Revenue Meta, RWA Looping & Uniswap Fee Switch | Roundup

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It's the revenue meta. If you are making money and maybe even buying back your token, Hype, for instance, is trading at 38 bucks right now. Do you know what it was trading before this entire thing happened? It was trading at 42. Any other altcoin, it's done. It's toasted. It's down 40% 30%. As as basically every single one of them is, the reason why hype is not is because it's buying back $4 to 5 million of its token every single day. >> This episode is sponsored by Canton, the only public permissionless blockchain built for institutional finance. We'll hear more from Canton later in the episode, but for now, let's get started. Hey everyone, quick disclaimer before we get into today's episode. Nothing said on Bell Curve is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and the views expressed by anyone on the

show are solely our opinions, not financial advice. Our guests and I may hold positions in the companies, funds, or projects discussed. Hello. Hello everyone. Welcome back to another bell curve roundup. You got Michael's one and two. Vance fellas, how we doing? >> Sunday, bloody Thursday. Man, >> there's supported zero. >> Or maybe we can go into negative numbers. >> What's going on? >> I shared this chart with Michael yesterday, but yesterday the quantum stocks went down like 45%. And today they went down another 11%. So today they're actually up relative to the rest of the market, but I mean, holy

equities are getting absolutely destroyed. >> Like honestly, crypto's hanging in there relative to um the equities, but I think if I think there's this whole cohort of like Robin Hood people who are just balls long the data center complex and are now just executed. I was gonna say there's a superp position joke somewhere in there about the quantum stocks being up or down. Had to get that joke up or down if you don't check them. >> My portfolio is in superp position right now. I have no idea. It could be anything. I have no idea portfolio.

Nobody knows. >> Manager's bag. You don't want to look at it because it might disappear. Look, I I think uh I I actually do think like that is probably an underdisussed element right now, which is the intersection of Robin Hood bringing in basically like highest growth, memeiest stocks with crypto means that when you give that access point, what happens after 1010 is that people are just like, "All right, got to find liquidity everywhere and got to be able to shore up holes. I gotta fix this. I gotta do that. I got to pay this bill and maybe I'm going to harbor some tax losses before the end of the year because I bought at 75 and it's trading at 40.

like the the the stuff that think has been going on is definitely real. And I I cow uh from Lions had a good tweet which I think he was the one who tweeted this where he was like if if you my brain is like all these positive signals >> QE uh you've got Fed cuts you've got you know like lower inflation like all the things that you would hope to be in line for what is happening right now and these are all economic in nature but then you've got my brain my gut which is all the kind of psychological elements and and kind of sentiment right now which is everybody's just like ah end of the four-ear cycle that was the top it's

over and like pack it up go home well might as well sell before everybody else does and I I I think what I ultimately think will happen is unless there is something that bubbles up to the surface in you know the data center trade the quantum trade whatever that may be unless there's something that bubbles up that's really disa dangerous are disastrous. Um people will come back into it and what will happen with crypto is that this will also realize that is is not a cryptospecific problem because if you remember everything that happened in 2021 or following 2022 and 2017 was a cryptospecific phenomenon which ended

the four-year cycle. This is not a cryptospecific phenomenon right now. And and so I don't think, you know, if we were to track this as a as a four-year, I it just isn't it isn't going to end with the 70% draw down in every asset in crypto because there isn't, you know, the FTX blow up or, you know, the the ICO craze being over or just the outright fraud that happened across the entire industry. Um and so until that happens, I I think that this is going to be a sell-off. It's not the end. Um and people will probably jump back in. Is that, you know, November or December or January? We'll find out.

>> Also, there are things that are not like like syrup is bottomed like it went up today actually, which is pretty pretty odd. Same same thing with Sky. Um like the DeFi names are kind of hanging in there. Like the alt season that never happened is kind of meant that these things are like perma bottomed in the sense that there's no other sellers. There's no other buyers which is unfortunate but uh there are no more sellers and that is the process of a bottoming. So I mean look like the the pico bottom for a was 50 bucks in June of 2023. It's at 192 right now. The tariff lows were 124. Like these things

are kind of hanging in there. >> This is this may be the alt season that people get. Maybe not the one they deserve, but there's things that have bottomed. it seems like at least. >> And so what's the through line of that, you know, and and this is something that Vance and I were actually talking about, which is it it's the revenue meta. If you are making money and maybe even buying back your token, Hype, for instance, is trading at 38 bucks right now. Do you know what it was trading before this entire thing happened? It was trading at 42. >> You know, any other altcoin, it's done. It's toasted. It's down 40% 30%. As as basically every single one of them is.

