Unchained - Bits + Bips: Why Crypto's Next Step Is Perps, Tokenized Stocks and Altcoin ETFs - Ep. 861

Episode Date: July 2, 2025

Crypto is bleeding into traditional finance faster than anyone expected. In this episode of Bits + Bips, the hosts dig into Robinhood’s move into tokenized stocks and perps, what’s actually holding back tokenized equities, and why perps might “eat the world.”  Plus, they talk crypto ETFs, altcoin summer, and whether staking in ETFs is the next big unlock. Sponsors: Bitwise Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Ram Ahluwalia, CFA, CEO and Founder of Lumida Noelle Acheson, Author of the “Crypto Is Macro Now” Newsletter  Guest: Thomas Uhm, Chief Commercial Officer at the Jito Foundation Timestamps 🎬 0:00 Intro 👔 2:25 Tom’s path from Jane Street to crypto  💸 5:50 Why Jito’s yield model works + the importance of market makers 📊 12:47 Whether tokenized U.S. stocks actually solve anything for investors 🌍 31:47 Why Tom says “perps are going to eat the world” 🏦 39:25 How perps could sneak their way into traditional finance 📉 41:43 Whether perps are a better instrument than futures 🧠 50:51 Why James thinks we’re heading into an altcoin ETF summer 📥 56:01 How liquid staking is critical in the context of ETFs with staking 📈 1:05:06 Why the S&P 500 keeps hitting all-time highs ⚠️ 1:07:43 Ram lays out the risks of 1% interest rates Learn more about your ad choices. Visit megaphone.fm/adchoices

I think perps are going to eat the world. Personally, not financial advice. I also read that MSTR is going to get tokenized on chain. And MSTR, of course, is an equity wrapper of Bitcoin, which is the commodity on chain. So this is evidence that we live in a simulation. I'm waiting for the sky to crack open. They say, congratulations.

The simulation has ended. And we have here, ladies and gentlemen, the sitting president of the United States, engaging in forward guidance. And the market seems to be paying attention to him, which is totally surreal. He's basically saying, now owning crypto is no longer a speculative position failing to do so is. So, and that makes sense. I mean, if you just look at the total market cap of the crypto space or Bitcoin specifically and you, you hold a globally diversified portfolio, it's telling you should have a couple percentage points in crypto. Hi, everyone. Welcome to bits and bits. Exploring how

crypto and macro collide one basis point at a time. Today we'll be talking about perps, tokenized stocks, Coinbase, and Robin Hood. We'll obviously get into a little bit of macro as usual. And there will be some updates about impending launch of new crypto ETS. So could be coming as soon as this week. But first, some quick intros. I'm your host, James Seyfert, Tradfai Archmister, Lord of Bloomberg Zen. Here with Ram Al-Alawalia, maister of wealth, leader of Lumida.

How's it good. Also joined by Noel Acheson, Highseer and Keeper of the Crypto is Macro Now Newsletter. Hi, everyone. Today we're also joined by Thomas Um, High Envoy of the Gito markets. Hello. We're here to discuss the latest stories in the world with crypto and macro. Just remember that nothing we say here is investment advice. Please check unchain crypto.com slash bibs and bips for more disclosures. Before we begin, let's take a minute 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. All right. Before we dive in, Thomas, why don't you tell our audience a little bit about yourself for those that know who you are and give us your one or two minutes spiel about what you're doing

and then we'll get into the topic of the day. Sure. Hi, everybody. It's really great to be here. This is a brand new format for me. so I'm curious to see what happens. I am the chief commercial officer at the Gito Foundation. Everybody here, I think, is pretty conversant with who Gito is.

Before that, I've been at Gito for about three months since the beginning of April. Before that, I was at a little trading firm called Jane Street. I was there for 22 years. Did a bunch of different things. I was part of the team of Jane Street that started looking crypto in 2017. And I was part of that team until James Street. Jane kind of resized the business in the second quarter of 2023. And at that point, my last 18 months of Jane has spent actually helping us build out our exotic options business.

So went from working with crypto people to like negotiating Istos with banks and trying to, you know, get them to lay off risk with quibals. When you say resize the business, can you explain that a little bit more when Jane resized? So Jane was at his peak. Jane ran a very, very substantial crypto business, which included all different types of products, you know, like trading spot and perps and derivatives. We also had a DFI program, but in the second quarter of 2023, this was maybe six months after FTX. It became very, very clear through a variety of different actions that the U.S. regulators consider James Street to be a U.S. person, which meant that if you wanted to build a fully compliant business, which Jane Street is like that is what they do.

It doesn't make sense for a firm as big as Jane to kind of take headline risks or regulatory risks in something like crypto and risk the rest of the franchise. And so, you know, Jane Street at every point in its business kind of built the most compliant business that it could at the time. And when it became clear that the U.S. regulators thought that it was, you know, no matter what Jane did, it was going to be a U.S. person because it was. of USUBOs or whatever source of funding or things like that, then it became clear that in order to have a fully compliant business, you're talking about like trading spot commodities, which is like Bitcoin and the proof of work coins and ETH and only trading derivatives on CFTC approved DCMs. And so basically only trading features on CME. Now, Giant Street obviously stayed in the business.

And I am a big believer in the idea that part of the reason why the Bitcoin ETFs work, as well as they did is because of Jane's balance sheet. You know, like the back end where the cashed the crypto lay was still free of payment, which meant that for these billion-dollar creations, you needed somebody to send a billion dollars off the door and then hope to get somebody back later on in the day. And, you know, the banks were still disintermediate and still are having problems, you know, between a combination of like Sab 112 and Basel 3, which still remains. That, you know, there are very, very few firms in the world who could have managed,

managed a billion dollar kind of free of payment creation. And so I do think that part of the reason why, you know, the Bitcoin ETS tracked so well is because, you know, Jane Street is there. Jane Street and firms like Jane Street, you know. Yeah. The two I think of are Jane and Virtue that I know we're able to actually do this in which I'm sure your former mortal enemy in some regard. I mean, where does this celebrate?

Sorry, go ahead. Just one quick question. Where does the yield come from on Gito? I think it's 7.19% I'm on the Protocol's website right now. Sure. Well, I'm happy to talk about Gito. So Gito's primary product is Gito tips is the primary way that you can get transactions to land on Solana today. And so essentially what you can do is you can send a transaction or a bundle.

The bundle can't be broken up or sandwiched or front room. And you include a Gito Tick. And so, like, if you want, you know, if you're in the middle of, I don't know, pick your kind of network activity spike. And you want the, you know, you want your transaction to land. You can use the GEDAO tip as a way of getting included. And so what GEDO does is it takes the tips and then distributes it to validators and who eventually pass it on to stakers in the form of increased yield. So, you know, this is why Gido is, you know, this is why Gido is over half. with Solana's RV today.

JETA will distribute over a billion dollars back to validators just in the last six months. And so the Cheetah Solana yield comes from a combination of like the native emissions, like the native inflation rate plus Gito tips and priority fees. Right. So the primary payers of that yield are market makers and HFTs that need to get ahead of the queue and get transactions posted. Is that any market participants who want to get transactions to land at Solana. Like if you are, I don't know, trading meme coins or something like that and you want to get early access or you want to get like you're one of the first ones in and yeah, yeah.

And you want to get those transactions to land and you can, you know, just pay more in the Gino tips to include it. It's a lot of yield to get ahead of the queue, a lot of value to mean first. Yeah. And, you know, I love these sorts of, you know, like really kind of niche market structure kind of discussion. I've written a bit on Twitter recently, Twitter X, whatever it is. You know, like everyone in Salinas talk about Clubs in order to compete with hyperliquid. But, you know, there's fundamentally this thing, you know, exchanges rely on price time priority. But because of the way the blockchains work, you can't actually, you know, use time as, you know, when you have distributed systems and you have kind of matching engines or validators who exist in many, many different places of the world at the same time.

