The Rise of Internet Capital Markets | Analyst Round Table

Transcript

Well, you know what's interesting is that crypto is very different today. Crypto has legitimate builders who like have head on their shoulders, who are commercially oriented, who are non ideological. I think that that really matters. That that new context really matters because in the past you had people who had to like maximally decentralize everything and, you know, frankly didn't have a history of building successful startups or did not have that web 2 orientation that really matters for winning markets. Quick shout out to today's sponsor, Algarand. We'll hear more about their Algo Kit 3.0 and how it's built to supercharge your app development on Algarand later on in the episode. Nothing said on Xerox research is a recommendation to buy or sell

securities or tokens. This podcast is forformational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Pocachio Ryan and our guests may hold positions in the company's funds or projects discussed. What's the bit? [Laughter] We should have led with Jack doesn't know who Rick Ross is. Yeah, that is wild.

Now it feels a little forced. But we'll keep Well, this is a real question. Like if you had to pick an age cut off to where somebody it would be expected for somebody not to know who Rick Ross is or understand that meme like is he at that age or is it 18? I don't know how old Jack is, but I think 18 and below you don't have to know who Rick Ross is above the pear bit. I eat pears and [ __ ] now. It's internet. Yeah, shout out to the pairs is internet lore. Like you have to know who Rick Ross is.

Maybe we're showing our Jack also doesn't have the internet. Yeah, he uses a flip phone. So though, I think he has the internet. I think he has like a pretty intense iPad in his back pocket at all times. Doesn't make any sense. How can he not have the internet as a journalist as well? He's just going to get out competed. Is it for a bit or is it like It's a pickup tactic. He's hitting on women saying, "Hey, I could never even, you know, I'm very unavailable, man. You can't even reach me. You got to call me." Who calls people anymore? Worse playing hard to get. That's more intimate. I guess that makes, you know, maybe they like that. I could see it.

All right, let's um let's get into it. Hey guys, welcome back to another episode of Zerox Research. Today I'm joined by the classic OG analyst roundtable crew. We've got Bacio, my other co-host. And Ryan, Cash Flows Connor, is back on uh the pod after a long time coming. Uh he he had to step away for several months. He said it was too much. He couldn't take it. His brain was overloading and now he's back. Um we've got the the threeman back in action. How you guys feeling? Yeah, I'm really excited for this freesome. Um, Ryan couldn't come because he was doing a lot more work, but we finally got to convince him to come after he went on Jack's podcast instead of coming on our

podcast. So, we finally managed to My my biggest realization um finally like appearing on podcast is that it's really hard to have takes all the time and you end up forgetting what you believe and I needed to dial it back. You just have to make it up. I think you you need to be if you're a host, you have to be reactionary, but if you're like a regular human being, I think you should have consistent takes. I don't know how you do it then. Uh I think it's fair. You I mean, you have to be on top of all of the current events and have an opinion or if not having opinion, at least understanding what's happening, which you know, I I understand it's it's

it's hard to always be on top of stuff. Um, but maybe before we get into the stuff today, uh, we have to, as always, talk about permissionless. It's coming up end of June, about a month out, maybe a month and a week out from now. So, getting close. Um, as you guys know, 10% off tickets. 0x10 link in the description. Use 0x10 the code. Um, everyone here on this pod is going to be there. Um, everyone here on this pod will probably also be in the dunk tank. So, there'll be an opportunity uh if you make it out to potentially drop some of us into the water. Um, and we'd love to see you there. That permissionless is kind of like maybe this is crazy for me to say, but like the block works event

if I'm going to be so bold. Um, and it's a great time to come out, see people from around the industry, chat with folks on the research team and the Blockworks teams. Um, and kind of mingle. Yeah, that's a great introduction. And starting postconference in July, we'll start talking about how DS is the conference to go to and then we'll repeat it every 3 to four months. Um, but I'm excited. Sorry, Ryan, please. Yeah, I I do think that permissionless is extraordinarily high quality. Like Bennett's very good good at curating um content and the at the last permissionless like everyone like the rooms were still packed at at the last talks which is you'd never see that. Um, and then just the the guest list, um, both the attendees and the,

you know, the people, um, on the on the panels are just like ultra high quality. So, yeah. And we're doing it in Brooklyn. And Brooklyn is great. Sick. All right. You guys know the shtick. It's 0x10% off. Link in the description. Get your tickets. We'll see you there. We'll all be there. We want to see you there. Um, let's hop into it. I think big thing is just like brushing through kind of some of the market action is, you know, Bitcoin is like back up testing highs again. Like there's exuberance in like onchain stuff in the trenches again. Um it seems like it was it's been a lifetime since people were doom and gloom and like everything

was going to zero and now like Bitcoin is back basically at at its all-time highs again. Um I don't know. Do we have any other big takeaways? you know, we don't have to get super into the macro stuff. I think it's been a lot of like, oh, tariff boogeyman and then that kind of like went away and now we're back to being excited about markets going up. Is there anything else big I'm kind of missing there? I don't think so. I think um Ian brought this up on the last time we had on and I've been like paying extra close attention to it. There are a lot of um passive flows going into Solana some way or another. like it's either validators buying up soul or like I guess nonvalidating companies buying up

validators and then seeding in more soul um by purchasing it on the open market. Um apart from that like hyperlquid has a consistent buyer as well in the assistance fund. We can discuss like if that's good or not and that's I think like a personal opinion to have. Um, and then Bitcoin obviously has strategy. Um, and there's more and more coming out. Like I read that the Japanese company or a Japanese listed thing called Metapay um that bought Bitcoin recently. So the general gist of this is that there are like pretty clear um I don't know if insensitive but like

at least neutral buyers for the large assets. Um I'm sure there's some for Ethereum as well. I think last week they actually had positive inflows on a few days which is rare for Ethereum. Um mostly it's been outflows. Um I don't have any commentary on the larger market like the past few days where there was a fake out. Um but in general I am like I think there are like historically it's always been money out of crypto um into US dollars in the sense that there were linear unlocks and people selling tokens very heavily. Um, and there are still obviously linear unlocks. I think Noah from um, Feya posted recently about like unlocks going into 2026. I I can find a

tweet maybe and we can put it in the show notes. But I feel like there's more and more tokens that are either buying back on their own. In the case of Hyperlid, we had Radium, what Jupiter, whatnot. There's a bunch of them. But there's also like additional buyers coming in from larger um either like cryptoreated companies, tangentially cryptoreated companies or sometimes even just pension funds who are like allocating to strategy and stuff. I don't know if that's the best way of allocating resources to be honest with you if you're a pension fund. But I mean it's all flowing into Bitcoin which is always fantastic. That's my take. Ryan, please.

