Unchained - The Chopping Block: Arthur Hayes & Tom Lee; Hyperliquid vs Aster, DATs & ETH - Ep. 917

Episode Date: October 4, 2025

Arthur Hayes & Tom Lee map the new crypto arms race—Hyperliquid vs Aster, Plasma’s stablecoin rails, and ETH’s DAT-fueled supercycle. Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. Live at Token2049 Singapore, we’re joined by Arthur Hayes (Maelstrom) and Tom Lee (Bitmine) to map two battles shaping the next cycle: the Perp DEX war—Hyperliquid’s moat vs. CZ-linked Aster, zero-fee experiments like Lighter, and whether ~$500M/year token unlocks can stay “bullish”—and the race to own stablecoin rails, from Tether-affiliated Plasma’s zero-fee USDT chain to distribution plays like Tempo and Codex. We dig into DATs, mNAV compression, and Tom’s “ETH supercycle,” plus prediction markets (Polymarket vs. Kalshi) crossing into the mainstream and a surprise Zcash revival. If crypto’s future is being decided in trading venues and in money itself, this is where the battle lines get drawn.  Show highlights🔹 Perp DEX wars — Hyperliquid vs Aster: Binance-linked Aster surges as Hyperliquid’s moat is stress-tested; CEX tie-ups (Bybit–ApeX, Coinbase–Avantis) escalate the fight. 🔹 Arthur Hayes on Hyperliquid: 126x call but sold ahead of ~$500M/yr token unlocks (starting November); “bullish unlocks” depend on sustained dominance + real fees. 🔹 Lighter’s zero-fee perps: Can post-airdrop volume stick, or do profits migrate to HLP/LLP vault strategies as fees compress? 🔹 DATs & ETH “supercycle” — Tom Lee (Bitmine): Communications flywheel, mNAV compression, ~70 ETH DATs with many below NAV; consolidation/unwinds/ETF conversions amid SEC/Nasdaq scrutiny and ZeroG controversy. 🔹 Plasma stablecoin chain (Tether-affiliated): Zero-fee USDT transfers, heavy incentives, Binance Earn distribution—are flows durable vs Ethereum/Tron? 🔹 Prediction markets — Polymarket vs Kalshi: South Park moment; funds cite PMs for shutdown/Fed odds; 2024 election accuracy pushes PMs mainstream. 🔹 Privacy coins & Zcash revival: ZEC rally, Monero 51%-attack mention, and the ongoing listings/compliance tug-of-war. 🔹 Stablecoins to $4T? — Tom Lee: Micropayments + 24/7 rails expand TAM across multiple chains, not just Ethereum. Hosts⁠ Disclosures⁠ ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tom Schmidt, General Partner at Dragonfly  ⭐️Tarun Chitra, Managing Partner at Robot Ventures   Guest ⭐️ Arthur Hayes, CIO at Maelstrom ⭐️Tom Lee, CIO of Fundstrat Capital & Chairman of Bitmine   Timestamps 00:00 Intro 01:15 Token 2049 Reflections 03:55 Tom Lee's Role in Ethereum 08:04 Challenges & Future of DATs 13:09 Plasma: Berachain for Stablecoins  20:06 Perp Dex Wars & Hyperliquid 24:26 Fee Compression 29:59 Kalshi vs. Polymarket 39:52 Zcash & Privacy Coins Learn more about your ad choices. Visit megaphone.fm/adchoices

I don't know if people saw this tweet, but it was titled, Tom Lee's E-thesis is retarded. Do you have a counterpoint to what you saw coming out of the Andrew Kong camp, the doubters? Well, as you know, in the crypto world, retarded is a good thing. Not a dividend. It's a tale of two quond. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm named trading firms who are very involved.

I like that eat is the old mid-pomps. D-Fi protocols are the antidotes. to this problem. Hello, Singapore. Welcome back. So we were here last year. Let's do the quick intro. Hello, everybody. Welcome to Chopin Block. Every couple weeks, the four of us get together and give the industry insiders perspective on the crypto topics of the day. So quick intros, first you got Tarun, the giga brain and grand Puba at Gawlet. Yo. Next we got Tom, the Defy Maven and Master of Memes. Hello, everyone. Joining us once again, we've got Arthur Hayes, the Arbiter of Alpha at Maelstrom. Good afternoon, motherfuckers. Today, we've got Tom Lee, the Heath Bearer.

Aaron and Bull Poster-in-Chief at Bitmine. Hello. And I am Seab, the Head-Hipe Man at Dragonfly. We're early-stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please buy every token that we talk about. Yeah, exactly. Please keep talking about the XYZ for more disclosures.

So we're back here again, token 2049, and we were just reflecting backstage on what it was like last year. So if you remember, if you rewind the clock back to before Trump was our dear leader, token 2049, it was all about meme coins. There was Salonah Breakpoint next door. If you remember Iggy Azalia, there was this big scandal. And I remember you were on stage with us, and you were talking shit about Jason Derulo, who hit you up and wanted to throw a party with you, and you were like, screw off.

What is your, you had a celebrity run in again recently. Tell us about it. Yeah. So Waka Flaka Flame hit me up on Twitter. And he was like, yo, I want to like reinvigorate the Flaka token. And if you look at the chart, it's like zero, basically. He's a lot of vigor. Yeah.

