Unchained - The Rise of Public Crypto, ICOs Make a Comeback, and Coinbase Wins Again – The Chopping Block - Ep. 850

Episode Date: June 12, 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, we’re joined by a special guest: Laura Shin, host of Unchained! The crew unpacks Circle’s explosive IPO, Tether’s threat to exit the U.S., and the meme-stock logic powering the rise of “crypto treasury companies.” From Coinbase’s grip on USDC to Wall Street’s sudden enthusiasm for stablecoins, we explore how public markets are reshaping crypto’s power centers. Is Circle overvalued—or the last compliant winner left? And are ICOs really back? We debate whether crypto’s just maturing—or if it’s being hijacked by the suits. Show highlights 🔹 Circle’s IPO Shocks Wall Street – One of the biggest two-day pops in IPO history: Did bankers misprice, or did crypto just break TradFi? 🔹 Stablecoin Season or Meme Stock Mania? – Circle hits 160x earnings, 15x revenue—Tarun calls it “CoreWeave for finance” 🔹 Tether Threatens U.S. Exit – New regulation looms: Will Circle rule America while Tether dominates abroad? 🔹 The Coinbase Cut – Why Coinbase might be the real winner behind USDC—and the hidden economics of stablecoin margins 🔹 Banking Consortium Incoming? – JPMorgan and Wells reportedly plotting their own stablecoin play. Is Circle racing against the banks? 🔹 The Rise of Treasury Tokens – From MicroStrategy to Solana clones: Are “crypto holding companies” the new ETF? 🔹 Copycats or Cult Leaders? – Why everyone wants to be Saylor—and why most won’t survive 🔹 Are These Companies Just Meme Stocks? – Laura and Tarun debate whether tradable crypto firms have real value—or just vibes 🔹 The Return of the ICO – Plasma raises $500M on Sonar, sparking a new wave of pre-token speculation 🔹 Is This Financial Innovation or Regulatory Theater? – Haseeb asks: Are we maturing—or just dressing TradFi in crypto clothes? ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Robert Leshner, CEO & Co-founder of Superstate ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Laura Shin, Journalist, Author of ‘The Cryptopians,’ Founder and CEO of Unchained Timestamps 00:00 Intro 01:25 Circle's IPO: A Historic Event 03:16 Market Reactions & Implications 06:49 Stablecoin Legislation & Tether's Response 08:56 Circle's Market Position & Future 23:12 Crypto Treasury Companies: The New Trend 32:09 Understanding Convertible Arbitrage in Crypto 37:02 Potential Risks and Market Dynamics 41:36 The Influence of Michael Saylor 43:57 The Need for Charismatic Leaders in Crypto 50:07 The Rise of ICOs and Market Trends 55:04 Concluding Thoughts on ICOs HostsDisclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

I actually feel like everyone keeps making this comparison to FinTech, but it's actually more like, and not even banks, just like non-bank financial lending people were, and mass of this thing. Like, like every major private credit fund CEO is at this. And so I kind of feel like Circle has a very different audience than Tether, and that audience, this is net worth is like almost disjoint. and the set of people who will use both is almost like, basically, the only time that's going to overlap is in the curve pool to trade USC for USTC.

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. I'm into trading firms who are very involved. I like that eat is the ultimate pump. Defi protocols are the antidote to this problem. Hello, everybody.

Welcome to the chopping block. Every couple weeks, the four of us get together, give the industry insider's perspective on the crypto topics of the day. So quick and control us. First you got Robert, the crypto connoisseur and czar of Superstate. Good morning, everybody. Next, we've got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo.

Joining us today, we've got Laura, CEO of the show. Hey, everyone. And I am the Steve, the head hype man to drive and fly. We are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping block that XYZ for more disclosures. So gentlemen, I can say we have fully kicked off stable coin mania. We just had the Circle IPO, which is probably the Blockbuster IPO of this year.

And it was absolutely insane. So for those of you who are not watching, Circle has been trying to IPO for years now. They originally tried to go out through a SPAC back in SPAC mania, didn't go through. Then they tried to IPO earlier this year. And then, you know, tariff tantrum kind of cut that off. And then finally, one last go of it of trying to IPO. There was also talk that maybe they were going to get acquired instead of getting IPO didn't happen. And their IPO absolutely incredible performance.

So this has been one of the biggest IPO pops in history, the highest two-day IPO pop since 1980 for any IPO that raised more than $500 million, more than Snowflake, more than Rivian. Their first day close, they were up 180%. Second day closed, they were up another 30%. Combined two-day jump was 250% total. They originally, in their IPO, the original IPO, they raised $1.1 billion. If they had priced their IPO at the day too closed and roughly at the current price that it's trading today, they would have raised $4 billion instead. It was underpriced by roughly $4x. Right now, it's trading at a valuation multiple.

It's a little bit insane. Currently 15x revenue of their 2024 revenue, 160 times net income. So if you compare that to Coinbase, Coinbase right now is 25 times earnings. Circle is trading at 160 times earnings. Of course, because in IPO, there's still lockup. Insiders can't sell until 180 days. But it seems that right now this is kind of the shot heard around the world, that it is now stable coin season.

I don't think anybody was expecting this. People were talking at the time of like, oh, maybe the IPO is not going to have enough interest. Maybe they're going to have to price it down. It priced up and then up and then up and then it just kept riding on public market euphoria. Robert, I think you were probably the closest to this. What's your take on Circlemania?

First correction, it's not stablecoin season. It's stable coin summer. You got to get that from rain. Okay. Apologies. But technically it's not summer yet. It's not. When does that begin?

How is it not summer? It starts June 21st, technically. Okay, fine. See what's right the first time? Stablecoin season. The summer bureaucrats are in full season. Yes. I mean, this was unbelievable because I think it showed and surprised everybody with just how much

enthusiasm there is for new public crypto companies. I don't think Circle thought it was going to be this successful. I don't think any of the bankers thought it was going to be this successful. I don't think the investors thought it was going to be this successful. No one on crypto Twitter thought it was going to be this successful. You know, the real question is, where did all this demand come from? So some, because nobody that I spoke to thought it was going to have this outcome. Everyone was like, okay, it's going to go public. It's going to be like meandering a little bit. This is blown away. everybody, and I think it's reset everybody's expectations for the valuations in public markets for crypto companies. The amount of demand here is just ferocious. And so I think it's going to

expedite pretty much everyone else's plans to go public. We're already seeing that with new filings. Oh, yeah, Gemini, right? Exactly. Like there's companies that have been waiting, and I think seeing the success at Circle, it's going to be empowering for everybody else. We're going to see Gemini. We're going to see All sorts. We're going to see Cracken, finally do it. We're going to But do you think this is a public markets generally or is it specific to stable coins? Well, I think this is both, right? I think everybody wants to get in on stable coins. Everyone can see the Genius Act and the Stable Act and like impending Stable Coin legislation.

