The Wolf Of All Streets - The Crypto Revolution | Ryan Selkis, Founder Of Messari

Episode Date: September 7, 2021

Ryan Selkis joined the Wolf Of All Streets podcast for the third time and shared his take on the current regulatory landscape. Ryan also shared his thoughts on bubbling NFTs, an inevitable Bitcoin ETF, the threat of securities law, and institutional interest in Ethereum. As the founder of Messari, Ryan’s knowledge of the space is unmatched - he is one of the most incredible sources we have. Ryan Selkis: https://twitter.com/twobitidiot -- Sorare: Where fantasy meets reality. Collect, trade and earn weekly prizes on https://thewolfofallstreets.link/sorare. #OwnYourGame -- 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 brought to you by SoRare. Stay tuned for more information on them later in the episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast, where twice a week I talk to your favorite personalities in the worlds of Bitcoin, finance, trading, art, music, sports, and politics. Basically anyone with a good story to tell. So today is a first for the Wolf of All Streets podcast. We have a fan favorite returning for his third appearance on the show.

Ryan Selkis is one of the most highly regarded entrepreneurs, investors, and writers in the crypto space. As a founder of Masari, a top research news metrics and live data provider for crypto, Ryan has been behind the longest running crypto daily brief in the industry. The last time Ryan came on the show, he shared with our listeners his insight and predictions into what would likely happen this year. Now I'm looking forward to an update and his thoughts on what is likely coming in the future. Ryan Selkis, it's a pleasure to have you back for a third time. Thank you very much. And like we were just talking about before we came on camera, I did not realize that I was in a league of my own, at least for this particular. Right now you are in an elite league of your own.

We even did one, I said, before we had video. So that must have been very old before we're doing these video at all. So first, listen, punks, rocks, apes, penguins, we're obviously seeing a major NFT craze here. And the big news yesterday was that Visa announced that they have bought a CryptoPunk. I'm curious what you make of that decision. Well, I think the Visa marketing play in particular was brilliant because the amount of money that they spent to be ahead of MasterCard to get the entire internet talking about them and ultimately to do so with an asset that may very well appreciate in value because of the story around it is a pretty lucrative combination. Now they have so much money and it's part of their marketing budget. I'm sure they're going to hold onto that as an artifact, just of the history of the company,

but the ROI on that alone, and we see this with crypto experiments more broadly, I think any newcomer to the space that executes a good entry point as a marketing ploy ends up finding a pretty absurd ROI on that investment because everybody likes a newcomer. Everybody likes a convert within the community. And as long as it's not completely ham-handed, then it's generally rewarded with a good groundswell of enthusiasm. If it's on point and it doesn't kind of reek of the Steve Buscemi, how do you do fellow kids type of vibe that some corporates do. But I thought they nailed it and good for them. Yeah. As long as they don't then announce that they're not going to accept Bitcoin for their cars or something similar, right? You get the upside move like the Tesla move, and then as long as they stay the

course, it will be positive. So what do you make of the craze right now in general? Do you see it as something that's bubbling? Do you see that it has legs? Do you think that this is the very early days of something much bigger? With NFTs in particular? Yeah, with NFTs, especially in, I'm talking about specifically with NFTs, but even more specifically the cartoon NFTs, pixelated art, the very simplistic side of it. Honestly, I have no idea. As an investor, I'm focused more on infrastructure companies and I tend to invest in companies that I think there might be some strategic value for Masari long term, just given how broad our information engine is and how many different data sources we ingest. So I have bet on picks and shovels companies personally that I think will do well if the market continues to heat up and accelerate and become a long-term trend, which I think it will be. Whether any individual project, digital rock,

penguin, or any other type of ape or JPEG mammal, I don't really have a specific bet or thesis on those as collectibles, but I do think in general, NFTs fit that category of things that look like toys, but are going to be really impactful as part of the financialization of everything in a good way. And certainly the most recent incarnation, it kind of it combines user incentives and alignment, community elements, social elements and game like elements that it's a pretty formidable combination. And it's something I think most people within crypto should be excited about because it brings in more new retail entrants. to win every single new entrance to the market as a wholesale crusader and religious believer in crypto and its ethos on day one. But what we see every single cycle is anytime that there's a new wave that attracts new entrants, the tide goes out, many of them defect or lose interest. But then there's a new core that's an order of magnitude larger than the one that came before it that's kind of hook, line, and sinker, interested in crypto for life or for their careers. core that's an order of magnitude larger than the one that came before it. That's kind of hook, line and sinker, you know, interested in crypto for life or for their careers. So that's how we kind of get these waves of talent entering the space as well and kind of building the foundation for all of these types of marketplaces. NFT has just been the most recent incarnation.

