The Pomp Podcast - #431 Yoni Assia on eToro’s Incredible Growth

Episode Date: November 17, 2020

Yoni Assia is the founder and CEO of eToro, the largest social trading platform in the world. He has been a Bitcoin proponent for almost a decade and was part of the team that built the original colored coins too.  In this conversation, we discuss institutional services, rise of millennial investor, staking, SPACs, renewable energy, sustainable meat, gene editing, and retail investor behavior during recent crypto boom. ======================= Harvested Financial makes options incredibly simple. They’re the first options robo advisor, where you can build and customize a personalized trading plan that gets automatically executed. Options help you speculate in capital efficient ways, diversify your holdings with market neutral strategies, and generate passive income by selling premium. https://www.harvestedfinancial.com/pomp ======================= Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to http://www.unstoppabledomains.com in the dapp browser to register and manage your domains.  ======================= Digital art is here, and it's real. NFTs are selling for hundreds and thousands of dollars. The only platform I buy on is Nifty Gateway, which is an official sponsor of the Pomp Podcast.They release content from the best NFT artists in the world twice weekly, and have featured many world famous artists including Kenny Scharf, Trevor Jones and WhIsBe. NFTs on Nifty Gateway are in extremely high demand, so if you really want one, make sure to be on the website as soon as it is released. Go to http://www.niftygateway.com/pomp and sign up for an account today.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Yoni Asya is the founder and CEO of eToro, the largest social trading platform in the world. He's been a Bitcoin proponent for almost a decade and was part of the team that built the original colored coins as well. In this conversation, we discuss institutional services, the rise of millennial investors, staking, SPACs, renewable energy, sustainable meat, gene editing, and retail investor behavior during the recent crypto boom. I really enjoyed this conversation with Yoni, and I hope you do as well.

Before we get into the episode, though, I want to quickly talk about our sponsors. First up is Harvested Financial. Many people have been asking me about options, whether it's in the stock market or in the crypto markets. If you don't know anything about options, you should check out Harvested Financial. They've got great educational resources, and once you feel like you're educated, you can actually start to invest in options through the Harvested Financial robo-advisor. So basically what they've done is they've created a robo-advisor built specifically for options trading.

Options traders may be hedging a position or trying to get some cash flow by capturing some premium, but ends up being that sometimes you just don't have time to manage all of your option strategies. That's where Harvested Financial comes in. You can go to harvestedfinancial.com slash Pomp to learn more, but basically using a robo-advisor for something like options may be a great solution for some of you.

So go check them out, harvestedfinancial.com slash Pomp, an options-based robo-advisor that was built specifically with you in mind. Harvestedfinancial.com slash Pomp Go let me know what you think Next up is Unstoppable Domains Unstoppable Domains has partnered with Coinbase Wallets To add support for .crypto domains

That's right, you can now send Pomp.crypto Or some other .crypto domain to somebody And have them send you Bitcoin to that name So when you go on the Coinbase Wallet Instead of having to enter in the really long Hex Bitcoin wallet addresses That's that long stretch of letters and numbers on a Bitcoin wallet address. You can now just say, hey, send me Bitcoin to Pomp.Crypto, and that will immediately route the payment to the right wallet address.

The thing is, just like with regular domains in the non-decentralized world, once somebody buys the domain name, you can't have it. So if you've got a name, whether it's your personal name, your company's name, maybe a username that you use, or some other word that you want to make sure you own, head on over to unstoppabledomains.com and you can pick up the domain today. Again, you can buy anything.crypto and once you get it, nobody else will have it. You can then use that as your wallet address on Coinbase Wallet. It's pretty damn cool. I've got pomp.crypto. You should go get one as well.

Head on over to unstoppabledomains.com. Grab a domain before somebody gets yours. Unstoppabledomains.com. Lastly is Nifty Gateway. Digital art is here, and it is real. I've been very clear about my interest and what my intentions here are. I've been buying up a lot of digital art. NFTs, non-fungible tokens, are selling for hundreds and thousands of dollars.

The only platform I buy on is Nifty Gateway, which is an official sponsor of this podcast. They release content from the best NFT artists in the world twice a week, and they featured many world-famous artists, including Kenny Scharf, Trevor Jones, and Who's B. If you are into digital art or you want to learn more, go to niftygateway.com slash Pomp. Again, Nifty Gateway is where you can either participate in the auctions of brand new digital art or you can buy art on the secondary market. I personally believe the digital art market is going to eventually eclipse the traditional art market. But if you want to start participating today, you can head to niftygateway.com slash Pomp and sign up for an account. Digital art is super interesting.

