Hivemind: Bitcoin Volatility, Perp DEX Trends, and Crypto Market Cycles

Transcript

I think like at this point like Bitcoin is really its own thing and I think for investors that makes it a really nice asset to own. I think for traders it can be really tough because you don't know how it's going to react to certain headlines and stuff all the time. Um like why was it strong with gold in the past and now it's getting trounced by gold? Why was it strong with NASDAQ in the past and now it's getting like trounced by NASDAQ? But if you're like an investor and it's a part of your portfolio, it actually has a lot of nice that's like reduces your portfolio risk by having it like so uncorrelated to everything, right? Um but it's just interesting that like we always seem to

have this discussion whenever there's a macro thing. It's like what is Bitcoin? >> Nothing said on the hive mind is a recommendation to buy or sell securities or tokens. This podcast is strictly forformational purposes only and any views expressed by anyone on the show are solely our own opinions, not financial advice. Hello everyone, welcome back to another episode of the hive mind podcast. I am your host today with Jose out cetus. I am uh head of research at Deli Research.

We have on with us as always Jason head of markets, Yan Ventures partner and um it's been on at least once or twice uh Flip. He's kind of our our PEPS guy. Um and there's been a lot kind of happening. I mean, there's always a lot happening in per so good to have him on. Um so yeah, good to see everybody again. It's Wednesday, Jan 21st. It's 11:20 a.m. Eastern time. So, Bitcoin is back close to 90K. The market's kind of like rebounding a little bit after after the past uh few days of just um trash action.

Uh what do we what do we think about this little reversal? It's Davos now too, right? So there's a lot of like headline risk and a lot of headlines are moving um stuff this morning. Yeah. Um I don't know, right? A couple days ago everything looked pretty good like uh generally speak I not everything never mind. Bitcoin looks pretty good a couple days ago. Um and I still think it looks generally okay. Like I mean I would have much preferred not to see yesterday's uh candle, but like you know I'm I'm looking you know you you have Sailor buying 2 billion right at like the pico top of of our recent

rally. I don't I'm actually not sure where he got the two billion. I wasn't really paying close attention to it to be honest. Um but again his execution was like pretty poor. Wasn't it like 95 or 96 or something? One thing interesting on that is have you noticed how they don't in the announcements now they're not saying the average price they're like making you do the math. >> It's it's it's like >> hard to do now, right? Um so like I wouldn't be like so I think it just comes down to like equities at this point like I think Bitcoin is like generally doing well holding in. I think you know flows have kind of returned.

you had a couple days of, you know, outflows like I think I think appetite is is starting to return to Bitcoin to an extent at least much more than we saw in, you know, Q4 of last year. And what I'm kind of looking at is is equities and what happens with kind of like trady markets. You have like a lot of a lot of things uh seem to be happening again with, you know, JGB yields just spiking. There's just like a ton of [ __ ] happening in Tradfi land that um while not directly related to crypto, like if it causes equities to kind of hiccup a bit, crypto being weak without, you know, a bid for most [ __ ] will just, you know, continue to get smacked. So like kind of my

my my I guess game plan coming into the year was like I I was going to see how the first couple weeks of January went with respect to like risk appetite. I wanted to look at a bunch of the per dexes to see like what do volumes look like? What does open interest look like? Like what what does trading activity generally look like as like a proxy for risk and and and behavior. Um, I wanted to see how some of these perplexes performed post TGE, which we could probably get to with with Lighter in a bit as like another, you know, kind of proxy of like where activity and, you know, capital will like coalesce too in that space, right? There's probably, you know, room for one, two, three good winners there maybe, but like there's not room for as many as there are. So, like I think that

would be a pretty good proxy. So, I'm just kind of like using this month as like a gauge of like how I want to allocate. And right now, it's kind of playing out to like yeah, just like Bitcoin's look looks okay. Like I like I don't think buying here or buying 75K if you get like a retest of Sailor's Average is going to really make a difference if you have like a a two, three, four, five year horizon. Um, but if you're like tactically speaking, like I'm not really itching at the bit to take any like tactical trades right now. um looking at things like Hyperlquid with all these huge unlocks coming from the or not unlocks but like unstaking of these huge whales, right? You have that tornado cash whale um as well. So like I'm looking at a bunch of these dynamics

and just kind of waiting to see how they play out and then looking to buy just like good coins that I, you know, that I can be comfortable holding because they're not complete [ __ ] So like it's just like the market is just like very like there's a couple good things out there. there, I think, a couple good opportunities, but it's just mostly not great. And I think there's probably just better opportunities for tactical, you know, trades in other markets, like, you know, small caps or ripping, right? There's just like a lot of [ __ ] that you could like probably have an easier time with than trying to pick out a few good alts. Um, >> yeah, I would say you've played this quite well. I I don't remember if it was right before or right after Thanksgiving. You mentioned you were, you know,

>> done. Yeah, you were just like, I'm done through your end and I'mma wait through January and I think you've done incredibly well. What are what are some of the the opportunities you're seeing? I mean, we've had onchain run a little bit over the weekend and then get whacked down. You're starting to see uh some life in some very small pockets. Um but it doesn't feel like a meaningful bid for any of the coins we know. And so what what are you looking for more specifically on where you might get excited to bid? >> Uh yeah, it's a good question. Honestly, like I I don't have a great answer for it. It's it's something I'm trying to answer right now. Uh I'm trying to figure out what I want to bid. Uh like the lower Hyperlid goes, the the more and more I get really interested in it

as like a a place to actually take a bunch of stables and just put them into. Not from like a staking yield perspective or anything, but just like, you know, it makes it like a I don't know conservative conservatively just say $750 million a year, right? It's more than that, but just conservatively. And the further it goes down as you churn through a bunch of these people who are up over a year, many multiples like that tornado cash whale uh who's been unstaking and selling like every week for the last I don't even know at this point. Um for the last like month plus uh he had like an average price of 8.8, right? So like these people are up and they're all churning through their positions which I which I think is

healthy. Number one. Number two, the fundamentals seem to like like generally what you look for is right like price price and value valuation's going down, but all the like underlying metrics are are stable or growing as like a really good sign of like dislocation in like a ship market. And it seems to me that Hyperlid's like underlying um fundamentals are are pretty resilient for the most part. Like obviously trading volumes are down, open interest is down, depressed from, you know, all-time highs, but like money-making, other revenue sources, the HIP3 things, there's probably pretty good opportunities there, right? I think Kinetic did really well over the last like month or two, but you have to be like really tapped into these EOS to um

you know, be ahead of that >> and a lot of a lot of that reflexivity in the revenue volumes is just cyclical like you're seeing it across the board in in all the exchange tokens and it's it's quite normal. And I'd say the distribution to your point like the distribution we're seeing in tokens changing hands now is quite bullish for for a longer term longer term price action. >> So I mean I don't have like many good opportunities like Hyperlid is the one that I'm like I'm super like I I I I know it very well too because I've been following it for a long time. So it's something that like I don't know maybe that's like not a good thing, right? famili being familiar uh or too familiar with something can be comp I guess you could be complacent but like I don't know

