Market Volatility, Stablecoin Regulation, and Saylor’s Next Move | Roundup

Transcript

I think tether is going to be the biggest financial institution on the planet and there's really not much that anybody can do to stop that because a lot of the growth is coming from overseas and like it's going to be interesting to see what happens but I I think diversifying cash is smart and I think the circle IPO is going to be a big tell on you know what exactly is happening under the hood of both these companies this episode is brought to you by Aries markets to learn more about AR's markets follow the link in the show notes below hey everyone quick disclaimer before we get into today's episode nothing said on bell curve is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and the views expressed by anyone on the show are solely our opinions not Financial

advice our guest and I may hold positions in the companies funds or projects discussed all right everyone welcome back to another bell curve Roundup you got me and Vance this week Vance how you doing Jim doing well how you doing doing well man doing well all right we got a lot of stuff to cover but before we get into it I want to give a quick shout out to a a is one of the largest and most trusted oldest protocols in all of defi they've got about $20 billion worth of tvl uh you know you can head over there borrow you can lend you can swap you can do whatever and uh yeah definitely go check them out and uh yeah tell them that I sent you so thanks Al for making this possible all right let's get on with we got a bunch of stuff to cover

this week uh Q5 is finally here talking about Bara baby uh and yeah it's been a pretty crazy week for markets in general too so we want to start at the uh Trump tariff levels here and then want to talk a little bit about micro strategy and the Rebrand to strategy and just the amount of Bitcoin that they've been buying over Q4 um that just came out in their earnings release and then let's get into Bara and some of the more Crypton native stuff um yeah um I mean it's been a volatile like eight days um like January 31st we do our we do our mon our marks monthly um so we were looking at this last night it was like you know Bitcoin was at like 105 and like eth was at like 34 and like there

was that massive Wick and uh like the rumor floating around is that some you know OTC desk somewhere got basically carded out on like a $400 million eth long that liquidation price of like 2150 and like you look at the buit uh you look at the B bybit liquidation chart and it's like like the literal exact bottom is 2150 so I don't know I don't like having been in crypto for so long I'm not convinced there's like coincidences anymore seems like someone just got absolutely hunted and then taken out on a stretcher um so I mean that culminated in the largest altcoin oi wipe of all time even bigger

than Co like the CEO of bybit tweeted that you know they don't publish all of their liquidation data neither do binance but his Gess is that we were closer to 8 to 10 billion of Liquidations in a 24-hour period which is like three or four x Co was so I mean it it has been Rocky for sure um and then right you had all the Trump tariff stuff which kind of resolved itself uh seems like he is you know off the war path for the time being but I think there's kind of like these elements of the America First agenda that you just kind of need to get out of the way like the tff stuff and um you know even for people who you know are not super pro deportation like all that stuff

happening and then you get to the good parts which is basically like Scott bessent saying yesterday that he's like targeting the tenure which is basically like the cost of capital for the entire planet um and he wants it lower and so I think you know maybe the way to think about maer right now is like there's not really as much of a trump put on the stock market maybe doesn't even need it but like the tenure has the best in putut um and so feels like things get more accommodated from here um and like you know you're seeing most these alts back at their 2022 lows which is pretty wild to see so and in some ways kind of like the bull market has been reset um to its you know 2023 2022 prices yeah uh with the big exception of of Bitcoin

here obviously which has been super strong but we can talk about that a little bit when we start talking about micro strategy or strategy I guess as they've rebranded too but you know in terms of the actual tariffs I think the thing that the market is trying to get a sense of is this a trump negotiation tactic or does he actually want to Levy these tariffs and I think Scott bessent actually proposed something like a blanket 2.5% tariff or like an attempted Global tariff or something like that uh Trump has gone for a more targeted strategy U where he started with China uh and both Mexico and Canada and I think the the initial selloff over the around the weekend time frame was these 25% tariffs that he was going to Levy against Mexico and Canada um there were going to be Retaliator efforts from the

Trudeau Administration and Mexico as well and then basically 24 hours later on both counts uh there were 30 at least 30-day delays um for both of them and basically markets mostly rebounded uh crypto Bitcoin traded back above like 103k or something like that I think now it's ranging around 100 uh alts haven't really recovered they sold off uh pretty significantly and the S&P has been Treading Water roughly as well but what are your thoughts on like the tariffs in general negotiating tactic or is it um actually a part of his longer plan I think he just has to do them because he said he would I don't know if his heart's really in it as much and you know like if you apply tariffs to China Mexico and Canada that's like three

trillion of goods a year and let's say you put a 25% tariff on everyone which is like potentially extraordinarily disruptive to the global economy that's like 750 billion of Revenue that helps plug the plug the Gap a little bit um you know would be like an additional 20% of revenue for the US which is not nothing but at the same time like Elon is roughly on Pace to cut a billion a day from Doge and the big elephant in the room is like can Scott bessent Finance out the debt because that would be a multi- trillion dollar swing in the interest costs going forward each year um so I I think kind of this is all

somewhat of a you know a leadup to what Scott Besson is going to do which if you've read Steven Moran who's the chief economic adviser to Trump he said like first we are going to tariff the [ __ ] out of everyone and we're going to use that stick to basically beat them into taking all their short-term US debt selling it and financing out uh their debt into like a hundred-year note for the US maybe that happens maybe it doesn't but like there will be more duration that's required and as a part of that they will weaken their currencies this is at least the thinking so I think this is all not really like a Target to generate Revenue it's a Target to lower the dollar andow lower financing costs which seems to be working like the 10 year is at like 44

today it was like at five few weeks ago um so look Financial conditions are easing and I think that's a good thing I think it is too I would have to agree um I think it's hard you know people like to talk about the fouryear cycle for crypto in general I think um CMS Holdings had a pretty good threat about markets this year where he he's described how this Cycle's been pretty different uh we've talked about it on the podcast a lot there's been a lot of dispersion some of that is pump fun related some of it is maybe still working through this 2021 overhang like you haven't really had you really just haven't had that many um successful exits for some of the more traditional private Equity type companies in crypto it's also a uh and we've talked about it here before as

