No Top Signal In Sight | Weekly Roundup

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If you think about all of these structurally good things that are happening to crypto like it's sign of a market that is maturing and a market that is doing well doesn't have to be the top right I this idea or this allegiance to like you know a market cycle I just think is is incorrect at a time when the US ad you know administration and government is actively pushing forward legislation that is going to bring this and has been bringing our market mainstream and so I I don't think it has to be a sign of the top.

>> Yeah. >> This episode is brought to you by Geodet, the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. You'll hear more about them later in the episode. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational 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 discussed.

We're live. Let's go. Santi, unmute yourself. Rob, what's up? What's >> going on? >> What's up? Yeah, I'm just excited for uh for for week two of my co-hosting capabilities here. So, let's see if I, you know, bring it to even another level. >> Nice. I'm a little scared. First time Emperor Empire has gone live. The amount of stuff that Santi mistakenly says and then that we have to edit out is is high. So, uh >> I will I will for for the record will clarify something. Uh we always I always like to listen back to the episodes to uh make note of all the dumb that I say in this pod. Perhaps the the one that was brought to my attention is this idea that hedge funds cannot invest in

ETFs. I had learned I heard it um I was recording a podcast and someone made that point and I took it at face value and it's incorrect. Hedge funds if you look at 13Fs they can't invest in ETFs. So this idea that you want to create a DAT because a hedge fund can't go buy an ETF is is not correct. So um it's just important. uh we've con continued to be pitch and I think it's just I just want to clarify that because I in the prior episode I'd mentioned that one of the reasons why you'd want to create a D is to allow you know hedge funds want to have exposure to this assets so they can't touch the ETFs which is actually not correct >> have you come around yet on DATs are you

invested in any DATs yet >> have I >> I did do Pexi but I did not contribute in kind that was Uh way back in the day, I did a cash deal uh very small part of my portfolio and I have not done one after that. >> Are we doing DATs already in the pod? I was like I was thinking about making this a DAT free episode. >> Datree? No, man. Dats gonna blow up this cycle. I mean it's we're gonna continue to talk about it.

>> Yeah. Rob, give us the give us the state of the union on these DATs. What's going on? I saw I saw the most ridiculous DAT I have ever seen yesterday with some criminal behavior going on honestly in this thing. So give give us the state of the union on these dats. >> Wait wait wait before I go. Can you tell me what what was the criminal behavior like that? You can't just say that and then not expand. >> Uh I mean it's basically just people who are involved in it that shouldn't shouldn't be involved. I'd say yeah. >> Was it a $ 1.5 billion debt or was how big was this debt? It >> was a big boy. He's a big boy and it's what they want to do with the money once they get it. They don't want to just buy the tokens. They want to they want to

start trading and yeah they they want to they want to do some things that shouldn't be done. So a levered up DAT we could call it. >> Listen I I will say on the Dats maybe I'll that'll I'll give a little bit of the state of the union. Um like clearly the market is softening right and so the pace of these things coming out is just it's tremendous at the moment and you know there's a million Bitcoin ones coming out there's a million ETH ones coming out soul uh but now you know every other token is also having one uh launch now as well um the amount of these things that are launching where people are trying to figure out other things to do to make them attractive um is also increasing Now uh the ones that are actually still

I think quite interesting and are still getting funded have some sort of like call it like foundation alignment and you know discounted tokens and this uh people around it that are trying to build for some sort of like longevity and we do see those happening right now especially with um some of the you know call it uh all L1s or or largest uh applications and and those I actually think are are super interesting but then you're seeing a bunch of really opportunistic sponsors uh and and I'll use the word sponsors loosely here people who want to figure out a way to to make a quick buck. Um, who are launching ones in a bunch of other types of tokens as quick as possible with as many kind of or as much hair on it as possible. Um, and trying to get to market as quick as possible. And that

there's a misalignment there too because like the right investors who will be in that vehicle for the long term, who allow this thing to trade well and potentially trade at a premium to NAV, they're not looking at those things. The people who are looking at those things are people who are trying to trade like the ball around them and and immediately get out. So I actually don't know the one that you're referring to, but I will tell you we're essentially seeing this like flight quality and this dispersion and and Santi might sit here and say there's no quality in DATs, which I think is is maybe it's relative quality, but there's um it's it's definitely a flight or a dispersion uh to, you know, things that are aligned with the long-term perspectives of and furthering of ecosystems with those foundations.

What's like the best out you've seen >> other other than perhaps Micro Strategy? >> Yeah, I mean Micro Strate is obviously number one. I I think maybe I there's a a number of ones that haven't launched yet that that I do like. Um but one of the ones that I actually think is >> what with what assets, Rob? Like the things that haven't launched, is it just more Bitcoin Ethan soul ones or it's you actually like more of the longtail of assets? >> No, I do still like some of the longtail ones. So, you know, for instance, we we um we invested in the one stable coin X TLGY, which was the the Athena one and you know, I I just recorded a podcast with Guy actually about that and his perspective, which I think is the right one, is that we're not playing a premium

to nav game. In fact, he had a pretty good tweet thread, I think earlier this week or or late last week that was essentially like why does this exist? And you know his perspective was you know Athena is a very interesting asset that is exposing people to a certain type of stable coin and the growth of the stable coin industry in the public markets. It's an asset that is really large hard for people to hold in you know different parts of the world who aren't you know super cryptonative. And so providing access to that asset and to call it the yield of the basis trade potentially if and when you know that there's able to be a fee switch and or something like that is actually I think quite um uh you know quite exciting for him and you know his perspective is this

may trade at a discount it might trade at a premium uh oh don't and he actually said on the pod do not buy this at a big premium to nav like that is not what this vehicle is for this vehicle is to provide you access at somewhere closer to nav and and I actually quite like that because these you know pro these these vehicles that are aligned with the foundation around furthering the ecosystem and around you know potentially providing access at you know even a discount to NAV those are good vehicles those are distribution for a outside of you know what can be a really tough market to navigate you know an infrastructure to navigate and so we're seeing a number of assets like that you know maybe on the alt L1 side or the the L2 side and frankly I think every

protocol over a billion ion dollar will probably try to launch one of these. Um, that should definitely not be true, but it's just a fact of life. Um, but if it's a big enough protocol, call it 10, 15, 20 billion at least, you can probably do one of these things and and have it, you know, make sense. And if it's aligned with the furthering of the ecosystem, I think it can be actually very very valuable. Um, but I think most of what we're seeing today is just some, you know, quote unquote sponsor trying to to make a quick buck. And and frankly, it's been I I I think, you know, pretty um what I would it just it hasn't I haven't felt good about what we've been seeing uh in the in the last few weeks.

