Standard Chartered's Geoffrey Kendrick on DeFi blue chips and tokenization

Transcript

Honestly, in terms of the tokenization thesis, that is 100% locked in. The technology has left the gate and tradi organizations like Standard Charted and others are literally arriving tomorrow. Over the past 3 months, Standard Charter has put out calls for 25x, 40x, and even 70x price targets on altcoins such as Uniswap, a chain link, Sky, Arbitum, and several others. Some of these calls are already starting to play out. Everyone is wondering, is this the start of the institutional alt season? What do you need to know about all of this? Hello and welcome to Milkroad Crypto, the show that knows that nothing says institutional bull market like a bank calling for an altcoin to do a 40x. I'm your host, John Gil, and today we are welcoming back to the show Jeff

Kendrick. Jeff is the global head of digital assets research at Standard Chartered, where he launched the bank's crypto coverage back in 2020. He has since then become one of the most watched, respected, and most bullish voices on all of Wall Street when it comes to price targets for digital assets. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. This is going to be a fun episode. I'm really looking forward to this one. Jeff is awesome. A reminder, our podcast today is free and that would not be possible without our wonderful partners at Nexo, the digital asset platform that lets you trade, earn, and borrow all in one place, all in one account. So, keep an ear out for more information on them later in the episode. But for now, welcome back to

Milk Road Crypto, the goat, Jeff. How are you, sir? >> I'm very well, John. It's it's it's great to be back. Pleasure is mine. >> I I'm always excited to talk to you, Jeff, because you're such a like a calm and measured person who works at a very respectable bank and yet your analysis on digital assets is always wildly bullish. So, I just think you're a wonderful person to talk to, especially here at what could be the start of a new bull market. Jeeoff, when you were here last, we talked a lot about Bitcoin and stable coins. Since then you have started covering a lot of altcoin projects like I said unis swap a morpho chain link many others um why now what changed and what's caused this pivot in coverage for you >> so there's essentially two things so it's clearly important for everything

that bitcoin does not go down yeah so and I think since I was on last time we can conclude now that bitcoin is not going down so I had called it earlier it was a little risky at the time I think in June when I started calling that we'd seen a low but then when about 6 weeks or so ago now Scott Bessant came out and said that US Treasury would buy more backend bonds it's not a massive number but that for me is the signal that the cycle is officially over. Yeah. So every cycle we see this sort of either at the highs or the lows. So the at the high was the 1010 confirmation that we'd seen the high in Bitcoin last October. And what Scott Bessant announced six weeks

or so ago for me says we've 100% seen the low and so now we can really start to broaden out focus. Yeah. So it's not only about the market beta i.e. Bitcoin but start thinking about where can we find alpha. So that's let's say big picture point number one. Big picture point number two is that during the downturn of the previous 9 or 12 months there had been a lot of building going on the background. So I wrote a note probably six months or so ago now talking about Ethereum and therefore other things that have been built on Ethereum as actually quite similar to what happened when uh in 2021 when the tech bubble burst at that time and later

on Bezos reflected on the share price of Amazon which at the time went from $113 down to $6. And I refer referred to that example with my ETH note because at the time Bezos said, "Well, my share price was collapsing, but all my internal metrics were going up and I think that's what we've just gone through in cryptoland as well." Yeah. So, you could see some of those metrics coming through and where those metrics are now going to play out is in the altcoin space and it's specifically the altcoins that are going to benefit from a tokenization revolution. Yeah. And so that's what I've been focused on. I mean, with my seat in Standard Charted, I can see very clearly how the tokenization revolution

is going to come out of Treadfi because banks like ours are specifically focused on this today. And so when you price that in for a number of these tokens that have been ridiculously undervalued, um, and you're starting to see very direct measures like Robin Hood chain and what that's meant for Arbitrum and Uniswap, for example, right? You can easily foresee for a future where the relatively large relatively long tooththed protocols and lay two in arbitran's case that get fairly direct pass through of value or value capture should win and so that's the ones that I've been writing on recently and obviously you listed a few of those already.

>> Jeeoff that's really helpful context and I think makes a lot of sense on on the change here. You also wrote recently that crypto is moving from a world where revenue is not relevant to one where revenue is critical and I'm curious if you could expand on that and how that factors into how you value altcoins in your research. >> Yes. So I'll go back to the Amazon example uh before. I think it's very uh easy crossover here. Right. So in the early days after Amazon listed they were losing a lot of money. Bezos would get a lot of pressure from journalists um who quite frankly didn't foresee his medium-term world dominance future.