well but Thomas leant of C2 did a great um talk at the all-in summit about just the IPO market and Tech in general which is really struggling we've had fewer IPOs in 2024 than in 2008 or 2009 which is a pretty stunning statistic so there's still a little bit of an overhang in just uh basically you know P like small risky tech companies which probably alts Falls in that bucket but yeah there's been a lot of dispersion this cycle and felt a little weird and um yeah it's just sort of an interesting spot to be and everyone's obviously very bullish feels like everyone's just consensus Bitcoin um at the moment maybe a little bit of hype or BTC hype Soul right it's like the trio that yeah um yeah I mean like the majors are eth is you know three or fourx off the lows

uh Bitcoin is I guess like four or 5x at these prices so there's been a huge recovery from the lows I think people are waiting to see like can crypto assets reliably push over like 100k Bitcoin new all times all-time highs for eth new alltime highs for soul um and then kind of what are the new L1 ecosystems um what has not worked is just like everything coming back uniformly dispersion you or lack of dispersion I think like pump fund did cause the death of like just like the middle of the road kind of project and binance listings are are a part of that and those have gone down so that's kind of like R equivalent to the IPO Market

but I you know I think we're in a bull market you know like there's going to be these signpost events where all oi gets wiped out then it's like all right what continues to do well what continues to you know not do well um and I think for us at least like where we're focused is um things with BuyBacks seem to be doing very very well um things that are new net new ecosystems are doing very very well and like strangely kind of like a rise of defi yeah like the dinosaur names more so like in the like there's probably more fees that have been created by defi this cycle than block space um maybe that's not exactly right but it's like you know within 30 or

40% um so I think like a focus on defi is bullish because that's a fundamental driver um but you know the meme coins are I think probably over indexed in terms of the death of alts like we I I just think we need to build like amazing things on chain that buy back their own token that's kind of the path forward for alts yeah I agree with that defi is very interesting at the moment um there's also this sort of platformization of some of the different def apps that exists like V4 is a really good example of this the evolution from V2 which was really simple in terms of how you could provide liquidity and V3 you had concentrated liquidity more you know complex strategies for um lpes but now V4 is a complete platform model

where they found a way to incentivize different amm designers to launch hooks um which is super cool so and I think you you'll see similar thing like morphos and another good example of this um sky is is in a sense as well uh I was just tweeting with Rune a little bit so yeah I think it's like very cool um what's happening in def5 yeah I I think like the other way I think about it is in 2021 crypto is kind of like where AI is today where like crypto is going to be everything like just centralize it just put a dow on it just put a token on it like it doesn't matter the vertical just like go do it and I think some of that has waned as people have tried things and some of the optimism around

like crypto is the next Computing platform has waned as well but I think what has emerged is just like these huge fee generating mechanisms that are pretty narrowly focused that sometimes don't comport to a traditional Financial uh you know portfolio but I think kind of like with more education and and just more time will become the things that these institutions buy like the cycle has been you know ETF inflows into Bitcoin and eth but like this time around because those are held in like literally a brokerage account it's not like that wealth effect goes off and buys alts um so I think kind of like the next real big thing is like who gets the institutional bid is it going to be the ETFs like how long does a sole ETF take

like James cyer seems to think it's like a 2026 thing maybe Litecoin or xrp before then um but like will the hedge funds of the world allocate to the altcoins of the world that have BuyBacks um or can you start a virtuous cycle where there's just enough crypto Capital to get there and I think for some of these tokens the answer is yes like maker is at 900 million fdv right now 10% of it's owned by the protocol so like 800 million is like roughly the float of that half of it is you know owned by people who probably would rather die than sell so you've got probably like 400 million to float you got 120 million BuyBacks a

year like that that is going to work at some point and like you know I don't really care the day-to-day price action I just kind of care about like are these BuyBacks really going to manifest and they're turned off right now they're they're going to be turned on once the Surplus buffer hits 120 million but like I mean that that will be a test and and you can kind of see it in Radium 2 where they had BuyBacks and they've been doing a [ __ ] ton and the price went up like 6X so BuyBacks are the path forward that means the defi is the path forward because that's the only thing that generates revenue and maybe like just like a Back to Basics principle for the existing alts plus new ecosystems is kind of how I think about it this

episode is brought to you by Aries markets Aries markets deployed on APS in 2022 and is now the largest lending protocol with $280 million in tvl to learn more about AR's markets follow the link in the show notes below this episode is brought to you by marinade marinade is a high performance staking delegation platform that brings both liquidity and security to the salana network by connecting soul ERS with the best staking rates on salana follow the link in today's show notes to learn more can we do a quick update on sky in general uh we were talking about it a little bit before we got started here but the total die Supply um has grown to or die plus usds has grown to 8 point just under two billion and if you look at the chart here that's up pretty

significantly even from the start of the year uh back in January was 5.7 and I sort of historically had it floating around 5 billion uh for a pretty long while so this is a pretty Mark jump in the supply which has historically been the criticism I think of maker sky is that the supply hasn't grown in a little while so you just give us a sense of what's going on that ecosystem yeah so I think the the thing about cdps like where you literally lock your collateral in it is that's a very sticky product and the interest rates are you know there's less price sensitivity to them than like a funding rate so like what you're seeing right now is maker able to charge a lot more in interest on the CDP than the funding rate on ether Bitcoin

for Athena Athena is at like 6% I think apy which is like a 6% funding rate so basically like what a lot of and I've noticed there's very sophisticated yield farming funds on chain now which is like if the sky rate is higher than the Athena rate like those funds go to Sky and they're going to decrease interest rates which will get their profitability to like probably 130 million a year uh which is like that all goes to backs um but that'll get it kind of closer to the Athena funding rate so like we'll have to see what happens once that executive vote post uh passes and that'll be I think in early March um or or maybe before then uh depending on how quickly

