On The Brink with Castle Island - Weekly News Roundup 4/17/20 (Libra 2.0, MKR lawsuit, and Grayscale's big Q1) (EP.68)

Episode Date: April 17, 2020

Matt and Nic review the top stories of the week in the cryptoasset industry. This week's topics include: Deal activity More bailout angst A discussion of Libra's second iteration The lawsuit against the Maker Foundation Grayscale's monster Q1 Blogs we enjoyed reading this week

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 Concentive 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 a Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this week's episode is brought to you by Zen Ledger, which is one of our portfolio companies. Zen Ledger is the best software to get your crypto taxes done fast and easy.

And you have a couple of extra months. They have the best customer service. You can do it by phone, email, chat. They'll actually work with you to complete your taxes. And if you have a CPA, you can invite them into your process. You can do tax loss harvesting and you can get a full audit report. And as a special offer for listeners of this podcast, you can type in Castle 15 to get 15% off. That's Zenledger.io.

Paying your taxes this year, Nick? Well, I feel compelled to, you know, but I'm not happy about it. And I think the case for paying one's taxes gets weaker and weaker every single day, you know, given the fact that the government has an apparently unlimited ability. to finance itself through issuance. Yeah, there's a lot of money being printed right now. A lot of bailing out, too. Yeah, I'm not happy about the bailouts in case you haven't notice.

Yeah, so you wrote an article for Coin Desk this week in the title. I know you don't do the titles, but the title was bailouts don't save the economy. They prop up companies that should be allowed to fail. So how do you really feel? Yeah, you know, it's crazy. I come up with great titles from my articles. and then they just change them. Yeah, what did you originally have?

Actually, in this case, it was definitely an upgrade. I don't even remember what I had. But, you know, basically the point is, you know, actually if you look at the previous airline bailout after 9-11, it's kind of similar. So there was a big old bailout because, you know, there was an exogenous shock. There was nothing that could be done

or it wasn't really the fault. The airlines per se, that was how it was justified. and over the next 10 years, every single major U.S. airline entered Chapter 11 bankruptcy. So they were all on a negative trajectory anyway, and the only thing the bailout accomplished was just deferring that necessary reorganization. And it meant that the sector was, you know, overly bloated for a period of time instead of shrinking to the size that it, you know, the market clearing size. eyes. And so I see a lot of parallels between that situation and today. So today you have a situation

where lots of companies are apparently faultless but are still suffering. So people say there's a moral justification for the bailouts. But then there's always this logic that, you know, we can just freeze the economy in amber and go back to the pre-COVID-19 world. The truth is we're not going back. The world after COVID-19 is going to look really different. There's probably going to be some sectors that are structurally decline in importance like travel, tourism, you know, education maybe. And effectively bailing them out is a way of, it carries a implicit assumption that their stature and size will be and should be unchanged from the pre-virus era, when in fact they might just, you know, structurally decline in importance. And in that

case, the government is trying to forestall or prevent a necessary reorganization. So that's basically the point of this piece is that, again, it's a, it's a distortion. And if we just let the market clear, then we're going to proceed to just a more efficient use of society's resources in a faster way. Yeah, I think it's a great point. And it sort of reminds me of some of these, you know, you don't want to put into effect, effectively state-owned enterprises. A lot of the critiques of the way China has centrally managed their economy throughout the years is that they prop up these SOEs.

And in order to spur GDP growth, they basically just build things, right? So that can only go on for so long. And you're going to enter this period in China, certainly, where you have really de minimis GDP growth because you just can't keep on doing that. And oh, by the way, you're just taking kind of people that could be put to more productive uses elsewhere. I mean, you know, think of it in the startup context where, you know, you don't want to keep on bailing out a startup because maybe a startup should fail and the people that are working for the startup should go on to start other businesses and go work for companies that are actually working. And there's just a lot of dead time there. Exactly. So the failure itself is a signal, you know, that a certain use of resources unproductive. You know, the other common argument I hear as well, like the airline industry employs a lot of people.

