On The Brink with Castle Island - Weekly News Roundup 12/13 (Pipe to Crypto, ICO Scammers, Jack Dorsey just gets it, and more) (EP.25)

Episode Date: December 13, 2019

Matt and Nic from Castle Island Ventures review the top stories of the week in the cryptoasset industry. This week's topics include:  - Deals - ICO Scammers and DOJ arrests - Charles Schwab Study - Jack Dorsey (Square and Twitter) - Poloniex cold wallets

Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called the Bitcoin. Bitcoin. Welcome to the On Brink podcast. I'm Matt Walsh. And I'm Nick Carter. And Nick, it was a busy week. There is a lot of news to get through this week. Yeah, so much stuff went down this week. A lot of regulatory news. A couple deals. Why don't we start with the deals? So these are the companies that are raising money. Presumably we'll be hiring pretty soon. So that's why we do this section.

The first one is Crusoe Energy Systems. This is a company that is operating in just such an interesting problem. There's a couple of companies in this category. So what they're doing is they are converting flared natural gas into energy-intensive computing. The first use case is for Bitcoin mining. So my understanding of what they're doing here is that they're setting up operations, flaring operations at oil fields. And whereas you would typically need to set these operations up in order to flare the gas

in a way that is compliant with the EPA regulations, right? So you can't just flare this stuff into the atmosphere. Well, it depends on the jurisdiction, but there typically are limits on the amount of vented or flared gas that you can do. Right. And so you'd have to have some sort of a remediation, some sort of a service to flare off that gas. And so what these guys have done is essentially put ASICs in those machines,

where you're getting this free energy, so to speak, flowing out of the ground, and they're turning that into Bitcoin. What a cool thing. Yeah. So the fundamental arbitrage that's happening here is Bitcoin is buying energy at a fixed price globally. You know, it changes over time, obviously, with the Bitcoin price and difficulty. But Bitcoin is a buyer of energy and it's indifferent to where you are.

These oil wells are producing natural gas as a byproduct. It's an unwanted byproduct. It's costly to get rid of. The ways that you get rid of it are, depending on the jurisdiction, you flare it, you vent it. so you just release methane into the atmosphere, or you build really expensive infrastructure to pipe it away. Natural gas isn't – natural gas has had a terrible bare market in the last 10 years, for those of you who aren't, you know, natural gas price watchers. Really terrible, declined by like more than 95 percent. So it's not worth it to capture it and build pipelines to pipe this stuff away.

So instead, we get oil wells, which naturally preempts. produce a ton of natural gas, right, because it's co-mingled with oil. They need to figure out someone to do with it. And it turns out the most economical thing to do is not simply just to burn it or to vent it, but it's to put it into generator and turn it into Bitcoins. So it's an amazing, creative way to remediate this problem. The other interesting thing is, combusting methane turns it into CO2. Methane is much worse for the environment on. a kind of per unit basis than CO2 is. So it's a much more powerful greenhouse gas.

So net net, this is actually good. The fact that it's being put into a generator as opposed to just being vented, which is the case in many places. Interesting use of methane versus methane there, but we're going to move past that. Yeah, you know, whatever. This isn't chemistry class. I'm going to how to pronounce these things. So basically what we have here is a global auction for Bitcoin. And this is the idea that, hey, if you can create Bitcoin, if you can get access to power

under what, four or five cents a kilowatt hour, then you can print free money. And we're going to start to see crazy innovations around just how to do that. Yeah. So for context, your median Bitcoin miners probably mining with something like six cent per kilowatt hour cost basis. Here it's effectively free. obviously there's operational costs and you need to also acquire the A6 and so on, but you might be talking net net one or two cents per kilowatt hour. So I think this is this company in this category really presents a compelling pushback to this notion that Bitcoin mining is wasteful.

