CLARITY, Base Vs Robinhood & Bitcoin Bottoming?

Transcript

Nothing said on ZeroX research is a recommendation to buy or sell securities or tokens. Hey y'all, welcome back to another episode of ZeroX research. Joined today by Carlos and Ryan from the Blockworks research team. How are you guys doing today? >> Doing great. Excited to join. >> Yep, same here. Super stoked to be on. >> Yes, some green on the screen and the vibes are the vibes are starting to look up and to the right. Um speaking of high vibes, want to give quick shout out to uh DAS Asia. It's going to be hosted October 7th at the Marina Bay Sands out

in Singapore. Um same time as uh Token, so you can go one, you can go to both. I know um Kunal from the research team will be in attendance there. He He showed us some tickers like Synapse at at 10 mil market cap before it went to 100 mil or so. If you want some alpha like that from Kunal, um highly recommend getting a DAS Asia ticket and uh and hit picking his brain out there. Uh Carlos or Ryan, you guys think you'll be going?

>> I mean, I'd love to go, but we'll see. >> Same. >> Yeah, uh we'll we'll see who makes the list. It's a It's a big trip out there, but um certainly worth the journey. So, talking about markets today, I guess we had a bit of movement on the Clarity Act. Um there was this provision in the bill uh related to uh ethics, called the ethics provision, that um it was probably the most debated, uh, line item in the bill.

Uh, I know some Dems basically wanted to prevent, uh, whether it's the president or elected officials from holding or profiting in certain crypto activities. Uh, the Republicans and perhaps the president we had some pushback to that. Um, but, yeah, dropped this morning, according to The Block. US President Donald Trump has agreed to an ethics provision in the Clarity Act, removing the final major hurdle advancing the crypto market structure bill towards a Senate vote. So, we kind of have a brief window here, um, or that this bill to, uh, to move to a Senate vote, um, before the recess, but

given the resolution on this particular item, it feels a little bit more likely that that it could pass. Uh, that being said, if we we look at the Poly Polymarket odds, they, uh, they really haven't budged on this news. So, while Bitcoin and and some crypto might might be rallying this morning on the back of the news, um, the probability that it actually gets passed is, uh, hasn't hasn't really changed much. I'm I'm curious, guys, what what's your read on whether or not this bill's going to pass, and then also how how important do you think it is for crypto markets into your end?

>> Yeah, I'll kick this one off, I guess. Um, I I definitely think it's the first thing I think it's interesting between the odds not increasing too much and crypto kind of rallying today. Um, to me, I think I'd rather trust the signal that crypto's sending rather than the Polymarket, um, market itself. So, perhaps there's a trade you could put on there, a spread of the two, but I would imagine there's just not much size. Um I think if it does pass, it's because at this point like I don't think too many people were pricing it in as it passing. Uh could definitely be like a short-term boost to crypto.

Um could provide a nice little end of summer rally. Personally, however, I'm actually like not too terribly bullish on like clarity act for crypto prices. Like we've never rallied in the past because of legislation and whatnot. I I don't see why this is going to be the difference maker. Like at the end of the day, um if crypto needs to be anointed by the high priest in Washington, like it's probably not that actually good of an investment. Um so yeah, I I think like maybe this can help like put in the bottom, but in terms of like if your bull case for crypto going forward from here like structurally revolves around like clarity act, I don't think that's a very like convincing bull case to like take this to new all-time highs.

>> Yeah, I I similarly I agree with most of it. I think the rally in Bitcoin over the past week has not been due to clarity. I I think Bitcoin does not need clarity to sort of perform well. Uh the signal for me is more of the rally in crypto equities uh today. More so coin up 11%, Circle up 6%. I think these are two names that clearly can benefit from clarity passing uh just because they're entrenched like the US and they do benefit from uh greater clarity uh in regards to US regulation. So, just from their reaction in Coinbase and Circle today, I would

say uh there are definitely more favorable odds today than they were yesterday uh off the act passing, but to be honest, I don't have any any edge here. So, who knows what's going to happen. What do you think Luke? >> Yeah, I I I agree with Ryan that like your bull case for an investment in in crypto shouldn't necessarily rest on the the anointment of the high priests in DC, but at the same time I feel like there there's a ceiling on on the bull case absent clarity and this bill moving towards the finish line.

Um looking at price action Bitcoin, I mean back to range highs strong off the lows and as you mentioned Carlos uh Coinbase with a bunch of green today and Circle as well. So I really think it is these these players that kind of sit at the intersection of tradfi, fintech, and crypto uh that have the most to benefit from uh the passage of this bill as opposed to like the long tail wild west of defi.