You also have kind of blockchains that are, you know, where each of the blocks are kind of batch processing units. You can't get deterministic in terms of, you know, using the time as the priority. And for those of you who are kind of relatively new to this part of the world, like Thubbs are Central Limit Order Books. It's the primary like electronic markets that existed in chat fire today. So, Thubes will lie. If you have a matching engine in one location and the central. limit order book, obviously everybody sees the order book at basically the same time. So everyone's competing to reach, you know, to hit the bid or lift the offer.

And the main way to compete in those worlds is by time. And so all of the trading technology that has been kind of built over the last couple decades have been focusing on this narrow dimension of time, you know, whether you're talking about like microwaves and fiber and, you know, FPGAs and things like that, It's trying to get, you know, trying to optimize for that one dimension. And you can do that if you have a matching engine in a single location, that can do timestamps to the, you know, to the nanosecond. And so you can see which order came there first.

But in blockchain, you can't really do that. And so people tend to compete on the price dimension. And whether price is like you're using a tip, you're using a priority fee, you're paying through the bid or through the offer, or you're getting sandwiched by ourselves. searchers, like if, you know, like you set some sort of slippage on your, on your order. So that's, you know, like you will eventually get your transactions to land, but somebody else is going to kind of intermediate that trade. And so trying to figure out like how you can create

priority on a different axis than just price and time. Intermediate that trade is a euphemism for buy it ahead of you, then sell it back to you. Well, that is like HFT trading. Right. It's HFT. That's what it's about. Right. It's not the same. It's similar.

I mean, in HFT trading, like there was, there was meaningful benefit to like getting closer to like a co-located, location like you said, with fiber cables directly connected, microwave towers. And like jumping ahead by like microseconds was like worth tons of money because of that exact

reason. But there is benefit. I mean, a lot of people think of them as like vampires, but they're, they're creating an efficient market and providing a service to, you know, make more markets more efficient and liquid in a, way. Yeah, and I think that from where I sit, and obviously people can say that I'm biased, but

you know, market makers, the advent of market making firms, the advent of electronic trading, you know, I think has undeniable creative benefits for the entire ecosystem in the sense that, like, it's much, much, much cheaper to be trade today if you were mom and pop than it was 20 decades ago. Rides are tighter, liquidity is much deeper, transaction costs are lower. You know, like it wasn't that long before I joined Jane Street. So I joined James Street in 2003, you know, and it wasn't that long before that where they were still trading in fractions. And now you're talking about like spreads and kind of subpanity. Or you can kind of, you know, if you're retail, if you're a retail kind of an investor, you can trade at midspreads now.

And that's not, that's something that kind of has existed because there is a much deep. deeper pool of liquidity. There's much weird kind of price discovery, and that price discovery is going to transmit it across the entire planet, kind of in a short of time, is kind of the laws of physics will allow. Yeah, I would say when I hear you talking about this, I think, like, one, you could create an ETF for tens of millions of dollars inside the spread in vast majority of equity products. But also, like, if you're wondering how efficient traditional markets are, like, If you're somebody who's a defy crypto native, look at a spread on a lit screen, like a coinbase or a Gemini and look at the fees you're paying. You're paying a, and they'll say it's 0.3 percent, right?

And then you look at the spreads. I mean, you're paying no fee on an ETF and the spreads are bips and the spreads are not bips when you're trading on lit exchanges, right? So there are a whole host of things that like the tradfai systems definitely be defy on for now. and one of them is liquidity in trading. Yeah, and this might be a kind of a convenient lead-in into the conversation about tokenized stocks. But I do think that it's weird to think about tokenizing a stock is like the first-order benefit. Just because, like, if you look at equity markets, particularly U.S. equity markets, which all the tokenized projects are kind of focusing on right now, like, is some of the deepest pools of liquidity that you'll find anywhere on Earth is like trading microstroids.

or Tesla on a U.S. exchange right now. So what additional benefits that you get in terms of price discovery or liquidity by tokenizing that stock? Like to the first order, the answer is very clearly none. Very clearly none. You know, I think that there are other benefits to it. Maybe in terms of access or the types of products that you can build or the types of, you know, other sorts of capital efficiency that you can introduce

for people who are only, like, digitally native. But in terms of, like, the actual liquidity that's available to trade U.S. stocks, to your point, like, it's just so much. Is it a market expansion opportunity? Is it an access play for people on chain? Is it a 24-7 trading story? Like, what's the primary driver of the focus here? Well, I mean, I think you'll have to talk to the tokenized issuers to figure out, like,

what their specific sales point is. Like, I do think that, so we've seen. just in the last, I think just today. So Cracken introduced X stocks, Robin Hughes, it has introduced tokenized stocks. And the main focus of those has been U.S. stocks from non-U.S. investors. And so, you know, whether or not the benefit is like 24-5 trading or access to U.S. stocks if you are kind of in an emerging market. There's a lot of demand for U.S. stocks internationally and in emerging markets,

including for Tesla. They love Tesla. I definitely agree. I definitely agree. But there are a lot of vehicles available. If you're on the, kind of the larger, if you're on the institutional side, there's so many ways that you can get exposure to these stocks in other countries, in other currencies, you know, at all different times a day. Even on Robin Hood, for instance, there are ways to get access to Apple stock on the traditional. I was just looking at my list because I keep a running tally of who's doing what in tokenized equities. And Gemini on Friday announced they were launching tokenized equities for the European Union as well, starting with strategy. Noah, you've been paying attention to this closely.

Why don't you just go through with like some of the announcements that were the biggest thing that caught your eyes over the last couple of days in the space? And then we can just rattle through them and get everyone's take. Well, the big, big one has to be Robin Hood. I mean, O'Crakhan is a pretty big deal as well. Robin Hood have come in this with a very big stick. And I've seen a ton of product launches, and I do pay attention to this. And this was the first one that I actually thought, wow, this actually could be something. Normally, I'm the one in the back going, I remember the one in back rolling my eyes and thinking, so what.

Now, this one was a very big deal. First of all, it was very slick. I don't know if anyone actually had a chance to see the live stream or the replay. It was a pretty slick production. But the content was actually up to the design of the event as well. And I won't go into the long list of what they announced because it's a lot. But there were three that stuck out to me. And not just because I'm in the European Union, but there were three that I think were offering something that I haven't really seen before.

Now, one is perpetual futures are coming to the European Union on the Robin Hood app. Now, perpetual futures, everyone's familiar with what they do. They're a very popular derivative. Coinbase are going to be launching perpetual futures in the United States, which is also a very big deal. But the thing about perpetual futures is, one, they have not really been retail friendly outside of Asia. And two, the usability is key. I mean, perpetual futures for people who are not really versed in this. It's kind of confusing, a bit intimidating.

You can lose a ton of money. One thing Robin Hood does well is user experience. So the designs that they were showing for, you just drag along your limits and your margins and everything. It sounds pretty easy to use. And I myself might even try perpetual futures for the first time ever after being in this industry for God knows how many years. The second, again, just for the European Union, is what we were just talking about, tokenized stocks. And again, I've been the one saying, why tokenized stocks? What really do they bring to the table?

Access to equities has not been a pain point. I've heard from absolutely anyone. There's no pain point there. And it seems a bit like just testing out the rails to see if they work. However, again, we get back to the usability. issue. I might actually be encouraged to try to buy tokenized Apple stock one day if all I have to do is tap a couple of screens and I'm done. So again, usability issue. And then the third was the most surprising and I actually laughed out loud when I heard it. And that is worldwide Robin Hood blockchain.

