The Pomp Podcast - #1300 Reflexivity & Elementus | Bitcoin Network Data Is VERY BULLISH

Episode Date: January 25, 2024

Today’s episode is a joint podcast with the team at Reflexivity Research and the team at Elementus. From Reflexivity, we have Will Clemente (Founder). From Elementus we have, Max Galka (Founder & CEO) and Alex Mologoko (Head of Research). This conversation covers a brand new massive report covering year-in-review of 2023 of everything that happened on-chain. Topics include bitcoin rally, open interest, wallet activity, inscriptions, stablecoins, and more.  ======================= Introducing Espresso - the world’s most interactive portable display. They have a portable screen that is incredibly light, comes with a nice stand, and the user interface is very easy. Anyone who listens to this podcast can go to ⁠us.espres.so/pomp⁠. They have a brand new offer waiting for you.  ======================= BetOnline.ag is a proud sponsor of the the Pomp Podcast. Use crypto to bet on sports, play poker and enjoy casino games at BetOnline. Visit https://promotions.betonline.ag/pomp and use promo code POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline boasts no crypto transaction fees, and processing is anonymous, instantaneous and secure. ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's episode is a special one. It is a joint podcast between the team at Reflexivity Research and the team at Elementus. From Elementus, we have Max Galka, who's the founder and CEO of the company. And we also have Alex Molugaku,

who is the head of research at Elementus. From the Reflexivity Research side, we have Will Clemente, who is the founder of that business. Why are there four of us on this podcast? Well, it's because Reflexivity Research and Elementus just put out a brand new massive report. It is a year in review, 2023 of everything that happened on chain. We talk about what drove the Bitcoin rally at the beginning of the year. We then get into the Bitcoin performance by geography and open interest. We talk about Bitcoin wallet activity. We talk about inscriptions, stable coins, and much, much more. This episode is jam-packed with insights, and I'm super excited for you to listen to it. So here is my episode with the team from Elementus and the team from

Reflexivity Research on the year in review using on-chain data. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Espresso, the maker of the world's thinnest portable display. Now, listen up.

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All right, guys. Bang, bang. I've got an awesome group here with us. I thought maybe the first place we could start, Will, Reflexivity and Elementus came together. They did this year review of on-chain activity. And the first question you guys hammer on is, what exactly is making Bitcoin's price go up as we went into the beginning of the year? Help us understand what you guys found. Yeah, absolutely.

This was a really exciting report that we put together. There's a ton of kind of year in review reports, but I don't think anyone's done one from an on-chain perspective. So we're excited to put this out. As you mentioned, the first thing we kind of dived into was kind of breaking down what's driven Bitcoin's price performance throughout 2023. So, you know, if you don't live under a rock, you've probably seen that Bitcoin has been one of the best performing assets of the entire year. And you kind of look at it aggregated, measured against equities as opposed to individual equities. It is the best performing asset class or was the best performing asset class of 2023. And there's a couple of kind of factors that have been driving that.

One is just mean reversion after Bitcoin and crypto got beat down so bad. You've got kind of an inflection point in the liquidity cycle. And then also the biggest one is kind of front running of the recent Bitcoin ETF approval and launches that we saw over the last couple of weeks. And people have been continuing to keep a close eye on. And we break that down into kind of data to try to kind of build a picture of the type of market participant that's been driving Bitcoin over the last, call it, 12 to 15 months. There's a couple of interesting kind of subsets that we can break it down into. And in the report, we broke it down into three. One is on-chain capital flows, primarily looking at flows around Coinbase.

