Steve Ehrlich (2:10)

Brian, why don't you just take a second to introduce yourself and your firm since it's your first time on the show.

Brian Rudick (2:15)

Yes, thank you very much. I'm Brian Rudick. I'm the Chief Strategy Officer of upexi. We are one of the largest Solana treasury companies and we were actually a first mover in the space. So we did the first large scale equity pipe to, to create an altcoin treasury company. We also did the first in kind convertible note to raise additional funds. We have about 400 million in Solana. Prior to this, I led the research effort for gsr, one of the largest digital asset trading firms for four and a half years. Prior to that, I spent a decade on Wall street loosely managing a book of bank stocks, always in a long, short construct for firms like Citadel, Baliasney. Millennium mentioned that because DATs are just banks. And that's what got me really interested in this and allowed me to really internalize where all the value creation for shareholders comes from.

Ram Alawalia (3:05)

For DATs, that's what just banks.

Brian Rudick (3:08)

Wow.

Ram Alawalia (3:08)

That's quite the provocative statement there.

Brian Rudick (3:10)

Yeah, we, we could certainly get into it.

Ram Alawalia (3:13)

Yeah.

Steve Ehrlich (3:14)

And before we do, Chris, I know you've been on the show before, but just in case there's some listeners, new listeners, why don't you just briefly introduce yourself and your firm as well.

Chris Perkins (3:23)

Yeah, I'm Chris Perkins, president of Coin Fund, one of the managing partners here. We're early stage investors with seed venture and liquid strategies. We've been around for 10 years. My background was also in traditional finance. I actually started as a U.S. marine, was in Iraq, came back and had a career both at Lehman. So blown up in Iraq, blown up at Lehman and then I went to Citigroup prior to joining Coin Fund four years ago.

Steve Ehrlich (3:49)

All right, great. So it's been a couple of weeks since we hosted the show due to summer holidays and some other things. So Ram, why don't you start just give us a quick recap of, of the month and, and sort of your take on what's happening so far. Historically, I think most people listening here know that September does not tend to treat bitcoin and crypto very well. Is there reason for hope this time around?

Ram Alawalia (4:13)

Right, well, that's where we left off, I believe. On the last show at where I was on I was like discussing just the negative seasonality around bitcoin and shared that I thought bitcoin would struggle to get above 125k due to that and some other factors. You know, you had a lot of enthusiasm around the passage of the genius act, Stablecoin Bill. And you know, after that it's hard for Marcus to see forward through that. You're also seeing just a softness in what I call animal spirits. So high momentum names that retail traders love have just been weaker, which generally also Happens this time of year. So I think that's a part of this happened the last year and the year before that too. The Clarity act is something to stay focused on. Maybe we'll touch on that soon. I doubt it gets passed in the first attempt. Just like the current stablecoin bill as well. There are some concerns around bitcoin and the, and the four year cycle, which for those that follow the cycle says that bitcoin tops in November. So. And some people are saying the cycle's over. I don't think that's the case for we are now. So when people are excited. I was pessimistic. People are getting pessimistic, getting a little more cheery. So we're kind of in no man's land though. We'll come back to that in a moment though. But I believe those are the highlights. I think one thing else I'd share is that several of these DATs are just not perform well. We've had DAT exhaustion, There's too many DATs. It's a bubble in DATs. We've been talking about this bubble and DATs for a while. When Wall street sells too much product, be cautious. My view is that you have one leading DAT per asset class, Bitcoin, Ethereum, Solana. Maybe there's a Pepsi. You ever going to have a Coke, you're going to have a Pepsi and then no one cares about number three. Some of these are trading below mnav. Michael Saylor, who obviously leads Microstrategy or strategy, which they called it, now change the rules governing when they buy bitcoin. I think that helped spoil the market in a certain way. Right. The whole thesis around bitcoin is immutability and you just change the rules.

Steve Ehrlich (6:23)

And then he changed them back.

Ram Alawalia (6:25)

He changed them back. Like that doesn't help. That doesn't help. None of that helps. Can't change things. But he had to change things. So these concepts are being tested.

Steve Ehrlich (6:36)

Okay, so yeah, let's talk about DATs. Since we have, I think, I guess maybe our first DAT representative on the show. I mean, Brian Upexi was very early into the Solana treasury game. Talk about what the last couple weeks have been like for you.

Brian Rudick (6:52)

I'd say not much has really changed. So for us we're really focused on what we can control. For any dat, that's really two things. One is you want to be as visible as possible. So you want to maximize people actually knowing about you. And so if they think about, hey, I want to invest in Solana, maybe a data is the best way to do it. They think about APAC C. And so we announced this morning that we're at three different traditional finance conferences later this month. I'll be disappointed if our pace doesn't pick up over the rest of the year. And so we're really hyper focused on increasing our visibility. We have a bunch of other initiatives afoot there. And then the second component is issuing equity. Which would you issue equity above book? It is by definition accretive for shareholders. MSTR selling it two times, they've come in a little bit, but it's tantamount to selling a dollar for two or buying bitcoin half off. And this is how they created literally 26 billion worth of free Bitcoin for shareholders over the last six quarters. So we're very focused on figuring out what we can do there. We have an equity line that we're hopefully will go effective very soon and then we're always out in the market. And this is not mmpi. It's the business model of ADAPT to raise capital in this accretive fashion. So we're looking at all options in order to do so.

Steve Ehrlich (8:10)

Okay, and Chris, you go ahead.

