Unchained - The Chopping Block: Crypto's Rebound, Reg Crypto, and AI Router Wars

Episode Date: August 28, 2026

The crew sizes up Bitcoin's rebound, the fight to bring Hyperliquid onshore, the SEC's new token fundraising framework, and why Stripe's OpenRouter deal could make AI inference markets look a lot like DeFi. 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. Tom and Tarun check in from Bhutan after lunch with the king, then the crew tackles Bitcoin's rebound, the path to a compliant U.S. Hyperliquid, the SEC's proposed Regulation Crypto Assets, and the growing overlap between AI inference markets and DeFi market structure. Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform. Show highlights 🔹 Tom and Tarun report from Bhutan after discussing Bitcoin mining, AI, and tokenization with the king. 🔹 Bitcoin pushes back toward $80,000 as ETF inflows and the debasement trade revive crypto sentiment. 🔹 The panel explains why a U.S. Hyperliquid would probably require KYC, surveillance, and separate liquidity. 🔹 Robert argues the SEC's $5 million startup exemption could reopen token crowdfunding for smaller projects. 🔹 Tom asks whether Regulation Crypto Assets solves an ICO-era problem that today's builders no longer have. 🔹 Tarun predicts financial engineers will try to scale the small-offering exemption through many token launches. 🔹 AI could overwhelm government processes by removing the bureaucratic proof-of-work that quietly rationed access. 🔹 Stripe's OpenRouter acquisition turns model routing, inference providers, and cached tokens into a DeFi-style market. 🔹 The hosts debate whether data rebates and inference tokens could finally revive crypto's 2017 data-ownership dreams. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tom Schmidt, General Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Robert Leshner, Founder & CEO of Superstate Disclosures Links SEC Regulation Crypto Assets: https://www.sec.gov/rules-regulations/2026/08/s7-2026-27 OpenRouter is joining Stripe: https://openrouter.ai/blog/announcements/openrouter-is-joining-stripe/ Timestamps 00:00 Intro 01:22 Tom & Tarun meet the King of Bhutan 04:13 Bitcoin rebounds and crypto gets hot again 08:10 What a compliant U.S. Hyperliquid could look like 13:14 The SEC's proposed Regulation Crypto Assets 23:53 Are the new token rules eight years too late? 28:23 AI removes the government's bureaucratic speed bumps 31:12 Why AI inference tokens could power the next cycle 34:13 Stripe buys OpenRouter and AI starts looking like DeFi 43:28 Router economics, data markets, and new security risks 51:01 Bull-market vibes from Bhutan and Asia Learn more about your ad choices. Visit megaphone.fm/adchoices

We had lunch with the King of Bhutan. He's actually very excited about AI. He told me he uses Claude Code and Obsidian. But he's been playing out with Kimi, and he was impressed with Kimi 3. What? Not a dividend. It's a tale of two Kwan. Now, your losses are on someone else's balance.

Generally speaking, air drops are kind of pointless anyways. Unimmedged trading firms who are very involved. I like that eight of the ultimate policy. D5 protocols are the antidote to this problem. Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider's perspective

on the crypto topics of the day. So first out, we've got Tom, the Defy Maven and Master of Memes. Hello, everybody. Next, we've got to Rune, the Gigabrein and Grand Puba at Gauntlet. Yo. Then we've got Robert, the Cryptoconosaur, and Tsar of Super State.

Hello, everybody. And finally, I'm Haseed, the head hype man at Dragonfly. We are early-stage investors in crypto. I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. please see chopping block that XYZ for more disclosures. So for those wondering, Tarun and Tom are not having a spa day.

Actually, they're joining us from Bhutan. Congratulations. Thank you. Yeah, that's very, very exciting. Tell us what are you guys doing in Bhutan and how are things over there? Things are lovely. We're here for a variety of reasons. There's a demo right here.

We met with the king. We had lunch with the King of Bhutan, learned a lot about Bitcoin mining. He's actually very excited about AI. He told me he uses Cloud Code and Obsidian. But he's been playing around with Kimmy. What? He was impressed with Kimi 3. Yes.

The King of Bhutan, honestly, one of the most amazing stories of how he decided to mine Bitcoin when Bitcoin was $4. I mean, the guy is extraordinarily eloquent. I was definitely blown away. I was like, I wasn't expected. My problem is like the British monarchy where everyone's kind of a moron, like Prince Harry or whatever. I just kind of expect everyone to be a moron when I hear.

And this king is like the opposite. He's kind of like clearly a genius. Wow. I did meet the king of Bhutan once at an event that Binance was hosting. And he was, I remember him being very suave, just like super cool guy. He had these like,

he had these little, he had these like little glasses that and he was just kind of, seemed incredibly gentle. And I don't know, he seemed like a character from a movie. It was like, okay, this is,

The first king I've ever met and very good introduction to the world of kings, I will say. Yeah, yeah, yeah, for sure. He made me, you know, my impression was just like, again, reality TV shows with the British royals. And I'm like, wow, they're all morons. But clearly that's not true. Are you a monarchist now?

No. I don't think so. Maybe. I don't know. Maybe for a good one. Yeah. If you can get the King of Bhutan, it won't be so bad. Well, I mean, they also have a prime minister.

Like, it is a democracy. It's constitutional monarchy. So like they... But England has the legacy of a monarchy. The people kind of, yeah, the vibe around it feels kind of bad. I don't know. The vibe here around it is like everyone loves King. It seems like kind of chill.

And he seems much more involved. He's working on this GMC project, which is kind of their own SAR, SEC kind of thing. So they want to get more entrepreneurs over to Bhutan. And he was saying, and he was right, like I feel like there's this Central Asia focus. Like the orb is kind of shifting. from Southeast Asia to Central Asia and well positioned.

