Markets Bounce Back, The Hyperliquid Thesis and Kraken Raises $200M

Transcript

This is the most interested I've seen traditional specifically hedge fund managers in crypto since Paul Tudor Jones called Bitcoin the fastest horse in the race. And that was May 2020. So, it's been 6 years since then. This is the most interested I've seen these hedge fund managers in crypto and it's in it's in hyper liquid. And these weekend markets are a big reason for that. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in

the companies, funds, or projects [music] discussed. All right, what's up, folks? Welcome back. Welcome back to the round up. Happy Friday, happy Saturday. Santi, what's happening? Not much, man. Excited excited [music] to come back on the pod. A lot lot is happening in the crypto markets and the in the world in general. It's a good time to be alive, man. Yeah, good time. Good time. Santi has went rogue on us and he's vying for our you know, our producer position. He's coming for Will's job. He's like apparently put all of the data of Empire into Claude and All of it. had it just Santi's like I did a bit of analysis which I know what that means. You exported our megaphone data and our YouTube data. You put it into Claude, used the new Opus 47 model, and he said, "How can we improve

Empire?" Not just like that, but that was something I definitely did. >> [laughter] >> Uh I did. I I even went clicked through the every single episode since like 2021, 22, 23, then ran a correlation with crypto prices to see like a lot of times you hear us say, "Oh, like that the viewership is the engagement is tied to like crypto asset prices." And you know, that's something that is not as correlated, actually. Um drop off rates by episode. No, really fascinating. I mean, honestly, like this type of analysis I just spend hours and hours and hours >> You found that it's not that correlated, right? No, not that correlated.

>> yeah. So, so there's two types of content in crypto. One is like purely talking about uh prices and that's what that's what actually rips on YouTube usually. So, like our our episodes will they don't do very well on YouTube. They do way better on Spotify and Apple. Um but we >> deprioritized by YouTube. There's Yeah, there's the retail people do really well on YouTube in bull markets and they they are the ones who move with the markets. So, yeah. Uh we got no Rob. Rob >> Yeah, basically the the TLDR is that we need to make sensationalist titles which which is just not on brand.

>> to Brian and David about that at length, the Bankless guys, cuz they're they've got the headshots that are like you know, and I I think I think my ego's like one notch too big to There comes a time and you just hold the line on like I will not cross that line. We will not do like the the the you know, BitBoy's of the world. Definitely no BitBoy. >> I respect their category and whatnot. >> Never go full BitBoy, you never go full Joe McCann, either. Too too far, too soon? Okay, moving on.

All right, let's get straight to business. There's a lot of news happening. There's just so much to talk about. >> Wait, let's talk about let's I want to get just take on general markets before getting into the news because I mean, a week or two ago we were talking about you know, market's down 10% and now the Nasdaq just hit its 10th consecutive day of gains. Um Yeah, I mean, [clears throat] that's that's a that's historically very rare for two straight weeks of of gains to happen, right? I think it's um I was going back through the data and I think that's only happened once. It happens once every like 5 years or maybe 4 years on average. Um and actually, if you look back since I think

it was since the dot-com bubble, like let's call it since 2000, it's like once every like five or six or seven years this you know, we actually get 10 consecutive days of gains. So, it's pretty rare what just happened. I'd love Yeah, love your take on just the old stonk market. It's it's it's ripping. >> Thank you. Thank you, Will. The last 10 days have been unlike any 10-day period in the market since 1950. Wow, okay. So, the S&P 500 is up 9.8% in 10 days which is in the 99th point 99.7th percentile of all 10-day returns in history.

Yeah. I was thinking about that today and uh it goes back to just be optimistic. If you're optimistic, you are positioned well. I don't know where this ends or how it ends or if it will end or if this is a new paradigm. Um but it's um hard to overlook. It's trickle um the the hyper liquid piece was very impressive at Colossus. We talked about that last week, I think. Um macro wise, I I you know, I was listening to So, I'm always willing to change my mind. I listened to that Leopold Aschenbrenner podcast that he did like a 4-hour podcast and basically the guy called it like like 2

years ago when he was leaving got fired from OpenAI. In that like hour one or two of the podcast, he goes into this whole discussion around like, "Okay, we've we're going to reach you know, AGI faster than most people think." And when that happens, like they all talk about this like doomsday scenario of if in the hands of like different regime, it's it's no different than nuclear arms race kind of thing. He was he was saying. And he should like nationalize these AI labs and we should not be open sourcing them because this could be existential and you could sense a lot of like nervousness in his voice and he's like, "I just get the feeling that there's like a handful of people that really

understand how far this is going to go and how fast and I don't think there's like enough gravity in the market around it." This was the This was the piece from 2 years ago, right? Situational awareness. So, So, look at this. So, I I tweeted out. I said I finally read Leopold's essay on AI. Everyone, regardless of your interest in AI, should read this. I took notes. They're sloppy, but figured I'd share. Welcome to the future. Went very viral, got like 10,000 bookmarks, you know, 1.6 million views and stuff. My my my my foolish uh you know, mid-curve thing here is I took notes on the whole essay. You didn't buy anything. I didn't buy anything. The guy's up. What's What's his fund at? For people who don't know So, he raised an initial he's at 5 and 1/2 billion now.

He rotates his book quite a bit. Now, some of his largest positions now are Bloom Energy. Took a very big position on Bloom Energy. I think he put 300 million bucks in it, now worth a billion. Uh took a big position in SanDisk, so memory chips. Right. Now, what Now, what people don't talk about is his his wife or his girlfriend is the chief of staff to Dario at Anthropic. Oh, really? He's got some nice Yeah. He >> That's all info. >> Funny, so before before running the hedge fund and before joining, I think, OpenAI, he was at Future Fund which was FTX Sam's endeavor to do grants.

