LIVE: Jito's JTX and HIP-4 |0xResearch

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[music] >> Oh, I got to remove Noah's message. What's up, guys? Welcome back to another episode of Zero X. Another live stream of Zero X. We searched Danny. It has been a while, primarily due to me. I just pre-recorded a bunch of stuff and we've just been putting those out. Um, how the hell are you? How you doing?

Doing good. Welcome back. Oh, welcome back Noah to the chat. He's uh exhilarated to have us back. Glad to see him uh hopping in. I think uh how long has it been since we've done one of these? Maybe a month? I don't know. I feel good though. I don't know how you feel, but the market's like I think I felt very strange maybe a couple months ago. Crypto's kind of been uh struggling and I was not that exposed to crypto, but many people obviously in our space are and so they're very doom and gloom.

So, it's nice to see people excited again. Uh there's more optimism in the air, which I like. I think it's good and it's kind of surprising how quickly all the thing is that also in the >> [snorts] >> It's so bad. I I always forget how bad it is in the like part of the podcast that is good and that is bad uh or part of like working in crypto that is good and that is bad is that if you're in crypto, you kind of have to keep up with crypto um and keeping up with crypto in a bear market is just [ __ ] horrible because because um it's all hacks. Like let's say every

week it just feels like oh, there's like another hack and that's all you talk about. Um but yeah, when the market starts going up a little bit more, it's less talk about hacks and it's more about I don't know, people releasing new products new new upgrades coming out. Um there's a bunch of new like EVM upgrades. I'm not going to talk about them this episode. I think this episode we're just going to do G JTX and EIP-4, but I read that there's well, there's Glamster Dam. I don't know what the GL is but I know Amsterdam is separate. It's like ETH one coming.

Um and then there's a Base Azuki upgrade coming up as well. Um and the Azuki one is actually, I think, the first one without Optimism, which is a bit stressful for I think Optimism. I kind of I don't know. I know you don't love these guys and and I like as an investment and probably neither do I. Um like Optimism etc., but Yeah, I feel bad a little bit when like cuz that was their whole thing, right? Like it was Base. Yeah, but I don't know. Was this not inevitable? I think we talked about this. I think when I joined the research team and came on the show like one of the first few topics we talked about was Base L2 on OP Stack and it was like

what why are they going to like if Base is massively successful, which I think we could argue that actually like I don't know that Base is really that massively successful, but they make money on it, so that's good for them. But um either way, I don't know. I I felt like that was something that you could see miles down the road that at some point like they'd just carve OP out of the picture and you know, they're not just going to give away a bunch of revenue just because they like promised, "Hey, we're going to use your open-source stuff, so we'll we'll pay you a bunch of money forever." It's just not how it works. They're business.

And uh we'll talk about I mean we'll talk about Coinbase more later, but like I mean they lost a bunch of money the this past quarter like minus you know, $400 million net income loss for Q1 of this year, so uh I don't think they can afford to just be like giving away money willy-nilly to to folks like Optimism. I think they they need to like figure out figure out how to make money and be profitable consistently. But um yeah, I don't know. I think we have pretty similar views on some of the L2 stuff. I don't know. The There's been a lot of changes there, too, over the past year now. I feel like, you know, Vitalik came on said a while ago like that was clearly not the right direction for Ethereum and now they're like fully

changing course and trying to speed up mainnet and do more improvements there. So, there's been a big shift in in things for sure. And I think it doesn't help that a lot of the L2s were just like vanilla copies of the exact same thing. They weren't even like optimized or higher throughput or anything like that. So, I think they've just been in the wrong They've been playing like in the wrong ballpark for a long time. Well, optimism or base or both? No, base I think base was doing the right thing when they came out and they were like, "We're going to scale this thing like crazy." Like all the other L2s up to that point were just like, "Okay, it's vanilla ETH, you know, single sequencer, but it's 14 TPS." Like, "What are you You're not solving anything. What are you doing?"

>> [laughter] >> So. Yeah, I I and I mean I think I think since then the L2 landscape has changed quite significantly. Like now Yeah. everyone's like, "Oh, wow, actually supercharging it." Um But I mean it took two, three, maybe four What What was the >> What was the first So, Arb was the first proper L2 that I can think of. Like Arb and OP kind of at the same time. And then those guys both kind of I think Arb scaled more than OP did like in terms of speed and stuff. I don't think they went as hard as Base because they didn't They also kind of went for this ecosystem approach, right?

And I It's actually seemingly doing okay for them. Like they have They didn't lose their biggest clients. And they seem to be onboarding more clients. Um And then we had a bunch of those like uh specific L2s. Um like the trading-specific ones didn't really work out. Um I think the landscape now is like very diminished. It's really like Arb on the like we're going to have our own ecosystem thing. Seem to be doing okay. Um Base, which is like purely execution, even that isn't like super fast or optimized.

