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- [00:04]
David
Welcome to Bankless, where we explore the frontier of Internet money and Internet finance. And today on the show we explore the frontier of capital formation on public blockchains. The big question we're asking today are ICOs back? Mega, ETH, Monad, Aztec, Infinix, Zama. These are five big high quality projects and they are all doing, doing public token sales. Some of these even doing the work ahead of their sale to classify their token as a consumptive good as opposed to a security which allowed unaccredited investors to invest right alongside everyone else. Ryan, I want this to happen. I want ICOs to return. The fact that we are seeing not 5 C tier projects or battles, B tier projects, but 5 A tier industry leading projects, all doing token sales inside of two or three months of each other, I think is a very big deal. It's something that I hope continues. And if it does continue, the implications for what this does to crypto and what this means for Ethereum, I think are very, very large. And that's what I want to discuss with you here today on the show.
- [01:17]
Ryan
Yeah, I think the question is not have they returned? But it's just like observing that they are returning and then trying to extrapolate that moving forward if this trend changes. To me, capital formation has always been one of the central money verbs of decentralized finance. Right? So when we started talking about like what is this bankless thing? If Bitcoin brought us the ability to hold a store of value asset without a bank going bankless and holding onto your value and also transacting some of that value. Okay, those are two money verbs. There's holding and then there's also payment or transacting. Right. Defi was about pursuing all of the other different verbs, borrowing and lending and swapping and also capital formation or maybe raising would be a term for that or minting would be a term. It is true to say though that crypto has had a complicated relationship with capital raising on chain in the past. Capital formation. Right. So the ico, the I guess maybe the immaculate ICO for an eth maxi out there was Ethereum and it was relatively unpolluted. It's just because it was the first time that this happened. Every other ICO since, particularly in the first cycle of these capital formation, ICOs had kind of a taint to them and it got progressively worse as the cycle continued. I know you were awakened to crypto in that 2017 cycle. Many have called this the Ethereum cycle or even the ICO cycle. You actually correct me if I'm wrong, David, but you got your start in an ICO company during those days when there was a lot of shenanigans going. It was. It was not all good on the capital raise formation side of things. So I imagine you have a complicated relationship to this topic as well. What was your first experience with ICOs and how did you experience 2017?
- [03:23]
David
Yeah, the importance of capital formation. To go back all the way to 2017 really was the big unlock for me in crypto and I think many others. This was before we even had defi. The word defi didn't exist. Defi itself didn't exist. Uniswap wasn't around. MakerDAO wasn't around. We didn't even have stablecoins. And the first real, real movement about crypto post Ethereum, using smart contracts was the ico.
- [03:46]
Ryan
And this was like Ethereum's only use case, basically.
- [03:50]
David
Only use case.
- [03:51]
Sponsor/Ad Voice
Yeah.
- [03:51]
David
It's like, what is eth? Eth was an investment bank where the currency of ether was used to invest in speculative ideas called ICOs.
- [03:58]
Ryan
That's right.
- [03:59]
David
That was like the first idea of what Ethereum was. And there was something very powerful about somebody else across the world having an idea and then me resonating with that idea and be able. Being able to, like, one or two click, invest in that idea.
- [04:14]
Ryan
Did you participate in some of these?
- [04:16]
David
I participated in one ico. I will get to which one later. I know you're bait. I know you're baiting me on. I know you're ashamed of which one. I'm definitely not ashamed of it. It just. It takes a little bit of context. But we'll get there. We'll get there, we'll get there. Obviously, this power of there's an idea out there that I want to invest in was powerful for many people because that's what fueled the ico Mania of 2017. We had the basic attention token, token sale sold out in three blocks for like $30 million. And really the race was on because it was a little bit too easy to come up with a very attractive idea. And it became a little bit too easy for people to send their ether and get some tokens.
- [04:54]
Ryan
That's right.
- [04:54]
David
But nonetheless, anytime crypto does something far too much for far too long, we learn how to do it correctly like five to eight years later. And that's what I'm seeing happen right now. Not only did we go through the ICO mania and learn about the power of capital formation, but just as like a completely parallel research and development path Crypto has also been developing very sophisticated auction price discovery mechanisms which ICOs of today are now leveraging. And so there is a lot of just.
- [05:31]
Work that the industry is standing upon in 2025, December of 2025, that really shapes up and tunes up some of the ICOs to the point where like now if you're an, if you were an ico, you know, back then it might have been averse selection. You're probably like a C or B tier project. But the fact that we have Coinbase purchasing Kobe's Echo platform with the Sonar ICO platform, and then you also have Uniswap with their CCA auction. We have some of the biggest players with the biggest reputations in the space building out ICO pipeline infrastructure, token floating token price discovery infrastructure, and some of the best projects in crypto are using it. And so it's time to return to this subject because as an industry we went through some fucking bullshit, excuse my language, that we shouldn't have needed to do the points programs, the yield farming, retroactive airdrops, like all of this stuff was just a runaround for what should have been an ico. That was. We just were forced to do that convoluted mess because of the regulatory environment.
- [06:37]
Ryan
Yeah, I guess we're like almost 10 years out from the inception of the idea of the ICO. And there were a lot of problems with ICOs in general, like principal agent problems, incentive problems, alignment problems that I would say happened. And a lot of investors and participants got burnt. I actually think the market would have figured that out in a shorter amount of time had we just let the experiment continue. Because what happens is initial ICO participants, they get burnt and then they come up with better auctions, better incentive alignment, just better mechanisms so that all boats rise together. But we were prevented from doing that, I would contend, by some of the regulatory apparatus which just shut down all of the free market ICO experiments with a hostile SEC and Gary Gensler regime that effectively made it illegal. And then you saw all, you know, you mentioned the points meta largely, I feel like a chunk of that was regulatory arbitrage. Just like to not call it an actual coin offering.
- [07:49]
David
A huge chunk of it. I would say that that was the majority of it.
- [07:52]
Ryan
Okay, so anyway, I do think the free market would have figured it out, but now we are back into somewhat of a free market regime, but probably with some better guardrails than we've had in the past.
- [08:03]
David
And we'll see internal self produced regulations.
- [08:06]
Ryan
I would say some of it, some of it is internal self produced regulations, bottom up, some of it is maybe some top down. And there's definitely an atmosphere of experimentation and freedom. And it's your sandbox to cryp, which is good. So, but back to which ones have you participated in or which one did you participate in 2017? Because I must know.
- [08:27]
David
Okay, so Amin Soleimani was a consensus dude.
- [08:31]
Ryan
You did the spank chain ico?
- [08:34]
David
I did. And he left consensus. He was working on payment channels that's hilarious. To do cheap instant payments. And he was like, okay, what industry can I apply this technology to that also needs the anti authoritarian freedom technology that is crypto? And he went towards the adult entertainment industry.
- [08:52]
Ryan
There you go.
- [08:53]
David
And built a, an adult entertainment platform. But the reason why the spankchain ICO was interesting to me was you were.
- [09:00]
Ryan
In it for the tech. It was very, it was very viral.