Everyone knows that this is a growth market. Whether or not Circle is the only or the beneficiary of this is for sure to be seen. I think in some ways, you know, all this legislation could be to their detriment. but stable coins are a hot topic. And we've had so few, like, true crypto-native companies outside of the miners going public in the U.S. That I don't think is limited to just stablecoins. I think this is the first shot out of the quiver. But I think there's going to be a lot more demand than people expect in general for high-quality companies that are rare that you don't otherwise have access to.

No one has had access to a pure place stable coin before in the public markets. Is it overvalued? Probably, right? Is it overvalued relative to Tether? Like, for sure, right? But there's no other way to like bet on this. Like betting on Ethereum, I don't think that, you know, really does it. Betting on Solana, betting on whatever L1. If stable coins succeed, it's easy whether or not, you know,

any particular L1 is going to succeed. And so I think if you're a public market investor, clearly you waped in. Well, so John Maugh from Artemis pointed out that if Tether were trading at the same multiple that Circle is trading at, it would be worth about half a trillion dollars. Just for reference, JP Morgan is like $700 billion. So that would make it the second most valuable financial company in the world. Well, I think it's more justified for Tether than it is for Circle, simply because Circles margins are actually not that good.

Circle has an incredibly bloated headcount and they share a tremendous amount of their revenue with Coinbase. You know, the same multiple on Tether actually is far more justified than it is for circular in particular. for circular for circular yes the other the other interesting thing is that so tether has announced so the stable act right now i think it's going to be voted on tomorrow so probably by the time you hear this there will already be a vote on the stable act in the not the stable act the genius act we're going to forecast that it passes yes uh well it passed cloture 66 to 32 so i think it's likely to end up passing

but still tpd but right now you know it augurs fairly well that there's there's appetite for this That being said, Tether has said that if this passes, if the Stable Act passes, or sorry, not the Stable Act, the Genius Act passes, that they will basically pull out of the U.S. market because one of the provisions of both the Stable Act and the Genius Act is that you can only have high quality collateral backing your StableCoin, such as, you know, short-term treasuries, which already is basically what Circle and most of the other Stablecoin issuers own, whereas Tether has a bunch of other exotic stuff, right? They have commercial paper, they've got Bitcoin in there, They've got other random loans. So they've got a lot of kind of a hodgepudge of collateral that they would have to totally redo what's kind of their financial infrastructure in order to be the sort of safe, secure stuff that the U.S. regulation is demanding. But would they, though? I mean, because like it has to be packed one to one.

They've been generating now in excess of $10 billion to profit, right, cumulatively. That has been used to buy all this other stuff. If they wanted to go strictly to one-to-one coverage, I think because of how much profit they've made and how much over-collateralization there could be there, I don't actually think it would be that hard for them to go to one-to-one backing with stable assets. Maybe not, but they've said that they will exit the U.S. market. Now, maybe they're blustering in order to try to move the regulation, but they've said their focuses on non-U.S. markets.

And I can see the rationale of that is that, like, hey, this is going to be extremely expensive. It also means that now, you know, every jot and tittle of everything we've ever done is going to be under a microscope from the Fed. And I don't know, you know, Tether is a famously insular and mistrustful business. They like their business the way that it is. And no surprise. I mean, it prints money. It's an incredible business.

And this might be part of the reason why you see high premium on Circle is because people realize that, hey, Circle is basically going to have the entire U.S. market to themselves because Tether's not going to enter because they don't want to be under this, this regulatory regime that's coming forth. So it's going to be Circle versus the banks. And there's been all this reporting now about the banks contemplating a consortium. I think it's like JP Morgan, Wells Fargo, and a bunch of other banks have talked about doing a consortium stable coin among the big U.S. banks. And so it might be that the industry separates into their circle onshore, which is the crypto-native kind of techie one.

Then there's the banks which primarily serve institutions maybe. They're more risk-averse. And then there's international, which is maybe predominantly owned by Tether. And then let's say on-chain is mostly U.S.D is historically dominant on-chain. I can see it playing out where there's different domains that are really owned by different parties, but obviously it's way too early to really say. Laura, what's your take on Circlemania? Yeah, so I have so many things to say.

So I agree with Robert that the reason that it's very frothy is both because stablecoins are hot, but also public companies. I mean, this whole trend with the crypto treasury companies, in particular Bitcoin treasury companies, people want access to crypto exposure in tradfai markets. So, you know, like circle kind of fits both buckets. But the thing is like, you know, all this stuff that we're talking about with Tether, I just had Jeff Park on the show for like a two-part interview. And it was so interesting.

Like basically, eventually what you could see is that stable coins kind of turn the U.S. dollar into multiple products. And that's basically if the U.S. is willing to be more entrepreneurial about. the fact that it has this asset that so many other parts of the world want. But, you know, who knows obviously TBD on whether the government will kind of talk together to understand that this is a valuable thing and that they, if they were more entrepreneurial about it, they could use it in that way. But, you know, one example would be just like, I mean, you know, everybody always talks about how tether is a good example for euro dollars. Like there's so much

demand abroad for dollars. And like essentially, you know, you could imagine. that there's different yields based on who it is or like which company you're using or like who it is that wants to mint the stable coin. So anyway, all I'm trying to say is that, you know, I think people understand that there's like a huge amount of space within this whole category for like a number of different niches. But something that was so interesting was, so I had two different people on the show talk about circle. I might have had more, but the two that I remember are Arthur Hayes and then Omar, I'm just blinking on his last. from Dragonfly. What's his last name?

