Unchained - Crypto Pump & Dumps Have Become the Ugly Norm. Can They Be Stopped? - Ep. 834

Episode Date: May 13, 2025

The Movement Labs scandal exposed more than just one bad deal –  it pulled back the curtain on a widespread problem in crypto: how some market makers, founders, and VCs play games to make money — whether the project succeeds or not. In this episode, Laura speaks with José Macedo of Delphi Labs, Omar Shakeeb of SecondLane, and Taran Sabharwal of STIX to explain: How market makers are supposed to work, and how they operate in crypto Why insider selling is more common than you think How projects like Movement, Mantra, and others exploit launch day hype Whether VCs often enable this behavior with side deals that retail never hears about And what the industry needs to do to fix this broken system Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Bitwise José Macedo, founder at Delphi Labs Omar Shakeeb, cofounder of SecondLane Taran Sabharwal, founder and CEO of STIX. Movement Labs: Unchained: How MOVE’s Contracts Put a Pump and Dump Into a Legal Agreement CoinDesk: Inside Movement’s Token-Dump Scandal: Secret Contracts, Shadow Advisers and Hidden Middlemen Market making: The Chopping Block: Can Crypto Clean Itself Up? Market Structure, Trust, and Regulation  Mantra Founder Is Burning 150 Million Tokens. Would He Try to Get Them Returned? ZachXBT Ties REEF Founders to OM Token Crash Timestamps: 👋 0:00 Intro 🤝 1:51 What Omar’s and Taran’s companies do 🎭 3:40 How market making works and how crypto twists the model ⚠️ 9:35 Why crypto’s market maker incentives are broken by design 🛠️ 16:25 What it would take to fix shady market maker behavior 🚩 26:20 How some founders exploit launch day hype to dump on retail 🧠 38:11 Did Mantra’s JP pull off a “genius” move or manipulate the market? 🔍 42:22 Whether crypto traders do any research before apeing in 💸 52:48 How founders are incentivized to dump their own tokens 🏦 59:09 Why VCs may be fueling this problem with insider deals 📉 1:02:37 What crypto needs to learn from traditional finance ✅ 1:06:13 The biggest fixes the industry must prioritize to stop these scams Learn more about your ad choices. Visit megaphone.fm/adchoices

There's ghost chains still alive with billions of dollars in assets doing nothing. It's great. I mean, Ripple is the amazing tech, but no idea what they do. They're the largest old coin. Yeah, it's very, very hard to be a founder of these days. Lack of a retail bid is very, uh, it's very apparent. Meme coins are up more than most alts this week. AI coins are up more than most old coins and infrastructure coins this week.

It's a tough market. And I sympathize with the founders. Hi everyone, welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin. Every episode, we're featuring your comments. Here's what you had to say about Coinbase's recent acquisition of Deribit from my interview with Owen Lau. On X, Mex Dax said, Looks like Coinbase just secured a sweeter deal than Donald Trump.

Also on X, Astoria, said, bruh. Derivatives are the real playground, but $2.9 billion for Deribate Coinbase? What's the master plan here? Want to hear your comment on Unchained? Leave it on Farcaster, YouTube, or X? We read everyone. This is the May 13th, 2025 episode of Unchained. 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.

Today's topic is market making and crypto. Here to discuss are Jose Maseido, founder at Delphi Labs, Omar Shakib, co-found at Second Lane, and Taran Suburwal, founder and CEO of Stix. Welcome to Jose Omar and Taran. Hey there. Thanks for having us. Thanks for having us, Laura. Great to me. Thanks very much.

So the accessible reason we're all here is because of the market-making scandal involving movement and to firms involved in that WebThreport and RunTech. And this is involving a report that CoinDesk published that show that these entities appear to have written a book contract that seems to kind of like plan or at least incentivize a pump and dump on users. And Binance banned the market maker WebReport after it made $78 million from market making. So that's how the story first began to unravel. But before we get into all those details about.

that particular case. Let's actually just have Taryn and Omar specifically describe your businesses. So Omar, do you want to go first? Sure, definitely. In a short, in a short nutshell, been in the space in 2016, 217, literally started in the trenches, ICOs, etc. Saw movement and OTCs, VCs buying assets like Solana, Adam, dots, you name it. That's where our business in second lane started by one of the oldest OTCs in the space probably. And we saw this movement on OTC happening, secondary markets, and we just expanded on it and made it bigger. And by now, it's regulated on our end through our broker dealer from the US. So that helps us reach out to potential parties in the space whom never have interacted on OTC side.

So that's it on our end in a short nutshell. Taran. I run a company called Stix. we are a trading firm focused on secondaries and OTC transactions. Primarily, you know, any sort of transactions you hear about that are private and not all exchanges go through basically over on a nice desk. That's, I was in a small nutshell. All right.

So let's talk about market making. Let's just talk about it generally. Like, why do they exist? What problem are they trying to solve for token issues? or just like market participants generally. And anybody can, anybody can go. So just say since you haven't spoken, maybe you want to start. I actually think maybe Omar and Taryn have a good take on this.

But the supposed purpose of a market maker is just to provide liquidity for a token on a bunch of different venues, right? To make sure there's enough liquidity for people to buy and sell. And they're supposed to make money on just sort of the bit-ask spread. right um in crypto market making is is is slightly different where they have this these option agreements which uh as far as i've sort of as far as my research there's no real counterpart to this in trotfi um and these these options agreements normally have basically so they have a loan from from the project of tokens which they they market make with and oftentimes this is like a large percentage of the of the

projects float. So if the tokens that are circulating, the larger the percentage, the more shenanigans they can do obviously because they sort of control more of the circulating tokens. And then they have this option with a strike price that sometimes it depends on the agreement. Sometimes it's the last round price. Some more sort of standard is that it's some kind of sort of premium to a TWOP post launch. So it might be. a seven-day two-up post-launch and the strike price is a 25 to 50% above that. So basically if the price gets there, the market makers get to get to cash in on this option. And what that does is it does create a bit of an incentive to, I mean, to put it simply

pump and dump, but that's like sort of a very, I don't think like most of the reptile market makers in the space are doing this, but clearly some of the less reputable ones are. And it's a very non-standard sort of structure. But you can, you can, and the fact that it exists in crypto, I think also probably highlights the power that market makers have, right? The projects basically believe that by incentivizing market makers with these, with these options that are above, you know, the price post launch, the market makers can somehow have an impact to getting the price there, right?

That's sort of like the business logic behind this option, which in itself is a bit of an issue. And actually, I think what we recommend to most of our portfolio projects, especially the ones that have the leverage to do this, is to just hire market maker on a basic retainer and ask them to just make markets, guarantee a certain bitass spread, a certain uptime, the kind of things they do. because it's just a lot less messy than having these option agreements which which tend to backfire, which can backfire. By that, what you mean is like it's a flat fee and there's no kind of like aspect where the amount that they would get paid is dependent on the token price going up. Is that? Yeah, exactly.

Yeah, exactly. So just pay them for the service, for the pure sort of commoditized market making service rather than this, yeah, rather than these like token performance-based ones. And then I think there's like maybe more shenanigans that projects do with market makers that we can talk about later on. But I think that's the basic sort of like overview of what a market maker does and sort of how the deal is working crypto. But I'm curious here, Omar and Tar and feel free to add anything to that.

