The Wolf Of All Streets - Institutional Adoption Of Crypto Is Here | Aya Kantorovich, FalconX

Episode Date: November 23, 2021

No single phrase in crypto is as exciting as “institutional adoption” for eager investors anticipating the “opening of the flood gates” of big money. Aya Kantorovich is the Head of Institutional Coverage for FalconX, the perfect guest to help us unpack this complicated idea that is both misunderstood and highly anticipated. Aya believes institutions are already in crypto in a big way, but it might not be exactly what you expect! Tune in to find out more. -- Amber Group: Amber Group is an integrated digital asset platform serving retail and institutional clients by providing deep liquidity, attractive yields, and sophisticated portfolio management tools. With 12 offices on three continents, and nearly a trillion dollars in volume traded, Amber Group offers clients personalized, compliant, and secure service across dozens of digital assets. Find out more at https://thewolfofallstreets.link/ambergroup -- HBAR Foundation: Fund your project quickly and easily with the HBAR Foundation. Apply for a grant and be put on the fast track to success at https://thewolfofallstreets.link/hbar -- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is sponsored by Amber Group and the HBAR Foundation. Stay tuned for more information on both of those later in this episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of Wall Street's podcast, where two times every week, we talk to your favorite personalities from the worlds of Bitcoin, finance, music, sports, art, politics, basically anyone with a good story to tell. Now, one of the main sort of underlying narratives of the crypto space for the past five or six years has been institutional adoption, conjecture as to whether it's actually happening, and then obviously seeing it start to progress over the past few years. But there's still questions as to where we are

on that sort of curve of full institutional and even mainstream adoption. So I wanted to bring on a guest that could discuss this in great detail. She's the head of institutional coverage for Falcon X. So she's the perfect person who basically studies this all day, every day, I would imagine. Aya Kentorovich, thank you so much for taking the time to speak with us. Thank you for having me, Scott. Excited to be here. Thank you. So first of all, can you just give us a bit of background on yourself and also tell us more about FalconX and what your role is there? Yeah, sure. So I started my career off as a banking capital markets consultant. Did that before joining my first startup. I was the first

hire of a company called Tegas, where we were outsourcing buy-side analysts at institutional hedge funds. Always had a crypto itch and had the opportunity to join Pantera Capital. So joined there working for Dan Moorhead, Paul Veraditak at Joey Krug on the venture side of the business. And we were really seeing everything and anything under the hood. And so anything across from exchanges, infrastructure, B2C, B2B providers, and fell across FalconX and through due diligence, really loved the team and the vision. And so joined now over two and a half years ago, built out our sales trading desk at FalconX. And what FalconX is, high level, we are a cryptocurrency financial services company.

We offer trading, clearing, and credit for only institutions across the globe. And so really, the ability for any institution to come in to buy, sell, trade, send, borrow, lend, etc. of any cryptocurrency that's approved by our team. And in addition to providing market color and really teaching these institutions what cryptocurrency is and the use cases for these today. Institutions is such a broad term. And so I think that it's very confusing probably for mainstream when we talk about institutional adoption. Does that mean, well, look, MicroStrategy bought some Bitcoin, it's in their treasury? Or does that mean a whole bunch of family offices and crypto-based hedge funds who

we know are in crypto anyways, who are buying it. Or what is really the definition of institution for you? And how do you, I guess, separate it under different categories when you're actually approaching these companies? Yes, I'm so happy you asked, because in crypto, we love labels. I say this all the time. You're even juggling. We love labels. And so, you know, when you peel back, what is an institution? It's all of the above You're even chuckling. We love labels. And so when you peel back,

what is an institution? It's all of the above that you just mentioned. So we service all of those. Today, I would say our largest institutional bucket is going to be these traditional asset managers. So these are traditional lending desks, traditional trading shops, prop shops that now have a crypto desk or a dedicated cryptocurrency employee that's focused on trading or research in cryptocurrencies. So that's very exciting. So these are going to be multi-billion plus traditional asset managers, very, very large. And then from there, you have, I would say, kind of your traditional venture funds. Now, these venture funds typically will make their first investment or have made their first investment in some sort of crypto equity stake. And now they're exploring projects that are equity that of traditional institutions. The next is just your smaller family offices and small, like, you know, very, very small funds. And then you also have hedge funds. So these are your classic high frequency shops, systematic shops. They're trading basis trades, doing exchange arbitrage. These are API driven players.

