The Chopping Block: Arthur Hayes & Tom Lee; Hyperliquid vs Aster, DATs & ETH - Ep. 917

Summary

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Unchained – The Chopping Block: Arthur Hayes & Tom Lee; Hyperliquid vs Aster, DATs & ETH

Host: Laura Shin (absent—episode features Chopping Block regulars, with Steve as lead moderator)
Episode: 917
Date: October 4, 2025

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Main Theme & Purpose

This Chopping Block episode delivers an insider’s roundtable on the hottest trends, controversies, and inflection points in the crypto and blockchain industry. The conversation centers on the explosive rise and evolution of Digital Asset Treasuries (DATs), the “perp DEX wars” between major decentralized perpetuals, Ethereum’s shifting narrative, the proliferation of stablecoin-only chains, and the culture and utility of prediction markets. Special guests include Arthur Hayes, Tom Lee (Bitmine), Tarun (Gauntlet), and Tom (from the Chopping Block crew). The tone is irreverent, punchy, and unfiltered, loaded with memes and big-picture insights.

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Key Discussion Points & Insights

1. Shifting Vibes at Token2049

[02:27 - 03:05]

• Last year’s conference was defined by meme coins and wild parties; now, it’s “comfortably boring” and more institutional.
  • Tom: "Everyone wants to talk about stablecoins, everyone wants to talk about DATs. No offense, Tom [Lee]. It’s just a very different vibe than last year." (02:29)
  • Tom Lee: Praises productive meetings and “the right people” in attendance over last year’s party culture.

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2. The Digital Asset Treasury (DAT) Craze

[03:10 - 09:40]

What Are DATs?

• Digital Asset Treasuries = public company vehicles holding crypto, especially ETH.
• MicroStrategy (BTC) pioneered it; now Bitmine is the biggest ETH treasury (2.65mn ETH >2% supply).

Bitmine’s Success & Tom Lee’s Approach

• Steve: "Most people I talk to... you are the savior of Ethereum. How do you feel?" (04:06)
• Tom Lee: Demurs, says ETH was strong anyway, calls Bitmine’s rise “good timing” as stablecoins boosted demand.
• Bitmine focused on simple messaging (“ETH is in a super cycle”), institutional engagement (Cathie Wood/ARK invested early), and clear communication.

The Wall Street ‘CEO’ Effect

• Steve: "DATs allow this outsourced channel CMO [chief marketing officer] to speak a different language to Wall Street, which crypto has really been missing." (07:15)
• Tom Lee agrees that institutional vehicles like Bitmine attract new capital and shape bullish narratives.

DAT Overload & Problems of Scale

• 70+ ETH DATs now exist, but top two (Bitmine, MicroStrategy) have nearly all trading volume.
• Argued that most should consolidate or risk irrelevance; trading below NAV (net asset value) is a danger sign.
  • Tom Lee: "No ETF trades below NAV and so a DAT shouldn’t trade below that." (09:24)
• Why so many smallcoin DATs? Arthur quips: "Because the baker makes 5%. You don’t give a fuck." (10:07)

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3. The Great Plasma & Stablecoin L1 Experiment

[13:00 - 19:41]

Plasma’s Massive Airdrop & Stablecoin Chains

• Plasma (Tether-backed L1 for USDT transfer) launches with huge farm incentives, but little to do on-chain.
• Plasma, CodeX, Tempo, and others trying to siphon stablecoin flows from Ethereum/Tron.
  • Arthur Hayes: "If you have a positive yield, then you'll do it... If they don't create value, they'll all come back. It's like all the other games you've played for a decade on all these tokens." (14:55)

Skepticism & Sustainability

• Tarun compares Plasma to Bear Chain: "Everything about new L1s is farming incentives, not real utility." (15:14)
• Users question how new L1s can beat entrenchment/network effects of Tron, Ethereum, or if the ‘stablecoin chain’ thesis is itself flawed.
  • Tom Lee: "Stablecoin is going to be a huge market... I can see a path to 4 trillion easily. But I don’t think you could fit it all on Ethereum—it makes sense that other chains are experimenting." (18:04)
• Observation: To win, a chain must originate new stablecoin flows, not just cannibalize.

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4. The Perpetual DEX (Perp DEX) Wars: Hyperliquid, Aster & More

[20:02 - 29:05]

Competitive Landscape

• Hyperliquid was the dominant decentralized perp DEX; now faces fierce competition from Aster (affiliated with Binance) and others as major CEXs pick their horses.
  • Steve: "Kind of seems like now it’s not just a war. It’s a broader war that’s brought in other combatants." (20:41)
• Arthur Hayes made headlines for predicting Hyperliquid’s token would “126x,” then selling, citing huge upcoming token unlocks and rising competition.
  • Arthur Hayes: "When Hyperliquid was the dominant 60–70% market share, massive unlocks didn’t matter....Then I checked, competition’s closing in—not sticking around to get repriced in real time." (21:33)

Fee Wars & Market Evolution

• “Bullish unlocks” thesis debated—will tokens maintain value if competitors are launching with no/trivial fees?
  • Tarun: "Let’s see how lighter [a new no-fee DEX] does after their airdrop. The real question is how sticky no-fee trading will be." (24:33)
• Multiple panelists observe that market will expand to accommodate many winners; new users and regions (mobile-first Asia, etc.) may drive more explosive growth.
  • Tom: "If you go back to 2010, do you buy Microsoft, Google, Apple, Amazon, Facebook? Turns out the answer is literally all of them." (27:04)
  • Arthur Hayes: "But they didn’t all offer the same exact product. The perpetual swap is the same in every platform... The market could get commoditized." (27:23)

What Comes After Perp DEXes?

• Arthur Hayes: “If I had to found an exchange again, I’d do fixed income, not perps...the next zero-to-one product will let DJs bet on crypto interest rates.” (28:23)
• Tom Lee: "Betting is what crypto is great at—hedging, factoring, betting on different ideas. That’s really going to be the big market." (29:27)

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5. Prediction Markets & the Polymarket vs. Kalshi Rivalry

[29:59 - 39:48]

Market Drama

• Kalshi (regulated in the US) and Polymarket (decentralized/on-chain, popular in crypto) are fighting for dominance—not just in users/bets but also in cultural relevance.
  • Drama over South Park episode parody; spat on Twitter over who was really the episode’s focus.
• Differences explained:
  • Steve: "Kalshi is off-chain, regulated, originally fiat—they only recently allowed USDC. Poly is crypto-native, on Polygon." (33:40)
  • Kalshi leads in volumes (esp. sports), Polymarket more on political & real-world event markets.

Utility Beyond Speculation

• Tom Lee (Fun Strat) outlines institutional demand: "Polymarket was so critical in how markets understood this election... Goldman Sachs is now citing polymarket betting markets... We’ve used it at Fun Strat for a long time." (34:40–36:21)
• Prediction markets provide real-time, crowdsourced “market odds” for events like government shutdowns, Fed appointments, etc.

