Grading Citrini's Viral Crypto Portfolio, Part 2

Transcript

Nothing said on Xerox Research is a recommendation to buy or sell securities or tokens. >> GM. Everyone, welcome back to another episode of Xerox Research. Um, not only another episode, but a sequel. Last week, we went through the first half of Citrini's portfolio. Um, giving our own takes and critiques. Um, I am joined again by Sam and Kunal and this time for part two. Um, sorry, Luke and Kunal. And this time for part two, Sam will be joining. Um, you know, you all we we teased it. You all asked for part two, and here it is. So, um, you know, I'm going to kick straight off into it. Um, but let but first, let's talk about the markets a little bit high level. Um,

Luke, how how are we feeling one week post um our our previous analysis? >> Yeah, I think uh we're recording today on Monday. Uh, we were promised Black Monday. don't really see it on the tape yet. Um, looking at Bitcoin, I I think it's holding up relatively well against equities. Um, despite the large VIX spike we saw last week. Um, high time frame though, it's weekly uptrend. Just looking for a weekly higher low in that uptrend. Um, kind of just normal short-term noise and uh, zoom out, see the bigger picture. Um, still an uptrend. So, I'm constructive. Although,

it might take a bit more time before we see the the vertical green bars that uh that we liked from the the August September stretch. >> Yeah, agreed. I mean, with all what's going on with interest rates, inflation, geopolitics, I'm I'm personally impressed with Bitcoin's resilience through all of this, especially with the ETF flows. Um Sam, maybe maybe kick it off there as well. How are you feeling? >> Yeah, pretty good relatively. I mean, it was a bit nerve-wracking last night. I guess everyone was a bit scared of um the Black Monday fears, but I'd say I'm still pretty bullish. Um it looks like Bitcoin and most of the major assets are holding up pretty well. Um especially given the sell off in equities and some

of the AI trades, so that gives me a bit of confidence. Um and I feel like it's because we're seeing fundamentals pick up a bit more in crypto, which is a good sign for me. >> Yeah, 100%. I love seeing the fundamentals are definitely going up. Um maybe not as maybe not tracking the prices one to one right now but yeah and and you know if if it was two weeks from now I think it would be the exact same if we were to blow up in the market right now in the next two weeks it would be the history repeating itself for the next two cycles. So I definitely think I mean a lot of the fear was that too but um any fair with you Kunal?

>> No I liked it like this kind of when the market's fearful it gave a good few dips to buy the coins I like. So quite enjoyed the dip we got over last week and I don't know if you guys read it but I think the Kuba Yasi letter like they posted like a pretty good research on X. So like highly recommend people to read it and there he basically outlined that like yeah even though like S&P 500 is off like 2% of the highs and you know you have so many like uh macro headwinds why the setup is still constructively bullish and like most of the S&P 500 constituents are actually like in a bare market. It's just these AI names have kept it up. So, if you take all that into account and the fact that we're at peak fear, it's actually like a good

opportunity to like accumulate for like the next leg up. So, I thought that was a really good article highlighting why, you know, the bullish structure still remains intact. So, >> okay. Yeah. I mean, I'm sure some AI stockholders will love to hear that there's a very much anti-AII trade going on with flows into bonds and some of the other assets, but um let's let's talk about um these assets. So, next on our list was Aerodrome. So, Aerodrome in in Suchini's portfolio was 7%. I'm particularly a fan of of Aerodrome, but maybe I'll hand it over to Kunal. Um yeah any thoughts on the waiting and this actual asset here? Yeah, I think

that's two parts, right? One is the asset and the other is the waiting. Like just starting with the the asset itself like I mean on X itself is I see quite a few people like bull posting arrow recently and a big portion of the thesis is that hey you know unis swap has like a had a huge run up and you look at unis swap's multiple is like 50x but then if you look at a drum's multiple it's like seven or 9x so there's like a big catchup trade that is there to play. Aerodrome also has like you know a bunch of like uh bullish catalyst coming up and one of them is the I think the version three launch like it's basically going to go on other like on Ethereum Robin Hood and other EVM chains. So you know if you get some market share there

like you know what the numbers could be. So all that story I get but and that's bullish right like but this this if you if you think deeper like so I did some work on like unis swap on base and like post his fee switch how competitive it is versus aerodrome and like like fun fact it it's still pretty damn competitive like uh the TVL has held up like if you look at its volume share on base has also held up pretty well so I I do think that you know even though aerodyome launches and this other EVM chains it might take some market share away but it's not going to dent too much especially like if you look at Robin Hood right like a lot of your existing launch pads are already built on top of unis swap so it's not like you know you

launch in day one you're going to get like a bunch of these volumes it's going to take some time to play out so that part I'm not as constructive about the catalyst coming up and on the discounted multiple versus unis swap you also to take into account it's a different model right it's a ve model uh you kind of have to net off the token emissions uh weekly So if you account for that uh maybe the discount is not as steep as the the market says. But on the other hand like the one thing I do like about Aerodrome is uh if you look at tokenized equity volumes so it's now the number two decks. So ever since like you know Coinbase launched like tokenized equities on on on base and Aerodrome is the main DEX provider for this almost