There's motion, there's sound, there's all kinds of things that it can do that traditional art just can't do. It's small today, but I think it's gonna grow a lot. So head on over to niftygateway.com slash Pomp and start learning about this new space today. All right, that's it for our advertisers. Let's get in this episode with Yoni.

I hope you guys enjoy this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. all right guys bang bang i've got yoni here thank you so much for doing this sir

thank you very much for having me always a pleasure this is either your second or third time on the podcast so i'm not gonna waste a bunch of time going through the background people can go listen to the first episode uh but spend maybe 30 seconds on just what is e toro sure eToro. Today's the world's largest social trading network. We have over 16 million registered users who register to our social network where they can trade commission-free stock trading, cryptocurrencies, commodities, indices, ETFs in more than 100 different countries. And the unique part of eToro is you can actually see people's performance in their portfolios and our users can automatically copy top traders from all over the world and invest in our copy

portfolios. We've been doing this for a while now, founded in 2007, quite big in Europe and in Asia, and just recently launched in the US, our crypto trading social network to start with, and plan to add soon our commission-free stock trading as well. One of the things that everyone knows you for is obviously all the retail trading, all the retail products, but you've recently put a big focus on institutional services. Help us understand what exactly are you guys doing on the institutional side and how's that going so far? Sure. So basically what we did is we had a surge in volumes in 2017 and 18 in crypto. So we had to build a lot of our own pipes because there weren't any real institutional players

back then. So we had to build our own aggregator where we connected to multiple exchanges, to 10 different exchanges, to basically aggregate orders for multiple exchanges into our own order book. So when our customers, in some cases, came and bought $200 million of Bitcoin in one day, we'll be able to basically get these orders and distribute them between several exchanges of course there's a lot of things like you know what's the credit risk some of these exchanges or all of them by the way aren't public right so uh i back then was impossible to trade with uh highly regulated uh and sort of uh large financial institutions in crypto so we had to sort of uh diversify the risk of how we're trading and we build a lot of the

technology again for us, because we had hundreds of thousands of customers who came into eToro to buy XRP, Ethereum, Bitcoin, and all the other currencies we support in eToro. And at some point we said, okay, let's take all of this infrastructure that we've built to ourselves. So military grade, air gaps, custody solution, the fact that we're a regulated entity, The fact that we have our own flow, which is hundreds of millions of dollars a day going through our own internal order books, and simply let's put it out there as a product until other institutions, other brokers, listen, this is the infrastructure we're using for ourselves. the best possible security because we custody a significant amount of crypto in eToro. It's regulated because we're a regulated broker dealer in five different continents. So we make sure everything we do is regulated as a financial institution. And obviously, we need to give a

great service and great pricing to our own customers. And you're getting it in a much lower fee when you trade directly with eToroX. And so far, what's been the response and kind of adoption of those institutional products? So we've seen a lot of institutions sort of evaluate the APIs or do the onboarding and some of them buy and hold. So I think what we so far have seen is institutions eventually coming to sort of buy and hold, thinking about sort of custody more than anything else. I think what we're seeing now is a bigger interest. We're seeing more and more partners who are looking to figure out

how do they connect it to their pipes. And again, that's what was what really are thinking when you look at DBS Bank in Singapore or the banks in Japan. So we built this so when traditional financial institutions want to connect into crypto, they understand that we can provide them the same services we provide to our own regulated entities. So there are a lot of conversations, there are a lot of accounts, but I think they're getting there. Institutions are gradually getting there to put in the pipes in place. I think that's also what we're seeing now in this rally that

we're seeing in Bitcoin. I think we're seeing this rally because some selected institutions said, okay, let's put a pedal to the metal. Let's set up the infrastructure, whether it's PayPal or whether it's Square also announcing they're buying out of their treasury or micro strategy, buying out of their treasury. Obviously, the devaluation of traditional fiat currencies has helped that as well. But I think our expectation is we'll see more and more traditional financial institutions coming in and eventually connecting the pipes to their either retail or institutional customers. And we just want to provide them with the same backend that we're providing ourselves. Absolutely. And I think this is part of this larger trend of, you know,

