🟢 DAS WEEK BEGINS: Institutional Bull Market Is Here ft. Transak CEO, ParaFi Live & Rob Greer on TAO

Transcript

Heat. Heat. 17 floor.

We'll see you around the timeline. Feels good to be back. >> I think The Rollup is one of the most premier media brands in crypto and Andy and Robbie are great experts at everything they talk about and it's my favorite podcast. >> Adding it to my library every >> potentially multi-chain deployments. >> We are at Dev Connect day one here. I'm guessing base. Heat. Heat.

JP Morgan, Black Rock, DTCC, Fidelity, the entire thing was just institutions. It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. I'm bullish. >> He said it. He finally said it. So bullish. It is bullish. I'm bullish. We're bullish. Heat. Heat.

Heat. Heat. Corola is headed to the top. If we're

not already at the top, we're going to the top. >> Roll up is my favorite. >> People from all walks of life, all over the world, all over this industry come together for the roll up. Zoom out. The institutions aren't

coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. Welcome to the next. See you on the show. Ladies and gentlemen, welcome back to the tokenization tower. Happy Monday. Happy D week. If you're here in New York live digital asset summit live here at the Javit Center, six avenues down south. You guys literally can't see anything today because it's absolutely it's foggy as hell. We got new hats. We got Zama here. Shout out to Zama Power of the Ro. Let's give Zama some love. We

got a nuclear power research department hat. As you know, I'm uh quite the uranium bull, slightly underwater, but we got the hat. Shout out to Van for that one. And we got a new lovely book. Uh we got Web 3 by Alex Tapscott, who's actually signed from DC. Uh we've got one of my favorite books, The Rise of America by Maratusu, uh who's kind of helped me on this gold trade and on this metals trade. And then of course the infinite machine by Cammy Russo. Guys, we have a busy day today.

We've got an amazing guest lineup. We've got first we've got Sammy Start, the CEO of Transact talking about what else? Stable coins, Aentic Payments, how they're thinking about this, what the evolution is looking like there. Then we've got a principal at Parafi, Andren the node to talk about the state of investing in digital assets, institutional appetite. And last but not least, we've got Rob Greer bringing us face to face with the Bit Tensor Bull thesis. Again, we had James on last week. You guys love that one. We're going to bring you another Bit Tensor one here. Now guys, let's get into it.

Let's get into today's topics. Shout out to Plume. We're at the nest. Plume wouldn't be possible without them. one of the best tokenization teams in all the space, bringing you tons of great private credit, onchain bonds, RWAs, and more on chain. Guys, shout out to Plume. We are live in the nest in the tokenization tower. Today's topics, welcome back to the nest, guys. We're back. Had a great week in DC. Last week, one show on Friday. Now, we're back in the nest. Markets and weather live from New York. As you guys can see, you can't even see anything outside. So, it's pretty foggy. It's pretty hazy. We got the transact co as I said we got paraffy and we've got an AI superle episode with a fun partner just focused on Bit Tensor

and Tao and the subnets if you guys saw that last week Jensen Hang and Shimoth talking about Bit Tensor at scale love to see it. So that's the show for today topics powered by Treasure. Let's give Treasure some love. Man, these guys are out here building great hardware wallets. Use code rollup10 on treasure.io to get a special discount on your treasure device. Guys, that's that is today's topic. So, let's go ahead and move move into markets and weather. But before we do, let me tell you about FRA, guys. Frack is building the infrastructure for the future of digital money. Open, stable, and borderless. For more information and start using the future of digital money today, visit fracks.inance. Guys, weather check. Here in New York, it is light showers early,

39 degrees, it's raining, it's cold. I had to use my umbrella today on the way off the subway walking to the office. Still breezy cold. Guys, if you're here for DAS, though, we're going to be just fine. The inside, it's an institutional bull run. I honestly expect Digital Asset Summit to rival some of the best conferences that we've seen at the peak of crypto mania. Not because we are in one right now. Sure, there's a lot of mania going on in the world as we know it. but because there is a institutional bull run going on that if you're not in the scene in the mix you don't really realize is happening but it is happening and it is

happening fast and so I'm really stoked about that for Dash so don't worry about the weather guys our weather is powered by relay relaylink crosschain swaps let's give them some love these guys are cooking some of the best crosschain swaps for moving your money from one chain to another guys shout out to the relay all right let's move to the markets this morning. Trump pulled a taco. Uh he tackled the entire market right before we we opened. Bitcoin is sitting at 70,000 just above pushed up to about 715. Bitcoin's back or sorry, ETH's back above 2,00 2100 and Salana and chain link respectively at their 90 and $9 mark which has seemingly been there for the for the last two weeks

that we've checked on the markets. And same with near at that 1.3 mark staying steady. Guys, our digital assets market prices are powered by none other than Zama privacy confidential computing on Ethereum. Guys, they sent us an insane pack today. Actually, look, it's on. If you could bring me that that Zama Rainco, I think we got to show Let's go to the wise shot. Let's just show what Zama brought here for the boys. Zama dropped in a raincoat and on the back of the raincoat says the ticker is Zama because privacy in an in an open society requires

cryptography guys. Pretty elite uh rain code here. Definitely stoking. We got Plume hats and Plume mugs as well. Shout out to Zama bringing in the heat direct to the office. Let's go Zama. All right guys, let's move on. We got a lot to talk about. A lot happened over the weekend. Obviously in the macro sense, but obviously with uh DeFi exploits, more Bit Tensor news and more. Before we do, let me tell you about Near. Near is the partner for AI, the blockchain for AI designed for AI native applications and autonomous agents.

Start developing today at near.org org or go to near.com for an all-in-one multi-chain portfolio tracker, guys. Near's a blockchain for AI, a lovely partner of the show. And as we roll into the news, we've got token terminal discuss price to fees ratio of hype, soul, and ETH. I put out a tweet about this calling the great valuation disconnect. So, if you just scroll down here, guys, you can kind of see the actual chart here. Basically, ETH is is is sitting at about a $250 billion market cap and it it has a so much higher price to fee ratio than Hyperlquid and Salana. And so I think

what you can kind of pull from this is that at the end of the day Salana and Hyperlid are valued on their fees. Their price to fees ratio is around a thousand. Hyperlids is, you know, I don't know. I I think it's a little bit lower, but this positions ETH as a digital commodity and shows its monetary premium. Now, look, I just I call this the great valuation disconnect. And and and here's why.

People are valuing crypto assets by their price to sales and price to fees ratios. Now, Ethereum, much like Bitcoin, is starting to be kind of ousted from that conversation. Ethereum is being valued as a monetary asset. The question is, do you agree with that? Is Ethereum exempt from the price to fees, revenue, etc. conversation? Has it earned the monetary premium status?

That's for you guys to decide. I saw another tweet go out that had uh Ethereum's fees since 2020 during DeFi summer when they really skyrocketed fees or revenue and then they've been extremely extremely down only since. I guess the question there is what's the right way to look at it? is Ethereum's fees and revenue compressing or is the scaling roadmap of the Ethereum Foundation and of the Ethereum team simply working out? And so I pose that question. You get a lot of push back from people on the Ethereum side as well as just generally in the space. But that's how I would think about this. And

so when I'm when I'm looking at this, ETH is like base layer infrastructure and a store of value question is are the institutional folks coming in going to see it this same way? And I don't know if they will. Frankly, I think institutions are going to come in and be a lot harder on Ethereum than they have in the past for a for an asset like Bitcoin. I think with Bitcoin, there's no questions. They don't have the question. They get that digital gold.

They understand it. But they see a chart like this with Salana and Hyperlid here at the bottom. And if you scroll up a bit, you'll see Ethereum's market cap at about 250 billion. And they wonder, does the value come from decentralization, security, and the moat? Or should this thing be valued closer to something like a Salana and Hyperlid? And then the question kind of gets to what is the value of these blockchain systems? Where does the value come from? If you think trading is the endgame that a lot of these chains are competing for, then you think like someone who's a who's a salonable, execution is what matters. If you think that monetary premium and being a good collateral asset matters,

right? Being being able to use it to borrow against and actually having a sturdy collateral asset, then you're probably on the team of Ethereum. If you kind of see pers and this massive fees, token buybacks, and just basically onchain business as being the core driver of value, then you're probably a big hyperlquid bull. And so I think there's many ways to think about this, but I think that the Ethereum people who think that they are just out of the question because they are safe, because they have decentralization, I think they need to be very, very careful. I think the Ethereum Foundation needs to be very very careful with the mandate that it's kind of pushed on with the removal of Thomas, the kind of revitalization of

the cipher punk movement. I think the Ethereum Foundation needs to be very very smart about how they're thinking about valuing this asset and the narrative that they're trying to tell. If we can nail the monetary premium side, there will be a lot of upside. If we get compared, if Ethereum gets compared to other assets like Salana and Hyperliquid, it will be seen as overvalued compared to others. So guys, that's my take on this. I don't know really what Token Terminal was trying to get at, but I'm sure they were trying to stir the pot that that they did. Let's move on guys into Aentic Payments. Open Agentic Commerce and the end of ads. AI agents are breaking the adsbased internet model. Uh, no attention, no

monetization. Interesting. Okay, let's get into it. So, ACP and UCP promise checkout in chat GBT and Gemini, meaning you can just order directly in an LLM whatever product that you want. Soon, hundreds of millions of consumers around the globe will find better products, merchants, and will have improved conversion rates and platforms will actually be able to take 5 to 10%. >> But ChatBT checkout is an incremental improvement. We must go back to the 90s to understand why. And so A6Z crypto put out this article about this open agentic commerce future where agents are going to transact freely via open protocols.

There's a shift from apps towards agents as autonomous economic actors. And I mean I think look I think this is spot on. I think the whole internet is going to realize like we spent too much time on trying to build a human centric UX. And I know that sounds really weird, but the internet and its developers have spent too much time thinking about how to make it easy for humans rather than making it usable and workable for agents. Think about it. If you're a company who has optimized your entire process for stable coins, agentic payments onchain and discoverability for agents, you are going to literally mog the rest of the internet market who

hasn't yet figured this out. Once there are agentic payments actually happening, the internet will move towards a discoverability place and process for agents first. And so I think that's kind of what what this article is getting at. And so, you know, this kind of talks about Facebook and and kind of how these guys got distribution and open protocols won. And so, that's the argument that A16Z crypto is trying to meet is open agentic commerce is going to win. And so you want to think about this as like we're moving from a ad driven web to more of like a permissionless open machine to machine economy on onchain

likely with stable coins. I think that's kind of where the digital assets part of it comes in. And so yeah, I mean A6Z put out a good post here. I think it's worth a read. Wanted to uh bring it up and talk about it. And yeah, I don't really have much more to add other than look, I expect there to be a big shift in the way people are designing their websites, designing their checkout flows, thinking about commerce. It's shifting towards this agentic to agentic flow here. So, let's move on from A16Z and get into some more of the uh hotter stuff here, which is Bid Tensor.

I cannot believe Jason put this out. I mean, Jason's obviously a prominent VC and podcast host. Yesterday, he put out this post saying TA over Bitcoin, which kind of sparked a debate from Bitcoin Maximalist accusing him of kind of showing his own bags. He was pushing this already on his show. Um, and it's he's pushing this hard. And so, look, my take on this is that this guy is coming in and now that he's done this, now that Jason has pushed into this world, he will have the Bitensor community fighting for his content, fighting for his work, wanting him to get excited, wanting him to bull. And now he's kind of like got himself

trapped in here like we got him, boys type of thing. Like, he's going to continue to bull to I mean, look at the engagement on this thing. It's it's it's it's nuts. Now, do I think that he means this literally like invest in Tao over Bitcoin? No. No. I mean, you know, I think he what he's trying to say is if you have Bitcoin, if you're thinking about allocating to digital assets, maybe think about Tao. Um, look, there was a lot of tribalism in the comments. Uh, Tao supporters were were praising this as, you know, Jason promoting the Bitcoin of AI here. Other folks were kind of Yeah, there we go. pushing really hard. Yeah, I suggest we don't push it hard and let the magic happen

organically. I'm very cry I'm very curious about a crypto that doesn't burn energy for posterity/proof work, but that solves the massive AI buildout. That's my simple bet. What if TA can provide more affordable cloud AI or SAS solutions via distributed solutions with subnets? And we keep going down here. You see some of the uh Bitcoin folks getting a little bit upset here. AI agent expert. That's classic. I'm curious to see what he has to say. But but there's there should be some more kind of comments from Dan Held and the likes here.

It was definitely, you know, was definitely a bit of push back on on this one. And look, I mean, we're going to talk to Rob today on the show about what his take on this is and and kind of generally how he's thinking about it. Um, but yeah, I mean, look, these guys are bold up on TA. Prices, you know, doing well off the lows, and I I don't blame them. I think that there's an actual narrative here that can get into the mainstream AI world, and I expect that's kind of what's going to happen. All right, guys, let's move on to some of the more uh DeFi oriented stuff here.

There was quite a bit of a unfortunate exploit this weekend with USR. Uh there was a $80 million minted unbacked on USR. So Omar here put out a tweet. Millions of bad debt at the time of writing were created across gauntlets morpho vaults from the resolve USR exploit. Almost all of it was supplied after the exploit. So why would curators supply millions of dollars in USDC to a broken market? Let's dive in. This was the craziest part. If you looked at the ether scan, there was literally transactions where the basically what the exploiters did was they took the

USR, borrowed USDC about it, and then pulled it out of the market and gauntlet kept refilling the USDC into into the market. So, if you keep scrolling down, you'll kind of see more about what happened. So, look, the original impact of the exploit was about 5K in USDC borrowed against USR. This was before curators began autosupplying USDC. Morpho specifically has a core feature named public allocator allowing curators to automatically supply capital to markets in need. And so basically once that market got to be in need, the curator stepped in to apply the capital.

