The Last Mile Problem For Stablecoins | Analyst Round Table

Transcript

when you send like a USD stable coin to an emerging country like the biggest problem today is one how do you convert that to the local currency and two how do you like exchange that for like cash because a lot of the economies are very cash prevalent still so even if you save a lot of cost in like sending the stable coin let's say from the US to Mexico or whatever then you still have the issue of what is the exchange trade between the stable coin and the Mexican peso and how do you withdraw that without like incurring as much cost as you would with a normal like remittance. So that's like the biggest issue that hasn't been

solved today like the on and off ramp and like conversion to local currencies. 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 Zerox 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. Bacio Ryan and our guests may hold positions in the company's funds or projects discussed. Welcome back to another episode of ZeroX Research. Today I'm joined by Bacio as always and Carlos, our resident expert on Salana

and all things related. Uh, how we doing today, guys? I couldn't get mugged today, unfortunately. But what' you say? Are we doing a salon episode? No, but that's just how I don't have a nickname for Carlos, so I just call him the Salana expert. We need a We need a nickname for him. You got any ideas? I I shouldn't start testing them out on recording. I need I don't have any. That's We'll workshop that. We'll come back to it. We're missing Mark today. Unfortunately, he couldn't make it last minute deadlines. We understand. And Ryan, well, to be fair, you know, past couple episodes, Ryan comes on, he says stated

verse revealed preference. And so, we figured give him a week or two. He really needs to come up with some extra lines. So, hopefully he'll be back soon with uh some new content. But the rest of us, you know, I think we can eek one out today. Yeah. I mean, I can just like answer every 30 minutes and say stated versus revealed for really missing him. Ryan is so funny because he he wants to come on the pod and he's like he's too busy. So, we keep telling him, but you're too busy. You can't constantly come on the podcast and he's like, "No, I got to come on." And it just he's too busy. Doesn't work. Big man. He likes listening to bank list. So, it's it cuts into his pot time. So funny that he

likes doing that. Um he just rage baits. It's like when you scroll like your for you page, it's like, "Fuck, I'm going to kill myself." That's what he does. Um, Carlos, how are you doing? I'm doing great, guys. I'm excited to get into all things. Uh, I think Plasma was the big news today. Um, Bog is really happy. I'm very happy. I like I mean obviously you guys know but typically when it's like when there's something that's opening up like a vault with a cap, you usually don't really have a chance of getting in because it just gets spotted to hell. Um I managed to get in with the sides that I wanted to get in as well. Like I didn't have to

do like limited amount or anything. I just like I'm in. Um felt really good. Felt really really good. Um, I put out a flash note on it around an hour before um because I wanted to see if the math made sense. It does. I It does. The math makes sense. I think Danny, I'm just pulling it up right now. Do you have it in front of you? No. Yeah. You want me to pull it? Yeah. Can you? Mhm. Dude, what you What do you want me to show?

Yeah. I just want to go to the chart to be honest. the the t Oh, this table looks this guy. Yeah, there we go. There we go. Yes. Um there we go. Very good. Thank you, Danny. Beautiful. So, um I got to give a first of all a shout out to DeFiest. I think that's how you say his name on Twitter. He's at he's like he's at Split Capital, which I did a pod with Zahir from Split Capital and Paul who's the founder of Plasma a few months back. Um, and Zahir and Split Capital are investors, so I took their word, meaning that like DeFi has posted on Twitter that they would have a free month lockup. Um,

so I kind of took their word for it. I assume they know. Um, and based on that, so the top table, um, shows the freemon lock up and if deposits, I think deposits will be at like 1.5 bill to two bill to be honest with I think they raise the cap every week. Um, and FTV at TGE, if it's like two bill, I think you get 40 30 to 40% API APY annualized. Um, which I think is a pretty good deal to be honest with you, like on stable coins because you're just depositing USDC. Um, and then you obviously get the option to buy at the end of um at the like whenever they want a TE. You have to lock it up for a minimum of 40

days. and afterwards you get to buy. Um depending on how much you locked it up for. Currently it's still in the deposit phase. It's going to move to a lockup phase and then afterwards there's going to be like a buy. Um and then based on how long you locked it up for um you get a pro router guaranteed allocation to buy in. I think it's this is like one of those things that I thought made a lot of sense to do even though the math doesn't sound that enticing. Like objectively 40% in crypto is not a glorious return. Um I do think that it probably has more legs than two bill but I want it to be as conservative as possible if I'm doing valuation stuff.

Um yeah I thought it was a like I thought it was a good opportunity. I I think a lot of people Americans probably not as good of an opportunity because you have a 12-month lockup. Um, and you have to be an accredited investor. Um, I'm based out in the EU, so I didn't really mind. Does that make sense? Yeah, I think so. I'd be curious to see. They have already hit 500 billion, right, in deposits. This was one thing. That's the big question, right? is like I think you mentioned you know maybe 1.52 billion is maybe your expectation. I wouldn't be surprised for this to be you know to see a massive especially if they're willing to just keep raising the caps. I mean we

saw Ian layer stuff like the boy co vaults like multi-billions went went into a lot of these things in the past. Yeah, those were quite different, but it's you know that's in my in my note as well and I completely agree with you. That's like the massive risk is dilution. Um to be honest with you, I told this to Ryan Connor as well and he was like you can't say that but I feel like downside is semi-limited here. Um like at 500 mil FTV, I don't think there's massive downside risk um for plasma. Um, but like you said, like there's a potential for dilution. And the other issue is that if they decide instead of like if this isn't a two,

