← CRYPTO 101
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- [00:00]
Podcast Host / Advertiser
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- [03:00]
Bryce
All right, ladies and gentlemen, welcome back to another episode, action packed episode of the Crypto 101 podcast. I'm your co host, Bryce, as always, joined by my good buddy across the country, Mr. Brendan. A little under the weather today. Brendan, I, I'm thankful that you joined us. How are you feeling, man?
- [03:17]
Brendan
Yeah, a little bit under the weather, but honestly, I blame the bears. It's the bears. They're pushing the cold front over here. I'm not supposed to get a cold. I'm in Florida.
- [03:26]
Podcast Host / Advertiser
Yeah.
- [03:27]
Brendan
So I don't know I'm going to cope. I'm going to say it's all due to the bears and no fault of my own.
- [03:34]
Bryce
Yeah, absolutely, absolutely. We'll just keep getting some rest, get some good vitamin C. But in the meantime, hopefully the CIO of Sharplink Gaming, Matt Sheffield, could make you feel a little warmer, a little more excited about where this market is going. So we are joined by Matt Sheffield. Matt, thank you for joining us. How are you doing?
- [03:53]
Matt Sheffield
I'm doing great, but it is absolutely frigid here in New York City. So I think I'm the one that's supposed to catch the cold.
- [04:00]
Bryce
I'm safe over here in, in California so far. Knock on wood. Although I was dealing with a very pesky raccoon last night who kept me up. So in between a one year old who's crying and the raccoon that's, that's scratching at the wall, I mean, it's just been crazy. But look, we, we don't want to get too deep into the weeds. We want to talk about all the amazing stuff that you're doing at Sharplink Gaming. Your team, Joseph Lubin. Joseph Shalom. Some incredible, you know, leaders and you're the cio, so you're managing the investments, the strategy. But before we even dive into like stuff, you're doing right now, we just want to zoom out a little bit on your background just to get you acquainted with our audience, understand who they're hearing from. You've got a great, you know, Wall street background. Can you catch us up a little bit on what you've been doing prior to Sharplink and maybe color it with how you got into crypto as well?
- [04:53]
Matt Sheffield
Absolutely. I got into crypto by accident around 2011. It overlapped with some of the other Internet communities I was a part of. And I started mining a little bit of Bitcoin on my gateway laptop at the time and I found it obviously fascinating. Got rabbit holed a bit, did not foresee Bitcoin and then eventually Ethereum becoming a risk asset, nor an asset class at the time. Others, maybe my chairman, Joe Lubin, were a little more pressing in that respect and recognized the opportunity sooner on. But what I ended up doing was going to Bridgewater Associates out of undergrad and trading fixed income there for a while. And there was actually a decent community of us that traded crypto on the side in our personal accounts. It wasn't something you talked about necessarily during the day. You still talked about global risk assets and macro as a whole. But there was always this group of us that knew that the others were trading crypto and could kind of discuss it privately one on one. Eventually, I think in 2022 it became much more, let's call it, socially acceptable for everyone to talk about it on desk. This was around the time that Lunat trade was playing out to the upside and people started breaking down the systematic mechanics behind what was going on there. And that dovetail of like systematic macro that we were so interested in. Bridgewater and defining the way the world works in like an if then statement way fit really well with the mechanics of a trade like Luna and being able to kind of figure out mechanically what was going on there. And so the discourse became a little bit more public, at least on the trading desk. And I ended up spinning out in 2022 with four of my colleagues to start a crypto hedge fund. It was designed to be perfect for a first time allocator who is used to working with these large macro funds to make their first investment into a crypto discretionary fund. It was very much designed to be a medium volatility fund. This was not moonshots. It was supposed to give you upside exposure, but also ensure that we were preserving capital through time. This was supposed to be a first foray for allocators. And we did that for a while and really Tried to educate the institutional allocator space on digital assets for the first time. That was really exciting. We did launch the fund 10 days before FTX and so that was probably subpar timing on that front. But I connected with a firm called Falconx. I was trading with them and ended up going over there in 2023 trading on their spot desk which I ultimately ended up leading in 2024. And we had a great time learning about institutional allocators from another perspective, which is those who are trying to figure out the liquidity. And at Falcon X we started off doing it was more riskless principle and then we moved into a principal model. We were trading 500 different tokens. So I moved beyond the liquids that we were considering previously and that's when we actually discovered digital asset treasuries in Q1 of 2025. And that was very interesting because we started investing in all these pipe transactions that I can talk about and that that's what got me hooked. We did 25, 30 of these investments on balance sheet. It was a great time. Ultimately ended up connecting with the folks at Sharplink trying to pitch them to trade with us and they did a better job pitching me to come join them. And that's kind of full circle. How I ended up in the seat I am was me trying to bring them on as a client and they they brought me on instead.
