Unchained - The LayerZero/Wormhole Bidding War Shows How to Value a Crypto Business - Ep. 890

Episode Date: August 22, 2025

The drama is heating up in crypto M&A. LayerZero, the omnichain interoperability protocol, shocked the market with a $110 million bid to acquire Stargate DAO — the very bridge it originally launched. Then Wormhole jumped in, asking the DAO to pause the vote so it could make a counter-offer. This episode unpacks the first-ever so-called onchain bidding war: how to value DAOs like real businesses, why LayerZero and Wormhole are fighting over Stargate, and whether this deal marks the beginning of a consolidation wave across crypto. Guests David Nage of Arca and M&A advisor Lawson Bae of Relayzero break down the numbers, the strategy, and what this turning point means for the industry. Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Sui Xapo Bank Guests: David Nage, VC Portfolio Manager at Arca Lawson Bae, Founder of Relayzero Links: Unchained:  Wormhole Foundation to Counter LayerZero’s Bid for Stargate LayerZero Foundation Proposes $110 Million Stargate Acquisition, Retiring STG for ZRO Tokens  Timestamps: 🎬 0:00 Intro 🧱 2:57 Why LayerZero wants to buy Stargate, the bridge it launched 💸 8:36 Whether the $110 million offer from LayerZero was actually fair 🕵️‍♂️ 14:07 How Wormhole may be trying to make things difficult for its biggest rival 📊 16:35 Why David thinks the $110 million number can be justified 📈 21:07 How the number of daily active users factors into valuing crypto projects 🔢 27:07 What a “reasonable multiple” for Stargate could look like 🗳️ 30:34 How the Stargate DAO should approach this pivotal decision 🤝 34:49 Why this deal shows that crypto M&A is booming Learn more about your ad choices. Visit megaphone.fm/adchoices

We're seeing that historic, you know, first on-chain bidding war for Crypto I'm inmate. I think this adds to the maturity of the space. It's no longer just yolo or a number go up or, you know, when token or airdrops. It's how can we analyze these things from a fundamental level and actually apply traditional multiples to them to make sense of what the valuation could be. This week, crypto witnessed something new, the first on-chain takeover battle. Layer Zero offered $110 million to buy Stargate, the bridge that it originally built. Just as the vote was starting, competitor wormhole jumped in, asking the Dow to hold off so it could make its own bid. This raises serious questions.

How do we value on-chain businesses? Is this really worth $110 million? Is it less or more? And what does this signal about the coming wave of mergers and acquisitions in crypto? Joining me are David Nage, portfolio manager at ARCA, and Lawson Bay, an M&A advisor at Relay Zero, to unpack what this deal means for Stargate, for Dow's, and for the future of the industry. The conversation reminded me, yet again, that crypto has reached a stage where only real businesses will succeed. And we all agreed, what we're seeing here is only a taste of what's to come next.

Our discussion gives a lot of insight into how to value on-chain businesses, what multiples to apply. and what metrics are relevant. Hope you enjoy it. At Unchained, we believe the future should be decentralized, and that includes our data. That's why we use Walrus, the fast, dynamic, verifiable data layer. Learn more about the platform that's powering our future

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Remember, go to the show notes now and subscribe to Bits and Bips. That's Bits, plus sign Bips, spelled BIPS, on YouTube, X, and wherever you get your podcasts. Welcome, David and Lawson. great to be with you again, Laura. Excited to see it. So as usual, there's some drama going on. Apart for the course in crypto, this one is especially juicy and exciting. Omni Chain inoperability protocol layer zero had submitted a proposal to the Stargate Dow for

layer zero to acquire Stargate, which I believe is the most widely used bridge in crypto. Layer Zero actually created Stargate, but it had released it into the wild as a Dow. And recently, they proposed to acquire it back. with, or not acquire it back, but to acquire it with a $110 million purchase of Stargate tokens and what Layer Zero CEO Brian Pellegrino said was what he believed to be the largest Dow acquisition ever. However, on Wednesday, Layer Zero competitor wormhole suddenly said in the forum, hey, put a pause in a vote, we're going to counteroffer. So before we get into all that trauma, let's just start at the beginning. Can one of you explain why it is that

layer zero decided to try to acquire Stargate, you know, even, like, even though they had created it and like, you know, explain the relationship and why you think they chose to make this move now. Lassen, do you want to start? Sure. So what's interesting here is this is the second then I'm aware of acquisition of a, like, related project by a Dow. So synthetics, SMX, back in, November last year, actually proposed to acquire Quinta, K-W-E-N-T-A token, which was basically a token for the app that they spun out. So the app, the user and experience had a token, and the Synthetics, the Oblian Protocol, decided to reacquire that. At the time, they decided to reacquire that primarily because it was too much administrative to, like, have these two entities and two different teams, and they just wanted to consolidate that. You know, looking at the layer zero action to acquire Stargate, to me, this is about revenue. Stargate is where the revenue is. There's no real revenue happening at the layer zero level.

