Inside MakerDAO's DSR Hike: Balancing Demand and Revenue in a Bull Market | Analyst Round Table

Transcript

a couple months ago there was like this consensus that unibot is the token for the next Bull Run make sure to like unibot roll bit and I'm sure there was a couple more but I can't remember and then like they had such a strong first mover's advantage and they kind of just let it die out it's I feel like this is one of those big first mover Advantage fumbles um not as bad as open seat but I would say like definitely what's up everyone welcome back to another episode of zerox research marches just around the corner and I want to make sure to give you a quick reminder to not top tick your prices of your D London tickets if you use codes 0x10 at checkout you can lock in a 10% discount on your ticket don't miss out on your chance to get ahead of

the curve I'll see you in London before we get into today's episode just a quick disclaimer the views expressed on this podcast by either myself or any guests are their personal views and do not represent the views of any Associated organization nothing in this episode should be construed or relied upon as Financial technical tax legal or other advice all right let's jump into the episode what's up everyone welcome back to another episode of zerox research today is Monday March 11th so this episode will air on Wednesday March 13th and today we are joined by wesy and a new face picachio uh welcome picachio thanks for coming on uh from the blockworks research team to jam on the latest Market happenings I just realized Bacha and Westy are apparently a roommates to anyone who's listening to

this on YouTube rather than listening on Spotify or apple but anyways ren do you want to kick kick us off with a little bit of news and governance updates yeah for sure um Bacha and Wesley also moved in with eord capital from what I heard and seen they have like nighttime Jam sessions in the living room together um but the kickstarter news and governance updates for this week Eclipse announced a $50 million dollar raise this morning as a series A's and basically they're going to use that money to build out the svm as a rollup that leverages Celestia for da and eum for settlement I think this is sort of like a nice intersection of multiple narratives you know da narrative is very strong salana and his virtual machines um the whole svm narrative is also very strong but ultimately you

still want to build that where the users and the liquidity is which is ethereum as a settlement ler and it'll be interesting to see Eclipse kind of execute at the intersection of all of that um I'm going to touch on a few more salana related things Camino K the native token of kamino on salana will snapshot for its air drop on March 31st there was some like Community discuss around this I think they're doing a fully like linear snapshot so there isn't like any tis sort of like what jto did um and apparently I think there's been some Community push back and discussion around that I know they changed a few things but I'm not sure what exactly they changed and last thing which is kind of salana related is that injective launch it's in evm which aims

to bring composability between Cosmos ethereum and salana like BMS under one Network's umbrella so there's kind of like three different Sal We Day the headlines there you guys have any thoughts yeah I mean I'm definitely excited for Eclipse to launch for all the reasons you said full disclosure I am an investor in this round um and yeah one of the things that was interesting that Neil recently tweeted was he's basically trying to juice the sequencer as much as possible taking advantage of like a single sequencer type of environment and so I'm super excited to see what kind of performance perance you get out of one sequencer jued to the max as opposed to having to have a full

validator set which I don't think any other L2 has really tried their best to maximize performance as much as this is going to so I think that's definitely a worthwhile experiment pushing the limits of of what's possible yeah I can um touch a bit touch up a bit on Camino I'm kind of up not upset but this might be a bit of a rant I um so like in my year feces I talked about how these deaths on salana need to airdrop um to attract Capital to the chain but I think Camino is doing it in kind of a weird way because like if you

and this is what the community was talking about Ren um but if you announce it it's just going to get diluted and the fact that it's linear I feel like Solana is already not a very Rich chain compared to ethereum so I think you really want to give out tokens to users to kind of increase volume and TV all across the chain but if you just give it to say the whales even though I don't necessarily like that term I feel like it'll be it won't give what jeto gave to Solana which is this activity this volume the people who are actually trading on Solana yeah yeah I think I generally agree there in terms of sort of like airdrop

distribution right I I understand the want or the desire to make your whals Rich because these are like the largest drivers of your protocol or your death's activity but at some point I do think it has diminishing returns right if I'm worth like I don't know like10 million I have $1 million worth of assets deposited on Camino like the difference between like a three million air drop and like a $1 million doll air drop probably isn't that much you know past a certain point it's just going to be like holy that's a lot of money it doesn't matter like how much money there is there and so I do think like a TI system makes a lot more sense sure I think maybe jto went like a little crazy

with the tiers I think like the bottom tier got like a THX like more Geo per like Soul deposited than the highest tier maybe you don't need to like make it that extreme but I do think like overall a tiered system even like if just like very very sightly tiered is better than whatever like Camino is doing with their sort of the near distribution yeah I agree with that and on the first note that you uh brought up Ren in terms of eclipse raising I'm just very excited to see svm experiments like in Faster paced environments because obviously Salon is like pretty decentralized at this point has a lot of moving Parts a lot of entities you got to get on the right uh the same page so

