WEBVTT

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Bankless Nation, it is the last week of August.

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It's time for the Bankless Weekly Roll-Up.

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David is out.

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He's at Burning Man, somewhere in the desert, I'm sure.

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Right now, we've got Hasib Qureshi filling in, back by popular demand.

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A lot of exciting things going on in crypto in the week.

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We've got to talk about the Besant put.

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It is week two.

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Is Besant really going to use $1 trillion in the treasury?

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Yes.

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in order to impact and enact yield curve control.

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We'll talk about what he's actually saying, how the market's interpreting it, what this means for crypto, whether the debasement trade is truly back on.

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And his former mentor,

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Stan Druckenmiller, give him a little slap down on the week.

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So there's some drama going on.

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Also, Coinbase entering the tokenized stock wars in a big way.

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Can they win the market?

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Athena turning on a fee switch.

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It's up 20%.

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And toward the end, since we have Hasib on, I got to ask him a question about the AI trade.

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How long it can continue before it eats up all the capital in the world.

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Stay tuned for all this.

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Hasib, it's great to have you back on.

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Am I imagining things or has there been a big energy shift back into crypto?

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And I'm not just talking about prices.

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This is more than prices, isn't it?

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What's happening here?

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Are you feeling this energy shift?

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I'm definitely feeling it.

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I think we have to give a big salute to all the people who left the industry over the last six months.

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I was thinking about that this morning.

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Just all of the big blog posts that people wrote and the Twitter.

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I was like, oh, so long, guys.

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You know, this industry is not for me anymore.

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All the haters.

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I'm off to greener pastors.

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All the haters.

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Everybody who quit at the bottom, look, we needed you.

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We needed you to move on so that we could be here now.

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So...

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Salute to everybody who moved on because, you know, look, a forest needs a wildfire in order to stay healthy.

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Yeah.

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So is that a bit of a victory lap coming from you?

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Is this earned?

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A little bit.

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But like seriously, I mean, is it just prices or is there something fundamental going on here?

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What do you think has been the driver of this energy?

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Is it just it's time now the builders are building or was there something fundamental that's happening?

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Yeah.

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Well, I mean, look, we're going to start with this, obviously.

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Macro is what initially catalyzed this move.

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Okay.

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But it's clear the macro part is done, right?

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It's not like there's more yield curve control.

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I mean, there's more.

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It's not, you know, it's not, the story's not over yet.

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But a lot of this is that crypto is intrinsically reflexive.

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Reflexivity breeds reflexivity.

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Upward moves breeds upwards moves.

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And the reality is that the sellers are done.

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Sellers are exhausted.

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It's been so many months of just everybody telling you crypto's dead.

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And the bear market ends when the last seller sells, when the last week hand turns over.

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And once that's done, it's just like, yeah, what else is there to be sad about?

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Who else is there to exit?

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Who else is like, yeah, you know what?

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I'm done at 80K.

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That's all I wanted.

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I'm out.

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I think the reality is that you need this clearing of a full cycle to give the next cycle permission to begin.

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Maybe this is why we always have cycles in crypto.

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We're going to start in the markets.

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Before we do, I want to thank our friends and sponsors over at Nier.

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And got to thank them for releasing Ironclaw.

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So 1.2, Ironclaw 1.2 just launched.

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This is from Nier.

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If you guys are giving your AI logins, credentials, keys, that is a very bad idea, okay?

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This is an AI.

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It's a cloud-based company's.

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Iron Claw is the way to lock all of this down.

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No custodian.

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They hold your credentials for you.

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Iron Claw 1.2 was just announced.

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So this allows multi-user secure agents.

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You can integrate these agents directly where you work, like into Slack, into Telegram, wherever.

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Your whole team, your whole group chat can benefit from this.

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It's still secure, so it's multi-user, but you don't have to hand the AI your secure keys and credentials.

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That's what Ironclaw delivers.

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Also, a cool superpower, Bankless just launched its MCP.

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So if you want to tap into our 200, 2000, that is, podcasts, all of our transcripts, you can do that.

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Hook up Ironclaw to the Bankless MBC.

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If you have a Bankless Premium subscription, there's a link in the show notes.

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Love what Nir is doing in AI.

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I know you've been a fan for a while of the Nir team.

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That's right.

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So really cool to see them in AI.