Layer Zero earns revenue from messaging via their messaging protocol, but the transactions that are occurring on Stargate, which uses the underlying layer zero messaging protocol, had a lot easier ability to take a transaction fee, which they're doing now. And so to me, this is very much a setup of bringing the revenue in-house and definitely doing that in a regulatory environment that seems open to that. Yeah, I would agree with that. What I've noticed is that, you know, if you look at what the history of Stargate and Layer Zero are, is that they were very closely tied together. They were obviously very significant cross-pollination of both of them. So Stargate was dealing directly on Layer Zero, was a cross-trained. liquidity with transfer protocol and bridge.

They were part of that world. I think some of the things that we've noticed over the years, we saw this with Polygon too, where Polygon had several different digital assets. They had their original one, then they went to poll, and then they had a few other different opportunities. I think what the market is starting to look at,

especially companies in the space, all together, a unified level. And this is what you're seeing across the board. I obviously focus predominantly, on venture. And what we're seeing in the venture world is you're seeing some of the largest acquisitions that have happened in the industry happen in the last quarter and they're still been happening now. You saw obviously ripple acquiring head road. You saw coin base acquiring and liquefy. You saw several other different ones out there as well. And so there's been about

five and a half to six billion dollars in Q2. And I'm sure that's going to be equivalent, if not more, if I was looking at the velocity of deals right now, you know, that is something that you're seeing. And this, what's obviously as Lawson, you know, what's super interesting about this is that it's obviously relating to the token. But at the end of the day, you're seeing companies that have been in existence now for a number of years really look to see how can they unify their product. How can they make it more sticky for their user base?

How can they build upon that user base? and at the same time, how can they also bring in that revenue that really at the end of the day, if you look, obviously, as Lawson said, they were very closely tied to each other at one point, and then they obviously had a little bit of a split. How can we try to bring that revenue back to the mothership? And I think this is very similar to the things that you've seen on the public equity space. If you look and you see, you know, kind of deals that you had out there, like when Slack was acquired, You know, this was something that, you know, again, Salesforce acquired it because, you know, they were obviously bringing in a ton of revenue and they brought in something to the to the Salesforce product line.

And so this is very similar to what you're seeing, you know, you're seeing this new kind of paradigm in crypto where it's following very similar trajectory that we've seen in public equities where you're starting to see this acquisition kind of new kind of focus over the course of the last few questions. orders on how to actually bring much more retentive value to the actual, you know, underlying company. Yeah. And, you know, just to add on the list of other major acquisitions that we've seen in crypto recently, there was Coinbase acquiring Deribut and Stripe acquiring bridge and privy. And, you know, we're just noticing so much more competition generally, even from players outside of crypto that won a piece of the crypto action. You know, before we get to the wormhole bit, I just wanted to kind of analyze the proposal that layer zero made to acquire the Stargate token. You know, they talked about like the price that it was trading when they made

this proposal and what they were offering and it was, you know, like a little bit above. And, you know, they kind of had this ratio between the ZRO token and one STG. And so I'll just say what the ratio is. It was one STG to 0.086340. So it was like about 17 cents per STG and $1.94 per ZRO. So when you kind of looked at the proposal, like did you think that was a fair proposal? Like did it make sense for the Dow? Like what did you think of how they were, you know, just of like the numbers that they came up with? I think it was a really good start.

You know, so looking at the. offer they made and wormhole noted this when they came back and and addressed the bid. It's essentially a combination of like, what are they getting for the offer? Right. And so the market previously was pricing it, I think around 1637 cents on the day that they offered it. And then they made an offer of 0.1675 cents. So like a couple percent of it. And so like what are they getting for that?

And so what they're getting for that when you acquire these things, especially in traditional finance, you're getting all the assets and you're figuring out how to disperse those assets. Those assets can be just the IP or it could also include like the cash and equivalence and all sorts of like different things that that company holds. In the context of the Dow, it was really cool is like most of this is on chain. It's like it probably verifiable. And so the Dow has around $95 million in cash and equivalence excluding the holding. of SDG. And so the $110 million offer, essentially says the value of the protocol, it is like $15 million. 15 million exchange. So you're holding $95 million and we'll pay for the entire star rate protocol, $15 million. So then the question is like, how did they get to that number?

Traditionally, when you're acquiring companies, you're putting a growth multiple on the revenue and what the cash flow looks like. Again, since we have on-chain cash flow, these things are irrefirable. So if you look at, I think it's according to the defied line with a 30-day fees, on $180,000, which is around $2 million analyzed. And so what that puts it is around a seven in the core, 7.25X revenue is the multiple they put on layer zero. And so then the question is like, is that what the market wouldn't only pay is the

multiple by a company, right? And so the way I look at that is if you look at the Derbitt acquisition by Coinbase, it was speculated that was around a 10x multiple. If you look at the ripple acquisition of something Hill, Hidden Road, I think that was 11 or 12 maximum. And so there's a multiple that's on revenue, right? And so as an advisor, as someone trying to help put these deal together, you need to figure out what that, like, what is the revenue and what is the multiple?