three month process, but instead it's a 6 to 12 month process, then you're just you're basically missing out on whatever capital you invested. You can't put it elsewhere. And on top of that, you're getting diloted. Realistically, I think that's pretty bad. Um, I don't think they'll do that because that would probably leave a sour taste in people's mouths. I've like from what I've seen from the team they they're pretty agile and they they seem pretty smart. Um I know they just had a competitor like a direct competitor announced last week called Stable who's also backed by Bitfinex and Tether. Um so we'll see. We'll see how everything turns out. I like the Plasma team. Um and I I thought 500 mil FTV was a pretty good deal to be honest with

you. Like I think if if a chain is not like a pure scam. 500 mil FTV unlock a TGE is probably like 80% of the time a buy. Um, right. Like I feel like that feels logical. Yeah, I feel like it makes sense. I agree that dilution is the biggest risk and I feel like everyone who wanted to get in didn't get in. Like if you look at the figures, there are around like,00 depositors like 970 addresses deposited more than $1,000.

And the top 10 addresses got 40% of the 500 mil, so like 200 mil. And then if you look at the top 100 addresses, they account for 83% of the 500 mil. So I feel like the allocation is pretty concentrated in Wales with big conviction and if they want to like increase like the distribution of like for smaller size accounts or whatever they may increase like the cap but yeah it feels like something they may they might do in the following weeks. I feel like the minimum uh days that it was locked is like 40 days right? Yeah.

Yeah. I think that like one month minimum, one and a half months. I think that's not bad. That's like I don't know. I'm like I said, my biggest issue is that if I lock up and then they keep diluting and then they're like we're actually extending the lock up period to 6 months. That's when I'm like okay guys. Like that's why I didn't put like I didn't sell any exposure to put into it. I just like had stables lying around. I'm pretty comfortable putting in USDT into a USDT backed project.

Um but let's see there's like you said big people donated. One thing I actually wanted uh deposited one thing I wanted to mention was Split Capital raised 5 mil at 18% on Wildcat Finance. So they're paying 18% to lenders on Wildcat Finance. So in my mind it made sense that this would have at least 18% APY because if Split Capital who is close to the team understands that like cuz they know they're how much money they can make by depositing into this better than anybody probably apart from the team. Um, so

unless something goes horribly horribly wrong, I feel like that's a pretty good like baseline to take and saying, "Okay, this is like if they're willing to bet, if they're willing to pay out 18% to deposit into this, I think this the minimum here should be 18%." Right. That's not a stupid take. Yeah. Yeah. Naturally, they would be expecting, you know, whatever their base case is should be probably a multiple of that, I would expect. Yeah. And, you know, factor in some risks there. So yeah, I mean I I'm guessing the the goal would not be to go like delta neutral on that on that loan essentially. Um they were already investors, right? So yeah, they were Yeah, I do think on the time component like I think time is a big risk, but I

think there's a trade-off here for the team, right? Because you know, Circle is in the news, the stock is doing crazy things. Everyone on CT is saying like why would I like the valuation looks stupid and yet on the other the other half of that is just like there's a very big stable coin narrative now and it's like what it's the only like pure equity that's just stable coin exposure I think is probably how I would term it. Um, so for Plasma, these guys like you kind of have this narrative tailwind behind you right now. And if you sit around 6 8 months with funds locked up, like you might miss out on like a valuation bump when the thing goes live. So I think they kind of have to play that trade-off

as well. If if they launch the thing now, you'd think you'd expect a lot of activity. Whether you're building D5 protocols, enterprise solutions, or next-gen DAPs, Algoit has all the tools you'll need to build faster, safer, and smarter on Algorand, Algoit 3.0 now offers native TypeScript and Python support, visual debugging, and seamless testing. Build, test, and deploy with tools designed for speed and simplicity. Start building with Algo Kit today by following the link in today's show notes. This episode is brought to you by Ledger, the global leader in digital asset security. Celebrating 10 years of innovation, Ledger remains the most secure hardware wallet for your crypto and login. Trusted by 7 million users and securing 20% of the world's digital assets. Follow the link in today's show

notes to grab your Ledger now. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. So, I should probably give a quick background on Plasma as well. Um, but I recommend that people listen to the pod that I did because it was really good. Um, like they were fantastic. They explained everything very well. Um, but their like whole thing is it's a Bitcoin side chain slash L2 that gets security from Bitcoin. Anyway, it's EVM compatible. Um, zero fees on USDT transactions except for complex transactions such as um anything non-payments and sending around money. That's what the complex

transactions are. So, lending, borrowing, smart contract interactions. Um, those will have fees. Um, and I asked them, how do you prevent spam in this case? Um, and I think they're just going to do minimum account like minimum uh value within accounts, which seems like objectively if if that's the first thing you hear, you're like, okay, well, that's not a great fix, so it's probably going to go to [ __ ] at some point. But um it's also like it's a great way to start a chain. Like I don't think chains need to be I know we say this a lot and we're like chains need to have a bunch of stuff to do day one but also there's no point in waiting like a year just to figure everything out. Like I think you