like week on week Aerodrome's like uh volumes and share of tokenized equity volume has been increasing. So that's like a a pretty bullish sign and I guess that's part of his thesis on tokenization as well, right? Like you know with Coinbase having such a good distribution, you could expect a lot of those flows to come on and Aerodrome is a good beneficiary there. But yeah, so like those are like the two pros and cons factor like at the back of my head. I view this more like a short-term trade like leading into the catalyst just to tap on a bit on the tokenization theme rather than like a long-term hold in my portfolio. And I definitely don't agree with such a high like 7% weightage like I think for me personally unis swap is deserves a much higher waiting and we

can touch on that why in a bit later. >> Yes that's some really good points and you did you did mention it's a different model. So like I'll pull up on the screen here showing their emissions to revenue and you know right now it's hovering about twice. So if you count emissions as spending, you know, then they're spending double what they're they're taking in in revenue. Um and what and unis swap kunal unis swap is negligible or is anything any material emissions? Yes, some marketing, some LP campaigns, but anything substantive there?

>> Yeah, I mean unis swap's model is slightly different how they work their emissions. It's like they have uh almost I would say like a growth fund. So it's like an annual I can't remember the exact number of tokens but yeah like every year they have a budget like you can spend this amount of uh uni tokens so it's slightly different and I think if you even if you account for those I think unis swap still will appear a lot more profitable >> yeah 100%. Um Sam any disagreements there what what are your takes on arrow? Um largely agree like definitely on multiples compared to uni I'd say. Um I guess in constructing my own portfolio anything touching like tokenized equities developments I'm pretty bullish on. So obviously the setup for them um

being tied to Coinbase here looks pretty good. Um and yeah so like on on DEX activity they're like looking at around third or fourth um at the moment. So yeah, I'd say maybe the waiting would be a bit less, but yeah, it makes sense as a part of a portfolio here. >> And then, you know, you mentioned the good distribution through base, Coinbase, is is AOS still uh consider would you still consider it a base trade since Bass doesn't have its own token? And then does this expansion to Ethereum, anything else, you think that would hurt that narrative if that's even true?

I'd say um yeah I mean this looking at ways to play base if you're bullish those developments it does make a lot of sense. Um I guess if you have a personally my fundamental views would be like favoring Salana um and its market structure um and DEX activity there over like Coinbase and Robin Hood um but if you are looking for easy exposure to Coinbase and the potential for their distribution then it probably is one of the best plays in that respect. Okay, fair. Luke, any final thoughts there?

>> No, I think Arrow's particularly interesting at this point in time with the upcoming upgrade. Um, I'm I'm particularly curious and excited to see how much market share it can actually capture on Ethereum mainet. Um there's a lot of debate and good research around, you know, what what is the expected value for an LP on something like Arrow as opposed to to Uni and how much liquidity and volume can that in turn capture. Um at large, I think the catalysts lay to the to the upside for Arrow. Um there there's not much room for disappointment uh with with that upgrade. Um, so I I certainly like it as

a play on on tokenized equities u with a number of catalysts to hit the tape soon. Um, but kind of similar to Kunal's point. Um, I'd probably weight UNI above Aerodrome. Um, in one part because of like that emissions to revenue figure you pulled up. Um, like you could still view Aerodrome as running unprofitable under that emissions to revenue figure. >> Yeah, 100%. I mean it's and that that the upgrade is expanding to multiple chains. They're also doing the unification, no pun intended with um with Velro and changing the tokens model. So there's a few few models coming up. One thing I did like about them um let me share this

on the screen was they they're they were the top leader for all FX onchain. They were doing at one point they were doing 90% of all FX volume. And by FX we don't mean I don't mean like USDC to USDT. It would have to be a foreign like Euro USD or some of these other pairs. Aerodyum was up there at 90% but now they're down. They're still the leader just barely. They're basically doing even FX trading volume with unis swap and then tacera's tacera's there notably in third. So I I used to think they were, you know, a good home to FX, but you know, maybe it's maybe that's changing with unis swap's dominance, but then even with unis swap, it's it's some of it is on Robin Hood as well. Some of it

is on um Ethereum. So it's a lot of L2s and um EVM chains here. It's taking the lead in in FX, which I think is interesting. Um let's move on to the next asset, which is kind of what we were talking about as well um in a lot of all of this. Um, unis swap I let's just jump ahead to unis swap because it's it's further down the list but I think you know since we're on topic with um with aerero drrome might as well talk about that. So unis swap is in 4% here um and like I say like we've talked about it's leading in revenues um it's it's it's it's buybacks in terms of of different chains um kunal you know you you mentioned it's when asking you about arrow you brought

up unis swap so what what are we thinking here? Yeah, no, I'm really bullish about uni like heading into the bull market. And in fact, I wrote about it in the newsletter as well today. So like shout out guys, read the newsletter. But yeah, like the thesis there. So I mean I mentioned that Aerodrome is the second for tokenized equities, right? So if you look at the number one, it's actually been unis swap and a lot of that activity is coming coming from Robin Hood chain. Uh and and I quite like Uni for like a two like it's almost like a barbell approach. So like one is on the institutional and tokenized equity front and I think they're killing it there. So I mean the numbers already show for tokenized equities but broader than broader than that like if you look at what V4 hooks

can enable. So I think like earlier in July they launch launched this like permission pools. So things like all your KYC or any other like transfer uh requirements that these institutions need for like these tokenized assets not just equities all can be enabled through uni visa hooks and uh earlier in October you had like a Japanese bank I think it's uh it's one of them I can't remember but they are also building like another like custom interface like trading interface for uh like Japanese clients using you know the different Japanese laws that are needed. It's all like built through UniV4 for hooks. And that's what I like, right? Let's say your thesis is institutions are going to come on chain and they're going to