What is the King of Bhutan vibe coding? We didn't get that far. It was a 12, 14 person lunch, so I couldn't really go deep. But you use obsidian, so I think that's another going to deep cut. All right. I feel like before you leave Bhutan, you got to get the word of what he's, is he like vibe coding government services for the country of Bhutan or like what's going? What is he working on?

National ID system on AWS. We did make the folly mistake of not asking him if he wanted to be a chopping block guess. I apologize. Next week on the chopping blocks. We did get some good leads on other guests, though, for future episodes. So stay tuned. Yes, very good leads to guests. Okay, excited for that.

Well, it's a good time to bring on different guests because crypto is finally cool again. So the big sort of the week has been this big rebound. No, I think it's good. Look, I think we're back in the headlines. People are excited. We're getting a lot more energy in the markets all of a sudden. And this has happened right as Bitcoin is just scraping against $80,000. It went over $80K yesterday. And now it's kind of right around $79.5,000. There's been a huge amount of short liquidations. Over $2 billion in ETF inflows, which the ETFs have been very quiet up until very recently, all of a sudden now we're seeing inflows again. And a lot of this has been. accelerated by what's happening on the macro side. So big story in macro has been Secretary Bessent has started to try to pull in the long end of the curve, buying back long-dated bonds to issue short, and all of that has been very stimulative of risk assets. So it is brought back what's

been called the debasement trade, this idea that, oh, okay, you know, the central bank is starting to, or not the central bank, sorry, treasury is starting to meddle in controlling currency markets and bond markets again. Besson-Beson-based. basically thinks that the long end is too high, which is showing some lack of confidence, perhaps, or lack of demand in long-issued government bonds. So all of that has gotten a goal to rally. It's gotten Bitcoin to rally.

And it seems to have people thinking again of like, hey, maybe finally it's time to revisit that old Bitcoin thesis or cryptothesis. And all of this was capped by a rise in hyperliquid. So hyperliquid recently hit close to an all-time high. or actually I think, no, it did hit an all-time high. And this was accelerated by Trump at a White House summit, talking about crypto, where he said that C-Lig, the chairman of the CFTC, was, quote, working to bring hyperliquid into the United States in a fully compliant and legal fashion.

This saw HyperLiquid rally to crazy heights over $80. And this seems to have been a combination of a lot of the groundwork that the HyperLigur Policy Center has been playing in the U.S. to try to figure out how can you bring hyperliquid to the U.S. in a way that is more compliant. And lastly, there's been a lot of petitioning from the Hyperliquid policy center for the CFTC to exempt non-custodial defy like hyperliquid

from legacy exchange rules that would normally cause them to have to register, do KYC, et cetera, and all the things that normal exchanges has to do within the U.S. So there's also a push to see if clarity can pass. There was a lot of mention from Trump at this White House Cryptosemont about clarity,

but clarity is still sitting now around 15% on polymarket. It looks like clarity is not very likely to pass this year. But if you draw the line forward for another two years, clarity's probably about 50-50, it seems like, to pass before the end of 2028. So stop there, thoughts around the horn. And what are you guys hearing sitting there in Bhutan about the sentiment towards crypto and Bitcoin? Well, I think the king has just never been more bullish. I mean, it's kind of crazy.

I think the other thing that's interesting is, I think whenever you go to Asia, you always remember, like, they're just people who just love tokens. You know, like, it's just like, sometimes in the U.S.,

there's this like kind of, it's like a on and off relationship, right? It's like, oh, we love tokens. We hate tokens. We love it. And Asia, everyone's like, no, no, no, no. Just one more trick.

There's going to be a new token. There's going to be one token that makes it to make it through. You know, like, what? I think that, that mentality you can kind of tell is like people, you know, last time I was in Asia and it was like kind of more bearish, everyone was like, oh, yeah, there'll be one more token eventually. And now it's definitely like, yeah, wait, it could be my token. You know, like that. That's how I would describe. Weirdly, I think there are, like, you still see some of the U.S. specific trends.

Like, FOMO obviously has been, you know, on a tear the past few weeks. You know, and there's a big fundraising round as well. and there's just really not as much interest or excitement or even like awareness of a FOMO in Asia from some of the folks that we're talking to. But I mean, overall, people also obviously do pay attention to the U.S. We ran a CZ. He's very much paying attention to what's happening in the U.S. And so people are curious about this crypto summit. I think there's one perception, like especially among the retail, that means that this means there's going to be full bore.

Anyone in the U.S. can just go use hyperliquid and it's going to be, you know, in your Schwab account. I think that's like not going to happen. I think it's going to look more like what Leiter did with Robin Hood in Europe where there's a KWC-gated version of it. And maybe there's some interoperability. Maybe you can use collateral across different deployments. But there's going to be some sort of KIC-gated version or some version of it that means sort of the standards of compliance that the U.S. expects of new venues. Rob, what's your take? My take is the devil's in the details.

definitely everyone is aligned with trying to figure out how do you wrap your arms around the big complex new thing that everybody wants. I think there's going to be a lot of figuring out the nuances here about how to make it work. I don't think it's going to be a quick thing. I think everyone is directionally aligned. But I think there's also going to be a lot of adversarial conflicts with legacy incumbents. as they watch something huge and new come in and they're afraid that they get treated to a easier standard.

We talk about no KYC. Everybody on Earth would prefer no KYC, right? It is a massive friction. Nobody wants to see, you know, something so permissible. Not everyone, but yeah, most humans on Earth who have the fortune of never getting a legal degree. But let's just say it is an overwhelming advantage to not have to deal with those frictions, right? It's operationally simpler.

It's easier for your users, blah, blah, blah. And so everyone's direction aligned. I'm just skeptical that it's going to be an easy journey. Yeah, I mean, to your point, the CME stock took a big whopping on the... Oh, yeah. Like, do you think the CEMB wants to see this? What's the name Duffy? He was just like on CNBC getting angry.

