Unchained - Do Centralized Real World Assets on DeFi Break Ethereum? - Bits + Bips

Episode Date: April 1, 2026

When do oil prices force a ceasefire? Why is crypto holding firm while equities crack? And does Canton or Ethereum win the institutional race? --- Thank you to our sponsor: ⁠⁠⁠Nexo⁠⁠⁠ ��� the premier digital wealth platform. Receive interest on your digital assets, borrow against them without selling, and trade a wide range of cryptocurrencies all in one place. Now available in the US with 30 days of exclusive privileges for new clients. Get started at ⁠⁠⁠nexo.com/unchained⁠⁠⁠. ---- Bond market tightening has become the invisible hand constraining every policy decision, from Iran talks to stimulus spending.  With Brent crude at $107 and the 10-year yield climbing, asset prices face a cascade of headwinds: inflationary supply shocks, tightening financial conditions, and no clear off-ramp for a conflict that the IRGC shows no appetite to negotiate.  Yet within crypto, a sharper debate is emerging: does institutional adoption demand Canton’s permissioned structure, or can Ethereum survive with real-world assets on a permissionless layer?  Austin, Ram, and Chris dig into the structural fault lines that the macro backdrop is now exposing, and why market-timing in a conflict where you don’t know who the endgame negotiator is may be the wrong frame entirely. Hosts: ⁠⁠⁠Austin Campbell⁠⁠⁠, Host of Bits + Bips, Zero Knowledge Consulting ⁠⁠⁠Ram Ahluwalia⁠⁠⁠, Co-Host, CEO of Lumida ⁠⁠⁠Chris Perkins⁠⁠⁠, Co-Host, President of CoinFund Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey, everyone. Welcome to bits and bibs, where we explore how crypto and macro collide one basis point at a time. We're here to discuss the latest stories in the worlds of crypto and macro. Just remember, nothing we say here is investment advice, and please check unchained crypto.com slash bits and bips for more disclosures. Now, before we begin, a quick commercial break. Introducing Nexo, the premier digital wealth. platform. Receive interest on your digital assets. Barrow against them without selling. Trade a variety of cryptocurrencies. All in one platform. Now available in the U.S. Get started today at nexo.com

slash unchained. All right. So, as always, I'm your host, Austin Campbell, high scholar of zero knowledge group, and here with my co-hosts, Ramalawalia may serve wealth, the leader of Libina, and Chris Perkins, the golden hand of coin funds. Today, we're going to start with a segment that we're calling the bond market is running foreign policy. So on Sunday, Trump told the financial times overnight that he wants to, quote, take the oil in Iran. But some people back in the U.S. are saying, why are you doing that?

He referenced Carg Island, which handles 90% of Iran's crude exports, and said, maybe we take it. Maybe we don't. We have lots of options. Chris, you've been on this before, but U.S. troops are now deployed to the region and available. Brent has surged up early in the day to 116 a barrel. Oil continues trading with a significant amount of volatility. The conflict itself is continuing. The Houthi's fired a ballistic missile at Israel. There was a suspected Iranian-backed attack on a Saudi air base that wounded U.S. troops. And Trump's April 6th pause on striking Iranian power plants is still in effect, but the FT interview signals that the military track might still be very much alive. Diplomacy, as is often the case, is going either nowhere

fast or potentially around in circles very quickly. Allegedly Whitkoff floated a 15-point peace proposal through Pakistan last week, publicly rejected it and offered five counter conditions, including war reparations. Despite public rejections, however, a source says Iranian officials privately signaled interest per CBS news. However, it becomes unclear which Iranian officials these are and what level of interest there is. Now, before the FT interview, oil had already been moving up.

It closed Friday at $112.57 a barrel for Brent. WTI at close to 100. Monday pre-market. Brent was above 116 briefly. The oil disruption appears to be significant. And the timing as this cascades throughout the world is on the verge of hitting some major economies. Also now getting it on the action is the bond market, which is where I want to turn to what Rahm has to say. But to set the frame there, the 10-year yield hit 4.48% on Friday, eased back down a bit. And there has been a pattern of Trump pausing tariffs or backing off of things previously as specifically the 10-year rate moves up.

And for those who are not U.S. persons, most U.S. mortgages, so the housing market are priced off the 10-year rate. It is a point of particular interest in the economy. So, Rahm, you've been saying, who wants a deal more? or who has the time pressure and what is going on with a ceasefire? Is this real or is this performative? I want to start with you before we go to Chris and ask, what are you making of everything going on right now? Yeah.

So Trump ordered or attempted to manifest the greatest taco supreme of all time last week. Trump has an extraordinary manifestation skills, but no taco was delivered. It takes two to taco here. The IRGC reiterated today that they are not negotiating. They appear to be hold up in bunkers and making highly effective meme videos targeting American consumers of American brands like Lego using American GPUs and Navidia technology. It's just, it's really quite extraordinary. Usually they make propaganda for their internal audience, but they're turning that around.

So Trump wants to taco. it's not clear what the off ramp is. It seems like he might make a move on Carg Island to create a bargaining chip and then use that to exchange, you know, as he calls it, escalate to deescalate. Markets don't like that. And to your point, the tenure moving up is not good for asset prices. Inflation's also moving up. Dollars continuing to strengthen.

and none of that's good for asset prices. And oil continues to move higher also. So yeah, it's not a good story for asset prices. Really no way to share any other way to tell you. I think you should be defensively positioned for the next few weeks until you see some kind of credible off-ram. Chris, I think you may be on the other side of this discussion. What are you making of this one right now? I feel as though there's no turning back at this point.

The world has seen what could happen if the straight is closed, the strait of Hormuz. Right now, Asia is choking. Europe is now based on some new ballistic missile technology. They're actually under threat. And so there's no way that we can return to the status quo because the status quo is just going to, if everything stopped right now, one went home. By the way, for the Gulf states and for the Israelis, they can't go home. This is their neighborhood. But there is no turning back. What do you do? You just pause and let the IRGC reconstitute. Next thing you know, they have weapons of mass destruction. If they do

achieve weapons of mass destruction, then they're holding the straight of homeless hostage forever. I don't think that's good for the global economy. So it's hard to, I hate looking backwards and saying, you know, should we have done this or should we have done that? I think it's more important to look at where do we go from here? Trump does have some very capable ground options right now. I think that's going to be very, very difficult to deploy them, particularly with the drone warfare that we're seeing. But again, I've been saying this all along.

