On The Brink with Castle Island - Weekly News Roundup 5/1/20 (SEC vc. SAFTs, Telegram, Ebang IPO) (EP.74)

Episode Date: May 1, 2020

Matt and Nic review the top stories of the week in the cryptoasset industry. This week's topics include: Deals of the week The SEC's court battle against the SAFT on two fronts Ebang's IPO announcement  a16z Crypto's new fund FTX's entry into the US Telegram's new offer to investors Brian Quintenz leaves the CFTC

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 another episode of On the Brink. I'm Matt Walsh. And I'm Nick Carter. And Nick, the price went up this week. Number go up. It sure feels good when it goes up for, in fact, it's gone up for seven weeks straight.

It's pretty good. When was the last time that happened? The last time that happened was in May 2017. I think like something good happened after that, but I don't remember what exactly. Oh man, I just feel better when the price goes up. So at the time we're recording this, the price of Bitcoin on Coin Metrics is 8791. And you know what the rising price of Bitcoin means everyone should be thinking about how secure your Bitcoins are. So this week's episode is timely. It's brought to you by Casa, which is one of our portfolio companies. How confident

are you about the security of your Bitcoin? Every quarter we've been hearing stories about exchange hacks, a new exit scam, a friend who lost their pin, or someone who passed away and had their family come up empty-handed. The best way to keep your Bitcoin safe is to hold it for yourself, and CASA is the easiest and safest way to do that. They have one of the most well-respected teams in the industry. They have amazing design, 24-7 support, and they have some great introductory packages available right now that were previously only available to ultra-high-net-worth individuals. So if you're ready to do a security upgrade, you can get started with a membership as low as $10 a month

and use the coupon code Castle to get 10% off. Head over to keys.casa to get peace of mind that your Bitcoin is safe. Pretty timely with the security solutions right now. Yeah, a lot of people are going to be wondering about that right now.

People who bought the dip, hope you did. I've been auto-DCAing on river. It kind of changes the psychology. You don't worry that much about the dips once you start auto-DCAing. I know. I've been using River Ferrado DCA and then also Block 5, but just awesome. Awesome to see. You know, it puts me in a better mood, but it's not about the price. It's about the underlying technology, right? That's the theory, yeah. The tech, well, Bitcoin, nothing much has happened in the last year.

I also heard that BIP taproot has been potentially delayed another six months. I think it's actually unlikely that we get taproot. or schnor in 2020. Interesting. And why is that? Well, there's just more review that needs to be done. It's fairly complex. You know, it's a really material alteration to Bitcoin. So it's going through the committee right now.

We'll have an ossification of that base layer at some point. But I was kind of joking about the underlying technology, but almost more referring to some of the infrastructure getting built with the companies as opposed to the protocol itself. But we actually had to. a couple really good episodes talking about some infrastructure this week. So we had Peter Johnson, who's the head of fintech and crypto investing at Jump Capital. So he came on the show early in the week, talked about fintech infrastructure, talked about crypto infrastructure. Jump's doing a ton of stuff

in this space. They're a proprietary trading shop, obviously, have done really well with just traditional asset classes and moved into crypto a few years ago. And Peter's super thoughtful. So that was a lot of fun. And then, had Mois Kahari on, actually. So Mois is previously a senior technologist at State Street and the London Stock Exchange. He left to start Manetu, which is actually one of our portfolio companies, and they're in the data privacy space. They're using blockchains to just timestamp audit logs. So we talked about Manetu, talked about privacy in general, why people are starting to care more, and also talked about the state of some of these crypto buildouts at large enterprises.

And not surprisingly, it tends to be a little bit harder to build some of these things when you're a bank or a broker-dealer. So that's why we're seeing a big kind of opportunity for startups to just get ahead of the curve. And you've seen this with the custody solutions and the exchanges, certainly. Yeah, I don't know if that's always the case that large enterprises move so slowly, but certainly in crypto, they've been really devastatingly slow, which is much to the advantage of the startup industry. Yeah, there's that saying that no one gets fired for hiring IBM. And I guess no one gets fired for hiring IBM to do a pointless blockchain proof of concept. But you would get fired, you know, if you did something crazy in the crypto space.

