Unchained - The Chopping Block: Hyperliquid’s Not-So-DeFi Moment, 23andMe, & STABLE Act - Ep. 808

Episode Date: March 29, 2025

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. In this episode, the crew dives into the Hyperliquid controversy and what it reveals about decentralization theater in DeFi. Then, things get weirder: the Say Foundation wants to buy 23andMe and put your genetic data onchain. We break down the backlash and privacy concerns. Finally, we look at the new Stable Act making its way through Congress and whether stablecoin regulation is headed toward bank-only control. Show highlights 🔹 Hyperliquid’s JELLYJELLY Debacle – How a DeFi darling nuked its credibility by bailing out its own vault at a fake oracle price 🔹 The Exchange Wars Heat Up – Why Binance and OKX listing JELLYJELLY perps looked like an assassination attempt on Hyperliquid 🔹 Are DEXes Just CEXes in Disguise? – What the Hyperliquid saga reveals about decentralization theater and validator capture 🔹 23andMe on the Blockchain – Say Foundation wants to token-gate your DNA; is this privacy-preserving or dystopian? 🔹 The Great DeSci Grift – Tarun revisits his war on DeSci and why putting genetics onchain is worse than memecoins 🔹 Stablecoin Regulation Showdown – The Stable Act vs. The Genius Act and who’s really winning in D.C. 🔹 Stablecoins as Narrow Banks – How crypto may finally force the Fed to accept a 20-year-old idea they’ve long resisted 🔹 Red Bull & Ratio Bets – The hosts make a real-money wager on whether HLP deposits will rise or fall after the meltdown 🔹 Memecoins and the Return of Olympus – Are the robbers now just quietly collecting rent from their broken treasuries? 🔹 Tarun’s Aesthetic Death Rankings – Why JELLYJELLY is a worse way to die than MobileCoin, but at least it’s on brand Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  Disclosures Links Kevin Zhou (Galois Capital) Tweet: https://x.com/Galois_Capital/status/1904942458666094932  Steil and Hill Introduce STABLE Act Press Release: https://steil.house.gov/media/press-releases/steil-and-hill-introduce-stable-act  Timestamps 00:00 Intro 01:29 Hyperliquid Drama Unfolds 10:49 Debating the Bailout Decision 18:28 OKX & Binance Join  23:05 An FTX Moment? 31:45 Future of 23andMe & SEI 44:20 Stablecoin Legislation: Genius Act vs. Stable Act 51:45 Are Stablecoins the Trojan Horse? Learn more about your ad choices. Visit megaphone.fm/adchoices

Closing it out in such a way that the HLP pool profited after being in a horrific position is the part that's a little bit confusing. Because when anybody profits in a perp market, somebody else has lost. And I think this is a very clear example of the hyperliquid team slash validators choosing an incorrect winner and an incorrect loser in this situation. Not a dividend. It's a tale of two fun. Now, your losses are on someone else's ballot.

Generally speaking, air drops are kind of pointless anyways. I'm in the trading firms who are very involved. D5 Protocol is part of the antidote to this problem. Hello, everyone. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insider perspective on the crypto topics of the day.

So quick intros for us to go Tom, the DFI Maven and Master of Memes. Hello, everyone. Next week got Robert, the Cryptoconisurer and Tsar of Super State. Good afternoon, everybody. Next, we've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo. And finally, I'm a sieve, the head hype man at Dragonfly.

So 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 see Chauvin Block at X, Y, Z for more disclosures. So we finally had a relatively quiet week. Markets are not gyrating horrendously in one direction or another, but there have been some individual markets or marketplaces that, that have been seeing a lot of activity. So one of the biggest stories of the week

has been this drama playing out on Hyperliquid. So for those of you not familiar, Hyperliquid is the new hot decks. They are now the number one decks by overall volume. They are a huge purpose exchange. They had a massive air drop. They've been kind of a darling of crypto retail because of the size of theirirdrop

and because of the fact that it was fair launched. Now, there was a massive attack that took place over the last couple days against Hyperliquid. And I'm going to try to describe the attack, although it may be difficult to follow some of the details, but it centers around a meme coin that we mentioned previously on the show called Jelly Jelly. So you don't even know the backstory of Jelly Jelly, but you do need to know that it's a very low liquidity meme coin that's

very much past its prime. So Jelly Jelly Jelly was listed as a perp on hyperliquid. So what happened was that there was a trader who opened an $8 million short on Jelly Jelly. Now, this was, I believe, something like 50% of the circulating market cap at the time of Jelly Jelly, meaning that this was a massive short position that they opened against this asset. Now, what the trader did is they went off of Hyperliquid and pumped the spot price of Jelly Jelly, causing themselves to get liquidated. Now, why would the trader do this? Why would they force their own liquidation?

Well, what happens is that on Hyperliquid, when a position cannot get liquidated in an orderly way, HLP, which is hyperliquids, basically crowdfunded market maker. That's kind of the easiest way to think about what HLP is. It has a bunch of retail deposits. It's very fundamental to hyperliquids liquidity. Always being a very liquid market is because HLP is always there providing liquidity to traders. So HLP, when a liquidation happens in a very presumably disorderly way, HLP takes on the position and tries to liquidate that position in an orderly way.

Now, this position was so big that HLP was now in a position to be short, jelly jelly, with no way to really get out of the short. There weren't people willing to take that short position or to go long and offload that short. And what happened was that then there was a short squeeze. Now, the short squeeze was not just retail deciding, oh, huh, looks like hyperliquid is stuck in the short. Let's screw them over. There were two other parties that entered into the short implicitly, and those two other parties

were OKX and Binance. Because what happened was that the moment that people realized, oh shit, hyperliquid as a protocol or HLP, you know, which is kind of implicitly backed by hyperliquid, is now massively short jelly jelly jelly. OKX and Binance announced that they were listing jelly jelly perps basically within 24 hours. Now this, almost everybody assumed like, oh my God, this is now exchange warfare. CZ and Star at OKX have basically. basically pointed their guns at Hyperliquid, and I've decided this is our opportunity to take

them down. Now, what happened next was instead of Hyperliquid eating the loss or retail investors on Hyperliquid eating the loss through their positions in HLP, instead hyperliquid validators voted to de-list Jelly Jellie and manually close out the position at an Oracle price that was not the real price at the time that the position got closed. Yes. The Oracle price was below, even like the starting of this fiasco price. Exactly. So Hyperliquid decided, you know what? These guys who shorted us and all the people doing this are bad actors.

