The Wolf Of All Streets - An ETF, A VC And A Token Walk Into A Bar | Investing In Crypto With Matthew Sigel, Dave Uhryniak, And Vineet Budki

Episode Date: February 9, 2023

Investments into crypto are always a hot topic. Today we have an opportunity to see the perspective of a VC investor, Vineet Budki from Cypher Capital, an ETF applicant, Matthew Sigel, Head of Research at VanEck, and a token, Dave Uhryniak, Director of Ecosystem Development at Tron. Matthew Sigel: https://twitter.com/matthew_sigel Vineet Budki: https://twitter.com/vineetbudki Dave Uhryniak: https://www.linkedin.com/in/david-uhryniak-40b87410/ ►►NORD VPN An essential crypto product to protect your privacy and keep your crypto safe! Sign up on my link below & enjoy the benefits of NORD VPN from just $4 a month. 👉https://nordvpn.com/WolfOfAllStreets ►► JOIN THE FREE WOLF DEN NEWSLETTER https://thewolfden.substack.com/ Follow Scott Melker: Twitter: https://twitter.com/scottmelker Facebook: https://www.facebook.com/wolfofallstreets Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #trading Timestamps: 0:00 Intro 2:00 Tron & USDT 4:00 Stablecoins 6:10 What drives the market 8:20 Regulation 11:20 Remittances & blockchain 15:15 Adoption 17:30 Staking business 22:35 Did crypto help or hurt people 27:00 Risk management 30:21 What will drive the adoption 36:00 Mining 40:00 Gaming 43:00 Tron & gaming 45:00 Innovators' dilemma in blockchain gaming 47:15 Garry Gensler will leave SEC - we will get Bitcoin ETF 55:00 Wrap up The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

A priest, a rabbi, and a football player walk into a bar. Everybody knows every joke that starts that way today. Well, we decided to be humorous in the title today. We've got Vinitia for an asset manager, a VC, and of course, someone from a token walking into a bar to have a friendly conversation about the state of the cryptocurrency market and what we can look forward to or maybe be afraid of in 2023. I've got Dave, Vineet, and Matthew here to discuss. Guys, don't want to miss this one. Let's go. what is up everybody i'm scott melker also known as the wolf of all streets before we get started please subscribe to the channel and hit the like button the jet lag is hitting me hard at the

moment i was in dubai as you guys know hanging out with one of our guests today, Vineet, for the second time. Seems that every time I leave the country, there he is. I met him at Token 2049 in Singapore, and he was the first face that I saw when I walked in to the hotel in Dubai. So it's always fun to have friends here. I'm going to go ahead, without further ado, and bring everyone, I've got Dave Vanete and Matthew Gentleman. Thank you so much for joining today. There's a lot happening right now in the crypto space. Dave, I want to address you first.

I found it very interesting, of course, we saw yesterday that Tether's backing was reported. Seemingly, they've really made an effort to be fully backed. But I was also surprised to find out over the past few weeks, I've seen it reported, that the majority of Tether movement is on Tron. It certainly is. Yeah. And, you know, probably really since for the last few years

since I've been around, nearly half of the Tether volume runs through the Tron network So when you look at stable coins overall the total stable coin market nearly a quarter of all stable coin volume trades on Tron and When you think about why? Why that is that a small relatively small chain like Tron who we have about a five point six billion market cap relative and Ethereum's, I don't know, at least 10 times that. How do we have a larger market share than a chain like Ethereum?

It's because we have significant competitive advantages. We're low cost. We're fast. And most importantly, I're it's reliable when you talk to people in the industry when you talk to people who are often trading stable coins and doing a lot of activity or have a lot of activity in the space they'll say tron just works and that's why we are able to capture such an outsized share of the stablecoin business. And we're really looking to grow. As you know, Justin has been bringing countries online, talking about making TRX legal tender. We're already legal tender in the Caribbean and Dominica, as well as

the Dutch side of St. Martin. There's expected to be a few more countries coming online over the course of the year. And, you know, I really could see Tron being the underlying chain for a lot of these CBDCs that governments are discussing. Okay, I'll stop there. Yeah, I want to ask, go ahead, yeah please, because we were just talking right before this that stablecoins are sort of the undiscussed key use case for crypto for people in countries that perhaps don't have access to dollars but i'll let you go ahead sure so you know again uh when i look at the crypto industry and how we have seen it evolving you know i always give this phrase that 2017 was all about building up icos 2020 was all

about building icos and use cases and 2024 will be all about icos use cases and adoption now thing is adoption comes from use cases and one of the biggest use cases around is the stable coin use. When you look at Zimbabwe today, just to counter the inflation, they're using USDT. When you look at Lebanon, people don't have access to their money at the moment. Banks don't exist. This is where a thing like a stable coin really adds value because you know you get the yields as consistent with the us okay i don't believe in those 20 deals but having a use case where people can access three four percent uh yields like in the us and can use a stable coin through a card or through any

uh financial uh product is is definitely a use case and that's where things like tron come in in fact uh when dave was mentioning that uh majority of USDT is done on Tron, I think the key reasons why I have always used them is one, it is fast. You know, during Ethereum, during bullruns, Ethereum suddenly starts getting crowded and it takes time to send a transaction through. Secondly, the cost per transaction is very less. You know, a dollar in terms of USDT compared to sometimes paying 40, 50, 100 dollars in Ethereum. That's where the value comes. And I think there is a trust that has been built around the Tron chain about USDT. So

I think this is definitely something that will bring a lot more adoption than other things that we'll come across in the future. Matthew, what do you think? Well, I mean, I think we should set the stage about kind of where we are in the markets right now. It's been a really ferocious rally. It's been led by a number of kind of sub themes, perpetuals, liquid stake derivatives, AI related tokens. And like the macro environment has improved a little bit. Right. If you look at money supply growth, it's zero in the US, but it's accelerated quite a bit driven by China and Asia globally. So, you know, BTC has been highly correlated to money supply. Global money supply bottomed in early November, along with Bitcoin price.

