Mike Dudas: The State of Digital Asset Investing in 2026 (What’s Changed)

Transcript

A friend of the show, Mike, how are you, man? Welcome to the show. I'm doing great and thanks for having me. >> Beautiful day in the city. It sure is and this view, I'm sure every guest tells you is ridiculous. >> see all of your previous places, all of your current places, everything. Yep. Old old neighborhood, current office and yeah, it's beautiful. >> How about the Knicks, huh? With the with the just heartbreaking loss in game Is that game two? Yeah. A little salty, but you know, we got a game tonight and I'm in the city, so find somewhere to watch it with some fans. Good, man. Well, this is kind of like our annual state of state of venture side of things. I think we did this last down in in Soho last year. It was a different state of things, different market

for sure. Um we had a Tom Dunleavy on from Vara's Capital. He he kind of wrote this viral kind of long-form piece about just like the state of founders and the state of of venture in crypto and I think you'd kind of been talking about this quite a bit last year as well already and his his general framework here was like, um you know, the amount of VC dollars in the space is is dwindling. There's less raises happening. There's less quality teams. It's just a different world. But I kind of thought of this as like, well, if you if you have capital and you can sniff out the good founders, there's a lot less competition. There's there's a lot of kind of newer founders coming into to the space with, you know, probably a better

pedigree than the than previous cohort and we we ended up agreeing that this 2025, 2026 vintage was probably going to be one of the, you know, more successful ones. Do you agree with that? Kind of how do you think about this current lay of the land with this current outlook for these founders? Yeah, so I'm a venture capitalist. I'm deploying in 2026, so I'm going to tell you this is going to be the best vintage ever. LPs, listen up. So, but a couple of things. So, one, there is plenty of capital in the crypto markets.

You know, in venture crypto markets. The there are a number of mega funds that have been raised. You've seen the announcements. There have been a number of early stage funds including ours that have been raised that folks aren't announcing, but there is a tremendous amount of capital that's resting and ready to be deployed. Uh Uh so, that's not an issue. It's um the other point you raised is, "Hey, you know, we've been talking about are there great founders?" Well, the answer is yes. Um are there great ideas? Clearly there are because you see a number of, you know, breakout protocols, many of them most of them founded, you know, many years ago, some of them in other bear markets, but there are ideas, there are

founders and there's capital. So, this absolutely is not a time to be sort of depressed about being in crypto based on those things. Yeah. Um what's happening is there's just explosions sort of happening and I don't want to laugh about it cuz they're serious, but you know, there's hacks, there's, you know, founders you know, being accused of things, being arrested. There's all of these there's, you know, the Trump family and all of the things associated with them that are looking increasingly sketchy. Um so, there's just a number of really the the regulatory environment in DC where we're really eager to pass laws.

We we thought they'd be passed by now or very close to and they're not. Um so, there's just a number of sort of crypto crypto macro things happening at the same time that the fundamentals are improving dramatically. So, there's not a lack of capital, not a lack of founders, not a lack of ideas and not a lack of usage, but it feels like every week there's like something that you didn't expect that just comes in and the next hack, the next bad regulatory thing, the next person who gets arrested.

>> Yeah. And and so, are you seeing less competition then on on the deal side? So, I would say yes. It's one of those things, right? The the consensus deals are because of what I just said >> Yeah. are hotter than ever, prices are getting pushed up. You know, I would say irrational. There's always one buyer. When we look in five years, it some of them will have looked rational and they'll be geniuses. It's so, it's a tough market in that I would say uh founders don't have There are good founders, but they don't have confidence to take great risk right now. The world

outside of crypto and inside crypto, there's just so much change happening so fast that I do believe and we're seeing it empirically that um we're seeing great We we assess talent and we're seeing great talent gravitate towards not great ideas or towards consensus ideas at a rate that we haven't seen in the past. So, that's what I would say and I think that's why you're seeing this lack of deployment. It's because venture capitalists have this like slightly higher view of the market where they can see a lot of things and they're just getting the same pitch over and over and over again, so it's hard to discern who's great and who's not. We're not seeing wild crazy people and we're not seeing right now many marginal