- [08:14]
Podcast Host / Advertiser
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- [08:47]
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- [08:52]
Matt Sheffield
This is not investment advice and trading. Crypto involves risk.
- [08:54]
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- [08:57]
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- [09:43]
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- [10:03]
Matt Sheffield
Toyota Thon is dealer inventory may vary.
- [10:06]
Bryce
Toyota Thon ends January 5th. See your participating dealer for details. Toyota, let's go places. I love that. That's an incredible story. And yeah, I remember those FTX days not so fondly, but quite vividly. And that was a crazy time. And yeah, I mean, just, maybe we could just start with some of the trading stuff. I mean, you're obviously super experienced trading at Bridgewater, which was I think maybe the largest hedge fund in the world by Aum and you know, then over at Falcon X, which is, you know, one of the largest trading desks in crypto. So, man, I mean, we've got a lot of folks that are on our, that are, that are listening to our show that are trying to trade. And what are some of your words of wisdom for folks that are, that want to be traders that want to try to trade? I mean, how do you, how do you do it?
- [10:58]
Matt Sheffield
I really resonated with the, the systematic approach. And it doesn't mean that everything, everything you do has to be fully automated. But I do like to have an if then statement of why I think something is happening and then what should happen or, and to test that understanding through time. Because if everything I do has to be maintained in my head, I always go off a gut instinct, which I do believe there is something behind gut instinct. Like you're, you're capable of processing a lot more information than you realize. But if you can codify it and put it down, then you can continuously improve that so that if every day you just come up with a slight tweak and then go and determine that that was better through time, you end up with these repeatable set of rules that makes It a lot easier to trade. So if you say, every time I see a setup like this, I think it's going to perform like that, which is an extreme in the trading world, but maybe a better one is usually when I see a setup like this, it plays out like that and you can go and say, great, let me go back, test that over a hundred instances and it works 55% of the time. You've got yourself a decent signal. And if you can do that a lot of times and figure out why I think something happens instead of just every time I see this, this does happen, you start to understand what we would call like the economic machine.
- [12:10]
Bryce
Yeah, the, the Ray Dalio economic machine. Very, very familiar. And, you know, I think that, like, he might posit that we're at that fourth turning stage where, you know, we very well may be at the end of an empire, the American empire. And with that you've got a glut of debt or indebtedness from the, the main issuer of the reserve currency. You've got all sorts of crazy dynamics. And if you kind of zoom out, where are we today in just the macro markets coming from, you know, a fixed income background, and then maybe you could color it a little bit with, you know, where does crypto kind of fit into today's market dynamics?
- [12:58]
Matt Sheffield
I would say that we're definitely an interesting turning point. I would probably leave the empire rise and fall conversation to Ray, who has spent so much more time looking into that. I mean, I think he went all the way back to dynasties thousands of years ago to understand how money worked. But if we take a look at the last few years, right, we are finally starting to see a path to the liquidity picture that we all know and love to be more likely than not pretty constructive for a risk asset. I still think that crypto fits into that longer tail risk asset bucket for most people. If you don't have the table stakes of your portfolio because times are tough, you may not have as much discretionary income to go and put into that higher risk, higher reward bucket. Through time, as there's more utility and more institutional adoption, I think this concept of crypto as an investment class probably fades away into it's just another asset class, some things being commodities, some things being securities, some things having utility, and some things being stores of value. But for now, it still is a fairly early adopter asset class fitting into that long tail bucket. And at the end of the day, that means it's going to be highly correlated to liquidity, which is A pretty good forward looking picture from here.
- [14:08]
Brendan
Yeah, you know, there's been a couple of big scares in the crypto market over the past couple of months and it's got a lot of the listeners thinking like, you know, what do we do here? Because there's a lot of really positive data and positive fundamental developments and good regulation practices. And I feels like people are a little bit torn and confused because they're seeing the fundamental developments, they're seeing DATs like yourself continue to accumulate. They're seeing institutions become more open to crypto and launch more products and talk about how it's going to be an integrated part of the future. And then they even see the Federal Reserve cutting rates, which should be a good thing for the crypto market. And then they look at the price action and they see us for the past several months kind of coming down to the downside. And then I think, you know, beyond just price action, there's been a few of these big events as well. You know, you've had that large liquidation event that happened back in October. You've had some other things that have kind of scared people off and there's a bit of just like mixed feelings and mixed emotions, there's choppiness going on. I mean, what do you make about all of this?
