The Wolf Of All Streets - $1.3B IBIT Dumped in Secret Dark Pool Trade #CryptoTownHall

Episode Date: May 27, 2026

In this episode, the team breaks down the massive $1.3 Billion IBIT block trade and what it really means (dark pool mechanics, redemptions vs actual sales). They discuss Bitcoin market sentiment, liquidity expectations, and why this feels closer to a bottom than a top. The conversation also covers Ethereum's challenges and BitMine’s big buys, ETH & SOL firms joining Russell indexes, DTCC’s Stellar tokenization partnership, and a deep debate on blockchain utility, RWA value, and substitution effects across networks like Stellar vs Ethereum. Plus, thoughts on Hyperliquid and broader market moves. Learn more about your ad choices. Visit megaphone.fm/adchoices

Well, good morning, everyone. Hopefully people can hear me before I talk for a while. Just someone give me a thumbs up if you can. I'm clear. Cool. So yesterday there was a very large I-bit trade reported at 10.30 in the morning to what's called the TRF, the transaction or trade reporting facility. And it has multiple possibilities of what it could be. And the Internet is all a buzz.

Crypto, Twitter is all a buzz. and most of the takes are absolute garbage. But some of them, like Alex Thorns, are factual and good. So we can talk about that. I think it's probably worthwhile, but rather than listening to a monologue about me, and just so everyone understands, I mean, I literally have been, you know, run and or built

three different dark pools in my life and understand all the mechanics here, so we can talk about it. But the short story is this could have been anything from reporting of a, trade that was done over a period of days. It could have been versus options, could have been versus futures. It could have simply been a sale of institutional holdings. It could have been anything. So it's not at all clear what it is other than the fact that it was done. For example, I'll

give you one example, because I used to run a billion dollar plus back in the days when a billion dollars meant something, index our book. And there's a product called Exchange for Physical, where what you would do is you would flip between futures and the underlying stocks. There are other trades vis-a-vis options or option strategies. And this could have literally been the stock leg of one of those, in which case it would have been completely neutral. But it happened in the context of some outflows, for sure, and in the context of kind of a soggy, if not particularly unvolatile market.

So it is interesting. And I'm curious how people react to think about it. Yeah, there was only 190. So to my understanding, when they report outflows, which is what everybody tracks, that's actually redemptions, right? So that's not this actual sale or buying of these, but the redemption. The redemptions was only, the outflow was only 192 million yesterday. So you have basically a $1.1 billion gap between the panic over that sale and what was actually

redeemed. So you can definitely dive more deeply into the mechanics, but the way I view it is that whoever, if it was a single sale and there's a counterparty on the other side, who we don't know, they're holding it for now. It could have been, just so you understand, the pathological case is somebody sold over the last week on a volume weighted average kind of trade and then swapped it from a swap that was done into just, you know, ending, getting rid of their physical. So they could have arranged to have somebody slowly selling it, selling, you know, selling Ibit that was borrowed short, you know, for a very long period of time, actually. It doesn't matter. It could have been a day, a week, whatever. And then that was done on swap and then flip the swap to a actual sale, which

then gets reported as a dark pool. I mean, dark pools, there are multiple types of dark pools that report to the TRF. The most common ones are, there are some big ATSs out there, or, there are some big ATSs out there alternative trading system. You know, all the big brokers run them. There's also single dealer platforms. There's also things done in derivatives and reported on swap that way. And then there's all the retail trading that's done by market makers such as the one that I ran two sigma securities or Citadel, etc. So there's a lot of it. And my point is we don't really know. It could have actually been a sale. It could have been hedging against something. It could even be bullish if it was a hedge partial to a bullish option.

And they could be buying stocked Bitcoin on the other side. Who knows? That's right. It's also possible. Can you get, can you guys explain what the difference between redeem and sale? Yeah.

Yeah. That's a great question. So effectively, you could trade an ETF, any ETF on the market all day long. Nothing stops it. Right. So, you know,

you're trading it on the New York Stock Exchange, on the NASDAQ, on the CBO, or any of, of these other exchanges or in a dark pool. And that's a human being. So let's say you go into your Schwab account and you say, I want to sell, you know, 100 shares of Ibit. You sell it.

Now, if it's Schwab, it's going to probably go to Citadel or Virtue or 2 Sigma or Susquehanna. But the point is that you're selling it in the market. Nothing happens in the ETF inflow or outflows. What happens is if, in fact, there's a lot of that and the price starts to get out of whack with like the price goes below what the net asset value is, then the, then the, then the authorized participants, the dealers, instead of selling more at lower prices, they can opt to take Ibit shares and deliver them

and get Bitcoin back, which they could sell, right? And so that is when there's big redemption. So the redemptions, and they happen, I forgot what the size is now, but it's usually between $5 and $10 million at a clip. I think yesterday's total outflow is $192 from Ibit on the same day. But those outflows are from authorized participants redeeming iBit in order to keep it directly in line with Bitcoin. So what they have the words that the market makers will use is there's a thing called the Arb Channel, the Arbitrised Channel.

What that means is with the fees that it costs to redeem, how far out of whack Ibit can get without it being profitable to either create if it gets above the price or redeem if it gets below the price. when it starts getting towards below the price, that's when they redeem. And so that ARB channel, and it's pretty tight. So you're not really losing a lot. It's actually a lot less than, for example, a lot less than the typical retail commissions that you pay or spread that you pay when you trade on most retail platforms. So that's why that exists. Does that make sense, Lou?

Did I explain it well? Or am I being, my assuming all, because I've been doing this. Yeah, I think I get it. Okay, cool. So effectively, the redemptions have very little to do with the big sale. the sale could have been part of a more complicated transaction. And that's really what matters, because very rarely do institutions want to go into markets? They generally have brokers do those traits for them.

