On The Brink with Castle Island - Weekly Roundup 08/15/25 (DAT fine print, stablecoin L1s, banks vs stables) (EP.656)

Episode Date: August 15, 2025

Matt and Nic return for another week of news and deals. In this episode: We review the DAT fine print Why being in power is sometimes the hardest part Stripe and Circle announce their own L1s We make the case for stablecoin L1s  The irony in Stripe's L1 What about a DAT of DATs?  Bullish goes public Breakfast cereals Do Kwon pleads guilty BPI sends a letter to Congress complaining about stablecoin interest Can you prohibit stablecoin yield?  Bo Hines steps down Bessent says the USG will not be buying Bitcoin Is monero being 51% attacked?  Content mentioned: BitMEX Research, Treasury Company Advisory Agreements Julie Hill, Governmental Debanking

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

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

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. How's your week, Ben? Well, enormously stressful. not actually that's the truth of it what about you it's been a busy week so you're up in boston it's a nice 85 degree day that felt like 105 with the humidity it was real nice in boston beautiful public garden

boston common a lot of stuff going on this week we uh i debated having just a an angry start to this podcast talking about these treasury companies and just some of the slew thing i'm doing in sCC filings I'm going to tone it down a little bit, but I'm getting a little bit upset with what I'm seeing in some of these asset management agreements. You were built for this with the Edgar Fu we call it. Yeah, it's not illegal stuff going on. It's all fully disclosed. But can this industry, can we just keep a good thing going for a while? We're just not mess it up by doing really ugly treasury deals that have all sorts of backdoors that retail,

public is not looking at. We can't, Matt. We love too much of a good thing. And so anytime anything in crypto starts to work, even the tiniest amount, we turn it up to 11, and then we ruin it for everyone. And that's what's happening with the DATs. Yeah, this industry just has two speeds. It's just on or off, right?

That's all it is. And right now it's on. Yeah, I thought the BitMex research piece on the DAT agreement. was exceptionally good. Yes. It was very good. All right. We'll dive into that maybe after the deals.

I actually want to do a full-blown discussion about that. It must have been Johnny Beer who wrote that. I have to imagine that. I think that's Bitmex research is Johnny. Yeah, it was well done. It must have taken a while. We'll talk more about it. Busy week on the podcast,

Wyatt sat down with Huff Hoss, the founder of Pair Protocol, talking about crypto market cycle, trading strategies. And you sat down with Nathan McCauley. Once again, the CEO of Anchorage, of course, talk about Genius, the stable going white label. Talking about Anchorage Prime.

That was a good pod. Enjoy having Nathan on the podcast. He's in the inner circle with a lot of these policy conversations. So it's always interesting to get a market update from him. Be interesting on this market structure bill. The problem right now from where I sit is that there's some factions in our industry around how they want that market structure bill to function. And so what I'm hearing from certain politicians is,

can you guys just decide what you want and then present a recommendation? Because right now you have like three or four different factions that are kind of warring here within crypto industry. Well, the thing about crypto is we love to snatch defeat from the jaws of victory. We do. That's what we're doing here. I think you get a bunch of good market structure stuff via rulemaking from the SEC. but not good enough.

We're going to need legislation. Yeah, but when has the crypto industry ever been united? I don't know if I can think of one thing we've been united on. I mean, I guess we all sort of want a genius. Yeah, we all want a genius. I think we were united as an industry behind the backlash to the infrastructure bill under Biden, where they put all those crazy permutations in around if you run open source software, you need to be like a broker,

the broker rule under the IRS, just all the nonsense stuff. The industry is good at getting behind. But the market structure bill is just complicated. So the definition of an ancillary asset and what's a security, what's not a security, how does that function? I think reasonable minds can disagree on that stuff.

Yeah, I would say it's easier to be out of power. It's easier to collectively rebel against things, right? When you're in power, not say we're in power per se, but we have more power, then the factions show up. Yes. So you're in fighting because the stakes are real because now you can win,

but not everyone wants the same thing. You know, Andresen doesn't want the same thing as paradigm, I think. That is kind of the faction. It's Andreessen versus Paradigm in terms of the ringleaders and the groups here. I don't even know who stands for what, to be honest with you.

But that's it. Winning is hard. Sometimes the hardest part is once you've won. Now what? Yeah, then you got to govern. Yeah, that's the worst part. All right, so let's hop into some deals of the week. First one up is a dat.