It needs a lot of help. But, you know, me and my chief of staff got on to call them, and they pitched us something about streaming and attribution of artist. It actually sounds not too bad. I'd love to dig into it more. Okay. I'm not shitting on them directly. I mean, the token's dog shit. But, like, maybe it can be there.

Okay. I'm not buying it to be fair. Not what I was expecting to say. He's in it for the tech. Not for the token. Just vibe, bro, vibes. We all know artists in for the tech. Okay, that's very good.

What's the vibe been of token 2049 this year? traffic traffic that is true i would say it's like almost comfortably boring you know i contrast like the meme coins with now you walk around everyone wants to want to talk about stable coins everyone wants to talk about dats no offense tom but it's just like a very different vibe than like you said last year and like the egosalia stripper party yeah yeah not as many suits last year more stripper outfits but now you've got tom tom how does it feel being at a much more institutional version of token 2049 There's great energy, a huge turnout. I think there's been a lot of the right people here.

We've had tons of meetings, so it's been very productive. Okay. More productive than the stripper parties last year? I did not partake. That makes sense. Okay, so let's talk about DATs. So for those of you don't know, DATS stands for digital asset treasuries. These are the micro-stratiization of everything.

We have here on stage with us, Tom, who is the chairman of BitMine. Bitmine is by far the largest ETH treasury. They're huge, accumulating very rapidly. They've got about 2.65 million ETH, over 2% of the entire ETH supply, now being held by Mr. Tom Lee. It's worth noting we've seen a lot of consolidation in the trading volume around these DATs. It used to be we had all these different EF DATs in the running. Now, 90% of the daily trading volume of all DATs is just micro-strategy and Bitmine. Everything else is a tiny sliver.

this point of all the trading volume. I have to ask Tom Lee, the feeling from most people that I talk to is that you are the savior of Ethereum. How do you feel? That's a big job. Yeah, it is. It is. I think Ethereum was in great shape on its own. I think that the Ethereum Foundation has prioritized the right things that happened to have happened this year. And of course, stable coins have come along. That's really ignited the difference. demand for blockchain, and I think Bitmine just got lucky on the timing. Well, it's definitely true. There was a lot of other stuff happening with the foundation shakeup and just kind of

a repositioning of the Ethereum narrative. But it also does feel like you are now basically chief marketing officer of Ethereum. Got it. I can add that to my title. Yeah, I think you should. You should. Yeah, yeah. What's been your sense, Arthur, of the whole Datmania with respect to how it's moved

Ethan and reinvigorated the narrative? I mean, people love listening to this guy on C. NBC. So fuck it. If he wants to go on and beat the fucking drum, beat the fucking drum, brother. Like, let's go. So I love it. We need more Tom Lees. Every fucking shit coin needs a Tom Lee. Is that possible?

I feel like that's... Yeah, every shit coin. Great. Let me ask you this. What do you think you have done well that some of the other people trying to be the Tom Lees for shitcoins have not done well? Well, I think that bit mine Number one was really thoughtful in terms of communicating.

You know, we've kept the message really simple that ETH is in a super cycle. We communicate that through our website with our presentations and our chairman's message videos. I think BitMine has had a lot of connectivity to the institutional world. Kathy Woods made it a big public investment in BitMine pretty early. It's now a top ten holding for ARC. that's drawn on other institutional investors into it. And I think that that process has created the flywheel. And that's why we're the 26th most traded stock in the U.S. today.

And between us and microstrategy, as you point out, we're really creating the liquidity and the dads. Yeah. So what do you attribute then? So you guys are now also expanding beyond just Ethereum. So there was a recent announcement that you guys were, I think it was like seeding the Worldcoin dad, and you guys are like kind of got your eyes open.

Tell me about that part of the strategy. Well, I think Bitmine wants to play a role in helping Ethereum make it to the next 15 years. And that's helping identify projects that are important that will use a lot more ETH and burn gas. It's also helping seed other payment rails that come onto ETH. And, of course, we're working very closely with the Ethereum Foundation to really identify and prioritize upgrades. So I think part of that is also investing. in projects that really stand out. So, Orbs, 8Co, which is a World Coin Dat,

as A16Z points out, out of the 11 things that AI really cares about, one is proof of humanity. And World is really one of the first projects. They're almost 17 million people that have been verified human. I mean, I think protecting humanity is a big priority on the blockchain. So one of my pet theories, I think we've talked about before on the show, is that part of what DATs is that,

do beyond just, okay, it's an institutional vehicle that you can invest into the underlying. It also allows there to be this sort of Wall Street CEO for a chain that can kind of do things that the foundation can't do, right? It's sort of like, look, you know, Vitalik or Tamash who runs the, co-runs the EF, he can't really go on CNBC. He can't really like bullposts Ethereum quite in the same way that you can. He can't like post-TA. It's just like a, you know, it's not cool to do that. And so in a way, these DATs, they kind of allow this outsourced chief marketing officer to speak a different language to Wall Street, which is something that crypto's really been missing, despite the fact that it's been so financialized. And I think you are, in my mind, you're kind of the epitome of that. Curious what you guys think of, like, going forward, the DAT stuff, we can see very clearly it's dying down.

