The Wolf Of All Streets - When Will The Bull Market Return? | Crypto Town Hall

Episode Date: August 19, 2024

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Why don't we have you spinning tunes at the beginning of these calls? I'm just trying to not be in the glitch. I'm assuming that was Alex and you're showing as a listener right now. Yeah. Well, I mean, come on. It's Twitter space. You can't expect it to work properly. Yeah.

So I'm not sure how I can moderate when all the speakers are showing as listeners to me. But hey, good times. I guess we'll figure it out. I took a week off. I came back and the title was like, what's cooking? I didn't even know what that meant. So I changed it to an equally generic title.

When will the bull market return? Because my God, people are clearly losing their minds because price hasn't gone up as if this isn't exactly what we've talked about and expected for August. I had Macro Monday this morning on YouTube. And we talked these things through quite frequently. And it seems people are losing their minds because stocks bounced and went back almost to their all-time highs after the quote-unquote Black Monday from a few weeks ago. And Bitcoin continues to somewhat languish or trade sideways and down. I made the point, and I would love your guys' feelings on this.

So I'm a huge fan of the Bitcoin as an uncorrelated asset. It's idiosyncratic. It adds an uncorrelated asset. It's idiosyncratic. It adds an uncorrelated asset to your portfolio. If you're an investor, it helps your portfolio as a result. So shouldn't we cheer when Bitcoin is uncorrelated,

even if that sometimes is to the downside and not to the upside? Like if Bitcoin was just going up with stocks, all we would hear is how Bitcoin is exactly correlated with the stock market.

Brad, are you here? I'm showing a lot of people as listeners who I think are speakers. I really have no idea which one. Is Alex, are you still on stage? Yeah. That's very strange. Anyways, I'd love people's opinions on that.

I cheer for Bitcoin to be uncorrelated, even if sometimes that's to the downside. Dave, we talked about it this morning. If to be uncorrelated even if sometimes that's to the downside dave we talked about this morning but yeah go ahead if it's uncorrelated if it's uncorrelated i mean then then we're how often is it i mean ideally those of us who like crypto from a principled standpoint it would be great if if operated more like gold, but it's still a speculative instrument. That's how people treat it and trade it. Yeah. I mean, hopefully it is decoupled at some point here soon. Yeah. I don't wish it traded like gold. Literally my point. I think

that Bitcoin is Bitcoin and that's the best pitch that you have for it. It shouldn't be correlated to any of those. You can say it has the properties of digital gold, but it's obviously never traded like gold, right? To your point, ever. And it has, I guess, certain properties of risk assets, but it is not trading like one. If the stock market is back towards the highs and Bitcoin has just gone sideways for months so isn't the best pitch for bitcoin that bitcoin is bitcoin is a completely entirely separate asset class that is uncorrelated and that obviously is going to mean that it goes down sometimes when other things go up yeah i think people when when they thought of Bitcoin as a non-correlated asset, and once that happens, they just thought up only forever and ever until millions of dollars for Bitcoin. So yeah, I completely agree. We want it to be not correlated to the markets, but anything else also has ups and downs. It's not just going to be up only. Lou, I think you were trying to jump in.

Yeah, undoubtedly, in the long run, it's going to decouple. I mean, personally, I look at it today as largely a store of value. And so my guess is over time, it will become more correlated with gold. But that's in the long run. In the short run, we've seen obviously risk on, risk off. Bitcoin reacts heavily to that. And it's also, as a speculative asset, because it has such massive upside, it's also really volatile. And people look at the volatility as a negative, when in fact, I look at it as a positive to the degree that you know it just means that there's more upside i don't know if i i mean like the way the way i see it correlations we're taking correlations on a very short period of time i think generally bitcoin is correlated

because it's a technology it's correlated to risk assets i think maybe in the short term you know in a very short period of time right now bitcoin hasn't been correlated to risk assets. I think maybe in the short term, in a very short period of time right now, Bitcoin hasn't been correlated to risk assets. You've got to ask yourself, in the short term, look, in the short term, it doesn't really matter because what you want to look at correlation, you want to look at correlation over 10 years or over five years, not over the two weeks in the summer of liquidity. You want to look at it. Correlation is something that you need to look at over a long period of time and i think when when you look at the correlation over a uh a short period of time we've got some anomalies we've got a supply overhang from mount cox we've got the us

government potentially selling so there's a lot of there's a lot of um of of of short-term forces in the market. We don't really care. But when you're talking about a correlated or non-correlated asset, this period in time doesn't really matter. It's like correlation when people refer to an uncorrelated or non-correlated asset, they refer to it over the last 20 years. So gold is correlated or non-correlated to the stock market because it's displayed those qualities for 20 years bitcoin hasn't had enough uh adoption so i think the whole conversation is is like futile as to whether it's correlated or non-correlated in the short term this time it's not correlated the reasons are pretty obvious because there's a massive supply overhang you know but let's look at it let's talk again at the end of the

at the end of the market and then make a decision. I mean, I guess that leads to since we have a title here, you know, the way when I see Dan with your hand up, Dan, you're showing as a listener to me. But if you can speak, feel free. Yeah. Hey, guys. Yeah, I think correlated, non-correlated people may be confused that sometimes saying, you know, thinking that when the stock market goes up, Bitcoin must go down to be uncorrelated. Uncorrelated doesn't necessarily mean that. You know, there's a scale between one and minus one on correlation. So, you know, even if it stays flat when the stocks go up, that's still kind of uncorrelated, right? And the only free lunch in investing is diversification, right?