- [09:03]
David
But also there was a natural price discovery mechanism that the spankchain ICO did that no other ICO did. And I saw like I saw Amin's leadership do this strike price mechanism where people would submit bids and then the organization doing the ICO spank chain would create a strike price and anything that paid anything that was outside of that strike zone didn't actually participate. And so the, the company only received only sold tokens. So the amount of people that was appropriate and only only received money from people that were willing to pay at the particular price. And so it was a natural demand and supply side finding an equilibrium that no other ICO had. And I respected the auction mechanism that Amine had. We're going to follow a similar pattern today with Uniswap's CCA model. But the whole idea is crypto has smart contracts, we're public infrastructure, we have unknown demand for supply of tokens, and we need mechanisms to equilibrate between these two things. And we have eight years of research of auction mechanism design that is finally being applied in some of these ICOs. And the if crypto has actually succeeded in producing some of the best capital formation infrastructure out there, I would expect the world, the global capital markets to leverage this infrastructure that we have built. And so that was to answer your question, Ryan, it was bankchain in 2017. But also we have the five recent ones that have gone on. Three of them have gone on in the last like month or so. Mega Eth, Monad and then also Aztec and then two we have on the horizon, Infinix and Zama. And so we have a bunch of ICOs that have happened and A couple that are happening.
- [10:52]
Ryan
Well, let's maybe talk about them now because let's just see what the latest is. I think that part of the initial crop of ICOs, and anytime we've tried these experiments in crypto, certainly there were some auction mechanics that went wrong, but there were also economic mechanics that went wrong and economic alignment mechanics. Like Most of the ICOs people will remember from 2017, they probably have a bitter taste in their mouth if they participated any in any or invested in any because none of them really outperformed ether. And certainly.
- [11:27]
A large chunk, maybe call it 98% actually collapsed to zero. A chunk of those were just sort of a vaporware, Bali rug type thing where they invested in some hype rather than actually capturing some economic upside. And like there's a question of, oh, that's just how, you know, startup and new projects, that's just how they work. Or maybe there's some fundamental flaws with like the token economics or the token rights you receive, or maybe it's a combination of those. And I'm unclear if we've also made progress on that, but I, I hope to hear your perspective on that as we go through some of these recent ICOs. The one maybe we could start with is the mega ETH sale. And these ICOs are sort of really crescendoing in Q4 of 2025. That's when I've started to see this uptick hit. Let's talk about Mega Eth. So what is this and what was unique about it?
- [12:22]
David
Yeah, a handful of things maybe to just be able to compare some of the metrics between all the ICOs. I'll rattle off some similar stuff like token supply of the Mega E. Token supply was sold at a 999 million valuation. You were allowed to submit a bid for like if you didn't want to spend more than at a 500 million valuation, you were as a, as a bidder allowed to bid for a particular price. So that's pretty cool. This was used on the Echo platform, which was recently bought by Coinbase. It was a 72 hour public auction and it also had a max bid per wallet, so $186,000 per wallet, so you couldn't bid more than that. And that was a matter of just like allowing for the token to be distributed widely. Wide distribution. We're going to see the wide distribution show up in other ICOs as well. It was massively oversubscribed, so they were selling 50 million. About $1.4 billion of bids came in. Now on the Echo platform, it's important to note that you don't just fill out a number and hit bid your. The platform looks at the tether, in this case tether, the USDT in your wallet and says, okay, you have $47,000 of tether in your wallet. You are allowed to bid up to $47,000. You can't bid $187,000 and have no tether in your wallet. So you can only bid up to the amount of tether. And then once you do bid, your tether goes into an escrow. And so when I say that there was 404, $1.4 billion of demand, there was actually $1.4 billion of tether locked up for people bidding into this Mega ETH token sale, a 28x over subscription. Now it's not known what the Mega Eth valuation was at the last equity round for Mega Eth, but I, I think everyone assumed that the maximum cap that they were going to sell the tokens at $999 million was well under the valuation of Mega Eth on the private markets between the VCS and Mega Eth did that explicitly. They, they just said we want to make sure that retail investors or investors generally get access to sub unicorn valuations. And so they did it to, you know, do it for their community, which is why it was so oversubscribed because they get, if you look at the perps, the valuation, the implied valuation of Mega Eth on the perps that was like a 75% discount. It was trading at $4 billion. So these are some of, some of the sale facts that are probably notable.
- [14:43]
Ryan
You've used the Echo platform. So in the 2017 era of ICOs, all you needed was an Ethereum wallet and you generally, you wouldn't even purchase these things with stablecoins, you purchase them with E and anyone could participate and there were no limitations. It was just like kind of a free for all. Right.
- [15:00]
What's the experience of using the Echo platform? So I imagine there's some compliance involved with this. So AML kyc. So they don't want bad actors or terrorists or money, you know, like known entities that are like banned. They would do that. Also accredited investor laws do, do they pertain for US users as well? So that would mean you have to have a certain net worth threshold of over a million or certain income thresholds, I believe. Is that what the Echo platform does? What's the experience of using this?
- [15:33]
David
Yeah, the Echo platform asks if you're an accredited investor and then it asks how you qualify as an accredited investor. I don't remember ever submitting any proof, so I'll just leave that up for the listener. Um, but yeah. So are you accredited investor based on yourself?
- [15:47]
Ryan
Self certified.
- [15:48]
David
Self. Self certified. I stamp myself as an accredited investor. And then the thing that Echo did was they asked you like, probably the most rigorous financial questionnaire that I've ever been asked. It was like maybe 20 questions. And it was like, what are the possible outcomes of this investment? And it's like, I make money or the investment doesn't work, but I get my money back. Or it goes to zero. It potentially goes to zero. It likely goes to zero. And it's a multiple choice. And like, if you use, if you're smart enough, you can just pass it on their first attempt. But like, it was, it was by far. I've done some of these questionnaires before in different walks of life. Definitely the most rigorous.
- [16:23]
Ryan
Better than reading, I guess a disclaimer or some long read. Me legally is it just wants to make sure, like make sure that, you know, you are investing in something that is highly speculative. Right.
- [16:32]
David
And you could lose it all. Yes. And so you would imagine if some regulator comes knocking the echo and be like, why did you allow people to invest on this platform?
- [16:38]
Ryan
They like, grandma lost all her money. Well, grandma filled out the survey.
- [16:42]
David
Grandma passed the test. You know, like, and I do remember seeing on Twitter people saying, oh no, I failed the test. Can I take the test again? And Kobe's like, no, no, you failed the test.
- [16:53]
Sponsor/Ad Voice
Sorry.
- [16:54]
David
But the fact that it's a test that anyone can pass. Yeah, like, you don't have to be born into anything. You don't have to have a certain amount of money to pass the test. Like, I like that. And so that, that was cool. And so if you pass a test, you could invest. And yeah, I enjoyed that. The other, the UX of it was like, had to bounced back between the sail.megaeath.com webpage and then the Echo webpage a handful of times. And that was a little bit confusing. I expect those experiences to kind of get collapsed in the future. But that's kind of just like the clunkiness of a web tooth phenomenon. Nothing to do with crypto.
