Unchained - The Chopping Block: When Wall Street Meets DeFi — How Equity Perps and RWAs Redefine Leverage On-Chain - Ep. 937

Episode Date: November 1, 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. This week, Kaledora Linn, Co-founder and ��Empress of RWAs” at Ostium, joins to break down the rise of on-chain equity perps, the funding-rate chaos that hit 365%, and why she believes the next wave of tokenized assets won’t come from exchanges—but from structured liquidity markets. We dive deep into Ostium’s hybrid CFD model that blends TradFi mechanics with on-chain transparency, explore why most retail traders can’t stomach perp carry costs, and debate what “safe leverage” could look like in an RWA world. The panel also touches on CZ’s presidential pardon and Coinbase’s new Echo platform, connecting the dots between political optics, capital formation, and how crypto’s product design is evolving beyond speculation. Whether you’re building perpetual DEXs, tokenizing RWAs, or just trying to survive the next funding-rate spike, this episode unpacks how market design, UX, and regulation will shape crypto’s next trillion-dollar frontier. Show highlights 🔹 Equity Perps, ADL, and UX Reality — Why funding swings as high as 365 percent make traditional perps unusable for mainstream traders, even if they work for short-term speculators. 🔹 Inside Ostium’s RWA Derivatives Model — Kaledora Linn explains how Ostium re-engineered perps into a CFD-style liquidity system to stabilize funding and attract institutional flow. 🔹 CFDs vs. Options — Why trillions in CFD volume dominate global retail markets and how a linear, simple payoff structure beats the complexity of options. 🔹 Market Microstructure and Path Dependence — How thin liquidity and whale-driven order books make on-chain equity markets fragile in early growth stages. 🔹 Funding-Rate Distortions — Tarun breaks down why “delta-neutral” strategies blow up when funding turns asymmetric and leverage resets too quickly. 🔹 From Perps to Products People Actually Use — Haseeb and Kaledora debate how to make RWAs tradeable without the hidden costs of perps. 🔹 Leveraged ETF Paradox — Despite structural decay, leverage products remain popular because of UX, accessibility, and clear narratives—lessons for on-chain builders. 🔹 Predictable Costs Win Power Users — Why whales and market makers prefer stable, knowable carry over yield-chasing chaos. 🔹 CZ Pardon and Optics — The panel dissects political fallout, public perception, and what “clemency for founders” means for crypto’s reputation. 🔹 Coinbase Echo Launch — A new experiment in on-chain crowd sales, retail capital formation, and the post-airdrop meta. 🔹 From Airdrops to Allocations — Why curated, paid token sales may replace “free money” farming to create long-term aligned communities. 🔹 MegaETH and Luxury Distribution Models — The “sorting hat” approach to allocation mirrors art galleries and luxury brands—scarcity and provenance as value signals. 🔹 Go-to-Market Over Purity — Tom and Robert argue that product distribution and user education matter more than perfect decentralization in early RWA markets. 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  Guest ⭐️ Kaledora, Co-founder at Ostium Timestamps 00:00 Intro 01:39 Kaldora’s Crypto Twitter Controversy 03:43 Debate on Perpetuals & Equities 07:20 Funding Rates & Market Dynamics 16:09 CFDs vs. Perpetuals 29:31 CZ's Pardon & Political Backlash 37:42 Trump's Pardon: Optics and Implications 39:06 Crypto's Midterm Impact 41:50 Echo Acquisition by Coinbase 46:11 Crowdfunding Platforms & MegaETH 55:36 Luxury Goods & Token Sales Analogy Disclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

Like everyone who's saying that is definitely like a neck beard curmudgeon. Oh, people who trade perp equity equities on perps are like people who care about tax optimization. Yeah, sure. I'm sure that's like some sub-serve. That's definitely not going to be the initial user base at all, right? They're not going to be the ones who care about exactly how you're not going to do it. Not a dividend. It's a tale of two pawn. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. Um, I'm named trading firms who are very involved.

Dalek.EAT is the ultimate problem. DFI 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 cruiter topics of the day. So quick intro is first you got Tom, the DFI Maven and Master of Memes. Hello, everyone. Next, we've got Tarun, the Gigabrein and Grand Puba at Conlon. Yo.

Joining us today, we've got special guest, Caldora, Empress of RWA's at Ostium. Thanks for having me. Hey. You're alliteration. are getting worse to see you used to make sure all of these titles had all the literation of RWA I thought that was pretty good it's like that sounds pretty good it's a it's a it's pretty good it used to be alliterative though you kind of it is alliterative empress of RWA's at osteum it's like it's like an Emily Dickinson it's like a half half alliteration okay yeah all right give it to me give it to me

all right fine it's all right you can write these from now on if you want it's musical you can write this now on I'll give you that okay all right rhythmic you All right, well, I'm a seat the head hype man of Dragonfly where early stage investors to crypto and I want to caveat that nothing we say here

is investment advice legal advice or even life advice. Please see chopping block at XYZ for more disclosures. So Caldora, you just got off being the main character

of crypto Twitter for about a day. You got pushed through the washing machine of everybody in the internet getting mad at you. How was that? Tell us about life in the inside.

It was my first time being, I would say, experiencing a public flogging. So I can, I can recommend going through experience at least once. It was definitely informative. I mean, look, my main takeaway was thank you to the haters because it drove more attention to us than we've ever had. So overall, I think, I was surprised, I think, by how people are able to misinterpret things or interpret things in a way that you totally did not anticipate. So any potential lack of clarity on a

topic that is likely to elicit strong opinions will likely be misinterpreted by some subsist. of the people who are reading it. So that was an important learning. But overall, I mean, look, I think it generated a very interesting discussion. And I'm just happy to see people talking about the topic because we've been thinking about it for a long time. And it's great to see it. Finally, I think, getting sort of mainstream attention. So even if some of that is negative, it's actually one not being very good for us. And we've seen now all time high volumes and stocks and indices this week. So all that ends well. Every cycle, there's always one community that is like the roving bandits who just like murder everybody in the

way. This cycle, it's the Dot HLs. In the past, I remember, I remember actually the show got assaulted by the Cardano guys a while back. I don't know if you really remember that. Interesting. I think both you and I had run-ins with the Cardano crew. Back in the day, it used to be...

Link Marines. I was going to tweet this, but I was like, I'm going to make so many more enemies if I say this, but I'll guess I'll say it now. The Dot HL's with the new Link Marines was my first one. But it's good. People are passionate. It's passionate. They're very passionate. They're very passionate. But it did, so it did lead to a very

interesting conversation at a reading level that I usually don't expect from CT these days. I think it even got jazz to like write a paper about the, uh, the convergence of funding rates to pay out dividends and da-da-da-da. So we should we should talk about what we're talking about for the audience that, you know, isn't quite as brain damage as we are. So, so, so osteum, which is the protocol that you're building is a on-chain perps on RWA's. Now, what does that mean, these are derivatives, they're Delta 1 derivatives, they track the underlying price of RWA's, meaning real world assets. So things like the NASDAQ gold, you know, named stocks, right? So like Tesla stock or whatever, you can trade derivatives of those things using osteum.

And your claim, and the thing that got CT up in arms is that, so what hyperliquid is doing, or rather what unit, which is a protocol built on top of hyperliquid, they're one of the first three markets on hyperliquid. They launched a product recently called trade. Xyz. And trade at XYZ right now, it's got capped open interest. So the market is not kind of fully open quite yet. But people are going on there trading the first popular product, which is basically, I believe it's the NASDAQ, right? And the NASDAQ market on there has a pretty large funding rate for what you would normally think is probably an extremely liquid and very easy to hedge market. And so I think it was paying you, so you snapshoted it at some point.