I'm curious what Yan and and Cetrus think when you just like look at the landscape of of tokens of something that like if you wanted to allocate like a significant you know like 5 10 15 20% of a portfolio to as like a spot position like where like where would you be looking in in Q1 in terms of of things that probably have a good amount of upside potential if the market recovers liquid enough that you could do something like that and be comfortable holding it. Um, yeah, like I'm curious like what that universe of to tokens looks like for you.

>> This is basically just like my portfolio. >> Yeah. So, please setters, what do you what do you have? >> I mean, um, I don't know. I'm still I do think this year will be a turnaround year for Salana. Um, I still feel good as like that being my L1 token that I hold. Um, I still think Zcash is interesting here. Um, I mean, pump I still I don't know. I still think that like pump has a lot in it. uh we kind of saw it a little bit over, you know, looked it looked for a

few days there that like the trenches were back and then pump volumes were up a lot and then bags came and then you had you know >> I mean to be fair >> the same thing again, right? >> Like actually one of the strongest coins uh year to date in crypto. >> Yeah. I think that like nobody wanted to I think there were some coins that like ending last year nobody wanted to straight up show that they like own them. And I think pump there's like no communication for a few months. Seems like there's like this Rico lawsuit that I don't know how big of a deal it is or not but it's something that like they're not talking about. Um and so I think a lot of people just didn't want to have that going into the

new year. Um, but you know, I think that it was kind of disappointing that it again crashed and burned that like speculative area, right? Um, it looked like it was going to be pretty good there for a bit and then you have the same old story where some like web two or like AI founder comes in and launches a token and ruins his life, right? Um, and I mean it didn't ruin his life. Probably he'll be fine. But like, um, again, there was no follow-through, which is just the same thing we've seen over and over. And it's like at this point, it's very hard for me to keep up with that sector of the industry because it just

seems like it's just let down after letdown. And this gas token thing looked like the first time that people were excited again that something was going to like real come out of this. And then once again the the founders like yeah I don't want to have this token anymore. Um and it kind of just like killed everything there. And then I mean the overall macro also just killed that too. So um it's clear though that there's always people wanting like that white whale token. You know we were on Thread Guy stream what a couple weeks ago.

>> Yeah. The white whale one. >> Like I don't know. So, like these these meme coins still have they still have this this there's still enough speculative capital that's always kind of like playing in these areas. Uh it's just like I don't know, man. It just seems like lighting money on fire these days, but the the moonshot's always there. I think with like Bitcoin specifically, um whenever we get these macro, everyone's always like, is Bitcoin this like macro asset hedge? Is it like this tech stock like NASDAQ?

And um I think like at this point like Bitcoin is really its own thing and I think for investors that makes it a really nice asset to own. I think for traders it can be really tough because you don't know how it's going to react to certain headlines and stuff all the time. um like why was it strong with gold in the past and now it's getting trounced by gold? Why was it strong with NASDAQ in the past and now it's getting like trounced by NASDAQ? But if you're like an investor and it's a part of your portfolio, it actually has a lot of nice that's like reduces your portfolio risk by having it like so uncorrelated to everything, right? Um but it's just

interesting that like we always seem to have this discussion whenever there's a macro thing. It's like what is Bitcoin, you know, like is it this I think I think for Bitcoin like the long-term the long-term use case is like very clear that a digital non-s sovereign uh bearer asset is something that you would expect to continue to be incredibly valuable in in this world and especially the way the world is going. But I think like still to this day like over the short medium term it's very difficult at times to understand what really drives Bitcoin price and like people will say oh it's OG selling or at the end of the year is tax law stuff or like fund shutting down. Um

it's just a really and then this like the start of the year turns out that was like mostly sailor right. Um it's just a very hard asset to kind of predict over the short medium term to me. >> Yeah. On the the sailor front, uh I think that caught everyone by surprise. He depleted >> I had no idea where he had that money. >> That's all uh ATM sales because he's still at a 105 or 1.1 MNAV. So I mean it's not what he's doing before, but it's still technically accreative to shareholders. And so, um, yeah, >> it's actually pretty good because it got down to like 08 or something.

>> Yeah, it got down, but they helped that Bitcoin nuked. Like Micro Strategy sucked and then Bitcoin nuking brings the um >> and so yeah, he's at he's over one. He's able to do it. It's impressive that there's enough of a bid for uh uh strategy in for the equity. He's just selling equity shares. Um yeah, he's deployed almost 3.5 billion this year alone. That is definitely what's been driving the market. It's kind of nuts to see that there's still, you know, that much uh supply overhang. um you definitely would have expected that to come down quite a bit with with where

prices are, but I think maybe there's some you've seen some of like the quantum headlines and and and so you know that might scare some people out and then it there's the domino effect of oh man if it's going to scare some people then you know others will will pull back and and so uh regardless of of you know whether you think it's a real risk or not it it definitely has some impact on price um particularly Clearly, if you know, you're thinking of this as the long-term buy and look away type of asset, this potentially, you know, invalidates that to some degree. Um, >> yeah. I mean, for pension funds, right, wasn't that like the guy's recommendation was like pension fund allocation, right? And it's and it's a good point and it's like it's true. None

of us really know how big of threat it is, but the market perceives it as a threat and like that's the bottom line. Whether or not you do is like irrelevant. It's it does like the market obviously does, right? >> Yeah. No, for sure. Um, to some I guess you know it can be an opportunity if if you if you think it's it's not, but it can be an overhang particularly because it could impact future bids that are no longer going to be there. I don't know that this really changes the thesis for me at least. Um, so I'm I'm, you know, I think it's a headwind but not an insurmountable one.

