The Great Digital Asset Regime Shift (...And What Comes Next)

Transcript

And let's start with what happened this weekend as a start, right? So, obviously, you know, there's this war going on in Iran and unfortunately, we have a lot of oil production in that part of the world and that is leading to oil prices flying. And so, the price of oil went from about $65 a barrel all the way up to about $110 a barrel over the over the last 2 weeks or so and this weekend we saw a massive massive shift in this weekend and last weekend in price discovery for markets that are closed on the weekend and like oil.

>> And if you think about it, there's a broader shift happening about how how these markets are reacting due to the crazy nature of the kind of administration that we're currently in, right? So, there's this consistent news barrage in the world today. I like to think of it as like a 24-hour amnesia where something happens in 24 hours that is like a mind-blowing event that would be a once per month 5 years ago that happens every day now, it seems. And so, this is leading to markets being far more volatile, to more wars, to more things more headlines. Like everything has been compressed into a headline. And so, what

this has done is that it has created a lot of opportunity for markets um and markets on on the weekend are increasingly becoming something that the NYSE has pushed, that we've seen people from ICE push, obviously today with Kraken and Nasdaq. And so, I think just to start off, this regime shift is a more volatile world is leading to a a much a stronger desire to trade 24/7. Well, I think you're right that we're compressing a lot more substance, [snorts] things that would normally take a lot of time are now taking much shorter time. This is attributable to several reasons. I think one is the

internet. I think faster communications, faster transportation, and and generally a more connected world than ever before. Um and you know, there was previously this 12-day war, right? >> Yeah. It was over in 12 days. You know, 50 100 years ago these wars are drawn out. So now things are getting compressed in real time and they're happening much much more frequently. >> Yeah. Um I think also, you know, if we're looking at this relative to the markets, we're thinking about how price discovery happens. And I think that is part of the key the the cornerstone of this conversation, which is a thesis that actually Solana ran with for a long time of always trying to be, you know, approaching the speed of light so that they were one of the fastest

paths of information and lowest latency. Yeah. Uh and what that allowed for is the quickest price discovery. Uh and if you can get liquidity behind price discovery, liquidity begets more liquidity. Yeah. Uh and price discovery ultimately is pushing the needle. Uh so what you're what you're alluding to and what happened over the weekend is that obviously traditional markets were closed. >> Yep. Uh and we're having developments not in Europe cuz Europe takes the weekends off. >> Yeah. But here [laughter] in America and over in the Middle East, we had developments happening over the weekend.

>> Yeah. Uh you know, the Strait of Hormuz, which is where a lot of, you know, the oil travels. I believe it's 20% of the entire world travels through this very narrow strait. Iran is threatening saying that, you know, they're going to torpedo any any boats that cross through the strait. America and Trump is saying, "Hey, we'll give you protection. We'll give you an escort along the strait. Don't worry about Iran's threats. Keep the oil flowing." Uh the insurance markets are set starting to say, "Hey, if you travel through this straight right now, we're not going to insure you." Yeah. That is causing even with this police escort, and so that is causing a lot of these boats to effectively say, "No, we're not going to travel." That slows down the supply and the production of oil,

leading to obviously demand hasn't shifted. You know, everyone still needs still needs oil, still needs gas. And so, maintaining demand, short supply, price flies. >> Price flies. And so, price appreciation flew over the weekend where all other markets were closed. The only market venue that was open, obviously in a more open competitive landscape, you're going to be pushing the pushing the edge on latency, techno you know, getting closer to bare metal, these sorts of things. The legacy markets are making it in extremely easy for hyper liquid because it was just the only liquid venue that was open trading these assets. And so, yes, hyper liquid was the venue of choice for price

discovery of oil Yeah. over the weekend. Yeah. I mean, and and the platform itself has processed I mean, trillions of dollars in in in trading volume. It surpassed Coinbase in annual volume. Also, something that with regards to the sign of the times, again, these tokenized commodity markets are hitting a massive scale right now um partially because crypto markets are far less volatile currently and less appealing. And so, you know, over the weekend, there was actually more that the top five pairs on HyperLiquid were non-crypto pairs for the first time in a while, which is again a sign of

the times, part of this regime shift. I'm not saying that that's always going to be the case. In fact, it's probably not going to be the case most of the time. But, the fact that the top five pairs over the weekend was showing that they weren't crypto pairs is a sign that in in investors, speculators, asset owners want to speculate on these markets on the weekend, just generally 24/7. And they want to do it in in a place that has good volume, good high levels of open interest, and they want to do it at scale. I think increasingly we're going to see those types of assets higher among the volume ranks on crypto exchanges. Yeah. And And I mean, you you see it, right? Like Bitget, we had their CEO on and she was talking about how they are the universal exchange now.

They just listed a bunch of gold pairs and these types. Bybit's doing it. Binance has it. >> Remember, this is part of the neo-finance thesis. Remember, the neo-finance thesis is essentially an acceleration of the assets that have typically been the most liquid and the most traded for centuries. Oil, gold, silver, these are the assets that people want to trade. We're not suggesting that we're going to take XYZ crypto, you know, equity token and it's going to become the most liquid traded venue ever, right?

>> No, yeah, yeah. What we're suggesting with the neo-finance thesis is that we're going to improve the rails. The platform through which these assets trade is going to be exponentially faster, Yeah. more affordable. It's going to settle quicker. It's going to unlock latent liquidity, and it's going to be composable with all of the other venues that are currently disparate. >> Yeah. And so, part of the neo-finance thesis is that we're taking these these high-quality assets, the assets that move most of the capital in legacy markets and in the neo-finance markets. >> them on chain.

>> And we're going to be innovating them. We're going to bring them on chain. And so, we'll get better assets on chain as a result of this phenomenon as well. We'll get different types of assets on chain, better types. And the the big thing here, so to kind of like round out this first point about this regime shift, how to position, obviously we're both hyper liquid bulls. We We own hype. But these markets represent trillions of dollars in annual trade with tens of billions of dollars in futures volume, right? And so, if you just think about how like how these these percentages of these markets start to come on chain, it's just like so obvious that uh the market volume that is being done just on uh perps in in crypto is going

to be uh first kind of like joined by and growing together, but I think that the that the volume of these, as you're saying, these larger, better assets, higher quality assets is going to grow >> supersede the volume of the perps on on uh crypto assets. And the other thing here is that to to kind of finalize this point and move on from hyper liquid and kind of this tokenized commodities trading is Perpetual futures do not exist in traditional stock exchanges. They have futures contracts that have expirations.