The Marine Corps has been preparing for this moment for 40 years. Their tactics have achieved, have evolved over time. There's Army Airborne units on scene, special operations on the scene. So there are new tools in the theater. that are available to him. But there is no turning back. We're starting to see some very concerning escalation. I think the Iranians hit a Kuwaiti desalization plant for the first time recently.

So look, I think it's going to get worse before it gets better. But I think the strategic end goal is pretty obvious. We need freedom of navigation on the Strait of Hormuz. I think the globe, the entirety of the globe, knows that this is the case. Even our adversaries in China know that that straight has to be open and free. I don't ever see it having true freedom of navigation if the IRGC gets its hands on a nuclear weapon. So I do think it's going to get worse before it gets better. Are you bullish on markets, Chris, given what you just said or no?

Short term, no. Short term, you're going to have some volatility. for sure. I do think if you time it right, it's going to be in a particularly in the crypto space. I'm a crypto guy. I think it's going to be a very, very good cyclical buying opportunity. Because once this thing gets settled, I think we're going to be in a very good place. I mean, at the end of the day, we've been talking about this for weeks. The world is more and more a trustless, permissionless place. I think crypto does very, very well. I think, and it's demonstrated continued resiliency.

Yeah, we had a little bit of a dump the last couple of days, but I think you're going to see Bitcoin starting to catch up to the gold narrative. It's inevitable. So medium, long term, bullish as ever, there's going to be short-term volatility until the situation improves. But it has to do. There's no way out of this. It will have to approve. What I do like, though, Rom, is I've seen the globe.

This is no longer a U.S. problem. You know, people will say U.S. Israel started it. This is a global problem now because the world is getting choked off. And so the world is axed to clear that straight. And I think one way or the other it's going to get cleared. So clear through coercion and escalation. I think so. I mean, unless, you know, at some point.

And by the way, like the propaganda really, did you really think that was amazing that they made some Lego videos? I mean, really. I wasn't like, that didn't scare me. I kind of laughed at it, to be honest. But I don't think of it's scary. No, it's entertaining, but it's effective. Overall, I would say the expectation, I believe, going in from the White House was a quick and decisive victory with a kind of head of the snake strike on the Ayatollah

and then what Trump calls Group 1, Group 2. Now you're seeing less missile volley from Iran, but more are getting through, including in AWACS, it was destroyed. There's an acceleration of orders for defensive equipment and bunkers that the Pentagon is doing. There's been no Pentagon briefing in nine days. So I don't think things are going as well as people had initially hoped.

And the White House is trying to do kind of play action, audibly, trying to find a path forward. but they need two to tack taco and the IHC doesn't want the IRC likes the status quo. And it's going to take a lot longer to get done. You know, the initial guidelines were four to five weeks. Okay, here we are, week five. And they're saying it'll be done quote unquote soon. It reminds me of like when Powell was saying subprime is contained or Paulo was saying inflation is contained.

They're overly optimistic. And it takes time. I don't even know how you negotiate a deal in 30 days if you don't know how you. your counterparty is, and you have 15 points of which there are egregious differences. How is any deal going to get done in 30 days? It's going to take, if not 30, 60 or 90. And all you need is a little bit of threat. It's an epsilon threat.

You don't, you know, the U.S. has dominant military advantage. There's no question about it. No one denies that. But if you look at like the Suez Canal conflict in the 80s, it was effective at denying transit for enough time to cause an increase in oil prices. And I think these destroyer convoys haven't been deployed. It's not clear that they'll be affected. We're spending $200 billion a month.

We're talking $2 trillion in a year, which is also inflationary, which will also increase interest rates. So the overall picture is not pretty. It's a very toxic picture for risk assets. It's, yeah, I think near term, there's there's a lot of unknowns and a lot of risks in the market hate that. If the genie gets put back, if we are, if we're successful, and that success could happen overnight. You know, we've seen these things move. Right now, like when we had spider marks on here, he was saying, this is going to take a long time, fellas.

The problem you have is that if you are a member of the IRGC, your entire legitimacy is based on your hatred of the U.S. and the West, right? And so it's very difficult for somebody to pop up and say, okay, I'm going to be that guy who's going to take the risk. I'm going to be the strong man who's going to take over this country, speak to Trump, you know, we're going to settle things. I'm going to be really rich in this process because, you know, you're probably getting get exterminated in like, you know, two minutes. And so. Well, they have more hardliners. The negotiating team was taken out. Spider-Marx, when we interviewed him, I said, when would the tanker start moving?

He said, could be tomorrow. He was wrong on that. So I think the military miscalculated effectiveness impact and is, you know, they're not communicating and markets are starting to price that in and they're losing trust. You know, Trump came out on the tarmac last Monday and was saying, hey, we have 15 points of negotiation. They just issued the points of negotiation, which there's no discussion around. So they're losing trust with markets.

And then on Thursday of last week when the cabinet assembled, it was clear for the government, from J.D. Vance and Marco Rubio that they're looking for a 50-year solution, a 50-year solution. And then if you look at the objectives, they're saying we have, well, four objectives. It does look like a regime changes in objective if you're targeting leadership, but none of those are the stated objectives. So it just seems like they're making it up as they go along. And this is going to extend the relevant question for markets is, will it last longer than markets expect or shorter than markets expect now. That's right.

We have to kind of make assumptions on markets expect. They were initially anchored at four to five weeks. Now White House is trying to set new expectations for soon and a few more weeks. And I think it's more likely that it'll extend beyond that. Thanks, thank God for prediction markets. At least now we have a market. I don't know. Is there one?