Um, yeah, in terms of the the I guess the smaller stuff when money isn't really flowing into crypto like you know go there are periods where where money is just flowing and and you see that uh in terms of the the pace of ascent for some of these the quantity of them that are ascending right it's just like a function of how much capital is going into them and and the the length and and height that they can get to and so in these environments I feel like if you're not in some insider cabal where you're getting a really early look like you you have to be so quickly in and out of this stuff because you see the draw downs of it, right? It it it like on one hand it can be beneficial if there's only one

asset running because all the hot ball of money just focuses on that. But um it's still a pretty treasures game and one I don't think I I can I can do well. And so I usually just sit those out and then um just watch them rip and then watch them dip. Um it it's it's actually kind of relaxing to be honest versus trying to stay on top of all them just like assuming you're not going to make money on this and and it's easier to to just not focus on it. Uh yeah, pump I mean I think for me it's it's um and this applies to to venture also is just looking at revenue generating businesses that have some degree of moat that that are also somewhat

cycle agnostic in the sense that even in a down cycle like nothing here is cycle agnostic. It's just the degree to which it is. And and basically, you know, in a world where you're at the bottom of the cycle, is this thing still fundamentally fairly or like cheap in in a in a in a decline that I think that's like a good floor finding exercise. I mean, like even pump, if you're looking at 30-day revenue and annualizing it, you know, no one would say that trenches are hot, but they've been pretty they they definitely picked up recently and I think it's trading at like a 5x buyback on FDV, right? So you have that. Um, and buybacks are great, but the thing is they they they they don't necessarily

offset flows. So I think what we'll see come into play at some point is the one-year anniversary for it, right? I don't think it's a factor yet, but there will be some front running of that. Whether that's people hedging to lock in the the gain and and kind of, you know, running the risk of of keeping that trade open um for a shorter period of time or or just trying to people trying to yeah, hedge somehow. uh or or people just getting out of the positions that are liquid in anticipation of people selling or hedging. So that that could be a headwind but um I mean yeah the the the price of it is the on fundamental fundamental basis is pretty good. The dexes I think are still reasonably

cheap. I mean it'll be interesting to see what happens with the uh launch of of NYC. I think that's slated for sometime in 26. I'm not necessarily holding my breath, but um I think that could be a boon for uh liquidity on pers. I I still think, you know, there will be people who want spot and there will be people who want per. But the the issue on the equity front on the per side is just like having market makers do that well. And and so if you can have the onchain assets be there, I think that bolsters liquidity a lot. It helps with funding rates. Um I think you know there part of the cost of the funding rate situation is this off-chain hedging and and

offchain marketing making that need to be done. And so if you can bring that all on chain I think it does reduce costs and and ultimately can bring um uh funding rates down or or just increase liquidity and and that has you know knock-on effects in terms of assets like Athena which they can do basis trade on on some of these assets and and you know people naturally want to be long. uh the like equity is obviously there will be shorts but I think overwhelmingly people prefer to be long that stuff and so Athena actually comes into play in in a really productive way because they're the short leg right they hold spot short per and so they can provide that sellside liquidity that most people are worried about where that's going to come from um so I think that that could definitely be a boon I don't really see

that being too big of an issue for um crypto in particular I'm sure it's going to be KYCed and gated right And so you basically have the people that want to follow those rules can can bridge the liquidity and then everyone else who doesn't want to can just benefit from that liquidity existing in in in an area that they can access. >> Yeah, I think net net it's going to be massively beneficial for a lot of these a lot of these per deckes to your point the liquidity will just continue to get better. Um to put it kind of super simple on why this is important is like equity pers are pretty well known for having horrible after hours and weekend trading. Uh lots of lots of shenanigans takes place funding gets out of whack.

Instead of pricing, you know, the New York Stock Exchange, the NBBO, uh for pricing, they they go after they kind of do their own internal pricing. And that's when pricing can get way out of whack because ATS's don't even alternative trading systems don't even run on the weekend. So they're having to do a lot internally which just makes it really really tough. So with 247 when this does go live, it should help traditional uh equity per models pretty well. Now what what does this do for CFD type of model? Something more akin to what oium will do and variational will do on the RFQ side, you know, TBD. Those are generally speaking just the sofur plus whatever premium they want. But I think overall this is a net net net

beneficial for everybody using traditional funding on equity per. Um you know I think this is this is ultimately good. I mean I think there was a lot of people bare posting that this is the death of per dexes but I think the narrative over the last two to three years has been that uh we ultimately want to replace tradey rails and now it's like okay they see the threat they're coming in to play ball and now it's time to to step up to bat and and perform at a a very high level. And I think there's a few teams that'll do that and and continuing to uh innovate and push forward. Some are partnering with Trady people, some are doing it completely internally. Um but netn net I think this is very beneficial especially for people who love trading equity per um yeah there's still a cost

of carry for that trade and you might be better off holding spot. But if you want to uh play leverage on some sort of event like let's say you Nvidia has earnings on Thursday and you want to place the trade a week before you can actually hold it through the weekend and you know go to sleep at night like decently well um if you think that's an attractive entry. So I think those types of trades get a lot more attractive and you can kind of sleep better at night with those. >> Yeah. Uh and just to add to that, the uh you know early on part of the the crypto thesis was kind of a regarb if you want to loosely call it that and and >> with these players coming into the space you still won't be able like they're almost reintroducing the regarb in terms

of users not needing to KYC to access the liquidity. Right. So I think like yeah like you mentioned the 24/7 component you you see a lot of these platforms needing to uh reduce the amount of risk they're able to take because they have to warehouse it or get creative solutions in in terms of how to not be too exposed in one direction and and so yeah I definitely see it as a boon um big time and and hopefully can also help with with option space as well but we'll see. >> How do you think this helps with the the option space a little bit? Uh well if it can I think you can get equity options because you need uh the spot whether it's spot or per liquidity to be there for market makers to hedge uh to provide like if they want to sell calls they

need to long somewhere else and and so if they need to do that on centralized like on on non-crypto rails it's it's a lot harder for them but if you can kind of do it here um it's potentially viable but it'll be an interesting test to see because you know that this is always that pers are uh preferable to options because they're easier to understand. It's very vanilla. It's it's pretty linear in terms of exposure. And so um it'll be interesting to see if if like the whole market for equity exposure just continues to be dominated or is dominated by per in the same way that that crypto ends up being.