Let's keep going down here. And basically these auto allocations from the curators are preconfigured and are approved cap. So basically if something you know goes wrong the curators will step in and kind of help you with whatever this issue is all these curators had enabled an automatic supply to these markets. Steakhouse as well despite being resolve's risk manager had no exposure to the protocol. Okay that doesn't make any sense.

Steakhouse is resolve's risk manager but does not have any exposure to the protocol. That doesn't make any sense at all. That that is very weird. Okay, so the logic of this feature is to capitalize on periods of high utilization and higher yields. However, in this specific case, when the exploit actually happened, it meant for the hours after the exploit, curators kept feeding their users capital to the broken market. And it took four hours for the resolve team to get online and and complete their multi-IG transaction.

And basically there was hardcoded oracles that failed to detect a DPEG. And so the bad collateral was kept as valid. And so if you keep scrolling down here, there was about a 90 minute window where this happened. Um and the and this kind of enabled this borrowing to keep happening. So, if you keep scrolling down here, let's let's examine how this played out. So, this was the uh this was the vault 18% on wrapped staked USR token and USDC.

There was obviously vault curators that allocated into this. And you keep scrolling down, you'll see that there was basically a collateral management issue here with the exact vault. And there was a capping of exposure quickly from the vaults, but it wasn't fast enough in that three-hour period. And so this kind of ended up with a systemic contagion. So, if you keep scrolling down here and finish off the thread, we can kind of get to the nuts and bolts here. So, here's the hardcoded oracles, which were that was the that was the first problem because basically the the oracle wasn't able to pick up that the USR uh asset depleting USDC to these markets after the exploit,

which is nuts. And we keep going. Keep going. Invoking. So basically once Gauntlet was actually supplying their USDC, the the basically exploiters or onchain wallets were able to just keep borrowing it. So if you see because the oracle was hardcoded for the WSTR token, they were or whoever was able to deposit that token and then borrow USDC against it at pretty much one to one or very close maybe like a 90 95% LTV and

then Gauntlet kept supplying the USDC because they thought that basically it it was hardcoded this autom automation that they had to keep doing it. And so this person just kept taking out tons and tons of USDC against effectively a worthless token that the rest of the market had realized that it was already exported, but because the oracle was hardcoded and because either it happened late at night or um the resolve protocol couldn't pause the protocol, Gauntlet got burned. And so because again, Gauntlet is supposed to have deeper liquidity and better UX for Morpho for this market, they got a better UX for sure. And so yeah, guys, I mean, you can't be pleased

about this if you're a DeFi bull. It kind of makes you wonder where we're at in the development of the entire space as a as a whole. This is definitely something that we're going to talk about on the show at D tomorrow and Wednesday. And yeah, I mean this affected Morpho. It affected um other looping markets, other lending markets. I saw Rob from Infinifi post that they had about a think 40 or $60 million pulled out of their protocol, excuse me. And it's just not good. And I I can check in on USR right now, but I I don't think that it's came back. Um

yeah, I mean USR is trading at 22 cents on the dollar. Wow. Wow. It looks bad. I mean, it's it dumped. It had an initial rebound and now it's back to the lows. Wow. I don't think this one's coming back guys. I really don't. Unfortunately, I don't know, but I don't think this one's coming back. All right, guys. Let's move on here into uh next post.

Um, everyone watching Tao price action. Nobody watching what's actually happening inside the network. Subnets stop being experiments and now they're generating real revenue, signing enterprise clients, and publishing peerreed research. Interesting. The subnet layer is where value actually occurs, not the token ticker. And so he gives us this list of the subnets. We heard from James about shoots and about Templar, those first two, but have not heard about these other. So if you keep scrolling down, you'll see these last couple here.

Drug discovery, early stage, confidential compute. Yeah. Okay. Okay, so honestly guys, I think these are going to be some of the best performing AI assets that are going to uh come from the next kind of AI crypto cycle. I think this is being slept on. We have Rob on later today to get more of the kind of Intel. I feel like these these are going to be bit up. If Tao runs, these things are going to run. I feel like these are all really low market cap. the market is waiting for like the next like so what happened was no of November 2024 and the end of that year we had this crazy AI run and the market was begging for something like

this like they wanted to see these like actual high quality legitimate AI tokens and instead what we got was absolute garbage. We got Zero Bro agent making some music. We got some terrible posters. We still have AI XPTt, but now we have something that is believable by people who don't really know AI. It sounds good. It looks good. Decentralized LM training, computer vision, data pipeline, all of these things. They sound legitimate. They they seem like they're actually doing something. You've got big names talking about them. Tao is running. Guys, I think there's all the recipes here for

these subnets to have a big run. Uh, I don't have any exposure to any of them right now, but I think that this is probably a decent list. And if we get an inkling of an AI run in the in the crypto space at all, if we get an inkling of it, I think these things will run. And so, I think you guys will want to have a look at these and pay more attention. I wanted to bring this up because I feel like I feel like not enough people are talking about this. And I know everyone in the market is waiting for an AI kind of like like AI catalyst to really get this thing going.

And I I just feel like this is a good enough one that will that could turn into a narrative. Especially because especially because the subnetss are like liquid venture gambling. Like you look at them, there's like 128 of them. It's really like just pick, you know, blindfold and pick. And you know, I think this is a decent list, but there's tons of them. So guys, that's my take on Bit Tensor. I think that there is an a pretty solid chance that, you know, these could do well, these could run. And yeah, I think that um that is what we have. I think that about wraps us up with the news. Um before we get into our guests, we we're going to take a quick

quick break. But first, let me tell you about Relay, our one of our amazing sponsors, relay.link, guys. Quick shout outs to them. An easy way to swap tokens across multiple chains from one interface, enabling consolidation on on assets like FOMO, so you don't have to worry about what happens under the hood. Better UX for you and your users. Start swapping seamlessly today at relay.life. Guys, we're going to take a super quick break. I'm'll be right back with our first guest, Sammy Star of Transact and more. Guys, welcome back to the tokenization tower, the nest, brought to you by our friends at Plume.

We got a ton to talk about today. We have three great sessions. See you guys in just a second. Hey, hey hey.

Heat. Heat. N. Heat. Heat. N. Heat. Heat. N. Get out of here.

Heat. Heat. N. Heat. Heat. N. Hell yeah.

We are so back. So back. All right, guys. We got Sammy Sammy Start, the CEO at Transact. He's going to join us. They are doing a lot of crossber payments, remittances and more in the stable coin landscape. And as you guys know, our NEO finance kind of thesis convergence on where the digital asset market is meeting finance. Uh actually recently in the stable coin landscape, we saw USDC overtake Tether for total amount of transactions volumes on a per month basis. This is actually something that was quite flipped for a while where Tether was dominating pretty much 98% of the time. Circles came out and is now

leading as of last month. We also saw uh USDS rise back above 11 billion total outstanding supply and stable coin total market cap is reaching new all-time highs which is not characteristic is not a characteristic of a bare market. In every previous bare market, we've had stable coin supply decline significantly. This is a classic tell of a bare market. In this one, we are seeing stable coin supply actually increase. Just like this past bull market was significantly different from a price appreciation perspective, from a time range perspective, from a kind of market price action perspective. I

expect this bare market to also be different. Frankly, I wouldn't think it's going to go as deep as it has in the past, and I don't think it's going to last as long either. I don't have a crystal ball. I might actually order a crystal ball for the Nest, but that would be what I would have to say. And I think stable coins are a tell of of that. So, what are we going to talk about with Transit? Well, they've they processed over$2 billion dollars in volume last year. They raised $60 million with backing from Tether and they have stable coins, payment primitives, dozens of regulatory licenses and regimes. They have direct on and off ramps and more. Really, what

I want to know is who's driving the most amount of flows, where is the stable coin adoption happening in in real time. What are we missing? Like what is the market missing from this puzzle? And more. So, I think we're about ready to get him up and let's bring Sammy up. Let's talk stable coins and let's get fired up for our first guest of the week. We've got an insane guest lined up this week, guys. I am really stoked to bring all of this content to you before we go to K next week. Without further ado, we're going to bring you up the CEO of Transact. He's here, Sammy Start.

We're live from the Empire State Building. Sammy, welcome to the show. >> Hey, Andy. How you doing, >> man? I am awake and I am alive. >> Good. >> Were you monitoring the situation this past weekend or did you enjoy some nice time with your family? Cuz there was a lot going on this weekend. >> There's there's a lot going on. Um what are you referring to specifically? >> I don't know. Just everything and anything. I mean like the headlines these days, it's just it's never ending. >> It's it's a crazy time. Yeah, it's a crazy time for sure. >> It's a crazy time to be in stable coins, too. It's a crazy time to be on the border of kind of inst in institutional adoption, uh, payments, everything that you guys are doing at Transact. I know it's your first time on the show, Sammy.

I'd love to just get a bit of a brief of kind of what your background is, how you got started at Transact, and just kind of what it is that you guys are really focused on. >> Okay, great. Yeah. So, so me personally, um, I'm from London originally. I have a technical background. So I studied physics and computer science and I started my career as a software engineer and then I came into this business because I was working in financial technology and I saw that the onboarding problem was something that was very difficult both on the side of the fintech that was trying to onboard the user and then also for the user to onboard into fintech applications. It was a very very difficult problem that that needed to be solved and I also got into blockchain and crypto in my spare time and kind of tied the two things

together and uh it was my belief when I started this company seven years ago that blockchain would be the substrate that binds all financial technology together and um it's it's taken a while but we're starting to finally see that come true now in 2026 where with stable coins with blockchain technology we're we're finally starting to see apps start to use this um for money movement for real use cases. >> Yeah. I mean I mean$ two billion dollars of volume for you guys last year processed tons of new jurisdictions, countries, adoption happening. Um I think people are curious about like what is driving these flows, right? I think

people understand crossber remittances, payments, these things, right? But like I think there's more to the driver of these flows, Sammy, from your side, from the business side. Where are you seeing the most flows coming from? Is it from institutions? Is it from family offices? Is it from banks? Like where is the true totality of the flows coming in? And and has that kind of spectrum changed over the last year or so? So, Transact does do some institutional flows, but what Transact is best known for and really what our business is is retail on and off ramps. So, Transact does retail on and off ramps and we get those retail on and off ramps integrated into third party applications. So, it's kind of

like a B2B TOC if you will where we're doing B2B sales and getting our software integrated into apps like MetaMask, Trust Wallet, Phantom, etc. And then the users of those applications are using us to move money between fiat and crypto or fiat and stable coins. And um that's a really interesting um area because you know there are a lot of so-called stable coin infrastructure companies that are doing money movement for corporates but there really isn't a great solution um that's doing it for retail and and that's what we're providing. And um yeah, over the last few years, we've been best known for allowing people to buy crypto in a lot of the major wallets. Um now, what we're starting to see in 2025 and 2026 is we're starting

to see a lot more use cases around money movement. And Transact has um evolved its product into a much more white label and modular set of APIs to enable these kind of use cases. And what we're really seeing now is is things like um payroll uh remittance and uh neo banking investing uh all all these kind of use cases being powered by stable coins and and transact being an infrastructure for that in the retail space. >> And are you seeing a monetizable moat here on on the fees, right? Like do users really have a preference to use Transact for a given reason around the fees or the convenience? Like there are

so many on and off ramps. There's a lot of competition here. What would you describe as the general moat in this category and like do you guys have a monetizable moat? >> Well, um our moat is um is a few things. One thing is is that Transact has global entities and licenses and banking rails all over the world. So we've established entities in um UK, Poland, Austria, US, Canada, Australia, Hong Kong, Dubai, um uh many many countries around the world, many more than that. And then in those countries we have local compliance stuff, we have local licenses, uh local banking rails and um that's a lot of

infrastructure. So, so very very operationally complex. When you see transact, it looks like a very simple uh sort of exchange thing, but underneath that there's a ton of regulatory and operational infrastructure. And um it's one thing just to get the licenses, it's another thing to actually operate that at scale in so many jurisdictions, all the edge cases around anti-moneyaundering around um uh risk and fraud and and uh compliance. And then another thing on top of that is the um obviously the running of the product, the money movement, the liquidity, all of that kind of stuff is is complex. Um but then the actual distribution of that product, it it's also a very complex product. So um just moving money between fiat and crypto is

one thing, but making that into a modular set of APIs that can service different use cases. like it's very different the way that an exchange would want to on-ramp a customer as compared to a uh remittance company as compared to a payroll company. In some cases the payments might be from one person to themselves. In some cases they might be to a third party. Um you might need the concept of virtual accounts. You might need to um move KYC between different providers which is something that is a big hot topic for us at the moment. So, so, um, our product is is a lot more complex than it might just seem from just saying, uh, fiat to crypto conversion. And so, um, that that's all like moat, you can say. And, um, but but

yeah, I mean, if you wanted to build build this business from scratch, it would take you at least five years to build out all of the licenses and entities and infrastructure that we would have. >> Yeah. Yeah. Yeah. And and as far as on the on the licensing on those kind of core core components, do you guys have a team that is like responsible for different like geographical areas? Because I know these rules for banking, for payments, the they all vary, right, from different country to country or state. Like how do you how do you actually accommodate all those different sets of rules? You said it would take you five years. I assume you've done a lot of the hard work upfront. What What

did that actually look like? >> Well, um when when we first started the company, we were live in uh UK and and India, funnily enough, >> cuz that's me where, uh you know, I'm from the UK and my my co-founder is from India. Um, since then we we kind of expanded out into different jurisdictions. And then every time you expand out into these jurisdictions, you firstly you have to hire local compliance staff and then apply for local licenses. Um, then there's also local reporting requirements that you have to set up in your operations.

