Unchained - Bits + Bips: DATs Are Crypto's Biggest Trend. So Why Aren't They Boosting Markets? - Ep. 865

Episode Date: July 9, 2025

In this episode of Bits + Bips, we examine how rising global trade tensions could impact macro conditions, the Fed’s next move, and market stability. We also explore how investors should position themselves with inflation cooling and an uncertain policy path at the Fed. We then look at what’s happening on the crypto side: volume shifting to tokenized public equities, the growing number of corporate stablecoin plans, and whether the promise of tokenization is matched by meaningful traction. Joining hosts Joe McCann, Ram Ahluwalia, and Steve Ehrlich is Rob Hadick of Dragonfly, who shares his perspective on product-market fit in crypto, shifting market structure, and where real adoption may emerge. Sponsor: Bitwise Joe McCann, Founder, CEO, and CIO of Asymmetric Ram Ahluwalia, CFA, CEO and Founder of Lumida Steve Ehrlich, Executive Editor at Unchained Rob Hadick, General Partner at Dragonfly LINKS: WSJ: Trump Faces Crucial Week for Reaching Trade Deals EU Still Hopes for Initial U.S. Trade Deal Before Deadline Reuters: Japan, South Korea face 25% tariffs as Trump ramps up trade war in letters to 14 nations CNN: Trump announces new tariffs of up to 40% on a growing number of countries University of Washington: OBBB Signed Into Law Unchained:  OpenAI Says Robinhood’s Stock Tokens Are Not Equity Tron Is Now More Expensive Than Ethereum. Will That Hurt Justin Sun’s New Company? AI Crypto Tokens Swoon as Nvidia Reaches a New All-Time High CoinDesk: CoreWeave to Acquire Core Scientific in $9B All-Stock Deal The Block: Bit Digital swaps entire treasury into Ethereum, says it's now a top public ETH holder after a $173 million splurge Timestamps: 🎬 0:00 Intro 🎭 2:05 Why Ram sees the tariff drama as more theater than substance 🎌 7:09 Whether Trump is leveraging tariffs ahead of Japan’s elections 📉 8:17 How low inflation is pressuring Jerome Powell and the Fed’s next move ⚠️ 12:06 Why Rob says the market feels “fragile” right now 🪙 14:52 Whether bitcoin has truly matured into a macro asset 🛡️ 22:16 How to hedge in an uncertain landscape, and what to make of Elon’s political pivot 💵 30:05 Whether Elon Musk is preparing to launch a stablecoin on X 📊 32:26 Why digital asset treasury companies are so volatile, and how these deals really work 🧱 39:44 How the tokenization race is unfolding, and whether innovation is keeping up 🧠 47:47 How to think about investing in the tokenized assets and stablecoin narrative 🕳️ 1:01:47 Whether tokenized equities have any real killer use ⛏️ 1:03:54 What the CoreWeave-Core Scientific deal signals for bitcoin mining 📈 1:13:08 Whether we’re still in a bull market, and if now’s the time to take advantage of dip opportunities Learn more about your ad choices. Visit megaphone.fm/adchoices

I think there's some technical pullback necessary. I think if you want a contrarian view, it would be the death of the U.S. dollars greatly exaggerated. I mean, look, it's been slammed. And I think it's the short rates of the United States, the growth opportunities in the United States are still better than else around the world. So if you want a contrarian take, it's take the other side of Ray Dalia. Yeah. Same.

Hi, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide one basis point at a time. Today we're going to talk about Trump's tariff letters, what to make up tokenized stocks, the launch of Salinas staking ETF, and much, much more. But first, let's do some quick intros. I'm your host, Steve Ehrlich, high scribe of the Unchained Kingdom. I'm here with Joe McCann, Lord Commander of Asymmetric and Master of Bunk, and Ram Al-Alawalia, Maister of Wealth, Leader of Lumida. And we have another special guest, Rob Haydick, Ember Lord of the Dragon Flight Holdings. Rob, since this is your first time joining, why don't you introduce yourself?

Thanks for that. Appreciate Steve and thanks for having me on. So Rob Haddock, I'm a GP at Dragonfly, as you mentioned. If anybody doesn't know us out there, we're about $4 billion in investment, best in early to midstage crypto companies. And yeah, excited to be here as the Amber Lord of Dragonfly. That's a new one. So one quick disclaimer and then we'll begin. We're here to talk about the latest stories and trends in the world of crypto and macro.

Just a reminder. nothing that we say is investment or financial advice. You can check out Unchained.com backslash bits and bips for more disclosures. And before we dive in, let's just take a quick moment to hear from the sponsors who make this show possible. Crypto moves fast. It's why Bitwise launched the weekly CIO memo, a jargon-free summary of what's moving crypto markets written by one of the best in the business, CIO Matt Hogan. Get up to speed in five minutes or less. Check it out at Bitwiseinvestments.com. slash CIO memo.

Carefully consider the extreme risks associated with crypto before investing. I'm not quite sure if it qualifies is breaking news because it's been out for a few hours at this point. But it's funny, we had a whole discussion on Telegram on what to talk about. And we knew the Trump tariff letters were coming and they started dropping a few hours ago. So, I mean, just a quick recap for where we see right now, Japan and South Korea, they've been threatened with a 25 percent tariff. Malaysia and Kazakhstan, also 25 percent. South Africa, 30 percent. Laos and Myanmar, 40 percent. We're hearing rumors of 12 more countries this week that are also going to get letters. And these tariffs, as you guys all know, I'm sure plenty of people listening do as well,

they don't go back, they don't snap in immediately. There's a delay until August 1st, I guess, to give time to negotiate. And on top of that, I mean, Trump has done as usual, threatening additional retaliatory tariffs if anyone tries to retaliate. And also, this was kind of an interesting one. I think he threatened additional tariffs against anybody who is sort of aligning with the BRICS nations against the United States. There's, I think, a meeting going on in Rio or something right now among the BRICs where there's, I guess, some sort of statement that's come out against the tariffs. And I believe also the U.S. bombing of Iran, which is a whole separate issue. But I guess the real question we have here. And Ram, I'll start with you. We did a live stream on April 2nd Liberation Day

right after that happened. Markets tanked and markets aren't happy today, but we're not seeing the same type of panic as we did then. I guess the questions on everyone's mind is, one, do you think Trump really means it this time? And two, if he does, what does that mean for macro for crypto for crypto. So first off, there's a tell in that Trump and really investing here delayed and created another extension until August. Markets are expecting more and more extensions. Trump also said that he wants to keep stock markets high. That's my paraphrasing. They also have a path to resolution, even if other countries are slow on the ball. They can just issue letters and terms. So I think the other consideration here is the impact. The training partners that matter the most are Mexico and

Canada, their primary training partners. Japan and South Korea are the major nations identified here. So we'll see. I mean, I think the objective of the admin is to open up other markets to American agriculture and American energy. That's what they want. They want those wins on the board. They're going to focus on that. I think this is more theater than substance. Also worth pointing out that we actually haven't seen tariffs roll into inflation reports now last few weeks. That, if that continues, that's, that's bullish. And, you know, we've, we've had these tariffs for a few months now. So does it hit earnings? It has to hit earnings somewhere. We'll see where that is. But I wouldn't be overly concerned around it. I think some of the pullback you saw

today just had to do mostly with some technical factors and you had an excuse to sell down with some of the news. You saw the VIX spike, the fear gauge spike eight to nine points. There's no complacency in the market either. And then you've got earnings season about two weeks out from now. So overall, I'm more constructive. I think a natural pullback this week would be totally healthy. And that's kind of what I expect. But I wouldn't be overly concerned around around tariffs here. I mean, Joe, it's, I mean, I saw you nodding along with Rom and just a couple of interesting things that stood out. I mean, Rom, you mentioned the 10% tariffs that have been in place and that's sort of been rerated as a new normal, even though historically that's quite high for global tariffs all around the world. And, I mean, just another factor that's on my mind that I'm interested in your thoughts, Joe, and Rob as well.

We're in a little bit of a different macro environment than we were than in particular, in particular the one big, beautiful building. has been signed into law and a lot of people are afraid of inflation, especially in the coming years. And for the first time, I think it was in the last Fed meeting or FMC meeting, we saw, or maybe in comments thereafter, there's been some disagreement among voting members as to whether or not it's time to raise rates. Jerome Powell has been very steadfast in saying he wants to see the impact of these tariffs kind of cycle its way through the economy. and because of this like, will he won't, you talking about Trump here, keep the tariffs. We haven't quite seen that happen yet.

