to go to zero and your business will be worth nothing but if you look at the evolution of their business over time they've always been able to extract about 30 basis points of all client assets point three percent but the way they've done it has varied at first it was through commissions and then it was through having money market accounts that they

paid sub National interest rates but they force customers into them and then it was launching their own ETFs and then it was charging other companies to sell mutual funds to Schwab customers the point is if you have a bunch of people with money who've entrusted your organization to hold that money you can find ways to monetize that besides the most basic way of engaging in transactions that's just a way of bringing people onto the platform and if you look at coinbase that's the same criticism People level either their fees are too high and they're going to come down or uniswap is going to eat their lunch right those are like the two criticisms for people who assume crypto will persist but if I look at it

I look at their user counts which have just gone uh you know amazingly upward if you look back at this time in the past cycle there were maybe 20 million accounts now they're 100 million if you look at their assets on platform how many assets are on the platform that has been nowhere but up and to the right and then the point I was making on this blog is you're already starting to see it they're having huge growth in their subscription and services business uh even as their Core transactional Business sort of Treads sideways what are they doing they're doing things like staking they're doing things um uh with with actions around crypto assets uh and they're able to charge a higher fee from that I think I think

it's the most important Exchange in the world I think it has the largest assets on platform if you look at all the proof of reserves that have come up coinbase has more assets on platform than any other entity in the world and I think holding that customer base is just enormously valuable over time so you know know you could tell me that the transaction fee on coinbase is going to go to zero and I would still be bullish on their business because I think they will find ways through staking through lending through margin deals through allowing companies to sell their funds on their platform to expanding into nfts to doing other things to monetize those users and I think people are looking at the wrong metrics uh if they're looking at short-term revenues and transaction

costs if you can't tell we love data here at block reach research and chain analysis the leading blockchain analytics company shares this passion with us we use data to extract Alpha and find the next thing coming in defy but chain houses is doing the gritty work and building trust in blockchains to onboard the next trillion dollars of capital into the industry we need to grow safe consumer access to cryptocurrency and promote more Financial Freedom with less risk chain analysis has some of the most comprehensive and reliable data in the space and they use this data to power a full Suite of their solutions that can be utilized by industry professionals Best in Class training and certifications are also led by Chain Alice's and some of the brightest Minds in the space if you haven't heard of chain analysis you gotta check them out and we'll link to them in the show notes

yeah Ryan is the more D5 focused guy I'm curious do you think like a revenue Avenue for coinbase would kind of be you know being the front end for retail users for D5 potentially I know they have their coinbase wallet extension and a lot of people like that at least friends that I have who are just kind of like dipping their toes in the water how do you view that yeah I agree I think coinbase has a really compelling offering as as like a non you know in the weeds kind of um crypto Savvy person who who doesn't want to necessarily uh have to I don't know like deal with metamask and a ledger and all that stuff like every time they make a transaction uh coinbase the app is a is a great place to go you obviously have a lot of restrictions on

what you can do compared to if you were just self-custing your own assets but I think the trade-off there um with the ease of ease of use and with being able to detect your bank account like seamlessly and honestly the comfortability of a us-based company um I think gives a lot of users users uh more Comfort than than doing what we all do which is plug that you know flash drive into our computer and and uh toggle toggle transactions on and off and so uh so yeah I I like coinbase a lot I think that it's likely that many that that users are already accessing D5 through coinbase um in the sense that uh I wouldn't be surprised if if coinbase to a certain extent it's like routing trades through

um through decentralized exchanges to get better pricing on certain assets where there might be like more liquidity than on the coinbase exchange uh and you know with their earned programs it's likely they're doing something something similar uh allocating you know funds to D5 and earning some yield there so I do think that that more and more uh we'll see coinbase being a front end to D5 I think it's really cool that they also offer these other like uh uh kind of web3 native features like they're trying to build a decentralized app store and they they offer you know coinbase wallet which someone could use to go access uniswap and like avoid using the coinbase platform if they wanted to uh but I just think that goes to show that coinbase seems to be a positive actor in

the space right they've always kind of um been pushing for the the greater good of the industry and uh it's not a surprise that many people are are finding themselves on coinbase um especially with everything going on with with fgx with Gemini uh and across industry but yeah just just just enormous just to put I'll just add the growth there is just phenomenal uh which people Overlook if you look back to the previous cycle they've 10xed monthly transacting users versus where they were in 2018 they've 10x assets on platform verified users have 5xed uh this is enormous growth engine and as