China's printing, Japan's printing, crypto is outperforming during Asian hours, not so U.S. hours. So I think U.S. investors are over indexing on some of the regulatory issues coming out of the SEC and missing what is a pretty continuous adoption story in EM. How many folks saw what happened in Nigeria over the weekend? People rioting and protesting because they can't get their money out of the bank. Look on Google Trends for buy Bitcoin versus buy gold in Nigeria. Look at the demographic pyramid of Nigeria versus Germany.

I think that story is just consistent adoption in EM, slightly better macro backdrop. And, you know, now we just got to find what are those next narratives for this year. You know, I'm a little skeptical that these AI tokens can continue to double every day. So, you know, we're looking at layer twos, maybe the economics may shift around

what layer twos will take once we get some of these ETH upgrades. We're looking at some of the gaming tokens that are slated to come out this year, and we're doing some work on real world assets. So those are some of the themes. Scott, you introduced us as an ETF sponsor. That's definitely true. But since we could never get a spot Bitcoin ETF off the ground in the US because of the intransigence of these regulators. You know, we pivoted and we're doing a lot of things in the private space. We've got a lot of venture investments. We've got three actively managed funds out of New York. And then in Europe, where regulation is easier, we've got the ETNs. Does that mean that regulation is

the narrative right now? I mean, is that all there is effectively worth discussing if you're in this industry in the United States? Well, if you're a regulated institution in the United States, then it's consuming quite a bit of time, right? So there's definitely coordinated multi-agency attempts to kind of slow down the on and off ramp in the US, right? You can see it with some of these banks withdrawing from the market. Now, there's going to be some investment banks that come in and fill the hole, but they are largely mid-tier right now. So that's, in my opinion, why we didn't see a big balance sheet step up

and, you know, recapitalize like at DCG. They didn't raise money yet at the parent level. It's still kind of sorting it out at the genesis level with no new capital. So US side, yeah, regulation is a big deal. Globally, less so. Scott, something just wanted to have, you know, every time we start a discussion on crypto,

US definitely takes center stage. But isn't, you know, personally, I think adoption in crypto is going to come from everywhere else. Trading or investing money in crypto, personally, I don't think is a use case. And yes, US, we have to give respect to US. That's where

a lot of crypto volumes also come from. But shouldn't we also talk about the whole world when it comes to crypto adoption and just not specific to US? And don't you think that the next revolution is not just US centric? It's going to come from Africa, going to come from Latin America. All the use cases. Wasn't Philippines the place where Axie and Pinty grew, but it wasn't the US person. So what's your view? You know, I would love to hear you guys as well on this. Yeah, I mean, in my opinion, it's sort of hard for Americans who have access to the global reserve currency and a robust banking system to care as much as people who actually need it in foreign countries.

So I agree that adoption will come from a groundswell in places where crypto is actually saving lives on a daily basis, whether that's Bitcoin or Tether or what it is. And yeah, I mean, that's my take. Dave, I saw you were sort of eager to jump in. No, I definitely agree with Vineet. I think that's a good point. And I think crypto adoption will be helped around the world as tokenization becomes more pervasive, right? And the capability to tokenize personal data,

personal creations, and monetize that information, I think is really critical in crypto adoption as well. And along with that, raising millions of people out of poverty. So that's that's kind of how I view that. And I think really, as more and more as tokenization takes hold, as Web3 develops, that's really, I think, going to be one of the big drivers of crypto adoption, as well as its use in daily transactions. And I think that's where everyone wants to get. Yeah, I mean, I don't want to be the cold water on this, and I agree with the EM story,

but if you look at where the largest remittance corridors are, like they include the US, right? And so, yes, Philippines just, what, onboarded Lightning Network via Strike, but not from New York, right? So just from the quantum of dollars perspective, you do want to see some integration with developed markets. You know, that's been set back somewhat with the FTX

and this administration. You know, we're optimistic it's going to change over time, but just want to acknowledge that, you know. Well, I think in the U.S., I think adoption will be a little different. I think it'll be driven by traditional companies shifting into web 3 and using tokenization and nfts really um to as as tools to reinvent their business models um and that's what i think is really going to

drive u.s adoption so there's kind of two different things at play there. But, Matt, I have a question for you. More economy focused. You mentioned about the money supply not growing. So my question is, you know, right now the yield curve in the U.S. is inverted, probably to historic levels. So as so obviously we've probably been in a recession for a while. We'll continue to be in a recession. But what's your expectation on how crypto performs as the yield curve steepens in those

transition periods? Will the correlation with equities really increased during that time? I mean, so our expectation is that eventually the Fed will join this money printing party, right? Which like Japan now it's rumored that their next BOJ governor is going to be more on the dovish side that the yen sold off on that a couple of days ago. Like China is clearly printing again, whether it's the debt ceiling, which will cause a government shutdown or the easing of inflation or some type of accident like with employment or just the economy going into recession. Fed is likely to be taking its foot off the off the brake and then we'll have money growth reaccelerate in the second half. And so, you know, I put out some predictions in December. one of them was that q1 would be a tough quarter for bitcoin that was obviously quite wrong um but the thesis was that the second half would be um easier money and the

correlation m2 and bitcoin would remain high and that we could get back to like 35 40k by the end of the year so yeah to be, the quarter's not over yet. Again, a funny part over here was, you know, if you, Scott, if you ever look at my Twitter, I projected something with the associates on in August. And if you look 99% of those projections were hit, getting on a point that, you know, the economy is going to improve and things like that.