Chris Perkins (8:14)

I think rom's too negative. If you step back. This is the summer of DATs. 2021 was DeFi summer. This is where DATS came on the scene and established themselves as a core innovation. And a lot of that unlock was frankly regulatory. Saylor proved it and now we've got this regulatory unlock. Now I'll agree with ram, there's a ton of froth. However, I believe probably like Brian here, that DATs are going to emerge as a fundamental part of market structure within crypto ecosystems. Bridge, public facing, then you've got the foundation labs, maybe they consolidate. But this has been a major innovation and the reason why not all of them have been successful is because it's really, really hard to pull it off. And we've been very, very active in the space. To make ADAT work you need about five elements. Market timing has to be right. The market has to be ready for you. The market was closed for a long time. Really important. Timing is hugely important. You need good fundamentals on your token. And I think as we depart bitcoin we get into yielding assets and, and that gets really exciting when you stake and you restake and you can generate fundamental value that way. To generate a natural MNAV foundation alignment really, really helps. You need to have a really good advisors, bankers who know what they're doing top notch. You need a strong management team. You need good asset managers who know how to manage those underlying assets and drive those that yield. And then perhaps most of all, you need a Kol. You need someone who can tell the story and who can translate. These dads are beautiful convergence tech innovations. They bring it all together. I think they're here to stay. Yes, there's going to be a shakeout, but the winners are going to be really, really a special thing to watch and we're very excited. And by the way, I don't think we're at the beginning of this. I think we're, I don't think we're at the end of this. I think we're at the very beginning. I think there's some amazing projects that are still coming out and yeah, we remain really excited.

Steve Ehrlich (10:21)

Brian, One of the interesting trends that came out when dats first came to prominence, I guess post Sailor, was the fact that the first companies to follow were focused on Solana, not eth. And it was you guys, it was Soul Strategies and it was Defi Development Corp. I believe I always get that last name. I always confused that last name. But now, I mean, ETH recently hit an all time high. Eth, treasury companies are raising billions and Solana is all of a sudden, in certain ways maybe the little brother to Ethereum again. What is it like for you right now? Because I'm sure when you're out fundraising, investors are asking about the differences between Solana and Ethereum. They both can generate passive yield. What are some of the hard questions that you're getting in some of these meetings and what are your responses to them?

Brian Rudick (11:14)

Yeah, that is a great question. I would say that candidly, the knowledge and tradfi is quite low. So the most common question I get is like, what's the difference between Bitcoin and Solana? Not even like, what's the difference between Ethereum and Solana?

Steve Ehrlich (11:30)

I thought we were past that.

Brian Rudick (11:32)

Yeah, I mean there are some folks that have some sort of a background in, in crypto or digital assets and we'll start to ask hard questions, but nobody's asking me about like when is Solana going to implement multiple concurrent leaders, like that type of thing. I still think that there are some folks that don't truly buy into the value creation from a dat. Like for me it's really about having access to these value accrual mechanisms that by the way, all compound. So the big one is issuing equity above book value, which you can do either via like an ATM or an equity line or even if you go to any sort of like convertible note issuance, most like options pricing models will have like a really high delta there and will suggest like there's a 90% plus of these things to convert into equity because the duration of these notes are so long and the volatility of the underlying is so high. So that is another way for DATs to actually sell equity at an even higher M nav than where they're currently priced. And so that to me is the big one. This is where MicroStrategy has created so much value for shareholders. It's more than tripled the return of Bitcoin and it has barely any leverage. But the second thing is when you get into pre mine tokens or you get into tokens that are built on a proof of stake consensus mechanism, you can do things like staking where UPACC is staking to earn an 8% plus yield, turning our treasury into this productive asset. And we're also buying lock tokens at this 15% discount. If you put that discount into any sort of yield equivalent, we're roughly doubling the staking yield on anything that we buy and locked form. And we have this buy and HODL strategy. We don't intend to sell any soul, so there's no reason for us not to do that. And so these additional value accrual mechanisms are things you can't get by buying a token natively or in other instruments like an etf. And so I think a lot of this is investor education and just walking them through how powerful this model can actually be when you're underpinned by the right token.

Ram Alawalia (13:30)

Can you elaborate on the statement you had at the outset around banks or dads? Like banks are FDIC insured, they can rehypothecate, they have a lender of last resort. What were you getting at there?

Brian Rudick (13:40)

Yeah, this is a massive simplification. But banks earn spread income, they raise funds from depositors, they lend to borrowers and they make the difference between the yield on loans and their cost of deposits. And then also a massive simplification. But investors will basically present value all of that future spread income and add it to book value. Banks generally trade above book value. They don't really issue equity because it's hard to come by loan growth. But there are historically some banks like M and T that had just issued equity again and again because they traded at this premium multiple and they used it for this roll up strategy and they just basically it's more of a.

Ram Alawalia (14:20)

BDC I would say you have, it's a BDC like a private Credit fund that's publicly traded business company. They make loans, they earn spread, they've got some back leverage. They're trying to capture that spread.

Brian Rudick (14:33)

Yeah, we're kind of the same way. So we raise funds from the capital markets, we invest into Solana, we earn the difference between the return on Sol and our cost of capital. When the market thinks that the return on soul will outpace our cost of capital, that spread will be positive not just this year, but in future years. They will present value that add it to the nav and that will work and out to be something that's above one that we can then monetize for shareholders.

Ram Alawalia (15:00)

Got it.