And then the last bucket that we also call institutions are retail aggregators. So these are what you would imagine the PayPals or the revolutes of the world. They're facing the retail, but they themselves are the institution that need liquidity on the back end. That's really interesting because I think if you asked your average person or crypto enthusiast and said, what does institutional adoption mean? They would point to Tesla and MicroStrategy or start talking about, well, endowments are coming and pension funds and these massive institutions. But you're really saying that that's not who's here at this moment. They're the ones who make the headlines, but clearly that's not who your average customer is. That's a good question. I would say, you know, the endowments and foundations are here, but they're here in very small size and they're still doing fund to fund investments.

So for us directly, to your point, we won't see them today. They're not getting direct exposure yet in crypto. Now, that being said, those conversations are happening. So we have received phone calls. We are working on conversations with helping endowments actually gain access to cryptocurrency directly. But no, you know, I would say not yet. And, you know, we work with a number of companies and allocating crypto to their treasuries. But I would say where it's very, very exciting is this much larger scope of Wall Street that's getting involved in size. Yeah, that makes perfect sense. And I think it's interesting, you talked about venture capital, obviously being so interested in this space. It's something that I talk about all the time, because yet again, the term institutional adoption just gives people this image of some company buying Bitcoin, right? And I think that probably

more money, I mean, you see Paradigm raise another $2.5 billion fund, for example, just, you know, in the last week. You see that I think the biggest institutions are really more interested in the picks and shovels approach than they are in buying Bitcoin or Ethereum, right? They want to be invested in the platforms that are the future. And so I would imagine you see quite a bit of that as well. Absolutely. Not just us, but anyone that's building the custodians for cryptocurrency, the trading services, the lending services, the services that allow you to send. So for example, also KYC AML, compliance services, exactly what you mentioned. The picks and shovels are really, really hot in the space right now. And that's reflected, obviously, in the valuations and funding capital that's pouring into the space from very, very traditional shops.

And where I think that's something that at least surprised me was seeing some very traditional private equity shops start to come in and make their first cryptocurrency investment, which should come out in the next couple of weeks. So all of that said, on a scale of one to 10 of institutional adoption, where are we on that curve? We always joked in 2017, I look back and I want to slap myself. Institutions are here, they're driving this, right? It's such nonsense. We didn't even have the tools in place, right? I mean, you think about like a micro strategy, buying a bunch of Bitcoin and putting it on a ledger or something because there were no proper custodians, right? That wasn't going to happen. So let's call that one or zero, right? Where are we now on that curve

to where we get full on institutional interest in crypto? I think we're at a six. So I think we're pretty far ahead. And the reason I say that is I make a reference to one of our clients or one of the largest prop shops, traditional prop shops in the globe. They called, I would say, 10 months ago. They were like, hey, we want to buy Bitcoin. It's like, perfect. Let's give you a Bitcoin address. And why don't we just set up an ETH address so you have it just in case? And they're like, hey, we want to buy Bitcoin. It's like, perfect. Let's give you a Bitcoin address. And why don't we just set up an ETH address so you have it just in case? And they're like, no, just Bitcoin. You know, we don't we don't want to dabble through anything else. Six months later, they're like, OK, let's let's start buying some ETH. And then I got a call roughly like two months ago and it was something not even top 50 coin. And so it was like, wait a second, you know,

there's a whole number of coins you missed in between one, two, and like number 65, you know, like, how did this happen? And so I think, you know, just based on that, the interest that people have once they buy Bitcoin and Ethereum, and they start to really understand either the underlying technology, the communities, the applications, get really, really excited. And so, yeah, I would say we're at a six, almost seven, just in terms of the enthusiasm from the institutions that have already entered the space. Bitcoin is such a gateway drug. I mean, what you just described is basically the path of every retail investor as well. I'll just buy a little Bitcoin, then all of a sudden, it's like dog coins, 4000 down market cap, and you can't understand how they possibly got there. But it's interesting to see that reflected in institutions as well. So we're at a six or seven. What does it take to get to 10? Is that