I'm just Keen to see the innovations that come about for the svm that ultimately help salana but also help Eclipse that can occur just in a more centralized way in the beginning and hopefully reaching to like more decentralized on that Spectrum as uh the project evolves all right moving on to some other news and governance updates the E ETF is looking a little less likely according to Bloomberg analyst James and Eric as they see no sign practive attention from Securities and Exchange Commission unlike doing the run up to the Bitcoin ETF approval I think personally I I generally agree with this stance I don't think an e ETF is happening this year the Bitcoin ETF took

so long went through so many like regulatory hurdles and after like God knows how many years it finally reached the point of where it was this year when it finally got approved I feel like the E ETF it's just like a narrative that people are trying to latch on to sure I do think like some of the price appreciation is due to the ETF but I just don't think like the evtf is going to get approved if I'm looking at this from like the sec's position they're like dude I gave you like your Bitcoin ETF already you know like don't ask for too much e can wait till like I don't know like five years later or next cycle right um and following some other news within ethereum land but also within Sala land I guess um Wormhole fix the air drop Checker and many users are

finally reporting that they're now eligible for the Wormhole token W I know there was some snafus or perhaps unhappy community members around the distribution and they made some not normal like I guess air job decisions compared to like a normal like air job including like Distributing the air job to like some select communities and having some like requirements for that in place but yeah so if you're if you think you're eligible for the wor air drop go double check that again today any comments there one thing on this is if you're ever wondering what like pure anger looks like go on a Project's Discord after they announce their after they release their like airdrop Checker or

whatever it is and that's like when you see genuine hatred from people and it's just like it's sad but it's also very very funny definite yeah for sure I agree with that big time I think the this is just also to the Wormhole team please make it so that if you have Rabbi you can check the air drop because it's just just like I had to go through so many Hoops to get on metamask again but I I'm very excited for more Wormhole um I think it's G to potentially be the best airdrop this year I don't think we had any other this year though like over the past let's say six to eight months I think it's going to be a really good one and in general I'm very excited for

Solana teams to do proper air drops and good ones and not like what I assume Kamina will be like is Wormhole the first airdrop to do this vesting thing because I know mad lad holders receive 16,000 W in total they get 3,200 at the start and they get their best vested over I want to say one year um but maybe a six months and I feel like I haven't seen like vested air drops I've seen like normal air drops I've seen air drops where you get like a call option to purchase the token below market price um but I don't think I've seen a bested job and I'm interesting to see how that changes the Dynamics I think it's like a relatively small portion of the air job Supply but it's still interesting to see nonetheless yeah know they released

their methodology for this air drop right before we started filming so I don't know if you guys had a chance to check that but it was like the madlads were the only uh group of entities that had this festing schedule so if this was applied to other nfts that give their jop too I think it'd be a cool experiment to see how that changes Maybe maybe price action or user Behavior Etc uh because it obviously incentivizes these types of users to stay involved for at least a year if not more as opposed to potentially just selling and leaving um but yeah I don't I don't know if this particular experiment you'll actually see like the results and be

able to take something away and apply it to your own airdrop do you know if uh Lads that you know get the initial airdrop and then they still have things vesting for that wallet or tokens vesting for that wallet if you transfer that lad does the new owner have the claim to claim those tokens that are vesting I don't know with 100% certainty but I'm like fairly sure that it's tied to the madlad itself and not the wallet address and the reason why I believe that is because it's basically a part of the badge within the wallet within the xnf and when you check your specific wallet on like the wallet checker for they air drop it doesn't come up within

that allocation so my guess is it's not tied to the wallet it's tied actually to the nft so if you were to sell it then the new owner gets whatever rights or left so if you let's say want to sell after the initial airdrop but you don't want to wait for the vesting period you can sell your lad now the new owner will get the the vested uh W over time which is interesting that's super smart yeah I like that idea honestly because then it kind of provides a little bit of intrinsic value to the actual Lads for the next year so maybe Tristan and Armani or or just Armani not Tristan sorry can can get a little break going back to the the EF conversation I feel like I've been

banging the drum whereas CT seems to think the EF is is a guarantee at this point I still think it's around like 50% that it gets pasted and like Ren said it seems from ETF experts for that that probability is probably lowering lowering slowly and slowly at this point um like I think looking back at the Bitcoin ETF that was only really approved from like a three out of five vote from the SEC where Gary Gensler himself was the tie Bricker and I felt like is he he only voted yes because his hand was forced uh by the court case and so I mean I feel like his hand isn't really forced in this case and that the

SEC can make up whatever reasoning they they feel like to deny the CTF and that's all it takes really I think the ETF is eventually going to happen especially if we get a better or more favorable Administration uh this fall and next year but yeah I still put it at 50% maybe slightly lower of passing yeah also followup go that I I think e is gonna do remarkably well the psycho to um but I don't think that any ETF will be as large of a supply sync as people think as compared to the Bitcoin ETF right you're seeing like $300 million net inflow days $600 million net inflow days I think that PE like 749 million or

something for Bitcoin I I wouldn't be too surprised if if ETF is like one whole order of magnitude smaller than that sure there are other like fantastic Supply things for Eve right now especially with like the whole like reaking and LRT protocols I think that of e that Fe St continues to go up and just e that is St normally but I don't think the ETF is going to have as large of an impact on sort of like the suppliers people think I'll actually disagree with that point um push back a little bit I'd say if it is uh put through then I think it'll have very valuable inflows maybe not on a like per dollar basis as much as Bitcoin is but the flows will I think

impact the price much more given that it has a smaller market cap has has a deflating Supply like I just think it's much more favorable for pushing up the price than Bitcoin even if it gets much less flows and me we kind of saw that with grayscale in the last cycle where um their Bitcoin trust had like six times as much flows as their eth trust but eth went up 3x so I think it's going to be something similar along those lines where yeah like the total dollar amount of INF clows will be much less but I think it'll have a huge impact on the price all right that's it for the news and governance section next we're moving on to the dydx segment all right we are joined today by Carl one of the dydx

grants contributors Carl thanks for coming on hey thanks for having me great to yeah yeah of course so the grant subow which is since rebranded actually to the dydx development program just received two years of Runway extension via Dow vote can you kind of explain I guess the Dy ex subow architecture and how this grant which is now the development program fits into that yeah for sure so um DX is obviously a pretty broad ecosystem at this point um but it has kind of these three buet buckets of core contributors so there's kind of the core trading team which is responsible for building and updating the code that's being used to deploy on chain uh so whenever you see like a software

