The Fellas Debate the Financialization of JPEGs | Bell Curve

Transcript

[Music] All right, everyone. Welcome back to another episode of Bell Curve. Before we jump in, quick disclaimer. The views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with. Nothing in the episode is construed or relied upon as financial, technical, tax, legal, or other advice. You know the deal. Now, let's jump into the episode. Velora is the easiest way to send, swap, collect, and purchase digital goods on the Cello blockchain. Download the app and start exploring DAPs like Ethic Hub today at valoraapp.com/mpire.

All right, everyone. Welcome back to another roundup of Bell Curve. You got uh I'm still thinking about when you told me about my podcast voice. Michael's one and two. Yeah, advance. Guys, welcome to the show. Thanks for having good to be here, Mike. Good to be here. Mid mids Yeah. Midsummer Mike over here with your Florida shirt. Ready to I'm in Florida. You're you're in Florida. Yeah, it's actually he's been on the show. It's Miles. It's uh it's Miles 30th. So I am down here. This is like the year of all my my entire friend group is turning 30. So there like five 30th birthdays in various places. So I was Vance and I were at a wedding this

weekend. We got another one this upcoming weekend. and one the weekend after. It's wedding season. Michael did what? What was it? 13 weddings, 14 weddings last year. 11 weddings last year. Damn. Sounds like the beginning of the wedding that he's invited to. I've told all of my friends that I'm only showing up to one of their weddings. So, you better make it count. Better choose. It'd be really funny if one of your friends was like didn't invite you to the first wedding expecting, you know, the second. I'm not coming to the second then. One and done.

You get one. You better be really sure. Yeah. Seriously, like I don't have that many weekends in a year. I feel you. I was just talking to this about like it's I was just talking to this guy and he's like, "Oh, is it going to be a crazy weekend?" I was like, "Yeah, we're not going super wild." He's like after 30 it's not called going wild, it's called going wild. So that's what we're doing this weekend. Going wild. Yeah. Boys in the hot tub. Classic. Boys in the No girls allowed, baby. No girls allowed. Good chicks. Got to bring chicks. That's us, too. Nice, nice soak. Nice soak in the tub.

I'm enjoying my 30s more than my 20s. Just, you know, just to put it out there. It's a chill time. That was my suspicion, too. Seems like 30s. That's a good age to be. 30s hype. Early 30s. Real hype. Are you two sub 30 or over 30? Sub 30. Sub 30. Wow. Get ready. We're right there though. I'm 29, so we're pushing up against it. Yeah. For sure. Can we talk some crypto? Yeah. Before we painted too vivid of a picture with the hot tub here, let's get into crypto a little bit. Um, should we do So, we've got Yeah, let's do some predictions because I think Coinbase earnings are actually going to come out during during this this uh this recording. So, just to just to refresh people a little bit, maybe

I'll actually share my my screen a sec. um just so we can recap how Coinbase did over the course of last year. So they break out basically they've got two buckets with different subgroups underneath, but they've got transaction revenue and they've got subscription and services revenue. Obviously transaction revenue is the bulk of their business, but Wall Street cares a lot about subscription and services because the general perception is transaction revenue is going to trend down towards zero over time. So they really want to grow that subscription services part of their revenue. Within transaction revenue, they break it out in between consumer and institutional. The consumer bucket is much larger just because of

the amount of fees. You know, it's kind of an unspoken thing. I guess it's spoken, but the fees that consumers get charged are much much higher. Retail uh gets charged much higher fees on Coinbase than the institute in the institutional part of their client base. And then for subscription and services, they break it out between blockchain rewards, which is staking basically, custodial fee revenue, interest income, which is generated largely based on their partnership with Circle, the center consortium, and then other subscription and services, which is kind of just a hodgepodge of different bets. It's kind of like Coinbase One, things like that. So, and then and then I guess this is if you look at it in terms of their profitability. So, there's net revenue, uh, income, and adjusted EBA.

And I was I was going back and Brian guided towards there's a there's a change in philosophy at Coinbase, which is they basically had a goal to make all their money during bull markets and they were going to break even during these sorts of bare periods. That has changed now and they have since guided that they want to be profitable in all market conditions. Although the CFO did walk it back a little and say, "Well, we're not committing to that in 2023. We want to see absolute growth in IBIDA. So classic the CFO kind of walking it back a little. I'd be I'd be curious. Um I have some specific thoughts, but I' I would love to get your guys thoughts on Hey, what are you thinking about for for Q1?

How do you think it's going to look? I think there are a couple things that that I'm looking at like maybe and we can break it down. So on the revenue side of things, I would um I would assume that Q1 revenue will look pretty similar to Q4 um but potentially higher. And uh if you if you look at like I bet the user base has actually shrunk a little bit and I bet you'll see like downloads of the app for example are down but you have higher ETH prices and higher I mean higher crypto prices across the board with higher interest rates which I think will drive higher revenue. So like first prediction I would have is higher revenue. Uh, second prediction I would have is on the earnings side. Those are always a little tougher to predict, but I think I think it'll look pretty good actually because

they had some they I mean they cut a ton of people. Yeah. Huge layoffs. Huge layoffs. And um I'm I don't know like what percentage of their expenses come from personnel, but you got to assume it's pretty high with like several thousand people and they had huge layoffs. So I bet their earnings will also look pretty good. um would have to assume that they have do a lot of talk about like regul regulatory pressure both on the staking products side of things and then their their wells notice. Um and I I bet that'll be like the main focus of this and then uh one interesting thing that I bet like main street or Wall Street like won't really talk about is um the new sources of revenue, but I'd be curious to see how they start talking about like their

international futures markets. um how they start like providing guidance around the L2 around base like that's what I think will actually be the most interesting aspect of this um that probably Wall Street will skip over. So those are my highle predictions to totally agree with all those. I would say in addition just like breaking down this chart right here. Consumer I would say is probably going to be pretty similar if not a bit higher in terms of net revenue from transaction revenue. Institutional I would imagine is actually going to be pretty far down. Post FTX I would imagine that a lot of institutions just frankly stopped trading. And I think in Q4 you had a lot of rebalancing and tax lost harvesting that attributed to the 13 million that you see in that in that column. The one

that I think is going to be most interesting which um won't show up in Q1 but I think will absolutely be present in Q2 and they'll probably talk about it or guide towards it in in the call is the actual blockchain rewards subscriptions and services revenue. I think post Shanghai, a number of, you know, institutional partners um put ETH into uh the the staking program that they had. And a lot of that I I'd say all of that is probably E staking. I'm sure there's some other staking opportunities that exist or persist, but I would imagine that in Q2 that's going to jump the most. Um, so whether or not they talk about it, I I I don't know,

but and it's not going to show up in in Q1 earnings, but blockchain rewards is is the one that I'm tracking the most. Michael, real quick, I completely agree with you on the blockchain rewards, and those are denominated, those staking revenues are denominated in ETH. So even if they basically stay constant, the price appreciation is going to do very well for that particular line item. I would push back maybe a little bit on the institutional uh part of your observation because I mean maybe just a question to you. Obviously crypto's done super well year to date. Who do you think has been buying? Do you think that's been institutional driven or retail driven?