I saw that there's one on, you know, when they're going to be ground forces. Yeah, I was going to say, I think they're being careful with some of the military markets. To me, I think there's two things you've got to think about when you're framing this that are being significantly under discussed as you want to think about both a market response and call it a real world resolution to this event. The first is that negotiating implies that you have a party with whom you can reliably negotiate. One of the things that I'm observing with Iran is the internal fractures and division appear to be growing, not shrinking over time, both between call it hardliners and moderates in the regime and then other sorts of things that are

happening in the country. The longer they are under pressure and the board is getting scrambled, the weirder things get over time. And it may be the case that the party who eventually we will be negotiating with to end this thing has not even come to the table yet because it's not clear that they are going to be the people in charge with this ends. Right. And that is not a one month period. That is not a three-month period. That is maybe not even a six-month period. Again, I brought up a long time ago on this show when we were talking about this, the French Revolution. Like, this could be a 10-year process of, like, cascading regime collapse in Iran. And what comes out the other side, maybe something nobody expects. When you let the genie out of the bottle, there is no guarantee that you can put it

back in. The other... Yeah, Iran is selling more oil than ever at higher prices. Yes. For now. So there's an economic benefit for now. Well, part of Besson release sanctions, there's an economic benefit for the IRG to continue this. I took a closer look at the composition of the Iranian population. So in Tehran, there are higher incidence rate of protesters that want change. But outside the major cities, it's kind of like American blue states versus red states. In the rural areas, they are far more pro-Shiya. and there are millions of Iranians on these coastal cities

and within access of the shorelines, you just need a couple dozen people with rockets. That's it, to have an effective asymmetric deterrent. I would encourage, you all want to dig into this, go to Google Maps and zoom in on the Strait of Hormuz and follow the coastline and look at the cities and look at the ports and then ask yourself, how do you contain this?

imagine you had like an Aegis destroyer off of Manhattan. One wouldn't be enough. That's just, we're talking just 12 miles there. So this is a very complex situation. You know, they made an assumption that you take out the head of the snake and you'd get a resolution. That assumption was falsified and there's no clear path of de-escalation. So you lead me into my second point, which is, and this is something that's been true basically post-World War II. but for a handful of the great powers when they're engaged in wars, the answer is to will they win or not is essentially how much resolve do they have to bring force to bear.

Because if we want to be particularly gruesome about it, the straight could be open tomorrow if the United States wanted that. The question is how many bodies are going to be left behind in the wake of us doing that. And one of the things that I would watch for as the IRGC continues these tactics from is if you restrict supply, and drive up global prices to the point that it starts doing real damage to China, to India, to Japan, to Europe, and causing starvation in Africa. At what point, obviously, the United States has to retain political will to fight, but at what point does the rest of the world retain, call it the political will not to strike Iran much harder, restrain somebody from striking Iran much harder?

How are they going to strike them? Like, UK's Navy is defunct, the prep that it's flying. apart. I'm talking about, I'm talking specifically about us and China, right? Like, Iran is in this war because the United States is unwilling to deploy our best weapons against Iran. Like, let's just be as clear as possible about that. If we choose to wipe them out with nuclear weapons, we have that capability. And I'm not advocating that. I want to be clear. But there's a strange game of brinksmanship that you get into with these conflicts that will lead to one side or the other backing down. And if you look at the history of them in Afghanistan and in Vietnam, the United States backed down because, quite frankly,

the threat of the people that we were dealing with there was not existential and global. But when you have an IRGC regime that has been dead set on getting its hands on nuclear weapons and having those capabilities, I'm not certain it goes the other way if they continue escalating. A number of China's thinkers got through today. Yes. China loves this. You may start seeing a taco from the Iranians because my point is the brinksmanship works differently at this level if you truly want to continue escalating. China does not China does not love this. Right now the oil prices are high. They have great risk that the U.S. takes control of the Strait of Hormuz and now we're in control of 80% of Asia's oil. They don't like any bit about this. They're in a

situation. They're like the current situation. They like the current situation. The U.S. over extended. Yeah, sure. So you see a top-up in the next 30, 45, 60 days. But what's the off-rap? Right. Like, oil prices continue to go through the roof. That's, that's putting a lot of pressure on their already weakened domestic economy. China's buying off-market pricing oil from Iran. They get the best price in the world. They're buying oil for many years. They did for many years. And their tankers are still moving through the straight-of-romoos right now. I wouldn't be surprised if China supplying rocket. and maybe targeting to the IRGC now.

You know, they, you know, in real Palatique, one of the goals is to ensnare the hegemon into a conflict that consumes blood and treasure. And you're spending $2 trillion a year at current run rate and you've got a block out on Pentagon briefings. It seems like interceptor supply is low because they're letting rockets land to preserve supply. That's not good.

I mean, clearly this was poorly actually. poorly executed at the very least. I do agree with you. You disagree? You think it was well? No, the one thing I agree with is that China is in a, I think they're in a bad place all the way around. If we do secure the straight and control the oil, that puts them in a very difficult strategic position, no matter what.

That's why they're so focused on all. If, right? You know, a lot of general, as you probably know. Status quo is not good for them either, right? because they have they're at risk all across their neighborhood oil is getting very expensive and yeah maybe they let a few tankers go through i think the russians are very happy right now because there's a lot of pressure for now i think it's going to bite them in the end uh but i do think they're happy but i think austin makes a very very strong point we're not talking about the tactical level of war there's

three levels of war there's tactical campaign slash operational and strategic this is a this is a battle at the strategic level. We will whip them every day on the tactical level, just like we did in Vietnam. Operationally, you know, are the Gulf states coming closer to us? Yes, I think the campaign is in effect, but it's the strategic that's the battle. How long can Trump hang on to this and not lose the political will? He's not trying to win an election, you know, next go around. He's already at his terminal limit. So he's got some staying power. Like, of course, midterms could impact him. And, you know, hostile Congress is likely to step in and cause him a lot of pain and maybe some impeachments and everything else. But it really comes down to the thing that we

ignored in the beginning, which are our allies. And to the extent, what have we seen? We've seen that Europe is now in threat. We've seen that our allies across Asia are their economy is bad. is close to turning back into Mad Max. You ever see that movie? Like, they're running out of gas, right? So if we can build social consensus, global consensus, and have the entirety of the globe and the, you know, like you said, Austin, if this needs to get fixed, the entire world.

They're a pariah. Who cares? Do you think IRGC cares? They're a pariah. Do you think they care about Australia's opinion? Australia doesn't have a military force to bring to bear. The U.S. is NATO. That is the force.

