Jupiter’s Dominance, SAB 121 Repealed, and XMoney | Analyst Round Table

Transcript

it solidifies that ecosystem as the center of risk-taking and experimentation you already kind of saw that with dii and mcoin trading generally but to see such a big public figure kind of bless the chain and you know effectively put that wallet in you know so many thousand more people's hands um like I think it's I think it says a lot Today's Show is powered by scale we'll hear more about them later but first let's dive into today's episode nothing set on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show

are solely our opinions not Financial advice bacho Ryan and our guests May hold positions in the company's funds or projects discussed hey guys welcome back to another episode of ox research today I'm joined by Carlos Ryan cash flows Conor and Daniel Shapiro uh from the research team great to have you guys on um I want to start off the conversation before we get into anything else um we've had crypto has had a bit of a crazy last week and weekend um some crypto related some not crypto related or tangentially related maybe um over the weekend we saw some crazy things around um AI models the Deep seek the Deep seek model and team um coming out of China and the subsequent reaction um

to crypto prices and and stock prices on Monday so um I'm curious takeaways thought thoughts from that sort of crazy volatility event that we just experienced off of like basically one kind of core um event or or or piece of news yeah I I can start this um you know I don't like to be I I don't want to say like I hate to use the word stupid but it is the stupidest Market selloff that I've ever seen in my career um usually like as much as markets are inefficient like at the end of the day nothing is perfectly priced in um they're way more efficient

than this right like they're performing very poorly in the face of new information um a few things about what sparked the selloff it was it was deep seek it gave aii Bears something to cheer about which is strange and we'll get into that in a bit um and it made people question kind of like the profitability of AI infra going forward and for some reason that sparked a a major market sell off um just first on the logic of it like I think it was extraordinarily stupid like why like so so China so both the Chinese government and public

institutions coming out of China have a long history of lying both about just simply audited financials and then technological capabilities um um from like a macroeconomic data perspective um China overstates its GDP by about 2.5x we know that from satellite imagery New York Times did a great story on a study on this um China is the only economy in the history of the world where everyone else's GDP year-over-year oscillates like this China's was a flat six s% for about a decade um since she has been in charge in China they've decreased the um macroeconomic data output so publicly available data to the markets by 80% and the list of corporate scandals

coming out of China like Luc and coffee Ceno Forest uh Rhino International KDX qtt um all of these guys like and it's not even like they had aggressive counting accounting practices like they lied about their revenue right um just probably 18 months ago it came out that China was working on a chip that was something like 100 times more powerful than an Nvidia chip and probably was true an Nvidia could make that chip tomorrow but the problem is you can't produce it right so like you can say you have all the technal C technological capabilities in the world like you need to be able to produce it at scale at a yield of 80% or better for semiconductors so a lot of nonsense comes out from official coms from China

deep seek is no different there's no way that this model was trained using like $5 million worth of gpus and we know from public comments that they have 50,000 h100s right so like they did not achieve some massive scalability um breakthrough in terms of training on the infint side it's much more believable um and and and it's clear because the the models open source right so you can run the test so they have achieved something on the imprint side um and that's great for rois like seoa has kind of LED this charge of like there's too much chip buildout AI is too comp computationally intensive the ROI is not going to be

there AI bears like came out in full force saying like see the ROI isn't here what are you talking about the cost of AI inference just declined the opportunity set is the same the ROI is increasing right so like I couldn't I don't think that the market could have handled this like worse um it's one of the silliest sell-offs that I've seen in my professional career and given everything that's going on with deregulation in the United States um AI at the mega cap Tech firms and um like the green light on crypto like I see us coming like we're going to be higher like it's kind of it's it's very obvious

to me yeah I guess unfortunately for our our industry um Bitcoin and other assets kind of took the brunt of the sort of bare pricing over the weekend or volatility um prior to are going into that the market open on Monday so um it was unfortunate for everyone on the weekend freaking out about well what the heck is deep seek have you tried it um I haven't used it I don't even understand what's going on um a lot of reactions like that that were going on I think that that reflect the sentiment that that Ryan says around um it being a bit stupid uh it's probably a fair take um that said there were other things that happened last week um pretty Monumental for crypto or at least looking like they're shaping up to be um we started

off with and let me share this um an official executive order from the the new standing president Trump related to strengthening American leadership in digital Financial technology so um we got a a sort of initial conversation starter executive order related to crypto is maybe how I would term it um some of the things discussed are really sort of setting a 180 from the prior Administration where you know previous executive orders that sort of set the tone for how um Regulators should think about crypto have either been rescinded or reversed and so now it's looking like more of a a positive approach to handling these things um some of the examples from that include um in the

previous the previous Joe Biden Administration executive order had specific in clear focuses on consumer protection Financial stability cbdc development elicit Finance prevention in and international coordination so those were it was very clear there was a very um negative sentiment in regards to the industry at that time and this was about sort of preventing illegal activities or um proper handling of um other illicit activities um making sure consumers were safe and protected like I mentioned basically a 180 I guess I'm curious there's a lot of potential Downstream sort of impacts from this is it establishes a working group um and I think really the big question is like where do we go from here nothing has really happened yet this is just setting