upgrade or anything like that that's being updated on chain that's because the core team has shipped some new version of of the protocol and that's being deployed on chain as a result through a community votes that's being done through the validators then there's the DX Foundation who supports the protocol and kind of overall ecosystem with Community work governance work they help kind of foster the ecosystem and then there's the underlying community so that's kind of the third bucket and the community as with most other protocols is made up of token holders users validators stakers um and then contributors obviously uh So within the community is where we've uh as a whole developed a few subd just kind of

forming them in order to help the community manage and maintain certain important responsibilities that are kind of key to uh being able to maintain the DX protocol given that the other two buckets might not necessarily be capable or have the means to manage them they mo fall on the token holder through governance or through maintenance or whatever it might be and so these subd outs were launched with the goal of okay let's give uh the community that the power to take control here and kind of appoint certain contributors in order to to manage those so grants was the first one that launched over two years ago uh it has kind of its main mission is really just to help promote the growth of the protocol through development

infrastructure um really anything that that helps kind of build a protocol and through ecosystem growth through Community initiatives kind of recruiting more contributors and just generally like promoting the the protocol across uh the space and then the second one that launched was the operation subow so that was responsible for uh maintaining the core infrastructure of the DX protocol which launched a little bit more recently so really you could think of subd dows as Community contributors that are hired by the community in order to take on these responsibilities such that uh more just like action and more um can occur via this kind of community bucket that was a great teup for next week too actually because the op subow is going to be the next DX short so yeah

great that played out pretty nicely but uh what are what are the plans with the funding extension of two years that you guys got recently from the Dow like what types of initiatives are you most Keen to fund yeah definitely so you know what what we've learned running the grants program in the past years is that it can be uh tricky and it can be dangerous to try to foresee everything ahead of time and try to kind of estimate what it is that that we should be funding but generally speaking we've been very excited with helping uh sustain and grow the infrastructure and kind of the protocol through hiring more contributors and through hiring uh service providers that can help um kind of like run key infrastructure uh

components that help kind of DX um run so previous example have been like uh hiring a team to run the first instance of the DX indexer which is responsible for all kind of like the data availability of the DX protocol we've hired uh like mint scan Kepler lots of other service providers to help run core kind of community um infra like explorers and wallets and that sort of thing and then on the community side we're really excited with a few different initiatives to help kind of uh continue scaling the ecosystem and and promoting the the dox environment and make making it really fun to interact with and what in your opinion like would you say like two years from now if

you're looking at you know all the work that you guys did what would what would make it look like a smashing success to you is there any specific kpis that you're looking at yeah kpis are are an interesting one when it comes to Grants because we don't like to associate ourselves with we funded x amount or redistributed x amount of Grants because that would imply that we're just handing out money right we want to make sure that we measure impact which can be tricky to measure just because how do you actually determine what is impact when it comes to you know a grant deliverable on a protocol but from our perspective if the grants program has had a significant influence in um the direction and the growth of the protocol through either onboarding new contributors who have gone on to build

something that is used regularly by the protocol or through recruiting contributors that are playing a key role in kind of maintaining uh core infrastructure for the protocol that help it's run efficiently or just has allowed it to continue growing and then also just have we done a good enough job to continue building out the ecosystem such that being a part of the dyx community is a fulfilling and kind of fun um uh position to be in yeah that's that's super cool and honestly we could do a whole episode with with you guys over at Ry to kind of dive into grant sometimes because obviously there's no Silver Bullet here and it's a very fluid space so plenty of

stuff to touch on but unfortunately today we're out of time but Carl thank you so much for coming on we'll have to do it again cool thanks a lot all right now for the hot seat C drone wesy I'm gonna throw it over to you first this week I know we got a lot of sort of really big news that broke last Friday so we love to hear what you have on the kaziu throne yeah absolutely so I have on cool Throne depending on where you guys put it might be the hot seat but I have maker Dow adjust ing the DSR to 15% which is up from 5% where it was previously said by the Dow and this is in addition to updates to the borrow rates of the of the platform for Crypt backed alans so they increase the borrow rate for a bunch of the eth vaults to

above 50 15% and then above 16% for the steth and R Bitcoin vaults so while this may seem like a huge jump it is still the cheapest venue to borrow against your e across Defi and exchanges on a I believe it's around 20% right now for example um and I yeah this is simply just indicative of the current market environment where there's a higher demand for leverage to capture returns generated by the market since we're obviously seeing immense returns within eth Bitcoin and alts at the current moment um and also like increasing the DSR is a necessary step

to to ensure continued demand for D because otherwise holders of D or S die or those that have locked uh within the DSR will sell their D in order to chase more lucrative opportunities and this will subsequently obviously drop D price and then leads to Arbitrage or swapping their die for stable coins in the PSM and ultimately reducing the number of stable coins maker has in their reserves to keep the peg stable and they also use the PSM uh to invest in rwas so if the PSM balance Falls low enough they'll dig into the current set of rwas looking first at the ones that are most liquid to build those reservers back up we

actually saw on March 3D of this year um so around eight days ago of this recording we saw the PSM drop to a new local low of $185 million which was likely one of the bigger reasons to spark this change in rates to help facilitate more demand for die at the current moment um if you look at take a look at the projected annualized revenues calculated by U maker burn they almost doubled from around a100 million in annualized profit to just under 200 million so this also plays directly into the maker thesis of having counter cynical sources of revenue so while rates are high rwa will be yielding a lot and when rates fall