The second is activity by geographic trading session. Then the third is activity within the derivatives landscape. So maybe, Pomp, we dive into, first of all, looking at some of this on-chain kind of capital flows, particularly around Coinbase. So in this first chart, we have basically a month over month chart of Coinbase Prime and the amount of Bitcoin held within Coinbase Prime. And so what we can see is that throughout the year, we've seen a continued increase in the amount of Bitcoin held within Coinbase Prime. What does this indicate? Alongside the transaction volumes picking up, it signals that there's more activity taking place within Coinbase's prime and custodial arms. And that shows an increased amount of activity from

this kind of US-based institutional cohort that particularly uses Coinbase. When we look at Coinbase relative to some of the other crypto native venues, Coinbase is well known for being kind of the most regulated, publicly traded, top five accounting firm audited exchange relative to maybe some of the the other venues offshore that are a bit more kind of in the realm of kind of wild west uh and so you know a lot of these uh us-based uh hedge funds high net worths uh family offices etc like to use coinbase as opposed to some of the other venues so maybe that's some some good context on uh why we're looking at coinbase in particular here uh so we've got the picture kind of being painted of you know increased amount of bitcoin held in uh coinbase custody as

well as um their their prime arm as well and then when we look at flows within the two as well we see very similar dynamic of we saw continued outflows from coinbase prime uh particularly leading up uh right after the the blackrock filing um into the actual etf launch so um you know that looks like a lot of kind of front running of the etf and then when we shift over to uh the kind of geographic trading premiums is another really interesting point to kind of hammer on in terms of looking at the type of market participant that we saw throughout 2023. In the chart that we have in the report, we have the US trading hour, basically cumulative return, and then we also have APAC and then EU. And so what we can see is that particularly after the initial BlackRock

filing in July of 23, we saw that the U.S. trading hour premium really started to show relative to APAC and the EU. And so that's just another data point to kind of illustrate that Bitcoin's rally throughout the back half of 23 was primarily driven by these U.S.-based firms. And then the last one that I thought was also really interesting was shifting over to the derivatives landscape, looking at activity around the CME. So the CME, very similar to how Coinbase is used as the spot exchange of choice relative to some of the other offshore venues, the CME is used by primarily regulated US-based hedge funds, institutions, et cetera, as opposed to trading perpetual swaps on some of these offshore venues. In particular, traditional financial players are probably going

to use CME as opposed to maybe going to use a Bybit or a Binance. And so this is an interesting signal for the activity taking place by that cohort of market participants. And so what we saw throughout 2023, once again, particularly after the filing for BlackRock in July of 23, is a massive uptick in both futures, open interest and volume on the CME. We saw this shoot up from right around two billion to reaching all-time highs of over six billion um in the chart you'll be able to see basically this this massive run up uh following the the filing in july and so this is kind of another uh piece of information to kind of construct this picture of who really kind of drove drove bitcoin up uh throughout the year and so you know our kind of thesis through through putting

all these data points together about the the type of market participant uh throughout 23 is is basically painting this image of um at the beginning of of bitcoin's kind of lifespan it was particularly you know um uh kind of cryptographers and and very much um you know people that were deep in the weeds about um you know building out something similar to bitcoin and then latched onto bitcoin once it was clear that that was kind of the best form of of uh sovereign you know scarce money that was ever created that was this that was digitally native um as we kind of progressed throughout bitcoin's lifespan then it kind of shifted towards retail retail high net worths. Over the last couple of years, we started to see some hedge funds and

some of these TradFi players start to dip their toes in the water. But I think it's pretty clear throughout 2023 that the dominating type of market participant that really drove Bitcoin up was this kind of US-based, perhaps more traditional finance-oriented type of player. So it's fascinating to look at this data, but how you get the data, I think is a pretty important question. I think maybe, Max, Elementus, obviously, the technology you guys have built allows you to provide incredible attribution to these wallets, understand capital flows. And there's a lot of the things that Will is talking about here is kind of the analysis or conclusions are driven by this technology of mapping wallets. Describe a little bit as to how Elementus does

this. Sure. Well, I'd say at the very highest level, there are two components to it. There is the clustering and the attribution piece. The clustering I would define as just data science methods for figuring out which addresses roll up into the same owner. There's a lot of different ways of approaching that, different kinds of heuristics. There's lots of academic papers out there that you can look online about some of the base methods for doing that.

