Hyperliquid Just Had It's Breakout Moment

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. >> People with British accent just naturally sound smarter than me. so much smarter. It's crazy so much. What's up everyone? Welcome back to the roundup.

Sadly, we do not [music] have British accents, so we will not be sounding smart on this episode. Santi, Rob, how you guys doing? >> Is that Is that a new haircut I see? Yo, >> dude, I was debating actually putting myself in the film where you can't see just so you could see my forehead. [laughter] So, I had to accompany my wife to something and uh so I had three hours in Midtown Manhattan where I like had nothing to do. So, I was just trying to take calls, but I had like 25 minutes in between in between calls. So, I walked in I needed a haircut and I'm I'm traveling so much, so I haven't had time to get a haircut. So, I walked into a random barber shop was like, >> "Give me a good like here's what I like.

Give me a good cut." And I have never had a worse haircut in my entire entire >> It looks like your eyebrows. Like, did you wax your eyebrows? You get a little trim there, too. >> No, I didn't wax my eyebrows. >> You look It looks bra. Even if it even if it were true, he would never ever admit to a lie. It I will say it it does look very perfectly manicured here. >> Dude, I always have I always have nice. This is crazy. This is crazy. >> I'm gonna have to enhance right now. And they're >> No, it's just cuz I got a big forehead now because I have no hair. That's >> ladies and gentlemen, it's highlighting my eyebrows.

>> I'm enhancing here and it looks perfectly trimmed right there. [laughter] For for anyone not watching video, we're talking about Yano's. Dude, this it's it's brutal. It's like I'm kind of My hair is receding a little too. You can kind of see it. It's not This is not boating well for me. I gotta I might go produce >> a little bit like you're about to be in a production of like Westside Story, you know? You've got you got like kind It's a little bit high. You got the eyebrows. It looks great. >> Okay, shut it down. Shut it down. [laughter] Hold on. Let me get my hat. Hold on. Yeah. It's like why why is the guy wearing a hat for three weeks in a row?

All right. Uh, should we talk about some good news, which is hype is just Did I All right, I might have a bad haircut. Did I call it or did I call it? I couple weeks ago like I'm buying the tokens again. Haven't been buying tokens in three weeks in in two years. Market's getting hot. I got to give myself because you guys are ragging on me so much. I usually don't like to give myself pats on the shoulder, but clearly you guys are not going to do it. So, >> it is Rob's definitely doing it. It is a world of halves and have nots. Bitcoin's at 76K, so it's kind of been muted all year. Uh, but hype is up 2x since liberation day, right? So, like hit 23 on the low and now it's at what is it now?

>> Oh, hype is 61. We are just >> sending. We love it. >> Godamn. >> That that DAT keeps hitting the ATM like as hard as possible. Like this is we're like in D season again, but for hype. >> Do you know? So, remember I got on here I think it was two or three maybe three or four weeks ago. I forget when it was and was like there's a hedge fund who's thinking about buying Hyperlquid and they called me because they read the Colossus piece the invest like the best Colossus piece on Jeff and they they went long they bought Purr and >> Purr per purr. >> Yeah. >> But the problem is is that because they're hitting the ATMs are the um PER is actually like way underperforming.

>> Purr I know I know I I literally I texted him this morning or I actually a different hedge fund who I texted this morning who's also in PUR and I said are you going to long the ETF instead of PER? probably better returns than the DAT. Um because yeah, PER's been >> so why is it ripping? I think I have some theories. It was pretty surreal to see the Cerebrous IPO was in the classic form, you know, uh the price discovery. If you see, I think it was one of the founders, one of the VCs took a picture on the trading floor and in that picture you see one of the traders had Bloomberg in one of his screens. It was he was looking at the hyperlquid preIPO market where the price discovery was happening.

>> Yeah. >> And it was kind of again I don't know if that picture was like altered or not. Seems like it was real. >> No. No. Real real picture. >> It was it was real. It was the the Benchmark uh the guy from Benchmark who did that deal. >> Yeah. It's pretty pretty. >> I don't even think he knew what he was doing and then I I think it was Matt Wong who maybe retweeted or maybe noticed it first or maybe somebody noticed it and told it, but he tweeted it out and then it went went super viral. And then now of course everyone as we enter you know talk about macro here the SpaceX IPO is coming up and everyone's looking at the hyperlid yet again. So pretty surreal to see.

>> Yeah the the SpaceX preo um the the preipo market is right now at about a 35% premium to what we're what we're being indicated that SpaceX will probably IPO at. So it looks like it's going to get priced at somewhere between 1.5 and 1.75 trillion. And the the SpaceX as of this morning was trading at like a little over two, like 2.1 trillion. >> Yeah. >> Right now. And I mean, you saw this with with Cerverus. They um >> you know, they it I think the uh trade XYZ price, preo price was something like a 30 35% premium as well. And then it doubled right when it um uh right right

when it came out. And so it was, you know, more indicative of the of of what the, you know, fair market value was, but, you know, not not as high. And so it it is quite interesting to see these happen. You know, there's not a lot of volume on these things. There's and there's not a ton of open interest, you know, that's it's fine and but it's it's it's pretty small. But we have seen this really interesting time in the market where there are so many new ways to get data on markets whether it's through poly market and this was a big part of the thesis that ICE did for the investment that that they put there which is like okay well now we have you know a market who can give us the real price of what the typical outcome is and

now we're seeing it with hyperlquid where these hedge funds are not most they're mostly not trading uh you know trade trade XYZ. They don't really can't really access it for for the vast majority of these guys, but they're all now using it for, you know, to look at what the open might look like when they can then, you know, trade on CME or when the thing comes public. And so, we're going to continue to see a lot more of that and how these things are good price oracles for traditional markets when they can get access to these actual markets and when those those traditional investors can actually trade on these markets. That's a different story. But um from a price oracle perspective, like there's no doubt that this has entered the mainstream.