the demand for leverage brings in a greater amount amount of revenue from these Crypt back loans um so yeah I personally think it's a it's a good move and a necessary move given where the markets are and the need for more die demand and I definitely recommend listening to the episode that uh Sam and red did with um a bunch of people last Friday including hu Vance um and Steakhouse talking about uh maker endgame and why the demand for die is super important where the source come from but yeah I don't know if you guys have any thoughts on this move I've got a question for you wesy I've been seeing a lot of people on my

timeline attribute the increase in interest rates and the DSR to Athena's launch and I agree Athena is like a huge deal in packaging that um you know delta neutral trade with the basis and future spread as like pretty huge and obviously on a billion dollars of capital at 60% yield in the middle of a bull market that's like 600 million of money like real money being returned to onchain users so would you say there's a legitimacy to that claim or do you think that's mostly overblown I think there's definitely a legitimacy to that claim like I said this is a move in increasing the demand for die overall and obviously if there's a competitive stable coin or synthetic

Dollar on the market that's yielding a much higher return than DSR then demand's obviously going to WAN from die to this new synthetic dollar you kind of need to compete on some level um and I also know that like the plan for D and S die is for it to be used throughout defi throughout layer 2 such as blast that are trying to have native yield like they want to be actually utilized how the DSR be utilized and therefore Drive di demand across the ecosystem and my guess is that usde from Athena is a good competitor to this to providing native yield to a synthetic dollar so yeah I definitely think this is in part A reactionary move to that as

well as just a reactionary move to lowering die demand and rates increasing throughout the market in general I have one more question for you sorry to keep you on the the hot seat I guess even though this is a cool Throne that that was not on purpose actually but uh is the profit like I don't understand how the profit doubled considering the borrowing rates and the DSR increased drastically in tandem is is the AUM and that 1 and a half% spread between the DSR and the borrow rate really just is it that much to the point to where it doubles revenue from 100 million to 200 million like am I understanding that correctly so my intuition is that

there's much more like die being borrowed from these crypto back loans than there are die in the DSR therefore like the actual revenue generated uh is much more significant than the amount that's going to be paid out through the DSR assuming that the DSR remains at the same number of die deposited obviously you might assume that the DSR increases the number of die that gets deposited and therefore actual amount of profit uh generate generates Falls because that's obviously part of uh Maker's costs but yeah I believe that that is likely like the biggest case for why you're seeing huge jump and profit I really like the counter cycal nature of

the business I mean it's kind of like say like Robin Hood like Robin Hood has like $3.5 billion dollars on their balance sheet so in a high interest rate environment they just print off interest Revenue but then on the other hand in the low interest rate environment which I'm not sure we are in yet they make a lot of money off like just like trading volume as activity comes back I think it makes sense for madow to do this move and adjust a DSR up to 15% because thinking we're going to like a lower rate environment and the demand for leverage is obviously here right so you might as well jack up borrowing rates to make as much interest Revenue as you can one point I'll be interested in seeing is how sensitive they are to like market conditions is it something

that they're going to adjust like every month as market dynamics change or is it going to are they going to be like a lot more careful about it and maybe only change it like every six months because there is is a very real scenario where they might overdo it just like how sometimes the Federal Reserve overd does like interest rates and the economy becomes too hot or too cold it's very possible that they juice up the DSR too much B rates go too high and they handicap sort of like die growth within the blue Market even though the demand for leverage is there I'm not sure how like the decision- making process behind this is and how they came up to those numbers but yeah I would be really really curious if did they make a lot of like micro change like every like two

weeks or do they make adjustments like every like three months for example yeah I'm pretty sure um that as a part of this they also reduced the amount of time it takes for them to implement a new change I believe they reduced it by like from a couple days like 48 hours to 12 hours I believe so I think they're going to be ready to respond to changes in the environment whenever possible but I don't think they're going to be updating this super regularly just monitoring and then being able to react to changes just riffing here I also think that this move was pretty parly like driven by Athena and

thinking of this from like there's two policy twos available right one is adjusting the borrowing rate one is adjusting the DSR I'm trying to think which one is a more like effective lever to keep maker solvent I guess or like the peg sa I think the Bor rate is a more effective leverage here because chances are Athena's funding rate stays pretty high or like uh SD stays pretty high um as market conditions increase and improve right and the demand for leverage stays there I wouldn't be surprised at like the current market cap if ssd's like yield stays I don't know

like some ridiculous percentage like 50% for like the next like six months right and if you think about the the levers that which you can like toggle from maker Dow between the ball rate and the DSR like it's hard to increase that DSR to a really ridiculous percentage to make it competitive with what s usde is paying out today and so I think the main level here should probably be the ball rate although that obviously like dampens the DI growth yeah that was my main takeaway actually from our conversation the other day and actually it was brick who co-hosted sorry Ren but it was uh it was a good conversation and my main takeaway was demand is something that the maker

