← CRYPTO 101
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- [00:00]
Bryce Brennan
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- [01:25]
Brendan
All right, everybody, welcome back to another episode here of the Crypto 101 podcast. Super pumped for today's episode. Brendan is joining me. You guys know me, I'm Bryce Brennan. Man, this is going to be a great episode. We're going to be diving into pretty much the fundamentals of what's underpinning a lot of these crypto altcoins, as well as just the overall narratives that are kind of driving prices. With the head of research at Blockworks, Ryan Connor. We're going to bring them on in just a second, but, Brendan, how are you doing?
- [01:59]
Ryan Connor
I'm stoked for this too. The crypto market strong and we get to see a little bit into the background of what's happening behind the scenes here. So how can you not be, at least, I was going to say a little bit excited? How can you not be extremely excited? So, ladies and gentlemen, buckle up.
- [02:13]
Brendan
Yeah, no, this is going to be great because one of the questions we get asked the most is like, you know, crypto prices move day to day, but like what really drives those prices? And we could talk about, you know, speculation, but I really want to hone in on the fundamentals of, you know, of defi. Of crypto. So what better guest to have us on the show with us is Ryan Connor, like I said, the head of research at Blockworks. Ryan, how are you doing, my man?
- [02:39]
Ryan Connor
I'm great, guys. It's a pleasure to be on. Thanks for having me.
- [02:42]
Brendan
Yeah, you bet. So before we dive into to all the incredible research you guys are doing, tell us a little bit about your background. Like who are you and how did you kind of come into the crypto world?
- [02:52]
Ryan Connor
Yeah, totally. So have a pretty vanilla background. Got into finance immediately after university, was there for seven years managing macro portfolios, so operating cross asset class and, you know, just doing tradfi, just pure tradfi. And then, you know, 2019 started thinking about crypto but not really taking it too seriously, dabbling. And by 21, 22 grew like obsessed with the space. You know, started out as really like a macro play, but then I remember, I remember learning about compound and thinking to myself, like, wow, these things actually do things. And. And that was like so powerful to me. And it was powerful because my peers did not know that and almost refused to know it and still kind of refuse to know it today. I think a lot of tradfi doesn't really know what's going on in crypto, so there's a lot of alpha there. So decided to make the jump to full time crypto in 23. And you know, Blockworks was really the natural fit. I, you know, learned from, had the privilege of learning from a lot of really smart people over my career. And one thing that they were was just objective. They didn't really care how they made their money. They could bet on Google today and bet against it tomorrow, and it was never considered strange. And somehow that's very strange in crypto. But if you like, if you poked around a little, you could find Blockworks and you could see that they were thinking about the space in similar ways. Like, yes, ETH could be doing great today, but it could have some problems tomorrow. And that should be. And you shouldn't be afraid to say things like that. So I was naturally attracted to Blockworks and I sit on the research team today chatting with institutional clients about crypto.
- [04:56]
Brendan
I love it. Yeah, no, honestly, you know, Blockworks is one of my favorite podcast networks, of course, outside of crypto 101. But yeah, you guys are the place that I go to to listen to some incredible guests you guys have a slew of hosts that are all incredible as well as your research team and, you know, whoever's running the social media. You guys just got great coverage, great events in person. I know Permissionless is coming up as well. So you guys should check that out. You know, we'll put that in the show notes as well, just so everybody could kind of check that out because, yeah, you guys put on, on great events. But I want to kind of just start the conversation a little high level because people come here. It's crypto 101. It could be the very first podcast they're listening to that has anything to do with crypto. So let's, let's talk about what the high level investment case is for bitcoin. Just today, like, you know, you kind of start your portfolio, you know, there's a million coins. Let's start with, you know, the investment case for bitcoin and then we could start to talk about the investment case for some of these smaller altcoins that might have more growth potential but more risk and all that kind of stuff. And of course, nothing that you hear us say or any of our guests will be construed as financial advice.