Right? So they would say, "Hang on, you're losing millions of millions of dollars a week. Uh how long do you think this can you can keep this going for?" And quite frankly, crypto has been in that bucket for the past 10 years or so. There's been lots of projects. Uh most of them quite frankly didn't do that much. And it's only been when we've finally started to see digital assets or blockchain technology more broadly replace some stuff from the real world which is really what stable coins kicked off 18 months or so ago particularly in US with Genius Act and other um you started to think well actually if we're going to replace stuff from the real world and today tradfi is participating we probably want to transition from a

world where revenue and data and transparency is mostly irrelevant because the large investors are VC funds that would like sort of blue sky or white sky medium-term opportunity set, but they don't need data or revenue today to one where we're now swapping over to wanting to have revenue, wanting to have analysts wanting to be able to build DCF models, which is what I've been doing in the past six months. And so we're kind of normalizing, at least from my perspective, we're going from revenue doesn't matter to at some stage in the future. We're not there yet, of course, but at some stage in the future, revenue will be the only thing that matters in the same way it is quite frankly now for the Mag 7 stocks, right?

Which was not the case in my Amazon example a couple decades ago. Just want to pause for a quick second to remind you all that the crypto bull market is back. I have been deploying capital into altcoins that I think are going to do very well this bull market. Some of them are already up over 2x from where I entered. So, if you want to see what's in my portfolio, what's on my watch list, and have access to me in Discord to ask questions 24 hours a day, join Milkroad Pro now. The link is in the description. It's just a dollar. I'll see you there. Gotcha. So, the market is evolving. The way these assets are valued is evolving. So, that'll make sense there, too. Uh, before we get into some of these specific assets and price targets, I want to talk about sort of

the macro things driving this for you. in your research, as I understand it, there's two big bets that drive the thesis on all these things. The first is tokenization and tokenized assets getting to around $4 trillion and then the the growth of DeFi along with that, which you're wildly bullish on. But talk to me about these two big um big bets that you're making here and just what your your forecasted growth is on those. >> 100%. So about 18 months ago, I put out a forecast for stable coins that they'd get to $2 trillion. And that's the number that Scott Besset uses. US Treasury picked up that forecast uh in 2025. And although we stalled in stable coin uptake in the last 12 months or so, I think medium-term we'll still go to a very very large number well north of a

trillion where $2 trillion I think is still in play. It makes some sense given what crypto assets have done that stable coin growth has stalled but transactions have continued to expand in the last 12 months. So I think medium-term we can still get to a very large number of stable coins outstanding. And then on tokenization of everything else I also have a forecast that we go to $2 trillion. And quite frankly that number looks too low to me not too high even though today we're only at about $40 billion. And the components of that are primarily the first one that started was tokenized T bills. So tokenized money market funds. And I can tell you from the direct conversations I've had with US corporate treasurers of which I've

had more than 100 this calendar year. When I tell them about stable coins, they're excited to get capital efficiency. I move money more efficiently from the US to countries that look like asbekistsan or equivalent where in old-fashioned rails it could have taken a week or so for the cash to arrive. So that's that's interesting for them. When I then tell them that Franklin Templeton's Benji product can give them intraday yield, they get even more excited. Yeah. So they can be capital efficient with stables and then they can get more yield using tokenized money market funds. Yeah. So for me the link between stablecoin transaction growth and tokenized money market funds is very linear and if you think about over like over the next few years a

chunk of transactions going onchain and I think maybe only 10% something like that of transactions are on chain in the next few years then you need to have 10% of the money market fund on chain as well because in my corporate treasury example they'll want to use stable coins and rather than going back to slow money market funds offchain. They want to keep cash onchain and 10% of the money market fund space in the US would give you 750 billion just in that category. So that for me seems let's say relatively linear. And then even more excitingly quite frankly has been the equity story recently. So, of course, there's been Robin Hood and a few other projects um on equities, but then a couple of weeks

ago after Clarity Act closure vote failed on the Tuesday, on the Thursday, SEC came out and gave this 5-year exemption for tokenized equities in the US. Right? So, that for me opens the floodgates to a massive market cap potential. US equities are $60 trillion. So you only need a very small amount of that to be tokenized to get a massive increase in tokenized equities and that for me could be another trillion dollars on its own in the next couple of years. Then you have tokenized commodities etc.