>> Um, and very often there's there's things that we actually need to build into our product. So, you know, for example, with the FCA license or with the Mika license, there are actual um uh product implementation things that you need to put on your road map in order to stay compliant. So, it's it's a big upfront effort. Um and then it's also a big ongoing effort that that consumes a lot of the bandwidth of what we have. And actually just moving money from one place to the to the other is not that hard a problem from a computer science point of view. It's just like add here and subtract there. It's all of the compliance and um and risk stuff around it that makes it really complex but also

really valuable. You know, it's also part of the reason why transact is valuable and why people pay us money to use our services. >> Yeah. You know, I'm curious if if you've built this out in such a way that you feel like, okay, so on the compliance side, on the licensing side, on the kind of global side, you've spent a lot of time building out what is required to actually make this thing work uh you know, in a compliant manner, in a phase or or sorry, a safe, fast, and secure manner for your users. And you've been thinking about the the users as as humans. Have you been thinking more and more about your user base being agents on chain or kind of like what does that even look like from your side?

Everyone's talking about aentic finance, aentic payments. There was a funny tweet over the weekend that was like the worst thing in crypto right now is that you have to pretend that you care about aic payments. I don't know. I I thought it was funny, but like where's your head at on this front? Like is transact prepared for an agentic first world on chain? we are prepared for it. And the way that we're preparing for it is um you know just generally uh building the concept of a nonhuman user into our system and a nonhuman uh um API key and and all that kind of stuff and how does that uh fit into our compliance processes, our operations,

etc. Having said that, uh sorry to bum you out, but the reality is there's there's not that much um payment flow happening on that stuff right now. >> Yeah, >> I do think it's coming very very soon, you know, possibly within the next few months. Uh but the volumes seem kind of low right now. We we are um onboarding some customers who are doing this kind of stuff. Um and and we we do expect it to kick off really soon and and we are prepared for that. Um, but right now I think it's it's very much at a sort of testing stage. You know, people are trying this stuff out. People are kind of nervous to give in an AI agent free reign over their crypto wallet or their credit card still.

>> Yeah. >> Understandably. >> Yeah. Yeah. Yeah. I mean, yeah. It's it's still very early. It's just there's just been this kind of developing idea in the space that well, crypto was meant for robots, not for humans. You've got all these zerox addresses. you've got all these um intricate transaction hashes, different smart contract programming languages. Um but at the end of the day, for a lot of the work that you guys are doing, which is a kind of like that last mile part with the with the on and off ramp of the company, that that's typically going to be a human doing that. I mean, unless these these agents have a bank account and a crypto wallet, I don't see that happening. So, it's more of like the agent to agent and

machine to machine commerce side rather than that last mile problem. Um, but it seems like this last mile problem is something that has gotten a lot easier for the space to solve, but it's still is still a problem. Like I'm curious what the state of that actual like dynamic is. How how hard is it compared to the last couple years for Transact to kind of solve that last mile problem? Are you guys seeing more receptiveness from banks, from other jurisdictions to be open to this? Are is it more restricted? Like talk to us about the development and the evolution of this kind of last mile problem for on and off ramps.

>> Yeah. And just to be clear, you're talking in general. This is not specifically about AI. >> Yeah. >> Okay. Okay. I just want to make sure I understood the question. Yeah. So, so the the banking last mile problem continues to be the biggest bottleneck in in what we do and uh that I'm saying that with with a lot of challenges in in order to to deliver our product like all those things that I just said you know licenses international infrastructure uh a lot of payments infrastructure but the bank account um is something that's very hard to get and maintain in a lot of different countries still and there's really only a handful of banks in each country that support crypto if at all.

You know, there are some countries where there just aren't really any options still. So, that that continues to be a major bottleneck. I think that it will open up, you know, as regulations become more clear and and banks have more more clarity. And in in the US, you have the Genius Act, you have the Clarity Act, which should >> should help with that. and other countries have their own things going on which which does help but I think for now there still is this feeling of some kind of operation choke point where where you know the banks don't really serve a lot of a lot of um fiat on offramps and and it makes it very very hard for us to um to operate much much harder than it should be.

Yeah, man. I mean, that was that was such a silly part of time where Silvergate went down and Signnum had issues and there was all this kind of like constrictiveness on the on the kind of onchain ecosystem, right? And then and then look, Kraken's got a Fedwire account now. You know, this is going to keep happening. We're seeing OC charters, uh, you know, actual banking licenses for different, you know, uh, onchain protocols, etc. Um, you know, I think that that that this is opening up, right? Like it's like your job should be easier.

>> Yeah, it it should be easier. And, you know, over time it is getting easier for us, but I wouldn't say that that's because the banking um offerings have gotten better or or or more um you know, and if anything, we've seen a lot of crypto friendly banks shut down over the last few years as well. uh like the whole silvergate thing and and you know all those other uh SBB and and all those other banks that went went down. Um I think as we get more mature and larger uh it does get easier for banks to work with us because their risk department can put us through more easily. But it it continues to be a major bottleneck for a lot of people to

to use this kind of infrastructure. And in a way transact actually acts as a layer of abstraction on top of that and allows people to to use this kind of infrastructure without having to interface with this broken banking system. um and it allows them to do that across all the uh different jurisdictions. So this is something that we've kind of gone country by country and solved and uh it's it's painful but uh we have solved that in a way that allows others to leverage our infrastructure as well. >> Yeah. Yeah. One thing on that on that point is there's a kind of a a push back happening from the banks on the Clarity Act and some of the stable coin yield rules right now because they feel that there's going to be a lot of capital

flight from banks if this kind of stable coin yield where all you have to have is stable coins idle in a wallet and you get to earn yield. there needs to be this kind of like active step in depositing it somewhere, actually putting it into a yield product is kind of what they're arguing. And there's different little nuances here. I guess what I'm curious about is do you think that do you think that that that stable coins could actually cause uh a capital flight from banks? Like is that a realistic thing to to think or is is this like an overreaction from the bank side?

Well, with with the Genius Act, um, which is quite smart, is is that they've they've stipulated that any stable coins that are compliant with the Genius Act need to have reserves that are in um, treasuries, which is good for the United States because it means that that money is being um, used to uh, to help the US. Having said that, um, every money that's in stable coins, every dollar that's in stable coins is is a dollar that's not in JP Morgan Chase or or, um, other banks. And so it it is it is competitive. Um, and eventually the

banks will start to embrace this, but um, the banks right now have a monopoly on on money movement, on a lot of financial products. And once you decouple the um the rails for dollars and and and the actual financial products, it reduces their monopoly and it it reduces their ability to charge money on things like overdraft fees and um credit card fees and and loans and and and all these products which are somewhat predatory. And um it it it allows you to unbundle and and rebundle financial products into better services.

And so I think it is it is uh against the interests of the banks and they either have to start embracing the technology which some of the banks are doing um or it will replace them uh in in the same way that the internet replaced Blockbuster. >> Yeah. Wow. I mean look I think that the I think the capital flight worry as you kind of say is perhaps a bit overblown but I think that the the snowball is going right like it's growing. It's growing. this is happening and the like the good news is that the whole and like the like the whole industry was kind of against banks against adoption from in institutions that's kind of like changed a lot over over the last six sixish

months. It's been a really really big kind of restructuring of how we think about bringing value into the world and kind of more integrative into the system rather than like overtaking the system. Um but yeah, I mean like there's pressure being applied right from the stable coin issuers, from the payment companies and and then you kind of mix in this whole agentic thing happening and like there's very clearly pressure being applied to traditional infrastructure. I mean, look look look look at the 247 trading announcements coming from the NYSC, from the NASDAQ, all of these things, right? And so it it kind it kind of seems like there's like a re a reshuffleling of the infrastructure required from a lot of

these legacy players in order to kind of keep up with this new world. >> Yeah, absolutely. And and if you think about if you think about this product, so let's let's say you have a a wallet, a crypto wallet that holds stable coins and then on top of that you have high quality retail fiat on offramps and you then have a product that starts to look like a bank account like a like a US dollar bank account. If you can um receive an a payment or a wire and move that into stable coins in your bank and if you can move stable coins in your bank and send a a wire um either to yourself or to a third party that is essentially um a US dollar bank account that is now something that any

individual in any country around the world can hold and operate. And then on top of that, you start to plug in other financial products like you can have a crypto debit card where you can liquidate stable coins and pay and buy a coffee in a in a store or you can have investment products such as treasuries on chain or stocks on chain or um other financial products such as loans and you put all those together and and that is now something that disrupts and displaces a lot of those financial players that you said. Now the the interesting question is that is that innovation going to happen from the side of the web 3 applications where the web 3 applications are going to embrace fiat on-ramps and they're going to start to look more like bank accounts or is it

going to happen from the other side where a lot of the neo banks and legacy banks start to embrace blockchain and crypto and they start to look um like a stable coinpowered financial services. Um I think uh it could go either way or it could be both. >> Yeah. Do you have a do do you have a take on which way? Like do you have a a prediction on kind of which way it's likely to go? >> I um well well the the the legacy banks and and fintexs have a distribution advantage currently because they they just have more more users. So if they move fast and some of them are moving pretty fast like um like Robin Hood and and you know PayPal to some extent um

>> are they're they're embracing a lot of blockchain and stable coins. Um having said that the they have they have a lot of legacy systems to replace. I should also mention Revolute is is doing a good on that job on that. Having said that they have a lot of legacy infrastructure to replace and so even though they have this head start in terms of user base and distribution the um the web3 applications and wallets and exchanges they're building from uh you know cryptonative web3 native from day one and that gives them a bit of a product advantage. So >> I really couldn't say and I am uh you know also transact we're agnostic of that we we serve both use cases. So it

doesn't uh matter too much in terms of our future. We're like the picks and shovels >> for that. But um I I'm I'm honestly fine with both because uh you know if if if the web 3 apps grow into some new financial apps that would be a great feature. But then also if if these web two companies are agile enough to embrace stable coins so fast and integrate it then you know good for them and more power to them. >> Yep. Yep. Last thing for you. You raised $16 million led by Tether and other big investors. Where is that capital being deployed? What are you uh what are you spending on? What are you investing in?

>> A lot of the expansion that we're doing right now is international expansion. So, we're setting up a lot of entities and licenses in different countries. With that comes staffing requirements, compliance staff, local operation staff, and then it also requires us to hold more capital in different countries. So, so that is quite a capital intensive uh growth that that is one axis of our growth. Another axis of our growth is that we're expanding into new market segments. So, we're really trying to tackle uh remittance, payroll, uh neo banking, investing uh not not just from a web three point of view but from a a holistic finance point of view trying to provide the new rails and infrastructure for those market segments. In terms of

the core staff uh core staff that we have in terms of software engineering, product etc. we are embracing a lot of AI. So our team size is not growing that much in that sense just because we're um we're able to squeeze a lot more productivity out of out of less people. Um so so yeah there there's in some areas we're growing a lot in some areas we're we're just um staying lean. >> Yeah. Could you just get into that just a tiny bit? I I think people are going to be really curious like what are you having your employees do with AI to like elevate their productivity? What does that actually look like such that you don't have to hire more people? Like what are the types of employees and like what are you kind of pushing them to work on or or kind of do?

>> The biggest one is software development. So um in the past you know a lot of software was just written by hand. Now a lot of it is is written using um uh code generation. A lot of the tests are generated. A lot of the uh QA is done with with uh um AI. So software engineers roles are changing and the product specifications are becoming arguably the most important part of the software development life cycle where our engineers are expected to have very clear idea of what it is they're building. What are the business requirements? what are the product requirements? The actual code implementation is becoming easier and faster and and so you need less people

just to write lines of code and and do repeatable stuff. Other than that, we're um we're using a lot of AI to query data in the company. So um previously people would have to come to our data department and request hey can you give me this uh information on this uh type of transaction or or this market segment or whatever. Now an AI is able to pick that up translate that into SQL queries run that through our database and give the answers that are that are needed without any humans having to be involved. So so less less uh less people more automation there. And then of course, you know, we're using a lot of uh Claude and Chach just in everyday uh business administration as well.

>> Yeah, Sammy, man, thanks for spending some time with us. >> Uh we're in New York. It's a huge week here. Digital asset summit is on. We are in the Empire State Building. We talked about stable coins, >> Aentic Payments, even though you're you seem bearish on Aentic Payments um on off-ramp last mile problem. Congrats on the raise and on all the success in your adoption, man. Great to have you on for the first time. Look forward to having you again. >> All right. Thanks for having me. This this was awesome. Thanks. >> Cheers, Sammy. >> Yeah. Bye. >> All righty, guys. Active Payments are not quite here. According to Sammy Start, the transact CEO, um they have clearly a good business model. I almost was going to ask him if they're if they

were going to do a token. Don't think they will or need one. Um, but there are a lot of competing on and off ramps in the space. Transacts been along for a long time and has done a great job. Um, so it's great to have Samuel on. Guys, we're going to take a super quick commercial break. We got our next guest and then we're going to have our our final guest, Rob Greer. Guys, we're live. Happy Monday. We'll see you in just a second. Heat. Heat. Okay.

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Hell yeah. Hey, All righty, guys. Welcome back to the

nest. We are live with Anjan Venode, a managing director at Parafi. Welcome to the Nest. >> Thank you. Thanks, man. Good to be here. >> It's good to meet you at that happy hour during uh I think it was SmartCon week. >> Yeah. Yeah, exactly. A lot's happened. >> Markets were green back then. >> That may have caused it. you know, we met and then the universe said, "No way." Well, now we're here. I see. >> Yeah. Yeah. Yeah. Well, you've got an interesting background from California doing work um and being a part of some university groups as well as research. Then you got into Parapi. Um man, what got you here? How did you get to Parify?