Ryan said they're leaning into straddling that line between C5 and D5 um yeah in in in crisis bear markets you always throw the baby out with the bathwater and a thing investors can do is try to figure out what the baby is and then hold on to that dearly and I think this is one of those examples uh where you have that kind of opportunity right on yeah it's it's hard to hard to argue anything else than their reputation only strengthening over the last couple weeks and I think Brian Armstrong has done a pretty pretty good job kind of being in the media and putting some positive statements out and kind of just like reinforcing uh you know where this industry is and I'm still definitely bullish on the idea of centralized custodians uh kind of being that intermediary for users I mean in the long run I just think it's too too

complicated for the average person to come come in and custody their own assets and maybe that needs to improve as well but if we let's take a look at kind of more of like what bitwise itself is doing right you know been one of the the leading and fastest growing asset managers I have a series of publicly traded uh funds as well as some private funds as well you know I'd love to kind of think about you know what when you know when you're building one of these new funds like what are your what's your thought process for how you create this fund and how do you include certain assets in it and maybe it'll be better if we like dove into a specific fund right so and I think bitw is uh the bitwise 10 crypto index fund and I love to kind of hear your take on how you

thought about going around building that portfolio yeah absolutely appreciate that yeah bitw it holds 10 the 10 largest assets but not actually uh if you went to coinmarketcap.com and looked at their list we'd be at asset 21. you know what we are trying to build there was a product that served a role for people who aren't you know all in on crypto all the time which is how do I make one investment and ensure that if crypto does well over 10 years I'll be allocated to the most successful assets right not pick Solana or pick ethereum or pick Bitcoin that have broad-based exposure so we built this index that's Diversified it rebalances every month so as new assets emerge they enter the

index you gain exposure to Cosmos you lose exposure to EOS as those those shifts happen and that's a beautiful thing and then what we're really proud of is we built in these screens because this is a frontier emerging market and the goal is to screen out assets that have significant hidden risks so an example of an asset that we screened out was Luna another example of an asset that we screened out was ftt both of these were top 10 assets at one point in time but they didn't make it into the index and so we have about seven screens uh that we use the the biggest ones we screened for assets that we think might be found uh of having undue risk of being in violation of federal Securities

laws so being on the wrong side of the line that keeps a lot of assets out we also look at the fundamental token economic design of a given asset that's what kept Luna out and then we look at things like liquidity and and supported U.S custodians we're really conservative crypto asset manager which is really annoying during Raging Bull markets uh but feels good at times like this because we have avoided some of those blow-ups that doesn't mean we'll avoid them all in the future but it's nice that we sidestepped you know those two uh among others that we've we we don't allocate to and we continue not to lk2 and happy to talk about those if there's interest yeah that's super impressive that's like

something you can definitely hang your hat on in light of everything that we literally just talked about um Ryan I'm curious what's a day in your life a bit wise like what do you do in helping there yeah you know [Applause] you're a bit Wise It's [Music] we spend a lot of our time focusing on education uh and and that's both internal education with making sure that uh our sales and investor relations team and kind of the you know the companies up to date on everything going on in the crypto markets and uh the regulatory front the the macro uh economy yeah and the crypto economy specifically um and then we also spend a lot of time either writing and producing content

like for our customers which are the financial advisors hedge fund managers Ria uh you know investment professionals and that can be that could be anything from like how to defy or or how what is decentralized finance for institutional investors or um how to think about nfts as an asset class so really kind of um one-on-one level education a lot of times and then we go on and have conversations with with those advisors and with the uh the money managers and I I really enjoy doing that um because you kind of you get to see where the uh we're kind of like the the broader Financial uh industry is on adopting crypto because most of at this rate like most of my friends are either