So I think I'm excited about it. I also have a day job, so I don't spend a whole lot of time surfing these platforms and trying to get a leg up on the digital art side because I just don't understand it. But I know that I don't understand it. But for the fact that I think it's going to be big and interesting and a new type of primitive that's an important part of the crypto stack. I've taken the same approach. And when I say, listen, I think it's amazing. I just don't get it. I get a resounding okay, boomer. So I'm going to give you an okay, boomer on that response as well, which I think is absolutely fine. It's interesting. It's sort of a two steps forward, one step back approach with every bubble, as you just mentioned. There was a lot of debate about Doge and meme coins in the

last run. And at the time, I think a lot of people perceived it as a negative because it was making people take crypto less seriously. But I assume that's a decent corollary to what's happening here with this, right? We'll have a bubble, some people will lose money, but then the ones who stay will be passionate and join us forever. Yeah. And I think as bubbles go, this one, I hope is going to be less dangerous because it will, if you think about 2017 and the ICO boom, a lot of people were investing a lot of money with the expectation that teams were actually going to deliver value and their tokens were going to go up and they were basically buying, you know, interests in these kind of new novel financial Internet stocks almost by another name.

That's how they were trading. That's how the markets were structured. That was just, you know,-like repository of information on all these projects and made big claims in 2017, and we're going to have to come to market and then gradually decentralize. So I think there was a lot of danger there from like a headline risk and kind of consumer protection risk. With NFTs, you know, I know it's going to happen to some people and it's unfortunate, but if you spend $150,000 on a piece of digital art, that's a picture of a penguin or a squiggly line, and you lose your house because of it, that's on you. I don't think that the regulators are going to turn around with a straight face and try to pin that on entrepreneurs or the crypto industry at large, as being bad for consumers. No, that is a situation that looks more like POGs or Beanie Babies or other kind of historical collectibles, FEDs. And that's not

to say that all of these are going to go to zero or all of these are going to correct sharply, although I'm sure many will. It's more just a reflection that I think there's less risk from a headline and optics standpoint baked into this because it's so absurd to think that people might ultimately be able to run to the SEC because my top shot card went down in value. These are clearly not security. it's something that I think excites people about crypto, but it's not cryptocurrencies and crypto protocols. So you're not kind of running into the same regulatory and legal issues and having to worry about big brothers not paying out the innovation in that side of the house. That makes a lot of sense because then you have to go after every person who's ever bought a piece of art that they love that would appreciate, or every person who's ever bought a piece of art that they love that would appreciate or every person who's ever bought a rare car that they couldn't resell. It's just it's the same as any other speculative purchase.

My dad always said, don't ever buy art for the value, buy it because you love it because you're going to end up looking at it forever because nobody's ever going to buy it. So it's got probably similar advice with NFTs. So you brought up regulators and we've obviously seen a major shift in sort of perception and seriousness from regulators, largely because of an infrastructure bill that had nothing to do with crypto, right? And it's something that you've talked about quite a bit. I'm curious, after seeing the whole process, at least in the Senate, before we moved to the House, if you're viewing it as more of a bullish event, or if you still think there's

a lot of risk from the poor language used in the infrastructure bill, do you think it will be fixed? Where do you stand? I think a lot of this is in our control as a community. Certainly, it's a net negative that the language was passed as is, but I think how it was passed and how the process played out at the 11th hour, cover to cover, was a good catalyzing event for the rest of the industry to take seriously the fact that we are no longer in the minor leagues anymore. And it's unreasonable to expect that global regulators and authorities are just going to ignore crypto because it's too small to matter. But that ship has sailed. It's big enough to matter. It's big enough to create a $28 billion CBO score in their estimate of what enhanced tax compliance could

mean for actually paying for some of this new infrastructure bill. Whether you agree with that or not, they scored it that way. And so now it's on a politician's radar, both domestically and abroad. I think the right approach historically has been, don't tread on me. This is new technology. Let's not throw the baby out with the bathwater. Don't regulate things they fired the first shot, the broker language, and the fact that it was passed as is, even though it's technically infeasible and its worst interpretations could push all innovation offshore, cripple the US crypto industry. The industry more broadly, I think would be significantly negatively impacted. So now that that G is out of the bottle, there's no choice but to mobilize as a community. And when you talk about mobilization efforts, it looks a little bit different when it's Coin Center and the Blockchain Association educating legislators and regulators on why

not to regulate new technology that they don't understand, or at least do so in a thoughtful way that kind of properly covers these from a technical standpoint. But now that we're kind of past that phase, you're going to actually need to fight a little bit more. And I'm not sure that those organizations themselves are able to serve as both the advocates, the friendlies that are educating these policymakers, and then the more aggressive grassroots type of lobbying organization or advocacy group that I think is going to emerge in the next couple of quarters that starts scoring these politicians and their staffs and creates electoral consequences for

those that are on the wrong side of the issue. I think that's part of the process. I think that's part of this being an emerging industry. And if there's any silver lining to what happened the last couple of weeks, it's that it's woken everybody in crypto up to the opportunity and the threat posed by DC. It has catalyzed them in a way that's very bipartisan, both on the Hill and within the crypto community, which I think is very kind of politically diverse. And so when you're on the right side of the issue and you're also operating amidst a backdrop where the institutions cannot do anything right now and are probably at all-time lows in terms of state capacity and trust that the citizens have in their elected leaders,

