Hivemind: Crypto's Leverage Hangover, Hyperliquid's Resurgance & What's Next for Markets?

Transcript

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 everybody and welcome to another edition of the Hivemind podcast. Jose is not here today, so I'm doing the intro. I am Cedus, head of research at Deli.

We've got Jason, head of markets. We've got Yan, ventures partner, and we've got Duncan, um, Duncan, Venture Scout. Um, so I guess we'll just start off with markets. It's been kind of a weird couple weeks. Uh, there's been a few random stuff happening, but we got like FOMC today. Uh, so yeah, I don't know how maybe Jason like how are you feeling overall? I guess since like the October 10th um per ADL massacre, it's been like 19 days since that now.

>> Um, so I don't know what have you kind of like seen since then? >> Yeah. Um, I don't know. Like I usually after you get such a massive like extinction event for trench warriors in crypto, right? like people bidding things that aren't Bitcoin, ETH, you know, things that don't have an institutional bid or don't have like a structural bid from them from like, you know, revenues or whatever. Um, like when you get an extinction level event like you got on the 10th, like I got I got wrecked, right? Like I got I got hit pretty good on on a bunch of uh leverage positions I had on that were like, you know, super super low leverage. Um, I mean, you know, relative to crypto

standards that just got like wiped out, right? So, like if I got wrecked on like that, every you know, tons of people got got wrecked. So, it kind of like kills the appetite to bid, you know, tons of tons of assets. And so, like in the aftermath of those liquidation events, you pretty much just like go through a period of like consolidation or just like you just like kind of oscillate sideways until you kind of like find like a new level of equilibrium. You let like people repopulate the books, people, you know, like figure out what their new thesis is after that, like if things have changed. If not, whatever it is, right? Like it usually takes a bit of time for the market just to kind of like digest it and and let the dust settle uh before you, you know, either break down further or, you know,

reclaim some key levels and and move back towards like the highs. Um, and that's kind of like what you've seen, right? you had like a little bounce and then you had like another dump and then you've had like another bounce and and it's like been kind of like volatile in that sense. But like when you like zoom out on like a daily chart, it's all like happening within like within like that that candle's like wick for the most part, right? Or like the the the main portion of that candle, it's just like oscillating within that. And typically like the severity of like the liquidation determines how long that goes on for. like the more severe liquidation the longer you get that you know choppy weird appetite in markets at least from my experience. So like um now that you know you said 19 days so

you know almost 3 weeks moved on from that event um I don't know like I think if things were going to break down further they probably would have already you know stocks are back at highs um every day it seems like. So like I don't know I feel like that's like that was probably like a good event. I mean like if you have money and something like that happens you have to bid right. So like if you bid, I think that's probably still going to be a pretty decent entry on things that like are still showing kind of strength, right? There's been a few alts that have kind of retraced that that candle like pumps done pretty well.

Hypes retraced that. Like there's been some pretty good, you know, recoveries across the board. So I think you just probably want to look at the names that have showed some kind of signs of life and focus your attention on those. Do we find out if any like mark making firm or exchange got >> I haven't seen anything. Maybe >> there's been I think there's been like some decentsized ones but nobody like systemic >> and no one I mean it's hard to be systemic at this point from a market making perspective. Um but it looks like everyone just took a hit but no one is insolvent or at least not yet. you saw Wintermute come out and um all the uh the kind of the documentation. It seems

like it was market making firms and just you know individual traders that got uh that took the brunt of it. Um yeah there some charts got shared around on Twitter where people just did kind of historical analysis of of um events based on like you know degree of OI wipe and and I I hear you on on the time. I think that makes a lot of sense. And then but but generally when you have I forget the threshold of OI taken out and then you look at one 36 month returns after that. They're historically pretty strong. Um I guess it depends on what you anchor to, right? Is like is zero the the the bottom? Then then sure, right?

Everything is going to look great from there because that because of that wick. So I think maybe digging deeper into what they're using as a starting price. Is it the the wick low because then that kind of invalidates the the results or you know if it's something like a what the price settled at a day or two later and then going from there because that's like a realistic entry. Um yeah, it seems like macro is is still really strong. You have a lot of the mag 7 reporting this week and FOMC. So um that that's definitely going to be a big one.

But it's it's uh I think the the mo the worst part for crypto is just seeing equities rip and then crypto kind of sitting there. Um you definitely saw that that uh rotation from gold to to BTC. Um I think that that kind of took us to the current level and and now we wait. Um yeah, it it's it seems just like a gradual accumulation game. you know, you don't have the DATs bidding, but it's also, I think, a bit of a blessing to not be fully reliant on them because then the second they stop bidding, you get a sell-off. So, I think, you know, that that to some extent is priced in. Um, you have Micro Strategy potentially still being added to the S&P in in uh December, which is

probably roughly like 20 billion in in passive bid from rebalancing. Um, but it's not I don't think that's a shoe in by any means. >> Yeah, you've still had these like pockets of some things doing really well like Zcash has done insane over the past month. You've had some of the onchain stuff, some in like uh like Metadow, Clanker, other stuff in the base ecosystem. Um, you have some like robotics plays which I don't know how legit these are. Um, but they have had like this narrative with the X42 thing.

Um, so you still had these pockets of speculation where some assets have done very well. Um, with like it's kind of Yeah, there's kind of like three. It's like the majors mostly recovered back. Then you've had these different like niche assets that have like massively outperformed and then you had a lot of stuff that sold off that is still like where it sold off at, right? Um, and so yeah, I guess that's not too surprising to me. Like it kind of makes sense. Um, I mean like the way like at least like the way the market feels to me, right?