the tone um what are some of the downstream impacts like first second third order that we're thinking about um that that are coming I think like first order is like stable coins that was very clear to me like when you go through the purposes of the executive order you see like promoting and protecting the sovereignty of the United States dollar they also have a very anti cbdc stance and so I just think one of the second order effects is going to be accelerating stable CL adoption and I think one of the winners here is clearly circle like over the past month like usdc Supply is up about 20% to 52 billion these are levels not seen since uh August 2022 like you see

usdc Supply in atanta is saw more than 2x in the past month uh I think it's going to be very bullish for Circle and for usdc uh adoption over the next four years let's just say and I think it can help like create uh innovation around like onchain bank accounts and this type of stuff that are very exciting and that can help like on board uh millions of users on chain like for instance I don't know if you have seen like this uh fuse development with their smart wallet where they have like a virtual bank account and like you can send an a just just as you would for a normal bank but

it converts automatically to stable coins I think we're going to see deel ments uh like this uh on a more massive scale yeah those are those are excellent points um I think one of the one of the things from it that that um caught my eye was the um potential for a national um digital asset stockpile and so you know already right um I think the order by effectively giving the green light uh to trafi to come into crypto right like I think the next logical step is um right like them coming to like buy our assets right like whether that's through ETFs or other vehicles um I think what

the stockpile could do is I think that could start to um accelerate um I guess like various ETFs and kind of give you know the the okay of like all right like these are these are good assets right like these are protocols or tokens or whatever that and I mean hopefully Ripple will probably be in there so you know not all of them but I mean you know they've had some pretty positive developments recently but um I think that giving that kind of stamp of approval um I think opens the door also for like more experimentation right so like I think the eth ETF has been underwhelming um you know if

there's more ETFs like a salana one might be might be next we don't want that to be underwhelming we want people to um to understand these assets to buy them to be able to experiment with the applications on them and so I think it's all kind of related but um if the government itself starts stockpiling specific cryptos or starts buying specific cryptos obviously like Bitcoin is is the obvious one um I think that that would that would really accelerate um adoption rapidly yeah like gives a green light to a lot of Institutions I still speak with my buddies in trafi quite a bit and um you know they're still on BTC and the reason that they're on BTC is because the government's given

it a blessing and they feel like they've been left out like if eth is very weird to them still despite the ETF it's still quite weird um Salon a little less weird I think just because of it's like a little bit more Venture oriented and eth is a little bit more Cipher Punk oriented so like it's it's strange but yeah I think you know if there is some sort of Reserve or basket of crypto assets oh my God like who had that on their bingo card this year like not like no one zero people zero people um I think the pretty interesting thing about the Stables the potential for stables in 2025 or maybe early 26 is um um like big cap Tech stepping into

banking uh I remember like gez it was like 15 years ago like Walmart tried to get into Banking and the government basically just didn't let them and they had you know you have a lot of dollars flowing through your system you might as well try to financialized to with DM Apple um flipped a switch on their phone and you know Apple pay is running at I think a $4 billion doar run rate um the Google Wallet is an experiment in that direction and like they've been tiptoeing because governments would not let them um perhaps this move to stable coins it it just makes it so much closer to the tech right um I think that they could get a wedge in there uh because no

one wants to go you know it's not it's not a good experience having Bank of America or JP Morgan as your bank um the ux is still terrible the websites work so awfully like it they're they're just so behind they they just have like a very web one ver like view of um a financial infra so like I don't know it's pretty interesting where Twitter um Tik Tock um Facebook meta are all making payments out to creators like if they were to get enough of a green light from

Regulators why not issue staes that they take 100% net interest margin I don't know it seems a little crazy but I think that what we're seeing with a regulatory environment like you have to be thinking about these crazy things in these tail outcomes this episode is sponsored by scale scale has differentiated itself from other layer ones by offering users a network of gas-free interoperable evml 1s where the user experience comes first explore the gasf free ecosystem at scale. Spacey and follow their Journey on X at scale Network to learn more about the gasf free architecture and growth of the scale ecosystem visit the scale research Hub at scale. space resarch yeah I think you make a good point on the social

platforms and I'll I'll even add the other side of that equation is that they're also handling like payment in from you know subscribers followers to their favorite channels or platforms um so taking those revenues in in terms of tips and fees and sub fees Etc and then also paying them out right to their creators and yeah I think you make a great point there um maybe maybe related to this point is um another sort of item that got um handled recently was Sab 121 um was also rescinded as sort of part of this kind of list of of quick acts by um the Trump admin um and and replaced with a a a new sabb 122 I I think basically the idea here was essentially another

180 um where previously Sab 121 um required more stringent um records in terms of um holding uh crypto assets as both liabilities and assets on their balance sheets um and so this might open up either simpler like simpler ease of offering or you know reduced compliance costs um for you know existing crypto companies potentially but also trafi institutions who maybe um would never have touched crypto um without sort of putting this ruling out of the way um I think both are interesting but clearly you know we just we just mentioned how you know maybe non you know platforms that are not Banks today um could

potentially become more like Banks um maybe this contributes to that point as well um where you know if you add you take this additional sort of compliance hurdle out of the way um you know this opens up potentially things for you know the apples the Google but it might also open up things for the jpms um the other Banks standing today thoughts here yeah I think the ability of banks to cost the Bitcoin can create uh very important second order effects uh I think one of the most important use cases would be to have a functioning credit market for Bitcoin I think today there is a very large demand in the market for using just Bitcoin as

