Unchained - DAT Stocks Are on Sale. Are They a Buy? Plus, Why Crypto Is Dead - Ep.985

Episode Date: December 20, 2025

In this combined episode of Unchained, Steven Ehrlich first breaks down why crypto treasury stocks (DATs) have swung from massive premiums to deep discounts, why comparisons to GBTC can be misleading, and why buying these stocks isn’t a clean arbitrage trade but a long-term, high-conviction bet. You can read Steve’s full report here and you can subscribe for 95% OFF before the end of year! 😱 Then, Figment Capital’s Dougie DeLuca zooms out to the broader shift underway. As fintechs and institutions embrace blockchain infrastructure, he argues that “crypto as we know it” may be fading—and that crypto natives risk being left behind unless they adapt to real users, sustainable products, and mainstream distribution. Need liquidity without selling your crypto? Take out a Figure Crypto-Backed Loan, allowing you to borrow against your BTC, ETH, or SOL with 12-month terms and no prepayment penalties. They have the lowest rates in the industry at 8.91%, allowing you to access instant cash or buy more Bitcoin without triggering a tax event.  Thank you to our sponsor, Figure! Unlock your crypto’s potential today at Figure!  Guests: Dougie DeLuca, Investor and Researcher at Figment Capital Steven Ehrlich, Executive Editor at Unchained Links: Unchained: Coinbase Launches Stock Trading and Prediction Markets Inside Robinhood’s Big Super App Plan: ‘There’s Still a Lot of Work to Be Done’ Dougie's “Crypto is Dead” article Timestamps: 👏 0:00 Intro 📘 1:16 What a DAT actually is and why mNAV matters more than most people think 📉 5:16 How deep the discounts really are and why some of them are optical illusions ⚖️ 7:12 Whether mNAVs should trade back to 1 and when that assumption breaks 🔁 8:59 How this compares to the GBTC discount and why the analogy can be dangerous 🧱 13:44 Why many DATs are stuck below mNAV and what’s structurally holding them down 🔍 16:34 How to pressure test different DATs to see which ones are opportunity and which are traps 19:34 Introduction 21:03 Why Dougie thinks crypto natives could be left behind as the market evolves 24:33 Why Dougie sees the current incentive-heavy crypto strategy fading away 27:13 Is crypto’s high risk market “saturated?” 28:32 Why Dougie sees Robinhood as a shining example of where crypto is going 29:46 How companies are shifting their strategies for this new moment in crypto 31:41 Why Dougie says the crypto label would be baggage in the future 33:13 Which companies are best positioned for the next phase of crypto adoption? 35:42 Which companies would have to evolve to survive? 42:11 Will the DeFi Mullet strategy prove successful? 42:17 Which parts of crypto culture should survive? 43:14 Why Dougie says Coinbase's content coins are still in their early innings 47:34 How crypto becomes mainstream 51:03 Is the four-year Bitcoin cycle over? Learn more about your ad choices. Visit megaphone.fm/adchoices

I spoke with a number of people for the story, and they all kind of said that once everything shakes out and it's not entirely clear when that's going to happen, the MNAVs for these companies should be somewhere around one. Welcome back, everyone. Crypto prices are down. Bitcoin is off about 30% from its recent highs and ether has dropped even more. But some digital asset treasury stocks or debts are trading at even deeper discounts. in some cases valued at half of their crypto holdings. These are companies that stockpile Bitcoin and Eath on their balance sheet, and during the bull run, many traded at massive premiums,

but now with sentiment fading, they flipped. Some investors think that means it's time to buy. Others are saying not so fast. To help us in Pack at all, we're joined by Unchained Executive Editor Steve Erlich, who dug into this in a new article that we just published. If you're watching this on X, We should be posting this link in the first comment.

If you're on YouTube, it is in the show notes. Welcome, Steve. Hey, Laura. So you just came out with an article about how many digital asset treasuries or dads are trading at a massive discount. And you looked into whether or not they might be a good buy. But before we dive into all our particulars, why don't we just make sure listeners have some of these basic definitions and understandings down?

So explain what a dad is and this concept of nav. MNAV. Yeah, thanks. So that stands for digital asset treasury. Even if you're not familiar with the term, I would imagine most people watching this are aware of strategy, formerly micro strategy that has amassed tens of billions of dollars of Bitcoin since it started accumulating the asset back in August of 2020. Essentially, these companies now, it took about five years or so, But a lot of these companies are copycats, like very explicitly following the Michael Seller strategy playbook of trying to find ways to stockpile assets, Bitcoin, ETH, Solana, and then a lot of long-tail assets in a way that is accretive from a capital point of view where the tokens keeps increasing, lets you raise more money to buy more of the asset. and then you want to kind of create this self-perpetuating flywheel cycle of generating additional value for shareholders. It really took off like a rocket ship over the summer.

I mean, billions and billions of dollars have been raised to funnel crypto into these companies. And for a while, it looked like a really smart business move. Many of these companies were trading at MNAVs above one. Nav stands for net asset value MNAVs, MNAV, multiv, It's kind of similar to in traditional finance that the price to book ratio or metric that people might look at when they're when they're evaluating stocks. And it really just kind of tries to quantify how much investors value the company on top of whatever their holdings of crypto actually are. So if the MNV is one, that basically means that the company itself is worth very little and it's really just the value of the assets. If it's more than one, there's a few reasons for that.