- [17:28]
Ryan
People are always angry at these things and they, they talk about fairness a lot. This is in particular crypto Twitter. This is kind of a sentiment. It's like, oh, only 5%. I mean, the thing to remember about ICOS is like, what's the status quo? Well, the Status quo is the thing stays private. Yeah, just about, you know, like until it's, I don't know, a DECA unicorn. Right. Or until it's worth, you know, this is what we're seeing with companies like Stripe or companies like SpaceX. Right. Retail doesn't get involved at all. And I don't think that regulators acknowledge enough that US capital markets are broken from that perspective. From the perspective of retail can't participate until it's like overinflated and all of the upside has been squeezed out of the thing. What's interesting though, about 2025 and the evolution of these ICOs versus 2024. 2024, as we said, was very much like points meta and very much still in the airdrop meta side of things. I'm not sure actually what Mega Eth strategy for airdropping a token is, but certainly they had a strategy around an ico, which I like and I appreciate because if you are skin in the game, purchasing these assets at a particular price, like you were invested in the ecosystem, you're not gaming this thing, you're actually participating. And that is so much more pure to me than kind of just getting free money basically and trying to gamify the system for getting weird strategies.
- [18:51]
David
Yeah.
- [18:51]
Ryan
For doing weird activities that just become sort of these, these metric, you know, propaganda type of things. Anyway, so Mega. Is it true to say that Mega Eth has really focused far less on an airdrop and far more in the ICO mechanic?
- [19:06]
David
I don't expect Mega Eth to issue an airdrop at all.
- [19:09]
Ryan
Okay, why would they?
- [19:11]
David
They did a public sale. They sold $50 million. In addition to that, they did an NFT sale prior to this. So they've already done a round of sales to allow interested community members to get in the door. Maybe, maybe they do a small airdrop.
- [19:26]
Ryan
Did they also do some economic work here too? So have they made it clear basically what token holders receive? I mean, one of the things that I recall from Mega Eth is, you know, they have a stablecoin on the Mega platform that stablecoin is going to generate yield. Do they have a story of how the like, if they get a billion in stablecoins on Mega Eth usage, how that yield generation, that 4% or whatever flows to Mega Eth holders. Because this is part of the story we never had back in 2017, which is like, well, okay, how is the token actually going to accrue any value? And it seems like the 2025 crop is more crisp on that or. Although correct me If I'm wrong here.
- [20:04]
David
I don't think they've released any documentation on the matter. I think you are intuitively filling in some gaps that have been left because, I mean, I think that's a level, like 300, 400 level question, which I also am curious to the answer to. But no, I do not think that there is a robust economic report about the nature of the Mega token that's out. And I don't think that they would do that ahead of time.
- [20:26]
Ryan
But that is becoming the consensus, the social contract, the social consensus. Right. I mean, they can't. They have to share the economic activity with their token holders in some form, do they not?
- [20:38]
David
Yes, yes. Do they want to broadcast that? I don't think we are totally out of securities law regulation hurdles that we want to just like say, hey, there's gonna be a stablecoin and Mega Eth holders get access to the economic upside of that. I don'. I don't think we're there quite yet. As a investor in Mega, I participated in this one. I would like to know those details, but I can also totally understand that they. You don't want to wave that flag around too loudly.
- [21:02]
Ryan
Oh, see, the other thing you mentioned is just the general interest in mega eth ICO. So you said it was 20x oversubscribed, 28x oversubscribed. 28x oversubscribed. So how did they determine, or how did the auction determine who actually got to participate if there were limited slots here?
- [21:19]
David
Yeah, this was part of their post sale, like just documentation announcements. So they said the project Mega Eth used what they called a U shaped allocation, prioritizing both key contributors, so, you know, early supporters, you know, community promoters, et cetera, and then also giving a smaller baseline allocation to many participants to have broad distribution. And so there were a lot of things that you could have done that there are like Mega Eth projects that if you had used with your wallet, like Cap Money, for example, if you had used that, you probably got some amount of allocation, maybe not your full allocation. And they did that to disperse the project widely. And then also they gave full allocations to people who are very loudly, publicly pro Mega Eth and other community partners.
- [22:06]
Ryan
So in a way they gave, they airdropped allocation slots rather than, you know, actual tokens.
- [22:10]
David
Yes, they airdropped allocation spots. That's right. Which is, I think, is the right way to do it. Yeah. Again, interestingly, there was a Twitter account, ICO beast who made a joke about how Mega Eth is trading at like some four or five billion dollars allocation. And he wants to learn, he wants to figure out how to hedge his position. What that means is selling. And so when he tweeted this, he got his allocation yoinked, which I actually think is totally fine. Like we are out of the airdrop meta. Like if you don't feel alignment with the team, why are you investing? The whole idea of ICOS is direct relationship to project believers. And how do we know who a believer is? Is somebody who's willing to give up the money, their money, and then hold it versus people who like we're doing the whole airdrop farming and be like I don't care about this project, I'm farming it to zero. We're trying to get rid of the latter and reward the former. And anyone who's like I'm going to take my free forex because remember at Mega E heavily discounted the raise, I'm going to take my free forex and hedge it. Like no that you got your project joint. And so Mega Eth had the option to be opinionated about who gets access to the allocation. And I think that's good because let's be deferential in people who have access to projects.
- [23:27]
Ryan
I agree with that too.
- [23:28]
David
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David
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David
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David
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David
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- [26:22]
Ryan
Let's talk about the second. This is the Monad sale. So another chain ecosystem Mega Eth was a layer two. Of course Monad is a layer one. Both of these EVM compatible Monad did an ICO two. They did it in a slightly different way. So describe what they did.
- [26:41]
David
Yeah, they did it directly through Coinbase. And so in order to participate in the Monad ICO you had to actually make a coin, have and fund a Coinbase account. So big win for Coinbase this is the first ICO after acquiring Kobe's Echo platform and it was just natively through the Coinbase front end.
- [27:00]
Ryan
That in itself though is crazy. That's clearing a regulatory hurdle because Coinbase, for Coinbase to actually launch an ico, that means they must feel very comfortable with their position with tokens and the SEC and operating in the US because they have always taken huge strides to not run afoul of securities law or U.S. law in the past. Yes, that's a sign in of itself.
- [27:25]
David
I think this is one of the reasons why I'm so excited and optimistic about ICOs moving forward is like, yo, Coinbase is pushing this forward. They, they've built out a whole token offering pipeline. So you do your token sale with Coinbase, but then they also have. Who did they, who did they buy? They bought some company called.
- [27:44]
Liquify which does token token compliance. And so all investors, they cap table management. Exactly. And then once your token like graduates and is and is sold, where do you think it's going to trade? It's going to trade on Coinbase.
- [27:57]
Ryan
Full cycle.