- [15:14]
Matt Sheffield
So I think that you really can't underplay how significant 1010 was in terms of the ripple effects thereafter. And I think we're still noticing what are probably the tail of those events playing out. This was the largest single day deleveraging loss of wealth crypto has ever seen it and the number was something like 19 billion of publicly recorded liquidations. And that doesn't even include all the OTC positions bilateral that we're on. When we saw something similar in scale, obviously for a different reason with ftx, it took two to three months before the market was really able to reposition itself de lever and then start to heal. And 2023 went on to be a fantastic year. It just didn't feel like it in hindsight because morale was pretty low. And that is often when you get the scary reps in a good way is you can't have it be a consensus trade. When we were talking over the summer when Treasuries were launching probably three a day for a month there, like everyone was saying Q3, Q4 going to be a blow off top. So much so that it became a true consensus trade. I think option skews were priced extremely strong to the top side. Everyone can't win at the same time. In crypto trading, like that's just not how it works. It has to be a bit of a non consensus view if you're going to see it play out. And the best time is after people have taken a bit of a hit and they're starting to say it's over, the top is in. And I think that's what you see on the fall of 10 10. Like it took some deleveraging, it took some people saying crypto's over for this cycle and now I think you can start to heal once we've seen all those kind of ripple effects play out on the follow.
- [16:50]
Bryce
Yeah, I mean I've seen fear and greed indexes, no matter how you parse it like bottomed out. I've seen just, you know, relative strength index and momentum. It just feels like it continues to get, you know, more and more oversold. So I think like you said, from these areas of just capitulation and depression and anger, you know, that's when you could really start to see the, the large price movements. And like you said, it's, it's an interesting spot because it's kind of colored by a backdrop of, you know, forward looking increase in liquidity and lowering of, you know, capital costs. And so I think it's you know, a really, really good setup. But it feels so hard to be bullish right here just because you know, you look at. So you know, if we kind of turn over to the things you're working on at Sharplink, I mean you guys have a huge balance sheet of crypto, you've got no interest bearing debt, it's a really interesting looking vehicle. And you're the chief Investment officer and we want to know how do you think about investments today in Sharplink and what's your goal?
- [17:59]
Matt Sheffield
Our goal at Sharplink is to building the most productive eth treasury in the market. And I think the productivity element is the most important to us. Obviously Saylor pioneered the concept of putting crypto onto a corporate balance sheet in a public company five years ago. But Bitcoin is a store of value. It's not a productive asset, at least natively. And being able to put a productive asset on a corporate balance sheet and make it both an access schema but also an actively managed productive treasury is a very different strategy. I think everyone views the concept of a Treasury as this homogenous notion, but in reality with a productive asset like Ethereum, we can go out there and first generate yield by simply helping secure the network with staking but then also build this efficient frontier of investments that maintain your original eth delta. Ultimately, if you're holding sharply, you should probably be bullish on eth. If you're not, then reconsider that thesis. But if you want to be bullish on eth, what's the best way to express it? And the way I think of it is when you have dollars in your safe, they're doing nothing, or if they're in a checking account, they're doing nothing. If there's a company that you think can do productive things with your dollars and you want to generate more dollars, then you go and invest in that company's dollar denominated stock. If the same thing existed for gold, then you could, instead of holding it in your safe, instead sell that gold and go and buy a company that's denominated its treasury operations in gold. If you think that the company is going to do things that are accretive in gold terms, then you would go and make that investment. That's how we think about Ethereum. Let's make this a productive asset. It is natively productive, but it requires a team to go and do so in a safe, institutional grade way. And so that's what we're starting to build out. And I'm happy to talk about some of the specific things we're doing a bit further. Further, yeah.
- [19:47]
Bryce
So does that entail like options and sort of deals like that or is it mainly defi? Is it a combination thereof?
- [19:59]
Matt Sheffield
So to date it's been defi. So we are 98% stake to start and that was really important to us. You're earning roughly the 2.85% staking rate. The next thing we did was we did a custom composition of an lrt, a liquid restatement token. And we said, okay, great. We've got this unique thing called permanent capital that doesn't really exist anywhere else in crypto. Berkshire Hathaway is a great example of existing in dollars. You can do incredibly potent things when your capital doesn't have a duration cap because you can go and commit it to longer term projects. And so we've got this goal of being kind of a benevolent capitalist within the Ethereum ecosystem. We went and said, okay, great. Linea Etherfi eigenlayer. We're going to go and compose a custom LRT which if anyone else in the retail community wanted to go and compose, they would earn roughly 40bps above the Ethereum staking rate. But we said, okay, great, we can commit 200 million for two years and we can go and put this all while Working with our qualified custodian anchorage into a QC de risking the trade further. And each of them can give us OTC incentives for doing so. Because we're offering something that doesn't really exist in crypto, which is lntvl. Like we can actually, instead of being like the mercenary capital that rotates every three months, the newest VC backed incentives, we can say, okay, great, we can leave this money parked and you can actually start to use it as a foundation for real growth of your TVL and protocol that you know is sticking. But we'd like to be compensated for defining a new term premium. And that to us is both accretive to the ecosystem but also accretive to our shareholders because they're able to potentially earn outsized returns relative to if they were to do it themselves or if they were to just stake eth, but also make Ethereum more productive for everyone else, which is a really good thing to do. If you own a large portion of the Ethereum out there, you want to show people what it is like to finish it up. I kind of like to use this analogy of maybe Ethereum is digital oil. It's hard to say. Like I think people are still determining we want to be our analogy. But I certainly can say if you do think it's digital oil, you should teach people about the combustion engine if you own a lot of that digital oil, because that's how you make it productive and how you make a scarce asset even scarcer through time.