And the allies aren't stepping up. And Iran is charging now $2 million a tanker. If the U.S. just withdrew now and just say, hey, we're headed back home. It's not going to happen. And Trump talked his, I'm not saying that what happened. Let's just visit. Like, what's the path to de-escalation? Trump is saying, hey, we won.

He could just walk away. They would still have control of the strait. So if he doesn't walk array, walk away, they have conflict. And it would turn into a proxy war where Israel would continue to bomb the hell out of the IRC and we would supply them. Maybe that's what's going to happen. But I'm telling you, we have a big problem unless that's great as secured. And the globe has a big problem.

I agree. What's the global economy has a problem. Look, I think the original playbook. I agree with all that. I think the original playbook was, it's the Venezuela playbook, right? That's what they're seeking to achieve. Super hard to do. Do you continue to use kinetic measures until that strong,

person pops up to take charge. I don't know. I mean, I would say on that front, there's a significant difference between somewhere like Venezuela versus somewhere like Iran, right? Like if you look back I totally agree, it's much more complex. And if we look back at pulling agitators out of the populace to Ram's point, part of what you're trying to determine is call it how embedded and representative of the populace are the agitators? Because, you know, the degree of difficulty of both removing, intervening, detecting, disrupting something like Islamic fundamentalist terrorism in the United States versus say the IRA in Ireland

is very different because of how the population feels about the people doing the thing. And I think in Iran, if we're being totally honest about what is the pathway to de-escalate this thing, then almost all roads lead to the United States having to continue to degrade the operational capacity of the IRGC and quite frankly kill them until it's too painful to continue. I will say the thing that I'm keeping an eye on, and I think

we talked about this earlier with the general, is do we start to see factionalist problems within Iran itself? To me, that is an indicator of when the IRGC is probably hitting the point of, oh, God, we have to negotiate from a position of weakness. Because if you start seeing problems in the east, if you have uprisings with the Kurds or the Azerbaijani's get involved or like Pakistan starts throwing punches. Now you have a very different problem in your neighborhood than what it's purely internal. I don't think we're at just observing the facts on the ground that level of operational degradation yet. So I really do think this is just, Chris, to your point about the strategic level of war, who has the will to continue fighting and also maybe an important lesson from the Ukrainians fighting

Russia. The call it tactical and campaign level capabilities to rapidly innovate to counter the things that your opponents are doing. Because, Rom, to your point about, hey, it's going to take a lot of people to keep the straight of Hormuz, like, secure, maybe, or maybe it just takes some really good drone tactics so that we can interdict all the people trying to interdict things themselves. And I'm not saying yes and I'm not saying no, but I'm saying we're seeing a rapid innovation in the art of wars. People integrate things like drones into battlefield tactics that quite frankly didn't exist

20 years ago. And I don't know which way the economics of that is going. I think it's very naive, guys. Look, you've got rockets landing in Saudi. You've got rockets landing interceptors can't stop. The straight-of-h-h-h-moos is a closer distance and there's more awareness of that category. You just need rockets and a couple of decentralized individuals. You've got millions of people. It's not more kinetics will make this go away. Yeah, I agree. It's not. It's never- Very deep miscalculation. Yeah. You can't win a war through just

It has to be at the strategic level. That's the issue we're talking about, right? And we just haven't seen that. They're holed up in bunkers. They haven't seen that leader show up yet. But the kinetics will get you potentially to degrade to a situation where somebody sees an opportunity. And they're like, okay, guys, I'm going to go for it. I'm taking control of this country. I'm going to be richer than I ever imagined. And I'm going to go for it. And I'm going to have all the power in the world. That's what the kinetics will get you. And that's by the, well, that by the way, to your point, Rom, you were talking. talking about this earlier is the leverage that Trump needs to create if he wants a way out of this. Like if we talk about manufacturing leverage out of nothing, you've got to create a path to winning for the other side who you're going to be negotiating with, right? Like how do you put them in a better position than they otherwise would have been in? And if you look at people who have successfully resolved these conflicts historically, in fact, we can go to how the United States handled

West Germany and Japan after World War II. The answer is if you want to create a winning condition, for both sides for one to cease the conflict, it's actually going to need to be very profitable and viable for both sides, essentially, to have that relationship. So if Trump is trying to manufacture leverage, I agree the stick is very important here from creating leverage, especially when you're talking about a religious fanaticism type argument. But the other side is there's got to be the carrot. And my question is, what is that carrot? Because, hey, we'll just stop bombing you as not alone itself a carrot. How do you guys think that? Besson gets the 10-year yield under control.

Because that is something that is just not... What's that? Yeah. $400 billion in incremental monthly deficit spending. That's one. All the prices are going up. That's two. You have a tiny financial conditions.

He can't control that. There's nothing he could do. That's part of the strategic level. Well, I was going to say... Actually, I think he's working on something that might help with that right now. If you saw the announcement today of the 30% bounty for finding government fraud and other things like that, we get to the point of how do you start dealing with the financial conditions? Like fundamentally, the administration is not the problem there.

It's Congress. Like if you look at the budgets, we've been passing since COVID, it's just been up, up, up, up. When was the last time Congress passed a budget that spent less money than the previous year? But that is the paradigm ultimately we need to be getting to. And I will remind everybody the last time that really happened to the United States was under Bill Clinton. So this has been a problem that's been underway for 30 years now. But the fundamental answer is y'all are spending way too much money. Yeah.

Yeah. And now there's a lot of cities. He's meant to replenish munitions too. It all comes back to spending. So let's talk about what markets are doing here because we've had the worst month in a year. Rom, the S&P closed at what, 6,368-ish on Friday. It's the fifth straight weekly decline that is the longest losing streak since 2022. The Dow was down 1.7%.

NASDAQ is down more than 10% from the October peak at this point. Year to date, I believe the S&P is down roughly 7%. The VIX has continued to be elevated. And Moody's said there were. recession model is it a 50% probability. Goldman has raised recession odds to 30% and others like Wilmington Trust, etc. are following. Part of the problem here as well is when you have a supply shock,

the standard monetary policy tools like, we can change interest rates, but that does not create more oil. So, Rom, let me ask you, as we're looking at all of this negative information coming out of the market, it appears to be pricing in a prolonged conflict, conflict, if things proceed sort of as you were predicting, what is the downstream impact? What should we be expecting from here? Yeah, QQQs are in correction territory now.