Guys hasn't, hasn't the money been out of the market for a year now if you look at bill gates keeping his money out and not investing a year a year has gone by do you think money will keep remaining in the wallets and in the banks for more than two years i think this has to go back up someday and it's one year 18 months is good enough time for the markets to bounce back yeah i mean it depends right you got to you? You got to tell me what happens to T-bills, because if T-bills are at 5% and ETH staking yields are at 5%, that is just not going to draw in much capital. So either we have to see real on-chain activity pick up significantly, which is starting to happen, right? Ethereum contract calls are at an all-time high. Bitcoin transactions moving in the right direction. Fees are, you know, got these ordinals taking up some of the fees. So things are moving in the right direction,

but we'll have to see some follow through, I think. Should I get a Bitcoin maxi on here to argue with you whether ordinals are a good or a bad thing or just skip that one on this stream? That's been the funniest debate to me on on twitter but venite you made the point obviously that adoption is going to come from other countries i mean we all know that a lot of countries look to united states to lead so they're likely just waiting for regulation here to mimic that same regulation but you're in dubai right they got we got another set of clarity yesterday from dubai regulators or at at least sometime this week. What's it like being there where you don't think about any of this?

So again, you know, when you look at Dubai for years, really in front of everyone in terms of, you know, trying something out new. I think in 2008 crash, when Dubai was completely routed, we were like, how does this get back up? And, you know, people in Singapore in the financial markets considered Dubai to be the phoenix, which rises up from its ashes. And that's where, you know, COVID was a boom for us, where Singapore closed down. But these, the guys in the, the people in UAE were open to crypto, came up with regulations that were helpful to people. And how do we see it is is i'm actually seeing a lot of

people shifting to this place in fact as you said you we had the big one of the biggest conferences known as the satoshi roundtable just a few days back you know people are using dubai as a place to set up things setting up the licenses is pretty easy meeting other people being at events everything is so easy so for us I think taxation is not there. So that is another advantage. We are the pure Tarik of Asia and Middle East. So I think it's quite helpful and I'm seeing a lot of positivity around it.

It's just that whenever I go to these conferences, I've been on conferences for the last five, six months, people really want to know how they can set things up and set things going over there. And that's what education needs to come in. But otherwise, I think we all are very positive of Dubai emerging as a hub, probably better than Singapore. And no stress in building up something.

Licenses exist. Government is ready to help. Even they are themselves implementing all these technologies in their own transactions. So, you know, great place to be and recommend everyone to try it out once. Dave, I mean, you talk about really quick. Yeah, I'll let you go. But you obviously talk about Tron becoming legal tender in the Caribbean and all these places. How concerned then are you with the regulator in the United States? Because Tron has to be one of the bucket of coins that could be blindly deemed a security one day.

Yeah, I mean, that's that's i think that's a really good question i think right now i'm probably more i don't know if concerned is the right word but uh more interested in how the potential um banning of uh retail level staking would impact not only tron but the market in the us um it's not a man of retail levellevel staking would impact not only Tron, but the market in the U.S. It's not a ban of retail-level staking, right? If Coinbase provides staking services on behalf of customers, then that would be a security, potentially, right, is what Brian Armstrong is tweeting about. But it's not going to stop anyone from staking directly to the protocol using self-custody wallet, etc.

Right. Great clarification. I hadn't known that. So wouldn't that just push investors to stake offshore or outside of the U.S. or through another channel, right? So Coinbase is a centralized exchange, right? Wouldn't they just go to a DEX or something else? Yeah, I would guess that Coinbase might have to either be registered as a broker-dealer, which is like they haven't been able to clear that with the SEC.

There's that Catch-22 where Gary says come in and register, and then it's physically impossible to fill out the forms, and they never give you the clearance. So they could create one. And they threaten to see you, just the record at the end. Yeah, I think that you're right, though, that it will just push activity into foreign centralized exchanges, or those those who will motivated will be motivated to, you know, download a self custody wallet and figure it out. But over the near term, it probably lowers the market opportunity. I think 11% of Coinbase revenues is staking related. So it's been a big growth area. Yeah, and then I mean, it sounds like it would then evolve more to like venture investing to where you have to be an accredited investor or something like that.

So then isn't it then pushing the retail level investor out of a potentially lucrative market? You're kind of closing the door on that whole space. Americans can't do anything. That's the bottom line. Land of the free, home of the brave. But we're so restricted, especially if you're not wealthy, that it's absolutely pointless to even try. We can't trade most of the coins. You can't invest in venture capital. You can't invest in early seed. I mean, you can't invest in your friend's pizza business if you don't have a million dollars in the bank. Right. So it's not, this is not something that's inherent to crypto. This is an accredited investor problem, which, you know, is under the veil of protecting people, but actually it just allows opportunity to rich people and not to poor people. And then you add in all of this, and then you add in all of the regulatory burdens

that we're experiencing right now. It's no mystery to Vinit's point that everyone's moving to Dubai or trying to do business in Dubai. That doesn't help a retail investor, but there's no reason to operate here in the United States. But again, you know, adding to that point, a lot of people who are big in crypto are already sitting on Puerto Rico as well as, I don't know if we have any data on how much is Coinbase used compared to a decentralized staking platform like an Aave or a Compound which doesn't require KYC. This whole argument depends on the fact that majority or 90% plus people are using a centralized platform like Coinbase to stake.