Die Hard into crypto and that's all we talk about like when we hang out or they're so tired of me talking about crypto and they don't care about it at all that like it's it's just they don't want to hear about it and so it's really interesting to actually be able to see um and hear the conversations and the questions that were being asked and honestly there's some times where the financial advisors are so deep down into the weeds of crypto they're talking about you know some some token that like none of us have ever heard of or something and it's you do Wonder like where did they where did they even come across that one um but yeah we spend a lot of time just kind of bridging that Gap uh and so obviously education is probably the biggest thing we do um like it's an

internal and external and then we do a lot of research on um on product and and kind of product strategy and just the space the space in general and I focus specifically on D5 uh but yeah we cover we cover everything like I said nfts Bitcoin uh emerging l1s l2s so it really is different day-to-day but uh it's been really fun you know growing with the company for the past year and a half uh and as the industry kind of grows and builds these new sectors out we get to kind of follow it yeah that's uh it's painfully relatable on your friends either loving or hating crypto and uh whether or not they're tired of hearing you talk about it there's no doubt about that uh but I'm curious as the uh that cohort of clients that you have right has their interests

or their needs like have you seen a shift in that over maybe the last six to 12 months at all or is it kind of you know been a consistent interest in like maybe the larger assets like the Bitcoin in ethereums out there yeah great question I'd say first you know one thing that's been really true over the last 12 months is that category is growing rapidly so our number of clients our client Kyle doubled over the last 12 months and we've been around for five years so you can contextualize the size of that growth we added as many customers in the last 12 months as we did in the first four years as a company um so that's that's a big piece in terms of their interest I don't know what Ryan would say the biggest shift from my perspective has been moving from Bitcoin

only to bitcoin and eth uh they're very interested in ethereum many financial advisors family offices are more interested in ethereum than they are in Bitcoin it's even become cool in that segment to sort of scoff at Bitcoin uh and talk about why you love eth I do think they've started to move down the Spectrum there's more interest in uh Layer Two Solutions I think that's a that's a space that resonates with folks um and there's a fair amount of interest in D5 because they know the financial services face pretty well so stories like uniswap and Ave uh really really connect with those folks on the flip side of the spectrum there's very little interest in nfts uh I think it's fair to

say um and it's hard for them to get Beyond one or two layer ones uh it's hard to get them interested in in the fourth or fifth layer one but it's hard to get me that interested in the fourth or fifth layer one so we're not we're not that far apart I I was I was gonna say it's tough to know where that breakdown occurs like whether it's a um understanding the different applications that all these different blockchains could have in their different trade-offs or if it's just getting over the hump of of of understanding with blockchain and technology and the Innovations they can offer and then not wanting to tackle that next time like oh there's now which one do I do I like choose and which one do I spend my time diving into and um that that's kind of I think why

bitwise is great in the sense that we can help advisors uh understand where the Market's headed um generally and we don't generally pick specific assets and we can kind of help them understand like the trends yes scaling is a big Trend that's why we're seeing polygon in arbitrum and optimism and Layer Two is like really emerge as part of the narrative and why we're seeing alternative layer ones Solana and Avalanche and others kind of also emerge because things cost a lot and uh on ethereum and and breaking down I think like what the difference is in these different L ones actually means to them like economically is is one way we can add value and just kind of putting in delay men's terms like layer twos are reducing uh costs and they've definitely

heard that it's really expensive to trade on ethereum or transact on ethereum so they can connects to that to that thought um well I there was one thing that I thought um I feel like I've observed over the this past cycle um or these past few months is that there's a little bit of a lag between um what everyone's excited about like in the crypto industry and then where that excitement falls in the nutritional Mark like traditional Financial participants and I don't know it's it's not like a full cycle behind but it is really interesting that when Solana and um and near and like all these these l1s over the past years were like emerging and growing really quickly like we were still working on

um or still helping understand like what is a smart contract platform and what are uh you know crypto applications built on top of blockchains and stuff and so now that that base level is kind of there I think that there's more of an appetite for other l1s but it there is just some level of um of there being a little bit like a longer lag and then staying up to speed with with the new developments just from not allocating 100 of the time to it like we do yeah I think that's that's right yeah absolutely there's definitely a learning curve with a lot of this stuff something interesting that you said Matt was that they're not interested in nfts at all because like I think it's funny because back from you know 2017 2019 it

was always like blockchain not Bitcoin implying that it was a technological innovation but Bitcoin was worthless and here it's kind of the other way around and I think it's surprising that they're not interested in it because you see like companies like Starbucks meta Etc understanding that but then you know traditional Financial investors maybe maybe not so much but uh anyways uh on another another point I'm curious is is your guys's basket of assets backed by custody funds and if so where are they custied it at and then on top of that do you guys partake in the governance process in any of the you know assets that you're invested in oh that's that's a great question uh all of our assets are custody the third party

