The Death of Crypto Leverage and Rise of DATs - CMS

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like the debt flows are at any given time, right? Like I mean Salana ran up the last three weeks because the you had two large DATs raising into playing like so that was like kind of the trade. >> What are you thinking about the rise of Hyperlid? What do you think about the the rise of these perplexes as a as it pertains to them being a threat to Binance's core business model? but it's going to open up the breadth of all the potential assets in this universe that have the ETFs and then it'll it'll kind of like have a wider funnel. >> Welcome back to the rule. This is your home to learn from the biggest guests, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto

out of its echo chamber and taking it to the real world. But what was interesting about the crash in 22 was that was the first time there was a material credit crunch with the bare market, right? >> So like not only are like asset prices going down, but people are like having to like pay back borrow and it like exacerbated things like much more to the downside. Um and it also like caused people to just like blow up like in in previous cycles if you had like prices went down like you were pissed and like you were out a lot of money but you it was very hard to like blow yourself up.

I mean, you could do it like BitMX and no KX were still around. But it was very hard to go like negative, right? Because like your your counterpart is going to just like unwind you. >> That was not the case in 22. And like obviously we saw that as everything had to like face with bankruptcy and like it was still dealing with it. Um and like everything like was a lot more like volatile. I this this cycle like the credit in that way never really came back. Um there's there's little bits of it but it's definitely not anywhere near the capacity and size it was before. You're seeing leverage like that though come through, right? So like a lot of these debts they have the ability to borrow or they're like issuing sort of like traditional um vehicles to like be able to like borrow money though they're

not like leverage for the most part like they're issuing just like stock and then selling and then buying but like the if there's any form of like leverage outside of just like what you see on like the futures like it's coming in sort of via those angles but still in by and far and large there's not like a lot of credit in the market. Maple's probably now like the biggest player. >> Yeah. They hit four billion. >> Yeah. Um, which is big, but like like that's still small compared to where we were. >> I don't know what the total number lent came out to be last highs of like that 21 22 cycle, but I bet it was 100x or so of that. Um, so anyway, yeah, like that like really but's got a good business.

They're like running. Um, but there still like lenders are still you still have to be fully collateralized if not like over like you can't the idea that you can just like go with like a Twitter handle and like borrow money is just like kind of gone. May not come back. We saw Wildcat get uh hit from a loan a small loan thing that that they were dealing with because they're kind of on the uncolater or underiz >> side of things which which never really came. Um you know we we got CMS here guys. Welcome to the world TV. Welcome CMS. We're just going to keep cranking. Um welcome Dan. Um, yeah. I mean, they they there was this idea in DeFi back in 2020 2021 that like we kind of extended all the debt that we could get with over collateralized lending and all these

different kind of ideas. And I remember us kind of thinking like, okay, we're going to get uh under collateralized lending next. And like that's what's going to, you know, give us like like the next leg. You know, it took four years. It's still kind of not even here. Three Jane is is kind of working. Uh Wildcat was kind of working, but not really at any scale. And now it's like, okay, the DATs is what is going to bring a ton of new money into DeFi. Like that is what's going to be the, you know, because these DATs need to get yield. They need to get more uh value per share. And so, you know, I don't know, I don't think any of us could have bet that that it was going to be these institutional treasury vehicles that were going to come and get DeFi to

the $1 trillion, you know, TVL three years ago. >> Yeah. I mean, I think they're still going to use the overcap like protocols. Um, I mean, we use Wildcat a bit. Um, we had an open loan in there that we rolled through like two quarters. So, like I think we did it for like six months. It just like there wasn't as much like inbound interest to lend at it, which I understand, right? Like it's uncolateralized. Like it's risky. Um, so like we kind of just like stopped doing it. Um, but maybe that will change. Like maybe there's a world that like people get even more risk on and like they'll start wanting to like reach further out the curve to like get yield. But I'm just like a little skeptical of it. Um, but like there there's like flow happening there. It's just been tiny, I

think, like in aggregate. Um, yeah, it might change. The problem is I think rates would just have to be so high that it's like >> it's a non-starter for people that are like looking to borrow it except for short-term stuff. The thing that defaulted was kind of like >> like that was doomed from the get. Like it was a protocol that got hacked, right? And they were like, >> "Yeah, yeah, >> we're gonna go try to find money to like plug the hole, but for now we're gonna plug it with a borrow." I don't know. That seemed like a wild like wild card for sure. They were admitting they were insolvent and like that they needed to. >> So I don't know. I don't count that one like against Wildcat. Like I think >> they were very upfront. I think it paid like a 50% APY or