Chris Perkins (15:01)

It's hard to underscore the importance of this education. Right now we have these dads running around all the traditional long only investors and explaining, you know what Solana means, how it's a yielding asset like that education is just incredible. So good for the asset class. And I mean I think that's probably the biggest benefit to the ecosystem of what we're seeing here.

Brian Rudick (15:24)

Yeah.

Ram Alawalia (15:24)

Is it education or marketing promotion?

Chris Perkins (15:26)

It's both.

Brian Rudick (15:28)

When we first started there were a lot of questions as to whether this was just a money grab and whether dapps were this existential threat to the token ecosystems are underpinned by. Because you could be a forced seller at exactly the wrong time then I think folks have seen like Ethereum success and Tom Lee is on CNBC every other day and in my opinion like this is what lifted eth from 2700 to 4700 is the reason. So I think like now there's this big focus by a lot of other token ecosystems to really embrace and push dats forward just as another key visibility mechanism to get them out there, especially to traditional investors.

Ram Alawalia (16:08)

There's so many DATs, you know, like I, I wonder if you were to pull someone on Twitter and say can you name eight tickers for DATs? I don't think anyone could. I know Chris could, I know Brian could. It's like I think about the, the dad who has like eight kids. I struggle with three kids. My kids names I call one by the other name. People know MSTR for sure. It took years to build that brand. And it literally comes down to these things, like how many elements then can the human mind recall and you're competing for those slots in the context of other tickers. It is the attention game. It's not just the product game, which is Brian and Chris, where you were focused on and the value creation machine and the financing machine and the staking yield, packaging machine, etc. It's like there are not enough slots in the human mind for all these players to succeed and thrive.

Steve Ehrlich (17:08)

What do we make though? I mean the attention game, Tom Lee and Bitmind, their MNAV is I think 1.1 now and it's been dropping. What do you guys make of that?

Brian Rudick (17:18)

So I haven't been super close on other ecosystems, but my impression is that Bitcoin has kind of become saturated. I think you're seeing some like Empiri and Sequins that are trading at like 07.0.8 of NAV. I don't think that Ethereum is saturated, but I think it is a bit of a race. And so I think you're seeing some of the players in there sell equity all the way down to one times. Whereas you had someone like Microstrategy that when they were the only game in town, they would only really sell via their ATM when they were at 1.6, 1.7 or higher. So I think all that selling out there and I see why they're doing it, they want to be the biggest because whoever's the biggest gets the most trading volumes and then you can issue the most equity via the ATM because that's what you're kind of limited by. So like that in my opinion is what is happening out there in the other token ecosystems. I do think that Solana has the highest staking yield. You can buy locked tokens at this discount for built in gains for shareholders. And so I do think like there's some argument for a Solana DAT to trade at this higher M Nav versus some others. And so far that is proving to be true. But again like, I mean it's out there in the public news. There are other Solana dats coming, so we'll, we'll see if that does anything to the M Navs either way.

Steve Ehrlich (18:40)

Yeah, figure at 1.7 right now. I was just checking your website, Chris.

Ram Alawalia (18:43)

In your view what's the better move? Like is it better to own spot commodity or own the dag? If I look at Ethereum, like Ethereum's got a bit a forced bid from these DATs. So it's an accumulation bid and if you're a DAT, you're issuing shares. That's called dilution. That's cell pressure isn't the simple idea. Just buy what people are forced to buy. Keep it simple.

Chris Perkins (19:09)

Okay, so it's still super early as we get into a lot of the dads and I'll give you an example, last week we put together a letter to the SEC in FASB because LSTs were considered liquid staking, Tokens are considered intangible assets. And so we still need to have a lot of things to come together. A lot of these DATs are only getting the machine running right now. I saw that one of our portfolio companies, Ether5, benefited from ethilla, put some ETH to work there. So it's very early. But when you step back, let's look at ETH as an example because there's a little more complexity around the etf. You can invest in the etf, you can invest in Spot. For a lot of investors, they can't touch spots. That's off the table. That brings them to the etf. But the etf, they can't generate yield because of the, there's a lot of constraints around daily liquidity. With ETFs, you know, you have a 13 day unbonding window. You can't just stake. Eventually they'll figure it out and you'll have a total return product. But it's an inferior product. No offense to the ETF issuers, but it is because you don't get that yield and that's core to the investment. If you're a long term investor, you're an any term investor, right? You want that yield. Okay, so that brings you to the dat. The DAT has that wrapper like the ETF that you can buy, you know, on your brokerage account, very easily and very accessible. It gives you greater access to the yield of the underlying product. So in a sense it's a better product because you can't, you can't touch Spot because you're a traditional player. You're not allowed to, it's not part of your investment authorizations. It's a little bit better than the etf. So that brings you to the DAT here. Now at the same time, maybe someday a total return, pure total return ETH product will emerge. And so maybe you have a little bit, a little lack of transparency. I think the dats are trying to say, wait a second, we're going to, we're going to differentiate through transparency. This is what we're doing with the assets. And, and that's the game is to give investors not just access to the asset, but to everything you can do with that asset, leveraging, defi and everything else. That, that's the investment case in a wrapper that they understand and in a wrapper that they're allowed to deploy. Oh, by the way, you open up the entirety of US Equity Capital markets. You can, you can, eventually it'll be, I mean it's no different than any, any other equity. You take it to your prime brokerage account, you can get leverage and you can use all, all the other things that you, you use equities for collateral, etc going forward. So that's the case for these, for this instrument. You're right Rom. There's like plenty of froth. I talked about the elements. They all have to come together. It's super hard. It sounds like Brian's got it figured out, but that's the case.