>> All right. Well, I want to know when Bill Gurley is going to go by hyperlquid because he's been talking a lot about how inefficient the IPO process is. I think if you look back since the 1980s, the average pop on IPO day is 18%. Of course, you have some wild stories of like Figma's IPO, I think, was like 30 times over subscribed. And you could argue like the the traditional book running process for anyone not familiar is there's a the lead investment banks lead left or right JP Morgan Goldman whatever they go out and reach out to their highest institutional clients to say look this company's going public there's a road show they kind of go do the rounds in Wall Street and coast to coast and then they price the book and and you would think it would be good price discovery but clearly there's

money left on the on the table. Bill Gurley's been advocating for direct listings, which you could also like I think Coinbase was a direct listing. >> Spotify was a Spotify was a direct listing. >> Exactly. So, I'm curious like I I definitely agree with you, Rob. I think the hyperlquid as a interesting price discovery mechanism is really interesting. Um, if you have good volume behind it um but um I I I agree too. I I I think this is um I wouldn't understate how important Hyperlid is for crypto right now. I think that this is the Hyper uh Hyperlid pricing the SpaceX IPO is almost as large as what Poly Market did for the elections in 2024. It's it's

it's the I'd say the first time since Poly Market and the elections in 2024 that we've had a mainstream breakout thing. Um, and I and I think it's actually still very early days. Like I'm, you know, I know hype is ripping and like I I'm still extremely long hype here because I think that it's only just starting to touch the general public and it's the it's clearly the best thing happening in crypto today. >> Yeah. The one thing that is interesting um is on a fundamental basis it's pretty expensive here.

>> They just flipped Coinbase, right? >> Yeah. Yeah. Well, and it's like I mean if you think about it, you know, it's doing whatever like 700 million of revenue right now. And you know, most of that is, you know, quoteunquote profit because they um you know, they don't they don't have a ton of expenses, but like if you think about that like versus OKX, OKX is actually still a bigger business today. Um you know, pretty pretty significantly. And they, you know, they just raised money from from um uh from CME or sorry, from from ICE at a $25 billion valuation, right? Right? And there's like a liquidity difference and like things like that, but you also can't, you know, a lot of people can't buy hype. And so there's a there's a little bit of an interesting story here, which is that for the longest period of time, hype was like by

far and away the best fundamental story um as a a you know, as an investor. And now I mean, I think we're all very bullish on where it's going and we're all very bullish on on on the business, but it's actually now very expensive on a fundamental basis. Um, so now it's like definitely more of a venture investment uh from here. So I'm I'm and and I wonder if you >> you know how that is going to play into the dynamics from here because I also agree with you Yano that like everybody was in you buying tokens. A lot of people have been getting back into the market and I was talking to um one of the heads of you know one of the biggest trading firms in the space yesterday who was saying listen I think everything is going to break out and I was like oh

like Bitcoin and Soul and ETH and he was like no no I don't mean that like all of the good alt tokens are going to break out he's like I think Venice is going to continue to break out I think hype is going to uh continue to break out I think lit is going to break out like you know these types of you know what are really actually like good businesses with a token attached instead of just like you know a blockchain. >> Totally. Totally. >> Um and and so it'll be interesting to see how that evolves and if people get more belief and then you start to see this sort of like reflexive behavior in tokens in a way we haven't seen. And >> I I think hyperlid will drive institutional buying of tokens for the for in in that like in size for the

first time maybe really ever like if you think about the last cycle you actually did see institutions buying tokens but it was the majors. It was it was really ETH and Salana. >> Bitcoin. There's a lot of Bitcoin. >> It was Bitcoin and then it's filled into in ETH and a little bit of soul too. Um and now >> lot a lot of stuff coming in on meme coins on the retail side. I mean the the institutions institutions I'm saying. Yeah. And I think this will be the first cycle ever where institutions start buying uh tokens tokens and um wait Rob just one point on Hyperlid being expensive. Uh you like I would just disagree with that because where Hyperlid is at is so completely different than where OKX is at. Like OKX is a has been around for 13 years.

Hyperlid's been around for two years, right? So like I know you guys just did >> I don't know what that has to do with valuation. So >> because No, it hold it's it's a venture bet. It's a venture bet versus >> that's what I'm saying. You're agreeing with me. >> Yeah, exactly. Okay, I'm agreeing like you guys just did var variational, right? Which apparently is an amazing like people have been, you know, in in the chats raving about variational. So I will give you >> variational is not competitive with with Hyperlid. It's a it's a more of a brokerage model. >> What is the variational revenue compared to whatever valuation you guys did it at? Like probably 100 I don't know the I don't know the valuation you did, but probably 100x revenue or something. So yeah, >> I'm gonna I'm gonna put my I'm going to

put my my my Patagonia vest to talk about valuation priced to earnings. Ladies and gentlemen, Briana, you pulled up the dashboard. Funny enough, I had it also pulled up. So last year I think they did Hyperlinker did like 800 million Rob close to your number. If you run rate the latest quarter, which you should never do, ladies and gentlemen, you let's just rough numbers say that they're going to crank out like a billion in in revenue call it profits um this year. If you think like the hype three and like commodities and you know SpaceX and all the these markets non-token markets continue to rip, okay, they do a billion.

The thing is you fully diluted it's 58 but I think coin gecko has an interesting metric here is like outstanding token value which is closer to like 34 but even if you take the fully diluted value of like say 60 billion you know you're at 60 times earnings for a very very fast growing protocol um and I think I don't think it's like on a relative basis that expensive to other stuff out there like if you look at the way >> more expensive ensive than the than the rest of the market. Coinbase like Coinbase is at what like 25 30 times.