just a matter of interest and comfortability? Is it a matter of risk managers that have been looking at this for three years and finally are coming in? Or are there tools that still don't exist that institutions need to feel comfortable investing in this space? I would say it's still tooling. You know, some of the larger reasons are, you know, in terms of reporting, most traditional financial institutions are used to very specific OEMS systems and reporting for accounting and auditing purposes, as well as, you know, I would say regulation on, you know, what different restrictions on who can access what. So, for example, one person can access trading, whereas another can access settlement, so different permissions. I would also say that some other tools that need to evolve in the space are cross-platform collateralization and margin,

and so really capital efficiency. In general, we've made a lot of progress in the space over the last year, year and a half, but it's still a very capital inefficient space relative to what traditional institutions are used to in traditional markets. And so I would say it's- Well, does the ETF solve that in any way, shape or form or is the futures ETF just suboptimal and not what they're interested in? The futures ETF does not solve that because at the end of the day, it's still not holding the underlying. It's holding the future and they're already trading futures. And so what you're getting is a product that trades, you know, 5% premium to market. And then year end, probably you have a cost of anywhere between 15 to 20% in additional fees just because of that additional premium in the rollover whenever the, you know,

the expiration hits. And so I don't think it's the best product to market necessarily for anyone who, you know, these institutions are servicing. And so what you've seen is, let's say someone banks with one of these investment banks, they'll likely just go and open an account in an exchange to buy it at spot instead. Sure. Sure. I was just thinking that perhaps institutions like investment banks would take what they can get and trade it. But I obviously know that that's really not the case. But what you just described is such a suboptimal product, right? I mean, we know that the Bitcoin futures ETF doesn't get us there. GBTC is arguably worse, but has now surpassed GLD, the largest gold ETF in assets under management. Does that show that people are willing to basically do anything to

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working with it. We're all working with, you know, the information that we have. I would say it's definitely top of mind for everyone. You know, you know, many folks, whether you just have to be mindful about like, what can you trade relative to where your traders are sitting, and the entities that they are compliant with. But otherwise, it's, it's, we have rules that we can currently work on today. And the rest, it just depends on, you know, how fast we can get the regulators to push out new, clear regulation. In a perfect world, what would that regulation be? I know that we don't live in a perfect world and we don't get it, right? But what would the ideal situation be from regulators for a company like FalconX? I think broader than just Falcon X and for the entire industry

would be, you know, even if we think about what just happened with the infrastructure bill, I think, yeah, I think, you know, the biggest thing is just thinking about definitions and how we define what is a node, what is a brokerage, what is a trading provider, what is, you know, what needs money transmission licenses and licenses across states and countries. And, and then where does, you know, one regulatory body sit? So whether it's the CFTC, the SEC, commodities, et cetera, like, I think right now we're just trying to figure out who regulates what and then what are they regulating? And then custody is going to be the biggest piece, right? And then, you know, stable coins, how can we make sure that

we have $1 for every stable coin in circulation, auditing, et cetera, best practices. So all of these just need to be really written out and laid out for not only, you know, folks like FalconX, but even decentralized companies to make sure that obviously, you know, at the end of the day, the SEC is just trying to do its job and protect investors. The travel rule, for example, is something not to be messed with. So you don't want to engage with anyone on the blacklist or terrorist list. And so, you know, these are things that they're just trying to protect not only retail investors and institutional investors, but also the US. So I think just a new framework that's very, very clear, which I think, you know, these regulatory bodies are doing right now in the form of just,

you know, requesting information from all of these companies. But we'll hope to see that, you know, hopefully in the next year or so. Things move so fast in this industry, though, like even as somebody I think who is pretty much has my mind on it 24 seven, I can't remotely keep up. So I guess I have to sympathize to some degree with regulators who are trying to put these systems into place to protect people. And the industry looks completely different six months later when they've already done their diligence on what it looked like when they started. I have a feeling that things are just going to get so far out ahead of them that a lot of the regulation that they're trying to establish now will be almost irrelevant by that

time. I mean, if it takes two or three or four years to get a spot ETF approved, people are going to have long since found ways to gain access to this asset and not care about a spot ETF. Yeah, I think, you know, it's a it's a really interesting problem. How do you create a framework for something that evolves as quickly as cryptocurrency? Like it's a it's a really hard problem to solve. And so I give regulators a ton of credit for having to work on this every single day. Now we're building the metaverse, we're building NFTs, you know,