tokenize a lot more assets. There's a lot more restrictions and requirements each institution has. And I like how V4 and the use of hooks can kind of tailor to each of these needs. So that's one side of the bar, right? like okay if you're long like institutions coming on chain and assets being tokenized that's like a very solid way to get exposed to that narrative and then on the other hand you have like you know the retail side where like people like meme coins the the next innovative experiment even there like so v4 hooks have enabled a lot of the recent like uh interesting novel launches you've seen so things like ston broker uh standard reserve uh fake bull assets I think All of these

are built using V4 hooks and uh a lot of like the the trading done on Robin Hood like this memecoin stuff it's also done on unis swap. So if you think we're going to get another like Robin Hood season again and there are some hints that you know there might be like a new a big grant going into Robin Hood chain and if you think there's another like wave of activity again like unis swap is the best decks and best way to play that trade. So, I like you get like a double barbell exposure of both like the legit stuff and also the short-term speculative stuff. And yes, people like kind of say, "Yeah, 50x is it's pretty high multiple, but it's not that bad, right? I mean, you look at what like some of the leaders like Hyper trading

at. And I mean, if you can make the case of how big tokenized assets could be, then I mean, the growth story kind of paints itself. So, even if it's a high multiple, I think uh it's fair considering how big this market could grow. Yeah, great points all around. I mean, so definitely more than 4%. Um, and it almost, you know, we mentioned AO as like the base trade. It's almost like, you know, you're saying unis could be the unis swap train and then some and then additional um, you know, revenue sources as well. Okay, nice. Um, Luke, do you have any further thoughts on uni or anything?

>> Yeah, I um I like Uni a lot. uh I think there's a very long period in the market where uh the investors left it for dead with no clear claim on value acrruel but it's running at like 100 100 million in annualized uni burn rate um which is impressive scale and um like to Canal's point it's decently expensive at like 50x um a lot of the time we see dexes trade in the to 16x area. Um but but to the point of like where where does the upside growth come from? Uh unis swaps maintained leadership in market share

for tokenized equities volume. Uh with the Robin Hood mania it went up to like 64% of um tokenized equity spot volume market share by DEX. uh it's it's down to about 24% right now, but still in the pole position. Um so yeah, I I see a lot of good arguments for them to maintain that for for a period of time. And um to Canal's point, like anything you can create on on V4 hooks just creates like a lot of upside optionality to um the different market implementations you can create on Uniswap. So, I'm constructive.

>> Yeah. I mean, to Canal's point, I don't think a lot of people realized how creative you can be with V4 hooks. And then to your point, Luke, I I'll throw it up in the screen here. Yeah. Their last month, September, was their best month. Yeah. Um, a lot of it came from Robin Hood during the meme coins. And I and I expect it it will share sim it will have a similar share in this month of October. And then I tweeted this out a few weeks ago, but you know, Unisoft, which is kind of like the light blue colorish at the top there, they've been the third highest protocol buying back their tokens after Pump and Hype. So, we talk about Pump and Hype a lot and they buy back all their shares and everybody knows that they're big buy um token repurchases, but unis swap has been

third on the leaderboard for seven months in a row. probably about to be an eighth and I don't know if that gets discussed enough. Um but yeah, Sam, we can end it with you here. What's Do you have any further takes? >> Yeah, I'd probably re reiterate a lot of the points. Um like definitely if you're constructing a portfolio that's based on RWA theatics, I'd say a lot higher than 4%, probably more 10 15%. Um and to your point, like it was around four times Radium's um tokenized equities volume um in the month of September. So obviously and is um very much crosschain in that respect. Um and yeah, I didn't know about the buybacks as well, but that's obviously another bullish point. That's something I don't actually know. Um like how the magnitude of those buybacks. Um

and yeah, it's one of those things where it's like the multiple is pretty extended, but um when you're constructing a portfolio um you'd be happy to pay for growth in that respect. Like a bigger multiple isn't necessarily a negative negative thing. >> Actually, Mark, like a quick one for you. Like I'm also I'm like I know Sam mentioned like what he would think the ideal uni weight would be. What do you guys like? What do Mark or Luke what do you guys think? Cuz for me I do agree. I think it should be at least 10%. Like it should be above quite a lot of the names he listed on the list and the main reason is like a big portion of his thesis was tokenized assets coming on chain right so where does the value acrew and then it probably goes to the the trading layer right? So by that

logic like a lot of the value is going to acrew to unis swap and yeah I think it should be like the top few allocations on his list. Yeah, couldn't couldn't agree more. Tokenized tokenized equities, tokenized securities where most of the money is going to be in the trading sector. Unis swap is currently a leader up there and you know unis swap labs. you know there's they're creating apps like you said they have partnerships with this this bank in Japan SNBC they've been around for a long time developed multiple distribution layers and you know they were the the face of DeFi trading for a while and it's a lot of what maybe TRDFI knows about and and feel comfortable with and a long track record and a lot of this goes into when these cos make these kind of decisions so um I think I

would agree with maybe Sam's 10 to 15% in a on a RWA a focused portfolio, theatic portfolio. Yeah, I think that waiting sounds fair. Yeah, I' I'd take it above 10%. Um, definitely have a decently overt overweight position in it. And like there are points in times where you can look at multiples and say, "Okay, this is this is expensive relative to the cohort uh to where it's been historically." Uh but something like tokenized equities volumes um they're up 100x year to date and like that's something I'd pay a high multiple for.