And it could be done, it could be accounted for in a variety of ways. It could be accounted for as what's called riskless principle, whereas the broker does their best job, but they accumulate it in their own account, and they flip it out to the customer. When they flip it to the customer, they'll report it in a dark pool, you know, that sort of thing. So that is one possibility. So I'm not saying that there wasn't a billion dollars of Ibit sold. Not saying that at all.

I mean, net. What I am saying is we don't know. So hopefully that explains it. And frankly, the market action has been pretty muted. So I don't think it's really. I was going to say the fact that the price of Bitcoin basically didn't move should tell you all you need to know. Not specifically about who did it, but that it wasn't just some massive entity exiting the market at one clip. Yeah.

I mean, exactly. I mean, and you know, when you look at markets today, I mean, like, I'm not going to lie. If you had told me that oil would be dropping like a stone at the same time as silver and the NASDAQ and basically all risk assets are also dropping, I would have been very surprised. So I'm curious what people think. I think that there's just, you know, that this is, there's a lot of uncertainty out there. and the oil markets are still trading way above cost of production. And so oil could drop a lot without it necessarily affecting risk assets. But if it keeps dropping, it will help out inflation, it will help out the Fed,

and people will start thinking about what happens on June 10th. And that's going to become the interesting story as we get closer. But that's my thought. I can't believe I didn't trigger people. Come on, Gary. You're there. Is that a new account for you? I see Gary as a listener.

I think he might have had your problem. Gary, you can hear it. I didn't even see you there. I'm here. Yeah, 007 here. I'm the cloned at the real Gary Cardin. Yeah. So, well, you're going out.

Yeah, I think we'll see oil continue to fall here, man. I think the oil plays maxed out, the interest rate. I don't see interest rates continue and just go spiral up. So on Bitcoin, man, you guys have been around longer than I have. have you ever had more negativity in the Bitcoin market? Yeah. Yes. Yeah.

Yeah. Yeah. I was going to say not that it's not bad, but I've never, maybe we're starting to see close to the levels of negativity. I still don't think so in like crypto broadly. But Bitcoin, I think actually it's been way worse in the past, to be honest, Gary. I think FTCX, as Dave said kind of when we were at 16,000 that time, oh my God, man, COVID loads. in 2020, like March 2020, when it traded kind of above 6,000 forever and then dropped into the threes in a six-hour period and BitMex literally had to turn the exchange off not to send it to zero on

BitMex. I mean, yeah, I think we all get a recency bias for thinking that this is the worst it's ever been, but I feel like this is pretty far for the course. Yeah, let me say it this way, because I hear what you're saying, but, you know, every morning I wake up and I see another tech stock has just absolutely exploded for the future revolution

and I think you know you got more players that are in profit who now have an exit like that makes sense. There's a real fucking exit here for billions and billions to your point. Yeah. Right? Yeah, for the first time in Bitcoin

other markets it's very uncomfortable to be sitting in Bitcoin. Totally. Totally. That just needs to be confronted, okay? The question is going to be, hey, when does this play, play off? Pay off. I do think it pays off. But this is going to be another issue for Bitcoin.

As I continue to buy Bitcoin, I now am beginning to think, hey, you know, there's some other opportunities here that I wasn't aware of a year and a half two years ago. And they are well positioned to play out really well. even if you believe in the Bitcoin story, which is digitization of the future of Earth, you've got to believe that some of these, like look at IBM, man. IBM hasn't done anything in absolute years. I think it's, what is it, up maybe 8% or something in 10 years? I mean, it's just stupid. You look at some of these legacy companies, and I wonder, it seems like every one of them has,

they put in their stock price. Look at Dell. All these guys helping Trump, it just looks like everyone's going to get a piece of the action to me. My view is very straightforward, but there is a liquidity tsunami coming. People know it. We have very, very high stock prices, and we need stock prices to continue to go up. When I say need, I mean, you know, from a taxpayer point of view.

Needs the right word. Absolutely need. So need is important. So governments, so you're going to see Fed, treasury, cooperation that we haven't seen since post-World War II. That is, I think, what's going to happen? Now, what will that mean for Bitcoin? Well, when the Bitcoin cycle flushes out, it means it will outperform. I am not smart enough to know when that's going to happen.

I don't. I'm not. I don't pretend to. I do think it will happen, however. I have been off in my life. I don't think intelligence aligns with the ability to tell the future, by the way. Crystal ball might be broken, but it doesn't mean you're not smart. Art or just humble enough to know, I can't, you know, you can't predict these things. I mean, trying to is very hard.

It's like there was a thread the other day that just made me laugh. Some guy who's who I know on spaces and talks about, you know, Bitcoin a lot was trying to orange pill somebody. And the person goes, why would I want to be in Bitcoin when I can make 10 baggers so obvious in the crypto world and in the stock world. And so why should I do that? Why shouldn't I just try to go for 10 baggers and make lots of money? And my answer is that if you think you can do so, then you've been lucky. You know, I once made a comment about my own self in playing poker, having had a really

good streak where I, you know, made the money multiple times in a row, went deep in the World Series. This was years ago, et cetera. I started believing my own bullshit. And poker is very relentless about that. You do that and you lose. You start thinking, oh, people will fold because, I mean, no, it doesn't work like that. You start believing you can find 10 baggers without risk.

