The Wolf Of All Streets - Bitcoin's Wild Ride: Plunge Before the Surge? | Arbitrum's Breakthrough - What Comes Next?

Episode Date: May 7, 2024

I am joined by Steven Goldfeder, Co-Founder and CEO at Offchain Labs, the company behind Arbitrum, the leading Ethereum's Layer 2 solution. My friends from The Arch Public, Andrew Parish, and Tillman Holloway, are joining in the second part of the stream to provide an update on the $10K algorithmic portfolio.  Unleash algorithmic trading with The Arch Public: https://thearchpublic.com/ Steven Goldfeder: https://twitter.com/sgoldfed Andrew Parish: https://twitter.com/AP_Abacus Tillman Holloway: https://twitter.com/texasol61 ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEKDAY! 👉https://thewolfden.substack.com/   ►► The Arch Public Unleash algorithmic trading. Discover how algorithms used by hedge-funds are now accessible to traders looking for unparalleled insights and opportunities!  👉https://thearchpublic.com/  ►►OKX SIGN UP FOR AN OKX TRADING ACCOUNT THEN DEPOSIT & TRADE TO UNLOCK MYSTERY BOX REWARDS OF UP TO $60,000!  👉https://www.okx.com/join/SCOTTMELKER  ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘25OFF’ FOR 25% OFF WHEN VISITING MY LINK.  👉https://tradingalpha.io/?via=scottmelker ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd  ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading 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.

Bitcoin has been trading all over the map, but arguably in a sideways range. But is this the big plunge that we've just seen below $60,000? Is that the move that's going to be the precursor to much more upside price action as the cycle continues? More importantly, today, I've got Stephen Goldfeder from Off The Chain Labs contributing to Arbitrum to talk about a crazy milestone that Arbitrum just had that I want to highlight for you guys. Of course, on the back half, I've got Tillman and Andrew from Arch Public to update you on the portfolio there. We got a lot to talk about, guys. Can't wait. Let's go.

What is up, everybody? I'm Scott Melker, also known as the Wolf of Wall Street. Before we get started, please subscribe to the channel and hit that like button. As I said, we've got a lot to talk about today. I have an amazing guest who hasn't been on the show before. So I'm going to just go ahead and bring him on. Stephen Goldfeder from Off The Chain Labs. How are you, man? Maybe first of all, you can explain what being a contributor to Arbitrum is when you are at Off The Chain Labs. Yes, absolutely. And great to be here. So I'm at Off The Chain Labs. I'm co-founder and CEO there.

And Arbitrum actually started off as an academic project in Princeton where I was involved together with my two co-founders. And then we spun up a company to develop the software. Today, though, for about a little over a year now, the Arbitrum core protocol, Arbitrum One and Arbitrum Nova, the chains have been decentralized. There's a DAO. So we continue to contribute to the technology and are leading technical contributors, but the community really owns the public chains and makes a decision of their future, including technical innovations and as well as spending and

the like. And to give you an example of what that means, we can create new software. We do, and I'm happy to talk about some of that today, some of the cool new software we've created. But in order for that to get on the public chains, that has to be a community decision. And anybody actually can create new software just like we can to get there. So we are contributing in a very significant way to Arbitrum and we are the initial contributors to Arbitrum. But today, it's an open and decentralized ecosystem. Right. And as I touched on in the beginning, just bringing this up really quickly, Arbitrum surpasses 150 billion in total transaction volume on Uniswap. It's the first layer two to do that. Can you talk about what total transaction volume actually consists of? Is this trading? Is this

actual utilization? Is it fees? What is it exactly? Yeah, it's trading. It's trading volume. If you look at Arbitrum, and Uniswap is probably definitely one of the top DEXs in Arbitrum. If you look at Arbitrum, and Uniswap is probably definitely one of the top DEXs in Arbitrum. If you look at Arbitrum across spot DEXs, as well as derivatives, Arbitrum is consistently leading in DeFi. And Arbitrum, the Arbitrum one is leading in DeFi innovation. When someone does something interesting in DeFi, they're often doing that on the Arbitrum chain. And this is a milestone. But the interesting thing is, you might think, well, Arbitrum has been around longer for some of these older chains, so it had a head start to get to 150. But actually, if you look at today's numbers too, Arbitrum does a leading volume every single day in terms of to that than any other chain. And that's just a symptom of Arbitrum being the home of DeFi and the leading DeFi chain,

but also home to other really exciting verticals as well. Yeah. So you can see this right here. It's official Arbitrum is the first L2. And you can see that just incredible parabolic sort of hockey stick curve of, I guess we'll call it adoption or usage there. But what, like, let me, I guess, ask you, what excites you the most? We have this world of seemingly 100 layer twos. We have new

ones every single day. It's hard, I think, for the average person to differentiate between them. So what's different between any of them, Arbitrum, et cetera? So we have, there are kind of two ways you can break that. So there's Arbitrum One and Arbitrum Novo. These are their public chains. And Arbitrum One, as you just said, and DeFi is doing like more than anyone else. And again, in today's spot volume, Arbitrum did double its nearest competitor in L2s as well.