things that would excite people to to take a risk, founders to take a risk. The classic thing would be there's not a marginal retail buyer, for example. There hasn't been I haven't seen a breakout consumer app that inspire people. So, I think there's just a little bit of a lack of inspiration right now, but you know, so so basically that's I think what the market sees and that's what's reported on. Underlying that though, there's as I said, you know, stablecoin issuance continues to increase. There's incredible usage like globally, but it's just not stuff that's reported on and money is moving into those companies,

venture money. Yep. Business money, etc., etc. And it's not the things that are necessarily reported on like a canton. It's a lot of these other startups are actually building on public blockchains. >> Yeah. Yeah, I mean, I think that there's there's a strong shift in the flows towards a lot of the companies that are operating more like in in between this convergence of the on-chain finance world and the traditional finance world. You know, we call this kind of like this convergence. You've got a lot of the tokenization companies getting a lot of the bid. You've got stablecoin companies. You get interesting on-chain credit opportunities. There's obviously a abundance of neo banks, it seems like now.

You know, I'm I'm curious in this vertical kind of shifting from like, "Okay, where is the broader market at?" to more kind of vertical specific here. What is Where do you see the opportunity with investing in on the edge of these two worlds kind of coming together? Like is there clear margins that can be undercut? Is there clear time or or settlement opportunities that can be shortened? Like where is the investing at the margin for the convergence happening and like what kind of deals or what kind of ideas, you know, have you been seeing there? Yeah, so all the way across the spectrum, the things that we're looking at are what is new and very inventive. And by

the way, that's like in the DNA of our firm. Like we prefer things that are on-chain even though like my background, like I worked at Venmo, Braintree, PayPal. We're looking for things that are native. We think because what happens is, you know, Venmo when it came out, blew people's mind. There's like you could text people money. There's an app from like that was alien. So, typically Polymarket when it was first introduced in Asia, it was an alien. It took six years for it to become now it's like mainstream and consensus. Um so, we're looking for I guess what I would say is are alien ideas in markets that you're talking about because we believe that then a couple years out those will become much more mainstream.

Um the challenge is so RWAs like as an example. Like looking at traditional assets, uh what you're seeing is a lot of them that the alien things like there's the the way to get to them and to introduce them is still you know, by regulatory arbitrage. So, I'm going to list oil on hyperliquid. It's going to become the most liquid market because everybody in the world can play. Like market makers don't have to be, you know, regulated. Like they don't have to worry about the CFTC and others.

Um that's that's what's happening. That's where you're seeing like growth and maturity. And so, at the venture stage because you know, the the stable act passed, the genius act, like things are, you know, like things are sort of confusing. I I would say that we're in a bit of a paralysis for a lot of emergent entrepreneurs in terms of like how regulated do I go right now because in past cycles, firms have been penalized by taking a regulated approach too early when their competitors were like, "Yeah, we're just going to yolo." Example would be just like issuing private stocks. There's a bunch of these firms offering like Anthropic

shares tokenized. Like some of them have like somewhat more robust structures with some protections. Others are just yoloing and it feels like the yoloing ones are like growing faster right now. I don't know and or believe that that's sustainable. So, I think, you know, when you talk about this convergence, it's a very confusing time. We would probably default again towards So, and also the model breaks down. This alien model breaks down when you start to talk about traditional asset classes, right? So, things like equities, you know, and things like structured private credit, where you want big names. So, it's a

I don't like at the very early stage, you just haven't seen a lot of capital move into, for example, RWA issuance tokenization, etc. companies. >> Yeah. You guys had a pretty strong focus on and you're still doing this kind of consumer on-chain environment. A ton of deals that you've done have been in that category. Obviously, Pump has been like the kind of big one for the market that, you know, you've grown a name from. I'm curious, I saw one of your tweets about them just absolutely absorbing that supply and the market not really responding to it. And the pushback that we get when people present that thesis is that the idea that is currently somewhat consensus, I think, is that the

token launch market is not going to grow in the same way that perps will grow, so that the buybacks for something like Pump or the economic model is not valued in the same way that it is with Hyperliquid because perps are potentially going to be this massive category and maybe we've reached the ceiling for the on-chain token launch market. Why is this wrong? Yeah, so I'm not even going to debate I like it's just wrong. Like you can't see it. Like we're in a brutal bear market. There are folks who are issuing tokens and Pump's doing, you know, million dollars on average or more a day. Like it's almost $400 million revenue run rate company. I think the more interesting questions are around, okay, given that, why is it token not trading