That's where the majority of our technology sits. The methods that we use go quite deep to be able to connect wallets together so for something like a say coinbase coinbase the exchange they have called 100 million addresses on the bitcoin blockchain um our mission with them is to be able to um identify the wallets on chain and understand the connections and to be able to group them all into kind of one entity uh now from that point we need to be able to go out then and say okay we have this network of 100 addresses that are all the same actor um like who is this and for that we need to go out and be able to put a label on it so that's the attribution piece

and how do you find out who it is like what are some of the ways or methods that you would use to do that well the easiest way would be for for a coinbase you just sign up for a coinbase you deposit small amount of bitcoin now you have one coinbase address and then you can extrapolate that and say okay the other 99.999 million addresses are also coinbase uh when you get to some of the other entities that are not quite so easy to sign up for if you're talking about something some of like the legal stuff darknet markets ransomware or even if you're talking about like institutional um buyers hedge funds um some of these kind of actors you know those ones not as easy to identify by by just signing up and interacting with so for those um you know we

have to get clever in our in our approaches but um and so as you've done this uh as part of this report there's this entire breakdown of wallet activity walk us through a little bit as to what some of the conclusions from that analysis is yeah okay so yeah this is a really interesting one so you know my background i i come from a background in in tradfi but so i worked for for nine years at deutsche bank and credit suites as a trader i traded tons of fixed income markets so you know i was on the front lines and looking at every piece of information that was out there for understanding markets seven screens in front of me i was on top of everything uh what this represents is something that's not even possible in tradfi which is that you can look across the

entire market and you can see what the cost basis is what the average cost basis is for everyone who holds bitcoin right and that's because you can see when the positions were put on you know the price of bitcoin at that time so you know what that person has in that trade so what this is looking at is the average cost basis at which bitcoin is held on the market so it's actually quite intuitive if you look down to the chart on page 13 the market value to realized value so what this is looking at is um well it's comparing what did the average person pay for bitcoin versus what is the current price of bitcoin so how much how much profit do people have in the market and what you'll see is that is that occasionally the market price for bit

bitcoin will drop slightly below um that cost basis number but it tends to stay there for only a very short period of time right because you know presumably people are not willing to sell at a price below which they um the price of which they purchased it so uh this is is a remarkably reliable indicator um which um you know this is uh we're looking over here here over a 10-year time horizon. And even though those kinds of opportunities don't appear all that often, the trend seems to be near 100% accurate. When you see Bitcoin dip below the cost basis, that is a very strong buy signal. And when you guys look at this, Obviously, there's a lot of on-chain data providers that are selling that data, but

the attribution and the collection that you all are doing can be used for a multitude of different purposes. What are some of the other ways that you can actually use this wallet attribution for either commercial purposes or for individual investors? Well, I would say this is a very big right so like in in traditional finance it is um almost impossible to find reliable market indicators right indicators that are predictive of where the market's going to go the one we're looking at here is is an example that very clearly does accomplish that so some of the things we're working on with our customers is that there's a lot of other ones like that that exist within these markets. You know, for someone coming from the TradFi world, like that's kind of unthinkable

that there could be like these kind of hidden diamonds just sitting around, but there truly are within Bitcoin and crypto. And so a lot of what we do with our data is try to identify some of those indicators. And those can be a lot of different things. So that's one of the ways and some of the primary customers we're working with right now is helping people to identify trading opportunities um if we're looking kind of more generally and kind of more broadly as to really where this whole ecosystem is going well like the coinbase commerce addresses that we've identified um excuse me not coinbase commerce coinbase custody addresses we've identified those ones are particularly significant if uh if you start under the assumption that

uptake of these ETFs is going to be a big driver of Bitcoin in the future. People aren't necessarily going to know in real time how much buying of these is happening and where they're going and how much Bitcoin is needing to be purchased in order to back the ETFs that are being created. But that's all stuff that we can track on-chain. So over the course of the year, and even right now, that's something that we're looking at very closely is movements and growth of the size of the Bitcoin sitting in Coinbase Commerce as a proxy for the uptake of the ETF. Got it. And then when you look at these wallets, it seems like there's a lot of Bitcoin that hasn't moved in a very, very long time. Is there any way to determine is that Bitcoin lost or is that Bitcoin just in the hands of people with very strong kind of diamond hands?