You need to roll them over. Uh they this doesn't exist in this world, in these markets. And so, once again, guys, we're here in the Empire State Building. We are bringing the convergence of these of these two industries together. This is going This is going to be an accelerant for investors, stock brokerage. Once you kind of learn about this, you are really intrigued as to how it happens, funding rates, uh how it all happens. And so, something something to note. Well, I think for us, it's like we're used to it, right? And and I think for people to understand is that it's important to untangle the asset from the underlying infrastructure. And so, we've we've learned this because uh when it comes to digital assets, you know, you've got what people

typically call crypto. You know, they refer to two things. And ultimately, that leads to a lot of confusion. What they refer to is the asset, think Bitcoin, and then think the Bitcoin blockchain. >> Yeah. Asset and blockchain are two fundamentally different things. We're seeing this play out with the more legacy asset class, the high quality asset class, as well. And so, I think what we're going to continue to see is the invention of new modalities, uh the invention of new infrastructure. Perp is a technology. Perp is a piece of infrastructure. You know, you can apply this to any asset class. You can apply perp, you can apply blockchain rails.

And and that application of that infrastructure is going to improve the liquidity, the composability, and the speed and the latency of any asset class. And that's why this is ultimately inevitable. We believe it's inevitable. And this is going to be a transgression over time where we're going to see more and more of the assets traded on these more liquid venues. Ultimately, it's going to it's going to positively impact the bottom line of whoever is trading these assets. You're going to be able to unlock liquidity. There is counterparty risk and and liquidity risk when you're doing T+1, T+2 settlement. You have the cost of money. You have to insure some of these overnight things. You have custody risk, counterparty.

>> Yep. So, ultimately, we're removing risk by putting things onto more liquid venues and and and more secure exchanges. Uh and then we're going to be opening up the abundance of capital in these markets. And so, I think there's an evolution here. Yes, we're going to see high-quality assets. We're going to see more high-quality assets on chain. Those high-quality assets are going to end up getting access to capital uh and lower settlement times, quicker, faster settlement times. What does this mean? I think is the next question to ask. >> is this So, yeah, what does this mean for you know, because if you go to like tokenized treasuries, these are you know, these are 1 1 billion, 2 billion, 3 billion coming on chain massively, right?

Billions huge. USYC from Circle is big as well. Those are the big two. Um this is a whole 'nother So, that's perp. That's on chain price discovery. That's going to happen. How to position? We told you what our position is. We told you how we think about it. I don't look at any of the I don't have really any other positions in any of the other per taxes. I this is a winner takes most market. I think there's going to be three winners. Right now it looks like hyper liquid, lighter, and variational or Aster. But again, I I I don't know. We'll see how that whole space plays out. Um but this next trend is like the big big pie, too. So like the perps pie is massive. It's something

to definitely focus on. The the tokenization and kind of like market infrastructure pie here is is huge. Right. How would you describe What is the value of tokenizing assets? Like like Why is having tokenized gold or tokenized equities trading? Why is that valuable? It's it's a lot of the same value proposition that we've been talking about for years. And and a lot of that is composability. And a lot of that is the innovation of lower lower settlement times, faster, and and more affordable.

And it's it's eliminating a lot of the risks that clog up the system both in terms of time and cost. And so as you're thinking about Yes, high-quality assets coming on chain, that does two things. One, it brings these assets into a place where they become composable with the entire asset universe that is already existing on chain. What that does is it allows these venues to become composable with one another. You can then take positions and use them as collateral and borrow against them and unlock liquidity against them, which is currently not possible in the existing legacy financial system. You can think You know, you have your Schwab, you have your bank account, you

have maybe your a fast cash like a Venmo or a Cash App. These are all disparate venues, right? A lot of these brokerages, these venues, they don't talk to each other. There's not a common language, right? On the blockchain, right? We operate on distributed ledgers, meaning that all of the validators, all of the nodes that are communicating across all of the blockchains, all of those speak a common language. On Ethereum, it's the ERC-20 stand token standard. Other blockchains have other token standards, but ultimately, once things are on chain, they become a lot more composable with one another.

They end up speaking a common language, and then they can they can start to communicate with one another, these systems themselves. And that means that we can start to unlock value that was currently not there before. They have that happens faster. And then we can apply that value into more assets. So, you can think that, you know, once we once we have these assets on chain, you become you start to eliminate a lot of the risks that that start to make costs in terms of speed and and capital. And then you can also start to apply the unlocked value into more positions.

I'm of of the perspective of essentially, you've got two asset classes. You already spoke about perps and and all of the high-quality assets like gold and oil that are coming on chain. Then you have non-speculative assets. And we're we're seeing the entire private credit market come on chain as well. Yeah. And show some cracks as well. Exactly. And so, I believe that now, once this is moving on chain, you know, the the old adage when FTX collapsed was that if FTX was on chain, we would have seen the cracks a lot sooner. And so, we can see a lot deeper into the system itself, who owns the risk, who owns the asset, and then ultimately, we can make make determinations based on that. So, first off, we're unlocking a lot of liquidity

once we have tokenization. The second is that we're improving a lot of the risk profiling that's happening that happens across the entire industry. And so, on the risk profile profiling side, we're going to be saving a lot of time and money. And then on the on the composability side, we're going to be unlocking a lot of latent capital. Ultimately, these two things are improving the bottom line for companies like BlackRock and Fidelity and companies >> it. I mean we've seen it. >> They're embracing stable coins, they're embracing digital assets for a reason.

It's because it just it makes perfect business sense. It improves their bottom lines twofold. Yeah, I mean so that's kind of tokenization as this pillar of the brand that we have that we're going to be covering that we think is part of this regime shift in a positive optimistic way. And I think the the kind of next and parallel is stable coins, right? Is just this you know, we're sitting at over 300 billion. I think usds just cracked 11 billion. So just kind of broke through that 10 billion kind of level there. Tether's obviously in the in the first place here. Circle's up. And and so this is a major area for businesses, right? Because they are

going to be able to lower their credit card fees that they have to pay those costs. Any sort of failed card payments, agentic micro payments and agents using credit cards and stable coins on chain and just the amount of money being transferred for global payments is remittances. This whole this whole category is going to keep keep going. And so stable coins is very clearly part of the regime shift. And so I think if you're thinking about perps, tokenized assets and organization and stable coins, you have a winning portfolio.