And like I'm kind of like I'm going to look more into this, right? But like I've just been like kind of thinking about like at what point like over the last several years does like the market feel feel like, right? And like it's not like a very scientific term, but like to me from like I don't know like July until like now it feel like where we've just kind of you know been chopping sideways above like 110K or whatever for like 3 months. Um it feels a lot like the summer of last year where we were pretty much like between like 55 and 70K for like six months, seven months just like whipping up to the top, whipping down to the bottom. You had the yen carry trade blow up in August which like wicked

every chart down a ton and then things recovered and took a couple weeks. >> Break out until the election like the election. >> Yeah, exactly. Right. It was like March to November and we pretty much just went between 55 and 70K for like eight months and like Yeah, I know. It's only been three months versus eight months. Like the choppiness of it at at the price range is what it feels like to me. Like it doesn't feel like macro toppy to me. It feels more like that. It just like Yeah, just kind of like just consolidating near at all-time highs for the most part.

>> Yeah, you're seeing a lot of like the big macro tutor uh was was on CNBC the other day and and everyone's kind of in this consensus that it's late 99 basically. There's a It's a Goldilock situation, but the setup is into a blowoff top, but by no means are we there yet, and you should still be heavily allocated to risk. >> Yeah. You know, someone, if you guys follow Alex Krueger on X >> posted a really awesome chart of like price versus earnings in like the dot bubble versus now. And it's like in the dot bubble, can I share my screen? Am I allowed to do that? Like I thought this chart was really interesting.

So, it's like you have the price versus earnings and it's like there is obviously like an insane divergence um in in the.com bubble that was hype whereas like chat GBT and this is like earnings is keeping up like pretty much in pace like earnings growth is keeping up pretty much in pace Yeah, earnings growth has been strong.

It's it's like it's such a it is such a weird market like Amazon today. I saw a tweet from Jeff Park like an hour or two ago and it's like this is what makes it so hard for the Fed is that like economy is doing well. Inflation is just coming down but like Amazon just laid off 30,000 employees >> of automation brother. >> Yeah, automation plus they like overhired massively during um pandemic. They're still kind of working through that. Yeah. I mean, you see the comparables, but I agree earn earnings are still holding up, right? So, you don't have this kind of similar dynamic of what you had in in the late 90s of, you know, your dark fiber and basically, you know, spending capex on building out infra with the hope that it'll be used.

Right now, every ounce of capacity is immediately used. Um, I guess the counter to that is basically, you know, you have the circularity arguments, but I I I don't think that, >> but I don't really get circular arguments if it's like >> you're basically financing your customers is the is the is what's happening. >> At the end of the day, you actually are like creating something of value, >> right? It's being used, right? It's not like empty server and and empty. It's >> not just like we're trading this [ __ ] thing back and forth. It's like you're actually making something that people are actually consuming, which is like the new net capital into the equation is like customers paying for these services,

but that's obviously not enough to fund the buildout. That's not enough because like Chad GPT is hitting some degree of of saturation, right? like they they they have a a lot of users already and and so I think the next wave is basically people building on top and building apps and and trying to like there's a lot of that stuff that hasn't been built and I think a lot of the future growth is predicated on the use cases that haven't really come up yet and and all of this is is building towards a world that enables these things to be possible. I think people look at like the capex spend and everything and how none of these these companies are profitable and they're like, "Oh, this is a bubble." But it's like there's a lot of money to kind of keep this going for a long time before

you actually need to people are going to stop funding these AI companies and then like the revenue will completely matter, right? But but but the other thing is like the actual penetration of AI into like most businesses I feel like is still so low. Like obviously like the really fast moving tech firms are like uptaking it pretty quickly but like in terms of actual like penetration into like personal use yes amongst like the younger generations for sure. Amongst the older generations, I'm sure it's like slowly creeping in, but amongst like kind of like small to mediumsized businesses, which is like a massive part of the American economy and stuff, it's probably so [ __ ] low. Like there's probably so much to go to actually, you

know, in terms of customers that are willing to pay for it and like efficiency unlocks that just like we really haven't realized yet because like these machines are like so slow moving and it just takes a long time to kind of update systems and and integrate these new technologies. Yeah, the impacts on GDP growth are still not really felt. I'm with you. >> Um, do you want to talk more markets or do you want to go into some of these? There's like a bunch of random stuff that happened. >> Yeah, I guess we can transition from from trady markets into their proliferation into crypto and >> into hypes resurgence and

>> Yeah. What do you think about um the the NASDAQ on uh Hyperlid? >> I mean, pretty cool. Pretty damn >> Are you back on the hype train, Duncan? >> Galaxy is just a a lock. So, I'm I'm holding strong on that. But have you uh checked out the uh HIP3 markets on >> Yeah. Well, I think that it's honestly really cool. I'm just like curious how this plays out because I was thinking like a few months ago when I was thinking about hyper liquid I was like well there is a chance that like stock trading does like they're like the main venue for that and now it's like kind of happening but

I think there's like are the banks and like the traditional people who actually [ __ ] have all the volume going to let this [ __ ] happen like or are they just going to kind of sneaky get away with it because the regulation's not clear and they can just like build a base of liquidity in traders from like you know offshore traders especially maybe I think it's it's [ __ ] awesome that they're doing it. I love to see it happening. I think it's like a really net positive for this space like if they can be the exchange and you can trade >> you know all these things.