The reason why hype is not is because it's buying back four to five million dollars of its token every single day. >> I saw the cow tweet as well and actually I uh yeah my commentary on that as well was it obviously there's just market forces here which every coin can't fully escape. But I think I basically had the exact same thought is that you're going to continue to see this has not been an even bull market even for the last three years. Like some assets have done far better than others. And I think that now you know for the first time you actually have real institutional capital coming into the space that fundamentals it's not the only thing that matters obviously but it will matter more and more. But I think it might confuse some people because even there are good projects that have good fundamentals but

they are maybe technically overvalued at their current price. So you might actually see good projects that have real revenue actually rer rate down but then go up. Right. I think that's that might be the phase that we're in at the moment. Absolutely. And I mean this is something that I think was commentary around Palunteer even which is you know the Michael Murray billion dollar short. I I think for him it's like Palunteer is probably a really good company. Is Palenter worth like 2,000x price to earnings? Probably not. >> And and so maybe it's not valued properly but it is still growing at an exceedingly impressive rate and it is a very successful business. And it's so that's that's kind of like where the rub is. It's like not all of these are frauds and not all of these are going to

be like the things that sustain. Maybe somewhere in the middle is a lot of them. But here what I would say just to follow up on the the final thought on the child perspective which is as an investor if you're trading with your gut and your psychology and sentiment that probably works in the short term but it fails you in the long term. If you're trading with a very sober sensibility and with fundamentals that will do you well in the long run over time and you may have to take some short-term pain to get there. But that's how I break down that analysis. The only thing that is potentially different is what he also kind of said I think maybe not in the same tweet but another one which is the if if the self-fulfilling prophecy self-fulfills which is maybe the sentiment short-term gets so bad that

something bad happens. But once again, that's like a the reason why Celsius blew up is because all these assets were crashing. The the reason why FTX blew up is because they tried to pull liquidity off and we found that there was this massive fraud underneath. I don't think that that's the case. Um and so unless that happens again, I don't think that the self-fulfilling prophecy will self-fulfill. >> Yeah. Um so I want to actually maybe that'll segue into our first uh topic, which was some of the stress uh that we saw in onchain lending markets. Uh but before we get there actually guys just have an announcement for bell curve listeners here um which is a little bit of a bittersweet announcement but actually ultimately a super positive which is um uh this roundup we're actually dividing and conquering in the

future on uh bell curve. So um basically Michael and Vance uh have outgrown yours truly as a host here and uh they are uh they have a slightly new version for a show which is maybe a little bit beyond the scope of just crypto where I love to stay uh nerding out. Um but uh yeah fellas uh but for listeners this is not a goodbye to bell curve. You guys are still going to be doing this on the bell curve feed. Um and maybe we can do some you know uh co collabs uh from time to time. Cross cross on the airwaves. But um yeah guys uh can you just give like a quick you know two cents around what this new show is going to be when listeners can expect it all that good stuff.

>> Yeah so you know it once again it's still on bell curve. It's just a different, you know, uh maybe content uh bit and and it'll be two voices instead of three. Um but, you know, have loved, you know, building this um over the last couple of years and and collaborating on it and um it's exciting, but you know, have have enjoyed the ride um so far. And I I think kind of the the 30 or 10 second teaser is um we definitely are going to be talking about crypto markets as they come up. Um, I think we're also going to be expanding into maybe where crypto is going, which is expanding into other technology categories, whether it be AI, um, energy or some of the kind of more, um, I would say earlier stage but interesting, super differentiated

perspectives of what crypto is doing and and DeFi is still the core, but it is going to be many different other things at the same time. and maybe even expanding outside of uh crypto itself. Maybe talking about, you know, San Francisco where we're based, talking about different categories within technology um or life and philosophy. Who knows? It's going to be fun. >> Yeah. No, I I think uh we talked about which show that we wanted to base it off of. And funny enough, it's like uncommon core was one of our favorites from back in the day with Hu and Sue, which uh you know, obviously didn't end great for one of them. But um this show will be more philosophical, more broad, but basically all crypto. It's not changing from that.

Just want to make that clear. >> Oh yeah, fellas. Well, uh there's still going to be tons of Yeah, like I said, still on the bell curve feed and uh maybe from time to time we can still do fun collabs and everything like that, but >> um Okay, guys. So, everyone just stay tuned for that. That'll um uh I think start up after Thanksgiving is the current plan. But yeah, perfect. >> Before we get back into the episode, here's a quick word from our sponsor, Canton. The only public permissionless blockchain built for institutional finance. >> Tradfi wasn't built for 24/7 markets. Dei wasn't built for regulated institutions. But Canton is where the power of finance meets the promise of blockchain.

The only public blockchain with institutional-grade privacy, true composability, real assets, real markets. Why reinvent finance when Canton makes it work the way it should? Canton, where finance flows. As always, investments in blockchain technology involve risk, terms, and conditions apply. Do your own research. Let's talk about lending markets here. Uh, can we just talk about 1010? Uh, so I actually had uh Sonia and Romeo on the show last week. They were talking about this from a pretty in the weeds perspective, but yeah, we so listeners got a little bit of a preview of this where we talked about some of the dry like the liquidity that dried up. Um,

but I thought it would be interesting because kind of if we are going into some kind of downturn, this is typically when those kind of credit crunches happen and you see who's swimming naked and this is going to be kind of a first big test for DeFi, I would say, which is in a much more mature place that it's ever been. And I would like to get your guys take on what happened, but also, you know, if you see more stress um coming to these markets. And then Vance, I saw you tweeting about um RWA looping in general. So maybe we can kind of start with just the state of the union and and then maybe end on the RWA looping idea.

