The Wolf Of All Streets - Tokenizing Everything | Crypto Town Hall w/@tap_protocol

Episode Date: June 4, 2024

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I think we've had what's Bitcoin's next move as the title 17 of the last 19 days. We're doing great in that department. But we are at least seeing some inflows. James, I saw yesterday over 100 million in inflows ETFs, or I guess was that across products or ETFs? I think it was ETFs specifically. That was ETFs specifically. That was ETFs specifically, yeah. Just, again, as usual, it's mainly activity from the U.S. Fidelity at the most, 77 million in high shares.

Nothing yet this week. Been in for Bitwise and been in for ARK. So, yeah, it looks like we might enter into a fifth consecutive week of inflows it's not the kind of same sort of levels we were seeing um in the prior sort of big run in february march um but the last couple of months have amounted the last month sorry has amounted to two billion dollars so not bad at all yeah that's, I think it's significant, especially in this kind of phase of the market. There was a story today that the Wisconsin pension fund

that obviously had bought about $100 million but had just dipped their toes and intended to buy a lot more. Obviously, in all the filings, we saw how many institutions have exposure to these things. I mean, price may not be reflecting it yet, but clearly there's a lot of institutional interest in the background. Yeah. And who hasn't as well? I mean, if you look at hedge funds of the largest positions, an average of 2.1% and then private equity at 1.5%. But what well in some ways surprised me was that investment advisors only

had 0.5 percent average position but i think what i was telling you is there's still a route to market sort of access problem for many um people in the investment advisor space and or retail investors and that kind of echoes with a lot of platforms still having not allowed Bitcoin yet. So maybe in the next filings when we get there, what will they be sort of mid-July, we'll see a lot more color because the 13F filing only represents about 25% of the assets under management. So it's still pretty low. Yeah that that makes a lot of sense i mean i guess now the conversation becomes what happens with the ethereum etf if and when it when it gets launched i mean are we still thinking july james yeah sort of mid july but i think after the i think the s1

i think it takes 75 days. There's probably someone that knows a lot more about this than me on the line. But yeah, 75 days, it probably will happen. But we think it could be just like what happened with the Bitcoin product. So Grayscale being locked up, you had a 60% discount this time last year. That discount's trended towards zero over the last year in anticipation of this. And I just think people, they've been locked into it because of that discount and they'll start selling out. So it might be a disappointing start. And it also comes in unfortunate timing, just July the 4th or just before or after then, people going on holiday.

There might not be that much action until September. Yeah. Jeff, you probably have more color on that. Yeah, I think what we can share is there's been active engagement and it does seem like there is movement. I don't think that we can be super surgical on timing itself, but there has been some rounds of back and forths and we expect there to be a few more of it. And I think July is a reasonable target. I think that is something that we are optimistic for. But yeah, I think we're kind of all in the same boat with all the other issuers here. Isn't it better to, the longer the better here

because we need time to prepare. We need time to prepare the adverts, to prepare the demand, all that stuff. In this case, I think people got a little bit caught off guard here. I remember with Bitcoin, we were all excited. We had ads. There were brokers playing golf with other brokers talking about the Bitcoin ETF. With Ether, it's like, no, it's happening.

Yeah, I think that's a great point. There are a few reasons for it. I think marketing is certainly one of them. We are moving very quickly to have some fresh campaign ahead of us. And I think everyone will be excited to see it. And we're working tirelessly on that. The other front, and I think my colleague Matt Huggins mentioned it a few times, is we just really need some time to digest the Bitcoin ETF in itself. And so, as you pointed out, they're kind of related. The marketing story of Ethereum is much more complex than Bitcoin and how you will choose to appeal to the audience. I think what you're going to see is a greater variance of original thought amongst even the eight to nine

issuers live today. I'm really curious and excited to see how all our friends and peers and competitors are going to try to flex their marketing engine to appeal to Ethereum. Ethereum is, as from my experience of having been in front of a variety of RIAs, one of the most complex things to pitch because it is a mirror. It's kind of a reflection of what you want it to be. And there's something really kind of compelling about that where we should see some of those things in action. And it is a lot more work, as you pointed out. So yeah, we are working on it here at BitBiz.

Yeah. I went to an RIA conference in Vegas, 300 RIAs, not huge. And I was there when the Ethereum Spot ETF got approved. So on Monday, they said it was likely to get approved that week. My friend invited me on Tuesday. I was like, hell, I'll go and check it out. No, I mean, I must have asked 100 of them. And I would say a minority even knew a Bitcoin spot ETF had been approved.

The majority certainly didn't know about an Ethereum spot ETF if they'd even heard of Ethereum at all. I'm talking about like 90. No idea. Right? So I think Bitcoin had even a brand name ahead of the ETF. Everybody heard of Bitcoin. Maybe they didn't know that there was an ETF yet or know much about it. But like, talk about even recognizing the name Ethereum, much less that there's an event happening here, right? So the learning curve is going to be far, far more difficult. Totally.

