On The Brink with Castle Island - Weekly Roundup 01/26/24 (GBTC chaos, BBerg's stable coverage, Listener questions) (EP.501)

Episode Date: January 26, 2024

Matt and Nic are back with a celebratory 500th episode. In this episode:  ETFs are off to a rocky launch with the GBTC premium trade closing Bitwise launches real time transparency for their ETF holdings Fraud in the metals market versus Bitcoin The boys confront some fake news Is there light at the end of the tunnel for GBTC redemptions? Nic's spat with Bloomberg The US is selling $130m of BTC seized from the Silk Road TFL declares bankruptcy The boys learn about a face amount certificate We answer your listener questions  Content mentioned: Bloomberg, Crypto fans lured by 20% stablecoin yiekds Sponsor notes: Tether's Ascent: Breaking Down the Dominant Stablecoin's Growth In Coin Metrics State of the Network Issue 243, we explore Tether's impressive growth, adoption, nature of USDT usage and reserves through on-chain data

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 to Britain's ailing economy with a new round of Conjecturee 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 episode is brought to you by Coin Metrics. And here is the Metrics Minute. All right. We're talking about Tether today. Tether is the largest stable coin. You all knew that.

It commands 75% market share in the $135 billion stable coin market. It recently surpassed its all-time high, reaching over 95 billion in supply. That's a 35%. increase year of a year. Of this, 50.8 billion, which is over half, is issued on Tron. 44 billion is on an Ethereum network. Tethers' influence in DFI does rival USDC with smart contracts holding close to 7 billion each stable coin, respectively. That's actually a change. USDC used to be the number one stable coin in DFI. This month, Tether's on-chain transfer value exceeded $5 billion on Ethereum and $11 billion on Tron.

Tether has done $13 trillion in transfer value since 2014. The average transfer size for Tether on Ethereum is $35,000. For Tron, it's smaller, $7,000, reflecting the usage of TetherTron for payments, remittances, et cetera. And in January, their trusted spot volumes are $25 billion, which surpasses their previous peaks in November 2020. That is your Metrics Minute. Big 501 here, episode 501. So this is our 500th episode celebration that we just mistimed. And so it's actually 501.

Yeah, this is episode 500, 501 edition. But just think of this as 500. Yeah. So we're going to be taking some listener questions, but we've done 500 of these things at this point. I mean, do you remember when we started? we were sitting in the in the office in Cambridge Kendall Massachusetts yes and you're like we need to start a podcast and I was like I don't want to do it there's too many podcasts we're now we're not we're going to

distinguish ourselves and we're going to have to do it every week and we're never going to be able to stop doing it we haven't been able to stop but it turns out there weren't too many podcasts a lot of the podcasts that you thought were the podcasts they're all gone now that's true there was podcast attrition I mean, there are too many podcasts just as a general piece of commentary, I think. But there's not too many good podcasts. You can always start a new good podcast. It's true. It's a golden age of podcast right now.

Yeah. So I don't know. Do you think we're going to make it to a thousand? I'm kind of running out of steam over here. Well, I don't know. We keep on getting hits from the mainstream press and from the politicians. I don't know. I think we'll be so angry that we'll just be forced to record two episodes a week.

That's true. It's like we don't run out of things to say because people keep on coming for us. We have to defend the industry. Yeah, that's always going to happen. There's always going to be no coiners and haters. There's an endless supply of that. Well, on our 500th episode that we thought was going to be $4.99, Sean sat down with Zach Abrams, a co-founder of Bridge,

talked about moving money with stable coins. so that was a good one. And you sat down with Brooke Pollock. A new podcast, Inside the Hut. Very good podcast focused on the industry. So really enjoyed that one. And there were actually a number of deals this week as well. A bunch of deals.

So first one up is EDX market. This is a US-based digital asset marketplace. They raised an undisclosed amount. It was a series B from Pantera and Sequoia. Next up, we have Bagel Network. That's my early contender for name of the week. They're decentralized marketplace for machine learning models. They raised 3.1 million from coin fund, protocol labs, borderless, and breed VC.

That's a great name. I like that one. Next one up is Polymer Labs. This is an Ethereum L2. It's focused on interoperability. And they raised 23 million from blockchain capital, distributed global, Maven 11, and others. Then you've got Cignam, which is a well-known Swiss bank that is focused on crypto. They raise $40 million from Azamute Holdings.