I would say it's probably more retail than institutional. Um but I think a lot of I I guess the comparison that I have well the comparison that I have is from Q4 to Q1 and I think a lot of the institutions were tax lost harvesting at the end of last year and so that's where a lot of that activity was driven from. There has been you know price appreciation in January and and I that was probably a lot of institutions rebying. So maybe this is flat, maybe this is maybe it's even up. I don't know. But I I do think that institutional relative to consumer isn't going to grow as much.

Yeah, you might be right. There were there was um I actually I went back and sort of skimmed the analyst notes from from Q4 and there there actually was a disclosure there that there was a a inbound in interest on the institutional side for prime. So they were onboarding a whole bunch of customers in Q4. Um they did kind of walk that back though and say you know typically the the sort of relative balance between you know re the retail and institutional part of their business doesn't change all that much. But I don't know I could I'm not really sure. I I I don't really think retail is back in this market yet. I I I feel like you're not I agree I I completely agree with that.

The one the one thing that I will say is that in Q4, late Q4 or maybe it was Q1, they did switch everybody over from pro who was a consumer from pro to uh advanced trading. And so there have been some product updates that I I personally have found to be uh on on the uh consumer side to be really beneficial. That's kind of what I'm basing in terms of you know where this activity is coming from relative to the institutional side. Um, anecdotally also just like institutions were not very active in Q1 because they were trying to pick up the pieces of what happened after FDX. Yeah. Yeah.

Coinbase has this, you know, Jason, just in response to your question about about BAS, Coinbase has this framework that they used to talk to their analysts into Wall Street. They call it their 702010 framework and they say about 70% of our resources and focus is dedicated to our core business. So basically everything that we're talking about 20% is allocated towards more strategic long-term pursuits and then 10% is kind of their risk-taking venture type investments within their product portfolio which I actually think is it's easy to understand and probably a pretty decent framework for running a business.

So I I kind of agree. I think base is the wild card but I don't it's kind of that would be firmly in the 10% bucket. So I doubt it gets much air time. that that framework was um started by Google in the early 2000s and it was all about you know 20% of time or something goes to the they also work on anything they also did the yeah the 20% time uh for the engineers and 70% is how we're going to make money in the next three years 20% is how we're going to make money in three to five years and 10% is how we're going to make money after the next five years I like that I mean what Like I haven't looked too much into Coinbase's financials, but

what this tells me is that a they're not leaving the US. Like all of this is basically US revenue or US- ccentric, especially on the retail side. And two, you know, like the staking arguments or or I guess the wells notice hasn't formally turned into a suit yet, but like they're going to fight that tooth and nail. Like that's one of their only at least steady revenue segments that has a chance to, you know, five or 10x. So I don't know. It it seems like Brian is trying to set up a straw man for like, you know, we're really going to leave if if forced to. But at the same time, like the math wouldn't bear that out at all. Like if Coinbase left the US, if Coinbase gave up on staking, like I don't know how much of Coinbase would really be left. Just just to reiterate,

I think I said this a couple weeks ago, but like leaving the US doesn't mean they're leaving. Like they're still going to have offices in the US. It means like the technical headquarters is going to be based somewhere else, but like nothing changes. the product is still served to US customers. They still make US money and pay taxes for those US revenues, but it's just that, you know, the technical like headquarters would be in London or something. Yeah. Yeah. So, I guess we'll see. I guess the just the last thing is that that interest expense that's really been carrying their whole services and subscription bucket of revenue. I think it's probably too late. I like I that USDC DEG I think that happened in March and then there's

been a draining of right there's been uh you know some seven or eight billion dollars worth of market cap that's migrated out of USDC and into Tether. I frankly don't know how to forecast that because I that even that market cap moving to Tether doesn't even necessarily mean that the portion that they generate they generate their interest on is like they they generate interest that's uh on USDC that's custodiated at Coinbase. So, I don't even know if that blip ultimately ends up impacting that, but it is worth calling it out because that is the the part of their um that's the part of the services and subscription revenue that's basically been carrying that whole number. And to be fair, to be fair to Wall Street, they've questioned that. I'm not really sure it deserves to be in there,

frankly. an interest expenses subscription. They're not likely to get more people to put a more principle into it at the size that they've been able to historically or b, you know, take advantage of the same level of interest rates. Just like doesn't feel like that's in the cards giving everything that's going on, you know, with the regional bank. I guess it's not even a crisis or what like what what's the name of it? Implosion kurfuffle like I feel like that's one of the thing, this is totally unrelated, but like I feel like there's like this intentional and like Michael and I have talked about this before.

There's this intentional like memory hauling or like trying to keep these headlines out of like Bloomberg or like New York Times or the Wall Street Journal. It's like how many banks have blown up at this point and like we're still not allowed to call it a crisis. Like just completely crazy to me. It feels like there's some serious uh just like sheeple hurting going on at least for the mainstream media outlets. It does feel interesting like when in 2008 I mean everyone in the world knew that these banks were blowing up and that everything was collapsing and today you have like the size of the banks blowing up is actually much larger. Uh and I feel like nobody's really talking about it outside of you know finit land.

Lesson there. There's a lesson there. I mean the lesson there is that like it's much worse than anybody is actually telling people. Well, I will say I mean to totally agree with all of that. So far throughout all of this process, there's been exactly zero dollars lost for depositors. Like there is an element of like, okay, sure, shareholders are done, bond holders are done, you know, the companies themselves are going through massive layoffs, but are are consumers here? Nothing to see here. It's a liquidity problem. It's not probably that at all. Like What? Like I mean but but Michael in 2008 it was the same thing. I mean the

bank the bank accounts were backed by FDIC in 2008 as well. Yeah that's a little bit different because those were investment banks and like when Leman Brothers collapsed there were a lot of clients who lost a lot of money. But I do think that there's an element I'm just saying you you're your argument that you're arguing that the because depositors didn't get hurt then it's not like a big mainstream thing. No no it is. I'm saying I agree. I would say, you know, that being said, so far nobody has lost money. Also, right now, I don't know like I I saw the list yesterday of the after hours trading of like 10 different regional banks and PAC West was at the top of the list and they were down like

60% after hours. Um, so like this isn't stopping yet, but how far can the FDIC go in back stopping these? How far, you know, like how how deep are the pockets, right? And is everybody How deep are they? How deep my I find out the FDIC insurance fund was before before all this. And I haven't It's not infinite. It's like $25 billion or something. I guess you know what I'm saying is we have saved off depositors losing money so far. I don't think it can go forever. It doesn't look like this is stopping.