You're going to get crushed. And almost every crypto influencer has to shut up when they make outrageous predictions because very often you lose everything. And it's just, that's the thing. It's just trying to find this stuff is very, very hard. But Gary, in answer to your question, I think the reality, reality is the when people lose hope or lose bullishness and the price is where the price is It feels a lot. I will keep saying this this feels much closer to a bottom than a top

And we're still sitting well above the the most recent bottom so I look at it and I'm like okay Whatever, you know, but I'm not leveraged so I could sleep at night if I was leveraged I would be worried because you could get a flush I mean if sailor decides to stop buying for six months where will the price go? Well, I mean, he stopped buying for a week and the price got soggy. Now it's only down a few percent, but the price got soggy. So, yeah, that's sort of how I would look at it. Oh, come on.

Someone has to, you know, David, you're the big skeptic out here. What do you think? I'm sure you're looking at this saying that the sky is falling, right? No. I think the floor, it's the floor coming up, actually. the no and and just had a conversation yesterday with a bunch of people over lunch not strictly speaking looking at crypto but just they're looking at broader market factors and just you know people were commenting with kevin warsh coming on board we can basically look forward potentially he wants to shrink the fed's balance sheet which obviously is negative from a liquidity standpoint now obviously what trump is doing on the fiscal side in terms of of making government-led investments into tech companies, you know, certainly that's positive, but is it necessarily positive for crypto?

Because we haven't seen a crypto company yet that has gotten one of these, you know, Uncle Sam grants out of Trump. But I would still say I'm liking Bitcoin better down here at 75 than up at 85. Do we really think that Worse wants to say shrink the balance sheet? Do you think that that's just what they said? to push him through. No, I think that's what he said. Go ahead, Dave.

Sorry. Oh, you believe what they say. Okay, got it. Wanted and is willing to do are very different things. Exactly. I mean, he wants other people to buy our debt so that our interest rates stay low. But is he going to find them? That's really the question.

I mean, what he wants to do is jawbone and beat up the market so that it's afraid to be short. You know, it's, I mean, you know, as James Lavish points out, we'll probably get into it very specifically. It would be very good timing next Monday with James. But the truth is that some version of Operation Twist or something in order to try to help on the long end is forthcoming. We just don't know what they're going to call it or when they're going to do it. But that's really that's really that.

But, you know, realistically, the other big story, and I don't know, we talked about it a little bit, you know, It is, and you were talking about this morning with Tom Scott, you know, is what's going on with Ethereum and the rest of the really crypto, non-hype and non-Z-cash crypto. And honestly, this is Crypto Town Hall. I mean, my read on it is when the whole market is in the doldrums and we're still in crypto winter and we are, that narratives, it basically the market will brutally punish. you know, in a, in the worst way possible, which is apathy, uh, tokens or, or assets that don't have a narrative that people can kind of hide behind and or, or believe it.

And I think we're seeing a lot of that. So Ethereum, the narrative keeps changing. And when the narrative changes, obviously it has less power. But Ethereum, you know, it, just imagine where Ethereum would be, we talked about crypto, with Bitcoin without Sailor, where the hell with Ethereum be without BMNR without Tom Lee? You tell me. I mean, I know what I... His biggest purchase ever this week, right?

I mean, over $250 million. He's at 4.4%. And, you know, said he'll stop at 5 and he was going to decelerate and then made his biggest purchase ever because he likes the price. I mean, he may end up being right. But, you know, my opinion is without him or, God forbid, he were forced to stop buying because the market takes away as punchful. I mean, I think Ethereum could get cut in half.

I think it got cut in three quarters, you know, to kind of gravitate down what, you know, to, if you look at it just as a percentage of, you know, from a market cap point of view, I mean, it has, what, that's 60% give or take of the layer one volume. This is a great conversation, Dave. What do you think the price of Bitcoin would do in that event? Let's just say 25% cut to Ethan. This has been my big concern with, because Ethereum is, you know, you talk about sailor stop buying. What if Ethereum needed to liquidate? I will say, though, that Bitmin and Sharplink. So I think Bitmine's about to be included in the Russell,000.

I don't know how big this is. But and Sharplink, think Ford Industries for Solana as well, be in the 2000 or 3,000. So there will at least be some passive flows into these now. Yeah, I used to trade those events. I mean, yeah, it helps. I mean, you know, the Russell 1,000 is. is, I mean, isn't micro strategy in the Russell 1000?

I mean, I think they must be because it's pretty mechanical. Probably. They're in the NASDAQ, you know, they're in the queues. Yeah. So, I mean, look, I think that it helps. But once again, that's not necessarily redemptions. That's not necessarily by being able to borrow money. It's not just buying the stock, right?

You know, unless he's ATMing selling his stock, in which case, if he's ATM selling his stock and diluting his shareholders for most of his purchases, Yeah, it'll help a little bit for sure. I think it's probably priced in now because by the time we get to turn the page to June, the Russell Rebalance Trade is really, really well understood. And I used to trade this for on a program trading desk. So believe me, I understand this stuff.

So it's there. By the time it actually happens, it's usually the opposite. So it's a buy the rumor, sell the news kind of deal. And I think we're in the, it's not rumor because you know about it. It's mechanical, but it's there. But I was just saying- I meant that the passive flows into them could help, not the actual trade on the stock itself, sorry.

I mean, I would say the answer to your question, Gary, if Ethereum, you know, premium over, you know, Solana and Tron and other layer twos that are gaining steam, collapses by 25%. I don't think that has any impact on Bitcoin. If Ethereum were to have a massive crash in a day, yeah, of course, everything would go way. Yeah. So the how matters.

But if you look at Ethereum versus Bitcoin, I mean, it's been a one-way train, but slowly, it's a slow train wreck, right? And a slow train wreck doesn't have any impact, but any sharp moves always has a big deal. I don't know. And that's just the way all this is. Yeah. I think Samuel lifted his mic. Samuel, comment? Yeah, I didn't see a hand.