Brian Rudick (21:49)

The one thing that I would just plus one on is I really do think that people haven't fully internalized just how powerful this accretion is and like compounding nav over time. And so here's the math and this is what helped me. And these multiples have come down, but this is the numbers that are fresh in my head. So say I want to start a dad to buy Solana. And let's say all the comps are trading at five times. So I raise a hundred dollars from Steve. I give Steve 100 shares. He now owns a hundred chairs worth a dollar each that my dad is holding a hundred dollars. I now remix that USD into Solana. And because now I hold a hundred dollars worth of soul, I achieved this peer like multiple. And now it is a 500 and peers are all trading at a 5 times M NAV. Now my company has a 500 market cap and Steve owns 100%. 100 shares worth $5 each. Here's where the accretion comes in. I now want to go raise another hundred dollars. But because I'm trading at $5 a share, I actually only need to issue 20 shares. So I go out to the market, I sell 20 shares at five bucks each, I get another US$100, I remix that into Solana, it takes on another $500 market cap and now it's $1,000 company. Steve has actually been diluted. So he owns 100 out of 120 shares or roughly 85%. But now he owns 85% of $1,000 company and he just saw his investment move from $500 to $850 via one accretive issuance. So my one point is just this accretion math is so powerful and you can trade at this premium that you could just use it to continually compound nab. And as long as your multiple holds, your share price should move up commensurately. The second thing is is I personally feel once we get past this wave of supply. That MSTR should be the floor in terms of M Nav. They're trading at like 1.6 right now. I say that because there should be some sort of embedded growth premium for a smaller company. Like if we issue $100 million of equity at two times, it's going to be very nicely accretive for us. Whereas If MSTR issues 100 million of equity at any multiple, it's not going to move the needle because they're so big. So there should be this embedded growth premium for us. Similarly, when you are underpinned by a much smaller token, all else equal, there's more potential upside. So Seoul is literally 4% the market cap of Bitcoin. Bitcoin is unlikely to 5x from here, you know, over any reasonable time period, it's the fifth largest asset in the world. Whereas Solana has a lot more potential upside, all else equal. So there should be more embedded growth premium there and then access to these additional value accrual mechanisms that you don't get with MSTR via things like staking and buying lock tokens at a discount. So for all those reasons, I kind of think when things shake out at least I'm very hopeful that that other dapps will end up trading at a premium to wherever micro strategy is based on market conditions. But that's at least how I think about multiples.

Chris Perkins (24:52)

If you're able to take on meme like properties in the process of driving these fundamentals, even bigger things could happen.

Brian Rudick (24:58)

Oh yes.

Chris Perkins (24:58)

And like, let's be honest, this is a phenomena we witnessed in crypto, we witnessed in equities as well. And that's the other thing to be mindful of.

Ram Alawalia (25:07)

Well, the whole goal is for these things to become a meme. Not all of them can. This is like a Highlander game. There can only be one. That's the nature of memes. You've got Palantir, Tesla was a meme, but you can't have them all meme. That's my view. That's my. Now I'll ask a question for you. I think I have an answer as well, but I want to get your perspective. So as an investor, would you prefer a high market cap to nav or a low? Now I think you're going to say, Brian, I want a high MCAP to nav because I can go accumulate the underlying spot. That's number one. Now the irony of obviously is that you get more value with a lower MCAP to nav. So there's this reflexive property at work And I think the game only works so long as the debt has momentum. And when momentum breaks, you better get out of the way. And the funny thing is, if you trade below MCAP10AV below 1, you're an acquisition target. If your MCAP, the nav is very high and you do an acquisition, I believe that that asset price would drop. So I think this is more complicated. There is a very complicated kind of game theory that, that plays out.

Brian Rudick (26:20)

I have so many thoughts. So high versus low M Nav. It all depends on where I think my M Nav is going in the future. If there's one dat that trades at two times, one that trades at five times, if I think there's going to be convergence, I'd rather buy the cheaper one. If I think they'll stay where they are, I'd rather have the one trading at five times because their issuance is going to be more accretive. And then for me, it kind of all boils down to risk reward. Like if we trade at 16, 17, I look at like one times as the floor. And then you're like this, I don't want to say levered because it's not really leverage where all this comes from. But we're going to trade with some sort of beta to Salana. And so, you know, the, the risk reward is that Solana moves up very considerably in times like that. Our M Nav will likely move up as well. So Seoul Strategies was trading at 15 times m nav back in December. It was a different market, there were many fewer options. But that can show you, like, where these M Navs can go to. And then when you do trade at these higher M Navs, you can do more and more accretive issuances for the benefit of shareholders. You add in all those things and they kind of compound versus, like, what is the downside? If maybe we drop down to one times, maybe Seoul falls 50%. And so for me, it's just this very asymmetric risk reward, which is why, like, I've placed all my bets in that land, essentially.

Steve Ehrlich (27:44)

All right, this is a really good conversation, but we do need to take a quick break to hear from the sponsors who make this show possible.