And the multiple is really a function of growth, right? And so is this company that has negative growth or positive growth? Is it double-digit positive growth? And if it's double-digit positive growth, you start to see 10, 15x multiples. If it's slowing growth, you know, you could see 5, 6, 7-7 multiple. In the case of layer 0, they get a 7.24x multiple on revenue declining. So there's something happening in the business. I haven't dug into what's happening here, but that they're making a lot less money.

The protocol is making a lot less money than it used to. So they're saying, hey, it's worth this amount because revenues kind of crashed. I'll say that and then I'll say, what does the public market look like today? Today, the public market is traded in like a 30x revenue multiple. And so if you look at like stocks, they're at hudgeoned all-time highs and generally 30x is where you start to see we need to have a bare market. It's generally kind of the top type signal. Yeah, I would say awesome. Yeah, there's a whole lot of things ripping that up.

But again, so you have a 7.2, 5x multiple, that's a 15 million enterprise valuation, the valuation of the protocol, 10x is a 21 million, 12x, 25, 15, 32, and a 30x would be a $64 million dollar enterprise valuation, right? So this is how you would look at these deals from a practical standpoint. With that said, like, there's a whole. lot of like if we actually get into the details and figure out like what is this thing actually worth you start to find a lot of nuances right like does the protocol does the Dow owe the trademarks does someone else own if they're in the license you fee how much of the protocol revenue are they

taking today have they turned on all fee switches are they needed given too much to the LPs there's lots of like variables you could start to play with to like figure out maybe a different number there. But I think from a big picture standpoint, their first offer was a good first offer. But what's awesome is these are public markets now. And so anybody can come in at any time and make another offer. And that's exactly what wordholes that come here. Yeah, honestly, before we go to David, like part of my thought about the wormhole thing was I was like, if there's bad blood between wormhole and layer zero, then all wormhole has to do is just make things more expensive for layer zero.

Like even if they don't win, they just have to make trouble for them. And it's just a way of like just being a thorn in the side of your competitor. And do you know what I'm saying? Like it's almost like even if their heart isn't in it to actually win this acquisition, they might get satisfaction out of just. The theater of it is fun. I mean, this happens in public markets as well. It's awesome to see if now happening in crypto.

And I think that's, spare, like, is this a real bid by them or is this fluff? They've simply said, we're going to send a bid, which is not a traditional mechanism of what you would do. Normally if you're going to counter, you come with a counter. But, you know, these are public, but not public. There's a whole lot of non-public information. And so they're kind of delaying and say, hey, give us the non-public information to figure out what we think it's actually worth. It'll be interesting to see if the blot is caught or we get what happens. Yeah, and I know we're going to discuss the wormhole thing in depth. But the other thing that I found funny was so they announced that they intend to counterbid.

And then they had this huge list of things that they're requesting for information in order to come up with this actual counteroffers. So I just thought that was funny. And when I heard Brian Pelagrino on Thread Guy's stream yesterday, he was saying like, oh, so they basically are asking for all this info and they can kind of get this like competitive edge and like getting all this information. Due diligence, all that stuff is super normal. Like none of those things was new to me.

Like, does it... Wait, right, wait, but what do you think about that? The fact that they announced their intention without making an offer. Listen, if this was a public company and there was a board directors of fiduciary duty, I think there'd be a whole lot of giving information and a lot of lawyers involved. Yeah, we're in a really sticky spot here because now we're going to start to see the proofs of the pudding. Are we actually going to, like, do the best thing for the token holders? Or we're going to do the best things for, you know, some self-interest here.

I think it's really critical that we have the conversations, And we expect our DALS to be better. And so I hear that, but in traditional markets, you know, it's competitive a bit. You know, you got to undertake the bit. Okay, David, what was your perspective on the layer zero proposal? First and foremost, I have to say, Lawson, hearing you talk about the fundamentals of a business and digital assets is music to our ears. We've been, you know, on the fundamental kind of kick for years, trying to understand these

things from a fundamental level instead of a degenic level, if you will, or what we call a network level, air quotes. And so hearing you opine about the fundamentals and about multiples associated to those fundamentals is just beautiful. I think it's a maturing aspect of this industry, and it's something that we definitely applaud. The second thing I have to say is that everyone needs to go watch Wall Street, and they need to watch the section where Gordon Gecko is trying to bid up Anacott steal against Sir Lawrence Wildman. This is exactly the playbook that is happening here. And so if you also want to read Sung Su, The Art of War, this is also probably very applicable to this as well. And so at the end of the day, you know, again, I will say this is not an investment

advice. Obviously, we have to say that every time that we're on these things, you know, I will say that in just quickly looking at this, you know, obviously from a venture perspective, we're very interested in interoperability and we're interested in some of the things that are happening from a bridging perspective because we have exposure to that in their own book. I have to say that, you know, I think Lawson hit it on the head is that it looks like they have about a $90 million, give or take, treasury. It looks like, you know, as Lawson said very correctly, that they're projected to do about $2 million of annualized revenue this year, give or take.

