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- [00:00]
Bill Barhardt
The bull run is not even close to having played itself out as it relates certainly to crypto.
- [00:06]
Robert Lesner
Who are you fooling when your dad is for a blockchain that doesn't exist?
- [00:11]
Bill Barhardt
The defi billionaires haven't come yet and I think they're going to be bigger.
- [00:14]
Robert Lesner
I think we have now entered purpification. I think it's a superior form factor for most users and I think that spot markets are going to slowly die out relative to burps.
- [00:26]
Stephen
Welcome to Bits and bips, the show where we explore how crypto and macro collide one basis point at a time. We have a lot to discuss today. Hopes for a renewed October, a new competitor to Hyper Liquid that's getting a lot of attention. Swift getting in on the crypto game, perhaps I would say about 10 years since they first started kicking tires on it and much, much more. But first, just a couple of quick introductions. I'm your host. So Steve Ehrlich, PI scribe of the Unchained Kingdom. And we're gonna. I'm here with one of our special guests today. We are gonna have more but first we have Bill Barhardt, the keeper of Abra's on chain oats. So Bill, thanks for joining us. It's great to have you.
- [01:11]
Bill Barhardt
It's good to see you. Thanks for having me.
- [01:13]
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- [01:29]
Stephen
Yeah, great to have you been following your work for a long time? Actually since Abra. I mean you've been in Abra for a really long time. I'm not sure if we've ever met, but I do recall that we've spoken at several American banker conferences way back like the 2015, 2016 type area. But for anyone who doesn't know you, why don't you just give us a quick introduction?
- [01:52]
Bill Barhardt
Yeah, sure. Again, thanks for having me. So. So I'm Bill Barheit. I'm the founder and CEO at Abra. I've been in tech and you know, capital markets, Internet software for 30 plus years. Started Abra almost 10 years ago and Abra is a registered investment advisor. We provide wealth and advisory services in in the crypto space. We manage separately managed accounts for clients offering custody yield lending across the crypto ecosystem.
- [02:29]
Stephen
Okay, all right, terrific. And Ram, the Minister of wealth, leader of Lumita. As always, good to see you.
- [02:37]
Rahm
What's going on? Good to see you.
- [02:39]
Stephen
And we are going to have one more guest. I think he's just running a minute or two minute or two late. Robert Lesner from one of the founders of Compound Superstate. And for anyone who's new to the show, he will also have his very own Game of Thrones. We'll surprise him with when he gets here. But why don't we just kick things off actually though, before I do, as always, a quick disclaimer. Nothing that we say here is financial or investment advice. For full disclaimers, disclosures, please check out unchained.com bits and bips. Bill, why, why don't we start with you. A fun question or I guess a good one after last week's. I don't think I'd call it a bloodbath but, but a disappointing week. Markets are, are looking up today. I know there are some renewed hopes for an October. What are you saying right now?
- [03:26]
Bill Barhardt
Yeah, look, I mean there's a bunch of macro factors that we track. They all clearly point to the fact that the, the, the bull run is, is not even close to having played itself out as it relates certainly to crypto probably macro in general. We can go through what those, what those are. But, but in general, I think, you know, the like start with the treasury general account, right. I mean it's depleting so, so it's moving in the right direction. And, and so for our, from our perspective, we, we are pretty bullish on, on Q4 and, and certainly think that, you know, I don't know, plus or minus a couple of percentage points. I'm not a macro guy in the big picture, but it feels like a local bottom is in. But we'll see.
- [04:12]
Stephen
Yeah, I have to certainly hope so. I know that sentiment was a bit negative last week. We spoke a lot, me and Ron on the show about I guess some level of disappointment with just the 25 bips rate cut. Although I think there was also I remember someone was talking about how if they actually cut 50 that would lead to more panic. So I'm not quite sure that there was a Goldilocks scenario for the Fed anyway. But I do find it encouraging that I guess like bullish long sentiment is already coming back in. Open interest is ticking up, funding rates are going up again and that's across Bitcoin ether a bunch of the other tokens there. And I always find it hard to sort of overestimate the bullishness and the positivity in this community, especially as we move into what is historically the by far the best quarter of the year. So it's outside of just a very specific catalyst. And I'm encouraged to see the market already kind of turning the page. But Rahm, what are you saying?
- [05:10]
Rahm
Well, Stephen, I was really impressed. You're talking about funding rates, open interest. Exactly. I mean all that's improving. That's good. Look, we talked about last week that the worst two weeks of the year are last week and this week in terms of seasonality, that's for broader risk assets. That was one. Number two is I don't, I don't know what people are kind of fearful about. Like Ethereum's above 4,000, Bitcoin's at 114,000. What are people talking about? This is holding up pretty strong, all things considered. I mentioned last week that I thought good buy points, at least tactically. That means for like a couple week kind of concept was Bitcoin at 112 and 107. It touched 112 briefly, then rallied from there. And you're seeing some of the digital asset treasury names do very well in the last few days and things are fine. I mean markets are acclimating to this higher altitude, which is very constructive. Right. Bitcoin acclimated to 100k plus altitude a few months ago. Now it's doing it at the next stair step higher. So all that's constructive. And then you also had the GDP report come in which was strong and exceeded expectations. So we had all this fear. Remember we talked about this a few weeks ago about negative revisions to non farm payrolls and disappointment. Well, we're back now. We're back, aren't we?
- [06:45]
Bill Barhardt
At historic low volatility. I mean people's idea of a pullback and bear market. I mean it used to be that you could see Bitcoin fall 25% in 10 days and sky was falling until it wasn't and then it would recover in two weeks. And that volatility, it feels like it's gone.
- [07:06]
Rahm
Yeah, well that's the disappointing thing actually. It's both disappointing and good. It's disappointing. You know, there are a lot of traders that like that volatility and they're finding that sorts of volatility in the equity market. They're getting their fix in the equity market now, especially with bitcoin miners. But yeah, look, it's, you're having more stability in the price, which was the vision. But it's disappointing when you get there. Sometimes when you get to your destination, it doesn't feel as satisfying. You know, Teddy was interesting like all, virtually all risk assets were up and yet the volatility index or the fear gauge was also up. Now a lot of that I believe is because you have quarterly operations, options, expiration coming up on Wednesday. So people de risk ahead of that because usually have some weakness right after that. But those are smaller. You know, there's like, there's the squiggle and then there's the, the trend. And I agree with you bill, on like Q4 seasonality, you should, you should generally be constructive. The time to be fearful was maybe like a month and a half ago. I still think like 107 and 112 are tactical buy points. Overall I think Ethereum is well positioned here. There was a nice news article we saw about Swift building a layer two on Ethereum. So the international payments that banks use to move money and large sums of monies across countries is talking about building. It's like a test by the way. It's not, you know, it's a test. It always starts with the test. It's building on Ethereum. Like the battle against CDBCs has been won and they're building on Ethereum. This is extraordinary stuff. This is pretty encouraging. And then you have tax cuts coming, you have some government shutdown news. That's always a nothing burger, right? That's my new title, a king of nothing burger. But yeah, that's another nothing burger.