>> I think largely they probably do to your point. They're just this more simple instrument. And I mean internally I've been quite bullish options in crypto and I still am but not for retail. I think it's it's it's a good revenue and business line for these perk dexes. They have a lot of pricing power. It should be a high margin business for them. But it's it's largely catering to institutions. Like I think if you can do that well on the majors, especially uh players who are more focused on the majors, I think that's an optimal way to hedge. I think for hedge funds that have a lot of the longtail, I think hedging via options is actually quite poor. And I think 1010 is a great example because at the end of 1010 your your alts were still like broad basket was still down

25% but after that wick was over ETH was you know down 3 or 4%. So all of a sudden your hedge in that moment was quite horrible using uh options but if you were able to do that on the per on the longtail it works quite well. So I think it'll vary per hedge fund and per manager. Um, but I agree. I think I think it's going to be a high high margin business arm for a lot of these teams that got it get it nailed down. >> Yeah. And then the other question I guess is you see a lot of like uh retail participation on in equity options on the zero day expiry stuff. And then the question is you know it it is comparable to mega high lever uh per but it's it's per are path dependent right? if it like

if you're 100x levered and it wicks down 1% you're out with an option it can go down 3% and then pump back up and and you're still fine. So there are are trade-offs there. I think your payout is going to be quite a bit higher on the 100x depending on you know where you're buying your option. But um yeah, it'll be interesting to see if we see some kind of movement uh there. Maybe if like is Robin Hood or one of these guys going to provide a front end to get exposure to these equity per do we think or um >> I mean the speculation is lighter obviously uh every everyone speculates that and you know Vlad's talked about it a little bit and whether that happens or not TBD um communications with the team is that they they are partnering with

with Robin Hood in some capacity I think Robin Hood's a great distribution angle but I don't think it's the end all beall for lighter um like the the team is obviously quite count talented. Um they built in-house RWAS per spot. The bridge even is all in-house and so they didn't leak value anywhere and I think that's a very strategic move on their part. I think Hyperlid has leaked value to unit and I think if they could go back and they had the capacity they'd want to build the spot instead of let unit come in and do that so they're not leaking leaking any sort of value there. And I think hyper or lighter is very in tune with that and realizes they don't want to leak value. So I expect as they build out their you know unified margin their options as they've got net interest

margin on deposits in the bridge um and integrations I think they'll be very keen on like keeping that value in house. Now, what does that look like with someone like Robin Hood? Obviously, they'll bend the arm type of thing, but >> why would Robin Hood then want to leak value to light because they already everything right with Koshi? Like eventually Robin Hood, you know, punted Khi out and built it in house. And so this is obviously >> right because they have the users already doing the activity that they're going to be doing anyway. You're just giving them a new product under the same user interface that they already like, right? Why why would you?

>> And it's super intuitive, super easy. They got their 401k, their trading accounts all in one spot. So, I think it will be tough for for those guys to leave. I do I do agree. But I think ultimately, back to the conversation on NY listing uh the moving into 247 and having digital securities on there. >> Uh I think ultimately they they're competitors at some point. they won't admit to it now and they'll say, you know, the the market is is super competitive, super big, but ultimately I think they'll end up competing for the same users and same liquidity and same flow. So, I think they'll end up end up competing at some point down the road, but no one wants to hear that.

>> It's not good for the bags. >> No, not good for the bags and no one wants to talk about >> But they they're just using it for settlement to start, right? >> I don't think there's been like any clarity even on that yet. Like it's it's all speculation right now. >> Gotcha. >> Yeah. >> How have you uh how have you felt about lighters everything post TGE? >> Yeah. >> So I got to meet the team in here down here in Miami right before TGE. And my one piece of feedback to those that I talked to was, "Hey guys, you need to be transparent on your tokconomics and your financials." uh whether that's hey we're doing x amount of buybacks or hey we're doing buybacks but it's going to be 10% because we're putting 90% into growth

and operations for you know our native a native stable coin options building out the sidecar unified margin things like that I think that would go a long way they didn't do that tokconomics were released really really late they're still not clear there's no guidance on how much will be used for buybacks which I don't think necessarily matters but we just need to know that there's like that conversation is happening and where flow is I'm firmly in the camp that one of the reasons hyper liquid is such a good asset to own last year was because they were hyper transparent like hey I know 97% of revs are going to buybacks as an analyst that's an easy asset to bring to IC like that is quite easy easy you can model that well that's an easy asset to go to your if you're a PM that's an easy

asset to go to your LPs with like that's a good story to tell with lighter you can't tell that story yet because you don't know where dollars are flowing I don't think we need a true income statement yet or cash flow statement, balance sheet, things like that yet. But like it I think it's pretty clear we're moving that way with the the new market structure bill. And so I think they should very much so get ahead of that in some degree. Um and so I was quite disappointed that they didn't really lean into that. Uh after conversations with the team this week, I think think they realize that mistake. Um I think they'll start leaning into that a bit more. um because it's really hard to to model an asset uh an invest investable asset when you don't know where any flows are going and so that that gets

that gets really hard. Um but overall I think that the team is the product is still good. Um they're working on their sidecar EVM that should be out in a few weeks and then unified margin will come after that. I would expect expect that to come in vaults so you'll be able to deposit into the LLP and use some of that as collateral on your per positions. Um and then I know they're building out options. Um I'm hopeful they're building out this internally and not using um derive or or cayenne or something like that. And so if they do that, I think that's a high margin bit high margin business arm for them. And then they've got net interest margin on deposit. So I think they're they're in a really good spot. They just need to flip uh the script on uh transparency around financials. And then I'm a lot more

optimistic. I think they're in in a prime spot to dominate the US. The OIM specifically, I think those two can be big players here in the US. They really just need to lean into the transparency and the US market structure bill and kind of get ahead of the curve and then they're going to be in a great spot. The product is good. Um they just need to be more clear with with allocators in retail on where flows are going and financials and things like that >> makes >> because outside of outside of like AIM in the US they don't have too much competition variational. I'm actually not sure where they're they're based. Um, so I think I think they've got a good path to dominate the US. And if if you end up do having, you know, crypto rails, you know, doing some settlement and whatnot for bigger players, who do

you think it's going to be? Do you think it's going to be Hyperlquid, who's not US-based, or is it going to be Lighter, who's a US-based team, who has their founder in DC all the time, and meeting with regulators? Who who's it going to be? And I think that's that's that's an uber bull case, but even without that, I think they have a great product and and new business lines coming that are going to be high margin. >> No, you're I mean I' I've used Hyperlid, not or lighter. I do like it. I think it's a good product as well. Um >> so yeah, I mean I agree. Um he's kind of playing the uh >> the lobby regulatory uh card here. I mean, smart, right? It's like kind of like the Coinbase approach to an extent.