The multiples, as Lawson said, you know, seven times is a little low. It's a little bit of a kind of slap in the face. Normally what you see in the markets right now is, you know, what we've seen. saw, you know, back a few years ago, when markets were humming along a little bit better, was about 12 to 15 times they are. Obviously, we've re-rated several times, especially in this industry, after several of the cataclysmic events that have happened. And so about 10 to 12 is usually, you know, kind of where you're saying things sit. And so if you're looking at 2 million of AR and you apply 10 times multiple in that, you're obviously 20 million, and you apply that to the 90

million treasury. And then I think that's how you kind of get maybe to that 1-10 number. Again, I don't know this. I've not spoken to Brian. I've not spoken to the layer zero team about that specifically, but maybe that's the justification for that number. At the end of the day, though, this is something that I think is going to go down as historical for this industry because you're seeing two companies compete for an aspect, a product in the market. And it's something that we have not really seen before. And it adds a completely new dynamic because you can start to have competition. You could start to see bidding up and you could start to see all these tactics that we've never seen this industry before. I think this adds to the maturity of the

space. It's no longer just yolo or a number go up or, you know, when token or air drops. It's how can we analyze these things from a fundamental level and actually apply traditional multiples to them to make sense of what the valuation could be. So in a moment we're going to talk about wormhole's intention to counterfeit, but first we're going to take a quick word from the sponsors to make this show possible. At Unchained, we care about the future of decentralization. So it only made sense for our media content to be decentralized. That's why we use Walrus. It's the fast, dynamic, and verifiable data layer for on-chain builders.

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Enjoy competitive rates, zero fees, flexible terms, and no penalties for early repayment. And your Bitcoin stays safe, never re-hypothecated, relent, or pooled. It's securely held until your loan is repaid. Check them out at sapobank.com slash unchained. Back to my conversation with Lawson and David. All right. So in announcing its intention to counterbid, the Warhol Foundation wrote, based on our initial review, we believe that STG holders deserve a more competitive process,

and we are prepared to submit a meaningfully higher bid. Lara Zeros offered the time, $110 million in ZRO for roughly $705 million in stable coins and $15.9 million in ETH, plus the permanent capture of all future protocol revenue. Treasury alone is $92 million, excluding STG tokens, yet the proposed deal hands over assets and ongoing economic upside for only $110 million in token consideration. It doesn't create a compelling offer, which values Stargates ongoing business at an unreasonably low number. Then they listed kind of some of the other assets they saw and then requested a whole bunch of information. Exhaustive list of assets are for sale and transfer.

This should include all administrative privileges, intellectual property, trademarks, software, and property on and off chain, and accurate and up-to-date accounting of protocol owned assets. data on users, traffic, et cetera, and there's more. But I was wondering, so, you know, what did you think of like what their pitch was and what do you think would be reasonable for them to counteroffer? And yeah, just how do you see this playing out? David, it hit the nail on the head right before the break. You know, we're seeing that historic, you know, first on-chain in, you know, bidding war for, you know, crypto emanate. We don't have the second bid yet, but we're already, since that time, the price is up 5, 6%.

So the market is pricing another 6% potentially out of this, right? That's like, collect 1, which would be more on the EV than the Treasury enterprise value. I think them coming out was smart strategically, you know, the art of work. They could be playing games. But I think it's also smart business. You know, if you look at the mixture of Stargate's business, maybe to the mixture of Wormhole's business, Stargate has a heavy arbitrium business for some reason. Maybe they like that.

Maybe they're missing that. And so maybe that fits into the Worm Pulfurl portfolio. And maybe they would value that differently, right? Because right now, like, are they direct competitors in market or are they like splitting off and taking change? Right. Do they dominate some chain and someone else dominates another chain? And as a result, they could dominate that market. And once you dominate that market as a monopoly, you can have more revenue in that market.

Right. So the equation is a little bit different when you start to think about competitors buying. Other things to note here is, you know, that the way I valued in that last conversation, the revenue multiple on the enterprise value of a company is one way, very traditional way, to think about value of companies. I'll say essentially since Facebook, we've started to look at companies differently. Facebook was the first ever to put out this concept of daily active users. And with more daily active users, the perception is I'll figure out.

a way to make more and more money from that user. And so daily active users started to become a metric to think about the value of an enterprise. And so, for example, when I was doing the M&A earlier this year, the DAU came out to around $500 per daily active user off the market cap for Facebook. Now let's compare that to crypto. Crypto reports monthly transacting accounts. These are monthly transacting not wallace, but users in this scenario. If you back into that number, it got to something like 250 per user.