So this company is called Heritage Distilling. It is a crypto treasury company. What protocol is it for? It is for the story protocol. And this one raised $220 million from Indrisen Crypto, polychain, and Amber Group, among others. When I saw this, thought it was like a tokenized whiskey play because we have those right like baxus right it's that

tokenized wine yeah i was at a conference uh was that bourbon one i was looking at a free sample i was looking at one where you could buy a medira bottle from the founding fathers that has never been on court do you think that still tastes good 300 years old probably not i mean does anything stay that long maybe can you imagine a flex having a dinner party and opening up a 250-year-old bottle of, I guess Madeira is what, fortified wine or something? What is Madeira? I've never had Madeira.

I don't know it's a place. That would be nice. So I did think about buying it, but then I realized that it would be a completely insane thing to do and you probably can't drink it. Well, you and I are angel investors in a mezcal company. Oh, yeah. Rosaluna.

Rosaluna, the finest mescal. You can get it at Soho. house you can get it almost everywhere now up here it's crazy it's really taken off we didn't see how they're doing so this is not a tokenized whiskey company this is a tokenized story protocol company story protocol does it exist or is it pre-launch no that exists there's a token that's out yeah yeah yeah well we're going to touch on these dots more in a minute uh the next one is alt-5 sigma corporation their crypto treasury company for world liberty financial they were 1.5 billion from the World Liberty Financial Team and others.

All right. Why not? Next one up is usd.a.i. This is an AI hardware-back synthetic dollar. There raised $13 million from Framework, Dragonfly, and CMT. I actually thought that one was pretty interesting. Next up, we have Bit to Me, a Spanish digital asset exchange. There is 35 million from Tether.

Wow. Yeah, big deal there. Next one up is Transact. This is a crypto payments company. they raised 16 million from Tether, IDG, Capital, and 1KX. Then you have a mesh. They're a crypto payments orchestration platform. There is 10 million from PayPal, Ventures, Coinbase Ventures, and Marana Ventures.

Then it's Honeycoin, a cross-border payments app. There raised $5 million from Flourish Ventures, Visa Ventures, and Antler. Honeycoin. Do you ever have Honeycomb cereal? No. I had HoneyBunches of Oats. That was the only, like, we weren't allowed. to eat the cereals that the American kids ate.

That's probably for the best. Yeah, we generally tried to have raisin brand, but sugar, whoof. Like lucky charms out of the question. Out of the question. Cinnamon toast crunch, absolutely forbidden in our household. The one we were allowed, the special treat for us, was honey bunches of oats. It's still pretty healthy. It seems like you've probably avoided the type two diabetes plague, which had to have

had something to do with those sugars. I think the notion of breakfast cereal is absolutely insane. Yeah. Cookie, what was it? Cookie crunch? Cookie Crisp. Wasn't that just, that was just cookies, basically, right?

Yeah. It was just like. Then you had, where are those, what's the one with the tiger is the mascot? Oh, Frosted Flakes. Frosted Flakes. It's just sugar, right? Yeah. How is that a thing?

Like, you're getting a massive carb and sugar dumped right in your bloodstream first thing in the morning. I guess maybe as a child you can handle that, like as a grown-up? I don't think you can handle that as a child even. Maybe you're energized for the first hour of school and then you're crashing. Yeah. I mean, I don't eat breakfast when I do it's eggs, basically. Eggs, yeah, that's the way to do it.

I mean, the serial doctrine in this country is absolutely insane. You get RFK on that. Is he working on that yet? Yeah, I think they're taking all the dyes out of the, They're taking the dyes out of fruit loops. Well, that's good. Yeah, the fruit loops is disgusting. We're still going to have them, but the dyes will be natural.

That's good. Yeah. That's good. All right. Well, banned from my house, too. Next one up is Zero Dev. This is a wallet infrastructure company. They were acquired by Offchain Labs.

Offchain Labs is the development group of the Arbitrum Foundation. And lastly, interestingly, we have sceniest capital there, a crypto venture fund. There is $20 million for a fund to fund strategy. Yeah, congrats to Ben Jacobs over there at Sinius. Great shop. So congrats. Where to start this week?