MNAVs are compressing. Few and fewer, one of these are coming to market. How do you guys think, like, where is this going? What are DATs going to be in two, three, five years? Well, I was going to ask, Tom, I feel like the projections and the timeline for Dats, it's so, it's accelerating and moving faster than I think even we thought. I think most ETH stats are now below MNAF. So what do you think they're going to do? Are they going to dump a bunch of ETH and try to buy back the shares? Is someone going to scoop them up? Are they going to pivot to AI? What would you do or what do you think they're going to do? Yeah, someone told me today there's 70 ETH debts, which is a lot. You know, if you look at traditional public markets, investors can back two to three, maybe four. So there within that universe, you know, there'll probably be multiple winners, but institutions can't buy 70 debts.

I think the ones that are trading below MNAV have an existential question. I don't think a debt should trade below NAV. So there is a negative message from that. I don't know if they should convert to an ETF. I don't know if they should unwind. They could consolidate. I don't think they should trade below NAV. I mean,

but of course it's the market is saying something. The skill issue is what you're saying. Yeah. I mean, you know, no ETF trades below NAV. And so a debt shouldn't trade below that. I think if they threaten to turn into an ETF in some way, then they would always trade it now. I mean, that should be the floor.

To run what's your take? Well, I definitely buy the consolidation thing. I feel like the Salana debts have really been messaging this like, we're going to consolidate. There's no way there's going to be 20 of them. But the thing that's weird to me is there's still people launching debts for like low market cap coins. Like one to three billion dollar market cap. I don't understand how that's even possible to keep those things alive. Like why are people still launching them?

Because the baker makes 5%. You don't have a fuck. Yeah, but like I feel like the people running those. Like that's only like it's a nightmare. Imagine, Tom, you had to run 3 billion market cap coin debt right now. And someone's like, yeah, I'll give you like 1% of the float, but you have to manage that.

Like, would you want to do that? Yeah, I mean, it seems like that could break down the reflexivity. You know, the reflexivity you want is that a debt is a permanent holder of the token, but you don't want them to be so big that you actually, the power law has negative attributes. That's why BitMind doesn't want to really exceed 10% of Eath, and the target is 5. So if there's a small coin with small, you know, float, I think that the dat might help communicate the virtues of that coin, but you don't want it to be so big that it's the bag holder. There was a lot of drama around this zero-g dat, which is a token that went live recently, but the dat closed before the

token was live. So they, they, like, contributed tokens that did not have a market price and, like, marked it to some, just some number that they were like, yeah, it's worth this. So that being said, we've also seen that the SEC is kind of pulling the brakes on a lot of this stuff, where apparently there's been, there's been some reports of insider trading. It looks like the SEC is starting to look into it for, you know, DATS kind of pre-closing and all this, this funny business. So I think people realize that, especially the NASDAQ, also tightening some of the rules around around dads. I think the ones that are cutting corners are likely to get a lot more eyeballs on them. But I think the story increasingly is one of consolidations. If you're not big, if you're not at

scale, if the asset's not big enough and serious enough, the dad itself is not even going to get trading volume. If there's no trading volume, you can't really do an ATM, in which case, what's the point of doing this? You just kind of locked up some capital and threw it on the stock market, but no one's trading it. So now with Ether, there was actually, there was a post that went viral that I want to get your reaction from, from a friend of the show, Andrew Kong. So Andrew Kong, I don't know if people saw this tweet, but it was titled, Tom Lee's ETHesis is retarded.

You got about 1.5 million views. And basically his claim was that, yeah, look, it might be true that stable coins are going Ethereum, R2A is going to Ethereum, banks are going to use Ethereum, but they're not going to pay fees. I'm always paying fees for any of this. This is all just a meme,

and you should buy, I don't know, robotic companies. I guess he's super big of a body company now. Do you have a counterpoint to what you saw coming out of the Andrew Kong camp, the doubters? Well, as you know, in the crypto world, retarded is a good thing. I took it as a compliment. Okay, okay, very good. I'm Eth-Tarting. There you go.

Good response. That's a very good response. Wow. Okay. This is why this guy needs to marketing every coin. That's why Bitmine is number one. There you go. All right, let's move on.

Let's talk about plasma. So speaking of stablecoins, plasma is a new layer one that is a stable coin chain affiliated with Tether. So I want to get a quick show of hands from around the room. How many people have farmed plasma? Or they have any plasma tokens? Hands? Okay, I see, maybe like...

You're lying. A lot lower than I thought. Very low. I'm surprised. Okay. Not a lot of people farming it. Well, it was a big farm. So far, it was one of the most recent token launches with a gigantic air drone. It's now trading at about 8.5 billion FDV.

So very, very large valuation. They've got over a billion dollars circulating in total supply. Very large air drop. So just a bit of background on the chain itself. It was incubated slash invested by Tether. It has zero fee U.S.C.T transfers. And the whole idea is that it's going to be a stable coin chain. We've seen a bunch of these going so far.

We invested in one called Codex. There's another one called Stable. Of course, there's, what's that? We're codex too. You guys are also in Codex. There's also, of course, tempo and ARC are also the corporate versions of these Sablecoin chains. So the question is, okay, we've got a very, very high nominal valuation for plasma. And despite that, right now there's really not much to do on plasma.

It's just like kind of a gigantic farm. I think they're blasting out something like 500 million a year in incentives to just move your USAT onto plasma. So thoughts, reactions, stablecoin chains, is this the new meta? And does this potentially impair the Ethereum thesis if you've got chains like this that are just trying to suck out some of the stable coins apply away from Ethereum? Because if you look at the outflows this week, in-flows outflows, I believe most of the stable coins were pulled from Ethereum. And so you see Ethereum, stablecoin outflows going directly into plasma.