10 years ago or eight years ago, it was all the conversation around like criminals, drug dealers, terrorists. That's what crypto is for. You know, these people are all bad people. Keep this out of our banks. Keep this out of our portfolios. Maybe, you know, four or five years ago, you started to see people saying, wait a second, like, what is this? Let me get educated. Now it feels like there's just this bonanza of large asset managers, large financial institutions that are saying, I have to do something here, right? Even the JP Morgans of the world kind of releasing you know, all sorts of analyst letters about their belief in kind of the future price appreciation and kind of the demographics and things like that. So it just feels like things

have gotten much more legitimate in the eyes of the legacy market. You've been doing this longer than almost anybody, literally from like, what, 2011, 2012. How do you think about where we are in terms of that arc of legitimacy and kind of how these financial institutions now are warming up to this so i think again first of all i love the goldman and jp research on bitcoin i just enjoy seeing their logos of their research uh talking about bitcoin um and their views are getting better as well by the way i think the pandemic everybody's talking about how the pandemic has accelerated digital transformation right suddenly everybody's at home the last time we did this was in person now we're doing it on zoom um people are closing deals everything is online

you know we've seen a surge of 200 300 400 percent uh in different kpis this year more than four million new registered users to etoro you but you can see the stock markets as well everything that's digital has become the hot thing of the markets because suddenly everybody's using digital to do anything whether it's trading or investing uh or whether you know it's suddenly my my father uh and mother who are now suddenly buying constantly on amazon and aliexpress uh and traditionally they they were actually going to the stores so and i think we are seeing the same acceleration of digital transformation in money they are looking at this and saying okay, let's make sure we don't miss this train because something real is happening here.

Take into account that the VPs and managing directors now at all of the large banks are our age. So, you know, millennials are taking over the executive positions in the banks, the decision making positions in banks and financial institutions, and they're much, much more open to crypto and on the other hand we have a macro shift in fiscal policy we have a stimulus of six trillion dollars in the u.s like i i can't count in trillions anymore uh you know i used to be always i made fun that assets under management in the world are 140 uh i think it's trillion dollars right so that's such a big number but now we are seeing governments print in trillions Europe, Asia, everywhere. Now, that printing is basically devaluing fiat currency. And that is a discussion that more and more people are talking about. I heard from one of the bank's analysts yesterday, he said something very interesting. He said, listen, you need to have an asset in your portfolio that's a real protection from central bank policy of money printing.

and bitcoin represents that on a macro view and i think more and more institutions are getting that but i think we're way way way way way early in in in the adoption of of crypto or specifically of bitcoin as a store of value love how jp looked at it and said listen if if it could be gold it could go 10x. But again, if you think about, I don't know, how would you compare Google before Google was Google, right? You couldn't imagine its size. So I think comparing it to gold saying it can go 10x, then you can also think, okay, but what if digital gold is actually better and bigger than regular gold as a store of value? Yeah, I absolutely say all the time, it is more likely that we are all underestimating how big this will get rather than overestimating

it, right? It's just that when you look at things on a global basis, the power of the internet, the number of people, right, already is big, and then it's only getting bigger over time. And when you start to think about an entire demographic of people basically waking up and growing up with the idea that they want digital goods rather than kind of physical goods, it's just really hard to kind of compartmentalize those different trends and understand how big it gets right so i completely agree there what have you guys seen people doing uh during the recent rise whether it's in the stock market or in crypto like are there changes in behavior that are very obvious to you um that you guys say look you know in our data we're seeing x or y happen

well first of all again this year has been the year of the rise of the millennial investor everybody's talking about it everybody's seeing it well you know we're seeing if you know when we saw the crypto rally it was the crypto rally like we were it was like a zombie attack on etoro people climbing over the doors opening accounts coming to buy bitcoin then this year it's it's really i think that the rally is about an entire generation waking up to the markets and saying i want to do something with my money right so this entire year everywhere people are talking about stonks uh people are talking about investing in the markets the markets have been crazy interesting crypto has been interesting as well with a very wide range and now at the peak since

uh uh the you know the bubble burst in uh 2017 uh so i think this really is the year that's opening up the millennial investors to start investing both in the markets and in crypto. Because we were so big in Europe in crypto in 2017-18, what we saw, which is really interesting, is how many of these Bitcoin ETH XRP hodlers suddenly started trading stocks this year And what stocks did the crypto holders buy? And what's interesting is their affinity to driverless cars, to Tesla and to NIO. So those are the, you know, for a large period this year, the most traded stocks on eToro. So you can say that crypto lovers, which is sort of, right, they like digital currencies and digitization.

and maybe blockchain is like a comparison for drive-offs cars ai so there is some connection between the two but that's very like interesting to see how bitcoiners are also teslars other than that i think you know we've just seen a lot of users look for the deep during the pandemic uh by the way the same with crypto so i think when we saw march we saw bitcoin Did it drop almost to $6,000, right? In March, it went just below $4,000 at one point for a second, I think. Oh, no. Why didn't I buy?