Um so yeah, I I think there's room to run. um I think barely scratched the surface of where those volumes are going to settle and uh unis swap's the leader in um in market share for that. >> Okay, nice. Well, we're moving out of the spot trading area here and we're looking I guess more at interrupt. So, first is zero. Um and next is chain link on the list. Um layer zero is I mean a lot of this interrupt technology I feel is either has either been underestimated or overestimated or there's there's some aspect of of it which isn't really understood by both operators and market participants. Um for for let's let's

double click on layer zero specifically here. Um Luke you probably have the most interrupt research um reports and knowledge amongst us. um what are your what are your high level thoughts? Yeah. So high level we've seen like the interop market move to favor um an infrastructure that gives like a canonical asset issuer the ability to um recognize and implement like a canonical um burn and mint crosschain workflow um as opposed to intents as opposed to a pool-based model because the canonical burn and mint framework is just infinitely scalable. Um, layer zero has vast majority market share um for

interop flows and um they've won tether uh as as a partner for the OFT standard and OFT broadly is is kind of preeminent um out of the box workflow for that burn and mint uh which like if you think of all these RWA asset issuers coming on chain um maybe at a point in time they'll pick one chain, but like in the long run, I'll bet they'll pick as many chains as possible, and they're going to need an out of the box workflow for that um those crosschain representations. And yeah, Tether's been an enormous win um for layer zero. I would expect more um

to to follow through and um ultimately that that's a tailwind. So I I like it in the portfolio for that narrative. Um at the same point in time I think for a lot of the zero tokens history um it was phenomenal project uh at a poorly priced token with poor um poor unlock and supply schedule. Uh look looking at the unlock and supply schedule I kind of still see that as being a risk and an overhang. So I'd kind of dampen the bullcase that way. But um in terms of like constructing a portfolio for the the narratives and tailwinds outlined particularly in the Catrini piece um

layer zero does have unique exposure. Um and it probably is uh the best instrument to capture that particularly particular angle of in growing institutional asset issuance on chain. Um so apart like the technology is great, the token supply schedule not great. Um do you have any thoughts on the tokconomics? Maybe not maybe not specifically for layer zero, maybe layer zero but just maybe this these kind of interrupt like solutions in general.

They're they're running buybacks in the I believe it's 50 to hundred million dollar range um each year which is don't quote me on that. I haven't dug up that figure in in some time which is still like is notable. It's decent size. U but is it enough to uh to offset the perhaps hundreds of millions in in um emissions and unlocks? That's that's where I I put on the bare case. >> Okay, fair. Um Sam, is is is zero in your portfolio?

>> Hypothetical. >> Uh hypothetical maybe not in my current portfolio. Um I mean interrupts definitely going to be important. I do feel like though when waiting a portfolio um especially in regards to the dexes L1's I would rather just a more significant waiting towards them um rather than something like interrop um although it's definitely important in the end game I feel like a lot of the interrop players like it's a bit of a black box for me don't exactly know how the token economics works um or how they're going to um like the value cruel and stuff like that um so it is something I I understand is important, but really just haven't done my proper DD in that respect. Um, and would rather

allocate to players that are a bit more obvious. >> That that sounded like maybe 0% waiting. Kunel, what what's your take? >> Yeah, I mean, I have to admit here like this interop stuff kind of goes over my head a little. I'm not like the best guy who fully understands what happens under the hood, but like I mean the way I look at it, it's like almost like a narrative play, right? Like the thesis is yeah, stable coins are going to grow. You're going to have tokenized assets on chain and for the end user, you kind of don't want to care which chain it's on, right?

These assets should easily move between like different chains. So that's where like Leo Zero's like OFD standard comes in. I think they've been killing it with the partnerships which helps with the narrative. So, in my opinion, that's what's moving the the price of zero. You're right. I don't fully get it. I think like the value acrruel part, it's a bit of a question mark for me. And like a quick search on how much they've bought back, it's like 0.25% of the total supply, but I think they have quite a big amount of like unlocks coming each month as well. So, it's tough to make a fundamental case for it, but you can make like a narrativebased uh case for it. And I mean, one of the other catalysts they have is Atlas,

right? Which I may be wrong, but if I'm not wrong, it's their own chain. So, I guess they could get some sort of like infra premium from that like priced into their token. But yeah, so it's just a mainly narrative thing. So, as long as the tokenization narrative runs hot, I think uh and if Zero keeps shipping the partnerships at at the pace they have, I I think the token price will do pretty well. So I think it's agreement that Lelay zero has product market fit, narrative market fit, but just maybe not token market fit at the moment. Um, which at the end of the day might could might be the most important part. I'm not sure.

You you can weigh them how you'd like. Um I mean so so next on the list we also have link but I feel like we've talked a lot about the interrupt here already. Does does anybody have any you know distinctive um remarks between chain links interrupt solutions and layer zeros. I know they can get very technical and then you know most of the time for the end users they can they can't tell the difference. they just they might not even know they're using an interrupt solution which is how you know you're using a good interrupt solution. Um but does anybody have any like additional takes maybe on the sector in general?