I guess it's probably the function of the farm, right? If you have a positive yield, then you'll do it, right? and if they don't create value after that, then they'll all come back. It's like all the other games you've played for a decade on all these tokens. So you're like, whatever's farm. Maybe it'll be, yeah, it's a farm, right?

And then it has to accelerate above the farm and then we'll see if there's real value there. In the spirit of X for Y things, it's clearly barrow chain for stable coins. Barrette for stable coins. Like, I mean, that is what... There's a plasma baddies, though. Yeah.

Elaborate, elaborate, elaborate. Why is it barrette chain for stable coins? Just because it's like very heavily incentivized on long. launch, new L1, everything is about farming. Like, the stable coin thing almost doesn't matter. Like, yes, everything is paid in tether, but like most of the interest in it was just like farming the XPL rewards, right? Like if you looked at almost all the yield, it was like 60 to 70% XPL rewards minimum.

So on most protocols. So it kind of had the vibe of Barra Chain where it was like, everyone was like ready at launch because everyone, it was kind of like publicized, this is the point that was this chain and, you know, providing liquidity on day one was important. I do think the interesting thing was like the Binance Earned integration, which got two billion of SUSCE, or U.S.C at least, on there. That was like, that was much more, you know, scale-wise crazier than I think. It's clear their BD has been amazing. Marketing has been amazing. Like, they've been absolutely on point executing. But I agree with you. I guess my question to you is, what would you recommend

they do? Like, what do you do from here to not become bear a chain in your... I just don't know how you get stablecoin flows to move to your chain. Like, it just seems unlikely, right? Like, you either have to cannibalize Tron and, like, who is the biggest XPL farmer? Certainly, his majesty of Tron. Like, it's not fucking someone... His excellency. His excellency. Like, it's like, okay, well, great. Like, clearly you're not going to really cannibalize strong volume. You're not going to cannibalize the eath volume. So where is the net long-term flow going to come from? I just don't, for all the

stable coin chains, to be honest, other than tempo, it's like hard, I have a hard time understanding where the natural flow is going to come from. Oh, Mr. Jake? Yeah, I mean, it is a little worrying sometimes when the only thing you see someone talking, or people talking about for a new project is how everyone said it's the most amazing farm ever. And I'm like, it's kind of like the SBF token in a box thing where it's like, if everyone's making money, you get the fuck out of that room. I think for plasma,

yeah, it's, I don't think there's anything wrong with the stable coin chain thesis. I think it's actually good. But I agree with Turin. It makes more sense for existing applications that have some sort of end distribution, basically, you know, slowly moving their own internal kind of flows onto some new chain, which I think is like the stripe tempo thesis. I wouldn't be surprised if some exchanges are looking at, you know, this exact same kind of play. But yeah, like the average, you know, tether holder, they're actually holding it through some, some other sort of, you know, end distributor. And so I think those are the people that actually have the leverage to be able to do something like this.

Tom, other Tom, what's your take? Well, I mean, I think stable coin is going to be a huge market because we're just only 300 billion. You know, I can see a path to $4 trillion easily. That's what Treasury Secretary of Best is talking about. That's probably not even considering the fact that micropayments are going to be really big users of stable coins because they you know, the tether is 12 digits. I mean, that's how you do micropayment. So, well, this all take place on one chain.

I don't think you could actually fit it all on Ethereum. So it makes sense that there's other chains experimenting, and, you know, I'd like to see a lot of things succeed. Okay. Yeah, I think you make a very good point, Tom, is that you kind of have to bring the flows in order to establish a new chain for just stable coins. If you look at Tempo, Tempo clearly has a path to doing that with Stripe

in the B2B flows that they're going to be originating. And I think if you look at Codex, which is our portfolio company, they're really doing this kind of local B2B, Southeast Asia, go-to-market, and they're originating a lot of flows as well that wouldn't otherwise be using stablecoins. But if you're trying to suck stablecoin demand that's already somewhere else, that does feel hard because the Tron network effect is so sticky. It's so powerful. And the same thing is true for Ethereum, right?

For the people who just have stablecoins on Ethereum, it's kind of like, yeah, I mean, I could pay you on this other chain, but it's just much more likely that we're both going to Ethereum wallet. And I mean, I guess also the bridge thing yesterday where they're kind of Phantom issued a stable coin in Solana. So like I kind of don't, I see like the flows going places are already users, not necessarily places that are trying to attract users solely with them. What was the issue with the bridge? No, no, like Phantom issued a stable coin using bridge on. Oh, oh, I understand. Right. Like so like that type of stuff just makes me think like, why would I go to another chain. Like if I'm an app, I'm going to issue my own sort of white labeled stablecoin

from one of these like five providers who do it. Am I really going to go to a new chain? I don't think so. Yeah. Yeah, that makes sense. Okay. So let's sort of here, speaking of bridge, let's talk a little about hyperliquid. So hyperliquid, of course, is the largest decentralized perp-dex. And there's now been a war that has broken out that increasingly people are calling the perp-dex wars. So at the top of the perp-dex wars right now is, Aster. Aster is the CZ slash Binance Lab slash BNB chain affiliated decks. They are now trading something like, what is it, like 60B a day? I saw that on DFLAM. Is that real? I mean, it doesn't really matter. Is it real or is it? It's being traded. I don't know. Talking about it so that that

they succeeded. Yeah, yeah, yeah, exactly. Exactly. So it's happening one way or another. We recently saw Bybit announce that they were doing something more with, with Apex, in which we are investors. Coinbase getting closer with Avantus, which is their play in the PIRP deck space. So it kind of seems like now it's not just a war, it is a broader war that's brought in other combatants of the centralized

exchanges kind of picking their horses to fight against each other in the PIRP deck space. So Arthur, you were recently in the headlines for a few things. So one, of course, I remember you made a big call that you thought hyperliquid was going to, or its token, was going to a hundred