I think like their numbers are similar to ours. Whereas like And then there's Mega Eve, which I don't know if I want to discuss today cuz it's very new for them. They just had the token out, so I want to give them a bit of time before I make my assessment. Um Yeah, so it's just like it's been four, five years. And then in terms of Base, I think it was inevitable for them to leave, especially since if you think about it, like Danny, when you're doing work to get like a report out. I know you don't write reports anymore, but let's say you do write reports, and you're trying to get a night of advice. You're trying to get a report out, and if you were relying on me to also get that report out, it doesn't make a lot of sense. Because you're just going to like

have to keep waiting for me. It's the same thing with Base and Optimism. If Base is trying to boost up whatever their execution, and they keep having to wait for Optimism to do that, I don't know if that's a great setup. Like you realistically want to have as little external um blockers as possible. Um and like really especially to like push the chain forward. Um So I think it's probably the right call for Base. We'll talk a little more about Coinbase later, but I would say they've been relatively successful. Um I wouldn't say that they've been extremely successful. It feels like all of the I can't think of any chain that is like particularly successful that launched last cycle though.

Like last cycle you mean like 2024? >> Like Base launched. >> Launched, yeah. That's probably the only Base. I can't think of any I mean I mean Hyperledger obviously. Like that's the big one. >> Yeah, if you want to call it a chain, yeah. Just like a chain. >> I will call it a chain. But yeah, like even that, like you kind of want to go for like, "Oh, it's a platform or an application that has a blockchain behind it." Which is also fine. Yeah, I think my mental model too, like when I think of these is I don't know. I think back a a to like BNB chain, and I think like what they did and obviously what Coinbase have done, like it's a similar idea and like concept and strategy there to like have your you have your you know you have

your off-chain, you know, stacks business and then you have your on-chain kind of DEX business, I guess, if you want to call it that. Um and they can kind of maybe bounce off each other in different ways. Like if you coordinate them a little bit or do, you know, programs where you bring funds on chain or off chain or deposit to Coinbase and then deposit to base, etc. Um it's funny to me that I think there was I don't know, I think for a long time there's been criticism against what Binance did with BNB chain and that it was like, "Oh, it's too centralized. You know, they they run 16 of the validators." And then it's like, "Okay, but Coinbase drops base single sequencer L2." And it's like, it's just fine. It's cool. So, I don't know, I think it's funny to me that there's just been this long time like I

think it's more of an East-West divide, and we've talked about it, where it's like just don't trust people in in like the the West don't trust like what some of the East releases, I guess, but I don't know, BNB chain is a a pretty like if we speak of throughput and like performance and cost to execute there, like it's been a pretty compelling option the whole time, meanwhile. Like L2s have kind of struggled through the issues that um you know, Eth Eth didn't solve them and then L2s didn't really solve them. Uh and it it took until Sorry, I knocked something on my desk.

Took until uh base was like, "Hey, let's just pump throughput." Um to getting to a a realistic outcome there. Zaki said we should talk um Maybe I don't have a lot to say there, but I guess the the big thing is that there they they went even more in the like kind of base direction to the extreme in the sense of shove throughput to max, cost to zero. And I guess the other I think what's uh what I would say the other interesting thing that they've done is they're trying to internalize some of the like higher value activities or like revenue generating things whether they potentially might include applications

but for now that includes USDM their wrapper on effectively USD e/USDTB so they can get that uh yield and potentially funnel to buybacks or potentially funnel it to operations what have you but that is something that every other chain up into this point has not really had as a lever so I think it's it's you know it's interesting to take I think it's good to see them take that approach um but we'll see how far it goes cuz I think I don't know my view and I could be curious your view is like I don't know one more chain two more chain three more chain like I don't think we the the problem in the

space is not that we have like not enough chains or not enough block space I think it's really just like do do you have an application that a user is is going to consistently use and drive revenue to your business and um is that consistent sticky demand or is it cyclical demand uh I think those are the more of the pressing problems that face the space than just like a newer chain with a flashier design So with Mega Eve I've seen brother Bing Bing Bing brother Bing Bing I don't I know her real name so I don't know if it's very public so I wasn't going to

say you know who I'm talking about um she has done quite a bit of um pods um she was also on the tokenization tower shoutout Robbie Rollup and Andy Rollup live from the tokenization tower um God I really hope I get invited at some point anyway um and she was talking about like how Mega eves is a token business, which makes me think Um and like this is also clearly what they're going with USDM as well, right? Like Trying to internalize this revenue. I imagine they're going to want to do as much like front end stuff as possible.