I mean, a lot of hype and a lot of FOMO, but some of these companies try to either create operating businesses on top of them or try to creatively use their balance sheets in defy and other lending markets, etc. To sort of create additional return of equity. That could be turned into an NNAV above one. So that's kind of what's been happening. But when kind of the air came out of the crypto balloon, especially over these last couple of months, when Bitcoin went from $126,000 all the way down to, I think, testing $80,000 as of a couple weeks ago,

these diets, which really trade as high beta plays on their underlying assets, both positively and negatively, strict almost universally and very dramatically reversed. It's at this point now where their MNAVs almost across the board are below one. What that means is that investors now are valuing these companies less than even the value of their crypto holdings. And I really was curious. It's not so much a secret why this happened. Frankly, we've written about it. Plenty of others have written about how this trend, it was unsustainable and that we were going to see these reversals.

But it led to a couple of bigger questions. One, what is the natural equilibrium for MNAMs for these types of companies? And then two, as you kind of mentioned in the intro, if they are trading at dramatic discounts to their MNV, much farther below one, is this a value play? If you want to bet on the crypto market going up, even if it's in six months a year or two years, could you get an extra, kind of get an extra discount, get some extra gains if you buy stocks in these sort of, I don't know if struggling is the word word, but the companies that are not flying as high as they once did. as opposed to just buying on spot. So that's really what I wanted to try to understand. So give us a sense of how big the discounts are in terms of where the stock price is at

in relation to how much crypto they hold. So they vary pretty widely. And in the story that we just published, we included a chart where I broke down some of the bigger ones. And I really just focused on Bitcoin and Ethereum, but I could have gone to Solana and plenty of the other long-tail assets. But in general, there are companies, that where their MNAVs are trading somewhere.

I'll hold up right here. So 21 Capital, Jack Muller's group and Tether, they're trading in an MNAV of 0.5. Nakamoto or Kindly MD, that's David Bailey's. That's at 0.53. Similar scientific, which actually I think was the first debt to ever drop below an MNAV of 1 is at 0.57. And then ProCAP financial Anthony Pompeiano's group,

which only recently, much like Canada Equity Partners, finalized its business combination agreement and fully kind of went, started trading on public markets. That's at point seven. So those are pretty significant discounts. By far, the largest discount of a company that I looked at was Ether Machine.

That's Andrew Keyes Group focused on Ethereum. But that number, as I pointed out in story, is actually a little misleading because that particular company is still finalizing its business. agreement and there's a massive dilution in shares that's going to be created which will increase the market cap so it's hard to forecast exactly where that and that will end up but it's not going to be 0.13 and then eth zilla is another one that it's an ethereum company where it's mnab is at 0.56 and this

one made some news in the last couple months because it broke i don't know if this is quite a cardinal rule but it was i believe the first that to actually sell crypto to buy back shares which is sort of anathema to at least purest of crypto. And so what should the value of these stocks be in comparison to the value of the crypto that they hold? The answer is it depends, but I did speak with a number of experts about this. And the answer is it should be around one, like plus or minus a few percentage points, either upper debt. One industry person I spoke with compared these to kind of like private credit model. or private credit funds or closed-end funds where there are management fees and there's not

quite the same mechanism to sort of arbitrage away a discount or premium like there is in an ETF. So it's natural for those types of funds to trade at an end of a little bit below one, but if the overall price of the asset, the underlying securities, et cetera, goes up, investors will make out fine. Especially for an asset or dad that tracks something like Ethereum, which is seen as a productive asset because you can stake ether you have, you can restake it. There are plenty of other things that you can do to sort of generate passive yield, at least maybe like 2.7 at 3%, depending on what the

staking rates are. That type of company, if they do things properly, might be able to trade at a slight premium overtime. Bitcoin is a little tougher because it's not, quote, unquote, a productive asset like ether. Miners don't have to stake their Bitcoin to get additional Bitcoin. They just have to buy more A6 and hook them up to power. So there are still ways to deploy Bitcoin in lending markets, even in D5, but it's not quite the same thing. But I spoke with a number of people for the story, and they all kind of said that once everything shakes out and it's not entirely clear when that's going to happen, the MNAVs for these companies should be somewhere around one. Okay. So there is an example that people in crypto will be quite

familiar with from the past, that could be used as a comparison for, you know, what might happen to an asset that is trading at a discount compared to the crypto that it holds. However, there are reasons why this comparison is not apples to apples. So explain, you know, what the differences are in terms of like the debt's ability to close this gap versus something like, you know, what people might be familiar with this, which is GVTC. Yeah. So, so GBTC, uh, is a very famous, I would say famous, not infamous. It's a very famous sort of investment trust in crypto. It actually was, I believe it launched in 2013 by Barry Silbert's Digital Currency Group.

The very first kind of regulated way for investors, and this had to be accredited investors, to get exposure to crypto without actually having to buy and hold the asset themselves. So it was very popular for that reason, and then for another reason, because it was only available to accredited investors, but then eventually, only accredited investors could create shares through the trust. But then after either 12 months and then eventually six months before this trust converted to an ETF, they could then sell those on OTC markets to retail investors who would pay premiums, sometimes 100% premiums to buy these shares because they didn't want to deal with the headache or hassle of actually having to go to Coinbase wherever and getting the crypto. It was a great trade. However,

that premium flipped to a discount in February of 2021, during the bear market of February of, sorry, bear market of 2022, which sort of bottomed out when FTX collapsed in November of that year, the discount dropped all the way to 50%. And it stayed that way for a long time. It really didn't recover until Grayscale won a lawsuit against the SEC, and I believe it was August of 2020, to kind of finally clue the way to convert it to an ETF, where it would, not automatically, but it was sort of by necessity, moved to an MNF of 1 because they they would have authorized participants that would sort of arbitrage away any discount or premium.

