The Wolf Of All Streets - Circle ARC ICOs at $3 Billion: What does that mean for crypto?#CryptoTownHall

Episode Date: May 11, 2026

In this Crypto Town Hall, the crew breaks down Circle’s big $222M ARC token raise at a $3B valuation from BlackRock, Apollo, and a16z. They debate whether ARC actually has real utility (governance, staking & security) now that USDC will be the gas token, how the token value stacks up against Circle’s equity, and if this is legitimate infrastructure play or just smart financial engineering. They also discuss tokenomics, the flaws with most governance tokens, network effects, XRP/Ripple comparisons, meme coins & community value, and the future of tokenized infrastructure. Learn more about your ad choices. Visit megaphone.fm/adchoices

Good morning, everybody. Welcome to Cryptotown Hall every other day here on X10.15 a.m. Eastern standard time. I love Monday, James. We just get to continue on all the things we missed on Macromonday. And in this 15-minute gap, I've done a lot more digging on the new Arc token. If that's going to be the title. Yeah, I think that the reason that I wanted to talk about this from is we always have these conversations. And, you know, look, we can look at the market price and we can talk about that. That's cool. But the real question. question has been it that the market's been struggling with is what's the value of token X, whether it's the X is XRP or Solana or Ethereum or Canton or Avalanche or Avax or token number 600 or 700, 800, 900. And what we have here are some of the A-list investors on the planet looking at a business circle, which has economics and under- understanding, and that business has decided to create their own token, which they will eventually release into the wild, and they're putting a value on it that is very relevant for what will

the value of other infrastructure plays be. And in fact, the ratio of the equity of the infrastructure matters a lot. So I think there's a lot to unpack here. But I'd love to hear what you dug into, because I use this to take a break. I did not do any reading in between the two shows. Yeah, it was, I mean, it's just largely tokenomics and clarity on what the token would be used for. So they raised basically $220 million for the token from BlackRock Apollo and the long list of others that I mentioned here before. But that's at a $3 billion fully diluted valuation. So they basically sold 740 million tokens at 30 cents each. So about, you know, it's 10 billion total tokens.

So we'll call it 7.4% of the tokens they sold for 22,000. million. Circle will always own 25%, 60% go to ecosystem, 15% to reserve. It said that the shortest vesting would be a day, I mean a year, the longest would be four years. But interestingly, they said that the token is for validators, security of network and governance, and USDAC will be the gas token, not ARC. And I think more interestingly, if you read the Circle disclosures, that I will find the exact language, so I don't say it wrong. But basically that if they don't reach specific milestones, then BlackRock Apollo and Friends can get a refund.

So not the same risk that retail has taken on ICOs in the past. There's a proof-of-stake transition, I believe, in May of 2008. And if they don't meet that, everybody can get their tokens back and get a refund. But basically, ARC here, you know, infrastructure, infrastructure for stable coins built for purpose and backed now by the largest institutions on the planet who have bought $220 million worth of tokens. But okay, so I'm confused. So Circle owns 25% of the network if you're wondering how it accrues to the stock. Now I'm not saying that it has value, but if they have 25% in theory, you know, a quarter of the network value would accrue to Circle as a

company. Sure, but that I understand. But if it's not being used for gas, What is the point of the... That's what I didn't understand. Well, it said, they said government security, validator, staking, and they said it's like Ethereum is to EF, but that's what it says in every article, but that's just not true, because EF is used to pay for the gas fees, right? And ETH gets burned when, yeah, you know, from... It's interesting.

I mean, look, this feels like a grift based on what you just said, but I don't want to say that until I've dug in more. I mean, you know, I literally had a conversation last week, which I thought, which, with, you know, the, with the, the, the, the, the, the, the, the G.C of the Crypto Task Force, where their view is that there needs to be a very, that there shouldn't be a regulatory arbitrage between whether something is a security or a commodity, that that's their job to eliminate that. And they know that that's a big deal, that the notion of a token shouldn't be prohibited from passing through token economics, i.e., you know, if you own the token, it matters for the network.

But if it's not being used for gas, if it doesn't get you discounts in terms of what you're using for, if there's no actual utility for the token itself and it's just governance, then what the hell's a difference in that in equities? Unless the network is going to have residual value and the tokens represent a claim on that residual value, I don't understand why it's worth a dollar, much less $3 billion. That's the question. And I'll be curious. of, am I looking at this wrong? I mean, you know, what do people think? Because, you know, if in point of fact that it was a value play and you made the statement and you looked at it, the numbers of the numbers, right? You know, they're valuing the network at $3 billion,

while Circles equity valuation is $30 billion, which means that the network would be worth 10%, give or take, of the equity value. And that's an interesting line in the sand. That tells you a lot about XRP and Ripple, which is inverted right now. And so that says some things. It tells you a lot about the potential value of layer ones in terms of relative to the total addressable market that they're going to be, that they're going to be supporting. And I think all of those things are interesting. But it's much more interesting if it actually makes sense and if it's not just a cash grab, right? I would love for people to jump in their thoughts on this, because I'm, I'm, I'm mixed.

Like, I know why Circle has to do it. There's no question. I'm just wondering how the value accrues once again, as you said. Right. Any one thoughts? Or are people just stunned by the numbers? I'm stunned by the participants, even more than the numbers. Yeah.