>> Yeah. I mean, what what's clear from the stable coin blowup is that there's people interested at borrowing at sofur plus 100 to 200 and lending at, you know, rates that they think could be as high as 11 or 12. then it makes sense, right? In the last crypto bull run, there were no uh positive interest rates for the most part. So, like that that didn't really make as much sense. And so, I think what we're seeing is the start of RWA looping. I'm coining that term. If you hear anybody else say it, I said it first. those people. Um, but basically what that means is you're going to see private credit come on chain. you're going to see new forms of credit come on chain like daylight and USDA are just starting to fill loan tape

and I think those are going to be huge going forward. Um I think Sky will have a big role to play here. I think a's horizon market will have a really huge role to play here. Um, and I think kind of the things that probably are less relevant are these kind of like I don't know like cryptonative like memecoin markets um those types of thing like the n like maybe those are going the same way as the NFTs and they're being replaced by this looping phenomenon which if you think about the cryptonative ways to trade perpetual futures and looping are the two that are kind of native to this industry and so it's really cool to see that community form it's really terrible to see there's a blowup involved and we still don't know where the stream finance money went. So like if we ever figure that

out, maybe we should have a pod on that. But it's awesome that it's that it's forming. It's a net new type of community which we have not seen in a long time. So I think that's something to celebrate. >> Yep. Only things I'd add are, you know, going back to 1010. Um it seemed like that originated from a specific vulnerability within Binance um in the pricing for USD. Um there's been billions of outflows from USD since and that's kind of like circled around different other uh yield opportunities within crypto. Um I I would not categorize this as like the first kind of test bed for DeFi. We've had many test beds. Some of them more violent than others. Um but the I I'd say there's a huge difference between um

looping or re uh looping or or reusing versus rehypothecating and where assets have gotten or ecosystems have gotten in trouble historically is rehypothecation to counterparties that frankly lose the assets and that's where you get in these like upside down insolveny issues um that we saw in 2022. Um the beautiful part of DeFi is that it's extremely difficult if not impossible to have that be the case. Um because these assets live on chain and that's kind of the direction that everybody is moving. You may have these like violent price action issues or these things where you have cascading liquidations. Um and look looping in RWA if there's a change in the value of that RWA, you can have

cascading liquidations pretty easily if you amp up leverage crazy. Um, but a rehypothecation is totally different and and creates a totally different risk vector that I think is is not possible within DeFi in the way that it's being built. So, I would say that's really like the delineation that we think about. Um, and so when you know, you think about uh unloading events or or d-risking events like 1010, it's painful, but it's not existential. And and I think there's also a bunch of interesting questions that come from this community such as uh who can liquidate RWAS? Like who's allowed to?

If you don't have a brokerage account, you can't really like take custody of that and unwind it, right? Same thing with lending markets. Um same thing like trading these fixed income securities. And so we're we're super excited to hopefully back a few things in this space that really pushed it forward. Uh but it'll be more institutional looking. It'll be more KYC, more whitelisting. Um and so there will be kind of a departure from the cipher punk ethos, but I think that's okay. >> Yeah. That and m maybe just double clicking into that a bit. Um one thing that we described is in uh in to partners or LPs in the space is in 2021 you had basically 10% institutional capital and 90% retail capital.

>> Yep. And that kind of breakdown of the landscape meant that you had token protocols who were launching airdrops that were really centric towards or or centrally focused on uh communities. You had um really people who cared about you know kind of the governance process and people who were getting paid to be governance participants and it was very communitycentric and it was very retail oriented. And I think after a couple of times blowing up retail um frankly that has started to shift. It also has really dramatically shifted in the last 18 months with the advent of the ETFs and the institutional products. And so now I describe kind of the landscape of investment dollars or or just kind of dollars on chain as being 90% institutional and 10% retail. And what happened after 1010 is probably that 10%

retail went to like 2%. Because everybody lost, you know, all the purse value, all the cascading liquidations. It's just like the like retail has just been like lambasted and flogged so many times that like they're just not coming back. They're not getting up off the floor. And so I I think it has been kind of a slowmoving process um in some ways, but in in other ways it's been very quick in that institutional capital is what is going to drive DeFi in and these markets going forward, which means that it it really is going to be an institutionalized product. um if you want access to it as an individual participant, you'll you'll be able to access it at the same level as institutions. But people who care more about two or three or 4% net interest

margin are really the customers that these protocols are going after, not the ones who, you know, wanted the free airdrop who are going to dump it within 24 hours or the ones that were looking for the thousand% APR uh pool twos in 2021. Like that stuff is gone. Um, and so I I think I'm very excited about where things are going just because it is much more durable value. It's much more sustainable value. Um, and and the counterparties are going to be there for the long run because they're the most notable financial institutions in the world. >> Yeah. I um Well, I want to talk a little bit more about the RWA looping. We were actually uh we had Sonia and Romeo from 3F. So, uh, disclosure, small but proud bag holder advance, they might object to your coining of RWA looping. But, um, I

