Trump’s First 100 Days, and AI’s Influence on the Markets | Roundup

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and once you know Trump's in office and we actually start to see some of this stuff play out like the first 100 days I'm sure is going to be just Madness so things will happen quickly and I think I would expect that they'll probably change more to the upside in the first 100 days hey everyone this episode is brought to you by uniswap Labs who is launching the largest bug Bounty program in the entire history of crypto it's a $15.5 million program this is aiming to be the most rigorously reviewed code base ever deployed to ethereum so if you want more elig on the scope rewards payouts Etc just click the link in the bottom of the show notes to tell them that I sent you you'll be hearing all about Unis swap Labs later in the program hey everyone quick disclaimer before we get into today's episode

nothing said on bell curve is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and the views expressed by anyone on the show are solely our opinions not Financial advice our guest and I may hold positions in the companies funds or projects discussed all right everyone welcome back to another another Roundup edition of bell curve this is the first one of the new year you got Michaels one and two and Vance fellas welcome and before we get into it I want to give a super quick shout out to this episode sponsor a a is one of the oldest and most trusted protocols in all of defi they've got 2020 billion worth of tvl so whether or not you want to swap lend borrow whatever you want to do just click the link in the show notes head over to a

Tom him I sent you and guys uh welcome how's the uh New Year getting started for you happy New Year everybody thanks for listening in it's going to be great year no matter what the market says it's still going to be a great I mean we're both a bit sick somehow um I feel like everyone I know is sick right now but uh ready for 2025 feel pretty relaxed from our our kind of vacation I think it's the first time we've taken really like a week or two off definitely in 2025 or 20124 so yeah I'm feeling ready and orange man isn't even president yet so there's a lot to look forward to yeah can I ask like how is everyone sick right now I was in zont over the

holidays and I'm sick everyone there was sick when I got back everyone in New York is sick and yeah you get Michael you're in Hawaii like I was in Hawaii everybody got sick there like there was something going around uh for sure but and then Vance and I were in San Francisco this week and Vance comes in and immediate I'm like uh oh like I'm not feeling super great I think I'm getting over something 24 hours later Vance is like uh oh I got what you got we we battle through it for the bell curve Chads always always bringing you guys content um so what's also before we get into the crypto stuff uh like very sad story so I mean you guys are relatively close to this like what's

going on with the Palisades um the I don't know it's like the craziest thing I've ever seen just the amount of fires going on over there what happened we've just had like Fox LA on in the background yesterday and last night just like trying to get updates I mean we we have friend so Vance and I previously lived in mostly Venice but obviously have a ton of friends in La um and all over Palisades all over you know Hollywood VY s to Netflix which is like right down the street from where that um that uh Hollywood uh fire started last night uh we have really close friends who are who lost their houses uh in Pacific Palisades

we have friends who live in Santa Monica and Venice who are like should I leave should I go I've got you know like five or six refugees that are like in my house and staying here but like now we're deciding whether or not to go it's Prett it's pretty gnarly um it's going to be something that takes a really long time to unravel um I I hate to compare it it this way but I think the only fair comparison is something akin to what happened in Maui a couple years ago uh and it's going to take years for that area to redevelop there are thousands of structures that have burned and this is some of the most expensive real estate in the world and assume that um I mean now there's all these questions as to

like what do you do um there's 1600 State Farm customers in Pacific Palisades alone that lost home insurance in 2024 that's one insurance company I'm sure that that's multiplied over basically every major insurance company you know the question would would have been okay do you take the insurance money and rebuild or do you take the insurance money and go somewhere else what if there is no insurance money and your house just burned down like this is going to be a really really big disaster for California and Southern California and frankly I mean it's up there we we're also looking at um just what are the largest from destru destruction of value what are the largest um uh natural disasters um there they're basically all hurricanes but um Hurricane Katrina was

183 in 2005 so you know adjusted for inflation let's call it 250 that's you know given all the things that have burned down so far in Palisades if it if thousands becomes 5,000 structures and you know you're you're talking about something that's not you know and it's $5 million on average per structure you're getting pretty close to that number um so this will be interesting to track woof well uh heart goes out to anyone that was impacted by that I saw this guy Keith waserman got absolutely torn to shreds on Twitter I thought it was a little unfair I mean he was just saying hey is there anything that anyone can do you know I mean obviously no there's not you're just supposed to die

and then blame climate change it's like yeah what comes next is now kind of this tension between you know you saw Bernie Sanders tweet you know this is just climate change that did this it's like may have been the homeless people lighting trash fires in 60 m per hour winds but we can call it climate change um and so I think there's that side and then there's the side of like what the [ __ ] happened and there's this guy Rick Caruso who ran from air and lost and I think a lot of people are now wishing that he won who's saying you know there there was no water in the fire hydrants there was no brush clearing there was no Forest management there was no all of the stuff that you should think is just you know very natural and there's a Joe Rogan pod from like a year ago I don't

know if you saw the clips of this where he's like I talked to this firefighter and he's like look certain point there's going to be the right winds the right humidity and there's just going to be the right fire starts in the right place and it's just going to burn down the whole city so to say literal quote which is a little bit eerie from July of last year was if there's a fire that starts in Hollywood it'll literally burn all the way to Santa mon without us being able to stop it which if you understand the geography of La is literally what just happened and and the Palisades is one of the nicest neighborhoods in LA and like I've rented a house there at least one summer and like it's like you couldn't even imagine a fire ever touching it but um I mean what's