Um or like trying to become an application. Like when you say sticky, that's what I think of. Like if you're if you want to become like sticky for users If you want users to stay on your platform and spend fees, you need to like become an actual front end. It's very difficult to compete as a back end. And I'll I'll I think I can tie this into a bit about optimism. Like you mentioned um uh base and optimism. I don't know about the base and optimism like fees for example. But optimism there is the back end clearly. Or like they're a partner on the back end side. Um or they used to be. Um There was this article that came out on CoinDesk a few years back and it was the Kraken You know, they started building in on

optimism initially. And it was like a 42 million OP grant. So it's like they don't really make money from it. And I think this is the thing with a lot of cryptos. If you're a back end provider sometimes you don't make any money. Sometimes you make very little money. And a lot of the times, like especially with some of the way that these L2s worked, they ended up spending money to be on boarded or integrated into the front Um So I think if I think if you are a chain, that's what you want to focus on as much as possible, like to be a front end. Um and I think that's what like I go probably go for. Um it seems like

based on what they say with the token business. You can also kind of read in between the lines. Like Brett always talks about Oh Yeah. Yeah. Yeah, I think it's a good I think it's maybe a good seg- segue for one of the first topics uh >> Yes. recent news of the week. JTX Jito, like I think more and more these teams, whether they're chains or whether they're infrastructure providers more generally, like either on on a chain already, they're realizing that like, I don't know, a lot of the traditional ways of making money at a lower level layer of the infrastructure stack is like being increasingly commoditized and they have to move further up the stack to make money more directly, earn revenue more directly from users.

So, like I think, you know, we're seeing that from Jito. I think maybe I'll give some background context there from the Solana side. We've been talking about it on Lightspeed, but just on the block building side. Um that that business model, like it very much seems like within the next year or two, like block building kind of becomes a zero um with just the changes that they're going to make to Solana around MCP Alpenglow Alpenglow first and then MCP is going to like kind of protocolize some of that stuff and so the revenue model that like Jito and Hormanik and some of these guys have to say will kind of go away. And so, in that sense, you know, maybe they're future-proofing themselves or like pivoting a little bit to be ready for that on the one hand, but two, I think as well, like

the increased competition there and just like the additional commoditization of that layer anyway, I think you probably would have seen this move anyway, but uh >> Yeah. I I guess like in my mind, I don't have any I don't have the Lightspeed expertise that you do. But in my mind it make like if you are providing something that like Jito provided, which is like block building, or like previously like the client and their maybe client or whatnot, um it would make sense for them to become internalized by Solana, for them to just be bought up by Solana, right? And then they just become a team.

Like to me, that's the exit of Jito in that sense. Um it doesn't make a lot of sense to like launch a token and then compete with Solana because anything good that you do will just like Solana will adopt it. And I think that's what is happening, right? Like Anza's just implementing it or even implementing better um solutions. The So yeah, I don't know if it makes a lot of sense for them to do back end, which I think they've also realized and that's why they're doing JTX. Um and then you kind of gave a short background, but I'll like cuz I went over the person little bit of a writing, so um their main pitch is that there's no unified on-chain trading app on Solana.

Um and that's particularly why, because the Solana side is very fragmented versus they they compare to Hyperliquid and they say the execution layer on Solana is better than Hyperliquid, but the user experience on Hyperliquid is better. I don't know if the execution layer is better, but I do agree with them and Mark Argen, shout out Mark Argen. He actually spoke about this today on not about it today, but like on the last inflection podcast. Um and he brought up that if you go on Jupiter to buy like tokenized stocks, it's not a great experience for the main reason being um you can buy like three different Teslas from like three different um issuers. Uh

can't be a good experience. And then on top of that, there's a second layer of um fragmentation, which is that there's like 16 platforms that each offer like specific things except for Jupiter. So, on the JTX side, I think it's the right decision for Jito. I am always a bit wary about and I also don't know the Jito team's background, so maybe you have a better insight on this. I'm always a bit wary about people who don't have trading or like HFT backgrounds building out trading tools. Um I think like we've kind of historically seen this like very smart engineers trying to build out perp taxes. Um and then what ends up happening is like an HFT team builds out a very good perp decks because they understand like a few things that make

this work. Um I don't know the Jito team's background. I'm sure they have experience in this, so they'll do very well. The other issue is I don't know how you compete with Jupiter. Like what do you use on Solana? You just go on Jupiter AG, no? Like that's the If you're going to buy something on Jupiter, I don't even use any like Telegram bots anymore. Like I I think Jupiter just has everything and it does it at Previously, you couldn't do it if you didn't have a Telegram, but they've like they fixed that. So you can just buy whatever you want on Jupiter. It's not like the greatest experience in the world, but I would say it's like above what you would want. Like especially compared to EVM, there's not a lot of great trading experiences on the EVM. Um I think the Jupiter one's pretty good