Something is going to have to give at some point. And the second that depositors start losing money, this is going to be like the biggest news story I think you know people are going to be talking about. I don't think any depositor is going to lose any money. I think we're just going to print infinite money and just like I agree under the rug. Like that's why we're not allowed to talk about on the internet or mainstream news. Just like we need to go to the real sources to get that information. You know what I'm talking about. Michael Vance, where's your tin foil? There's some corners of the internet where the real news is being reported.

Yeah, bro. You friend time these days, man. Oh, bro, you don't even want to know. What's your What's on your What's on your bookmarks list? Let's see your open tabs right now. There's some There's some pretty funny open tabs right now. I'm not going to lie. Let's move on. Our is the ultimate wallet for exploring the Cello ecosystem. Access over 50 different crypto assets and over 30 different DAPs for swapping, sending, and growing your crypto, all from your mobile phone. If you want to see real world use cases for crypto, Valora's DAPs page is the easiest way to access a growing list of the latest refi and defy applications, including DAPs like Ethic

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Yeah, blending blur. Yeah, let's talk about Blend. So, Blur obviously is the NFT marketplace that launched earlier this year. They just announced something called Blend, which is sort of the next evolution of NFT. It's a peer-to-peer NFT marketplace where there's a bunch of I'll just give you my I mean, there are a bunch of features on it. I think there's something that's very hard to digest about it cuz one of the things that it allows you to do is do buy now pay later for NFTTS and I a lot of people have had a very negative reaction to that myself included but I think if you look at the design of this marketplace there are actually some things that are pretty cool about it so basically it's just a it's just a marketplace you know similar

sort of to to something like a where you can deposit um where you can you know lenders can lend to people who want to buy NFTts and only put down a small amount of collateral. And there's some kind of cool mechanism design that how that actually works. And notably, they don't rely on oracles for price feeds. So, because these are individualized loans and it's not peer-to-pool or something like that, uh individual lenders can set um basically the interest rate that they're comfortable lending at. And the way they get around relying on an oracle is at any given time the lender can essentially trigger a Dutch auction and wherein another lender can either scoop

up uh the the NFT at a higher interest rate or in the case that no lenders want to step in they they actually take possession of the collateral. We can dig into that. I think a lot of people have a lot of problems with that and see gamification there. But the the other thing that I thought was kind of cool about this construction is they assume I I kind of see this in an evolution in in crypto market structure where if you have these sort of two-sided marketplaces where you're relying on liquidity in the very beginnings of like unis swap you relied on retail liquidity you know for amms and then with uni v3 kind of like well in order to create a

better borrower experience right kind of the the demand side of the equation really complexity and they were okay that basically came out and said we are actually basing this one of the assumptions in this marketplace working is the existence of more sophisticated lenders who can and honestly just hearing them say that I was like that's probably the right assumption. I'm actually not sure that it makes sense for retail at large to just be market makers can contribute passive liquidity. It's hard to be a market maker. So, this is just kind of me rambling about about this protocol, but what what do you guys what's your guys take on this?

I love that. I love that Blur is out here just launching a buy now pay later thing for NFTts. What a in this market like the market of all time for crypto. They're out here just doing like, oh yeah, buy now. Meanwhile, buy now pay later is like collapsing, right? My first reaction was you guys should have read the room. I aren't they like doing a bunch of volume right now though? Like they have well trading volume or lending volume? Let's see. I think one of the pumps some NFTs like 17,000 lended.

Yeah. No, I mean it's done well. The the volumes were I I'd call it a successful launch. Also since the launch like the floors of a couple of NFTs that have been that are like featured on Blend really popped. like Isuki's ran up from like 15 uh like 14 or 15 to like 18 um and if you if you dig into the data there's a lot of users buying Isuki with the buy now pay later one I I so Mike I I agree with all that. Um I think the biggest thing in my mind is kind of the only thing that's left in DeFi right now is retail and like there aren't any institutions that are stepping in and market making things.

there aren't any institutions that are like going to be the initial backs off of liquidity for this ecosystem yet. Maybe it comes back eventually and it could be designed for that um you know eventually. But I I do think that we're kind of in this place of like it's really only like crypto whales and retail players that are in this ecosystem. So like building that base of liquidity is going to be hard. If they can do it, that's going to be great. But um yeah, I also I I think the 30hour Dutch auction is tough because what that frankly means is you got to be like paying attention and that if that you know goes off the hours are not that long.

Yeah. Can Can I tell you why, Mike? You you've spent a lot more time digging into this than I have, but the reason I didn't like it was actually around their messaging. I think Blur's really smart and like uh Pac-Man's smart and stuff. Um, and they've clearly like advanced the institutional NFT like world in a in a good way and like pushed competitors in in the right direction. But they had the their tweet thread announcement. Um, there was like one of the tweets was like every I'm just going to read it. Every trillion dollar market relies on financialization to scale. NFTTS are no different. Instead of paying a million for a house, buyers put $100,000 down and pay the rest through their mortgage.

Without this mechanism, almost no one would be able to afford homes. So he's explaining like the mortgage market and then but like I think that's a pretty dangerous thing to do to compare massive leverage and debt positions on these extremely volatile JPEGs with the purchase of a home. And I think it sets this like dangerous mentality. I think people are going to get wrecked on this. I I do agree with that though. It's just like a matter of whether it makes sense or is sustainable to lever up any asset in an attempt to buy it. So like you know buying a house it sounds very sweet you know you have a family you go buy a house American dream whatever you do that with commercial real estate you know 90% loan to value everyone stops

come to the office you know all of a sudden the portfolio is zero so like you know is an NFT more like a house or is it more like you know commercial real estate it's probably not similar to either it's probably just like internet money with a picture on it and like you know do these things have any fundamental value that's kind of what the entire assumption of levering it up is based on or maybe it doesn't and maybe it's all just meme value and it'll come back and and it's a good way to speculate but it reminded me a little too much of like so affirm and afterpay and cla are like the main buy now pay later platforms and they absolutely ripped from like 2019 to 2021. Um I think there was like 2018 or 2019 there was like two billion in buy

now pay later debt. Uh two years later it increased 10x to like 25 billion. And if you look at the marketing of a lot of these buy now pay later programs, they were like this is really good for gig workers. This is great for young people with poor credit histories. This is great for the unbanked. And it was like a similar kind of like I didn't like that messaging because you're kind of like preying on those folks. Um and it ended up completely backfiring for those people. And in reality it was great because of ZERP. Yeah. you can get a zero interest loan on a mattress or like you know all I I I do find it interesting that financialization of PFP NFTts particularly right now is what they're

going after and and to Vance's point there is no fundamental utility there is no fundamental value we created these things so far and they have value in a in a secondary marketplace but it it will lead to some people you know overextending and getting burned and at frankly I think is is probably not worth going super head first into this ecosystem right now. Um but maybe there's enough liquidity. Maybe there's enough liquidity on the lending side to actually make this work. That that's kind of the thing that I I keep going back to. Let me just set up the like overall like this kind of a philosophical discussion like how much financialization is enough financial like some amount of financialization is

okay and good right like to use your example Jason of like the mortgage like America had a social contract where they made a decision where owning a house is a good thing that's not the case everywhere like there are other countries where everyone just rents we were like we think it's a good thing to own your home and basically everyone should lever up and buy their home and that'll be okay so like we all kind of thought that was But then like where's the line? Because now it's not small community banks that are lending to, you know, to people in their community. This right there's going to be none of them left. But really what happens is those are more like small distribution centers where these mortgages are originated.