Social Network Effects

• Tarun: "Prediction markets are closer to social networks than trading." (36:49)
  • Insider trading on Taylor Swift’s engagement bet became international news—more about media spillover than profit.

The Inevitable “Token?” Question

• Steve: “It’s been reported there are warrants for a Polymarket token but nothing confirmed. Real impact is also flowing both ways—prediction markets are beginning to shape the real world, not just reflect it.” (38:07–39:42)

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6. Privacy Coins & the Zcash Resurgence

[39:48 - 44:20]

What’s Driving the Hype?

• Zcash, an OG privacy coin with academic roots in ZK-proofs, suddenly surges with a Gen Z-driven social media revival.
  • Zcash’s market cap spikes ~60% in a day (~$2B), despite no major tech updates.
  • Monero (largest privacy coin) faces regulatory bans and was recently hit with a 51% attack.

Privacy’s Societal Role

• Tom Lee: "Privacy is important; even government agencies use zcash and Monero when they want to use payments. But not everyone cares. Young people are comfortable sharing info with companies over governments." (41:44)
  • He contends proof of humanity will become core in a world full of bots and AI.

Regulatory Attitudes

• Zcash’s selective privacy (opt-in) has made it more “acceptable” than Monero; Monero banned on many Asian and EU exchanges due to robust anonymization.
  • Arthur Hayes: "At a dinner six or seven years ago, someone from the FBI said Monero was the best for privacy—and that’s all I needed to hear." (43:44)
• Panelists agree privacy coins “work”—even governments exploit their features for sensitive transactions.

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Notable Quotes & Memorable Moments

• Arthur Hayes: “Good afternoon, motherfuckers.” (00:55)
• Steve on the CMO effect: "Every shitcoin needs a Tom Lee." (05:04)
• Tom Lee, on being labeled a meme online: "In the crypto world, retarded is a good thing. So I took it as a compliment... I’m eth-tarting." (12:46–12:55)
• Arthur Hayes, on Plasma: “If you have a positive yield, then you’ll do it. If they don’t create value, then they’ll all come back. It’s like all the other games you’ve played...” (14:55)
• Arthur Hayes, confessing about Hyperliquid: "I'm not gonna sit around and watch the market reprices forward in my face. I'm just gonna sell." (22:09)
• Tom on exchange wars: "I think the phenomenon is... it's like induced demand where they figured out this blueprint and now everyone's copying it... Everything's going purpose, and so the market is 100x from here." (23:28–23:54)
• Tom Lee on prediction markets as market indicators: "Prediction markets provide real-time insights because for a while David Zervos popped up [on Fed Chair bets]. To me, this is real-time information—it’s the wisdom of the crowd." (36:21)
• Tarun on prediction markets as media: "Fundamentally, prediction markets are closer to social networks than to trading." (36:49)
• Tom Lee on privacy coins: "If it’s good enough for government work, it’s probably good enough for other people." (42:47)

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Important Timestamps

| Time | Topic/Segment | |------------|-------------------------------------------------------------------------------------------| | 02:27 | Panel’s observation on Token2049’s new institutional, “boring” energy | | 03:10 | Introduction to DATs and Bitmine’s ETH holdings | | 05:04 | “Every shitcoin needs a Tom Lee” – meme CMO in crypto | | 06:22 | Bitmine’s institutional strategy, ETH supercycle message | | 09:40 | Debate: Problems with too many small DATs, trading below NAV | | 13:00 | Plasma stablecoin chain hype, farming-centric launches | | 14:55 | Arthur’s analogy: stablecoin farming as “games you’ve played for a decade” | | 20:02 | Perp DEX wars overview; Hyperliquid vs Aster, central exchanges’ growing DEX involvement | | 21:33 | Arthur’s Hyperliquid thesis change and the “sword of Damocles” unlock | | 23:28 | Copycat DEXs and market expansion—“everything carcinizes to crabs” (crab meme reference) | | 28:23 | Arthur’s future bet: fixed income will be the next big DeFi primitive | | 29:59 | Prediction markets section—Polymarket vs Kalshi, South Park drama | | 34:40 | Polymarket’s institutional uptake: Fun Strat, Goldman Sachs referencing odds | | 36:49 | Tarun: Prediction markets as social networks | | 39:48 | Zcash’s sudden revival, privacy coins’ enduring appeal |

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Tone & Language

• Direct, unscripted, loaded with irreverence and meme references; the crew is blunt, humorous, and often self-deprecating.
• Crypto-native language: “shitcoin,” “bullish unlock,” “sword of Damocles,” “buy the crab,” “degens.”

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Summary

This Chopping Block episode is a no-holds-barred, inside look at the state of crypto in late 2025. The panel dissects the consolidation and narrative-pushing effect of Digital Asset Treasuries (DATs, especially as Bitmine helps frame Ethereum’s supercycle), skeptical takes on “stablecoin-only” chains, the intense competition among decentralized perpetual exchanges (and what might come next), and the role of prediction markets in both crypto and mainstream life. The group doesn’t hold back, poking fun at industry drama, meme culture, regulation, and government attitudes on privacy.

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A must-listen for anyone wanting to understand the current crossroads of crypto innovation, narrative-building, and cultural memes—with just the right dose of skepticism and swagger.

Transcript

[Steve]

I don't know if people saw this tweet, but it was titled Tom Lee's Eth Thesis is Retarded. Do you have a counterpoint to what you saw coming out of the Andrew Kahn camp? The doubters?

[Tom Lee]

Well, as you know, in the crypto world, retarded is a good thing.

[Steve]

So not a dividend.

[Tarun]

It's a tale of two Kwan.

[Steve]

Now your losses are on someone else's balance sheet.

[Tom]

Generally speaking, airdrops are kind of pointless anyways.

[Steve]

Trading firms who are very involved. Talik Eth is the ultimate defi Protocols are the antidote to this problem. Hello, Singapore. Welcome back. So we were here last year. Let's do the quick intro. Hello, everybody. Welcome to Chopping Block. Every couple of weeks, the four of us get together and give the industry insiders perspective on the crypto topics of the day. So quick intros. First we got Tarun, the Gigabrain and Grand Poobah at Gauntlet.

[Tarun]

Yo.

[Steve]

Next we got Tom the Defi maven and master of memes.

[Tom]

Hello, everyone.

[Steve]

Joining us once again, we've got Arthur Hayes, the arbiter of Alpha at Maelstrom.

[Arthur Hayes]

Good afternoon, motherfuckers.

[Steve]

Joining us today, we've got Tom Lee, the eth baron and bull poster in chief at Bitmine.

[Tom Lee]

Hello.

[Steve]

And I am Steve, the head hype man at Dragonfly. We're early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice.

[Arthur Hayes]

Please buy every token that we talk about.

