Dragonfly $650M Mega Raise, Wintermute Launches Tokenized Gold & Bitwise CIO Matt Hougan Call In

Transcript

I'm about the [music] back [music] the [music] [music] I'm above the [music]

[music] >> [music] [music] >> JP Morgan, Black Rockck, 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. [music] You said it. He finally said it. So, boys, boys, I'm boys. We're [music] boys.

[music] >> [music] >> I'm about the [music] >> [music] >> H the back [music] up the [music] B the B the

>> [music] >> Hop up above the [music] back. [music] >> [music] [music] >> The rollup is headed to the top. If we're not already at the top, we're going to the top. We're [music] on fourth floor today. We're going to be on floor one and then we're headed straight to the moon, boys.

[applause and cheering] >> All right, we are back. We're live and never felt better. Bit of a rocky start this morning, but we are live once again. Plenty of updates for you guys and pretty excited. We've got Matt Hugan from Bitwise, the CIO, the chief investment officer of Bitwise coming on the show later today with uh tons of news in the neo finance space to talk about. Obviously, you guys have seen Black Rockck getting into Uniswap with their Bold product. Also, Apollo uh getting into Morpho. So, these guys are starting to adopt DeFi technologies and it's happening sooner than anyone

thought uh it was going to happen. So, uh Matt is at the center of all this and he actually believes this is what is going to pull us out of the bare market. Uh he's going to be on in about 15 minutes and we're going to chop it up with Matt Hooan from Bitwise. But first, we've got some news that we want to go over with you guys. So, let's do it. Let's bring up some headlines. We've got the payments firm Level closing their $7 million seeds round seed round. Uh this one was led by our friends over at Galaxy Ventures. Uh Galaxy's on an absolute tear. uh they did tenbin and now they are uh working with level. And if you had listened to

our chat uh with the Galaxy Ventures team uh I believe this would have been two weeks ago, maybe three weeks ago. Um yeah, we did have Will Newell on the show and he told us about another company that he was particularly excited about. Uh, I have a feeling he was talking about Levelville, which announced their $7 million seed round today. Uh, Levelvel enables businesses to process both fiat and stable coin payments. Again, we're seeing teams on both sides of the aisle. These companies are helping to cross the chasm. They're helping bridge the gap. Uh, we're seeing this in the RWA space, right, with native issuance, digital twin, uh, the tokenization teams working on both the

equities and the crypto side. Uh and now you know we have Level uh which is a payments company that it's working on both fiat and stable coins. Again sitting in the middle and and able to service both sides of the market. Uh founded by X AQR Trader and spun out of Galaxy Digital. Uh their team is from PayPal, Deutsch and Black Rockck as well as other major financial institutions. Uh the $7 million seed round will expand their product suite including B2B crossborder transfers, payment processing and lending solutions across London, New York, Canada and Switzerland. So shout out to the Level guys. Uh I think we're going to see more

of this and um we're going to see more forex as well. I think that is an underrated part of this uh stable coin business. But obviously stable coins in general are exploding. We've seen a lot of B2B businessto business stable coin payments happen. A lot of people are starting to pay at point of sale with more stable coins and crypto debit cards. Uh and then obviously the remittance industry uh is actually still quite early. Uh the global crossber payments market is demonstrating explosive growth. Transaction volumes are projected to reach $320 trillion by 2032, but global payments remain constrained by legacy financial

infrastructure. And so we're going to see level play in this market as well. Shout out to those guys. Congrats on the level $7 million seed round led by Galaxy Ventures. Next up, Wintermute. Wintermute launches institutional tokenized gold trading. Uh you guys know Wintermute good and well. Uh people like to say they are responsible for pretty much everything that happens in the market. Uh them and jump trading are uh some of the most uh villainous characters. Uh obvious obviously they're not villains here. They do good work.

They're market makers. But a lot of this things happens behind the scenes. You know these are the guys making the markets. most of retail is out there taking the markets and so they're just you just got to take what Wintermute gives you. Uh which is why they g they catch a lot of flack, but uh they're getting into gold. Uh which is no surprise if you've been tracking Tether and the amount of tokenized gold products out there. Um and so uh what Wintermute plans to do is they expect the tokenized gold market to reach 15 billion dollars in 2026.

This is a result of tokenized more of these gold products as well as the gold market just continuing to rip. Uh which is why we've seen a lot of growth happen in this industry um up until now. Uh Wintermute is going to be working on an OTC institution trading product. Uh and so this is what is going to target hedge funds, corporate investors uh and minimize price impact for large trades. So these are people and market participants trading large sums of gold. Uh the settlement obviously is a difficult thing particularly with gold because it's difficult to move from place to place. Um paper contracts and derivatives have made that particularly

easy but settlement time is still a blocker. And so tokenized uh products bring settlement time all the way down to nil. Instant settlement for tokenized gold. And this is representing gold that's held in vaults, enabling electronic settlement, simplified market access through blockchain technology. Uh tokenized gold is one of the things that I think we're going to see happen a lot more. There's going to be a lot more growth here. Uh we've been talking a lot about tokenized equities, money markets, these sorts of things as forms of collateral in vaults and other trading strategies. But you know you have this permissioned layer that that prohibits a lot of uh retail investors from buying

those products uh because they are securities. Gold on the other hand is a commodity. Anyone can buy it even in tokenized form. I believe we're going to see a lot more tokenized gold used as collateral in DeFi and NEOI going forward. Moving right along, we've got Banksa, Banksa and Ton partnering to enable stable stable coin payments for APAC businesses. Uh integration should allow small medium enterprises to process crossber transactions and B2B settlements B2B settlements using TON's blockchain AR architecture. Uh obviously TON being the Telegram blockchain. Uh,

Banksa is licensed in US, Europe, UK, Canada and they are expanding Ton's global payment network. Uh, recent uh, Ton Pay was launched on Telegram and obviously Telegram's got massive distribution, 1.1 billion users. Uh, I think Telegram is moving a little bit faster than some of the other messaging and social media platforms. Um, we're also hearing that X is going to be launching a financial services uh component to the social media platform X. And so this, I think, is very uh very similar. We're going to be seeing a lot more of this. And social media companies

are getting into the financial services game. Um, anyone with massive distribution can stand to benefit from financial products and services because the lifetime value of customers is so high and they already own the relationship with the end customer. I'm sure you guys feel it. You hop on your phone, next thing you know, you know, you hopped on to check an email, next thing you know, you're checking Twitter or you're checking Instagram. It's just second nature at this point. And that's why it makes sense for more of the highv value products and services to be integrated more deeply at least from a capitalistic perspective. Uh that is what is going to maximize the amount of value that you're squeezing out of all

of the attention in the app. Uh WhatsApp I believe already has payment uh embedded into it. Telegram is now partnering with Banksa to enable more financial products and services. Mr. Beast is launching a financial product and service component to its business. Uh, and X is doing the same. This is all a result of the distribution that they already have, building and verticalizing more of the business stack and integrated into their existing distribution.