Yeah. >> So, >> and then I'm also like somewhat concerned for those that don't know, they increase their fees or they're raising their fees to market makers. Um, while I've been in the boat that I think they have pricing power there, I wouldn't raise them this much. Um, so what they're doing is they're requiring market makers to stake. Um, they haven't been clear on what amount, but stake x amount of light to get the discount back to the current fee model that they're at. Um, I think this could this could pull liquidity um on their platform and and widen spreads a bit, which I'm not too optimistic about. My my thing is you should probably keep market maker fees as low as possible for as long as possible, which gives you time to ship differentiated products, which is your options, unified margin, you know, debit

cards, onoff ramps, things like that. And while keeping liquidity really good, because then once you have those products, then you have sticky user, sticky liquidity, and things get a lot a lot better for them. I mean, because ultimately their model, the pee off model, trading fees themselves aren't the long-term money maker for them. It's the insul incillary products and flows. >> Yeah. >> I don't know if I like that model. >> Yeah. >> Because as a market maker, >> basically all your profits can be wiped out instantly by the token just like dumping >> for some reason out of nowhere. Yeah.

And then you can say, "Oh, you could like borrow the borrow the >> if you're holding it and >> the token, but then you're paying the funding costs with it and um >> it's not clean." And it does >> it's increasingly hard because a lot of these people forget the market makers, they're also usually investors to some extent. And when they can't model a floor price for an asset, which comes back to the transparency on financials, they're not going to step in and bid because to your point, if all of a sudden they're bidding at $2, it drops to 150. They can't take that kind of hit like that.

>> Can you imagine if you had to buy DYDX to market and it went down like every day for three years? >> So like I mean it's so like there I mean clearly to me it seems like it's like okay like they want to sync for for for the token. Uh, but like it seems like they could probably get a similar result by like, you know, with with USD staking or something like something that's different. Like I don't like if they want to in like I don't know. I this seems like a very suboptimal uh solution. >> I think they chalk it completely. That's what I would do. I'd be like, "Hey guys, this is a this is bad idea. Let's go back." Like I that's that's what I would do.

>> I'm very against at this point after all the years we've been here of like forcing people to own tokens for different reasons. Like I don't think these utility type plays ever really work. They always just add friction. They always turn people away. And there's been enough times people have got burned now >> that I think there's just a lot of just apathy towards any of these models. What would you uh I mean if you if what what what would a a better solution flip look like to you if like if they were I guess kind of intent on increasing fees like what would you do instead of this because this obviously doesn't seem like

a good >> I think right now I'd leave as as is not even try it right now and just >> Yeah. No, I wouldn't because your money makers are going to be these other business lines and that's how you're going to build brand reputation and that's where I would lean into. I would I mean again I think the reason you keep fees as low as possible is you're buying your time to ship differentiated products. >> Yeah. >> And I think that's what they should keep doing. >> That's what I would I would do if I were them. And then you can really And then also you have to stake in order to get access to the LLP.

>> How much more are they making from this increase? Like assume assuming volume doesn't leave assuming market makers don't pull liquidity because doing this >> because it it depends because we we don't even know like what tier how many how much you have to stake to get to this fee level and so you we don't we don't know there's not much transparency that's been super vague >> um which should be out in the next you know 8 n days um so we'll know more then and we can talk about it next week but right now it's it's very vague and I don't love that and they're doing similar stuff with the LLP where you have to stake in order to deposit. I don't love that because they're trying to bring down the LLP TVL because they want to be able to have higher yield there because law of large numbers once

you're a billion dollar market maker you you can't keep running the same strategies to get the same returns. And so I think they should just let it keep growing. Let it keep growing and you're you're not going to have these crazy 50% APYs in your vault. You're going to have somewhere between eight and 10. I think that's just fine. I don't think you should be optimizing for max APY in your in your vault at this point in their in their their life cycle. >> Makes sense. >> Um yeah, I don't I don't I don't think I have any more questions on lighter. I think you you uh hit everything there.

are they able to to just because you know like the per business from a revenue perspective is very attractive, right? That's that's very high margin revenue. Um yes, it's volatile with activity, but it's still fairly consistent and and can scale well. Um, I guess it it's not necessarily that sticky because people can choose somewhere else to trade whereas a product like a credit card or something like that is definitely a bit more sticky. Once you're in, you're in. So, uh, what I was going to get to is does the math math for them to get a decent amount of revenue from these other ancillary services compared to, you know, um, the the the

trading side? because I I get to some extent if you if you know it is somewhat of a commodity uh providing trading and so you know you you definitely have this this gra assuming everyone's getting relatively comparable execution you do have this kind of race to zero on fees and so it makes sense to try and win that and and almost use as a loss leader to to build out you know your user base for these other assets you can monetize. I guess the question is basically, you know, h how how monetizable are they and and when you do monetize them, does is it get to a big number?

>> Yeah, I would options it depends what you charge. Uh but I would just Yes. Like I've been modeling the numbers. I'm not at a spot like going back and forth with the team that I feel comfortable sharing them, but like yes, they should be, you know, great revenue drivers that like per, you know, for the foreseeable future will still be the main revenue driver, but option should come in at number two quite shortly. And I think ultimately what these these guys end up doing is doing a subscription model um similar to Robin Hood Gold. I think ultimately they end up doing a gold service to where all of a sudden, you know, I'm a retail user and I want to pay whatever $4.99 to trade on lighter and in doing so, like paying for this service, I all of a sudden can use my

LLP as collateral on my perks. Then I also get opt access to options which will have a higher fee. So I think there's interesting ways they can monetize that going forward. But like does the math math? Like, yes, the math is good, but it ultimately depends what they're going to charge on those products, which I'm not sure. That was a non-answer answer for you, Deion. >> No, no, I get it. >> Right on. Um, I don't think there's anything more to talk about per >> is burnt out on purp.

