Solana & Shopify, Tornado Cash vs DOJ, Coinbase & Circle | Roundup

Transcript

foreign I feel like we're like uh so we haven't done a round of in a couple weeks yeah you know it's been obviously we covered some did some specific episodes not roundups around friend Tech that was last week we had a regulatory pod and um I mean I think there's been some activity but not a ton I would say but I think we we have a good good content and material to talk about during this this Roundup for permissions all right man here's what I want to talk about I want to talk about friend Tech we did that episode with ansem that I thought was pretty interesting um there's it's been a couple days since then so I just want to do a quick update there uh we have tornado cash uh then there's an interesting collaboration

between Solana and Shopify that happened and then coinbase made an investment in circle and that has some implications for uscc um we can so we'll try to talk about all that we'll see if we get to it first thing is um friendtech I'd love to just get your not before we look at Dune before we look at the transaction data and all that kind of stuff would love to just get your like thoughts on that episode and the last two days and if you've thought more about that yeah I thought it was a good episode it forced me to think about um kind of whole two conflicting ideas at once in my head on one and then I looked at the comments and the feedback from people

and um a lot of people reached out so now I would have expected you to go on there and uh I saw a part of me like first of all I think it's very positive from an onboarding perspective from a usability perspective it's gotten a lot of traction over a hundred thousand users um I think you were the one that mentioned this but the flow of course it's on base and I'm very bullish on bass as being a very positive positive for this space but the it sounds to me like and I haven't gone through it but a lot of the episodes I wanted to get your thoughts on how easy it was to get initiated and Bridge and to get started and and that's really important because um I think that is in and of itself

really positive that now we are getting closer and closer to even before account abstract in the state of the world where it's just really easy to use these apps putting aside my thoughts around is it good or bad around betting and having a you know speculating on influencers like I'm like is it the right implementation of that I'm not sure I actually lean negative on that but the idea uh and I think you and I both agree on this which is it feels like the relationship between the content creator and their fan based ought to be reinvented in a more direct intimate way I'm not sure this is the right

implementation and I reference things like steemit and bitcloud and other prior iterations of that and compared it to stable coins fascinating but don't work really um or haven't not not sales algorithms algorithmic yes but uh but yeah look I um I'll pause in a minute but I think net net I I still haven't signed up uh I'm very curious in terms of the activity that's happening there and uh you shared a tune dashboard right before this episode and we'll cover that here but um but yeah you know that's uh so so that's my my thinking yeah the biggest breakthrough for me has been um

it feels like the future of connection with um like fan connection with uh with either artists or celebs or even just like Founders that you enjoy following and other people and things like that like it's really fun to be in like I don't know like in raw you know like Rob lechner's chat for example like children and Lesnar's chat and people are just like talking about different things and his chat is like very focused on just like kind of shooting the [ __ ] about news and then you go into like disclosures chat and there's only 50 people in disclosures chat and he's like showing behind the scenes of like how he just made this song it was really cool and then you go into someone else's chat and you're like they're doing like trading strategies and I'm like no I don't really care about the trading

strategies like I'm gonna sell I'm gonna like sell this this now they don't call them shares they call them keys keys so I I don't know like is it friend Tech the future of like that connection is that the platform I have no idea but it does feel like we've it there's this unlock about connecting with fans and I'm yeah it's made me think about like you know there are some baseball players there's some football players some basketball players some artists that I would love if they got on the platform I would buy their keys instantly not because I think their price is going to go up um which was my original thought of like because it allows you to go long on people that you enjoy it's actually this access point that um things like patreon and I always I think I still think of

only fans is like just like this porn platform still but like I'm sure I'm sure it's evolved into more than that but like I don't think either patreon or only fans have have nailed that and um hugely successful businesses by the way usually yeah yeah no I agree with you like the the access thing is is very interesting um and so uh one of the things that was brought up during the episode was and I asked the question like what would be the things that you would change and it sounds like video and general chat because right now the chat is direct only right like you don't have access to it's like not an open chat between all the key holders and these that's the biggest problem of

the whole platform right now is that you have to and there's this like workaround which is um people are basically saying so you'll ask a question in my chat or you'll say hey like what you know you'll ask some question and uh I have to say like hey Santi just asked this question quote and then I respond to it so yeah I actually saw it so so I have the keys to uh to some of our to some blockworks people and um I saw one of our analysts this guy Matt he uh he got this question it was like you know he did the retweet quote thing he's like hey who's your who's uh who do you like more Mike or Jason I was like oh he's not gonna answer that is he and sure enough he answered it but he I mean it was a smart