And the last point I would mention is I know all eyes are focused on the ETH ETF, on the action of the SEC with the S1s now in motion. But the other thing that we saw earlier in April was SEC delaying the listing of Bitcoin ETF options towards the end of April. And that timeline actually is going to hit towards the end of April. And that timeline actually is going to hit towards the end of this year too. And I actually think that's a much more momentous change to the capital markets that we can be excited for and anticipate. And that is something where I see a little bit of imbalance in the public dialogue and discourse. I think we should be equally excited for the

possibility of those things and the effect that will have versus the spot ETF on Ethereum. What's easier for Wall Street to understand? A store of value that does nothing but store value and allow it to transfer from one place to another or a base layer for multiple apps to build on? Yeah, so you're talking to 65-year-olds who are going to look at you cross-eyed when you say a base layer for blah, blah, blah. I don't know if I should trademark this here in the moment, but when Jeff was talking, I thought to myself, understanding the audience that's going to be hearing the pitches associated with Ethereum ETF, you know, probably the most concise way that they would understand it is Ethereum is akin to Cisco in the early 2000s

associated with the internet, um, that you're talking about the levers and pulleys and the quote unquote, because you can make that case and they'll understand it. You know, the Cisco of the early internet, and then you're able to then talk about the point that you just made, Ran, and it will make more sense. If you lead with dApps and apps and blah, blah, blah, they're not gonna know what that is. But if you lead with, if you understand what Cisco was in 2000, 2001, 2004, 2005, that's what Ethereum represents

associated with the crypto ecosystem. I don't know if I should be paid by the issuers here, but maybe I'll hold out on that. I don't know. We send a formal request. Yeah, I'll make a submission to Bitwise and VanEck and the like. But I do know that that particular pitch or a version of it, because it will have to be fairly concise, because then they have to dumb it down even further to their customers and clients. I hate to use the term dumb it down, but that is the reality, right? If an advisor is 65 years old, most of his clients are older than he is. So the idea that you're going to pitch base layer, that can be the second or third sentence in the pitch. But the initial pitch has to be almost a visualized story of can you understand what I'm talking about?

And Cisco and the early Internet, there's going to be a lot of people in that 65 to 80-year-old range that owned a ton of Cisco over the past 20 years. So that's going to be a point that will resonate in some way, shape. Here's the tough part, though, you know, in some way, shape. Here's the tough part though, for, for the issuers and their marketing, they can't put into a campaign that they put in, uh, airports, wink, wink, um, and magazines and, and, uh, and on, you know, CNBC that, that mentioned Cisco by name that, that, that would run afoul of some trademark issues. So, yeah, it's still going to be a tough sell. But, you know, in those meetings where they're face to face and, you know, providing lunch

to a, you know, to an office of however many, you know, Morgan Stanley guys, you know, that type of word picture probably would would would resonate we pitch bitcoin as a bit like amazon web services but with the currency rolled into it and i think a lot of clients kind of can grasp that concept of it i think one of the the worst well the difficult things about the etf launch in the united states and it's different to Europe, is that these assets are not offering any staking, these ETFs. And that puts them at a big disadvantage to other investors in Europe with these ETFs or just straight out holding Ethereum or people who can stake because that's quite a lot. You can pound that. It's 4%. You can pound that every year.

That's quite a significant amount. and i think so a lot of investors might be feel like it's a bit of an inferior product and might hold out until staking comes along i mean i don't know legally how that can be untangled um in the current sort of etf structures in the in the us but you're definitely a bit of a disadvantage. Graham, what do you make? I just said it's a small pivot. We just got, Bitcoin just kind of got rejected at 70 again. What do you make of the price action here?

I mean, to me, it's just sideways chop and boring and we're on the hunt for narratives, but it does seem like 70,000 has been a real struggle. Anyone have an opinion on that? Go ahead. The range has been extraordinarily tight over the past 60 to 75 days. If you go back to the last cycle in 2021, Bitcoin was down effectively 50% 60 days after it hit its cycle high. We have been in a range between 60 and 70 for all intents and purposes the last two weeks and a range of anywhere from three to eight percent above and around the all-time high now for about 60 days. The price action for sure has adjusted. You know, I wouldn't, you know, smart folks would probably say not the worst idea to hang out in between, you know, 63 and 69K, you know, with a floor of

BlackRock and Fidelity, keeping it in that price range. My guess is, is that we go higher at some point, but it's probably be another couple months, but having, having the price hang out at or near highs versus what things look like in 21, 17 and beyond. That's a, that's a huge,

huge, huge shift. Yeah. I mean, we ran sideways for months after the halving, basically every time. You have to be surprised. But, you know, now we are in the top half of that range. So I would be surprised if we don't at least get kind of near that all-time high.

Although we did hit basically 72,000 just kind of at the end of May, two weeks ago. Well, the sideways too, though, was still a little bit different than it is here today, right? Sideways was, you know, 15, 20%, 11%, 12%, you know, a range that is different than three to six, right? Or three to eight. So, you know, we've kind of stayed on this. Yeah, sorry. Yeah, yeah, yeah. It's 23.35% from the top at 73,777 to the low at 56,552. I'm just looking at a chart. So yeah, I mean, it doesn't mean we won't get it, but usually we're talking about that 30 plus, you know,

and we've gotten shallower retracements the entire way up. Right. And that 57, maybe 48 hours later was followed right back up to 62. And we basically haven't, we haven't budged below that in a meaningful way since so yeah it's a you know um the price action is interesting and it begs the question when and what is the is the next meaningful move or is or is that a part of the you know part of the way that bitcoin acts now um you know you've got overnight overseas type of stuff that is just extraordinarily muted. Weekends, very, very muted. Very, very different than what, you know, we as crypto Twitter degens are used to back in the day. It's very, very different.