>> 50%. Yeah. So >> I mean you knew what you were getting into. Um but that's that's niche, right? Like that's not going to be like a material use case for it. Um like right now it's mostly been like well-known players looking to like get balance sheet as they can anywhere. Um, I mean, like I think that's the big problem of a lot of shops is they it's hard, right? If you want to scale your activity up, like there's not a ton of ways to get capital. Um, it's very hard. You can't like really tap traditional sources for the most part. Um, it's just like not open like sort of for like crypto. They they do the business is too risky, which might be like the reality of it. Um, and then like inside crypto, it's like very expensive to borrow. Um, or you just got

to be like massively overcolateralized or you got to go and sell equity and like people just like don't want to do that. So like that's I think why things get like hamstrung. Like the market makers in particular who have like the easiest claim for like why they need the balance sheet and like they're not just trying to lever long like have the hardest time borrowing. >> And you were saying earlier that the 202122 cycle had a lot of those lenders that that would extend credit into the system. They're not really here now. and and so we're kind of looking at like the DeFi sources for that credit. But do you think there it's a result of there was a low rate environment then and then rates started to go up?

>> No, I don't think I don't think the rate at all the lenders are going to come back in at all. >> I don't think I don't think it's a rate function. No, I mean like the like they I mean I don't know what we we were in a 2 3% rate environment and like they were lending at 10 to 12. Like I don't think like it cranking up to five like mattered. I think it was just there was like there was this big push, right? Like I mean BlockFi had all these like ads like on podcast and stuff like go earn 8% on your money and like people were just like yeah let's do that and like nobody thought the problem was like nobody ever really gave a true thought of like where the end paper like landed right like where did the money

ultimately like reside and that was obuscated from the lender because they didn't know like if you lent your money to blockfy you do like all right I face blockfy like I don't know where then they take it and like give it to same way with genesis right like or Celsius all of them they were the same Well, you like had no idea who was like the end holder of it. Like if the reality is was like, hey, we got like four market makers and like three prop shops that are probably just like levered long with it. Like people might have been like, h I don't know if that's >> Yeah, so like I think that was the problem, right? It's like there was no way to like figure out like where the risk profile of that like really work and and they were largely borrowing from

retail. >> That was the other thing, right? like it was like taking all these like slugs of retail money and like lending it out or it was like retail and like wealthy crypto which like functions a lot like retail >> and nobody's asking a lot of questions. So Dan, I think as a result of that, basically what we've seen in the market more than ever, right, is this dispersion or you call it like a bifurcation of returns where, you know, you look at the market as a as a whole and you know, with the Bitcoin bid that we had the last two years from Sailor, you would have thought that we would have seen better performance across the board outside of just Salana, Soul, Memecoins, and you know, some very select few winners. they've they've started to show themselves more and more

this you know last six to nine months but for most of end of 23 mid to end of 23 into 24 it was very Bitcoin and memecoin dominated and probably as a as a result of uh where the interest rates were at although you seem to not think that maybe that has as much of an impact also just of the lack of credit and and so we started to kind of get this idea going here on on the show and I coined this term revenue meta which I got so much flack for pretty much for the name meta because why is it a meta? It's just business guys. And so I think that is where the market is kind of at now. Um is this kind of like fundamental coins understanding that that there's actual value in tokens that have cash flows that return to the uh you know token.

I'm curious like you know think about syrup uh oiler pump hype um these types of like a right these assets like are you seeing and expecting considerably more flows into these tokens that have um this kind of like revenue structure or like buyback profile and then how do you think about these when it comes to the DAT which is just like we're just going to raise a bunch of cash and buy back forget about needing to buy back with our own protocol rev we're just going to be buying back in scale uh as a result. There's kind of like two different uh categories here of like I would consider highly investable tokens.