But pressure is growing on the Fed and now we're seeing some cracks. How do you think that might impact what's happening here, especially if the tariffs do go into effect or Trump does negotiate some trade deals that have an inflationary effect, even if it's not the 25 or 30 percent tariff rates? Yeah. So a lot to unpacked there, but naturally I have a lot of opinions. So let me get started first with the letters. No disrespect to any of the country is named, but I think the only real material country is Japan. Now, what most people are not aware of in the United States is that there's an election in Japan this month. And so this could be some political pressure that Trump is utilizing to get Japan to the level that he wants.

And so you could potentially see Japan's rate come back. They settle kind of compromise. I'm picking a number 10, 12 percent somewhere in that range. And then the election happens with no issue, right? Like that's a potential scenario. But I think for the most part, I agree with Rom once again, that this is just, you know, really good TV. Trump is really good to that kind of stuff. And you take him seriously.

You don't take him literally. We are clearly seeing that from the kind of walking back. or softening the language around a lot of the trade policies that he's put in place. I think it's also worth noting, though, that the inflation is not showing up because it's not there. And in fact, if you look at Trump's, if you look at CPI during Trump's current term, it's actually 1.5% annualized. Now, that can fluctuate and go up. Let's use the actual metrics. Right now, if you take shelter out of the inflation, it's at target.

shelter, of course, is a big deal, housing, rent, et cetera. These things are coming down dramatically, which is deflationary. And then in addition to that, if you look at the spread between the 10-year treasury and a 30-year mortgage, it's continuing to tread lower. It's actually the lowest it's been in years. So is it easy to buy homes? No, not for most people. It's not.

But it's significantly better than it was, I would say, a couple years ago. And I think that's only going to improve. And so this gets to the question about Powell, right? There's this notion that the political pressure that's building on Powell is, is it insurmountable? I don't know. You know, he can maintain some level of independence. But I think, you know, I saw Treasury Secretary Besson mentioned something today, because I thought it was an amazing reference, and this is definitely showing my age,

where he talked about Bobby Knight. And Bobby Knight said, you know, you always work the refs. Eventually it works out in your favor. And it's like the people kind of surrounding Powell are applying, pressure, feeling pressure, palti from the FHFA, like, it's out there. And so does that imply that he's going to step down or is going to cut rates? I don't know. I think the confusing part about the last presser that he ran was they're talking about

what they're forecasting now. And prior, they were talking about their data driven. And so which one is it? You know, like you cut 50 bips last summer. You didn't in December after trouble in the election. Nothing's really changed since then. it feels like a political maneuver, even though, you know, their data dependent and now they're forecast dependent or they're being influenced more by forecast and the uncertainty around trade

policy. So from my perspective, if you look at like the actual numbers and the data behind the trade policy and the impacts on inflation, they just don't really exist. Now, you can say, well, Joe, they'll exist at some point in the future. We've also heard this, you know, that the economy is going to be in recession for years now and that this is a bubble and it's et cetera, et cetera, et cetera. Meanwhile, stocks continue to make all-time highs. The yield curve continues to steep in. You have an incredible amount of, I would say, a pro-innovation administration, which is clearly beneficial to crypto, but it's also beneficial with things like nuclear energy, quality computing, defense tech, et cetera. It feels like there's this kind of almost like a

resurgence of, I don't want to say American exceptionalism, because that was my biggest bet for 2025 was like a continued kind of expansion of American conceptualism, but it feels like there is something happening different in the government now, irrespective of your politics, because the numbers just simply support the fact that the United States is really executing on or firing at all cylinders right now. Rob, I want to come to you and curious if you have any high-level thoughts in relation to what we just discussed.

But I'm happy you're here as well. I know Dragonfly also has some liquid token funds. And I'd love to kind of just get a sense of how crypto is reacting to all of this. Just like the rest of the market, it's an interesting place. Bitcoin was sort of bumping up against all-time highs again this weekend, even though I think a lot of people are surprised at the lack of price movement, given the crypto treasury company rage. But all, everything else has sort of been struggling to sort of keep a commensurate pace.

What's happening in the crypto market right now, especially given that retail interest is much lower than I think people would expect where the price of Bitcoin is. Yeah, I think I don't have a ton to add to everything around and Joe said. I agree with a lot of it. I do think the market is pretty fragile, though, at this moment. And I think depending on what happens during earnings, we could see, you know, much bigger sell off. I think to the point that we talked about earlier, there's not a, I just don't think the market is taking, you know, this terrifying. threat that seriously. But if there is a time in which we need to take it more seriously, of course,

there will be, I think that the relative size of reaction will get bigger. But I do think people are going to be concerned about growth headwinds. And so what happens with people's forward guidance during the during earnings and the crypto side? Listen, the market's really bifurcated, right? And, you know, Joe knows this too. He trades, you know, regularly. Like, there's Bitcoin, which is a macro asset. It is very clearly decouple from the rest of what's happening in crypto. And you're seeing, a significant, significant amount of inflows into these Treasury vehicles into the ETFs. There is a institutional bid and also like a retail, but like less of it or less crypto-native retail bid for these, you know, Bitcoin assets and for Bitcoin generally,

that just like it's not quitting, right? Like it's very clearly getting put into people's portfolio as a, you know, it's 2%, 4%. But it's people see it as an asset they have to own, right? The rest of the market is not necessarily there, right? There's, you know, some conversation around Solana and ETH and some of the smart contract platforms, but you go beyond that and, you know, maybe a couple of like, you know, OGD-Find names or in the hyperliquids of the world, ENAs of the world, that have, you know, this kind of like revenue conversation that they're actually have a real product market fit.

The rest of everything that we used to trade and that we used to hold, it's really struggling right now. There is no on-chain activity. There is basically no volume whatsoever on chain. All of the volume today is happening into these kind of centralized companies and is happening in the public markets. You see it anecdotally, but you also see it in, you know, across the data, right? So I think the question we have to ask ourselves is, is there demand for most of the things that we see in crypto launch and the tokens that we see launch? Or is it really bifurcated into like, hey, here are the things that the institutions want to want to buy.

these are the things that are going to continue to go up, and everything else is going to really, really struggle or when does that turn around? And that's the question we're asking ourselves a little bit. I think for me as a venture investor, I've always been pushing people to try to find product market fit and build a product that people wanted to use. And that comes natural to me. But for a long time in crypto, things without PMF,

I've traded on this future hope. And that is going away. And that bid is not there. And it hasn't been there for months. Yeah, that's what I would actually agree with Rob pretty strongly on that. And it can also be very much identified in the volatility associated with crypto in general. So, you know, historically, Bitcoin's been a pretty high volatile, highly volatile asset as measured by realized volatility. And you can pick your window 30 days,

90 days, doesn't matter. That is no longer the case. And I remember when the ETF's, you know, first launched, I got interviewed, somebody asked me like, what do you think is going to happen at ball. I'm like, well, I think it will probably take a couple years, but you should see realize that's volatility come down. You got to get the options contracts approved. You know, you're going to have all these structured products and these covered call strategies, etc. It's all going to be ball suppression over time. It happened faster than I thought. It took about a year. And since more or less, I would say mid-December, kind of early January this year, you've seen Vol just plummet in the face of crazy headlines. Right. So just look at the

crypto headlines. Could not ask for better crypto headlines as a crypto investor, even recently, right? Like, it's just relentless. Then in addition to that, you've got foreign policy, you've got trade policy, politics, these things that are driving Trump is tweeting, right? Like, whatever. These types of what would be considered volatile events are just these kind of contemporaneous spikes in Bitcoin ball. And that, of course, you know, other assets as well, E's Salonah in addition to that. This to me is an example, and I think this is somewhat related to what Rob was saying. This is an example of when an asset becomes mature, its vol tends to get suppressed. And so the days of Bitcoin, or I should say the years of Bitcoin going up 10x likely way

behind us. And a lot of that has to do with the way the market on the institutional side is suppressing the broader volatility. If you go into the crypto native market, it's even worse. So today, I just had a look at end of July, I bit at the money options contract. So that's the BlackRock ETF. It's 34. It's like incredibly low historically. It's even worse in crypto-native. It's now in the high 20s.