Yeah. Michaela? Yeah, just wanted to add to what Andrew said we're in a stage where seasonality is definitely key, right? I mean Bitcoin seasonal price pattern over the last seven years is quite an statement by itself

we're seeing the intraday performance currently decreasing slowly as we're entering summer but as I said it's just about seasonal performance and this pattern has been seen through how different markets for ages. I know all asset managers at the moment are just taking the best of it. If we understand statistical significant seasonal performance then the rest is to take from there. No investment advice

from this is just purely dropping research. But we're on a stage in which we just need to sit and hold. Decisionality will do everything by itself. And then just mentioning what the rest of the speakers said a few hours ago, it's like we're not here for quick wins. If you see, for example, the etf when it was first launched um it took over almost four years to reach the maximum potential of that investment vehicle so i'm not saying it will take the same for bitcoin etf and ethereum etf but it's just going to be a matter of just wait patiently it's not going to be the institutional influx is not going to be

direct it's going to be gradual progressive and we're seeing that already so yeah that was my yeah i think gradual and progressive is exactly what we want this time right i don't think we need to massively overshoot and go parabolic and cause them to catch. I think slow and steady growth with inflows is exactly where we want to be. Well, we're smack dab in sell in May and go away too. So we're in the middle of that. And you think about all the 13Fs that came out, and those are just their initial allocations to Bitcoin. They're not moving that position, right?

They just took that position. And any of those positions of size, they're not looking at charts over the last 48 hours and said, oh, we need to sell a third of this position. That's not happening. Those organizations exist inside of traditional capital market structures. And for all intents and purposes, Bitcoin is a part of that now. And so the lack of volatility versus what we've seen from 2015 up to about a year ago, that daily possibility of some piece of information coming out that the main character in crypto Twitter has screwed up and Bitcoin dumps by 12 percent. Yeah, that's gone. That's gone. You know, unless Larry Fink gets caught in a, you know, in a, you know, a way station doing weird stuff. We're not going to have a Bitcoin dump associated with the main character.

Yeah. Yeah. Paul, what do you make of all this i kind of just think i was just thinking about you know the the practicality or the functionality of of uh when you're talking about what the end investor really wants and you kind of think back you know before like 94 1994 like you couldn't buy like a share of stock on you know on the online you could only buy it through a broker directly calling someone by 2004 was commonplace same thing you couldn't buy a hundred million dollar treasury you know investment for you know institution couldn't do it before 2000 without speaking to someone. Now, there's old trade web and different systems like that. So, I kind of think of the key investors,

they're really trying to see what the functionality is going to be for them, owning owning, you know, let's say, you know, effective like gold or something like that. You know, the Bitcoin is now the new gold. You know, that's useful, but it doesn't show like a function for them. And, you know, it is going to take a long time for those kind of, you know, they don't see the progress that's being made. But, you know, over time time like you just said it's functional i was just like reading an article like they tokenized a uh violin from uh stradivarius yeah stradivarius it's like okay like i mean is that practical or is that hokey like what

what's the real reason uh it's useful uh thoughts on that yeah but yeah it's pretty cool though it's cool yeah it's cool and then but it's like is someone going to trade a portion of their their ownership on the fly like probably not but it will someone eventually you know sell uh like their uh their money market online through some tokenized method? Yeah, of course. I think that'll happen. I mean, it can happen now, but maybe it's going to take 10 years for people to get there. This is the underlying technology that can provide it. Yeah, I mean, the Stradivarius is interesting. For those who missed it, I think it was

a 316-year-old Stradivarius from the 1700s. It was owned by Catherine the Great. And Yatsu, who we often have on the show from Animoca, was the buyer. I think it was $9 million at auction, if I'm not correct. I could be not correct, but something like that. And Galaxy, Novogratz, basically, we don't know the amount of the loan, but issued a tokenized version, an NFT effectively to prove ownership, a tokenized version of the violin. And both the NFT, I believe, and the violin are being held in custody in Hong Kong by a third party, certainly the violin itself, until the loan is paid off. And then, yeah, that gets the strat of area. So obviously, that's not as Paul pointed out.

There's no mainstream use to that. But I think it's a very interesting proof of concept and a very smart move by Galaxy to attract high net worth individuals into situations like this, because this could be very, very useful for them over time with very trusted, uh, counterparties in transactions like this, you know, I mean,

you know, yeah. And Mike obviously know each other. They know the money is there. They're doing this, uh, sort of symbolically, but it could become very interesting because we know that,

you know, the, the ultra wealthy collateralize their, um, collateralize their possessions all the time. I mean, the first time I ever had Sailor on my podcast right after he built... After he bought Bitcoin for the first time, he went into detail about the mechanics of using your yacht as collateral and how hilarious it is that Bitcoin is not really accepted as collateral when they are going to have a lot of trouble going to get your yacht if you get liquidated. Right. So this is not an uncommon thing. You think of the in the art space, like the provenance of art is so important. And that's something that the blockchain can

definitely cover. And again, yeah, you can provide financing financing lending against your art um you know via tokenized method and this you know it's but it's not like the your average person is not going to have that you need that functionality but it's something that you know it just kind of builds up the network over time yeah really really interesting i would say actually the more interesting story is, now I don't have it in front of me and my brain's not working particularly well today, but the football team that is Watford, I believe, Watford FC that's tokenizing 10% effectively of the ownership of the club and selling it to the fans. That's a much more interesting and bigger story for something like this.