Um so all else being equal uh I I love seeing progress on this bill and um ho- hopefully we can get it over the finish line. >> Luke, can you can you pull the charts back up for a quick second? Did Securitize also move? >> Good question. Let's check out Securitize which uh which recently went public. Um perhaps it wasn't priced priced perfectly a bit big sell-off um since going public, but it is strong today uh 12% so there's some movement there.

Would you be a securitized buyer on Clarity Ryan? >> Um to be honest, I have read things that they're the spec itself like has a lot of I don't know what's the right word to call it, but there's a lot of extra shares out there that could be hitting the market. So, I haven't dug too deep on that, but in my mind Clarity does help an RWA issuer probably more than most projects. >> Yeah. >> So, potentially. Again, I have to actually like crunch their financials and like make sure there's no hidden unlocks [laughter] coming my way. Um but potentially.

Definitely potentially could be a bid. Um I I definitely agree with the thesis that like crypto equities make a lot more sense in wake of Clarity versus the long tail of the wild west of coins. So. >> But uh the cap table might be a little bun bundled with some share overhangs. >> Yes. >> Speaking of uh bundling, um perhaps we can pivot to reviewing kind of the first few weeks of data on Robinhood chain. Um unlike other chain launches over the past few years where I guess there's more interest and excitement about the

chain announcement and the chain launch day, uh Robinhood chain seems to have some solid legs beneath it. Um with with the first few weeks of of metrics coming in pretty strong. Um so, we can look at spot volume by pair category here on Blockworks Research data, and we can see, you know, e-stablecoin swaps doing the most um followed by memes in second, and uh tokenized assets are still lagging a a bit. Uh if we look at this on market share, we can see yeah, it's e-stablecoin and memes doing 97% of the volume with with

tokenized assets. Still lagging a bit. Um unsure if a meme chain was kind of in the vision of what what Robinhood chain would would host, but certainly uh the crypto natives are taking it and running with it. Um So, Ryan, you've been pretty deep looking at uh some of the dynamics and kind of the launchpad wars on Robinhood chain. So, curious what your your high-level look is um on how that landscape is evolving right now. >> Yeah, sure. So, we've finally So, I I think it helps to start with a little bit of context. So, when uh Robinhood chain first started popping off, there

was a launchpad called Noxus, which um in on team, they're typically just like a launchpad that tries to deploy first to like every chain launch. Um and because of that, like they caught fire on Robinhood chain, and they were absolutely crushing it. I think like in a week, they did like over 7 mil in revenue. So, they were doing like making a million dollars a day. Then, there was some internal team fighting. I I still don't fully know what happened there, but they shut down, more or less. [snorts] They basically like paused all new deployments. Um So, as a launchpad, that basically just kills your business. So, obviously the opportunity opened up for other launchpads to take its place, and um I pointed this out a couple days ago,

like massive opportunity if you can win this, just because This is a great dashboard by Adam. Um massive opportunity to win this, just because I I think like why meme coin activity has popped off on Robinhood so much is like Robinhood chain represents the first time that a company with a massive user outside of crypto that crypto natives also can see them getting more involved with crypto is like finally coming to us, right? Um this is different than like Coinbase launching base, right? Cuz Coinbase's user base is already in crypto.

Um obviously a significant portion of Robinhood's user base is probably also in crypto. But they're the biggest retail trading app in America. That's obviously like the golden grail of customers right there for crypto. Um so if Robinhood is successful in onboarding these people to Robinhood chain, like that's absolutely massive. So Yeah, the the the opportunity to like be the winning launchpad on Robin chain, I think is like a a nine-figure plus opportunity. And we saw quite a lot of launchpads launch, but over the past couple days we've seen some consolidation uh around Ponds.

Ponds was a fork of Noosa. So once Noosa shut down the dev forked uh Noosa, renamed it Ponds, and someone launched the Ponds token. Uh it wasn't like a planned launch, and then it got adopted as the platform token. And because of that, I I I think that's played a a huge role in its success, actually. Like conventional wisdom in the past has been like, "Oh, you don't want your launchpad to have a token because now there's like an implicit ceiling on all the tokens on the platform, right? Like if the launchpad token's 5 mil, no meme can go above that."