I'm a Kanji. Yeah, Kanji. So both of them, you know, were negative on the Circle IPO. And they were saying like, and I mean, this is like, well before the IPO actually happened. So it was like shortly after the news came out that they were going to do this. But, you know, it's all the things that we all know in crypto that they have huge overhead, that the business is super different from Tether because it's compliant. I mean, you even hear things like people kind of in the security space complaining about the fact that when when there's kind of like bad actors using USC, Circle will not freeze the money because since they are a U.S. company, they can be sued much more easily than like Tether. And so anyway, so the point is they just have like

a lot more, they're very, they're much more encumbered. So it was interesting is like that was kind of the conventional wisdom in the crypto space. But then I don't know if you saw this tweet by Vicki Fu, who I guess she used to work at Circle. And she was, wrote, watching Circle's IPO pricing is fascinating from a fintech infrastructure perspective. Having built payments infrastructure at Circle, I can tell you, when you control money issuance, you're not in fintech anymore. You're in monetary policy. And then so she basically like walked through kind of, you know, what the numbers were looking like. And then she made comparisons. She said, PayPal, 70 billion market cap, $1.5 trillion in volume. Visa,

a $500 billion market cap, $14 trillion in volume. Circle. Six billion dollar valuation, $12 trillion in volume. So it's like very close to the visa volume, but like what is that? Like, I don't know, 12 or 13 percent of the market cap. So anyway, and now I actually don't know what the current market cap is. She was, she put this on June 4th. But the point is just like she was saying everybody, everybody in crypto is kind of downplaying the significance of this. But she said, you know, the math doesn't work 25 times oversubscribed, tells the real story. Underwriters priced for safety but missed the fundamental shift. She said Circle controls the digital dollar printing press. So anyway, point is like I honestly, I really know where this is going to go

because, you know, just from everything I understand about Circle, like even just the fact that they have to give half of their, is it profit, I think, to Coinbase? Like Coinbase is making more money from USC than Circle is. And, you know, it's all this like even like I know for, for a different conversation, a different topic we're going to cover later. Like Mosey tweeted this little pyramid of like who has the most power and it's the, it's the people with the at the distribution channel, right? Like the exchanges and stuff. And so again, it's it is kind of like, okay, so I know all these things about circle and

their business. At the same time, I know, yes, okay, stable coins are going to be a huge, you know, category. So am I like overthinking it or, you know, and then the last bit is just like, with the banks, when the banks get in, then it's like, again, it's another distribution channel that circle doesn't have. And yeah, okay, maybe they're going to, you know, launch their own bank. Like, I don't know? But still, like, don't you feel like trying to create their own bank and compete with the likes of a JP Morgan? Like, how's it going to go for them? So I don't know. Anyway, so I don't have conclusive thoughts. I have, like, thoughts in a lot of different directions

and I'm kind of curious to see pan out. Am I going to be the only non-hater on this about this topic? I'm not a hater. I'm a confused person. Robert and Laura, there was way more, way more hater vibes. No,

it's not hating. Maybe not hating, maybe negative, negative. Let's go that way. I actually went to the IPO party on Friday. And so I talked to Jeremy and saw the whole thing. And first off,

I have never seen that many. trad-five people showing up to like a crypto event like there were literally three of us who were not in suits so like that was like that was also pretty funny and illuminating and it was like funny you know they like rung the closing bell and it was like everyone was around the suit and all the people who are not in suits well the three of us were just kind of in the back but I think it was like I don't know I all I have to say is I've never seen this much interest from traditional finance people that was like legitimate there's usually a lot of like bullshit cakes Fabe stuff where they're like, oh, like, Bitcoin prices up. We're going to like pretend we're going to do

something with blockchains. Like, you know, like in 2017, 2018, like Visa and PayPal then. And then they kind of don't do anything or just do enough to have enough lip service so that their investors don't like dunk their stock for missing out on the next thing. And this time definitely did not feel like that. I actually feel like everyone keeps making this comparison to fintech, but it's actually more like, and not even banks, just like non-bank financial lending people were and mass at this thing. Like, like every major private credit fund CEO is at this. And so I kind of feel like Circle has a very different audience than Tether. And that audience, this is net worth is like almost disjoint. And the set of people who will use both is almost like, basically the only time

that's going to overlap is in the curve pool to trade USCC. Outside of that, I feel like they are just going to diverge over time. And I think I could see that being a pretty hard to, you know, like, if you look at a lot of the new stable coins, I do really feel like a circle may have paid a lot for a early distribution advantage, but it's clear that like none of the new stable coins have been able to, I'm not talking about tether. I'm talking about all the competing stable coins, have not been able to find even like a distribution channel that's like one one thousandth of what the Coinbase deal is. And so like I think there's a lot of stuff

you have to think about when you're thinking about it. I think you're, I don't think you're right that Circle has a totally disjoint distribution channel. Circle is still making these deals, right? Even today they're making these deals where they're giving a huge portion of their earnings, of the float that's like owned by a wallet or owned by some other platform,

which implies that they're still competing. Like, they're obviously trying to gather up a lot of market share and they're trying to become dominant. And they're okay with giving up a lot of the earnings today in order to build this dominant position. But it also means that they don't perceive themselves as a monopoly. They perceive themselves as being in a competitive market where they actually need to give a lot of incentives. I know. I did not say they perceive themselves on monopoly. I'm saying that their competitors have generally either had this problem where they've had to pay much more than Circle had to pay to get even 100th of the distribution.

or they've just tried to go down the yield-bearing route and the U.S. government has slapped them in the face and that will never really happen. It seems like that's not going to happen. So I sort of think Circle set the floor price to like what any distribution deal will look like. And it makes it exorbitantly expensive for a newcomer to actually overcome that because like everyone's going to be like, give me 75% to 80% of the revenue, right? Like no one's going to they're going to like circles paying 50. You're like a small fry. We're going to, we're going to, charge you way more, right? I think that there's actually this interesting, weird pricing power dynamic from it being so high that it actually makes it, the barrier to entry is hard, and that's why I think, like, you're more likely, ironically, to see banks be successful than I think startup stable coins. And arguably, you know, I, I am sympathetic from the startup standpoint. I do feel like the regulation makes it very hard to be a startup stable coin in 20- That's definitely true. But what do you, okay, so you mentioned, okay, the Circle has a dominant market position.