Then it's Masa, a Web3 privacy project that raised $5 million from Anagram, Avalanche, DCG, and Golden Tree. Then we've Axiom. They're a protocol that gives smart contract developers access to historical data from Ethereum. They raised $20 million from standard crypto in paradigm. Then we have an interesting one. BitGo, which is, of course, the crypto custodian. They raised an undisclosed amount from Brinks.

This is like Brinks trucks. So now we're going to have bridge trucks just traveling around with private keys. I mean, this makes sense, right? Like Brinks is in the business of safely moving and storing physical cash, right? I love it. They're in the business of crypto now. You see these things all over the place. Yeah.

Now it's like you never know if there's an HSM on board. Fair enough. Yeah, that actually tracks. Lastly, we have BitFlow. they're Bitcoin decks. Wow. There is 1.3 million from Portal Ventures and big brain holdings. All right. So busy deal week. Well, mandatory ETF section here. The price is going up. The price is going down. The price is going sideways. People don't know what GBTC is. You're having to explain it. Let's just give the quick rundown here. Well, we're kind of getting crushed,

actually. Let's be real about this. We're having net outflows now. Yesterday, there were net outflows. the GPDC redemptions have been killing us. JPM did say in a research note that they thought there would be about 3 billion of GBC redemptions associated with the arbitrage trade. There have been about 4 billion. So we might be done on the redemptions front. It might be kind of light at the end of the tunnel here. Yeah.

So of course, to rehash it for those who aren't following it, GBTC, closed end fund, converted to a ETF, it was trading at about a 40% discount to NAV for a good part of the last two years. FTX owned a billion dollars and they just punted that into the market this week. So that was confirmed in a few reports that the FTX estate has liquidated a billion dollars worth of the GPTC. Obviously that is net outflows. You have the, you know, some of these traders that were in this discount trade that as the discount went from Neg 40 to about NAV. They got out of that. this has definitely been offset. So you've had strong inflows into the BlackRock Fidelity and Bitwise ETF products.

But keep in mind, the RIA platforms and the wirehouses are not fully turned on yet. So it's going to take a few months here to kind of trickle into that advisor channel, the private wealth channel as well. So, you know, just don't freak out. It's a few. Isn't this? This is what we said, right? Like week one, week two will disappoint. Yes?

Didn't we say this? you were you were a big kind of sell the news type of person on this i don't think anyone really knew that ft x was just going to punt a billion dollars worth of bitcoin into this market though that we didn't know i think also we didn't appreciate the magnitude of the gbdc unwind okay took us by surprise a little bit but we did say that we thought it would be disappointing at launch but there were structural long-term flows which were coming so all i'm saying is trust the process. That's it. Trust the process. I will say not to put FUD into the market here, but if you go on capital IQ and you just look at the largest known holders of the Grayscale

Bitcoin Investment Trust, digital currency group is the top one. So I don't know what the actual regulations are around affiliated entities selling out of your own product, but keep an eye on that one. That does sound like FUD. There's another piece of FUD, which is true FUD. There should be a word for FUD that's true, which is the U.S. government is going to sell, what is it, over $100 million of Silk Road Bitcoins? So they announced that they will liquidate $130 million worth of Silk Road Bitcoins. It looks like they do this on Coinbase. They must have a Coinbase account, but that's actually not that much in the grand scheme

of this market. Knowing them, they're going to do it at Sunday, 3am, weakest liquidity moment, market sell. Probably. just torch the order books. I'd like to think that someone at Coinbase can teach them how to do a TWOP order or something. That would be kind of funny, though. They just wanted to cause maximum carnage. Now, also in ETF news, one of the coolest things I've seen in a long time.

So Bitwise partnered up with Hoseki to do a proof of, would you call it a proof of reserve? I guess it is. They published their address and they prove where the Bitcoin are in the, the coin base custody. Imagine having that for like a gold ETF. I think this should be the industry standard for all of these things. Yeah, a lot to say about this. A lot to say about this.

