Tokenized stocks on Base and onchain lending

Transcript

Um, I'm actually the most bullish I've ever been since I since I started in crypto five, seven years ago. >> Tokenized stocks on base did over a billion dollars in volume in their first month. And now you can even borrow against your Nvidia shares on A. Is Wall Street finally moving on chain? And what do investors need to know about all of this? Hello and welcome to Milkroad Crypto, the show that would tokenize itself, but the SEC only approved 75 stocks per exchange, and we didn't quite make the cut. I'm your host, John Gill, and today is Thursday, October 1st. And today we are joined by two fantastic guests, Matt Hogan, chief investment officer at Bitwise, back on the show again, a old friend of Milk Road, and Antonio Garcia Martinez, better known as AGM internally at Coinbase. He is the head of growth at Bass, one of the best

people in the market to tell us what's going on with tokenization right now. This is going to be a fantastic episode. If that sounds good to you, make sure you like and subscribe, share this episode with somebody who needs to hear it. And as 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 to Milkroad Crypto. Matt, Antonio, gentlemen, AGM, welcome. How are you guys? Hey, >> Matt, I forgot to unmute. You're gonna have to do another. I'm back. That's all right. AGM could take the lead. Um, it's great to be here, though. It's good to be here with both of you.

It's great to have you. I do want to start with AGM on this. I I thought a great place to start the conversation would be introducing you to our audience because I think this is your first time on Milk Crypto. Tell us about the path to becoming head of growth at Bass and a little bit about this collaboration with Bitwise here. >> Oh wow. How much time do we have here, John? Um [laughter] so yeah. >> Yeah, it's a slightly it's a slightly twisty tail. So, um, I was a founder of a company called Spindle that got backed by Dragonfly and Multicoin and other investors right around 2022, which, you know, feels like a long time in crypto years. Wasn't that long ago in actual years. NFTs are still a thing. DeFi hadn't quite taken off yet. Hyperlid didn't even exist yet as far as I know.

And Sam, we we started um a company that was basically onchain attribution and eventually an ad system. What that means is someone logs in in an app, in a wallet, whatever, and then does something on chain and we join it all together into sort of a user file. So you'd understand where your actual users are coming from. This is all very known technology in the web two world. We basically built the onchain version for it. And so Coinbase, which was an investor, eventually acquired us and that sort of core function of like, oh, something happened in the world and onchain value actually happened, kind of morphed eventually into what's become kind of the base growth team. Um, and what we try to do is is measure that funnel and then also incentivize where we can that funnel. So that means running campaigns to give a little bit

more yield on CBE lending say uh on base for example and a few other things that we can get into but that's the sort of thing that we do to to drive growth on base. >> Okay. Well I'm I'm really happy to have you on the show. There's a lot of things driving growth in crypto right now. One of the biggest ones is tokenization and I wanted to talk about that in this conversation. Two weeks ago, a little bit over two weeks ago, the SEC put out something called the innovation exemption. They and the the CFTC have been working very hard to bring clarity around tokenization. Just in plain English, Matt, you're really great at this, like putting things in things people can terms people can understand. What's been approved here? What does this unlock for crypto? What do we need to know about this?

>> Yeah, it's a big moment. If I were to take it at a 100,000 foot view and then maybe we'll go down to 30,000 and then we can go down to three if you want. At a 100,000 foot view, the SEC sort of made accessing tokenized stocks legal for Americans. A good way to think about tokenization. year so far was it was very hard to access these uh stocks if you were in the US. It was mostly for international users and they created a pathway for us to get to the point where where US users can access them. That's the 100,000 foot view. At a more discreet level, they did a couple of important things. They allowed tokenized securities venues to operate without being national securities exchanges or ATS's on an exemptive experimental

level. So that's like letting them exist and try out this technology without being subject to the same tier of regulation and the same rules that we apply to New York Stock Exchange and NASDAQ. So that's a nice little sandbox. They also made it possible for AMMs to provide liquidity into the space effectively for us to create this sandbox to see how this works in the US system. Now there are limits you mentioned them at the top limits on number of stocks limits on size but importantly it opens the door to tokenized stocks in the US. I think we'll look back at it as a signal moment where we started to make the evolution from the old system to the new system.

>> AGM this leads right into a question I had for you which is that Coinbase's tokenized stocks are still as I understand it offshore only. Does this open the door enough for Coinbase to start moving those onshore and making them available to US customers? >> I mean that's certainly the plan. Um, we definitely want to move them and offer them to to US users. We obviously started overseas as many crypto projects do for all the reasons that that Matt elucidated. Yeah. No, no, we we want to get them on shore. I mean, look, the big advantage here is that, you know, when I started on Wall Street, we still had Matt probably remembers we had T+3 settlement for for stocks and then I think incrementally like in the 90s it got to T plus2. I think we're at T+1 now, but it's still like hyper slow.