So it's a pretty easy still if you're at one of these big enterprises to say we don't really care about Bitcoin, but we care about blockchain and the underlying technology. But pretty soon, and I think more and more actually just given the macro climate, it's inexcusable not to have a point of view on this technology. that's at least informed by the fact that, hey, Bitcoin is really has a purpose here. And oh, by the way, stable coins too are really gaining some pretty critical mainstream adoption for public blockchains. And so if you're just ignoring that at a big enterprise right now, it's probably not as easy as if it was 2016. I've definitely noticed a shift as stable coins have come to the fore here.

People have realized that, you know, Fiat, settlement, on chain is a real use case. and that's not subject to the same critiques as, you know, cryptocurrencies, which are volatile. That critique obviously doesn't hold. So then, you know, you have to come up with more creative reasons for why you don't like it. There's something materially changing here. I mean, you know, like look at the amount of effort visa is placing on stable coins or, or at least the amount of interest they have in it. Kai Sheffield over there is super smart about it.

I think something seems to be changing here. maybe stable coins kind of got critical mass and people realized they weren't just used for inter-exchange settlement. Yeah, I think it's so funny that Jeremy Allaire is sort of at the forefront of both of these things. Back in 2013, it was like, hey, there's a real entrepreneur here, a guy who's, you know, started some very successful companies getting into Bitcoin and obviously, you know, grew circle. And then now he's really at the forefront of stablecoins, which is again one of these just huge trends that big enterprises are going to have to kind of come to grips with. And we're going to see a massive dollarization here in countries that otherwise wouldn't really have easy access for their

citizens to get exposure to U.S. dollars. And so it's going to be interesting. U.S.D.C. is really growing rapidly. Tether continues to add just tremendous, I don't know if you'd call that AUM, but tremendous assets. Yeah, they'll be over $10 billion in a couple days here, is my prediction. They're at about 9.5 right now. And I know a lot of you reached out and gave us really good feedback on the crypto dollarization series. So thank you for that. We're going to have at least two more episodes in that series, probably three. So stay tuned. Those will be pretty soon. Yeah, that'll be fun. So a lot to talk about there. A couple deals this week. So SCUE, which is a crypto asset data and trading platform, I really like these guys' charts. So they've a lot of

good derivative data. They raised $5 million in a round led by Octopus Ventures with participation from First Minute Capital and Seed Camp. Do you see that one? Yeah, of course. Yeah, skew is a platform that I consult probably daily for info on derivatives, options, liquidity within the industry liquidations. You know, real credit to a manual on the team. They built something really cool. You know, they're alums of blockchain. Info. If you trace it back, there's so many startups in crypto that are built by alums of blockchain, which is kind of funny. You wouldn't really think of blockchain as like a mafia per se, but there's a ton of, you know, really vibrant startups that are built by blockchain, ex-ex-blockchain employees.

Yeah, I think Ash Egan had written that blog post about the various mafias. It would be interesting to see a revision of that blog post because there's the blockchain.com mafia, the coinbase mafia. I would venture to say the Fidelity Mafia, maybe, on that list. So there's a bunch of good... We need some more people to leave Fidelity and start startups for it to be real mafia. It's like the Bill Parcells and the Bill Belichick coaching trees. Yeah, what are the other big ones?

I mean, consensus is obviously a big. spoke here. Cracking. A little bit of a mafia there. Yeah. Although I think canonically for a mafia to exist, you need there to be like, I think the theory is that there's a big exit,

but not like an overly large exit so that a lot of the early employees, you know, can like self-fund or bootstrap businesses after that, but not be so rich that they don't want to work. So we haven't had one of those in crypts. So that's the theory about PayPal, I think. Well, we got small mafias for now, but we're on our way to bigger and better

mafia, I would say. Exactly. The other deal that was announced this week is Taurus Group, which is a platform for the issuance and custody of digital assets. They raise an $11 million Series A, led by Arab Bank, Switzerland, with participation from the Tazos Foundation. So good to see some deals happening in this space. And speaking of deals and companies that lead a lot of deals,

in Dresen Horowitz announced that they raised $515 million for their second crypto fund. So this comes on the heels of a $350 million fund won, which they raised in 2018. So congrats to these guys. What a great thing for the industry. I mean, you can, you know, like this investment thesis, you can not like this investment thesis. It doesn't really matter in my mind. I think this is really good for the overall industry to have sources of capital to be able to, you know, write big checks into this industry and to support some of the great companies.