it's a perfect storm and backdrop to actually mount not just a defense of crypto, but, you know, an offensive of why this is a better path forward and why our positions need to be, you know, aggressively asserted. And, you know, we need to basically start coming up with lists of demands versus always being on our back heel and just trying to dodge blows and parry and be patient. So I think that's new territory. And this is literally three-week-old territory, I think, for everybody. And so now the question is, all right, there's a revolution brewing. How do you

actually get all the misfits together and align on core values and align on what we want the outcome to be here? Because if the one extreme outcome is every man for him or herself and every community for themselves, then we're probably going to lose a lot more ground than if there's kind of a set of core values and principles that people are generally aligning on, or at least the 90% or 99% of more kind of reasonable people within crypto. So you're always going to have the fringe folks that are like, fuck the government and expressing interest to opt out or not play games or this, that, and the other thing. I definitely understand that frustration.

And I think, you know, over, over, you know, a few beers and, and, you know, amongst friends, that's, that's certainly the, the maybe common ranting of folks that have been in the industry for a while. But if you're actually looking to kind of win over the swing voters and get some results here, there is no alternative but to play a game that's been forced upon us because there's nowhere to run to. And this is going to happen whether you like it or not. The question is, will your crypto activity be black market activity or will we be able to

kind of find out areas that we can operate and experiment and keep this momentum that we've had for the last decade? Just to temporarily galvanize even the most tribalistic of communities, which was very encouraging to see the entire crypto space come together. there's going to be some opportunistic congresspersons, people, congresspeople, who will see this now as an issue to gain voters as opposed to being on the other side of that. So I'm hopeful that the language will be very quickly fixed and that there will actually become more pro-crypto politicians because they see this incredible base that stopped legislation for three or four days without a lobby, without a PAC. Don't you think that now is the time that we're going to start to see a lot more support come out as a result of the way that played out? I think people have to be prepared for this to actually go into effect as law. And the important thing here with the House is not necessarily to win, although obviously we want to win.

And you want this to get reconciled and the language to get fixed. But there are procedural reasons from what I understand that that might be unlikely, just given how close the vote is, how narrowly controlled the House is, and the fact that they're going to try to ram through the spending bill. And the way to do that might be to avoid, you know, an extended reconciliation process and back and forth that's only going to further hurt, you know, this current administration who's taken a beating the last couple of weeks with Afghanistan and, you know, a number of other items. is the time to take names and not even necessarily take names of you're either voting against this bill or that's essentially like a declaration of war on crypto and we're going to come after you. Because I don't think that's going to be very effective nor reasonable to take that approach in the context of a $3.5 trillion spending package and $1 trillion spending bill for infrastructure in particular, which is what

this kind of subsection was included in. Because any reasonable politician that doesn't know anything about crypto is going to say, I'm sure that there are items in this mammoth 1,700 page or however long this page bill this is. I'm sure there are issues, but we're basically trying to push through infrastructure for the good of the American economy and for everybody. So your objections are noted. Here's what we meant. And this will be figured out during rulemaking. That's probably going to be the out that a lot of the politicians give themselves. And there's one extreme where you say that's not good enough, veto the whole thing, or you're anti-crypto, which I think is unreasonable. And then there's another, which is, okay, can you say that into the microphone, please? And let's get some of these folks on record, because I think

getting any type of legislation passed is incredibly challenging, particularly given how kind of polarized both sides are. So if you can get enough folks, especially on the Democrat side, where they're going to have a vested interest in making sure that this overall spending bill gets passed, and you can give them an out, but you can also get them on the record to state what their crypto position is and express interest in actually fixing this through subsequent act. That is putting us in a better long-term position, both from like evidence of all of these lawmakers that passed this bill had this in mind. This was the intention and kind of the letter of what they had written versus like the spirit of what they'd written.

And so you can start fighting some of these out in court if needed, but also kind of lay the groundwork for corrective legislation down the line if it comes to that. And I think that's probably the direction that we're heading. So it's going to be a long, you know, 18 months, but ultimately I think this is something that, you know, we are never going to have more leverage than we do today for a few different reasons. One, we've got the midterms coming up and no one is going to want to be on the wrong side of this issue, seeing how vocal the community is and how popular this issue is with the under 40 crowd in particular. Two, you want to be fighting battles during a bull market versus a bear market, because then they can just slap the shit out of us on consumer protection and fraud.

And is this actually a good thing? Look at how many people have been ruined from this. The SEC, you know, needs dominion over all this. We can't have unregulated finance. So if you're going to kind of wage a political fight, it has to be in an upward market. And I think, you know, just generally speaking, there's a lot of the right narratives are on our side. And again, because this is a bipartisan, you know, quasi political movement, you can, you can actually make even some of the more extreme conservatives or extreme liberals that might be, you know, at risk for, you know, primaries or the moderates that desperately need swing voters to rally around this as an issue that

is going to help shore up their support for the next election. That's going to be true in the House and in the Senate, but especially in the House. So I think that's kind of the battle ahead. There are different ways to kind of approach that, but we're just getting started in terms of mobilizing on the offensive versus the defensive. When I saw that they had written a 2,700-page bill, I thought, that's about the same length as Selkis' end-of-the-year crypto review. Exactly. I was like, he could have knocked this thing out. Exactly.