people vote so I mean die Supply is growing but the thing about die Supply growing is like the more D or usds that maker has to allocate like if funding rates Spike again they can just like allocate to that and take all that yield and kind of like use that subsidy to keep growing die and it like really speaks to the network effects of money where like you you you are a big stable coin because you like are you have like it's like you are growing because you're big and you're big because you're growing it's like kind of like reflexive like that and if you just click on like usds die Supply just that 8.11 n just go up one so go to Max just

yeah so like the the alltime high is 10.1 and die supply has only been above eight for like 30 or 40 days in its entire existence so we're in rare erir here and like you know for me it's like you know we're heavily incentivized to hold things for three years because you know that is when our lower tax rate as a GP kicks in just like little behind the curtain it doesn't really matter to me what the price does this week or this month I care about what it's doing in like two years and this is I don't know seems like it's on a pretty positive trajectory and BuyBacks will just you know basically start the flywheel again yeah and the other thing that'll be interesting is uh we we

actually had a good episode with um Sam mcferson U of spark and Guy young of Athena so I would highly recommend listeners go back I think we recorded that 3 weeks ago or something like that um where they talk about some of the synergies in between sky and some of the other um D5 protocols in the space namely Athena here but I think it'll be interesting to watch as there are other subd Dows or or Stars I believe as they're called uh like spark um as they come into existence in the next year or so I know there are at least a couple cooking there and then would you also mind just describing as well Vance this uh this swing in estimated uh annual profit here so we've swung at one point from being relatively profitable to estimating a $60 million loss here so what's the sort of push poll in between

the um die usds Supply growth and the net annual revenue expectations here yeah so the estimated of annual net revenue and I only know this because I like Ping the steakhouse guys I'm like what is going on um the first one is it annualized the past three months of expenses so there was like a big $10 million launch project expense that happened in the past three months that is going to go towards basically launching um all the sky agents and a lot of those for people just who don't know it's like instead of kind of like having like an AI 16z you instantiate your protocol in a lending market and you borrow against the

treasury protocols and like maker financing the AI agent vertical is kind of the next big strategic move and so they need capital for that they need subsid for that you know that will um cost money and so the annualized expenses that they're clocking if you just click on estimate of annual net revenue the 59 um so it says Workforce expenses here are like you know 91 million this is actually like 46 million if you look at the the trailing 12mth actuals um oops so like yeah so like if you look at like the last month annualized it's like there's 200 million

like this dashboard is just kind of wrong um this also includes non-cash expenses that are maker and Sky subsidies that are going to Camino lend on salana so it's like that's like a non-cash expense really the best way that you can track um the you know the real profitability of the protocol if you just go back to the main page so click on Surplus and like basically just like hover over this this like uh like that like that dip Point here so uh keep going going like a few in so 60 what was the low 62 now it's at

64 you know a week later like basically how I actually account for maker is like what's going into the Surplus buffer because that's what's going into BuyBacks and it's growing you know one or two million a week at this point and it's picking up so you know that's kind of how I think about it uh but if you look at the most recent steakhous proposal um they have maker profitability clocking in with the interest rate change at about 120 130 million of earnings per year nice only complete nerds will will understand that but that's my job um I love it I uh I mean it's always just great to root for

uh it's just very cool to watch the complete reinvention of that protocol expansion onto salana like just taking big swings um also yeah I feel like defi is in a little bit of a Renaissance here as well uh so I it's not a lot of the names that did well previously I would I would argue that maker will do extremely well but I mean the nice thing about having a ton of cash flow BuyBacks is like you don't really need to care what other people think you can just kind of wait for it to play out yeah all right I want to switch to talking about micro strategy here or just now strategy so they've rebranded to uh yeah micro strategy is micro strategy no more uh they're now just strategy um and it seems like uh not 100% sure for the

reason for this other than drop the micro it's cooler or maybe just a reflection of their uh more sole focus on being a Bitcoin acquisition and holding company these days um I was also going back and forth with uh Patrick Bush of Vanek who is theorizing that maybe it was easier to sell a Bitcoin treasury management like uh services or Solutions there which maybe um I interesting idea I think it's speculation but maybe that could be a thing um the interesting so they just had their Q4 earnings come out um so the thing that really stood out to me was so actually just as a hypothetical for audiences here before we reveal what this data is so um how much if I had to ask you to guess uh Bitcoin did micro strategy Buy in Q4 of this year and what

percentage of their current Holdings does that Bitcoin represent so just kind of think for a couple seconds get a number there Chain of Thought yeah get the 01 uh cranking in there1 all right so uh micro Strat or strategy holds 471 th000 Bitcoin uh in Q4 they acquired 218,000 of that so almost half so they've got $44 billion worth of bitcoin they bought 20.5 billion in Q4 uh which seems like a lot so back in October of this past year uh sailor made public their 2121 plan which is to issue uh $21 billion worth of uh equity and $21 billion in fixing income securities and

that would fund the purchase of 42 billion um over some predetermined time period and it looks like they got to work pretty early and they deployed just under half of that um so 20.5 of the 21 billion in Q4 of this year alone so that's pretty interesting I I would guess I don't actually have the the Bitcoin ETF complex inflows over that period of time but I would guess sailor is the marginal buyer here still uh from 2021 to today that's still the case um it's dragged his cost basis up to $62,000 that's the cost basis of Sailor at this point yeah um yeah I don't now that's different from I don't know where and people object to this framing uh like his you know quote unquote uh you

know liquidation threshold is but it's whatever he would you know at whatever uh price he would need to sell Bitcoin to pay down his um portfolio of you know debt that he's been issuing but you would imagine it's 62k today after another 21 or 20 $1.5 billion doar worth of bitcoin buys it's probably going to be higher than that I would guess it's above the 100K level so he probably drags that up to 75ish 80k maybe which feels high that feels pretty high um very high yeah I'm also just reading this uh this was published in 24th October 2024 so this was probably before a lot of these buys were accounted for but bitmax had his liquidation price basically like you'd