- [08:59]
Stephen
We need to get you signage made, Ron, because you have a question for you, Mr. Nothing Burger.
- [09:04]
Rahm
I need a nothing burger diet so I can shrimp some pounds here. But.
- [09:10]
Stephen
Wednesday morning there might be a lot of federal employees that don't go to work. And again like my sense is unless this somehow becomes very protracted, and I'm talking about months, not days or weeks, it will be a nothing burger. But Democrats do seem to, I guess at some point they're going to have. They do seem, I guess what I'm looking for resolved to like plant their flag in the sand and maybe stick up for a couple of these funding or pools of funding related to healthcare etc that they really want to get done. Maybe roll back some of the Medicaid cuts. Could this be protracted? I mean, what do you think?
- [09:53]
Bill Barhardt
I mean, define protracted. I mean I wouldn't be surprised if something happened that went on for six weeks. Is that.
- [10:00]
Stephen
Yeah, I guess maybe the way to look at it is like typically I saw some stats in one of the newspapers about every week the government shut down, how it shaves off gdp and it's not a huge amount, but it can add up. It's like a tenth of a percent a week or something like that. But it can shoot up again if it, if it stays longer.
- [10:21]
Rahm
So I'm all for cutting government spending. It's insane. Doge was a failure. When we have these interruptions of government services, at least for me in my own personal life, I really don't notice much impact. Now, look, if you got to apply for a new passport, that can be an issue. There are scenarios where it can be an issue. But people are spending 35% to 43% plus of their income on services where no one even notices in the government shuts down. So this is just theatrics, politicians trying to be relevant. We did a study at Lumina around what happens during these government shutdowns. What we found is this. The vast majority of the bad pricing impacts and negative price shocks happen on the day of the government shutdown. And that's the low, and that's the low the market prices in instantly.
- [11:16]
Stephen
By any chance, Rahm, do you have a screenshot or something we can put up? Because I'd love to.
- [11:20]
Rahm
I'll see if I can dig it up. You guys carry forward. I'll see if I can find that.
- [11:23]
Bill Barhardt
Yeah, as I recall, I mean, under Obama, right, they had these triggers on, on spending when, when either you didn't agree on a budget or shutdown happened. And, and those triggers actually turned out to be fantastic because they kept spending under, under control. And. And sometimes the best solution is to do absolutely nothing.
- [11:43]
Rahm
It turns out maybe this is the new balanced budget. We just have a government shutdown conversation. Look, there you go joking there, obviously. But like, you know, I'm. I'm glad that people are having a conversation around what's the appropriate level of spending. That's important is it's an important headline for people to focus on. This is all theatrics, though. It will get passed. It's unfortunate that the United States has to deal with this as a, like a brand for our debt, that we have to kind of deal with this. But, you know, it is what it is.
- [12:17]
Stephen
Continuing resolution to continuing resolution.
- [12:20]
Rahm
Right? I think people are tired of this stuff too, especially in recent weeks. We think about school shootings and the assassination of Charlie Kirk and this tragic incident at a Mormon church in Detroit. I think people are tired of being partisan. I think they really want people to get stuff done. And I think they're really, really tired of that is my instinct. At least I'm tired Of that.
- [12:48]
Stephen
Yeah, well said. But you did raise a couple of interesting points related to Swift. And I know we were going to talk about it at some point, so why don't we dig in now? For one, I actually do think, I mean, it's worth restating your point, Rob, that The war against CBDCs or the war between CBDCs and stablecoins is probably over. Maybe China will try to do something with the digital yuan, but for the most part, I mean it's dead in.
- [13:13]
Rahm
Euro land is still alive, I guess.
- [13:16]
Stephen
But I mean, unless the Euro, I guess somehow is going to replace the dollar if and when the dollar ever drops. Like I guess maybe the easy way to say it from my, in my opinion is as long as it's not going to happen in the US it's not going to happen. It's not going to happen anywhere truly significant. And there's not going to be a lot of copycats that want to do something that the US is not doing. They'll just follow on our stable coins. But I think it's. Again, you guys disagree with me if you do, but I think it's worth stating that two, I mean, Swift, again, we've all been in crypto for at least a decade, I think. And I mean, I remember the Ripple saying they're going to go after Swift. And there are plenty of projects on Hyperledger, not hyper liquid and R3 and so many other people are trying to go after Swift. And it was this messaging giant that had these network effects that just seemed insurmountable. And the community really seemed to rally around this announcement from Swift, more so than perhaps I expected. I mean, maybe it's because of just how popular stablecoins have become in general. I mean, maybe at this point tokenization does seem a little bit inevitable. For years it seemed like just a lot of pilots and POCs that never amounted to much. But I was personally impressed and happy with the reception that it's getting. And I'm interested to see how it's going to grow from there. But I'm curious what you guys think.
- [14:39]
Bill Barhardt
Yeah, I'll go first. I mean, look, they had to do something. They couldn't basically just sit this out, in my opinion. I mean, there's just too much action going on for the largest messaging router in the world as it relates to money transfer to be sidelined. Right? So let's break it down though, right? So at the end of the day, Swift is not a money mover. They are a message routing system. Okay, so when you initiate a cross border wire person to person. That's what's called an MT102 message in the Swift system. That is a message that gets routed from one bank to another via, you know, often via correspondent bank if there's a small bank in the middle. And everybody takes a fee for the, for routing that message. And then there's a physical settlement process which happens later. Okay. And so the question becomes, in 2025, in the age of the Internet, in the age of, you know, real time, near real time finality with, with crypto transactions, is a, a message broker architecture from a third party required? Or could the banks actually end up bypassing Swift eventually altogether with their own, you know, kind of messaging system that simply bypasses them and settles in real time? Now there's a whole bunch of things that have to be worked out here because when we talk about stablecoins, by and large so far we've been talking about dollars and that's not the way Swift works. Right? I mean you send dollars, you receive euros, you receive Euros, or you send euros, you receive dollars. Right. And so you have the exchange component to this, which is not prevalent in most crypto transactions today. The vast majority of stablecoin transactions outside the US initiate in dollars and settle in dollars. And so it's possible that that creates a new type of dollar hegemony. But I don't think so. I think we're going to go the other way where you're going to see a plethora of international stable coins created and then we're going to have to figure all of that out. But my point is, is I don't think, I don't think that, that, that they had to do that doing nothing was an option. Right. So, so you know, we'll see where this goes. But look, crypto gets excited about any large tradfi company making an announcement in general. And, and that's fine. I don't, I don't, you know, we shouldn't mind that. But, but, but in general, I think I am not bullish on Swift's long term prospects, let's put it that way.
- [17:08]
Stephen
I think it's the surrender as much as the excitement about bringing someone on that bit that could very well be true.
- [17:14]
Bill Barhardt
And that's a good way to look at it. Yeah.