Wow. Really? It went that deep? Yeah. That's like one of the biggest things this year is to say, why didn't I buy in March? More stocks and crypto. So we had that fear when the markets panicked. uh for us it was a insane month both in crypto and in the stock so when all of the institutions

and that's so interesting to see like the dynamic between you know panic and hysteria and how different audiences or how do different age demographics and institution versus retail sort of how do they react to panic and hysteria right so there was a panic when i say hysteria in positive hysteria like the market's going up this week five or ten percent so when we saw the panic in march we saw i think institutions pulling out money right so all of the institutions were de-risking saying wow there's a pandemic here what are you going to do put all of the money in cash nobody knew the size of the stimulus effect and i think what happened there is that asset managers that had crypto still held crypto as a risk asset which is interesting because that theory that that

we bitcoiners like to say that bitcoin is a great hedge to the portfolio code it's uncorrelated asset uh and because um it's basically de-risking central bank uh printing of money uh so it's a a hedge against governments. So I think that statement, I truly believe in it, but that's not necessarily the reason or the bucket where a lot of the institutional money went. And I think institutional money initially went into crypto, not as a treasury hedge, but as a speculative wager. So somebody young at some of these institutions said, hey, let's do this. Everybody's talking about crypto let's be in crypto let's buy 50 million or 100 billion for crypto and i think when we saw the crunch coming and everybody going to panic a lot of people sold and that's why we

saw crypto drop uh so much um because it's because they all tried to simply de-risk their portfolios and i think what we're seeing now suddenly is investors actually coming in from that different perspective. They're coming in as a treasury asset into Bitcoin. What's really interesting that we saw this year, and that's crazy, and I know we've put a lot of data out there, there was a lot of data out there, is discount stocks. So in March, when everything dropped, was the highest revenues month for eToro since the crypto in 2017, where we had in one month a hundred million dollar revenue so this was like one month just blown after a promotion of just retail investors coming in and saying whoa whoa whoa why is everybody going out of market what

will you change work and they bought everything like we saw a retail investor buying hertz fedex airlines boeing like our top 10 traded stocks back then was stocks that went down 80 90 percent and that was awesome because by the way recently they all made a lot of money right because of the rebound um but but that's also telling you the story of crypto in the markets right retail investors can take by definition higher levels of risk because it's their own personal money they're not managing other people's money and that's what they did this year they came into the market they tried to save companies going bankrupt uh which is an amazing story that i don't think has ever happened before and became a significant force in the markets. I think from

about 10% of volumes in the markets, retail are now 25% of volumes in the markets. So that's a very big shift towards retail. And I think if you think about crypto, it's the opposite, right? I think it's 80, 90% retail now, and gradually we'll see institutions coming in and taking a bigger piece of the point. Yeah. You've talked a lot about kind of this millennial investor. And I think that millennial investor and retail are somewhat interchangeable. But what else have you seen those millennial investors? So you mentioned, you know, crypto, obviously, there's Tesla, there's what I'll call a lot of like the pandemic stocks. So whether it's the Zooms of the world, the Hertz's, you know, all those stories that people have heard, was there anything that

was really surprising? Or anything that maybe people don't know that the millennial investor was interested in that you guys were seeing? I think, and that's a part of how we're building the copy portfolios on eToro. So whatever we're seeing and saying, hey, that's interesting, we'll actually set up a portfolio on eToro so our investors can get access to sort of that data.

So renewable energy was a very big thing this year. So we've seen a lot of our clients going into companies like SolarEdge. Unproportionate amount of assets in eToro are going towards renewable energy and sustainable investing. So the likes of sort of Beyond Meat, Tesla, NIO also are in that category. So electric cars. So we definitely saw the audience sort of looking for disruptive technology.

We saw them going into gene editing, which is sort of both created two copy portfolios around that. what is around the vaccine companies. So also, you know, drug companies were so boring last year. Like, if I would try to talk to you about Pfizer or Moderna or Gilead, you would be like, you know, who are they? Suddenly, we have retail investors who are analyzing the financials of Pfizer and estimating how much money they're going to do from the vaccine for COVID. And what's interesting in these things is if you think about retail investors suddenly analyzing,

and we see this really interesting, like on the social network, giving a full analysis of suddenly drunk drug companies and comparing them to one another. That's very interesting because that means retail investors aren't only exposed to what we've seen so far, which is the fangs, right, the fangs and Teslas, et cetera, suddenly because of the pandemic, they went into things like drug companies, which is a big category, healthcare, health tech, big category of the S&P, but also into utilities, into airlines, and into leasing companies, and into, you know, Boeing and Airbus.