I am curious, uh, I am curious, um, on the on the institutional side. One thing that's kind of put my brain in a knot, and I'd be curious to get your perspective on this, is I completely agree with the idea that most of the capital in the space is institutional. Um, at this point, I was uh, I was listening to a a friend of mine is basically starting a uh, you know, kind of a what's it called? like a risk curator type business and branding is institutional. In my head, I was thinking, okay, but what what's the advantage here over something like steakhouse, right, which I don't know if you'd say they're institutional or retail, but I feel like the trend is you kind of start with retail, build up a base, and then you pivot institutional or you onboard the institutional

customers. So this is maybe more of a positioning question from the perspective of founders but do do what advantage do you get of only being institutional versus just serving both? Is it a focus thing? >> So there there's multiple elements to it which is um well first off one participant is a thousand to 10,000 times bigger than you know another type of participant. >> Yeah. Yeah. execution is going to be at minimum deploying tens of millions of dollars versus you know tens of thousands of dollars uh for for a retail participant. So like the size is really what matters. Number two is in a world where we are hopefully moving towards clarity like literally clarity act um that that will hopefully give us some

understanding of of what these assets are and and how to regulate them. But if you got counterparties that can KYC and prove that they are accredited or qualified, that is a very different riskreward profile when you're talking about things like real world assets that actually are securities onchain. And even, you know, two days ago, Paul Atkins said anything that is a security in the real world or or not onchain is also going to be a security onchain. So if we're talking about Janice Henderson CLLO's, you know, AAA's ETF, or if we're talking about, you know, tokenized treasuries or if we're talking about anything, you know, private credit moving on chain, those are securities.

And and so like it is very difficult to have a retail audience interfacing with those because they're just like the current security, you know, regulatory regime is is very clear. Um and and Paul Atkins also said in the speech, he expects to change this, add more exemptions once we get there. maybe retail can come back and participate at at you know full-fledged but in the meantime it's going to be institutions that can kind of access these things um and so that's another element to it but I I would say you know the other reason why I think historically retail has been a participant in these ecosystems and just you know calling it out is because they've wanted to be able to access venture scale like returns in the tokens that aggregate value and the protocols

have um structured themselves to be you know operating in that way. Um and they've expected that the protocols and the kind of like positioning and the branding of the protocols will attract buyers of the asset uh that want that type of exposure. Well, I propose to you that what if you build a sustainable business model and instead of relying or hoping on these individual people coming in and and buying your asset because they think that it's attractive, what if the protocol itself is the thing that's buying these assets and is the largest holder of the protocol token and is using the cash flows that are generated by the sustaining and profitable business model to do so. in which case

you have no need for an individual retail audience in your protocol whatsoever because it's institutions borrowing, it's institutions lending, and it's in and it's the protocol itself that's buying the asset. That's a pretty strong loop that I think we're just starting to see kind of like what that would look like um in some of these protocols, but it it doesn't require a participant that is an individual um going forward. >> Super interesting. I I wonder if you know this is one of those lessons where you know I think a lot of going back to like 2017 2018 time frame there were a lot of ideas that might have been right just too early and I think one of the things that will mess up a lot of people that have been in crypto for a long time is you see a graveyard of um companies

that kind of had this approach but what's different now obviously is you have clarity and genius and um you know the embrace. So yeah, I think there there are a lot of there are a lot of areas that are like this, right? Where you really have to question your priors uh to understand what's going to work in this day versus what's worked in the past. But >> um I guess just like final word on RWA looping in general like where do you see early traction on different types of so you mentioned USDA so that's a stable coin which is secured by cash flows from uh GPUs right? Um, yeah, and and Meltum was on stage at Dask talking about something similar.

She might be a co-investor with you guys. Uh, but I'm just curious like where do you see on the looping side of things? Like where do you see traction from different types of RWAs? I guess >> energy and compute I would say are the two kind of obvious ones. There's also like CLOS's and like Acred which is Apollo's product. Um I think with all of these things there is this duration question where most of the classical RWAs that we talk about or that are even in like the ETFs that package them do have some duration component to them. That does not mean that they are not immediately liquid or cannot be made to be so. But there is this question of you know typically you have onchain liquidity that you can access atomically. But if you are looping even

something as simple as like USDTB which is the Biddle token or I guess Athena's kind of version of the Bidd token B only works market hours. So if you need to get your money out you know you have to wait till 9:00 a.m. the next morning. Uh so you need to build some sort of like overnight repo facility and that will be like another interesting product that gets created. And so like the trunching and the liquidity in the duration of these things is really kind of the next frontier that we need to push into as well as things that are able to liquidate these things compliantly, trade them compliantly, lend against them compliantly. So I think there's also this exciting vector of just there's tons of new products that need to be created to facilitate this. But um this is going to be a multi-year trend

that really the the value acrews to the people who hold the RWAS. Uh and a lot of that right now is Sky. >> And um ju just to like RWA is such a loaded term to like double click into that. I I think what we're typically talking about here is like a dollarbased asset that accumulates yield from some sort of business activity or some sort of like lending activity. And um that I I generally say is um you know yield coins maybe but you're like putting in stable coins or collateral and and um it is acrewing to the value of this asset and um I I think that as the stable coin industry grows there's just going to be