Tony, go ahead. You know, it's really amazing that these trad-five firms, like BlackRock and Apollo, are doing these VC-type deals. But instead of taking equity or... taking tokens. And earlier this year, or maybe even late last year, Apollo, they invested 9% in Morpho. BlackRock also bought Uniswap tokens. Citadel, they bought zero, I think it is.

But it's just so fascinating. And today's questions, I'm also struggling with that. And I guess it's TBD, honestly. I don't know how this all plays out, but it's fascinating. Yeah, I think from a crypto valuation point of view, though, it does start to give people understanding of something that we've talked about a lot. I mean, you know, we don't have anyone from the XRP army up here. Oh, Mickle's a listener. Maybe you can get him up on stage.

I'd love to hear his reaction to this. His requesting is up. He's connecting. Okay, cool. He must have heard you say XRP and you summon him. No, no. I mean, I think it's very important because when you mental model, Mickle, you up here? because I see you as a listener, but I see your hand.

I see his hand up as a speaker. Michael, you hear us? Yeah, so I didn't hear the first part of what circles doing, so I'd be curious to get an update on that. But long story short, I mean, this is something that I've always had a problem with in terms of different tokens in the ecosystem. I mean, it makes a whole bunch of sense for a layer one to have a token because a layer one, theoretically, at the moment,

could not exist without a token. So the token is critical infrastructure in order to make, a decentralized blockchain function. But for a lot of these layer twos and a lot of these other things, there's a token associated with it. And people are drawing all these crazy loops and trying to incorporate the token into these different pieces of quote-unquote utility. But the truth is, is a lot of the times the network doesn't even sit in a native place

where the token is. So I see this all over the ecosystem. And in my opinion, it creates massive odds between the token holders and the underlying equity holders, because a lot of people push it to governance. but who actually has the governance then? Is the token holders or is it the people who are holding the private equity? So I think there's a huge problem with a lot of these tokens that don't actually have a layer one network to support the token because it gets to the argument of what is the token actually for?

And I don't think that's been well defined in a lot of cases. Oh, I screamingly agree with you. I actually made the statement last week that Gensler and Warren were actually evil geniuses and by pushing people into governance tokens and, of course, memes, they were more or less big digging a pit, filling it with snakes and spikes and all sorts of stuff and just waiting for people in the crypto world to kind of step into it. And I think that that has taken a lot of money out of the ecosystem and has hurt the crypto ecosystem a lot. I mean, the notion of a governance token where there's no equity rights, no rights to any economics,

to me is complete bullshit always has been. And one of the things the regulators need to solve is giving those governance tokens and the founders and the people who built it the ability to pass through in a clear articulated way some of the economics of the network. Now, it could be as simple as gas being burned or tokens being burned as earned it money is earned and so it becomes more scarce. But you'd nailed it. The key is is those are necessary. But if Scott is correct, and I have no reason to believe that he's wrong, that USDA will be paying gas. and the arc token is functionally a pet rock inside the network, then I have no understanding of what the hell is going on.

So I kind of hope that that's not true. I mean, these people are not dumb people. I mean, but, you know, everyone gets seduced. And if you give someone a free option, which is what Scott basically said, you give me a free option that you can buy this thing and get your money back. If it doesn't work or if you can't make money by selling it, of course you're going to do it. You know, who wouldn't do that trade? Right?

I mean, Scott, did I articulate anything wrong? Yeah, no, perfect. I agree with all that. I'm just, I'm kind of dumbfounded. Yeah, I mean, I'm reading, I continue to read this entire time and I'm still just not really getting it. I mean, once again, I fully understand my Circle needs to do this. Like, let's be honest. So Circle is in a unique position where stable coins are growing massively, but because

they're publicly traded and they actually have, you know, quarterly earnings and such, If interest rates come down, there's no way that stock can go up unless they somehow massively replace that income from their passive earnings on treasuries and figure this out from another side. So it seems like they have to go into the token market and create a layer one in a token. And I do think there's reasons for them to do that. Listen, like, I've said this before. If you need this to be institutional and, like, banks are going to use stable coins and grandma in Omaha who doesn't know what she's doing, like send something. You can't have grandma

who's sending to a salon address instead of an Ethereum address for stable coins, right? So like USC, it makes sense they would have a chain that's highly centralized and that you can have customer service and, you know, fix transactions and things like that. You can think whatever you want about that. But they need this to make money. Like if interest rates go back to ZERP, like stable coins don't make money. Really? Because the fees are commoditized. Yeah, they become almost a massive cost. cost because, I mean, you have to look at it, like circles growing revenue and they have a nice clip there on how fast they're growing revenue, but interest rates, as you were saying, could

decelerate at a massive rate. I mean, even cutting interest rates in half, I mean, that would still put interest rates at over the past 20 years higher than they have been. And, I mean, circles looking at 50% haircut on revenue. So they need to figure out a new way to make money quick. What I think does a disservice to them is I think there's been a huge amount of credibility or at least behind the scenes given to cryptocurrency companies who have taken a step back and actually assessed whether or not they need a native token. I think that's been something that's been refreshing for a lot of people because when you have the conversation of what does this token do, if you're jumping through hoops to try to answer that question is clear that it was just a money grab to extract value from the

crypto ecosystem, I think being able to say, hey, we don't have a token because there's not a defined purpose for it is a huge benefit. I've always looked at it as kind of a a huge contradiction. It's something that absolutely needs to be solved. And in my opinion, and this might not be 100% true all the time, but just slapping the word governance on something seems like a cheap way to try to make that statement make sense. And I don't think it's really worked, especially when a lot of the- -Rab and what does that mean for actual value anyways? Like, governance, I understand why that's of a value to the network that, you know, that people who have skinned the game vote

on the future of it, but how does that actually accrue value to investors or anybody who buys the token anyways? I think without a clear framework of how that value is defined, right? Like most of the governance things we've seen is at the issue where holds all the governance anyway, and then they issue some fake governance to everyone else, and then that's a complete odds with the underlying equity of the foundation or whoever they're calling themselves, who actually has the power to execute on all these things. So it's just one of those things.