I think we all agree with that. What do you think about the pricing, though? Because that's what most of us have been commenting on here. You know what two meme stocks exist that both start with C, core weave and Circle. And they both were started around the same time. So that's my, that's my like, that's my astrology training. How are you positive on this? If you're calling it a meme stock, isn't that you acknowledging that the price is crazy?

I think both, course. or even circle are meme stocks in the opposite sense of GameStop. They're like meme stocks of like something that in 10 years is supposed to be a hundred times as big, right? They're kind of like as a market or as a company specifically? Well, that's what the problem is. There's not many proxies to bet on those two separately. So everyone just funnels all their bets into one. That's what I was saying. That's the real story. Yeah, I think that's the real story is that right now there's only one thing you can buy in public markets that represents a stable coin. And that's circle. And the reality, you know, if we talk about low float, Like IPOs are a little flow. There's not a lot of supply out there for all the people who want to own this narrative.

So that's what happens. The narrative just runs. And like when there is more supply out there, then maybe there's there's more that they get that. Although I will say the circle IPO is much higher float than some of these data center companies. I mean, the nebius and core weave IPOs aren't exactly like, those aren't exactly the thing that you would, I would show a regulator to be like, yes, Crypto is so much worse with these low-float high FDV. Some of the AI IPOs look like bad crypto token. But what's interesting, actually, I think Rob from Dragonfly was doing this analysis, that if you take, because, you know, as Laura you mentioned,

half of Circle's revenue just goes to Coinbase, right? And so what that would imply, if you look at this current valuation, is that there's a circle inside of Coinbase, plus the rest of Coinbase's business that produces Coinbase's market cap, which would imply that all of the rest of Coinbase's market cap, which would imply that all of the rest of Coinbase's revenue is trading at like a less than a three X or something like that? If markets were efficient.

If markets were efficient. Which obviously they're not. And obviously like this is okay. This is an artifact of the fact that Circle has very low flowed. And so therefore not that much price discovery because there's all this demand for stable coin. Buying CoinBias doesn't give you enough of that stable coin exposure. Right.

And like Circle is the pure place stable coin investment you can make today. But it's an interesting artifact of like, hey, if markets were efficient, coinbase should have repriced way up when when everyone realized that like, oh, the circle revenue is worth way more than we thought it was. And the reality is it's not the circle revenue. It's a circle brand. Right. It's the ticker that's worth so much. So I again hate to keep making this analogy to Corrieve, but if you look at Core Reeve versus its customers ratio of market caps and its customers are all like RevShare slash buildout customers, not so different to this case. So like I think you have to look at the macro market stuff. But also I do really think the market does,

is kind of tired of betting on pure ETFs effectively in crypto and like micro strategy and treasuries and stuff. Like you've seen the like 10th treasury launches not doing that well, right? Like in the last few weeks. And I do feel like Circle actually feels like a real product to people that they can use on like the 10th BTC treasury company, right? Which I think that I actually think there's some irony to these, I know we're going to talk about this soon.

The irony to this BTC treasury thing is like there might be like a golden goose that they killed by having too many of them trying to catch it at the same time. Well, that's what stacks were. There's like a little, like it's almost like there's too many of them to all survive concurrently beyond micro strategy. I'm not going to give them a okay. Well, let's just gears and talk about crypto treasury companies because I think we've been touching them a few times in the history of the show, but there's, I think there's more wood to chop that's worth getting into here. So for those of you who are not following,

the original CryptoTresherty company is Micro Strategy. Micro Strategy, now rebranded a strategy, is a company that once upon a time was a software company. Now they're just basically a giant bucket of Bitcoin. And they issue corporate debt and they buy more Bitcoin with it. And for some reason, it trades above Nav. Nav being the value of all the Bitcoin in the bucket.

Right now, Micro Strategy trades at about 1.7X, all the Bitcoin in the bucket. And the big mystery is why is this so? And there's a lot of competing explanations about why it is that it trades above that 1X nav. And to be clear, at times it's traded below nav when crypto is in a bear market and there's not a lot of demand. But right now it's trading sustainably above nav. Right. It's not sustainably.

It persistently above nav. And of course, what most people think is that the reason why is that it gives you some kind of leverage exposure. And it's likely that they're going to be accumulating more and more Bitcoin. So it's kind of a way that you can get a levered bet on Bitcoin by buying this thing. So we've had more entrance. We had 21 by Jack Mallors. we had Trump media go out and play the same playbook, buying a bunch of Bitcoin. You tell the same thing happened with Nexon in Korea.

Then, of course, in Japan, there's... Metaplanet. What's the name of the one in Japan? Metaplanet. And then we just had the launch of Sbet, which is an Ethereum version of this that's backed by consensus. Sbet is up 10x as they announced that they're moving to this Ethereum strategy. Now, critics have started to warn that maybe this is this cycle's GBTC. Maybe this is...

GVDC very famously known as the Whittermaker trade that led to the collapse of 3AC and implicitly through BlockFi and a bunch of the lending companies in crypto back in 2022. But people are not so confident about when this will happen, how this will happen, or whether it really is the same thing or not. Unlike GBGC, there's not the same kind of obvious mechanism for this leverage playing out in the market because corporate debt operates very differently from hedge funds, you know, taking on leverage and making these trades. There was a story that was put out by unchained, talking about the compensation structure. for a lot of these crypto treasure companies. Laura, do you want to summarize that really briefly? Yeah, so basically there's like different ways to think about how you would value a company like this

and therefore how you would reward the executives. And, you know, I think traditionally stock price is like the metric, right? But in this case, I think some, at least some of these companies are trying to be a little bit more innovative. So there is one in particular, Defi DevCorp, which is one of the ones that is accumulating Solana. And essentially, they are tying the compensation for the CEO, CFO, and CIO to the ratio of Salonah, the ratio of Salana in comparison to the amount of shares in circulation.

So it's like Salonah per share is kind of how you would think about it. And, yeah, that, you know, we don't know yet how, like, 21 or Nakamoto, which are some of the bigger name new treasury companies will be compensating their executives. But basically, it's just kind of like an interesting way to look at it because right now if you look at these valuations, a lot of them are, you know, they're just trading at like so many multiples compared to the actual underlying assets. So it's just kind of like, yeah, what is how like is that is it literally just stock price? you know, especially if, as we all know, like right now, because...