Dow Community hasn't focused enough on that was at least my takeaway and I think that we're seeing in real time them address the demand problem because obviously they're trying to attract people to lock stuff into s diet and grow the diet Supply but my one worry is just Why would you you borrow from maker Dow at 15% when there's other venues to do it cheaper but it's going to be interesting to watch play out I will say maker is still the cheapest place to borrow your eth at the current moment like obviously it's a fixed rate so that could change any day but right now like a is around 20% and I'm fairly confident that right now it's the cheapest place but again that could

change that's surprising me I didn't know that that's a good flag I guess I just ousted myself as not uh being a leverage if you will yeah I think one one last point I have here is it'll be interesting to see how def5 protocols respond to like compar to the D5 protocols when like the market dynamics change I think D5 as a whole is a lot more developed than what it was like in 2020 2021 there's so many more protocols these days and there's like enough protocols within a sector that like they're kind of able to influence each other's Dynamics especially in like the lending and money market sector so it' be interesting to see like who else

makes sort of like business strategic moves based on like some other protocol doing something one issue there I feel like is that that only really happens on ethereum and like on other chains they're just forking of it and there's not like a lot of competition on Solon I know they have margin for I don't want MC Brenan adding me on Twitter and saying we do it but I feel like it's really only on ethereum and potentially a bit on SOL on at the point like at this point like people actually coming up with competitors and doing cool stuff etc etc what's up everyone March is approaching fast and I want to give you another reminder not to miss out on Das London it is coming it's right around the corner and it's in March from the

18th to the 20th we have three full days of content this is your chance to bump shoulders with some of the world's top Executives and have open dialogue with both attendees and speakers we're going to be focusing on a range of topics that I'll let Ren discuss for you first on the list we have Bitcoin Catalyst the Haring and spot ETF next we have a view from the buy side from investors on things like strategy portfolio allocation and more we also have a topic on Aras tokenization and stable coins which I think we can all agree are going to pay a large vot in crypto's future we'll also talk about global regulatory Frameworks like compliance best practices and the evolution of global standards that are shaping the Global investment landscape we'll also have someone from the institutional front to talk about infrastructure such as Banking and payments with financial

giants like visa and JP Morgan and last on the list the macro case for digital assets so don't miss out on this Monumental event seats are limited so be sure to register today by hitting the link in the description and using the promo code 0x10 to save 10% on tickets see you in London maybe that's a good time for me to hop into my cool Throne mine's super easy this week I feel like I've said that the last three weeks in a row but I've got my sailor in the cool Throne he bought 12,000 Bitcoin for $822 million which brings the company's cost basis to about 33.7k uh it recently announced so I think it was March 5th the closing of uh an $800 million offering of convertible notes due in 2030 at an interest rate of

0.625% so this isn't super surprising that they of course yellowed it into Bitcoin but what was really surprising to me honestly is the insane rate like that 6.625% is just so cheap to borrow money uh and maybe that's normal for a convertible notes I'm really not super familiar but to me my takeaway is it kind of sounds like a call option for the lender and and they basically get the ability to purchase or convert uh the the loan into shares of micro strategy at I think it was about $1,450 um which was a 40% premium at the time but Micro strategy is already trading above 1,600 as of today so good on that lender not sure who it was so

micro strategies Bitcoin Holdings are up to 205,000 bitcoin which is getting very close to that 1% of the total Supply that will ever exist uh they'd hit that at 210,000 because there will obviously only ever be 21 million Bitcoin which is just pretty mind-boggling honestly like this guy is unbelievable I can't believe he actually has bet now a total of about7 billion and Mark to Market it's worth over 4 14 billion he got absolutely destroyed the last two years and like just like all of us have like friends and family being like you know what are you doing in crypto like you know this is kind of a joke and except he was like on a global like scale so I can only imagine how hard that was to sleep for the last two years for him but

that conviction is is pretty electric um I'm not sure what the end game is here it's obviously just a software company like a smaller one that just holds a lot of Bitcoin so I don't even know what they plan to do with it in the future I guess it's yeah I don't know but I definitely don't condone sailor going on TV and telling people to take out debt and buy more Bitcoin but at least he's leading by example and I I think he is actually the biggest Deen out of all of us so H tip to Michael sailor not sure if you guys have any uh things to add here I think it's this is like probably one of the better examples of how like this entire like Financial Engineering Process could have turned out there's

definitely like a lot of ways this could have turned out pretty disastrously other than Michael sailor I think one buyer that I be interested in seeing how much Bitcoin they've been scooping up is tether so in 2023 tether had announced that they started like purchasing Bitcoin um I don't remember how much it was but I feel like it was like a relatively significant amount you know like maybe maximum of like1 billion dollars and at that point they also had a few other Holdings on the sheet I think like they also bought a bit of gold and people were like oh you know this is like the return of like gold and like hard money backs like US Dollars you know in tendo's case UCT so I'll be interesting to see if they've been

buying up the dip uh because if they did like they would probably be up a pretty ridiculous amount to to be honest um so yeah that's who else I'd be looking at right now in terms of like BTC Holdings this is um I don't know if you guys saw but sailor had an interview today and he was just smiling the entire time for like however long they interview with but I think like apart from tther I'm also excited for this is something I see on Twitter a lot and it's I feel like Obi Felman talks about it and one of the things he talks about is like the next top will be marked by or no the next bottom will be marked by nation states capitulating and I wonder

how many like states are actually actively buying Bitcoin at this point point I think it's the only one I know is obviously Bou and El Salvador but I'm sure like there's a lot more I'd take the other side of that I don't think nation states are buying Bitcoin right now I think we might get like a mid tier like top 70 in global GDP buy some Bitcoin this cycle maybe like two or three and people are going to be like oh my God the floodgates are open like all the nation states are about to be scooping up Bitcoin but I I I find it just very hard to believe that they're doing that yet especially considering the government is like trying to offload the US government is

trying to offload their Bitcoin it's like why not just sit on that I feel like that's a good insurance policy I also think that there's a decent amount of nation states where like the treasury or the balance sheet of the central bank is too large for them to deploy in a Bitcoin in like a meaningful manner like even like a 1% allocation for some of these like central banks it's like just going to move the market so much that it's probably not worth it for them and if you're like a developing country so to say you you probably shouldn't be shouldn't be yeting money into Bitcoin and watching that as like as that draws down like 60% in the bare Market yeah I think there's going to be potentially some opposing forces maybe