One thing that's interesting, though, is we caught them off guard. Nobody expected this bill to be frozen because of this one line. And so the community came together and 40,000 calls to senators and offices and letters. The question is, if we don't catch them off guard again, is it even conceivable that crypto can go head to head with banks and fintech and all these huge lobbies? Or do we need another way? Well, you know, lobbies only go so far. At the end of the day, you need the support of the voters and the populace. And, you know, the banks have all the money in the world. You know, big tech companies have all the money in the world. And they were slow to mobilize because they just thought that they had kind of voters and users on their side. So I think the goal here needs to be to mobilize as many voters and humans as possible on the right side of the issue, because we're not going to turn overnight into the American Bankers Association that has like, you know,

$200 million of annual spend versus $2 million for the Blockchain Association. It's just not going to happen. So, and that's fine. I don't think we necessarily need to play that game because we are in an environment where both sides are growing increasingly populist. Well, this is a populist issue, but it tends to be like a third way versus, you know, kind of the extreme right, which is, you know, the hardcore, you know, like Trump anti-swamp, you know, kind of the extreme right, which is, you know, the hardcore, you know, like Trump anti-swamp, you know, type of sentiment. And then the extreme left, which is, you know, the AOC squad contingent, which is outspoken about being a democratic socialist.

So I think this middle path is something that I think is going to resonate with a lot of people. And because it's going to rally so many individual voters versus just their pocketbooks and like the right side of this bipartisan issue and being, you know, having a support on record for all the senators that had voted this in because there was a compromise amendment, which I think is a really important kind of fact here. I think, you know, you take the combination of those three things and it becomes potentially, you know, explosively dangerous to be on the wrong side of this. And no one, the lobbies, the Hill staffers, the politicians themselves, even the regulators

who are ultimately at the mercy of, you know, the elected office holders that are going to have to run for reelection at some point and kind of answer and be accountable for how their agencies have performed. I don't think anyone's really

clear on how the crypto community is going to evolve now that it's descending on DC, but they know that it's a major risk, potentially, if they're openly hostile, if not supportive. Right. So that summarizes the legislative side of it, but that was obviously still the regulators. And I think when Gary Gensler was appointed, a lot of people, the knee jerk reaction was this guy gets it, taught blockchain at MIT, he's a huge fan. You posted a thread recently about Gary Gensler that made me think potentially otherwise. What are your thoughts on him, his role, and if he's the right man for the job, at least to benefit our space? Goldman Gary. Yeah. Look, I think it's important to have, I knew that calling Goldman Gary was going to put up good numbers on Twitter and get it, get oxygen to the thread and the important kind of meat of what we were talking about, which is, you know, a few things. This is someone that, you know, good for him, $120 million net worth from, you know, decades

long successful career at Goldman Sachs that, you know, is now swooping in and trying to protect the little guy and making his whole shtick about consumer protection and making sure that the markets are fair and investors have a fair shake. And, you know, it's one of those things where it's another, you know, kind of second career politician in this case that is saying all the right things, but only because he's got this paternalistic attitude that he knows best and the SEC knows best, and they're kind of here to save the day. And the question is, here to save the day from what? Because crypto has been the best performing asset class of our generation. That's not just Bitcoin. That's not just Ethereum. That's many of these other emerging assets as well. They're at all time highs or close to all

time highs, almost across the board. These are the ones that have real usage. And so protects consumers from what exactly? From the public markets where most of the gains in companies that finally go public after decades are reaped by the venture capitalists that were able to kind of bid up the private rounds for extended periods of time, well beyond what we used to have in terms of companies going public. If you just look at Gensler's reaction to crypto and his kind of sweeping interest in oversight of both the crypto exchanges, DeFi, and his belief that everything is a security, I think it's a dangerous combination. And do you want to give someone that much authority over the crypto? And this has been

the problem with the SEC for the past four or five years. It's not about consumer protection. It's about the fact that they can't keep up. They're not equipped to keep up. They're probably incapable of actually stamping out some of these tokens. To do so would actually be counterproductive from a financial inclusion standpoint. But financial inclusion is not one of the SEC's mandates. So that kind of gets brushed by the wayside. And they just look at the negatives of protecting investors from harm instead of the negatives from actively prohibiting certain types of investors from accessing investments and other financial instruments, which is the financial inclusion piece that I think we have a really

good leg to stand on. So the Goldman-Gerry meme, I think works because it kind of shows how out of touch they are, not just kind of with the reality of the current crypto investor and how well crypto investors have done, tinkerers have done in this industry. But it also, with kind of some blanket statements, would suggest that user-owned networks are net negative, are not going to be welcome in the US, which I think is the exact wrong approach that we need. And again, if Hillary Clinton had won, Gensler very likely could have emerged. He was the CFO of her campaign. He could have emerged four years earlier, hypothetically, as the chairman of the SEC. And back then, he had said pretty definitively that Ethereum looked like a security. So would we have this trillion dollar smart contract market, DeFi market, and many American entrepreneurs that are building on that stack if Gensler had been in office in his particular share four years earlier, had Hillary