and it just offers everything. So I don't know how J- JTX is going to compete unless they figure out a way to abstract markets, which is like tying into the market point. Um three different Teslas. If you can just make like a market that says Tesla USD and then it's not like fragmented. Um and you just give somebody one receipt token that is Tesla. I don't know how this work, but I think that is a good setup. Because then you are actually making a um a fun thing to like a good experience comparable to Hyperliquid. Which also has its own fragmentation issue issues.

Like you can buy Tesla USDC or Tesla USDT or ACH one of those. So it's Like they all kind of struggle. Um So yeah, a lot of word salad there, but curious what you think. Yeah, I think it I think it's a good point on the on the multi-tickers. I would agree. I I think I think everyone has this problem right now because there's like this I mean, talk about tokenization tower. Everybody Everybody wants to tokenize, right? So there's like, you know, there's 50 teams who are saying we're tokenizing assets on chain. And so then you end up with like you said it's like you get Tesla one Tesla two Tesla three Tesla XY Tesla ON Tesla whatever.

Um It is a good point like I think it would be interesting certainly like if you use Jupiter today it's like you got to pick you have to pick you know which issued Tesla uh spot token you want to buy. Um that would be a an an interesting like UX UI thing to abstract all of the tokenized variants under like an umbrella but I guess the concern there would be I don't know you'd be taking on some risk for the user to do that. But maybe if the way in which that they're they're tokenized like if this if a few of them are maybe similar enough in nature you could you could do it but

I don't know if if I'd have to look at the numbers but like my guess or my estimation here would just be that there's probably one variant that gets most of the volume for all of these and so you probably just want to direct the user to that one to be quite honest um whichever one gives like the best pricing uh relative to the to the actual like spot price on exchanges. Um but yeah I think that's a good point and I kind of agree with you like I don't know on the spot side it feels really tough like do you definitely dominates the like retail spot trading on Solana today like it's just I mean it's just a good product and like uh how how are you competing with like the spot

just the simplicity of what spot trading is and like their distribution today like anyone who's traded spot on Solana's familiar with Jupiter and like maybe you've played with Titan or some of these other new newer routers that are like trying to beat them a little bit on on spreads by offering you know like more advanced like trying to be quicker to some of the more advanced routing things um like Titan's been doing lately. Um so I don't know are they going to get into the into the craziness of the routing game? I don't know that Jito has like the distribution to like a big retail audience to drive them to use them over like a dupe for spot trading.

On the perp side, like I don't know. Maybe they can they can bring something there. It feels like perps is wide open on Solana to be quite honest. From from I guess, but then I think then you have the problem of like now you're competing Now, I think you're competing with like the hyper liquid products but I think it's really dependent on Can you do both of those things or like a multiple things all very well and also solve for distribution at the same time. I think those are a lot of hard questions to ask. Yeah. Another thing here is We I think we chatted about this in our last live. They They launched the Solana team launched tokens.xyz like a new front end. Yeah, and then you also I don't know if they're going to go with like a routing thing in on that and

or if it's going to be like a tradeable interface. Um You're also going to potentially compete with that, although I haven't heard much about that. Maybe it's because my I think that's going to stay neutral. Like from my understanding from what I've seen, it's like they can they they launched another product recently. It was like um pay. sh No, there's like a pay I think it's called pay.sh or something like that. Uh where you can pay for like APIs via like an XRO2 thing. I don't I didn't look at the details.

>> that. >> They they keep dropping like little things like this that I think are generally speaking like relatively neutral. It's sort of like tooling for devs, businesses on chain, etc. So, it seems like that's kind of the lane they're going to stay in with that type of thing. Which I think they should. Um I don't know. I think if Solana was going to build one thing, it should have been a perps thing that is um cuz that's like the only thing I think nobody else is really competing on. Although there's like that Phoenix ellipse ellipses ellipses labs Phoenix thing. I don't know if it's ellipse it's not a ellipse >> Phoenix trade Yeah, Phoenix trade that's the the perps

um Yeah, I don't know. I don't I also don't know if the Jupiter team is a product team. Like I know they have products, but I don't know if they're like cuz selling back end stuff is seems a lot more B2B versus like trying to go B2C is a whole new beast. So I don't know how they're going to make that work. Um they are a good team though clearly and I think they very clearly understand like Solana markets very well because of their experience. So I think they'll do fine with the routing. It really depends on like if they manage to hire a couple of really good product people.