That's how ETSs work. It's easy to look at those discounts, look at discounts on these stats, and be like, hey, history is repeating itself. But as you mentioned, there are a few reasons to be very cautious about that. One, at that point, especially by the time that Graysko won this lawsuit against the SEC, the market bottom had already sort of finished, and Bitcoin crypto was already on its way, way back up. I mean, remember by then, I think BlackRock had even filed to list a spot Bitcoin ETF in June of that year. So there was already some momentum. And the fact that the SEC lost this lawsuit, there was kind of a very clear timeline on when the conversion would happen. I mean,

didn't know for sure, but it was weeks or months, not years. In this case, it's really hard to tell. You ask 25 different people where the Bitcoin's going or Ether and get 100 different answers. So we're not sure if the bottoms in or not these discounts, they might seem large, but they could continue to widen. And then there's just a lot of other red tape and nuance. There's a lot of other, I guess, fine print associated with these companies, most important of which there is no just clear way to arbitrage away the discount like there is with GPDC or with ETFs. The closest that some of these companies are doing is of trying to engage in share buybacks, but based on the number of. numbers than I did, those buybacks don't come close to like sort of matching the inflation or massive dilution that came with creating these stats. So it's like, it's like trying to kind of shoot a BB gun

at a coming freight train. So there's a lot that has to happen. And each company's specific, has specific circumstances surrounding it. But any analogy or similarity between GBT and these companies, I think is unfounded. All right. So in a moment, we're going to talk about what it is that these companies are trying to do to bring their prices back up to an MNAV of one. But first, we're going to take a quick word from those fosters to make the show possible. If you love the conversations we have here on Bits and Bips, you're going to love our brand new Bits and Bips newsletter. Our team will break down the key macro trends impacting crypto, the biggest market moves, and expert insights you won't find anywhere else.

Whether it's the Fed, inflation, or major Dow proposals, if it affects crypto, we've got you covered. Best part, it's completely free. Stay ahead of the market and subscribe now at bits and bips.bibs.bohythe.com. That's bits and bips.behive.com. Find the link in the show notes. Back to my conversation with Steve. So some of these firms are trying to fight back with things like share buybacks or staking strategies. What are you seeing in terms of what kinds of tools they're using and which of these do you think might be successful in helping them? Well, it's really hard to kind of see anything that's going to be massively successful because like I said before, the share buybacks, they're really not large enough to put a meaningful dent in just the

massive supply inflation that was created and how these deals were structured. So that's one. Two, investors need to be really careful when they see some of these big top line numbers about buyback programs. Like, for instance, Sharpling Gaming, a big Ether one announced a $1.5 billion. buyback program, but I don't think they've bought back anywhere close to that. E. DeZilla has a $250 million program, but as far as I can tell, they've only spent $40 million to buy back shares. So you see a big top line number. That's not a requirement that they spend it,

and they certainly aren't going to spend it all at once. They're going to try to kind of use it flexibly. And the logic is, well, if you're looking at, if you're trying to acquire this crypto creatively, you want to buy it at a discount, buy back your own shares theoretically. Like if if one share is supposed to equal one eth, but you can be able to. buy a share for 0.70s as a creative, but it's just not enough to move the needle. And then the other issue, too, is psychologically, once these companies kind of cross the Rubicon and begin buying max shares, it's going to be harder to make the case to continue to raise it creatively in the future because investors are going to remember this and they're not going to fall for the same

type of promo. So, like, really the way that I kind of, my big takeaways from the story from my own reporting and interviews I did is that it's going to be very hard for certain companies. companies to just flip a switch or there's no magic bullet to reverse this. It's really going to come down to being patient. And if you believe, which I do and the people I spoke to from this article, believe that long-term MNAVs are going to settle somewhere around one, you need to buy and hold and not be tactical, but be strategic. Like have a high conviction bet here and then wait to see what's going to happen.

Isn't going to be a big market reversal? Is there going to be a wave of M&A where some companies get? acquired perhaps at premiums to their shares. Strive, Strive, which is Vivek Ramoswami's group, is looking to acquire similar scientific. And the deal prices similar shares at a very large premium to where they're sitting at now. However, I mean, that deal may not close because similar shares are going down as part of this broader market.

That deal was concentrated in September before all of this recent crashing happened. But, like, there are some ways that things could work out. And I do believe long-term things will work out, but it's going to be a bumpy road. Yeah. So, you know, as you mentioned, there's nothing that will, you know, force this to head back to one. But you already started naming different, like, things that you think investors should think about. Are there any other factors that you think they should look at before, you know, deciding, oh, I'm going to get some, you know, cheap stock that will eventually rise or, because I, like, it seems like there's particulars around each company. Yeah, I mean, there are particulars around each company.

I mentioned the one with similar scientific. You need to be careful about that. Kindly, MD, NACA, NACA, that's the ticker. They actually were served a warning from NASDAQ. They're at risk of being delisted in the next six months because their stock has been trading under a dollar for 30 consecutive days. However, I did speak with one analyst about this. It's not a huge concern because you could even do something.

like a reverse stock split and then therefore that would kind of like contract the flow and the price would go up so you kind of meet that that threshold but this that just kind of shows sort of the struggle with that particular company with ether machine as I said before that one seems to be very cheaply priced especially with the point one three and that but keep in mind that because that deal out of all the other ones I mentioned in the article has not closed yet there is going to be a massive sell while coming once that happens. as one of the very first stories that I wrote about that back in the spring was about how pipe shares, it stands for private investment of public equity, like these big nine-figure deals that were used to sort of bootstrap these companies.