I just want to jump in. I mean, pitfalls to avoid as a founder. You know, there's two models. you know, you can pay the market maker a monthly fix sum or you can go with the option model. Now, it's a matter of incentive, right, and what you want to achieve. Marketmakers do two things. They provide liquidity and debts. That's their main sort of business.

And second is sort of like the consulting side where a lot of founders, you know, may want a marketing-focused liquidity events, right? where if they've got, for example, if a project's launching main net and they expect a lot of demand coming for the token, a lot of volatility, they may incentivize the market maker over a short period of time to increase depth to prevent, you know, volatility or price to move against them. Now, you know, when market making mixes with such consultancy agreements, that's when, you know, trouble really happens, I think. A lot of big olds. this happened. A lot of founders, they had no idea where their tokens trade.

You can do a seven-day T-W-up, like Jose said, and after token launch, and if you're lucky, that works out really well, and you can set sort of these thresholds of its strikes are set, where the market maker doesn't actually, you know, make a lot of money, and there's not a lot of dumping on the market. What happened with, you know, some coins just perform extremely well, and some founders make the mistake of negotiating strike prices

before the tokens are already out. Now, that works against them, where the market maker, let's say, for example, a particular token, the strikes set, I think, $3 billion or whatever, and they traded north of 10th. So market makers' options were, the call options were massively in profit.

So the market maker is going to do what they have to do. They have to excise those options and taking the profit. A couple of things. I mean, first of all, the incentivization of these guys is on the wrong side. That's what they need to adjust because they're only looking for the upside and that's it, which shouldn't be the case because what they are basically need to do is put bids and asks on both sides and then hope for the best that the retail will come in and pick up those volumes at some point. So that's one.

Lack of transparency is the other thing because usually they use multiple market makers as well. So not one. And these market makers don't talk to each other very often. They're like separate entities and working separately on multiple exchanges, et cetera. So that's the second part. They should be talking to each other. And the only person who knows this is obviously the foundation and the exchanges. They know which market makers they are using.

Nobody else knows it. And even us, we don't get that information on the second year market as well. And they should actually announce that so that you can pick it up and see what's happening in the order book and whom is doing it. Because then you can actually call these guys out and say, like, what's the hell is happening here? Guys, why are these gaps here and what's happening here? So that's another thing.

And some of these market makes, if the price dips too much, they just don't do much. They just take their hands off there and say, you know what? Done. We're going to just wait it out until everything drops. And there are market makers out there, whom we know as well. They're legit guys out there. They do the market making, even if it dips or goes much higher.

They pick things up. So those are already a couple of things that we should be getting. More transparency is the key component here, to be honest, because that has been lacking on all fronts. That normally doesn't go to market making, but goes to us as well as OTC providers, secondary market, private market, the price movements, whatever. So, but yeah, that's that part of it. And just to understand, so I, so now, because I, so I wasn't aware of that, but I'm assuming

neither of your companies worked on movement. We did. As you know, on our end, on private market, it's pretty simple. Even Taran and B, we need to do vetting on all deals. So all of the founders, we know them personally, we reach out to them, we check the softs of each investor, advisor, whatever you can name. We are connected to probably all of those guys out there.

So in this price movement on the market making, et cetera, that we didn't knew, obviously, that it was that far and what was happening because those docs weren't shared with anyone, besides obviously, I think, the foundation and the market making themselves. So basically, you actually were a market maker during that TGE, but you clear,

I guess you must have had a very different, agreement with the foundation. No, no, no. But it is, we don't do the, we don't do the market making. We do the private markets. That's a totally different case. That is actually the secondary market itself. That means soft trading, in a sense.

So which happens usually pre-TG or post-TG as well. Jose, you want to do it. Did Rushi OTCC his move tokens? No, he did. No, this is fake news. This is, I mean, believe me, Jose, I've asked them multiple times on our end as well because we also wanted to know the things as well. And he mentioned, no, I'm not the foundation in selling and the team isn't selling it.

But the tricky part here again, Jose is he's saying something to us, obviously, to multiple other guys. But how can you verify that? And that's the tricky part in this thing as well. That goes for even the market maker itself as well. If he transacted those volumes, it could have been very well. it was the team tokens which were being sold at that given time. Nobody knows. And that's the tricky part, again, transparency.

So what I would recommend is at the beginning of these dolls allocation, just tag these wallets like, hey, this is the foundation wallet, this is the CEO, this is the co-founders, whatever. So that you can backtrack those and figure out who is actually selling which kind of assets on which wallet. I mean, there's some issues with like, because we considered doing that for some point. projects that we were involved in.

And we got pretty far down that. But then you don't really want to dox people, like people's wealth and stuff like this in this kind of format. Like it's just very uncomfortable for people. And like, especially, you know, you're raising the bar even more to be a crypto founder. Like now you have to be comfortable with people knowing that you have eight figures on chain or whatever. You know, it's not ideal.

So I do think transparency is really important, especially on the market making arrangements. Like, I think Hester Pierce recently. mentioned this right in her in her like safe harbor rules like the idea that projects would have to disclose market maker arrangements i also think of if the top market makers came together and just and just like self-policed this way like agreed to to sort of open source their their market making arrangements with with with projects that would already be pretty good and probably forced some some change um it's just that no one's really incentivized to to do this like both the market makers and the exchanges really benefit from the status quo, at least like short term,

right? Like exchanges make money on fees. They make a lot of money on the low float high FDV meta. They make a lot of money on these market making arrangements. And then I think the other thing that would be useful is having some sort of regulation around market making similar to what exists in TradFi. So I don't know, for anyone who's caught up with Tradfai, like it's changed a lot in the last 40 years because actually if you read like reminiscences of a stock operator it's like a really famous

trading book by edwin lefevre and uh he he poses as jesse livermore and like talks about some of the stuff he got up to trading in the 70s and the 80s and he was doing like blatant market manipulation right like some some projects would some companies would pay him to exit their stock and he would paint the chart on the way up and and get people to buy and then he would dump on them like literally the stuff you see happening in crypto. And this happened. It was pretty widespread in track five, which is why there are rules against all of this stuff. Like there are rules against you can't have spoof orders, right?

You have to you have to actually believe a trade is bona fide before broadcasting it. You can't have layering or spoofing. You can't have like you can't trade ahead of customer limit orders, which yeah, who knows if market makers are doing this or not. You can't like front run customer blocks. So there's all these rules around traditional market making, which would be very beneficial to have in crypto, especially in the cases where these market makers own such a significant portion of the float that they really have a lot of power in terms of what they can do with the charts and stuff like this. I mean, I guess so when I hear you talk about this about like how there needs to be a way to have this transparency with, you know, the issuers, the, the market makers, like, you know, immediate, and even just the fact that you're bringing it past her purse,

like, you know, she's U.S.-based. And like the chopping block just did an episode about what happened with movement. And, you know, Evgeny, a gay boy of winter meet was on there. And he was saying, like, oh, like, I don't even know all the market makers. There's like a bunch in Asia that, you know, I don't know at all. So like, whenever I hear these things, I'm like, okay, but how do you do that? Because, like, you know, in a way, it's almost like we're in this digital world where it's global. but then like the, you know, meat space world of regulations, it's all like divvied up by country. So it sort of feels like there would need to be some kind of like, you know, supernational crypto organization. And then you have to get like, I don't know, all these different people that are in all these jurisdictions.