- [06:05]
Bryce Brennan
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- [07:49]
Brendan
Just educational.
- [07:50]
Ryan Connor
Totally. Yeah. So I might be the wrong person to ask. Depending on what your opinion is on like, like the investment case for Bitcoin. I think Blockworks Research has a pretty differentiated view. First one, like we don't exist to really talk about Bitcoin. It's pretty much the benchmark asset for the asset class. And if you're coming to us, you're probably looking to generate some alpha. So you want to operate outside of Bitcoin. But you know, I think that the, the median kind of, or the average crypto investment manager will tell you that there's a digital gold thesis or there's a censorship resistant store of value, non sovereign store of value thesis where you can own this asset and no government can stop you from owning it or transacting it. And I do think that there's some truth to it. But for me the reason why bitcoin is performing today is structural. It's because there is essentially only one asset that is open to tradfi and in any amount of size to get exposure to the crypto story, and that is Bitcoin. So you've opened up the floodgates to only one asset and the, you know, the capital can only go one place. And Tradify often wants benchmark exposure. You know, think of just the rise of ETFs and just like and playing with betas, Bitcoin has become that asset for a lot of traditional money managers. So for me, like, you know, why does someone want like why would Bitcoin be a part of your portfolio today? I think it's to get beta exposure to a growing asset class in the same way that you would own the queues to get exposure to technology.
- [09:37]
So when you say that bitcoin is the benchmark, you know, let's say that Bitcoin is up you know, 15% or 20% in a year. You're looking to outperform that. Right? And that's where you go to generate alpha. Like how do you generate the alpha? How do you look to outperform bitcoin?
- [09:55]
Yeah, totally. So our, our subs are looking to generate alpha. The investment managers that buy our research and they do that by going out on the risk spectrum and timing and buying things with strong fundamentals that they think will outperform, will outperform bitcoin. Our subs are mostly venture capital funds and long, mostly fund managers in crypto. And then we have a, we do have a bunch of tradfi subs as well. But yeah, they want to go out on the risk spectrum and that often necessitates finding real businesses generating sustainable economics operating in the crypto economy. Whether it's perpetual futures exchange trading or whether it's lend borrow lend, whether it's Dex activity, whether it's consumer applications or depin. Our subs are looking for things with fundamental floors, things that have longevity similar to what you would, you know, similar to what a small cap equity manager would do.
- [11:00]
Brendan
Right.
- [11:00]
Ryan Connor
It's a very similar game. So they would be going out on the risk spectrum and, and, and looking for, you know, good teams with, with real economics, delivering, you know, real products to consumers.
- [11:10]
Brendan
No, I love that. And it's something that you know, we spend a lot of time here at crypto1. Crypto 101 trying to grok as well is kind of where the real value is in the space. And there's two kind of sides of the coin. There's like the meme coin stuff where it's like openly sort of in a campy style like self acknowledging, like there's no value behind whatever we're doing. It's just a community, it's just vibes. It's going to go up big, it's going to go down big and then just kind of like owning that. And then there's the other side which is almost like what you're talking about where there's real businesses, real economic value, you know, passing back, you know, some kind of, you know, accretive sort of value to the, the holder's bottom line because of either buybacks or you could stake the tokens or blank. And I guess my question is to you, what is that sort of, you know, value creating mechanisms that you're seeing that you're kind of most bullish on?