And what is Paraf? >> Yeah, so I I've been at Pari now for coming up on on seven years and you know, we're we're a crypto focused investment firm. Been around since since 2018, manage around two billion. We um you know, the firm as a whole has been a very early investor in DeFi. Back in 2018, we were some of the first investors in a lot of the core primitives like maker and a unis swap and uh funny enough before I before I joined Parafi my first foray into crypto was was Bitcoin and specifically remittances. I was trying to send money to family in India and it was super super expensive and so there were a couple companies back in the day that allowed you to use Bitcoin and now in hindsight it's a terrible idea because by the time you send a 100 bucks by the

time it gets to India maybe 90 but the idea was was quite interesting. So then kind of stuck with it, started networking in the space, got connected with the team. We were very kind of small back then. Um and then yeah, we've kind of grown over the years and um it's been an awesome run. >> Yeah. Yeah. So what is Parafi's main kind of role in the digital asset space? What is the what does the firm do? >> Yeah. So we're uh we're an investment firm. So we invest in um early stage late stage companies in the space. We you know buy you know liquid tokens. We're involved in public equities. We run you know different credit strategies across the board. So you can think of us as a as a multist strategy you know investment firm um team of around 25 folks combination of investors engineers

but how I spend my time is kind of backing the next generation of founders helping them scale um helping them with product fundraising hiring that's how I spend most of my time >> yeah you guys did poly market as well >> yeah yeah yeah >> big win for you guys >> yeah we we've been super excited about poly market and chain we first met him chain back in 2020 um we've kind of doubled down over the years and um it's been awesome like I know poly market's and the entire space is getting a lot of heat right now, but we're very early and um I think it's it's going to be one of the largest asset classes as a whole, just prediction markets in general. >> Yeah, man. I mean, I don't know if you saw the clip from Hib and Mason from Panta on a panel and they were arguing

about whether or not prediction markets actually need to be decentralized. >> And it was like this kind of back and forth about like why and and kind of Hib was taking the stance that well, yes, they do. We can't really forget where we came from with all the all the regulatory uncertainty and kind of just like geoblocking and all these things that the space had to go through and kind of Mason was arguing well we don't really need decentralization in prediction markets. Khi runs a very you know kind of like lean hedge fund style inside their market making arm of their company. they run it like a a CME exchange or something and they kind of have this entire order book inside their own kind of centralized entity here. Um

>> I think this is a question that a lot of investors are asking across the space broadly is like what do we really need decentralization for and like where is their fugazi that we're kind of keeping on for the sake of it. A lot of it was regulatory arbitrage driven, right? You know, you had these Dow structures to avoid being a company in the states. You had all these kind of governance token structures to avoid being a security. A lot of this was regulatory arbitrage and just due to the lack of of certainty and clarity. We're starting to get that now. Obviously, with this new administration, decentralization is kind of less prioritized. I guess my question then is like where do we draw this line? like is there a are we losing the ethos of the space by kind of optimizing for more efficient structures or is there certain

categories and niches where like yes it's required and there's a lot of value there. How do you guys think about the decentralization spectrum at Parfy or you personally kind of investing in the asset class going forward like it's clearly shifted. What does that spectrum look like today? >> Yeah, I think what well you said it best. It's like it really is a spectrum. I think decentralization is talked about binary good or bad but I don't think that's really the case it's really spectrum so there are some use cases and products that need to be more decentralized maybe pick your layer one right and there are other products and use cases that I think can be more centralized and that's not a bad thing but with prediction markets I think there are trade-offs with both if you think about a decentralized prediction market you know you can tap into a

global base of liquidity you're not restricted to to one jurisdiction that's one and two what about and not speaking about poly market or cushy but in general what about permissionless Permissionless market creation right now is it possible for one team to go and create thousands of markets maybe. What happens when you have 5 million 10 million markets? >> Yeah. >> Who is going to create that? Is that one team or are you actually better suited to have hundreds and thousands of market creators around the world creating you know markets on esports or cricket in India or politics in Asia um in areas that they find interesting. So does that mean like everything needs to be decentralized? No. I think there are parts of the product stack and that can be centralized and there are parts that can be decentralized. But to kind of label everything as decentralization is

good, decentralization is bad, I think misses the actual nuance and the argument. >> Yeah. But there's definitely areas of value where like decentralization should have a premium on it, right? Like there's like people argue Ethereum has this monetary premium comparatively to like Salana, Hyperlquid, other assets because it's got this credibly neutral base layer that's, you know, decentralized to a certain extent. And so there's like there's like a decentralized there's like a decentralization premium, but there's also kind of like a discount in some cases, right? Like like Hyperlid is not decentralized really at all, but has a very large premium compared to other assets trading in in the space. Ethereum is and has this premium as well. It's kind of this weird dynamic here where teams are shifting away from Dows.

They're shifting into more kind of like centralized CC Corp structures. Is decentralization a cost or is it is it a premium now? Like how do you how do you value decentralization? >> I think a lot of it comes down to what is your what do the end customers want, right? So take Hyperlquid. I don't think the large users in Hyperlid care about decentralization because the product is great and it works well. >> Let's take Ethereum though. If you want a credibly neutral layer that every institution can come and build on, maybe that's something that's appealing to them. So I think the market-based approach where hey uh the product itself caters to what the customers want is the best approach. But if you take the flip side approach which is I'm building something decentralized for the sake of decentralization I don't think customers

gravitate towards that. So I think it depends on what the end customers and customers want. And look to your point on on cc corps I think it's healthy that tokens and dows are now evolving. I think that a lot of the dows were just theaters right they weren't actually accomplishing much. I'm personally favor in favor of having high quality aligned teams building for the long term that are wellunded and that may be more of a centralized model than decentralized model but I think that's actually how you ship products talk to institutions onboard folks you generate revenue which is very different than having a hundred different entities kind of fighting over kind of a pool of resources and trying to move things forward. So I think it'll depend on the protocol and ultimately what the customers want.

>> Yeah. Yeah. Yeah. I I think there's a lot more of that thinking happening like the like the customer first customer like customer centric really at at the end of the day. Um, we're seeing the evolution of kind of like the points of value in the space. For example, um, Salana Foundation, Lily, she put out this tweet, I think on Saturday, saying that that gaming on blockchain is never coming back. And it kind of spurred this entire thing about how the Salana Foundation is actually conducting their comms and all of this. And then you've got folks that are like very focused on like per tokenization, stable coins, some vaults, some other kind of DeFi activity and like very finance oriented.

I'm curious if your personal opinion of kind of like the value of blockchains or or the value that is being created in this onchain ecosystem has shifted. Like I think there was a lot of investment into tons of different categories, but there's a bit of a consolidation happening. We're kind of framing it as stable coins, pers, tokenization, and then kind of a mix of like vaults and DeFi in a sense, but there's got to be more to that. It feels reductive just to be like, all right, we've done all this work. There's four things that work. These are the four core exports of this industry. Like, good luck, have fun.

What are we missing? Like, what is actually still valuable? >> Well, I think to your point, like even if it's four to eight things and they're all around money, those things are incredibly valuable. If you just solve stable coins, right, tens of trillions of dollars of of M2 money. If you just solve tokenization, right, like DTCC announced their tokenization project, right, with Kanton, they move four quadrillion dollars a year, right? And they have a hundred trillion in custody. >> That itself is much larger than vast majority of TAMs that entire teams are going after, right? So I think that's actually not a bad thing that the market now is realigning on the areas that have the most value, product market fit, underlying demand.

>> In 2021, the the thesis was if we build it, they will come. If we build something in gaming, in decentralized social, in reststaking, you know, the idea was if you build it, they will come. Now it's all the institutions are here. There's a lot of stuff going on. Stablecoin tokenization prediction markets. Those TAMs have actually grown since 2021. So why not double, triple, quadruple down on the things that are working because the TAMs are growing much larger um instead of taking these more, you know, idealistic bets that are still very early. >> Yeah. The tokenization trend just seems like it has so much fluff on it though, man.

>> Yeah. I mean like it's very exciting but it seems very fluffy men. >> Why do why do you say that? >> It's just all right we're going to tokenize all the assets. We're going to bring them on on chain and it's going to change the way that finance happens. It's like okay for sure but like what we're doing then we're just bringing more of the kind of traditional assets on chain. We're going to give them 247 trading and we're going to unlock that same existing capital but onchain. Like the I guess like the area where I'm excited about it is that a lot of us have been valuing onchain environment as solely a place for crypto assets, not a place where the TAM can be addressable to a lot of other types of assets, right? So like your your average DeFi uh protocol, your average stable coin

protocol, etc. even just your average blockchain is like all right there's a total market cap of four trillion or so three trillion now and we're going to that's that that's kind of like our value capture area so I guess like the non fluff part is like all right we can bring so much more on chain the fluff part is like >> well unfortunately there's not many ways to really invest into this in a public way you can buy I don't even know what you can buy you like you can't buy any of securitize of superstate you can buy circle stock, but there's like there's fluff in the sense that I feel like it is it is it is slower than what people are saying it as, and it's not really happening quite yet. And so, yeah. Yeah. I mean,

yeah, I look I I think there are some areas I agree, some areas I'd push back. I would say look like think look at the if you just look at the past couple of months, look at what ICE is doing. ICE, you know, put you know, too poly market. >> They invested a big chunk of capital into OKX. NASDAQ's now working with with Kraken. You have the the DTC stuff that we that we spoke about. I think they're starting to realize it's not just about bringing, you know, US or Western capital on chain. It's about taking those products and selling it to crypto focused pools of capital, right? So people are living on chain. All the stable coin that's sitting on chain, all this Bitcoin ET that's sitting on chain, some percentage of that wants to diversify into real world assets, right?

So if more and more wealth comes on chain and sits on chain natively, I don't want to leave and go, you know, sign up with a brokerage and do all the stuff on the side, why can't I live and and do everything I want in finance on chain? Tokenized assets have to play a big part of that. And that's why I think you're seeing the ISIS and the NASDAQs move quicker. Now, as it relates to what that means for the investing side, I think what's different this cycle is it's it's a tale of two cities. We're in an institutional bull market, but more of like a crypto token bare market%. >> Right. But that is to me actually the opportunity because it's not that every single token goes up and to the right. I think there'll be a you know a select group of high quality tokens that are

fundamentally sound that capture the tailwinds of stable coins and tokenization. So look at the DeFi assets right the DeFi assets look at the a chaminos Jupers of the world etc which you know Paraf has positions on. Um they are all centering around stable coins and tokenization. They realize there's going to be this 10x growth in stable coins and tokenization. Tokenization itself is not enough. You have to do stuff with those assets. You have to put them into protocols. You have to be able to swap them autonomically, you know, 247. They have to be index pools, right? So, if DeFi is the way these assets are actually brought on chain and used, then DeFi may be one of the best bets in this in terms of the actual growth of tokenization and stable coins, if that makes sense. Right. You can own the the picks and shovels of maybe owning NASDAQ

or owning ICE, but the DeFi protocols also capture that growth in terms of how to invest behind it. >> Yeah. I I put out this tweet that was like, if these if the tokenization thesis is correct and trillions of dollars of assets come on chain in the coming years, which company will benefit the most? And the resounding answers were uh DeFi protocols, oracles, exchanges, and then a little bit of like the L1 or like some some like blockchain uh kind of uh asset. >> Yeah.

>> I'm curious, do you do you have a is it just DeFi protocols? Is that kind of like your number one or or like how do you like what are the second and third order effects of tokenizing all these assets? Like how can we think about this from like an investor's lens to like kind of get ahead of what's coming? >> Yeah. Yeah. Yeah. I mean definitely not investment advice but do research but look I I think the DeFi protocols are quite interesting because you get the best of both. You get all the permissionless assets and now the the composability with the real world assets and tokenization and now they have cash flows or buying back the token. There's a lot of tailwinds there. There's a lot of interesting stuff going on in venture that I think you're starting to see like whether it's new tokenization platforms,

new marketplaces, people bringing on longtail assets like tokenized collectibles on chain, watches, Pokemon cards. I think that's super interesting. And third, think about the legacy players as well. I think this is an area that's not talked about as much. Look at all the public equities out there that are now trying to do stuff in crypto. They will capture some of this value, too. Whether you're a fintech that's launching your own stable coin or the ISIS or NASDAQs or all these exchanges of the world that are now integrating tokenization, they see that benefits for their bottom line. They can launch new products. They get new revenue sources. So they could also benefit from this, right? So I think you can have multiple winners. Now if you say like there's a $100 of value created like what percentage goes to DeFi protocols versus the incumbents versus like upstarts?

It's like difficult to say, but um you know I think multiple kind of categories can capture that value. >> Yeah. On that note, uh Santiago, the exarify uh investor and partner, etc., he came on our show and he said that he thinks that basically the companies adopting stable coins as as part of their business to adopt increase their revenue, you know, their LCVs will outperform any token. >> I Yeah, I mean I I don't know. I don't know if I'd fully agree with that. I understand maybe I see where he's coming from but I think any token at least in my personal view maybe a little bit uh I would take the other side to that most tokens I 100% agree with but I think there are select tokens that I think you know will capture that tailwind and the

fundamentals of stable coins tokenization and um you know the other thing is these tokens the other thing that's talked about is you look at what a is doing right now right you have position a full disclosure they are moving away from this like equity structure and token structure and value grow to now driving all value to the token Yeah, >> look at what Ether, Jupiter, a lot of the large DeFi protocols are doing. They're hosting quarterly analyst calls. You now have clarity coming to market this year, right? So, when you have new regulation and these tokens operating like public companies in terms of investor disclosures, quarterly calls, one-on-one touch points with investors, real-time dashboards, these tokens are going to look and feel like public equities in a good way in terms of the disclosures and investor protections.