Do you want to start with these digital asset treasury companies in the Bitmex post? Yeah, let's do that. Let's start with the dots. I'm going to give you the general stats here, courtesy of Blockworks. The Blockworks dashboard is really good. It's really, really good. It is quite good. So the thing that stands out to me, there's a lot on here.

BMNR, the Tom Lee Ethereum dat, more than doubled micro strategies trading volume on several days this week. Even though micro strategy is way bigger. So something is it going on there. ETH dats are up to 2% of ETH supply off of zero a couple of months ago. They're going to catch Bitcoin Dats on a supply basis, share of the supply. The MNAVs are coming down, generally coming down. down. The sole MNAV is up. ETHMNAV for on average for all the ETH stats is 1.3. Bitcoin 1 is down. It's about 1.5. So that's the that's the overall aggregates. Now tell me about the

Bitmix research post. What do they find? Yeah, I guess to just frame this up, so you're effectively investing in a closed end fund, I would say. People might have a different take on that, but ultimately these things are just going out and buying crypto and some of them are trying to increase the yield on that crypto. So you would think that that would trade it around 1x nav theoretically. But since you're locked up and it's closed end, maybe you would argue that would trade a discount. I think what's interesting and Bitmex went into this is you have to go in and look at the SEC filings to figure out what the companies are going to do with the money. And a lot of these DATs have advisory fee structures with investment managers in the back end.

So think about this is, and I don't think micro strategy has this. Like they just go out and they buy the Bitcoin themselves. But a bunch of these DATs have partnered with venture funds and hedge funds to quote unquote manage the money, which like what is there to manage here? Yeah, like what are the managerial efforts, you know? Like is it really that hard to issue equity through like prefer to acquire to. who got the money? Like, is that hard?

I don't know. I've never done it at a public company. Like, I seem to make the filings. Is it hard? I don't think so. And so I'm just going to read out some of these things. And I think my instinct here is to maybe not put people on blast in terms of who's getting this money.

If people want to research this on their own, they certainly can. So there's one called UPEXI, which is a Solana-focused one. They have an asset management agreement. basically the way this works is that it looks like there's a 1.7% fee on the assets that are held. So 1.7% of the Solana that is held there gets paid to this asset management firm. They also were given options to purchase 2.2 million shares at various prices that are, I believe, below where it's trading now. This is an asset management fee that is in place for 20 years.

So for the next 20 years, close to 2% of the Solana is effectively going to get taxed and sent to this asset manager. That seems kind of crazy. There's another one, which is focused on the telegram ecosystem, that has an annual advisory fee of 2% of the company's market cap for 20 years. So 2% of whatever this thing's trading at goes to this asset manager for 20 years. So you're talking about massive capital, in relation to what these things are worth.

So this should not trade anywhere close to 1.0. Yeah, that's a great point. That's a great point. I mean, think about the leakage on that. You have another one of these, which is Bitcoin focused, that has an arrangement with an asset manager that says, and this one is peculiar, so 85% of the gains in the Bitcoin price go to the equity investors

and 15% go to the manager. So you're just basically not getting the full. exposure. I don't know, man. This feels like a grift is kind of where I would net down on this. I think you've got to be really careful if you're looking at this through a retail lens and expecting these things to outperform the underlying. You know what, though? How about the way securities markets are regulated? Isn't it nice that this stuff is just written down and you can read it, albeit hard to find? It's super hard to find. It's super hard to find. And I don't. I give, so we'll post the thing in our newsletter, but it's blog.bitmax.com and slash

treasury company advisory agreements. And you really do have to sift through. And a bunch of these things are in SEC filings that reference schedules. Some of those schedules aren't actually there. So there's a bunch of these things where, you know, I don't think they've made the right disclosures yet. It is good to, it is good to have the Edgar database, though. Yeah, it's real nice. You know, stuff like this happens in the token world. doesn't get disclosed. How about market, how about clarity? Let's get that done.

Yes. But yeah, I agree. A lot of these structures, they vary widely. And it does add more fuel to the concept that they shouldn't trade at 1XMNAV.

I mean, a closed-down fund shouldn't in general, I would say. And, you know, there's also significant extraction going on very different, based on the entity.

I think these are going to consolidate. You need tons of consolidation. I think some of these things will just not exist. They'll be bought by other ones or they will just have to close their doors. These things, you know, fast forward six months from now. Some of these things are trading at 0.3x. Then what, you know? Yeah.