Well, fine, but if all you're trying to achieve is just putting food on the table for the employees, why don't you just go direct? Just go direct. Go UBI, increase the share of handouts that are directly to individuals instead of processing it through this corporate lens, which rewards the hedge fund owners which own the equity in these companies. Just go direct. You know, I have no problem with the handouts to individuals. I have a problem with handouts to individuals where it's only three cents of the dollar, which are going to normal folks, and 97 cents on the dollar to the owners of assets. Another great point. I mean, and I think Shamath said this very eloquently on CNBC a couple weeks ago. It's, you know, the employees will certainly be impacted in the short run, but, you know, there will be an airline industry here. There's a market clearing price to put capital into that business on the private market. and it's certainly lower than what the government is going to offer.

But these companies will go through bankruptcy. They'll be restructured. There will be the creation of employee option pools. We have ways to deal with this that don't require such interventions. And certainly the other thing is just that who's negotiating these deals for the U.S. government? Why are these grants? I mean, shouldn't we get a real negotiator in the room here?

Are we just getting swindled? They should be warrants or they should come bundled. with call options, with super low strike prices. I mean, if the government is going to, they shouldn't be grants, the government should be getting a good deal out of this. But they're not being structured in like a logical way here. They're really not. The government has no upside from these.

Yeah, it's really, it's blood boiling, really. The other thing is that people seem to imagine that chapter 11 is like this catastrophic, terrible thing. It's just the most historical thing ever. Airlines, literally all of the major carriers in the U.S. kept flying through Chapter 11. It seemed totally normal from the perspective of, you know, the passengers. It's just they just so happen to be

undergoing reorganization. So it can be done in a non-disruptive way. It's just that the cap table gets reshuffled. Yeah. I couldn't agree. more. So we'll see. I mean, this will be playing out over the next, you know, few weeks and months. I think we've already lost the battle when it comes to bailouts, to be frank. The only thing we can do now is just educate people and reveal to them that they've been, uh, they're the suckers, basically, they've been swindled. Oh, yeah, it's over. I mean, it's, it's clearly happening. So it's all we can

really, all we can really do now is just report on the facts. Exactly. Speaking of facts, what, uh, what happened this week? Well, we had a couple of really good podcasts. I think we're going to give ourselves another pat on the back for some good podcast this week. So we had Bob Davis, the founder of Lycos, general partner at Highland Capital Partners, really just an awesome entrepreneur, talked about his entrepreneurial journey, starting Lycos at the early days of the internet, talked about how he's invested in early stage technology companies throughout his VC career at Highland. And then talked a ton about blockchain technology. So he just led, along with Sean Judge, Highland Series A investment in coin metrics.

And then we talked a lot about Bitcoin. And Bob's bullish. It was awesome to hear. He's really done his homework. And we talked about Bitcoin as a store of value asset and some of the, or an option on a store of value asset, I guess is a better way to put it. And some of the infrastructure being built around trading and brokerage. So I definitely recommend checking that episode out. And then you had a really good one with Brian Klein at Baker Markwar.

Yeah, this was a fun one. And Brian's the second lore that I've had on the show. The other one was Jake Trevinsky. So Brian, you know, very well known in the crypto industry, federal prosecutor who switched sides and, you know, joined Baker Markhart to represent individuals, corporations, in particular, you know, in some of these cases against the SEC. So that's a pretty fun dynamic and against. FinCen. And he's represented some really interesting folks, many of them pro bono. So it was a really fascinating interview. And he put up a spirited defense of the saft, which I wasn't expecting. But yeah, I mean, I guess maybe it's not over for the saft yet, TBD on that. Yeah, he kind of put you in your place on the saff there. I wasn't expecting that either. But I have to say if I ever get in trouble, I want this guy representing me for sure. Yeah. And then there were a bunch of deals this week, which I think last week when we put out our newsletter, there were no deals, which was a little depressing. But I'm sure all these deals happened sort of pre-COVID, but let's