So, now you can unlock new waves of capital that never touch tokens, right? It's not just the crypto fund or not. It's not just retail. It's now institutional pools of capital to say, "Hey, I want exposure to largest money market. I want exposure to the DeFi super app on chain and this token is the best way to get that exposure." >> Yeah. Yeah. I mean, I wonder if you're a protocol founder and you're, you know, you're watching this, you're getting ready to launch a token. I just can't fathom that you launch the token in any similar way that's been done in the past considering all of the developments that the market is having. Like like even the mega EH people are getting flak right now because they're like oh when are you ever going to launch you you haven't hit

your KPIs on your you know stable coin or apps whatever. People are just so negative right now towards tokens. Happens to every bare market. I'm sure this isn't, you know, you've seen this before, but I do expect and and I'm super curious on your opinion that like old token, bad token is always a thing kind of like governance not really doing much on on cash flows, buybacks, etc. New token, good token here, I expect it to basically be what you're saying, a lot more like an equity, a lot more kind of like a actual asset that creates value and wealth long term. And then I think what may happen is that if you can't do that, you might just not be end up launching a token. Like you might

just just forego it. >> Yeah. >> It's just Yeah. I mean, I think it's a healthy thing like you want the market to correct and reward tokens and projects that actually produce value. Like there are tens of thousands of tokens out there. I think the more critical question is how many of those underlying projects have product market fit? And I would say it's probably sub 1%. Right? So the focus should actually be on the sub 1% of tokens that actually have product market fit. How do those tokens do? Not the 99% that don't have product market fit and the tokens don't do well. Well then it's not a token issue. It's a product issue. >> Yeah. Uh did you see the resolve exploit that happened in the weekend?

>> Yeah, I did. >> Yeah. So there's a lot of chatter about curators, right? And like what their role are, >> right? They're they're almost akin to like an RAIA in a traditional world, right? where they they kind of advise you how like where to put your funds and and they manage them, but it's in a non-custodial fashion. Uh it's obviously not regulated in the same way. But in this case, there was a really like weird thing that happened where the exploit actually happened and then Gauntlet, the vault curator, was actually continuously depositing back into the vault after the exploit happened because the oracle was hardcoded for the UR WTSR token. And so you had this dynamic where

the vault was literally already compromised and the curator was consistently adding to it after the fact. Yeah, >> kind of showing bit of a misallocation of capital and kind of a a structural issue here with vaults. I'm curious what you think the curator complex is going to evolve into because I feel like this is going to be a bit of a turning point. This is a huge exploit. It was like I think it was above $25 million up to like 80 somewhere in that. It's still yet to be seen, but like how do you anticipate the curator complex to evolve? because this is clearly it's working but then you get these really you know just sad and bad events that happen and then it's just like well clearly curators aren't doing their job.

Do you think that we have a curator problem in DeFi or like what is the curator complex and what's happening there? >> Yeah. So I think with uh how complex DeFi has become, I think vaults and some type of asset manager, I don't know if the current uh curator structure makes sense or is is ideal, but it's not realistic to expect millions or hundreds of thousands of institutions to go on chain via MetaMask or pick your whatever phantom. That's just not going to work, right? So you need these vault products first. I think that's like a very important kind of distinction. So now the question is who actually manages the vault? Um and how do they do that and what are the right disclosures? I think many people that provide capital into the vaults don't actually have a really good sense for what happens underneath

the vault. So I think one need to have very good disclosures and I think some are better than others in terms of what protocols does that capital touch. I mean you may see like the yield is kind of 8% it may touch these protocols but what are the underlying kind of levels of exposure that I'm exposed to different protocols different chains that I think needs to be kind of continued to be disclosed. I think look some some are doing better than others there. two, when it comes to to curators, look, if you're managing kind of people's money, that's a that's a big obligation. It's a it's a privilege, and it also requires a full-time team and effort. It can't be done on the side, right? So, I think a lot of the curators right now are kind of done as as side hobbies or side businesses. Um, it's not

exactly clear who's running the vault, you know, daytoday in the middle of the night, you know, who's going to come in and and tackle that. So, I think one is you need to make sure you have the right team and resources. And then the last thing I'll say is um incentive alignment. >> I think the big question is are all curators economically aligned with vault providers long term? >> That's a key. >> Well, that was the problem with this one was that steakhouse was the main risk manager for this specific vault, but they did not have any any draw down from the exploit. Like they were not a part of the like they didn't have any capital basically on on the line, but they were like one of the main risk managers.

>> Yeah. I mean, look, I think incentive alignment is is everything, right? Um, so I think whether you're backing a project with a token or investing in a fund or whatever it may be, you want to be aligned with them. So, I think as a vault liquidity provider, that's a big question. Like, are you economically aligned on the upside and downside? That that I think is a big thing. Do you have any capital at at risk? Track record is obviously very important. And look, what's surprising is people's memory is short. Go back in 2021, 2022, same thing happened with uh loans to market makers and different DeFi protocols, right? So the same problem is coming up again. The complexity of the issue is different, but the underlying problem is pretty much the same.

>> One of the things that I do like about vaults though that kind of hopefully solves this problem is is they is they shift from short duration to more long duration yield products, which we don't really have onchain. I mean, we've started to get them, but like the whole kind of idea of onchain was instant liquidity. Come in, get in. If you ever need to get out, you know, you you can get out. Now we have like three three-month term products, six month term products, but I think that we'll see the evolution into like one year locked up um you know uh vaults or deposits that give you extra yield, two years even like I mean in traditional finance it goes all the way up to like 5 10 years, right? 30 years. So do you think that that's a healthy development

for the DeFi ecosystem? like how do we get to a more longer duration time frame and yield opportunities on chain that kind of give us a better foundation like what does that process look like from your experience in parifier just kind of thinking in parallels to the to the traditional system what does that actually look like for for the onchain rails >> look I I think a lot of D5 protocols maybe without putting aside maybe the top two or three a lot of users aren't ready to deploy capital for a year I Think about one year ago where rates were completely different environment.

One year before that, completely different environment. So I think it's a unique institutional base that can underwrite where DeFi rates are. I mean, if you asked a 100 market participants, where are DeFi rates going to be a year from now? You're going to get like 50 different answers, right? Um, you compare that with traditional markets, you're going to get probably a much more narrow answer and much more sophisticated answer. So I think there's still DeFi is still very early and I would say immature. Um, and so a lot of the institutional capital I don't think is ready to lock up for one year. And the second layer is I think it still comes down to disclosure risk. I mean, every time we have one of these setbacks, it kind of hurts all of all of DeFi. And even though this was isolated to one or two or three different

protocols, kind of hurts all of DeFi because it's kind of bucketed together. So I think whether that means better disclosures, um, I still think we need insurance. I mean insurance is one of the hottest categories in 2019 and 2020 and that would I think at the surface solve a lot of interesting issues when you can actually underwrite and see how the market is pricing the risk right so let's say for example I I deposit into a vault on a large DeFi protocol maybe an insurance protocol or provider can say here's what it costs to actually you know provide uh insurance on the specific vault and you can see like wow that's a very high premium what's going on from a risk perspective now the challenge is you have to find protocols and people I mean Nexus Mutual did this back in the day who can actually

underwrite >> right >> which is difficult >> but if you can't find people to underwrite the risk what does that say about the underlying vault >> right >> structure >> right so in this specific case it was a morpho vault that was curated by gauntlet and some others and stakehouse was kind of doing the in-house risk and so Morpho's got this kind of unique design right where they have a you know they have hundreds of vaults on their on their protocol with different kind of curators they have kind of like tanched about risk as well as yields. Then A's got not a pulled model, but it's different in the sense that it's much more like top down uh risk manage, right? It's like we're only going to list certain assets. There's certain assets that are in E mode. There's

certain assets that can that can affect the whole pool, but typically they're like kind of like isolated out, but not this in the same way as Morpho. Do you think one of these models is better than the other? like is there a I know there's pros and cons to both, but how do you think about evaluating the onchain lending and the difference in these two models? >> Yeah, I I think you have room for both. Like even in a you have a v4 which the team has is building towards and launching soon that's actually going to have more of these elements of like vaults and isolated structure along with the broader kind of pulled model.

>> Look, I I think DeFi is heading to a space where we have too many different types of borrowers and lenders to pull everyone into one market structure. So that's one, right? The second is when you start layering on tokenized assets like private credit, right? Like that I think is a very different risk profile than posting ETH, right, as CL obviously, right? So you're going to need professional asset managers, curators, whatever you want to call it to actually underwrite that risk and isolate that risk to those specific markets. So I think for um certain assets, you're going to need these isolated kind of vault products and then for the larger more liquid assets, you can have them pulled. I don't think it's either or. The other trend we're seeing is kind of lending as a service. So as more and more fintexs come into the

space, they want their own borrow and lend market natively, right? Like why be part of a broader pool one? Maybe they want to control for KYC compliance. They want to own the borrow and lender end to end. So then you'll have like more of the vault. So I think you'll have a little bit of a little bit of both depending on maybe whether you're servicing a more institutional customer or someone more crypto native. >> Yep. Yep. You said something earlier that I'd I'd like to to kind of come back to around the the difference this cycle, if you will, that's kind of causing this sentiment gap, which is like there's this really strong institutional kind of bull on and there's kind of like this crypto token bear. I mean, we've been we've been just absolutely beating this this horn. I mean, just being here for like three

weeks, you're like, "Wow, like a lot is happening." you go on Twitter for three weeks and you leave the city in and it's like it's kind of it's kind of a war zone out there. Yeah. >> From the investor's perspective though, how do you adapt to this new environment, right? Like we used to have, you know, the infamous alt season or the infamous kind of narrative. Do we need to be thinking about the market in much more of a fundamentals perspective? Analyzing kind of like price to fees ratios, looking at revenues or just kind of what is the process to start to think like an institutional allocator if you're just, you know, one of us average retail allocators in the space? How should we actually start to think about the market?

>> I I think so. So, one on the market side like these environments are the most exciting. This is like where all the alphas all the alpha is in these type of environments. It's it may seem like it's fall 2024, fall 2021. That's actually not much alpha because everyone's excited. These types of environments, everyone's written off crypto. They're skeptical. This is actually the time to double, triple, quadruple down. Whether you're a builder, investor, whatever it may be, like this is where the the alpha is. And so, I get pretty excited about that having gone through 2018 and 2022 and now now this cycle. >> I you remember back in 2019 when Facebook announced like Libra and like Bitcoin jumped like 60%.

>> Like two weeks ago, Facebook said, "We're coming in and launching stable cocoin integration." And no one cared, right? And like you can write that off as saying, "Oh, crypto's dead." Or it's like, "Oh, there's a big disconnect between what's going on on the ground and what's going on price-wise." So, I would say my advice is stay close to the ground, meaning what products and services are being built that actually produce value. >> Seems like a pretty obvious and simple question but >> I think a lot of people don't do that. They focus on the narratives. What's hot at the moment? Like right now, what are the areas that actually have product market fit? Like stable coins. There's, you know, thousands of companies. There's thousands of opportunities there in stable coins. Even in tokenization like if if you go deep you can kind of cut the fluff from what's actually

substance right so where are the flows going where is the TVL who's making money like tracking what's going on on the ground is super valuable I say same thing for prediction markets right there's a whole ecosystem of teams building on top of poly market and ki um and you're seeing this you know and a couple of other verticals now is it 40 different verticals no I think it's a couple but I think the best way is to stay close to what actually has product market fit right and the doubling tripling down Then e even on that I'm going to show you a uh a chart here. There was a there was a a post from token terminal showing uh the valuations of Hyperlid and Sky and it says not all revenue is valued equal. And so

Hyperlid's trading at about a $40 billion market cap doing about $800 million per year. Sky is trading at like one and a half billion and it's generating about 375 365 million dollars on an annualized basis. How do you justify this? Is per that much more valuable than stable coins or like how do how does an investor think about okay there's two protocols one is is generating double the amount of revenue than the other but is trading about 30 times higher. Is that overvalued? Are they both undervalued? I know there's ways to kind of like spin this, right? Always, but like how do you explain that dynamic?

Because if you're just looking at pure pure revenue, it's like it feels like there's obviously mispricing, but the market doesn't seem to be picking it up. >> Well, I think so. So, putting aside the the price of hype in Sky, I think when you're looking at two different protocols in general, um you can't just I think one you have to make sure are you looking at the same type of revenue numbers, meaning right, is there a gross revenue or net revenue, right? I'm not commenting on these specific I'm not sure um at least on these specific numbers, but typically like in crypto markets, people look at revenue apples to apples. It's not all the same. You have to account for maybe what incentives or um making sure they're actually apples to apples is is very important. So kind of gross versus net is is one very important. Two, the

quality of the revenue is really important. Is it sticky? Is it um is it recurring? Is it coming from one large customer? Right? Is it very dependent on one or two things? Right? I think not all revenue is is the same, right? All right. And the third thing you have to look at is the growth rate. Is that revenue growing at a faster rate than another protocol? Is it staying stagnant? Like I think there's kind of multiple factors when you look at kind of revenue. Um and then look like look, Hyperlid focusing on that from a product standpoint is front and center for being the news for the S&P partnership, right? The stuff around, you know, I think six of their top 10 markets are non-cryptonative, right? So I think there's a lot of excitement there. So I I think there's kind of multiple layers

to to look at that. But I would just say at a high level like revenue is not always, you know, you have to look at it at I think at a more nuance level versus just looking at price to earnings or just revenue versus revenue. >> Yeah. Well, I think that the space is getting to the point where like these things are going to be these are going to be start to be the things that we talk about rather than like this like narrative or this you know big trend or this main net or whatever it is. It's like there's this shift towards all right like what's the what's the bottom line? what's the expenses? You know, this shift's happening. >> Well, even I mean, it's funny like for crypto for years like mainet was always a big thing.