And another part of that podcast that he does with Duras or that was he was coming out of actually leaving OpenAI and he talks about that episode of working with Sam and Mhm. um pretty interesting, actually. Uh the lessons he learned there and stuff. So, All in all, Yeah, here's the stat here's the stat for you about the FTX book. Their stake Sam bought a 7.8% stake in Anthropic. I don't know if you saw this week they're raising at 800 billion. That stake in Anthropic would now be worth more than all of Coinbase. So, FTX's stake in Anthropic would be worth more than all of Coinbase today. Yeah. And that was liquidated by the

uh trustee. Yeah. >> Right? Yeah, at like 1 and 1/2 B or something. Yeah, crazy. Yeah. Um Yeah, talk about the creditors. They're all of them been made whole and then some. Yeah. So, is this market like maybe just get get back in the market, then we can talk news. The it feels like public market investors are very skittish right now. They like they're like they're there's they're very jumpy like looking for something and there's all this AI related I'd call it fear. There's fear it's it's two sides of the same coin, right? Like a ton of fear, but also a ton of excitement and it creates these pretty like intense I I guess just the word is volatility, right? Pretty intense draw downs.

Um but the but it feels like the market also wants to go up, right? The market is realizing that there's no way to uh I mean, that this this thing's a runaway train, it seems like. Well, on on one end of the spectrum, you you're in the thick of people don't really know how to underwrite AI good and bad in their models. It they're still trying to make sense of it on the wake of all these labs coming out with a ton of progress. So, like it's hard to keep up with that and it's cau- causing a lot of nervousness to your point. Combined with the the sense of thrill, excitement when you hear a pod

it it doesn't take much to go listen to a podcast like Leopold or Elon or some other Dario um and you have this sense of like this we're at a like precipice of human civilization. It's dawning upon us and like you also have like rockets going out far out in space and coming back and it's yeah, it's the market is definitely skittish. But willing to go higher, right? Uh True.

How are you How are you like let's talk personal because we can all pontificate, but how are you positioned? [clears throat] Like, you know, you tweeted that situational awareness 24, like I haven't changed anything in the book. I did not sell my I did not I'm just I'm a bag holder. Like, I just buy things and just sit on I'm I'm I'm a bad podcaster, right? Because it's not I'm not an interesting podcaster cuz I'm not trading trading that much, right? I rode I rode Robinhood up from, you know, whatever it was, 10 15 bucks to like 125 and I'm still holding Robinhood and you know, just buying some more buying some more Robinhood. I just, you know, told I think I told you either here on Twitter somewhere or text them. Bought a bunch of DoorDash. Yeah.

Yeah. This is really smart. Like, looking at the companies that for people that didn't listen to prior episode, you said something that really resonates for just I looked at my spend year over year and there's a couple of companies where I've increased that consistently. Amazon was one and I think you made an investment back then. And then DoorDash is one where you've just continued to buy more. It was a I had a class my freshman year of college um with actually my my friend's dad came in and, you know, this this guy was a He Yeah, I think his fund at the time I don't know you know, multi-billion dollar hedge fund. I don't know the size. Like, you know, 5 10 billion AUM, whatever it was. And he said all of his best trades in his life have come from looking at what his uh

either his his personal stuff and then and then it became his kids, right? So, when his kid, you know, came when she, you know, his daughter came to her and said I want um I want I want an iPhone, right? He actually, you know, he bought Apple. Then she said, you know, all my friends are hooked on this app called Snapchat. He did one of the early rounds of Snapchat. And there you know, there were like five examples. I don't remember all of them. And I think that he basically said he's like, you guys don't He's like, there's this term called alpha. You know, we're like 18 19. He's like, there's there's this term called alpha and you guys don't realize how much alpha you have being close to the metal by being young. He goes, every year you get older, it's harder and harder to get alpha. And uh

there's no He's like He's like, we're moving to a world where there's no alpha left on the internet. So, you have to get alpha from realizing and seeing things, you know, in in in person and uh Yeah. Before it was like uh Reddit Reddit forums were full of alpha. There was like this hedge fund that just like scoured Reddit forums. He made a fortune cuz he >> [clears throat] >> He actually went long Mattel uh when the Barbie movie was coming out and he was reading the Reddit reviews and discussions. And he said, holy [ __ ] this is a great movie. And like, Rotten Tomatoes would have told you that it was a terrible movie. And he said, no, no, no, Mattel, who's the maker of Barbie, is going to make an absolute killing.

And lo and behold, he just um So, yeah, go go whip up cloud instance and say scour Reddit for all kinds of information. Uh But um Let's talk about the news. We've got a >> about the news. Yeah, so so there's this Tether Tether's coming in and backing Drift. Uh Tether came out with wallet, two Tether stories. We've got you know, Rob's big VC manifesto, which maybe we can save that until next week when when he's on. Uh Kraken, you know, definitely gearing up for an IPO. Uh they had a $200 million investment from Deutsche Börse. We We do have the Hyperliquid Colossus. Um This I don't [clears throat] think we talked about that last week cuz I think it came out earlier this week. We It's probably you're thinking of um we talked

about it on our episode with Logan, which comes out on Monday. Um but we, you know, I'd love to hear your takes on Hyperliquid, so we can start Maybe we can start there. I mean, this Colossus piece was uh um By the way, if you don't know Colossus, it's uh Patrick O'Shaughnessy, who runs a podcast called Invest Like the Best and also an asset management firm called Positive Sum. He launched a physical magazine. It also comes out in digital format, too, called Colossus. And they do these amazing profiles. I'd say they're the best profiles, you know, on tech and finance people in the world right now. And he did one They They did one on uh Jeff, the founder of Hyperliquid. Really really good story.