Um I don't know. I still don't know how you compete with Jupiter cuz also like the Jupiter side is really only product focused and they're quite good at it. Um so it'll be difficult, but Yeah, I guess the interesting thing maybe the and for folks listening Lightspeed will have an app next week. Uh Carlos, our friend from the research team, got to talk to Lucas about JTX last week at Accelerate. So maybe he'll have some more, you know, intimate details about what they're planning there. Um but I think maybe an interesting comparison is if you look at like Harmonic or the temp the kind of the temporal umbrella. Like those guys have Harmonic block building, but they also have Humidify the prop MM.

And then they have Nosomi the uh transaction transaction lending service. So like it's not unprecedented that teams and even Ellipses I think is a good example, too, right? Like they built the they built the um the club initially for spot trading and then they and then they did prop MMs and now they're doing Phoenix perps. So it's It's not unprecedented that you have teams that like kind of get into multiple lanes in Solana. In fact, it's kind of like more of the norm. And Harmonic is kind of technically already doing this today cuz they do block building in competition with Jito.

But they've been working on Humidify um and doing a lot in the prop MM space for the past, you know, year and a half now. And I guess the difference there is that doesn't compete with like front ends, right? Prop MMs are just routing flow. Um they're not trying to be like, you know, a retail or whoever interface for trading. Um so I I guess it's a bit different strategy there if Jito's getting into trading, but they're explicitly going to go for like a a front end interface approach and try to get um you know, if it's retail or institutional or whoever flow to their front end, then uh they're going to be like they're going to be playing a different game than than like the prop MM teams have been playing cuz those

guys don't really have to like they don't have to fight over users. They just have to compete on pricing to get flow. But if you want to have the interface, then you have to fight you have to fight for users and and you know, figure out distribution and get people to your front end versus Jupiter's or Phantom's or whoever else's. Yeah. I wish them luck. I think it's a very difficult problem to solve, but I think I'm also not even sure if the problem is with the front end. Like on the EVM side, I think the problem is like partially with the front end. I think there aren't a lot of great front ends on the EVM side.

Right now, unfortunately. Like I think Matcha is okay. And then DeFi Llama swap aggregator, like DeFi Llama's meta aggregator is the really great one. Like it works. >> the problem with EVM is that it just it's >> But the UI the UI um About what you mentioned, which was like um there's just a lot of diff tokens. Like I don't know. If you held like X Tesla versus, I don't know, K Tesla. And you're like trying to put on a position of $10,000 in USD.

Um but like if you the issue here is also if I am like if I go on the front end of JTX and I say I want to buy $10,000 or let's say I want to buy $100,000 of Tesla. Um if I'm buying $100,000 of X Tesla, I'll probably move the price up or there'll be some form of an issue if it's reliant on AMMs because of the way the pricing curve works. Whereas if I split it across 50/50 um it's probably a lot better, but JTX would have to recognize this and I don't know if Jupiter recognizes this as well.

Do you know what I'm trying to say? Like the price you're getting relative to what people are getting Because because these pools don't have a lot of liquidity on their like there there's not a lot of liquidity. Let's say there's like whatever a million dollars of liquidity in each. If you put on a $100,000 position in one pool, you're going to move the price up. And you're probably not going to get a great fill. But if you put out 50/50 on two other pools, you probably won't move the price up that much. So like if I'm JTX, I show that like Tesla and I create like a unified back end for it.

Right? Like the router works X Tesla K Tesla. But then you get into the issue of when I receive my tokens, my wallet will show X Tesla K Tesla. And I think Jupiter has a better shot at fixing that because they also have a wallet. Right? So they can mess around with the wallet as like you can literally have Tesla and then you click on it and it shows K Tesla X Tesla amount amount. Like Phantom is probably the ideal way to build this. If I'm Phantom, I don't even let any of these guys do anything. I just like cuz Jupiter has their own router API, right?

So you can just implement it. Jupiter doesn't care cuz they're getting whatever back end. Um and you just get to adjust it on your front. Does this make sense? >> I get the feeling I think my feeling right now would be that I don't think [snorts] outside of X stocks probably I don't think any of the other competitors are doing any meaningful percentage amount of relative volume. So, I don't know if like the more correct decision here. I mean maybe there's no decision at all and you let the users just kind of like you surface the one that has the best pricing and liquidity to the top and you and that's the one that they trade.

Um or you kind of like de-promote the ones that just have awful liquidity. I think on one hand like my thought around some of this like wonkiness is that it just it will get solved by better pricing from AMMs and not passive but active or prop or whoever will start pricing. Like we saw a couple weeks ago Alpha Q was pricing like even the pre-stocks which are the like they [snorts] don't even have publicly traded prices, right? But they were doing a ton of volume on them for a few weeks.