companies that are being built. There's historically been a little bit of a gap in financing here, right? You have a lot of capital, potentially at the seed stage. I wouldn't say a lot, but you have capital providers at the seed stage, but there haven't been a ton of very large funds. And it's good to see in Dries and Horwitz be able to pull this raise off. And it's great to have them out there just as a mouthpiece getting more institutional investors thinking about this space. Yeah, this is a real vote of confidence on the part of their LPs for the crypto industry. And this fund is being positioned explicitly as a venture fund. You know, it's clear to us, of course, that the venture approaches is the correct way to play this strategy. And it seems that A16C agrees. So definitely a positive development for the industry. So congrats to those folks. Really good job with that raise.

in other news, FTX, which is one of the larger in emerging cryptocurrency derivatives exchanges, they operate outside the United States. I'm actually not sure where they're domiciled, but there's a report this week that they're planning on launching a U.S.-based spot market exchange in May, which I absolutely love, by the way, just the fact that, you know, they're coming out and say, we're launching this in May, which is like a day away. So some of these companies just move so fast. yeah that's i think when you're not you know strictly regulated per se you have many fewer encumbrances uh but yeah ftx is one of the most dynamic exchanges in crypto i remember when i first found out about them and saw their levered just i guess financial products that

were intended to you know multiply the performance um of like various you know baskets of cryptocurrencies I thought immediately of the Direxion inverse or 3x levered ETFs, which retail loves. And, you know, I had a feeling that they would do pretty well. And they've just continued to innovate. They created prediction markets for the election. So just all kinds of interesting and exotic products. Yeah, this one will be interesting to watch because, you know, they're going to have to go through the money transmitter or license process, which it looks like they've already started. we'll see they're going to have to kind of fall under these U.S. regulations if they want to do it right.

So, you know, we've seen other cases of non-U.S. exchanges come in and be successful. So we'll see how it goes with FTX. But exciting move. I think more platforms, more exchanges is a good thing. So moving on, I thought this was kind of an interesting story. So we've been monitoring this SEC versus KIC case for a long time. You know, kick, of course, is the messaging app that did the big ICO, $100 million. I think ICO, it's being prosecuted now by the SEC for being an unregistered securities offering. I would say the facts and circumstances don't look very favorable if you're kick, but what do I know?

This week, the SEC opposed an amicus brief that was filed by a trade group called the blockchain alliance. And it's apparently it's pretty rare to have the SEC just opposed. a brief even being put on the record here. But basically what the SEC said was that this is a group talking about the blockchain alliance that was not impartial and that they had a number of members of the group that had a financial interest in either the equity or the tokens or even like the issuance and trading of these tokens for KIC. And so they called out the fact that Polychain and USV and E Toro, Cumberland, Coinlist, a few others, I think, were all members of the blockchain Alliance. I thought it was interesting that this was opposed, first of all, but at the end of the day,

it looks like the court actually accepted it, but pretty aggressive posture by the SEC to just not even want this on record. I thought that was at least interesting to me. Yeah, I can't say that I'm shocked that a group called the Blockchain Alliance was considered to not be neutral on the topic of this lawsuit. It seems like the SEC basically has the upper hand in both this case. In both this case, and the Telegram one, which also has new developments this week. These are kind of two of the bellwether cases, in our estimate at least. You know, both of them involved the SAFT. In the Telegram case, the SEC really won a significant battle.