They're packaged up and then they're sold to people in Japan. And it's like well maybe that you're because you have a larger base of people that are willing to buy those mortgages, you get a better price, but is that really a better system? It's a philosophical question at a certain point. I mean, so the two points coming out of that are number one, a house is a fundamentally useful asset. Whether or not you live in it or somebody else does, someone's going to be living in it most likely. And number two, the other reason why home ownership became such a American mainstay is because overall the the residential uh housing market has gone up over the last 50 years and that became the largest asset for most families. And that I think is you know if you if you don't own and you rent like you miss out on

that wealth creation possibility over the last you know multiple decades. So I agree there does need to be some financialization. It's interesting to have it be in this ecosystem. I I guess maybe the point that I'm trying to make is um the messaging around it and comparing it to mortgages is to Yano's point is is not something that I thought that was bad. Let me make one financial in my mind financialization equals good in my mind. it it unlocks a bunch of opportunities and that's fine and like if you think that NFTs are just like are you either think that NFTs are just tokens with pictures in which case like yeah you should financialize these tokens and then on the other side like you think that NFTs are this really valuable thing that like creator in which case yeah

financialization is also good it was the messaging and um it wasn't just that messaging too it was actually like there's this strategy that they did that I thought was like also not great where you can um they're incentivizing loans on the platform through these things called lending points that where where the more lending points that you get the more the more of a the next airdrop you get. And in the mortgage land which were like if you just keep going with that analogy there's this thing called reggg n regulation n that um it's known as the like mortgages acts and practices. It's the mortgage advertising rule basically and it prevents a bunch of like over overpromoting and over advertising uh and like doing deceptive advertising in

mortgages. And to me when I read this I'm like you are incentivizing people to like do more that than they should on this platform to farm the next airdrop. Oh, I agree with you. But I my understanding of their point system was that they changed around. So they're incentivizing the lenders, not the people who want to borrow an NFT, buy now, pay later. So they're incentivizing people to provide liquidity and extend credit to people who want to buy because I think they're concerned of everyone first of all either gaming like playing some kind of game where you set an unreasonably high, you know, um, interest rate and then people default on it, no one wants to pick it up, they

scoop it up for a reasonable price and dump it immediately. That's the game that everyone has already outlined. But I think what they want to do is they want to provide a liquid market of sophisticated lenders and those points are pushing people to, you know, not pull out basically and do that. That was my understanding of those points. Okay. Yeah. I mean, it's the same way that they incentivize the trading of NFTs as well, which is you get points whenever you put out an an offer, not when you buy something. Mike, do you feel comfortable sharing the um like what you were explaining to me about the difference between like lending and borrowing on like a verse versus compound versus blur or unblend. Do you well it was kind of I mean what I was trying to I think it's the look I I

actually agree with everything you guys are saying. I just think it's important to provide like some kind of devil's advocate. Um because I really do think like so I I like for instance I think being able to buy and sell stocks is good. Do I think it's great that Robin Hood basically pushes people into options because those are the highest margin products and that's what the order flow that Citadel wants to buy. I don't think that's good. So there's like some there's a bell curve of financialization that I think is basically see what you did there. You see what I did there? Yeah. But like like I feel like this argument does not actually hold water when you just have like other examples.

Sugar is bad for you. Should we allow children to drink orange juice? Probably not. But that's like part of a balanced breakfast and also part of like the food pyramid. Like that's not great. Every asset class benefits from financialization. Like why shouldn't crypto? Like have you seen the terms of auto loans like interest rate interestonly auto loans that like jack up and and refinance to the to the you know whatever the the new interest rate that the Fed decides on? Like those are pretty toxic and poisonous. And not only do you have like the industry for the loaning of that, you have the industry for the buying of those loans and chopping those up and syndicating those to pension funds. So like I don't know.

I feel like crypto always gets put in this kind of like ideological corner of like you know you shouldn't be doing those things and those arguments just like never hold water if you look at the real world. I I agree with that. I go and you know what even as we're here because the fundamental question that we're asking is do NFTs have value? And if NFTs have value I think we would all say then you should be able to some degree of financialization is you know right and good and acceptable. Define though like does a car have sure like I think that's the place, but like what if you're like not doing anything with your life like and you're just like speculating on this car because you want a cool one?

I don't know. I I had read the analogy and and you know 6 to 8 ounces of orange juice in the morning is is probably healthy for you, but you know 60 to 80 ounces of orange juice is probably going to give you diabetes. I agree. I think it's kind of everything in in moderation. But it is cuz you know when we're here sitting and saying uh is is it right and good to be able to take out a loan basically to buy an an NFT we're like oh I don't know about that and sort of making a value judgment there but none of us question the ability to take out a loan on say Ethereum or Bitcoin or something like that and 99% of the world would say that's completely unacceptable level of risk and that's not right and good. So

do I think the marketing was a little aggressive? Do I think this is probably gonna end in tears at some point? Probably. Do I have a philosophical problem with it? No. And the the other thing that we haven't even really talked about is just like close your eyes and imagine it's like a year and a half from now. The the bull market is returning. You have two options. You can either buy your NFT at full price or you can buy now pay later. It's I don't it our value judgments aside, people are just going to do that. I or yeah, you have two options. You can sell your NFT for some asset for ETH or you can borrow against your NFT to get some liquidity on it.

Like these things should exist. It's just a question of, you know, how pervasive they need to be. You're always going to have people wanting to borrow against any asset that they own. I think the question is like will there be lenders for that requisite, you know, borrow flow? And this actually makes it possible. So, I'm all there for expanding the use cases of crypto. I feel no moral high ground over anybody borrowing or trading or being degenerate. Like, if you want to do that, go light yourself on fire. I might even lend to you to go do that. But, like, you know, it is what it is. I I don't see the problem.