And instead of eating the loss or having the HLP holders eat the loss, instead we are going to artificially close out the price at a fake price, not the correct price, to make sure that HLP users are made whole. So that was more or less the end to the drama, but it has caused an enormous amount of conversation. So one, it dropped the price of hyperliquid by quite a bit. I think it's down something like $15. It started the day at something like $21. So it dropped something like 25% in a single day as a result of all this whole debacle. But it's caused a lot of people to debate, first of all, what should hyperliquid have done in the situation? What was the core

mistake that they got wrong? And second, does this mean that, well, you know, how could they have done this without showing their hand that maybe hyperliquid isn't as decentralized as it was one's claimed to be, or maybe isn't as fair as one's claim to be. So you've got a lot of people on different sides, kind of throwing mud at each other. You've got some people at centralized exchanges like Bitgett calling out what's going on hyperliquids, same thing, OKX, call that hyperliquid as what they were doing was somehow unfair. So it now feels suddenly very PVP, feels like the centralized exchanges versus the decentralized exchange, and kind of a watershed moment in the exchange wars now extending

to defy. So curious to get your guys' reactions to ruin what? you start? What's your take on this whole HLP drama? Help contextualize it for us. Yeah. I mean, I think there is sort of like a sense in which these types of protocols have some certain types of deficiencies in the sense that like a little bit like an AMM, like being an AMLP, you know, you can't reject orders. Like the naive Unisov V2, even v3 to some extent. There's no real notion of like,

I can reject an order without me going and pulling my liquidity. There's not like a way of saying like, I want to pick one order to trade against and not other orders. And I think you inherently have the same thing in these pools. The difference I would say between sort of like HLP and sort of its predecessors in GLP from GMX and JLP from Jupiter is that the hyperliquid balances, So it's like you deposit, say, eath into the pool.

Hyperliquid will take your ETH and market make on many different assets. So maybe you'll take 1% of the ETH and market make on jelly. It'll take 90% market make on ETH. We'll take the remaining in market make on BTC. That algorithm for choosing that is completely off-chain, and you're trusting the single whitelisted manager for that. So there's a sense in which the pool is not really trustless already. you're kind of trusting the effectively the hyperliquid team

who is doing the allocation rule. So I think clearly there is, you know, and they've written tweets about this, so I'm not going to belabor this, but there clearly were a lot of mistakes they made on their side in terms of like how their strategy was working and how they didn't have position limits and cap sizes and OI limits

and all sorts of stuff like that that could have ameliorated this without the emergency price. So let's just say, I think they learned a lesson about sort of the mechanism design aspect. That's like the first, I mean, that's the only concrete thing that has been said that they will fix after this incident. So let's start with that. So the thing they'll fix is like open interest limits per asset? Open interest limits and then like concentration limits and, you know, like what's up?

For HLP or for the actual underlying change? For the types of positions HLP will liquidate. Oh, I see. So now in the future, HLP won't even touch. something as like JLU. This is why when I started describing this, I described liquidity pools that don't discriminate, right? Anyone, you can't say I don't want this order and I want this other type of order.

And basically if they had a way of having HLP discriminate versus like third party open liquidation, then like the market could have priced with the value of that position as an HLP didn't have to eat the loss. But the way it's constructed right now is like it does just automatically trade against it, like a UNISOP pool in that sense for the HLP liquidary pool. liquid air pool. So there's a sense in which they didn't put much, many restraints on the strategy. Strategy was just kind of like, and you don't, you know, it's like that strategy is run by the hyperliquid team off-chain somewhere. So like, it's not like I know what the code looks like. I mean, most of their code

is not open source, right? Like, I can run a node, but I only get the binary. And like, there's a lot of stuff that, like, is not clear about how the setup works. And so I think this was a very clear thing where they made mistakes on their strategy limits. And I think that's the first thing they said they're rectifying to clear up. But to the rest of the market, I think it sort of does exemplify the value of having that strategy at least somewhat more open than the way it is right now. Because clearly you have no transparency until like the fact that, you know, like you as a hyper-HLP depositor, you don't actually know if there is some risk limit that

HLP will automatically take an entire position. or not. You also don't know if they'll devalue the Oracle the way they did. And there is one note in the docs that tells you this, but the code's not open source. So you can't really very, you don't have any, even if it's not open source, you, there's no like verifiable proof that it's doing this. So I would say, yeah, the guarantees they gave you were sort of different than what people I think may have thought they were getting in other protocols where you do actually see what the strategy is doing. Um, you know, there's tradeoffs, right? The, when you don't have a public strategy, you can be more capital efficient.

So, like, it's not like there's a, I'm not trying to, to, to, I'm just saying there's kind of like a decision space, tradeoff space, and they clearly made some wrong decisions up there rectifying. But I think the, one of the big questions that I saw Kevin Joe wrote a great tweet thread about this, from Galois. He was the guy who famously shorted Terra at the top. One, one big question. I have is like, do you think it made sense to bail out the HLP depositors? Right? So obviously the HLP would have pretty significant losses.

You think it was a mistake. No, I think this was the cardinal mistake, frankly. I think resolving a market after messing up, we'll call it the risk parameters of the platform, that's one thing. I think closing it out in such a way that the HLP pool profited after being in a horrific position is the part that's a little bit confusing. Because when anybody profits in a perp market, somebody else has lost. And I think this is a very clear example of the hyperliquid team slash validators choosing an incorrect winner and an incorrect loser in this

situation. And frankly, the HLP liquidity providers who are backing this, you know, platform market maker that takes on positions, are entering into a risky proposition. You know, if the liquidations are successful, they will make money. If they are unsuccessful, they will lose money. On the other side of them, this example, when closing out the market, are all of the people that were participants in the per market normally, the people that happened to be long. for instance, the people that happened to be short. And the HLP product combined with the price that it was closed out at, somehow HLP was up, which means that somebody else was down.

And in this situation, I think that's inverted. I think that the whole system would have been better off had they not done it in a way in which they profited, so to speak. And the user base has a whole. lost, so to speak. If you're going to, if you're going to pick a price and rig it, don't pick one that's favoring yourself. Like, honestly, they picked a crazy price. And not only that, it was extra crazy because it was lower than where the fiasco even started. It's like they chose to just give themselves a winner, you know? Yeah, I agree with that. I mean, I think it kind of

gets back to this weird, I think, tension between like HLP as a product versus hyperluid as a product. because HLP is not the only vault, right? There are other vaults people deposit into that run other off-chain strategies. And I think the perception presentation of HLP is like, hey, this is our, you know, first-party vault product, but anyone can run a vault. And I don't think anyone assumed there's any sort of privileged access that, you know, HLP would have. I think people online compared kind of with the saga to lost socializing or auto-de-leveraging

that has happened in other perfect changes in the past. where, hey, this market overall is below margin. And so, we're going to freeze positions and sort of socialize, you know, losses are tapped at the insurance fund. This is not that. This just happened to be HLP was in loss. But hyperliquid itself was not at risk of default. And so it's like, I think it creates this weird perception where it's like, why is HLP

a favored liquidity provider on the security provider on this. exchange where if they have a bad trade, they get bailed out. What do other market makers think? What do other vault owners think? Bailed out at a profit. Yeah, it's crazy. It's insane. Billed out by a profit at a profit by hype, not HLP holder denominated Oracle manipulation.

