TradFi Capital Is Powering Defi’s Evolution | Round Table

Transcript

I think people do generally kind of feel like we might have might have maxed out uh what can be done on DeFi right now outside of just like kind of like memecoin speculation and just being like the first to like hit like a sex arb. Um and like maybe that's not like a horrible thing, but I think in general it' be nice to be able to just do whatever you want in in all of finance just like onchain. Quick shout out to today's sponsor, Algarand. We'll hear more about their Algo Kit 3.0 and how it's built to supercharge your app development on Algorand later on in the episode.

[Music] Nothing said on Zerox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only and any views expressed by anyone on the show are solely our opinions, not financial advice. Pokio Ryan and our guests may hold positions in the company's funds or projects discussed. Hey guys, welcome back to another episode of ZeroX Research. Today I'm joined by my lovely co-host Bacio and we've got Ian and Teddy from Kyros Research joining us today as well. How's everyone doing? Good. Thanks for having me on, man.

Always a pleasure. Yeah, doing great, guys. Doing pretty well. I enjoy I enjoy coming to these. Awesome. Love it. Well, while we do love having you guys on, before we get into anything, uh Boach and I, we've got to talk permissionless. It's coming up end of June. Get your tickets 10% off link in the description. 0x10 is the code. Uh lots of crazy stuff going on at Permissionless Spock. What are you most excited for? Uh wrestling Westy and that's your No, we have we have a few things. Um I think probably most excited for is like activity-wise probably the dunk tank if we can get it.

I'm probably not supposed to actually say this. Um but we might be able to dunk Jason Yanowitz. Um, we need to figure out a pool that is, um, deep enough that it works out. I don't know if you guys met him, Ian. Teddy, Teddy, you seem tall, so it might not bother you. Ian, you don't seem that tall, but um, he's kind of a kind of very tall, a lot taller than you expect him to be. So, we need to figure out a way to do it. But that's probably what I'm most excited about, the Dunk Tank. Um, apart from that, just meeting people. I uh I had the pleasure of meeting James Kristoff um the last time we had an event in New York who was like a very big podcast listener, big podcast guy and it was fun. So I'm excited to meet everybody else. Um if

you are a listener um come to permissionless. If you can't come to permissionless, ping me on Telegram and so that we can get you to the Xerox Research site event. I'll try and sort it out even if you don't come to the event. This is not a good advertising, but um please it's exclusive, but it's not exclusive. If you're going to be there, definitely come check it out. I think it'll probably be the most most fun part of the whole event. We're we're working on making it that way. And I know uh are both of you guys going to be there, Ian and Teddy. The Kryos Kyros Research Boys should be there. I'll be there. Teddy has a a wedding like that weekend, so he might have to miss out.

But I've got a pretty pretty exciting double header with with that and then Teddy's wedding. I spent a long time thinking about the priorities, but I I'm just going to spend the instead uh that week. You know, I'm pretty sure crypto is a little more important, but we'll let this one slide and we'll see you at the next one, I guess. But yeah, for anyone out there, for all the listeners, one, join the join the Telegram. You'll meet James Kristoff in there. Uh understand his legacy. Two, check out link in the description. 0x10 10% off tickets. We'll see you there. End of June. Uh let's get into it, guys.

Let's talk markets. I think um box reaction. Let's talk markets. It's been crazy couple of like weeks and maybe months at this point, I guess. Uh since like March, April when it was doom and gloom for everybody. Uh the macro picture was people freaking out about Trump, the administration, tariff talk, you know, 100 plus% tariffs on China. Uh recent couple of weeks, people are excited again. I think some of that is like walking back tariffs, coming to deals, what have you, what whatever it may be. But lots of crypto charts and tokens look much more interesting and volatile than they did uh a few weeks back. How are we feeling? Are we looking

at anything in particular? I know you are, Boach. Can I just say something? It is unironically the art of the deal. Like it worked out. Um, I don't want a macro alert. I do think that the way that coins are going up kind of shows the main struggle of being a liquid investor or an alt focused investor is that it really doesn't [ __ ] matter how much fundamentals you look at. What does a bit like 30%, previously it was 15%, let's say, but the thing that is leading is virtuals was up like gorillions last week. Um, I think it makes like $25 a month.

um initial which I love like I I like the theme a lot but they don't have anything live. It's up tremendously. Um so I think it's like it once again shows you do you guys know that meme where it's like the woman that's like the square and she's putting it in the into the circle thing and then it's like again it's that thing where it's just like constantly we're just buying stuff with no fundamentals. Initi is kind of actually kind of a tough thing to say because they just launched so I don't want to really [ __ ] on them and the guys are cool in the project school but like we're not sending up like what is the cash flow stuff that people love like radium I guess that's also up you get the general gist we like immediately go

into dog [ __ ] mode in crypto um and I really enjoy it but also it makes me sad. Yeah, it's kind of funny like whenever there's some like big liquidation event and then like some some squeeze or move up, it's always Yeah. to box point like the dog [ __ ] coins that run the hardest immediately because I think like if you know if you're like a fundamental investor, you're not waiting for these moments to actually buy in. Like you're buying hopefully when you know uh everything is a little bit more chill and you're you're making your um you're placing your bets there and you're underwriting appropriately. Uh but yeah, initi's been pretty interesting. Um, it's definitely gained kind of like a cult following pretty fast. Um, I don't completely know what they do, but you

see it all over the timeline. Uh, I mean, there's there's there's quite a lot of like people following it and people trading it despite, you know, kind of um things not being live over there, but um, yeah, I think that's been pretty interesting to see. And we should probably disclose we put $500 into that go round into Initia. Whale alert. Obviously, we haven't done uh much research, but maybe it's time three months after. Thank you very much for the disclosure. I appreciate it. Um I can give a short rundown of why I think is doing well if if you guys aren't very familiar with it. Um I think a they launched quite low. I think they launched at like 100 mil market cap circulating which is

think a lot lower and it's um they have actually a few things live. So, they have Kamagotchi, which is kind of like Tamagotchi but onchain. Mind-blowing. Um, which is my brother, um, who is a recent graduate who hasn't been able to find a job yet, has been grinding Kamagotchi for the past two months. Like, it's all he does and he doesn't do anything else crypto. He just like enjoys the game for some reason. We're going to get him tested. Um, but apart from that, he's also just like like that game. I've also seen it on Twitter all across like people just genuinely love it. Um, so I think there's definitely stuff there. They have a few lending markets launching.

They have another game called Sevishia, which I think already launched at Back to Block. Um, but overall I think this is just like it's supposed to be Bar Chain similar like they have a kind of a similar both they both have like that vested interest program thing. Well, Bar Chain has proof of liquidity. It's a similar concept um like feeding in loops and I think they just launched at a low FTV. I think that's a good sign for teams to finally see that like if you launch something at free build you're marginal buyer like there's no new buyer. Um versus if you launch something at whatever it was like 500 mil FTV maybe less. People will say okay well this actually should could potentially go up and then you have idiots who not

idiots but community believers who want the coin to go up. the guy. Yeah, I I think there's something to be said to like building an ecosystem by launching it a fair FTV. Whether I mean even is 100 million fair, I don't know. I I can't say if it is, but um like letting people experience some upside makes them actually want to come use your product rather than being the last private round was at two billion. Yeah. Why in the world did I touch that? Yeah. It gives me 2023 summer vibes. Like I'm thinking you know even if you don't rate say for example like they I think launched at a couple hundred mil market cap and then if you look today like story beer like think about all the recent bigger token launches it's like

all billion plus market cap starting valuation. So I mean I think there's a point there like if all these networks are brand new and they don't do anything like why are you going to bid the thing that's two billion versus 100 million like Yeah. Exactly. And especially if you don't have like at that point you're betting on an early startup like a very early startup that you're projecting to potentially onboard protocols and eventually gain some form of like revenue and like a sustainable business. Um and like you said if something is at 4 billion versus at 200 mil you want to buy the thing at 200 especially if it has the same outlook.