But the bottom line is clearly this is happening now. Right. I mean, if any of you, Mike, did you by any chance take a look at that story? I don't want to put you on the spot. Yeah, I mean, this is a controversial topic because for me, I think about the value of blockchain as a native digital asset. And so when we think about things like a violin or a Picasso or even a football team, the question is, what do you actually have perfection to?

Do you actually know it's there and do you own it? So with Bitcoin, you certainly do. It's a native digital asset. But for a real world asset, it's a much harder construct because you have some trusted oracle. And the premise of blockchain is to not have to trust anything. So I'm conflicted about the use cases. I like to see them happen, obviously, because I like to see the blockchain adoption, but I like to see more native digital asset use cases as opposed to physical assets, because I think it's a stretch in terms of that trusted Oracle construct. Right. Well, then what about like, you know, in theory, lending against a crypto pump, you know, like

native digital assets that have a relatively stable value. I, you know, I'm not going to say we should be lending against meme coins or, you know, low float assets or a bunch of crappy NFT projects, but the things that actually have some proven value that are digital. And that's a great use case. Lending against Bitcoin, lending against Ethereum, Saylor is absolutely right. It's an asset secured loan and you have 24-7, 365 perfection of the collateral. It's the best collateral you can get. And so right now, because of the bankruptcies and sort of the absence of lenders, the cost of

capital is relatively high on a secure basis because of the overhead of crypto. That I think will change over the course of the next couple of years. And you'll see crypto-backed loans, everything from crypto-backed mortgages to crypto-backed personal loans be much, much tighter than non-asset backed lending. And one of the things you're seeing on the exchanges right now, and I had thought this was because of the ETFs, you're seeing the cost of dollars be very, very high. So if I go to Binance, my overnight borrow margin rate is over 20% for USDC. The term margin borrowed for three months, I think, is right now probably 60% or 70% annualized.

You know, Aave, the other day, hit the inflection point, broke through 92% of utilized USDC, and so the rate started going up hyperbolically. There's a lack of dollars in the ecosystem right now. And I think that's one of the biggest issues when you think about the price of Bitcoin. You know, lack of access to that leverage, I think about the price of Bitcoin. Lack of access to that leverage, I think, is somewhat of a headwind. And I think that the institutions, as they're getting comfortable with Bitcoin, are going to get comfortable with putting dollars against Bitcoin. You're going to see a lot of dollars come into the ecosystem over the next 12 to 24 months.

And I think that'll help in a whole bunch of ways in terms of both supporting prices, providing access to capital, but also providing more entrepreneurial opportunities as well. Yeah. I had Sid Powell from Maple Finance on YouTube this morning. We dove pretty deeply into this. Obviously, they've launched a lot of these products. And right now, he said there's a, I would say, a huge demand, lack of supply for people willing to make loans. So those who are getting pretty high yields, once again, in a pretty secure environment, sort of as you've described here, maybe 15%, 18%, again, we're seeing here. And we're nowhere near to that end of leverage that we saw at the end of the cycle. We're at very early cycle levels of

leverage in the system right now. That sort of leverage, I can't speak to perpetual swaps. That's right. That's right. I mean, if you look at our lending platform, we lend, we do traditional lending like HELOCs, but we do them on chain. And that's secured by property. And that LTV might be up to 80%. And we charge, call it 10.5%, 11% for that loan. Right now, we have to charge higher than that for a Bitcoin secured loan at 50 LTV. And the risk profile of that is a much better loan. That's a money good loan. I mean, Bitcoin has moved over 10% in a one minute interval once since 2018. It did it a few times in 2017, but it hasn't done it in the last five years. And so it's a little bit crazy, the dynamic between risk and return on traditional lending versus Bitcoin secured and E secured lending. But as I said, that'll normalize that.

I think institutional capital is starting to lean in. I think folks, like you had mentioned, the City of Wisconsin Investment Board, who are long Bitcoin, I think folks like that are starting to look in the lending space as well and realizing there's some outsized returns there right now. And I think capital will flow in

and bring that cost of financing down. Mike, how do they see it? But how does that get past the risk managers? Because we obviously know how long it took them just to do due diligence on Bitcoin. And even on a Bitcoin ETF, which is viewed to them probably safer than Bitcoin. So what kind of timeline does it take or what type of process to say, now that we bought it, we're also going to go collateralize this? It takes a lot of patience, a lot of perseverance. But one of the biggest things is education, because the number one question that we get asked from institutions, whether it's the Apollos of the world or the pensions and endowments on these Bitcoin backed loans is, well, what if Bitcoin goes to zero? And the response is, well, as long as it doesn't go to zero within 30 seconds or 60 seconds,

that's not an issue because you have this 24-7, 365 perfection. And I think that in general, people don't understand how deep and liquid that market is and how much you can push through that market across different exchange venues at any given point in time without moving the market. And so it's an education process. It's showing them the price action of Bitcoin, showing that, hey, it hasn't moved more than 10% over a 60-second interval in five years. And that education process will get people more and more comfortable and they'll lean

in. And ultimately, what I think you could do with Bitcoin-backed loans is I think you could securitize them. And of course, I would securitize them on-chain. But I think you could effectively do a 90% A bond on the top and a 10% support in it. And if the loan was at 12%, and I think that A bond is around 8%, that equity underneath is, you know, 35%, 40% yield. And that's enough to, you know, there's enough greed out there that people will start moving in and taking that. Yeah, I'd probably take that. Jeff, go ahead.

