On The Brink with Castle Island - Weekly Roundup 07/02/21 (Eyeball based coins, why airdrops don't work, the Mining Council shares data) (EP.227)

Episode Date: July 2, 2021

Nic and Matt return for another week of news and deals. In this episode:  A new twist in the turkey tale Why airdrops historically haven't work Sam Altman's eyeball-based cryptocurrency Brady partners up with FTX The FCA tangles with Binance Nic's paper on DeFi risks NYDIG deepens their bank partnerships Mexico's bitcoin rebuke Coinbase's aggressive new strategy The Bitcoin Mining Council shares Q2 data This episode supported by:  Eventus, the leading global provider of multi-asset class trade surveillance, transaction monitoring and market risk solutions. Its award-winning trade surveillance platform is easy to deploy, customize and operate. Eventus is proven in the most complex, high-volume and real-time environments and supports many of the industry's leading crypto exchanges including Coinbase, Gemini, ErisX and OSL. Find them at onthebrink.link/eventus

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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 quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called a Bitcoin. Bitcoin. Welcome to On the Brink.

I'm Matt Walsh. And I'm Nick Carter. Recording this one a little bit early, but it's nice to see you. You've been on CNBC. been all over this week. That's right. I'm making the move. I'm diversifying my TV exposure from Bloomberg to New Horizons, now to CNBC. Just moving up in the world.

Well, certainly laterally, they were kind enough to give me a slot. You know, they didn't ask me a single thing. So, like, the way it works on, like, financial TV is they ask you for talking points, and so you tell them what you want to tell them. And then if you're lucky, they ask you the questions that, irrelevant to the talking points you gave them. But in this case, they didn't ask me a single thing that was relevant to what we discussed we were going to talk about.

And so everything was 100% new to me. It's like, okay, come up with extemporaneous answers on this stuff. So what did you think you were going to be talking about? The mining transition was really the main thing. Well, you had some hot takes on finance in lieu of that, I guess. Yeah, I just had to come up with, you know, some money. finance stuff. But yeah, I thought we were going to be talking about the mining transition. Hot takes on finance, some thoughts on Coinbase. It was good. I thought it was a good appearance.

In podcast news, we had a good podcast this week with Kinjul Shah of blockchain capital and Manasi Vora of Skynet Labs. They sat down and had a conversation with RIA around Dow's. Dow's is the new investing paradigm. So another busy week on the podcast. Are Dow's the new investing paradigm? Are they the new organizational unit of choice? They might be. I think there's a lot of there's going to be a lot of questions from regulators for sure, but there's a ton of capital currently in DAOs. There's tons of entrepreneurs that we're speaking to every week that are setting out on the course to build DAWS. So they might be. I feel like we need the equivalent of the East India company for DAWS. We haven't had yet.

a watershed moment as it pertains to Dow governance? Well, I mean, we all we had a watershed moment for Dow governance, I would argue with the Dow that was sort of the watershed moment for Dow governance. It might not have gone great. Oh yeah, well that's right but um like a functioning Dow like we need an example of a Tao that really you know just like succeeds and works and sort of has robust controls and things like that. I don't know if we've seen that yet. Well, I don't know. I guess this is where you'd have people argue that some of these treasuries that have decentralized sort of are doing that, like maker. And so I guess the degree to which they're actually DAWS is a big open question. And you can argue that from both sides. But

like it or not, that experimentation is definitely underway right now. So I think we'll we'll see it play out. It'll be interesting to see how it works just from a governance perspective with the people. It'll be interesting to see how it works from the investor perspective. And it'll be really interesting to see how the SEC thinks about it. Totally. So the Brink Nation, is a Brinker's or Brinknation I keep forgetting? We got some very direct feedback on that. I think people didn't like be called Brinkers. Anyway, the listeners of this podcast have yet again requested for an update on these feral turkeys that are terrorizing your family. So what is the update?