Just make sure you got the notifications turned on loud and make sure you got paid your day. like they'll like go on a camping trip after 30 hours is not that long. I have one more one more question on this before you guys move on. So the way that buy now pay later works the monetization scheme in like e-commerce is I I don't think it's a Zer thing, Michael. My understanding of the way it works is actually the you get a 0% APR loan because merchandisers are actually subsidizing that cost because the amount like your average I forget what the unit is. It's the amount that you spend on one average session or purchase or something like that goes up three or four times. So yeah. Yeah. But but but the but the

platforms still have to pay the full price. So like the firms, you know, put the money up and they borrow to be able to make that interest free loan. So that that's that. Got it. Got it. Um, so my my question to you guys would be, do you think there's ever a situation where Blend goes to basically charges NFT collections when they do their initial mint or drop or something like that to offer buy now pay later? Because just look at the impact that it's had on Isukis and Mades and Punks. Like if I were a blend, I would be like, "Hey, we can we are we've got this market of people that are going to offer loans against your NFTts and that's going to offer that's going to result clearly in

a higher floor price, but we got to get a little something something." I I think like the primary asset issu issuer uh facilitating leverage trading effectively of these NFTts is probably a non-starter. I think it's something that you'll see like the cloak and dagger like governance, you know, yeah, we're going to vote this in, we're going to, you know, get it going and I think it's going to be really good for projects until it's really terrible where there is no way that you can short NFTs right now. This is probably like, you know, theoretically if I were to go off and and try to short NFTs, I would probably try to find an NFT per to short and then I would try to immediately go off and get at the spot NFT, whatever it might be. And like literally in in this

uh like the hard part about shorting crypto is that like especially if it's a closely held coin like you can't make people give you their spot so that you can sell it into the market and you know close out your short on the per. What you have to do is you have to actually like go off and source that and horse trade and it's extremely difficult. But on this like you can literally just take people's NFTts. So, I think like you're going to see these things pump and then you're going to see someone smart like the GCR of NFT trading. Who knows? Uh, it's like a smaller cottage industry, but somebody's going to like take a shot at all of these that that have all this, you know, potential borrow flow that you can take and use to short. So, double-edged sword to say the least.

Who's going to be the George Soros of NFTTS? I mean, you're going to make like $100 doing this stuff. So, like maybe the rest like never going to be worth it, but like I don't know the the peak valuations of like board API club and stuff like that, like that would have been extremely juicy. We had some guy in the last cycle approaching us trying to get all the Topshot NFT cards so you could short them, but it was like this like ranky dank operation. It like didn't end up working. Like this is this actually makes it possible, which is pretty scary.

the NFT had a rough year. So, yeah, they did. They did. I don't know. I I sort of I I kind of am with you. I look I Jason, I agree with you to just bring it full circle. I think the way that it was marketed and something even after all this discussion, buy now pay later for NFTTS, I feel pretty confident that retail's not going to be on the winning end of that. But I also think you kind of have to choose like do you want a free market where people are allowed to make these decisions or do you want a market of tradi where you know they it's regulated all the way up to here and this is what you're allowed to do versus not. And I I kind of maybe there are people out there that have thought in much more detail

about me and maybe that's a false trade-off but that's kind of what I think of. Um always I do think that do whatever they want. That's my my personal philosophy. Yeah. same. I I do think that we're going to see a lot more uh NFTtx defy financialization opportunities. Like there's going to be more AMMs that launch. There's going to be, you know, fungeible tokens that are associated with these collections that's going to, you know, get liquidity on these AMMs. Like we're we're going to see a lot more financialization of NFTts. And frankly, like broadly, philosophically, I I agree with all of that. And yeah, it just depends on how you want to approach it and who you're trying to attract.

Yeah. Do you guys want to chat briefly? I know I think Coinbase earnings got to come out too soon and I want to check the results but CRVUSD launched this week, which was which is pretty cool. So, I think we covered this a little while ago when we were talking about some of the new new stables that are getting launched. So I would put go sort of in this bucket. But this is kind of the convergence of a couple of different protocols that started out with separate business models but are now converging. So I would put makerdow in that camp and a curve. But just to like do a level set on what curve is and why they're doing this and and how it sort of makes sense is curve is obviously a stable coin swap. uh you know sort of like unis swap but instead

of you know their kind of volatile assets they'll only do like stable coins or pairs of something that are similar in price. So something like ste to ETH and they kind of dominate that pool. And they've been talking about launching a stable coin for a little while. We're recording this on Friday the 4th and it looks like the first loan for CRBUSD went live. And the other I guess the the two things to note here is it's going to be a revenue driver for them. So yeah, you basically have to borrow and there's an interest rate that ends up getting paid which would be pretty good for for Curve because it's an alternative revenue stream. You could also imagine I think the reason this sort of makes sense and one of our analyst uh Dan Smith is super bullish on this is you

can right now there's kind of there are these uh it's the the um I'm blanking on the name the the three pool basically with USDC, USDT and D. You could imagine a situation where Curve basically puts its own stable coin in there. And what's kind of interesting is there's kind of this similar to Coinbase where there's going to be the race to zero in terms of fees. I think the general sentiment is that there's going to be fee compression in DeFi as well. If you had a pool where CRV was one of the assets that was in that pool, you could drop the fees, the trading fees to zero because you're earning interest income from the borrow of CRV. So, it's kind of a way to

subsidize going to going to zero cost. The the other thing that's uh sort of cool about CRV, this is a little little wonky, but it's an innovation in the liquidation mechanism. They have something called Llama, which is a little bit of a a new twist on an AMM. So, the way that uh liquidations happen historically is there's an oracle and once your, you know, your loan to value or whatever crosses over a certain threshold, then you basically just get liquidated and some serger understands that and they liquidate and there's a there's a price for doing that.

I my general understanding of this and I've only sort of dug in high level is that when you reach a certain like health check or health health threshold part of your possession gets sold off and it's replaced with curve the stable coin itself which is actually pretty interesting. It's a much better user experience. So you don't just like you know tick over a certain threshold and your entire position is liquidated. It's a pretty cool pretty cool mechanism. So that was a lot of me talking. I don't know how much you guys have dug into this or what your thoughts are on this new wave of stable coins or or Kirk in general.