They are developing their own blockchain on which all of their tokenization efforts will run. And again, you can be the one in the back rolling your eyes going, why? But it's, What Robin Hood have done here, and here we come to the Y, and this is the bigger thing here, is they are building an all-in platform that they want to control every single aspect of. And this is fascinating. Robin Hood has been a platform for trading for some time. That's not new. Now they want to also integrate crypto into all of that in a fairly seamless way that we don't even know we're using a blockchain to buy an Apple share. We're just buying an Apple share on the app in a very convenient way.

They are building the platform. Now, this is fascinating because we saw this with the internet development. Platforms end up winning because us, the users, we're lazy and we want convenience. But it's more interesting here even because blockchains and theory were created to decentralize, to unbundle traditional bundled financial services. And here we are rebundling them. But in a way, this is not a defeat. It is a success because we are abstracting the whole blockchain part.

Blockchain is not the important part here. What's important is better financial access for anyone, anywhere, and better opportunities in which to park your savings and or make money. So the abstraction, the platformization, and the rolling out of convenient usability to different, to fairly untested parts of the world. That, I think, is the big message of today. I think the larger value prop that these platforms, Robin Hood,

and also Coinbase, who led with base, they were the first to roll out their layer two, and Cracken's following suit, too. It's really a bid for the super app. There's this mythical thesis of the super app on Twitter for several years now. It's where you do your payments, you do your trading. Elon is building a super app on X. It makes a ton of sense.

You can do international remittances on it. That's what they're all gearing up for. One other opportunity set for tokenized equities are these Treasury Dows. So, Aluminah, we're talking to these Treasury Dows that want to diversify their asset base. They've got a significant concentrated risk in their own token. But if you can enable them to programmatically invest in tokenized securities, an algorithm that will manage that on chain. and you can have asset managers on chain that are doing this,

that opens up another customer segment opportunity. One thing Vlad said in the product release today, which I thought was also specifically interesting, was the possibility, again, it's not a definite announcement yet, but he hinted that it will be possible to take your tokenized Apple stock off of the Robin Hood app. Now, this is a twist to the bundling that we were talking about, to the super app.

Right now, you buy your Apple stock via your traditional broker and it's in custody and that's that. It's not really going to go anywhere else. But if you could have a tokenized version, that can head off the app. Then we get into the, now this is why tokenized equities can matter. Because imagine tokenized Apple stock being used as collateral in a defy app. Or imagine another app appears that allows you to use your tokenized Apple stock for streaming on Apple TV or something like that. I'm sure you can all think of much better examples

than I am managing to do it off the top of my head. But that's where it gets interesting because what can a token do that a traditional share can't? It can be compatible. It can be programmable. It can be a lot more flexible than the equities that we know today have been. That's where the use case starts to get interesting. Because just tokenizing equities,

that's what they say, you know, paving the cowpaths. That's not that interesting. However, it's a good first step for what can be a new type of market. One other additional point. I had to chat with Christine Moy from Apollo. She loses our crypto and AI team at the Permissionless Conference last week. She brought up the point that you can now invest in ACRED. I believe it's Apollo's 40 Act Fund and you get access to it on chain.

And then it gets not financial advice, little entertainment. But what you could do is you can invest in ACRED. Now you're getting like a 10 to 12% coupon private credit fund. you pledge that it's collateral, borrow on morpho, apparently at one and a half percent. I don't know how that yield is out there. Maybe Thomas or someone can explain. We'll ask garage. And Trunron invests back again in ACRED.

So now you've got the ability to get like a mid-teens return on a non-marked market private credit product. Now, the funding leg is you might get margin called on. So you're not truly doing a Warren Buffett where you've got a carry trade where both legs are secure. but that's the direction things are heading into. Yeah, shout out. I saw ROM in person last week. Shout out to the Blockworks Guy for putting on a great conference. I mean, overall, my view is just this whole space.

It just feels like it's it's accelerated. It's almost like two masses coming together. It's like a defy and tradfi are like accelerating. Like I feel like the amount of announcements, whether it be Cracken or Coinbase or Robin Hood, even Schwab, they're going to have crypto trading. Fidelity is a little bit slower, but they have crypto trade. Like everybody, it was like before it was siloed like just two years ago. And now it's like it's like they're sprinting together.

And it's getting fast. They're rolling downhill. It's getting faster and faster. Internationally as well as reading today, I mean, South Korea, we know Japan's doing a lot. I was reading today that one of China's largest mainland brokerages is tokenizing shares via its international arm based in Hong Kong and three different currencies, including the offshore you want. That is fascinating.

And this is, again, not China mainland. It's their international arm. But they wouldn't be doing this without the OK from headquarters. Yeah, I mean, all the tradfai guys that tell me this whole space is worthless. And it's a bunch of beanie babies. I wonder what they're thinking over the last little few months to a year. Thomas, what are your thoughts overall on this? You came from one of those tradfoy firms, but they at least believed in it.

I'm sure you heard it all. Well, I, myself was a pretty big skeptic until I wasn't, you know, and I have said in the past, like having a background in traditional finance could actually make it harder for people to understand if you've come from that world, why this is so disruptive and why it makes a lot of sense. And, to add to the Asia part, one of the questioners or the chat people, my God, I'm such a boomer, has reminded me that by, BIP has released by Rio today, which is where you can trade stocks on Salauna by Jeeper and Camino as well. I think that weirdly, like, the A-Credit example is probably easier just because there's a lot of like back-end maintenance in holding stocks that adds complexity that might make it harder for some retail investors to actually understand what they're doing. Like, you know, one of the big issues with tokenized stocks is, like, what do you do with entitlements? Like, if there is a dividend or a stock split or a spinoff or, you know, some sort of corporate action, like what actually happens. Like in the traditional world, like exchanges set, you know, like X states.

And there's a, you know, there's, you know, admin or transfer agents who kind of maintain records of ownership. If you kind of take your token as Apple off of Robin Hood and just kind of move it around within crypto, like I don't actually understand how that, like how you can establish or how people understand. Like, okay, today, you know, this Apple stock was entitled to a dividend, but I just moved it to somebody. And now either I've given my dividend to somebody else or somebody doesn't understand why, you know, the, you know, it's down by a dollar or whatever the Apple dividend is. And so it does create some complexities. If you're just investing in a tokenized fund where somebody else is managing it, then a lot of that kind of back end is abstracted away.

So, again, it is a thing that I get why the ability to kind of take tokenized equities and use it within crypto can be really powerful. But at the moment, like crypto money managers is a very small fraction of traditional money managers. So I get the use case. I think it still needs to be developed. And, you know, in the same way that there's an education process that has to take place. I remember when the Bitcoin ETFs first kind of launched in Europe and everyone was like,

well, why hasn't it just taken off? This is what people wanted. And, you know, but the issuers at the time didn't actually understand, oh, well, you know, just because you list something on an exchange, you can't just go, you know, like, institutional investors can't just go and buy it right away. Like it has to get, you know, it has to be put on internal white lists. There has to be compliance. Like, they have to just look, you know, like, just because you list something doesn't

mean it, you know, adoption like goes hockey stick right away. But it does lay the foundation for innovation to come, you know, in the same way when CME launched Soul Futures, you know, everyone was like, oh, well, these things aren't trading. Why is, you know, or the forward curve is weird? Why is that? And then I was like, well, you have to be patient because, you know, third people are still trying to figure out the investment thesis for Solano.