rattle off a few of them. So crypto finance AG, which is a Swiss crypto asset manager, they raised $14.5 million in a series B. And that had a number of participating firms. Then you had shapeship. has acquired a non-custodial wallet company called Portis. So M&A activity there. And then maybe let's talk about this one. The big M&A activity of the week is Bitco, the crypto asset custodian. They acquired Lumina, which is a crypto asset portfolio tracking platform. And the way I read this is just Bitco's effort to move more and more into trading in prime

brokerage. Pretty clear that custody is the beachhead. And then you move into more high volume, high margin products like trading. prime brokerage. For sure. And Bicco seems to be a winner here in terms of custody. It seems like every week I hear about an exchange they'll be using Bicco as their exclusive custodian. But it looks like they're trying to own the whole user relationship here now. Yeah, I mean, Bicko is just really executing well, very quick on like speed to market for them is great. So they have the ability to onboard exchanges really easily.

And then a staggering amount of Bitcoin transaction volumes going through their multi-sig. So you can see on chain that this is very, very, very popular service. Another deal that happened this week, DeForce Foundation, which is a Chinese decentralized finance platform raised $1.5 million from multi-coin and Huobi. And then the last one of the week is Atomic Loans, which is a Canadian company. that is building Bitcoin back to lending instruments. They raised $2.45 million in a round led by initialized capital with participation from Morgan Creek. So a bunch of deals. Good to see some deals. Yeah, the crypto capital markets are still churning. We thought they were done for a second there,

but they're still going. Still going. We'll see what the timing looks like in the weeks to come. And then what I want to talk about a little bit now is Facebook's revised white paper here, or should I say Libra Association's revised white paper. And there's a bunch of stuff to get into. So why don't we dive into it? What was your take? And maybe we can just talk through some of the changes that were proposed or, I guess, agreed upon.

Yeah. So we'd heard it had been leaked that they were planning on doing, you know, sovereign currency denominated coins in addition to retaining the Libre Reserve. So that wasn't a surprise, but confirmed now. They're doing single currency stable coins, and they're keeping this Lieber Reserve coin, which will look a bit like the IMFSDR. The other thing is that they've completely compromised

on their plan to become decentralized, whatever that means. Not surprising. I think it was always a bit of a pie in the sky idea. You know, now they're going to remain. just about as centralized as they are now, look more like a cross-jurisdictional PayPal, something like that. It seems like they're compromising in terms of, at least to a significant amount,

in terms of third-party wallets. So initially it was said or implied that you would be able to use and transact with Libra you know, outside of their walled garden. And it seems like at launch that's not going to be possible. With the caveat that they do still want to get there, so, you know, let someone transact with their assets in a third-party wallet without their knowledge. But they would put limits on those transactions

in terms of transaction size. They put a limit on your balance if it's in this, you know, this third-party model. and that's not going to be available at launch. So it's kind of a significant compromise on the original vision. That said, I think it can still work, actually. Yeah. You know, think about how useful it would be if Venmo worked seamlessly

between even just the U.S., Canada, and the EU, which, you know, is currently not the case. People are saying it's just PayPal. Well, you know, Facebook has a huge number of users globally, and if they can unite them on the same payments network, it's still probably pretty interesting. Yeah, I'm going to take a pro-Facebook stance on this. I think this is entirely rational what they're trying to do here,

and it's probably going to work. So my take on it is, you know, this whole like we're going to be decentralized thing, that was kind of a joke in the first place. If you look at the decentralized, quote-unquote, decentralized protocols built on Ethereum right now, none of them are actually decentralized in the first place. So I don't even know what we're talking about here. These guys are trying to build a payments network that becomes ubiquitous. They don't actually need it to become decentralized.