First of all, two Siv-POR COs. Congrats both of them. I mean, really cool to see this. Second of all, everyone all should do it. Third of all, Bitwise is really set in the standard for the ETFs, man. Crushing it. They have the transparency. They're funding, Bitcoin developers.

with some of the fees, and they're a healthy third place behind the joggernauts of Fidelity and BlackRock. So whether we can call it a proof of reserve, you can kind of argue both sides. Technically, there's no real concern about where the bitcoins are, whether they have the bitcoins. That's just, you know, obviously part of the ETF structure. It's a regulated product. We don't need a proof of reserve, you know, externally for an ETF, the way that we might. need one for let's say an offshore crypto exchange. However, it's still really cool to see the flows in real time. And it does make me think I was listening to Odd Lots recently. They're talking

about nickel. Nickel is a high leave fraud-based metal in the commodities market. Half the time or some percentage of the time, you know, these bags of nickel are just full of rocks. Is there's no way to audit them or it's expensive and annoying to do so. And so there's all kinds of nickel fraud in the markets. I mean, of course, just the same with gold, but especially for nickel. So, I mean, just think about that versus Bitcoin where we're approving every last Satoshi of the Bitcoin. I mean, that is in real time globally, anyone can see it. That's a radical departure and that's something TradFai has never been able to do before. And we should pound her chest over that. I think it's really great. And it also presented the opportunity, of course, for people to send

money, send Bitcoin, send SATs into this address. So, Someone last night sent a 0.000 6969 Satoshi units to the address. So technically BitWise is running an over-collateralized UTF. Love it. I think someone also sent an NFT, which looked like it may have been an artistic depiction of a certain senator. Oh, did that get sent? A beloved senator to the address.

Oh, I thought that was just a Native American. Well, what's the difference, Matt? So yeah, you can now donate to the BOWISETF and cause it to be over collateralized if you want. Pretty cool. All right. Next one up. I thought this was a headline from two years ago, but Terraform Labs, which is a company behind the failed Terra Luna quote unquote stable coin, they declared bankruptcy. It's 2024.

What's going on here? I mean, Lunk still exists. the Luna Classic. That's still a thing. They still have going concerns on the blockchain. But I guess they didn't make it at the corporate level. Well, how much GBTC do these guys hold? It's everything that goes bankrupt just is a bag of GBTC right now.

You remember, I still think about this. Remember how they thought that they were going to stabilize the value of their quote-unquote stablecoin with the Bitcoin Reserve? Yes. The irony is, and I think we're, talked about this, they actually, that's what caused the whole system to collapse was buying the Bitcoin. I know. That's what, because they sold the other side of that trade just started nukeing the market for UST once they swapped the Bitcoin. TFL sold UST for Bitcoin into a thin

market for UST. The counterpart in that trade sold the UST for other stable coins, crushed UST, D-Pag, bang. So that's like a very supreme irony. Their Bitcoin Reserve was what killed the Terra Stablecoin. Some of these things you say and you're like, was there no one around who could have just been like, you know what will probably happen if we just chuck $3 billion worth of this UST that makes no sense? I wonder if it will destabilize that market.

in hindsight that's probably should have been a consideration yes i would say do a little pre-traded analysis on that maybe yeah so speaking of us t um i have an absolute bone to pick with bloomberg in more than one way today so yeah let's talk about it i mean you know i'm simith i love journalists love journalists. Okay. Some of my favorite people are journalists. I used to be one. I used to be a journalist.

Do you know that? I did. So it's not always their fault. It's not their fault. Always. In this case, what I think happened was the Bloomberg editors,

you know, came in over the top and sort of changed the contours of the story and the angle and the headline. The editors are at the headlines, usually, not the journalist. So there's a story in Bloomberg

today, crypto fans lured by 20% stablecoin yields, even after 2022 bust. I'm quoted in it. Mountains in there. Athena's in there. So they're basically implying that people are now backing new versions of Terra, Luna, because there's new interest-bearing stablecoins on the market. That is false. That's false.

That's true. So that is literal fake news. Literal fake news. The news is fake. It's quote, the same type of investment product that led to widespread disaster in the cryptocurrency market in 2020 is proliferating once again. Wrong. Not true. That is a wrong statement, Bloomberg.