- [17:16]
Stephen
But before we go on, we have our fourth guest here, Robert Lesner, one of the co founders of Compound from Way back, CEO of Superstate. Right now, the project that is tokenizing the shares of all the DATs and you're also one of the hosts of the popular Chopping Block podcast that also airs on our network. And most importantly, you are the crypto connoisseur and czar of Superstate. That's your given Game of Thrones nickname. So, yeah, I mean, Robert, we're talking about the Swift News, and in general, we just started off talking about just kind of like the bullish start to the week after a tough one last week and what that might mean for October. So feel free to just kind of chime in on any of those if you want to quickly.
- [18:02]
Robert Lesner
Yeah, I haven't dug deep into the Swift news. What I picked up on Twitter, which could be inaccurate, small preface by saying that is that they want to create their own ledger. Working with consensus, create another chain, potentially. Is that good? Is that bad? Is that bullish? The chainlink army seems to be excited about this because they believe that another ledger is good, especially if, you know, they're using chainlink to connect their ledger to a different ledger. But in terms of how it impacts other blockchains and other usage, I mean, at a surface level, my read was that it's we want to take stablecoin volume and activity away from Ethereum, we want to take it away from Solana.
- [18:46]
Stephen
We want to take it away from.
- [18:47]
Robert Lesner
Tron, and we want to use our own system to transmit value between different geographies and different banks. I think it most directly, you know, infringes upon the mind share of Ripple and their use cases, you know, as sort of mentioned. But I think a lot of it is wait and see because the ability of incumbents to launch new projects, I think is overestimated pretty frequently. And oftentimes someone sees an announcement, they're like, it's coming next week. And it's like, okay, let's wait six months. Let's wait, wait a year, let's wait 18 months. It might be longer to see tangible progress than people expect. And so the bigger something is, the slower it is to steer the giant ship, and the smaller something is, the faster it is to get to your destination. So I think it's a cool announcement. I think it's big. I think it's bigger than stripe launching a blockchain, frankly. But I think therefore, it's also slower.
- [19:46]
Stephen
Okay, Ram, I know you wanted to share your screen. Do you have.
- [19:50]
Rahm
Yeah, check out this. This is a post that Mike Dudas, a friend of Six Man Ventures, posted, which I thought was a very good take. I think it's consistent with what Robert is sharing around don't get your expectations too high on what to expect out of this consortia. So he says you're going to see many headlines like this. Reminds me of mobile payments consortia 10 to 15 years ago. Meanwhile many net new giants like Tether will be formed building 10x better products directly connecting businesses and people with 24 7, 365 low cost open Internet money. So I think that's the right instinct. Right. Every time there's a new form factor the incumbents are at risk and some new dominant market player emerges. Why wouldn't that happen here? I do think Stripe, their Layer two is something to keep an eye on. Although I do think they woke up like the grizzly bears. Like Stripe has no more friends now Stripe is going for all the marbles on the table including the marbles of Visa and MasterCard. Even though Visa co participated in this. But sometimes these institutions co participate so they have a leading window into the disruptive technology that might disrupt them.
- [21:07]
Stephen
Yeah, I kind of see a similar thought process with that too. I mean like, like companies like Stripe and Plaid didn't get massive by working with like the JC Penneys and Macy's of the world. I mean they, they were Internet focused businesses that dealt with like e commerce native platforms. It's almost the same thing Rob that you're doing with, with Superstate. I mean I'm sure you'd be thrilled to, to get JP Morgan or something on the platform but you're, I mean it seems like you're really going after or having a lot of success with dax. Like companies that under are forward thinking and are embracing this new technology and then within the vein of Swift, I mean what they're doing, sure I'm sure they're excited but I studied these things for years and years and years and frankly I used to work at banks and I have to say most of the people I dealt with they were studying this stuff hoping that it wouldn't make sense so they didn't have to go any further as opposed to crypto native people that really solve this as the only way forward.
- [22:00]
Rahm
So two banks to my knowledge there's some reporting said maybe a dozen banks but there's BMP Paribas and BNY Mellon that have come out and so they're testing this. So I think it's more it's in balloon rather than real substantive progress.
- [22:16]
Bill Barhardt
I mean have they specifically said that they're working on a layer two at Swift or have they, they clarified that they're working directly at Ethereum because my I have this kind of growing theory that if you look at Robinhood, Stripe, even Coinbase, right, they're kind of treating layer twos almost like decentralized SQL. And I'm using decentralized in air quotes because I have to start saying, okay, what problem are they trying to solve by basically trying to push large groups of people to effectively what amounts to their. And again, I'll just say proprietary layer two when we have now scalable layer one technology that doesn't require this kind of adoption of my layer two, your layer two, the next layer two. And it's just creating more fiefdoms and we're reinforcing this idea of fiefdoms, which is not what, you know, to me, what, what decentralization is supposed to be about. I mean, look, the competition is fine. I think they can do whatever they want. I'm just questioning the viability of what they're doing in, in the short and midterm. And why would you bother putting stocks on a layer two that no one is going to adopt except for you? Right? So, you know, what problem does that solve? Why would you, why would you start putting stable coins on a layer two that no one is going to adopt except for you, whoever you is? Right.
- [23:55]
Robert Lesner
But if the U is all of these banks across all these countries that are using a system, they can hot swap out one guts for another guts, then there's actually massive adoption. And there's a point to it.
- [24:08]
Bill Barhardt
Yeah, I mean, that is the question, right? Meaning, is crypto ultimately its own parallel universe or are the banks going to be the purveyors of how we end up using stablecoins? And I remember making this point on a Peter McCormick show six years ago. And not much has changed since then other than the core crypto community has ballooned. Right. The use of tether and circle outside of the banking system. And we're still talking about what the banks are going to do, but they haven't done it yet. And so I don't think the banks are going to be pervaders of anything. I think crypto is going to continue to evolve in its own parallel universe. And I think that's better for everyone that it does. I don't. I'm fine.
- [24:52]
Rahm
And I think that's 99. Right? I would say there will be a handful of banks that generate windfall profits by being the back end of fintech that's on the front end, like a cross river or a lead bank which powers Stripe. And maybe that's what BNP paribas and BNY Mellon are gunning for most of these regional banks and community banks just aren't necessary in the future. It's whoever controls the customer relationship and can move the money compliantly. That latter part is why some handful of banks will still be relevant. Obviously the mega center banks will still be around. I'm talking about regional as a community bank, those are the folks that have a lot of issues ahead of them.
- [25:33]
Stephen
Yeah, the regional banks is going to be. I actually used to spend a bunch of time trying to, not as a consultant, trying to sell consulting services to regional banks on crypto. And like once you got over the education hurdle and this was like 2016, 2017, 2018, which was considerable, especially back then. I mean this blockchain stuff, like they were concerned about cybersecurity upgrades and being able to have like multi user accounts and better treasury services and FX services and all sorts of other stuff. Like crypto on blockchain was so far down the line. Maybe that'll be different at this point.
