The Wolf Of All Streets - Crypto Pumping Amid ETH ETF Approval! w/ @COTInetwork | Crypto Town Hall

Episode Date: May 21, 2024

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Testing, testing. What a time to be alive. Can you hear me? Yeah. Oh, sick. I hear you. So say it after me. Say it after me.

ETH is still king. Where's Ren? Bow down. Where's Ren? He sold all of ETH last week. He did? And I said it was the ultimate bottom signal signal and thank you for your service, sir. Oh, really?

He sold his holdings last week? Literally on this show, like did a 20-minute speech on why it was dead and he had to convert it and be done. And I heard that from like 10 people last week. But what was the reason they said that? What was the narrative? They gave up, right? People gave up. There's no narrative for ETH.

The ETF obviously is not going to get approved. You know, just the usual death despair. And, you know, it's taken too long. It's lagging. I'd rather have my money elsewhere. I mean, same things we hear and you look at it every cycle. I literally posted a tweet today that shows the Ethereum and Bitcoin charts for every cycle back to back. And it's the same every single time. I like I mean,

listen, it's for me, I've been bullish on it for over a year and keep saying that, you know, the fact that it's lagging is a opportunity, not an indictment. So I get to celebrate a little bit today. I see David Towle obviously giving me the 100. He knows that I agree because we've had a call about it, that I'm telling the truth. And I've written probably 30 newsletters about it yesterday morning before there was any news. I wrote in a newsletter about how Ethereum was probably a great trade at this point and uh you know you know here we are but um and then everyone will say you know it was only because of the etf news and who cares what the reason is it did exactly what it does every single cycle

it trails and then heads on up so can you can you maybe explain to the audience what led to the rally yesterday um we can guess that everyone knows, but not everyone follows the news obsessively like us. Yeah. So there's quite a few things, actually. I think we can point, obviously, at the sea change on the expectation of an Ethereum spot ETF being approved because that has to be decided by Thursday. So when the Bitcoin spot ETFs were approved, we saw this massive sort of wave of communication with the filers and the SEC for 60 to 90 days leading up to it. It's been basically radio silence with ETH. We know that if you guys may have just noticed the scam exchange, Prometheum, I won't call it a scam, but the one that the SEC has effectively set up to show that you can, quote unquote, come in and register. They just announced custody of Ethereum as a security.

So that obviously led people to believe there was no way this was going to happen. And then all of a sudden, the Bloomberg duo of Seifert and Valtunis said that they had been hearing a lot of rumors. There had been a complete change in tone and that they were raising their expectation for 25% to 75% of an Ethereum spot ETF approval this week. And so that set the world on fire, obviously. And then we saw that the SEC actively asked all the filers to resubmit, which most of them have done this morning and are doing today with the expectation that if they can get submitted what the SEC needs to see, they remove staking, for example, from their applications, that these could start to be approved on Thursday. Now, none of that speaks to the thirst for this to

actually happen, to actually get AUM or that there's actually going to be interest in it. But we're obviously talking about the approval again. But this happens in the context of quite a few other things. And if you follow the breadcrumbs, I just spoke to Matt Hogan from Bitwise on YouTube this morning. If you follow the breadcrumbs, this makes a lot more sense. And it's a much bigger story than the SEC just having a random pivot, right? So if you take a look at what's happened over the last few weeks,

the anti-crypto army has been absolutely slaughtered, neutered, destroyed, and utterly kneecapped, led by Elizabeth Warren and Gensler, and of course, the Biden administration. So if you want to take a look at why we might all of a sudden be seeing a change of tone at the SEC, well, we just had the Saab 121 vote where 10 Democrats went against Gensler, Warren, Biden, including Chuck Schumer, and voted to get this thing passed, even in the face of Biden preemptively saying he would veto it, which I doubt he will now. So there's a complete political sea change. People are realizing on Capitol Hill that it's very unpopular to be a part of the anti-crypto army and distancing themselves from that now that they see that Trump is winning massive votes and Republicans could sweep just as a result of crypto.

So a huge sea change there. Then you might have seen the story that the FDIC chairman, who, by the way, oversaw all the nonsense with Silicon Valley and the Operation Chokepoint 2.0. There was a report last week that Elizabeth Warren was covering up his indiscretions and that the and reports of a massively toxic worst workplace at the FDIC. And she has defended this guy literally to the death. And the report came out that behind closed doors, she was covering up basically all of this bad news and tried to keep him in power. And she said in the past that she would keep this guy in power no matter what. Well, he's resigning and we're getting a new FDIC bank chairman. So that's the Gary Gensler equivalent at the largest

banking regulator who's been exceptionally anti-crypto. So this week, you could make the argument, and that's the argument Matt made and how I see it, that the break finally happened in the dam here politically for crypto. The tailwinds are tremendous. Everything that's been standing in the way is becoming largely unpopular. And like I said, I mean, I think Biden pivots here, to be quite honest with you. I don't think he comes pro crypto, but I think they just stopped being anti crypto. In fact, I would bet all these Wells notices that we just saw served by Gary Gensler. I bet those cases don't come while the Biden administration is still in power. And then we

see what happens depending on who wins in November. Because a Wells notice is just an announcement of announcement that you might get a court case. I would be at this point, a little more surprised if there's an appetite politically to go directly after the crypto industry with what we've been seeing. And before getting into the markets, especially Scott, something you said that as long as Bitcoin is below 72k, then you're not going to get too excited i'm not sure if that changed with the with the ectf news no i i don't have a spontaneous ejaculation every time price goes up and think that we're going to five million dollars it's equally it's equally dumb acid to get bullish resistance as it is to get bearish support talking talking about we're talking about personally,

it's not about price, Ran. Talk about that, Ran. Since you're here, your thoughts on ETH. I know you were a bit more cynical a few days ago. So I think this is very, very, very bullish for everything, for the market. I think it's very bullish for ETH. I think it's much more bullish for altcoins. And I think it's less bullish for Bitcoin.. I think it's much more bullish for altcoins.

And I think it's less bullish for Bitcoin. So I'll break it down for you guys. I think everybody's getting it. I think the first thing is we all have to celebrate and we all have to get excited that crypto won and that the Dems have basically abandoned Elizabeth Warren. They can't risk supporting Elizabeth Warren when they could lose the election. And I think they've realized that. And i think that that's the massive turning point and so it's much much much bigger than it's actually about the gateway to crypto i think when they when they if and when they approve the eth etf then i think it's they've basically opened the door they've done a full 180 degree

turn on crypto so that's the first thing. Then I think it's very, very, very good for ETH and I think it's very good for altcoins. So for ETH, it's obvious why it's so good. For the ETH ecosystem, you can already see Arbitrum's up 25% today. Optimism's up 20% today. Lido's up 35% today. So for the ETH ecosystem coins, it's also very, very, very positive. It brought the life back into ETH. But I think it's also very bullish for the rest of altcoins. So I think like Solana, I think it's

super bullish for Solana because I think the market is going to start looking downstream and saying, ETH ETFs approved. Where's this thing going? It's also, you know, like I think that if there's been a u-turn in the in the anti-crypto policy then it's not just going to stop with ease they've got to they've got to drop the coinbase lawsuit they've got to you know you can't you can't do a half you can't do a half i

don't think that's true i don't i think if those are in action mean, that's up to the court. If it's a sentiment change, if it's a sentiment change, then I think a lot of modifications need to happen. I think the biggest loser here is actually Bitcoin. Why do I think the biggest loser here is actually Bitcoin? So you see Bitcoin rallied, went to the 71,000, 71,800, got rejected at the 71,800. And I think the realization for Bitcoin is the following. For as long as Bitcoin was the only ETF, then when portfolios said they're allocating 2%

of their portfolios to Bitcoin, then when you say you're allocating 2% of your portfolio to crypto, it's not only now Bitcoin. And so now the revenues are going to be shared or the inflows are going to be shared between Bitcoin and ETH. I have no doubt that Bitcoin will get the lion's share of the inflows,

but regardless, it's now going to be shared amongst two ETFs and not necessarily just the one ETF class. And so I think- Couldn't you argue that it'll just be a bigger wave of money?