Have you remediated the turkey problem yet? So they don't, yes. Well, no, I've not remediated it, but I've decided that we're going with the fence. We're going with the fence. The threat of violence did not work. I didn't feel great about the violence. And I did kind of come to this realization that if you have a neighbor who's just feeding turkeys all day, you're just going to have turkeys. And so you're going to need a fence. Now, the

X factor is that they fly. So, you know, a lot of people might not realize that, but they're birds. I was going to say, I mean, there's a fence really going to, they think in like all three dimensions, you know, they've got the vertical ability too. They go up, yeah. And they, they roost in trees, which is just a really alarming thing. My neighbor, my other neighbor has a skylight. And occasionally he'll have like a turkey looking in to his bedroom which is just talk about a nightmare and so i'm just going to go with the fence and we're going to see how it goes and you know maybe we'll move maybe maybe i'll move if it doesn't work so the thinking is that while they may want to get into your yard the fence would be just too much of an impediment well i just need a little bit of a deterrent

just a little bit. All right. Well, we'll see if it works. We'll find out next week. Probably take about five months to get a contractor to put up a fence in this market. It's absolutely crazy. What, you can't just dig some holes and do your own fence? I might.

I might. I mean, I'm not the handiest guy in the world, but we'll see how long it takes. So I guess we should talk about deals. There are quite a few. Yeah, let's get into it. First one up is Mercurio. Mercurio, Mercurio, across-border payments company. They raise $7.5 million in a Series A funding from Target Global.

Next up, we have Nancy, a crypto data company. They obviously specialize in attribution, in particular for defy, but just more generally for Ethereum-based address. and entities, they raised $12 million from A16Z, Coinbase Ventures, Mechanism, Capital, QCP, and others. Next one is the Deutsche Borse Group. This is an exchange holding company. This is one of the largest exchange holding companies in the world, if not the largest.

They have acquired a two-third stake in a company called Crypto Finance AG, which is a diversified crypto financial services firm. This is a big deal for sure. So to have Deutsche Borges take such a big move into this space. So crypto finance AG is doing things like trade execution, they have asset management products, they have custody. So this is a big, big deal. And I think I'm not an expert, but I believe the German regulatory environment is actually reasonably accommodating as far as crypto is concerned. Well, yeah, Coinbase actually got a custody license this week from Baffin, which is the German financial regulator.

So things are evolving there pretty quickly. And it seems like with more of these, quote unquote, institutional participants, the liquidity landscape will probably mature in a hurry over there. Next, we have blockware mining. They're mining and staking company. There is $25 million. Next is mintable. This is a marketplace for NFTs. They raise $13 million from Anamoka Ventures, Metapurse, and others.

Then we have Valkyrie investments, which is a crypto asset management firm. They raised $10 million from Precept Capital, Justin Sun, Charlie Lee, and some others. Next one is World Coin. This was interesting this week. There was a Bloomberg article. This is a project that Sam Altman from White Combinator is behind. So it's a project that's introducing a new cryptocurrency. They're going to tie identity by doing retina scans, it sounds like.

They raised $25 million from A16Z, Coinbase, Reid Hoffman, and Day 1 Ventures. Are you going to scan your retina to get some coins here? I have weighed the costs and the benefits of, you know, surrendering my biometrics in order to achieve an air drop, and I have chosen to not. You're just going to see how valuable it gets before you turn over your retinas. But maybe they'll give incentives to early scanners. They probably will, right? So, yeah, give up your retina early. I saw some good jokes about how in the dot com the metrics, you know, the valuation metrics went from, you know, price earnings and, you know, price book to like eyeballs on the page, right?

Yeah. Now this is literally monetizing eyeballs. It is. Yeah. It's that we've achieved the dreams of the analysts from the dot com bubble. Now, I've always thought that there would be some sort of a retina. scan tied to unlocking a crypto wallet. It just seems like if we could ever get the technology really bulletproof on that

side, it would be a lot easier than storing phrases. My understanding from what experts have told me is that biometrics should be analogized to the public key, though, not necessarily the private key. Because ultimately how concealable is your, for instance, your retina. scam like a high quality camera could potentially capture it just as you're walking through. Yeah. So I don't think it would suffice as a private key, you know, equivalent. Yeah, that makes sense.

But I think the retina in this case is a proof of uniqueness, right? And so that's like kind of the point is that, you know, when Satoshi created Bitcoin, Sasocia didn't have a way to distribute Bitcoin to the world's population and, you know, chose to use proof of work instead. But in this case, I suppose everyone's retinas are, there's enough kind of bit space there, like people's retinas are sufficiently differentiated. You're not going to get collisions? I don't know.

Do you know? I don't know. That was my big question, is that are retinas sufficiently unique? I mean, you'd think maybe they are. Probably if you scan them with a high enough degree of fidelity. But then maybe they change over time. and so do like what happens if you get an eye injury, you know. You get more coins.