I'd recommend people read it. I'm curious what you thought of the article. I'm curious what you think of Hyperliquid. I'm curious what you think of Jeff. I'm curious what you think of traders running companies. Like, just give me your brain dump on Hyperliquid right now. I'm going to steal your thunder because you said something in during the Logan podcast, which is very true, which is I've never felt this amount of interest from outside non-crypto people in a really long time. And similar to how Polymarket really came to light and is what it is today because, you know, during the presidential election that was contested, you caught lightning in a bottle.

Jeff has now captured the imagination and the interest of Wall Street. And you had to have had unfortunately this geopolitical catalyst where people are very interested in trading commodities over the weekend. And Hyperliquid is capturing a lot of the interest and attention. And so finally, like I I think it's I don't Like, if you think about bringing blockchain on the Naz you know, Nasdaq on blockchain, I think if if for every Like, I'm very encouraged what's happening in Hyperliquid.

I don't think it stops if there's resolution in, you know, in Iran and the Strait of Hormuz and whatever happens there. I think the the train is shipped and I think you're going to see way more volume and activity. Um cuz right now I believe there's now more volume of non-crypto stuff than crypto stuff. Right? Is that true? I believe. There's more non Yeah, commodities are now the second biggest asset on Hyperliquid behind Bitcoin. Be- behind Bitcoin. Yeah, I think I think if I want to make a prediction and stay accountable, I think that flips later this year. You think commodities flip Bitcoin on the >> Commodities will flip later this year.

And Hyperliquid can become a top five crypto asset. Interesting. >> Sitting at 25 billion. I think there's a clean path for it to be 100 billion. And I'm looking at coin Robinhood sitting squarely in that camp. Coinbase couldn't squarely in that camp. I think Hyperliquid uh if they continue to execute, and I think they will, um they have the technical talent. They have won over the minds of crypto traders and now increasingly Wall Street traders. >> So, here's your data. Bitcoin makes up 25% of Hyperliquid open interest.

Commodities is 17%. Ethereum is 16%. Hype token, 10%. The indices, I think that's like levered S&P, is 7%. L1 tokens are 4%. And then, you know, it goes, you know, equities are 4%, Solana is three and a half, meme coins, privacy coins, DeFi. Hm. Yeah. I think I mean, I think it's one of the most interesting stories May- maybe actually the most interesting story in crypto today is uh the interest in oil uh oi- oi- uh oil markets on Hyperliquid was uh really I guess you could say Trade XYZ, which is I think who's the

fou- uh Shoku, right? Shoku's thing is Trade XYZ. Um there when you saw the Iran war or you know, the attack or whatever you want to call it, you had surging volume and open interest. And uh the pricing you you know, cuz oil markets are closed over the weekends, right? So, you have this you now had weekend oil pricing. Um and it crossed the chasm into the mainstream. So, if you look at the daily volume and the daily open interest, it just skyrocketed with the Iran war. And we built this website called uh weekend markets.

I don't know if you saw it, but I can pull it up here. It's um It's uh it ba- it basically shows all of the Here, I can show you this. It's very very cool. So, when traditional markets close, Trade XYZ is the only live venue for price discovery. So, Trade XYZ Trade XYZ for people who don't who don't know is um when Hyperliquid launched the ability for other crypto people to create perps markets, right? That was HIP 3 or HIP 4, whatever it was. Uh Trade XYZ is the only venue for price discovery on the weekends. They have billions in weekend volume and a 50 bips median error predicting the Monday open. So, now now Trade XYZ prices are the most informative signal in finance relative

to the like scale Friday close. So, yeah, we built this whole uh website called Weekend Markets. Where you can actually see These are These are all the equities and commodities that trade. You can see a bunch of yeah, charts and, you know, map of everything, analytics. You can look at yeah, methodology. So, it's pretty um very very interesting. We There's probably more traditional capital allocators interested in these Hyperliquid weekend markets than anything else in crypto today, I'd say. Yeah. Yeah, it's interesting. I oil um is doing like 500 million volume, 350 million open interest.

That um Yeah, I'll have to check that dashboard up. But the S&P 5 Like, what are um I know I know a lot of folks ping you like, especially non-crypto folks ping you. So, you're actually like a really good first entry for a lot of like you know, these folks. Are they are they interested squarely in in commodities or are they also interested in S&P um you know, I think people are most interested in Hyperliquid, actually. So, I would I would say this is the most interested I've seen traditional, specifically hedge fund managers, in crypto since Paul Tudor Jones called Bitcoin the fastest horse in the race.

And that was May 2020. So, it's been 60 years since then. This is the most interested I've seen these hedge fund managers in crypto and it's in it's in Hyperliquid. And these weekend markets are a big reason for that. I got a call from a hedge fund manager this week who asked me to explain Hyperliquid to him. He said he found it. He said he spends most of his time on Twitter. This is, you know, massive massive fund. Spends most of his time on Twitter. Most of his team spends most of their time on Twitter. They get most of their trade ideas from Twitter now, which just goes to show the importance of Twitter. Mhm. The Twitter, he said one of the best traders he knows posted something on Twitter, posted about Hyperliquid. He had never heard of Hyperliquid until a couple months ago. He went down the