Like, how do you enforce that? No, the thing that you mentioned the chopping block. obviously I was listening into that one as well. And the thing that if Gini mentioned as well in doing the pod, it was that he, Salini and GSI, a couple of other big guys, it would be probably smart to just build up an alliance between those guys so that they can build as an example to everybody else out there

because that would be the smartest thing to do so that they can set example and set rules for everybody else to follow. Because right now, nobody knows what's happening. under the hood just to be bluntly honest. And that's the tricky part. But what I'm trying to say is like, because if you have like, like I could see that creating a sort of race to the bottom scenario where the players that are less ethical will then just know, okay, let's not use those people. We'll go to like more shady type of outfits. That's why I'm like, I don't know how you would really, you know, tamp this behavior down. I think on the regulation side, the easiest way to

do it is on the exchange listing side, right? Like make, uh, because you, you can enforce these obligations on exchanges to say that, you know, you have to, your projects, the tokens that you list have to be working with like market makers that are regulated or that, or that you've, you've sort of insured or following these best practices. And I think that's the easiest way to do it because that will effectively force anyone who wants to be any token that wants to be successful in crypto to kind of, kind of do this. I also think self-police. leasing is like underrated, you know, like, audits work, right? Everyone has to get an audit these days to get listed or to get investment.

And there's no regulation for that. It's just become a social custom that you don't want to invest in in a project that isn't audited. And similarly, like it matters who audits you, right? Like the famous, is it Zellic, like the famous Zellic audit, like reverse signal or whatever. Like, if people are using shady market makers, it's going to end up reflecting poorly on them. So I do think there's self-policing we can do. And I think on the regulatory side, it isn't so hard because of the, because the centralized exchange is sort of the, the place where you have leverage. They all want to serve U.S. users and the U.S. has

historically been, been, you know, pretty hard-handed. And if you serve U.S. users, regardless of even if you, yeah, if a U.S. user uses your thing, it's, it's in U.S. jurisdiction, right? And so I think, I think both of those are like paths that could work. But just one question about what you said about, you know, like, I forget how you phrased it, but it was like everyone should know your marketmaker. But like, and like the certain ones would be in places where they're regulated. But like, what if you just know which ones are not regulated and then you just choose to use them? And then that market maker is also not incentivized to publicize that you're using them. So you could still get a situation where, yeah, they're using some of the legit ones that come with good reputation,

but that they're simultaneously using ones that, like, are just shady. Like, how would you know that or how could you? I mean, I think in the case that that I was talking about, it would be like the exchanges themselves. So, like, maybe I haven't thought about this too much. So I'm just thinking on the spot about the regulation specifically. But if you had like a list of regulated market makers effectively and then you would have to certify that you're using only those, right, when you, when you launch a centralized exchange.

And then if it turns out you're using a shady one, that's fraud, right? You've lied about something. And so, yeah, I think there's ways around this. And also, like, you can work with multiple market makers, but realistically, there are only so many tokens that you can loan. And there's normally, like, one market maker or two market makers that are taking most of that. So it's hard to, it's hard to, like, pretend you're working with two legit market makers and then actually work with a non-legit one under the...

I'm curious what Taran thinks of this actually. You've probably seen a lot of this. Yeah, so I think I'm going to take the market maker side here because, like, it's very difficult if you shade, if you sort of bucket market makers into just two discrete buckets of being shady and non-shady, right? Now, regulate, how can unregulated exchanges, you know, how can they expect their trading entities to be regulated?

That doesn't make any sense because the top three exchanges are all unregulated. You know, Binance sure does some volume out of the UAE, but the majority of their volume is still off of shore. Same with OKX, same with buy bit. You know, the only one is probably upbeat, but that's spot markets only. And only a limited circle of market makers have access to career markets. Now, you know, that's first. Now, also without market makers, I think the space would be a lot worse. You know, that you can see on chain.

even if you trade, you know, let's say you trade on Solana, right? I actually just 10 minutes before this podcast, I had a pretty large order I exited, and I took 22% slippage on a seven-figure transaction, right, on chain. Now, that's ridiculous, and obviously market makers would make that a lot better, and they should get paid for it because they're saving all of the traders a lot of money, you know, going in and our positions. You know, geographically, it becomes a big issue as all, which jurisdictions should they get very much.

regulated it also increases the barriers to entry for new market makers and training first your competition is obviously healthy probably like the top seven market makers have 95% of the industry right um you know some European market makers are coming up but that the top seven just take up majority of the business and small market makers need to start somewhere right and they can only start if they if they if they spend three years trying to get licenses before they can even trade their opportunity cost is too large they're giving up a potential opportunity to also their competitors. So they're giving up a competitor advantage.

So I think we can add layers of transparency, mainly between the founders and market makers. I think the responsibility should be with the founders, right? Exchange is sure they should have responsibility, but onboarding with balance is like pretty hard anyway for any entity. It takes two to three months. They have a lot of DD.

I think they're pretty good with their due to reasons. And they're also very good at enforcing, you know, they keep what to report out, example, from Binance. But they're going to realize it's going to be a new entity with a completely new UBO signing up for Binance in the meantime anyway. So you can't ever kick these people out. And why would Binance do that? They're giving away, you know, potentially another 50 billion monthly trading volume just by kicking away one trading firm. And they make their money in training fees. So I don't think it sounds vanilla. I definitely think founders need to be more responsible,

right? The big, we're talking about movement here anyway. I mean, 5% to one market maker is ridiculous. but they had incentives. They had a motive. They had an ulterior motive. What they wanted to do was build up cash in the treasury. Now, movement was more of a social issue, I think, rather than a technical issue. The token in December was like, you know, everyone was talking about it in January and December when Trump got sworn in 14 or 12 billion FTV. Rushi was a god.

He was taking pictures with Eric Trump. Everyone wanted to be Rushi. Even now, you know, movements, I haven't checked, but it's not two billion FDB. It's still a dream come true for new launches. And they, you know, for example, another document came out, you know, showing who actually signed the documents with the market maker and who was actually running the, which one of the co-founders were actually running the show. So, yeah, you know, they made a lot of social mistakes, structural mistakes inside the company. They gave up the control of the foundations to someone else that they shouldn't have. That was all a shit show.

And I think that's the reason why movement should probably just go to zero. Wait, and I'm sorry, you're talking about the friend that was like that didn't have an, I'm just forgetting his name for a second, who didn't have an official position. Is that who you're talking about? No, no. I mean, again, I'll talk to Jose by incentive. You can go on this, I mean, Van Achauma, Mosey, his Twitter. He tweeted about it first.

I think some press covered it as well. I mean, the document without a report was not signed by Rishi. excited by someone else on the team. I'll let you find out who. But, you know, it just shows, like, he can't do anything. He's tied up in legal battles everywhere. It's, you know, it's a shit show. Like, so we talked a little bit about, like, all these different problems.