So like I don't think it's like a hey, everything's going to just happen type thing. Right. I mean, it's interesting that this made it a Trump speech. You know, that's a level of specificity that I would not have expected at the stage without more details. So Barron is trading on hyperliquid, right? That's what we're. Somebody in the inner circle seems to really care. Hard to know who it is.

but the given how, like I think Polymarket is probably the clearest blueprint for what that looks like, which is that, okay, there's an overseas version, which is no KYC, which is, you know, totally open. It's on the blockchain, blah, blah, blah. That one's decentralized. The U.S. version is probably not going to operate that way. The U.S. version is going to have to be, you know, market surveillance. It's going to have to be KYC. CFTC is going to have to oversee it.

They're going to have to know everybody who's trading on it. They're going to have to be able to pull their names if there's some kind of market manipulation. You know, but not more than half of their volume. They might not approve ADL. If you look at a call sheet, that's a big point, right? Actually, I wasn't aware of that.

On the perp side, what's the alternative to ADL? Like normal futures clearing, like centralized clearing. Oh, I see. You have like a broker who takes the hit. Like they put up capital, risk capital. So I think that that stuff is actually going to be

the real devil's in the detail is like how the kind of clearing settlement stuff works because like that that's sort of where governments spend a lot of time writing law also. So like I don't think they're just going to be like yeah, we're going to rip that all up

and have it be fully algorithmic. That's my guess. Again, just from the vibe I get from CFTC people who've talked to, it seems like. Oh, is it to your point? I mean, there's precedent now around, you know, offering you onshore perps to a limited extent

through CalG. I think the big question is, can you offer a compliant Dex, a separate deployment or a separate version of it to people in the U.S. and sort of meet, like you said, for example, surveillance requirements. And I think that was part of the discussion was like, hey, actually a Dex that's well built, has a lot of things that you would normally have to sort of do manual for compliance built in, like the code actually does it for you. And so that would be a huge step forward versus, hey, there's just another centralized perps venue, which I can imagine there's a huge pipeline. of applicants they're about to be approved. Yeah.

Well, I mean, one of the distinctions, though, is that, well, I mean, it's like Polymarket U.S. in that you probably do have to have a separate pool of liquidity, right? You can't have domestic people trading against liquidity on the offshore or on the overseas on-chain exchange in large part because, of course, you don't know who the other person is. You have to be able to unmask the person you're training against. So if somebody is filling you or you're being filled or, you know, you're filling somebody else and that person is in some unknown country, well, then half of the

trade cannot be surveilled, right? And that's a big part of what the CFTC does is to make sure markets are orderly, no one's manipulating anything, blah, blah, blah. And given that half of their volume is RWA's, more than half of their volume now is RWA's, like, obviously that exists under a very different regulatory regime that has to continue to be respected if you're going to do that domestically. So how that's going to look, obviously TBD, we got zero details. Nobody seems to be super clear exactly on how this is going to be structured. But it is very clear that perps, like, we're going to see this. What Polymarket did is going to happen on the perp side as well.

Probably you are going to see, there's been a lot of chatter about Lighter in which we are, we are all investors. We're investors in hype as well. There was a lot of chatter about Lighter doing the same thing. Of course, they have this partnership with Robin Hood. And Lighter has also been rallying on the news that, hey, you know, it looks like perps are going to be coming to the U.S. and there's going to be some room for these products that are decentralized to have some kind of gated U.S. version.

So big story. But on the other side, we've also seen a lot of regulatory developments. Now that clarity seems, call it unlikely, both the CFTC and the SEC have been signaling that they are going to be starting to pass some kind of rulemaking to basically get the same thing that's in clarity, but via rules instead of by a law. right so we don't know how long clarity is going to take there's an outside shot that it passes this year but most likely it's going to be either 2027 or 2028 story under a very different Congress so in the meantime the SEC the the CFTC has signaled yo we're going to do this we're going to move forward with something or other we're going to pass some rulemaking on both prediction markets as well as for you know the they have a compute markets rFC as well as a bunch of stuff that they're going to do on on perps and crypto exchanges and then the SEC came out with a 402 page release for a set of rules called regulation crypto assets. Their first actual crypto rulemaking that they're going to be doing. They've elicited a 60-day comment window. And in this, so I haven't read this entire release, to be honest, I can't imagine

most people have. I threw it into my AI and started poking around a little bit. The main stories behind this rule is that they're going to be fundraising exemptions. So one of them is a one-time five-year fundraising exemption over four years. so you can issue some tokens sell up to $5 million. Or if you're issuing audited financials and some ongoing reporting, you can raise $75 million over a 12-month period. So very substantial fundraising opportunity for token projects that they can do under this new rule.

There's also a conditional safe harbor. So you maybe, if you're a qualifying token, you can basically elect that, look, there's not an investment contract. and you can exit from security laws entirely from some kind of SEC approval. They can go and look and say, hey, you're no longer fulfilling this kind of managerial role and therefore this thing, you know, the investment contract has now expired. And all of this is still subject to comments. So I think a lot of crypto funds and crypto projects are going to be weighing in on this

set of rules that are coming out. So Robert, given that you are the one probably close. closest with your ear to the ground on the regulatory side. What's been your perception of the SEC rules as well as what the CFTC has been signaling here? Yeah, so I'll just focus on the SEC and reg crypto because this is very tangible proposed rulemaking. It's not nebulous in any way. This is rulemaking, and in a lot of ways, dates back to the Dow report and the process of raising capital using an ICO, right, token fundraising.

We've had this regulatory chasm going all the way back to when Ethereum started conducting ICOs. There's been a lot of consternation about it. And with the stalling of the Clarity Act, the SEC has really stepped in and said, hey, we are going to define something that needs to be defined. When is it appropriate to raise capital using a token, to like sell token for money to build your project? It's something that has been talked about for a really long time. and how do you create a framework to do it correctly improperly. This is something, frankly, that I think they could have or should have released eight years ago. This is not something that required any legislation.