>> Um, >> yeah. The what the point is the point and I I don't want this to get I obviously just said I'm not bearish on Hyperlid. The point is is now that Hyperlid is very full fully valued, right? And so the from from here what you're pricing in is you're pricing in like not that the core business is going to continue to do well, which you know you said it's very fast growing. It's not that fast growing at the moment because the market's been terrible, right? And so like their core business was down 30% in the first quarter. >> You'd have to believe two things in my mind to go long hype as Yano is. You'd have to believe that the non-token markets continue to grow.

>> Yeah. Correct. >> Quite quite a lot. And I think Hyperlid stands probabilistically like the number one out of any other protocol out there. So that's number one. Number two is I think related to something you said earlier both of you guys said which is crypto kind of rebounds from here. So, if you're going to go long crypto, hyperlquid is kind of the best bet that you could express. >> Yeah, that's probably, >> right? I mean, because because if if in a world, let's just put it this way, like I like to think about the downside. If hyperlquid doesn't do well, that probably means two things. There's no institutional interest in crypto and token prices continue to drip and hype is back at 4030 bucks. And the rest of crypto does on a relative basis way worse than hyperlquid in my opinion. all

all. >> The interesting thing though to to put in kind of out there, right, which is that, you know, we we see all of these they're not they're not all public, but the uh the the kind of reduction in the core crypto pers in on Hyperlid uh in the first quarter in terms of volume was basically the same as the exchanges. So the the centralized exchanges, so they were basically as exposed to the reduction in trading volume as the the centralized exchanges were. And so it it's not as if you know they're there's like this like you know kind of dislocation where like they're taking all this market share. It's like it's it's it's very correlated. Now there obviously what's happening is the is the

trade XYZ markets the hip three markets are doing incredibly well because they're able to offer this you know kind of price discovery as we we started talking about on the weekends overnights um and these you know markets that people care a lot about and then also with people who have liquidity already on chain who don't who don't want to go offchain and so that's super interesting and that's what's allowed them to not have the business kind of you know do as well as it did in the first quarter on a relative basis to to some others and so I but I I think that's the right point which is that from here what you're underwriting is actually the you know the you know what like people talk about the other markets you're not you're not necessarily underrated relative b relative value on the crypto markets

you're underwriting that they continue to do really well and grow on the other markets the real world asset markets >> so put a finer point on that totally agree 3 I think went live end of October of last year and you had back then 100% of volume was crypto native tokens Now uh I think it's like gone up to 45% of all volume on hyperlquid is X crypto meaning oil um commodities now stocks that to me is the most bullish indicator of any protocol in crypto at large. It just to Yano's point it's a Paul Tudtor Jones moment for the industry which is like you're getting like this is getting the attention of people that had zero interest to come and bid crypto. And uh

maybe a question for you JENT is um okay so what p where does that percentage go for Hyperlid over the next year or two? Is it 80%. Does it peak at 50%. Or is there a world where Hyperlid like 80% of the volume is like X crypto? I I think I have a there's a little bit of an interest story because I I it it depends a little bit on what you think about tokens all you know generally right so what do you think is going to happen on on the larger tokens on Bitcoin etc. I I am not as bearish tokens I think as you are Santi over the um you know over the kind of the medium term. I also think there's a there's an

arbitrage that exists right now. So so I actually think the correlary to to poly market into the prediction markets is actually a very good one because there was this period of time when you were trading on on poly market where there was basically no way to trade those markets during the periods of times that people were trading those markets. A and it was growing incredibly incredibly quickly because of that, right? And then it got to the size, you know, Kali started uh growing as well and the um the deal with ICE happened and then everybody else started launching prediction markets, right? And now we can see the market is getting a lot more competitive for prediction markets. And you know, obviously Hyperlid launch type

four, which are are not quite the same thing, but um you know, that keeps getting conflated that way at least on on Twitter. And there's, you know, IBKR and like all these people and now you're starting to see that there's, you know, the market is um finding an equilibrium a little bit and we I think prediction markets are going to be huge and it will continue to grow, but that equilibrium is is changing. Um I expect the same thing to happen in per uh and for real world asset related purpose because we're starting to see, you know, some of the centralized exchanges start to grow on the real world asset per days for like the architects of the world and QFXs and, you know, etc. And then we're almost certainly going to get regulation from the uh CFTC relatively soon on PERPS in the regulated persp

you guys I'm I'm sure have have seen if we look back to what happened with um options onchain like Darabbit was the largest I mean none of the really onchain protocols did that well but then like the second that CME offered IBIT options like options on crypto just like skyrocketed essentially. Um and so I you're you're going to start seeing that happen and you've got both the NASDAQ and CME etc saying that you know this year probably they will go to 247 trading right so when those two things happen then like the market finds an equilibrium so I think there's a lot of runway for hyperlid up until that and then it'll we'll have to figure out where that equilibrium happens >> but isn't isn't the case that like um I mean we debated this privately in your wonderful event in Japan um which is

there's a huge part of why tokens will never die because there's a xus um people that want access to you know financial products like a preipo like a lot of retail doesn't have an allocation in cerebra so you had you saw call it like close to 300 million in trading I would argue a lot of that maybe was some hedge funds arbing or you know retail also um so even even in the scenario where you have the cmemes of the world like compete quote unquote against hyper I just think the the addressable market is what you'd want to believe and I think is true is >> is massive, right? And so I don't think it's I don't think it's subtractive, right? Zero sum here, which is you can still have I think a world where you have like the CME launching per is a

huge validation to crypto and a huge validation to the product itself. And so um I'm just kind of curious like how much volume you think you see in the SpaceX leading up to the SpaceX IPO? Probably 500 million, close to a billion. Uh, I think it's I think it's it's it's quite small right now. Um, it's like it's like, you know, 25 million on 24hour. Uh, right. And so, um, I think the and I don't want the HLS to come after me because they're like the the worst part of Twitter right now. Uh, but they, um, you know, we've been we've been very hype and and, you know, I'm very very bullish. But I I I do think again I think the the the correlary a