But if you have Solano Futures, then you can introduce Salana Futures ETFs. Then you can construct a forward curve because Solana Futures ETF holders have to roll into the back. And so then, you know, kind of forces a curve to emerge. And once you have a forward curve, then you can do things like BISS trading. Like it sort of builds on each other.

And so you do need people to take the risk to kind of build the initial products that allow the foundation, you know, that create the foundation for all of these future, you know, what the world will look like. And I think we're all on board. Like, I don't know, my kids are never going to have to kind of worry about, like, which CSD their Apple is in because they're just kind of transferring it in a very, very easy way. But there is some stuff that needs to be figured out. It will get figured out. Yeah, that's what you. It will get figured out. It will get figured out. They're too irony. It's better for the world. It's better.

It's easier. The promise of blockchain was that it was supposed to replace the DTCC, right? This antiquated ledger keeping system in lower Manhattan, which got flooded in 2011. It's supposed to be all electronic. So now actually we have a ledger in the DTCC and we've got a ledger on chain and they're cross-referencing each other. I also read that MSTR is going to get tokenized on chain. And MSTR, of course, is an equity wrapper of Bitcoin, which is a commodity on chain. So this is evidence that we live in a simulation.

I'm waiting for the sky to crack open. They say, congratulations. The simulation has ended. I think one of the reasons why this is all happening, why there's great interest in it, is because crypto equities have been outrunning crypto token substantially. Take a pick, Coinbase, Circle, even crypto-adjacent, like Coreweave. The rollout running crypto token. So the primary value prop of crypto, calling a spade of spade, has been speculation.

So you're able to offer a value proposition of speculation to these, to DGens on chain now. They can broaden the universe to equities in the 24-7 format, let's them scratch the itch. Yeah. I mean, one way that you can look at with, you know, that statement that, you know, equities is out running tokens is the fact, is this idea that. you know, the money that's available for equity investments is just far, far larger than it is for token investments. Which is weird because, you know, like there is a dominant narrative right now about RWA. And by the way, I hate the fact that RWA is no longer risk-weighted assets.

It's real-world assets. It's a bit of a bug there, my. Yeah. But, you know, there's this dominant narrative of like, how do we get, you know, traditional assets on chain? when actually the opportunity set might be the other way, which is like how do you get these digitally native assets in traditional rampers? And that's one of the things that we're working on with Gito Sol, the liquid staking token. But, you know, like there is just so much more money sitting on the sidelines

or sitting in funds waiting to be deployed in traditional markets than there earns a crypto. And a lot of it is restricted as well. So many funds can only invest in assets that are traded on regularly. exchanges. And even within that subset, there are many that can only invest in bonds or can only invest in ETS or can only invest in different out of class depending on them. And that, and you're right, Thomas, that is where the big money is. Good caveat. You've done this before. The other thing I wanted to say that we didn't really mention is, I mean, it's not no shocking surprise. I don't know. They're going to do staking for, you know, if you're depending on what state

you're in and in the EU. And so Robin Hood's, you're. getting into the staking game as well, which is huge. So I wanted to throw that out there. And then obviously, do we want to talk more about perps? Like, what do you guys think? I have a personal question. Like, do you think perps are really going to catch on in Tradfai? Or do you think, like, they're going to lean still on the old school way of, you know,

rolling futures contracts? Or do you think like perps could be, you know, the next big thing in Tradfai even? Yeah. I think perps are going to eat the world. Okay. Personally, not financial advice. But, you know, there are risks to perps that don't, you know, that, you know, perps are fundamentally like, it's just a cash settle derivative, right?

And it is one that has no expiration date, which means that you have to kind of manage the margin as you go. And they're managing it kind of, you know, using kind of periodic margin call or margin calculation periods. and you have to margin column, things like that. But fundamentally what it does is it allows you to kind of have this derivative that as long as you maintain the margin, it kind of replicates the value of spot. And you can do it in a cash settled way so you don't need to settle up all infrastructure and things like that. And you can do it with leverage, just depending on how you're accessing a perm market. So as you pointed out, there's lots of utility to perps that don't exist

with features or with dated features. But there are risks to it. The reason why PURPS work is because there's this liquidation mechanism, such that if there is a large move in the underline, then you could just give the top-da and you just lose all of your equity, which is hard to do in the existing market. And it's unclear what clear. clearing houses are going to do with perps.

And I do think that, you know, right now, one of the ways that I sort of look at exchanges historically is that perp exchanges do exist in a world where, like, all of everyone with an account or anyone with equity on that exchange was actually served as clearing members in a weird way. Maybe this is less true, not that there's like insurance funds and things like that, But like a while, like years ago, okay, X had this loss and they socialized losses for everybody with an account. And that's functionally what like clearing members would have seen.

And so you do need to get the clearing piece figured out. You do need to get like, you know, no institutional market maker and no institutional kind of money manager is going to want to have to kind of set up a way to top up margin payments, you know, at midnight on a Saturday. But I do think that, yeah, like, Perps serve a lot of the same purpose as like zero DTE when it comes to the gambling. But you can also imagine Perps being a much better kind of buy and hold thing as long as you figure out like how you manage the margin. Because you do not, you do have this thing where you don't kind of get front run on, you know, on the futures roles. So then you're subject to like funding and periods and things like. It's funny. You're bringing this up and you're talking about this. And it reminds me like SPF was in front of Congress basically trying to get perps and like using futures and derivatives to get through the CFTC. It looks like Coinbase is going to do it. And this reminds me of this tweet from a sieve from this weekend, which is like every time I use cursor or Claude, I'm reminded SBF was a terrible exchange runner, but he might have been the goat investor. He invested in Salana, Sue, Cursor, Robin Hood, Anthropic. I mean, if he could have held, that's like a staggering hit rate from the bottom. Right. And honestly, he was seemed to seemingly a pretty good exchange value. He was. just absconded with money.

He couldn't have to invest in these things, right? That's really credit to Amy Wu, though, right? Who left Sequoia, I believe, to join FTX. Let's give credit where credits do. Well, I mean, there's also survivorship bias. Like, he was also law on a lot of serum and oxy and things like that.

Overall, though, like the M.OIC, the multiple investor capital, I mean, that's EV positive. He's creating value. You know, one interesting thing is, like, you never saw Perps develop in Trotify because in Chicago, the birth of these futures contract, they were tied to delivery dates. You can manage risk in the real world. You can manage risk around physical commodities, such as the delivery of corn

or hogs or oil. And in crypto's like, you don't have any physical delivery. I don't need to manage that risk. Crypto's like, look, I just need leverage. Yeah. And it's not speculation. So give me perps. Fully financialized speculation. Right. And we do have to take into account that we're, I totally agree on that perps are going to find their way in traditional markets because it's a good product. It's just much much less hassle. But it does exacerbate volatility. I mean, we've seen this with crypto. When there is a massive liquidation event on the perpetual futures, then it does exaggerate some movements in prices. And that's in Bitcoin, which is the most liquid of crypto assets. Imagine perps in some less liquid stocks, for instance. It could definitely pick up volatility or even some of the more

liquid ones if the perp market gets big enough. Liquidation events are tricky, and especially if markets are not open 24-7, they could exacerbate volatility. Yeah, and you do have this weird effect where, like, if you have perps done at a clearinghouse, the clearinghouse, if they have a liquidation mechanism, is weirdly like short gamma, like they're selling when the, you know, when the markets are down, which, you know, like anybody who's kind of watched markets understands, like the short Gamutrap is very scary. And so, you know, like, well, it depends on, you know, the skew of the perp OI and things like that. But I think that these are solvable problems.