These pipe shares would be sold. These pipes would be raised. The investors would get these shares. And then usually about 30 days or so after all the business deal closes, these shares would become liquid. And what happened is back in the early part of the year, these investors were sitting on profits, so they would sell immediately and prices would crash 50 or 60%. Every company on this list has gone through that except for Ether Machine, which is still going to have to go through that. Maybe investors will hold on because the market's already at the bottom. They don't want to sell at the bottom, but that is something that's going to have to be kept in mind if you want to buy stock in that company.

So every company is a little bit different, but that just kind of speaks to any investment. investor in a very not official financial advice point of view, if they're going to try to, if they want to try to buy one of these companies really understand the mechanics of the deals. So you understand sort of the hoops that will have to be jumped through in order to kind of get that end up back to one. All right. Great. Steve. Thanks so much. That was incredibly insightful, super interesting analysis. A reminder to everyone that the full article is available at our website, unchaincrypto.com. And if you're not yet subscribed, Steve's newsletter, bits and bibs is what you need to stay ahead of the markets.

Again, if you're watching this on X, you can check out the link in the first comment. And if you're on YouTube, it's in the show notes. People didn't build on cloud because they think cloud is like the coolest thing in the world. And like, they're early adopter to cloud computing. Like, they used it because it like fundamentally unlock things that like existing technologies couldn't do for them. And now all of a sudden we have like AWS as a humongous platform that is the backbone, clearly of so many businesses that live online. And I think like the future of crypto in many ways, not always, looks like that.

Hi, everyone. Welcome to Unchained. You're a no hype resource for all things, crypto. I'm your host, Laura Shin. Before we get started, a quick rinder. Nothing you hear on Unchained is investment advice. This show is for entertainment and informational purposes only. And my guest and I may hold assets discussed in the show.

For more disclosures, visit UnchangedCripto.com. Looking to unlock your crypto's liquidity? Figure offers crypto-backed loans with an industry low 8.91% fixed rate. They're the only major provider with decentralized MPC custody and new liquidation protection. Take out a loan at figuremarkets.com slash unchained. Today's guest is Dougie DeLucah, investor and researcher at Figman Capital. Welcome, Dougie. Hey, how's it going?

Thanks for having me. Yeah, it's going well. And your essay on X really hit a nerve, including with me. It went viral. It was titled, Crypto is dead. Surprisingly, you know, I think a lot of people agreed rather than being outraged. And I find it interesting that we're going to discuss this topic. The day after Coinbase announced it's adding stock trading, prediction markets, it's opening up its everything apt to everyone. But before we dive into all those details, just explain what it's, is that you meant when you said crypto is dead? Yeah, definitely struck a chord people more than I was expecting. I was expecting to get a lot more pushback than I got. And I certainly did not expect like the reception that this article got. But I think I did a pretty good job of like saying out loud what a lot of people have

clearly been thinking to themselves and or having conversations about in small circles. And that's like exactly what drove me to write this. It wasn't just some thought I had in my own head. This is the thing I've been grappling with. for the better part of the last year, I would say. And last week, I decided to, like, kind of first start having conversations around this, people who are not on my team. And everyone, you know, seemingly has been dealing with the same thing

and thinking about this problem of what does crypto look like in the future in a world where this technology actually does, like, go into the rest of the world. And, you know, we're seeing signs of a lot of, you know, incumbent people in FinTech and institutions actually start caring about what's happening on chain, moving on chain, in various ways, embracing stable coins. And I think the dilemma a lot of people are struggling with is like it seems like there are non-crypto-native entities that are going to be essentially taking over the things that we thought we would win undisputedly.

And it's made people feel like the industry that we've known is kind of dying, hence the name crypto is dead. And the technology will persist, but like crypto-natives will largely be left behind unless we choose to react and respond. and move forward in a way that does actually meet the world with where it's at. And so the article is basically talking about my belief that a lot of the things that have defined the industry, how we build, who we build for, what we're doing will actually soon be left behind. And there will be certainly things that persist.

Like, crypto is not going to just go away magically and everything we've done will just become irrelevant. Like a lot of things will persist. But we do have to understand that Like there's a bigger world out there. And our technology is now finally ready to be put in real people's hands who've, you know, never been on crypto Twitter before. And it's time for us to start actually going out and reaching them. Because that is how the industry reaches a state where it becomes, you know, mass adopted, the thing that we've, since I've gone in the industry at least, have, like, dreamed about.

And I just wanted you to explain a little bit when you say that crypto natives might be left behind. Like, what do you mean by that? Yeah, like, so this is a good distinction to make because someone wrote a response to my article, which is well thought out. And I would put crypto natives as people who are actively transacting on chain or on crypto Twitter and have lived within like, you know, our pretty insular bubble for the better part of at least the last few years. The people who, you know, the first people to read my article, the first people to use the new apps on chain, people who are LPN on chain. those things. I don't view people who hold Bitcoin on Coinbase and passively invests in the space as crypto-natives. I think that is a separate category that is actually pretty accessible and much larger than what I would consider to be the crypto-native user base.

