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- [00:00]
Haseeb Qureshi
World Liberty Financial is like the garbage got into your living room and now it's just there. It's like, oh, yeah, we have a gold paper written by the president's sons, and the biggest holder is Justin's son, and we're buying back the token even though we have no revenue. And it's just like, why is this here? Why is it? Why are you doing this to me? Leave me alone.
- [00:17]
Robert Leshner
Not a dividend.
- [00:18]
Tarun Chitra
It's a tale of two Kwan.
- [00:19]
Haseeb Qureshi
Now your losses are on someone else's balance.
- [00:22]
Tom Schmidt
Generally speaking, airdrops are kind of pointless anyways.
- [00:25]
Haseeb Qureshi
Unnamed trading firms who are very involved.
- [00:27]
Robert Leshner
Alec Eth is the ultimate defi Protocols are the antidote to this problem.
- [00:33]
Haseeb Qureshi
Hello, everybody. Welcome to the chopping block. Every couple weeks, the four of us get together and give the industry insiders perspective on the crypto topics of the day. So, quick intros. First you got Tom, the defi maven and master of memes.
- [00:43]
Tom Schmidt
Hello, everyone.
- [00:45]
Haseeb Qureshi
Next we've got Robert, the cryptic connoisseur and czar of superstate. Good afternoon, Robert. Well done. Sidling in. Just perfect. Robert was super late, but you would never have known if it wasn't for me calling this out right now. Next we've got Tarun, the Gigabrain and Grand Poobah of Gauntlet you. And I'm Haseeb, the head hype man at Dragonfly. We are early stage investors in crypto. But I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping blocks at XYZ for more disclosures. So, Robert, I assume you were late because you were so engrossed with what's happening with World Liberty Financial. Did you end up getting your stake in the President's defi project?
- [01:25]
Robert Leshner
I was not engrossed in World Liberty Financial. Unfortunately, I was late because I had a call that ran very long. I don't have a bag. I have yet to participate in the new World Liberty Financial order. And I'm curious to see which of us do.
- [01:44]
Tarun Chitra
What am I being liberated from by being?
- [01:46]
Haseeb Qureshi
Do you have any bags? World Liberty.
- [01:51]
Tarun Chitra
I am bagless. I am bagless. And I saw all these tweets before. I couldn't tell if they're fake or just trying to game these Kaito like things, but they were just like, I'm under 20 and I'm a millionaire thanks to World Liberty Financial. And I was like, that's exactly why I did not own it.
- [02:12]
Haseeb Qureshi
Wow, we're just too old. Tom, you got anything?
- [02:15]
Tom Schmidt
I have some Trump NFT trading cards. That's about the best I can do.
- [02:21]
Robert Leshner
That's an uncorrelated asset, Tom.
- [02:23]
Tarun Chitra
The Polygon ones.
- [02:25]
Haseeb Qureshi
Yeah.
- [02:25]
Tom Schmidt
They aren't Polygon.
- [02:26]
Haseeb Qureshi
One of.
- [02:27]
Tom Schmidt
One of the great BD successes from last cycle.
- [02:30]
Tarun Chitra
Yeah.
- [02:31]
Haseeb Qureshi
Wow. Okay.
- [02:32]
Tarun Chitra
That's like the Millennial Trump Coin. Millennial Trump Coin.
- [02:36]
Haseeb Qureshi
That's true. That's true. That's how you show your age. It's like, no, no, I got the back in the day. You kids don't know.
- [02:41]
Robert Leshner
I got the OG Trump.
- [02:43]
Haseeb Qureshi
You have that new coin before. You know, there was a time when Trump wasn't president. We'll be saying that in the year 2050. Is that, you know, there was a time when Trump wasn't president.
- [02:52]
Robert Leshner
When he's on the.
- [02:52]
Haseeb Qureshi
Anyway, World Liberty, you know that's right. He's crying. There's like an interface that we use to communicate with Trump and he's still president.
- [03:02]
Robert Leshner
Anyway, that's what the coin is for. The coin lets you communicate with his brain in the jar.
- [03:09]
Haseeb Qureshi
That's how you get access to ask the president questions. Great. So World Liberty Financial debuted on Binance, OkX, Bybit and Bitget yesterday. Yesterday, when you're reading slash hearing this, it'll be Labor Day. So it came out at a $22 billion fully diluted valuation with a 6 billion circulating market cap. That makes it number 33 on the leaderboard. It is worth more than the Trump Meme coin, worth more than the Trump Meme coin has ever been worth. Now, the price on the initial day of trading fell about 34% to about 21 cents from a high of 32 cents, settling now around 23 cents. There's been a huge amount of trading volume, $2.5 billion trade, and supposedly now the circulating supply is 27 billion out of 100 billion total tokens. So 27 billion circulating. Now, I've seen a lot of question marks around. How much is truly circulating? Who is it circulating with? Apparently, supposedly initially supposed to be much less that was circulating. Now it's claimed to be 27 billion. So there's a lot of confusion about where all these tokens from and exactly which tokens are circulating to get this high of a float. Now, it's important to understand a lot of craziness happened around the time of the launch. So first of all, we saw gas prices on chain just explode to over 100 Gwei. You saw swap prices go into the $100 around the time that the token. All the launches, sorry, all the claims and the initial trading took place and there's been a lot of criticism of the overall project. So one thing that you've seen is that now this thing has substantially inflated the total nominal wealth of the Trump campaign or sorry of the Trump team. So Trump family ostensibly now owns over $5 billion in crypto wealth, 5.6 billion, which is worth more than all of the real estate holdings. Huge amount of that is now attributed to just World Liberty Financial, of which the Trump family has about 22% of the entire World Liberty Financial supply as well as 75% of all the pre sale. So the presale, which they sold hundreds of millions of dollars in the presale, 75% of all that cash goes straight to the Trump family, which is about $440 million of cold hard cash. Now of course, Trump is the co founder emeritus of World Liberty Financial and his sons are co founders. And of course instead of a white paper, they have a gold paper. Now another interesting wrinkle of this is that originally World Liberty Financial, of course you guys might remember, was framed as an Ave fork. And now of course they have USD1, which is a stablecoin. And that seems to be the main story of why World Liberty Financial is valuable. However, initially they promised that 7% of the world Liberty Financial supply as well as 20% of its fees were going to go to AAVE as part of the initial partnership. Well now ostensibly because World Liberty Financial has come out at such a high price, AAVE's share of this would be worth about $2 billion. But World Liberty Financial about a week ago denied that they had ever made this deal. Now this deal had been proposed originally in the governance forum and then it was ratified in World Liberty Financial's government forum. But then the World Liberty Financial team came out last week to say that this was fake news, which Stani apparently is disputing. So there's now a some kind of dispute which unclear exactly how this gets resolved or what the legal status, Clara's Court. That's where you take it. We're going to Claris Court.
- [06:30]
Tarun Chitra
Aragon Court. Aragon Court, baby. Forget about clarity.
- [06:33]
Haseeb Qureshi
How these things get or what the legal status of something like this is unclear. But there's a lot of money at stake on whether or not AAVE is gonna get.
- [06:40]
Tarun Chitra
I don't there is any legal status first off, that's the first answer.
- [06:44]
Robert Leshner
Well, this does go to the heart of daos. Okay. And yeah, governance tokens.
- [06:50]
Tarun Chitra
And this is snapshot. This is snapshot even for, for one, there are non.
- [06:55]
Haseeb Qureshi
There are non. There are binding verbal Contracts that is totally a thing. So if they engage in what a judge would would determine is a verbal contract then they could totally enforce this. I have no idea how enforceable it is though.
- [07:08]
Tom Schmidt
Does aavenot have bsl? I would assume they also have something in their terms of the code use.
- [07:15]
Haseeb Qureshi
My understanding is that World Liberty Financial does not have a product yet. There's no app, there's no actual thing that you can do. There's USD wallet.
- [07:23]
Robert Leshner
They haven't forked anything yet.