Like the AMMs that Matt talked about will literally do the trade in a second and it's that's it. Like it's it's T plus four two seconds. It's not a day, right? And so like that advantage plus all the other things we're going to talk about in the show, I think is part of the reason why like it's inevitable that we kind of get to the point where even US equities, it's not this weird offshore oddity. It's like and and most users aren't even going to know it. They're just going to go to a new bank and buy a share of Nvidia and they're going to own Nvidia and there's going to be a stock split and dividends and all that. It's all going to work and they're not going to know the rails they run on in the same way that nobody knows what T

plus1 is. But that's going to be kind of the future. >> Yeah. Except for they do know when they sell the stock and they have to send someone money and they have to wait a day for it to settle. I mean it is worth noting, you know, we we we we rush over these things. But T+1 is absurd, >> right? When we went to T+1, you may remember this AGM uh Bloomberg ran a article that said stocks settle the fastest in 100 years, which meant that we just caught up to where we were settling stocks in the 1920s. Think about any other space where we're like catching up with the 1920s. It's completely ridiculous. So yeah, I think users won't notice that much of a difference except for settlement will make that money instantly available to them and the tokenized version will be easier for collateral. There'll be all

these uh nice benefits as well. 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. Okay. AGM, I have another question around this. The rules that the SEC has laid out say that a tokenized version of a security has to carry the same rights as the real share does. So, this includes dividends, voting rights, all of that. How big of a

lift is that for Coinbase to to do technically, or are you already pretty much there? Like, what what's what's that gulf look like? >> Yeah. Yeah. Yeah. So, that that was the super hard part actually and I I you know, I'm the face of it here, but I'm not even the guy who deserves credit for getting this through. But yeah, when you own a base equity, you have voting and dividend rights. It's it's the shares are actually custodied by somebody somewhere. Like even if Coinbase were to go blow up tomorrow, you'd still own the shares, right? And that means you actually own a share of it. So dividends are typically a multiplier. So like I'll own a share of Google and somehow I get 1.05 shares of Google, which then obviously gets realized when I sell it.

um how voting is going to work. You have voting rights. How voting is going to work is a little bit TBD. Like we don't actually have it baked into into the app yet. But uh yeah, no, it's coming. That that's the key part to it. But you know, there's a not to mention some of the competing stocks here necessarily, but it's very easy to have something that kind of nominally represents the stock. But frankly, it's just vibes kind of maintaining the lock with the the the the offchain world. But in this case, there's like a mint redeem window, right? In the same way that like if you have an ETF whose NAV is like in log with like the underliers because somebody is actually either selling the ETF and buying the stocks or vice versa depending on how slightly it is out of whack. You have the exact same

phenomenon going on with base tokens, right? So you're kind of locked together because there actually is real value going from offchain to on depending on how pricing works. So it's it's as real as anything can be real effectively. >> Yeah. No, and I think that what I wanted to highlight with that question is exactly that Coinbase has gone, let's say, a different route on some of these things than some of the competitors and that differentiates the product there. Um, Matt, I I've heard you compare this moment to Nvidia right after ChatGpt came out and you said that this is when most of the gains came after everyone could see it. Um, why do you think that tokenization is at this point right now? And and walk us through what you what you think happens from here.

>> Well, I mean, I was trying to respond to investors who are like, I missed it. It already happened. It's already priced into these assets. They're up 10, 12, 13%. And I was trying to make the point that like if you decided AI was going to be important, not just after Chat GBT came out, but a year later after ChatGpt came out and you invested in the most obvious stocks like Nvidia, you did exceptionally well. Like most of the gains did not come from ChatGpt3 in the first year. They've actually come more recently. When you're investing in mega trends, it's completely fine to miss the first 10, 15, 20, 25, even 100%. In the case of tokenization, there's $300 billion of tokenized assets worldwide. Maybe $350 billion. There's

$674 trillion of assets worldwide. So, this thing could 2,200x before it penetrates the existing market. It doesn't matter if you weren't like on it the day before the SEC issued its tokenization exemption. Uh this is a story that will play out over the next decade. And so the point I was trying to make was like people miss a lot of these opportunities because they think they're quote unquote late. We're 1 1200th penetrated into the tokenization market. It's like super early. And I was trying to get people to recognize that that that's going to be a mega trend that you can invest in in multiple ways. Well, a 2000X sounds mildly bullish. So, thank you for that context there. Matt, uh,

AGM, I wanted to talk to you about where we are in the growth of this so far because we're about a month into these tokenized products. Like I said, we've done over a billion dollars of volume on base so far. Most of this is going through aerome right now. What's your just assessment of the launch and the success? Is this exceeded your expectations, been roughly in line with what you thought or just how's it been so far? >> Yeah, definitely outpaced. I mean, you cited the billion dollar number. I think uh September 30th we had our first $100 million a day day in terms of volume trading on Airrum. So it's getting up there and I'll note that we launched because we did it this like heavy-handed like everything has to be official way.