What would be kind of the best way for this to go for all the participants involved? I think that the main thing that would be most important is transparency. So, you know, the retail being able to know who owns what tokens, which is already pretty clear in most projects, although not all. The market making arrangements, so how many tokens were loaned to market makers? If there are any option agreements, what are the strike prices, just having that be open-sourced? And then what the real float is is also a huge issue. Like projects are inflating their floats to make the token seem more, like the valuation seem more real than it is.

effectively. And then I think that the last thing, yeah, so real float would be also like what tokens are actually unlocked because a lot of the times people think that insiders are all locked, but the foundation treasury or the labs treasury are not unlocked, right? And they can actually sell on launch day. And oftentimes they're doing that through market makers. And for the more for the more shady projects, I think what people don't realize is that that is a way to soft exit the team because what you can do is you can sell from your treasury on the day of launch. You know, and obviously that's the day where there is maximum hype. It's normally, unfortunately, for a lot of tokens this past cycle, the maximum price to projects

can exit large amounts into a lot of launch liquidity. And then they can take that cash, wait a year, and bid. on the team cliff day, right? And effectively, they're buying back like the, the, the, the, the, the tokens a year later. So it's sort of like a soft exit for the team or in some cases, what protocols will do is take that money, use it to pump TVL in their own protocol for a year. And then when the unlock happens, take the money out of their protocol and use it

to bid, uh, tokens and, and effectively like soft exit the team. So for me, like, it, the. most important thing is just that there would be transparency around all the all these arrangements. And then secondly, I do think it would be useful to have more unlocked tokens on launch with a cost basis. So I think if ICO platforms like Legion, which we incubated or Echo and some of these others become more mainstream, I think having some of these unlocked tokens with a cost basis or because like launch pool doesn't achieve this either right it's finance launch pool it's just it's unclear there's always like 15 billion dollars of capital farming in there it's unclear

how much is you know real people is how much is just finance farming this for themselves and so it would be really useful i think to have some of these like public sale mechanisms too so for me it's just having more of a float having transparency around the real float market making arrangements and everything else, I think, is sort of the main thing that we need. Omar, Taran, do you have any thoughts to add? What I would do as a start is just the whole fundraising thing, just to be going with that part. Because the issue that I see there is all these projects are building several stuff.

Obviously, they're gathering, fundraising as much as funds, to build up a whole ecosystem. And that's where the whole valuation things move to a range where, most of the retailers don't want to buy things. They're like, you know what? If you buy it at that, it would be a good thing. Movement, for instance. It was at 14 right now at 2.

Those guys are like 10x lower than what it is right now at this moment. So that doesn't help for those guys. First of all, that would be one of the core things that we need to adjust on our end. Don't go and build up ecosystem fund and move this valuation to a Skyrope of $3, $3,000,000, $3,000. which doesn't help anybody, in my opinion. So that's the first thing. Lower that so that retail can actually jump on and buy assets at a lower valuation, much lower.

I mean, Salana, Avax, all those things, raised like $300,400 million valuation, and they're still doing phenomenals at this point. So maybe go back to those points and build it at that moment in time. Second thing, but Jose mentioned about the ecosystem fund, that is a tricky thing, because we see that on our end as well. Projects using those funds to build up a treasury,

and then they're like, how should we do that? Should we give it out to a market maker? Should we do OTC? Should we do other options? And then they reach out to us. They have a chat with us. And then we always advocate them to do OTC because that way you have strategic alignment

with the people whom we actually buy, instead of just using it for a market maker and selling those positions. I mean, Celestia did the same thing. They raised over $100 million at $3 billion valuation post-launch and everything. And right now, it's still trading pretty good. I mean, I know Taranen Nas, we traded millions in Celestia, if I'm not wrong. And it goes back to a lot of other assets as well.

So there needs to be a bigger picture of how can we do this to build it gradually, to build up the whole order book organically, instead of just going and putting bids and asking and hoping for the best. Because that doesn't work down the line. So in a moment, we're going to talk a little bit more about other ways to make these types of token launches happen in an ideal fashion. But for us to quick quarterback, the sponsor needs to make the show possible.

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 business. 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 bitwiseinvestments.com slash CIO memo.

Carefully consider the extreme risks associated with crypto before investing. We have another listener comment. This one in response to our recent episode on the stable coin bills stalemate. In particular, Kristen Smith's statement that she'd rather deal with the Trump family than with Gary Gensler. On Farcasters, Sterling Skyler wrote, From the policy side of things, I can understand her point. But damn, is this really the timeline we live in? We agree.

The timeline is wild. Tell us your thoughts about it on YouTube, X, or Farcaster. Back to my conversation with Jose Omar Antaran. So when I hear you guys talk, one of the things that I keep thinking is that in a way, a lot of this action is it's to take some token activity that may not be organic and have it end up following the path of something that is more organic. Would that be like a fair characterization? And for like all the different participants to win.

And so the initial token buyers, the team, like, is that kind of a way to characterize it? Yeah, I think for me, maybe even more than organic, it would be transparent because I think, yeah, sunlight fixes a lot of issues. And, you know, if these inorganic arrangements where if you see that the real float is 5%, and market makers have been loaned 4%, then retail can sort of see and people can start tweeting about it and stuff, that this price action is not going to be organic, right? And so it's sort of, I think, naturally fixes these issues. But definitely, I think there's also a lot of inorganic stuff that's the problem here, launching at high valuations and stuff like this. But I do think transparency to me is sort of the most actionable solution to fixing this.

So I can give you the trader's mindset. Last cycle, there weren't too many coins, right? whatever you bought still kind of went up in 2021. This cycle, there's just way too many infrastructure points. And back to Omar's point, which is correct, too much venture investment. Most these VC funds are down. Most don't have DPI. Most will sign huge UPNLs.

They didn't sell last year. Now they are texting people like Omar and I to sell because they want to get money back to the LP so they can rinse and repeat, raise any funds. Now as a trader, if you want to. want to go, you know, if you want to buy things and if you want to hold things, asset selection becomes like 10 times harder. I think the real math is like a thousand times harder because there's probably a thousand times more coins to buy it. Now, that's obviously not good.

Now, if you look at people actually buying things and holding, most of the old coins, you know, went down 90% between, you know, Q4, 2023, Q1, 2024 and Q3, 2024. they had a bit of a run late 24, but now most of it down, again, 80%. Some of the old coins are returning now, but they're still down massively. Some are returning back to their all-time highs. Virtual is now only down 60% from his old-time highs. So traders now want to make sure that they're trading, and it's very hard for them to buy and holdings. So as a founder, they have to consider this.

They have to consider that, you know, actual, you know, Buy start is just, I mean, fragmented is a very popular word to use, but it is. Buyers don't know what to buy. They can buy something, but they will rotate out very quickly. From a risk return point of view, it doesn't make sense to hold anything anymore. If you're buying things OTC, you know, majority of guys, like, you know, the sort of assets traded by us and lot of tokens, in 2023, you know, people were buying things and they, they wanted things OTC and they wanted it for cheap.

and they would hold it for the entire maturity of the trade, which means holding it for multiple years. Their P&Ls were huge, but then obviously drawdowns happened and they realized, you know, they should have hedged. Now, the second time, old ran, a lot of people bought stuff, you know, at 70, 80, whatever, percent discounts to spot prices. This time, however, they hedged their exposure. They remain completely market neutral because they didn't want to go into naked longs anymore. There's too many coins to allocate to, and they want to take advantage of purse. which are by far crypto's for the

top three greatest inventions. So I think that's something founders have to keep in mind. They have to launch coins. You know, movement launched a coin without a chain. They wanted to treat main net launch

as one of the catalysts that pushes the token price up. Which actually, you know, it makes sense if you understand incentives. Even the team members are sound a one-year cliff. So, but for them to make any money,

the tokens need to be worth something at the end of the one year. So they need to have some chips in their pocket to play by the time the bests happen. Solana and Avax have, you know, they came on different markets altogether. They became industry leaders. They're going to stick on forever. They want to the top 20 coins. But new coins is very hard, right? The most successful coins this cycle had small floats.