>> Yeah, my my additional take on link is you know uh they they offer very similar like out of the box crosschain workflow to these asset issuers. The difference is layer zero has 90% market share in the volumes that those settle. Um so chain links kind of kind of losing on the integrations there. Um they are running by buybacks with the chain link reserve. Uh the issue is they show no visibility or transparency into um what the top line is or the nature of those revenues whether they come from um more more

recurring flows um or just these big uh one-off like integration deals. Uh so I think chain link in particular is a project that needs substantially more uh transparency and disclosure on its fundamentals and financials for it to become investable. Um so at large though um similar to zero it's very well positioned from a a narrative point of view. Um so like the equal weight uh zero and and chain link in the portfolio I think uh can really capture that narrative exposure. Um but in terms of investability uh I I'd almost rank it

less than um zero given the the risks and the lack of transparency previously mentioned. >> Isn't it crazy that you know investors would like to know how much money you make and how much you're spending? um what these kind of crazy transparent results that we that we that investors would love to see. It's like they need to fill out block works token transparency filing or something. I mean something to benefit the industry there. But uh I I just you know we have there's link there's chain link there's other I mean link is also an oracle. Um we you know I start to wonder about this is not on their list but solutions like N um N is doing a lot of volumes in across multiple different L1s um and you know

users of their of these wallets that run near in the back end just get a clean UX experience um is because I mean N actually has wallets on those chains and doesn't need doesn't care about the specific token type. So it wouldn't need a layer zero of FT standard or a CCIP integration. Um you know are these two things competing or do you is there a world where they're basically symbiotic or you know or what are we thinking about interrup general? >> This is a tough one.

My my long-term view um very long-term is a lot of interop is solving for problems that don't need to exist. Um should a majority of financial activity consolidate on a single chain and globally shared state. Um a lot of the interop problems wouldn't exist. Um so like given a given enough time I I would expect um substantial consolidation in market share towards a particular venue. >> Okay. So you're kind of a maybe this is too hyperbolic but a one chain to rule them all believer.

>> Um I I think it'll be remarkably more topheavy than um the number we see today. Yeah. >> Yeah. I think I agree with that. Um, we're talking about interrupt and bullets and user experience. The next one we have on the list is backpack. Um, this is on a chain that I I think I'm I'm not sure if I'm right, but I think Sam is a familiar familiar with this. Sam, what are your what are your takes here? Um yeah, Backpack so is essentially trying to become another exchange like like Coinbase um and Robin Hood per se, but essentially it's very tied to Salana. Initially it became very

interested them because of the way they issue equities on Salana. You can have that equity in like the traditional financial system, move it into Salana, move it back out within seconds. um which is something I feel like is very novel and it gives a lot of validity to the instrument that is trading within Salana and because of that as well as their developments with Sunrise they've done pretty well over the last couple months in regards to spot deck activity for these tokenized equities and um the more important thing um other than just outright volume is like the market structure itself it's created because these are what I would say is like the most legitimate claim to a tokenized equity on chain um as you

can literally move it in and out um that allows these prop AMMs which are very popular on Salana um to have a low confidence in their inventory when quoting them and because of that um they're essentially from the stuff I've measured been able to achieve like the best spreads for these big tokenized equities and smaller ones that's even competitive with trading as well and so because of that whole dynamic um it's made me Um although like that exact thematic isn't like something you can necessarily tie to a lot of value acrruel or um a lot of um equity like a lot of revenue generation for backpack itself. It's more or less like how they're thinking about the end game.

They're designing their exchange a lot like a blockchain itself even though it's a fully regulated entity. And because of those matics, the CEO Armani um just how he's thinking about things, it makes me um pretty bullish and I would definitely have backpack as one of my like bigger allocations in this respect. Um in regards to the token economics, it's um it's roughly 20% of the token supply can become equity like a year after IPO or something along those lines. if there are some wishy-washy stuff with like you have to be staking for a certain amount of time and only in certain jurisdictions, but it is essentially a play on Backpack IPOing, Backpack becoming a big player

like Coinbase and Robin Hood. Um, and yeah, going from there. >> The the staking is something like am I right in saying it's somewhere around the ballpark of maybe four years or around there abouts in order to qualify? Yeah. Yeah, that's the probably the weirdest thing about it. Um I'm not sure if that's going to change or exactly how that's implemented. Um but there's that and it's also making sure you're in XY Z jurisdiction. Although that being said, like I feel like if um if a certain amount of people that have the token can claim equity, it's I feel like the token's just going to trade relative to what the market's thinking this future

equity price will be when they IPO. um because of like maybe not fully maybe like 90% but because of um those dynamics but that yeah that I'd say that's like one of like the weirdest things about it. Other than that like I really like Armani um really like how he's thinking about the end game. They definitely coming from like a regulatory point of view um as they like wanting to be a house for finance doing per um having your cards and banking and stuff with them as well. um but like they spent the last 5 10 years just really um nailing down all the regulatory people or the key hires going into the key jurisdictions whereas some a player like Hyperlid per se which is bit different kind of similar um they like I guess

they came from the other point of view um so that's how I kind of see it >> okay so Sam for backpack would you say that it's almost a good token incent like alignment equity token alignment to have this 20% because if the actual equity starts capturing more and more revenues, nobody really sees this, nobody would price it as a bad misalignment because potentially 20% might turn into the equity anyway and like you're saying it would trade as a beta trade. So, have they somehow created this structure at least where the market could perceive it as a a removable a removal of that misalignment?