26X. I did say that. You did say that. And then about a month later, you sold your hype position. I did sell it. You did sell it. And then your claim is that the reason why you sold was that hyperliquid has a sword of Damocles hanging over it. Explain what was that sword hanging over hyperliquid? So yeah. So obviously there are these unlocks, right? And it's not like it's secret. Everyone's known about it for a long time. I think it's like $500 million a year starting in November that the team is eligible to sell on the market. Now, it either matters or it doesn't. When hyperlipers, is the dominant, so a 60-70% market share, which it was circa a month like half and

ago, it doesn't really matter if they have these massive unlocks because everyone assumes they're just going to make more money and fees, buy back the hike token, and it's what they call a bullish unlock. So like Solana was, like 20, 20, 2021 or whatever it was. So that was the dominant narrative. Okay, cool, I don't care about unlocks. Then I was one more, one weekend, whatever, a month ago. Oh, go let me just check DeFi Lamo, see what the rankings are.

And then I pull it up and it was like hyperliquid. at like $4 billion or whatever. Then there is lighter, like right below it, like 3.9 and Astor like 3.8. This isn't good. It's competition. Now, not to say that hyperliquid can't dust them all because it's great tech and HIP3 and builder codes and all that kind of stuff, right, in two or three years, because I said by 2008, 2026X.

But fuck, man, I'm not going to sit around and watch the market reprises forward in my face. I'm just going to sell, sell on the sidelines, and wait. And either goes up or it goes down. Either hyperliquid demonstrates that it has a moat, that it can charge a real fee against all these other competitors, or it doesn't. And, you know, I'll reassess what the perp landscape looks like, or what is the new product or service that a perp deck is going to roll out that a client is willing to pay for, and it can't get instantly commoditized by, you know, a centralized exchange. They basically wants to make sure that nobody else trades on Dex's. So let's just take out the number one by making sure they make no money. Okay.

Thoughts on the hyperliquit sort of Damocles? You guys on board? I think the bullish unlock thing is very real. I mean, I think it's... Who should you buy it right now, hyperliquid? At this price? I mean, I think, you know, the phenomenon is it's like induced demand, right? Where, like, they figured out this blueprint and now everyone's copying it.

And I think, like, this market is just going to continue to blow up. I think it is this, like, phenomenon and, like, you know, evolution where there's like carcunization, right? Everything across these different species, they end up evolving to look like a crab because it's, like, very efficient and very robust. But you're buying the crab? Buying crab. Buying the crab.

You're buying the crab. Buy it or seller? What are you doing? Well, why am I preaching the value of perps to you? You should be preaching the value of perps to me. So I think everything's going to be purplified. And so therefore, this market's going to 100x. And so why can't hype sort of be alongside that?

Okay. So you're buying. Rose. Right here, right now. I think I'm buying perps. You know, perps. Okay. Come on, man.

We are a long hype. We are a long hype. So de facto, yes, we are buyers at this price. because we're not selling. Are we buying more? I mean, look, we also own a lot of perp decks. So like you, we're also investors in Leiter. We're investors in Apex.

We've got exposure to a lot of the space. Turud, how do you think about the Dex Wars are going on right now? I think to kind of Arthur's point, let's see how the lighter no-fee thing does post, you know, obviously mainnet launch today for lighter. Once the air drop happens, the real question is like, how sticky is the no-fee trading? and I don't think I can really make that much of an assessment until I see that. So I'm just a hold and wait until the air drop, which is kind of what Arthur is saying. So I'm not a buyer or seller.

I'm just flat. Don't you think that's the way the market's going to go, though, where it's just like you get fee compression over time and like, yeah, why not jump the gun? But the weird thing to me is that once you're feeless, all the real money that's being made is in LLP and the vaults and not in the actual exchange. And so like there's kind of this weird dynamic between like the vault side versus the order book side. Like that it's going to be fearless forever, right? I mean, right now it's still extremely. But we have to survive that. Yeah, yeah, exactly.

So like I don't know. If it turns out that the profits in HLP and LLP are actually where people are competing to allocate, it might look kind of different than what you're. Yeah, fine. But I don't think it's going to be feeless forever because right now even if you're feeling, even if you have fees, right, look at Astor. Astor has fees. It's making more than hyperliquid because of all the trading.

volume, but it's obviously negative margin because everyone understands that they're dumping tokens in the form of points, right? So whether you have fees or don't have fees, the negative margins are there for all of the pre-TGE perp taxes, right? Of course, but the thing is, if you own hyperliquid, are they going to survive at that multiple? Yeah, yeah, I don't disagree with that question, but if you look at Binance, right, so Binance was the first one to kind of take the market share away from Bitmex. BitMex used to be the monopoly, effectively, on perps. Binance ended up taking up the mantle in like, what was it, 2020? Yeah, that they end up becoming the number one.