In practice, what we're actually seeing here is a lot of capacity and a lot of R&D going into cleaner ways to talk. harness energy and to basically, as you have said in the past, contribute and access this global energy sponge that is the Bitcoin network. Yeah, something people don't understand is that the energy that goes into mining Bitcoin is often energy that would be otherwise wasted or lost or curtailed. So a lot of it was due to the overabundance of hydro assets in parts of China. So Sichuan, the reason Bitcoin mining concentrated there was not a coincidence. It was a because China had overbuilt those assets and there weren't enough population centers to absorb that capacity. So people turn to the next best thing, which was Bitcoin mining. So this is just a

natural consequence of inefficient creation of energy assets worldwide. And Bitcoin sucks up the assets that are being underutilized. So people sometimes think about the energy that Bitcoin uses as being rival with the energy that we use to turn on our lights. That's not the case. Energy is a very local phenomenon. It cannot travel very well. You need extremely expensive infrastructure to make energy travel well. It's very lossy. So because energy is localized and because you've got all these subsidies and governments that are doing weird things with how they create energy assets and also because the environment means that certain places more suitable to different kinds of energy creation than other places, you get this localization

effect, which Bitcoin is able to exploit the sources that would be otherwise wasted. So as far as I'm concerned, it's actually an extremely efficient phenomenon. And this is just another case of Bitcoin being put to use in a really interesting way. So it's a really exciting development. So Crusoe raised $30 million in equity in a round led by Bain Capital. It was also a round that had $40 million of project financing led by upper 90. So additional articles can be found in the block in Bloomberg, for those of you who are interested in learning more about Crusoe. Another deal that happened this week was a German company actually called UpVest.

So they raised a $7.8 million series A led by Notion Capital. This is a company that's focused on the tokenization of real-world assets, which is certainly an area that's getting a lot of attention and has gotten a lot of attention for a number of years now. So let's transition into the news of the week. There is a ton of legal regulatory and enforcement actions this week. This was, it seemed like every day this week we had a trickle out of an enforcement action. And they seem to be getting more and more punitive as time goes by as well. Yeah, I guess there's this argument that, so we, everyone in the industry is sort of aware that there's been a lot of subpoenas flying around in the past few years. around ICOs and maybe you don't want to be fighting the ICOs subpoenas from the SEC.

Maybe some people just decide to settle in the next few months here. Yeah, it seems like the weight of evidence is going to become crushing that the SEC is not going to be in a conciliatory mood, and they might have burnt their few favorable outcomes on settlements with EOS and so on, and the ones that are left are going to get a much harsher treatment. So the first one that came out this week, this falls into the category of just no-brainer kind of fraud scam. This company just has it all. So the SEC charged Shop-in, so Shop-in, which is a ICO that conducted a fraudulent securities offering.

And I guess the token was for shopping or something like that. I don't really know. So what happened here is that they conducted a $42 million ICO. the criminal complaint has everything you'd ever want. So this was a failing business, which how many times have we seen that? So the company's going out of business, do a token sale, pivot it. This had advisors who actually didn't even know that they were advisors. So they were putting people's, you know, high reputation people on their website that actually had nothing to do with the offering. So that's classic. They had no KYC procedures. They had no ability to actually know who is participating in this in this thing and overall you know this just had everything so it's a

$42 million scam yeah so very typical 2017 ICO um the other interesting thing is that the nya g there's also criminal complaint referred to the nyg here so not just a case of securities fraud but also you know criminal charges being brought here um so it's not just a case of security fraud but also you know criminal charges being brought here. So it's not just a case of having to disgorge all of the ICO funds. So more to come on this one for sure. In other enforcement action, the Department of Justice has arrested three individuals this week that were charged with running a $722 million Ponzi scheme involving fake mining pools. And so it seems like what these guys were doing was essentially just selling fake kind of cloud mining contracts and fake access to mining pools.

That's a staggering Ponzi scheme, $722 million. Although small, if you look at the plus token. I guess the plus token is, well, we should define the, talk about the plus token really quickly. Plus token is the mother of all Ponzi's. That's the best Ponzi scheme in terms of just total assets under management, those guys, you know. They can be real entrepreneurs if they put their. Yeah, that's always the tragedy about this is like the entrepreneurial talents that these scammers put on display.