That's the other weird thing, right? It's like the hype holders voted to give the HLP holders this profit. Well, can you be specific? I mean, what's the exact mechanism by which the hype holders are participating the validation of hyperlop. Because I'm actually, I don't know the details of how the validation. You can delegate to a validator and like, but some of them get to KYC sometimes. So it's kind of still a little opaque, but it's true is right.

But they control the Oracle so that they chose the governance vote chose the Oracle price. So the hype token holders effectively voted. Indirectly voted through Validate. Well, they voted by governance to reduce the market and then choose an Oracle price, right? Yeah, there's a lot of criticism because. the fact that the foundation itself runs, like basically they have, they're delegated a super majority of the total hype tokens. So, you know, the hype holders are voting through delegation, but of course, this whole thing happened in about two minutes. So like the beginning of the

vote to the end of the vote was not enough time for voters, quote unquote, to actually be able to have a say. Okay, so one more question, taking this back to like ground floor, you know, education. Let's go back to the original, like, you know, this is an attack-type situation, where two exchanges that were not hyper-liquid listed perps at the same time, I don't necessarily agree with the hypothesis that other exchanges listing perp markets would have an impact on hyper-liquid necessarily. And I'm still a little bit confused by this narrative as to what this sort of like sequence of impact is because, you know, the perp markets themselves are just another trading venue that is detached from the spot market, right? And even if

there's excess demand on a new finance jelly, jelly perp, like on the long side, it's not necessarily going to change the price on hyperliquid or in the actual underlying spot market. which is the index to control the funding rate on hyperliquid. Like, they seemed attached to me. Like, what's the sort of mechanism of transference? I mean, so the first thing, of course, is that if you're Binance, you need actual spot inventory,

and it just takes longer to go source that, right? But they open the spot market. They didn't open a spot market. No, that's what I'm saying. That's what I'm saying. It's faster to launch a part market than to launch a spot market. Because for the part market,

you don't have to actually get the inventory onto your platform. So somebody has to be figuring out how to get that inventory to where it needs to go to get the, you know, to basically move the spot price and get it in line with the index, right? But you don't have to worry about that if you're just listing perps. If you're just listing perps, all you need is enough demand for people to go and trade the perps.

So structure... And for every long there's a short. For every long there's a short. That's right. That's right. But structurally, it's simpler to rate... It's like, if you're like, hey, I want to kill shot these guys as fast as possible. And there's a limited time to do that.

What's the fastest way to get there? The answer very clearly is perps, not spot. No, but how is it a kill shot? That's the part I'm still grasping at and don't fully understand. Because it gives more people access to participate in the short squeeze, right? If like hyperliquins getting short squeezed

and the goal is like, look, no, but for everyone who's longing it on Binance, there's someone shorting it on Binance too, and they are short. It's not like, you know. Well, that's not true, right? It depends on the funding rate dynamics. And the funding rate did blow out.

If the funding rate goes to zero, then yes. But the funding rate blew out. The funding rate blew out. It went up 300% in one hour, right? So, like, the funding rate was, like, very out of whack from that super. But that's fine. That's, like, less than a percent a day, right? And, like, when this thing's doing hundreds of percent in minutes.

It's a crazy short squeeze. Right, exactly. So this is something that markets are expecting will be over. I'm sure they will delist jelly jelly perps within a week or two, you know, because obviously there's not real demand for jelly jelly. There's only demand because of this event. No matter what Sam lesson says, no one wants jelly jelly. But the interesting thing about this thing.

Okay, so again, it might be difficult to follow the mechanics here if you're not familiar with perps and you're not familiar with, you know, liquidity providers and HLPs and all this stuff. So let's abstract all that away, right? Fundamentally what happened was that hyperliquid was stuck with a toxic position and two other exchanges, Binance and OKX, jumped onto this to try to further bleed out hyperliquid, right? Basically to try to force it, force HLP, not hyperliquid itself.

but force HLP to become insolvent. Now this is kind of a crazy move, right? You know, some people were saying like, oh, this is kind of like CZ, what CZ did with FTX, which I don't think is true. I don't think CZ had good reason to believe that FtX was going to become insolvent

by dumping FTT. And if you look, for example, what happened with a Bynance hack, or sorry, the Bibit hack, with the Bibit hack, actually Bynance and Biket came to Bibet's defense. and they actually lent by bit ether in order to help them fulfill the shortfall

and to maintain exchange operations, right? So what you see is actually the total opposite behavior that they were doing just a few weeks ago with a bi-bit hack compared to what they're doing now with what's happening with hyperliquid. So it's... I don't know if there's a good theory

that explains why they chose to go this way, but it seems like, and this is what Kevin Joe was saying, hyperliquid has implicitly said now through this behavior that there's a put on HLP. There's a hyperliquid put. If HLP loses too much money,

hyperliquid is going to come in and defend it. And you can see that the hyperliquid price moved really dramatically in response to what's going on with HLP, which to me was kind of confusing because I'm like, why, what's the connection here between HLP and the value of hyperliquid?