So maker is not decentralized. Compounds not really decentralized. So let's just forget about that argument. So I'm not offended by that at all. Foregoing this transition to a permissionless system, I think this is a little bit of a tough one. The implementation detail certainly matter. I think the big question is,

are other people going to be able to, are other developers and companies going to be able to build on top of this platform? And that's the big question. Developers like to build on open protocols. And so we'll see exactly what that means. It's also a slight change in the asset mix, it looks like. And I don't quite understand this, but it looks like the basket is being said to alter a little bit. They're going to focus on short-term maturity, low-credit risk, and high liquidity instruments.

So I don't know what that is, like, especially in this time frame, what exactly is a low-credit at risk and high liquidity instrument. I mean, like dollars. Yeah. So, I mean, that all sounds fine on the face of it, but implementation details matter. But this is going to work. I mean, they're going to launch something that sort of looks like Venmo, cash app, PayPal, whatever you want to have, you know, as a comparison.

It's not really a competitor to Bitcoin, Ethereum, or the public blockchain networks. And it's something that the regulators can actually get comfortable with. So it brings a new front door to payments. for potentially almost everyone in the world. So it's probably going to be a home run economically. I think so. Although the monetization is interesting because if you're in a, many people have made this point,

but if you have negative interest rates and you hold billions of dollars in a bank account, that's costing you a considerable amount just to have those dollars to be custody with the bank account. And if you want to get back into the positive yield territory, you have to go further up along the risk curve and start behaving more like a bank. And then if you read the white paper, it's interesting,

they talk about not only being fully collateralized. They talk about having a buffer, so really being over collateralized with something like treasuries. So I don't see how exactly they can make a net interest, come here. They're obviously not paying interest to holders of Libra, but in a negative interest rate world, they're not making any money on that float. So, you know, the only way to make money on this is to institute fees or something. So economically, maybe it works if it's a loss leader, and it encourages people to stay in the Facebook Wild Garden, for instance, and, you know, consume Facebook's products

and so on, but it doesn't monetize that well, at least with interest rates where they are. Yeah, so that's an interesting point, but just because it doesn't monetize on net interest income doesn't mean that there aren't monetization features that Facebook could eventually implement. Obviously, advertising would be a big one. So just getting more kind of the ability to target ads within that type of a platform, I think, will be interesting for them. The other thing is they could upsell other financial services. So they could upsell index funds.

They could create their own brokerage platform. Square is sort of moving in this direction as well. So just get more people on the platform is their whole thing, just eyeballs and individuals. That's the play and become more and more intertwined into their everyday lives. So you have the social graph and now you're about to have the monetary graph. So from a purely economical standpoint, this is pretty rational, I think. Yeah, it certainly makes sense. And it comports with Facebook strategy of just effectively being, for many people on the earth, their only internet application that they use.

Totally. Now they would have the full suite. One last thing that I found was interesting. So they do talk about how they would have transaction limits on these third body accounts, which they call unhosted wallets. So these are wallets not. you know, governed or controlled by Libra. But then, you know, you, in a kind of vanilla blockchain, what, to impose those limits, you'd have to have the amounts of transactions be in clear text, as is the case with Bitcoin. That's not the case, for instance, with Monaro Zcash. So, but, you know, so, so that seems to be slightly in tension with this objective of knowing the transaction amounts. So I'm wondering if they would, this seems like an opportune place to use zero knowledge proofs

to prove that a transaction is below a certain size without revealing the actual contents of the transaction to everybody that's scraping the chain. That's interesting. You know, I think that could be an interesting application. I think they probably don't want all of the transactions amounts to be in clear text that hit the chain. that allows for too much analysis.

And that's like allowing millions of people to post their pretty intimate financial information on chain. So TBD on that front. But I did like this. I thought it was a clever intuition behind this notion of having limited transaction amounts for unhosted wallets, wallets which are outside of their control. That seems to mirror the way that cash works. You know, you can make smallish transactions with physical cash.

but if you start to make really big ones, then eventually people are going to ask questions. I agree. I think that we also just need to step back a little bit. And this is going to be a huge overall positive for the industry. So so many people that are not wrapped up in this industry day to day are just going to read this in terms of Facebook is actually launching their blockchain project. We're going to get more infrastructure built. We're going to get more awareness. More people are going to become aware of public blockchain-based assets.