>> Yeah, I don't know, man. >> Cedric doesn't even trade burps, bro. He probably hates these conversations. No, I mean >> he's an angel. Come on. >> Spot max. >> You disclosed your monad angel even when it wasn't brought up and you haven't mentioned the lighter angel once. >> No, no, no. I not angel bulk. >> Bulk. Yeah, >> which I think is we'll see how it's just a lot of one. >> Um >> it should be good. >> Yeah, I think they're they have like a test net right now. So, we'll see how they go. I mean the salon specific perk market is wide open still and I do think that there will be a winner there right um because there's just a lot of people that use Salana and would rather just

use Salana for perks right so I still think that that alone is like its own opportunity and then there's like the bigger which is like going after hyperlquid and stuff right uh but um I am more interested on like the technical you know size of curves rather than just like raw um as a trader. Um but uh yeah, I don't know. The It's funny that the market totally just retraced everything as we've been. This happens every time on this podcast. It's like we think it might be okay and then uh full retrace of everything. I don't know. This it's funny. This kind of reminds me a bit of I mean last year I guess was worse to start the year um

because it was like down only every day. to this day there's like I don't know it goes up and down and stocks aren't like terrible yet but uh yeah did you guys see um so XM so Monero has been uh performing quite well to start the year and there's always kind of this like Monero versus Zcash debate. Um, it turns out like the the reason for the Monero pump is someone stole like what 200 something mil and then was just swapping uh Monero on like different dexes to then to get out. I think that so we kind of talked about this internally on like the research

call. Um, like Monero versus Zcash is really interesting to me. Um, I think that Monero is really like a pure privacy play. Um, it's also associated with like nefarious criminal activity, right? It's like it is the privacy coin for criminals as it stands today. And a lot of people who are bullish on Monero will tell you that you want to own the privacy coin that criminals like, right? because that means it's doing its job well. Uh, and that's a and that's a thesis with it.

Zcash sits in this interesting kind of like middle ground to me where I don't know if it's fully a privacy play. I also think that Zcash has done a good job of like Zcash, the privacy narrative for Zcash is is from like a freedom angle and like individual liberty and out of like the the eyes of the government and stuff whereas uh the Monero privacy angle seems to be more about like um like all the way um just like pure crime privacy I guess and maybe maybe that's wrong but like that's my perception and that's I think the perception that a lot of the market has, right? Um, and but then Zcash also has this like Bitcoin hedge angle which

I'm not sure if Monero has. Like if you think about institutions if they were to buy a privacy coin, I find it very hard to believe that they would and I mean maybe they would buy privacy coins at all. maybe and like that's probably a good thing like that it just is a totally individual thing but um it would be really hard for me to see any sort of like big money even like funds get really behind Monero um whereas Zcash it seems like there's there's much more willingness uh to get behind it and then Zcash has got like this tech angle um it's like the quantum thing with Bitcoin right some people are looking at

as a hedge now. Not that Zcash is quantum resistant, but there are, you know, paths to make it and like the shielded pool by nature makes the coins less quantum hackable to begin with and everything. Um, so I don't know. I've kind of just been thinking about these two recently because I think that privacy is clearly um a narrative for this year and it will be moving forward. Like I definitely believe that privacy is coming back and so it's like Monero is pure privacy. Zcash is kind of this hybrid with like privacy and then this other like quantum zk tech stuff, right? And I mean I own Zcash. I don't own Monero.

Um but could I see a world where Monero is the one that does way better this year? I could for sure. Um but I think uh I don't know. I think these like are pretty it's like an interesting dichotomy between the two. Um and just seeing like what moves prices like a lot of Zcash's movement at the end of last year had to do with the Winkle Boss Twins aping at that right and then a lot of the Monero price action this year had to do with the $200 million hack. It just like it just kind of shows the the buyer base and you can say that like um the tech like at the end of the day it's like criminals could use Zcash as well. Uh but the thing is that like they

don't it's like when Thor Chain was used as like North Korea's moneyaundering thing. Like it doesn't matter that Thor Chain is like this permissionless DEX thing. If it launderers enough money for North Korea, it's going to be under the purview of regulators like regardless of any of these arguments you make. Right. Um, >> so for me, because I don't know enough about either of these things to have a strong opinion, my strategy is I own both.

>> Yeah. I mean, that's obviously a >> I don't know which one will win, but if there is a privacy coin that wins, it's probably going to be one of them. And if one wins, the other will probably win, too. Just not as good. So, like, >> yeah, there's nothing worse than being right on the thesis and expressing it. I'm Exactly. I'm just owning I Yeah, I mean I don't own Monero yet. I still have some Zcash that I was buying >> uh towards the end of last year or whatever. Um but I I I'll probably probably pick up some Monero. That's like my my plan. And it's just like Yeah, I just own there. It's not like a basket of L1's where there's like a [ __ ] hundred and you have no idea like Right. It's pretty clear there's

only two in. >> Yeah. crazy. >> It's pulled back quite a bit. Like what was the the time period for the T-W into it and then >> Yeah, I was going to say it had like a pretty strong like yearly like it wasn't like [ __ ] spiking, but it was just like continually grinding up for months and months and months. >> Uh well, the big move it it uh basically fully retraced. It's not liquid at all. So on Jan 1 it was 420. Today it's 508, so it's still up a bit. But from Jan 11th, which I think the hack was on Jan 11th.

>> Okay. >> Or Jan. No, the hack was Jan 10th, I think. And basically from Jan 10th to the 14th, it went from like 450 to 750, >> right? And then it's kind of like consistently now drawn back down. >> It's where it would be if that hack didn't happen, right? >> Basically. So there's still there's still like you know there there is this privacy narrative and and these two there's like a lot of Yeah. It was January 20 sorry it was January 10th so that's exactly when the chart turned.