you have one small maybe two nation states buying Bitcoin and then you have others that are going to start Banning it I believe Nigeria baned Bitcoin pretty recently and we're probably going to see other third world countries or like start to ban it as well so I think that'll be interesting I also think it's been weird watching the micro strategy stock price just rip continue to RI despite like you'd think that people were only buying it previously as exposure to bitcoin and now that they have Bitcoin ETFs that they sort of migrate but you still have these speculators buying up micro strategy it's above its 2021 cycle High whereas other like mining stocks or Bitcoin

adjacent stocks have not made new highs yet or aren't even close so yeah it's been weird to see the stock continue to climb and obviously Sailors can take complete advantage of the stock price climbing to buy more Bitcoin so power to him I still just can't get over like the Larry Fink Snippets I'm seeing on CNBC of him being like it's a store value and like battling the CNBC Squawk Box like host who's saying like well you know gold silver like they're used in things he's like yeah but bitcoin's a store of value it's like yeah that guy that guy definitely like had a late night with the boys and like figured out crypto and is definitely like fully fully ingrained

because he seems to actually have a bit of an understanding on how like tokenization ethereum and and stuff further out on the risk curve actually works so I'm I'm super excited for like the next five years to see how this evolves all right I think that's a good point I'm going to shoot over the hoty C Throne to myself um this week I got jeto in the hot seat actually um so last Friday jeto announced that it suspended their alternative mempo offering offered through the jto block engine and they cited negative ex externalities it caus users of the chain and apparently this convo has been in progress for quite a long time to be honest it wasn't like a sort of spur of the moment decision

however bundles and other block engine functionality will continue to operate as normal so the bundles is allowing the people to submit bundles um giving people like sequential and atomic transaction execution and then the block engine is responsible for a few things including ingesting transactions from the relayer forwarding those transactions to Searchers ingesting modles send transactions from Searchers performing simulations and selecting the best and most profitable transactions for the network and for validators I think there's been some speculation as to why they made this decision the sort of ongoing Theory out there is it's because of telegram bot users um a lot of these telegram bot users are setting a ridiculous slippage

of I don't know 50 90 99% um and obviously once these transactions are sent to Kos meu a seal comes and say okay you said your slippage to 50% I'm just gonna SNP you for 50% and that's not like a very good experience um so to say and validators were making a lot of money I think there was one day I know I kind of annualized this um but John Char annualized it so I'm going to use his annualization there was one day um where basically if you annualize that number validator tips were on track for 550 million so that's a lot of money at stake to be honest um but yeah I think now the network Dynamic has obviously changed without this

meu now you just get better execution because their trades don't get sandwiched um but it lowers the probability of the transaction getting included faster because we go back to sort of where salana was Pito and Searchers are incentivized again to spam transactions to the network in order for for transaction inclusion and I think preo the numbers were like really really ridiculous like 94% of transactions on salana were like fill transactions or like something that was like uh really insane um but yeah jto came out uh and basically said that they're going to push in a different direction that will be more fruitful profit and user experience- wise I'm really curious to

see how they serve that and how they sort of design a more profitable model because I don't see a more profitable model at least for like Theo the token without going back to like extracting M um so that'll be interesting to see and as far as profit goes you know at least the bull case for like token value or cre is not there anymore because jto I think used to charge like 5% on validator tips and overnight that basically disappeared right and GTO Souls product is essentially the same as marinades now and I think once you flip that switch and you sort of like succumbed to community pressure it's hard to turn that back on you know if

jto ever makes a decision to say hey okay we're like re-enabling M but this time like you can capture less or whatever like so will go yo what like six months ago you say that you're going to stop like your M offering and like salana is not going to have me so yeah I think it's hard to compare this to ethereum directly because ethereum is pretty different ethereum has like a public men Pro by default which means that if you want to protect transactions you need to send them to some like private RPC or meu where salana doesn't have that right salana basically took the opposite approach they have a private meu by default and so on one hand you want sort of pre-execution privacy for your transaction so you don't get sandwiched but on the other hand you also want to enable some form

of Meb so that you prevent Network spam and of course I think a lot of questions have roled as to why won't someone else just like fork gito and create the exact same thing create an alternative man there's obviously like Network effects to jeto which I think made is so successful but given the economic incentives that are now there and amount of money to be made from muv extraction on salana I don't think it's too impossible to Envision someone else basically building a GTO competitor with especially the meu offering but I'm going to take a pause there we love to hear your thoughts because I think this was a pretty like heated issue to be honest on the timeline yeah it it sucks seeing a team

like get a ton of social pressure to basically get rid of a huge value driver for their products and I tweeted a pretty hot take the other day that I think if a user sets their slippage at a high enough level and and they end up actually like their Max slippage to a high enough level and they actually hit that as the real slippage that user is not being harmed because that was within their intent like so for me I don't see this specific example as users being harmed but at the same time obviously you won't it's not an ideal case uh for transactions to be sand which in one interesting tweet from Buffalo was

basically that because salon and transaction fees are so low any possible trade will be sandwiched as long as it goes through an external men poool because otherwise on ethereum like if the uh fees are high enough so that it's not actually profitable to sandwich a given Trade It Won't Be sandwiched that problem doesn't exist on salana so every single trade will be sandwiched as long as it can be sandwiched which is a pretty difficult problem to solve um I'm sure they've thought through this a lot and are currently thinking through a lot of solutions uh whether that's you know encrypting part of the transaction only