So it's continuing to not only have that lead, but continuing to expand that lead. And if you look at other metrics like ETH on-chain, Arbitrum has more ETH on-chain and significantly growing faster than all other L2s combined. So it's just sort of very, very far ahead there. But when you mentioned, yeah, there are a lot of other L2s as well, and L3s also. So layer chains that are building on top of Arbitrum and other L2s, this is an increasing trend. And the cool thing is that

most of these today are actually powered by the Arbitrum technology stack. So there's the Arbitrum sort of, you can think of them as the like marquee chains. And then there's all these other chains that are also powered by the Arbitrum stack and also contributing back to the Arbitrum DAO as well. And by the way, the really non-intuitive things here, so there's about, I think roughly 35 announced chains. We call these Arbitrum Orbit chains. Some of these are L3 chains on top of Arbitrum 1. Some of these are Arbitrum chains on top of Ethereum. L2 is just like Arbitrum. But some of these are actually Arbitrum chains on top of other L2s.

So for example, there's a chain called Dgen chain, which is the most popular layer three on the base blockchain. That's an Arbitrum Orbit chain. That's running Arbitrum's technology because it is the best technology to run your chain anywhere on Ethereum, the best execution environment on Ethereum, whether you're building in the Arbitrum ecosystem or elsewhere. And that to me is really, really cool. So yes, it gets a little confusing with all these chains, but most of them are actually powered by the Arbitrum technology and contributing back to the Arbitrum DAO. Yeah, that makes perfect sense. You've mentioned layer threes.

I had done an interview with Stan Deep from Polygon at least a year ago, if not more. And we kind of went deep down that rabbit hole. And he said there would be layer fives, layer sixes, layer sevens one day. So then it comes to, we understand the competition here between layer twos, but now it's going to be scaling those layer twos

and then competing with chains that maybe say, you don't even need layer twos at all. You can do it all on one layer, right? So it's funny because I remember there's a, so there are some benefits of layer threes and what they are is it's basically, you know, to get onto layer two, one is onboarding. So to get your funds onto layer two, say you're on Coinbase today, you're on Binance. So if you want to go to a layer two, specifically for a new layer two that doesn't yet have direct support from the exchange, you'll have to go from the layer underneath it. So if you're onboarding via Ethereum, your costs are going to be, I don't know, tens to hundreds of dollars. If you're onboarding via a layer three to Arbitrum one, you can go from Coinbase to Arbitrum one because all that support is there. And your onboarding fee to this new chain is going to go down to like a

couple of cents. So there's like some massive, like pragmatic benefits of layer threes, uh, technology for onboarding and keeping the fees low for new, for new chains. Uh, and the costs of users,

users onboard. But the cool thing is it actually mostly stops at layer three. I don't think we're going to see this proliferation to like layer 15. Uh, most of the technical benefits, um, or would be the same at layer three, as well as layer four and five,

which is really nice. So I think we're basically seeing most of that today. There might be like some communities that form. That's another reason you'll see additional layers. Like you'll have like a base chain and then you'll have other layer threes in this universe. Like this is a design paradigm we're seeing where sort of a chain wants to be a chain of chains. But from a technical perspective, most of the benefits stop at layer three. And I think we're probably going to see mostly layer twos and threes. And the funny thing is, there's like a little bit of a stigma today around layer three, I a lot of people say, I don't want to be a layer three, I want to be my own thing. Which is only funny to me, because I've been in this space long enough to remember when that was a stigma to layer two,

you know, we were the first ones to build a layer two, we were the first ones out there in 2018, or an earlier saying, hey, instead of launching your own blockchain, ones to build a layer two. We were the first ones out there in 2018 and earlier saying, hey, instead of launching your own blockchain, you should launch a layer two blockchain on Ethereum. Everyone's like, a layer two? I don't want to do that. I want to be my own thing. And now today, everyone wants a layer two. There's some stigma on layer three, but I feel like it's the same trajectory, which

over time that will go away. Yeah. So you don't think we necessarily need layer fives and sixes and sevens one day? Because if you talk about scale, a billion people on Ethereum, something like that, that's a lot of transactions. I don't think so. Because actually, from a scaling perspective, you can put a ton of layer twos on Ethereum. We don't even need layer threes for that. The reason for layer threes is more pragmatic, because if you want to build a chain, you could do a layer two, but your cost of onboarding users, your cost of posting to Ethereum is going to be cheaper. One way to think about it is for layer twos, you have to take the carpool to Ethereum.