So again quite frankly the only feedback I get on my tokenized real world asset piece which I've put out a forecast of 2 trillion is that that number is too low not too high and things like the SEC exemption I think solidify that for now. So that's one bucket tokenize everything very exciting space and the other bucket is today if you have a look on the likes of DeFi llama you can see what percentage of assets that are onchain are actively used in DeFi and that percentage is very small depending on which asset class you look like it's it's basically always single digits yeah so I think over time and I've had some conversations in tradfire that say well

if there's a tokenized money market fund that pays 4% why not make that seven where the extra 3% comes from Aveo for example right so if I've had some conversations like that then I think it's fair to say over time more of those assets will make their way into DeFi and so instead of single digits you get to 30% or plus right and so if you add the two together the amount of assets that are onchain and deployed in DeFi has a massive multiple or like 50x over the next um few years being the base or perhaps as high as hundreds of times depending on that second percentage in uh going into D5. Yeah. And so for me

that means you want to then start thinking about the D5 protocols or layer 2 in arbitr's case that perhaps could capture a chunk of that flow and most of those projects which is the next exciting part can scale in a very linear fashion because of how blockchain is set up right so they can scale much more directly than offchain businesses would otherwise do. Jeeoff, this all just makes ridiculously good sense to me. But thank you for laying that out in such clear detail. I want to talk about some of these altcoins. Now, you put a $6.50 year-end target on Uniswap back in June during the the depths of the bare market. It uh was under $3 at the time you made that prediction. It's already

blown way past that. Uh in August, you wrote, quote, and I loved this line, I fear that my 2030 target of $100 on Uniswap is too low. Um I'd love to hear your updated thoughts on unis swap here and how that token that project sits in this thesis for you >> 100%. So unis swap was the first of these deep dives that I did and that was for a few reasons. So it has extremely direct value capture. So last December unis swap finally there obviously been discussion about this for a while but finally turned on the fee switch. first few months not a lot happened but then when we got into the summer um and particularly with the Robin Hood chain uh implications for buyback and burn um and people can see this on on dashboards

online the amount of buyback and burn has increased dramatically. So I think about buyback and burn in terms of what percentage of tokens could be burnt in an annualized sense and have that be sustainable. So if unis swap today was still below $3 rather than above $9, then you'd be burning between 12 and 15% annualized every month. Yeah. So the only way to square this circle is for the token price to go up because clearly it'd be unsustainable to burn 12 to 15% of a project like unis swap which is a quality project that's been around for the best part of 10 years. Yeah. So token price must go up. And so that's

how I'm thinking about the value capture thesis is if something means and you have in unis swap's case fee switch turned on so you have the the burn uh active what will that what will the current burn project mean for annualized burn it seems because unis swap's burn has stabilized around the 3 to 4% now i.e a price tripled. So instead of being 12%, it's down to 4% roughly. It seems that that's the market equilibrium. Now, this is a relatively unproven thesis given I have literally one data point here, but I think that's a reasonable thing to think about going forward for the others as well. Yeah. Now, the other projects I've written about are slightly

less direct, but I think over time you can feed them into the same sort of logic. Yeah. So, if you get more activity, you burn tokens today. unis swap's case or perhaps later uh in some of the other projects you can start to think about that in a sort of DCF measure or how many tokens in a percentage would it be reasonable to burn at any given moment. >> Okay. I want to just ask a question around your view on unis swap's moat between now and 2030 because obviously you know a lot of this volume has come from the the Robin Hood chain um but there's always a risk that another DEX could could come and get that volume that market share. How do you think about like the the value proposition in terms of the moat that unis swap has to

defend between now and 2030 to sort of get to that $100 token valuation target? >> For sure. So the good point here is that liquidity tends to be kept liquidity. Yeah. So unis swap starting point and again being around for best part best part of a decade meant that it really is their market to lose now. So over the years obviously you've had a lot of competition come the most recent being aerodrome on base. Now in most of those examples including the aerodrome one they paid users to switch and the key when you look back in history is that when the paying to switch stops people tend to take their assets back to unis swap. Yeah. So that for me is a very

very strong sign that unis swap is more likely to be the medium-term winner and it's probable that you will have one large winner in each category where for me indexes unis swap looks the most likely. The second is when you think about tokenized equities and tokenized IWAS more broadly coming onchain and going into liquidity pools like unis swap. There's a relatively um simple story here that Treadfi can't quite do themselves but would like assistance in.

Yeah. So think about correlated pairs. Um so over time you'll probably end up with the likes of oil versus oil companies. Yeah. You today have uh QQQ versus Nvidia. Yeah. So those kind of correlated pairs that don't need to go back to dollars in the way trad are very very suited to the style of decentralized exchange that unis swap is especially under a chunk of the upgrades over the past 12 months or so. So again, I think you have this uh confluence of factors for unis swap. The 10-year history roughly, the liquidity be getting liquidity, the upgrade at the right time when tokenized assets come on

chain to enable things like those correlated pairs and you're already seeing quite a lot of that. Um I would say that people should have a look on the unis swap website and see exactly where the pairs are going. It actually sometimes tells tells you interesting things about what's happening in market uh detail as well. So, uh, for me, that's probably enough, um, as well as the token burn back program that's been kicking in in the past few months to see unis swap continue to dominate that space, um, for the next few years. And again, that $100 target may well be too low um, given we've already blown well through my previously very bullish 2026 target.