Airbus was the most traded stock in Germany for like a month or two earlier this year. And that enables more people to both impact the markets, but also understand what's happening in these companies. Yeah. It's really interesting when you also look at those things don't seem so risky to that millennial investor, right? When you're talking about gene editing, when you're talking about renewable energy, when you're talking about sustainable meat, I think that most people are like, of course, right? If you're under a certain age, it's just, of course, that's going to happen. Very similar to, I think, you know, Bitcoin, that's why the younger demographic It's just, of course, digital goods are going to be a thing. Of course, these trends are going to

happen. And so it seems like they are putting their money where their mouth is to some degree, right? And they're all making money this year, which is great. I mean, that's always a good, you know, people coming into the market, making money becomes viral. They talk to their friends about it. More people are coming in. They're learning. There are better tools today than there were five years ago or 10 years ago they're communicating with one another from all over the world so i i think we are seeing a you know a real new sort of era for capital markets which is you know what we've been chiming since 2007 uh is you know open the global markets for everyone to trade invest in a simple and transparent way we're just seeing it happening

now. And it's funny because it took me, Warren Buffett, to hit my head with how easy capital markets are for me to feel comfortable shouting that more and more now. I love it. Before we get back to crypto, the last thing I want to talk about in the traditional market is SPACs. It feels like everyone has a SPAC. And there are all these transactions happening. You're seeing people speculate on basically who the SPAC sponsor is. You're seeing kind of great performance post acquisitions or post deals. What are you guys seeing when it comes to SPACs, the trading of them through client portfolios and kind of just how that market is maturing? So first of all, SPACs of 2020 are ICOs of 2017. So the institutionalized ICOs into capital markets,

And that's roughly what we're seeing. So, you know, they raised $60 billion of dry powder to SPACs this year. SPACs were traditionally, you know, blank check companies who went on to try and buy brick and mortar companies. There were a couple of sponsor groups in 2018 and 19, which sort of led this change in dynamics for SPACs to invest in high growth companies. And over the past 12 months, that entire narrative just took off and blew out of proportion. And I think a lot of the sort of ecosystem is because how it's built. I think most people don't really understand how SPACs work. So what we have is great examples of successful SPACs, whether it's DraftSkin, which, you know, was an awesome, you know, one of the most successful SPACs earlier this year.

Whether it's things like Virgin Galactic, which is a huge story. you know, there were a lot of successful SPACs over the past 12, 18 months. They all start in $10 and a lot of them sort of suddenly were at $15, $20, $25. So it legitimized significantly the entire sort of vehicle of SPACs. And I think it also attracted a lot of very talented sponsor groups who said, hey, there are great companies, there are great private companies. We saw a huge increase, by the way, as you probably know, in private placements and increase in VC. There are more and more mature companies. I think last time we talked, we said, you know, there are so many mature internet companies who are private right now, raising $100 million and staying private.

Now there are more and more companies who are generating $500 million revenues and are still staying private. And SPACs is basically a tool of capital markets to sort of accelerate them being public. Take all of these private companies, a lot of them really great private companies, and take them into capital markets. And I think, by the way, this relates very much to what we talked before about the impact of retail investors in the market. So when you think about taking sort of higher risk profile, higher growth profile companies at higher valuations through SPACs to the market, then the fact that retail investors are there and participate in it, it's a great opportunity because you can't get into IPOs. It's like

amazingly hard for a retail investor to get allocated to a successful IPO. And here you actually get to trade the stock of the SPAC prior to the deal being done, right? So a SPAC closes a deal with a target, and until that month before signing and closing, you have this trading, which is interesting because they're trading on the basis of this SPAC is going to buy this company. I believe in this company and that a lot of shares are changing hands and retail investors are participating in that as well. And some of the SPAC shares, some of them, you know, Nikola was a very big story this year. So there was a couple of really big retail stories coming from SPACs this year. In crypto, what are the areas that you're most interested in?

right? You've obviously been a Bitcoin holder and fan for a long time, but what other areas are you paying attention to or interested in? I think, you know, I've always, I was always a big, big fan of ETH. I think moving ETH to staking is super interesting. Having a sort of, let's call it ETH risk-free asset generates five to ten percent returns i think that's super interesting especially again look thinking about macro fiat right fiat is zero percent returns you're buying now bonds of berkshire hathaway with zero percent interest rate so i think having something as big as eth which is uh you know i think it's 42 billion dollar market cap now um suddenly giving think

the size of what they're giving right five to ten percent a year to their holders that's two to five billion dollars of ETH being distributed not to miners which is complicated and requires you to buy stuff and to buy a hard but just to the holders of ETH that that's a big paradigm shift in crypto I think so So very interesting to see what's happening there. We see its progress. I think because our interest in staking, we also started staking services in eToro.