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Steve Ehrlich (28:41)

To turn to some of the tokenization news that we've seen in the past. But I just want to go around the, I guess the, the panel really quickly. Where does the altcoin movement go from here? One chart that has been circulating on Twitter, I'm sure you guys have all seen it. Bitcoin's market dominance is around 58% and change or so I, I know during like at the peak of the COVID driven boom et cetera it drops down to like the low 40s even below 40. Not necessarily saying that history is going to repeat itself, but it does suggest that this rotation out of bitcoin into alts has some more room to grow. Brian, for someone like you, I mean that could be open season for perhaps Upexi investors. But Chris and Rahm too, I mean this is sort of the time when guys like you also make your money. So maybe Chris, let's go to you first. I mean what do you think? Like where do you see us in this current like altcoin cycle and like what are your goals in the next couple of months?

Chris Perkins (29:39)

Very bullish alts right here. A lot of it is predicated on the regulatory de risking that we're seeing even in the absence of clarity. You're seeing like yesterday the CFTC and SEC announced, you know, coming together to, to work to allow spot tokens to list. And so that crystallization of of alts as as largely commodities is going to be a mass, is going to be a nice unlock. And I'll give you some alpha what I'm looking for. And I think one of the biggest things to watch for as alt unlock are listed futures in the US because as these tokens start having listed futures you know immediately that they're a commodity because as you go through the process the SEC didn't hold it up. It unlocks basis trading right where people go long spot, sell the future. You do that spot goes up, it unlocks ETFs. Because what do ETFs rely on for surveillance. They rely on the futures market. So the one thing to watch for are alt futures coming into play, listed futures in the US because again, it's like the missing link for a lot of institutional buyers of DATs. Now we have some initial sole futures for, for people like Brian. But as we go down the curve, I think this is going to be something that I'm looking for. I think it's going to happen now with the regulatory certainty that we're starting to see. I mean have great conversations with regulators all the time. That's going to be huge. And so look, that aside, I think that we're seeing incremental focus on fundamentals. There's good projects, there's bad projects and there's ugly projects. We'll continue to look at fundamentals but I do think that we're starting to this education process is so important with the DATs. People are going around saying this is ETH. Okay, this is what Solana is. And as we go down investors are like wait a second, these are different, they're nuanced. I like the utility of this token because it's at the intersection of AI and crypto. That makes sense to me. So I'm very bullish and I think we have a long way to run.

Brian Rudick (31:46)

Yeah. For me I would say that thinking about it in the exact same way over the medium term, near term I agree with ram does seem like risks are mounting like national debt concerns, sticky inflation, tariff uncertainty, elevated valuations. But we've been dealing with these for a while and so I kind of think like near term altcoin prices will go the way of macro and policy risks long term I am supremely bullish. My view has always been that the biggest thing holding crypto back is a lack of clear rules and regulations. And I think that we are probably going to get that with the Clarity act sometime next year. I think that that generally like incumbent big tech and, and big finance firms haven't really wanted to come into crypto and dismediate themselves, particularly if it adds legal and regulatory risks. But now once we get regulatory clarity they're going to have to come in in a big way. It's all these big incumbent firms that this is a bit antithetical to crypto. They literally have billions of customers, they've got built in trust, they've got billions of dollars worth of capital to throw at it and they have the top developers. And so this would be something like Google Chrome adding in a crypto wallet or something like Amazon adding You know, and accepting like stablecoin payments and we actually have like the opportunity to potentially onboard the masses and so I think like we could potentially be on like one of the biggest altcoin booms that we've seen over like the medium to longer term.

Chris Perkins (33:15)

It's a great point. So you have the DATs that are buying, you have trillions of dollars of stable coins coming in that are buying and then you have 401ks coming in that are structural buyers for the first time. That's pretty powerful. Appreciate the macro noise that that's always going to. You know I'm on the other side of the macro.

Ram Alawalia (33:33)

I'm actually on the bullish side of the macro by the way, just to be clear, like I think rates are coming down, I think that's bullish. I think fiscal deficits are are bullish. Income tax cuts for several hundred fifty K are coming. That's bullish. There's some indigestion there, turn around tariffs. But markets looking through all of that, like retailers which import from China, they're up substantially. So I'm actually bullish on the macro stuff. There's like a couple of weeks to sort out in September. So like timing matters. I agree also like on and Chris, you made this point actually the last time you were here about hey, after the stablecoin boom you get the defi boom. I think that thesis is right on the mark. I like that thesis. I like that thesis and spot. Ethereum has momentum though. Like these are digital assets, these are momentum. It's all about momentum. Momentum is the measure of the attention. And one, one last thing, I'll say there is the person with the biggest megaphone for onboarding new flows as Chris's point is. Flows, flows, flows. Okay, the person, the biggest megaphone is Tom Lee, not the guitarist. That's right, the heavy metal guy. It is Tom Lee who might be going on Joe Rogan show and what is he talking about? Ethereum. Right? Attention follows a power law distribution. Like keep it simple, what has momentum, what has attention? What benefits from regulatory clarity? What's been highly shorted and is not transitioning from non consensus into momentum. It's Ethereum. If you look at the Ethereum chart, you wouldn't guess that people feel despondent and there's that kind of malaise out there, right? You wouldn't guess that. You look at that, you're like oh no, these Ethereum people are happy, they're sitting pretty. But I like Chris's point though on especially around that defi Thesis, you look at like aave. Look at aave. It's a leading defi protocol on Ethereum. It's doing fantastic.