Um so that that was kind of the prev- prevailing logic, but what I think Ponds got correctly is that the token in of itself is a is a marketing mechanism. And like if you actually care about the token and then don't just treat it as a side show, like you can actually like cultivate a larger user base and like actually use it as the product in a sense. Um and that's exactly what they've done. So this is a completely fair launch token. There's no like VC overhang inside insider ownership. Um they're using 80% of platform revenues to buy back and burn the token. Um obviously not as good as something like hyper liquid but um they've also just started out. I think 80% is perfectly fine and actually like way above what I would probably do if I

was in their position uh cuz I'd want them to grow this, but but yeah, they they so this token is like super community aligned and from past launch pads uh aka pump a lot of the community has felt uh spurned by them, right? Like they never got the airdrop. There's no VC unlocks coming. Um the pump token kind of seems as like a second thought. Um and I guess the trenchers in Robinhood chain really like that "Hey here's a token that they care about. They care about us. Let's keep trading on that platform." And then the other aspect to it is because the trenchers have gotten so hyper rotational, so PvP, the dominant strategy has kind of become like when you see a runner, right? Like you don't top blast that runner, you go down the the ladder and like try to find

beta to it. So typically this doesn't help the main runner. Like you saw this with Cash Cat, right? Like liquidity fragments because nothing is if you're not buying Cash Cat, you're not supporting that coin. But in the case of Pons, if you're not buying a coin launched on Pons, like you're generating revenue for Pons and making its fundamental stronger. Um and then obviously last night Vlad followed the dev of Pons and the trenchers kind of took that as a signal that Pons is the winner. Um if I was a betting man, and I guess I am, I would say Pons is probably the winner. It's doing good, but um Bonk just launched their launch pad.

Like there's definitely going to be more challenges to Pons. I'm not sure I would put too much weight into him, but I imagine the market's still probably fickle just with how young Pons is and if like I I wouldn't be shocked if this scenario like last summer where Bonk fun was able to like capture a significant portion of market share from Pump Fun for like a period of time. I I don't personally think it'll be long-lasting. Like I I think as long as Pump Fun like continues with this community-first mantra and like the people's launchpad, I I I think their position's quite secure and I think people will tend to rally around them.

>> Yeah, absolutely. Uh Ryan just cooked on that one. Uh he really gave us a free 8x. Uh all in public. Uh he posted his thesis on Twitter, so no one can complain. Um I think it's interesting. Do Do you guys think that activity on Robinhood chain is cannibalistic to Solana meme coin activity or is additive in the current environment that we are in? Like I've seen Pump has performed well over the past week and over the past month, even through its first cliff of team and investor unlocks. Uh but when you look at Pump metrics, um it's not like they're down, but they're

definitely not up, right? It's the same amount of revenue, it's the same amount of volume, same amount of token launches. Uh so it does seem like for now the Robinhood chain activity has been additive rather than taking away from Pump and Solana trenches specifically, but I am curious if you think that uh we're in the current environment where Robinhood chain succeeding uh is detrimental to Solana or they can both uh have higher meme coin volumes over the past over the following months.

>> Yeah, so I think there's a couple ways this can go, right? Like the scenario where meme coins on Robin chain like actually onboards Robinhood app users, I think everyone wins, right? Um and we've seen this in the past, too, like 2024, you had meme coins on Solana, on Base, some even on Ethereum running, so in a full-blown bull bull, like there's definitely enough market participants, enough liquidity for multiple ecosystems to win. However, if like Robinhood app users are never really onboarded into the app, and like Robinhood chain just wins out because, hey maybe they're super supportive of the ecosystem, maybe they start listing

tokens, and like actually you know, have a have a uh go-to-market strategy that like revolves around catering to the degen. I I don't know how likely that is, but if they do do that, and like this turns off Robinhood app users, that could be a scenario where like Solana loses out. Um I'm not I would not put too much weight behind that vision just because Solana traders seem to be cockroaches and will survive literally anything, and they come back and keep trading. Um and there does seem to be some sort of loyalty to Solana. I I do think ultimately um so I I think the most the more likely scenario is Robinhood app like onboards users from

uh onboards users onto Robinhood chain, there's a return of the bull market, and like there's multiple winners, but I do think there is a scenario where Robinhood chain like actually steals market share from Solana. Lower probability, but still a possibility. >> Yeah, I think that's the first statement. What one thing that is interesting to me is that Robinhood chain was specifically designed for tokenized assets. Uh yet tokenized assets are currently a rounding error in terms of just the volume. It's like 0.6% or something like this. And then memes like over the past few weeks have been like 60% of volume, and then the ETH USD pair has been like the remaining 40%. Um I think it's funny how

memes are sometimes, you know, mocked or like vilified by like more serious people, but they're definitely like the greatest onboarding tool for retail when it comes to having a new chain. Like we saw that with Solana. Ethereum had its fair share of meme activity like back in the day. We kind of saw it with base during the like AI season and like the the mini meme coin season. And now we're seeing it with Robinhood chain and I think it's great that Vlad is sort of not promoting but like kind of accepting like this is a really important onboarding tool as well.