- [26:06]
Rahm
But I'll give you the defensive banks now. Now that we all kind of, you know, threw the banks over the cliff here. So there's two startups. One is called StableCore, another is called Omnia, both venture backed. You know, StableCore is a team that spun out of Coinbase and they represent between the two of them that they have a couple dozen banks as customers. What they do is provide stable core banking services. They plug into the legacy Bancorp infrastructure and you as a bank can then have a front end that you offer your consumers or enterprises and you can now bank their stable coins. And there's other ambitions beyond that. Think like lending against digital assets. So there are a couple dozen banks. At least one of them is a top 25 bank too. Now JP Morgan's already active in this stuff. JP Morgan is doing tokenized deposits. Right. But they can invest in their own technology. So there are these picks and shovels, infra players that are helping the banks try to adapt and move forward. The issue with most banks is they can't get the regulator comfortable with compliance and safety and soundness. The second is they may have a vision, but they have no idea how to execute or build products or attract a team to deliver on the vision.
- [27:17]
Bill Barhardt
Yeah, yeah. I think first of all having banks figure out how to put digital assets on the balance sheet via the core system is super interesting. In the short term. I'm very skeptical to your point that the Fed is going to just, just do it. Basically like do a rubber stamp that that's, that's fine. And second, you know, I am a little skeptical on the problems that they perceive that they're going to be solving with these mid tier banks. But we can come back to that. I think, I think it's a longer conversation, conversation as well.
- [27:51]
Stephen
Well, before we do, we have to take a very quick break so I can tell you about the BIPS and BITS newsletter. Every week we publish multiple stories, original reporting, research looking into sort of the macro and crypto trends that are moving the week. I'm actually excited because we, as we were talking we just published my latest story. You guys probably saw this. The, the zero stack DAT focused on the Zero gravity blockchain. The AI. The AI focused blockchain that went live this week on Mainnet or I guess late last week on Mainnet. There were a lot of headlines over the last week or so about how they raised $401 million in order to launch this dat. First time I think it's ever happened for a DAT that launched before the blockchain itself but went through the SEC filings and basically I found out that there's only $13.67 million of new money actually raised. The vast, vast majority of it were in kind donations from the founders and then about 22 million came from one of the Solana Defi Development Corp, One of the Solana treasury companies that basically loaned them $22 million worth of Solana in exchange for 8% APR with basically a free convert at some point in the future. And we talk a lot on the show about how, how people really need to do their own research, read the fine print especially when you get these massive 9, 10 figure headlines for DATs, especially now that M navs are starting to go down and this is just another example of it. So we always appreciate the feedback and if you guys want to subscribe you can just go to unchained.com newsletters selling.
- [29:31]
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- [30:21]
Rahm
A dat that launched without a blockchain. They raised a boatload of money. There's an in kind contribution, but that.
- [30:26]
Stephen
Doesn'T, they didn't raise it. That they said they said they did. But that one's here.
- [30:30]
Rahm
Robert, what do you think about that from like where we are in cycle and private market valuations and sanity overall. Sanity levels?
- [30:37]
Stephen
Yeah.
- [30:37]
Robert Lesner
I mean I think it proves very directly that there's a lot of facade when it comes to making a digital asset Treasury. Right. These are ETF wrappers when you start to get to this level. Right. This is an ETF using the public company shell and not an investment company shell. Okay. Like that's what this is like. You can't have a company naturally say, oh, we've decided to adopt, you know, the token of a blockchain that has not launched yet as our reserve. Like reserves are originally meant to be like, here's the cash and cash equivalents and like balance sheet that we're keeping for our company, which has a purpose. Right. To me, like we're getting into the nutty territory that's sort of making a mockery of the registration process. And like I get why the NASDAQ is so pissed about like these companies at this point because they're, you know, starting to get more and more ludicrous as time goes on.
- [31:37]
Rahm
And like that is in the check, is in the mail, but trust us, it'll be there.
- [31:42]
Robert Lesner
Yeah, like, you know, who are you fooling when your dad is for a blockchain that doesn't exist yet.
- [31:49]
Rahm
And it's an AI blockchain, of course. I mean like, remember Long island blockchain? Yeah.
- [31:53]
Robert Lesner
It's, it's like a venture investment in a, you know, not an investment company wrapper. You know, it's like.
- [32:03]
Bill Barhardt
That an ETF has to maintain a one to one peg. Doesn't have to, but, but generally we'll, we'll maintain a one to one peg for obvious reasons. Right. Whereas here, you know, it's hedge funds, it's, it's leverage, it's barring behind the scenes. So, so I think the transition that we're going to see is okay strategy. People will more or less trust that there's no shenanigans going on even if they don't agree with all the, the strategies that they're imposing with all these different versions of the stocks. But, but I do think we're going to see a transition now to operating companies that are basically either going public or are going to be adopting, you know, real treasury plays. But they're, but, but they are real operating businesses. It's not some beauty product, product company that is becoming a debt. It is literally either a crypto operating business with a huge treasury or a viable, you know, tech business that is also saying we are committed to putting our profits in crypto. And, and I think that that's the next wave here because I think that the hedge funds and the pipe investors are feeling a little played now on this topic. I don't know. I'm, I'm, I'm reading the pipe investors care.
- [33:16]
Rahm
It's, it's heads they win tails to get the fell back. But overall, right, it's, it's actually retail investors, those are the ones that are most at risk. And deal quality is just getting worse. I don't think that turns around until the next cycle, actually.
- [33:31]
Stephen
And if I could just add on quickly, I'm led to the story too. Big red flags, because I spoke to some people who got the pitch deck. I spoke to just some, some debt experts. One was they somehow, and this is all in the SEC filings, they arbitrarily gave the tokens a $3 value when it came to like pricing, pricing options and warrants and things like that, which meant that with a $1 billion supply, it had an FTV of $3 billion again for a blockchain that didn't exist or didn't go live. No idea how they came up with that number. It launched on Binance, I think it launched on Gate, IO and Bitget, and it seemed to do okay, but the price is down, I think 50% since launch a few days ago. And then the other one, and this was a big one, that came up a lot. The tokens that were put in from the founders of the blockchain were locked. And now once the business combination agreement is finalized, once they file the S3 and get shares registered or whatever, they can exchange that for liquid equities that they could then sell if they want. And that certainly people I spoke to for that story really felt like it's like circumventing the spirit of locked tokens. And I know that what it means when a token is locked can sometimes be a moving target, but that certainly seems to be in the eyes of the people I spoke with, kind of breaking a cardinal rule of how vesting and all that type of stuff is supposed to work. So yeah, it's upsetting. I mean there are some dads, they're doing things the right way and then there are some that are just looking for a quick cash grab. I'm not necessarily trying to say that this particular company, it's called Zero Seconds, doing anything nefarious or wrong or even fraudulent. It's just, it appears they're taking advantage of a, of just a situation and it may end up hurting some of the retail investors who buy the stock, thinking it could be a play to sort of piggyback on the AI hype.