Chris Perkins (35:28)

Yeah, but after Defi, they're going to go to the agents, right? Because you can manually try to optimize your yield. This is the whole stablecoin thesis, right? One of the greatest gifts to crypto was that the regulators and the banks suppressed interest because now you got to find it back, you got to go to Defi, and then you're going to realize, okay, I can do it, I'm okay with it. But my agent over here, we invested in a company called Giza Arma Agents. They're awesome. Let's let them do it. They can do it better because they're awesome at optimization. So. So that narrative is coming together nicely.

Steve Ehrlich (35:59)

Rahm, I wanted to ask you a question about the macro outlook. I think I know the answer, but I'm going to ask it anyway because you tend to say things are nothing burgers. But just given the tumult at the Fed, what's going to happen with Jerome Powell? Obviously now Trump is trying to fire Lisa Cook and I guess we're going.

Chris Perkins (36:16)

To have to wait for the Supreme.

Steve Ehrlich (36:17)

Court to decide what's happening there. The iappa, no one cares.

Ram Alawalia (36:21)

Nothing burger. Sorry, no one cares.

Steve Ehrlich (36:24)

But I wanted to get you on the record, but I kind of what matters Questions asked my wife. I know what the answer is going to be already, but I still have to do it.

Ram Alawalia (36:32)

In the long term, what drives asset prices? Earnings growth, the level and change of interest rates, the level of change in inflation which drives policy. In the short term, what drives asset prices is positioning an incremental news flow so that that news around that termination is short term incremental news flow. It's negative, it gets priced in and then you move on. That's it. Every buyer of an asset bought that asset fully informed about the background news information. That's what causes the pricing in. The fundamental backdrop is strong. We just dropped up a quarter with exceptional earnings growth and we have more stimulus coming and rate cuts the economy doesn't need, which is bullish. I disagree with the policy, but I'm bullish. That's okay too. I have exposure to these small caps and rate sensitive names and things like Home Builders now and consumer discretionary stocks. Because the backdrop is bullish and the consumer is strong. This is a strong consumer. Yes, it's a bifurcated economy. Yes, there's pressure on the low end of the consumer. Always was, always is. What matters is the Top one third. They drive two thirds of spending on average. Consumer spending can see the utilization different areas. Travel and leisure, airlines. Banks are lending again. Bank lending activity is increasing. Bank deregulation is still coming. That's stimulative. We're talking more credit creation. You're seeing private credit firms compete for deals. I talked to a sophisticated bank that essentially is like a private credit fund wrapped with an FDIC insured charter. And they're starting to say no to deals because there's so much availability of credit. Now at some point that's bad, but it's not now. We're not seeing DQs flare up. Things are actually quite reasonable. And credit begets more credit. The cycle just keeps going. There's no external pressure to stop that from happening.

Steve Ehrlich (38:37)

Why don't we turn to tokenization? Because there was some big news this morning that we were talking about on Telegram Galaxy. I think it's tokenized some of. Or sorry, they did not tokenize some of the shares. They just directly issued shares onto the Solana blockchain in partnership with Superstate. I know that, Chris. That got you particularly excited because there was no sort of like middle layer. It was just native issuance. And I think the hope is that that will be the future. So why don't you kind of share some of your thoughts?

Chris Perkins (39:05)

Yeah. Disclosure. We're investors in Superstate, good friends with Rob Leshner and the team, and gosh, this is a guy who decided to start a regulated asset manager and transfer agent in the depths of the Gensler era of destruction. Fast forward to today. This is a big deal because today what we've had is we've had like this idea of tokenization of rwa. And as a banker, I hate RWA so much. I can't begin to tell you because it stood for Risk Weighted assets and it gives me ptsd. And so I'm sure we're going to screw up the acronym here, but the way it used to work in the past, and this is how stable coins largely work as well, is you take an asset, you put it in a box, you issue a token to represent that asset, and then you set it off into the ecosystem. But this is different because it's canonical. And you don't have this stock that's locked up in a box and bank of New York custody account, and then you issue a token on that represented asset. No, this is canonical. This is a canonical digital asset that we've actually taken a share. And that's the only representation of that share. This is A big deal when you put it on blockchains and they used superstate as the transfer agent. It's regulated. And when you speak to people like the FCC chair Atkins, he's like, hey, we need to make IPOs great again. We need to make capital markets great again. We need to make them more accessible. What is more accessible than a public blockchain? And this was issued on Solana. Incredible job. Solana has always tried to position itself to be the, the decentralized nasdaq. What a great step forward for that team and that ecosystem. And so now you have these assets. Now they're not perfect. This is a great first step and I would say this is an improvement of what we've seen in the past. I'm also very excited about the tokenization of private equity. But this wasn't like some SPV where you're getting some piece of the SPV and blah blah, blah. This is a true stock, a tokenized equity. Now you can't trade it yet. On amms, there's this thing called regulation nms, there's an nbbo. What this means in simple terms, national best bid offer is that equities need to get routed to the best price on an exchange. And if you have an AMM and you have the traditional system, they kind of don't talk. And so I think the SEC is going to work through, through some of those challenges on what we call reg nms. But you can transfer these, these, these stocks peer to peer for people that have gone through the right onboarding process. And this is the beginning of unlocking this global Internet to buy assets like, like, like equities. I'm, I'm hugely excited. Last thing I'll say because I, I could go on forever. I get too excited. The IPO market cap last year was like $30 billion. The meme coin market, that's how much money was raised. The Meme Coin market cap was like 140 billion. It's an apples to oranges relationship, but we're soon going to be able to unlock the superpower of blockchains, slash transfer agents. And that's capital formation, right?