have to sell Bitcoin to finance the cash Redemption of the bonds at about like 20,000 I'd imagine this is probably like 30,000 now yeah or probably even higher like maybe 32 or 33 I don't think obviously like I don't hope Bitcoin gets to that level but yeah I don't know it's great to have him as a buyer he's also issued this new um instrument that like I don't fully understand it but it will just be able to raise more cash for the ATM of micro strategy know it's getting a little getting a little risky for for the old boy it is it does right and when you look at existential threats for crypto like what could cause some big

deleveraging or something like that I mean it's really like it really looks like sailor at this point or maybe Mass outflows from the Bitcoin ETF complex if it's really fast money or retail money and not like this kind of slow ra wirehouse type money but yeah it's pretty interesting what he's done and the it seems like the actually we'll do this for next podcast but I would love to go back and retrace how much Bitcoin he's bought because we're certainly seeing exponential acceleration um in terms of how much he wants to buy um and it seems like he's not planning on slowing down anytime soon but I think that also is a big part of explaining why there's been such Market Bitcoin strength here like we've talked about it Nvidia sold off and Bitcoin sold off

less and it bounced back to its relatively all-time high price pretty soon but maybe a big part of that is just these you know Bitcoin buys that say slamming into the market here more so than anything else so I mean how how much longer can can this go on probably a long long time but you know I think he probably get another 20 billion in the ATM he can activate and then it's a question of like who's the next marginal buyer and I've I've noticed that like you know just the unrelenting Bitcoin strength is definitely convinced a lot of people that they're just like going to be Bitcoin only so maybe they just like follow on here but I don't know there's like what like how many inflows

do you need on a daily basis to be at 250,000 BTC reliably I would say probably like a billion net a day yeah I think so too um I don't know who the ne the next marginal buyer is here um I think people want it to be the US government it feels unlikely to me that that's going to happen on any short to even midterm time Horizon I just don't really see it I mean they'll take the Seas Bitcoin they have and you know half of Tik Tok and put that in the Sovereign wealth fund which honestly is a super badass start to a sovereign wealth fun but like you know well why aren't you buying paler stock why aren't you buying you know why aren't you buying my stock it's

like there's there's a long list of people who would also like their things to be bit up I just don't think it's realistic to expect that it you know it's going to be Bitcoin um it has to be sovereigns is my guess um um or just like a massive concentrated retail wave um and that could happen like you know Bitcoin gets to a new alltime high and it seems like it's always back on you know it'll it'll push 10% above or 20% above but there's also been people who have been waiting for [ __ ] seven eight years to sell Bitcoin at 100K so I think you just got to watch those people out first too does it give you any sort of spidey sense I

feel I was describing this to a friend uh the other day but it feels like whenever there's so much consensus and conviction around one crypto asset especially one of the majors that's usually around the time when it starts to cool off so that was you know what I mean like I mean even you know people are you know very happy with salana price action but you know I will say I think salana hit you know 200 or 220 back in like March of last year right like it's basically it's slightly lower than it was March of last year uh there was a point when eth you know around 4500 or where wherever it Peak last cycle felt like you know the massive consensus and it was super out of consensus to say anything else and Bitcoin was actually in the gutter then and now it feels like everyone is just

completely coasted around Bitcoin Bitcoin dominance is at the highest that it's been in a long time when alt sold off pretty bigly there was a huge Bitcoin dominance candle Spike I don't know I mean the I guess the the argument for why that wouldn't continue is who is the next marginal buyer once sailor runs out and you know there were something like 40 billion of inflows into the Bitcoin ETF complex this last year does that continue into 20 if prices are more muted I I don't know um I think people are looking for new marginal buyers new ecosystems like one thing I've been tracking is like Joe luin has been bull posting uh which is good and he's also kind of signaling that like the consensus IPO could be around the corner maybe he turns this into like an eth

micro strategy thing like that would kind of upend The Narrative of like there's only one sailor and there's only one micro strategy and like micro strategy started as like a one or two billion dollar company for it you know absolutely mooned on the back of these Bitcoin purchases so like that's maybe a new marginal buyer you got soul unlocks I me people say they're priced in people say they're not priced in I I have no idea I think you just kind of need to see what happens um when that notional amount of uh Capital unlock from the eth ETF it dropped like 50% so like who knows um Eric Trump bu posted e this last week our our president you see it's just crazy and like I think also like world lii like that launching on eth will be

pretty bullish eth I'm excited to see what they do I hope it's just like an actual D5 protocol um but I think you know can like my very simple framework is like can things can things double can things triple I think I think they probably can in the right macro environment but there's a lot of these assets that have been super consensus like even Nvidia is another good case it's like that has been in the same range for the past 18 months like I don't know if people are like the Nvidia Reddit which I check on from time to time not having a good time yeah you're absolutely right it's been basically ranging um it's actually down uh no it's up actually on the year

but it's been ranging basically for the last six months yeah you know it was like in this range in like May of two or whatever it was two years ago um I think you know what we'll provide is this a durable bid also gold is absolutely mooning which is usually a good sentiment check for like where crypto will go um but I think what we'll bring about the next kind of sustained rally is like effectively Trump announcing the tax bill everybody getting Clarity on what's going on because like last night he said he's going to remove carried interest for fund managers that will cause selling if there's like you know if you can sell this year and kind of you know get your carried interest and you know next year

you just kind of reset like he needs to kind of announce what's going on there Financial conditions loosen QE starts again like I think that's kind of the basis for a sustained stock market rally and I don't fade Tom Lee he's got 7200 as the target for the S&P this year and if the S&P is 20% higher then crypto has probably doubled or more I think Alliance Bernstein uh just put out a price target for Bitcoin uh of in the next four years during the Trump administration of 500K and Alliance Bernstein you know they're a very well large it the past couple years too they've been crushing it yeah their predictions have been super good they I know some folks from their team they are definitely in the weeds and