Yeah. Yeah. Well, yeah, this is another big one that we're looking at as well, because, you know, when you look at the size of the companies that have launched these ETFs, guys like BlackRock, Fidelity, VanEck, you know, lots of really big companies that are thinking really big with this. Right. BlackRock didn't launch this to make a few million bucks, right? BlackRock launches new products to make huge amounts of money. They have trillions under management. So I think a big open question here is when you're trying to answer the question of, well,

will like the buying of these ETFs, which I expect to be substantial, that for every Bitcoin bought in ETF, there needs to be some actual Bitcoin that someone is willing to part with. And so a big question is, like, how easily is that Bitcoin going to come out? And you're entirely right. You have of 21 million Bitcoin, that is the final number that will be mined of all time. Just right off the top, you have a million of it that's owned by Satoshi and that's not going anywhere. You also have other big chunks of it that are lost for various other reasons.

I think there was a big chunk that was sitting in a landmine somewhere or landfill somewhere. right and you have you have lots of other chunks that for various other reasons are likely never to come out and I've seen some quantifications of that number and I've heard two million ish thrown out as a rough estimate but I think you start looking beyond that and then you have say you know the Bitcoin that I have sitting on my treasure wallet which is in my closet somewhere and you know which i may not even be focused on crypto right now so i may not be likely to you know no matter how high the price goes to go in and sell it and i think um you know as if the start the price starts ticking higher and it feels like we're in a built like a bull run i think you

also kind of get this uh reverse scenario where higher price doesn't necessarily make people more likely to sell it could actually make you more likely to want to hold it um so what's amazing about Bitcoin is that we can actually survey the entire ecosystem the entire economy of all of these positions and um start to put together some metrics on like how these different positions respond to diff different uh price movements so that's a long way of saying I don't have an answer right now on how easily that Bitcoin will come out but um yeah I think it's a relevant question for what happens with this ecosystem going forward. Yeah, that makes a ton of sense. Well, maybe you can walk us through the inscriptions, which obviously was a huge part of

Q4. There was tons of explosion in fees, and I think a lot of people didn't understand or see this coming, but being able to see on-chain what's happening there is pretty enlightening. Yeah, absolutely. Inscriptions were one of the most exciting developments, at least from an non-chain perspective throughout 2023 so take a step back what our inscriptions our inscriptions are kind of a newly discovered feature if you will of the Bitcoin blockchain was created through a loophole in the end of 2021 a soft fork which is called taproot it enables users to basically store text media Etc in the metadata that's attached to the smallest numbered units of a Bitcoin called a There's 100 million Satoshis in every Bitcoin.

And so you might have seen Eric Wall or Udi kind of pushing ordinals widely on Twitter. They've caused kind of a ton of controversy within the Bitcoin community, if you will. Some people feel that they're a detriment to the network because they increase fees and increase the amount of data that you need to download to run a node. Other people say that they're great for the network because they raise fees and then also kind of take away the long term security budget issue that a lot of people have voiced about Bitcoin. Reality is the answer is probably somewhere in the middle. But nonetheless, as activity for inscriptions is picked up, it's become a bigger and bigger conversation kind of within the community. When we look at the amount of fees that have been generated, upwards of $200 million of fees for the Bitcoin network, just from the transactional activity around Nordinals, which, of course, benefits miners directly, although it maybe makes the kind of, you know, small transaction for, you know, if you're trying to buy a cup of coffee or something like that with the Bitcoin base chain, jump up the belief that that's not necessarily what the base chain is supposed to be used for. It does make, you know, obviously, you know, transactional costs slightly higher for those types of those types of transactions.

But overall, the increased amount of fees benefits miners. And then in theory, that should create a higher incentive for for miners to want to continue to bring on more machines to capture those fees. And then as a byproduct of that, secure the Bitcoin network. And so one fun fact was this is no longer the case as fees have drawn down over the last month by about 80% since when we pulled some of this data initially. But at one point in December, Bitcoin reached the number one blockchain by transaction fees over the last seven days and 30 days. And I don't think this has happened, at least in a very long time. I'm not sure if I've ever seen that happen. And usually ETH dominates the kind of number one spot for blockchains by transaction fees.