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Okay, let's take a look at the charts here.

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Because we got to do it.

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Man, seven days looking good.

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Bitcoin up another 10%.

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It is hovering just above 80K at the time of recording.

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ETH got a big bump last week.

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Another smaller bump continues.

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So up about 7%.

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Solana was a big mover on the week.

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On the seven day, it's up about 20%.

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So last week was the largest weekly dollar gain in Bitcoin history.

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Okay, so in absolute terms, in dollar gains, it was a 14K up week.

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That is absolutely massive.

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But we also have to zoom out a little bit here, Hasib, and we have to look at prices from a year-to-day perspective.

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This felt huge in the last two weeks, but we are back to approximately May 10th pricing.

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Okay.

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So we just went back in time about four months.

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What do you think of these price moves?

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Do you think we've seen the lowest of lows on Bitcoin for the cycle?

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That would have been, I guess, 630.

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June 30th, Bitcoin hit about 58K.

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Is that as low as we go in the cycle?

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Is it kind of

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up from here, at least above 58K from here.

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Look, I think so.

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The reality is there's clearly a lot of resistance around the 80K level.

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We've been hovering around 80K for a little bit.

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If you look at the options markets, they tell you a lot of information about what the market believes the likely outcomes are going to be.

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So actually, if you look at Polymarket, Polymarket's nice for dummies like me to just condense what the options markets are saying about the likely moves for Bitcoin from here.

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So, yeah, if you look at Bitcoin in 2026, you'll see that it's about equally likely that we hit 100K as that we go down to, I think it was like 65-ish or like 67 maybe.

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So, actually no, below 65.

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So closer to 60K.

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Like 60K to 100K is roughly even odds of where we end up on the year.

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So...

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I think where we are set up right now is clearly Bitcoin is going to move.

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It's not going to sit here at 80K.

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Now, a lot can change in macro.

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A lot can change in crypto, period.

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But I think it's very unlikely that we tread below 60 this year.

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That, to me, feels like it's behind us.

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Again, because of just the seller exhaustion.

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Seller exhaustion, do you also think some of the actions of Besant, this treasury put that we're going to get into next, are part of this?

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This is Bernstein Analysts.

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And of course, they're bullish when things are bullish.

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So take this analysis with a grain of salt.

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But a lot of people are calling for the debasement trade, saying that trade is back on.

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Here's a headline from CNBC from Bernstein Analysts.

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Debasement trade to take Bitcoin to $300K in three years, Bernstein says.

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Let's talk about what they're calling the Besson put, this treasury put.

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And just to recap what happened last week and to bring us to some of the events that happened over the weekend and then on Monday.

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So we had the 30-year...

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bond market.

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So yields on the third year, they tagged on August 18th, about 5.3%, which is a 20 year high, the highest since 2007.

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So people monitoring bond yields kind of freaking out.

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This is notable.

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This is interesting.

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On August 19th, Treasury then doubled its long-end buybacks.

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So it was doing some buybacks for market liquidity.

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Went from about $2 billion, those buybacks, I think it's per week, to about $4 billion.

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So immediately, yields on the 30-year dumped.

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But then they bumped back up.

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And so Besant came out and said, we will continue to do this.

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On Sunday, August 23rd, the 30-year yields went back to all-time highs.

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So Besant called a Monday press conference, and that's where we got the news on the week.

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In the Monday press conference, Besant said that the $4 billion per week was kind of a minimum.

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He called this his brand for it.

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It wasn't the Besant put.

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It was the Treasury twist

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That's what he's trying to meme into existence.

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He said, we routinely do buybacks and we're going to increase the size of the buyback.

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It could be more than $4 billion per issue.

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So he's saying now this $4 billion that he put in place last week, well, that's more like a floor.

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It's not a cap.

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And he sort of implied they're going to do what it takes to keep yield within lines.

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At least that's how the market interpreted it.

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And then finance media kind of ran away with this a little bit.

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It's hard to know what happened.

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But I saw this report earlier this week in CNBC.

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It said, Besant could tap nearly $1 trillion in the Treasury General account to fund buybacks, sources said.

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Okay, this wasn't Besant actually saying this, Haseeb.

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But this story was citing two senior Treasury officials who,

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Like anonymous people who knows who these people are who did not rule out tapping the TDA, which is a $950 billion account that Treasury manages for liquidity purposes.