Um I I I think it'd be pretty easy for prop AMMs to also just be quoting some of these uh on-chain tokenized equities as well cuz it's like it's effectively the same as like I think what they do with like sole prices relative to Binance spot. You just you know what the you know, you know what the live pricing is on the like regulated TradFi exchanges or like the Nasdaq or the NYSE for a stock and then, you know, you can kind of trade around you know, the arbitrage and offer spread or whatever based on kind of where it's trading at on chain today. If there's a discount or premium to what the market's trading at.

Um and I think they can, you know, bring efficiency efficiency to those those markets in the pricing of those assets. Probably the better question is like where I don't know, there's just like not a ton of demand, I think just generally speaking, for those spot assets like quite yet. Just because it's like a very It's like a niche thing, right? If you want to own Tesla on Solana, like why do you why do you want that today? You're like you're probably not from one of the major like Western nations that has easy access to brokerage accounts where you can just instantly deposit funds and buy Tesla in in bulk.

Um so you or you have some like strange stipulation where like you have funds on chain and you don't want to remove them and there and you want to hold, you know, stocks specifically in that on-chain account for some reason. Um I just think it's kind of a niche thing now, but I don't know the I don't know. I I think as if the liquidity and like interest in those and demand for those will they'll reach an amount where it becomes meaningful enough for like, you know, more AMMs or prop AMMs or whatever shops to start pricing them and then I think a lot of the the issues there, at least on Solana, will kind of disappear.

Cuz you'll be able to you'll get a a pretty good price relative to just buying it on a brokerage. I think that makes sense. I'll The only thing about this is that X stocks is doing well, but they also have Ondo, which I think will maybe not do great, but let's say like X stocks captures 80% Ondo captures 20%. That's fine. I guess you just push X stocks. There's still a bit of a gap, but it's not that big of a deal. Um the ideal scenario is you probably just can make one of them and you just say use X stocks or you just say use Ondo.

Um but >> Yeah, I don't know if they have to. Like I think you can kind of let it happen and Yeah. Like you you're just like the way that all these like um like the way Jupiter works. Like if you search Tesla, it's going to surface the one with the highest like score that they give it. And the reason it has the highest score is because it has, you know, the deepest liquidity. It has the most number of trades, like the most number amount of volume on it. So, whichever of those like tokenized equity platform variants like can, you know, get the most traction going, like it's just going to it's going to feed into itself. Cuz people are going to go for the most liquid version.

Unless there's like a severe mispricing in something and you believe that like I don't know. You believe for some reason that you can profit on a mismatch in like uh, you know, the Ondo Apple Yeah. token and you people you have confidence that like people will come in to bid it back up to normal price, but that may or may not be the case if the liquidity's bad. Yeah, I feel like it won't be the case, probably. Uh I mean, unless you can play the like unless you can play the redemption process in some way. I'm not even I'm not positive how all of them work in terms of redemption to like off-chain, but you know, maybe if there's a uh premium or discount, you could buy at

a discount and then redeem and then get the full value off-chain. I'm not sure though. But outside of that then. Yeah I um last topic of the day is I actually really wanted to discuss this with Shonda, but he's not going to be on this week. I think we'll probably discuss it next week with him. But it's HIP 4. Um actually, you know what? Should we just skip this and just do Coinbase cuz we don't have that much time anyway. Sure. next week. Save it for Shonda. It's his favorite topic. Um >> You want to give short intro and then I'll praise Brian and you'll say you won't praise Brian.

Yeah, I guess we alluded to this one. I alluded to this one a little bit earlier Coinbase. Um, I guess the main I mean there's a couple pieces of news I guess from them recently in the past week. One, [snorts] they laid off, I think it was 14% of their staff. Um, and there was a little bit James James was getting upset in the ZeroX chat Telegram chat. Um, because I guess they effectively tweeted out the fact that they were laying off the people before internally messaging them. And they And then the people internally received an email that they were going to be laid off and then they would receive like a personal, you know, meeting or call later in the day or in the week.

Um, so I guess a bit weird on like pro like process. I don't know. I think some people maybe have like a kind of a respect issue with that. It's It's a It is a bit weird to be like the CEO and like tweet out, "Hey, we're laying off 14% of you before maybe getting that message out internally." I think that's that's going to be a weird feeling if you're there and you're getting fired. Um, so they do that. They cite I think kind of like AI generally speaking as like sort of the panacea there in terms of, you know, we need to lay off people because there's so many productivity gains we can get here. But then their earnings came out um May 7th.