So I'm rooting. for it. Well, it's a little bit of a compromise on on the more expansive original vision, but I'm very interested to see how it plays out. I think it's part of their whole plan. I mean, they knew that they had to, they put forward a big, bold vision, which presumably they wanted to do. And now they're in a position where they can roll that back a little bit and get the regulators on board with it. You could argue it's a game theoretically rational move. So did you see this, this, class action lawsuit leveled at the Maker Foundation. Yeah, so I'm kind of debating how in the weeds I want to get on my understanding of this

maker attack, but it seems to me like there was an incredibly sophisticated attack on the network that resulted in about $8 million worth of ETH being essentially absconded with on the network. I don't know if you call that a theft or if you call that a clever kind of manipulation of how the system is designed to work. But I think there will be a lot of analysis of how these transactions were actually originated in looking at Mempool data, looking at on-chain data. It's going to be fascinating. This $28 million class action lawsuit could spur a level of blockchain forensics that we've

never seen before. It also, it's an interesting case study in, you know, what Angela Walsh calls the veil of decentralization. because basically if you read the lawsuit, which is a very easy read, it alleges that while Maker claimed that the system was open and not controlled by any one entity or collectively controlled by the Maker token holders, in practice the Maker Foundation was really the puppet master behind the scenes and effectively controlled everything since they had the line share.

If the Maker tokens, they could influence those results, and, you know, they wrote most of the software. So even though, you know, it's held up as one of the more, you know, it believes or it represents itself as, you know, decentralized in some respects, this lawsuit alleges that that wasn't really the case and tries to sort of pierce that decentralized veil and find the specific entities and individuals that really controlled the system. So it'll be a significant test. I found some of the claims to be pretty persuasive, to be frank.

So what do you think the, I mean, I'm not going to ask you to predict the future here, but you think they have a pretty good ground to stand on here? Well, a lot of the case rests on the representations that the Maker Foundation made about the maximum amount you could lose in a liquidation. So currently that's 13%. So a lot of the marketing material said, you know, if your CDP becomes underfunded or below the risk limits, it gets liquidated, right? And that's how it's meant to happen. What happened in this case, and then you'd lose 13% as a penalty.

In this case, CDP holders lost everything because the set of NADs that are meant to come in and buy up and liquidate those insolvent CDPs, those depositions, they weren't able to make those transactions. they weren't able to make those transactions during the 10-minute window that they were required to. And, you know, a malicious or hostile or adversarial entity was able to buy up insolvent CDPs at zero, at zero cents on the dollar, which meant that the CDB holders suffered a total wipeout, total loss. And so you compare that with what the Maker Foundation had potentially been guaranteed, or implicitly stating that the maximum loss was, you know, 13 cents on the dollar, you think the plaintiffs have a pretty good case here, even though it looks like there was like an adversarial attack or an exploit here.

So it'll be an interesting one in track. One of the things that's interesting is that you never know who did these attacks, obviously, and maybe we'll never know. But in bank robberies, you always kind of find out who robbed the bank. I can't think of many huge thefts over the course of history where we just have absolutely no idea who did it. I guess the Isabella Stewart Gardner, what's that museum in Boston that had the big art theft is one that comes to mind. But you don't have a ton of those in the real world. But how about like the Tao attack and this Maker Foundation attack?

I guess Gox, right? We don't know who did that. There's just been so many of these crypto attacks that we don't know who did them. and maybe we never will. It came out today. It was reported that I believe the State Department thinks that North Korea is behind $2 billion worth of attacks on crypto exchanges. I know that had been rumored for a long time,

but I wouldn't be surprised if North Korea was behind a lot of these because it's, you know, it's an effective way to acquire lots of money for relatively little effort if you know what you're doing. Another attack that comes to mind that resembles the maker attack is actually the FOMO 3D, the resolution of the FOMO 3D experiment, which also involved effectively denial of service on other transactors for a specific period, is actually exactly a very similar scenario. So I wouldn't be surprised if there was like a super sophisticated group out here that's coordinating these attacks on different systems. It's a good book to be written there if this ever becomes public. What a fascinating kind of event. I'm sure that the chanalysis is of the world are having a field day looking at some of this data.