I think this expands the money, amount of money. I i don't think so i do think that the ones who exist will diversify into eath because it gives them the option to do that i agree with that but i think there's more money going to come in no i don't think i don't think i think he's going to be very unpopular initially by the way i don't think i don't think he's going to do much i don't think that i don't think ETH is going to do much. I don't think that just because there's an ETH ETF, now the funds are going to say, look, we agreed to put 2% of our allocation into crypto. Now we're going to increase it to 3% or 4%. I think it's going to remain 2%,

and I think it's now going to be shared between two ETFs. And that's why I think that probably the right trade now is the long ETH short Bitcoin trade, which is funding neutral and market risk relatively neutral. So long ETH BTC pair too, effectively, the less complicated way. Yeah, I just go long short. I play the long short. I'm pretty much funding neutral. Yeah, that's good. Where can you if btc where on perpetuals i just meant you could effectively like if you're just a spot trader you can sell btc into if you wanted to make that same trade it's just a you know relative pair but yeah yours is uh better yeah i think think, can I give a bit of context? I think that we all are still in our little bubble and we kind of treat these, we know

the space very well. But when you look at the adoption from the institutions right now, they're allocating largely 0.1% to 0.2% of their entire AUM into crypto. They move extremely slow. And the world is just barely getting comfortable with Bitcoin as a diversification of their portfolio. Barely getting comfortable, like just a little bit. But it is the gateway drug. It is the thing that gets people hooked on, wow, there's a better way to appreciate my portfolio value.

So then they want to dabble a little bit more. And what's the second best risk to reward for someone who's very risk adverse? It's ETH. And this is what I've been saying for my channel a long time. I've known this is coming. There's been so many reasons why this ETF was going to be approved. It was impossible to argue it. It wouldn't from other than Gensler just being an asshole.

But the reason is, is because it's the only smart contract platform in the world that hasn't had, it hasn't gotten down. It hasn't had, it hasn't gotten down. It hasn't had problems. And so if you're an institution and you're going to one bet on a platform, a smart contract platform, you're going to, you don't care if it's cheap and fast. You care about security. That's the number one most important thing from a big money perspective.

And so if you want to front run institutions, if you want to front run where the big money comes from, you're going to be looking at ETH, right? I agree with Ran when we talk about UX, UI. Solana is a superior 100x better user experience. But again, these guys are not using blockchain. They're certainly not on the kind of scale that we use it. But Larry Fink did choose to tokenize on ETH. Exactly. Because you would never, you would never in your right mind put an institutional fund on Solana, right? You just wouldn't do that because it hasn't had an entire cycle where it's been proven to be, you know, to not go down.

So you just wouldn't do that, right? You put video games on there. You put meme coins on there. You put things with not a lot of value. And so the lion's share of T of TBL will be on Ethereum for a long time to come. Now, you know, what would suey or aptos or maybe Solana next one, maybe well, it has to prove itself first. So this is why I'm also

I see a lot of a lot of posts on timeline say that next we're having Doge, ETF and this kind of thing i think that's that ethereum is probably the only one that we see this year and i agree with i do think with ram this is going to be a net increase in revenue into the the crypto ecosystem because i don't think that people are going to look at this the same uh as a crypto. They're going to look at this as a different type of, yes, they are crypto asset classes. However, there are very different types of commodities, if you will, right?

One is a world computer, one is digital gold. And why wouldn't you have skin in multiple games? Just like in the tech industry, you're exposed to multiple different entities with different types of data. Just let me just jump in quickly. Eric, I've sent you an invite so eric boltunis um him and um jeff increased the probability of an ectf this week from what 25 to 75 james and from 25 to 75 is that right scott yep that's correct and it was

effectively overnight right i mean based on a single you know in a day yeah so eric i'm just saying an invite would love to get your thoughts on on what got you to change um your perspective and maybe give us a bit more context on these rumors and whether any you've got more information uh since uh since that tweet but uh yeah kyle and david oh there you are eric eric how are you a really quick a really quick stack there was more more in ETH on that candle. Two times the volume of Slom is market cap in that one candle on that announcement. So thanks, Eric. But just to give you a percentage of the size of Ethereum versus Slom.

So, Eric, my first question is how does it feel to be one of very few people that can move markets? I'm not comfortable with it. I almost... Yeah. No, I talked to James a lot. We were... We knew it probably would, although we weren't sure what was priced in

because I wasn't sure, you know, I can't imagine I'm the only one that was kind of hearing this because it was clearly being communicated that day. And so, but no one was on it. I kept searching Twitter and I kind of wanted to just quote tweet somebody else and be like, you know, Hey, our odds are up because this nobody was on it.

And we thought, well, you know, look, our odds are, are safe place. This is what we do. We give odds and we have heard that the sec reached out and gave comments and people were like all of a sudden in scramble mode and so i got uh i basically triple confirmed it um because of the possibility that it would move things so i did i i don't i don't know i mostly i don't like that position, to be honest with you. I'm an ETF analyst. I'm just not used to that. I'm used to sitting way out and just giving my comments on things. Obviously, ETFs typically cover massive markets where my little voice means very little.

But obviously, I'm just a messenger here. It's the SEC that changed. Obviously this is a issue where they did, you know, like a one 80, um, shocker. I mean, uh, holy shit was the term I heard. So, you know, we had to, we had to adapt quickly with new information because I knew we'd also have to eat crow or we'd hear it from people because we were at 25% odds. So if this got out and it started to grow before we had our voice in there, we'd look like we missed it all. So even though we were low and some people are giving me crap because we were 25%, everybody involved was feeling negative. I mean, the people in the process were also very low. It was almost like a foregone conclusion so this was literally a shock to everybody uh involved and so we wanted to get

that those odds changed quickly to adapt to the new information and the calculus which is what we've always done um in my opinion i think the ether people thought we were like bitcoin maxis and we just hated them and i had made a couple comments comparing them to like the opening act of the concert um and i feel like i was maybe a little too loose and dismissive and welcome to crypto eric yeah somebody's gonna hate you all the time um so i think they they were having fun getting a little revenge for me kind of demeaning ether as being not as big of a deal. But I think most rational people who watched all this realized that the political wind shifted fast. And that's where we're at. This is, as far as I can see, and everything I've heard,

this is a complete politically driven change. Just like that. Yeah, Eric, I mean, strong opinions loosely held that if you're handicapping things or giving percentages, you have to adapt to new information. Yeah, you know, right. I mean, you can't be blamed for being 25%. When we saw, you know, Wells notices going to consensus and zero movement from the SEC, and literally nothing happening. I mean, you changed when there was an appropriate reason to change. I don't see why people would give you crap for that. Yeah, so I'm a Sixers fan.

In game four or five, the Knicks played the Sixers. And then on the ESPN percentage win thing that they do, the Knicks were a 96% chance of winning. With about 30 seconds left, they were up eight points. When the Sixers won that game, it was like a miracle. I didn't blame ESPN. I was more like, wow, I can't believe the Sixers won with a 6% chance. That's how I would view this.

I can't believe that this changed so quickly. That's the takeaway here. I'm the ESPN in this metaphor. So I think that's what everybody should just be like, holy moly, what just happened? Not I was wrong. But you know, like I said, it's, yeah, we stick our necks out. We're used to we have thick skin. Eric, it makes you feel any better. If you've made it feel you feel any better. Predictive markets and analysts have been saying we're going to get a Fed rate cut for 18 months as high as 95% at various times. So you're doing better than all of them.

Eric, can you give us any more detail about, I mean, obviously some information was made available to you yesterday and to whatever extent you can get into details like, sort of like how is that information made available or sort of like what is your understanding of what changed behind the scenes or what was what was communicated about a change behind the scenes yeah um bottom line it it sounded like trading in markets which is the 19 before people right right? There's two divisions. There's trading and markets and corporate finance. Corporate finance does the S1s, trading and markets does the 19 before. The 19 befores are more important here right now,

because they're the ones with the deadline. So on Thursday, the SEC has to say yes or no. So what I heard second wind was sort of that the trading markets had a couple changes. So really the news was the SEC finally reached out. They broke their radio silence. And once they start that – Sorry to interrupt. When you mean a couple of changes, you mean like headcount changes? No, no.