You got to pay Ethereum fees yourself. If you're layer three, you can take the bus to Ethereum, right? So you can package your transactions, all the other layer twos and go to Ethereum. So there's some pragmatic benefits of being a layer three, but they're not actually the scaling benefits in the sense that you can put a lot of many, many more layer twos on Ethereum than we have today. And those things don't get cheaper in layer four or five. So I think we're going to see layer twos and layer threes primarily. Again, we might see some of these communities. We might have a layer three that wants to be a hub of chains.

You'll see layer fours on top of it. But from a technical perspective, I think most of the benefits really stop at layer three, which is a good thing. Because otherwise, it would just be daunting and confusing. Every year, we're just going to add in 10 years from now, we're going to talk about layer 100. So the good news is, I don't think so. And I think that it's sort of the technical arguments really stop here. And we'll be able to focus on primarily layer two and layer three adoption. Let's talk more generally about what you're excited about that's coming up. Obviously, we have this sort of price action dip, right, that everybody loves to

talk about. But I think there's still consensus that we're generally in a bull market. But every bull market, we have sort of these segments of the market that go crazy. AI is up again today because NVIDIA is doing well. And Apple mentioned that they'll have an announcement in two weeks or something that might be AI related. And you get the RWA, real world asset hype, and then it kind of diminishes. And then again, so what do you think we'll see in the coming year, 18 months, that's real, that might be sort of a new killer app or sector for crypto that you're excited about? Yeah. So Arbitrum, as I mentioned, is leading in DeFi today. But two up and coming sectors that it's doing really well and I'm really excited about.

One is gaming. Arbitrum has now probably about a dozen, not games, but gaming platforms that are building, using Arbitrum more, building Arbitrum chains. These include Zai, Hytopia. This includes ApeCoin from ApeCoinDAO, from Portia Club. In terms of culture, Azuki recently announced AnimeChain and Arbitrum. So there's so much when it comes to like culture and gaming happening on Arbitrum. One game I love a lot is Pirate Nation by Proof of Play, a fantastic fully on-chain game, which check out if you haven't. And there's so, so many, and I'm for sure going to leave some out because there are just too many, but that's one area where Arbitrum is doing fantastically well. And the other one, which

is actually a little bit counterintuitive and almost surprising to see so quickly, just happened yesterday. There was a proposal in the Arbitrum DAO where the Arbitrum DAO has now earmarked about $100 million for RWA funds. There are a lot of these RWA funds that go on chain. And then the question is, how can the DAO accelerate the adoption? Well, they can put aside some money to invest in these products that go on chain and get yield in it just like anyone else would. So the Arbitrum DAF is earmarked. I think it's about $100 million for that. And the cool thing is, and this just happened yesterday and was on Twitter a bunch, really big traditional institutions have been coming to the arbitrage forum to ask for those

funds you'll see franklin templeton posting in the arbitrage forum saying hey could we be part of this program uh securitize on behalf of blackrock went ahead and posted on the forum so now you're seeing like people always said like oh don't actually decentralize just like kind of pretend to decentralization because you're never going to like talk to a traditional financial institution like they're never going to work with a DAO. Arbitrum was like differentiated there and actually went ahead and did decentralize instead of a program that was enticing to, you know, tradify big, big players. And you're seeing them actually come and work with the DAO for interesting opportunities. So that to me is like, I always expected that to be completely honest. I don't think I expected to see

it this quickly. That is really, really exciting to see happening. And those are some of the, I would say, RWA's gaming and DeFi are probably the three big pillars of adoption that I think we'll continue to see on the Arbitrum Network. Yeah, I always kind of comment on the fact that we get really excited about these trends and then nothing happens because it's not ready. Right. But then a cycle later, we really start to see them come to fruition. And I think you highlighted gaming. And I think that to me is the one that has the best chance of really, really blowing up in this cycle, because I've seen so many games, so many actual AAA gaming companies outside of crypto starting to talk about adopting. And there are games to your point that have launched or are launching very soon, that have sort of abstracted away the complexity of the blockchain side. And it's just a game where there's a crypto aspect.

That's exactly it. Where in the last cycle, if you will, the games were blockchain first and game second. And the consumers were like those who are like, I love the blockchain. And it's so cool that I can play a game, my favorite blockchain. And the world of those people is like, even though like I'm immersed in that world all day and you probably are as well. So like, it feels like it's a lot of people, but like if you zoom out, there aren't that many people that are like, I'll play a bad game just because I think it's coolest on

the blockchain. The games of today are like you said, AAA studios, like really, really good games and games first. And they're appealing to large audiences. So if you don't care about the blockchain, you just want to play a good game, you can still play a fully on-chain game because they've extracted the experience away. And one of the reasons that games are predominantly choosing the arbitrum orbit stack is because it's super fast. The block times are like pithy, like you expect in a game, right? If you go to a different blockchain and it's a couple of seconds every time

you press a button, well, that's not going to be very fun. And it's also super cheap, right? If your wallet's being drained every time you do something on-chain, also not going to be a very fun game for those that don't care about the blockchain. So I always say the blockchain needs to be additive. It should add something for those that want it, but it shouldn't actually reduce the user experience for those that just say, hey, I'm just here to play a game. I don't care about this blockchain stuff.