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It's not been used to purchase long term bonds in this way, but it could be.

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So you kind of wonder if, you know, they're trial ballooning this a little bit, putting this out there to see how the market reacts.

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What's your take on this?

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Because the market took this and said, debasement trade, it's all in.

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We're going to talk about Stan's piece in the Wall Street Journal in a second.

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But is this what Besson is really doing?

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Is this yield curve control?

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Or do you think financial media is kind of running away with this story and the market is misinterpreting what's going on here?

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Well, so let's zoom out a bit and give some context to the story.

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Part of the reason why this story is kind of scandalous, it's a little bit of a full circle for Besant, is that Janet Yellen was doing the exact same thing.

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And Besant famously was very critical of Janet Yellen, saying that, oh, this is messing in the treasury markets, like, this is never going to work, this is an ineffective strategy.

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And so him doing the same thing,

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And now giving it a different name of calling it, oh, it's the Treasury twist.

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You know, this is not quite exactly what she's doing with yield curve control.

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It's a little bit like, okay, you know, you step into the ring.

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It's very easy to criticize from the sidelines.

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But look, when you're the, you know, you're the head of the Treasury, you report to the president.

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You are there to fulfill the president's demands.

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And if the president wants the bond market to, you know, drop the long-term yield and to basically allow him to finance the government long-term at a lower rate.

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Like the reality, why is he doing this?

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He's doing this because the current debt in the country is not going to go down anytime soon.

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Our deficit is massive, and there is just no appetite for any kind of austerity.

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And so the only way that you can keep this alive is by not getting eaten alive by your debt,

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And if it costs you, you know, 5 plus percent, you know, 5.4, whatever it is, to finance your 30-year bonds, that's just a nightmare.

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And so he's in the situation where, okay, if I refinance that debt, I mean, what is he doing?

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What is the yield curve control?

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It's basically refinancing the debt.

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It's saying that, okay, I've got these 30-year bonds.

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I'm going to go and instead buy those and reissue those as short-term bonds, right?

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Right.

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The problem with the strategy, one, he's doing it with very small amounts, right?

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So doing it with a few billion dollars in the treasury markets is nothing.

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It is a very small amount of money.

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It's symbolic.

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And initially when he did the symbolic thing, Marcus reacted and said, oh, wow, the government really wants to get these long bonds down.

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But it's in reality so small that it doesn't affect the market.

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It's a little bit like the DATs, right?

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When the DATs start buying tokens, people are like, oh my God, the DATs are buying.

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But then you realize that, wait, the DATs are so small relative to the volumes that they're not buying.

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They don't really, you know, they can't really make that much of an impact unless it's like a very small asset and a very big debt.

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So what Besson is doing right now is more symbolic than it is actually going to move the market in terms of flows.

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And that's why you're seeing the market more or less reject the story and also reject the underlying implication is that, okay, is Besson actually going to, quote unquote, do what it takes to, you know, move some of that yield away from the 30 year and pull it into the, you know, the five and 10 year?

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And the answer is, yeah, they don't believe him.

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They don't believe he's going to tap the TGA.

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They don't believe he's going to do everything it takes.

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They think, look, this is what the market thinks the yield ought to be.

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So that's what it's going to be.

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Do you think that's all part of the strategy is to float these things out there and say, you know, look, like I could do this if I wanted to just scare off the bond vigilantes.

227
00:13:28.885 --> 00:13:30.526
Tom Lee's logic was something like this.

228
00:13:30.866 --> 00:13:33.127
You don't need to actually tap into the TGA.

229
00:13:33.407 --> 00:13:38.589
You just need the market to believe that you might or you could at some point in time.

230
00:13:38.949 --> 00:13:50.354
But I am almost getting the sense every time yields have floated on the 30 year to this, you know, 5.3 percent zone, something has happened, right?

231
00:13:50.374 --> 00:13:52.755
Like they've done something about it.

232
00:13:52.875 --> 00:13:54.656
So you kind of wonder if this is...

233
00:13:55.356 --> 00:13:58.337
kind of a ceiling that they don't want to hit.

234
00:13:58.777 --> 00:14:06.759
And they actually would tap into some sort of measure in order to suppress these yields down.

235
00:14:06.819 --> 00:14:07.880
Do you think he's bluffing?