They wanted them to remove staking from all the documents. I think airdrops are not allowed uh there was a couple things but it wasn't i i don't think it was as much as the bitcoin etf filings got because you have to remember the bitcoin etfs probably created a large part of the template that the ether using so this i would say is fine tuning not course tuning um but that's that's what they wanted to do now the 19 befores I heard were due back today at 10 a.m. Now, due back could mean sent to SEC offline or refile. We already saw one refiling from Grayscale, but that's the first one. So either everybody else is late or they sent them offline. I don't quite know that answer yet. We'll see, I guess. And then the S1s, I don't believe corporate finances reached out with comments yet. I believe they will. Looks like Fidelity already went out and said no staking, probably because they heard they can't use it in the

19B4, so they might as well update the S1. ARK undid the staking a week ago, but they didn't have this information. They were undoing it really because, in my opinion, they wanted to give the SEC one less thing to like have in their denial. So I thought that was a little sort of jockeying with the SEC when they removed it, you know, a week ago. But now I think everybody's got to remove it and do what they say. And that's part of the process. So now we're we immediately went from total radio silence for months into two days before this is like, again, this is like 10 seconds left in the game. And there's like a, you know, a complete reversal in momentum and now it's comments. And so this will

play out the S ones though, could take a little bit. I don't know if, I don't know if this is an all hands on deck for corporate finance to quickly turn them around to get this done fast. I haven't heard any real details there. Or if corporate finance is going to sort of take their time. I do know that this has to be a bummer for if you're the SEC or a lawyer. If you're on the SEC side or if you're a lawyer on the issuer side, you know, Memorial Day weekend's coming up. The summer is starting. And it's funny, the Bitcoin ETF went into overdrive right around Christmas. So it's like, kind of, it's just got to suck in both cases to have all this kind of

hit you right before what would be holidays. Anyway, that's sort of where it stands. So like I said, the holiday could actually extend this a little bit into when the launch date is, but I just don't know. What would be your base case for, and if the answer is you just don't have a good sense of it, but what would be your base case about the amount of time, assuming 19B4s get approved on Wednesday, tomorrow, what's your base case between that and S1s getting approved? Again, this is just me as a guy reading the tea leaves. I don't have any information, but I feel like the SEC just likes to get it over with.

I feel like they're going to push them just to get it out of their hair, kill the news cycle on it, and move on. So I would say two weeks if i if you're asking me to make an over-under but this is just based on my general feel for the matter because they also have to line everybody up i think they're going to let everybody launch in the same time that's my other but it the s ones will take a minute to go back and forth but it's i don't know it two weeks seems about right for me but i don't know that's a that's just my longer the better right i mean eric the longer the better for the market in my opinion right uh more anticipation more fuel i would yeah i mean i would make it six months that'd be amazing it'd be the

best it'd be the best thing possible for prices if you if it yeah but then but then but then when it launches wouldn't it go down more as a sell the news event? Maybe, maybe not. But I think we – yeah, that's possible. I just think we saw – I do think that would happen. But when people saw the Bitcoin spot ETFs have that immediate sell-off and then what happened afterwards, I would bet the appetite for aggressively selling would be a little bit less this time. But I could be – Yeah. One of the subplots here is, okay, if this is on, if we're in green light mode, now,

I know in the last go round with the Bitcoin, everybody kind of felt like it was happening. So they had they had time to like, line up friends and family call all their clients try to get like some assets going early because they wanted to look like a winner early in the race. It's part of marketing. I mean, everybody was caught flat-footed here. So that'll be interesting to see how big is day one, if and when they launch. My guess would be it's a lot smaller.

Like I said, even though the ETH people hate this, this is like Sister Hazel coming on after Nirvana. You know, it's like... I know those guys personally. I grew up with them. Really? I saw Ken yesterday. Yeah. There's no... My dad is a huge fan he loves hard to say what it is i see in you but yes hard to it's not it's just that this feels like it everybody got i kind of spoiled i think with the bitcoin launch i i would just anticipate a much smaller scale version but

you have to understand that even if they gather a couple hundred million or a billion, it's pretty good. Most ETFs go under 100 million in their first year. It's really hard. The Bitcoin ETFs made everything look easy. But I would already ratchet down expectations a bit. Eric, one more question for me. Do you get any sense that the 180 from the SEC was somehow related to the vote on SAB 121 and how that shook out for Democrats, you know, a number of powerful Democrats kind of crossing party lines and voting, you know, pro crypto on that? Do you have any sense of that? So again, I don't have any actual information. This is really fascinating stuff. I don't do politics on Twitter. I like to stay in my ETF lane. But you know, this is part of the analysis now. And so I'd have to say yes, that would that probably factored in. James has a note out today. The headline is ether ETF odds rise after Trump makes crypto an election issue in my opinion what even might have influenced schumer was this comment or instagram post from trump where he says

he might have said it out loud at that one rally he says something like at the end and if you like crypto in any form and it comes in a lot of different forms if you're in favor of crypto you better vote for trump well Well, that and then I saw some more moderate people like Mark Cuban and Scaramucci, who clearly doesn't like Trump, say and Novogratz and Novogratz say, you guys are about to lose a big issue. There's like 15 million people who own crypto. Don't be idiots. So if the moderates are, you know, chirping, it all kind of adds up. So again, this is not inside information. But logically, if you connect the dots, it seems like in a tight election year,

this is a way to remove one issue that the other side might own. And I get it, I would probably do the same thing. So to me, it was might have probably been if we're going to ground zero, it might have been that, know you better vote for trump uh phrase and him like sensing smelling blood on this issue and totally trying to own it had he not said that does schumer move over i don't know um you know it seems like that might have been the nucleus or the core a catalyst to all this eric tonight when that happened i did a poll on twitter out of sheer curiosity where i offered four options you can only do four so i couldn't put rfk but i basically said listen understanding

we're in an echo chamber but please retweet we here's the four options i want to know where you fall it was if you were a biden or trump voter last time and whether you're going biden to biden biden to trump trump to trump or trump Biden, right? And in that crypto echo chamber at the beginning, which I was a bit surprised about, if you looked at the results from last election, it was 42% Biden and 58% Trump. As voters, it was when you aggregated the people who would then be voting for Biden in the next election, it was 17%. So I don't care if we're a small constituency, what it is, I understand it's a slightly biased audience. But there was not a single person, it was maybe sub 1% that said, I'm going from Trump

to Biden. But there were, you know, 30% who were going from Biden to Trump. Well, and this is a real issue. The other thing here is crypto, I find, tends to lean younger. So there's also the youth vote, which I think everybody wants that vote. And then the other thing is, in your poll, you saw people move over because they were kind of single issue voters on this. I don't know if the reverse is true. I don't know if there's any anti-crypto voters who would be like, oh was going to vote for trump but since he's for it that's the point that's zero people so we've said that from the beginning that you you have to understand how insane the anti-crypto army stance is and you have to understand how big whatever they are protecting must be to take such

a politically unpopular stance people don't vote because somebody is against something. Elizabeth Warren is not gaining votes because she doesn't like crypto. There's nobody out there who's passionate enough about hating Bitcoin to vote for that issue. Yeah, I agree, I this is just such a fascinating thing to watch in real time. Again, I'm used to dealing with like dividends and like smart beta and international ETFs. It's just like a whole different world. David? Yeah. Hey, great morning. You know, Scott knows this, but for purposes of the audience,

in addition to the crypto fund that I manage, I'm the CEO of a public company that owns ETH as its primary treasury asset. Stock trades in the U.S. as well as in Canada, which is where the company is based, and it stakes the ETH. So for purposes of full disclosure, the name of the company is Centaurus Energy, and we're currently raising capital on a debt basis to go ahead and buy and stake more ETH. Micro-strategy for ETH. Exactly. Exactly. And, you know, clearly, you know, this obviously increases the value of our existing holdings. In terms of where it goes from here, it seems that the ETFs are going to be limited in terms of their functionality. It seems, you know, for purposes of my company, I don't need to very much worry that much about the SEC because we don't have US-based primary investors. So we're not regulated by the SEC.

We just have a listing here in the US. The opportunity to go ahead and give ETH more prominence in terms of an investable asset, to me, is interesting. The technical differences between ETH and other layer ones will leave out there for purposes of debate. And I think that debate will continue and the development all around will continue. I think that that's good generally for the ecosystem and for values overall. To me, I'm a broad investor, as a lot of people here know. The about face from the administration is really incredible to me. It shows that Biden is very desperate. It shows that he will do anything to win the election. He's speaking out of both sides of his mouth on multiple issues at

this point, whether it be geopolitical, worldwide, whether it be domestic. I don't know if he knows what he's doing in terms of the contradictory statements, actions that he's taking on everything from Israel to crypto to other stuff. And the big wonder that I have here, the only real question I have, and Scott, maybe you have an opinion on this, is whether he threw Elizabeth Warren under the bus with this move. Did he let Elizabeth Warren know first? And was she allowed to go ahead and object or say, I go along with this? She publicly objected on the Senate floor and tried to get the vote killed for Saab. Oh, God, I know. But I'm saying between Saab and now, question is whether Biden told her, you know, I think Gensler is the sacrificial lamb.