Yeah, I wanted to echo all the points that Mike was sharing. I think education is a critical part of it. And the other component, too, is we really do just need more regulatory clarity. I mention it because there are aspects of this that I think organizations like SWIB and others would love to touch these assets. But there are some roadblocks still ahead where we need conversations around the actual accounting treatment too. So take, for example, there is a wide-reaching accounting rule as it deals with derecognizing assets off the balance sheet, for example. It's called ASC 860. And it concerns itself with how do you book an asset that you might sell or transfer, where control is surrendered, and therefore you do recognize it off of your balance sheet.

Or if it's some way that you're actually pledging as a collateral, and where you may not. And, and it deals specifically with financial assets. And I think the original intention is to assist with booking around repo transactions, for example. Here, we have this weird dynamic where stablecoins get caught up in this, right? Stablecoin is cash-like in many ways. We think about it like cash. But it's in the scope of being potentially a financial asset in the way the SEC would like to consider its treatment. So to participate in, you know, you mentioned Maple, for example, if you're not using Bitcoin back loans, and you're trying to use USDC or stable coins,

which I do think is the predominant way that institutions still want to try touching some of these tokenization type projects, less so with the Bitcoin native approach. It's a roadblock. It's actually a little less clear. In fact, what I'm trying to say is, it is in fact, much easier to do Bitcoin backed loans, not dollar denominated loans. And that's a paradoxical thing for something some organization like a SWIB. So I just want to echo the point. I think the Maple folks are doing a great job educating. We certainly are trying to push the narrative forward in the ways that we can as well. And all the things that Mike is doing on the forefront is helping drive that dialogue. It's both a combination of education and a little bit of the regulatory clarity

that we need to address some of the modern aspects of these financial assets. How much risk is there with the unknown unknowns, the smart contract risk or hacking risk, things like that, that they just can't even vet or due diligence. Jeff or Mike. I think one of the, you know, one of the easiest things to do with, with crypto backed lending is you can say, well, I'm going to use a qualified custodian like Anchorage to hold the crypto and not rehypothecate it.

Obviously, rehypothecation was what caused all the problems in Celsius and BlockFi and others a couple of years back. And I think people can get comfortable with that. I think that a better solution on the back end is multi-party computation wallets. I think MPC is especially decentralized MPC. So some of these custodians run MPC internally, but they're the policy signer across all nodes. And to me, that's a little bit of an improvement over a centralized custody construct, but it's still a centralized actor controlling the asset and vulnerable to the hacking attacks. So I think MPC is, in my mind, one of the most important technologies that's coming to blockchain.

And I think over the next two years, it's going to become a predominant technology because of what it does in terms of allowing for cross-collateralization and decentralized custody. And it also is a much better way to prevent against hacking and other attacks. The problem is, you know, I think someone had mentioned earlier about explaining to a 65 year old a level one network, going into a pension and trying to explain multi-party computation wallets is not a task that I'd want to take on necessarily in the morning. Enjoy those risk managers. Yeah. So we got to figure out ways to make this accessible and understandable.

But I think that you can generally get past the smart contract and hacking construct with the easy out. It's just, hey, I'm using Anchorage. It's a qualified gas bank. Yeah, so the answer is that we've come to a DeFi-CFi hybrid, where effectively you have the smart contract executing margin calls liquidation, but the actual coins are held by a trusted custodian. That's right. In a hot wallet to manage that execution if you need it. Yeah. Interesting. So, you know, because even in the last cycle, I mean, we had all the CIFI collapses. DeFi hummed along pretty effectively, right? I mean, we saw orderly liquidations, the collateral was there. It was pretty straightforward.

But then you do get the risk of the hacks and rugs and such. So it seems like that might be now the natural way to go with that sort of hybrid approach. It really does make a ton of sense. David, have you been looking at any of this? I have not. I'm going to play the rates. You're too busy buying ethereum uh i'm trying to accumulate as much as i can before it goes to the moon for those who don't know david effectively has a uh similar structured company in uh

canada that's doing what micro strategy is doing in the united states but with ethereum so it's been a bit of a wish you We wish we'd gotten more before it rocketed. What are your thoughts on what's going to happen with the ETF coming? I really don't know. I wish I had, you know, something really wise to say on this. Bust out your crystal ball, dude. Come on. Yeah.

Don't I wish. Look, I tend to agree. I tend to defer to the ETF experts over at Bloomberg, who seem to be the most informed. You know, the S1s being revised and submitted are encouraging. And, you know, my expectation is, I think, like most others, is that we get trading on those ETFs before the end of June. You know, just a plug for Centaurus, you know, we are able to stake in our stock trades, both in Canada and in the United States. So I think that that will be a differentiator for us for some time to come, whether it be staking, restaking, whatever other activities we may do and potentially invest in other

layer ones as well. But, you know, I'm really like, I think like everybody else with respect to the veto of SAB 121 at the end of last week, just incredibly frustrated around the fact that we just have absolutely no understanding, we being the public, has no understanding of what the direction of this administration is. And that's just not a good way to run policy, especially for an emerging industry. It's really hard for people to go ahead and put their full force and efforts and resources when they don't know if things are going to get, things are going to pay off for them, whether they're going to get sued to the point where they run out of money in order to go ahead and defend themselves.