They missed on revenue by 70 million, but you know, they had revenue 1.4 billion. I don't think the revenue is necessarily the problem, though it was a 30% year-over-year decline. Um, on earnings though, they missed by 28 cents um and had negative earnings and over 100% year-over-year decline, which again, it's like a pretty small and like near zero earnings amount in the first place, so I think it's pretty easy to have like a wild swing like that, but it just it's interesting kind of the chain of events there of, "Hey, we're laying off 14% of staff.

AI so good productivity gains." And then to like post a really bad quarter uh from an earnings perspective is just like a it's like a funny combination there but I think obviously like there's certainly in a position where they're forced to do so. I'm assuming Coinbase like many companies probably over-hired during COVID um and then maybe did not like lean lean up the org enough since then and so now like a lot of other companies they're kind of using AI's like this. They get kind of like a free excuse of like well AI man so we don't really need that many more people so we can we can start cutting some of that fat that we didn't cut before. So I think I think that makes sense but I think they got some fuel added on top of the fire here.

Yesterday night or maybe I don't know if it's still ongoing but uh trading on Coinbase was down for like something like 6 hours. Um So Brian's been having a bad week I think that's suffice to say they've been having a really bad week. And that's all. Yeah it's also always kind of funny when people say or like when companies say oh we're switching like mostly to AI which I can understand like why you would because I I like read through what they were talking about which is like the pod structure and I mean we internally know that like you can get a lot more work done with AI.

Um if you know how to use it um as and like the idea that there are like non-technical people building products I think a block works is definitely true. I don't know if you want that on the exchange. I don't know if you want an exchange to ship products from non-technical people. Like I would say I am well I am not technical. Um I would have feel comfortable but I'm good at AI but I still wouldn't feel comfortable shipping a product or like shipping code that I've written that has not been reviewed or like that isn't from a technical person.

Um And uh yeah what I was saying is it's always kind of funny when this happens and then uh you know, there's an outage for like 5 hours or 6 hours or something. Um yeah, I don't know what Coinbase I saw that James got upset. It's always kind of difficult when you're a public company because I know there's like specific ways that you have to say things as well like you have to make it public first um so that you don't get in trouble um is my understanding. I'm sure someone else has a much better understanding of this.

Um Yeah, I don't It's definitely they're they're leaning like I guess what I would say is they're leaning in the right direction. Like certainly if you're still having like obviously crypto is kind of in the in the [ __ ] the past quarter or two. So it like to me I don't know if if you follow the space then you would not be shocked to to know that their their numbers are down. Um that should be pretty obvious from anyone who like hardly follows the crypto space and what's happening here since their business is entirely dependent on basically trading revenues.

Um And I it's definitely it seems like the right approach, right? Like you should lean into leaning up the org, say you know, save some money on payroll, but I don't know. I I feel like they probably have some other problems there like they acquired Echo for what? 400 million? They acquired Paradex for 1.6. Don't quote me on the number, but it's 1.6 billion maybe in that ballpark. Um I don't know. The Echo purchase seems a little questionable. Maybe you know, hindsight's 20/20, but it it just seems like I don't know. They did the Monad sale.

Um but I don't think there's really been any other like big sales that like Coinbase has done on the platform and it's kind of been a bad like period now I would say for like big token sales generally speaking. I think we've like been kind of getting away from that as an industry. Um so it feel it felt like and it feels like now even more so like not really like the right place to spend money for them. Like I think if they wanted to have a sale platform, they could have vibe coded it in a week like they say that they're going to do.

Um so I don't know. I think they probably need to figure out like more effectively like what are the areas where they can really execute and find profitability. Cuz we know they charge plenty of fees to their retail users. Um so if if the high fees for for retail trading are not enough then they need to figure something else out. Either scale down their costs or find another like and ways to expand revenue generating opportunities. But I don't think Echo was necessarily it.

A lot of money spent as well. It's a lot of money spent that hasn't been used yet. I thought Base was going to be their thing as well, but it doesn't seem to be making a lot of money. That's probably just because like crypto's kind of down in the down at the moment. Um I think Base can be good like Yeah. Base speaks to a little bit like I would imagine the the kind of like cost structure around operating Base versus like operating the rest of the Coinbase exchange is probably it's probably much leaner. Like it's a single sequencer, like you know, it's a server box and then they have Jesse and some guys on a growth team that like try to push initiatives for it.

Um versus [clears throat] the rest of like Coinbase and Coinbase and Coinbase support and all that kind of stuff. Um it's just a matter of like I don't know how much can you grow that? How much can you push like some of the things that are maybe traditionally done kind of like on the the centralized portion of the exchange to the decentralized portion and maybe like get get savings from like an efficiency and operational cost standpoint while still while still like generating some revenue by like getting users to interact with things on base that that feed back to Coinbase.

