Luca Monahan (4:31)

I'm writing it down. Nft.

Kane (4:36)

I'm not gonna lie.

Luca Monahan (4:37)

I actually don't.

Kane (4:38)

I don't.

Luca Monahan (4:38)

I don't think that's a bad idea.

Kane (4:40)

Yeah, I mean, like, the purpification of everything, right? Like, you know, if we want to bring NFTs back, we need some demand for the underlying. And, you know, if you, you have a highly liquid perp on it, I think, you know, without going down too big of a rabbit hole, when people have tried this in the past, the challenge is what is the price of an nft? You know, because they're not fungible, because everyone is unique. You know, the floor price tends to be somewhat fungible. Right. Like, you know, you can say a floor pangu is worth, I don't know, whatever it's worth right now, 3, 3 to 5, 8 or something like that. And then there's like, special ones that are worth more. But really what you care about is like the baseline thing. Right? So. Yeah, I don't know. What do you guys, what do you guys think about the whole oil hype?

Luca Monahan (5:34)

I think it is absolutely fascinating. I think it is really the future of crypto being displayed and honestly and frankly a masterclass by these guys, how it's all transpiring, like you said, Kane, like we've had these ideas, they've been around, but it's just working there. Is it, is it, is it luck? Is it a culmination? You know, who knows where we derive it, but it's phenomenal. And I'm going to be frank, when I'm looking at the crypto landscape, it's just really hard to imagine a world where Hyper Liquid isn't a top five coin. So kudos to those guys and keep on trucking on. And in a world where I think everything's focused on AI, shout out to them for holding some relevancy, at least for the crypto side, at least in the short term, but it's the future. I think everything's going to be perped, I think everything will be tokenized. I think you will see a world where tradfi and tokens converge and I think Hyper Liquid is going to be at the center of it. So at this point it's train that's not stopping. So kudos to those guys and gals.

Kane (6:45)

Yeah, yeah, sorry, go take.

Taylor Monahan (6:48)

Yeah, I was just gonna say I think it's interesting that this very centralized team, no offense, Hyper Liquid folks, but really like since day one, right, they have been, it's a small team, they work together in real life, if you guys don't know. Like they have an office that they go to and they work together. And obviously a lot of the choices that they've made early on have been more around shipping and getting it right rather than like the ideals of yesteryear. But I think it's really interesting that they've actually then kind of pushed out these new markets that are permissionless, right? Like actually permissionless. And that has then successfully done what everyone wants to do, which is empowered a whole bunch of other people to create new markets, right, for whatever the current thing is. And I just think that that's quite interesting because if you go back in time and you say, hey, could like a small team of people build like a sort of centralized thing, mostly centralized thing, and then, you know, within a year push out decentralized, permissionless like markets and be massively successful. I think the crypto culture, you know, five years ago, three years ago even,

Kane (8:18)

I think there's two things. One is, you know, talking about all the things that Hyper Liquid is doing that people have tried before that haven't worked. One of them is permissionless. Markets, permissionless markets never worked in the past. Like many, many people tried permissionless markets. You know, anyone can turn up and make their own, you know, prediction market, et cetera. But like, at the end of the day, there's some critical mass of liquidity that you need liquidity, attention traders, whatever, beneath which nothing works and beyond which it seems like almost everything works, right? And you know, hyperliquids. On the other side of that, I think Mike Ippolito, you know what's the best explanation for why hyperliquid succeeded where, Sorry, Tay, you're doing your crazy typing typewriter system. So hyperliquid, what's the reason why hyperliquid succeeded where basically all of the other perps dex has failed, right? Like what is the underlying reason? And I think there is no one reason, but there are, you know, this is something I've thought about quite a bit. And, and you know, I think there are like several proximate causes that are like really, if you take them away, it doesn't work. Right. And I think the most critical of all of them is that they made the right decisions for the best liquidity. Like they were optimizing for an outcome without, you know, without trying to like do this ideological decentralized thing. And you know, the interesting thing about it is they chose an L1 to do this, right? Like by choosing an L1 by saying, okay, we're going to build our own chain to do this thing that will allow us to have control over throughput and all of the things that we need that allowed them to then build an order book, which was the thing that was missing most of the dexes were these weird hybrid AMM systems with just janky components to them that prevented liquidity from really aggregating there. And so I think the fact that they started off with this architecture that allowed them to build a Dex that was genuinely competitive. Instead of trying to reinvent how a per exchange should work, they said we'll just replicate a perp exchange, but on an L1 and that like as soon as they did that, then everything else kind of unlocks from there. There's a bunch of other things that then work because you have the capability to handle the throughput and, and whatever. So yeah, I think, you know, when, when we look back on, you know, hyperligid is what, like three years old or something like that, right? Like when we look back in another three years time, you know, I, I think we will see that hyper liquid kind of cross some liquidity chasm where it's it's pretty unassailable. Which doesn't mean that there's not opportunity for other players. You know, there, there are 20 large centralized exchanges that have a ton of liquidity, ton of users, et cetera. But in, in terms of like per Dexes, I think it's going to be hard to take HARP liquid down from here.