Um yeah, I like in general I see a pretty positive in how they're structuring it. Um besides a few things. So I do feel like the market will largely price it to that. There's also like like any typical exchange token like you can get lower fees, you can extra get extra perks um if you do have the token and you do stake it and do those things. So there's always that like extra intangible value that gets priced into these things. Um but yeah, largely I feel like and I'm pretty sure like all employees will get the equity IPO um like they're not allowed to sell like a year after the same time the unlocks are happening for the token itself. Um so I feel like they're pretty aligned in that respect and I'd be

pretty confident it trades roughly in line with what they expect an IPO value um becomes in the future. >> Okay. Okay. It seems like they put a lot of thought into this structure and like you said, he has a lot of thought in the endgame and you know, it sounds like they want to kind of go Neo Bank style. I mean, they do have some level of distribution. They're approaching half a million just holders of their tokens. Most of it under $100. Um, but I mean, that's just how most exchanges work, not just crypto exchanges. That's just how a regular Trady brokerage um spread would be as well. Um but you know Kuna Luke do you all have any additional thoughts on

backpack? >> Yeah for me on backpack again it's mainly like a narrative thing like Sam mentioned I agree like there's some cool features about it that that make it like a very like cool like those redemption features and all of that stuff. I think it's quite ahead of some of the other tokenized equities we see out there. But overall in the the longer term, I just feel like if there's anyone who's going to win this game like of an integrated exchange and also kill on the tokenized equity side, I lean more towards Robin Hood. And I guess of course, it comes down to like a relative valuation game, right? And to that point, I don't really know what the revenues of of Backpack are. But if I just to bet on the thesis on who wins the distribution, I would

lean more like Robin Hood, Coinbase, and then maybe Backpack cuz there's just a bit of like a bit more question marks. uh around the model. But yeah, I mean on Solana they're definitely killing it. And but at the end of the day, if I had to make a bet on this tokenized equity thesis or asset thesis, I would just go for unis swap, right? Like cuz that's where most of the activity will happen at the end of the day at least on like EVM chains or like you know if you want to play it on Solana then I'll choose I think radium where that's all the activity happening. I I rather play the trading layer or let's say these assets will go into like money markets. So, Camino or Moro like where are these assets going to be actively used and where is most of the value being

generated I rather focus like my higher weightage on those plays right cuz I guess in the case of backpack as well with these tokenized assets so when you tokenize them like how are you actually generating a lot of value from it probably not a lot right there's just a bit more question marks there so yeah I just prefer like the other ways to play this >> yeah fair Um I mean we talked about the trading layer being the venue. Maybe backpack can have some other integrations remains to be seen. Um Luke any any thoughts or you think it's rounded out well?

>> I outsource all of my backpack thinking to to Sam Schubert and he was telling me to buy back in June um and I didn't. So yeah, >> mistakes were made. >> Mistakes were made. >> Okay. I'd say it's definitely like a um a play on like if you're bullish the market structure Salan has built um and you feel like there's a big exchange player that connects it to Tradfi that's going to maybe not compete outright um but like get to some competitive level to Robin Hood or Coinbase like the implied value I think today is around 4 billion if the tokens are 20%. So, if we can catch up to that in that respect, um, that'd be like the best risk

risk-to-reward way to frame it, I'd say. >> So, I'm hearing from both of you parties that 5% may be too low, maybe higher up given where it is in the stack. Am I reading that right? >> For me, I do at least 10, but that's me. Yeah. That's almost in line with Uni. Um, so I mean I feel like I'll have a general consensus here. Maybe I wouldn't. We've been talking a lot about the trading layers and a bit about interrupt. Next here we have syrup at a 5% waiting. Um, I think Luke, you might be perfect to

kick this off. >> Yeah, I like syrup a lot. Um definitely notable departure in like the loan origination model from uh what we saw in like a morpho compound days. Um and just looking at the relative strength in deposits and loans outstanding that syrup was able to put up um during the whole bear of 2026. um it's quite notable relative strength and I think if you see um yeah if you if you see a continuing Bitcoin bull uh that's that's going to accelerate to the upside even more so um and then the

latter point is just the composability of um the SR USDC and USDT products uh they they find tremendous success as like yield bearing assets and collateral types on money markets um significant interest in borrowing against them, looping them, whatnot. Um, we have been in uh a deep yield bare market that certainly has not caught up to um the rise in spot prices yet. Uh that being said, like if you see a rising interest rate regime, um in addition to higher Bitcoin prices, higher active loans on um on Syria, they'll be able to monetize

a growing active loan base at at much higher rates of interest. And and with that, I'm incredibly constructive. It's also one of the um despite the growth it's it's seen, it's one of the more uh wellpriced or cheaper names in um in in lending. So, >> thanks, Luke. Do we have agreement here? Does anybody think maybe lending is a little bit too boring? Maybe not high beta enough. Um or do you think it it b maybe it's a diversification asset in the portfolio? Maybe it's the main way given it's stable coins, still a tokenized trade. Um Kunal, any thoughts?