even further and further demand for this because they're going those assets are going to come on chain and they're going to be seeking some sort of yield. Unless all the USDC is kept in Coinbase and earning whatever Coinbase is paying you as an incentive. There's no other way to get yield on your stable coins on chain. Uh and and so I think these opportunities are scaled to hundreds of billions of dollars of collateral. I mean look at um you know what the AI data center um capabilities are in terms of sucking up capital. Um think about what that would be for energy. U there's you know commodities trading that is moving on chain. There's also trade finance that is moving on chain where you know customers that are some of the most notable um without saying names like financial or payments facilitators in the world they're interested in

borrowing because JP Morgan's charging them 15 to 16%. Well, what if you can charge them 12%. Like that's a pretty attractive proposition for them and it's pretty attractive I'd say for people on chain as well. Like that that type of a dynamic is something that I think we're provisioning access to. um and it's going to live on chain and it's just going to be more transparent and there's going to be a cost reduction element to it um be because of that. So like that's kind of the outset of what this RWA ecosystem I think becomes um tons and tons of opportunity. Yeah, I think the repo market's a super interesting analogy uh here where there's an observable pattern in Tradfi, right, of basically taking a very safe trading

strategy like a convergence trade you run on treasuries and just levering it up uh to take more risk on it. And so it makes sense to me some I I was actually listening to the Zach guy from Bridge talk about this. Uh he had a really great phrase. I'm going to forget exactly how he described it, but a lot of that financial activity is just going to move on to blockchain rails. It facilitates it much better. So, yeah, excited to see what happens in this world. Everyone in crypto loves to talk about transparency, but would any serious business publish its payroll for the world to see or hand competitors its contracts? That's not a feature. That's a bug. And it's why most financial institutions can't operate on today's public rails. Canton network is different. It's the only public permissionless layer 1 blockchain built with privacy at its core, sharing data

only on a need to- know basis. That's why Goldman Sachs, NASDAQ, and Broadidge are already building on the network. Only Canton delivers the network effects of a public chain with the privacy and control real finance demands. Learn more about Canton by following the link in today's show notes. As always, investments in blockchain technology involve risk terms and conditions apply. Do your own research. Speaking of alts, regulations, changes, uh we got a proposal this week from Hayden uh from Uniswap uh the long awaited UNI fee switch. So this is I'm not actually going to read from the post. I'm just going to read the summary that he posted on Twitter here. So today I'm incredibly excited to make my first proposal to

unis swap governance on behalf of unis on behalf of unis swap. Okay, this protocol turns on uh this proposal turns on protocol fees and aligns incentives across the unis swap ecosystem. Unis swap has been my passion and singular focus for the past eight years. yada yada. I'm going to skip actually to um so he mentions uh this restriction of not being able to turn the fee switch on was in great part due to a hostile regulatory environment that cost thousands of hours and tens of millions in legal fees. Fortunately, the regulatory environment has shifted. This proposal comes from a strong desire to see the unis swap protocol win as the global decentralized exchange for tokenized value. At a high level, the proposal one turns on protocol fees and uses them to burn uni. Two, sends uni chain sequencer fees to the uni burns

100 million UNI from the treasury representing the protocol fees that could have been burned if fees were turned on at protocol launch. Introduces protocol development uh protocol fee discount auctions, a a new way to improve LP outcomes internalize MEV to the protocol. It introduces aggregator hooks uh which turns unis swap v4 into an onchain aggregator that collects protocol fees from external liquidity sources. Um and there this is a big part of it which is labs will stop collecting fees on its interface wallet and API to supercharge distribution and adoption of the unis swap protocol. So that's you know yeah big um big uh update there. So I think those are those are the main

parts of this and obviously it hasn't passed yet but I think that people are generally um there's kind of first of all people are generally pretty bullish on this because this is coming from Hayden for the first time. Uh and so I would love to get your guys breakdown on not only the specific terms of the proposal but also what this means for alts because I think this is kind of a bellweather very symbolic um you know act that's been talked about for a long time. So, wherever you want to start on the specifics of the proposal or what it means for alts in general, >> this has been talked about for years. I I think um what are the chances it doesn't pass?