>> I know, right? >> And then it's like now you have to ask yourself like is that actually what the big event should be or is it like, hey, we just launched this new product, we have this many customers, we're doing this much volume, this much revenue. Like for for whatever reason, mainet was generated >> uh was um celebrated so much more than actual product. And now I think the market is correcting to focusing on yeah, it's great you launched a product, but like who's actually using it and what's going on. I think that's a that's a healthy correction. >> So, one of the larger topics kind of going on a tangent here away from the revenue, away from DeFi, which I've really appreciated this because I mean I'm thinking about these things all the time as an investor trying to understand like how is this space shifting? How are

how are allocators thinking about it and I think one thing that keeps coming up that's quite you know quite a bit separate from DeFi is AI is everyone's wanting to uh invest on the intersection of AI and crypto. You got projects like Near, Bit Sensor, uh all the subnetss, all these different types of kind of like aentic uh agentic finance and um payments and things. I'm just curious like what is Parafide doing at this intersection? Are you guys uh doing things on the venture side, actively investing in the public side on this?

Like what's the what's what's your view on the AI crypto convergence? Yeah, I mean I would say as a whole we've been um a bit more skeptical on most projects building in the AI crypto space because there's been a little bit more fluff than substance in terms of like do they have a product or people actually using it. >> I mean look Aentic Finance like every investor, every builder is talking about that. I think conceptually it's very interesting like medium to longer term. I think what I'm focused on today is what agents are actually using stable coins today. Like I get the longer term why stable coins are better than credit cards. Everyone's got their like five point talking line. I get that. I don't think that's like contrarian. That's like consensus at this point. Stable AI agents are going to use stable coins.

But I think now it's okay, what part like who's what agents are actually using stable coins today. >> I mean, I've seen a poly market and and in some of the prediction markets like you're kind of seeing agents trading, but how much volume is there and how much like I don't know if anyone's pulled this number, but how much in stable coins or crypto do agents actually hold today? Like actual agents. Yeah. And that number is probably like a lot lower than I think where people's expectations are. I think that'll grow like rapidly over time. >> But it's interesting yet sometimes you see the market get really excited about these themes over deploy overfund and you can be right medium to longer term but shorter term it can be a little bit more noise. And look I think the other dynamic is >> you know you know Stripe just launched

MPPP their own agentic finance uh structure right Coinbase has 402. I mean there's like 10 different um stable coin agentic frameworks right and now it's a question of who's going to adopt what. So, you know, I think we're actively talking to like all the teams building in this space. I think there's a lot of interesting opportunities, but going back to what I was saying earlier, it's easy to get ahead of your skis and instead of focusing on what are agents actually doing today, where is the volume, where's the traction and then taking a more calculated bet. >> Yeah. Did you see Chimoth and Jensen Wong talking about Tao and Ken? >> I didn't. I didn't.

>> Yeah. So they were at the uh he was on allin at the Nvidia conference and they were talking about it and just getting excited about decentralized intelligence and decentralized training. >> You know like in the early iteration of the AI investment thesis with crypto it was very much around decentralized inference and decentralized training and this kind of space. And then now we've gotten to the agentic part. But I think as you're saying like this part is ahead of its skis and I think actually maybe the decentralized training and inference >> part is actually kind of getting traction now.

>> What do you see as advantage of like decentralized training versus centralized? >> Well, it's it's kind of like okay so you have all these closed source models, right? You've got like the anthropics and and the open AIS, all these closed source models. you don't actually know what the training or data inputs were into the models that you you're using. And so the idea with decentralized training at least from the understanding of just pure pure data is you can get or you can have a model or an agent that has not been effectively tampered with. And so you have an organic agent or an organic model, if you will, that you can know that hasn't been, I don't know, maliciously given a like actions or or prompts to to, you know, take your data

or do something with your funds or not or kind of give you the wrong answers or be or be deceptive. But I think it goes bigger that than that because then you can actually have folks that contribute to the training as well. So rather than just having one kind of set you can have people globally have a incentive mechanism to actually contribute like uh quality data quality training data but as you say I you know we're that's where we're at. It's like I mean I think conceptually the data side's actually quite interesting because if you think about I mean there's a couple projects working on this um whether it's internet data I mean just so much data that I think these models will need to consume.

Now the question is like how what's the quality of the data? Is it good? And I think the most important question is anyone willing to pay for it? >> Because you can you can get all this data, right? But is anyone actually willing to pay for it? I mean I think maybe there are some I can think of one or two protocols that are kind of building in this space. That's that's interesting. And look even with even with agents too like and stable coins like I think it's pretty interesting when you when you like query an LLM, right? um you know right now like you're kind of just seeing the results of that but over time like as creators publish more and more content online they need to also be rewarded for LLM kind of using that data right and so how does that work in a did they have to go do

licensing on every single creator or could it be like a stablecoin microp payment where I query the the chat GPT or claude or whatever and oh I use this Substack article or like I queried and I got an insight from one of your podcast clips maybe you should get you know some monetary value from that right because otherwise like I mean you have to go license to all these different creators all these different companies that's going to be a big lift so maybe there's like I think a number of interesting intersection between agents LLM training and crypto >> but then that may also differ from what is the investment case right so you can both things can be right >> yeah this is kind of the in the in the doldrums of the crypto bear it's like okay there's all this adoption happening okay but how do I invest in it and it

continues to be >> it continues to be a question that's not super easy to answer in this time, but you know it's coming and you know that the NYC is thinking about launching their own chain or their own network and DTC is coming in. NASDAQ's going to allow 247 trading, aic finance is happening, tempo's happening, right? All these things. Uh but I think there's this big sentiment kind of like banging going on where it's like, okay, but like how do I invest into this? And I think like the like the answers are are just continuously proving not easy to like find that answer in the public markets >> compared to like you used to have a a narrative and be like, "Oh, I'm going to go buy Arweave because decentralized storage just got talked about on CNBC

and it's super exciting." >> Yeah. >> But I think that's also exciting and that's the alpha, >> right? >> Right. When it is actually a little bit more challenging to find the pockets of of alpha, but you know that they're taking place behind the scenes with all the catalysts we spoke about. That's actually far interesting, far more interesting than an environment where everything is getting attention. Everything seems hot and it's tough to actually short what's real and not real, right? I actually like prefer these types of environments versus everything's doing well. Every narrative is awesome. Um because you know it's not sustainable versus here it is a little bit more more sustainable.

>> Anjun, thank you for spending some time. >> Absolutely. Thanks so much, man. >> Thank you for having me. Welcome to the show. Tokenization Tower. >> Awesome. Thanks, Andy. >> Thanks, buddy. Guys, we'll be right back with a quick commercial break. Heat. Heat. Okay.

Okay. Get out of here. I'm back.

Hell yeah. Hey, hey hey.

Heat. Heat. N. Heat. Heat. N. You know I'm here.

I'm down. Hell yeah.

Down. Heat. Heat. Heat. Heat. Heat. N.

Get on here. Ladies and gentlemen, I think we have successfully upset some Ethereum bulls with the valuation disconnect. I did not mean it, guys. Ethereum is a monetary premium asset. I promise you, okay?

Okay. Just stick with the program, guys. We've got Rob Greer coming up here, the partner at Bit TensorFund. I'm rocking my nuclear power research department hat. Uh hopefully we uh stay out of the nukes here in 2026. Great conversation with Anjan. Um DeFi Parapi's big big investors in Jupiter, a Camino. And I think the part of the thesis that the market is kind of starting to pick up but hasn't really really really picked up yet is that a lot of these DeFi protocols have been valued as if they are only subject to the total market cap of crypto right and so what I mean by that is that there's a certain amount of assets on chain uh I think I don't know

what the exact TVL is but DeFi reached about like 200 billion or so probably on its way to a trillion but it's not going to get there without these newer highquality assets coming on chain. And so when you think about it, I think what Anjan said very well and kind of explained is that there's this shift happening where a lot of these protocols are valued based on what you know the collateral of ETH and rep Bitcoin and link and these others are but really where we're heading is to a world where they will be valued much more based on the total TVL and volume of actual kind of real world assets and these types. I thought it was interesting what he said as well about how kind of the institutions are shaping this cycle and that there's a lot of lot of

quoteunquote alpha happening there where kind of in these quiet market environments you get these you get these phases of time where there's actually a lot of kind of lack of attention on certain assets and more focus on kind of primitives that are going to drive the next bull leg and I think that's kind of what we're seeing um those guys are huge investors in Poly Market. I think they did the Poly Market seed, which I mean I think maybe was at a $100 million valuation or something. And so I think Poly Market last round was 12 bill. So I mean those guys are sitting very very pretty on that. What else did we talk about? Uh incentives obviously the USR event not great for for the program, not

great for the asset class. We'll see what happens there. But overall great show was glad to have him on. We got AI supercycle episode number 26 with Rob Greer, the partner at Bit TensorFund. This is going to be fun, guys. Bitensor is absolutely on fire and it is just blowing up on socials and absolutely hitting. So, we're going to run you guys through the uh basically here's what I got. I got Nvidia, what's going on with Jensen Wong and Shimoth. I got Tao and Subnets trying to understand what's happening there. getting some insight into Grayscale's bit tensor trust what's happening there um his take on AGI and how subnets are going to be a part of

that uh open AI still core perspective what he's allocating into um and just kind of like why Tao's mispriced if it is uh what does decentralized training even mean um he asked me an asked me that kind of like what is that thesis I kind of articulated it well right the open source models versus closed source models there's There's definitely a better articulation out there. And then when will people realize that it's too late for TA and like all are they? So let's get in. Let's go to Near. We're going to go to the Super Cycle AI Supercycle episode number 25. Let's go ahead and get the show started, guys.

Last guest of the day. This is going to be exciting. Bit sensor community is going to be all over this guys. We pull this together for you. Let's do it. Here we go. Quick quick commercial break and then we'll get Rob up. Welcome back to AI Supercycle, our

premier AI show airing every single week presented by Near. We cover the ins and outs of decentralized AI, privacy, and the future of this massive technology. Near is the blockchain for AI and the execution of AI native apps. You can check out Near's latest AI product at near.ai. Sit back, relax, and enjoy the show. Ladies and gentlemen, welcome to AI Supercycle episode number 26. We've got Rob Greer here talking about his big bet on big Bit Tensor and Subnets. AI Supercycle is our premier weekly AI show powered by our friends at Near. Check out near.com or near.ai to learn more about their AI product suite. Without further ado, let's bring Rob up. Let's

get this show started. Rob Greer, welcome to the show, man. >> Thanks for having me on, Andy. I appreciate it. >> Big big big BitTensor Bowl. I had James Ross in here, the co-founder of Synth, earlier talking about his thesis. We kind of broke down a lot of what what Bit Tensor is, what what the kind of protocol stands for, etc. Today, I'd like to get a bit more kind of into the nitty-gritty from the investment side and learn more about kind of what your vision is for decentralized training and all what's been happening. Before we do, Rob, would just love a quick background, man. How did you start your fund? How did you get into the Bit Tensor ecosystem? Welcome to the show, man.

>> Yeah, thanks. I appreciate it. And would would preface with saying that James is a great guy and Sith is an incredible subnet. They're having some serious traction right now and love to see what they're doing with basically taking their revenue and repurchasing their alpha tokens with it. Kind of similar to the concept of Nvidia has a ton of excess profit. Apple has a ton of excess profit and they re and they basically repurchase their shares. That's what some of these subnets are doing now obviously with the idea of increasing their market cap and then their tow emissions. So would would uh applaud James for that. would love to see more sub.

>> Well, I'm going to push back on that, but first please intro. >> Let's do it. And then uh in terms of my background, uh I come from a private equity investment banking background. Uh became an entrepreneur a couple years ago and and run Stillcore Capital. Uh we're one of the few funds in the world that's specifically focused on decentralized AI with, you know, a preliminary exclusive focus on the TAB tensor ecosystem. Uh we think this is you know the the third big you know the third big coin as Mark my partner calls it the third great coin. Uh the idea that you could decentralize intelligence just like you could decentralize finance with Ethereum and decentralize money with Bitcoin. So uh that's the underlying thesis and our third partner in the mix here is Jason Calacanis. Uh he's a member of the all-in podcast. Um

and you know that's the that's the three of us here. >> Jason is is a partner of the fund. Jason is a part a GP in Sto Capital alongside Jeffrey and myself. Yeah. >> Wow. Epic. Okay. So, I'm I'm just going to start off with the hard question. Why are these subnets not just like a glorified kind of like DeFi summer pool to Ponzenomics kind of uh setup here? Like you you take your towel, you stake into the subnets, then you get the subnet token back. How is this not just like a big kind of game of being early, being first, dumping the subnet tokens, getting more tal like kind of walk me through the flywheel here as you see it from the more innovative perspective. And why am I

wrong? Like how is this different than just kind of traditional yield farming and staking? Yeah, look, I I one I'm glad you said DeFi summer because I think we're on the cusp of what will probably be a DAI spring or summer. And uh I think it could make uh you know, DeFi summer look like a small little appetizer. Uh our kind of controversial controversial view is that decentralized AI has a much bigger TAM than DeFi. And I think we'll see it, you know, potentially orders of magnitude larger when you kind of look back 5 to 10 years in the future. I think five years from now people will look back on 2026 and kind of slap their face as if you know why didn't you invest in crypto AI. Um it was pretty obvious that the intersection of those two exponentials would produce some interesting you know

financial outcomes. Um but yeah look I think like the you know Bit Tensor is unique in that this is disproportionately an AI ecosystem that happens to get built on top of blockchain rails and that's that's a genuine statement. you know, the the people in the ecosystem, the developers, the investors are people that are from the AI community that are teaching themselves crypto, which is something that you've never really seen in the history of crypto before. Um, I would go so far as to say that Bit Tensor is like the iPhone moment for crypto where a lot of what we've seen in the history of crypto is just pure fluff and vapor. Um, I think there was a lot of pure fluff and vapor during the DeFi summer. I think previous kind of crypto AI um kind of uh enthusiasm, you know, early 2024, uh late 2024 when Trump got elected. Um

the one the one interesting kind of dynamic with Bit Tensor is that these subnets are going to pump like Salana, you know, shitcoins, for forgive my French, but you they're actually technically sound and foundationally sound like these are genuinely worldclass teams building decentralized AI kind of open source breakthroughs. And so the actual price justify you the fundamentals justify the price is what I would say about that. But I think we're going to see some pretty nice price action. At least that's how we're positioning ourselves. So you said Tao is like Bitcoin plus plus the subnets and that TA in 2026 is like ETH in 2016.

