Institutional Capital Is Pouring Into Crypto | Analyst Round Table

Transcript

I just look at the forward environment and they're opening up the floodgates to institutional capital for the first time and like even like the weird like NFT like buy a bunch of tokens and meet a creator things are like starting to happen like all these experiments that crypto people have wanted to happen are like being legalized like the the capital's allowed to travel here and um I don't know very short-term oriented traders uh on the timeline are finding reasons to get out which is yeah it's good for us. Quick shout out to today's sponsor, Algarand. We'll hear more about their Algo Kit 3.0 and how it's built to supercharge your app development on Algarand later on in the episode. Nothing said on Xerox Research

is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Picacio, Ryan, and our guests may hold positions in the company's funds or projects discussed. Hey guys, welcome back to another episode of Zerox Research. Today I'm joined by my right-hand man, Picacio, and Mark Arjun. And we're waiting on Cash Flows Connor. He will be here shortly, don't worry. Um, but we're going to get into it. And before we chat on anything, Bach, uh, I want to give a quick shout out, as you know, to Permissionless. It's coming up in I want to say what, three weeks now.

June 24th through the 26th. We're already in the month of June. Uh time is flying. 0x10 is the code for 10% off. What can the fans, the audience, the listeners look forward to at Permissionless Spock? Uh just hanging out. We're going to be hanging out. It's going to be nice. We're going to do drinks one night. We'll have Dunk Tank during the actual event. Chess. There's one more thing. There's multiple things happening in the event space. It'll be fun. Um, I think if you are interested in chatting to Danny, Mark, Ryan, or any of the other Blockworks research analysts, um, you should show up. It'll be fun. Uh, last time we

crashed Felix, Fhiao, the macro guys event. This time, I think he's going to be crashing ours. Um, so we'll also have him potentially Quinn. I don't know if Quinn's going to be showing up to be honest with you. I don't He blocked me. So, we'll have to see. But there he is. Um, but it should be pretty fun. So, if you are going to come to Permissionless, well, if you aren't going to come to Permission List, you should come to Permissionless. Um, so we can hang out. It'll be a good time, a jolly good time. Welcome, Ryan. If you don't come, Bach is going to eat you. So, make sure you get your tickets. 0x10 10% off. Link in the description. Check it out. Get some tickets. We'll see you there. Um, let's jump into it today. Ryan, great of

you to join. Great of you to join us. How are we doing today, folks? I think um you know, we talked a little bit about the markets last week on the live stream. Um how do we feel today? It seems there's still this creeping uncertainty. People are pointing to, you know, Bitcoin Treasury and other crypto treasury companies as like, you know, it feels toppy. What do we feel about that? I um I have something to share although it doesn't look as good as I wanted it to. So I might it's not a chart so I apologize about it's just numbers. I think that's fine. Um so this is if you are not tracking Bitcoin flows you can do it through this website

farsideinvestors.co.com.co.uk. Um we had I need to zoom in. Sorry guys. You can also do this on the Block Works uh analytics website now. Oh, very good. Uh we'll do that next time. Daniel Smith will just get upset with me for this episode. Um we had 615 million net outflows on Friday. Um and like 350 million net outflows on Thursday. So we're seeing quite heavy outflows from the ETF products. Um surprisingly, I think the ETH ETF actually had inflows over those two days. Not huge inflows, 90 mil and 70 mil, but still like net inflows, which is Daniel Connor. Ryan Connor is very upset about it. Daniel

Connor. Um, on the other side, again, the third week I'm mentioning it, people like Micro Strategy, Micro Strategy clones keep buying uh, Bitcoin and other dog [ __ ] Um, apparently there's stuff for XRP now. Um, there's this one in Japan called Meta Play that just bought today. Um, today. Yeah, sorry. Meta Planet. Um, Sailor bought today. So, there's clearly a lot of inflow, but Westy was talking about it on our analyst call this morning. You guys were all there. Ryan, you weren't there. Um, and basically, it's like it feels really toppy because we have a lot of these clones. Um, and we also have net outflows in BTC. But

also every week you look at the news and it's something positive. Um, either on the regulation side or on the market side. Like it's still good. Like inflows from micro strategy copycats are not particularly exciting, but there's clearly interest in crypto from institutions. So it's it's kind of in a weird spot actually. Like we're still at 105K, I think. I don't I haven't checked charts today or yesterday. Um, so the market's up. We actually had a green day across alts as well today. I'm just like in a weird spot. I think a lot of people are in a weird spot right now. If you go in the trenches, you you might lose some, you might win some. Um, but it's like it's not as clear as it was before.

Whereas like when we're really going up, everything's going up. And when we're really going down, everything's going down. Um, kind of a weird spot. That's my that's my take. Like I don't have any edge right now, so I'm just holding on to whatever spot I have. And I've closed my pers. um just seeing what the market gives and then based on that I'll decide maybe I'll cut spot below like 100k or something but I'm not like rushing to do anything. Um quick question do we know B do you know does anybody know if all of these like micro strategy clones that have announced that they're doing this are they like fully deployed or is it like they're going to deploy or is it partial? Do we know?