won? It's, I think, a fair question and people need to understand that context before just handing over the reins to another unelected leader of one of the most important regulators with respect to credit. Do you love sports collectibles or fantasy sports as much as I do? SoRare is blending this together to create an entirely new gaming experience powered by its community. SoRare cards are officially licensed NFTs for over 160 clubs, including Real Madrid, Paris Saint-Germain, and Liverpool, and all built on Ethereum. You truly own your collectibles. They are productive gaming assets

that will generate rewards if you're a good fantasy player like me. Join SoRare and connect with your favorite teams, live the game with passion, and earn weekly prizes. You can do all of this at thewolfofallstreets.link slash so rare. Crypto is a unique asset class, really not comparable to the existing ones. Do you think that we need a regulator or a regulatory authority that is specific to crypto and outside of the purview of the SEC or CFTC or one of these others? Or at least a task force specifically for crypto who understands it and is willing to make reasonable regulation? The thing is, I think a lot of this is already covered. And the way to ultimately get this done

and figure out a way to regulate different parts of the crypto ecosystem is not to try to regulate the protocols and developers themselves, but actually look at who are the service providers and where do they fit, right? I think it's a perfectly valid question to try to get a sense for whether, you know, Coinbase, Kraken, you know, the big, you know, US exchanges or the big US custodians, which agencies oversight do they fall under? Or is it an entirely new task force or kind of, you know, agency of the government that is going to oversee those crypto providers in general. I think that's fine. And honestly, I don't even know if some of those entities are actively pushing back on that because historically good regulation and kind

of collaborative regulation and self-regulation, even from industry, tends to help stimulate additional growth in those end markets because it gives a more kind of trustworthy brand and veneer to those markets and ultimately makes it accessible to an entire new class of investors, which is other regulated financial institutions or asset managers that otherwise are not going to take the risk if it's still treated as like a Wild West asset. So I don't know that anyone's really even pushing back on that. I think it's the sweeping mandate and powers that they're trying to bestow upon themselves with respect to DeFi, developer activity, staking, validation, the things that were omitted. And we know that they were omitted

intentionally because of how aggressively Yellen's treasury was actually pushing for a competing amendment that explicitly carved out some of that defi language. So this is not just like an oversight and drafting, because that may have been the case, or we may have been able to give them the benefit of the doubt until we saw the second amendment that was kind of counter to the Toomey-Wyden amendment that was first proposed. That second amendment kind of proved the point that no treasury really does want full oversight and control over DeFi within US borders for any number of listed reasons. But the wording is very intentional. So we should not give them the benefit of the doubt when it comes to rulemaking, because they already tipped their

hand. And I think that's where things get a little bit concerning. And you're always kind of on high alert for not acting like a chicken little and saying the sky is falling when, oh, really, it was just because they didn't fully understand it. And the broker language will be clarified after the fact. That's not how this works, because if they wanted to carve out that language initially, they would have. And clearly they would have because we had an amendment and then a counter amendment, which still carved it out. Sure. I mean, talk about giving them the benefit of the doubt. It's very hard to give the SEC the benefit of the doubt in general, when you look at accreditation laws or all the things that they do

to protect the little guy when in reality, we know that they're just preventing the little guy from having financial opportunity. So why would we think that this will be any different? I mean, why should you have to have a million dollar net worth to be able to invest in your friend's company? That doesn't make sense. Right. And so if you extrapolate that to all the potential pitfalls in crypto, it's pretty endless. Yeah, I think that's right. Now, this isn't all on the SEC, right? You know, they are regulators are going to regulate. So if they believe that they have this authority and they do based on some precedents, like the Howey test, then they're going to try to do their job and they've got to hammer everything looks like a nail. That's human nature and it's to be expected. I'm sure

that there are plenty of great people at the SEC that think that they're doing a stand-up job for the American people and the folks that are going to be most susceptible to scams and fraud and this, that, and the other thing. And I think crypto as a community needs to also take that seriously and try to direct people to information sources that help them not get ahead of themselves. That's why we started Masari. I think we need to adopt best practices that are not explicitly gamifying some of these new emerging assets and their protocols

to be get-rich-quick schemes. And to a certain extent, that's unavoidable, but there's always going to be some of that. I think, you know, uh, very oftentimes salvation lies within, uh, and we can kind of proactively head some of these criticisms, uh, off and, and, and, and maintain the moral high ground. But, um, until we've done that, you know, at scale and won some of these battles either in court or, you know, through the polls or, you know, with just good rulemaking that actually is balanced and is technically