allowing back running and not front running things along these Natures I'm sure there's a lot of work being done behind the scenes for them to make this decision uh to temporarily suspend their external men poool uh but it it definitely sucks to see that like social pressure seems to be the best way to mitigate M at this point as opposed to actual Technical Solutions yeah I would I would take the side of I agree with the move from jeto even though they did kind of give into social pressures I just think like the people aping these meme coins don't actually know what they're doing with telegram Bots it's just it's easy onboarding they're just yoloing into the latest meme coin they have no idea what

their slippage is set to by default and then they get screwed that way so I think it was the right move in general and I also think down the line and this is like a consensus take at this point so um yeah it's like not my original thought but like you might as well grow the pie and then jeto can figure out value cruel further on down the line make these your experience as good as you can and then figure out value cruel I mean they're build they're building out critical infrastructure they've got the network effects through the airdrop like I think J's here to stay and I think I'm not worried in the immediate term about returning me and exploiting users and extracting value from them is really the the right way to go forward so happy to see it on one

hand like I think to like people trading in their like stock brokage right if you use like a slightly more sophisticated stock brokage that's like not Robin Hood and if you like do a market order at least like on the normal UI you don't get the option to specify like your maximum slippage right so I do think that's like an interesting thing that crypto has and sure I get that a lot of like that is abstracted away in telegram Bots but I do feel like it is up to the user you know you're like expressing a preference for how much you're willing to get slipped uh on your soft sure it will be nice if you don't get sff to like the maximum slippage that you set but you

did kind of like put an agreement on chain and say hey this is something that I'm okay with and this is the maximum that I'm willing to toter so I'm I'm kind of in the me middle you know like on one hand like I do think that like in some forms like me especially like sort of like Atomic Arbitrage between like different poos is definitely like a valuable thing but on the other hand I think an interesting thing about salana is that its block times are so short so if you wanted to build something like a MV blocker or muv share right like jto already adds 200 milliseconds of latency to a stand salana block which is like a 50% increase in the block time given

that a normal salana block is 400 milliseconds right and I think long term they're trying to aim for like 200 millisecs so if you try to do like a m block style auction to like Searchers and return that value to the user I'm pretty sure that's going to take longer than 200 milliseconds but then again you know maybe like salana is too fast for its own good I don't know if that's like a really stupid take that's going to get me a lot of hate um but that's definitely like a possibility you know because like these blocks are so fast so you can't design a lot of like these auction mechanisms that perhaps take a little bit longer of time you know but also if like you're if you're like a user I'm not sure how big of a difference 400 milliseconds or one

second makes to be honest you know if I'm coming from I think anyone that comes from ethereum to salana says like it's amazing so maybe like native on salana and starter the crypto Onana will feel the difference between 400 milliseconds and 1 second for example but perhaps someone coming from ethereum wouldn't um but yeah just a few like interesting dynamics that I think will impact what jeta will do from here my main thing on the salana side is the transaction fee mechanism like I I personally find the ux of using arbitrum smoother than salana just because like half the time when something busy is going on like I I can't get a like a transaction in it is so frustrating and

I am that's why I'm so excited about Eclipse like I really want to see this transaction fee mechanism get implemented this year on Solon main net yeah totally agree with you uh I think that's a good point to pass it on to bachio so last but not least who do you got in the Hy drone yes talking about um telegram Bots I am putting unibot on the hot seat today so they announced today that the the unibot core team decided to part ways with the team which deployed unibot on Solana and just for context uniba launched unba on Solana separate from unba launched on Solana late December early January which was around the time

where a lot of like meme coin activity started picking up on um Solana I think whiff was that 3 million which I remember and I was like ah it's it's a bit much now um yeah this was like the first wave and then so according to the unibot on E team um they decided to split because the Sol the Solana team wanted to launch their own version no they decided to launch their own evm unibot on blast or they made the attempt to which is obviously um kind of impeding on the fum Bots territory and they also refused to kyc

which I would have assumed that they had already kyc and knew each other quite well if you're giving somebody like your brand name and um they don't want to pay fees to e unibot holders and this was already kind of like a weird launch from the very beginning because they allowed this random team now that we know like not random but non kyc team to launch on Solana and they air dropped the unibot on Solana's tokens to e but they still ended up diluting the original unibot token holders because they launched a new token and only gave up like 80% of it back to e holders it was just like kind of a botched uh launch but it was at I would say it was at a good time

because I mean it was a good play because like now we know all meme coin activities on salana and like there's a lot of people putting 50% slippage so many people that gto's like hey guys let's relax like maybe let's get rid of me for a bit um but that's it and like that's the I this one honestly like my take on this is kind of I'm just really confused about it because I'm like why did you guys just and from what I understand the unibot team is just kind of lazy and they didn't want to like actually develop the app on Solana this is what Twitter think so it could just be a rumor so they just

gave it to a shop but it's just like I don't know if you guys remember but in j a couple months ago there was like this consensus that unibot is the token for the next Bull Run make sure to like unibot roll bit and I'm sure there was a couple more but I can't remember and then like they had such a strong first mover's advantage and they kind of just let it die out it's it's a bit of a shame I feel like they had a good brand I know there's other Bots I don't want to name a lot of telegram bots on the podcast today but I know there's others that are much better than it um but it's just I feel like this is one of those big first move Advantage fumbles um not as bad as open seat but I would say like