- [12:05]
Ryan Connor
Yeah, yeah. So I think two sectors that we're most bullish on. Right. Now is one's kind of a cop out answer. But I do think it's real and I think if you're early stage, you want to be thinking this way is consumer. I think that you know, over the past few years consumer has proven that it's here and it's sticky and it generates a ton of money, it could be really successful. And if you could find the right founders playing in the right markets, there are some really big outcomes. There's the Pump Fund. ICO is imminent and that is proof that consumer crypto, it's an extraordinary opportunity. So we're really excited about experimentation there particularly with respect to net new asset issuance. So consumer applications that issue new assets that are interesting to consumers and we can dive a little deeper into that a little later. The second, the second sector that we're most interested in is, is depin. Depin is really interesting. It often inverts cost structures of very capitally intensive businesses which is really attractive both from an economics perspective. If you look at, you know, helium versus its telecommunication comps, it's stripping out 99% of the costs of running a telecommunications network. But the other interesting thing is that like I can envision a world where traditional money managers see something like that and it's very easy for them to put in their portfolio, right, Like Bitcoin. It's like what is this, is this illegal like censorship resistant money? Like some, some, some investors will have a hard time selling that to their LPs and their compliance officers. Deep and much easier sell because it looks a lot like Tradify but it does this very interesting thing of, of inverting cost structure. So two really excited about.
- [14:02]
Brendan
Nice. No, I love it. Yeah, very, very excited about Depin and consumer crypto. I mean that's a, that's a good one. And I know you said it felt like, like the low hanging fruit but most people don't come on the show and talk about that. So I want to kind of unpack a couple of these concepts there. I think you said net new asset issuance is a kind of a, a metric that you look at and then reference to the pump fun ico which I think should probably be pretty big. They I saw like a chart of how many users or I guess it was monthly active visitors and it was like at the very top, it was like the 10 top like crypto related ones and it wasn't actually even crypto related. It was like I remember DraftKings is up there, Betfair was up there, Polymarket, you know Robinhood was at the top and coinbase both like 30 to 35 million like monthly active visitors. And then Pump Fund was in there and like, you know, number, you know, 7 or 8 with like 5 or 6 million sort of monthly users. So people like hate on it and think it's going to be like, you know, this big, you know, extractive thing. But at the end of the day maybe that's where the eyeballs are, that's where the usage is. So yeah, the consumer stuff is interesting. I want to have you kind of like riff on it a little bit and then also maybe in context, I don't know if you've done any research on this, but the launchcoin Believe app thing, because that's where I see new assets being issued. It's like on Pump fun and on Launch Coin.
- [15:20]
Ryan Connor
Yep, totally. So yeah, we, we kind of theorized about this concept about a month or so ago. It's something that I personally have been thinking about for a few years now. That is just net new asset issuance. So like what is that? I, I think just think about it empirically. What has been successful in crypto, it has not been trading stocks on the blockchain. It has not been trading bonds on the blockchain. It is, it is from trading new, weird, interesting assets that are very different from what we're used to. So think of Bitco, it's 150 volume asset with like a sharp of like, I don't know, historically like seven, like it's ridiculous. It's just this like new thing and it's, it's interesting for portfolios for that reason it adds diversification benefits. Probably the second most popular net new asset product is perpetual futures. To be able to take on leverage without having to manage expiries has been extraordinarily attractive, particularly for retail traders who want to get leverage, get leverage quickly. But they don't want to have to think about the complexities of managing some laddered futures strategy. Right. And think about expiration dates. Most of the most successful products in crypto rely on issuing, you know, fundamentally new assets. And Pump is the most obvious one. Meme coins are a net new asset. These are, these are assets that are only possible because crypto exists. They allow people to issue arbitrary assets with unique characteristics that either are, you know, in a legal gray area in on tradfi rails or just like too costly to issue on tradfi Rails. So you know, pump fund issued 10 million tokens over the last 12 months. There's no enterprise in human history in tradfi that's ever done that type of volume in terms of asset issuance. Right. So new assets are extraordinarily popular. One of those new assets have been Meme Coins is this Pump fun style game where you keep on churning out these arbitrary units, you throw like funny names on them and you use technical analysis and crypto native kind of like fundamental reasoning to trade. And most of them go to zero, but people still trade them over those time frames because they, because they want to gamble. Right. And it's okay. And it's been extraordinarily successful. The app has generated over $700 million in revenue since it was first launched. And is.
- [18:01]
Brendan
Which was only like a year ago, right? Or a year and a half?