You know, Athena is probably one of the only coins, which, you know. Sui was, by the way. Sui. Suri was a big winner this time. Still is. It still is. Yeah. And Mantra and Ondo, right? Every founder wants to, up until own collapsed, every founder was texting JP as to, you know, they wanted to run the same table. You know, the way JP handled it was genius. The guy's a genius. Up until he wasn't, right? And obviously, everyone in hindsight, you know, everyone was predicted on his downfall, apparently.

reality, all the founders wanted to run the same playbook as Ondo and JP. Ondo's zero float, again, you know, sub 2%, the largest holder of Ondo's Columbia University. They don't even have a wallet. They can't even claim their tokens. So they're never going to sell, right? The large funds, they've got side deals going on with foundations to make sure despite the drawdowns, they can still manage to not destroy spot markets completely. I'm sorry, this thing about Columbia University, I am so unclear about this. How could they receive that money if they don't have a wallet? No, exactly. They're not going to sell.

But like, why would they do a deal where they can't get them? I don't get it. I don't know. But it's a public source. They have a lot of tokens. They're one of the largest holders of under. They will just never sell. Again, the largest holders are two of the major VC funds in crypto, the founding team members,

and most of these guys control a lot of the liquid float. After the big unlock in January, Ondo just doesn't have any unlocks up until January next year. We actually just did a trade last week. That's why I'm coming to Ondo because there's no float. Perp markets are still healthy. The spot order books are still very illiquid. I can look at depth, but they're also very well capitalized as a team.

And the token probably keeps going for a lot longer. And it could become one of the major shorts if it has a God candle again. So it goes back to Jose's point about artificial token metrics. There's no floats. Mantra had no floats. The guy got all of his money. But doing these OTCs, he just extended the cell pressure. to OTC buys. It's called the time market charge. He extended the cell pressure to people in the

future, took that money and bid spot now into empty order books, right? It pushed out the price 60x, I don't know, 100, 100 X, 100 million market to a 12 billion FTV, right? It went up over 100x because he was just taking 20, 30, 40 million or whatever, however much it cost him to bid into empty order books, pushing the price up artificially and blow out the shorts because a lot of people betting against Montre. So earlier when you were saying that everyone was wondering how to do what he did, were you saying that you feel like he figured out something that should be emulated? Or are you just saying that people are just in it to make a quick book and they don't know

what's going on? Or like what do you think of what he was doing? What do I think of what he was doing? I think his playbook was pretty genius. It was also one of a kind. founders wanted to emulate it because he was the founder of a $10 billion coin. Yeah. I don't know.

I'm not commenting specifically on OM because I honestly don't know the details there. But I don't think if you lie about your float, it's not really like, I don't know. I get what you mean by genius in the sense of. In terms of founder incentives, that's what I meant. All founder of one of the $5 billion coin. So in their eyes, J.P. was a genius because he manipulated. Yeah, but in traditional markets, this is, this is like fraud, right? In market manipulation, like, if you lie about your float and also like people would not have acted that way.

I mean, who knows, but people are entitled to have the right information, right? Like if it's a tiny float, you don't get, you probably get people being more careful shorting if they know the real float. You probably get not so many people bidding if they know the real float. obviously a lot of this Saudi money that came in near the top probably wouldn't have wouldn't have done that if they knew what the what what the real float was or yeah maybe not but but I think this is the this is the thing where it's like I don't know these games are a lot harder to play with transparency like transparency is the best disinfectant and that's really what what's missing here I think because I just agree with it you don't think so no because

all the facts were there right you could go into mantras at one You'll find one cluster with like 87% of supply back then. 90% of supply in one cluster. People just don't want to research. Traders want to make money. They're gambling. 90% of retail. But there was one thing which you and I both didn't even know is that there were

multiple vestings. Those vestings weren't announced. So multiple different vestings. And that's the tricky part of this whole thing. And Coin Gecko is sort of like the canonical source of information effective for low-shunders. If you go on Coin Gecko, the real float looks like it's like 50% or more. Like that's what it's what Coin Gecko basically reports, which is obviously not the case.

And that's the problem. That's what I mean by transparency. Like a lot of these projects will tell Coin Gecko like to count the treasury coins as part of the float because they're like circulating and unlocked. But realistically, that's not part of the float, right? Because they control it and they're not going to sell it. And then you start playing these games where people think, oh, this thing is 60%. out there, you know, but actually 55% is sitting in Treasury and team-controlled wallets that will never move. And the real float is 5%, 4% of which is controlled by a market maker, right? And that's

where the, in my mind, like, the fraud, like sort of starts to be in. Right? Like a $1 million buy pushes a price up 5%. The debt just wasn't there. The order books were empty. If traders did, right, more than the token. Because technically, the tokens were invested, but technically does count as market cap, right? That's what these guys think. Now, if they go into the order books, they'll see just no tokens in there. So a lot of shorts did get blown out.

First time month across the billion, I knew a lot of people shorting it. Those guys get stopped out, and they never shorted again. The same story was with WorldCoyne. Early last year, WorldCoin was like 120, some stupid FDV. Real market cap was probably like 500 million market cap.

Right? It was a smallest float anyone's ever seen in crypto, probably ICP back then, But, you know, like, Waltcoin managed to play those games. WorldCoin is still still kicking at a 25 billion FDB. Retail traders just don't want to do any research is the reality of those. And then founders thought of JP as a genius. JP, I don't think he's a quick extractor.

Respect with respect to you, the guy was selling his watches at the bottom to buy back his coin to make sure his company survived. He was doing equity. he was raising money with equity fund. He actually is an amazing, amazing founder. He still is, by the way. I mean, he's trying to recover the whole thing at this point again. It is not an easy thing to recover from that positioning itself as well.

But yeah, but I say like honestly, I feel like maybe I think Jose and I have like a similar view and you guys are maybe a slightly different view, which is like even Taran, you said the word, he's an amazing founder. I think you use the word startup. That's kind of like a centralized view. Like if Josie and I, Josie and I, you know, correct me if I'm mischaracterizing your stance, but we're talking about like a whole network or communities like more ground up type of thing

rather than like, you know, a top down. Like the way you're describing it is her reminds me of Doquan. Like, you know, I know I am responsible or, you know, like,

like yeah, like it's like the difference between like Bitcoin versus like, you know, Richard Hertz, whatever, I forgot the name, hex, you know,

like that's, and I know I'm talking about extremes. but like, don't you see that there's a difference there? No, I think what I think, Laura, is I'm pro transparency, definitely, because for my perspective, they should tag those wallets from market makers to foundation so that everybody knows what's happening on each side and give the vesting out. That would be the most clear thing to do so that we, even on our end, on private markets, understand what's going on.

But people definitely need to do their research 100%. I agree with that on terms, points. and probably Jose as well, because that is what's lacking at this moment. People just ape into things. I mean, that's why all these meme coins were blown up at that given time. But the other thing is, is founders need to evaluate how they actually positioned themselves in this space and also go back to their employees, go back to their investors as well, like, hey, what are you looking for at this moment in time? As an employee, do you need to have money back?

For instance, do you need to sell your shares? Do you need to do proper OTC if you want to buy a house, etc., etc? Those things are a bit taboo in crypto in general. Nobody's talking about those. They're like, no, you can't just sell your tokens. It's not allowed. Wait till you get your tokens and then you can sell them. And that's where all the sell pressure comes.

