Why DeepSeek Disrupted Markets & How Tokens Are The New GTM | Roundup

Transcript

this deep seek moment was one where it compressed the timeline for the Market's patients to start asking when is the p&l going to show the benefits of all this investment in AI someone asked me what's the most overhyped sector right now I said Ai and and it's not because I don't believe the impact is is is going to be massive don't get me wrong I think it's hugely transformational but like everything and we see it in crypto in in extremes is there's always it's never a question of how impactful a piece of technology is going to be it's it's more so the spread between the timing of that impact and when it's actually realized relative to baked in expectations this perfectly encapsulates what I think is happening here which is dog coins lead

to cat coins lead to celebrity coins lead to AI agent coins lead to Trump coin lead to actual companies launching tokens today's episode is brought to you by geod net discover how the Network's native token geod is powering the next wave of the robotics Revolution by hitting the link in the description of today's episode what's up everyone welcome back GM GM I feel like GM went from being like the thing everyone said and then it was like super cringe no and then and then now GM is back no look okay there it outlasted we're all gonna make it like you know when soccer workg

sister uh put out that video the oh Randy yeah that was top cringe moment and then that sort of killed it but GM is it's nice you know G good yeah good morning we are recording in the morning it's a good morning yeah 5:30 6:30 yeah 5:30 in the morning yeah nice commitment to block Works to Empire baby to Empire so let's see we have some some updates um one is if you are a thousand X listener you usually listen on the Empire feed um thousand X now has its own feed so you no longer have to get stuck with Santi and me you can just go

listen to Jonah Navi if you want it so that's that's one update just go f go find the Thousand X feed in Spotify or apple or wherever you do it um and yeah go go follow And subscribe and rate that show helps us out a lot uh the other one is Das D agenda is live um we're about to crank ticket prices higher so if you don't have your dash ticket yet go do that I think I have a code I think it's I think it's Yano 10 or Empire 10 or like it's usually like Empire 20 Empire 10 Empire 1550 Empire 5 I would I I think I would go on the Das page and just start typing in Empire 50 40 30 until you hit one I have we have an official code um and I think it's one of

those so go go try it out um it's going to be great I was looking over the agenda yesterday and uh I'm going to be there it's uh looks like great line up and yeah I'm going to be there she'll be a very exciting conference people ask me all the time like what is D known for it's really it's skewed historically a lot of Institutions but I think this year being like so pivotal I think um yeah I think it'll be very very good yeah yeah comparing it to last year's in London uh I'm excited to do that comparison yeah last year in London was by far our best one yet too I mean we had 1,700 attendees which for D is massive and uh we did at the Hilton in London um but I thought was like a fine venue it

wasn't anything amazing but the the Hilton shut us down they they basically said you have to stop fire code you you have to cap it so we had 1724 um this year I think we'll have like 2500 attendees we had to get the we had to do it at the javet center in New York yeah this is where I pick up the New York uh Marathon bib every year no it's crazy like I I never thought we'd be hosting events at at especially not D at Javit Center a big yeah we'll have to do we'll have to do some cool Empire uh side or meetups yeah we've got yeah 100% um yeah it's crazy we have Michael sailor Kathy Wood novag Gratz Muhammad aleran who's the chairman of Pimco um Richard the CEO of binance um we got like congressman and we're close

to confirming a senator hopefully so yeah it's Cra Crazy lineup go get your ticket Empire something is the code Empire something um I think those are the updates anything else cool oh um Santi will uh we we we finished a uh we finished the podcast studio so if you block works we we we have an actual full podcast Studio we're going to start doing more inperson recordings in New York we are maybe going to do our first inperson recording next week so TBD but yeah that's exciting so next time we do uh hoker night you guys can all see the studio it's awesome so all right nice uh news of the week I mean deep seek you know I know this is a crypto show but tough to

come on here not talk about deep seek and AI because it impacted the entire market right Nvidia sold off uh 177% and lost I think 500 or 600 billion is a single worst stock loss in history and that you know spilled over into all of the mag s which then spilled over into all of tech stocks which then spilled over into crypto which then spilled over into basically every asset got impacted by this so um I think we should talk about deep seek um maybe you let me give uh at the risk of being someone who knows really minimal about Ai and pontificating about AI um I I did end up reading a lot about it uh this week just because it impacted everything and I

think the best article I read oh was probably by um Dario I'm blanking on his last name but the CEO of anthropic Dario amodi I think it is um we can link the this article in the show notes but I'll try I'll try to summarize it here if people don't want to read the full thing it's called on deep seek and Export controls and this is by the CEO of anthropic so basically what happened to give people a summary if they weren't paying Too Close of attention is there's a uh deep seek is a Chinese Quant hedge fund actually and um very successful Quant Fund in in China I think they're in Beijing and they've basically turned into more of an AI company so they actually launched this thing called they launched deeps V3 which was a pre-trained model they

launched that about a month ago and that was this actually really Innovative release and it showed that they were able to essentially come up with more efficient uh ways to uh train a model and that was I think for people who are really deep into the AI World actually even even us I think we talked about it here like it was a very impressive thing this V3 model but it was a fully pre-trained model then they came out with R1 last week um which I think was a which is which is their first reinforcement learning model um and from what I've read this was actually less impressive but it but it kind of SPO but it kind of caused people to realize what they had built with V3 and this is what triggered this Market Panic Nvidia sold off