I think one of the reasons why it took so long is, you know, especially in this administration, they were waiting for the legislation to come first, right? If the Clarity Act passed, I don't even think they would necessarily need to come out with reg crypto. What Red Crypto is is it looks a lot like other paths, alternate paths to raise capital. Looks like Reg A. It looks like Reg A plus. It looks like all of these things have been developed in the past to say, how do you raise capital with a lighter burden than going public? And so I think Red Crypto does that very well.

It says how do you raise a little bit of capital? How do you raise a lot of capital? And what are different requirements? Raising a lot of capital, it looks like Red crypto. it looks like reg A stuff. It looks like mini going public. The burden on a project is not insignificant, right? Like this requires you to be a pretty buttoned up project if you want to raise $75 million.

But if you want to raise $5 million, it's actually very permissive. And I think a lot of projects could fall into this path, right? There's still a lot of projects that are going to say, oh, it's easier just do it offshore and not offer it to U.S. people and blah, blah, blah, blah, versus do. a little bit of paperwork. But I actually think the $5 million path is going to be potentially exciting. If we go back to a market where a lot of founders are coming into the space, it isn't very burdensome, frankly, to raise $5 million using this legalized frame.

I can see projects doing token sales in a small way to get off the ground. I could see people testing this. I can see people using this. I can see victories coming out of this. frankly and these these token sales you can do full crowd sales these are not like only

to accredited investors as far as I understand correct correct can I ask a very stupid question because I haven't read this is it only in USD funding like I can't do like an eth denominate ICAO sold

no you should be able to you should be able to I wonder if you should be able to I wonder if it's just about like the value of what you're raising right it's like how much capital are you taking in by selling tokens

I just feel like there's lots of ways of getting around the five million limit if you're taking in-kind, that's why. Oh, right, right, right. But, like, yeah, you're able to raise $5 million of capital by selling tokens. And I think this is a good thing, right? This is objectively positive to allow this framework. I don't think it's going to be that controversial.

This is not something that completely disrupts how traditional equity markets operate. This is not something that necessarily, like, runs into the complex friction of incumbents. this is you know just like no one was opposed to frank a everyone's like oh making capital formation a little bit cleaner and a little bit better high five this is not that controversial this is not a controversial set of rules that are being proposed right if you so robert also okay the five million dollar threshold i agree it sounds pretty light touch you know there's some self there's some self certification you have to do there's some like basic information that you have to disclose but it's pretty it's pretty easy it's not super

expensive the 75 million dollar thresholds right to get up past five million. You have to get PCAOB audits. Yeah, no, it's burden. I don't think that many people are going to adopt it, frankly. This is my contrary to take. I don't think it's going to get used. I think they designed a rule. And to get audits that are PCOB compliant, that's probably going to cost you in the like hundreds of thousands of dollars, I would assume. And then all the lawyer filings and whatever else you have to do to get a, you know, whatever that threshold is. Now, to your point, Robert, if you want to sell to non-Americans or you don't want to do a crowd sale, you're good. You don't have to do this,

which means that presumably to sell to VCs, you know, private investors, just do the normal old thing you've been doing in the past, right? Exactly. You don't need this. You don't have to do this. Yeah, it's a form D. It's private sales. It's exempt, right? So I, I'm also skeptical that people are going to use this $75 million tier of public fundraising in the same way that we've seen very few. I don't know if there have been any. I mean, if there have, it's gone under the radar. I don't think anyone's really using the reg a plus $75 million threshold.

Nobody wants to do a hundred-ed financials, right? Like, it's just, if you're doing that, you literally may as well go actually public. You may as well file an S-1, right? Because, like, that's the same requirement. And so no one's using reg A plus tier two. I don't think people are going to use this relatively burdensome tier two. of Red Crypto Fundraising. I think it's probably going to be untouched.

But because the standards are no different that already exists, there's really nothing for anyone to complain about it. It just really says instead of selling equity and raising $75 million, you can sell tokens and raise $75 million. I don't think it's going to be commonly used because very few people sell equity under Reg A plus tier two. I do think people are going to take advantage of this lower tier. I think it's going to be popular, potentially.

I think it's going to be exciting. If you're a smaller project, it used to be $5 million for a lot of money. It doesn't mean you have to sell all your tokens. You can sell a small sliver for $5 million to get started, whatever. I'm excited to see people test this. I think it's a great channel. I'm actually proud of a lot of the staff and the commissioners and the hard work that went into thinking through this.

And so there will be teams that come along and use this, and I think that's a good thing. Tarun, Tom, what do you guys' thoughts? I mean, I think I agree with Robert and that it should come out eight years ago, but maybe more in a more pessimistic sense. I think the crux of the industry's beef with the SEC right now, I think it's more around asset categorization. What is a security? It's not a security.

And what has that path sort of unfold. And obviously, that plays into fundraising. But I don't see a lot of new teams that are, you know, in the security. the spirit of a 2017 ICO, trying to raise some money to build a new network that gets decentralized and what is that threshold meet, et cetera, et cetera, building a new D5 protocol. It's much more about there's some sort of app or some sort of centralized company that has some value and they also want to issue a token. They want to send some value back to the token, how these two interact. It's sort of this open question when we talk about all the time. But that's really, I think,

what people look for. And obviously, that allows there to be, you know, regulatory clarity within the existing reggae or reg D security sales regime. But short of that, you don't actually know what the token is. And so therefore, hey, you can have safe harbor, but to what end? So your point is almost that this set of regulations is really designed for an older generation of crypto where a lot of those founders were building decentralized stuff. today, you know, how many things that you get pitches for that are like, yeah, I intend to walk away from this project and no longer be involved because it's all self-sustaining on chain. Yeah, exactly. And that was like the spirit of those ICOs. And that's why, hey, there was just all these lawsuits around, well, what were these tokens sold as? What did they become? How did they become with it? What was that path? And so there's both of those sort of components. And obviously the two are intertwined. But today, I just don't see a lot of teams that are from day one or even for successful teams.

talking about, well, we want this to be totally decentralized. We're going to do our first raise as a crowd fund and then build a decentralized network. Maybe it'll come back and maybe, hey, this is providing the path to do that, but it's not really what we see in the market. Yeah, I would also just say, like, the word decentralized has been watered down and changed so much that, like, I don't even think there's this threshold. What the SEC concerns decentralized, what hyperliquid considers decentralized, what hyperliquid decentralized with Solana Concertis decentralized decentralized,

Ethereum, decentralized, decentralized are all kind of different notions. So I'm not even sure like this is, yeah, to some point, it's going to be a legal standard now. Yeah, it's just a little feels like, yeah, a little too little too late. But I think the $5 million threshold is interesting.