Um which I think they do like initia versus chain. Um I feel like they have the same system. Um but also on Twitter people are very very loud about initia and like you mentioned like Robert Chang for three weeks just b posted in which I thought was funny. Um Danny we kind of glossed over this but I want I want to give them the chance to do this. Um I don't know how many times people invite Ian over to podcast. Guys, do you um do you want to give a short short introduction on Chyros and what you guys do? Because I kind of know, but I feel like you guys pivoted since the last time you was on the pod or you've expanded is a better way of putting it.

Yeah, sure. Yeah, we've definitely expanded. Um so like a quick kind of background on Kyros and I guess like Teddy and myself. Uh prior to Kyros, Teddy and I were both at Binance on the the US arm there. Uh so we did listings, staking kind of growth. um pretty lean team, learned a lot, really like the Binance environment, uh moved really fast and then um we kind of saw a gap in in the research market, I guess, where there was um obviously like we think like crypto is going to be like a massive market and so we think there's room for like some boutique shops to really show up and kind of um play certain intersections really well. and our kind of niche that we're looking to corner is kind of around like DeFi and

the staking economy and kind of um everything around there. Um because like if if crypto is to kind of fulfill its grand vision, I think a lot of people think it's going to um it's really going to just be another kind of um economic system just on chain. And I think having an edge on how these mechanisms work and function uh early on is you know and having these relationships with these teams is very helpful. And so we've also kind of look to deepen our research by expanding into uh staking and node operations. Uh, so we're currently live on Babylon and Salana and we're looking to be on a few more networks by the end of the year as well. Um, but yeah, that's kind of a expansion we've we've

had on, but Teddy, if you want to add anything there, go ahead. Yeah, I'll just chime in. I think in a way Chyros is kind of like a a passion project in the sense that we get to work on whatever we're interested in um, in a good way. And I I think this is probably similar to block works too where there's a lot of freedom to actually like work on what you're interested in. And if you hire the right people and have the right people doing that research, usually that kind of relates to the broader audience, too. Um, so we get to spend a lot of time with projects we actually think are building something pretty cool and should be talked about and should be explored and then like we'd like to kind of get involved any way we can, whether that's research or governance or staking

and uh spend our time following them and seeing how they do. Whether you're building D5 protocols, enterprise solutions, or nextG DAPs, Algoit has all the tools you'll need to build faster, safer, and smarter on Algorand, Algoit 3.0 now offers native TypeScript and Python support, visual debugging, and seamless testing. Build, test, and deploy with tools designed for speed and simplicity. Start building with Algo Kit today by following the link in today's show notes. This episode is brought to you by Ledger, the global leader in digital asset security. Celebrating 10 years of innovation, Ledger remains the most secure hardware wallet for your crypto and login. Trusted by 7 million users and securing 20% of the world's digital assets. Follow the link in today's show notes to grab your Ledger.

Now, since you guys went on Salana staking, what is something that you realized before that you think the market might not know? as like since you started doing all of this, is there something that you came up with that was like wow? Like one thing that when I was reading over Marinate, I realized that like validators make a [ __ ] ton of money just because of priority fees and how it hasn't been adjusted yet to be switched to um to be paid out to the delegates properly. Um is there anything else like that that you've noticed?

I think that there's a lot of lessons that we've learned from Salana just coming online pretty late into the network's still like nent history. Uh but like you know there's some validators that have been in there since Genesis and they they just made an absolute killing. Uh you know thanks to their high conviction early on. Um but it's definitely difficult to break in. And I' I'd say it's the most competitive um validator market in all of crypto for sure because to your point Bach like there's um there's a lot of economic opportunity there and I think like they continue to win out. It's the same thing you're also seeing with Hyperlid. Um Hyperlid's valet is extremely difficult to get into. Uh obviously it's like much smaller but I mean that also just makes it much more competitive in that sense

too. Um but yeah, I think there's some interesting things that are happening over on Salana now with like uh initially we got involved with like the foundation de delegation program and now they've announced that like if you don't have any I think it's above a thousand souls staked to you outside of the foundation uh within like 18 months of joining the program or something like that they're going to take your stake away. So looking to continuously make um the salon salon of valor ecosystem more and more competitive uh just like through natural market forces and ultimately we think that's a good thing.

Uh we want to be there to compete with a lot of these other guys uh over like the next couple decades. Um but yeah I think we've just kind of realized how um mature the Solano ecosystem really is. Like the the validator calls the validator community calls are just extremely high quality. You get to hear from like the fire dancer team. You get to hear from double zero. Um I mean salon as a whole is just maturing extremely fast. Um, and then also like last week I went to um they have like a a you know uh policy institute now and they uh poached some really great talent from the blockchain association and uh their message at this event I went to in New York was pretty clear of like if you're building something and the regulation around it is you know unclear or if there's none for that matter like

let us know what you're building uh and we'll get you in front of folks in DC and try to actually get laws built around this uh which is which is great. I mean, can you imagine anything like that a year ago? I was just sitting in there thinking about how desolate it was a year ago of like literally having the administration essentially trying to kill you. Um, you know, business-wise at least. Um, but yeah, it was it was nuts. But yeah, I've just been blown away at the quality of that ecosystem. Very good. Yeah, I'd second all that. Like coming into a validator set late is a whole different game than coming in early. And I think the open question is still like how do you go about get stake when you're not one of the first 20 people on that list when somebody goes on to look

who they want to stakeh delegate their stake to. So I I think we've learned a lot about that and like learned a lot about the stake pool e ecosystem around Salana and who you should talk to and kind of what value you can add to the ecosystem. Um, and then of course you can send Ian around to these events and have beg people to stake their seven soul with us. Uh, and just bootstrap it that way. Um, but it's cool. I mean, it's fun to work from two different angles, being kind of an initial validator for one network and then being several years late to the game on another one. Um, especially when like the validators all competitive in terms of performance. So, how do you guys think about or have you thought about this at all? the um rise

of like the strategies of Salana in terms of these businesses who are doing raises and then buying soul and thinking about like running their own validators and setting up services around that. Like do you think that it's going to be another sort of credible piece of competition coming into the this marketplace? I I definitely think that's a really interesting angle. I'm not entirely sure how it pans out um from a competitive standpoint right now cuz like a lot of them are just uh focused on outside of I'd say like Soul Strategies which acquired um Stake Wiz or Lane is who he's known as for I believe like the letter of intent was like 34 million and this was a validator that had like around um it was a top 100 validator so I'm not

entirely sure how much soul it was but it was a decent amount um and he he's a massive value ad to the team. They also bought um uh Orange Ventures, I believe it was. So that's Max Kaplan and uh he's he's quite sharp. Uh he knows he knows the ecosystem really well. And these other guys that I've seen pop up, a lot of them trading on um some Canadian stock exchanges. I'm not entirely sure what their angle is or what their edge is. Um they seem to just be doing this from um like a capital focus standpoint. I don't know if there is a grand strategy. Maybe you guys could get them on the pod and make them uh you know kind of talk next to each other. I think that'd be kind of interesting to hear how they're how they stack up because there's like six companies doing this

now. Yeah. Um and I mean they're continuing to buy uh not only soul but also validators themselves. Um and it's like how much of that uh delegation is sticky as well. I think it's like you know it's their business to underwrite that. Um, but yeah, I mean it's a really interesting thing and I think that's also kind of been like a structural buyer that we've seen for soul over the last couple months where that was one of the first ones to um one of the first like I guess call it altcoins or one of the like majors that's not nonBTC to bounce off the lows and I think it's because you did have like actual kind of structural buyers here um that were not necessarily sensitive to uh value like the current valuation or anything like

that. Yeah, it's interesting. I think we'll see kind of if they're late to the micro strategy game of just like trade several times above your book, then it just makes sense to go out there and make these acquisitions and buy soul and buy Bitcoin. Um, I don't know if a lot of the Micro Strategy initial move is like people were able to get exposure to calls on MSTR when they couldn't get options on Bitcoin in the US and like that just gave it some positive drift like the absurd demand for that gave it positive drift and allowed it to trade it several times its like book value of Bitcoin and then allowed it to kind of have this novel mechanism. It seems to have been work like be working for these Salana uh forks of it too. like I think