I think the downside could be something like 6,6,600 in the S&P or 15% correction, something that pulls you back to the Liberation Day valuation lows. This is more serious in Liberation Day, though, because you have factors outside control. such as the price of oil, which is inflationary. 53% of the S&P market cap depends on that. You've got consumer spending that's pulling back. Consumer discretionary names will get hurt. And already you're seeing commodity prices like wheat, corn, agriculture going higher,

which creates more inflation at home. So, yeah, I think the first time I said there was a something burger was when this broke out five weeks ago. Like this is a, you know, war is highly inflationary. It's just not a good set of background conditions. You know, I'll reiterate what I said before, you know, you should stay small, have excess cash. This is not a market where you want to be a hero. What I see are continued de-leverging from institutions and retail investors.

I also see a lot of denial and complacency on Twitter. I see people talking to other people. into buying these stocks that are down 40 to 50% and that they're trying to buy the dip. The dip keeps dipping. They're referencing fear and greed indicators which really don't have any relevance given the broader backdrop and structural forces and facts around the Strait of Hamoos. This is like a sentiment reflex kind of thing. These are legitimate issues.

So at the same time, there's starting to be some value emerging. You know, it's not back up the truck, but like I picked up Berkshire Hathaway last Friday. It's got a price of tantra book of 1.3. I picked up Microsoft. I picked up meta at 17.5 Ford PE. So I think there's a flight to safety to U.S. assets. I think names in large cap tech, but not all of them. Not all of them.

By any stretch, Netflix is still expensive. Tesla is egregiously overpriced. But they're pockets. It's right. Look at the leaders in the market that had the highest relative strength they've rolled over. Whether that's micron, lamb research, bloom energy, the industrials complex, which I have shorts on, that crack today, names like a teradine, caterpillar, John Deere.

That's a bubble. That whole category is a bubble. So this bubble existed before the conflict and people were bulled up on Goldilocks and now you have this torrent of negative information. hitting market. So people are trying to adjust. They've got Vue app orders in. And there's just a simultaneous degrossing so that whenever you see a market rally, it gets sold off. You had a gap up today. It gets sold off. People are being trained to sell rips, taking that advantage to de-gross. Biotech is rolling over. Emerging markets are getting whack by a stronger dollar.

So I'm sorry, guys. I wish I would be more bullish for you. I was bullish, I think, up until five weeks ago. But now I think it's just a very caustic environment for risk assets. Yeah, I mean, it's a flight to fund. It's not a flight to safety. I mean, it is, but it's also a flight to fundamentals. And that's what I'm hearing, right? For the, for the right companies with the right fundamentals, when sentiment is down, it actually is a pretty decent setup. So I think you need to double down on fundamentals, acknowledging that there's going to be some near-term macro stress. How do you feel, ROM about Bitcoin, right? Like, Bitcoin. Bitcoin's actually holding pretty well at 66K here compared to some of the carnage elsewhere in markets.

It's kind of chopped sideways. I was going to say we talk about the equities market here, but from a crypto perspective, it's actually the one thing that's been holding up decently as this has started. Why do you think that's- I think a lot of this crypto, yeah, Bitcoin's held up quite well. It's really notable to say that. I think a good chunk of that is just STRC flows. That's it.

So Michael Saylor launched another product. It's being heavily marketed. We had a new client joined today. I looked at his portfolio. He's got STRC. He said market sell. We're getting out of that one. And that's creating inflows to Bitcoin.

This is not a healthy bid. So it's hard for risk assets to how to run this. When it comes to finding good names and with good fundamentals, it's just very difficult to find those assets. This is my day jobs, what I do. It's my night weekend, all the, like, it's like, Berkshire Hathaway is not bad. It's not a screaming bargain. You know, there's some opportunities here and there, but the tides around these companies are under pressure.

Like software, software, you still got companies like MongoDB and Datadog that have 50, 60, arm 60, 80 times earnings. It's hard to find that one nugget that can rise above when the entire theme is under pressure. under pressure due to valuationary rating because of higher interest rates. So if I'm hearing, if I'm hearing you right, if we're talking like Mag 7, you think now is when the chickens start to come home to roost for a lot of like the AI hyperscalers who have been spending a huge amount on CAPEX, like impairing their forward cash flow, no longer doing buybacks, right? Like is the rubber meeting the rubber?

Yeah, all that a lot. I mean, they were amongst the first to feel the pain. So they took their lumps earlier. And there's some value in some pockets of that category, but not across the board. You have to pick and choose your spots. So on the crypto space, you know, crypto is very responsive to liquidity. And gold has sucked out a lot of liquidity. Oil is now sucking out a lot of liquidity. But it's still been pretty resilient.

And again, when you step back, and we should talk a little bit about the Clarity Act, whether Clarity Act goes or not, I think if it does go, go, that's going to be a very, very nice tail win for the asset class. But we couldn't imagine a better regulatory environment. I mean, I was at the Digital Asset Summit last week. The number of new faces coming into this space coming from institutions who do care about fundamentals, it was profound. I think it was the most signups they've ever had, right?

And so, yes, macro is macro in liquidity. When you're a crypto investor, you have to be very mindful of. But there are these underlying fundamentals that are, and macro themes behind the scenes that are coming together very nicely. So when those black clouds lift, I think this asset class has shown that it's here to stay and that it's pretty well positioned coming out of this. All right. Well, before we have a bigger argument about crypto, given where we are on timing, we do need to go to our second ad break. So before we continue, another word from our sponsors. Step into a new era of wealth.