- [27:58]
David
Yeah, the full pipeline. Okay. Five day token sale period. $2.5 billion network valuation for at the sale. And so Monad was selling itself at $2.5 billion. That's down half a billion dollars from the last VC invested raise. And so while it's not down as much as Maggie's was, my GitHub was like 75%. This is like 18% lower than the last VCs. And so the theme here is that the public sale is happening at a lower price than the last equity round or two for two on that. And so that's pretty cool. 7.5% of the total monad was sold again. That's a 2.5 billion valuation. So 2.5x the valuation that Mega ETH raised at roughly six hours after it began began the token sale was 45% subscribed. So 45% sold out with about a hundred million of tokens remaining. So it was 43 million in 23 minutes. Crazy. Sales slowed down after the first six hours, but ultimately came to sell out at roughly between 115 to 145% oversubscribed. We have the token price of Mon is it's trading now, it's liquid and it is currently at 0285. So 2.85 cents up from the.0025 cents that it was sold at. So investors are up 13%. Pretty cool.
- [29:20]
Ryan
And should note that Monad is not fully liquid. Right. So Low float, high FTV asset. But the assets in the Mega Eth case and the Monad case, the tokens that retail investors are buying by participating, is there any lockup associated with this? Because the investors do have vesting periods and lockups. That's why all of that flow is not available on the market right now. How about the ICO participants?
- [29:47]
David
Yeah, the ICO participants are the first people who get unlocked. And so for in both the Monad and the Mega Eth case, the earlier investors who got in at lower rounds and took on more risk are locked for a longer period of time. And so the first tokens that will hit the market are the, the, the sale participants.
- [30:05]
Ryan
Okay, so so far we've talked about two of these new ICOs and of course when you have the power of the platform of Coinbase and the user experience and all of the compliance, I'm sure it was done, you know, like in a highly compliant fashion. Good ux, good participation, all of that. The onboarding had to be seamless. This is getting away from our on chain, purely crypto native. All you need is a connection to the Internet and you like some private keys and you can participate worldwide no matter who you are. Basically it was getting away from that idea and we're going into these more closed garden type ICO platforms. So I want you to bring in the third, which is a super crypto native ico. This was the Aztec ICO that I think just concluded last week. Correct me if I'm wrong. So what's special about the Aztec ico?
- [30:56]
David
What's not special about the Aztec ico? I think the Aztec ICO is probably the coolest sale mechanism that I've ever seen in crypto. And it's.
- [31:06]
Ryan
You participated in this too?
- [31:07]
David
I participated in it. It's why I'm excited right now is probably why this episode is happening because you know the first two mega Eth mod ad. Okay, cool. Like interesting data points, but the fact that a third token sale of a very large project is happening in the same manner but in a completely different direction. Without a bank. Without a bank, yeah. Complete, completely bankless, completely on chain, no intermediaries, all just on chain financial infrastructure for what I consider to be a grade A project I think is a very big deal. And so the really the key secret sauce here maybe there's two standout components about why this was a big deal. First, the Uniswap CCA mechanism continuous clearing auction. Well, we're going to talk about that. And also that Aztec went ahead and did A lot of legal work to get legal opinions that the Aztec Token is a consumptive good, not a crypto asset security, which therefore it's their legal opinion that it's not a security and so that they can sell to unaccredited US investors. So when you were go to the ASX sale page, you know when you would go to a, any sort of airdrop page and then it would say, hey, your IP address is from the U.S. we're not airdropping. You're geo blocks. No, no, no. This one is, here's a pop up, big bold letters. US Token sales are back in the usa. US Residents can easily participate in the Aztec Token sale. ASIC is building the private world computer and you're invited with a green button saying let's go. How refreshing is that, right?
- [32:39]
Ryan
Okay, why, why, why, why this do you think? So they did publish basically their legal opinion in all of these jurisdictions. I saw this posted. It was a legal document in all of these jurisdictions that the Aztec token, again, it's a, it's a layer two. So it's a chain token in the same way that Mega Eth is, is not a security right in all of these jurisdictions and including the U.S.
- [33:05]
David
But.
- [33:05]
Ryan
Projects weren't so bold in the past and certainly they were not as bold in the Gensler regime. You just think it's because the SEC has lowered its defenses and its attack. It is now saying tokens are okay. There's going to be some regulatory sandbox, that these projects are just responding in kind. Is it all about Gensler not being in office? Is that why we get this?
- [33:32]
David
Yeah, I think that's a very big part of it is if you had published a document like this, it would be a flag of just like, yo, let's fight, Gary. Yeah, let's, let's go toe to toe.
- [33:42]
Ryan
They would have used that document in court to pursue their Wells notice against Aztec in the past.
- [33:48]
David
Yes. Yeah.
- [33:49]
Ryan
And now that's no longer happening.
- [33:50]
David
So this administration is much more. I think the read between the lines of this administration is people know when they're violating securities laws. The institutions of Wall street and Tradfi also know when other people are violating securities laws. And the big money, the money that matters, aren't going to touch people that violate securities laws. And so if you do your due diligence and if you're also correct and the market believes that you're correct, I know you're a big markets guy. If the market believes you're correct, then institutions will believe that, yes, The Aztec is actually a consumptive good and not a security.
- [34:24]
Ryan
Also the more you do it, the current sec, the more you do it and the more parties that do it. So if you have coinbase that's doing it like the sonar platform doing it now, Aztec doing it on, on chain and the SEC is not pursuing them. We just had the, the guy, the lieutenant of Gary Gensler, Corey Frayer on the podcast and he made the point that the SEC must as an institution maintain self consistency. Okay, so that means cross administration self consistency. Some people are looking at this and saying yeah, because Gary Gensler is out and you know, pro crypto president is in charge, we can have ICOs. But as soon as that reverses then these things are going to be banned. I don't think that's going to be the case. Why? It's because the SEC from the period of 2025 to whatever 2028 has been very crypto favorable and essentially not only allow this to happen, but Paul Atkins is having like talking about tokenization and speeches and talking about a regulatory sandbox. And so the next administration, even if they hate crypto, they can't go back and take these projects to court because the judges will just like laugh them out of the court. Like they can't. They must maintain some self consistency because they'll say no, this the SEC's position that these things were not securities and these were legal for a whole period of time. You can't now go back on that and say they're so I think the cat's out of the bag and I think this is crypto projects realizing that US investors can now participate, that these are not securities and they're never going to be in the future.
- [36:02]
David
And it also behooves the industry to supply the market with the collateral that it needs in order to understand the legal nature of these tokens. Which again is why Aztec made a 28 page document called the Token regulatory report about the Aztec token, about the legal opinions of Aztec. And so that that's just good for Aztec to give to investors, potential investors, funds, anyone who wants to just read about the nature, the legal nature of the said token. So that's the first awesome ingredient of the Aztec token sale. The second is the Uniswap cca. The first Uniswap CCA auction. Like I said earlier, CCA stands for continuous Clearing Auction. And the way that this works is that a token issuer seller submits a an allotment of tokens, 5% of the supply, 10% of the supply whatever customizable. It also picks out a time frame, one day, three day, five days, also whatever. And the way a CCA works is it takes every single block, it takes an allotment of tokens and sells that amount of tokens in that particular block until the very end of the auction. And it's just a very plain cost.