17% um and I think for probably two reasons right the initial gut reaction was a um holy [ __ ] they just built this thing with I think the the headline number was like five or six million so a we don't need as many Nvidia chips as we thought um that we were going to need to build these things so Nvidia sold off and then B the profit margins of like Google and Facebook and Microsoft are going to be way less than we thought then people start digging in and I think the realization as we've been able to sit with the news for a little bit is deep seeks main achievement here was engineering efficiency and they managed to do this like K value cache which I don't understand what that is at all um but they achieved performance I think

the actual performance is close to what some of the US models from like roughly six to 10 months ago look like but at a much much much lower cost um the thing about the cost is that there are um the $6 million uh saying that they spent six million whereas us companies are spending billions is very misleading so the Claude CEO who wrote this article said Claude 3.5 Sonet which in my in my opinion is the best model right now he said we spent a few tens of millions so let's call it 20 to 30 to 40 to 50 million to build this thing not billions now there's a massive infrastructure build right where you have to spend hundreds of millions or billions and he said that deep seeks total

infrastructure investment where they have 50,000 Invidia chips they spent roughly his estimate was about a billion in Hardware in infrastructure alone so that is comparable to us companies right so uh there's a natural cost reduction that comes from these training models and he said look like you would kind of expect the industry cost reduction curve to where we're at in the in the AI cycle to be kind of getting four times more efficient per year every year we should get about four times more efficient and the Claude model is roughly I think he said about eight times more efficient so definitely more efficient but just from some like great engineering efficiency improvements not from some like they

were only able to spend six million not a billion it's a it's comparing apples to oranges so um if you look at um I so anyways I I think that was the I think that was the biggest takeaway is like we're at this crossover Point um where reinforcement learning for reasoning is becoming super crucial um smaller Investments can can have bigger gains but this isn't a oh my God sell everything nobody's going to need Nvidia chips um type of moment uh The Six Million does not include the costs associated with you know research and and and buying all the Nvidia chips and all that kind of stuff um so yes you can build a $6 million model if and only if a research lab has already spent

hundreds of millions maybe even billions on prior research and has access to these large clusters and stuff like that so um but but but I will say it was still very impressive right it was the number one app in the in the App Store um ahead of Chad gbt claude's never been able to accomplish that Gemini has never been able to accomplish that um it is compar comparable to 01 right open AI 01 from a quality perspective it definitely lags 03 um from what I've seen but it but it is as good as 01 and it seems like they were real algorithmic breakthroughs that led to it being dramatically more efficient to to train and to inference so my anyways my Layman retail dumb take on this is that um if this was put out by if this had been

done by a Google a Microsoft a Facebook a US company nobody would be panicking Nvidia would not have sold off even 2% there would be no Panic in the market um but the real Panic comes from this being a Chinese company and us saying holy [ __ ] uh we thought we were winning the AI race right micros and Google and Facebook but oh wait there's actually this Chinese company that uh not only has been able to build this model that's great but actually somehow they have their hands on you know 50,000 Nvidia chips which uh there's all these export controls which we can talk about if we want to but um wow how did they actually get 50,000 chips without us even realizing this so anyways um yeah I did the I did the retail thing and I bought some in video on the 177% sell off and

uh but yeah man I I'm very curious to get your take because you spend probably more time than me uh in the weeds of AI today's episode is sponsored by geod net their leading dpin protocol that's providing critical location and spatial intelligence Services needed for Aid driven robots and drones discover how the Network's native token geod is powering the next wave of the robotics Revolution by hitting the link in the description of today's episode today's episode is brought to you by uni chain an upcoming Layer Two that's purpose built for the next generation of Def applications with up to 95% lower fees than ethereum and 250 millisecond block

times coming soon after launch unich chain is designing the future of cross-chain liquidity stay ahead of the launch by visiting unich chain. org and giving unchain a follow on X yeah I first heard about it over the weekend um Prav was supposed to be on like wanted to talk about markets and when he reaches out there's something going on um then I pinged a few other folks like Casey which likely going to record a podcast with her um Casey we've done a few podcast on thei I'll share some of her thoughts because I spoke with her um and then I spoke with a few other research analysts and whatnot I'll I'll add some more just color so obviously um Mark endri had a good tweet which is like this is a Sputnik moment for AI um you know like Russians kind of

beat us to the moon this is like well are Chinese beating us in the AI race thought that was well articulated uh as you said the market was down a lot across the board um the market coming into this was very nervous I mean the Magnificent 7 already accounted for like 38% of the S&P which is like a historic high and so there's all these comparisons saying oh it it's it's never been that high of like a select few of stocks I think the the prior moment in time was like in the 80s or like where Peter Lynch was a manager and like the but anyways historically a data suggested like when when that happens like there there's a there's a pretty big correction recalibration uh I'll add a little bit more data points before I go into just my take because again I'm not an AI

expert um no one really saw this coming at all um is there there's a really good video from the CEO of scale AI Alex Wang on Davos um that people should go listen to maybe we can link on the show notes and he just it's a 7 minute clip he goes into his his thoughts on on deep seek and of course you need to just take that well I think his main takeaway from that interview was hey guys actually they have way more chips Than People realize and they didn't go build this thing with like a dozen ships they built it with like 50,000 chips so right yes yeah yeah so anyways everyone has an opinion um just add a little bit more context of