I think it at one point in time, and I think some people's gripes was that it was a very narrow point in time and didn't reflect the sort of like average funding rate. But my point was more about the magnitude of the rate. At the time when I snapshot it, it was 365%. So people were up in arms because for several reasons. One, because they misinterpreted the post in the direction of the payment. But two, because the claim, they felt that it was an unfair claim that the funding rates being so high was an indication of market structure failure. in some sense. And my claim was that from a user experience perspective, having such extremely volatile funding rights that can either go, can reach 365% in one direction or the other is

detrimental to the user experience because the result is you as a user you typically want to be, unless you're running an arbitrage strategy, which is very different. But if we're talking about sort of the average retail user, which is really what people have, this is sort of the broader vision for equity perps. Like the narrative right now, and I'm fully bought into that we've been on this for a long time, is that there's a massive opportunity and basically expanding this sort of perp or perp like instrument to sort of the general audience, especially on assets like stocks that people, if they want leverage, they're typically trading it through options, which are much more complicated instrument to understand. But that the whole premise that this

is based on is like, this is a, you know, it's a linear instrument. It's easier to understand. and you're not trading, there's fewer extrinsic sort of like market-specific variables that you have to track or like instrument-specific variables that you have to track rather than just tracking sort of like the directionality of the price. But the fact is that that assumption or belief completely erodes and actually winds up not being true. If the traders are, you as a trader might be subject to funding rates that could wildly swing in one way, one direction or another, that are orders of magnitude larger than what the average price change would be of the asset

over the course of that year. And so as a result, the thing that actually impacts your P&L winds up being more so the funding rates so the payments between the sides wind up impacting your P&L more than the actual change in price of the asset, which ruins sort of like gets to the very heart of what actually the whole premises around why people would want to trade these instruments.

So that was my broader point. And yeah, I took the screenshot at like a very, I wasn't like tracking the number and then screenshotting at the right time, I just like went onto the page, saw the number, and I'd been looking at it periodically over the course of the day, and I screenshot at that time. But yes, it was, it was, it was quite, it was quite high at the time. And long-ger getting. So I want to get into the, the wonkish side of this debate about the structure, like what's the right structure for which perps should come on chain, but also

I want to give a little bit of background for the audience who might not follow all the details here. So I'm going to try, I'm trying to see if I can, I can get them caught up. So the big story that we've been talking about off and on on the show has been that perpetuals, which is the primary way that crypto derivatives get traded are actually really well-suited instrument to trade a lot of different stuff. And many people want to bring perps to equities. So, you know, Robin Hood very famously is trying to do this. Coinbase has talked about this. And many people have talked about, hey, can we get this instrument that trades so much volume in crypto to generalize to generalize to other assets? Now, many people think this is one of the largest opportunities that exist in crypto.

And if you want to get equities on chain, one way to get equities tradable on chain is to tokenize them, get the actual physical equities, put them in a box, put them on the blockchain. But a much faster way to do it is to just create derivatives. And of course, derivatives trade much more than spot in crypto and in every asset class. So the natural way this is done with perps, and this is the thing you're pointing to, is that in a perp, when there are more people who want to be short than long, than people who are short have to pay the people who are long. And they might have to pay them a lot of money if there's not enough people willing to go long.

And what you're pointing out is that they're going to have to pay them if the funding rate did not normalize, which obviously it fluctuates a lot, they would have to pay them 300% a year in order to hold this position to, for a year, basically, this like massive carry. Now, the number's been fluctuating last I saw. It was like between 15 to 20% or something like that. There's still open interest caps. So one would assume as the market matures that that number is going to go down, given that it's like really easy to hedge the NASDAQ, but there's still, you know, meaningful funding rate. And crypto at various times has had funding rates go up and down to, to, to, to, to, varying degrees. So hopefully that's some exposition of why there's so much debate about, okay,

does it really make sense to have a venue to trade these things where you're having to pay like even, let's say not 300% a year, but like 15% a year to hold these positions. Because of course, a lot of people invest in the NASDAQ, not because they're yoloing. I mean, some people are yolowing the NASDAQ, but a lot of people buying the NASDAQ because they're like, yeah, I want to invest in the NASDAQ for the long run, but the NASDAQ doesn't go up, you know, more than 15% a year on average. So it kind of, you know, if that's actually what the, if the funding rate is actually causing longs to pay shorts, then it's kind of a moot point to hold a position long term. Now, many people don't use perps to trade long term. So many of the counterarguments are like,

well, no, these are really short term derivatives to get leverage and do like, you know, short term trade. These are not positions you should have open for a year. So I'm going to pause there. Tarun, want to get your take on this whole debate about whether or not perps are well suited to trade equities and other RWA type instruments. I mean, I guess I think all derivatives have some funding costs, right? Like if you're trading options, you want to pay an annual, you have an annualized option. You're going to be paying the roll costs of rolling each expiry. I think, you know, obviously continuously priced things are maybe harder to deal with than

options where it's like it does feel like a lottery ticket. Actually, when Jeff was on TCB, I think. like a few months ago, maybe like six months ago. We kind of had this debate, right? Where he was like, oh, yeah, everyone wants perps for equities. Like, it's completely obvious. And I was like, well, some people like lottery tickets because they don't have to think about them. They just throw the money in and then they don't think about it unless they win, right?

Like they don't have to think about liquidation price. They don't have to think about their payoff changing. Their payoff is either a zero or whatever the lottery ticket is. And inequities for some reason, that's like systematically built in. I don't think all these debates about the dividends are annoying to compound and include are useful. Like everyone who's saying that is definitely like a neckbeard curmudgeon who's like, oh, like people who trade perp equity. Equities on perps are like people who care about tax optimization.

Like yeah, sure. I'm sure that's like some subset. That's definitely not going to be the initial user base at all. They're not going to be the ones who care about exactly how you compound with them. They want 10x long Tesla. Like that dividend is like 25% of that, right? Like I doubt they even care at all. But I guess like collateral management's a lot more annoying with RWA perps.

Obviously, you have to like think about collateral in and out. Also, it's not clear that a lot of the systematic things in crypto that people take as truisms like basis trades are particularly in contango in a certain way like it is with Bitcoin is like. going to be true for equities. I don't think we have enough volume to really know whether you kind of, you know, it could be a funny thing, but it may turn out that like equity purposes have some weird properties where due to their, you know, the fact that like during market hours, they're sort of like a linear Delta one product like that tracks the spot thing, but like after hours, they're more like some weird futures market on the next day's opening price that funding flips overnight to the opposite sign that it is during the day.

And there's lots of weird idiosyncrasies that I have no clue how they will change and obviously how you choose the Oracle and all these things impacts that. So I guess, I don't know. I don't see a reason to be like, oh, we should kill this thing before anyone even tries. But I also just sort of think it's much more likely you're going to be more successful at getting these right if you've had to do collateral med. for the crypto assets first and then figure out the lessons learned from the crypto assets and then specialize to these kind of assets with way more covenants than the other way around

because I just think crypto collateral management is kind of just its own beast and all of these things are going to be margined against that at least in the beginning I I mean the I mean one thing that we have learned is that crypto is really simple compared to these real world assets right There's no dividends. There's no weekend versus daytime. So you're talking about this 365% funding rate. On October 10th, on multiple centralized exchanges, Solano was at minus 200%.

Because someone blew out. No one was market making. And no one was taking the other side for like six to seven hours. So like these things do happen in even the continuous assets in the, in these kind of like really bad event times. It's just in the equity's case. they happen more frequently than the kind of cryptob. So I think it's just this, there's kind of this belief that Perps or Delta 1 is also a little

bit of a lie because like the funding rate process need not be this thing that's like mean zero and very small at all. Like it can have these kind of huge blowups that suddenly make you look like you had this kind of option smile exposure, this tail risk exposure. So yeah, I guess it's more like people should just run these. experiments. I don't I don't know why we have to like neck beard before people play around with the market. It just seems like too much like intelligent design. I thought that was literally your job is to like neck beard stuff before. Yeah, but the perth. The equity purpose thing is like,

I just need to see the demand first, right? Like it's like it first needs to just like have users that are like a lot of them like before we can make any, you know, kind of claims. I, so first, so I have a lot of thoughts. I mean, my first comment would be, I mean, I'm totally on the same page. Like, this is, we 100% should be running this experiment, and the markets are only going to get, I mean, I'm vastly a proponent of different implementations, people trying different stuff. And we have a very different approach. And it's great. It makes everybody more competitive.