And I do think that the world is converging on it. Like, the CME is introducing something that is perp-like. They're introducing these things that are like spot-referenced features, which I think are functionally, like, you know, their equivalent of perps. They are going to do something weird, which is not weird. I mean, it makes sense given their existing market structure, where I think it's going to be a 24-5 market, but the perps are going to trade over the weekend.

But they're going to treat the weekend as like a holiday maybe, so there might be huge margin calls on Monday morning when, you know, depending on what's happened over the weekend. Like you can imagine, like, you know, if what happened a couple weeks ago or a couple of Saturdays ago, it costs and large moves that people have to, kind of prepare for. But broadly speaking, I think that there's a lot to perp, but a lot.

But it's also worth mentioning, like, there are things that look like perps that have caused problems in the past. Like, in the UK, something called CFDs or contracts for difference. And CFDs are also used very, very commonly in, like, FX, particularly for like controlled, like, not free-floating currencies, which are just kind of cashed. settled derivatives and people got blown up in training CFDs to the point where the FCA actually banned retail from training by CFTs. And so there are risks that a lot of the risks have to do with the amount of leverage that's available in the existing CFD market or the existing market. And you do have to manage like how you're going to handle liquidations and how you're

going to handle margin payments particularly on times when, you know, like FX windows are closed. but speaking as kind of a theoretical. If you're starting for first principles today, would you build a perps market or would you build a futures market? I'd ideally have both because the advantage of a futures market is that you can look at contango and backwardation. The disadvantage is you have to bear a role risk. There's a lot of information from seeing whether the futures price

is higher than the spot price like you have in contango. It sends signals and information for people, whether to store or produce or to sell down current inventories. you know, the idea of providing to the mass market access to perpetual swap derivatives is a this is a big deal. Like if you sign up on, say, Schwab to write options, you've got to attest to that. You have a lot of experience in this five to ten years. If you want to write naked calls, you've got to demonstrate that.

So this is kind of extraordinary. This is really extraordinary. stuff. Like, this is the high powered leverage and velocity in crypto is coming to the masses. I wonder what the suitability requirements are for the product and what the user experience is to opt in and qualify. All right. That's probably enough on the exchanges and all of that stuff. We're 40 minutes in. So let's take a break real quick before we move on. There's like 15 questions in here about the ETF. So we'll get into that. then we'll get into some macro. But before we do, let's hear from the sponsors that make the show possible.

Hey, everyone, it's Matt Hogan, the chief investment officer at Bitwise Asset Management. Each week, I write a five-minute memo covering the biggest topic in crypto. This week's memo is a special one. I look back at the 2025 predictions I made in December of last year and see which ones I've gotten right, which I've gotten wrong, and which are still up in the air. Do I still think Bitcoin will hit 200K by the end of the year? Check out my memo to find out at bitwiseinvestments.com slash CIO memo. That's bitwiseinvestments.com slash CIO memo. Carefully consider the extreme risks associated with crypto before investing.

Okay. So before we get into the ETFs, I'm going to share my screen a minute. I want to cut this, this news actually, for a while I thought it was going on notice, but I guess it was just the weekend. But basically what Rick Edelman came out with. So Rick Edelman is, he meant there's hundreds of billions of dollars. that use him. He's a legend in the financial advisor community. He's pretty much been very early to seeing the potential benefits in the crypto and ecosystem, Bitcoin, Ethereum, you name it.

And he came out with a note recently, basically saying that his firm is recommending a 40% crypto allocation for aggressive investors and as high as 10% for conservative investors. He's a full-bone believer. He was actually on for anyone who knows, the Ritt Holtz guys, Ritholt's wealth management, they'd do a few podcasts, and he was on with them. And he was full-throated endorsement of crypto and Bitcoin. But yeah, I mean, this is a pretty aggressive stance coming from somebody who I'm sure there's a lot of clients here that don't like him saying this because there's still plenty of people in the Trad Bar world that I run into who still think this space is a complete joke and worthless.

But I don't know. First thoughts here, Rom, Rom, you... Look, if Bessent succeeds in becoming the next Fed chair, which seems like his motivation and goal, and he follows Trump's call to lower rates to 1%. You're going to see digital assets take off. And then you'll see them roll over, just like you saw in 2021. So this is really quite something. I mean, I kind of have to read this three times to believe it.

I mean, this is a, we should get Rick on the show, let's kind of poke it and see if it's real. I was just going to read the last sentence. Basically, it's like until I, this is something we've talked about. Like until the last couple of years, it was like, as a fiducii, you were taking a real risk by recommending clients invest in the space, whether it was Bitcoin or other digital assets. I think that has changed. And Rick is saying it's been completely flipped on its head as far as he's concerned is basically, are you a fiduciusia serving your client's best interests or are you simply in order taker avoiding difficult conversations? He's basically saying now owning crypto is no longer a speculative position, failing.

willing to do so is. So that makes sense. I mean, if you just look at the total market cap of the crypto space or Bitcoin specifically and you hold a globally diversified portfolio, it's telling you you should have a couple percentage points in crypto or at least one percentage point in crypto in some regard. Well, he says crypto not Bitcoin, right? Most crypto tokens have gone to zero. Bitcoin dominance has been increasing.

Look, part of it is he can sign up more customers for his crypto education course to these advisors in a way it's a call to action. If you want marketing shock value, here it is. I'd also say a message like this would have landed better in 2023. Like maybe we've got nine to 12 months to go in this cycle. Or if you talk to people like Michael Peripin, he'll say Q4, which is six months away. I'll take the other side in that 2023 comment. I think once Trump was elected and once Gary Gensler and Biden was out of the White House, That's when it became part of the left tail of the risk of anything crypto or Bitcoin-related went away.

So that could have been, yeah, I think, but I think sometime after the election, it made sense to start saying you really should be considering owning this. And again, you can argue there was no risk, no reward. But go ahead. True. One thing to realize here is when I first saw the headlines, I was thinking, what's the big deal here? Because Rick Edelman has been recommending crypto for years. I remember being on a webinar with him back in 2018, back when it was a coin desk. And he spoke at many of our events.

And so he even wrote a book about crypto. So Regan-Iroman recommending crypto is not the news. The news is the 40% recommendation. He was about 1 to 2% was his recommendation back in 21, 22. So I think that is the big thing here. And when it comes to the timing, RIAs don't tend to think like that. They tend to be long-term, they make long-term recommendations. for their clients, they're not going to recommend go in and go out.

So the fact that he's gone from one to two, which is the standard, you're right, James, that's what we hear in most places, to up to 40. That is, as I agree, that's the big deal. And it's odd because, as you pointed out, Noel, an advisor is supposed to develop, like, a strategic asset allocation that's relatively inflexible. So is he saying that these assets should be huddled versus traded? That's not my view, especially like crypto. I mean, these are like narratives and memes and momentum and being early to a concept.

It's a very different approach. So it is striking. Yeah. I mean, I would also say when so I mean, I think Scaramucci, I think this is Scaramucci story. He was talking with Sale about his book that he was writing and he was recommending a 5% allocation. And Saylor was like, well, how much do you own? And it was like his his allocation was like in the 30 to 40, 50% range, right? Even higher.

And they were like, well, you should be, you know, practicing what you preach. And I will say, I'm in the middle of writing a book. We've entered a lot of people in this space. And for the vast majority of people we talk to, they say 5% allocation, maybe in the high end. I've heard some people go as high as 10, mostly in the sub five, two to five, five percent range. And you ask them, okay, that's what you think should be recommended to clients. What do you own?