I'm kidding. >> The but actually like this truly has been talked about for years. Um I I think it's great to see kind of a recognition of, you know, what's going on. um and maybe the directions of where kind of the industry is going in in terms of value acral. Um and yeah, I I hope that it is wellreceived and and um it actually works in the way that people hope that it will. Um I I do think that there is a real big question and you kind of touched on this Mike, but if you are a shareholder of Uniswap Labs and you do not own any UNI tokens, how do you feel right now? pretty terrible in

that you invested, you know, they raised $100 million at a billion dollar valuation um for something that was making tens to hundred million dollars of ARR that just got turned to zero. Um I don't know how they amilarate that or how you know maybe there's some kind of backroom negotiation that happened for that to happen, but this this touches on something that we've talked about multiple times on this show, which is who gets favored. Is it the shareholders or is it the token holders? Well, I guarantee you that the shareholders definitely have rights when it comes to securities laws and they definitely have shareholder protections when it comes to you know securities laws and unless you are declaring that the uni token is a

security those rights do not persist for the token holders and and so there there's going to be a big kind of question I would say that comes from this as to um how do you how do you traverse both having an equity and a token if you're talking about you know the same value approval mechanism for both. Um you're obviously going to be disadvantaging one of them when you allow for one of them to have, you know, that value approval. Um so maybe this gets sorted out in the fullness of time. Maybe things already have been sorted out behind closed doors. Who knows? Um but that was my visceral reaction. Um just because I thought that this would be a perfect case study as to how this could potentially get sorted out. And it looks like the answer is we're gonna

basically take the balloon and squeeze one end to benefit the other end. >> Yeah, I agree. I actually hadn't even really thought about it from the perspective of the shareholders, but that's really tough. I mean, this is I think it unis swap is in a really difficult position. They are in a sense may not sound overly negative but a little bit of a casualty of the Gendler era here where I I fully believe that they're a great you know team that had all the right intentions but you were just limited in terms of what you could do during that period of time and you know I think unis swap was kind of sometimes talked about as kind of the poster child of this weird clash of incentives in between an equity instrument and a token and I I have to respect Hayden here. I think he is

plowing through and doing maybe the short-term painful but long-term thing that needs to happen, which is having both of those. To me, it just feels I have a strong internal bias towards things that are clean. Uh, and so it was just always going to be tough to make both of those things work. But it's interesting because at the same time that we see Hayden doing this, we're also seeing Circle talk about their new L1 Arc having a token. Um, almost every major exchange has a token. It's like folks are going the other way, too. And so yeah, I guess that's that's kind of an also an interesting meta point. But for me also why this is symbolically important is because with the backers that unis swap has, you know, unis swap could have done this at any point.

They're doing it now. I think people will view this as a line in the sand that others can safely acrew value to the token. And you saw Lido, there were some immediate follow on proposals that also, you know, uh, directed fees to token holders. Lido me being a major one. So I don't know. Um, but I have no idea what's going to happen to the shareholder side of things. Like I think that would have to get made whole somehow right? >> Something tells me probably not. I would also say like I saw some math being done on Twitter about how much the buybacks will actually be and saw some, you know, some other math from the Aer Drrome team on on what they might actually be. And I think there's not a broad consensus on on how much volume is going to be able to be monetized here. I think it could

be as low as high eight figures of millions of dollars per year. It could be as high as like four or 500. But a lot of the analysis that I saw that was interesting was if any fees are charged on any of these pools, they become uneconomic, especially ones that are doing wash trading or kind of low volume coins. And so there is kind of like these interesting second order effects that will start to become apparent once this is actually flipped in terms of what is the viability of a go forward business model based on a fee switch. I imagine they have also done this math. So it's, you know, smart people disagreeing on something that should be quantifiable. Uh, which always makes for an interesting discussion.

>> I one thing as well that I feel bad uh maybe to be a little bit more negative, Nancy, but there's the okay, what does this mean for the whole space, but then what does this mean for unis swap specifically? And you know, it kind of struck me as I was reading this proposal like, man, there was a point when unis swap was just so dominant and this would have been such a market moving event. But now you kind of look up and you're like, does it seems like unis swap has lost market share. It doesn't seem like that. They've lost market share. >> It doesn't seem like that. They have >> measurably >> strong base and on kind of the new most important chains, they've definitely lost market share. And I think the other thing is that Aerodrome seems to be gaining market share. We don't hold air

drone, but I was tracking their announcement of they're combining tokens. They're moving to Ethereum mainet. They're also launching on ARC. Um, it's going to be more of a horse race from here on out basically for the entirety of crypto. And I just think this like legacy first mover advantage is just basically gone. >> And I agree. I think they are a casualty of the Gensler era. Um, and maybe this is a little bit too um, punitive, but I I also got the sense like one of my visceral reactions was them finally turning this on after years of deliberating and debating. Um, and also it's like we've known what this is going to be for, you know, quarters now, maybe even months. Like why why this week is

the week that you choose to to do this announcement, not even like earlier this summer. Um, and it it just feels like OpenC finally announcing their open tok or their C token, whatever it's going to be. It's like this is like years too late. Um, and and so I I think maybe it's reactive in that sense where they notice, you know, that things are kind of dwindling and and trending poorly. Um, but yeah, it it does feel a little bit reactive and um it it feels like it should have happened way sooner. Mhm. Um, yeah. And, you know, to be like a little bit more positive as well is like they've still got the brand. They've still got, you know, dominant volume on ETH main chain. Like one way you could

look at it is if you're a believer that Dex volume, you know, is going to take back off on ETH main chain. Like they've still got all the volume there. But yeah, I think that they've got their work cut out for them. It seems like uh from from this point on. One other small meta point here too. I don't know what you guys think about burning 100 million UNI tokens from the I I I just I don't see what that gets you at all. I I think I've never seen those burns correlate to any number go up action at all. Uh >> so this was a big debate with Sky as well where there was all these tokens that had been bought back that had they're literally just being kept in this multisig no corporate entity around it, no foundation around it, no voting process around it. And people were like,