>> I think that the demand is definitely there. um especially with you know we assume we're going to have more companies go public and and just the the advent of AI right previously was crypto was the only place to get some insane returns but now with um equities popping off I think that that you know shifts a lot of that demand plus I think people in crypto just want to get broader exposure with there being less in terms of quantity obvious alt to to just sit in um the question I guess is become s whether it's hyperlquid that wins with their model or or kind of like an osteium or somebody basically um like you know you have baseline funding rates

for per being 11% and I think you know for a buy and hold that that's prohibitively expensive for leverage trading I think that's fine um so whereas like you know I think is is a bit lower so I guess the question is like >> that's the minimum rate on hyperlquid >> it's just like the baseline rate for for funding in general when when it's when it's balanced, it's it's at about 11%. >> Yeah. So, these are not things you can just like go long and hold it, >> right? Yeah. You could like I mean, you could do like a 3x long for a short period of time and Right. And then that that doesn't necessarily eat into it to the same degree, but yeah, it's it caters to a a trader um cohort rather than any kind of longer term hold. But

like Hyperliquid's already absolutely [ __ ] Astium up in terms of volume. Like Austium on the 28th has 22 million stock and indices volume and Hyperlquid has like 87 million today on NASDAQ alone. Like Aium some days they do like here this day they did 100 million on >> Yeah. No, I mean the trader community is certainly there, right? and and I think they're less sensitive to that and so it makes sense but if you're if you're thinking you know these things are going to grow another one to two orders of magnitude then you probably shift to some past >> yeah the thing is if you're trading size too you do get way better execution on

OM >> yeah because AIM's model is this whole vault [ __ ] whereas like hyperlquid is >> it's closer to like the payment for orderflow model than >> they just bridge liquidity to trad five venues basically. >> Oh, they do. >> So, you get much better execution. >> What? Illegal? I feel like there's no way that's allowed, is it? They just take the position. They just hedge themselves out on a Trady broker. What if you're North Korean trading?

It's like, oh, we just put on this friend for our we just put on this position for our friend in over in North Korea. Like at Hyperlquid, it's a >> They're not really putting on the position, though. They're just hedging >> and you don't you don't own the underlying, right? So, you don't have any governance. So, if it was, you wouldn't have North Korea. >> You're just in like a one v one PVP off against >> Well, there's a hyper does the is HLP not participate in in uh >> No, I don't think so >> because they're all hip three. It's like literally just like a one v one. There's one side of the trade and the other side of the trade and there's like two independent counterparties, but I guess it's kind of the same. I don't know.

No, no, it's completely different market structure. Hyper >> that the venue is doing it just seems a little I don't know how kosher that is. >> What do you mean? >> Like I don't know how like is that I feel like that doesn't sound right, but I'm not like it's not how it works. Just like I don't know if the regulators would be chill with that. Anyways, I'm curious to see how this space works out. I think it'sing awesome it's happening and um props to these guys for doing it. if they listed Galaxy, you know, I'm an Osteium fan. I'll go check it out. >> Uh I honestly haven't traded traded these yet, but I I I do think uh people should probably play around >> if I do. Okay, the open interest cap's a million dollars. But like basically, if

I buy a million dollars of Galaxy long here, they're going to go and buy a million dollars on the exchange like on the NASDAQ. >> Awesome. Yeah. >> Uh I think so you're not buying like some spot you're dealing with uh like they have order flow in the back end. Yeah. You're not you're not just buying these like wrapped spot RW assets that don't have a lot of liquidity. This is kind of why their thesis is that this model is a lot better because you don't get these crazy wicks, right? Like you saw the NASDAQ on Hyperlid Hyperlid uh licked up a lot on the weekend, right?

Um >> yeah. And so are they are these markets also trading? Uh no, they're not. >> I think they've reduced your leverage outside of uh trading. >> I see the candles disappear between the opens and the closes. So I'm guessing they're not. >> Some of them I think they might close down when the market's not trading and then some of them they reduce your leverage like significantly. But >> Got it. Yeah, because hyper liquid will stay open. Anyways, it's pretty interesting. >> Yeah, >> I'm I'm a fan of the innovation. Yeah, it definitely though seems like a lot of stuff is going and it's funny because like we've done this in the past and it was just so illegal and now it's just everyone's just doing it again and it seems to be okay. So, >> oh, we'll see what happens.

>> See how it goes. Like synthetic both synthetics and like mirror protocol, right? We're like doing stuff like this. Um, >> yeah, there's always been issues with with models maintaining the peg. >> Yeah, >> everyone's kind of had different solutions for it. any of you guys uh do the mega ETH sale? >> No. KYC. >> Yeah, I was going to and then the KYC was a lot. Like the pump KYC was a joke. It was like scan a driver's license and then the the KYC for this one was super invasive. And then I started like thinking about it, doing the math on it.

And uh like there's going to be over a billion dollars of commitments at the 1 billion. there's only 50 mil available and then then they're probably going to then prioritize people who lock for a year and then people who have like a really rich onchain history. So, um I don't know. I think it's good that they're doing a public sale so that people can get in. And I think they're they're going to try and be pretty selective in since it's so overs subbed and actually picking people who have been genuinely interested in like Mega E for a long time um and are just like pure retail people.

So, I'm hope hopefully like, you know, I don't want to [ __ ] on this too much because it's like we're doing I think doing ICOs is is great um for like retail. Uh but it's uh yeah, I think I think a lot of people who who are in this are going to get no allocation. Um which kind of sucks to go through the whole process of all of it and then get no allocation. >> Yeah, it's kind of impossible to make everyone happy, right? It's it's >> yeah, pretty zero sum. So, and it does make sense to >> Yeah. Sorry. Go ahead.