Right. And so I haven't looked at the numbers here. Like if we start to look at a number of active accounts, so the way I value the deal recently was monthly transacted accounts, basically the number of wallets regularly engaging with the protocol or app, and then put into multiple in that. Because then, because at this point, now we're looking at the lifetime value of a company. that ends up becoming enterprise value that ends up becoming like revenue like revenue opportunities but alternative ways to look at this really depends on what you think you can sell in that market and what your pricey power would be in that market if you create a monopoly for example and you can then trump's more i would also like to jump in so again from a fundamental perspective the numbers

and law someone you know talking about that is is critical but there's also another issue there that I have not seen many talk about, but it comes down to the technical challenges here. When you're looking at a traditional merger and acquisition, obviously ex-crypto, you look to see where the business lines are creative and where they're not. And you look to see, especially from a workforce, you know, does the workforce blend itself together in terms of compensation, in terms of, you know, structures, et cetera, et cetera. And you try to make a determination how long that merger and acquisition is going to take to actually become accretive to the overall. overall business. And so if you look at the technical integration challenges here right now,

Wormhole, I believe, uses a decentralized network of about 19 guardians that observe and validate messages across chains, requiring 13 of 19 anything to approve cross-chain messages. There's generic message passing protocols focused on cross-chain communications, whereas Stargate is built on layer zero's protocol with unified liquidity pools sharing between chains, and it uses, I think, some sort of a delta algorithm for automatic liquidity, pull rebalancing. And so what you start to cross-chain validation, whereas Oracle and Relayer system, that power Stargate. So how is that going to work?

And I have not heard many people, and there's people who are far better at the technical stack, you know, complexities there than me. But I would, you know, as I was looking at this and looking at the combination, that is something that seems like it's going to take a long time to start to integrate and actually get to work together. And I have not heard many people talk about that aspect. Yeah. Well, then this sort of goes back to that theory about just being a thorn and the side of layers here. But actually, one thing I wanted to ask the two of you is, you know, Lawson made a case for why the multiple would be 7.25 rather than something more like 10 or 12,

as you were saying. David was probably more typical for the current market. And, you know, he mentioned that the revenue is going down. So I just was wondering, like, between the different numbers that you came out with, like, what do you each think is kind of a more reasonable number? And by that, I mean, most of the ball. You can go with that. I'm not even going to try it. It's a fun conversation. I figured it out. I just, I found out about the bidding war, like, out of two o'clock yesterday. I was driving, and so I just started, like, thinking about what I should do about it. And so I posted in the in the in the form where all this is happening publicly right now. People are dow holders users, uh, token holders are debating what should happen with this.

I basically said, hey guys, you're all the situation in your hand and I need to do some analysis to figure it out. And I basically just kicked the chaos. I need to spend some time to figure it out. And that's honestly what Wervo asked for. They asked for a little delay to figure it out. And I think that's a reasonable request. I think that there's, there's two sizes of coins. Who engaged me is what you would argue, right? One person would say the revenue is decline in, so this is, you know, you probably should put a lower multiple on it. But the alternative approach is, what do you have a competitive bidding more? It's literally just what people are going to pay for it. And so what the multiple is going to be, what people are willing to pay for. It's

just like a traditional market, except as one large buyer. Yeah, that's my thought of that. Yeah, I think the other thing that, you know, folks need to take into consideration is that when Stripe-acquired bridge, the market really started to become very interested in what's happening with interoperability and the ability to, you know, kind of bridge assets across. I think traditional, you know, players in the space, non-crypto, started to understand that you do need to have technical capacity to be able to bridge or move assets that are on Solana or Avax or whatever, you know, kind of chain you're using, and that it doesn't work harmoniously and unified at this point in time. And so I think that, you know, that acquisition has probably kind of lit up this whole process now.

And as I said again, I think this is just the start of something that we start to see much more of where you see, you know, bigger chains or chains that have more, you know, funds and reserve or have the capacity to do things, start to look at say, okay, we are missing this. Now, we can go and build this for the next six to 12 months or we can go buy. this for, you know, a certain premium in the market. This is what you see on, you know, in traditional pharmaceutical companies where they have neglected orphan, you know, kind of drug building and, you know, a lot of the things that, you know, are not as publicly aware of in terms of illness and disease. They go out and they buy these smaller pharmaceutical research labs for,

you know, a certain premium because they don't want to actually use CAPEX to do it internally. they just want to build it and be able to get to market fast. And so I think that's where we're going with this in terms of the market, that you're going to start seeing much more of this. Okay. So if you were in the Dow, how would you think about this? And I know we don't have the actual counteroffer from Wormhole, but I don't think we necessarily need to have that to...

You might not, Laura, by the way. You might not. As Lawson said, they asked for it was five days, correct? They asked for like a five-way. You might not. If they do diligence and they come back and they say, you know what, that 110 offer was probably pretty good and we're probably not going to be able to get there. You might not. So that's the other thing, too, that people need to consider is that they're asking for a five-day referendum or pause to be able to do their diligence.

That does not necessitate that they're going to make an offer. Yeah. Let's assume that they will, but in this universe right now where we don't know what the number would be, how would you think about like, Like which, you know, partner would be the better, or it's not really partner, but which acquirer would be the one that would kind of steward the future of Stargate better. So one of the things that I, the ideas behind, you know, Relo Zero is to help, help founders and project protocols find exit market fit. But when you're trying to sell something, whether it be a small company or something large,

there's definitely an element of there's a financial value in like I have, I don't know some sort of financial outcome. But there's also like the Edo's and the idea of what you're trying to do. Founders tend to want to find buyers who are going to continue the vision, especially in crypto people have this crazy big vision. There's like this idea they want. With regards to Dow's, you know, the meme of the Dow arguably is how they, you know, should be a blend of like, does this thing still continue the values of the Dow or not? And, you know, in that stance, we're arguably does.