interesting kind of tying this back to crypto is um I mean Michael and I are both both homeowners and um you think about a home and the price of a home and it's you know the price of the home and the real estate and the land and the building but there's also the property taxes there's the insurance um there's significant carrying cost that's associated with real estate and and and there's also interest rates right if you have a mortgage that's another carrying cost and and so you think about the carrying costs of real estate property tax is going up Insurance sure as [ __ ] is going up a lot interest rates probably not coming down and so like you know for for me I think one thesis for crypto is like maybe the

physical asset market cap has forever topped just because these carrying costs on fiscal assets that used to be so low are going significantly higher you know the carrying costs on digital assets are zero um and it's like you know I'm I'm thinking about getting another place and it's like do I want to buy it do I want to rent it do I want to do I want to like you know own this thing that has you know burndown risk earthquake risk you know all this High sorts of carrying costs and this is going to be a watershed moment for the insurance Market especially in California where the cost to have a house here goes significantly higher and with all assets you know the higher the carrying cost the lower the price and just to add more color to that on the carrying cost side

the reason why specifically State Farm dropped 1 1600 Pacific Palisades customers last summer is because there was a California uh state law that was attempted to I I think either it passed or it didn't pass but basically what it enabled or what it um uh pulled back was the limitations on how much you could raise in insurance premiums on home ownership and it capped it and basically State Farm said if you want us to be able to if you want this cap to be in place on these insurance premiums in high-risk areas such as palisad such as you know Napa had a fire a few years ago any place that's in a more rural landscape even if it's Suburban or you know even slightly Metropolitan but it's

close to something that has the potential of a fire risk or natural disaster risk they're not going to be able to Ure it anymore if they're not g to be able to price it properly and so what they're going to say is it's just you can't you can't buy home insurance anymore like I I have a place in San Francisco you can have fire Insurance in San Francisco because most of the buildings are up to date they're now earthquake safe like it's a very different environment than rural Napa or rural Palisades but you can't get fire Insurance in Napa period end of story and so what what do you do do you just own the house I mean that's the other part of the carrying cost is you your choices are you can't get it and you buy the house or you don't buy the house and

you you know if you buy the house then you run the risk of like okay well what happens if fire rips through you know the you know how many million dollar house is basically just like a potential loss completely um so this is the the bull case for digital assets as well it's like okay let's say you're a millennial let's say you you know worked at a tech company for five years in the bay and you've got $5 million do you go buy a house in Napa that can burn down and go to zero and has significant carrying costs or do you buy stocks or digital assets or other stores of value that will persist like I think the answer to Michael's question of like what do you do if you can't get get fire insurance is like that house in Napa probably needs to be half the cost

for that to be worth it for me like yeah I'll take a punt on an Napa house but like I need to be priced right for it to burn down basically which is a crazy thing to say yeah I don't I don't know if it's half I don't know if it's a third you know less or 20% like who who knows but basically where you used to be able to cover the risk now you can't cover the risk so that should be affected in the price the other angle here is um I think that we're going to see a large generation you know this is kind of combining all these points a larger generation of younger demographics who don't want to buy but want to rent and because you don't have the carrying cost you don't have the equivalent expenses that pass through but I also think there's going to be a

new asset owner so instead of you buying the house in Napa and being able to go and visit it whenever you want and have friends over blah blah blah there's going to be more longer term operational use opportunity and so it'll be a a corporation who buys a bunch of vacation homes and it's like a shared model where you don't actually own the home but it's a corporation who pulls everything together like there there's potential for new business model on you know changing preferences of of renting or leasing or short-term short-term use versus long-term ownership uh of physical assets for this reason I I the last thing I would say is like the insurance markets in California are such

that um many of the you know private company insurers pulled out last year over the past few years because California has to give you permission to raise insurance rates and so many of them just said you know it's not worth it [ __ ] it like we're just going to cancel our coverage and so the uninsured portion of that falls to the state and you know today they're looking at probably minimum 10 billion of insurance losses and the state has a hundred million in its coffers to cover that expenditure so like you know they're off by several orders of magnitude and you know what what what that how they plan to fix it and refill those coffers is they're going to say any insur that's in California based on your market share you are going to pass

through a sarch charge to your customers and so like insurance rates are going to go even higher and potentially even you know I don't know if the insurers have to pay but some of them may even bail on that I I would say there's now like a probably 10 to 20% uh Financial not maybe Regional crisis risk but like Municipal crisis risk where the insurers just get blown out and like if you think about all the things that could cause the FED to Panic or cut rates or like do any of the easing you know this is one of them insurers are hugely Capital intensive that benefit from lower rates and they're going to need significant help to cover all the the costs outlaid from from

this yeah the this this is the case across every single natural natural disaster Zone Florida with hurricanes Florida yeah ice storms in Texas even a few years ago when that happened like that as you know climate change becomes more climate variability the ability and the models that exist for pricing and the risk of these physical assets are going to have to fundamentally change yeah and it's a weird there's Insurance markets they reinsurance markets and then ultimately sometimes the government has to step in and when the government steps in it starts to look more like a bailout and it's politically complex so yeah it'll be interesting to see what ends up happening there but we should probably pivot a little bit into uh crypto here um