I think we launched with four names and we launched another four and then I think we've got nine on the way. I might be spilling the beans but then and obviously we're going to be launching more coming forward like as fast as possible. So we're not even really fully launched. It's not even supported in the retail app yet although obviously that's coming overseas. So basically, we've we've literally just thrown out a few of the names, set up the AMM liquidity, and kind of seen what happens, and that's where we are. So imagine once it's inside the actual retail app, imagine once we actually have a couple hundred names that exist, then it's I I think it's going to do very well. So yeah, it's it's very it's very much outpaced, I think, what we expected at first.

>> Okay. Well, you're more than welcome to keep spilling beans all over the show. That's kind of what we're [laughter] um feel free to continue doing that. I'd also like to talk about some of the things you can do with tokenized stocks that you can't do now with like traditional equities issuance. A started letting people borrow USDC against tokenized Apple, Nvidia, Tesla, other things. Why is this such a big deal and what do you think this unlocks for the future of the equities markets? Um either one of you I think actually I'd like to hear both of your takes on this but whoever wants to start go ahead. >> AGM starts off. I >> I'll start with the obvious thing. Yeah. And then you can go into the bitways part of it. So um yeah so a London borrow pro protocol for those who aren't

familiar with it and then a v4 has this interesting hub and spoke model and what it basically means is that there's like a cluster of collateral that you can use to pledge and borrow against it and so they have like a mag 7 hub and basically I can deposit Nvidia shares in it and then borrow cash against it and why is this interesting I mean it's interesting because it basically matches the functionality in Schwab right I can obviously borrow money against my stock portfolio what I can functionally do is get 2x leverage right? And say, "Well, you know what? I'm going to put in a million or $100,000, but I'm basically buying $200,000 worth of of Nvidia."

Obviously, they're charging me financing on the $100,000. That's the finance leg of it. But basically, I can do the exact same thing onchain that I can do offchain. That's cool. Here's here's something that you sort of can't do offchain or is harder to do. The reverse of that, it doesn't exist yet, but like obviously it's in the cards. the reverse of that which is which I lend out my Nvidia and make make a vig on it like I which by the way is what your broker is doing behind your back. They're actually lending it out holding in street name and then someone's shorting the stock on the other side. You can actually enable that in a very open and transparent way. The analogy everybody cites is like DeFi is composable like Lego. So like there's a tokenized equity, there's a London borrow market. So now you can lever the

long side and you can take the short side and then I think you can do cool things like what Matt is doing with Bitwise. So I'll I'll popin to you. >> Yeah, for sure. Uh, I'd love to love to love to pitch the Bitwise thing, but just one note on that. This is widely available to very wealthy investors in traditional systems. If you have $10 million and up, you can lend out your shares. You can borrow against them pretty easily. That gets pretty smooth. Everyone else has a hard time accessing that. Maybe you can set it up if you're extraordinarily persistent and annoying, but basically the rest of the market is closed out of it. One of the things I love about this, it's just like everyone can do it. you can do it at this scale, you can do it at this scale, it's fine.

Um, and so it really provides this uh more even playing ground that lets everyday people access the kind of returns and flexibility that that traditionally has been reserved for the largest investors. So, I'm very excited about that. >> Awesome. Okay. So, we talked a little bit about the T+1 settlement time and we're moving towards 24hour, you know, 24/7 trading basically. Uh, Robin Hood talked about this. They're moving in that direction at their product event this week. Coinbase's tokenized stocks are already trading around the clock. However, the traditional markets aren't quite there yet. Talk to me about this gap. Does this present some kind of structural risk management problem of like, you know, when the markets are closed, you're still trading and there could be issues there or do you think like eventually we go to 24/7 on all

these markets and this problem resolves itself? Uh, Antonio, what do you think of this? >> Yeah, so this is one of the more fascinating problems. My former quant here loves this problem. So the the problem is right you've you've got like whatever it is I guess it's what is it 7 hour trading day so 75 trading right 7 hours in 5 days and then you know going to 245 or or or 24/7 right sort of trading is the next step that's interesting for a bunch of reasons obviously the market can dislocate right like you can have trading on chain that's different than the market that's offchain why why does that tend to happen and by the way everything's going to have to change on Wall Street because of it as everyone here knows all the companies involved here included right?

They tend to announce a result exactly half an hour after the market close or they try they tend to have news happen outside of market trading hours to intentionally not royal the markets. Well, that's kind of that's going to not be meaningful anymore because the market is still trading. It doesn't matter, right? So, that's one interesting thing. The other thing is getting back to this aid business and lending um you have what are called oracles, right? And so, these oracles link the outside price like in the world to the price onchain that you use do things to like liquidate margin positions, right? So, if I borrow against say $100 of Nvidia stock and it's not, you know, probably not going to happen, but let's say Nvidia crashes 50% or something, there's obviously going to be a margin call there. Like, what triggers that? How does that work?