Hyperliquid rabbit hole, listened to podcasts that Jeff has been on. And um he they can't buy hype in the fund, right? So they found uh the Hyperliquid DAT actually you know, this was kind of the bull case for DATs, right? So he can't actually buy hype. So he bought the Hyperliquid DAT. And um yeah, it's one of their biggest positions. He's like, "Look, it's it's it's one of the few uncorrelated things I can buy right now is buying Hyperliquid's, you know, it's uncorrelated to all these AI trades that we have going on." Yeah. So I just prompted the AI. I said, "Explain Hyperliquid to TradFi." So for all our dear listeners, it says what it actually is is imagine if the CME took its matching engine, order book, clearinghouse, and margin system and

rebuilt the entire stack on a single integrated system where every trade, liquidation, and funding payment is written on an immutable public ledger. That's Hyperliquid. Mhm. Um Is there a possibility here where >> you could see a massive re-rating too of Hyperliquid if they get approved in the US, which is I'm I'm like way out of my depth talking about this because, you know, I'm not a lawyer, I'm not a regulator, or anything like that, but you know, they did hire Jake Chervinsky to run the Hyperliquid Policy Institute or whatever. I forget the actual name of it. I think it's Hyperliquid Policy Institute. Imagine you know, what like after uh after 2008, right? I think futures now have to trade Again, I'm talking out of my depth here, but like my understanding

is futures have to go through these regulated entities like the CME or you know, Cboe or whatever it is. Um And the reason for that is transparency. And I think this was I think it was Dodd-Frank that you know, made this happen. And the reason for this is yeah, transparency. You have to see all the trades, make sure nothing blows up. If you're Hyperliquid or you're Jake, I'm sure your argument to someone like the CFTC is "Hey, like you enforced that you you made this rule happen because you want all the trades to be public and you wanted it all to be you want to make sure nothing blows up. Well, we've got this system called DeFi.

Noth- you know, things blow up, but they don't there's no like you can see everything, right? And so it's fully transparent. And uh yeah, the you know, liquidations work pretty well. And Hyperliquid got tested on 10/10 and it, you know, for the most part work worked pretty well. So I would say that it should be their argument if they're not already arguing it. And I'm at I mean, imagine Hyperliquid gets approved in the US. Like boom, instant re-rating. Yeah. The CME is a 117 billion market cap. So the market always likes to understand comps.

Yeah. I think I think there's a possibility like Yeah if we'll have to we we had people to go listen to that episode that we recorded with um with Jake. But what probability would you ascribe to that happening of it, you know, being offered in the US? I'd give it like a 30 or 40% 30% chance. When you go talk to hedge fund guys, what is the bear like have you heard anything negative around Hyperliquid?

>> for Hyperliquid? Yeah, they're like, "Yeah, this this this this is never going to work like uh >> They're just learning about it. They're just learning about Hyperliquid. I don't think they even have necessarily a bull or bear case. I I think uh many of them are just finding out about it now. Yeah. Yeah. So >> But look, I mean, I think um let's not forget Solana at its peak was a $100 million protocol, maybe more. Um with a lot of meme coin activity. So like in the podcast with Logan, we talked about volume and I think that peaked in January 2025 or 2024. 24 no?

Um and you had at one point there was like in January of 2024 or 2025, you had 500 million at um REV for Solana, mostly coming from from meme coin trading. Now let me ask you a question. What how would you give the same multiple to protocol earnings coming from meme coin activity or commodities trading from TradFi? Yeah, commodity trading. Exactly. >> Okay. That's why I think you see a path where Hyperliquid could be much larger than that. Yeah. So Look at this. So this is the top protocols mentioned at DAS.

Right? So we scraped all of the panels, firesides, keynotes, everything to find the what was mentioned the most. So Bitcoin and Ethereum obviously massive outliers here. So Bitcoin was mentioned 742 times. Ethereum was mentioned 143 times. Hyperliquid is number three at 66, then Morpho at 59, then Solana, and then Canton. And then surprisingly Espresso. Uh then Circle. You know, I got a lot of love for Espresso, but didn't expect them to be number seven here. Um then Circle, Stellar Avalanche Jupiter Tether Maple, Optimism, Superstate, and the list goes on.

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What are the news you're looking at this week? There was uh just a quick uh Tether invested in Drift uh in this mechanism to make whole uh the protocol losses. And similar to was it the Bitfinex token, right? That basically uh the affected parties will be paid out um as soon as the protocol starts making [clears throat] more fees. And so um I thought that was good to see. You know, it's always good to see when people, you know, uh that have suff- you know, suffered losses to eventually see a path towards um you know, making them whole. Right. That was 200 285 million in losses. I think there's a this structured recovery plan is

uh up to nearly 150 million in combined support, 127 million of which is Tether. Right? I think it looks like instead of a full recovery refu- you know, recovery or refund, this is closer to a a plan where users I was trying to figure out users recover their hacked amounts by trading on Drift. Mhm. >> Did you see this? Yeah, yeah. Yeah. So it incentivized people to use and I think they have to use USDT basically. So it's a good it's a win-win for them. >> Uh uh Which which actually makes sense.

Yeah. There was a lot of commentary in the timeline about like USDC. I think this hap- I believe this happened during the time where like people reached out to USDC to freeze the funds and they didn't act as quickly. Um Um I think obviously Tether also has the ability to freeze funds um and there was some commentary around there of it being actually a pretty interesting deal for a big win for Tether, a loss for Circle um and uh USDC. So that that's that. I don't know if there's any more commentary on that.

>> you think of this style of a recovery plan? Like any any other thoughts on on it? No, I mean, it's it's it's a good mechanism, right? I mean, it's it's it incentivizes people to use the protocol. So it's it's a good way to structure these things. Um it's quite clever, actually. Um and actually they're kind of the only way to do it, in my opinion. Um un- unless you have a massive dilutive event at the and I I I don't know if there's probably some of that at the kind of that underlying like Drift So that was that that caught my eye.

Um [clears throat] What else? Wasn't there a new SEC guidance coming out that uh So SEC came out this week and said certain self-custodial DeFi interfaces fall outside of broker-dealer rules. So there was a big I think, you know, one of the main attacks by against by Gary G by Gensler and his, you know, regime of terror was uh do we I think they're going to try to make these DeFi protocols register as broker-dealers. You know, you got to you know, you know, got to get a license and all that kind of stuff. Obviously very against the, you know, permissionless nature of these things and in a in a way not even really possible.