why the market panicked and the interesting thing is crypto started to sell off over the weekend which is so interesting from a like a risk barometer perspective so you just knew that as as crypto started sell off over the weekend like stocks would like the open on Monday was going to be pretty award which is not which is not which is a very important thing I think it not to be dismissed I think the all of traditional equities markets are now looking at crypto over the weekends because it's the only Market that's open so the best signal right you used to look at like pre-market and what were options doing and like now now it's I mean I'm pretty sure like if you're sophisticate a Futures Trader in in New York and Wall Street like you're looking at like Bitcoin uh const to infer some signal uh but yeah you're

right like look companies like what's a big deal the big deal is there's all this hyp and AI uh companies spending huge amounts of capex like open aai on Tropics spend over 100 million just on computing power what they do is they acquire massive data centers with thousands of gpus and it's like a huge huge Factory to run these models and then deep she comes along and says what if we can do this with 5 million not 100 which basically as you said uh and they did that um and people were like trying to piece together and scrambling like how they did it uh there's to your point a little bit of like we just don't know right but um there's a couple of things that I'll just

add color from Casey JP Morgan to few other people like they they reimagined everything from scratch Casey described it as and I'll quote it is an interesting showcasing of how top us alabs like open AI have deprioritized architectural innovation in favor of scal and compute uh meaning like deep seek was like maybe the current constraint of not getting their hands on enough gpus or just resource constraints instead of throwing just much more compute at a problem they're like architecturally can we optimize this thing and I thought that was an interesting observation and she said it's logical to me open aai has a little incentive to reduce the cost of training Transformer based models as their financial resourc

ources are part of their competitive mode with only a handful of organizations able to com afford such training and so open AI benefits from maintaining this barrier uh given this it's unsurprising that this Innovation didn't emerge from open AI or entropic so it's actually an interesting like take of not often times the most resource um able company or competitor is going to innovate um and sometimes having a resource Contra constraint not having enough money can lead you to think in in a different dimension that can unlock more output out of a particular um kind of thing right um and then I'll add so on on that

Sant there's one thing that um from from this article that I think was important let me see if this is if I'm sharing the right thing so um I thought I thought this guy Dario laid it out really nicely he said there's three dynamics of how AI gets developed there's basically three scaling um three basic dynamics of AI systems there's scaling laws Shifting the curve and Shifting the Paradigm and I've never actually seen it laid out like this but it was very helpful for me to understand so uh scaling laws so all L's equal scaling up the training of AI systems leads to smoothly better results on a range of tasks so for example a million-dollar model might be able to solve 20% of coding tasks a $10 million

model model could solve 40% and $100 million model could solve 60% so uh you know you've got these factors of 10 corresponding to the difference between like I don't know might be like I don't know an 18-year-old like freshman in college to a PhD skill level like so the more money that you're spending the better the better these things get right that's the scaling laws but then you get Shifting The Curve which is what I think deep seek did here so Shifting The Curve he describes as like uh just making things more effective or more efficient so instead of uh like if if Innovation is a 2X compute multiplier then it allows you to get instead of the uh uh you know what what do we say before 10 uh you know you spend 10 million to get

40% or 100 million to get 60% now maybe you can spend five million to get 40% or 60 uh 50 million to get 60% instead of the 100 million so he said every Frontier AI company discovers a lot of these compute multipliers all the time oftentimes very small like you know 1.2x or a two X and so very very very infrequently they're a 10x um and what deep seek might have done here is actually figured out a 10x better uh way to actually train these models and then um and then the third one is just shifting the Paradigm right and that's you know 2020 to 2023 the main thing that was being scaled was pre-trained models and then in 2024 last year obviously we came up with this idea of

reinforcement learning so that's like that's Shifting the Paradigm so anyways that's kind of to Casey's Point like they were able to do number two which is really shift shift the curve here and come up with a compute multiplier yeah there's a couple two other things I want to add there is like they introduced a mul talk about Shifting the the curve or the Paradigm is they introduced what is called a multi- token system and for context normal AI reads A fir like a first grader it's like every single word like the catat and then it just tries to predict the next token and deep SE kind of processes an entire phrase at once making it twice as fast and 90% accurate and so when you're dealing with billions

of words uh it makes a significant difference so I was like Point number one that I find quite interesting this multi token system like reading entire phrase at once not single word or token um and then they develop what is called an expert system so instead of think of like instead of having one massive AI trying to know everything and the analogy there would be like having uh one person be a doctor a lawyer and an engineer and you never know at any moment's notice you need to be all you know one or the other um they use a specializ specialized experts that are activated only when needed so so to put a finer point on that like traditional models have all 1.8 trillion parameters

active all the time so you have to be again all the different professions have to be ready on call in any moments notice to be able to kind of like surface insights um deep seek us say 671 billion in total versus 1.8 trillion parameters uh but only 37 billion are active at once um and and so it's the again the further analogy and I know like people you can't reason through analogy but it's like having a large team but only calling experts when needed and that is another efficiency gain when you talk about like that 100 million versus six or 5 point something million it's really that like specialization and reading phrases not words that have allowed them people