It's like this governance thing just seems like a way to slap a piece of utility onto a token that doesn't have any utility, my eyes. Johnny. I was just going to add that. Look, obviously we know that a public blockchain can't be successful without a native token, right? The aspect of decentralization,

having liquidity incentives and all that. However, to your guy's point, how does the token accrue value? I think that is something we, TBD, we still have to figure out. And I think to Dave's, the crux of the issue that Dave's highlighting for a while, I don't think anyone has figured that out, right? Maybe ETH, you know, as far as the token being used for gas,

and there's some burn elements here, but what else, right? Maybe the staking. So a lot of chains still have to figure that out. But, you know, while we may sit here and say, well, that sucks. It doesn't accrue value. There's a speculative aspect to all markets, so people are still going to bet on use horses, so to speak, and we may not be able to stop it, even though we may not like it. Well, that's certainly true.

I mean, you know, Scott, you were pointing out that bored apes and even ether rocks have gone up in value recently. I mean, it's like, okay. I mean, that can happen. But look, I think there's one other aspect of this, which is fascinating to me. And that's why, and Mickle, I'd specifically like to ask you about this. So if, forget the mechanism for a heartbeat, which, of course, by the way, is probably a dumb thing for me to say.

but just to just go with me for a second. We know circles equity value is somewhere in the neighborhood of 30 billion, give or take, you know, depending on how one measures it. And if their native token is worth $3 billion, is that relevant? I mean, the fact that the token being, I mean, the token needs to be worth less than the economic value of the entity that controls it and monetizes it. Because nobody would, you know, it just, it doesn't make any sense for the token to be worth that much. more than whatever. But do you think that that's a relevant thing that anybody should care about? Or is your opinion, you know, forget which token, forget XRP or anything. It doesn't really

matter. Whatever the network is, can a network be worth more than the economic value of the actors that use it? The answer is no, in my opinion. I think you agree with that. No, I actually heavily disagree. I think the market is just saying where the more perceived value is, for example, circle the company, right? I mean, from all eyes, in my opinion, Circle has been massively successful in terms of being a high-quality stable coin issue in the crypto space. In terms of this new network they're launching, I mean, most Circle, most USDC is out on Ethereum and a lot is issued on Tron. So that does absolutely nothing for the success of the network. So it makes a ton of sense to me that that underlying network would be at a severe discount to the company itself that's had massive success.

I think in a future where Circle's new network is hugely successful, and let's say, and I've done zero research in this, so I highly doubt it's going to be accurate, but let's say this network is massively successful, outgrow Circle the company, and becomes a new stablecoin standard. So like everyone's just plugging into this new stable coin standard, I would be 100% convinced that the network would ultimately surpass Circle, who is just a single actor on a highly successful stable coin network. Now, I don't think that's going to happen. I think Circle's kind of already been a little bit late on having its own protocol to do those kinds of things. But I think the market's just telling you what's more powerful, what's more important?

Is the network itself more important? Can it expand past just that single company or is that single company more important than the underlying network? That's how I look at it. Yeah, I'd like to get other people's thoughts. I mean, you know, Gary, I don't know if you've looked at this, but you're, you're one of the most sane voices at valuation up here. You know, what are you? Does this mean anything to you or have you had a chance to digest any of it? I haven't really dug into it.

But can a network have more value than its underlying asset? I think that's probably true. I mean, Visa is worth more than what's. they earn, right? Right, it's generating income, yeah. So if the network itself is generating income, yeah, that's absolutely right. But in this case, it's- Yeah, but this network would be generating income in USC, right? So I, if the gas fees are paid in USC, then maybe their play, which I don't understand why people would invest in it,

you know, otherwise, but their play is that it increases usage and that. value of USDC as a stable coin. But isn't the better, I mean, for any of these cases, and Mickle, maybe like you, you know, we always have the debate XRP versus ripple, you know, shares, which is, but Ripple's obviously not publicly traded. Like, isn't buying Circle stock a better expression of the value in this case than the ARC token? I think once again, it depends on where you want to bet on success, right? If you want to bet on the success of Circle, the company, right? and Circle saying, you know what, we don't need to be reliant on a specific chain to succeed. We're going to be the highest quality issuer of Fiat in the digital world, then you would be betting on Circle the company.