Maybe I'm wrong. I just saw that as Mike. Well, I see the lifting the mic. Samuel, are you there? I don't think so. Yeah. Well, I'll jump in. Listen, I love BNR.

I love BNR. I think, you know, the 300 million annual revenue, they've got a great balance sheet. You know, the price of Ethereum is less impactful to that company as it, you know, as it relates to the health of the company. You know, unless you think that Ethereum's going to zero, you know, I wouldn't. take it as a big alarm. I mean, Bitcoin and Ethereum been tethered together, you know, certainly since last cycle, you know, they separated as far as those two and then the rest of the all coins. And then even when the ETS were approved, right? So, you know, moving forward, you know, I think they'll continue to be tethered to some degree. And, you know, as far as,

you know, directionally, I mean, this is a long-term play, right? I think, Lee and Saler have found between their two companies, they're 90% of the trading, you know, in liquidity that in all of these DATs, right? I think they're separate. The other thing that Tom Lee talked about in his presentation was that there was potential, you know, mergers and acquisitions. So, you know, as he's reached the 5% thresholds, guy, like you mentioned with the Ethereum, I mean, maybe he stops there and maybe he starts to look at maybe some of these other

other Bitcoin treasury companies that may not make it through this bear market. And he could scoop up some of these, some Bitcoin and actually really create an interesting hybrid debt with it has some great revenue coming in and then strengthen it with Bitcoin on its balance sheet. That would be incredibly promising moving forward. I mean, he already invested in Mr. Bees. Right. So he's already shown a willingness to go off play.

But the other thing, I think, well, yeah, go ahead. Dave. No, no, keep going. Sorry. Yeah, I mean, I think that if the price of Ethereum dropped massively, it could become problematic for him. What I'm actually surprised about is that he hasn't launched an STRC-type instrument. Because with Ethereum, staking yields and what you can actually do with Ethereum, I think it would actually, for him probably be a less risky product than even Sailor doing it back to my Bitcoin. Isn't that what Samit Bit Digital's been doing using the flywheel technique by stick in the ether? I'm not sure, actually. Probably. I mean, yeah, I mean, a lot of these obviously, like, you know, listen, you can debate the validity of an asset as a treasury asset.

And I would debate that Bitcoin is probably the only worthy treasury asset by definition. But if the goal of a treasury company is to outperform whatever asset they're benchmarking to, a Bitcoin treasury company makes a hell of a lot. less sense than an Ethereum or Salon a treasury company because you can simply participate in the network and earn a yield so you can naturally beat the price of the underlying. So I think there's a lot more that Tom Lee could do without it being real financial wizardry or strange engineering of the balance sheet to beat Ethereum. Well, if you say that you're going to beat the underlying asset, then you beat the underlying asset, including the yield, right? If you buy us, you don't say, hey, I'm going to outperform IBM stock by taking my dividend and buying, you know, more IBM stock.

That's not outperforming. Well, I'm saying versus Bitcoin specifically, holding Bitcoin has no yield. And most people who hold Ethereum don't earn a yield. So I'm talking about to Wall Street. I think it's there's a more rational case to say we can. Most people do. I think whether there's a, the percentage of the Ethereum being staked has been climbing. I haven't looked at that, but I'd be very surprised.

Yeah. And Dave, I also... I'm not saying you're wrong. I'm not saying you're wrong. I said, and haven't seen it. And certainly, you know, and obviously all you're doing is take the degree you're getting any value. All you're doing is taking away from the people who aren't staking. Right?

There's no actual value being created. It's just being taken away and diluted from the people who aren't staking. I mean, but the real. And Dave also, you know, I actually think, I mean, there has certainly been a narrative shift for Ethereum, but, you know, in my mind, it's still largely the same exact thing, which there are two, I think, clear leaders today in decentralization in terms of platforms. And it's Bitcoin and Ethereum. And, you know, and Ethereum is a place where the world is going for smart contracts. And I think that's a massive business. Yeah. Actually, I liked that Vitalik doubled down on that this week. I don't dispute that. And in fact, from an investing point of view, I mean, it feels like, I mean, look, I'm not a huge believer.

But when you get to this negative and it starts getting negative, if there's a crescendo down, I understand what you're saying. I mean, the real question is what's the value of the network and you will need to come from the value of the network. And at one point that you need Sam to mute his mic. Sorry to interrupt. I was sorry. I did have a thought. Okay, Sam, why don't you talk because we wanted to let you talk before. I apologize.

So a couple of just thoughts. Yeah, I think the question of, I don't want to call it a disconnect between the EF and what's actually going on with Ethereum the network and the commercial opportunities. And obviously, Tom Lee being the chief marketing officer and being the best voice, I think is a major issue for that ecosystem. This space was downloaded via Spacesdown.com. Visit to download your spaces today. And it seems like there is a, I don't call it an existential crisis, but, you know, is this just a public benefit to have a world computer, or is this going to be really a platform to build commerce and, you know, to be the preeminent smart contract layer? I think all of those remain to be seen, and I realize it's a little bit less of a trading perspective.

The other point that, again, just dropping in, I'm surprised that there has not been more M&A with that, especially as NASCO negative. Somebody made the point earlier, but it just seems like an obvious buying opportunity for the right organization to consolidate. How does someone not buy Nakamoto right now? Can I answer that one, Scott? Bailey won't like my answer. But when you run a dad- Does someone not sell it? Well, here's the thing.