And so it's just kind of a testament to the amount of activity that's taken place and kind of the frenzy around inscriptions that we've seen. At one point, also, inscriptions made up over 25 percent of daily fees on the Bitcoin network. So this is something that I think is exciting to continue to watch for a couple of reasons. But, you know, I would expect that if we have kind of a raging speculative bull market, you'll probably see inscriptions continue to persist in full force. You know, we saw kind of the speculative bubble, if you will, around NFTs in 2021. And I think there's a there's a decent probability that we may see something similar around inscriptions. And then I guess to kind of segue inscriptions into the next chart that we have is looking at hash rate. So, you know, as I as I just mentioned, as fees are increased on the Bitcoin network, it creates a stronger incentive for people to or for miners to continue to add more machines onto the network and try to compete to increase the amount of hash rate that they're generating to compete for the amount of fees so so that they can increase their revenues.

As we can see in this chart, hash rate has just continued to absolutely rip throughout 2023. It makes the China mining ban of summer of 2021 just look like a blip on the chart. And so, you know, I definitely don't think this is fully driven by inscriptions. But, you know, if you do have kind of an elevated regime of fees for the network, that should continue to kind of, you know, further advance that rise in hash rate that we saw throughout the year. Now, when we see so much of the miner activity, we also know that they outperformed Bitcoin during 2023 in terms of the financial return. Should we expect continuations of these trends, hash rate going up, fees going up, miners outperforming the underlying, or could this have maybe been an anomaly and actually the outperformance by the miners of the

underlying is something that people shouldn't expect moving forward? Well, I think typically, if you go back and look over the last couple of years, miners usually trade with beta to the underlying Bitcoin. And so what does that mean? It basically just means that when Bitcoin goes up, the miners tend to go up more. When Bitcoin goes down, miners tend to go down more. And so, you know, with that, there's a ton of volatility around these miners. And I think one kind of mental model, at least that I've used for thinking about allocating to miners is they're similar to a call option on BTC. So, you know, if you think BTC trades at call it 100k plus over the next you know 12 to 16 months you know miners

are probably going to outperform that just given the way that that they trade relative to BTC you know in the short term we're recording this on you know January 22nd you've seen some reversion miners went on a pretty aggressive run it seems like it seems like maybe they were kind of being used as proxies for front running some of the ETF launches and filings and launches and then also So as I mentioned a minute ago, we've seen the fees that were elevated over the last month and a half kind of come down. They're down about 80 percent month over month. So we've seen, you know, some of that that inscriptions activity that was fueling fees higher cool off in the short term. But, you know, when I think about maybe allocating to miners, the kind of general general heuristic that I use in my mind is they're very similar to call options on BTC.

and then you kind of have that added x factor of you know if we do see kind of this prolonged regime of ordinal's activity or they go on some type of you know speculative runs similar to how nfts on ethereum did in 2021 um you know that would significantly increase fees uh for miners across the board i mean just to kind of put it into into perspective uh in the middle of uh i guess i guess on average uh across q3 2023 fees hung out around you know 750k to a million dollars a day. During the peak of this recent wave of ordinals in December, fees reached upwards of $23 million, which was the highest single day of fees ever generated for the network. And so you think, okay, if this persists for two or three months, especially again,

during a bull market where you also have just people using the Bitcoin network more in general, that could be pretty effective for some of these public mining equities. So it's just one thing I think to continue to keep an eye on for sure. Alex, let's talk about stablecoins, which is the last part of the report, but to me is maybe the most interesting part. Just given a couple of years ago, no one thought that stablecoins would be that big of a deal. Now it's a major part of the crypto ecosystem and maybe even global finance.