think this sort of efficiency game so anyways not to sound like an ant expert which I'm not I'm just kind of regurgitating stuff that I'm hearing I think there's a couple of like implications about all of this the biggest one is you're wondering um are AI Services inflated and what about the capex spend that these companies have been doing and going forward will be doing and so naturally in my predictions coming into the year I felt video is going to be the single most important stock to watch um and because that's a proxy for just everything in the market I think just the the amount of excitement for AI and Nvidia makes its money through a couple ways but like you

have to look at when analysts are looking at their earnings report it's like how much GPU how much h100s have they sold how how much like what's the order uh and the backlog for that so if all of a sudden you don't need a 100 million capex investment to run these models you have like an order of magnitude less then obviously that that's a big adjustment to your model for NVIDIA it's like they're no longer maybe going to sell as much um Hardware as you thought they would and they make some money on Cuda like software but nonetheless I mean it's it's a big hit I think to why people were adjusting and then there's like a I don't know if that's like the right interpretation I've saw some memes of like that being a very belt like middle curve take and the left and right

was like no this actually just increases the demand for gpus yeah je Jin's Paradox that everyone was talking about which by the way is I I'm not going to pontificate on this uh actually I will pontificate it seems obvious to me that um that is actually correct it seems like you I'm just thinking about this from a company's perspective and people allocating Capital like let's say you're let's say things are getting cheaper to build you're not going to stop building the thing you're you're not going to allocate less resources you're basically just trying going to try to go faster like for like let's use blockworks podcast for example it's gotten way cheaper to produce these things with AI right and just like there's way there's

there's all these efficiency gains we're not going to create the same amount of podcast for cheaper we're gonna 10x the number of podcasts that we're making right so we're g we're gonna actually spend the same amount of money and just 10x the output you don't you don't decrease so it's it look I think it's uh we'll talk about this a little bit later but it it's hard to piece together together how much like the deflationary aspect increases demand like and and the the point I will make in this podcast is one and it's just how I reacted to it was um it's going to take the market some time to process all of this there's earnings report coming up there's a Fed meeting that happened yesterday we can talk about all of that but my initial

gut reaction was um this deep seek moment was one where it compressed the timeline for the market patients to start asking when are when is the when is the p&l going to show the benefits of all this investment in Ai and and you know I was on a podcast yesterday said someone asked me what's the most overhyped sector right now it's said Ai and and it's not because I don't believe the impact is is is going to be massive don't get me wrong I think it's hugely transformational but like everything and we see it in crypto in in extremes is there's always it's never a question of how impactful a piece of technology is going to be on the margin you might argue it's it's more so the spread

between the timing of of that impact and when it's actually realized relative to baked in expectations and I think this is it comes out and it's a huge shock to the system which which is like you know Nvidia is selling all this hard specialized Hardware with 90% profit margins open Ai and untr Tropic are selling their services that are pretty hefty they're pretty expensive and this competitor just comes in and says no guys it can be done far vastly more vastly cheaper so there's a natural disruption to that um so there's two things one like um I think if you're an analyst looking at a company that's spent hundreds of millions of dollars on on on gpus you're going to ask the

question in an ex earning call saying hey guys what have you done and when is this impact going to show in the bottom line like so my point is if we had two three years to prove to the market that this m investment in AI is going to prove out I think the market might just lose its patience a little bit more because you have this thing called Deep seek and now you're you're going to put more pressure and be less patient um and and so naturally I think that that might just break the hype cycle you know what I mean uh of AI um is it gonna I'm not dismissive of like the transformation the companies will be able to realize it's just more so the the timing of it is compressed instead of having maybe two three years

maybe you have a year now this will be the year where companies will have to prove that they're they're spending 10 20 30 100 20000 million in Ai and capex they're going to have to show that result in the in the bottom line you know 100% so yeah so it's what you're saying is like the open AI maybe don't need to show The Profit because they're a startup but Google Facebook yeah Microsoft the analysts on and you know the street is going to start saying hey guys what when when do we actually see these margin Improvement I'm paying I'm going to be paying a lot of attention to earnings calls Microsoft I think just reported the stock was down quite a bit but you know listen to the commentary like I like to actually you could put the earnings call transcript into deep seek and say you know give me all the

commentary from SAA or from you know all these Executives around Ai and I think they they're going to be put on the spot of of trying to ask answer this question which is hey guys like great you've spent all this money you're in an investor in open AI how does this kind of change your your model right a bit um but it's incredibly exciting also the other thing that we we've discussed it in in some AI pods before with Sam from Cusco and Casey and Dan from modulus it's this idea and this is Casey's observation I spoke with her quite a bit over the weekend was it really just reinforces um that open- Source models are beating closed- Source models and I think that's both it's quite positive for crypto um and and I think that's um that was one observation that Casey had

which I I agree with um and so I think that will have a spillover effect into crypto into you know AI crypto AI um not to sound overly jargony and hypy but I do think that like this you know Zuckerberg has been teasing at this also an investor calls in and and Facebook like events you know which is he's very much now like llama open sourcing these models is and so that's I think just boats very well for crypto as an open source movement Geet is a first ofit kind dpin protocol that's revolutionizing satellite navigation Services they're actively generating onchain Revenue that's growing 500% year-over-year by providing Precision location services

that are 100 times more accurate than standard GPS on Empire we always talk about finding how crypto can power completely new business models and they're a perfect example of this they're already trusted by over 30 Enterprise customers across Industries including Auto motive agriculture construction and even robotics the network is powered by its native token GE EOD and easily mined with their satellite Miner by setting up a base station you can get involved with this uh groundbreaking web 3 ecosystem learn more by heading over to geod net.com or just by hitting the link in the description of today's episode today's episode is brought to you by uni chain