to reflect that over two-year track record of revenue and now almost a year track record of buybacks. And what I think is, you know, obviously, the the team takes a posture that I don't love. Like I love the team, but I don't love their posture about not communicating with the market about [clears throat] how robust their business is, how defensible it is, etc. So, they don't do the traditional, you know, investor relations. But at the same time, I also understand a little bit why they don't do investor relations because, you know, fundamentals in crypto aren't rewarded. Like and and part of that, it's not it's because we

don't know what fundamentals are that like matter. It's and what I mean by that is like equities are you know, an asset class that have like decades of you know, rigor around them, how they should be valued, what the right should be, etc., right? Like debt securities, like very explicit, predictable in most asset class. I mean, obviously, we've had many times when we've, you know, had obscure ones, but but the most straightforward ones easy to understand, right? Like I understand what a treasury bond is.

Uh tokens like there's not standards. They're very new and it means a million different things. And so, as an investor, fundamental investors, whatever that means, look at something like the Pump token, even the Hyperliquid token, Hype, and just don't understand like how to value it. It doesn't have the same rights as things I've seen before. So, um it's it's confusing and therefore these things trade Pump significantly, Hype I would argue, you know, reasonably at a discount to what the fundamentals of their businesses and the prospects

should suggest. Um and so, candidly, in a bear market, I I think it makes sense. I think in a bullish market, it provided that you know, Pump continues to deliver. So, to your that they'll reflexively go the other way. Now, the the question you asked is is Pump's business sustainable? Like I actually think it's more defensible like so than the many businesses that I won't say more defensible than a Hyperliquid or something like that, but I see some of the best companies in the world uh trying to compete with Hyperliquid right now. Everybody it's a very consensus opportunity. And by the way, it's one that I agree with, which

is perps are, you know, a superior you know, way to express a perspective on an asset than what we've historically had with options. It's Okay. So, I believe that. The world believes that. More assets can be exposed to this. You know, prediction markets will eventually like move in this direction as well. It's like all merging into one, but that's going to be wildly competitive. Like so, there's a question about whether, you know, what the profits will be at, you know, will they be at execution, market making, you know, who knows. >> Yeah.

Uh will be much more So, what Pump has is something that everybody's like it's out of favor. Everybody's like meme coins >> Yeah, it's out of favor big time. Yeah. Um and >> Just anything on-chain is out of favor in general. >> Yeah, and by the way, they're out of favor. They uh admittedly haven't introduced like over the last year much publicly novel stuff, but I would argue that's because the marginal person who cares about what they do that retail person isn't in crypto right now. That person will come back. Yeah. Yeah. So, so so still very much in the camp of being the on-chain consumer landscape will continue to grow. I don't know if you invested in Mega ETH. They have They just announced their token launch on

April 30th. They've got kind of a growing on-chain primitive infrastructure, a lot of like gamified like interesting ideas. And it's kind of like very very interesting bifurcation happening with like chains like Mega ETH, uh protocols like Pump and companies like Pumpa, and then out. Like you like you, you know, tokenized assets, RWAs, onboarding these large players, this is what matters to us. This is what our like the future is of this industry. And then you only have a couple chains and protocols still optimizing for like this more retail on-chain user base. How do you think about why that's happening?

Um so, Mega ETH specifically, I don't so I really like them. You met them. I ETH L2s were something I didn't understand. >> wasn't part of your thesis. And it like clearly hasn't worked out particularly well. Uh the I think like my guess with a Mega ETH is like it's a great name. Like they'll probably end up as a super app and like there's there'll be a chain. Uh and then people contribute to it and like things will feed back. Like kind of like Hyperliquid.