Taylor Monahan (11:44)

Yeah, I, I agree. 100 they're, they're killing it and yeah, we'll see what comes next.

Luca Monahan (11:51)

Is it zero sum you think or you think this is like, can be perp Dexes can be like centralized exchanges where there are a couple that are incredibly successful.

Kane (12:00)

I think that, you know, we saw the success of lighter, you know, with a different architecture but like a similar principled approach. Right, like, like product principle. Not, not decentralization principle. Right. You know, we are going to optimize for a thing that has the best, you know. But I would argue that LiDAR probably still got a little bit caught up in the like, you know, weird Ethereum decentralization stuff like around, you know, like oh, we're going to use like zero knowledge proofs for this and it's going to be all provable. And it's like as soon as you start at. It's hard enough, it is very hard to build a good protocol. When you start adding extra magical requirements that are like orthogonal to the underlying aim. You're just like magic making your life way harder than it needs to be.

Taylor Monahan (12:57)

Yeah, yeah, exactly. And I think it's, I think it's a testament to like their, their choices and their focus. Right. And I think that we're going to see this a lot more in the coming years. We're going to talk about this later in the show but like we're, we've been talking about this sort of overall haul around daos and like where is the value is this hindering people from building that kind of stuff? And I think that, yeah, I think crypto is growing up a bit in the sense that you have to focus, right. You have to like set those goals and those goals have to be, have to revolve around your success, not around like some fancy technology, some fancy culture, some fancy, you know, whatever it may be. And I think in this case the most interesting thing is that the permissionless markets are actually part of their goal. Right. Their goal is to build the best, the fastest, the most used, the highest liquidity. Obviously permissionless markets unlock a whole new layer of markets and, but, but that sort of like that drive comes from that singular goal that they've had since day one rather than some philosophical ideological thing that they wanted to do. And I think that that is another like thing that we're going to see more successful teams do. And it doesn't necessarily mean that we're going to like lose the ideals or lose the, the value of the permissionless tag. It just means that the permissionlessness is going to come from the value rather than from like some enforced culture or ideals or whatever it may be.

Luca Monahan (14:52)

Yeah, I remember coming into crypto and I remember like my day one, it felt like you had to do two things which was like accomplish the function of the business that you were trying to accomplish and then also pander to the ideology that everyone had. And if you, if you. Actually the, the unfortunate part is they, they were most of the time paradoxical. They meant opposite things. And you know, like, like in our situation, like, you know, imagine if everything that we, if I got caught in that loop, we would have unequivocally failed. I'm glad that crypto has matured past this, past this point where I think people are starting to accept that. And I, and I said this about Ethereum. There's like, there's two different blockchains there and there's two different functions. I think, like one is to be, you know, important for the world and important for humanity. And those builds are different than builds that are supposed to be performance and make money and that, you know, can scale into really big organizations. Like, you know, those two ideologies are functionally different. And it seems like we're going from this, you know, cypher funk ideology which again like got us here and I think is very important for just, you know, remove the money and the success. Right. Like that's just an important fundamental, you know. Right. That I think humans should have. That I still think is important. But in a world where you're going to compete with AI businesses and you know, huge financial incumbents, like, you do have to play their game to a certain extent. And I feel like we're crossing into this new era where it's okay to, you know, build up a first principles business in crypto and not try to, you know, save the world while, while you're doing it.

Kane (16:49)

Yeah, yeah. Like there's, there's two issues here, right. Like, one is that the audience, the, you know, we weren't completely like the audience that we had at that time.

Luca Monahan (17:03)

Yes.

Kane (17:04)

We were building for it was like a giant circle jerk of people that were like decentralization and communism and like all of these things. Right. And so you know, if you didn't do that, you had no audience. Like genuinely, like, if you weren't like decentralization first, there was no audience first, you. Now, it didn't help that we also had all drunk the Kool Aid because we're all in that audience. So it was this bubble of people that were like, we're going to change the world by like forcing the world to be like us, right? And you know, we're going to do things like, in a maximally transparent way, etc. Etc. So you had these two things of like a bunch of crazy people who were like, ideologically aligned and then that was the, the only audience that you had, right? And if you deviated from this stuff even a little bit, like, there. My favorite thing from like the old, like Haven synthetics days, like this goes back to like 2018 or something. There's a Reddit thread where this guy like tears us apart because we had proxy contracts and the contracts weren't like completely immutable. And it's like a tirade and people are just like piling in like, these guys are monsters and like, how could you do this? And we're like, we just want to be able to build things quickly. Guys, like, and they're like, unacceptable. Like, you cannot, like, you cannot optimize for anything other than pure decentralization. And so I do think that like, as the audience has matured, right, and as we've like added more non ideological people, we have gotten to a point where like, you have an audience where you can do things and not immediately get, you know, burned at the stage stake for, for not, you know, being maxly decentralized. And then I think the second thing is that it, there's like very practical exam. We didn't have many practical examples of like, good businesses in crypto. We had L1s and protocols that were like, they happen to be very decentralized and very successful. So it was hard to like, look at a thing and go, oh, you know, I want to be more like pudgy penguins where my shit is in Walmart than, I don't know, Cardano, where, like, I've got hawks on a farm. Or like, you know, like, there weren't good examples of like, this is, you know, this is the thing that I want to be, right? And so I just, I think that like 15 years in, we have much better examples of things that people can aspire to be and aspire to do. And like, I want my, I want to build products and I want those products to be in the best places to be distributed. I want them on Amazon, I want them, you know, that sort of, that sort of stuff. And I don't need to be a dao and I don't need to like, do everything in public and be maxibly decentralized. And so, you know, that also conveniently happens to be a much more sensible way to build value.