- [18:03]
Ryan Connor
Yeah, I believe it was last March. It might have been a little bit earlier, but yeah, last March is when you really start to start to see the revenue kind of on the chart. And you know, the interesting thing about Pump is that it didn't do anything new. It, it just did what we've been doing in crypto for a long time, which is issuing arbitrary assets, trading them and like giving them funny names and trying to do the next thousand X. And all it did was compress the friction with which we were able to do that. And it created this interesting Internet native like game of chicken and Keynesian beauty contest to like trade these assets. And it's been extraordinarily successful. And in the same way like that DraftKings is successful, right? Like you go to a party, you know, you might not be into sports, but you have DraftKings. So like, you get a little bit of action on the game. And like Meme Coins are the same thing. Like, oh, I have 15 minutes between two calls. Like, let me get a little action in the Meme coin market. Because like, you know, 15 minutes isn't enough to do more than trade some Meme Coins, right? So yeah, it's been really successful. And the market's very short. This idea, I think increasingly less so, probably because of the block. The work that Block Works Research has done and just like shining light on how much money is being made here and how sticky this product is. It's objectively one of the most successful in crypto history. But there is a problem with Pump. It's that it lacks a curation layer. So there's a lot of traders out there who don't want to trade completely valueless things. And I think that that's where Believe comes in. Believe is a platform for issuing arbitrary assets, but it has a curation layer that will vet the teams that are issuing these assets to be sure that there's some product either, like, loosely associated or it could be associated with the thing in the future to make sure that there's good actors. And you can trade the assets of an indie dev team, which could potentially look like some equity one day, depending on how the product evolves or how the regulatory environment evolves. So, you know, we think Pump has been extraordinary success. We're really excited to see the demand for the ipo, and we think that Believe is kind of like a natural successor to this model where fundamentally oriented investors who want to trade a similar style of Coin but need some fundamental four on the thing will participate on Believe.
- [20:32]
Brendan
Yeah, and one of the things you just mentioned that I thought was, was definitely worth, you know, kind of circling back on, you mentioned, like, investing in indie devs or, you know, it kind of just reminds me of like, the ICO bubble back in, you know, 2017. It's like you buy this token and the token has like, some semblance of, of, you know, accreting value by the, by the efforts of these developers or whatever. So is Launch Coin and the Believe app going to, like, kind of pull in ICO Mania 2.0, do you think, or. Or is it kind of just like a lot different?
- [21:07]
Ryan Connor
I think it's a lot different. I don't know if it's going to cause a mania. I think that anytime you get a new, like, game of, you know, money raising and crypto, that you will see that tendency. Perhaps that already happened. It had a f. Like a really big first month and the, it's. Its activity has kind of gone sideways since, but perhaps it will. I think that the market's different now. I think one, just like people have wised up, retail has been participating in crypto now for a longer period of time and retail is getting smarter. Frankly, you, you see this in the valuations, you see this in the reaction to the low float, high FDV coins that launch. You see this in, you know, public calls for more transparency around token launches that come from, you know, the Twitter crowd. So the retail investors in crypto are wising up. So I think that, you know, what was the ICO boom characterized by? It was characterized by insane price action and valuations and like, big numbers on the cap table. And I, I don't think that you'll get that style again, maybe directionally. But, you know, I think the more interesting thing with Believe is that there the kind of curation Layer where they are reaching out to indie dev teams and getting them to raise money. Just like it could change. And again, you have to be optimistic here, right? I don't think it's like useful to like say, oh, it's a startup, it's a hard idea, so therefore it's going to fail. Like, I think we should try to reason about the ways that it'll work. And I think one of the ways that it can work is just like it's really easy to code up an app. And like indie devs, historically they don't have huge outcomes, so venture capital doesn't pay attention to them. But as a consequence, they don't market and they don't target demographics over the age of 20 because they don't share apps and therefore the app can't go viral. So if these teams are able to raise even small amounts of capital, you add a tool to the indie dev tool chest and you potentially open up the, like, the space to target new demographics for these apps, which could lead to different outcomes. You've seen really big, you know, everyone has something on their phone, like everybody, everyone who I ski, who I know who skis or snowboards, use slopes. And like, that was like a solo dev who didn't raise any money, who went to market and made that thing go viral. And to, to give ordinary retail investors the ability to participate in that kind of upside, especially if that app is sold to like a legitimate, you know, web two incumbent. That could be really interesting. It's a net new asset that wasn't possible, possible without crypto. And, and it's exciting, you know, where.