So we started with Cardano. It's also interesting to see like how our customers who have Cardano on the platform were banging the doors for, hey, can we get staking? Can we get staking? And we had to be like, they're shouting at us to give them staking.

Then we need to put like 10 engineers for half a year to figure that out because it's still an alpha but it was fun like it's because of that we've participated in a lot of these early stages of of the staking protocols like we're doing in ETH like we offered Cardano we're gonna launch very soon Tezos which has a very different view of staking which I think also is interesting and I like what they're doing at Tezos um uh we're seeing tron uh i think we're already giving staking so i think staking is a big part of what's happening now in crypto and it forces also us uh and the companies offering crypto to sort of connect more to to the rails to the platforms to the blockchains themselves

and obviously you can't talk about uh crypto and what's going on without defy right what um on the staking product what are you seeing in terms of the interest from people is that something where it's uh specific to a protocol uh or is it kind of there's widespread interest across all of the different uh protocol groups that uh that they really want this i i think we've seen the most interest coming from the cardano investors on etoro um i think eth is a bit earlier stage i i you know it's also very complicated because you need to lock it up so it's going to still take a while uh before people i think expect that expect it because it's sort of like uh i don't know how to call it uh fork schmork uh with the whole uh

ice age and you know locking up the eath for a year etc so that's very that's still complicated for most people who are in eath they think we haven't heard that from them um so that's the loudest voice we've heard is from Cardano. I think a lot of the community there was really interested to see how they're moving from testnet to mainnet with our staking services. Got it. And on the DeFi side, are there specific things that you guys are going to try to build into the product or do there that, yeah, this is a big divergence from the stock market where everything's pretty straightforward. There's a whole bunch of stuff going on. What are you thinking there so first of all we're following a lot of the action so we like uh wherever we

see action and people uh um uh where you see crypto twitter uh uh screaming and shouting you know you need to to at least take a look so uh we'll be adding a couple of these interesting uh defy protocols soon uh onto the toro platform uh so far we were very focused on blockchains but I think gradually these DeFi tokens are somewhat becoming similar to protocols just without the, you know, without the metals, right? So if you think about it, all blockchains require computers and mining and, you know, some hardware. And these DeFi protocols just, you know, are just sitting on top of ETH mostly. So it's like progressing from hardware to software. I'm a very, very big believer that code is going to change legal mumbo-jumbo, lawyers and accountants eventually.

So if you could do a transaction in code rather than lawyer, 200-page legal agreements between three different parties, I'm a very big believer in the future of DeFi. I think tokenization should happen first before DeFi can really happen on a large scale. But I think what we've seen this year in DeFi is sort of a micro world or micro cosmos of the entire banking industry. We've seen loans. We've seen flash loans. We've seen interest yielding accounts. We've seen sort of mortgage-backed securities, which are, you know, or CDOs, which is sort of what's happening with Maker.

So you've seen sort of every single financial innovation that you've seen in Wall Street. But, you know, that requires a lot of suits and lawyers and just being done between financial institutions. I think you've seen all of that sort of crystallized into a, you know, developer chef. saying, hey, let's do something crazy here and just launching it and suddenly have a lot of finance geeks using it, pumping it, moving it. And it's super interesting. I think that's how finance is going to look 10 years from today.

I just think right now it's still, you know, it's a microcosmos of testing, developing, launching, and using it all at the same time by really, really smart people. Are you worried at all that we may be having a repeat of the 99 internet bubble? And what I mean by that is, if you go back to the mid to late 90s, all those ideas were actually very valid and ended up being highly successful companies. It was just the, you know, music streaming, the grocery delivery businesses, like all of the ones in the mid to late 90s ended up not being the winner. It's almost like 10 years later is when they actually got built. And those were the sustainable companies. Does it feel a little bit like that is happening in DeFi right now where it's like these are the right ideas? And I agree with you, you know, 20 years from now, we'll be like, wow, this is amazing.

But maybe these iterations aren't going to be the sustainable one. or do you feel like there are some that uh can be the winners you know that that are being built today so first of all all markets work on the notion of bubbles and bursts uh so uh this was my thesis in my first degree was uh basically a gaming theory that if you actually put agents and you build just a market of bots theory information all they know is what everybody else is buying and selling and you computerized it i actually ran a simulation of it you get to see and all the bot knows is look what everybody's doing decide whether are you buying today the asset or are you selling today the asset it looks like this

because at this point everybody says hey everybody's making money so what i should really do is buy now then up up up up up up and then down like this so that's like in theory of markets, that's how markets behave. They go up for a long period of time and then drop very sharply, very fast. Is DeFi specifically in a bubble right now or does it justify the valuations of the tokens? It's very hard to say because it's still very small, right? So market cap of all the DeFi protocols are still very small and in most of them there are logical sort of revenue generators right so they're all basically financial is complex financial instruments who sort of take money put money in other smart contracts create

some time of arbitrage or enabling others to create some type of arbitrage or take a market risk like Uniswap. So take a market maker risk, right? Again, what's funny is if you look at each of these protocols, you can compare them to something from, you know, you take a Goldman Sachs and there's a department, an entire department doing manually what one smart contract in DeFi is doing. So I think the answer is prices can definitely still go down, but there might be winners as well in the group of DeFi protocols we're looking at today.