Do you think Biden knows? It's Elizabeth Warren's staffers. No, but I'm not being serious. It's Elizabeth Warren's staffers in the White House that have orchestrated crypto policy. That's a fact. I literally don't think Biden has any idea. I think somebody who is watching exactly what Eric described on the Trump side in the White House has said, we're going to take the foot off the gas. I don't expect the Biden administration to go fully supportive of crypto, but just ceasing the narrative that they're a massive enemy could be enough to secure some of those people. But no, I have no idea what she knows or doesn't, but she's done.

She's dead money on crypto. Do you agree? I think she's dead money on crypto. Do you agree? I think she's dead money. My question is, does Deaton now have a better chance? Yes. And for the plug, anyone going to Austin consensus next week, myself, met a lawman, David Silver, who's obviously here off in Crypto Wendy, a bunch of us are throwing a massive fundraiser for John Deaton on May 30th at the Hilton right next to the convention center from 6 to 730. I cannot express to you guys, it's actually been really disappointing to see how little money the crypto industry has donated to individual candidates who could affect major change but this is the single most important race aside with the presidency but maybe even more than the presidency for the crypto

uh world and we literally have one of our own an american hero john deaton running against elizabeth warren he put in a million dollars of his own money by the way just to do this like if we can't support this guy, we're literally useless. It's probably an awareness thing, Scott. I mean, I don't even know where to go and check for this kind of stuff. Yeah, I'm relentlessly tweeting about it. But yeah, if you're anyone who's going to be and also, well, you're an American citizen, I believe. But anyone who's not a citizen, you cannot donate to American political campaigns.

I'll be there too. I do want to go back to the news. Maybe Eric, a general broad question for you is how significant is this in your opinion that it was approved this early and what does it mean for crypto in general? And I want to go back to the panel on what that means for the markets. Well, I mean, let's say in general uh you have to understand that etfs are so awesome um they are again if you're making music the etf is like digital it's like spotify you could make your music and put it on vinyl or something that's harder to deal with, a compact disc, more expensive, cumbersome. ETFs are the premier vehicle. So just being in an ETF, at least you're fishing where the the fee war in the US, I call it the pterodome. This is

a special market here. Elsewhere in the world, they all cost 1.5 to 2%. In the US now you can get one from 20 to 30 basis points and some of them are have a waiver. So the fees should be nice and low, the liquidity will probably be high. And you get those two things. Plus, it's in an ETF, plus you got these brand names. That has a lot of – that's just right there that has a lot going for it. Whether it does well the first couple months, who knows? But just being in that vehicle, it's like you've got to be in it to win it.

And just being in there is a huge deal. I'm in this – I've always been bullish on, or not bullish, but supportive of these approvals simply because I know the ETF can handle it. And I know that the ETF can give people the best possible deal for a good deal who don't want to do it themselves on the legwork. They want to outsource it. This is probably the best deal when you want to outsource it, this is a probably the best deal when you want to outsource something, even if it's S&P 500 stocks or ether. So that would be my take overall. And this my take is sort of not going to give any short term or medium term speculation, we'll probably come up with some kind of over under on assets. But again, I would probably stick to about 15% of what you saw in Bitcoin, which is like $60 dollars would be ether so maybe a couple

billion how long it takes maybe i don't know you will have to see uh but that's how i'm looking at it right now and in terms of the the performance of the the etf and based on the experts and the players you've spoken to um do you expect that same hype that same demand we saw with Bitcoin? No, because if you look elsewhere, like Bitcoin futures ETF and Ether futures ETFs in the US, we have data there. And in Hong Kong, they launched spot Bitcoin and spot Ether together. So we have data there. And, you know, in Hong Kong, I believe it's about 15% Ether makes up. And in the futures, it's lower here in the US. But E-futures came out at a weird time.

So I kind of give them a little bit of a pass. But again, so I've got to lower my expectations based on the data I see. Also, just think about a normal person. I know everybody here is all into this. And they're, you know, they are like their whole lot of people, their whole portfolio is crypto, like a regular investor would have a 6040. And then a little window for hot sauce. Well, if you buy a Bitcoin ETF, you're probably good. It's like, okay, I got my exposure. These two things are

largely correlated anyway. I don't really understand either Bitcoin is like gold, but like digital, I get it. I'm good. I think a lot of people will just be satisfied and they won't move on. But some people will, and believe me, the issuers will come out with a one ETF that has both in the same ETF. But there is, for example, I just see like silver, like SLV has about 15% of the assets of GLD, right? So silver has a decent little niche, but it's nowhere near gold. But it's interesting, this issuer came out and came up with a precious metals basket of like

gold, silver, platinum and palladium. Those are the four precious metals. And it did okay, it got like a billion. So I do think there'll be ether Bitcoin together. But I don't know if that will even sell that well. So I see it to mirroring gold, silver, and then glitter, which is the basket ETF. That's another pattern that I think will end up becoming prescient here. Travis? Eric, I assume you're pretty high conviction-based cases that these initial ETFs are not going to have staking involved. Correct me if I'm wrong there, but then do you have any view on the likelihood or the timing over which they could have staking in the future? Like, is there a path where,

you know, I don't know, later on this year, or you get to the other side of the elections, and maybe Gary Gensler steps down from the SEC, and then you get staking put into these things, or any comments there? Yeah, my read would be if there had to be some kind of a change at the SEC or at the presidency, probably, to move that. I think in general, the 180 from the SEC was to just not deny it. I think they saw writing a denial letter, it would be picked apart, it'd be big news, and it would feed into the into the anti crypto narrative, just by not denying it. Okay, they don't add staking, but it's still they're approving it. And that news will win over everything. So there's not really a political reason to not to let staking happen. And we know they're not they were never comfortable with it,

even if they were going to approve it. They weren't gonna we had heard they weren't gonna allow this. So I don't see it happening. I, you know, if let's say Trump wins, I think you do have to open the door to almost anything. I mean, it's possible he's super liberal on all this stuff and we get Dogecoin ETFs. I don't know. Certainly all of a sudden you're looking at a bunch of other stuff. With Gensler, this is a lot of hold your nose and approve. So I would assume that they're going to let, they're going to let out as much as they can possibly stomach while looking like they're okay with crypto without going too far. That'd be my guess, that we will not see staking anytime soon. It would take some kind of a bigger change.

But this is just my opinion. Yeah, I do want to go to the rest of the panel and kind of pivoting more to what that means for the markets we have matthew david um and michelle i want to go to you it's been a while we haven't had you on stage how are you hey thank you thank you for the invitation i'm actually um pretty excited to participate in this one um well for the ones that don't know me i work for a buying institutional have been working for the firm for quite a while. I'm also an economist by profession. What I wanted to touch base here is, and again, this is my personal opinion, it's not an opinion on the firm, but I think the estimations are actually bigger than the ones discussed already in this space.

The standard charge rate already estimated that this new vehicle could attract between 15 billion to 45 billion in the first three months. And what we need to focus on, and personally, I want to bring this to the table, is the sector that waited so long to invest is already investing. And those are the sovereign wealth funds, the pension funds. And they're already starting to come to the space, right, to Bitcoin ETFs. So projections have changed so fast. And a few months ago, almost every expert in this space were projecting pension funds to jump in the space in two years from now. And in a matter of weeks, those projections have accelerated by 10x.

And this is the beauty of it. And some of them have already made the first steps in investing in those ETFs. We have the Wisconsin Pension Fund allocating 160 million according to resources. Then the Japanese government pension investment fund, a trillion dollar fund already considering allocating. anymore is when um and from a bitcoin etf to an ethereum etf is a mile distant what i mean by that is if those funds have already worked on the infrastructure needed to embrace those assets then the path is created the path is then is there so in order to to invest in be in in in ethereum etf is just a mile distance as i said said. Another point I wanted to bring to the space is, as a fellow speaker already mentioned at the start, is that this vehicle is also changing the narrative around Ethereum because this will completely fuel demand for services related to staking,

DeFi, NFTs. So again, the narrative is way different than the one we have experienced so far for the Bitcoin ETF. That's it. Those are my two. I've got a couple of questions since you work at Binance's institutional team. So my question to you is, when you say that changes the narrative behind Ethereum, can you elaborate on this? Is that more acceptance within the traditional world beyond just Bitcoin and understanding other use cases for crypto? And does it also change the narrative within crypto as ETH is still king and makes it harder for other competitors? Yeah, again, just let me clarify this.