- [35:36]
Bill Barhardt
I also think the consolidation hasn't started yet. Yeah, right. And that's, we don't really know how that's going to play out. Whether that's going to basically help maintain a one or, or better nav or, or whether it's going to get much, much worse, you know, vis a vis the old grayscale, you know, days. But, but, and that happened for different reasons. But, but still the analogy holds. We'll see. We don't know yet.
- [35:59]
Stephen
Yeah. Okay, so let's talk about Aster and, and Rain. Who wants the first crack at that?
- [36:07]
Robert Lesner
I have not followed aster.
- [36:10]
Bill Barhardt
Leverage.
- [36:11]
Rahm
It's 50x. 50x leverage, right? I thought it was 50x. So, so hyper Liquid was built on Ethereum and is a largely centralized Dex that enables high throughput, high leverage trading on chain. And it's grown quickly and they're making money and they're profitable and they're doing buybacks. So that's been the darling of the last couple of months. That's Hyper Liquid. Now Binance rolled out Aster, which is the new kid on the block. It's a bigger, better Aster. Sorry, Aster is a bigger, better Hyper Liquid. So it's even more leverage, even more tokens. And it's also centralized. Of course it has to be centralized. That's how you offer the convenience to the user. You have to have some centralized entity providing that role. They're very aggressive with the marketing. They have aggressive airdrops. They have essentially the concept of multi level marketing where you get bonus and incentives for enrolling people in your community. They're starting to take market share. Although Hyper Liquid still has dominant market share in these Dexes, but it is growing quickly now. There are others emerging. So the gap here then is what about Solana? Now Solana's whole thesis of layer one was to provide, you know, Internet capital markets and decentralized trading at speed and high throughput and all this rest. Right. So now Solana is, I think there's a, there's yet another chain that's, you know, or protocol that's launching soon. But it reminds me of like back in 21 when you had like DYDX was the cool kid on the block. Right.
- [37:53]
Bill Barhardt
It's like significantly higher usage. Yeah, right. Yeah, right. I was at a hyper liquid event. I'm in Singapore for token 2049. There was a line around the corner. I am not exaggerating. It took me 25 minutes to get in the building. Yeah, it's like the hottest, it's the.
- [38:13]
Robert Lesner
Hottest, the hottest project right now. Of course, the line.
- [38:15]
Bill Barhardt
Right, exactly. And, and it was all kids. It was crazy. And, and so, you know, I look at what BNB is doing with, you know, with Aster and it makes perfect sense. I mean obviously people want leverage and it's just, that's the been the consistent thing from cycle to cycle, whether it was Bitmex or now this or pick your favorite degenerate gambling solution from cycle to cycle. And this is clearly it now. And I think we're going to see a lot of these competitors coming up. And I'm 100%.
- [38:56]
Rahm
How old are those kids are like teenagers or young twenties. Like how do you define that?
- [39:02]
Stephen
I still think of myself 43.
- [39:04]
Bill Barhardt
I don't know, 20s maybe. I, I, it all looks the same to me at my age. So I, I don't know anybody with.
- [39:09]
Robert Lesner
Stable coins and a vpn. You know, it could be any age.
- [39:12]
Bill Barhardt
Right.
- [39:13]
Stephen
How does the, the Robinhood and Coinbase bringing perfs especially to the US play into this? Because I mean it seems like Hyper Liquid and Astro or Binance, I mean they're fighting for, for rest of the world, but I mean they're also thinking of the US how does that play into this?
- [39:27]
Bill Barhardt
Well, you can trade Tesla shares on Aster, right. Or the equivalent of Tesla shares with what, 500x leverage? I mean, that's insane, right?
- [39:39]
Rahm
Yeah, you got to be CFTC regulated to offer perps.
- [39:44]
Robert Lesner
No one is saying this is in compliance with the U.S. yeah, this is.
- [39:47]
Rahm
Not a U.S. story.
- [39:48]
Stephen
Yeah, I'm just thinking because I wrote a story a few a couple months ago about hyperliquid and I think we found, we, we looked it up on similar web data. I think we found something like 25 to 30% of all their website traffic to their trading interface came from the U.S. although, like when we tried to attach a U.S. wall, it was GEO blocked. So I'm not trying to say like 30% of their clients are American, but like there's just so much demand and the US is still the biggest prize. I'm curious, in this world, when it.
- [40:16]
Bill Barhardt
Comes to these levered products, you don't need to basically offer workarounds for Americans. There's such a big market and such huge demand for levered bets globally that people will just ignore the U.S. now.
- [40:32]
Rahm
I think this is the consequence of housing in affordability. People said, well I'm going to speculate. The boomers got the houses, I'm going to put the cash I would have put in a down payment into digital assets and crypto and speculation. I think the other take here though is CZ is an incredible and formidable competitor. This is a big win for cz. I don't bet against cz. I wanted to invest in Tether in their private round. Been looking for access. Obviously they don't need capital. The Multiple is like 60 times EV to sales. I don't know Robert, if you looked at it or Bill, but it's absurdly overpriced. But I think the move is will CZ let you into Binance? I think that's the move. I don't think we can do it.
- [41:19]
Robert Lesner
Everyone can be in Binance right now.
- [41:20]
Stephen
Bnb, don't even get started on that.
- [41:26]
Rahm
That's interesting. There's equity and then there's a coin that has like this intangible relationship.
- [41:32]
Stephen
I have some ftt.
- [41:33]
Rahm
Right, Go ahead.
- [41:35]
Stephen
I was just drawing. If you want bnb, I have some FTT I can sell you too.
- [41:40]
Rahm
You got some serum token to go along with that.
- [41:42]
Bill Barhardt
But by the way, I'm looking at the numbers. So 340,000 wallets in the first 24 hours for Aster. If I'm reading this right, it's just remarkable. Yeah. Post launch, first 24 hours, 330,000 newer wallets. Massive surge in BNB on chain activity as a result.
- [42:07]
Rahm
What would the market cap of my dance be? It would be. It would be bigger than Coinbase, I would say for sure.
- [42:12]
Robert Lesner
Oh yeah, no question about that. Like no question. Here, let me do us a favor and pull up Coingecko.
- [42:19]
Rahm
One second. Let's pull up Coinbase's market cap now and just take a look.
- [42:21]
Bill Barhardt
I mean like 100 billion I think. Right?
- [42:24]
Stephen
Or start off BNB.
- [42:26]
Robert Lesner
The token BNB which only gets a portion of the revenue is $143 billion market cap.
- [42:31]
Rahm
So finance is like what is it, like a half a trillion dollar? Like enterprise value.
- [42:37]
Robert Lesner
Yeah. The rumors that they're doing like 50 billion a year of profits.
- [42:42]
Rahm
Maybe Binance is actually cheaper than Tether from a price to earnings perspective.
- [42:48]
Robert Lesner
Absolutely it is.
- [42:49]
Bill Barhardt
Right?
- [42:49]
Robert Lesner
Yeah.
- [42:50]
Rahm
So we got to go put an SPV together, guys. Let's go do this.