feasible, it's going to be a little bit more contentious. And so, you know, hopefully you can de-escalate openly hostile situations, especially when we have the lower hand in terms of power dynamics, but also flex a little bit of muscle wherever we can, which I think is unique to this cycle. In cycles past, I'd say we'd more or less be at their mercy, but there's so much money, so much kind of user support that the dynamics are a little bit different this time around. Interesting to talk about gamifying these assets because we're seeing that in legacy markets as well. I mean, Robinhood is a perfect example of that same behavior, watching Dave Portnoy day

trade on live Twitter streams. That's the general trend. It is not something I believe you could hold against crypto specifically. No, I agree with you. I don't want to point fingers. I think David Day Trader, Global, the best part about what Portnoy does is, in my mind, it's almost impossible to go after him because what he does is entertainment and satire. But what he does is also exactly what happens every single day on Bloomberg and CNBC. It's literally no different. The only difference is, you know, Dave's joking. Yeah. And everybody else on those other channels are serious. And the most irresponsible advice they give every day is to execute a trade because more often than not, you're going to lose to the market and the index. You're going to net windfall for actually spending time in the market and investing is probably going to be negative the more you watch some of the talking heads. With Portnoy, at least you might be able to follow the memetics of the market

and come out net ahead because you're in front of the next GameStop or the next AMC. We were talking about Gensler before, and one of the big stories has obviously been the theoretical approval of an ETF. I think a lot of people view that as the catalyst for the next big wall of money into crypto. Gensler sort of tipped his hat and said he would consider a Bitcoin futures ETF. And we just now are seeing one launch in Europe. Do you think that that is the direction that an ETF will go first? And do you think that a Bitcoin futures ETF is enough? Do you think that that's a good substitute for a Bitcoin ETF and that that will allow that wall of money to enter? Honestly, I have no idea. You know, part of the reason that I don't care is because I've been hearing about this and talking about this since 2014. You know,

not only indirectly, but like directly, because, you know, I mean, I was there, right? When when Grayscale was two employees at Digital Currency Group, right? So, like, this is a very long conversation where the SEC has historically shown no interest in moving quickly, and I don't really expect that will change. So whether it's, you know, six months, 12 months, never, it's almost becoming irrelevant because you have institutional solutions now for custody. And eventually, these large investors, if they can't access these assets in the public markets through an ETF, they're going to find a way to buy spot through some regulated custodian. And maybe this is going to impact like 40-act funds. Maybe they're going to be the last ones to kind of enter the market because of lack of ETF.

But there are still other ways to kind of get that synthetic exposure. It's not an ETF, but it's still available like publicly traded security, whether you're talking about one of the ARK funds or MicroStrategy or Grayscale trusts or Bitwise trusts. There are now options and there's more every day. So to me, it's more of a formality than anything else. And I don't really think about it because it could still be a long time off. And there are bigger battles in the here and now that I think we're thinking about and have to get ahead of. You mentioned Grayscale being two employees. Last time we spoke, I believe the Grayscale premium was still 15%. And that was sort of the big institutional trade was that cash and carry trade taking advantage of that premium. Obviously, now, I believe, as we're recording, it's about a 15% or 16% discount. And I think

it would seem that Grayscale is sort of pinning their hopes to some degree on the ETF so they can convert that trust into an ETF and move forward that way. What are your thoughts on the present discount? Do you think that that will evaporate? And then the next question, I guess, after that is how are institutions making money? How are these traders making money to hand over these yields to their customers if that premium doesn't exist? I think it's a great question. I'm not sure how exposed some of the private companies are to this trade at this point. I think a lot of that kind of cycled out in Q1. And I kind of feel like that was largely due rest. I'm sure it hit some of the lenders that were relying on this trade and some of the other companies that were relying on this

little bit of like corporate treasury alchemy to make money on the back end. But I don't know where the premium or discount will settle. I think, you know, eventually if GBDC does get converted into an ETF or there's some redemption mechanism, then obviously it goes back to par, less whatever kind of the annual fees were for, you know, on the product itself, which I believe is something like 2%. So that'll play out over time one way or the other. But again, that's more of a function of, the SEC won't allow them to actually convert to an ETF. Then the assets are basically stuck there forever

because there's also no redemption program in place. Is that discount a good trade? You're getting it at a 16% discount right now. I'd leave that up to individuals. But again, if you look at historically where closed-end funds trade, you should see something, I think, that's going to be a discount. I think 15% is probably on the high end. It's certainly on the high end so far last, you know, so far this year. I think that the worst it's gotten is about 20%.