So the kind of, I think devol, which is Derbitt's kind of somewhat VIX related or Vol-related product to Bitcoin, is at like multi-year lows? Now, in the past, when it was at these multi-year lows, you just bought, you just got long volatility. You're like, this thing's going to pop and it's going to rip. It doesn't matter in the direction. I'm just getting long ball. That's not the case anymore. And it has a lot to do with the maturity of the asset because of the institutions. But much like energy, at least from my perspective, as a trainer, I love being long convexity. I love being long volatility when it's cheap. The volatility is, it can't really just be destroyed. It gets transferred. Where is the ball getting transferred? The public interest. Right. So if you look at micro strategies, annualized

volatility over the past, you know, call it 52 weeks or a year. It's a little, it's around 100. Bitcoin's around 50 and change. Well, what is the share price appreciation of MSTR relative to Bitcoin? It's dramatically outperforming it. And there's various reasons as to why that's the case. But the point that I'm getting to is that the volatility is actually no longer in, say, the spot ETFs, certainly the crypto-native spot markets.

It's in these public equities. They could be the Treasury companies. There's plenty of them. I mean, if you know, Rob, and probably ROM too, you've seen these things come across your desk like every day. Yeah, it's crazy. The ball in these things are nuts, which is where, you know, if you're a volatility trader, like you want to be trading these types of things. If you look at a handful of the treasury companies, it could be a Bitcoin one, Solano one, Ethereum one. It doesn't matter.

It looks like charts of shit coins four years ago, right? These incredible moves, these drops and then these crazy swings after the fact, these are public. equities. And that's where the ball has shifted. And so as it relates to like, you know, I've, I've been a barringer of bad news for quite some time. I don't think there's going to be an old season this year because Bitcoin dominance hasn't really peaked. And it still feels like Bitcoin is going to be, you know, the most dominant factor in crypto for quite some time. Well, that asset is seeing its volatility suppressed. So that's going to squeeze even more on the crypto native side. I do think that if you look at, you look at, you know,

at like the M&A activity that's happening. Some of the news is coming out with Robin Hood. And you've heard chatter of Revolut, probably going to do an L2 as well. There's stuff happening. But again, it's all in the public markets. And so if you're going to be doing a treasury play, if you're going to be doing, you know, buying circle stock, which its vol has been crazy since the IPO,

you're going to get that kind of juice versus what's in the crypto market today. The last thing I'll say is there's always a caveat, right? the second that, you know, Vol goes in the absolute gutter, it just takes one catalyst and that ball can pop pretty significantly. The problem is, we're in the summer.

Summer tends to be pretty boring, right? In terms of activity and certainly volatility. So I would just be a little bit more patient and identify probably Q4 as when you're going to have a better shot at seeing ball tick back up in crypto-native way. Maybe just one thing on that. And I'll disagree with Joe a little bit because I, think we'll see alts some alts get a bid uh this year like but but i just think the the natural evolution

of everything joe just said which is that we just don't have the correlation that we used to have right 2021 to joe's point like oh you just get long ball we also used to just get a long spot of like anything right like if you got long spot anything you made money right at the right time and today we're that's just not no longer going to be true like you need to be thoughtful about where you um where you pick your spots and you need to be thoughtful around what assets are people are actually excited about and are getting PMF so i think it's just a natural maturation of everything. And no longer can you just, it's much harder today to make money trading crypto than it's probably ever been. I'm not a trader, but it seems that way

from the outside end. And I'm not sure Joe can attest to that. It's true. It's just starting to look like traditional markets in a lot of ways. And that is to be expected, which is a good thing. And that is why you're seeing these L2s by, you know, all of these big companies. It's why you're seeing the institutional interest because it's starting to look more institutional. but that also means it's harder. I want to tie a bow on the tariff discussion and then move on to more, I think, fun things. But, I mean, all of you, there's a saying that's very common saying, hope for the best, prepare for the worst. There seems to be consensus here, at least, that everyone expects deals and that the worst fears of these tariffs aren't going to come to fruition.

But, of course, I mean, Donald Trump is famously thin-skinned. And he's very aware of the whole taco trade sort of narrative that's that's circling around. And like, even if it's a 5% chance or a 10% chance that he's going to say, you know what, no, like I don't have to face the voters again. We just passed our bill. Like, I can't delay again. We're going to do this. What are you guys thinking when you strategize with your teams in order to react?

should, if nothing else, we see a few months of pain. Ron, why don't we go to you first? Quick reactions. I think, you know, Joe is right. The volatility has moved to public equities, right? It's in things like IPOs, you know, core weave, core scientific. I own both of those. That's an interesting topic to talk about the IPO season. And crypto investors, invests across other themes like uranium, like robotics.

You know, this is the season of the Kathy Woodstocks. Kathy Woodstocks are back. I've actually been a critic of Kathy Wood. This is coming from a guy that's generally a critic of Kathy Wood. Those stocks, those themes, those animal spirits are back. You look at like factors in equities markets. Momentum and volatility are some of the best performers over the last 12 months. That's what's drawing.

One of the primary value proposition of a crypto asset is momentum and volatility. Public equity markets are delivering that and that's starting to pull the interest, you know, in that area. up. On the tariffs, like, Trump is also facing political competition from this potential new America party from Elon. He's eyeing the midterms next year. He wants to win. He's taken a fairly diplomatic response to Elon. Like, he didn't, he critiqued it, but he didn't really rail into him. I mean, about as polite as he can be, as far as I saw. And, you know, he wants to own these markets, he likes to win. Markets are up. Markets are winning now. I don't think he wants to change

that dynamic. I think it's old luster. Markets will see through that. I think if you want to figure out how do you hedge like some left-tail risk, it be around thinking about how do you diversify your U.S. exposure, right? Dollar keeps dropping extremely oversold. I think it's one of the worst first halfs to the year for the dollar. We've seen it in a long time. It's down 10% or so. Despite the fact that short rates,

are higher in the U.S. versus the rest of the world, and you have earnings growth in the United States. But I think one of the ways that we're positioning is international value with momentum. If you look at, for example, banks around the world pick a country, Brazil, South Korea, Italy, Spain, UK, Germany, banks around the world have momentum. They have earnings growth. And that's one way to benefit from a potentially cheaper dollar, which could have, happen if you believe that international investors like Canadians and Europeans starting to rotate away from US assets. One of the things that I think about with respect to putting a bow on the tariff thing

is believe it or not, like, I think the Trump administration, when they first announced this stuff back, whatever, back in April 2nd and calling it Liberation Day and then the deadline being right around the Dependence Day, I mean, come on. They were planning this. And furthermore, the big beautiful bill. passed and within 24 hours, Speaker Johnson came out and said, we're going to do another bill. And then another one after that. And so if you read the tea leaves here, forget what's happening with trade policy, which I know is the point of the discussion. Look at what's happening in the

political arena. And let's, I'm fading the musk thing. I mean, I'm never going to fade musk, but I don't think it's actually going to be as material as people think. I could be wrong. I've been wrong before. But the reality is, is that the Trump and be. administration and the Republican Party are likely teeing themselves up for a juicy midterms, especially if they're going to get two more bills to pass before the midterms. And so what does that do to markets? If they can also, you know, get rates cut, there's a potential that Bessent actually runs the Fed. It's maybe the first time since the 1930s that that happened.

Like, whether you agree with it or not, I mean, that's likely an outcome that they're going to end up getting these additional bills passed. Stock market all-time highs. Mortgage rates are down. credit cycle begins, you know, deregulation enables banks to lend more, and then the midterms happen. So I look at the trade policy or tariff piece as just kind of some political fodder that isn't necessarily driving a lot of the decision making. What's really going to happen is the midterms need to be teed up for Republicans. And I think that the Trump administration is strategically sequencing

a number of events to enable that to actually happen. So from my person, perspective, I think it's, you know, I think it would be more difficult to be, uh, you know, in cash or short for sure heading into this type of stuff. Yes, there's going to be some, you know, volatility and et cetera. But for the most part, this just feels like, uh, what was, what, what, what, what it felt like in December, we know what happened. The difference being this time, we know that Trump's, uh, trade policy bits, he continues to walk back and trade deals have already been done. Here's one interesting thing. I know Rom you want to double click on the musk topic and this kind of fits into the discussion. I'm really wondering if for when he's going to

try to launch his own stable coin. I'm thinking about it when he's talking about his America first party and he wants to sort of find a way to incorporate Bitcoin into it. But at the same point, he has X. They want to offer payments and tokenized stocks and do everything. He's the richest man in the world. Stablecoin business is such a profitable one if you can get scale. I'm wondering if and when he's going to try and do that. I know the Genius Act puts some restrictions on like technology companies that aren't necessarily banks doing it especially at a certain size. But to me, it makes a lot of sense if he wants it to be the Everything app. And we're having this real stable coin moment here. I think that could turbocharge everything. And it's such an interesting

time for stable coins because like you said, Ron, the U.S. dollar had its worst first half the year in what, decades. Yeah, it's stable coins. is the hottest investment on Wall Street right now. So there's so much happening here. Rob, I know you have done a lot of work on stable coins as well. So I'm interested in your thoughts on that. And then just also anything else related to the potential America, was it America first?