Hey, trade XYZ being on top of Hyperliquid, it feeds back to the underlying beast of Hyperliquid. Like but you know, Hyperliquid's the brand, the app. It's different than a Solana and Ethereum. Uh I mean, Bitcoin's very different. >> Yeah. I I'm not sure we're going to see like we probably will. We're we're not going to expect it. It's going to be obvious in hindsight. Maybe there will be some L1 that does something wild. I don't I don't know. Like quantum compute or like something like BitTensor, you know, yeah. So, who knows. All right. Um but something like Mega ETH, I would probably value on like just application revenue versus anything

else. And I don't know what applications are on it, but I like the team. Seems like they have an excited community. Same thing with Monad. I did invest. I was like an angel investor in Monad. Team, love them and, you know, really wonderful and have built, I believe, fantastic technology. This isn't a shill. But you know, it's they'll have to probably go I'm I'm just not convinced you can like be valued Monad in the same way that Solana was. So, I think it's going to be what's the application revenue on top?

And I don't know. They're going to >> Like is that a time thing? Is that just because the era that Solana was in was like pre-this new era of thinking or is it just a uh The pitch is just too close to what Ethereum and Solana are. Like BitTensor is very different, right? >> base a Mega ETH Monad is a fast cheap retail chain. Yeah. Yeah. Yeah. So, um I could be wrong, by the way. And like I continue to advise Monad, you know, entrepreneurs and I think it's interesting. Like Yeah. So, um I could be wrong, by the way. And like I continue to advise Monad, you know, entrepreneurs and I think it's interesting. Like but but I think like Mega ETH looks more like an app chain to me. Like they're going to be a super app. We're

investors in Plasma. It's going to be a stablecoin led, I think, super app with, you know, a supporting chain around it. Like that to me can have value, but that's different than Solana, Ethereum, and then obviously Bitcoin different. So, you bring up Plasma. We're also investors in that on our fund. Tempo just came out and partnered with DoorDash to do their agentic payments and what do we so you know, a year ago, these stablecoin chains were like the the best thing. They were like the very hot investment. It's kind of changed a bit.

But it's still like very different than it's, you know, traditional L1. Your thesis around something like Plasma is just that, okay, they have this Plasma One neobank. It's going to just be all around this kind of central app. The rest like like sure there's other primitives on that chain, but in the sense that like a general purpose chain just kind of ends up being like this is going to be a stablecoin payments DeFi chain specifically. >> companies. So, like Plasma versus Arc versus Tempo, it's just going to be three of the largest FinTech companies. Like, it'll be like, you know, PayPal versus Venmo versus Stripe. Like, you know, that's that's what it's going to look like. It's just going to be a question of, you know, which rails uh merchants, consumers, you know, all

the other stakeholders in, you know, payment settlement, movement, etc. uh and financial services operate in. But, yeah, you have to look at like Tempo's just a business. Like, it's not like you don't think about it like a blockchain. Um and they don't today. Um they're they have an incredible advantage. It's like part of the Sequoia, you know, paradigm cabal. It's you know, DoorDash is working with them. But, but it like incredible team. I I haven't looked deeply deeply into the product, but I assume it's incredible and um fees in the near term aren't important.

It's like, can we get people moving dollars across our settlement network, right? And that's the same thing for Plasma. So, like, the way that you think about these specific companies or their chains, but they're more they're payment services based companies trying to ba- basically earn money or earn fees or profits and generate revenues just based on volume of of of stablecoin payments essentially. Um yeah, to some extent. Exactly. And like, what that means like is going to look a lot different over time, right? Like, today it's like we think of things in terms of businesses and and humans and I'm not going to get like

Yeah, yeah. The entire train ride in today, I was like, the 6th Man Ventures team with like my partner Carl and I worked at Paxos or Google Wallet. Aaron's been super deep in AI and agent payments. Like, we were talking nonstop about how a lot of like the stuff like, the way people trade is the way people pay each other, it's not going to be the same in a couple months versus the way it was 6 months ago. Uh but I have no idea what that means.

Like, genuinely. Like, I'm not trying to like fake you and be like I'm some genius seer. So, uh I think you can make the a safe bet that um I'll And again, legacy bank tech isn't all still built on COBOL, but like I'll make I will definitely say that agents aren't going to be able to transact on, you know, rails that were programmed 60 years ago, okay? And the way that we're going to buy stuff, the way we're going to express our preferences financially is going to move very differently. And so, that's the bet that, for example, uh Tempo's making. You know, that's the bet we made on Plasma.