Ram Alawalia (42:03)

No, in my head, I, well, I mean cattle F formation, I mean that gets me turned on. So yes, I, I like, we need more capital formation. The, the registration and listing costs for public markets is way too high. The on chain activities that are done by firms like securitize through reg ATS and all this stuff is just trying to mix TRADFI with permissionless networks. It doesn't work. So the direction of travel is good. I think Galaxy, Galaxy's move is mostly symbolic. You get 24, 7 trading, that's the main unlock. But the symbolism means you're going to get more to come. The funny thing about this actually I was a took my family to the beach this weekend and as one generally does on a holiday, you dream up different things. I actually posted this on Twitter. I said should Lumita. So actually like Robert Leshner I started Lumita as a digital asset wealth manager in the bottom of the bear market. And the first thing we did is with Sec Chart. Arthur Levitt is criticized Gary Gensler in October 2022. And then we said digital assets need a regulatory framework and fast forward here we are. But I wrote should we tokenize on chain the equity on chain on August 31st. And then I see this news from Galax like oh shit, something's in the water. Second thing, it means that no ideas are original. Chris, you know this is a VC guy. Someone has one idea somehow the magic of consciousness or whatever it is. I have no idea. 100 people all around the world have the same idea at the same time comes on to execution. So I have no doubt we're going to see a lot more of this happen. I think it's mostly symbolic. What I'd really love to see is a way to get a permissionless market going that provides an unlocking of participants. The things have sort out there. You got to have sanctions screening, you got to make sure North Korea cannot get involved. These defi pools that are engaging this market and there's really fascinating things happening like credit coup. I don't know if Chris, you've taken a look at the, what they're doing to finance Raincard which is a credit card that lets a crypto native spend and they tap into the digital asset wallet on chain. You can finance that on chain. You can make a deposit and get a 14% yield on chain. It's amazing. That's a bank on chain. You can deposit on chain, get a 14% coupon fully collateralized with T +2 duration risk. You get liquidity in two days. You want. That's incredible. That's a mispriced short duration high yield asset. But it's all permissioned and it's. But it's a, it's a, it's a step in the right direction though. Same thing with the Galaxy. So you know, if you look at Sechr. Paul Atkins about three weeks ago gave a speech and this follows Bessant's speech about a month ago and it was timed a week before Fed Governor Bowman's speech and both were pro innovation. And Paul Atkins specifically called out tokenization and the rise of the super app. And Bowman also talked about tokenization as well. So the regulators are starting to, they've already announced and signaling the market, hey, we're going to get out of the way if it's lawful and compliant. So we're moving into that world now. You're going to see 200 FinTechs. They're already applied for OCC charters like Anchorage. Dozens will be approved in the next few months. So I think Galaxy is very symbolic, but there's more to come behind it and we need more permissionless frameworks to unlock the next level.

Steve Ehrlich (45:28)

I just want to build on that Ram, because I think you made an important point and Chris, you did too. Solana obviously is a permissionless blockchain, but Superstate is very permissioned. And I mean, Rahm, you were getting at that as well. I mean I followed tokenization for a long time. I'm sure all of you have and I can't tell you how many pilot projects and I know this is not a pilot project but of like tokenizing some sort of credit instrument or whatever and there could be a huge 9, 10 figure top line number. But there's no secondary market, there's no secondary liquidity because these things are siloed. And I'm curious, I'm not sure what the process is in order to break down that barrier. Like maybe we need a lot of companies to agree to issue one superstate or ave's version of it or something else at the same time or Securitize or any of them. But how do you do that? Because that's the key to unlocking this. Anyone can go ahead.

Chris Perkins (46:27)

I have the answer. So what did we just do with Stable coins? Right. How is this different than Stable Coins? Yes, with Stable Coins you lock them up, but the issuer has a duty to KYC and AML and then the person that someone receives them and then based on the activities of that individual. If you send your securities to North Korea, you're going to get in trouble because it's based on behaviors and activities. That's the stablecoin model. And yes, they have freezing seas. But does it really work because of latency?

Brian Rudick (46:59)

I don't know.

Chris Perkins (47:00)

But I think when you step back and what we're seeing right now, it goes back to what Brian's doing. This is a massive convergence trend. Right. We're taking equities and we're canonically making them tokens. We're taking tokens and we're turning them into equities on the dads. Right? So my question for Brian is when are we going to tokenize and issue your debt canonically on chain. And by the way, they all have different economics.

Brian Rudick (47:28)

We have announced it. So yeah, two thoughts. One is like I couldn't agree more with you guys on everything you're saying on tokenization. Like in my opinion, finance is built on antiquated rails. Stablecoins are literally just like RWAS or tokenized dollars. It works on ACH which was created 50 years ago. And even Fintech is just this front end wrapper that if I sent you 10 bucks with Venmo it would use ACH on the back end. So blockchain and tokenization reimagines the Rails themselves. And then the second big thing is like finance is rife with intermediaries that that's why like DEFI is such this big thing. And so like this can help us remove all these rent extracting intermediaries that we really don't need given where technology has progressed to. And then second thing is we have announced our intention to tokenize Upexi equity via Superstate in case it's helpful. It was really two main reasons why we chose to do it with them. One is just exactly what you said. So direct issuance of stock on on chain for global access, not a wrapper which can fragment liquidity between wrappers. It's not like restricted to just X U X U s and then also holders are getting the exact same legal and economic rights as traditional equity. So that was like one big reason. And the second one is we are hyper focused on compliance and legal and regulatory risk. And like Superstate is doing everything exactly correctly. They're dotting every I, crossing every table. They're an SEC registered transfer agent. They're working on regulatory clarity with the SEC via things like Project Open. When you tokenize equity via Superstate, it has strict compliance with securities laws. So they have like these allow lists in terms of who can actually access your tokenized equity and who have actually kyc. And so we got very comfortable working with them to eventually put Epexi equity on chain.