I'm kind of curious if there's going to be someone who like tries to make like a holding company that launches like 20 different tokens to get to the $100 million without having to do the odd-ed financials. Like I'm sure there's going to be some some kind of like clever way of farming the $5 million limit to emulate the 75. And someone will do it.

It's crypto. There's always someone whose financial engineering interests will lie in doing this. I think to also Robert's earlier point, I think Stax did a reggae offering 10 years ago. And Muneb was always complaining about how much of a pain in the ass it was. So hopefully this is, you know, less of a pain in the ass. That's why I'm saying. It doesn't look like it will be that much less of pain in the ass. It looks quite pain in the assy.

75 million dollars one sucks. Yeah, but my point is, like, imagine I, I find a way to make, like, a holding company. Like, especially in a world where everyone, there's 100,000 tokens, you know, there's hundreds of thousands of tokens now, right? This is not the world eight years ago where it's like, there's very few. It took a while to launch one, whatever, right? There's going to be someone who, like, meme coin style DDoS is this legislation. Like, I'm willing to bet that that will happen.

I think that the, the DDoS protection is the fact that you have to get. It's still the legal costs, I think, to do the filings. I was asking Chatsby-T to estimate the cost of like the, just like the administrative burden of even the $5 million threshold. It's probably like between $10,000 and $20,000 of just like the legal work you have to submit to the SEC. 15 subsidiaries of one company.

And I can now, I can now share those costs. And it's not going to be 15 times 20K. it's going to be more like 100K, right? So like, I'm just saying, I like, there's, there's going to be someone who figures out the engineering to like basically do many of the small offerings. I don't doubt that that will happen. Yeah, yeah, yeah.

Actually, that's interesting because just yesterday, somewhat unrelated, but actually in a weird way related, I was reading this economics paper about this concept of like AI flooding of government services. And the idea is that, you know, there's a lot of government processes that have a high fixed cost because of the costs of basically navigating administrative complexity or just sort of bureaucratic bullshit. And the cost have effectively decreased for a lot of government services of like, you know, for example, applying for refunds or contesting parking tickets or sending comment letters. Like a lot of stuff like this that's actually designed to have this proof of work that makes it costly.

And now a lot of those government services are getting overwhelmed because of LLM. and basically people sort of didn't realize that there was a fixed cost. They were sort of pretending that there wasn't a fixed cost. But that was kind of their flow control was like, you know, because it's hard and you have to hire a lawyer, but now it's not hard and you don't have to hire a lawyer. And therefore it's basically like a one-click thing that you can get your ChatsbyT to do it overnight.

And this paper was looking through a lot of these different mechanisms in different government services and being like, look, you have to kind of revisit what was effectively a speedbub. that has now been removed from society. And a lot of these things are now getting deduced effectively by just genuine people trying to consume government services that we didn't realize we were rationing through bureaucratic bullshit.

And I kind of feel like this is the same thing potentially for capital markets, right? There's like a sort of rationing of capital markets through fixed costs that might go down because you can get your LM to like prepare all the administrative statements or whatever. And it's like, okay, now the SEC is getting overwhelmed by these. Yeah. I don't doubt there's going to be some civil attacks.

It just seems people are too clever and this will be easier than the $75 million thing. Yeah, totally. This is ultimately good, though. I mean, I'm very curious. At the end of the day, this is still mostly focused on crowdfunding. If you're going to raise money from VCs, probably you don't need to do this. And any of the VCs who are worth their salt, they have some kind of overseas structure and they have the ability to, you know, whatever,

kind of be non-US domiciled for investing into some of this stuff. So the interesting question here is, like, who is actually going to avail themselves of the $5 million crowdfunding limit, right? If you're a meme coin, you don't need this because you're not a security, right? We've already established that.

Mean coins are fine. So what are the projects that are going to be doing $5 million crowd funds to U.S. investors and have to do some amount of disclosure, right? It's not nothing. You still have to disclose, you know, you have to disclose a team, you have to disclose what your managerial efforts are going to be,

et cetera, et cetera. Like, you got to put out some stuff here that does give you exposure. I have a more than crazy hairbrain theory, but I think, like, to me, this is the next token type that will be the L1 potential. Like, I don't know if it will be as big. Like, I don't think it will suck up as much capital as L1 tokens did, but I really think the Venice token, like, inference,

play of like I'm giving you this real service and like the state maybe if I stake I get a discount or if I stake I get kind of like I kind of get zero data retention from the inference Friday really right there's like different levels of quality of service you can you can do it the token and the token can have revenue on day one from the inference providers in fact we were talking about that with the king who actually is already thinking about this he's very excited about tokenization very excited yeah yeah the king was like super excited but the these types of tokens I I think like you're seeing a lot of crypto companies becoming inference providers because it's like very similar to running a decentralized network. You're managing a bunch of nodes. Maybe they're more co-located. You don't need them super distributed.

But you're seeing this like for instance with EigenLayer becoming inference provider with Venice, of course. And you're starting to see a lot of other teams kind of go this direction. And I think it's actually a very natural tokenization because you're delivering a digital good. It's not like I'm doing some off-chain RWA type thing that's complicated. I can kind of value the good. Now, there's some trust assumption there for sure, but again, like I said, no one's trying to say we're tokens equals full decentralization anymore in 2026.