It's worth spelling out why stock price is a bad idea, which is because of the fact that these things are so tied to the underlying, and the underlying is very volatile. So if you just try to stock price and Solana rips, these executives are going to make a bunch of money, but that doesn't really make sense because they didn't do anything, you know, even if they fail to accumulate a lot of Seoul and do the financial engineering stuff of, you know,

if they don't do that successfully, but soul goes up, stock price would go up and they would make money. And it's like, well, what's, you know, We know it's a bunch of soul in a bucket. Your job is not to have soul go up. You can't make soul go up, but you can put more soul in the bucket. And that's effectively what this financial metric seems to be measuring is how effectively are you putting more soul in the bucket?

Or how effectively are you levering up? Because really what is incentivizing at a fundamental level is doing the crypto treasury company's strategy, trade, whatever, which is issue a lot of debt to buy the asset. you know, a company that's one-x levered doesn't have as much, you know, crypto per share. If you load it up with debt, like 5x, you know, the original amount and by 5x the amount of assets, right, the company is crazy risky relative to its original equity, so to speak, but you've achieved the metric that you're being paid on or optimized for, which is amount of crypto in the thing per share.

And so really what I think it incentivizes is companies to take on more. more leverage. And if you squint, you know, the Crypto Treasury strategy looks like a levered ETF. It's way more exotic than that for so many different reasons. And you cannot model in such like a levered ETF. But if you squint and like, you know, look at it from 90,000 feet as levered ETF. And really, I think the trend that we're going to see is companies trying to lever this play up as much as they possibly can, issuing as much debt as they can to buy as much of the assets as they can. Salar is very public about that is the goal to load as much Bitcoin in and borrow as much as humanly possible to achieve that

with the end goal being accumulate all the possible Bitcoin because it's a competition, it's a race. There's only so much, it's scarce. Right. Well, the difficulty is like the way in which you lever up, right? Because there are bad ways to lever up and there are better ways to lever up.

Totally. And micro strategy used to lever up the bad way and now it's almost the good way, which is like... It's an amazing way, actually. It's an absolutely incredible way that they lever up now. Tarun, you were showing me some of the new offering that they recently put out in micro strategy, which is like the stupidest financial instrument

I've ever seen where basically it's like... Strikes? Yeah, yeah, yeah. I think there's strikes is what they're called, which is like it's debt that they don't have to pay and it doesn't, there's no catch up. So if they miss a debt payment, they don't have to pay it back later.

And it's like a 10% coupon. And that's it. And it's like, yeah, buy my debt and I'll maybe pay you back if I want to. And I'll go buy Bitcoin with it. And I get all the upsets. and you're stuck holding yet. So I think there's actually this interesting theory that I've heard people posit around

micro strategy, which is like in the same way that the more forks that Bitcoin had in some way has made Bitcoin more valuable because it airdropped their holders to basically sell and buy more Bitcoin. There's a sense in which the forks of micro strategy, all these like the second and third tier Bitcoin Treasury companies, if they start failing, people may just crowd back. into micro strategy and it becomes this kind of like shelling point for this treasury thing. This is another reason. I don't think that I think we're going to see like micro strategy crush and continue unless there's some like catastrophic Bitcoin collapse in price,

which it has shown it has can survive up to some level like not maybe at the size it is now, but but these other ones are just like competing for scraps. I feel like who are the convertible debt traders who want to buy the like fifth place Bitcoin Treasury company is debt, right? Like, I just don't understand how they get that feedback. Like, micro strategy really was immaculate conception. To Robert's point, they borrowed the kind of dangerous way first to build up this treasury. And then now they have, now because they were successful, they have like this very cheap form of convertible debt. But the convertible debt market is not like infinitely elastic. There's not like infinite number of people who are like, I see this yield.

I'm going to go on the debt side. Like most people who want to, get into this trade, we'll go buy micro strategy equity or go buy Treasury company equity because it's easy. To actually do the debt trade, it involves a lot more work, a lot more sophistication on how you think about your risk. And also just like, there's just not that much demand for people to like own that, that spread, right? It's like a very precise arbitrage. You need to be in large enough size for it to work out for you transaction cost wise. And there just aren't that many people. So I think of it personally as like there's a fixed pie of demand. And micro, strategy probably takes up like at least 50% of that, if not more. Right. And the other 50%

everyone is just like fighting and the more there's new companies, they're all fighting for the same set of convertible debt arbitrageers. And maybe that grows, but that's like 10% a year. That's not growing as much as these companies demand if you look at the aggregate demand is. And I think there's going to be some shortfall. I wouldn't be surprised we see like some these treasury companies completely pivot because they're unable to issue debt and they have to find some alternative. Well, let me say yes, but. Okay, so I think here's the biggest difference to traditional convertible arbitrage in the market for it.

So if a normal, normal, not crypto treasury company, let's just say some manufacturing company, you know, in the heartland that does, I don't know, whatever makes widgets, wants to issue convertibles. The market for it is looking at really the volatility of that company and the upside. in the stock above the conversion price and doing options valuation arbitrage to say how much is the option at that convert worth. And the market for that is really tiny because you're basically betting on this one little widget company and like its prospects in essence. And how many people even want that exposure in the first place? Because with convertible, you still have the debt

underwriting downside of that widget company combined with an option that you can value. with strategy or with any of these other ones. Sorry, for all my micro strategies. I know. You were inceptioning me to get it wrong. So with strategy or any of the crypto treasury companies, it's actually different than that, right? The downside across all Bitcoin companies is almost more uniform. There's actually less esoteric weird company risk that you have to underwrite, right?

It has nothing to do with the company itself. The company is a shell. The company is a holding pot or a box, you know. And so all of these companies in a lot of ways look a little bit more like the downside is based on the downside of Bitcoin. That's going to be uniform across every one of these Bitcoin-based strategies. And the upside is actually more uniform across them as well. It's based on the volatility of Bitcoin once it becomes a pure Bitcoin play.