And that's okay. We want to take, maybe we'll convert them eventually. Yeah. And eventually they'll be like, oh, I can take my asset like on and own it and take it to a marketplace that's awesome or maybe they never will and that's okay too and that's i think the core difference like you know the pirate nation i mentioned before ahmed who's developing that he developed he was one of the founders and lead developers of farmville like these are really really um established gaming players that's just one of many that are building fantastic games on the Arbitrum ecosystem and broadly on the blockchain.

So I do think we've had a bunch of false starts a game. Some were over-financialized as well. That was another theme where like everything had to be earning and now it's just like fun game. Yeah, like Axie Infinity where people were literally like quitting their jobs to just press buttons all day because it paid for slightly more than their job. People were setting up farms of people to play the game for them just to make money. It wasn't about the game.

But it was a really good proof of concept, I think. Yeah. And it took us cycles and times to build. We probably wouldn't be here today if it wasn't for those previous cycles and trying and understanding. But I think it's real now. And I was actually at the G GDC, which is like the big game developer conference in San Francisco a few months ago, uh, maybe a month, a month and a half ago. And blockchain gaming was like a massive theme there. This is interesting because this is not like, this is like where the developers are. So you get to kind of see what the games of tomorrow, if all the developers today are focusing on blockchain, it kind of gives you a

window. Okay. So what are going to be the titles that come out in like a year from now, a year and a half from now, and that's sort of the alpha you're getting there. And like the largest booths there, including the Arbitrum booth, were the blockchain booths. And the largest center of attention there were the on-chain Web3 gaming. So I think that's really here and here to stay.

And I'm very excited for the day. And if we don't say Web3 gaming, we just say gaming because that is what we do. Yeah, that's what we need for everything, right? We need to abstract away all the like crypto terminology and complexity and the old meme UX and UI for grandma. I just have to laugh. Like there's literally a story right here on CoinDesk. AI tokens lead crypto market recovery as NVIDIA hits one month high, right?

So it literally reflects exactly what I was saying. It's hard to take it seriously when, you know, we saw it last cycle, obviously, you know, meta. Facebook rebranded to meta, every metaverse token went insane. But I guess that's a part of the charm of being here. Yeah, absolutely. So I think, yeah, you know, but the nice thing is, particularly if you've been in this space for long enough, you see the trends where it starts off as hype, and then it becomes a real and more real and refines itself over time. And like, so it used to be, for example, people would just say, Hey, just like, like throw everything on chain like put your like medical data on chain i'm like

i always like that's like the dumbest idea you know that's that's not a really great idea let's just say um now people are refining and say okay let's their web 2 web 3 from my perspective is not a replacement for web 2 it's a complement for web 2 there are certain things that belong on web 2 like show you know distributing content locally that makes sense there are certain things that belong on web two, like, you know, distributing content locally, that makes sense. There are certain things where centralization makes sense. And there are certain things where augmenting that with the ability to own and control, and, you know, own in web three, decentralization and censorship resistance, etc, really give you added benefits. And we're finding the right not the lazy thing to do is just say, all right, get rid of web two and put it all up three, the responsible and the hard thing, but the thing

that will actually lead to real adoption is saying, where are those points where Web 3 is actually additive? And we're finding really good examples there. I need to just cook through a few news stories. And you don't necessarily need to comment, but it has to be mentioned that in the environment where we talk about all this building, we also have to talk about the fact that the United States is aggressively trying to stop all of us from building. It was mentioned yesterday, but people who didn't see Robinhood got a Wells notice, which was a pretty big news. We saw consensus last week, Uniswap recently. Obviously, we all know about Coinbase and Kraken and Binance and all those things. So great headline. The SEC can't stop suing crypto companies. Then you have a wave of crypto enforcement actions that's coming within the next two years.