So what ETH in 2016 was kind of the inception of smart contracts and this idea that wow you could build things on chain in a programmable fashion right this was a a massive breakthrough in kind of like this idea of D apps right like decentralized applications you know if you're a developer you you could come build smart contracts you can almost build whatever you wanted does that same kind of uh idea apply to the subnetss like what is the comparison from smart contracts and kind of like programmability to the AI world with what subnets actually bring to to the Bit Tensor ecosystem.

>> Yeah. And look, I don't want to diminish Ethereum at all. I think like it's it's an incredible ecosystem and project and like Bit Tensor is building on the shoulders of giants of Ethereum and and and Bitcoin here. I think uh you know what what the Bit Tensor founders did here was take some of the best elements of Bitcoin and Ethereum and apply it to Bit Tensor and apply it specifically to the AI context here. And I do think like some of the deficiencies of Bitcoin and Ethereum were addressed uh when when Jacob Steves and Alo were building this ecosystem. So when we say like Tao is the Bitcoin of AI, that's actually a factual statement. You know, it has an identical tokconomic design to Bitcoin.

21 million tokens, four-year having schedule. Uh the first having was in uh December of 2025. So apples to apples of Bitcoin. We're in March of 2013 right now, which you know for the Bitcoin OGs would recognize that as the beginning of what was big Bitcoin's biggest run in history. Um so 82X was around this time uh for Bitcoin. And then secondly, I say, you know, you could have kind of an Ethereum ICO moment with Tao because you have these subnets, right? and you could have this demand shock of people rushing into purchasing these subnets which is kind of similar to what happened with the ETH ICO mania where you needed ETH to participate in the these ICOs. So what we could see with Tao, you know,

and this is hypothetical, but our expectation is that you have a Bitcoin style supply shock intersecting with a Ethereum style ICO demand shock at the same exact time with a fast takeoff in AI and just like stupid amounts of money, trillions of dollars around the world flooding into the AI sector. Decentralized AI as a category is about 15 to 20 billion. If you just look at the three largest centralized AI labs from OpenAI, um, uh, Enthropic and XAI, it's about 1.5 trillion. Uh, so I think that's like a 100x valuation delta. But that's actually an unfair comparison to what Bit Tensor is doing. So everyone is probably familiar with like these Chinese open source models which are like, you know, Kimmy and Deepseek call

it 90% of the quality of Opus 4.6 and 10% of the price, right? and they're trying to commoditize these frontier labs because it's, you know, a, you know, geopolitical angle with the CCP. Bit tensor is doing that to the application layer of AI startups. So 90% is good, 100% is good, 5 to 10% of the price. The idea is that Bit Tensor subnets are going to steal market share from the cursors of the world, the scale AIS of the world, all these other overvalued Silicon Valley darlings. And from a financial standpoint, you know, like a ridges for instance, subnet 62 decentralized cursor, they have a model that at least from the software engineering benchmark is at par like the same quality as like a cursor, but it is five times cheaper. And Ridges is a $40

million market cap. Cursor is a $50 billion market cap. There's actually like a 12 like a,200 times valuation difference. >> And so that's not for lack of quality. It's simply because it's information asymmetry. We're in like the Mount Gaus era of Bitcoin. It's It's like really really difficult to purchase these subnet tokens. Yeah, it is. >> But as soon as like Robin Hood, Coinbase has these subnet tokens. There's going to be a flood of retail capital into this. And um yeah, obviously we're that's why we're positioning ourselves and so excited here. >> Yeah. I mean, you've said this kind of AGI or this, you know, transition towards intelligence is going to be not just one model. this kind of e uh economic growth of all these subnets.

There's a couple here that I wanted to ask you about. Shoots, Templar, Score, some of these others. Could you just walk us through from more of like a fundamentals perspective like what some of the leading subnets that you're either in invested in or highly interested in are actually doing because I think you present a really compelling kind of uh comparative and comparable to the kind of closed source traditional AI space. But what are some of the actual subnets that you are uh actually excited about from a product and a team adoption pers uh perspective and from a kind of fundamental value creation perspectively excited by the innovation that's coming out of these subnetss like genuine worldclass breakthroughs. It just like

so happens that um they're going viral within niche corners of AI which is why like crypto Twitter is not waking up to this quite yet. Um but at some point they will. You know, our expectation is that retail is going to be purchasing Tao as the Bitcoin of AI and then people like us, you know, the the institutional money is actually going to be, you know, diving deeper into to, you know, kind of the brilliance that it that is Tao. But, you know, shoots is incredible, right? You know, I I believe that they're, you know, the inference layer for the largest number of tokens in the entire world uh for open source models. So uh it you know a decent chunk of Silicon Valley startups are probably running on shoots and they don't even realize that Tao is on the back end of this. So Tao

is B when people say that this is the Linux of AI that's that's what they mean. you know, Bit Tensor is powering just that single subnet, right? And uh shoots, I think, is is like a a core blue chip asset in Bit Tensor and always will be because Shoots is probably powering a significant percentage of Silicon Valley, but guess what? Other subnets on Bit Tensor are leveraging Shootes as well and Shootes will probably power a significant portion of the Bit Tensor economy. So like these subnets are selling external to Bit Tensor and internal to Bit Tensor. They have revenue in the form of Bit Tao emissions and then they have USD revenue. Um and that allows them to underpric an AWS. So for instance with shoots 85% cheaper than AWS for the same exact quality and less downtime. So you

know hot take you know when when AWS servers are going down because of the Iran war shoots is having no downtime. Uh so it's it's actually a superior product. People just have to wake up to that you know to it as an available inference option. And then um you know score is awesome. you know, uh, sports prediction. We re recently announced that, um, you know, they're a portfolio company of ours, uh, you know, within the sports context and vision context. We like the subnetss that are kind of, uh, you know, doc docs teams. We've met them in person. They have real revenue.

They have enterprise customers, but they also have a subnet that is going to be comprehensible to retail capital when it comes in, right? because you could have subnets that are doing like genuinely significant things technically, but if retail doesn't like it, then the capital is not going to flow there versus oh like Bit Tens or sports prediction subnet. I get that. I'm going to buy that, you know. So, uh trying to position ourselves accordingly there. Um and then Templar obviously is is is an incredible breakthrough. Th this was the decentral this was the deepseek moment for decentralized AI and you know this came out of Bit Tensor. Uh the idea that you could train a 72 billion parameter model with nodes across the world, that's incredible. Um and what's really exciting is the exponential they're on.

I believe they were training about 1 billion parameter models, you know, about a year ago, 6 to 12 months ago, and then they've gone to 72. And so what makes us excited for that in the coming years is that Bitcoin is the world's largest supercomputer by 500 times. Why couldn't that story play out with GPUs? Why why couldn't that story play out with decentralized training? It's just an engineering problem to stitch millions, tens of millions of GPUs across the world and use those in a coordinated fashion to train a model. And so decentralized AI models pro training will probably catch up to the open source frontier at some point and then potentially even the closed source frontier. And that's just a single bit tensor subnet of what of you know and the idea is that there will be many thousands in the coming years. It's an

entire economy. >> Yeah. If a hater or a person who wanted to criticize the tokconomic structure and the economics of Bitensor was to say that it's too inflationary and that it's going to be a hard time to fight the inflation of the TA token itself, how would you answer to that to an investor who wants to understand the plans to be able to actually accommodate the inflation schedule? Right? If if I'm an institutional allocator, I'm I'm looking at this. I'm seeing supply coming on the market. Obviously, we've got dynamic TOAO subnet expansions coming, but still this kind of inflation question will come up. How do you kind of address the inflation uh of Bitensor the TOA token

itself? >> Yeah, I mean that person would also be um you know taking issue with the Bitcoin tokconomic design. So that's the short answer to that question, right? Um so that's a pretty hot take. I think that's pretty controversial. Um and I would debate that point any at any point. Um but I think like the tow emissions in tokconomic design I believe is a qualitative update over bitcoin uh because you're actually shutting shuttling emissions to these subnets which are proof of useful work. It's proof of intelligence. So what Bitcoin got right is that you could incentivize people across the world to donate electricity to a network uh and incentivize them to do these SHA 256 math problems. And ultimately it's it's you know uh energy expenditure um and it

secures the global monetary ledger. uh with with Bit Tensor they're like okay well why can't we just make the incentive mechanism programmable so that you know um a weather prediction subnet could say hey miners all you GPUs around the world all you AI devs that have an extra Nvidia chip um we're going to reward you if you can uh submit a model that best predicts weather patterns and the winning minor gets rewarded with with tower you know these alpha tokens what ends up happening is through this ruthless competition uh you end up getting best-in-class uh weather prediction models and then the subnets could build a business around that. So these subnets are producing engines and then the subnet teams build a car around

those engines and you know obviously then USD revenue comes into the ecosystem. And so the idea is basically that the miners are an outsourced AI developer team and the network pays for it. And so if you're a, you know, a a brilliant developer in Poland, um, are you going to go to Silicon Valley and go to Y Combinator and get dilutive equity funding or are you going to start a subnet on Bit Tensor where the miners are your AI dev team which you don't even have to pay for? I think obviously you choose Bit Tensor and then all of the market cap built from all those subnets acrru to the token Tao because the only way you could get access to the alpha tokens is by first purchasing Tao.

Um, and I think that's like the upgrade over Ethereum, right? Because like the whole controversy over Ethereum is that like all these layer twos like what is the value of cruel to ETH right whereas with Tao um you have to purchase Tao first and it's really interesting positive sum game too because Templar pops off and that increases the the Tao price and then all the other subnets are like that's awesome because that benefits their subnet and their emissions. So you actually have subnets rooting for other subnets. It's a positive sum game. I think this is the most brilliant tokconomic design in the history of crypto and I think a lot of people would agree with me on that.

>> What do you think is the biggest misconception of the Bitensor ecosystem? What do people constantly get wrong about the design about the product about the actual blockchain or the subnets themselves? What are people constantly getting wrong and and how do we kind of reframe this misre mis representation or just mis kind of like understanding here? >> Yeah. No, it's interesting. Like I have a lot of these investor conversations, you know, we're talking to like family offices and uh fund to funds and you know, ultra high net worth individuals and it's the recurring thing is like I've heard of Tao, you know, that's a top 50 crypto token. It's actually the only thing in the top 50 that's that's AI and not like DeFi or anything else which is which is interesting. Um but

they haven't like kind of gone deeper. They haven't peeled back the onion that is TOA. And Tao is admittedly extremely complex. You know, Barry Silver, obviously OG Bitcoin guy, he likes to say, uh, you know, back in the early 2010s, you ask 10 people to describe Bitcoin, you get like 17 different answers, right? And that issue is even harder with Tao because it's like it's like describing Bitcoin, but then you have all these subnets on top of it. And that's what I mean when you say when I said like yesterday like Bitcoin equal Bitcoin or Tao equals Bitcoin plus subnets. Like that that's what I actually meant. So, it's extremely complex. Uh, and we're trying to we're trying to kind of like dumb it down. Um, and I think like in in the fullness of time it it'll be it'll be made easier.