very knowledgeable so that was an interesting interesting call but you know like I think the cycle will take a lot longer I agree with that on the alliance Bernstein side and you know I do think there's things that are kind of like hot SL inexplicable like Ando being at50 billion with 300 million of TBL like who knows how long that lasts I think our bet is just like new ecosystems and things that I BuyBacks will do well yeah I want to return really quick to the idea that there could be some sort of micro strategy for eth and it actually is interesting the I mean we've talked about this so many times and it's so true that price drives the narrative and you know all else equal right if you

didn't have it's very interesting to do the sliding doors moment of where Bitcoin would be if there wasn't a guy named Michael saor I mean that guy has done an enormous amount for that I don't know what the price action would look like or what the chart would look like without him but that guy has single-handedly bought an enormous amount of Bitcoin which has had a very reflexive effect on that ecosystem and that asset and yeah you haven't really you almost had FTX or Sam bankman freed doing that with soul for a little while and uh but we haven't really had that so much with eth and it's just funny because everyone's talking about the foundation and what that should look like Etc but maybe you just need some massive bulll that's Levering up and buying threat of that happening like yeah who knows if consensus IPOs this

year I personally think a lot of IPOs will happen and so more likely than not um and if he start signaling these eth buys they've probably got a few hundred million of Revenue minimum you the last round was at nine maybe it comes out at six like micro strategy started at two billion and just started Levering itself I think Joe luin can get there um and I generally my my perspective is like you know people rationalize X poost facto it's not really about the information it's about like what story people can construct from it um and that is kind of how people rationalize price action which feeds back into the narrative so I mean look

like like I'm a bull I'm a bull on basically all high quality crypto assets I I see no reason to sell so we just ride it well also here's the thing too I mean so a few hundred million I don't know what the chance I don't know anything about uh consensus or the IPO Market but you know if you had to guess what the because what most people probably haven't dug too far into the uh the finances of strategy and you know if I had to ask you to guess like what do you think roughly strategy does in terms of Revenue per year right like this was the story of micro strategy when they started doing this we're this Legacy tech company we generate good cash flow yada yada and we can't find ways to reinvest that so we're going to buy Bitcoin with it and it was this nice

story really was probably more of a financial engineering story than anything else but uh the amount of Revenue that strategy did in Q4 of this year was 120 million which was a record year a record um a company record uh and then the amount of cash that they have on hand and cash equivalence is 30 uh 300 wait a second 38.1 million that doesn't look right all right but they don't have an enormous amount of on hand um it says 38 million what I'm looking at but that feels really low uh so maybe that's not right but you know it doesn't take a whole lot right really what you're doing is you are becoming sort of a meme coin a meme stock right for people that want to take like a

levered punt on something and I think that after people saw the success of Strate of uh strategy and what they've done in the public markets if you had an eth equivalent of that that would actually do quite well creating a new micro strategy for eth is pretty low like if they're doing 120 million of cash flow and they I mean what's what's micro strategies market cap I think it's like 85 billion wow yeah 86 billion that's wild I mean the thing about it is as well if somebody else does it tlor will seem a lot less novel and once that happens like maybe some of the sheen comes off it I don't know but I don't think the bull case for Bitcoin to 250k can be reliant on

Sailor this is the crazy chart of all time the start like that's yeah that's like 199 this 2000 yeah and then then they had the accounting Scandal he's like you know front page of the newspaper people are like he's a this a bad person and then he has like a 20-year break and comes back and starts buying computer coins yeah 24 years to get to a new high that's pretty remarkable you know what I was just thinking about the other day cuz I was looking up some of this stuff and looking at micro strategies um you know executive leadership team and imagine you had been like the Executive Vice President of Sales or something like that at micro strategy which was at the time a pretty midling to maybe C tier you know software company that was

dwindling into nothing and one day your boss comes in and says I'm goingon to start buying Bitcoin and and you're like what you're like manager and he described getting his exact team and boarded on this by sending them YouTube videos so I'm imagining him sending like old Andreas an YouTube videos and Andreas video and then the funny thing is is that it's done like a 36x since he started doing that so I bet those guys are all pretty big Bitcoin Bulls at the at the moment that's not a bad result but what's crazy is it's cost basis I think you said this it's like in the 60s now yeah it's in the 60s yeah um I mean one of the greatest trades ever gets

less amazing the higher his cost basis go but like it seems like the higher his cost basis goes the higher Bitcoin goes for for a time um but like you're going to want to sell Bitcoin when everyone has adopted this as their personality and it feels like we're like like I saw like the LA Vape ball was like you should be like 70% Bitcoin I took note of that it's like okay quick shout out to today's sponsor Aries markets Aries markets deployed on apts in 2022 and is now among the top 10 lending protocols across all blockchains with $280 million of tvl Aries markets has expanded its product Suite to become a fully integrated defi Hub combining lending borrowing and More in 2024 alone

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management whether you're in defi trafi or somewhere in between marinade has something for you to learn more about marinade follow the link in today's show not can you explain what is the LA VAP ball I was just listening to tun talk about this and I have no idea what I think it's kind of like ative term for like anom and like Frank de gods and this guy Faz Banks and I mean look like they're bringing new people into crypto so I don't think you can really hate on them that much maybe some of the stuff they do is like somewhat extractive and like makes crypto seem like a little bit of a joke but like you can't control what other people do yeah so you know I mean like you know you go to their Instagrams they like posting like contract addresses and like deck screener

screenshots and um yeah I mean crypto is always going to have that that element to it so I don't personally mind but like I know that there's a lot of people who feel you know like oh man [ __ ] these guys you know Frankie God sucks like whatever um I I don't have any personal problem with them yeah I um I've got no problem with that either I I I think that people really I don't know I sometimes I talk to some of these like new L2 teams that are building or new l1s and uh especially in Bitcoin this is probably the case like Bitcoin l2s it'll be very interesting to see what their go to market strategy is and you know it's very tempting there there's kind of like two there there's like on the spectrum of I want everyone I want to basically

launch like an L2 gambling casino because that's what's working to I only want stable coins and like upstanding you know fintech sort of use cases yeah I don't know where the line to draw there is I I would eror probably on the side of not being super prescriptive about what people are using your platform for and just welcoming having a pretty large open tent you know I think that's roughly the right strategy although I'm not sure what you're yeah like you want to be open to new things and I think there's like a difference between at least I can tell people who are building things that they believe will create enduring value and are different and will add value to the ecosystem and like sure that may be another L2 that may be another L1 like there there is no kind of like you can't really you know cut off