It's like, you should be running, you know, company on the up and up because you'd probably kill it. But Plus token manage to accumulate 1% of all the Bitcoins. That's where they went. That's insane. 1%, which they then sold. So you can think plus token. They're being sold right now, right?

They're not all sold. The pace has slowed down to a trickle. But yeah, they were being sold so you can thank them for the recent collapse. Plus tokens in China, right? Yeah. And targeting Southeast Asian retail investors as well, which is what Big Connect targeted as well. So fertile ground for scammers, unfortunately. Well, so these three individuals that were arrested this week, it turns out that there's five people that were involved in the scam.

Two of them are at large. Their identities are being kept under seal. So maybe we'll hear more about this. But people in the industry actually knew these folks. So they were going around and representing themselves as kind of affiliates with certain. mining companies that they may or may not have been. And they were getting themselves into some pretty serious rooms, actually, these Ponzi-Sea-M guys.

Well, they might have done some actual mining as well. Yeah, it might not have all been complete vapor. Yeah. But, you know, like, if any of you have been in this industry for a while, you'll know cloud mining is one of the oldest scams in the book. It really is. Yeah. And, you know, it's no surprise.

There are some legitimate cloud mining companies. Don't get me wrong. but they tend to be U.S. domiciled, the identities of the founders are known, you know, and they're reliable, and they're not making extravagant promises. But generally speaking, cloud mining is something you typically don't want to contribute funds to

because you're paying a spread, and then you're mining, which is a difficult business in the first place. So, you know, you think that if someone was able to mine profitably, they wouldn't sell the right to a third party to mine as well. They would just mine themselves. Mining just a fringe. kind of a fringe set of characters there at the edges of the mining industry. It's really, you've got to be careful out there.

So another one, so in the Netherlands, I found this to be pretty interesting. There's a bill pending in the Netherlands that would punish crypto scammers with up to six years in prison. That would be kind of interesting to see that in the United States. Yeah, yeah, that would be much more severe than what we have here. So there's so much lawsuit news this week. So there's an interesting one, interesting complaint against Bitmex. Bitmex, everyone's favorite offshore Bitcoin derivatives exchange. There was an early investor in Bitmex.

So these are allegations, you know, they'll be decided in court. But so there's an early investor in Bitmex that wrote them a safe. And the complaint is that Bitmex never triggered the safe. So they never converted it into equity. despite the purported existence of a triggering event, which was when they went through a different accelerator. And so this is a pretty funny lawsuit. Arthur Hayes has this funny quote that he said

where you're welcome to sue me in the Seychelles. In this case, Bimex was sued in the USA because as it turns out, they actually have a significant presence here. So I'm sure this lawsuit will be fought over jurisdictional questions, as are many crypto lawsuits, whether the plaintiffs actually have standing to sue the entity in the U.S. because BibX doesn't strictly allow U.S. investors, although many of them find their way around the firewall. They also have executives that spend time in the U.S. and work here.

So that's my guess, is this will be fought over standing issues. Certainly one of the largest and most profitable companies in the crypto space. So that's a high-stakes type of situation there. So let's move on to some non-lawsuit news. There actually was some non-lawsuit news. There's quite a bit of news this week. So let's talk about Stone Ridge. So this is a $15 billion asset manager.

They're based in New York. They have a subsidiary or an affiliate called NIDIG, so New York Dig. It's a custodian and a crypto asset manager. So they have received SEC approval this week for something called the NIDIG Bitcoin Strategy Fund. It's what's called an interval fund. And so it's a closed-end fund. It's going to be capped at $25 million, and it's going to hold exposure to Bitcoin through the cash-settled futures.

So let's just define this a little bit. I think this is a big deal, which is why I want to talk about it on the podcast. So this is a closed-end fund. The shares do not trade on the secondary market. And so what happens is that the fund itself will periodically buy back shares at NAV, at net asset value. And so the structure with theory. theoretically have some advantages over some of the alternatives that are in the market, like the Bitcoin Investment Trust. So you would theoretically, you would not expect to see some of the

premiums to NAV that we see with GBTC, which is a result of retail buyers trying to buy the GBTC product that's listed on the OTCQX when the supply is pretty constrained, just do the fact that you have to create it at NAV and hold it for a year before you can roll it to the OTCQX. So that product ends up trading at a pretty significant premium. It's usually at least 10 to 20%. I'm not sure what it is today. So that's a clear advantage that this type of interval fund would have. The second advantage is that the fund itself is going to be registered.