- [24:02]
Nicole Byer
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- [24:30]
Ryan Connor
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- [24:33]
Brendan
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- [25:31]
Nicole Byer
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- [25:37]
Brendan
Um, yeah, that's a hot take.
- [25:39]
Nicole Byer
Go on and add it to your.
- [25:40]
Brendan
Cart and take it.
- [25:42]
Nicole Byer
A pink glam nightstand from Wayfair.
- [25:44]
Brendan
Scalding hot take. Take it before I do. A mid century modern cabinet from Wayfair that doubles as a wine bar. Do I have to say it? It's a hot take.
- [25:55]
Nicole Byer
Get it@wayfair.com and enjoy that free shipping too.
- [25:58]
Ryan Connor
Wayfair. Every style, every home.
- [26:01]
Yeah, I really liked what you said about the longevity of these pump fun coins because, sure, you know, every now and then we get one of these. That has some credibility. They actually do have a good team and they blow up and they last for a while. Right? They do something meaningful and they stick around. But for every one of those that happen, you got to think, you know, thousands don't. And I think people started to get a little bit frustrated with that. You know, the longer that I, that I felt like pump that fun went on, the more rug pulls we were seeing, the more the projects just kind of went to zero and they really weren't going anywhere. And so, sure, you know, it is fun to kind of come in here, gamble a little bit of money. Just like playing casino in real life, like. Right. I mean, it has a time and a place. People enjoy it. But I think that they, they want a bit more substance. They want something like this, something new. And that's really where I feel like Believe comes in here and that you're right. You know, people can have a more vetted process. They can still get in early, they can still play some of this early game volatility. But there are some caveats and there's definitely some big differences here. So I guess is it fair to say that Believe is like the crypto native Kickstarter, but with embedded token incentives and secondary market Liquidity that happens from day one.
- [27:16]
Yeah. The big thing is the price chart. I think that the price chart is a retail feature that is experience extraordinary pmf and you're seeing it everywhere, right? Like Trading View is like a breakout consumer app. If like I'm on the plane and I'm just like looking ahead of me. Like I see people like checking their stock apps all the time and I'm like, I don't know, like I just like I, I see the guy. Like, I know he's not a professional trader. He's like scrolling through Palantir like I know where he's got his money. You, you see it in ESPN with win probabilities. Now you can track the minute by minute win probability in an NBA game and that's really exciting and people will use that as a time when they should probably bet a little. Right. The win probability is super low. Let's bet on and turn around in this game. I really retweeted something the other day where it was like there's a, there's a bar in Asia. I forget which country it was in, but oh yeah, I saw this. Yeah, you. Yeah, the, the beer prices adjust by supply and demand and it's adds an element of gamification to a process by adding a price chart. Because all of a sudden you can draw lines on it, you can theorize about where it's going to go. And it's like, and it's funny when like PvP trade did this fantastically, like you spin up a telegram group, you all trade perss. And if you get liquidated and lose a bunch of money, it like shows where you sold and it's very shareable. And then you can like make fun of your friends forever because they made it fantastic. So, so it's the price chart. I think it's the liquidity in the price chart that makes believe fundamentally different than a Kickstarter. And you know, Kickstarter without a price chart, it's like, what am I doing? Like think, think of the, think of the.
- [29:01]
Brendan
I got this shirt.
- [29:02]
Ryan Connor
You know, right. Payback period on DraftKings. It is sub one day, right. Probably a few hours. And, and the payback period.