I haven't talked to a single person that was below 20% that is like a, a, a believer in the space in recommending people allocated. So I think there's like a dichotomy with like, okay, if we tell them to only put two to four percent of allocation in their portfolio, it's not the end of the world. It's safe and secure. But I fully believe it. And I'm going to allocate a huge chunk to it. And I think this is kind of like they've, Rick seems to have a little bit of junk to shark here

and was like, okay, I'm not going to keep recommending these single digit percentage point allocation. Yeah, he's also not saying what crypto is exactly which assets is he talking about here. Yeah, he's predominantly Bitcoin, yeah, based on what I've heard it. Like, he definitely is a Bitcoin believer, but he also believes in other cryptos and stuff, what we've been talking about here. Got it. I think there's a couple of things about this that I took away from it.

One was that essentially I saw him speak very briefly about this, and his point was that as life expectancy extends, then we need to think about risk differently, and we need to extend along the risk curve for longer than we have in the past. So I think that's probably just true. And the second thing is, like, if you're not, if you have a zero allocation of Bitcoin, when you're essentially short, which I also think makes sense. I don't know what the optimal number is. This is not in my area, but I do think kind of contextualizing it with, you know, if you're an RIA, then you need to take on more risk for longer than you have been conditioned to you. I think it probably makes some sense. Like the guidance of Ray Dalio, who I think,

think is a bare and totally off sides around the end of the US dollar and this debt stuff. But the general idea of having seven to 10 on correlated return streams with positive expectations is the right approach. That strategy is why Millennium and Citadel and others have done, have done very well over time. Yeah. And Laura, Laura Schind just made a good comment, a good post in the chat. He said a lot of people allocated 5% and agreed to 40%, which is different than allocating 40% out of that, but which is very fair assessment. I don't think anyone, I don't think most people are going to be like investing and all of a sudden just plopping 40% of their entire assets in the crypto. But we've circle, they've outperformed Bitcoin in a few months. You've got Mag 7 that

there's a lot of great opportunities. There's a lot of good opportunities. The uranium. Robin Hood. Robin Hood. It's like there's a lot of interesting things in the world. I'm kind of surprised again. Well, I wonder if he would consider some of those things you mentioned to be related to crypto investing. Like I would argue if you're investing in crypto, a coin base, like that is investing in crypto, not necessarily. Like I think it's a broad umbrella.

Yeah. And we remember back in the, it wasn't that long ago, all the institutional investors, the Goldman Sachs, etc. Doing the calculations, where by if you put one to two percent in Bitcoin, if you put one to two percent in your portfolio on Bitcoin goes to zero, you haven't lost that much, goes up 10x, you've made a lot of money. That's a different. equation at 10. It's a different equation at 40s. So again, I think the news here is the all-in

allocation. Yeah, you've got to be believing in a significant dollar debasement. We've probably killed this topic to death now. We can go on, but quite interesting to see that. So on Friday, we updated our odds. We talked about this last time. Basically, we think the spot salon ETFs, all of these ETFs are going to get approved in 2025 for the most part, with the exception of Swee, Tron, and Pengu. There's some questions. I think if you have a CFTC listed futures contract, which there's plenty on Coinbase right now, you're probably going to get an ETF.

A lot of people are asking, so Rex Osprey on Friday, basically, I talked about this on the show before. They went through this really convoluted way to kind of use a Cayman Island subsidiary and using this unique structure that would get around the SEC rules and technically allowed them to offer exposure to spot Salana staking and spot Ethereum staking. The SEC kind of said, no, we have a problem with this. And that went back and forth behind the scenes from what we could see. And then late last week, we got kind of a letter that basically said the SEC had no more

comments or concerns at this time, which makes it seems like it's going to go live. Rex Ospre has tweeted that they're going to go live soon. There's rumors now that it's going to go live on Wednesday. I don't know that for sure. but this week, if that really, that letter from the SEC was saying it's okay, it's going to go live Wednesday, we're going to have a salana staking exposed ETF on the U.S. potentially this week. That said, I want to be very clear. This is not like pure exposure. There's going to hold some securities and other ETFs in there as well. But what matters here

is that it's kind of in my mind similar to when we got the Bitcoin futures ETFs. Like it wasn't the spot product. It wasn't the be all end all. It wasn't the pure simple exposure that people ended up desiring for its low cost and simple, simple structure. But this is exposure. And what it does tell me that as I've been saying for forever, we're going to get staking in ETFs here.

Ethereum ETFs are not going to be far behind. I think the ones that are existing are going to be able to stake before the end of year. I think all these products are going to launch. And it looks pretty damn good. So yeah, we'll see in the next couple days here. where we could see a product that offers Solana staking yield. James, have a question. This doesn't offer direct exposure to Solana.

When do you think in your estimation we get that? And what's the hold up, meanwhile? Well, it will hold, like, I think that I don't quote me on these exact numbers. But I think it's going to hold 40% in the Cayman subsidiary of Spot Salana or like some, some number is going to be owned by like other Solana ETS potentially. It's going to be rather convoluted to meet all these like legal and regulatory requirements. I don't want to get too bogged down. down in the weeds, but it's going to give you mostly pretty damn close to spot salon exposure.

We don't know the fees yet. We'll see all those when it goes live. But for the pure like 1933 act, it holds nothing but salina or liquid staking tokens, which Thomas can comment on maybe. That's going to happen this year. Will it happen next month? I don't know, maybe. The SEC is working towards this.

Like one of the things that I'm looking at is, like I know I said, CFTC futures contract, I think if you have one of those, you're going to get a spot product at some point because if you don't approve an ETF or spot and it has a futures contract, you can't deny a futures ETF, right? Because there's CFTC regulated futures contracts. We know that. And then if you get a futures ETF based on the gray scale precedent, you kind of have to allow a spot product to go live. So maybe you need some sort of like timeline of length of existence or some level of open interest and volume or some size of the underlying asset, some percent of float, all these things and or like U.S. trading dollar, U.S. dollar trading pairs, things like that

could matter to the SEC. But as long as you satisfy whatever framework the SEC comes up with, which is like what we're trying to understand what might come out of this, it's going to get approved. And I think the vast majority of these things have been applied for are going to get approved this year. Well, all of them, I don't know, but over a long enough time frame, you're looking at the top 20 tokens. And as long as you have a decent. enough size, your float isn't like extremely low. You have a futures contract. Who knows? It's going to be some combination of like end functions and or functions. I don't know exactly what it'll look like, but that'll be what we get. And at the very least, we're going to see

approvals by October, but it could happen this summer. I have no interest in Lykoing, Hedera, Pocodah. I think you could probably leave them for dead. Tron could be a sleeper, though, given its prominence in offshore U.S.D settlement. That can be quite. You might be able to get direct exposure to Tron via inequity soon. Yeah. You might not need the, you know, exposure to Tron with the token, which would live inside DTF. So, Thomas, I'm curious. You, Rob started out of the show asking about, like, the staking yield of Gito, right?

I would argue, and I have argued, staking, offering Salana exposure without staking is, like, not great, particularly when the yields are, like you said, north of 7%. It's not great for Ethereum. I would argue it's probably worse for Solana. Can you just talk about how you see this? Like, would you like to see all of these just hold like Gito Solve or like using some staking validators? Like Canary has filed a product that's going to partner with Marinate who will like basically diversify across 30 different staking providers. And that might be good for like diversification.