- [37:14]
Ryan
Averages the investor in over time.
- [37:17]
David
Yes, exactly. And so on block one and the the platform will allow pre bids. And so when the auction goes live, there's already people that have bids waiting. But as bids come in, there is an allotment of tokens, a thousand tokens a block, and people are bidding for those tokens. And then also teams can set the floor price. So the Aztec team set a floor price of something like $300 million, which was 75% off of the last VC valuation raised for Aztec. And so once again, for three, for three, the community is getting a discount to the last venture capital valuation. And so at a $300 million price, the Aztec token was starting to get sold by the Uniswap CCA every single block. So Aztec put in 15% of their total supply of their tokens into the Uniswap CCA auction over a five day period, I believe. And so every single block, a pro rata amount of those tokens were sold to the bidders who had taken ether and put a bid into the market. Now, as a bidder, you could put in the max valuation that you would not want to pay above, but other than that it would just take your ether, prorate it, spread it out for the whole rest of the sale. And every, every bidder was like this. You couldn't end your ether bidding early. Every single person who put bids in had their ether spread out until the rest of the sale. So you were slowly dcaing in to the ASIC tokens at the price that it was clearing at with all the other bidders.
- [38:48]
Ryan
This one felt the most like 2017, but with like 10 years of enhancements from a few perspectives. Number one, and I guess we should just underline this, the 2017 ICOs were mostly just like white papers with a promise to launch some sort of product or something that would change the world later. They were ideas in all of these examples. These are networks that are basically getting ready to mainnet.
- [39:15]
David
It's like the token is the last thing that's coming.
- [39:17]
Ryan
Yes. And they've already done kind of the pre work, the idea phase in sort of the, the angel investing and VC investment phase. And now they're getting ready to launch. So now when they go mainnet, they're giving this to retail. So you don't have the, the risk of like it's just vaporware, it's just a white paper. As soon as these founders raise, they're going to leave. Like these are actual products that work. The other thing that's great about the CCA mechanism is there's no rush. You don't have to be on your computer by like 1201 Eastern in order to catch the bid or it's all sold out or you have to buy at some exorbitant price. Right. This was. How long was the CCA open for? Was it like a week or something?
- [40:01]
David
Like five days, maybe A week for Aztec.
- [40:03]
Ryan
Okay, five days are a week. And at any point in that time you could decide how much you want to allocate and allocate it and you get about the average bit of everybody who's participating in that. So there wasn't this huge race condition where you'd have to like stay up and make sure that your transaction got in the block and like gas fees would be so high and you'd have failed transactions on your, on your wallet. All of that chaos was contained in this auction mechanism, which was brilliant. And then the other point, maybe you could get to this too is it was actually compliant as well. They did do some sort of an AML KYC type of check, only it was in an incredibly crypto native way. So I know you participated in this. Can you talk about that part?
- [40:46]
David
Yeah. Let me check off a few more boxes about the cca then I will go to that. The sale ran from the second to the sixth, so four days. Okay, you said that there's no rush with the cca. That is true. But what's cool about the CCA is that you actually still get a lower price if you are earlier in the bidding order. It's just not critically better. And so the highest price of the Aztec token was sold at something like 490 million. The earliest price was something like 350 million.
- [41:15]
Ryan
Okay.
- [41:16]
David
So that was the dispersion. So over those four days, if you were in the first, you were getting 3, 50 million. If you're at the end, if you waited towards the very end, you got something like 480 million valuations. And so there is rewards for being early and enthusiastic. But if you're just lazy or slower, it's not a catastrophic error for you. Like you're just, you're just paying a few percentage points higher. So that's that's noteworthy. Importantly, there's no edge to any whale. There's no edge to anyone who's sophisticated. There's. When we do these on chain sale mechanisms or points programs or yield farming, usually there's a unfair, there's a way to have an unfair advantage. The sniper bots, the sniper bots, like all this, all this shenanigans with a uniswap cca, there's no, there's no way to have an unfair advantage or it's very, very minimized. And so these are, it's very, very good mechanisms. And then like you said, in order to be compliant, Aztec needed to do KYC on all the investors. And there were two ways to do kyc. There was the normal way where you have a third party service provider scan your passport, scan your id, look you up, you know, give you the thumbs up.
- [42:24]
Ryan
You send them pictures, basically send them.
- [42:26]
David
Pictures of your identifying information. They also, Aztec did this ZK passport thing where some of the modern passports, maybe your passport has this Ryan, it has like a little rf, an NFC chip in it and your phone can scan that and the query will be, you know, is this person of, of age?
- [42:48]
Ryan
Right.
- [42:48]
David
Like is this person on any sort of list? But in ZK is everything.
- [42:52]
Ryan
Yeah.
- [42:52]
David
So it's completely privacy preserving.
- [42:55]
Ryan
So cool.
- [42:55]
David
It's as cypherpunk as I think it could possibly be. All of it complying with regulations.
- [43:02]
Ryan
That's right. It's UK proofs, all of it, ZK verifies, all of it, attests to it. And so it's like, okay, you know, David is US citizen. He's not any on any kind of like sanction list or no fly list. And then it doesn't share all of the precise details of who you are, your address or all of those details, only, only shares what it needs is required. And then all it does is it whitelists your address so that then your ETH address can go participate in the CCA auction. Super cool.
- [43:30]
David
Very cool, Very cool.
- [43:32]
Sponsor/Ad Voice
At the end of the CCA auction.
- [43:34]
David
The proceeds, some of the proceeds went into a Uniswap V4 pool. That LP position is owned by Aztec governance. And so the money is owned by the governance, the liquidity is owned by Aztec governance, which is very cool. It is locked for a year and then after one year asset governance can decide what they want to do with it.
- [43:54]
Ryan
That liquidity is locked for a year.
- [43:55]
David
The liquidity is locked for a year. Yes, okay, yes.
- [43:58]
Ryan
Now I understand. The Aztec tokens themselves is those that participated the investors that participated in this, they, their assets are locked for like 90 days. But there is going to be, okay, there's going to be a governance vote which presumably would unlock all of this. And again, better terms than the existing investors get. The existing investors have some sort of vesting schedule. Multi year, probably like three plus years.
- [44:22]
David
That's right, yeah.
- [44:23]
Ryan
Vesting schedule. Whereas the participants in the ICO do not have that. And then you could do something as soon as you're done, which is like again, live network, there's actually staking going on, there's, there's blocks being being created, no transactions yet. It's kind of like a beacon chain launch where they just have the sequencers, they call them validators, but they have sequencers that are live. So you can take your Aztec tokens, you can actually stake in the network and participate in it. So that's different again from the ICS.
- [44:54]
David
Live networks after you get the tokens. Crazy.
- [44:58]
Ryan
All of these felt very wholesome. And again, it's like who knows what's going to happen to the price? They could collapse. Like they could go to zero, they could go to 10 billion, they could go to $100 billion. You don't know. But investors should have the ability to allocate and choose and. But they, all of these projects felt so wholesome compared to the 2017 era. ICOs.