Um I think for the general purpose chains like Ethereum and Solana, it's they're in a risky moment. Like, they I I actually do think they need We haven't mentioned Base, by the way, which is fascinating. I think Coinbase has really struggled and sort of lost their way and I've no idea what they're doing, but the it's Solana, I don't think has clearly expressed like, why would I use a general purpose chain in a public network? And why is that better for settlement? Like, is it censorship resistance? Is it speed? Is it cost? Is it composability? But, like, why does that matter to the business or the individual in Argentina or, you

know India? The I I actually feel less confident in that story than I did a year ago, right? Um so, we're just in a like super exciting time because these are so fluid, it's super confusing, and honestly, I would say the market feels incoherent. And so, actually a fun exercise would be to go through and to look at how many different, for example, layer one and layer two blockchains Visa has done a major partnership announcement with in the last 24 months or MasterCard or whomever. Like, it's wide open.

No, I know. And I mean, you've been in the space for about as long as I have or perhaps a bit longer and you know, this was not a part of the old regime. These announcements were like one once a quarter, once a year at best and you know, prior to 2020. Even even in 2020 to 2021, you know, there's So, obviously, we had this big Drift exploit and now this big you know, layer zero Ave Kelp DAO exploit. And there's been two separate schools of thought or actions from the largest stablecoin issuers in the world, Circle and Tether. Circle has gone out and not frozen any of the funds that were then bridged from Solana to Ethereum and then, you know, Tornado Cashed and mixed and, you know, gone. And um

Arbitrum came out a couple days ago and froze 70k or sorry, 30k ETH on their chain and today Tether froze 344 million dollars of Tether that was connected to a group that was doing anything from pig slaughtering to human trafficking and everything in between. And also perhaps some Lazarus ties. And so, these two companies are kind of operating in like a flip-flopped manner than what I think the public consensus was of them. Circle being highly regulated pub- public company, Tether being kind of known as more of this gray area, not so um you know, compliant. But, as you see, Circle has failed to freeze these assets and then they've got a lot of pushback and Tether has frozen so- some assets as

of late and is kind of being, I think, rewarded in the public eye. I'm just curious on the stablecoin kind of landscape right now. Do you have a strong opinion on, let's say we get to a trillion dollars of stablecoin supply? Is this just Tether like like just absolutely taking 70-80% of that and Circle having a small share? Is it going to get to be more even? Like, what is your broad view of how these two heated rivals go head-to-head for the coming years? Yeah, so it's pretty clear that Circle's strategy is to be as close to a CBDC as possible. So, they are basically saying, "Hey, government, we are completely aligned with you. We lobby,

we take you through all of your methods of power and execution as our uh you know, sort of general ruler, right? And if we don't get a subpoena, we won't freeze funds. Like, you you know, our rails are your rails. Our issue So, I'm exaggerating a little bit, but that's pretty much the story that Circle's told through their actions, through their silence, and it's candidly in character and not surprising. Uh they've never been DeFi native, they've never been um you know, they're the guy like, you

know, who carries a skateboard behind his back and to the high school meme, you know, and it's like, hey, if anybody So, like, it's it's a very uh revealing time for Circle. There's a place for them. Like, they can be the government bucks. I call them the cuck bucks. They're going to be the government dollars. And by the way, that's not a bad product. Government dollars on a blockchain are way better than the I get from my bank, right? So, good for you, Circle. You won that market. But, I think that that is a smaller market than the world and the way that we're headed.

Um where the reason is because the most the boldest people in the world, what you want to do at any given time is like the people who are creating the future or want to serve them, I want them to believe in me, are not going to believe Circle. They're going to believe Circle is government tethered. Tethered versus, you know, innovation, future, and judgment tethered. And the best people building the best, biggest businesses and, you know, money producing and sharing things in the world believe in themselves and their judgment. Circle's not aligned with that, you know? It's a bald guy with a suit who's in DC, you know, three times a week and basically would rather a

judge tell him what to do so he can absolve himself of any responsibility versus going and making a really crucial decision to protect his customers from losing hundreds millions of dollars. Tether has said, and by the way, I've had my issues with Tether in the past and I think the Tether of today is extremely different than the Tether of 7-8 years ago that I had significant problems with. Um you know, I won't relitigate that, but, you know, there were pretty clear gaps in the balance sheet. Um it they weren't super transparent. Uh they've changed as an organization. They don't like talk to me cuz I was pretty straightforward about