To like think about how to allocate >> to. And it's not easy right now. And there's some perps companies that you can allocate to tokenizing. There's a couple, but a lot of these are kind of more in the private sector. And then stable coins obviously you've got, you know, the skies, the athenas as part of our N7 it's sky. Obviously Circle has a stock, not financial advice. But that was those are like the big three of this uh shift that that I think is important. Okay. So, I I see your mental model. You got perps. Uh you've got stable coins. Uh and you got tokenization. I think those are three very very key pillars.

>> Yeah. Um the way I'm seeing this regime shift is almost more of a progression. And so, I I think of it as, okay, stable coins are extremely important and now we have regulation and it's becoming even more accepting of stable coins. Uh once we have stable coins and high-quality assets, right? Tokenization is the absolute foundation of a lot of this because ultimately uh this infrastructure uh it can support really anything and everything. The key is filling it up with high-quality things uh through which we can start to transact and we can we can use as value and we can start to create more value as a result of it.

And so, once you have these assets on chain, and I mean both the speculative assets in terms of the the high-quality, you know, oil, gold, things that, you know, have are some of the most liquid venues. Uh also equities, you know, US equity is one of the most liquid traded asset classes in the world. Once you have these speculative high-quality assets and you have non-speculative cash instruments, treasuries, private credit, these sorts of things, uh you end up with a lot of value that is essentially sitting on blockchain rails. The thing about money is that it's not it doesn't just sit, it moves. And so, there's a velocity to this capital through which can become so much faster and and so much more

efficient on blockchain rails. And so, my mental model is, okay, yes, first uh tokenize all of the assets. The the speculative assets, the high-quality assets, uh and and you know, the cash instruments. Uh once these things are on chain, then we have the plethora of DeFi, NeoFi mechanisms that we've been studying since we were DeFi slate. And so, what what we have here is we have the mechanisms like the Aves, like the skies, like a lot of the decentralized exchanges that we're now seeing get wide adoption from the most important, most, you know, reputable asset managers and financial institutions in the world.

These are the building blocks, the Dfi Legos if you think back to Dfi summer 2020. These are the the building blocks of a new financial system of a of a token standard. So, yes, tokenize all the assets, make sure that all of these disparate venues can speak to one another and they speak the same token standard, and then start applying the Dfi building blocks that we know and love cuz we've been in this industry, but now you have high-quality assets, extremely liquid assets with trillions of dollars of market cap in both speculative and cash instruments flowing through some of these mechanisms.

>> let's think of And so, so let's get to this, right? So, that is a a really good point because right now we're valuing a lot of these Dfi applications, especially the ones that we've been tracking in Neo Finance, there's just a lot of these on-chain protocols and blockchains just for the understanding that we're using crypto assets in them, and not that we're going to bring billions and billions and billions of treasuries and private credit units and CLOs and on-chain and be able to put that in Morpheus and loop that thing like, you know, 100 times. Put it in Ave, you know, use it across a set of of applications like like Pendle, Hyperliquid, Lyra, etc. All of these kind of like financial primitives

on-chain, they've been thought about and valued right now as kind of like what is what can be done with the crypto collateral, but not what will be done if all of the assets in the world essentially slowly but surely come into these applications. And so, before we get there, this is and and, you know, on that topic, this is cause, I believe, of this massive sentiment disparity right now, right? And so, this is part of this regime shift is that we have a massive sentiment disparity on I call it like CT token bear market and institutional mania. And so, what happened is that there's been this large amount of theoretical value created in

crypto, right? The total market cap peaked around 4 trillion at the end of last cycle, right? We we saw all these different tokens, all these blockchains, all this venture funding. We built a ton of infrastructure and a lot of kind of groundwork for the space. Right? But, we haven't really thought that deeply about actually capturing that value. And so, there is this deep fear right now of institutions or whomever with large distribution channels Robinhoods Revoluts etc. coming in creating a POC for their, you know, on-chain endeavor and capturing the majority of the value because they own the user relationship, they own that

application. So, what we've seen is we've seen companies like Lighter have gone and integrated with Robinhood, Revolut is is is building on Polygon, for example. So, you're seeing this kind of like DeFi mullet play out where you've got the distribution partner and the DeFi protocol underneath. But, there are many many many many many tokens and protocols that are literally generating zero revenue, have got a ton of funding, they have maybe 12 to 24 months of runway left in the current market or less.

And they have very little users. And they're kind of the brutal reality is that it's kind of over for them. So, and so, I want to be optimistic here, but Let me Let me give you Let me give you Let me give you a reason to be optimistic. >> And we're not like there are there is a lot of fat that is going to get trimmed as this regime shift happens with clarity passing, with Yeah, so we're just going through this rapidly. It It certainly is, and I think I think this is a I think this is a a very important tangent into value accrual.

Which is that You mentioned that, you know, a lot of these protocols essentially the the teams and the companies that look, you know, maybe they have research fetish, you know, maybe they're they're doing things for valiant reasons according, you know, to their own complex. You know, you you said that they have they haven't thought deeply about value accrual. Yeah. It's capturing the value that they've created. Like, we've built these blockchains and and we had this Metcalfe's law idea where like there was these network effects that would drive a lot of these values to these L1s. It's yet to be seen if that's going to happen. I think clearly congestion fees and gas fees across all blockchains as a revenue source have decreased significantly. I'm not sure that the L1 trade is alive at all anymore. I don't

think it is. And there there's so that's kind of like one whole like network effect-based thing. But yeah, how do you capture value in this space? And the problem is that there's these larger institutions or firms that are going to come in and capture a lot of the value that that has been built by crypto natives, open source. And so there's this really nasty stuff that happens. >> I don't think that's a problem. I think they're going to create a lot of value, and that's why they're going to capture a lot of it. What you have to do is you have to have a regulatory regime Yeah. that allows you to capture value. Yeah. That's why they haven't been capturing value. It's not because they haven't been thinking deep Some teams haven't been thinking deeply about it, right?