I'm curious how you're seeing like this more broadly. >> Well, look, if a token has revenue, it can like buy back its own token. Like the market can like can't really dictate its valuation like beyond so I guess I say this like right like there's there's a forward projection of what like a token's valuation should be as a function of its revenue, right? like if you're I mean this is just like traditional equities, right? Like you do a discounted cash flow, you figure out like sort of what that valuation is and and that's like your baseline for these things. So that gives you like a floor of sort of like how this stuff like will trade. Um everything else like on top of that is like obviously just expectations of like where like future P&L is like going to go up or down like any like

risk to the business like any competition that comes, anything they may be able to do on top. Um, so like those things will trade that way according to I think like and that gives you a floor. The problem is if you're like a protocol that effectively well if you're a protocol that like makes the decision like we're not going to try to like figure out how to make money in any capacity then you're just subject to the whims of like the same thing as meme coins where it's all just like driven by flows, right? And those speculative flows are like they they move randomly somewhat, right? like they have like a beta to the market, but you're you're much like you've got much more risk of just like going to zero, too. So, I guess my question to answer your question is that if you do have this

like good business with like revenue, like there's not a lot of reason to think like suddenly that's going to like stop, right? Or that like the whole thing is going to crash. So, those things should continue to trend up. What's going to like dictate the price now is like what the forward guidance is on whatever their like niche is that they make money, right? They're they're all fun. All the stuff you mentioned kind of is primarily driven by like trading activity still, right? Like hype is just perks and leverage and then pump is just like basically a basket of like casino tokens that you can like gamble on. So it's like two sort of sides of the same coin of like it's it's fundamentally driven by like speculative interest by like people. And if you think if there's a bare market and suddenly people aren't

interested, like the token may just trade down because like there's less expected speculation like in the future. And there's also like risk because there's other competitors building in the market like they'd be able to maybe grab market share. There's like regulatory risk still on these things even though we're in the Trump administration. So like those will be like the shocks if they have any. Introducing extended exclusively on Stark, a nextgen persp trading platform live today. With 50 plus trading pairs from crypto to tradi, you get the best experience on chain today. Deposit in the community vault for attractive returns, EMV compatible, and engage in unified margin spot trading lending and per trading exclusively live at

extended.app on Starknet today. Dan. So, uh, on that note, I put out this tweet like on the first of all, completely agree with your, uh, frame of reference. If these things are are making money, they're likely to continue. You got to understand what the market is, what the size potential is. That's why Flood is like, look, hype will always be bigger than Pump. You know, if meme coins are just a dying market. Now, Pump is doing more like streaming. Maybe they have a thing there. I don't know. Um, but we'll see. But I totally agree on those two points. And on the competitive point, I put out this tweet uh it was May 22nd this year. If you were CZ watching Hyperlid hit 8 billion in open interest, what would you do about it? And then

today or last night I quote tweeted it. He's they've launched this this thing Aster. They've launched this token Aster their own per you know I was like BCZ watch Hyperlid win the last 12 months sidelined realized the entire business is at risk yada yada yada launch a competitor launch a token pumps the pump the brakes off of it what an absolute wild industry and it seems like a lot of these uh centralized exchanges are now trying to get into the decentralized exchange per game as a result of Hyperlid's success so it you know if you were CZ in May or if you're CZ Now, what are you thinking about the rise of Hyperlid? What do you think about the the rise of these perplexes as a as it pertains to them being a threat to Binance's core

business model? >> Yeah. Yeah. I think there's two ways you look at as a competitor, right? Like you either take the tact of like this is like unfair because these things aren't like subject to KYC and AML restrictions that like we are and like you lobby regulators to like do something about it. um that does not seem to be the case of like what's going to happen or you sort of like build a better product cheaper and like you try to get it out there, right? Like fees should come down through all this stuff like the the vig that like pump and height like collect is like too high. I think like they'll that'll get driven down so there'll be fee compression.