Scan it again. You're a new person according to the protocol. That's kind of a perverse outcome of the system. But yeah, so I guess the point is that you're enforcing uniqueness here. So this is a way of doing a fair drop, you know, universal basic coin. Now, will it beat Bitcoin? Will it be a better Bitcoin? TBD. I don't think so. So the interesting thing about these airdrops is that people just value them really differently.

So we've seen air drops on a ton of different protocols. The stellar one that I think they did it with Facebook comes to mind where people activated them just to dump them quickly. And so you ended up with these people that were almost, it was almost like the Russian voucher program where people were forming little groups to just buy up the airdrops. So they don't actually have the effect of as fair of a distribution as maybe people think. Totally. Yeah. I mean, you can kind of get people to engage with your thing by paying them to do it through an air drop.

But it's hard to get people to actually stick around. And that's always been the issue. I mean, Ripple and Stellar had all their air drop programs. You had clams, lightball. I mean, there were so many eardrops back in the day and they basically didn't work. what did work, creating an interesting product that people wanted to use. Like Bitcoin has obviously not had an airdrop. I mean, there were some faucets in the early days, but there's no formal air drop.

But the Bitcoin ownership keeps just getting more distributed because people value the system inherently. Same with the theorem, actually. If you look at the distribution metrics, it's like constantly getting more dispersed and smaller. Those are basically the only blockchains where we've seen that sustained growth in ownership over time. And others have stagnated, even if they've had air drops. So, you know, the cool thing is that we can sort of empirically measure the success of airdrops. They've been largely failures so far. Oh, you're right.

It all comes down to building something useful. So people, net new people are coming into Bitcoin and Ethereum at pretty aggressive rates. And so the distribution of wealth is changed. changing over time and you have you know early holders obviously selling off some of their their coins but that only really works when you've built something useful which i guess all of these things are just kind of building cities that you know cities in the sand that they hope people come to at the end of the day yeah you can't have distribution without a product you need product also so yeah your your point about russian vouchers is well made i mean it was kind of the same situation like

when the Soviet Union was de-collectivizing all the state assets, as it was collapsing, just for the audience's benefit. I know you know this. They tried to give, you know, citizens, stakes in local, basically corporate assets factories, things like that. And so you were entitled to claim your share of these state assets that were being spun off and being privatized effectively and they did it through a voucher program but the problem was nobody knew how to value these things they didn't know if they would be valuable and in many cases they just sold their vouchers immediately to like opportunistic you know hedge funds and like speculators basically and so

the concentration of wealth I mean Russia and the post-Soviet Union era was unbelievably concentrated in terms of wealth like the genie coefficient was like completely through the roof. That's why we have the oligarchs, you know. So, you know, you might think that a transitional moment like that would be an opportunity to kind of reset societal inequality, but actually it ended up doing the opposite and making, you know, these formerly state assets concentrated in the hands of just a tiny handful of oligarchs

effectively. Yeah. And then those days, I think, was Bill Browder, who is one of the most prominent hedge fund guys, who was going around and buying up these vouchers, if I'm not mistaken. And, you know, with similar schemes in the crypto space, you'll have crypto hedge funds that go out and buy up a lot of these things. And I guess that that's how it'll evolve. Yeah. So I guess the message is you can't just engineer, you know, a widely distributed and dispersed like crypto asset or new currency.

There has to be demand. It has to be organic. All right. Let's keep going with the deals. SoftBank has invested $200 million in Mercado Bitcoin, which is a crypto exchange based in Brazil. Just a huge deal here in a market that's growing very, very quickly. I mean, extremely telling that SoftBank is now getting,

involved in the crypto space with direct startup investments. I expect we'll see more of that. Next up, we also have community gaming, a crypto e-sports platform. They raised $2.3 million from Dapper Labs, Multi-coin, and others. And additionally, FtX, the crypto exchange, everybody knows. They announced an investment from Tom, Brady, and Giselle. and not only that, Tom is now sponsored by FTCX in addition to investing in their equity. Could Sam Bankman-Fried be any better of an entrepreneur here?

I mean, just talk about a savvy, savvy move here. I mean, I'm sure that the math here is that just look at history has shown us that teams that Tom Brady joins, they tend to have great morale, great clubhouse chemistry, some would say. and they tend to win championships. And, you know, they, they tend to have championship parades like every year or two, basically. I can't really deny that. I think you might be a little biased due to your, you know, immense standing of Brady historically. But, yeah, I mean, it seems savvy.