>> Yeah, I would say I like syrup as a business. Like I love it. Wrote a report about it, but when I talk to people, I think one of the main issues they say it's a boring business, right? like you mentioned like this institutional lending it's it's not as like sexy and like high growth as you could say like Etheina right like I mean where like the world is your oyster and I think the the thing with syrup is to really do well you need to secure a lot of this like fintech partnerships and that's where like Moro and Athena have been very aggressive in capturing the share like you just take a look at the Robin Hood savings vault right like it's powered by Moro and a bulk of the deposits in that Moro vault are actually allocated to Etheina and then you have 20% in in uh

syrup which is which is great but again the majority is going to ethena right so I mean they mentioned in their investor calls like quarterly investor calls that they will be more like aggressive or for these fintech distributions so that's one thing I'm looking for cuz if you can be integrated in some of these bigger exchanges I think they've won with Kraken as well but yeah you need more of these cuz then that kind of gives you like a big source of TVL coming in and uh the team has definitely showed like a great ability to source borrows for the capital being deposited. So I don't think that's the issue. The next thing they need is just to secure this distributions and get the high velocity of TVL coming in. And it's also a great from a narrative perspective. I think

that's one of the reason Moro has done so well this cycle is just from a narrative point it has secured like some of the top partnerships out there. So that's something in my opinion syrup has to to try to replicate. But yeah, from a tokcon tokconomics point of view, they did turn on buybacks recently and I think month-on-month buybacks have been increasing. So that's great. Multiples cheap. I like the business. Yeah, the only thing remaining for me is the distribution front. I I think if they they solve that, it'll be like a pretty killer product. >> Yeah, that's some that's some solid points. Um Sam, any disagreement with either of your colleagues?

>> Um I mean it makes sense in like yeah a diversified port like this. Um to your point though I would say I mean I'm a lot more confident in regards to the RWA thematic on just like Dexes and even L1s and to your point they're a lot more those assets are a lot more reflexive too to the upside um than lending protocols in my opinion. Um but yeah, so I'd say it definitely warrants some place in your portfolio. Um whether it be syrup or another player, but um around 5% or 5 to 10% um in total for these type of protocols makes sense to me.

>> Okay, nice. And yeah, I I I kind of do I do agree with you canal and like how fintech distributions, integration, licensing that's becoming a bigger part of it. I think that might be a good thing within the sphere larger. I mean just maybe in general even as we see AI start to take on more use cases in software I think the software becomes less of the mote and it's more about the distribution and partnerships and licenses like you've mentioned or we mentioned so I mean that that could be something that could be a form of a moat um that these earlier players end up um capturing as the space grows in general I'll pull to the stage again we're coming to the end here so next on the list and these we have two more and these were Citrini's lowest waitings I think I think Luke might have some beef

on the Pendle rating. Luke is um a big Pendle bro. Uh and I mean if you want to if you want to hear Luke um shill Pendle more with the fundamentals and interest rates and contango and all of these lovely terms then he'll be at at Das London this November and 10th and 11th this year. So um definitely come through. Dubby 1,500 attendees, 700 different companies, Black Rockck, Coinbase, every big name that you know about. So come there for for Luke or come there for for the event. Either way, um Luke, let's get your thoughts on Pendle.

>> Yeah. So I guess to start, I honestly don't disagree with the 3% waiting too much. Um there there are a number of reasons for that. I guess I'll start with like making the case for why I do think it it should be in the basket is like one I view Pendle as the marketplace for some of the most attractive financial instruments uh crypto has to offer which are these high yield zero coupon bonds with you know low low variance in the principle um and like the number of players in this supply chain every yieldbearing asset issuer wants to list on Pendle and overspend on incentives. Um, viewing

Pendle as like a premier go to market venue um for bootstrapping uh liquidity and TVL. Then downstream of that, uh, money markets love listing the PTS um because a huge share of the PT supply ends up as collateral on money markets and they generate um, incredibly high loan to deposit ratios um, generally like maxing out the leverage ratios. So they're incredibly profitable listings for um, money markets. And Pendle in particular has historically maintained like 90% plus market share um in liquidity on these venues compared to

things like um Raidex, Exponent, uh Spectra, things like that. Um but there there are reasons why I would uh dampen the bullishness. Um, one being is like the activity you see on V2, it's really concentrated when a a new yield bearing asset issuer comes to market and they're spending on incentives um, which you only see in um, the early life cycle of new asset and it's not durable. And the incentives are great because you're dumping call options on these markets that drive huge premiums to the underlying yield. Um, but you can't maintain that. All of these markets and

hot maturities eventually expire and roll off the books. Um, the the Athena flywheel is just always going to be a perfect case study in how that's going to go. Um, and and with that, like the business, it it doesn't monetize as well on this RWA narrative the way many of the other names in the basket would. Um, back in the 2025 peak, Pendle was running at like a $80 million annualized um annualized run rate. It's fallen to about 10 as we've been in u basically one of the worst yield bear markets crypto has ever seen. Um, the third

longest stretch where onchain yields have been at a discount to short-term treasuries. Um, so of course like when you're a yield exchange, uh, your business isn't going to do too well in that environment. Um, where I do see like huge upside, um, for Pendle is less on V2, which is really a bet on new yield bearing asset issuers coming to market with incentives. Um, I I see the long-term bet being on Boros um, and and the swap model. uh and Boros's ability to capture a share of open interest in the perpetual futures complex for both