move he said he said he likes both of us so uh that was I was like all right you passed that test but it did get me thinking I was like man like what else are people saying about block works on here or like what's happening in these like private chats you know so it got me thinking yeah absolutely um the thing that gives me pause is sort of the unlike other platforms like patreon is this kind of price constant price feed and the implications that it may have on just uh you know thinking of worth uh I mean certainly there's a lot of criticism on social media that's that social media has created more anxiety and for folks and

is this is this net positive in many ways it is uh I could see in a world where some people become really obsessed with the price and demoralized if you will in a similar manner as nft collections right have really gone down in value um I think technology is neutral but certainly you know it doesn't feel good it feels great if your price goes up let's just be honest it feels probably doesn't feel as good if your price crashes um and so yeah it's just going to be interesting to observe I've been I tweeted out and said I would love to see a correlation between like the number of followers in other platforms particularly Twitter and

how that is translated into the price of the key at um on friendtech because as you pointed out in the episode there are certain people that don't have many followers on Twitter but on Forensic they are actually wildly popular I think it's influence people I think yeah I think there's a strong correlation between what people perceive someone's influence and Power in their space to be and then less other followers which it's interesting because as we've known on some of the traditional platforms like there's a lot of bots historically people have paid for followers and so it is um this certainly is more a real

um you know it's a market right and so it's it's there's more there's money behind it so you understand true influence I guess and interest in a particular person um and it allows for I mean I guess the upside cases that it would allow up and coming people that are putting out good content or just generally to be discovered because markets tend to be way more efficient in discovering value right and that the gap between real value and discoverability like really compresses right and so whereas in social media platforms traditionally like there's there's a lot of accounts so you're like well probably probably paid for those

um or they're a bunch of bots and so um yeah yeah the other so you said um it gets you excited when you know your price goes up or maybe gets you demoralized when your price goes down you know the actually an interesting thing happened this morning which is the every Friday they give out the air drop points so the point these points that are off chain but will eventually impact an airdrop and uh you know I really haven't been playing with this app to get an airdrop like that hasn't even crossed my mind really however this morning I didn't get any points and I was kind of pissed off right I was kind of pissed off because I was like oh I've been you know I've been using this app a lot why didn't I get any points it's interesting to see I've only thought of airdrop like air drops

and points and these kind of things is like positive reinforcement mechanisms I've never thought about them actually as negative reinforcement mechanisms where you might have some good users but if they didn't get what they feel is their worth then it actually disincentivizes them to use it so anyways we can look at this Dune chart I mean these transactions have uh completely fallen off the table so if you look at before August 18th transactions were kind of sitting around 1500 a day by uh August 21st they had peaked at 30 8 000 transactions in a day that chart is now down only since uh since the 21st uh and they are now down to 2000 transactions almost back to the original levels so these are some

I mean just very bearish charts I would say but you know sellers is catching up to buyers um money that went into the platform is now streaming out of the platform um is that okay yeah this is not this is actually in that's just inflows continue to be positive but what's the output like the net the Nets low is that negative no I think it's still I think it's still positive right yeah yeah so look I mean I think still money is coming in and when I say money is more like users are coming in um although at a slower rate yeah and what's interesting is total protocol

fees is what you were just showing them but it's north of three million or so a portion of which it gets shared with uh the key owner um some people like 3.5 million 3.5 million that's aggregate that gets split amongst the protocol Developers the team and and then the key holder right so folks like Kobe have made uh 80eath or so I think you were saying the episode exactly exactly so yeah anyways it'll be interesting to follow it yeah overall I mean the this is um zooming out a little bit uh obviously

base people should go listen to there's two episodes that we've recorded with Jesse it was one of the league kind of leaders uh within coinbase uh to spearhead that effort and um we recorded the second one right before they were launching and this kind of uh on-chain summer and bass is part of that where it's it's been getting a lot of traction and so that's good to see you know um it's just the uh you know just generally my my thinking is that bass is going to be incredibly positive for the space it will allow people to venture into this world you know um and you know I'm looking at over 100 million users of coinbase um that potentially are gonna Venture

into um you know up three and have a applications um and access that so uh that for me is really the most important thing and something that I will continue to Monitor and probably we'll talk in this this episode yeah yeah base just hit 16 transactions a second surpassed eth pretty remarkable I mean hats off to the base team right a week or two after however long it's been live um we're already past eath so that's off where do you want to go next um let's talk tornado I think yeah that's uh development that came out yesterday Thursday so that was Wednesday yeah so um the update for folks I can share it right here doj just arrested tornado