so this is this is a um this is a California podcast now uh but actually it's been a while since we've been a macro pod and it probably does make sense to touch on the macro a little bit because it seems like that's what's driving um a touch of the selloff so we had um it seems like inflation is coming back into focus at least a little bit um in this last round of uh um fed minutes and so the FED has decided to uh they're draw boning in a little bit more of a hawkish way um than they were and now there's a there's a a pause in effect for um for rate cuts and so over the course of the last several weeks we've shifted from Seven Cuts being priced um I believe in 2025 to now about one um

and you can see um long end yields are rising again and people are kind of looking at this 5% level for um the 30y year and so that plus a combination of a stronger dollar is just putting a little bit of pressure on the the economy and um you know one thing that I've seen people start to debate again this was coming up in like Q3 or or Q4 or uh Q4 sorry of this last year when when Trump won and he had these tariff plans is is the Fed going to be worried about tariffs and actually be a little bit more hawkish on rate Cuts than they otherwise would have been to combat the tariffs and uh Drome palel hasn't come out and explicitly said that but I think that's sort of the concern that's um bubbling up in macroland and maybe translating into the sell-off in risk

assets generally but also crypto I I'd be curious like how how are you guys interpreting everything that's going on in in Market I mean just to like the the basic understanding right now is to your point exactly uh there is no micro it's all macro yeah like it's happening everybody's coming back from vacation there aren't any major announcements major changes upgrade like there are announcements and you we expect in the next couple of weeks like long awaited main net launches are going to be happening etc etc the industry will kind of have you know moments of of um Clarity and excitement but right now it's just like everybody is writing the trend of whatever macro is is delivering and I think um yeah December 18th with

the fomc notes was pretty hawkish which was a surprise I mean everybody expected five to seven Cuts now it sounds like zero to two but probably one is the most common what what this means though is that the market is basically pricing in all of that hawkish perspective since December 18th to now and December 18th remember we were at like I think 103 104 now we're at like I mean as of right now it's like 92 93 you know it's it's had to take its shellacking pretty heavily um but you know PMI came out a couple days ago that was higher than expected um like there are kind of signals that inflation is going to be stickier and it's probably going to take you know months to quarters for it to actually

get to a low two percentage if that's still the target but think broadly the way that we're thinking about it at least the way that I'm thinking about it is you've priced in all of this um so you priced didn't count of all the market narrative where does that leave us that only leaves us with upside potential because right now there's one cut that's priced in to the market right now what if there's three what if there's five you know upside potential what if INF and inflation is at you know the Cleveland fed U Now cast has the next inflation Target at like 2.8 % what if it's lower than that and inflation comes down faster you've got like uncertainty around tariffs and like

rumors of 25% tariffs being imposed on you know Canada and China and all like that's GNA Drive inflation what if it's not and what if it doesn't like there's a lot of I'd say downside risk that has now been priced into the market which leaves the potential Market positioning to just have upside potential and that that's broadly how I would describe kind of like where we're at um you know two weeks we whatever 12 days from the inauguration like nothing's really going to happen I think until now from from now until then and once you know Trump's in office and we actually start to see some of this stuff play out like the first 100 days I'm sure is going to be just Madness so things will happen quickly and I think I would expect that

they'll probably change more to the upside in the first 100 days yeah the other stuff I would add is um Scott bessent has laid out his framework over a series of interviews for how he plans to basically accomplish Trump's goals first thing he's going to do is deregulate the banking sector and allow them to buy more treasury so that they can absorb more of this debt that'll bring down rates second thing he wants to do is some sort of like Trump Plaza Accord where he devalues the US dollar against you know specifically the Chinese RMB um and then the third thing he's just like look we need to you know cut rates aggressively so like everyone is rowing in the same direction and the the purpose of all of this is like let's

get rates lower let's grow our way out of this deficit and let's term out the debt once rates are low enough like that's the big thing that he's trying to do but you don't want to ter out the debt if the rates are at 5 percent you want to do that when they're like three four per. so I think the dollar is so high and the tenure so high that like the last time they were at this level crypto was probably a fourth of the price a third of the price you know eth was at 1200 1300 when rates were last at 47 or 48 during the Ukraine war you know started to pop off so like there's just so much juice that we can put back into the system I I I think people are going to be really surprised at how this year

turns out um just because it's gotten off to a little bit of a bearish start I don't think that means much I mean what one of the questions that I heard on a different pod was like where are we in like baseball Innings wise in this cycle and and everyone's like oh we're in the eighth or ninth inning right now like I don't know what the start was but in my mind we're we're probably looking at just like during calendar months wise we're probably looking at another like nine to 12 months of fundamental positive catalysts from a crypto perspective from a macro perspective but the the thing that I I keep coming back to is I think it's going to take longer than people expect

it's not going to be this like massive pump one week and boom okay that was your shot oh you didn't you missed it okay well better luck next four years this is a slow rise it's going to take longer and keep in mind everybody the back half of this year is going to have a market structure bill that fundamentally changes the landscape and prognosis for this industry that I think alone let alone the macro stuff that's going to happen in the first half of the year I think alone the back half of the year in the market structure bill will be something that breaks the four-year cycle for us I was listening to the blockworks Empire pod I think and they were all giving their predictions and it was like we're going to 125 and year Bros dream

bigger who is that that Santi and Yano said that I think it was a gang of like the analysts I forget who oh okay maybe that's zerox research um but yeah I'm not sure I mean I think the other thing too that people um I don't know I mean I I I think it's increasingly less useful to ask where are we in the cycle that was the question that's literally launched hundreds of podcast episodes and I'm just not sure that that's that useful of framing anymore you know it's been great for media I don't think it's really going to be great for for analyzing when when btc's at you know 200 and eth is at 10K like I think you do have an argument that you know like these Cycles are