- [29:11]
Brendan
Instant gratification.
- [29:12]
Ryan Connor
Instant correct. It's. It's the instant gratification that retail needs to be. Be engaged. Especially today. We know how these apps work. We know what retail wants and they want quick feedback. So you know, also like Robinhood, you know, ultra short options. Right. Like those within the trading day. That's what retail wants. So you know, Retail likes a lot of volatility, and the price chart gives them that. So I think that that's why Pump is successful, because, you know, whether or not you're making money very quickly, like, do I want to buy Apple stock and, like, maybe make 15% this year? Sounds terrible, right? Like, I want to either lose it all or make. Make a few bucks in a very short time frame. And that's what Pump allows for, and that's what believe allows for, which. Which is. It's what we want.
- [30:01]
Brendan
Yeah, No, I love that. That idea of, like, just the price chart, this shared social icon or whatever that everybody, like, kind of worships in a sense. Just, you know, the price chart just as a. As a construct is. Is very interesting because it's kind of the. The social consensus of, like, what anything is worth. Right? And, you know, it's just. Yeah, it's pretty trippy. We could trip out on that for a while.
- [30:27]
Ryan Connor
I mean, just like, think about. Think about your friend group and think about how many of them knew what a price chart was before COVID and how many of them knew what a price chart after was. Like, everyone in my friend group now knows ta. Every one of them. And like, like, like, like they know it better than the. Than some, like, fundamental investors themselves, right? And because it's, like, very easy to understand, it's something we can all get behind, it makes it a fun game. And, you know, you have a huge installed base and especially in the United States, that a lot of their apps have charts on them. They all know how they play the game. So, you know, adding, adding, like, I think I tweeted the other day, like, if you're building a retail consumer app, like, add a chart asap. I don't care what you have to charge, just add the chart.
- [31:13]
Brendan
Ryan, while we have you, I want to make sure that we cover some of the fundamentally strong defi concepts that are out there. Because I know, you know, you've done quite a bit of research as well on real economic value and revenues and all that kind of stuff. And so could you kind of give us just the high level, I guess, if we call it like, defi. I mean, I don't know if this is crude, but, like, 1.0, like the maker, the ave, the uniswap, like, this kind of world of a value accrual. What's your kind of take there? Are they doing it right or wrong? And then, like, are. Is there kind of like a new era of, like, where the puck is going with D5 that we should be paying attention to.
- [31:51]
Ryan Connor
Yeah, and I would even broaden the scope. I don't, I wouldn't even say it's just defi. I think it's just crypto generally. Um, you know, crypto has a weird path dependency where it started out with Bitcoin and wanted to be gold or payments or something, but it was always trying to like, be money and therefore, like, I don't know, money doesn't have financials. Right. So you, like, you can't think about how much money money makes. So people ignored, you know, basic financials around these tokens. Things changed in 2020, 2021, where TVL started happening. And then, you know, you mentioned Maker and A and Uniswap. They were solely valued on TVL because it was the only data that the market had. But now revenues are routine, right? Like, like go to, you know, any data provider. You'll get time series of the project's revenue on a daily basis since inception. These assets, they generate real cash flow. And it's time for crypto market participants to start thinking about those real cash flows with respect to the valuation of the protocol. And you're seeing that in markets, I would argue. So, like, what are the two big sources of revenue? You know, one is, well, like at the L1, we coined a metric called rev, which is just the demand for block space. So how much a user has to pay to get into the block. And that includes base fees, priority fees, and then tips to structure mev transactions within a block. And you're seeing these L1 blockchains generate billions of dollars per year in rev. And, you know, they have the potential to be really phenomenal businesses with really strong network effects to generate really strong revenue. So we think that, you know, we think it's pretty obvious that these things are going to be valued with respect to the rev that they generate. And we think it's like super obvious that that'll be the thing that makes Tradify attracted to it. I was at a conference, it was more tradify oriented. And they showed this REV metric that Blockworks popularized on the screen. I didn't know that they were going to do this, but they showed it.