I mean, the case isn't over yet, but they did get the judge to issue an injunction against Telegram issuing grams out to their investors, so to effectively to stop them redistributing out those. tokens to the general public, kind of alleging that the early investors weren't just investors. They're actually, you know, distributors or underwriters effectively. So now Telegram is kind of negotiating with their investors because this clause has been triggered that entitles the investors to a return of the funds or partial return because actually Telegram spent some of the funds, as it were. And so now they're in treating their.

their crowd sale investors to not actually ask their money back and give them some more time. Yeah, I thought that was pretty interesting. So they came out this week with Telegram and they announced that they're going to postpone the launch of their network until at least 2021, give the investors the option to take their money back at a discount or roll it into equity in Telegram, which is interesting because Telegram, I don't think has raised an equity around, but it's obviously a very, you know, it's a big platform.

I mean, a lot of people use Telegram. I don't know that it monetizes, but I guess that was why they were doing an ICO to monetize through senior age at the end of the day. Yeah, I mean, and the whispers are that it was the ICO funds that have been used to pay for the Telegram servers, which are apparently pretty expensive, which I understand because, you know,

I put a lot of data on Telegram. It's just a great product. Yeah, they haven't raised an outside equity round. No one aside from the Durobs owns equity in Telegram as far as I know. I probably wouldn't be averse to owning equity in Telegram if I was an investor, though. I feel like they do have ways to monetize this if worse comes to worst. How funny is it, though, that Telegram is very similar to KIC, right? Like, Kick was a pretty popular messaging out back in the day.

That was one of the only ways that you could message from an iPhone to a BlackBerry, I think. And so that was the real use case. It was basically they took BBM and then they took it cross-platform and they could never monetize it. They raised a ton of money. And both of these companies end up doing ICOs. Yeah, that might have been, you know, like maybe the ICO allowed them to arrest that kind of market signal from coming through that maybe fundamentally it's just very hard to monetize a messaging app. I mean, how does WhatsApp monetize, for instance? I think it's just part of that Facebook ecosystem kind of thing.

Yeah, Facebook had that huge deal in the Indian telco company in the past week. And I think a big question there was whether or not this was going to be part of a grander vision for WhatsApp monetization strategy. But I don't know if you'd remember that WhatsApp used to charge everyone a dollar per download. And so at the time it was acquired by Facebook, it was actually doing decent just based on people paying a dollar per year to have it. I'm not sure that there's a monetization within, not to say there won't be. I think monetizing messaging is a huge opportunity.

We're going to see some really interesting companies come across to do it, but to date there hasn't been a real big company built there. So there's actually a lot of regulatory news this week. So another thing the SEC did was charge the founders of something called Drop Hill with a, violating securities laws in a 2018 ICO. So it seems like the SEC is still undertaking this cleanup act.

It's crazy. Every time they come out with one of these like rinky dink ICO projects that get slapped, I mean, I've never heard of this thing. I'm sure there's hundreds of others that I've never heard of. So they're fighting the front with the two big, huge, kind of well-financed ICOs with kick and telegram, but they're simultaneously going to. going after these little rinky dink ones that basically just scammed people quietly. Yeah, it's funny.

I haven't heard of half of these ones, and I thought I had a handle on these. The last regulatory news item is that Brian Quintenz, who is a CFTC commissioner, has announced he's not going to be seeking renomination for his position, and his term ends next month. So Brian is out at the CFTC Well, that's too bad I guess that's how these things ought to work though You know, you do your statutory term

And you go on to the next thing I'm sure he's going to have no shortage of job offers In the blockchain space he really gets it He's one of these people One of these regulators that has a really good reputation Of being someone that engages with the startup community I've heard him on some podcasts I think he was on Peter McCormack's podcast

So, you know It's a shame that he has to leave, I guess. I remember him speaking of the Coin Center annual dinner with Hester Pierce. And they told a story about, it was like a scorpion and the frog kind of story. It was like an allegorical tale. It was pretty interesting. Yeah. Well, I guess the same could probably not be said about SEC Commissioner Jay Clayton.