But I think I personally as well use decentralized exchanges. I wouldn't go to it after what happened with FTX. I would never ever land up on a centralized exchange. So it assumes that everyone, majority of the people use a Coinbase right now, even in the US. I mean, Matthew, can you speak to that at all? I don't know if you have data on that. I mean, you obviously said that 11 percent of Coinbase's revenue themselves is via staking. I would I would assume that Vinit's correct that most people who are savvy enough to stake or have even heard of it are probably doing it on their own. Yeah, I'm looking

at a chart of market share of ETH staking. We track this very regularly given some of our holdings. So Lido has a 29% share. That's your decentralized option. Coinbase, 14% share. centralized option coinbase 14 share kraken seven binance six so like lido 29 and then the next three coinbase kraken and binance are 28 combined and then you've got a like more than a dozen that take up the tail off like kind of three percent or less, Stakefish, Figment, Bitcoin Swiss, Rocketpool, et cetera. So it's a pretty fair fight right now between the centralized and the decentralized. And you have to think what Brian tweeted last night is somewhat of a negative if it comes to pass.

Yeah. I want to play devil's advocate here and ask you guys a question that I previously would have probably never dared to ask that just popped into my mind. And this is not about the assets themselves, but the crypto industry and talking about adoption around the world and all the positive use cases. But as we stand in 2023, do you believe that the crypto industry has helped or hurt more people on this planet? That's an good question. I mean, I would say hurt, but you guys can go ahead and jump in. Haven't you seen Shawshank Redemption, Scott? You've seen Shawshank Redemption, right? Hope

is the most powerful thing. And you can DCF hope with a very long duration and still have a large valuation. And there's a timing element. Yeah, I think if you look at investing in a very compressed time frame, you could really ask that about any market. You could ask it about equities or you could ask it about fixed income or ETFs, not FANEC ETFs, but maybe other ETFs. But, yeah, so I think, you know, if you look at anything in a pressed enough time frame, you could draw different conclusions. I would say you have to look at it over a longer period of time to really get the accurate picture. Yeah. 2022 would have been hurt. Right. But since inception, I think we're still solidly in the green. Right. I just, maybe perhaps that was,

I'm getting at the net washout from 2022. If you were on Voyager, BlockFi, Celsius, FTX, I mean, who wasn't right. But maybe the really hardcore simply self-custody were unaffected but i think even especially at ftx a lot of people who really believed in crypto and were crypto native and were very active lost all their money too like i said this is not a statement about the asset class or the underlying assets at all it's a statement of the industry scott again when you say people were hurt more again so if we look at some numbers and we look at the crypto.com report which said 400 million wallets exist, assuming one wallet

is one person, it is less than 4% of the world population out of which 90% are speculating. Again, speculators getting hurt is a different story than investors getting hurt. But use cases are coming and we have to look over a 10-15 year horizon where in the end all these title deeds will land upon the chains and people can lend borrow on that. You know we are looking at USDT being a predominant way to transact in a lot of Latin American and African countries. So when you say the hurt part against the greatness that it gives, it's going to come. It's a very small speculative market right now. I had done an interview a few months actually at the peak of the bull run where I said,

we've not even started yet. The adoption hasn't come. And there were hate comments. People said that tomorrow morning VTC is going to be a million dollars. But again, we are too early in the sales. When you look at these hurt things, it is speculators who invested money on, you know, 20% yield on a platform is not heard of. You know, if people are putting that money, they've not been doing their research well. If people are coming to the market, believing in 100Xs, you have to understand

that we are too early and it's a highly speculative market. It's like the 1980s Indian stock market, where everyone was jumping in. We had two scams. Finally, regulations came after 10, 15 years. And today, it's a very stable market. Though, you know, recent days have not been great on the Indian stock markets as well. So, I think we are too early. The value case will come up.

People are hurt, yes. But the hurt is from their own not doing their own research. There are great projects out there. You know, it's just that they need to do a little bit more research and be risk managed while investing. I agree wholeheartedly, which is why I gave the caveat until now, right? Like I wouldn't be doing these streams if I didn't believe what you guys are saying about the future.

But yes, it's largely speculators that got washed out. I think the problem was in 2022, though, that, you know, companies like Celsius were advertising themselves as banks. Right. And your average person who doesn't do their own research thought they were depositing their money into a bank. Right. And there was no transparency as to what they were doing with that money afterwards. I'm just I'm going to say that the reason I asked that question, and I talked about this yesterday, Vineet, you might have met with these guys as well. I met with 3AC when I was in Dubai,

and I can tell you that this entire cycle is starting again as if nothing happened in the past, right? And so that's where somewhat of my disillusionment or questioning directly comes from. Have you met with them? You're in Dubai. I met Sue for lunch a few days back. Again, I come from the startup background. I've been doing startups for 15 years.

I think it was a badly managed risk. You know, again, startups fail. Let's be clear. You know, there's this whole thing about putting everyone on the cross that they have done fraud and stuff like that. But startups fail. There's bad risk management. You know, probably there was no adult on the table, even in case of FTX, where risk management has to be thought about.