So that. Just coming to Rand's point about overhang of supply. Yeah, we've had some supply, but I saw today that 75% of Bitcoin hasn't moved in the last six months. So we're still only talking about a limited part of the Bitcoin supply that is actually trading and moving. Yeah, Rand, to your point, I mean, I think over a long term, I think the 10-year correlation

of Bitcoin is like a 0.14, which is uncorrelated. So directionally both up. Yeah, but you can't take the first 10 years of the asset's life because the asset wasn't like, you know, you're talking about 10 years of the life, but it wasn't even an investable asset for most of those 10 years. Yeah, not the same asset, not the same market. You can almost start when we get the ETF and call it. Yeah, or maybe two years before.

And then let's talk about whether it's a correlated or non-correlated asset. By the way, speakers, if you do want to jump in, raise your hand because we can't tell who's actually a speaker or a listener right now but go ahead yes right that was me again um i think the correlation also depends on the volume right so the reason that we couldn't really call it correlated uncorrelated before is because the volume was so low um i think now we have a significant volume in bitcoin it makes that correlation more real or the the non-correlation more real if that makes sense yeah i think that's that's fair but it doesn't just go back to the fact that uh dave weisberg and i were talking about this this morning but like you could have just kind of like fallen on your head over the last three years and this is all exactly where it would have been with

the four-year cycle whether you believe in the four-year cycle or not and if things just go up in october as they kind of have historically, all of these conversations will be laughable. I mean, you know, do we believe, I mean, Rand, is your base case still up and falling through 2025, like the normal cycle? Anyone else can feel free to jump in. I don't know if Rand heard. Yeah, Scott, Iott i you know like we

were talking about this morning my thought process is pretty straightforward it from a price perspective uh i think that the most likely scenario is that in the united states that the democrats will uh i don't like to use the word pivot, but I think will adopt policies that are more Bitcoin price friendly. I think that it will not necessarily be friendly to our individual liberties, etc. And that's a much different conversation. But I think that there are things that they will do that will probably do that. And that'll be at the same time in the cycle that one would expect, you know, that people will have seen, OK, the miners aren't going to die. You know, you know, we've we've talked about this. Why is it that that it's always six months post the having that the rallies start?

You know, it generally is because the having people look at the miners and go, oh, my God, the network's going to fall apart. Well, if you look at the network, it's pretty clear that that's not happening. So you could talk about what they could do and how they can do it. I think the fact is we're going to see this week something, you know, if there's any mention in the platform, if anyone even talks about it, my guess is not a whole lot gets talked about at the convention about crypto, about Bitcoin, and there might be something but probably very little in the platform. But we'll see as things develop because it's definitely a point that they're concerned about. And the reason for this is because quite a significant percentage of their

base owns Bitcoin. And so that's kind of important to them. And money does talk in politics. There's just no two ways about it. Anyone else thoughts on that? David, you jumped up on stage what are your thoughts sorry i don't have any particular thoughts on the matter great excuse the show with with the market is dead and sideways as uh anticipated as exactly the show that i expected today but sorry i wish I wish I had more exciting things to say. I mean, this is what I will say. First of all, you know, clearly crypto has not seen the slingback that the rest of risk assets have seen since the sell off in equity markets of two weeks ago. I don't think there's anything in particular that has come out during that period of time that should be concerning.

The selling of the United States, even if it happens, is a one-time event. And the unknowing of Kamala Harris's platform regarding crypto, I guess, is leaving some uncertainty, maybe chills in the marketplace. But those things alone should not be taking away from, I think, the fundamental strength that we're seeing. You know, it's not, it's not lights out, you know, unbelievable fundamental strength. But, you know, we're seeing institutional investors continue to adopt, continue to add, continue to, you know, begin their investments in crypto. I think we're seeing a better, you know, at the very least legal environment in terms of the wins by the industry and the losses by the SEC. The regulatory environment, I, you know, I wish I could say that whatever Schumer said,

you know, is going to go ahead and, you know, make me feel great that we're going to have legislation before year end. I don't know if that's the case, but we should. And hopefully, you know, people come back from their summer breaks in Congress and get to business. And so there should be a catch up at the very least, there should be a catch up trade here with where we're sitting in crypto, you know, to where risk on markets are. And, you know, where the end of August volumes are generally low, unless we have, we're going