I mean, are these securities? How do you apply a security framework to these new types of technologies? And so I think it's just a really hard question to solve. And so, you know, the more folks that we also get from crypto into these regulatory bodies will be more beneficial for us as well, too, to help, you know, speed these things along in terms of just the learning curve as these things, you know, push out and as these new technologies get launched. Yeah, I mean, the infrastructure bill is a perfect reflection of what you just said, right? curve as these things push out and as these new technologies get launched.

Yeah, I mean, the infrastructure bill is a perfect reflection of what you just said, right? You have the Senate, Congress, they're largely older people, baby boomers, probably very little understanding of the asset at all. And they're the ones who are legislating on it. And then you have like three senators who understand it and are actually trying to do the work. But how damaging is that when the infrastructure bill that there could have very easily been a compromise gets passed, gets signed. And now,

as of now, the law of the land is extremely damaging if taken literally. Correct. So how much risk is our industry at because of that bill? Yeah. So I would say a couple of things with regards to the infrastructure bill. It was the first time that you saw a bipartisan agreement on cryptocurrency. And so I think by and large, it was actually a really positive marketing brand exercise for us in terms of just getting crypto at the forefront and really one of the accelerants for this massive bull market that we've seen seven weeks of until the small correction this morning. So I would say, you know, the first is just how much attention crypto got, right? Like, you know, it got to the point where, you know, things were moving because cryptocurrency was at the forefront and it was pulling all the headlines. So I think that's a

pretty cool place to be. The second is this law doesn't go into effect for a number of years. So I believe 2024. And so, you know, until then, there's so much time for us to get our act together, organize lobbying groups, and really focus on ways that we can push better, more specific regulation out there. And also just have conversations with our congressmen. I think, you know, one of the things that we should probably all be doing is making trips out to Washington. And so, you know, that's the next level of cooperation I'm super excited to see is really get the right spokespeople in front of these folks to continue having these conversations. So it doesn't lead to something like what we saw in the infrastructure bill.

Yeah, I mean, we're already seeing Lummis and Toomey proposing a bill to amend that language. And I think that everyone understands it's sensible. It's just not at the top of their minds, obviously. We as an industry think that this should be the most important thing in the bill. It's basically a couple sentences in a $1.2 trillion piece of legislation. So it makes sense that this would have to be somewhat solved afterwards, I think. And I think you brought to light something really important is that this doesn't go into effect for

another two or three years. People are panicking as if it's now the law and this is going to happen, but two or three years is 20 to 30 years in any other industry if you're a crypto. Right, exactly. Just heads down, keep building. I think, you know, we're going to figure this out. So I think as long as we continue, that really the biggest thing is just urging the industry to work together, to have one narrative that we can push out as opposed to, yeah, yeah, as opposed to, I mean, I talked about labels, right? We also have many, many, many narratives, but we really just need a narrative we can all kind of stand behind around what the right definitions should be and the framework should be so that it can get much more organized. Yeah. I mean, we're as tribal as it gets, I would say, between the maximalists for each coin and those who think one thing's a scam or another

thing is obviously like sent down from the gods to bless the universe. So what is that one single message that we unite behind in theory? And listen, the infrastructure bill did do it for a while there, right? So I kind of laugh, but nobody expected a bill in Washington to be basically frozen for three or four days because of a few simple lines on cryptocurrency. And we all came together with no lobby and no super PACs and no anything and actually froze that. So it can happen. I laugh, but it can happen. But what is the narrative that we should all get behind collectively, regardless which community we are, that would be the most compelling to push this forward? Listen, I am by no means a lawyer or a regulatory expert, so I'll keep this as broad as it gets. is really focusing, again, going back to the earlier point, really focusing on, you know, who is the brokerage and who is the node and service provider and who needs to be regulated by what body, regulatory body, right? So who needs to be regulated to focus on securities

versus commodities? What are those? And then moving from there across, you know, who needs to report and get audited on different transactions? And then whether or across, you know, who needs to report and get audited on different transactions. And then whether or not, you know, you know, all the way down to nodes, whether or not those need to fall into that definition. So screaming about Bitcoin being a great inflation hedge isn't going to get us there. I guess, in this case, whether true or not. So you mentioned that you worked for Dan or with Dan Moorhead at Pantera. Actually, he was one of the more vocal people recently on the launch of the ETF, something that we talked about.