>> Interesting. Interesting. Um Dan, are you particularly bullish on on a basket of of DeFi tokens of of majors? What does the CMS portfolio look like today? What's your kind of outlook on where things are headed? Let's call it in the more kind of like midterm. Um, with with regards to a specific basket of majors or DeFi tokens kind of what are you interested in now? >> Yeah, I don't think there's going to any reason to think that like the the current trajectory of the revenue generating sort of basket of names is going to change for the record. Like I think that's like still a great trade.

So, like I don't see any reason to like deviate from that until you see like there actually be some compression or competitor or like regulatory change that pushes it. Um, but I just don't see anything right now. Um, not to say there won't be, but like as it stands like I don't think you got to do anything if that's like where you're allocated. Um, I do think people are going to So, I I I kind of just like complain about this in Twitter a bunch where like people like are like the death of the four-year cycle and like everybody's just going to like if you remember about eight months ago everybody's like it's only ever going to be Bitcoin again because like that's the only one with the DAT and it's got Sailor. Um, I do think the DATs are like a structural risk. I think

that's going to like end like very badly for everybody at some point. I don't know when, but like as we get I mean there's a lot of them now. I think there's like 300 or so. Um, and they're obviously like are getting shittier quality and like they're putting like crappier assets in them like as time goes on. Um, so that's like not great. And also all of it's dilutive to Sailor, right? Like the fact that there's more of them like this was always like the concern. People are like, well, like Sailor can just stop selling stock and then like can sort of like he doesn't have to like keep crushing the stock and and the problem is like well people can just like launch competitors, right?

like the market's going to find a way to like if people are willing to buy a Bitcoin for a$120 when it's worth a dollar like the market's going to find a way to keep like issuing$120 like and that's what the equity is. So like they're they're finding a way to like crush that and you've seen a lot of these have like traded back to like MNAV now. Um it's really hard to get good information on that by the way like all the dashboards are like just generally broken. Um but like the idea is just like they're they're tra like they'll trade down on days like crypto's up and then like you really know it's like compressing. Um anyway, no sorry, but my point was that like I do think there's still like a phase of the cycle of like where you see people risk like grab risk

like longer out the risk curve. Um I mean I there's a world that just happens to be memes, but I do think like you still see like a flow into like larger like cap also. >> I think it's just like taking a longer >> Yeah. So the the news today with the ETFs which seems massively bullish on the face of it right now I you know I saw essentially if there's something that has a a perpetuals on a on a reg regulated centralized exchange like Coinbase these things are basically just guaranteed to get a spot ETF.

>> Yeah, I think that's the that's the way the Bloomberg guys put it and they're generally smarter than everybody else on Twitter for this stuff. Yeah, I so I saw the same thing you did. And so if this is the case, it it kind of it feels really similar to the principle that you just described with the DATs. It's going to be dilutive to the ETFs that are already out there, but it's going to open up the breadth of all the potential assets in this universe that have the ETFs, and then it'll it'll kind of like have a wider funnel for the >> Yeah. I think like there was like a thought that in the beginning of the year um like there was going to be a blessed handful of assets that like were able to make it through and like those would just be the assets and like that's

where all like the flow would go. But it's like no no no instead we're going to find a way to just put everything into like the tradey vehicles. Um so I think that's like really what we're going to probably end up seeing. >> Yeah. I mean, I had the Canary Capital CEO on who has been doing a lot of the ETF issuance uh or at least, you know, um filings and he mentioned that basically the end of this month is the end of like the review period. The early into next month into mid-occtober is going to be the kind of like decision-making period. And then his thought was that by the end of October, uh we should see an onslaught of ETF, you know, for the Litecoins, the Stellars, the Salon, like the Souls, the