to get a decent speech at the very least out of Powell in Jackson hole that we should be expecting a 25 basis point recut in September. I think that's all we're going to get if, if, you know, that much conviction, um, nothing beyond September and not nothing beyond 25 basis points, but nevertheless, that should be enough to go ahead and gin up markets to go ahead and have, you know, pretty good post Labor Day run. And so in my opinion, you know, the upside downside from where we are right here right now for the next couple of months, two, three months, I think is kind of a no brainer. That's my thoughts. Alex and Jonathan. alex and jonathan yeah i think um not exactly clear why everything else recovered so much better post um the what are we calling it black monday whatever we're calling it right now but i i do think the fact that trump's been losing momentum on the polls is probably tied almost more than anything uh the democrats dropped their platform

this morning they've done a draft version back in july but they did the final one this morning since it's their convention this week and unsurprisingly makes zero mention either way of crypto uh which i think is what was pretty well probably expected and forecasted given sort of the rumblings we've heard of the campaign wanting to do a reset but no one particularly senior or on the record doing it i kind of think that crypto is probably already peaked in the amount of like salience and focus that it's going to have for the election um and just not really going to be much more of a thing in this one like everyone has figured out where everyone stands on it but the markets are going to be much more of a thing in this one like everyone has figured out where everyone stands on it but the markets are going to definitely i think at least to a degree continue

to move as like a little bit of a bet on how likely people think trump is to win versus harris since i'd say if harris wins it's probably more of the same and a little bit of an unknown for crypto whereas i think everyone is sort of expecting, sitting back, waiting, looking, expecting that if Trump wins, it drives a whole giant bull market thing, whether that is true or not. I tell you, I think it's funny. We spend a lot of time, obviously, on this show talking about politics. And I think in the long run, it doesn't matter what the US government does. This is a global phenomenon. And I'm here because it doesn't matter in the long run what the government does. And whatever the government

does today, the government can do something tomorrow based on who gets elected or who dies or who gets shot. And I think time is much better spent if you want to make money in crypto, thinking about other things in politics. I mean, I think that's, I'd agree with 50% of that on it. I think that if you are a trader, if you're doing anything in the short term momentum, the politics of it really do matter. If you're a builder, it also definitely does because it affects where we can build and set up our companies and like the realistic regulatory environments uh we have to deal with but i think if you're in the third class if you're a long-term like just kind of

true believer on and you buy bitcoin and hold it for a long time then yeah what the government does kind of doesn't matter it's not going to be able to ban it i don't think they're ever going to actually try and ban it at this point. They'll continue to crack down on the on-ramps and off-ramps and things. But like, if you're just a buy and hold person, yeah, none of this matters. If you're a trader or a builder, it unfortunately kind of does. I agree with you. If you're a trader, it does. If you're a builder though, I would say, yeah, if, if you really want better US crypto regulations, the best thing you can do is move out of the United States and build out of the

United States. Because ultimately, they will bring, they will pass the best laws when they realize how many jobs are achieved. I mean, yeah, but man, we got families. I have a beautiful house in Montana. I don't want to move out of the country. I've had plenty of people be like, you need to go to Dubai. I don't want to fucking live in Dubai. I like where I live. It's very much for me to stay in Dubai. I appreciate it. Yeah, I'd be

incredibly angry, as so many people are on this call because if you want to build stuff and you're not in a position to leave the U.S., that does suck. But even if you leave the U. and you're not in a position to leave the US, that does suck. But even if you leave the US, your taxes chase you. So it's not like you can just leave

and pretend that the government's not going to collect your taxes for the next 10 years, even if you denounce citizenship. You're going to pay taxes in the United States. So yeah. I love when people are like, just move to Portugal, dude. They don't have taxes on crypto as if like that ceases to make the government

come after me for my taxes. You know, you know, interestingly, they cannot throw you in jail for not paying your taxes. And after 10 years, your bill goes away. You know why? You know why your tax bill goes away if the government hasn't collected it in 10 years? Because they've Epstein'd you? I don't know. No, because the laws are written by rich people.

Because the laws were written by rich people who don't pay their taxes. That's super interesting, but I'm just going to throw out there. I do not take how to not pay your tax advice from people on the Internet, man. I've seen some crazy shit about that. So got to be a little suspicious. I never said don't pay your taxes. I would never say don't pay your taxes. I'm just pointing out that if you don't want to pay your taxes, you don't have to get worried about getting thrown in jail as long as you report your taxes and you don't lie about it. I remember in 2017, I was working with a client and, and they were doing, we were building an arbitrage bot and I use my own account to,

to do stuff. Anyways, I had no idea what to do with all these tens of thousands of taxable events like what do you do i called the irs and they had no idea either all they said was just put in a good faith effort we don't know either um but scott our stock twits users they are prepping for i don't know if you want to call it alt season or not but a lot of the a lot of the meme coins like dog with hat pay pay flocky a bunk they're picking up a lot of volume momentum of people wanting to step in and dip in because over the last three months

they're you know some of them are down like 60 51 51%. And I'm not a huge meme coin trader, but I know a lot of people are. And this is right about the time when you start to see them dip their toes into the meme coin world. AI coins also are heavily beat down like Render, The Graph, and Fetch. I mean, they're all turning into the artificial superintel, that ASI coin. But there's a lot of the big time, very active traders who like to find these big dips that's going on. They're getting into it right now. I don't know if that makes me excited or really worried. I can't tell which one that is. If you want to be trading with the herd or counter-trading it.