- [22:12]
Brendan
Yeah. And what it sounds like for all the listeners out there, what it sounds like is you all are not only, you know, the second largest Ethereum treasury out there, the second largest ethat, you guys are also trying to support the Ethereum ecosystem. Because when a lot of people think of sharply that they, they think, okay, well, the primary goal is they go out there and they buy a bunch of ETH and then they hold it forever. But there's a lot more going on behind the scenes. And that's what I want to paint for the listeners, is that it's more than just as simple as buy and hold. You guys are a lot more active and there's a lot more going on behind the curtain. And that's one of the things that I want the listeners to see and understand.
- [22:48]
Matt Sheffield
Yeah, absolutely.
- [22:49]
Bryce
No, that's a really good point. And, and like kind of, you know, piggybacking off that, you know, if you think about, you know, what you guys are doing, it's both to add value to Ethereum but also, you know, most importantly, add value to your shareholders. And how do you kind of delineate between that and is there like a metric, I think like maybe ETH per share or like how do you kind of show to your investors like, hey, we're doing a good job, like what are the KPIs?
- [23:17]
Matt Sheffield
I guess absolutely, it's ETH per share. Ultimately that is what our investors are entrusting us to do, which is take their ETH or effectively be a replacement for the ETH Delta they could have purchased by buying Spot and generate additional ETH on ETH returns in a safe way through time. And so there might be other strategies that you could do yourself or via a public investment that has a very high risk reward, volatility wise that might be able to generate you more eth. But we're trying to do it as a steward of your Ethereum, not trying to take outsized risk and smoothly through time generate a consistent above market return in ETH for you.
- [23:57]
Bryce
Super smart.
- [23:58]
Brendan
Do you guys view maybe other, I don't know, maybe like there's a lot of dots out there. It's like you said at one point in time there was multiple being created every single day. There's a lot of them out there. I mean, how do you view all these other ones? Because one of the things that we've learned is that they're not all created equally. They don't all do the same thing, they don't all have the same same mission, they don't all work the same behind the scenes. So do you view them as competitors? Do you view them as, oh hey, this is all friendly? We're all trying to better the crypto ecosystem. Like what is that like?
- [24:29]
Matt Sheffield
Generally speaking, I think it's all fairly positive. We like to say coopetition. You know, ultimately the end of the day, we are all here to explain to people how Ethereum can be more productive. And we're all going to show it in different ways and potentially offer a menu of options for people who are considering investing. So there are some Treasuries that have explicitly made it their strategy to effectively run like a hedge fund strategy with the Ethereum. And there's nothing good or bad about that inherently, it's just different. Like that's not what we're looking to do. There's some that have decided to take more of a pure operating business approach. They've spent considerable portions of their value and said we're going to go and buy companies and we're going to try to generate outsized value by running These companies, those are just two completely different ways of approaching it. At the end of the day, if you're investing in a Treasury, hopefully you believe that they're going to generate you more of the thing you're looking to hold, which is, Ethan, the case of eth. Treasury. But we're going about in a very different way. And I am generally glad that we have more people out there because historically, Ethereum hasn't had as many folks who have dedicated to explaining the protocol, explaining the mission and getting out there. And so you can see the treasury is potentially supplementing from a brand perspective and being able to explain to different audiences the benefits of what we see with Ethereum and its roadmap.
- [25:50]
Bryce
Yeah, we're getting a lot more Ethereum evangelists, and I think you're seeing this start to make serious fricking inroads, because even just this week already we saw JP Morgan say that they're going to be issuing some instruments on the Ethereum blockchain. And we've already got folks like Fidelity and BlackRock who've issued different instruments and vehicles on the Ethereum blockchain. You've seen, gosh, I mean, bank of America's, Merrill Lynch, Morgan Stanley, they're now giving their advisors the ability and the encouraging folks who want to take those growth, those opportunistic growth portfolios, you know, as high as 4% crypto ETFs. And so it's like, it feels like it's been a long drudge, but we, we're kind of like now, you know, in the promised land, in a sense, like we've, we've arrived. Like, we're looking around, we're like, oh, wow, the institutions are officially here. And so, so how does that kind of affect your business? You know, are you dealing with, you know, large, you know, index investors? Are you dealing with retirements and pension funds that are saying, hey, you know, we want to get allocations to crypto in a smart, efficient way, and instead of buying the etf, we're going to look at Sharplink. Are those kind of some of the conversations you might be having, or what are those conversations like?