I think his quote, I can't remember specifically, was like, somebody please call me the day before the Bitcoin futures ETF launches so that I can take a bit of risk off the table, something like that. He obviously has a somewhat sinister view on what the Bitcoin futures ATF really means. I spoke with Mark Yusko recently. He had the same view. He didn't think that it was a charitable happening by any stretch. He thought that this was just another way for the government and Wall Street to control it. I mean, what's your view on that? Do you think that this is something that they want to kind of just slowly kill off by creating these suboptimal products?

Or do you think that it was just the easiest thing to get through it and keep people quiet? I'm of the latter. I think that the Bitcoin futures ETF was just sort of a layup. They threw everybody a bone and now can move on with our lives. Listen, I mean, the CME, you know, has shown and proven that Bitcoin futures has volumes. It's a profitable business for them. They've been able to do it really successfully. And there's demand. And so I think, you know, that was enough to get the Bitcoin futures ETF launched. You know, I we love negative headlines, but I think because we move so fast, we fail

sometimes to take a second to just reflect on how great, you know, even getting an ETF futures across the table is, right? And it honestly was one of the reasons we were able to hit all-time highs in some of these tokens in Q, you know, end of Q3 into Q4. And so I think, you know, it was really, really good. Again, it's all about accessibility at the end of the day. There are some institutions that just cannot, you know, open an account with, you know, FalconX or Coinbase today. They need to be able to access these in a traditional aspect like the Bitcoin ETF. And so if that's the way that they're going to access it, then that's great. And I think at the end of the day, there's only a limited number supply of Bitcoin. So it helps all of us in the

space who were early to continue making that accessibility wider. Yeah, I think to your point, a lot of people view this bull run as a result of hype around an impending ETF approval. So we saw that happen. Do you think that there's another catalyst coming or that we need another catalyst for that next sort of push into the bull market? I mean, there's obviously this Q4 is always good expectation, but that doesn't mean it has to happen again this time, right? You see the stock to flow model and we'll be 98K in two weeks and all these things. What's going to push us there?

Do we need another catalyst, another big piece of news? Is there something you guys are watching for on the horizon? Yeah, I would say, you know, we had a small correction this morning and that's bound to happen. You can't have really have a bull market going, you know, three months straight up. It's not always up. People are going to want to take profits off the table. And so we'll likely see some volatility going into the new year. That said, to your point, you know, holiday season, people tend to gift Bitcoin. You tend to see it like Google search for crypto spike around Thanksgiving, around Christmas,

when people come home with their families, especially now, you know, with COVID and traveling just increased and COVID fears, I would say kind of decreased with more vaccinations. You know, more people are going to be around others. And so you'll probably see that pattern happen again. What I will say in terms of what we're looking at and even just broader is that, you know, where this has become really interesting is I think part of this bull market was also relative to NFTs and gaming and really cryptocurrency being larger than finance. I think, you know, to start, we always thought about, all right, you know, the Bitcoin white paper was created in after the 2008 financial crisis. And that was the trigger for just peer to peer trustless financial systems. How do we build that? But now we've been able to find a really scalable use case for crypto, whether in gaming, whether in art, that has really expanded the audience far more than the finance scope. Because if you think about it, how many people are

actually going to yield farm? And how many people are going to try to figure out how to stake assets? I mean, these are not easy. The UX, UI of many of these products are still pretty poor, to say the least. And even like KYC AML for some of these exchanges are just such a headache to go through that most people won't do it. And so I think, you know, today, the ability to do like play to earn gaming and just art, which really, you know, caught, I think some unique, unique communities really built out that scope for us and expanded. So I would, I would keep an eye there to see if there's any, anything new that will really, again, whatever expands the, you know, community of people who now access the underlying technology is really

