Blockchains Are Central to the Future of Finance and Agentic AI

Transcript

[applause] >> I think it's probably best to start with a quick background on me cuz I think it's going to be relevant. So, I studied engineering at MIT and spent my first five years of career as a software engineer across Asia and the US. And back then, cross-border tech meant taking literally the hardware, the server workstation through the customs, which I had to do to do a product demo in front of SK Telecom. But then, I went to business school, switched over to the world of investment, and managed institutional capital centered around technology and emerging markets, emerging countries. And I will

often ask myself when I'm looking at a technology company, one, um, does this technology work? And relatively speaking, that question was actually easier to answer. Cuz the second question was, does this make money? Does this company make money? And often times that was much harder questions to answer cuz you're going to have to analyze the context of that technology, and competing technologies, the industry, the competitive reaction of other players, regulatory environment, geopolitics, and so on.

But if the answers to both questions were yeses, then you will have a winning formula for multiple years of outperformance from there. And I'm going to address why Ethereum's answer to both are yeses. Everyone's pretty aware that ETH price has been on this consolidation pattern for four to five years. The price has dipped a little bit, but even even then, >> [clears throat] >> it's well within that range.

And we used to have a saying that the longer the coil, the more explosive the breakouts will be. And uh hopefully we'll talk about why the breakouts will be on the on the upside. The one reason will be the Iran Iran war is ending. And the Trump administration cannot afford a prolonged war and wants a rather a quick uh >> [clears throat] >> off-ramp. And obviously um you know, there's a uh oil price that's that's high because of the uh supplies uh constraints. And if the oil prices uh reverse, um Ethereum will have a big tailwind because this now we're seeing the

highest ever inverse correlation. And obviously oil prices go up uh has a uh effect on our core CPI and CPI goes up, interest rate uh could go up and have uh negative implications on all asset prices. And the second uh is Clarity Act uh is a big deal um and you guys are probably aware of the details, but I want to mention that a lot of businesses are on the sidelines um looking to jump on after the Clar- Clarity Act passes, but not only the businesses, but a lot of countries are looking to the US for policy uh direction. As a uh EM uh fund manager for over 20 years, uh I have seen a lot

of countries, especially when they lack expertise in certain areas, look to the US uh for policy direction. The Clarity Act uh according to Polymarket is uh has about 56% chance um and I think it's actually a little bit lower today, but when you talk to the people in DC, uh this does really seem like uh understated in terms of um uh the probability. And clearly the big banks don't want these things to happen, uh but big banks don't make policies.

Our policy makers do and policy makers are elected by the people. A lot of people want this to be passed. Another point is the current administration is crypto-friendly and crypto is positive for US dollar policy. Just imagine you are in Argentina and you just spent last 10 years experiencing 74% per year inflation for 10 years and saw your bank deposits in your currency deflate by 99% in US dollar value.

Or you were in Turkey and you saw the same thing, your bank deposits by 94%. And you guys all know USD stablecoins are mostly owned outside of the US and you could imagine why that would be the case. But if this continued to happen, the central banks in those countries will uh be faced with a dilemma. Cuz in international financial realm, there's this theory called impossible trinity. Basically, you cannot achieve all three of these objectives. So one is free flow of capital, um money going in and out of your country's borders, two, fixed exchange rate, very stable currency, independent monetary policy, basically having that ability to

move your interest interest rates up or down. And you can only do two out of three. And the US of course has a floating fixed [snorts] exchange rate but have full control over the other two. So now if you have if you're seeing a mass outflow of your own currency, you're going to have to do two things. One, either you ban that, so we've seen banning of cryptocurrency activities in other countries like Egypt, or Um, you rush to launch your own stable coins, which a lot of the countries are uh queuing up to do.

And what does this mean? It means just we're going to see a lot more activity on chain, on cryptocurrencies being launched across the world. And uh from the US's perspective, uh US dominance in uh US dollar uh in in fiat world is going to extend extend into the digital world, maybe even more so. Uh fourth, uh the we have a new Fed chair and he Kevin Walsh and he's uh pro-crypto as well. And lastly, uh our demographics here in the US uh is uh positive long term. It's the upper chart is the number of Americans in the 30s and 40s and how that correlates to the US um stock market and risk assets.