No, but a lot of these protocols do not have any revenue. >> A lot of the teams didn't have product market fit, and that's why they didn't have revenue. You have other You have other companies that felt like they had to sufficiently decentralize, and that was the the >> That's over. Dude de- is over. >> because we have a regime shift. Like we have a we have a regime change. >> the coming for the coming years. It's not over, but like the whole like I'm very glad Ethereum is still push and Vitalik still pushing for censorship resistance and all of these from the highest level, but like dude, that whole like DAOs are done. It is a hierarchical top-down decision-making on product and scale and speed. You're competing against FinTechs. You're competing

against 3,000-person firms. >> Yeah. Yeah. >> There's no more fugazi about DAOs and decentralization. That's over. Absolutely. I'm not I'm not not fighting you on that, but the the part that I am I am thinking about and talking about is is where equity meets token. And that is a part that has started to evolve very very significantly over the coming months or in the past few months and and continuing. And that is a that's a cornerstone of this this regime shift. >> Yeah. And that's because that's why DAOs were created in the first place. Maybe you know, there was Vitalik had some philosophical arguments as to why DAOs are important. We all believe in decentralization as maybe a decision-making mechanism, but as a corporate treasury strategy, no, it

doesn't make any sense. >> No. And so DAOs existed so that they could you could put up some fugazi, you know, a facade in front of protocol that actually did have some revenue that you could pass back >> But hold on hold on hold on. Hold on hold on. OKX OKX just raised at a $25 billion valuation >> Yeah. and the token is trading at $1.8 billion. >> Yeah. This is this is a this is something that is going to change as well. They will likely be merged to one-to-one. And I don't know how that's going to look for like back setting that and like setting and like going back and looking at all these protocols, figuring out how to actually allocate the you know those but this this is coming together and it's

going to happen because like let's say Coinbase launches base. You've got base token, Coinbase stock. You've got this like weird thing going on. It's just going to be one. Um and I generally think that that there's protocols like Backpack are doing this. They're actually giving away equity um to people in their I believe in their airdrop or in their points program. So they're they're like like this is going to come together and I think that's also a big part of the regime shift. So let's And it's going to it's going to weed out a lot of teams. >> Let's drill into this Coinbase example because this is one that people like to use a lot. Let's say, you know, Coinbase launches the base token. Let's also say that Coinbase tokenizes their stock. And now they have a tokenized coin. Yeah.

Yeah. I know. Base is the L2, but you can buy coin on chain, you can buy base on chain. >> So then Coinbase has a token and they have a base token. So they have two tokens? >> It's weird. So so value accrual ends up and you know, you have different assets for different folks, right? >> Yeah. So you can have an on-chain audience buy the base token. You can have an off-chain audience buy the coin token, but once these two things start to intermingle, ultimately you're going to have to look into uh where the revenue is coming from, right? Where is it going? Yeah. That is that is the question here that I would be looking into as a shareholder or as a token holder and I would be looking for clarity Yeah. on where my revenue sources are coming from because

ultimately the way that these things are valued normally this you know, these these token stocks these P P to E ratios, right? Like I'm looking at how much revenue you have and what are the chances that you can start you can solidify those revenues and grow them Yeah. over 5 years, 7 years, right? >> here's the thing. Then you're trading seven times earnings or five times earnings. >> Well, so Hyperliquid came in with the Trump administration earlier and I think it was it was about a year and a bit ago and they said we're going to buy all the revenues we're going to buy back the tokens with all the revenues. Trump's in office. We don't care. We're going to do it. Yeah. completely shifted the entire landscape of of tokens, Trump and hyper liquid. And now there are there are tens of thousands of tokens with zero

revenues and they have zero passback. And there is those tokens are are are are done. >> I'm not disputing >> They're done. And so they're part of this like part of this regime shift as an investor in this asset class is you have to have a consolidated portfolio. Like there is no room for distributed kind of spray and pray narrative based tokens. I don't think that that that's really going to come back in any major way. I think there are actual investable assets right now that are doing very very strong revenues, doing buybacks, have have open programmable transparent financial data and are doing it at an institutional scale. And the a lot of this industry is

not going to make it past this phase. And there's a lot to be optimistic about because those winners that what that do win will accrue a lot of market value. And there will be a lot of upside for those over a longer period of time. But as you say right now these these assets they're just not like equities. They don't have a claim on cash flows. There's no direct ownership rights. And this will change with clarity. And so clarity is kind of this line in the sand, right? Let's talk about clarity because it's a big part of how this is going to shift.

Big thing right now that's holding it up is stable coin yield. Right? But clarity is going to give us a framework to understand what digital assets can and can't do with regards to yield passback, with with regards to all these, you know, different types of um crypto asset frameworks. And I think it's going to be an obvious thing that marks the bear market like a line in the sand of the bear market. It's like you you Are you calling bottom? >> You didn't buy you didn't buy when Clarity Act passed at 46K, at 66K. You didn't Clarity passed in 2026. That was obviously set the bottom for the 2027 to 2029 run, duh. Um right, but I think clarity is this line in the sand that's going to all be This is going to mark the regime shift because it's going to

be like, all right, guys, here's what's available and allowed and legal. Go build. And that is going to once again force the hand of teams that aren't prepared for it. So, we've been living in this in this fugazi bubble. >> Yeah. And it's changing and it's changing rapidly. And uh again, the roll up, you know, we we couldn't have done it without the guests who have come on the show. Uh two of my favorite guys, two of my favorite guests that we've had on multiple times have been uh Haseeb, uh you know, founder of Dragonfly and and Santi, uh you know, founder at Inversion. Uh one thing that I I I love about these guys is that, you know, they they draw upon their experience in capital markets as a whole.

>> Yep. Um you know, Haseeb's got a background in poker and he's, you know, take takes more of a a venture perspective on the market and Santi takes a very pragmatic investor point of view. >> Yep. And so, um if I'm looking at these things, I have to choose. Am I Haseeb or am I Santi? If I'm Santi, I'm looking at things as a PE, I'm looking what is their revenue now and how what is the likelihood that they're going to be growing that revenue and how long can they be protecting that revenue and or growing it over the over time? That is going to factor into some PE calculation, I'll come up with a valuation. If I'm Haseeb, I'm thinking what is the chances that this thing ever gets revenue? And I think you can look at the crypto market and you might hear

us use the word crypto as a whole a little bit less these days, but when we talk about crypto, we refer to essentially the altcoin complex, right? Because we're untangling crypto and blockchain and we're treating the crypto asset class as effectively the altcoin complex. We're treating Bitcoin, ETH, hype, revenue generating coins and tokens as high-quality assets, right? And then we're going to see high-quality assets from outside of crypto come on chain and join the Bitcoin and ETH in hyper liquid.