And just allowing both meme coin volumes and tokenized more serious projects to thrive. I think it's a great dichotomy. >> Yeah, if we we think of Solana's history, it took many years before tokenized asset volume eventually took off like it did in recently weeks going from zero up to 10% of total total DEX volume on the chain and I think we can kind of expect to see something similar to be true for Robinhood chain where I mean the the first people out of the gate to go over there and start punting around on stuff

are going to be the most crypto native and perhaps the most degen. Um so to that cohort, I think meme coins are a great product type and highly palatable to that sort of user base to start kicking around out of the gate. But but ultimately I think like all those line items can grow um for for total volumes on Robinhood chain. And to the question of whether or not it's, you know, competitive with uh what Solana has to offer and whether or not it might be eating Solana share, pump fund share of um DEX volume or meme coin volume. Like ultimately the the amount of capital willing and able to play these games is

is finite and the level can go up and down depending on uh market cycles, interests, and whatnot, but I think we kind of saw this I don't know post Trump meme coin launch on Solana where like BNB meme activity picked up substantially and there were runners there while while meme coin activity on Solana was in a prolonged um downtrend and really I I think it's just a question of where the runners are, uh where where people have funded wallets and they they want to punt and play the game and right now it seems like it's on Robinhood chain.

>> Yeah. I think like I don't know if we want to talk about this, but I think one interesting thing about Robinhood chain is that previously when you had a new chain, you had like bridge to that new chain, like create a new wallet or like go through the bridge or whatever. I think it's interesting that a lot of the volume uh on Robinhood chain today is coming from trading apps like FOMO where as an end user you don't really need to do a lot. You The underlying app just supports that chain uh and you can trade there.

And I think it it it speaks signals like it speaks volumes to like the importance of owning the end user and what activity will look like on crypto retail like from now on. Um so I know Luke we had some slides on Robinhood chain uh volumes, but also on FOMO revenue. I think it's Yeah like for context, uh this is like Robinhood chain daily spot volume and below you see FOMO daily relay revenue, which is basically like the cross-chain uh revenue. And you can see just that peak up in revenue as they started

supporting Robinhood chain on July 10th. And it has just been up into the right. I think it's quite impressive that FOMO is doing almost as much revenue as Robinhood chain itself, like the sequencer, just from supporting that chain. Uh and it speaks to also it also speaks to the pricing sensitiveness of some of the users trading on that app. Uh which I know Ryan we were discussing like uh previously. Uh but yeah, like props to FOMO. I think it's a it's a really good it's a really good app and and really impressive growth.

>> I'll go a step further and say this is like one of the best apps in crypto. Um I personally use it more and more for my trading and not even just like social signals, like it's just easy to trade on. Uh especially like if you're a mobile-first trader. Um they've absolutely crushed it. I think their kind of the parallel is like Phantom last cycle. Um but the beauty of FOMO is like you the chain is completely abstracted, like you just have coins thrown at you and you buy those. So, yeah, I I fully expect like if we're not going to have like a concerted effort from like, let's say, Robinhood to push users on chain, like the onboarding is going to come from

FOMO just cuz it's such a fantastic app. Um it also plays perfectly into like how retail in the past is like onboarding into crypto. Um where it's like they hear about some dude making a million dollars off 100 bucks or something like that. Um that that's really FOMO. Like you see everyone's P&L live. Um, I wouldn't be shocked in the future there's like FOMO influencers, kind of like how on Twitter there's like crypto influencers and KOLs, like where they're just operating from FOMO now.

Um, I think they've crushed it. I fully expect like FOMO to keep growing from here. Um, and I I think it's also a big part of the reason like why Robinhood chain was successful is like there was a huge bump up in volume in Robinhood chain once FOMO went live. Like there's a significant portion of crypto users now that are not loyal to any chain, they're just loyal to FOMO. And when FOMO is added to a chain, like that chain gets a boost, so who owns the user? It's starting to become FOMO, so hopefully they launch a token and we can get exposure, but I don't think that's going to happen.

>> [laughter] >> Yeah, I mean, I don't know, Luke, do you remember like maybe a year ago or like 2 years ago we used to discuss a lot like this intersection between social and trading. And like people used to complain that nobody can really pull it off. Like you have things like friend tech with which like never really like took off beyond like the initial hype. I think FOMO is actually the first step that has like perfectly uh, captured that like intersection between trading and social and they're like executing almost to perfection and I think that this is displaying out in real time. Uh, so yeah, I agree with Brian. Like the experience is pretty is pretty neat. Uh,

you see other people's theses, you can ape into those coins. Uh, I think it's like what people envision when they when they when they had like this social and trading uh, kind of intersection. >> Yeah, we we've always kind of thought there's something there at the intersection of social and trading and and finance cuz I mean, you want to follow the people who have alpha. Um and you know, you you you want to see their trades, how they're how they're positioning, and whatnot. And there's been a lot of stabs and attempts at that intersection, be it friend.tech or perhaps Zora. Um but a lot of lot of

failures as well and a lot of capitulation kind of out of that vertical. But at the same time we we see FOMO, like um that first chart was 100k a day in daily revenue from the relay. Um they're doing over a million weekly in revenue. Um so whatever they've got going on, it it certainly seems like they've struck that right that right balance um me- meeting the market where they need to. So, happy to see the success there.