And I think there's going to be a lot of these types of like small cap AI type of raises because the minimum AI raise like now is like feels like it's like 20 million, right? But there might be a lot of these smaller teams that are going to raise less to like do a small inference rider to kind of like localize certain technologies. So I kind of could see that market actually being like, there are going to be like many Venice tokens. And like there's kind of going to be a boom there. And that's like the non-memecoin token boom of the next cycle.

Yeah. I feel like you saw a little bit taste of that. It was also this past two weeks. Like all the non-crypto AI normy people were really excited about the dark bloom, which was like the Apple Silicon, you know, sort of distributed. Which is from eigenline. Yeah, yeah, yeah. Like backyard compute kind of.

thing and it's like almost rediscovering the like decentralized inference idea from from kind of of first principles like running into the same issues and you know this obviously being kind of like the next step in okay well once we actually have this like you know network quote unquote of computers that we can we can you know do inference on you know how do we actually go about distributing some of the value and bootstraping like the rest of it I think it's going to look like mining pools actually it's like it feels a lot more like mining pools except like you don't have cryptographic guarantees you have these like statistical guarantees the cost of cheating is high versus like cryptography, making sure it's like basically internet.

But I think like if that, we start to see more of those tokens take off, like I could totally see those people raising on this. Like that makes total sense to me. Well, speaking of AIA inference, one of the big stories this week has been that Stripe purchased OpenRouter for $7 billion. Now, OpenRourter was founded by Alex Atala, who is the co-founder of OpenC, long time, you know, kind of in the, crypto world ended up in 2023, I believe, founding open router, founding open router.

Open router, for those of you don't know, it is basically an aggregator of inference providers. So it's kind of like one inch, if you know any of the defy aggregators, but they do that over LMs and particular models for finding you the cheapest or fastest

or most of, you know, low latency or highest cashing rate LM provider for a given model. So they've been growing like crazy. This has been one of the big stories is just how fast AI inference has been growing, and of course how fast open models have been growing relative to the centralized players in a world where it's just open AI and anthropic. Maybe you don't need something like this. But in a world now where we're seeing so much more competition from all

these other open models, especially from the Chinese labs, something like OpenRouter suddenly becomes very compelling. Now, Tarun, you recently published an article called Caching Cheaters on OpenRouter, a bit of a pun of like catching cheaters through caching cheaters. To be fair, you gave me the idea. for the title. Wait, wait, I think the title, what was the original title? The original title was something very dry. You were catching and I was like, actually, why don't we just make it a pun by removing

one letter? It was very, very good, very well done. Do you want to summarize, you want to summarize the paper of what it was about? Because it's a very, like, defy, MEV-inspired paper looking at what's happening in inference markets. Yeah, so maybe I'll give a little high level view of this and also why I think, like, there's a huge genius in what Alex did, like, whether he explicitly realized, he was going to end up making like a very crypto-like thing out of AI stuff or not.

I'm not sure. He clearly obviously has amazing timing and taste historic, like from having two large kind of exits, like partial exit and one and, you know, like it's kind of like, you know, there's real skill. Like he really understands. He sees the future, you know.

But there's something interesting about how open router started. So let me just give a little bit of history on the open source. model world. So like chat GPT comes out, there's this huge, you know, bursts of interest and demand, this pre-clawed. And that was at the time where like all the big tech companies were getting very scared of losing their modes, right? Like Google feels like they're going to lose search or Facebook feels like people are going to use social media less because AI will make the content worse, et cetera. And so Facebook, of course, famously made Lama, right? The one of the first large open source models. There were a lot of smaller open source models, but they were just not very good.

not competitive. But once Lama launched, there was this whole cottage industry in 2023 of making like fine-tuned versions of Lama, like Lama for coding, because at that time the coding models weren't very good. Or Lama for images to compete with like, like, you know, people would make open source versions of mid-journey,

like stuff like that, right? So there were starting to be these like flora and fauna of like special purpose models built off Lama. And it was really hard for you to know, I want to make an image of seed with hair, right? That's my prompt. And it's like, okay, which one do I go to? And I think in the closed source world, right, you just get one prompt, right?

It's like open AI gives you one thing. In the open source world, it's very unbundled. You have to figure out, okay, like this Lama thing made by this academic lab, fine-tuned, apparently does really well on this benchmark for generating hair correctly, realistic hair. Okay, great. That's the model I use, right? So that was the original pitch for open rudder. It's like the flora and fauna of these opens, there's two many of them.

Very similar to how defy, there were tons of forks, right? There was tons of, you know, once AMMs were popular, everyone started forking uniswap. Same with Avey, same with compound. Right. So you kind of actually see this very similar thing. And there was this kind of unbundling that occurred in defy of the centralized service, right? Like the centralized services, finance and Coinbase offered, defy unbundled them. But then it made it on the user to figure out how to use them.

and there was services that aggregated and that was like the natural thing. So where we kind of are right now with the open source model world is something that looks really, really similar to Defi. So there's sort of the front end, the harness.

So like Claude code, cloud desktop, whatever your app that you're using, there's the router which decides which model to use. Then there's the model itself. And so if it's open weights, you can go download the model weights and run it. And then there's the information. The difference writer, the people who provide the GPU that actually runs the device.