There's definitely going to be some technical challenges there, but it does. With that said, the spirit of it, it was, you know, created as spun out by the Layer Zero team. And so maybe you're more. Wait, I'm serious hits the ethos of the Dow than layers. Not better. I think they're both, I think they're both good fits. It both passed the test. I personally bearish current bridges and how they work. I think ZK is stuff like that's going to solve this.

It's a little while. But this is pretend like they're valuable and they're retained value for now over some sort of time frame. Yeah, it comes down to like the ethos and the vision. And can you still buy that vision? Are they going to continue that vision versus some sort of acquisition where it's going to like not continue that vision? both of the potential buyers here are definitely going to continue that. And so I think that passes. Yeah, I would say, and again, I don't know this or gate team.

I haven't spoken to them. And again, this is not an investment research or advice to them or anything like that, but it is a cultural fit. Now, are you going to a place where you're literally just going to be an aquahire? And in the next six months, you're probably going to be gone. Or are you going to be someplace where you're going to continue on the mission of what you started and you're actually going to be able to continue to build and be able to work within the culture of the organization that you're part of now.

That is something that is a very large consideration. There are founders who want to do, you know, the latter, who have built and have been working through a very, you know, obviously difficult market these last few years and who see a chance to exit and be able to also do well for their investors and folks that have been working there. And they want to just go into that, you know, kind of quiet night and just, you know, end it and build something else maybe in the future. And then there are others who have said, okay, we're just at the start here and we want to continue on.

We want to make sure that we're working with the team in an organization that really has that fighting power too. So that's something that the team at Stargate needs to determine is, from a cultural perspective, do they want to continue working and continue to fighting to build this thing into something bigger and better? Or do they want to, you know, as I said, you know, bow out, do well for, you know, your employees and people that have been burning the midnight oil and go on to build something else.

That's their determination that they need to make over the next few days. Okay, well, we'll have to see how this all plays out. Before we go, I just wanted to ask you both, because I know both of you, you know, think a lot about M&A and crypto. We started to, you know, kind of chat about this a little bit earlier in the show, but I just wondered if you could give your thoughts on, you know, what this stage that we're at right now in crypto, what you think it will show in terms of M&A,

like what kind of, I think, new trends we might see or like what, you know, potential developments you're looking for. Yeah, I think I alluded to this too. And it feels very similar to the kind of the pharmaceutical world that I've seen for the last 20 plus years in the markets where you have a Pfizer or Merck, etc., who become very large and become very well endowed, you know, from a, you know, kind of a treasury and a budget standpoint and a bottom line, they have the ability to go out. and look for smaller acquisitions to be able to bolt on into their larger offering. I think you're seeing that. You've seen that with Coinbase, obviously, over the course of the last six to 12 months. You're starting to see that with Ripple and with their acquisitions of Hidden Road and Rail. I think you're going to start to continue to see this.

You're going to see the velocity of this continue over the course of the next six months, you know, throughout the rest of the year. And I definitely think that from a standpoint, the regulatory, clarity that we're starting to get with genius and obviously not with clarity. And obviously the very public vocation of support for this industry and the asset class from the administrator and the regulators. I mean, Hester Paris is basically calling out for anybody in Chicago who's building in the space who might be an early stage company. She wants to meet with you. I mean, this is something that we've never seen before. And so this is, I think, you know,

you're starting to see that there is a real shift in the tide. And I think the companies that have the budget and the capacity, especially also the ability to tap into the debt market to be able to raise capital to make these acquisitions if they need to. That is where I think you're sure seeing more of that happening over the course of the next. I understand. I agree with David. And for me, to zoom out just to hair, in 2018,

I went crazy over this idea of on-shank cash flow, it being this idea where the users are both the consumers, worker and the investors of the protocols. And at the time, that was like really a nascent idea. There was really only MakerDAO was the only equivalent value. MakerDAO and staking. 18 months later, we have DFI summer. Seven years later, we now have fully on-chain businesses.

And it's incredibly exciting. Now that we have on-chain revenue, we have referral fees, liquidity rewards. We have on-shane marketing. And now, at the end of the life cycle, we have on-shade NEM&A. This is the next era of crypto is really a recognition that the business of crypto is working. We have revenue up and down the stack from consumer to defy, from apps to protocols, and people are going to try to capture that forever. We're trying to try to grow in that type of environment.

All right. Well, this has been such a great conversation. Thank you both so much for coming on on Change. Thank you. It's always Laura. Thank you. And great talking, awesome. Heads up, everyone.