But again, we've seen what happened with, was it Sushi who got slashed? Sushi, right? Yeah, absolutely. What are you seeing when it comes to the institutions in DeFi? You know, the institutional services you guys are building, will that include DeFi stuff in the future? And has there been interest from the institutions in that, you know, kind of subset of the crypto market? I think so far we've seen more institutions looking into you know staking because they're saying hey here are yields how do we get our yields on these protocols from institutions and if I think it's a lot in the research so when we talk to financial institutions they're all excited they all have blockchain teams right now right so all the big banks and financial institutions and institutions are thinking about sort of how do we tap into blockchain how do we connect so they're all hungry for information

they're hungry for potential sort of product integrations or testings but I think we're you know I don't think we're gonna see institutional demand for investing in DeFi protocols or in sort of the DeFi itself yet. There's also a range of financial institutions, right? So 25 year old guy who made a million dollars in crypto consoles himself today in financial institutions. Of course. What's interesting to me too, I think is like, if you go back and you look, you know, I don't know, maybe in the 80s, right into the 90s, a lot of the hedge funds that are today the Goliaths of the legacy financial world, you know, they started out with just a couple million dollars. And so, you know, you kind of look around the room a little

bit. And one of the conversations I've had with people is there are some crypto funds that are, you know, hedge fund in nature that will likely be the Citadels, the Renaissance, the, you know, name your favorite kind of large hedge fund of the future. And part of that is going to be just because they're merely trading an asset in a market uh that those guys aren't playing in yet and are unlikely to do anything in for some period of time right it's kind of like when it when those large hedge funds want to play what do they go first they go to bitcoin right and then it's like oh what's this eth thing right and then maybe they'll go to two or three others to get to you know sushi swap uh it's going to take a while right and that feels like a big opportunity for

kind of the crypto native audience i think that exactly sort of uh you know i was joking 25 it could be 35 or 45 that this group uh of uh let's call them crypto hedge funds for a second of people who got rich in crypto and and now said okay what now are we what are we doing with our crypto right so and do at some point they said oh let's do icos uh then they said okay let's do new protocols, or, you know, this, then that, then they said, let's do DeFi, right? So it's a group of people sitting on, let's say, $100 billion. These are not these are not the what I call financial institutions. These are not hedge fund manager, these are just the people who made the first 50 to $100 billion of crypto in the crypto space. And they have a lot of crypto, and they're

looking they're looking for arbitrage they're looking for yield they're looking for interesting projects and that as long as crypto keeps on growing we're just going to see these guys constantly be the early adapters of the ecosystem yeah absolutely those are definitely the users on toro who we saw coming in on the toro platform buying in bitcoin in 2015 and by 2019 saying hey i actually want to trade bitcoin to xrp and bitcoin to uh to to tron or you know i want to actually use the exchange rather than just buy and hold an asset i i want to do more with my crypto i would be uh remiss if i didn't ask what what do you hold whatever you want to say by the way my entire holdings are public right so itoro is a social network you can just

go to itoro.com i think it's slash people slash yoni asia all right itoro and yoni asia you'll get to see my entire portfolio so um i am now about uh i'd say 50 50 roughly stocks and crypto uh my biggest holdings by far in crypto are uh bitcoin and eth so i'm 70 percent eth uh sorry 70 bitcoin 30 eth roughly um and then my stocks are extremely diversified any product i use and like i buy its company so you know i do have some tron so i bought some tron when i met i i went with Justin to meet Warren Buffett so I have some Tron every every I think every blockchain where I know the owners like Arthur from Tezos I also at some point said okay here look here's my tour here's how fast you can buy Tezos I

think when I met him in a conference so I have a lot of the I have a lot of the smaller coins but let's say it's about 10% of my portfolio and then stocks just Anything I use, Disney, Coca-Cola, Jack Daniels, Facebook, Google, Netflix, Amazon, all the usual suspects. Any company I use their products for a long period of time, and especially, by the way, if my kids use their products, I'll take a small location in my portfolio of that. By the way, when my kids start using Bitcoin, that's where the boom is going to happen. Completely agree. I always ask everyone the same two questions to wrap up, but you've already answered those questions.