Any opinion in this space is not an opinion on the health of Binance. It's just a personal opinion. I do think it changed the narrative in those two points. The first is changing the narrative on use cases, specifically on the sovereign wealth sector. But also it changes the narrative on the vehicles that we thought were not possible at this stage. Now they are. So that's what I mean by changing the narrative. Hope that was clear. It does. I do want to go to matthew and david um and the rest of the panel um what does that mean for the rest of the markets is that the beginning of a of a of a long-term rally should we wait and see the inflows is that what will

determine what happens next because when the ectf sorry the bitcoin etf um not got approved but when we knew it was inevitable the market rallied But then when we saw the real rallies post-approval, when the inflows beat expectations. David? Yeah, I think that this is going to be a bigger rally. Maybe not initially because people will be focused on the wrong thing, which is the inflows. The bigger issue here is the change in sentiment from the administration. And I think that that's open ended. You know, certainly until the end of this presidential term, we won't get on the one hand, I don't expect any

more ETF approvals of any other coins or tokens. But we're not going to get the same level of SEC clampdown. If Scott is right, and it kind of makes sense, if it's going to be a stand down matter broadly, and maybe there's a picking and choosing by the SEC on which actions to continue with or which really, you know, hyper technical points to go ahead and push forward. But nevertheless, it's going to be a huge easing up on the sector. And I think people are going to start because of that easing up, people are going to start to get really comfortable with the sector, especially to go to Michaela's point, especially institutional investors. And then, you know, with the run up to the next election, there will already be anticipation. Obviously, if there's a Trump win, I think

Trump couldn't care less about this issue, to be honest with you. He'll just let crypto run wild. And then in the long run, that may be a bad thing. But with Biden, it's clearly not going to be Gensler. And even for Treasury Secretary, I mean, the fact that Jamie Dimon is potentially stepping down at some point in the next five years from JP Morgan, you know, if Jamie Dimon becomes Treasury Secretary, let's say, or someone of his ilk, John Paulson, or somebody like that, and then you get someone who's a much more hands-off SEC chair, the possibilities are endless. So you're saying that's bigger news than the ETF approval. It's more the slow death of the anti-crypto movement. That's what matters most. For sure. I mean, look, for everybody in this space who's a long-term crypto holder, I think that that's a much more powerful narrative than just this ETF approval and the initial flows that are going to come from it. I mean, if there's any weakness on, you know, the actual ETF flows to ETH,

you know, underperforming expectations, I would use that opportunity to buy, you know, I don't think there's any expectation. Yeah, David, I don't think there's any expectation. That's the beauty of it. We had months and months and months for everybody to debate what the inflows would be and what it would mean i think well the expectation of the approval is more important right now we have to let eric go so he can go ahead and set some expectations so that we can start commenting on what we think those numbers are going to be you know vis-a-vis other etf historical flows inclusive now of bitcoin Bitcoin. Matthew, Kyle. Yeah, hi there. I think this is amazingly positive. We've had such a change. I think all the anti-crypto people will really be running out of excuses or reasons to

go against crypto. Obviously, it all started with the Bitcoin ETF. But now if Ethereum is approved, and we're now more than 75% chance of approval this year, I understand. So really, really positive, but the market will do exactly what we don't expect. So I think it probably will be by the rumor, sell the news. So we're seeing that now buying the rumor, I think when the news does come out, we'll get probably quite a sharp sell-off. And technically speaking, we would expect that. We would expect some kind of pullback sometime soon. So hold on. You're expecting a pullback when the news comes out that the ECTF gets approved?

So buy the rumor, sell the news? Shouldn't that depend on what inflows we see afterwards? And what do you think of David's point that this doesn't matter as much as the anti-crypto movement getting decapitated? Yeah, I think that's a massive story. And, you know, we obviously I'm always talking about how, you know, Bitcoin 0 to 69,000 was the retail phase. And now the institutional floodgates have opened and so this you know the anti-crypto guy's been decapitated that argument is massively positive long term but we have to expect the markets to do what we you know the unexpected and so it will be a case of no matter

what the narrative is behind it we will definitely there's still people moving these markets and we're definitely going to get you know people buying the rumor now like with the bitcoin etf it went from the ftx low 15 and a half thousand to all-time high just on the speculation of this etf happening when it happened we got a bit of a sell-off the same is going to happen i'm absolutely sure and however powerful the news is and the narrative is no matter how powerful we're going to happen i'm absolutely sure and however powerful the news is and the narrative is no matter how powerful we're going to get a sell-off and so there will be a sell-off we basically had some kind of corrective move down this is quite likely a corrective move up probably to meet the previous all-time high and and then we'll get a further correction to the downside but long term

it's very very positive so i do think long term do you agree with the guy's got no i was gonna you can you can continue because i had a separate point no i wanted to ask about the do you agree with scott's point that anything in carl i'm going to go to you next anything um below 72k it doesn't really matter once we break 72k that's when it gets interesting yeah the previous high 73.8 is right yeah so once we break the previous high and break it consistently you know closing closing above it at least on a daily basis as a minimum yeah but if we don't break above that then right now it's a massive risk to go along at this moment so i need to see a convincing break above 73.8 to be happy about this market.

Yeah. I mean, that's the right approach. You get cautious at resistance and you get cautious at support, but everybody gets bearish at support and euphoric at resistance. I mean, it's why charts are the way they are. It's why humans behave the way they do. It's why people were selling the bottom of things at the bottom of the range and why they'll probably buy the top if it gets rejected at the top. Mario, I just want

to point out one thing. I actually tweeted this earlier, but I think probably a lot of people will be surprised about if they don't look at charts or pay much attention. And it was Ethereum versus Solana. Which one is closer to the all-time high and how close it is? Because there's been this, obviously, a narrative that's correct in this cycle that Solana has outperformed. Ethereum has massively lagged. But if you take a look, Solana topped at $259 last cycle. It's now at $180-ish, 30% from the all-time high. Ethereum topped at $4,868, currently at $3,800. It's 21.7% from the all-time high. So just think about that. Solana is 30% from its all-time high. Ethereum is 21% from its all-time high. And the reason for that is because Ethereum massively

actually outperformed the downside, which I think people don't remember. And Solana got irrationally destroyed by FTX. So had a much longer way to go for mean reversion just to course correct. But you guys may not remember, but Bitcoin went down to like 21 or 20 and Ethereum broke below 1000 and went to, I think, roughly 800. Then Bitcoin broke down again after the bounce and went all the way to 16,000. I don't think Ethereum even went back below 1,000. If it did, it was slightly, but never even made a new low like Bitcoin did. If you were a hedge fund and you were trying to outperform a down market, Ethereum was actually the play. It outperformed the market on the way down and is actually closer to its all-time high so for people who have generally bought or bought one of these assets in the last market

even if you bought the top of ethereum versus maybe the top of Solana you're actually performing better I think it's a perspective most people would not have looked at because there's just been the sentiment that ethereum is. And it's just nonsense. Kyle, Matthew? I wanted to just kind of zoom out for a second here, because I think that there's a lot of, well, everyone here is discussing kind of how this Ethereum ETF affects the markets. And if there's going to be more institutional buy pressure

and how this will roll into alts and things like that. What we have to understand is a company like Brookshire Hathaway, for example, holds, I think right now, the most cash on hand they've ever held before. Why is that? Well, if you look at housing market, it just topped. It's starting to come down. If you look at the S&P 500 and the stock markets

are pretty much at all-time highs. So are you willing to buy the top? If you look at the S&P 500 and the stock markets are pretty much at all time highs. So are you willing to buy the top? If you look at bonds, well, we know that the Japanese yen is inflating at a massive rate. They hold the largest amount of US bonds in the world and losing faith in that and that might unwind that whole carry trade thing, which is dangerous. There's really gold and silver., like that's done pretty well. But other than that, when you have you sitting on massive amounts of capital, and you're you have a fiduciary responsibility. And all of

these people's retirement funds, 401ks, they rely on you as an institution to make the best decision for their future. You really have to look at things seriously and understand where do I park this capital? And from what I can tell, there's not a lot of good places to put money right now. And if you look at the performance of our industry, Bitcoin, for example, over the past, it's performed the best asset it just in history, except for a few years, since its inception. And this is true. And then we look at the dollar, right, and the dollar has lost

25% of purchasing power within the last four years. It's we're printing a trillion dollars every 100 days. And that's likely to accelerate right now as we see m2 money supply tick positive for the first time, first monthly candle in a very long time. The perception of inflation has gone down. The reality, if you look at like, I just saw this chart of McDonald's menu going up, the reality is that inflation is actually going up because it's a lagging indicator. And so what we're about to see is going into another cycle of even more money printing to offset the bond sell pressure, to offset the markets, to stimulate for elections. It's an election year.