[Steve]

Yeah, exactly. Please see talking about XYZ for more disclosures. So we're back here again, token 2049. And we were just reflecting backstage on what it was like last year. So if you remember, if you rewind the clock back to before Trump was Our Dear Leader, Token 2049, it was all about meme coins. There was Solana Breakpoint next door. If you remember Iggy Azalea. There was this big scandal. And I remember you were on stage with us and you were talking shit about Jason Derulo, who hit you up and, like, wanted to throw a party with you, and you were like, screw off. What is your. You had a celebrity run in again recently. Tell us about it.

[Arthur Hayes]

Yeah, so Waka Flocka Flame hit me up on Twitter and he's like, yo, I want to, like, reinvigorate the flock of Token. And if you look at the chart.

[Steve]

It'S like, zero basically needs a lot of vigor. Yeah, it needs.

[Arthur Hayes]

It needs a lot of. But, you know, me and my chief of staff got On a call them and they pitched us something about streaming and attribute attribution of artists. Right. Actually sounds not. Not too bad. I'd love to dig into it more, but.

[Steve]

Okay, so you're not shitting on them directly.

[Arthur Hayes]

I mean, the token is dog shit, but, like, maybe it could be.

[Tom Lee]

Whatever.

[Steve]

Okay.

[Arthur Hayes]

I'm not buying any of them, to be fair.

[Steve]

No, he's.

[Tarun]

He's for the tech, not for the tokens.

[Steve]

We all know Arthur's in it for the tech. Okay, that's very good. How. What's the vibe been of torque in 2049 this year?

[Arthur Hayes]

Traffic.

[Steve]

Traffic. That is true.

[Tom]

I would say it's like, almost comfortably boring. You know, I contrast like the meme coins with. Now you walk around, everyone wants to talk about stablecoins, everyone wants to talk about DATs. No offense, Tom, but it's just like a very different vibe than like you said last year and. Like the Igizalia stripper party.

[Steve]

Yeah, yeah. Not as many suits last year, more stripper outfits, but now we've got. Tom. Tom, how does it feel being at a much more institutional version of token 2049?

[Tom Lee]

There's great energy, a huge turnout. I think there's been a lot of the right people here and we've had tons of meetings, so it's been very productive.

[Steve]

Okay, more productive than the stripper parties.

[Tom Lee]

Last year, I did not partake.

[Steve]

That makes sense. Okay, so let's. Let's talk about DATs. So for those of you who don't know, DAT stands for Digital Asset Treasuries. These are the micro strategy ization of everything we have here on stage with us, Tom, who is the chairman of. Of Bit Mine. Bit Mine is by far the largest ETH treasury. They're huge, accumulating very rapidly. They've got about 2.65 million ETH, over 2% of the entire ETH supply now being held by Mr. Tom Lee. It's worth noting we've seen a lot of consolidation in the trading volume around these dats. It used to be we had all these different eth Dats in the running. Now 90% of the daily trading volume of all Dats is just MicroStrategy and Bitmine. Everything else is a tiny sliver at this point of all the trading volume. I have to ask Tom Lee, the feeling from most people that I talk to is that you are the savior of Ethereum. How do you feel?

[Tom Lee]

That's a big job.

[Steve]

Yeah, it is, it is.

[Tom Lee]

I think Ethereum was in great shape on its own. I think that the Ethereum foundation has prioritized the right things that happen to have happened this year. And of course, stablecoins have come along. That's really ignited the demand for blockchain. And I think Bitmine just got lucky on the timing.

[Steve]

Well, it's definitely true. There was a lot of other stuff happening with the foundation shakeup and just kind of a repositioning of the Ethereum narrative. But it also does feel like you are now basically chief marketing officer of Ethereum.

[Tom Lee]

Got it. I. I can add that to my title.

[Steve]

Yeah, I think you should. Yeah. Yeah. What's been your sense, Arthur, of the whole DAT mania with respect to how it's moved Ethan and reinvigorated the narrative?

[Arthur Hayes]

I mean, people love listening to this guy on cnbc, so fuck it if he wants to go on and beat the fucking drum. Beat the fucking drum, brother. Like, let's go. So I love it. We need more Tom Lee's. Every fucking shitcoin needs a Tom Lee.

[Tarun]

Is that possible? I feel like that, yeah.

[Steve]

Every shitcoin. Great. Let me ask you this. What do you think you have done well, that some of the other people trying to be the Tom Lees for shitcoins have not done well?

[Tom Lee]

Well, I think that bit, mine, number one, was really thoughtful in terms of communicating. You know, we've kept the message really simple that ETH is in a super cycle. We communicate that through our website with our presentations and our chairman's message videos. I think Bitmine has had a lot of connectivity to the institutional world. Cathie woods made a big public investment in Bitmine pretty early. It's Now a top 10 holding for Ark that's drawn other institutional investors into it. And I think that that process has created the flywheel and that's why we're the 26th most traded stock in the US today. And between us and MicroStrategy, as you point out, we're really creating the liquidity in the dads.

[Steve]

Yeah. So what do you attribute then? So you guys are now also expanding beyond just Ethereum? So there was a recent announcement that you guys were, I think it was like seeding the world coin dad. And you guys are like, kind of got. Got your eyes open. Tell me about that part of the strategy.

[Tom Lee]

Well, I think bitmind wants to play a role in helping Ethereum make it to the next 15 years. And that's helping identify projects that are important, that will use a lot more ETH and burn gas. It's also helping seed other payment rails that come onto ETH and Of course, we're working very closely with the Ethereum foundation to really identify and prioritize upgrades. So I think part of that is also investing in projects that really stand out. So Orbs8Co, which is a world coin dat, as A16Z points out, out of the 11 things that AI really cares about, one is proof of humanity and, and world is really one of the first projects. You know, there are almost 17 million people that have been verified human. I mean, I think protecting humanity, you know, is a big priority on the blockchain.

[Steve]

So one of my pet theories I think we've talked about before on the show is that part of what's. What dat's do, beyond just okay, it's an institutional vehicle that you can invest into the underlying. It also allows there to be this sort of Wall Street CEO for a chain that can kind of do things that the foundation can't do. Right? It's sort of like, look, you know, Vitalik or Tamash who runs the co, runs the ef, he can't really go on cnbc. He can't really like bullpost Ethereum quite in the same way that you can. He can't like post ta. It's just like, it's not cool to do that. And so in a way like these DAT's, they kind of allow this outsourced channel chief marketing officer to speak a different language to Wall street, which is something that crypto has really been missing despite the fact that it's been so financialized. And I think you are, in my mind, you're kind of the epitome of that. Curious what you guys think of, like going forward. The DAT stuff, we can see very clearly it's dying down. Mnavs are compressing fewer and fewer. One of these are coming to market. How do you guys think, like, where is this going? What are dat's going to be in two, three, five years?

[Tom]

Well, I was going to ask Tom. I feel like the projections and the timeline for DATs, it's so. It's accelerating and moving faster than I think even we thought. I think most ETH dats are now below mnav. So what do you think they're going to do? Are they going to dump a bunch of ETH and try to buy back the shares? Is someone going to scoop them up? Are they going to pivot to AI? Like, you know, what would you do? Or what do you think they're going to do?