the trigger. Yeah. You just touched on something so important, which is we've been talking about institutional adoption, but mainstream adoption and getting your average person comfortable with this asset is very difficult when the UX UI is so poor, right? And so I still think that we lack the tools or the platforms that your average person who knows nothing about the space would be comfortable using, right? Don't you think we need, you said it before, you want it to be as comfortable as your Schwab account or as your PayPal account or any of these things that people

are just comfortable with and know how to use. I think that's a huge challenge. I don't know if you agree. Oh, it is a huge challenge. I think PayPal acquired Curve, what was it, eight months ago? They just launched the buy crypto in Venmo a few weeks ago. And so, I mean, this takes time. This kind of technology is just really hard to build and to build on top of. There's lots of checks and balances. There's no FDIC insurance, right? is just really hard to build and to build on top of. There's lots of checks and balances. There's no FDIC insurance, right?

So if you send it to the wrong wallet, like you're done. And so, and these wallets, I mean, even before like ENS and the.eth wallet addresses, I mean, these wallets are like a number of letters and numbers and you're double checking each time to make sure you entered the right thing. So yeah, it's definitely even not even, I mean, one thing it's bad for retail, but even the institutions that we deal with today, they're like, oh man, this is tough. Right. And that's why you get, yeah, that's why you get the, that's why you get the yield and the opportunities that you can in the space, because it's still a very clunky infrastructure and space to be working in. Yeah. I mean, you talked about the capital inefficiencies being a problem, but for

institutions or people trading or working in the space, those are probably really where the opportunities lie. So the question is, once the infrastructure is actually fully in place and those inefficiencies are either programmed or arbitraged away, do we still see the massive upside in crypto that we saw before or these opportunities for institutions to basically, I mean, let's be real. They're making like market making, arbitrage, cash and carry, trading the GBTC premium when it existed. This was free money, right?

I mean, it was free money for these institutions, almost risk-free free money. Is that going to be eliminated from the system eventually? Everything's going to be eliminated from the system eventually. No opportunities in the market are forever. And so I think, you know, as you expand accessibility, this will naturally happen. But I also think about it in the same way, like, you know, your classic yield farming example, right? When you have a protocol that is basically using dollars or their tokens to incentivize people to post capital on their protocol, that only lasts a certain amount of time, right? And so it's a high yield for a certain amount of time, and then it compresses. And so similarly, with the GBTC premium, you saw it, you know, everyone poured into that, they thought it was free money, a lot of people went unhedged, and then it immediately, you know, flipped to a discount, because it was, it had so much demand.

And so I think nothing, nothing is free. And no opportunity is forever. Uh, and that's really where, you know, you start to see, uh, you know, who are the good traders, uh, versus, you know, the ones that aren't, and we're all going to get rugged at some point. And so, um, we've all been rugged. Uh, and so as long as we learn from that and, and move on, but yeah, I think, you know, it's going to be what's so interesting. And that's what keeps the space so, so, so interesting is that there's so many new opportunities that keep popping up. And that's what you're recycling through.

And that's what you have to kind of stay on your toes to continue to watch and keep on top of. Yeah, it's easy to see who the good traders are when the bear market hits, right? Everyone's a genius in a bull market. And what seems like a free trade gets very ugly when it flips, right? And we've seen even some of the larger platforms, the C5 platforms, we've seen their yields basically disappear, because most likely because their trading desk had that very problem, right? It was relying on something that seemed like it would last forever and then doesn't. But I still think that Penn with who I could never get to buy Bitcoin. But it was a very quick light bulb for them when I said, but you can park USDC on this platform and get 10 percent. Right. I mean, that was the gateway. I always thought Bitcoin would be the gateway.