It's an emotional pressure. And then they do things which they shouldn't be doing, like these market making deals. etc, et cetera, et cetera, just to build up a treasury which they need down the line. So that's the thing that I'm actually trying to make. The point is there, like, let them sell whenever they can sell to build up their own stuff. Other thing, for instance, DYDX, the employees were waiting like four years to get their tokens and their money.

And they were building this project like four years on a straight row. And they got normal salary. That was it. but nothing else. And then they launched a main net, started trading at $4. And right now it's well below $1. Around that time, we had like 30, 40 million buyers on our end on private markets. And the team was like, no, we're not going to sell at this moment,

so pass on the whole thing. And then what happened there is a cascading effect. The price dropped from $4 within a timeframe of two, three months to below one box. So that's what we are trying to. to make a point like, hey, reevalued your strategy. Instead of just using a market maker, there are much better strategies out there, not only doing it in that manner. Yeah.

Before I ask you more about those other strategies, I do just, like, my personal take is, so I understand what you're saying, Taran, about how, like, this was all, you know, they could have checked on chain, like there are tools that they could use. It's not the fall of, you know, JP or whoever if the traders aren't doing their own research. I understand, like, of course, we're all adults and, you know, everybody's making their own decisions. But I guess I would say that, like, just because, like, for most things in life, just because you can do it doesn't mean you should. Like, there is something slightly exploitative, I think, about that attitude. Like, like, yeah, personally, it probably is better to, like, create a project that people actually want to participate in.

And it's, like, more like, you know, an actual ecosystem that kind of, like, has that. that raises the price rather than just like what games can I play to try to pump up the price. There are two different things. Yeah, I agree with that, honestly. Like, I see the other side too. Like, you can, people don't do any nearly enough research. And obviously, we own like a research firm. So kind of talking our book here.

But it's like, it's kind of, it's kind of hard to expect people to, if they want to, Ape, home, like, go learn how to use a Cosmos block explorer and like identify the deployer wallet and see the cluster addresses and then, you know, and then go look at the order book depth, especially because there's a lot of spoofing on these order book depths. Like maybe it worked for own, but it doesn't necessarily correlate to every token, right? Some tokens, the liquidity looks a lot thicker than it actually is because there's games being played there. So I do think having transparency and some, some like best practices, which I think the exchanges have tried to enforce and they've learned and gotten better at that over time. But I think improving that is really the

best way to to create like better conditions for because ultimately I think what you want is for for these like basic games to be so for there to be transparency so that these basic games get punished and then everyone launches in a more like rational way where if you like a project you can you can mostly just buy it without having to worry about okay is the float am I being gamed on the float is there like a ridiculous amount of issuance. Is there some strange unlock happening soon? And obviously it's going to be hard to get there because we're literally giving liquidity to early stage startups. And like these same issues play out in early stage startups just behind closed doors and OTC markets and boardrooms and stuff like this. But I do think we can, we can and we have done

better. And I think it's going to keep getting better. But yeah, I think some more transparency would be super helpful for for people or at least like coin gecko because I think that is the, the canonical coin gecko coin market cap these are like the canonical sources for most people where they go check before if if they even do that right most people probably just look on binance and buy it there like if they're a bit smarter they'll go on coin gecko or coin market cap and look at the market cap and be like okay this thing is 60% this year read or whatever and then like a very small percentage will go on chain and actually like verify stuff and check the order book depth and things like this so i think you've got to try and make that a little bit easier and and not have people play these games but Three point. I mean, the problem is you describe are not exposed to crypto. Do you go to any alternative market and trade on the public stock exchange? Almost like 90% of the stocks play the same game. Those stocks probably have retail participants. I think retail participants are probably down like 90% from, you know, three, four years ago. Cryptos is PVP right now. One trading firm trying to profit from another trading firm. You know, one market maker trying to take out like a, you know, a prop firm, like, you know, who bought a bunch of tokens. on the open market. Yeah, I think retail business has completely gone. Back to my point, you know, when I said JP is an amazing founder, he has been building for a long time, like a long, long time.

Mantra and, you know, I think Soma, yeah, Mantra and Soma have been around a long time. I think it's 2019 or something. Mantra is also a second cycle coin. I did the ICO turn just to give you an idea. That's how far ago. Yeah, a long time ago. And by what I meant, amazing founder, lots of founders. Up until the token crash happened, hindsight, we're all geniuses, right?

Hansi Capital is the best performing hedge fund of all time. But at the time, every founder wanted to eminibrate what Ondo did. You know, Suu was a different story. What Ondo did, what Mantra did. They wanted to embryonate that because at the end of the day, founder incentives are make the most amount of money possible. Cryptos become this industry that participants in the industry and people joining the industry

just want to exploit the participants, right? If you look at, you know, some new firm trying to offer real estate to crypto people, for example, in Dubai, end of the day, that's extraction away from the crypto industry. They want to extract from crypto participants. And that's something I think that we're straying away

from the true ethos of crypto. You can build great products and your token will not catch a bit. Look at DeBridge. I think Dreebridge is one of the greatest bridge experiences ever created in crypto, right? One of the best app use cases in crypto. Tocons are a 30 million market account, right?

But the founder, Alex, he's one of the best founders I've ever seen. But at the end of the day, these guys, you know, they're making good revenue. But, you know, they see people, you know, like some coin out there, out of via coin, five, 10 billion FDV. The founders are in a position to cash out eight, nine figures. And they're like, it's tough, you know, it's tough coming to a desk and seeing, you know, our meme coin trader made 20 mil from one coin called goat. And, you know, you think, you think to yourself, you know, what are you in it truly to build?

Right. It becomes really, it's just human psychology, founder psychology. It's hard, man. I think it's a deeper problem about because he's not found. I have to, I push back against it a little bit. I definitely think there's a lot of that. And probably I think maybe from your guys's lens and position in the industry, you see a lot of the underbelly. I think as a VC, you also get to see a lot of the really ambitious founders that are trying to build something for the long term.

And I think there are like a lot of examples of that. Just people building in the background, like not really worrying about short term token price, not playing PVP. And it's also like this mentality and I heard you say recently that like fragmentation, right, that more tokens is there's like there's more fragmentation of. of bidders and stuff, that that kind of implies that crypto is just like this zero-sum thing, right? It's just gamblers aping capital into this zero-something. And if there are more coins to ape into, then each of them will be less valuable. But if we're actually building technology here, which is what I think we're doing, then this isn't zero-sum, right? It's positive sum. There will be massive outcomes from people creating the world coins, the identity layer of

the future, the dexes, the uniswops, all this kind of stuff will be massive. like positive some outcomes and like you wouldn't say this about the stock market or about venture right there there are too many companies like to invest in it's just it's not it's not a thing that it's not terms in which people think if there are more companies it's a good thing because you have more economic value created more founders trying to do cool things if anything we have the opposite problem there's too much capital chasing chasing too few entrepreneurs so i think it's the same thing in crypto like there are a lot of coins and i think a lot of them will go to zero which is exactly what you'd expect if you did the same thing in startup land, gave like liquidity to startup shares that, you know,

most of them would go to zero. But I do think they're really good founders building stuff for the, for the long term. And I think, or I hope in the long term, those people get rewarded. And I know you guys are trying to help those good founders play the token game better as well. So they don't. So, because success is path dependent, you know. And oftentimes launching your, your token badly can really hurt your prospects because you can't recruit the best engineers. stuff like this. So yeah, it's tough and we're all learning as we go, but I remain hopeful. And like a lot of the founders I speak to, especially recently, really give me more, get me more excited. Yeah, I feel like there's problems like at multiple stages because you could say kind of for like, you know, I've been in

crypto for 10 years, you guys. I have seen this happen so frequently where people, they don't, they like launch something and like maybe they've done like some amount of good. but they don't make whatever they say that they're building a real success, but they at least now suddenly have enough money where they can kind of chill out for the rest of their lives and like live a pretty nice life. So it's sort of this, like even though I kind of dropped out and I didn't do anything for my community after a certain point, like I'm going to be sitting pretty for, you know, the rest of my decades.