And then they talk about interest-bearing stables like Mountain, which is based on treasuries. like tokenized money market mutual fund there's not at all the same thing as terra luna uh they talk about athena also not the same thing as terraluna also completely different the conflation here i find to be very irresponsible because as far as i know i haven't seen anyone trying to recreate terra luna no i have not said that it's all right so unfortunately uh they are wide of the mark there Okay, second Bloomberg-related problem. I don't know what happened at Bloomberg H.Q. Today, but they woke up on the wrong side of the bed, man.

Declared war on stable coins. Yeah, and when you come at stable coins, you're declaring war on us, too. It's true. You know? So, Matt Levine, in his ordinarily good newsletter, uh, said, uh, he quoted my quote in the blue. Bloomberg article and he says, beyond stable coins is a category of financial story that is like, quote, somebody convinces venture capitalists that reinventing banking is a good idea.

And those stories end up in interesting places. Reinventing banking is a great idea. You can make a lot of money pretty consistently by taking risk that your venture capitalist don't notice. So this is an insane thing to say also. That wasn't very nice of him. First of all, it's mean. So how about just being nice, Matt, Levine?

Second of all, we're talking about the Mountain Protocol in this case. That's the context. I'm pretty sure we're aware of the risks. Basically, the risk is the U.S. government defaults. So, like, that is a risk that we are aware of. Also, we've been on top of the interest-bearing stablecoin story for months. Like, we have been talking about it loudly on this show. we made a whole bunch content about it.

I did a whole podcast circuit or conference circuit even. And I don't think we're, like, he's implying we're being duped by these entrepreneurs. But like we know the nature of the product. We've been saying these are good products and they should exist. And in the case of Mountain, the product is a tokenized money market mutual fund. That's it. Regulated in Bermuda. Yeah, I went to Bermuda.

I met with the premier. He did the show on the brink. They love Mountain. So like what's going on here? Why are we getting flack for this? It's tough. It's these people hear stable coins and they just think about Taraluna. It's crazy or tether.

It's like a complete category mistake they're making. They're conflating all stable coins with Terraluna, which is, it's like me saying every hedge fund is Bernie Madoff. It's like the worst example of. of a fund you can think of, every fund is like that. Those tradfai guys, all scammers. Like, that's what they're doing to us. You're very scandalized for good reason.

So, yeah, I'm heated, and as you can tell, and I won't stand for it. So this is going to be what I tweet about for the next week now. Yeah, I feel like we're heading towards a retraction here. I mean, Matt, and here's the crazy thing. Matt Levine knows who I am. He knows that I'm not. idiot. He's actually put me in the newsletter a number of times. We've interacted before.

Like, he knows that I'm not a moron. So why would he pretend like I'm some sort of clueless venture capitalist? It's being tricked by our entrepreneurs. He might have just woken up, like you said, on the wrong side of the bed. I mean, the guy was so, you know, he spent so much time yucking it up with Sam Bankman Freed. Maybe he feels like now he is to flip hostile to crypto in order. to atone for that. That's true. That's my theory. He was a big SBF guy on stage with him, all sorts of places.

And like all these journalists like to claim that they, you know, because they interact with SBF, they like helped expose him or whatever. And Matt Levine will claim that his odd lots appearance with SBF helped expose him or whatever. But none of them exposed SBF, to be clear, not one of them. They were all, they all had access to him. They didn't expose him. CoinDusk did

Crypto-native journalists that looked at the balances moving between Alameda and FTX did. Actually, I'll give dirty bubble media, I think, credit for publishing an article right around the time that was actually pretty good. But no mainstream journalists exposed SPF. That didn't happen.

Correct. Correct. So that's the grievance portion of the podcast. All right. Well, do better. Bloomberg, we're going to be keeping track of you. All right, a couple other news items. So speaking of stable coins, so figure markets, this is a company that is founded by Mike Cagney. He previously founded SoFi. Bloomberg reported this week that they have filed,

Figure of Markets is filed with the SEC for an interest bearing stable coin. It would actually be a security. So it would be regulated under a face amount certificate, which is a pretty interesting fixed income instrument if I if I'm not mistaken so that's kind of interesting and I wonder what the SEC will have to say about this I kind of worry a bit that if the SEC were to approve this version of a stable coin it could give them some reason to go after the existing kind of circle version of a stable coin I worry a little bit that there's going to be confusion in the market there I mean, I've never heard of before today of a face amount certificate. I don't think these things are very common.