they're all trading at multiples of their uh soul holdings. So, um I think it's interesting. I I'm cheering for them, I guess. But, uh I I think we'll see a lot within the next year or two on that. But, yeah, you guys should definitely talk to him. I'd love to hear a little bit more. Yeah, I'd like to understand kind of like how they're how they're underwriting these investments more or less and like if they're kind of worried about any if if there's like six companies playing the exact same game uh with like a really volatile asset like much more volatile than Bitcoin even uh and like lower liquidity. It's like is there is there contagion risk at all if we're to go through some like um you know tail risk event or anything like that? But I think on the validator side too, they're doing

the private equity m uh model too where they bring some amount to closing and then you have to keep your validator TVL over a certain amount um for the foreseeable future. So they're not like fully just buying these validators out. They're like, "No, you have to continue to keep the stake or grow the stake in order to be paid out this whole amount." So I think there's some upfront payment and then there's a hold back um for a few years. I I think it's interesting too like seeing kind of who the largest stakers are um on Salana like are they nimble enough to move once they realize that one of these companies that now controls a validator. Um it's all kind of interesting questions. Yeah. I um on the structural flows thing I think we're

also supposed to get the Salana ETF over the next 100 or like a decision on the Salana ETF. I don't know. I expect it to be a positive one, but um I don't expect that to get um good flows to be honest with you. I think institutions don't seem to have a huge appetite for altcoins. I feel like they're just oneshotted by the store of value narrative and that's all they want. Yeah, I I think it's like yet to be seen. Like we'll we'll see like when it actually happens. Um like at first I thought it was like okay are these like kind of um companies that are buying soul like this is this trying to frontr run ETF flows of any sort and it's not

entirely clear. Uh like unless like they all know something that we don't um great but like to my understanding it's still pretty hard to uh yeah like get institutions or any sort of allocator to buy into like the ETH ETF. But obviously like uh those are two very different chains in terms of you know Rev or however you choose to like underwrite that investment. Um yeah, Rev mentioned. Um but yeah, I think I think that's a pretty it's like yet to be seen how exactly these flows will stack up, but I definitely think there's a a compelling growth story around uh Soul that is not the same for ETH in terms of it. It looks a lot more like a traditional tech company, I would say, as opposed to ETH.

Um, but we'll see. I think it's interesting, too, like the dynamics of the prior ETFs as well. Like, uh, I don't think it's clear. I mean there I see opinions on both sides like oh bitcoin the bitcoin ETFs are showing institutional demand for the products but then you hear like folks from black rockck and and different larger firms saying like you know these are largely retail customers still today. Um, and then the, you know, the large funds that we see holding them are, you know, the millennial, the millenniums and whatnot that you assume are taking, you know, trades, maybe they're making basis trades or other things and and not taking like a a directional stance or like a long-term view on the asset. So, it's I I'd say

it's still really hard to like decipher what like the Bitcoin and even the ET ETFs even might translate to or mean for additional ETFs to come because people are pretty mixed on what what the flows and who the buyers are today. Yeah, I I know that there's definitely a lot of like raas too and like wealth management people that are advising their clients who it's maybe even in like the retail account to just like allocate some percentage of their account to Bitcoin. And I I've heard that kind of through and through. So I mean maybe that's something where it's like institutional capital in a sense just because there is somebody that's advising their clients to take on some amount of crypto exposure, but it's still technically retail flows. Um, I think it's

interesting too like that makes me think too about who the bid on ETH was over the last couple of weeks. Like it obviously wasn't ETF buyers. Like there was been kind of it was Pacio fully exposed. Um, but yeah, I mean, Bitcoin obviously had significant ETF inflows over the past week and ETH didn't, but ETH made the move that was three times the size Bitcoins as well. So, it's like what's going on? I think that Ian and I have chatted a little bit about that, too. I know it's been a conversation on Twitter. Yeah, go ahead, Ian. You had a guess. Please

speak. I was just gonna say, yeah, the Bitcoin ETFs are at all-time highs in net flows, uh, which like you haven't really seen seen mentioned too much, but it's around like 41 billion, uh, right now in in net flow. So, that's pretty good. And to Teddy's point, yeah, like the ETF flows for ETH. Um, not really material. So, it's like who who do you guys think is is the buyer? I guess we can kind of start there and walk into that conversation. I think it's for E. I think it's mostly people getting squeezed. Um I think a lot of people do they short let like they short ETH to hedge their whatever their longs.

Um I think that's my quant. No, but I legit mean it because if you think about it, like over the past year, and I hate saying it like this because it sounds really stupid, but I still strongly believe that a lot of crypto is like a lot of cryptoflow is retail or like semi- retail where it's like small funds basically like 27 year olds who made money during the food farms and then now they're just betting on like institutional stuff. Um, and I think a lot of them started putting on the E short leg. Um, and then they're just getting blown out. That's my like honest to god opinion. It might be stupid and I'm sure that if like somebody could come up and say there's actually a

better explanation for it, but to me that just makes sense. Like the amount of people who are just shorting ETH every time they want to long the market is our counterargument. Um, which I think we largely agree with that too. The counterargument would be that open interest has increased pretty notably over the past week in ETH. Um, but I I think that there was obviously like Ian has some data on it. There was some sizable uh liquidations on the short side for ETH, like much larger in terms of market cap share for ETH than it was for Bitcoin or Soul. So, there's I think that may have been a spark. And then maybe these 27 year olds who have a range of LPs, they're like, "Okay, ETH just moved up 50% like why did the fund

completely underperform that?" And they're like, "Oh, we didn't own any." So, like there's probably some like catch up to get exposure to ETH as well. Like that's kind of a two-pronged answer to maybe where that move came from. They like just started bidding perbs to get exposure to ETH and be like, I can't miss this if it goes to 3500 or 4,000. So, yeah. Yeah. Like, yeah. Yeah. for for May 7th, I mean in ter for Bitcoin liquidations on that like big leg up, um there was $394 million of Bitcoin shorts and for Ether is 259 million. It's like that's pretty substantial. But then like the Bitcoin short liquidation is kind of like you know that was kind of it.

There's like that big move and you know not too many others. But then the next day for ETH, another 150 million shorts of uh liquidations. Uh oddly enough, 142 million of longs liquidated as well. Uh and then the day after almost another 100 million of shorts liquidated for uh ETH. So I definitely think there was to point I definitely think it was just like such a beaten down asset like narrative wise like you had like gains you go like the pump fund stream just like crashing out over ETH. Um, and that yeah, I mean it's like that was kind of symbolic. Um, but I think it's like also like I think it was just kind of how everyone was feeling at that point. Um, and so I think that move caught a lot of people off guard and then obviously I

think there's a lot of momentum trading in crypto as well. So it's like the like liquidation is always like good entries for people and then people just love uh doubling down on anything that's running as well. Um, so Ian's liquidation is my entry. many such cases. No, Ron, I was just going to say to to finish off his thought there is like if you look at some of the assets that are going crazy, you mentioned virtuals earlier and then like you know AI6Z cerebro like these this this narrative trade that kind of ran its course and now they seem massive wicks up. Obviously, they're much lower market caps, so that's maybe to be expected here. But, you know, it's probably a lot of the same behavior,

right? Some liquidations, people closing out things, and then some chasing. Love the momentum after they start moving. It's just what people do. Yeah. I um about zero, you said Ian, you mentioned them. I had Austin on the pod last week. Um he's supposed to come on next Monday. the the episode will air next Monday. Um, that's not relevant. That's not a flex. Just wanted to mention that I'm important enough. Um, more so that it seems like Solana's kind of moving away from this. Um, like the EVM is still trying to figure out the EVM, you know, like that's what they're working on versus Solana's like kind of moving towards, okay, the SVM is fine.

Um, what we need is we need like better hardware. um or we need to like in their case specifically we need private um fiber so that we can actually like get through like the SPM's working okay we just need to speed up the dependencies um I feel like this is first of all I want to understand if you think if you guys think it's necessary I don't know how much you've looked into zero um but like knowing that you guys are running a validator I'm actually curious if you guys are on the zero test net as well or if that's something that you're considering um and second of all like do you think that's actually necessary or not? Anybody can take it either of you.