Steve Ehrlich (49:18)

I'll tell you what I'm really interested in is, is, I mean Chris, I understand what your take your point about regulation and so on so forth, but I'm waiting for one company to just put everything on chain, especially like one major company that would essentially Force anyone who wants to own that share to engage in the onchain economy. Like imagine if, if Tesla decided to just completely go onchain at that point. I mean, how many of us own Tesla shares even indirectly through Ethereum ETFs like we would be forced to participate. I'm not quite sure what that would, what that would take, but I, I almost wonder like it's, or like a hot up and coming company. I mean Palantir is obviously not up and coming anymore, but, but something like that, that would essentially force, force the hand as opposed to a nice to have. So Brian, we're waiting for, I'm waiting for a big announcement from you guys that you're, you're delisting from what is the NASDAQ and just going completely. But I, I wonder if that's what it going to take. All right, so Robino and, and Chris, may remember from the last time you were on the show, I always like to wrap up by giving each guest a chance to share something that was left on the cutting room floor. Or if you have some sort of interesting contrarian opinion that you're, you're dying to get off your chest and start a Twitter fight about. I'm, I'm all for that too. Chris, why don't you go first.

Chris Perkins (50:41)

I think we're in the period, the golden age of convergence. That's Galaxy Equity. Now's the time institutions are coming in. And I think my contrarian take is that the one thing that's preventing further progress beyond this, as I said earlier, is a lack of futures, a lack of listed U.S. futures because they solved so many things. That's what I'm focused on in the coming weeks to launch.

Steve Ehrlich (51:07)

Actually, if I could push you on that because I mean there are futures for obviously Bitcoin, E Solana, I think XRP too, barely.

Chris Perkins (51:14)

Yeah.

Steve Ehrlich (51:15)

What are there two or three assets in particular that you have your eye on?

Chris Perkins (51:20)

Everything beyond those four. Seriously. This unlocks everything. It'll unlock ETFs, it's going to unlock basis trading. It cements them as commodities. This is what's needed next. This is one of the most important. We have a massive gap in the United States because, and honestly this was an SEC issue. They prevented exchanges from listing that. It looks like the window's starting to open and that's what need. That's the missing link and that's what needs to be solved for.

Steve Ehrlich (51:49)

Okay, Rom, would you like to go next?

Ram Alawalia (51:52)

Well, I was just looking at the report for American Eagle. That was the Sydney Sweeney that thing is up 24% report after the close. So that's just evidence of these non consensus ideas like retailers that were beating down to tariffs working. I expect that to continue to work. I think the mortgage refi concept, we talked about that a few weeks ago like Better Mortgage still own both of those names. I think that's going to keep working too on digital assets I think you did a timing thing. You just got to wait a few weeks. It really depends on most of the day now. You know I would position for a rally through November. It's just you gotta time it, time it. Well there's some, you know, there's just some chop to get through.

Brian Rudick (52:37)

Mr. Rudick Yes, I will stick to that land because that's what I think about all day pretty much. And yeah maybe I'll talk about how many daps can potentially work. I think that I'm somewhere in between Chris and Rom. So my view is that only three to five different assets can really work over the long term for a DAT and that there's only going to be three or so companies within each DAT that can really compound nav and create value for shareholders over the long run. Thought behind this is 95% of altcoins are down 95% over five years and the biggest determinant of any DAT success is going to be the underlying performance of the token that is underpinned by and so I do think that a lot of these trades can work out. Someone can come in at one time, see it move to two to three times when the registration statement goes effective, you sell and it works out to be this really great annualized return almost regardless. But I think like if you're looking for these long term winners it's probably kind of going to be far and few between of these companies that could potentially come close to replicating microstrategy success.

Steve Ehrlich (53:42)

And just, just for me I have two questions quick fun things I I guess one Rom I know you are the, the king of the Nothing Burger. I, I tend to I think be a little more risk averse.

Ram Alawalia (53:54)

Am I new moniker now.

Steve Ehrlich (53:58)

Mr. Mr. Nothing Burger start making a Halloween costume. I tend to be a little more risk averse especially when it comes to stuff at the Fed given everything happening with Lisa Cook et cetera. But it got me. I was watching an episode of the Office last night and the woman Nelly was one of the later seasons came in, took Andy Bernard's job as office manager and and tried to use surface authority by giving out everyone raises despite having tenuous authority to do so. And Dwight was going in to get his raise, and Jim looked at him and said, dwight, you know, it's not real. And Dwight looked right at the camera and said, money hasn't been real since we went off the gold standard in 1971 time. And I, I thought that was pretty funny. And it reminded me why bitcoin and crypto is so valuable. And then two for all NFL fans out there, welcome back to the season for what I hope are millions of listeners in the Philadelphia area. Go Birds. And and with that, thank you, everybody, for, for watching and listening. Thanks to Rom, as always, and Brian and Chris for joining. And we'll be back next time with another episode of Bits and Dips.