So if you put yourself in David Bailey's shoes, he bought Bitcoin magazine. He's paying himself and his insiders a stupid amount of money for running a money-losing business. Why would you sell when literally you probably have no net asset value or enterprise value left in the company when you can, until you, until the market. I definitely understand why he wouldn't sell. That's fair. I'm just saying that there have to be opportunities out there. I mean, what's their Bitcoin worth versus their market cap? I have no idea it's got to be a fraction. It will be a bankruptcy sale. That's the only way is you can't force insiders to sell when they get nothing. So imagine a world where the CEO of a company is able to pay themselves a million bucks a year and just bleed their shareholders dry until they go bankrupt. He's motivated to believe it.

I mean, I hate to say it. It's the only way he gets money out is just take his paycheck. I mean, I sold early relatively relative to some of you guys, but I lost money on it. But when I realized the executive compensation structure, I sold. End of story. And that was a wild go. I think it was more than a year or maybe it was last summer. I can't remember.

It all bleeds into it. You know, crypto is sort of like dog years. So, you know, it's, you know, but it was. was at that time. But seriously, it's the executive compensation structure. You know, executives are only incentivized to sell when they retain enterprise value. And you never know what the deal, what the covenants are in financing grounds. Like, for example, if you run a, if you have pref shares and the liquidation preference is such that anything more than, you know, X amount, you get nothing. No, no executive is going to want to sell. The board would have to step in

and force his hand. And that might happen, but that's literally what it would take. And I'm not trying to pick on Nakamoto. I think that's true with a lot of companies. If you're buying distress assets, I mean, it's too bad if you, you know, your guest this morning. I mean, Tom, he used to do distress, as I recall, if I remember telling me that. When you're buying distress equity and distress debt, that's what you're looking for. You're looking for those situations where it's gotten ridiculous. And it has to get ridiculous first. I don't know if that answers your question, Scott, I think that's good. Yeah, it does. I just, it's just to the point that Samuel made. I mean, it seems that we're at that point in the cycle where some of these companies have to be exceptionally ripe for a purchase where someone would even just want the underlying treasury asset.

Yeah, but even then, most of the time they buy the assets. They don't, it's called an asset sale rather than a box sale. Yeah. Scott, to your point, the value for the market cap is like around 100 maybe, I'm honest to say 100 million, just keep it easy. and then the underlying value of the Bitcoin is like some pretty close to 400 million. So it's almost like, well, what's the debt? But there's hundreds of millions of debt too. Yeah. Exactly. It's not, there's not much buying a Bitcoin from them.

So can I pivot to another topic, one that that's also crypto? I mean, am I alone in what, I mean, obviously the market is starting to price it in? But what do people think of DTCC using stellar, not XRP, which is why it's down, obviously for a similar reason, for some of what they're doing. Obviously, we know they inmate announcement with Canton and all this stuff. I mean, doesn't this kind of prove the thesis that I keep banging the drum on that companies will switch onto blockchains that have lower fees and lower cost and that everyone who thinks that there is huge upside because of, you know,

quadrillions of transactions are missing the point that the blockchain itself can make money and can have value, but that these upside predictions are just nuts because they're of the substitution effect. I mean, this seems to be a pretty clear story. I mean, do we do we know how much stellar DTCC got for that? You know, my guess is, is, is, is, is it's a lot more, uh, that was driven a lot more by that than any low cost chain. That's not decentralized.

Possible. I mean, you know, anybody know. If anybody does know, then, you know, you know, I'd love to understand that. But to me, a large part of the whole infrastructure plays with crypto are what's going to actually generate value, and where is it going to be, and is it overvalued as an industry or not?

And I still think not, but I do think that there are a lot of people with very unrealistic expectations on the basis of this. So, I mean, maybe I'm wrong. I don't know, but it feels like this is important from evaluation point of view. It's true, Dave. And the more that there are swap bridges

between different networks, the easier it is to move assets from one to the next. And so the less value extraction can exist for the layer ones who are all in near perfect competition with one another and can only then ultimately compete on price, which is the value of using the network,

which means that there's no tax to extract from users of the network, no matter what the outcome is. But there's a huge difference between the networks. There's a huge difference between Stellar and Ethereum in terms of decentralization and security. Now, I mean, I'm sure Stellar is secure. I'm not saying it's not secure. But they're very, very, very different things.

and to say that they're all, they're all, they're all largely centralized. Well, so is, and why is Bitcoin? Anybody can build Bitcoin. You can fork Bitcoin, and now you've got the exact same thing, right? No, I don't, I think that's really fundamentally different, you know, because Bitcoin isn't saying, look at all the assets you can create on Bitcoin and trade on Bitcoin and smart contracts you can run on Bitcoin.

Bitcoin is saying there's a limited supply that gets harder and harder. But you're saying there isn't a limited supply. You're saying that anybody can copy. a chain and now it's a it's another chain and there's no cost to moving, which is obviously ridiculous. Because there's no value to the token. Well, okay, I mean, we can agree to disagree, but So then what's the value of the stellar token? In your view, what's the value of the stellar token? Negligible. It's negligible, right? And it, and it'll continue to reduce, like, it's purely people speculating on the narrative that Dave is saying is, is not a solid narrative. It's like, oh,

People use XRP for banking and money transfers. Well, only if it's the cheapest thing and it actually works. But anyone else can offer cheaper. They don't use it. That's not true. They don't use this. What's the volume? What's the true volume going over XRP?