collateral and borrowing against it like I don't know to buy a house or buy a car or whatever uh and today the options that you have like uh the most liquid options in the market are just like uh protocols like a where you have to use the rap version of Bitcoin and borrow Stables against it and then those Stables you have to kind of like off-ramp it into US Dollars and then like spend it any way you want whereas if you have like a bank that costed as Bitcoin and allows you to borrow against it is like a much more efficient process and I think like a functioning credit Market with banks accepting Bitcoin as collateral could be one of the uh crucial Catalyst uh for expanding like

bitcoin's usability worldwide or in the US at least I think this is also going to like in an interesting way impact companies like coinbase itself right right because coinbase has such a head start on the crypto side it's like why couldn't they be a bank themselves right and like maybe coinbase issues their own stable coin I mean obviously like they have a partnership with with circle to some degree but right I think um I think ultimately the banks that don't um evolve are going to die and the new age ones I mean why can't every bank issue their own stable coin right against their own assets and I think um that's going to kind of be the future here like obviously Trump um in the executive

order kind of outlawed cbdcs so you're I think you're just going to see increasing competition um for stable coins and I think like banks are like a prime candidate um to issue their own um stable coins yeah it's it's they definitely they're definitely going to want to the ux is going to be so bad though um maybe there's some opportunity for some clear during like institution or some group effort on Stables because the friction associated with going in and out of of different Stables is such a pain in the ass maybe only a small portion of consumers end up doing that but like I don't know there's there's this

complexity issue and like everyone just wants to own one stable right like seeing usdt usdc um whatever else is there die in your wallet it's like why can't this just be one light item um I honestly thought that we'd be there by now that there would be so like if you asked me two three years ago I thought that there would be some solution uh not there yet maybe this green lights um yeah maybe this catalyzes it who knows yeah I'll agreee on the on the points sort of maybe supporting platforms like coinbase maybe even Robin Hood as well going forward I think like they're clearly the most well positioned today in terms of offering a variety of services you know having crypto asset

trading you know having stable coins um you look at Robin Hood and having the connection between you know trfy markets crypto markets regular Bank deposits um you tack on you know the potential for stable coins there as well um I think you know these platforms have have gone beyond the hurdles that Ryan is mentioning of you know crappy ux and like old banking you know slow applications so um definitely from from the kind of the Viewpoint today it seems like they're they're most most well positioned um to sort of continue benefiting from you know positive legislation um in this direction I think uh Twitter just announced an X wallet

powered by Visa pretty relatable um allows for secure inant funding of your xwallet connects to your debit card allow P allows for P2P payments and option to instantly transfer funds for your bank account [Music] um no mention of crypto though I bet so this is interesting that they partnered with Visa it looks like Yeah x money sorry we're uh learning this real real time live but um very relevant um definitely interesting though I think I mean going back to what you said earlier like this plays right into that point like these social platforms there's a lot of money flowing

through them getting wallets getting payments really locked in here and essentially like baking Services um seemed like a clear next step for them um and it seems like they're maybe taking those steps um I'm curious on your guys thoughts here like their decision to work specifically with with Visa here um you know how do we think about that and then the potential for them to like integrate stable coins crypto payments other things maybe down the line um do you work via you know through and Via Visa um as maybe they kind of onboard crypto services or is is this um opening up the

potential for them to kind of onboard other partners like a circle or you know a coinbase or other other platform um for handling different types of payments I think the competitive Dynamics are so weird like visas clearly at this point in time with these rails are like so commoditized um given what crypto can offer I think it's just kind of like maybe missing the scale and the legal backing but like these is purely just extractive right they take like some some non-zero amount up to 2% per transaction um you have to think that Elon hates

partnering with visa on this right like he's vertically integr ated SpaceX for a reason and like did something very close at Tesla for a similar reason like I don't know I think it says that you know the payments payment tooling is probably more ingrained than we'd like um I don't know maybe it changes in 18 months maybe an interesting line from this tweet that I'll just highlight is that um the Tweet specifically says Visa is our first partner for the x- money account so um it does give me feeling that maybe they're looking to open that up to multiple partners going forward um and have optionality here um and I guess something interesting um to note is like

I do think um I do think that interoperability infrastructure specifically for trafi is getting better um in terms of PayPal um or in terms of Visa specifically um like they actually have like a like a stable coin dashboard on their website um and so I think that right like I wouldn't be surprised if like PayPal like issues a sable coin themself um like I think that it that would make a lot of sense to me um they've kind of they've kind of dove into crypto um in various domains I know they're working with chain link um and so yeah I mean I would I would be very

surprised if there wasn't some type of like stable coin or like crypto functionality to this wallet yeah honestly not surprised that they're integrated with bisa you see this a lot of with neobanks where they just integrate with visa to have their own debit card and the reason is you want people to stay on your platform so for instance if x pays a Creator x amount they don't want that Creator to offramp their dollars to another platform so if you have like a Visa debit card where you can directly spend that then you kind of retain your your user that way so I think the me the Visa integration actually makes a lot of sense to me hey everyone we'd like to give a special

shout out to the sponsors of today's episode scale scale is built different unlike other layer ones scale is offering users a network of gas-free interoperable evml ones where user experience comes first scale operates like the AWS infrastructure model where developers pay for space in the network in skl tokens to validators essentially scale has chain fees and not gas fees this allows for free transactions on scale and has saved 46 million users over 9 billion in gas fees explore the gas free ecosystem at scale. Spacey and follow their Journey on X at scale Network visit the scale research Hub to learn more about the gas free architecture and growth of the ecosystem that's scale. space research I guess let's let's continue on um from this one