And then to what you said before, then you get, you know, NBA Top Shot and NFTs and now Metaverse. These are all things that are really, really accessible to your average person, and I think are what is going to drive sort of the next wave. I don't know if you agree if there's anything specific that you're excited about, but like the gaming Metaverse space now, after seeing the DeFi summer and the NFT summer, seems like a very compelling use case. It's going to bring a lot of people. 100%. At the end of the day, people want their money to work for them, right? And so if you're looking at your Marcus account and it has 0.5% in yield, and then you look at Terra Luna and it has a 20% yield on their stablecoin UST, then you start to ask yourself questions in terms of, you know,

am I comfortable taking protocol risk in smart contract risk in order to get the 20%? And for many people, it is yes. And so I think 100%, the, you know, the tokenization of dollars, and the ability to provide yield, and that yield being just higher because it's a 24-7 market is huge. And so that is already in itself a very, very large adoption mechanism. The second is gaming is a massive industry. And so the ability for you to make money when you game is huge. And, you're seeing actually all of the gaming, large traditional gaming shops actually open up a crypto centric desk or shop and, you know, hire people in order to start to look at tokenization internally. That's going to be really,ibles into gaming is also big. So if you think about just collectibles, you mentioned NBA Top Shot. But even if you think about, for example, the Louis Vuitton bags, someone actually mentioned

this to me, and I thought this was really interesting. Louis Vuitton is actually very, very focused on being able to create an NFT of their original bags, because typically what happens is someone buys a bag, and then maybe they use the bag for a year and they resell it, and that bag gets resold up to 20 times. And Louis Vuitton doesn't get any portion of the reselling price. And so if they're able at the initial sell to provide an NFT to the first owner, that NFT then progressively moves seller by seller. And each time that it gets resold, Louis Vuitton gets a portion of that reselling price. And so they're now much more okay with their bags being resold in the secondary market. And so a lot of these even like merchandise, commodities shops are looking at

NFTs as a way to, you know, continue to make money off of reselling. And so similarly, you're seeing that with music, and that's a huge industry as well, right? A huge industry. I mean, I used to actually be a musician for about 20 years. And yeah, good luck getting paid your royalty check within six months. And, you know, it's being done by SoundScan, which is monitoring radio stations. It's absurd, right? And so much simpler if those royalties can be paid out through a smart contract or you get, you know, the secondary sales, as you mentioned. And once you sort of start going down this rabbit hole of possibilities, I mean, you talk about LVMH, they're one of the biggest companies in the world, Louis Vuitton. And not only will they attach an NFT to a handbag, but they're going to be selling their merchandise in the metaverse, right? And so not only now do we have sort of physical goods in the physical world, but you'll be able, I mean, I'm pretty confident you'll be able to go to a Louis Vuitton store somewhere in the metaverse and purchase something. And maybe when you purchase the NFT of the bag, the real one arrives at your house, you know, but once you go down this rabbit hole,

it's pretty insane, the possibilities for these brands. Yeah, absolutely. And it's a marketing, at that point, it becomes a marketing game. And so, you know, Coca-Cola invested money into the metaverse. A number of these large brands are pouring money. And I always say, follow, follow where the trail of money goes. Right. And so if all of these, you know, companies are pouring marketing and branding dollars and budget into the metaverse, there's something happening here that people may not be realizing. Facebook has spent so much money acquiring companies. They just changed their name to Meta. For us, especially in this industry where we want to make sure that this is decentralized, I think it's even more of a notion of trying to come up

on top. But this is big news. And so this is all going to be a trigger because within all of this are going to be free flowing economies where you can move assets across these different platforms interchangeably. I mean, the interoperability of all of this is so exciting that you can suddenly really take something and move it anywhere, right? Anywhere, regardless of where you are. And just thinking about like the opportunities too, for someone maybe in a developing country to be able to, you know, speak to someone in the metaverse, maybe even join like work.

There are some companies where you have offices in the metaverse. And so you can go into, you know, the meta office. So I think this is all really, really cool. And, you know, in terms of the institutional side, like there is very much interest in these token names. And so we're seeing a number of, you know, interest in Axie, Sand, as well as like other gaming platforms and metaverse moves, Mana. Right. And so, you know, these are names that people are following very, very closely, even on the trading desk and institutional side. So much to unpack, right? I mean, would you want to live in the Zuckerverse or decentralized metaverse?