And so it has nothing to do with the company's esoteric behaviors. It really is a bet on Bitcoin's volatility and Bitcoin's downside. And as an investor, not only is that market like a thousand times bigger than people's willingness to bet on like some widget companies, you know, volatility and downside, not only is it just infinitely bigger and will continue to get bigger if crypto and Bitcoin continues to go up, but each company looks more like alike than they do different. And I think it actually makes it easier for hedge funds or capital to come in and do this like at scale and in mass. And so I actually think it's going to be more sustainable than we think it is on this. surface, and I think it can get actually a lot bigger than this. Do you agree with that for the Solana and Ethereum ones? Bitcoin I can kind of buy because, like, the market cap is just so large relative to the

debt issuances that, like, it doesn't seem that crazy to imagine people care about the duration risk. But in SolarEath, it does not seem like that's going to be. Like, like, how many, how many can there sustainably be for solar Eath? I mean, at the end of the day, I think it's also a function of the size of, the spot derivative markets, right? If there's a huge ether derivatives market, right, it's actually not that hard to like model or hedge the convertibles of an ether strategy company, right?

And I think like it's a function of just how big is that market in general? If there's no market otherwise, if we're talking about like, I don't know, pick coin market cap number 400 and you would like make a company out of that, I don't think there's any demand there. Like you can't do much with it. You know, it's hard to trade. you can't hedge it, whatever. But for things that already have a huge options market,

like we know how to price the upside and the downside of the asset, it's like, it can get really big. I just think there's like a caring capacity. It's like there's not, the world does not like have infinite number. Like for Bitcoin, I think people are fine with the duration risk. But even for ETH,

like I don't think people want to take that long of duration risk. You can like see it in the funding rates. You can see it in kind of like ETH options on the ETA. The funding rates between Ether and Bitcoin, are pretty similar. They're not that different. Like, because of the state. On the notion on the OI is, if you, if you, oh, I waited, it's very different.

I don't think you could, like, eat up 10 of these ETH-Sbet type companies. I think, like, I guess that's my point. Like, like, so, I mean, yeah. There's 10 for Bitcoin. There's, like, two for Solana. No, no, no. There's more than 10 for Bitcoin, right? There's all these, like, random companies adding Bitcoin to their treasury and, like, in different countries.

That's not the same thing. There's like minimum 90 or I don't even know. It's like a huge number. Well, but no, adding Bitcoin to the balance sheet versus being just this. Yeah. Yeah. Yeah. Yeah. Outside the US though, there are a lot of, have been a lot of announcements for Bitcoin leverage companies. Sure. But they're, but they're tiny, you know, it's like relative to micro-stratage. They're like 1% of strategy and they don't have, you know, there's no real corporate debt market in those countries. And so, you know, it's kind of like, okay, it's not really the same playbook at that, at that scale.

Yeah, the one thing that I want to talk about is that tweet that everybody was tweeting that, like, it looks like these companies are being set up to be some version of a future, play the role of some future collapse at which like GBT or these types of stocks are at the center. And we also wrote about that. And it kind of feels like it would only really happen if you could take out loans against these. And there are other factors like, you. you know, you know, micro strategy could probably get whatever terms it wants, whereas like some of

the other players might go out further on the risk curve and do things that are, you know, just prime them for, you know, more downsides, I guess, when, when the markets kind of go haywire. So point is like, if for whatever reason there are lenders that are willing to let you borrow against them or something, I guess that's how it would happen. But it is also something, where you could see some kind of cascade, right? Where the price of Bitcoin drops for some reason or another, and then maybe some of the, yeah, in the long tail, these companies that aren't getting as good terms for funding their purchases,

but then they have to sell and then that causes a cascade. So I don't know, those are kind of just my thoughts, but it was just interesting to see so many people tweet about that. And, you know, as far as I understand right now, I don't think you can borrow against these, but I just thought it was interesting that JV Morgan is going to allow you to borrow against Bitcoin ETS, which like, you know, Jamie Diamond is famously pretty anti-B Bitcoin, but clearly his company doesn't mind making money off of all that. But, you know, who knows?

It's a pretty low ratio, though, right? What? Yeah, LTV is a pretty low LTV, right? Yeah. I mean, they're not the only broker to do that, but the LTVs are all right. Yeah, every other broker has done it except them, basically. Yeah. Oh, wait, for ETSs?

I guess I didn't know that. For ETS. Well, I guess I just mean, like, if you're trading, usually your broker will offer you some form of margin. And I think J.P. Morgans was pretty conservative. And you can definitely borrow against micro strategy. Let's put that way. But not that some crazy LTV, but most brokers will offer you for a term one.

Oh, okay. So do you think that, then does that explain all those tweets where people were saying it could be like the future GVTC? I kind of think it's like these collapses never happened in the thing that everyone's watching. Yeah, exactly. Totally. Like it's kind of like a little too much of a. Except for Tara. Tara, everybody was watching Tara.

Well, everyone knew the failure mechanism for it. Well, not everyone, but something. Yeah, definitely not everyone. There was a lot of Tradfibros who were aping in who, like, had no idea how it was... So I feel like the failure mechanism for this stuff is actually more like if one of them goes into the S&P 500 and then right after it enters the S&P 500, like all these ETFs are forced to buy it. But then in the first window before the S&P rebalance, like the coin crash is so high that it should have dropped out because it's selling debt that is duration of like when the next rebalance will happen, which is the... when it's kicked out and there will not be this forced buying. Because when you're added to SMP 500,

there's a million funds in ETFs that just have to constantly buy your stock to track it. And if Bitcoin crashes a lot right after you get added and you start issuing debt, the thing is you can issue debt very cheaply because everyone thinks your stock is going up because you're constantly being bought because you're in S&P 500. But if the crypto assets crash enough, at the next SMP rebalance, you might follow out. But the debt he's issuing now, it does not have any claim on, like, there's not conversion. You can't take him into bankruptcy if he doesn't pay you back. No, but the debt has equity conversion.

They're equity convertibles. So, like, the equity that gets real. The S, whatever it is, the newest. No, no, no, no, no. Microstrategy, again, they're a special beast, right? They're immaculate conception. only one that could conceivably enter into the S&P. But all of these other ones are going to try, right?

Like, their goal is to enter the corporate debt. I mean, they'd have to put like 10 to the S&P 500. Yeah. No, no, no, no, no. Sorry. I'm just trying. I'm just trying to, I'm trying to say like if, if there were some collapse, this is like the type of thing that like, I think.