- [27:08]
Matt Sheffield
So we're having conversations with folks across the different allocator types. So, you know, last week I was in Abu Dhabi for Finance Week having incredible conversations with people over there about what the future of blockchain, what tokenization is going to look like and what different access vehicles might look like. Broadly, treasuries were something very of interest because people didn't fully understand them in some cases, or others had heard of them, but had not yet actually shaken hands and had a conversation about the nuances between them. There's a massive amount of interest from institutional allocators, but Treasuries are a fairly new concept outside of MicroStrategy. And because a lot of us look different than MicroStrategy, they're not fully up to speed necessarily on how to make sense of it, how to consider it, versus just buying a spot ETF or maybe investing in a vc, which is what a lot of people did as their first access schema. And so we kind of treat it as part of our mission to go out and have these conversations and to translate between the crypto native side and the institutional investors. And that's a lot of the folks that we brought onto our team. The reason we did so is that we both come from institutional world and the crypto world. So our, our CEO built a lot of the Treasury, a lot of the crypto products at BlackRock. He helped build IBIT and ETHA, their Ethereum ETF, their Bitcoin ETF. Our CMO just joined from Bain. Crypto, like, being that link between traditional finance and crypto is really important because a lot of it's still education. I think we see it as an industry. We're very good, actually, as a community, about taking the time to educate people who are interested and keen to hear. We all just got back from Thanksgiving. I'm sure you explained to some family member how crypto works. When we go into the holidays, I'm sure you'll explain to a few more. I think we're all pretty good at doing that and we do spend a decent amount of our time doing the same.
- [28:57]
Brendan
Yeah, I agree, man, and I don't want to shift gears too hard, but there's been a lot of discussion and talk about MSI recently because they brought forth this idea. They're proposing that they want to exclude companies with more than 50% of their balance sheet that holds crypto from major indexes. And I've seen people online talking about this, and ironically enough, on Friday afternoon, one of our team members reached out and they're like, hey, the community is wondering, like, what do these treasury companies think about this whole MSCI proposal? I said, hold your thought. We're having the CIO of sharply on on Monday and I'll get a direct answer for you. We can talk a little bit more about this, but it just goes to show a lot of people are, I think, confused and a little bit frustrated. Like, yeah, why? Where did this come from and why is this being proposed? And I guess generally speaking, like how do you view that proposal and what would it mean for companies like Sharplink?
- [29:57]
Matt Sheffield
I was a bit taken aback. I thought we were past this. Honestly, as an industry. If you exclude companies that have over 50% crypto on their balance sheet one it's going to create some very weird corner cases. They're going to be very large companies that happen to not be sitting on very much cash during the snapshots and all of a sudden you're excluding $50 billion firms from the index or you're going to have to start creating carve out. So I think implementation is going to be tough, but going to like the broader point. People want to get exposure to the technologies of the future and you do so in a market cap growth way. Like that's the whole point of indexing. If you wanted to pick a specific sector or exclude it from particular sector, there is an ETF for almost every permutation or mutual fund of investment that you could possibly think of that you can go and compose. But if you're following a broad based investor index, you want it to actually comprise everything that it describes to be without making whether it's politicized or just discretionary decisions of what to include and not, because it ends up creating a world of haves and have nots, which the entire goal of crypto is to democratize. And in this world you're going to end up with people who don't realize it's excluded, who now are going to miss out on what I believe to be a considerable amount of upside. And those who do proactively know about this, which is probably a very small subset of the world that goes and understands that MSCI is about to exclude an industry and then goes and proactively adds something to their bucket and to help them get that exposure back. So you're effectively just excluding a large portion of the investment world without their knowledge. And I don't, I don't love that.
- [31:37]
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- [32:06]
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- [33:06]
Brendan
Mean, I'm confused about how they justify it, right? Because for diversity's sake, like, it just makes sense, right? Why would you say, oh, you know, well, there's this one new group, we're gonna exclude it. That kind of defeats the whole purpose of diversity and indexes in the first place. Like, if people want direct exposure, they can go get it, but it feels like it should be included. And then the other part of it is, is like, where do they draw the line, right? Because then you can start looking at like Fortune 500 companies, S&P 500 companies, like Coinbase for example, and you can say, okay, well you know, if you look, they have a ton of crypto in terms of assets under management because they act as the custodian. And then are they going to look at them at some point down the road and say, well actually, you know, they have the bulk of their assets under management all in crypto. They have a ton in crypto, so maybe we're going to exclude them next. And then it's like, okay, well they're also a custodian for the government and for BlackRock, the world's largest asset manager, and all these other things. And so it kind of creates this question of, of where do they draw the line? And I understand this isn't all finalized, it's not all completely firm quite yet, but that was the other question that I've seen from our community of like, could this have ripple effects in the things that are not only dats but crypto related companies as well. And you know, you're also starting to see a big push from other publicly traded companies, you know, Robinhood, SoFi, a bunch of these other, you know, I guess asset managers and banks who are going to start bringing more crypto into their balance sheet. Are they going to potentially be affected by this.