definitely top five it's a yeah it's a weird story to be honest I I agree with you Pacho if feel was like they went on Fiverr or like some like random death shop it's like hey guys we want this to be built on Solano like can you build it oh yeah by the way you promis you're going to give like 50% of Revenue to like us right Pinky promis and then like they just went from there I do think that there's a larger question I I would guess like 99.9% of brands in crypto haven't sort of like file a pattern for the IP or like trademarks so like is it that illegal to copy someone brand and launch it on another chain like ethically

questionable yeah for sure illegal maybe not if didn't F like your trademark um but yeah just like a really word dynamics and yeah I agree with you it seems like a shame cuz obviously they launched like their uni bought on Soul uni Soul token and sure like I feel like all things considered that token decision was relatively okay since uni bot holders were only getting diluted by like a very very minimal amount you know they were getting like 90 or 95% of the token Supply and the salana users were only getting like five or 10% of the supply and the Tailwinds are there you know like sana's taking off as a mcoin chain I wouldn't be surprised if telegram bought usage is going up across

the board not just on salana and you know what just headed into like maybe the largest bull market that crypto has ever seen and you want to botch that because you didn't have like a formal contract and like both of these teams are coming out with conflicting statements it's just like a really really messy scenario that sure I get the want to Goen Market faster and maybe Outsourcing to a Dev shop was the fastest way to do that but I think you know like people run into these like business snafus or like drama all the time outside of crypto to so this is probably just another case of that I would say if the unibot team on ethereum trusted some random Dev shop

without even getting kyc then like no offense but you kind of deserve to get hosed on this front like Just Launch another deployment if you think you can compete but I'm pretty sure at least last time I had checked salana volume was absolutely torching ethereum volume in terms of like which deployment was making more money so this whole thing just has red flags all over it like I don't even know if we can verify that the unibot team isn't the ones behind the one on salana and I shouldn't speculate on that but I just want to like highlight the fact that you're trusting these people like pretty much 100% with your funds so always be careful with uh the telegram bot stuff I would never put like an egregious amount of your net worth on those this is a prime example of perfect

opportunity and strategy but absolutely horrible execution because as Picacho said they were the first mover in telegram Bots before telegram Bots were everywhere and widely used they were the first mover and really sort of started a an entire Trend in sector and they blew that lead on ethereum first of all but they recognized that salana was an upand cominging ecosystem and the perfect place to launch a new telegram bought and they completely bought to that execution as well like they had the perfect opportunity they they saw it before anybody else did and they just blew it um so yeah I guess this is a good lesson to Founders that finding the right opportunity is not

enough you have to make sure you you know execute and I mean really it's a simple as don't let some random developer team you didn't kyc build using your name came and messed everything up like I didn't think this was that hard but I guess yeah this is definitely a tall tale for new Founders as a whole though I do think that telegram trading Bots uh still do really really well uh this cycle I think telegram trading Bots have been around for like I don't know I want to say one year or so and you're starting to see more sort of product and services being launched around them for example these days there's like

telegram Bots not trading Bots that make calls for you you know they they'll highlight like a meme coin on salana that's like a 200k market cap it uses some like time series model and it basically like sends you like a notification in the telegram chat to ape this token and you know some of them have performed really well and I think you mix like telegram trading Bots telegram trading twos and maybe some like AI whether that's BS or not in there and you sort of like recreate these like trading groups that we saw like come out in Mass last cycle but sort of like the reincarnation in like AI form um I do think that like there's may be some interesting phase there to be

honest yeah they're definitely going to start launching AI agent fueled um telegram trading Bots but honestly what I'm seeing more of is like um trading terminals um but not like not on telegram but you can do Progressive web app or just on um desktop and I feel like that's kind of and it's not custodial um so I feel like that might be a better alternative to the telegram bot thing that we had a few months ago but I like telegram LS um NFA but like obviously be careful with your kyss Etc but I think they're like I think they're probably here to stay I think like

especially if mcoin Mania continues it's just so convenient like being able to like be on your phone in Telegram and like make a nice little like $500 play and some coin that this AI agent flagged for you and you you either like hit a zero in 10 minutes or a 10x in five hours like I think that's just gambling and people like to gamble so definitely agree that telegram Bots will continue to be a wave I have no thoughts though on like individual tokens and how those will perform because you know how it can be when fundamental are actually tied to the underlying token as is the case with unibot so don't want to speculate there just one last note on sort of like

the trading terminal thing I know like uni bot launched their own terminal so I don't know how that's doing these days but um in cico which is sort of like a more like Chad by side of like crypto training terminal integrated with vertex today to provide state-of-the-art execution software so it'll be interesting to see whether these study more like chadf five hedge fund Focus like execution terminals integrate with onchain venues rather than just purely offchain venues and I think just one last random point last cycle or maybe in the bare Market I feel like we saw Builders try to launch these like copy trading vaults um I think like stfx comes to mind where you basically like

buy into this idea and then like someone can execute it for you I don't think that was maybe the best idea but I think this cycle with like telegram trading Bots you being able to identify like wallets that are profitable Traders or everyone just copy trading an AI agent like making calls I do think that that may be a sort of like interesting sector to look towards end in some sense it's like a self-filling prophecy because the more people like buy into this coffee trading bot the higher like price goes up just because all of these people are aping like the exact same thing when like the tegram AI whatever or the telegram bot like first makes a call or like makes a notification so in some sense I do think that would be like an

interesting Dynamic to see and how like reflexive that gets at some point of the cycle all right I think that's a good place to call it then Wesley vacho thank you so much for coming on and we'll see you guys next week hey everyone thanks for watching today's zero X research episode I wanted to take a second and remind you about the upcoming 20124 digital asset Summit in London this March seats are limited so hit the link in the description and use the promo code 0x10 to save 10% on tickets see you in [Music] London