can go mainet beta and then go like full mainet at some point. I don't think there's a lot of sense in like, oh, we have to figure out this like very intricate thing and then the market's fasc. Yeah. Um, everyone's talking about it. Stable coins are obviously massive right now given that everybody's apart from Circle like that's the big thing that Prat's pushing is stable coin settlement. You see stripe integrations. Um, so I think yeah, they would they would they would miss out on some narrative bump if they didn't launch over the next three, four months. Um, on the other hand, obviously you need the

product ready. I don't think they're doing something super complicated to be honest with you. Like I think they're going to start off with a smaller set um hot fast hot stuff BFD derived plasma BFD um and then that's it. like they have some Bitcoin bridge integration. I think they're posting um chain data onto Bitcoin every some period of time to like get and get the security of Bitcoin, which basically means the final state of the chain. They can always roll back to it. Hopefully, they don't have to roll back. But um yeah, I think it should be fine. That's me talking myself through my investment that I made this morning. I think I think it's fine. Yeah, I think I have

two thoughts from that. The first is I fully agree you don't need to have everything ready to push to mainet. Now I'm thinking of monet as an example of a chain doing totally opposite of that where they're like constantly like pushing the date of the mainet release and I think it's better just to break things in production than to just like push and push the date and potentially miss out on a narrative. And then the second thing that I'm thinking is like do you guys think this has any implications for like Tron and Ethereum USDT supply once it launches that do you think it migrates over to plasma? This is the one thing I wanted to mention. So

they were actually very vocal about this on the pod and they are very vocal about this. I think they are directly going for Tron and their main arguments are two. One is that Tron is expensive now which is true. two is that Tron is centralized which is also true. Um and they say that they want to offer they want to capture basically that so Tron's very popular in countries that have that don't have trust in their central banking and that don't trust have trust in the banking system in general. Turkey, Lebanon, Argentina um emerging markets. Um and in these countries uh Tron the network is used for USCT payments. Um

that's the exact market that plasma is going for which is just the USC market in these emerging market. Now the issue here is that Tron is expensive. Yes. Tron is centralized. Yes. But it has probably the biggest moat in crypto, right? Like I don't think anybody else has that moat. Maybe USDT has the moat. That's it. But that's also related. Um, I'd say Tron like in terms of distribution, in terms of contracts and contacts with like whoever is using it, payment providers, settlement for USDT, they have the best network. Um, so it's a very tough uh market to enter into. I do think that

Tether backing and Bitfinex backing and Paulo backing um and I guess Peter Fel backing is like enough to do it. We'll see. Um but yeah, that's the market they're going after is like payments and settle and settlement and USD like Euro dollar market. Um we'll see. It's it's really tough. Like I don't know if you can beat it out very easily. So I think from what I saw they have the contacts and the contracts within like some of these countries. Um but it like also depends on if users are willing to switch over, right? like you can only do so much and then because if

I'm a bit let's say I'm like a payments provider, I will offer both Tron and Plasma. I'm not going to cut out Tron for Plasma. That doesn't make any sense. So, you have to entice the user somehow, which if low fees are going to do it. We'll see. But it's tough to make people switch from one network to another unless they're like trying to make a lot of money. But going from like $3 fees to zero dollar fees with one being like very safe and guaranteed and you've used it for four years. I know it's not like it's centralized, but I don't know if a lot of people care in those countries. So, we'll see. I think they have their work cut out for them, but I do like them, which is why I invested NFA. Um, but I think they could probably pull it off.

It's a long diet tribe. I'm sorry. Yeah, I think the distribution is is the hard and probably expensive part, right? Like wallets maybe like what are these users using today? Are they using like some Tron wallet? Are they using some Binance wallet? You know, the bakedin options to send currencies over specific networks are already present there. So, it's like, okay, do you need a you need an agreement with Binance? you need an agreement with, you know, other large exchanges. That's probably not, you know, maybe there's a charge associated with that. You know, we've seen what it takes to get, you know, token listings, for example, in some cases. Um, yeah, I would imagine, maybe Bach knows

this, but I would imagine Binance is one of the big distribution channels for USDT on Tron. I think people just use Binance ID to receive and send payments. Um, so I think like a plasma integration with this like Binance and these kinds of front ends would be like a huge first step to get adoption. Yeah, it feels meaningful. The other the other thing that I know of Tron is that there is gas incentivization. So as like a user, you get maybe one or a few transactions free per day, I want to say, or like per period. Um, so it's like the normal network fees are they

have become a little bit expensive, but they they have this kind of ongoing program where you like build up energy when you don't use the wallet and then you get like a free transaction sponsored. So, um, we'll have to see. I think they might need maybe even more than just free transfer free transfers of USDT. We'll see. Yeah. Yeah. I mean, I think like USDT has the biggest mode as Box said. I think people don't really care what network they're using as long as it's not expensive and it's like free to send. I I know Paola shared like this thing on Twitter where prices in Bolivia stores now are using like USDT. I think that's pretty amazing. I think like as long this is more like a BD thing for

plasma, right? As long as they get the right integrations and people start like B2B they start using them, they should have no problem like um taking over Tron uh in these like countries. Yeah. I wonder how much of that is like they're going to focus on emerging markets or if there's also like they have to work with Stripe and stuff um like in the US if they're going to do stable coins settlements because I imagine the money there is probably more um do you Yeah. Do you think US businesses are more reluctant on USDT compared to USDC? Yeah, I feel like it's not even worth going after the US right now. I think historic in terms of USDT