Yeah, I think um I think the summer like we've seen investor allocator surveys where investors are you know or or sorry on the allocator side it takes them many months to spin up a portfolio and do the due diligence on fund managers and takes a while for the fund managers to raise and the survey data showed that allocators um were targeting the summer to deploy capital into liquid token funds and venture funds. So, it's just a lot of PO, like we've been saying it for the past few months, there's just like a lot of positive things ahead. The the macro I think is, you know, the only thing I think that matters in macro is AI. I think if you're going to anchor on the tariff

stuff, like sure, like maybe you'll trade around some wiggles, but AI is really the only thing that matters there long term. And and that's fantastic so far. And then um you know, the the reg the regulatory floodgates are open for Drivey Capital come to crypto. And it's it's you know it's near-term so very bullish. I will say I wasn't expecting us to go up this quickly this um it was that pivot right like that's why I I think you know Trump scared the market. He added you know you have to add risk premium to the or you have to discount what's going on in the market.

like it was a huge moment of uncertainty for a lot of players and you had to shed assets or sorry you had to shed risk and then almost 180 right and it's it's looking that people are getting the the approach on tariffs that they want which are targeted and lower um and you know the man's reversing course so it was solely dependent on that I think if he hadn't we would have had some chop for a while because that that that liberation day stuff was just it was absurd Um, so I'm glad that cooler heads prevailed. Yeah, there there was a very big pivot away from like what I think the market was pricing in in terms of like some kind of austerity amount of things with, you

know, proposed or like expected cuts from Doge plus tariffs plus a lot of other things combined. And then we see that completely reverse course and then now we want a big beautiful bill with lots of tax cuts and things. So it's it's completely in in the opposite direction. And so, yeah, I think what you're saying makes sense to that point, Ryan. Um, that the kind of the risk assumptions are are totally different now than they were a month and a half ago. Um, it's almost like COVID when the world shut down and then everyone extended their revolvers and then the government gave everyone money. It's like so you had to flip based on the new information very rapidly.

That's how it seems. And it seems uh I agree with you, Boach, as well on the other point of like just not expecting the markets to kind of rocket right back up to where they were essentially. So uh we'll see how things go from here. But yeah, it's it's been pretty surprising so far. Whether you're building DeFi protocols, enterprise solutions, or nextg DAPs, Algoit has all the tools you'll need to build faster, safer, and smarter on Algorand. Algoit 3.0 0 now offers native TypeScript and Python support, visual debugging, and seamless testing. Build, test, and deploy with tools designed for speed and simplicity.

Start building with Algo Kit today by following the link in today's show notes. This episode is brought to you by Ledger, the global leader in digital asset security. Celebrating 10 years of innovation, Ledger remains the most secure hardware wallet for your crypto and login, trusted by 7 million users and securing 20% of the world's digital assets. Follow the link in today's show notes to grab your Ledger now. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Another one that I think like a topic I think today that has rocketed up into the attention sphere um and kind of came out of nowhere as well is this believe app and internet capital markets coming right back to the front of the conversation. So, I kind of want to preface this discussion with we saw this

pop up a few months ago, January, February, I want to say internet capital markets was like definitely a um an intended sort of narrative that was being I don't know crafted or just like you know there was there was a goal here by you know different teams on the Salana side of things to have tokens maybe associated with like tech startups launching on chain. Um and the initial wave of that we saw like a lot of the AI related tokens and and I think Jelly Jelly was probably the big one um that people sort of coalesed around back in February I want to say um around this idea of like a tech startup launching a token onchain people trading that and then that like you know it's like an

innovative new way for them to raise some cash for this idea but also for people to like kind of have upside on the potential for this idea to do well or like you know gain and some verality. Um, which of course, you know, people in the trenches liked that. That was it's like a fun game for them. Um, we've seen Believe kind of spin-off of that. So, Ben Pastnac originally behind clout.me, which was kind of like a friend styled like social token, creator token styled launchpad. Um, you know, if you're a creator, you can have a token associated with you and then people can buy and trade that. Um, pivoted that idea completely to now believe and it's, you know, a similar thing. It's a it's a launchpad. you know, you create tokens for these ideas, but instead it's um it

seems the main goal here has been taking this like cohort of like web two startup focused creators um or you know founders maybe is the right word here. Um getting their ideas uh kind of maybe vetting them a little bit, having them launch tokens associated with their ideas and then letting people trade those on chain. Um and it's in its past couple of weeks it's done some crazy numbers. I'm going to pull it up. But I I think the big like question is one thing that's clawing at me is when this when this idea first came to the market, it you know people were just launching tokens on pump fund and uh I think clearly there was a need for some additional like parts and pieces like

the maybe the pump fund design wasn't enough for this particular use case and it seems like believe kind of spawned out of that. Um, I'm curious what your guys' takes are there and like, you know, getting at the inspiration of believe and like what what Ben is doing. Um, how do you feel about that that notion that pump kind of maybe fumbled the ball a little bit? Yeah, I think I think permission permissionless listings only go so far. I think that we've, you know, Pump has achieved incredible PMF. Um, I think it's but it's a very specific PMF. I I do believe it's a cryptonative game of