[Tom Lee]

Yeah, someone told me today there's 70 ETH debts, which is a lot. You know, if you look at traditional public markets, investors can back two to three, maybe four. So there, within that universe, you know, there'll probably be multiple winners, but institutions can't buy 70 deaths. I think the ones that are trading below M nav have an existential question. I don't think a debt should trade below nav. So there is a negative message from that. I don't know if they should convert to an etf. I don't know if they should unwind. They could consolidate. I don't think it. They should trade below nav. I mean, I. But of course it's the market skill.

[Tom]

Issue is what you're saying.

[Tom Lee]

Huh?

[Tom]

It's a skill issue is what you're saying.

[Tom Lee]

Yeah, I mean, you know, no ETF trades below nav and so a dash shouldn't trade below that. I think if they threaten to turn into an ETF in some way than they would always trade it. Now, I mean that, that should be the floor.

[Steve]

Tarun, what's your take?

[Tarun]

Well, I definitely buy the consolidation thing. I feel like the, the Solana doubts have really been messaging this. Like we're going to consolidate. There's no way there's going to be 20 of them. But the thing that's weird to me is there's still people launching DATs for like low market cap coins. Like 1 to 3 billion dollars market cap. I don't understand how that's even possible to keep those things alive. Like, why are people still launching them?

[Arthur Hayes]

Because the baker makes 5%. You don't give a fuck.

[Tarun]

Yeah, but like I feel like the people want running those. Like that's only like, this is a nightmare. Like imagine Tom, you had to run 3 billion market cap coin dat right now and someone's like, yeah, I'll give you like 1% of the float, but you have to manage that. Like, would you want to do that?

[Tom Lee]

Yeah, I mean, it seems like that could break down the reflexivity, you know, the reflexivity you want is that a debt is a permanent holder of the token. But you don't want them to be so big that you actually, the power law has negative attribution. That's why Bitmind doesn't want to really exceed 10% of ETH and the target is 5. So if there's a small coin with small float, I think that the DAT might help communicate the virtues of that coin. But you don't want it to be so big that it's the bag holder.

[Steve]

There was a lot of drama around the zero G dat, which is a token that went live recently. But the DAT closed before the token was live. So they contributed tokens that did not have a market price and like marked it to some, just some number that they were like, yeah, it's worth this. So that being said, we've also seen that the SEC is kind of pulling the brakes on a lot of this stuff where apparently there's been, there's been some reports of insider trading. It looks like the SEC is starting to look into it for, you know, Dax kind of pre closing and all this, this, this funny business. So I think people realize that, especially the Nasdaq also tightening some of the rules around, around that I think the ones that are cutting corners are likely to get a lot more eyeballs on them. But I think the story increasingly is one of consolidation. If you're not big, if you're not at scale, if the asset's not big enough and serious enough, the dad itself is not even going to get trading volume. If there's no trading volume, you can't really do an atm, in which case, what's the point of doing this? You just locked up some capital and threw it on the stock market, but no one's trading it. Now with Ether, there was a post that went viral that I want to get your reaction from from friend of the show, Andrew Kong. So, Andrew Kong, I don't know if people saw this tweet, but it was titled Tom Lee's ETH thesis is retarded. He got about 1.5 million views and basically his claim was that, yeah, look, it might be true that stablecoins are going Ethereum. RWAs go on Ethereum. Banks are going to use Ethereum, but they're not going to pay fees. Nobody's paying fees for any of this. This is all just a meme. And you should buy, I don't know, robotics companies, I guess. He's super big in robotics companies now. Do you have a counterpoint to what you saw coming out of the Andrew Kahn camp? The doubters?

[Tom Lee]

Well, as you know, in the crypto world, retarded is a good thing. So I took it as a compliment.

[Steve]

Okay. Okay, Very good.

[Tom Lee]

I'm eth tarting.

[Steve]

There you go. Good response. That's a very good response.

[Tom Lee]

Wow.

[Steve]

Okay.

[Arthur Hayes]

That's why this guy needs to be marketing every.

[Steve]

That's why bitmind is number one. There you go. All right, let's move on. Let's talk about plasma. So speaking of stable coins, plasma is a new layer one that is a stablecoin chain affiliated with Tether. So just, I want to get A quick show of hands from around the room. How many people have farmed plasma or they have any plasma tokens? Hands. Okay, I see. Maybe lying a lot lower than I thought. Very low. I'm surprised. Okay. Not a lot of people farming it. Well, it was a big farm and so far it was one of the most recent token launches with a gigantic airdrop. It's now trading at about 8.5 billion FTV. So very, very large valuation. They've got over $1 billion circulating in total supply. Very large airdrop. So just a bit of background on the chain itself. It was incubated slash invested by tether as zero fee USDT transfers. And the whole idea is that it's going to be a stablecoin chain. We've seen a bunch of these going so far. We invested in one called Codex. There's another one called Stable. Of course there's. What's that?

[Arthur Hayes]

We're Codex too.

[Steve]

You gu. Also in Codex. There's also of course Tempo and Arc are also the corporate versions of these stablecoin chains. So the question is we've got a very, very high nominal valuation for plasma and despite that, right now there's really not much to do on plasma. It's just like kind of a gigantic farm. I think they're blasting out something like 500 million a year in incentives to just move your USDT onto plasma. So thoughts? Reactions, Stablecoin chains. Is this the new meta and does this potentially impair the ethereum thesis? If you've got chains like this that are just trying to suck out some of the stablecoin supply away from Ethereum? Because if you look at the outflows this week of inflows. Outflows, I believe most of the stablecoins were pulled from ethereum. And so you see Ethereum stablecoin outflows going directly into plasma.

[Arthur Hayes]

I guess that's probably the function of the farm, right? Like is if it's going to. If you have a positive yield, then you'll do it. Right. And if they don't create value after that, then they'll all come back. It's like all the other games you've played for a decade on all these tokens.

[Steve]

You're like whatever's farm, maybe it'll be.

[Arthur Hayes]

Yeah, it's a farm, right. And it has to accelerate above the farm and then we'll see if there's real value there.

[Tarun]

In the spirit of X for Y things that's clearly Bear Chain for stablecoin.

[Steve]

Baracha for stable coins.

[Tom]

Like, I mean that is what the plasma baddies though. I haven't.

[Steve]

Yeah, elaborate, elaborate, elaborate. Why is it bearish for stable?

[Tarun]

Just because it's like very heavily incentivized on launch new L1 everything is about farming. Like the stablecoin thing almost doesn't matter. Like yes everything is paid in tether but like most of the interest in it was just like farming the XPL rewards right. Like if you looked at almost all the yield it was like 60 to 70% XPL rewards minimum. So on most protocols. So I it kind of had the vibe of Bear chain where it was like everyone was ready at launch because everyone it was kind of like this publicized. This is the point of this chain and providing liquidity on day one was important. I do think the interesting thing was like the binance earn integration which got 2 billion of SUSD or USD at least on there. That was much more scale wise crazier.