I mean, look, you got another one here that is there's two funds that are managing the back end of this. They have a tiered scheme between a quarter of a point and 1.2. percent per year to the asset managers based on the AUM that this publicly traded company holds with a minimum fee regardless of AUM of 1.25 million each it's like come on all right I do I have I have one thing that I need to address here which is a tweet from a certain Michael Saylor okay now you tell me if you think this is true so this is a tweet micro strategy trades at a premium to Bitcoin nav due to credit amplification all these things are capitalized weirdly an option advantage passive flows and superior institutional access to that equity

and credit instruments provide compared to commodities i think literally every word of that tweet is wrong you know who didn't like that tweet is uh jim chanos great minds matt great minds every single word of that tweet is basically it's it's false okay uh let's go through it credit implication that's just leverage. It's not making, doesn't mean the thing is like worth, it shouldn't trade a premium because you've leveraged. Options advantage? Maybe. Like, I don't know. That's a real stretch if you asked me. Passive flows? What are you talking about? Well, he's passive flows, I guess I think he's referencing that he's in some of these indexes. That doesn't say anything about the stock fundamentally. No. That would apply equally to every other stock in the index. And then,

And superior, this one actually bothered me the most. Superior institutional access, the equity instruments provide relative to commodities. Hello, we have ETFs. ETFs exist. If you want equity exposure to Bitcoin, get it today in an efficient format. That's crazy. Every word of this tweet is crazy. Yeah.

And it's not just, is it just me? Well, I guess there's chain house as well. But chain house doesn't like the dads. You don't like the dad. I don't like the dats, but I think we're, you know, we're probably the only three people, I guess it's fair to say at this point. So, and honestly, financially, this is the, we've made a huge mistake because, like, we should be shilling it.

Like, we should be a frontman for a dad. We should be the back end manager for a dad. Are you kidding? Yeah. We got $1.5 million for getting out of bed. Then you get a big slug of the carry on a publicly traded company. Yeah. I mean, this whole venture thing doesn't work out then, you know,

know. Let's go do a dad. I'll sell out. I'll take it all back. I'll take it for $10 million. I'll take it back. Long tail debt. I don't know. This is in the category of buyer beware and this is a classic thing that could just get overheated and cause a ripple effect in a negative way. Yeah, although, you know, we keep expecting, you know, multiple compression. Has anyone done a strategy that shorts the dat and longs the underlying or longs the dat if it's trading a discount and shorts the underlying has anyone done this not to my knowledge but i had lunch yesterday with a public equities manager who was talking very similarly to what you just said around some of the things that are going to start to happen here yeah what about a dat dat you know a dad of dats dad of dats that actually mostly

shorts the dots so maybe we call it a tad something. Oh, I like that. Inverse dat. A tad. Yeah. If I were to start a dat, that's what I would do. Convergence. Do the LTCM of Dats, you know? But it works this time. All right. So that's talking Dats.

Let's talk about this other story this week. So Stripe and Circle both announced their intentions to launch dedicated layer one blockchains focused on payments. Stripe came out first. They announced the launch of Tempo, which is a new L-1. The CEO of Tempo is going to be Matt Huang, who's the founder of Paradigm. He sits on Stripe's board. The next day, and I think it was the night before their earnings, Circle announced ARC,

which will be dedicated. It's a stable coin L-1, their version of this. What did you make of these two new L-1s? I think one of them is likely to be a huge. success and one of them not. Why is that? Can you guess which one, I think? Well, I'd say stripe has massive distribution advantage relative to Circle, who's an issuer.

Stripe is just embedded in so many places. That's it. I think the Stripe one could be extremely successful because they can get their entire network to use it maybe. So in stable coins, you win if you have the distribution, right? So that's actually why Tether won, right? They had the extraneous. That's why Circle one because they're Coinbase.