Like Ryan now. Um would love to be long the FOMO token, but un- unfortunately, that opportunity is not on the board at the moment. And perhaps pivoting back to Robinhood chain. Um It's quickly become one of the highest revenue generating L2s. Uh we can look at Robinhood chain's uh network rev right now. Um And I'll share my screen.

So, a million in weekly rev. Uh right, this this goes to Robinhood. So, I mean plenty of reason to to see Hood equity rallying on the backs of back of success with Robinhood chain uh coupled with the, you know, perhaps a movement on on Clarity Act. Um We can think of kind of the the Coinbase and and base example where, you know, base was a uh not not significant as a share of total revenue for Coinbase, but um incredibly attractive profit margins from um the base and the base

sequencer. And some of our research um even JP Morgan's research on Coinbase and whether or not base were to launch a token, um you know, JP Morgan's writing sell-side equity research on Coinbase saying if base launches a token, that could be a 12 to 30 billion-dollar opportunity um given the multiples that L2 tokens trade relative to rev. Um the same thing's kind of in play for Robinhood right now. Of course, there's been almost no discussion of a token for Robinhood chain, but I'm curious

what what do you guys see playing out here for Robinhood? >> Yeah, I'm actually like not really bullish at all on on network revenue for Robinhood chain. I think this will trend downwards over time, honestly. I think that's kind of the case across the board. Um I'm bullish on Robinhood's ability to like monetize the ecosystem through like partnerships and and whatnot. Like typically the the chain launch strategy is like the chain has to give grants or incentives to like apps coming on the chain because those apps are the ones that actually have like the distribution and the users.

Um this dynamic is completely flipped on its head with Robinhood chain. Like Robinhood chain has all the users and they have the distribution, and there's crypto apps that need to expand beyond this little bubble of on-chain users that we currently have. Um and I think that's the way Robinhood will monetize. And we've seen some early examples of this. Like the most concrete one is the Lighter partnership, right? Um Lighter deploys on Robinhood Chain, and they have Robinhood Chain Robinhood has a 50% fee split with Lighter on all fees generated by the the Robinhood instance. So, I would expect we see more of that.

There's also I again, these are just rumors. I don't know if they're true or not. Morpho paid uh Robinhood to get distribution through the main app for their their Morpho vaults. And if that's the case, like genius play on I think both their parts. Uh but specifically Robinhood chain, like they're going to make more money on that deal than they're going to make in network rev. So, So, yeah, like I I think I I don't think this is probably like correctly priced into like crypto revenues from Robinhood yet. I I think most equity sell-side analysts don't understand like the exact dynamics of how everything works here. My guess is they probably are just comparing it to Base with like

uh sequencer revenue, which if your view is like it'll be similar and maybe this is like a 20 50 million-dollar business line. At the end of the day, that's not really moving the needle. But if you have the view that Robinhood can like monetize through the ecosystem and the application layer is now where the majority of fees accrue, and this turns into a nine-figure revenue line, like that's where you probably get an upside surprise. So, So, yeah, I it's very early. Like there's no like formal strategy, but if Robinhood Chain is like going to go through this route of like forming partnerships that like they can monetize, I am very bullish on Robinhood Chain for Robinhood's bottom line.

>> Yeah, so we've kind of held this thesis that uh you know, network revenue kind of declines relative to your application revenue. So, like application revenue grows faster than than network revenue, and Rob- Robinhood can take upside in that with their own ecosystem, like you mentioned with the lighter revenue um revenue split. Similar deal with Morpho, whether that's from tokens or um a take rate on some of the vaults, or just a growing USDG supply.

And um interest generated on some of those reserves, like that that can be a um material line item for Robinhood as well. But, on on the point about network rev, you know, we we can expect meme coin activity to be pretty uh pretty material in generating rev for the ecosystem. Perhaps tokenized equities less so. Um but all that all that taken together, I think, yeah, we could we could see an upside surprise from Robinhood chain activity for the Hood equity holders.

What should we pivot to next, guys? Osteum? Base Jesse capitulating on social? >> Yeah, I mean I don't I don't think it's that that deep, right? Like the base uh thing. Like props to Jesse for admitting uh that he was wrong during his thesis. Uh I think like the greatest example of it was Sora and like creator coins. I think they never took off as Base intended.