>> Yeah. I I think the most underrated reason why people are doing these is actually the marketing element. I think the reason people think that you do these is because it you can use capital to buy the token. But uh actually the most underrated reason is because you actually get like a you now get to market on TV and uh you get basically institutional marketing and actually um so Telegrams was a really good example of this. They raised like 500 or 550 for the ton vehicle. And then I think the next day, Michael Sailor was on Fox Business talking about Telegram and how it's such a great, you know, it's such a great platform and how that now an institutional investor is not going to go buy a ton on Binance, but they will buy the ton the ton vehicle. Um, and so I thought I thought that was an

interesting example. Rob, there's a um this is kind of a controversial I don't know if I should even ask this uh especially on the live stream where we can't edit this out, but I will anyways, which is um the price I've noticed the price movement on these things is very on the underlying token ends up being very similar. So, you can actually kind of predict when a DAT is coming because the token rips pretty hard and then the day the DAT is announced, the token falls. So you can see something like ton token moving like this and then in the weeks leading up to to the DAT and then the DAT launches and then and then the price falls. Um why is that is that I mean is that not insider trading? Is

that like is that a acceptable for form of behavior here? What what are we what are we looking at? >> Um I I I would say it's certainly not an ethical form of behavior. Uh but I mean listen people have different viewpoints on this because it depends on what you think the underlying is right. So um obviously in the US you know what constitutes insider trading uh is actually pretty broad. Obviously we saw it with the um the openc case where um I think it was de I forget it was it Devon or some one of the OpenC employees um got charged with insider trading because they were buying uh NFTTS before they got listed on the front page of OpenC back in in 2021. that um was actually recently overturned, right? And so the US has taken, I think, a uh a narrower

view recently on what it what can be seen as insider trading. Um specifically if it's not if the underlying is not a security um and so you know in these cases, sorry it was it was Nathan. Um in these cases where there's you don't believe or there's not an expectation that you know the underlying token is a security um uh it's potentially possible that you know it is okay to you know call it trade these things uh and it's not being insidered trading if you're also not in call it been wallcrossed and you're in possession of um an NPI uh you just you know understanding that like

all of these things will probably have you know some sort of um public treasury vehicle. I I think the more the crazier ones have been where we've actually seen some of the call it when you've done pipes into the operating companies, you've actually seen some of the operating companies themselves like you know increase by 400%. uh that is clearly insider trading because you are clearly buying a security before there is an announcement of an investment into that security. And by the way, these are definitely being done on brokerage accounts where they absolutely know who you are. And so I'm not saying go an insider trader if they don't know who you are. But what I am saying is if you go and buy an equity

before an announcement is made before uh uh open on a Monday and it and in your brokerage account, you are probably going to jail. Like the people there are analysts at Goldman who trade options on you know pre and M&A acquisition of you know and make 25 $50,000 and they go to jail. And so anyone out there who's listening to me right now, stop insider trading. if you are, don't do it if you if you thought about it. >> Yeah, good advice. Good advice. Um, okay. There's um let's get away from dats because I'm I'm a little datted out here. Let's talk about uh Coinbase Coinbase Convertible um this week. So um uh let me So for those who missed it, Coinbase is raising two billion in

convertible notes. Um and I'll just I'll I'll read the headline announcement. Coinbase's sale will be open to qualified institutional buyers to buy a billion dollars worth of convertible senior notes that mature in 2029 as well as a billion of notes maturing in 2032. These notes can be converted into cash shares of Coinbase's class A common stock or a combination of both after paying the necessary expenses uh associated with the sale. The announcement says Coinbase will use the proceeds for uh general corporate purposes including acquisitions, capital expenditures, working capital, etc. Um, I'm not sharing my screen. Here you go.

>> There you go, Santi. Uh, >> there's a great there's a great tweet by Mike Mike, your fellow co-founder of Blockworks that said, "Last time, Coinbase did a convertible note offering." There >> and and to which I, you know, politely commented for the sake of this industry and your job, please, no more, no more like this. And I and I've now adopted the the thank you for your attention to this matter without an exclamation mark. >> Yes. >> Copying from our fellow president of the United States.

>> Yeah. Santi, take us uh explain what's happening here with the convertible notes and and and maybe why Mike might have said this. >> Well, uh you know, history repeats itself. I think you know, Coinbase is what an all-time high now at 315 bucksish, right? >> Yeah. Down to 315. Had a nasty nasty I mean bad earnings. they they popped up to 440 and then um now down to 315. >> So So let's just unpack this from first like why why would a company issue a convertible note Rob and Lightness? >> Oh you you're pitching it to me. Listen these convertible notes for Coinbase are actually um they're pretty interesting.

So uh these are actually very cheap capital, right? And so if you think about okay anybody who's taking a corporate finance class 101 uh equity is typically the most expensive form of financing. debt is the least expensive. You know, there's a bunch of stuff in between. Convertible is you know, essentially a debt instrument, but it's um you know, a little bit uh somewhere in between those two things. Um these specifically were interesting because okay, so they went out and said, "Hey, we're going to do 2 billion of issuance." They had enough demand to upsize to 2.6 billion across the two tranches. On top of that, it was a zero coupon uh instrument. So people aren't actually expecting any uh yield back.

They're not expecting any um uh any sort of of of interest rate. Um and the uh the call strike was capped at I think double the price at the time that these were um these were issued. And so what does that mean? These means that these were very cheap because like it's not actually going to turn into equity unless people the price doubles. And so that means that these investors are actually very bullish on where Coinbase is going. They're very bullish on the potential for them to buy 2029 double in price and they don't need to get paid an interest rate between now and then to sign up for it, right? And so for for Coinbase, what that means is they were

able to go and issue a very cheap piece of capital to go and and probably my guess is it's mostly M&A that they're going to be focused on here and to try to expand that business at a time when, you know, they've talked about, you know, trying to put together an everything app and compete with Robin Hood who's been kind of eating some of their lunch, honestly. And so I actually think this is a, you know, to maybe not to disregard what Mike said, but I think this is an extremely bullish sign that they were able to go raise this type of piece of paper uh this quickly with this much demand.

>> So let's uh I want to just add a little bit more context there. So there were two tanches uh in equal size 1.3 and 1.3 billion. They're both zero coupon. So again, if you're if you're the investor, you your huge opportunity cost is you can go clip treasuries like 5%. So like every year you basically have to be extremely bullish on this to to actually enter into this because the opportunity cost right now we're we're in a in a persistently high interest rate environment is just quite quite high. So it just tells you the the demand the expectations of the market participants. So anyways the difference between the two tranches in equal sizes one matures 2029 the other one matures 2032. Um, and what else the other component is? So, I

think they have different strikes, right? One has a the shorter I think that the coupon the note uh maturing 2029 has a 52% premium, right? >> Yeah. So, they had different premiums, but they had the same cap call strike. >> Yes. Yeah. Yeah. Different premiums. Yeah. And the other one has a 32% premium, right? Uh, so that >> that makes sense because of the duration. >> The duration. Yeah, that's right. So one is roughly 452 per share. The other one is converts at 394 per share, right? Um but yeah, it's pretty interesting. I mean, >> so so explain to someone why if there's no interest, right? If this is zero coupon, um why why would an investor

want this? >> Um I'm not really sure to be honest who's buying this stuff. Like is it just that they want exposure to Coinbase if Coinbase rips but they don't want the downside in case we go into a crypto bare market, right? Because if you go into you're not taking the downside exposure, but you maybe get the upside exposure like like I don't know who buys this. >> Well, I'm just trying to like Okay. Like yeah, if you want to cover your downside like there are other strategies that you could do. >> That's what I'm saying.