Me managing a fund, everyone has been saying where to invest. I have been talking about how do you manage your risk? You know, how do you take money off the table? At the peak of the bull run, we were cashing out. We were up front in stages and saying that we take our profits out. While everyone was saying that BTC is going to go to $200,000 by December. The point is, it's about bad risk management. And I don't know how you felt about the guys, but I had, you know, Suzu was talking normally.

You know, he knew he had committed a mistake. And he was, he clearly mentioned that they are talking to the Singaporean government and trying to resolve this whole story. So if they were serious about resolving it, they would be dealing with the liquidators and not avoiding subpoenas that are clearly reaching them on Twitter. So it's hard to take that seriously. You know, I haven't invested on them. I met them for the first time ever in my life. So I don't know the backstory. That is the backstory, right? They ignored the requests to deal with the liquidation and put their head in the sand. And that's not a responsible way to manage money. That's not how a fiduciary acts.

So that's well documented. While raising money, and I should mention, it took them about five minutes to raise their entire raise for their new exchange. So clearly, there's plenty of people still willing to bet on them while raising money for GTX, which they openly admitted, we literally only named it. Kyle said this to me.

I said, GTX, are you trolling? Like, is that a joke? And he said, yes, it was literally a joke to get PR. We've now renamed it Open Exchange. And they're in the meanwhile, selling Flex Token OTC, right? While, to your point, Matt, haven't paid anyone back, but now they're raising money and getting rich again. Doesn't that seem like maybe we're going to repeat some of the mistakes of the past?

Well, who's the we, right? Like US institutional investors will not repeat those mistakes, is my guess. Part of that is because of the additional scrutiny that we're getting from regulators. And part of it is just learning curve. So, you know, let's see. Right. De-globalization is a big theme started a few years ago. We'll see how just how much there are cracks in some of these multinational institutions that set the rules of the road. But I don't think U.S. institutional investors are giving Kyle Davies any money anytime soon. I absolutely agree with that.

I don't think they could if they even wanted to at this point. But yeah, so it just was, like I said, sort of disillusioning. But let's then talk on a positive note, because that's the entire point of being here. What is being built right now? What is exciting you? Where do you think the next levels of adoption will come from? Yeah, Matt, you made a joke sort of about AI tokens won't double every single day. I once again think that we're doing the whole, you know, DeFi summer, metaverse fall, AI winter bubble trend here, right? So where do we think that the next wave will come from? How do we actually reach a higher level of adoption?

Anyone can jump in. So personally for us, I think DeFi would be a play. You know, people in non-stable countries like in Africa and Latin America are looking at ways to gain money. You know, the biggest example I use is the Argentinian PISO losing 95% of its value. So technically someone who had 100 PISO has just 5% worth. Maybe a USDT and a platform which gives them 3-4%. I'm not talking about those 20% crazy returns, but 3-4% match to the US returns can be value as such. Digital identity can be a value. I don't want to name a project and talk

about something, but I know there's a Sam Altman project, which is talking about building identities of each individual into a hash, which can be used later to verify transactions and people, things like that, I think have have value this is pure play from the adoption perspective there are definite layer ones which are trying to do ecosystem building you know there's this whole story that people talk about that we'll make 10 million transactions a second but hasn't that happened in 2017 it's not about transactions but it's about building the ecosystem how quickly can you get valuable projects on board your chain so there will be definitely L1 place this is from building adoption case but I also

look at the market and there is this speculative cases which will take market up you know they can be nfts they can be metaverses but if it's just about adoption, those initial three ones would be great. The second two would be ways to make great returns for funds. But I would personally, I would invest, but I might not fully believe in that idea. Dave, you're probably the best person to answer this because that's literally your job at Tron, right? Yeah, I lead ecosystem development here in the US for Tron. But I our AI development fund. You know, I think it's a billion dollars to invest in AI projects. Now we're expanding our ecosystem. I guess you would call that horizontally into other technologies, right? So we're really broadening the scope of our ecosystem to encompass a wider range of possibilities.

And I think that integration with other technologies is also going to be something that helps push adoption. I think it's three, I guess three things. One is, you know, it's always there. It's Bitcoin and emerging markets and frontier markets using Bitcoin as like a negotiating tool as they deal with the IMF and the U.S. dollar. And I was quite encouraged to see the big Bitcoin mining deal being done in Abu Dhabi, you know, 250 megawatts. That's that's not a small project. There are special economic zones that we're expecting to be announced in Saudi.

This year, that could catalyze the first Saudi crypto exchange licenses. Vinit, you'd know better than me on that. Yeah, isn't that you? Sorry, I didn't finish. I'll let Matt finish. So, like, one is just Bitcoin. The second is payments and especially leveraging some of these zero knowledge

tech advancements to automate, you know, payments and Visa experimenting with account abstraction. Like although ZK has been, you know, hot for several quarters now, some of the main net releases are still ahead of us.