If for some reason you have this supreme thesis that most other chains out there at the moment don't fit the actual role of what the future rails of the digital dollar is going to be. and this new chain that Circle is releasing Arculus, right, is the future, then I would bet on the arc token. Now, it sounds like to me there might be a little bit of some confusion about the actual purpose of the Arc token on the Arculus chain, but it just depends on what you're betting on, like for the Ripple and XRP example, right, like if I was betting on solely Ripple success as a centralized company and I just want to have access to what they're doing on the prime brokerage side, on the custody side, and it's just making a bet on that company, then I would go get Ripple Private Equity. If I have a vision that a blockchain with fast and efficient utility is going to be important into the future and there's going to be a new platform for financial contractions,

and I believe that is going to be the XRP ledger, I would bet on XRP. So I think you just have to have a defined thesis of what you're betting on when what you think the future is going to be and you need to place your bets accordingly, trying to substitute one or the other, I mean, let's face it, they're different things. You want the really cynical view, Dave? Now I'm thinking about this. So they just raised $22 million from the biggest institutions on Earth at a $3 billion valuation, which magically put $750 million on circles balance sheet in tokens since

they're 25% of the network. Tell me how that's not the major upside. They just basically magically created $750 million of value by owning 25% of a network that's now, that they can now justify a $3 billion valuation on. Without giving away any equity in the company either. Or spending a penny. Yeah. Now ask yourself how Brian Armstrong, you know, wishes that base had a native token from the beginning.

They're going to launch it soon. Yeah, but, you know, it would have been a hell of a lot more valuable if they had launched it when they launched it. I wonder also to that end, if launching ARC and doing this and using USDC in some way actually minimizes circles reliance on Coinbase. I mean, there's a lot of corporate stuff that goes on that we'll never know, but it depends on how those agreements are written. Right. Anyway, David, you have your hand up. So sorry, I didn't mean to jump on top of you. Yeah, no, I was just going to say, you know, value of the network. from a valuation standpoint you know

and say we took a look at a stock as opposed to a network here you know you've got a value of present earnings and then you've got a factor of how much value to put it in the future and it looks like this deal basically is all betting on the come and I love the fact

that the institutions can get their money back and yeah Scott you're dead right I mean this is a way where we've got circles building and they've monetized it I wouldn't be surprised if they borrow against the value of it or try to at least. So it's kind of a build, borrow, die.

Lou. Magic. Hey, guys. Rather than Ripple, is Canton a better thing to kind of compare this to? Canton's got their own news today, by the way. Yeah, I mean, that's a $5 billion. $300 million. Yeah, 300 million raised led by A16Z.

By the way, A16Z also is leading all of these, right? So A16, Andriesen Horowitz also led the circle investment. I don't know Canton well. I don't know if anybody on the call does and why their network is valued at that rate. But I think that could give insight into Arculus. Well, Canton has a layer one. So like one of the things that I don't push a lot of pushback on is like when a layer one has a token, like what I push more back on and I don't want to name a specific one.

But one of the things that I have like a little bit of a harder time would be would be something like, the link token where they have this Oracle network that's highly successful, but then the link token is issued on Ethereum and it's like doesn't directly incorporate into what they're doing on the Oracle side. If Canton has a layer one where the Canton token, like the Canton network itself could not work without the Canton token, it makes a lot of sense for a token to be there. And then the market will figure out the long-term value of the token. Like what is the long-term value of the token? I don't think there is any way any of us are going to be able to forecast that.

It is this brand new asset, nothing like this has ever existed. It's a digital commodity. That's completely different from a company, having private shareholders, having a successful network, and then saying, okay, let's go issue a token and we'll figure out what that token does later. I think that's why you see all the top tokens in the market right now are all layer once. The market has determined, look, these things have real value because the underlying networks could not exist without them.

But when you have a network existing already, let's say like the base. network and then all the sudden a token comes out of nowhere it's like well the network was already working people were already using it was already highly successful what could this token possibly be it seems like artificial incentive to me i mean so this i mean if you're looking at the news on kenton i just looked this up because i was actually curious their their headline is kanton network builder nears 300 million raise led by a 16 crypto this is an equity raise not a token raise and their token already exists and as you said, did you say $5 billion is, Canton? I haven't looked. I don't want to speak out line. Yeah, close to six. It's like different approaches. Yeah, it's different approaches to effectively

the same thing, but both of them, you know, have an equity side and a token side, which maybe is our new big structure for institutions to make a shit ton of money. And just one quick one on that. If I'm looking at Canton's market cap, it's 38 or 6 billion-ish right now. If you're looking at diluted, it's much higher. But that's a case where they have a lot of RWAs, and I think the network will probably be at a higher valuation. Value valuation in close, because I think it's even hard to compare equities to these assets. But I think you'll see the Canton network pretty high because they have a good network effect going on. the more you can plug in that network to more and more important players and have people issue and take stake in the network itself,

the more I think you have an expandable valuation outside of just what the Canton Foundation or whatever they call themselves is doing. Yeah, I think that that gets you to the crux. I lost track. Is it Tony next? I see three hands. Yeah, I can go next. I see none, so go for it. Just to piggyback on Michael said, and I think he hit all the points I was going to follow up.

on, but, you know, if we have the thesis, guys, of where the puck is heading, if all these markets are going to run on blockchain rails, right? Blockchain becomes that black hole that sucks in stocks, commodities and all that stuff, then these tokens allow you to bet on the network. So I don't think we should look at it as an, from an equity standpoint, or how much value necessarily is being accrued to the token. I understand there's a part of that there. But I think, again, going back to the foundational aspect of blockchain, that public chains, you can take a bet on the protocol, the network by holding the token. And yes, some are better than others and some give you more value and utility in others. But still, if we believe, again, where the puck is heading, all of this is going to be a blockchain real.

That's what these companies are betting on to hold a respective token. Dave, did you see other hands? Yeah, I see Lou and David, but I don't know if there is shadow hands or not. I can barely understand half of what you guys are talking about. Like when I look at investing in an industry, I look at fundamental underlying value. Scott made an interesting comment. I may just show you how stupid I am. He said, hey, look, you know, when Circle converts that to USDC, like, it's all going to get converted to dollars at the end of the day.