chicken that people are playing and and that's the thing. It's very hard as a legitimate builder to permissionly launch on a product with a certain reputation that's known for a certain type of activity. It adds a it adds a a huge layer of uncertainty. If you think of any project team who wanted to spin up a token with the you know pump at the end of the address, now is not the time for that, right? you're you're actually adding complication to your to your launch even though it is um perhaps um easier and more cost- effective. So I think you know believe TBD if it if it'll work I'm hopeful and I think that there's a decent probability that it will um but to for believe to add that

curation layer is that critical wedge that they needed to to kind of you know it's step one in the right direction of like making this work. So, you know, could have could pump Pump have done a cur curation layer for this type of activity like totally. Um, they totally could have they perhaps they still can. Uh, it'll be interesting to see what the the response will be. There we go. What is this? Oh, yeah. Do you want to show the 100% chart so I feel like it's a bit clearer? Yeah, let's pull that up. So just to qualify this data, we're looking at memecoin volume by origination. So seeing how much volume is being traded on these

different platforms. Um so obviously Pump Fun had a majority of basically the market here up until recently. And obviously there's another story with and we've talked about Radium Launch Lab and Bonk Fun. That's been another piece of things here. But um you can see believe app shot up here um took up nearly a third of actually almost 40% on May 15th of uh memecoin volume from these different launchpad sources. Um and cut into like pump pump funds dominance like greater like majority dominance of memecoin origination volume for the first time um ever. The combination of them and bonk fun essentially. Can I my um Ryan, I'm gonna unfortunately disagree with you. You know how much I

hate doing this, but um I I think actually it's sometimes good to not curate because it just you don't have to take an opinion. Like I know now we're saying you need to have a purpose and I think like with chain it makes sense like you should have a you can't just launch another generalized chain and expect to do well. I do think that launch pads are semi like we're still in their infancy such that I think it's probably good to just allow anybody like the the market is much larger for just launching random [ __ ] as opposed to launching a token startup that can be curated. Um I don't

know if I had to disagree with you on this because I feel like that's exactly what you said as well. Um, but one thing, okay, with Launchcoin, I think it probably inevitably dies out and I think we're already kind of seeing it. But I do think that the the idiots who are saying, "Oh, this was just like this is clearly not going as intended at this point." Half of the memes that did really really well were like joke memes where it's like this is a startup. Invest in my startup. But the general idea that you can just launch tokens to fund raise or like to get capital allocation onto your idea makes sense.

And will it happen on launch? Will it happen on believe? Probably not because the first iteration is always dog [ __ ] and it's always co-opted by idiots um and extractive people. What am I wrong? Am I wrong? It's just funny. Why? Bucks iron rule of markets. The first iteration is always corrupted by idiots. No, but it's true. Like if you think about it, the first iteration of every single crypto product is dog [ __ ] and then the second one comes and it's better. Like you can think about anything that you want to think about in

crypto. Dexes, lending, staking providers, they're always the first iteration fails. No matter how legitimate it is, they always somehow fail. And it just makes sense. The second one is just better than the first one because it learns from the lessons. This isn't a hot take. Yeah, I think this is just a n he's making a natural statement that products get better over time, which I ag I agree with that statement. Believe is the first to do this specific model, right? Like they're focusing specifically on the web two startups and having them launch the tokens. So like you could there's definitely a chance to improve that. But so I'm correct. I thought we had all agreed on this very clear natural observation. Well, you know what's interesting is that crypto is very

different today. Um, crypto has legitimate builders who like have head on their shoulders, who are commercially oriented, who are non ideological. I think that that really matters. that that new context really matters because in the past you had people who had to like maximally decentralize everything and you know frankly didn't have a history of building successful startups or did not have that web two orientation that really matters for winning markets. So, you know, I I don't know much about the belief founder, but he seems so far to be a little bit more web 2 native than um crypto founders have been historically. And I think that that's really important um and impacts the probability of success. So, um yeah, I do agree that the kind of perhaps the

V1s have always been bad in crypto, but it's it's a new it's a new market. So, I'm I think it's likely that that changes. I agree. No, I want to say I agree with you, Boach. Like there's there's some improvements to be made. It can be made better. But what I will say is like I'm I mean it's only been what two weeks maybe and maybe one week in the in the spotlight. Uh I mean I'll give past some credit for being like fully past mode right now that like people are posting like here's how you can make this better. Here's how you can make the discovery better. Here's how you can make like people buying early better, the launchpad, the you know the auction mechanism, etc. better and they they seem to be, you know,

semi-responsive to that. I think the biggest thing for them is just going to be, you know, if they have a if he has a big team behind him or if he's hiring more people now that he's got some traction and a probably a bigger war chess now, um iterating this product really quickly because the people who are in the trenches that are trading these tokens and want big outcomes, they want to see action like today and tomorrow and the next day. And if they don't see, you know, feature shipping, then you're right. I think it'll be okay. What's the next new product to bid on?

Okay. I just want to say we cut me off when I was saying it was dog [ __ ] But what I more so I wasn't saying that believe is dog [ __ ] I was just saying the first iteration of these ideas just never work out. The market isn't ready yet. No one has actually like understood. The thing is that legitimate builders take or like people who want to legitimately engage with a product take longer than two weeks to engage with the product like to engage with that sort of idea. So the first two weeks are people who are just like trying to make a quick buck. Um versus after that like that idea somebody picks it up and says wow like we can actually make this work. Internet capital markets could actually be something that is very sustainable and then in three months or six months we'll

see a better iteration of it is what I wanted to say. This can be from past and believe or it can be from a completely different team. But I think that logically makes sense like the first it even if you think about Telegram trading boss I mean they just got much much better over time staking like they're on Salana let's say like it was marinade not bad jet much better like they get an idea three to six months later they just develop it and it just ends up working out better. That was my whole point not that believe is our [ __ ] I don't think Believe is a great app. I don't I'm not particularly like happy about how they approached it, but I think it's it's a fine app, but the next iteration either by them or by other people where they

serve like their intended clientele might be better if that makes sense. Let's talk about that. Like that's what I'm pretty interested in here. Um I think that the go to market is very interesting on the supply side. um where you're kind of targeting these web two founders where like a4 million dollar equity outcome would be a fantastic outcome. I do think that there's a really good story where it's an underserved niche in capital markets and ex, you know, and the reason it's underscerved is because venture market structure just isn't there. Like you're not going to be impactful impactful to a portfolio at that size. Um so who should fund that? arguably it's retail and arguably they cannot because of current

regulations. So like believe like really like I think steps in like has an interesting wedge to and like could be very success successful on that thesis. Um but I don't know do you guys see problems with that? Um because at the end of the day like there are a lot of indie devs out there and none of them make money. So, are there are there going to be enough interesting new web 2 indie devs coming to market that you could keep people interested? I think that's a big open question. Bach, you're you're dying.