We're not in the testament right now, but I do think it's probably one of the most like interesting projects out there. It's like whether whether or not it's necessary is up for question. Uh I mean it's like how like you know what what actually is necessary in the grand scheme of things as well. was kind of like an open question, but um will it be used? I think absolutely. It's like I think people I think there's like a lot of like uh revealed preference for landing speeds or landing transactions at the fastest speed possible. So I think like that's not just cryptoreated. That's like all the finance. Um and yeah, I think I think they're going to be pretty cool. I'm excited to listen to that

podcast. Um, we got like kind of a sneak peek on one of the validator calls on like kind of everything they have going on all already. Um, I'll let that episode air and let him talk about it. But, uh, yeah, I think there's some incredible things happening over there that um, kind of go beyond just what we're trying to accomplish in crypto. And they're literally trying to make the internet faster and try to like monetize uh, you know, unused fiber. So it's really really cool. Do you guys have strong opinions like thinking about it more generally in terms of where Salana validators and like the network is at today? You know, is it increasing

hardware of validators is going to be big improvements to the network or is it really like focusing on continuing to just beef up software, fix bugs, land improvements there? Um, or can you know improving network you know download upload rates be that meaningful here? I guess you know from your operations is that is it clear to you like you know they just really need to keep beefing up the software piece of this or the hardware or a combination? Yeah, probably a combination. I would say like it's working pretty good so far. I mean the simple kind of tagline of like IBRL is just like pretty pretty catchy and just kind of easy to rally people around.

Um, so I think it's really kind of from both sides. I think you're kind of seeing two like in general chains go in one of two directions of like beef up your your validator, make it as fast as possible. um that by nature is probably going to squeeze out some like the longer tail validators that can't um you know be running all this hardware um can't afford rack space and the right data centers um where like they might want to be like colloccated to certain uh you know other things. Um but yeah and then the other side of that is just like you know going like super light uh and just having like a bunch of light clients kind of like the let's say like the Celestial model more

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accessible for everyone. Ledger's newest devices, Ledger Stacks and Ledger Flex, introduced the world's first secure touchcreens, making it easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, they have also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. Follow the link into today's show notes to get started with Ledger today. So, we want to switch over to Danny. It's your pod, bud. Do you want to switch over to Bach Bach is so bored. Yeah, let's uh let's jump in another combo. This was uh I think this one this one came from Ian, I think. Uh but I think it's a good topic. It's relevant. Uh there's been a lot of larger M&A deals in the space lately.

Some from kind of within the industry, some from like maybe fintex more generally looking to kind of position here. Um, Coinbase and Darabit obviously is a big one recently that's gotten a lot of talk on the timeline, but you know, Robin Hood and Bitstamp is, I think, still working through things. I don't think that's meant to be completed until later in this year potentially. And then there was the Stripe Bridge deal. Um, so a lot of like large I mean obviously Coinbase is a a crypto native company, but Robin Hood, Stripe, others out there, I'm sure plenty others um that are, you know, generally more fintech or or finance related businesses like really digging their heels in or

like making their mark here. Um, do you guys have like strong thoughts here on how these firms are positioning or like what this kind of trend is is signifying? or just a general take like what's your what's your vibe on Stripe getting in on Bridge and Coinbase and the Derbit acquisition? Yeah, I think Teddy has some pretty pretty good thoughts on this. Uh, regarding Stripe and Bridge, I think it's kind of interesting now. I've seen two different angles. like the Stripe Bridge announcement was more focused on like cryptonative people that are well people who own stable coins being able to pay traditional merchants just with the Visa card and kind of have that be seamless and I think that's

obviously a huge step in the right direction but uh the PayPal investor day they talked about stable coins actually for 10 or 20 minutes which was um cool little shout out but the their general idea is when people like pay merchants or businesses through PayPal like that immediately leaves the PayPal ecosystem. It's not like when people are pay like it's not peerto-peer when you and I are using PayPal to pay each other and we know we're going to have to do it again. Um no, it's like the merchant just puts it straight in their bank account and it's gone. Um so like that's the problem because 90% of the time that's exactly what happens. So they're like how do we keep it in our ecosystem and make it interesting enough to um provide some additional like utility for these companies? And the their idea

was like, okay, when businesses get paid, they wait two or three days for settlement on the ACHs or they pay 3% on credit cards, like if they got paid in stable coins, could they want to use them to then pay um like do bill pay type work where it's like they don't want to wait 3 days for their funds to settle, then have to pay whoever their um supplier may be. It's like there's just going to end up being five or 6% in fees. you're waiting weeks at a time to get people paid. Like maybe you're going through QuickBooks and sending a paper check through QuickBooks and paying a percent on that and a $3 fee to do it.

It's like I think that there's a huge area to be explored there. And I think that PayPal's kind of hitting the nail on the head. I I don't know how close they are to actually getting people interested in doing that, but I think like offering the product and then like spending years kind of teaching people why why that could be good for them. um makes sense to me for stable coins beyond just like crossber pay like peer-to-peer payments. I think that makes sense. I know from PayPal last year, I want to say they had some announcements around a few businesses who were starting to use their platform for like B2B transactions. So, you know, making invoice payments and whatnot. So, the the value there, I think, is is clear. I

guess it opens up a new question, right? like with some of the stable coin and market structure and probably other regulations coming into play like play now like we know recently I think there's been some announcements around banks being generally allowed to custody crypto like kind of more broadly um and obviously if they you know get clear guidance around what's okay with stable coins it might take away some of these hurdles potentially um if if they can start onboarding into like these crypto-based stable coinbased rails Um, maybe you take away the need for like everyone to just do everything on on Stripe or PayPal's network. I don't know. Do you guys have thoughts there?

Like is this a chance for Stripe and PayPal and others to like really try to capture some of that that market up before the banks can walk in or are banks kind of doomed to uh just sort of be left behind? Generally, I think the fintech companies are probably going to be the the earlier ones to this. So I don't know where it ends up in 5 years but I think they'll be the ones experimenting first and like releasing products first like as we see. Um so I think generally you're right there. Um again it will depend on like good regulation and I know that like PayPal has also talked about just like having an internal ledger like when people pay each other in stable coins like they're

just using their like internal ledger. They're not necessarily going to be using a blockchain to settle all of those transactions. So, uh, where it goes, I'm not exactly sure. I mean, at some point there has to be settlement, and I'm sure there will be, but I don't think it's going to be like every time people are paying each other, like it's necessarily a blockchain transaction if it's going through PayPal either. So, um, I think that's something to look out for. All of this stuff is has just like come up over the past few weeks, which is very interesting. like we had all the stripe ramp bridge uh PayPal I actually can't remember saying and then we had um also like a lot of good tariff news obviously but this feels like stuff

that's just going to keep coming up over the next year as more and more people coming in like the Europeans are always late so I imagine Revolute will come out with something in like three months say we're offering this um or they may have already actually offered it but I'm kind of shocked that we've had a few attempts at this on the crypto side. Um, Holy Held is one. Um, no cis obviously the but that one I feel like is on a completely different chain. This is the first time that I've realized, wow, like I can get paid um in USC and I can be or USDT ideally and be fine. Um, but I'm I guess there's two things. First of all, I don't understand

how, and I assume you guys might not have the answer to this, but I don't understand how what chain they're going to use. First of all, um, and Teddy, it you made it sound like they might actually not use a chain necessarily. Plasma mention, um, is that another disclosure you guys have to do? Yeah, I'll let you handle that one. Yeah. Yeah, we invested in Plasma. Um, and yeah, we think they're a great team and stuff. It'd be awesome if they use them because they have they have zero fee transfers uh for USDT. I think, you know, being able to move money around the globe is probably should should be like anyone's

right to do. If it is actually your money, you shouldn't be paying someone else to to move it. Um, if it's like, you know, dollarized at least. Um, yeah, I think that's really interesting. I also think like one kind of like analogous point that came up in um a a pod with it was the bell curve pod, the one that they just did with Hu and Lesnar. It was kind of about like where uh stable coin regulation ends up in kind of say call like the next like five 10 years. Um so it's like whatever chain they're on um is like one question but another question is like where this money of uh what's backing the stable coins where it is actually being

allocated. Um because like right now it's like not not really beneficial to anyone but like the issuers. Um is this the same model that like banks want to have because it's not like the current it's not in line with like like fractional reserve banking or anything like that. So, uh, I think that's like kind of another interesting point to consider along with like where what chain does this all happen on. I think no matter what though, like they're going to choose the chain that, um, impacts their business, um, in the most beneficial way. So, like they're going to want the most fees. Uh, it's pretty hard to beat zero if you're using something like Plasma. And they've already had like a couple fintech integrations kind of more in the emerging markets.