cash co-founder Roman storm uh and a couple other folks were involved um in this piece I don't know if you were able to read the piece but uh and oh there are of fact sanctions against uh Roman seminov as well um the two let me just read some of the blockworks piece two co-founders of tornado cash were charged with U.S federal money laundering and sanctions violations on Wednesday one of the co-founders Roman seminov was additionally added to the office of foreign assets controls especially designated Nationals list Roman storm who's the other co-founder uh was uh they're both deemed responsible for laundering upwards of one billion dollars in criminal proceeds through the mixing service which if you guys haven't used tornado before it's this mixing service

um and uh yeah that's that I mean that's kind of the update I the first important thing I think to understand is that the the US government only attributed seven percent of the activity in tornado cash to a legal activity they continue to kind of make this claim in the piece that uh the the quote-unquote majority is illicit but they only attribute seven percent of the activity in tornado cash to illegal activity and so then I think that begs the question well what are they really going after here what why is this why are they really going after this if it's 93 is legal activity and I think the key to the government's argument here uh this account Seth Seth for privacy had a great threat on it um the key to the government's argument

now is is profit instead of custody their previous key argument in precedent cases was was about the custody of these funds now it's about the profit and uh there was this piece where they talked about uh the the torn token the tornado cash token and I think without torn I doubt there's a case to be made at all here um and I think this is a I think this case is kind of turning from you know custody and illegal activity and they've started to realize that maybe there hasn't been as much illegal activity happening on this platform as they once thought uh I think the court is now going to start to focus on on the profit motives as there was this kind of you know maybe as they would call it clear profit motive at stake for the founders indicted here so I don't know I think

it's a pivotal moment here I think it's a real shame I don't I'm I'm sure I'll get some some backlash for this but I think it's a real shame to go after tornado cash and I think that this I would call it neutral Tech should be able to remain standing and I think that you should go after the Bad actors you shouldn't go after the platforms that enable the Bad actors and I think we're seeing another this is Napster 2.0 this is this is um you know like uh Ross ulbricht all over again like this is I I think we I think we're going after the wrong folks here they agree it's a very pivotal moment in terms of privacy which is you know fundamental you know right in my in my mind and um there's all there's a couple of

things that people way smarter than I have commented and brought attention to one is the idea between you know developing code and Publishing code and the implications that that may have or historically it hasn't had um and this obviously is not an example of that precedent um and the the Nuance here is that you know these developers they they sort of burned the keys um at some point and then you know what for people you know that just sort of means that they're not able to take down the protocol like once you bring the keys like it's out in the wild like you deployed this working thing and it's just gonna live on forever and so you

don't have control over making modifications no one can really kind of force your hand um but then there are some arguments that like they they've thought about changing the front end and making some things like that was I think a big part of what I will think be what gets argued in court um you know their motive and their intention or what they could or could have not done because they you know one point spurned the keys so it was gonna be interesting to follow um you know some folks were pretty witty and just Framing and analogy of saying hey messaging services or car developers okay well there's you know uh certain illicit activity happens and people are using messaging

services to communicate does that make you liable if you developed a car and cars get used by you know criminals does that also make you like like where does it stop I think a big part of going back to your original comment that uh you know that the six percent numbers is low is a lot of it in part of enabling what is a very clear enemy of of the state which is in the offic sanctions which is North Korea like Lazarus group has been behind very large hacks of certain protocols um like Ronin and a few others and they've they've used tornado to kind of launder These funds and I think that's uh that's

if I in my thinking that's probably the biggest issue here which is you're you're basically you know have a loud a clear enemy on the state to to use a piece of technology tornado cast to to get funding and and that's very problematic right uh you know North Korea and so I think that's uh a large motivator I won't say all of it but uh you can't know for sure but I think that's a big piece of it right yeah yeah exactly I think it um you know it has to go to the courts obviously but like this would set a horrible precedent right it would say it would kind of allow this stretching of the term money transmission and it would really expand the reach of these kyc AML

laws to to practically every non-custodial privacy privacy tool and if you think about that you know maybe that even includes Atomic swaps right maybe it includes non-custodial dexes right and I think this like this logic that a non-custodial service has to implement kyc AML with without prior precedent or legal impetus for this is is just this absurd claim but it would all but but if it got pushed to the courts I would have this very it would have a very negative impact on D5 yeah absolutely yeah um yeah I remember when this first came out uh this was months ago right um one of the founders got uh put in jail Alex I believe who recited resides