- [45:20]
David
Yeah, yeah. We got two more sales to talk about. The Zama public auction and also the InfiniteX sale. Just to get some of the details. These are the ones that are incoming, they're on the horizon. We'll talk about some of the details to them. But I've just got a bunch of takeaways and themes about what's going on here, Ryan, that I want to talk to you about. So let's go and talk about all of those things. But first a message from some of these fantastic sponsors that make the show possible.
- [45:41]
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- [47:08]
David
All right, two more sales incoming. We'll start with the Zama public auction. 10% of the Zama token supply will be sold in a sealed bid. Dutch auction on Ethereum using the Zama protocol to keep bids private now. Okay, what's, what's Zama? Zama is an FHE platform. It's another privacy platform. Unlike ASEC, it's on a layer 2. It does shielded things on other blockchains. So it's like a privacy service provider for general privacy service provider for blockchains, generally speaking. The other cool mechanism about this is that like Mega eth, you need to have the either usdc, USDT or DAI in your wallet and then you need to shield that USDC using Zama to submit your bids.
- [47:53]
Ryan
Oh. So you actually have to use it. And by the way, you mentioned a whole bunch of stablecoins. It's just stablecoins or can you also buy an eth?
- [47:59]
David
Just stablecoins as I just stable coins.
- [48:01]
Ryan
Interesting.
- [48:01]
David
Yeah, yeah, yeah. Because they, they need to fix the price. And so they are assuming every stablecoin is $1. They're fixing a stablecoin to a dollar. And in order to actually do the Dutch auction mechanism, it wouldn't work if ETH was fluctuating.
- [48:14]
Ryan
By the way, of the three we just mentioned, Mega ETH and Monad were USD right? Dollar denominated, whereas Aztec was ether denominated.
- [48:22]
David
All ether. It was all interesting.
- [48:23]
Ryan
Okay, that's right, that's right.
- [48:24]
David
Yeah. Okay. So yeah, you see, you shield your stablecoins using Zama to be able to invest in the Zama Dutch auction. And so I'll just read from the blog behind the scenes. Shielding deposits your ERC 20s into a wrapping contract and issues you the equivalent amount of ERC7984 tokens whose balances and transfer amounts are encrypted while shielding is visible on chain. And any transfer you make from that moment will be fully confidential. As such, we recommend shielding more tokens than you intend to bid with because otherwise we will just assume that you bid with nice amount tokens, which is pretty cool. Okay, so what is a sealed bid public Dutch auction? The way that this works is that everyone submits one bid privately sealed. That's the sealed part. You because you can't see other bids after all the bids are in, the seller ranks them from the highest to the lowest. Then they determine the lowest clearing price at which the entire amount of tokens or assets can be sold. Everyone who bid at or above that clearing price gets filled at that price. And everyone plays the same clearing price, not their individual bid. And if you bid below the clearing price, you get your stablecoins returned to you. Very similar to the strike price auction mechanism that Amin Soleimani did with Spankchain forever ago. And another auction design mechanism that crypto is using to discover price to do price discovery that we are just not seeing in TradFi. Like, could you imagine what would how much more money Circle would have gotten if it had done something like this? A sealed bid Dutch auction or even a Uniswap cca for example. They would have. Actually, I do know the answer to this. Do you know how much more money Circle would have gotten?
- [50:06]
Ryan
How much? No.
- [50:08]
David
Something like $1.2 billion of money that they did not get because they IPO'd at such a low price.
- [50:14]
Ryan
The investment banks. Look, I'm going to grossly oversimplify this. I've not been on the side of an investment banker, but they kind of guess at the price, don't they? They just put a finger. It sounds like this, oh my God, we just. Yeah, we did the exact same thing. Because they just feel like it's worth X billion and they price it as such. And they're either incredibly right or they're incredibly wrong. I guess there's some room in the middle, but they never get it perfectly. And so there's inefficiency, there's waste here. Yeah, it's like auctions. Guys who do we have there are.
- [50:45]
David
Thinking that they're more efficient pricing tool than the market.
- [50:48]
Ryan
A hundred percent. 100%. Okay. How is the Zama auction different than the CCA, which we went into exhaustive deed? Is it. Is it kind of similar? Am I getting an average price?
- [50:58]
David
Yeah, it's a binary event. So you actually don't know the price that you will get. You can, you can submit a bid, you can submit a price that you don't want to pay more than, but at the final outcome, you don't know what the price will be. You do know that it'll be lower than the amount that you put or you won't get, or you won't get it. But Zama does some balancing between.
- [51:19]
Ryan
That's a little bit more mental overhead than the cca. The nice part about the CCA is you just say how much you're going to invest and you just like, know it's going to be sort of fair, I suppose.
- [51:28]
David
Well, actually, you don't totally know that because with Aztec, they had a very large amount of tokens to sell. 15%. And it's a pretty reputable project. Yeah, but you don't want. On a cca, you don't want to submit an infinity bid because that could actually end up ultimately getting filled at infinity. If the CCA issuer issues a very low amount of tokens in the final blocks, you can customize the curve of the token allotment per block.
- [51:54]
Ryan
Yeah, but you could just. With the cca, you could just say, hey, I have like a thousand dollars and just buy, do a market price. You don't have to like name your price. I guess I'm just saying with the Dutch auction.
- [52:03]
David
Yeah.
- [52:04]
Ryan
Isn't there cognitive overhead here?
- [52:07]
David
Yeah, there's a little bit of cognitive overhead. And people think that there was cognitive overhead. With the cca. I think there was much less than there actually were. I would encourage you to not submit an infinity bid because as we get into like longer tail projects, I hope many, many, many more projects use the cca. Like smaller projects, community projects. And the CCA is very customizable, so.
- [52:28]
Ryan
It can get kind of funky.
- [52:29]
David
And so don't like, do think about the maximum valuation that you want to put and actually put that in there. There's a place to put it in there. I guess if you put it infinity, there's going to be something that you do where you literally do pay infinity.
- [52:42]
Ryan
Dollars for Aztec worked out fine because there wasn't exuberance for the Aztec tokens.
- [52:48]
David
Yes. And they also had an ample amount of tokens selling out in the Final blocks. And so what that allowed is that didn't allow a price spike to happen at the very end.
- [52:57]
Ryan
Right. Okay. Okay, that makes sense. This, this has not happened yet. This auction, this is a future event.
- [53:04]
David
Zama is in the future.
- [53:05]
Ryan
January 12th to 15th it says in the tweet from the co founder of Zama. But then also it says registration opens in five days. So I guess you could register first.
- [53:15]
David
Yes, register first and then the bidding happens for three days and then claiming happens on the 20th.
- [53:20]
Ryan
Okay. Do you need a special wallet for this? I guess tbd. If you go and you participate in this and use this. But like you said, you have to kind of cloak. You have to make your.
- [53:31]
David
I would assume you can confidential. You can seal your stablecoins in a web interface. In a web interface, yeah.
- [53:38]
Ryan
So all the standard wallets and then there's a web interface that probably is with a shield button in it. You can shield. It's kind of cool. Another example of the network is like here, basically. I know it's not a chain, but it is a protocol. Smart contracts. And they've spent years building this, literally. And they're basically going to Mainnet and doing their token generation event at mainnet, which is very refreshing.