XRPs, all of these, you know, names, the Injectives, Pangus. I mean, it could be >> it could be everything. >> Could be 10 millions, it could be 50. >> If they can if they can cobble together a couple million bucks for the filing fees like >> together. >> So, yeah. >> How do you think that that Okay. So with the context of a lot of us thought that this cycle was going to be dominated by ETFs providing buying power to get us to like BTC 200K. That was not the case. It was firmly the DATs. How do you see the ETFs that are coming on for like the more esoteric uh cryptos? How do you see that impacting debt flows or just general flows um in the in the context of debts being the main driver and also

in the context of a lot of the speculation this cycle having taken place so far on the public markets and not as much you know on chain or uh on on you know centralized exchanges and whatnot. >> Yeah, I just don't know how much like end demand there is for all this stuff. Um and we're going to definitely test it. So like we'll see pretty quickly. I I just don't know if there's like a demand for like the 50th like altcoin ETF. Like who's buying it? Like where's that like flow coming through? So I don't know necessarily how much they'll be like we're going to tap out pretty quick I think.

>> Yeah. Yeah. Fair enough. Well, I mean the supply will be there but like yeah like if somebody wanted to buy Avalanche already for example, they would have bought Avalanche. Like it's not that hard to get exposure to Avalanche. But I suppose like 401ks, pensions, these types of investors perhaps. But those these types of investors are likely not trying to allocate to like longtail crypto assets, you know, like I don't know, Dan. I mean, >> I don't know. I mean, if it's there, maybe they trade it. Um or they buy a basket of it or you got a guy maybe got like a long short ETF altcoin fund. I don't know. I I'll tell you this though, the issuers are making a ton of money, so they're going to keep doing this.

>> Yeah. But at a certain point, we're going to run out of demand as more as we go deeper down the risk curve. They're going to continue to push them out there. But that feels like it's going to be the signal of kind of like the beginning of the end where it's like okay well we have a lot of these they don't have a lot of flows coming into them and so when they're there what what h like it's not th this isn't driven by leverage and credit like we were talking about earlier like this this >> well it is a little bit >> by you're right like it's not the same way >> selling selling the stocks >> well I mean like I guess it's not like leverage but like you don't know who the individual Like I guess you don't know the leverage profile of the individual

like dad buyer, right? Like they may just be like it could just be like getting rolled into like margin financing like inside the brokerage and you have no insight into it. >> I'm not saying that's necessarily happening, but I'm saying we have no like we have almost no visibility into like parsing that out anymore. >> I get maybe just point blank. Do you think I mean we're com relative to >> I don't think that's happening. >> Right. Right. So that would mean that the system is a lot less levered than it has been in previous market cycles, at least at this at this current point. >> Yeah, I'd say phase.

>> Yeah. >> Interesting. So I I kind of have had this thesis that I think that it'll be it'll be a slow slow decline in buying for for a lot of these DATs. And I think that this probably a consensus view and then there's going to be >> true for the ETFs as well. >> Yeah. And then there's going to be some blood on the bottom. you know, uh do do you expect >> well these dads are some most maybe all but most of them are going to trade under MNAV? >> Yeah. And then do you think that they'll be forced to then sell their their ETH their soul or their Bitcoin to you know try to get back to premium or what do you think that they will do?

>> It's going to be in a case by case basis, right? Like it's going to depend a lot on like what the governance and management looks like in any one of these dads. >> Yeah. >> There's like they're not they're all and it depends what their debt looks like if they have any. It depends like it depends on so many things. You got to remember also these things all have like some shitty core business too that they were like previously doing. So like >> there's there's like a real world that like I don't know management goes look like we did this crypto like thanks I'm going to sell it and I'm going to go try to run whatever I was previously running again. Right. Like they they're not beholden to like doing the crypto thing forever.

>> Yeah. >> Depending on like the case, right? Like these things are very nuanced in that like everyone's a little different. >> Yeah. And would you say that so so there is a possibility of like these guys are actually more patient and they don't have much debt and so they don't have to go sell their crypto to cover that debt and they can just kind of wait it out until they they really just have the patience to let the market re reappreciate back to where it's sort of out of equilibrium. >> That's another possibility on >> the ones that just like sold stack and bought crypto where they can just wait.