Yeah. I think at this point, like, I mean, I look, I don't know how he did it. But Michael Saylor has the most incredible access to capital for the shit that he's pulling. Like, at this point, it's not Sailor who's going to tank the market. It's going to be somebody else. And look, if the market does tank and like Bitcoin goes to 50, 40K and it stays there for a long time, like for fucking, you know, like for years, then yes, Sailor is going to further way down the market.

But it will not be him who does it initially, right? Like that, that seems kind of implausible. Saylor will make it worse. But on the upside, he's like increasing the cyclicality of the asset, both the upside. And if we have a downside, it's going to be harder to get out of the asset. of that downside. Well, I think the next leg up is going to be a good one. So, you know, good for Sailor.

Okay. No, no, I, mad respect to Sailor for pulling this off. That's kind of why I'm a little like, I find this boom in the copycats kind of like, you should repreciate how crazy it is what this guy did. I don't think you need to copy it because I know imitation of flattery, but this is a way to burn money on fire flattery, you know, it's like. No, but if it works, no, if he's successful. I even even I just don't think anyone does everyone is like has like sailor dollar

Bitcoin dollar signs in their eyes who are starting these companies when you talk to them and you're always like I like the immaculate conception surviving all of these crazy crashes totally totally totally no other than it will have sailor is a gangster sailors a gangster they will never be another like him and and what Laura points is it's not that there will never be it will be a different game it will be a different game yeah yeah not the People should not be compensated the way the sailor was, right? Sailor owns so much of micro strategy. All these other people, like running the quote-unquote next micro strategy, they're all hired guns.

You know, they're all mercenaries and they should not get paid the way that Sailor got paid, right? They should be like, oh, you have to optimize this financial metric that Sailor basically invented, you know, because you realize, like, look, I'm a financial engineer. And if you're a financial engineer, you should get paid on the value of your financial engineering, not on the value of the underlying. So I think we're moving in the right direction. It's just hard to get that excited about these things. It doesn't feel like the market is that sustainable for them. I would love to be proven wrong that like there could be 500 of these. But it just doesn't, it's like, I don't know.

Yeah, I mean, I feel like what's going to happen is, you know, the reason why it worked for Michael Saylor is because he is a very good mascot, right? So like 21 has a shot because Jack Mallors is kind of the same time. of personality, but maybe like for a different generation. These are not my original thoughts. I forget who said this or where I heard this. But the point is like I feel like for a lot of these, you kind of need somebody to like be that, you know, evangelist in the face of the company that will get people excited because otherwise, yeah, I mean, financial engineering is important, but also like things like the terms that you could use to, you know, finance these purchases.

like part of whatever the magical juju is that like Michael Sailor has. Like that is an ingredient that's necessary from these executives also, I think. I agree. You have to scream. There is no second best, you know. Wait, wait, wait, wait. Okay, let's play a little game that I'll call fantasy CEO for one of these companies. Like pick an asset and like who in the world would be the best Michael Saylor of that asset.

So who do you think for Ethan's whole? Who would those be? Honestly, but you guys, this is why, because like, oh my God, I got so much shit for the Max Resnick show that we did with Tarun. Don't worry. I need to. We both. I know. For whatever reason, people think that I hate Ethereum, but I don't.

But I had been thinking about this, and I was thinking for the Ethereum treasury companies. I was like, who is that person? And, like, everybody is like, oh, like maybe Joe Lubin. But Joe Lubin, he, in my opinion, he is not as charismatic as kind of like a Michael Saylor, like, just, and I couldn't even think of, like, who that would be, you know? Can you? Like, you know, so, like, obviously, this is not something that Tulloch would even want to do. So clearly not him.

Not that I think he should or that anybody would even suggest him. But, you know, he's the face of Ethereum. Other than that, like, we've got the etherealized people. But, like, I don't know. Don't forget the bankless guys. That was a joke We had a show Yeah we literally had a show

With David from Bankless And we were like yo And we were like dude You should you should be the guy I still I still stand by that He's like the best I could come up with What about for Solana? What about for Solana?

Solana I kind of feel like Anson I know it's weird to say Anson actually would be quite good No no I think it would be good I think he has a little too much history with the meme coin stuff that I think would make it difficult for Wall Street to embrace him. Yeah. However, however. Raising convertible notes that does not seem like his jam.

No, but. And Sam, if you're ever interested, clearly there is three out of four, three out of four podcast hosts. But to your point about Jack Mallors, right, I think like he sort of plays that role, just Salana. It's more of a young person's game. It's more about, you know, Gen Z and Gen Alpha. I think Anteim would play really well for that. Yeah. And frankly, like the convertible stuff does itself, right?

Once you're the endth of these, it's kind of like, okay, you know, show me your metric. Will people buy the, will people buy the stock? I mean, also, even the legal docs are probably standardized for those. Yeah, exactly. Exactly. Like, AI is running all them at this point. You don't need to worry about that. It's pretty easy.

Yeah, but the thing about, like, how we were talking about how the prices at which these stocks are trading is just, like, nowhere near any kind of fundamental analysis. Like, that is why Ansem would be a good, quote unquote, mascot, as I'm calling. You know what I'm saying? Because he's the meme coin guy. He's the person. who like, you know, he could be associated with some random meme coin. And, you know, let's just face it.

Like, for most mean points, there aren't like good, quote-unquote fundamentals, right? That's a good point is that if it's the Solana, if it's the Solana micro strategy, it's not going to get distribution on CNBC. It's going to get distribution on TikTok. And so it's really like, who's the TikTok mascot, not the CNBC mascot for this thing? Exactly. Okay. Okay, wait, wait, wait.

We missed one very important asset for this, which is XRP. Who is the XRP? Because like, if you just like, if you look at the everything above Solana, the only thing we've kind of missed are BNB and XRP. BNB already has CZ, you know, it's like, I don't think there's really any other mascot. But so XRP. They could just be Garlinghouse?

Can it be like one of the leaders of the project? I think we just be like Ripple Labs itself goes public and then just gets a bunch of debt and buys more SRP. Yes, that is perfect. That's perfect. Actually, that would be really fun. That would be really funny. They have an underlying business.