And maybe there's something I'm missing with respect to the tokenomics of HLP. HLP doesn't really have have any tokenomics. It's like an LP pool. It's not tied. Okay. Yes. It's not tied to the hype price. No, no, no. I think I think the weird thing here, and this is maybe a better way of viewing this, is like, I view the HLP pool is like a company having debt, right? Because it's like, I raised money from depositors to go land. It's not dead. It's equity. No, no, no, no. Hype is equity. That's what that's the weird part about this. No, no, no. I'm saying it's equity in the

market maker, right? Because the pool investors take all the profits. It's not dead. Sort of, yes. The market maker is taking the users, USDC, and using it to trade all of the different markets on high. That's right. But the users get all the profits, right? So it's not dead. Yeah. I think the reason why hype dumped is I think it sours the future of the exchange. Like, why would you want to trade an exchange where you know there is a privileged LP that can't lose? Like, why would you want to provide liquidity there? I mean, this is sort of, again, the same things that come up when exchange. just have, you know, in-house market makers is like, okay, well, how far does this privilege kind of go? I think for... There is, there is one very cynical take that I think a lot of people

have had, which is like the majority of the HLP liquidity is from the hyper-liquid team themselves. So like they didn't want to take that loss. No, I'm not sure. I'm not sure. $500 in there. No, it was like $200 at the time. Yeah. Oh, sorry. I could easily, like, when they bootstrap the pool, it had over 75. So it's like, it could be a large majority. of that 200 listeners. But still, what did their balance of hype be so much larger

than... For sure, for sure. Here's another reason you should be thinking of the HLP pool as a debt, more debt-like instrument is that it takes money

from depositors who are supplying and you can think of it as like lending to each market that it's kind of market making in. So it's doing kind of this like local loan.

And in the case like Jupiter in GLP, they are explicitly lending protocols. They like charge fees in that way. In the hype case, they charge a fee plus the spread effectively. And the idea is like if it defaults, like in this case, then it, like, you know, the depositors have first right rules. It's almost, that's why I say it's like debt holders and equity.

They actually can claim the collateral. It's not like equity and they get zeroed out. And so I feel like it's not, it's like some weird in the middle, but like I think it's closer to debt. And hype is the real equity. because hype is the thing that's like able to really control. I mean, the thing that can control the Oracle is the equity instrument in my opinion. The way that I would frame it more is that like hyperliquid is almost like an exchange that's

B booking, but the B book stuff is happening through HLP. HLP is the equity in the B book and hype is the equity in the exchange itself. Can I make just a very controversial statement real quick? Go for it. I feel like we should have learned after FTX that an exchange and a exchange and a, a hedge fund-like thing where a proprietary market maker trading on the exchange should be separated, right? One of the price-separated.

I mean, to the credit of this, though, I can see every single trade is- I can see every single trade that HLP is doing. I can withdraw whenever I want. Like, it is very different. I agree with that. I don't think you can compare them. It's still, it's still their team running the market. They are attached to the hip.

No, no, no, no, that's not what I mean. What I mean is that if the exchange is putting a put on this market maker and saying this market maker cannot lose money, now they're exchange, now they're joined at the hip, right? Just the team running the market maker itself, it's like, well, if you don't believe in this team being good at running a market maker, don't buy equity in the market maker. You know, fine. That's not a problem. And that's how it was presented. You know, it's like, you, hey, come spin up your vault and here's another market maker that you can deposit into. And it's like, we are one of many.

And actually, no, this is a one of one. I mean, I will, I will say that if you look at their other market makers, my favorite one time. look at is seafood who just constantly loses money. Like, I don't understand why people keep giving that guy money. He's just, he already, he's historically lost money, you know, forever. I think he's up today, right? Great. Maybe up this week.

Beautiful. His vault is very funny to watch. But my point is, yeah, there's a lot of adverse selection already in those vaults that, I think like, yeah, his, intuitively, these two things were separated until this event. And now they're not viewed as separate, right? And that- I don't think they were separated even prior to that. Prior to the event, the team was running a market maker that was the primary market maker on the platform.

Yes, the economics were owned by users and not them, but it was the same owners of the trading venue running the primary market maker trading on the trading venue and being the liquidation mechanism. Yeah, I mean, obviously, then being tied into the liquidation mechanism does make them somewhat privileged. although in some ways it makes them unprivileged, right? Because they're forced to take on these positions that another market maker might not want to be taking on all of these limitations. Totally. But Alameda, whether they wanted to or not took on all the bad positions on FTX with the mobile coin and all these horrible things that blew up their exchange as well. Right.

They were forced into it. It was both a blessing. Right. But the whole idea of why this is potentially okay is that even if HLP goes to zero, takes on a bad liquidation, gets completely fucked. the retail users are taking the risk, like not retail users, investors, investors in HLP are taking the risk

and hyperliquid can continue on even if HLP gets zeroed out, right? That should be how it works. If it's not how it works and it's all commingled, then I think this whole structure no longer really makes sense, right? By the way, from a vibe standpoint, just like aesthetically,

I think getting supu-ed by mobile coin is a better aesthetic than getting spooked by jelly jelly. Like, jelly jelly is just like an embarrassing excuse of a VC meme coin. And mobile coin, there are lots of negative things you can say, but at least it has a network. Like there was something that was built versus like this dog shit piece of shit coin that was like some VC who was too bored decided to try to dump on retail. I agree. They were, mobile coin was trying to be a real project versus just an outreach. Yeah.

Anyway, sorry. Aesthetically, if you got killed by mobile coin, there's like a little. bit, it feels a little like, okay, that's like an honorable. Yeah, but it's sort of like it could have been anyone, you know? They just like found jelly jelly. I get that. I'm just like aesthetically, aesthetically, not financially. They're just like an object on the ground that they sharpened into a knife and then stabbed

hyperliquid with. I just think aesthetically, aesthetically, not. Sure, sure. Aesthetically, yes, yes. Yeah, okay. So, so one of the points that Kevin Joe made as well is that, you know, in the wake of this, what you should expect to see now is that, okay, let's assume that HLP and hyperliquid are now tied to the hip, whether they acknowledge it or not. What that's likely to mean is that, one,

third-party market makers or liquidity providers are likely to do less on hyperliquid, because they know now that they're not fighting on an even playing field with HLP. Second, HLP, to be fair, to be fair, most market makers I talked to already said that. So I don't know. I think it's not like they didn't know that, but now they get to use it more as a real excuse. Sure, sure. Second is that you should see more capital going into because people now realize that like, hey, the protocol is going to protect you. Disagree. Less.

No. Now, you see the flaws in. Wait, can we, can we, can we, can we bet some Red Bull? Oh, good idea. This one, this is like a Red Bull case bet, I feel like. Well, I think, because the problem is that we, we don't know in absolute terms, will it go up because it depends on. No, no.

Let's go right now on Defilema. It's, it's, uh, we'll just use DeFi Lama just as a, it's a, what's happened to the fault? Has it gone up or gone down? It's gone down. It's at 185 million. It was three days ago, $296 million. $2.99. Let's say it was $300 million on March 24th.