I think this looks like something that was like a 1940s, 1950s financial instrument. I mean, I do support resurrecting incredibly arcane historical financial instruments. Just from a purely academic perspective, that's interesting. Let's bring back tontines. Let's put them on chain. Tantines are illegal in this country, right? I think they are illegal, yeah. Yeah.

That probably won't stop some crypto people to do. Basically life insurance, right? Yeah. Well, I think there's going to be a lot of moving pieces in the interest-bearing stable coin market. That is basically one of the big questions. Will it be allowed in the U.S.? What does the future of interest-bearing stables look like?

maybe Bloomberg thinks they're all scams. These ones are scams too. All right, a couple other just ones for the weekend here. So a couple good interviews. Scott Fletcher from Intersection Growth Partners was on the Blocks podcast, The Scoop. Also enjoyed Galaxy Brains with Dan Matashefsky. Alex keeps on getting good guests on that pod. Yeah, awesome podcast, one of my favorites.

And Dan doesn't do a lot of podcasts. No, no. So that was a good one. His first ever podcast appearance was with this show, right? I think that's right. And he came out and said that Tether is real. Yeah, he said I've transacted hundreds of millions of dollars on Tether. That was back when people thought Tether literally had nothing.

Yeah, people actually thought that there was like no way to create a redeem. This was before the Canter Fitzgerald days, you know, where you have the CEO of big investment banks going, Bloomberg saying Tether has the coins. This is back when people really didn't trust Tether. We got to get Howard Lutnik. He needs to come on CNBC or this podcast, really. I would go to New York to interview Howard Lutnik. Of course. I'd make the trip, no doubt.

Yeah, just get him on. Look, Bitcoin's not for Americans. I mean, I respect his take. Like, it actually is consistent. I think it's wrong, but it's consistent. He's got strong views. I love it. All right, so we said we'd do this.

listener questions. So we put them out there a few hours ago. We've got some good ones. Why don't we kick it off? Well, I don't even know where to start. There's some good ones. How proud are you? Magnum says, how proud are you to be Amerizens? Very. I'm extremely proud to be an American. Yeah. I mean, I went through a lot to become an American. So I don't know if this is controversial, but I think that makes me actually slightly more of an America because I had to pass an actual test. Yeah.

Yeah. I'll give you that. I'll give you that. You didn't have to pass. I had to answer three whole questions. What were they? What were there? So one was who is the vice president and at the time it was Joe Biden.

So I nailed that one. One was what are your duties as a U.S. citizen? You have to name one duty. And I said, I think you have to register. for the draft and then one was what are your rights under the constitution so you know i think at that point i knew all of the amendments in the bill of rights by heart but yeah i said one of the rights that was that's pretty good i'd say a high percentage of the population probably wouldn't be able to pass that yeah i mean they also tell you what all the questions are ahead of time

so you can study for the test and just memorize okay all right Well, then, yeah, you got to, I wouldn't take too much of a victory left then. Okay. Well, here's a good one from Brian Borner. What has been your highest conviction, early stage investment company or category that hasn't worked at all? And any lessons from that? Well, we were big on the privacy coin thing years and years ago. We, you know, we thought that the Zcashs and the minaros of the world really were going to have

product market fit. That never really happened. Yeah, we actually had the exact same answer to this question was we thought privacy coins would win and or at least be important. And I think what happened was the liquidity never got there. Well, first of all, people didn't care enough. Second of all, the liquidity was challenged because a lot of exchanges ended up delisting privacy coins. The regulators asked them. so it turns out that the somewhat transparent model seems to be necessary for these things to trade i also think it's auditability at the base layer is a is a factor so when zcash had that issue a lot of people lost trust in zcash and as a result other ones uh yeah i don't think

zcash didn't have inflation per se but they could have had on detectable inflation There was no way to disprove it, I think. Yeah. Yeah. Okay. Next one is, do you think crypto-backed stablecoins are a winner-take-all market? Well, do you think they're a market to begin with? What do we mean by crypto-backed stablecoins? So I guess there's a couple kinds. There's sort of the maker style, the original dye, which was over-collateralized.