>> Just to be clear, convert investors are are typically the same people. And so the there's a a subset of hedge funds that invest in call it like the vast majority of converts and often you know there is they care about what the underlying is but they they also just care about the capital structure of what the underlying is and they care a lot about the volatility of who the underlying is right and they're pricing this based on essentially v right not just who um not just like maybe like a long-term outlook on you Coinbase specifically or or any other company specifically. Now, this was such a good piece of paper for Coinbase that it was

actually quite rare. You really only see call it like Mag 7 or be able to, you know, Shopify etc. be able to raise these type of call it zero coupon converts. I think in um Cloudflare recently did one um and Zcaler maybe did one. There there's not a lot of um these types of pieces of paper. That said, uh it is a it's the same investors and these are not the investors who would buy the public uh equity or at least it's not in the pools of capital that would buy call the common equity. But like Rob, let's just unpack that a little bit. So why would you buy this paper? You um to Jason's point, downside protection, right? You do not like if Coinbase trades down to 150. Worst case, you don't convert, you get your

principal back, you do not get the coupon. So you've the opportunity cost there is you you you didn't clip 5% for the foreseeable future. Okay, fine. But you you're you have a slightly positive um bullish skew on Coinbase doing, you know, converting um to that point, you need to look at the capital structure of Coinbase, right? Because you're junior to debt. So, I forget how much debt Coinbase has, but reasonably speaking, you're looking at like the last three years, the peak to trough, like volatility and earnings, and you're saying, "Look, this is like I'm fairly protected on the downside because in a in a truly truly uh bare scenario, Coinbase like goes really under and you

get wiped, right?" But that's unlikely to happen because I don't I forget how how much debt they have in the balance sheet, but you sort of have to look at that the capital stack. >> I think they have Yeah, as of March, they had a it's like almost it's close to four and a half billion of debt. >> Four and a half. and they're cranking out how much an EBA like. >> Yeah, it's not I mean they've got um uh I have to go go back and look, but you it's not it's not their their their leverage relative to you know their cash flow. It's not that high. Um >> yeah, >> go back. I was looking at the Kraken um primary and and was looking at like the peak to trough of like Coinbase, Robin

Hood, and Kraken to understand okay like can these guys actually flex down in their in their cost structure like how much of it's fixed versus variable because you know we're going to have another bare market and like earnings like just take a nose dive and and it was just interesting because that that's if I'm a convert investor I'll just kind of pay attention to that which is what happens if you know between now and 2030 32 there's likely going to be a bare market where the the earnings uh the revenue base of Coinbase like materially let's assume goes down 50%. and how well are they going to be able to service the debt and and are you in a position where like I don't think you get wiped but again that's like something that probably these convert investors said hey we feel like you're reasonably well

protected the the edge case of us getting wiped is very very low because they don't have that much debt on the balance sheet so >> yeah so just just to just to be clear so so Coinbase has they did a trailing 12 months of like 3.7 billion of IBIDA they've you know so they've got debt that you is approximately equal to, you know, five quarters uh worth of of IBIDA, right? That's pretty reasonable, frankly. Um that's uh and not only is it pretty reasonable that it's it's obviously it's it's a high ball name and so, you know, could potentially go through through a bad bare market, but there's, you know, ways I I think it would be pretty easy for them to refinance and to roll that. Um clearly I

think part of what you've seen here in the you know the equity market has been a a concern around dilution from these things and I think that's part of the reason that common equity has has traded the way it has it was also a relatively bad quarter as Santi mentioned relative to you know Robin Hood and others but I going back to the convert side like who is buying these things like it it is specifically convert desks and these convert desks the way they typically price these things is they price them has options, right? And so you have the downside floor, the downside protection.

So you're probably underwriting that the likelihood of not getting your money back based on what we just talked about in terms of the capital structure is is very very small, right? like you think there's enough asset value there and they'll do well enough that you should at least get, you know, call it there should at least be call it $6 billion or $7 billion worth of equity value that or or enterprise value that could come to you and the debt holders because it is a 78 or or 80 billion equity value company, right? And so like your your coverage there is is really good and you have that floor and then you know they're pricing the upside uh because of the fact that there is so much vault in Coinbase like you're there's a lot of

upside gamma here and so like you're probably able to underwrite the potential to convert over that period of time and that duration pretty pretty well right and so I I think >> I believe that between now and 2029 or 2030 32 the the price of Coinbase is going to exceed the strike and you're going to be able to punch out of it, right? Because because the they're fairly liquid instruments like you know you could you could probably sell not as much as options but you could punch like this convert will trade at a premium right if you know best case scenario the price of Coinbase goes to 500 >> and you're sitting pretty there because your strike is 450 or 390 and you're saying oh or what is it like >> 390 for the other trench but anyways in

any case like that's probably how you get you go to committee that that's what they were pitching right which is to your point huge ball probably Coinbase goes above that in during the during this period and you could probably like is it reasonable >> when you you can hedge as well, right? And there's there's positive carry while you're hedging. So like like there is like these are good pieces of paper uh for the volatility that Coinbase has right now. If volatility gets suppressed obviously like it's it's a different issue. >> Would you have bought uh any of these notes and if so the 2029 or the 2032 note?

Um I I mean I'm I'm not a convert investor and I wouldn't say I'm a a uh expert in in any means. Um but these are pretty like scarce pieces of paper and you know I'm structurally bullish uh Coinbase and structurally bullish you know this whole space and so would I if I had a convert mandate and have you know piled a bunch of money into into both of these tanches? Absolutely. Right. Um, you know, and I think that even at the 50% 52% premium on the the 29 trunch like, yeah, definitely. >> So guys, as as to round out this segment because I I want to there's some other stuff I want to cover. Um, to comment on Mike's take about Coinbase is raising two billion of converts telling about where we are in the cycle. The last time

Coinbase raised via debt was checks notes September 13, 2021, which uh was two months off from the pico top. Agree or disagree? that we're near the top. >> I don't know. Sign sign of the top. >> I I don't think it's a sign of the top. If you think about all of these structurally good things that are happening to crypto, like it's sign of a market that is maturing and a market that is doing well. Doesn't have to be the top, right? I this idea or this allegiance to like you know a market cycle I just think is is incorrect at a time when the US you know administration and government is actively pushing

forward legislation that is going to bring this and has been bringing our market mainstream and so I I don't think it has to be a sign of the top. >> Yeah. Yeah. Um all right we uh we're going to end that segment. We are going to do something. By the way this is our first live stream so I think this is going pretty well. We are going to introduce a wild card which is an advertisement into this. So uh we'll see how this goes. Um but yeah, roll tape baby. This episode is brought to you by Geonet, the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics. Geodet shows that blockchain

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>> Smooth. Geonet. That that ad slaps. That's a good ad. Um, so, uh, Kraken is raising at 15 billion. Um, got a few texts from folks saying, "Hey, what do you think about doing Kraken at 15 billion?" Um, Coinb So, I want to get your guys' take on that question. So, Coinbase right now trades at um, 80 billion. Uh, Robin Hood is at 100 billion. So, the the the way that they're pitching it is um, or so they've got some, I think, brokers who are taking this thing out into the market. And when you're raising at 15 billion, there's so many people involved in a deal like that that I think it's now filtering out into the into the ether.

So, the way that it's being pitched is, hey, 15 billion, um, this thing's going to just do a one and a half or 2x upon IPO, right? Because I think people see Circle getting bit upon IPO. They see Figma obviously ripped like 4x. What do you guys think about Kraken at 15 billion? Are you doing that? I'm not. >> Why? >> Um I think it doesn't outperform Bitcoin.