Um but I mean obviously these these same kind of economics can be highly beneficial for um more developed countries as well. When you see like companies like Robin Hood offer like zero fee commission trading. It's like okay what if um we just have like zero fee transfers for stable coins? Um have you guys ever used like Venmo or any sort of like kind of regular um services to transfer stable coins? Do they do they charge you a fee at all? I've used Revolute and they don't charge you a fee, but they do hold your assets because they're like, "Why are you using stable coins?"

So, it's kind of they're kind of in a weird spot where they allow you to do crypto stuff, but then they're like, "Actually, why the [ __ ] are you doing this? Send us all of your KYC information now." Um, yeah, that sounds right. I do I think they had a fee. Um, it definitely wasn't zero, but I don't think it was very high. Gotcha. And I I think that Venmo maybe subsidizes PYUSD transactions just because it's obviously they want people to own PYUSD. So, I think that may be that's the only one I've really done is sent that kind of across Venmo. I'm not seeing any fees on that. Just looking at Yeah. if if they do do like get into stable coin

transfers, it I feel like it makes a lot more sense for them to just kind of own that full stack. Don't really integrate it with DeFi too much. Uh and then like the banks themselves can just have more control over it. And obviously we already saw like PayPal try to integrate into Salana DeFi. Um and just they threw a bunch of incentives. It just got farmed to oblivion. uh that's like a really hard market to get into uh this late in the game for like stable coins uh where it's like you know largely dominated by uh you know tether and circle. Um but I think like the last kind of interesting acquisition uh that was most recent as well was like uh the coinbased derbit acquisition which was rumored a couple weeks ago and then like finally was announced on the day of their earnings. Um and Teddy I think you

were kind of like looking into that and some interesting thoughts. Yeah, I mean I'd like to kind of see like Darbit's books a little bit more, but just like high level I looked at their volume over the past year and it's like okay over the past year they probably generated and this is before rebates and everything else that's kind of a black box but probably north of three or 400 million in trading fees and I think that Coinbase could obviously plug and play where they don't need the whole the team to stay around like I mean maybe they keep them but like you don't need the same overhead when you already have the compliance, you have the engineers, you have all the infrastructure. So I think that there is a world in which it was accretive in that sense and it's also

like if they bought at that multiple it's I should check this again too, but I think a lower multiple than like Coinbase's priced to earnings. So like if they used majority of their own equity, it was probably a decent buy. And I think that there's some arguments to like why couldn't they just build out an options exchange? But I think we've seen with their futures exchange so far how that's gone. I wouldn't go ahead. I'm a bit worried just because of what you said as well. It's like I don't I brought this up at D to people and they looked at me like I was stupid, which is fair, but I don't trust Coinbase to build out a good product. I think they've done really good on regulatory side. Um, but I just I don't think that they offer a good product. Like even their fees are

horrible. um they go above and beyond to give people a bad customer experience, especially like in terms of KYC and like holding people's assets. Um and I just think like if they didn't have regulatory backing, they just wouldn't do very well. And I think it's the same thing with their bit. Um like I'm worried that they're going to [ __ ] up their bit, especially since Darabbit is like the only options that people like the only options exchange that people use for crypto. Um, and as like more serious investors come in, I imagine there's going to be more and more options activity. So, it's actually kind of good if you're like a player in options, you can come in and potentially do better if Coinbase starts like [ __ ] things up.

Um, but on the other hand, like if I'm somebody who trades options quite um like a lot, I'd be a bit worried. Um, which I've seen people who trade options quite a bit, they're like, "Fuck, this is going to suck." Yeah, I think that's very I mean since like Coinbase's existence too, they had like Coinbase advance app and then they also had like the just standard Coinbase app and like one of them they just screwed you on fees and the other one it was slightly better on fees but there wasn't like a notable screwing you on fees. Yeah. Now, no, now it's all in one app and it's like not super intuitive. like you're like always looking for how to switch between like advanced and simple mode and like your

portfolio button looks different on both. So I think that I agree with you there. Like I use them and I like Coinbase generally, but it's like there's a lot left to be desired like from a user standpoint there. Um but I think they bring some like brand awareness where people feel more comfortable like having money custody by them than maybe they would with their bit. Um, I don't know if that's true globally, but maybe in the US it would be true. Um, knowing that it's Coinbase, people are slightly more comfortable. Um, so maybe that's a win and maybe they just can leave Darabit like the product itself alone and not try to get overly involved on that. Um, because maybe they've learned

the same lesson. It's like, okay, we've had now the NFT marketplace and now futures roll out like have not been perfect. like maybe we should leave it as people like it. There's a reason we're buying this company. Um yeah. Um this is partially why I think um Hood is just a much better bet than coinon. Like I feel like when people are like, "Oh, I need to like long some form of institutional like web two company coming into crypto." Um and people always mention like coin or hood. I think Hood wins on everything. Um, we have a they're teasing a lot of people

right now because they're the Hood team. I think they're going to half of their clients and saying we're going to go on Arbitum and half of their clients saying I'm going to go on Salana. So, we're gonna see. I don't know if you guys saw those tweets where people are like, "Hood's definitely coming to Arbitum." And then the other Salana. That's a It's a great PR tactic. of just like released uh leak leak something saying like you're choosing one of two very competitive ecosystems and then you essentially get both sides excited no matter what um just off like the news itself and to my understanding that was like to trade uh European equities like on on chain or something. So one I'm kind of interested

yeah we've all I' I've been trying to ape Nova Nordisk for you know a couple months now. No, I think it's big one guy. I think Europeans can ape US equities. Nobody wants. Yeah, it would be the other way around there. Okay. Well, I'm still sidelined from from Novo then. I will say like I do think they've been kind of teasing this idea for a while of using blockchain to as the like venue for their trading activities. And I think the plan essentially is to use international markets as that testing ground rather than the US. So it kind of makes sense this approach with Go ahead, Ian. Were you gonna say were you gonna finish the thought there?

Sorry. No, I was just wrong. But yeah, I think it's like a it's one interesting thing it kind of makes me think of though is like um like when we're looking at kind of where where the next like expansion can be for any sort of like crypto product or anything like that. Um, I feel like the reason so many people are excited about like uh Robin Hood or any other like institution coming into the space is because like a part of them feels like DeFi might be like maxed out for the time being and you need some sort of new like capital come in uh and like right now I think like DeFi on like Ethereum at least is like very developed where you've got like um like you've got like a really complex kind like modular DeFi ecosystem

over there where um like risk can be like siloed off and you can curate um things to your liking and so it's it's much more attractive uh venue for a lot of these guys to come into. Um but like on on the flip side of that, it's like I think people do generally kind of feel like we might have might have maxed out uh what can be done on DeFi right now outside of just like kind of like memecoin speculation and um just being like the first to like hit like a sex arb. Um, and like maybe that's not like a horrible thing, but I think in general it' be nice to uh be able to just do whatever you want in in all of finance just like onchain.

Um, and so I think that's kind of like the Yeah, exactly. Exactly. I think the excitement is at least from like people in within crypto is that there's an opportunity to see the Binance and Coinbase playbooks repeated with Robin Hood where they have their own ecosystem, they get apps spun up, they, you know, promote them, pump them, whatever you want to call it. You know, Binance's strategy lately, they've gone kind of back to the 2021 days where, you know, they have Binance Alpha now. So they list tokens and they've been listing more from the B&B chain ecosystem there and then that's like their pre-list of things that might get to the main exchange. So it acts as like this, hey look at these things like look

at this stuff that's happening on B&B chain and then it eventually like filters up. Um and and we've seen Coinbase like they're doing a lot of things of a similar nature where it's like you know they're using Morpho on base for Bitcoin lending. uh they're playing around with like different unis swap permission pool ideas, different like direct integrations between the exchange and the chain. And so I think like you just look at Robin Hood in the same vein in terms of the amount of users they have, the amount of trading volume that's happening there on both crypto and equities and like there's an opportunity that they can like suck some of that into a chain that probably they spin up and you know some new apps form around that. Maybe there's tokens to you know for the for the market to speculate on. Yeah, I think you're right, Danny. I

think that people are like have been patiently waiting kind of for a non-ircular like crypto. It's like we've had a lot of speculation on crypto tokens and that's been the activity on chain and it's like obviously payments have kind of started to break the ice there, but I think tokenized equities are something people would be very excited about to be like, okay, people are actually using the chain for something novel that is sustainable and will stick around and gonna bring like a lot more people on chain whether they know it or not. Um, go ahead, dude.