We can call all these little tokens, stable coins, whatever we want to call them, but aren't they all tied to the U.S. dollar? Yes, of course. Of course. My point, Gary, and the reason I picked that. We're just, we're just diluting Kool-Aid here. Like, I'm trying to understand, hey, what does circle do? Is it financial engineering?

Or are they providing a service? Well, they're providing a service, really. I mean, the question here is there's a network, right? If the network itself is processing transactions. Well, the problem is there's too many networks.

There's a million different tokens, right? There's Visa Masked card. Like, those guys don't compete with each other. Y'all are beating each other into the zero levels. Well, let's not personalize it because I don't know. No, not, you know what I'm saying. I mean, the token world. It's like, one, what do they do?

Here's the thing, Gary. So think of it this way. And Mickle was sort of getting at this. And I think it's a good mental model is if the entire world is going to use tokenizer. Well, that's a map. Now, that's a, Matt. That's a different discussion. That's kind of why I said, hey, I don't really know what you guys are talking about.

I must be stupid. I don't know. The issue is if the whole world is going to use this technology and this technology. Well, is that, are they? Like, I don't need a blockchain for my assets. Well, we could have that conversation. Those are separate conversations. But it is a fundamental, but it's a fundamental.

See, my only question was, hey, what do these companies do? And now you're going to like, you know, I just. It's a deep drive that needs to happen here, which is why tokenize rails. But the simple question, where I fail, where when Tony starts saying, what are you saying, and I'm not trying to make fun of you, Tony, I'm just saying that people tend to make this logical leap. And it feels like it's happening, which is if the entire world is moving, if, let's say a trillion dollars is going to flow through a network, that network people say, well, the network has value. Well, no, the network only has value if it takes a fee, even a,

small one for that trillion dollars going through. So let's say they make, you know, $100,000 from a trillion dollars going through. Okay. Well, that's cool. So it does that. And if it does that every single day, that's real money. And it starts to, and then you start putting a multiple on that. But if there is no fee, right? You know, if, if, if the, if the, if the, if the, if the, if the, if the, token itself doesn't have anything to do with the fees, my brain doesn't understand how it could be valuable unless the fees earned burned tokens. But then in that case, what's the need for? I mean, BNB token is worth something because if you don't own it, you get, you pay more in fees for using, you know, for using finance, right? Hyperliquids, same thing. You have to stake a certain

amount of tokens in order to get those, those things. And as they get burned, it gets more valuable. I understand that mechanism. If you can't explain that mechanism for ARC, then I don't understand why it's anything more than just, you know, as I said, a pet rock, right, if it's not part of it. That's really the question. Does that make sense? Tony, you, you, you, yeah, no, I absolutely agree with you, Dave. I think, like I said earlier, some of these things are TBD, and I don't think BlackRock or idiots just saying, oh, we're going to grab this token for no reason at all.

I think maybe they're betting on the innovation that may come and these incentives and these fees or whatever you want to call a revenue generating aspects of the token will follow. You know, it's kind of like peer Teele investing in Facebook before it even ran an ad, right? And Facebook goes valued a millions of dollars just because people were on their sharing, but there was no revenue being generated. Right, exactly. And so the point, like, you know, Chainlink, just let's pick on Link because Mickle brought the buck.

Chainlink has this, this successful Oracle process. if the token itself allowed for not just some nebulous, well, we're going to kind of set up this fund that might very well be, but we're not going to tell you how much, because if we do, we're going to get in trouble with regulators. But let's just say they go through, work with the regulators, and they can have a very clear method for how use of the network translates the token holders. Well, then people would know how to evaluate. Now, of course, the cynical person would say if they did that, then the token would be considered overvalued. But well then the token would be considered a security if they're just passing back revenue that the company or the network is making and they're just passing it through what's the difference between just having a stock and a dividend like it completely defeats the purpose of why these tokens need to exist in the first place no no no no wrong that's the first thing you said that's wrong there is a difference in the capital structure equity confers ownership of a thing of a business of a business with liabilities there's all is it a huge legal structure. A network that is autonomous that runs in a decentralized basis that has a defined capital flow to it would not be the same thing as an equity. It would be a claim on revenue.

Be more like the closest thing would be a non-discretionary perpetual preferred, but non-discretionary, which by the way, I don't know that that exists, right, because this would be in a smart contract. So you're getting revenues without any ownership, essentially. Correct. And it would be contractual. They be programmed in the smart contract unless the, you know, and that's where governance is tough. See, governance is sort of ownership if, in fact, it allows any impact to revenue. But of course, governance tokens are structured, so as only to be able to do things that have to do with the operation, but not the economics.

The problem is, is we've invented, crypto has invented an entire new asset class. that's never been fully defined. And they're now trying to define it. That's the key point here. I think the obvious problem is that networks like Bitcoin and Ethereum came along and the XRP ledger with clear utility and a need for a token. And then a bunch of other projects didn't have a need for a token, but realized if they sold the token, they could make a whole bunch of money.

So then they sold the token to try to make a whole bunch of money. And then people started asking them, hey, what's the token for? And no one could answer what the token was for because the token was for making money without giving away equity. Oh, and I think we have 100% agreement. Is there anybody who disagrees with that sentence? Lou, like, I think that's like the thing that no one in crypto wants to admit. That's the truth of it.