- [07:24]
Haseeb Qureshi
Yeah, they haven't forked anything yet. They could argue well we decided not to do the AAVE fork and that's why we're not paying. I don't know. Very unclear how all of this works. Justin sun today is WorldBuild Financial's largest backer. Holds more than 3% of the circulating supply and so the last thing. So when the token launched of course the token price immediately went down because a lot of the initial airdrop recipients or not sorry, not airdrop. The sale recipients sold their tokens of course. Unsurprising, it was like a 20x from the initial crowd sale price. So you had a bunch of people selling. Seemingly the team probably panicked in response to this and decided they were going to start buying back the token which they previously had not said that they were going to do. Now there's no proceeds from which to buy back the token. So they said that they were going to buy back the token using the basically the liquidity like the fees that they had on chain and so they used a $3 million slug to immediately buy back the token which seemingly did not actually come from the liquidity but just came from some of their own money. So they started buying back the token which caused the price to immediately rally. So now there's the team's buying back the token despite the fact that they don't really have sustainable sources of on chain revenue. But this token top 30 token presidential project. Okay, where are we guys? Where is this in the overall meta of crypto that we now have? Top 30 stablecoin AAVE fork that now is worth more than any defi project in existence.
- [08:54]
Tarun Chitra
Bored apes of this cycle.
- [08:58]
Robert Leshner
Speculative asset of the cycle.
- [09:02]
Tom Schmidt
Tarun's just totally uninterested. There's a brand new top 30 token and the man doesn't care at all.
- [09:09]
Tarun Chitra
It just feels like bored apes to me where it's like a kind of thing that exists to get made fun of and great. I'm too bored to. I feel like I've been in crypto too long. I'M too jaded by these kind of things that there's no real substance behind that have high valuations.
- [09:27]
Robert Leshner
That's what a guy with no bag would say.
- [09:29]
Tarun Chitra
Yeah.
- [09:30]
Haseeb Qureshi
So, okay, let's, let's break it down. I want you to break it down for me. What parts? Let's do like a sum of parts analysis. What are the parts of this business that you feel like don't have any substance? And which ones you think might have substances? Or is it all substanceless? Okay, because there's the obvious.
- [09:47]
Tarun Chitra
USD1 is interesting in one way in that it was used for a multi billion dollar investment into Binance Y so like it started off with a hot streak.
- [10:00]
Haseeb Qureshi
It is. They, they did announce that it's the fastest growing stablecoin in history, which is true. Over that one week period it was the fastest growing stablecoin.
- [10:08]
Tarun Chitra
Look, look, look, look, look. AI companies think that they can annualize their one day, that's their best day of revenue. They just take that and multiply by 365 and then like raise money on that. Crypto is one upping them with this. But I, I think like a USD one makes way more sense than trying to be a defi fork. Like remember when we, when we first talked about it in the show and we're like why is World Liberty like trying to run a protocol? Because like they just. This doesn't seem to make sense. Like you, you're basically a meme coin. So like do something simpler, you know, like, like I, I feel like there's kind of this interesting thing in crypto where things that are real products that launch a token have much more trouble becoming like memetic. And things that are meme coins always have this like death spiral where they just have to do buybacks until they try to for as long as possible until they can figure out what to make a product with it with kind of like the Yuga Labs stuff they released all these tokens and it was like down only and they were like okay, that's. We have to get, we have to make these last long enough for our game to survive. And so like I kind of feel like there's this kind of question of like are these just two sets that can never be reached from one another? Like the like real product but the token is just like priced on revenue multiples and like meme coin no product only buybacks eventually spirals. They try to bolt on a product, be a spac, acquire some, some IP some nonsense like last cycles thing was IP obviously maybe they did run a dat.
- [11:43]
Haseeb Qureshi
So alt five sigma I believe is the dat that just acquires World Liberty Financial and they raised 750 I think.
- [11:51]
Tarun Chitra
Great. I guess my point is it really feels a little bit like Yuga to me where it's like instead of IP it's rights to talk to Eric Trump. Question mark. You know what I mean? It does.
- [12:08]
Tom Schmidt
I feel like everything about this was almost engineered to break journalists brains. I'm so tired of having journalists hit me up wanting to talk about War of Liberty, ask about War of Liberty, but it just feels like they just keep stacking on the offenses and it's like everything that you have in terms of a caricature of the Trump family, this is it. It's like okay, the opaque supply and the buybacks and the dad and the self dealing and it's like what is actually going on here? And I find that actually to be like almost more amusing that it's like, you know, they just, it's like, you know, like the, like the Aristocrats. You know, it's like the. In the Joker and this is like the Aristocrats of crypto. It's like what more can we stack on this to like really offend even more people or like live up to this, this you know, person that people think they are.
- [12:54]
Tarun Chitra
I think in the, in the current world I'm post offended. I don't even think I even get offended. I just don't care anymore.
- [13:01]
Robert Leshner
What could they do to offend Tarun? That's the real question. Because that is the next innovation.
- [13:09]
Tarun Chitra
That's the last thing to stack. It's like the final boss in the video game, right?
- [13:14]
Robert Leshner
The hair that breaks the camel's back. That's the thing I want to see. I want to see.
- [13:18]
Tarun Chitra
How about for everyone here, what is the thing that they could do? I'm kind of curious.
- [13:22]
Haseeb Qureshi
For everyone I think the thing they do is they claim that they solved mev. I feel like that'd be the last thing that would just kill Tarun.
- [13:28]
Robert Leshner
No, I think they have to launch an L1.
- [13:33]
Haseeb Qureshi
Launch an L1.
- [13:34]
Tarun Chitra
No, no, no. Actually, actually I think one thing that would be funny but offensive is that they, they buy Story Protocol. Like they're like we need an L1. We're just going to do a M and A and buy out all the Story Protocol token holders with World Liberty.
- [13:49]
Haseeb Qureshi
Story Protocol is pretty expensive at this point I think that.
- [13:51]
Tarun Chitra
But, but they can still afford it. They can still afford it.
- [13:53]
Haseeb Qureshi
They can, they could afford it. They could afford it. I feel like, I feel like if they acquired like hashgraph or something, that would actually be pretty sick or like iota just like go last cycle and like just go really deep. Or like dash.
- [14:07]
Tarun Chitra
Yeah. The thing about story is like the mid curve 30 IQ narrative of this IP thing which, like, I don't know, we can talk about in the different era of like, what does IP on the blockchain ever really ever gonna mean? But that thing is like something where I've observed people who have never bought a crypto asset before are like, ip, I know that has value. I'm going to buy it. And I feel like that's a perfect brand for World Liberty Financial to own. Right, the ticker ip.
- [14:37]
Haseeb Qureshi
Yeah. So there was this, there was this piece in Blockworks that I really liked that talked about the, the garbage moat of crypto, which sort of describes it sort of paints this picture that like when you're in crypto you constantly see this, like, you know, you know how people talk about there's this like ring of plastic garbage like in the, in the Atlantic Ocean or the Pacific Ocean that's kind of just like, there's like this big thing in crypto of just like garbage that's just floating out there that we all kind of ignore. We all know it's there. Of like, do you see shitty low rent projects that are constantly out there just, you know, scalping retail and occasionally like they bump up against your feet and you can like feel, oh, like some trash has touched me. Ew. And you like, okay, I'm in. I'm in a. I'm in a weird website. I'm on like cryptopotato.com or whatever, one of these places where like, that's where these, this stuff congregates. Or like I see some weird kol who has like 300,000 followers and I don't know any of them and just like, okay, I'm in. I'm on. I'm. I'm in the. I'm in the trash heap of crypto. I'm in like, I'm in like that part.
- [15:33]
Tarun Chitra
The banana zone.