I think he has, what, another year left on his term? You know, I hope the job market's doing really well for Jay Clayton. I hope that there are a lot of firms that are poking around and want him to join as a partner at their prestigious law firms. Because if we're being honest, it wouldn't be the worst thing in the world to have some new blood in at the SEC taking a fresh perspective on a lot of things. Yeah, it seems like nothing's going to change on the ETF front until Jay leaves, which, yeah, we looked it up. It's about a year from June, assuming that he doesn't extend his term by 18 months, which apparently is a thing they can do. And, you know, you just look at the chaos and the oil markets and the USO instrument,

which is incredibly inefficient and just ripped off retail investors. And then you look at GBDC, which is pretty inefficient. And you wonder, hmm, like, would a Bitcoin ETF really be so bad? And we kind of know what a Bitcoin ETF would look like. there's that the Bitcoin note product that trades on the Swedish Nasdaq, which is listed by coin shares or administered by coin shares, that thing trades very, very closely to the underlying. So you really do wonder about what the SEC's issue is here when they allow these 4x levered ETFs and these really inefficient commodities ETFs, why they still have this prohibition

on a Bitcoin ETF. I agree. So if you work at a large law firm, your partner there, you started it, and you're looking for a new partner, Jay Clayton would be great. He's got about a year left. Probably a good time to start putting out some feelers. And if he wants to hear about some job offers, it's always good to have an SEC commissioner with that experience at your law firm would be a really splashy hire. And if we can do anything to help, just let us know. So, yeah, we'll put in a good word. So in another SEC related piece of news, we have, a Chinese ASIC manufacturer, E-Bang Holdings, which is filed for $100 million US IPO. Now, the question is, what are the odds that it turns out there's some sort of accounting fraud going on here? Yeah, I mean, this is, the ground is littered with similar frauds. I would just say buyer beware on this one. Yeah, very much so.

What was the previous Knan? The Knan IPO has come under a lot of scrutiny. that one is looking extremely suspect. We have the Luckin Coffee IPO. Apparently there's an enormous accounting scandal there. Very much, very much buyer-beware of these offshore IPOs. I'm reading the Bernie Madoff book right now, the book about his scandal.

And it's pretty brazen. I mean, you got to hand it to the people that pull off these huge scandals because they just have no moral compass. and they just are so brazen. Like Madoff was just falsifying DTCC statements, which is just so crazy. You know what I, the one that I found interesting was the one MDB scandal.

Oh, that's the all-time best. He didn't even have like the pretext of running a business or making investments. He just siphon the money and spent it on like models and bottles. You know, like there wasn't even the, the slightest attempt. to actually run a business or anything.

Like Bernie, like it looked like he was running an investment firm. You know, some of the activity there was legitimate. But for one MDB, it was literally just, let's liquidate these funds in Vegas. I cannot wait until that movie comes out. If it's going to be a movie, hopefully it will be. But what an awesome book. It was the billion dollar whale was the name of the book. And Joe Lowe.

Joe Lowe. So Joe Lowe financed the Wolf of Wall Street. you know, which is absurd, which is a great film. And then as it turns out, there's like some like even greater shenanigans involved in the financing of the film. It's like a film about embezzling money or, you know, financial fraud. Turns out it's being backed by an enormous fraudster. Can't make it up.

I wonder who they're going to get to play like Leo DiCaprio in the movie about the financing of the Wolf of Wall Street. Yeah, I don't know. Maybe Matt Damon. So you've been really busy. You had two articles this week. So your latest for CoinDesk, how blockchains become great big garbage patches for data. I thought that was really interesting, something we talk about a lot, just around some of these

blockchains that really don't have robust fee markets that allow for a lot of data to be written down to the chain results in a lot of blockchain below. So you have just private companies using the block space for something that benefits them, but is really not beneficial to the overall network health. So we've seen this time and time again on many different blockchains. I thought that was a good piece. Yeah. Thank you.