>> Yeah. >> Yeah. But like I don't know like management might want to do >> what we're trying to get at is like last cycle there was so many forced sellers that has caused so much PTSD and it seems like this cycle even these they may not be forced sellers in the same way I think is what the market's trying to answer and understand. No, but they may not be forced, but they may decide to, I think, is like the thing, right? Like just because like somebody's not like, "Hey, you're getting liquidated. Do this." Doesn't mean like they won't make the same decision down >> 30% to MNAB or whatever the hell like the metric like you want to like call it right?

>> Yeah. >> Um, yeah. Just switching gears a little bit, I I'd like to get your perspective on this whole uh denominator going to zero thing. like that seems like it it could also just kind of rip this into a whole another paradigm where all of a sudden DXY continues to depreciate. We're just going to just turn on the money printer and and then you know these things end up running a lot higher than maybe we we think they're going to if things don't trade under MNAV and they don't become force sellers. How important to your thesis and and the operation at CMS is like a inflationary view and generally like how do you think this how do you think that plays out

over like a shorter time frame because I think like we all kind of got into this like we see where inflation is and and it's time to own assets but a lot of times that that's kind of the thesis on a long-term view and it doesn't really play out maybe as as slowly then suddenly and it's still playing out slowly. So, how do you how do you, you know, rationalize this on a shorter time horizon? >> We don't I think like anybody who thinks they're like on crypto Twitter talking about like how they know the macro picture is just like lying to you. And like all these funds that go and do it, they go and blow up, right? Like it's hilarious. Um, so just don't do it. Like we tend to think things in like relative terms, right? Like why do I want to own

X over Y? Not so much like do I want to be like allocated to dollars and like I have no idea like what Euro dollar is going to do and like I don't even know anybody that has any idea, right? Like I'm so far from that like decision making person and like having edge there. It just like doesn't factor in. >> We try to just like think about the world that we know which is like the privilege which is like honestly like a lot of this dad stuff like we don't have like a lot of insight into right like none of us like really have like ever like we all had jobs in Chadfy at one point in our lives but we're so far removed from it specifically like this like center of it like we don't necessarily have great edge or knowledge of like what's going on. So a lot of

it's like just like speculating. What we do know is like how it's going to move spot around. So like that we can like figure out but like we're not necessarily like how does the governance work like how does the SEC like think of these things like what is the listing like that's stuff's like out of our wheelhouse. So I don't we don't like we just generally don't think about it is the answer. >> What like do you do you carry the a a scarce asset thesis as well? Do you think it's just kind of like whatever like like h how do you maybe just curious how you see the Yeah. Like the gold trade, the Bitcoin trade, the real estate trade, the freaking uh land trade, the you know the rare art trade.

Like it's all kind of trade. >> Yeah. You want to own risk assets. Like that's just like the end of the day. And like just don't deviate from that. And like don't like you guys are 26 or whatever, so this is like not even in your like thought process, but like as you get older at some point, you got to be like, "All right, I need to like own like enough like less riskier assets such that like my like timeline doesn't like blow up." And like that's just sort of the I mean it's like the same investing logic that like people have been doing forever. It's just like just nobody owns fixed income anymore. You just own degrees of like other riskier assets.

>> Yeah. And so you you guys are much more thinking about how can we position for relative market share growth within this industry within risk assets. And so >> even even smaller a niche. It's like how do the pieces like inside the crypto universe like grow relative into size of each other like that's like much more what it is. >> Yeah. And so you guys are looking at some of the different sectors, payments, stable CH chains, stable coins where I mean there's also like the revenue meta that Andy mentioned earlier and the hyperlquid trading pump thing like revenue meta. It's like I sorry I don't mean to cut you off but like it's just like like companies making money is suddenly like a a meta time. It's like a for the for the moment >> and so