going to be a lot longer and probably more muted but you know these ETF inflows are still a relatively new phenomenon they're picking up day over day um and again it's like the debasement trade is on gold is doing very well Bitcoin will follow that eth is the other kind of big crypto asset that people know and is a blue chip and I think the rest of the field is going to be more kind of like cycle resistant in some ways where it's just going to be more of like a venture market and and not like just like private to public but like new categories new themes things that are buying back their own tokens all right everyone listen up like I said at the top of the episode Unis swap Labs is rolling out the red carpet and

launching a 15.5 million bug Bounty this is the largest bug bounty in the entire history of crypto to anyone that can find a critical bug with the Unis swap B4 protocol this bug bount aims to make it the most rigorously reviewed code base ever deployed to ethereum now the Unis swap name is basically synonymous with security $2.4 trillion in cumulative volume has passed through Unis swap V2 and V3 without a single hack so Unis swap V4 is dedicated to bringing that same level of security and transparency to the V4 protocol so if you want more information or eligibility or scope or Rewards or payout or any of that good stuff there is a link in the bottom of

the show notes I highly recommend that you stop listening right now go to the show notes click the link head over and tell them that I sent you start earning money today what do you guys think about the influence of AI here um just on the stock market in general as well and feel like Nvidia has become this massive Bell weather for just risk assets but now the S&P and the economy in general and I think there's a lot of focus being uh like focus and attention being paid to Nvidia and we've obviously seen the rise of these AI agents and this whole new AI meta and and Frank I'd love to get your guys opinion on all here here's crazy stat um the expectation is that there's 5% GDP growth over the next 18 months so it's

not 5% per year but you can assume like basically 3% three and a half% growth and that in the next 18 months 7 and a half% of that growth is from net new AI Revenue that's a crazy stat and and you know we we haven't really gotten there in terms of other Industries I mean the only one that's really comparable is the forecast and this isn't like asset value this isn't this isn't like oh it's a bubble from you know the stock market in 1999 or like the real estate bubble in 2007 this is like GDP measurements and revenue and products that are being purchased and and basically the reason is because every technology company who

over the last decade has just been printing cash you know Apple more money than God has been like the narrative they even have their own hedge fund that literally just does management of cash and it's based in Henderson Nevada um and it's just like how do we manage Apple does uh apple has a $250 billion cash only hedge fund within Apple that's like treasury management um it not I used to work in the finance department there as an intern in 2011 and and pretty crazy but the uh imagine that all of these companies who've just been stacking cash over the last decade or two it's like okay what do we do what do we we've been waiting for this moment to invest and they are buying anything and everything

they can from an infrastructure and and AI perspective and and most of that's been flowing to Nvidia some of that's going to start flowing to others but you also now have consumers and 15 50 million or 120 million daily active users of chat GPT what happens when that goes from $20 a month to 200 a month with 01 like the the the business metrics here for AI I think will be the thing that also pulls crypto in this direction too yeah I mean AI spending is starting to show up in GDP so like you know it's it's only a matter of time until people kind of catch on that this data center buildout Microsoft said they're going to spend 80 billion like the stock market will be supported and I I agree with Tom

Lee he call he's calling for 7,300 this year on the S&P if that happen that would really blow people away 7,300 we're at 6,000 right now right we're yeah 5,900 I think after the past couple days keep in mind his BTC call is also 250k we've talked about Tom Lee on the Pod before but he's just like a I wouldn't even call him a perable I would just call him like a rationalist and a PR and and you know he I think he understands that technology is growing but also the PE multiple kind of naturally increases over time as the money supply increases so if that happens people are going to be really shocked and um you know at 250k people will be more bullish than they are today

by probably an order of magnitude so what how does this translate into crypto I'm pretty sympathetic to this idea that I mean AI is obviously much larger than crypto and this might be crypto glomming on a little bit to the massive AI um growth that's happening in the at least the US economy at large but you know the big meta that people are interested in right now are these agents and I would be and you're starting to see I mean what do you guys think about all these names there's AI 16z which is kind of funny because it was a um you know like an investment club or onchain da or whatever now I know there's Eliza and there's the whole open source sort of rust based framework for creating these

agents but you know I started to see things I don't want to name them because all super micro caps you know but they're just regular companies with AI in the in the tickers and ju I'm curious comes to mind um huh Long Island blockchain comes to mind if you remember yeah I do remember that look I think anybody's gonna latch on to this but keep in mind like the vast vast majority of the business of AI right now is businesses purchasing infrastructure to build out systems that will hopefully then productize and then be sold to customers eventually this is like the data center buildout this is like laying fiber this is buying you know h20s and and the thing that Jensen just announced

at CES this week like this is buying like hardware and infrastructure getting access to data paying electricity to be able to train these models like we're not even talking about the shift from training to inference of these models which is like basically like development to use is how I would describe it and and so I I think we're we're still in this like we are betting that AI is going to work and that's and that bet is so big that that bet in terms of Revenue dollars is showing up in GDP like that's basically what we're saying so even if you are building out something in in AI agent land or AI or you've got crypto and AI in your n like I think the future