little bit to prediction markets and and um because I think prediction markets are going to be huge. Pers are obviously going to be much bigger than than prediction markets. But I I think the market is huge for for PERS. Uh and I think the launch of regulated PERS does actually also help hyperlquid in terms of getting people comfortable with the product and getting people understanding um that this is you know something they may want to trade. Right. And so I think it's it's it's actually it's net good for the the market size growing. Uh absolutely. I also do there is this interesting thing that's happening right now in terms of like preIPO markets which is that like you know depending on what considering what happened with Enthropic and saying hey all of these SPVS are you know we're not

going to honor these transfer restrictions or we're not going to these transfers we're going to put restrictions and this there's now starting to be I think like interest in like DC on like how you know we should make try to get people to go public earlier or and and get rid of some of the restrictions to that and make it easier. And we don't want these companies to have trillion dollar IPOs. We don't want them to get these like suedo public liquidity things where they do with the desks and you know the regular tenders etc. And so there is some interest in that. And so I expect that to also drive growth uh in the near term. And synthetics are an absolutely better way

to trade preo than spot. Like the spot markets for these like preipo deals like are it's not at all scalable. It's a huge problem right now. People keep talking about it, but I I don't think you can scale those markets in any way. So synthetics like per should be the main beneficiary. >> Yeah. >> Yeah. 100%. I think I think you want to go synthetics to avoid this whole SPV physical set like Robin Hood tried to do this right and it's just super messy but ju just to kind of move on. I still think it's pretty amazing not to get lost in the discussion the surreous IPO itself like it was priced at 185 it opened at 350 trade XYZ had it opening at 340 that's insane. No, no, I don't think that's

right. Uh I think it was like two something pre IPO. >> It ripped a 340 I think like right before it opened. I think >> Tradeex was way closer, but it was still like pretty far off. I'm pretty certain. >> Either way, the point stands like I think this is a there are maybe once a year, once every 18 months in crypto you get a breakout moment. It was right Paul Tudtor Jones calling Bitcoin the fastest horse in the race and unlocking, you know, takes away all the career risk for hedge funds to buy Bitcoin. It's the Bitcoin ETF from BlackRock being the fastest growing ETF in the history of ETFs. It's Poly Market calling the 2024 elections and now it's hyperlquid being able to price the hottest IPOs in the history of the world which it wi with

SpaceX, right? And by the way, can we just talk about how Elon is a genius for front running OpenAI and Anthropic, sucking up all the retail bid on this IPO? Like it is >> it's the largest retail uh allocation ever as well. >> Yeah. Yeah. Which is more and more that is happening more and more. It's like I think the percentage is actually similar to more and more of these IPOs are giving more allocations to Robin Hood and more you know upset institutional Goldman clients which you love to see it. Um, I I will say my uh I had a prediction at the beginning of the year that that the equities market would top with a gargantuan uh SpaceX IPO and uh I am a little I mean historically crypto and equities

and all these things have traded um in tandem, but I'm I I am curious if we'll start to see a divergence here where SpaceX SpaceX feels a little toppy in the equities market. Actually, I'd say very toppy, but I'm also very bullish crypto tokens, but worried that what worried about what happens to crypto tokens if the equities market falls apart. So, >> are you guys uh I I will say to your point, Yano, a lot of when I go talk to hedge fund managers and people that are actively investing, this is the biggest probably open question, which is they're all saying if the SpaceX IPO is doesn't rip and doesn't hold up, it is going to be like very bearish for the rest of the market.

Um, I don't think I'm not bearish, uh, for what it's worth. But >> you're you're bullish on the you're bullish on the SpaceX like >> um I'm bullish on like I'm not sure I would necessarily buy SpaceX. I love Elon and the way and just betting on him, but um I'm not sure I want to buy SpaceX and I'm definitely met curving it because it's not profitable. It has been profitable, but you know the the the cloud Starling's profitable. So >> into space data centers like I've talked to a lot of some people about that like definitely it's like enterprise like the terminal value of SpaceX probably is more than two trillion. Uh but uh if you

discount it back I just think like I don't know I'm definitely >> by the way everything we just said about like venture you know investing like there there is no fundamental way to price like SpaceX anywhere near where it is today. to your point, >> it's the it's the most venture and the largest IPO, but it's still super super venture. >> Did you see the T? I think any founder raising venture money should go look at uh how Elon walks through the TAM of SpaceX, which is we He goes, "We we believe we've identified the largest actionable TAM in human history. We estimate that our quantifiable TAM is 28.5 trillion." By the way, I love the specifics on this, right? He you know he included like only 370 billion of uh you know space from space enabled solutions

and uh he goes for illustrative per so there's like you know 22 trillion in enterprise applications like you know these ridiculous numbers um and then he goes for illustrative purposes of sizing our TAM we exclude China and Russia from our global estimates as if this is like as if these are real numbers uh in any way so I don't know it's a yeah lessons for founders who are pitching rob I will tell you I I've seen a lot of um TAM slides in my life uh as I know uh you guys have as well. I have never once looked at one.