It's just, it's, it's really, really, it's a really bad look by this administration. And, you know, as with a lot of policies coming out now uh from the white house you know relating to the upcoming election it just seems like there's a lot of schizophrenia going on and that's just uh it's not a lot of fun to be uh be involved with scott i wanted to shift to tap protocol if it's a good time yeah perfect because it's uh i was just going through the project and uh i've got got some cool questions for them, especially when they're being built on Bitcoin, so it makes it pretty exciting. Guys, is your mic working?

Because Twitter's been glitching all day. Yeah, mine's going good. Benny, you sure it's all right, mate? Hey, Benny, how are you? I'm all right, too. Thank you for being here. All right, so whoever's behind the TAP protocol account, your mic is bad.

Benny's mic is perfect. So while I just ask a bunch of questions Just please make sure your mic on the top protocol account is working. Yeah, so what was your name? Sorry, sir on the tap account Well, I'm Benny you can't really hear me. Oh Benny. Yeah, the mic isn't great We can hear you but it for just for people to connect it's got to be pretty crisp clear so I'm not sure if we can fix the Bluetooth or anything. But let's give it a shot in the meantime and you try to fix the audio.

You'll fix it for me first, Mario. Yeah, perfect. If you try to fix that, mate. Yeah, beautiful, Fitzy. Where are you from, by the way? England or Australia? Yeah, I'm from England, mate. England, nice.

All right, cool, cool. Listen, man, I was just going through Tap Protocol. Just tell us first because I got a few questions on why you've been building on Bitcoin as on Bitcoin's L1 is just a,

it's a fascinating decision that I want to try to understand a bit further. But first, just kind of give us an overview. What is TAP protocol? And disclaimer,

we're invested and we're very happy investors. No, no, great, great question. So TAP's a Bitcoin meta protocol and the short version is that it enables sophisticated functionality that's perfect for creating DeFi, Dapps ecosystems, basically like we've traditionally had on chains like Ethereum,

right? But except, as you say, TAP is built on L1 Bitcoin, no L2 infrastructure is required, and just for a bit more about a higher level zoom out for a second, TAP Protocol is one of the broader part of the TRACK Systems ecosystem that includes TRACK Core, which is the only decentralized Bitcoin indexer and also serves as an Oracle network. So it's like if Chainlink and The Graph had a baby. So that's kind of the setting the scene for you.

And I'm just kind of dumbing it down for the for the average person It's just joined crypto chip There isn't many in those spaces and in the crypto town hall spaces, but good to do it as well Just for the average Joe for the user. What can they do on tap protocol? Kind of linking it to see find a way to miss relatable. Yeah I mean you can do also again if you think about traditional behaviors that we have so you know it's taking pools and all this kind of stuff You have that on Ethereum.

No one ever questions it. But because of the difficulties of building at an L1 level, everybody never thought, including me, I must say, until I sort of, you know, was aware of that, never thought that that would be possible to achieve here. But it's more than DeFi. So we have gaming built on there. You could have social five governance.

You know, you can have tokens do as you wish them to be. You have more control over that. And I can come on to the specifics of how distribution is just better, smoother, and also cheaper. So in terms of a very basic level, think about behaviors that you see on Ethereum and you don't even question in terms of models that can be built out and ecosystems and economies, that facilitates that on L1 Bitcoin. Yeah, but how are you able to do it on L1? And why do you guys just choose to build it on an L2 Bitcoin?

It's a great question. It's one of the absolute technicals. I mean, you're definitely going to want to ask that to Benny. If your microphone's better, maybe just pop in here with the actual technical deep dive on that. Yeah. Is the mic better? It's a bit better. Yeah, Benny. Okay. All right. Yeah. So I'm relatively technical, but I tried to make it simple.

And I also should also refer actually where we're coming from. So literally, since like 15 months or probably even longer, the space is always trying to figure out right how to do things on Bitcoin, basically. So there's one like a stream of people that say, okay, we need to put like literally everything on uh on l2 and there is a another part of people that are saying okay uh we like l1 better for various reasons we'll come to that to that a little bit later and um and in between there sits these so-called meta protocols yeah that you have uh since the emergence of uh of bitcoin audience for example which the tech protocol is one of so um and we had recently in the past like um uh literal um um yeah kind of um experiments right how uh how you can do um these things or that things right and um the problem was that um that the uh the actual research on that what can be actually done on an l1 you dating all made up protocols and bitcoin audience wasn't really explored further um we that or we keep doing that and the reason why we keep doing it, that is simply because it's not just about asset classes that find the equivalent, let's say, on EVM chains, right?

But there's also new asset classes that you can only literally create, right, on Bitcoin. For example, an expression of that would be digital meta theory, which is implemented in the tech protocol. Just to be clear, so you're saying there's some asset classes that can only be built on Bitcoin? Yeah, if you literally want to have them built on Bitcoin, you can only build them on Bitcoin. This is the non-arbitrary approach, right? So when you create an asset class, let's say a fungible token, it's based on the history of Bitcoin itself. It's literal data that has been computed and stored, right? And instead of arbitrarily saying, okay, my token XYZ is having that amount of supply, let's say.