>> Yeah. I have to ask myself, am I Haseeb or am I Sante, right? And if I'm and if I'm looking at the altcoin complex, I can say, "Okay, yes, this thing doesn't have any revenue now. There's a chance, maybe a good chance, that it goes to zero." But then the venture, the Haseeb in me says, "Maybe this thing gets revenue one day." >> Yeah. In which case I'm willing to take a flyer, right? Now, the fact that they've already launched a token and maybe it's all, you know, it's it's you know, in the market altcoin complex, that is probably premature. I think we're going to start to see a lot later token generation events uh because ultimately the way to do this thing is first you launch your product, then you get product market fit and get some revenue, then you you go public, if

you will, which is effectively your token I agree because I think that the pendulum is swung too far right now on the revenue meta side. Like it's funny that I put that out like so long ago. I think it was like early last year. Um and, you know, we had everyone was everyone is now looking at the revenues of companies and like doing P/E and like trying to map out what the forecast is going to be. It's like, "Look, it's kind of gone too far a bit." It I think we we will get some of those network effects, Metcalfe's law, future revenue generation runs in different assets and like the market will shift back towards like more optimistic thinking.

But as soon as like any of this bear hits, it's just so bang bang bang on like, "Here's what it is now. Here's what we're looking at." And so, I think that that that that has shifted too far and I think it'll come back. >> sounds That sounds reasonable. I I want to answer the L1 uh trade kind of thesis here. Um I think the L1 trade as we know it is over, but I think there's going to be a new There's a new L1 trade brewing. It is It's this token It's a combination of the tokenization trade and an L1 trade. It's the New York Stock Exchange, but, you know, first they're going to tokenize, but they're going to do it on their own chain, right? That's the new L1 trade. It's the New York Stock Exchange launching tokenized equities on the New York Stock Exchange L1, if you

will. Yeah. How you get exposure to that is a different question. >> why that's why I think there's this massive dragon sentiment because there is no way >> are they're they're shut out. >> There's no way to get exposed to that. >> of getting exposure to >> the biggest problem right now. >> why we're here. >> That's the biggest problem right now. >> is how the role of getting >> the L1 trade will will shift though. It'll shift towards the agentic finance trade. >> That is what I want Let's talk about what I >> a Hopefully there's a strong demand for block space increase as agents become more and more able to interact on chain.

I think that could drive some real block space demand. >> Yes. Um But if But But if I'm an agent, I'm just going to find the cheapest chain always. And so Those things still generate a lot of revenue and take a more volume-based approach. Well, that Then there Then the whole kind of like Like the burn could come back for Ethereum. Other L1s could get their, you know, actual transaction count up. You could start to get more of that Metcalfe's law network distribution model. So, I think the agents could save the L1 and L2 trades. Um but I have zero interest in participating really in a lot of those assets. The other thing here is that On the venture side, I think it's it's really important to talk about when it comes to this regime shift is that um a lot of these tokens are just meant

to go down only because of their uh unlock structure. Yeah. Um and so I think that there's unfortunate a unfortunate reality for the venture of the space. There's only going to be like five to seven VCs that are going to be able to raise uh big enough rounds in the future, I I think to be able to actually do series A or like actual large-scale like 15, 25 million dollar checks. Paradigm Dragonfly Pantera A16Z Framework, and I mean, I don't know. Maybe a couple others, some small ones um that will get anywhere. I mean, Paradigm and

Dragonfly just announced big rounds or or the at least Paradigm announced their desire to A16Z did. So, there's also a massive consolidation in the venture funding of the space. >> I'd imagine that a lot of uh LPs could be a little bit more uh enthralled with AI these days. >> Yeah. And I think they also want more liquid strategies is is what I've heard. So, two things on the venture side that I think were interesting as far as the regime shift. Um spoke to a guy at drinks the other night, uh big prominent VC, is deploying their fund three large scale. And um he basically said that we're not doing any deals unless they have a clear path to revenue.

Which sounds like a real business model. >> Didn't exist a year ago, a year and a half ago, or like 2 years ago. So, that was a big kind of it was like if there's no clear path to revenue, if they're not already making revenue, we're just not even like not even uh considering it. So, I thought that was that was interesting. And then yeah, I think there's a lot of drag. I think that's another reason for the sentiment shift is that there's this AI takeover of of interest of speculative interest at large. Yeah. So, agentic tokenized finance is the final frontier in this progression that I've been talking about.

>> Right. >> Once we bring all the high-quality assets on chain and we tokenize them, then we put them into our DeFi mechanisms that have now been resilient. Uh and we unlock a lot of the composability and the liquidity and we get a much richer sense of the risk profile. Um then the third piece of this bef- and and AI is getting here. Uh the third piece of this is vaults. Um risk managers are extremely excited about vaults. Uh I Matt Hogan on from Bitwise, uh and he mentioned about why BlackRock is getting so deeply invested in the space.

>> Mhm. And it The reason is because uh BlackRock missed out on the entire ETF business. And so, he he kind of went wound back time a little bit, uh and walked me through uh the mutual fund uh complex of the early 1990s and 2000s. Uh what happened back then was essentially that you had uh you know, socialized losses, and and it was a very uh inefficient structure. And so, mutual funds kind of ran the world, but they weren't perfect. Uh then you had the invention of the ETFs. And it's pretty interesting to hear a lot of the commentary around digital assets and tokenization these days was very similar to the to the conversation around ETFs in like the mid like 2000, 2005, that that kind of era. Uh and so, so

BlackRock uh was essentially sitting back on their heels, almost like Apple is with this whole AI race. Yeah. Uh Apple's sitting on a lot of cash. You know, it might be apples to oranges, but BlackRock uh didn't get involved in ETFs right away. Uh they kind of sat back on their haunches cuz they were major beneficiaries of the mutual fund uh landscape at the time. Uh then 2008 came came around. Uh major bank uh I forget which one it was, but they had to sell their ETF business. Mhm. Uh it was the previous owner of iShares. And BlackRock at the time, because they were sitting on all that cash, uh they were able to come in and purchase the entire iShares ETF business uh from from this previous bank.