Yeah, I think the really interesting thing for equities would be like would they allow 247 trading of these things uh like essentially like when when US markets close uh does price discovery then for like Apple or Tesla, Nvidia, whatever it may be. Does this all happen on chain? And if so, I think wherever that is facilitated chain wise that could be like a pretty pretty interesting rev driver. Um, but yeah, like if I were Robin Hood as well, like I think it does make sense to just kind of uh verticalize and maybe explore having your own chain. I think that's a great point, Danny. And I was gonna actually pose that question, but yeah, I'll add like so Robin Hood equities trading is 245, I think, for most stocks now, US stocks now. So like to me and I

don't know I don't I don't work at Robin Hood so don't take my advice here but like my assumption or understanding from their kind of public facing responses to things is that like they believe that using the blockchain is the answer to 247 and maybe that's true. Maybe part of it is a regulation problem as well. But that seems to be like the idea going in is they'll be able to open up trading of everything like 247 do it all on these ledgers and that'll be I mean that's a big win for them, right? because that's just more more trading activity, more more fees generated for them. Tim Cook just LP.

We've really got the like both um working out now. Both on the settlement side where it's like crypto is great because we get not T+1 T plus2 settlement and it can run 24/7. Also sovereign money has also been working out. So we it kind of worked out. I don't know if you guys ever sit down and you're like, "Wow, like it all actually kind of worked out for crypto." But I have it like once a week. Um because it's it's worked out. Um on on the DeFi stuff, Ian, you mentioned that we're kind of exhausted. Um this is not particularly relevant to the pod, but I want to bring it up. Um in previous cycles, you could do this exact

play. There's a new chain. I'm going to buy the first DEX. I'm going to buy the first lending protocol. I'm going to buy the first CDP, whatever. Um, and then you could also say, and the last time this worked was with Solana, um, I think JO, uh, Jupiter, um, Camino, like it's the second iteration. I would even say they're the first iteration. Like, I wouldn't count serum, and I mean, I guess Radium did okay, but like I wouldn't count these as like serious DeFi um, protocols. I still hate Radium. I don't know, Danny, if you noticed this, but I still can't get over how um this just hasn't been happening. I'm sorry. Go ahead. I was gonna say Tom's

gonna be so sad. Avid listener. No, I'm sorry, Tom. You're great. I just I hate your front end, man. Please fix it. Um I feel like this has kind of died out and like you said, like Ethereum's maxed out. Um, I guess new chains never get that new narrative going and the only DeFi that we've seen is on Salana and Suie. Um, any any hot takes about this? Do you see us like getting back a experimental DeFi season anytime soon or do you think we're just going to do the bog standard like Teddy? You can also answer. Um, he he he muted the moment I said you can also answer. Please anybody can answer. Yeah, I think one it's like question where the experimentation

speculation is kind of coming from and I think for Salana a lot of that coincided with like a massive run up in the price of the native asset. Um so if I was looking at kind of where I think the next wave of experimentation might happen in DeFi, uh that's like outside of institutional integrations, the number one ecosystem I'd be looking at honestly is Hyperlid. And that's because I think like if you're looking at kind of what drove the the memecoin craze for Salana, that was really just tied to like uh a combination of great distribution plus like a massive runup in the token and then just kind of like the verality of some of these coins of

them being able to cross across, you know, different like kind of social networks and just get a lot of people excited around like speculating on something. um coins that were moving like 100% in a day at like already like nine figure valuations uh if we can call it a valuation. Um, but for for Hyperlid it's like you've already got a kind of cult following over there which is really important and you've got tons of DeFi activity. You've got good tokconomics that like actually acrewing value back to the token itself. Uh, you've got the addition of the hyper EVM. So if I was like a builder looking to kind of do something new in DeFi and I wanted a ecosystem where I knew

everyone was like really happy to be trading and there's also like a continued wealth effect especially now with like kind of the recent um slight runup and I think has like a lot more room to run in terms of like where people are looking to comp hype too like you're comping it to um Binance or any of these large exchanges um like they're now to my understanding doing like 10 to 15% of like per volume for for Binance which is like pretty amazing for a product that raised zero outside capital and is now doing numbers like that. Like that's actually fascinating and I think it's really inspiring for a lot of builders. Um I think that's an ecosystem to really like kind of watch because you

really kind of haven't seen this play out yet. Boach to like your point of you know like who's going to who's going to win the the lending landscape? who's going to win the liquid staking landscape? Uh who's going to like kind of dominate all these subsectors? And I think like a lot of those monopolies pretty quickly, but then like what else comes of all of this DeFi activity taking place where like you've got a concentrated user base of people that are willing to speculate. I think the only thing they're really missing is like uh like a Phantom integration or like just one of these like large wallet integrations, one of the kind of more consumers, consumer apps like a moonshot or anything like that. Um, but yeah, that's what I think at least.

Yeah, I mean I I think it's also healthy like not being able to just rotate to the new chain and buy the first unis swap fork. Um, like I it's kind of cool that it's happening in a sense like obviously it's tougher to make money when you can't just be kind of the first one to bridge over into new ecosystem and buy the three tokens that are there. Um, but it's also pushing to people to build stuff that is actually in demand. Again, like Hyperlid, they're being rewarded because they built something that people actually wanted to use. Um, so hopefully that is a trend that continues to happen. It's like don't reward people just for building a blockchain and forking a few apps that have already been built. Yeah. Yeah, in

crypto for quite some time you could make a lot of money just if you could just like use very basic epher scan fork functions and like you know how it is like write and read. If you could just do like three things you could make but yeah I guess I'm not happy actually Teddy that we've stopped doing that. I'm not going to lie to you. I'm I'm quite upset that we've stopped doing that. It's cool in the sense that like obviously it means the industry is maturing if the like very obvious inefficiencies aren't happening anymore but on the other hand like but our edge is now gone. Yeah. Well, yeah. Exactly. Like a large part of I think a lot of people that I knew that because I that was like one of the main

things that I loved like I love bridging over to new channels and just checking out what's happening. Um, and I think there was a whole class of group of people who did that. And they've largely either become very very like good memecoin traders. Um, like that's what their edge is now, I guess. Um, or they've just given up on life and just they just buy BTC hype soul and just hold it. I think the peak of my crypto career was the sheep game on Avalanche whereas like you just before it launched you minted a bunch of NFTs and you either got sheep or wolves and then like you got to shear the wolves sheeps and um it it was actually kind of fun and of course it died after

like a week but uh it was fun. Great tech. Great tech though. very good thing. Um, on Hyperlid, I agree with you, Ian, in that I think it'll be the next next big ecosystem to do well. Um, I don't think they even need that much to do well. I like I wrote about this as well. Um, I think they just need like lending and ways to get margin and collateral. I I don't think they need like massive like I don't think Hyperlid needs an NFD marketplace. They'll have one and they do have one and it does most of the the like it most of the gas on the hyper EVM is spent on it as well as like on an AMM

but they don't really need it. Um I think they really just need lending and margins and maybe some cool ways to get like tokenize um the vaults although that's a bit riskier now but yeah I would agree. Yeah, I think if it's a creative to like Hyperlquid itself, like the core app, then it makes a lot of sense to me because the interesting thing that I see now in the market is like these trading apps just integrating like everyone who's trading memes, they're now also starting to integrate more and more hyperlquid pers into that experience. And so it's like if you're just this like speculative retail guy and you're trading Salana and base memes or whatever now you can do