But I do think that there's a consensus idea that the four-year cycle will re-kick in in the fall. Go ahead, Dave. Yeah, actually, why don't you let Simon go first? Because I think he had his hand up first. Although I do have opinions on that topic. All right, no worries um as we're really scraping the barrel today i think um i was just when we were on the tax topic um i was just gonna say um not tax advice obviously but if you do live outside us um in most countries you are able to leave your country and cease being a tax resident. And so in general, what a lot of people

do is they buy their Bitcoin, they don't trade. And if you continue to dollar cost average over time, and it becomes a significant part of wealth, and if it makes sense for you as a lifestyle decision, then people wait for it to hit a certain amount of wealth. And as long as you haven't traded it, and your country doesn't implement an exit tax, which some countries do, I think Canada does, Dave could confirm that. And I guess in general, the whole world doesn't move to a wealth tax, which is something that I think the global system, the OFAC, I've forgotten the name of the entity now that's trying to push out one. But then you can actually choose and only incur the taxable event in the country that you want.

So just some general planning. And as a rule of thumb, just buy, don't sell, don't trade. And you can make those decisions later in life if it suits your lifestyle. Just thought I'd add that because we're scraping the barrel, I think, today. I know what you mean, scraping the barrel. It was the highest quality content we've ever put together. Dave, go ahead. Yeah, I mean, you know, the one thing that people, it's like, you know, we've been calling for, you know, we're in the summer, it's August, no one really cares, you know, there's low liquidity.

It's actually, it always becomes clear in hindsight. But I think, you know, we're kind of all sitting here saying the same thing, which is there have been multiple, whether it was, you know, Germany, whether it's people worried that the U.S. and I still David Bailey is claiming that the 30,000 and the 10,000 Bitcoin have been or are being sold. Maybe he's right. I mean, you know, I don't know. I mean, I've been asking for a smoking gun and no one's able to seem to provide it. But those sorts of things, you know, will cap the price of an asset. But you have to ask yourself the real question,

which is, what is actually happening in terms of Bitcoin's likely adoption? And what is likely happening in terms of people's ability to for crypto adoption? And I always phrase them separately. And just just to bear with me for a second, Bitcoin in terms of is Bitcoin getting more or less likely to be adopted as the base layer of the Internet of Value, i.e. will it become digital gold or beyond? And I don't think you could – it would be really hard to find people who think that it's less likely now than it was a year ago, six months ago, or three years ago. Yet we're at the same price that we're trading – that we traded at at the end of the last hype cycle three years ago, yet we're at the same price that we traded at at the end of the last hype cycle three years ago. And I think most people would say it's probably 5x at least more likely that it will be adopted. So you get to that sort of thing and you get to understanding if you start getting into a bull run, what does that actually mean? And I think that's why.

At the same time, politically, Bitcoin used to be in all the FUD that they've tried is looking really bad, right? You know, the environmental FUD, it is there are many, many, many experts who now will will swear up and down that you can't build sustainable energy projects without Bitcoin to be able to take the off-peak power, because the demand is just not there without it. And that matters a lot. There's lots of stranded energy sources. All of this information is important. You know, last I saw from Nick Carter, you know, Bitcoin's sustainable energy use was up over 56%, which means, you know, a bunch of things for a bunch of people. So all these things are true. And yet, none of that matters in the price. What matters in the price is liquidity and supply and demand. At the same

time, politically, there are multiple players in the Democratic Party, I'm going to flip to crypto now, who understand that the future of financial markets is going to be digital. They get that. And they understand that the analog financial markets that we have in the United States are the most, literally the most efficient, and we've gained a lot from that. And they're starting to get very, very nervous about what does it mean if they push it all offshore. And that will take time, but the real question is what will they actually do? And it wouldn't take much to get for the U.S. to tilt from absolute hostility to ambivalence would be a massive positive catalyst. Notice that's not supportive. If you actually did have an administration that

was supportive, I mean, we don't know how to price that. It's not even remotely in it. Last I looked at Polymarket, it's a coin flip between an administration that might be hostile and might be ambivalent, we just don't know, that would be the Democrats, and one that is unabashedly supportive. And unabashedly supportive is not in the price. It's not even close to in the price. So if there's a 50% probability of that, the markets are massively underpricing that. But people aren't even thinking about thating that. So but people aren't even thinking about that right now. So you're going to have to wait, you know, another month or two for things to clarify and we'll see. And it just means don't get caught short because it

feels like what's happening is a classic weak hands to strong hands rotation, at least in Bitcoin. And as longer that continues, the more likely it is you have fuel for a rally later. Now, obviously, if there's a global financial crisis, all bets are off. But, you know, I think most people believe that the Federal Reserve and the global central banks will cut rates significantly because they can't really afford a global financial crisis. But we'll see. Simon, you're a listener for me, but I think I saw your hand go up down there. Yeah, cool.