- [15:35]
Haseeb Qureshi
Yeah. And then like at a certain point, like the garbage gets into your living room and you can like, wait, I'm in my kitchen and like, I can feel the garbage against my feet. That's World Liberty Financial. World Liberty Financial is like the garbage got into your living room and now it's just there. It's like, oh, yeah, we have a gold paper written by the President's sons and the biggest holder is Justin Sun. And like, we're Buying back the token even though we have no revenue. And it's just like, it's just like, why is this here? Why is it? Why are you doing this to me? Like, leave me alone. So that, that's largely been my feelings in World Liberty Financial is that, like, when you read the comments, they're all negative. Like, every, like I was going through their, their tweets and they're doing it all on Twitter. All the comments are negative. Everybody hates this. But people are buying it anyway because there's like, oh, it's the President's coin. Like, you know, it'll go up. And then of course, a lot of people who are just not crypto people are buying the token because it's like, oh, the President and Defi. And they keep talking about this. And, and, and it also has to be that there's no way this is the real float. Like, I just, I, I refuse to believe that they have not picked up the tricks of the many predecessors in crypto. Like, you know, they're following in the footsteps of great projects before them that have lied about their floats. There's no way that 24% of the supply is floating like that. I just do. I refuse to believe that because especially when they said originally there was going to be 5% floating and now how exactly is 24% out there? So, yeah, all of it just seems very, very. To Tom's point, it's all very tedious. I feel quite exhausted by just how painful it is to see all this stuff. But to your point, I think we're all going to be asked lots and lots of questions about World Are Financial in every podcast we ever go on?
- [17:13]
Robert Leshner
You think this is going to be the Thanksgiving conversation of crypto this year instead of prior years where it was like, oh, my God, did you see? Bitcoin is close to 100k. You think this year is.
- [17:24]
Tarun Chitra
This year is when the grandparents are like, son, you've been talking about crypto for 10 years and all your stuff has been a scam. But we found the best coin that.
- [17:34]
Tom Schmidt
We made money on.
- [17:35]
Tarun Chitra
World Liberty Financial.
- [17:38]
Haseeb Qureshi
President is on board with your bullshit industry. Here's how you know you made it real well.
- [17:45]
Robert Leshner
If it goes up and everyone makes money, no one's going to complain about it.
- [17:48]
Haseeb Qureshi
I'm sure it will only go up. There's no way this thing could ever go down. I believe, by the way, the top two holders own something like 40% of. Of world Liberty Financial. And what is it there? There was some number of, like, the, the amount Held by insiders. It was a lot this thing. I'm sure it'll go up. It looks like a very good token. So anyway, yeah, like not financial advice. I. I don't know. I mean, maybe. Look, let's take a step back and let's see.
- [18:17]
Robert Leshner
Is giving financial advice about whether to long or short.
- [18:20]
Haseeb Qureshi
I. I will say let's celebrate the fact that they now feel like they have to build an actual project. I feel like that's progress relative to the Trump Meme Coin. Is that, you know, if, if that was, you know, to Tarun's point, if we thought that was the first and second tower of, you know, Trump, Trump coin and Melania coin. I feel like this is the Iraq war. This is like the war on terror. You know, this is like, okay, this is a much bigger, grander scale legacy that they're trying to build. And on some level I support that. I feel like, okay, they're trying to actually do something about it.
- [18:52]
Tarun Chitra
Are the WMD promises to daos done.
- [18:54]
Haseeb Qureshi
In Snapshot Y the WMDs were the AAVE governance proposals? Those are the WMDs. Anyway. All right, so now in response to this politics. This has been a week of wash with politics. In response, in part to this, we have presidential hopeful Gavin Newsom announcing that he is going to launch his own Meme Coin in response to the Trump Meme Coins. He was on an interview with Carl Swisher and he claimed that he was going to launch his own coin called the Trump corruption coin. And polymarket is now pricing 36% chance that he actually launches the Meme Coin. Any thoughts on Gavin launching his own Meme Coin, Robert?
- [19:33]
Robert Leshner
I would not buy that.
- [19:34]
Haseeb Qureshi
You would not buy it.
- [19:36]
Robert Leshner
This is investment advice. Don't buy that coin.
- [19:39]
Haseeb Qureshi
Don't buy the Trump Corruption Coin.
- [19:42]
Robert Leshner
I can't think of a stupider coin to look.
- [19:44]
Tarun Chitra
No, no, no. He's saying don't buy the Gavin coin.
- [19:48]
Haseeb Qureshi
I know.
- [19:49]
Robert Leshner
I, I don't think that will be a good financial investment for the people that buy that. And I think the odds of him actually launching it are close to zero. I think he was trying to call attention to what he perceives as a.
- [19:59]
Haseeb Qureshi
He did launch. He did launch the Merch store. So that. And apparently they're like making a lot of money from it. They're apparently, they're selling out like hotcakes.
- [20:07]
Robert Leshner
All right, all right. You know what I would love for entertainment value alone, to see Gavin launch a coin and to see how it's received by the world. I would love to see This, I think it'll be amazing fodder for a future episode of the shopping vlog. So, Gavin, if you or your staff are listening, pull the trigger.
- [20:27]
Haseeb Qureshi
We will bring you on to talk about your meme coin. I would love to. We'll bring you on the chopping block to pump your Meme coin.
- [20:34]
Tom Schmidt
It does need a better name, though. Trump Corruption Coin. I liked actually, all the fake Gavin coins that were being launched on Pump today. Wait, wait, I have it.
- [20:43]
Robert Leshner
It has to be called G Money or G Coin. You.
- [20:49]
Tom Schmidt
We can, you know, we can workshop.
- [20:50]
Tarun Chitra
It a little bit, but we'll work on it.
- [20:52]
Haseeb Qureshi
We'll work on it.
- [20:53]
Tarun Chitra
That one had a little hello, fellow kids energy.
- [20:57]
Robert Leshner
Yeah, I think that's what this point will be.
- [21:00]
Tarun Chitra
I guess that's fair. Maybe that demographic is.
- [21:04]
Haseeb Qureshi
There was. There was a lot of stuff on Pump called New Scum. So I feel like that, that, that might end up being.
- [21:09]
Tarun Chitra
I mean, I mean, I just don't get it because I'm like, the 4chan pump fund demographic is like, never gonna buy it. So it's like, who is. Who is the buy? Who is like the buyer? Like, I just don't.
- [21:23]
Haseeb Qureshi
I think the news cycle just creates the buyers. Like, as long as it's in the news and he can keep it there, then people will show up to buy it.
- [21:32]
Robert Leshner
But I agree.
- [21:32]
Haseeb Qureshi
I don't think. I don't think Gavin has like a raging fan club the way that Trump does. Maybe he's getting it now, but it doesn't feel obsessive. It feels more.
- [21:41]
Tarun Chitra
Well, I think the difference is like, Democrats policies of like, trying to not talk about money or like, not like, like, basically make them do much worse in merch sales. Like, I saw some study that was like a study of Democrats over the last 10 years versus Republicans in terms of like, political contributions from sales of items versus political contributions from donations. And the Democrats, like, just like significantly lower. Like, they just don't. People don't buy their item. Whereas for Republicans, it's like, all about like the, like, branded shit. And so there is something to the fact that a meme coin is like the ultimate version of the, like, buy my branded stuff. That does nothing for you. Right? It's like the. It's the kind of. And like, it's sort of. I just don't see. If Democratic voters don't buy hats, I. Do you think they're going to buy the Meme coin? Like, that's kind of what I'm.
- [22:39]
Tom Schmidt
I think the problem is it's hard to be Second, the man has sort of opened the window or been the first mover for a lot of these things. And then it's like you follow up and you're like, I'm also having the hat. I'm also doing the coin. And it's very transparent that this is what you're doing. And I think, like you said, you need to kind of look one step ahead, and it's like, what would you do next instead of actually launching a coin today? I don't know what that answer.