It's very similar to on-chain finance where the harness is like the wallet. It's the front end. It holds the data, users private data. It might hold secrets, like private keys, API keys, things like that. Then there's the router. Like a Dex router. So if you've ever used a swap function in Phantom or Uniswap, under the cover, there's a router that's routing you to different tools. And you don't even know that you're using it.

then there's a model, like the protocol, they collect some fees, usually less than the other providers. And then the inference providers are like liquidity providers or validators in a decentralized number. And if you look at the lessons of crypto, it kind of tells you the value flows to the edges. Like it goes to the liquidity providers or entrance providers, or it goes to like the wallets. And so a natural question is if you see this kind of analogy, do a natural phenomenon in crypto is M. where validators might reorder your transactions, might put certain preference, certain users, might front run you. And the question is, like, do you see this in Open Rider? And so that was something I spent like a couple of months just scraping data from OpenRouter. And the nice thing about OpenRouter, it's on a blockchain, right? It's like a private service, but they publish and post prices continuously. So these inference riders like a Venice, a base 10 together, they can update their price all the time for like how much they charge you for the different. different tokens. And basically the type of thing that the paper focused on is there's a difference

between cash tokens, so tokens that don't have to do the full compute, you get to reuse compute you did earlier in your chat versus input tokens. But there's no cryptographic verification of that, or there's no real verification. The inference order just says, oh, yeah, I use this many cash tokens or not. And so one way of manipulating that is saying, hey, I'm going to give a lower price on the expensive tokens, like the input and output tokens, like the fresh ones, but I'm actually just going to say I never use cash tokens so I can kind of charge more. And so there's evidence of that already happening. The interesting thing is a lot of the people who are doing it are used to be in crypto or we're Ethereum miners or have kind of connections to crypto. So I think the

lesson here is that this market structure, which Alex kind of invented in some way, like you can really argue that open router opened up this market. It was not kind of, you need the router to glue together this market. Without the router, this market is a bunch of independent things. You have to stitch together. It's like the U.S. In a way that in a Dex aggregator, it's a little bit easier. But the main thing I think that's interesting right now, and I'm kind of curious about your guys' takes on this, is how I kind of think we're about to have the revenge of the SaaS company, like enterprise company. Because the last two years, SaaS company's stocks have just been getting bludgeoned, right? Like, Sigma, you know, obviously, Figma had the worst hit in the sense

of, like, Anthropic literally made a, you know, initially it was a partner and then just, like, made an exact, a clone slash better version, whatever. And so there's been a lot of kind of this consternation of all these software companies, are they going to survive because, like, they're, they're going to lose their seat. Everyone's just going to write their own CRM software using cloud. They're not going to pay Salesforce. But what you're finding right now is that these companies are finding a new way to monetize SaaS users with routers, which is sort of the revenge against Anthropics. So say you have data sitting in, so for instance, like Ramp, the credit card company, launch a router, Stripe obviously just bought Open Router, they have a

router. DataBricks, Palantir are both, both have their own routers. And so you're starting to see this kind of like every SaaS company at who owns a bunch of user data, like user data that maybe the user wants more private or they, it's too expensive for them. to move that to Anthropic or in a data warehouse or Anthopic could access it as easily. You're starting to see them offer routers and charge a percentage fee on tokens. And the routers won't route all the tokens Anthropic. They'll route them to cheaper open source models. And so you're finding out that the monetization of this, again, looks like crypto.

There's almost this like payment for order flow type of thing. I generate order flow from my users who are using my SaaS app. Some of the tokens I route to Anthropic, some I route to the Chinese models. and I can take a little bit of a spread on that. Well, there's a very interesting idea actually by Brett Harrison, I think he posted this yesterday, that the payment for order flow in token routing probably actually looks like hedge funds

that will pay you for your LM queries just to get real-time information into what's happening in the economy. Yeah, for sure, for sure. I think that is already happening a little bit, but not at like the systematic level of hedge funds, but more in the level of the inference providers are offered deals to people who send them tokens. Like if you guarantee me two billions tokens,

yay, I'll give you a cheaper price, which is already moving in this direction. But I think the interesting thing about this market is it really, really looks like crypto, except decentralization isn't the most important thing, but open competition is. So it's like you still have the centralized entity and open router, like deciding which providers are added.

It's not like anyone can join and leave. but the open competition is the thing that's actually been driving the price down a lot. And I think this is like, if this works, it sort of says like every SaaS company is going to be a router because it's the easiest way for them to charge a margin on top of like owning user data,

user flow. And I think to me, this is going to be the most exciting thing in AI that kind of like looks like crypto. It's like, to me it's like the one thing that's actually kind of a real place where they might interstate. So anyway, I know I went on a rant for 10 months.

Tom, what's your take? Yeah, I've been jamming on that this a lot this week. I mean, also just like, you know, talking about, hey, like, they're just offering your discounts for ZDR. I think it is, feel like you kind of keep relearning the same lessons around like, you know, statefulness and stickiness being like the moat and thing that is like monetizable. And, you know, I could see a world, you know, down the line where even the frontier labs end up, you know, maybe using third party models and they just end up end up having so much

stickiness from their existing user base. And you already see that a little bit, right? People will like, yeah, I love ClaudeCode as a harness, but like I want to swap out the back end and use Kimi or something. I think the question is almost more on the models where you actually see, again, some crypto analogs. Kimmi K3 when they were when they published the new license, it's very BSL-like where it's open weights.

You can use it for personal use. But if you're a company with over 20 million revenue, you have to pay us a licensing fee and here's the fixed price. And so you don't just get to use this free, which was also some of the, original concerns about, you know, open source defy, which is, you know, why wouldn't someone not just pick up new swap and copy-paste it and make their own version? You know, how does this not just get absorbed by sort of both ends of the stack?

And like, this is the answer so far, but it seems kind of brittle. It relies on, you know, the legal system to kind of adjudicate this. And we were also discussing, like, you know, open-rider also, you know, charge their listing fee for emphasis providers to get added. So, like, there's all sort of, like, weird, interesting kind of analogs, you know, across both. So much like, much like Binance and the token market. It's interesting.