It's the position that they find themselves in. So, we're going to keep moving along. Let's see what we've got up next. Yes, China is running the EV playbook on humanoid robots and it's working. This is insane. I wish we had the video to show you guys, but I don't think we do. So, we're just gonna we're just going to talk about it. There was a video that went uh pretty viral uh of these humanoid robots dancing. And so in 2025, last year, they did a similar ceremony where these things were, we talked about it yesterday on the stream, they were actually like still robotic looking, kind of clunky, kind of robotic

movements, not very fluid. They did this same ceremony, show unveiling of like the latest years of these this humanoid robot, and it was incredible how humanlike these things are. They were dancing. Uh they were uh practicing kung fu martial arts. And all of this was with humans and robots on the stage together. And so um I think these things were particularly small at first. Um and it just goes to show that these things are going to scale up uh incredibly fast. the difference between 20 25 when they did this in 2026 was basically the

difference between um like chat GPT 2.0 and chat GPT like 5.0 whatever we're on now. It was an incredible step function and uh increase in the effectiveness and productivity of these things. Now, it actually looks like they can coexist with humans, which is an insane thing to even say and think. But that was the impression that I got watching this. Um, we're going to be seeing a lot more of this. Obviously, Elon is working on his own Optimus humanoid robots. Uh, they've shut down certain models of Tesla so they can focus on the Optimus robots. uh they are also uh they've also at least Elon has been uh particularly fascinated

by the hand of these uh Optimus robots and how difficult it is to build a good hand. Um and so I did notice in these Chinese robots that they had almost like a mitten or a glove on and so it did not have the same kind of dexterity that humans hands have. And so I think that would open up another set of use cases. China is shipping these things extremely fast. They're innovating very quickly and from from what I'm hearing, China is also going to be selling these things at a very affordable price point, which I think is going to open them up uh to end consumers very very quickly. Uh we're going to be seeing a lot of these. Maybe they don't have all of the robustness of all of the tasks that you could imagine,

but they are certainly coming and I think once Elon gets Optimus out the door, it's going to be a little bit of a higher price point, but uh we are going to see a lot of those and apply that technology to a lot of different use cases. Um there's one last thing um uh about um the robotic industry that we're seeing progress that I want to mention which is that if you guys have been watching some of the um some of the podcasts that we've done previously with Arthur Hayes uh you would have seen that we had Niels from the Ayuki project uh the Auki company is one of the few companies out there that's mixing

blockchain and robotics. Um, I had mentioned them a couple weeks ago on the show. Probably should have been a lot louder about it. Uh, because that token is on an absolute tear. See, we've got the video now. Why don't we cut to the video so you guys can see what I'm talking about with these robots. Yeah, that this is crazy. Like these robots are if I'm a parent of one of one of these kids,

like do I want them on this like that close to an experimental robot doing kung fu? These things are so light on their feet. They have so much dexterity. The agility is incredible. They're doing back flips. Oh my god. They kind of stutter step when they land these back flips. It's not super super smooth. But if you guys see the comparison between 2025 and 26, it's it's night and day. These things are actually actually good now.

These kids do a great job. So, I haven't I think I've seen a humanoid robot, but I haven't really interacted one with one. Um, I have interacted with some of those robotic dogs. If you guys have seen those, those Boston dynamic dogs. Um it is very unnatural. Um there's an an interesting phenomenon actually about this though uh which is that you know obviously me my age I I've interacted with plenty of real dogs um as well as real humans.

And so they did a study uh with babies and they checked whether babies could tell the difference and [music] they really couldn't. Um I've also heard stories that uh babies are basically their babies aren't afraid of snakes. You can actually put a baby right next to a snake. It's totally unfazed. It kind of pets it. It thinks it's cute. It doesn't have this innate fear of this thing like us humans do. Yeah. Why don't we cut back to the article? Um, and so I think the reason why uh this feels very unnatural to us now is because we've got, you know, decades

under our belt of uh time in which we've interacted with humans and we've interacted with uh, you know, real animals. So when it when we're faced with an artificial humanoid robot or an artificial human or or a robotic dog, it feels very different from what we're accustomed to. Um, smaller people or people that will grow up and these things will already be ubiquitous working in factories or teaching your kids in school. If your kid is coming up through, you know, their life and their experience and they're accustomed to robotic dogs and humanoids, there's going they're going to have a very very different relationship with

them. Uh it won't feel unnatural like it feels to us. It'll feel like they're interacting with someone or something that feels very familiar and very natural. Um which is going to be a very strange thing. uh as this continues to develop. It it's it's pretty pretty a fascinating development. Um so how am I getting exposure to this? I have bought some Aayuki because Niels uh came on the show and he talked about it with Arthur Hayes and uh it's doing quite well. So take a look, do your own research, not financial advice. We've got one more headline before we get to our first guest.

Shout out to the man Dragonfly founder and investor Hib. These guys closed their fourth fund at $650 million who said that VC was cooked uh because this was raised during a bare market. You guys seen the fear and greed index uh at extreme fear. Uh it was pretty much as fearful as it could possibly be. Dragonfly has been around for a long time. Uh they're one of the best VCs in the space, constantly staying steadfast in the vision that they have for the space overall. Um they're also uh not dissuaded by the fact that this is a

bare market. I think it's pretty uh pretty clear at this point that we're in this crypto winter phase. Uh if it's a V-shaped recovery or a U-shaped recovery, we don't know, but we're going to find out. And so uh for Hib to to you know raise these kinds of funds uh it it's pretty incredible. They first raised uh they raised during 2018 ICO uh winter. They also raised uh pre-Luna collapse uh and you know that is where they returned the fund. And so they've continuously time and time again uh been profitable in the space with VC. uh they're also generating some some pretty

radical fees which makes it a tremendous business. Uh hib um has said that his view is that non-financial crypto has largely failed. So these guys you know didn't get wrapped up in the you know governance and decentralization theater, none of the social creator coin nonsense, none of the memecoin nonsense. Uh these guys stayed steadfast in DeFi and have continued to build throughout uh the DeFi summer, DeFi Renaissance, DeFi 1.0, DeFi 2.0, and what we're calling Neo Finance, uh which is the the latest iteration of Vitalic calls it low-risk DeFi. Um, and it's generally this convergence of legacy finance in the Wall Street cohort merging with a

lot of the DeFi OGs, and this is what we're calling Neo Finance. Uh, the financial crypto sector is accelerating rapidly. You see this in stable coins eating more and more of the payments stack. And then obviously all of the mechanisms being built around stable coins. Defi is rivaling CFI at scale. institutions are actively building in this space. Uh prediction markets are emerging as trusted infrastructure. Uh the fund for thesis is that crypto remains early.