You're itching. You're raising your hands. Both of them over and over. I think I think on the retail side, it makes more sense for them to like use something like Echo or Legion to invest. Like, I think your returns are I think being able to invest on the retail side, like on a smaller ticket size, it makes more sense to invest in like I guess more established or like legitimate founders. Although I don't know what it's going to look like in six months. Like the the indie devs that might become might be amazing and choose instead race through other platforms. Um on the supply side, that's the difficult bit. Like the thing is that crypto has historically

pulled. Um, and Ryan, you know, when you say like we don't need ideal ideal logs, like people who are like maximally decentralized, the thing is that crypto appeals to that niche, and it's very difficult for us to pull in devs who don't appeal to that niche, who are also like going to stick in it for the long term. I think we're just getting there now because people still haven't recognized how much money there is in crypto. like like you said, retail should fund it and they can like in crypto historically retail just doesn't mind spending money on dog [ __ ] Um, but we just haven't gotten that like flow in yet from from founders and devs. And the

flow that we have gotten is from like ideologues who have very like clear opinions on decentralization and who are like very privacy oriented maybe um who don't like the way that the governments operate etc etc and those people like the top class of those people if they have the ideology that like they want to pursue decentralization they'll come into crypto but apart from that we usually just get like mid mid developers um or like lower tier developers because the better ones will I don't I know they'll they'll they'll get funding in like the traditional world or they'll take a 800k TC at Meta and not do any work or something like that if that makes sense.

I I think that there are but again I think that that's backward-looking. I think that things are changing. I I would say over the past, you know, greater than 18 months, especially on Salana, you're seeing web 2 people come poke around. And like I think the market's coming to this realization that like you don't really need to make your app on the blockchain. You probably just need to issue the token or like perhaps if there's if you want like US USDC deposited into your app, then you use the blockchain. But like perhaps you should just put a token on the chain and let people trade it and either collect trading fees or raise capital or whatever. Like and I think the Salana folks are embracing that reality.

um which is a much which is I think a more sellable and realistic um framework around why to use a crypto thing than the decentralization thing because clearly that didn't work for many many years and still isn't really working today. Well, I'd say the best product that we got this year happened because it's some guy who could have made a lot more money doing what he used to do, but instead was like, I want to build a decentralized alternative. Oh, what was that? Hyperlquid. That's it. Like Jeff went on multiple podcasts and said, I just wanted to build something decentralized on chain as an alternative to centralized exchanges. And that like

I feel like that's the guy you now that this is a very but he didn't need funding. So, I don't it doesn't really feel like it fits the bill here. I don't think he made something decentralized either. I think it was more like a regulatory ARB thing. Who's to say? Who is to say? I I just feel like it's outside the argument because he they didn't need the funding, right? That was that was so fun and then they launched a token. I'm specifically discussing the profile of the guy who's coming in like what he is as a person which is like somebody who has some form of ideology that relates to decentralization and has to build on the blockchain. Um and Ryan I agree with you like eventually I think the ideal goal is that just assets are issued on chain.

You don't need to make everything um on chain. Um ideally you do like yes trustlessness is good um permissionlessness is good but like if we can also just get people issuing assets on chain like people issuing their equity on chain I think that's already it and we're seeing more and more of this like settlement is now the thing as opposed to decentralization like you said so I think eventually it'll just turn more and more into that to that point like believe feels like a necessary step in that direction not not that it had to be this app or this founder or this thing, but they're they're making that bridge of, you know, Nikita Beer is pulling up his web two, you know, tech founder contacts list and

saying, "Hey, come la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la la launch token on Salana from from a bunch of guys who probably never would have done it previously." So, they're kind of doing their part to try to make that a reality. It doesn't I would I would agree with you like it's not just going to happen all at once like we won't just get this wave of like now every company launches a token on chain but you don't get there by not doing anything. So I think this is kind of like the necessary one of one of the necessary pieces of of going like one step further. I do think the longer term question of like do

these always have to stay meme coins or like do regulations need to change and like these can have you know future upside via conversion to the equity or something like that. That's been a big question as well. It's like these are just meme coins so it's like you know that's that's the common criticism right it's stupid because these are just meme coins again. Well it's like that's kind of the point initially right like just bet on the reality of the idea or whatever. Um, and people in the trenches just want to hit 100x, so they don't really care. But on a longer term basis, then it definitely matters. Yeah. I just wonder if it's going to become instead of doing something like this, we're going to get more loose regulation on Echo and Legion style products and we just instead focus more on that to fund

like these indie developers. We'll see. I think it's easier for the founder if it's the just launch a token way, but I think it's better for retail if it's to just use like something that resembles a traditional structure but onchain such as Echo or Legion. One thing I will say is that they also kind of brought up that whole memecoin thing on themselves because they they wrote that this doesn't represent equity which I don't know why they did that. I feel like they could have just avoided that language altogether if it's like a legal thing, but I'm not smart enough to be a lawyer.