I think there are a number of those. and I don't think that's winner take all. The second model is sort of the Athena model. We did a show on Athena where you have sort of the long side of the trade and then the short future side. I think you could argue that's also crypto back. I think there are more economies of scale there. So I would say that type of crypto back stable coin is winner takes most, in my opinion.

Maybe winner takes most, but I think about these things almost as technology firms. and you're going to have regional competition, I think. So I could see a world where several of these things are market relevant. That's true. All right. Next one up is for you, I think. It's from Mr. Doggy. I won't say the rest of his name here.

How much do you bench press? More than one person asked me this. And I don't like being put on the spot like that. My one RM max is somewhat embarrassed. It's 225. It's my one RM max. That's not that. That's pretty good.

I will admit that. It's the sad truth. We're working on it this year. There you go. All right. Next one up is about the job market. When will there be new job openings for socially awkward 24-year-olds in this market? Are you paying any attention?

I mean... This market is the best market in the world for socially awkward 24-year-olds. There's nothing but socially awkward 24-year-olds in this job economy. Yeah. Like once upon a time I was an awkward 24-year-old and I was just convinced that I wanted to work in crypto and I just sort of figured out how to do that. I think crypto remains one of the most open and meritocratic sort of industries that exists. And it astounds me still how folks can go from total obscurity to really, you know, being important within crypto just by becoming a talented on-chain analyst, creating content, participating in DOWs, for instance,

you know, just completely open and participatory and getting involved in whatever niche appeals to them. I still think that's possible today. I don't think there's a bunch of glass ceilings in crypto or anything like that. And it's not a credential-focused employment market. So I still think it's a great place to get your start as a young person. I totally agree. If you're in college right now and you're trying to break on the scene, the number one thing you could be doing is starting a blog post, starting a blog, putting posts out there about just your thoughts on the space,

doing on-chain analysis, joining a DAO, getting involved, just get in the arena. And by the way, you know, I'm grateful for people who took a chance on me, you know, back in the day. You know who you are. And I always try and help elevate new people that are good. So, I mean, it's not just enough to ask for a coffee meeting and then ask for a bunch of introductions or whatever. You have to do more than that. But I would say if you are creating something that's of quality, I always want to help elevate that and put eyeballs on it.

So always feel free to DM. Send me your blog post, whatever. Ask me to read it. and if I like it, you know, I'll re-broadcast it. And I believe that there are people that I've helped make their start like that. It's not just me. So you can always do that. Yeah.

There's a lot of stories like that in this space. All right. Let's hop on to the next one. It's also about stable coins from John Smith. Is the end game for stable coins a fully algorithmic version or will it be the USD asset holding variety, basically the backed version? So fully backed or? fully algo? I think there will be a blend. I think the largest stable coins will be fully backed

for sure. So the fiat backed model is the most capital efficient. It's the simplest and it seems to be the safest and has the best track record. So I think that will be the dominant one. But I do think there will be a long tail and a large number of other stable coin models that people will pursue. and there will be demand for otherwise. So, you know, there's always going to be crypto-backed stables. Algo stables like Terra, I'm not optimistic on or rebasing stables, like Ampleforth, not excited about. But as far as crypto-backed, certainly I think there'll be a number of those. Yeah.

I don't think that fully Algo stable coins are going to be a feature of this market. So that's my only nuance. I don't think the Terra type base coin type of stable. coin will really exist here. Okay, next one should be an easy one. Can you share more about the revenue models and methods of valuation associated with your investments? I guess basically how do we make decisions and what are the revenue criteria that we look

for? So how we make decisions. So we have a four-pronged analysis that we typically talk about internally and it's people market product valuation. in that order. And so those are the foremost important things to us. Revenue models, a lot of these businesses look like traditional businesses. So it's, you know, AUM-based revenue. If you're an asset manager, if you're trading technology company, you're taking, you know, basis points maybe on trades, a lot of subscriptions. So enterprise software, data licenses, things like that. Not really

trying to innovate on the revenue model, I would say. Yeah. I mean, for us, actually, it's a plus to have Comprehensible revenue model as opposed to some esoteric Crypto thing that is very hard to understand In terms of actual revenue thresholds that we look for I mean we're often investing pre-product pre-revenue Sometimes it's just a team and some ideas scrawled on a napkin So we don't necessarily require You know a company to be cash flow positive certainly at C at A

Also you know sometimes we're not like you know traditional VC firm non-crypto might be looking for a threshold like, I don't know, four or five million A or R to do a series A. That's not necessarily always the case with us if, you know, the growth dynamics look exciting and there's a story of how you could get to that revenue. So I would say we're not driven by specific revenue thresholds. All right. Here's another one from a listener.