MetaPlanet for context is similar to strategy where they're posting the like post facto like hey we bought x amount at this average price and actually sailor kind of mogged them because their their announcement was likeund they bought more than strategy did but they bought at a higher price than he did like announcing it six hours later so he kind of mogged them even though he usually has awful execution like I think people typically comment on like how did you even buy above you know market price for the time period. So, I thought that was like a funny thing to point out, but the buys were very like small for for strategy like 75 million I think announced today. Yeah. I mean, he bought 705 BTC, which is quite small for him.

Um, given that he bought in Q4 last year, Q4 2024, he bought 20 bill or something in BTC. Um, Mark, to answer your question, I don't know about BTC stuff. I know for the alts like soul specifically like the soul strategy stuff it's it was undeployed um last time I checked which is like a month ago. So I don't I feel like we would have seen if they had started deploying it um but like the 100 mil that they initially had was undeployed. They didn't buy any soul or they didn't seed it. They just seated with capital and they were waiting for something. I need to check on this. Um yeah, a lot of the newer ones I think it's you know they've completed raises for funding and um some

have maybe started buying like I think by now Soul Strategies Janver like a couple of those ones from months back months weeks back have already purchased some but I think for the most part like when you see these announcements it's like funding have not bought anything yet or maybe they've started buying but there's no confirmation. Yeah, it makes sense because I know like shoplink, I think we talked about this last time. There is 425 million for an ETH treasury and I was just like there's no chance you're just going to deploy all of that 425 million market buy everything at once. I think you want to be a little bit more strategic with it. But yeah, on markets I think same sentiment as probably the last couple of times thing things are a little bit mixed. Um I have like Bo, I have no per positions open.

Um, you know, I've just been adding cash for the past few months. I think my last big buys was was on Liberation Day and just been adding to cash since. Um, you know, I'm waiting for either some blood in the market or some strong catalyst to like actually go direct like long or short directionally. But yeah, that's how I'm feeling. Yeah, I um I think it's pretty interesting watching crypto Twitter reason about um entries, exits, whether or not the markets topped. Um after the uh after the Great Depression, like people in the United States were perpetually underallocated to financial assets until like the 80s because you know the the the

um common advice coming out of it was like never buy stocks. like my our families lost all our savings. You should never own stocks of course. They're extraordinarily risky. Um I think it got a little bit of that out after 2008 as well where people lost significant amounts of money and it took them a while to get reallocated. It wasn't until you know 2013 I think after that the market really started seeing um strong performance post GFC. Um, and I think you're seeing the same thing happen to crypto um, post 2022 and 2023 where you just had this brutal bear and now anytime like Bitcoin's down 1% over the last 24 hours and I don't know I I don't have a

lot of traders on my timeline. I like more my information from the team on like sentiment, but I'm even seeing it where like people are calling top and we're seeing all these vehicles and should I sell all my bags and that's crazy to me. Um, like I I just look at the forward environment and they're opening up the floodgates to institutional capital for the first time and like even like the weird like NFT like buy a bunch of tokens and meet a creator things are like starting to happen. Like all these experiments that crypto people have wanted to happen are like being legalized. like the the capital's allowed to travel here and um I don't know very short-term oriented uh uh traders uh on the timeline are finding reasons to get out which is yeah

it's good for us um but I don't see any reason to um exit the market to me that's crazy yeah I think I think that's a great take the the like opposite side of this sentiment is that you've got people like James win ripping nine and 10 figure public per trades on, you know, 40x leverage. Do you guys think that that's real? No, it's not. I don't think it's real. I mean, I think it's I think there's a lar occurring there, but either way, I think he's either dodgy or someone is funding him for some form of a reason like and they're just taking the opposite of

whatever trade he's taking on another venue. Um, is it a hyperlid marketing scheme? I don't think that's the rumor on the timeline. Is it actually? I don't think so. I saw like I mean he's interacting with CZ now um saying, "Hey, I DM'd you. Can you please onboard me to Binance?" So, it's a pretty weird marketing scheme from the Hyper Liquid guys. You see, CZ actually mogged him. Yeah. He said, "This guy can't even afford one BNB to send me a message." CZ CZ is so funny. Whether you're building D5 protocols, enterprise solutions, or nextG DAPs, Algo Kit has all the tools you'll need to build faster, safer, and smarter on Algrand.

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Terms and conditions apply. Do your own research. So they had that obviously like the big talk on the timeline has been after when is like how good are transparent trades and there's like I think a pretty obvious take that it's not great because you can get hunted. Um so obviously like CZ started posting about dark pools and stuff on the timeline and saying that like this is what happens in tradition. That's why like onchain transparency isn't great. Um, and we saw Jeff also posted quite long post about how white transparency is good. Um, to be honest with you, I think both sites kind of make sense.