So, not sure. Algoit 3.0 includes all the tools and open source resources you need to unleash the power and performance of the Algrand blockchain. Access a resilient network with instant finality, consistently high throughput and low fees, and layer 1 features like atomic swaps and native assets. No smart contracts required. Whether you're building D5 protocols, enterprise solutions, or nextG dabs, Algo Kit has all the tools you'll need to build faster, safer, and smarter. Start building with Algoit today by following the link in today's show notes. Ledger is the global leader in digital asset security, trusted by 7 million users, and securing 20% of the world's digital assets. In recent years, Ledger has built a comprehensive ecosystem of products and services, making digital

ownership more secure and accessible for everyone. Ledger's newest devices, Ledger Stacks and Ledger Flex, introduced the world's first secure touchcreens, making it easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, they have also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. Follow the link into today's show notes to get started with Ledger today. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. What's next, Daddy? Cool. No other takes. Um I think the next piece is like I want to tie this into the conversation of like trading apps. So obviously Pump Fun, Believe, like Bonk Fun, these are all

like, you know, making waves. Pump Fun has been crazy for the past year and a half now. It's like the kind of starting point for the trenches at this point outside of you know these hiccups from Bonk Fun and and Believe in like the recent month. But we we do know that like still a large amount of activity happens on trading bots, trading apps and there this has been like an incredibly competitive category. Um I wrote recently about Axiom who's gone on a run to take up more than 50% of trading bot volume on Salana which is a massive tally to do in the span of like three months post launch. Um, and and it's not the first time we've seen like

a trading bot or trading app be incredibly like revenue generating like pretty much right out the gate. Photon and Blex had and even Bonk Bonk uh Bonkbot itself had like pretty crazy runs themselves when they first like gained steam um and went on to be doing hundreds of millions in trading volume a day. The big thing is there's like these there's these weird interconnections between you know what's happening on like pump fun for example and you know and these other launchpads and what is happening like in these trading wallets and bots and apps that people are actually using to interface with things.

So you know one of the big pieces of discussion I want to say maybe a few months back was like who owns the end user. This is like I think this was just like a common talking point of like pump fun's going to launch a DEX and but it's like well do they actually own the end user so like will they not really take that much you know revenue and trading volume away from radium who has the liquidity. Clearly we've seen that you know they they have grabbed a ton of trading volume as a result of that. Um I can grab that chart but there are still like these like fairly sticky user bases of people that use trading apps. Um, and Axiom is just like another cycle of like a new app comes to market, combines like some of the hottest features of the

time, makes like the, you know, the most premier product and put some additional incentives behind that um, and captures up a significant piece of that of that market share. So like their big innovation was just add Salana mean trading with hyperl period things right now on chain and that worked out has worked out really well for them so far. Um, it kind of has to have you asking like where is this going? You know, one of the common criticisms is like the fee rates are too high. They have to compress. But like, you know, that that doesn't have to happen right now or next month or next year.

Yeah. I think as long as people are willing to pay them, it'll be fine. It seems like people are willing to pay them. And as I mean, Axim has lower fees than the others. No, comparatively. Danny, please. So yeah, so their net their net take rate is a little bit compressed comparatively, but that's largely due to like the referral schemes and the referral mechanism, referral rewards mechanism, but then they also have like a leveling system. So there is like a direct if you trade enough volume on the app, you can get down to like 75 bit net take rates. Um, and most of the prior trading bots are probably like 70 80 bips net take rates across like in general. So they have like they're they

are giving a little bit more back to their users. I think we'll just see a decrease as like I imagine at some point for example Jupiter launches a wellworking mobile app or they like use their moonshot acquisition. Um they have a pretty good mobile app already. Yeah, I think the I mean the end state I what you want is integrations and state and that becomes your moat and um you know I think these guys should I think the plan is probably to become a wallet. I don't think these guys are dummies.

Um, and it would be interesting to know what percentage of onchain trading takes place. I mean, I guess you could very easily figure out like it takes place on Salana and Hyperliquid. It's probably gez upwards of depending on how you want to count hyperlquid volumes. That's like all the volume right there. Yeah. I mean, hyperlquid has 80% of the pers volume and then Salana has god knows how much of the L1 L2 trading 60.

Yeah, 50 60%. It's a pretty significant percent. By what I mean by the Jupiter like mobile app is that there's clearly like people clearly have a better experience while using these Telegram bots and it's either because they offer them a better like UX or more likely it's because it gives them a slight edge. So I think if Jupiter says hey like we should actually be capturing more of this user flow or if a wallet comes out and says it before Axium etc can like I think eventually competition is just going to drive them lower although I have been saying this for like a year and it just hasn't gone down. Um they just like mask it with referral fees now I guess like the the lower the actual fee percentage.

Um, I think the next iteration is not wallets. I think the next iteration is trading apps mobile. Like I think that's where it's all I'm surprised at how little mo like I always say this. We have no mobile applications in crypto that are actually used. I know you're going to say Jupiter has a mobile app, but it's like who uses it? Everybody just uses Telegram. And I guess that's just like how we are wired at this point. Like I'm always on my Telegram. I don't even use Twitter anymore. Um, so like the information flow is right there. I get the contract address or whatever information I have and then I either put it into PVP trade to long a token on FEBS or I put it a contract address to whatever bought um, Trojan mainly to buy the token. Um, I think

eventually that probably will go towards mobile if we onboard more and more people. I feel like it's just Telegram is kind of unstable. They always force you to use ton for some reason and then they change their minds. Um, also it doesn't feel very secure to me to have it. Although I'm not sure if it's very different if you have it on a mobile app. I just feel like the end state like the winner probably builds out a proper terminal app for the phone where it combines Hyperlid and Salana primarily and then maybe adds other stuff. Um, and that could even be an existing wallet provider. Like I think Backpack acquired FTXUS. I would imagine they do something with that. Like they already have Salana

obviously. You can swap in the app. Um, why not also add FDXUS for like your centralized exchange thing? I don't know. It it would just make sense if your wallet provides that. Well, when I say wallet, I definitely mean mobile. Well, you should have clarified it. So, you should say mobile then. You should have said mobile app then because I said it. Therefore, I got the one point and you get the You are correct without question that mobile is should be the focus.