Like, a lot of these things were created simply to raise money without getting away equity. If you have a layer one chain that's being used and that layer one chain has an underlying token, that's a clear need for that token to exist. network could exist without it. But other than that, I don't know. Yeah. So I think we can all agree that there's a lot of tokens out there that are worthless. And I don't think we need to spend our time talking about it. Well, but to get back to the circle for it. Yeah. We'll be worth, what will be worth, worth full. I can't, that's not the right word. I don't know what the right word is, but what will have value. I think that, that's what, that's what I was

trying to steer it for. But you're right. I mean, we could make fun of crap all the time. That's easy. But understanding where value is going to be created is what what people really do care about. And frankly, none of us really know, you know, not, not, not correct. But just to get back to circle for a moment, because people are, are wondering what's going on. I have personally believed for a long time, and this is just, in my view, just another signpost that I'm right, that circle is going to be the U.S. central bank digital currency. And that's what people are investing in here. Yeah. Why would the United States want a private company to control that? Like, the United States will just issue their own version.

It's not going to be private. It's not going to be private. It's not going to be private. I didn't say it will get the U.S. government will subsume and take over, you know, at least some aspects of it. And it will be the central bank digital currency. That's why the U.S. government has given them so much regulatory.

No, it circles a private company or a public company now. But like, why the United States government, and they could just work with Circle to issue an actual digital currency. Like, why would they assume what USDC already is? Like, they would just create their own. Like, Circle might be a technology provider for those. Time, time, time, time will tell how it gets played out. But, you know, I don't think the government is our friend.

I don't think this is helpful to individuals, but this seems to me to be the path that we've been on for a long time. I can't see the hands, Dave. I see nothing, so I don't know if people are still waiting. Dave, the one thing I'm curious in your aspect, which goes to what I think people might care about, which is like how these things, rather than picking on the losers, what ones do. And the one thing I guess I disagree with what you said was that the networks that produce the most fees are the most valuable.

Like, in my opinion, the way to value these networks are very similar to very early social media networks, the ones that have the most connections, the one that creates the deepest network effects, the ones that get the most intertwined with all aspects of finance, down the road, there is going to be a lot of the underlying tokens on those networks that get chewed up from native capabilities, whether it's staking, liquidity pools, all those kinds of things. And then there will be a huge amount of investors who see the success of that network and want to invest, behind it and the perception of investing behind that network is going to be purchasing the token. So I see it as more of a race to network effect. And I honestly think the chains that have the

best fee structure for people to want to use the chains, which is typically lower fees, are going to be the ones that are successful. I think that's true to an extent. I mean, I think it is very, I think it's very, very clear that there's elements of truth there. But I do think that that's one of the reasons the market cap of crypto is north of a trillion dollars when there's not even you can't possibly come to any sort of valuation based on you take bitcoin out of the occasion, take stable coins out and look at the rest of crypto from a revenue price to revenue point of view they look it looks very expensive it's all on the come the the the most important uh you know network right now on the planet in terms of processing is DTCC right in DTCC I forgot what their

valuation is, but it's a hell of a lot smaller than crypto or than the aggregate of all non-Bitcoin layer ones. It's a lot, lot smaller. And it processes quadrillions in transactions. So it depends on the amount of monetization possible. With a social media network, you have those eyeballs. With a blockchain, you don't have eyeballs. I mean, you have you're going to have agentic finance out there looking for the cheapest means to transact. And that doesn't mean these things can't be worth more than they are today. I'm not saying that at all. But I am saying that people who look at and think that the network itself could be more valuable than the economic activity that's processing on it, I think that's delusional. But it depends, right? You know, it's all you're right. What's the extra

value you can gain from being on that network? And it's in the case of Facebook, that was a really clear one. It's like, okay, well, you have people's attention and they're going to buy things. Well, you don't have anyone's attention on a blockchain. That doesn't mean there isn't a way to monetize. I'd be really curious what people think about that. Well, I don't think you have eyeballs, but you have the value, right? So rather than having the eyeballs, you hold the value. That's how I say it. Yeah, Dave, I mean, I don't know. I think you're wrong there because look at what's happening with meme coins. That is simply attention-based. Yes, people are putting their money behind it, but I hate meme coins. But look at what?

what's happening, Dave. The dynamic has changed. The president has a meme coin. And then you can take it to NFTs, the artwork aspect. I believe in NFTs, the technology, but the artwork stuff, I'm not a big fan of. But what is that? It's culture on the blockchain. It's community. It's community. All the value is created in community and the network affects around community. Meme coins are just one tiny subset that most people on this call deride. But they're not going to way. So let me ask your question, because what's the difference between owning one ape coin or one whatever meme coin and owning, you know, a billion? I mean, you could be part of the community with one. So, you know, what's the, the value? I understand the notion of that. Well, that makes sense

for the NFT and not the token specifically. I think, Dave. No, I understand that. Look, we go through this all the time in terms of valuation. I mean, I'm obviously not a fan of. of pure meme coins because meme coins are not scarce, right? And there's no version. I mean, if you own a board ape, I absolutely understand that value. I'm not saying that it's right or wrong. I'm saying, I understand it.