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started on building your dream applications so Santi can can we pivot a little bit into talking about what did you do with your personal portfolio here yeah that's I think that's what that's what I want to know that's what because I know I mean you did message me over the weekend say you know you're you're you're trimming a lot of your positions and this was kind of spooked you and you're moving out of the out not out of crypto but out of a lot of the risky stuff so what did you actually do like what what yeah I sold all my uh I have like a wallet that is just more hot in the sense of like more like tactical I'd say so I sold um all of it it's not it's not a m it's like less than 5% of my

portfolio were those All Your Meme coins yeah those are those are the that's the meme coin bag like every when I punt meme and stuff like that so like I I rotated back into Soul largely to just be a bit more defensive and then I I went to I'm went The Stables uh over the weekend uh I'm like I'm just going to sit this out there's going to probably be an overreaction from Market at some point I just want to be um you know and and was paying attention it's like it's going to be a big week it's earnings season you know and also there is the Fed meeting that happened yesterday so I I was like I I just there are moments where I'm like I don't get paid enough risk like the amount of risk units that

I need to cash in for the potential upside I just felt like in the conversation with Prav and yeah he um him and I chat a lot during the these moments it was just like it just didn't feel like you were going to get paid enough to be long versus the current scenario where the market you talk about all the dips being bought but the market was looking for reasons to sell it was already very around the mag 7 accounting for all this it was just looking for reasons to sell and when I when I I I feel that I was like yeah I I think there's just more downside here um it sort of Might contradict a lot of what I've been you know my style of investing but I do think that I I take this tactical wallet

as as an opportunity to develop my more agile like investing Trader um so it's it's like um a thing that I'm trying to develop right reacting a market it's interpreting that so anyways I sold that into Stables uh over the weekend uh and then have and rebot yesterday after the FED meeting there was a lot of really good comments that that's one thing I did on on this particular wall again it's like 5% of the my book uh it's all very liquid it was meme coin gains um that I you know was largely lucky so I you know I wanted to lock in that profit and my thinking there was hey could we go down 20 30% maybe likely could could be Poss POS Nvidia definitely did I was actually

surprised that crypto didn't go down as much like like Nvidia going down I mean some things did like bit you know Bitcoin like you know Bitcoin has performed remarkably well something like fcoin is down from 250 to I think it fell to sub a dollar fell to 80 cents right so you know like virtuals is down 70% or something like that in in 30 days like yeah well in 30 days right I mean it had been coming down it had been coming a lot of it dragged down like it sucked the air no pun intended here far coin uh the me the Trump mcoin phenomena just sucked the air out of most other alts but um so so the alt Market was already in a downward trajectory and

losing momentum and so I felt that this was just another reason to get out and so I rotated to salana so that was a good trade meem to salana during the whole Trump launch and then I just felt that I I went to Stables now um I was but then you said but then you said you rebot so did you bu just salana or you bought back myti position my entire Sal position I rebot it slightly lower like I sold at like 234 bucks or something 236 it dipped uh and then I bought it like a 232 or did you buy anything other than salana no no that for that wallet like again the long-term stuff I'm not not touching um this was just fun to Just Adjust but I will say I I did other stuff in my in my traditional portfolio

outside of crypto uh um I people may remember like I've been doing this trade for now the better part of like four years Phoenix they call them Phoenix not it's a reverse autoc call converts and so I the idea is basically this so like you like a particular company say you like Nvidia or you like coinbase um and but you know in your portfolio you want to optimize for income generation because you're so exposed to crypto you want to have like Equity like participation you like a particular name like Nvidia but you feel that it might be expensive and I felt that the market was like hasn't been

cheap for a long time uh so what do I do basically these products are ones where you set a barrier which is like say Nvidia is trading at 100 right now and you say um I'm going to it's a derivative and you basically say I'm betting that Nvidia doesn't go down below 30% the current spot or you basically can choose 20% 10% 30% up to 40% 50% if you wanted to and what you're toggling is downslide protection with the amount of coupon that you're being paid on an annual basis to to give you some perspective like for instance Nvidia maybe not Nidia but like uh if you wanted to do like a Tesla for instance reverse autoc call convert Phoenix note it's the same thing you say