in in the Netherlands he got put in jail and then released I think on bail um and we brought on uh you know we talked about it in the regulatory episodes we will talk about it you know when we have um you know Rebecca and Jake back again um around what is the president right as you mentioned like where is that placed in other defy apps um and I think that's uh sometimes sometimes you know they go after a specific kind of the this feels certainly more on the edge right which is you know closer to enabling like just laundering and just you know

alfons if you will um but but then that's such a really bad precedent for some like you know uniswap and other amms and whatnot so yeah it has unintended consequences second order effects I think it will be heavily you know argued in court and uh probably peel back to some extent I just hope at least I think it yeah here's my just maybe my concluding thoughts on this is that I think that it comes down to whether or not you believe technology itself is morally neutral or is a good or a bad thing and for me I think technology itself is morally neutral right it can be used for good or for bad depending on the intentions and the actions of the people who create and use it and I don't think developers of

Technology are you know are inherently evil or or good oftentimes and I think that the responsibility lies with those who choose to use technology unethically right for example like a cyber Criminal Who hacks into a private data is more culpable than the programmer who made the hacking tools um and I think you know a lot of people might bring up the Oppenheimer example with nuclear technology there's I wouldn't get the I don't think the person who pioneered nuclear energy nuclear energy is inherently evil maybe someone who creates bombs might or who drops bombs might be evil but someone who creates uses nuclear energy for to power a city is a good person or maybe you could also look at algorithms right

developers who who create algorithms to maximize engagement they're I wouldn't say they're you know they're they're evil but maybe companies that have that enable algorithms to spread misinformation I would say they're not doing a good thing but then they're also companies that use algorithms in a good way so um the key is uh intent and motive and I think that's what's going to be the point here in the defense and and the argument in court which is um you could argue and that the motivation here was to have privacy and I think you know reasonably speaking you want to have privacy you have privacy in the financial system like it is vital to to be able to to have the the possibility to have privacy you know in in a crypto context

um and and that is I think I think that is is is is is a valid defense um and so yeah we'll see I think it's going to be very interesting how this gets um interpreted and and you know resolved in court if you will yeah yeah I mean I'm in this chat with some different crypto Founders and one of them posted this thing that I was I've been thinking about this morning which is it makes a he said it makes a lot of us in this industry who are agnostic to the use cases of the technology we build think twice about whether we could potentially be scapegoats if a bad actor uses such technology for evil this then limits Innovation um yeah and I I just didn't think about that this morning so

yeah absolutely hey everyone we'll get back to Empire in just a minute but before we do that I want to let you know that we have permissionless coming up permissionless is Big conference that block works and bankless put on together it is the biggest the best D5 conference in crypto this year it is in Austin Texas September 11th through 13th if you've been in crypto for a while you know that bear Market conferences are the best kind of conferences we have a phenomenal lineup of speakers a lot of the guests that you hear on Empire are both going to be speaking there you will have the opportunity to meet them there and a lot of the topics that we cover on Empire ZK attack roll ups account abstraction Mev

app chain thesis a lot of that kind of stuff that will all be discussed at permissionless this year so because you are a listener of Empire you get a special discount that's right Santi and I negotiated with our marketing team you get 30 off if you go to blockworks.com forward slash permissionless Empire 30 is going to get you 30 off your ticket today when I'm recording this that's about 300 off your ticket so type in Empire 30 when buying your permissionless ticket you get about 300 bucks off click the link at the bottom of this episode it's in the show notes do it quickly because prices go up all the time and if you are going to permissionless hit me up let me know shoot me a DM on Twitter I would love to meet up with you there

all right let's look at the coinbase Circle deal so pretty exciting announcement between uh Jeremy o'lear and Brian Armstrong a really Circle and coinbase this week which is that coinbase has now taken a stake in circle and quote commits to the long-term success of usdc so if you remember uh uscc was actually created by this Consortium um or I guess this partnership between circle and coinbase a couple years ago uh now coinbase is actually has bought an equity stake in circle uh and there's a couple changes that come from that first uh with this new approach to the partnership the two are shuttering their Center Consortium which is this group that I mentioned this governance group that was created five years ago to oversee usdc and a circle is actually bringing the governance and

the operations of usdc In-House so that's that's one big update the second update is that usdc is now going to launch on six new chains uh so they're on a couple of chains right now between September and October usdc is going to launch on base uh near optimism polka dot polygon and I think Cosmos um so yeah pretty I don't know pretty exciting um yeah pretty exciting for Circle and and for coinbase I think there was also a piece of like the net interest income that they receive um being split ah yeah let me read that because that was actually very