Can't really can't really make it simpler than that. They're still early. Uh and so obviously you've got to have some foresight into which phases and sectors are going to appreciate the most, but this is where we're at. Uh don't get messed up in all of the hype and narrative. Stay steadfast. uh what works is DeFi and that is where Dragonfly is continuing to focus on agentic payments, onchain privacy, tokenization and expanding financial infrastructure. Uh these are uh the sectors where uh crypto largely has found product market fit and this is where they believe Dragonfly believes the best investments will be made especially when sentiment is weakest.

So, congrats to Hib, friend of the show. Always a pleasure when he comes on. Uh, we'll be seeing him out in Denver. We'll be talking out about the fund and what they plan on doing with the $650 million um and where they plan on allocating. All right, guys. That is all we've got in terms of the news and the headlines today. We've got the man, the myth, Matt Hugan. You've seen him on Twitter. Uh we're going to send him in to the green room behind the scenes.

He's going to be up in just a moment. Uh and we're going to be talking about several things. Bring the glasses back up here. Uh and so we're going to get him in in just a moment. Uh in the meantime, let's go over a bit of what we've got. So Bitwise did see $260 million in flow to onchain products in a single week. uh they saw the Salana staking ETP in Europe pulled in $60 million. Uh generally we're seeing this convergence between legacy finance and the evolution of DeFi. You guys have heard it several times as we've been talking about it. A lot of the the instit infrastructure on chain did not find product market fit. They're

being forced to innovate and a lot of the legacy financial products are now meeting tokenization where it is and they're being forced to innovate as well. the market knows where this is heading. Uh, and it's heading to tokenization, but it's happening a lot faster than I think a lot of people expected. So, we're gonna bring up Matt and we're gonna be talking about it. There he is. Without further ado, Matt, welcome to the show, man. >> I'm so excited to be here. Thanks for having me. >> Absolutely. I'm I'm glad that you joined. I've been longtime follower on Twitter. Uh, I think you've got a very reasonable, nuanced, and pragmatic uh approach to the space. Um, and I'm excited to uh to chat about uh what you guys have going on at Bitwise.

>> I love it. I appreciate the kind words. >> Absolutely. Um, well, I think uh there's been two pieces of news uh as of late that I think would be great to start with um that are that are right at the apex of this convergence. Um, we're seeing some of the DeFi blue chips uh work with some of the largest financial institutions in the world. Um, it's pretty incredible. Uh, and so I'd love to just get your initial reaction to Black Rockck working with Uniswap as a liquidity mechanism for their product B. Uh, and then also Apollo building on top of Morpho. Um, your first impressions, your reaction to when you saw this in the news and we'll we'll dig into some of the nuts and bolts.

>> Yeah, absolutely massive. Uh, I think the market hasn't recognized what a big deal this is. is the world's largest asset manager integrating with the world's leading decentralized exchange to provide liquidity into Bidd. A second piece that you didn't mention is the CFO of BlackRock saying they will tokenize all their ETFs in the next 3 to 12 months. And then this massive endorsement by Apollo, which is really like the Black Rockck of Credit saying it wants to build on Morpho. I I it's it's hard to imagine the the scale of the importance. This is really opening the door to institutional DeFi. It's a huge first step. If we were in a bull market, these tokens would be plus 100%.

We're not, so they're basically flat, but I really think it's a a critical event in the history of DeFi infrastructure. I'm I'm really excited about it. >> Yeah. Um, Matt, I was listening to a podcast that you did recently with the block and and you mentioned this uh Black Rockck is is I think it was the CFO mentioned that they're going to tokenize these ETFs in short time in 3 to 12 months, which you said is a foregone conclusion. It's basically happening. >> Yeah, that's the thing I think the crypto market may miss. When a big bank says 3 to 12 months, those things are already 90% done. This is not an experiment. It's not an idea. this is something that's happening and they're just aligning it with their marketing calendar. So I was really taken aback by

that. Look, we all know Larry Frink, the CEO of BlackRock has said every fund, every asset, every stock will be tokenized, but I think even me, a bull in this space, thought that was a five or 10year period. Now five or 10 years has shrunk to 3 to 12 months. Um I think it tells you a lot about the pace at which this is moving. >> Yeah. Um the the people in the chat they're asking you know this is a permissioned feature right um and you know if you look at the black rockck bidd uh partnership with unis swap you know they they're working with securitize in the middle there to make sure that there's qualified uh individuals and market participants that are you know end up getting into the biddle fund. um how much does the the

permissioned uh you know aspect of these things separate them from the existing DeFi landscape? You know my my impression was that tokenization one of the the biggest value propositions was always composability. So how much are we you know kind of tokenizing for tokenizing sake without actually getting the the the main benefit um versus you know kind of separating these things out. >> Sure. I mean, it would be nice if they yolo shipped for full fully uh decentralized, no AML, KYC, access to everyone, and they went from zero to 100 miles an hour overnight. That's not the way that these banks work. So, what you're saying is absolutely true. This is permission. It's controlled. It's only institutional investors. It is

work. It means that the institutional investors want exposure to this probably because they want to experiment with looping strategies, maybe because they want to borrow against it as collateral. So I would take it as two things. One, a sign that institutions want to do this and two, the necessary first step for Black Rockck to move into full-blown DeFi. I think if you back up and think about DeFi three or four years ago, there were like 10 major challenges separating us from disrupting all of finance. There were regulatory challenges. There were bandwidth challenges. There were institutional understanding challenges. And then there were these challenges around AML KYC and

sort of digital identity. We've knocked down all of those other challenges. That's what this signals. The market is mature enough. It is tested enough that Black Rockck is willing to attach its reputation to true decentralized exchange, true DeFi. We still need that last piece of AML KYC and decentralized identity before we take over the 10 trillion dollar finance market, but going from zero to one is is a much bigger deal than going from one to 100. And I think we've gone from like zero to 10.

>> Um and and I think the rest is just a matter of time. So you the the critics are right. It's limited, but it's a huge step. Mhm. I I tend to agree with the idea of this being a stepping stone. I think I think that's the right way to think about it. And I can't help but think that, you know, when we hear Larry Frink talk about tokenization more recently, he's also talked about basically one chain to rule them all, which I think maybe is a is an opinion that, you know, his other financial institutional counterparts may not share, but it does signal that he is already thinking about composability to the extent that everything is happening on one unified chain.