Yeah, >> it was 282 mil uh Litecoin and Bitcoin due to hardware wallet social engineering scam and then >> yeah just instantly started converting to Monero that's a lot of money man 300 million like >> so it all it all like do we do you know what time period it went into the the the chart at >> like was this an order of days or like over the next two or three days, right? It was just t-wapped, I believe, from Jan 10th to the 14th or Yeah.

>> Yeah. I mean, Zach tweeted about this on the 16th and so it was done by then, I'm assuming. >> Yeah, maybe not. >> It was on its way down. Yeah. It had already peaked. It peaked on the 14th. That was it like had that ridiculous. So if the hack happened on the 10th, the next day is when >> I don't know if they all actually but so like there might have been front running of this too. People saw that this guy was doing this and so there was more buying of Monero for >> sure people would Yeah.

>> Whatever happened to uh >> I was wondering how long it took. Basically if if you did it over the course of hours then you don't really have that much time. If you're doing it on a longer time period than you have Yeah. Whatever happened to the BAT token? Like the whole privacy meta going on. You've got, you know, Braves, you know, it, you know, their token and it's like not moved. Is anyone following that? >> Brave for privacy. Wasn't Brave like the Brave token was you watch ads and you get some tokens back and like that was how >> protection? Yeah. >> Has nothing to do with privacy.

>> I just looked it's still trading at almost 300 million market cap. >> That's more the b the browser was private. >> Yeah. and the the demand for a private browser would lead to >> Yeah, >> I actually use Brave. >> I do too >> to this day. >> Yeah, >> it's just like I've just been using it and >> I don't know. I still use Chrome for some things because sometimes uh sometimes some websites don't like Brave. >> Um >> did you acrew bad tokens? >> No. It tells me though how much time I've saved. It says that over my lifetime I've I've saved two and a half days >> by watching ads >> by blocking trackers and ads. 40 gigabytes of bandwidth saved and 4.3

million trackers and ads blocked. So I don't know if that's real or not, but it makes >> you watching ads go on news websites or like >> I don't know. Maybe it's just like pop-ups. The thing is you can like install your own >> like anti- popup stuff, right? I think when they started doing this, it was people didn't like build this in as automatically and everything. You had to download these weird extensions, but now I think it's pretty common to just block that stuff. Um, >> I don't know. I still like it as a as a browser. I don't use it for any like privacy reason like when I I did at the beginning for sure. I didn't like know any like when I I didn't know any of this [ __ ] man. Um, so I even like with VPNs, I'm like I

turned my VPN off my phone a few months ago because I was like, what am I actually getting with having a VPN on on my phone? It honestly just makes my life a bit more annoying cuz like a lot of things don't like it and then I've got to turn it off and I got to turn it back on and it's just like I don't know. I still keep it on my computer, but even still, it's like what is the real benefit I'm getting from it? And I've kind of brought this up, and a lot of people will say how like you actually should not use like VPNs are oversold for their like, you know, privacy benefits and all this

stuff. >> It's I think it's good to use when you're using public Wi-Fi. >> Oh, for sure. Things like that 100%. >> Yeah. or just apps that um I can't access wherever I am. >> Yeah. I mean I I was Yeah. I was never under the illusion that using a VPN was a super private solution. It was mostly just to like geo like avoid geo. >> Yeah. I mean that's probably and that's the thing, right? That's how I've just always used it to use it. I felt like, oh, I need to be protected. Like I need it's like I feel naked if I don't have a VPN on. But I think that's just like a psychological thing.

>> Something I started last year was I just don't do crypto on my phone. If I'm out and I'm not at my apartment, I just don't do it. It's such a better I mean, I do have I do have like a hot wallet to like ape some [ __ ] if I need to. But like >> I've basically never >> I want to do stuff on my phone. If I'm out, I want to not have to think about trades and positions and stuff like >> I mean I've basically never been able to do stuff on my phone. Um there was one time when I was testing one wallet and it was kind of cool. I was just trading. I had like some dollars in it and I was trading some like Salana [ __ ] coins like mother and uh some other stuff and uh I remember I

was in Japan and I was still able to trade some like I think what was the other one? Gecko or Gecko or something? Geeko. >> I was just trading these like meme coins, you know, with a few bucks. Um and I was like this is kind of fun. But uh yeah, I've never been the mobile. Yeah, >> trader type. >> I had centralized exchange access on mobile and then I never touched mobile in Ethland and then once memes in Salana became a thing. It's it's when I I the only wallet I have access to is a soul wallet on my phone.

>> Soul meme wallet on my phone. Exactly. >> Yeah. >> Yeah. Because you already kind of expect that money to be zero. And so >> yeah, I'm just trying to be as like as quickly as possible be exit liquidity for someone who's an insider. >> All right. Is there anything else we want to talk about? It's been 55 minutes. Uh >> are y'all familiar just one last thing, are y'all familiar with Jason Chow's kind of uh structural cyclical framework where he talks about cycles? >> Well, the way the way he kind of talks about cycles is I mean it's nothing no rocket science. I'm just going to kind of throw my own spin on it. It's like you've got your you've got early consolidation and you have the early early bull run which you know uh we we

might have seen with with Salana moving early. Um and then with the wealth creation we really saw with hyperlquid uh to some extent and that's kind of like phase one and two of a market cycle. Then phase three is is wealth distribution and you start to see a lot more uh PVP. So we saw that with memes and then most recently we saw this with perexes. Perexes were very PvP. There were incentives everywhere. everyone was fighting over which perp decks uh was going to win and which one had the best incentives and points and things like that. And then you really started to have wealth uh destruction and you have down only down chop. And I think the start of that really was like 1010. That was like the moment something had really broken. We had we had wealth uh distribution with all the PvPing going

on with perplexes. Then then we had the wealth destruction with 1010 and then we had we've had the sideways chop ever since. And now we're kind of at the point where I think we're in uh what he'll call phase five, which is which is the lull where where bad news is no longer nuking markets. Good news is also no longer nuking markets. And we s we saw that kind of late last year in late three early 4Q where good news was getting sold off. Bad news was just nuking prices. And now we're at the point where, you know, Bitcoin was down 2% yesterday and you had the NASDAQ and the Q's down two as well. And you had Nvidia down four. And so you're starting to see uh crypto, our our our Bitcoin asset, really start to uh react better