interesting bullish coin bullish for coin right yeah that's what I was thinking yeah so let me here let me pull this up somewhere uh the here I got it right here the revenue will continue to be shared based on the amount of usdc held on each of our platforms and additionally we will now equally share an interest income generated from the broader distribution usage of usdc that's what you're talking about right yeah yeah I mean the the comp here is tether is one of the largest holders of treasuries in the world more so than a lot of sovereigns I mean I think it's a top 10 holder holds more treasuries and like certain countries and it is uh I think their latest reporting I mean it is making a sizable amount

of of yield on on those prices and so in a similar manner you can think about you know that being an important line item in coinbase is financials at the time the the thing that some people might argue is the the dominance from usdc has gone down and I don't really know or can explain that candidly I don't know if you've seen some analysis to point to as to why that is but certainly like the uscc is a percentage of like all stable coins has gone down tether continues to go up um and so maybe this is uh you know them launching six different chains um reignites their growth and and their kind of position in the broader

stablecoin Market yeah I don't know I don't really know why it's been going down but but I agree yeah I'm surprised that I'm surprised coinbase's stock hasn't changed or that the outlook for Q3 is unchanged here between between base between this announcement and base gotta imagine like well I mean this goes back to the point of I fundamentally believe the markets are not efficient and that sometimes and you would argue we're more connected now there's access to information more so than ever before but sometimes things go uh you know the coverage that you get one a lot of the

market is passive right now like you have a growing share of just flows going through passing mutual funds like fidelities of the world that are not very actively managed and and they're not paying maybe they're not paying attention to it or and or they don't understand the full story um and so it's sort of like what do you believe in that others don't what do you understand that others don't and so I mean a full disclosure I've been I've been looking at coinbase stock for a while um I have exposure to it I think it's it's uh you know and then and then it rallied a ton once bow post which is one of the smartest I think guys out there I mean think about Smart Guys in the room like Seth clarman incredibly smart

um he hits a bell post and they bought the bonds and they were trading like they dipped all the way to 40 cents on the dollar now they're trading at like 62 cents uh coinbase is now tendering those bonds I think they have a billion bonds outstanding the three and a quarter coupon they're tendering which means they want to buy back those bonds at like 67 cents and they're not getting any interest from investors and so not surprising I mean I think this these are sort of things of course credit stories different than Equity story like owning a bond is very different than owning a stock but um but yeah I think I I think this is a prime example of the market May sometimes just does not understand the story yeah and it goes through like not just not just crypto by the way just

over time there have been pockets of of the market that are just not understood by analysts you can already nuclear has gone through that phase I don't think Wall Street thinks of coinbase as just a crypto exchange and they think about yeah that Wall Street is where we're in a world volume is down a ton the fees are going down volume is down it's in a bear Market there's no interest which is true but they don't appreciate you know maybe the business model just goes through an entire transformation where it becomes more of you know fees attached to subscriptions and you know base and sequence or revenue and um and that uh an interest income from uh the stable coin right and so that uh that just changes right and so anyways

so I have maybe a personal question for you I don't know if you're comfortable sharing this when you buy like when you buy coinbase and you're talking about these bonds like do you buy the bonds do you buy the stock do you like how do you think about that that's a great question I mean it depends on the price it really fundamentally do I I'm of the Mind and I truly believe I ascribe to Howard marks which is the founder of oak tree his whole thinking is price is the big determinant you could buy a great company at a terrible price makes for a bad investment think about a terrible company at a great price makes for fantastic investment and so um I started looking more closely at coinbase when when it dipped to like close to 30 bucks 32 bucks 33 bucks and

the bonds were like really gone you know there's excessive amount of negativity and everyone's calling for like you know something's dead I just go to that and I pay attention to that and that was what ultimately limited coinbase the question that I've always asked over time people is as a as you think about interest in the space um how are people going to allocate in their portfolio if they want crypto exposure absent and ETF coinbase is an important Avenue to do that um and and so if you as I think about my overall crypto portfolio coinbase is an interesting an interesting way to get exposure to

just how the overall Market will play um they're them wanting crypto exposure um and so so yeah that was um I I didn't buy the bonds um I've just haven't been a credit guy my entire life I thought they were interesting I talked to a bunch of other folks around it uh my rationing was my back then was I'd rather just have exposure to the equity and I didn't actually invest directly into Equity I think I mentioned this in a prior episode I I did it through like a a complex structure where it's called Like a Phoenix note it's quite quite popular and basically

um it's like a structured note where I'm getting paid a very high coupon with a barrier so that essentially says like today the price is at 70 bucks right you say okay I'm gonna it gets issued today you have downside protection meaning if the stock doesn't go down 30 or 40 you're getting paid a quarterly coupon and at the end of in six months it could be called it's usually a year of maturity and so what happens if the price of coinbase stays within a range of the stripe like the issue price and and the and the barrier which is lower then you get paid that coupon if it dips below that then you actually get settled in chairs and you end up owning coinbase