- [54:01]
David
Yes. Yeah, yeah. We are four for four so far on mainnet token sales.
- [54:06]
Ryan
Well, I don't think anyone's going to buy a white paper anymore. I mean that was a 2017.
- [54:10]
David
This is good. This is good for the industry as investors, the listener included. I think we should be pro ICOs that are associated with mainnets and we should generally speaking be anti ICOs that are not associated with respective main nets.
- [54:25]
Ryan
Yeah. And you, the market will do that.
- [54:28]
David
The market will do that. The market will do that. But listener, you are the market.
- [54:33]
We are the market. Don't do anything stupid.
- [54:35]
Ryan
Yeah, don't do anything stupid. Get general advice. Last one you wanted to cover was another future one. The Infinix sale.
- [54:41]
David
Yeah, Infinix token sale. They're selling 5% of the total token supply, targeting a $50 million raise that comes to a 30 or $300 million fully diluted valuation happening through the sonar platform. Not any crazy mechanism here. Sonar, same thing as Mega Eth. There's no crazy auction mechanisms, but it's just noteworthy. Kane Warwick. Very high reputation. Infinix project, very high reputation. Happening soon. And so this is just another data point that this is the meta.
- [55:09]
Ryan
This is an app, which is different.
- [55:11]
David
This is an app. Yeah. So everything we just said about a main net doesn't apply because There is no Main net.
- [55:16]
Ryan
Yeah, there's no mainnet. But it's not a white paper either.
- [55:18]
David
Like it's a fully functioning project, develops.
- [55:20]
Ryan
This fully functioning project and that's happening, happening in January as well. So do you think 2026 will be a year that this trend accelerates?
- [55:29]
David
I hope so, dude. And like we have all the ingredients for it. We have the investor clarity and regulation, regulatory clarity that we have, man. Like I don't know why it wouldn't be that. I do think that this could be a very big theme for 2026. I want it to be it though.
- [55:47]
Ryan
David, you do need good projects.
- [55:48]
Sponsor/Ad Voice
You do need good projects.
- [55:49]
Ryan
These examples were like projects that have literally been building for years towards this. That doesn't happen overnight.
- [55:56]
David
That's, that's very true. Now that being said, you know, B and C tier projects will just be valued at the appropriate level of risk. So I'm assuming a C tier project is not going to like raise at a $1 billion. A C tier project is going to raise at a 5 or 10 billion dollars and you have a lot more upside and also a lot more chances that it goes to zero. So I'm also okay with that. I, I just want more choice in the ICO market. 5 is a great start. 5 a tier companies is a great start. I want for 202610 more A tier companies and like 50 B tier companies to all do token sales, public token sales, direct to the purchasers, direct to the investors. Ideally with a Uniswap CCA model or some other on chain price discovery mechanism. I think that would be good for the industry.
- [56:42]
Ryan
Are you worried about the exuberance at play here? So these have been successful. You know, the fact that they've, they've sold out, they've done well, they haven't been exuberant. I, I would say, I, I guess, I mean some of these valuations are in the billions, so some people would say they're already exuberant, but nothing like we saw in previous ICO exuberance cycles. Are you a little bit worried that as if the successful ones are successful that that will just bring new tranches of entrants who are the B and C tier, but they sell like they're A tier and S tier, you know what I mean? Like whenever we get into capital formation types of events and when they're successful we do see narrative ahead of price and things get messy and things get exuberant and then eventually for me, the free market take is you just have to accept that, that's the fact. That's what markets do and you have to be comfortable and okay with that. I think there are others that take a dimmer view on that though. And they try to dampen these exuberant cycles. Are you worried about that in 2026?
- [57:49]
David
I'm less worried. I think the crypto market, the market participants are the sharpest that they've ever been. Like, when's the last time you've seen exuberance in crypto? Dude, it was probably pumping TIA to $25 meme coins. Yeah, but not in the same way. Yeah, not in the same way.
- [58:09]
Ryan
Everyone knew it was.
- [58:10]
David
Meme coins itself was a smaller microcosm of the broader crypto industry as opposed to the NFT mania in 2021, which was the whole industry. So even our exuberance is happening in a smaller and smaller silo. And so.
- [58:24]
Ryan
But some would say these projects are still multi billion dollar projects. I mean that feels huge. Maybe we're in part of the exuberance without realizing it.
- [58:35]
David
Well, I don't want to think about that.
- [58:38]
No, I'm less worried. I'm less worried because. Because like they're these. The. Even the Monad, the run that raise at the highest valuation here has a needed to get the token out of the door to launch the network. To get the network started and have that be decentralized and distributed.
- [58:55]
Ryan
Yeah.
- [58:56]
David
And like they sold at $2.5 billion and it was like 1.4x over subscribed. Not, it was. That was a, that was a. Roughly about the value that the market was willing to pay for it. And so I don't see that being too exuberant.
- [59:09]
Ryan
What does all this mean? What are your takeaways here?
- [59:12]
David
Yeah, there's a bunch of takeaways. It's interesting to see there being a pattern of the discount for the public compared to the last VC equity round. Both Aztec and Mega ETH gave a 75% discount. Monad has something like an 18% discount. These are not the only examples that has happened. There have been sales earlier in this year that did back to back raises, first with a VC equity round and then a later token sale. And the token sale, even though it's happening like weeks or a month later with something like 20 or 30% off. I like that theme. The public, the public gets in at a lower price right before the token gets.
- [59:49]
Ryan
Yeah. Can you imagine if that happened to something like Uber where like let's, let's say for Uber, like pre ipo, let's say all of the early Uber drivers, end users, participants had some sort of discounted allocation slot as an airdrop in the company.
- [60:07]
David
I love this example.
- [60:08]
Ryan
And then they could go purchase it. That would be super freaking cool.
- [60:12]
David
That'd be right.
- [60:13]
Ryan
None of that happened in US capital markets of course. Right. So the investors made out like bandwidths. But the early quote unquote network participants and early believers providers. Yeah, they got nothing out of it. Yeah, that can be inverted in crypto.
- [60:26]
David
Yeah, totally. Yeah, exactly. Perfect point. So that's my big takeaway. I like that theme. I hope that continues. The second theme is just the price discovery mechanisms. Aztec and Zama both are using pretty sophisticated price discovery tools. If there is any industry that should be using well designed price discovery tools, it should be ours. We have almost a decade of R and D and the perfect tools at our disposal. Smart contracts to do fair market pricing, token sales. We have the tools, use them.
- [60:57]
Ryan
We're way better than TradFi.
- [60:59]
David
We are so much better. Dude.
- [61:00]
Ryan
We are auction maxis.
- [61:02]
David
Yes, yes, we. And the reason why being an auction maxi is so future proof is that these auction mechanisms need to happen on inside of adversarial environments. An IPO is not an adversarial environment. It's like wall garden, like bubble boy ICOs. Like don't harm it. Like it's cute. It's cute. It's cute. What happens when everyone is trying to like game your system? You we, we have the public market infrastructure for people who are trying to exploit the hell out of our auctions. FlashPost has learned this.