that and you can also be you know long short whatever on hypes and that's like an interesting combination to where I think the like average user now who's trading in their Phantom wallet or in their trading bot wallet like you said Bach I don't I don't know that they're necessarily going to the new ecosystems to like you know check out Hyper EVM but like once if a token spawns from there and then goes to 50 million market cap, you can be sure like they'll be looking at it in their trading bot and wanting to bid on it. Um, so yeah, I mean I think it just depends like if if someone's going to push up a an ecosystem of that type of stuff on the Hyper EVM, I think it'll percolate to the apps and the like experiences that people are doing now. But I don't know

that it has to happen. You know, the lending and all the other stuff could just be a creative to hyperl per and that could just be a net positive overall as well. Yeah, but that one's kind of tough because I mean Ian, you said like the comp is Binance and BMBB and whatnot, which I think is a fine comp to make, but also on the other hand we've like historically like the L1 gets a very big premium um for being an L1. And I feel like, okay, so Hyperlid is two L1's. There's a hyper core, which is the club, and there's a hyper EVM. And the hyper core can only get so much of a premium for being an L1 because at the end of the day you can't do a lot of the like it makes money but for some reason it's treated as a perpetual deck which it

should be because that's what it is. Like it you can do spot trading and per trading um and that's what it is versus L1's like if you look at Apttos and Sooie the premium that they get is ridiculous. Um, so I think it has to work out like the Hyper EVM kind of both doesn't have to work out because there's the hyper core that you can rely on, but also it has to work out to get that like very significant um valuation bump. You can't just give a valuation bump to a fir like it's great. I love Hyper Liquid, but you can't just slap a 300X.

I'm going to it doesn't work. I'm going to disagree, but using the same logic in the reverse direction. Like I think if you relate it to Binance, like the BNB token did not get a big multiple because BNB chain or BSC was like this insane ecosystem. Like yeah, it went crazy in 2021, but I think the BNB token got a crazy multiple because it was associated with Binance the business, which is an exchange. And so I think you can do the exact same math here and like if you're relating Hyperlquid to Binance and it's just like this exchange business at the at the core of it, then they can pull the same playbook of if there's stuff in the Hyper EVM, you you know, you can prioritize some of those assets on maybe, you know, getting onto the Hyperlid like core exchange um and run

that same flywheel that you know, Binance and Coinbase and Bass are doing um which I think is positive like because we've seen that work. It's it's like a it's a very uh effective model. Yeah. Just to add one more thing and then Ian I'm going to just pick I'm sorry. Uh you mentioned 15% of Binance which is true. It's also like 33% of OKX and like 40% of Bets. So these guys are pulling in like very serious volume. Um unexpectedly serious volume to be honest with you. When I checked it like I'm writing a report right now on the BERS Texas and I checked it and I was like wow this is [ __ ] ridiculous. is the only at least in my mind it's the only um deck that has ever been able to compete relatively with sexes like

before I guess DYDX was somewhat popular um but like people were shilling GMX heavily and that was like maybe 3% maybe 2% of like okay X volume not Binance volume so yeah I I think um I think there's some similarities between like kind of like lore of GMX and Hyperlid um in the sense of just like they were they had like big kind of cult followings. I think like the I I would actually argue as well though like like Hyperliquid is probably one of the most organically valued assets or organic valuations in crypto outside of like Bitcoin uh and Ethereum let's say because like when we talk about like an

L1 premium it's like that premium quote unquote premium is set by private valuations from mega funds that have to allocate a certain amount of capital and they can only really allocate to projects that are like above a certain size and that kind maybe will like lead us into like our next kind of conversation of like um like the VC feedback loop like kind of now starting to close um where you're seeing you know projects like like move that I think TGE at like $9 billion uh FDV or something ridiculous like that um and have like no real product no real technical edge uh more or less all fugazi uh everyone

who's playing that game from the investor side more or less knew it. They and like they realized what game they were playing at the same time. Uh and like now that's starting to close. And when you're looking for an asset that maybe has like a very organic valuation, I think like Hyperlid is maybe like one of the only top assets out there that um is priced even reasonably like and it's still priced like less than Avalanche and Hyperlid. I mean, it's just like ridiculous to say that like a project is doing like, you know, uh 33% of like OKX, 15% of Binance like per volumes and it's valued less than Avalanche. And I don't know anyone who uses Avalanche.

Does it? No. Like, huh? Does Hyperlord have subnets? Sorry, that's all. I think that could be it, Teddy. I think you're on to something now. I think we've just discovered the case. No, that's unironically that's literally it. There's nobody who's going to be like, "Holy [ __ ] we could bring JPM on like evergreen subnets." So, nobody can slap a [ __ ] I think Avalanche is at like a 400x multiple or something. Nobody can come on and say, "Holy [ __ ] these guys can moon." So, nobody can stop the multiple on it. And like they're also just kind of they created a product which is core to crypto itself of just like you're an asset ledger. Uh, it functions extremely similarly productwise to like any

centralized exchange. It's very clean, very fast, good colors. I mean, it's like, you know, there's a green color. Good. Um, you know, like there's like a lot to uh lot to love there. Um, and then when you put it amongst its peers, it looks even better. Yeah. I mean, I don't know how. Danny, do you trade a lot of perks? No, I've never been a perp trader. That's how I lose money consistently. Yeah. Teddy Ian, any any burp traders in the chat?

I dabble, but I haven't actually used Hyperlid that much just because the barrier to entry at the beginning. So like I I used GMX for a while and I know Hyperlid is vastly better. Um then I've recently just been playing around with Aster decks which is just trying to be a fork of uh Hyperlid 2. Um, and that's Yeah, I um I've spent the past week looking over other preps and it's just like there's the gap is still so so high um compared to hyperlquid. So yeah, I agree with you on that. Yeah, I um I don't know. We'll see. I that whole like market finding its price versus VCs doing it on the back end and saying we

should actually like because that's how the VC world also works. It's like if you raise at like no one wants to do a down round um first of all and you want like the next raise to be higher than the previous raise obviously and like significantly higher as well. So it's tough. I think they've been hurt move I think is a bit of an exaggeration. You know I don't I didn't want to say this on the pod but I I think that's not the best example to give. I would give um Barra Chain probably as an example as like one that like valuations are clearly compressed um and they're continued to compress and that's like also why I think the L1 premium probably goes away as well. Like if they stop making money they'll stop putting in 300

mil into rounds. Um although it hasn't been it's been okay. Yeah, I would agree with that. It probably is like furthest out on the curve of like ridiculous things we've seen in the industry. Uh for like move at least. Um it's like a weird game though for those rounds as well. It's like okay if your competitor is raising at a massive valuation um do you just want to comp to your competitor? Because if you comp lower your token incentives are going to be worth less and if your token incentives are worth less you're kind of dead in the water. Um but at the same times it's like the person who raised at like the higher valuation is also like do they really have like product market fit? Um is there like

real like kind of novel tech here? Are there real developers that like are trying to build something novel here? It's TBD for a lot of these people. I mean there's there's um there's monopolistic tendencies in all of crypto and all financial markets anyway. So like it's just a it's a hard game. Yeah. Yeah, I mean I think with a lot of these coins like if if the valuation is such that retail doesn't want to participate I feel like that's a loss because you know that's who you're opening up the market to when you TG the token and if they don't want to buy it then why even start it at that valuation. You're just you're destined for the chart to look exactly how you think it's going to look. Um, on the Hyperlid, back on the Hyperlid point though, maybe to close things out, like