Is that what's called the Musk Party? America Party. America Party. Yeah, he's pulled out. I guess the first is kind of taken. Yeah. Might be a little bit of a working title. So I guess we'll see what happens there.

Listen, I think on the must stuff, to Joe's point, I don't know if I would ever fade Elon, but what's clearly true is that he, he changes his mind sometimes as a lot of people do. And he definitely tweets his part, right? So like he tweets and then he changes the way he does different actions depending on that. So I don't know what will happen. I will say broadly, you know, Silicon Valley embrace the Republican Party, including people like Elon Musk in a way that it hasn't in basically ever, right?

And they were a big part of bringing the Republican Party into power and the way it happened this time, not just Trump, but then also in the Senate and in the House. And I do think there is risk if there is a real, you know, crack in that, you know, Silicon Valley support for, for the Republican Party, especially coming into the midterms for Joe, as Joe mentioned, for the party. And so I do, I wouldn't necessarily fade Elon if he does feel like he is disenfranchised enough or he is unhappy enough of what is happening, that he might try really hard to not, you know, build a whole big new apparatus of a new party. But as he mentioned, he actually tweeted about this, just going after a few key seats, right? And if you get a few key seats in the House, a few key, a key seat in the Senate, like you can theoretically just grind everything to a halt, right? And he did mention doing that. And so it's possible, right? I don't know what will happen.

but I think there is going to need to be amending of that relationship if the Republicans want to stay in power. I think broadly to your point about like stable coins themselves, he will probably launch a stable coin. Yes, like technically you are, the tech companies are not. What's that? The Musk buck. Yeah.

Yeah, I mean, I'm sure. Hopefully that was also a working title because, but he, the tech companies technically aren't allowed, based on the Genius Act. But what we're likely to see is a lot of white label solutions where some other like banking entity or regulated any entity issues a stable coin that is called the Xbox or whatever and is used by them and is distributed by them. Every single person I talk to, whether it's a fintech, whether there's a technology company, whether it's a financial institution, every single one of them wants a stable coin. And honestly, it is like absolutely absurd. I expect that a lot of them will die out and get no real usage, and then we'll see, you know, maybe a consolidation around some sort of shared liquidity layers or even the existing, you know, branded stable coins and maybe a few others.

But in the near term, I think almost everyone that matters that thinks they can make a buck will probably issue their own stable coin, or at least their own branded stable coin. That's a white-level solution of something else. Interesting. So we have to take a break in a minute, and then we're going to move on to some other topics. But Joe, I wanted to ask one follow-up on something that you mentioned earlier. You're having a good discussion with Rob. And that's really kind of how volatility has shifted from some of the large-cap assets to the crypto stocks. Or sorry, the crypto treasury stocks.

And I'd like you to kind of maybe zoom out a little bit. And just from a broader perspective, like, is there a real bifurcation happening between the tokens that are getting the treasury companies and everyone else? And this kind of lays into what Rob you were saying, too, about how activity on networks is, is plummeting. There was an article on CoinDesk, I think, earlier today, that the mempool is down to zero. People are not using blockchains, but they want to invest in the volatility. And that could be a dangerous situation for investors if they're caught on the wrong end. And maybe some these crypto treasury companies are hiding this, or at least providing a safety valve for investors that are in these crypto stocks. But it seems like it could be a dangerous situation,

too. So Joe, I wanted to just kind of hear, maybe you could expand on that. a little bit more. I'll probably preface this with that any investment carries risk, right? So it's, it's dangerous to even just be sitting in cash. It's dangerous to be sitting in, you know, risk-free rate treasuries, right? There's always going to be some inherent risk with anything that you do with your money that you're putting to risk. That being said, the volatility of a lot of the crypto treasury companies, I think they're

now called DAT's digital asset treasuries, DAT. A lot of that has to do with the mechanics of these deals. Okay. So I'll try not to go way down the rabbit hole, but in short, the way that these things tend to work is there's either an RTO, which stands for reverse takeover, or there's a SPAC. And there's pros and cons to both. A lot of the ones that you've seen that have really ripped, like Tom Lees and Joe Lubins and David Bailey's, these are reverse takeovers. And what happens is they end up having a pipe deal. I think it's private investment in public equity.

So sophisticated investors like us on this call get access to these deals to invest in them at a favorable price. You do have some sort of a lockup and with a reverse takeover, it's when the shelf offering is registered with the SEC. And so you can see, if you look at say S-BET, which is the one that Jolubin did, you can see the run-up and then you can see the collapse. And that was mostly that there was some kind of fun around it by, I think, I think it was a press releases or some news release around how long these investors were locked up or something to that effect. But the point was the thing actually absolutely face plan. I think it's actually undervalued relative to what's called its MNAB, which is your multiple net asset value. But that's besides the point.

The move in something like S-Bet is not unique to S-Bet. There's dozens of these companies now, and they're all seeing these types of pipe deals as well as like the convertible debt that, you know, Michael Saylor kind of pioneered of being able to access. the debt markets to buy more Bitcoin. They're all running a lot of the same playbooks, and you are going to see a lot of speculators in these deals, and you're going to see the volatility dramatically increase. Another reason why the volatility is super high is a lot of these stocks are low turnover or low-float stocks.

So some of these stocks are trading like $10, $20 million notional a day, and then all of a sudden they're training like billions of dollars, right? So it's going to cause inherent volatility in the way that the stock actually trades. So the SPAC is different because there's a, you know, a SPAC is already a publicly with the company. You guys may be familiar. I know ROM is.

I'm sure Rob is too with what, you know, happened in the previous SPAC boom that was at 0% interest rates, helicopter money and COVID. So the SPAC boom back then is very different. I think the way that these structures are being put together today. We also have a pro-crypto SEC and administration. So I do think a lot of these SPACs will de-SPAC, which is when the employer company becomes a publicly trading company. And you're seeing things like Jack Mahler's 21 trade up. You know, these SPACs typically are priced around $10.

That thing traded up over $30. It's hanging out around there right now. That's very, very valuable. You know, for investors that got into the private deal, as well as, you know, investors that are trading the SPAC. The issue, I think, is crypto-native. folks are used to the volatility being with them. And as money is flowing into these other deals, that means less money is flowing into crypto. So as an example, a number of folks in crypto, I don't know if Dragonflies, if you guys have done any of these, but I know a lot of crypto VC funds

and hedge funds have invested in these pipe deals. That means that money's not being deployed into crypto, right? Now, they could have done an in-kind contribution of Bitcoin or Ethereum, so on net, it doesn't really change too much. The point that I'm getting to is that the pipes that are raising all of these, the money that's being raising these pipes are not going into crypto. They're not going into crypto VC. They're not going into crypto hedge funds. They're going into the public markets. And I just don't think that this is going to slow down anytime soon. The last thing I'll kind of allude to is, everyone is trying to say, this thing's going to blow up enormously. I was kind of in this camp until I kind of reeducated to myself as to what is actually

happening. If you look at micro strategy as the kind of canonical example here, they have like something like 60 plus billion dollars worth of Bitcoin and way less debt. I think their leverage ratio is something like 17% or 15%. It's actually quite low. And he continues to innovate with these other products, these prefers that pay dividends, et cetera, that have come out. And I was listening to a podcast this morning. It's fascinating. I've dropped like the guy's name, but I've got to give him credit.

You know, you can buy preferred shares in Boeing, and it'll pay like a six and a half percent dividend. Boeing has airplanes falling out of the sky, right? Now, you can buy, I think it's, I'm going to screw this up. It's like stride or strike or whatever the top preferred one is. I forget, and there's three of them. It pays 12 percent, at least when they first price it, There's so much demand for it, and that percentage has dropped because the share price has increased.