And I'm curious like how you see this whole space potentially playing out in the Tradify, DFI, overlap for staking exposure. Yeah. I should say, first of all, in the interest of full disclosure, Gidosol was named explicitly in the Rex fire leader. And I do think that, so if you have a thesis, as I do, that the optimal products that you can design for users today would be 100% state. So I think that's relatively uncontroversial, just because, like, you're talking about kind of yield maximizing.

for users, then 100% stake is kind of the best design that you can have inside a new yet. I don't see any way that you get to 100% state without using liquid staking totals, especially for Ethereum, but also for Salon. And Ethereum and Salana have different characteristics that make staking kind of, you know, harder or easier for one versus the other, or creates a different risk profile, like Ethereum is a little bit riskier just because they have a longer unbonding queue, which is like when you request to unbond your liquid staking tokens,

when do you get your EF back? And also there's this weird thing where if everybody heads for the exits, like if everybody kind of unbonds a liquid staking token at the same time, the queue for the EFs unbonding can extend, whereas Solana is deterministic in the sense that like you get your, if you unbond your liquid staking token, you get your salina back at the end of every epoch, which is roughly about two days. So generally speaking, we have been speaking.

So there are nine filings. We're in very, very active discussions with eight of the issuers. And not only the issuers, but everybody throughout the ETS ecosystem, because you can't just to get the issuers. You need the custodians. You need the index providers. You need the APs. Actually understand what would be difficult about facilitating or managing

using Gidosol or any liquid staking token inside an ETF. And I think broadly speaking, the main thing that we're waiting for now is what guidance will come not only from the SEC, but also from the IRS. And so healthfully or potentially unhealthfully, Van Eck explicitly listed liquid staking tokens as a liquidity solution inside their ETF.

We'll see what the SEC comes back with. It's possible that the SEC comes back with. it's possible that the SEC comes back and asks them to start that language because they don't want to think about liquid-staking tokens right now. Or it might be possible that they come back and ask for clarifications or don't say anything about that. And given kind of how broadly all of the language in the ETF filings have been, you could imagine liquid-staking tokens appearing in other filings as well. So, and when it comes to the IRS, the IRS is a pretty key player here because we don't actually understand,

or there's no rule set around how staking is handled and whether it's permitted inside a grantor trust, which is the primary kind of structure that the 33 Act funds are applying under. And if staking is not allowed under the ground toward trust structure, then what ends up happening is the issuers are going to have to decide

whether or not to restructure it as a partnership or as a corporation. And a partnership and corporation has, like, different act rules and make them kind of structurally, either more annoying or worse, depending on your output. Like the product is a 40 act, but the structure is a C-Corps. And one of the main questions that people have is like how taxation is handled under the C-Corps. And you have this weird feature where the tax has to be taken out of the nav,

which might make it look like it's underperforming just because of the way, like if Solana doubles on day one, then the nav is generally going to increase by, you know, something much less than two. Yeah. 60% of it theoretically. I mean, let me just say Thomas knows ball because the number one thing that's holding up anything right now with staking being these ETFs is how the IRS is going to handle that

income. Is it good income, good? as in a quote of how they handle this allowed, essentially. I've heard people try to make the argument that it's not necessarily income in the sense because it's just like a payment in kind. And there's no, like, dollars coming in. It's just holding this asset and it's getting more of this asset. I don't know if that's going to hold up with the IRS.

I think the IRS has something different to say about that. So this all comes down to part of the reason we don't know about timing is because of exactly what Thomas was just getting into. The main concern, I think the SEC is ready to go. They're fine with this, right? They're ready to allow staking. Some regards, maybe they'll allow liquid staking. Any of this can change over time too.

I mean, look, the Ethereum ETS launch without staking, it's coming back. If they don't allow liquid staking tokens, it's probably something they can come back to and get in there. Inkind wasn't allowed. It can come back. But right now, it's really about these issuers figuring out a way to like fits this thing in the wedge hole, wedging in the whole of like what's allowed from a regulatory perspective. And it will get sorted.

There's so there's enough money and enough people and enough people trying to do this. It'll get sorted. Yeah. And, you know, this has just made my entire. appearance here. It's 10.30 here in London right now. And you're saying that I know what I'm talking about. I'm done for the night. But I will say, like, you know, like liquid staking tokens are a pretty neat solution to this whole question around like liquidity on redemption risk and yield optimization. And we'll have to see what they have to say. There's also a possibility that I've heard, which is that the SEC, so I think that the SEC has to rule on stake to ETH before. they have to rule on Stakes Solana. So it's possible, I guess, that they come up with a rule set for ETH and just apply them to Salana, which would be a little bit weird.

But if there's, you know, so under the 33 grantor trust, you're also not allowed to have something that looks like active management. So if you allow staking, then you're like, well, how much of this can I stake? Like, if the issuer takes too much discretion on that, then it runs, you know, the risk of kind of going afoul on some of this kind of active management. So I think there may be a world where they allow staking, but only up to a certain percent of the assets. And if that's the case, then a 100 percent liquid stating token is just a far superior product. And we have spoken with a number of issuers who get that.

And, you know, like weirdly, or weirdly, you know, like from where, part of the reason why I'm attracted to liquid staking tokens is because liquid staking tokens actually carry a lot of the characteristics of some. something like an ETF in the sense that. So the liquid staking token, for those of you who are less familiar with it, it's just basically a deposit token that it says that you own some amount of salana that is being staked. And the yield that you're earning from your stake continues to accrue within this deposit token. And so essentially, you have this thing which provides economic exposure to the underlying asset, plus the increasing yield. But abstracts all of the middle and back office kind of mechanics. You don't have to claim the yield. You don't have to do anything.

You just hold the token and it accrues within the yield. Within the token, you have this liquidity flywheel because there is essentially primary and secondary market liquidity because you can mint these tokens or you can burn these tokens in the same way that you can create and redeem ETFs. And because you can create them in kind, it carries a lot of the tax efficiency that ETFs carry. And plus, Gidosol and other liquid staking tokens have the benefit of being able to be used as collateral at a number of different kind of prime brokers. And so you can post Gidosol, for instance, at Falcon X, you can use it to kind of secure the rest of your portfolio, or I think, Rom,

you're talking about this earlier. Like, you can use it, take the G2Sole, borrow against it, loop it up, lever it up, things like that, and is a way of kind of increasing yield. And there's, you know, it's possible to do that on numerous platforms on Solana today. So generally speaking, like, if you have this product, the liquid staking token that you can use to maximize the yield and you can meet redemptions because you can burn it or you can sell it or you can convert it, then it does feel like you get something that looks pretty close to an optimal kind of product producers. I guess we'll find out soon enough.

If it's how optimal, the SEC thinks something like that will be. But everyone else, like the custodians, we've got them ready. The index providers, we're getting them ready. The APs have all indicated that they could support this. Yeah. We'll see what happens.

All right. We're going over a bit on time here. Noel, do you, Ron, do you have any comments on the ETFs and Gito Solar? Should we move on to Macro? I think market top within 12 months. No later than six months after the last ETF in your list launches maybe three to six months, but enjoy the ride. If the Fed cuts race to 1% as Trump wants, and it looks like Besson's really angling, like for a Fed chair role, and it looks like he'll do what Trump wants, then you're going to see one hell of a rally. Yeah, I mean, here's-

sugar pump, right? Here's a letter that Trump sent to Jerome Powell basically saying, Jerome, you were as usual. too late, you have cost of the USA. Fortune continue to do so. You're at all-time highs. The economy, you know, stock marks are all-time highs. Like, we're not late to the party. Like, where is the economic weakness?

Initial claims haven't gone up. Ernie's growth is double-digit year over year. Disinflation is taking place. Like, so I really want to see what happens in next Fed chair announcement. And, you know, is there a shadow chair? And, you know, I think, no, what you're talking about. this before the show on Shadow Guidance. Yeah, and we have here, ladies and gentlemen,

the sitting president of the United States, actually engaging in forward guidance. And the market seems to be paying attention to him, which is totally surreal. The market, it's more people are off-sized. They've got to get back in the market. The benchmark's going up. They're under-invested, so they got a performance chase.