- [42:53]
Stephen
Well, we had someone actually do a story on this. The only question is why would Binance ever. I mean, I guess they would take on strategic investors if they want certain doors open. But like they wouldn't. I can't see them ever needing an IPO. I mean, CZ owns like 90 something percent of it. And in fact, like when I was at Forbes, one of my researchers did a study, we found out that Binance's ICO was actually pretty much a flop. And Binance owns like tens of millions of BNB tokens that people thought either didn't exist or were sold to ic.
- [43:23]
Rahm
They don't need one. No. I mean CZD is floating in loads of free cash flow low. Yeah. And judging by the Twitter pics, he's content. He doesn't need more supervision of scrutiny. Right, right.
- [43:39]
Bill Barhardt
Tether doesn't need to do a raise either, but they are.
- [43:41]
Rahm
I think there's a difference there though. I think, see, Tether wants to get after the US market with their US based stablecoin and they hired the guy that was the deputy crypto czar. So they have bigger ambitions.
- [43:53]
Bill Barhardt
Right.
- [43:54]
Rahm
I mean, I guess if Binance want, like Binance US is a. Hasn't gone anywhere.
- [43:58]
Bill Barhardt
No.
- [43:59]
Rahm
I don't know if they have ambitions to invigorate.
- [44:01]
Bill Barhardt
Often the big issue often is employee liquidity. Right. So if you have people who've been with you for years and they can't cash out. Right. I know firsthand for I, you know, I talked to all of the exchanges internationally and they all have this issue right now with people who have been with them for years, very loyal. And they're all sitting on shares and they can't cash out the shares. Right. And, and you know, oftentimes like to your point, like the CEO owns 90 of the shares or whatever and is not incentivized because he can basically just pay himself dividends.
- [44:31]
Rahm
Right. Well, since he can pay them in cash, sure. I'm sure he is just like Tether can. Yeah, yeah.
- [44:39]
Stephen
I'll say something about the Tether guys though, because I, I've done a few profiles on, on Paolo. Like he has a, I think a pretty massive chip on his shoulders. Older, like, like back from like, like when I first started talking to him in like 20. 20. 2021 20. Like. Like, the first thing he ever said to me in one of my interviews, like, he was quoting, like, some song that, like, Americans would say to him, like, calling him a stupid Italian or something like that. Like. Like, he was just tired of people telling him, well, you must be a fraud because you're not American. And he would say, well, look at what J.P. morgan did, or look at what Wells Fargo did and how much they got fined for not having an AML program or whatever. And, like, he just cannot get over the fact. And I don't blame him. Like, people like Tether had a shady history. I mean, I don't think anyone would dispute that, even if they're clean now. And I don't think. And, like, a lot of people just don't take him. He thinks a lot of people don't take him seriously because he didn't go to an Ivy League school, he didn't grow up on Wall Street. And, like, who are these people? Like, a couple of which are very secretive, running this massively profitable company. And, like, if they're able. So, like, being able to bring on these strategic investors, coming to him saying, please take my money and we'll give you a. Like, an incredibly frothy valuation. Has to be incredibly fulfilling for him.
- [45:57]
Rahm
Does he have in the business?
- [45:58]
Stephen
I actually got the cap table when I. When I did the first story. I think he owns. I forget the number. Like, Giancarlo, I think, was the biggest shareholder, but I think they own somewhere between, like, 8 and 11% each. I mean, that's probably changed because they've been on some money from Canner, but they've never done. I mean, they never had to raise money. I mean. I mean, the actual money you need to launch Tethered, it was nothing back.
- [46:19]
Robert Lesner
In the day, it's like, up to 11 each. I'm a little.
- [46:22]
Rahm
I would have guessed higher.
- [46:24]
Robert Lesner
Yeah, I would have guessed higher.
- [46:25]
Rahm
What happened?
- [46:25]
Bill Barhardt
Like, remember, there was a bigger group. There was a bigger group, right, because you had.
- [46:29]
Stephen
Yeah, it was a bigger. Yeah. And Giancarlo Devasini was the one who owned the most. I remember now.
- [46:36]
Rahm
So CZ owns what, the whole thing? Pretty much.
- [46:40]
Stephen
Again, like, this information is from, like, a couple years. I think he owns. Yeah, I think he owns, like, some. Around 90% of it.
- [46:46]
Rahm
So Larry Ellison is the wealthiest guy in the world, nominally, according to Forbes, because he's got Oracle, which is worth $350 billion now in stock. CZ is worth more than Larry Ellison. CZ will go down history as one of the most successful technology entrepreneurs of all time. And he's not on the Forbes list. He should be. The only person ahead of him is like Vladimir Putin, I guess.
- [47:09]
Stephen
Well, the Forbes list is only for Americans but Bloomberg does worldwide. I think the Forbes 400. But yeah, I mean the tether guys, I mean they're instantly going to be like 100 billionaires if they raise the money at that level. I mean they're going to be among the richest in the world too. I don't even know what amazing you.
- [47:22]
Rahm
Think about like the wealth creation that's happening in digital assets and crypto and I still don't think people really get it. Like outside digital assets, like there's enormous, I mean it helped shape and influence an election outcome. That's how big a deal this is. I don't think people fully understand how significant it is.
- [47:42]
Bill Barhardt
And it's bigger. I mean the D5 billionaires haven't come yet and I think they're going to be bigger. We'll see.
- [47:49]
Rahm
But yeah, I think there'll be bigger, bigger outcomes than, than Tether.
- [47:53]
Bill Barhardt
Tether, yeah, you'd have to build a.
- [47:57]
Robert Lesner
Pretty big defi application.
- [47:58]
Rahm
Robert's pretty happy with that statement.
- [48:01]
Stephen
Yeah, we'll see.
- [48:03]
Bill Barhardt
I mean I think look what happened post Celsius, Blockfi, Voyager, ftx, right? All of that moved to Ave and, and it's, it's shrunk but, but a significant percent of it percentage of that business moved to AAVE and it's barely started yet. Most people don't know what AAVE is. So, so I, I, I really think that the coming onslaught of Defi applications is going to make most CFI stuff in crypto look like MySpace.
- [48:30]
Rahm
I'll say maybe here' come fast enough for me. It's a really interesting point. It's, it's something to chew on. I'd say whoever owns the customer is the long term winner. Right. Binance has the brand, they own the customer. Tether has a brand in usdt. They have the relationship, they have a lock, they have the network effects. Now for them it's not the customer, it's the network effect. I don't know if a defi protocol will be kind of front of your.
- [48:55]
Bill Barhardt
Assuming the customers are all people. You're assuming the customers are all people. I don't think that's going to be the case.
- [49:00]
Rahm
That's true. That's fair.
- [49:02]
Stephen
Yeah, I'll give a couple numbers just about the defi. So Feather actually raises money at this point they're going to be like what like the second or third as big as, like the second or third. Second or third biggest bank in America. I mean I think JP Morgan's somewhere around 800 something billion. Citibank's 191 billion. I think Wells is under 500 billion. Like, like these guys, like that's, that's the league they're playing in right now. It's, I mean, let's see if they close the deal. I mean at this point a $300 billion valuation will seem like a disappointment.