And again, if I did the exercise of looking at over the last like five years, how Kraken relative to Coinbase and Hood was able to manage the downturn. And I appreciate there's been leadership change, but it just felt to me like it had a more rigid cost structure where they they didn't downsize as much in the downturn. And so for that for that reason, I just I just again, does it outperform Coinbase? Does it outperform Hood? Um, putting aside the fact that it's going to, you know, probably it's gonna IPO in the next year and a half or so. I think it's been preparing for an IPO. Um like I I I never want to just make an investment on that on that basis, right?

Which is like okay um you I think everyone I would assume that a lot of the investors in Kraken in this round are probably saying hey we could have invested in Circle Look at what Circle did. You could have bought Circle preo at you know call it what was it three to5 billion valuation if not less and then you know clearly you've done phenomenally well. Um, so I I don't want to make an investment banking on the fact that like the IPO market's going to be wide and there's going to be continued like demand for for this. Um, I think we're just in like that state of the market. But again, on a on a fundamental basis, I don't think the multiple is crazy.

But I do worry about like I do worry about and maybe I'm being overly punitive about how they were performing in like 2022 2023 where like their margin really degraded and they just didn't manage the business I think as well as Robin Hood and Coinbase did. >> What do you think? >> I would say I actually think it's probably a pretty good investment to be honest. I mean it's obviously for the right you know investor. Um if we think about like what what is Coinbase traded at? It's traded at something like you know eight to 10 times forward revenue. Um I if >> what's Kraken revenue Kraken's revenue

is like one and a half right? >> They yeah they like one and a half billion of revenue last year. I believe they they reported that themselves. Um if you you know extrapolated out their you know growth uh this year like my guess is they'll outperform that this year by call it you know something like 20% 25% right you know volumes were pretty bad part of the year they were really good for part of the year if you look at I I believe Coinbase Coinbase is up um yearon year like 20-ish% on the first half 24% on the first half and so if you extrapolate out like okay let's say that it's you know call it 1.8 8 billion of revenue uh this year. That means that 15 is probably, you know,

fair priced or fully priced. If you think it trades at a little bit of a discount to Coinbase for being number two and being smaller and I I don't think having performed quite as well as Coinbase in in certain periods of times. So 15 is probably, you know, something like, you know, fair value. But if you believe that, you know, this market is going to structurally continue to get bigger and and I do think and I'll give um you know David Ripley and Arjent Seth a um you know a bit of a pat on the back here. Their speed in shipping new product has materially changed over the last call it 9 to 12 months. there from what we hear and see internally um I I

believe that that is a organization that is on the upswing right now in terms of their uh ability to you know execute strategically and to you know try to respond to the way the market is moving and so I I think it's it's probably a pretty decent investment but it's for a pool of capital that is you know solving for a different type of return than I am um do I think it outperforms Bitcoin, I actually think there's a pretty good chance it it hits it doubles. It hits 30 billion before Bitcoin hits, you know, 250K. And so, um, you know, over the over the next 10 years though, yeah, buy Bitcoin.

>> Yeah. So, it's interesting. So, I I've started use I hadn't used Kraken since like, let's call it 2017, 2018. I started using Kraken again and um it's a really good it's a it's it's a really good experience actually. Um, first off, so there's a couple buckets here like the support experience. I mean, Santi remember a couple months ago kind of we're bitching about like Coinbase support. Um, and uh, yeah, I mean it's an industry known thing. Coinbase has no support team or you know maybe if you're only the highest level institution, but even if you're a really high institutional client, their their support sometimes sucks. Uh, Kraken support five minute five minute replies every time. Like if you need anything, Kraken's five minutes or less. Um, so that's been impressive. Uh the other

thing is they list tokens extremely quickly and that's actually what originally pulled me over. You used to like if you wanted kind of a a weird I don't know a longer tale uh token you used to have to open up like I don't know VPN into MEXC or something like that. And now uh Kraken Kraken is like very very quick to to list. Uh and then the the if you dig into their financials at least their self-reported financials uh their revenue per user is 3x what Coinbase's revenue per user number is. So I don't actually know how they're doing that, but that's a pretty material difference. Um, so that that might be the sometimes the bullcase for a company is to just get into the product and see how it is. And like sometimes I'll DM their team like some people on their

exact team and the I'll be like, "Hey, this product should be like this one week and it'll be improved." That's that's a very u once you see that at a company like that's kind of what you want to see. >> Oh, you're on mute. I was going to say I I totally agree with you. I think they they have uh I mean from a security standpoint, product standpoint, I was using Kraken way back in the day. I think it's it's I don't I believe they're one of the few exchanges that has not been hacked. Knock on wood. I mean it's just been they're super buttoned up and the product probably ranks like higher MPS than most exchanges out there. Um so I don't I don't disagree with that at all.

>> Maybe I'm overthinking it. probably I'm middle curving it for sure. >> Yeah. >> Rob, do you guys participate in deals like this? >> No, we um this is a little too late stage for us. It's not what our LPs are are asking us to do. You know, we're uh well, you know, we would look at it and but we just don't have the right pool of capital today to be doing call it, you know, quote unquote preipo investing. >> Yeah. You know, >> I will say that there was a some secondary going around in Kraken last year in the $3 billion.

>> I saw it I saw it I saw it at 35. >> Yeah. And we we you know we Dragonfly did not invest, but um we thought hard about it. Uh and now looking back I I feel like an idiot. So uh maybe I was I was I was mid-curving that one a little bit too much. >> Yeah, you and me both. You and me both. Um >> you know who's the what type of pool of capital is investing in this round? Is it like a like a preipo? >> Yeah, it's traditional investors preipo hedge funds. I I actually connected like a large, you know, preipo uh hedge fund to them, you know, kind of earlier this week. Um it's everyone that you you could name, you know, all brand names.

Let's talk Roman storm unless there's anything on Kraken or actually sorry before Roman storm uh bullish is IPOing who else who else are we do you expect to see uh get out in the next next like let's call it I don't know six months Rob Gemini bullish Kraken >> Bico I think just announced again uh >> figure yeah so that alone that's we could see five crypto IPOs it's pretty amazing Yeah, figure I think is a little bit different because they so they recombined their crypto business and their you know traditional heloc business. Now the traditional HELOC business does use uh you know a blockchain and they and that blockchain is validated by the hash token but it's

basically a direct to consumer home equity line of credit business that has done very very well and has done very well because Mike you know obviously was the founder of SoFi and he knows these types of you know credit products uh very well but I I think that one probably doesn't trade like a crypto equity I think it trades based on being call it a high growth lending in business. But I, you know, I don't know, maybe I'm mid-curving that as well. >> Yeah. Yeah. Um, okay. So, uh, shifting gears to a little more depressing note.

Uh, so Roman Storm was uh found guilty on on one count in uh in a part in the in the trial this week. So, there were three uh three things that they were charging him on. One was um money laundering. two was um uh I'm trying to actually remember the the second one, but the third thing was operating an unlicensed uh money transmitting business. Um and he got >> so the second one just just to be clear, it was basically conspiracy to evade sanctions. >> Uh yes, that's right. That's right. Um so he was found actually Jake Travinsky had a good thread which I can I can pull up. Uh Romantorm was convicted for conspiracy to operate an unlicensed money transmitting business under section 1960. The jury was deadlocked on

moneyaundering and sanctions. DOJ will decide in the coming days if it wants to retry those charges in a new trial. Sad day for DeFi. Uh the government never should have brought this case. Section 1960 should not apply to the developer of a non-custodial protocol who lacks control of user funds. This case should go on appeal. Hopefully the second circuit will correct this and many other errors in the case. This is a terrible outcome for Roman and for all of crypto. If the Trump admin wants the USA to really be the crypto capital of the world, then the DOJ must not be allowed to retry the two deadlocked charges.