I think that's the primary dynamic, just creating this grind up. You know, the Iran-Israel thing, kick people out of the market again. And then it went away. This is a performance chase that's taking place. You know, there's so many boomers relying on T-bill income that, and this is a boomer economy, that keeping rates where they are may be just fine for spending. I don't think you need to cut it all, actually. Yeah.

I'm on the record of saying I don't think we'll get cuts this year. And next year, who knows, a lot, depending. But you're right. You're so right. The rates are, they don't really matter. What matters is the fiscal stimulus. We've argued about that a lot, debated about that a lot on this show. And even the Atlanta Fed today, I think they have the GDP forecast for Q2 at 2.9 or something like that.

That's pretty healthy. That's really great. And financial conditions are loose. So, you know, you loosen them anymore. You kind of get more. I agree. One percent rates created the house. bubble that ended badly in 0608. That was the response to the implosion of the dot-com bubble,

which was a narrow sector of the economy, even if it was a big part of the market cap. And then we had this whole experiment with quantitative easing, won't hope that we've learned from that. I don't think you need to go back to 1% rates. Arguably, you know, we didn't have a recession from raising rates and escaping the 1% rate environment. As you know, Noel, they called that a liquidity trap. Can you escape it? One reason why we didn't have a recession is you had massive stimulus that accompanied the raising of rates, trillions of dollars of stimulus. We don't want to do that again. We don't want to do that again.

So we had this graceful unwind with eight points of inflation that's now behind us. Let's just keep rates in this new normal, which was the old normal. So two things first, real quick, Noel. One, I do think we get 50 bips of cuts this year. That's my guess. I think we get 50 bips of cuts. I think probably later in the later hand. I don't think it's going to come in September necessarily.

And the other thing I would say, the arguments for why you should cut, I tend to agree with you. I don't think we need to cut. There's nothing breaking the economy. Yes, the labor market is a little bit softening. The housing market just looks completely disjointed in many places that that probably could benefit from some cuts. But the real reason is what Skarmucci was saying last week? Like inflation is what?

2% right now, arguably lower if you look at inflation and we're so far above that. Real rates are rather high if you trust what's going on with inflation. So you could argue that we are restrictive on. that sense. But the rest of the macroeconomic data from my point of view doesn't necessarily support needing to cut at least the, yeah. Real rates are high because productivity rates are high. You know, real rates are good measure of the return on capital for the economy writ large. We have a productive economy. We want real race to be high. You want to live in a world with where the return on capital is attractive. Yeah, what in your macro thoughts, Thomas?

Well, I'm much less of a macro person than you guys. But I will say, like, you know, for those of you who, you know, who kind of might not immediately grok that, like, decline in rates might cause inflation in asset prices. It's mostly like if you have something that's USD denominated and the USD kind of depreciates, then kind of the left-hand side just has to go up. And anybody who's kind of familiar of, like, I hate that I'm talking about this in the context of dollars, but anyone who's kind of looked at quantum products in the past, like, understands, like, what impact that has when kind of the, the,

value of the right hand side goes down, then the left hand side just has to go up. And if everything's denominated in dollars, then everything just kind of goes up in dollar terms, but it might not go up in kind of real times. And I think the other thing that, like, everyone keeps talking about like Fed and rates, but I think that the largest impact on kind of the mindset of the government was actually in the reaction of the bond market to some of the earlier rhetoric. And so I think you do have this world where, like, they might push for rates, but if it causes, like, a downturned bonds. Like, if everyone starts selling bonds, then, you know, like the effect of a rate cut is not going to be, it's going to be very different than what has historically happened in the past.

Totally agree. And, you know, there's quite possible we get rate cuts and yields go up further. Or it's quite possible we don't get any rate cuts and yields come down anyway. And it's the yields that matter for the interest payments on the deficit. not so much the rate cuts. And it's also interesting to see that the United States right now amongst all developed economies has the second highest interest rate level. I think we're just behind Taiwan.

Everyone else has lower rates now. And yet, the U.S. dollar has had its worst first half since the 1970s. I mean, we were talking about this kind of before the show. But, like, you know, we've seen some of this posturing in other countries, like most recently in Turkey with Erdogan, where he kind of very publicly disagreed with his kind of a succession of central bank governors around the effective rates in inflation and the currency. I think that in a world where the Fed actually doesn't have independence from the executive branch,

I do think that that changes the way that you look at investing in U.S. debt in a way that is kind of divorced from whatever the Fed targeted rate is. And I think that that might have been what we saw kind of earlier. Where the dollar would be if they had been cutting rates. I mean, the dollar would not be worth as much from like interest rate parity and attracting foreign capital. But a lot of this, I think, is that people accelerated imports when you import, you're selling a dollar to buy some other product.

So, you know, maybe we've seen the worst of the dollar declines, especially since rates still remain elevated. I mean, if you look at Trump's rhetoric and what's going on, he wants to go back to a pre-1951 world where the Treasury and Fed acted in lockstep. I mean, just look at the note he wrote that we had up on the screen. He's concerned with how much money the rates are costing the U.S. government in dollars. And like, I guess that could matter, but like that's not the Fed's mandate. The Fed's mandate theoretically should be, you know, full employment and keeping inflation under control. But now it's also funding the U.S. government theoretically.

Are we going to get a third mandate from the Fed? I agree. There's more liquidity than ever. You know, Noel, you've been focused on the fiscal dominance thesis. You see it playing out with a big, bold, beautiful bill. We should see how that resolves in the coming days. And I've got tax cuts for sub 150K. By the way, the way, they're scoring these budgets that they're saying that they're deficit neutral by assuming they expire. It's all made up funny math. It's all hocus focus. It's like nonsense math. Like deficits are going up. And they're telling the American people that they're not. There's like no responsibility. no accountability.

And that's bullish. That's actually bullish. And there's worlds where like a weaker dollar, weaker dollar is good for exporters. Like you're paying less and you're receiving more. So if you actually do want to bring manufacturing back on shore, then this is one way to do it.

But, you know, it's a short term. But yeah, I agree. Like Americans, Americans are consumers. They're not exporters. That's been the way that the world has grown. Technology services.

You know, Google and Meta were getting taxed from Canada and Europe, et cetera. But sure. Sorry, sorry. I mean, like, you know, Americans are consumers of finish goods. It has been for the last, you know, since the end of the World War II. And so, yes, if you want to bring manufacturing onshore, then this is one way that you can accomplish that. that's kind of divorced from, you know, the impact of on deficits or deficit spending or Howard. But it does force you to kind of go back to, as James is saying, like a different time in history.

All right. We're coming up in 80 minutes. Any final thoughts, Noelle, on the macro or anything else we haven't discussed or should we wrap up? No, we've got an interesting jobs report out this week. There have been signs of some softening, but it still looks pretty robust if you're going by the unemployment claims, which we get every one. week. But again, who knows? The market seems right now priced for perfection and all it would take is one very nasty surprise, which could come even in the jobs or in any of the many inflation indications we're going to be getting before the next Fed meeting. We have a lot of jobs data coming this week, five different economic reports all around labor markets. I think markets keep grinding higher. You're going to see, you're going to see the term all-time highs again and again and again for at least the next 20 to 30 days, my expectation. Thomas, any final thought?

I've really enjoyed this. I've learned a lot of me, that's pretty cool. Thank you, Gary from them. And we're from you, Thomas. Yeah, thank you for joining us. Yeah, really great. Thank you. All right, guys.

You can follow Thomas on Twitter's handles right there. Thomas, UM, UHM on there. Thanks for joining us for this episode of bits and bits. We'll be back in one week to discuss more about how the world's crypto and macro are colliding. Until then, everyone.