Taylor Monahan (20:03)

Yeah. And I don't think it means that we have to like, lose the values entirely. It just means from like an operating perspective, like the core goal of what you're trying to build needs to come first. And the reality is like decentralization, permissionlessness, all of these things are valuable, but they're not inherently valuable. Like, just building something in that way doesn't make it valuable. However, as we've seen with like hyperliquid.

Kane (20:33)

Right.

Taylor Monahan (20:33)

Once they've unlocked permissionless markets, that is new value on the table. They are creating new value in a way that is one, aligned with their goals, but like two, like huge amounts of new value that they couldn't do by themselves. And I think that's, that's sort of the, the, the missing piece from before was that everyone was trying to build these things just for the sake of it. Right. And so there wasn't really a lot of clarity on like, why does permissionlessness or why does decentralization, why does this help us unlock new value or create new value or achieve our goals? And that's why, like Luca, you put it really well, right? You're like, we had to do these two things that were like, not the same at all. Like, we're trying to achieve our business objectives, but then we're also like, you know, trying to pretend we are something

Kane (21:27)

and we're going to tell everyone what we're doing like six months before.

Taylor Monahan (21:32)

And so, yeah, I'm excited, I'm excited to see what comes next. I do think that thinking about it in a purely like, like, I don't, I don't think that there's a reason to think that like this, the cypher funk, like values are completely gone. It's just that you're not starting from those things. You're not doing them just for the sake of being this thing. It's going to be, you know, it's going to come from your broader goals, what you're trying to do for the business, for the product, for your users.

Kane (22:05)

Like, Ethereum is the embodiment of this, like at the protocol layer. If you're building something on Ethereum that is just like much better inherently than if you were building your own database, one of the problems is it was like everything all the way up the stack has to be decentralized and if it's not, then you know, it's worthless, right? And it's like actually there's different ways that you can approach this problem, right? Like, you know, don't be custodial. I think that's like not, you know, don't be custodial. Like if you, if you have to be custodial to achieve your aims, then that's not ideal. But even then there's like, you know, like some kind of gradient, right? It's not binary. But you know, if you're, if you're non custodial and you have 10 different teams that are really centralized that are competing hard against each other, the outcome you're going to get when one of those is successful is in like just inherently better than if you have 10 teams that are trying to be maximally decentralized and compete against each other. There's just like, there's no, we've seen the empirical evidence of this. Like every single time someone turns up and is like, I'm going to build this as if it were a business, but on these rails and, and it just is better.

Taylor Monahan (23:22)

Yeah, exactly.

Kane (23:26)

So, all right, let's, let's see what happens. One thing, Luca, you, you made this kind of offhand comment about Ethereum, the network, and this has been on my mind, I think that particularly because Vitalik has had this very long term view, right, of like this is where we want to go to, you know, and I, I think he, you know, there's definitely been missteps, right? Like the whole L2 thing, you know, there's been a whole bunch of places where like the world has not ended up in the place that the Ethereum community and particularly Vitalik expected it to end up, right? Of course, like it's hard like, you know, you're building things in an imperfect information environment, right? But I think that like the outcome, the, the goals, the long term goals have, have kind of remained really clear. And you know, I remember sitting there in 2018 and Vitalik was like the merge is coming in three months or something, like something ridiculous, right? And you know, it was actually like two years later, but when we look back it's like that's actually not that bad. But I think that there's something that is about to happen in Ethereum that is not priced in at all, but which is that all there? You know, for the last, what, 10 years there have been like 20 guys who can actually build the thing. And all of a sudden there are these magical aliens that we have inside our computers that are making everyone so much faster, better at building this stuff. You know, there was, there was someone who was like, I built the whole 2030 roadmap on the weekend, right? And it's like, cool. Obviously we're not going to ship that tomorrow, but the pace of innovation in the Ethereum community, I think is about to accelerate massively. And if some of those things that I remember, we even talked about this on one of our pilot shows that didn't get published. We talked about the 2030 roadmap and how ridiculous it was that you were publishing a 2030 roadmap. We could be past the singularity by then. Right? But I think that 2030 roadmap might happen in like a year now. And if it does, that is just not on people's radars. I don't think they, they have an expectation of how quickly Ethereum ships and how quickly it moves. And it's been better lately because of better coordination. But I think we're about to see what happens when it gets better because all of a sudden the engineering resources are a hundred x what they were, you know, six months ago.

Luca Monahan (26:06)

Let's go. I love it.

Kane (26:12)

All right, before we continue, here's a word from the sponsors that make the show possible.