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Access enhanced interest rates. reduced borrowing costs, and crypto cashback on swaps. Get started today at nexo.com slash unchained. So welcome back, everybody. And for our next segment, we're going to talk about the public chain problem. And at the start of this, I want to say, like Chris, I attended Das. And it was a very impressive event this year. So first of all, good works to block works in the team for putting that on.

events or a tremendous amount of work sometimes. But the crowd, I think, was maybe the best mix of institutional along with crypto that I've seen in quite a while. And despite the despondent mood among altcoins, I can say with certainty that was not true among traditional financial participants. But this paradigm is also starting to reveal some of the fault lines that exist within crypto that have been under discussed. One of them is the emerging brawl between Canton Network and call it many of the public block. And everybody else. At least some people. Like I might argue there's a third faction here that right now is staying out of it watching the two brawl. But so Canton's co-founder, Shalkfeer, has been telling regulators and institutional

buyers that, quote, ZK proofs are too dangerous for mission critical financial infrastructure. And this went fully public. He referred to Solano's April 2020. 25-0 day and its ZK-powered confidential transfers that could have allowed unlimited token minting and nobody, quote, knowing if it was exploited. Obviously, ZK. SIG's co-founder, Alex Jluchowski, fired back with a tweet thread, and then more things were happening here. So on the Canton side, they continue to add super validators, like Visa, for instance, as was reported on Unchained. Don Wilson has been criticized. MEV saying that it's not appropriate for people to reorder transactions to extract valuable,

quote, that's just not suitable for financial markets. And the industry has been fighting back. Meltem DeMir's Rebecca Reddick and Omead Molokon, friend of the pod, have all had things to say about this, calling it things like a special or permissioned interest at work, a grossly outdated view on MEV, or, to quote Omead, MEV, a risk of blockchain says guy who backs corporate database alternative where a single entity can steal everybody's money. There's some strong opinions on both sides of this. So I'm going to pause there after describing this fight. Chris asked you as somebody who's been investing in and looking at the space for a while. What do you make of this brawl? I mean, it's a really, really interesting

dynamic going on. I'll be honest with you. Eric over at Canton, DA Holdings, he got me into crypto, like a really, really, really long time ago. So I've known. these guys forever. And people fail to realize that that not canton itself, but DA Holdings is about the same age as Ethereum. I mean, they've been around forever. So look, the debate is, there's a couple of things. There's also the MEV debate going on where Don Wilson said last week, hey, you know, this MEV stuff, it's just not institutional ready. We should talk about that. But in the bigger conversation between, you know, private permission chains versus public chains, Look, I think that there's enough for everybody, but it shows that we're in this institutional era where everyone's fighting for real estate.

Everyone's fighting for real estate. If you look at DTCC, right, who have they prioritized? Canton's on there. Ethereum's on there. No one's sure which way the market's going to go. So the competition is as ruthless as it's probably going to get because once you have that real estate, it's hard to push you off of it, right? my personal take is that different strokes for different folks like if you're an institution and you know a lot of them we're investors in Canton for a very long time that solution fits their

needs other folks there's some real value in Ethereum and Solana but it really comes down to differentiation how are you going to differentiate your chain and then which applications thrive because of that differentiation. It's as simple as that. And it's not one is better than other. I think it's going to be very, very app-specific, right? So let's look at the theory of main net. Maybe not the fastest thing in the world.

But what's its edge? Its edge is decentralization, permission list, public, right? No one can shut it down. No one can roll it back. And that's its edge. The Crops thing makes a ton of sense in my mind. They're leading with censorship resistance. What is Solana leading with?

Speed, right? TPS. And what's Canton leaving with? Privacy, right? And permissioned and other things of that nature. Institutionalization, right? So I just feel like every single, it depends on the app. It depends on the institution.

And it depends what app the institution is trying to achieve. But I do think you're going to see liquidity throughout. Who's winning the stable coin game today? Ethereum, lesser extent, Tron. But we know you and I are going to have a debate about real world assets here in a second. But again, it all depends. And I think the great thing about the space is everything's programmable. Everything is customizable.

And I just feel like you're going to find different apps thrive in different places. So the interesting part to me hearing this debate was that being fair to both sides, there's elements of truth on both sides. And I think they reveal how underbaked many of the current solutions are. So I'll say something that I think everybody in crypto gets angry with me when I say, but the blockchain that the majority of financial assets will be trading on in 30 years probably has not yet been created. And the reason I say that, Chris, you make an interesting point about taking territory is there is a vast, vast middle ground between a very

permissionless ETH and a very permission private bank chain or can't it that is mostly unexplored. And if there are explorers, they are the explorers who are like deeply disfutable. favored by the market right now, like the Stellars and the avalanches of the world, that everybody is just ignoring as they sort of go off on the Y axis while everybody is fighting about the X axis. And the reason I keep coming back to this, and maybe it's the brain damage from having run a stable coin, is that if we think about ledger technology that is decentralized and permissionless, and then we think about real world assets, then regardless of what the rules of your ledger are, The ultimate dictator of the real world assets are going to be the courts, right, and the legal system in the place where you have issued this asset.

This is also something that many financial and regulatory people are missing is removing from an account-based world to an issuer-based world for these things. That is a big change. But the reality is, let's take Paxos where I used to work, so I can use them as an example. If I get a court order from a federal judge to do something with the tokens at Paxos, and I want to tell them no, I am going to jail, right? And so the position that that puts you, it is the rules that Paxos will follow or whatever a federal court tells them the rules are. And so you need to be aware of those rules and willing to reflect those rules on your chain, because if you don't, it's not going to be the ledger of record. So my concern with Ethereum going in that direction is very simple, which is that

if there's a disagreement between your ledger and the real world, how do you get your ledger back in alignment with the real world and will you get your ledger back in alignment with the real world? And if you don't, you're going to break stuff. Because the ETH problem, like as I've described it, why Chris, they continue to be bad with me over at the Ethereum Foundation right now is not that I think you can't have a permissionless ledger with real assets on it. It's that if you want to do that, you should not have smart contracts and complex interactions. Because, like, to give a very live example of something that's on there right now, if there turns

out to be a decent amount of Iranian money on AVE in either USD or USC, and a judge freezes the entire AVE lending pool. The stable coin issuer is not going to tell them no, but then you brick an entire protocol, right, which will have a commingled cascading effect. We're back to like 2008 in derivatives markets. And so to me, it becomes one of those clarity of vision type issues back to the strategic level of thing, is if ETH truly wants to be decentralized, the Ethereum foundation should be hammering on people every single day to reduce complexity and inter-conductivity and to not build things that if somebody pulls that one jenga block the whole thing falls over and if you don't want to do that we move towards canton now the problem with canton is not call it a technical design one