>> Yeah, I think that's I think that's reasonable. Um, you know, I think no one knows at this point how it's exactly going to pan out and and my own view is it's more likely to be to be multi-chain. Um, but I do think he's thinking about where this goes. Look, some some context. You know, I come from an ETF background. Maybe I mentioned this on on the block podcast, but I think a lot of the the push for BlackRock into tokenization is that they actually missed the ETF game. So Black Rockck today is known as the world's largest ETF issuer, but they had to buy the ETF business from Barclay's global investors after the great financial crisis. So they missed the innovation of ETFs and had to pay up to catch up and that became a huge business. I think

they see tokenization and DeFi as the next wave of that. They're determined not to miss it. Um whether it's one chain or multi-chain almost doesn't matter. um what Black Rockck thinks it'll evolve the way it evolves. But it is interesting that they're seeing the big picture. They see how this spans out over time. >> Yeah, it it you know, one of the things that we've noticed on the show just recently has been this transition in previous cycles which I I know you've you know you guys and Bitwise have been a while around for a while I think since 2017. So you guys have been through multiple cycles. Uh you've seen how this space has evolved. you know, back in would have been the DeFi summer 2020 era, you know, we started to see a lot

of L1's pop up and this was primarily, you know, around a lot of surge in DeFi as well. And so each chain had kind of the same components with their own skin around them. Every chain had a DEX, every chain had a lend borrow market and and every chain had a yield aggregation service of of some kind. Um it was a very chain ccentric way of of looking at the world. Um and now we've noticed that this transition has happened and it and it's taken us to more of an asset ccentric view of the world. And I'm curious to hear your thoughts on this because now you know we're looking at Bidd on multiple chains. But now Bidd has, you know, a DEX and soon enough

Bidd will have a lend borrow, I'd imagine. And then, you know, soon enough it'll have a yield aggregation or or preferred vault aggregation service. Do you think that this is the right way to look at this space overall now that we have some higher quality assets coming into the ecosystem or or yeah, generally kind of tell us about, you know, the pros and cons of of what this mental model might might give us? >> That's a fascinating mental model. I think it's probably accurate, right? It looks a lot more like the traditional market which is how that is structured like there are there are multiple exchanges where stocks trade but there is only one stock. Uh there are actually multiple prime brokers lending against that um even though there's one entity.

The same is true on the fund side. So I think that is probably the right view of the world. I think, you know, may maybe an extension of that is there's probably a power law distribution in terms of in terms of dexes, in terms of lending markets, in terms of of vaults. Um, so I I'm not sure it will be one to rule them all. I think it's probably more like a classic um 703010 or 702010 uh distribution is is what you end up seeing. But I I yeah look in the end the the the people who have real power in any sort of financial ecosystems are the product providers and then the customer aggregators the actual infrastructure um it's it's challenging to compete. So so I think I think when

you think about where control lies I would think in the customer aggregators and the product side as much as in these actual dexes and and such. So, I' I'd love to dig into that a little bit more. And we've heard this on on throughout a variety of different product and market verticals. It's those who own the end customer on on the distribution and front-end side. And then the bare metal, you know, that is that is where the money's made. It's this barbell. Everything in the middle tends to get commoditized as people kind of commoditize their compliments towards the middle of the stack. And so, you know, as we're looking at the ETF market and and some more of the legacy financial products, could you just help

because a lot of our audience is founders builders investors but cryptonative founders, builders, and investors. Could you give us a sense of who currently owns the the majority of these two bookends in the legacy finance and ETF world? >> Yeah, it's a great question. So in the legacy financial world, it's really the broker dealers and the financial adviserss who own all the customers and assets. So it's either Charles Schwab or if you want to go one layer deeper, it's uh it's it's Morgan Stanley, it's Meil Lynch, it's UBS, right? They have a huge chunk of the marketing power. And you see that in ETF land, right? ETFs pay effectively a listing fee to be on

Charles Schwab to have access to their customers. Um and and sure like the the ETF providers have a certain amount of scale and can build great businesses. Um but yeah, really where the customers are are where it matters in cryptoland. Uh I think people don't pay enough of attention to like the value that Phantom has created or those sorts of wallet based aggregators. I think there's a huge amount of value there and you're going to see them monetize that customer relationship and trusted brand over time would be would be my guess. Yeah. Yeah.

Um, back in I think it was 2016 or 2017, there was the original article of the fat protocol thesis, >> which you know was kind of the counterpart to the social media rising of of these apps capturing and then people thought that all the value would acrew down to the L1's gas fees. Shortly thereafter, you saw the fat app thesis was kind of flipped the barbell back. I think it's been, you know, now the consensus seems to be what what you're saying which is essentially the fat wallet thesis. This is the portal through which people, and I think people like that, too, because it's like, oh, I got a fat wallet.

>> Sounds great. >> Want that, right? >> Yeah. >> Um, and yeah, you're right. Those seem to be the entities that are owning most of the customer relationships. Um, I'd probably say, you know, the wallets and the centralized exchanges at this point are are where people see custody and that's their primary access point. >> Yeah, I think that's right. I mean, look, the the apps can be fatter than in traditional markets because they're two-sided. So, they have supply dynamics and demand dynamics and that allows them to create more defensible modes. So, I don't think the apps get squeezed to nothing. I think they're fatter they than they are in the traditional markets. But I think the fat wallet thesis looked I mean that's how it plays out in every other ecosystem. I would even say you're seeing it play out here.

I mean the largest primitives in DeFi are tiny right now right unis swap is a $3 billion asset something like that. Uh obvious $2 billion massive business is trading 20x revenues or something like completely silly given the scale of its growth. I think that explains a lot of it. you do have this this power in the fat wallet space. Um, again, the apps don't get squeezed to nothing here because they're two-sided markets. I think that's really an important differentiation, but I do think uh there's more power in the wallets than maybe most people have historically given credit to.

>> Yeah. And and just to kind of put a number around this um or you know kind of tie up this thesis that you know the the those who own the customer relationships are able to set prices that everyone else is downstream of and can kind of just pick up the pieces afterwards. Um and so I think you know wallets are in that position now. Um and then you know we've got the other side of the barbell right on both the legacy world and and also the you know DeFi neo financial side. Um, in typical blockchain companies, you know, bare metal actually kind of is a is a somewhat neat term because ultimately these things are machines, especially in proof of work, even in proof of stake,

these things kind of uh all follow down to the bottom of the stack. But in the legacy financial world, when we're thinking about ETFs, what is considered bare metal as you get, you know, to to kind of the two barbell ends of the spectrum? Yeah, that's a great question. I actually don't know what the right analogy is. Part of me wants to say the index providers um which are the bare metal of the intellectual property behind the ETFs. And if you want to look at a beautiful chart, type in MSCI into Yahoo Finance. Uh that's the leading index provider. It's been one of the best investments in the world over the last 30 years. So I think that is like you know ultimately where it boils down to. the the barest of bare metals like the custodians are just completely

commoditized and not interesting. But the the IP level at like the index level, it's been a it's been a great business uh to be in for a long time and they've they've maybe aggregated more value even than some of the ETF issuers. Look, ETF issuers build deep relationships with customers at Bitwise. We have thousands of clients. We spend time with them. We cross-ell them from one product to another. We introduce them to crypto. you can have very strong relationships. Um, but I do think the the the index level in legacy finance is is sort of maybe the equivalent of bare metal. It's the IP uh behind asset management.