Sponsor Voice (26:18)

The world is about to see one of the largest infrastructure shifts of the century. New technologies are using more energy than ever before. But our legacy grids, we can't supply the demand and we are barreling towards a global bottleneck. So Fuse is rebuilding it. The energy network is an intelligent, decentralized grid that coordinates smart devices to balance supply and demand. The network harmonizes existing infrastructure, increases grid capacity and unlocks low cost clean energy. Energy dollar is the native token token of the network. The more electricity the world needs, the higher the demand for the energy network. The value of energy dollars may fluctuate from one of Europe's fastest growing energy startups. Follow fuseenergy on X to find out more.

Sponsor Voice (27:14)

Multichain Advisors is an emerging technology growth firm that has helped create over $50 billion in enterprise value for more than 80 clients like Pith, Moonpay Commerce and Wormhole. They've worked with some of the largest and most impactful companies in the space. They're the partner you want when you're navigating markets and trying to break out from the noise. They help navigate TGEs, go to market, BD and partnerships, capital markets, advisory, PR, media, placements, KOL activations and more, driving execution from launch to scale. Their results are measurable. To learn more and start building real

Kane (27:48)

traction today, visit multichainadv.com all right, very exciting news. Pudgy Penguins has shipped its Club Penguin moment. Pudgy World. I have to hand in my Pudgy Maxi card because I have not yet played it after 24 hours. So I'm going to be relegated to the Pengu Gulag, I think. But my kids and I are going to play it this afternoon when they get home from school. So I'm very excited to check it out. Yeah, Luca, give us the. Give us the rundown. What are we looking at here?

Luca Monahan (28:24)

Yeah, it's a browser free browser game. Anybody can basically go to pudgyworld.com, click a couple buttons, and basically live in this immersive universe. As I was mentioning in Kane just a second ago during that commercial break, it's one of the always a good time in the igloo when people outside of our sphere, specifically technical people, you know, kind of give us our praise specifically around the 3js web GPU community. I was telling Kane just a second ago that there's only a couple people in the world who can build a product like that. It's really a developer and a talent issue. Not many people build in that tech stack specifically in the WebGL realm. And I can confidently say we probably got one of the best out of, you know, three or four or five guys in the world that know how to do that. So it's a unique experience in and of itself. Really proud of it. It's the first game we've ever built in house. So Pudgy Penguins has shipped games in the past, most notably Pudgy Party, which is our partnership with Mythical Games, which is a triple A mobile gaming studio. But we built this all in house and we've never built games before. Probably the closest build to this that we've done is our Igloo Dot Ink website, which is just like an immersive lander.

Kane (29:44)

That.

Luca Monahan (29:44)

That is a pretty cool experience to say the least, but it's great. I think the reception is great. Obviously we have a lot more to go. I think we have an AI agentic vision for what I think this could be. Like, how do you bring Tamagotchi to this immersive world and you have to take care of your AI age? A pretty big vision for it, but we needed to see if people even wanted the product. And so I think right now, today, we're averaging about 20,000 daily active users. So far, so good. And another, another win in the igloo in the igloo camp. So happy that we finally shipped it after many years.

Kane (30:27)

Yeah, so that was my question. My first question is like, how long have you guys been cooking this for?

Luca Monahan (30:33)

We've been cooking this for like three years. So that actually came out of an idea with the community.

Kane (30:37)

Community.

Luca Monahan (30:37)

So for those of you who are not familiar, every two weeks I do

Kane (30:40)

an inner igloo with the community.

Luca Monahan (30:41)

I basically speak to them and I say, look, what ideas do we have? What problems do you have, what objections, what's good, what's negative? And it's kind of like a good feedback loop for me to keep them aligned. And really just the build of the brand and the company as transparent as possible in that world. We basically created the bridge with the toy. So you buy the toy, you get the QR code, you scan it, you get your NFTs via gases experience. The whole, you know, web wallet is custode, is custodial. So that product was built. But then once you kind of built your own little pudgy penguin after buying a Walmart toy, the question became really obvious, which is like, what do I do with this character that I just made? And unfortunately at the time, because you know, we've been, you know, we've been running on a tight budget, but we came to the conclusion that like you got to bring it into an open world, duh, right? Scan QR code, build your own pudgy and then play with it in an open world. The tasks seem pretty gargantuan. Thankfully over the last year and a half, two years, the capabilities of browser have expanded. So we were really keen on making this a browser only experience. I think from like a click through rate and how we already built the product via the toys, it kind of

Kane (31:55)

needed to be that way.

Luca Monahan (31:56)

But if you understand, like, why haven't experiences like this lived in the past, specifically on browsers? Because of the limitations technically that browser kind of presents.

Kane (32:06)

You know, you can build anything if

Luca Monahan (32:07)

you download a packet on Steam and you do the whole nonsense right. But I believe that that experience, especially for a brand like ours, didn't really fit the bill for what we were going for. Like, I can't expect somebody to buy a toy at Walmart, scan the QR code, get the whole thing set up, and then, you know, port that over to desktop, download a packet and have that whole installation. That flow just seemed obviously broken. But in a world where you can actually take it directly into the game From Browser Within 15, 20 seconds seemed like a really great experience. So it's long overdue. But at the end of the day, the community gave us grace. I mean, we were supposed to launch this two years ago. The community gave us grace understanding this, our first rodeo, and I think it shook out pretty good.