You own a unique thing that nobody else can own that people can look at. You own- Are you a fan of community? I absolutely understand the ability to monetize a community. But unless that monetization can pass back to the owners of that community

in proportion to the value, I don't understand it. Does Doge fit that? So do you like Doge, hate Doge? I think Doge isn't a thing. Think Doge is going away. I think that people continue to value Doge on the basis of Elon potentially incorporating it into X money. I don't think that Doge would be anything close to where it is today if that wasn't a possibility. But I could be wrong, right? You know, as I said, if you could create monetize a community and create pass-throughs back to the owners in proportion, to what they own, that's a very different and very coherent way of value. That's all I'm saying.

You see, the difference between owning one token versus, you know, a million dollars worth of a token, you don't need to own a million dollars worth to be in the same community unless there's value there. Now, that's not to say that people won't create that, but I don't see it right now. It's the same thing with regard to this circles thing. I mean, we're trying to get at what is value. And that's the most important thing for most investors. It's like, where is it going to go?

And this is a really interesting story because like it or not, when you get big investors like this piling money into these sorts of valuations, betting on the come, that's a good thing. And all coins should be doing very well today. I mean, I don't think they are. I don't think they're doing anything bad, but, you know, it doesn't seem to be mattering. That's all. But community is monetizable.

Facebook was clearly, I mean, I call it boomer book now. given how much time my wife spends on it. But, you know, it is, it, that matters. So, yeah, no, I'm not against that by any stretch. Did we lose, Lou? Sorry. I think we did. Anyway, but no, I'm not that much of a skeptic.

I just, is this, the notion of being able to get to value. And what Michael was saying is absolutely right, in my opinion, which is to say that if you are, there's a need for something, it makes sense and it's generating value. And it, and it becomes more. more valuable the more people use it, that's that way. That's what network effect is, right? Am I articulating that view right or wrong, Michael? No, I absolutely think that's correct. I think the place that we might disagree, I don't know, is I see like immense value in the fact that these assets that exist today, simply in what they are, are decentralized neutral pieces of liquidity

that anyone can contribute to or draw off on without any centralized organization able to take control or change the rules of the given asset itself. So I think inherently, and you can argue about this, just the XRP token, just the Bitcoin token, just the Doge token being what it is is valuable in itself. and then the amount of people interacting on that network increases the likelihood, increases the mind share, increases the amount of participants that are ultimately going to engage with, purchase, and have economic activity adjacent or directly with that underlying token. So I see the next 10 to 15 years that we're going through right now as a land grab for all these

layer ones. And all of them are going to spider web and create as many networks and tentacles all throughout their traditional financial system. And when it's all said and done, very similar to the very internet protocols, there's going to be specific protocols that really win out on activity. And that's just going to be because they were designed in a way that made a lot of sense to adopt the financial system we interoperate with today. And I think the tokens that sit adjacent to those networks that are actually there for

a purpose and are perceived as valuable will ultimately appreciate greatly into the future. And I think if I was to lay out my entire thesis, that's how I look at it and invest. into this industry over the next 10 to 15 years. It's interesting. From a narrative perspective, I find myself agreeing. Anyway, Jamie, I see your hand up. Well, Michael, you know, said the correct word, and the perception of value.

That's what we're trying to figure out. I mean, this is kind of new, so we're kind of, you know, speculating a little bit more than what will come from this. I mean, but what we do know is that likely that the Clarity Act is going to, you know, likely severe. impact, you know, Circle's current revenue model, right? Stable coins, infrastructure is likely to be a significant growing business moving forward.

You know, so this kind of creates maybe a hybrid corporate plus protocol economy to position for the next stage. Like this kind of establishes the first type of valuation model for tokens and blockchain value. So that's, that part's significant, you know. there's there going to be some fees that's going to be generated from USC somehow it's going to be converted to ARC and portion is going to be distributed to stakers and validators and then there's going to be a portion that's going to be permanently burned right

to keep things deflationary so I mean like you know overall I mean that's what this is that the other but the significance part is that this is the first one and how we kind of maybe derive value going forward for something similar but the other thing about Lou would he mentioned with the memes I think it used to be community. I think that was the utility of it. I would question now if that is the current use case. I mean, like 95 to 98% or something.

I don't even know what the number is, but are not community driven. They're just pumping dumps and they're just extracting values. So that would be the only thing I would kind of push back on the idea for what mean valuation can be because what they were and what they are now are completely different. In my opinion, I'm curious what you guys think. Well, I think there's pump.5. sort of created that, right?

You know, tens of thousands, hundreds of thousands of individuals trying to tap into, you know, what is, you know, some immediate sense of what might be valuable. And everyone trying to become the next Shiba Inu, you know, is just an incredible thing that happened. And, you know, honestly, I don't even know if it's still happening. It might very well be. I don't know. I'm just so disconnected. I mean, I do have my smoking chicken fish bag somewhere.

in some wallet somewhere. But, you know, it's not very big. I'm not sure it could buy a lot smaller than it was regardless. I doubt it could buy a cup of coffee anymore. I think Starbucks coffee's gotten to the point where I can't do that. But, you know, maybe a tea bag. If you do buy a cup of Starbucks coffee with it, you'll have a taxable sale of your smoking chicken fish.

But it'll be a couple of loss. So that's okay. So, you know, I can. Sure. But no, the. the point is that there's a lot of crap, right? But real community is a real community achieved via asset ownership, or is it achieved by, you know, being part of the same community?