One path or the other yeah think there's a difference between that and doing things that you think will pump and that you can get liquidity on and there's some of that happening too but uh I think especially the memec coin complex has focused a lot of the attention on that side because that's specifically what they're designed for um and you saw things like jelly jelly and Vine launch and and like look those just like went to zero immediately like like the prognosis for launching your like Web Two coin on on whatever chain like I don't know I don't think it's as rosy as people are actually making it out to be with like things like Internet Capital markets and stuff like that that that terminology you you gota you got to also

keep your mind open but not so open that your brain falls out of your skull and I don't know like launching a launching a meme coin that has nothing to do with your company's equity and then just watching it go to zero is not a great like attention grabbing go to market strategy I just I think a lot of people looked at that and like does Sam Lon look better or worse than he did before jelly jelly I would say he probably looks worse post jelly jelly and he didn't do himself any favors when he was like oh I I don't know what this token stuff is and I'm sorry it's like you're just having fun on the internet yeah yeah dude well you also seed investor in salon and you like to talk about that so you know you can't really have it both

ways you can't every K can eat it too so I don't know it's it's like yeah the oh we're just stumbling around just having fun goes up we're g to take it seriously but if it goes down like it was just a joke yeah um yeah I think just the commitment level is kind of what I look for yeah all right should we talk a little bit about let's talk about Q5 um so we've had yeah chain with the chain has a bear on it um we are trading now so uh Barrow went live yesterday we're currently at $4 billion uh plus or minus fdv um almost a billion dollar of market cap uh it's been I would say a successful launch um I don't know what everyone's

expectations were I saw uh stuff ranging from kind of like the two and a half billion range to the six billion range so this sort of fits on the higher end of that um and overall it feels like like one of the uh the differentiators of bar chain in general as a go to market strategy was that it had these enshrined apps so you could do something from day one I know that they were very focused on they had a couple novel approaches to solving the coldstar problem and we're gonna have Smokey on next week so I don't want to get into too much of the technicals here but they've got you know proof of liquidity is a really interesting way of incentivizing um like linking up the incentives of the validators with the users versus the defi app creators um and not losing a whole bunch of capital

efficiency which is cool they've got that dual token approach uh and then also they started with apps because this is the other challenge with the cold start problem is that users go to the chain and there's no apps launched so there's nothing to do so you basically just stake everything right so these were the it seems like the challenges that uh Smokey and his team were trying to solve um now uh maybe we can address as well well actually I want to just get your um like overall take on on the LA and how it went and then we can talk about this uh Felix tweet and some of the some of the maybe push back that's G as well I think it was a successful launch um this is the range that like if you are like a new L1 ecosystem I think like you frankly want to launch in this

like two to four billion range like it's where Celestia launched it's where Ando launched it's where Frank Frankly like you know sell me all the salon you want at $3 and then [ __ ] off that was at like I think two billion fdv so like this is like a credible range it's a good foundation for them to build off of and like I don't want this thing to go to 20 billion on day one where then the chart just looks [ __ ] forever um and frankly retail has no ability to participate in a new ecosystem like this is great and like you know the future of the chain is determined by the actions that happen in the coming years not like the coming days and weeks like sure like like let's you know have this thing go up whoopy Doo but like we're locked up

forever um it really makes no difference to me and like theidea a that you know oh like the VCS are you know they're hedging on hyper liquid um first of all the daily funding rate is negative 3,000 and my lockup is I think four years so every day that I short on hyper liquid if I did that which we didn't and literally if you did this you're [ __ ] you lose 15% of your principal if you short at a 3,000% negative funding rate let's let's just reference the specific tweet here so we can respond to it so Felix works at block works you know we love Felix um but I was there's a bear chain Griff

flywheel launch you at the top of the cycle for Max fdv insta launch per so VCS can short on perss and hedge their bags allow VCS to stake their lock bear bags and be able to sell the bear before they uh unlock just like TS this was also a criticism of Celestia as well that early investors could stake and sell their sell their uh Stakes rewards and then throw a small amount of air drop at Community to Fain Community Vibes so okay my locked bar which I literally cannot move I somehow figured out a way to put it on hyper liquid and then I shorted where I lose 20% of my bag every day for three years how does that work uh so that I can hedge this like bro like it just like doesn't make any sense so like that's like the first

thing like number one VCS are not hedging that's just not even possible when funding rates are this high like the funding rates that that are that high mean that you can only keep that position open for like three or four days at a time before you lose all principle so like that's the first thing second thing is like oh like the VCS are like staking like their inflation whatever first of all like if you understand proof of liquidity you need staking and second of all like I'm actually very sensitive to the you know people like Celestia which we were a seed investor in we like I didn't think like the the inflation rate the staking you know made a ton of sense like giving people access to liquidity that were supposed to be locked up for a long period of time like lessons we learned

like when we stake our Bara I think 70 or 80% of the inflation goes towards po so like we're maybe getting half a percent in terms we super quick explanation there actually now when you're because there's two tokens for those who don't know there's the Bara token and then there's bgt so could you can you actually just give a quick 15-second overview of what that means that you just said actually totally so um when you stake Bara you get bgt bgt is the staking token Barett is the gas token when you have bgt basically what you do um is you are directing most and in this case it's like 80% of the block