It's actually IPOable, right? Like, they've survived this SEC case. It's kind of the perfect setup. You've convinced me. You've convinced me. And they have a stable coin. Speaking of the meme coin. Wait, but also, wait, I'm sorry.

So I miss like part of what you said, but are you saying it's because they already hold like 50% of the ripple or whatever it is? Great start to the treasury. Yeah, exactly. Great start to the treasury. They've already loaded up. And they just keep buying more. People thought the business model of Ripple Labs is selling the XRP.

Wrong. Wrong. It's to buy the XRP. Oh my God. If they actually pull this up. But by the way, you guys, I don't know if you saw there is an XRP holding company.

This VFO power, it's going to be like, I think you're seating it with 121. This is the Saudi guy, right? Yeah. Saudi. Yeah.

And it's starting with, yeah, $121 million. They're going to get mobbed by Ripple Labs. You mark my way. I mean, it would be really funny, actually, if Frippelav just did it. Because it's like, it's like the natural end point of this whole saga. It's like you start a coin just to like have the labs company do this.

So they ended. So basically then they would have played it all perfectly. We're on the way up. They make their money selling like billions and billions and gazillions and gazillions of dollars just selling and dumping on retail. And then at like this moment in time, they pivot. And then they start. They just become, you know, an accumulation company and an XRP treachery company. So I think it's beautiful.

Dear Lord, may this not play out like we've produced. Okay, well, so one last story I wanted to get to. So kind of circling back a little bit to stablecoin mania, there's a project called plasma, which is supposedly a stablecoin chain that's affiliated with tether. There's a bunch of these now that are basically supposedly natively or, you know, quote unquote natively issuing tether. and they have zero transaction fees on the chain.

So the idea is that this is supposed to be better than Tron because Tron has fees. These have no fees. And they facilitate stable coin payments. So Plasma, you guys aren't investors in Plasma, are you? No, okay. So Plasma, they recently did, we're not investors in Plasma. They recently did an ICO of raising at a $500 million valuation via Sonar. They raised $50 million for 10% of the plasma supply.

at a $500 million FTV. They had these vaults, which I think were like liquidity vaults, that they filled up with $500 million of demand in, I think, the span of seconds. The top 10 wallets held 38% of the total supply, top 17 wallets held 50%. One wallet alone deposited 50 million.

There was a gigantic gas war. I think one person paid 100K to get in with their $10 million of USDC. So we're seeing kind of this ICO boom. This ICO took place on a platform called Sonar, which is a new product that was released by Echo, which of course is created by Kobe. So Echo was originally a platform, or not originally, it still is, a platform for these kind of syndicates that are led by individual syndicate leaders who syndicate deals, and it's kind of,

you know, more traditional syndicate style investing, where you have to be an accredited investor, usually in some jurisdictions to invest into these things. But Sonar is a response to the fact that more and more people have been asking for ICOs. And the idea is that Sonar, because, you know, ICOs are of questionable legal status, Sonar is a self-hosted ICO platform. So you can, as a team, use Sonar software to run the ICO yourself. But, you know, Kobe slash Echo, they're not running the ICO. They have nothing to do with it.

They're just software providers, essentially. So that's Sonar. So these guys did this ICO. I think they're European-based and kind of a crazy explosion in the ICO meta. Laura, you and I argued recently on the show about whether or not ICA. are going to come back, and I think I was pretty incredulous that, well, ICOs are super illegal, so obviously they're not coming back. Because I was the one who said, wait, don't you guys think this is happening?

And then you suddenly started, like, reaming me and saying it's not. And I was like, wait, I think I'm noticing trends. But anyway, yes, I feel vindicated. I'm going to take my victory lap right now. Boom. All of one. I mean, every first year of a Trump term has been an ICU boom. Oh, true.

No, no, no, no, no. I'm just saying, like, 2017. this year. This is why you're not a public markets analyst. No, Taru is good. Yeah, yeah. I'm just saying it's like funny, right?

Like the first year of Trump's rule last time and this time is like everyone's saying I see oh again. Okay. All right. Yeah. So Kobe was saying that, you know, they started Echo, but because of the syndicate model, people weren't in love with how they needed to get endorsed and how they didn't have full control.

And, you know, this allows. them to do that. And so I just find it so interesting that basically it's more like the, what's the word? Like, like, you know, because in my book, I wrote all about ICU. So you just look at the Dow, where they basically created this big, like they got all this money. And then once it was in the smart contracts, they realized, oh, shoot, we didn't build out any of the tooling for you to do anything once the money is in there. Like, we have no way for you to get the money out. Then, of course, when the hack happened, like, you know, that created issues. And then, you know, we saw like the janky version where, you know, people were doing this for my ether wallet. And like Taylor was dealing

with people who, Taylor Monaghan was dealing with people who like lost their money or was getting fished or, you know, scammed or whatever. And now it's like we have the kind of adult version. And, you know, I feel like basically this kind of is sort of this like long term trajectory that we're seeing where, you know, back like in the dot com era, companies would, you know, be startups. And then they would go public, like kind of early, whereas nowadays, it takes like forever. Like people, companies, they just don't go public early. So now we have like a new function where you can kind of get in earlier. And like, yeah, I understand there's like risks in there.

It needs to be education. And there probably also needs to be some changes in the accredited investor laws, but at least in the U.S. But the point is like just kind of when I look at the full span of like what's happening across history and how like markets are changing, like it does make sense to me that there will be something more like this, whether it is exactly this, because obviously there were a lot of problems with this ICO, but yeah, I could see it becoming more and more of a thing. All right. We got to wrap up. Robert, do you want to give us the last word? Are ICOs here to stay?

ICOs are hopefully not here to stay. Hopefully not. Oh, shit. Okay. Now, all right. Next episode on the shopping blog, we'll have to come back to this. We'll come back to this. We'll come back to this. We'll see if they're born in different shapes and forms. The 0th law of Whenever Trump's rule, whenever Trump's rule begins. First year of every rule is barred by the blue moon of ICOs. The zero law of capitalism is everyone always tries. Everyone always tries to find a way to securitize things that people tell them they can't securitize.

Okay. Inspirational. Thank you, Tarun. Thank you for the inspirational speech. You're welcome. All right. With that, we got a wrap. Thanks, everybody.

We'll be back next week. Thanks, everyone. See, all. Thank you.