And there's no physical risk, right? Bitcoin just is sitting in cold storage somewhere. There's no, like, airplane to fall out of the sky. And you're getting, like, you know, these companies that have, you know, pretty heavy leverage ratios are still being able to dominate that kind of that area of fixed income and pay and raise cash from those debt marks to receive, you know, a six, six and a half percent interest rate. I think what's going to end up happening is there's going to be a significant amount of innovation in accessing the debt markets, but then the second order effect being things like reinsurance markets. That's an enormous, enormous market that is currently untapped. And typically the reinsurance market uses dollars. Imagine you use Bitcoin or Ethereum or Solana for that.

I do think we're kind of at the cusp of the digitization of the kind of securities that are available for asset-backed securities. with that asset now being Bitcoin and other forms of cryptocurrency, which only begets even more volatility in the public markets. All right. Well, thanks for that. We need to take a quick break to hear from our sponsors, and then we're going to move on to tokenized equities and catch on stable coins a bit more as well. Hi, I'm Matt Hogan, CIO of Crypto Asset Manager Bitwise.

Look, crypto can be confusing. There's so much noise and the space changes so quickly. That's why, every week, I write a five, minute memo on the biggest stories impacting crypto in plain English. Why is Bitcoin up or down? What are people missing? Where should investors look next? Get the lowdown every week. Sign up to get the weekly CIO memo delivered straight to your inbox. Go to bitwiseinvestments.com slash CIO memo. That's bitwise Investments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing.

Really interesting discussion. I want to move to a big story last week. I guess the confuffle over Robin Hood and whether or not they were offering tokenized shares of Open AI and I think was SpaceX and maybe a couple of other really high value private companies. Open AI publicly refuted that and I think they kind of forced Vlad Tena of the CEO, Robin Hood took it that it was, I guess, some sort of derivative that was going to track the value of a share of Open AI. I'm not even entirely sure how that works. Maybe one of you do. But tokenized securities, tokenized equities, tokenized debt, tokenized everything is once again a very hot topic. I know we were talking about Robin Hood launching its own L2

and then maybe X will, maybe other companies will at this point. I mean, after all, if nothing else, why not? It seems like some of these L2s are willing to pay out like tens of millions of dollars in tokens to do it. So it seems like a pretty smart thing to do one way or another. So I want to kind of, Ron, get your thoughts on what happened there. But this also kind of leads into, again, the stable coin discussion that we were having because you can't buy tokenized anything with dollars. You need stable coins. And in this world where people seem to be fleeing a dollar for the euro or other types of safe havens, this trend could again, accelerate demand for dollars and maybe provide Donald Trump a little bit of a relief valve as people get

worried about the U.S. debt, especially long-term debt. So I want to get your thoughts on all of that. Yeah, well, look, I think Besson said that stable coins could represent something like a trillion dollars more in incremental treasury funding. That seems like in the high side to me, anything more credible estimates for a couple hundred billion, not nothing. So yeah, Robin Hood is leading on tokenization equities, but I should point out that, Coinbase has been active with base as tokenization programs and Cracken is also following suit. It seems like all of these firms are doing something or another on tokenization of equities. It seems like they're starting to run out of genuine product innovation that on ramps the next leg of customers.

Now, interesting about tokenization, we've seen an incredible success with stable coins, right? The original paper that Satushu Nakamoto wrote was electronic peer-to-peer cash, and stable coins are the fulfillment of that promise, ironically, of course. And Bitcoin has shifted to more the store value and depatement of U.S. currency and decentralized sovereign money. So, like, what's next? Like, people have focused on tokenization of equities. I think what could be more interesting is taking advantage of the idea of programmable money. This is a big idea to have smart contracts that can enforce agreements and behave algorithms. based on certain conditions states of the world, that's pretty extraordinary idea.

Can you run securitizations on chain? Can you get music royalties on chain? Can you empower the long tail of creators to monetize and capture more of the value they create rather than letting middle men like studios capture that? I think it's a far more interesting dimension of innovation that these exchanges are kind of missing right now. And the other is like, well, AI is here. And people aren't innovating on the form factor.

That seems like the obvious opportunity. You know, the current ways we're interacting with these tools should be AI native. It's not. It's still, you type in a ticker, you scroll for this and that. So those are, you know, some quick thoughts on the tokenization plan. Open AI, I think they use a derivative. I think the mechanics of that are less interesting. It's more around there's increased competition where Robin Hood and Coinbase and others are starting

compete for the marginal customer. They've got to broaden their product content to do that. They're getting to alternative investments. They're going to hop pre-IPO deals to have an attractive value proposition. They're getting to wealth management. So I think it's more to say around that as opposed to like the innovation I'd be excited to see. I was just going to say that I'm interested in your thoughts and then Joe on what might really move the needle on tokenized equities. I mean, we've all been in the space for a long time. I've been in crypto since 2013. I wrote a story, I think back when I was in Forbes, at Forbes either 2020, I think it was 2024 in the fall. And the title was something like why tokenization is failing.

And I led it with a presentation I heard from a couple of partners at McKinsey that I think I also heard back in 2016. Like tokenization as a concept is pretty old in terms of crypto's history. And when we look at things like adoption of tokenized products like stable coins, very suddenly it became the lifeblood of crypto. If we're looking at tokenized treasuries, which is still very, very, very small component of their overall treasury market, I think one of the real big catalysts was I think when Deribet started accepting, I think, wormhole's product as collateral for leverage on options. And then everyone else, all the other prompts are thinking, hey, our traders will want this too so they can take out leverage and get yield. tokenized treasuries are now growing. What's the equivalent of that for tokenized stocks? I mean, is it private stocks? I know people trying to tokenize private funds, private everything for years.

Is that it? Or what? Because I know we've discussed this topic. I know, Rob, you were here, but we've- What's the problem we're solving? What are we unlocking here? Yeah, exactly, because we don't need a tokenized share of Apple to buy Apple. So what's going to be the catalyst. Well, I think, I mean, I think there's two different markets we need to talk about here, right? Which is one is like public equities and one is private equities. And those are different problems. They have different reasons for being on chain. Different people are trying to sell to. And I know they were in the same Robin Hood announcement, but I think like every we think about like these actually getting for a PMF, like they are different conversations. And to your point, Steve, listen, I was at Goldman when we invested in the thing called Axani.

It was essentially a bank consortium to go and put high yield credit on chain. Right. And the was like 2016. Okay. So this is not a new conversation. And to your point, right? There's, but I think the reason it's not a new conversation. And, you know, again, like, Blythe Masters was on the front of Bloomberg business week in 2015 saying blockchain, not Bitcoin, was because that everyone understood what blockchains can do for financial markets if things were to be natively tokenized and be able to be freely moved between each other, right? That conversation hasn't changed. The infrastructure has gotten better. And then we've gotten closer to realizing that that world.

But the conversation, the understanding hasn't actually changed. I think to the point around stable coins, stable coins had to exist for these other things to exist. Right. Like if you didn't have, if you were in every pair, every trade was eth denominated or or sole denominated or Bitcoin denominated, like that is just risk that the people who operate in these markets cannot take. Right.

And so stable coins had to work. Stable coins are, and I heard someone else put it as like, the oil for the rest of the capital markets machine that is going to exist on chain. And I absolutely 100% agree with that. Like tokenized equities are going to happen at some point. You know, tokenized, you know, RWAs are going to continue to get bigger. But they require a couple of things. They require the traditional market infrastructure to be ready to accept them and then to be

able to put them into their and the settlement into their tech stack. Right. So I was talking to one of the largest, essentially like market makers in the world, right, who they have a huge traditional business and they have a crypto business. And they were telling me that it took them basically two years to get comfortable that their back office system could do 24-7 collateral mobility with tokenized, with stable coins and like, you know, tokenized products like Biddle, et cetera, right? Basically, they were sitting on this tech stack.

And this is one of the most technically proficient trading firms in the world. It took them two years to even think that they could do their accounting appropriately for tokenized, tokenized assets, right? And those are the makers, which who are much, they put a lot more investment into this type of, you know, technical infrastructure in KAPX than the takers, right? So if I take, you know, and I'm just throwing out names, I have no idea what these people are doing, but if I take like a Ballyasne, for instance, right? Like, I would bet that Ballyasne has absolutely no idea how to settle on the weekends. And it's not that they like, you know, these people aren't smart enough. It's that their technical infrastructure has years of technical debt on top of it, that they probably hard-coded in there somewhere that like don't settle on the weekends.

And then they will not be able to figure it out. And they'll have to go back and rebuild that system, right? And that is what we're seeing. And that is what I'm hearing from a lot of the people on the trading side. But they all understand that this is a better infrastructure from first principles, right? If they can do intraday programmable yield, if they can do atomic settlement and programmable money movement. If they can trade between a bunch of different types of assets, which are maybe some of them are digital and some of them aren't, like that is a better infrastructure.