integrations I think historically yes but this like I am not a big politics person or a big understander of legislation and regulation I'm not going to lie but there have been like do you guys remember when Paulo did that whole like week in Washington and he like posted pictures of himself in Washington do you remember? Yeah. And it was like the same week that all the stable coin and genius bills were going on. I think that USDT has made a strong push from what I understand into the US market or they're trying to make a strong push into the US market. Um I think historically that's been captured by USDC who tried to

um get like regulatory capture basically and um make themselves the only stable coin um in the US. I think since Paulo was there as a representative, I imagine it didn't work out and I imagine that USDT will uh do okay in the US. They also have some key people in power. I think Lutnik for example um big USDT guy, huge Tether guy, um very important in the administration. I do think the business like in the US the business integrations is is probably like rather than going after the consumer I guess would be the

way to say it because there are ways like there are already many ways to send dollars for free to other people to businesses and so like just bringing in a chain and like an app and a wallet that lets you do that with Tether doesn't like within the US that doesn't feel like a big unlock whereas elsewhere of course I mean you talked about the pain points so I understand like there's a divide there. But if you can capture like well PayPal is trying to roll out their own stable coin so I don't know if you'll be able to get Venmo but you know if you get partners along those lines and then they use you as you know sort of the underlying the back end there um that that feels like the valuable angle.

I just it seems like a more difficult ask today. Yeah. No, completely agree. And Jesse from Aula posted about this the other week and he mentioned that he doesn't really get the stable coin angle that much for settlement. And he's completely correct because in developed countries you don't really need stable coin payment rails um like USD payment rails you need it for crossber payments and you need it in emerging markets but like like you said then you can just use Venmo um I can use Revolute in Canada they have e transfer like things are very very simple. Um, as opposed to in other countries where you can't hold US dollars first of all, like that's the

big unlock. And the second one is that if you do hold US dollars, you don't really have access to them all the time. Um, I think for a while, like I'm not sure if you guys have seen this, but there are, for example, banks in Turkey, you can't necessarily go in and pull out your US dollars all the time. Same in Lebanon. Like they're not going to let you have it. Um, they need it. So, and they're not going to let you convert to USD as much as you want. Um, so that's you're right, that's the bigger unlock. If settlement is important, like T+ 2 is too much and they want instant settlement, which they should. It is more efficient. Um, that's maybe where it can come in where they but they would have to make big deals with players like

like you said, Stripe, Venmo, it's difficult because I can imagine they just launched their own or USC's already captured that. We'll see. I think if anybody has a shot, it's Tether obviously like they have the biggest mo in crypto and clearly they're welcome in the United States again. So, we'll see. It's tough to like decide. Yeah, I totally agree. Like the biggest product market fit is for emerging economists with high inflation that have like high capital controls against people having like US dollars in their bank account. I know for Argentina that was the case at least a couple of years back where people could not have

like US denominated bank accounts and stable coin what was the only way to to do this and like for crossber payments I feel like the biggest issue today for remittances is the crypto on and off ramp like when you send like a USD stable coin to an emerging country like the biggest problem today is one how do you convert that to the local currency and two how do you like exchange that for like cash because a lot of this economies are very cash prevalent still so even if you save a lot of cost in like sending the stable coin let's say from the US to Mexico or

whatever then you still have the issue of what is the exchange rate between the stable coin and the Mexican peso and how do you withdraw that without like incurring as much cost as you would with a normal like remittance. So that's like the biggest issue that hasn't been sold today like the on and off ramp and like conversion to local currencies. Yeah, I feel like honestly it's kind of ridiculous that you still have to use centralized exchanges to off-ramp and on-ramp. Um it's there's no good on-ramp offramp apps. There's no good like like Revolute, do you know what I mean?

If you try and on ramp off ramp off Revolute, they're going to take you to the shop. I don't know if that translates well into you get what I mean. Like yeah, it's there's no there's no like wallet provider that has a very good on-ramp off ramp. I know there's going to be like Moon Pay. I think they take like a 3% fee. Uh yeah, the card they only onramp through cards, right? And the credit cards charge like 6%. It's just ridiculous. And even when these providers say it's free, they're like screwing you up with the exchange rate, right? So they're taking like a lot of money from the exchange rate and people are not stupid, right? Yeah.

There is stuff like like Sphere Pay is pretty good. Their fee is pretty is fairly low. It's like I want to say.1% or something along those lines. But I don't know how like widescale they are like how many countries they've been kind of spread out to. But within the US it's been fairly good to on and off ramp. But yeah, I mean I think that's kind of a constant problem is just like at some point you need the the interconnect between the stuff that is onchain and the stuff that's offchain and and that's been the hard it almost feels like you could just get you know the plasma guys could walk around like local villages and just as long as you you could just convert enough people there like hey as

long as all of you guys who are trading your goods and like providing services to each other are using stable coins then you don't even you know you don't even need the bank but um It's a hard ask. I think it's like that you need enough people to to get that sort of transition point where uh you know maybe businesses and other entities are willing to just offer up their services maybe at a slight discount by stable payments rather than using traditional. 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 nextgen 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 and 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. Let's chug along. Another one I wanted to topic I wanted to bring up again that we breached on the Friday live stream was Morpho. Um they dropped an announcement around the Morpho token and DAO and the Labs entity. And I'm just going to read a line here real quick that they mentioned. and they say Morpho Labs is becoming a wholly owned subsidiary of the Morpho Association to eliminate any perceived conflicts with equity value