Is it the onchain price? Is it the offchain price? It's 3:00 in the morning on Sunday. What is truth here? It's like an epistemological problem of like what is the value of Nvidia right this second? Because we have financial decisions to make. And it's it's a fascinating problem. It the problem already exists on on a protocol called Hyperlquid. They're trading oil and size. there's all these events, geopolitical events going on. What what typically tends to happen is they maintain a sort of oil price over the weekend that's kind of, you know, bend within a certain like floor and ceiling and then it repins and then I mix price on Sunday and kind of a similar thing kind of happens is going to happen here as well. What you're going to have is you're going to have the risk curators, basically the overseers over the lend

pool are going to look and see, okay, like how much are we going to actually lend this let this move and then specifically how much are we going to borrow against assets whose you know overnight liquid or sorry volatility might be high and might be shifting. And so basically, this is getting a little wonky, but basically the amount you're going to be able to borrow against that position is going to be less than if the market's trading because obviously, you know, if something is very liquid and the market is clear, you can borrow against and if it isn't, there's less. And so it's basically a riskmanagement problem with totally like you can deal with this risk management problem that over the weekend curators are going to have to get a little bit more aggressive on the on the caps basically.

>> Okay, cool. Yeah. And I just wanted to kind of hear how you were thinking about that problem. Um, I want to keep talking about some of the things that this this new tokenized version of equities unlocks. The the biggest one I want to talk about is these ATPs, um, automated token portfolios that Bitwise has launched on base. Um, for anybody who missed it, Ryan Rasmusen, who is head of research at Bitwise, came on our show on Milk Road Crypto to talk about this the same day these launched. We did a deep dive on that there. But Matt, I think for anybody who maybe missed that episode or hasn't caught up, could you give us a little like summary high level of what automated token portfolios are and what investors should know about these? Yeah, at a really simple level, they're model portfolios created by a

professional asset management firm like Bitwise to capture a specific exposure. So, an example of one we have on base is the the Mag 7X. So, the Mag 7 stocks plus SpaceX, but you can imagine a wide variety of thematic or tactical exposures that we can design in a paper portfolio and someone can subscribe to and then what happens is that it is replicated in their own direct wallet. So they own those individual stocks in the percentages that match what the paper portfolio is doing. In a traditional asset manage world, we might point to this as something like a model portfolio or an SMA. It's not quite that, but that's the idea. You have a professionally designed portfolio and

then someone can subscribe to it. It's interesting for a few reasons. From a user's perspective, it's very interesting because they retain direct custody of those assets. This isn't a pulled vehicle like an ETF or a fund. They own those individual assets. They can use those assets in the DeFi ecosystem. It's much more direct from a product development perspective. It's much more interesting because it's very fast. It's very flexible. It's very movable because it is just a a designed model that people can replicate in their portfolios in their own wallets at their discretion. uh we can launch new ATPs very quickly. We can adapt to changing market conditions and from that

perspective it's very uh it's very interesting and very lightweight which is nice from a innovation perspective. I always like to think about you know when you get a new technology what can you do with it that is uh similar to what we've had in the past but better in certain ways. This is similar somewhat to what ETFs are doing. There's certainly a lot of thematic ETFs, but it's better in that it's faster, it's lower cost, it's more efficient, it allows for direct custody by the end customer, it's not a regulated fund, so it doesn't have the same protections, but it has a lot of benefits that are interesting to people.

>> Okay. So, lots of new benefits, lots of opportunity for innovation. Uh, AGM, I want to ask you about this. When this launched, you said that now a taxi driver in Argentina can get the same portfolio exposures as a professional wealth manager. Uh, and I'm really curious who you're seeing as the adopters of some of these products and and customers who are, you know, engaging with these products that have been launched. Is it taxi drivers in Argentina? Is it professional wealth managers? Is it some of both? What are you seeing? >> It's interesting. I mean, it's funny that's become a meme because the the original story was I actually I was in DevCon in Bonositis and my taxi driver actually held crypto and I asked him what he did with it and he said kind of nothing because he couldn't invest in anything. So that's where the meme came

from. So there there was there was in fact the archetypal Argentinian taxi driver. I don't know what he's invested in these days. I mean to be honest it's early days like we don't even have most of the names out there. So we just started you know with the Mag 7 because obviously it has the most in like Matt said that's you know that's obviously where you start. It's a weird curiosity that the names that get traded on chain are not necessarily the names that are most interesting as a company, right? So like one thing we've seen inside retail, the sort of names that get traded, we also have like an off-chain equities product tend to be interesting. You know, it's like the GameStop phenomenon, right? Like what the hell is GameStop? Like when's the last time you even saw GameStop and yet it became it like

possessed the entire Wall Street world for like weeks on end. It's kind of the similar phenomenon where it's not necessarily the most high market cap name, but those are the ones that are going to draw the most onchain attention. And we haven't even gotten there yet. So, sort of long- winded way of answering your question. I I don't think we know exactly what they're going to trade. I don't think it's going to be obviously the case that they're just going to, you know, buy spy ETFs and go away. I think knowing the onchain world, it's going to be a little bit more interesting. I mean, ATPs, right? Like novel trading strategies that don't exist now that again, I mean, those exist as hedge funds in the offchain world, but here we're bringing them into the onchain world accessible to anybody.