>> Not once. >> Yeah, of course. Obviously. Obviously. >> Okay. But I mean, can we just agree Elon and Jensen are the best salesmen ever. Like they you have to sell. And I was I was listening to a I was listening to an interview with Jensen Huang and Michael Dell. uh I think it was CNBC that was or Bloomberg and and and they were talking about like the AI and you know AI revolution they're like uh and Gavin B uh what is it the other guy based in Boston Xfidelity Gavin Baker or um >> yeah yeah >> and they're all saying the same thing which is like you are definitely definitely underappreciating how big AI is going to be like there's I think Jensen was like there's no fundamental reason why the economy can't be like a

you know a five times larger with AI and and you hear them and it's it's hard not to be bullish once you like hear it from them. >> Um >> they they just really are able to captivate and and and convey a message and I think that's like the probably the best skill that you can have as a founder. >> There's a uh Mark Beni off episode that he just did with Allin uh with the All-In guys on Friday and they were talking about the the CEO trip to China. I don't know if you guys are following this but the Beij Beijing summit and stuff like that. So there's these uh CEOs and you know they're like oh you didn't get the invite and he's like look and and he's like look I'm happy all these guys are there and you know it's like David Solomon from Goldman, Stephen

Steen Schwarzman from Blackstone, Larry Frink Black Rockck Jensen, Jim Anderson from Coherent, Tim Cook, Apple, Elon is there um and he's like the reason all these guys are there he goes they're the country's best salesman. He go all these guys are the single best salespeople. So for anyone worried about their their job going away or whatever it is and how to succeed in this AI future, I think uh I think sales will be incredibly important. So um last question before we move on from hype here. Are you guys Rob, I know you guys as a fund are long.

I don't know if you're trimming. You don't I'm obviously you can't share that. >> Yeah, we're we're I mean yeah I we haven't talked about it. So but no, we we've been long for a while. So since the somewhere in the 20s. So, >> are you will are you guys going to continue holding your hype positions here? >> Yeah, I mean I also I also have a personal investment in hype. Uh and I will say that I I was this morning talking a little bit with people around like, you know, who's trimming and who's not. I've been surprised by a little bit by the lack of I mean, if you look at the order book and you look at the trade activity, there actually hasn't been a lot of profit taken yet. Um, everyone in crypto and this is me too I think is like all of us I've I think been trained

to see crypto trading as like a flows game and it has mostly traded as a flows game which means that every time you kind of get these like you know kind of reflexive you know uptrends like we've had in in hype recently you know there's usually pretty quick profit taking uh and that hasn't happened yet here or you've seen at least a lot of buying into that profit which is surprising. The other thing that has happened and >> Rob I don't I don't agree with that. I I agree I don't agree with that. I think that that is how crypto works in bare markets. You have little bull pumps in bare markets where people quickly take profits. I think in bull markets you tend to have these extended. Yeah. So >> definitely not in a bull market yet. So >> but I think that is the thought of

people right now is are we entering a bull market? And if we're entering a bull market, why would I ever sell my hype if we're entering this the next crypto bull season? I I think it's an important thing to >> that might be right. And that maybe this is the start of that mentality, right? But if you looked at like like if you looked at like Venice, right, which also has extremely strong fundamentals, you know, it traded it it traded up kind of reflexively over a couple days and then it kind of sold down quite a bit and now it's kind of regained. Um, and I think there's been a couple of of things that have done that. And and so this was kind of the point that I was getting to which is that even everything else that has done well and that has done well

especially for fundamental reasons. Um hype is the one where we have not seen that happen which maybe is just hey like we're going into a bull market or maybe it's that the the the people who are buying hype are a little bit different than the others and they're not just crypton natives. I I think the the thing I was going to point out um which which is I I think is is helpful here which is that if you've been following hype on on if you've been following the hype pers on Hyperlid the uh what we've seen is a lot of times that they it's had kind of these like really quick you know kind of runups over the last few days. uh the funding's actually gone negative and that's very uncommon when things are kind of running this way because usually

what happens when things are running is that people are loading up on leverage and on pers and so they're you know they're paying a lot to get more leverage to get long and what it tells you is that probably there's actually a lot of spot buying over the last few days because the spot price is outrunning the per price on Hyperlid so the the mark so it actually tells you that there's like maybe something very um fundamentally different that's happening in terms of the buying here than we've seen in you know tokens at other times which is probably more bullish for the price.

>> Totally. Totally. Sorry, last thing and then we'll move on from hype. Um there was there's one last thing that we didn't cover which is that the um the SEC uh innovation exemption for tokenized stocks. So Rob, you mentioned that um you know Anthropic said you can't buy you know these SPVS and there's like you know other other people followed suit. The counter to this is that uh the SEC uh is preparing to release an innovation exemption framework for tokenized stocks, I think as early as next week, which would basically allow crypto platforms and and DeFi protocols to trade digital versions of these public company shares like an Apple or Nvidia or SpaceX under uh lighter regulatory rules without full broker dealer registration. So you could

have uh I think what they said is you could have thirdparty issuance made possible without issuer consent or backing. And so yeah, even though I I mean I said the same thing, Rob, like two weeks ago. I was like I think this could end in tears for some of these guys, but the I mean I might have to change tune there based on what the SEC is saying. >> The SEC hasn't put out their guidance yet and so everything that's been out so far has been uh >> oh theoretical based on what they could Okay. Okay. >> Yeah. Right. Um, and the if they haven't put it out yet, that means it's still being debated. These things are debated up until the really last minute, right?

And the thing that I would caution is I think people are probably you know I was I was talking to people who you know in DC yesterday and I have a perspective that there's probably a lot of things happening on the timeline about how people expect that this is going to to look like that is probably far more bullish for DeFi than it is actually going to be true. This is now I do believe these sort of like wrapped versions of public equities are going to be able to trade it onchain with some sort of like gating at the at the on-ramps and off-ramps, right? Uh but that's kind of what we've seen people do so far internationally. They've just

been taking risks because there hasn't been like, you know, an an explicit innovation exemption. But I don't actually think it's likely to look that different from what we see today. And what I also do believe is again clarity people need to read clarity. So the the one thing I I think Kyle Sanmani has been like tweeting with he's been like kind of waring with a bunch of the thes on on Twitter uh telling people to read clarity and he's right because all these people are saying things that are like explicitly untrue based on like the current version of clarity act. And so there's likely to be a um an an ability for DeFi to exist and for DeFi to do uh allow for um you know tokenized versions