and ensure that token holders and these contributing entities share the same incentive. So they're trying to take a step in the direction here of kind of uh eliminating or alleviating this like question mark that we've had for a long time where you've got like DAO or token versus the sort of labs entity that typically is like the founding kind of team behind the project but then also sort of continues to be an ongoing provider of you know dev work and whatnot to the to the protocol. But there's this weird kind of problem that we haven't solved yet in that often times like if you look at unis swap for example you know labs makes a ton of money the token is basically a memecoin

right they don't there's a fee switch that could be enabled but it never has been and obviously the influence from you know labs and like core investors um they have enough basically voting power to make sure that that never happens if they wanted to um at least with kind of current ownership. So, this feels like a step in the right direction. Uh, I'm curious in your guys thoughts like are there more specific things we want to see out of like token labs or just like how a transition like this might play out or like thoughts around revenue share, what we're doing with tokens in general. Like I I think this is going to become more and more of a thing. Um, and certainly like having a strong voice here about

like what is a good model is going to be important going into the future because in the past like you hear a lot of people who are like you know give all the revenue back to the token but that's not really the best design either. You know in some cases maybe it can work there. There's maybe small edge cases where that can work, but it's probably not often a good idea for a business to just give back all of its revenues to its, you know, quote unquote shareholders every single time. Curious if you guys have big thoughts. Yeah, there's two things I really like about the MOR announcement. The first is that you have a legal guarantee that the token is going to be the only form of value acrruel for Morpho because the Morpho association is structured as a

legal as a French nonprofit organization and like legally they are prohibited from having any shareholders or distributing any profits like externally. So you kind of have like a a legal guarantee there that the Morpha token is the only way you can get some sort of upside exposure to Morpho. And then the other thing that I really like is that they in the article they made a huge case for reinvesting protocol profits or fees instead of like acrewing them to the token directly either by token buyback and burn or like some form of staking yield. And I really like this long like long-term approach because I

think like a lot of crypto protocols today have sort of this short-term meism where they instantly distribute fees back to stakers or allocate them to token buybacks and burns. And I feel like for many of these protocols, they're kind of like startups and are very early stage in their growth cycle and they're better off reinvesting rather than just like distributing that to the to the stakers like the SB. Finish up. I will argue with you later.

Okay, cool. I feel like if you look at the web two examples, right? Like for instance, Apple didn't pay a dividend like for 17 years. Like Tesla went public in 2010. They still haven't paid off a dividend. I don't I don't see people arguing about why Apple and Tesla are bad investments because they don't have like dividends back to shareholders. I think yeah, let's give the the counter. My my general idea with this is that I agree with you but but for the current market where the market is semi immature let's say just semi-ature

a buyback program adds this idea of value acrruel to the token this narrative. Now, let's ignore the fact that it's like probably not the best thing to do if you haven't completely carved out your market share, you're not the leader, you don't have a mo, whatever. But if you just have, let's say, a 25% 30% buyback, that signals that look, there is at least some form of value acrruel going to my token. Now if the crypto market was such that we were 100% sure that all tokens were the sole holders of like that equity. You get what I'm trying to say?

Like there's no dual structure. We all know that it's just a token. Then yes, it makes sense. Reinvest it. But I don't think that's what I think like if I see a token, my first guess is that there's a reason that Morpha had to write this blog and make these changes because the first guess that you have when a token when a protocol launches a token is okay. Well, I'm pretty sure they also have equity. So, I don't know what the [ __ ] they use for this token is. um in that case I think it makes sense to do like a 20 25% buyback um just to get some value equal to the token. On top of that it's like crypto is very narrative driven still it like I would say it's

probably like 70% narrative 30% fundamentals. I'm sure people will disagree with me. Um, so I think given that split, it makes sense to buy back because it just gives you a good valuation bump. And in crypto, people use the products that have like higher market cap means less likely to be scammy, I think, still for people and people want to use the products that they hold that goes up that they can root for. Um, I know that's technically not like the way that we are supposed to do it. It's just one of the funky parts about crypto.

Yeah, I agree. I mean, I do think it's an artifact of the two the two dual ownership model basically. And if like you're saying, if the if equity didn't exist behind these things and it was just tokens, then, you know, I'm sure there would there would probably still be people on CT saying, you know, what happened to the 100% buybacks and stuff, but um realistically, like it wouldn't it wouldn't make sense anymore. there'd be not a need to do that and you could basically operate these tokens as if they were businesses essentially. Um, and so I think that's probably where we're headed if more teams start adopting this model. And I I I mean I think my basic expectation is that they would will will or should would or should uh given current like at least in

the US like the administration is um far more is easing off the you know hesit hesitancy of the past around tokens and you know being securities offerings and things of that nature kind of warming up to that. I think, you know, maybe we still need to see some more like written down legislation that says, you know, X, Y, and Z. This is okay. This is not okay. But it I think it's great that Morpho is taking the step. They're sort of, you know, probably one of the few who are trying to like break into whatever that next kind of version of a token design looks like. Um, and it seems like a good start. Yeah. Yeah. I

think I agree with that. I think like buybacks today are kind of like this signal of like there's alignment between like token holders and whatever that that is. But I think I like the morpho approach because it adds another way to signal alignment without giving back this optionality of investing fees in growth instead of just giving it out so early in their life cycle. So I feel it adds a new like optionality to add like this alignment if you will between token holders and the protocol. Um I don't think it's going to happen like for US-based um protocols at least in the short term.