So the CFTC chair, I mean, it's just a lot of rhetoric coming, I think, from all the regulators, even, you know, the CFTC. Does any of this like affect the way that L2s are building? People like you are moving forward or you just keep building, it's noise, you maintain as compliant as you can. And it's just an interesting, tough time to be building certainly in the United States. Yeah, we, I think like many or most others that I speak to, and obviously they're always bad actors in every place, in every space. But I think predominantly there are many, many, many more good actors in the crypto space, at least the ones that are building real protocols with lasting

values and real users. And, you know, obviously more clarity is always good, but we always do our best to make sure that we are on the right side. And I think that's true for most of the real builders in the space. And, you know, I think one of the biggest requests over time is just give us more clarity and let us know, you know, but we always obviously try to do our best. The nice thing about Arbitrum is that it is a decentralized network today. I think that's actually quite important. I do think that there is central, you know, there is some, in some area, decentralization theater and central and which are things that are sort of look decentralized but are actually centralized i think actually staying true to the

real values and building the real decentralized thing is going to be the important thing uh you know we just keep building and that's that's uh what we do we keep building in the you know most uh true and compliant way that we know and that's building really true decentralized technology and i think that's uh you know, obviously on time, hopefully more clarity will come, but our mission is to continue building the real true thing. And I think that's true for, you know, most of the builders that I come across with

that are building the real protocols that attract real users. But sometimes, unfortunately, like a few bad apples pollute the reputation of the ecosystem. And sometimes I guess it's hard for a regulator to really discern who are the good apples, who are the bad apples. And, you know, we see unfortunate ramifications of that. What are your views on decentralization in general? Not like a topic I necessarily just intended to discuss. But to me, we get caught up in the centralized or decentralized, and it's probably more of a sliding scale. Right? I mean, you know, there's only so much you can be decentralized and still functional. And then

obviously, you have to talk about if you're hosted on Amazon web server, Google Cloud, are you truly decentralized? So like, what are your thoughts on decentralization? Is it just a goal to be as decentralized as possible? Yeah, so it's definitely a sliding scale. And actually, like, maybe counterintuitively, I don't think decentralization is the goal at all. I think it's the decentralization is the best tool that we know how to get to certain outcomes. And those outcomes are more like things like censorship resistance, open innovation, right, the idea that people can can like lowering the bar, the barrier to entry for DeFi protocols or gaming to actually build an open economy and a shared economy in a way that you know, central censorship is,

is not, there's not some party that can like just shut your account down overnight because they decided they don't like you. And there's like, or just lock down your IP or things like that. So I think there's a lot of benefits of openness and censorship resistance and other properties that are emergent at decentralization is the best way that we know of how to build that. So, um, so decentralization does become sort of the intermediate goal to get there. And there's definitely a spectrum of decentralization when you have networks like Ethereum, like

all the way on one end of the spectrum, I think layer twos that are truly decentralized are very, very close to Ethereum. And then you have networks that are, I would call, very centralized or de facto centralized, right? They might be decentralized in theory, but considering the parameters of the network in practice, there's only a couple of people in the world that can actually participate in running the network. Those become more centralized networks to ones that are like just AWS, which is actually just centralized. So the answer is, like you said, it's definitely a spectrum,

but I also think it's important for us to remember why we're here. And I very, very care very much about these properties and I care very much about decentralization, but also realize that as we expand and go mainstream, more of these people that are coming in will care less and less and less about these cool properties. People might just be coming into crypto because they want to buy that cool NFT and they don't actually care that it's decentralized. But we have to remain true to what we're able to care. I'm not here and I haven't been here building for the past 10 years

of my life to build something that ends up centralized, which is a different set of actors controlling it. That would be a big failure. And that's, I think, a core difference of our industry, right? If you're like selling widgets on Amazon, all you care about the end of the day is how many widgets you sold, right? It doesn't really matter. As long as you didn't do anything super unethical to get there, or like, you know, how many widgets you sold, the end goal is what matters. But when we're building decentralized technology, I think there are some some out there. And you know, one of my criticisms of other teams, they focus too much and too early on growth. And that's their sort of like leading metric where like, no, that's not the way if we like grow arbitrum, like 200x. But it turns

out that we have to centralize in the process. Big, big problem, like send me I'm out like, like, you know, I don't want any part of this, right? So we have to actually remain true to our building and say, we have responsibility to those users. And we think decentralization is important. And we have to remain true to that, even if the market now is saying, ah, you know, we are okay to be decentralized. Because the theory is that there are true benefits of this technology, and they will

be emerging over time. So I think just staying true to the values and not putting growth over sort of the values is sometimes hard to do. And the best is to have both, right? Arbitrumary is decentralized, leading decentralization and also leading when it comes to just about every growth metric. But that's to me is the hard part, which is not to get too focused on the growth metrics, but actually make sure that you're building the real deal at the same time and never compromising there. Really interesting stuff. I have so much trouble not being non-technical differentiating between all of these things.