- [23:07]
Haseeb Qureshi
Newsom is doing it, obviously, as a parody, right? So he's calling out Trump and all these things where he's like, selling Bibles. Obviously, no Democrat is selling Bibles, but, like, he's. He apparently sold a shitload of these Bibles that. Branded Bibles. Yeah, yeah. They're like Gavin Newsom branded Bibles. And, like, it's obviously a joke, right? Like, it's not. Nobody who's supporting Gavin Newsome is into buying Bibles, but it's working. It's creating clicks, it's getting headlines. It's like a funny thing. It's like, Gavin Newson Bible. Isn't that hilarious?
- [23:34]
Tom Schmidt
It just feels very, like, forced. Right. It's clearly some staffer or some comparison was like, this would be a funny thing to do, but it's clearly not in Gavin's nature to be doing this. I mean, he's had however many years to do something like this, and he hasn't. And you're right that in the short term you're getting this. But I do wonder if what would Zoron do?
- [23:54]
Haseeb Qureshi
Right?
- [23:54]
Tom Schmidt
Zoron actually, I think did something fresh in politics, independent of how you perceive him. And I feel like he would actually do something interesting in crypto. I don't know what, but, like, I feel like that would actually be the move.
- [24:07]
Tarun Chitra
The Zoron Meme coin would, I think, do better. I agree with you.
- [24:10]
Haseeb Qureshi
That would crush. For sure.
- [24:12]
Tarun Chitra
For sure.
- [24:12]
Haseeb Qureshi
That would crush. Or, like, it would crush, though.
- [24:16]
Tarun Chitra
No, no, no, no, no, no, no. Yeah. It has to be someone, like, younger and newer. Like, I guess AOC is, like, similar, but she's, like, been around for a while.
- [24:24]
Haseeb Qureshi
Yeah.
- [24:24]
Tarun Chitra
It needs to be someone fresh, I feel like.
- [24:27]
Haseeb Qureshi
Yeah, interesting.
- [24:28]
Robert Leshner
You're fresh.
- [24:31]
Tarun Chitra
I was just talking about how I'm too old. I'm post. I'm post being shocked.
- [24:36]
Haseeb Qureshi
I love. I love the way you guys gas each other up. Tarun, you're fresh, you're young. You're the face of crypto. You get out there, you're a great Podcaster. You know, you're a great podcaster.
- [24:47]
Robert Leshner
You're the best. Yeah.
- [24:49]
Tarun Chitra
Okay. What would Duron sell? This is a good question. I like, I don't think it would.
- [24:53]
Robert Leshner
Be a tripped out.
- [24:54]
Tarun Chitra
Yeah, yeah. Like what? Like brainstorm. Imagine you're his pr Public goods.
- [24:58]
Haseeb Qureshi
It's some quadratic voting. Oh, yeah, yeah, yeah.
- [25:02]
Tarun Chitra
Quadratic voting.
- [25:03]
Haseeb Qureshi
Oh, no. One of these things where like everybody in the world gets an airdrop and like they've all failed. Like, none of them work, but it's like, oh yeah. Every single time. People love this idea.
- [25:13]
Robert Leshner
Yeah. It would be like World Coin for Astoria.
- [25:15]
Haseeb Qureshi
Yeah, yeah, yeah.
- [25:18]
Robert Leshner
You mail in a vote and you get your coin.
- [25:22]
Haseeb Qureshi
That. Hey.
- [25:24]
Tarun Chitra
I. I actually think like, like, what is Cuomo going after him for? For, like somehow his apartment is not his rent stabilized and he doesn't need to live in the rent stabilized apartment or something. I feel like you have to design some quadratic voting token around that so that Cuomo can't, Can't. Can't make make up shit.
- [25:43]
Haseeb Qureshi
Yeah, fair enough. Well, speaking of regulations. So we got some big news. Some big prints on chain. Specifically GDP prints. So the US Department of Commerce has recently announced that it is now going to be posting GDP prints on chain. Now which chains? There's nine chains that they're posting it on. Bitcoin, Eth, Sol, Tron, Avalanche, Polygon, zk, Sync, Optimism, Arbitrum. Stellar Using chainlink and pif. Apparently they got some help from Coinbase, Gemini and Kraken, I guess because Department of Commerce doesn't know how to use an rpc. I don't know. Apparently they did not use Cardano and Cardano. People are very upset about this, but other than that, apparently they are going to be expanding this beyond just GDP to also post PCE and real final sales. According to Secretary Lutnick, we are making America's economic truth immutable and globally accessible like never before. Cementing our role as a blockchain capital of the world. What do you guys think? GDP prints on chain reactions.
- [26:47]
Robert Leshner
What problem does this solve? Like, I love that this is happening because it shows that you have bureaucrats somewhere in the Commerce Department using blockchains, which is good. It means there's more people testing a technology, working with partners to do this. It's awesome. But like, I don't think anyone asked for this. I don't think, like, anyone's like, man, I don't know what GDP is. If only there was eight different immutable records of what GDP was.
- [27:20]
Haseeb Qureshi
Also, if you post it on Eight blockchains. What if they disagree? Which one? No, it's the same Oracle.
- [27:26]
Robert Leshner
It's the same Oracle posting on all the chains.
- [27:29]
Haseeb Qureshi
Oh, I see, I see, I see. Okay, fine, fair enough.
- [27:32]
Tarun Chitra
I will say the one kind of trivia, industrivia that I think is funny about this is the type of person who really wanted GDP on The blockchain in 2017 was exactly the opposite of like Trump. So it's like kind of funny to me because like in the 2017 ICO boom, there are all these like CPI pegs, stablecoins that people were trying to like. Celo started that way, right? Like they were like instead of being a dollar, we're going to be CPI pegged. And actually if you have all these. If the BLS of everywhere in the world posted this, you could actually. And they were actually going to have oracles where they like posted this to their chain to like compute their CPI index. So it's like there is something actually kind of funny about this in that two cycles ago it was like the, the like leftist crypto side that really loved this and like now it's like, like, you know, like the political spectrum is a circle.
- [28:25]
Haseeb Qureshi
I totally forgot about that. I remember basis once upon a time said that they were going to eventually shift to cpi.
- [28:32]
Tarun Chitra
That's the best use case I can come up with for this.
- [28:34]
Haseeb Qureshi
The gdp we were asking, we were.
- [28:39]
Robert Leshner
Asking what project World Liberty could build to make tarun. Actually I found it.
- [28:47]
Tarun Chitra
Honestly, if they pulled that off, I would just say amazing.
- [28:50]
Haseeb Qureshi
That'd be a great way to tie all these things together. Performance that would actually be really elegant. Yeah, yeah, yeah. And then just take the money in World Liberty that they have as backing and replace it with basis. I feel like that's done. Brilliant, brilliant business move. What's also thinking back about this, like the idea of pegging something to PCI or sorry to cpi, which comes out once a month, right? So like every month there would be like this very sudden move where all of a sudden the Oracle price just jumps to the new CPI level. Just seems like a horrible design for a coin.
- [29:32]
Tarun Chitra
Also, all of these things would have blown up in Covid, basically.
- [29:35]
Haseeb Qureshi
Yeah, true. Exactly. When CPI was hitting like 10%. Yeah. These things would have all exploded. So yeah, in retrospect that sounded like such a good idea in 2017. In retrospect, what a terrible idea. I'd absolutely do not peg anything.
- [29:49]
Tarun Chitra
But I was just trying to think of when does someone want this type of data on the blockchain?
- [29:54]
Haseeb Qureshi
Even on people don't bet on GDP prints. People don't bet on cpi. They bet on.
- [29:59]
Tarun Chitra
Don't they bet on the Fed cut, though?
- [30:01]
Haseeb Qureshi
Yeah, they bet on Fed cuts, but there's also an external oracle for that, which is go look on the CME and you can see the interest rate futures. Nobody's directly betting on these things. So it does feel, to Robert's point, like, why this?
- [30:15]
Tarun Chitra
Hey, who wants this? Look, for the record, that is obviously the null hypothesis. There's no reason you should want this. I was just trying to present some alternative hypotheses that one could really stretch the imagination and hope could be used.