>> No, I was just gonna say like, yeah, like just make the the people who legitimately are like super bullish on Mega ETH the tokens. I hope that they don't like there's over 50 million commitments for the locked and so they could just like basically if you don't lock then you're not going to get any allocation. Um hopefully they still do some unlocks because I think it's good to get unlock circulating earlier. Um >> well we Okay, so we got Monad Airrop, we got Mega ETH airdrop, I guess in a couple months, right? Um like what are you Cedus specifically more interested in or more I guess like excited for? I

feel like this has kind of switched over not for you but like in general from like what I remember reading on the timeline like a year ago. I feel like more people were probably bullish mega verse monad and I feel like it's maybe swapped. Um but I'm kind of curious like what are you kind of excited for? >> I mean I'm biased because I I say this every time you honest >> assuming you Yeah, you we know you're Yeah, we know you have your bag of money. But like, yeah, even still, I'm still just way more excited about Monad because I just believe in the the like the centralized L1 model more so. Um, I do I do think Mega E is going to do well though. It's like I'm more excited for Monad because I'm more like in favor of

the architecture, but I do think Mega E is kind of a cool L2 architecture that is just going all the way to the one extreme. And I think they're doing some cool things with the token. Like all these L2s that exist today, the token does not do anything. So Mega E is actually going to use it for like sequencer rotation. They're going to use it for like these proximity markets thing that I can't totally explain because I didn't look into it too much, but I think it's basically like bidding for like priority access um to like be close to the sequencer or something like that. Um, so they're making the token actually have a use, which is good. I think what I'm most interested to see coming out of this is like first of all,

it's another liquidity drain, right? We've had like a lot of liquidity drains and these things don't help the whole consolidation thing, right? Like the more tokens you add, the worse the consolidation gets. >> I'm really curious to see how it impacts like Bass, how it impacts like Arbitron, >> um, Salana. I don't think either of these will have too much of an impact on like hyperlquid but I am curious like if you if you go with the assumption that users coming into crypto doesn't change because new L1's or L2s come to market which I think is a fair assumption then it's like where is the distribution for these chains coming from right is it coming from like ETH mainet is it coming

from base >> did you guys see that chart of like the top 50 altcoins on Binance like below the FTX. >> Most of the top 50 alts are now below their post FTX crash levels. That's how deep this bleed has gone. >> Yeah. I mean, I think you showed price versus market cap. There'd be a difference, right? Unlocks weight on this. >> This is CT in a picture. >> This is >> like CT's mental health in a picture. >> It's like literally billions of dollars of tokens dumped on everyone's head with no money coming in to bid the alts.

This is a tough one. >> But even still, the people who made people blame like VCs and all this stuff for the unlocks. Jose was like saying this last podcast, the PE the only people who made money on all this was like the Binance Launchpad B&B holders who just got all like the unlock tokens day one. >> They didn't really get that money on it. >> I mean, Binance gets like 10% of supply of a lot of these tokens. Yeah, but like it's you probably get >> pretty small air drops like BNB is a big token. You're getting whatever percent.

>> It's definitely not nothing. I guess it's it adds up over time, but you know just same way Monet air drop, right? like it's it when you actually do the per person return it's not that >> yeah I do think that the unlocks will be less of an impact moving forward only because the valuations have come down so much that it's like you're getting projects now that are launching and they're trading fully diluted for less than like their last raise. >> Yeah. Well, that just needed to hap that just needed to happen. The degree of the pain of the unlock is also a function of just how much volume. Like if if if the unlocks start and no one bids and it drops off. It doesn't actually drain

that much liquidity because no one bought, right? Like price nuked 50% on on no volume because there's just zero appetite. So in that sense, right, there wasn't that big of a liquidity drain. Liquidity drain is there's massive volume and a lot of exit and it's like, okay, now those investors actually got money out. But you can argue most of that stuff usually gets reinvested anyways, right? And so if you need new apps to launch and and something compelling, then to some degree it's not the most extractive uh scenario. But yeah, I think people have wised up. You've seen even like double zero, right? That thing's kind of traded like trash since launch and that was obviously a really interesting project. It's just no one's really looking to pay those vals when when value cruel is kind of nebulous and and

adoption is still slow. I don't know. I'm I'm hopeful that because you we've always talked about how we need apps to kind of start to to come in and tend to bridge new users in and and so you know there is the the hope that Mega Ethan Monet which have been really focused on on trying to bring over interesting apps and and and grow ecosystems can be a bit of a boon if if you know at least one of these can really take off. Htopia. Htopia announced their launch date November 14th. Disclosure Dela as an investor. Uh Htopia, the Roblox of cryptocurrency.

>> The Roblox X Minecraft of crypto. >> Haven't they been live for like a couple years? But they they're doing a relaunch and their their metrics are actually growing quite a bit. >> Oh, nice. >> So that >> Are you ready for the million billion person onboarding event? Yo, you should launch a pump stream and stream yourself playing. Sure, but I don't want to sell people a token, but I I the game, bro. >> You're selling people entertainment. >> Okay, watch watch this. This is just Wait, these watch this is 10 seconds.

>> What is he about to show us? >> This is holding alt is Bitcoin chop round. This has literally been the last two years holding alt. Oh, [ __ ] Yeah, except I'm not wearing the armor, dude. I'm [ __ ] destroyed. >> Like, imagine signing up to do this. >> This is I'veronic coded in that thing.