- [61:36]
Ryan
Oh my God. Uniswap has learned it's very orderly and capital efficient markets. Isn't that the SEC's mission?
- [61:41]
David
That's exactly right.
- [61:42]
Ryan
We're doing it for you guys.
- [61:43]
David
We're doing it. Yeah. In public. We've never had public fair, orderly capital formation tools until today. And we've got them.
- [61:50]
Ryan
We've got globally accessible, I should also add, which is super cool. And that goes without saying for all of these ICOs.
- [61:56]
David
Third big takeaway, the UI UX of Internet capital formation has never been better. All of these that I participated in were seamless, very smooth. We even like extrapolating from the AAVE announcement, the AAVE app. Have you downloaded the AAVE app yet, Ryan?
- [62:11]
Ryan
I'm on a waiting list. Is it available for me?
- [62:14]
David
If you DM the right person, they'll.
- [62:16]
Ryan
Be available for you.
- [62:18]
David
Not a single mention of a blockchain or smart contract anywhere. Not just you just have assets and an app and I think that is where these are going. Like, I don't really actually remember encountering the blockchain really anywhere other than signing messages with my wallets. And I think that trend will continue as Internet capital formation. The blockchain is ghost going to be obfuscated. And you know, imagine a world 2, 3, 4 years in the future where everyone has stablecoins in a neobank app somewhere like Ether Fi, Frax or whatever. More people have access to stablecoins and all of a sudden they are just one click away from investing in the next thingy that they want.
- [62:57]
Ryan
Whatever's trying to raise capital, whatever, whatever.
- [63:00]
David
Local idea is interesting to them. Regulatory favorability is the next one. We just had Aztec do a token sale without having to need to adhere to investor accreditation laws. Very cool. Very cool.
- [63:13]
Ryan
Wait, wait. Investor accreditation laws?
- [63:15]
David
Yeah, yeah, because that's right.
- [63:17]
Ryan
Because they're a utility.
- [63:18]
David
Because they're a consumptive good.
- [63:19]
Ryan
Yeah, there's. They're not even. And that was not true of I guess Mega Ethan NASDAQ was the only.
- [63:25]
David
One that did this. Yeah. And so they are setting precedent for network tokens to be treated as consumptive goods. And we also have a CFTC NSCC allowing crypto assets to be treated as crypto asset commodities instead of crypto asset securities. I mean maybe tomorrow the SEC comes out and says that they disagree with Aztec, but that's not.
- [63:44]
Ryan
Aztec is doing it all right too. I mean they've had years to prepare. Like there is a consumption case. As soon as you get the tokens you have go stake it like it's the. The purpose of the tokens is to run sequencers. Right. And protect the. The network. Anyway.
- [63:57]
David
Go on.
- [63:57]
Ryan
Okay. Regulatory favorite. Oh but. But do you think that could reverse? We don't get the Clarity act if we don't.
- [64:03]
David
In theory, time is on our side. So every single day it doesn't. We get to continue on this meta.
- [64:08]
Ryan
All right.
- [64:09]
David
Yeah.
- [64:11]
Just. It's nice to say this Ryan, but we are done with points programs, yield farming airdrops, retroactive airdrops, gaming airdrops, all this airdrop for now.
- [64:22]
Ryan
I'm not convinced.
- [64:23]
David
Most. Mostly done. At least we could be done. I'm a fan of this. It's just all of those things had intricate.
- [64:30]
Ryan
We get to call things what they are tokens rather than just using like I guess euphemisms for token calling points tokens and stuff like that. Yeah.
- [64:39]
David
2020 through 2025 had pretty terrible token distribution mechanisms. This the public ICO with fair market discovery Tools is the best distribution mechanism for tokens that we've ever had and we ever will have. We should continue down this path and the last one, this is my favorite one, Ryan. This is where I really want the listener to use their imagination. Sophisticated on chain capital formation tools like Uniswap, CCA or Blind Dutch auctions, whatever pairs really, really well with tokenization. If you can tokenize a bunch of assets and also have the world's most robust token floating tools, how to float a token onto the market for the first time, price, discover a token's price for the first time, put those two things together, collide those particles. I think there is a whole world of stuff that can happen when we have a lot of people with Neo bank stablecoin wallets, fair and orderly token token sales mixed with the rev tokenization revolution where we tokenize everything under the sun. I think you can add all those things together and you can come out with a very big white space for capital formation and tokenization on Ethereum.
- [65:53]
Ryan
That's pretty bullish. I think this tokenization theme, you know, a test to me and I don't know how many years we are away from this, but I feel like the tools we are building here, the auction innovation, just the global participation, are better in a number of aspects than TradFi. Not on all aspects, but on many aspects it's actually better. I mean we don't have the liquidity, we don't have some of the big institutional purchases or purchasers. There's some things we don't have. But I can imagine a world, and I don't know if this is three years away or five years away or a little bit longer, where Elon Musk, say his next company decides maybe to do a Internet native ipo, let's call it, right. And maybe it's a tokenized asset or it's a security in some form. But rather than bring it to the New York Stock Exchange and ring the bell, you bring it to Internet capital markets and that's your main event. That's the way you kind of release this to the public. Or maybe you do a hybrid, so you do the your stock exchange, but then you have a tokenized version of the same company share on Ethereum effectively and you're launching that on the Internet. Once that starts to happen, it's over. Once that starts to happen, then Ethereum and crypto becomes the new New York. It becomes what Amsterdam once was when we created the first joint stock company back in the markets back in the 1600s. And all of this capital, all of this activity.
- [67:30]
Moves to the Internet for its central point of raising capital. And that happens on blockchains. We're still a ways away from that. But some of these mechanisms we have.
- [67:41]
David
All the puzzle pieces, we just need to put them together.
- [67:44]
Ryan
That's right. Very bullish, very exciting.
- [67:47]
David
We have often said on the show we are speed running the history of money and finance. It's just to really emphasize the point that you just made is that capital formation comes before defi. We always think defi basement. No, no, no, no.
- [68:02]
Ryan
We need tokens first.
- [68:03]
David
Investing in tokens is actually a pre defi phenomenon and it's bigger as a result.
- [68:10]
Ryan
That was the order of operation.
- [68:12]
David
It's such a big part of capital markets. Moving capital markets on chain is the biggest thing that crypto can do. And I think there's specifically a lot of tailwinds on the Ethereum side of things. It has a stablecoin liquidity. It's a uniswap auction mechanism. It has just a lot of stuff going for. It has a tokenization narrative. So Internet capital formation on Ethereum could be a big theme in 2026.
- [68:37]
Ryan
Very bullish, very exciting, guys. Got to let you know, of course, this is not an endorsement of ICOS or any particular ico. Of course, you guys know none of.
- [68:45]
David
This or financial advice. You thought that we'd you. We did not.
- [68:51]
Ryan
You know that crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us in the bankless journey. Thanks a lot.
- [69:14]
It.