I'm glad you you like my writing. It'd be weird if you didn't. So you guys know the concept of Chesterton's fence, right? It's like if you come across a fence somewhere and it doesn't seem to be guarding anything important, your first instinct might to be like to tear it down. but maybe there's just like a bull in the corner of the field or something and it was actually a good idea to have that fence up in the first place so you can kind of make the same argument with like features of bitcoin so bitcoin has fees for a really good reason basically to stop bitcoin being uh hit with spam or dOS attacks and to stop it being cluttered with completely un-economical

garbage data in fact there's two things that protect bitcoin is the fees and the block size limit. So of course, you have people that say, well, we don't need these features at all. We can just throw them away. It's unfair that there are fees. So they effectively subsidize block space. So they push the fees down to zero and they remove block size caps. And unsurprisingly, you get a very predictable result, which is the chain gets absolutely bloated with complete junk, non-transactional data. and long term, this is going to resolve in one of two ways. So either the node operators are going to get sick if having terabytes of junk data, and they're just going to prune it, they'll just eliminate it,

which will mean that fundamentally your immutability assurances are really weak, or you'll just end up with one or two industrial-sized nodes, and it's not going to be a peer-to-peer network. So that's what is in store if you eliminate these practical constraints. A lot of examples to point to for this. Would you say EOS is up there at the top of the list? Yeah, so EOS tried to price various resources. So they kind of tried to be a capitalist about it

because the problem is that you've unpriced externalities. So they tried to price the externalities. They already had industrial nodes. So they actually went for like one of the long-term outcomes here, which is just have industrial nodes. And as a consequence, like it's very, hard for any third party to run a node and validate the blockchain, download all the data. We know that from experience at Coin Metrics. So EOS is one extreme. But yeah, there's like a whole

bunch of blockchains that do this. I wish I could rewind the clock and actually have this conversation again. But back in probably early 2018, there were some really well-respected global macro people that I was talking to that were just pitching me hard on EOS being the Bitcoin killer. So really funny conversations if you really think back on some of those just crazy points of view. Nothing ever changes. I mean, there's new Bitcoin killers every year. It's just a different one each time. So you wrote another piece for the American mind this week called Apre le Deluge Bitcoin, which I'm guessing you did not pick that title. But you basically, I thought it was a good kind of good hook for a bunch of folks that maybe not as familiar with Bitcoin in the blockchain

industry and your point was less about the monetary properties of Bitcoin on this one and more about how the infrastructure, the fact that it is not owned by anyone and not really subject to some of these political kind of points of non-neutrality make blockchain architecture. Specifically, I think you're talking about like stable coins, just a lot more compelling. So another, you know, another good piece, I think that it'll be interesting to see the reaction to that one. There's more of a mainstream audience reading that than Coin Desk. I'm kind of scandalized that you think I am not sufficiently cultural to come up with a title.

Like, A prior de luge. Did you come up with that? I did not. I did not. That was the editors. Yeah. What was your proposed title? It was something very boring.

Like the world needs a political financial infrastructure. So maybe I am not. I'm just not the best title. come or upper with. I just, I think that's a, I like to be very specific with my titles. Yeah. I think that. Say where you're going to say, say it and then say what you said, right?

Exactly. Just, and I think the five paragraph essay, by the way, total tangent here, just, I wish more people could just talk that way. Every time I, like, someone's rambling, it's just like, give me the introduction, the three points in the closing. Come on. I don't know. I don't think we do a good job of that either.

Well, we're just rambling now, but I mean, in general, if it's a high stakes meeting, give me the three bullet points. The art of the ramble. So, yeah, this is, if you guys don't pay attention to the American mind, which is a publication of the Claremont Institute. Highly recommended. I really like those guys. The editor is this guy, James Poulos. Very smart.

Fun fact about Claremont, I actually considered going to Claremont McKenna. and then I was accepted, but I didn't go. Oh, man. What a what if? I know, that's a real what if. Like, I could have spent four years in like beautiful Southern California. Instead, I spent four years in an extremely rainy and cold Scotland. What could have been?

You could have been like a West Coast Ethereum person coming out of that experience. Yeah, that would have been the outcome for sure. But yeah, this is for general interest. So I would recommend this if you have. have no coin friends that, you know, maybe they know what Bitcoin is. They don't really understand what crypto is. They don't know what it's for. This is a rebuttal to that. Basically, I'm talking about neutral or apolitical financial infrastructure. And, you know, I wouldn't say that crypto is perfectly neutral. Like, we actually see a lot of corruption in protocol design.