I think it's more likely to happen like in European jurisdictions in France, Switzerland or whatever where there's like more like flexibility in terms of like structure and they don't fear like their token being cataloged as a security. Yeah, I like that. uh as long as we can get away from this this design where you know historically it's just felt like you know you know that these teams have equity and then they do a token and then if they give if there's no revenue that drives to this token or to the DAO or what have you that represents the token it's like you know is is this token just like is this like an exit kind of scam like they get their value from it maybe they you maybe they use some of the

tokens to incentivize you know their metrics get people to farm volume or what have and then that makes their equity valuations look even better too. Um but then you know have no intention of doing anything with the token. Um so seeing some intention here I think is good. That's generally I think that's positive. We need to see more teams kind of going in this path. Uh but I think you're right Carlos like I think the US markets they need more time. they're going to want a little more regulatory clarity or at least like, you know, indications from SEC or whoever to say like, you know, maybe this is generally okay to do. Um, and I don't think we're quite there yet. You know, they're happy to say that commemorative coins and memecoins and NFTs and whatnot are not securities, but um, we've not seen some

strong lang language yet on tokens generally, so we'll see. 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 Tradfi, including liquid and native staking, as well as direct enterprise integrations. Marinade'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. Cool. Uh, I guess one last topic for today. I think this is an easy one, but I want to get your guys' thoughts on what's interesting. Like, what are we exploring right now? Because I think, you know, we're getting into the summer. This is usually like a kind of a slower, more of a lull in the markets kind of time period. But it's also a good time to check out like what new apps are popping up, what new ecosystems are popping up. Uh, I'll shout out some big ones that I think are maybe where our heads are at. But like, you know, obviously Hyperlid has a pretty strong narrative right now. The Hyper EVM is maybe a place to look around. And then, you know, Salana has been a big, you know, DeFi ecosystem since its runup. So

curious if there's like new apps that we're exploring there. And then outside of that like the sort of other ecosystems like you know maybe the tier twos of places where people park capital of you know aptoses and swes or avalanches or are there interesting things happening in these kind of side side places that maybe aren't the front center. What are we looking at? Yeah I I played around with the hyper EBM. My thought so far is that is still early stage. I feel like a lot of the apps I use are like copycats of other applications you see on other chains.

However, that is really just the case with new new ecosystems. That's what you would expect. So like on the deck side, you have like kiton swap is like an IRO. You have like hypers swap is just like an AMM. On the lending side, I think like Felix is like one of the biggest ones. Yeah, it's liquidity, right? It's liquidity. No, it's not. Yeah, it's liquidy. Liquidy, you know, Felix, I haven't tried out that one. Oh, yeah. Yeah, yeah, yeah. You you say the copycat on Yeah. Yeah. It's the same model. Yeah. Yeah. Um and then Yeah, I I played around with this cool liquid launch I shielded the other day. Um not

financial advice, obviously. I don't know if it's a scam or not, but it's like a it's like the pom pom version of the Hyper EVM. And they also have like an aggregator I think is the only aggregator on the Hyper EVM, though I'm not as knowledgeable. Maybe there are other aggre aggregators and they do have a token that like speaking of like distributing value back to the users, they distribute a 100% of the fees back to the token holders. So it's gotten like a big narrative in the in this hyper EBM sector. But yeah, it's I I feel like it's one of the most interesting ecosystems to like farm because it's so early stage and usually you have like a big wealth effect from

hype that's just going to flow naturally to the EVM. He mentioned the one that I was going to bring up which I feel like is a bit unfair. Which one? On Hyperloop. I've been mainly using Hyper EVM. Um, to be honest with you, I think Danny, this was the wrong time to ask this. I don't want to tell you how to be a host, but I mean, we have Monad and Mega Eve coming out hopefully over the next few months. I think that'll be a bit more exciting. I'm a little bit disappointed overall. I Why did he leave? He got really angry at me left. I pressed the wrong button.

It's okay. I'm uh I'm a bit disappointed in a lot of these chains. I feel like we're not really scamming anything. Like I think the last time I bought something that was pure dog [ __ ] was on abstract. It was this thing called Bitcoin. Do you remember it? Nobody buy I mean if you buy this you're an idiot at this point but um I think that was the last thing that I can remember like holy [ __ ] I'm in a scam right now. Let's pump it. Um but since then I haven't like had any anything particularly interesting. Um I'm not a big like lending borrowing guy. I I'm not I'm not going to deposit for8% yield on a I don't care. Um I'm on the hyper EVM just because I think maybe

there's an airdrop. Um I've actually been trading like a small uh I've been doing like my small per gambling on lighter. I think there might be an airdrop for that at some point. Um, I don't think it's as good as Hyperlquid, which is something I wrote about, but but there's no point in not making money if it's potentially there. That's my big like. Um, apart from that, I feel like, yeah, it's a bit boring, right? Like, I think Mega E will probably be pretty good. I saw I'm kind of excited about the Mega Mafia projects. Lock me up. Um, I like Euphoria. I saw this one. I don't know if you guys saw, but it's this. She's clicking on the chart and it's like