What are some of the takeaways based on this analysis? Well, yes, stablecoins are certainly the backbone of DeFi, the fastest growing part of the crypto ecosystem today. And we have two charts in the report covering stablecoins. One is showing a change in total stablecoin market capitalization. And the other one is velocity, aggregate velocity of money for the stable coins. So what we see throughout 2023, the market cap of stable coins mostly contracted with that trend reversing only in the fourth quarter of the last year. So what happened can be attributed to several trends. First of all, we had the Silicon Valley bank running the bank's care in the beginning of 2023,

which also affected the other two big so-called crypto banks, Silvergate and Signature. That was also seized by the Feds before running the bank really started. We know that, for example, Circle and Coinbase deposited funds back in USDC. Stablecoin with Silicon Valley Bank and Silvergate Bank, which at some point resulted in panic surrounding that particular stablecoin. trading with the discount as wide as 10 percent that scare resulted in usdc market cap reduction through the year where that stable coin was mostly redeemed uh which was uh partially offset by the increase in tether market capitalization. The other trend that contributed to the reduction

in market cap was the shutdown of Binance USD as Binance native stablecoin administered by Paxos and Paxos was affected by the same Silicon Valley banks here because Paxos main depository institution was Signature Bank which was seized by Federal Reserve as I already mentioned. So right now BUSD is in redemption only mode and no new units are being issued. the units of BUSD are only being redeemed. But in the end it all worked out. In the fourth quarter we've seen expansion of stablecoin market cap, which basically means the expansion of fiat capital base in the crypto ecosystem, which is a sign of things to come. We're looking forward to towards Bitcoin halving to really kick off the bull market because stablecoin market cap expansion

is normally associated with the speculative phases of the bull market, as you can see on the chart. So when I look at these stablecoins, one of the things that jumps out to me is internationally, there's been lots of adoption but also where they've been adopted has been pretty interesting you know usdt on tron is not exactly where many people thought there would be adoption of stable coins or any of these products but that seems to be a very popular use case how do you kind of decipher maybe the narratives versus this is just the on-chain data tells a story that is hard to argue with because it's you know more objective and more kind of factual uh yes certain stable coins have different use cases and uh because tron is a relatively low cost chain it became

super popular uh in asia for uh electronic transactions by passing uh the global banking system but not just in asia for example you know one of our co-workers just mentioned that you you could you can pay with usdt on tron for a taxi ride in venezuela for example so that so tether is actually seeing the most adoption as payment rails whereas usdc is the most popular uh uh defy instrument representing fiat dollar but just to add on and my thoughts on this the uh you know i think the use of the volume that's traded on tron is roughly similar to the volume that's traded on ethereum which was a stat that really blew my mind when i first heard that because tron is not something that's used for a whole lot else so i think what it represents

in um the d5 or uh stablecoin space is really i think what alex alluded to which is like a shadow banking system and that could be money laundering it could be capital flight from out of one country into another uh in venezuela for instance um but um i think that's what that segment of the stable coin ecosystem is got it and then maybe another you know kind of question is like as we enter this world where uh there's multiple assets you know you see larry fink on national television talking about uh tokenizing different you know kind of traditional assets etc will we be able to use some of these same technologies to track on chain the same movements etc and so you know a technology like elementis has uh now kind of can evaluate the entire financial market if everything

goes on chain yeah and it's a really interesting concept and i might even take it a step bigger that um you know some some of the conversations we're having right now are with um generative ventures whose thesis is really on this new digital economy that's forming and that's kind of some combination of blockchain technology and artificial intelligence um and yeah what like what we're working on together right now is um quantifying some of these base economic metrics such as a gdp right that you know you can look at how much bitcoin on a very raw level is transacted on a daily basis but um quite different if you're talking about people exchanging one financial asset for another for speculative purposes versus

somebody paying for some kind of good or service and like the the number of use cases that fit into that second category of um like actual economic transfers so real value being created through the blockchain is really starting to proliferate um so uh you know these are the conversations we're having i think it's a really exciting prospect the idea of um of an entire economy where um well everything can be calculated very very precisely from bottoms up as opposed to the traditional economy where economists are looking at sort of big picture indicators and making estimates of things um that i think yeah as as the use of blockchain proliferates into real economic use cases um yeah the level of transparency is really going to be a