reward to apps on chain and that's the P complex so like we don't see the inflation the inflation that like we get to direct goes to these apps on chain which bootstraps them like there's no mechanism for us to like get in the middle of that inflation take sell it on to retail we have no interest in doing that and also like that's also like illegal like rule 144 means that we cannot sell any token that we get for a year so like you really think we're like breaking the law to get like half a percent of this inflation out no um so look like that's kind of what I'll say about that I wish people were a little bit more open-minded but I also get the trial by fire mentality of like

launching these tokens like okay you launched your token guess what everyone in hyper liquid shorting the [ __ ] out of it it's kind of like you know you go to prison and you have to like stab the the one guy in the gang to like make sure everyone knows you're serious like there is like I I respect that a little bit of the you know if you can't get past this initial gating which feels like you know the the launch pipeline to like everyone hyper liquid shorting you to like okay I guess we won't short you anymore and like the shorts have already come off and like bar is like at like four and a half billion right now so things are moving in the right direction but I think it just speaks to this like it's uh there's no easy wins in crypto

anymore more and if you especially a new ecosystem that's like trying to get shares of the attention economy um you're really going to have to fight for it but that's totally fine by me but I just take issue um with like people saying that uh just like things that are obviously mathematically false like all right I also got to hop in here and defend my boy Felix real quick you know Felix is a very astute guy and you know I think there he definitely had some points uh maybe bar specific maybe just more about the general perception that VCS get um a good deal sometimes in General within crypto but one point that I wanted to make sure that we clarified is on the actual staking rewards of something like Bara so I know some of those go into

this proof of liquidity uh sync but are token rewards available for VCS to sell or how does that work um also just to be fair as well the funding rate is very high but that also means that someone is selling so maybe it's not VCS but I I don't think in general the observation was totally wrong yeah so Celestia I think the year one inflation was 10% and went all to investors yeah with Bara I think the year one inflation is I think 4% um yeah but 80% of that goes to PO and that's in the the docs and it's like this is all public information which is kind of well was a little frustrating but um we are not seeing inflation that we can sell that's the kind of net net

of it all and I think that's frankly like something that we've learned over time and you you know there was a few tokens who really pioneered like this like staking inflation for investors thing which I don't think is frankly like value accretive to the the network yeah so look I mean ultimately it's going to be test of time here um and we'll see how the like what are you looking at for adoption and we can ask Smokey this as well when we have him on next week but you know if we were having this conversation in a year what are the metrics that are going to make everyone you have outside of obviously you Everyone likes Tok it go up Tu number go up but what are the sort of adoption metrics for a bear chain roughly that you be looking at I mean the Northstar

is always fees which is like um you know the sum of the blockchain in the case of Bara and any po complex the fees is like the fees from lending the fees from swapping the fees from perss the fees from block space as well and you add all those up and I think basically what you're looking for is you know 500 million to five billion of average annual fees for an emerging ecosystem that's sustainable um I think you want to see kind of like some iteration of the looping or the mem coin complex or like the Bas Lum Primitives that most blockchains have taking off and then I think you want to see probably like this cultural movement that I think be chain probably has the strongest case for which is just like people really like

the IP they really like the community they really like the token um so I think those three or four things I don't think you necessarily need to like reinvent the wheel or like reinvent some sort of net new use cases and then I would think the last thing is like can they Pioneer some different L2 L1 model where like the l2s really are like not tariffed but like they're really accre value to this main chain that's kind of what I would look for um and I think if they can get all that done this is going to be a pretty serious ecosystem but I think right now it's like launch went well check we need to turn p on like that's happening um you start with the Bas level Primitives and then you kind of get into the more complex stuff like how do you do p for

like puff ball or how do you do p for like you know any of the more further flung consumer apps yeah well we'll uh we'll have Smokey on next week and we can get into yeah Smokey will be able to kind of speak to the day-to-day like what will happen when um but yeah I mean that's kind of how I think about it Unis swap Labs is rolling out the red carpet and launching a $15.5 million bug Bounty this is the largest bug bounty in the entire history of crypto to anyone that can find a critical bug bug with the UN swap V4 protocol this bug R aims to make it the most rigorously reviewed codebase ever deployed to ethereum now the Unis swap name is basically synonymous with

security $2.4 trillion in cumulative volume has passed through Unis swap V2 and V3 without a single hack so Unis swap V4 is dedicated to bringing that same level of security and transparency to the V4 protocol so if you want more information or eligibility or scope or Rewards or payout or any of that good stuff there is a link in the bottom of the show notes I highly recommend that you stop listening right now go to the show notes click the link head over and tell them that I sent you start earing money today all right maybe we can close just discussing tether here for a little bit uh so tether um the numbers actually so in terms of uh profitability uh they just I think they're right right around 13 billion in terms of profit and they're looking to expand de sorry per

quarter per quarter that is so bananas and they're looking to expand deal Mak outside of crypto so one thing that they did actually that I think flew a little bit under the radar is they made a $500 million investment into Rumble um and or SE sorry 775 uh million Strategic investment um and I know there's a little bit of involvement here as well with Howard lutnick uh who is I guess one of the guys who is chairing alongside Scott bessent this uh us Sovereign wealth fund that Trump just created an executive order for uh he's also uh the CEO of caner Fitzgerald and they have a deep relationship with tether they're their custodian um but yeah tether is basically a social media

platform and app um it's a little bit you know the to do a oneliner right Rumble is Rumble Rumble is yeah yeah yeah yeah Rumble so it's it was a little bit more of like especially when you know pre- Trump there was a lot more sort of you know the perception of left censorship issues for more more the mainstream apps this was like the alternative uh and it was more of a right-leaning you know libertarian type application so I actually you know I can kind of see the link or the Strategic relevance for tether there maybe it's distribution maybe there's some angle of like a tightening of the relationship with Howard lutnick I'm not 100% sure what it is but I don't know anything that you like what do you think about tether's expansion outside of investing in crypto here because they've been buying a bunch of Bitcoin as well with