the still maybe on the topic though somewhat um related to Trump at least um the mem coin I think we we've sort of discussed the Trump token a little bit but um you know prior discussions were really more generally about um what it is or kind of it it being sort of a shock to the industry at the time um last week but I think there's sort of a bigger question here that the Trump token kind of symbolizes a shift potentially um for you know what chains where activity is happening on chain and what types of things um are maybe interesting in the moment or if we see some different Trends um that pop up obviously one of the one of the big um

sort of factors that we saw was moonshot which was an official partner of the token um saw like something like 400,000 plus new users um on boarded in the 24 hours after the token was launched which was pretty significant I think the number of daily active users has declined significantly since then um so it was sort of a one-off like yeah I'll come on and I'll trade the Trump token because that's crazy that's interesting um but they've not maybe NE neily been retained for the most part um outside of maybe the Curious few who stick around um I'm curious your guys takes Ryan I know you have an interesting one around like what other sort of signals this gives or what other kind of impacts we could see to whether that's the CH

blockchains or like the types of tokens being trading the types of games being played on chain now that we've had sort of like a presidential token that sort of opens it up for anyone yeah I I can start um I mean there are a few obvious implications I think um look the tokens and um meme coins have always kind of been a gray area or at least it was assumed to be we all knew that they didn't depend on a team in their purest form if you just issue an Arbiter a unit and you give it no road map and you give it no plans and you just disappear like

it's not a security um but it felt a little weird now that you've had the president do it it is a green light for everyone else to do it so long as they're maintaining compliance with the hoe test so you're go you've already see more of these it's like very very very obvious you're going to see more of these the increase in stable coin Supply and then what that's going to do to salana uh defi activity um is is another obvious kind of first order effect um I think it solid it solidifies that ecosystem as the center of risk-taking and experimentation you already kind of saw that with Defi and mcoin trading generally but to see such a big public

figure kind of blessed the chain and you know effectively put that wallet in you know so many thousand more people's hands um like I think it's I think it says a lot the throughput that it showcased again it shows that the chain like there were problems no doubt but we continue to see the problems get iron out and fixed on salana so like no worry there um the second order impacts are interesting there's a lot of I think interesting product ideas around meme coins I think like one like it it helps to think like three or four like like steps down the road when thinking about

products here um I like the idea of donation rugs where um you know we know gamification increases engagement we know that kind of meme coin trading kind of like ignites this desire of speculative Capital to like make a quick Buck knowing that the thing is valueless and will probably go to zero and we're seeing increasingly celebrities um and notable public figures crypto toy with the idea of creating mem coins giving a large portion of the supply to some cause or affected individual and playing that Meme coin game and attracting capital and letting the recipient of that large portion of

the supply decide when to rug and I'll play that game all day like it's fun uh it's funny when it goes to zero and you contribute to a good cause like sign me up like who does doesn't want to like throw a few shekels at that and see what happens um why not leverage like this insane like kind of djen game for like the greater good you've seen it I don't know five or six times now and that's like me like passively paying attention to this space I'm sure I can dig up more examples Mark Cuban most recently floated the idea of releasing his own celeb coin and giving the proceeds to charity effectively letting them rug or

sell off you know a portion of it over time so I think that that's interesting and I think it should be its own Standalone product because you know you worry about um kind of conflicting incentives on the general platforms and like vetting who launches these things whereas like a GoFundMe like takes care of that right like they they establish a reputation um for you know what they have on their platform kind of like a clean slate I think like as a crypto project in like the nonprofit space or sorry not the nonprofit space but like in this like in like the giving sector I guess like there's an opportunity there um for for a standalone product which I think

is pretty interesting um for me um and this isn't necessarily like as much mcoin related I guess it might be more of like a second level effect but um I mean if if Trump is doing this I think that a lot of uh tradire like regulated financial institutions I think that this could be an impetus to where they're actually going to start doing stuff like on chain um and experimenting on chain in significant ways and I think that the first sector that um could meaningfully see like a SI like a like a sizable tvl increase is defi um so you know things like a um a Camino a chain

link um kind of your like traditional like def infrastructure and it probably starts with lending um if there's just if just a you know a few basis points um of the capital so like some large asset managers start like you know whatever putting some some stable coins or some or some eth or some Bitcoin or some salana or whatever into these defi applications like their tvl could go up by multiples and so um I'm not as versed on on the meme coin side of things but I do think that right this is kind of a um like this is this is a complete 180 from the previous regime and so to me like

that's that's where my mind immediately goes um in terms of like a down a downstream impact and we might not see that for um you know till later this year like there's still um there's still technical um challenges to connecting the those ecosystems but I think that um once they are connected like I I think you could see defi tvl like literally go into the trillions um very rapidly and that's just a once again that's just like a few that's just like a percentage that's like a few basis points a percentage point maybe Max getting getting allocated to these things yeah I kind of kind of wanna Echo Ryan's thoughts on this like Trump gave the

greenl for other celebrities to launch their own meme coins I think you had David Sachs as well saying like nfds and meme coins are explicitly Collectibles they're not Securities so it's like just another blessing for everyone to launch their m coins and I one thing that I want to ask you guys is do you see this as a 2021 NFD moment where celebrities get on boarded they buy their nfds or here they launch their own m coins and then go fast forward like a year later two years later and no one buys nfds like do you think like in two years time we'll see meme coins uh being launched