I typically my I have a really high level view of this which is that um typically been pretty bearish on these like protocol based stable coins but like when like I was kind of ragging on a stablecoin go when they were when they announced it. Um, but this one, seeing how they've structured it, makes me think that they're just going after Maker and that they're going after Dye basically. Um, and like if you I mean I've spent a lot of time at Baker and like it's uh I mean I think Baker I think move on some things and like they've gotten like a little bit stagnant and uh there's some like key people who have left Maker recently and I think Curve sees like this huge opportunity to go

after Maker right now and that's my like zooming the multi that's what I would assume is the multi-year vision here is to go after Maker. I I think the liquidation mechanism is cool. you are basically warehousing the risk of that liquidation within the curve stable coin itself but like it certainly would help uh and it's certainly something that maker doesn't have in the worst case scenario where instead they just start printing maker which is like really like a bad idea the lending liquidating AMM thing that they have and it continuously liquidates and all yeah but it it does it peace meal so that you don't have like you know hey maker liquidators like everyone wake up like there's a 400,000 you know eat slug

hitting the market like is anybody prepared to bid and frankly when all that stuff was happening last year around like uh I think bad ones were in June the liquidations like seeing those come down the pike of like you know there's a 100 about it's just like how is the system going to deal with this in a time where there is very little tradi liquidity very little you know retail liquidity whatever but it did work perfectly frankly there was on another black Tuesday or whatever that incident was um that's that's cuz we had uh someone on the Oracles uh putting the thumb on the scale. I don't know if you remember that.

Yeah, I do remember that. There was uh yeah, there were some fortunate oracle delays. Um but like not having that is good. I just kind of wonder like you know Curve is now emitted a lot of its own token. There's not like a ton of rewards to go around like a lot of them already being claimed by like the people who are doing the curve gauge farming. Like how do you bootstrap you know from zero to I think maker has what what's like makers TVL seven billion or something five billion two of that's you know USDC probably three of billion of that is ETH like how do you actually meaningfully take share the reason that Michael and I still use maker is because like we know that it's battle tested I don't I don't think the the appetite to put large

amounts of ETH into new code bases is super high right now. So, I think that's kind of my question is like how impactful is this really? But yeah, I mean the the curve team is is smart, you know, if nothing else, like they'll they'll figure out a way to to game it effectively. To totally agree with all of that. I think the only kind of perspective that I would include um this past week we've spent uh some time with um some regulators and talking to them about you know what their priorities are especially from a crypto perspective for the next 6 months. I think the the sentiment coming out of those conversations is there's going to be a bill that includes and and mostly features stable coins as the the primary

kind of component of the regulation. I I'm not saying that, you know, I actually agree with, you know, this is an interesting model. The new liquidation methods are are awesome. It's going to be really difficult for a decentralized stable coin, I think, to integrate into a legal framework in the US going forward. And so when we're talking about how do you break through, how do you get to the size of Maker, Maker already has the dist the the distribution to be able to have D in all the places that it already has it integrated, you know, like Coinbase or any other centralized uh, you know, providers. It's just going to be an uphill battle, I think, after this bill gets released. And I think the text is going to get released in the next couple of months. Um it's it it will be difficult I think uh to be able to

compete with some of the more centralized stable coins unfortunately. But that that's kind of the stable coin Rob stable coin perspective that you know became more apparent this week. Yeah. I have a question. This is a little in in the weeds of of Curve and their whole tokconomics and everything, but you know, I think people initially sort of got excited by this because kind of what I was mentioning before, it's a way to subsidize uh fees on some of their some of their pools and I think people generally agree it's going to be a race to the bottom. The question that I have for you though is sort of curves tokconomics are sort of like Bitcoin in that you sort of need the number to go up like they they are they live and die by liquidity and the way that they

direct liquidity to their pools is by emissions and what they don't they have a just like Bitcoin they have a deflationary supply schedule I think it's like every year it's like 15% lower so they want to have basically a constant amount of you know dollar denominated value that they can use to incentive incentivize liquidity into different pools. And so they that's why the the gauge and the lock rate that VE boat vote escrow mechanism is super important because they want to incentivize people to lock that curve up and not to go and sell it onto the open market. I I feel like if they have their own sort of horse in that race, then doesn't that I feel like that takes away an enormous incentive for other people to lock their curve? I I'm sure I'm sure

these a really smart team. I'm sure they've thought about this, but I feel like it does risk destroying the Golden Goose kind of or the the long game that they're playing. So, I don't know if you guys have thought about that. Well, the the the thing that I have thought about independent of this uh launch is, you know, Curve launched what when was it? August 2020. And if you remember, the the largest lock at the time, which gave you the most vote escro curve, was four years. So, we're we're coming up on a year left of where I would assume most people put their locks. And so, not only is it going to be hard because you've got, you know, less uh supply and less incentives and number has to go up for, you know, those incentives to stay, you're going

to have a lot of unlocking of the token itself and in not like that long of a time. So, it's going to be really interesting to see how that plays out as well. There's a lot of those cases like not just not just curve either. Like if you look at arbitum, if you look at optimism, like there's going to be multi-billion dollar unlocks kind of like by early 2024. I think a lot of these are are running towards product market fit and like token economics that make sense before those unlocks hit. And and frankly, like my expectations of where the market is going, I think that a lot of these things might peak before the cycle itself peaks. like you're you're kind of early at this point if you know your unlocks are coming in six months and you don't have things figured

out. Like that's how I would at least uh kind of think about it. Yeah, they're a smart team. I really like the stuff they ship and generally how they think about stuff. So, yeah. No, that's cool. I don't know. All right. What do you guys want to Has uh has coin have earnings come out yet for Coinbase? I was just tracking. I haven't seen anything. Maybe we could talk a little bit about um I mean I know we've talked about this before but sort of in more DGEN sort of land here we've got uh Pepcoitcoin which depending on I guess how you're allocated is the gift that get keeps on giving or it's like the bane of your existence but that thing just keeps

running. I think the market cap on it is 700 million or something right now last time I checked and the market wants things to rip right now. It just people people want it. People want it. That's crazy. Yeah, that's nuts. It's really It's done a lot more than I thought it was. It was going to for sure. We talked about that being an indicator. I'm curious like do you view that as just kind of noise and the markets do what's going to do? Do you take anything away from that?

Not at all. No. You need to read deeply into that stuff even though it seems so silly. And yeah, it says you got to pull up your 4chan account. You got a word right here. You got to look. Would this Would this have happened in Q4 of last year? Absolutely not. No. Q3? Probably not. Q2 certainly not. Like it's been a year since this I was I was going to say I don't know if post Luna this happens in 2022 at all. Totally. And like you're seeing these big LST farms. You're seeing these like L1, you know, meme coins. And like there's also a reason why you don't see this on any other chain. ETH is the only chain with enough liquidity for this to possibly happen. Um, and like look at the burn today is 8,000 ETH burned. You

you got 10K spent on uh ETH transaction fees overall today. Like you're probably looking at a scenario where if we get back to like four or 5,000, we're going to be breaking all-time high fee revenues pretty easily by like the start of the run. And so, like, you know, people are starting to, and it's not just about like the trading volume. People are starting to self-organize into like these little like groups that are searching for $10 million market cap meme coins. And, you know, the hot ball of money is turning itself over and it's going around and round and like that's kind of what you need. You need like a sentiment recovery and you need a credit recovery and we still haven't seen that.