- [49:31]
Rahm
It used to be the Swiss banking system, it was the Swiss banking system in the United States. Now UBS is thinking about decamping Switzerland, by the way, and going to a US regulatory regime. So now it's the US versus Tether and Binance. Those are your two big monetary regimes now. And Tron. Throw Tron in the international mix too. We should all be a token 2049. That's my conclusion from all this.
- [49:56]
Bill Barhardt
Well, I am, and it's 5:00am but.
- [49:58]
Stephen
But yeah.
- [50:01]
Bill Barhardt
So, but again I, I, I kind of see it a little differently and it's a really interesting conversation because to me the, the, the CEFI is closer to banks than it is to what I call crypto. And, and so the question is how does this evolve over the next five to ten years? And, and hope because the shadow system or the, the parallel shadow system that I want is not cefi because it has no choice but to eventually merge and buy banks at some point. If you think it through right, it's inevitable that crypto companies, cefi, crypto companies start buying big banks in the coming years or asset managers, especially with the tokenization.
- [50:39]
Rahm
I heard they'll want to buy banks. I don't know if they'll be able to pull it off for the regulatory reasons. So you're saying, hey look, it's not real crypto because it's cefi. But isn't the lesson of hyper liquid that the customer wants convenience, decentralization be damned. I share your ideas, but I'm all about the self sovereignty and decentralization and self custody. I like those concepts.
- [51:01]
Bill Barhardt
So you're saying that people use hyper liquid because of the convenience.
- [51:06]
Rahm
Yeah, the convenience of speed of settlement, the access to leverage, a clean ux, no gas fees to low. No gas fees, low transaction costs, the air drops, you know, the people will.
- [51:21]
Bill Barhardt
Trade generous leverage with no kyc.
- [51:24]
Stephen
Yeah, yeah.
- [51:25]
Robert Lesner
It's not about instant settlement every per.
- [51:27]
Bill Barhardt
I don't think it's about settlement at all. I think it's, I think it's leverage and it's no kyc, it's, it's getting around liquidity to basically lose market share, which was all of a sudden they had to go C5 legit. And that's what's driving it 100%.
- [51:42]
Robert Lesner
And listen, we mentioned DYDX earlier, right. Any perp exchange will win when it has that critical mass of liquidity. When another perp exchange comes with more liquidity, all the traders move because they're like, oh, I can trade more size, like with less slippage here, you know, for the, and therefore I have a better price. When you're trading with 100x leverage.
- [52:03]
Rahm
Yeah.
- [52:04]
Robert Lesner
Price is huge P L differences. And so the best liquidity wins the users the very, very, very fast. Which means these things can die very fast and it means they can be built very fast.
- [52:17]
Bill Barhardt
Yeah, yeah. Somebody has to take the other side to these trades. And so it's the liquidity that begets the, the, the, the, the reasonable premium. Right. And if that disappears because Binance is now basically giving you hooks to get off of Binance sex into Binance or, or, or Astrodex, that's very compelling is if I can Trade Tesla at 100x or 500x leverage, as insane as that sounds. Yeah, right, Yeah.
- [52:46]
Rahm
I mean Binance has a balance sheet to back up Aster. They can provide their own liquidity. They can use principle.
- [52:55]
Bill Barhardt
They can. But that's not even their advantage here. Their advantage here is access to the user base that has a balance on Binance. That's their advantage. And having their trust wallet system that can act as the Dex interface is the key.
- [53:14]
Stephen
In the vein of like Robert, you were saying they can rise quickly, they can die quickly. Various advantages between Binance and hyperliquid. Maybe just to tie a bow on this part of the conversation before we move to just the, the final part, who wins? And, and maybe it's not a zero sum game. It probably isn't, but that's the question I'm sure everybody listening is going to want to know, so go ahead. I don't think there's, I don't think.
- [53:40]
Robert Lesner
There'S like a terminal state where it's like, oh, you know, like Astro won forever, like put the crown on them and like it's done right. If you look at the history of derivatives, general, Right. These are derivatives. Liquidity is the game and liquidity does shift and it can shift from regulatory changes, it can shift from technology changes, it can shift from user strategy changes. But there's been lots of markets that were trad. That Were like, oh, they won and it's game over. For oil futures, it'll never change. Oh, for government bond futures, it'll never change. Stuff have changed. Right. It's happened in trad derivatives, it happens in crypto derivatives. It's I think, a carousel that will never stop moving. And I think people are always going to have to compete on cost, liquidity, you know, ease of use, all of these things, because it's not a permanent market structure like equities and stuff like that is like much stickier. Derivatives come and go a lot faster.
- [54:44]
Bill Barhardt
Absolutely. And the fact that we still have to normalize settlement in something else, you know, Bitmex did it originally. They were the, the people that founded the idea of real crypto perps and everything had to settle in Bitcoin. You know, now we have, you know, some settling in usdc, some settling in bnb. It's, it, none of it is ideal. And it also drives, you know, obviously higher spreads or, or higher premiums. And, and we don't have a good cross chain way of dealing with this. And that's why we're backed into this approach. Approach. But again, consumers, retail doesn't care because of the leverage they're getting. Why do I care if I'm paying 8% or 9% premium if I'm gonna basically go for 50x leverage? Right. But if you want to normalize this against kind of like applying traditional trading principles to crypto, we're going to need a true cross chain perps model that we don't have yet. Not that I'm aware.
- [55:43]
Rahm
Fair enough. Yeah. Like the fact that Hyper Liquid achieved success with no venture backing and was community led, I think is a great point. Right. You can have another one spin up. On the other hand, I agree, Bill, with your point that Binance has advantages. It has customers, it has awareness. They also have a balance sheet. So I think they'll still be an enduring player. Yeah, but it's not, it's not hard to put your hat in the ring.
- [56:09]
Bill Barhardt
But you said something earlier which is they're basically using the tricks and economic models of how BNB launched and they know what worked because that's what made CZ a billionaire. Ultimately it was the burn game with BNB and how he could buy business doing that, which created ultimately long term stickiness because once they had the balances in the sex model, the, the churn wasn't as high. Whereas to your point, like the Dexes can come and go and there's very low cost of change and so he Learns. I mean, he knows that those economics better than anyone.
- [56:44]
Rahm
Yeah. We need to get CZ on the show. I mean, he has the most incredible hero's journey that's tracked like the political climate. It's really extraordinary. Extraordinary visual.
- [56:59]
Robert Lesner
Yeah. The man is the center of the story and has been for a really long time. Like, he is main character, main charact.
- [57:07]
Rahm
He's the main character that survived. Right. That's the position you never want to be in. Right. Like the main character always gets taken out.
- [57:13]
Stephen
But he did go to jail. But. Yeah, he is.
- [57:16]
Rahm
Yeah, go ahead. Yeah, sorry.