you know a big shift and it's going to be something very different yeah i completely agree with max you know the thing that kind of captivated my mind a few years ago kind of initially diving into on-chain data was this idea of if bitcoin is to become kind of the global uh settlement layer for everything um you know it becomes very much akin to looking at maybe you know the st louis uh fed data right as opposed to just looking at you know what are on-chain flows so that i know how to speculatively trade it over like a couple months time horizon so i think you know the on chain data will definitely evolve from as max eloquently just said uh from maybe being used for kind of uh market analyzing uh or you know kind of speculative purposes around coming to conclusions

about you know the state of the market or different dynamics around the market to more kind of viewing holistically where this kind of new uh world is with with bitcoin as kind of the the settlement layer and then i guess one other piece to to tag on is you know as uh as you know you have things such as you know securitization of of different um uh i'm sorry as you have the the tokenizations of different securities or things brought on chain um all of a sudden you're able to kind of view these things in a level of granularity that you were never able to do before you know i think one example uh we touched on towards the beginning is inscriptions right like um you know you could see in real time that minor fees were going up for you know these

publicly traded uh equities but you know that wouldn't have shown uh until the end of the quarter whenever whenever the company released their earnings so um you know i think holistically will be you know kind of evolve into um you know a way to view kind of granularity of the economy itself that you've never had before as well as uh you know different different companies or assets that are brought on chain in a level of granularity that you've never had before yeah and you know one other just aspect i would add on to this is um you know something that i Some way that I see that a lot of these different trends that ties them all together is, well, you have like ETF stuff happening right now, which is a way of taking digital assets and packaging them for buyers who really are not set up to hold digital assets. But you have some of this, the tokenization of real assets is actually just the reverse of that.

It's it's tokenized. It's tokenizing traditional assets for buyers that can't hold traditional assets, but can hold digital assets. So in both cases, kind of a bridging of the gap between traditional markets and traditional financial markets and crypto financial markets. And you might throw stable coins in there as, you know, another element of that. And well, a lot of the new trends that we're seeing deep in would be another one where it really does feel like some of the new developments that we're seeing are less sort of crypto self-contained and much more connective between traditional and digital. So my last question, I guess, is, Max, maybe you can just, if you had to describe something, what does Elementus do? What is the technology? Obviously, I'm very bullish. I'm an investor and think highly of both the team, the technology, and what you guys are building.

But how do you describe it to someone? We help people make better, smarter, more informed decisions on the blockchain. And how do you do that? Well, we do that through data. so uh we can help inform people of information that happens in the blockchain coming from traditional finance right as a trader but even all the people around me that i was working with everything in finance is um well information is the fuel of finance for understanding risk for understanding opportunities um those are very sophisticated

markets as this market starts to approach traditional finance it evolves and i think there's you know a lot of open-ended questions but i think some things you can guess pretty well how it's going to evolve and some things are going to look quite like traditional finance the data piece is going to become increasingly important and so with our data we can help people to understand risks better so that some of these internal teams within investment banks can go to their managers confidently and be able to articulate the the opportunity they want the risks that it poses and be able to quantify that with numbers or for those teams that are looking around for opportunities and really want something to focus on we can help them do the exploratory work to

find those um yeah and just generally speaking um we can help people to have a much closer pulse on on the market so being able to understand what's happening off chain you know a lot of news makes its way to crypto twitter which is tends to be i think most people's source of information and it's a it's a great one um and there's a lot of stuff you can learn on there you can't learn on the blockchain but there's also a lot of information and a lot of things that happen on the blockchain that don't make its way out such as ftx you know that's one that could have been identified you know a year or more before it blew up as with uh some of the other big companies that blew up so um we help people make better smarter uh better educated decisions by

using our data and maybe we can just go around real quick uh will where can you find you on the internet uh sure first of all you can check out our research firm reflexivity research at reflexivityresearch.com you check me out on twitter at w clementi iii awesome alex if somebody wants to get in touch with you element this website is obviously elementis.io and uh my twitter handle is a mall gawk amazing there's a lot of o's max you take us home where can they find you uh well if you want to find me on twitter uh i am galka underscore max amazing i appreciate all of you the report is incredible if anyone wants to go check it out i highly suggest you do it uh reading through it is uh quite informative so we would definitely do this

again in the future when you guys do another one excellent yeah thank you very much anthony