>> yeah like where are you seeing relative market growth? What are your trends that you're thinking about? >> Yeah. Bullish on companies making money. Yeah, >> I mean that's sort of like evergreen I think is like the revenue meta. So I wouldn't I wouldn't call that I mean like right now like a lot of stuff is being like structurally driven by like where this like the debt flows are at any given time, right? Like I mean Salana ran up the last three weeks because the you two large DATs raising and deploying like so that was like kind of the trade. >> Yeah. Yeah. Yeah. It was Yeah. I mean, Smani came out and said publicly that he was going to do that and then >> Pant but it's like funny. It's like right like these the guy comes out they're like hey we're going to buy a billion

dollars of like I don't know pick whatever coin and like then they go and do it and people are like wow it's like >> it's like Trump doing the same thing when he's like guys like he tweets like stock market is going up like just get on the ride it's like all right but these people talk you just listen sometimes >> I don't know like nobody's hiding anything like they have to disclose it like yeah I think I think sometimes it's a little bit easier >> Dan everyone wants exposure to stable coins you haven't talked about this much I don't know if you've done much venture into like the plasmas, the stables, the arcs types or if you did the circle IPO or what that is but everyone wants exposure to stable coins.

>> So I worked at circle for five years so I am very familiar with like sort of that's how that's um we we also we did this we invested in plasma. Um I think that's a great that what is that September 25th now? You got a week. That'll be >> tra at seven bill pre-market on Hyperloop. >> I tend to discount heavily what the like pre-market like pricing is. So, we'll see when it opens. Um like I'm I'm look it's worth something like it's a data point, but like these things tend to trade away like up and down depending on like where those like marks are. They're pretty thin. There's not like a ton trading there. Um so, we'll see where that comes out. But that's like a good way to get exposure to it. Um I mean historically like people had used like Tron as like a proxy or whatever you can

get. I mean, you can buy Coinbase and Circle in your like equity sort of account. Like I own both. So like it's just like a way you can like get exposure to like stable coins from that side of the house. Like people want to complain about like the strengths of whatever the business is, but that's like a pure way to do it. Um and then like I think these chains will be like another really good way to do it. Um plasma is probably going to be the first of like material. So those are like good ways to get exposure to it. >> Yeah. Yeah. I mean there's really not much else. I mean like Sky and Maker, you know, is >> Yeah, but that's it. That is a stable coin, but like it really isn't, right?

Like it's >> Yeah, >> it's a it's a dead instrument. >> Yeah. >> So, I don't know. Like it's a little riskier, but there's another way if you want to like get in like it's just like not as pure sort of the way to get into it. >> Yeah. I mean, I think this trade's going to be or this this trend, let's just call it as a trade. you know, a stable coin market cap right now is about 300 billion, maybe 280 or so, 270 in terms of total uh supply. I I believe in I think we're we're getting close to the 300 billion mark. I think we'll get to the trillion mark some point in the next like 18 months. I I just like plasma pseudo tether equity. Why do you need a token? Why do you need a new chain? Why is there ARC? Why is there stable? Like

>> because everybody wants to try to be the one. Yeah. There's going to be a rush of these things, right? And like you can either try to pick a winner or you just spray and buy them all. >> Yeah. >> Yeah. Yeah. But like plasma at five bill for retail, I I don't know like you know is this thing going to trade 50 bill? I mean I don't know. It's just like >> got two billion commitments, right? >> What is the stable coin chain worth? You know >> if there's one it it's a it's a hard question because like is it one and is it only one stable coin? Like how did the fees acrew back? Like what is like the velocity? It's I don't know. I would say right now if you put a gun to my head and you're like, "All right, like

there's one Tether stable coin chain like what's its valuation?" I'd say like 12 to 15 billion or like sort of be like where I'd be willing to pay for it. >> Yeah. >> Yeah. Interesting. >> Knowing like what the mechanics are like even going to look like for how that thing like acrews value back. >> Yep. Um, regardless, it does feel like stable coins and as a result their underlying infrastructure where wherever that may be is one of the more sustainable sectors like going forward over the next 6, 12, 18 months. >> Rates don't get cut in into like, you know, by 2/3, you know what I mean?

>> But like those businesses grew big when like rates were low like they make less money, but like it's a problem for Circle because like they live on razor thin margins. Like Tether just can like has to like stop buying like dairy farms in like South America. Like it's like like they're going to be okay. They just they I mean they they have so much money. They're just doing ridiculous with it. And I love those guys. Like I issued a ton of Tether back in the day when I that thing first got started. I have nothing but love for that team. I just But like they they have enough like they're going to be fine at rates at 1%. Like it's not like they don't have a systemic risk to the business.