[Steve]

Than I think it's clear their BD has been amazing. Marketing has been amazing. They've been absolutely on point executing. But I agree with you. I guess my question to you is what would you recommend they do? Like what do you do from here to not become Bear Chain?

[Tarun]

I just don't know how you get stablecoin flows to move to your chain. Like it just seems unlikely, right? Like you either have to cannibalize Tron and like who is the biggest XPL farmer? Certainly his majesty of Tron. Like it's not his excellent.

[Steve]

His Excellency.

[Tarun]

His Excellency. Like it's like okay, well great. Like clearly you're not going to really cannibalize the strong volume. You're not going to cannibalize the eth volume. So where is the like net long term flow going to come from? I just don't for all the stablecoin chains to be honest other than Tempo it's like hard. I have a hard time understanding where the natural flow is going to come from.

[Steve]

Thomas.

[Tom]

Yeah, I mean it is a little worrying sometimes when the only thing you see someone talking or people talking about for a new product is how everyone said it's the most amazing farm ever. And I'm like it's kind of like the SPF token in a box thing where it's like if everyone's making money you need to get the fuck out of that room. I think for plasma. Yeah. I don't think there's anything wrong with the stablecoin chain thesis. I think it's actually good. But I agree with Tarun. It makes more sense for existing applications that have some sort of end distribution, basically slowly moving their own internal kind of flows onto some new chain, which I think is like the Stripe Tempo Thesis. I wouldn't be surprised if some exchanges are looking at this, this exact same kind of play. But yeah, like the average, you know, tether holder, they're actually holding it through some, some other sort of, you know, end distributor. And so I think those are the people that actually have the, the leverage to be able to do something like this.

[Steve]

Tom, other Tom, what's your take?

[Tom Lee]

Well, I mean, I think stablecoin is going to be a huge market because we're just only 300 billion. You know, I, I can see a ma. A path to 4 trillion easily. That's what Treasury Secretary Bess is talking about. That's probably not even considering the fact that micropayments are going to be really big users of stablecoins because the tether is 12 digits. I mean, that's how you do micropayments. So will this all take place on one chain? I don't think you could actually fit it all on Ethereum. So it makes sense that there's other chains experimenting and I'd like to see a lot of things succeed.

[Steve]

Okay. Yeah, I think you make a very good point, Tom, is that you kind of have to bring the flows in order to establish a new chain for just stablecoins. If you look at Tempo, Tempo clearly has a path to doing that with stripe in the B2B flows that they're going to be originating. And I think if you look at Codex, which is our portfolio company, you know, they're really doing this kind of local B2B Southeast Asia go to market and they're originating a lot of flows as well that wouldn't otherwise be using stablecoins. But if you're trying to suck stablecoin demand, that's already somewhere else. That does feel hard because like the, the, the Tron network effect is so sticky, it's so powerful. And the same thing is true for Ethereum, right? For, for the people who just have Stable coins on Ethereum, it's kind of like, yeah, I mean, I could pay you on this other chain, but it's just much more likely that we're both going to have Ethereum wallet.

[Tarun]

And, and I mean, I guess also the bridge thing yesterday where they're kind of phantom issued a stablecoin Solana. So like, I kind of don't. I see like the flows going places that are already users, not necessarily places that are trying to attract Users solely with them.

[Steve]

What was the issue with the bridge?

[Tarun]

No, no, like Phantom issued a stablecoin using Bridge on.

[Steve]

Oh, I understand.

[Tarun]

So like that type of stuff just makes me think like why would I go to another chain? Like if, if I'm an app, I'm going to issue my own sort of white labeled stablecoin from one of these like five providers who do it. Am I really going to go to a new chain? I don't think so.

[Steve]

Yeah, yeah, that makes sense. Okay, so let's Swift here. Speaking of bridge, let's talk a little about hyperliquid. So Hyper Liquid of course is the largest decentralized perp Dex. And there's now been a war that has broken out that increasingly people are calling the perp Dex wars. So at the top of the per deck wars right now is Aster. Aster is the CZ/Binance Lab BNB chain affiliated DEX. They are now trading something like. What is it, like 60B a day?

[Arthur Hayes]

I saw that on DVLLM.

[Steve]

Is that real?

[Arthur Hayes]

I mean it doesn't really matter.

[Steve]

Is it real or. I mean it's, it's, it's being traded. I don't know, talking about it.

[Arthur Hayes]

So that, that they succeeded.

[Steve]

Yeah, yeah, yeah, exactly, exactly. So it's happening one way or another. We recently saw Bybit announced that they were doing something more with, with Apex, in which we are, we are investors Coinbase getting closer with Avantis, which is their play in the periptex space. So it kind of seems like now it's not just a war. It is a. It is a broader war that's brought in other combatants of the centralized exchanges kind of picking their horses to fight against each other in the perip space. So Arthur, you were recently in the headlines for your. For a few things. So one, of course I remember you made a big call that you thought hyperliquid was going to or its token was going to 126x.

[Arthur Hayes]

I did say that.

[Steve]

You did say that. And then about a month later you sold your hype position.

[Arthur Hayes]

I did sell it.

[Steve]

You did sell it. And then your claim is that the reason why you sold was that Hyper Liquid has a sword of Damocles hanging over it. Explain what, what was that sword hanging over hyperliquid.

[Arthur Hayes]

So yeah, so obviously there are these unlocks, right? And it's not like it's secret. Everyone's known about it for a long time. I think it's like $500 million a year starting in November that the team is eligible to to sell on the market now either matters or it doesn't. When Hyper Liquid is the dominant 60, 70% market share, which it was circa a month like a half ago, it doesn't really matter if they have these massive unlocks because everyone assumes they're just going to make more money in fees, buy back the hike token and it's what they call a bullish unlock. So like solana was like 202021 or whatever it was. So that was the dominant narrative.

[Steve]

Okay, cool.

[Arthur Hayes]

I don't care about unlocks then I was one more one weekend whatever a month ago.

[Steve]

Oh God.

[Arthur Hayes]

Let me just check defi lamo see what the rankings are. And then I pull it up and it was like hyper liquid number one at like 4 billion or whatever. Then there is lighter like right below it like 3.9. And as they're like 3.8, this isn't good. It's competition now. Not to say that Hyper Liquid can't dust them all because it's great tech and hip three and builder codes and all that kind of stuff. Right? In two or three years. Because I said by 2028, 2020, 126X. But fuck man, I'm not going to sit around and watch the market reprices forward in my face. I'm just going to sell. Sell the sidelines and wait and either goes up or goes down. Either Hyperliquid demonstrates that it has a moat that it can charge a real fee against all these other competitors, or it doesn't. And you know, I'll reassess what the perp landscape looks like or what is the new product or service that a perp dex is going to roll out that a client is willing to pay for and can't get instantly commoditized by a centralized exchange that basically wants to make sure that nobody else trades on dexes. So let's just take out the number one by making sure they make no money.

[Steve]

Okay, thoughts on the Hyper Liquid sort of Damocles? You guys on board?