But like we're starting to check the boxes off and like I talked to some guy who works at a different fund over the weekend and they're more of a trading fund and he was like, "Dude, like my dopamine receptors are just so shot. Like I need something to trade like at all times. Like you know, Pepe has been like really like big for me. It's like really really water like you know take a walk around the block." Um, but I think it's big that people are starting to do this stuff and even like the NFT vi stuff on on Blur and Blend and all that stuff.

Like that's great, too. And guess what? It's just burning a bunch of ETH. So, I'm here for it. Also, NFT is only an ETH1 phenomenon, just for the record. Yep. So, thanks for the comment. Not to uh not to throw a whole wrench into this uh perspective, but one idea that I was contemplating recently is okay. So, you know, the the model is the model where 1855 you burn ETH as opposed to keeping it. But we're on track to burn about a million ETH, give or take, maybe even more than that over the next year. What if that was distributed back? I mean, it's going to be more, but two might I think two might be

too much. We'll see. But what if that 1 to 2 million ETH was distributed back to stakers? That would immediately put the staking rate somewhere in the like high teens, I think, based on 15% being staked right now. Um, kind of an interesting concept of increasing the staking rate, uh, instead of, you know, burning it and having it be deflationary. I I think we're going to see major discussions on this. I I listen to uh Anthony Cissano's daily guay podcast like basically every day, but uh he it's kind of like a good temperature, you know, thermometer for like what the ETH core devs are thinking and he would like, you know, he's thrown out a few like different tidbits over over the past like couple months. One is

like to your point is like it's 8020 right now in terms of what gets burnt versus what gets given to stakers. Should it be 2080? So that was like one interesting one. The second one was a cap on the amount of ETH that's allowed to be staked to maintain a minimum APY. So that's another. And then the third is um like the the formula for the actual inflation is the square root of I don't know. It's just some math that I I don't have on on hand right now, but it's pretty complicated. And he his thought process is like, you know, should that be higher or should it be lower or should the equation be different? It's like the square root of some number. And I'm sure it has mathematical significance but doesn't mean anything to me. And so like you know I think those are going to be interesting uh

concepts to go through especially over time cuz like what happens if ETH scales 100x you know the and fees don't scale 100x like we're going to need to start making changes and like there's a long road map for Ethereum. We're going to be at this for probably next five years you know building the protocol tweaking the economics. I I don't think we've seen the last in terms of like ETH economics and the potential changes to go in there. Yeah. Coinbase earnings. Are we going to make it? I just saw my n I think what happened? Oh, nice.

Revenue. Not surprising given the the volatility in the quarter. I Jesus. Carvana shares jump. I mean, the block did well. Coinbase did well. Door Dash didn't do well. Sorry, Block. Shopify way up. Watch yourself. What did uh Wait, what what outside of the So, it was a beat on revenue. How' they do on um trying to find it on their site? Yeah, I'm trying to find it, too.

Beat on revenue. Little short on trading volume. Yeah. Know, could you share your screen? I just typed in coin revenue on Twitter and I'm scrolling through all the watcher guru things. We're at the point of the market where it's only like the watcher guru. All right, I got it. I got it. I got it. All right. Now, Mike gets to share the screen here. One sec. All right. I haven't looked at this yet, but I'm going to share. All right.

So I mean at first glance this looks a lot better on the So net revenue came in at 736 million only a loss of 79 which is huge and on you know humanly talk that's amazing. I mean, there's a huge headcount reduction and it didn't show up immediately because there's severance and stuff that you have to pay, but I'm sure some of that Well, wait. So, so sorry. Go back. Go back. Um, the biggest number there is the adjusted IBIDA. Yeah. 284. Damn, that looks Yeah, they a lot a lot of this is non-cash cost.

Yeah, man. I my hope is that when all these tech companies, you know, when interest rates get low again and they really reacelerate, like I just hope they don't hire all these people back, like just like learn your lesson. Like no, no more like yoga and smoothies. Just like run a profitable business. Yeah. Wow. Bad bad take on my part with the institutional. Yeah. Atrocious. So in I mean to but to your credit I mean it's not like it it didn't you know it's but 22 it's like basically their their biggest real source of revenue outside of transactions.

Look at that interest income baby quarter quarter of a bill I think JPAL. Yeah I was going to say I mean so blockchain rewards makes sense because ETH is up in price. Yes. I would imagine that this jumps a lot more in Q2. Yeah, I would guess so too. You know, I one thing that I've been surprised about, not to distract this too much, is you know, CB ETH was one of the big liquid staking providers that enabled withdrawals post Chappella and they've lost market share since then. It's been I think they're down something like 2% and RocketPool's been crushing it. They had their Aura upgrade, I guess, and

that's actually made a a pretty big difference. Um, but yeah, I think Lido and Rocket and and Fracks were basically the the big winners. And I don't really know why. I mean, basically just Lido, but the other two or three are cool also, but you know, like the the amount of like I was having like 20, 30, 40,000 ETH days. Like it's cool that Rocket added 3,000, you know, two days ago, but like time to pay. market share is up. I mean, the market share is up. I know it's always easy that you bet on the incumbent or whatever, but like it is very hard to hold like 70% plus market share for a long period of time. I think

it's a tough thing. I'm not advocating for Rocket Pool out here. I mean, I like Rocket Pool. I actually think the AR upgrade is super interesting, but um I think yeah, I think the long tale of LSTs is going to be a major narrative. I've said this before on this on this podcast, but it's going to be LST summer in my mind because you've got I agree with that. You've got like five to seven, you know, very very small at this point uh LSTs that I think are going to grow relative in size and there's going to be all this infrastructure built around like indexes for LSTs and you're going to have like liquidity pools for LSTs. I think it's going to be interesting to see, you know, how material they become, but my guess is that's going to be a big

narrative. Yeah. I mean, the liquid staking category just liquid staking just passed dexes in terms of total value locked in the for and like now all the LSTs are going to be in short order the ETH asset that is put into all these dexes. Like I that's why I kind of think FRA is like an interesting model, albeit much smaller. It's like it just kind of internalizes all of the indogenous yield that exists because of the LSTs on, you know, their stable coin. I'm sure they're going to build their own decks and like you can do that. I think the the question is like will the regulators ever like just you know say nope and like kind of put a stop to it. Um but like these things have a ton of

different avenues to capture value. And so to Michael's point, I do think there will be some of them that, you know, like, as much as I hate this, there will be like a magic internet money liquid staking token like, you know, like Frog Nation rise up against the evil venture capitalists and who knows if it ends well or not, but that will definitely be a narrative. So, Coin, the stock is up like three and a half. Yeah. Not not a not not a ton. Not a ton. I think a lot of people expected this type of an outcome. I agree. And I think they they want to hear what Brian and crew have to say about regulation. I think it's going to be relatively large. Once again, I'm I like doubling down. I I think that we're

going to get some text in the next two to three months. It's going to be something that's sensible. It's going to be bipartisan in the House and then it's just be a question of whether or not it can get through the Senate. Uh, Yanner, you asked earlier about the analysts not asking about Bass. Do you think that Coinbase wants the analysts to understand Bass at this point? What did I ask about the analysts not asking about Bass? I thought you mentioned at the beginning of this like that was part of the, you know, Oh, me. Oh. Oh, I see what you're saying. Um, do I think that Coinbase doesn't actively doesn't want Wall Street analysts to understand base? Lar thing

I'm asking, this isn't this isn't a micro original thought. I'm sort of borrowing this from someone who planted this idea in my brain. I don't want to blow up his spot. is uh is I you know the one negative potential downside of bass is it might end up drawing a lot of scrutiny to what's going on in centralized sequencer land on the rollup layer and I'm not really sure if you want that many eyeballs on that frankly um like if you start the uh sequence yeah starts looking you know look too close that's the thing with regulation like some of it's going going to be good.