- [34:00]
Brendan
And they said, like, I invented that. That's my chart.
- [34:03]
Ryan Connor
I pulled out my phone, I got ready to, like, I. I got ready to take a photo. And then, like, as I'm pulling out my phone, I hear gasps from the crowd because the person on stage mentioned that solana was generating 3 to 4 billion a year in rev, which is like cash Flows or revenue to token holders. And people were gasping. They had no clue that these L1 and L2 blockchains were capable of earning income in a way that, you know, the stocks that they love trading do. And it was, it's extraordinarily attractive. Like, that's a lot of revenue. That's, that's high earning potential. If you look at it on a Dex volume basis. So you can think of the ability to. Or you can think of these rev in terms of the activity on top. So like rev as a percentage of total Dex volume, and over different time periods, it varies from like 5 to 20 bips. So you have a trading business and you're generating 5 to 20 bips in fees per unit of trading volume. Like that's really exciting, right? Yeah, it's a ton. So it's a superior monetization method.
- [35:13]
Brendan
It's.
- [35:13]
Ryan Connor
It's a lot of monetization and it has the potential to just have a lot more activity on chain. Right. So you have to be looking at rev. And we think that we're seeing increasingly institutional investors are. If you think about all the big names in crypto, they are focused on this metric because it's something that they can get behind.
- [35:34]
Yeah. I was going to ask actually a little bit more about what you thought about it, but you kind of answered it just the question of how important is generating a real cash flow? How important is generating revenue and will that become a basic expectation of crypto projects moving forward? Because in the past, what we've previously seen is that, yes, that's important to investors, but it's not an essential piece. We saw a lot of projects that have been able to blow up with little to no revenue. And it seems like, and you're kind of getting at this, that that will become a basic expectation moving forward in the industry. Kind of like it is over in the stock market. Right. You know, you see a lot of stocks that come out and regardless of whether it, you know, their, their revenue is sky high or mediocre, they all have some form of revenue. Right. Most of them have some form of revenue. So would you say that you see the crypto market kind of gravitating towards that same direction, 100%.
- [36:34]
And to be clear, like, I don't think that a project needs revenue on day one. Like that's, it's just going to be the same as in tradfi. Like you can't get by in crypto anymore by saying. By making up. Yeah, like just saying that you're going to no, no, my money is going to be the money. And our TAM is in the trillions because there are trillions of dollars and we're going to be the dollar. Like it's, it's. Okay, let's say that Bitcoin can do it and it does have a credible way of getting there. It's, it's a very low probability thing. Institutional investors will hear your pitch, think about the probabilities and ignore you if you just, if you, if you tell people that you're going to be money or you're going to be the global reserve, whatever, right. Like you have, you have to, you know, show me the economics. And you know, the big, all the big funds are saying this. They're all, look, it's all, it's in their investment processes. The retail side of crypto hasn't caught up yet and it'll be some time. But, you know, 24 and 25 are showing. You know, you see the low float, high fdv, no revenue projects. You see how those tokens are doing and then you see how the hyper liquids and Solanas are doing. Right. And it's an earnings story.
- [37:50]
Brendan
Yeah, it really is an earnings story. And I'm, I'm also, I'm asking, but kind of projecting it might also be a regulatory story because I think that a lot of these projects, you know, during Gary Gensler's sec, they all, if there were like any sort of hint of revenue or value being passed back. This is why Meme coins went so bonkers, because they were like, we're not a security. We're, we're not doing anything, literally anything valuable. So they're like, all right, you guys could keep going, doing your thing, but anybody who was like, in good faith trying to do valuable stuff, they were like, yeah, we're going to geofence like Americans out of this. And sure, you might be able to buy the token, but we're not going to really have like the fee switch or the buybacks and all that kind of stuff. And so it seems like the, the regulatory tone is really switched. Do you see that actually being like, kind of a factor here? And do you think that it's going to continue to galvanize, like the trend in the way that it is?