Another fairly funny and comical one for us all to watch is the whole politicians learning the wrath of the crypto versus Bitcoin maxi debate. So RFK came out and tweeted one of his talks, and he was being interviewed by Charles Hutchinson from Cardano.

And if you look under all the comments, it's like this. You know, I'm not sure if RFK knew what that meant, but obviously there was all the Bitcoin maxi saying, you lost my vote, okay, shit coinery and all that meant. But obviously, there was all the Bitcoin maxi saying you lost my vote. Okay, shit coinery and all that stuff. So I think it's going to be pretty interesting. Obviously, politicians need to go for both crypto and Bitcoin. But RFK was particularly interesting because Bitcoin 2024 he really gave the Bitcoin maxi speech, you know how it's, you know, an end the Fed type of thing, store of value, anti-war, all that type of stuff. But now he's getting the wrath of deciding.

Yeah, he understands Bitcoin. I mean, you know, I interviewed RFK at Bitcoin Nashville before his speech. I went to a dinner with him, a fundraiser. The guy gets it. He owns it. The material part of his net worth is in it. So it's laughable that because he decides to have a conversation with Charles Hoskinson

that the community is up in arms, which I think just says more about the toxicity of the community more than it does about RFK, right? Yeah. How dare a politician talk to people? How dare politicians talk to people? How dare they? By the way, this is going to continue to be an issue for this

industry and group. Because I've heard it from folks in D.C. before too, right? Is that they will propose something, they will put something out, and they will just get pounced and trounced upon on Twitter and with calls and things from people who aren't even trying to really work with them but are just pissed because it didn't match

their view of the current religion. And it just makes folks not want to engage on the topic and work with us. And love or hate Charles Hoskinson, we couldn't find... I mean, he is a good speaker. He knows what he's talking about. And he's a good representative for crypto as a whole. I mean, he's a pretty normal...

I mean, let's face it. There's a lot of people in crypto and a lot of founders of whatever chains or stuff. They look like they were an extra in the Hunger Games for District 1. I mean, they're not exactly what you would look at and go oh this guy's legitimate charles hoskins said he's he's smart he knows what he's doing he's a good he's a good representative to government fuddy-duddy types yeah but he did he did release several videos like really trying to. Does anybody know or have an estimate for the percentage of Bitcoin that's owned by Americans? Anybody have a thought about that?

I mean, you could estimate by the mining. I mean, that's how much of the supply is mined here in the States. That's, I think, the best way that you could estimate it. Thanks. Does anybody actually have any remote... I don't think... I mean, mining and holding, I think, are different,

Jonathan. I think that's a good way to start to get there. But, I mean, the bulk of Bitcoin is held by anonymous people regardless of where it was mined, right? I think a more important question is how much of the supply is actually just poof, gone forever. I mean, there's estimates, but I would really love to know. It's probably 20%, 30%. I mean, 5 to 6 million, right?

Simon, what do you think? I think 5 to 6 million bitcoins lost. Yeah, I reckon that we will never be able to accurately know because that just means that you need to know whether someone can retrieve their key or not, which is impossible to know. But I personally believe and again, what have we got but beliefs that the Satoshi coins are lost. I don't think those can be accessed anymore. So yeah yeah i reckon there's um you know the estimate's always between four and six million so uh that's a significant you know chunk of the 21 million that's a massive reduction in an already deflationary asset with fixed supply and i think that most people probably don't even understand that so i think it's in an already deflationary asset with fixed supply. And I think that most people probably don't even understand that.

So I think it's an important point. Yes, I think we've talked through the market and what's happening right now relatively to death. And we have kind of a more interesting conversation on the horizon here. We have Rich Rimes and Cordell, and they're building on Bitcoin. I think it's a perfect opportunity and segue to talk about everything that's happening there with interoperability, bringing back the concept of safe yields on Bitcoin. So welcome to you guys. I want to hear a lot more about what you're doing.

Just to give people some context, you know, Core, just from your guys' Twitter heading. CORE is a Bitcoin-powered EVM-compatible blockchain introducing the first ever implementation of non-custodial Bitcoin staking. And the context of everything we're talking about here and governments and what's going to drive Bitcoin adoption and value in the future, you guys have really been at the forefront of this sort of explosion of building on Bitcoin, right, Rich? And so I give you a chance, I guess, first to just kind of break down exactly what you guys are doing and why it's important. Awesome. Well, thanks so much for having me, Scott.