Kane (32:53)

Nice. That's really exciting. And so one of the things that I read is that, that this is very much like not crypto in your face. You know, what, what's the, what's the thinking there in terms of like, how do you integrate crypto? How are you thinking about what a consumer crypto product should look like?

Luca Monahan (33:14)

Yeah, so what I think it can evolve to is I think you can add a lot more crypto elements today. The login and the account is on abstract, so it's all through the abstract global wallet. The traits and things that you collect are NFTs. Right. So it's not in your face crypto, but you know, there is those. Rails are in place so that people can eventually trade the trades back and forth, sell them for real dollars. So you can kind of create this browser, cute penguin world, but also that has some sort of real economy tied to it. And I'm excited for that to kind of open up as we kind of go over the. The next couple of weeks here. I think from our perspective, I've always been this champion of this idea that crypto onboarding has to be. Or crypto rails have to be a tech stack and not a hook. So what I mean by that is when you tell somebody to get on Instagram, you don't tell them, hey, get on Instagram. It uses this amazing technology called Python. It does these great things, right? It should just be a function of how it runs. And we've never been a brand that sold crypto first. We've actually done the complete opposite, right, which is like sell crypto last and try to merge the two worlds. I think that's really the role that Pudgy Penguins plays within crypto. I think there's other people that are going to try to shove crypto down your throat. I think our role is to be the brand that the family and that every person within that family can get around and participate in without having to understand the complexities of exactly what our industry is. I think as time goes on, the user will mature and they'll start to understand it a little bit more and we will probably walk them through that process. But everything we ship always has to be crypto second in terms of. In the eyes of the user. If at any point in time, through that process, it becomes crypto first. I think you lose people on that journey. So in layman's terms, I believe in abstracting everything away. Hence why we built the abstract blockchain to try to help build that in that thesis in vain.

Kane (35:22)

Awesome. Awesome. I mean, it's funny, like, we have so much pudgy merch in our house. Like it's everywhere. And, and you know, when my, my kids friends come over, like it's the first thing. And it's crazy, right? Like, they're not into crypto. It's not like they've like seen a penguin nft and they're like, oh, that's like they have no idea. And they turn up and like we have, we have this like golden Pengu with the, the red baseball cap backwards, one of the like, you know, I guess half size figures or whatever. And like every single kid who comes in is like, oh, like, what's, like, what's that?

Luca Monahan (36:06)

Right?

Kane (36:06)

And my kids like, oh, they're pudgy penguins. But tell, you know, and try and explain like what NFTs are or whatever. But it's just, it's really interesting like as a brand, how powerful it is that you can just have a pudgy piece of merch, like a figurine or a plush toy, and like, kids gravitate to it. Like they see it. And it has nothing to do with NFTs. It's just like, it's a good brand, right? It's a good brand and a good.

Luca Monahan (36:32)

Well, let's hope we stay in business because we just got sued by the original penguin. I don't know if you saw that. We got, we got a, we got a trademark lawsuit. It's hilarious. You missed it.

Taylor Monahan (36:42)

I saw, dude, it was. It's crazy what's going on.

Kane (36:45)

I know I need to know about this.

Taylor Monahan (36:47)

The funniest tweet. Let me try to pull it up. The funniest tweet though was the, the pudgy was like they put the two penguins side by side and they're like, with the like, like they're the same thing meme, but like, they're not the same thing at all.

Luca Monahan (37:03)

It is the most frivolous. Usually. You know, I'm in the business of cortisol spiking. I mean, I'm. I work in crypto for God's sa. So half of my job is to manage my cortisol spikes when they happen. The lawsuit is so frivolous. I shit you Not Kane. I had the least amount of cortisol spike that I had had in the fiscal year when I saw this frivolous, ridiculous lawsuit that I frankly think they did it for marketing purposes, actually, because it's so frivolous. They try to compare this, like, scribble of a penguin to this cute, beautiful blue penguin that we have that everybody knows, and they try to make a comp. And they also, apparently you can trademark words and you can own words and then make the claim that they own the penguin word and that you can't sell things that use the word penguin. So, you know, I actually thought you were a prize. So I was. I wasn't gonna go. I'm not gonna go down a deep rabbit hole, but it's a pretty funny joke. And Kane, you should definitely check out the tweet. I feel like our intern did a really great job lowering it for sure.

Taylor Monahan (38:03)

Yeah.

Kane (38:04)

Yeah. I mean, look like, you know, crypto, I think, has a long history of, like, frivolous nonsense thrown at it, you know, including by the U.S. government. So, you know, we will probably be okay.

Luca Monahan (38:17)

Yeah, we'll be fine.