So that, you know, that should catalyze some innovative work on real time payments. And then Web2 companies experimenting with loyalty programs, as you guys have been talking about, you know, Starbucks and Stripe and Instagram. We now count more than half of the Fortune 500 have some type of web three partnerships so that just continues to grow stable coins would be a big part of that in the in the u.s we'll need some i think some regulatory help to to really bring that to mass adoption but we've got some investments in latin america um where you know that's less necessary the regulation is sufficient yeah vanit isn't that uh mining operation you

so interestingly yeah because you mentioned that uh the mining operation is being run by cypher capital's parent which is phoenix technology we had if you look at the news a year back we had ordered 650 million dollar worth of miners uh we're building that two billion dollar mining plant and anyway we have over 800 megawatts spread across US and Canada already. I think the thing with Bitcoin mining per se, this is what I feel

that it's in crypto, it's all of anywhere in the world it's about asset building and cash flow building. I think mining is an amazing cash flow building activity. It's not 100x, but it gives you that 2%, 3%, 4% a month in a good market. It's a great business to be in for us

and gives us enough cash flow to keep on investing without stressing on market conditions. Interesting. It's a good business for you guys to be in, but it hasn't been a great business for the publicly traded American miners. See, that is because of the poor risk management. See the problem again, this is what I have been telling to people again and again, that it's not about returning multiples but about risk management. You know when BTC was at $60,000 and $70,000

and these miners were available for $20,000, these companies went, took leverage and bought those miners and they were ready to pay electricity prices of eight cents you know and when i was trying to buy my own miners this guy said oh eight one cent difference in price is just twenty dollars how does it make a difference and my whole point was what happens when btc falls this twenty dollars will take me negative this is where they didn't understand you know when the bull market is going on when the snowball is affecting people forget all about risk management. And the reason is over leverage. The reason is buying at markets which are completely up there. So it's not it's bad risk management. That's all that is. There's nothing wrong with the business as such.

So, Vinay, since you were involved in the in that marathon deal, it sounds like, what's the fuel stock for that Bitcoin mining? What are you paying for electricity? Is the government subsidizing it? Because electricity prices in Abu Dhabi are not cheap. They are heavily subsidized already. I was just curious what role the government's playing in making this energy affordable. I'm not associated with the marathon deal. It's the Phoenix technology deal, which is that $650 million worth of miners that are coming. We are setting the end-to-end of the process.

Because I'm running the VC fund for Phoenix, I should not be answering the questions on electricity prices and subsidy of this thing. I would rather prefer not to answer this because I wouldn't like to answer something that is not right. I'm really sorry. I can check for you, but I cannot answer it directly. It's interesting though, what you just described, Vineet, I think extremely eloquently about the mining space and risk management describes everything and everyone through the entire bull run i think

i i have i personally have 100 peta hashes under me that is 1400 miners i made anywhere from 15 to 25 i can actually show you with data and i've switched them off when it's not profitable and i have not leveraged it up it works it's someone doesn't have to come to me to prove it it's just that you know i was always given this option of buying electricity in US and Kazakhstan at 10 cents. I was told that I can get 70 percent loans on buying more miners. You know, if my 1400 miners cannot give me a million dollars a month, I'm pretty sure my 14000 miners are not going to go take me anywhere. So for me, it's about risk management more than the multiples. That makes sense. So Dave, I don't think, yes, we did actually discuss. Matt, I wanted to ask you because you sort of casually earlier mentioned that VanEck was

looking at crypto gaming and that sort of struck me as a surprise. So what are you looking at in that space? Because I think that's been one of the hottest narratives and still remains one of the hottest narratives for adoption moving forward. Yeah. I mean, the, we, we have an analyst who's dedicated solely to playing all these games. So we're tracking like every week. He's half a year old his age uh you know what we found what we found from from tracking and playing all these games last year is that the vast vast vast majority were not fun uh and there was

no interesting tokenomics so there's no reason for the gamer to stick around and hold on to those tokens the gamer is heavily incentivized to just dump them. And so what you end up with is like no type of number go up. And yeah, what is changing a little bit this year is that you've got some well-funded kind of AAA game, high production value, more interesting tokenomics coming out on purpose-built Ethereum layer twos and layer threes. So we just published a big piece on layer 2s and layer 3s. So we just published a big piece on Illuvium and Immutable X.

We're pretty bullish about that type of project and think there's going to be a reason for the gamers to stick around on that chain rather than just dumping it, partially because the game is fun and there's a big budget behind it and partially because the tokenomics and the integration with the Ethereum stack is better. So it's still really a rifle shot approach. The sector as a whole is not really working. It's the worst performing category of coins that we track. But there are a couple of interesting projects that we've been accumulating some coins in.

Is it the worst performing because of the benchmark time period? Because obviously it had its bubble, so it's going to, when that bubble pops, which is to my point about the AI tokens, depends on the starting date from when you're tracking, correct? Because I'm not surprised by that at all.

I think there was massive hype. And as you said, the games actually suck. Yeah, that's a very good point. So like like our metaverse index has a lot of sandbox and decentraland as large components and the index began right around the time when that bubble started but if you just look at the daily active users on the on those platforms and across web3 gaming in general like they've been kind of you know they're not that it's not growing parabolically nobody's right nobody's using the peak was axi which was the same right the peak it might anecdotally it just seemingly the peak was axi which people were just playing because

there was a financial incentive which was also a terrible game and that's what you described basically is that they were doing it for income so they would earn the tokens and sell them. The funny thing about these games is that when I look at my kid, he every week goes and buys $20 of V-Bucks. So he actually pays the game while in crypto game, everyone goes to make money. So that doesn't make real sense. If it's a real game, I am ready to pay for it, to play for it. While if it's a game, and I think this was one of the issues we saw as well because we've invested in Fenix Games, that is one of the ex-Mythical founders and some of the team that's building up a gaming studio. It's about first building an amazing game and then building tokenomics around it. So, I think one of the players is all about Web 2.0 to Web 3.0 games, which is coming out from Japan quite well. It's, you know, tokenomics come later. First, it's