And I see a bunch of familiar faces on this call as well, which is awesome. So yeah, to quickly kind of break down Core. So Core, there's really two sides. So on one side, you have the fastest growing BTCFi or Bitcoin DeFi ecosystem with almost 300 million in TVL, tens of thousands of daily active users, really trying to be the home of Bitcoin liquidity to help these Bitcoin native DeFi solutions grow and find a home with real users. On the other side, you have Core's first and only non-custodial Bitcoin staking that's yielding, I think it's about 4% today on about $330 million of Bitcoin. And Core is a vertical approach. What we mean by that is it's got both sides of the scaling Bitcoin play. And the idea is one side feeds the other so you actually have a reason to use the token to hold the token as well as sustainable rewards over the next let's call it 79 years originally 81 years but of course been in market for about two years now before kind

of this this bitcoin season two you know fully kicked off. And I think the other piece that's just important to kind of contextualize here is you talk about with governments, and you talk about all these kind of emerging, you know, Bitcoin pieces, there's this real problem that we're going to have in the Bitcoin space, where let's call it two halvings from now, there's going to be a crisis around the Bitcoin security budget. We don't know if it's two halvings or three halvings, but it's gonna be really important to keep Bitcoin secure and decentralized. We're going to need scaling solutions that give back to Bitcoin miners in the form of additional block rewards to help keep Bitcoin secure and decentralized for the long term. And it's a story that we don't hear

as much about, right? We hear much more about the BlackRock's the world, people, the centralization of Bitcoin, all that sort of thing. But it really is this emergent problem that we need to go solve and cores out there trying to solve it. But yeah, happy to double click on any all of the above. Yeah, so so many of them. Actually, I really wanted to get to because it's so incredibly interesting. I guess first, why is it important to you to build all this on Bitcoin? Right. Because that's been sort of, I think, the story or one of the big stories of this cycle, that a lot of the innovation that was happening on other chains, a lot of the developers who are working in other places and sort of come back to Bitcoin after Taproot and opening the capability to do a lot of these things. But sort of what drove you to do that and to be then EVM compatible? So the initial contributors of the core ecosystem, you know,

have been Bitcoin maxis since 2013, I think when most of us got involved in the space. And the idea was, we had seen so many things, particularly since the 2017 cycle, where people had traded off decentralization for scalability. And that trade-off is just very antithetical to the overall crypto ethos. And there was this desire to say, wait a second, this is what crypto is all about. How do we go scale the hardest money that the world will ever know, which is Bitcoin? Because ultimately, it's this better collateral asset. If we can separate the Bitcoin asset from the Bitcoin rails, it should dwarf everything that we've seen in the Ethereum space today.

It's a better collateral. There's real product market fit there on global scale in a way that we just haven't seen before. And Core was working on this for several years, and then came to market in early 2023. Under that premise of, hey, there's so much opportunity here, let's go out there and let's go scale Bitcoin. And I think if you think about just the numbers of Bitcoin, it's, you know, trillion dollars today, you know, at peak, maybe around a trillion and a half. If we look at the Ethereum comps here of 10% to 30% of that making its way into DeFi activity over the next few years, Bitcoin should easily be the

dominant asset by TVL. And some of these scaling solutions should ultimately wind up taking some fraction of Bitcoin's market cap as a potential proxy for how big this space can be. But it was really just going back to first principles. And that's also why Cord did a fair launch as well, trying to go back to that original Bitcoin OG ethos, saying, hey, there's still so much left in the Bitcoin story. We don't just have to stop at store of value. We can actually start to engage in this entire new wave of potential opportunities on Bitcoin. Yeah, it makes perfect sense. And obviously, you sort of hinted at the almost 5% yield that's been generated on over $300 million in Bitcoin so far. Yield kind of became

this four-letter word, obviously, in the last cycle, right? So how are you offering the yield? How does that work? What are the mechanics? Why is it safer than we know it is? But then the things we saw in the last cycle, how are you able to do that? So as many folks in the core community are probably familiar with the line that I repeat ad nauseum, just if you don't know where the yield is coming from, you are the yield. And that applies to core as well, right? Like you should always be asking difficult questions, you should never be afraid to dig into the details. And how core produces its yield is it's using native Bitcoin time walks. So what that means is you're actually time locking on the Bitcoin L1 that's been an opcode in Bitcoin available for, I think, eight years. So again, it's tried and tested. And the idea is you're never giving up custody. You're never sending it to a multisig. You're just probably

encumbering those funds for some period of time. With Core, the minimum window, I think, is 10 days. So again, it's a very short, short timeline. But by doing that, you're actually never giving up custody. There's no scenario where Core or anyone else can take that those underlying bitcoin from you and that's really critical if we think about what happened in the last few cycles it was mostly decentralized play the block five the genesis the celsius where you were giving up those assets and many bitcoiners unfortunately fell victim to some of those you know some of those bad actors and that's a lesson that people don't want to repeat. So the first step is, hey, can I ensure that the key that Bitcoin always remains under my keys and that boxes check?