- [30:32]
Robert Leshner
Here's what I think Lutnik should have announced in addition to this, because I actually speaking solely as somebody who loves crypto and loves app development and loves all the things you can do with it, I think they should have announced in parallel to this. You know, there's also like an X Prize like thing for whoever uses this data in the most interesting way or the most important way or the most valuable way. If they actually challenged America to use this data on the blockchain and the winner, I don't know, gets a tour of the White House and gets to like, take a photo with Trump or whatever it is. If they actually challenged America to use this data and do something with it and show off what's possible on chain, then I would be impressed.
- [31:12]
Haseeb Qureshi
And actually, I imagine what people could do if they had access to GDP numbers.
- [31:16]
Robert Leshner
Well, I don't know.
- [31:17]
Haseeb Qureshi
We're not that creative. We're not that creative.
- [31:19]
Robert Leshner
But if you let any American get creative, I actually think there might be something cool.
- [31:24]
Haseeb Qureshi
I think there's one application you can build with this and it's called GDP bet. And I think it would have been sick if they built it themselves. That would have been sick if they like launch this alongside GDP bed and they just like threw it on chain.
- [31:36]
Tarun Chitra
I mean, I mean a very funny but random use case that I, I guess there is. I mean, this is not particular to the GDP data, but there was this like, contest for, in 2018, 2017 for like, like a NIST, like National Institute for Science and Technology. Like that sets the standards for like, figuring out how to generate the world's best seed entropy for like a random number generator. And like they tried a bunch of different sources, like stock closing, stock prices, like the last 10 bits of a bunch of stocks. And then they use some aeronautical stuff, like basically measurements from the National Weather Service. They had to use public data and they tried all of them and Basically the stock price1, the closing price was the most random seed you could get from nature effectively. But I kind of wonder if the GDP prints are equally random, especially now nowadays that like the last, the trailing bits are random enough, especially when they.
- [32:38]
Haseeb Qureshi
Have this like two significant digits.
- [32:40]
Robert Leshner
Is it like 3.2?
- [32:42]
Tarun Chitra
Well, actually they're. You're right. You're right. What they're posting on chain. I. I was thinking more about the stuff where like jobs numbers and whatever.
- [32:48]
Haseeb Qureshi
With like revisions now that they fired the BLS head. I don't know that I would trust the digits of. All right.
- [32:57]
Tarun Chitra
I'm trying to. I'm trying, I'm trying real hard to find something useful.
- [33:00]
Haseeb Qureshi
Yeah, we're trying to best to win this competition. Yeah, yeah.
- [33:04]
Tarun Chitra
The GDP on Chain X prize. Is that what you said?
- [33:07]
Robert Leshner
Yeah, yeah, that's what we're calling it.
- [33:10]
Tom Schmidt
Does remind me of truflation.
- [33:13]
Tarun Chitra
Yes.
- [33:14]
Tom Schmidt
I feel like this was like, like, oh, you kind of remember truflation, but it was like a dream and it was like several years later and now you're like, we should do something with the blockchain and cpi. Don't know what exactly but like you.
- [33:24]
Tarun Chitra
Know, the only commonality to truflation and this thing is, as always, Justin sun, because I feel like a true flation. Didn't he end up buying that team? There was like the whole true USD bailout thing. Whatever. Weren't they the same team?
- [33:40]
Tom Schmidt
I don't know.
- [33:42]
Tarun Chitra
You can edit. You can.
- [33:45]
Tom Schmidt
You think it's a different team?
- [33:47]
Tarun Chitra
Yeah. All right, then add in my comment.
- [33:49]
Tom Schmidt
We'll edit that out. Or maybe not.
- [33:52]
Haseeb Qureshi
We're keeping it in just to. Just to keep the record. We're going to put on the blockchain. We're going to post it using chain link on nine blockchains so nobody will ever forget.
- [34:00]
Tarun Chitra
Yeah. So when are we posting the podcast on the blockchain, Haseeb? It seems like now once you get gdp.
- [34:06]
Robert Leshner
Actually, actually I was asked for us to post the chopping block on ZORA as content and donate the money to charity or something. But we could put the chopping block on the blockchain.
- [34:22]
Haseeb Qureshi
I'm down.
- [34:24]
Tarun Chitra
Chopping blockchain.
- [34:26]
Haseeb Qureshi
No. If you post it on Zora, do they actually host the files?
- [34:32]
Robert Leshner
I think so.
- [34:33]
Haseeb Qureshi
They do. Okay. Yeah.
- [34:35]
Robert Leshner
We could post this to Zora and any of the coin that gets made or whatever, we all give it to Coin center or something useful and the world wins.
- [34:43]
Haseeb Qureshi
Do it. Okay.
- [34:45]
Tarun Chitra
Thank you MEV Snipers for funding Coin center in this very indirect manner.
- [34:50]
Haseeb Qureshi
Yeah. Don't well, watch out before you actually buy this content coin, because we understand it's a dark forest out there, so stay safe. But if you do, then you'll be supporting Coin center and all the great work that they do. So excellent. So another piece of news I thought was quite interesting on the regulatory side. CFTC is reviving the FBOT Foreign Board of Trade registration path for overseas exchanges. So the announcement was I think a little bit mangled by a lot of reporters who claim that this was Binance and Bybit and whatever can now come back into the US market. It's not quite what it means. What it does mean is that according to Carolyn Pham, CFTC Interim Head, the CFTC has opened up US markets to the rest of the world. Firms now have a path back after being driven offshore by regulation, by enforcement. This means that you can apply under FBOT rules to be CFTC licensed and offer derivatives and other asset classes to Americans, but you have to undergo very, very pretty strict CFTC oversight, market surveillance, you know, all this other stuff. So it's not a walk in the park and it's probably not trivial for somebody like Binance or Bybit to do this on day one, but possible that they could decide to accept this regulatory regime and open themselves back up to the US market. So, thoughts? Is this good? Is this bad? Does this mean the end of Coinbase? Robinhood, what are your guys thoughts on CFTC opening up the US market to foreign exchanges?
- [36:17]
Robert Leshner
Well, I think there might be some confusion here and again I'm not a lawyer, I'm not a legal expert, I haven't actually read through this too much, but I just heard on Twitter that this might have been misinterpreted a bit. And again I have not looked at the actual guidance etc. But one of the opinions that I saw was different was that specifically what they were saying was that US businesses could be re onshored and that the goal was instead of activity moving offshore, the inverse in that you could start a business in the US with all of this activity and it could be sold to US persons and offshore persons and that this would actually be a huge benefit to businesses built in the US or that want to reassure user activity. So I'm not really sure how this works in practice, but I just saw a lot of conflicting and different opinions on what the actual impact of this was and what the wording and ruling really included.
- [37:19]
Haseeb Qureshi
So my understanding is that FBOT applies to exchanges like your ex or you know, I think for something like elmax or something like that it's relatively straightforward for them to get this designation, an FBOT designation. But it's not something you can easily get out of the box but doesn't require you to be domiciled in the US is my understanding. But it does require you to expose your trading surveillance stuff to US regulators so that CFTC can pull records anytime they want, if they want to do an investigation or whatever.
- [37:47]
Robert Leshner
That makes sense then. So you have to onshore to US regulation and US and ex US businesses can do that by submitting to US jurisdiction.
- [37:59]
Haseeb Qureshi
That's right. So again, is this something that Binance is going to do out of the box? Probably not, but it's certainly possible. I'm really curious to see if you get these moves because right now almost all of them are using US subsidiaries that are cordoned off from the global exchanges. Right. So Binance US recently came back to the US market, is now offering trading competition or trading incentives and so on. I think OKX is doing the same thing. So there does seem to be an interest in a lot of the overseas exchanges to reestablish a US footprint because they just see how big the US market is becoming. But so far it's been very difficult for them to get that foothold in building these US subsidiaries. This might be a path for them to be able to compete using their global liquidity and just tap into US markets. But it might well be that the people who are trading there, they're like, yeah, I don't want the CFTC to be able to see everything I'm doing because trading surveillance requires them to be able to say like, oh, this Chinese guy, this Russian guy is trading on your exchange. We don't like that so much.