Probably trying to write about it at some point. But it still does a fairly good job, especially relative to our current highly politicized financial rails. It's no secret that the U.S. weaponizes Swift and the correspondent banking system, right? So that's the point is, look, we're not going to be able to do this forever. People are eventually going to get sick of it. So what's the alternative? Is it a China-dominated system where it's just, you know, meet the old boss, same as the new boss, or the other way around?

Or is it a truly neutral system that nobody controls? and that's what crypto could be. Yeah, I think it's a good point. Pretty clear that these stable coins are not going away. So we'll keep an eye on it. Some more analysis and some more articles that I thought were interesting this week. So Flipside had some coverage in Coin Telegraph, which, by the way, I didn't realize Coin Telegraph is so big.

A lot of people read that site. It's not in my rotation, but Coin Telegraph did a piece, about some of the transaction fee dynamics at play on March 13th when they had that big downdraft in both Bitcoin and Ethereum. So that was interesting. Transaction fee is very interesting to me. I was talking to one of our friends in the mining community today. And his point of view was that as the capital markets around derivatives get more mature in the mining space, we're actually going to start to see swap contracts and other forms of direct. derivatives formed around transaction fees.

And so think about it if you're Coinbase and you know that you're going to be paying X percent in transaction fees based on your outbound transactions per day, would you want to kind of lock that in, you know, over time as opposed to having the volatility? Pretty interesting to me. So you'd want to hedge your exposure to future fees that you expect to pay? Yeah, exactly. That's very clever. I actually hadn't thought of that.

Yeah, I think that was a really astute point. So maybe we'll do some more, maybe we'll do a podcast episode just on derivatives and some of these things. Some of these things are pretty much not likely until we start to have more compression in the block space, I think. Right. Yeah. Right now, that's not really wrong. Right now, that's not really wrong. Yeah.

Relative to the subsidy, both on Bitcoin Anathorem, they're still in the single digits. Right. So right now, I think it's pretty likely that we're just going to see like mining contract type of derivatives and hash rate futures and stuff like that. But maybe at some point we'll see more around transaction fees. And then another article that I thought was pretty interesting was just talking about some of the hiring that's happening in the crypto space. So we have record unemployment in this country right now. But some of these exchanges are really ramping up. So Crackin, I think was on track to hire 250 people this year. they're going to increase that to 350. A lot of interest around the Bitcoin having, you know, a lot of people looking for alternative assets. So it's good to see some of these crypto infrastructure companies growing so quickly. Cracken is really on the spree and they're hiring a bunch of Bitcoin OGs. Seems to be almost part of a marketing strategy, I would say.

And what else do we have this week? So a couple good podcasts. So you were on Hidden Forces with Dimitri. I thought that was good. not that that's really a crypto podcast, but he talked about Bitcoin a little bit. And then Jeremy Allaire was on what Bitcoin did with Peter McCormack. I thought that was a good episode.

I was surprised he hadn't been on the podcast before, but he was talking about stable coins, and specifically USDC, obviously. That was a good podcast. I'd recommend people checking it out. All right, so I think that's it for the week. Day 5,237 of lockdown, but I think we're getting used to it, right?

Yeah, it's the new normal now. Maybe we'll never come out. We'll just become like mole people. I know. I think we're like, who needs that office? Do you even remember what's in the office? Your dead plant is definitely there. But apart from that,

feel bad for the plant. Got some Bitcoin art that's probably still there. Maybe it's been looted. I think that's a really high value item for looters these days. Have you seen any good masks come to market that have like Bitcoin logos on them? Or is that a thing yet? I'm sure it is somewhere. right? I don't know where you would actually get masks, though. I feel like they're still kind of hard to get.

If anyone has a good line on some good masks with logos or memes on them, let us know. I'd definitely be interested in that. Got to make the most of it. So we have a couple good podcasts coming up next week. Had Marcos Verrimas who formerly led crypto asset research, who's a managing director at Cambridge Associates, has a really good perspective on the institutional LP landscape. He'll be coming on the podcast on Monday. He's now at Evanston Capital Management. So really excited about that one. And then we have a couple more up our sleeves as well. You've been expanding this dollarization series.

So we'll have some good pods coming out in the weeks to come. That's right. Well, stay safe and have a good weekend.