by celebrities as well or do you see more more like a like a hype kind of thing like an Emeral Trend that will eventually die down I've got to take care I think I think the game will evolve um I don't want to compare it maybe to the cycle basis but maybe more of like how it how the attention games has have sort of evolved on chain um you know we we've even recently have gone from you know animal memes and AI memes and you know different sort of like sub sectors within its own category um that kind of like get some attention and then die off and I think this I think will follow similar sort of Trends as just general sort of onchain trading activity has

where you know if this is a trend and a bunch of you know celebrities are going to launch coins then yeah i' would agree like you know 12 months down the line like that's that's not going to be the interesting thing anymore but the game might evolve over 12 months to where you know maybe instead of launching like the Mr Beast coin maybe it's like he launch he does a new competition and there's you know 12 contestants and every contestant has a token and you can like bet on which contestant is going to win by buying their meme coin and like it gets bid up by people watching this competition um and you know you can sort of play the game around it I I think this really opens up like other games to be played Beyond just like the token it's you can build up games around them

and then like use the tokens to sort of incentivize how people interact and play with the game um which I is I think where things will sort of naturally evolve as as people kind of like fight for views and attention like they do on on traditional social platforms yeah I think you're right I think that um it's interesting what happened in 2021 as a consequence of the pandemic like trading as like a cultural phenomenon got a huge installed base as a result of Co like people in my network who had never traded anything like RSI is known Binger bands are known um chart you know cup and handle wedge pennant

whatever like they know Trader lingo it's it's not hard to get up to speed on it it's it's embedded in like very like male like gambling oriented circles now whereas it was not five years ago um I think to compare it to the nft craze yeah I I I've always been short that view I think when something happens once it's weird and you can dismiss it when it comes back um stronger faster than ever um with like serious teams Building Products around it like you can't you you can't ignore it there's an installed base for that behavior and that means that there's people to sell to and

second time around like if you're young founder you like games you have a new dimension that you can incorporate into a game that you basically weren't allowed to experiment with in the past so you've like opened this like box of creativity that simply wasn't available before so I'm pretty bullish on what can be done with putting arbitrary coins into apps I think it's going to be like look is it going to be like an Instagram type app no is it going to make a few billion dollars in market cap like of course good stuff I'll add one more point on the topic before we jump to something else but um what I think is interesting and what is has been more cemented by um this event is the decision for Trump to use moonshot and for other teams to sort of lean into

this idea that things are happening on chain um Robin Hood has recently integrated with moonshot as well kind of following this event um to enable quick onboarding there um and moonshot themselves is really marketing themselves as like this just easy to use SWAT like download the thing put some money in with Apple pay look at tokens that are funny buy them don't worry about gas fees don't worry about anything else you just you look at the tokens and you buy them um and that's really the experience that like people who are not in this industry need to have because when you get into the like the gas fees and the knots and the transactions and your metamask wallet all that stuff it's it's it's way more complexity than anybody really wants to deal with um and so I think it's it's really interesting to see this trend

kind of continue to shape that more and more things are happening on um versus on centralized exchanges for example um and we've even seen coinbase recently um mention how they want to improve their listing process they feel like they are missing out on assets um because they're you know launching on chain they're rising up to you know incredible market caps there's lots of trading volume happening on these things virtuals is a good example um where they just are not quick enough to respond to listing them on their exchange um and the community sort of feel is like confused that's like why aren't you listing this multi-billion asset that's that's on base it it doesn't make sense um and this is kind of this is cementing and contributing and sort of continuing that Trend it seems like yeah um

moonshot is smooth like very very smooth app um I'm not sure like what it takes from a a de perspective like the talent Delta that you need to like make an app like that but I don't know whoever whoever made that app like hats off like that is it's a very haptics are great um you know minimizes uh on boarding super smooth like very very impressive and I guess to segue into another app that um I think a lot of people would agree is fairly smooth nice to use is Jupiter um they've also had some interesting announcements recently um their caten Bull event was over the recent weekend I believe um and they announced multiple things one big one was sort of symbolically burning 3

billion of of the supply um some other things like announcing a stake in moonshot um and some Omni chain plans I guess Carlos uh I know you you grabbed some data on this and and you sort of dug in um you want to give us uh kind of an overview and and what you're thinking yeah like they had two uh sort of developments one for the product and then for the token like if you want to get into the product first they had a majority stake acquisition of moonshot and they also had uh they also acquired the sonar watch portfolio tracker uh they had a roll out of Jupiter spot B2 like they renovated their UI and they also announced an upcoming omn chain Network that's going

to call jup net which is basically going to abstract away like the experience of trading on multiple blockchains I think like the moonshot uh acquisition is really interesting and it it's kind of vertically in integrating their distribution like if you see the Trump token launch like the primary liquidity benue for that was metora which is part of the Jupiter stack of course it's the same team so I think we can see this in upcoming months where celebrities choose to launch a moonshot then of course Jupiter benefits because the liquidity back end is going to be Meteora and then they trade like on the back end through

their through their fees and then make they make a lot of money off of it so I think on the product side uh this is really important and then on the token side to drive more value to the jup governance token as you mentioned they burned three billion jup tokens which is like 30% of the total Supply and then they also announced that 50% of Jupiter fees will now go to our Juke BuyBacks H I don't think uh people realize like the buyback yield on this like I made some napkin math numbers and it's like 40% annualized like here we have like Jupiter weekly fees from both like the spot product or the Dex aggregator and