- [38:59]
Tom Schmidt
Yeah, I mean, I agree. I think I see these offshore exchanges trying to reopen US entities. And OKX announced they have a new office in San Jose and a lot of rumblings that all these exchanges are looking at going public with their U.S. entities. Obviously in the U.S. i think the question is, is the sum greater than the whole, greater than the sum of its parts? If you have binance us and binance.com offshore, is that worse than actually having one sort of global exchange with this surveillance? And I don't know what the math looks like on that or how the exchanges think about that, but it does seem like it would simplify things, all.
- [39:33]
Tarun Chitra
Else being equal, no real opinions, but there was also some other SEC and CFTC news that hit the ticker right before we we did this where like they're allowing other exchanges to sell spot crypto. Like the cme.
- [39:49]
Robert Leshner
Spot on.
- [39:50]
Tarun Chitra
Cme?
- [39:50]
Robert Leshner
What?
- [39:51]
Tarun Chitra
Or it's maybe not just cme, but like CME and nasdaq. It was like, certain crypto assets are safe for equity and futures exchanges. It was like, just came out. It was like a kind of weird news headline. And so, like. Actually, I'm more curious instead of, like, trying to dissect how much that headline was, one commissioner saying something or not, let's just pretend that's true. That nyse, nasdaq, CME can offer spot Bitcoin.
- [40:21]
Tom Schmidt
I saw Atkins retweeted it, so I'm guessing there's some endorsement.
- [40:24]
Tarun Chitra
Yeah, there's clearly something there, but I don't know the whole news story. But I'm more interested in what happened, the consequences of if they allowed this. Are the ETFs dead then? Because wouldn't you rather just buy bitcoin on. I'm just kind of curious. What do you guys think?
- [40:41]
Haseeb Qureshi
I think the ETFs are not dead, because probably they will be. They just have kind of a liquidity moat. Right. Like, if you're buying spot bitcoin on one venue versus another, what does it take to move it from one venue to another? That's actually. If you're a traditional pet fund, it's probably not the kind of thing that you're used to dealing with. Okay, I have to provide an address from NYSE to go move it over to this other exchange over here. My guess is that they'll probably just keep trading the ETF for a while. The ETF is super low fees. Right. So relative to simplicity and the liquidity that it already has, my guess is that the ETF probably just remains entrenched for a while. That'd be my guess, yeah.
- [41:24]
Tarun Chitra
I don't know. I just think there's just, like. It's something interesting if every exchange can sell every asset all in one the same place. Like, Coinbase announced they're starting to do stocks today. Right. So it's like, what is the end world where everyone can do everything?
- [41:38]
Robert Leshner
Yeah, I mean, the end world where anyone can do anything looks almost like a crypto blockchain with applications on it that are composable and open and anyone could build. I mean, I think at some point this will all get amalgamated and you will have applications that sell every financial product, because at the end of the day, you have a similar user base, you have a similar set of risks, you have a similar everything. And so having these extremely tall walls that separate asset classes based on Arbitrary parameters is a little bit outdated and a little bit ridiculous. And so I do think this is where we're headed and we may as well rip the band aid off.
- [42:16]
Haseeb Qureshi
Yeah, it's interesting because we talked with Vlad about this, about the idea that both Coinbase and Robinhood are going in the same direction, which is being the Everything app. And it does seem to me like, okay, let's say that Schwab or Fidelity starts offering you to buy and sell crypto, which I guess Fidelity already does, but let's say every brokerage does, every exchange does. What we've seen historically in crypto is that exchanges really want to verticalize. So they offer trading and lending and staking and ICOs and this, whatever, every single product they can possibly come up with, they offer it under the same roof. And this is what financial institutions do, is they start offering more and more products. They cross sell, they sort of pick up more and more margin through offering auxiliary services. I think, although it's already been true for a while, that there are some traditional platforms where you can buy and sell crypto. Overwhelmingly people seem to want to buy and sell their crypto through Coinbase or through Robinhood or through a few places. Even when almost everywhere, it will offer you to buy and sell crypto. It's not where most people buy and sell their crypto. I don't know why I wouldn't have predicted that five years ago if you'd asked me, like, okay, what's going to happen when Vanguard starts supporting crypto or Fidelity starts supporting crypto? My assumption would be like, well, everybody's going to get a piece of the pie. Coinbase is going to suffer. And anybody who has a relationship with a brokerage or with some financial institution, that's where they're going to get their crypto. Because they don't care where they're getting it from. They just want a trustworthy platform that's going to custody their crypto. Demonstrate that's not what's happened. Right. People sort of want to do their yoloing over in Robinhood and they want to do their safe stuff over in their brokerage account. And they sort of don't have the two elements touch each other. And maybe that's the answer, is that it's sort of like these mental boxes that all my yolo degen shit goes over here and my safe stuff that we have a family brokerage account that's over here. And I don't necessarily want my kids to see all my fartcoin.
- [44:11]
Robert Leshner
So now you got to Put the retirement money into the fart coin, that college fund, put that into.
- [44:18]
Tarun Chitra
Seem really. You're sounding like Cliff Asness when you're describing this partition of mind thing. Because he always, you know how he's like. He's always really going off on this fart coin thing about how people like, like they need like their gambling budget and they're not gambling budget and fartcoin takes up all the gam. I don't know why fart coin. For some reason, people of that age, who are like, like 50 to 60, it like really is the meme coin that like strikes them in the head the most.
- [44:43]
Robert Leshner
It's because they went to high school in like the 70s or 80s or whatever and, you know, they just made a lot of fart jokes then.
- [44:48]
Haseeb Qureshi
Look, farting is a human universal. Everybody. That's the thing. Everybody understands fart coin.
- [44:53]
Tarun Chitra
Yeah, but I don't think. I don't really. I feel like it's like very boomer friendly in a way that's like.
- [44:58]
Haseeb Qureshi
But. But the thing that defies explanation is like, look, Venmo, you can now buy and sell crypto. PayPal, you can buy and sell crypto. Fidelity, you can buy and sell crypto. But it's not where people are buying and selling crypto. Right. Overwhelmingly, they're doing it through Robinhood and Coinbase. Am I wrong?
- [45:13]
Robert Leshner
No, you're not wrong. You're not wrong. But I don't know. I personally am an individual who. I would like one app that I can do all this stuff, assuming that it was good economic terms. I think the risk is that a business has its core constituency and all the new products they view as an added rake. And they're terrible terms and they're not as good as the competition. And you don't get a super app. You get a crypto native thing that starts off and it's like, good at crypto. And then everything else is they're not as good at it, so they charge too much money or it's weird structures or who knows? And so I personally would love something where it's good at everything. Do I think any platform or product can be good at everything? No, I think it's going to be clunky as anything, but like maybe 10 years from now, we look back and we laugh at this. We're like, of course you can have one app and you can buy every possible asset in it, from live chickens to crypto tokens to a stock to a derivative to a banana.
- [46:15]
Tarun Chitra
I think there's an interesting question of if every app becomes the every financial product app. Let's ignore the rappy type of stuff you're talking about where it's like yes, I can get cash delivered or chickens delivered to my house. I'll let those be separate from the financial one. But there's kind of this weird thing where like the stable coinization of bank accounts, I don't know what else to call it, if that happens, then there's basically very low lock in to a lot of fintech apps. Whereas like right now there's kind of a ton of lock in to like ach fronting. Right. Like lending you money so that you get money immediately on the platform processing your ach. And like because you've done it so many times, they're willing to do it. But like stuff like that kind of disappears when you're holding most things. Like a larger percent of society is holding things in stables and so in that world the only competitive advantage is like yield and ux. There's like nothing and marketing I guess. But like those are, it's like you only have three levers. There's not kind of this like I have these systematic lock in things and like, does that mean that you converge to like there's only one app or does that mean you, you have.