>> And and where does Bitwise sit in this? You know, you got Morgan Stanley, Maril Lynch, and Charles Schwab on the one side. You've got MSCI on the on the other side. Where does Bitwise's ETF offering sit? Yeah, you know, I like to think that we cover both the asset manager and the index side. So, we run our own indexes for our index products and design the IP there. And then even on the ETFs themselves, we try to differentiate, right? We're a large staking service provider. So, we run our own staking service. We we integrate more of that more vertical integration than maybe a traditional um asset manager. in part because we want to own the stack. In part because on the index side, we haven't been huge fans of how

other people have approached indexing crypto. Um, and in part because I think, you know, people trust is at a premium in crypto for legacy finance coming in. And so the people that we've built relationships over eight years trust us to do a large part of the asset management business. They they sort of want a trusted provider. >> Yeah. And we're we're hearing as we have more of these conversations with people that are sitting in the middle of these two worlds and able to service both sides that there's a knowledge gap there. There's an education gap. And if you can sit in the in both sides, understand both of these worlds and speak both languages, you're able to serve as a trusted advisor and and and a

teacher of both of these worlds to ultimately help prepare them for what's coming uh down the pipeline. like tokenized ETFs from Black every every ETF from Black Rockck is going to be tokenized. How are you helping your clientele prepare for the changes that you know that that causes in the world? >> Yeah, I love that. I mean, that's how we built Bitwise for what it's worth. Uh about half of us come from asset management backgrounds and half of us come from the tech space because I do think you need to understand um both sides. The answer is we just spend a lot of time with clients. Uh you know, we we we do 15,000 meetings a year with adviserss. We'll meet the average adviser we have a relationship with four to six times a year. We'll send them, you know, high quality materials. Um,

and we when we take something like vaults, they have never heard of the term. They want to know how a vault actually works at sort of a base level, like where money goes in, how it goes to somewhere else, how you manage risk, how you monitor the ecosystem, how you make sure the lending pools you're in aren't fully, you know, fully allocated. Um, so they want to understand the nuts and bolts and it's just a matter of spending a lot of time with them. Uh, it's exhausting building a business, but it pays off um, eventually. So, it really is just hand-to-hand combat with people.

>> I I'd imagine vaults to asset managers are a lot like AI to everyone else like in the sense that the people that, you know, get caught off guard and fall behind are are maybe going to get innovated out of it. But asset managers that utilize vaults, learn about it, try to, you know, incorporate them into their asset management business are going to end up using them as a tool to further ahead their business. >> 100%. I mean, look, I think all assets will eventually be managed in vaults. I think eat vaults will disrupt the traditional fund structure in a really fundamental way. Obviously, they're starting at a small space. They're starting with yield only. But there's nothing about the idea of sort of dematerializing asset management, making

it pure IP and execution that can't be applied to basically every area in the market. Uh I think you'll see the most forwardthinking traditional asset managers um follow uh our and other leads in moving into vaults, right? I think Bitwise is maybe maybe the first sort of traditional asset manager that's building in vaults, but I think others will follow us pretty quickly because it is it's the next phase. And like you said, look, we've seen this before. I keep coming up with ETFs because I I used to run ETF.com before I joined Bitwise. But when ETFs launched, they were disruptive to mutual funds and you had some firms that seized on that and some firms who stuck in mutual fund

land. And the mutual fund firms are now effectively out of business or no one talks about them and everyone is doing ETFs. In 20 years, the same will be true with vaults. It will all be vaults. uh it's dematerialized asset management and we're hopeful that this creates a huge opportunity for the people who are first like bitwise look we're not we're not black rockck but maybe in vaults land we could become one of the leading providers at least that's uh that's the vision we're pursuing >> very cool um I I want to get an understanding of what you guys are currently doing in vault and what your experience has been but I can't help I any chance I get I want to increase my understanding and and experience of the legacy financial world and and you know

coming from that world you know I I'm curious why were ETFs so transformative to the legacy financial markets you know what did they do to money market funds that you know caught the MFS you know caught them off guard and why why were they so innovative >> yeah they had a number of key advantages so one is that they're more tax efficient actually in a traditional mutual fund if you and I were in a mutual fund and you decide to sell out of the mutual fund and the stocks in the mutual fund had gone up, I would have to pay taxes at the end of the year because you sold, which is an insane reality, but that was how the old system works, right? The the word mutual means like we're all in it together. That sounds

great, except for when you sell and I pay your taxes, that's less great. So, that was that was not a good starting point. Um, they also traded intraday 9:30 to 4 instead of once per day. One of the big ironies to me is all the ETF people are now looking at tokenization and like we don't need to trade 247. I'm like guys the mutual fund people said the same thing about ETFs. We don't need to trade 9:30 to 4. Once a day is fine. So they were more more liquid. And then after they got to scale they were cheaper. And that's also something people don't get. Like building a vaults business now is hard. It's complex. The tools are imperfect. It's expensive.

Bitwise is losing money on it because we have multiple people doing it and we're just Yes, ETFs were also more expensive than mutual funds. But at the bare metal level, ETFs are a more efficient mechanism for bringing in capital and deploying it than traditional mutual funds. So once you got to a scale, they were cheaper, more tax efficient, and more liquid. And that's why they won. When I look at vaults right now, more expensive, a little corner of the market, um, sort of annoying, but in the end of the day, it's 247. It will end up being much cheaper to run for asset management, and, uh, it'll be much easier for people to understand, and I think those advantages will eventually,

um, win out. >> Yeah. Um, okay. And, and what are you guys currently doing in vaults? You mentioned your experience thus far lost a little bit of money. It's been difficult. It's been, you know, a tech lift. I'm also curious what the material that you're sending out to asset managers. What is that consist of? And and what do you find resonates most with those asset managers that might be a little bit more traditional? They're like, I'm hearing a lot about tokenization. I guess I got to learn, you know, I got to read up on it. What is this new vault thing? How do you help train them and and bring them up to speed?

>> Yeah, sure. So I think you should think about the vault strategy as like as like two trains moving at different paces. So what Bitwise has done is building like a really conservative prime vault that's lending into morpho pools for collateralized Bitcoin and ETH right the most plain vanilla thing. There are other people that are great firms that do a similar thing. The reason Bitwise maybe has a space there is because we're, you know, a registered RAIA and we have a certain like, you know, size and scale and and regulatory status and systems and there will be some people who are using other vaults who may be interested in what Bitwise is doing.

That's like a a V1. You can imagine that serving that audience, which is mostly a cryptonative audience, there will be a V2 of vaults, a V3 of vaults, more complex vaults, taking on more risk, more differentiated exposure. So that's that's one train and that's actually like the immediate monetization train if you will. That's like the the business we're serving. The other thing we're doing is we're educating people about what vaults are. They're probably the traditional legacy world. They're probably not going to allocate to vaults in the next couple of years, but they value the relationship with Bitwise. And so introducing them to this area and helping them understand it makes them

feel that Bitwise can be their complete crypto provider. If we weren't doing it, someone else would be doing it. And in two years, they probably will be allocating to this space. Or if they're Morgan Stanley, maybe they're building in the vault space. They want to know and they need a steward to know that. And so we are doing that as well. So there's there's really serving the effectively cryptonnative audience with highquality vaults from a a regulated entity and then there's educating legacy about what vaults are to build our our brand and and relationship in the space.