is high high highly potential that things will work but I also think that it's going to take a really really long time because even you know the apples of the world or the open AIS of the world are are still just barely scratching the surface in terms of what is the productization of this like we are very much in you know the ining analogy again we're like we're in the preseason right now game hasn't even started yet so I would say the general perception of AI and crypto is that everyone knows that it's a meme you know the just these new AI agents or the new meme coins and that there's a pretty low expectation in terms of what they're actually going to be able to deliver on any sort of short or even midterm time Horizon is that do you guys roughly

agree with that are there use cases that you think might actually be more interesting than that or is it all just an infrastructure play and it's super early innings for this kind of AI crypto intersection I mean relative to the web 2 implementation of AI I would say it's like pretty level footing like everyone's still talking about you know you're going to have your chat bot book your travel and call your hotel for you and it's like I I think the problem is that like people just don't want to use chat Bots and like even you know think about Sam alman's most recent uh model announcement it's like yeah you know we're breaking all the benchmarks it's amazing but it's going to be about $1,000 a query so like there's kind of like obvious gaps in each industry in

terms of like either the cost or the use case or just the relevancy to a larger market um but I think the Market's going to be patient and kind of letting people sort out what exactly is AI and and how it manifests like do I think the current AI Protocols are going to be the ones that win I would say probably not um there's more talented people that are getting into the space and specifically people from these AI Labs starting crypto protocols on chain I would expect those to do pretty well but um I would still say that AI on chain is probably the most interesting use case that people see within AI today like the other ones are very far a field it's like we're going to have ai develop biod drugs or we're going to have ai replace

you know like call centers like these things are great they're just like probably four or five years away so I think crypto is likely to have the most year term near-term use cases for AI and like what are people tweeting about they're tweeting about TR truth terminal they're tweeting about fcoin they're tweeting about all the stuff that AI has created on chain as silly as it is today it shows you probably where the money is going to go um and maybe that changes after the open uh open AI IPO that will probably be a year or two away ditto anthropic yeah longer anthropic I I I think yeah just to Capstone this we as an industry and as as like a people who analyze the industry uh far overestimate what's going to happen in the next two

years and far underestimate what's going to happen in the next 10 years and this is a classic example of that everybody's like oh in two years we're going to have all this [ __ ] working on chain and we're going to be able it's like no like yes will get there but it's going to be four years congratulations and also like what you thought was going to take 10 years is also going to take four years and like that's that's where we're at and and I think things will happen a lot faster but the expectations around what the use cases are right now is going to take a lot longer do you think we're do you think that there's a okay so I mean I know you guys invested a good amount in gaming and I I'm I'm much less familiar with the sector in general but I sort of

remember there was a little bit of a talent uh problem when it came to gaming because a lot of the true Gamers were like I don't want to like they viewed crypto from a very negative lens and all the crypto people are confused like why are you viewing it like that and I wonder if it's the same in AI a little bit as well like are the hardcore AI people there's so much opportunity and money for you to make in web 2 where it's considered more serious and I wonder if there's a little bit of an analogy to be drawn there where kind of you might have almost adverse selection for the AI people that come to work in crypto you think that's the case right now well once again everybody who works in AI right now is in the like development and research mode right

nobody is in the productization and distribution mode when this industry shifts to that which is like happening slowly right now but it'll happen increasingly more over the next year or three we're going to start to see a lot more product focused people come into the industry and say okay well how do I actually get distribution like what are the actual use cases of this ass of this technology of this asset and and that I think is where crypto actually provides a unique angle um for distribution and you just mentioned something that I think is actually my base case for like what is the most interesting use case for crypto and AI right now which actually is gaming like there there is a really interesting Confluence of you

want to play a game you want to have it be something where you're not just working against like what feels in the game like a computer that you're playing like an NPC that you're playing what if you had an intelligent player that you're playing against what if you're instead of going to a Marketplace and you're like oh here's the order Board of all the things that I can buy in this game I can go and like actually negotiate with an AI agent and have it be something that's a lot more engaging what if I can use AI technology like a mid Journey or or any sort of content creation to actually build a game and reduce the cost by 10x of what it costs me to have the artwork and the creative and everything that goes into the game and I can build a game a lot

more cheaply like the the gaming side of this and historically games is one of the industries that has led in terms of new subcategories within internet Technologies I think AI is also going to be the same everybody is focused on chat Bots because of chat GPT and that was the first thing but I actually think gaming especially when it comes to crypto is going to be the first thing that happens from an AI integration perspective other examples that are I sort of remember like Prime being an example um of an early AI gaming intersection play or I mean just like the permission structure in Silicon Valley is like you need talented Founders to leave start a company and like that's already happening from these AI Labs so like the entrepreneurs have some respect um and then I think you

need the VCS to be excited about which like you have chth Shilling like bit tenser like you're there um and I think it's also a function of like he showed stable coins too the other day right you know I don't think he knows much about them but he knows they exist um of the month kind of guy it but it's great though you know you need him to give everyone permission to get in the pool uh definitely and I think the other thing is like it's a function of how large these AI companies are where you know you you're early at open Ai and it's a 1010 billion do startup you know you're you're just you're mogging the crypto people for being stupid because it's going to go to 150 billion but at 15 billion there's probably greener pastures in crypto in terms of just your

ability to create value than staying at you know the open AIS of the world which I think we're seeing already and and the last thing is like you're also seeing a lot of the AI startups hit a wall a lot of them aren't working a lot of them are looking for areas that have less platform risk like crypto versus just like being able to get shellacked by open AI so there specifically the AI product startups right yeah like the AI infrastructure startups are obviously doing well and they're the ones that are going to power all the products but I think this is also where like there's no bad ideas I think in in startup land I think there's just bad timing if you decided in in 2023 you're GNA quit your job and like go start a product that's