Gandalf told us all you have to decide is what to do with the time that is given to you. why do you believe that blockchain is the best use of your time on earth? That's a really deep question. I like that question. I mean, I actually call me an optimist or, you know, Polyana, but I do actually think that this is the most important thing that we could be doing. Certainly at least with a toolkit, at least in my case, that I possess. I think this is the most high leverage way to move the world in the direction that I

want because I'm very dissatisfied with the state of the world. And I think that we need to restore certainly different monetary approaches, you know, different types of monetary policy. That's one thing. And then to re-basically re-restore the notion of actual cash products, which I think we've lost because cash has become so surveilled. as it's become digitized, it's become highly tracked. As the financial system went digital, we lost a lot of transactional autonomy in the U.S. over the last 50 years or so. So I think blockchains offer us the best new terrain to do this.

And whether that's liquid crypto or stable coins, I think we're actually moving in the right direction. So I think it's very easy to be jaded in crypto after X many years of doing it, but I still believe in the mission. I think we're getting closer to it. That's a good answer. That's a very good answer. My answer is that this is an industry that we have the pleasure of speaking to so many entrepreneurs that actually share my values across a number of dimensions. So three primary ones. So the first is that a lot of people who believe that individuals should have self-sovereignty over their money, who should have the ability to actually hold their assets and not be reliant on a third party.

And so that's something that's very important to me. The second thing is around just more inclusive and less rent-seeking financial services. And so a lot of these founders that we're speaking to are very mission-driven around the fact that the existing structure is just not working for a lot of people. And, you know, we see that in the stable coin thesis where it's all about inclusion and people outside the United States or underbanked people in the U.S. having access to dollars for the very first time, not having to go through Western Union and some of these exorbitant, you know, rent-seeking groups. And then the third is more about data privacy. And so it's really

this vision that you could build a better internet and an internet where the user has a much greater control over the personal information that they put onto the system. And so I don't know. You can't find another industry that has mission-driven founders that are targeting those big problems. I mean, the market sizes of those things, too. Good Lord. Yeah. So, you know, it's that concept of Ica guy, right? It's the thing you're good at, the thing you get paid to do, and the thing that you feel that you're self-actualizing and doing. And I feel very lucky that that is the case with us. And what would you be doing if you weren't doing this?

I think about that a lot, maybe a musician, actually. If I had never gone into finance, that is what I probably would have wanted to do. I would have wanted to be a baseball player, and that just wasn't going to work out. So I'm glad this worked out. So this next one is from Matt Klein. He says, what's my preferred cheese? I have a lot of favorite cheeses, but my number one favorite is a Stilton, blue cheese. Okay.

And then I would also say like a buffalo mozzarella, coastal cheddar, an aged Manchego, Aguda. Those are probably in a top five right there. I've had a lot of good cheeses. I can't remember the names of them, though. Those just so many great ones to choose from. It's very hard question. I mean, I like the Vermont cheddar is pretty good.

Seriously sharp Vermont cheddar. That's very good. That's key. What's my V-O-2 max? I think I used to have a garment. and it said that it is 56, 57. Do you know what yours is? It's been so long since I measured this.

I was back in my cross-country days. I don't know. Yeah, you were a collegiate runner, so presumably yours is very high. Well, probably not as high as it used to be. What is your favorite long-tail coin? I don't think you can answer this question. It's not financial.

Yeah, no, I can't because that would be market moving. I mean, these long tail of coins, man, the market caps are quite small in these. You can't be getting into that. Yeah, unfortunately not. Okay. What's the most important thing that we disagree on? We were actually struggling with this a little bit because we don't disagree on a lot, actually.