Kane (38:20)

Cool. Okay, so I'm very excited to play the Pudgy World game this afternoon. Our next segment, this is, I guess, kind of speaks to this idea of like, you know, more company, like entities building stuff in crypto across is considering turning their tokens into equity or pseudo equity. So the idea is ACX holders, which is a token that's been around for, I think maybe three or four years now, may be able to exchange their tokens for equity. You know, it's. It's interesting across and, you know, UMA and like, the whole, you know, there's a whole ecosystem here of, of different protocols and tokens that have had this same problem. Like many projects of, you know, the equity token split and, you know, where does it live, et cetera. So, so this is, this is quite interesting. I guess they're. They're still a dao, so they're doing a governance temperature check to see if they're allowed to become more centralized. So that's very on brand for daos. But the proposal is basically that ACX holders would choose between exchanging tokens for equity in a new company or redeeming tokens for usdc. I guess this is like the equivalent of like a take private transaction, right? Like, they're. They're basically saying, like, we've got this public token and we want to privatize it and we're going to offer open bid on. And this is A very common thing in public markets. So we haven't seen much of it because there wasn't much you could do. The premier that tokens get versus being private was so distorted that it just didn't make sense to do something like this. You know, your tokens trading at $100 million and a private company with the same structure would be worth $10 million. So why would you possibly reverse this? But I think, you know, as we see more projects that have like, you know, decent revenue, decent kind of, you know, business structure that maybe are like mispriced by, by the public markets because tokens have been so crushed, maybe this becomes viable. You know, the fact that they're offering a 25 premium to the, the recent market price is, is pretty indicative. What's the, I'm curious, what's the FTV at that price? Does anyone know?

Luca Monahan (41:13)

I'll tell you right now, 25 to market premium FDV would be 80 million, 70 million.

Kane (41:22)

Right.

Luca Monahan (41:22)

And so the announcement, well before the announcement it would have been 50 million.

Kane (41:30)

Yeah.

Taylor Monahan (41:31)

Because it pumped, right.

Kane (41:33)

Interesting, Interesting.

Taylor Monahan (41:35)

I'm curious, like, I don't, I don't know. I guess one thing to point out is I'm not super familiar with the across token, familiar with the bridge. Not sure how the value accrues to the token as it is, I think, I don't know, it's just interesting. What is the, it's like, what's the end goal here for them?

Kane (42:01)

Remember, you know, like across was. Was this like second product on top of, you know, the, the original product, right? So like there was an original token and then the new token. And so, you know, there's, there, there's been already some confusion about like, you know, where does the value accrue, etc. But you know, across as a protocol, as a bridge does a lot of volume has like, you know, very good, Lindy, you know, has. I think it's one of the bridges that Infinix integrates. Like they've got a, they've got a good architecture, you know, good liquidity. So like as a business running a bridge and this is the thing, right? Like, can a defi protocol bridge thing be a business? Is like the question, right? Defi Ignis says absolutely not. Get the fuck out. Huge failure of crypto. It feels like a betrayal of the crypto spirit. Investment across, sorry, investment access for everyone anywhere globally. ACX stops being freely tradable on Dexes if they ever IPO that liquidity goes to TradFi instead. It should be the reverse tokenized Equity. And look, I think. I think this is a fair point. And people are trying multiple different variations of this right now. You know, Leshner, good friend of mine, has superstate where he's trying to, you know, create these kind of hybrid pseudo equity tokens, right? Where it's like a token but good,

Luca Monahan (43:47)

you know, instead of.

Taylor Monahan (43:48)

Robert's gonna love that description, by the way.

Kane (43:51)

I know. Yeah, you can. You can put that tagline on your billboard, Leshner. So, so. But you know, that to me, though,

Luca Monahan (43:59)

Kane, because actually, this is a very interesting thought and very serendipity. So I actually want. What's Lesnar doing, actually?

Kane (44:05)

All right, So I sat at dinner with him for three hours, and he explained the entire thing to me. So I should have a deep understanding of it, but I do not. I have a very cursory understanding of it because I've purged all context that's not related to AI coding in the last six months. But, but. But essentially the thesis is that the good parts of tokens are that you, like, what literally what like, Defi Agnus is saying, right? Like, global liquidity, global access, transparency, you know, there's. There's a bunch of benefits to the token as an instrument for liquidity and trading, right? Which we all know. Like, I think that. I think the innovation of tokens was, like, in the instrument itself, not in the underlying value generation, right? You know, the criticism of tokens has been that you have no idea what it is. Most of them are somewhere between nonsense and vapor. Even if you do have something that looks good, every single one is like roll your own pseudo equity. So every single token is issued in a different way with different structures, different. Like, there's no template for how you do this. And so, you know, I mean, talking about fungibility, right? Like, no token in crypto, I would say, is actually fungible with another token, right? As in, like, you can, you know, across has all of these things that are, like, similar to snx, but also very different. And, like, you would need to have a table that was, like, a hundred rows deep to be able to, like, do the comparison of all the little nuance differences of, like, how a cross works versus synthetics. And that's just two tokens, right? Then you throw in, say, pengu, right? And again, like, a whole different set of, like, things like, where does it live? What happens? What does it do? What doesn't it do? What does it. What rights do you get from holding it, Et cetera, et cetera. And so the inefficiency of the market is that you have this very, very powerful instrument that is not coordinated at all. Right? There's no structure to it, there's no way to reason about it. Most of the ways that the tokens work are not even explicit. They're like implicit, like, oh, you didn't realize that this thing does that, you idiot. Like, what are you doing? And it's like, that is not an asset class. That is investable. The only reason why tokens have done as well as they have is because of the underlying genius of having a 247 liquid instrument that can be traded by anyone, anywhere with no kyc. Like that's the brilliance, right? The brilliance is that you have a global blockchain that anyone in the world can access and these tokens just flow around on it and can be bought by anyone.