And so I think these things are happening. I think the problem is that we continue as an industry to want to move so much quicker because everything does move quickly in this space, and then moves so much more quickly than those firms can that we put out these products that are subpoly at times. And then they kind of die on the vine. And then we all get really bearish. And we're like, go, this thing isn't going to work. But it's not that the infrastructure doesn't enable a better product. And it's not that it's not going to happen. It is just simply that we were not ready yet and it wasn't the type of product we needed yet. And we've seen that play out with stable coins. We're seeing it play out, I think, with a lot of the tokenization that's happening now.

And I remain really long-term bullish about this existing on blockchains. I just, I haven't loved a lot of the products set that people have built so far. How do you position around it? And who are the winners and losers, you know, Rob or Joe, like, love the thesis, love the long-term opportunity. I mean, Tom leaves betting on Ethereum. That's one way to express a view. Do you like that view? Do you bet on Anchorage as an OCC chartered bank that maybe can intermediate something here?

Like, how do you think about expressing that view here? Yeah. So my point of view is like the smart contract platforms that you think will be the winners, are obviously going to accrue a lot of value here. So like, you know, an Ethereum, a Solana, I think, you know, there's a lot of conversation right now. around for a theorem specifically. If everybody has an L2, like, what is the value accrual, right? But I think if you just think about NetCast law, and that's the way I like to think about this,

there is going to be so many more net new users and so much more net new economic activity that there has to be more value into the token itself, right? And so I think that it's a very easy way to express that view. I think, you know, if you're long stable coins, like, you know, whether or not you believe circle is going to be a winner being long circle is the only way to express that view in in the public equity market. And I don't know that I think like a custodian and, you know, and frankly, like, I bet we see a lot of OCC chartered banks, new banks over the next few years is a, is a way to express that. We are, you know, we're a venture firm, right? And so we're, we do, you know, private investing primarily.

But, you know, we're along the smart contract platforms. We're long, you know, new and better infrastructure. And we're long people that are providing the infrastructure needed to interact with stable coins. and tokenization, you know, more broadly. And that's how we're expressing anyways. Yeah, I'll kind of chime in. I just got to tip my hat to Rob. That was an excellent breakdown. I got to, you know, that was really, really good because I agree with pretty much everything you're saying.

So let's take Tom Lee, who is a good friend of mine. Let's just take this as an example that kind of drives some of my decision making. So one, retail loves Tom, institutions love Tom, CNBC loves Tom, like he's been dead, right? and a lot of stuff when people were telling me he was crazy. And that includes things like Bitcoin and subsequently now Ethereum. And so I think that the challenge that I have with at least his primary reason for doing Ethereum specifically versus a Bitcoin or a Salon or picks of the else is he brings up the stablecoin use case and says, you know, look like the majority of stablecoins are a sure of Ethereum, the majority of the

volumes on Ethereum, institutions are going to end up having to own Ethereum, and the number should subsequently rise. I think there's truth to that, but I think the difference is, and this kind of gets back to the kind of use cases, is that the majority of stable coin activity, assuming it starts to get adopted with your Visa and MasterCards and Shopify's and Apples and all these other folks in the world, is going to be with consumers and retail, right? Assuming that it augments the current payment flows that that exists. I just saw something, I think Salada actually put this out, and it's not specific to Salon, I believe, but it's something like a 99% reduction in fees to merchants if they stop

using Visa or MasterCard and just use, you know, a stable coin. I mean, it's enormous the impact that it can actually have. Just to be clear, there's a ton of nuance in there around fraud and chargebacks and all that stuff. Oh, totally. Yeah, yeah, yeah, yeah. I mean, it makes for a great headline, Rob. So don't steal my thunder.

Sorry. But it's all good. So my point, though, is that if you look at the incentives behind a lot of this stuff, so let's take Tom Lee's example, he is incentivized for Ethereum to go up and he's using the Stamblecoin kind of current market and volumes and transactions, et cetera, as it means to do that. The problem is, at least from my perspective, that the, you know, Ethereum used to dominate Stamblecoin flows and TBL. I mean, it's still due to some extent, right? No disrespect to them.

But it's actually the market share has been dropping. So I think it was like even about a couple of years ago, Ethereum had roughly 75, 80% of all of the volume with sample coins. It's now down into the 50s. So that's a pretty material drop in two years for, and by the way, this is not, I'm the Salonable, but it's not just salonate at Cron. It's DSC. It's a bunch of these other ones that are eating into the share of Ethereum. And so if the incentive is, I want Ethereum to that because I'm doing this Treasury company, and I'm using Stablecoins as a means to justify that, I think there's some issues there.

And I also think there's issues because the idea that as institutions are all going to gobble up a ton of Ethereum because they're going to be doing so many Stamblecoin transfers, et cetera, I don't think that's actually going to be remotely as large potentially as something like what retail could potentially be doing. Now, let's get back to the incentives of the L2s. Coinbase launch base, wildly successful. product. Coinbase is a for-profit company. They saw an opportunity to build a new revenue-generating product and it's wildly successful. Crack into the same thing. Robin Hood has now done the same thing. As this relates to tokenized stock, this is just another way for them to, A, you know, expand their

kind of share in the market by getting more users to be doing whatever. Let's assume it's international-based users. So the more users to Robin Hood as an example. But B, they can continue to control it. And so one of the challenges with a lot of the token of stock, and this is kind of what Rob was referring to, there's like the actual infrastructure for like, you know, imagine like a Ballyosni and has no way to actually settle 24-7. Like, that is true. I realize this when I worked at a hedge fund for crypto in San Francisco back in 2018. I was like the back office is like completely not set up for this kind of stuff. So, is still true today. But I think also the regulatory and compliance nature of this stuff is a massive,

you know, drag on the ability to move quickly. And to Rob's point, like, we and crypto are like, we move fast and like, we're spinning up new stuff left and right. And we do, we create new DFI primitives like every month and et cetera, et cetera, et cetera, right? You can't do that in the enterprise. I learned this when I ran an enterprise open source software company many years ago. I was walking into Bank of America and being like, you guys told us you wanted our product, you're using this new open source software, we have the solution. They're like, yeah, it's going to take 18 months to close the deal. I was like 18 months. It just didn't make any sense because the pace of the open source project was breakneck. Inside the enterprise, it's super slow. And so as I look at

someone like Robin Hood, I'm like, yes, of course they would do it L2 because they're going to be able to control things, they're going to be able to manage it within the constraints that they have, not necessarily from the infrastructure like technology, that they're a great, you you know, tech progressive company, but the regulations and compliance and settlement and reporting and all the things that are still very archaic, they can kind of control with that L2. Whereas Crackin, what's interesting to me about Cracken's approach, and yes, they do have an L2, they don't really talk about it too much. They were like, let it rip.

We're just going to do tokenized stocks, and it's just going to be an SPL token, and you guys can do basically whatever you want with it. I, of course, love that approach because we're now going to get to see experimentation. with what these tokenized stocks are doing on Solana. And yes, they could probably bridge over to L2s and Ethereum, et cetera. But like for the most part, they're going to be on Salana. and within like the first 48 hours of tokenized stocks trading on Solana, it dwarfed basis volume. It's not even close.

And it's because of the kind of the ability for people to, you know, trade very frequently at a very low cost on something like Salon. So what does that mean then longer term? It's like, well, genies out of the bottle, tokenized stocks are cruising around Salinas blockchain? Are they going to end up as collateral? and like Camino that you can borrow against. Are you going to be able to use them as collateral on DRIF or Jupiter to trading perps?

Like what are the new types of innovations they're going to happen with sort of thing? And there's no going back from that. The question is, does that actually like bleed over into Tradfai to get them to be more aligned with doing this 24-7 tokenized stock trading? I think that's TBD and a lot of it gets back to Rob's point. Are they set up to actually do something like this? I mean, this does provide an opportunity. for companies and startups, frankly, to kind of carve in there.