Like I think objectively, like intuitively, it doesn't make a lot of sense to have all of your trades public at all times to everybody. Um, on the other hand, like transparent markets could make things more efficient. Um, one thing I will say is that like if you are I think there's I I wrote about this three months ago for Blockworks Research, but there is one team that is building um private execution on Hyperlquid. Uh I keep begging people to let me get into this round. I don't know if they raised or they already have or not. I just can't. But it's called Silhouette. So, if you're like somebody who likes Hyperlid and are interested in

Dark Pools, I'd recommend checking them out, um, I don't think they have a lot of documentation out yet, but it's at least something to keep track of. That's my like Hyperlid die tribe of the day, I think. No, I have one more, but I'm saving that. I like that because I mean, even CZ chimed in and said, you know, given recent events, I think it's good time for someone to launch Darkpool per decks. So, I mean, I think it's right in line with that thought. Ryan, I'm curious your talk, your take. I'm sure you've got a tread based view here regarding uh public um transparency on trading. Yes. Yeah. I think um I Yeah, I think we need dark pools. Um it's just such a common market structure and you know, we'll do it. And I think

it's like mostly OTC is where the stuff happens today, but it's mostly spot perhaps some custom derivative stuff. Um yeah, seems like a no-brainer. Um, you know, yeah, it's just going to come with like all the maxiism on the timeline, but in reality, like investors are just going to use it. So, I'm excited to see them. What's like the breakdown there? Like, um, you know, darkpool trades relative to like overall volume on like top stocks, for example. Yeah, it's it's pretty significant. Um, I don't I I did a lot of work on darkps in the uh 2014 2015. Um the numbers have have probably obviously changed.

Um no, they're really popular. Uh they're really popular from large investors. Um I I think I think I've seen stats that they're like 80% of total trify market volume, but I don't know if that's still the case. I think by definition it's hard to know because they are dog fools. Well, no, they they they have to post their volume now. I think in like 2016 there was a regulation passed at least in the United States. So I don't know for total global volume but in the United States it was basically they have to post their volume but they only do it at the end of every day or at the end of every week or something like that. It's pretty good.

But but then there's like this there's like another issue of what they I think they call it cross clearing where if you are a desk and you know one person wants to sell and another one of your client wants to buy like you just cross their volume on your own books and that's like another form of dark market or of of dark volume. Um, so like when you try to incorporate that you uh obviously the numbers are hard because you don't know that stuff but that's a significant amount of volume as well. I wanted to bring something up. I wanted to bring two things up. One is what do you think about if we are in this like weird state of I don't know what is going on. Um well Ryan you're not you're very bullish as always. Um, do you how are you I

guess approaching information like are you looking specifically Mark you mentioned this that you're looking for some form of bullish catalyst like what are you looking for and if you're not getting what you're looking for are you looking to like hedge exposure buy potentially like shorting stuff I I'm not that bearish where I'm looking to hedge anything right now um the best I mean probably the best way to quote unquote hedge is probably diversify um it still feels very P2P. So what I'm kind of looking for now is market share shifts. So like not necessarily overall increase in volume but like who is getting the new volume now like we see like the sulfi of the world on Solana and then we see you know Satus the um

hack on Suie and then that whole that whole DEX landscape is changing up now as well. Um it just it seems like it's so diversified over there. there's like a momentum and blue fin and the market is kind of open up there for possibly a new winner if SIUS' reputation can't um you know can't be undone there. Um that's mainly what I'm looking at right now. That makes sense. I was going to say both of the things you mentioned don't have tokens because SFI doesn't have a token. Yeah, but Bluein does. Um I have a question. If you are thinking of shorting things, assume you could I mean you could look at things in the market that have like no fundamental floor that are effectively like projects that are going to die. So perhaps like

you can concentrate your shorts there. And I even think it's pretty interesting um in the L2 space now that perhaps Ethereum is bringing activity back to its chain to some degree. you'll actually have some dead chains like for the first time like really dead chains where the teams just um where the dead chains that could be an interesting short basket to hedge because you could potentially win in both markets up. Yeah, just hedge like shorting in crypto is so difficult.

Well, I guess shorting everywhere is very difficult but in crypto it is increasing. it's more difficult I think because the market I know we like to say that it's fundamentals but maybe like 30 40 50% is fundamentals and I think a lot of the rest of it is because the thing is that typically the let's let's like take it from the L2 if an L2 is [ __ ] um and it's [ __ ] because it's kind of scammy then they're doing in like dodgy stuff with their holders with their token concentration with their market makers and what could end end up happening is you just get blown out eventually.