And now, of course, maybe it's a conversation for another day. But now, of course, you have everybody attempting to build all of it on Bitcoin, too. So there's just a lot going on in the ecosystem. But at the end of the day, I think it's just really encouraging to see how many people are passionately building. Absolutely. And that's the really thing to focus on here. There are so many really amazing builders in the space. And sometimes we get competitive with each other, but we're all, or most of us are rolling in the same direction and trying to find the ways to

actually bring this decentralized, new, innovative technology to mass market. And I think that there's a lot more in common that we have with our quote unquote competitors than not. And we're all sort of doing, there's a lot of shared benefit from the work that we're doing. So yes, there's, this is early on and their pie is, there is growing so much and we all sort of, you know, I think are contributing to the same result. Awesome, Steven, really great insight. Thank you. I'd never really dug in deeply to Arbitrum and we hadn't certainly done a show on it. So it was really helpful to get all that insight. Everybody, you can follow Steven. His Twitter X, whatever we're calling it these days is down in the

description. I highly encourage you to follow him. Thank you so much, Steven. It's a pleasure. Thank you for having me. Awesome guys. Really great insight there. I, you know, like I said, I'm so busy making content to doubt it. doubt it. I just see all these layer twos and layer twelves and nineteens and get caught up in the weeds. So it's good every once in a while to get some insight as to how they're differentiated. I want to briefly, before I bring Andrew and Tillman on, I want to talk about the title here, Bitcoin's Wild Ride Plunge Before the Surge. This is based on this article. Bitcoin rebound has crypto options traders anticipating 100K.

So I don't know how we're talking about 100K when we simply bounce from the 50s to the 60s. But this is basically on the fact that there's exceptional bullish market sentiment with higher call contracts than puts at the moment. And those calls are largely in the 70 to 100K region for out of the money calls. So just shows you that we're back to having traders, even though we're ranging sideways, starting to make bets on future price action being much higher. Now, these are for end of the year. I think it's very likely they'll hit. If they're in the coming week or two, months, I don't we'll see maybe we'll get some uh insight from the men from arch public public tillman and andrew good morning gentlemen good morning how are you good morning scott i wish i was where you are where where what is that background that i'm looking at

this is a reflection of the beach in front of me in puerto rico nice. Down here exploring my libertarian values with the crypto guy. I was with Peter Schiff for like two hours last night. We didn't even argue about Bitcoin and gold at all. Wow. We just talked about life in Puerto Rico. It was amazing. Actually, a really fun and entertaining guy to be around. But it's been a good time down here.

But I'll be traveling uh soon so won't won't be on tomorrow you should go you should go throw some fruit at david bailey he's he's running around in puerto rico somewhere down there yeah he's just he he's like the king of a certain neighborhood here i don't want to get into deeply into it but uh jokingly the guys where i'm at are like he's the Scarface of this other different house. You know, like the casitas of people in this family and stuff. So, yeah, there's a huge Bitcoin community down here. So it's a good place I've never been.

So I figured I'd come down, check it out, take some meetings and hang out for sure. So I want to talk about what you guys are doing now. Maybe give us a quick update. What's going on? Yeah, sure. We I want to talk about what you guys are doing, though. Maybe give us a quick update. What's going on? Yeah, sure. We had a losing trade the day that we had our last podcast with you, 4.30. It gave back 2.8% of what we had made this month or over the last 30 days of trading, it still is an important lesson. Kind of what we wanted to go through today is why automation helps you when you're in a losing trade. And so let's look at the chart right now. And we took this opening long right here and this was indicative of the gap so this was betting that the overnight gap was going to get closed which the gap was down so we took a long position that long position it

did not reach its profit Target it got capped out right here and it turned against us we stayed in because the automation didn't reach its stop loss through this violent downturn. And then this rocket ship back up. So all of this, if you're live trading this, this is what we call the emotional whipsaw roller coaster. This is the ride you don't want to take because most people make very bad decisions when these types of whipsaws happen. So then you go straight back up, you reach this cap again, you can't pierce it. And then boom, you have this waterfall effect that takes you down to your stop loss. Okay, well, it's very, very psychologically hard to time your entries and your exits when the market is

whipsawing like this. But there's no emotion involved to the exit of the automated strategy. You set that as a user prior to turning it on. You could be completely asleep, away at the gym, at your regular job. You could be doing whatever else you want to do, and you don't have to suffer the whipsaw. You're oblivious to it. There's something that is driven that's managing that emotion for you and getting out at predetermined levels that you had already prescribed to prior to the trade being placed. So it's a tool that's, in my opinion, the crux of why automation is going to be here to stay is that it removes human emotion, both good and bad. So let's take it from here. Let's just say I was manually trading this and I see this bounce and I see this rounding bottom. Well,

most traders that are technical in nature are going to say, okay, we've got a rounding bottom after a big waterfall. There's going to be at least a 50% retracement into this fair market value gap. And so I'm going to play this. This could be a nice long play right here. Well, what does it do? It does exactly what the market always does, the opposite of what you think it's going to do. And it turned against you and it took it all the way down to the very bottom of the depths of the chart. Right. Right. By the the performance report. So most people, if they were manually trading it, including myself, would have exited much, much lower than the stop loss was triggered. And so the point here is, is that this trade on a $10,000 account would have lost you $281.25. And we think that's a measured loss. Like we think