So on Tuesday, they the Division of Trading and Markets came out, issued a staff statement that exempted crypto wallet interfaces from broker-dealer registrations. So the SEC is telling MetaMask and Phantom and I think basically every DeFi front end, you are not a broker. And that is yeah, that's really important. You know, for years like the biggest one of the biggest legal questions and I think some people say the biggest legal question DeFi was does building a front end make you a broker? And you know, for for many of them like if it if it was yes, right? Every browser extension that you use, every DEX interface, Uniswap, MetaMask, everything, they would need like Series 7 license, compliance

department, SEC oversight, um and yeah, this broker-dealer license and yeah, now now you don't need that. They created a new category called what is it called? Covered user interface. And this includes if you help users convert transaction parameters into blockchain commands, you qualify. There's a exception here, which is that custodial wallets are excluded. So, it includes, right, self-custodial wallets, Phantom MetaMask right browser extensions, mobile apps, and soft and then the software embedded in the soft self-custodial wallets. So, very Yeah, pretty big update.

I'm surprised some of these things didn't re- some of the DeFi tokens didn't re-rate, did they? Uh no, no. The the thing that did re-rate is because of regulation was Robinhood, but it was unrelated to that. They just lowered the 25K minimum equity requirement for like day traders. So, obviously You Robinhood's I mean, a lot of things you know, things are up, right? Aave's up 20% on the week. Uh Bitcoin you know, Bitcoin hit 75K. I think that is because there's a higher likelihood though that um that that clarity comes out. So, You think? That's That's my take on why things have re-rated. So, I think if you went into you know, this round up last week, it was 50/50, dead split, right? Would Would clarity pass? 50/50. Everyone you

know, I was in DC last week. Everyone was saying 50/50, 50/50. Um I'd say now it's moved to like probably 60/40 or 65/35. The other big update is you had a couple you know, well-known crypto people on CNBC kind of you know, saying that if this if clarity didn't pass by April 1st, it was completely dead. I don't know why they were saying that, but that kind of got incepted into the minds of people. And now, from my understanding, is that if this thing if clarity doesn't pass by you [clears throat] know, what's you know, we're already past April 1st. If it doesn't pass even by May 1st, like we've got time. Like we've got until you know, maybe maybe it's August, maybe it's even 2027. Obviously, the longer the bill doesn't get passed, the more crappy stuff could get put into it. Um

you know, someone said you know, if this doesn't get passed until mid-2027, this becomes the DEFI bill, right? So, it's like the you know, the longer you wait, the more stuff gets pushed into it. But um yeah, this I think I would guess that's why things are actually re-rating. I mean, this is also goes back to I tend to think that crypto's performing well cuz macro's performing well and the stock market's performing well and it's very correlated. As it relates to Bitcoin, obviously, MicroStrategy did a massive purchase funded by um you know, the proceeds from stretch, STRC. This is like perpetual preferred stock via an ATM offering.

So, that was pretty big. I think they bought 13 close to 14,000 Bitcoin. Um So, that's you know, obviously continues to Uh so, I think it's one of the largest purchases that they've done. Um So, their total holdings, crazy, 780,000 uh Bitcoin and they've spent close to 60 billion. Their average cost basis is 75,000. So, that's pretty interesting. I think this is something that we the market's going to continue to pay attention to.

Like other than the premium or the discount, now it's the this like uh STRC perpetual preferred stock. Yeah. >> There's an interesting protocol called Saturn that is hit TVL's also gone up quite a lot. It's basically a wrapper on this thing. I think it's paying out like 11 and a half yield. Uh so, bringing that STRC on chain. Uh and and so, that's another I met those guys at like a Wharton conference and they were like tell me all about this stuff. Um We should bring him on. We should bring Mike We should bring Saylor on the pod. So, I was at I actually was at MicroStrategy's office in uh Tysons Corner, Virginia uh last on Thursday. And the whole the whole

meeting was about stretch. They're going to do some really interesting things with stretch at STRC. Um and uh yeah, I mean I mean, it's uh 11 The a lot of discussion This is something that I think there's you'll find all kinds of takes on the timeline, but the facts are stretch is paying 11 and a half percent um annual dividend. Yeah. That's a meaningful meaningful increase. Um and pretty juicy yield. At the time, we've been discussing a lot of the DEFI yield, right? When you put that into perspective of how low yields are on chain. Uh I'm not going to comment on the risk. I will save that for a later conversation. The Saturn guys were giving me some good insights on it, but I do think that it's worth bringing

a panel in here or MicroStrategy to talk about like, hey, what is this 11 and a half? Like, where's the yield coming from? Yeah, yeah. >> serious is it? >> Have you dug into stretch? Like, I'd love to get your take on the 11 and a half percent. >> I'll I'll save it for a more informed view. I do have preliminary thoughts. Most of it is just borrowed thoughts from this Saturn guys that you know, gave me their own. Uh but I need to get smarter on it, to be honest. Yeah. Cool. >> Yeah. What else we have for the week? >> [snorts] >> So, we talked about Kraken. They raised 200 million from the Deutsche Börse. I don't know if they go public this year.

You don't think so? In everything that I've talked to folks that have been like done the SPV and all this stuff, I think I don't know. Well, here's the thing. I think it all depends on how how SpaceX, maybe Stripe if it IPOs, but I think the SpaceX IPO will either be a huge detonator good or bad for the market. And that is to me, that is going to be the line in as you like to say, the line in the sand this year of how that IPO performs is going to dictate a lot of what else happens after that. So, I I'm not I

wouldn't be surprised if people are lining up saying, look, let's just prepare because if SpaceX has this massive bid and wealth generation effect we're going to like the gates will be open, right? And so, uh after SpaceX, I think you'll see a back-to-back of like just IPOs. Yeah. What do you think of Kraken's valuation coming down from 20 billion in late 2025 down to I don't know if you saw this down to 13 billion? I did not see that. But did that Was that the valuation of Deutsche? Did Deutsche invest in? I think so.