So, I think the collision of that is going to be really interesting. And again, it's just it's just too early days. Like they're just even going Beyond Base, Robin Hood, whatever. We just haven't had them long enough to even understand who's going to really trade these things. >> Yeah, it's always exciting to see what happens when the memecoin trenchers get a hold of tokenized assets. So, we'll see what it plays out there on base. Um Matt, I want to ask you about this. This is something I've asked Ryan about and some other people from Bitwise, but as the SEC starts to open the doors for things like this and ATPs become a product that you could potentially bring onshore into the US, how do you see this relative to your ETF business? Does this, you know, is it a competing product? Is it a supplementary product?

Do they conflict with each other? And and just how do you think about that in terms of different products that Bitwise is bringing to market here? >> Yeah, sure. I mean, I come from an ETF background, right? I used to run a company called ETF.com. You can think of ETFs as a hugely disruptive to the mutual fund industry. It's not that the mutual fund industry went away. It still exists. In fact, until about a year ago, it had more assets than the ETF industry, even though no one's bought a mutual fund in a long time. I think a little bit like that when I look at the tokenized world. Look, we love ETFs. ETFs are going to be here for the next 30 years. They're extraordinarily efficient. There's some efficiencies that come from pulling capital together.

It's a beautiful vehicle. Uh but there are these other vehicles that are capture new users, younger users, a different demographic, global users, and they're going to scale over time. What Bitwise tries to do is to have a core level of expertise, which is a deep understanding of the crypto markets and the traditional markets that we can smash together into interesting projects that could be expressed through an ETF or an ATP. I think of them as existing side by side, right? We also do vaults and we do SMAs and we do hedge fund like strategies. You have different rappers for different people. This is just a unique rapper that we can do unique things for a unique audience. I do think there this space will be very significant otherwise we wouldn't have

moved into it but you know I think of it as complimentary to the ETF. >> Gotcha. Okay. So they can grow together. I I want to talk about growth. Um because AGM you are head of growth at base and growth is something that's happening a lot in crypto right now. Tell me a little bit about what the strategy is to grow from here in terms of adoption of these products and of base in general. Um, you know, you have a a very successful history. You were involved in Facebook's ad machine growth over there. Any lessons learned that you're applying to grow uh base and just what's that overall strategy look like for you right now? >> Oh god, Facebook was such a different world. [laughter] I mean, it's um crypto is the reverse of the regular world. I always used to joke that like Facebook

had more ad inventory, more users, and it knew what to do with while crypto was in the reverse situation. That said, on the flip side, the average crypto user is worth more than the average Facebook users for a bunch of reasons. But um yeah, so what are we doing on Grove? Like I said, you know, we came Spindle came out of the whole ads world. So like we still run ads actually inside like Coinbase wallet and a few other places, but like what we're really doing now again is just like seeing where do users come from, where are they going? Like we have these beautiful flowcharts that we should probably have blog posts about that literally show like where's money coming into like tokenized stocks or like liquidity insights and lending pool and then where does it eventually go?

And so just under making sure that it's like real retain TVL, right? Like these are real users who are actually trading. A lot of things get farmed on crypto. And then having targeted incentives. So we actually have like a cashback reward system for trading equities through and I would rattle off the list of names, but I I I don't know them off hand of like the 10 or 15 partners that we're launching with. Uh and then we probably run the same thing with with retail, the Coinbase retail app once it launches. So running things that are like I mean it's you know it's very similar to what other brokers like hey you know here's 10 bucks to like transfer 100 bucks to your account and start trading and then holding on to it for 30 days or whatever. We're probably going to have trading style competitions for like the

big whales to see who like trades the most in size. Very typical sort of crypto tactic uh to drive growth. I I think we're where we're actually a lot better. It's a little bit more scalable is just making sure there's things like like AMM liquidity. Like there's actually liquidity in these names such that people can actually trade them and it actually costs them less to trade than they would in the trady world. So making sure that that makes sense. Or when it comes to like lend borrow, markets are always unbalanced. There's people trying to lend more than there are people to borrow or vice versa. So you've always got to juice the yield on one side or the other to kind of get that flywheel going and get that spin going. So like things like that. We have like a lot of measurement to set up to

figure out like where do we need to inject a little bit of liquidity reward and actually get the markets to sort of solve the cold start problem and get going. Particularly a market like Dit that's literally starting from zero. Like the organic growth has been amazing. Again, $100 million in a day is is more than we thought you'd get a month into it, but still, right, like the the the borrow pool on a is nowhere near that yet, right? So, do we need to inject liquidity there to get that lend borrow going and get those wheels going? I mean, the answer is probably yes. So, like things like that are what we think about. >> Okay. So, targetive incentives to to get things running. What is the metric that you're most focused on? Is it users? Is it applications built on base? Is it volume? Is it all these things? Like,