the perb side and like Jupiter fees in the past 90 days have amounted to like 375 million uh like a little bit half of that a little bit more I estimate to be from SWAP fees I I am like in this methodology I am assuming like five basic point take rate on the Dex aggregator side like there's not a lot of reliable data on this uh but you can kind of estimate based on some uh of the numbers that the Juke documentation has like for instance they charge 10 basis points on the DCA product they charge five basis points on most swaps although

some some swaps are free like stable coin to stable coin so I'm just like taking this five basis point uh approach and then the pur fees are are really very large as well and so if you take this H and and you assume a price of like $1 per Jupe like Jupiter could like uh accumulate 40% of the total Supply in one year like with this BuyBacks which is absolutely insane uh I think uh the Jupiter token token has rallied like 20% since then but like uh I think it's really bullish for the market structure of the Juke token I don't know what you guys

think does that seem to be a misallocation of capital such a large buyback yield like why would you do that yeah I kind of agree with that it's an interesting discussion of like early in your life cycle you kind of want want to reinvest your profits instead of just like giving out uh taking yield or investing it all into BuyBacks but I think I don't know right but my intuition is that they're taking some inspiration from the radium uh buyback program like radium also buys back rate tokens from a portion of their revenue and it has been

really beneficial for the performance of The Raid token over the past 12 months like Rim has accumulated like I think like 20% of the raise supplies since the start of the buyback program and I think like Jupiter wants to kind of achieve something similar like we've seen some criticism in the community like useless governance tokens and whatnot and like uh people demand like value to the Token even if they don't actively contribute to the product which I think it's misplaced like allegation but like Jupiter is kind of like alleviating these concerns and trying to create like positive uh prize Dynamics I think can they once

they've bought back the tokens they they just go to Jupiter's treasury correct so like they could theoretically do anything with those tokens like they could convert them to to Stables hold them um allocate that to to other stuff it's almost like they're just choosing to they're almost betting on themselves in a way like they're storing fees in their own native token I guess in their treasury yeah yeah I kind of view it as a stock Buy back in trafi where when uh where a corporation buys their own stock you kind of just remove that from circulation and at the same time it just adds buying pressure to the Token right because if previously x amount of people was buying the juup token now you you

can add like just this constant buying pressure that's coming from the fees the token uh whereas on the on the sell side you you don't really have that that incremental uh like like sell offer so I think it's just like positive for the market structure I don't think that Jupiter would like implement this buyback program just to sell jup tokens that wouldn't make any sense otherwise just keep the like just keep the revenue right don't don't buy back the token yeah you're right you're at that point you're you're incurring slippage two ways and trading fees two ways to do that so um yeah I guess it's a figuring out like what's the ideal percentage of of the Buy backs um yeah I

mean that's that's crazy that sounds very that sounds very bullish um and even if it's moved 20% already that doesn't feel uh priced in with these type of annualized fees it's it's already it's like 20125 is like already rapidly like vindicating two thesis I believe from our 2025 thesis report which is just like multi-product defi is going to beat out single product Defi and um you know pretty obvious there traditional financial institutions you you cross- sell Services because the money's there and money does more than one thing um and for years it's like been it's been quite it's been pretty odd to watch

crypto just like stay in like a very or D5 team St stay in a very narrow vertical um so it's you know Jupiter and many other teams are attempting to execute on that Vision Jupiter's probably one of the best and um it's super interesting I this is going I think it happens this year but like these are growth Equity Investments like you're going to see a growth Equity shop own a token like this because it looks like an astounding like it looks like a fantastic growth Equity investment you have massive year-over-year growth you have a sizable market cap it has a strong Market pos position it's been der risk High margins um the only thing that's stopping it from being a growth

Equity investment is that it's not a common stock it's a it's a token and the governance structure is different um but like I I find it really hard to believe that like a growth Equity shop especially that's operating on the bleeding edge uh or like has made historical investments in fintech would just let this opportunity pass them by um this seems like something they need in their portfolio yeah this definitely very meaningful and what I what I actually find interesting here is how large the per fees percentages as as part of like Jupiter's total sort of fee revenues that they're pulling in um I think this it sort of begs a question or maybe a

conversation around pex's we've talked about them at length um but like hyper liquid has just really been gaining steam since um you know since people airdrop farmed it for a year and and since the token launch it's it's gotten more popular um Jupiter per perss are interesting because they run so much volume yet only offer like it's BTC e Soul maybe there's there's only a few assets even enabled on the platform and yet regardless they they run um process a massive amount of volume through there to you know warrant pulling in these kinds of fees um I guess for me it kind of begs the question like can they can they maintain that like we haven't really seen any movement there to you

know start listing a bunch of other assets like try to compete with sort of like the hyper liquids of the world um what what is it going to take to sort of keep or Main main or you know stay in a leading sort of per spot going forward yeah I I agree I agree with you in on that point I think like if we ask the question of what makes a pers Dex successful to me like the number one reason is like just rapid listing like a rapid listing framework right like you want to have tokens at your platform that people actually want to trade Jupiter right now only has like three assets like BTC Ethan Soul they have like the most Market shance salant by