I'm guessing it's it's has something to do with them buying secondary. Um I saw I saw one They There was one line about it being secondary. So, I'm guessing it's a 35% discount because or 35% off that 20 billion dollar mark because they're buying they're buying common instead of preferred, I would guess. But I'm not entirely sure. Yeah, you're right. It was 13.3 billion. They bought a 1 and a half percent stake in it. Price structure, but >> [clears throat] >> I mean, uh speaking of Kraken, they had like a somewhat of a security incident and they just not related to user funds, just someone in their support group, I think, a party, but uh as a footnote.

But this to say, Kraken is a very well-run machine. Like, they are This this can grow into Coinbase type of outcome. Yeah, Arjan's doing a fantastic job, for what it's worth. So, I I'm encouraged by that. Actually, I might look into secondary. >> [laughter] >> Uh last time I looked at their numbers when I I I got an offer in their SPV. And one of the managers was doing it and I What I wanted When I evaluate Friends of someone I invest from Backpack. So, Backpack is also kind of much smaller scale, but very interesting. Armani, again, very very good builder.

What you want to look at an exchange model is how does how much what percentage of their cost structure is fixed and what is variable? Because inherently, they're tied to crypto asset prices. So, when prices are up, obviously, they're very profitable, but >> [clears throat] >> so, I did an analysis back in the day of like Coinbase, Robinhood, and then Kraken. And of the three, Robinhood was best positioned because they have more diversified like trading volume that is ex-crypto, but also they they actually were able to cut costs quite a bit. Um Robinhood number one, then Coinbase and then um um Kraken. So, to me, that was a bit And I I I appreciate like this was pre-

Where is it? Arjan's time. And so, there's been a lot of reshuffling and and like brought they brought on more competent operators. So, maybe that's like me middle curving it. But I want to see in any business like a lot of operating leverage and not as much fixed costs or the ability to at least flex up or down, right? Cuz what you don't want is like margins just getting crushed when you have a drawdown. And that is I I underwrite a business through cycle, right? And so, that's something that kept me on the fence, but I have heard from a bunch of folks of And And he And recent like how they built the DEFI team, for instance, and others like they they're really on top of the game, to be honest. Yeah.

What is going on with X stocks there? Anything I mean, we talked about hyperliquid and like you know, these perps on the S&P, but uh there there I've been seeing some commentary on the timeline around like uh pre-IPO. Yeah, yeah. Like Anthropic and a couple others. Um I think reasonably low volume, to be honest. I haven't seen anything as as dramatic as oil, of course, but Yeah, we've got it We've got some data on this. Actually, let me pull this up. >> [clears throat] >> So, you can see actually These are These are the pre-stocks data.

It's still small, right? 17 million. Yeah. Yeah. So, what I I I talked to the X stocks team actually at Kraken the other day. And uh they're I think a lot of the exchanges including Kraken are that equities will have a equity on-chain equities will have a massive year. Massive, massive year. So, I think that's the bet of not only Kraken but other people. Um X, so do you see Nikita's post at uh So, here, let me share this. So, uh Nikita, who's the head of product at at Twitter or at X, came out X has always been the best source of financial news for traders and investors. Billions of dollars are allocated every day based on what people read on the timeline. Today,

we're launching our new cashtags feature in the US and Canada on iPhone, bringing real-time financial data to X. When you search for it, so here's how it works. So, when you search for a search for or post a cashtag or contract [clears throat] address, X will automatically suggest matching stocks or crypto tokens. Anyone who taps a cashtag will see a post mentioning it along with its price chart, so you never actually leave X. So, yeah, this is X direct I mean, this is trying to complete Elon's vision, right? This is uh this is them trying to let you build, you know, the all-in-one financial platform. Mhm.

>> [clears throat] >> Um What's going on? Anything interesting going on in the Ethereum ecosystem as of late? It's been sort of crickets. Other than Tom Lee, like, you know, claiming that Ethereum's going to go to 62,000. >> know. I don't know. I mean, yes, but I'm not deep enough in to talk about it. Like, there was actually from you know, I talked to some founders who were at ECC and like, low vibes, but actually some cool stuff happening. I just, yeah. I I don't know.

What what what has been going on on the is Ether.fi migrated from Scroll to Optimism mainnet. Uh they migrated over 70,000 cards and I think >> Look, I know I know you're an investor in Scroll, so I don't know how much you're able to talk about this, but it seemed like Scroll did something like may- maybe kind of shady, which is they Yeah, you know, yanked up the uh the fees when Ether.fi was trying to migrate from, you know, Scroll to Optimism. So, they yanked manually yanked up the fees, which would, you know, cause Ether.fi way, way, way more money than it should to to migrate off. The uh found- one of the founders of Ether.fi tweeted out, said, you know, "This situation's even crazier than anyone would ever believe." or something like

that. So, Yeah. Yeah, what do you I don't know if you have thoughts on that. Yeah, uh well, to put it in context, s- um Ether.fi is like caring about Scroll in terms of TVL. Uh I think they had like, without if you strip away Ether.fi, there's practically very little TVL. Um I don't have insight into what's going on. What I do, putting the [clears throat] what is uh happening on chain is over the like 6 days in early April, that the network raised its amount the amount of charges to publish data on Ethereum mainnet by a factor of 1,000. Like, two orders of magnitude, right? Um and

that forced users to pay over 50,000 in excess transaction fees. So, that was obviously what um yeah, it's the timing again, the timing was suspicious. That it so happened to be the exact same time where Ether.fi was migrating over. Um So yeah obviously the on-chain uh data is there and so it's definitely pretty damning. Um Yeah just What puts in a question What went wrong with Scroll, Santo?