it's like an option yeah but you're getting paid a super high coupon because it's a very volatile name so the coupon on this thing is like 30 40 50 percent so what is that so my thinking was and just this is a strategy that I've been deploying in my entire portfolio just I'm not like do I like it at this price I don't know but would I like it 30 lower absolutely and in the meantime if I'm getting paid a really high coupon I just cut cost average my way down and this is something that I've played around for the last year and a half because generally I'm uneasy where equities are trading and so I it's a great way to get income while also potentially if it dips below that I just think my margin of safety

going back to what Seth clarman talks about like I love the possibility of just owning something twenty Thirty forty percent lower than what it is now if I don't end up owning it I still get a really high coupon great um and so I minimized kind of my opportunity cost that's smart I always thought Phoenix notes were uh like that were a type of bond that was issued by a company emerging from bankruptcy but I might be wrong there no well this might be out interesting all right that's good to know um I have another question for you on coinbase reminder that none of this is financial advisor yeah yeah right well I have another question for you here why what are the main reasons why a company would buy back their bonds well because they're buying it at the you know if they if they issued

a nominal like at a dollar right the principal is a billion but they're buying back like they're they're repaying that debt and they're essentially like saving 300 million bucks right like you're buying that debt at a discount you're you're terminating that so you effectively got you know 30 for free it's a real low coupon to be fair I can spend like three and a quarter if they were to issue those bonds again they were not that coupon would be much much higher yeah they should those bonds right when they were going public there's a lot of interest yeah that makes sense yeah they get to reduce the data they get to reduce the future interest costs manage the bond maturities kind of yeah it also probably sends a kind of signal to the market um yeah it helps increase earning like

future earnings by retiring the bond you're retired at UH 60 cents on the dollar well you just got a bunch of money for free yeah yeah interesting um all right last cool thing that happened this week um Shopify enabled usdc payments Via Solana pay integration um there was a good tweet by a circle guy hold on let me pull this up yeah which basically talks about like the the percentage oh yeah okay Patrick Hansen so Patrick Hanson is a director EU strategy and policy at Circle so he said Shopify accounts for 10 which is just a crazy number 10 of total uh us e-commerce and 440 444 billion dollars worth of global economic activity the

average cost per transaction using Solana pay and usdc is .00025 so yeah 0.025 cents uh versus roughly two percent credit card fees on Shopify which if anyone's ever used Shopify before it's usually more like uh three to four percent so yeah yeah I think it's pretty interesting what do you think what do you make of this because if you remember this was a I feel like I've seen this before right I feel like do you remember in 2018 when coinbase turned on like e-commerce stuff and they launched crypto payments and so the my first thing was like I've seen this before but then my second thing was yeah but in 2018 we didn't have

tens of billions of dollars of stable coins outstanding it was no one was buying things in in Bitcoin and eth right you know even apps uscc back then I believe right right so I think actually yeah so it is it is um look I think uh the question is the skeptic here might say well com like Merchants are not going to want this thing called stablecoin usdc but I think over time that's just gonna prove to be I think the adoption views is incredibly bullish payments are something that we've all is one of those areas that is easy to dismiss to your point because it hasn't worked before like coinbase Commerce shut down and didn't get enough

Steam and but I think credibly payments with stablecoins should be a massive component of of crypto usage and adoption like it's just it's just people wanting to not hold local currencies because of the volatility um and they want to have dollars well you can do that very easily with stable coins basically digital dollar the usdc's is held like there's a doll that is held in a bank account you get comfortable with coinbase and how they do it in the counterparty risk so you know it's it's back dollar for dollar in a bank account like it's they publish a reserve they publish kind of who their counterparties are and so I think it's very interesting um I think to your point A lot of times it is important to revisit things that

you were bullish on and your thesis from back and because something hasn't worked before it doesn't mean it won't work again particularly how fast technology changes and and the environment is different this time and so I think uh certainly like with Solana versus um uh you know the the the transaction fees are very very low one of the biggest criticisms back then before Solano and ethereum was well wait a minute like gas feets are really high and then that two percent three percent while true it's actually in certain instances the gas fee on the layer one was very high eight bucks nine bucks 12 bucks and the spikes really made it difficult