based around you know in AI uh and basically focus on distribution and productization I think you were probably three years too early yeah the timing just sucks it's really hard to get right um so yeah we not gonna have a new crypto use case every year some years are going to be spent scaling the existing ones some years are going to be spent you know with a breakout app that is new but like it's not all going to happen in the same year and if you think of the past three years I think we've got um AI games I mean defi scaling you know Meme coins like we are creating use cases quite quickly I know everyone may not be excited about you know like one or the other but like the industry has a ton of

breath I completely agree and I actually think what's going I mean the defi stuff is there are you can't just ship a new D5 primitive every year or even every other year but there's a lot of innovation there that's going on which is highly interesting you know we've talked about Morpho on this show and more modular based lending um there's kind of capital efficiency gains like fluid is an example of um you know more Capital efficient structure between their lending pools and decks I think there's there's cool stuff going on like maker sky is um crushing it like you just look at the amount of cash flow that they're generating they're expanding into salana so there's big things that are going on it's just not yeah it doesn't need to be a revolutionary new use case you know prediction markets broke out last year

like I I think it's just the attention span of crypto Twitter is so small and based around their ability to get rich or not off something that it kind of obscures a lot of the progress that's happening in crypto yeah it also feels like there's a there's a lot of the crypto space is just much larger than it used to be and there's way more dispersion and I wonder if that's contributing a little bit to you know I saw a lot of tweets this week saying hey everyone feels pretty exhausted going into into this new year and this bull market and yada yada and I kind of understand that a little bit it feels a little different um to me than it has in the past when prices were up as much as they are off the lows and I

wonder if part of that is just that yeah you can't really just buy you know the five or six biggest assets and you know do a 20x anymore and you actually have to be a little bit more Discerning and yeah there are people that are probably probably lost or not done very well as this Market has done extremely well where were were we last equivalent in the cycle where we were was you literally had Dave Porto pulling Scrabble letters out of a bag and picking what stocks to buy like we're in a very different world now but that was the mentality because everything everything assetwise was up and to the right because we were printing trillions of dollars of of cash and now yes you have to be Discerning

you have to make the right choices it's not as easy it's not easy in general but you you have to ALS have a longer time Horizon and this whole like let's get in the Discord and pump it and like this micro cap and like that those little mini games can work for a little while but but it they run their they run out of their energy very very quickly and so I I think you know we're going to move to a longer duration you have to be you know picking the right things and in the right things at the right time you have to hold on to them longer they have to have durable sustainable value like this is just the industry maturing you know in the with the backdrop of rates at you know 4.5 plus percent we're not printing trillions of dollars of cash and a more

sensible growth oriented economy is on the horizon but it's not here yet you know it was just absolutely Bonkers what was going on last time yeah it was um you know on this note I have a so there was a there was an exchange that I saw crop up between uh Jesse from base and Anatoli that I thought was interesting and I would love to get your guys take on and it kind of has to do a little bit with this like how much more new stuff do we need versus basically trying to get a sense of like the market size for um this was specifically kind of like l1s and l2s and uh this is Anatoli responding to somebody Nam Millie on Twitter uh the quote is seems logical but it's also

wrong there's no point to multiple l2s if a single L2 can handle parallel execution then it can use up all the blob space and run every single use case uh skipping ahead a little bit there are like only six major smart contracts that matter and there just isn't a need for infinite developer optionality and Jesse responded to this um you know as far as I can tell this is one of the biggest philosophical differences between the salana svm and ethereum plus evm is the perspective on what we can and we'll build on chain with smart contracts and basically the evm mindset here would be that we're just scratching the surface of the world computer and there are infinite new contracts to be built and obviously this is this is really tough to ever fully know but just kind of makes me think a little bit about what

we were discussing before that hey we don't need a new a fantastic new primitive every single cycle and the truth is there's probably some middle ground in between there are only six smart contracts that are really worth writing versus there's infinite uh new smart contracts and kind of infinite possibilities and we're going to bring every single thing on chain and I would love to you know without getting into like an ethereum versus salana debate or do we need l2s or whatever I would just love to get a sense of kind of I don't know Market sizing for interesting opportunities that you guys see out there right now this is the fundamental philosophical difference between we are going to build the NASDAQ for blockchains where trading is the major use case you know in anat's World you've got one smart contract for exchange and

speculation and uh trading basically NASDAQ as one of the six main functions maybe like there's a payment smart contract and then there's like but it's like there are only a certain number of small use cases that blockchains are for whereas Jesse on the other hand is like this is a new developer platform we are going to have decentralized applications where there's tokens related to them look at Blackbird look at glow look at you know all kinds of applications that are are building novel differentiated use cases obviously way more than six of them and it it it's just a total different philosophical approach and so you know you don't have to be there there isn't going to be anyone who's right or wrong right now or at least until there's more than six extremely

successful use cases then maybe Jesse's right but I I do think our perspective just given that we are Venture investors in the space is fundamentally that there are more than six major major use cases of what blockchain technology should be used for yeah I mean I think it's a little self-serving to be like we don't need any more chains beyond my chain I think that's a little telling um it's also very like a scarcity mindset in terms of like your perspective on the industry and where it goes I I think we're still short block space in fullness of time once we have a billion daus there's no shot we have enough I mean one one like question would be okay

