How to Identify Which DeFi Protocols Will Actually Survive with Austin Barack

Transcript

But as far as global scalable execution layer and a composable smart contracting network, there's nothing in Salana's league. >> What's your thoughts on the more like infra landscape versus like the DeFi application landscape? >> What's your take on Pump Fund, but also how does Pump Fund's token launch affect Soul Soul and Solana? >> Welcome back to the Rowup. We are your hosts. I'm Andy. I'm Robbie and this is your home to learn from the biggest guests, the brightest minds at the tip of innovation.

>> Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. Austin's coming up now. >> The man, the myth behind >> the traffic of the city. >> Traffic of the city nuked them real good. >> Got the real BFB band on. Yeah, I got it all now. That'll get you. >> It's smiling today cuz [ __ ] cuz uh syrup is up 20%. >> 64 cents this morning. Guys on fire. >> Yeah, it's it's kind of surreal how the market is figuring it out all at once.

>> What What is the market figuring out for anyone who's still revenue meta still on the sidelines? >> One revenue meta, but obviously there's a lot of protocols generating >> 61 cents now. >> But yeah, it's uh so they they had a very different protocol early on. They were an over an undercolateralized lender. Um they lend to market makers uh trading firms and during 200 uh 2021 2022 >> they were lending to folks like Celsius and BlockFi and trading firms and that didn't go well right.

>> Yeah. Yeah. So they rebuilt the protocol, focused on overcolateralized lending, still on KYC permission borrowers, but then what they built out is instead of requiring KYC lenders, opening that up, creating a receipt token that's syrup USDC that can be used in DeFi, used in Pendle, >> and their growth has just been exponential. So they went from essentially back from nothing to 2 and a.5 billion of TVL now like 20 million of revenue of uh per per year run rate.

And >> I'm not going to make you say it, but I'll say it. $5 target 2026 and and end end of the year. Not financial advice. Austin and I had a good call about this the other day. Um >> yeah, these are of course all my opinions, not the opinions of the fund and not financial advice. So I'll caveat with that. Um but I think with not as opinions of the role either. >> Yeah, I think the opportunity is huge. I I ran an analysis the other day that if you apply the same multiple that A is trading at and just for context, Maple has grown 10x in the last year, a has had flat revenue over the last year.

Syrup would be at 88 cents. So Syrup would be about 50% higher just if it was trading at the multiple of a slower growth protocol. >> Yeah. So what's the next uh what's the next big winner then? What what what is the market sleeping on on the liquid side right now? >> Yeah. >> What's the what's the trend that you'll see that'll develop because obviously Hyperlid's got you know it's a 30 40 50 bill now right or you know or sorry I think it's around like 12 or something like that. Uh depends on uncirculating FTV admin you got ularn syrup. So what's what's the next one? So, I think we're going to see a lot more activity around borrow lens, dexes, and stable coins like we've seen, but that to really start to accelerate as we're getting

more stable coin regulation, as we're seeing more traditional firms get more comfortable using onchain products. So, you know, Maple is a perfect example of that of trading firms, hedge funds, market makers, but also miners, corporate treasuries, all these traditional sorts of companies that have Bitcoin and other assets on their balance sheet to borrow against it uh and bring that yield on chain. So, you know, one one asset that I think has incredible distribution that the market isn't quite on top of is Aeradrome.

>> Interesting. >> Yeah. If you look at base, it's pretty much other than Hyperliquid and Salana, >> the main place where activity is happening on Jane. Uh, and you know, there there's a couple, you know, other ecosystem. Avalanche has some interesting things that are happening there as well on the social side and otherwise. Um, but if you look at base, they have this incredible distribution through Coinbase and now they're plugging in DeFi in the back end so that you can as a Coinbase user borrow from Morpho and use, you know, essentially access onchain capital and yields. And they're doing the same thing where now it's not like, well, when is it going to be a Coinbase listing? It's trade everything directly on chain directly from your account. Um, and the Arrow

team is killer. So, I I think they're really well positioned. >> Introducing Asset Runes, the future of decentralized finance. Stable coins natively on Bitcoin. Hedge against volatility. Diversify your portfolio. All directly from your Bitcoin wallet, secured by ZK Technology. This is asset runes available now exclusively on Starknet. There's a there there's a bit of a conversation going around that a lot of these L1 tokens are forever topped.

They're trying to cut down their their staking rewards. Uh you know, proof of stake in terms of economic security has been kind of uh getting it's getting a bit uh abandoned per se due to overinflation and just down only charts. You look at things like Aptos, like Near um like some of these like larger L1s that have been around for a while. What do you think is the future of these L1 uh uh chains? Like are these things uh investable at a at a you know fair market valuation? What's your thoughts on the more like infra landscape versus like the DeFi application landscape?