- [47:28]
Haseeb Qureshi
Well if you're on somebody's ledger, right, I'm sorry, you're on somebod platform. Right. They're not necessarily leaving you out on a public ledger. Right. They're probably going to have some kind of segregated account, but the data is not fully public, it's not typically visible where your money is. And to that end they actually don't want to be able to export your data, your credit, your reputation on their platform such that they can extend you credit. But if you go export your stablecoins and go to some other platform, they don't necessarily know your spending history, they don't know how good of a credit risk you are. And so they actually don't want all that data to be exportable. Naively. So I think they will still fight to have that lock in even if you can.
- [48:06]
Tarun Chitra
Yeah, I think the main problem is even in a lot of apps they'll give you fast withdrawal to your main bank account, but not fast withdrawal to other bank accounts because that's the one they KYC'd or trust or whatever. Right. But if everything is becoming more like crypto, it'll be more like using a crypto exchange where it's like I withdraw to wherever I want and you can't really Stop me that much. Right? And in that world, right, like, if, if, if everyone's bank starts looking like Coinbase in that way, or like Binance or, or wherever, then it really does become like, you know, what are the things that make people sticky on crypto exchanges? Like, some of it's laziness, some of.
- [48:48]
Haseeb Qureshi
It is, like, a lot of it is incentives. Right? So, like, if you're, you know.
- [48:51]
Tarun Chitra
Yeah, that's what I meant. So yield, Yield and UX are like really the dominant.
- [48:55]
Haseeb Qureshi
No, no, not just that. Not that, just that. But it's like if you're, if you're really locked, like, let's say a huge Binance user, you have really low fees on Binance, you're not just going to go say, like, well, Bybit offers the same products, I'll just. Might as well use Bybit because Bybit doesn't give you the same fee tier because you haven't traded on Bybit for as long. Right. So you can, you can basically build in that lock in, like, crypto exchanges are already in the state of nature that you're describing. So it's.
- [49:16]
Tarun Chitra
Yeah, yeah, but I'm saying, like, imagine now that's true for, like, all these other apps. They're going to have to change a lot. They're not going to look, yeah, granted.
- [49:24]
Haseeb Qureshi
Granted, but they change a lot in the direction of basically looking like crypto exchanges.
- [49:27]
Tarun Chitra
Yeah. Right now your bank app will have to look more like Coinbase.
- [49:31]
Haseeb Qureshi
Right.
- [49:31]
Tarun Chitra
Which is like a kind of weird thing to think about.
- [49:33]
Haseeb Qureshi
Kind of. Kind of. But then at the same time, like, look, if I imagine this, this end state where everything is the everything store. Right. I still can't really imagine being like, great, I'm going to move all my ETFs to Coinbase. You know, I just, like, for whatever reason, like, that just kind of feels weird to me. Like, I feel like I wouldn't trust Coinbase to, like, if only we had.
- [49:52]
Tarun Chitra
Paul Greywall here, right, to give you a lecture. How dare you.
- [49:56]
Haseeb Qureshi
That's the thing is like, I want my ETFs on, like a boring platform with like janky 2fa, but, like, still. But it has 2fa. Like, somehow I like, trust that more.
- [50:04]
Tarun Chitra
I had. I had to use a transfer agent recently. That is the most ghetto, unsecure thing ever I've ever used.
- [50:12]
Robert Leshner
That's why Superstate exists. But that's a different episode.
- [50:15]
Haseeb Qureshi
There you go, there you go.
- [50:17]
Tarun Chitra
I'm just, I'm just saying, like, there's so much janky stuff in the equities market.
- [50:20]
Haseeb Qureshi
Totally, totally. But it's like janky in a way that you gotta like, call stuff somebody on the phone, you know, and like. And somehow that gives me some confidence somehow. Feel like no Russian hackers are taking my, my ETFs.
- [50:32]
Tarun Chitra
I love that you trust DTCC so much with your life. You're just like, there must be the smartest. And it's like anytime I meet someone.
- [50:38]
Haseeb Qureshi
From dcc, kind of a good, like, yeah, no Russians are allowed on dtcc. That's a pretty good security model.
- [50:47]
Tarun Chitra
I don't know.
- [50:47]
Robert Leshner
Yeah, it seems very easily hacked and forged. It's a very flimsy security model. Yeah.
- [50:54]
Haseeb Qureshi
I think there's an obvious sense in which a big cornerstone of security is just being very low tech. So don't let the thing touch the Internet. Use very simple devices. A ledger is much preferable to some fancy newfangled thing that has a three. Whatever, touchscreen or whatever. And I think the same thing is kind of true for ETFs, is that I think it's pretty safe if a company has a ledger that's just an Excel sheet. Like, I'm actually not worried at all about that getting stolen. But if I have, you're shaking your head. Let's do it.
- [51:29]
Tarun Chitra
This is like.
- [51:30]
Haseeb Qureshi
This is the episode. This is the episode. Let's go.
- [51:32]
Tarun Chitra
I feel like. I feel like the whole stock issuance process compared to like calling the Mint function and like, knowing where it's going is ridiculous. Right? Like, it's not even.
- [51:40]
Haseeb Qureshi
Yeah. I think there's trade offs. I think there's trade offs. I think there's trade offs. But, like, I. I think it's very clearly true that I never worry that my portfolio company, my stock in my portfolio company will get stolen. Literally never worry about it. I've never worried about it once in my life.
- [51:54]
Robert Leshner
But is that because you're confident in the IT practices of these companies and the probability that data is exfiltrated or it's hacked or data is changed, or do you feel confident in it because you know that if there is a problem that it's reversible and that any 0 is easily turned into a 1 and that any court can fix a problem when it occurs?
- [52:22]
Haseeb Qureshi
Yeah, totally. Granted. Yes.
- [52:23]
Tarun Chitra
That's why, I mean, that's really what you're getting. Because they get hacked all the time.
- [52:28]
Haseeb Qureshi
Yeah, totally, totally. But if my shares ever disappear, I have my. I mean, it's basically a blockchain, right, where we have our own idea of what we own. They have An Excel sheet they have to match. If they don't, there's like a. I.
- [52:41]
Tarun Chitra
Do think it's just funny to hear, hear a crypto investor be like, I don't want to hold my ass.
- [52:45]
Haseeb Qureshi
Okay, okay, okay. Would you move your ETFs to Coinbase?
- [52:48]
Tarun Chitra
Yes, sure. Yeah.
- [52:50]
Haseeb Qureshi
Straight away, Tom.
- [52:51]
Tarun Chitra
Yeah, if they gave me better fees, I'm not paying a fucking two fees. They're not paying 2% to trade an ETF.
- [52:58]
Haseeb Qureshi
You know, I'm not talking about better fees now. Yeah, if there's better fees. And that's a totally different story. But that's, that's a different reason why you're doing it.
- [53:04]
Tom Schmidt
I think Robinhood is the, is the counterpoint here though, right? Which is like, this is the way the Youngs have come into investing and crypto is such a huge point of it. And I think that's maybe the bigger thing here is I think it's very.
- [53:16]
Haseeb Qureshi
Likely for young people that, like, they grew up on Coinbase, they will totally buy their ETFs on Coinbase. The question is, will you move your ETFs to Coinbase if they start offering ETFs?
- [53:25]
Tom Schmidt
I guess I have no reason to. It's like, I already have a brokerage. I think part of it is just young people are going to be the ones buying crypto. So it's like, even if these other brokerages also offer crypto, I just don't think they're going to be successful. It's like sort of a very much, you know, kind of backwards way of. Actually, you think about it, it's like people get locked into their behaviors when they're 25 and they're not going to change. And so if you're used to banking through a neobank, that's just where you're going to keep everything. And you're not going to go and transition to fidelity just because you're like, oh, I'm old now, I should use like an old person's product. Like, those businesses just die over time.