So it is kind of trending towards that cyclical bottom or at least that we've seen so far. And I would be surprised if it goes much further south than that. But at the end of the day, you're buying GBDC because you believe in Bitcoin and its performance versus will you be able to close that 15 point gap? That's absolutely true. Where do you think Ethereum's role is now in institutional adoption? We hear a lot of anecdotal stories that they're looking at it, but we're yet to obviously see a Tesla or Micro Strategy level buy of Ethereum. Although Coinbase now with 500 million of their treasury going into assets, I have a feeling will be weighted at least partially to Ethereum. Do you think that Ethereum will become popular with institutions and that that's a

true narrative? I think it will. And I think there's a half-life to new crypto assets. So the first asset that almost all new buyers are going to accumulate for their treasury or as part of an investment strategy is probably going to be Bitcoin. And then Ether is going to be number two. And the way that I think about it is digital gold versus token interest in the financial internet, because Ethereum has real transaction volumes, real applications that they're running on top of it. And this is a co-opted example from Arthur Hayes, who I think hit the nail on the head with a post earlier this year. He compared M0 and the Thangs market cap. They're about $6 trillion each. So if you think about Bitcoin as digital gold and

kind of hitting that M0 addressable market, and then you think about Bitcoin as digital gold and kind of hitting that M0 addressable market, and then you think about Ethereum as a financial internet hitting that FANGS market cap at scale, then could you see a situation where both Bitcoin and Ether gets a $6 trillion? I think the answer is yes. And for me, that's also the most entertaining outcome because you'll have Bitcoin and Ethereum maximalists at each other's throat and arguing in perpetuity over basically a false contract and a false debate because it's just two completely different things that happen to be the same size. So that would make me immeasurably happy if they just kind of traded in the 40 to 60% band at scale

with each other and neither one actually ever broke out. Better than pay-per-view. And if they both go to 6 trillion or something equivalent to one another, that makes Ethereum the much better trade from here, right? Yeah, it does. But risk adjusted, people have to come up with their own risk adjusted strategy. Certainly it's a higher upside, but also might be lower downside with Bitcoin. Right. The narrative is always the flippening of market cap or of price. And to me, those are almost the two least relevant metrics, right? I mean, even on Coinbase, we saw more trading volume on Ethereum last quarter than on Bitcoin.

And one could argue, obviously, with transaction volume or any other number of metrics that Ethereum is already more popular than Bitcoin, right? Well, in many respects, I think that's true. But again, I think people every single cycle underestimate Bitcoin's staying power and how resilient it is as a global wealth and value transfer system, because it has kind of withstood the test of time and proof of work works. You might not like that it's dirty, but so far it works and it has worked and I think it will continue to work. One of the only things that I think needs to be de-risked in the coming years for Bitcoin is how will the security of the system look once senior is dropped below some kind of arbitrary threshold, whether it's kind of 1% or 50 basis points, or what is the annual inflationary reward that's actually securing the entire system? Because at some point, it does become dangerously low relative to the value that's being secured in the network. So I think that's

the one thing to consider, but it's still a few years out. So we're talking about hypotheticals. And in the meantime, Ethereum and all the other major blockchains have their issues as well. I mean, miners need to make money for mining. I asked Whit Gibbs from Compass Mining a similar question. Well, what happens when the last Bitcoin is mined? It's one of the famous, obviously, quagmires. His position was that the transaction fees will cover it. Do you believe that? Do you believe that miners will still be incentivized to mine when there's no more Bitcoin left? We'll see. Fair answer. Fair answer. And speaking, obviously, Ethereum still on proof of work is making the transition in theory eventually to proof of stake.

Do you see any potential pitfalls with that move for them that could be debilitating to Ethereum or they could, you know, sort of take some of the shine off of that trader investment? I'm tempted to give the same pit the answer of we'll see, but I think there's still execution risk in completing that migration. And there are a lot of other proof of work chains that are starting to process different types of transactions. So I don't think that Ethereum is kind of the definitive winner in settling decentralized finance transactions or settling any type of value transfers, whether it's NFTs, currencies, other kind of new emerging applications, distributed computing, things like that. It's still, I think, too early to peg them as the winner. But in reality, I think we're going to learn just how good proof of stake is for an at-scale set of security assumptions, number one. And we're going to see how whether Ethereum's community has staying power as like the 80% dominant market share winner, or if some of that demand starts to ultimately you know peel off and and go more

application specific so like flow and their blockchain is a good example kind of custom fed for nfts so lana um another good example there's there's you know a number of um other platforms that are processing transactions for you know specific use cases that could ultimately siphon off some of that demand. And the reality is that all these systems are going to be interoperables. So it's no longer, I think maximalism is dying a slow, much deserved death across the board. I think maximalism for Bitcoin kind of got us to this point because without that religious fervor, you don't basically build the monetary base to this scale. I think with Ethereum, that kind of radical community orientation was critical in getting people to think about, could you decentralize markets and kind of build

social contracts into a technical system that people would trust and really start to rely on as the foundational infrastructure for their own companies or decentralized organizations. I think without Ethereum maximalism, that also probably doesn't happen, but I think that's starting to dissipate at exactly the time that we need it to. And more of these networks are starting to look like maybe decentralized companies, but they still have very similar designs and have to kind of go to market and compete more like companies than new churches, which is a net positive. And at the same time, it probably keeps Bitcoin and Ethereum pretty firmly entrenched. So the notion of an Ethereum killer is something that everybody always discussed. But now I agree with you. I think that each of these blockchains

will find their niche. They'll all be successful. And then interoperability will basically be the future, making them all work together, which is really exciting. But that said, we're seeing absolute booms in these other layer ones that you kind of talked about, Avalanche, Solana, as we're talking, they're all going completely nuts as far as coin price and adoption. Do any of these specifically excite you or do you just kind of look at all of them as a basket and see which one will win? How do you approach it? I rely on our analysts for that. So everything that I know about the ins and outs of these other competitive platforms, I know from Wilson on our team. Everything I know about DeFi is from Watkins. Everything I know about NFTs and kind of Web3 assets is from Mason.