Nobody uses it. And what about over Ethereum? On the promise of something on the come, when if the thing ever eventually does come, which for many of these notions it hasn't come, then the ability to extract the profit of it, of that thing is severely limited by the fact that there is, like in the case of smart contractor tokens, there's hundreds of other chains which are direct forks of the thing, which provide the

same value because you can bridge from one to the next. None of them have the scarcity and decentralization that Bitcoin has, Bitcoin's decentralization is only important for the scarcity of its token. Not like, who cares about the decentralization for an asset that has a central issuer? It doesn't really add that much. You know, you get some transferable. transparency, but they all offer transparency. So decentralization is not the important point here. If you're just trying to create a token trading. If not, then why do you think everybody,

why do you think Ethereum is dominating the RWA like it is, if it's all fungible? I mean, the RWA stuff is even more preposterous because it requires a government with armed forces and courts and police to actually enforce any real world thing. So I think that there's a tremendous misunderstanding of what blockchains can actually do and provide. And when people think that a blockchain can enforce ownership of real-world assets, they're out of their minds, but they don't know it. So they've made a terrible miscalculation in not understanding that data on a ledger somewhere, centralized, decentralized,

whatever, doesn't enforce ownership of real-world assets. is a perfect example of the mispricing and misunderstanding of the market that exists right now. Boy, I'd love to deconstruct that. But, Lou, do you want to respond before I deconstruct that a bit? I mean, I think we could have a whole show on this because I strongly disagree with what he's saying. And in my view, the proof is in the pudding. The vast majority of RWA assets are on Ethereum, not because Ethereum is cheap. cheaper, but because Ethereum is functionally better.

That is why they are all there, and they're not going to all move to save a penny. It is true. Well, I was more, that thesis, I'm more picking on XRP than I'm picking on Ethereum. Ethereum at this level. It's, you know, it is what it is. I mean, the thing about, I don't think you, we talk a lot about stuff on this show that have no value or that most of us on the show think have no value. And I'm not sure that there's a lot of value to talking about that. Well, I mean, there are a lot of people out there with a lot of wealth in various chains.

And, you know, to honestly, it's more, it's much more religious slash, you know, political party like, I mean, it's, you know, it doesn't matter. It's tribal, right? You know, crypto has been tribal for a very long time. And it's something that Scott and I have complained about for years and years and years. But so is the stock market. I mean, what is Tesla? Tesla is the just tribal. Well, I mean, look, you want to know what the one of the biggest stories in the stock market is Micron.

I can remember in the 90s, various analysts calling Micron the flying pig. You know why? Because the price kept going up and literally put up. And they couldn't make money because they couldn't compete with Samsung and others in South Korea. So the pricing was always shitty. And here we are. Micron, that in those days was in the double digit billions. and it just hit a trillion dollars now why you know can narrative sometimes grow up is it overvalue

it's probably overvalue but who cares it's not overvalued by that much i mean it's gone up by a factor 20x so okay maybe it should have only gone up by a factor of 10x okay big deal you know but 10x is pretty good you know and so the narrative changes i mean tesla or space x i mean space x is going to be overpriced on its IPO almost certainly you know it I will be stunned if SpaceX doesn't do what other IPOs do, which is pump initially, fade back below its IPO price for a while, and then eventually regain it and do better. Why do I think that will happen?

I think they will own a market that's going to be a massive market in 10 years, which is space-based data center. I think you're going to be surprised because there's obviously a massive, massive cult around Elon. And you could say it's deserved or not, but what we do know is whatever he floats, you know, people don't care what the value, what the prices, they want a bus. And by the way, that's obviously been an awesome strategy. I look at Tesla as a robotics company, not as a car company, right?

You know, then again, I drive a Tesla Y, and it is a friggin robot on wheels. So I kind of know that. And I think you would value robotics companies with the kind of revenues and potential more than you would value a car company. And people who have been trucked out for a world. Right. And we've all seen Kathy Woods, and we've all seen Kathy Wood's model of Tesla that, you know, to validate, you know, its current trade. I mean, I, could someone explain Kathy Wood why she's a single one?

Why people listen to her? I mean, she sounds smart when she talks, but, you know, her, that kind of a track record. She's incredibly smart. She's incredibly smart. Very smart. She's had a, she's. I mean, just, just, just, just, just. whatever. I'm just curious because I actually agree with a lot of her statements. That's why it scares

me. But, you know, whatever. Anyway, the point on that we were getting back to that I wanted deconstruct from Tomer is there, you can have value. I mean, this notion that that value is binary, it isn't. So whether it's stellar or XRP or any of these other chains that are that are designed for, not for functionality. They're designed for high frequency, high speed, very cheap movement of value and that's it. That is very different than Ethereum, which is literally designed for building applications that are smart contracts that could be understood. And so if you're an art, if you're a real, you have real world assets and you move them on chain. Now it depends what kind of asset you're talking about. If it's gold in a vault, that chain does no good at telling you that there's still

soldiers, there's still people valued it, et cetera. Add cameras and people who can validate it. And all of a sudden, you know, now all of a sudden there's something there. If it's a building, then you know it's there and there are people constantly, you know, understanding it. So it depends on the types of assets. The chain itself is just a vehicle for independent observers not listening to everybody else to be able to validate it. But if those independent observers have no way to validate the asset, you're right. It provides no value.

But if there is, then it's far better than trusting a bank because the bank could be validated. it wherever, you know, whatever, but it has to do with independent observations. That's the difference. So not all real world assets are created equal is the short answer. I'll give a very concrete example. You should most companies will eventually tokenize their shares natively. Why? Because then you'll be able to know with certainty those who are permission to see it, who owns the shares. Right now with current share registries, the way it's designed, it's so fucked up that every time you get a big proxy war, there's always a question who actually owns it. and, you know, where do they even mail the proxies to it's, it's a completely screwed up situation

because all shares are physically, quote, owned, put in air quotes by DTCC and a vault. Everything is in street name and distributed, and reconciling that is incredibly difficult. That will get much easier as an RDF as when those real world assets are fully tokenized. Those are very different scenarios. Does that make sense to you, Tomer? Yeah, I want to be careful about what we describe as real world asset. And I'm not disputing the fact that more transparency is tremendously needed and that we can solve for it. What I am just cautious of is the suggestion that there will be a chain that can win and sustainably hold value in its native token because of the substitution effects. Ethereum is open source.