crypto instruments and RWA perpetuals as well. Um I view that revenue from that venue is going to be um stickier and less cyclical due to um uh no basically nobody's dumping points on those markets. And um going back to like my first model or forecast for like how big Bor Boros could grow, um I I do see a very compelling long-term case for Boros growing into like a 9 figure revenue line item for Pendle. Um the the traction's not there at this point in time to support like a clear case to hit

that within one or two years. Um but but it certainly could be there on the board. Um so like for for those reasons I I think it certainly deserves a place in the basket. Um but at that waiting uh I I think it's fairly weighted. >> That's that's some really good points. U I like that nuance take. So it is it fair to say that maybe Pendle is potentially going to have the same kind of trajectory as the overall theme that we're thinking about for tokenized assets and that is there was a lot of cycl cyclicality and volatility which would produce booms in bust not just in token price but in terms of fundamentals like revenue and this new wave of

onchain assets is actually bringing on a a more durable and sustainable source of revenue particularly with the Boros application with PES for funding rates swap rates and the the once it's based on on these tokenized assets. So, and we're looking at basically we're speculating on what the term of those tokenized assets would be and what to achieve Pendle's potential nine figure annualized revenue. Is that is that fair? >> Yeah, I think that's that's a pretty fair take. Like at large, I'm incredibly bullish on the perpetual futures market.

um both both crypto and and equities and um Bor Boros is like basically the only public market venue for participants in those instruments to hedge their cost of carry. Um whereas like V2 uh perhaps if Black Rockck was dumping u Black Rockck equity on the Biddle product, Bidd would have seen really good PMF on on V2. But I don't really think um that these institutional off-chain asset issuers um that is the whole tailwind for the RWA complex are are going to be running points programs the way the cryptonative um priors have.

>> Yes, maybe not yet, but yeah, definitely not anytime soon. Um I mean I think you you've you've given a great overview on Pendle and our thoughts. Unless anybody has any further points they'd like to add. Um maybe we hopped to our last asset. Okay, brilliant. So, you know, again, same waiting as Pendle, which was deemed fair. That's a surprise by my accounts, but given the given what Luke just said, I think it makes it actually makes a lot of sense given the current, you know, market structure and the other assets that there are. But last on the list here is Ono with an equal waiting to pendel at 3%. Um I I'm I'm not who's who who'd like to take this one? Who'd like

to kick this one off? >> I don't mind. Yeah, I can start for Ono. I mean, just metrics wise, right? I think Ono has been killing it. They're one of the biggest like tokenized equity issuers out there. So, they've got that part, right? And then the the next thing is, okay, how do you monetize that? And you're kind of seeing like early innings of that take place. So, they launched the Purps product for like equities. They tokenize and recently they launched spot as well. So obviously these these markets are nowhere near as like liquid as what you see on Hyperlquid or other exchanges, but it's a start, right? They have enough like institutional partners.

They're in this game long enough to hopefully over time build like more liquid deeper markets and since they control like the tokenization layer, I'm sure there's some synergies there that they could tap on to as well. So it's great like they got the starting point nailed, right, which is getting like a huge amount and uh big TVL of tokenized assets on chain. They're working on variety. They're like the some of the biggest partners out there such as Black Black Rockck as well. So it those are all great. Now it's just about monetizing it. And I think the biggest issue with Ono is devaluation sadly.

Like I think if this was something that was like sub 1 million or like 1 1.5 M that would be like a great buy where the the upside case is a lot more easier to like quantify. But the fact that it's like, you know, 2B market cap over 4B FDV, I'm sure there's like a big chunk of unlock still to hit the market, that's what is a bit less appealing. But from just from like a product and metric standpoint, I think they're they're doing pretty well. >> So 3% fair or >> Yeah. Yeah. I would say 3 like somewhere on the lower end, right? I think that that's completely fair.

>> Okay. Solid. Yeah, don't know too much about Ono. Um although like they are one of the biggest issuers um in regards to assets that are out there. However, when looking at spot volume um it's like it's like towards the lower of the big players. Um like a good example is like backpack of like total equities and stuff issued is like 10 times smaller but backpack actually has more volume um last month in regards to those type of assets. Um, and I feel like more volume, like seeing volume activity is like the biggest indicator of like if these assets are actually wanting to be used or not. Um, but to K's point, they are

definitely very important piece of the puzzle. Um, and I'm sure they figure out a way to monetize that in the future. Um, so they're definitely needed, but yeah, it might be a bit of a stretch of valuation. So I would personally rather um other names or higher waitings to other names in my opinion. >> Yeah, that's interesting. It's it's volume shows that there is let's just call it product market fit. There's there's demand for these use cases. People would like to trade them and own them. Whereas with they have a a massive supply but it's not it remains to be seen whether yet this can actually become something you know monetizable commercialized. What can they do with this? I guess it's two different approaches. Not not that one is correct but it's you know we'll see. We'll see

where the market lands. Um I don't know if Luke has any final thoughts. Otherwise, we can wrap it there. >> Nothing on there from me. >> Okay, great. This one, this one was neat and tidy, just under the hour mark. That was the full uh review of Catrini's tokenized asset token portfolio. There's still the their stocks portfolio, and I don't think we we have our perfect edge there yet. Um, for at home, if you if you like this kind of content and like us to drill into and go deeper into any specific assets, please let us know. But Luke, Sam, Kunel, thanks for joining me today as always. Um, and for for those at home, I hope you tune in next week.

See you. Cheers.