So it makes it way more likely to be accepted, in my opinion, by registered investment advisors. So if you think about financial advisors, that's a great distribution channel for a product like this. And that channel, again, in my opinion, would be a lot less receptive to selling a non-registered private product, a private placement. Having it be registered is a big deal. It makes it just a lot easier for them to sell. So that's a big advantage. So I think this is a super clever structure.

I'm surprised that no one's done it yet. It's pretty clear that Stone Ridge, just being the kind of the high reputation and well-plugged-in firm that they are, must have been going back and forth with the SEC. quite a bit to try to figure out if they could do this. And of course, the cash settled futures haven't existed for a very long time either. So that's another part of it. It hadn't, it's not a structure that would have been possible three years ago, certainly. And it's capped at $25 million. So maybe what's happening here is that the SEC is opening up a little bit and saying, look, try this out, $25 million. It's almost like a pilot fund. I'd imagine a lot of the money will come from

people that Stone Ridge knows pretty well. This is definitely not going to be the type of thing that you or I are going to be able to buy on a brokerage account or anything or through a financial advisor in the immediate term. But I see this as a huge step forward. I think this is a great development for the ecosystem and who knows what the impact will be on an eventual Bitcoin ETF, but this feels like progress. Yeah, I was actually looking at buying GBDC in my IRA yesterday and the premium is 23%, which is just, it's an incredibly inefficient asset. And it's also a situation where you expect the premium to eventually go to zero. So there's no reason to take that almost guaranteed loss.

Well, so the counter argument there would be there's no other way to get Bitcoin exposure in a brokerage account. And certainly not within an IRA style brokerage account. And so the argument would be, hey, if you think that Bitcoin is going to 10x, then the premium is just something that you hit. Yeah. So, yeah, that's the cost of doing. business with the ticker, yeah. But, you know, it'll be nice when you'll be able to buy a Bitcoin and Berkridge account without that inefficiency. And maybe that'll be when there's an ETF, and maybe it'll be when there's just more interval funds. Who knows? So a lot of people

probably be studying this, what they went through in order to get this approved. But good for them, Stone Ridge. That's great. Next story. Jack Dorsey just keeps on doing Jack Dorsey things. What a guy. Yeah, I've said this publicly. Jack Dorsey, is maybe my favorite entrepreneur active in the world today. He's just so impressive and has a huge amount of foresight. So setting up square crypto is obviously a huge boon for the whole industry. Some of the work they've been doing sponsoring, open source developers is great,

and it means that the number of entities that are acting as patrons within Bitcoin keeps growing. So power keeps on becoming less and less consolidated, which is great. And this latest one just takes the cake. Well, there's two. So which one do you want to talk about first? So let's talk about the pseudonymous Bitcoin developer that they sponsored. Yeah, what's his name? So it's ZMN, SCPXJ, or as we colloquially know him, Ziman's.

One of my favorite developers, this guy. So if you read the Bitcoin mailing us, he's actually quite active on there. So he's talked a lot about how to do smart contracts on Bitcoin, you know, Charming Coin Join. So a fairly well-known character in the Bitcoin dev ecosystem who chooses to remain anonymous. And it seems like he is anonymous even to his benefactors, which is pretty cool. What a cool thing. So Square is a patron for an anonymous developer.