Binance chain is the Ethereum virtual machine running with a different set of validators, with a different set of incentives to support the validation. And there are countless of these EVM clones. There's EVM clones that are trying to sit on top of Bitcoin now. And so it makes it very hard to sustain any kind of value extraction for providing the service because the competition is so intense because you can just lift the code and drop it somewhere else and run it, and it runs just as smoothly.

So that, to me, is the concern I have with all these tokens. I certainly have concerns with the story of real-world assets. Like, if it come, if you say, you know, we've got, we've got a building and you can see the building, it doesn't mean that you can, it doesn't mean that you can enforce ownership of it just because you've put shares of the building on a blockchain. You need the execution and the regulatory mechanisms that exist in public companies today to enforce it. And so until you get alignment of enforcement with this, it's nothing but a technological man behind the curtain show. And that's why you also see so many of these rug pulls happen on these smart contract platforms. People think that they're entitled to something.

And it turns out, well, there's no entitlement. there's some anonymous person who broke in and stole the master keys and stole everything or the founders stole everything. It's like we're in, the regulation of the ownership is not built into the system. And when you write smart contracts that have master keys, there's no decentralization. Like I don't care how decentralized the Ethereum chain is. Almost all of these contracts on there have individuals who can freeze everybody's funds. So it doesn't matter if what's beneath.

it is uncensurable. If the thing is itself is censorable by one person or a couple of people, or rug pullable by one person or a couple of people, you don't have any protection from the decentralization of the main chain. And that's what I just, I don't know, that's what I feel I got to keep in my mind as I analyze the space and often warn people about because it just keeps, these things keep happening. I'll stop there. Look, half of what you said I've been, I've been pounding the drum on for a while now, right? Which is, I think that there's delusional expectations on many chains. I mean, I always pick on XRP worst, the worst one,

because of the, there are people there claim, you know, it'll go to $10,000, you know, whatever. I mean, literal delusional people. I mean, it could happen, but that's what we're, when it's a wheelbarrow full of cash for a carton of X, right? You know, the two are synonymous. And that's because of the substitution effect. You can't have something that is set up to be faster, cheaper, better, getting that expensive.

It just can't, right? And that's your point. And so on that part, we're completely aligned. Where it gets interesting is what could be validated. And, you know, as the world goes more and more digital and digital representations become more and more obvious. I mean, the thing that Bitcoin is, is your point is Bitcoin isn't a representation. It is digital. I mean, my point about Peter Schiff is more or less yours, which is, he says, well, digital gold.

It's like, well, but digital gold rely on men with guns protecting something that you don't know it's there. How many people, if we do a show of hands on this space, how many people believe that Fort Knox has exactly what the U.S. government claims is in Fort Knox at this point? Anyone going to raise their hand to believe that since they have not been willing to audit it for how many every years? I mean, I don't believe it. And I'm not saying it does or doesn't, who the hell knows. I'm just saying, you don't know. And understanding that and trusting, trust is very hard, right, you know, if you're non-sovereign. The reason the U.S. dollar doesn't, that that lack of trust doesn't matter.

People don't care, right? The dollar is the dollar. And until it changes, until people repudiate it, it's still what matters. So, yeah, I mean, you're right there to a degree. but there are certain things that can be validated. I mean, there's no difference between that you could have like shares, like stocks could be natively digital without any problem, right? There's no physical building there.

But so when we say real world assets, you have to, I distinguish between ones that can be natively digital and ones that can't. Does that make sense in terms of what I'm saying? And how this boils down to our audience is it's like, what are you investing it? Right? You know, like where? I mean, I would go. So just to offer the term financial assets as the things that can be digitally native versus real-world assets,

which are physical things, I think, is a good distinction because otherwise this confusion over the enforcement of the gold or the enforcement of the buildings ownership enters in because of terminology. So I would prefer not to call financial assets real-world assets, but to call them financial assets and to call physical goods real world assets. But maybe my nomenclature is out of sync. But it's an important distinction between physical and finance and notion. It's certain rep, isn't the real key just still having

the legal wrapper that bridges, whether it is a physical asset, a financial asset, you do need the legal wrapper that connects the thing that is not on chain to the token or whatever the tokenized RWA is that's represented on chain. So I huge distinction, obviously, between a financial asset and a building, but ultimately it's the legal wrapper that I think needs to get defined. I think that's fair. I think that's fair.

I mean, it depresses. And if it is the legal wrapper at the end of the day, a transparent SQL database does the same thing with the legal. enforcement that a chain does as far as I can tell. That is true. It's a question of verification. I mean, like things like I'll pick a good example, Tomor, titles, I mean, if Gary's brother was on, he could go chapter and verse as to the title industry in the United States. And should those be, should that be non-fundable tokens? Should title be a non-fundable token, right? Share registries are another one. But real estate titles are matter. I mean,

It's a huge industry. And it's a huge frictional cost because of, you know, you need insurance because people can cheat. I mean, so yeah, you know, but all those examples are interesting to me. I mean, why that matters to token holders. I mean, look, there are multiple tokens out there that are claiming to be digitizing finance. And one of the things you said to them are that I find fascinating is, is we have no idea if you're a token holder

of some of these networks, what your rights are, what your economics would you would expect. Let's say the token itself ends up achieving all its goals. What's the value to the token holder? We still don't know. And a large part of what between the SEC and CFTC are trying to do is normalize is to make sure that people, when they buy a asset, know what the hell that asset is.