of things to trade. But if they are a security, there is going to need to be at least at the gates a um KYC and there's going to need to be like real you're going to need to have a you know potentially a um uh some sort of licensing. I think what will probably get and this is what somebody was proposing to me yesterday. The framework that the SEC is getting in their head is that DeFi is probably most like an ATS. Um, so people look like ATS regulations and that we'll probably get something that's sort of like a hybrid ATS regulation. So it won't be like DeFi as it is today for these securities. It'll be something that's a little bit

tighter, but like not as tight as like, you know, broker dealer licenses. So So there's a lot to come there. >> Uh, okay. That's I didn't I didn't understand it like that. That's super helpful. That's helpful. Um, all right. Let's go to the other side of the L1 trade, which is um so Ethereum uh I don't know if you guys have been following the Ethereum Foundation three protocol heads left. >> There's now five. So there's uh basically been this rapid wave of high-profile Ethereum Foundation exits. You had Tim Beo, Carl Beak, uh Barnaby, uh Trent Left, uh Trent Van Eps, and uh Josh Stark, um and and and actually others. And so there's kind of this like intense speculation happening about

what's going on. Is it internal restructuring? Is it talent migration going to Hyperlquid and Salana or other places? Is it, you know, they're not paying enough? Is it compensation? Is it Vitalic is coming back and meddling with everybody? And um yeah, I don't know if you guys have a a take on this, but it kind of culminated in uh David Hoffman uh posting yesterday that uh he has sold David Hoffman obviously bankless uh you know, good good friend over there and we like what they do. Um but you know, David has sold all of his ETH. Um and uh yeah, just I think you know J Ryan Sean Adams who's his co-founder of Banklist said you know end of an era. Um you know for the first six years we were very

focused on ETH. Now I'm taking a backseat. Ryan's always been the kind of more ETH maxi than David. Ryan said I'm taking a backseat. David tweeted and said I've sold my last ETH today. Um and so >> Oh wow. Who would have known? Well, you know, three still a $255 billion asset. Send it to I mean, what is the real what is the real value here uh of Ethereum when you think about it sitting at like 2,000? You're basically um you know, sucking all the value from you know all the L2s are continue to suck the value.

I think the rollup you know road map was broken. Vital conceded to that like earlier this year. Um I just don't for the life of me like I mean is this a clear short? I don't I don't want to short in the crypto markets but I mean when you when we talk about hyperlquid seeing all this traction still sitting at you know 40 billion and Ethereum being basically you know 255. No I I I think like protocols just don't die. I think the protocols of like the pre207 era like just have staying power in a way that is not rationally explained. So I'm not here to say that Ethereum is going to go to zero, but I think it just is a slow death. I I wrote

about it in October of last year, which is this reminds me of Cisco. it will just never recover, will never breach its all-time high unless there's like a major shift. But it is hard to believe that in you know >> Wait, Santi Cisco Cisco's up 50% in the last six months. >> Well, you know, but but if you look at >> I know it took 20 years. I know it took >> it and and and by the way in Intel 2, right? It just Intel 2 just kind of breached its all-time high from the dotcom crash. But it is you look this is a very competitive industry like you know it's you have tempos of the world and hyperlquids and uh it's it's challenging to hold ETH here. It has been for a while.

>> I I don't think I don't think I don't think institutional adoption happens without ETH. the the question is um and and we're seeing that by the way like like all of these institutions are they're they're looking at like a few different like chains to build on um and ETH is always one or two um and you at least had the the conversation. I think there's a real question that you're allowed to have which is the one you're proposing which is like okay relative to the value and relative to like value capture like what matters for the token. Um, I still have a p uh a perspective that like if all of this institutional adoption that is uh happens that we're talking about like ends up having um I still have a perspective that it'll do well as a network um and and network

value. But you know on a relative trade is you know would you rather be like relatively long you know whatever uh one of these businesses we're talking about versus like the base layer um I you can totally convince me of that and I think you could convince um but I think the same conversation is true for you know Salana honestly right and the um and so what happens over time I I don't know but I I think if you're if you're going to be long the space and you don't want to, you know, sure, we can just put all of your money into hyperlquid, but if you're going to be long the space, uh, you know, I still think you're supposed to own, you know, Bitcoin.

>> I fundamentally disagree. I think I mean, David said it even himself, you can you can be constructive and supportive of like the network, but the asset, the ETH, two different things and the same Uber for >> this was David Street, sorry, just to interrupt. So for people who aren't who aren't watching on YouTube, David said, "I have consistently supported Ethereum the network. ETH the asset is increasingly questionable. Let's not conflate the two." Sorry, go back. >> Yeah. And I mean I literally just said this so you and it's literally the thing I just said which is you can debate the value capture and the relative value but um I I do I do believe that there will be I I like honestly like if there ever there's a bottom signal like you know David uh you know selling all of his aid

like that might be the bottom signal or I mean again like these things can just you know kind of continue to >> people have said that for like several month Dankrad leaving was you know the bottom signal like you that this >> I didn't say that. >> I mean no because the the I mean when you think about people like Dankrad or you think about people who have like left the ecosystem, right? Um they are uh employees and they are employees who went to go make money for the most part, right? And they pursued different opportunities, different interests, you know, etc. Uh David is an evangelist and he was like a member of the church, right? And when the when a member of the church leaves, I think that's a little

bit different uh than you know, call it, you know, an employee who and again I don't want to downplay Dank and and what they've done for the for Ethereum, but you know, people have a lot of um interests and they have a lot of, you know, reasons, incentives for they how they make decisions, right? And so I I um I don't think those things are quite the same. You know, I I I've always like the Ethereum network pulled off like probably the one of the most impressive coronation stunts of humanity. I think just like upgrading Ethereum and moving to EIP559.