We've got exciting news. Bits and Bips, our Macro Meets Crypto Show, is officially spinning off into its own podcast feed, YouTube channel, and X account. If you've been enjoying the deep dives into interest rates, monetary policy, and how they intersect with the crypto markets, make sure to follow Bits and Bips wherever you get your podcasts on YouTube and on X. You'll find the links to YouTube, X, and other podcast platforms in the show notes. If you're watching this, there's a QR code on screen. We'll be posting here for a few more weeks, but start to you. Starting in September, Bits and Bips will launch on its own feed.

For now, we will publish longer clips from the show on those accounts. Remember, go to the show notes now and subscribe to Bits and Bips. That's Bits, plus sign Bips, spelled BIPS on YouTube, X, and wherever you get your podcasts. Thanks for tuning in to the weekly news recap. We begin this week with Kanye West stepping into crypto. Musician and entrepreneur Kanye West has launched a cryptocurrency called the YZY token, also branded Yeezy Money on the Salana blockchain. The token surged 881% within 10 minutes of its debut, briefly reaching a $3 billion market cap before retreating to

about $1 billion. Insider wallets purchased large amounts of YZY before its public launch, including an insider wallet, which knew the contract address in advance, according to blockchain analytics firm, Look-in-Chain. Coinbase executive Connor Grogan noted on X that insiders appear to control more than 90% of the supply. The token's terms include a class action waiver, preventing buyers from joining lawsuits over disputes. If you're buying this, you are literally giving them permission to rug you without consequences, wrote pseudonymous crypto trader Damion X. Turning to Asia, China is weighing a dramatic policy reversal. China is considering the approval of WAN-backed stable coins, signaling a sharp reversal from its 2021 ban on cryptocurrency trading and mining.

According to Reuters, the State Council, which is China's cabinet, will review a roadmap later this month that could authorize their use to promote the wider adoption of the yuan in global markets. Hong Kong and Shanghai will be the main cities to fast-track local implementation of this plan, according to Reuters' sources. China is establishing an international operation center for the digital yuan in Shanghai, Shanghai, while Hong Kong recently enacted the Stable Coin ordinance, which positions the territory as one of the first markets to regulate fiat-backed stablecoin issuers.

Huang Yi Ping, an advisor to the People's Bank of China, recently told local media that an offshore yuan stable coin in Hong Kong is a possibility. The effort aims to counter the dominance of dollar-pegged stablecoins, which account for most of the $280 billion global stable coin market. The one represents just under 3% of global payments compared to the U.S. dollar's dominance of 47%, according to payment platform Swift. If approved, the plan would mark China's most significant move yet toward using blockchain-based finance to support the yuan's internationalization. Back in the United States, Gemini is preparing for Wall Street.

Crypto Exchange Gemini filed an S-1 registration with the U.S. Securities and Exchange Commission to go public on the NASDAQ global select market under the ticker, Gemmy. Gemini, which was founded in 2014 by Twins, Tyler and Cameron Winklevoss, has yet to disclose the number of shares or price range. Financial services firms, Goldman Sachs, Citigroup, Morgan Stanley and Cantor will lead the offering. In the same week, the twins announced a donation of more than 188 Bitcoins valued at about $21 million to the pro-Trump Digital Freedom Fund pack. In the announcement, they make a push for various pieces of legislation, including a skinny market structure bill that is

lean and mean, and a Bitcoin and Crypto Bill of Rights, which codifies the right to own, self-custody, and transact peer-to-peer, P2P, with Bitcoin and crypto assets. Tyler Winklevoss on X said, The mission of the at Freedom Fund PAC is to help realize President Trump's vision of making America the crypto capital of the world. And in another first for U.S. markets, Bullish broke new ground. Crypto Exchange Bullish settled its $1.15 billion initial public offering entirely in stable coins. The listing, which closed August, 14, and debuted on the New York Stock Exchange, marks the first time a U.S. IPO has been funded without traditional cash.

The transaction was managed by Investment Bank Jeffries, which oversaw the minting, conversion, and delivery of tokens across multiple blockchains. primarily Solana. Most of the proceeds were settled in Circle's USDC and custodied by Coinbase. Other stable coins used included PayPal's PYUSD, Ripples RLUSD, World Liberty's USD won as well as Europegged tokens from Circle, Societe General, and All Unity. Bullish's chief financial officer David Bonano said in a statement, We view stablecoins as one of the most transformative and widespread use cases for digital assets. Internally, we leverage them for rapid and secure global fund transfers, especially on the Salana Network. Meanwhile, one U.S. state has made history with its own digital dollar.

Wyoming has become the first U.S. state to issue its own stable coin, unveiling the frontier stable token, or FRNT. The dollar-pegged token is backed by U.S. cash and short-term treasuries, with an additional two-partisan. percent over collateralization. Custody and reserve management are handled by Franklin advisors with monthly attestations from the network firm, which is a crypto accounting firm. Frenti launched this week across seven blockchains, including Ethereum, Solana, and Base. Issuance and interoperability are supported by layer zero, while Cracken and CryptoCard Platform rain will be among the first platforms to offer the token to the public. The rollout follows passage of the Genius Act, the first.

federal law regulating stablecoins, but exempts state issuers from direct federal oversight. Goldman Sachs projected in a report released on Wednesday that the stablecoin market could swell into the trillions, with circles USDC alone potentially adding $77 billion by 2027 as new U.S. laws fuel adoption. On the startup front, a high-profile founder is stepping away. Jason Zhao, co-founder of blockchain startup story protocol, has stepped down from his full-time role just six months after the launch of its native token, IP. Zhao will remain involved as a strategic advisor while shifting focus to his new artificial intelligence company, Poseidon.