Um it's also so news-based still that it's like I don't I don't like showing stuff. What I have been I do agree with you that there are going to be like a handful of assets that are just going to be perma shorts and I think we've had this this entire cycle. Um that's my fear to book. Yeah. Yeah. like all these outs just go to a low enough market cap where some market maker some news can just pump it and you just get eroded on your short like go ahead. Now, generally speaking, like even even some of the non scammy ones like the arbitums and optimisms, stark nets, like even their their tokconomics that the amount of token dilution coming

out, they're like their market caps are very similar, you know, similarish to like a year, two years ago, but the actual token prices are down bad, you know? So, maybe my maybe that could be a safer short if if you're looking at what the token unlock schedule is. Um, but but even then, I would I would still be cautious. I'm happy you mentioned token unlock schedule because I want to talk about this a bit. Um, so this is the L2's grow the pie.xyz. Um, so Tao has 1.46% of revenue. Um, across the L2s. Uh, let me get you that in regular numbers. They made this is one year. This is monthly. My bad. One sec.

I can't find it. They made 125k. Um I don't know what their valuation is. I assume it's quite high, but they have a 71% cliff unlock coming up this week. So that's like one thing that you're going to be like, should I short this? Um but at the same time, it's going on a Binance launch pool this week as well. So it's or just went on a Binance launch pool. Um, so that's like one of the things that ends up happening is teams end up coordinating it. Either Binance Labs, not CV now or I don't I can't remember what it's called now, but like the Binance Labs invested into it or it has some form of something coming up that like they try to blow you out. Um, so

it's very difficult even with an unlock even knowing that this thing is probably fundamentally not worth anything, you still have to like double triple guess yourself. So I'm I have like huge respects for people who can like who who are the guys on Trafi side that are like short only is it Hindenburg? I mean I closed down actually they recently shut down the offices but they were they were the big guys. Yeah. So even the best close down eventually. Yeah. Like even if they can't make it I don't know how I don't know. Yeah I agree with you Bach. I think the I mean it it's clear for anyone who's like looked at these tokens and considered um taking trades like that, you have to go a level or two deeper than just like oh

there's an unlock coming up. Oh, it's going to get diluted. Like just how these events get approached. Um, but you know, if you get these TR like these explicit examples where a 70% unlock happens and then the token rips 100% or something in a week, like I mean maybe that sets you up for an even better short than like prior to the event. Um, so it's something to keep in mind. Like I agree, but when I look out across some of the L2s like that maybe people were foaming at the mouth for like a year and a half, two years ago, like they already look quite beaten down. Um, I mean, you might be right, Ryan, about the perpetual, but like the lower these get and the, you know, the lower the liquidity is, like the more I would be concerned about getting eaten up by uh

like a little pump squeeze. Well, well, it uh yeah, I agree. Uh I think you want to you have to time it. You have to be, you know, a trader to an extent. You have to, you know, sell rips and buy dips. Would be the opposite if you're shorting, right? Um um short rips and whatever. Close your position on dips. Um but it's like I think that there's a nice pro there's like a good template that you can follow. It's like is the you know from a business perspective is the thing ago going concern is it generating fees is the team launching like a second token right like is is the is

the I I mean no clearly not what do you mean the team is launching a second token called secret well does I mean that token doesn't have a claim on Salana rev like soul does right so it's not a second token yeah I Let's continue. I I I sharpened the blade on on that kind of push back already. So, you kind of stepped in [ __ ] there. Um, no, but yeah. So, but but yeah, Salana is a going concern, but you can look at these other ones that aren't that aren't generating and like I was just looking at one chain and they generated a few hundred bucks in revenue the other day. Like they're getting paid less than individuals, right? So, um, you got to think that the team's going to be thinking of doing something else.

Potentially key members are leaving. U potentially like you can have a LinkedIn premium subscription and you can see the total employee count of the foundation or something like kind of rolling over, right? I think that there's ways to target some interesting there's perhaps some ways to target some interesting shorts in the market. Are you sure? I am not. I am not. I did sell though. It's a sol research crime. They're going to beat me up after the bot. No, but I did I um selling into weakness. Nothing like it.

I bought other stuff. I just I don't know. I'm kind of disillusioned with. I have enough that I won't cope, but I also am not sure if it's the most exciting thing for me to hold at this point. And even though we have very clearly highlighted the fundamentals of Salana as opposed to other chains um a lot as blockworks research and I think we were one of the earlier ones to do that which is why we got a lot of hate for doing it. like we're very clear that this is overvalued compared undervalued compared to Ethereum. Um and we were right. I just I didn't buy Ethereum by

the way. Um I'm just like wondering how much of that gap is going to close because Solana is going to go up um versus Ethereum is just going to keep coming down. Um I just think there's more exciting stuff out there that I could make more money on as opposed to Solana. However, I am still avoiding tokens launching not like on Ethereum um etc. So, I still think that Solana will have a lot of activity. I'm just not sure if it's it warranted the allocation that I had. Um if that makes sense. I don't want to be bearish Salana because I don't think it's going to go down. I just think there's sexier stuff

out there for me to buy. I I think you make a good point, Buck. Like, I mean, I can recall, you know, back to last summer, all the soul well, not all the souls, all the souls wanted soul to go to $3,000 or whatever and flip ETH that way. But I think, you know, people with thinking a little further ahead, I I did see that sentiment of like, you know, maybe soul won't go to $3,000 a coin in the next year, but it wouldn't be absurd to see a flipping happen in the reverse direction where, you know, the fundamentals anchor these tokens back down to realistic valuations. And if you're going if we're looking at Rev or, you know, Rev share to token holders, then um you know, we're on that course.