institutional qualified custodians so the bitwise 10 bitw is custody with coinbase institutional our our D5 fund is custody at Anchorage our Bitcoin fund is custody at Fidelity and we do that for security we don't lend our assets uh we don't uh we don't stake the majority of our or any of our assets at this point um because there's added risk on there so we just take assets and and stick them in rides be close to governance so I'll let him uh I'll let him jump in on the government's front sure we definitely would love to participate in governance I think uh Matt spoke a little bit earlier is that we're very conservative uh asset manager and with

that come comes the fact that we only work with certain uh partners and those Partners uh that we use for for custody like Anchorage and uh coinbase and such like have to be able to support participating in governance while still safely and securely storing those assets in Cold Storage so there's a Nuance there like technologically that's still being worked through it's definitely possible for a handful of assets and obviously the way things are built in crypto like once they figure it out for one governance structure they can expand that to the other assets they support that share that governance structure um but but so we are looking at it and like interested in doing it definitely

with the D5 fund as you can imagine even with with uniswap being in the bitwise 10 we do um we do you know accumulate a lot of these governance tokens one way or another um in our different funds and so there is somewhat of like a of a duty to the industry at some point right to to participate and in governance and I think we're all like bought into web 3 at bitwise in in crypto and so we I know I I feel the want and desire to do that um but there's just a little bit of of not being able to quite yet in a way that that still is appropriately safe and secure um but I think you know we we could eventually get there uh and and I'm excited about being able to you know

contribute and participate kind of on the ground level um I know at a personal level I'm like on those forums and in there and stuff so I'm excited for when we turn that corner um and are able to to do it yeah absolutely that's uh that's you know it makes a lot of sense and even on the uni swap uh point you know I was looking at your D5 fund and noticed it was a about 56 or so percent of the overall fund and I'm curious is that uh mostly related to like a market cap waiting or does that come down to just like expressing it a more of a view on how you feel about these assets it's it's a market cap uh weighted index so um all of our indexes our market cap weighted indexes uh uh today that that we um support Matt correct me from wrong

there but at least with the the D5 fund uh yeah it's based on the market cap we don't have any caps either a lot of in indexes could have caps on how much could be allocated to a certain holding but we generally don't cap it that we have our methodology that Matt talked about and if an asset passes the various elements of the methodology uh its percentage of the top ten from like a market cap perspective really dictates it it's holding and then we rebalance and reconstitute on a monthly basis for any changes um but it's still based on a market cap weighted approach although it's also true that we we or at least I love uniswap a big fan so I'm happy that it has a significant weight yeah and you

guys are diversifying your custody risk that's so responsible for crypto what is what are you guys doing there that's yeah that's great to hear um I think it's fair to say that on the research team over at blockworks we're like kind of we're pretty bullish on the ethereum ecosystem and the cosmos ecosystems like those two just like structurally seem to have two like pretty good road maps um so I'm curious to hear you guys thoughts on on how that's playing out and where you think this this space looks like and whether it's an e-dominated feature a multi-chain future a bunch of app specific chains just love to get your thesis oh I love it Ryan you go first cool um I so I think I I definitely came into the crypto ecosystem from like in ethereum uh

I don't say maximus like ethereum was kind of like the the blockchain that I like learned about and then became really interested in crypto so I think um there is an element that's hard to to shake uh where the bias would be that that most things should consolidate back to ethereum uh I will say that I was widening my view that we would have like a mini multi-chain world and um during the the bull run but I think it's rather obvious now in hindsight that that um there's not that that users and capital don't really want to aggregate across a different a bunch of different layer ones and and app chains like it's not a great user experience and we're seeing that with like the lack of security and bridges

and having to take on risk just slowly moving from blockchain to blockchain or take on risks if you were using one app chain and going to to a different one and so I think that uh users aren't are are really not gonna like prefer that in the long run and would rather just stay in one ecosystem where um you don't have to bridge assets you know from from A to B or from App a to app B so I definitely think there's gonna be a a few chains but likely ethereum would be the largest um definitely bullish on like l2s and scaling Solutions um I don't have a negative view of like of polygon and side chains um that that I know that some some do um so I'm generally bullish on just the amount of developer and activity um the number of applications the amount