their profits that's been well announced but what do you think about their deal making expanding outside and I don't know if you have any thoughts on the rumble acquisition I've just I feel like I maybe get 50% of it but I feel like I'm missing something there too um I mean tether is hugely impressive in terms of just the the scale and the growth of their underlying product of usdt and I you know usdc hit I think 53 billion I think like the less discussed part of stable coins is like what are the incentive programs like tether based on its profitability has very very little incentive programs Circle based on the market cap that like the secondaries are trading at like it seems like the profitability of like a usdc token versus a usdc token is like very very different

um and so that would be how I would like level set with like where are stable coins today usdt is a very different frankly like more organically driven business um and I was in El Salvador last week with some of the tether people for their kind of annual meeting and um I mean they are just it's like 15 people um but they're just like moving at the speed of light and all this kind of investing stuff like Paulo has an AI play Paulo has obviously the social media play Paulo even has like kind of like this like brain uh like like brain cognition like kind of like uh like neuralink um so it's like he's kind of has his own horse in all of these different Arenas but like I think the asymmetric bet on Tether getting to a

trillion of usdt is probably worth making and I think the things that are really perplexing you know about the ecosystem today are um where is tether defi um and where's the future home of of usdt and um we'll have some news on just a a investment we've made on that front in some in a few weeks time but like I think death is going to be the biggest financial institution on the planet and there's really not much that anybody can do to stop that because a lot of the growth is coming from overseas and like these like trade Finance use cases and these like crossbow repayment remittances use cases so um yeah it's going to be

interesting to see what happens but I I think diversifying cash is smart and I think the circle IPO is going to be a big tell on you know what exactly is happening under the hood of both these companies yeah we're sharing the chart of tether's market cap here this is one of the craziest charts in crypto in general stable coins are emerging as this is the least hot take of all time right but a massive winning category for crypto r large and the tether chart here is just I mean they just keep printing new alltime high I think they're I think they're at an alltime high in terms of market cap right now 141 billion something like that the it would be so hard to replicate the success because you know one of the things that they really got right was leaning into uh

they really found a way to make all of the offshore exchanges where a ton of trading activity was happening a distribution mechanism for them in the early days and it was kind of this neutral uh stable that all of them could get behind whereas usdc has found a lot of success with its partnership with coinbase but of the other exchanges maybe view it as slightly less neutral so it was a little bit of a different bet usdc launched at a slightly different Market structure there maybe a different strategy in terms of Regulation and being the US sort of Blue Chip approved one and more use in defi but yeah tether's growth has been just yeah it's hard it's hard to see much competing with it at this point um unless the US were to really crack down on it or something the network money are

just like insane you know you become big because you are big and people use you because you were big and it's just this thing that feeds on itself but I've like I've just talking to def5 builders like it's been interesting to see their tone change as well where they're like I think there was like this like and we don't really want to have USD for for a while but now it's kind of the opposite where they're like we are like really over reliant on usdc and like usdt plays like something of a lesser role in like I guess like the defi that we all know and love versus usdc today and so like I think they're trying to kind of rebalance to have more usct and I think we Frank frankly are as well like I think we're now kind of like more overweight USD than usdc in our

transactions and it's nothing kind of personal with usdc but like we just want a variety of options and there has been some incidents with coinbase or like usct like freezing things or like your account has been cancelled or like this other stuff that's been popping up on Twitter um I had that personally happen to me and like that you know once it happens to you once you're kind of like okay probably time to develop like a multile stool for our stable coin transactions yeah totally although tether I think actually does more friezes than usdc which maybe would be unintuitive you think it'd be the other way around but the the other thing that's happening on the US front here around stable coins is there's this proposed Hager Bill uh so Martin K Mountain protocol did a really good

overview of the bill uh where he includes the good and the bad so the good being uh Banks and non-banks this bill would allow Banks and non-banks to issue stable coins uh it mirrors the two-tier banking system so you could be regulated by federal or state regul ators until $10 billion worth of issuance uh provides clear outcomes for insolvency uh he said it could be but better but this is relatively good uh reserves are held on pristine assets that we know T bills insured Banks Bank deposits repos Etc You Can't Ban yield bearing stable coins which is huge because that's a huge uh yeah something really nice that uh the more defi native Stables like the usds is of the world are able to compete on uh clarifications on that it's a non-security non-commodity um

and yeah actually one funny thing is the ensures Communications from Regulators are in writing to avoid an operation chokepoint 3.0 that is that is funny because it weirdly admits that there was this uh operation choke point 2.0 but yeah definitely good there was I mean there was yeah yeah for sure I mean yeah thank God we're not back in that scenario but look we we did not have a bank for like two or three weeks when silvergate failed svb failed uh Signature Bank failed we we were like the First Bank of coinbase for a little bit and that is a terrifying perspective for a fund manager for sure um so hopefully never moving back uh into that

world uh and on the things that could be improved bankruptcy remoteness is not done via an orphan SPV which means that insolvent stable coin holders could face unclear timelines the capital requirements were left open so this is a little bit of a loophole with M and the EU if you require 2% Equity that's obviously very difficult for stable coin issuers uh comingling rules are not super clear um and yeah host state law this regulation might kill State paths as home state laws could mirror the MTL model where companies take four years to get 50 MTL licenses so that is still a challenge I think but overall it feels really positive and yeah a lot of this stuff is pretty common sense um and it feels like there's a lot of momentum for this to get past in 2025 and if we saw a real

stable coin Bill get passed I think it opens up the floodgates in terms of the new types of issuers that would want to come into the market it could be everyone from Banks to fex to the black rocks of the world maybe who knows so yeah I just think it's a still a very interesting sector at large yeah I I mean I wonder how many I I don't know what the update on like a PayPal USD is but I mean that's kind of my prognosis for most new issuers I don't think it's doing very well um yeah my computer creep is crashing here so I'm actually not going to look it up but yeah I think it struggled for a little bit it was doing better on salana um but I think not too much is the answer but all right my friend I think that's all the time

we've got for this week anything else that we missed or call here keep on chugging later then talk to you