You want different competitive products in the markets. There will be different approaches, and some will work, and some will work less than others. My comment on sort of funding rates was more as it relates to what it'll do for, demand. And I think that's also what piss people off the most about the post because, you know, you just mentioned you first want to see what the demand is. And what we found, the reason, so we moved away from a model that had funding rates to, and you can talk more about this. You actually made a post about this to see afterwards, which is, you know, you were asking like why were equity perps better than CFDs for some of these assets? And our liquidity model, we need to find actually a better

name to describe it. I think some of our problem is that we don't, we need to be better nomenclature, so that's in the works. But our model is somewhat of a mix between a PURP and a CFD. There's a lot in the liquidity model that's actually more akin to a CFD, just put on chain and made more transparent. Sorry, Keldor, can you explain what a CFD is and the difference with the PERP? Sure. So a CFD is a contract for difference. And CFDs do trillions and notional volume a month outside the U.S. They're like the largest retail derivatives market for TradFi assets. They effectively are besides like some some other markets.

FX outside the U.S. They are the primary way that people trade derivatives outside beyond the U.S. and India where options are the largest retail derivatives market besides those two geographies, CFDs, are the largest instrument, most widely used instrument. And my general view, I think that actually reflects something very important about demand. Like, people want to trade the simpler instrument if they can. And maybe my quippy way of describing that same phenomenon in crypto is like given the option between options and perps, like people pick perps. Perps are a far larger market. They're like nearly a hundred times larger in crypto than options. And you see similarly, like in any market where people have the choice between like retail is a choice between using

options and using a CFD. They pick a CFD. For those who are unfamiliar with like how it works, like CFDs are very similar to perps in a lot of ways. They are, they don't expire. They allow you to go long or short easily. They're fully synthetic. So you can't redeem them for the underlying. and they are sort of a linear instrument, maybe absent the sort of funding rate discussion, they're linear instrument. And the difference is they don't have a free-floating mark price. They don't have these sort of natural market dynamics, the way that you have in like a proper perp on an order book exchange.

The way I would think about it is if you're an online trading platform in the Philippines and you want to offer, you know, your people, you know, your guys want to trade the NASDAQ, you're not going to try to recreate your own native exchange and native order book for that. You're instead going to go in pull pricing from the most liquid market. And there are thousands of retail brokers around the world. And they're not each going to create their own. It's this funny. I think it's a strange phenomenon in crypto because I suppose like a Binance is both like a retail

facing, like a consumer facing platform and an exchange where those markets are made. But that's actually not the case. And I would actually bet I would bet on a. strong thesis that like I think the disaggregation between like the exchange layer and the more front facing. There's like the extreme end of the front facing, which is like you're just a front end, you're running trade somewhere else. There's something that's a little bit more in the middle where you have some control over liquidity. You do aggregate liquidity in some way, but you don't have an order book and there's actually the back end like order book. I would bet that that's, I think these are going to

become like much more distinct categories in crypto as the space matures just in the same way that you've seen in the traditional markets. And yeah, there's these thousands of consumer facing trading platforms around the world to get entry into different markets. They're not recreating their own exchanges. If people want to trade the NASDA, they're not trying to recreate your inner, like, or Tesla, they're not recruiting, they're not recruiting their own exchange for Tesla. It's even a Robin Hood, right? They're going and they're routing. They're finding Robbins is a slightly different model, but like on one of these CFD brokers, they're going and quoting a price from the underlying market, usually with some small spread or a markup on top based on their own internal pricing model. And then they're

internalizing some of that flow, and then they're routing some of that flow to liquidity providers who then, you know, aggregate that across exchanges, ultimately lay that off in the underlying market in some way through some sort of image intermediaries. The point that I'm making here is we have moved away from this pure sort of traditional pert model because, and you know, you could make an argument that we were just too early. That's like, I'm open to that argument. But I do think like the core insight that we found was we tried to use natural market dynamics, like a funding rate, to incentivize balance between the sides, like balance and open interest. And what we found was, ironically, the same funding rate that would incentivize people

to come in and hedge on the short side, because people, you know, in general, the market is like skewed long, was ironically, like basically the same funding rate that would completely kill the demand on the long side. So it's this terrible kind of like catch 22 like cold start problem. We tried it. Like, we actually used to have funding rates, like proper funding rates on all of the traditional assets. And we moved away. We kept them, you know, on crypto because there's a whole market for arbitraging the stuff. And like there's the, the market structure exists to arm that stuff out.

But it doesn't exist, especially when you think about, I mean, even what it would take to run, you know, something delta neutral and rebalance your collateral across wherever you're hedging off chain and on chain. There just isn't this infrastructure

to go and hedge out these imbalances and ensure that your book isn't massively skewed. So you just wound up with like, you know, you could have one whale, especially in the market's nascent, you'd have one whale that comes in, opens a massive position in one side,

and completely screws it for all. all the other traders and suddenly they're faced with this massive funding rate. And it's this, it's this chicken or egg problem where, and then I totally believe that over time, this stuff will get better on the large assets. The problem is as you go into the long tail and in like, you know, NASDAQ right now on chain is a long tail asset. It's behaving. It has the funding rate volatility and the, you know, like liquidity depth of basically like a shit coin because like it is relative to the amount of liquidity that's that's sitting around in crypto to go and market make this stuff, it's like really close to the bottom of the totem pole. But over time, it'll get better.

But if you, if you're trying to list hundreds of stocks, it's just, you're going to unfortunately wind up with the system where, as I was saying in the beginning, people, you're going to, you're going to kill the demand ahead of time if you have these funding costs that are so variable because no normal person, I mean, maybe some crypto people are willing to tolerate it because they're like used to it and they're not actually doing the math in their head. Like, it actually does make sense in crypto when assets move like, you know, 20% in a day to maybe bear that cost, you're willing to pay for the exposure, the leverage exposure to an asset with that much volatility. That's not really the case for more traditional assets, even though recently,

you know, even gold, you know, 30 trillion dollar asset has been behaving, you know, behaving like a shit coin. But it's, yeah, you are going to wind up, you kill the demand in the first place from the sort of normie audience, which is this sort of North Star, like normal people are going to want to trade perps on these assets instead of options. You kill the demand in the first place if you eliminate the core promise of using this sort of like delta one instrument in the first place as a means of taking on exposure. Okay. So let me let me let me get Tom in here. Tom, what's your take on funding rates as a dynamic in RWA perps? Uh, I mean, I think that I always kind of comp actually to like like leverage ETFs where you obviously also have volatility drag,

but they're like insanely popular, you know, some of the most popular ETFs that have launched this year are like 3x leveraged single name equity ETFs. But like, but the point and obviously the point of us also run options is like, you know, these aren't people who are like taking their retirement account and like putting it into a purpose. Like I would not recommend you do that. The point is people do want to speculate with leverage on a short term time horizon, right? Like zero DTE options. You know, you're just trading Delta, getting leverage to the Delta. I mean, those are like, you know, what quadrupled in like the past three years. And so like I think I hear people that like, hey, obviously on a long-time horizon, you know, funding rates are not attractive.

But like, the point is like, these are short-time horizons. Like these aren't long-time horizons. And I think, you know, clearly they work at crypto where you can get spot access. And yet, you know, perps are still gigantic. And so I guess like, I guess maybe zooming out, it's like, I think the critique doesn't really make sense to me because you can see sort of the analogies in traditional finance and in crypto where like clearly people are okay. paying for this because the type of exposure that they want is different.

So, like, I also don't know why people are so up in arms about equity's purpose. Because I agree, like, CFDs are insanely popular. Obviously, some of the specifics are, you know, different between the two. But I'm like, this isn't, doesn't strike me as, like, so insane of an idea that, like, okay, people in crypto might also want exposure. And it also seems like a more feasible path in my mind than, like, yes, literally trying to tokenize actual shares of assets and put them on chain and now have this access to a global audience,

which is obviously just very, very difficult to do. It just depends on what the competitive landscape looks like. If, like, what you're saying is true, like people hold their positions over a short period of time. Like, they're not, you know, they're trading over a short time horizon, if they're trading on high leverage on perps. But if there's a place, if there's one place where they might,

you know, a large trader might face like massive, they might suddenly massively skew the book. And they have no, they're not, they don't actually know, when funding rates might renormalize and it's very unpredictable and it's now an additional factor they've taken to account. But there's another platform where they can go and they know they're going to face a much more predictable cost that's much lower. They will migrate there. So it's, I think like the market structure is path dependent and I think that's something that people tend to ignore sometimes because like you're working with markets that already,

people might be also willing to pay like a premium to trade something on chain, maybe a 5x premium or a 2x premium, they're probably not willing to pay like a 20x premium. Like there is the bar for the liquidity you have to offer and the cost that people have to pay is it is just a higher bar in terms of because of the alternatives that exist. It's not the same as sort of like a defy Wild West. Yeah. So, I mean, this is one thing that Turun has brought up many times is how retail just gets destroyed on these leverage ETFs.