I thought that was like impressive to see harder to underwite now like when you think about I think the the road maps of Ethereum are like 10-year road maps and you know I think we were in last year we discussed a lot about like new blood coming in to like get the Ethereum Foundation just in consensus were just like not well coordinated and I think you saw I forget the name of the entities come in and say okay like we're going to be more institutional friendly and interface with institutions and I think that was part some of the DAT game as well. But it it is really tough to say, okay, can they pull off the road map, which is incredibly hard to do as a decentralized network when you have this leakage of talent. Like it's it's it's

tough versus having an incredibly centralized team like Hyperl this, you know, you want to kind of see a very centralized tight chip like you see in Hyperlquid. You could argue Salana has that to some extent. Um but it it's it's it's really tough. um to when I I guess Rob when you think about like institutions where are they going to go build well now you have tempo and we could argue that there's like a number of institutions that are just not going to build on top of tempo for competitive reasons but is it still true and does it matter for a black rockck a Janice Henderson or some of these folks like does this compute when they see like hey

wait a minute this Ethereum network like I'm seeing a lot of like management leave like key executives leave like is like what's going on like should we actually build this like do you think that's actually how they think or is it just like Ethereum is has this brand staying power that is somewhat independent of key key personnel leaving >> Ethereum has had a problem for a while which is that like you know when somebody wants to build there there's nobody to call and like talk to about like okay well how do how do I build there like what what do I what should I be doing? How do I think about the road map? You know, etc. Um, you know, that is what Etherealize was supposed to was supposed to solve, right? Was that like, you know, somebody at a bank or at an

asset manager could could call >> the EF also just the EF now just hired an institutional sales team, too. So, they're >> Yeah. And so, you know, they they understand that they've had that problem, right? Um the when you talk to like who makes the decision you have to think about like how institutions make decisions right and most of the people who make decisions on products that are not huge revenue drivers or like call it like you know the future products right they're mostly they already know that they're taking risk and so then when they decide to take that risk they decide to take the least amount of risk within that risk parameter and what does

that mean That means like you do the things that your boss knows the easiest or that everyone else does and you the same reason everyone ends up using the same custodian, right? Or the same service provider because like you're not going to get fired for you know if you know this custodian that everybody if if everybody's using Coinbase for custody, you're not going to get fired for using Coinbase for custody, right? And even if Coinbase gets hacked, right? Um and the and Ethereum has had that working for it because like that is where most of the institutional adoption has been built and maybe on L2 etc. And because it's been the most battle tested of any of these blockchains for like asset issuance now not for trading because obviously trading doesn't really work on

L1 for for any of these things but for asset issuance. Um I will say that like you know and I heard this from a uh somebody at Salana recently too um who was saying that like you know Canton is like crushing the institutional BD game and you know Salana was very worried about Canton as well um according to this person that I talked to and they were you know losing deals that they thought they were going to win be because of that. Um and and so you do have this, you know, this future world where maybe you know Canton or you know these these tempos or you know these like kind of more tailor made blockchain start to start to win more of this institutional adoption and maybe that means that you know whatever Ethereum is

going to is going to continue to bleed out because of that. I have a perspective that we're in this point of time where there's, you know, people are more bearish than they probably should be about Ethereum over the long run in terms of it being a, you know, a base layer and a network that people are going to continue to want to build on top of. um because of the fact that it is the most battle tested. It is something that also has now like years the years and years of people getting comfortable with the architecture, people getting comfortable with the how to build on top of it. But yeah, they don't they don't have the game the BD game. They don't have the ability to go sell people the from a centralized perspective the way Salana does, the way Tempo does, the way uh

Canton does. And I also just think and I'll make this the the last point because I I in the world that we are talking about or that I envision for the future in terms of institutional adoption on chain there is not enough block space still to this day. Everyone says there is enough block space. That is not true if the world comes to fruition that I think will be true which is that all of these assets are traded on chain which means that there will be multiple winners and this is not zero sum. I agree, but you just have to ask yourself which which company selling which company selling the blocks is going to do the best at selling the blocks and right now ETH is not doing a good job of selling the blocks. That would be my take.

>> I don't think I don't think that so I I would I would disagree because I >> actually you know what they are they are doing a decent job of selling the >> Yes. >> the inst Yeah. Okay. >> But the token is a different point. And so I think I think this is all a value. It's a relative value and it's a value acrruel point not a are people building their point. >> Can we go back to one point here about like interfacing with institutions and the credibility like no question Ethereum is like still I think number one in terms of visibility and in the minds of most people I would say um hyperlquid and then Canton distant third. Um >> I I would put Salana in that chat too.

>> Salana. Yeah. Uh alth although interesting like Black Rockck initially did not select them if I remember correctly like selected others like Aptas and a couple other networks which I found interesting. I think that happened last year like around March. >> I would underweight those types of deals because there's a CR there's a it's all it's all a game behind the scenes of how much >> Yeah. Western Union I think you mentioned this Yo like anytime you see an institution announcing like there's a lot of grants behind that. There's there there's there's probably the biggest one ever like in the history coming soonish and it is the most amount of money I have ever seen a chain pay and it like these deals are still happening. Is that is that Canton?

Um uh no it's not >> link to okay interesting salana >> the the sorry go ahead >> I'm not I'm not telling no >> so so I would say that the and I and sorry you you should talk of this but I would say that the point I want to reiterate the point that Yano just made which is basically every announcement you have ever seen other than on eighth mainet is paid for almost always >> fair enough um on this point when we talk about like institutional credibility and interfacing. Um, you talked about Etherealize. I I have I don't know if you guys have an update on that, but I do want to bring attention to like Tim Lee. Um, you know, he goes on consensus in Miami

and says, you know, his target for the end of the year for Ethereum is like 9 to 12,000. And for BTC like 150 to 200K, I actually think the BTC is is sensible. But, you know, how much how much uh damage or not have these new factions that have come in to evangelize crypto, particularly Ethereum and ETH, like is that is that net positive, negative? I know they obviously, you know, the DAT structure and we could argue has been very destructive for crypto, but just just specifically on like for