And they said that he's going to be, he or she, I suppose, is going to be leaving his day job of the past 15 years to work full-time on Bitcoin as a result of this grant. Yeah. And if you're familiar with his work, he very prolific, very, he writes at length and generally has extremely compelling ideas for Bitcoin. So just really cool. But maybe that was a little bit overshadowed by this Twitter news. Yeah. So do you ever run into publicly traded companies that announce their intention to obsolete themselves or get rid of their largest monetization opportunity? It's a Clay Christensen case study in self-disruption and this overcoming the innovator's dilemma. Yeah, so Twitter or Jack Dorsey announced that they're going to be funding open source developers to develop an open standard for social media, of which

Twitter would eventually be a user or a client down the line. So there's no knowing whether this would pan out and whether developers that are from Twitter's culture would be able to build such a thing. But this is, this was just a mind-blowing development. I think Jack Dorsey is skating to where the puck is going here. To me, it's very clear that these social media platforms are incredibly politicized already. The CEOs and the founding teams are under a huge amount of political pressure to interfere with the system in some way. Obviously, governments, see it as a high leverage opportunity to alter narratives. And in many cases, they pressure the executive teams running these things

to configure things in an acceptable way. So this seems like it will not last in perpetuity. One alternative people talk about is federated models of social media. Mastodon is one example. I've been a user of Mastodon for a long time. A much more esoteric example that we've talked about here on the podcast is Erbitt. Erbit is trying to facilitate the building out of these kinds of standards. So there are some decentralized social media standards already.

We'll see what these guys come up with. Really exciting and prescient, I think, development from that team. I wonder what this is going to look like in terms of what platform they choose to use. He calls out the fact that it's going to be a multi-year approach here. They're not expecting this to be the type of thing that gets commercially adopted in the near term. but he also in the Tweetstorm called out the fact that they want to start to speak to teams that are building protocols. So that'll be interesting too. What this actually looks like from a network launch perspective, we're probably getting way ahead of ourselves,

but just how do you put this into the wild is a big open question. Yeah, you know, it's not clear they'll be able to actually produce anything here. But you can imagine there are still monetization models even on its centralized standard. for instance, you could pay Twitter to curate your feed in a specific way or to develop algorithms around curation that work for you, even if they don't strictly own the entire namespace. And even though they don't strictly govern the whole kind of polity in that case. So really fascinating development kind of validates a lot what a lot of people in the crypto industry of thought for a long time. What do you think happened to him in Myanmar when he went over there?

He just came back and all of a sudden he was adding Bitcoin to Square Cash. He's funding open source development. Now it's the Twitter thing. It's crazy. Something changed in Burma. I need to go on a two-week silent retreat in Burma. Maybe they'll come back a lot smarter. So did you see this Cracken news?

So Cracken is the latest exchange to launch staking as a service. It's going to allow its customers to earn proof of stake rewards on networks like Tazos and eventually other assets. So this seems to be more of a trend. Binance did this last week or the week before. Finance, Coinbase, they're all piling on. Yeah, Staking as a service. It seems very, very logical that the custodians for these assets

would bundle in staking. It's kind of something that you expect users will come to demand. Yeah, I guess you would theoretically, it would almost be a fiduciary obligation if you're holding customer funds to, you know, if there's an opportunity to make more money there. Or protect them from dilution. Yeah.

Yeah. It's kind of the same way the users demanded that exchanges honor their forks. Right. And most exchanges understood that this was a user expectation. So it seems like the same thing is happening with staking. There's definitely questions there in terms of what this means for staked protocols long term, whether liquidity will just accumulate in the exchanges because it's more convenient to stake there, as opposed to staking individually.

as we know lots of users like to outsource custody to exchanges, even though that's not strictly what they may have been intended for. So many exchanges now have come to resemble custodians and even have understood that to be a significant part of their business model. If this is the case and many assets accumulate on these exchanges, the authority in those networks becomes a function of a small consortium of exchanges and custodians at that point. So this is going to be a significant challenge that the people building these networks are going to have to reckon with. Yeah, certainly is. Well said. So there's two big financial firms that were in the headlines this week. I mentioned one of them earlier. So Reuters reported that ING, the Global Bank, it's based

in Amsterdam. They've developed, or they are developing a digital asset custody product. It's surprising to me that we're not seeing more of this. In the United States, there are a lot of issues around questions around the Fed, basically. Questions, there are large banks that are looking at this, but they question whether or not they can hold a digital asset under the Federal Reserve. So it's the same type of issue that broker dealers are dealing with around what is the definition of a good control location under 15C3-3. So super technical type of things that would structurally prevent a large bank from entering.