about the game and then also it's not just about a AAA star game, but about a gaming studio that will try it because, you know, there's no guarantee that the game will succeed. It has to be, even I think if Angry Birds took 14 times before you came up with that amazing game. So, it has a great model. It just has to take time to evolve still. Dave, how much is Tron focusing on gaming? I couldn't hear you, Scott. I asked how much Tron is focusing on gaming right now, if that's one of the sort of main area you're looking at for partnerships and development. I wouldn't call it one of the sort of main area you're looking at for partnerships and development? I wouldn't call it one of the main areas, but it's definitely a high priority area. We have relationships with one of our closer relationships with Gale Games,

which is a large game maker, and we expect to continue to grow that relationship. Yeah, so they're doing quite well in developing these games. And we're looking forward to continuing to work with them. Do you guys think that then the adoption of crypto gaming will come from someone crypto native building a AAA game, which to Vinit's point is not something we've seen, right? They do the tokenomics first and worry about the game later. Or do you think that it will be from a legacy, let's even call them that, game company, a Call of Duty or a Fortnite that adopts crypto? Or do you think there's going to be an intersection there? That's a really interesting question. I think

gaming is such a difficult space because you never know what people are going to think is fun right would any what if you saw minecraft before it was adopted and rolled out would you have said boy this looks really fun i think a lot of people are going to play this probably not so it's really uh you know you just have to try different things so i it's possible i like the idea of a traditional game or a game that's already established now offering the ability to you know own things via tokenization um i think that probably it sounds like it's the path of least resistance as opposed to creating something brand new um and hoping people like it and getting adoption that way.

I'm going to go high conviction that the, that the, the next kind of $10 billion web three gaming company is going to be native web three that even though you've, like the CEO of Ubisoft, he called blockchain gaming a revolution. Activision CEO, sorry, Electronic Arts rather, CEO called Web3 the future of the industry. So they get it when it comes to the talking points, but they're just trapped in this

like classic innovators dilemma where Web3 gaming will be detrimental to their margins because by definition, they'll be keeping like a lower take rate, distributing more to players in the ecosystem. And when, you know, they get paid on EPS per share, right? And those time horizons are pretty short and they're just not incentivized

to cannibalize their own business. So with the amount of VC funding that's gone into the space in a couple of years, it's going to be a name that no one's heard of. I would say that takes the cake here. The new revenue, you're probably very early on some of those projects right now. I have done quite a lot of deals. Last season I had, again, you know, investment and ecosystem are two different things. I did quite good returns on a few games. I was in Star Atlas. Personally, I was on Splinterlands as well, which did amazing stuff. But again, I still stick to my

part that it would be, I'm not saying big games, but at least small, well-adopted games that would work with studios to come into the Web3 space. Because, you know, it's not just about shifting the game to the web. It's about getting the users to end up making these wallets. And then there are other products like, you know, you have Web3Auth out of Singapore that sees to it that with an email you can create a wallet. So there's a lot of those things that will have to come in and that will also get users

on board with us. I have tried the game. Some of the games, they're not amazing. So I would still stick to the fact that there will be a Web 2 and Web 2.5 and then finally a Web 3 something. And then the United States regulator will come in and deem all the in-game assets from Fortnite as securities and we'll be back at square one, right?

Don't put it past them. No, I'm not putting it past them. So let's talk about regulators again. Matt, what are the odds that we actually ever see a Bitcoin spot ETF in this country? I think we'll see it eventually, but not during this regime. But you can correct me as you're closer to it. I think the odds. So one of my predictions for this year is that Gary Gensler is going to leave the SEC, that, you know, the amount of political heat on him from both sides is uncomfortable, that he can take a victory lap with a ripple victory or settlement and either like move out or move up. The average tenure for an SEC chair is less than three years. The median is two years.

So that, you know, that could be a catalyst. Certainly, if the White House changes. Then I also think there will be eventually a Bitcoin spot ETF. So now it's just about the regime, not about – it's somewhat inevitable. It just has to be someone who understands it. And so you do believe it will happen? Yeah, I do believe it will happen. I do believe it will happen. I can tell you's my mind. Yeah, I do believe it'll happen. I do believe it'll happen. I can tell you who's not going to get it.

Grayscale. Maybe that's just my opinion, but it sounds like that is a house on the verge of collapse. And I'll tell you, Vineet, that was the main, that was the other main narrative that the three AC guys were pushing. I don't know if they gave you that story as well but they did tell me about that uh just a point on the regulation parts it's a bit controversial i'll try to put it as as much sugarcoat it up uh you know if i'll get my history from the indian stock markets till mass adoption of a financial instrument doesn't come which means minimum 10 to 15 percent

of the global population regulations don't come governments have much more work in life than to regulate something that is managed by less than three percent of the world population so overall regulations i would i still hold my line that will come by 2030 we will talk about it in india they've been talking about it for the last two years. It's a very controversial one. It's just that whenever a stock market becomes so big that a certain scam sees to it, people end up at the top of the building and jump. This is where the government step in. So I think we don't have that much mass movement. So your feeling is we did not get that with FTX and Celsius and BlockFi and Voyager, just not enough people?

It's just 3% of the world's population. Do you think that's a considerable amount? That's not even a vote bank. Like 3% of the world population. We're not even a billion people in crypto right now. It's 300 million wallets. If I assume one wallet to 1%, this is 3%. Otherwise, it's less than 2% odd, which is nothing.

Maybe in the US, I think the biggest number of wallets in this whole number, if you look at reports, is India as well. It's not even the US. So I personally, it's a very controversial one. I am trying to as much sugarcoat it up. But I think we don't have that much of a volume, number of people behind it that people will start regulating it end to end. It's still early.