And that ultimately put BlackRock in a position where yes, they weren't the innovators or the creators of the ETF uh you know, landscape uh as it were, but they were able to come in and buy it, right? And so, now uh Matt from Bitwise believes that BlackRock is getting so deep into crypto because they don't want to miss out on this next thing that they saw like just like they saw happening with ETFs. >> Yeah. You know, they they felt like they missed the boat on ETFs. They kind of got lucky if you will, but they were able to buy the iShares ETF business. Now they have a more well-rounded business that way. But now they're they're, you know, putting their their first step forward and they're getting more involved deeply with crypto tokenization.

>> in digital assets is the biggest and that takes us into kind of like how these these firms are going to get into vaults as well. >> Exactly. And so now, once you have the high-quality assets on chain and you have composable liquid venues for these, you have the the DeFi building blocks, the Legos of the the lend-borrow and the decentralized exchanges, you have everything you need for the vault complex. And and the vault complex is essentially an asset manager's dream because asset managers are able to come in and normally they have to do really manual processes. They have to call someone if they need to liquidate something. They need to they need to, you know, rebalance these positions manually. It's a lot of it's essentially their entire job,

right? So now, if you it's essentially like the AI version for asset managers. You put this thing into a vault. You can have a very very broad swath of vaults that you can cater to your clients. You can have a risk-on vault, a risk-off vault. This one can generate yield. This one has this risk profile. This one has speculative assets. This one has high-quality assets. All kinds of different vault complexes that you can create as an asset manager. The final piece of this >> Yeah, I think this is a big part of the regime shift. It's like there's a there's a bit of a kind of like a black box happening where these firms come on chain. They don't really want to get involved. They don't want to do it themselves. You got trusted curators,

the the gauntlets, the rockaways of the world. They provide very solid parameters and frameworks. And you're getting better yields than you are off chain. So that's kind of like a really interesting thing is that um that's part of the of this regime shift is that there are better yields on-chain with some more risk. You got smart contract risk, you got DeFi protocol risk, amongst others. >> Uh and yeah, you know, the amount of exploits and things have come significantly down. Uh but but there are better yields on-chain with these vaults. >> Yeah. Remember, we can once we have a better understanding of the risk profile because we can actually see where these the money is on-chain, we bring a lot of those risks down as making sure they're resilient, they're audited. You know, as we have uh you know, larger institutions

come into the space and and they deploy thousands of engineers at their fingertips on the code that is underpinning this. BlackRock has obviously done due diligence on Uniswap, that's why they're partnering. Apollo with Morpho. We're going to continue to see those risks those smart contract risks come down. And we're going to see uh risk uh dispersion. Uh we're going to have a better understanding of that. So, we're going to minimize those risks. That's going to lead to less losses. It's going to also lead to uh faster settlement times and quicker latency. Uh and then we're going to unlock a lot of the value, right? And these are ultimately positive things for the bottom line. The last piece of this puzzle, AI is the final frontier in this puzzle.

>> to close the loop on vaults. I think that this is something that is going to be very exciting. People are very bullish about RWA looping. They really want to see this happen. Um it's going to keep happening. Uh I keep I've talked to multiple people about this. A lot of these private credit cracks a lot of these institutional products Yeah. I think a lot of these firms think that they're going to come on-chain and just like dump their products on the on-chain ecosystem. And the the distribution that they get from this on-chain audience Just something to know, guys. Like I, you know, think about why why these firms are wanting to come on-chain to get more AUM, to get more fees, to sell you more

products. Like it it's a really nice time to be at the forefront of this convergence but um but when you think about the incentives a bit more, uh you you understand why the sentiment gap exists such that we built all this open-source technology and then there's there's a bit of a vampire attack happening from the outside. I uh like I I think, you know, there might be people that are disillusioned with what they thought crypto it was and is and, you know, where it's going. Um I'll just say like I've been in this space for you know, we we've been in the space almost 10 years. Yeah. Right? Uh each, right? Um and the best way to get exposure is to build something. I I would encourage

people to become entrepreneurs, especially in the era of AI. Um it's not that you can just buy an asset that got TGE'd and ride it to the top anymore. Yeah. Um you may realize where this this space is going. You may realize where the industry is headed, uh but you may feel like there's no way for you to partake in the upside of it because there's not some instrument for you to buy. But there is. Create your own instrument. Create a company. Yeah. Go where the convergence is happening. Yes. Seek out, you know, a lot of the value that you think is coming and provide, you know, your own your own contributions to it and I think you can capture a lot of upside that way as well. Dude, before we get into that, um what's up with the the regime shift

about culture and conferences? Um think like culture-wise, right? So, there's a bit of a clash happening right now. Um Vitalik even put in one of his recent posts to like take your suit off, go, you know, leave your like uh high-status slop membership club or something, and like go and, you know, be free, right? And at the same time, you've also got the rapid professionalization of the space. We're in the Empire State Building. We are quite literally >> This is the beginning of our of our attire. You you see you're going to see NFT PFPs go for uh the space at large.

You're going to see the conference strategy change. You're going to see the culture change. Like like I don't know, there's just going to there's just these budding of heads of like keeping crypto fun, weird, and Cypherpunk versus like the industry is growing up like from an age perspective, right? Like we our first conference we were probably like 18 or 19. There was people in the industry from that age all the way to like 30. Now those people are, you know, anywhere from like 26, 27 to 45. And so the like the industry itself is growing up. So I don't know, I'm just curious anything on like the culture side. Like what do you How do you expect this regime change to impact culture, conferences, um and how the space is going to grow there?

Look, it's pretty obvious where we sit on this topic. We are quite literally in an ivory tower. Okay. I mean like the walls are painted ivory and we're on the 77th floor of a of the tokenization tower. So you know, we are embracing this, right? Uh with open arms, um but it doesn't mean we're abandoning our values, right? >> Correct. That's the important part. Yeah. So uh you know, we are transforming along with our industry. I think also part of it is becoming malleable and adaptable. Uh but never never uh sacrificing on the things that you hold, you know, uh very very important to you. Yeah.

>> Uh personally, uh I'm a believer in this technology. I'm also a strong believer in uh technology. And I think uh the blockchain is a very important technology. I think it's extremely innovative. Uh people are going to use technologies for very different things. Uh, some people are going to use blockchains for decentralized social media and NFTs. Other people are going to use it for, you know, getting three more basis points to their bottom line because they can reduce the risk profile of their assets. I think both of those are extremely positive use cases.