there have been some critiques there but i think all of those are fixable i think they have a governance one because like rom actually i remember you and i at one point we're talking about this when we were having dinner is the idea that you can start a private chain with a bunch of money from a small, specific group of financial entities and have everybody adopted by having to pay into that thing is just not a thing that happens. Like, you're not going to get Jamie Diamond to make a gigantic donation to another bank to join a blockchain. And so I think the Canton problem is, if you look at DTCC, that worked because on day one,

they got all the big guys in a room and the SEC kind of held them at gunman. point made them all jump together. I don't think Canton's done that. So Chris, here's the question I'm actually going to put to you at ROM is, do we think 30 years from now either a theory of or can't know the answer? I'll answer that. I really don't understand your line of, I really don't understand your line of reasoning. I'll be honest with you. So you talked about the Paxos example, and I do think we have some big security problems that keep me awake at night. And that security problem is related to latency. So even if you had an any chain, let's just say, if you have a tokenized equity and it's out in some chain, transfer agent's tracking it, everyone's happy, it gets hacked.

You can say, yeah, but the transfer agent know who's is what. The problem that you have is that if somebody moves very quickly and swaps it off into Bitcoin and bridges somewhere, you're gone, right? So we have a security problem that has to be solved. The great news as we've talked about over the years is that we can track it. I would have introduced privateers in the market structure act, and that's going to take care of a lot of our practice security, but we can talk about that later. But getting to your point around Ethereum,

what I know about Ethereum is that it's an ecosystem that tends to evolve in very difficult ways. Moving from proof of state, proof of work to proof of stake was like flying an aircraft and changing the engine. And it's an ecosystem that continues to evolve with the market. And we can talk about that. So is it going to be around for 30 years or not? That's what they're trying to do.

And their edge is to make it censorship resistant. And so where I struggle with your examples is as follows. If I have a stable coin, we agree that you can freeze and seize. We agree that the stable coin is centralized. But why can't you, why can't you house it, stake it, put it in a pool, why can't it be on a decentralized censorship resistant blockchain? I don't see why. Now, if you deposit it into an application that's centralized, of course the regulators or the government or the DOJ or whomever, if that app is subject to censorship, subject to sanctioned, it will be sanctioned.

But again, it's almost like saying, you know what, guys, this internet thing, you know, you can't do anything sophisticated on the internet. You can't pay on the internet because, you know, no one can control it. That's the whole point. Like Iran uses the internet. They're tweeting, right? My point is that I don't see, like, I totally appreciate the fact that you have centralized assets, centralized applications. But I don't know why you think it's a problem to have a decentralized permissionless layer one. So my answer is I don't think it's a problem if you don't have the apps, right, is essentially the way I would put it.

Right. Because again, go to Avey, look at it right now. you have very large commingled lending pools. And if one of those contained sanctioned money, the whole thing will get frozen, which breaks the whole ecosystem and damages a bunch of innocent people. I'm more on Austin's side of things. But I think Chris used the word ruthless earlier, which is the exact right word to describe the behavior of Wall Street.

These investment banks have principal strategic investment groups. Goldman Sachs has one. They created ICE, market partners, trade web, whom we had on the pod previously. Their first instinct is going to be, if we're going to be customers of some platform, how do we maximize our own value capture and take this company public? They did the same thing with Visa and MasterCard. And the mistake that crypto entrepreneurs make again and again is they focus too much on product features. They focus on the features of the car rather than what the customer wants.

What the customer wants is control. They want to deepen their moat. They don't want expose them of the competition. They do want permissioning. They do want compatibility with existing norms and contracts in the real world, like trade disputes, for example, or the ability to handle a legal dispute or compliance with OFAC. So, you know, just because you have a G-WIS decentralized network with all sorts of a great. product features doesn't mean it drives Wall Street adoption. In fact, the initial instinct, I agree with you.

I'm not to go the other ways in co-op technology. So I'm not disagreeing with you. And by the way, I'm not saying, oh, yes to Ethan know to Canton. What I said earlier was that different applications will thrive in different ecosystems. You're right. Trade Web's an investor in Canton. Goldman Sachs investor in Canton. They're axed and I, and if those are my investors, I'm going to make sure that I'm going to solve their needs, damn it. So they have product market fit. Can't that. Anton guys are doing great. Like I said, they're the ones who got me into crypto in the first place, like a long, long, long time ago. And they're going to customize solutions for their Wall Street owners and their Wall Street supporters, totally.

But what I'm saying is that- So what market will crypto capture? Go ahead. Crypto? Would a trustless-publishness chain like Ethereum capture? What institutional part of the market is the Wall Street component? Okay, what segment of the market is up for grabs? legitimately upper grabs where some industry-led solution doesn't come to the fore and they seek to maximize their own value capture. Again, it depends on the apps. Could you see like repo migrating into a Canton for sure?

But the thing about Ethereum that I think we're also seeing a lot of people really like is, and I know the EF has pushed away from the layer two roadmap. Avalanche does something similar, Austin. You talked about them too. but you have the benefit of real customization, optimizing for a number of different value rules, cost, TPS or whatever, leveraging that Ethereum security and doing so in a cheap matter. So look at Arbache on Robin Hood, as an example. Look at optimism technology base and Coinbase.

So these are getting used, Inc. Cracken. Ethereum technology is being used and adapted by major crypto institutions. And Trad Robin Hood. So, like, why wouldn't that continue? But I think the real, if you look at Ethes, a layer one, the real value is the sense that it's censorship resistant. It's decentralized if we agree. That means if you're in Botswana or name your developing country of choice. Like, you can use this new internet and you can move value over that internet.