- [34:38]
Bryce
I mean also like, you know, thinking about tokenized assets, I mean all these asset managers are tokenizing different shares. So it's like, okay, imagine if you have like, you know, a bunch of tokenized stocks and bonds. Those are blockchain based digital assets, crypto or whatever. Now is the MSCI gonna, you know, discriminate against them? It seems like it's operation choke point 3.0 in a sense.
- [35:00]
Brendan
Is it? I guess maybe we don't have the answer to this, but is it possible for the SEC or CFTC to shoot something like this down, saying it is like another operation choke point?
- [35:10]
Matt Sheffield
Maybe. I'm not sure actually. Great question. I mean, the interesting thing is I think that it fails to understand what holding crypto on your balance sheet actually means if you're trying to make it productive. I understand if it's a buy and hold strategy, literally buy a billion dollars of bitcoin, put it there and plan to do nothing. Okay, maybe I understand that point. Although once again, I think the line being drawn is a bit arbitrary. But in our example, we're staking 98% of our 860,000 or so eth and that is doing a very vital service which is securing the network and we're earning revenues via staking from that. And that goes to our top line because it is revenue. This is a action we are getting compensated for as a firm and generating revenue on. You need Ethereum to be able to do that. So you're effectively saying the thing that you need on your balance sheet to be able to power the business that you're in part running is no longer allowed to be held on the balance sheet if you want to be included in the index. It becomes a bit confusing, like why is fiat any better to hold on your balance sheet in that sense? Like, I know it's a bit of an abstract argument, but conceptually you should be allowed to hold whatever you need on your balance sheet to do your business properly.
- [36:22]
Bryce
Yeah, it's wild. I think, you know, it's a lot of the education stuff that still needs to happen. You know, some of these, you know, regulators or index investors that are really from the old guard of finance, they're, they're thinking, well what is mining? What is staking? You know, why is that important? You know, who cares if we have tokenized stocks and bonds? They just, I don't know, maybe they're stuck in their ways and it'll just take a little bit more time, a little bit more persistence. I'm curious. Yeah, like, you know, we, we've now got two of the largest like super PACs that are fair Shake and Fellowship and they're doing, you know, they're $100 million each in terms of, you know, political action funds and they're going to be doing a lot of educating on all this stuff too. So I think, you know, time is on our side. We've got all the time in the world with crypto and you know, we're, you know, it's a, it's an emerging asset class still. And so I'm still super optimistic on, on where the, the dats as a concept go, where you know, all these, you know, defy activities and stuff go. But I want to shift gears just a touch outside of, you know, what, what you're working on at, at Sharplink, you know, is there anything in the Ethereum ecosystem that kind of is just percolating your interest, whether that's prediction markets or some interesting stuff going on in the stablecoin world, like what kind of gets you excited, maybe even you know, circling back to like, you know, what might be part of the future of Sharplink, but you know, what kind of percolates your interest.
- [37:52]
Matt Sheffield
So it's definitely, I would say tokenized RWAs and equities first. That is a space that we barely scratch the surface on. I mean at the end of the day, stablecoins are the first manifestation, it's the easiest to make sense of. It's the first thing banks want to adopt because they can keep most of the interest income like that has pmf. Without a doubt, we've locked that in. But tokenized equities I think will be this zero to 60 moment that happens very suddenly right now. We were the first company to tokenize a NASDAQ company on Ethereum. Right? We did that via our partnership with Superstate. But there's no liquidity in the ecosystem for tokenized equity. So there's not that much of a marginal benefit to holding it. When you eventually bootstrap the liquidity to be this robust ecosystem that adds a lot of extra utility to holding a tokenized equity versus holding the traditional, then you can do all the things that the crypto natives are already very familiar with, like hey, I want my staking yield. Here's the lst. I'm going to go borrow against the LST to go and farm a new protocol like you can do multi legged trades that maximize the productivity of your asset. This happens in traditional finance but not for retail generally. And in retail case if you lend Your stock out, most of them are taking 50 to 90% of the retail brokerages of that income. You're effectively not able to achieve proper capital efficiency on chain. You would actually be able to do so, but it's a bit of a bootstrapping problem. You need to have the liquidity. Liquidity begets liquidity, such that I think once we go from that zero to 60, it's going to be all bets off. Like the best way to hold your equity will be in tokenized form because you'll be leaving a lot of juice on the table by not having it there. So that's very exciting to me.
- [39:39]
Bryce
Yeah, I saw the dtcc, the department or what is it, the depot, the depository trust clearing company. I think they just put out some big announcement like on Friday or over the weekend about tokenized assets and how this is something that they want to really shepherd in. So I thought that was a. Another good key milestone that we hit.