we feel really good about those losses because we know human nature would have caused us to lose a lot more than that if we were trying to catch it manually. And so that's really the lesson here is that you have predetermined stop losses that are half the length of your potential profit targets. Well, that builds you this mechanical advantage of having a profit factor greater than two. And that's really exposure to profit factors greater than two and exposure to winning percentage rates that are greater than 50% is where you want to stay. And trading automation allows you to measure that on a day-to-day basis. Well, here's the good news. This trade didn't turn into a catastrophic loss. Why? Well, number one,

the stop loss took us out at a $281.25 loss. Number two, there's no trade that we could have placed today that would have lasted into the overnight session. So every day you get to wake up with this fresh mentality, this fresh perspective, and you get to take it for what the day can bring you based upon that measured approach and not bringing any of the past losses. Because if you're carrying a loss overnight and you wake up the next day and you pull up your account and you see that the overnight session is going against you even more, psychologically, that's very, very hard to overcome for getting yourself in the right mindset to make good decisions for that day. So it's really the avoidance of all of this stuff is the emotional roller coaster is the main thing that you're focused on. I just can't believe you took a loss. You're admitting it.

I love that. That's the whole point, right? The transparency, the fact that nobody's claiming it's perfect. You just win more than you lose. And as you said, your runners run a little further than your losers do. Very simple. People just, we all fuck it up when it's actually our turn to do it manually. Well, and we're not hiding the strategy behind what this automation is doing. You can manually trade this. If you think this is a great sound strategy and you're going to trade the opening gap, there's nothing that keeps you from waking up at 630 in the morning and sitting at your computer and trying to beat all the automated strategies into the market on that opening candle, you can do all that. We just

know that it's really, really difficult and it's very time consuming and it eats you up emotionally. And so what is automation doing for you in this instance? It's allowing you to participate in trades that you otherwise wouldn't or shouldn't participate in because it's too taxing on your life. So it's exposure and diversification into time periods and portions of the market that otherwise you kind of tend to ignore because they're too intense and they require too much attention. Yeah. Andrew, any thoughts? Yeah. The thoughts are is that there's, you know, our algorithms are associated with at minimum three levels of math and sometimes four, right? So you're talking about a stop loss. Layer three and four. Yeah. There are layer three and four with our algorithms. But as Tillman mentioned, you know,

you're looking at over time, a 25-year period of a better than 60% chance that that gap is going to close. So that's layer one of math, right? Layer two of math is a profit factor above two plus, right? That's another layer of math, right? Then you've got stop loss protection. That's another layer of math, right? And then our Martingale strategy inside of our gap strategies, that's another layer of math, right? And then our Martingale strategy inside of our gap strategies, that's another layer of math. So we're now on layer four, Scott, as you like to say. We'd like to get more layers, but that's four layers of math associated with an algorithm that you can set it and forget it. And again, with our institutional great execution partners, all you got to do is

just simply follow it on your phone. You're not downloading the platform. You're not following charts. You're not stuck in front of your computer, right? You can leave your computer and go have fun in Puerto Rico and do whatever it is that you want to do and let the algorithm do its thing. It's layers and layers and layers of math that are working for your benefit without your emotional involvement. Before I go back to having fun in Puerto Rico, Andrew, I have to throw you some red meat. I can't help it. I was going to let it go. But Grayscale, spot Bitcoin ETF, log second day of net inflows.

So the good news is that we had all the outflows last week. Those have been more than compensated for in inflows. You know, I think Eric Balchunas had a great tweet thread about it, basically saying, listen, this proves that people aren't paper handed. We dropped, you know, 20 percent and they largely didn't sell a few of them. And 90 percent of the people, I think he said, held. But how is Grayscale? Listen, there's two ways to answer this question. held. But how is Grayscale? Is it temporary? Because I know you love them. There's two ways to answer this question, right? There's measured and considered and there's conspiracy theory, right? So I'm going to start with measured and considered. They have billboards

across every airport in America and they advertise to the 17 people that daily watch CNBC. So some of those people decided I want access to a Bitcoin ETF. And they chose Grayscale and their ridiculous fees. The conspiracy theorist in me says, I wonder who decided to put 60 some million dollars into the most expensive Bitcoin ETF on the planet the day that that happened. Hmm. I don't know. I wonder. There are folks that that certainly can do that. And oh, by the way, deposits into Bitcoin ETFs are not on chain. You can't go find who put it in there. Right.