The second question comes down to, okay, these yields, you know, sound really attractive. But but why, you know, where's this yield coming from? How do I how do I square that circle? And for the core story there is also a great answer. They come from cores block rewards. And the way to think about that is core has this very long tail emission of about 81 years really designed to be this exogenous block reward for Bitcoin, like I mentioned, helping to provide additional, additional cash flow for the Bitcoin miners. And then also the Bitcoin holders. And the way to think about it is Bitcoin holders are now participating in a proof of stake system with their Bitcoin for the first time. So they're actually now part of that in a way that isn't possible on Bitcoin directly. And that's really a killer combination. I think the final piece is we've talked about this idea of Bitcoin miners, Bitcoin holders, et cetera, being part of the core network. But it's important to think about what's actually occurring here. And through cores dual staking, the idea is not just is there this security sharing that also goes on, but there's also this capital sharing. And the idea here is to earn higher yield on your Bitcoin,

you'll also be able to stake core tokens and it auto compounds that way. So you can feasibly get to a place where you know, the 4% or so that it's averaging right now is actually significantly higher. And that net is good for both Bitcoin holders and Bitcoin miners over the long run. Sorry, Scott, can I ask a question? Yeah, please. So is the yield paid in Bitcoin or another token? Great question. So today it's paid in core, but we're very open to finding folks that want to build an

ABS or similar to do the automatic conversions into Bitcoin on our behalf. It's a tricky problem for us to solve at the L1 level. And the reason I say that is it would involve some sort of a swap or some sort of a conversion, which would then bring us to some sort of adverse selection or difficult things that you'd have to solve at the protocol level. But we're actually actively looking at ABSs, et cetera, that might be interested in building this. So if you're excited about building something like this at scale, please come talk to us. And what would drive the value in the token? Go ahead, Simon.

Oh, sorry, Scott. Sorry, Simon. Go ahead. Yeah. What would drive the value in the token then? Like what's the token economics on it? Great question as well. So Core is a full Bitcoin DeFi ecosystem. So the Core token is gas on the network, it's governance, it's staking. It has a lot of utility. It has since it was launched.

And the way to think about it is the value accrual kind of mechanics are very similar to something like an Ethereum, right, or like any kind of L1 gas token. But unlike many of these, you know, Bitcoin scaling solutions, core has real usage and has a lot of existing applications that are already built. I did something like 150 dApps that are live on core today with probably another 150 plus that will launch, you know, by the end of the year. So the idea here is there's going to be a few bigger Bitcoin ecosystems that help unlock all of this trap Bitcoin liquidity. And we think Core is in pole position to win that race. Cool. I didn't know if Simon was done. Yeah, Rich, that's really interesting. You said AVS, I believe. Just for people who don't know, can you clarify what that means? Yeah, so it's actively validated service. And there's a bunch of different folks that are trying to solve this problem, right? So in the Ethereum space, you have Eigenlater, you've got Symbiotic, you've got Carrack, like you've got all these different folks that are that are working on these different solutions today. And then similarly, in the Bitcoin

space, you've got folks like Babylon that are focused on restaking, you've got folks like Pell Network that are working on it sat layer, many of whom are, you know, partners and prospective partners with core. And the way to think about it as core is really bitcoin staking where that base layer yield and these other folks build on top of core and you get some sort of risk premium that comes on top of that right because now you're actually taking on additional risk versus just this you know bitcoin bond layer that that core serves as but what's powerful kind of about that combination is you can now start to mimic even further what we've seen in the Ethereum ecosystem today, which is, okay, you've got this really sustainable base layer yield, you've got these hard assets, how do we then go extend it into things that might not need, you know, L1 layer, like level L1

level of security, right, they might be able to get away with smaller security sets due to their attack vectors, potential economic security, what there is to gain, etc. But we're actively searching for folks that want to build these. And I think as a L1, we're also excited to have groups that maybe migrate from just being a gap and as they scale to actually needing their own chain. So we've seen that many times in the Ethereum ecosystem. A great example is DYDX, right? Pretty successful protocol wound up doing their own chain after doing L2. They went through all the different phases of maturity. And I don't think the Bitcoin space will be any different. And from an L1 perspective, we'd much rather have these chains be able to grow on top of core. And then as they eventually graduate out to still maintain an economic relationship with the chain. Rich, do you think that most of what's been built elsewhere on other protocols is eventually now going to come back to Bitcoin now that we have the capability?