Um but yeah, I think there's not much to add there. Like the the drama of the past week has been Brian uh just changing his profile picture to I don't even know what it was, and then that meme coin running up and down as he changes uh profile picture again in the span of like 24 hours. Um but you know, I I don't think there's much to add there. Like, I think it's bullish for Coinbase that Kobe is now in charge of all the trading products. Like, hopefully we can see some cool innovations there. One thing I I don't like about Coinbase uh is that they've always seem to be lagging in terms of innovation and kind of just hoping to

get some lobbying and benefit from regulation. I would love to see more pushing forward on their side uh in terms of uh products and features, not like 4-hour candles, you know, but something like an HIP-3 integration for like perps trading or something like this. I think that would be much cooler, and I think it's something that the industry is missing from Coinbase as well. >> I actually have a ton of thoughts here, not specifically on the social aspect, but like, I actually think there's real concerns with Base and its positioning in light of Robinhood chain. So, before Robinhood chain, like, Base was able to kind of portray itself as like

the I don't want to call it like corpo L2 cuz like that kind of carries a a negative connotation, but like it was becoming like the Ethereum like playground of choice whether you're a degenerate trader or like you're an actual builder, like it's still a lot of motion from Ethereum, and like, it was becoming Ethereum. I think that's like gone. Like, I I think that might be finished now. Like, I don't know how in tune you guys are with like the trenches, but people are absolutely pissed at Base. Um they just seem to actually like do everything wrong when it comes to like how they treat the actual like marginal user or right the actual revenue-generating marginal user, right? Like, majority of

Base's revenue came from degenerate traders. Like, let's be real. Let's call a spade a spade. Base constantly is burning them at every turn and like the latest stuff with Brian Armstrong like how he handled that whole thing. Just another just like why are you doing this? Like um and then like his legal speak apology afterwards. So everyone in the trenches is just fed up with Base and now Base seems to be pivoting to this like oh tokenize equities the same thing Robin chain is going to do.

And at a certain point you just have to ask yourself like who do you think is going to be able to execute on that better? Is it going to be the company that is operated in the equity space is seen as like the innovator for for retail equity investing or is it going to be Coinbase which is seen as like a laggard in crypto? You imagine are they now suddenly going to be an innovator in equity land in RWA land? I'm not sure about that. Um I think so yeah, I'm like I'm actually concerned about Base and its like positioning. I think they've lost out on the user that is making the money and now they need to go find out find the user who's going to make the money and I'm not clear they're going to actually be able to like out execute Robinhood chain in that if they're both

going after the same pie here. So um I'd be a bit concerned and I I think the deeper meta issue here between like with Base is um Robinhood chain to me like seems very in line with what Robinhood wants. I never got the same vibe with Base and Coinbase like Base almost does not want the same things Coinbase wants like Base wants to build its own separate unique decentralized ecosystem and that like is not what Coinbase wants. Like Coinbase wants to take what's works on Base put it in its own playground and whatnot and make money off that like there's no better example of this like why is there a Coinbase app and a Base app? Like that's just stupid. It's horrible product design. You have like two separate areas for users.

um I'm and I guess you know in a sense Robin Hood does have that, but Robin Hood maybe is going to pursue a different strategy. We will see. It's still early, but but yeah, I I am generally generally concerned about Base's positioning here. They've seemed to spurn the one user base they were able actually to retain, and now they're fighting up against Robin Hood, which I think is going to be able to out-execute on the RVSD side of stuff. >> Yeah, I love that take. I I do agree with you that they've historically sat sort of in an ivory tower and sort of being out of touch with what the actual users want.

I do think they have made some like to their like to their benefit, like they have made some cool integrations. Uh I can think of the Morpho integration with CVTC, for instance. I I think that was great, like using like decentralize infrastructure in the back end, and then just allowing Coinbase app users to borrow using BTC as collateral. I I think that was that was a great example of just like the convergence between like Base and the Coinbase app, but I broadly agree with you that their strategy has sort of been misplaced.

>> Yeah, I think that's going to be kind of a a good signal of what's to come, right? Like I think Base is going to increasingly have less of its own identity and just kind of fall into being back-end infra for Coinbase, and if there's certain stuff they want to decentralize, and I think that's a good outcome for Coinbase. I don't think that's a good outcome for like the people that have been building on Base, uh that have seen it as kind of being able to be its own separate identity. Um so so yeah, I I I I think in this scenario, like I think that's good for Coinbase, and I would imagine like I think it's also good for crypto in the sense, like I think Coinbase is product where you can borrow against your BTC in app through Morpho on Base is like a great product. And I would

want to see more of that, but I think in the process of doing that base is going to lose its own identity. It's going to lose its community and it's going to just increasingly seen as like back end infra for Coinbase. >> Yeah, ultimately these venues seem to be moving towards or competing for the, you know, all of finance within one platform approach. And if I think of Hood versus uh Coinbase, it's I can trade the universe of traditional financial markets and options um on Robinhood in addition to breadth of crypto. Uh Coinbase particularly constrained to just crypto