I like Tesla I would love it at down 20% I would actually be a buyer down 20% or 30% uh but I'm not ready Buy It Now I want to get income generation in my portfolio so you'll structure this product with a 30% barrier so Tesla so long as Tesla is not down more than 30% you're going to be paid a coupon and that coupon could be anywhere from 10% 15% 20% 30% depends on the volatility of the underlying and so that's pretty good from my standpoint which is if you look at the Historical returns of the market it's like 8% a year 12% 14% a year right in in a good year but we've been on this run for quite a bit of time so I'm think well if I can if I can clock in an above above like historical average return of

the market which is 10 12% more so than like credit funds and I know it's a different risk profile but nonetheless I'm like I'm getting paid a really interesting coupon which is reviewed quarterly um at best Tesla doesn't go down more than 30% I get paid this pretty high coupon um and I kind of outperform the S&P and I'm not taking as much risk worst case scenario is um Tesla runs up a lot so you miss out on the upside participation but you and you get called so you might get paid a coupon one qu or so but you get called uh and so you lose on the upside participation and the wor the other scenario is Tesla goes down more than 30% and then you have to buy that at

whatever the prevailing price is um and so and that gets reviewed quarterly quarterly I structure it bespoke which is I reviewed uh semiannually so at least I lock in half of that coupon if if it stays within that range uh but there is callability risk and there is just up missed upside participation like with coinbase I've done a lot of these you know arguably it was better to go long when it was 12 13 bucks like I was I was doing all of these in size I'm like I'm getting paid 40% coupon like I I'll do this any day um but you missed out on coinbase going from but I missed out on coinbase running from 50 to 200 like a 4X but you know it's just a matter of like in this part of my portfolio

I'm not optimizing for the 510 X I'm optimizing for cash generation you know what I mean and so what I did over this week was I bought a lot of these and and I like to buy these when V spikes quite a bit because then then these products pay a higher coupon so I bought like a basket of like Tesla and meta sorry it was Tesla and coin why because I think this Administration like you have so like say what you did with coins so coins trading at what and how much do you get paid on it so coins Trad coin train at 291 coin was 291 and Tesla was like a 336 or something like that wow coin draw is done 25% this year yeah so right 25% in a month and a

half I'll I'll tell you um what the and coupon ended up being so I did a coin Tesla Phoenix note reverse AOL convert I paid I was paid a 35% coupon on that 30 at what price uh whatever the spot was uh Clos yesterday um and it has some features it's like 30% barrier so down 30% um and conditional memory coupon which means that it if if it gets reviewed in a six months and it dips below 30 but then it goes above but it stays within that range I catch up like

the entire coupon is paid so I like to have this conditional because if markets are more volatile I want the conditional feature which or memory coupon which like has this phenomenon where like it catches up if at the end it goes up within the range you get paid the full coupon um so I did a basket not just one name of Tesla and coinbase and I was paid a 35% coupon and then I did a basket of three names meta Tesla and Google and I was paid a 22% coupon well so like it's above what I think the S&P will give you now I think last year what was that return of the NASDAQ like it was like 20% 18%

yeah um could I have done better just sitting and chilling maybe but I'm not the income generation is like pretty compelling in my mind yeah um anything else on this topic uh just a reminder like none of this is financial advice uh but uh I'd like to do it for for the reason that I think you and I have talked about extensively here a number of times which is there are parts of your it's good to like compart compartmentalize parts of your portfolio uh and and have income generation strategies have things that are you know less correlated to crypto um and will give you peace of mind Peace of Mind might be a wrong word but just

will give you the the ability to be the aggressive tactical when you know the Market's kind of puking freaking out kind of thing um so yeah not not on my standpoint I think uh maybe looking ahead I don't know if you want to add like what you did or it sounds like what you did was you I did the I did the the retail move I I mean I did sell I moved out of meme coins and I just bought salana I moved nothing into spot because I mean into Stables because why would you know why would you ever do that uh so I sold a bunch of m coins moved it into soul and then when Nvidia dropped 7 % I just bought the bought the dip at the open bought the dip yeah you're probably I'll be very intrigued to see the comments here of listeners like y

was a better investor probably ladies and gentlemen prob I can assure you that is not the I think the number don't lie I can assure you that's not the case I just don't I just not sophisticated enough for that earlier in today's episode I mentioned Ledger's latest products the stacks and flex and I wanted to take a few seconds to tell you more about them these wallets feature the world's first secure touch screens which don't just simplify your digital transactions but also keep them extremely safe these wallets are virtually impenetrable to online attacks because they store your private key in a secure offline chip you can manage more than 5,500 tokens and install up to 100 apps choose the most

trusted name in Hardware wallets and take control of your digital Security today at ledger.com or hit the link in the description of today's episode to check out their latest wallets should we talk about pow statements there was a couple that I really lik that I just want to emphasize um yeah I I've got a statement that he said that I think you won't say that I think it was my favorite statement but oh should I say what I'm trying to say and if I say it like I get you get some point I'll wink at you or something yeah okay all right blink twice um he said uh po stated quote banks are perfectly able to serve I thought you were going to say some

macro take or something no no he said banks are perfectly able to serve crypto customers says fed is not against crypto Innovation yeah let me read that expanded let me read that again because I actually it's very important um in context of if you guys remember last week uh Sab 121 got rescinded which means that Banks can now custody crypto um and uh so Jerome pal said banks are perfectly able to serve crypto customers as long as they understand and can manage the risks where we're not against Innovation and we certainly don't want to take actions that would cause Banks to terminate customers who are perfectly illegal just because of excess risk aversion uh maybe related to regulation and supervision and I think Nick Carter who's obviously been either leading

operation choke point 2.0 or created that term uh I Hon I kind of forget at this point he said this is particularly notable because uh to Nick's understanding the Fed was the Nexus of operation chokepoint 2.0 so yeah ve very important statement by poell especially in context of Sab 121 getting rescinded absolutely yeah he also he also talked a little bit about like regulation crypto regulation saying like we're kind of ready to move in this direction and chapter uh so that was very um you know that was very interesting too uh he he said and I'm quoting Walter Bloomberg all caps would be helpful to have greater regulatory apparatus around crypto so yeah yeah it was good yeah