what what would be the Counterpoint or what would be like the proof point of one of these things one of these perspectives being correct is it time is it like the enablement of something I mean it seems like basically toally saying if it's not just n stack and payments like I don't know what other use cases make sense on blockchains I think that's roughly I mean this is Kyle Sani also doubl down on this as well and you know the multi-or perspective on this is that blockchains are asset ledgers and they're really good for recording asset values and transferring asset values but the use cases outside of that is a little bit limited and I maybe that is the perspective right I I don't know um I think we're still scratching

the surface like the AI stuff we have no idea how it's going to play out the energy stuff we have no idea how it's going to play out it's not launched the gaming stuff is still subscale like I don't know you got to dream a little bit bigger if you think that you know these things are just asset ledgers I mean that's a pretty bearish perspective so uh I also got to give a shout out to Jesse who shaved his head this week um there was some he's bald yeah pulls it off looks pretty good um he's got not a bad shaped head um so shout out to Jesse for actually delivering and live streaming the uh the Shaving on X live stream that's aen that's crazy I didn't realize

he live streamed it yeah I think it took a couple of different streams because Twitter kept cutting him off but yeah I tuned into the last one where I saw the last vestiges of his hair good shaved off so um yeah definitely very good stuff but I guess like final um this I'm I'm curious what you guys would think about uh something that's been getting talked about a little bit is I mean Robin Hood and their um their involvement in crypto in general and I think we might have talked about it a little bit on the predictions episode but I don't know I would be curi like Bas has done extremely well or coinbase has done extremely well with their L2 um like if you just look at tvl I think they've gone from you know 400 million to over four billion in tvl over the

course of last year um actually L2 beat has actually they've changed their definition of tvl it's just total value secure it's just the number of assets that are actually on the Chain not necessarily locked up it's a good move from l2b just making terminology consistent but there's an enormous amount of assets that exist on base um they've been very successful and just taking a bunch of activity and volume and and assets there and I'd be curious do you guys think that there's an opening for Robin Hood uh to do something like that they have an enormous amount of um retail users they have more daily active users actually than coinbase even though coinbase has a larger total verified user base um globally than than Robin Hood does and I just kind of seems like if they were to

lean into it they could run a pretty similar Playbook um they've got massive distributions they could do something like maybe launch a stable coin they could do something like create their own L2 I just be curious you guys see that as an interesting possibility or no the L2 is probably the most logical one the stable coins that are corporate branded have almost universally done pretty terribly um but I think there is something to like one of the main metrics that they advertise is like TBL on Robin Hood and they're specifically trying to make a push into wealth man management um and I don't know if you've tried to you know put your money into T bills in a bank account or a CD it's like next to imposs to actually figure it out those are things onchain make a

ton of sense and that are composable and you know Robin Hood also has this uh borrowing feature where you have stocks and you have buying power you could build that all on chain in a way that's probably way more efficient and way more Capital effective than a traditional business so like I I think this gets to the point of like you know why do we need more block space it's like well these companies are incentivized to sell additional products block space being one of them and if you can get all these people on chain that's an incredibly sticky mode that you have the the best indication of whether or not an L2 makes sense for Robin Hood will be what Kraken and Inc ends up doing and I think coinbase has pulled off one of the most difficult things to

do which is how do you transition a bunch of users who frankly in 2017 the vast majority of the tens of millions of people on coinbase I would imagine I don't know this for sure this is a yes were in 2017 what I would call passive users and what has happened over the last you know five six years is those and I guess now eight years is those passive users have started to get more and more active based off of the products that coinbase has launched coinbase wallet the ability to stake participate in new asset launches and and be able to do defi things in 2020 and 2021 that pulled the passivity into a more active role with coinbase wallet

and then it made very obvious sense that you were going to be able to move from coinbase wallet to base because all of those activities all of those actions were going to happen on the L2 that was functioning on base what that did was you had the carrot on one end of all the verified coinbase users using coinbase wallet pulling assets into base and pulling app developers into base as well that's what jump started the fly with I think it's exceedingly difficult if not impossible for another basically like passive crypto Product Company to be able to do that like period full stop I don't think Robin Hood is going to be successful I also don't think Kraken Inc is going to be successful at all and I think uh the they will have an incentive

to do it for sure and and it's in their you know board strategy I'm sure they're going to be like we need to do this because look at what base is and we we have X number of users relative to them and we could get X number of you know Revenue dollars like all that stuff everybody's going to try it but I don't think you're going to be able to successfully transition uh your users from passive to active in a way that you would need to to be able to have these l2s actually be fully functioning and sustainable and so maybe the wealth management product is actually the better approach because if you've got a bunch of passive users like you just throw more product at them like you you put t- bills on chain or okay great we're going to have you know the

interface and just like make it super easy mobile oriented for you to be able to oneclick buy T bills on chain and that's going to be their whole stick or maybe it's going to be more creative products like a straddle strategy for whatever the interest rates are like you you could add more products that makes Robin Hood more interesting but you're further cementing the fact that these are passive users um that that's the way that I think about it could also be as simple as like put all your users on chain lend them at 6% and put it in Athena or maker at you know 10 to 20% right a product that's only possible on chain that's facilitated by their access to traditional borrow that makes a ton of