And what you saw was that both, one, Binance eventually also lost market share, and the market got much more evenly spread across a lot of competitors. So today, Binance is like 40% market share roughly in Perps. But also the market has grown really dramatically, right? So DeFi is still very small relative to CFI in terms of the dex volume. And I think a lot of what these exchanges are doing is bringing in people who have never traded on a Perp Dex before. You can see, we went from in the DIDX days, it was like a few thousand people who ever traded on Perp Dex.

Now we're over 100,000 for sure. And with Aster, I haven't looked at the numbers, but I have to imagine there's a lot of new people, particularly from Asia, who are coming on to trade on these things, especially because they're in mobile apps now. And hyperlibly doesn't have mobile apps. Yeah, they're super slick. And I think, again, it's like, if you go back to like 2010 and you're an investor and you're thinking, do I buy Microsoft, do I buy Google? Do I buy Amazon? Do I buy Facebook? The answer is you actually buy all of them.

The market just continues to blow up. And yeah, maybe you can, like, pick and choose relative value with the edges. But, like, being under-exposed or being non-exposed is, like, actually the bigger. But they didn't all offer the same exact product. The perpetual swap is the same in every single platform. I think there's a commoditized product. There's room for a little bit of differentiation. I mean, you know, even in the exchange space, hey, do you have like a localized go-to-market?

Do you have particular markets? And you could say cloud computing also, you know, somewhat commoditized. But, like, hey, you know, the market is not perfectly efficient. But maybe if it sort of trends that way over time. Tom, what's your take bit my perspective on the Perp Dex Wars? I mean, it sounds like this is capitalism at work, right? Because you've got a product that really broke out. People sort of took notes, launched their own version.

But as Arthur says, it's going to be important for the leader to stay the leader. And if they're not, then the market really becomes commoditized. So, I mean, it kind of makes sense. I do think it's a market that's going to grow in size because to me, there's still, a lot fewer people in crypto than in crypto. Arthur, if you had to be an exchange founder again today, what would you do? Like, where do you think the opportunity is? Fixed income?

Not in perps. Yeah, I think there's a lot. Obviously, I'm invested in Pendle. I think Boros, what they launched is super interesting. Interest rate training is a much larger market. It's a lot more idiosyncratic. It's a lot harder to actually create something that a Dgen crypto person would want to speculate on. So if I had to say the next zero to one super successful product will be someone

hopefully its Pundle comes out with a very sticky way to bet on some way, some sort of interest rate within crypto, and it's fun to trade, which right now it's not really fun to trade. And that's why, you know, Perfx is and all that kind of stuff. Because technically it's a lot harder to do a fixed income, super sexy fun VGen product than it is to, you know, copy the spec on every single centralized exchange and not watch PerpDX. You think people are going to trade fixed income for fun in crypto? We trade fucking cats. Yeah, yeah, yeah.

We're going to make it fun. You know it's a traditional finance. It's like, people don't trade rates for fun in traditional finance either. It's a huge market. When you got a thousand X leverage, a lot of things become fun. All right. All right, fair enough. I think the second act, if you come out of retirement, I'd love to back your fixed income for fun trading platform.

But I might add, Arthur kind of hit the keyword, I think, betting. I think that's what crypto is great at is. And I know you're going to talk about it, but it's really the idea that people can do hedging and factoring and betting on different ideas. And so, I mean, that's really what is going to be the big market, right? It's basically betting markets. And, I mean, the breakout has been polymarketing, Kalshi, and there's going to be micro-betting. And it could be rates. It could be fixed income.

It could be on real estate speculation, whatever it is. Yeah. Okay. Well, with that, let's talk about prediction markets. So it's certainly one of the big metas of this year has been the excitement around prediction markets. Of course, the two big prediction markets are a polymarket in which we are a few of us. on stage our investors, as well as Kulshi, which is a competitor that's been regulated in the

U.S. and now has increasingly started to creep up in terms of its volumes to the point where now it's even and sometimes even flipping polymarket in terms of net volumes. Colchie, of course, has a partnership with Robin Hood, which is also sourcing them a lot of volume, specifically around sports betting. So a couple of things I want to talk about. First, there's a little bit of drama here at Token 2049 with Tom. Tom, do you want to tell us what happened with your panel? You know, I didn't think it was very dramatic, but I can see why some people would.

I obviously have been doing some panels, monitoring some panels here. I was asked to moderate a panel that featured, you know, someone from Kalshi. And they complained and said, you know, maybe I would not be the most, you know, unbiased moderator. Why do they complain? Well, just because of some social media activity, some of my tweets they might not like. Okay, I will, I think the tweet was, Kalshi is a team of little rats. Yes. Yes, that is true. That is the tweet. Well, you know, I think I try to be a pretty good moderator, ask pretty good questions, and I'll let my own bias he slip in. But, you know, maybe that's not coming through on my Twitter. So I got booted, unfortunately. But I was able to go get some, some kaya toast and coffee this morning. So it kind of freed up my Thursday morning, which is nice. Okay, wow. Okay. Well, in addition to that drama, there was a lot of drama this week about a South Park episode that just came out last week about prediction markets.

So the internet was a blaze that all of a sudden, wow, South Park, this cultural fixture, if you don't know South Park, it's like a kind of raunchy cartoon in America. It featured prediction markets, which featured both Kalshi and Polly Market. And so promptly, in response to this, Kalshi tweeted, there was a South Park episode purely about Kalshi. And then Polly Market was like, wait, what the fuck? Why? No, there was both of us who were in it.