>> Okay. Yeah. >> Yeah. I don't So, I am hopeful for like the Monite and Mega ETH uh ecosystems. I they they do have a lot of like um like there's a lot of new per uh prediction market type things that aren't like traditional prediction markets like a lot of these different kind of plays on prediction markets that I think are kind of cool. All obviously all the social stuff. Um yeah, I do think that yeah, someone just asked me like we're writing our year ahead reports like what are the themes? What's like the main theme? Because a couple years ago when everything blew up, the theme was like the great reset, right? And for me, it's basically this like whole institutionalization thing obviously, but then revenue and like valueless

tokens are like actually valueless now, right? >> I wish I could pull up our chats from March 2024 when I was saying this [ __ ] >> I was getting wrong. >> I was getting giga clown >> like valless. No [ __ ] revenue is the [ __ ] >> Sorry. I know that was I know everything in crypto. Yeah, I know. I'm not I'm not like picking on you. I'm just being like this is like in hindsight, I feel like this is so [ __ ] obvious, but like a lot of people were deluded into this vapor having a lot of value.

Well, because it just boils down to the flows, right? If if when flows are strong, you just want to be in the trashiest trash. that's untethered to fundamentals, >> but it's also like things you can like the the more time goes on, the less you can kind of dream of some of these upside scenarios. Like the reason why a lot of DeFi tokens traded high value without any real fundamentals is because it was like this new thing and you can like kind of I remember there was like this whole like remember the whole sushi DCF and everything and like uni traded at like 20 bill or something like that that that chart that you showed with the top 50 alts being below. The reason that chart came up is because I tweeted the UNI chart um about how UNI's below its FTX low.

>> Yeah. >> Which is insane because unis swap is like the most well-known DEX protocol and so B people are just like not buying these tokens that >> but but that never once traded at a reasonable valuation. No, but you have this for a lot of tokens and even like the good even like the good DeFi tokens >> good projects even traded >> dude we talk about we've talked about like a on here a few times obvious like a great protocol massive tons of TVL but it's still very hard to make the case for the A token at least to me because it's just like >> you need so much more revenue for what it is um and the market is just kind of doing that and then this whole like dual token equity structure you've seen a big movement in

that area too where like you know it's like metadal is doing these ownership coin things which you have the token and it's actually tied to the business and it's actually tied to the IP and it's like that's how this stuff kind of should be like it's stupid how you have the equity and the token separate all the time and the token doesn't do anything and so I just think the market is going to and I know pump is doing their ICM thing I don't know what those tokens are going to look like hopefully they're not like pure meme coins hopefully those will get like revenue streams and stuff too. Um, but you're seeing the market move to this like we no longer are willing to like bid like if you have a product but your token is [ __ ]

>> Yeah. >> I'm not going to bid your token anymore because we kind of know that game now. >> Yeah. No, no, for sure. I agree. >> It's healthy. It's good. >> I I Yeah, it is healthy. I guess like still with stuff like Salana or Ethereum or Bitcoin, I guess just like the kind of the the tokens that more derive their value from like kind of the quoteunquote network. Like how do you think that shakes out? >> Um I think that like Bitcoin's different >> because I think like when we were talking about ETH before all this dad stuff like we were all kind of agreement like ETH's kind of cooked and like the fundamentals haven't really improved at all.

>> I still think ETH is mostly cooked but like >> Yeah, exactly. like the price has gone up a ton but that as Yan was saying you know in the short term things are driven by flows and that was the DAP flows. So, like, do we just think ETH is cooked continually or Bitcoin, you know, rises, then there'll be enough money to buy and it's going to have a really bad draw down? Like, what what do we kind of think? >> ETH is like super simple to me. It's will people really value this thing as money or not? And that's all it is. And it's like I can't tell you the answer to that question. It's never going to justify its fundamentals. Whereas, I do think that like Salana fundamentals will keep getting better from like financials perspective. Um, and so that's why for me it's like it's easier to hold soul

over ETH because I'm just confident like I know one, two, three, five years from now, like every year Sana one is just going to be doing like way more. Um, obviously things can change and like competitors can come and whatever, but it's like I just believe that the their metrics, their onchain metrics will just keep getting better and better. Whereas ETH, it's like you just got to believe if if uh you know, I I feel like this is a topic that I don't really feel like even talking about anymore because it's like it is what it is. It's ETH becomes this big monetary asset that people hold because they think it's like an alternative to Bitcoin or it just trades a lot less.

>> What about Zcash? >> Zcash is like Exactly. It's like >> about privacy. >> I don't know with Zcash either, man. And it's like I mean Naval is a great K and Mert is a an amazing K too. >> Getting >> there is a real there is real tech with Zcash. Like they do have real tech. They're the only project that has an actual light client which is like pretty sick. Um that has gone the shielded thing really quick. >> Yeah. >> Uh yeah. Well, they have like a transparent pool which just works like Bitcoin so you can see everything and then there's a shielded pool where if you put your assets into there then it becomes like private right and the shielded pool has been you know growing

pretty substantially uh over time especially recently and yeah it's still though like again it's another store value asset right Um >> and again how many store value assets are people obviously Zcash is tons of distribution. It's got a lot of good momentum. There are like new teams working on Zcash. So there are like a lot of new faces in working. >> It's like Bitcoin like you can't really program it, >> right? Uh no, but you can uh you can probably do like L2s and stuff easier um with Ccash. So, I guess like my my thing is like I'm trying to gauge like is this ridiculous runup simply a result of something that's like pretty