>> But some of the newer stable coins that are a little bit smaller that don't have as much scale and and operate at thinner mar they Tether's able to operate at thin margins. the other guys if rates get cut may not survive that. >> Oh, they're going to have to cut materially like headcount like get like cost down and stuff but like Yeah. >> Can you tell us some more like ridiculous things about Tether? They're buying. I didn't know that they were buying D. >> They did. They bought Oh my god, I got to look it up. They bought >> they bought a steak in uh Juventus, I think, or in one of the big soccer teams in the uh Premier League uh FC F like a Spanish league. >> Barcelona. They paid they paid 600 million for a South American farm company.

>> Yeah. >> Which like is like a dairy farm. >> You bet. >> I mean they got Look, they can do this stuff. I mean like how much they bought like a couple billion dollars of gold. I mean like >> in Bitcoin as well. Yep. >> In Bitcoin. >> I feel like sometimes I feel like they're like we just own so much of this Bitcoin stuff. Like we just got to buy some other >> Yeah. >> Go look at Go look at the Tether jobs board. It's like all AI stuff. They're like getting into that too. >> Yeah. Wow. This is like the new new bank of like the modern age. >> Yeah. I mean like at some point they got to diversify. Like it got so big. >> Start issuing mortgages. >> Man, the the story that that the Tether had with Bitfinex back in the day. I

used to read those Medium articles. Man, it's just so crazy how they survived this whole thing. >> I like to think that they were always above solveny, but I've got a pretty deep down feeling that I think that in the early years >> they admitted they weren't when they issued Leo. They they've they've coped that. >> Yeah. Yeah. So, Dan, I think we just got a couple more minutes and and I know that you know, you've been very uh very open and sharing your time and we appreciate that. Um, man, I think like from my end though, like the you've answered and we've talked about a lot of things that I'm currently interested in.

My main thing is like what happens next? Like it's September, end of September, market's ripping. You know, we got DATs buying. Like are we topping soon? Is there a top cycle? like what the hell's going on here? >> Well, so there's some pretty big TGEs coming up in the next month. So, I think that's going to be >> plasma interior plasma fogo. What's the other uh anom? There's a bunch of stuff that's like raised a bunch of money that's like going to hit like the tape in like the next 30 to 60 days. So, I think a lot of that'll like drive some volumes and some like interest. So, we'll say a Bitcoin so big it's just going to trade with equities. I I don't think it's going to have like it's too much idiosyncratic like it's just like trades like a tech stock.

>> Okay. But do you see Bitcoin under 80K in the future? >> Sure. Why not? >> Okay. Above >> I don't know. I don't know. It's a volatile asset. Yeah. >> I mean, you know, just trying to just trying to just trying to, you know, assess where you're at. >> Like if you woke up tomorrow and Bitcoin was like 80K, would like you'd be like shocked like you'd be like, "What happened?" But like would it be like Yeah. But would it be like out of your like realm of like possibilities? Like >> No. No. There's more of like do we get to like 160 180 and then go all the way back down there at some point. >> Sure, why not? >> It's all it's all well within like the the path of that thing.

>> Yeah. Yeah. >> Does it get an idea of like what your secular thesis is like? Okay. So, stable coins, right, are like a sustainable thing. What what else what other sectors do you think are going to sustain? >> Yeah, I think the big ones are going to sustain. Like I think that's like a pretty there's enough things going on that's diversified that those are like going to maintain as businesses. And then like obviously people like love to like gamble. So like you're going to have some version of pump or that maybe that will go back to the exchanges just listing tokens and like that's like the way it sort of like and then people are going to want leverage. So there'll be like people for looking to like leverage trade. I think those things will all persist.

>> Yep. CMS Dan, I'm going to butcher your your last name. >> Matt, just call me Danm. >> Danm, thank you for your time. We appreciate you being on and uh looking forward to the next couple months in the market in in just all these big TGEs, Plasma notably as well as the others. Thanks for your time, man. >> Yeah, no worries. >> Thanks, Dan. >> Cool, dude. Next.