of capital all of those like fundamental metrics are generally accruing to ethereum uh in the in in the Bear Run mostly but also in the Bull Run we saw some big spikes so so yeah I think ethereum is probably like gonna lead the way um for it for a long time Cosmos is really interesting I mean one of the most interesting things in my opinion about Cosmos is that we had the whole Luna UST blow up which was like a cosmos um the cosmos plot like sidechain whatever you want to call it um and so it and yet Cosmos operated fine throughout the entire the entire implosion uh still does Still Still Fortune ecosystem and I think that's really really interesting um but but yeah yeah I I would just add I love

that you call those two out Sam I would call them the two most interesting things a a a mistake I see crypto investors making all the time is is to take something like ethereum and assume that something is five or ten percent better on individual technological specs will overcome ethereum's giant Network effect that's never worked in technology if you want to replace an incumbent you have to be 10x better not 10 better or you have to have a completely different technological architecture and that's been true whether you think about mobile Cloud social whatever technological Paradigm you've been at the incumbent always wins unless there's something that's radically better or radically different what's appealing about Cosmos

is it's radically different right it's a completely different architecture I think people who try to like overclock ether increase throughput by X percent I think that's largely a Fool's game but I do think those two ecosystems uh are are interesting and I also think it's early enough that even if you have high confidence that ethereum is going to be the winner it would be foolish not to diversify to some of these other interesting architectural approaches because even if you're wrong your risk adjusted return is better off because there's a chance that that is valuable too so you want some exposure there but I think those are two probably the two most interesting at the moment yeah Sam and I uh we we kind of jab

about this all uh pretty much every day to be honest uh you know he's he's definitely the eth bull in the crowd uh and and you know I I do have the same view right like it is the dominant ecosystem just as you described it has those Network effects it does have the user base it has the funds um but to me like the app chain ecosystem is super exciting because it adds another design space for developers to leverage with the validator network and I I just think that that's something we're going to see really push forward uh in the next year and I think dydx is actually going to be leading that push you know last week we talked to Antonio the founder and CEO and he kind of gave a little bit more insight into what exactly they're doing but I'm really excited to watch that kind of that

development push forward um and then you know I guess if we kind of think about the crypto landscape as a whole like do you what do you think is going to be the the next unlock that that brings in that next wave of users is it going to be something that that already exists and you know we just haven't had the time for it to draw that in or is there is a new innovation that's waiting to pull this next wave in yeah uh I think it's going to be a new innovation but I specifically think it's going to be the combination of three different things so one of those things is increases in regulation that makes it safer for more people to mainstream into it and defines more clearly the parameters in which you can play I think that's part of it the

second is throughput if you look back at what broke in 2021 a lot of people say the FED broke the market a lot of people say over leveraging broke the market but the cost to transact on eth went from dollar to two hundred dollars you can't do much when it costs 200 to do a single transaction so I think I think sort of the throughput um uh is is the second piece of that puzzle and then the third piece is new applications I don't know what those new applications will be I think D5 will grow I think stable coins will grow I think we'll get a billion nft applications but there's so much developer activity so much Venture Capital coursing through the system when you take smart money and improving regulations and improving technology you

typically get something really exciting and I think it's you know we could we could speculate but if we knew the exact app we'd go and build it um I I look more at these preconditions but the preconditions look better than they ever have in the history of crypto the preconditions today are way better than the preconditions before defy summer they're way better before you know the launch of ethereum the preconditions today are just ripe for a a Cambrian explosion of really interesting apps yeah I I think that's right um I I'm really bullish on stable coins personally I think that that the Rope how expansive the stablecoin ecosystem has gotten um and and how much liquidity we have in

the stable Point ecosystem across different stable coins it is really bullish for the space especially in the cycle that we're seeing now where like everyone has moved risk off I think in past Cycles they've moved out of the crypto ecosystem generally and so then you have this uh lag effect in the next bull run where like the capital has to move back into the ecosystem but I think today it's largely just kind of like sitting waiting on the sidelines um and I think that that's better for that moment where we do kind of turn and see the next ball cycle take off I think we'll have more of a uh of a loaded spring like ready to to release um but the actual Catalyst that I I am most bullish about for the next cycle is it

has already kind of started with nfts and and the transition of like viewing nfts um not as singular uh pieces of art that you're like speculating on the price rising and dropping right um and more of their utility and functionality um I think I think blockworks actually recently put something out that was really interesting on um Dynamic nfts like Tesla came out with this like uh concept of dynamic nfts um and where where uh if you you have a car and the metadata about the car is updated over time and a cruise nft so like the mileage the uh the maintenance the year at spot right all of that stuff kind of like a um I guess like a Kelley