I mean I would assume it's relatively supply cornered for the mo or could be for the most part how how long it's been out right um so you have that perspective you have or like that factor you have obviously naval right k it's attention it drives flows you have that um you have I guess like the privacy narrative like okay like you know using that as like another kind of way to sell the story from the KO perspective and then you have um you know to your point people are actually like doing stuff. So like how much of this is pretty much just like front running things like nar or you know like events like you know it has its having thing coming up. It has all of these you

know people pumping it well not pumping it but you know talking about it has like all of these things going on. Um, and how much of it this is people just kind of like front running these flows or just like a momentum trade versus like an actual shift in like the underlying view of Zcash and and privacy is like what I'm trying to gauge versus is like if it's one or the other determines like if I want to build a position over time or look to buy on dips in the future or whatever. >> Yeah, I mean copout answer is it's definitely a combination of everything, right? question just like the weights is >> yeah that's I'm trying to gauge like what you think the weights of that are right >> like Zcash like near's intent bridge has been really good for Zcash you can now

you can do like swaps on Salana like by 100k of Zcash with like less than 10 bits so it's becoming more accessible for for everybody um there there's yeah I don't know you wanted to say it's also just like the main pure play bet on privacy right so I think there is something to be said about there being one asset everyone coaleses around for a narrative and so you don't have >> kind of proven that I guess the because like when it first started pumping I was like I'm not buying this and then I looked at things like XMR um even chain right and I was like looking at these things that are you know like additional like you know betas to the privacy narrative and I didn't buy anything because like effectively it's like I

might as well just buy Zcash at this point if I'm going to buy something because buying the I don't know buying the to me buying buying the betas don't ever >> think about if Zcash and Salana had a baby. Jason, wouldn't you want to invest in that one? >> I just don't know if people My Zcash My thing My thing with Zcash is like >> disclosure. Um >> I just like once the momentum runs out, I don't know how many people who have are buying recently are going to like want to keep holding it while other stuff starts to go and then you start to get more of these. It's also like not listed in many places, right? Like it was delisted a while ago.

>> Yeah, they're trying to MERT has been talking about this. It's really tough, especially in like the UAE and stuff. You can't get exchange listings for it. Um I think in like UK it's probably pretty hard. So yeah, exchange listings. That's why though getting it on Salana, I guess, has been pretty good. Um it's opened up an easier path for a lot of people to buy. I don't know. Zcash is one of those ones where like I'm totally comfortable sitting on the sideline and if it goes up a lot, like good for them. Like I I think Zcash is, you know, it is it has this weird mix of people who have been in crypto a long time that have kind of just like value bag held it for a long time and like people have been working on it the whole you know over

the years. Um the tech is legitimately it's like if it if Zcash goes up it's not a bad thing, right? It's not like vapor. It's uh you know >> Yeah. I mean it's not insanely it's at like five and a half, right? That's not outlandish for >> That's the thing, right? It's not like >> knock is 300. >> It's Yeah, it's like it's just tough to buy 7x up in the past month. >> Well, you could buy knock up 2x in the past year.

>> Yeah, I feel like maybe I I'll buy like a little bit and then >> I bought some I bought some at five cents. >> You got to buy some to get your real entry because you know it'll nuke right out afterwards. How much do I need to buy for this thing to nuke? It's a sliding scale. The more you buy, the more it nukes. >> I I actually think like it seems pretty cool. >> What do you like about it? >> It like it seems like it has all the privacy of >> Did you talk about Noct Chain? >> Yeah, but then they But you can actually build apps on it. It's like literally like Ethereum.

>> That's not the cool thing about Noctane. You're You're a bad shill, >> right? I don't own actually. Yeah, Deli owns blockchain, right? Uh but >> AI had a good post, >> right? Uh that you put on the portal. Basically, the the the thing that's kind of cool about it is that all the miners in Noctchain compete for new uh rewards by like generating these ZK proofs, right? And so basically the better you are generating these ZK proofs the more rewards you get and then that makes the chain like >> better because you're now creating better proofs and so it has this very nice kind of like flywheel aspect to it where miners >> make the chain actually faster

>> um >> or yeah like the proofs are more efficient and faster and everything. >> So it's not like Bitcoin where all your mining computing power you're not improving Bitcoin or anything. you're not making it faster or anything. You're just putting more where in this case if you're actually the minor and then also in Bitcoin your chance of getting the rewards is directly proportional to your like hash power basically, right? It's just like random chance where in this case if you're like actually a really good minor and you're like innovative and you're going to, you know, so I think that's kind of cool. Will it gain like big adoption? I don't know, man.

It's it's uh how many like of these chains are going to really go mainstream right? >> Yeah. But like you could build like private versions of apps that exist on like Ethereum on it, right? >> Yeah. But like what's the market? I mean, >> well, this is the whole 5.5 billion according to Zcash. It's a 20x. >> Yeah. But do people want to do stuff you don't want privacy for though? There's a lot of stuff that you don't want privacy for like you don't want privacy for DeFi because you need to like see uh as much information as you can to like keep the system solvent and everything, right?

And so >> I'll accept a few percent of Ethereum's market cap as the private version. >> Yeah, we'll see. I'm still Yeah. Uh I don't know. It has it has good momentum. Ccash, >> what did you guys, if uh if you don't mind switching gears, what did you guys think of the uh the pump fund acquisition, the far caster stuff? Uh seems like some M&A type activity in crypto is continuing to heat up.