how do you think about measuring the success and the growth here? That depends who's nagging me on Slack asking me a question where we on what number, whether it's Jesse or somebody else. I mean, usually the high level metrics are the obvious ones. I mean, at a core level, the chain makes money off sequence revenue, right? So, gas fees is like a core thing, but that's a very that's a very short-term sort of way to look at it. Obviously, I I mean, Dex volume is is one of it. DEX market share compared to other other chains is actually a big one. Lend borrow and financing is super successful on base. Like we've just been seeing balances for lime borrow just go up uh on base for for different assets not just tokenized equity CBTC CBETH etc. So just understanding how much we have locked up

how much of that retains. So once again we do a reward does it stick around or is it flighty capital for example. So like metrics like those total payment volume right there's like billions and billions and billions of dollars of of USC on base that gets paid all the time. So that that's another metric that we look at. So sort of the basic high level stuff you'd find in a in a Dune dashboard. Specifically when it comes to growth, things like retention, where are they coming from? How long do they stick around? Like that's the sort of thing that we ask. >> 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 Milkro 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. Telem sent you. Gotcha. Okay. So, one of the key things for growing any ecosystem is things being built on it that people really want to use. Matt, I'm curious your perspective on why you guys chose BAS for ATPs, for these automated token

portfolio products. What was that decision-making process like? and and what were those conversations like leading up to launching this product? >> Yeah, I mean it's it's pretty easy. Coinbase is an exceptional partner. Uh Bitwise has been partnered with Coinbase, I think, for eight years now in some one way or another. So, we're we're deep friends uh with the company. Uh we knew and liked how the actual tokenized stocks were functioning in terms of uh what AGM said uh being actually the tokenized stocks with full rights and responsibilities and we felt confident they would do a good job on liquidity which in fact they have.

Right. So just a high degree of trust when you come out with a new product into a market. You really want to get it right on the first instance and you want there to be a high level of trust and quality and and we felt comfortable doing that with base. So it's it it's a it's a great part of a continuing Bitwise Coinbase story is how I view it. >> Okay. Continuation is always a good thing. Uh, AGM, I wanted to ask you a question about something that I saw you posted on Twitter. Um, which was about who wins the automated or the agentic trading economy. Um, and you wrote an an essay about this on Twitter and I didn't get a chance to read it. Um, but I I wanted to ask you about it because I thought it was like really relevant to

like just the growth of crypto overall. And so, you know, just give me some highle thoughts on this and and how that figures into the growth strategy at Coinbase and for Bass. >> Oh god, being held accountable for what I post on Twitter. This is like one of my nightmares that I posted something three months ago. I think I think this one went kind of viral. People from like Stripe and Tempo are replying to it. So yeah, so this this agentic payment thing is kind of cool, right? So I think everyone probably understands it, right? This business like oh my agent goes out into the world and spends money. It's a site example of another company building on base Cloudflare which hosts like 20 25% of the internet will have a feature where if like an AI agent comes and scrapes your data that's fine but they

pay you some microcent amount. And so there's this thing called X42 which is an HTTP code which basically says hey bot like you got to pay me a tenth of a penny say for this information. I mean the the the publisher can set what that is right and so rather than having like 100 subscriptions you just go and like incrementally get whatever information you need you know you paid 5 cents for that query in the same way that you paid that many tokens to the frontier model and like life goes on and the world information is open to you. So that's kind of the agentic payment example. I mean I think there's a lot a lot of ways this conversation can go John. There's like aentic ads, there's all that, but I think the agentic economy is is is really interesting. I mean, I'm I I

totally live in constant AI psychosis basically like everybody else in San Francisco. And I've literally got 12 agents like chugging along even in the middle of this podcast. But like that world, right, is real. And obviously crypto being programmable money, it's the perfect currency for AI, right? So, I think increasingly you're going to see this collision between AI and crypto. And the AI people don't like crypto. So, we're going to have to re we're going to have to rebrand it as stable coins and payments because that's that's the new name for it, which is fine, but you're going to increasingly see that collision happening going forward. >> Okay. Well, this collision and going forward is exactly what I want to talk about with the last little chunk of this conversation here. Um, and Matt, I want to start with you. It's been a while since we have caught up. Our Milk Road

audience loves hearing your takes on the market. You've been doing a road show, traveling the country, talking to institutional investors. What What are you hearing on the road? What's your outlook and and what are some of the lessons you're learning from from these conversations you've been having recently? >> Yeah, I think I've been at eight or nine TRDFI conferences in the last two weeks. So, that's almost one a day. They're extremely bullish. I mean, that's the short story. The TLDDR is they're extremely bullish. I think, you know, investors are always looking for non-conensus bets that they think are interesting. And one thing that's happened that's probably important is AI has become so consensus and so mainstream that it's no longer occupying that niche of where I'm generating excess returns from a portfolio. So we're seeing traditional investors sort of cast around for what that could be.