I think that's a good benchmark time. It's down to $185. I think like I could see both at both points. I actually wouldn't be able to pick one because it's possible that it goes up like the way Haseeb is saying because it's like, oh, it's viewed as a FDIC insured, hype insured product. or something, you know, like, but there's also the fact that, like, the fees on the exchange might go down because of this because, like, there's a loss of confidence. And so then, like,

the fees it could make go down. So then, you know what I mean? Like, those are two countervailing things. And I don't know which one will dominate. I actually think the risks have gone up. And yes, if the incident is bad enough, then the platform steps in and closes the market and uses a resolution price such that HLP doesn't lose. We just saw them with jelly job. Right? There is a put. Fine. There might be a put when things are really bad, but the jelly jelly incident has exposed the fact that small-cap assets on hyperliquid are easily exploited under the current mechanisms. And the probability of a repeat incident has gone up like at least an order of magnitude. And if I were looking at H&E... I totally disagree with that. Now nobody's going to try

this again. You guys are like... You guys are like the... This is like trying to fight over whether like an airline that just had a plane crash is more safe or not. Well, they are also materially changing, obviously, HLP strategy in the exchange, right, to like limit L.I. So it's not like, yeah, it's, you know, these are not totally independent events. Yeah. I know. But again, this is also not the first plane crash. There was a plane crash like two weeks ago, the exact same thing, where there was a intentional liquidation in the Bitcoin market, which is not a small cap asset, which is a very large.

cap asset, and the exact same, we'll call it, attack parameters took place like two weeks ago. I think you guys should bet. You're not betting? I already told you. I'm kind of like, I'm in Mardiangale. I don't think I have a decision on which one is. What's our time for 30 days? No, let's say end of the year.

End of the year. End of the year. End of the year. More deposits or fewer deposits in HOP. I think you do HLP as a percentage of OI. Because, you know, the exchange, OI might go down, deposit might go down. Yeah. That's a better metric.

That's a better metric. I don't know what is right now, though. Okay. I say down. I say down. I say definitely goes down. I say it definitely goes up. Definitely definitely goes up.

Okay. So what are we betting? One case of sugar free red bull? Hyperliquid. Okay. All right. Well, we'll figure this out. We'll publish it alongside the, the, the episode of what the current number is.

And we'll see at the end of the year. Total. Total open interest as of yesterday was $3 billion. And yesterday it was at $236 million. So we want today. So 7%, 7%. The ratio of HLP to OI is 7.6%. Right.

But the OI dropped a lot since yesterday. The OI dropped. Not the OI, the HLP. The HLP dropped about 10% also. Okay. That's pretty close. It's not like that. So.

Yeah. So it's at like 7.6% now. All right. So we'll find, we'll lock in those numbers and we'll see it at the end of the year if I'm right or if Robert's right. So I like this. Okay. So did you guys pick who, just so do we have?

Yeah. I'm lower and it seems higher. Okay. Yeah. On the ratio of OI. Sounds good. I'm going to pin this in our group chat so that we have a memory of the number. Okay.

Good. Good. Yeah, I'll send a reminder. Okay, let's talk about some more positive news. Let's talk about what's happening in our good friend, Terun's favorite field, D.Sai. So big news in D-Sai land, SAE protocol, which is a high-performance layer one EVM chain, has announced that it is placing its boldest D-SI bet yet. The SAFE Foundation is exploring the acquisition of 23 and me, the genetics, that has famously filed for bankruptcy recently.

And what they said was that they are going to defend the genetic privacy of 15 million Americans and ensure their data is protected for generations to come. They are going to deploy 23 and Me on say and return data ownership to users through encrypted confidential transfers, allowing users to choose how their data is monetized and to share in the revenue. This isn't just about saving a company. It's about building a future where your most personal data remains yours to control. Wow. Tarun, how can you argue against the magic of D-Sai, saving all of our genetic data?

Please prove to me that there's any bare modicum of understanding of any privacy-preserving technology known by anyone who works at say. Oh, I'm waiting. There isn't. If you told me, like, someone who's doing a real privacy thing about it, it'd make way more sense. If you're telling me someone who's buying it and it's like, we're going to somehow spend a lot of blockchain money and then maybe make it open in some weird way, that is almost worse than the people who are just buying it.

Okay, so what you're saying is that you support this if they do it right. Yeah. Sounds like maybe you should do some consulting with... I think you should be an advisor. I think if you're going to do it and you're going to... Because like all the other bidders and the current stuff right now are like all these comp bio... Okay, so I know a little bit about the bidding that's going on for 23 of me is a lot of people who are lining up are like computational biology companies, like AI drug discovery companies who basically want to buy the data as like a training set.

The reason P there's this uproar is that people are like, I bought 23 and me eight years ago. And like their privacy policy then said they were not going to share it with anyone. And they went bankrupt. And now they're sharing it with like people who are getting who maybe will make like some blockbuster drug out of my data. And I didn't consent to that, which is fine. So like there's two aspects there. One aspect is the privacy aspect, right? Like the terms of service that you initially signed,

which are now null because the company went bankrupt, on privacy are not there. But secondly, the kind of terms of service on monetization aren't there. And I think if you're someone like... Wait, is that right? Like the terms of through which you bought a thing get terminated because the company went bankrupt? Because they're chapter 11th.

What entity of enforces those afterwards, right? I thought there's like a if they come out of chapter 11 they're doing a restructuring they're not they're not like liquidating the company yeah I I okay this is a good question I kind of assume that that that that's what people are yelling about if only we had a guest who was like a bankruptcy lawyer yeah exactly I that all right well that's not okay yeah the main things people care on the terms service are the privacy aspect the monetization aspect right like they they kind of like those were the two

things and all of the people trying to buy the company there's like one set of people whose entire goal is pure monetization right like the people who are these comp bio drug discovery companies and then there's some people like non-profits and stuff who are like trying to to bid and then of course there's the D-Sai world then they're say they're say and I would say no pun intended that if the blockchain is supposed to help monetization, fine. That's like a 2017 ICO pitch. I'm excited to see that fail once more again. But if you said something about the privacy aspect,

I'd be like, okay, that maybe you could actually be useful and find a way of like doing this in a privacy preserving way, but still making it somewhat monetizable. But I think if you're just like, oh, we're going to like let you own your own data and monetize it. I just don't, I don't think I've seen anyone who's successfully been able to do that. It's a little bit like this thing Tom was complaining about earlier right before the show about like people complaining about the studio Ghibli stuff because like people didn't monetize it on the blockchain or something.