So, yeah, I don't know, man. I don't know who's buying a Bitcoin ETF that has 150 basis point fee. That doesn't make sense. That's the beauty of the law of efficient markets is time will tell because no one will continue to buy premiums that they don't have to buy if they're knowledgeable about you know an alternative that doesn't have those premiums so you know time time will flush this out is the point yeah well and they had they had those inflows you know kind of at the they had the biggest the longest history of outflows in the history of like etfs like 80 days in a row right it was like you know i think eric put out a tweet that had like the blood rushing on the shining or something like it was crazy um well maybe it's like a good restaurant like if i see a bunch of people coming out of it, I go into it.

You learn the hard way when that happens. Dilma is doing a good job of playing defense on my potential conspiracy theories that could come out of my mouth right now. So I'm going to leave it right there. Listen, I just believe in the simplest answer is most likely the right answer or the truth. And the simplest answer to me is that Bitcoin carries a very big brand. And there's a lot of people out there that do a lot of crazy and dumb stuff, including pay too much. I mean, go to the airport and see how many people are buying bags of peanuts for $17 and 50 cents. I mean, it's, it's, I don't know. And then, you know, and then I do have to go, but Andrew, then the sec, just with the Wells notices, man. Yeah. It's not going to slow down. And the reason, you know, I love John Eaton, right? Great guy running for Senate in Massachusetts.

But the reality is, is he's running against Elizabeth Warren. That's not, you know, that's going to keep the pressure on. That's flat out going to keep the pressure on. And she's going to keep, you know, twisting the knob with Gary Gensler. And the reality is what we're seeing on the ground. The Wells notices are going to keep coming. Robinhood has been in crypto for six years and not a peep out of the SEC. And they delisted everything that the SEC was kind of labeling.

Yeah, come to meetings with the SEC. They've had conversations, lots of labeling. Yeah, come to meetings with the SEC. They've had conversations, lots of conversations. And so it's just, yeah, it just kind of is what it is right now. What I will say, though, and I put out a tweet late last night, buy as much Bitcoin as you can right now that it's going to 150k. One of the reasons behind that thesis is that all of this action against securities and all that stuff, it's going to keep pushing people into Bitcoin. It's going to keep pushing the money into Bitcoin. It's going to be a consolidation of the market for sure. Yeah, 100%. I mean, we've seen that, right?

I mean, the spot ETFs, that money is what's quote unquote different this time is that that money doesn't flow down, you know, fast, but if it's sitting at an IRA and a IBIT, no way, there's no way to decide one day that you want to go flip that into, you know, and then flip it back when you, you know, so yeah, I think that that is what's different. So before we go, we got to, you know, we talked about obviously the losing trade there, which is great transparency, really small loss in line with what someone would do if they had perfect risk management. How could people get involved? I know we've seen a ton of people in the chat who are a part of it. So I just want to give the soft pitch. Well, if you go to the arch public dot comcom and our entry level product is 99 bucks per month. And it's a it's a proof of concept product where you're going to, you know, there are percentages associated with our product on the website.

It's clear and concise. And our concierge program, we bring people on every month. Those are larger products that people can put more assets into and benefit on a bigger scale. But we've brought out a ton of folks in the last three months. Everybody's really satisfied. And we focus on the service and the process and the concept of what it is that we do. We don't love to run around with a big old sign saying, you're going to make this much money, right? We want people to really commit to the process of automation. I had a conversation yesterday with a couple of guys who said, we're really interested in the concierge program. What's the background here? And they're like, we made a ton of money in 2021 on NFTs. They may be the only people that did.

And they said, but it's exhausting, right? We want something that we can commit to where we don't have to spend our entire day committed to the process of going through it. And that's exactly what our brand is. It's the math behind layer one, layer two, layer three, and layer four. And there's an entry-level product that you can get. Yeah.

And I would just add to that, if you've ever heard of automation, it does exist. You can actually use it on your own computer. We will give you the software to do that for that $99 subscription fee. We can prove to you that you can have a real tool that removes the emotion, that allows you an advantage in your trading activities. And that's US-based with TradeStation being the broker dealer that manages all the trades and the platform that you download. So it's as customer-friendly as any automation that exists. That's the point of this, is to educate people and bring them into the education

and into the relationships with us, TradeStation, and whoever their execution partner is, if they choose to go that route. It can be a completely seamless process whereby which they've got all the experts to help them in those various areas. Awesome, guys. Thank you. Appreciate the alpha as always. I'm going to go try to hit the beach before it rains. So everybody else, I'll be off tomorrow. So I'll be traveling. Awesome, man. Thanks for the time. We appreciate you. See you, Scott. Of course, man. I still don't miss them when I have a chance. All right, guys. Thank you so much. Everybody else, I'll see you, I guess, tomorrow afternoon. I will be back and then on Thursday morning. Thanks, guys.

Have a good one.