I don't know, man. To be honest, when So, Scroll was one of the I was an early investor. Um They had this is a time of like ZK roll like ZK rollups in the zero-knowledge proof like roadmap, which is I think it's very, you know, it's is real, has a lot of merit and they have uh one of the co-founders is just a deep cryptographer and they came with like to me, I was interesting enough to put a position. Um And then, yeah.

Not just Scroll, but other networks have just faded into no man's land. Uh ZK like Tell me an L2 that has performed well. This goes back to the post of Vitalik earlier this year, I believe, which talked about the roadmap for L2s and or lack thereof and putting into question the the the the need and the role for L2s and I think um it's an admission that I think the market are already woken up to, right?

If you look at the performance of Optimism, you look at the performance of um Arbitrum, you look at the performance of ZK Sync and many of the other networks, it's I think Scroll probably is the most um like if I if you look at just the price, um I'm just going to pull up here. Scroll for context has a 8 million market cap. >> [clears throat] >> Fully diluted, 45 million. Um That is 45 million is below the first round.

To put it in perspective how kind of dire That's crazy. >> Yeah. So, does it come back up? What does it need? Like, where's the volume going to come from? I mean, it ties into a lot a lot of the conversations I've had with in call it infrastructure providers, some better than others, is you're at a point where it's like [clears throat] a melting ice cube. Whether you want to see it or not, it's a melting ice cube. Because man, in 2017, there was no users and no traction.

So, you could sell the dream. And you like that's that's not a that's not a damning comment. It's like you you have to any founder, whether you're Elon Musk or Scroll or anyone else, you have to sell the dream, right? And then you have to back it up. Crypto for so much time was in suspended kind of this this era of white papers and trying a lot of things and the market had a lot of patience for that. Today, that is basically nonexistent when you have things that I think I went back like 2 years ago or a year ago, I said, "Look, there's going to be a growing divide of the haves and the have-nots in crypto."

Today, that is very wide when you compare the activity that is happening in Hyperliquid and pretty much everything else in crypto. Um There are some novel attempts. I think this neo bank category is pretty trending. Like, you have Plasma, you have Ether.fi, right? You have good attempts. Like, Aave has its own neo bank attempt. Like, three theses that I have as an investor that I translate into my personal portfolio and inversion, which is the demand for stablecoins outside the US is and will continue to be dramatic and it's unmet, right?

Um the world is only going to become more volatile and there's a big affordability crisis. Those three pillars have on-chain implications. Position yourself accordingly. Yeah. But, it's very tough. Even like Solana's come out of it's like the the volume of the REV of Solana again, in the in the Frictionless podcast, we talked about this, but it's down from 500 million at its peak to 20 million. So, what is going to be the catalyst of uh that brings Solana? There There's good stuff happening under the hood, don't get me wrong. Like, Western Union's supplying their pilot there. Uh they have a very competent set of engineers and teams that are genuinely

trying to figure out. Um But it's in my conversations with a lot of these teams, it's like you have to go for the jugular. Like, you have to really either use your capital or go out of your way to cement yourself as as an enduring protocol. And the second last piece I'll say is I think now you're going to uh see protocols go to zero. Like, genuinely go to zero. Not kind of float around to see, "Hey, hold it all hold on to the dust because dust becomes moon."

I don't think that dynamic is going to be as prevalent as it was in prior cycles where you're holding a bag of like Lend, for instance, migrated to Aave. Uh I I think the the market would rather just say, "Look, we're going to rally behind Hyperliquid and we're going to rally behind Bitcoin and we're going to rally behind I don't know. Other than Hyperliquid and Bitcoin, what is like, in your mind, like, is there anything that when you go talk to your normie friends, they'd be like remotely excited about or have heard of?

Well, Hyperliquid, what did you say? What's the other one? Bitcoin. Yeah, I mean, stablecoins and prediction markets are the hot things. But, both prediction markets don't have a token, right? Yeah, yeah. Yeah. >> [clears throat] >> I saw, I don't know if this is true or not, But, things lag, dude. Things lag to the normie market. Like, we've been saying for a while, what what are the What were the three hot things last year? Perps, prediction markets, stablecoins. If you were doing one of those, you got funding, a lot of users, a lot of money. If you weren't doing one of those three things you three things, you got crushed. And now it flows into the normie market.

There'll be three new things this year. I don't know what they are, but there probably will be. Will there? I don't know. Equities on like, tokenization, equities on chain, like, there like, tokenization actually, you know, it feels funny to say cuz tokenization feels like such a that's been around for so long, but it's a and like has, you know, but yeah, I think tokenization is probably one of the three big things this year. I met with um the other day I met with Daniel from Tokeny. He kind of he pioneered the ERC-3643, which is becoming more mainstream now for like RWAs.

Um definitely RWAs. That that's something that I should say. Like if I if I wanted to talk more about one particular topic in this podcast is what traditional issuers are doing and will be doing on chain. And where where will that happen? In their own I think it I think it will happen in public uh permissionless networks. Yeah. Hm. Wasn't there something I I I >> [clears throat] >> I saw Jamie Dimon come out saying something more about I love like this arc of Jamie Dimon like going like from totally against crypto to now being way more um he talked about Airbor.

Uh Airbor is doing some interesting things. Um Um but yeah, he's been way more in the camp of let's you know blockchain I guess Jamie Dimon has gone from he's closer to Larry Fink than he's ever been. And that gap continues to close um every incremental month that goes by. And he's actually on the Clarity Act, he's been very vocal against I think at one point he like really went after uh Brian Armstrong and uh but yeah, I think I think TradFi is trying to buy a little bit more time before this thing passes as they figure out their internal strategy, make sure that their points really get reflected in the bill. Yeah.