We'll we'll see kind of if that ship continues. Algoit 3.0 includes all the tools and open source resources you need to unleash the power and performance of the Algrand blockchain. Access a resilient network with instant finality, consistently high throughput and low fees, and layer 1 features like atomic swaps and native assets. No smart contracts required. Whether you're building D5 protocols, enterprise solutions, or nextG DAPs, Algo Kit has all the tools you'll need to build faster, safer, and smarter. Start building with Algo Kit today by following the link in today's show notes. Ledger is the global leader in digital asset security, trusted by 7 million users and securing 20% of the world's digital assets. In recent years, Ledger has built a comprehensive ecosystem of products and services,

making digital ownership more secure and accessible for everyone. Ledger's newest devices, Ledger Stacks and Ledger Flex, introduced the world's first secure touchcreens, making it easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, they have also launched the Ledger Security Key app, offering a safer alternative to traditional passwords in enhancing your digital security. Follow the link into today's show notes to get started with Ledger today. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. But I want to say on this discussion though, like Ryan, I'd want to get your takes. I know you were pounding the table a little bit about like Soul ETFs, JTO Soul, like the relationship there. There was a post last week from Jedo about Jetto Soul

being the first LST named in a registered Soul ETF prospectus. Like what does this mean? Is this meaningful for Soul as an asset? Like we knew ETFs were coming or is this like more meaningful for Cheeto? Like what's the the thinking there? Yeah, I I don't think that I have the best view on this in the market. Um I think that there are people like way closer to the metal that would know more. Like for example, like I think we have h maybe I take it back. we have a good like pulse on like institutional demand for things. Um we're we're not an allocator obviously so like we're not pushing the buy button as an allocator but um there are some people that are very bullish on a Salana ETF from from flow from in terms of flows um that are like saying like

institutions want this asset as opposed to ETH which was kind of a flop. Um, I don't know. I've been short every ETF like kind of intellectually like right like I didn't think that Bitcoin was going to get meaningful flows and it while it it seemed my expectation did fantastic. I was bearish on the ETH ETF and that it was right to be bearish on that thing. I I got to be honest, I would be like over the next 12 months like I I think that the market's overestimating what the sole ETF could do in terms of flows, but I don't know there's smart investment managers that are saying that we're wrong on that. Um, I was going to do a report about how we thought that Geto Soul would be the most likely ETF to sorry, LST to get an ETF.

I didn't publish it because I just felt I got a lot of push back from the team and I I felt like kind of uncomfortable. I like I if we want to go to market on a thesis, we want to be pretty sure of it. And um I just don't think I know enough about the inner workings of the ETFs and you know what regulators are going to say yes or no to what. But it does seem reasonable that the Getool LST could perhaps beat um you know an ETH liquid staking LST just given the complexities around staking there and and unstaking right that like the cue for ETH makes the um kind of withdrawal time times uncertain and the GEO team's done a fantastic job with just like connecting with people in

Washington. So, um I don't know how big it's going to be for Soul, but I think it's the it's more important for Jetto, right? Like, um if JTO has uh opens up an avenue for Tradfi flows directly into the Jetto soul ETF, its dominance as an LST provider on Salana really compounds and has a structural advantage against its competition. And I think they're like 5% of total stake now. Like you could see them getting up to Lido levels of total stake if they pull that off. So it's exciting for Jet. It's it's exciting for Salana, but way more exciting for Jet.

One other thing with sold is like I think 0.25% of the circulating supply unlocks every day right now, which is quite high. It seems high. Every month. Every month. Not every day. Jesus Christ. Every month. Holy [ __ ] Um, but just on the on the SEC thing, I think even bigger than this GTO soul mention in some I can't even remember the name of the SEO on ETF. Like last week the SEC put out a statement on the on staking in general talking about how staking activities they don't deem staking activities to be a security. Um but then when I when the logic for why

was that it failed it failed the fourth prong of the howi test and just for background how we test is a kind of soft test to see if something is security investment of money is it a common enterprise is an expectation of profits and then lastly is it derived from the efforts of others and so it failed the fourth one derived from the efforts of others meaning that but only only self-staking staking with a you know, self-custodial staking with a third party or custodial staking with a qualified third party only those are not considered um like security like which kind of because they follow the rules of the protocol. They're not doing anything extra. So there's no effort of others,

right? But the fact that it you know it failed the fourth one which the effort of others but it didn't fail the third one a common enterprise. So they still deem it as a common enterprise or at least it didn't fail that one which makes me question what does that mean for liquid staking tokens now cuz you know like is that derived on the efforts of others again I'm I'm not a lawyer but then we have to go into that and then also with the GTO soul ETF like GTO is an out of protocol um you know I don't know what they call it in Solana Sidecar whatever right um it's not following protocol rules which was why the SEC allowed um selfstaking because it followed protocol rules, right? They have their own rules, right?