Because right now you don't. And that large part of the rug pulls happen because people just, they don't care. They just buy it because they think other people are going to come along behind them and buy it from them. Right. Well, and this to me is where I'm just trying to point out the distinction between what people think is true about blockchain and what is actually true about blockchain. And these expectations that are misplaced by many people who invest in these things and they say, oh yeah, I own a share of this or I control a piece of that are completely mistaken because they're misled into thinking that blockchains provide enforcement of ownership of assets outside of the native token of the

blockchain, which they don't in the real world. That's true. That's true. The blockchains provide more decentralized verification of something that has happened. But the question is, is that thing that happened, whether it's real or not. That's what you're saying. You're making that distinction. Yes.

And so, you know, that. that matters, right? Yeah, I think I think you're absolutely right. I mean, the reason I pointed out the XRP and stellar thing is that so much of the XRP narrative boils down to being, you know, the most used, but yet, you know, I'm not going to call it a clone because there's legal whatever, but, you know, the closest chain to XRP out there is stellar, you know, in terms of its functionality. And that's a DTCC pick. That, that's why, you know, I'm not surprisingly, you know, XRP is down, you know, it's recovered a bit. You know, it's down only a percent. And so Stellar is, what is it? And I look, and Stellar is up like 6%. So it hasn't heard XRP so much today.

It was starting to drop. But, you know, whatever. So it is what it is. Yes, Jamie. Yeah, I was just going to add, like, I just think, like, when we're going into a period moving forward where we're trying to figure out, like, we talk about this all the time, Dave, like, who are the winner's going to be and you're not really certain like this at least establishes Stellar as you know a project that because of the you know it is institutional validation with the DCC that they're going to be a multi-year or multi-cycle project moving forward so it just I think it helps to kind of pick out who the winner's going to be if I'm walking in the door with Stellar and you're talking about Ethereum

versus Steller as far as the choice. I mean, because Lose points, you know, important. I mean, Ethereum is significant. But, like, their specific, I think, differentiation is there, it's a platform for experimentation, right, for innovation, whereas Steller was just built specifically for this in mind from the beginning, as far as traditional banks, Fiat currencies, and payment systems. So, you know, I think that's where I would focus on why this.

over Ethereum, it certainly adds them into the mix moving forward where I think XRP's kind of established it and there's not as much questioning. Yeah, I think that's fair. I mean, I think that's fair. I'm not trying to take, have huge opinions on any of this stuff. I just like to be the voice of reason for people who make outrageous claims. I am not saying that XRP is valueless here and it's going to go to zero. I know a lot of people.

And me too. I'm just trying to give it a broader context of where it replaces in it. like why this happens right and because we don't know who's going to be those next chains right so we're kind of this kind of helps narrow down the choices as we move forward to who's going to be have staying power and who and who doesn't i mean is that kind of a fair framework just to kind of put this in i mean homer's point though i agree with i think substitution effects limit the you know if you're building utility i mean i guess it comes from the the simple fact of me being on wall street for all those years and watching what happened in the internet bubble, many of the sub-trends that

happened, there were all sorts of collaborations between the Wall Street firms that got spun into companies that became utilities. And some of them had value and they did okay. But for the most part, if you're a utility, there's just a limit to what you could be worth because you're just, you can't raise your prices, right? And so it becomes that. And, you know, whether or not owning a piece of infrastructure is important or not, it has to do with what could the cash that that infrastructure generate? What's the value of that infrastructure? You, someone compared BNB to Ethereum before. Well, BNB, the reason you buy BNB is if you think Binance is it going to continue to grow and make money and burn BNB and make it more and more scarce and people

need to own it in order to participate in it. Same thing with hyperliquid. I mean, hyperliquid is growing leaps and bounds. There is no equity that you could buy. People are buying the token as a proxy for that equity because if you want to trade on hyperliquid and get the best tiers, you need to own a bunch and it's going to keep getting burned because of the revenue is going into it. So is that the best way to do it? I don't know. I mean, change the legal environment and maybe not. Maybe they'll come up with a better way. But those are the stories that matter.

That's why Hyper Liquid is doing so well. It's because the platform is generating a lot of money. I mean, you can say it any other way. Do you agree, Jamie? Yeah. I agree. You know, the interesting part is that, like, you know, I was talking with Alex, uh, at Damsker about this.

And, like, she, she, you know, she comes at it from a SEC framework of regulatory risk, right? And so, like, it's like 800 million a year, like, very small, you know, people involved in the, running the company. So it's incredibly profitable and impressive. but, you know, she points out that, like, 30% of the revenue comes from the U.S. markets, which is restricted currently. So, like, they're going around the systems for it to work. When I hear stuff like that, it's like, okay, like, this obviously isn't going anywhere, but, you know, how they're deriving some of their revenues, given that there's restrictions is,

it's going to have to be addressed moving forward to include the U.S. markets or restrict it from its revenue model. that to me blows my mind. Yeah, well, you know, we're up against time. I saw Mickle jumped in. I would love to have gotten his perspective. I've actually got a drop right away. Thanks for entertaining my comments. We will see you all again on Friday,

and maybe we'll dive into some of these crypto topics for, because I think that's what our audience wants to listen to anyway, not just hearing us talk about the Bitcoin price action. Hyperliquid is the topic across all space. right now Dave so that that would definitely get you a lot of eyeballs yeah well I think we can talk about that and this whole XRP versus you know versus stellar and all this stuff I think is actually worthwhile to dig into so you know we'll think of something like that to talk about on Friday in any case have a great day everybody and great great job Dave we'll see you

all on Friday morning show