And so there was a big fight on the Internet about who was this episode about? Was it more about Kalshi or more about Pauly. market, typical crypto, like fighting over very, very unimportant questions. But did you guys actually watch, did anyone actually watch the episode? I have not, but now I want to. I saw a couple clips. I think probably more people saw these tweets than actually, like, watch the episode. That's definitely true.

It was like millions of people interacting with these polymarket versus Colchie fights. But it does feel like now this is like the fight. You know, it's like the sort of Bitcoin versus Ethereum guys where it's like, oh, is Colchie, are they real crypto? Are they not real crypto? What's a different? Educate us. What is the major difference

between the two platforms? So Polymarket is actually on chain. Polymarket is actually on Polygon. They've been cryptinated from day one. Kalshi was a U.S. regulated business. They were originally, they were the ones that fought the battle with the CFTC that they won in the appellate

court to actually allow prediction markets in the U.S. So Kalsh, to be clear, industry owes a big credit to Kulshi for fighting that fight to allow prediction markets to be allowed in the U.S. But Kulshi has always been an off-chain business.

So they recently allowed USC deposits, maybe like a year ago in Kalshi. And they've also recently started offering markets on crypto-related topics, but it's not a crypto, it's not crypto. So that being said, they've recently hired crypto influencers. So I think it was John Wang and then Ultra, X-X Ultra. They hired both of them to just kind of like tell the Kalshi story to more of the crypto crowd. It largely because the crypto crowd was historically more skeptical of Kalshi. relative to polymarket. So that's the background. But I think now Kalshi is trying to be like, no, no, no, we're also crypto. We love crypto. We're totally, you know, one with the crypto community.

This is the thing I find weird, though, because it's, you know, they recently announced, hey, they just passed Polymarket, I think this past week in terms of, you know, volume for the week. But if you look at the markets, it's like 95% sports markets, right? So like, why, like, how valuable is like the crypto territory? Like, like, are these users actually so valuable? that is worth having this fight over, because it seems like they're doing pretty well themselves. Or, like, you know, I don't quite understand why this is like, yes, this is the king of the hill that we want to kind of fight over. It seems a bit strange. First of all, it's definitely true that whatever polymarkets market is is worth a lot of money to call sheet.

So they would rather take all those traders if they can. Secondly, of course, is that crypto traders will, as we've learned recently, they will trade anything. So if you can find a way to make the thing interesting and volatile, crypto traders are going to be on it. And lastly, I suspect that a lot of it is just like the narrative. Yeah. The crypto narrative is so big. They want to be a part of it. Yeah.

And I might add that Polly Market was so critical in how markets understood this election, presidential election. Remember, Pollymarket betting got every state correct on the electoral college. It called every state correctly. Nobody else called it correctly. And so if you think about how Wall Street is going to. use these prediction markets in the future. Whatever size betting took place on polymarket this last election, it's probably going to be 20 times bigger. I think that has

really changed people's minds. In fact, Goldman Sachs is now citing polymarket, betting markets on a lot of things, whether it's fed action, shutdowns. At FundStrat, we've been using polymarket for a long time. I think it's been so useful and I can see it, I can see why sports is the big thing, but remember sports can get micro. You can do local sports, but you, you know, there's, there's a big market. What do you guys use, uh, polymarket for? At FundStrat, what do you use polymarket for? Oh, all the time.

So giving example, there's a shutdown, the U.S. government shutdown. And so the question is, you know, will the shutdown end by June? There's another bet on Lisa Cook. And there's another bet on, is Fed Chair Powell going to be the Fed Chair in December? There's another bet that's pretty liquid on who is going to be nominated for, Fed share by December 2025. And all of these are real-time insights because for a while, David Zervos popped up, but then he disappeared. And I think this is, to me, this is real-time information. It's really the wisdom of the crowd, but it's been hugely helpful. I mean,

at Fundstra, we use it a lot. Yeah. Yeah, I mean, I completely agree that. I'm not placing bets on it. You're not placing bets, but your consumer also leaves the information. Yeah. No, I, this is a big part of the story prediction markets to me as well, which is that there's so many users of prediction markets who are not betters, right? It's like only really a small percent of the people who are getting value from the prediction market are themselves participants in the market. But the information externality is the main reason why these things are so socially valuable. I mean, I think fundamentally, prediction markets are closer to social networks than they are to trading. What do you mean?

So think about the Taylor Swift bet about the proposal where, like, like someone insider traded, whatever. They didn't make that much money from it. It was like tens of thousands of dollars. Someone insider traded Taylor Swift's proposal? On the whether she's going to get engaged on a certain day. And like this clearly there was someone who knew like a day before and you can like see it in the chart. Oh, okay.

Wow. Yeah. So this person made like tens of thousands of dollars. It's not like a huge trade. That thing got picked up by every press like media outlet across the world. They basically got tens of millions of dollars of media. coverage from a 10K punt. That to me is more like social network virality almost than the transaction itself

as betting was not the important part. The important part was someone proved that they had insight knowledge and then that became a new story around the world. And I think like that feels more like media and social networks almost than like pure betting, right? It's like kind of betting is like the engine in the background. But like the final outcome is like, you know, something that feels more like media. And that's kind of the weird thing about prediction markets.

They go beyond the crypto thing in that way. Yeah. So it's a market doing a token? So it's been reported that there are warrants for a polymarket token, but my understanding is that still TBD, nothing's been confirmed. And polymarket right now, there's also been reports that are raising a new round between 8 to 9 billion. I think Bloomberg reported on this.