And so I just wonder how how they're going to look at this now given that those that prong wasn't clearly failed for the regular staking. Um I'm not super bullish in it, but I mean I'm hope I hope it does come out. And then the next point is remember Kraken under the previous guidance their staking got banned. They had a settlement with the SEC because you know they were giving out a specified interest. they were investing in some of the things that they own timing not on Ethereum's timeline. So then I wonder if an ETF stakes 50% has to choose when to unstake to pay out the cash flows like again is that following protocol like how how does how is that deemed if as following protocol rules or is that derived on the

efforts of others ieds? So just even though I think it was really great news for the industry to get staking not as a security it kind of made me a little bit less optimistic on um liquid token taken especially in the form of ETFs. Shouldn't the incremental news from JO um being named in a in an ETF uh filing after this um after Hester Pierce's note? Shouldn't that make you incrementally bullish that an issuer felt that it would be worth their effort to move that forward?

I mean I I I control that in the document and then I saw the mention and they they're talking about they're going to do staking and then in the future if liquid staking token is allowed such as in brackets cheto soul then this is something they would consider. I was like, "Okay, this is just some issue mentioning uh GTO soul in a document for something if it happens in the future and and that might get scrapped. I I don't know if the SEC will just, you know, make them remove that part either, you know, so it's just a filing." So, this is like a credited in the fine print type of situation, you know, baited into a headline type of deal.

Yeah. I mean, to Jesus's credit, they did say they were the first listed uh they didn't they didn't oversell it. They, you know, they stated what the facts was, but then then the market can take it as how they like, how they like. I would assume that issuers choose their words very carefully with a SEC submitted document. Um, I would I would assume that there's not too much hype involved, but I don't know who is the issuer. It's not like it was Black Rockck. It was like some like no-name ETF issuer, right? Yeah. Rex Osprey or Osprey. I don't know how to pronounce it. I haven't heard of them before, but yeah. Yeah, they're crypto native.

They've been around for a while, but yeah, it's not like Black Rockck said it, which would be more significant. This episode is brought to you by Marinade. Marinade is focused on developing staking technology that strengthens the Salana network and connects soulholders with the best staking rates available. With solutions for both DeFi and Trady, including liquid and native staking, as well as direct enterprise integrations, Marinad's high performance staking delegation platform brings billions in liquidity and security to the sole market. To learn more, follow the link in today's show notes. And thanks again to Marinade for sponsoring today's episode. As always, investments in blockchain technology involve risk.

Terms and conditions apply. Do your own research. We can jump on if there no other thoughts. Um, something I do want to chat about that I don't know that we've talked much. We talked about CZ today. We didn't talk about uh Binance BNB or the chain. Um, I don't know that we've really broached much conversation around B&B chain, but we've got a great dash on Blockworks Research site. Um, I'm going to pull something up. There's been some interesting activity there. I feel like for many years, uh, BNB, BSC, the BNB chain, I think is what it's called now. Not BSC, but, um, has been sort of like, uh, this thing that exists and is over there to us in, uh, the West

um, but doesn't really get like broached or talked about much. But they've been having some interesting activity. Uh let me just zoom out here a little bit. But on BNB chain um we can see right in let's pull this out a little bit. We can see right around January time when uh the Trump token launched uh on Salana there was a big uptick in meme trading activity on BNB like a quick spike from you know a couple hundred million a day to just straight up into the multi-billions a day in in meme trading volume. Um, part of this jump as well was, uh, CZ kind of came out publicly publicly at that time and was like, you know, maybe I should be using, you know,

things on chain. I'm going to play around with Dex's. Let's let's play around with memes. Um, some memes kind of spawned out of CZ. His dog's name Broccoli like became a meme. They made a he made a they made a test token, I think, um, that went took like a couple hundred mil market cap. Um, but either way, uh, the BNB guys or the team, you know, the Binance affiliated folks and CZ have like kind of been sort of promoting the onchain ecosystem a little bit. They've been giving shout outs to like their launchpad for meme um, lately from like Binance affiliated accounts um, things like that, trying to spur more activity there. And you can see like zooming out there wasn't a lot of stuff happening for a long time and even