trading volume right but like you need to be able to offer more than that if you actually want new users to come into your platform and trade like the trending topic of the the trending token of the day right like hyper liquid I think took like two hours or something crazy to list the Trump token and I think like this kind of like quickness to list new assets is what's making like it's obviously not the only reason but it's one of the main reasons that that hyper liquid has been so successful and yeah like you can see this chart here like hyper liquid right now registers like almost five times more trading volume than all of salanta spbs protocols combined which is a crazy statistic yeah I think um and to tack on

to Carlos and get to get to the question of like what what will give a per um staying power um obviously like volume is the game or liquidities the game entirely because that's what um that's what gives and users tighter spreads um and better best execution right I think um the other thing hyper liquid got right was the um was their order book model um and their Market making Vault to kind of intelligently um add liquidity to the most popular uh pairs so as they listed you know fresh new pairs that people want to trade they provision liquidity on those quickly and efficiently um and

that's super important I I think that um you know I think it's going to kind of be like whack-a-mole like I think the I think onchain perss are going to face increasing competition from centralized exchanges um now with the you know as we talked about earlier all the deregulation with with Trump um you know like if Quint for instance like if coinbase had um like they're they're building out their derivatives platform it's coming along right I can go in I can look at it I just get a gray bar at the top of the screen that says I can't use it because I'm in the US and as soon as that uh goes away um right the

question is how many users are just going to stay on centralized trusted options with even you know potentially more liquidity and better execution um versus Venture on chain my intuition is that on chain there's going to be a power LW distribution and I mean you're literally seeing that um right now right like hyper liquid has the most and then you see a decreasing long tail um following an following a um exponential decaying function um down down the line and I think that whatever the leader is um right they're the way they have Edge over centralized exchanges is they're listing assets before um and centralized

exchanges are and they're listing kind of the most you know experimental F tale assets right first and so I think that in the onchain pers land I think that that um completely agree with Carlos like that that's going to be um the the winner the winners is it's all around obviously you need sufficient liquidity but then it's going to be all all around um you know assets uh and and listings yeah like like on the topic of liquidity there are some like technical limitations on the Solana L1 that prevent like uh liquidity providers and market makers from offering very tight spreads and like

it's really challenging from a technical point of view to provide liquidity to a fully onchain order book like some of these technical limitations are one like suboptimal latency like if you look at salana today like yes it's one of the most performing blockchains like it has 400 millisecond block times but like you look at a sex like binance and you see like it has latency of like even as low as five milliseconds so like even the most performing blockchains today like don't even come close to the performance that you see on centralized exchanges and like if you look at per Dees the majority of the volume like if not today gradually it will be from high frequency

trading firms and this trading firms like need this low Laten as possible like to take advantage of like fleeting Market opportunities so I think like one like there's issues around latency that blockchains need to solve like today like to be able to be more attractive for these high frequency Traders than like their centralized counterparts like even hyper liquid like I think it has like 200 millisecond block times like yes it's really fast like uh I saw a statistic the other day like the blink like the blink of an eye is like 150 milliseconds well so like for a human this is like it doesn't make a difference if it's like 200 millisecond 400 millisecond but like for Bots

running these arbitr opportunities it is very very significant uh the other thing like for the salant L1 is just like the congestion issues that have been uh in the past like if like around April of this year like congestion was really bad on this planet blockchain like I think like transaction rebirth rates at some point got to like 70% which was crazy and one thing I want to make clear here is like uh this like transaction rebirth rate was skewed Higher by like wallets like with 10,000 or more daily transactions which these are obviously not humans right they are Bots but these

are the same Bots that are like conducting these kind of Arbitrage opportunities and if you cannot do this profitably then you're just going to go somewhere else you're just going to go to a sax or you're just going to go to hyper liquid if they offer uh better like uh like a better trading experience and like for liquidity providers this is obviously not great like if you want to offer very tight spreads and you don't want to accept like non-toxic like toxic orderflow that uh like basically makes you lose money so like it also affects like the liquidity on chain yeah great call out on uh revert rates is that that data on our platform right yeah yeah that's a I

mean that's a big part of the story um the yeah Dan Smith did a great job with that dashboard the difference between revert rates for someone who does sub five transactions per day and someone who does more than 10 thousands per day are completely different like that was really lost in the narrative in April and May when salana was having congestion issues and people were having a tough time Landing transactions like the bulk of it was due to these spots um data always helps more context yeah so maybe the maybe the longer term question for Salon purose platforms is you know timelines to either optimizations of the chain you know lower block times um

other improvements higher throughput to enable you know basically better latency increased bandwidth reduced latency um for these types of applications um though obviously you know we're sort of we're coming down to sort of engineering timelines there from you know if it's if it's fired dancer if it's General improvements um to the to the chain the core protocols um that's sort of up in the air um and and I don't know if like you know making your own svm rollup Etc um you know that may not be the way to go either um because then you're you're sort of islanding yourself away from all the liquidity that is on on chain today um I don't know do you guys have any

other thoughts there like at least for Soul Purpose if we take hyper liquid out of the equation like what what can be done to sort of Challen can anything be done to challenge Jupiter today you know these these other platforms they're offering more assets like more features when it comes to perss but they can't make a dent like if we look at the numbers really I I wish we had zeter on here as well but it would be a line down there at the bottom as well um relative to jup and um it it doesn't really seem like they can make a dent yeah I have strong opinion here I think that it is look if you look at Global Financial markets um derivatives volumes are many multiples that of spot