Blue Book but like in a dynamic nft and you can just think about how that application like goes beyond just buying and selling profile pictures like incident like the Auto industry is is gigantic and uh to be able to start applying these these like crypto Innovations in real use cases especially with nfts but we saw Reddit with their digital Collectibles and we see Starbucks uh rolling out like nfuse of their loyalty program and then we're seeing these other use cases like um like title insurance and dynamic nfts for vehicles or real estate or what have you I think that's the type of stuff that's really going to fuel this next bull market because uh it it takes the conversation away from speculating on price and more about

um benefiting from the utility and that's for me what helped me kind of transition into fully believing in in kind of nfts and crypto and like disrupt their ecosystem and and so yeah I'm excited for the general public to make that transition I I love that can I test one other thing on top of what Ryan said because it it got me all excited the last thing I'm really excited about is that the space is just so small right now like if you remove Bitcoin the entire space is half a trillion dollars same size as Louis Vuitton the parent company of Louis Vuitton you could own all of eth and all its Alternatives and all of defy and all of stable coins or you could own a manufacturer of purses

in Champaign and I think when you think about that comparison and you think about all the things Ryan said about all these incredible things that could happen you see the scale the opportunity and you're reminded just how early it is sometimes if you're in crypto for a while you look at those numbers you're like half a trillion dollars wow that's big it's quarter the size of Microsoft and it's equivalent to lvmh I mean it's still so small and there's so many big things coming that it it gets me pretty excited yeah absolutely now you guys have already been super generous with your time so I'll only ask one more question but uh and maybe Ryan I'll ask this one to you but tokens like GMX and you know a couple other projects that return Revenue back to their token

holders have like fared really well this bear market so I'm curious if you think that's kind of where the future is headed if you think it kind of you know walks the line of security and on security if you think that's you know just your general thoughts there yeah it's definitely I think a narrative that that has been missing from a lot of D5 tokens over this last cycle like we got so caught up in the Deep by applications like Drop governance tokens and that's what gives them value that I think people um have straight away from from the general understanding that like these D5 applications are businesses like I mean their software but they're like businesses in a way right and so um it makes sense that in order for them to continue growing that they do need to

generate some kind of cash flows and that like those cash flows should either be distributed to investors uh like like a dividend or used as a buyback or used to really like invest in future growth which to me makes the most sense for these companies right now and so um I think like with the uni swap v-switch conversation kind of heating up again recently that's a great example of where uh there's a lot of value that can be captured here but until there's a way to um to turn that be Sichuan on and whether that's allocated to token holders or like used to field growth like we're not really seeing the full potential of uniswap and so I feel like that that's kind of how I feel about other tokens who are kind of embracing this like cash flow

models like that is what is needed to get D5 applications to go from a single use case or a single like protocol to um multi-vertical businesses that are growing and flourishing and sustainable in in the long run because like how else do you have a sustainable business unless you're somehow capturing part of that value and either like refueling growth either by drawing in investors or reinvesting in growth so I do I do appreciate that that narrative um and I don't think that just because you turn on like a fee switch it turns something into a security there's a lot of cash flow generating Assets in the world that aren't security so I also think that the debate of whether that specific Nuance like with unisoft for example would make

it a security uh is overblown and so um yeah it's really nuanced like space but I'm generally supportive of uh of wanting to you know turn on some kind of cash flow for token holders I think that draws in more Capital you can use that to fuel the ecosystem if it's done right I don't think it it automatically implies that the token is a security clip it that was good I love that answer yeah that was great Matt I don't know did you have any uh thoughts on that topic are you uh you ready to call it I thought he nailed it all good Brian well do you guys want to tell uh people where they can find you sure you can find bitwise at bitwiseinvestments.com or I'm on Twitter at Matt underscore Hogan

which is spelled funny it's h o u g a n yeah and I and I am uh you can find me on Twitter at rasterly Rock it's like casterly rock from Game of Thrones but with an R uh no space I also try to post a lot on LinkedIn that's like a growing kind of crypto crypto space so uh you can find me over there Ryan rasperson as well awesome well thanks so much for hopping on guys we'll uh we'll see you next time thanks for having us thanks for having us