>> so use it use the technology, uh, understand it, appreciate it. There's going to be subcultures, subgroups always like with anything. Yeah. Um, when it comes to, you know, I'll I'll I'll just add a little bit more color there because, you know, the subgroups typically have found their own venues to to to inhabit. And so, it's not but on the blockchain that's not necessarily the case. This thing is decentralized by nature. You can have two disparate worlds that are composable with one another.

>> Well, right. Inclusion works both ways, right? Like if you are include everyone into in a space into a an a a financial stack uh you can also kind of like choose you you include all and then you can choose what you want to be. Right? Like you can be whatever you want to be in the space. Um, and so I I think what >> Yeah. Like like what I'm trying to say is that in like yes, you can be accepting to all but there's going to be these subcultures that form like within Look, I think it's about your strategy, right? If you're a a protocol, a product, a business, who's your audience? Who do you need to sell to? Who are you trying to build a recurring, you know, revenue source Who's your customer? Where Where are

they? Are they at Eth Denver? Are they Spork Whales? Are they developers? Are they at, uh, you know, Money 2020? Are they at, you know, in Vegas at a fintech conference? Are they at Simon's uh, Simon Taylor's Nerd Con? Are they at Consensus Miami? Is it at like a CyBorg? Like who's your customer? Who are you trying to uh, uh, play with and like kind of target and then adjust your strategy to that? But I think at large like there is a growing up. Like, you will not be taken seriously, I don't believe, unless you have a very refined brand that shows legitimacy and credibility, shows a understanding of the professionalization and and and kind of growth of the space, and is is not like this narrative-driven hype thing. Like,

we're so beyond past that. So, look, I think like my my thing is like the culture is shifting, people are growing up. The space is growing up, we're all growing up and maturing. And look, we're trying to do our part. I think everyone's going to going to do that, because at the end of the day, like we haven't been taken seriously by the world. Like, just finally, like we're getting a lot of this adoption happen. I think like a big part of this uh regime shift is that there's going to be a trimming of a lot of the hocus pocus and a lot of the kumbaya and a a rising of of the professional of the professional. Like, this that's just like how I think about it. I I think I So, I agree with with all of that, and I I think part of the reason why that's

happening is because AI is taking a lot on the peripheries. Yeah. Uh AI >> talk about that. It's reshaping company operations right? This kind of the transition here of of AI here is like um on on the culture and conference side of things. You have AI is so amorphous, it's so weird, and it can be used for so many different things that at the extremes, it looks a lot weirder than crypto. Crypto back in, you know, 2016 to 2020 was just as it was it was a lot more new than AI. AI's been around for 40, 50 years. You got to reinforcement learning and, you know, different machine learning tactics been used for a long time. But, AI in the modern context is actually newer than crypto. And so,

crypto and I mean digital [clears throat] asset blockchain, not necessarily altcoin complex that we think is dying. But, you know, crypto as a whole, the culture of it, has solidified. It's grown up and it's Well, you know, I think what happens as it grows up is that it it solidifies and it kind of like reaches this final form where it's like, "Okay, when something's" And think about like a a kid, right? When it's in kindergarten, people ask, "What do you want to be for you know, you you can be an astronaut, race car driver, whatever." You get it's so broad, it's such a broad spectrum of things that, you know, you kind of have the ability to do any one of those.

Crypto was in that position, right? When it was extremely new. Yeah. >> have been anything. Yeah. Right? But now that as it's matured and gotten older, it's kind of gotten pigeonholed a little bit. Not in a bad way, but it's solidified into what it is actually, all right? And I think that is that is going to continue to happen. It's going to continue to ossify into the thing where it really has found its its product market fit as a as an industry. >> Yeah, and I mean it's it's reductive to say it's just finance, but clearly any sort of like all the revolution revolution lization of finance is going to be where the value is mostly going to happen right now.

Like it's kind of like this annoying step that we're in where it's like everyone's got to grow up. We need to ship products that work. We need to onboard in- in- institutional flows, tokenize assets, stablecoins, T-bills. We got to do all this all of this stuff. And then we we will get to a point where we have this like burgeoning on-chain economy. Yeah. Um but we're in this like annoying middle ground right now where prices aren't moving. >> Yeah, it's called a bear market where we actually have to do the work. >> Adoption is flying, but prices aren't moving and they're like it's like the weirdest most like So, the only weird bear market that I'll I'll just comment on on the, you know, it's only finance thing. It's only in so far as the best example of this is prediction markets.

It's only it's in so far finance in so far as prediction markets are finance. But they're also like really like they're tools and tactical things that you can use for things outside of finance. When it comes to probabilities and and understanding the future outcomes of things. And so, I think yes, right now it's only finance. Maybe we get somewhere else. Um but, you know, just to close my previous point was that, you know, crypto was new. When it was new, it was weird. It could have been anything. Now it's solidified, it's matured, and it's essentially grown into what it is going to be. AI now is extremely new. It can be anything. You can use it for anything. It's getting very weird at the boundaries. And I think new people like younger people are going into AI and they're using it for

very weird things because they can use it for very You don't can't really use crypto for anything very weird right now. And that's getting reflected in the culture. Um I think this ebbs and flows. AI is going to grow into itself. It's going to get sort of like less interesting. Crypto can, you know, then grow and expand and blossom into a new new fold. Yeah. I think something that Yeah, go ahead. No, I was just going to say, I mean, it's JP Morgan had massive layoffs. Yeah. Amazon Prime Video had massive layoffs. Um Jack Dorsey's company, Square, massive layoffs or Block. Um so, it's it's happening, too. And Well, both of these Yeah. Yeah. Both of these things are happening. And this is this is what

I wanted to talk about, the final frontier here for this progression of the industry as I see it over the coming 5 years. Yeah. Um Put the high-quality assets on chain. Put those high-quality assets into DeFi mechanisms. Put those uh structured products into vaults and allow asset managers to manage them. And then make the asset managers AI. And once you have AI agents managing vaults made up of complex looping strategies, yield strategies, risk-curated strategies, structured products of high-quality assets, you end up with the new financial system.