very positive um makes you wonder right like technically the FED should be independent from like an independent unit but like you have a different Administration I think we're I think we're long gone from that different tune uh overnight actually speaking of this I saw very um very strong take from Gemini um saying that uh they will not hire anyone from MIT now that Gary Gensler is back there again and I don't know what you feel about that but that was a that was a bold statement I think you're just seeing this a I think Founders feel very empowered right now after four years of not feeling empowered and four years of kind of operating on their back heels and I think we have entered into an era where Founders feel incredibly empowered and maybe a like maybe a little too uh

excited to just like I don't know take down anybody but I mean I I love it like let the free market go and if you say that you I mean gentler terrorize these companies and specifically really came after Gemini pretty hard and so yeah I mean I I I actually love the move yeah absolutely anything else by Powell I have two other topics I want to run by you go for it um one is uh the uh so last week we talked about the the vine founder launched a token called Vine oh yeah um and I don't think he was actually building anything I think he was just like let me you know launch a token um the venmo founder uh launched uh actually launched an app

this week called jelly uh jelly is basically it's like FaceTime but you can record conversations and share Clips on social um so you know I could FaceTime you and we could we could talk about like what were you know deep seek or or here's a better example you could have called Casey or it sounds like you did call Casey and you're talking about deep seek you could have recorded the FaceTime and then you know instant edited that and then shared the clip on social um he launched a token to go along with the app and it's called the jelly jelly token so it's the Jelly app it's jelly jelly token and you need the token to actually access the app right now and um I think this is just exactly what I was talking about the last couple weeks where we're moving from tokens as

a technology that's used to secure a network to tokens to drive interest and tokens for fundraising right so the the tokens trading at over 100 million um I I I don't know exactly the price 100 or 200 million so a that's a big Capital raise um but but b um it's driven a lot of interest in his app where that you that you normally wouldn't have had um I think if the I think if he had initially launched this thing you know you try to get covered by Tech crunch or whatever it is and um yeah I think this is just you're starting to see Tech Founders like web to Tech Founders using crypto as their goom Market strategy um so I

think it's very interesting actually I loved I I loved Raj had um Raj where's where's let me pull up Raj's Twitter um because he had a meme that summarized it perfectly yeah like Internet Capital markets kind of no this is this this perfectly encapsulates what I think is happening here which is dog coins lead to cat coins lead to celebrity coins lead to AI agent coins lead to Trump coin lead to actual companies launching tokens um and which leads me into the second conversation which is I I can't share any names here but had a very very very interesting conversation with the founder of a uh private Equity Firm uh

one of the better Middle Market private Equity firms in New York um he's can you hear the heater just BL can you hear this I can it's like the tinkering the tinkering all right well sorry folks for the every time I hear that I'm like are those rats running around the the the just said welcome to New York baby uh so yeah it's just the radiator just blasting turning on or something um are you are you def like how you how do you know it's not rat he's not rats these things are it's the it's the New York radiator I mean New York rats New York radiator Dude tell me you never lived in New York that tell him me he never lived in New York I i' I've lived in New York sir I've seen the rats

too dude Eric Adams took care of the rats he hired the rat exterminator he took about the rats but not everything else he took care yeah exactly uh so anyways this private Equity Firm you know been around for I don't know 30 years or something like very successful private Equity Firm uh got I've gotten to know the founder of this firm pretty well over the years and uh get on and uh he he emailed me saying I want to learn more about memecoins and so we get on and he knows very little about crypto but you know we just by us being close he's kind of follows the industry and he said look like we are kind of getting smoked by some of the black rocks and kkr's and Apollos of the world they all have these products that are just eating

up like all the Middle Market because they they're so big and they can offer so many products um I need to figure out a way to differentiate should we launch tokens um should we be launching tokens for our companies and it reminded me honestly a lot of inversion actually and like what you've been thinking about which is hey there's all this capital on chain and liquidity on chain and um there's Tech improvements that you get by moving things on chain and he said look I really know nothing about this stuff but it seem seems like there's new technology that people clearly like right like black Rock's launching you know Bitcoin ETF and maybe more stuff and you get that combined with like a huge valuation valuation mismatch right you have a data company in trafi might

be valued at 100 million you put a data company on chain with a token it's now worth a billion and uh he said look we've got all these companies that probably I don't know why they need a token but should we be launching tokens and this is all it's all gearing up towards every company's eventually going to get a token I don't know if it's going to happen in two years I don't know if it's happening in five years I don't know if it's 20 years but you'll see I you'll eventually see the NASDAQ and New York Stock Exchange be able to trade tokens on those things or if they don't you'll see Crypton native exchanges like the coin bases of the world overtake these guys and you'll see crypto companies launch tokens like they are to like the next phase of this is crypto companies that don't have a

blockchain launching tokens like Kido I keep talking about this I think you'll see a lot of those kind of folks do it and then you'll see the Netflix's and the you know Ubers and the maybe the private companies who aren't big enough to get public but they need liquidity they'll launch tokens um and it's just like it's it's just crazy seeing it in real time so yeah everyone I've talked to about my vision and the strategy and I it was an iterate iterative process if you remember everyone has been very receptive and they understand the mission the vision and the structure and that the structure piece was something that took me a little bit of time to iterate on but as soon as I repackaged this from a traditional