early in 2024 when other like when Salana was kind of having its its run of like initial fame. Um not much was really happening on B&B chain relatively. So it's interesting that they kind of they jumped in and started really focusing on this. I do want to point out that this recent activity here, this project tokens, the Polyhedra ZKJ token, uh, launched a few weeks ago and is doing, you know, billions in volume a day. I can't really explain why that is other than, you know, it's in this Binance Alpha launch pool thing and I think there's maybe a points program associated with it. But um either way, the the meme activity, the some of this project maybe wash volume activity has

been kind of up and to the right a little bit as of late for B&B chain and I and I think it's kind of going under the radar. Um, I don't know if you guys have any strong thoughts here, but like the really only other big takeaway I can make is that Oh, actually we have it right here on DEX's for the longest time. I mean, and still now, let's do percent like Pancake Swap just kind of dominates B&B chain. Nobody's ever really tried to step in. UniS swap got a bump here and I think this was related to that ZKJ token catching some of the volume there initially but it seems like that has all gone to Pancake Swap since um they kind of just dominate this ecosystem and they're just chugging out you know billions of dollars in trading volume a day if we go back to the number

something like you know seven eight billion in total daily trading volume on on B&B chain which is sizable I think relative to I think if we're talking about soul for example Yeah, I think I mean I think it's a really interesting observation. Um about a year ago I probably considered a BNB short because nothing was going on on the chain and then um um one of the block works analysts at the time told me I had a mental illness if I wanted to short BNB. So I didn't put that out. Um it's you know if you look at the onchain per stacks to centralized perp stacks ratio and then the onchain spot to um spot volume

ratios. They're like both up and to the right. It seems like onchain is slowly winning against the more centralized service providers in crypto. I don't know how long that lasts given crypto is legal in the biggest capital market in the world now and there's regulatory clarity around the corner. But if you think that that trend is going to continue, you probably prioritize your chain as opposed to your centralized exchange. And feels like Binance is doing that, which is pretty cool. An obvious big winner from this is um is Pancake Swap, right? Um I mean p I mean past few months they've been burning

either between like 10 and $40 million worth of their token each month. So like they're one of the biggest um largest revenue generating protocols in the space. I I I can't maybe like top 10 definitely top 20 um and you know and and returning value to token holders at least in the form of um at least in the form of burn burning the token and it's I mean it trades at a relatively low valuation to compared to other dexes and I always I always wonder if that's like the um Chinese versus US um like discrepancy like famously um US equities trade at a higher valuation to Chinese equities um even at the same like levels

of revenue, growth assumptions and whatnot. Um and then you know you look at other tokens similar like one the ones that are deemed Chinese tokens and and they have similar discounts in um in their valuation. So I always wonder if that's the case if there's a bit of uncertainty or western bias or what or you know regulations but you know you know pancake swap is has been along around for a while and and actually has some strong fundamentals. its FTV to fees or or revenue is like two times for Pancake Swap and it's the fourth highest earning onchain application last month. I think it's interesting to note I've got the chart pulled up that they

basically achieved similar trading volumes in January, February of this year as they did at peak in 2021. So, oh actually much more because let's pull these off. they they beat out their 2021 trading volume numbers. Um I think largely probably propelled by the CZ kind of push for meme trading. Uh I think this recent month there's maybe an asterisk on that one with the ZKJ trading volume, but uh you know I think with how large it was at the time like Ethereum certainly did not did not return to its 2021 levels of of activity. So I think this is you know impressive to say the least because um you had a a large amount of activity at that time. Safe Moon was a very large asset. There were lots of, you know, dog

coins trading on on BSC at the time. I I I don't have a strong thesis there, Mark, on what you mentioned outside of like it just feels like one of those things where, you know, in the US or, you know, in the West, like people have just been afraid to touch it or, you know, go much further than just kind of acknowledging that B&B exists. Um, I I I think there's like this maybe weak association of just like people don't really understand maybe the relationship between the token, the chain, the exchange. Um, and like question marks over like, you know, are they using the token internally like

incentivizing certain different things like how does that play into B&B chain itself? Like I think there's just some question marks there that maybe people in the west like especially if you're not using Binance products like you just kind of have no clue. The it's it's opaque at the end of the day like there's just like this veil of uncertainty over the whole thing. Um that like the east west divide is real and you know if you can't if you don't speak the language, you don't understand the culture, you miss the idiosyncrasies and then there's like this opaque relationship in the whole ecosystem. it becomes really hard to underwrite, you know, meaningfully participating. Um, I mean, Danny, do you still participate in the Binance

ecosystem? I know that's where you got your stripes. No, that's that's why I'm um maybe more surprised now is that I think basically all the people that I knew alongside myself who were trading in the the BSC trenches in 2021, like nobody's nobody's touching that ecosystem right now. It's I'd have to imagine it's very like east dominated now because you know I think people in the west are using Salana using hyperlquid you know using bass even come on chain base. One thing I will say about cake is that they actually also recently updated their tokconomics. They cut down the emissions for cake from 29K

to 20K initially um and then they further reduced it to 14.5 I think. So they have emissions um and they retired veake and the gay system like the past cycles demons that have been haunting a lot of these protocols of like vote escrow tokens are finally being phased out. over complicated mumbo jumbo. Um, and I'm honestly still I didn't know it was at 2x. Um, to be honest with you, Ryan FTV, that seems ridiculous to me.