FGX is leaning heavily into the sports angle. Obviously, sponsors the Miami Heat. I thought that was very topy, must say. I thought that was a top signal. I mean, not that FTCS. They keep nailing these endorsement deals. It's pretty cool. It's not that they need more help over at FTCS.

That's a monster. But I mean, help is on the way right now with Tom Brady. I mean, it's just whether you like it or not, you're going to be a dominant, dominant franchise. So Tom did a Twitter Spaces, which apparently you missed. I don't know how you missed Tom Brady Twitter Spaces. I follow him on, I guess I don't have my notifications set up right. Yeah, that's disappointing.

He also had the laser eyes for a bit, and then he said that the laser eyes didn't work. They didn't. No, he put the laser eyes on at the top, and then we lost like 50%. So they definitely did not work. So it's time to try something new, Tom. I mean, he did post a video of him throwing a Bitcoin into the moon. It hit the moon, yeah. It hit the moon.

So, you know, I guess he's trying all kinds of stuff. What did he talk about on the Twitter spaces? I wasn't on the spaces either All right Well we got to figure out Next time he does a spaces Just if you If you're out there

Just drop us a DM And we'll make sure that we We hear about it I wish they recorded some of these Twitter spaces I mean I just naively figured That you would have that spaces on lock Because you're the Bitcoin and Brady guy Yeah I know

That's I don't know I need to figure out the The Twitter space I didn't even know you were talking to the president of El Salvador I mean. Well, I didn't know that when I started that spaces either. Yeah, it's market moves fast. So I guess there was some news this week. Fair amount of regulatory. I guess we can start with that. The UK, the FCA, that's their top financial regulator. Historically pretty hostile to crypto, dare I say.

they have told Binance Markets Limited that they can't really operate in the UK and apparently I believe that there was some additional news about banking linkages to Binance

for UK clients being severed Yeah so the whole like organization structure of finance is pretty opaque. I don't know if anyone really has a good handle on which subsidiaries operate where And so it doesn't sound like this is the parent company that had been operating in the UK, although who knows, maybe it is. And so the effect here seems to be that they have shut down as of June 30th, the ability to advertise, do financial promotions in the country and just serve UK residents, basically because there's not a license in place.

And so we'll see how that evolves. But one obvious choke point would be the banking kind of on ramps into that venue. that you could shut down. It would be interesting to see what this does, if anything, just to the liquidity landscape. I don't get the sense that this is really that big of a deal if you just look at overall kind of volumes on Binance writ large shutting down this country.

Yeah, I mean, the UK probably material, but certainly not even, probably not even the top five, you know, client domicile for Binance. maybe I'm wrong about that. I will say I, you know, I did see a lot of people protesting saying, oh, you know, the FCA only shut down a subsidiary or they didn't shut down the parent co from operating in the UK. But, you know, I don't really believe that, I mean, if the FCA wanted, they could eliminate finance ability to do business in the UK, regardless of how many like shelf companies there are being like shuttled around. And, you know, they're not a regular to be trifled with.

So. Yeah. And I think this is just part of a broader theme around how the exchange landscape is going to evolve here. You're going to have institutions like Coinbase that are just going to go out and get licensed in these jurisdictions and try to play by the rules. And you're going to have others like Binance that just go fast, break things, decide not to do some of these activities or selectively, maybe it was a better way to say. selectively do these activities through subsidiaries that get licensed and maybe have different capital structures. So it's evolving pretty quickly. I think the global regulatory landscape is still grappling with how this is going to work. The other interesting exchange news is the

continued pressure being applied to the mainland exchanges in China will be and Okiecoin. And so it's not 100% clear what's happening there, but it continues to look like the flow of assets from the yuan to crypto markets is just being choked off. Not entirely, but much more aggressively managed. Was there some news that some of the entrepreneurs are looking to leave, some of those exchange entrepreneurs? Was it Star from OKCoin that was kind of rumored to leave?