[Tom]

I think the bullish unlock thing is very real. I think it's.

[Arthur Hayes]

Would you buy it right now Hyper Liquid at this price?

[Tom]

I mean, I think the phenomenon is. It's like induced demand right where they figured out this blueprint and now everyone's copying it. And I think this market is just going to continue to blow up. I think there's this phenomenon in evolution where there's like carcinization, right? Everything across these different species they end up evolving to look like a crab because it's like Very efficient and very robust.

[Arthur Hayes]

And I think buying the crab.

[Tom]

Buying crab, but buying the crab, you buy the crab.

[Arthur Hayes]

Buyer, seller.

[Steve]

What are you doing?

[Tom]

Well, why am I preaching? Are you buying? You. It's like you should be preaching the value of me. So I think everything's going to be, you know, purpose. And so therefore this market's going 100x and so why can't hype sort of be alongside that?

[Steve]

Okay, so you're buying Rose right here, right now.

[Tom]

I think. I think I'm buying perps of your perps.

[Steve]

Okay, Come on, man. We are long hype. So de facto. Yes, we are. We are buyers at this price because you're not selling. Are we buying more? I mean, look, we own. We also own a lot of perp, Dex. So like you were also investors in lighter. We're investors in Apex. We've got exposure to a lot of the space. Tarun, how do you think about the Dex wars going on right now?

[Tarun]

I think to kind of Arthur's point, let's see how the lighter no fee thing does post. You know, obviously mainnet launch today for lighter once the airdrop happens. The real question is like, how sticky is the no fee trading? And I don't think I can really make that much of an assessment until I see that. So I'm, I'm just a wait, hold and wait until the airdrop, which is kind of what Arthur is saying. So I'm, I'm, I'm not a buyer or seller. I'm just flat.

[Tom]

Don't you think that's the way the market's going to go though, where it's just like you get fee compression over time and like, yeah, why not jump the gun?

[Tarun]

The weird thing to me is that once you're felis, all the real money that's being made is in LLP and the vaults and not in the actual exchange. And so like there's kind of this weird dynamic between like the vault side versus the order book side.

[Steve]

And I thought it's going to be fearless forever, right? I mean, right now it's still extremely.

[Arthur Hayes]

But we have to survive that, right?

[Tarun]

Yeah, yeah, yeah, exactly. So like, I don't know if it turns out that the profits in HLP and LLP are actually where people are competing to allocate. It might look kind of different than what you.

[Steve]

Yeah, fine. But I don't think it's going to be fearless forever because right now, even if you're feel. Even if you have fees, right? Look at Aster. Astra has fees. It's making more than hyper liquid because of all the trading volume. But it's obviously negative margin because everyone understands that they're dumping tokens in the form of points. Right. So whether you have fees or not or don't have fees, the negative margins are there for all of the pre TGE perp Dexs. Right, of course.

[Arthur Hayes]

But the thing is if you own hyper liquid, are they going to survive at that multiple?

[Steve]

Yeah, I don't disagree with that question. But if you look at Binance, Right, so Binance was the first one to kind of take the market share away from Bitmex. Bitmex used to be the monopoly effectively on perps. Binance ended up taking up the mantle in like what was it, 2020. Yeah, that they end up becoming the number one. And what you saw was that both won. Binance eventually also lost market share and the market got more, much more evenly spread across a lot of competitors. So today binance is like 40% market share roughly in perps. But also the market has grown really dramatically. Right. So defi is still very small relative to CEFI in terms of the Dex volume. And I think a lot of what these exchanges are doing is bringing in people who have never traded on a per decks before. Right. You can see we went from in the days it was like a few thousand people whoever traded on perp Dex. Now we're over 100,000 for sure. And with Aster I have to, I haven't looked at the numbers but I have to imagine there's a lot of new people, particularly from Asia who are coming on to trade on these things. Especially because they're mobile apps now and Hyperloop doesn't have a mobile app.

[Tom]

Yeah, they're super slick. And I think again it's like if you go Back to like 2010 and you're an investor and you're thinking, do I buy Microsoft, Do I buy Google, Do I buy Amazon, Do I buy Facebook? The answer is you actually buy all of them. The market just continues to blow up. And yeah, maybe you can like pick and choose relative value at the edges. But like being underexposed or being non exposed is like actually the bigger.

[Arthur Hayes]

But they didn't all offer the same exact product. The perpetual swap is the same in every single platform. I think there's commoditized product, there's room.

[Tom]

For a little bit of differentiation. I mean, you know, even in the exchange space, hey, do you have like a localized go to market? You have particular markets and you could say cloud computing also, you know, somewhat commoditized but like, hey, you know, the market is not perfectly efficient, but maybe if it sort of trends that way over time.

[Steve]

Tom, what's your take bit? My perspective on the per deck wars.

[Tom Lee]

I mean it sounds like this is capitalism at work, right? Because you've got a product that really broke out. People sort of took notes, launched their own version. But as Arthur says, it's going to be important for the leader to stay the leader. And if they're not, then the market really becomes commoditized. So, I mean, it kind of makes sense. I do think it's a market that's going to grow in size because to me there's still a lot fewer people in crypto than in crypto.

[Tom]

Arthur, if you had to be an exchange founder again today, what would you do? Like, like where do you think the opportunity is?

[Arthur Hayes]

Fixed income, not in perps. Yeah, I think there's a lot. Obviously I'm invested in Pendle. I think Boros, what they launched is super interesting. Interest rate training is a much larger market. It's a lot more idiosyncratic. It's a lot harder to actually create something that DJ and crypto person would want to speculate on. So if I had to say the, the next like zero to one super successful product will be someone and hopefully it's Pendle comes out with a very sticky way to bet on some way, some sort of interest rate within in crypto. And it's fun to trade, which right now it's not really fun to trade. And that's why, you know, perp Dex is and all that kind of stuff because technically it's a lot harder to do a fixed income, super sexy, fun BGen product than it is to, you know, copy the spec on every single centralized exchange and not watch Perp Dex.

[Steve]

You think people are going to trade fixed income for fun? In crypto we trade fucking cats. Yeah, yeah, yeah. But like we're going to make it fun. Even in tradition, people don't trade rates for fun in traditional finance either. It's a huge market.

[Arthur Hayes]

What do you got? When you got a thousand x leverage, a lot of things become fun.

[Steve]

All right, fair enough. I, I think the second act, if you come out of retirement, I would love to back your fixed income for fun trading platform.

[Tom Lee]

But I might add, Arthur kind of hit the keyword, I think betting. I, I think that's what crypto is great at is. And I know you're going to talk about it, but it's really the idea that people can do hedging and factoring and betting on different ideas. And so, I mean, that's really what is going to be the big market.

[Tarun]

Right.

[Tom Lee]

Is basically betting markets. And I mean, the breakout has been poly marketing call she. And there's going to be micro betting. And it could be rates, it could be fixed income, it could be on real estate speculation, whatever it is.