This is existential. If you've been sleeping on section 1960, wake up. Um Rob, I know um Hib has been pretty actively commenting on this. Um any any comments on this? >> Yeah, it's I mean it's sad, right? And so, um, I think we're all, you know, happy. And I think actually when you saw Roman come out of the courtroom, uh, yesterday, it seemed like he was kind of upbeat. Um, and excited about the fact that, you know, the the really for him personally, uh, existential threat was, you know, the, um, was the other two charges. So the

conspiracy to evade sanctions and um and and the moneyaundering the moneyaundering charge I believe had a maximum sentence of 30 years uh or a guideline sentence of 30 years if he had been convicted of that. Um the money transmission sentence that he was the one that he was convicted of that is I think five years max. >> So yeah maximum five. So very very significantly different for him. I I also believe and I think he believes that he has a very good potential to win on appeal for that specific charge. The as as I think Jake was trying to say there um Fininsen has actually recently given guidance that uh a smart contract does not count as control of customer

funds within crypto. And so this actually goes directly against Fininsen's guidance. And what actually happened um is that they tried to after Finson gave that guidance, they tried to dismiss that charge and there was a motion by by Roman's lawyers to dismiss that that that charge. Um and the uh DOJ and the court decided essentially to uh not dismiss that charge and then meant that the jury had to follow essentially the jury had to follow uh what the court was advising them on and didn't really have the appropriate tool set to

understand why this actually shouldn't be he shouldn't be convicted of this. So, under the way that the that the and I want to explain this quite as well as I should be, but under the way that the um courtroom proceedings happened, I don't think this is super surprising, but I think because of the way they happened that he probably has a really really good chance of appeal. What is also true is there's the uh BRCA which is the blockchain regulatory certainty act which has been attached to the clarity act um going through Congress right now that would actually confirm in law that non-controlling developers are not money transmitters and if that is true then this is like he obviously you know did did not commit the crime that

he was convicted of and he would he would win on appeal and so let's hope that they don't retry him for the other two, then let's hope he gets through appeal on this charge and you know then that that should be and hopefully will result in you know the best case scenario for him. >> Yeah, it's very funny to me because you're getting very mixed signals from from like you you've this comes a week after Atkins and the SEC said we got to move everything onchain, right? And like they're showing off graphics of uh you know a docs and you know how unis swap works and then and then and then this happens. So, it's kind of like, do you want us to move money on chain or do you not want us to move money on chain? And and it does feel like the the really key

difference here is that uh they're kind of telling us moving money transparently on chain is okay, but it can't be done very privately. Um if the government can't see where you're sending or spending your money, you're a criminal. If it can see where you're doing it, you're not a criminal. And um uh you know I saw I saw Mike posting about this earlier in the week, but like it does feel like privacy is is the kind of final boss here. And it feels like privacy it's not really in the narrative today, but you got to give it one one or two more years. It it does feel like privacy will be a hotter topic. Yeah.

Santi, did you have >> Well, I guess like for context, right, there is a jury out here that was randomly selected for this type of trial, right? um you're on jury duty, you get appointed. And I do wonder, is this more of an indication of public perception of crypto is still is still quite bearish because of the last decade where people just still need to like remove that um kind of stigma that crypto continues to have, right? because like I I I would think that like look you have limited time to present your arguments and like I I guess like for a jury that's

hearing it I I could imagine like crypto not just this case for any other case like you know this is perhaps just a residual of all the negativity that has been instilled in people's brains right that crypto is you know an industry that is used by criminals and uh you know it's for nefarious activity when it's it's it's actually like you know when you look at the data it doesn't suggest that right you look at chain analysis data you look at cipher trace like but but it's still hard to convince like a jury I would say like about some of these arguments right and like so I I don't know that's just my reaction to it it's

obviously unfortunate but uh I don't know I mean, I wasn't there. I don't know if you guys had reporters there, Yano, but I would be really interested in understanding like the profile of these the jury and like like >> Yeah, we did. We we had reporters there. I think one of one person on the jury was actually uh it was very split like there was a decent number of them were older. Um and then actually there was like a software engineer, there's uh someone who worked at Palunteer, I think. Um and like no no surprise you can guess how those people voted. Um, so >> no, I mean the the the thing I would just add here is is I think Santi's point is apt and is correct, but I I actually think there's a good argument

for like like Fininsen specifically said or their guidance was that non-custodial smart contracts where users retain full control over their funds generally do not render a developer a money transmitter. But if the smart contractor DAP holds transmits funds on behalf of users, then it is right. When the lawyers for Roman storm tried to get that charge dismissed after that Fininsson guidance, they did not define uh the money transmission the way Finson defined it. And so the jury had to make a decision about facts based on the

guidance that was given them to them by the court. And the court gave guidance that was different from Fininsen. And the court gave guidance that was different from the BRCA which is now you know going through uh going through Congress at this at this moment in time. And so it highlights the fact I think not so much about the jury but the fact that we still don't have enough clarity from the agencies and from Congress to define how DeFi should be perceived and how DeFi should be treated. And if that Beninson guidance had been in law but in legislation, this he this would have he that would have been dismissed that charge, right? And so that's what it

highlights to me is we need that clarity and we need to get with Congress to to get that law passed. >> Yeah. Yeah. The other thing that I thought was interesting was that um I feel like a lot of people don't know this, but it was Jay Clayton um right was was Jay Clayton the attorney Jay Clayton's the US attorney for the Southern District of New York. Um right he's a >> Yeah, he runs he runs SDNY. >> Yeah. Yeah. But he's on is he on the board of Fireblocks? And he used to be the chair he was the ch previous chair of um of the SEC. Um but I I've always thought of him as being decently pro crypto. I mean at least like we didn't think that when he was the SEC chair,

but then once Gensler became chair, he kind of moved into these advisor positions for crypto companies. I was like, "Oh, this guy actually likes crypto." But yeah, kind of a bummer to see him getting involved here. Um Rob, what else is on your mind? Santi, what else is on your mind? How big of a deal is this? Um, so Trump Trump is signing an executive order uh that allows private equity, real estate, and crypto and all all other alternative assets uh to be in 401k and retirement accounts. Uh scale of like one, this doesn't really matter, 10 being like, oh, this is a massive flood of capital uh that will actually move the market.

Where do you guys fall? Uh, pretty big I would say. What is the scale? One to 10, 10 being the most. >> Yeah. >> Uh, well, I don't know the particulars. Um, so yeah, I would like to read it, but it's pretty big. I mean, uh, people should remember like, um, what is it? 1979 was a landmark year where like Moswit's portfolio theory and there was a change in the law that allowed like pension funds to invest in alternatives and it detonated a huge wave of like it it gave birth to private equity as an asset class. Um, so, uh, yeah, I'm not I'm not sure the particulars, but my bullish

brain wants to think that it will have a similar effect cuz like you you in fairness, like you are able to invest uh through your 401k into some of the products, right? Like I guess like that's what a lot of the demand for Bitwise back in the day was like you you could buy through your 401k and it was like tax advantage and whatnot, I believe. Uh, so you've been able to do it. I just don't understand what the difference is now. >> Yeah. >> But maybe it's more Rob, I don't know if you looked into it closely, but I'm just speaking out of turn here, which is maybe it's more of the fact that it's coming from like an executive order gives more confidence to these allocators to like make a recommendation and get off of like zero, I guess.