assets. Um now on the L2 picture as well as, you know, what what can I do on base that I can't do on Robinhood chain. Um there's there's steep competition there as well. So, I I think Coinbase has kind of found themselves in a tricky position kind of knowing who their customer is on which particular product they have. You know, they've been some of the most uh for- forward facing and high initiative in in DC um in Washington, which is great to see for the industry. But then we think of, you know, the base uh the base trader user base is highly

distinct, highly different demands. Um so it might be hard to meet both and cater to both across the whole organization and product suite. Perhaps wrapping it up, um we had more sales from strategy to start the week. I believe just over 200 million in Bitcoin was sold uh Monday morning. And Bitcoin continues to rally in the face of that. So, what sounds like bad news is now good news.

Um feel like for most of the bear, his new buys were increasingly viewed as strategy, you know, digging themselves deeper into a hole with with those purchases financed through stretch issuance. Um now, well, well, you don't necessarily like to see this large player uh selling selling Bitcoin for a dollar reserve strategy, uh it kind of looks like um strategy walking themselves out of the hole. And markets responding favorably to it. Bitcoin strategy stretch green on on the back of these increasing sales.

Um curious what you guys think of this. Is this Is this the right move? And do you think it's a bottom signal? >> Yeah, I mean, just add that to the list of bottom signals, right? Like it's also like I'm not really a technical uh trader, but if you see the Bitcoin chart, it it traded for 2 weeks below its 200-week moving average, which has historically been a good indicator of like Bitcoin bottoming. And now it is above it like 66 uh thousand dollars.

Uh you've also seen constructive ETF uh flows, which I repeatedly said it's for me it's a more uh constructive signal than strategy uh because it actually means like investor or institutional uh demand as opposed to just uh sailor. So, we've seen four consecutive days of ETF flows. Uh we saw inflows yesterday, and we saw inflows for the past uh week. So, it is constructive in that sense, and I guess we'll just wait and see uh how it plays out. Um I don't know what the main risk you see, Luke, with Bitcoin right now. Do Do you think it's still a strategy and and Saylor?

>> I I think most of the risks are priced in um and have been realized at least to the downside. Um We still see realized price at 53K. Uh I'm open to the market tagging that, but that's still pretty modest downside. Um most of most of the bear market if you think of bear markets from their historical distributions in price and time, uh most of that is behind us at this point. Um So So, looking out to the future, like we know Strategy has the tools they need to buy themselves some time. Um and currently they're they're using those

tools. And yeah, like like you called it out, Carlos, the the 200-week moving average on Bitcoin um historically marks some pretty key lows. And we tagged that recently. So, I'm I'm pretty constructive here. Um that's my read. I'm not necessarily calling bottom, but I I would be calling a bottoming zone here. Um that's my look. What do you think, Ryan?

>> Yeah, so I I think like look back to last cycle, right? We bottomed on every single player in the space blowing up or committing crime, and I think because of that, there is a portion of the market that wants to see the same for like forming a bottom. And when Strategy was blasting more into Bitcoin while it was pretty obvious that there were cracks in the armor that outcome seemed was already a very low probability and maybe went from like 0.1% to 0.5% but a risky self to price in.

Um so as strategy is selling off Bitcoin for cash like the chance of a spectacular blowup is decreasing. Um I think most likely this bottom like ends up looking similar to two cycles ago where you didn't have like any defining big moments like the ICO bubble just kind of burst and eventually just everything that was to be sold got sold. Hopefully that's what it plays out like and I think the more you know Saylor selling BTC for cash like that outcome becomes more and more likely.

Um the counter point to that is like then there was the COVID bottom. Um hopefully there's no world pandemics to cause such a a wick like that but yeah I I think the the strategy situation is becoming more and more de-risked as he sells. Um what is their dividend coverage up to now like two years? Um if Bitcoin is not trading significantly higher well I wouldn't say significantly higher but if Bitcoin is still the same price as it is now in two years there's probably like severe issues with the Bitcoin thesis and like you have bigger issues beyond Saylor at that point in my opinion. So So yeah I I I I tend to agree with you Luke. I don't know if we have bottomed

but like the tail scenarios where everything goes up in flames seem to be decreasing and I think that's probably helping price action a bit. >> Yeah this this bottom perhaps might be more characterized by by apathy as a as opposed to the peak chaos and crime of the 2022 and 2023 cycle, but I uh I think strategy, I guess perhaps in their moves, is they're a bit more of a deterministic player where given their capital structure and balance sheet exposure and and liabilities, um there there are certain ways they need

to behave to manage that risk. Um so the way they've been moving, um I I I think is supportive to the market, but I as Carlos mentioned, like ETF flows have shifted positive um for first time in in quite a while. And what's nice to see is like a few days of positive flows is more than enough to take the other side of strategies outflows. Uh increasingly like we should expect to see uh the ETF product is is just a more important and capitalized vehicle um for inflows and outflows than

strategy would be as a player in this market. >> We've we've talked a lot about uh Bitcoin like in recent weeks and like it's forward-looking implications due to strategy and ETF flows and whatnot. What do you guys think of ETH uh in its current spot? Like I Are you guys bullish ETH? Uh do you think Robinhood chain is constructive to ETH like at all? Like I'm just curious what you probably think of ETH uh right now.