>> Thank you for that context. And I think that that that summarizes it well. There's a lot of things working in their favor and it's sort of their their space to lose there. Um, I want to ask about another project. A was one of your boldest calls. I think you put a target of $3,500 on A by 2030. I think it's trading around I could be a little bit out of date here, but but around 150 170 somewhere in that neighborhood here. Um, it's been fluctuating a little bit this week. Um, but you made this prediction, this bold call on a just a very short period after there was a $300 million exploit on the protocol. Obviously kelp was the the the where the exploit happened not on a directly but um talk to me about this outlook on a where's this valuation coming from and and why

are you so bullish on this protocol you know despite the the hack. Yeah. So, the interesting thing about the hack for me was the response afterwards um both from the community um so the raising of uh $300 million roughly in primarily in ETH which reminded me of some of the things that has happened in traditional financial institutions in the past. I.e. in that case the major players in the market that was affected or were let's say would have been affected indirectly um if a continued to be hampered were basically came together because there was no regulation and so it felt to me like um let's say a maturing moment for the industry or asset class more broadly

that I have seen in traditionally right so for me that was positive news number positive news. Number two was that afterwards Stani uh adjusted some of the risk metrics um which was super super bullish for me and because of those two things it only took a couple of weeks for liquidity to come back on a which was a very very positive sign and given again the longevity of the project um because sitting in a trade matters actually issues like the Cald incident in some ways make the post incident reality safer um for money that's going in. Yeah. So, I actually

didn't mind seeing the response. I'm sure for those in the weeds at a terrible few weeks um around that incident in April, May, but actually they've bounced back pretty well. And it's fair to say that um my forecast in the near term is also starting to look a little little bit too low. So I've got $180 by the end of this calendar year and we're almost we're at 170 today. So obviously having had quite a good day today. So for me actually again like the unis swap story I think will dominate or continue to dominate despite that celd issue in in April. Um let's call it the onchain banking space. Yeah. So at the peak last year, Ave when ranked against other US

banks would have been about the 35th largest bank. Um someone set up a website to do exactly that ranking. Obviously it's lower now given the market cap decline, but it's a large project that's been around a long time that dominates essentially an onchain bank space. And again in that space for me it's likely you'll have one winner. And Ave is a unique beast and very different um to Morpho that I'm also bullish on for different reasons. >> Well, let's talk about Morpho. You started covering Morpho with a $60 price target that has lagged some of your other calls um this year so far. Um talk to me about this lending market. Do you think this is going to be winner take most, winner take all? And you know, do

you think that there's a need to have an a and a morpho? Can they function together? Does one dominate the other? What's your outlook on that? So I see them as quite different animals. Um it's only really that this industry is so nent that we really like. So there's a lot of commentary comparing a morpho. If this is tradfi I'd say a is a is a bank. So I work for standard charted banks make money by getting in deposits and lending at a higher interest rate. Right. So essentially exactly what Ave does. Yeah. In the in the in the most basic form of banking. Morpho is more like a platform or let's say a platform for asset managers. Yes. So kind of like a black rockck like black rockck do

slightly different things but let's just say morpho is black rockck and a standard charted to like in their sort of most simple form. Yeah. So um in that case I would say stand chart and black rock are very very different animals. Both can be successful. In fact both can be cooperate. They can kind of cooperate in various ways. Yeah. So there are some crossovers but I think the vault product or moro in particular kind of differentiates them significantly from the let's say individual lending market and actually when you when you exclude the when you just look at the lending product and morpho and compare that to a way bigger right so just in that specific narrow piece but actually on

morpho it's the vault product which is much more interesting to me another interesting point about morpho is the investor base is different. So, uh, Ave is mostly driven by retail flow and so it tends to be a much higher beta version of Ethereum is sort of how things go and then you have some of the detail in the weeds of what's happening at Ave as well. Morpho is mostly held by VC funds and they tend to be less like that they have deeper pockets if you like and so the the token tends to be both less volatile and less liquid and so because of that on the top side it's probably less volatile on the top side in the last little while but I think medium-term I would put Morpho in the