I mean, whether it's on Reddit or on X or on any other social media, you know, there's a community value, right? You know, and people can monetize, the best way to monetize community values, you know, like Wall Street Betts found, is to be able to get into the same trade and then except for the last few people into that trade everybody makes money as long as they get out but is that really you know and i don't know it's just it's hard for me to understand community based on ownership as opposed to participation engagement i totally understand as a community of value but i think that but mickles point is listen you know if you're if you are incentivized to participate

more, to own more, to buy more, to transact more by being part of it, well, then that's going to create value. Right? I think that's the distinction. I mean, I don't know. I just don't want my, like, you know, if I join a country club, I don't want my membership to go up or down and value by, you know, 7,000 percent on any given day. You know, I can see owning a membership and paying for it.

I just don't know why the asset the actual membership card has to be so volatile and can go to zero. Well, unless you want to sell that membership. right if you want out of the membership of course i understand the membership to go up no i think just one piece of clarification so dave i think you can make my argument applicable to meme coins as well i think at the end of the day the world we're moving into has a lot to do with social consensus like if you take a look at like why people perceive that doge coin has value people have perceived all kinds of weird things that have value over time, whether it's Mickey Mouse collectibles,

whether it's Pokemon cards, like all these crazy things. Like humans in general, they create these networks where they perceive certain things to have value. And they just, we've always as human society, had this weird desire to collect and attribute value to these different things. And I think just specific coins, it could be random. It could just be how they're built up through society, what people gravitate towards. I mean, that's kind of how Bitcoin started out at the end of the day.

I mean, in the very, very early days, I mean, I think most of the world probably looked at Bitcoin as an I-e-me-coin in a way, and it passes a societal construct where so many people see value in it. Financial institutions start stepping in and creates a network effect all on its own. There's a transition stage where something goes from being a joke and something goes from being a very niche sort of thing that a specific community likes to getting enough buy-in work becomes a real economic tool and a real network effect and a real position of value. So I think certain coins might have the capacity to do that. But I think betting on something else to do

what Bitcoin is done is probably unrealistic. I think there's other avenues. And I think one of those other avenues that can be drawn on is a network that is not simply doing it off a social consensus, but is providing real value to the world. So as we move into a world where things actually get tokenized. If there is a network that can, let's say, handle 10% of all digital swaps or 10% of all cross-margining or 10% of defy, right? I think those tokens can reinvent a new narrative in some kind of utility. But I don't think many other things are going to be able to usurp what Bitcoin has done in terms of that digital sort of collectible and that embodiment of investing in crypto. Yeah, I think that's absolutely right. Anyway, I see Gary.

So we're assuming, and I think some of these points are really interesting, but just remember when you do that, all the people with distribution right now, the metas, the visas, the master cards, they're going to destroy people trying to build communities. They already have the community, man. They have the trust. They have the KYC. They have the AML. I think you're going to see some of these tokens. We haven't talked about it are going to come under undue competition, the type of competition they haven't even seen yet.

These are not token guys. These are people that have millions and millions of users for years and years. To me, that will come first. If you have the distribution, the token will follow. Y'all are suggesting the token's going to invite people into a big party. And I just question that. Very interesting take, actually. That's interesting then watching.

I think there was announcement MasterCard, just what I think called for the Stablecoin issuer rain is that the platform and i think that they became uh did a official some sort of partnership with mastercard which is going to bring you know uh destable coin credit cards to a few hundred billion people 210 countries or something mastercard principal member that's what's called and we saw that visa uh stable coin cards have massively exploded as well so i wonder if visa goes this route eventually gary like circle you know kind of launches their own thing or if they're just going to keep adopting existing stable corners and networks. I mean, we, we, they're buying things right now.

You just watch these two companies. They're going to buy anything. They're a lot of everything. And they'll overpay and then they'll shelve it. They'll get rid of the teams. They've done this every time. I've watched them buy three dozen companies. I tried to sell one to them.

And, uh, once they decide they won in the game and I guarantee you there are all over this fucking space. The head of fraud seven years ago, he knew what I was doing around Bitcoin. He called me in his office. I said,

hey, what do you think of this? He said, dude, this is a monster. He's one of the smartest guys that I value at MasterGard. But I think there's an awful lot of clubs already built. Like, you know, what is the problem

with Bitcoin? Distribution, man. That is the big. It's the whole. grail. It's getting to the last mile. You're trying to beat Bank of America who's been here 50 years. Yeah. I think it's going to be a challenge, dude. You know, a Black American Express card member, right, for 30 years or something. Look, they can send me a gift, dude. They can send me a nice gift. And I become a part of their little token. Like, I'm going to trust the Black American Express token quicker than I am, anything other than Bitcoin. And that is what the Black American Express card is. And you're applied. card and the silver card and the black, you know, right? It's a token, dude.

Yeah, by the same. I mean, if it's about community and membership, that's the greatest, and grateful that there is, yeah. All right, guys, we hit 1115, so I know I got to run, Dave. Yeah, I think we should call it, but, yeah. Yeah, I mean, we actually stayed on like a single, pretty much a single topic that was very in the news for an entire show. It's incredible.

Yeah. Well, I think we're, just so people know, Scott and I have been talking. We think we really should focus more on these sorts of issues inside of crypto than just the latest macro news and who's bombing. Smelting town hall. Smelting town hall. Yeah. Now the crypto's moving again. It makes sense. Yeah. Yeah. Well, I mean, there's a walk going on my care.

And we'll try to unpack topics like this, you know, on Wednesday and on Friday. Bring back Fartcoin. There it is. Wednesday's topic, the future FartCoy. All right, everybody. Thank you. See Wednesday. I think we've reached the perfect conclusion. Yeah. We have. Bye. Go get them, Scott.