And people at the end of the day feel this when they go to the cash register. They go and they feel – they know the CPI numbers are bullshit. And so you're looking for an alternative solution. And people are starting to be more vocal about the fact that the monetary system is broken. And so you have to look at this is my take on this is that, of course, there's going to be more money flowing in. The ability to buy Ethereum is just another diversification from Bitcoin. It's another different type of asset class. And it would be like, you know, and there will be more to come.

But the same way that that all of us diversify our portfolio within crypto assets will be the same way that they start to look at this. It'll be slower. But but but with all due respect, Eric and you guys, we're also quite, quite conservative on the expectations of the Bitcoin ETF to launch as well. And and with every right to do so. And I'm not saying that's going to be massive, and I think Hong Kong is a decent indicator, but I do think overall this is going to, there's nowhere else to go.

And it doesn't take a genius to look at what's going on, and one of the only places to buy an asset. Plus, the crypto market isn't anywhere near it's near old all time highs. But everyone else knows what kind of cycle we're in right now and that it has still has another leg up to go. And it's just everywhere. Over 50 percent of the top 25 U.S in the country have Bitcoin, right? There's like, every major country in the world is holding, or at least the biggest ones are holding billions of dollars of Bitcoin on their books. You know, every bank, this has been going on since 2017, or even earlier, 16, with every banking infrastructure setting up to be able to facilitate crypto. We just saw the completion of DTCC with all these major banks participating in essentially how to upgrade Swift using CCIP from Chainlink to be able to put everything on chain.

You got Larry Fink, the biggest asset manager in the world, coming out and saying the tokenization of the world is everything. Like you have to be completely blind to not understand what's going on. And so like, I think this is just a natural path. The fact that Biden had to pivot or Dems had to pivot. We also saw that coming a while back, right. So I think the conversation really is like, yeah, I mean, that's my two cents on what's going on. And I think that we have to look at a bigger picture than just this immediate effect. And Dave, I appreciate coming up.

We'd love your thoughts on this. We do have Cody, who's also partnering with the show. It's an Ethereum L2. It'd be good to get an update on his thoughts, Shahaf's thoughts on the news and what it means for the Ethereum ecosystem. Eric, any response to what Carl just said before going to Dave? You know, our estimate for the Bitcoin ETFs was 10 to $15 billion in net inflows in the first 12 months. So right now,

they're at 12.8 billion. So I assume they'll outdo that. But we're not dead yet in our prediction. And you've seen what a pullback can do. The flows will definitely get muted if there's a pullback. So it's a long road to 12 months. I still think 10 to 15 billion is enormously successful. So that's pretty bullish. But to your point, I think I'll admit that we probably underestimated, especially the second wind that that that those flows that came in late February and March were unusual. Normally, there's a big hurrah, and then it kind of settles down to an equilibrium. But that second wind, and now they're getting a third wind. These are unusual things. And I got to sort of give, you know, the category credit for

that. It's unusual. But again again we're not we're not to our ceiling which was 15 billion dollars we're not quite there yet um but you have plenty of time too so i'll just say that let me go to to travis and then dave get final thoughts on on yesterday's news eric any view on sonen shine stepping down from grayscale, you know, the morning of the SEC doing a 180 on this? Any view on those two things potentially being related? I didn't think of that. I really just thought yesterday was just bonkers like news day. I felt maybe Sonnenschein was more related to all of the outflows. And the story

inside there will be interesting when somebody gets it. I don't know. My read on the whole situation is, you know, when like the Lakers just fired their head coach because they got bounced in the playoffs in the first round. Somebody has to pay for, you know, an early playoff exit and LeBron's not going, so the head coach has to go. This just feels like that. I don't necessarily think it's his fault. 1.5%, a fee, what did you expect? So I think that's my read there, but you're right.

It's possible. They said that they had looked for a new CO or started the search back in late 2023. But, I mean, I don't know. I didn't know that. Yeah. They said that, but they may want to just divert attention from the news and the outflows

and that whole story just to get rid of the new story that, that happens sometimes in press releases. So I don't know. I wonder if they're going to rethink their approach on ETH-E in light of the pain train of GBTC. It's a good question. Like James and I were talking, one of the subplots that we're looking for is what will the fee be on ETH-E? And will they put the mini-me out at the same time so they have a competitive product at like, say, 15 to 25 bps? And then maybe the ETH is 1..5 and that could be what happens that that'll again that'll be an interest i bet

they learn though i i don't think they'll just convert at 1.5 again i think they'll shake it up a little uh dave how are you? David? I'm fine. Can you hear me okay? We can, we can. It's kind of a very one-sentence recap of what we've discussed. Obviously, news yesterday, the ECTF most likely getting approved, what that means for Ethereum, for the crypto ecosystem, and then the anti-crypto movement getting slowly decapitated over the last few days and weeks. I would love to get your thoughts on everything. Yeah. First, you might remember several months ago when we talked about this, my prediction was they would approve the ETH ETF and not approve staking if they were forced in order so that

an inferior product would be out in the marketplace. So I don't think the anti-crypto army is dead. I won't believe it is dead unless Gary Gensler and all the other appointees of Elizabeth Warren are purged from this administration. And I think that people need to temper their enthusiasm a bit because the fact is that there is a reason why the eFutures product didn't do terribly well. And I suspect that the ETF will not do anywhere near as well as the Bitcoin ETF, because relative to spot, the Bitcoin ETF has very little

underperformance, the fees are microscopic. And, you know, in the case of ether, compared to someone who can stake it one in any place that you hold it, or build your own node, you're going to underperform by 4% a year. And money talks. And I think that that's relevant. The timing of it surprised me, sure. But it feels more like a strategic withdrawal than a full-on panicked retreat. SAB 121 was unbelievably dumb and a clear overreach and they pushed too far and so they had to concede. But they have yet to concede and we will see as the FIT Act goes. I will be wrong and I want to be wrong. Believe me, I want to be wrong. If Maxine Waters allows a significant majority to support Fit 21, and if Sherrod Brown allows Fit 21 to get to the Senate floor, I will be very, very pleasantly surprised if that happens. So I would temper our enthusiasm a bit. That said, I think the power of what we're doing

and the note of how important freedom is to people and where it's resonating is relevant. And I think that the Democrats are starting to understand that. And so, yes, definitely the tone is there. Look, I've been wildly bullish on Bitcoin, and I'm actually bullish on Ethereum as well. But I think that people need to understand that, Mark, as Scott would say, humans are going to be human. There's going to be a lot of ebb and flow. And so I don't put as much stock in technical levels. But I do think that it won't take a whole lot for Bitcoin to move towards patent to price discovery. I mean, but if you consider the magnitude of the move, the magnitude of the move of Ether Bitcoin, it went from 0.46 or 0.46 to 0.053. That's almost 0.054. It basically moved

from the bottom of a range that looked like it had broken through back into the middle of its normal trading range in one day. It's a 17% move in that spread. That is a very big move. And I would fade that if I were trading it. We obviously have people who use our technology to do that. I think it's important to understand what's actually going on. And then two more final questions. The first one is, what are your thoughts on the two narratives?

I can't remember which panelist was talking earlier that what really matters today is not the eth etf they're related but not the etf approval or the likely approval of the eth etf but the again the anti-crypto movement losing steam and with all the news that's been happening well look i think it's really important we all have to know that half the world's investable assets are in the united states you know I'm sitting in Miami, and that is fine. And I feel, I've been feeling for, and in fact, my company, you know, we're opening up offices in Madrid and Dubai. You know, we've been feeling getting pushed out of

the country for a while. We're not changing our plans until such, or probably will never change our plans because it makes sense to be overseas anyway. But the fact that it is, we are political wins is good, but it's sort of like celebrating in the first quarter of a basketball game because you've got a 10 point lead. There's a long way to win, to go to win. Winning whatever it would whoever wins the election in november it's somebody who does not have the current appointees and staffers throughout all the agencies that are pushing on crypto winning means clarity so that entrepreneurs in america can actually do something now will the market react before that happens of course it will and that's a good thing, right?