>> [laughter] >> what was going on then. So, like, it's not like we have a great relationship, but I do respect that um they will make difficult decisions. And so, I think that these companies need to make difficult decisions because, let's be honest, nobody looks at Tether and USDC Circle and says, "These are decentralized companies and I believe that these are decentralized assets." Once you decide you're going to transact in them, the expectation should be that like I might be censored. I might have my transacted transaction impacted. And I believe that by a wide mile, I mean, we're talking like professional NFL team versus high school football team, Tether

has blown Circle away in terms of decision-making about how to handle absolute black and white decisions over the past month. Uh if North Korea is stealing a hundred million dollars plus from individuals, you should stop that if you are able to. Circle's on the wrong side of history and they're going to pay for it. Wow. Um on that note, is there room for other stablecoin issuers in the market? >> Unquestionably. Yeah. You saw USDAI, no exposure, this isn't a shill, Yeah. but there are So, sorry.

I wouldn't say that's a stablecoin, but I think there's uh there are, you know, tokens that are Yes, there's more room for stablecoins for starters. Like, we don't have success in stablecoins outside of USD at any real scale. >> Right. I think that's going to happen. Um and then I think you're going to start to see uh coins that, you know, generate yield in stable ways like with USDAI and others, where hey, maybe you'll pair higher risk yield coins with a stablecoin, um but I absolutely think that there are going to be alternatives to fiat money.

Um the same thing that like got me excited about crypto, you know, Bitcoin in 2012. But like with sort of dollar-denominated real-world asset ties, not like, "Hey, the machines are purely making money." Although, by the way, a lot of it is going to be tied to machines in a very different way than it was historically with Bitcoin. Yeah. Meaning, "Hey, we need GPUs. We need to finance them." Right. Yeah, yeah, USDAI has found itself in a very nice narrative position at the very least and product position. Um And they're just great. I mean, they're doing a good The stablecoin issuers um the kind of stablecoin as a service, yeah, Bridge, M Zero, couple of these others. Paxos. Paxos, of course.

These three are like those are kind of like the big three. What um what's the future for these guys? Like, I think the the stablecoin issuance business was extremely hot for about 18 months. I think margins kind of came down. I think the amount of capital required in terms of outstanding supply from day one increased significantly such that it was actually going to be a, you know, a profitable operation for the companies that wanted to work with the Paxos or Bridge or M Zero. How do you think about these specific cohort of companies as they look to kind of expand their business? Um you know, there's you you obviously have a lot of, you know, experience here.

What is What is the future of these types of companies as it becomes more and more competitive to launch stablecoins successfully? As kind of the same thing that happens to blockchains, I think will probably happen to stablecoins, where there's this kind of explosion and then consolidation. Kind of in the consolidation phase, at least for USD uh denominated stablecoins. >> They're going to plug like any other market. Like, Okay. it's You know, it'll be like 70 20 10, right? Uh it's going to be a big market. Yeah. It's not a clear market now, right? Like, "Hey, should I Is the OCC charter what I should get? Like, should I issue the stablecoin as a New York Department of Financial NYDFS coin?"

I would argue that the market's a little bit slower in terms of these Every single company that has users and has money on their platforms stored should have wanted it in a stablecoin that's backed with treasuries. They don't all today. It's not worth the lift. They're they're worried about it. Yeah. Like, everybody's going to be doing that and they're not going to be like going and, you know, getting the actual charter themselves to be able to issue their own dollars. So, massive, massive market for a handful of X as a service stablecoin providers. Yeah. The banks aren't going to do this. It's not their core business. So, um I would I would imagine like Stripe, I would imagine meaning like Bridge, I would imagine Paxos, and

and probably like Zero Hash, I think does this. Like, I don't know who's going to win, but those are going to be really big companies. And then whoever does this internationally, because there are very, very, very big money markets that are untapped there. Yeah. Um so, yeah, that's the market. I I mean, I spent some time as an advisor Paxos after I sold the block. Yeah. Um so, I'm very bullish on stablecoins. >> will IPO? Uh Great question. I think Paxos will be worth uh I I think I can say this. I'm a registered investment advisor. I think it's I think it's a value I think it's a very valuable company. Um I don't know what Chad wants to do, if he wants to be a public company CEO, but um they have some incredible partners. It's a