And one of the places that they're landing is on crypto and specifically on anything associated with stable coins and tokenization. And the reason is they're seeing crypto follow its traditional four-year cycle. They imagine that we're entering a new period. They're seeing the proc crypto regulatory push and then importantly they're seeing real world metrics of just astounding growth even through a bare market and they're putting those together and saying maybe this is the non- consensus but correct trade where I'm going to generate excess returns. I don't think I've ever been more excited about the state of financial advisor interest in these uh allocations. uh they're not sure exactly how to express stable coins and tokenization from an investment perspective. Whether that's a

blend of crypto assets, whether that's a blend of crypto equities, whether it's a combination of both, they have those sorts of questions, but they know it's a mega trend that they want to get behind. And um I think we're going to see significant inflows from that audience in the in the last three months of the year. >> Yeah. So, this is a question I would really like to hear, you know, AGM's thoughts on this because Matt, what you bring up is is a great point. Everyone is bullish on tokenization right now and talking about it, but my community at Milk Road is asking me lots of questions of how do I get exposure to this? Do I just buy the layer ones like Ethereum and Salana? Do I invest in decentralized exchanges like Aerodrome or Uniswap? Or, you know, people are asking me about Ando or um Securitize AGM. You know, as

from a perspective of somebody who's deep in the weeds on on people building on this technology, where do you see value acrewing between these things and just how do you think about that from a value acrruel perspective? Where in the stack a lot of this shakes out? Well, just to plus one what Matt said. I mean, I just retweeted uh this VC called Top Tong Tom Tongas who keeps an eye on crypto and AI and he said the big the fastest growing market to your point about AI being a little consensus now is actually not an AI, it's in crypto. So, real world asset spot volumes had 500xed in 20 months. That's a big number even by AI standards, right? And this means everything. It means tokenized equities, it means bonds, it means commodities. I mean, hyperlquid is probably a huge part of that number. And so you the world is

coming on chain, right? Like this is happening. There's like no question and it's only accelerating. How do you play it? I mean, I probably can't plug individual names on a podcast. It's a reality. And then I'd have to disclose if I held them, so it would be even more awkward. Um, >> full disclosure, I hold everything. I hold all of it. I'm >> hold of it. [laughter] >> Even competitors, all of it. >> He doesn't want to say Coinbase. Uh, [laughter] but I'll throw it out there. Um, look, I think the answer is at any time you're in this phase of a technology boom, the answer is to own a wide variety of things and not pick the wrong horse. Talk to somebody who bought Ask Jeeves instead of Google in 2002 and see how they're doing today. I think that's the case where we are in

tokenization. So, the answer to your question like should I own L1's or apps or companies is yes. you know, I don't know where the value is going to acrue between that cohort, but I bet if this thing 2000x is, they're probably all going to be okay, or at least enough of them are going to be okay. So, I really, you know, that's our message to people is don't try to be too cute about it and find the one asset that you think represents the future. Um, that's historically been a challenging bet. uh you're much if the beta is good enough and I think the beta here is good enough um buy a suite of these things and uh and I think it rest easier >> Matt you know what we need we need a tokenization ATP >> that's built by Bitwise that's what we

need here [laughter] >> there it is all right let's get it launched let's get it launched I'll shoot you the the equities we want for sure but that's exactly right yeah that is what people need I think is broad-based exposure like that >> that was a very well-reasoned answer and don't get cute is what Yan Benek said to me this summer when I interviewed him, too. So, there's a lot of wisdom in that. All right, let let's talk about the road map here, AGM, I want to start with you. What's next? What's next for tokenization? What's next for Bass? Uh, and just what's on your your horizon going into the last part of 2026 here? Uh, what what are you focused on? >> Yeah, I mean, the big things are obviously activating tokenized equities in the US. I think no mystery there. We kind of started the show talking about

that. I think it's going to be doable. I think it's going to be a lot of lot of eyes have to be dotted and te's have to be crossed to get there. I think just get getting it in Coinbase retail, right? Opening it up to to the average Coinbase user. I think having more retail distribution for it. I we have a we have a number of retail partners now, but I wouldn't say it's at like scale at all to be honest. The lend and borrow side is interesting again. You know, the ability to to to do a levered long on a stock if you want or to earn money for holding a stock to be able to short it. We still need to get the kind of feature parity with the DRFI world or even better, right? Like I can earn for just holding a stock. When that happens, by

the way, I think you're gonna start seeing things like people are going to take offchain holdings and bring them onchain, right? They're gonna like it sort of doesn't exist yet because we've like shipped it so fast, but there's going to have to be like a mint window for the average user who's like, look, and then obviously without a new cost basis ideally, right? Like, hey, I own a thousand shares of, you know, Nvidia and I've been, you know, gig along and I'm up a bunch. I I want to get paid for for lending them out. How do I bring them on chain? That's going to be possible eventually, right? So things like that, making it such that you'd actually rather have your stocks on chain than whatever your conventional broker is, I think is the kind of the next big step.