All right. So you talk in your essay about the different ways that the industry has attracted new crypto-native users. And like in the power, I don't even know if it's in the past because we still do it. But, so explain like what those strategies have been and why you think they're going to change going forward and how they'll change going forward. Yeah. So I think it starts with intent. The crypto native, you know, bubble has grown immensely over the past like decade. There's a lot more people, the people with a lot more money. There have been groups and funds and organizations that have actually like fully embraced the crypto native bubble. And I view as like crypto native entities. Those certainly weren't things that existed 10 years ago.

So a lot of people who have been building in the space have basically made it their entire mission to win over that user base. And the way they often do that is through consented programs, whether it be points, liquidity mining, things like that, where you're early, you get a super high yield that's usually through like token emissions or something like that. And eventually that yield kind of dries up because it's not an infinite sync. And by the end of it, great. The business is probably done. The people who are early made a lot of money. The people who are late usually didn't. And okay, we're on to the next thing now. And I think the mistake a lot of builders have made is that

the product is the Ponzi and that is it. And when you ask someone what happens after the scheme dries up, there's not really a good answer. And a lot of users have that mindset. They want to be the first ones there because that's usually the ones who reap the highest reward, get the largest airdrop and so forth. And then they recognize when the end is coming and they leave and go on to the next thing. And so that is like the entire like kind of strategy that I'm calling out and saying is going to fade away simply because it's not sustainable. I think this is the first, let's call it cycle where it doesn't feel like there was this

massive wealth creation event for a large portion of the space. And as a result, the size of the bubble actually seems to be receding. People don't have enough money to keep sustaining these schemes, the way they used to do in the past. And again, I'm using schemes in Ponzi as like more aggressive labels. Like that is not exactly everything I believe the space is. Don't get me wrong. But there are people who view our space on the outside as exactly that.

And so I think it's important to address it and understand that like this isn't what go to market should look like in our space for the rest of its existence. Like sure, there will always be a degree of this. But I believe there's a much different future that exists for new on-chain products. Okay. And so, like, why is it that you think that new users won't change to become more like crypto people? Yeah, I think, you know, there will always be people who want to feel like they're on the inside and being early and having knowledge that others don't will be rewarding. But I pretty largely believe we've saturated that market. Like, I think over the last several years, like, for the most part, the people who've wanted to come. on chain and do the things that a lot of people on chain have been doing have done that.

For sure. Like there are people on the outside who would be probably willing to be moving in. But I think for the most part, like we've saturated that like super risk on very like chronically online market. And I think there's a large user base of people who want to like invests, create wealth, generate wealth without having to like deal with like that niche cultural element and amount of risk, an amount of like time that it takes. And so I think we need to like find that spectrum and meet that, meet those people where it's like you can look at equities and how

people are investing. Like more people are trading more is clearly more risk on behavior. But I think like a lot of this stuff is like even beyond where those people want to go. And there's a huge space that's not really being adequately met by our industry. Like look what Robin Hood's doing. It's the easiest company to point to that's like meeting these people where they are. And I think like that's like a lot of that energy in the space go towards. It's like meeting those users where they are instead of this very, very far end of the risk curve group that we've been like obsessing over for many years. Yeah, yeah.

I just had the CEO of or what a breeze called the general manager of Robin Hood Crypto on the show. So it's just funny that you use as an example. But yeah, they clearly have, you know, a very rapid user base. And they're like slowly bringing them into crypto, you know. Exactly. Yeah, all they're offering. And something they've done really well is to quickly touch on them is like they offer a diversified suite of products. Like they have retirement products. They have a savings product now.

Like they aren't just focused on like hyper speculation and like hyper financialization. That's for sure a feature of their entire platform. But you can also just do other things and create wealth in a more long term way on Robin Hood itself. And so I think like they've found that balance really well where like my critique of our space is like a lot of teams and a lot of builders just focusing on that one end of the spectrum and never really acknowledge the rest of the picture. So for the companies or projects that you feel like are shifting their strategies now for this new moment in crypto, how do you see them doing that? Like, are there particular

either strategies or like changes that you're noticing in their approach? Yeah. For sure. I actually see startups like showing promise in this area. It's funny. Like a few years, I've been an investor in the space for almost four years now, and we focus mostly in early stage companies. And so I've seen a lot of change, obviously, through the years. A few years ago, like, there was really very few teams who would tell me that a big part of their go-to-market is TikTok and Instagram. And now, like, there are a lot of teams who I speak to

who have, like, a very well-thought-out plan. And that's a big part of their go-to-market is actually winning over a certain segment that lives on TikTok and or Instagram. And, like, there's a huge user base. obviously a lot of like, you know, digital native companies where that's their go to market, is targeting the subset of users on social media and getting them to use and try out their products and then hopefully they become, you know, long-term customers. And so that for me is like a very obvious change that I have noticed over the last year is that builders who are building

on-chain products actually do understand there's a whole world of social media beyond crypto, Twitter. This for sure other examples, like Polymarkets done an amazing job of like getting into into mainstream media. A lot of people check collie market without actually trading on the platform. That's a sign of like sustainability and longevity, in my opinion. It's certainly other examples.

But I think like for me, the thing that stands out the most is the one I gave with like teams actually acknowledging there's a social media world beyond crypto Twitter. Yeah. Yeah. At DevConnect, I met somebody who they're,

that's where they're focused. And they were telling me that my company should be doing that which we probably should. All right. So one other part about your essay that was interesting to me, you said that you think labeling is something crypto or Web3 will become baggage. So how do you see different crypto players positioning themselves or marketing themselves to users from this point forward?