It's not easy to unpack, though. So more Square News this week. The U.S. Treasury Department approved Square as a lender for the SBA's PPP program. So it looks like they're going to work with a Salt Lake City Bank. But Square is kind of taken over the world. Yeah, they're a really strong force for financial inclusion. And I remember when Jack said, you know, work with us, let us help you distribute out these funds destined to individuals because we cover a lot of people that don't otherwise have bank accounts. And some people turned up their nose at that.

But it's true. Square covers a large portion of the American South, people that aren't strictly banked. They're kind of killing it these days. Yeah, they really are. And then another story that I thought was interesting. So Trade Station, which is a traditional company. So they're an online brokerage company. I do a bunch of white-labeled stuff, I believe, for a number of retail brokerages.

So they're integrating and they're building out their crypto asset efforts. So they're integrating with ERISAX as liquidity provider. I love to see more traditional folks moving into this space in a real way. And that's what Trade Station is doing. Along those lines, well, I guess a little bit of a little bit of a little bit of a a detour, but speaking about just national, the kind of governments moving into this space, China is national digital currency, the DCEP. Did you see that they're reportedly going to be going live with local governments in May?

Do you care? Yeah, I saw some screenshots on Twitter. You know, I don't think this is going to surprise anyone. It'll be a surveillance tool. It'll probably be very convenient, but it'll almost certainly come with the cost of personal liberty. So U.S. policymakers that might be influenced by this, I think we'll learn that a system like this is never going to fly in the U.S. This is going to be 100% surveilled down to the nickel, right? So it'll be full visibility. And I don't think it should be celebrated.

Yep. Maybe someone to celebrate would be Grayscale's Q1 performance. That was pretty strong. If you're gray scale, you're definitely celebrating right now. So they added $5003.7 million in total AUM in the first quarter, which is an all-time record. And about 389 million of that inflows into the Bitcoin investment trust. So really awesome headline numbers. I guess let's peel back the curtain a little bit. Yeah.

So one thing we've talked about quite a bit on this podcast is, what do the inflows really mean? And, you know, we know, a lot of people know this. There's this trade that people make where they, well, funds specifically, where they buy these private trusts at NAV. They wait 12 months. It was previously now at six months for Bitcoin. And then they can liquid it at market price and collect the premium.

So in previous versions of this report, at Grayscale reported the in-kind contributions. That is for GBDC folks that would be contributing Bitcoin as opposed to dollars. And that was always very high, 70 to 80%. And it was assumed, you could sort of safely assume that those in-kind contributions were not net new kind of dollars flowing into Bitcoin, the asset class, but instead they were funds performing this trade for a 12-month period. Grayscale didn't report that this time, though. They stopped last quarter, actually.

So we don't have a sense exactly of what fraction of that is people making the six-month arbitrage trade on Bitcoin versus folks just buying GBDC because they want to be long Bitcoin. But regardless, this is a monstrous performance. I mean, half a billion in a quarter. It's crazy. Yeah, it is. It's a really good performance.

And I guess it doesn't matter at all, really, if you're gray scale, kind of who's participating, who's participating, how they're participating in terms of the assets going in. The one thing to just be clear on, if you're an industry kind of onlooker, is I wouldn't take this as a representation that there's kind of a long-term by-side interest necessarily in, in crypto as an asset class, it does seem like there's a big portion of this that is just there for the trade.