>> Yeah. I think listen on the 401k side um this is good of course but but it actually hasn't been um it has been true that potentially depending on who your 401k provider was you actually were potentially able to buy crypto and retirement accounts already. Um the uh the fact that we're going to allow a lot bigger of a lot larger amount of alternative assets uh into call it retirement accounts is probably net good. Um but what you actually still have to do is you have to get the administrators to select that they want these specific you know uh assets and they want these specific vehicles in there. the vast majority of people in

their 401ks are actually in these like target date funds >> uh that like you know Black Rockck and other put together. Um so I I think it is call it a net positive. Uh it's not clear to me that it's a huge gamecher in terms of you know people wanting access. That said, of course, like you know, the the tax um you know, deferred uh access here or the tax deferred ability to invest um is certainly, you know, good uh for people and, you know, it's a it's an asset that potentially has appreciation over a long period of time that is kind of unrivaled and and I think we all believe that on this this uh podcast. So, I don't know. I I think it's a good thing. I I certainly don't think it was the thing. I I think the

market was up call it like 5% right afterwards, you know. Uh it it strikes me that that was probably an overreaction uh to to the news. >> All right guys, time for another ad break and then we will be be back for content recommendations and a little uh data that I'm looking at. This episode is brought to you by Geodet, the world's largest decentralized RTK network delivering real time centimeter accurate positioning around the globe. Powering technologies that enable precise navigation for drones, autonomous vehicles, first responders, farmers, and robotics, Geodet shows that blockchain can be a truly transformative force by delivering realtime centimeter level accuracy. Geodet enhances emergency

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It's still, ladies and gentlemen, still bare market for empire. We got we gota a lot of it's a lot of ads >> when you actually through them that some of them are like actually pretty if you're looking at video. They're not bad but >> not not bad ads, but man, it's a lot of ads. Lee Hurful makes the right comment. No 1.5x listening and have to wait. I'm sorry, Lee. I'm sorry. Um, all right. the the the last piece of news that I wanted to talk about was um Ripple's making another acquisition. So Ripple just announced that they're buying a stable coin payments platform rail for 200 million. I would love love your guys take on a this deal um but b just Ripple as a whole. I'm I'm just going to say

it. I think they're I think they're buying their way into becoming a very real business, very real business here. Um and I would love to hear you guys' commentary on this. Well, again, we I don't know the deal specifically. We talked about it in now prior multiple episodes, but you know, Brad and team appreciate that they have a very valuable kind of currency uh that they are now using strategically to buy real assets and and you know, uh Rob, I'm sure you can talk more about the Hidden Road acquisition, right? But again, you know, this is it's very smart of them to, you know, use XRP and their strong balance sheet and um and buy

assets that I think, you know, they're sort of working their way in into real world businesses and it's actually a very various a suit, I think. >> Yeah. And I don't have a lot to add beyond that. I um as Santi kind of alluded to we were you know large investors in Hidden Road and I'm a board observer there uh until that that deal closes um you know clearly between that and between rail here like they are very focused on the growth of RLUSD they are very focused on trying to be a legitimate player in the stable coin space. Actually the I think the first empire I was on with you guys call it you know two three months ago now we

talked about hidden road and we talked about Ripple at that time and I think one of the things you guys asked me was do I believe that Ripple could be a top three to five stable coin you know in you know in the next couple years and I was like absolutely like no doubt in my mind >> and I think the reality is is they're going to continue to buy things that help them proliferate the usage of RLUSD because they have this strong balance sheet. They have over, you know, they have hundred billion dollars worth of XRP and they can't sell that into the market, but they can certainly, you know, borrow something against it. they have, you know, billions of dollars of cash and they're going to go and continue to focus on building some of that original vision that they had,

which was that, you know, there is going to be payments on XRPPL. There's going to be people using stable coins, uh, or, you know, originally it was XRP to transmit value, right? And so, I think they're they're clearly doing a very good job. Uh I I happen to know, you know, without naming anything specific that they've been extremely active in terms of, you know, kicking the tires and doing diligence on a bunch of different platforms across a bunch of different verticals, but almost entirely it has been obviously with this idea of finding ways to proliferate RLUSD and so they're going to keep doing that.

>> Rob, uh any insights into the uh the way they're structuring these deals? Are they paying part cash, some XRP, equity in Ripple Labs, combination of all three? >> Yeah. So, I I won't comment on any one, you know, deal specifically, but um it's mostly cash in a lot of these cases, right? With um you know, call it uh equity as well. You can't really use the XRP token for any like realized uh acquisition. There's a lot of tax considerations that happen there that typically make it, you know, not particularly worthwhile. Um, and they also don't want to be selling the XRP into the market uh for or or >> sorry, say that again,

>> borrowing against their balance sheet. >> Yeah. So they can borrow against the balance sheet and um and they can raise cash pretty easily but also they they sell the XRP into market in a programmatic way every quarter which allows them to raise cash but you know they would they're they're haven't been as willing to do things outside of that programmatic um selling and to to go and sell um but there so it's a it's been a combination of of cash and equity uh in the in the in you know Ripple Labs or the the Topco um and it's been a lot of cash and They and you know that's what people people want. Um and to get these deals done that's what they they've had to do.

>> Fair enough. >> Rob uh when you think RLUSD becomes a top three stable coin ever top five. What are we looking at? >> Uh yeah I don't know if it become well listen I I think you know Agora Athena is number three right now. So, you know, obviously can't can't unseat them uh as their their largest investor. Um, and you know, I think I think Agora is going to going to be there as well. But listen, I I think RLUSD I I don't know what it is today actually. Um, but I would expect there's call it, you know, five to seven stable coins that matter in the future and I would expect they were absolutely in that conversation.

>> Yeah. Yeah. because I mean if you get past it's tether USDC then Athena then we get into SC USDS and die right sky and die um then it quickly goes into like not people I'd consider as like very attackable targets B which is I'm not sure if that's a I wouldn't consider >> I would call that a stable coin different product >> yeah Ripple has 600 million circulation it's pretty far down it's like uh you have even PYUSD has more circulating supply out there is close to a billion.

You have Pax Gold, Falcon USD. Never heard of that. >> What is What is Falcon USD? >> It's It's like an Athena competitor, I believe. >> Oh, not related to Falcon X. >> No, it's not related to Falcon X. >> Interesting. Falcon USD. Yeah, but Ripple has I guess prediction wise, we're looking at, by the way, Coin Gecko has a great category of stable coins and you can filter through that, which is probably what you're seeing, Yano. But like, yeah, that it's it's a very, to your point, Rob, it's a very concentrated like amongst the first two really, Tether USDC, and then it drops off from there. Athena being a really good contender there is close to now 10 billion, but that's still a fraction, right? And it just drops off from there.