Like the role costs are terrible. They don't really track the underlying very well. but nevertheless they keep making them because they just sell like hotcakes like people love these leverage ETFs because they're just extremely simple products and I think that to me that's emblematic of

I actually don't know how much the market structure stuff is going to matter so much as just the go-to-market and like the product marketing and like just getting all the like the little finishes and the details right I kind of think like the worst product I think people sort of overestimate

the kind of call it structural determinism of building products and building startups. Like it's not clear to me at all that the best product by structure or design is going to win. The reality is that, you know, equity perps are tiny. All this stuff is tiny compared to crypto trading. And the CFD market is absolutely fucking enormous. And so if crypto can start to just take a bigger and bigger piece of that pie,

probably doesn't matter that much if in the short time, I mean, maybe if people get up in arms about it and they can manage to make it something. about which they raise a stink and socialize the idea. They're like, oh, these funding rates consistently make this a bad trade because blah, blah, blah, yeah, fine. But I more or less agree with Tom that a lot of people are coming into these trades. Like, they're not thinking about making 15%. Like, they're thinking about either I'm going to, you know, this is my lottery ticket

out of this dump or, you know, it's back to the, back to wage cucking or whatever the kids call it these days. So if that's, that is what they call it. If that's your mentality, then like, who gives us? a shit, right? Like, mostly what you're going for somewhere that, like, is a cool product, easy to access, easy onboarding, and like that your friends are using, and that has this kind of viral, you know, just sort of accessibility to it. I think that that feels to me much more relevant than is the funding rate 15% or 20% or is it like, you know, how many market makers

are arbitraging this and that. Now, it could be wrong. And I do think that at some point, people are going to come on chain, not to Yolo, but to actually save. And obviously, there are many more savers in the NASDAQ than there are yoloers, right? Even on, obviously Robin Hood and zero zero-d-gee options and all this stuff, yes, it's all been growing, but it's all still tiny compared to the people who just passively hold their money in all these instruments. And so on some level, if you're talking about trading fees, you don't make trading fees from passive holders, but if you're talking about the AUM that comes on chain and the real

kind of economic disruption, I think that also happens from savers coming on chain. and savers coming on chain is a much longer putt. And to me, I think that's probably more about tokenization than it is about derivatives, because I don't know that you want to have a derivative position open for like, you know, 10 years. Like, that, you know, I don't think any protocol is necessarily going to be around by the time

that you want to exit your savings position. Whereas if you're trading and you're yoloing some, you know, like, hey, I think Trump's going to strike a great trade deal. I'm going to go 20x long, the NASDAQ, then, yeah, you're playing a different game. game, you know. It just depends on size, too, right? Like, there are like Yolo shrimps, and, like, you're probably right that they're not even

looking at funding rate at all. But there are a lot of, you know, very high leverage traders. If you are the market, yes. If you are trading a lot of size, which there are a lot of people. I'm sure. That's the thing. When you have that scale of money, too, you're also a lot, probably more economically literate.

Yeah, yeah, yeah. You're thinking a lot more about, hey, what's my carrying cost for this trade if I want to put it on for a few days? And I could just say this from personal experience. Like, we've had like hundreds of conversations with freighters where, and like we change the system specifically because of this complaint, like after months of complaints. Like, conversate, like people changing their behavior on the platform because of the variability of our funding rates.

And we had like dozens of hours of calls with people trying to figure out what to do. So, but these are largely, yes, these are largely whales, to be fair. It's not like, you know, someone you're onboarding through TikTok. Yeah. In that respect. All right. Well, speaking of Wales, we're going to switch gears a little bit and talk about one of the big stories this last week, which was the pardon of CZ. So CZ, of course, was indicted.

2023, he entered into a plea agreement with the DOJ and served a four-month jail sentence. He was basically, it's kind of a complicated story, but the Wall Street Journal actually did a great deep dive into all the back and forth that took place here. So basically what happened was that there was a lot of reporting that CZ, was angling for a pardon. And CZ publicly denied that he was angling for a pardon. He said, no, and I'm not trying to get a pardon. What are you talking about? I've never heard of this for, which is his thing of like, oh, this is fud.

And then it was reported that CZ decided like, you know what, since everyone's reporting that I'm looking for a pardon, fine. I will go ahead and publicly apply for a pardon. Mr. Trump, please pardon me. It was widely reported, of course, that MGX, which is one of the sovereign wealth funds behind the UAE invested into Binance, the first ever investment. investment they made into a crypto exchange. They invested $2 billion into Binance. And that investment was made entirely in USD1, which is World Liberty Financial's stablecoin. And to this day, I think Binance still

holds like 90% of the USD1 still in USD1. And it's one of the largest sources of circulating supply for USD1. It was also reported that there was some assistance that Binance gave to World Liberty Financial in terms of development and some stuff they were doing together. in Pakistan or something, something, something, I don't know. There was a bunch of stuff lying around about how different ways in which they work together with the World War of Financial Team. And all of this apparently culminated in CZ

receiving a pardon last week. So Trump announced the pardon, and he claimed the pardon that he had never met CZ, but that he had heard that CZ was a good guy and that this was a Biden era, you know, one of these, what a victimless crimes, whatever, blah, blah, blah. This part of the whole crypto witch hunt that Biden was doing.

And so the crypto community largely celebrated, but this has seemingly resulted in a massive political backlash. I've been honestly somewhat surprised at how much press time this pardon is getting. But it's even now really penetrating MAGA. I think you're getting a backlash within the MAGA movement about this pardon because of the fact that, of course, it just appears to be potentially corrupt, pay to play. There's all this discussion about, hey, you know, CZ is he's not even American. like, you know, he seems to have been, has some financial interest with the Trump family, blah, blah, blah. So now, of course, all of this is, these are more or less like immaterial because CZ already served his jail sentence, so he's already out. But the presumable impact of this is that there are things that one cannot do as a result of his plea agreement with the DOJ.

One of those is that he could not be an officer of finance anymore. And so he was, you know, kind of separated aside and instead running his family office and investing and doing sort of other stuff in the wings as opposed to directly being involved in finance. Now that he is pardoned, presumably he is able to retake the reins and become CEO of finance if he so chooses. Now, unclear yet what he's going to do with that or what that means. But obviously, this has been a pretty titanic story within the crypto industry. Tarun, what's your take, CZ getting pardoned? How do you feel about it? I mean, I feel like I've gotten lots of angry messages from people I know who hate crypto.

You got angry messages. Yeah. But why did you get angry messages? Fuck you guys. How did you guys figure out how to bribe the president? You know, like I got like text and DMs and group chats that were just like. How did you guys? Wait, why is he roping us into this?

You guys means like anyone vaguely related to crypto was the you guys. Wow. So I will say, I will say, the political backlash. is real. I feel like I've never gotten more random reporters emailing me. Do you have any comments on like what you think about this thing? I'm like, what the fuck? I like, I forgot that this happened. I got a lot of reporters hearing about this. Yeah. I do. I did feel like I had to talk to the reporters and I feel like I kind of deflated the story a little bit where I think you look at it and you see if you know nothing, you're like, oh my God, $2 billion going going into Worldly Big Financial

and it's like, no, no, no, actually it's they're using the stable coin and they're foregoing. yield. So, you know, depending on, you know, what the current short-term treasury, it's like, okay, maybe like 60-80 mill that they're of yield that they could be getting, they're not getting. And so it's like, this is actually kind of very roundabout way, to your point of like basically giving finances to this thing that is like in part owned by Trump family. But it's like, I feel like this actually like a very funny kind of thing. I've also seen like there's like a couple of European countries have this like golden visa thing. And I've seen people where they have like a Bitcoin fund that has like, like, just holds Bitcoin has insanely high fees.