So I would direct people to them and their research if they want to check out Masari. So what are you personally most excited about in the coming months and years now that we've sort of, you know, a lot of these little aspects are starting to mature. We had a DeFi bubble, it came back. We had an NFT bubble, it came back. Is there something that you're specifically looking at that's getting you really pumped for the coming months and years? Yeah, I think community organization and doubt infrastructure is one of the next major areas of development. And we're seeing a lot of enthusiasm. We're building a lot of product there as well because just governance information tools

is kind of part and parcel to one of the core features of our enterprise product. And I think if you zoom out a little bit and you think about the future of work being decentralized and really centering around protocols and marketplaces versus companies, you're really talking about wholesale changes in the kind of structure of the theory of the firm. Right. And the way to build those out and scale these protocols, it will not be to have proxy votes every single time you want to unlock $100,000 of treasury to an individual contributor, right? So you need to

kind of build in delegation frameworks and like committee frameworks and then performance monitoring and all of that, the company level. But now you have to think about it as a decentralized organization without the typical like hierarchical system that's just, there's a dictator on the top, and then his or her lieutenants, and then their lieutenants, and then the worker bees. I think the way that you can basically replicate that management infrastructure and those hierarchies has to be through 100x improvement in information flows and availability. Because you're not going to get people, like it's already difficult to get people to vote. They need decision support tools to basically like click, sign, approve, and know

what they're doing. It's not just spraying and praying capital for folks that are going to be contributing or creating like major misalignment issues or, or, you know, just generally, you know, piss poorly managing these, these protocols in our communities. I think, you know, good information, you know, good governance tooling is going to be a big part of solving that and helping, you know, decentralized contributors scale and, and, you know, get more people in this economy that never worked for a company again. I think that'll be, that'll look obvious and be the norm in 10 to 15 years. But we're like, you're talking about beginning of this year, maybe there was like a dozen people talking about this,

working on this full-time, like in a professional capacity. Now it's probably 50 to a. And I think that's going to continue to skyrocket. The kind of case study that I think people are going to point to and that a lot of ideas are going to be born from is this flip side proposal that just went in front of the Uniswap Grants Committee. It was interesting for a whole host of reasons, but basically the proposal was ultimately pulled to provide analytics platform and then kind of different data analyst bounties on behalf of the Uniswap community for basically an allocation of Unitokens. It was voted down at the kind of last minute because there was a groundswell of

opposition to it. I think the opposition was around a centralized company being both the provider of services and the distributor of tokens to other kind of subcontractors within that system. I think I actually agree with that structure and I think that's the right way to do it. But I think at the end of the day, the issue was not that Flipside was going to make some money and the analysts were going to make some money and they were kind of serving as both the middleman and one of the primary actors. I think the issue was a lot of people kind of felt that it went through without anybody debating it and without kind of stress testing, like the numbers involved, like whether this was a good thing, whether it sets bad precedent. And so the result of that, I think, is going to be more kind of proactive discussion around how are these centralized entities managed? How are treasuries spent?

How do companies versus service providers versus individuals organize themselves? And that there's going to be multiple billion dollar businesses built solving those problems in the years to come, because we know that these decentralized marketplaces and DAOs are going to be the future of how user-owned networks are ultimately governed and scaled and compete with their centralized alternatives. Love it. Great answer. So where can everybody follow you after this and check out everything Masari is doing?

Sure. I'm on Twitter at 2BitIdiots. Masari is at MasariCrypto, M-E-S-S-A-R-I, crypto. And we've got our Mainnet conference coming up. Are you coming? You should. Mainnet.events. I would. I saw you tweeting about it, actually. So check that out.

September 20th through 22nd, Mainnet.events. We've got 2,000 attendees, 150 plus speakers, 100 projects represented. It's going to be the event of the fall, given that I think DEF CON is going to be moved again. So it will be the best and largest crypto event of the fall. And I can say that unless DEF CON somehow pulls off an event in Colombia in two months, which I don't think is going to happen. I don't think that's going to happen. New York in just a few weeks. Awesome. Well, I think now that I've had you three times, I'm going to change my Twitter name

to 3BitIdiot and one up you. Yeah, there you go. Go for it. I'm never changing my handle. I'm never changing my avatar. Never, ever, ever. So thank you, man, for doing this. I appreciate it for a third time.

Always great insight. And we'll get you scheduled for the fourth in the coming future. Awesome, man. Always a pleasure. Thanks for'll get you scheduled for the fourth in the coming future. Awesome, man. Always a pleasure. Thanks for having me. See ya.