The supply is dictated by what happened historically on the Bitcoin chain. And that also goes further into non-fungibles. We have in the TAP protocol, for example, a DMT asset class for non-fungibles called UNETS, right? And this is something that people are pretty bullish on, right, in that space. And, of course, it can do like all the other asset classes that we know and love already. But if you want to have all these new opportunities, new features, things like that, you're forced to do that

on L1. If you would, for example, do that on L2, it's not Bitcoin. You could potentially make a reference to it but the settlement layer for that is L1. This is just an example of why we're actually doing it the way that is.

But we also left the door open, of course, to connect with the protocol to L2s. It's not a one directional thing. And I think that this opens a lot of opportunities because this space especially is all about experimenting. Even if that might sound a little bit counterintuitive when you're coming from super streamlined EVM solutions. And just recently, you probably saw that too, there was a super funny meme going around on X, right, where there was a video, you know, like here, Bitcoiners are figuring L2s, right? I don't know if you can recall that. But it literally is like that, right? There's a lot that needs to be figured out. And every time you're doing these things something new emerges right and um

it's it's it's about to give not just to give uh the uh life to things that already exist but also potentially life to stuff that people don't know yet right and that they are that they are discovering and especially with that digital meta theory stuff in the past, the resonated very, very strongly, we had probably already combined 1 million minutes on DMT assets, or even more just in the recent few weeks, right? prematurely even before we're going out with with tap itself. And that that signals us there's a demand. Before getting into technicalities, because we've already gotten to technicalities, but I want to understand

what you mean by authorities. I was just going through your website and how that works. But just from a regulatory perspective, because we were talking regulation earlier, is there any difference when building on an L1 versus an L2? I would say yes um we are located in europe and we are um we're following the the um the regulations here and um you you can already like see it um based on on decisions that the

eu regulators for example uh and force up on on on projects right just EU regulators, for example, enforce upon projects, right? Just to give you an example, you're having a kill switch in a smart, having the requirement to have a kill switch in a smart contract, yeah? For example, shows you that if we would put out, let's say literally as the main characteristic of a protocol, something that requires the use of

actual smart contracts in that sense, that these require, this protocol would fall into this. And our strategy is here to say the TAP protocol that allows that for tools, but it's not its main characteristic. You can literally achieve as an approximation of what you can do on EVM chains. The same on an R1 without it being like a smart contract. Also, it sounds a little

bit counterintuitive. I hope in the coming days and weeks it will be more clear. But we're not that much exposed to that kind of risk simply because there are no smart contracts in play per se. Yeah, and just going back to the question I had about

what are authorities? It talks about enabling a better distribution of assets. Can you explain that a bit further and try to avoid getting too technical? Yeah, authorities are literally like a hook into the protocol where you can literally extend the protocol without the protocol needing to know what's happening within the authority. And the authority itself can be by itself an L2, right?

There was previously a discussion about stables and things like that. that would also fall in that category if you, for example, need to have an authority that does liquidations, right? And then needs to be literally like an authority that is actually as an entity regulated in some country that would play into their hands legally, let's say. And when it comes to better distribution, there is an example. It's called the privilege authorities. This enables you, for example, to directly on L1ly distribute uh distribute assets from the protocol can be uh can be um fungible non-fungible tokens regular ones dmt assets whatever i can distribute those through such an authority and why is that important because previously on l1 we had with the issue for example that people got front-runned a lot.

That's also something on the EVM side where you would say, okay, nothing special. We could put mechanics in a smart contract with whitelisting and things like that. And what's so special? Yeah, it wasn't possible before to do that. Now it's possible uh to streamline and it solves a ton of problems for example uh congestion issues um m scribe io for example did uh recently uh um a um a uh a mint yeah um um as a white listed meant using privilege authorities and you could notice that on uh on on the Bitcoin chain in terms of

congestion and high fees like usually when some bigger uh minutes are happening I believe they're at around 10k of size and you could notice it simply because it was done in orderly fashion nobody was trying to you know like to front run each other and it's also not not a way of like um a weird way of you know achieving um something like this what i mean by weird way is for example other protocols they try to do a similar thing by literally asking a pool oh can you please put our mint mint inscriptions right in into that block all together right so nobody else can do that yeah and um that's that's it's unfair and weird you know like it doesn't really solve the problem because you're preferring a certain type of transaction which would be then ordinals right

uh just for a mint right and in this way it just what we're doing is basically following the principles there we're exploring that further and um try to optimize that and and use and and try to use l2s where it's absolutely necessary and not like as a catch-all you know like solution for everything yeah and by the way yeah did you guys get ran on board I can see in your list that you have a few KOLs. I see Ivan on tech, and you had Ran on board as well? Yeah, that's cool. Oh, cool. I'm not seeing Ran do much recently.

Do you have a guy called Scott? I don't know if you've heard of Scott Melker. He has a channel called Wolf of Wall Street. It's a YouTube channel. He's pretty good. I think my invitation got lost. I'm actually pretty impressed. You guys are also going on CoinList.

Last project we had on CoinList, we had a countdown space for Scott. I don't know if you were in that one. It's called SubSquid. Oh, shit. You were in that one. Cool. Good for you. But yeah, they did.