I mean, Matt, if it takes till 2030 for us to get regulation, do you think that people in the United States just sit on the sideline assuming that regulation is about to come, regulation is about to come? I mean, I think it's just it's more complicated than that. Like what are you, you know, crypto is regulated in many ways at the state level. Like there's a whole number of overlapping agencies that have some say in this. We just, you know, are at this logger head where the SEC is calling everything a security without actually putting down on paper what are the variables that they use to create that and going through the standard rulemaking process. So I just, I want to like get more specific about what type of regulation when it comes to a spot ETF.

It's not an active. The way that the U.S. government works in general, right, is that you the regulator allows something to proceed or they block it. They don't say like they don't stamp it and say, oh, yes, this is now an approved product because we are theoretically a free market economy. So we just need to get back to that mainstream approach. There's a shipping futures ETF. That's not a liquid market. So it's just a series of contradictions. There's leverage marijuana. There's leverage marijuana ETFs.

I actually just saw from, I don't know if you guys saw this, totally pivoting, but Unusual Whales on Twitter. They've launched and apparently gotten approval for an ETF where you can trade an ETF on the Democratic and Republican politicians' portfolios. But no spot Bitcoin ETF. You can trade Pelosi's trades in an actual ETF, but no Bitcoin spot ETF. Is that in real time? I have not looked at the structure. I literally saw and laughed at the tweet today.

But I believe that this, I don't want to report fake news. Now I'm looking, but yeah, the U.S., it's absolutely absurd. I mean, I'm glad. I think you should be able to trade these things. But my point is, a Bitcoin spot ETF seems less controversial than that. Yes, it does.

I'm glad you agree, Dave. I don't think we'll see any regulation this year. I think with the latest roadmap from the White House that they put out, it was really just, it was, I would call it sparse of details. And it was really just warnings to banks to not do, not get into crypto um so you know you can see just kind of the threats continuing to emerge um and that's going to keep really that'll keep the mid-size and small banks out of everything while the larger banks um integrate crypto certainly on the wholesale side and even take steps to move into the retail side with it. So then finally, when they do get around to it, small, mid-sized banks will be well behind the curve. And maybe there's a wave of mergers and acquisitions. We'll see. Yeah, there's been a lot

of speculation, actually, that the bank banking system is really going to be the choke point that regulators are going to focus on moving forward i know nick nick carter tweeted something about it and had a few people somewhat confirm and i've talked to caitlin long about that in the past of course custodia bank just got uh denied their fed master license which is her project. But yeah, I mean, if you cut off two or three banks from the exchanges, that effectively crushes the United States retail investor in crypto without doing much else. Right. Matt, you've got to have thoughts.

Yeah, I mean, totally agree. You know, it's it's it's it's not a positive. And the OCC also said, that's one of the banking regulators, that state chartered banks in the business of crypto are also unlikely to get federal charters. So that was the category that Silvergate was in, state chartered California bank. There's a lot of eyes on this and it's going to just, I think,

take time for these folks to pay the ransom, pay the settlements, and then get a different regime in here so we can move forward. So just a bunch of big fines and move on with our lives, the usual. That seems to be what we get in the crypto space. Guys, we're basically up against time right here. So any final thoughts on anything we've discussed today? We'll go around the horn. Dave, you first. Final thoughts. Stablecoins will continue to be a focus area. And I think we're open to seeing and we expect to see further adoption of the Tron platform for stablecoin trading because of what I mentioned earlier. Vineet?

So for me, it would be, you know, mostly a lot of retail sees these conversations. I think they need to focus on the use cases and the value blockchain and crypto gets to the world. They need to, you know, people have been, I met people who said we're investing because we saw a green candle. That's not how things work. Just see the use case. If you believe in it, just invest in it

or just follow it just like you do stocks. The future is crypto. Be on the bandwagon as soon as possible. I want to say rest in peace to local Bitcoins who announced that they're shutting down today. One of the OG peer-to-peer platforms. There's a lot of pain, a lot of businesses that are shutting down that we feel for. But I think folks out there watching need to know these are the types of headlines you see when things have bottomed or sort of starting to bottom. And if you look back at the last three cycles,

Arcana Research had a great chart on this. We are right on track in the year before this having. It should be a positive year. So money supply growth is re-accelerating. Inflation is coming down. Everyone's bearish. Dollar cost average. Stick with it. That's what we're doing. Now you made me want to share my screen really quick, Matt, just to that point. I mean, if you eliminate literally all of the noise and every narrative and everything that's been discussed, it's literally a perfect timed bottom for a four-year cycle of Bitcoin halving. And if you just eliminate literally everything, the bottom came at the exact

basically right time, which would have been kind of November, December, January, leading into the next halving. We got to't, but I happen to have that pulled up and it's exactly what you said. Dave, Vinit, Matt, thank you guys so much. Thank you everybody for listening. I always want to share everyone's comments because there's so much fun as they're going by, but we just don't really do that on Thursday, but thank you guys for contributing in the chat. We are watching. I will of course be back tomorrow at 9 30 AM Eastern standard time doing the week in review as we do every Friday.

Everybody, thanks for tuning in. Three of you, you're all welcome back. Everybody, go follow them. Their Twitter, Dave, I think in your case, LinkedIn is in the YouTube. So, guys, reach out to them and follow them in the future. Thank you, everyone. I will see you tomorrow. Bye, guys.

Bye-bye. Bye, guys. Thanks. Thanks. see you tomorrow. Bye, guys. Bye-bye. Bye, guys. Thanks.