But let's be clear, these banks, they're grips on anything that has to do with making money, and they are wildly disincentivized from changing that, especially if you evaluate someone's career risk inside that organization, it adds to the friction. Yeah, I think the career risk is a good point. I mean, I think, like, for those of us that were in or new people in, like, traditional big, large firms in 2021. A lot of those people that did crypto in 2021 got fired in 22. And they had, you know, great jobs. I had like great, great firms. But I think there's one thing I wanted to go back to that Joe mentioned what she was talking about, like Ethereum losing like stablecoin

market share. The one thing I would say to that simply is that we did a report with the guys at Artemis and Nick Carter, Cass Island, maybe six weeks ago or eight weeks ago, we dropped it. And they, we actually looked, we basically looked at 31 companies who do payments for stable coins or with stable coins. These are people specifically that are only serving the payment space. And we had them send us a lot of proprietary data, you know, because you can see what you can on chain, but it's not entirely clear, you know, what's happening on chain, what use cases for, where it's coming from, etc. And we took it about proprietary data. And we saw that actually Ethereum's market share for that piece was relatively stable over the last 18 months.

The unsurprising thing, or maybe surprised depending on New York is that Tron continues to be about 60% of stable coin payments. They just dominate stable coin payments because there's so much USDT on Tron in emerging markets that people are using. And then if you looked at the rest, it was like call it like 30-ish percent to 30, 35 percent for Ethereum. Because again, like speed isn't actually the concern there because a lot of the average transaction size was actually quite high. So we were talking 100 to 200K8 transaction size. part because a lot of these people are actually batching transactions and netting them, end of day. And then if you looked at the call it the 5 to 10% that was left, it was Polygon and BSC that were mostly dominating the rest. And because Polygon dominates India. And India is a big part of, you know,

the global remittance corridors and people in, you know, BSC, people in them in Asia. We started to see a little bit of slana near the end, but it was really, really quite small currently anyways. And so I think there's definitely that story can still is proving itself out on the data, the question it becomes is like when do we, if we go from call it like netting to like real time, like sending and receiving, and then you need, you know, a faster blockchain, then it has to move off of, off of main net. Yeah. Tran's actually a really interesting case because it has a reputation for being like this ultra-pest, ultra-cheat blockchain, but it's really not, especially when it comes to sending

USDT, which has a separate price structure from, I think, sending TRX. I spoke to the, I did a story on this a couple of weeks ago, and I spoke to least one company. that's looking to move away from using USDT on Tron because it costs almost $4 a transaction for them, which, again, this is an emerging market-focused company that's unsustainable economic. So that's one thing worth watching. Ram, I want to come to you to kind of tie bone this conversation because then I want to get to one more topic before we have to wrap. But I still, and I want to just be a little bit of a contrarian here. Rob, I'm hearing what you're saying.

Joe, I'm hearing what you're saying. And in certain ways, I understand the technical debt, like the global focus, like banking servers and again, those are all the same things that we've heard for years. And building a better product is sort of like the field of dreams built it and they will come type of scenario. But what do you think is going to be like the real use case that's going to force people to tokenize equities,

to force them to use any sort of tokenized security? So it's not just a nice to have on a blockchain, but it becomes sort of table stakes. I know that there's a lot of people that they hear all these great things, but they're waiting for that one killer moment of Genesis where the world is never going to go back to being what it was. What do you think? I know it's kind of a big question. Yeah, I know. I think by the way, fantastic discussion. We're enjoying every minute of this. This is learning a lot here. Like, I think it's alternative capital markets. You have a public capital markets framework that includes things like an NS1 and registration requirements. or in compliance they have to do around that.

But I think if you think about the promise of democratization of payments, a democratization of capital, the blockchain and the technology around this is actually what can deliver against that promise. And the surface area of opportunity is significant. You know, we talked about consumer payments, cross-border, including reminences, enterprise, B2B payments. There's a lot to do here. But if you look at the success of say, Republic,

in doing crowdfunding transactions. Look at what happened, 2017 ICOs. They didn't really work out that well. Look at 2021 specs, but this is the demand for an alternative capital market. I think there's a way to make that come together in a way that leads to better outcomes for investors. You need more governance. You need more testing, more skin in the game.

But why can't that be an opportunity to move, share from traditional, kind of Wall Street and provide capital access to a broader set of issuers, including private credit, by the way, not just in the equity side, but also in the credit side. I think that stable-clean money is going to have to find a way to park that and generate a yield. And I think that'll find its way into Main Street lending. I want to one less topic I want to get to, and I'm going to give each of you a chance to kind of wrap up and share some final thoughts.

But today was a big acquisition announced. I think we finally found the right price to acquire Core Scientific, which I don't know if it is still today, but at least before it filed for bankruptcy a couple years ago, was the world's largest publicly traded Bitcoin miner in terms of hash rate. I'm sure it's still quite large today. A lot of really interesting intersections here because it's a Bitcoin miner. Bitcoin miners have been struggling, even though I know the last month was pretty good for them because of some curtailments, down in Texas, but I have to imagine that Core Reeve is acquiring core scientific because they want to use the data centers to do more AI stuff. So question number one, and I'll throw it out to the

group for whoever wants to take it, what does this kind of mean for the future of like mining and how kind of like is competing with the demand for AI for infrastructure, energy, et cetera? And then two, another story I wrote, I think it was last week or so. I noticed a really, big divergence in sort of AI tokens versus AI stocks like Nvidia hit an all-time high but all the major AI tokens and invity did this after a pretty tough spring all the major AI tokens were down like 20 plus 20 to 40% in the last month or so so there's a clear sort of delta there so I'm interested in like I don't know if any of you invest in AI tokens or

have exposure to the decentralized AI space but if you do I'd love to kind of know what your thoughts are on that so I'll throw out to the group because I'll take a stab at this. So yeah, it's quite a quite a turn of events for Core Scientific. They were in bankruptcy, past a billion dollar acquisition and now got bought for $9 billion in stock in Corweave. That's pretty good trade. You know, it's pretty good. So there's kind of like a high level thing here, and I'll kind of get to the AI token thing in a second that I look at. One, Bitcoin miners have also suffered the fate of the four-year cycle I remember in 2022, I saw tons of distressed deals for miners, their loan books, all kinds of stuff.

And I'm not, I'm certainly not a Bitcoin mining expert, but I look at what's happening in the markets. And even today, I think it's Bit Digital. BTBT is their stock ticker. They said, F it, I'm just going straight all in on Ethereum. Like they just stopped everything and just became an Ethereum treasury company. Yeah. I was just to say a new type of capitulation perhaps than we typically essentially. associate with Bitcoin miners.

But that signal is what I'm getting to, is that like whether some of these miners start pivoting to, you know, AI infrastructure related stuff and inference, et cetera, or they just become treasury vehicles, I think you're starting to see, you know, some capitulation across the sector where you're still going to have, you know, the winner takes most Bitcoin miners. But these other ones are going to be doing other things. And so I think that you'll likely see a continuation of Bitcoin mining operations spin up. Somebody's always got a scratch their rates. They've got a better, faster, cheaper, stronger, whatever it is.

However, some of the stuff that I've seen earlier this year outside of the U.S., there's a big Bitcoin mining operation that was going to be in a country. I won't name the name because I don't want to give it up. But pretty significant. Government was behind it, et cetera. and the second bullet point in the ask was how can we utilize this for, you know, GPU infrastructure for AI inference and model training and et cetera, et cetera. And so, you know, if you're doing infrastructure today,

unless you are a vertically integrated, you know, blockchain system where you're, you own the data center, you own the validators or the miners, you own, you know, everything that's, that kind of spawns out or sprawls out from there, you kind of have to have this on your radar when you're doing any sort of mining and you're starting to see that play out today with something like the core we've acquisition of core scientific as it relates to AI tokens to me it's just another category that doesn't have enough attention there was way too many tokens there was an incredible run-up and a lot of the speculative AI tokens last year particularly in Q4 people are buying meme coins or they're

buying Bitcoin for the most part and and again to Rod's point Rob's point point earlier around, you know, on-chain activity really kind of dropping off, it should be no surprise that you're seeing these prices depressed and seeing things like Nvidia and others run. That's where all the money is going into. It's basically back into the public equities and not necessarily AI tokens. Okay. Thank you for that. Ram or Rob, do you guys have anything you'd like to add to this question? I mean, listen, I don't think I have a ton to add. I think, you know, if you looked at the presentation today that Corby put out, it actually specifically said that scientific was going to shut down their crypto business and their Bitcoin mining

business. So, like, it's very clear that, but, you know, they seem a better return on capital by, you know, investing in the AI data centers. I think I'm not an expert here. Rom is definitely more of an expert than I am. But it seems pretty clear to me what's happening here is the same thing that happened into the Bitcoin miners, which is to, like, be competitive, you need to vertically integrate, right? You need to own more of the stack. You need to be closer to the energy. Like, you need to be able to lower costs and you need to grow quicker, right? And you need to have better access to more types of financing. That was all over the presentation, was we can do much more interesting financing if we own the data center as well.