sense for the users this is precisely what I mean which is once we have regulatory Clarity on what these assets are you're going to have the ability from financial institutions and publicly traded companies a AKA Goldman Sachs and Robin Hood to be able to put their customers assets into things like defi some assets they won't be able to because it'll be you know an unregistered commodity or like it'll have to be going through the registration process but once certain of these platforms become registered and clarified like the the head of digital assets of Goldman Sachs is basically he said in a in a quote he's like we are ready to go we are waiting for regulatory Clarity so that we can get

all of our assets and and client assets into the D5 ecosystems and use them in productive ways like that's I think where things need to go and and then you take care of the entire you know millennial generation and their financial management you have unique opportunities in Defi and if you're the first there like that's the productization differentiation that that builds the mo for Robinhood users what do you guys think about Athena in general we haven't really talked about them they have been I think one of the I think they're the fastest stable coin or they don't Define themselves as stable coin but whatever close enough um to get to 5 billion in um Supply and yeah the yields that they're able to generate are are pretty massive and it's I I don't really

remember watching um you know relatively new protocol become so integral to defi so quickly and I don't know how much you guys have paid attention but um and I would assume a little bit because they've tied up a little bit with sky and I think I saw that usde is moving into the um the backing for uh usds uh moving forward and so I just be curious like what your guys thoughts are on Athena the sort of rapid growth that they've had the yields that they're able to generate all that good stuff it's very impressive very impressive I mean crypto yields across the board right now are super high like sky is at 12 and a half I think ethena is maybe 15 or 20 um I think there is some question as to

like is this extractive from the ecosystem probably in some ways yes but also like you're financing Longs so I think there is the argument that like you're lowering the cost of capital for Crypt native participants um but it's super impressive and I think it's just a testament to like stable coins Being A Primitive that you can grow extraordinarily fast if you are doing it in the right way but there's so many that have done it in the wrong way like py USD like no one wants a payment stable coin they want to yield stable coin um and I think that's kind of the the underline here is like there's a lot of sideline Capital that wants exposure to yields and if they continue to go down you know if the FED keeps cutting it's only going to continue to grow

where you know Robin could can lend at five and then put it in atha at 15 that would be very very interesting yeah the big I mean very impressive the mechanism that they've designed the scale that they've got gotten to I I think what's been most impressive as of late is their business development strategy um every every single stable coin that's dropped into Boo for Bear chain is actually swapped into USD as well um you know they backing maker like they've just hit all of the the Zeitgeist um initiatives with n D5 that put usde everywhere and everywhere that it should be um and so they can keep that up I think they're they're going to

be you know platform ubiquitous but I I do think what will be very interesting is let's let's assume that the interest rates start to come down you know that 4.5% gets down to like two and a half% 3% whatever it may be um does the does the yield on on on Athena actually follow that I don't think so just given the fact that it's funding rates and so as the separation between like the natural risk-free rate and and USD rate starts to separate I think that's actually where they start to gain more ground uh and it becomes an even more attractive proposition just because you know you can earn 12 13 14 15% if we get into a crazy bull market and funding rates pop like it could be

you know back to the 25% plus rates that they were getting before um at smaller scale and if you're doing that at a massive scale like there's real potential here for this to be a differentiating factor within Defi and getting access to it I mean once again this is like if you're a Rob Hood user and you're like hey I can earn two and a half percent treasury yields in 50 years with you know $10 million I'll be able to buy a house in Napa that I can't Ure but if I have you know usde and and it's earning 17 18 19 20% like that's a fundamentally different proposition and if it's just cash on Robin Hood and I'm able to choose between the two like that that is the product that I think Robin

Hood would absolutely crush with there keep in mind their whole like future strategy Is wealth management so I mean what better product to offer your wealth management clients that a 20% yield risk-free yeah you're you're right that it should be at the at least the Athena yield or usde yield should be almost inversely correlated with interest rates and yeah frankly it's super cool and those those and the rates that Athena is able to generate bleed over into the rest of defi right like as USD starts to back usds then those yields get passed over onto um you know there's there's a fre rate which is US Treasury yield 10 year maybe we can call

it that um then there is a reference rate let's call it within def5 which is not risk-free like you USD Athena absolutely not risk- free I remember I think in April when I think there was like the first attack from Israel and it was like oh [ __ ] is this thing gonna blow up and you know it was one of their first tests and everything was obviously fine but there is risk involved obviously making sure that that is clear but this becomes the back stopping rate the reference rate for for most of defi do you remember when people used to call 20% the risk-free rate in crypto because you could dump Stables into anchor and get 20% speaking of our boy is in the US and it looks like he's

getting we've got 12 months to wait until his his jury trial starts maybe just something to leave this on is like I mean we started this but we started with this but like last time the yields in dollar worth this rate crypto was a fourth of the value it's a testament to the strength of crypto the strength of the ETF flows and frankly just how much juice is left in the system to to just Goose risk assets it's going happen but you need to see that turn and I think look Scott bessent Trump Jay Powell I think they're all singing from the same him book so you just need to wait for that and I do think you know to get to the uh fire points we're making the higher the

carrying cost the lower the price of the asset we're seeing that in crypto today it would be more concerning right if we were going into this new year and everyone was pricing in a strategic Bitcoin reserve and rates were already at rock bottom and all that stuff but there's definitely more gas in the tank I agree so this is my point the market over the last I don't know three weeks since since the fomc meeting has basically der risked all of the positive um uh upside potential now all we've got is upside potential because it's all been put into the market and oh by the way we're only at you know 94 95k yeah all right that feels like as good of a place as I need to leave it uh

fellas this was a good one uh first nice first round up of the year and see you here same time next week peace [Music]