very likely to win that onchain asset management platform is how I think about Moro. Okay, that that's a helpful distinction between those two there. And you know, I think a lot of these things can do very well together. So, I appreciate the context on that and the subtlety. Um, speaking of banking, you have called Sky Protocol DeFi's federal bank. Um, and I would love to hear your updated thoughts on Sky and and what that means exactly. What is DeFi's federal bank and why does Sky fit that label? >> Yeah, so for those that haven't looked at Sky before, um, obviously most people probably know it's the old maker D, right? So since rebranding roughly two years ago now from make a dow to sky the what's happening underneath uh or in the

detail is a little complicated so I'm going to have to go slow on this part. Sky itself sits in the center and then they have outsourced the equivalent of wholesale banks. So if you think about in the real world, we have the Federal Reserve in the US. They can they make rules for banks to abide by. They print money and they put money into the system. Sky makes rules that these outsourced uh companies, and there's a few that are sizable so far, um need to stand by. And they print the money, which in this case is USDS. they still have the old uh die from the maker dow

days as well. Um but the point here is that they incentivize the banks or banks equivalent in the system to increase the amount of USDS outstanding. Yeah. So the the banks borrow your SDS at the equivalent of a wholesale funding rate which is exactly what happens in the real world from in this case the central sky which is sort of like borrowing from the Fed and then they put it out into yield products and other so over time it does kind of look like a federal bank system. Now the key for Sky is that you end up with more USDS over time. That's how Sky makes money. And I think the stable coin space I'm very bullish on.

And the yieldbearing stable coin space, which is where Sky sits, I think over time we'll be even more bullish. Right. I over time yield bearing stables will outpace non-yield bearing stables like USDC and USDT in terms of market cap. Yeah. So if you're bullish on stable coins, I think you must be bullish on Sky. There's also a technical point here which means that you today pass through a certain percentage of value to token holders. In Skye's case, it's partly with token buyback and burn, but it's mostly via staking yield. In eight or nine months from now, they will have built built up enough stockpile of uh

returns over time or excess cash that that that amount will double in terms of pass through. Yeah. So in Skye's case, if the token price doesn't go up, that would imply that the staking yield doubles. Yeah. And so then you'll probably get individuals buying the token for the staking yield. So again, apologies. It's a relatively complex story where you if you get more USDS, so if you're bullish on stable coins, you probably think you will. And over time, you'll be able to pass through double the amount of value to token holders. Yesterday on this channel, I interviewed Greg Fibbus uh who is the the head of uh capital markets at Sky and Max Baris who's the head of lending at Galaxy about a $100 million purchase of SUSDS

that Galaxy did. So, if anybody missed that and wants more detail on this admittedly complicated but important part of DeFi's banking industry that's growing, um definitely check out that episode. Um, Jeeoff, I want to just get a little bit more clarity on the last part of that you talked about because I had another Greg um, Greg Viviverto from Tag Capital on the channel last week and he talked about how he's very bullish on Sky, but you know, they had one of their best quarters ever, $100 million of revenue, but only a few million is going to token buybacks. Could you talk to me a little bit about your like outlook on the Sky token, how that captures value, what are the sources there, and just the outlook on that for you?

>> Yes. So, so in value pass through, I guess there's a few ways to do it. Yeah, the two simple ways are token buyback and burn. So, my unis swap example, that's all they're doing. The second is to have staking yield. Now, different projects have chosen different versions of that story. Yeah, in Skye's case, they've actually chosen it to be mostly in staking yield. So, it's the same cash that's going to get passed on, but instead of being primarily for token buyback and burn, a the vast majority goes to staking yield.

Um, so I guess it's the same as if you think about a an off-chain corporate, they could either buy back their own equity or they could pay large dividends. In Skye's case, essentially, they're programmed to pay large dividends. So, if they make more money, you get a very large dividend. And in off-chain land, if your dividend percentage goes up massively, probably people will buy the token and over time the percentage will therefore fall. And so I think in Sky, that's the way to view the pass through is kind of like a dividend stock. Yeah, that's essentially how they've set it up with a little bit of buyback uh on the edge. So it's just a different model, slightly more complicated. It's not clear, I guess,

yet which model is going to dominate in blockchain space. Probably like in equities offchain, you'll end up with a combination. So, you'll have some that do nothing. They just keep all keep everything in retained earnings. So, think about Amazon early days. That's exactly what Bezos would would have said. You'll have some that are high dividend stocks, utilities, and other kind of fall into that category. And then you might have some that are high buyback stocks which you know we've seen a lot of buybacks in equity land in the past few years. So different horses for for different courses if you like.