>> Yep. Got it. And so these are the these are the two trains moving at different speeds. Um Yep. And uh you know the the ETF uh industry as a whole has a much higher barrier to entry. And I'm thinking about the progression again the stepping stone from mutual funds to ETFs to vaults given that the barrier of entry to curate one's own vault seems to be much lower than spinning up one's own ETF. Um are you worried at all that maybe an asset manager might take this material and say, "Hey, this sounds great. Rather than allocating to Bitwise's vaults, I'm just going to go spin up my own and put all my funds in there."

>> Bring it. Bring it. I mean, uh, people ask me a similar question about are you sad that Black Rockck is in the market and has such a huge ETF in IBIT when you have been here for eight years and you only have like a couple billion dollars in BITB? Um, yes. And my assets are up 15x since Black Rockck entered the market. >> So, um, I'll take it, right? Uh, so look, will traditional asset managers come into vaults? Absolutely. Will they be able to compete for the current users of vaults for whom Bitwise's brand is maybe more resonant than some legacy providers?

We'll see. But will they grow the vault space if they come into it? Absolutely. And and remember like the the the vault space is tiny right now, >> right? >> Um the broader market is measured in hundreds of trillions of dollars. So there's plenty plenty to go. So, no, at this point it's like a rising tide. Um, I think that Black Rockck ETF analogy is a good one. >> Very cool. Um, and and as Black Rockck tokenizes more of these ETFs, vaults become more ubiquitous. Composability, I still think is is the paramount value proposition of tokenization.

Do you anticipate that these vault strategies start to incorporate tokenized ETFs uh start to incorporate tokenized treasuries? These things start to become more blended and we see a lot more of these tokenized structured products end up in vaults. >> Yes, absolutely. I think that's the direction of travel. the the um and we're really excited about that and I think you're see vault managers help tokenize products and push that along so that they can use them. Uh particularly as vaults well even when vaults are really focused on yield but over time I expect them to expand to other sort of investment objectives as well. So yes um absolutely and I would add the the the

the other angle of the lower cost to entry for vaults is it's cheaper to spin up a new vault. So, it's interesting that you mentioned structured products in legacy finance. Structured products are these specialized exposures that are sold to really wealthy clients. They take time and lawyers and fees to build. Uh they're they're somewhat cumbersome, but they can be very profitable. They can be very interesting. It it's it's so much easier to build novel products in vaults. Like the not just the cost to enter, but the cost to innovate is dramatically lower that I think you're going to see a lot of specialized exposures. My bet is that much of the market will rely on brand.

So I think people who built good brands in vault, the gauntlets, the stakehouses, hopefully the bitweises of the world, I think most of the uh money will will go into the top brands and then look at all these interesting sliver strategies as opposed to just entering the the the vault space in the wild savannah and having a billion names and trying to pick one. I think they'll aggregate to brand and then there'll be a billion strategies within brands. That's probably more of the innovation funnel.

>> I I heard you talking about Vanguard Vaults. Like the branding of that is just spot on. We like to dabble a little bit in branding ourselves. Maybe Bitwise baskets. [laughter] >> I like it. I like it. Let me register the URL. >> Yeah, we'll we'll get the marketing team on it after uh after this. Um very cool. Yeah, I I I think you know this is again just a D5 primitive that we're going to see you know spiral upwards in terms of adoption um as more tokenized products and and tokenized assets come on chain. Um I I I think you know we're also going to see a lot more um of the you know a as more of these things happen on chain um I it happened much faster than I expected that you know black rockck

started to position into uni um and Apollo started to get you know position into morph. I I did not think I thought you know I figured there was a progression like you were saying right first we tokenize the assets then we be you know these assets become integrated and composable with DeFi. Um and then you know you end up buying the governance token if you will or the network token right you get a stake if you end up you know really uh investing heavily into a particular mechanism or protocol. This happened almost in one fell swoop.

Did you think this was gonna happen so quickly or or how do you why do you think, you know, Black Rockck and Apollo were choosing to make these these activations now versus later once Clarity Act is enacted or or once it becomes more widely accepted? >> Yeah. No, it's wild to me to be honest. I didn't have it on my bingo card at all. I mean, seeing it, it makes perfect sense, right? Um, you know, why why did Facebook buy uh buy Oculus or or Insta or whatever? um because it was sort of an existential threat to their business, a big new operating system, a big way to onboard customers. I think if you look at Apollo and think about what Morpho means. Um it makes a lot of sense, particularly at the the the really low

valuation that these protocols are operating in. And then also from a governance perspective, they want to influence the direction of travel for these protocols. So it makes sense, but it was it was shocking to me. I think I'm still a little stung. Like I'm still part of my mind is stuck in like the Gensler era where anything crypto is toxic and large innovative asset managers are like no way. >> And I really think we're now >> not just in a positive era but in an aggressively positive era right we in crypto forget that Paul Atkins the chair of the SEC is going on CNBC and saying all assets will be tokenized and move over blockchain based rails in five

years. But for Black Rockck, Paul Atkins is the most important person in the world. He is saying this is the way the market is going. And so Black Rockck is responding by saying, "Okay, we will go that way." >> When I think about it that way, it makes perfect sense. I just didn't expect that. I think because I still have this like this Gensler anchor dragging me down behind the scenes. Um but but if you reframe it, it makes it makes a lot of sense. Well, I I think Black Rockck is moving faster than really anyone in in you know the the typical blockchain startup complex. We're we're the ones that are used to moving fast and breaking things. I heard you say yolo shipping earlier like test and prod that

was the spirit of the industry and now you have you have black rockck moving this quickly because they're listening to the regulators whereas there's there's a significant drag that all of us I think still feel as a result of Gendler this you know bifurcation between foundations and labs corporations that was created because Gendler pushed pretty much all of these companies offshore >> caused you know these fugazi foundations to be spun up. Those were the issuing entities of the tokens. And on the other side, you had, you know, real shareholder value and venture capital pouring into Labs Corps um and all of the value acrruel acrruing to those equities because it it regulatorarily couldn't flow to the tokens um which

were offshore. and and this is still being felt I think across the industry and it's part of why you know we haven't seen kind of the catchup that a lot of us would would like to see. >> Yeah, I think that's exactly right. But I I think it's important for people to recognize that they had to do it right. If if you had a way to acrue value or to put it in regulatory speak, if you could profit from the actions of others, then under the Gensler era that satisfied the Howie test, you were a security and you went to jail. So, you had to build a token that couldn't profit. I right like that was the rule. It couldn't profit and so they didn't. I think the mistake people make now and you're starting to