>> So, this was kind of like that whole dual token equity thing I was talking about before. I think these were really good um two kind of sides of this where in the pump acquiring Padre case, it's like Padre had this token, but there's no legal rights or anything. They said they were going to do things with this token uh and they didn't. And then Pump bought Padre. They didn't buy like the token and everything, right? They just bought the equity and the business that was not attached to the token. And then the token, they were like, "We're just going to rug the token." Now, they took like a snapshot of the Padre holders and they're going to get them pumping and like return and everything, but there's no like actual legal reason for them to

even do that too, right? They're doing that for like optics and, you know, wanting to, you know, not come across as like rugging the Padre token. Whereas in like the Farcaster situation like they bought the Clanker token um and like the the Clanker protocol which is like this launchpad that is like integrated to Farcaster and they started doing buybacks right away, right? Um and so like very aligned for like in that case if you're Clanker token holder, Clanker went from like $20 to now trading at 115. So like that's a great acquisition, right? Like whereas in the pod it went to zero >> equities, right? Like if you own a stock that gets acquired, right, the price just kind of gaps up, >> right? And that's what you want. That's what you want. You don't want the Padre situation where it's like again, they're giving them like tokens pump is, but

like there's no you don't want the ability for just to like rug the token and and Padre token holders, I don't know how much they're going to get of Pump. Pump can just give them whatever they want because it's kind of like a goodwill thing, right? Um, so again this just goes back to like for instance if you were to if you were to if if the Padre token was like a metadow token they would have actually since the IP is attached to the token like they would have had to actually buy out like the token holders which I think is the way these things should be like yeah I mean the difference though is like is caster doesn't have a token and pump does right so if they're acquiring they need to shift that value flow to their own so I mean like you know they they could

realistically give Padre holders their dollar fordoll equivalent pre-acquisition and it's like yeah it's it's a rug to some degree but you're getting what you could have sold it for you just losing all the upside so you probably lost opportunity cost in whatever you're sitting in for fun but that's probably the fairest way to do it I mean I think it's it's super bullish pump though right because this is everyone's been you know there's always been this disconnect of yeah they have this balance sheet but like as a token holder you're not actually getting access to that this is kind of the ideal way to get access to it, right? They are using it to buy companies and using the value generated by those companies to buy back pump. It's like they're this is

the cleanest way as a token holder for them to monetize a balance sheet to favor you. Oh, as a pump holder, I had no like, you know, but it's like it it's just it's it makes you realize if you're buying, you know, a lot of these tokens, they give you zero rights if like something like this goes down and uh people I think this like there's a token equities have like this equity premium thing. I think tokens are going to have this like this token discount thing, right? where like if you own a token you need to value it and that's why you do see a lot of tokens like even pumps token trades at a very low multi multiple right whereas if the pump token was equity it would trade at a much

different multiple it's the fact that it's a token that it trades at such a low multiple people are just discounting tokens even though pump is like shown this whole time that they they're doing everything they can to be good for the token that still trades with this it's still not like 100% clear and there you still don't have legal rights and everything and so it trades at this pretty big discount out. Um >> yeah, it's definitely a gap that that was not appreciated. Um I'd say, you know, in like 2021 period when everyone there was just unanimous consent that tokens were the best capital formation tool because of the flexibility and and and the the path to liquidity and and kind of enabling some form of utility alongside the economic value that they

that they came with. and then right and then when things go to [ __ ] and you realize you don't really have the protections that you thought you had and so that that gap wasn't really obvious when things were going great but um on the bright side it is going to be gradually corrected right with with with all these launchpads and and just the the approach and and people being tired of of being burned and kind of voting with their money and ideally forcing the protocols to to to give holders some more certainty. Yeah. >> Can I talk about the Galaxy off the >> Yeah, go. Why did Galaxy dump? As a Galaxy shareholder, I was very upset with Duncan yesterday.

>> You should be You should happy. Okay, listen to this deal they got. So, they raised >> Look at this deal they got. >> They They raised a $1.15 billion exchangeable note, which is different than a convertible note. We learned all about this my friend chat yesterday. >> Do you have it on on your Twitter? You want to share your screen or >> Well, I can just explain it. Okay. Yeah, that's >> But basically, so it's 1.15 billion they raised and then they could raise another 150 million after that. And essentially they they struck the call portion of the note at $55.

So I think that was like a 37 premium to 37% premium to the day's close and it's like half a percent interest per year. So basically the notes due 2031 and they can choose to pay it back in cash or shares with like the conversion rate starting at 55 bucks. Um so basically if it's like way above 55 bucks they'll probably just you know pay it back in shares. But if it's like around that price or something then they can just you know um you know pay pay them cash one to one. they'll kind of decide what what's best for the company at that point. But basically like you know their crypto business lines grew massively in

Q2. Like their trading volumes were up 140%. Their loan book grew 60% from like 1.1 billion to 1.8 billion. Their um staking business and like assets on the platform, their AUM grew from 9 billion to 15 billion just from like one quarter to the next. So like their crypto business lines are like growing really really quickly. And so like there's a lots of opportunities to deploy capital there. Plus, you know, they're they're expecting to get another 800 megawws of uh power capacity approved at their Helio data center. So this would give them like a lot of capital to kind of fund the equity component of that, which is like super um lucrative if they can like

>> Yeah, it seems fine. It's like rational for the market to kind of like sell off a bit. But but then the other thing where is like the market doesn't make sense is they had a convertible that they issued in 2021 at like a 3% interest rate and like the strike price was like 36 bucks or something. But they can essentially refy that convertible with this one and pay those people back in cash and lower their not only lower their interest payments but also lower the dilution that they would have incurred if that got exercised. So they they just got a better deal and they can just roll that through. So it's actually their interest that they had to pay goes down and their dilution that they would have incurred goes down if they pay it back in cash and they still have like 700 million left.