So hopefully we'll be hearing news about all of this fairly soon. The other thing I should mention is that the causation with prediction market is, has also been both ways. So it's not just that prediction markets are, you know, causing these news stories that are emanating outwards about what's happening in the prediction markets themselves, but also they're affecting the real world. We remember the story, I think, earlier this year about WNBA, where I think it was like there were markets.

On the Court. Yeah, dildos getting thrown on the court. And there was a market of like, will another dildo get thrown in the court this year, which is basically a bounty to throw a dildo on a court? So luckily, I think that's behind us. I don't think that's continuing as far as I know. But I think we're going to continue to see some of this weirdness. And so my guess is by the next presidential election, like this last presidential election,

I felt like the polymarket was mostly considered to be alpha. You look at the polymarket and it's giving you information that's not price of the market. My guess is that in 2028, polymarket is going to affect the election itself. Because just looking at that is going to affect people's willingness to go out and vote or affect their willingness to back different candidates or for people to team up together and say, look, I don't care about your polling. Look at the polymarket. You got to drop out because you're hurting the odds of this other person in the party.

And so my guess is that information quality and the liquidity of that market is going to end up impacting the world of politics in a really big way. Yeah. Maybe we'll get some more political mean coins too so we can hedge them and do all sorts of fun stuff. A lot of different ways to express the same bets. Cool. So let's also talk about Zcash. So there's been for whatever reason. I don't know if people have been following the story, but there was a lot of.

of excitement this week about Zcash. So Zcash, for those of you don't know, extremely OG crypto privacy coin. So the most OG crypto privacy coin is Minero. It used to be called Bycoigne way back in the day, became Minero. It's probably the most used privacy coin today. But the second behind Minero is called Zcash. It was originally created by a bunch of professors who are building zero knowledge proofs in a currency. It was originally called the Zero Coin Protocol. Eventually became Zcash. They allow you to do both transparent transfers, which are not private, and then Shield of transfers, which are private. It's had a little bit of a revitalization lately.

I've seen a lot of Gen Z marketing coming out of Zcash all of a sudden, where previously it was kind of for these sort of crypto boomers, more my generation. You're just talking about one Twitter account called Gen Zcash. Is it? I see a lot. You see more than one? What's the market cap now? It's not just me.

What's the market cap now ZCAP? What's the market now is like $2 billion, I think? Yeah, yeah. And previously it was like in the hundreds of millions. So it's up like 60% just today. So I think they've been hitting this fever pitch of just tapping into the narrative all of a sudden that, hey, privacy is a big problem and it needs solving. Well, it's funny you mentioned Manaro because they had this 51% attack recently. That's right.

With the cars rubber. Yeah, exactly. It was crazy, right? AI Garth. AI Garth took over Madero. So I think like I was surprised that like that didn't affect the Zcash price and that this happened like a month later. You're related. You think people funneling profits from the 51% attack to go buy some Zcash?

I don't know about that. Probably a pair trade. Probably a pair trade. Yeah. Tom, what's your perspective about the privacy narrative? Because right now, that's one of the criticisms of Ethereum is that doesn't really have privacy per se. Yeah. Well, one, privacy is important.

I actually think that even government agencies use Zcash on Manaro. When they want to use payments, so it actually has a real use case. I might say privacy is something that certain people care about. A lot of people don't seem to care. So I don't know if everybody needs privacy. I mean, if you look at a lot of surveys, young people are willing to share more information with technology companies because they trust them more than they trust governments.

And so I don't think it's just going to be privacy on your wallet. I think, of course, there's going to be other forms of protection you're going to want in a world of AI and bots. And so, I don't know, the use case is going to grow. I mean, even proof of humanity, right? Just proving that you are Hugh is going to be important, especially now that we're getting spoofed by robocalls all the time. So what's your take on privacy coins,

these separate coins purely dedicated to privacy? I mean, they really work. I'm just going to say, I remember talking to some people at the agency level that actually, you know, there are use cases for those. So, I mean, look, if it's good enough for government work, it's probably good enough for other people. Wow, the government Z-Cash truth or conspiracy was like not one I'd ever heard. I don't think governments generally like privacy coins. I mean, so far they've been banned.

Yeah, travel rule type of stuff. Yes, but remember, there are reasons a government may need to use privacy. Right, right. So. Yeah, it's interesting. I mean, ZCash historically has been the one that regulators are most okay with because they have the transparent path. It's not all private by default.

Whereas Monero, my understanding is that especially a lot of Asian countries have delisted minero. You can't list Monero in like, I think it's like Japan, Korea. I think in a lot of places in the EU, no Manero listings anymore. Because it works. Yeah, you were a Zcash hater backstage. What's the... I'm not a hater.

I mean, I don't think it really works. I think I remember that a dinner a long time ago, maybe six or seven years ago. And there was someone from the FBI. And we asked her, like, what's the... What would you say is the best coin for privacy? and she said Minero and that's all I needed to hear. Everything, maybe she was lying to you and trying to honeypot you and using Minero.

I really hope he doesn't use ZCats. You just show at the club. It would be a lot easier. That's right. That's right. I think you were getting set up there, Arthur. But maybe time to rotate those wallets. Yeah. Yeah. Anyway, so I think that is up for us.

Thank you, everybody. And we will see you all next week. That was great.