But it's like if you do this, you can get the gold of visa. And so it's like very like much like a backdoor, like just give us some money because you were going to pay, you know, non market rates or for this like management fee, which is effectively very similar versus like, okay, literally give somebody some money. And so I don't know how you think about opportunity cost or, you know, cost of capital as a form of bribe. But that's, you know, basically kind of we're giving up here. Well, to be clear, finance doesn't like if they were holding it in tether, they would also forego the interest. Yes. So they would have to, the counterfactual has to be that they're holding it in cash in a bank account, which probably they have bank accounts now. But that probably, you know, once upon a time, Binance didn't have bank accounts that they could hold that kind of money in.

I did try, maybe they're getting some off-chain rewards. We don't, you know, the full story. I did try debating, debating one of these, one person who kind of really brought this into this one group chat of old friends of mine from like 15 years ago. And I was just kind of like, yeah, well, HSB. is paying like $2 billion in AML fines a year. I don't see their CEO going to jail for six months. But I got pilloried and then I quickly never replied to the rest of that. Your friends are very aggressive against you for like collective blame for what happens

in the cryptocurrency. Who are your friends? Yeah. Yeah. Let's put this way. There's a reason Zoran is winning in New York. Okay. All right.

Caldora, what was your reaction? Oh, man. Honestly, God, I didn't spend too much time on it. I don't have a very strong. opinion. I'm very curious to see what he does. You think Cizzi should have gotten pardoned? I'm going to decline to express a strong opinion. I don't, I actually

really don't have a strong opinion. I'm going to be honest. Like somebody who needs to get listed on Binance. Very good. Excellent. The C. Haseeb, the translator. Yeah, yeah, yeah. No, I actually, I think it's an interesting case

because I actually, I do think that the prosecution against CZ was kind of bullshit. Like he got four months, which is like what, you know, you claim that he's some criminal mastermind and that he facilitated sanctions violations and, you know, rattled all this money in Hamas and gave four months. Yeah, it's like this is like a fake. It's like, okay, either he's a horrible criminal or he's not, right?

Like there's no, like what the fuck is four months? And the other thing, of course, that he's the only person who's ever been put in prison for a bank secrecy act violation. So it was claimed that, oh, he's like a, you know, his money laundering violation. It was not a money laundering violation. It was a failure to implement an anti-money laundering program violation, which is not the same thing as money laundering.

Money-landerers get very different treatment. They do not get four months and, you know, a slap on the wrist in like a minimum security, whatever camp in Seattle or whatever it was that he was serving his time at. So I do think it was very clear that this was a post-FTX. We got, you know, something must be done. This is something. He's Chinese. He's like the big boss guy who like Elizabeth Warren says we got to get,

We got to go get them, and so they went and got them. So I do think that the prosecution of CZ, and not necessarily the prosecution, but certainly the sentence was clearly unjust, right? And, like, I think the same thing, largely true for Arthur Hayes, is that, like, again, rather to that, Arthur Hayes didn't serve any time. But I think both of these prosecutions were obviously unjust.

Now, that being said, I think the optics of Trump doing this are incredibly stupid. Like, I mean, what the fuck did you think was going to happen when you pardon the guy who like... What did he stand to gain is my... It's not... I don't think Trump is... 60 to $80 million when he's decided.

But he already got the money. You already got the money, right? Like, what more does he need? Yeah. How does the pardon... Like, yeah, exactly. The pardon and that are almost completely separate, right? Like, it seemed like the pardon came way out.

Well, I guess the answer is you keep the money in USD one, right? So like, you know, obviously you can redeem. It does feel... I agree. The optics are really bad. But then I'm like, I don't know what the standard is. Like if you bank with Chase and they also pay you nothing in interest,

are you bribing Jamie Diamond? Like, you know, you could run the exact same playbook, but, I mean, nobody who's holding $2 billion with Jamie Diamond. To be fair, yeah. It's also like there's not just like one,

you know, just stick it in the Chase savings account. You're earning 0.01%. You know, there's a free 80 mil for Jamie. No, but as a percentage of your market cap, of your float, no one is giving a bank CEO that much in it. Also, yeah, The bank CEO doesn't make that much of the margin of

Yeah, exactly. I was, you know, it's being donated to J.P. Morgan Chase's top line. Yeah, yeah, yeah. The joke. It's being donated to the evil building. Yeah, look, I don't know, I don't know what the right answer is here. I mean, so for one, like, I think doing this in the middle of your administration is just incredibly stupid, like, especially going into the midterms.

I think this is now, like, I think this is actually quite bad for crypto, because this has really animated people in a way that I was not expecting. I kind of thought like, okay, it's another Trump scandal, you know, whatever. But like this is still front page news. It's been like a week and like there's Wall Street Journal is running like a full page spread on it right now. It's even going to reach the, uh, the, uh, the retirement homes because I heard there's like a 60 minutes like the long form special.

Oh no. Yes. Yes, there's a 60 minutes that's coming on this as well. So I don't think I docks anything. But yeah, I guess there's a big, they've been talking to a ton of. of people. So, yeah, the people, people didn't get in the word. So yeah, this is definitely going to be, this is definitely going to play in the midterms. And I think this does hurt crypto and its credibility. So, do you really think this will play in the midterms? You think people care?

100%. You think they're going to play out the, interesting. Yeah. Yeah. I mean, this is, this is, maybe I have, I have different friends. I don't know. I, I, I, uh, so Turo, Turo's got friends who are pillering him and collect, you know, collectively blaming him for the sins of the industry. Your friends was like, whatever. This has been true for a long time. Complete silence. Not one friend has brought this up to me. So I don't know.

I must have a very different. Maybe you're just ostracized from your, because you're in New York, right? Yeah. Yeah. Yeah. Are your friends pretty liberal? Not really, to be honest. Yeah.

I've got a lot of pretty like, most my friends are like pretty libertarian tech friends. Okay. Okay. Yeah, maybe they're fine with it then. I think I agree it looks worse for crypto. Like I don't think any Trump photos are like, oh, well, this is the final straw, you know, him pardoning, you know, CZ, that's actually the thing that's not going to make me vote Republican or vote for Trump anymore. But like, I think to your point, we felt like the

industry had this tailwinds, things were getting more legitimized, more buttoned up. And then it's like, oh, this is kind of a pointless detour, you know, versus kind of the exit all the other headlines that we were getting, which I think we're, we're quite good. Yeah, I think the, you know, add that to like the meme coin and like all the other, you know, it's just like the parade of kind of bad optics just doesn't stop. So I don't know. I'm hoping that this new cycle does end because like, again, I assume that for CZ, like this,

I mean, it's nice to have a pardon and like, you know, when you're worth that amount of money, whatever, 60, 80 million, whatever is like not a big deal to pay for like getting your name cleared. But so I wouldn't fault CZ if, in fact, that was the master plan from the beginning. But it's just like such a headache for the rest of the now they don't have to deal with this because yeah it's it's just stupid okay so moving on the other

big news that we had with the last week was it's seemingly mn a season and one of the big mn a stories was around the platform called echo so echo of course is a crowd sale platform and it was founded by cobi who's one of the beloved traders in crypto twitter and Kobe so it's used for icos and or syndicates that you can follow a syndicate into investing into a pre-launch investment into a token. And Coinbase announced very recently they're acquiring Echo for $375 million, combination of cash and Coinbase stock closing in Q4. Alongside that, they also bought the $25 million up-only NFT. This is an NFT that Kobe created seemingly as a joke claiming that if anybody bought this

NFT at an absurd listing price that the buyer would be eligible to commission one extra season of the up-only podcast. And so seemingly as a publicity stunt, Coinbase bought the NFT the day before they announced the acquisition. I'm assuming that this is part of the acquisition price, not actually that they paid $400 million, but obviously very, very, very good marketing stunt got the entire internet excited. But actually a pretty massive outcome, of course, for Kobe, but also a very interesting deal in them acquiring an ICO platform

and seemingly putting their sites on capital formation and going earlier in the token generation pipeline and you know kind of playing a little bit in our lane, gentlemen.