>> But, um, misconception um, I don't know. I mean, I I think I think like just the complexity of the ecosystem is um, is is kind of a barrier to entry. And I really think that's what's been weighing down the TOA price than anything else. I think if if people understood Tao and what was happening here uh it would be many many multiples higher even without any change in the ecosystem uh from from where it is currently um but you know people are starting to wake up and uh the right people are starting to wake up for instance you know Jason our partner um Chimath and Jensen Wang were were on stage filming an all-in podcast on on Thursday at Nvidia's GTC event and uh Chimath was actually applauding the the decentralized training run from Templar

Um, and so the the right people are waking up to this and like if you kind of just look at the standard adoption curve of any new technology, we're in the early adopter stage, which is generally what when you want to be deploying capital. >> Yeah. So the way that I've kind of thought about it is is TA is like your is like your it's like your powder and you've got all these, you know, 128 subnets or something. I kind of think of it as like liquid venture within the kind of Bit Tensor ecosystem. So, I'm sure there's going to be like a power law of returns. I mean, there's probably already been such that like these things started, you know, anywhere from under a million in in total market cap, you know, across like the smaller subnets all the way up to about a 100 million, I

think, is where shoots and templar are kind of oscillating around now. And then basically as a towel holder, you want to basically be looking to uh invest into these subnetss as almost like a a liquid venture bet with teams as you said that are docks, have clear product market fit, clear revenue, clear adoption, and basically be an early supporter of these of these subnets. Stake your stake your towel, get the token back, you know, hold some, sell some, whatever it is that you want to do. and basically be thinking about kind of like yeah tow is like your bitcoin or your ethereum and then these subnets as like these liquid venture plays that you want to allocate to. Is that like the right way to think about it? Think about it like by

definition still core capital our fund is a liquid venture fund and so you know these are liquid uh tokens so like you know we're structured as a hedge fund but you know we're taking a venture capital style approach to these subnets and having medium to long-term holds in them and uh you know power law absolutely I would expect that you know the top 10% of subnets will drive 90% of the outcomes here the success of Tao is going to be the success of subnets um for sure and the basis of our fund is to allocate in in in size uh to to what we think are going to be the blue chip subnetss of tomorrow to into the Uber the Amazon that is getting built on top of Tao. You know Tao is the internet of intelligence. You know the idea is that intelligence is going to be as

widespread and abundant as information is. No single government or corporation is going to control it. And you need an internet to organize all of this intelligence just like the worldwide web emerged to you know to organize the world's information. And um there was one thing you said earlier which is I don't think there's going to be a single god model coming out of one of these corporate labs. As Bellagi says it's it's a bizarre of of AI which means you know hundreds of thousands millions of different models. And if if you look closely enough that starts to sound like bit tensor in a couple years thousands tens of thousands of different subnets subnets equals websites. That's the way to think about that analogy. But um yeah at our f at our fund you know the way to think about Tao to answer your question

directly is that this is basically an S&P 500. You buy Tao and you get exposed to this kind of economy of decentralized AI startups. But if you want to take some risk and if you have you know alpha then participate in the subnets because you could outperform Tao maybe even meaningfully. So in our fund you know we we already are uh significantly outperforming Tao and um you know we expect to do many multiples of Tao in our fund at least that's what we're underwriting too. Well, Rob, this is an amazing kind of concoction that's brewing because all of the market, especially in digital assets, kind of isn't getting exposure to the AI kind of super cycle, let's say, right? Like it's happening and it's hasn't been easy to

get exposure. You get an SPV for Anthropic at 380 bill through some sketchy, you know, pooling thing and you have to sign and who knows if you ever get those shares. It was impossible to get any exposure into any of these large companies. And now those valuations have kind of ballooned to such a level that it's like for any average investor, it just doesn't make any sense. I mean, you're going to bet on these. >> Yeah. The only thing I the thing I would say is that like I think Tao is the best value in the world. I think it's the best value in crypto and it's the best value in AI. And >> you're a crazy mega bull. I was kind of getting there, but like Yeah, it's an it's an investment opportunity to get exposure to AI.

>> Yeah. >> Right. For sure. >> In a world that's hard to get decent exposure to AI. >> Yeah. I mean decentralized AI and specifically Bit Tensor uh could be existentially disruptive to all these corporate labs and certainly these startups that are that are raising at tens of billions of dollars of valuation with just a a couple of teams that spun out from open AI that and um yeah I mean the frontier of decentralized AI is three billion right and so like from a risk return standpoint um I think like Tao is way better than punting money into open AI 850 billion right like where are their moes right if if AGI is open source and sitting locally on everyone's computers. Where's the moat?

I don't get it, you know, and I would rather put my money into uh the decentralized AI infrastructure that that TOAO is building. I actually think that people and retail are going to be buying TA as the Bitcoin of AI. That's going to be the narrative. And when AI is displacing white collar jobs in large sums in the coming years, I think people will be looking to Tao as as an investment of hope. Um because I think most people would agree that a world where intelligence is decentralized and cheap and abundant uh is far better than a world of you know uh corporations controlling AI. Um that seems much higher probability of producing you know a dystopic outcome for humans versus the the tow vision. Um and so when people start to wake up the tow I think you

know that that's what's going to happen. So you would say that you know Tao is probably the most mispriced asset in crypto right now. >> I think I mean I think Bit Tensor is one of the most important inventions in the history of humanity. I I do believe that because >> it just it just producing these these digital commodities, right? So like Bitcoin is a digital commodity just in the form of money. Bit tensor is producing dozens and eventually hundreds and thousands of them. Decentralized drug discovery, inference, all these things. I I mean I I've been on the record saying like I think this is going to be a trillion dollar ecosystem by 2030. Uh because five years in AI land right now, five years in the future is is like an eternity. I think we're going to see

some some price outcomes and things happen over the next five years unlike anything we've ever seen in the history of financial markets. And Tao feels like one of the the safe havens where you could invest, right? Like in the equity markets right now, the whole issue is that people can't price terminal value. You know, like how are you going to price Salesforce at a 30x PE multiple when you don't know if they're going to have a business in 5 years because there's no modes on software. Um so I think at some point people are going to wake up and see Tao as that is that hedge. You know, by investing in Tao, you're actually investing in the future of AI.

and is the core team of Bit Tensor you've met them I I assume and you know seen a lot of their work and grow like where are they most you know kind of focused on or like what are they doing now like how does that work with the subnets I don't think they work directly with the subnets those are their own team so what is like the bit tensor core team actually working on on the road map for 2026 from the tech side from the uh kind of intelligence side like what's actually happening there >> you know I would say like the the the people at the pinnacle of Bit Tensor, you know, the OGs are not only some of the smartest people I've ever met in my entire life, but also some of the some of the most ethical and and uh quality people I've ever met in my life. Like

these are not, you know, capitalists. These are people that genuinely want to decentralize intelligent for intelligence for the benefit of humanity. Uh K, Jacob Steves, uh and then Allah are the co-founders of Bit Tensor. is I believe an AI PhD and Jacob Steves was working at Google DeepMind underneath Demis in the mid2010s before the transformer paper and he had the foresight to say hey can we apply what Bitcoin got right and apply that to to AI that was 10 years ago um and it's crazy that um you know people like Andre Karpathy are now arriving at the conclusion that the the the next step in AI research is actually going to be more decentralized research. Um, so Carpathy was on a podcast the other day where he

was describing Bit Tensor one to one without realizing Bit Tensor exists. Um, so yeah, I think like in terms of the Open Tensor Foundation, um, Bit Tensor is going to be a geopolitically significant ecosystem, uh, probably before too long. I think you know, sovereign countries around the world that are not named the United States or China, I think will probably be running on Tao and the models on Tao um, as part of the sovereign AI play. they're not going to be running on anthropic or deepseek models. I think that's that's for sure. Um, and so yeah, I mean I I I think that's that's how I think about it. And so like the as a result the the open tensor foundation is dispanding. So Jacob Steves is probably the closest thing to Vitalic

Buterine for Tao and he's actually he's stepped away from open tensor. He's building his own subnets. So he's actually building in the ecosystem rather than on the ecosystem and um yeah so they're actually taking it was kind of like a Satoshi moment where they're taking a step towards uh Bitcoin level decentralization. I think it's admirable. >> And Rob, when it comes to new subnets launching, how does one get in the loop on this? Where where is the information for new subnets and what is the process to for price discovery on a new subnet? Right? like how how just like just be straight up, how insider is it like or how fair is it? What is the price discovery and and kind of launch process

of a new sub of a new subnet? Anticipate they're going to be more and more coming out probably more and more better ones. >> Absolutely. >> What does that look like? >> Yeah, like on on the number of subnets is currently 128. So it's 3264 128. We'll see if they go to 256. I think it's a function of the tow price and the US dollar value of tow emissions, right? with with Tao at a $3 billion ecosystem, that's probably sufficient for 128 subnets uh to have their funding to kind of grow their teams, but you could imagine a scenario where TA rips a quick 5x and uh you you could actually accommodate more subnets in the ecosystem as a result of that. Um and so I think that's that's what's likely to happen. Um, and then yeah, like the economic incentives to mine on Bit

Tensor and to build subnets on Bit Tensor, I think reaches the point where you're going to start getting defections from, um, potentially centralized AI labs because you can make more money and you can mine Bit Tensor, you know, um, you know, sipping a panina colada in Bali. You know, >> you think you think Bitensor is going to poach OpenAI employees? >> Uh, I don't think they're going to poach OpenAI employees. I think OpenAI employees and, you know, other centralized labs are actually going to willingly you know, just going to join. >> Yeah. Yeah. Because they're already flushed with their equity and they could just go to Brazil and they can mine Bit Tensor subnets, you know. Um or you could build a subnet on Bit Tensor yourself. Um and so when that starts happening, that's that's when the real flywheel is going to take effect. Like

everything we've seen with TA recently is just like a a small little appetizer compared to what's to come. I think what what happens is like you know the crypto AI season comes again. Bit B bit bitensor is likely the catalyst for that. towel price goes up, more subnets, more innovation, towel price goes up, and that never stops, you know, and so I think it's gonna get pretty explosive here. It's gonna be a fun ride in a couple years. >> Never stops is just not how markets work. But what's your time frame on this? >> Well, if you're the AI super cycle podcast, why wouldn't it be a super cycle? >> I mean, there is an infinite capex right now on AI.

>> Yeah. And all that capex is going to converge on tow because those GPUs contributing them to the bit tensor ecosystem in the coming years will be a far higher ROI than contributing it for for any other use case just like the same happened with CPUs and AS6 with Bitcoin. So I actually think like my hot take would be like all the capex around the world right now from the hyperscalers they're actually just bootstrapping what will be compute that goes to bit tensor in the coming years. And from a ethos perspective and from a just a pure kind of understanding of how these technologies work with large techno corpse and the data sharing and the privacy and all of the kind of ins and outs that go in. I think there's also like a big ethos kind of emotional

attachment to this idea of decentralized AI just from the perspective of you don't want Altman and Zuck and whomever else to be controlling the future of the humanoid robotic AI VR kind of physical and digital reality that we're living in. You want that to be far more uh distributed and far more equal and fair at at the very least. So I think that there's something there as well for Bit Sensor and and for Tao >> for sure. Yeah, >> that's kind of why it is I think. >> Yeah. I mean and that describe, you know, that explains why such a significant percentage of Tao is staked to the ecosystem. It just doesn't move.

Um and I think that's just going to play out even if Tao, you know, even even as Tao goes up in price. Um yeah, I think like decentralizing intelligence is the most most important thing um of >> Oh, yeah. It's a mission driven >> like Yeah. counterweight to the fiat uh currency and Federal Reserve kind of printing money recklessly. And then Ethereum emerged as a counterwe to Wall Street. Um and Bitensor is is emerging as a counterweight to the Mag 7 and specifically corporate AI labs. Um but like you and I Andy, we're in our lifetimes are going to live through a technological singularity. Uh and there's going to be an intelligence explosion. Uh we're not going to be the apex intelligence on this planet by 2030. So, I think it's like very important that, you know, AI is

distributed um instead of being weaponized uh by by a corporate lab in the coming years. Um that that sounds pretty terrifying, but I don't think it's going to happen and I think it's going to be because of tow. >> Rob Greer, thanks for spending some time with us today. Safe travels >> to New York >> and we'll have to do it again. We'll have to see we're we are now going to be tracking the Bit Tensor ecosystem and the subnets as part of the show here. I think that this this is going to give people something that they want to uh learn about and get access to as far as upside investment opportunity for uh this AI trade. As I said, I mean, it's been hard to get exposure to it unless you're in SF, unless you're very well connected, unless you're very well

capitalized. It's clearly different here. Uh you have a lot of very very very bullish takes. I I probably have a bit more of a moderate tone here, but it's always good to hear from you and and I'm glad that we got your perspective today. >> Yeah, thanks man. And um you know any anyone could kind of reach out book a call uh stillcore capital.com uh if you're an accredited investor and happy to talk about Tao anytime and uh we have some thought pieces coming out regularly um I think it's stillcorecap onx so feel free to read our content and uh you know looking forward to doing this again guys check them out at rob_vrn this has been AI supercycle episode number 26 live from the Empire State Building here in New York City huge week for DS Rob we'll let you go man see you

soon. All right. >> Thanks, man. I appreciate it. >> All righty. Cheers. All right, guys. We're going to take a super quick break, but before we do, oh my goodness, was that bullish or what? Goodness gracious. I mean, come on. Come on. I mean, what do we got? Dynamic towel, more more subnets. AGI won't be one model. It'll be an economy of subnets. I pushed back on the on the towel equals E thing. He had a good answer. Um, I mean guys, this this community is culty. This entire ecosystem is blowing up. I think the biggest two things for me on this because I did give a bunch of push back because I, you know, I love people coming on. I want them to be bullish. I want them to be excited about what

they're investing in, but you know, we have to we we have to make sure that we're getting as much of the truth as we can and as much of a kind of balanced take as we can, which Rob did. Two things that I'm excited about. One is that I think the missiondriven aspect of decentralized AI is particularly interesting. I think that that's going to drive value. It's going to drive people to be interested in these technologies as they see data leaks, as they see privacy concerns with these kind of corporate AI structures. I think that's for sure one. And I think the the other part is that it's the comparable in the the uh value of these subnets from their market cap compared to like these large venture rounds happening in

San Franand. I mean it is like multiples of tens of hundredx differences in valuations and in pricing here. Um would expect to see more of these to kind of converge potentially. Look I don't know not financial advice. I currently do not own any subnetss or any towel. Um I'm being tal pill right now and I think it might have to be part of the kind of AI allocation as part of the portfolio. Uh but guys, I mean that's the AI thesis for the show. This has been AI superle episode number 26. Ladies and gentlemen, we're going to wrap up tomorrow. You will see us live from Digital Asset Summit in New York City here. We have so many great guests, guys. Stay tuned for

that. Been an amazing show here on Monday. We're gonna close it out. Thanks for being part of of the rollup. Let's give him some love. Everyone who's still here paying attention. Let's go, guys. Thank you so much. You guys make it possible. Hope you like my nuclear power hat and my Zama hat. We got more hats. All right, guys. Signing off. Peace out.