Yeah. So, that is what I'm extremely excited about. I think it takes place least 5-year time horizon. But ultimately, I think >> Five years, I think it's more like five to 15. Five to 15 years. >> Yeah. Well, look, I think a lot of assets are getting tokenized. >> But I think that You're seeing price discovery happen in real time on a hyperliquid. >> Yeah. A lot of these RWAs are starting to become composable with the rest of DeFi. Yeah. >> And you have open claw that people are using for very weird things. >> Yeah. AI agents managing vaults made up of high-quality structured products, I think, are a very weird use case for AI agents right now, but I think five years is a long time, man. I think the world can change a lot in five years.

>> a part of this regime shift. It's It's a the It's the the usage of AI internally for your company's work, whatever that looks like, the usage of um actually using agents on chain, that's finally accelerating. Like we're finally getting agents on chain, right? Like it's coming. Yeah. Um and uh the the intersection of building smart contracts with agents and AI, these is all This is all kind of like a corollary to like these big categories that we define. So, if I was to kind of like put a summary on the regime shift and um kind of close us out here, perps tokenization stablecoins major things to be very optimistic about in the current state of affairs. There's

zero reason to be bearish on these. These trends are going to rapidly accelerate. If you've been following our Neo Finance kind of outlook, we've covered a lot of these assets, and we've also just covered kind of this at whole. That's happening. So, that is really exciting. Vaults also a really nice touch to kind of like add on to that. >> Yeah. I would I would structure a lot of those same advancements of our industry on a timeline because ultimately I think there are things that are prerequisites to the things that will come after that. And I think you can't have AI agents until you have vaults, and I think you can't have vaults until you have DeFi mechanisms with high-quality assets, and and you can't have high-quality assets on chain unless those are tokenized.

>> that brings us to a really good point, which is so that the those three kind of buckets there plus vaults is genius. >> perps tokenization, stable coins, and vaults. It's that, and then it's Clarity Act passing. It's it's it's genius being implemented. That's kind of like a progression that's going to happen as well on that timeline. And that all This is already starting to happen, but that is causing the mass wipeout of a lot of fat in the industry. I'm more bearish on a lot of tokens, on a lot of teams with no revenue. I'm just not excited about it. There's there's no investable case in in it. Which that is leading to a consolidation in venture in venture funding in venture the

ability for VCs to raise. We're going to see a lot of consolidation there. We're not going to see a lot of these VCs like, you know, shut down office, but we're we're going to see them turn into more like liquid liquid kind of like broader macro cycle traders. Look, this >> I I think this is happening. >> Right. >> So the revenue meta It is going to keep happening. We're going to see that, but but the pendulum has shifted. Right, the pendulum has shifted a bit too far to like, let me go on DeFi Llama and analyze exactly your revenue forecast, look at your PDE. We'll see some of that Metcalfe's law optimistic network effect trade return. And that's probably going to be driven by the agentic side of things.

>> Yeah. Um I I really do think, you know, perps are an important part part of this, Clarity is an important part of this. These are accelerants. Um and I think ultimately Yeah. We're progressing along this timeline. It's it's up to everyone who works in this industry and the regulators, everyone who contributes to this as far as how fast we accelerate down this timeline. >> Yeah. And so what this looks like from the portfolio perspective is less asset ownership. It looks like trying to own really quality assets in those three sectors in in potentially in the vaults. >> you're structuring this as three sectors. I see this more as a progression. Okay. Okay.

>> But ultimately, ultimately what I think I think this is is, you know, you have your perspective, I have my perspective. We're talking about the same thing. 100%. It's neo finance. >> 100%. It's neo finance. It's the It's the convergence where digital assets is meeting finance. And it's happening. And so, just kind of keep rounding out and And if you summarize this point It's the evolution of finance itself. Correct. As high quality assets evolve into programmable money. Yes. >> Right? As we have programmable collateral in DeFi and in mechanisms like Vault, we end up with high quality assets that are the next iteration of the things that they were. It's before, you know, it's when gold was, you know, something you just plucked up, you know,

in the Hudson River. Yeah, you had to go to California for that. But, you know, you you would take it and then it was an ETF and then it was a tokenized product and then it's a tokenized product that earns some yield in a Vault and then an AI agent manages that tokenized product. And so, what we're talking about is really >> but that's what the regime shift is. It's not a single point in time, it's this ongoing thing that has been happening, you could say since 10/10 or since Hyperliquid launch or since the administration came in, but it's been happening. It's going to like that is that that is what's happening and like we're just kind of in the middle of it, helping people navigate through it. And it's not it's it's big change and there's there's a lot of like more brutal realities to it, but there's a

lot of things to be optimistic about. I think again, on the culture side, on the business side, it's the era of the mature, sophisticated, kind of professional brand. It's not this this hype fugazi decentralization DAO structure. It's structured, hierarchical decision-making, fast execution, product-oriented user-oriented uh results. It's it it's focusing on conferences and branding and conversations that actually matter to who your customer is.

Um And unfortunately, in every bear market, it means being somewhat like, you know, firm with, you know, what your bottom line is, what's going on, who you're who you're supporting. But, through all this through all of this kind of somewhat pessimistic side of this regime shift, there is so much to be excited about because we will get into a time where we'll see a lot of value be consolidated into really quality assets on chain. We already see a couple, and this will provide multi-year to decade-long investment opportunities with tokens that look more like equity with claim on cash flows, with real rights. This will provide you to own wealth and store wealth not just in Bitcoin, but in in other assets. It will provide a

magnificent onboarding of a lot of assets on chain, a full tokenized uh revolution of the way assets are traded and managed and settled. It'll be It'll bring a rise of capital formation that will drive such value and such democratized access to opportunities that we've never seen before. There's a lot to be optimistic about. We got to get through this regime shift. You got to know how to position for it as an investor. You have to be willing to be adaptable and to recognize what's happening in the space. We're going to try to help you guys do that day in and day out here from the Empire State Building live on Real Vision TV.

We're going to continue to learn as much as possible. We're going to be speaking to extremely knowledgeable people in the industry that are going to be coming into the Empire State Building. They're going to be here in the nest, and we're going to be sharing all of these conversations with you uh as a very, very important part of the roll up. You. Couldn't have done it without you guys. Guys, hope you enjoyed the first show from the Empire State Building, The Regime Shift. It's on. We're here. Thanks for watching. See you next time. Thanks, guys.