Thoughts on the Kobe acquisition? Do you consider coinless a competitor to VCs? Yeah, I'm not worried. I mean, they do. Yeah, like what? I don't think it's like... They say they are.

I mean, do you not agree? That's certainly the rhetoric. Yeah, definitely not. Yeah. I don't know. When you walk down, you know, the street and you see, you know, world's best coffee in the store sign, do you also believe it's, you know, the world best coffee? Do you believe that the 500 number one Chinese restaurants are number one?

Yes. They're all number one. They're all number one. I do think it seems like, I mean, I agree. They're just trying to go more full stack. And you see Coinbase doing this with more and more companies. I mean, they also bought Liquify, which was a portfolio company for us, doing just like token distribution and investing.

So it's sort of like this full token life cycle. Cracken obviously doing this partnership with Legion. So they also have their kind of own play in the, you know, token launch platform world. I mean, part of this also just seems like a bet on more aggressive token issuance, clarity or something like at passing, more types of companies issuing more different types of tokens beyond kind of what we've seen historically. And also just, I think the most interesting with Echo seems like it's kind of gotten over a lot of this adverse selection issue that you normally see with crowdfunding platforms where

they have actually had, you know, a lot of decent wins early on in the life of the, of the platform, whereas like you go on, you know, the best majority of crypto or non-crypto crowdfunding sites and it's always just like garbage and the performance has always been bad. And maybe Echo just wait, you're telling me. You're telling me that the, uh, the 500 billion open AISPV that's charging me a 7% management fee is a bad idea. Damn. Well, you know, it's that or, you know, some sort of juicerro type startup.

You know, those are really your two options when it comes to craft funding platforms. But I don't know. Maybe there's, you know, also again, banking that we're going to see 10 times more crowd sales in the future. Yeah. I mean, look, obviously Echo right now is the premier one. Legion is sort of second. And then there's whatever, just kind of a graveyard of other ones that don't really matter. What's interesting is that, like, it's very feast or famine, I think, is the right way

to understand these platforms, which is that most sales on Echo do not sell out. The demand does not clear the market. There's still tokens left over. And then there are the Blockbuster ones, you know, the Mega Eaths or the plasmas, and they just go like crazy. It's just completely oversubscribed. And there are very few deals that actually end up doing well. Those are two of the ones that have done very well off of Echo.

But it's like there's a little bit of a, almost like a fantasy that's being sold to founders that this is like the solve for capital formation, that you're going to be able to raise money using these things, even if nobody else, like the VCs don't want you, but there's always retail and you can always go on Echo. And I don't know, Caldor, how do you view these platforms as a founder? I think, I mean, the timing matters a ton.

Like, I think a lot of people probably try to go out, exactly what you said. It's totally feast or family. It's like most things, to be honest. Like, I mean, the world just like, almost all things are just, they're not like evenly distributed. Like they usually fall like on one end or the other. other end of the spectrum. So when you, we've thought about it a lot, to be honest. And I think like

the timing for when you do one of these sort of like crowd sales and the platform you use and how you want to do it is is extremely important. There's also this like kind of unique dynamic that I'm still trying to work through. And I think it's going to, it's going to change substantially where I think the echo was initially used as this kind of like way to get in a bunch of crypto KOLs after a large VC round. and there's this weird dynamic where like, in order to, you know, some platform, so you know, you might be right before a large round or you might be for, you might be right before your next fundraising round. And you can either have, you know, a VC price it and have your round and raise most of it from VCs,

but then you have a smaller allocation left over for some sort of crowd sale. And then they expect, the expectation typically has been like some discount to the last round. Or if you give a larger allocation, maybe the time between your last. round, you know, round one and round two, you three-xed. So if you try to, if you try to majority raise through sort of like crowdfunding, maybe you're trying to give it to, you'd wind up at the same price. So you're going to do a price midway between round one and round two at the, for the, let's say the echo sale. But people will see that. There'll be a negative perception because you're doing it before the next round. And so people think, well, how, you know, this is so unfair.

You're not giving the community the right to, you're, you're raising at a higher valuation than last round. Meanwhile, like, you know, you couldn't possibly raise that amount of money at the last round valuation, you would be insanely diluted. So, and you'd have like a very unfavorable token pie, let's say. Whereas, you know, then the expectations, you know, people want a discounts. Then you kind of have to go out and raise regardless and have someone institutional put a price on the thing and then offer this discount and then you sort of like pay the perception game better. But then you can only offer so much. Well, one, because you're expected to have to give a discount. And then two, you've given up the majority of the round to sort of a set of institutional

investors. And so there's less left over. So there's these, I think, I think, the as with all things. You can't win. This is what you're saying. Yeah. Well, look, you can, look, you can, you can play both sides to you come out on top. That's the answer. You can always win.

There's always, you can always win. So, but you have to be very strategic, I think about when you do it. And so I think, yeah, I mean, it's totally, it's like, if you're, I suppose naive as a founder, it can be, you can perceive it as like some panacea. Like, you know, nobody, as you said, like, nobody wants you, but like, you can totally go out and raise crowdfunding. That's just, like, simply not the case. Like, all the winnings tend to aggregate to, to the top.

So you need to already. is that it was once the case, right? Like there were moments in time when absolute dog shit products were raising a lot of money. And yeah, you're right. It's gone. That window. Yeah, well, that's also a different story. Like dog shit product versus like dog shit narrative.

Those are two different things. You know, you can have a pretty bad product and a great narrative. So, yeah, many such cases. So I'm less, product side entirely aside, I'm talking more so sort of like building up public perception and hype around like the perceived valuation of what you're building. Yeah. It's a very, for better or for worse, I think because people largely fail to understand sort of the general, like maybe like round mechanics or how dilution works and those sorts of things and what's going on behind the scenes. There's a lot of crafting that winds up needing to go into like the precise time at which companies, even with, I mean, with Meggith, you guys are clearly much more of the experts on Meghaeth and I am as investors, but, you know, they bought back some of the equity prior.

which was, I think, very, it was a very interesting choice from like a signaling perspective, and then went out and did this crowd fund. So those sorts of, yeah, it's another tool in a toolkit. And I can totally understand why Coinbase is investing massively because, I mean, this is kind of somewhat the original promise of crypto in some way. There's a lot of different sort of parallel promises of crypto and narratives that people got people to buy in in the first place. But I remember when I was first trying to convince, you know, I know, my grandpa that like there was there was some value in, try to explain crypto. One of the examples I used was like network, you know, the early users of a product being able to be owners of it. All these guys, all these drivers,

this was the example I used with my driver on Uber. It's so unfair because all of these drivers who helped build out the network and you wouldn't have Uber made this today. If there were these drivers didn't exist, they didn't invest early on. They never saw any upside beyond just what they got paid. They should be able to. And that's more related to like rewarding network participants. but, you know, what if they had been allowed? What if based on hitting the criteria of using being a driver for Uber, they had been allowed to invest or have been allowed to earn a share of it? Like, that is, I think, very core to the initial promise of crypto.

And it's often what I found when I'm trying to convince, you know, Normie is, for lack of a better word, is one of the things that people find most convincing. So it is very compelling. Ironically, it has totally failed. Like the story that, okay, you just like, drop your users and then that's going to create this, like, aligned communication. that will never abandon you. We've seen in real time how that narrative has completely just evaporated. And we've seen a reversion now to the ICO meta, right? And that's exactly what

echo plays into is that, okay, theirdrop meta is dead. Like, it's all farmed. It's all kind of these bullshit artists who will pretend to be aligned with you until your token goes down and they'll tell you how terrible you are. And the real thing that you want is economic alignment. You want a big massive investors who are all going to care about you. So to your point about Mega-Eath, mega-Eath right now is raising, I guess their last ICO, because they did multiple pre-ICO,

or pre-TGE raises. This is their last public raise. And they're raising at a billion-dollar valuation, selling, was it $50 million? I think they're selling. And there's over a billion dollars in interest that registered for this particular sale. And the way the mechanics of the sale work,

so it's like, I think it's like, what is 16 X oversubscribed or something like that? 25.6. Last time I checked, 25.4. Oh, I'm sorry, you're right. Yeah, 27X oversubscribed. Yeah. And so this, the way of my understanding is that in this sale, the mechanic is that they basically decide how to clear the market.