Yeah, it's a great question. I think if you look at other technologies and people who build on top of them, like they obviously mentioned like the technology they're leveraging, but they focus more on like the efficiency gains and why this product is better versus competitors and why it's really great for the customer segments they're targeting. And you know, I think the reason why I'm saying like crypto becomes baggage is because it actually like does alienate some people. Like you tell someone like, hey, this is a crypto product. And unfortunately, a lot of people become scared. And they lose trust in the product. Whereas if you just give it to them and say, this is a

an amazing application that's doing X, Y, and Z. And I mean, I don't want to say because it's built in crypto, you can do X, Y, and Z that you couldn't do in other things, but maybe that is a part of it. And hopefully that helps, like, fix the image of crypto. But the whole point is, like, you focus on the things the tech actually unlocks for people and why this is better for them versus the other product that might be already using. And I think, like, that is where things are going to change mostly. because I think so far, like, it's always been we're building in crypto.

This is like you should come to our space and try out our tech. And it's less about like why we actually are building better products for people. And so aside from Robin Hood, are there any particular companies or projects that you feel like are positioning themselves well for this next phase? Yeah. I mean, it's certainly companies like Coinbase, Phantom is definitely doing a great job of it. Stripe, I would say, is like a non-crypto native entity seems to be making really interesting. resting strides in this direction. There's people like Polymarket that I think are doing well.

You could point out Moonshot, someone in the past who been a pretty subtle innovation that actually ended up like really moving the needle for a lot of people, which was like Apple Pay based onboarding and then being able to access like, you know, it's meme coins, but still like that was a key thing that changed how people are able to access on-chain assets. Like someone went from not even having an on-chain wallet, downloading Moonshot, onboarding funds from Apple Pay and then buying a meme coin via Moonsha, which like, sure, we can argue over like the substance of that.

But at the same time, like, it is a big unlock for the space in terms of the U.S. side of it. And so I do think, like, the big thing that, you know, I've taken away from this quote-unquote cycle is like, I've seen teams be able to actually put products in people's hands in better ways that have ever seen before in crypto. And so, like, that's where I was like, we actually have the tech to do it. We just need the intent more. And certainly, like you ask, there are companies who,

have shown that intent, but I would love to see it become the norm that people actually use the tech and make it get in people's hands more easily versus, you know, focusing on the insular bubble. All right. So in a moment, we're going to talk about how other companies are positioning themselves and what crypto will look like going forward. But first, a quick word for the sponsors who make the show possible. Today's episode is sponsored by Figure, which is transforming financial services using blockchain. They're the largest non-bank mortgage lender in the U.S. with over $19 billion unlocked on their lending platform. Now, they're offering industry low crypto-backed loans at 8.91% interest rates at 50% LTV for BTC, ETH, and Sol.

They differentiate themselves by offering decentralized MPC custody, which protects your crypto ownership in a segregated wallet. They've also recently launched liquidation protection to protect you from liquidation during large price drops. whether you're funding a major purchase, investing, or even buying more Bitcoin, figure makes it transparent. Visit figuremarkets.co slash unchained to take advantage of their crypto-backed loans today. Back to my conversation with Dougie. So I realize you may not want to name names, but I'm curious to hear either which businesses or which types of businesses you feel like have not positioned themselves well for this next phase

or that you think would need to evolve to survive? Yeah, I'll try my best to refrain from naming names. So I think I'll just label it as products that begin and end with the incentive scheme, whether that be an airdrop farm, a liquidity mining program, or anything in between. and there's very little emphasis and understanding of how the product continues to succeed after that phase comes to an end. And there are plenty of examples in DFI

that meet this criteria. I'd say it as something that is unoriginal, may or may not live on a new chain and does not stand out versus existing players besides the fact that it is on a new chain and has a new points program. that is an example of something I think has a pretty short shelf life and we're clearly seeing that. Yeah, so I think like, you know, the way I'd boil it down is like I think we need to see more original ideas.

And, you know, there's been a lot of derivatives that have existed in our space, no pun intended. And a lot of times the way that derivatives kind of stand out is just by offering a new fresh incentive scheme that, again, just leads to that never ending cycle of like going on to the next thing and whatnot. I think those things have already kind of like reached their exhaustion level. I don't think we've seen a lot of examples of like those products succeeding recently. There certainly are some like counter examples to that. But yeah, like really anything that falls into that category, I think is going to struggle. Because like what I want to point out, and this has like been the most common pushback is like, I'm not here to say like going out to crypto natives as your first user base is wrong.

I believe that is a great starting point for most on-chain businesses. Your most proximate customer and like you need to. have like die hard technologist users who give you very valuable feedback so that you can iterate and get ready to reach the masses. A whole point is like there needs to be a broader strategy and understanding of like when the time is to go after that next customer segment. And like that's what the fintech companies, you know, businesses that have grown to be very large of all done. They understand who their initial users are and who their next users are and who their next users are. And so yeah, I'm going to refrain from naming names for obvious reasons here.

But the companies that fail to recognize this, I think, are going to be left behind. And same for the investors who are investing in the game of the past that will not be the game of the future. Okay. So in your essay, you also talk about what you call a middle class of users. Explain what you mean by that and why you think they're important for this next phase and how companies can attract them. Yeah. So I would put the middle class of users if we're like on the curve of like early minority. early adopters as like closer to like the early adopters phase where like they are more technology savvy. They understand like from a principles level like why a lot of our technology matters. And they don't really want to be in like the super niche culture that is crypto.