Luca Monahan (47:11)

So what is he proposing the solution to be?

Kane (47:14)

So what Leshner says is let's put some structure to this. If you buy, let's say Leshna comes to you and says, okay, we're going to do a proper Pudgy Penguins token that is a representation of the Pudgy Penguins company is a representation of the cash flows that the Pudgy Penguin company will generate from the business activities that it does. It has very clear rights that you get as a token holder. It has, you know, very clear disclosures as to what the company is doing, what the company is not doing. You can't have a bunch of tokens that are sold on market without, you know, disclosing who's selling them. And you know, it makes the token much more like an equity instrument, but it maintains a lot of the benefits of the, you know, global 247 highly liquid instrument. Now there are trade offs because, you know, there, there are like constraints around like who can trade it, etc. But I think that, and this is where like, you know, we haven't solved the problem, so we need people trying different ways of solving it. But the idea that we will have tens of thousands of tokens that are all unique snowflakes in terms of how they operate. And, and you know, what rights you get is just not viable.

Luca Monahan (48:49)

Right?

Kane (48:49)

Like, it's not, it's not going to be something that is like actually long term viable. And so the idea is like, find some way to put some structure around this so that people can reason about the difference between the Pudgy Penguins token and the across token.

Sponsor Voice (49:06)

Yeah.

Taylor Monahan (49:06)

And so Taylor isn't sitting here every single episode saying like, by the way, what does this token actually do? Right? Because that's like. And then you have to go, like, do some deep research. And a lot of times the answer is it's not super clear. And the team has made promises very informally on Twitter, but actually you don't.

Kane (49:28)

That's a good disclosure regime. Like,

Taylor Monahan (49:32)

yeah, like, you don't actually have, like, token holders don't actually have rights. It's not actually, if there is, like, a real company with equity that's separate, it has no real link to the token itself. You know, jurisdiction is all over the place. So, you know, I think Robert Leshner is approaching it in one way, which is sort of take the, the good of the traditional system, which has, in my opinion, like, the benefit is that the, you actually do have rights. Crazy concept. Right?

Kane (50:10)

I think, honestly, that's the crux of it, right? That, like, you, you have, you know, you have this instrument that is, is liquid, but also has, like, very clear disclosures around what the rights are for holders.

Luca Monahan (50:23)

Yeah, well, I, I, I do have some, you have some breaking news. But I will say in this vein, I'm probably before the end of quarter two, we probably, I probably change how everyone looks at this.

Kane (50:39)

Interesting.

Luca Monahan (50:39)

That's why I'm asking. I'm writing things down as well.

Kane (50:42)

So I like. My hot take is we should get Leshner on the show. I can force him.

Taylor Monahan (50:47)

I'm down.

Kane (50:49)

So, so I'll, I'll make sure that he comes on the show in the next few weeks. Because I feel like this is a thread that keeps coming up. Like, how should be structured? Why? And, you know, important is this new

Luca Monahan (51:01)

Kane, if you were to index this, like, how important is this for the future of crypto? I think it's, I think it's, I think you can't find three bigger problems than this.

Kane (51:11)

But what do you like? Yeah, like. Yeah, yeah, like nine out of ten. Yeah, like easily nine out of ten.

Taylor Monahan (51:18)

Yeah.

Kane (51:18)

You know, so, so because it's the

Taylor Monahan (51:21)

whole, it's the crux of everything, right? It's like we have, it's, we have undefined informal shit posting as rights, and then people keep getting rugged. In the best case, they get, like, inadvertently rugged, and there's like governance forum posts around your rugging, but in most cases, like, you just get rugged, and then you just have to sit there and stew in the fact that you just got rugged. If we want to unlock real value at the end of the day, like, we need to have structure. Buying a token, sure, we can still have meme coins, right? I don't care. But if the token if the token is reflecting like something, right. If promises are being made, then there needs to be like, yeah, there needs to be disclosures. There needs to be some formalized structure around that. There needs to be accountability. Right. If you screw your token holders after making promises to them like that should be, you should be punished for that. Right. And so all of those things seem to be defined, tried by, and so

Kane (52:29)

like, but why, like, why should you be punished for doing the wrong thing? And this is like a really critical point and I think Leshner would, would have a lot to say about this. Not because it's good to punish people, not because, you know, people who do the wrong thing are bad or whatever. The reason why you need to have enforcement of rights and responsibilities is so that the market is efficient. Yes, that's it. If the market is inefficient, then we're allocating capital poorly and everyone is going to be impoverished.