you know what we should do? We should send those to the burn address. What does that accomplish? doesn't accomplish anything. Like the the right structure for these things is those tokens go to some sort of permanent capital vehicle. That's something I disagree with on the uni fee switch one where it's like we're going to fund ourselves with uni tokens each year where the mandate is to never sell the tokens but to develop technology that is open source that benefits everyone in that ecosystem. Like there there are no good things to do with these like tokens that have either been bought back including burn them. like they should be held in a permanent capital vehicle that's used to push the ecosystem forward with tight controls around the major ecosystem stakeholders and and their governance process as to what to do with them.

>> Yeah. I mean, so when you say the permanent is that DATs for the most part that you're thinking of? >> No, not DATs. No, >> I I think of those as non-permanent capital vehicles. >> Oh, interesting. You may be about to use the Fafo method to figure out whether they really are tokens are >> talk about a narrative and a category that is dead beyond dead. >> Dead dead. Um that was so crazy because it was so obvious the whole time as it was going through and >> was it obvious over >> networking themselves into some MNAV calculations.

>> Oh my god. Um well although maybe to be fair it does look like bit mine and uh strategy are those guys are going to be still that's like the two that have emerged right from the I mean sailor wrote the playbook right but it does feel like bit mine is going to be a permanent fixture and player in Ethereum and unless you guys feel differently but >> the the the general uh perspective that I' I'd say we have on debts um just you know now it looks like I don't know that the dust has settled but it's definitely getting closer to that uh settling is that there's two that matter. You're right. It's Michael Sailor with strategy and Tom Lee with Bitmine. And if you're not those two, then you don't matter and you're probably going to trade below 1x

MNAV. The other thing is it's not very easy. It's not like a sure thing that you can just get the MNAV back up. If you're trading at a 0.9 point 8 085 MNAV, you're not very easily going to be able to do a financial or corporate financial transaction that allows you to to get back to 1x and and people say, "Oh, well, what if we just buy you?" Well, buying a publicly traded company requires shareholder approval uh and the board and it requires some sort of premium to market value. And so, it has to be a large enough premium for it to make sense to buy the whole thing. Um, and it if it's at that like point8x, it's only a 25% premium to get to the 1x mnav. So, like there's there's issues there. Um, and the volume is the lifeblood of these things. Um, but that

being said, and and volume is is dwindling if not zeroed. Um, that being said, I'd say the the crossing of the chasm moment is creating financial products that are able to be traded in brokerage accounts that have a access point that is not easily accessed for basically people who can only trade in brokerage accounts. Whether this is pod shops, whether this is individuals or 401ks or or what have you. If you don't have a publicly traded equity, you won't be able to get, you know, access to it uh or or be able to distribute that product. And and so I think that that is the remaining kind of like value here.

Um but but that you know it doesn't necessarily need to take the the sense of a a DAT that trades on MNAV. >> Yeah, I agree. Um maybe like in closing here, I would love to get your guys take on you know we one of the points on that you're bringing up positioning institutional and the shift of institutional versus retail money in the space has changed. Uh I would like any other lessons or points like that you know to to give to the audience because I think there are a lot of instances where the future is not going to look like the past and we have to unlearn some lessons. We've covered some of them like don't just burn tokens willy-nilly.

That doesn't mean your price is going to go up. That doesn't actually correlate to anything really. Um you know in like the implications of you know a more institutional market than a retail market. Like if you had to if if you could wave a magic wand and have crypto unlearn some lessons that we've learned from the past, what would that look like from your guys standpoint? >> Man, so many things. Um, well, airdrops are dead. >> They should be. >> They the community is your business development and partnerships and sales and all that like that that's dead as well. I think that that's more of the institutional or or maybe just like the lack of retail focus. Um, like that that is very clear at this point. I think what's becoming more clear, which

started with hype a year ago, is that when you have real value acrruel, you will be outperforming the rest of the market. Whether that means that you're not going down as much or whether means you're going up more, um, depends on the market. um the fundraising strategy that you have to go through. I I would say um look there there will be certain funds that are able to raise a fund um more so than you know 10 or 15 or 20% of the size that they wanted to. Um th those you'd probably count on only a couple fingers. Um, and so if you are a founder in the space and you're looking to raise capital in the next 12 months, um, reset expectations.

Um, and I know we've been saying this for a while, but less capital, lower valuation is frankly the only way that these things are going to get funded. Um, and when you come and pitch VCs, at least, you know, if you come and pitch us, um, pitching a business model that happens to have a token versus here's a token, we're going to figure out a business model later is the only way to get through. Um, just some random musings. >> I I think that's all relatively true. I think the other thing is just there may be this trend where the stable coins and then their backing collateral are like in this super cycle and then

everything else is kind of just like left behind. Um and I think that's a very large surface area for startups but at the same time it flies in the face of a lot of the startups that are out and alive today. And so that could be painful but I think ultimately it will mean that the space gets more institutional and much much larger. And that's like this RWA looping community stuff. That's why I'm so intersect, you know, interested in that intersection of like the crypton natives and their their cryptonative trading style, but these new assets and these new form factors of of bringing yield on chain and the stable coins that power them all. It's just uh it's just pretty awesome in my mind.