Like they want they value self custody. They probably already own Bitcoin and understand like why Bitcoin is a valuable asset. But they haven't made the journey to like actually engaging on chain in a meaningful way because like the culture and intent around being on chain. like kind of for them is like not of interest. They want to enjoy the benefits of like immediate settlement, build companies that like literally do leverage the technology unlocks to crypto without having to deal with the cultural component. And so like that's where again, like I think like they're the next wave of like

large users and builders, people who like actually do understand why this technology is valuable. But they don't want to be in this like self-referential culture that we've built for ourselves. And so I think like those are the people who they probably are using crypto. They probably also own some crypto, but they're not like engaging in a meaningful way and choosing to make build a business using our rails. And so that's kind of how I define them. It's a loose definition.

It's also different for like every product based on who they're going after. But I think like it's a large, large user base. We're talking like probably hundreds of millions of people who with the right focus and way of like getting in front of them would be very willing to use a lot of our products. And what about this whole defy Mellet strategy where companies will use defy in the back end to offer it to their customers? Do you feel like that will be a successful playbook going forward? Yeah, I think there certainly will be people who actually love that kind of offering. It's like you get the best of both worlds.

Like you don't feel like you're in the Wild West, but you're getting some of the reward that exists in the Wild West. And there will be people who hate that and there'll be people who love it. And that is the beauty of addressing a large audience is like different people have different needs and different wants. And so I think DFI Mollett does work. Is it going to be the whole space? I don't think so. But it certainly will be a part of it. And you have a section where you talk about the parts of crypticulture that you think should survive and become more widely adopted.

What are those? Yeah. So I think like the reasons a lot of us got in the same. space are extremely valid reasons to be here. And I don't think they should go away by any means. Like, I do believe that it's important to have the ability to self-custody should you choose to. I think it's important to have censorship resistance. I think it's important to have, like, for me, like stable coins and the global accessibility in 24-7 nature of blockchain was a huge reason why I found this technology to be compelling. The fact that, you know, I could send someone money

who lives in South Africa, I'm in New York City for less than a dollar and they get it immediately is like a huge unlock in the world that like for a lot of people does meaningfully change their lives. And there's also people who live in, you know, countries with currencies that are inflating at a rapid rate. Being able to hold the U.S. dollar with their savings does change their life. And so I think like all of those things like should definitely be the emphasis and should exist. And like I also, I don't know, I love the speculative part of crypto too. Like I'd be lying if I was like, that part of the space is like not it. Like, no, I do believe like there's something really compelling there.

And the world is moving towards like a more speculative future. You can see it in AI. You can see it in nuclear. There's so many other examples. And I think the crypto rails are actually the best place to like express this tendency. But my whole point is like none of those things should be like the whole picture. And we shouldn't give people an ultimatum to either accept these rules or get out. We have to be willing to compromise in certain areas.

And there's going to be a spectrum. You're going to have the hardcore technologists who want to be on the blockchain where they self-custody everything and never have to deal with, like, their real world. But you're also going to have people who want to just send money from point into point B very quickly and reliably. And maybe they don't feel comfortable with like full self-custody. They want to have someone else to make sure they don't send it to the wrong person or they send it and can never get it back. And like we can serve both of those people. And that is what like my view of like the matured end state of crypto kind of looks like is like the whole. whole spectrum of people's needs and wants are met. And it's okay that like the people on the left

think the people on the right are doing it wrong. So I definitely also want to touch on the coin base announcements yesterday. I'd be curious to hear what you think about. Well, you can react to any part of the announcement generally. I mean, they announced so many things. But I was curious in particular about the creator coins thing that they've been doing, which I'm sure you've seen on the timeline. They've been mocked. They've been criticized. I think my personal opinion is that what people are reacting to is them trying to push a behavior in a top-down fashion whereas so much of crypto has been more grassroots.

But if you could just talk a little bit about how you think they're going about doing that or really any part of these new initiatives they're going into. Yeah. So Jim and my team came on your podcast to kind of talk about some of these same things. and I think he has like really great takes on this stuff. Thought deeply about it. And I think like I'm not one who's going to call creator coins like a failure and they're not useful. Like I think they could be.

I think we're just in the very early innings of like exploring what the utility looks like. Because like let's use the example of, you know, a well-known creator today who has a large following. They probably have like a million followers on Instagram, maybe TikTok, whatever, platform and if they launch this like token uh and market it to their followers and then everyone loses money on it because something happens that was out of their control or like was they weren't aware of like that's a great way to just pretty much you know eliminate your entire following and destroy your reputation so for those people like this is like not the most appealing thing however I think there are ways to like you know avoid those issues and like those are

the things that I really am excited to see explored because, like, again, that's just like what the early innings of like a new kind of innovation look like. Things go wrong until they eventually go right. And so I think there's a design space there. For me, it's not like top of mind. It's certainly not the thing I wake up in the morning thinking about. But I do think like so far it's been pretty underwhelming in terms of like what that whole picture looks like. But I think there is a world because like it's obvious that like people can make more money from this unlock than they could without it. And for me, that's a good starting point in terms of like, okay, is there value here? Yes. All right. Now, how do we reach it? And that's where I don't have the answer, certainly.

But I think there are people out there who will find it. Yeah, yeah. I mean, my take is like, they've clearly identified a problem with Web 2 that is a real problem. And it is very obvious that there is probably some way to use crypto to address that problem, you know, whether or not, you know, the creator coins or, you know, pump fund or whatever any of these efforts are. And, you know, my company is is doing a lot of them because we recognize like we exist in that space. Our company, you know, has one of those models that could be, you know, that could benefit from this new technology. But, you know, what exactly that looks like going forward is definitely an open question.