Who How does this I guess if you if we're recording a year from now, how does this look? Who really wins here? Are we going to see one or two new stable coins? You mentioned Agora. Um or or is it going to be like JP Morgan coin that just like catapults to top three because of their distribution? >> Yeah. So, kind of kind of depends on how we how we define this. like like JP Morgan's going to launch this deposit token probably before they launch you know call it an actual stable coin that obviously they do have JP Morgan coin as well. Um if I were to just like you know take you know what is outstanding and say you know like JP Morgan's balance sheet and throw it on this DeFi Lama page would it

be you know as big or bigger than the things that are on here like absolutely right but does it have like real distributions and usage outside of the you know JP Morgan ecosystem? Um my expectation is no, right? So I think these things will be really insular within you know call it the JP Morgan correspondent banking market, right? Um and so it's a little bit like it's a little it depends a little bit on how you define it. Um if we just start slapping those things on here like they're going to dwarf uh everything else we're doing.

But you know if I start talking about okay well like who is actually you know getting used across a broad set of of fintexs like I don't think that's going to be JP Morgan coin or you know any sort of these bank consortium type coins. >> Uh two points on stable coins. There was an Apollo report on stable coins that I I got my hands on and I guess the to your point around like I think to inform the view of how this changes over the next year. uh you have to have a view on like what are stable stable coins going to be used for right you have a couple of key catalysts you have uh bridge brand you know bridge um um stripe obviously pushing that you have the other competitor I guess you guys are investors in raw I forget the name um

but mo most of the most of the stable coins in usage today is like native to crypto like a lot of it's just speculation right it's borrowing against crypto assets and just use onchain. That's changing a bit. I forget the number, but it's like roughly like now 10% and a lot of that's now B2B like I think as a category I think I forget who put that report. I think you might have tweeted it like a couple weeks ago, right? Um which is the fastest growing categories of stablecoin usage are like I think B2B is is is shining pretty well >> uh and like non-specative use cases, but they're still like sub call it 15% of the total utilization of stable coins. I would guess that that would you say that

that figure really changes over the next year or are we still going to have this kind of like very big um the lion share of stablements are just going to be used for like speculation I guess. >> Yeah. So so I think you might be referring to a report that we put out alongside uh Artemis data platform. Yeah. And and Castle Island. Um so B2B crossber transactions are the fastest growing uh you know vertical within stablecoin usage. You know we're talking you know at the time we put that out which was as of February um we're talking like a hundred billion dollars annually in transaction volumes. Um you know this is still to your point like relatively small um in terms of you know

call it like total transaction volume. Um but I I expect to your question that that continues to be true that they are growing extremely quickly. Now um do I think a year from now that you know call it um of the $2.5 trillion dollars of stable coin you know transactions that you know half of that will be for like B2B use cases? No, absolutely not. But do I think that hundred billion dollars will gain more market share over the next year than any other um you know vertical within the space? Absolutely.

Right. And we're seeing it. I mean I I can tell you I think there are 12 Fortune 100 RFPs out right now to do treasury operations in stable coins and tokenized assets, right? Like this is after the Genius Act passed. We're seeing everybody take this extremely seriously. uh people are going to start and and or continue to accelerate their usage of stable coins for legitimate use cases and in places where it's obviously a better product. So B2B, crossborder, anything that gets you around the correspondent banking system, anything around treasury operations that has to go cross border, across geographies and cross different types of assets. Like

for instance, um Coca-Cola gets 80% of its water from Western Africa. The reason they do that is because they like the mineral content and it makes, you know, Coca-Cola taste better. um if they need to send a wire from the US to Western Africa, which they will do regularly as part of their treasury operations, uh I would bet you probably 10% of the time that wire gets lost at a minimum, right? And it might get even when it doesn't get lost, you know, you're talking T+4, T plus 7, >> you know, settlement times, right? It's capital efficient. On top of that, a lot of these treasurers, they cannot I I was talking to one Fortune 500, they could only move their cash to a money to a yieldbearing account uh twice a week,

right? And so at, you know, if you're talking hundreds of billions of dollars of cash on hand and you can only twice a week but move between those a a cash and a yield bearing uh like a money market fund or something like you're giving up, you know, billions of dollars of revenue um in hundreds of millions of dollars of revenue at a minimum for a lot of these guys, right? And so I think what's really clear is that this is going to continue to accelerate, but you know, so is stable coin usage for for trading. So, >> I'm looking again at this report by Apollo. Um, stablecoin market cap roughly 250 billion. 85% of that is USDT and then USDC.

Almost all of it is US dollar. Um, Apollo predicts this is like their chief economist says stablecoin market cap could grow to two trillion in 2028. Currently, 255 billion. Uh, most notably, stable coin volumes have now surpassed Visa. So um yeah compare I mean transaction volumes 2024 stable coins 28 trillion Visa 13 trillion Mastercard 10 and so yeah I think I think the the the point that you made there around the genius act like that really I think is a huge huge detonator it's kind of hard to underwrite because I in all of my time in crypto I've just been terribly terribly wrong in my predictions like like a for instance I would have I would

have thought there oh maybe we get like a billion dollars in deposits and it's now like you know what is it 30 billion or 40 billion um one of the things I I've just observed anytime like technology has this like anytime you remove friction in this case the regulatory burden was a big friction point to adopt stable coins it unleashes like this nonlinear demand and to your point like it's if you can improve the cash conversion cycle like any treasurer worth their salt any finance department and any company understands that and so again it goes back to that insight that you had in that report which is so great maybe we can reference it in the notes which is B2B transfers is probably going to be the fastest growing category um and and you know over the next five

years probably account for a very decent share of overall aggregate stable coin volume >> yeah 100% what what was the number that the um black rockck guys put in there for stable coin transfers >> you mean Apollo >> uh or Apollo you said it was 13 trillion >> I'll send this to you but uh stable coin transfers relative to Visa and Mastercard or 28 trillion. >> 28 trillion. Yeah. I will say I I do I hate a lot of those numbers that get thrown around because um you know I referenced 2 and a half trillion earlier. That's the quote unquote adjusted number that the Artemis guys use. Um a lot of these transfers are like you know call it like uh quantitative like wash trading.

>> Yeah. >> In your report you strip away all the just pure speculative right. And >> we try to like MEV, we try and sandwich bots and like all that stuff that happens on chain which is makes up a big portion of that. It's still a very big number, right? But um we're talking >> in the sense of like these blockchains can support these the the movement like the rails are robust enough to support the activity, right? which is which by the way was not the case 2017 2018 like the point there probably the more salient point there is like we built this core infrastructure for settlement that can support massive scale so like that is no longer a consideration right like the fees are very negligible you can actually process a lot of this

activity um I know we want to go to content maybe this a good segue but there's a fantastic fantastic podcast I think it's the acquired podcast in visa that talks about this which is I think the the guy that like u not the founder but the guy that like really was instrumental to the growth of Visa as like a coordination like like network said uh something to the effect of if we were to build Visa again today we would most definitely build it on top of crypto rails and you know obviously guy we could probably have in the podcast but they've been fairly active in in seizing the opportunity that they see in like stable coins I would say >> yeah They've been extremely

forward-looking. Um, so they've I'm a huge fan of of Kai and his team. >> Yeah. I There's also an interesting Morgan Stanley report that um I can send to you guys that says I thought there's an interesting line in here. It says uh stable coins are disruptive to payment networks in the broader credit card industry. Stable coins could disrupt existing payment networks which have historically had resilient business models. And it goes on to talk about how uh credit cards and payment networks have been one of the most resilient business models that we've seen over the last 50 years and stable coins are the first real challenger to that. So I thought it was great. Um >> it's it's funny the all of these um equity research sellside analysts. I I wrote a rep uh and not to show my own content but I wrote a piece uh that I

that I've pinned on my Twitter like you know call it like six or eight weeks ago about like the collapse of the legacy payment model. Yeah. um specifically around this. And after I wrote that, I probably had five or seven sellside analysts from places like Morgan Stanley reach out to me and be like, "Hey, listen, like we're thinking about the same thing. Can can we chat?" Right. And everybody across the street sees the potential for this and they want to understand, you know, what uh and what it could mean for, you know, the equities of the things that they cover.