I don't know how they're going to fix it and I also don't know how taxes are going to go. Like like Coinbase still hasn't listed any tokenized stocks on their platform yet, right? Or I haven't seen it. Yeah, I don't know if they have. Uh like Binance did it. I don't know how well it's doing. I think Bybit has also done it. Either Bybit or OKX. Feels like that's the next big thing, right? And like if you want to compete as a sex, that's where you want to go. Um but even then, you're competing with IBKR and Robinhood and whatnot as well. Yeah, they feel like they're feel like Coinbase and Robinhood have felt kind of like they've been you know, meeting in the middle like

at some point like they started kind of on opposite ends and the expectation was sort of they sort of like meet in the middle and do what the other one is doing. So like Coinbase starting on the crypto side, Robinhood starting on the equity side. Um but I don't I think Coinbase has probably been a bit a little bit slower to execute like their you know, bridge across to equities land and other things. Um but also crypto is like a lot more cyclical uh than equities are. So it it again like from that perspective, if you just look at like how the crypto markets are and how cyclical they are and how big like Q1 2025 was relative to like

what things are happening in on-chain markets in Q1 2026. Like that's a vast vast difference in uh you know, activity and trading activity. So, it you know, it's not too surprising to see them down in the dumps. They They kind of always have that like you know, is the speculative like craziness going to come back and like juice their juice their numbers for a couple quarters or is it going to is it going to like wash out for a couple quarters and they'll they'll have some tough some tough quarters to work through.

Uh I think that's kind of like always going to be a headwind or tailwind that they have to work through, which is tough. As long as they stay basically like, you know, 100% dependent on crypto as their revenue source. Yeah, I don't know how they're going to sort it out. I don't know. Um I don't have any other takes on this as well, Danny, so we might as well end it. I um >> [snorts] >> Thank you for coming on today. Salve, no take bocaccio. Salve, no take. Back at it again. Perfectly hedged.

Actually not hedged, no take even. No positions. I do have positions, but not on Coinbase. >> What Maybe we close it out. What are the What are the positions? Not not trad. Any crypto positions or is it just hype? Are you just hype? >> hype and BTC. Uh I actually bought a bit of lighter recently. Um Wow. Wow. What's the lighter thesis? I think it's too low. >> [laughter] >> It's too low. I don't have a lighter thesis but I think it's too low.

That's funny. I've Maybe I don't have them in like I'm I'm I'm in BTC. That's well, I bet, but I don't really have any exciting on-chain positions, but maybe I'll call out some of the narratives that I've seen thrown around. It seems that the market has come back to Zcash. We'll see how long this one goes for, but it had a pretty insane run last year. So, that's interesting. Um Ton is another interesting one. Pavel came out and was like and uh What? I'm coming through on your mic.

Sorry? I'm coming through on I think I'm coming through on your mic. Oh, maybe it's not happening anymore. Oh, there we go. Uh they kind of said that uh the Ton Foundation is not going to be the center of Ton anymore, and it's just going to be Telegram. So, that that's caught a bit of a move. Um people are interested in that. I think that's an interesting outcome. Like, definitely teams are less scared to uh kind of like back their back at back a token now. Like, it's not it's not the Gensler admin anymore. So, I think uh maybe we'll see more of that. I don't know.

In a lot of ways we've already seen like most of the I I think it's the right way to do it as well. I I think that foundation system's probably going to be done soon. I think you like if everybody's adopting crypto, you won't adopt it with your main company and not like random other companies. I think that's fair. That's all I got. Oh, and then I guess uh you know, we talked about JTX and Gedo is up quite a bit since that announcement. >> Yeah, but I think it's down again though. No.

>> it's still up from the announcement quite a bit, but it may have already it may have already popped up. I don't know. I think my opinion Oh, yeah, it is up. My opinion is probably a little bit of like a over I don't know. An over-adjustment to the upside off the announcement like I don't know necessarily like what you're pricing in there to to the token. The The The product isn't live yet and we haven't seen any any revenues or anything yet, so. But people love to speculate, so.

Yeah. People do love to speculate. We'll see. Okay. Cool. Let's call it there. It was a good chat. All right, thank you to all of our listeners for coming in listening. Um we will be probably not live next week, but we will be again once or twice a month probably. So, if you are a listener, I appreciate you guys coming on and to all of that are not listening and are going to listen to it later, thank you also for listening. Um Danny, have a good weekend. Um and yeah, peace.

Thanks all. See you guys.