I think we all know the answer to that. And you talk about the interest in these. I mean, Axie Infinity is literally supporting families in the Philippines, right? I mean, people who have quit their jobs to play Axie Infinity. And if you look at it, or if you look at even what's being presented by Facebook for the metaverse looks like when it looks realistic it's astounding to me that when you look at it it's not that impressive right now the the current iterations but it's still being adopted so imagine what that's going to be like when it actually catches up technologically to the interest absolutely yeah i i mean so i loved sims so that i'm i'm the wrong audience i was a huge fan of sims um never progressed into the the fortnight but um i would imagine it's a much much better game uh i mean

axie infinity to your point right it's not a great game either right now and i i played decentraland and i really tried to give it a shot and there was nothing to do. You could go to the casino, but there's definitely outside of that, there was really not much to do. So yes, 100%, very, very early stages and this stuff takes a lot of time. The other problem too is it takes a lot of money. And so to create these game developing shops, it's very capital intensive. And so right now, if you look at how much money is being invested into this stuff, a lot, it's very capital intensive. And so, you know, right now it's, you know, if you look at how much money is being invested into this stuff, a lot of these shops, a lot of funds are actually creating like gaming funds specifically so they can allocate capital to just creating

games because that is so capital intensive. But I think, you know, this is super, super, super exciting. And it's going to be interesting, you know, what moves and how does stuff communicate from, you know, the real world and real world assets today to whatever is going to be in the metaverse. And this seems to be like the topic that comes up the end of every podcast now is the metaverse. No matter what we start talking about, we end up in the metaverse and sort of just riffing on what the possibilities are. I think they're really endless. Just to circle back to the beginning before we're done,

we talked about getting from six to 10 before, and we talked about what tools maybe would be necessary. What's a theoretical timeline for that to happen? At what point does Bitcoin and crypto just become another asset and we're not out here defending it and telling people that it's not going to zero and that it's not a scam and it's not tulips? At what point does it just become such a, you know, in time, does it become such a normal part of the conversation that it's just another asset

that people own? To be honest, I think Bitcoin's almost there. I would give Bitcoin another like six to eight months. At the end of the day, Bitcoin is a store of value, right? We just went through the taproot upgrade. There's going to be ways in which we can actually store more into Bitcoin with the Lightning Network. But Bitcoin is a store of value. It's digital gold. And I think we're there. You know, in six to eight months, there will be no question about that. Now, as it pertains to Ethereum and all of the other layer one out there and the tokens associated with them, for that, I think it's going to take at least a year or two. And the reason I say that is because we're using these tokens for transaction purposes. And for us to get to the Visa and the MasterCard transaction per second, that's going to take infrastructure that just needs much more time, scale, developers, and capital that we have more so than we've given them credit for.

So I think we'll still see a year or two there. And I think that's also where a lot of the institutional focus is now too. If you think about where should I park my money and where's going to be the most upside relative to growth of the space? If you think about you have your store value, your digital gold, but then you have your transactions and your infrastructure layer there. I think a lot of focus is now on the layer ones in addition to Ethereum. So I think at least a year or two on that side.

That's faster than I would have imagined. I get people who are like, oh, 10 years. No. I tend to agree with you that it's more of a year or two. So before we go, any other final thoughts, things I might not have touched on that are interesting you at the moment or that you're excited about? This has been great.

I think, you know, the largest thing, I can't emphasize this enough, when you think about crypto being larger than finance, everything, the whole world is an opportunity for you really to adopt this technology in a peer-to-peer way that's trustless, right? Every single thing. And so I think as we start to see this industry progress into other industries, outside of finance, outside of gaming and art, there's so much more. We're going to see it in logistics, which we've already seen in enterprise. We're going to see it in climate. You know, there's so many ways we're going to see it in voting.

There's so many ways that we can really use this technology in scalable ways that I think we've been toying with these ideas to start. And hopefully now we can start to really see mainstream. We always talk about this, another label, mainstream adoption, once it really infiltrates some of these other industries, but I'm very excited for that. Awesome. Well, where can everybody find you after this conversation and follow along with what you're doing? Sure. So if you want to reach out via email, my email is aya.falconx.io. And then Twitter, aya underscore Cantor

is where you can find me. I really, really thank you for the time, Scott, today. Thank you. That was amazing. And once again, like I said, end up in the metaverse, no matter what happens. If the trajectory of my podcast has anything to do with the trajectory of the crypto industry, then I know that we need to all invest very, very heavily in the metaverse.

Our next meeting will be in Decentraland. I'll see you there. It will. And it'll look like The Sims. Thank you once again for taking the time. I appreciate it. Thank you.