- [54:01]
Haseeb Qureshi
Let me articulate a clearer explanation is that, that if you hack into my Vanguard account, there is very little you can do. Like, you actually just can't do that much.
- [54:10]
Robert Leshner
Yes and no. I mean, there's a lot of scams that are similar to like the way it works in crypto exchanges where like, they could dump your entire account into some random ass penny stock, right. And bid up some penny stock from $0.01 to $2. And then through all these different other accounts, they're selling it at this Price, there's ways to totally rug a tradfi account and they do happen in financial markets all the time in the same way that it's one of the ways that people exfiltrate the profits of an exchange without sending it to themselves in crypto. So there are ways where you can lose your money in a brokerage account today.
- [54:50]
Tarun Chitra
Do you remember when the Bangladeshi century. Do you know when the Bangladeshi center crypto. You remember in the Bangladeshi central bank like, like almost lost a billion dollars because someone called the Fed like custodians. These custodians are. Yeah, yeah, yeah, yeah, that's true. They did they. But I don't think they lost a full billion. I think they lost like 600. They lost a lot.
- [55:10]
Robert Leshner
Yeah. Do you remember when someone fat fingered like a bond payment from Revlon or some company for $900 million?
- [55:16]
Tarun Chitra
I mean like, and Citi. Citi. Citi had to pay a huge fine for that. Yeah, like, dude, Haseeb, I think it's fucking crazy when put your ETFs in a crypto exchange as, as a, as a crypt.
- [55:29]
Haseeb Qureshi
You know, like, you think it's crazy that I wouldn't do that?
- [55:32]
Tarun Chitra
Yeah, yeah, I think it's crazy.
- [55:34]
Haseeb Qureshi
I think you guys are not paranoid enough about crypto exchanges. I think crypto exchanges are like some of the biggest honeypots in the world. I used to work in anti fraud. Right. I know, like, and you know, you see all this stuff coming out about like the, the just the rate at which people on crypto exchanges are getting fucked all the time. Like, I think the answer is that you want to keep as little of value on crypto exchanges all the time because they are such massive honeypots. They are extremely.
- [56:03]
Robert Leshner
But this goes back to your point from earlier. The reason why they are targeted exponentially more is because today crypto exchanges handle assets that are irreversible. They handle crypto tokens like USDC and Bitcoin and Ether that once it's gone out, you cannot get it back with a court order. You cannot get it back with all the safeguards of traditional markets. The other assets going into the crypto exchange do benefit from those protections. The stocks that you're so comfortable owning because of these incredible legal protection.
- [56:34]
Haseeb Qureshi
It depends on how it works. It depends on how it works. Okay. If you can take my ETFs, log into my account, sell all the ETFs and then transfer into Bitcoin and then withdraw to an account, then yeah, I would not want that at all. You can't do that right now. In my vanguard, right on my vanguard, all you can do is withdraw.
- [56:50]
Tarun Chitra
In the world where everything becomes the everything app. App, you can always do that.
- [56:55]
Haseeb Qureshi
Okay, that may be true. That may be true.
- [56:57]
Tarun Chitra
Maybe that's like, that's, that's the future we are careening towards. So you might as well go to the people who, who, who, who learn how to build security practices the longest. Then like Fidelity getting hacked by North Korea 5 million times and then suddenly, oh, finally they hire, you know, like build in different processes because they weren't used to it. They weren't used to this attack vector.
- [57:18]
Haseeb Qureshi
Fine. I, I just don't think this is something that you should be dogmatic about. I think this is like intensely practical, which is just the 101 of security.
- [57:26]
Tarun Chitra
I think it's just more like if I'm a crypto founder, if I'm a crypto founder and I'm like, I, I'm like, I'm like, I'm trying to make this thing so that like everyone who's 21 who's like never going to buy an ETF anywhere near someone who has an E in their name or like has a name like Fidelity. Like, no offense, I know, I'm not trying to pick on them. I'm just any of these E trade, Fidelity, whatever, right? Like no, no one young I was ever going to go, go to one of those apps and like I'm trying to pitch a VC and, and like they're like, no, no, no. Like your product's amazing. It's Great. All these 19 year olds used it. I'll never use it. That's not. I like that to me is like crazy. That's all I.
- [58:03]
Haseeb Qureshi
Look, I think if you create a totally different like walled garden within Coinbase where like all of the traditional assets live and they cannot be like all you can do is the same thing you could do in something like Fidelity where you can just, you know, take the assets and take them out. They cannot cross the blood brain barrier between the crypto side and the traditional asset side, then I would, then I would be comfortable with using it. But if it's literally all just like co mingle, it's all just a big fucking pile of assets and you can just sell one, buy the other and then go withdraw on crypto.
- [58:33]
Tarun Chitra
You're not ready for, you're not ready for the Everything app future though, because like the regulatory stuff is making every exchange become like this. Like I like imagine CMES bomb and.
- [58:42]
Haseeb Qureshi
It'S not an Everything app. Right. That makes sense for what I use it for.
- [58:45]
Tarun Chitra
Imagine a CME spot.
- [58:47]
Robert Leshner
Are you going to stop using a cme?
- [58:48]
Tarun Chitra
Yeah, exactly. Your argument, your argument natural leads you to this.
- [58:54]
Haseeb Qureshi
I don't think that has anything to do with the CME and spot. Why would that affect the cme?
- [58:57]
Tarun Chitra
Because now I can withdraw. I can sell on CME and withdraw to Bitcoin.
- [59:00]
Robert Leshner
Sure.
- [59:01]
Haseeb Qureshi
Okay. If you can withdraw Bitcoin, fair. I could see it potentially. Yeah, I mean, I can see why I think it would, because yes, if you can, how do you fence? Look, I'll tell you, having worked in Anti Fraud, okay, one of the biggest questions you always ask is what is the cost of fencing a stolen account? Right? Meaning like, what is that? What is the rate at which you can monetize? If you have an account worth a hundred K, how much can you actually get that out for? If you're a Chinese hacker or Russian hacker, what's the take rate? The answer could be 20%, 30%, 50%. It depends on a lot of details, right? If you can withdraw crypto, then it's like 70, 80% that you can monetize for cash. Which means your incentive to hack this account goes way, way up. Everybody in their right mind knows this. That's why I'm saying there's an obvious reason why you want your account to be dumber. If you can afford it, you want to have less degrees of freedom if a hacker is going to attack you. Now for Coinbase. Look, if you're custody in crypto, then you have no choice. It has to be in that security model. But I think that's the reason why I would not expect many people to move their ETFs over into something like Coinbase. The same reason I don't think a lot of people move their ETFs over into Robinhood. I have a Robinhood account. I don't move all my ETFs into there, even though I'm sure it's probably not expensive to do so. You want to have as many different segregated accounts as you possibly can in case something goes wrong to Farm Fidelity.
- [60:31]
Robert Leshner
Airdrop one day we'll have a system with the safeguards that Haseeb likes awesome high tech programmable stuff that Tarun likes.
- [60:41]
Haseeb Qureshi
And it'll be, look, I'm as rah rah crypto as you guys. But I'm just saying, if I think this, there's like millions of other people who think this and maybe can't articulate why they intuitively feel that so if there's some way to address them, then maybe there is a path that people could start moving their ETFs into a Coinbase or Robinhood and really make it into that everything app. But until then, I think I. I think I'm the voice of the people on this one.
- [61:09]
Tarun Chitra
All right, so, well, I guess with that, on that note, we gotta turn.
- [61:12]
Robert Leshner
Off this crypto podcast and go.
- [61:14]
Haseeb Qureshi
All right, all right, let's post.
- [61:16]
Tarun Chitra
The Chopping Boomers have reared their head again. The Chopping Boomers.
- [61:20]
Haseeb Qureshi
That's right. All right. I feel very attacked on this one, so we'll see. Let's see what the people think. I want to hear what people think on this because I don't think I'm alone, but maybe. Maybe I am. All right, but that's it for this week. Thanks, everybody. See you all next time.