private Equity Fund to a permanent Capital vehicle on chain it was like the reception to that structure was far greater and some people had certain concerns on the margin but for the most part it was that and from my standpoint it was really informed by looking and talking to most of the foundations and understanding that there I feel that there is far more opportunity to be aggressive as an industry to acquire acquire users in a more tactical way and to solve the biggest problem the crypto has which is go to

market and and I think it's there's a big big opportunity from both sides you're seeing traditional companies trying to like the tokenization of things and real world assets like why would black raw KKR be interested in in in that well because they can tap into these massive pools of liquidity like you have Global Internet Capital markets that's profound like the amount of liquidity moving money at the speed of light 247 365 in real time like settling has huge cost efficiencies and and allows you to monetize more like the amount of velocity of money the ability to monetize that user in many ways like trading fees all that stuff like yeah it's happening and and by the way people are now the nice thing

about all of this is that perhaps people were thinking about it and doing stuff internally now they're feel more open to they feel more comfortable being open about it and that has you know like Vlad there's only been a few folks that have been in like talking about this uh before kind of this regulatory like 180 like Vlad from Robin Hood we've had that clip that I always think about which is comparing his his business of traditional brokerage and crypto and he's like the crypto side of my business is in order of magnitude cheaper more efficient than the and lucrative than the n one I'm like by the way you saw Kraken like like there's a couple of like very tectonic shifts like you have

the we've we've talked about this at length like coinbase is Krakens of the world no reason why they can't become large Banks and next JP Morgans or binance right we have Richard I asked him that he's like I think he just gave the politically correct answer which is like we're not looking to be anything other than the best exchange I'm like I think in in the internal strategy meetings they got they got to under believe like if they're going into markets like Indonesia or whatever they're like you could serve that customer things much more so than crypto right yeah um so yeah I think uh there was going to maybe as an interesting exercise is like who do you think is the largest company not that announces like buying Bitcoin I think the more

interesting question is what is the largest what will be the largest company or the biggest splash of a company doing something on chain other than Bitcoin you know I mean I mean I mean the the the very obvious one is stripe right I I mean stripe is going to move all of their Merchants onto onto stable coins and uh I don't know you're your froz again so I can't actually see if you you can see this or not but I'm going to share this uh let me share this thing that I post on Twitter this week which is I went to pay a stable coin or I went to I went to pay a stripe invoice this week and you know usually you go to pay your stripe

invoice and it was a bank transfer or a US bank account it's always bank transfer US bank account and now it says crypto stablecoin this is the first option ahead of bank accounts right so it says choose how you'd like to pay it's usually just these two options right I've paid the hundreds of stripe invoices in my life bank transfer US bank account then now it said crypto so I click crypto and I go to pay and it says usdc on ethereum so I click usdc on ethereum and it says select a currency right usdc on ethereum usdc on polygon usdc on salana usdp which is paxos ethereum usdp on salana so I mean this is a boring answer but like the obvious one is just like I think everybody is

still sleeping on how much stripe is going to do in crypto this year absolutely yeah it will go down as uh it might take a few years but it's it's hugely transformational yeah we keep folks should go listen to that episode that we recorded with the uh Zach from from bridge the acquisition hasn't closed is that right yeah but I heard it's going to close yeah I'm pretty sure the regulatory like the approval process willm after the election it will probably pass but no hu huge I would agree with you hugely beneficial we're kicking off Das um on the in the institutional track we put Zach first um Oho uh it's Zach Rob hack from dragonfly

and then guy from Athena like we I I love the title of the presentation Financial room temperature superconductors yes exactly that is a quote from the cison brothers when they announced the acquisition exactly exactly so um that's great anyway anyways uh good chat anything else anything else you're thinking about or that you wanna you want to cover here uh Kraken I mean Kraken pay was pretty interesting um that they launched recently what did they launch Kraken pay which allowed you to only if you're a cracken customer I think it allowed like instant payment across like their user base which is pretty cool feature I don't know if you could pull it up and

show people but KRA has been doing some really good stuff I would be that's one of those companies I feel like it's going to go public this you know soon and I think they're they're doing a lot of interesting stuff Kraken pay I didn't see this that's cool yeah it's pretty cool yeah it's only for cracken so send any asset anytime to anyone anywhere um but but it's only cracking users I believe oh that's cool yeah yeah I thought that if you have a Twitter account over 20,000 followers you're saving your crack tag for you for a limited time oh so they basically just built venmo into Kraken yeah that's a cool product Shout out to uh Kraken folks and Lou and the whole team over there yeah yeah pretty cool stuff that's

that's cool um no that's really it I mean I I think uh it's an important week uh looking ahead uh on just earnings just of of companies I'm going to be paying a lot of attention to that and um yeah but uh otherwise business as usual well nothing else from my standpoint go cool all right folks appreciate you guys listening have a good rest of the Friday good Saturday good Sunday whenever you're listening to this and we'll see you next week hey everyone just wanted to give a quick thanks to today's title sponsor geod net by setting up a base station you can get involved with this groundbreaking web 3 ecosystem learn more by heading over to geod net.com or just by hitting the link in the

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