And like, so there's one end. And then, you know, some of, I feel like what Taran is talking about is like this smart short term attitude where it's like, well, you know, if people aren't doing the research and I see how all this goes, like, you know, I can make money again in that way where like I don't maybe build something. The long term thing is like much harder. And even just say, I feel like you referenced this where you were talking about how, you know, for all the different participants, like there's different things that they wanted. For the founders, they want the quote unquote soft landing when their tokens unlock. And, you know, what you mean by that is like they want to make money,

which like there's nothing wrong with it. Of course, we live in a capitalist world and there's definitely nothing wrong with making money. But it's this issue of like, well, you know, like you want it to be when there's been like a success kind of for the community and not for the community is even strong, but just like something that is more self-sustaining. Then it's like you kind of got it off into a liftoff phase where like as long as, you know, all of these different diverse, participants in this decentralized community are all invested, then it will keep going. And so, yeah, it's just like I was trying to think of like, oh, what are all the different ways in which that you could kind of revise the different, you know, factors that would

result in an unlock? And yeah, there's so many different things, but, but a lot of them, other than time, can be gamed. So that's why, you know, I think we're just having this discussion and, yeah, it just shows how complicated it can be. I think this whole thing starts, obviously, once VCs and founders have a chat with each other, and the fundraising starts from that point on. VCs want to build a solid tech. That's their core vision. And I think if they build that, there are certain participants whom they also need to think about as well. Investors is the first one. I mean, Jose, you guys put in the next amount in each and every protocol. And end of the game is, you want the next amount of return back,

well. It's not a charity show, just to be bluntly honest as well. You have your LPs, etc., as well, all over the place. So you need a return. So they need to think about those founders, you need to feel obligated that they need to think about the tech, but also about if they launch a token, that it needs to perform to a certain degree. Obviously, they can't just move it up the way that some projects do it. So they shouldn't do it in a bad manner. But it needs to be a lot. But it needs to to be something that they definitely need to think about or else they should just do equity and move on and do something else. That's the other portion of this whole thing because it goes back even worse because this goes to market making, this goes to retail because you're hurting

those people down the line as well. If you're not serious about launching a token, you shouldn't just do it. You should just stop there, build a tech, do an equity basis and move on because the obligation on the founder side is much bigger. And it's all about the reputation of crypto itself as well. So if you are a founder, launching a token, think about the consequences down the line, not only for the VCs, their market makers, but also the retail. Because if they don't feel comfortable, they wouldn't come back. They're like, you know what?

You're done with this whole thing. You're going to move on and do something else. The other thing goes for VCs. VCs invest in something. They want to have a return, but they also have this obligation towards their LPs, but also towards the rest of the market. They should ask the report code to be more transparent. Just post the vesting, et cetera, whatever you have.

Post the funding rounds like, hey, we have done three funding round. These are the prices, et cetera, et cetera, all the information. Believe me, the amount of time that we on second lane spent into getting these details, it takes us sometimes hours to figure out the vesting. And there are all these side deals as well happening with large VC funds. I mean, AGLER did a side deal way to A16Z, for instance, like a $2 billion, 100 million, etc., etc. It came out like months later when the funding was down. Those are the other things.

Most of the people don't even know about it. We know it, obviously, but retail, they don't even know it that had happened. They just posted like A16C invested in A1, Aguilier. That's it, dot. And then we move on. Nobody talks about it. So those are other things. there are multiple things, retail, employees, et cetera, et cetera.

There are multiple layers, and you need to think about all those layers as a founder. And that's the core thing with I, we are actually advocating. There are so many things. And liquidity is one of the core things, obviously, and everybody's looking for it down the line. Obviously, transparency is one of the pillars of that, for say, definitely agreed. But liquidity is the key thing, and you need to think about that on all fronts, definitely.

I agree with that. I mean, we, we're definitely not, we don't have external LPs, but we're definitely not running a charity. We want, we want, we want to return. And that is something that sometimes misaligned between these, like VCs and founders have this misalignment where for us, we have a portfolio of bets and we, we want each one of them to be as successful as possible. For a founder, they have one bet, right? So if, if, if this thing is, is trading at some large valuation, an inward,

their share represents like life-changing money for them, they will want to take chips off the table, right? It sort of makes sense for them, but for actually for the VC, purely rationally, we wouldn't want that, right? We want them to have maximum skin in the game, so they want this thing to succeed. But you have to sort of find a balance between that. And in, I think a lot of this can be solved by learning from Tradfai, actually, like some of the like legal frameworks that exist there. Like in in tradfile land founders have control shares right and control shares have way more way more requirements around how you can sell them like you need approval from the board to sell your shares it's it's not like investors who can just OTC their shares like founders and

other people who own more than 10% I believe it is have different requirements around and I think we basically need to learn like and implement like these kind of tradify lessons onto onto the the crypto somehow. And I mean, I definitely agree with the VC deals being transparent too. I think that would be really good. If it were just, if it all happened on chain, Gabe Shapiro from Metalex, who we incubated is trying to, trying to make that happen. Yeah, it would be great. If all of that was on chain, if the side deals were like, again, side deals are something that in Tratify, you just have to disclose, right? To your lead investor, you have to disclose if you have any side deals. That should be standard. Like all the liquidity deals that,

projects do with people should also be disclosed tvl pumping deals like so yeah to me it's just creating these standards and the kind of learning from tradfly so so we can stop a bit of the yeah a bit of these games they get played much better than tradfai to be honest as well because on our end um everything is on chain basically so you can just build it up show it so that people don't read through it that's the most thing that we have but yeah reading it is the difficult part of this whole thing because it needs to be translated to everybody on common knowledge like one earcliffe to L'Hia resting instead of going through code and reading the code because even I can't read the code just to be bluntly honest. No, it's not possible.

All right. So we're coming up on time. So I just want to ask like, so basically in this conversation we had, we noted kind of, I don't know if mistakes is the word, but we noted ways in which all these various participants could be doing things better, from DCs to the token issuers, to the market makers, to the investors themselves. It's kind of like all over them up. So, you know, when we're in this phase where we don't have kind of the regulatory or even self-policing organization that we discussed earlier, like, and, Frank, another participant would be exchanges. what kind of like ways do you think each of those different groups could improve? Like if you were to give one tip, I don't know if tip is the word,

but just like one or one wish that you had for how those different participants could do their part to improve this situation. Let me start with the founders themselves. So besides building a protocol for, let's say the community, the investors, market makers, partners, whomever you can think of, they're building a solid tech. That's their core vision. Besides that, think about liquidity for everybody surrounding you.