see this addressed in in in things like like what a has done with aomics and then with the a will win uh proposal is the tokconomics can improve and there is a natural tension in the market where I don't think protocols will succeed if they don't share the value at least between the labs and the token and maybe all of the value needs to end up in the token over time even if they're IP style purchases like what you saw in the have a will win proposal. I I think people are maybe making the mistake they're they're underestimating how much value these protocol tokens can claim in the future by changing the tokconomics over time because again we have this this ghost of Gary Gensler um keeping us in a

poverty mindset. Um but I think maybe we're out of that mindset. Maybe we're going to stretch from it. >> Yeah. Yeah. the uh the ghost of Gary Gendler I think is [laughter] is right. >> That's my dream. >> Yeah. Um that's the next the article right that can go out to to asset managers for for this educational material. I I think you're absolutely right. Um, there was an an article that that went out by uh Jake Travinsky and Jesse Walden of Variant Fund which kind of put some some framing around this and I think you used the the moniker protocol tokens which is exceptionally accurate I think in terms of how the value should acrue at least according to

this article was that value generated onchain stays onchain acrru to tokens value accured offchain chain generated offchain acrru to equities and you know in the case of um the a will win proposal you know we we had Stani on the show last week uh he was unpacking kind of you know what the proposal entails taking the two buckets you got the protocol layer um this includes a v3 a horizon a lot of you know the the uh fees that are built up in that and then you've got you know all the IP the brand the foundation the the auh.com Um, all of that, uh, the A mobile app that they're looking to spin up, all of

that is in this product layer. I found it interesting a after reading, you know, we had Stani on first, then I ended up reading this article. A is talking about directing a 100% of the revenues being the product layer, the off-chain value acrruel, and the protocol layer, the onchain. All of that goes to the token. And I'm thinking to myself, if I'm an if I'm an investor in AB Labs, I'm pissed. I'm like, where all the revenue is going to the the going to the token now? You know, they're going to get a lot of, you know, subsidies from the DAO treasury. But yeah, where do you where do you stand on this? Is onchain stays onchain, offchain stays offchain, or is that the right way to think about

it? Do you have a different, you know, a different mental model here? >> Yeah, I mean, I I I like all the value going to the tokens. I think it's simpler and cleaner. Um there may be a world like a Red Hat style world where a labs entity can do corporate uh installations on open source uh protocols but I I like the direction of travel that a is going um obviously you have to deal it's it's it's a hard situation right like you've ended up in a hard place um uh but I do think the the the the ideal starting place if you had to do it all over again and you were freed from the Gary Gensler constraint and you're starting from uh budget zero, you would probably just have it all crew

in one place. >> You wouldn't have this two-headed Frankenstein. So, the extent that we can get there, even if it's painful, I think that's positive. Now, I'm not an investor in a lab, so I may feel differently if I was on the other side of the um the spectrum. But I do think thinking about where you would like from from a zero budget perspective, how you would design it, >> it'd probably just be one thing. >> Yeah. >> Right. Um, and so if we can get there, even if it's painful, and you think this has the potential to 100x from a business entity perspective, then it's worth getting there and and solving that challenge.

>> Yeah. Yeah. And, you know, we we talked earlier about, you know, one uh one vehicle on multiple venues, uh, which I think is it's ultimately the place we want to land. Obviously, A is approaching it from, you know, the token angle. um they have the labs corp right which may go places as well and then you've got people on the other side take you know bitco for example recently went public you know had this native token or native equity that was tradable onchain not really I guess it's a token kind of it's still the equity and so you know they're kind of approaching it from the other angle and so is is which model do you does this ultimately get us to the

same place what they're just kind approaching it from different different uh different angles. >> Yeah. I mean I think ultimately the idea is unification and single single economic exposure and we were forced into this odd fracturing uh by a hostile regulatory environment. We still have an uncertain regulatory environment right we don't have the Clarity Act. We don't have fixed rules of the road. We have proposals from Atkins but we don't have uh detailed regulation. So all of these are sort of early movers in the direction. uh but but you know ultimately uh it's ideal if everything fits into one in most cases is my view. So I do hope that we get there.

>> Yeah. Um and and I I think ultimately a lot of you know there there's regulatory reasons to get there now and people want to unify the liquidity around these things. The investors want you know a unified vehicle where they can retain exposure to all of these things. Um, you know, you guys are another one, right, with the vaults. You've you're generating some some revenues onchain and then, you know, you've got plenty of off-chain products as well. How are you thinking people want exposure here, right? Like not saying Bit Bitwise token, but you know what? How are you guys approaching this, you know, internally?

>> Yeah, it's a great question. It's above my pay grade. You'd have to ask Hunter, our CEO. Um, >> we'll get him on. Let's get him on next time. >> Let's get him on. Yeah, I'm sure he would love to come on and uh and talk about it. Um, I think it's a fair question, right? Like, you know, from a from a philosophical view, I think we have a problem uh with companies staying private too long. I'm not saying Bitwise is in that class. Um, but we do have we do have that problem as a society. I think it would be great to give people earlier exposure. I also think and maybe this is this is this is like not the angle you were going but I think it's true that the idea of using equity to incentivize consumer behavior in smart ways is something that society hasn't

explored and becomes infinitely easier when we get security tokens and I wouldn't be surprised to see some interesting experiments along those lines. Um, yeah, I think I think that could definitely happen. Uh, to to make a fund legacy finance point. Uh, for what it's worth, Vanguard is actually a collective. Um, it's owned by the shareholders of its funds. It doesn't acrue profits and pay it out to those shareholders and instead it continually lowers its cost to benefit those shareholders, but it's actually like pretty close to a Dow, which is almost ironic given um given given their view of crypto. But I do think you're going to see more of those experiments that align sort of shareholder incentives with um activity in a company. Uh so I

don't know if Bitwise will get there, but I think you'll see other people do it. >> Very cool. Yeah, I I wasn't aware that that Vanguard was structured that way. Um when you know you know when you say say it's structured like a collective, I guess the closest that I was thinking was like the Green Bay Packers I think are owned by citizens of Green Bay, right? >> That that's exactly right. Yeah, it's similar to that. So, if you own a Vanguard fund, you own Vanguard and uh but but like like owning Green Bay, you don't get profits. Green Bay, you get some you get a cheese head or something. And in Vanguard, you get to continually lower their fees. That's why their fees are lower than everyone else because there is no profit layer there. Um which is interesting.