But it looks like ING is trudging along regardless. And if you think about it, this makes all the sense in the world. If you're a custodian of traditional assets, why wouldn't you be looking at crypto assets? You know, you could make this bet based on several different worldviews. One is you could, you know, you could look at it through the Bitcoin lens. You can say, here's this alternative asset, this digital gold type of thing that customers want to hold. And clearly there's a premium that you can make by holding it. you can certainly charge more for custody for Bitcoin than you could for a traditional kind of

an equity or fixed income instrument. So there's a kind of a clear case there, not to mention the fact that it's a foundational building block to get into other things like lending and asset servicing. You could also come at this from the perspective of tokenization. And I certainly am not a big proponent that we're going to have public market equities be tokenized, but I think that there's a real use case here around some of the less liquid assets, traditional assets, and even digitally native assets, where we're going to see security tokens emerge here. And if you can build a custodian for, you know, Bitcoin, a lot of that architecture theoretically would be extensible to tokenize things.

And so it's surprising to me that this is not being seen more as a foundational play for a variety of digital assets in the future and that we're not seeing more firms jump into this. Certainly, we're aware of a number of firms that have skunk works efforts that they're just waiting for regulatory approval in the United States. But ING is one of the first that you've really started to see news leak out, which is positive. And what's the other big firm that has been talking about crypto lately? Well, Schwab had an annual study that came out around the holdings of their customers in self-directed retirement accounts. And so this was a a report that broke down millennials, Gen X, and baby boomers.

And what was interesting is that the fifth largest security held by millennials on the Schwab platform is the gray scale Bitcoin investment trust. That's crazy. Like that's, I could not believe that it was so high. Millennials love Bitcoin. It's so. Zoomers love Bitcoin. But, all right, so you would logically say, okay, so, you know, Schwab has this insight.

What are they doing about crypto? Well, they are potentially buying TD Ameritrade. Well, TD Ameritrade is doing a lot with crypto, and certainly that's an acquisition. I don't think they're acquiring TD Ameritrade based on their crypto business. But as far as I can tell, Schwab is doing absolutely nothing in blockchain or crypto. I've never been in a room with a Schwab person in all the years that I've been working in this industry. And as far as I can tell, they're just kind of looking at their primary competitors across all their lines of business who are doing things, and they're just kind of watching it pass through.

So you have, they're a largest competitor on the RAA custody side is Fidelity. We know Fidelity is doing. I mean, building custody and trading business has over 100 employees. Okay, well, look at the emerging brokerage competitors, which, by the way, they have a lot of millennials, and you might want to have those millennials as we go through the largest intergenerational wealth transfer from the boomers to the millennials. So like a good demographic to target here. So look at Robin Hood, look at Square Cash. They're all on the cutting edge.

They're both on the cutting edge, rather. offering Bitcoin and crypto assets. So someone should wake up at Schwab and read their own report. Yeah, we'll see if this TD acquisition moves the needle on the crypto front. They're certainly acquiring some very talented crypto-focused staff. Yeah, they definitely are. Did you see this thing about Digixt Dow? Yeah, so Digixt Dow is such a funny case study.

I actually love this one. So not the token itself. I don't own it. But it was initially an ICO, which was about $5 to $6 million. Collected an ether back in 2017, if I recall. The idea was to create a gold-backed coin so that the DGD tokens you had would be backed by some gold and some vault somewhere. And there was, I guess, some Dow element, so, you know, you could vote on proposals. They held the ether.