Yeah, Starshoe posted a somewhat cryptic image on the socials, implying that he was leaving China. I think Wang Chun, the founder of F2Pool, has also completely reoriented his business, such that it's outside of China now to eliminate all of his externalities there. So maybe even an entrepreneur flow, in addition to how. cash rate flow out of China now. I mean, this is not real estate advice or anything, but if I was one of these entrepreneurs, I think I'd probably look for somewhere else to live. It's just tough being a tech founder in China. As we've seen in the last year, there's kind of an upper boundary to what you can achieve

before your assets get nationalized. There's not a lot you can do about it. Happened to Jack Ma. You know, it's happening to Ant Financial. The idea of like going on a vacation that you didn't really want to go on and just falling off the grid for like a half a year doesn't sound that good to me. No. So the interesting thing is that I think minors now have this renewed appreciation for like political stability and the rule of law and property rights. Possibly even more so they might be waiting that more heavily than just cheap power now.

Yeah. Yeah. All right. So the next one up is, so Compound Labs had an interesting announcement this week. So this is, of course, the team behind the compound protocol, one of the largest Defy protocols. They've launched Compound Treasury, which is a brokerage platform that is geared towards businesses to allow them to earn stablecoin yields on their treasury accounts. So big opportunity. Obviously, there's tremendous just yield to be had here on US dollars within the context of Defi. And so Compound is building a brokerage platform to, serve that use case. Can we call this CDFI? Is the CDFI or is it just still defy? Yeah, I think this is part of the

evolving landscape here where you're going to have centralized brokerages just giving people access to defy. So I guess it's CDFI. I don't know. I think eventually the lines just get completely blurred and it's all just like finance. Yeah, this is one of the

actually this is one of the risk factors I talked about in that paper that I wrote with Linda Jang. I'm not sure we talked about on this show yet. The paper? Yeah, we briefly touched on it. But yeah, let's tease it out a little. I think you've been stonewalling me on this paper. Paper's great.

I'm trying to promote it on the show. I don't know what's going on. Read the paper. Well, yeah. So it is the top 10. It's in the top 10 of the most read papers on SSRN last month. So it turns out people have a huge. appetite to read.

SSRN. If you don't have that like bookmarked, I don't know what's wrong with you. Well, academics actually do know what that is, Matt, for the record. So, you know, it's where you post your draft papers, basically. But yeah, so that was one of the risks is,

you know, centralized services interoperating with DFI protocols and being exposed to kind of weird, new flavors of risk that they'd never considered. I mean, obviously, compound is considered these things, but fintech company that's plugging into defy yields maybe hasn't or at least hasn't communicated them to their end clients. So it would be pretty interesting to see,

especially if there's sort of like abnormalities or anything that goes wrong under the hood in defy. We know things go wrong. Yeah, there's going to be a ton of fintech companies just looking to introduce these type of accounts. I mean, why wouldn't you look at something that can generate a 4 to 5% yield on US dollars within the context of a fintech app. So I think there'll be a lot of these product pushes. I guess the question is, do they fully disclose that that yield is being generated by defy or do they seek to obfuscate it? I think they're going to have to disclose how that yield is being generated.

Yeah. And I don't know if we have enough data yet on basically critical risk events. I mean, do we have enough data to ensure these things? yet. I think, yeah, I mean, there's a lot of them, a lot of risks, right? Just smart contract risk. You know, these things do occasionally get borked. Interestingly, most of the, like, rug pulls and various protocol failures, they actually seem to be happening on Binance smart chain these days, as opposed to Ethereum. Have you noticed this? Yeah, there's, it seems like every day there's a new rugpole or just complete catastrophic loss of funds on finance smart chain.

It's comical. I think the reason for this is because Ethereum had this gating factor in the form of fees, making it, you know, creating kind of a threshold of sort of competency that was sort of required to write a smart contract, write and deploy it, because you were always going to face some fees. And then BSC kind of abolished the fees and permitted virtually anybody with, you you know, even basic programming knowledge to make, you know, some like, quote, unquote, yield generating pool or something like this. And then you had just had tons and tons of, like, copy pasting and, like, iteration.

And I think it just meant that the average, I don't want this to sound harsh, but like the average standard of developer that was active on BSC was probably slightly less than active on Ethereum. Yeah. And so now you have all these shoddly written contracts, which are easily exploitable. Yeah, it's like, you know, your entry-level Java guy, JavaScript guy, and, you know, all of a sudden you're managing a smart contract with $100 million in it, and that's probably not the safest place to be. So there is some cool news. This, this 9-Dig and what's called core banking, these engagements, keep.

deepening. So the new one is that they've struck a deal with NCR, which is another core banking provider. And NCR apparently services 24 million customers. Additionally, this week, NIDIG took out a full page ad in the WSJ with this gigantic banner Bitcoin for the people. Did you get a copy of yesterday's newspaper by any chance? I didn't get a physical copy. I do the digital edition. But yeah, that was really cool. Full page.