So I have two different ones for you. We'll start with the fun one first. What is your favorite hummus? And this is coming from people on Twitter. I don't know why they're asking you, but what is it? By the way, I'm guessing it's Howard Linsen asking it. It was not. Answer and then I'll tell you who it was.

so so unfortunately and you didn't say anything about the fact that since the last time you saw me I lost like 15 kilos so fortunately unfortunately I'm on a keto diet or fortunately I'm on a keto diet which means I meet a lot of I eat a lot of meat and no carbs and hummus unfortunately is carbs so I just eat a lot of tahini uh or tahini uh it's almost as good as hummus uh for uh for for anybody there in the u.s i know really hummus took off but tahini is as good um and uh i use the gamal one all right the other question i have for you is uh it's much more fun i want to learn which is you went to dinner with uh warren buffett uh through this justin's son donation i think it

happened, whatever. What was the biggest takeaways that you had or the lessons that you learned talking to Warren Buffett for a prolonged period of time? So what's personally amazing for me is, you know, I've spent my entire life on opening access to capital markets because I believed retail investors should be more active in the retail space. But it was always I had this, you know, fear of shouting too loud and telling people, listen, investing in stocks is easy. And it's easy to make money in the markets, because people always tell you don't tell that to people, you know, be, you know, put your disclaimers. I think my biggest aha moment sitting with Warren Buffett is, you know, I read a lot of his books. And he says, by the way, in

his books exactly what he says in person. So I highly recommend reading a lot of his books. But he says, listen, if you look at the stock markets and you identify companies who you believe will just get stronger, who have a moat around them, right? So you believe in their product, you look at their financials, you can read their investor relations page, which people can. And it's really not that difficult to understand how to invest in capital markets. He's just reading public materials. And if you can understand that and read that, and you can make the right decisions to invest in companies you believe in, in companies that produce products that you believe in, and you will generate double digit returns over a long period of time. And I think that's what's happening. Investors today, millennials, are suddenly realizing, I should use my money, because when you're compounding 20% returns for 30 years, it's a mind-blowing figure.

and I think that's the you know and he's been saying it in books I've been reading it for years but sitting with him and hearing it from his mouth and like at some point I'm like I can't believe it he's that's what he's been saying all the time that's like the purpose of what we're doing in eToro and like until that point I was afraid to just shout out loud people should invest in stocks, people should read financial reports, and if they make the right decisions, which isn't necessarily simple, so you don't need to sort of just make decisions out of your wazoo, but if you actually read and get educated, you can generate double-digit returns in the markets over a long period of time. And I asked him, do you think this is also correct now?

If I would give you the next 50 years to invest, would you still be doing the same thing? And he said that I would do it better. Wow. It's so simple, but people want to make it harder than it really is. It's like everything. It's yin and yang, right? So it's simple, but it's complex. But again, I think we're seeing on eToro, we have now more than a thousand popular investors who are being copied by others the average uh um irr return rates for our top investors are 30 to 40 percent on average for

the past five years so you know they they've been killing it by the way combination of stocks and crypto and that's why suddenly this year the assets copying popular investors on etoro grew by, I think it's five fold. So suddenly people are looking at them and saying, hey, this guy's trading for seven years on eToro. He has a track record. A lot of them have this bump during crypto winter.

So it's like, and I think that's really the awakening again of the millennial investor. Yeah, it's awesome. Where can people go find you on the internet or find more about eToro? On eToro.com. And when you're on eToro.com, after you register, you can just write in Yoni Asya and you can see my entire portfolio and holdings.

And you can go and ask me, why are you holding this stock or that stock? Or why aren't you holding this stock or that crypto? And I'll be happy to answer. All right. And my parting question is, what are the updates you want to give us on eToro itself in terms of user metrics, revenue, future plans, whatever you want to share, the floor is yours. I have not come prepared to that question, but we've had the best year of eToro ever. So this year is going to be better and bigger than the crypto boom. So the, you know, Corona rally and the rise of a millennial investor, we've seen more than 4 million registered users this year.

We've seen revenues more than double. We've seen assets of our customers almost quadruple. So, like, we've seen mind-blowing figures this year, and I think we're seeing sort of a glimpse to the future. So, you know, the new investors are flocking to the markets and it's, you know, I'm so happy to see this. This is what, you know, why we've built eToro to see this moment in time of the digital transformation happening. Ladies and gentlemen, that's Yoni from eToro. Thank you so much, sir. Thank you very much, Pomp.

Always a pleasure.