And I think this is going to continue to be true of the Bitcoin miners, to Joe's point. Like, you have to be able to build a full stack business to be able to really compete today. And so you're going to see less and less of these like general purpose data center businesses be able to continue to exist unless they've got huge, like global scale, right? Which, of course, Scientific didn't have, right? And so I think that's the likelihood of what we'll continue to see, both on the Bitcoin mining side and on the AI side. And as you've noticed, the Bitcoin miners who moved or pivoted to AI the quickest have had the best outcomes. So because like there is just such an opportunity there.

As it relates to AI tokens, frankly, like, I don't know if there's a single AI token that has a real PMF and like a real business. And it's just kind of, there's really these are like AI agent chatbots with meme coins attached. And so like that's just a different market than, you know, essentially the entire C change and and huge economic shift we're seeing from from AI, you know, more generally off-chain. Yeah, a few quick thoughts. One is all these miners want to get acquired by CoreWeave. That's what it's like, how do I get bought by Corweave? It was an all-stock, stock for stock deal, by the way. And the actual final deal value is determined by Corrie's price in the fourth quarter, by the way.

It's a friendly deal. Yeah, it's a friendly deal for the acquirer gets the acquirer motivation because Corweave can use their public markets currency. They don't have to spend precious cash to fund that acquisition. And on the target, or the target believes in the future, they get a source of liquidity here. So I think the second message here is energy, energy, energy. Proof of work goes back to energy. Store value goes back to energy. The world needs more energy, all the above kinds of energy, uranium, old energy, new energy, and these miners have access to energy. You need that energy to power data centers. I think most of the values actually in their energy hookups has less to do with decentralized compute. That's a very difficult burden to execute operationally.

I'm skeptical on that side of it. Corweave will make money on this because of the, you know, the expression Jeff Bezos has, your margin is my opportunity. What they're doing is taking this supplier contract where they're paying a price plus markup cost plus market kind of deal and internalizing that so it's value of creative for core weave good on core weave you know core weas an edge here they know where the miners are they came from this industry they were actually very thoughtful in locking down supply of energy well before they went public so they could de-risk the next three years of their revenue growth they have an eight billion dialed backlog you know we were investors in core. The first commercial activity my business limit ever did was invest in core

we've, by the way, is the first thing we did. And we also on core scientific, not nearly as much. It's primarily core weave between the two. But good deal for core weave, good good deal for core scientific. I'm sure iron is knocking their door. I say, can you buy us next? Yeah. And Rob, I like you're saying, it was a bunch of AI chat bots, like the main points. I think that one, you need to get T-shirts made of that one. Okay, so we are just about a time. When I do have the opportunity to host, Rom, you know this. I'd like to end by asking each panelist to kind of share either just something that they left on the cutting room floor or, ideally, perhaps a contrarian take that kind of share with our audience.

So, Rom, why don't you go first? Look, I think it's a bull market. It's, you know, so fade the fud. you should be buying dips. I don't know. Is that contraign or not? I can't tell anymore. And I'd be mainstream at this point,

but I'm sure there are people that don't. Yeah. Good, yeah. I was going to say, positioning is still crazy low, considering going to an all-time highs. Like, I don't know. I think you just think it has serious legs, barring.

I mean, look, if you had asked, if I had asked you, you know, three or four years ago, Ram, hey, Israel's going to bomb Iran. What do you think is going to happen to the S&P? You probably say, it's probably down 5%, right? We were basically flat that week. So, like, I mean, I don't know, like, to Rob's point, maybe there's too much complacency.

But, man, it just feels like, especially as for the most part, I think the first half of the year with the geopolitical, as well as the kind of foreign policy stuff and trade policy stuff behind us, mostly. I don't know. It's really hard to be, for me, to be bearish at this point, especially given that positioning is so low in markets. I think there's some technical pullback necessary. But I think if you want a contrarian view, it would be the death of the U.S. dollars greatly exaggerated. I mean, look, it's been slammed. And it's, I think it's the short rates in the United States, the growth opportunities in the United States are still better than elsewhere in the world. So if you want a contrarian take, it's take the other side of Ray Dalio. That's usually a good bit anyway. Just fade Ray Dalio. Rob, what's your? What's mine? Listen, I have to be an optimist because I'm a venture capitalist.

And if I'm not an optimist, I'm not doing my job, right? No, but I think maybe one thing I'll say, because we didn't go into the tokenized equity piece. And so sorry to regress a little bit. But the question was asked, like, what problem is being solved and like, what are people, what are people, like, want out of this? Like, why are we doing this? And, you know, I wrote a somewhat bearish post last one. week about like the current state of the product that exists on chain. And there was a bunch of people reached out to me and they said, hey, listen, this is about access, right? Access in emerging

markets. This is about the people who don't have equities or equity, U.S. equity access otherwise. But the reality is like the Robin Hood thing is being launched in Europe to people who can easily get U.S. equities for very cheap. The Cracken and the X-Tox piece mostly being launched there. Now, now to Joe talked about it. It's being, you know, now you can take it to, you know, your stuff. custodial wallet and you can use it on on salana. I mean, I think it did, it did like 500K or it did 900K of volume yesterday. It's going to do like maybe four million a volume today. I'll just be very clear. I know it's early days, but like almost everything that graduated from pump yesterday did more than 900K of volume, right? And so like it's it's really, really small today.

I had one person read out to me and say, hey, listen, we are the biggest provider of tokenized equities in emerging markets today. And I asked them how much volume they were doing in the equities. and it was like $15 million a month. And so, like, you know, I know we're talking about that there's this demand for that product with those people. But my honest opinion is that like for this to really take off, to really put a bow on it to what you asked earlier, Steve, you need to have a product that works for the institutions who are going to do all of the volume and the current products don't.

And so I expect we'll get there. And I was really bullish on this earlier. But it's it's got to be more native. It's got to be easier to hedge. and it's got to be something that fits within the risk parameters of a large institution. And it probably needs to be primary and not secondary. But that's a broader discussion. And sorry to regress a little bit.

Okay. I appreciate that, Rob, and your perspective. See, the good thing about me being a journalist is that I don't necessarily have to be an optimist or a pessimist. I kind of say what I want. Exactly. And then if I'm wrong, I can just write another story two weeks from now and hopefully people forget about it. But I would have to say at least, like, if I'm going to put out a contrary intake here, I would say that the market is more likely to see a big downturn than another moves to the upside.

And just a couple of reasons why. And Joe, I mean, you mentioning, I think Israel bombing Iran, like years ago, I mean, that would have been cataclysmic. I mean, it's the same thing like when Trump, during his first term, I think, what was the, he killed the IRGC head or when he made. move the Israeli embassy from Tel Aviv to Jerusalem. All of those were seen as like red flags at the time and didn't happen. And now with this sort of like scripted war game between Israel, the U.S. and Iran,

and that didn't necessarily blow up markets. But there's so many different like fires or like sparks that are happening around the world right now. It doesn't, I feel like it doesn't take a lot for them, one of them to turn into a fire. And Bitcoin has been very calm for a while. And we've gone over the reasons why. The last few times that Bitcoin has moved out of a very calm period, like in 2023, when BlackRock filed for its Bitcoin ETF, or then last year when Trump came out big for Bitcoin back in July, Bitcoin is looking for another stimuli and just look at where the world is right now, the conversations that we're having. and then also just, I think some of the limited activity that's occurring in crypto,

that's, I think, hidden or obscured by the excitement of the crypto treasury companies, it's a little hollower than I think many people. You guys, I think, see it, but many casual observers don't necessarily see. And if it's the tariffs or some sort of geopolitical conflict or whatever, I can see investors getting spooked. So I guess my contrarian opinion would be that everyone's looking for when Bitcoin's going to go up to be and reach a level commensurate with the excitement over the crypto treasury companies. But I would say it's more likely than not that we're going to see a downturn

before we see another upswing. Thank you. Thank you for your service. I am so much more bullish now. Fair enough. I'm happy, happy to be wrong. So with that, thank you, Rom, Joe, and especially Rob for joining us today. It's a really interesting discussion.

and enjoy it, but Rob, we'll have to have you back. Thank you to everybody for listening and watching, and we'll be back next week with another episode. Thanks for having me on, guys.