Yeah. So, chains are really interesting just like execution layers broadly because these are really like series A to series C companies that went live at multi-billion dollar valuations and had lots of potential and were valued really highly because of that potential and everyone comparing them to Ethereum and then comparing them to Salana and there was interesting tech but like no one was really using them in a major way and things that people aren't using shouldn't be worth billions of dollars and I think like the market is finally adjusting to that. Um, but if you do have usage and you have a lot of activity happening on the chain, like I don't think there's any reason why we shouldn't see networks be worth hundreds of billions of dollars and more. Um, you know, I think Ethereum has proven that

and they're they're through coming through an interesting transition because so much of the value capture has gone to L2s. Yeah. um data availability is not monetizing in quite the way you know they would have expected they have some monetization from settlement. So you know while Ethereum still has the most TBL and a meaningful amount of trading volume so like surpassed that um it it kind of has a little bit of a legacy valuation. It gets inflows from ETFs and other assets, but that's a trickier one where the valuation is probably ahead of the fundamentals at least on a revenue basis. You don't subscribe to, you know, store of value.

>> Yeah. >> And I think, you know, maybe a contrarian opinion, probably not anymore, but Bitcoin is probably the only store. It's very premium asset. >> Yeah. Yeah. >> So, so what metrics are you looking at aside from store value, but what metrics are you looking at on a fundamental basis to indicate revenue? You mentioned trading volume is is an easier one to measure. Yeah. But what what are some of those metrics that you're looking at to indicate, okay, this is a network that has staying power and and is probably either undervalued or overvalued according to the fundamentals. What are those fundamental metrics that you're looking at?

>> Yeah. So the the kind of closest to the surface is just revenue. So how much revenue is going to token holders that are validating the network through like delegated proof of stake or or whatever mechanism ends up driving value to those token holders. Then a layer below that is what are the indicators of future revenue. So what is trading volume? What is you know obviously you're looking at the growth of all these metrics. trading volume, its growth, TVL, which I I generally look at as a little bit more of a lagging indicator because it it takes time for people to, you know, unwind a collateralized, borrow, and

move it to another chain. And that that ends up being a little slower, but often stickier. Like I think that's the perfect example with Ethereum. It's been really really sticky the TVL that they have. Um, and then users for a long time had been a metric, but that's so gameable. I think it's more of a more looking at applications that are solving real problems and have real users and usage over a sustained period of time. And and that's something that it's I mean, you can measure quantitatively, but I think that's worth measuring more like not confusing the forest for the trees

and seeing like all right well people are using Jupiter a ton and it's an incredible application what's the revenue all right maybe that's a little bit weighted towards a pers product that is harder to defend you know you can look at hyperlquid and what sort of activity is being generated there and that seems really really sticky you know kamino seems to be running away with um permissionless borrow lend on salana um you know I think you can look at you know stable coins and that that same realm like Pendle right now has a decent amount of trading volume, not a ton of revenue, but it essentially owns the category of stripping yields and then incentivizing points to to um bootstrap TVL. So, it's kind of like what what are

the you know S tier category one applications on a given execution environment. >> So, today's show and tomorrow's is is is powered by a good close friend of ours, Ether. We did their uh one of their early rounds several like a year and a half ago. They've launched their cash card. They're doing buybacks. I saw you retweet DCF God's post today. >> Yeah. >> What's your What's the take there? Do you have a cash card yet? >> Yeah. So, I do have a cash card. All right. Also, >> there we go. >> I think I invested at the same time as you guys. That was my very first venture investment in the fund in Ether Series A.

>> Yeah. >> Uh I should have mentioned them before. So thank they for bringing it up. They are >> a top five team that I've ever worked with in terms of their ability to have a big vision and execute on it. Yeah. In crypto. They had buil building for a really long time. Saw the opportunity in liquid restaking. Built out the best product in liquid restaking. Quickly capture that market. But you know as we all know restaking hasn't generated a ton of revenue. There hasn't yet there hasn't yet been a ton of demand. So what have they done? They realize like all right we have all these users we have $6 billion of TVL.

Now that we've acquired all these customers let's create more products for them that are useful and increase stickiness. So they built out their um Ether liquid products which is you know if you have ETH what can you do with it on chain? How do you earn additional yields? And you know, instead of just getting the 4% yield from staking or restaking ETH, can you get 16%. And what can you do and make that just one click? And then they're like, all right, well, if people have all of this ETH that's deployed in the protocol, instead of a debit card, which doesn't ever really work that well, what if we can plug into borrow lens, collateralize the position they have there, allow them to borrow against that position, and now actually

have a credit card, not a debit card. And then the credit card have, you know, functionality like, you know, these are generally crypto users first. So, free tickets to conferences, all these sort of really cool crypto perks. And now they're doing a couple hundred,000 of volume a day. >> Hockey stick growth numbers. It's insane. >> They every product they launch has hockey stick growth. >> Better take a chance. Sign up for the cash card link below. $50 back on your first $1,000 spent. Who else is giving you that cash back? >> No one is. Yeah, it's a it's an incredible product.