right to see a world where you would have billions of e-commerce flow going through an L1 well now you have an L2 and now you have I you know a cheaper environment like Solano well okay that's that's very different where you're not only a parody you're actually way below that two three percent per transaction so on the on the app absolute cost and so that's quite different yeah here would be my Skeptics take my Skeptics take is that um the if you look at the three percent fees that Shopify takes or two percent fees that Shopify takes we're all assuming that that is a an infrastructure cost right we're all assuming that the infrastructure that they have uh those two percent fees go to covering the technology Hardware

software Personnel infrastructure costs required to operate a payments Network and by using usuc or crypto you bring down those infrastructure costs there's a bucket though that those fee there's there's another big bucket though that I think people in crypto maybe don't talk about which is the risk fees and these are the fees that account for a significant portion I think of what of that of the payment fees of the two percent because when a financial institution takes on payments they're also taking on the risk and liability of processing processing those payments right and so like the settlement right the like two or three percent fees help cover the cost related to things like fraud prevention verification uh payment reversals chargebacks uh things like

that and so that is that is not something that this hauls right so well no hold on there it actually does right because these transactions are absolute like they're they're settled the finality is there like when you think about prod like you like no it doesn't happen like what is like basically not a primer this is not I see what you're saying you can't call up Bank of America and say this like interchange fees like the whole the whole banking system is like is a cluster [ __ ] a patchwork of things that have been developed since the 60s and just put together and you keep adding on top of this Patchwork that is highly inefficient in the communications slow and the sediment slow and so all of that introduces risk right

but think about like when when you're paying you're swiping your credit card the merchant doesn't get the money immediately and these you know your credit card pays them that 20 and at 30 depending on the Side Merchant and then what happens on the back end is sort of these two Banks need to talk to each other make sure you have your money and all this sort of stuff that's where there's incredible amount of fees interchange fee and emergency and all these sort of things to cover for these possible risks and also just processing overhead but when you're settling a stable coin like it's like you're transferring a stable coin well you could have kyc that's separate but the reality is like there's no fraud like there's no like it's sort of the

sediment is instantaneous or near instantaneous and it's final and the working capital component for veterans is also hugely impactful like they're getting that money immediately so anyways there's a whole host of things why suddenly you're a merchant very interesting I think there is a category in crypto that will emerge which is the reward component by using these this mechanism um you know right now you don't get points if you're using your usdc but I think there's an opportunity for someone to come in here and say hey we're going to give you points reusing uscc um if you're if you're settling on this right and presumably a merchant might give you a discount because why because

instead of compared to when they would much rather get the stable gun right if they have a very clear like they can swap us to see for dollars very quickly on coinbase if you're the merchant where you're getting that money immediately you're not waiting 20 30 days to get that money from American Express or Visa and if that's the case then they should just issue you Jason if you're swiping with a Nosa safe card right Visa you're immediately transferring that uscc to the merchant the working capital like the present value of that is higher and so they can offer you a discount right some reward or whatever and so that that whole category is going to probably is an ancient but I think we'll become more

important to incentivize people to use this mechanism because the merchant would much rather get that money immediately it's hugely beneficial small businesses get crushed by credit card this is why the famous Amex doesn't work in Europe because or they only take like because Amex is notoriously known for really having bad terms especially for smaller Merchants which need it the most the working capital piece makes or breaks your operations so anyways this is going to be very important for e-commerce I think yeah little secret they do take AMEX they just get crushed on the fees too much yeah yeah they do they do like they they have a turtle they just don't want you yeah they just much rather use you these are pay cash right yeah well a lot of people want discount because they

want to obfuscate there's actually an amazing the best piece I've read about this is by David Marcus who was head of messenger of Facebook and then became head of Novi and was running their uh was running their stable coin and then left to build this thing in uh the lightning space we should actually really have David on but he wrote a piece in 2019 called uh why building a new protocol for money is the only way to truly change the game for people it's quicker it was like five minutes I'm gonna I'm gonna link it in the show notes here um but if you really think about the payments I mean I I'm very excited by this because I think the payments narrative has been dead for years and I think it's coming back now that uscc and stable coins are a big thing and if you

look at the current payment system it's so broken right existing networks like ACH and Swift they're built in the 70s 55 years ago and they're close to Outsiders wallets right venmo cash app they're not connected they literally don't talk to each other uh moving money from country to Country takes too much time too much money two high fees Merchant fees crazy um and I think yeah stablecoins really do fix that yeah so it's Auntie man good to be back it's great to be back yeah any uh anything else that we should cover any books documentaries watching this documentary on Netflix about um