But Circle itself doesn't have the distribution there, the issuer. So I don't know if Arc's going to work. I think that's motivated by desire to diversify revenue with interest rates, cuts coming, which shall lax their revenue. But I do think the paradigm, sorry, the Stripe one could be a winner if they can execute well. it'll be interesting to see what the token model does on stripe you could imagine a world where this becomes a pseudo equity token and you could give rebates on stripe transactions it's almost like just a new payment network of sorts yeah there's an irony a little bit

well a significant irony in liking stable coins for the interoperability but then trying to get people to use your quasi wild garden um l1 yeah I will say a lot of people are mad at the stable coin all ones. I think they make a ton of sense. Obviously, we're an investor in one of them, you know, full disclosure. I do think they make sense. Look at the status quo. You're transacting on a blockchain with an alternative gas token that you have to use,

you have to juggle, you know, what about a fit-for-purpose blockchain that's built around stable coins? Why wouldn't that work? I think at least one or more of them will work without it. out. I wonder if it's such a good point around just the user experience of trying to move assets on a blockchain when you don't have enough gas to cover the, like enough of the native token to cover the gas fee. Yeah, we've all been there. I mean, how many times you use an L2 and it's like, oh, well, I need the gas token for this L2. Okay, well, then I also need like ether on the L2.

I can't just use regular ether, you know, and I've wrapped it. Like, what is going on? That's terrible. I'm sorry. It's an awful user experience. We can do way back. Just abstracting all that away would be the way that some of these L2s and other L1s with native currencies. If they were to just completely abstract that way. And of course, there are efforts to do this. But you can just pay stable coins as the gas token on another chain. Like that's what people want.

In a few years, people will think the old model was insane that we did that. Yeah. So it is a land grab right now. How many stable coin L1s are there, at least a half dozen? You got a few Tether affiliated, a few Circle affiliated, a few non-affiliated. Very interesting time, I think. Yeah, Circle got behind, what was it, Codex? I think Codex is a native L1 that has USDC as the native primitive, or at least they were thinking about it, I think.

And Tether's back to Stable and Plasma via Bifnax, not directly out of Tether. They want to keep morons length. But, yeah, I mean, I think that's one of the most interesting sectors in Stable. now. I think so too. All right. Other big news this week. Bullish. The crypto exchange, they went public, massively oversubscribed. They raised about a billion dollars, went public at 37 cents a share. I think it's up, it was up with like 90% the first day, at least. Yeah, all these IPOs are popping day one, although I think Figma kind of scared people a little bit, had to pop and then sold off hard after. But right now the meta is simply by the IPO. It seems to be working. Yeah, it's

Yeah, it definitely seems to be working. And you'd have to imagine a lot of companies in the crypto space are seeing the growth of circle and bullish on the public markets and saying, you know, let's get hurried up here. Let's get public. This was an interesting piece of news. Bitmine, of course, this is the Tom Lee, ETHDAT. They filed to increase their ATM stock offering program from $4.5 billion

to $24.5 billion, which is significantly more than the market cap. Ethereum at all time highs too. Is it officially? It was last night, but it's a lot of these DATs just buying a lot of Ethereum right now. Yeah. And the Ethereum price seems to be correlating heavily with the DAT pace of acquisition. I want to talk about this Scott Bessant thing. So Bo Hines was announced that he was leaving the, I guess the Digital Asset Advisory Council.

stepping down to work in the private sector. Today, Treasury Secretary Besson says they've started the strategic Bitcoin reserve. He says they're not going to be buying Bitcoin, but they're going to hold on to confiscated Bitcoin. I think Bitcoin sold off on this. I'm very surprised that anyone was surprised by this. I thought this was pretty fairly telegraphed by Sacks months ago where they said there's two kind of categories.

We're going to not sell the Bitcoin we have. and we'll buy more if we can do it in a budget neutral way, which to me means we might sell other cryptocurrencies that we've confiscated into Bitcoin. Yeah, I mean, people are now like theorizing that Bo left because Besson wasn't pro-Bitcoin enough, which is crazy. I mean, Besson's been very, very pro-Bitcoin, my view. And yeah, I mean, did people really think? Did they really think that we were going to sell all the gold and buy Bitcoin with it?

You'll believe that. Some people believe that, actually. Yeah, a lot of delusion out there in Bitcoin land, as we've said. So Bo Hines was, what was his title? Executive Director under the Cryptozar or something, but he's leaving pretty early. I mean, it's only been there for six months, but I guess at the same time, he said some big wins under his belt early, being able to get genius through. There's a little bit of a tumultuous process, maybe leaving on top.