very good business, and it's funny, every couple cycle every cycle, they continue to get the best companies working with them. It was were the highest revenue producing ones. It was Binance, then PayPal, and now Schwab, and they have a bunch more in the pipeline that they're not talking about. I've heard some insane, insane stories about that guy. Chad? Yeah. Some very some very crazy lore of just all different types of movies and culture and all all sorts of stuff. He's an awesome individual. Yeah, interesting. And this IPO pipeline, Kraken Yeah. has confidentially filed.

It's so weird that these confidential IPOs end up hitting the news wire. It's like, "Kraken's confidentially I, you know, filed for their IPO." We had this IPO kind of season, if you will, kind of close to the top last year of the cycle. >> [snorts] >> And, you know, we there's been kind of hints towards Kraken, Paxos, Yeah. um FalconX, um couple of the of these names. How do you think about the evolving public markets opportunities to invest in the space Yeah. uh as it pertains to like just buying the crypto assets, you know, now we have ETFs, we have all these different types of products. Like, what is the what is the what is the reasoning why like why more public companies on uh that are like on crypto rails or

crypto-backed uh entities going public? What does that do for for the industry? Yeah, so uh in a market where people cared, it would be great. Meaning, like, Coinbase, Circle, you know, Kraken, >> Yeah, yeah. eventually. Like, it'd be great. People would be like, "Look at these public companies. What else is there? Where's the alpha? Oh, it's on chain." Problem is, and this is true not just of crypto, but many industries, SaaS, you know, consumer tech, AI is sucking all the air out of the room. So, >> Yeah. uh it's not that Kraken Like, Kraken's I would imagine they'll have a very successful IPO at some point in, you know, the not-too-distant

future. But right now, nobody gives a about crypto [laughter] IPOs. Like, let's be honest. They're focused on SpaceX. They're focused on Anthropic. They can focus on OpenAI. Yeah. And what I think will be useful for crypto, and this could be me with my VC hat on, um is you have a lot of folks with a very low cost basis in these companies, and they're the types of folks who are crypto Like, there's a lot of crossover between the folks who incubated early crypto and early AI. Uh some of them are in jail for their >> [laughter] >> It wasn't just SPF, okay? Yeah. So, there was a crossover curiosity

in innovative edge technology that disrupted uh you know, basically centralized incumbents and, you know, the sort of holders of information, money etc. Okay. So, these companies are going public over the next year. And there's no question I can't tell you whether they're going to trade up, whether they're going to trade down, or sideways. Uh there's so much at play geopolitically. And like, who knows? But the bottom line is you're going to get a lot of liquidity for people who are sympathetic, interested in, and engaged in crypto.

And the size of, you know, the companies coming to the public markets in crypto are much smaller, you know, the size that it takes to move the assets that we care about are much smaller. Yeah. Like, my default view So, the last cycle ended more sooner than I expected. I didn't think, you know, 10 10 was going to be the end. I thought we were going to go into 2026. Um but my expectation is as once we work through like now that we're in this thing and we've been What are we? 12? We sort of Trump was the top.

>> Yeah. Um like So, two years from Trump is like 2026 Trump the meme coin is 2027. And that's kind of lines up with, you know, when all these IPOs will launch in four-year cycle. >> be out public. It's I think we're in like a pretty constructive period, and it's been fascinating to watch how much bad news we've had. Um you know, narrow bad news that we talked about earlier. But like I said, prices haven't gone down. No. Um I've been surprised by that. Candidly, I have. Yeah. Uh And what's interesting is because the industry has rallied in a way that

some would say is unhealthy to long-term. Like, Tether, you know, supporting a drift recovery process. Yeah. Um you know, Arbitrum freezing or a seeth, right? Like, I think like we can debate these things all day, but they are stability mechanisms. So, it's very different. Many of most of the issues we've had this cycle been on chain. >> Yeah. But the centralized entities that totally effed up like sort of last cycle >> For sure.