- [40:01]
Brendan
And I just saw, I think it was bank of America talking about it this morning, saying that they see banks. I'm reading it off to the side. They see banks will move or they see that banks will be moving on chain over the next several years. Obviously, Bryce, you said the JP Morgan news about their money market fund on Ethereum. It that it does feel like that's the next direction. Like.
- [40:23]
Bryce
Yeah, Paul Atkins, the chairman of the sec, just the other, other week he said, you know, this is happening faster. He said a couple years for, for bringing assets on chain. I mean, this stuff's moving fast and prices are down, but the fundamentals keep growing.
- [40:37]
Matt Sheffield
Yeah, absolutely. I mean, Larry, think BlackRock on the most recent earnings call, we're going to tokenize all of our products. All right, well, there's $6 trillion of iShares right there. That's not insignificant. That would just 12x what is currently tokenized. That's pretty incredible. It's going to happen and it's going to happen in a stepwise way because the people that have the majority of the assets are several or multiple large institutions. And so you're just going to see these massive stepwise moves higher every time one of them comes on board. And it'll be the first one that really opens the dam. And then after that everyone's just going to be racing to catch up.
- [41:13]
Bryce
Matt, I actually got a question on that. That's a great point. Like, you know, having just, you know, again, imagine just 12x in the amount of, you know, TVL if you will. That's on, on Ethereum. Or whatever. How does that translate back to the price of Ethereum? And I don't want to get into price targets or anything like that, but if we think from like, you know, a value standpoint, like if you think about a company, hey, there's, you know, ebitda, there's cash flows, you got a multiple, so on and so forth. But people look at Ethereum and they're like, how the heck do we even value this? Is it the right way to value it based on, you know, how many assets come on chain or is it the right way to value it based on something else?
- [41:50]
Matt Sheffield
For where we are right now, I do think that the high quality asset secured model is very effective because ultimately the value of a network is only as strong as how much it's securing. And they can only move, they have to move in a bit of a correlated fashion through time. Otherwise you could get into some weird dynamics around the network not being secure relative to underlying. And we have historically seen that relationship, we prefer to look at it as high quality assets secured. So we've, we've seen that 2 to 1 relationship of for every $2 of high quality DeFi, there's roughly $1 of Ethereum market cap. I don't think that's going to maintain in a linear sense. Like I'm not saying that the day that they tokenize the iShares complex, we're going to see Ethereum's market cap go up by 6x. But I do think it'll be J shaped and it will be pretty significant because the amount of utility is ultimately a function of how many market participants are there and how much you can do without having to leave it. We like to say that Ethereum has the license to win. It's not that it is 100% fully entrenched will win, but it is pretty close to reaching a point of no return where it would be very difficult for any other person to take it out of its incumbency for the tokenized asset space. And I do think that once we get to that next step, then there's no return. I do think Ethereum will be firmly cemented as the security layer for all on chain going forward, at least for high quality defi and institutions that need to rely on that security element.
- [43:21]
Brendan
Well, leaning into that, I mean, why do you think that you're kind of answering this, but why do you think that people should tokenize on Ethereum as opposed to private blockchains?
- [43:32]
Matt Sheffield
Because it's about the composability and the marginal utility. So if you have a large network that you can basically make your assets available on, there's going to be more people who can do things with your asset that are higher utility than you yourself. As a result, they're going to be willing to compensate you more for it. So the rate that you could get for lending someone your tokenized equity, for example, will effectively go to whoever has the next marginal highest use case for it. The larger the network, the more that value is and people are generally going to move to where the value is being created. It's not a perfect model. I think it takes time, it's not instantaneous. But if someone's willing to borrow your stock at 5% and someone else is willing to do it at 3%, you're going to find a way to do it at the 5%. As long as risk adjusted, that 5% is still superior. And I think through time that has to go to the largest network.
- [44:20]
Brendan
I think that makes sense. And that was one of the things that I was fearful of a couple of years ago is like, hey, when all these institutions come in, are they just going to go and build everything on their own chains? Are they even going to want to use Ethereum or something? And it looks like the resounding answer is yes. I mean, Ethereum is being looked at by all these institutions. But along those same lines, I mean, maybe this is a fiery question forewarning. Our community here likes all crypto. You know, they like Bitcoin. Obviously we're huge fans of eth, but there's a lot of Solana fans that listen in here.
- [44:55]
Bryce
So.
- [44:58]
Brendan
Why tokenize and why just do all this with Ethereum and maybe not something like Solana?