And what are you actually building? Are you building it for a product market fee? Because that's the core thing. What I see on my end is people just raising a shitload of money in order to create a market fit, which they shouldn't be doing. Because you should figure out if you, the thing that you're building, that it has market, fit or not. That's the first core question there. On our end, for instance, second lane, we have, we had market fit and then we went on building this company, the other way around, and people

should do that. People should just raise one or two million and try to figure out if you can have market fit to that fund instead of going like raising another 50 million from VCs and promising that they will get you the next 100x because that doesn't work in my opinion. my humble opinion, let's put it in that manner. But yeah, that's what they should be. And obviously, to Jose's point, definitely agreed more transparency on all front from VCs, from founders, from market makers, from exchanges. Why the secrecy? Just be transparent so that everybody understands the market much better than what we do at this point. And we are trying to do that, with our monthly reports, posting them out on each and every month, just to give you an idea of what

kind of order book is moving from on private markets what assets are moving from a to b to z and that does help obviously and they should be doing the same thing on their front i mean for me look it's a very difficult game i think human psychology and you know founders looking at other players in the industry get massively wealthy by extraction you know they've got to keep their values up front at the same time keep building things that people like to use it's very important but you know it just people do need money to build you know lots of these big layer ones

tech companies they spend one to one to one point five mil a month on deaths they need that much money you know I can still paying you know paying their like two million a month I think in salary that's the pain mess but their token was worth a bid in I think

a couple weeks ago and you know these people don't cut foundations become founders, family offices, for example. We're seeing that in the second cycle now, where founders have lost most motivation, foundations are used as these just financial powerhouses that founders can use on their whim. All of that, I think, you should stop. You know, there's ghost chains still alive with billions of dollars in assets, doing nothing. It's great.

I mean, Ripple is the amazing tech, but no idea what they do. They're the largest old coin. Yeah, it's very, it's very, very, very, very hot. to be a founder in crypto these days. Lack of a retail bit is very apparent. Meme coins are up more than most holds this week. AI coins are up, more than most old coins and infrastructure coins this week.

It's a tough market. And I sympathize with the founders. They don't know when to launch. All of these founders delay their launches. You know, I think Barrowchains should have TGEs early last year. I've heard they might not even TGE this year. It's a tough market out there. But, Taran, to your point,

Just want to follow up one thing before we move on. Eigen, for instance, right? You and I both know when they were trading at $6, $7 billion. People were looking at it like, hey, could we potentially buy this asset? At that point, Laura, we had like 20, 30 million buyers sitting on the side. But the foundation chose not to allow these transaction happen. So what they could have done at that moment in time, just to give an example. Go to your employees, go to your treasury.

say like, hey, do we need a potential 20 million at this moment just to build up a bit more roadmap for us? If the answer at that moment of time was, yeah, sure. Or the second bond, maybe if we don't need it, our investors might need that liquidity. So let us allow them to sell like 5, 10% of their tokens. Because at the end of the game, that's also their investment and they need the next amount of return. So that's what we try to advocate. The pie is much bigger than only your piece. If you eat that,

somebody else also needs to eat something at that point. And that's what I actually trying to mention them. I think the reason why they do that, founders, they hate it when their investors exit before them. Sure, but you and I both know as well. Their core vision is building a solid protocol for the community itself, right? And they built that

through the money that they're getting from their investors down the line. And those investors, obviously they have a time frame of, let's say five years, 10 years. Some are much shorter,

obviously, two years, three years, because it depends on the funds that you have. So if you help them out, and then once you go on to building series A, B, C, D, whatever,

then they will help you to connect with new founders whom are on that level because you have several types of investors. You have one year, two year, five year, and ten years. And then they will get you a different type of TreadFi investors. We'll jump in and say, you know what? This is a solid investment for us because they allowed their investor to sell their shares when they could sell it.

So it's a positive thing at the end of the game. And that's what we mentioned. Like, hey, it helps you as well down the line once you become a business. bit bigger. Then you get better investments and better and bigger investors on that line. What I'd say, I guess for founders, the founders is tough because they sort of just have to play with the play the game as it exists. They can't really try and reform things. I think they have to profit maximize to some extent. They have responsibility to their investors, to their team. But I think the main thing is to build real stuff to not get carried away by the hype and

the XRP because I think the main thing people don't see is like you only like when you see XRP for every XRP there are tens of thousands of vaporware things that went to zero or never launched and that that is the median and the mean outcome for vaporware is that it goes to zero right and the best way to try and build a real company is to build a real project that people use like it's much easier to do it that way than to build vaporware and hope somehow you're the vaporware that goes to $300 billion. And so I think founders really get carried away with this. They see a meme going super high and they see some project that they think shouldn't

be worth what it is being worth a lot. And their incentive is to, okay, I don't know, when eigen layer was big and we're investors in eigenlayer. So no, not hating on eigenlayer, saying when they were big, everyone wanted to build restaking for X, right? It was like, oh, eigenlayer is worth $6 billion. I'll build restaking for Solana. That's going to be worth, you know, some multiple of that, some fraction of

of that and it's going to be a good exit or restaking for why. And it's just such a waste of time and capital. And ultimately, it almost never works out because as a founder, your timeline is like four years. You need to build the thing, launch it, launch the token. One year later, you start vesting, like the meta. And when you see all these restaking projects now, people have devoted two years of their lives to building these things. And a lot of them probably won't ever launch a token, right? It's just, it looked like a good decision at the time. But when you actually think it through, it's much less of a good decision. And so I think build something real that you believe in for the long term and also raise way less money.

People don't need to be raising $100 million to build crypto stuff. Like this isn't hardware. It's not like deep tech. It's software. We have like AI now. It's very easy to build software like small teams. So I don't, I think raising less money also solves a lot of a lot of the problems that founders end up facing in crypto.

So investors advise sort of similar, like don't fund silly copycat stuff. And like, I mean, we're guilty of this too. It's not like we, we, everyone makes mistakes in a mania. You know, you get carried away and, you think you see free money or free arb and you end up investing in things that sort of diverge from your, from your thesis. I think not doing that would be super useful because these big rounds also send signals to founders that this is what investors want to fund and then founders do more of that stuff. It's just like a circle.

And then I think market makers and exchanges, I think they have the, I think exchanges specifically have the most power because they're like the biggest retail, like interface for crypto. And I think for them really, as they've been doing, like they've gotten a lot better,

but really enforcing standards and like publicly enforcing these standards around transparency of market making arrangements, around like your real flow, it has to be disclosed and it has to like correspond to what's on Coin Gecko, around like market maker arrangement, side deals,

like all this kind of stuff having like a real policy around it I think would be really useful. Yeah, that's probably my recommendations. All right. Well, this has been such a great conversation. Where can people learn more about each of you in your work?

So can lean.com or reach out on Twitter. Yeah, I'm on Twitter. at Tarran underscore SS. You guys reach out anytime. DMs are open. I'm on Twitter at Z-Z-E-M-A-Messidy. I probably need to simplify that ticker. But yeah, you should be able to find me

and yeah, DMs are open. Perfect. Well, it's been a pleasure having you all on Unchained. Definitely. Thanks a lot. Thanks very much. Thanks so much for joining us today to learn more about Omar Jasei and Tarran.

out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Matt Pilchard, Juan Aranovich, Pamich, and Marka Korea. Thanks for listening.