some of the new launches that are not the successful ones, right, are I'm seeing them launch with iOS Android apps like day one from their releases. Um, we've yet to see like, you know, it's I don't know if it's surprising from Axiom. The one thing that I've always said is just like if you can ship the app now like today versus two weeks from now that you should ship it now because they've printed how much in revenue in the past two weeks that if they waited around you know deving out the mobile app they would have missed all that revenue. So it's like they can drop the mobile app next week and you know they're they still made all that profit in the meantime. Um we'll see if they do. I think they certainly should and I think you know more apps should should

definitely trend in that direction. I agree with you though, Boach. Like, sure, Jupyter has a mobile app, but like I have Phantom wallet on my phone, and then I use Jupiter in the inapp browser on Phantom to to trade on Jup. Like, I don't download the Jup mobile wallet. Um, not yet. Maybe maybe they'll convince me to change at some point. Um, yeah, they optimized for like the wallet, like the the classic kind of wallet wallet experience. I think that the the important consideration in this market, it is I think you Danny, you make a great point. It is a proumer market today. So if you want to make money, yeah, desktop probably comes first, then then wallet to like kind of round out that experience and capture the whole relationship. Um, and I think you've written about this in your prior

piece is like you need advanced tools that traders want. It is it is a distinctly proumer market and the the the kind of V1 of apps while they are quite profitable because they you know make it easy to trade they they've neglected those features and yeah we skipped to Jup um so u when we use a wallet so and pump is the same right like they it it was a desktop app and then they finally after a year they have a mobile app as well because I think they realized the same significance but they've you know they didn't have they don't have all the pro features available like SC screening all the different screenings and like sniping and copy trading and stuff and so then naturally that has you know that's ended

up on these like trading apps. Yeah. One one thing I will say is that there's also like a dangerous part here where teams instead of like f if you're a trading bot you should focus on telegram. Everyone's using telegram. It's the primary way of getting information. You should always have a telegram counterpart. like it makes no sense to go away from the user I think which is what and we're talking about this what is that thing called vector yes tensor's product which is vector funfun they did the I think they did it the wrong way because they were just so far removed from the user like you have to I know they aimed to do like a different style of a product but it was just wasn't we're still as Ryan said appealing to the proumer not to like

some random person just scrolling for oh my friend Danny bought Bull buy bull. It's We're not doing that. That's the latest money I lost money. That's Gooncoin. I don't want to say Gooncoin on the bottom. Although Felix was announcing it in multiple chats saying I'm a Gooner bought Gooncoin. Um they went away from the user which didn't make any sense. Like you want to be on Telegram what people are used to and Yeah, that's it. I think there's nothing else like Sorry, go for it, Danny. Yeah, I was going to say the other big thing I think is like, you know, Ryan, your core

thesis for the entire year is this whole multi-product DeFi approach. And like that's the main thing behind Axiom, right? It's soul memes plus hyperlquid persp. And I think we're seeing that with a lot of these products now like Pump Fun, Jupiter, Radium, like pick your thing. They're all trying to horizontalize, verticalize, do a bunch of different things all at once. Um, it does feel like a lot of these trading apps, they're they're just kind of moving in the direction of like eventually becoming Robin Hood apps on your phone because that's all that that app is, right? It's the mobile app that has your stocks, it's got crypto, it's got options, you know, zero DTE options, like all of the It's got the gambling in

it, it's got the long-term investing, it's got the wallet, it's got the credit card. You know, I it seems like there's kind of an eventuality here for these trading apps to just like basically be a newer version of that and have all of the the different types of trading things trading but also saving and yield and all these other DeFi related apps, you know, actions available in one spot and all the curation and other things too. Yeah, I think free markets tend toward highly centralized financial players and um owning that user user relationship. We see it in trify markets and I think you'll see it at an accelerated pace in crypto markets actually. Um no doubt there's still going to be like little startups popping up here and there but

it just makes sense to do all your stuff in one place and it makes sense that um an institution like if you have savings deposits you should probably offer investment accounts because the money's already there. So yeah, the DeFi super app thesis, it's actually all one big game to become a DeFi super app and and Coinbase gets it too, right? That's it's like the entire reason for having base. So then they can integrate all these things directly into the exchange or in the like Coinbase mobile wallet app, which makes a ton of sense. I think we can call that one there. I think there's not a lot of arguments here. I think we're we're in pretty solid agreement on this idea.

This episode is brought to you by Marinade. Marinade is focused on developing staking technology that strengthens the Salana network and connects soulholders with the best staking rates available. With solutions for both DeFi and Tradfi, including liquid and native staking, as well as direct enterprise integrations, Marinad's high performance staking delegation platform brings billions in liquidity and security to the sole market. To learn more, follow the link in today's show notes. And thanks again to Marinade for sponsoring today's episode. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Well, next topic that I think we're in agreement on, but uh maybe the broader community is not in agreement on is around ETH. Um REV, how blockchains are or should or people

should think about valuing them. Um can we please my please? Can we do what? Pull up my funny tweet. Yeah, you can pull it up. What do you mean? He's asking me to do the work that he could do right now. Oh, dude. I'm pulling it up. I'm pulling it up. I can do my own tweets. I'll just I'll open it up. Um I think by this point people are aware that there's like this pivot going on in ETH culture and if you want Yeah, go ahead, Buck.

That's it. I just want everybody to read it. I thought this was a very fun tweet. I haven't seen this, but I haven't seen any of your tweets in a long time. I must have muted you. No. Why did you mute me? This is This is what Saul and stuff want to base the value of E on. It's like the token is burned once a year when there's 350 mil liquidated on a because E went down 14% in one candle. It's the VFXs curve E looped assets on mainet. And then this one's very key.