I I do think like we're seeing their model work and they're growing and like this is what everyone says, right? The Per experience is incredible. Um, but I feel like they have a clear path, right? They they build out this business as an exchange. So, you know, grow the list of spot assets, grow the liquidity there, continue to grow and expand the per offering. you know, if you can become the Binance where new tokens and teams like want to list their assets on Hyperlquid on day one and like TGE there um and do deals with Hyperlid as a venue because that's just where trading happens. That's what people prefer to use. Um then you know there's a there's a path to a very highly successful business there. um and it you know it's

already from like a revenue perspective that's clearly already on its on its track and that's the in it thing as well right like not the revenue side but more of so like launching launching at a low valuation um I think a lot of people underestimate like in crypto what ends up happening is we realize some very basic thing about general finance like revenue is important fantastic great realization guys. And then like then everybody becomes hyperfixated on revenue when the reality is like we've seen traditional markets move more and more meme like at least over the past few years because retail has become more

and more like apparent in markets. So it's the same thing in cryptos like if you bet your entire idea of like how the price should move on revenue, it's it's just not the case. And in fact, retail is very very important in crypto still, which is if you launch something at nine bill, the guy's going to look at it and say, you know what, there's like a 200 mil comp. I'm just going to buy that instead. And it it happens. And uh I think founders sometime in crypto in general, we like overindex on the on the institutions. Like historically, we've been institutions, please come in, we have something to sell you. Um but the reality is like 20% of the retail does

most of the the fees. They generate most of the fees apart from the bots and everything. Um like these people are important and they have a lot of money to bid these coins up. Um, so I think like sometimes we don't think about that class and we say the institutions have more of the money and obviously they do, but like the retail is still very very important within crypto and I think if you're a chain you kind of need to appeal to that which is where like echo comes in. I think that's a fantastic opportunity for these chains to kind of get like buyin from the general population. It's like it both I guess like helps retail in a sense because they like they get to buy buy whatever uh at the similar valuation to VCs but

it also like helps you as a project to kind of get that buy in and then I don't know Teddy you guys put in quite a bit of money into Initia that round. Do you have you has that led to you checking out Inisha more or less? I guess let's find out about it live on the podcast. Also, Zan listens to the podcast, so please don't lie and tell them the truth. It's on the to-do list to look into it further. Um, very good. That's our investment pipeline is usually invest and then uh due diligence like I'd say probably six to seven months after investing. Very good.

I love this founder. Um, no, I I really do want to look into it. But yeah, that was I I had some money in Echo and I wasn't getting accepted into many groups and the first group I got accepted into had initia um allocation so I was like I guess I'll try it out. That's pretty good. That's a good allocation to get first try. I mean now we know in in like now $500 is a decent allocation. You said no I meant like getting it into Well, $500 is quite a bit of money. We'd have to disclose that. But um like getting the first opportunity to pop up be Initia and not Coinzilla is

also pretty lucky. Like what if you were a Coinzilla investor? We wouldn't have anything to talk about on the pod. Yeah. No, you're right. I do feel lucky. Very good. Ian, did you also do did you guys have to split that 250 250 or is it 500 500? It's 499 in one. Dang. So, I'm all in. You guys are splitting you're splitting the outcome of that or how does that work? That's just like a power dynamic between you. Skipped dinner that week.

So, so no, I I just had some stable sitting around and it's a Chyros research account, so we can backtrack into how that goes. If it goes well, um, I'll take all the gains and if it doesn't go well, I'll Venmo request Ian and $250. Amazing. Well, we love, uh, I think that is one one area that I'm still very excited about is like breaking down like existing walls of access for investors to like early stage things. Ekko, I think, is a good example of that. You know, I know that Vlad and Robin Hood are very like primed on this idea, but there's like regulations at least in the

US in the way of that and I'm sure there's lots of other things at play there, but um it's I think it's one like big bastion to look forward to into the future of like continuing to open up more markets that were not accessible to people previously. I think that there's definitely a balance, too. It's like raise it a fair valuation where you're going to get enough capital to build what you're trying to build. Um, but don't try to fully maximize that and then screw people that you're supposed to be aligned with. Um, so I think there's a balance and we're hopefully going to find that soon. Love it. Well, we can call it here. I think that was pretty good. We dived into a bunch of stuff. Uh, before we close out though, uh, we got to do a

round out of shout outs to one, join the Xerox Research Telegram. Uh, lots of fun stuff happens in there. These guys from Cars Research are in there available to chat. James Kristoff, the legend, will be in there. All the all the Blockworks research analysts and data and various other team members are usually in there chatting it up. So, come in with questions or memes, whatever. Um, we love when you guys hop in there. And then, uh, check out the newsletter, ZX Research newsletter. Drop in daily during the week. Interesting stuff, tidbits, stuff about the markets to keep up with. So, um, awesome. Do you guys have any big closing thoughts? Wait, before we end, can I actually do something? Always.

Um Um I I completely lost my He's choking it. Baka, are you you good? Yeah, I'm good. Um are you Ian, you're coming to permissionless. Is there anything you would want specifically? I know that sounds weird like cuz in general uh Teddy you can also chime in but you're not coming in so uh unless you want to do the you know Yano can ordain I think it's fine if if that's something that you wanted to do but um Ian is there anything that you want to do so that we can get it set up me and Danny.

Um I think I saw on like the agenda there's going to be like some debates. So, I think like those are kind of interesting to hear two sides of like one thing just kind of like straight back and forth. Um, I think that kind of stuff is helpful. I went to last permission list I was at was like 23 I believe in Austin. I missed out on Salt Lake City last year. Uh, but it it was great. Yeah, it's like a pretty builder focused conference. uh did doesn't feel at all like consensus or kind of like one of those ones where um feels a bit like doesn't feel a bit more kind of like normies. Yeah. And it doesn't feel like an ETH Denver type either. It's like um it's a really good group of folks. Like I feel like you got just a lot of people

that are already deep into the weeds and so the conversations you can start are like you know one or two degrees deeper than uh you'd have to start otherwise of like you know just talking about stable coins with people. uh like you can get like pretty like esoteric, but yeah, I think just kind of um I'd like to like to see like more kind of opinionated debates on maybe like highly contested uh areas. So yeah, from people who don't think alike, Boach, he wants to see more debates where you ask VCs point blank if they're valueless or not. And I know everyone loved that. Okay, I'll give the lore on

that. It was actually originally supposed to be somebody else. It wasn't just supposed to be Mike and Hibum who actually did a fantastic job. Like they're great, but it was originally meant to be like um and Mike versus like other nonVC people. Um obviously that didn't happen, so it kind of looked awkward, but I think I played it really well. Like I think I I kind of did a great job. Um let me know if you guys agree. Um, the second thing is I'm happy you mentioned that permissionless is a different thing because I went to token 249 in Dubai.

Um, and it was dog [ __ ] Uh, I don't know if I'm supposed to say this on the pod, but it was just so [ __ ] bad. Like I I went and it's immediately like Coinzilla and like people coming up to you and saying, "Hey, I have like this purpose exchange that I'm running." And it's you can tell that they're just going to take care of like you deposit and immediately goes to the guy's bank account. Um it was just horrible, horrible. So this is like oftentimes I I ask people like, "Are you going to come to permission list?" Cuz I'm on a commission model. Um and I asked them like, "Do you guys like are you guys going to come?" And they say, "No, I never want to go to conferences because they're always dog shit." But like I've been to Blockworks conferences. They're

not dog [ __ ] They're actually quite good. Um because we don't have people coming up to you and trying to scam you. It's like actual regular human beings who are just in crypto because they like it and they want to chat to you about looping stable coins and whatnot. But nothing scammy, just regular smart contract risk. Nothing further than that. So if you are somebody who's listening who's saying I never get any benefit off of uh conferences, um I think you should consider just coming once.

Um, and then just checking it out. Like if you haven't been to permissionless because you have some pre uh like pre-created notion that it's going to be dog [ __ ] I would I think you're going to be um pleasantly surprised if you do show up. That's my like very genuine shell. Um Danny, I I interrupted your your closing remarks, so please don't show up. We uh yeah, so permissionless, we gut check the grifters at the door so they they're cleaned up by the time you get inside. And uh 0x10 10% off. Bach will be in the dunk tank. I'll be in the dunk tank. Maybe we'll get Ian in the dunk tank. We want to get Yano and Mippo in the dunk tank. And maybe we'll get some VCs in the dunk tank. That would be

amazing. I know I know there's people out there that would love that. Who knows if they would agree? Probably wouldn't, but it would be funny nonetheless. Um, yeah, we'll see you guys there. Uh, end of June, 10% off, link in the description as always. And thanks for coming on today, guys. This was a great chat. And, uh, to all the listeners out there, we will see you next time. [Music]