>> So the the 2021 convertible note was for how much? >> I think 400 or 500. >> Okay. So that's why you can pay some of back. Is that something that they can actually use this for? Is that like one of the >> Yeah, that that Well, because basically it's like at that point they struck like not as good of a premium and a higher interest rate. So now they they've struck a lower interest rate and a better premium. So they can instead of issuing those shares, I think it would have been like uh >> instead of issuing those shares to pay down that note, they're just going to use >> 400 from this note. They could >> Yeah. And so it's actually less dilution if they do that and less interest payable.

>> Got it. Got it. Got it. >> Kind of a giga Chad move. >> That makes sense. What do you uh speaking about crypto stocks? What do you guys think about that Ezilla thing? >> Oh yeah, we should have talked about that. the data. >> So they they give it quick. Ezilla is like it's not one of the top two Ethereum DATs, but it's one of them. >> And they sold ETH to buy back their shares because >> Did they sell or did they just move it? >> They sold >> Oh, they also moved Bitcoin. That's what it was. Sorry. >> Okay. So, Ezilla sold 50 mil of 40 mil of ETH to buy back their share because they're trading below NABNAV. And like this is like in a vacuum what kind of these things do. It's like if you're above MNAV, you issue shares. If you're

below, you sell the underlying and buy it back. I think people were kind of surprised that they did it at this point. What's also interesting is that I think they still had like a lot of cash on their balance sheet from their latest raise, but they didn't use the cash to buy back their shares. I think someone was saying that like legally the cash has to be used to buy ETH. So, trading below MNAB with this cash balance instead of going out and just buying ETH or something. to maybe that can like help or they actually sold um ether. >> It's like if you're going to do it, you want to be first, right? Like that's that's the rule. You always not I wouldn't put this in the panic bucket, but more so in in terms of of like like rational approach. If you panic, you

want to panic first and if you're going to do this, you want to do it first, right? Because the the the second order effect is that now your stock becomes more attractive. I think in the grand scheme of things you will have the like you know what can drive an MNAV premium and and it's management style is one of the things that I think can do that right and so if you have a management team that will actively optimize for ETH per share then then as a passive bidder into ETH debts you would choose this one over the others right so I I think them doing it early doing it first is is very constructive for future bid and and MNAP premium them because they know that like they're not really going to move the ETH

price by selling 40 million, but they can do quite a bit to help their their like ETH yield, you know, on a per share basis. And so, >> yeah, >> I think it's a good move. >> Yeah, I agree. I also thought it was like a good move. A lot of people were upset because they're like, "Oh, these aren't like the sailors of the world that are just gonna >> these aren't >> like Gabe was so upset. Gabe was like shaming them so hard on Twitter. I'm moving to Onad. >> Okay. Wait, is Pull I can These are the exact numbers, but just to show >> You want to go back over this Galaxy? I thought we were over with Galaxy.

>> I know, but it's just cool. So, >> we're still >> They can sell Yeah. like 8 million shares like in the future at 55 a share to avoid like having to issue 13 million that would have had to happen in December 2026 or they like pay this back in cash. So even if they use the 445 million to refy, they still have 700 million of cash and then avoid that dilution. Plus the interest rate is half a percent versus 3%. Is this your thread?

>> No, this is probably your written house. I >> This is This is the goat written house. The goat of data centers. >> Um yeah. And then that that declines their interest payments by 7.6 million a year. So I think like basically what happens is when when you issue these conver these like kind of convertible type instruments um some of the funds who like participate will short the stock um to like hedge themselves in some sort of way. So like that maybe a little bit of that's happening but like giving them another billion like 1.3 billion potentially of cash given all the you know good opportunities they have to deploy it at a very low interest rate as a long-term holder. I'm very happy with

this move. >> Yeah. Yeah. Galaxy. I think Galaxy is my big Yeah, it's my biggest single stock. >> Um >> Oh, bigger than Camco. >> Yeah. >> [ __ ] >> Well, Camco I just like didn't put a lot into when I bought it, so like it went up a lot, but >> pain. >> Cool. Uh I mean, we're up on like close to an hour. I don't know if anybody has anything else they want to talk about. Um, feel like FOMC is going to be mostly a nothing burger today compared to like past ones. They're going to cut and then they'll say some stuff, but then >> So, Jason, I I hear that there's no way they're hawkish when the government shut down. Is that true? Is the rumor true?

>> It's what I've been told. You know, I don't have uh the red phone to JP, so I can't confirm, but >> good afternoon. Yeah. I mean, it's it's like it's hard for them to be even you have job cuts and and all this stuff. It's just like there's too many reasons for them to >> Yeah, it seems >> Yeah. Poly market says it's a pretty much a lock. 98% chance there's a 25 basis point cut. >> Everything I've seen is pretty much like it's a lock.

>> Yeah. >> Yeah. People are expecting like four cuts in the next five meetings. The this guy betting no in the comment section says my mom works in Fed. She said Powell will not cut. This guy's got some crazy inside info. We can make a quick 50x here. >> I mean it's 100% priced in. If you actually that no, you would make like >> Yeah, it's 1.6 cents to buy. No, >> it's a good hedge. >> If this guy If this guy's mom the cafeteria, she overheard them >> in line. Yeah.

Oh god. >> All right, guys. Um, yeah, I thought that was a pretty good episode. >> Honestly, we probably got to turn it off. The market keeps going down. It's been going down. You turned on the stream. >> Yeah, it's been straight down for the last hour. Um, yeah. Anyways, uh yeah, I hope uh everybody enjoyed the episode and we'll see you all in a couple weeks.