It would have been nice to see him leave after getting market structure done, but my guess is that he's got quite a nice job lined up. Yeah, I'm sure there's something exciting for him to do there. Yeah, I can't say I'm surprised at all that we're not buying Bitcoin. I don't think we should do it. I mean, I've also been very clear about that. So not only is the thing I thought would happen. I'm glad that it's not happening.

My case for Bitcoin is not pretty common the U.S. government doing something or not doing anything. Yeah, and I think, look, I think they will buy Bitcoin. They'll just be buying it based on having long-tail-seased assets that they don't want to hold and move those into Bitcoin, right? Yeah. So there's a pretty interesting letter from the BPI Bank Policy Institute. There's a few BPIs. They are urging Congress to close the quote-unquote loophole around stable coins basically passing on interest to stable coin holders. And it's very funny because, you know, I guess like it's just so transparent.

Like they represent banks. The banks feel threatened by stable coins. You know, as they did actually with money market funds and all the banks survived that. So it amuses me greatly that it's just so transparent that they're just trying to protect their little cottage industry and their hate competition. It's also interesting that they think stable coins are going to be so enormously successful. Well, like they said stable coins could create $6 trillion in depository flight. Six trillion? Six trillion.

Which is nobody has forecasted or projected that. They're even more bullish than Besson. I know. I love it when the critics are secretly exposed how bullish they are and the thing that they're criticizing. Like, you remember people used to criticize Bitcoin mining. They'd be like, it's going to use all the Earth's power. So it's like, okay, so you just think that Bitcoin is going to go to a trillion dollars,

basically. So this is the same thing. again, they're saying it's going to cause trillions of depository flight. So you're just saying you think stable coins are incredible and everyone's going to love them. It's so I dislike the Bank Policy Institute for so many reasons. But one of the interesting things here is that they're trying to get people to put money in basically a less, an inferior product. So something that deposits pay like nothing right now.

And you have the credit risk to the bank. And of course you're going to have people opting for. stable coins. They're backed by treasuries and you can use them anywhere, interoperability. However, it's, they, they kind of won the war on the interest account. So the way that they won the battle. They won the battle, not the war, I guess. So they did, the bank lobby held up the genius bill and they were able to stipulate that the issuers cannot pay interest. However, they were not able to win a battle around the brokerages can do whatever they want. And so if Coinbase, wants to give you out of their marketing budget, they want to give you four and a half percent

on cash or assets that you hold on their platform, they can do that. That is not directly tied to the issuer paying the interest. It does kind of look like a loophole, but how else would you regulate this? You can't go tell Coinbase that they can't give away money. Yeah. I mean, you're basically trying to enshrine in law, you know, the prohibition of a model whereby a stable coin issuer makes a payment to an intermediary, whether that's an exchange or an app or a custodian, and then the intermediary makes a payment to the end holder user of the stablecoin. I don't think it's possible to prohibit that. Like you couldn't define all of the ways that it happens.

You could be so creative with it. Technically speaking, I just don't think it's practical. You'd have to almost say, look, as a stablecoin issuer, you cannot make a business-to-business payment. Because what's happening here is Circle is paying Coinbase for the distribution. And Coinbase decides to take that money and share it with the customers. How would you stop that? No, you can't. So I think it's, I don't think Congress is going to, you know, adhere to this request, frankly.

And I think it's good. Like the banks pay barely any interest on deposits. Why shouldn't the American consumer get a better product? You know, you don't have the. counterparty risk of holding an uninsured liability in a bank above 250K, and you're probably getting a better rate. So that's great, you know. I don't, I don't like this, this like shaming they do of anything that could suck a deposit out of the system. Like, okay, yeah, maybe there's less credit creation on net because we go to a more narrow banking model. But if the banks can't offer a

service, it's comparable. Like, that's just going to eat into their profitability. They have to hike the rates that they pay. Just because banks are and not the sole instrument of credit creation in this economy, it doesn't give them the moral high ground. We don't have to protect that at all costs. They're not even the ones

that are giving you mortgages anymore or like all sorts of lending happen outside the banks. So just because they do lending doesn't mean we have to protect their profitability at all costs. Just, you know, compete. Yeah, it's interesting. I had a experience growing up

where I had a passbook savings account. Did you ever have one of those, the old school books where you'd go in, you'd make a deposit, and they would update it physically. They would like stamp the new balance in. You could actually see the interest that you're earning. No, I've never heard about that in my life, actually. So this is before the internet, but kids will never have that experience because first of all, people don't go to bank branches.