It appreciated a lot. And then they held it all the way down, but it's still worth quite a good deal. I think it was worth 50 to 60 million right now. they have also, as many of you know, tokens in an ICO context are not typically a claim on balance sheet assets of the organization that typically is entrusted with running the system. So if there's a foundation or there's a corporation and they hold ether or Bitcoin on their balance sheet, the tokens themselves are generally considered not a claim on those, those assets, even though they potentially should be, and that's how equity works and debt and so on, or at least in, you know, more developed capital market situations, investors do have a claim on those assets, even if it's an oblique claim. So DGD did something quite new for the crypto industry,

which was they created this proposal to token holders that they could essentially trigger a one-time liquidation of the ether held on their balance sheet, and investors would receive their pro rata share of that ether, which at the time of recording this podcast, the outstanding ether is worth more than the market cap of all the DGD tokens. So this would actually be a good trade. Trading below book value. Yeah, so this is the equivalent of a stock trading price to book ratio lower than one. So many people have speculated that this might be opening up an avenue for activist investors to come in and convince the issuing team to return that capital to investors. It hasn't happened so far. I'm sure it'll happen at some point. This is a very interesting case study. If I were a DGD investor,

I would ask for my money back. Yeah, I guess why wouldn't you? Yeah, so maybe expect fireworks on this one. We'll see. Pretty interesting. And there's a few of these companies or projects that are trading below book value based on some of the wallet tagging that coin metrics guys have done. So maybe we'll see more of this. Did you see this Poloniac's cold wallet analysis that Coin Metrics did this week? Yeah, it tells a rather sad story. So one interesting thing about blockchains is, of course, that you can audit the various large entities that use the chain.

if you do a little bit of detective work, so coin metrics, part of one of the things they do is tag all the big exchanges, including Poloniacs. And there's this interesting chart floating around where they've shown the cold wallet balances, so the Bitcoin that Polonix depositor is held, you know, via Poloniacs. The sale of Poloniacs to Circle happened almost exactly at the peak of, of their balances, so when Polonix was the most influential was largest. And then there's a long term. There's a slow decline in those balances as users left the platform gradually.

So it tells a story that that acquisition of Polo was extremely good timing for the founders and really bad timing for Circle. Well, maybe Justin's son will revive their fortunes over there. We'll see. So we have some exciting podcasts coming up in the next couple of weeks. We have Terrence Dempsey, the head of product at Fidelity Digital Assets on Monday. That was an exciting one. Yeah, and Terrence, to my knowledge, has not done a podcast before. I think it's his first podcast.

So this continues our tradition of getting relatively in the weeds, technical guys that know what they're talking about and are deeply entrenched in some specific corner of the industry and servicing their views for the first time. So really excited to share this one. And then after that, we have Dave Ball, That was an exciting one. So Dave is a very analytical person, and so we spent a lot of time talking about who's actually using these public blockchains. And Dave is not ideological at all. He's really just looking at the data.

And some of the things I think people will be interested in. Some of them, I think, might be somewhat controversial. I mean, we talk about Tron and the fact that it appears that Tron actually has real users. And, you know, if you look at some of the metrics, it would lead you to believe that they're actually building. a community that has people building D-Apps on top of it. So interesting to hear some of that perspective. Jury's out on Tron. I guess.

I mean, I have a very low opinion of the project, but they bought BitTorrent. It looks like they bought Steam this week. So there's a lot of marketing hype there. I don't know how much of it is real, but, you know, people are building stuff on Tron. How you actually acquire a decentralized protocol like Steam is a question to which I'd not know the answer. So I wonder if they're just buying that. that interface, I don't know if they're actually buying the protocol. I mean, sure they're just going to launch their own token, right?

It remains to be seen. Steam is one of the very few kind of use cases in crypto that people, including myself, have actually found useful, kind of, you know, uncensurable, unsopple, social media. I found it to be a good idea. Obviously, the token economics were really zany and didn't make any sense at all, kind of a classic Larimer situation. Yeah, Dan Larimer founded it. Yeah.

He's a fan of incredibly intricate, possibly overly intricate token economics. Very complex. But I found Steam to be fairly useful in its own right. It certainly makes a lot of sense. I don't think the implementation was really up to snuff. And then we recorded an episode with Joe Luluz from Bison Trails yesterday. And they're an infrastructure company that is helping people stay, helping people participate on these chains as well and that was a great discussion so we have some great content

coming we're going to be doing another weekly roundup next Friday as well and we'll have interviews carrying you through the holiday season so I think that's it thanks for listening have a great weekend everyone