And it's like that is like completely not the thing going on here. That is very true. I also don't know how they would buy it because I think there's still like $200 million in debt. So unless they have some crazy structuring or, you know, hey, maybe the, you know, the 23MEC editors want some say tokens. Sweeten the deal a little bit. Do you some block tokens for I mean, the thing is all the other people bidding, so there's like some big

companies bidding, but I actually feel like I have no clue of their chance of winning, but I kind of get the feeling of sentiment-wise. It's like people want it to go somewhere else given the initial turmoil with the company. But yeah, I don't know. Like make sure

if you have a plan for like some like preservation of the sense that the original terms of service had, then I think, like, sure, fine, go buy it. Go default your validators because you're basically borrowing against their future earnings. If you think about it. At a high level, here's my take on this. Right now, all the data is in a database that's owned by a company that's bankrupt, right? In general, putting all the data on a blockchain can be no more private than it currently is, right?

I think there's risks that putting all the data on chain, you know, has more exposure for the information. Obviously, it comes down to what security measures are being taken, what encryption there is, what zero knowledge, whatever there is, blah, blah, blah, blah, blah. But I don't think it's going to improve privacy and security versus the status quo, which is there's a bankrupt company with a database full of info. Well, seemingly right now, if what Turner is saying is correct, It is true that, you know, base case, some company acquires that database full of info and just does whatever the hell they want with it.

So that, that's clearly not the... But great, there could be worse outcomes. There could be... There could be... They can't be... Worse buyer who takes it. And they publish it on the internet without any security standards, right? Probably less likely, but yes, that's the principle possible.

It's in principle. Yeah, I don't know. Like, I've never bought this idea that, like, okay, you know, sort of data ownership means that you take some data, you encrypt it and you put on the blockchain, and then you sell people, you know, if you want to use my data, here's the key to decrypt it. Like, I've never seen how that solves anything. It's also just like, I think especially if you are blockchain people who don't understand the privacy side for doing that type of stuff correctly, there's so many ways you'll fuck it up

and release everything. And I feel like that's more of the thing. think is more likely to happen is that they spend all this money, they accidentally release it in some weird way, and then like, I don't know, North Korea makes a super bug from training their, their bio weapon, LOM. Yeah. Yeah. Okay.

So what you're saying is that you're not bullish, true. I think if someone else is doing it, I'd be more bullish. If someone else are doing it, who has to do it for you to be bullish? Open AI. XRP XRP Microsoft I think someone who's doing more like

T Pfizer actually T's stuff like I actually sort of have this weird thing where I actually like Nvidia doing using this to prove their privacy preserving H800 stuff

that it works is like kind of a good way it's a way for them to have a data set that's unique to their chips that you can't see the whole data set but you can do queries against it in their GPU.

And like, I feel like someone like that probably has more incentive to not just like completely fuck things up. Okay, but nobody in crypto. You wouldn't trust anybody in crypto to do this. It'd be a good story. What about the Adrian Foundation? I think like, I think like people doing

like low level cryptography, advanced credit stuff like ZK, T, FHE, I think all those people are, would be good. But like, I don't think that they're going to like figure out how to productionize it because they're already fine all right let me let me let me let me ask you this putting this story aside um it's been i think three months now since you've declared war on d-sai how how is it going uh since my war on dica i mean i don't know what's where where's bioprotical nowadays i just kind of i kind of gave up because i was like i'm

kicking a dead cat you know it's like i think everyone kind of realized it's like mainly a dead cat I don't know, 23 and me can bring it back. I think mixing metaphors a little bit there. It's mainly a scam. There are some well-meaning people who... Does you know, Bio Protocol has 321 million FDV? That's pretty serious. That's worth more than 23 and me.

Don't give them any ideas to see. I mean, the thing is they'd have to admit more than they have currently unissued to get 23 million. My point is like, you know, I just I think people have realized like most of the hype at that time was like it was just a meme coin that happened to have a different type of branding. It like attracted people who are like meme coins are gross. Those are hype beasts. But DSI, DSI is like donating to a nonprofit. I feel like a great meme coin holder.

And like it attracts. That's like what I thought it was. It's kind of an affinity scam to kind of target people who are like meme coins give me the ick. but like a meme coin that does social good. Oh, but I don't check how it does the social good. I can't even verify that. Oh, I'm trusting these random five Dow token holders. Okay, great, whatever, buy.

You know, like that's kind of how 90% of DCI is. So you're just saying it was meme coins with better branding or more or more. Different branding. Like, you know, it's like targeted a different demographic, right? Like, then the, the Salana DGEN stuff. What was that OMFORC from last cycle that was like, we're going to use the treasury to like plant trees. The carbon credit one, right?

Yeah, the carbon credit one. Climate down, climate down. Yeah. That's right. That's right. Yeah. reincarnated. Wait, wait, wait.

Can we look at the price of climate? Wait, wait, wait. Can we look at the price of climate down? Yeah. All right. Five million market cap. No. FTV.

FD is 5.5. I mean, it's really this year it's down like, 80% this year. Huh. I mean, this chart is. I just checked. Yeah. So Ome, like Olympus, like the OG Ome

is at 430 million market cap. It's up 100% this year. Yeah, it's been up. They've been monetizing their treasury and like distributing yield. I feel like Ome actually has some secret comeback story. You think so?

Maybe on the future episode we'll have Ome on. They rate, because basically the thing about this, in the process, they, raised a huge treasury. And then they started monetizing that treasury and defy as things went up. And then they're distributing some of the yield back. So like it's like a kind of a weird business that's like robber barons or something where like the underlying business has disappeared, but they just have this foundation that continues on. I think they're still building new products. So I'm not sure. But I know that there's there's now real yield coming in.

So they're like the new Nosis. Nosis, file coin. Like I, I can think of all the ICO people who did similar things, right? Where they, like, raised a huge ICU, then monetized the ICO very well. EOS, sorry, EOS, it changed their name. What is their name now, VALTA? Block 1. No, no, no. EOS, the chain changed its name to Volta.

Really? Yes. Yeah, yeah, I saw that. They did a whole rebrand. Well, Block 1 who made Eos and made all the money. There were a bunch of rebrands today, right? Like, people were complaining on Twitter at, like, Wintermeet rebranded as someone else rebrand? No, I thought the joke was Whitermute did it. much of a rebrand.

I didn't see it. They just made their logo like short, small green text. It's the same thing. Okay, okay, okay. Because I just saw like, Evgeni, like, fighting haters in the replies somewhere. Like, you don't know the difference between a brand update and the rebrand or something.

And I was like, what the fuck is happening here? Like, it's spring. It's time for a fresh coat of paint. I respect that. All right. Well, speaking of a fresh coat of paint, there is a new stable coin bill now working its way through Congress. So before we mentioned the previous version of the stable coin bill called the Genius Act,

that was sponsored by Kirsten Gillibrand. We now have another one in the House instead of in the Senate called the Stable Act. Now, the Stable Act was introduced by French Hill. Yeah, go ahead. Petition for prediction markets to bet on the names of these bills. Well, I think it's somewhere between stable and genius. It's sort of stable genius, you know. Oh, I did not, that did not occur to me.