Second of all, banks just don't pay interest anymore. Yeah, I mean, like, look, we're in a new age now. I think genius enshrine this. We're moving towards an air banking model, and that's fine. Everyone's sick of the banks. They never pay any interest. And people are moving towards money market funds and tokenized treasuries and staple coins. That's just what's happening.

And yeah, it's going to hurt bank profitability. That's fine. We don't owe them that. I think if you got a bank executive under truth serum, they would say, yeah, we don't share interest. But that's because we got blown out in the great financial crisis and we're still recovering. and also we just spend so much money dealing with our 20 different regulators. And so just the cost to operate a bank has gotten up so much over this past 20 years. That's fine.

I don't like this blackmail thing they do with. It's like, oh, poor me. Like I'm the only one, you know, putting credit into the economy and mom and pop aren't going to get funded and no one's going to get a mortgage. Like it's not even true. First of all, there's plenty of lenders out there. And yeah, look, you're going to have. pay more.

You're just going to have to deal with it. In other news this week, looks like Doquan, founder of Tara Luna, pled guilty to two charges of fraud relative to the collapse of Luna, changed his plea. I guess he's not going to do the trial. Looks like he's still facing,

what is he facing, like 25 years in prison? So this is in the U.S., right? It's not South Korea or Montenegro. Yeah, this is in New York. Yeah, so it's a lesson in there. Like you can do a defy thing, but you do have to tell the truth about it. Yeah, so we'll see what happens with that one,

but I feel like we haven't said that name in a long time. The other thing that was interesting this week, did you see Minero underwent a 51% reorg attack? Yeah, it's really hard to figure out what's true and what's not. There were a lot of rumors about deep reorgs. a lot of service providers saying they're reorgs. There is, I guess, a coin which has some... Cubic.

Yeah, which... Not being confused with Cubic Labs, which is the sponsor of the Boston Blockchain Week. Yeah, different... And they're apparently the biggest pool on Manero, and I think they have a meaningful... They're doing selfish mining, I think, and I haven't followed it that closely,

which is... I used to be a big Manero guy, too. and there's some incentive they're doing to get people to join the pool and I think they're only building on their own chain and there have been some reorgs. Apparently the Manera security budget is very low. Like how about $100,000 a day? So I think it's something interesting to be mindful of as Bitcoin security budget declines.

Although we're not there yet. I think it is, yeah, I definitely agree with that point. I think the other thing that's interesting is since you can mine Menero, I believe, with GPUs. I think that just makes it a lot more fragile going forward since so many people have GPUs and are using them for other things. Yeah, this is a real failure mode for proof of work and exogenous incentive to mine. I don't know what the, the Minero people kind of deny that this is going on. So they're basically saying this pool doesn't have 51% and there haven't been reorgs. It's like very hard to get to the truth of it. But I don't know, I'm pretty

concerning actually if you like proof of work like big you know it's not going to happen to bitcoin any time soon but it's something to be mindful of manara is just an asset that just the lost total support from the centralized exchanges over the past four years that's just been delisted almost everywhere yeah it is one of the sad features of this industry is the privacy coins are basically not a thing anymore so no no i mean zcash had its issues around the perceived or the potential for a inflation bug. Manero got delisted largely for concerns around money laundering and things like that. Grin never went anywhere.

Yeah. Privacy coins didn't pan out. There is an interesting paper I want to draw your attention to. It's called governmental debanking. It's in the Texas A&M Law Review. Author is Julie Hill. She's been really good on debanking. I thought this was the best summary of debanking, specifically

the kind that we complain about to date. So I'm going to put this in the show notes because there's an excellent paper and she has some suggestions for remediation, like how to fix it. All right, I think we have to wrap it this week. We always say we're not going to talk about the Dats,

but we always end up talking about the Dats. There's just been so much mischief recently with the Dats. Oh, and we forgot to talk about the fact that the Patriots completely smoked the Washington football team. It's preseason. Last Friday. Doesn't count.

Drumming. You can lose all your preseason games and then go 17 and 1. You can, yeah. But I think you guys should be really worried about that one. I'm feeling good about it. All right. That is it for the week. Everybody have a safe and healthy weekend.

We will see you on Monday.