- [57:17]
Stephen
But, but, yeah, but you're right. I mean, he didn't lose. He didn't lose any of his money. He didn't have to pay the fees. And now he's riding high and doing business with the President, so.
- [57:26]
Rahm
Right.
- [57:26]
Bill Barhardt
And he'll probably get a pardon.
- [57:30]
Stephen
So quickly. Just one, one more announcement and then we're going to sort of move into, I guess the final part of the show, which is, I think, the most fun part. But first, I know everyone tunes in week to week so they can hear from Rahm and all of his great thoughts. We had a really good reaction last week when Rahm, you got into that debate with Vinnie Gold versus the S&P 500. Bitcoin fits in. There was a demand for more and so we listened. And Thursday noon Eastern time, Rom is going to get in the ring with Vinnie and I'm going to moderate and we're going to hash out which is better, bitcoin, gold or the S and P. So. Yes. So please check out unchained.com for more updates. Lara's Twitter feed, Unchained bits and bits, Twitter feeds for all the info. But live stream 12 noon. It should be a lot of fun. And if you guys have questions, please submit them. Want to know what you guys want to hear. And with that. All right, so we're getting close to the end. One of the things I always like to do is kind of ask each panelist to sort of share a thought, a contrarian thought, something that, like, I mean, Bill, you've. I guess you've just got up and maybe you haven't had your first cup of coffee yet. Hopefully you have something you thought about while you were shaving that either got left on the cutting room floor. A contrarian opinion, just something that you've been kind of like chewing on as sort of a parting thought. So, Bill, why don't you go first.
- [58:56]
Bill Barhardt
I think the stablecoin business is going to be as big as everybody thinks it's going to be. But I don't think the winners are going to be who everybody thinks it's going to be. I don't think it's going to be the banks. I don't think it's going to be swift and I think that's a good thing. And I think that there's going to be lots of competition for international markets that is barely emerging. And you know, we'll see how, how the CDBC world responds. But I am not bullish on, on the banks.
- [59:24]
Stephen
Great. Rob, you want to go next?
- [59:26]
Robert Lesner
Yes. I'll say what I'm not bullish on. Just like Bill did. I am not bullish on projects continuing to innovate on additional Spot and Dex markets relative to perp markets. I am like calling it right here. I think we're talking about perps earlier. I think if you look at what was successful in crypto for a long time Spot has been the number one driver and then it was perps on CEFI exchanges. I think now we're starting to see perps off exchange. I think we're at the point in time where perps because of the leverage are just fundamentally more efficient than Spot plus borrow lend.
- [60:13]
Rahm
And I say this is someone that.
- [60:14]
Robert Lesner
Was the first one to really experiment with like spot borrow lend. I think this is actually bad for all borrow lend protocols long term I think and I, I think there's a lot of ramifications of this but I think Spot is going to lose out perps. I think the amount of interest in perps is growing and we're starting to see perps for the very first time get built into the end user consumer interfaces in a way that people have not experienced before. This mostly coming from hyper liquid in their builder codes as in they're paying people a portion of the fees to like build hyper liquid markets into wallets. But I think most retail, once they experience perps relative to Spot it clicks. And I think we're actually past the point of no return here and I think the consumer interest in Spot generally is going to go down and I think it's bad for the consumer facing venues that don't figure this out. I think it's why Coinbase is sort of like tripping over themselves to like go deeper into perss. Yeah, I think we've now entered perp ification. I think it's a superior form factor for most users and I think that Spot markets are going to slowly die out relative to perps.
- [61:31]
Rahm
I think they're both phenomenal takes that's very powerful. And it means, look, perps had the first product market fit in digital assets. That makes sense. Speculation was the initial user value proposition.
- [61:45]
Robert Lesner
Well, I think Spot had product market fit first. I remember people training on Buck Ox, right? And it was like, you know, spot markets were the ones that started this all. I think for most consumers in their heads, like all crypto is, it was like Spot. It's like, oh, I buy some coin, you know, I hold an exchange or wallet, you know, and I think that's going to change.
- [62:04]
Rahm
No, I think they're both, both great takes. I don't have much to offer this week. I'll say, look, from a markets perspective, sometimes best just do nothing. I think this is one of those times. Just wait a week, reassess, let things cool off.
- [62:16]
Stephen
Okay, well, then I'll, I'll add something in sort of within the vein of what Bill was saying that I actually found kind of concerning. Did you guys see the story in the FT where a circle exec was talking to a reporter about potentially looking at revertible or revocable transactions? I feel like the crypto community is okay with at least sort of blacklisting transactions, but I feel like in many ways that's about as far as we're willing to go when it comes to compromising on immutability as a cost of doing business. I don't know how just technically a reversible transaction could work on a blockchain. I'm not a coder, so I'm sure there's a way you could sort of make it work. And maybe it has to be on like an L2 or something that's not really a block.
- [63:03]
Robert Lesner
I know how to make it work, but that's a whole separate concept.
- [63:05]
Bill Barhardt
51% attack.
- [63:07]
Stephen
No, no, no.
- [63:08]
Robert Lesner
I know how to like, do it.
- [63:10]
Stephen
But, but I mean, I just like, at what point is it no longer crypto? Like, like if you can actually, if you can do a chargeback. I like, like, like, like I ordered something on ebay. I ordered an Eagles jersey. It wasn't what I wanted and the credit card company gave me my money back. Like, there, there's a time and a place for it, but that's not a reverse.
- [63:31]
Bill Barhardt
So, so, so the right way to look at this is there are two different transactions. There's the payment, right? And then there's the return. And, and, and crypto basically makes clear that in the real world they are two different transactions. The fact that a bank chooses to arbitrarily allow you to roll Back. A transaction in a database was always insane, in my opinion, and it was always solving some problem that was imposed upon them. Right. I worked at banks and never was it like, oh my God, we need reversible transactions because it just makes sense for the consumer. No, they're different transactions. Right. You would lay out the two accounts and you would say, okay, here's the first transaction and here's the second transaction they net out and that's the way it's supposed to be done. All the Maxis looked at that FT article and go see, I told you so. And, and, and you know, now, now, by the way, Jeremy came out and clarified that it was taken out of context. But you know, there's not a lot of different ways to take that.
- [64:27]
Stephen
Yeah, I'm not sure what kind of context there was. I mean, that, that, yeah. And like, I, like, I know those guys. I'm sure all of you know them too. And like, like, like, I mean, Jeremy believes in crypto. I mean, I mean they, they got into the space for the right reasons. But like, there's certain things and, and I'm not especially dogmatic, I try not to be as a reporter, but like there's certain things that to me are just like inviolable and I, I'm not sure how you can create like reversible transactions in anything close to a decentralized network and, and make that work. So that was just something on my mind too. But otherwise. Thanks, Bill, for getting up so early to do this. Like Robert, as always, Rom, as always, Rom, we'll see you again on Thursday. Thanks to everybody for watching and listening. And we'll be back next week with another episode of Bits and Beps.