[Steve]

Yeah. Okay. Well, with that, let's talk about prediction markets. So certainly one of the big metas of this year has been the excitement around prediction markets. Of course, the two big prediction markets are polymarket, in which we are a few of us on stage are investors, as well as Kali, which is a competitor that's been regulated in the US and now is increasingly started to creep up in terms of its volumes to the point where now it's even and sometimes even flipping polymarket in terms of net volumes. Kalsi, of course, has a partnership with Robinhood, which is also sourcing them a lot of volume, specifically around sports betting. So a couple of things I want to talk about. First, there's a little bit of drama here at token 2049 with Tom. Tom, do you want to tell us what happened with your panel?

[Tom]

You know, I didn't think it was very dramatic, but I can see why some people would is, you know, I obviously have been doing some panels, moderating some panels here. I was asked to moderate a panel that featured, you know, someone from Kalshi and they complained and said, you know, maybe I would not be the most, you know, unbiased moderator because why do they complain? Well, social, social media activity, some of my tweets they might not like.

[Steve]

Okay, I will, I will. I think tweet was Kalshi is a team of little rats.

[Tom]

Yes, yes, that is true. That is the tweet. Well, you know, I, I, I think I try to be a pretty good moderator, ask pretty good questions, and I'll let my own biases slip in, but, you know, maybe that's not coming through on my Twitter. So I got booted, unfortunately. But I was able to go get some Kaya toast and coffee this morning. So it kind of freed up my Thursday morning, which was nice.

[Steve]

Okay, wow. Okay. Well, in addition to that drama, there was a lot of drama this week about a South park episode that just came out last week about prediction markets. So the Internet was ablaze that all of a sudden, wow, south park, this cultural fixture. If you don't know south park, it's like a kind of raunchy cartoon in America. It featured prediction markets which featured both Kalshi and Polymarket. And so promptly in response to this, Kalshi tweeted there was a South park episode purely about Kalshi. And then polymarket was like, wait, what the fuck? Why? No, there's. Both of us were in it. And so there's a big fight on the Internet about who is this episode about? Was it more about Kalshi or more about Polymarket? Typical crypto, like fighting over very, very unimportant questions. But did you guys actually watch anyone actually watch the episode?

[Arthur Hayes]

I have not, but now I want to.

[Tom]

I saw a couple of clips. I think probably more people saw these tweets and actually like watch the episode.

[Steve]

That's definitely. Yeah, yeah. It was like millions of people interacting with these polymarker versus Koshi fights. But it does feel like now this is like the fight, you know, it's like the sort of Bitcoin versus Ethereum guys where it's like, oh, is Kalshi. Are they real crypto? Are they not real crypto? They've. What's the.

[Arthur Hayes]

Educate us. Like what is the major difference between the two platforms?

[Steve]

Well, so Polymarket is actually on chain. Polymarket is actually on Polygon. They've been cryptonated from day one. Call sheet was a US regulated business. They were originally, they were the ones that fought the battle with the CFTC that they won in the appellate court to actually allow prediction markets in the US So Kalshi, to be clear, industry owes a big credit to Kalshi for fighting that fight to allow prediction markets to be allowed in the US But Kalshi has always been an off chain business. So they recently allowed USDC deposits like maybe like a year ago in Kalshi. And they've also recently started offering markets on crypto related topics. But it's not a crypto, it's not crypto. So that being said, they've recently hired crypto influencers. So I think it was John Wang and then ultra 0x ultra. They hired both of them to just kind of like tell the Kalshi story to more of the crypto crowd in larger. Because the crypto crowd was historically more skeptical of Kalshi relative to Polymarket. So that's the, that's the background. But I think now Kalshi is trying to be like, no, no, no, we're, we're also crypto. We love crypto. We're totally, you know, one with the crypto community.

[Tom]

This is the thing I find weird though because it's, you know, they recently announced, hey, they just passed Poly Market. I think this past week in terms of, you know, volume for the week. But if you look at the markets, it's like 95% sports markets. Right. So like, why, like, how valuable is like the crypto territory? Like, like, are these users actually so valuable that it's worth having this like, fight over? Because it seems like they're doing pretty well themselves or like, you know, I, I don't, I don't quite understand like, why this is like, yes, this is the, the, you know, the king of the hill that we want to kind of fight over. It seems, seems a bit strange.

[Steve]

I, I, first of all, it's definitely true that whatever Poly Markets market is, is worth a lot of money to call she. Right. So they would rather take all those traders if they can. Second thing of course is that crypto traders will, as we've learned recently, they will trade anything. So if you can find a way to make the thing interesting and volatile crypto traders are going to be on it. And lastly, I suspect that a lot of it is just like the narrative. Yeah, the crypto narrative is so big they want to be a part of it.

[Tom Lee]

Yeah. And I might add that Poly Market was so critical in how markets understood this election.

[Steve]

Absolutely.

[Tom Lee]

Presidential election. Remember, Poly Market betting got every state correct on the Electoral College. It called every state correctly. Nobody else called it correctly. And so if you think about how Wall street is going to use these prediction markets in the future, whatever size betting took place on Polymarket this last election, it's probably going to be 20 times bigger. I, I think that has really changed people's minds. In fact, Goldman Sachs is now citing polymarket betting markets on a lot of things, whether it's Fed action shutdowns at Fun Strat. We've been using Polymarket for a long time. I, I think it's been so useful and I can see it, I can see why sports is the big thing. But remember, sports can get micro, you can do local sports, but you, you know, there's, there's a big market.

[Steve]

What do you guys use Polymarket for? At, at Fun Strat? What do you use Polymarket?

[Tom Lee]

Oh, all the time. So give me an example. There's a shutdown, U.S. government shutdown. And so the question is, you know, will the shutdown end by June? There's another bet on Lisa Cook and there's another bet on, is Fed Chair Powell going to be the Fed Chair in December? There's another bet that's pretty liquid on who is going to be nominated fed chair by December 2020. 5. And all of these are real time insights because for a while David Zervos popped up, but then he disappeared and I, I think this is, to me, this is real time information. It's really the wisdom of the crowd. But it's been hugely helpful. I mean, at Funstrap we use it a lot.

[Steve]

Yeah, yeah, I mean, I completely agree.

[Tom Lee]

I'm not placing bets on it.

[Steve]

You're not placing bets, but your consumer also leaves the information. Yeah, no, this is a big part of the story of prediction markets to me as well, which is that there's so many users of prediction markets who are not betters. Right. It's like only really a small percent of the people who are getting value from, from the prediction market are themselves participants in the market. But the information externality is the main reason why these things are so socially valuable.

[Tarun]

I mean, I think fundamentally prediction markets are closer to social networks than they are to trading because.

[Steve]

What do you mean?

[Tarun]

So think about the, the, the Taylor Swift bet, about the proposal where like someone insider traded whatever. They didn't make that much money from it. It was like tens of thousands.

[Steve]

Wait, someone insider traded Taylor Swift's proposal on the.