>> Austin knows. >> It's an incredible product. Um I'll quote Arthur Hayes, the MX of crypto. >> Yeah. >> Yeah. We actually had Arthur and Mike on the pod some some time ago. BTC was trading at 74. >> Arthur was like the bottom. >> Arthur was like [ __ ] all in, man. Let's go. >> Yeah. It was good stuff. >> Yeah. That's the That's the very different thing about this market where in prior cycles you'd see these really large draw downs in Bitcoin like with other alts. >> Yeah. And Bitcoin this this time around has just been impervious. It has flows from ETFs. Sailor >> Pano is aping like $350 million like the last three days or something.

>> Yeah. It's like rather he's got another 300 to buy. >> Sailor's taking a break. Pomp is stepping again. >> Yeah. Yeah. >> It's wild. Innovating finance global institutional and onchain. Deep liquidity to drive capital efficiency. out. Maximize yields on institutionalgrade liquid staking with M. Unlock trillion dollars of capital via F Bitcoin. All of this secured by Mantle's treasury of billions in stables and ETH capital pools. This entire ecosystem is coordinated by a vast network of seasoned VCs that are aiming to create the next generation of banking and

financial technology. This is Mantle. >> I got to ask you, what's one thing that you are very very bullish about that that that we haven't covered? >> Yeah. >> And what's one thing that you're fearful of or or bearish on? >> Yeah. So, it went from contrarian to consensus to somewhat contrarian. Again, I am incredibly bullish on Salana and the Salana ecosystem. I think Hyperlid has taken a lot of the attention and it's definitely entered the competitive set for decentralized NASDAQ. >> But as far as global scalable execution layer and a composable smart contracting network, >> there's nothing in Salana's league right now. And obviously I'm including Ethereum there because Ethereum has a

lot of activity but not scalable at that level. >> Yeah. and Hyperlid has pretty much everything left to prove for the HyperVM. They've built an incredible product with PERPS, but as far as the broader execution layer, most of that activity is just farming right now. >> Yeah. >> Um, so I I think people are sleeping on Salana and once we get an ETF that goes live and you know, we're seeing a lot of stable coin activity happening there. >> Meme coins have been very resilient. You know, people like to speculate in crypto. I do think that's going anywhere anywhere.

>> So on that note, Pump Fund launches their token. >> Yeah. Are you going to do that ICO? >> 4 billion valuation, right? >> What they're raising at. Maybe they do a full bill, maybe they do a little bit less. >> What's your take on Pump Fund, but also how does Pump Fund's token launch affect Soul Soul and Solano? >> Yeah. And and the ecosystem there. Yeah. >> Yeah. So is it is it going to be like a a airdrop like wealth ad or like a or like more of like a constricting effect, right?

>> Yeah. So I I think we can use the Trump and Melania token launches as parallels for what might happen because those were really big events where it was clearly sucked out of the broader ecosystem to buy those assets. And at that time most alts and there was a lot of AI alts at the time on Salana got absolutely crushed. Assets moved out capital moved out of there went into those meme meme coins. Um we saw some minor outflows from Salana but really Salana benefited pretty tremendously at the time. Like if you remember Salana was 170 humped to 290 in the next couple days. Oh I know.

>> Yeah. So people are like, "All right, Trump is launching a token here. This means more activity. This is bullish." And also there's with Pum Fun, there's going to be this massive wealth generation event for all the people that were in the trenches for a long time and get air dropped this token. So if if you look at that as a parallel a lot of Salana, DeFi, things like radium which is somewhat competitive to pump Jupiter and others have seen capital outflows already and I think that has been frontr run as people have look to put capital aside to participate. Some of the fundamental assets that are trading at lower multiples have actually done

pretty all right. So on the liquid staking side, Marinade and Cloud have done well. Jetto has done well. A lot of that is also people looking forward to the ETF launch. Kamino has stabilized and done pretty well since um you know the last couple weeks or so. >> So I think most of the liquidity moving out of alts has probably already happened and I think it's beneficial for Salana as this wealth generation event more attention. Yeah. Um so I actually think it's a positive. >> It's going to be huge. Austin, thank you for joining us today man. And I uh I I'm glad that we got to do this in person rather than virtual. Have a great conference. It's going to be It's hot here for sure.

>> Um >> glad there's all the fan set up here. >> Yeah. Yeah. You can feel it. I look at Ralph's hair. We're just flowing over here. Flow. >> Yeah, man. Cheers, man. >> Yeah, it's great to be here coming on, man. >> And pleasure to meet you, man. >> Likewise. Cheers. Thanks.