Well, I know for you, you also had a bit of experience with like aftermath. of having a creator coin that is launched. And I'm sure like that was a moment to like stop and reflect. I know it certainly was for obviously me being like a witness to it all. It was a very interesting thing to see. Yeah. I mean, I'm going to be 100% honest and say like I don't think that we thought about it as hard as people might have expected and they might have been disappointed for that reason.

It's like there are so many of these platforms that we've done. So we added that one. Right. But we are working internally on like coming up with a way to actually utilize these apps in a way that's, you know, something that I think people could get more excited about. But, you know, like I said, we had just joined so many of them. We had hit that one. And yeah, we didn't have like a, you know, a huge grand plan for it. All right.

So let's now look to the future. You know, your essay kind of ends with like what things will look like going forward. Something that interested me was you talked about how you didn't think future apps would market themselves as being on chain. So explain a little bit how you think crypto technology will become used by mainstream people. Yeah. I definitely don't have like the full picture. Otherwise, I'd probably be like ready to absolutely knock out of the park as an investor. I'm constantly revisiting my views and people challenge my assumptions and like that's the beautiful part about like kind of being at the cutting edge of something I think. But look, I think I kind of alluded to it earlier, and it's hard to actually elaborate very cleanly. But I think people will build applications and technology because of the unlocks it provides to them.

People didn't build on cloud because they think cloud is like the coolest thing in the world. And like they're early adopter to cloud computing. Like they used it because it like fundamentally unlock things that like existing technologies couldn't do for them. And now all of a sudden we have like AWS as a humongous platform. form that is the backbone clearly of so many businesses that live online. And I think like the future of crypto in many ways, not always, looks like that. And the thing that I constantly kind of go back to, and it's like tangential to a debate that's happening around like L1's new networks, like, are they overvalued? What's the role they play? Like I do wonder, like, is the future of some of these L1s,

like being closer to Amazon or is it truly like sitting behind the scenes and letting someone else like kind of be the person who actually puts this in entrepreneur's hands to innovate on top of. I do think like there does need to be some sort of transition. Is it solely an application builders? Is it on the networks? Like that's probably a whole different essay for me to write at some point because it's the thing I've been thinking about pretty much all of this week. But yeah,

I think like the second that people start building on chain without ever having this like the conscious thought of like I'm a crypto native builder is a huge win. And it's like that people start using our technology without ever thinking about I'm touching crypto or being on chain is also a huge win. Like, again, there will be people who always love the technology. And it's a big part of like why they use and think about certain things. But the majority of the population do not. Like if you ask the person on the street who just went to go buy a coffee using Apple Pay, how it works, they would have no idea. And that's a good thing.

And so I think like the future I see is people who can meet that user. but also impress the super savvy builder who wants to build the best fintech application possible. And it's like, whoa, I can actually do this on chain. I thought this was impossible. And then they love it. And all of a sudden you have like an evangelist of the technology, but for the right reasons, not because it was like a great way for them to make a lot of money quickly. Yeah, yeah.

I really think or I would rather hope that some of the values around like permissionlessness or like user ownership, things like that, that those actually really would become, you know, part of the culture going forward. But we'll see it. Like in my head, I'm like, oh, maybe during the adoption phase, people won't recognize this things,

but after a while they will. So last question. Oh, sorry? I think they will continue to live on. Like, I think, like, there will be experimentation that exists on chain that would never happen anywhere else. And sometimes those experiments become, like,

the next massive company. in the world. And I truly think like on chain is the best place to do that. So I think like permissionlessness and the things that I really got in the space for will always be an important part of it. All right. So last question for you. A lot of been a lot of people have been saying that the four year cycle is dead. Brian Rasmussen, a bit wise was recently on the show. And he said he believes that 2026 will prove that the four year cycle is not or sorry is is actually dead. Sorry. Sorry. Sorry. I meant to say. I think you got it. You're right. People have been saying it's dead that now recently they've been thinking it's not dead.

But he's saying, no, no, no, no, this next year will prove that it actually is dead. What do you think will happen next year? That's a good question. So I think I'm somewhere in the middle here because I do think a lot about like behavioral economics and how that influences markets. Like markets are obviously like the mass coordination of a lot of people. And I think it'll be very telling probably like early on next year. who's right and who's wrong. Because like the four-year cycle

theoretically ended in November of this year. And you saw a lot of people sell, clearly. The markets have gone down considerably. And that's like the behavioral economics part. It's like a self-fulfling prophecy. If enough people believe that like the four-year cycle will forever hold true, then it could just by the fact that like more people are selling

than buying out of this belief. Structurally, do I think the four-year cycle persists? Like, no. I don't. The reasons that, like, my article is actually touching on is, like, the more technology adoption you actually have, the more businesses making money independently of market cycles, the less this actually thing exists. Like, when crypto is just one big macro trade, then, like, yes, there will always be cycles that depend on, like, the macro economy around us. But now when there are micro economies that exist, companies that make money, regardless of the price of Bitcoin,

then the four-year cycle does technically get defeated. So, like, I do believe in, like, the four-year cycle not existing. Am I ready to say this four-year cycle is already dead? Like, I don't know, to be honest. I'm kind of looking around to see what happens over the next, like, several months. But I do believe, like, we are moving past that future. And I believe that pretty strongly. All right.

Well, Dougie, it's been such a pleasure chatting with you. Thanks so much for coming on Unchained. Yeah. Thank you so much for having me. as well. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Oranovich, Margaret Curia, and Pam Majumdard. Thanks for listening.