That was something. So we talked about this last week, but basically the gist of it is that all of the through these core banking providers, and by the way, they like don't work with each other very often. You know, they're very competitive. So the fact that Nidig managed to get so many of them on board, capturing the vast vast majority of the market is pretty impressive. The TLDR is that through these providers, which provide sort of the key operational software to tons and tons of banks, there's like

5,000 banks in the U.S. They obviously can't write their own full operational stack, so they outsource it. If banks opt in, the clients of those banks will be able to buy, sell, hold, Bitcoin, through, it won't be custody by the bank, it would be custody by NIDIG, but they would effectively be able to seamlessly create an account with NIDIG through this engagement, with the bank passing on kind of K-Y-C information, and with the account obviously already being funded. So it's just like a much more seamless way of creating a brokerage relationship. Yeah, and if you're a community bank CEO or CEO of a credit union, this seems like a no-brainer because if it, you know, no one uses it, no one uses it, but it turns into an additional

revenue line that is really low friction in order to add. You don't have to worry about custody or trade execution. You just add the integration and people can buy, you know, crypto assets on your platform. Seems like a no-brainer to me. And to be clear, the banks themselves, I know a lot of people keep the thing about the Basel rules. We've had the clarification on the risk-weighted capital Yeah, that's just for their money. It's not for customer funds. That would not be relevant here because the banks would not actually be holding Bitcoin on behalf of clients.

The banks would not be holding Bitcoin on the balance sheet. In this case, the bank is an interface through to the Bitcoin brokerage and custodian. There was another kind of banking story that I thought was interesting. It was actually I think this was maybe the front of the business section of the Wall Street Journal. So Ricardo Salinas Pliego, who's the chairman of Grubo Salinas, the parent company of a bunch of banks, including Banco Azteca. So he's a Mexican billionaire. He announced in a pretty public way that his bank will soon be accepting Bitcoin

and that they're really leaning into Bitcoin. So not every day that you see someone of that stature leaning into it and just telegraphing product decisions. So what is kind of interesting is that right out, After this announcement, the Bank of Mexico, the Mexican Central Bank, came out with a statement saying, this country's financial institutions are not authorized to conduct or offer to the public transactions with virtual assets like Bitcoin. And so there was kind of a bit of a rebuke to Ricardo Pliego. So what? They read the Wall Street Journal and they just said, no, no, no, no.

Well, I'd be reading the Western Journal, too, if I was a central banker. But yeah, they didn't like what he had to say. Well, that's just like their opinion, but I guess, unfortunately, their opinion is the law. Yeah, it carries some weight. So, yeah, the quest to Bitcoin-Ice Mexico continues. Live to fun another day. So one thing I want to talk about is this Brian Armstrong blog post this week at Coinbase, which I thought was really, really interesting.

interesting and I think under discussed. So he wrote this blog post called Embracing Decentralization at Coinbase. And he lays out a bunch of future kind of ambitions at Coinbase. So I'm going to kind of tick through what they are quickly and then we can talk about them. So one is to bring more assets to Coinbase a lot faster. And so accelerating their process for exchange listings, so evaluating new assets and getting them on the platform. So this is going to be streamlined. And And they're going to start adding more assets to the wallet as well and a lot faster. So there will be assets that they make a decision on from a securities law perspective. Maybe they can't go on the exchange.

They can't have a central limit order book type of functionality, but they can still add them to the wallet and allow people to store and move the assets. Second thing is moving Coinbase to be more of a global company. And so shipping products faster in over 100 countries. And so not, of course, every country, but the idea would be from their product perspective to really accelerate shipping the same product everywhere to the extent possible. And then the other thing they talked about was building a crypto app store. And so this is really interesting. I want to talk more about this.