The move has fueled criticism within the crypto community. Anthony Sasano said on X, another L1 founder exits after producing absolutely nothing and making a lot of money in the process. Adam Cochran of Sinemain Ventures added, It's so disheartening that even the top VCs just seems stuck on this loop of rewarding flashover substance. Story Protocol has raised about $143 million,

with a valuation of around $2.25 billion, as of its latest funding round led by A16Z, though blockchain data shows minimal fee revenue to date. Turning to corporate hiring news, Tether is building out its U.S. strategy. Tether has appointed Bo Hines, the former head of President Donald Trump's Digital Assets Advisory Council, as a strategic advisor to guide its U.S.

The move comes just weeks after Heinz stepped down from his White House role. Bo's appointment demonstrates our commitment to building a strong U.S.-based presence, said Tether's CEO, Paolo Arduino, noting the company's focus on both digital assets and domestic infrastructure investments in a statement. Alex Kruger, trader, and co-host of Unchained Bits and Bips, wrote on X, Tether is now king. The world is drooling about it. They are everywhere and even higher talent straight out of the White House. Tether plans to launch a U.S. focused stable coin later this year, and in Washington, the Treasury Department is asking for public input. The U.S. Treasury Department is seeking public input on new methods to detect illicit activity involving digital assets as part of the rollout of the recently signed into Law Genius Act. The law enacted in July created the first federal regulatory framework for stable coins, requiring issuers to hold full reserves, undergo annual audits if valued over $50 billion, and comply with new licensing rules.

The Treasury's request highlights potential tools such as artificial intelligence, digital identity verification, and blockchain-based monitoring. Treasury Secretary Scott Besant said on X, Stablecoins will expand dollar access for billions across the globe and lead to a surge in demand for U.S. Treasuries, which back stablecoins. Comments are due by October 17th and will inform future reports to Congress that could lead to additional rulemaking. At the same time, industry and law enforcement are joining forces.

A coalition of major crypto firms and law enforcement has launched the Beacon Network, a real-time system designed to stop illicit funds before they can be cashed out. The initiative led by blockchain intelligence firm, TRM Labs, includes industry titans such as Binance, Coinbase, PayPal, and more than a dozen others, as well as global security researchers and federal agencies. The platform provides four core services, flagging suspicious addresses, propagating those alerts across the network, notifying exchanges instantly when suspect funds arrive,

and enabling rapid reviews to freeze deposits before withdrawal. Membership is free for verified exchanges and law enforcement. Coinbase's head of anti-money laundering, Valerie Layla, Jaber, said there's no program like Beacon Network, while noting that access to real-time intelligence is a game-changer. Cracken's chief compliance officer, C.J. Rinaldi added that protecting consumers requires seamless collaboration across industry and law enforcement. TRM Labs estimates that since 2023, more than $47 billion in cryptocurrency

has flowed to fraud-related addresses. In banking, SOFI is turning to Bitcoin's Lightning Network. SoFi Technologies is set to become the first U.S. Banking. to offer international remittances using Bitcoin's Lightning Network. The NASDAQ-listed FinTech Forward Bank announced a partnership with LightSpark, the Bitcoin Infrastructure Company founded by former PayPal, and Meta Executive David Marcus, to power real-time, low-cost transfers through its app. The service will launch with support for remittances to Mexico, with additional countries planned.

Customers will be able to send U.S. dollars directly from SoFi's app, while recipients receive local currency deposits abroad. Transfers will show upfront exchange rates and fees, aiming to address common frustrations in traditional remittance services. The rollout marks SoFi's return to crypto services after suspending them in 2023 during its transition to a national bank. And finally, one controversial group is shifting its focus. The group behind last week's 51% takeover of the Monero blockchain has voted to make Dogecoin its next target. The Cubic Network, an AI-focused blockchain project founded by Sergei Ivancheglo, revealed that more than 300 members chose Dogecoin in a community poll,

far outpacing votes for Caspa and Zcash. Kubic recently gained majority control of Monero's hash rate, successfully reorganizing six blocks in what it described as an economic attack. Following the incident, Cracken suspended Monaro deposits, citing risks to network integrity. Dogecoin, with a market value above $35 billion, currently operates at about 2.23 petahashes per second, a fraction of Bitcoin's 964 exahashes, and is what makes the network more susceptible to 51% attacks. Since 2014, Dogecoin has shared security through merged mining with Lightcoin. Lightcointers support Dogecoin. Always have, always will. Lightcoin community posted on X, affirming its backing amid the new security concerns.

Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Oranovich, Margaret Curia, and Pam Majumdar. Thanks for listening.