So, we uh if you can you can deduce that there's still a lot of upside uh from here. So, that's uh just current quick picture of what's happening uh in the ETH market. And let's talk about uh future of money and future uh fundamentals because Elon Musk uh famously has said that it is uh mass and energy, compute and energy. And we think that Ethereum is the best implementation of that future. So, um there are a few drivers of ETH um demand going forward. So, one clear area is genetic AI and robots.

Everybody points to the ChatGPT moment as the moment for the moment for AI, but um it's not the case. Not to date myself, but when I was in college at MIT uh in the 90s, uh we had a a building called AI Lab and that AI Lab was not uh uh established in the 90s, it's not was not established in the 80s, it was founded in 1970. And even going further back, um uh uh um Marvin Minsky uh uh started this artificial intelligence project uh in 1959. So, we had over half a decade uh half of century and more of development that has uh gone on for um and at a steady pace,

but when all the um break breakout technologies converge into one moment and we can have an open AI type uh ChatGPT type moment and from there we saw a hockey stick type of uh development and progress. So, AI is getting better and better and smarter. AI is interacting with the websites. Um the robots are becoming more dextrous and um being deployed more widely. I don't know if you've heard of a dark factory out in China by a company called Xiaomi. It's famous for running 24/7 in the dark because the robots are running it with very minimal uh human uh oversight. Um and they claim that they can make produce one uh smartphone per second.

And also um AI is becoming smarter and superhuman. And if you haven't seen uh just recently there was a big uh mathematical uh breakthrough, uh 80-year-old Erdős problem that the humans couldn't solve uh has had a breakthrough uh through open AI. And not only that, uh the internet is now uh increasingly used utilized by uh AI. Um the all content, this is the chart of all the uh content is share of all the uh content that's uh created on the internet.

And AI is not just answering questions, obviously. The agents are uh doing executing things for you. You're They are scheduling uh your next meeting. Uh they're executing your programs. And also they are uh transacting on your behalf. And in that world, AI agents are going to need money, according to Marc Andreessen, and in that future, blockchains uh advantages are much more pronounced than the traditional rails in areas like authentication, data integrity, and so on and so forth.

And second, Wall Street is tokenizing. Uh we hear about this constantly, and here's a big number, $300 trillion of um assets to be tokenized and moved on chain. Uh you can see the real estate on the left, uh fixed income, equities, and go on down the the graph here. And then the very far right is the tokenized asset you can barely see uh the bar graph there. And as things move on chain, um the underlying token market cap also moves along with it. There's a debate whether that relationship should be one-to-one uh going forward, but regardless, uh as TVL goes uh multiple hundred trillion dollars, the market

token market cap is not going to stay at $200 billion. Uh Ethereum as a monetary unit, um the system won't use dollars as currency in the future. It'll just be mass and energy, uh which is compute and energy, uh and recently Standard Chartered uh put out a interesting report, and in there also described what happened to Amazon in the bubble burst of 2001, one, and how that compares to ETH the price. If you remember back then, the Amazon stock price went from $113 to $6, um but underlying business was still improving. And if you're a smart investor and held onto your stock or

invested at the time, you would have made generational type returns since then, cuz the stock uh more than a thousand times folded uh since then. Uh Ethereum is moving beyond found foundation-centric. This is uh what our executive chairman, Tom Lee, uh has presented last week. And Vitalik has said it multiple times. The role of EF uh will change and be more focused and more streamlined. Which makes sense because EF's holding of ETH uh has gone from 17% to now uh 0.1% at $2,000 for ETH.

So, it's uh it's about $200 million. And if you apply a traditional um foundation model of 5% yield, uh that's roughly about $10 million where you would spend on grant money and helping the ecosystem grow. Which is nearly not enough. >> [clears throat] >> So, when Bitmain started last year, uh EF was at 0.3%. It is now at 0.1%, but during uh the last 1 year, >> [clears throat] >> Ethereum treasuries have really increased its holdings. So, these are strategic holdings um that we don't plan to sell, and all together, we hold about 7%. At 7%, you're yielding about $500 a year.