- [45:05]
Matt Sheffield
Because I think that Ethereum did the hardest part first, which is focus on cryptography and security. And now they're working on transaction throughput. But they have enabled the layer 2 ecosystem to let others do that portion of it in the interim, while explicitly saying that the roadmap is prioritizing throughput through time, but they're going to do it in a cryptographically secure way as opposed to a centralized way. And I don't think that that makes Solana bad. It's simply different. I think that the use case for Solana is still there in this high throughput, very low cost way. It's just that it's not the same as securing a network. You ultimately want to go to someone with a million validators and the cryptography of 10 years with no downtime for the security layer of things that doesn't mean that that's the best application for sending micropayments in the moment. Like that might be an L2 or Solana that has superiority there. Or if you need finality in seconds. Right now you're not getting that on Mainnet. You can get that on the Layer two though. And so I think that Ethereum was very clever in kind of an Uber esque way where they said, okay, great, we're going to just ensure that everyone has this on their phone. This becomes the standard. I say Uber when I mean rideshare. Even if I'm taking a Lyft, I say I'm ordering an Uber ubiquitous concept. I think that that's what they've effectively done. They're trying to maximize the network effect and then eventually they can work on the economics later. So listen, I've used Solana for a lot of things, a lot of it being meme coin trading. Like it's definitely a seamless experience in many ways. I just don't think that that's where people are going to tokenize trillions of dollars of assets because the value prop isn't there for that use case that I view to be the most important.
- [46:46]
Bryce
Very interesting. Look, I mean we could go on for, for a long time and I really hope we do get the pleasure of hosting you back again as your business develops and kind of in, in closing, I've just got a question and it's kind of a two pronged question, but like, you know, what excites you about the future of Ethereum in terms of like, are there any upgrades, are there any adjustments to the economic security model? Is there anything kind of on the horizon with upgrades that you might be looking forward to and then secondary to that would maybe be, you know, what's, what's on the roadmap for Sharplink? And I kind of just was thinking, I was like, you know, it's still called Sharplink gaming, but I'm not sure if there's any gaming aspect. So is there a name change in the, in the works or you know, what's on the roadmap?
- [47:36]
Matt Sheffield
I definitely think the throughput related upgrades are exciting to me. So like I'm looking closely at things like Lean and just trying to I think be close to the developers and following the part of the ecosystem that is trying to prioritize the user experience for retail side of things.
- [47:52]
Bryce
Nice.
- [47:53]
Matt Sheffield
That's exciting stuff. And there are people who have done great things there. They're starting to put MVPs out. You can watch on some websites as some of the ZK provers are able to generate sub 10 second finality, conceptually speaking, but that's interesting stuff. I also think that on the other side of things people are building interesting layer twos. Like I don't think it has to be that if you're an ETH maxi, you need everything immediately to be on mainnet. I would rather them continue to build super high quality upgrades, do so in a timely way, allow people that are able to solve particular use cases to do so on the L2s and be supportive of the L2s so that the L2 ecosystem can thrive and kind of coexist in this great like app store app world where you know that you don't have to be the best at everything, but the things you are going to be the best at, you ensure you do really well. So I'm a very big supporter of sunl2s going out there and doing that thing which is special purpose and extremely accretive to the ecosystem. On the Sharp Link side, I can't speak to any naming specifically, but what I can say is that for Sharplink we're looking forward to, I think, redefining what people understand a treasure to be. And part of that is taking our stockholders along with us through time. So when we do some of these deals, we sometimes get accused of ad nauseam describing them on social media and people are like, this is getting redundant. We've heard you say the same thing five, six, seven times, but for a lot of people, they may be hearing about the concept of a liquid restaking token for the first time and they don't want opacity in their holdings. And so what really excites me for us is that education component and bringing the market along with us to teach them more. They may not put all of their investment in ETH in sharply. They may decide we're going to put some in Sharplink or none at all and we're just going to go and do these cool things that you taught us about on chain ourselves. And that's also a win. And so I think that's an exciting component for us. The Sharp Link brand, hopefully through time, is associated with being that link between traditional finance and the on chain economy and doing so in an intelligent way, in an institutional grade way. So well, I can't comment on specific rebrandings. It. I do think that the name already in a sense embodies what our goal is.
- [50:07]
Bryce
I love it. Connecting people sharply. No man Matt. Mr. Matt Sheffield, CIO of Sharplink this was really quite an enlightening conversation. We greatly appreciate it for the show notes where could people follow along with you and you know some of the stuff that you guys are putting out in terms of just like crypto related content.
- [50:31]
Matt Sheffield
So you can follow me at SheffieldReport on X. SharpLink's account is also just that, SharpLink. And then we also have on our website, SharpLink.com, our live ETH treasury dashboard where you can follow along with all the transparency that we provide on a weekly basis of what we're holding, how we're holding it and how it's performed through time. Since we think that transparency is key.
- [50:52]
Bryce
I love it. The Sheffield Report Give him a follow. It's incredible. Incredible to be able to hear directly from you. Thank you for joining everybody listening at home or on your way to work. Or maybe you're already at work and you're trying to escape the doldrums by investing in crypto and learn more. We appreciate all you guys joining us today and we'll catch you guys back same time, same place next week for some more incredible guests.
- [51:17]
Matt Sheffield
Thanks Matt. Appreciate you having.
- [51:31]
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Bryce
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