Ethereum itself, like are these is this restructuring that we saw last year net positive or or negative for Ethereum um the ecosystem? I I I don't think it has done anything actually like Tom Lee I would Tom Lee has um built well so he was chief equity strategist at JP Morgan for like a decade and then he built Fundstrat his whole brand at Fundstrat is which he started like you know over 10 years ago is the permable so he's always put out these like crazy crazy um yeah ambitious price targets that often defied like broad market consensus and I think that's kind of how he built his brand. And so if it wasn't ETH, it was I actually don't know his other his other

calls, but um I I think actually the institutional folks who care what Tom Lee says know that that's what they should expect from Tom Lee. I don't know if you would I don't know if you would disagree. I disagree, but I think like I think people are kind of used to that. It's it's like um like Jim Kramer. It's like if Jim Kramer started saying crazy stuff about, you know, Hype or Salana or ETH, it's like yeah, well, it's Jim Kramer saying it, you know? >> Yeah. Tom and and Kathy Wood and Jim Kramer, like they're all the same. >> You know what you're getting from them. Yeah. They're >> market and nobody nobody expects anything different. So, >> yeah.

>> What's the difference between Elon's Tam and uh and Tim uh or Tom Lee saying Ethereum is going to go to 12,000? >> I mean, Elon is building the thing, [laughter] right? But >> that was a layup, Rob. >> Yeah. And he's continued to like, you know, uh deliver, right? like you know there's there when it comes to I was listening to a podcast yesterday on best like the best um that that was that was quite interesting but when it comes to like building like hardware or like material goods there's probably you know there hasn't been a better entrepreneur and you know like since like the railroads essentially right and he's

been he's done an incredible job it Twitter you can I think you can probably debate how successful that's been but like for um for when it comes to like you know tangible goods like he's just incredible incredible job >> folks agree >> I'm going to have to drop and break tradition of content of the week >> wait you got one content oh you have a call in a minute all right >> hit us real quick hit us real quick >> content of the week gosh I don't really have anything I will say like oh oh uh I guess uh that I I I mentioned it earlier that um interview with uh Gavin Baker in uh uh invest like the best.

>> That's the one I was talking about. >> Yeah. Yeah, that's the one everyone's talking about. Um really good. So, I would tune in to that. >> Rob, what do you got? Sound, you can drop. >> Okay, Jen, great to see you. >> Yeah, so um I I'm gonna I'm gonna say two things. So, one, uh, if you're into horror movies like me, there was a really good podcast on the best picture, the big picture, which is like my my favorite movie podcast, um, about the 10 best horror movies of the year, uh, like last week. So, that like, you know, kind of gives you the >> And and what got number one?

Uh they they they their favorite of the year was um you know they liked um Bone Temple which is the the 28 Days Later uh piece and then they they really liked they liked a few others and one of the ones that I'm going to suggest which is um Obsession uh which like just came out which was a kind of a a super interesting movie. The thing actually I thought was most interesting about the podcast though was there's this I've said this a few times on the podcast but uh horror and in independent horror is like the only part of independent film where you can still make money today and like people are making films for you know 510 $15 million and they're they're returning you know$125 million. Uh and we've now started to see the like YouTube creator to like getting like

real deal pipeline uh on the horror movie side which I think is super interesting. And so there's like a ton of horror movies coming out this year. So, you know, big year for for horror. So, um you know, and off uh off topic, also listen to, you know, things that going to enrich your life, but you know, horror films, you know, big big year, the year of hyper liquid horror. >> Interesting. So, our head of creative showed me the new AI video models and um it is nuts. It was almost like a chat GBT 2023 moment for me. Like, they are so clinging, I think, is what they're like. And I I played with this maybe two months ago and could not really build something good honestly. And he like he basically built a movie. So I think yeah

I didn't know that that was happening in horror like the YouTube to production pipeline. But it's going to be really cool to see what happens with all movies as as these models get better and better. I mean this the the video I saw he I it you couldn't tell it was AI at all. It was unbelievable. >> Yeah. Um content of the week. uh the new Drake album uh where he mentions your boy >> Shane Copin. >> Shane Coplan. Shane Coplan. Yeah. Um hold on. Let me pull up a Do you remember the lyric?

>> Uh I don't I don't know. Yeah. Said uh Oh man, I'm not going to try to sing a Drake song. >> Are you going to rap? >> That'd be bad. >> Did they put it on the tra table? Better treat me like Shane Coblin. Bank tellers better stay clocked in. There you go. >> They also call it Poly Market. They talk they they mention Shane and he also mentions Poly Market in another another song. I think >> mentions it mentions Bitcoin in like half the songs. >> Is it really that many? >> It's probably it's I think there's like I don't know of the 20 songs on the album, it's probably three or four actually.

>> Yeah. >> Yeah. >> All right, folks. Good pod. >> You didn't give your content. Oh, I guess you're just saying Drake is the content. >> It's Drake. I can't give another David Senra or Invest like the best. I'm forcing myself not to. >> Yeah. Um >> listen, that's why you're the the great entrepreneur, you know. I'm just sitting over here as the the VC. >> Please, please, please, please. All right, guys. Um hope you guys enjoyed the Kagney podcast. We are um I'm going to put this in the chat, but we're debating a slightly different guest episode format where, you know, right now we we release these episodes every single week, every Monday. And uh oftentimes we'll we'll feel a little forced to like get a guest in here and they we lead it tends to lead to some of the the kind of like mid-tier podcasts

that we do are always because we're scrambling last minute. We're probably going to move to a mostly in-person format where we're comfortable skipping weeks. Sometimes we'll do three in a week, sometimes we'll do zero. Um but I was just, you know, thinking about a lot of my favorite podcasts, Invest Like the Best, David Senra. Um you know, a lot of these they they don't have a forced schedule. They still record all the time, but I think there's more of a focus over on quality over quantity. So, thinking about moving towards that. If you have thoughts, drop in the chat and we will see you next week. Cheers, folks.