Going back to your earlier point, I think it will get passed. Um All right, we're going to wrap with some YouTube comments cuz I haven't read these for a while and I and uh I just pulled up our YouTube >> As you do that, here's an interesting tidbit. He told um I don't know if you know this, but he Jamie Dimon was out in the air told CBS that uh they're they're considering prediction market services. What does that even What does that even mean? Prediction market services. They're like, let me get my rake. Let me get my So I I had a post about this like on something. What is that What is that >> Yeah, but you know, every everyone's going to want to build a prediction market. For me prediction markets are like, you know, another form of a derivative, right? And or insurance

product like a CDS basically. So lines are increasingly blurred there. Yeah. What's a YouTube comment? Hit me with YouTube comment? You want the You want the good ones or the bad ones? Always bad ones first. All right. I love Santi. Who Santi, who famously completely missed hyperliquid despite being full-time in the space at the same time, sent inversion to zero before launch. Hm, I like Santi, but it sounds like he doesn't use DeFi at all. He hasn't farmed for years. How can you be qualified to talk about any of this stuff?

How are you qualified, dude? How are you Not qualified. Thank you. >> qualified? I By the way, I've never said I'm qualified. >> [laughter] >> I just Santi is many things, but definitely not a contrarian. He is skilled at telling us what has already happened, not what will. Damn, you're getting roasted. Thank you, man. Oh, here you go. Just want to you guys to know Empire is my favorite crypto podcast. I live in Bangkok, so I couldn't be a DAS. Fair. Fair excuse. >> So are all Let me get this straight. All the negative comments are about me. There's no negative comments about you because you haven't been on the show for a while. There's a lot of talk about how And Rob has his entire DragonFly team censoring comments. my good takes, my good looks.

>> [laughter] >> I love it, man. Uh any content of the week? I think I mentioned this, but I've been just obsessed about Oh, well, the uh Leopold Asch enberg podcast. Uh that's pretty good. It's 4 hours. Still kind of like 2 and 1/2 hours deep. And then um I Yeah, I know that that that one I there's there's another podcast that I want to listen to about the this VP of Amazon. By the way, it's a Leopold Asch enbrenner. So anyone's going to wrote me at roast me on the timeline for being wrong on that, please. There's another podcast about this Amazon VP um on Ethan

Evans, I believe. Um on So yeah, I want to listen to that. Apparently he's very good. A couple people recommended him. All right, I'm saving it. >> Um I've been just you know, the same old. I'm I'm going back and listening to So David Senra's got all you know, the Founders podcast, but I haven't listened to that in a while. I'm listening to his like founder interview one. So I just I listened to obviously Tony Xu. I've been talking about that DoorDash one, but I just listened to Evan Spiegel. Um She's decent I'd say decent. There's a you know, some people are just such good story Some people got the it.

Storytelling. Some people kind of got the it and some people don't. And uh Tony Xu from DoorDash, he's got the it. He's got the it. Evan's Evan's like kind of got the it. You know who has the it this week? Me. Other than you. You always have it. >> [laughter] >> Allbirds has the it this week. Allbirds has the it. Long Island Iced Tea. And most wild wild corporate pivot that I've seen Allbirds sold their company >> a thing it was like Allbirds just dropped their AI finally. It's like a chat GPT wrapper. You go to allbirds.ai.

You type in any question and it just goes shoes shoes shoes shoes shoes shoes shoes shoes. >> [laughter] >> Forget about it. The stock is up 10x or was up 10x yesterday on the news. We can all definitely agree that we are closer to the top than we are to the bottom when these things happen. All right, content of the week. I'm watching Seinfeld for the first time. This is just uh in the in the 20 minutes of spare time you have to fall asleep. My brain I'm like >> [clears throat] >> Yeah, like you know, you know, we're working on a few things right now that aren't public yet and she's sprinting and I've got like 20 minutes at the end of the day where I

just need to turn turn the old brain off and I usually don't even make it through a full Seinfeld app, but yeah, that's It's a good I think I think So this is how culturally disconnected I am. I think I I think I've seen like one or two episodes of Seinfeld. I've never I've never seen I'm a I've never seen it. Yeah. I had never I didn't watch I didn't watch TV until I uh TV in your room? No. No. No, I don't I don't sleep with my phone in my room. Yeah, no no. I that's honestly the big biggest thing. >> have a I don't have a TV in my room. Which I should. I Not be Not because of pride or like I should have a TV. I'd love to have a TV.

Bear market Bear markets uh donation address here below uh accept in USDC, USDT, uh wif. No, it was actually a colossal botch. When we bought this place like, you know, we the guy the guy we bought it from had a huge TV in the corner and we it was hanging up, beautiful setup and I was like, I don't want a TV in the bedroom. Botch. Should have just kept it. So okay, parting thoughts. I want to We're going to talk about how to make Empire great again. Um we will uh continue to level up. I want to focus on more public companies doing interesting things in with crypto. Um that includes Better, that includes Figure, that includes Klarna, obviously Western Union, more of that. I think I

want to focus because other than hyperliquid, this might be probably the biggest um detonator for the next cycle. If if a lot of these traditional companies start implementing. And there's a lot of talk about I've been just following the kind of go going down the rabbit hole of what uh with chatting with the Framework guys about positioning Better, looking at Figure. It's kind of interesting stuff happening. Yeah, yeah. We we had to call it the Figure guys a couple days ago. It's interesting. All right, well let's leave it at that, man. Uh thanks everyone for listening.

Continue to roast us or me on the on the comments and on the Telegram group. Um and we'll see you next Cool. Cheers, everyone. Have a good weekend.