cold callers uh the first uh are you really telemarketing the first telemarketing business yeah it's like something it is a sad yeah the two things I was like are the two things I had lined up were like that and then the the Jared from Subway documentary or hands oh really uh you know like a child abuser I think it was I was like oh man I'm going down two dark rabbit holes here what's going on yeah no I told you I've been getting I've been watching like uh fellow Media Company hodinki I've been like well I've probably watched a hundred hours of hodinky things like every talking watches every like all the John Mayer interviews they just did this great thing with Ed Sheeran uh been going going deep into the hodinki rabbit hole nice yeah Corona 24 is another big company in space he they just raised

they've been around for a while they're raising capital from General panic and I feel I think General money but then most recently Cristiano Ronaldo which is you know it's interesting how dinky is this really I mean from a media company perspective I like studying them they did over 100 million in Revenue last year they started the watch blog and then they launched uh the marketplace actually so it's this really interesting like evolution of like media into e-commerce which other folks like uh you know meat eater did 100 million in Revenue they're like a Blog into e-commerce food 52 does a [ __ ] ton of Revenue just selling like pots and pans and stuff they started as a food blog so they're they're all churning group companies turning groups best in the world of doing this absolutely yeah yeah nobody reading what are you watching I'm

looking at my Kindle right now I reading anatomy of a breakthrough um so far I'm like a third of the way out interesting I wouldn't say like Earth shattering um it's about like how to get on stock and like you know if you have writer's block or you know about like I don't know it's it's interesting um and then I read Mr China I think I mentioned this before it's a book that it was like you know written by a guy who was one of the first pioneers in the 90s and or like turn of the century raising huge amounts of money in the US to go invest like private Equity money

to invest in Chinese businesses and basically got rugged um like raised I think over billions of dollars and then just like into a bunch of stuff that end up working oh is this about um Tim Tim Clissold the British believe so yes yes so it was like highly recommended and uh it was just I'm fascinated by China I've read a bunch of stuff on it um from Kissinger's book to a few others and just understanding the psychology it's a very different market and so I don't pretend I understand it I don't speak Mandarin and but but I am fascinating to buy it um I think it's uh I think it's a big obviously what they're doing crypto is is interesting now the like the the West seems to be like taking a more dogmatic stance to this technology whereas now China Hong Kong Singapore like the east

in general has been more um is taking a more Pro stance um statistically speaking I think we ought to be seeing more projects come out of the region but we haven't at least not to my understanding but I think there are some interesting pawns and people out there that um you know that are like scroll for instance and step in like all these products out there so yeah I'm really fascinated by it I think always studying Asian markets would have been highly beneficial for for a lot of people that were dismissive or thought it was just copycat Nations but I think it's very important um particularly like how they've totally LeapFrog like in the fintech space like

how people interact and how they've just the way Commerce happens there like WeChat actually another great book um the story WeChat or intense like very interesting so anyways I'm always kind of curious about books that talk about the region to get an Insider perspective uh and better understanding so this one was good not I expected more because it was so hyped but it was fun to read you know a book I just read that you would love is uh the dream of salomeo by Brunello cuccinelli oh I've heard about this one yeah you would really like it you'd really like it so I just read that basically transformed an entire town yeah transformed salomeo and uh yeah

yeah it's like he's all about like humanistic capitalism um which is this kind of fluffy thing I think oftentimes when like us folks talk about it but he's he's done it well so it also helps that he can sell a scarf for eight thousand dollars so it's crazy yeah yeah yeah pricey pricey um all right man that's awesome well it was a good Roundup welcome back sir it's a good time to be back I forgot to say we're hiring engineers and sales people I'm supposed to say that at the very beginning if you're still listening at this point you hopefully like block Works enough we're hiring sales people and we're hiring Engineers uh full stack is this a lot for the research platform um we're hiring Engineers both on the editorial side of the business and uh to make our media site better and then also

on the research um analytics and governance side we're launching this big thing in three weeks of permissionless we're really scaling up that platform uh and then we're hiring on the sales side for advertising and sponsorships so if you want to you know work with coinbase's CMO to help them you know advertise across our platforms that's uh that's a good one great cool that's awesome all right folks well thanks for tuning in uh as always drop your comments if you want us to talk about something or you don't like uh X or Y uh otherwise we'll be back Sandy loves those YouTube comments I do I actually I spend a normal amount of time you read everything you got to start commenting on them no of course I

feel like it really impacts your day you're like someone's like oh Santi had a bad haircut you're like this is you think I'm gonna go on front end and see my price collapse like I'll have a mental breakdown I'm still having mythical breakdowns out here reading comments but uh so I'm not prepared to go in front deck yet no Brave New World man yeah all right guys we'll see you next week all right all right take care foreign [Music]