Because it came from your friends at faculty. But yeah, so subscript is really good. Coinlist is doing really well. I think the way they launch projects, the way they select projects, it's very impressive. I'm a big fan of Coinlist. We don't see that project launch and just go down on that downward dump, like some big high FTV, low market cap listing, and then just kind of downward trends from that point. CoinList has got a better, healthier process to this project.

So how did you guys get into CoinList? And what was the process like? I'm curious. Well, yeah, the process was virtual. I don't know if the word is probably overused, but organic. You are asking, right? Hey, did you have a chance to look at us? Maybe you can do something with your platform. And then there was also the due diligence, even that they got to that point to do

due diligence and then you know that they are having really strict rules there and they're compliant, right? It's literally like a process that takes months, right, to go through that. And over that time, you know, like, yeah, let's call it projects like CoinList, they developed confidence, yeah, about your project, right? And also needed to be made sure that what we're doing makes sense, that it is not that kind of one-off thing that you often see. And previously, for example, there was mentioned uh that um there's

also the parent project uh track core right which is about uh indexing uh we're following here like a multi-year plan yeah uh and and that's and that all together um clearly showed that uh that there is something behind that yeah that it's not something that's trying to come up with false promises, like what we're doing here is the mother of all solutions and things like that. But instead, we're moving forward, also moving forward carefully. I see Fitzy wanted to add something. Yeah, it's just the one thing that I would kind of say,

let's make sure that we do say it. The tweet pinned at the top, the clonelist launch is available until 5 p.m. UTC, June 5th, which is tomorrow, Wednesday. So it's not too late to get involved in that if anybody would like to. Just wanted to get that in there. How did you guys, also you mentioned a partnership with ICP as well?

Yeah. So that was, we literally just announced that yesterday. So if anybody's not aware, the internet computer ICP from DFINITY, that's who we're partnered with and kind of trying to do a TLDR on that. So basically what that allows us to do, it enables Bitcoin to now interact with Ethereum's DeFi ecosystem. So users can either manage their TAP protocol assets directly on Ethereum or utilize their Ethereum assets on TAP and benefit from some of our

protocol's unique odd-fi features. As Benny alluded to earlier, the non-arbitrary way that we can interact with Bitcoin does offer some things that literally no other DeFi ecosystem can. So even greater TLDR is looking at it this way. Whatever your preferred ecosystem is, we believe that you should be able to take your assets with you, benefit from the services and liquidity within both ecosystems, whether that's on Bitcoin or Ethereum,

and that's utilizing ICP's chain fusion technology. And have you guys had discussions with any exchanges yet? I know it's pretty early, when's the listing date? yeah we had talks we are having talks but it's literally like NDA involved yeah but the

the feedback is positive but it can at this point really give you something precisely. So to finish up, I think you guys should generally talk to Scott. Like me and Scott have been very active in doing panels and having discussions and investing as well. I think we've been a bit more aggressive than Scott by investing in a lot of Bitcoin ecosystem projects,

especially building on Bitcoin L1. I think that is very underrated. Sorry about the background noise. Just moved offices. But yeah, I generally think you should talk to Scott about it. But anyone building on Bitcoin is really exciting. For you guys to have some of the VCs that we know well, that we respect,

also be going on CoinList, which is not easy to achieve, is a big vote of confidence. And congratulations on the announcement with ICP. They've been announcing a lot of partnerships recently. So it's just good to see the movement on that front. But yeah, man, I'm excited to have you guys on the show. We're going to have you on more shows and maybe have discussions closer to the listing,

a bit less technical as well. So this is Crypto Town Hall has more technical audience members that understand some of the things that Benny was talking about. But the other shows that we do is kind of more mainstream. So kind of having a bigger discussion on why Bitcoin and, you know, the future of DeFi and Bitcoin and Bitcoin L1s versus L2s, kind of more broad topics that will be interesting for the audience. But you guys are pretty well placed to kind of play a key role.

So it's going to be an exciting investment for us. And I'm surprised you got Ran. This is congratulations for Ran as well. But I think this is it. Fitzy, any final quick points? No, I mean, just thank you very much for having me. It was an incredible conversation. I really enjoyed listening in.

I'm glad you didn't bring me in on some of those earlier points, because when it comes to the prize stuff, that's not me. But, you know, I appreciate the opportunity to talk about that. And hi, Michaela. Hopefully we can connect too. Fitzy? Sorry, Benny? but you know appreciate the opportunity to talk about that and hi Mikael hopefully we can connect too sorry

Benny yeah thanks a lot too for having us here and hope to speak to you

soon if you have any questions of any kind you can join us on telegram or discord

yeah and me myself or the team usually is very where you from where you from Benny I'm personally from Germany Discord, yeah, and me myself or the team usually is very responsive. Where are you from, Benny? I'm personally from Germany.

Actually, the project is located in Germany. Yeah, you're German, German. The ja is like as German as it gets. Yeah, cool. I've been to Germany in a long time, so I kind of missed the accent. If anyone else wants to check out Tab Protocol, the tweet is pinned.

You can check them out there. Otherwise, we'll see you again tomorrow, same time as always. And, yeah, I appreciate you all joining. I appreciate TAP Protocol for partnering with us today. Bye, everyone. Thank you so much. Bye, Scott. Bye, Scott.

Bye, Scott. Bye, Scott. Bye. Bye.