>> Yeah. Yeah. Um All right. Content of the week. my content of the week. This is actually this is super nerdy. Maybe I actually pre- getting into content of the week. I just saw Chat GBT dropped. That's why I've been like distracted looking over here. Um Chat GBT uh five GBT 5 just dropped and um I keep getting texts and people ping me different examples of of what people are using it for. And uh we actually have a slack channel at block works called AI kitchen where everybody who's working on AI they're like you know using claude or Google or um you know chat chatbt or vibe coding or anything just drops all their experiments in there. It's really cool thing. I would recommend companies if they're do something like that have like an AI channel to just show show

people what's possible. But um I just I just saw this thing this guy someone sent me this this thing from Ethan Mik who's a professor at Wharton. He said, "I had access to chat GB to GBT5. I think it's a very big deal as as it's very smart and just does stuff for you, but uh full write up in comments, but this is a make procedural brutalist building creator where I can drag and edit buildings in cool ways and and quote make it better a bunch. I touched no code and Chad GBT built this entire thing." So, I will say I haven't had uh as a segue into content of the week, I don't get really that giddy for products anymore. Um the when Chad GBT launches a new model,

I get giddy and I want to like cancel my whole afternoon, cancel my weekend. And uh that is my like because I sometimes get giddy for content. I'm like, "Oh, like a new new season of The Bear or like new season of the like that's or like new acquired episode just dropped or Sante, I know you love founders right now." like, oh, new founders just get a little giddy. I have that content feeling with actually which is so nerdy, but new models of new GBT models right now. So, that is what I will be nerding out with. >> Fair enough. >> Yeah. >> Yeah. You've been playing around a lot with that. I remember that that site you you did two that were pretty interesting. One where you could upload your podcast and it would rank like your your presentation and it would rank you

on like the delivery which is like pretty um pretty insightful. And then you did the one of like uh swipe left or right for VCs. I think that >> Yes. I built stories for and then like a VC ranker. Yeah. Yeah. >> It's pretty amazing. Uh my um to be fair I was I was driving and uh you know I I put on the acquired podcast in 2x speed and this person that I was driving with was like this is anxietyinducing. I hate it. So I I could I I've heard that I love uh sorry founders I love founders podcast but I can appreciate like some people just don't like the the the monologue I guess.

>> Yeah. >> But my content um was this report by JP Morgan. Uh it was just a very brief note I guess um this guy who's pretty skeptical. I mean he has like a very sobering look. Uh he's been around for a while. He's eye in the market by Michael S. I'm going to butcher his last name. Saliset Sambalis. Anyways, he's been at JP Morgan such a long time and and the note is something to the I sent you a link, but it says, "Do JP Morgan's blockchain projects argue for building positions in Ethereum?"

And any he has an interesting note around that. Um, you know, he talks about JP Morgan's Kexus product. uh you can listen to his podcast because he he touches on a number of things but this is a part of the part of the content. Uh I just found it interesting how they're looking at that and really like this idea of you can use public infrastructure does that mean the value cruel is going to happen? And I mean, this has been a long-standing question, fat protocol thesis or not. And so, it was it was just an interesting it's it's always interesting to see people coming into the industry and like comment on things that we've been talking about for such a long time. Um, and and so anyways, I like that.

>> Yeah, that's great. Rob, do you have some nice fiction for us this week? >> Uh, I I so I'm the fiction guy now. I like that. No, I'm actually gonna I'm gonna go non-fiction. Um, so, uh, a new book dropped this week called The Devil Reached Toward the Sky. And it's basically like, um, uh, interviews of a bunch of people who are around the, um, the start the building of the atomic bomb. Um, but, uh, by it was written by a guy Garrett Graph, who used to be, I think, the editor-in chief of Politico, and he's got a um, I think he was a Pulitzer Prize finalist. Um, and and he's he's written a couple of different books about like Watergate and other things that have happened historically.

Um, and I I like the book because uh I've been really interested in that period of time. I liked Oppenheimer, but he actually includes a lot of interesting details um that are um that are basically not been heard before, different types of voices. And he also focuses a little bit on kind of what happened after the dropping of the atomic bomb um and and Hiroshima. Um, and so I think that's in Nagasaki and and so I think that's been um it was it was pretty interesting. So that's a that's one I'll put out there on the fiction side though.

>> Devil the devil war wears Prada. >> That's the one that that I was talking about. >> Oh no. What's the actual name? The devil. What? >> The devil reached toward the sky. >> Gar Gar. >> That's the one. Yeah. >> Oh, nice. Nice. >> Now seeant was just trying to or sorry Yano was just trying to um disguise like he was actually looking at the double west earlier. That's right. Great. Great. >> But was it you that there's a great podcast on um the editor-inchief of Vogue, right? Which is obviously the inspiration for the movie. I think you were the one that tweeted it. No, >> yeah, yeah, yeah, yeah. Her biography is actually fantastic.

>> Like phenomenal parts. >> Yeah. >> Here you go. One one more. If you if you want something more light-hearted, this uh director Zack Greger, he did a movie a few years ago um called Barbarian, which kind of like came out of nowhere and was like a really popular kind of like indie horror film. I'm into horror, so I'll just I'll throw that out. Uh his new movie dropped this week. It's called Weapons. Is getting good reviews. I'm going to see it I think tomorrow. So, uh, >> of horror >> huge >> that's a twist that I >> honestly I'm not surprised.

>> Yeah, >> guys, I I got to tell you, not not to go way off the rails here, but um, Eli Roth was raising money through Republic for his like new production studio, and if you put a million bucks in, he would kill you on screen. And I've never thought harder about burning about putting money into a production studio than that moment right there. So, Well, you know, I've heard some crazy >> Wow. After Yeah, >> this might be the best clip that we're going to reuse for Empire. You should put it on TikTok is um I I would pay a million dollars to be to be killed on screen. I I >> um

>> Rob, there are so many jokes I could make, but I'm gonna spare spare the audience. And uh >> this I mean if there's a better way I don't think there's a better way to end any podcast that ladies and gentlemen y'all have a great weekend. >> All right folks thank thanks for joining. Thanks for bearing with us on our first live stream. I thought this went pretty well. If you guys have feedback drop in the Empire Telegram. We have a great episode on Monday with um Eddie and um I'm actually blanking on his name unfortunately, but uh basically the GC and the CTO from Andre Horowitz uh gave a really good conversation about just like essentially how do you launch a token these days? How do you build a legal crypto company? What do all the changes in DC actually mean for you as a

founder? This is really good, really good episode. So Rob, Santi, appreciate you guys. >> Thank you guys. [Music]