>> Yeah. And and ultimately, you know, provides a better product and service uh than a lot of others, you know, on the market. Um very very cool. Uh, Matt, I guess, you know, as we kind of close out here in the next few minutes. Um, I'm sure and I heard you, you know, discussing some market takes uh on on a couple other podcasts, but I'm not I'm not asking you to call bottoms here. I just, you know, I'm curious as far as like how you're thinking of positioning. Um, actually, what what I wanted to ask was about the DATs. A lot of people are predicting that DATs are going to be like once they unwind, it's necessary in order for this market to bottom. if we don't if the DATs don't capitulate, right, we're not going to go up. How how do you feel about, you know, these these

treasury companies? Do you think it's necessary to shake them out before we go higher? >> Um, well, I think you need to separate uh DATs. So, you have the megaats like strategy or Bitmine or Forward that are missionaries in the space that are completely aligned with their tokens and that have high enterprise value and very low debt. Like even Micro Strategy or Strategy has very low debt compared to their Bitcoin position. I think there's no way an entity like m like strategy unwinds in the next five to 10 years and probably ever because you'd have to have Bitcoin go down 80% and then stay there for three years and then a bunch of other things happen for them to get into

trouble. It's just not going to happen. So, uh if we're waiting for them to unwind before we bottom, uh we should get into another business. It's going to be a long time. some of these lesser DATs that were late to market, I absolutely think they'll unwind and pivot. Um, but the scale of those are relatively small. So, if if if crypto natives need a body to sacrifice on the altar, I think the DAT gods will offer them up a body at some point, but it won't be like a it won't really matter because it won't be that much Bitcoin that they sell or that much ETH that they sell. Um, so I think it's more a narrative thing. You're not going to get

strategy or bit mine or others um uh into trouble just mechanically, financially, it it sort of can't happen. >> Sacrifice a dad at the altar and to the to the ghost of Gary Gendler and he for he washes away all of our >> If that's what it takes, I hope someone raises their hand to be the sacrifice. Let's get it done and move on. >> Yeah. Um, and you've also said that, you know, Black Rockck, you know, positioning into Uniswap, you know, Apollo into Morpho, these are things that ultimately bring us out of a bare market or a crypto winter. Anything else that you think could be like a big catalyst? Any reg, you know, do you think the Clarity Act holds a lot of weight? anything else that you think you

know is is relevant enough that it could cause some and and at the macro scale too. How much are you paying attention to the new Fed chair easing monetary policy the these sorts of things as you're you know thinking through the investment strategy at Bitwise? >> Yeah, absolutely. Look, if you if you position yourself out three years from now and you're looking back and you're like, "Wow, how did we bottom and then go into a historic bull market?" Well, stable coins went from, you know, 300 billion to $3 trillion. Tokenization went from 20 billion to $200 trillion.

Black Rockck and others were building in DeFi and buying Morpho and Uniswap tokens. You had Quantum Risk being put to get to bed by Bitcoin core developers. Kevin Worsh cut rates more than people expected. Maybe we pass the Clarity Act, maybe we don't. But there's like so many positives. Uh, I keep hearing people saying this is worse than 2022 or worse than 2018. That's absolutely ridiculous. There were existential threats then and no positives. When you put all of those things together, um, oh, look, in three years it will be obvious why we rallied.

Those are massive markets and right now they're really undervalued. Um, I do think DeFi could lead us out. Like listen to Apollo, listen to BlackRock, look at these valuations. Like Morphos, billion and a half dollars, largest credit fund, they want to have a stake in it. It's not going to look that complex a few years from now. So, uh, yes, there are a ton of catalysts. Um, but bottoms always round out. It's never V-shaped. So, it's not like the Clarity is going to act pass is going to Clarity Act's going to pass and we're going to be back to 100,000. It's not what's going to happen. It's going to be this accumulation of good news that gets ignored until it's so weighty that it's

just obvious and then we'll be at new all-time highs. >> Yeah, I think that's I think that's a prudent approach. Um Matt, LA last question I got for it is, you know, we've been thinking a lot about where the space is heading. You know, you've been around for multiple cycles. We've been around creating educational content in the in the space for multiple cycles. Um it feels like finally these institutions are being forced to innovate. uh they're they're you know evolving. Uh and then at the same time you know a lot of DeFi is is starting to find some product market fit. There's a lot of infrastructure that never really found product market fit. Maybe they never do. They're being forced to innovate as well. Where these things are meeting is it it looks a lot different.

It's you know not really seed phrases and self-custody. People want forgot password buttons and customer service. You know they they also you know they they want a neoank approach. They want vaults. They want tokenization and composability. We're calling this NEO finance and and we think it has to be something that you know not DeFi 1.0 2.0. We've done that, right? Like we're trying to come up with what we think the new moniker is. I'm just curious. Do you think this is the right way to think about it? Are you know would we see Neo finance go out to some asset managers and Bitwise educational material? What do you think is the right mental model?

How do you how how do you think about neo finance? >> I like that. But I like the term. I do think we're reinventing finance. I think it's way overdue. Fintech has effectively been a failure. Uh finance is the least disrupted sector in the economy. The largest financial services company in the US was created in the 1700s. That's like embarrassing. Um so I do like the idea of neo finance. I think it is important to get out of um cryptospecific terms. Mhm. >> Crypto terms are limiting. Even decentralized is relatively limiting and many crypto terms are actually negative in the real world. Like trustless sounds bad.

>> Um uh even zero knowledge proofs sound no one wants zero knowledge sounds bad. Um so yeah I like neo finance. I do think the scale of it is right. Um yeah, ultimately this like again the scale is like vaults take all of asset management, stable coins take all of payments. Uh onchain lending markets replace all of lending. I think that's the scale that we're going. So something like NEO finance uh is a pretty good term. >> Awesome. Appreciate you saying that and appreciate you coming on today. It was a pleasure. Would love to have you on again, you know, in a couple months to to reassess where we are at hopefully in the crypto spring. uh and the neo the neo finance uh next era I guess.

>> I love it. I love it. We'll do it for sure. >> Awesome. Thanks so much, man. Really appreciate it. See you again. >> Thanks for having me. >> Awesome. There he is. That was Matt Hugan, CIO at Bitwise. Absolute pleasure of a conversation. The guy's a great guy. Um very, very smart. I'm sure you guys have seen his takes online. We're going to have a bunch of clips coming out as a result of this. You guys heard his take on NEO finance there at the very end. Um, this one went deep obviously. I mean, we talked tokenized equities, uh, tokenized everything. Uh, Matt believes everything is going to be tokenized. Uh, and he's actually talking to the asset managers and the

institutions. Uh, so I think he's in the right place with the right knowledge. Um, look, Black Rockck is tokenizing all of their ETFs. We're going to see how that evolves. These things are going to become collateral and assets within these vaults. It's going to be so many of these vaults. You're gonna have so much expressiveness. You can pretty much get access and exposure to anything you want. Uh I'd even suggest maybe a bit wise equity token something collective. We'll see. Uh absolutely great conversation difference between equity and token as well. Uh and then obviously you know we went deep on a lot of the legacy financial uh aspects as well which is important to understand

especially as a builder uh in today's day and age on blockchain rails as we're applying a lot of these assets and financial infrastructure to our blockchain and digital asset uh ecosystems. So guys that's it pleasure. Uh, we are going to be live tomorrow on AI, which we didn't cover too much with Matt, but we're going to have a whole special episode about AI tomorrow with our friends at Near Live from ETH Denver. I'm flying there later tonight.

Uh, I heard it's going to snow, so hopefully my plane lands. That's it. Cheers, guys. See you up See you tomorrow. [music]