So it's not just, okay, we divide up by everybody gets one 27th of what they asked for. We're going to look at who you are, what you did, you know, we're going to try to figure out if you're sibling or like signing up all your grandparents to like join the, because you have to KYC in order to participate in this, in this ICO. And they're basically going to decide how aligned you are before they give you an allocation. Which I also think it's fair. I totally think it's fair. Something I've thought a lot about.

It's maybe kind of more like an open question is like it's very unclear what the optimal sort of like genie coefficient of ownership of some supply of ownership in like a token or a company is. Like if because I think some of the promise or like initially I think the way people were using Echo was like I got to get all the KOLs on Twitter to like say nice things about me. So I'm going to give them all like a tiny, you know, throw them a tiny bone. right? And then they're going to say nice things. The problem is like, if you don't have enough skin in the game, and you guys certainly know this as investors, like, if you don't have enough skin in the game, you simply don't care. You're going to be more mercenary. You have to kind of, people only really value things that they've invested like capital or effort into. And so if you make it, you know, if you raise a massive round, you give like a 70% discount to your round. You open your,

you know, echo, you know, everyone in their mother is in. It's just like, you're not really creating alignment. Like there's a lot of other things that go into it. And like, it's probably better to have, whatever, like, selling 10% of your company, maybe the optimal setup is like 10 investors with 1% each rather than like 10,000 investors. So I think, I don't know, I don't really have an answer, but it's a very interesting question. I was like analyzing the other day, like, what was the split among like at hype TGE? I was very curious and I was looking at a couple different TGEs. Like, what was the split of the sort of, like the kind of genie coefficient of ownership? it's a very thorny question.

It kind of depends on the product. It depends on the market too. But like max distribution is like not always necessarily optimal. Obviously a high level of concentration is not, which is sort of what you see in the in the VC world. I think we like went probably too far with like purely private capital races and a very high concentration among a small number of people. Then they're sort of like and you wound up with this like super skewed thing where you had like, you know, people largely raised through VCs. It would be super concentrated. Then you do this tiny echo round where everyone's putting in like a thousand dollars, right?

You kind of, I think you need more of a middle class. And I think that's like what this, this, the, what I see, I think, mega-eath, like, aspiring to. And I hope they, if they achieve it through this ability to, like, solicit all of the demand and then ultimately make the call on who gets, who gets a piece of it. Though they did cap it, to be fair. I would be very curious to know, like, why they capped it at, like, 182,000 per person. Because I would imagine, like, more of a middle class.

You might want a higher cap. Or different ranks. Like, you have, you can have different tranches. some commit that was, you know, like a mid, and then the big jump between the tranches, like, mid, you know, mid, 10K, up to 100K. Then you can have a tranche that's like 500K to 2 million. And you can kind of then architect these, like,

different tranches based on what you want the composition of your, the, of your sort of cap table, whatever token cap table, what do you want to call it to look like? Tom, what's your take here? No, I really good points. And I think I agree with a lot of it. I've kind of discussed this with Megheath and other teams that are going through this, this process of like, yeah,

you don't want to just prorata distribute tokens to everyone based on who ended up, you know, bidding the clearing price. Because then like you said, it's, you know, do I care about a thousand dollar position? No, I'm just going to eat it and like move on to the next one. Like you actually want real skin in the game. And then part of that also is like, who is this investor? What if they done? Are they willing to lock? Like, is this sizable for them?

It's really like this kind of multi-variable auction at the end of the day. In some ways, I was kind of, it kind of reminds me a little bit of like the art market or like luxury goods market. where it's like, you know, you can't just walk into a gallery, like a high-end gallery and be like, I want this piece of art. You know, they have to like, they're going to vet you and figure, okay, are you a person who buys and then flips in the auction? If you do, you're banned. You can't buy this art. Or are you someone who has previously, you know, bought really nice stuff and it's kind of a tastemaker, okay, then you can actually buy it. And there's not as like, vetting of the people to make sure that like, okay, you're going to be a long-term

and holder and you're going to bring some sort of like aura to the brand. I feel like maybe like, maybe like token projects are also going through. kind of a similar sort of ways. Okay, hold on. I want to delve into this analogy here because this is very interesting to me. Okay, I understand this for, let's say you're, you know, whatever, a high-end beauty brand, right? And it's like, okay, we want to engender a certain vibe about the brand and a certain

clientele and so on. But if you are an art dealer that seems different to me, like in the case of, like in the case of when you're buying some, you know, high-end beauty store, they are giving you like bulk discounts and they're giving you special favors and there's like a whole system of pricing that they use to like bring you in and make you feel like you're being treated in a special way whereas when you go into it into an art gallery is like okay were you go to buy this 25 million art piece of art like if you're going to go flip it like why does the art dealer care it doesn't work like literally you could you could go into a gallery in your

like I want to pay full freight for this piece of work and they're just not going to give it to you why why a lot of it is it's like the burkenback you can't buy the burkin bag you can't buy It's exactly a Birken bag or relics. It's very reflexive, right? It's how to we sort of ultimately, the lot of this also is about like price appreciation. It's because they own the stock of that particular artist. So it's like for that artist.

Yes. They are trying to make the price. Yes, they want to sell a floor price. That is the job of the gallery. Right. And it's also who you are, right? Like if you're someone who has a history of buying great art and creating a track record and like being a socialite in some way,

great, you're more likely to be able to be approved to, you know, buy, you know, a really nice watch or a Birken or a piece of art versus some Joe Schmo who comes in off the street. And so I think because of it is kind of manufactured in some ways, like that is also why there's all these sort of touch points around who gets to buy this piece of art or whatever the item actually is. The reason the gallery is take like a 50% cut. But the difference here, of course, is that these are both examples of whether it's

like the Hermes bag or whether it's the emerging new artists at the fancy gallery, is that these are, one, limited supply and their positional goods. right? So like these are things that are valuable because of their scarcity and because of who owns them. Whereas, you know, mega-eth tokens, like the reason why it's valuable to be in the ICU is because everybody knows the clearing price is below the fair market value, right? Yeah. And if you're buying, no, no, no. If you're buying like, again, let's say a Rolex today that's like an in-demand model, the retail price that you're buying at is like way below what it's selling for on the secondary market, right? So you're also effectively getting a giveaway. I think the

point in all of these practices to like encourage the appreciation of the price of these items over time. There are a lot of things that are rare or like scarce that aren't super valuable that don't necessarily go up over time. But here it's basically like we will, it's sort of an artificial scarcity, but then also placed with people who aren't just going to go sell and, you know, also in create induced demand for the item over time. And so it's sort of like, yeah, I'm only going to sell the people who are promised to lock it away in a vault forever. I'm like, great. That's actually like if you care about the, you know, appreciation of your assets that you sell over time, those are like the best buyers you can have. And so, you know, that's also why you kind of get the,

you know, report system. So you think it's a one-to-one analogy? It's, it's not one-to-one. I mean, it's certainly there's like a sort of soft component to it, but like ultimately it's like, like with any of these sales, it's like you're basically giving away some value. And the trade-off is that you want to give it to people who are going to be good stewards of the asset to make sure that, hey, this thing isn't going to get sold immediately. It's sort of like long-term capital, right? Like, why does someone raise from a VC or P fund versus just like going to the market? It's like, yeah, because this is long-term patient capital that's going to be there to sort of

support the thing, which is how you create, you know, value and sort of price appreciation over time. And so it's, I'd say more similar in that way versus I don't know. Hold on, hold on. There's a difference, though, between the exclusivity of the holder base, right, which is like what it is. So there's holding period and then there's exclusivity. Yes. Maximizing just for holding period is different from maximizing for I only want really cool

people who are extremely refined. That's how you define. Yeah, it's multi-variable, right? Like if you are extremely cool, your sort of effective price maybe goes down even if you occasionally sell in your, your sec art, you know, on an auction. But, you know, hey, if you're not super cool, but you are a storied collector and you never sell anything, then maybe that it sort of increases, you know, sort of your effective value that you provide.