volumes uh risk is managed by sophisticated Risk Managers via derivatives contracts um you don't have sophisticated Risk Managers and mass onchain today because for the reasons that Carlos pointed out like it's just like the the ux and uh isn't there to to allow them to avoid more sophisticated Market participants and do the right thing with spreads and there's issues of downtime uh Etc um but I think that and it's going to take a long time but as institutional Capital gets onchain like the derivatives space is going to completely change it's it's up for grabs um it's it's really up for

grabs and you've seen it historically with crypto Pur platforms uh market share changes dramatically and users are very fleeting and they are not loyal to their chains I think there's some evidence that hyper liquid users are going to be marginally more loyal than historical um user bases have been to specific purp purpose products but since this is an Institutional asset class at the end or sorry since this these are institutional venues at the end of the day where that institutional Capital comes in is is really just going to flip the script on market share and you know it's any it's anyone's game I I think it's it's pretty hard to

predict yeah I kind of find Jupiter's uh dominance in volume um perplexing to be honest given that they only offer like three assets to trade uh like one of my theories is like uh people were incentivized to trade on the per product of Jupiter uh for the jupy airdrop that happened like two weeks ago or like three weeks ago I can't recall well I think some of these activities are probably farming for that airdrop and not like organic yeah I mean OB obviously like the um if you ran like um if you just plotted like the daily volumes of like

let's say like the top 250 um crypto assets like that actually that falls a power LW distribution as well so like you know Jupiter offers the three largest assets by market cap right that all have that all trade the most volume so um the volume isn't is that that doesn't suit take me by surprise too much um but in terms of like Jupiter's position specifically um recently so radium actually in terms of spot decks radium does like the the most trailing 30-day volume and you know maybe sometimes Unis swap will be just above it um it might take back the lead but it's essentially the number one spot

deck now and um they integrated uh orderly uh orderly's Perpetual uh Futures into its platform and orderly offers 80 pairs um and so that's actually that's actually pretty interesting right like um Jupiter's just based off like defi llama like their spot to uh derivatives ratio volume ratio is like six to oneish um and that could be wrong that's based off of dii llama but like if you defi llama but if you follow that same ratio like if an equivalent am amount of volume um of radium went to orderly like that would 6X orderly's volume and that

would actually like put it pretty competitive um with Jupiter so um we'll see how that how that develops but um yeah as of now I think uh it it does seem like Jupiter has like a sizable lead um even though it only has those those three assets to trade I think that's a great call out um Dan and maybe gets right back into the point around multi-product defi sort of really being a a catalyst for um you know kind of defining some of the the key winners right now um and it may be that that Jupiter users of of other of you know their other products um that Jupiter offers um simply use Jupiter pers

because that's just the one that is easily available to them on that platform um hard to say that without some concrete data but it you know it may just lend itself to this this thesis this idea around just offering a great set of products um as a multiproduct defi platform um and driving your users who are swapping and DCA and um doing limit orders Etc and also you know maybe getting some flow into the into the purpose product as well if you've got the biggest assets and that's where most of the flow is generally then you know you might get a big bump there um I think that was a great chat I want to wrap up there but I guess I want to probe you guys for any like last big thoughts kind of if we look ahead 612 months like you know we talked about

executive orders we talked about Sab 121 you know visa and Twitter um or VISA and X I should say um you know maybe stable coin and Market structure bills are maybe in the pipelines potentially or even a strategic Bitcoin Reserve like what's what's the core takeaway right now like heading into you know mid to late 2025 in these markets yeah like yeah just before we get into that I just have one more thing like on the orderly thing that I was thinking about as Daniel was talking and he's like no one actually uses the radium front and like all the radium like basically are I dare to say like 90% of the volume that radium has is like good goes through

Jupiter like so how are are they going to incentivize like these per volume and I think that's one of the importance of of of distribution right because sure like they have a multi-product defi and they not have like a purse volume but no one actually goes into radium's front and like most of the r of the volume that radium generates like just goes through the Jupiter UI so I just find that really interesting it's maybe one of the reasons or like one of the modes around like Jupiter's uh volume in the per salana landscape you know that that's actually that's a great point and maybe the way salana perss compete with Hyper liquid is someone makes a per aggregator and

you know like if you combine all this Salon of perss all of a sudden um you know it looks a little more competitive to hyper liquid and then starts to pick up momentum gain more liquidity right and reflexively like you start to see that uh that momentum build so so yeah maybe maybe it's an aggregator that you know allows the chain to to compete with Hyper liquid that was the uh that was the original margin 5 business model when they raised they were going to do I think it was like called decentralized Prime brokerage where they were going to be a layer on top of the various trading uh per venues and and at the time it was like mango markets and I think a derivativ protocol called 01 and then drift maybe there might have been one or

two more um yeah so that's definitely like a vision I would like to know why they totally 180 it maybe the change just wasn't where it should have been um and maybe maybe it's different this time I like that I should have let Carlos go first because maybe the takeaway is that we need someone to reattempt the pers aggregator for salana um you know sounds like we have a clear business opportunity there um in a market that's up for grabs that uh either failed or they gave up last time maybe the the activity just wasn't there at the time but clearly there's way more things happening on salana today um Trump has cemented that like we've said um thanks so much for coming on guys and

uh we will see you all again next week [Music]