Because to be blunt, you know, price goes up actually increases the likelihood of the anti-crypto army being pushed into retreat because people really don't want to be left out. Let me go to Shahaf. Shahaf, are you there? Hey, Mario. Thank you for having me here. Long time, man. Well, Mario. Thank you for having me here. Long time, man. Well, congratulations. I think this is anyone in the Bitcoin, sorry, in the ETH ecosystem should be celebrating yesterday's news and the pivot by the SEC. We'd love to get your thoughts on the news. Appreciate you partnering. You know, you guys are an L2, a privacy-centric L2 that most people would know about.

Koti, I'm not sure if anyone else on the panel is invested. I think Scott is as well. So I appreciate being on the show. Dude, Koti is my favorite. Shaka is my favorite person in the entire crypto world. Man, we partied hard in Paris, but kind of missed it in Dubai, buddy. Thank you, Scott. Okay, there you go. Scott is an investor as well, a bit more than an investor. Yeah, man.

So again, I appreciate being on the show. Your thoughts on the news? Pretty perfect timing. Yeah, yeah. I mean, it's shocking that nobody considered the fact that this whole thing appreciate being on the show at your thoughts on the news pretty perfect timing yeah yeah i mean it's it's shocking that nobody considered the fact that this whole thing happens because cody just launched a developer network over ethereum uh i think that's the most significant event on the ethereum ecosystem no but being serious look this is obviously good news um i agree with dave

the edf in itself is just a detail a detail. It's a part of a bigger story about acceptance in the US. And, you know, maybe the anti-crypto movement losing is more important than the ETF in itself, because the ETF is just one bottle in a wider war. So yeah, good news for everybody. And just as a reminder, you know, ETH in itself has intrinsic value. It's a fee-generating machine. It does not need an ETF to be valuable. Yeah, I'm just looking at your talker's performance with the news. I haven't looked at other L2s as well.

But can you tell us more about what that means for ETH? Does that just make ETH king having the ETF approved which was expected or does that really not change much about the entire ecosystem again you guys are on ETH L2? Yeah I don't think it changes the ecosystem as I've mentioned I think ETH won its place without the ETF and if the ETF is approved, I think this really paves the way for other tokens to have their own ETF over time. So I don't think it matters that much. Yeah. And I kind of skipped through expecting people to know what Coty is, but not everyone does. So maybe can you tell us more about what you guys, what problem you guys solve? Sure. So look, a lot of smart people believe that privacy and the protection of sensitive data on a public blockchain is the biggest opportunity in crypto in the next 10 years.

So Kodi is a privacy-centric Ethereum layer 2. We use a novel cryptographic protocol called Goblet Circuits to introduce the fastest and most advanced solution for privacy and data protection on a public blockchain. And using Kodi, builders can build dApps that they weren't able to build before. I mean, everything around DeFi, real-world assets, AI, games, ID, and more. Can I ask a question? Yeah, go ahead, man. So I was looking at, because I'm quite big into FHE,

for those of you who don't know what that is, it's fully homomorphic encryption. It's what has been believed to be, until I read Coty's website, the creme de la creme, or the be-all, end-all of encryption. And when we look forward, when we're forward looking into AI systems

and if we want AI to truly be companions to us, they need to know literally everything about us, right? If we want our AI to be a virtual clone of us, we're the best assistants that they can be, even better than us. They need to know us inside and out. And so they're only like, they need to know us inside and out. And so they're only like, I don't know about you guys, but I would not trust or want Google,

Microsoft, open AI, anyone to know everything about me. And but but that's the best way for an AI to be able to help you. So I believe that for us to have optimal AI, we must have privacy preserving 100% of the path, the inputs, and the inference as well. And so from what I understand, you guys, did you invent this new type of cartography? Because your claims are pretty insane that, what did it say, 100x the efficiency and speed, but the same type of results as FHE. And if this is true, where can I find more information about it?

Because I have a lot of friends in the FHE kind of realm and AI, and they hadn't heard of it before. So that's perfect. And for those who don't know FHE or fully homomorphic encryption, that's like the intellectual merit of it is that you can actually work with encrypted data without needing to decipher it, right? So that's like... Thank you for clarifying.

It's literally right now the way encryption works, if you guys don't understand, is that I can send a message from my device to the data center or whatever machine needs to look at my input. Usually at that point, it's it's decrypted into plain text, the machine processes the data encrypts it and sends it back to me. So you have this, this vulnerability

states of exposed. Essentially, essentially Essentially... Yeah, that can... Go ahead. Yeah, I said essentially any data leak that has ever happened in the internet happened because data was not encrypted

and it wasn't encrypted because someone needed to use it. So that's like the big problem and this is why people love FHE, right? But the issue with FHE is around performance. It's super slow and expensive.

Nobody thinks otherwise. The claim is that it will be better over time. It may or may not be. But what we're doing with Goblin Circuits, and I'll answer your question in a minute, but what we're doing with Goblin Circ services is essentially the same concept, right? We use encrypted data that we do not need to decrypt in order for it to be valuable. However, we do that using standard encryption. So, the entire world doesn't need to change the way they encrypt things for this to work.

And it's far more efficient essentially it's a it's a it's a not it's not a hundred x it's about a thousand x faster than than anything else out there and about 250 x lighter than everything out there to your question so the academia knows gobbling circuits for quite a while it wasn't practical for blockchain until a few researchers that we invested in, Dr. Abishai Enay, Dr. Meital Levi, created a few patents and made a few inventions that actually made this practical for blockchain. And we described that in our white paper that is available in Kodi's website.

So is it live in practice right now? So yeah, the good news is that we essentially, two hours ago, released our first developer network. Essentially, it's an early testnet. We just launched it. Alongside the Kodi Foundation is launching a $50 million builders program, which is one of the biggest funds out there

to solve privacy on Ethereum. And it allows builders to start developing on Kodi's new layer two and receive grants ranging anywhere from $1,000 to $100,000. So yes, you can actually use that. We have something that is called GC EVM, Goblin Circuits EVM. Essentially, it's the same EVM, same solidity, but with new types of data, new types of operators, very easy to use. I think we'll go main at around Q4,

and dApps will be rolled out. Shachaf. Hey, it's Ran. Question. So the big rage now is fully homomorphic encryptions, FHE, as everyone talks about it. What are the tradeoffs between – I mean, I heard you talking to Kyle, and I heard that you said that I think with FHE,

the whole world has to start encrypting their data in a completely new way, whereas you guys are saying that you don't need the world to start encrypting data in a new way. Just keep encrypting data the same way that you've encrypted data, and you can still get the same effects as FHE. What are the what are the other like, surely the FHE community would look at this and go, Well, why are we still developing FHE? What's the flip side? What does FHE have that that says the circus don't have? Well, first of all, yeah, well, first of all, you know, what we do is fairly new. I mean, Goblin Circuits have been around for about 20 years or so. Actually, the biggest researcher of Goblin Circuits is an advisor here.

And it's novel, right? So I don't expect it to have the same acceptance as FHE that is, you know, pushed strongly by Zama and a few top VCs for the last four years. So obviously, there's a head start there. The awareness is just quite wider. Now, with technology, there is no such thing as the best, the perfect. There are always trade-offs as you've mentioned. With Goblin Circuit, what we do

actually demands more communication. So FHE requires less communication. It requires other things, like more computation, etc. But we require more communication the but the story is that communication is very cheap uh and like more law uh that does not apply anymore for computation i think people should know that. For communication, it does apply. So it becomes relatively very cheap these days.

So this is the trade-off. And I think if you look at the data, if you look at the benchmarks, and obviously we ran all of this, Fitches, the libraries are available out there. We just benchmarked it. So the data I give you right now is accurate. It does run much faster. Am I right in saying that FHE is not practical or usable at the current level of computations? In other words, like no matter how far they are right now, you couldn't use FHE right now,

right? Am I right in saying that? You could use it for limited use cases, it will probably be better in 18 months or so, but you will always be dependent on it's, there's no way to change the fact that FHC is very computational. demanding, right, and that is always expensive. Storage, right with FHC, the proofs themselves are very, very big. There is no way around this. But I think, look, FHE for me is very sexy, right? But I believe that what we do is just far more practical. And for blockchain, it's the right path.