Luca Monahan (53:06)

Right?

Taylor Monahan (53:06)

Right.

Kane (53:06)

If we're allocating capital, well, because we understand what we're allocating capital to and we don't put money into nonsense because we know it's nonsense and we put money into good things because we know they're good things, then we will have a much more efficient market and everyone will be happier and we will generate more value. And that's it. Like, it's not because people are bad or rugging people or, you know, like, this is a sad. There's none of that. Like, who cares about any of that? The, the sole reason to have, you know, disclosures and clarity around what the rights of token holders are is to make the market more efficient. It's better for everyone who is trying to generate value than that people can reason about the value that they're generating. The more transparent and open and, and easy to grok it is, the better.

Taylor Monahan (53:57)

Yeah. And the, and anytime there's uncertainty, there's like. And like with tokens, there's so much deep uncertainty. That is risk, but it's not quantifiable risk. Right. If the token, if the people who created the token wake up one day and decide to do something completely insane and, and nobody can do anything about it, if that's like a real possibility, then anyone investing in it, like outside

Kane (54:27)

that, like whether, whether it's explicitly or implicitly priced in, that is priced in. If all tokens can just evaporate at any moment, that's priced in.

Luca Monahan (54:37)

Yeah.

Kane (54:37)

Like the market understands that. How is it priced in? Because 90% of people will not touch them. That's how it's priced in. Right. And if you remove that risk, that someone can just like, evaporate a token overnight on a whim, then all of a sudden, there's a whole group of people that could be like, oh, okay, I like the pudgy. My kids love pudgy penguins. I want to invest in this thing. I just want to make sure that if I put a million bucks in that, it's not going to disappear the next day, right? I want to know, like, what are my rights? What am I going to get? Who's going to make sure that Luca does the right thing? You know, what jurisdiction is he operating in? You know, is he in the Seychelles or is he in Miami? Right? Like, you know, we need to. We need to know, like, what's going on here. And if we know all of that, then it's like, okay, now I feel comfortable. I think the Pudgy brand's awesome. And I'm going to, you know, I want to put 10 million bucks into it. Great.

Taylor Monahan (55:33)

Because then you can reason about the risk as well. But when you have when, like, the quote unquote, long tail risk is that the whole thing can just disappear. And that long tail risk isn't actually long tail. It's like the entire risk. Like, I'm sorry, it's just. It's completely insane. And it's. I think it's one reason why the industry has gravitated towards meme coins, because it's like the. The. The facade of all the other tokens. Like, turns out you didn't actually have rights. You know what I mean? And people kind of got sick of that. But. But the solution is not to just turn everything into this, like, nihilistic. Nobody expects that they have rights. The solution is to fix that. Like, the solution is to, like, establish structure. Do disclosures have rights, uphold promises, create accountability, on and on and on so that people can then reason about the risks, and then you can unlock immense value.

Kane (56:28)

But the problem is, like, the problem is that there was a period of time where the partners who would have been sitting on the other side of this process were like, if you come within two miles of our building, you will be disappeared, and no one will ever hear from you again. And maybe not even that. Maybe we'll just come to your house and just, like, you know, shoot you in the head, right? Like, those. Those people were the ones who were supposed to be working with us to create a regime where you could have clarity, right? But the problem was, and, you know, we saw this with that, like, Mary lady or whatever the hell her name was. She's like, you're all scammers, so why would I. Like, of course I'm going to shoot you in the head if I have a chance. Like, you know, the fewer of you that exist, the better the world will be.

Luca Monahan (57:18)

Right.

Kane (57:18)

Like, that was like, the tacit assumption behind all of the things that they were doing right, as opposed to, like, oh, no, this is another industry that's, like, generating value but is inefficient because there's no structure to the market, etc. And there's a bunch of good actors that are trying to, you know, create value and if we help them to form. But, like, you know, whatever. They, like, went to Harvard Law School or something, so it's fine. So. So I think. I think, like, we will. We will figure this out, and we will. We will solve the problem ourselves. And, you know, the most bullish thing for me is people like Leshner who have been through this, they've seen how expensive it is to have a token, how insane it is to, like, manage a token, how you can't even give people the disclosures that you want to give them, even if you tried, because you would go to jail. Like, all of these things. And he's like, I'm going to turn up and try and solve this. And that's one person. And there's, like, 20 people who are trying. Trying to fix this. It sounds like Luca is also working on it. So, you know, enough people working hard to try, and the problem will get solved, the market will solve it. Which was always my view is, like, hoping that Mary from the SEC solves our problems is, like, just not a thing. Right? So, you know, I'm bullish on. On our ability to actually innovate around this and solve it. So, yeah, let's. Let's see. I think our last segment, if we still have a little bit more time, we do not. Okay, I guess we're gonna wrap it up here then. So we'll talk about AAVE next week and maybe. So that's it for this episode of Uneasy Money. If you enjoyed the conversation, follow the show on the Unchained feed on X and subscribe. Wherever you listen to podcasts and if you're watching on YouTube, hit subscribe and drop a comment. It really helps the show reach new people.