- [38:42]
Ryan Connor
No. Yeah, I think it's a great point that you make. There is a path dependency to this and people try to keep token and value separate so that they could survive. But now, you know, we've, we've legalized crypto in a sense and we're getting More and more legal every day or we're inching toward regulatory clarity. The political process is unfortunately slow. But yeah, no, investors will reward tokens that have a real value capture capability and they will ignore tokens that do not. And that's a self fulfilling cycle. Right. The, the tokens that do not reward token holders or for the risk that they're taking, those will move to the fringes of Internet capital markets and the ones that, you know, play the game. Right. Will be rewarded with higher valuations over time. Yeah.
- [39:33]
Brendan
Is there, is there like research that you guys are putting out that is like, kind of publicly accessible to, to our listeners if we want to go track, like this emerging Internet capital markets thing, but you know, we don't have billions of dollars like many of your institutional clients. Is there a way for us to kind of keep tabs on what's going on with your guys's research?
- [39:53]
Ryan Connor
Totally. Yeah. So we're@blockworks research.com. uh, we have a bunch of, we have a bunch of free articles. We, we periodically put out free stuff. But X is the base, is, is the best place. Um, a lot of our thinking is very open source. As we are writing our research and talking to teams and funds, we're constantly putting our thoughts out on X and we're all accessible there. So look for us, we're at Blockworks Res on X in the conversation there. And, and yeah, yeah, you can get a lot of our thoughts there.
- [40:27]
Brendan
Nice. And then Ryan, you know, kind of last question, but was there anything that I didn't ask that you're studying, that you're researching, that you're really excited about, that we probably should have spent some time talking about that we didn't get to yet?
- [40:39]
Ryan Connor
Yeah, I mean, there's a lot going on, right? Crypto, Geez, there's a ton going on. What do I want to prioritize? I think, I think that there's an interesting thing in crypto capital markets right now where like, again, like, why bitcoin is successful, it's because the floodgates open, but they only opened in a very specific way toward bitcoin. And I think to be successful in liquid markets, you have to think about the structural, like the market structure that funnels capital to different projects. One thing that we like a lot are incumbents. I think historically incumbents haven't worked. In crypto, there's always been a new thing, capital flows to a new place. But institutions want to put their money in things that are tried and true and that are safe and that have deep liquidity and by definition, that's the incumbent. So, yeah, we're on the lookout for incumbent projects and how they're positioned to best attract capital in this. In this new regime.
- [41:43]
Brendan
Yeah, I think Brennan and I would call them Dino coins. Sometimes we see like, you know, zcash, you know, having this big candle, like, oh my God, it's a Dino coin. It's back. But I. Yeah, I totally think that. Yeah, full disclosure, you know, I, you know, I've got a lot of exposure to like, maker and like, that's one that I think, you know, now that it's sky and they're doing like, all sorts of cool stuff, I think that's going to be a really, a really big winner just in terms of like, you know, making 100 million bucks a year and trying to plow that back into token holders is. Is pretty crazy and pretty cool. So, yeah, man, we're really excited about all, you know, kind of, you know, following along with your research. We hope we could have you back on again at some point because I know there's a lot to cover and yeah, people could, you know, follow you block works res. Do you have a. An X handle yourself you'd like to shout out for us in the show notes?
- [42:30]
Ryan Connor
Yeah, I am underscore Ryan R R Conor on X.
- [42:34]
Brendan
Beautiful. All right, Ryan, well, we really appreciate your time today. Let us know how permissionless goes. Maybe you come back on. Give us the. The.
- [42:42]
Ryan Connor
The.
- [42:43]
Brendan
The 101 on everything that we missed out on if. If listeners didn't. Didn't attend. But until next time, we'll see you soon.
- [42:50]
Ryan Connor
Thanks a bunch, guys. Appreciate it.
- [43:03]
Brendan
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