Saul RSA and Mr. David Hoffman every month go on a podcast and say Ethereum is money. And then Justin Drake gives a diet tribe on blobs, L2s, and the triple point asset and how it's going to become money. Because this is legitimately what I I do want to preface this by one thing. I feel like often times people just learn about revenue and they're like, "Holy [ __ ] revenue is insane. We need to use revenue for everything." And then that's also just a horrible approach to take because like the traditional markets are not only trading on revenue and cash flows and whatever you want to value things on anymore. Like traditional

markets are becoming more speculative, more narrative based, more like silly Billy. And then in crypto there's this entire class now that's like holy like this is a store of value and then there's a whole other class we just found out about revenue and like holy [ __ ] like I'm slapping DCFS on this bad boy and I'm going to value it forever using this method but it's like an a different mix like you need to take into account the actual market. I I don't think anybody here, even Ryan, I know for a fact, just like has a big speculative bone in his body and he just wants like he understands. So, if you're listening like Ryan Connor once said that he only values stuff based on RV, it's not true.

He understands the difference between revenue and narratives and speculation. Although we disagree on how important it is, he knows. Therefore, you should also know if you're one of those idiots that's like, "Holy [ __ ] this is a PE of 14. I have to buy this." It's just not It doesn't work. It's not how the market works at all. That's my diet. It's true though, Ryan. You have to agree. Well, the interesting thing about the low PE is that um or low price to sales is that, you know, typically that means that the the entity is being priced for lower growth in the future, right? You think that their growth or market share is going to come down. So I it is it's interesting to watch this conversation

evolve. Um I think you know today waking up and looking at the timeline I think people have more or less admitted that revenue exists and that it matters which is a big step in the right direction but just isn't enough. And now there's kind of this consternation about um oh but you know revenue is not the only thing that matters. It's like yeah dude no [ __ ] Um, no one no one thinks that the trailing 12 month revenue multiple is the only measure that you should look at on planet earth and consider it in the context of only itself and and nothing else. Like this all goes without saying.

And I think the sad thing is is that you know we have to exert a lot of energy just to get the basics right which I mean it it's not like it's not like Blockworks benefits from it's not like the analysts at Blockworks benefit as investors from helping the folks who don't understand financials and don't want to understand financials understand them. we it would we would actually be better off if they kept misunderstanding them because that's the opportunity for alpha. So, I don't know.

TLDDR. It is a tiresome conversation, but I think it's one that has to happen because at the end of the day, I do think that there's some um I do think I think that there are a lot of um unsopistic retail investors in the space and they've been told the wrong thing for a long time and over the last 12 or 24 months, they felt the consequences of um of, you know, of being purely narrative driven and um and I think we owe it to them to to to tell the truth. truth in in crypto financial markets.

Yeah. I will say one more thing though. I will give it to some of the people who are criticizing RA only for one thing and it's the name isn't great. I will admit that like we need to change the name eventually. But apart from that I agree with everything you've said. It it'll it'll it'll slowly morph into revenue over time and then it'll be like rev never happened. I'm hoping so. Ryan, I want to know. You've been listening to every you've been like speed running and hate listening through every ETH podcast and podcaster that maybe you like or don't like, but either way, I think you're pretty up to date on maybe where the the hive mind is at, but also like where the the maybe the

research community is at as well, like how do you feel about the the forward potential for Ethereum now that they've clearly shifted focus, right? Yeah. Yeah, totally. So, I um I should say that I do I do really like the ETH podcast circuit. I think that they are very good at what they do. It's it's a really they're really like I really just enjoy listening to the stuff even though I might not agree with the conclusions or I think that you know emphasis is misplaced. It's fantastic content. Um so it's it's nice to be back and and you know listening to to ETH media. Um, yeah. I think that the most interesting thing, like look, I've I've listened to

all the official coms that have come from the EF people on the podcast circuits and and and then the subsequent commentary from, you know, very important ETH people. Um, I've been talking to Darren and other and Mark and and others on our team who are ETH experts. The most interesting thing um up until today is that the in in these official podcasts the word revenue has not been mentioned once. Has not been mentioned once. Um there there was this um and there's these long segments of like how we need to tell Wall Street a story like from the ETH perspective and then they talk about the very complicated things that

ETH is involved in like L2s and blobs and censorship resistant things but again no mention of financial performance. So I I like pretty conclusively I think that they still just don't get it. I think that the evidence that the um the emphasis is misplaced that and that they still don't know who they're selling to. I I think that there's so other than simple window dressing and saying that we're going to do a lot more um they they haven't um you know they they haven't learned the correct lesson in all this which is you need um to make money to sustain valuations.

It's just so funny though that we like have this conver because I remember we had this conversation when I just started the pod or Ryan maybe when you first joined like the podcast circuit. Yes sir. Um and like I I was talking about it and I was like I'm actually really hopeful because Max Resnik is coming out and you know admitting some of these problems. So Ethereum might actually turn around. And then it's been what like a year maybe year and a half and it's just still hasn't we're still just not there yet where we're like recognizing it fully and saying we need to make a shift. Um there was a few months in there where RSA and David Hoffman were very clearly saying like yeah we we really need to shift. Max Resnik is completely correct. Hasn't come up since

then although I haven't been listening to their podcast. Um, this is interesting to see. My worry was always and back then I also said this is like I don't think that a company dies if or like I don't think Yeah, I don't think a company dies if they recognize their mistake and moves against it. Like that's actually a good thing, but if they're just like infighting. It's kind of like I imagine there's like CIA operatives within the Ethereum community that are like purposefully trying to distract each other from doing something that might actually beneficial. So because or else it doesn't make any sense. Like it's been two years. How can this be such a long grind and arduous process to like realize, hey, the chain should make a little bit of money. If

the market wants it and we want the market to recognize that the price should go up, we should. Well, they haven't realized that. I I think they they still have not realized that. the the the official language is that we need to make the chain faster and we need to make throughput increase and we need better UX but they will not acknowledge the the um the basic reality that they need to generate a lot of fees because the long-term solution or sorry the long-term plan is still to offload um execution to L2s and the long-term plan is to still be like this blob layer rather than this execution layer. So,

it's still it still shows this, you know, it's a missiondriven organization. It is not an economically driven organization today. Still, I had to pull this up. The uh CIA's old guide to sabotaging an organization. Whoops. Um, and so they had some key steps here, and I just think it's relevant like some of the changes that um you've heard heard folks talk about with, you know, the Ethereum Foundation now. Um, think changes that they're making for the better. Um, but some of these things kind of I think come through. But some of this is like insist on doing everything through channels. Never permit shortcuts to expedite decisions.