So it's like, it is multiple things sort of triangulating to what is your actual bid on this item. What I was going to say on this is like I, it's a lot of it's just like it's about creating artificial scarcity. I was thinking just not to bring this up again, but just thinking because I was looking at the number specifically on the hype TG and looking at a few other ones. And there, like, I think it really played in their favor that you couldn't buy it on any centralized exchange because and that's, that's only the case.

It's kind of like inflating the money supply is that it could be like deflationary or like inflationary. You know, like 2008, everybody was of concern. Things would get super inflationary. We're like pumping money in the economy and actually like it became a little bit more deflationary. So basically what you're adding is you're adding something to the system that can create a reflexive loop, but it can go one way or the other. If you create scarcity, if not enough people care about it, you actually can deflate the value. Like if not enough people care, they can't buy your token. It's like obviously most token launches that don't get listed on like by bit, finance, OKX, whatever.

it's a sign that they're going to go poorly. But in that case, there was enough of a reflexive loop that was pushing things upwards that I actually think it was a huge benefit to them. Because I don't know how you guys felt at the time, but it was honestly to me, it's funny, we're talking about this now. I was reflecting yesterday. It almost felt like a luxury good. You had to like bridge to this like new chain.

You'd like go to this like new exchange. You're like going buy the token. There was like one place you can get it. Like it was kind of hard to get. And I really think that played in their favor. And there was a small, you know, there was a small number of very fervent supporters talking about it, but not that many people got the air drop. It was like, you know, most people didn't approve the thing in their what, blah, blah,

it was like five, six thousand people got like something actually meaningful. And that was like, but it was really life changing for them. And so it created this like incredible mystique and hype around the few people who had access in the same way that like, you own a Birkenbag and it's like, holy crap, like this really cool person owns it. Like, you know it was really valuable for the few people who had it. But then there was this sort of like artificial barrier of scarcity. that massively, I think, like, increase the sort of like mystique and demand for this thing. And I think like similarly, I was thinking about this in relation.

And by the way, like, we're talking about ICOs, like, you know how they run an IPO, right? You go around, there's a road show and you go and you're trying to build your book and you figure out. And they love to ask you exactly how much is available. People, you know, VCs do this too, right? Like how much is available in the round? You actually should not tell people exactly how much is available. Because when you do it, then you're, then you're cornering people into being like, okay, I'm taking five more checks of like 250 or whatever. It's just like, you know, you don't know,

actually. You know, like, I don't, I don't know. It like depends on how much conviction you show. It depends on how much you say you want to put in. What's the optimal amount? What is your target amount you want to put in? And then I can take that back and look at it. And then we'll close the books and we'll decide. And like that is what they do in an IPO. And I think that's generally what you should do as a founder when you're fundraising. And I think that's what you should do through like in ICO. Obviously, there's going to be a lot more people. You're going to be a little bit less considered. You're going to be more programmatic about it. It's going to be less vibes based. But my view has always been like,

if you're trying to close the last $5 million or whatever it is, like in a round, rather than saying like, okay, I can only take one million. You've preallocated ahead of time. People should tell you, give me a range.

Like what is your desired? What is the max amount you would want? What is the minimum that it makes sense for you to have enough skin in the game? And then you collect all of that. You're like, all right, final numbers are in. I've closed the books.

And then you decide and you allocate at your own discretion according to who you think ultimately is going to be the best steward of the equity of your company. And I think like that is the process that's used in a, IPOs that works and that's that's how it should work like you should you and and I think like yeah these platforms are really just go back to the core topic like there there's a few things that have been tried there's been the like get as many people as possible to put a thousand dollars I don't think that's the way the way that you maximize you get more out of like if you can fill out a million dollars in any

way you want to fill it out in the best way possible that's going to go towards the people who are going to be the best steward of your capital and create treat your treat your company and treat your token like a luxury good because if you really believe in it, it is. All right. We're running up on time, but I want to get Tarun's take on the luxury goods ICO question. Tarun, what is your take as the sort of chief scientist of the podcast? Having sold a couple art pieces, I at least have some idea of like the other side of the

market of like whether what the value a gallery gives you is. And I would say there's something that's kind of Tom. hint to that, but I think like you're kind of missing here, which is not really true for token launches. But generally the history of the buyer is extremely important in the art world. Not even just the history of it being an individual, but like there are artists who will only sell to institutions that have like a certain set of criteria met, right? Like it's an institution that's young. I won't sell to MoMA because fuck them. They're too, too like old people go there.

Like there is stuff like that that's constraints that like the artist. actually place, which is like the equivalent here. And a lot of those are path-pended. This conversation is making me feel like a plumb. I just want to say that. They're all, they're very like pat-dependent. Like you care about like the entire history. We definitely, and whereas like in the pseudonymous world, the path dependence is like

purposely broken, right? Like it's like I'm purposely trying to hide as much as possible as I go into the irdrop. So there's like a little bit of like a weird trade-off there. Like I know that like the the protocol. call developers would love to force revelation, like force the users to disclose something with themselves. But realistically, they are, right?

They're forcing some stuff, but it's, it's like, you don't know their whole provenance, right? Like, you don't, truly have you connect other stuff? Yeah, they have like, like, I think Twitter or telegram or something like that. Yeah, yeah, you connect your socials and stuff. Yeah, but you do it even better. You can see your whole on-chain transaction history. You know, you could have, oh, you could have another wallet where you're dumping stuff.

Yeah, why would I ever reveal a wallet that actually is, like, are surprisingly unsophisticated about the stuff, I feel like. You're either like a industrial farmer or you're just single account. My favorite thing is watching all the hyperliquid air drop farmers who never use crypto before suddenly realized everyone could

watch all their trades in front around them. Because like there is that aspect, but I do think like the people who you want as sort of stewards or whatever, like your criteria is going to have to take a lot of factors. And I think the art world this kind of weird in that the next sale price is completely determined by the entire history

of holders in the past. And I'm not sure that's, you know, I think that's what NFTs were trying to get at, but they obviously didn't really work out. Whereas like I definitely don't think that's true for token, especially tokens with the yield like staking tokens. Like I, why is that true? Like eventually that goes away. And like you've seen that with all of them. But that doesn't matter. All right, Tom, I'll give you the last word here before we close out. I, I don't know what the last where it is here. I do think, you know, the history of crypto is someone invents something new, some experiment. It works extremely well. And then everyone just copies them until all the alpha is gone and the strategy is exhausted and then we're on to the next thing. And I actually think we are

on the cusp of something happening in ICOs. I think this Meghi-Eath style, reveal me your true bid, show me your true colors and I will sort of place, you know, allocation where I see fit, feels like the way things are going. You mean it's the sorting hat. It's the sorting hat. Yes. It's like basically. It's the bouncer.

As opposed to an auction, it's a sorting hat. Yes. Yeah. But to Caldor's point, like this is in some ways, crypto also be learning the lessons of tradfi and like maybe some things were, we're good. And overall, I'm just like, it feels like the sophistication of capital allocation is just getting higher and higher.

So. Got it. Okay. Well, that's all the time that we have. Caldora, thank you for joining us. Where can people find you and what do you want to plug? Thanks for having me, guys. You can find me on Twitter and Telegram. I'm at Caledora everywhere, just my first name, K-L-E-D-R-A. And yeah, come to Ostium. We have the most predictable and stable funding rates and deepest liquidity on stocks, indices, metals, energy, FX.

So really any triadfayaz that you want to trade, we are far and away the most liquid in the best place to do that. We got a lot of people trading Google, Apple, Amazon, Nassau. And even weird indices like the Hongseng Index if you want to, you know, bet on the Chinese market indirectly. So yeah, come try it and give me feedback. If you don't like it, message me DMs and I will fix it. If you don't like it, roast her on Twitter. If you don't like it, message me and we'll fix it. I can promise you that.

Okay, great. All right, we'll be back next week. Thank you, everybody. Cool. Thank you for having. See next time. Ciao.