Um So, this is the summary charts uh pre-2024, the foundation was quasi-corporational. Which uh what I what I mean is that it has done a lot of activities. So, it funded public goods uh funded a lot of uh research that were important, it provided infrastructure, it coordinated ecosystem's growth, I protected neutrality, uh and did a lot of work around bootstrapping the adoption and created network effects.

But, what as we said in 2026, uh the foundation role has evolved and will have to evolve, which makes sense. But, it will have to steward continue steward the public goods and long-term research, especially in areas like security and quantum resilience. Um it will coordinate with private sector efforts, it will develop best practices, represent the the ecosystem, and strengthen decentralization. So today, Ethereum's network value is over $200 billion and has a perfect track record of 11 years of running without one day of downtime.

It has over 11,000 nodes across 89 countries and has over 15,000 developers work developers working on it. It is simply too big to be coordinated by one single entity. But Ethereum So if you look at other sectors and how they have grown over time um you could look at mobile telecom industry, semi industry, and broadcasting industry industries. All of these consortiums over the last few decades have evolved in its roles. And for example, mobile telecom has now 1,000 members and you know, they are they operate and develop standards, they do certifications and surveys and

so on. And semiconductor industry as well, their roles have um evolved into policy advocacy and rule setting. And broadcasters is a great example because in the '80s it did a lot in the 1920s, it did a lot of bootstrapping or by itself, but now it has over 18,000 members and their their role is centered around advocacy, lobbying, education, and so on. And Ethereum's has to evolve as well. And we already have players like these private companies doing a lot of engagement work engagement work for the uh, the industry and we have um, treasury companies uh, generating

$500 million doing a lot of ecosystem boosting type work, which in turn is beneficial and um, accretive to our shareholders. So, Ethereum is in good place. Uh, EF is going to be stronger by being more focused, and we'll have more players involved in this ecosystem pushing this forward. So, now I'm going to talk a little bit about the timeline. So, during this mini crypto winter, uh, we've been doing a lot of building. First, we invested in Aiko. We actually, uh, increased our investment in Aiko just recently, and Aiko, uh, holds Worldcoin. Worldcoin is Sam Altman's uh, proof of human uh, project, and they

have recently, uh, attracted some commercial, um, a lot of commercial interests, including Reddit, uh, who's going to adopt the orb, uh, technology, as well as Zoom. And we launched Maven. Maven is the largest single staking operation in the world, not just Ethereum, but, um, across all digital assets, and we are open for business, um, and we, uh, stake about 50 uh, $14 billion, and more than $2 billion of that is our customer digital assets, including, uh, uh, hype and and SOL and and others.

We've also invested in, uh, Beast. Uh, many of you guys already know. Um, what they have recently announced was that their revenue for 2025 was nearly billion dollars and grew uh, more than 100% from the prior year, and they're, uh, guiding for another 60% plus growth. And, of course, Mr. Beast is the biggest content creator in the world, and they're interested in entering, uh, financial services for Gen Z and Gen Alpha. We believe they're uh, well positioned to be the Robin Hood of the next generation.

We up listed to New New York Stock Exchange big board. And just recently um Russell has announced that that Bitmain is on the um preliminary list to be included on their index and on June 26th. And it is actually a very big deal in the investment world because about $4 trillion of assets are benchmarked against Russell Russell which means about 1600 investment managers will have to make a decision on whether to invest in Bitmain or not.

It's kind of like being on the main menu at a restaurant versus being on the pantry in the back kitchen. >> [snorts] >> So and Bitmain is the only way for them to express exposure on Ethereum. Lastly we reached 4.6% we made a press release this morning. And we're going to take a slower pace going from here. We'll probably reach 5% sometime in the second half of this year.

And so proper that's outperform crypto underlying asset and last year we outperformed by quite a bit and this year also in the down market we are outperforming the underlying asset as well. There's a big correlation with ETH price underlying price and if our friends at Ethereum Alliance is right and it goes to 2050000 dollars there's a lot of upside in our stock. And with that I want to close my remarks and thank you very much.

>> [applause]