>> Once again Jeeoff very helpful on that. We talked about a lot of these DeFi protocols um lending protocols and and decentralized exchanges. Let's talk about the rails that underly them because you started writing coverage on these as well. Um, and I'd like to start with Arbitum, which I think is your newest call of Arbitum going to $10 by 2030, which is about a 70x, which is um, let's just say bullish. Um, but it's already up over 60% since you published that. Talk to me about arbitrum and the updated outlook for this and and you know, again, does it continue to capture this value and what's the outlook there for you?

>> Yeah, I think I think the arbitr multiple was the was the largest one of all of these series and that's for a few reasons really. So the the very direct point for arbitum is and if anyone anyone looks at Robin Hood chain fees which sort of did that right they've come off a little bit recently part of it was due to blockages on the Robin Hood chain um in terms of the the peak but that's meant that in the month of September the total revenue earned by Arbitum will be something like four or five million I haven't checked the last couple of days but in that range whereas last month it was $1 million Okay. So the one change Robin Hood chain has multiplied the revenue by five times.

Now over time I think it's reasonable to say that what Robin Hood chain is doing today is small fry right this is only a very very small uh part of the tokenized equity landscape that is likely to build out which will either happen on Robin Hood chain and arbitum gets exactly 10% of net revenue on Robin Hood chain and they run at a 90% profit margin there so essentially 10% of everything that happens on Robin Hood chain arbitum receives because they helped with the tech stack. If we think about new new Robin Hoods coming online so which I think will be inevitable in the next couple of years. So both Robin Hood themselves doing more uh onchain and then secondarily uh their competitors wanting to come on chain as well be they

in equities or in other asset classes they'll probably say hey we saw that Robin Hood chain ask arbitum for help and that seems to worked out pretty well for them and so they'll probably turn around and do exactly the same thing. So for me, if you've got one Robin Hood today, which is small, Robin Hood becomes larger over time and then in a year or so, you'll probably have four or five of Robin Hood's brothers on exactly the same setup. And so the amount of fees getting paid to arbitum instead of four or $5 million a month could easily be 40 or $50 million a month in a year or two from now. And so when you think about what that means in terms of value capture and today arbitum just keeps the

revenue they don't have a token buyback and burn. So it looks very similar to quite frankly what ave does today after they turned off their buyback program in April. The amount of value capture is massive that could come through an arbitrum. So that's point number one that there's very very direct implications here for tokenized equities and tokenized other stuff coming on chain and value being captured by arbitum. The second is that today and actually pretty much always the layer twos have always been massively undervalued compared to layer ones. And I think that will also change because between you and I, Arbitum and Ethereum basically do the same thing like in

terms of what they do for users. Yeah, Ethereum is is of course where the value ultimately lies. I.e. Ethereum has a security layer as well, but if you're an enduser and you just want to get something on chain and recorded, you could care less if it's on arbitum or Ethereum, right? Not least because Arbitum is much cheaper and you can get access to the team if you're like yourself, John, based in Manhattan. Yeah. So over time and when you look at multiples the best multiple I like to look at is market cap divided by the fees paid to the protocols that are built on the layer ones or layer 2 in this case. Now the multiple for Ethereum

Salana and Avalanche are all basically the same when you do that and they have been relatively similar over the last couple of years which is great. The multiple for arbitrum is about 30 times less than it is for the layer ones. Yeah. So if you get direct value capture plus an upgrade in the multiple which is the equivalent of an upgrade in a PE multiple in equity land then actually my target of 70x on publication starts to come into play. Yeah. So, I'm super bullish arbitum and I think for me it's one of the ones that people have almost entirely missed um over the past couple of years. You know, one of the weird

things about crypto is that the longer you're in it, the more accounts you seem to end up with. You buy in one place, trade somewhere else, earn yield somewhere else, and if you actually need capital, you end up having to sell something that you probably wanted to keep. That's why we at Milk Road are partnering with Nexo. These guys keep the whole thing under one account. You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it. All in one spot, all in one account, all on Nexo. So, if you need liquidity, but you don't want to give up your position or you're already holding crypto and you want to be able to do more with it, I think Nexo is worth your time. We love working with them. I think you will, too. Tell them Milk Road sent

you. I think one of the questions on the ARB token specifically has been this value capture question because as you said in your answer the the revenue from the Robin Hood chain I believe is going to the the arbitum DAO treasury not directly to token buybacks. Um what's your thought on that and how does that revenue and and value capture that arbitum as a network is is creating come back to the token? What's your outlook on that? arbitum on the token buyback or revenue capture feels a little bit like unis swap let's say 18 months or two years ago right so there had been discussions about uni turning on the fee switch and token buyback and burn afterwards I can tell you there are some discussions today about whether arbitum should do the same thing so I personally

think they should do that at some stage or even just getting a plan out there to do something in that space for me would be very constructive um mostly because investors understand what buyback and burn means and so they can price it into into models like the one that I mentioned before in terms of sustainable buyback and burn for unis swap. Um today arbitum's view would be well we're still in land grab space. So they're taking in money and using it to reinvest which I think is fantastic as well but I suspect over time they can probably do both. So again, let's say 18 months or two years ago in in unis swap sense where they turned on the the buyback and burn last December.