And no one can stop you. And that's its edge. So I want to. The sovereign neutrality is really the. edge. You need to, there's got to be a blockchain that's sovereign neutral. That's the edge of a wall street. That's right. But it's hard to it's hard to sell to wall street a pitch that you're sovereign neutral when they're subject to the sovereign. Yeah, I think your bigger problem is upstream of the banks on that one. Go try to sell sovereign neutrality the SEC or the Fed. They are

totally not down with that. So Chris, if like but they use the internet. The internet is actually a very different animal. because in the United States of America, we have the First Amendment. If the First Amendment did not exist, the Internet would not exist because the government shall pass no law regulating speech. The Internet exists because of the First Amendment that does not exist for money in financial assets. So the road to climb for free money is much higher. The assets, the centralized assets will continue to be regulated. All I'm saying is that I don't see any issue with a censorship resistant, layer one, a global settlement layer.

I don't see any issue with that. Regulate the activities, regulate the behaviors, regulate the centralized players. That's what we said from day one. And I have your hands off my decentralized tech. I want to be clear. I have no problem with ETH working purely as a settlement player that does one-way sends of assets or maybe even like bilateral trading of assets. To me, the problem that a lot of the people building on Eith have not thought through.

And your Robin Hood example actually kind of brings this to the fore is if within Robin Hood's four walls, something goes wrong. Robin Hood can solve that problem laterally. But what ETH is creating with the current defy ecosystem is an interlayered thing where it's Robin Hood, Coinbase, Cracken, OKX, Binance, like put whoever you want, and they throw them all into a pot. So a problem with one breaks everything for everybody. And then you need simultaneously.

But that's the point. It's unbreakable. It's unbreakable. I think what you're saying. Chris, it is not, no, let me, hold on. Let me give you a very specific example. We have an ETH pool right now with a ton of ETH and a ton of USDC in there. Okay.

And the USDC side gets frozen by circle. Does that or does that not break the pool for everybody? On which app? What's that? Uniswap. Again, it's about the app if the app is decentralized, I mean, that's a very, very high thing to achieve. But I think what you're saying, though, if you have a centralized application,

of course it's going to be subject to regulation wherever it's. based of course no but the u.s no the u.s.s.s. is the thing subject to regulation if there's 500 million of us be in there there's 25 million of iranian money right if there's a centralized application it would be subject to sanction as well correct but i'm saying if there's no centralized application if you commingle decentralized money you've created a ticking tie bomb the things that work are things that have a structure like mini pay on so i everybody has a segregated account So here's the deal. You cannot violate the laws if you're an individual, right, or an institution. So if I go into that pool and I trade with the North Koreans or the Iranians, I'm in trouble because it just broke the law.

But that doesn't mean I need to shut down Ethereum or I can't use Ethereum because I can use advanced analytics to look at the pools. And I don't trade with them because that's how it works. And I don't violate the law. It's not the technology that should be indicted here. the behaviors and the activities. But there's no way around the behaviors and the technologies implicitly involving open access things. Like the Iranians can bomb into that pool whenever they want. Yeah, everybody can then try to start withdrawing.

But now you're in a race between a freeze order and usability. And by the way, I don't think it's reasonable to put the duty on the average retail users to monitor all of that. Like that's just functionally not. But again, if the Iranians are using stable coins, then there's this thing we call freeze and sees, which we both know and love. And by the way, like no one hates money getting into. to sanctioned hands more like me, right?

But, Chris, you've just made my point for me. There is a thing called Fries and C's, so the commingled pool is going to get frozen, right? So what does that have to do with the later one? Right, but to go back to the point, the problem is the trilemma of permissionless, real world assets, and complex smart contracts. You can pick two of them. You can't have all three. If ETH is purely a settlement.

It's not truly permissionless, immutable, and trustless. Yeah, the legal system intervenes. It's not truly immutable punishments and trust. It's like the original concept of crypto was an anarcho-libertarian capitalist world, network state kind of concept that was free from the puvure of sovereign control. What's happened is crypto is really become fintech 3.0 and it's shaped, molded, and governed by U.S. laws. And so U.S. laws still prevail.

laws are layer zero. Totally agree that code is not law. Law is law, right? We all agree with that. But the point is that, again, it goes back to the fundamental argument. Do you regulate the coders? Do you sanction the coders? Or do you sanction and regulate the behaviors and the activities of the people that use the tech? That's where I am. But. And I was going to say, I think, the unfortunate answer to both of those as we look at essentially how we build things in the United States is you're going to end up regulating both for real world assets, whether you like it or not. Right.

To the except it's centralized, right? From day one, if you have a company that builds tech, that company is going to be held accountable for the tech. I think here we have a horizontal solution where if you truly have something that is, and again, incredibly high bar, because something that's truly decentralized, you know, something that perhaps has a million validators, right? You can't turn it off. You can't roll it back. It's very difficult. Chris, I'm not saying, I'm not saying we're giving court orders to the validators. I am saying there is functionally no way to build a uniswap pool that includes real world assets

that does not answer to U.S. courts. That is Rob's point about what the layers are. I agree. I don't disagree. Look, if you, if there are, this is the great thing about crypto from national security perspective. If there is a tainted pool, we freeze and seize. What you're saying is you're saying that creates this domino effect where you just can't trust anything because there's bad guys in the system. That's how blockchains were invented because we needed a way to be able to have trustless permissionless exchange of value in a very adversarial environment, right? That's the whole idea. Well, I want to pause you there. I'm not saying you can't trust anything.

I have no problem with holding like USDC at a personal self-custodial wallet. What I'm saying is all the commingling is what you can't trust. like that i guess let me be very explicit in the argument if eith wants to be the global settlement layer that is decentralized and have real world assets defy needs to go away on it i don't maybe defy in its current form needs to adjust you know i i hear you like we did there are some challenges of course with with sanctioned activities that need and we have no tolerate for that we also need folks that can proactively leverage the technology to take of those, you know, to freezancees to track privateer, you name it. So I don't think we're that

off. I just, I do think there's value in a trustless permissionless layer one. And I think it's going I think that is a humongous opportunity, huge mode for certain blockchains. Yeah, that's it. But I think I'm coming on time. I was going to say or L2s, to be fair. Like I don't have a argument against building L2s on top of that layer. Now, Chris is correct. We are coming up on time. So we will continue this debate at some point in the future. But for today, I have to say, thanks for joining us for this episode of Bits and Bips. We'll be back in one week to discuss more about how the worlds of crypto and macro and apparently genetic warfare are colliding. Until then, take care, everyone.

Thanks, guys.