But, you know, anybody that is developing over FHE, anybody that is advocating for privacy on a public blockchain um is a friend not a competitor because this as i've mentioned am i right in saying that that effectively here you've got uh that you guys are building an each layer two with with basically selected privacy so in other words like you can choose the level of privacy that you want. Yeah, look, that's, I guess, that's the big difference between what people confuse, you know, anonymity versus privacy, right? There's a big difference. Anonymity in Web3 has traditionally been met with very negative regulatory enforcement, because it just becomes

a hotbed for bad actors and illegal money laundering. Confidentiality or selected privacy, as you've mentioned on the other end, it's a cornerstone in traditional systems within Web 2.0. It has regulatory clarity. It's protected by law. So there's a widespread adoption for that as a result. So we do not engage in hiding one's identity and actions. We selectively share information only with those who are authorized to view it. And if you decide that nobody is allowed to view that, then you're fully private. Okay. And am I right in saying that actually there's two elements to this?

The first element to it is that it's an ETH layer two, which is a chain. Effectively, you can call it a side chain or an ETH layer two chain. But then there's also a technology, right? Because it sounds like from what you're saying, there's a technology and a chain which uses the technology. Am I right? Yeah, look, the the obvious path right now is is if you're going to build a chain, make it an Ethereum roll up like we like we did. Just and you know, we we use the central decentralized

sequencers, like all the top standards in how you build an L2. The big differentiator is obviously privacy in it. So you'll have nodes that are engaged in generating privacy and nodes that are approved transactions. So you'll have both. I guess the third important thing to realize is that we roll this out on top of our existing liquidity partnerships, community, and all of that. So when Cody rolls out, it's like this layer rolls out. It's not, okay, so now we need to figure out listing and liquidity and all of that. And what happens to the existing coding network? So there is an existing coding network.

As far as I'm aware, it's not an ETH layer 2. It's just a coding network. Exactly. It's a layer 1. I don't actually know. I don't even know if it's EVM, right? It's not EVM. It's a layer 1 based on a graph. So towards the year's end, there will be a swap,

and then we'll sunset the existing layer 1 and fully be this layer 2 Okay, I mean that's that, yeah, I mean, look, I'm very bullish on it, I just wanted to clarify all those points because those have been, yeah but I mean, I'm very bullish

on it, you said you launched Q3, Q4 Yeah, so I'm very bullish on it. You said you launched Q3, Q4. Yeah, so developer network is today. Testnet Q2, sorry, Q3, and mainnet Q4. Rani, you guys invested as well? I can't remember. Yeah, we did. Look, I mean, full disclosure, I was actually an advisor to

when they first launched in 20 2018 2018 oh wow 2018 i was an advisor i was an advisor to coty and i've been a token holder since because i got i mean i've got a whole lot of tokens for advising at the time uh and then i've obviously invested along the way i've been a big investor along the way and then yeah of course we we've obviously invested in all the rounds along the way so yeah it's not my not my first rodeo your thoughts on what they've achieved in the last year they've been doing pretty well the team behind him i've met shahad from dubai for the first time scott has been partying with him for like 10 years um your thoughts on the team and the project so look shahaf is a good friend um shahaf is a good

friend i'll say this that he's probably one of the most competent people that I've ever met. He operates at an amazing level. He's a serial entrepreneur. He's incredibly, incredibly powerful in business and in marketing. It's like he's had exits before this. He's obviously launched Coty, he's launched one or two other projects as well, which have been all very successful. So, you know, for me, if you're investing behind people, if you take Shaka and you take the power of the team behind Koti, and especially the team today, like, you know,

Koti's been through multiple teams, but the team today, specifically with the new additions as it relates to this technology, is absolutely, absolutely unbelievable. Also, I think the one thing about Shachaf is there's no bullshit with Shachaf. He's an absolute man of integrity. You know, he's been around for a long time. He's fully doxed, you know, and he's, you know, he's living in Israel, which is a real country.

So it's not like, you know, he's living in, he's not a crypto backpacker, so to speak. So, yeah, I think for me, he's living in, he's not a crypto backpacker, so to speak. So yeah, I think for me, like it really is one of the best projects out there. I'm a big investor. I've been speaking about it a lot. And just disclaimer for the audience, this is purely an organic conversation with Ryan.

Ryan is not, so Koti's here on behalf of IBC. So we're working with him. We're invested and we got them on the show. So Ryan coming in and Kyle as well, coming in asking questions, et cetera. Kyle, I don't think, are you an investor as well, Kyle? No skin in the game. That's why I'm asking questions.

And I was just curious where I could find, you said that Garbled Circuits was, you guys needed to essentially invent a novel approach for blockchain. Is there anywhere that I can read more about this and the entire process? Because again, this is like a really, really, really critical kind of aspect. Sure. Yeah, absolutely. The white paper. Kyle, just for the record, I've sent the white paper to the developers of the mutual AI project that we are invested in. I don't want to mention it here because in case that I want to be mentioned.

But I actually sent them the white paper to have a look at. And? Yeah, we can have a chat offline. I mean, no red flag. Let's put it that way. Okay. Yeah, I'll take the white paper.

Ran, on a side note, before I end the show, wrapping it up, Ran, Kyle, the AI project that you mutually invested in that you can't talk about here would be good to talk about offline as well. But yeah, Shahaf, it was a pretty good organic discussion between Kyle, who's obviously a big investor in the space, and Ryan, who's an investor and also an advisor. Are you still an advisor, Ryan, or you were an advisor? All right right Shahaf

final words I'm not an advisor I stopped all my advisory roles in 2017 2018 I think I advised one or two projects

and that's because I'm really involved so my relationship with Coty is only an investor not an advisor not a team member only someone who's put money into this project. Yeah, Shahaf, I really enjoyed this conversation.

I love when this happens, where it just becomes very organic back and forth between a project and potential or existing investors. But any final words for the audience? I know we went a bit over time. So, yeah, for Kyle and for everybody else, we like to keep information organized. So you can go to coti.io, C-O-T-I dot I-O, and you can

find all information, white paper, etc. And I am widely available everywhere. Any questions, etc., just send it my way. I would love to provide information. I think again, as I've mentioned, I think privacy is a huge, huge opportunity in this space. And it's, and so it's also very important, right. So very

excited to do this. Anybody who cares about this should reach out and would love to exchange ideas. Can I can ask one more simple question that's not obvious? I think Coty initially, I remember going to a party you guys sponsored back in like 2018. And I think at the time it was meant to be some sort of, I think you guys were competing directly as a currency, obviously, or not obviously, now you're related to EVM. Have you expanded that scope to all smart contracts on EVM? Or is it still predominantly a currency

focus or? No, it's our focus is around privacy. So we'll be like a general purpose, Ethereum layer two, with privacy capabilities. So essentially, I think any dap will be better with the ability to add privacy as a feature to its users. And payments is part of it, right? Obviously, confidential transactions, you not being able to watch my entire transaction history

is important to people. Stable coins, real world assets, all of that makes sense when it has privacy in it. So in that sense, we've expanded what we do. Shahaf, Kyle, I can also connect you guys. If you're not already connected, I can just connect you on WhatsApp. I can just do a group now. Great discussion, Shahaf.

Appreciate it as always. Pleasure to meet you in Dubai as well. Excited to join your cap table along with Scott and Ran. And good to have you. And I hope to have you back on the show. Appreciate you partnering. Everyone else, thanks a lot for coming today. We'll see you again same time tomorrow. It was going to be a bit of a debate-based topic that we're supposed to have on

Friday, delayed till Monday, and now delayed again because of the news, delayed till tomorrow. Just focused on a piece by Bloomberg on KOLs and also a couple of articles by Binance on the whole VC model and crypto um which is come join our space in 15 minutes if you want to learn more about that ah shit yeah that's right oh is it my one or your one is it separate one are we doing with you brother oh shit well okay cool we have another one 15 minutes and you could join it there uh what's the topic of that one kyle it's basically it's it's uh we'll be talking a lot about that a lot about um the whole you know the whole narrative oh shit hold on the commonwealth one

is it a commonwealth one yeah oh sick sick yeah commonwealth you've mentioned it in the show here and other shows as well so so kyle kyle's team or kyle himself is launching a project called commonwealth he's been passionate about it for a long time he's been kyle is very critical of the vc model i think him and scott would agree on a lot there or even me and Rand would agree on most of the things there. So yeah, there's a project

that we're invested in that we're hosting on our show in 12 minutes. So I think this is the entire topic of the show. So it's going to be

a good one. So yeah, join Kyle in 12 minutes where he just completely shits on the VC model and what's wrong with it and what should be improved. So yeah, I had no idea it was in 12 minutes.

Cool. On that note, Shahaf, thanks a lot for joining and everyone else will see you tomorrow. Bye, everyone. Thank you. Bye, everyone.