putting in like it's like squares like a grid style. She's clicking on a chart. Um to the listeners who aren't watching the video, I'm doing grid clicking. Um I'm kind of excited for stuff like that. Mega Mega E Monad, I don't know. I'm I need to do a deep dive into that. Danny, you wrote it before. Maybe I'll read over that this week. But general view is it's a bit boring. Yeah. Yeah, I agree. Uh, but to your point, like, you know, I'd love for both of those chains to go to mainet this month, but, you know, we'll see. I don't think it's going to happen. I think, you know, I bet we probably have a quarter. So, I can ask the question again in another quarter. Maybe there'll

be some new stuff. I will say, yeah, I'm I'm pretty similar. It's like I'm looking around for things. Hyper EVM seems like one of the one of the main ones if you're looking at maybe a potential airdrop. I've been using like Axiom on Salana just because they had such an insane runup and I wrote a report on that like what a hypothetical airdrop would look like. It you know if they did it they would be kind of be breaking the mold, right? Like the top bots trading bots on Salana have historically not done tokens. So they'd be breaking the mold a little I think it'd be like a highly anticipated, highly like loved token drop to be quite honest. Get just given its usage. Um, and the like the expected value there

for just trading on the thing seems seems pretty good. Um, outside of that, I just I saw that Sharples posted about the arena on Avalanche. I've not used Avalanche in a long time, but uh it's like a Socialifi like launching Launchpad app and it's their TVL or their market cap of tokens launched on there surpassed 100 million yesterday. So, it's one of the only launchpads right now where aggregate token market cap is going up. Um and I think part of that's probably because it's relatively small.

Like 100 million total is not huge. You know, when we're looking at pump fund, it's billions. Um, but you know, maybe there maybe you need to like look into the smaller pockets for interesting things. And I'll agree on Abstract as well. That was one like I was looking there, you know, maybe a month ago. I played like the Cambria Gold Rush season 2 for a week. That was pretty fun. But how was that? It seems like a low. I check it out. I kind of miss I just miss like having a lot of stuff to do. I feel like the cycle I never got that like I need to do a lot of stuff versus like last time I was like holy [ __ ] I can't keep up. Um I need to like make a list of everything I need to do every day versus this time it's like

okay like I guess I'll buy this and sell that. Part of that is I think I'm probably experimenting less because I I mean I lost money doing a lot of stuff last cycle so maybe I'm like I should probably not do all of these things. Part of that is we it's not as he made it. So now he doesn't need to farm. I did not make a man up on a podcast talking about Avalanche Arena. I feel no I feel I agree with that sentiment. I feel like maybe it's just like sentiment but I feel like we haven't seen like zero to one innovations like a lot of them this cycle as opposed to just like copycats on new chains. And that's part of like

why it's so boring just to like try out these new lending protocol that does exactly the same as other lending protocols or these new decks or these new launchpad or whatever. So I feel like there's like that like this missing of like zero to one like new primitives or new innovations. And I feel like this may be controversial, it may not, but I feel like new like improvements in tech like for new chains are no longer like the main thing. I don't think like Mega E or Monaet are going to be like huge successes just because they have like this like better tech or whatever. I feel like a bigger like catalyst is just like this wealth effect that's flowing from the native asset to like project tokens of the of the new chain. So for

instance, you saw that with Sena in late 2023 2024 where Soul had a huge runup and then projects within the Salena ecosystem benefit from that wealth effect. I feel that's why I'm excited about hyperbm is not because hyperbm has better tech it does not but I feel like the wolf effect hype and the community has like this potential to like flow into these applications because like if you were looking purely at the tech or you were look you would look for other applications but I feel like the community and like this like um yeah this wealth effect from the from the main token is probably more important important at this stage. Yeah,

completely agree. It is like a very poor chain right now objectively because um well, first of all, deposit caps are super low. Like I think Carlos, if you wanted to deposit into like BTC into Hyper Lend, you couldn't. They they just they don't have any space left. I think they have 30 BTC in it, which seems ridiculous, right? Um yes. So yeah, it is like it's very early stages. They are working on it. It's nothing special right now. I am It's the only one I agree with you though. It's the only one that I'm like very actively at least trying to participate in because I want to have kind of an like my ear to

the ground over there because there's like you said there's been a lot of money being made on the airdrop um and the main token. So I think eventually something will probably pop up. I did write a report on it. I don't know if you looked at that, Carlos, because if you looked at it, you wouldn't have mentioned liquid launch. You would have mentioned another thing, but that's okay. Um, yeah, I think it's good to keep track of it. And if you are launching shitty games on the blockchains, please DM me on Twitter, Salacio, so that I can play them and not be bored anymore. I'm sick and tired of gambling. He wants to lose all of his money on

I want to click on stuff. You know what I mean? I want to take on some [ __ ] smart contract risk. We need some We need some tap to earn games come back. I want tap to earn. Dude, my favorite time this this cycle like a year ago unironically blast crypto valleys. I lost money on well I made some money and then I got in a second time and lost money. But Crypto Valley is absolutely dog [ __ ] game. You click on some crops, you plant them. It's like Stardew Valley, but you have to spend like 40 grand. Um, stupid [ __ ] game.