Wow. You guys didn't realize that? The whole point is it's a play on Trump's quote about being, you know, a stable genius. No, no. Really? Yes. Again. Wait, but which one came first?

No, originally. Genius came first. Yeah, yeah, genius came first, but I thought it was like the stable genius act. It was the very first iteration of the, you know, backronym. No. Are you making this up or do you actually hear this? No. I'm serious.

So they were making fun of Trump. No, it's not making fun. No, it's a celebration. Oh, I do not believe you. Where are you getting this? I don't know. The internet? It sounds like a wivesdale.

This does not sound real. There's no way. What? No, I mean. Robert was allegedly in D.C. So, you know, he's, I'm going to maybe trust him on this. But I actually don't see anything about this. This sounds like D.C. hearsay.

This is no way. Because they all, because they, because like, first, the genius that came first. And it was, the previous version of this was not called the Stable Act. So I think it's a coincidence. I think it's a totally coincidence. There's no way that you would call it stable genius. Because now that's like an insult. People use it to make fun of Trump.

Do they? I think it was so much. I think there are things that Trump himself that other people think are insults. He doesn't think they're insults. He's like the Teflon-Done thing. Is this? Okay. Well, regardless of whether or not stable genius is meant to be a joke.

So anyway, this new bill is called the Stable. Act. So just to give a sense of the differences between the Stable Act and the Genius Act, because we now have two versions of this bill. These two versions are going to be competing in the House and the Senate to get reconciled into one final bill that's going to eventually pass. And we don't know which pieces of which are going to end up making it into the final bill. So relative to the Genius Act, here, the big differences between the Genius Act and the Stable Act. So first and foremost, the Genius Act is probably more industry-friendly. It's more flexible. It allows bank and non-bank stable coin issuers alike, so you don't have to be a bank

in order to issue a stablecoin. It allows for state regulators to oversee a stable coin issuer rather than just federal regulators. And it has a big focus on interoperability. It allows you to pay yield potentially in some situations. And it's basically just more encouraging the growth in creation of stable coins. The Stable Act is more restrictive. Stable Act only allows the Fed to oversee stable coin issuers, so you need direct Fed oversight. Only banks or approved bank subsidiaries are going to be allowed to issue stable coins under the Stable Act. There's a much heavier compliance regime under the Stable Act, and the overall sense you're going to get is that no yield coming out of these stable coins, a lot less creativity you can have around the types of

assets that you have in reserves. And there's also going to be a two-year moratorium on algorithmic stable coins, although currently existing stable coins are going to be grandfathered in. So that's the Stable Act. Robert, you said that you were on D.C. making the rounds, talking about stablecoin legislation. What's your sense of how this bill is being received and how do you think about it? Yeah, so I happened coincidentally, I mean, timing unrelated to, you know, stable coin legislation being top of everyone's mind. You know, had a trip to D.C. on Tuesday and Wednesday, had about 15 meetings with members of the House. And obviously, the number one conversation the whole time was on stable coin legislation

just because it's so close. I think there's obviously a tremendous amount of excitement from both parties for creating legislation that's pro-crypto and non-controversial. And I think in a lot of ways, stablecoin legislation, everybody, both sides of the aisle, all, you know, pro-tech, a little bit tech-scarred, realizes that we need to enshrine law around how stable coins were. It's too important not to. And so I think there was a widespread consensus that stablecoin legislation would obviously

be the first major crypto legislation that gets passed because it's also relatively simple. I mean, we're talking about a couple differences between the House and Senate side that will get resolved, you know, in the near future. There was obviously a lot of conversation about what comes after stable coin legislation. I think there's a widespread consensus to its market structure in some variety. And I think it feels a little bit farther out. So most of the conversation of focus was really on stable coin legislation. And to reiterate, widespread support, and granted, I was talking to members that were in general,

more aligned with crypto than skeptical of crypto. So there is some like perspective bias in there. But, you know, full support for stable coin legislation and a widespread expectation that, you know, any differences between the House and Senate would be easily reconciled. I think the first time I ever heard the phrase narrow bank was 2009. I'm like, everyone and their mom has been talking about narrow bank legislation for like, okay, this makes me just sound like an old curmudgeon. But I'm like, everyone's talked about how like, oh, you should have these kind of. narrow banks that kind of very restrictive on like the types of yield they can offer but like so can you explain what a narrow bank is so i guess the original definition narrow bank and the

current definition deviates i'll give you sort of like some intersection um narrow banks like i think especially after the financial crisis there's kind of this view of like can you make banks you know like at that time there was like hey do you put a ton of regulations on banks to say like okay, you can't trade or do these types of activities or whatever. Or do you try to also just make a completely separate bank for consumers that can only do very simple loans and deposits and does not really do much else. So it's like a little, ironically, a lot of the early fintech apps and, you know, currently like Square Cash, Venmo, stuff like that, they sort of function as like pseudo-narrow banks

where like or N10 or in Europe and stuff like that, where you can deposit, but there's not many products you can often earn, like you can maybe buy treasuries indirectly or in the case of square, I guess, Bitcoin. But there's not like the principle who's holding the funds is allowed to really go and earn yield in very exotic ways.

Like they can't have a prop trading desk. They can't have like, you know, they can't buy weird bond portfolios. Like they're very restrictive. And in some sense, a lot of the stable coin bill really reminds me of neurobanks. It's like the no yield on stable coins, the kind of how the bank charter is used. And it sort of feels to me like it's kind of interesting. It's like took all nearly 20 years from the first time this like concept existed.

And then it took this like new technology to actually make it kind of eventually adopted. So I just sort of feel like there's this weird feeling of like history. repeating itself or taking forever to repeat itself? Because, you know, there was this like 10-year period where there were like no new banks in the U.S., no new bank charters, right? I was going to say, my understanding of, you know, narrow banking from when it was originally proposed a little bit different. So the interpretation I always had was that, you know, a narrow bank is one that would park pretty much, not pretty much, 100% of its deposits at the Federal Reserve at like the discount window and maintain full 100% liquidity period. Just say,

we don't need any investment analysts or loan officers. 100% of it just goes to the Fed and takes whatever they're going to give us. Turn around, take 10, 25 base points or whatever off the top and pay that rate variably to all the depositors. And there are no other services. It would basically be a wrapper around the Fed in a lot of ways. Yeah. It's a full reserve bank.