>> Not the same ones, but I'm saying central like have actually stabilized the on-chain ecosystem and that convergence you were talking about it kind of looks like some of it's working. It is. Now that does say the question is okay, does then the value accrue to the centralized entities or the on-chain entities? Either way [clears throat] it's enough to boil up in the bear like a lot of these things they boil up and they keep happening and it's like we had all these like I think in hindsight it'll be like we had the most institutional adoption we've ever seen in the industry. The Clarity Act passed. We got through all of this IPO AI hype. Crypto was absolutely left to dry after everyone was chasing these like the largest AI company IPOs and that that's going to come Q2 Q3 this year definitely by Q4.

There's a setup to you know to be had of you know these things launch and crypto's at you know lowest points and we'll see where we go, but yeah I mean it's it's um the amount of attention that is going to flock towards that period of time and that asset is going to completely everything else kind of like sidelined. That's what I would say for period time and then you know the bull case is again there's liquidity for a lot of folks who are interested and then there's this bull case that again this is for a separate uh conversation with actually my partners who focus on this, but with you know does the advent of agents and people performing transactions or sorry transactions

occurring different ways pretend you know a much larger market for crypto than we have today. Yeah. Like the answer's probably yes. The last thing that I wanted to ask you about was uh I talked to Carl about some of the vault stuff that you guys were Yes. uh writing about and working on. Obviously this exploit that happened with Aave was you know kind of on Aave's curation model that they were at fault Layer Zero's security model Kelp DAO's um entire uh setup right, but this happened in a pooled lending model which is affecting all different types of people. Vaults very institutionally friendly because they want a very risk uh managed and kind of like parameterized uh way to express their credit on chain

whether it's originating new types of credit new new types of RWAs products etc. And they want to do it in like a very controlled manner. Morpho's kind of like stepped up here and been like the de facto vaults layer. I'm just curious like what is this vaults concept that you guys are working through this vault thesis generally as we kind of close out here. Yeah, so the idea of vaults is it's really hard for the average person um or even institution to figure out what do I invest in on chain? Like what is the risk? How do I um assess all these different things? How do I rebalance over time?

Um to your point the um it hasn't been done exceptionally professionally over last 18 to 24 months while this vault term has taken off. Yeah. Um I would say Morpho actually takes a really hands-off approach uh which sort of absolves them of every any responsibility. They're like okay the man like so I wouldn't necessarily say that vault I wouldn't say Morpho's like solving the problem. I would say they're like pushing a lot of the difficult decisions to folks on you know assets listed on their platform.

Um one of our portfolio companies Upshift just announced hey we're working with Securitize to do a NAV analysis net asset value analysis of you know basically every vault on our platform um so that institutional buyers can get confidence that this is a place to invest. So it's not only our own you know measurement of the value of these assets, but we have an independent third party who's credible you know and and does this professionally for a number of asset classes um valuing [clears throat] our assets. So we're moving in that direction. Uh it's not in response to what happened Like it was clear to everybody that to bring more dollars into

uh on-chain vaults are one you know mechanism um where hey we can select different assets put them together. You know we're starting to get into structured products which are things that are appealing to people, but the point is um the the last month month and a half has been a clearing call to everybody uh that we need to uplevel assessment of uh risk management assessment of asset selectors um so there's like vault issuers the the folks who curate them uh and it all ties back though to what are the assets that we're putting on chain. Yeah. And you know basically and then what are

people doing with those assets? Yeah. Uh and so obviously having you know in the Aave situation rETH ETH um you know basically be convertible into ETH at a Yeah. at the ratio that it was like unacceptable given what it was backed by how that asset was being used. Everybody knows this. This isn't finger pointing at this point. There was just like just a chain of poor decisions and what I'm seeing what I what I'm seeing already there's going to be much slower pace of new asset innovation at like you'll see you'll see massive scale. Yeah. You're just not

going to see somebody open a $300 vault with a weak asset with no collateral backing or little collateral backing and poor behavior behind it. Um so I'm very bullish on the structure and very bearish on the behaviors of the past. Yeah. Ladies and gentlemen that's Mike that is Mike of Six Man Ventures. That is our annual episode. Great to have you. Awesome. All right.