Yeah, yeah, yeah. I mean, the market structures are very similar. And it'd be, you know, this being kind of this open worldwide competition for this service. I do think what we are going to see more. So, you know, Turin, what you pointed out in your paper was that there's incentives to cheat by nominally lowing your price, but not actually lowering your price. Like you sort of cheat on the back end to have like a lower sticker price, but actually higher all-in price or the same all-in price or whatever. there's a one can imagine

so there was these stories about these data brokers that would give you illegal access to Clawd in China or overseas in countries that that Cod is not allowed and these data brokers

usually what they're doing arrested recently for like running one of these services actually oh interesting yeah six students right so what a lot of them do

is they're either one they're stealing accounts so they're aggregating like a bunch of account takeovers and just jumping around between subscriptions and selling those to third parties. But another thing that a lot of them do actually, besides lie, some of them are just like, there's not actually clod.

But what a lot of them will do is that they will give you highly subsidized prices because they are scraping the contents and they're selling them. And usually they're selling them in large part because there are a lot of secrets in them. So there are API keys, there's PII, there's all sorts of stuff that literally they'll just come in, grab a bunch of the secrets that you have. have and then like drain your accounts. So the, what you can imagine that the more of this kind of thing you do,

we talked about hedge funds doing it to just have information, but you can imagine, you know, more nefarious ways of monetizing the data that you're getting. And that creates a lot of the competition of, you know, having lower and lower prices because you're making it up on the back end, doing wier and wilerier things. You're talking about a malicious version of this,

but there's already kind of a non-malicious version of this in that thinking machines, on OpenRrater and like just generally, if you use their models and you don't use zero data retention, like they delete all your chats and prompts, they give you a little cheaper price because they're basically trying to generate Mercor, you know, like these companies like Mercor, Surge,

scale to AI who like do all this human annotation, very expensive, right? Because you're, it's hard to grow off that. And you're starting to see people basically do the 20, do you remember the 2017 token dream of like, okay, get paid for your data, somehow use a token to do that, whatever. This is actually the first time I actually think that stuff will act. It might actually work in this trace model where you basically give rebates or cheaper inference,

which could be done via a token model like a Venice type of thing or not, but like some type of rebate to a user if they give you their data for their chats for your post-training or for later usage. And like, again, this is like these crypto dreams that were just like too early. They were like, it just like didn't make sense at the granularity because like your data was sitting on this platform like on Facebook or in Google and like you couldn't like pull it out. But the AI now makes you, it kind of streams out your data for you. And so now you can actually resell it and like actually get a cheaper cost of using AI. And the other thing that's really worth noting here is that there's this huge rush of like people making data companies, right? Like the Mercours and surges and whatever.

because all the labs are talking about how they're spent, Anthropics said they're going to spend $10 billion on data payments this year. And so there's this kind of interesting thing in the AI world, which is very much like crypto, where there's the cost side, like training, data collection, and then there's the huge margin side, inference, right? Like inference is like 90 plus percent margins. Like in a lot of cases, people are basically running away

in terms of like the financing costs, right? Like all of the people doing the open weight models, like the Chinese companies, all of their revenue comes from just being one of the many inference providers in this market place. And so I think the crypto stuff, there's a sense in which we should be revisiting a lot of ideas from 2017 right now. There are a lot of them that just sounded sci-fi, didn't make sense, were too hard to do,

that actually might, like the token models for the crypto tokens, for making it easy to monetize these inference tokens, I think there's actually going to be stuff there. And that might be our next real bull market. So speaking of bull market, we've got a couple of minutes left before we wrap. I mean, I'm only in my bully pulpit today. No, it's good, it's good.

You're bold. Given that you guys are in a very different environment out there in Asia right now in Bhutan, what's the vibe that you guys are getting? Are we in a bull market? Has it truly begun? Is this just a bit of a rebound? Like what's what's the what's the vibe check just quickly from from the from from from us here at the table? Weirdly, I was saying most of the the teams I've been talking to are still very much in this kind of buttoned up

Tradfai RWA meta that we've been in for me the past two years of we're going to tokenize some you know, invoices. We're going to do invoice factoring FX. And so it's almost like oh, like the gear shifted again and you're still like you know doing like STOs or something. And you know, I think there's those are good. markets and I think there are probably plenty of good projects. But it feels like a lot of people were caught off guard with the shift. It reminded me a little bit of, you know, when like, you know, Larry Think went on TV and said Bitcoin is good and, you know, the ETFs were

getting approved. And everyone's like, oh, shit, like, where did that come from? It feels like we're kind of in a little bit of accurate again, too. True. Same, same, same read. I think the interesting thing to me is like, I think of like, you know, Asia as the true source of like, KOL gambling punter, you know, like trading token 199 in market cap as they fit with their entire life savings, right? But the funny thing is everyone seems like less D-gen than the U.S. like meme coin stuff. The U.S. meme coin stuff is actually very crazy. Like there's something weird about that that, that like it hasn't translated here. And I don't, that's the thing I'm, I don't know if that means there's like another bull cycle from a mini cycle for that or not but like you know you were

saying that earlier right too right like we they like they like they haven't had the like phomo pumped out fund stuff as much and like right there's a lot of people trying to figure out how to like Asian eyes that Asian eyes I don't know sorry up at volumes more volatile more local friendly right the social trading stuff is like very Western word is localize I know, I know. I was just Anyway, localized on localized foam.

Like that, I think there's a lot of like people want to bring. And like that, maybe that is like a little. Binance life is doing really well. Binance life is, is rallying. That's like the one,

the one Chinese characters on page one of Coin Mark Debt now is, is Binan's life than being coin. So, yeah. There's, it's trenches are back to life. We are up on time. So we got a wrap.

But thanks everybody. welcome back to crypto being cool again or at least starting to get the green shoots of being cool. Hot again, hot again, hot again. I think the coolness and the hotness are very correlated. I will say that. And the longer that Tarun and Tom wear those robes, the cooler and hotter, it's all good.

The cooler and hotter is getting in the air. We are definitely hot. We're wearing our normal. Yeah, we've on three layers. Okay, all right, nice. All right, well, enjoy Bhutan, you guys, and we'll be back next week. Yeah.

Yeah, everyone. You know,