>> Gotcha. Okay. And Matt, same question to you. You know, we just joked about you doing a tokenization ATP on base. Um, but Bitwise has been launching products at an amazing clip. You guys have launched a near ETF, I think a lighter ETF. A lot of other products have come to market here. Uh, what should we know about some of these and what's next on the road map for for Bitwise? >> Yeah, look, I think there's still some single crypto assets that need more ETF exposure. um assets where they think there's significant upside. I think NER is a great example of that. Uh NER is a relatively small asset but with very large ambition, having great success on intents, uh having great uh sort of goals on the AI side. So I think you'll see us do a few more single asset ETPS.

I do think toward the stable coin idea, I think we're close to the moment in the market where people will want thematic exposure equal to their single asset exposure. It used to be we were all tribalists in crypto, but now there are some people who are like tokenization maxis and stable coin maxis. I think when you get that, you can get some new ETPs. And then I would look for Bitwise to do more on chain, right? We're now a major staking provider. Uh we're now doing vaults, we're doing ATPs. We definitely see that as a big part of our business. So in the future, you know, I think an equal part of Bitwise's business will be onchain as off-chain.

Um and that's sort of where we're driving. >> Okay. So final question here for both of you. I want to get like you know just directional you know wind in the finger in the air which way the wind is blowing on crypto overall here because a lot of people are worried that the macro environment is deteriorating and that this rally in Bitcoin is going to fade. Um and I think we've broken out into a new bull market and a lot of other people are leaning that direction. Which way do you guys shake out on this? Do you think we're over or under 100k on Bitcoin? Antonio, if you can't give a price prediction, um I would just generally like to hear you know your perspective on the markets here. Let's start with you and then we'll finish with Matt.

>> You don't want to hear my Bitcoin price predictions. They've been they've been always wrong every time I've opened a position in Bitcoin. So, I'm I'm horribly bad at predicting that. No, I'm bullish crypto in general. Um I'm actually the most bullish I've ever been since I since I started in crypto five to seven years ago precisely because it's like the tried people coming online. Like if you go to the I'll give you a little anecdote. If you go to the New York office of Coinbase, it's like the same people I was working with at Goldman 20 years ago, which is a bull signal. It's the same guys in the in the the pedagogi like these specs talking about trading in size onchain not as some like weird little social experiment. It's like oh no this is just the way the world works now right like

that's the change you're seeing and I think it's going to happen faster than we think and I think 10 years from now we're all caught up in it now but 10 years from now everyone's just going to assume that they trade equities in a split second and get paid for it and have ATPs running. Oh that's just the way the world works. That's how technology works. Everyone just assumes it's true when they grow up in it. But then it's this is the tangle to to to get to that point. >> More bullish than I've ever been is always an acceptable answer. So, thank you for that. Am Matt, what what's your what are your thoughts here? >> Yeah, I'm also more bullish uh I think than I've ever been. Uh this is a crypto rally based on fundamentals and improving regulation and a widening audience. It's still the case that, you

know, 95% of all Bitcoin, to use that example, is already owned, but 95% of investors don't own it. I think those two have to collide uh and come with an outcome of higher prices. I think absent a dramatic market pullback in traditional assets, crypto is in a uh a long-term bull market that has a lot of sustainability to it. So, I'd be I'd be buying on dips and and uh I'm pretty excited about where we'll be in a year. >> Matt Hogan, CIO, chief investment officer at Bitwise and AGM Antonio Garcia Martinez, head of growth at Bass.

Thank you both so much for being on Milco Crypto. I really enjoyed this episode. I think our audience is going to love it, too. I would like you to just tell us where we can send our audience to find more of both of you and your work online. Uh, AGM, let's start with you. >> Uh, Antonio GM on Twitter. >> I'm Matt_hogan on Twitter. And Hogan has a U in it, which is weird, but you know, it's the way it is. >> And you also publish. Do you want to plug your CIO memo? Because I would like your CO. >> I write a memo every week. I write a memo every week called the CIO memo. You can get it at bitwiseinvestments.com. Uh, it tends to cover the most important topic in crypto that week. It's always under a thousand words, so it's an easy

read and I'd love for you to subscribe. It's free. >> I wanted to make sure we got that in there because it's one of my favorite things to read in crypto. Gentlemen, thank you both so much for being on Milco Crypto. This is a great episode. Really great conversation. Thank you both so much for being here. >> Appreciate it. >> Thank you. >> And thank you all for joining us. I hope you all learned something today. I know I did. So 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 everyone. Bye. [music] >> 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 [music] 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 [music] position. Check out Milkroad Pro at the link below. Everything you hear on Milkroad 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 [music] that are right for you. See you next time.