It's a full reserve bank with 100% liquidity, zero liquidity risk. And like you could do this hypothetically with like 12 employees. and scale to any amount of size. And people hated the idea of a narrow bank because, A, it would compete with the existing, you know. If you say people didn't like it, the Fed didn't like it. People loved it. Yes, people loved it. But the Fed didn't like it for a lot of reasons.

But it would compete with the existing, you know, fractional reserve and commercial banking sector, right, that increases the money supply through loans as opposed to just parking it at the Fed, right? And, you know, they thought that the radical simplification would also dry up liquidity for mortgages and for things that are good. And that narrow banks wouldn't. Well, here's the way that I would describe why the Fed rejected the concept of a narrow bank is that it restricts the Fed's ability to directly intervene on the money supply, right? Because it's not as though nobody would give mortgages anymore. It's that it would move to private lenders, right? Private lenders would start offering rates on mortgages because ultimately, you know, you know, Yeah, people want, you can borrow money for fucking anything in principle, right?

And house is obviously good collateral in America. So, but once the market moves into private lenders, the Fed loses a lot of the mechanism to be able to directly intervene on the basically expansion of the money supply. Well, no, if anything, they'd have more ability to intervene because the lever of what is the overnight rate changes everything for everybody everywhere. But they also have the reserve ratio, right? The reserve ratio is the second lever. That's a very powerful lever that can instantly, like the-

Yeah, it changes the money multiplier. Yeah, increasing rates or decreasing rates. Obviously, you've got the zero lower bound, which I guess, you know, technically you can cross, but the U.S. is not to go into negative interest rates. But second, it's just a much slower mechanism to go into the market than, okay, now as banks you can loan out everything that you have in reserves and just like go hog-wild. That can change much faster. Which brings us back to the Genius Act, and Turun was saying that stable coins are like

narrow banks, although I would say with this legislation are not like narrow banks, but... Well, no, I think what he's saying is that the Stable Act in particular, because it doesn't allow yield, why aren't they allowing yield in the Stable Act? Presumably because they don't want it to compete with commercial central banks. Oh, okay. I thought Turin was saying that makes it more like a narrow bank, but the whole point of a narrow bank is you pay people in credible rates and it's fully liquid. Well, so I think what he's implying is that you could create a narrow bank using a stable coin if you don't disallow paying yield. Correct. Right. So under a Stable Act, you cannot really create a narrow bank that would compete with commercial banks.

But under the Genius Act, you could. You could basically have a stable coin that just holds a bunch of treasuries and pays back all the, you know, treasure yield minus 20 bibs or whatever. And that ends up becoming a really easy business. And you can argue that's kind of what tether is, you know? Like, I mean, obviously they don't pay yield. But if they did, it's an incredible business model. It's very labor efficient. They have like, what, 90 people or something over the, you know, $100 billion plus that they hold in assets. So that's a pretty damn good business. I think there is something there that this is kind of a backdoor way to reintroduce the concept of a narrow bank, but in a way that we're a little bit more comfortable with and has broader geopolitical advantages, whereas a narrow bank would really only harm

commercial banks without having any offsetting benefit to the U.S. dollar or to, you know, the internationalization of the dollar, as it's often called. The advantage of stablecoins is that, okay, even if you do have something that competes with commercial banks, it also increases the overall tam for the dollar by exporting it internationally. Narrow banks don't really do that. It's purely zero-sum between commercial banks and narrow banks. So I think from a policy perspective, that's like the reason why you might look at it

differently for stable coins. But I do agree with you, Turin, that it's very likely that when you get central bankers and or even banking executives looking at this thing. They're kind of like, yeah, actually, we should only have people with banking licenses being allowed to issue stable coins. Because at the end of the day, this is kind of regulatory capture 101 is you really want to make it so that a smaller and smaller number of players can capture this market if you're a bank.

So, Robert, given your time in D.C., what's your read on how the final bill is going to go? Do you think it's going to look more like Genius Act or look more like the Stap? Act? More restrictive or less restrictive? I think it's going to be less restrictive with the exception of yield. I think the commercial banking sector as it currently exists doesn't want to see yield on stable coins. And I think with that exception, it'll be a looser bill, but with the one caveat being no yield on stable coins. That's my guess if I had to just put it. a line in the sand. Right. And honestly, it is one of the weird rackets in banking that, like, you know, I have, you know, I have a Chase Bank account and I'm like, why doesn't my cash

automatically get swept into money markets and then like it draw? Why am I earning one basis point? Right, exactly. Why is it like purely a function of my laziness that my money, like, this is so trivial to do if they would just do it for me. But if you don't do, if you don't do it yourself and a lot of people don't do it themselves, your cash is just sitting there. I think there's also true for like brokerage accounts that a lot of people just have their money sitting there doing nothing. And like there's like one button to move it into the money market. And a lot of people just like don't. And so the broker just makes shit loads of money on people just kind of being lazy with their cash that they haven't swept yet.

Yeah, I mean, brokers make money primarily off of interest nowadays. There was a FTC, I guess a lawsuit or investigation to city. I don't know if you read about this, where they had two different savings products that were basically the same name, but one was this like one BIP and one was true. Yeah, Matt LeBos. Yeah. Yeah. And then I think actually the new Trump admin dropped that.

So we'll never find out what happened, but you know, city gets investigated and the stables get away with it. So yeah. Yeah. Yeah. You can't lower the rate for new customers very easily, but you can roll out a second product that goes up and all of the old customers were left at the interest rate that didn't go up.

Well, but ironically, you know, if you think of this as like a cash account, right? Stable coins, even if you're not getting sharing yield, like if you're not getting yield on your tether or your USDC, just lending it in the market gives you reasonably high yield. Not, you know, it's not necessarily treasury rates, but it's pretty good. I don't know what it is right now. Is it above or below treasuries? I think it's for stables. Five, six percent.

But I mean, you can also, I think the idea with their bank is you can choose, instead of bundling all this together, you can unbundle it and choose your, your risk profile, you can put it into private credit, you can put it in the tokenized treasuries, you can do whatever you want, versus having a SQL NG kind of do it for you. So, you know, you can go in and do that if people so desire. Yeah, that makes sense. But if there's a reason why stable coins do win and drain deposits out of the, out of the banking system, my guess is that that would be the reason why, is that your cash is always earning a yield, regardless of how lazy you are.

So anyway, all right, we're up on time. We've got a wrap, but we'll be back next week. Thank you, everybody. Thanks, everybody. See, yeah.