than equity assets for the first time in four months. So that's something I've been watching is like we talk about equity cycles and and market cycles is we're in this like lull period and you go from this low into the consolidation and into the early bull. That's kind of why, you know, for the first time in months, I've like actually started to deploy some capital and buying reflexive assets because it it feels very much so that bad news is no longer nuking markets. And yes, there might be some idiosyncratic stuff with certain tokens where where good news gets sold off, but generally speaking, it feels like we're in the the bottoming phase uh in crypto at least. And so that's something I've been thinking a lot about is like where are we in in this smaller you know six month 12 month cycle and it feels very

much so that we're in the low bottoming period right before uh you start to see the early signs of bull which we might have actually seen over this past weekend with Ralph running and some of these tomato and AI coins really cooking and starting to see some life and some random places but I think I think we might be at the spot where I'm getting quite optimistic that buys in this range are getting decent. >> Yeah, I mean I was getting optimistic too in the last few days have been like >> yeah it would have been a lot better if Sailor didn't just tell us he ate 2 something. Um, >> but if >> that being the driver of all of strength, I agree on a longerterm horizon right now, it's a it's a good bid, but it it uh like I wouldn't be

surprised to see like high 70s, low 80s and and that I think would be a really great time to to bid uh because yeah, for me, you know, I think for all thesis hasn't changed. And so, uh, yeah, the painful thing is just in that world, alts are going to be looking pretty ugly. But I I still think like you mentioned, yeah, if you zoom out, >> yeah, I think like in no rush to bid, but I think steady DCA from here over the next month or two, call it Q1 as a as a whole, I think is is getting really attractive. And that's kind of what I've been doing, buying the reflexive assets.

I might still have 20% down, but I'm okay with that because I've missed the first 60% 70 80% down in some of these names. >> Yeah. Yeah. I mean I I I think yeah that framework's like I think it it's yeah it's similar to like a lot of ways that other people have like spoken about it over the years like it's kind of like right you have like 1010 which pretty much just nuked every everybody who's like active in the market just nuked right and then you have like so that that's your like you know pricebased capitulation right there and then you have like what I I forget who who initially called it's like price based capitulation then like timebased capitulation which is effectively the wealth destruction and then the lull, right? It's like whoever didn't get

wiped out by the nuke gets wiped out by the sideways downward chop after the nuke. Um, and then it allows whoever's left or new money to come in to, you know, pick up the pieces and accumulate and, you know, set up the foundation. Yeah, it's like I think that generally makes sense. And I think, yeah, Q1 is is like the period you look for. And I think all of the things you mentioned as like factors or or proxies of what a like reaccumulation might look like are are are true. And it's kind of like look at other things that we were talking about before just like general trading activity on the perexes, right? Like is that is that recovering? It doesn't need to be at pre10 levels, but you know, you look at trends of things, right? Like is it increasing week overw week like

trading volumes, open interest, right? Um stuff like that is like a sign of risk appetite. trench trench graduation rates on meme coins, right? Like things that are like potentially leading indicators of flows into these names. I think yeah, it's the best way to judge if that reaccumulation is going to happen or not. And I think you're starting to see that yes, a lot of those things are pointing in the right direction. But yeah, to Yan's point and the the point we made earlier, it's like if if we retest Sailor's entry, which seems like a meme, right? Like it's such an obvious meme. It's like a CME gap meme or some [ __ ] Like it just seems like it's going to happen because it's like a funny outcome. It's a meme.

Like everybody's going to, you know, think of all the memes like it'll be like a Titanic meme with Sailor when he's finally underwater. Like just like it just seems so obvious and funny that like the simulation will have it happen. So yeah, like visualizing what your favorite altcoin looks like if Bitcoin's like, you know, minus 10% with a liquidation into 76K or something. It's like, yeah, that could not look great, but if you're not dead, probably a fantastic fantastic buy, which is, you know, where I would shove whatever money I'm willing to stake in crypto back into the market.

>> Yeah. The uh I think you you often see the like just in terms of sailor price, you often see that uh not not even a meme, people just trying to dunk on him, saying, >> "Yeah, >> oh man, look, he's bad. Is at his at cost average." That's not the right way to look at it. You know, you what you compare is the price of strategy when he started buying to now. >> That's not what That's not what Peter Schiff likes, dude. Peter Schiff's I know. Every time Every time he tweets underers like announcement of buys is so funny. Like today he was literally yesterday he was like, "Oh, after five years of buying Bitcoin, only up 20% from your entry. Not much to show for it. Should have bought gold."

>> Price strategy. Yeah, it's it I mean it's a convenient narrative for someone who's Yeah, >> it'll definitely be somewhat of a magnet. Um >> yeah, >> it Yeah, it seems. >> And then the lower it goes, the better as Emv goes and he can just start like there is some resiliency to the model in that he can like the lower it goes, the more cash he kind of gets unironically. >> And also like it's it's new Fed share front running is coming for that. Like even if like there's just so many things coming down the pipe like election midterm year like I don't know I just don't see a world in which like Trump and Besson aren't like okay like we clearly can't go into midterms with like markets in like some kind of you know

February March April tantrum like tariff tantrum like type pullback or something like we're we're very clearly in a world where politicians are like do these things right like I don't know. I It's hard for me to get bearish with like the backdrop of 2026. Um >> yeah, >> you also have the STEMI checks uh that'll probably come from tariff stuff. But the question is basically, you know, last time we got them, you had deployment across both equities and and crypto as just great great places to speculate. But the the question is basically whether that'll continue here, right? I assume you get some retail activity on on stocks, but question is basically will people

>> No, it's going to go draft accounts for the World Cup. >> Yeah. >> Yeah. True. >> That's that's where I'm going to send it. Let's be real. >> All right, let's uh I think we should wrap it. But uh >> Cool. I >> think that was a good episode. Um hopefully you know >> we started in Bitcoin was 90k and it's like 86 or some 85 87 >> 87 and a half right now. >> Must have been a pretty bad show. >> So >> we'll see where we are in two weeks. But uh yeah um thanks for tuning in. Thanks for everybody on the episode and uh yeah we'll see everybody again in two weeks.

>> See you guys. >> See you. Heat. Hey, Heat.