Uh, make speeches. Talk as frequently as possible and at great length. Illustrate your points with long an anecdotes when possible. Refer to all matters to committees. Make more committees. Have, you know, constantly spin up new committees for new questions and new problems. Haggle over the precise wordings. Refer back to matters decided upon a long time ago and then reopen them and discuss them again. Advocate caution. Always be cautious. Be reasonable. Be worried about the propriety of any decision. Always raise the question of whether the action as contemplated lies within the jurisdiction of the group or whether it might conflict with another committee or some higher echelon. And I think you can see a lot of these things like in their previous actions of just like you know we hear that the the ETH foundation was

like having some core decision-m happening through like closed Telegram chats like but you know decisions were being made like okay let me reach out to this guy and then like go reach out to this guy this channel. It's like not nobody knows that that's happening. It's like unclear to everyone. So many of these the debates and the conversations it's just like okay solo stakers we need homestakers and solo stakers to just like they are the priority nothing else is the priority we have to be careful we can't break the network we can't improve because we'll break the network I feel like these were all narratives for the longest time and you're right Bach like it reads right out of the manual of just like who the hell like planted like did the Salana Foundation plant people here uh or did we just fall into this trap

because it's crazy how like spot on that is I do think one of the comments that um Westy made maybe on a morning conversation today, but was just saying how I think a lot of the conversation around like the ways to value the thing like people are up in arms about rev and revenue and this that and the other thing. And I and I think some of it is coming to terms with like exuberance around previous valuations and like maybe those didn't quite make sense when the narrative piece of that kind of bubbles away. um and you're left with the non-narrative pieces of those things. And you know, I think some of this is a reaction to realizing what maybe an appropriate valuation for

something would be on a revenue basis and working backwards and saying, "Well, that valuation isn't quite high enough for me in my bags. So, let's go back to the narrative part because that will really propel us higher." Which in a sort of roundabout way, I think kind of makes sense. But in a long ter on like a long-term vision for like a tech platform. I don't know that that makes sense. Well, yeah. Yeah. The I think you you hit at it. The re the reason that you reject financials is because they don't make sense for what you're trying to do. It's it's a it's the lack of objectivity um in the ideological framing that forces these folks to um reject uh common sense. uh you know sad sadly I think a lot of

people are lying to themselves and you know perhaps you know perhaps they'll realize that sooner than later perhaps they'll realize it after it's too late like we we like ETH right like we want it to do well um but you have to be realistic and objective and I think that um when you when you have a necessarily a a political organization you necessarily lack you know the ability to do And maybe what's interesting is that like if we think of some of the other examples, you know, your your XRPs, your Cardano, your I mean just pick any token that went to a crazy valuation in 2021 on, you know, no real metrics or

activity. Um there is like like XRP has a clear opportunity and like Ripple has an opportunity here to to take that massive valuation that they have like clearly established a war chest from and then like spin out businesses as a result of that and build something there. So there there almost is this potential to have a fake it till you make it kind of opportunity in the space and like I think I mean not that ETH was fake there was a lot of activity on Ethereum in you know 2021 2022 2023 until you know they shipped it all the way to the L2s but you know they were making it and then I think there was an insistence to start faking it at some point but there's definitely still an

opportunity to make it like it it's still a highly valuable asset you know the EF has a ton of money all of these organizations that are ethaligned have a ton of money. So, um they they can make profitable businesses and they can make Ethereum a very valuable thing. There's there's plenty of time. Cool. Everyone's quiet today. We get our points out and then uh and then that's it. But I think there were some good funnies in there. I'm a bit worried about the CIA thing. So, I mean, I was blown away by that segment. I am I think that you're right, Boach. And I and I know that you tried to save face at the end there. I know that you actually do believe this. No, I don't. I do not believe this. Do not listen to me. I do

not believe. I I I know that I know that you do believe this. I'm shocked by I think we have to dig into it more. I think perhaps a long form research report on uh who is Satoshi? Um who did he work? Going forward. Let's never dig into it. Let's completely avoid it. No, this is crazy. The ETH guys, they figured it out. Max Resnik was a plant. No, but that was actually plant. All right. Well, I think we can close it up there. Um, maybe another big shout out. Permissionless, end of June, June 24th through the 26th. Be sure to be there. 0x10 for 10% off. Tickets link in the description. Um, we want to see you

guys there. We want you guys to come and dunk us in the dunk tank. I don't even know if that's confirmed yet, but I'm going to keep saying it. I'm going to fake it until we make it. And the dunk tank will be there at Permissionless in June and we're all going to get in it and Meo and Yano are going to get in it and maybe we'll get some crazy founders in there. I don't know. I'm I'm faking it again, but I think we can probably kill like convince somebody to get in that tank that's, you know, maybe I don't is totally going to be there. Pick somebody crazy, somebody big. Um maybe we can convince him to get in the dunk tank. That would be awesome. Um otherwise, join the Telegram. Uh come chat with us. Come meme with us in the Zerox Research Telegram and check out

the newsletter. New content every day during the week. Um, constantly spinning out other stuff that we're not chatting about on the pod or in the Telegram. Yeah. Uh, the newsletter and the chat very important. Permission list is the most important though because I get commission based on that. So, make sure to use code Pacio 10 to come to permissions. Don't use Picachio 10. Use 0x10. That's a lesson. Always use 0x10. I'm not even shilling my own code. I want to use I want you guys to use 0x10. I want the pod to do well. I want the pod to win.

Um, we will see. We will see you guys next time. Block Ryan. It was a graceful return to the traditional three men. Uh, and we should all be back here next week and we'll see you then. [Music]