>> I personally I am just of the view it just follows Bitcoin. If Bitcoin goes up, ETH's going to go up. I don't see a scenario where like there's a massive rally in ETH BTC unless somehow Tom Lee just finds another $10 billion hiding under the couch. Um if you're bullish on crypto like from a a macro standpoint, the play has always been Bitcoin. I I don't think that's going to change in favor of ETH yet. If at all. Um the actual value accrual from like Robinhood chain to Ethereum is extremely extremely small. Um and then like obviously the the whole argument is like oh ETH is money, it's being used as money. Oh, it's being used as money for meme coin pairs. It's not going to be

used as money for tokenized hot pairs like that's a very obviously going to be traded against dollars and not against ETH. So, yeah, I'm not I don't like if you're bullish on Robinhood chain, I don't think you buy ETH. Um you buy Hood or you buy Uniswap. Um if you're bullish on crypto, just putting in a bottom and going up, buy Bitcoin, don't buy ETH. Like why subject yourself to that? So, no, I am not I'm not buying ETH here other than like unless you have a view that Tom Lee is going to find a [ __ ] ton more dollars to start bidding it up again.

>> Yeah, I I mean that's kind of the problem when the only bull case for an asset is that there's this one person or that's one entity who's going to buy that asset. I think that was kind of the problem for Bitcoin over the past year or so where it went like the bull case for Bitcoin at some point went from this non-sovereign form of form of money, right? That it's uncorrelated to equities and like other asset classes to a bull case where he say he's going to buy all the Bitcoin, right? Uh I think ETH may be kind of in a similar uh bad spot where for a lot of people the bull case right now is just how much is

Bitmain going to buy? Which at the end of the day is just a circular thesis and and it doesn't work out. Uh so, we'll see how it plays out. If If BTC has been up a bit, I think, over the past few weeks. Um and and yeah, we'll we'll see how it plays out over the coming months, but I do think uh the bull case If the bull case is just uh Bitmain is going to buy, I don't think it's going to be enough for the rally to sustain. >> Yeah, I looking at the ETH chart, it's at the low of a 6-year range.

Um it's been flat and sideways for ages. Uh that range, though, is wide and volatile. So, like at the low of it, I'd be I'd be looking to the upside, um particularly with a favorable um favorable backdrop or outlook for Bitcoin. Um And while like we can we can back into a perhaps a bearish thesis based on uh perhaps like technical performance, price to rev, uh more more competitive uh chains with more users, more activity, more DEX volume, things like that. Um I also still wouldn't fade the impact that

animal spirits can have on expectations. And uh if enough people buy into the Tom Lee gigabull thesis, uh where however many financial institutions will will start buying ETH to stake it to secure their tokenized asset issuance, and perhaps there's 20 to 50 more traditional institutions that want to deploy an L2. Um I think that can be enough to uh to conjure up the animal spirits to send it back towards at least the high of its six-year range. So.

>> Yeah, to to further clarify, like I'm not a big TA guy, so if, you know, your trading channels on ETH could be a good trade. Personally, like it's not just ETH, like I'm just not really interested in any L1 or L2 tokens. [snorts] Um as I mentioned earlier, I think the writing's very clearly on the wall that these aren't the best the Um they're not the best way to express like revenue generation in crypto anymore. They're the application layer is winning. I'd rather allocate to the apps. The only like crypto asset that I think that has like a durable sustaining monetary bid is Bitcoin.

Maybe you can make the case for Zcash um as well. That'd be the only other L1 asset I'd be interested in. It has been doing well, I'm pretty sure, so maybe there is some uh something in the crumbs there. Uh but it personally, like I'm just not interested in owning ETH, SOL, L2 tokens. Like I I I just think their their time is behind them, but if you're betting on the animal spirits returning and like have a good read on TA, which I don't, then perhaps could be a good trade, but that's just not how I personally operate.

>> Yeah, but but better opportunities on the board with uh more sound investment theses behind them, I think. All right, guys. That's all we had for this week. Want to thank our listeners for tuning in and uh Carlos and Ryan for great thoughts this week. See you all next time. >> See you guys. >> Nothing said on ZeroEx Research is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Luke and our guests may hold positions in the companies, funds, or

projects discussed.