Say that again. I didn't know it was only at a 2x Ps. Yeah, 2x um on the trailing 180 annualized 180 days. But to that to that point, Buck, um, like even that that that vote that they got rid of the VE tokens, like one address came in and voted to get rid of the VE and, you know, he he got a chunk of the vote and and everybody was like, where did this massive token holder come from? And they had no clue. So that kind of adds to the okay, you know, the speculation, but it um it kind of adds to the opacity of of of the um of the pancake decks as well.

you know, this just odds it even though I do think it was the right move overall. But yeah. Yeah. I think there's there's a question there too of like if you could get into CZ's head and you knew he was going to be bullish on memecoins in January then like you know you I think you have yourself an easy long there right like bit up the decks that's going to facilitate that. But you know without knowing that I think you would have been in the dark and and I think the broader question here is like you know whatever the valuation is right now um you know does that low multiple reflect uncertainty? Are they going to maintain this level of trading volume or is it you know going to be a another spike and then they're you know they'll return back to the prior prior levels.

I think it's good if the project owner comes in and says [ __ ] you guys you're wrong. we need to phase these out. Like I think at the end of the day and that's the whole point of investing in something. No, like you can just say, "Okay, well I don't agree with what this guy does, so I'm not going to invest this. Like I'm going to sell it and leave." I don't think you should listen to everybody on what they think because people think of their own like as a business I guess the business owner also thinks about his own bags. But I don't know. I I think you need to give the person who created the company or created the chain or the protocol, whatever, a bit more say than everybody else. I think some protocols and chains

have this issue where they try to let everybody have a voice. And I don't want everybody to have a voice. Like in real life, would you listen to everybody? No. It's [ __ ] stupid. You should only listen to the people who have like who know the product or who have some idea of what it needs to become. shouldn't listen to every Allison. Bob experiments in direct democracy. They don't go well. You're telling me. Was it direct democracy though here in this case? You know, wasn't Mark just describing someone who had a massive bag influence the direction? That's kind of like what we're saying is the ideal outcome.

Yeah. In this instance, we probably think like the opacity around it stinks. like no one knew that that person was going to come in with the bag and change the vote. But um you know playing decentralized token where everyone gets a say like we've just seen how terribly that goes for everyone involved. So like Apple would be nothing if it if Steve Jobs wasn't making all the decisions and like Birkshshire Hathway is great because Warren Buffett is at the helm, not because he asks me what I think he should do with his portfolio. That'd be so funny.

The reality is you want Yeah. I mean, you want these things to ship, not argue on the timeline. So, it makes sense. And I think increasingly people are realizing this, but they're like kind of shifting blame. So, a lot of Salana people will say, "Oh, like Ethereum takes [ __ ] ages to make decisions." And then Ethereum people will say, "Oh, like Bitcoin's going to crumble under quantum stuff because they take [ __ ] ages to make decisions." At the end of the day, it's like I think we're all agreeing on the same thing. You need three to four people who are leading the organization and then the rest of you just get to and watch sit in your little chair at in the corner and just watch what they're doing and if you don't like it then you can just leave. Yeah, I

think I mean I think that's fair. The you know people love the quantum doom posting for Bitcoin. I don't know what realistic timeline that's on, but I I do think Bitcoin is a little bit separated in that. I think some of the appeal is that nothing changes and people like that. Whereas in every all in basically every other case it's like we want to ship you know the new money connected internet you know the internet computer whatever you want to call it but you need to ship if you want to do that. Okay cool. Um Boach I think you have a hard stop here. We can call it there if we want to do some just final thoughts.

Blame me. Ryan also has a hard stop. Ryan Well, sorry. Ryan always has a hard stop, man. You can't You can't get Ryan in a room for longer than 45 minutes. I got to go. I'll be free at a time. I'll be free at two. I have to be here because my Fresh Direct order is coming. So, I have to be here. I'm going to What What are we getting this time? I don't know. I don't order it. All right. All right. I have a hard stop now. Um, first before we have the hard stop, let's uh let's talk permissionless. Couple weeks out, June 24th through the 26th, we're all going to be there. Everyone on this pod is

going to be there. We're probably all going to get in the dunk tank. Mark, you're going to be there. You're flying out. Water. Hell yeah. Ryan Cashwells Connor is going to get in the dunk tank. And any of you Lions out there that want to dunk this small dog, come out. Do not call Ryan Connor the small dog. I'm out of here. Bye. Thanks for watching, guys. We will see you next time. Peace out. Live stream on Friday. We'll see you then. Bye. [Music]