>> I I would also just close by saying too, I think that people in this space have a really skewed understanding of what it means to create value. Um, and creating value is really hard and I think the archetype of a successful founder, you guys probably have some perspective on this from the fund side as well, but I think the founders that might have done the best in crypto will probably need to, many of them will just fail, but I think everyone's going to need to evolve into a place where you're scing something, which is what a lot of the early founders did. They were kind of this tinkerer visionary founder type into scaling. And I agree with you like the stable coin space is probably the most interesting area very wide very broad surface area but you need you need

like you need to be able to scale into business and have a enterprise sales function that you can work with fintex and yeah I I think a lot of the the era of kind of hey my gigabrain me project can raise hund00 million because I'd know some infra stuff is just that is dead and it's never ever ever coming back. Um is >> honestly that has been dead for a year. Yeah, >> maybe recognized from the market. Um the the other thing just sorry to interject the the thing that that that this just peaked uh in my head is um the perspective that I you know you raise a seed you raise a series A whatever you want to call it and then like the next

phase is you dear for the token launch and that is that is also dying on the vine as we speak where the ones that are going to be successful are the ones that and and I don't know if we want to think about this in like series or like stage, but it it used to be like I've got 25 30 people. We've got like we probably don't even have real market product market fit yet, but like we're starting this scale a little bit. Like let's launch this token and have number go up. Um that does not need to exist anymore. And we are calling into question that with portfolio companies that haven't launched assets yet, which frankly like the ones that are going to be probably doing the best in the next year or two are the ones that are like launching their token after they've already hit

profitability and scale and being able to say, uh, hey, we don't even need this three-year cliff or this three-year like unlock schedule because like as soon as we launch this thing, it's working. It's live. Like boom, it's out. and people now have access to this value that they didn't have access to before. And and that I think is going to be a huge shift as well. Um you know, we we call this like moving from early stage to late stage in terms of your launch strategy. Um it used to be that you would launch it and there would be demand because there's retail. Well, what if there is no retail? And then you're talking about institutions and institutions are going to be the buyers of your asset. Well, institutions don't care that you like are a series B company that's still searching for product market fit. In

fact, they're going to be apprehensive towards that. And so that's why I think you see a lot of these token launches happen and then fall like a stone because it's like, okay, well, who's buying it? Who's interested in this? And and so until you have a business model that works, I I frankly think there shouldn't be zero buy, zero interest. >> This is I think Vance, you've said this a lot. The cure for too many tokens is more tokens. And I think that's actually what you're seeing, which is you launch enough tokens, they fall, and eventually the this is something that you actually did not need regulation to fix. And eventually people were just going to get sick of this. And >> yep, >> it takes a while to play out, but it's played out. And no one wants the type of things assets that people are launching.

I have a sexy road map, a gigabrain, an on founder, and it goes up a thousandx. That's just not happening anymore. Chinese team lowflat Binance thing >> just like the that people used to say was just so absurd and I'm glad we're done with it but the transition is always painful. Um and that's why if you don't have a 5 to 10 year time horizon it's just like you got to have that for basically everything too. All these data center AI plays. Guess how long data centers take to build? Long time. the uranium mining complex. I'll see you in the 2030s.

>> Quantum computing. >> Quantum computing. RI rigetony computing or whatever it is. >> Computing computing. >> Italian team quantum computing. Lowflat >> son of boyd boy family investor. But when everything's going up, it can mask all these problems, which is, I think, historically been somewhat of the issue with crypto. Um, but these are the times where we actually figure these things out. And the macro environment is conducive to doing that and especially bringing productive assets on chain, which is the silver lining in all of this.

I do also think, not to underline my own point here again, but I do think one of the things that will really confuse people is even good assets are overvalued and will need to rerate in some instances before they can resume going up because I I think there are some assets out there, not to name any part, that are great and they're winning and they're gaining market share, but the token is going down. And my perspective on that, that actually could be rational. You can just the valuation can just be way too high. And that's what DeFi, this was what largely happened with DeFi, right, with Sky and a it took a long time to work through that insane valuation overhang, but now they've worked through it. So >> there are some projects like that on that. The only thing that matters is price to earnings.

>> Yep. >> What's the cash flow of the asset? >> All these things and more will be discussed on our to be named podcast. Exactly. Um all right, fellas. Well, maybe that's a good place to wrap it. And uh I'm very excited about the new show. Um yeah, guys, still on the bell curve feed and yeah, we I'm sure we'll do lots of crosspollination and all that good stuff, but I'm pumped for it. Um and >> it's been great. It's been a great ride. Thanks Mark. >> It has. It has indeed. All right, fellas. We'll see you soon. Thank you. Bye. [Music]