It was just so much fun. It was so much fun. I guess that might be just a gambling as I just liked it. You have to join log in every day. I need to water my plants. And there's like a gotcha element. You get seeds. They do like a little and then I always got the dog [ __ ] seeds. I never got a rare. That's fun stuff. That's what I want back. Just put Gotcha on the blockchain and you'll have Bach as a user. It's It's really that simple. I think another point, Carlos, I wanted to bring up is like when I think back to 2021, people like it was I think it was easier to go to like the Nth chain and do like mess around with the five apps because they

all had tokens and there was like this rotational thing that was happening where, you know, this chain would all the tokens would go up 300% and then the next chain all the tokens would go up 300%. And so it's like, yeah, sure. I'll go buy like the shitty DEX token on Harmony or whatever and then go to the next one and repeat. And you know, that's not quite as much of a thing anymore. And I think on the in the tech improvement side, I think you're right there. Like for apps as well, it's like we're at this point where there's like these slower, smaller incremental changes to things. And you know it's not so frequently that like a new app pops up that is very much like a 0 to 100.

You know they we get those few like big winners here and there. You know pump fund was a big winner. Hyperlquid was a big winner. Um the things that related to those trading bots things of that nature like have done really well but you're you're kind of like sitting around waiting for like what's that next big app going to be is what it seems like. Yeah. Yeah. Yeah, I feel like you can also bet on existing chains like for instance there are Salena protocols that are high quality and are still like pretty that are like interesting to form like I know there are two yield trading platforms exponent and radex which haven't released a token they may release one that would that may be interesting uh there is loop scale which

is like a onchain order boot like lending market and you can like loop like exponent positions there Um there's also like fragment which is like a restaking protocols or there are still like options to farm on existing chains. I think just people need to prioritize and like know what to do with the capital. I know that's something I struggle like like if I want to form X thing like you obviously need to like consider the opportunity cost of removing like capital other. So yeah. Yeah. Maybe that's the other part of it is that it it you know I think it generally feels a bit more well understood these days like a little more researched. You know it's it seems

like it's going to become more and more uncommon that you know you put a hundred bucks into a protocol and that turns into a million. Um you know you've got droves of people who are you know they're doing the anticipated FTVs and like what's the yield I'm gonna earn on this position that I've got stuck into reststaking protocols and what have you. So um you know that part of it that part of it I think kind of dilutes the expectations a little bit right which which makes sense right but yeah I think a bunch of the teams you mentioned like they're all doing points programs as well currently like exponent x fragmetric kyros loop scale I think I think they're all doing points

programs actively and you can like you know get reststake assets on one of the restaking platforms and then go and do things with them on like rad or exponent and then you know do things with them on loop scale. So there's ways that you can kind of like chain some of those together and maybe make that more meaningful. Um but yeah, cool. We can call it there. I think uh good pod covered a couple of meaningful topics. We have not talked about something today bo that we need to talk about. It's coming up two weeks. No permission for Brooklyn, New York. The Dunk Tank will be at the Zerox Research Arena. Should we add the producer

to to show it as well? Should we add our producer or No, does the producer want to come on? I don't know if the producer wants to. He's He's hiding. Hey guys, if you come, we're going to dunk tank our producer. He's going to get Wet and Wild at ZeroX Arena at Permissionless from June 24th to the 26th. Make sure to be there. Brooklyn, New York, the greatest damn city in the world. Carlos, anything else you want to say?

Not really. I'm excited to see you go in the dunk tank. Carlos will be there. He's gonna be dunking Bach personally. He's He wants to be the one to do it. Uh 10% off tickets. 0x10 link in the description. Get your tickets. meet us there. Yes, Boach. I don't really understand how the dunk tank worked actually. It will be people be throwing stuff at a Yeah, that's usually how it goes. There's like a target. There's usually a target and then you get like a baseball or something and you have to hit the target. Doesn't it make if I was Carlos and I was sitting, I would throw the ball at me directly trying to hurt.

Usually there's like a a net or something in front of it, so you can't do that. But I mean, if you want to injure him, then I mean, yeah, I don't know if the legal is going to want that one, though. If it's like a baseball type of thing that I might miss and hit bo. It's like just throwing it with a hand. It's It's going to be easier. I don't know. We're going to do this. I think it'll be fine. I'm being told we've got six hospital beds on standby just in case. No, I'm just kidding. No, no one's going to get hurt in the dunk dunk tank.

Unless you're like deathly afraid of water that's like four foot high. Uh four foot is quite a lot by the way. Four foot is I'm like Well I'm not a height. Are you gonna You're going to drown in four foot of water? It might not even be that high. I don't I I don't own a dunk tank. I don't know the dimensions off off rip. It's probably something like that. It's probably 3 four foot of water. It's got to be enough so that like you're sitting and then you like get dunked.

How you know? You're probably a few feet tall when you're sitting. So, it's got to be that high. How tall do you think I am? Uh, I don't know. Six foot. Good. Subtle nod. Well, we're going to find out live at Permissionless June 24th through the 26th. We'll see you guys there. I think we're going to call it. We're rambling. Thanks for coming on today guys. Thanks listeners for tuning in and we will see you next time. See you guys. See you guys. [Music]