[Tarun]

Whether she's going to get engaged on a certain day. And like this, clearly there was someone who knew like a day before. And you can like see in the chart and you can. Yeah. So this person made like tens of thousands. It's not like a huge trade. That thing got picked up by every press like media outlet across the world. They basically got tens of millions of dollars of media coverage from a 10k punt. Like that to me is like more like social network virality almost than the, the transaction itself. Those betting was not the important part. The important part was someone proved that they had inside knowledge and then that became a news story around the world. And I think like that feels more like media and social networks almost than like pure betting. Right. It's like kind of betting is like the engine in the background, but like the final outcome is like, you know, something that feels more like media. And that's kind of the weird thing about prediction markets. There they go beyond the crypto thing in that way.

[Steve]

Yeah.

[Arthur Hayes]

So is Polymarket doing a token?

[Steve]

So it's been reported that there are warrants for a Polymarket token, but my understanding is that still tbd, nothing's been confirmed. And Polymarket right now there's also been reports they're raising a new round between 8 and 9 billion. I think Bloomberg reported on this, so hopefully we'll be hearing news about all of this fairly soon. The other thing I should mention is that the causation with prediction markets has also been both ways. So it's not just that prediction markets are causing these news stories that are emanating outwards about what's happening in the prediction markets themselves, but also they're affecting the real world. We remember the story, I think, earlier this year about WNBA where I think it was like there were markets.

[Tom]

Dildos on the court.

[Steve]

Yeah, dildos getting thrown on the court. And there was a market of like, will another dildo get thrown to the court this year? Which is basically a bounty to throw a dildo on a court. So luckily that I think that's behind us. I don't think that's continuing as far as I know, but I think we're going to continue to see some of this weirdness. And so my guess is by the next presidential election, like this last presidential election, I felt like the poly market was mostly considered to be alpha. Right. You look at the poly market and it's giving you information that's not priced into the market. My guess is that in 2028, poly market is going to affect the election itself because just looking at that is going to affect people's willingness to go out and vote or affect their willingness to back different candidates or for people to team up together and say, look, I don't care about your polling. Look at the polymarket, you got to drop out because you're hurting the odds of this other person in the party. And so my guess is that information quality and the liquidity of that market is going to end up impacting the world of politics in a really big way.

[Arthur Hayes]

Yeah, maybe we'll get some more political meme coins too, so we can hedge them and do all sorts of fun stuff.

[Steve]

A lot of different ways to express a same bets. Cool. So let's also talk about zcash. So there's been, for whatever reason, I don't know if people have been following the story, but there was a lot of excitement this week about zcash. So zcash, for those of you who don't know, extremely OG crypto privacy coin. So the most OG Crypto privacy coin is Monero, used to be called Bitcoin. Way back in the day became Monero. It's probably the most used privacy coin today. But the second behind Monero is called zcash. It was originally created by a bunch of professors who are building zero knowledge proofs in a currency. It was originally called the zerocoin protocol, eventually became Zcash they allow you to do both transparent transfers, which are not private, and then shielded transfers, which are private. It's had a little bit of a revitalization lately. I've seen a lot of Gen Z marketing coming out of zcash all of a sudden, where previously was kind of for these sort of crypto boomers, more my generation.

[Tarun]

Haseeb, you're talking about like one Twitter account called Gen zcash.

[Steve]

Is it? Is it?

[Tom]

I feel I see a lot more than one.

[Arthur Hayes]

What's the market cap?

[Steve]

It's not just me. What was that?

[Arthur Hayes]

What's the market cap now?

[Steve]

ZCAP market cap now is like 2 billion, I think. Yeah, yeah. And previously it was like in the hundreds of millions. So it's up like 60% just today. So I think they've been hitting this fever pitch of just tapping into the narrative all of a sudden that, hey, privacy is a big problem and it needs solving.

[Tarun]

Well, it's funny you mentioned Monero, because they had this 51 attack recently.

[Steve]

That's right.

[Tarun]

Which. Yeah, exactly. It was crazy, right?

[Steve]

Like AI Garth.

[Tarun]

So I, I think, like, I, I was surprised that, like, that didn't affect the zcash price. And then this happened like a month later.

[Tom]

You're related. You think people funneling profits from the 51 attack to go buy some Zcash?

[Tarun]

I don't know about that.

[Steve]

Probably a pear trade. I'm not. Yeah. Tom, what's your, what's your perspective about the privacy narrative? Because right now it's. One of the criticisms of Ethereum is that doesn't really have privacy, per se.

[Tom Lee]

Yeah. Well, one, privacy is important. I actually think that even government agencies use zcash and Monero when they want to use payments. So it actually has a real use case. I might say. Privacy is something that certain people care about. A lot of people don't seem to care. So I don't know if everybody needs privacy. I mean, if you look at a lot of surveys, young people are willing to share more information with technology companies because they trust them more than they trust governments. And so I don't, I don't think it's just gonna be privacy on, on your wallet. I think, of course there's going to be other forms of protection you're going to want in a world of AI and bots. And so I don't know, the use case is going to grow. I mean, even proof of humanity. Right. Just proving that you are hue is going to be important, especially now that we're getting spoofed by Robocalls all the time.

[Steve]

So what's your take on privacy coins? These separate coins, purely dedicated to privacy.

[Tom Lee]

I mean, they really work. I'm just going to say I remember talking to some people at the agency level that actually, you know, there are use cases for those. So, I mean, look, if it's good enough for government work, it's probably good enough for other people.

[Tarun]

Wow. The government. Zcash, Truth or Conspiracy? Was, like, not one I'd ever heard.

[Steve]

I don't think governments generally like privacy coins. I mean, so far they've been banned and.

[Tarun]

Yeah, travel rule type of stuff.

[Tom Lee]

Yes, but remember, there are reasons a government may need to use privacy.

[Steve]

Right, right, right. So, yeah, it's interesting. I mean. I mean, zcash historically has been the one that regulators are most okay with because they have the transparent path. It's not all private by default. Whereas Monero. My understanding is that especially a lot of Asian countries have delisted Monero. You can't list Monero in like. I think it's like Japan, Korea. I think in a lot of places in the eu. No Monero listings anymore.

[Arthur Hayes]

Because it works.

[Tom]

Yeah, you were. You were a zcash hater backstage. What's the.

[Arthur Hayes]

I'm not a hater. I mean, I don't think it really works. I think I remember I was at a dinner a long time ago, maybe six or seven years ago, and there's someone from the FBI and we asked her, like, what's the. What would you say is the best coin for privacy? And she said, monero. And that's all I needed to hear everything.

[Tom]

Maybe she was lying to you and, you know, trying to honeypot you.

[Tarun]

That's a show at the club.

[Arthur Hayes]

It'd be a lot easier.

[Steve]

That's right. That's right. I think. I think you were getting set up there, Arthur, but maybe. Maybe. Time to rotate those wallets. Yeah, yeah, yeah. Anyway, so I think that is up for us. Thank you, everybody, and we will see you all next week.

[Tom Lee]

That.