Some of it's going to be like you can't do that anymore. Yeah. Right. It'll be black and white. Some things will be white. Some things will be black. But I do think like one of the things that I think there so there's going to be two things that come out of this. Number one, uh what number one uh how do you go from being a security to a commodity is going to be an interesting thing that gets defined. The other one is what does decentralized mean? Is it, you know, five nodes, three nodes, 21 nodes? Who knows?

I'm I I don't think I can share this now. I'll tell you guys after we stop before we do a lame podcast thing to say. But there's a new there's a new uh there's a new L2 coming from like a big company. And uh hell yeah. I think I think we're going to start seeing a lot of a lot of a lot more like base like things launch where companies are like, "Oh, damn. Smart idea. Uh, let me go launch an L2 with one with a fully centralized sequencer. All right, sounds good. Dad, I mean, if you have money transmitter licenses, have at it. I think Coinbase I agree.

There's many such cases. I mean, companies with money. Yeah, exactly. So, you know, it it is funny. Sometimes we're off in our own little crypto land doing mechanism design and stuff like that. And I've been getting pretty deep into the weeds. And at MEB this season, I saw this take from this guy on Twitter, Cedar Cetus Parbus. I can't find the tweet. I was just looking for it, but it was like the unpopular opinion, but me is going to be solved in an offchain way. It's called going to jail.

I kind of agree with him. It's like, yeah, dude, like what's all this mechanism designed for preventing sandwiches? Like, you will go to jail. That's called front running. That we got a law about that. had. So, we've seen a few big uh MEV players stop doing it over the past couple weeks. Not names. Wow. They're they're like the they were the largest block builders um and just like well-known trads and they just stopped. Um and they've stopped doing some forms of MEV but have continued doing others. And so, like from the outside looking in, it feels like a lawyer got to them and was like some of this is not okay to be doing.

That's amazing. The the other piece of news that happened this week was um Nate from OpenC officially charged. Man, yeah, I saw that. What do you guys What do you guys think of this? I mean, he did something wrong. I think that's clear. And like, you know, you shouldn't do that stuff in general. Um, I think just reading through the the Financial Times article, like the sentence is like, you know, maximum of 40 years, like does the punishment fit the crime?

He made $50,000. He hasn't been sentenced. Um, right. But like I've met him once. I think Michael might have as well. He seemed like a pretty like nerdy but nice guy. Um, and yeah, I mean it's obviously illegal to do that, but it was such a small amount that going to jail for 40 years feels like uh just like a lot for that type of violation. I mean, he he got convicted of fraud, which is a felony. Like even the specific no matter what the sentence is, like that that is that's that's tough. I think he also went to court at like probably the worst time sentiment

wise for crypto. Like he's not going to get the benefit of of the doubt with with generally anybody. Yeah. But I think he I I think he goes to jail for less than a year, gets probation and a fine, but he still has a felony on his record, which sucks. Yeah. And like dude, being for what it's worth, I think I do think what he did like you're the the definition of inside trading is pretty clear. like you're the head of a pro of a product for a marketplace. There's a level of responsibility that comes with that title and in that role, you know exactly what's going on and and and you know what you're doing there. So therefore, I think what he did was wrong. I think the punishment is wildly unfair. And I think both those can be

correct. And I also think that the regulators here are looking in like the so the wrong direction here. They're like going after this 50k thing or 60, however much it was. like meanwhile there's a bunch of other stuff they should do. Oh yeah. You know what my take I think you should just we should all I you know no commenting on like what he actually did which whatever but I think it's just important to have some empathy like everyone knows his name now and that he did this and I think that's cuz to be honest okay like the jail would definitely suck the felony if he works in crypto. I'm not really sure that impacts his job prospects to be completely honest with you, but I I I you know, but I do Come on, Mike.

Are you hire? Yeah. Uh, wow. Fair point. He should I don't know. I've met the guy, but I've just I don't know. I think it does suck to have your name just like splashed all over like that and to be the poster boy because that's when he he's like the poster and that just sucks. Yeah, that really sucks. Yeah. Suck. He's gonna have a lot of time to think about, you know, just that one click of the the mouse. I I think it was more I think it was more than one. But yeah, there was a few. He was a repeat offender. But yeah, don't do don't do that.

This isn't just NFT land, by the way. Like there was a there was this um person this uh woman named Ann Herbert, I think it was. She was a a Nike employee for 25 years and she was um I think she was flipping Nikes on the secondary based on like cuz she had access to the memos that the CEO was going to send out. I'm probably getting the story really wrong but she got fired and I think she might pay some time like that's illegal and she was selling them on on StockX or something like that. If it feels like it's an unfair advantage, don't do it.

Yeah. Yeah. Yeah, always. Speaking of unfair advantages, Blockworks launched GovHub this week, which is the most powerful governance platform in crypto. So, if you one unfair advantage in governance, if you own governance tokens, you should subscribe to Blockworks Research. Always be selling. So, are you guys just going to be like massive delegates? Yeah, we're going to be delegates. Yeah. Wow. Okay. We got some tokens we might delegate to you. every crypto venture firm cannot be a deleg cannot be active in governance right now. Um and uh we got you there's a certain amount of fit. I mean our

analysts they only check they only like keep up to date with like three three protocols at a time. Like they are so in the weeds for this stuff like they're they're the ones that you'd want to delegate to. So don't govern too hard. You and Nate might be seeing each other at some point. Oh boy. All right, just to just to end this on a a more uplifting note, like a funny story of the week. I don't know if you saw that uh Pornhub pulled out of Utah. Do you guys see this? Oh, I I saw the headline because of the KYC stuff. Pornhub.

Why do you think Van Why do you think Vance just left Utah? The guy was there for like six weeks. Okay. Okay. Show us your tabs. Show us the tabs. All right, everyone. Hope you have a good uh good rest of your week, good Friday, and see you guys next week. [Music]