>> Okay. So that'll be an evolving conversation. We'll have to keep an eye on that. Um the other rail that underlies all of this that you've written about is chain link and you've set a target of $200 by 2030 on chain link tokens. You've called it the only endto-end platform for tokenized assets and you think this makes it very attractive to institutions. Talk to me about the chain link thesis here and and why is this such an attractive platform for tokenizing assets. >> Absolutely. So if I described Sky before as complicated, I'd say Chainlink is as complicated but from a completely different perspective. Yeah. So Chainlink's core business is to bring data on chain. Yeah. So blockchains are great, but they're not great at getting data. Yeah. So I spent decades um looking at things like Bloomberg

terminals in my old jobs but getting that data from a Bloomberg onto blockchains is difficult. Now that's has uh information from anything you would like to see in financial market space. Now what oracles do which are the backbone of chain link is to securely bring that data onchain so that it can't be faked is essentially right. So if in onchain smart contracts you say if price goes here uh you'll get this payout that data that tells you where the price is has to be reliable and so that's the essential monopoly that chain link has is in bringing data on chain securely and because of that they dominate that space they have uh very tight

relationships with tradfi as tradfi uh starts to come on chain as well. The second business line is interoperability and just the other day they put out what is called CCIP version 2.0 which was their interoperability example where which means that if you have data on one chain you want to move to another one again they'll do that securely and that they just updated that tech um just the other day. So if people have a look at that after that's essentially what chain link does. Now the the story here is that if you're getting more information on chain, so more need for data and more tradicants on chain that really need the data to be reliable and to be able to

move things around when you're on one chain to another. That's the space that chain link has an almost impregnable moat is the way to think about it because they've dominated that space for such a long time. So value capture is much more indirect. You don't really know in terms of all the throughput that's coming through chain link. There's not great data out there on most things. About 12 months ago, they did start up a stockpile of cash if you like. So, they take some of their fees and put it into their token link and hold it in that over time. They've got something like hund00 million in that today. Actually, that number's possibly too low given what link price have been

doing this week. But in that range, in the hundreds of millions of dollars of link that they've essentially taken off market and holding as a stockpile to be used down the track in whatever form they see. So, a complex animal that is, let's say, in in all the weeds in the background um of moving data around both between chains and and getting information on chain as well. >> Okay. Yeah. And I think that's pretty well understood. it's essential technology for the whole industry and I love that line of nearly impregnable moat uh for chain link. So there's definitely a thesis there. Um I want to talk about some of the major uh major caps here at the end of this conversation. Um and I want to start with Ethereum. Most of the projects, most of the D5 protocols that we've

talked about in this conversation are native to Ethereum. Um, and I'm curious for an updated uh target for you on Ethereum and how you think Ethereum captures value from all of this uh all of this we've just talked about in this conversation so far. >> Yeah, for sure. So, pretty much everything that we've discussed is built on Ethereum and it makes sense that it is because as Trafi comes on arrives on chain, they want to have the sort of old-fashioned trusted protocols, right? um and also those that are large enough that liquidity can be get liquidity. So again, it's logical that most of these are ETH native. Now the value capture story for Ethereum is obviously

extremely indirect. So more activity on chain is great. Um it should mean you end up needing more pe more people need to buy ETH to settle transactions. Yeah. But that pass through is quite indirect and it's also quite indirect by nature in terms of how uh the Ethereum ecosystem has increased throughput capacity over time with the blobs and other things, right? And so again, the pass through is relatively indirect um compared to what it is on some of the protocols that we have been talking about, but this should all be an ETH positive story. Yes, the end of this year I have a target of $4,000. I think that looks well in hand now and by the

end of 2030 $40,000. So it's a ETH outperforming BTC medium-term I guess is the story that people should be having as a takeaway here which is as activity increases onchain that's probably ETH positive certainly all the protocols we've discussed are primarily based on Ethereum and so over time that value capture even though it is indirect should see the token price go higher and so ETH BTC which is now just above 3% I have going back up to 8% % by 2030, which is roughly where it was in the 2021 DeFi summer.