But the idea that decentralized apps will become a much bigger part of the Internet going forward and that Coinbase would like to play the role as a curator of those apps and be in that flow. which is very, very interesting to me. So there's a lot to unpack here. I guess the last thing I would say is that there was also a pretty big emphasis on third-party interfaces and self-custody. So this idea that self-custody should be a big part of the future evolution of this industry and that Coinbase is going to lean into that as opposed to pushing to hold all apps on the platform. And of course, the Coinbase wallet as it exists today,

which I think used to be called Toshi, that is a self-custody product. And so they're already doing some of this, but they're pushing the functionality around self-custody. So a lot to unpack here. I guess the first thing to talk about is just this idea of adding more assets to the platform and how that factors into it. Yeah, I mean, it's clear they've already took a deliberate shift towards being much more aggressive with asset listings.

But the way I'm reading this is they want to actually increase the pace of new listings and actually kind of reduce the hurdles to getting listed on Coinbase. Is that right? Yeah. So they want to make it easier for an asset to get listed. And they want people to make up their own minds and do their own research on the assets. But what's interesting here is that the reason that Coinbase, I believe the reason that they had not been adding assets as fast is because they were unclear if some of these assets might

be securities. And they didn't want to have things trading on their exchange that were actually unregistered securities. And they would obviously be in some hot water with the SEC on that. And so there had been efforts in the industry to create these like ratings councils. I don't know if you remember the crypto ratings council, which had scores on various assets on a spectrum of whether or not they would be in violation of the Howie rule. And so you had like, ripple would, you know, kind of like on one spectrum and Bitcoin was on the other and most assets kind of fell in between. It seems like the suggestion here is that they're just going to move a lot faster here and that they're less concerned that some of these assets would be deemed to be

securities, is my guess. Does the ratings council still exist? They must do, right? So they do still exist in terms of like they have a website. It hasn't been a, updated in quite a while. These councils, you know, people were mad about the ratings council. Now they're mad about the mining council. Council is, yeah, council can be a word. Maybe council is not the right word. Maybe it's not the right word. I mean, could be worse. Could be cartel, you know, could be the Bitcoin mining cartel. You don't want to be called a cartel. You definitely don't want to be called to cartel. So speaking of the Bitcoin mining council, well, we're recording on Thursday. tomorrow you'll have known this by now by the time you listen to this but so tonight as in

Thursday I totally botched that the mining council is doing their first disclosure on the data contributed to them by pools and although I'd be front-running the announcement if I released it now because this podcast won't come out until Friday we can discuss the data that they will share or will have shared, depending on your temporal frame of reference. So anyway, it's pretty good. I guess you haven't seen it, but yeah, the miners that contributed data to this study are pretty disproportionately green. So good news on the mining front.

Oh, good. That's a good council update. Yeah, so they're going to be doing them quarterly. The other good news is that Cambridge is refreshing their data on minor location. through the pool attribution methodology. So now we've top-down data from pools and bottom-up data from entities like the council

that are doing disclosure. And through that, we're going to be able to build a very clear picture of sort of what miners are using energy-wise. So it's all pretty good. Well, let's see.

I'm just bracing myself for the Elon Musk response tweet here. Well, Elon, we've met the Elon threshold, okay? Or we're meeting it. We're making progress. towards the threshold. All right, well, that's good to hear.

So what are your views on the Coinbase app store? So this is the type of thing where if this version of the world, this vision plays out, where you have hundreds of billions of dollars of economic activity running through decentralized applications, you know, if defy takes another leap forward, if there's, you know, kind of consumer apps that use cryptocurrencies in really unique ways and that Coinbase can establish itself as the app store and not have to run things through Apple, then I think you're talking about the basis for like a trillion dollar business to be to be made here. Obviously, there's tons of ambiguity here and a lot of things need to go right. But to me, as I read this blog post, this is a very, very bold

vision that if some of these things come true and if they they execute then you're really setting the stage for just a huge huge company and it's already a really big company but this is this is the type of market opportunity that could be gargianchuan wow not mincing any words there i certainly agree it looks like an enormous swing i think the big questions they're going to have to answer would be this globalization of their product by going international on day one and the securities considerations with opening the throttle on asset issuance. We'll have to see how regulators react to that. But yeah, with you, huge, huge swing from Coinbase from an already public company. All right. So I think that's it for the week. A lot of deals this week. I think there'll be a lot more

next week as well. So we'll stay on top of it. But this space, continues to move very, very quickly. And can't wait to see what Brady comes up with next to save the market. I mean, how did we not have the idea to bring Brady onto our team? I mean, Sam is just 3D chess over there. All right, we'll see you guys on Monday with an episode with the founders of Talos. So have a great weekend, everyone.