I think it will. But I'd also like to take maybe one step back there. And I think one of the things that we've seen in Ethereum is it's this competition on who can build the most novel thing. And that's been great. We've got to watch so much innovation and that's something we should 100% keep doing. But I think what we have the opportunity in the Bitcoin side as well is to build real businesses, not necessarily based on just tokenomics, but actually looking at the AUM these protocols can drive. So the one that I've been, you know, proselytizing on, you know, Twitter spaces and podcasts for probably the last year or so is we need amazing

CDP protocols to come to the Bitcoin space. And it's just such natural product market fit for Bitcoin holders, because you want your upside exposure to Bitcoin and you want leverage in the form of dollars, being able to get core yield. So again, like 4% on top of that is really just a sweetener, if you will. But that can be a business that realistically in the next few years can be deca billions in AUM. And if you're. But that can be a business that realistically in the next few years can be deca billions in AUM. And if you're just clipping, you know, a few, you know, maybe 10 to 30 bps on that, that's a great business. And that can scale really dramatically as more and more of this Bitcoin comes on chain. I mean, what we've seen is, again, there's a whole bunch of Bitcoin that

wants nothing to do with anything besides holding, and that's totally fine. There's another group that's willing to accept non-custodial staking because there's not any risk involved. And then there's a whole other group that is willing to take the leap to bridge or to swap over and then to participate in full DeFi. But many of these things aren't necessarily just reinventing the wheel, they are actually just better execution and probably delaying the token as well until you know, there's some sort of community building piece that that needs to happen. But I think we will see everything that's you know, done in Ethereum come over as well as some some more Bitcoin specific innovation. Can them can the Bitcoin be slashed if you're staking? Is it like is there a punishment

or anything like that? So in the core system, we slash the validator, we don't slash the delegate. And that was very important because we wanted this to be a riskless solution for the Bitcoin holder. And that's why core has been able to unlock the first yield bearing ETPs for Bitcoin that are live in Europe, and then soon will go live, hopefully in that are live in Europe, and then soon will go live, hopefully in Asia, the Middle East, and then eventually, hopefully, we'll get to the US. But the idea here is for the trad five sector in particular, there can't be a situation where you wind up with a hole in your balance sheet for customer funds, right? You have to be able to kind of guarantee this yield, and it has to be safe. So it was a very deliberate product design decision from the core side to ensure that we could bring this offering to the world in a state that was going to be forwards compatible with this institutional motion that core is running with Valor and a few others rich before i let you guys go like what are you most excited about that you guys are

working on that we could see you know in the in the coming months i mean unique to core but also in bitcoin development in general it seems like we're very much at the beginning here we're sort of in the summer doldrums but i think there's a lot of excitement as to what's likely coming in the next six months. So summer doldrums is a great characterization of kind of where we're at. And I do expect that with the U.S. elections and Fed rate cuts, I do think things will get a lot more exciting here in the very near future. In terms of the core roadmap, so dual staking is a big one for us. It's really important as many of these solutions are launching, particularly in the Bitcoin yield space, to be asking, where does the yield come from? Is it sustainable? What risks are involved? And

dual staking really puts core in a league of its own beyond just the risk-free rate that was established. It's more now into how do you increasingly create better rewards for these Bitcoin holders without taking on additional risk. And it's further entwining the core and the Bitcoin communities. There's already 55 plus percent of the Bitcoin hash rate currently secure in the core network, 300 million in Bitcoin stake. But of course, there's always more, there's always more work that can be done there. Another big unlock is going to be the Bitcoin LST ecosystem explosion and cores welcoming so many of these LSTs that are getting built on top of whether it's core yield, or maybe some of these other folks, there's so much opportunity

there. But Bitcoin LSTs are really this missing primitive from the Bitcoin space. And what we saw with STETH, et cetera, this is this massive unlock where once you have native yield bearing assets on the chain, you can then unlock all of these new use cases. So there's just a ton of opportunity there. And Core will launch its own LST as well. But we're actively working on probably at least active work with at least probably 10 different providers there. And then finally, there's kind of an interesting exploration going on right now with with local fee markets, really trying to ensure that people will have predictably fast and cheap Bitcoin transactions on core for the foreseeable future. Amazing. So listen, yeah, core Guys, Cordow underscore org on stage.

Also in the title, you can tap and follow them, obviously. But Rich, for people who want to do more digging, who want to participate, where and how can they do that? What's the best way to get involved and check you guys out further? So the Cord Discord just has a wealth of information and just ways to get involved. No contribution to Cordow is too small. We welcome people that want to get involved in any way. And we've got a really awesome community team that's really good at helping to bring people in from that direction. On top of that, Cordow.org,

there's so many great different materials and things like that, where you can learn all about the consensus mechanism, the developer docs, etc. And then one last shame was plugged core also has a program running right now called ignition, ignition is going to have a season two that will start very quickly as well. And you'll actually get rewarded both as a builder and then also a user of the core chain that's adding liquidity or participating in participating in building gaps on core. So definitely get involved. I'm glad I was able to invite you guys up today, Rich. On otherwise down days is really interesting and great conversation. So appreciate

you and you coming and your willingness to come up and speak with us. And we'll have to have you guys back on down the road. Rich, you're obviously welcome as a guest just to chat anytime. Thank you. Thanks so much. All right, everybody else. Obviously, we'll be back tomorrow, 1015 a.m. Eastern Standard Time with Crypto Town Hall. See you guys tomorrow. Bye.