>> It's nice to talk to somebody who is at least as bullish as I am on Ethereum. I want to ask about Bitcoin here as well. You have a target for 100K on Bitcoin by the end of the year. We're 3 months away from that. We seem to be like tracking much closer to that than we were in June um when we're initially making some of these year-end targets. Uh what is your outlook on Bitcoin for the rest of this year here? And do you think we'll be over or under 100K now that we're, you know, much closer to it than we were just a few weeks ago? >> I think 100 looks pretty good. Actually, I'm quite happy with that forecast for the moment. So, it tends to go in fits and spurts. I mean, after uh US Treasury said they'd buy more back in debt, 6

weeks or so ago, you saw 15k upside very, very quickly. Um, I think you uh we're now used to seeing that sort of price action in Bitcoin. it sort of jumps and then goes sideways for a while. So maybe it tracks sideways for a little bit just now. Obviously next week we will have the 12 months uh past the all-time high from October 6 last year. So those that are very focused on the four-year cycle theory, which is you'll go down for 12 months and then up for the next three years will probably use October 6 as a as a buying opportunity, which I think is sensible. Um the disappointment on clarity act a week or so ago, a couple of weeks ago now was also probably a a very good buying

opportunity. So I'd say you want to be buying into things that look logical. October 6 maybe one any term any uh at some stage hopefully we'll get some more geopolitical stability. Perhaps this comes after midterms now in the US. But if we could get some positivity out of the Middle East, maybe that would see oil prices lower and therefore backend bond yields lower. that would probably help Bitcoin as well. So looking for catalysts like that I guess is one way to do it or just stay invested and wait and see the 100k by Christmas. >> You are the global head of digital asset research at Standard Charter. You have put out a lot of really fantastic research reports on a lot of different altcoins in the space. Now um I'm curious if there is anything you want to

share about what you're looking at next, what you're researching next. Could be specific project or just a sector in digital assets. What's what's next on the horizon in terms of your research work? I I continue to want to go deeper into my broader thesis which is tokenization revolution and finding winners in the space. Yeah. So we've spoken about potential winners here as the onchain bank onchain asset management platform um and others. Yeah. So layer 2s etc. So some of the weeds like um things in the weed like chain link. So I continue to look for other projects. Now, there aren't very sizable ones in some of the other spaces, but that's where I'd be seeking either yield plays or, you know, derivatives on

chain. So, there's still a number of other components to be built out uh in terms of uh the broader winner space. And I suspect over time that's where I'll continue to go. I'll probably also give more of an update on stable coins given that was the original thesis here, like how that's playing out. for example, will you continue to have the the dominance of the large two or will there be more space um for other stable coin projects like Sky or or Athena to come through? >> Jeeoff, this has been a wonderful conversation. I always love having an opportunity to talk to you um because I learned so much and I think that our audience does as well. We've talked about a bull thesis on a number of different things, right? On on Bitcoin, on DeFi, on Ethereum, arbitum, like

we've covered a lot of ground in this. Do you have one thing that you think you you think would say is your highest conviction play? And it could be something as general as just tokenization or it could be something as specific as Ethereum outperforming Bitcoin. You know, you've made a lot of calls in this. Where do you think you have the highest conviction and and just what would you Yeah. Like what would you say to answer that question? >> Honestly, in terms of the tokenization thesis that is 100% locked in. um the uh technology has left the gate and tradi organizations like standard charted and others are literally arriving tomorrow.

Yeah. So if anyone's thinking tokenization is not going to happen, forget it. Start picking winners. Just take a medium-term view on the ones that we've listed. UniS swap, Harve, Morpho, Arbitum are probably my top four. >> Jeff Kendrick, global head of digital asset research at Standard Charter. one of my favorite guests, one of the guys I watched very closely in the space. If you're not watching Jeff's work, I highly recommend you check him out. He's one of the best there is. Jeff, where can we send people to find more of you and your work online? >> You can either have a look on our standard charted website um or otherwise people can people can always find me on LinkedIn as well.

>> Jeeoff, thank you so much for being on Milk Road Crypto. I'm really looking forward to catching up again as we see how all this plays out. >> Fantastic. Thanks, John. >> And thank you all for joining us. I hope you all learned something today. This was a fun one. I've been looking forward to this episode for a while. Uh, so I can't wait to put this out and see what everybody thinks. But until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Crypto. Thanks for being here, everybody. Bye. Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milkroad Pro is built for. Our analysts have called some of the biggest winners early, and Pro lets you

see what they're buying next, every trade they make, and the research behind every position. Check out Milkroad Pro at the link below. Everything you hear on Milk Road is forformational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about. Always do your own research and make the decisions that are right for you. See you next time.