Now, that being said, the counter argument to that is that, you know, after six months, which it used to be a year, but now I think under Rule 144, it's six months where you can freely trade these on the OTC QX market. And you can buy like GBTC under, I think the ticker, well, you know, the ticker is GBTC for the Bitcoin won. Ethereum has one. and then there's a digital large cap fund. But it doesn't really matter, right? So if you're hedge fund buying this as part of a trade, like the shares still exist in the market. So a retail user is going to be buying that

after six months or a year, whatever it is. So it's, I don't think it takes away from, you know, the performance of the product at all. Yeah. I mean, it's certainly, if anything, it's good for retail, the fact that this arbitrage is being closed because it means their exposure to Bitcoin through this product is more efficient.

The premium on GBDCs in the single digits today, which is very low relative to where it historically is. And something like 120 million worth of these subscriptions that were issued about six months ago, they mature next week. So I'd expect the premium to fall even further to zero or potentially negative. I mean, you wouldn't expect it to be negative for long.

It has flipped. briefly negative in 2015, I checked. But it's typically in the 20 to 40% range. I would expect that the premium will be very low for the foreseeable future unless Bitcoin has, you know, an eye-watering bull run in which because retail overpowers the funds that are closing this arbitrage. I was going to say, are there any, you know, things happening on the Bitcoin protocol on the next month? Oh, yeah. Yeah, the halving's happening. But we're not that bullish on the halving. Well, you're an efficient markets guy, but I think you're wavering a little bit. I think there's going to be a lot more kind of general interest in Bitcoin over the next

month with the halving and just with all of the bailouts, don't you think? Yeah, I certainly agree. I think the monetary chaos that's happening out there is a bigger catalyst than the halving. You're an efficient markets guy on the halving? I don't know, man. I think the having is price positive. marginally. You know, it's only a difference of 900 coins. That's not that much. That's not that much coin. Well, my net net on this report is I really appreciate that they put out all this data. I think it's really good for the industry.

And it shows just a level of transparency that you don't see in a lot of companies. So I hope they keep doing it. We'd love to see what the paid and kind number is. But really, you know, kudos to them. They're building a great business over there. Yeah, and these reports are great. If you're listening, Grayscale, please bring back the in-kind line item. That would be great. What did you read this week besides your Coin Desk article? I thought Haseu's piece on Deribit Insides on the Onion model of blockchain security was really good.

That was awesome. Yeah, just peeling back the layers of how and why blockchins like Bitcoin are secure. I thought it was really well done. Yeah, his point around there being a social consensus is one that you don't really hear much about, right? But there is this undeniable social consensus layer that sits upon Bitcoin. And we've seen it in the past when you have these inadvertent bugs get inserted that everyone just kind of says, well, you know, that's not how Bitcoin's supposed to be. We're not supposed to have infinite inflation. Let's just roll it back.

We had that big one in 2013, I think. So it's a great point that you don't really hear all the time. Anything else? I enjoyed Christine Sandler's appearance on BlockFi Live. Christine is the head of sales and marketing at Fidelity Digital Assets. And BlockFi is putting out some great content throughout this lockdown. So check that out. So the coin metrics folks did an analysis on USDC growth over the past few months.

And I thought that was really interesting. USDC has really taken off. Yeah, people focus on Tether, but USDC has had a great couple months. Interestingly, the growth coincides with that global risk-off event we had in mid-March. But also, that's right when Circle announced their new suite of platform services on USDA. So it could be one or the other. I'm not sure to what it's attributable to. Yeah, so it'll be interesting to see how USDC continues to grow.

There's a lot of competition, but you have circle behind it, you have Coinbase behind it, and there's a lot of, you know, there's a lot of participants in this network, so we'll keep an eye on it. They're inching towards a billion. I'd be shocked if they didn't get to a billion this year. All right, so I think that pretty much covers it in terms of content for the week. What are you doing for your lockdown weekend? It's my dog's birthday today, actually. It's Penny's third birthday. Oh, happy birthday.

Yeah, I was thinking of grilling her steak. Every year on her birthday, we give her a steak. Does she eat the whole thing? Yeah, and then she takes a nap. She passes out. All right, so we'll be back next week with a few new episodes, some exciting interviews, and another episode on Friday.

And everyone, have a great weekend.