Historically, we've had times in our relationship where we're on different ends of the political spectrum. But I'd say Elizabeth Warren has done a really good job of pushing me towards a very firm agreement with you. I think the listeners can probably intuit from 500 episodes where we stand on such things. But yeah, that's right. We've converged on that. We probably disagree on the relative merits of living in Boston. That's one thing. Yeah, yeah, we disagree on that. I think Boston's the best city in the world. Yeah, I don't show that view. No, no, like big ticket items. I don't think we're, you know, there was a time, I guess, where I was way more into Ethereum than you were, but then you kind of got a little bit more into it. Yeah, that's probably

fair. I used to be much more Bitcoin focused than you. I think there are probably times where we disagreed over tokens versus equity as sort of like the prime focus. Yeah. And I think we are on the same page now. All right. What else do we have here? What if any hardware developments are you most excited about? So I am excited about the new era of hardware wallets actually. So a block, formerly known as Square, just came out with a Bitcoin hardware wallet, which is really interesting. It's just like a little hexagon, I think. I believe you interact with it via NFC. So you'll see more of that. I really like the idea of just little. Pucks that are NFC wallets.

Maybe you can use a multi-sig, you know, moving away from the old form factor of just a ledger or a trezor that you plug in. So I think we are about to see an explosion in interesting approaches to hardware wallets. So my answer to that would be there's a bunch of startups that are working on these zero knowledge cryptography hardware devices. So it'll be interesting to see what comes out of this. but just the idea that privacy starting at the hardware level could power some of these protocols in the future.

I think you'll probably see some L1s built on top of this technology at some point in the next five years. Yeah. Also, this isn't a crypto answer, but I'm excited about these AI wearables. Oh, yeah. So like full disclosure, I'm an investor in Tab, which is an AI pendant that you wear. And it listens to all your conversations and then synthesizes them. and you can ask it later about what you talked about that day. I'm really bullish on that sector. Kind of scary, but yeah, it seems like it'll be big.

Megan says, what would be the first thing you would do if you entered the oasis of the seas, which is a cruise ship? I actually just saw it on the way over here. Okay. This is your favorite ship, right? No, my favorite is the icon of the seas. Oh, icon of the seas.

Yeah, which I made a fan cam for yesterday, and no one liked the video. Why do you like this cruise ship so much? It's really big. It's really impressive to look at. I think it's a feat of engineering. And it makes a lot of people upset, which I like as well.

But to be clear, I don't want to step foot on the cruise ship. It's not for me. I don't want to go on the cruise. Yeah, I just appreciate the artistry. It's like, how do you pack all the seats? stuff into one boat. That's amazing. Oh, yeah. And how long

does it take to get people on and off of that thing? I would never get on a cruise ship unless I had to flee in a cruise ship. If like Boston was burning and the only way out was to get on a cruise ship, I'll get on it. I'm not getting on and going cruising on a salmonella cruise. Yeah, I mean, what impresses

me is also the logistics of the cruise. Like they turn these things around in 24 hours. So you're stalking a week's worth of provisions to support 7,000 people. for a week and you're refreshing the entire ship in 24 hours. That's amazing. One more here. Can you steal man the argument that Ethereum will end up being a more valuable protocol over time? Basically that this Ethereum will be the number one coin. I'll give it a shot. Okay, you go. You go. Whoever put this in did not specify time periods. So I think the easy answer

to Steelman, I don't think this will actually happen, would be if the block emission, if the subsidy basically doesn't work. And so the FUD that you hear around, okay, once the miners are no longer getting the block reward, what happens to the stability of Bitcoin? And maybe if that were to happen, Ethereum just has a better, you know, economic policy over time and maybe that could emerge. Again, I think Bitcoin fees will increase, though. I would say you would emphasize the adaptability of Ethereum to react,

to new circumstances. I would emphasize the fact that Ethereum leadership turned Ethereum into a protocol that has some notion of capital return to token holders through staking, you know, fees being expressed as a capital return. And I mean, factually, Ethereum does have more economic usage than Bitcoin. That's true. So I guess you could say it might be the case that that ends up being the most important thing for an L1 is a robust and vibrant economy built on top of the blockchain as opposed to just sort of the inherent qualities of the of the asset. It's a good answer. All right.

So I think 501, it's in the books. Yeah. Here's to another 500. All right. We'll keep it rolling. Thanks, everybody. Have a safe and healthy weekend. And we love all of our listeners.

See you on Monday.