236
00:14:08.260 --> 00:14:12.901
Or do you think he would actually do it, do the thing, which is actual yield curve control?

237
00:14:12.921 --> 00:14:15.582
Because that's what the market seems to think he might do.

238
00:14:17.002 --> 00:14:19.343
And they're kind of testing whether he's bluffing or not.

239
00:14:20.541 --> 00:14:21.882
I think that's exactly the right instinct.

240
00:14:22.102 --> 00:14:28.527
Again, it's a little bit like Trump on Iran, is that the threat is most effective when you don't have to use it.

241
00:14:29.407 --> 00:14:35.852
When you start actually having to go in and say, okay, we're going to buy 2 billion, we're going to buy 4 billion, that's when your credibility really starts to weaken.

242
00:14:36.292 --> 00:14:38.213
This is a tool you never want to actually use.

243
00:14:38.654 --> 00:14:40.595
Because of course, it's a one-time intervention.

244
00:14:41.616 --> 00:14:43.998
Once you get through the Treasury General account,

245
00:14:45.258 --> 00:14:47.639
now you're out of money, you're out of bullets.

246
00:14:47.959 --> 00:14:51.600
This is something that you really want to threaten and never actually break the glass.

247
00:14:52.220 --> 00:15:06.183
So I think he's in a very tough situation because again, the real thing that matters, the real thing that's doing all of this is not that, okay, that they're not being intervention, they're not being interventionist in controlling the yield curve.

248
00:15:06.563 --> 00:15:10.944
The real problem is that the debt is too high and the deficit shows no signs of going down.

249
00:15:11.444 --> 00:15:12.565
That's the underlying problem.

250
00:15:12.925 --> 00:15:14.285
And Besant can't control that.

251
00:15:15.306 --> 00:15:23.233
$40 trillion to remind folks, also a massive deficit on the fiscal spending again this year continues to compound.

252
00:15:23.753 --> 00:15:26.336
Druckenmiller rebuked him in the Wall Street Journal.

253
00:15:26.416 --> 00:15:30.039
I know you read this opinion piece because I saw you comment on it, Hasib.

254
00:15:30.340 --> 00:15:34.363
Some quotes from Stan Druckenmiller, and I should give some personal context here.

255
00:15:34.463 --> 00:15:37.886
So Besson actually worked for Druckenmiller.

256
00:15:38.547 --> 00:15:41.870
Of course, Stan Druckenmiller, notable investor.

257
00:15:42.131 --> 00:15:43.452
He's just one of the legends.

258
00:15:43.512 --> 00:15:45.754
They worked together with George Soros.

259
00:15:46.274 --> 00:15:48.256
These two actually broke the Bank of England.

260
00:15:48.276 --> 00:15:50.699
You know that famous trade back in 1992?

261
00:15:50.739 --> 00:15:51.540
They did it together.

262
00:15:52.320 --> 00:15:56.244
Druckenmiller is kind of a mentor to Bessett in a number of ways.

263
00:15:56.264 --> 00:15:59.307
So this is an interesting public rebuke for...

264
00:15:59.367 --> 00:16:00.787
for Stan to deliver.

265
00:16:01.108 --> 00:16:05.009
He said this, the long-term treasury yield is the most important price in the world.

266
00:16:05.449 --> 00:16:10.250
It is also the only fiscal disciplinarian the US has left.

267
00:16:10.710 --> 00:16:17.132
Every basis point of artificial yield suppression is a subsidy to procrastination.

268
00:16:17.733 --> 00:16:24.435
If the 30-year must trade at 5.5% to clear, that isn't a crisis, it's an invoice.

269
00:16:24.455 --> 00:16:26.415
So he's saying basically best, and you gotta pay up.

270
00:16:26.755 --> 00:16:28.456
Stop doing this suppression stuff.

271
00:16:28.796 --> 00:16:29.897
It's not going to work.

272
00:16:30.237 --> 00:16:31.197
It's a bad idea.

273
00:16:31.478 --> 00:16:36.880
You're just continuing to kick the can down the road and make the problem worse.

274
00:16:37.181 --> 00:16:40.903
Why do you think Druckenmiller is smacking him down publicly, Hasid?

275
00:16:42.724 --> 00:16:44.144
I think it's kind of the circle of life.

276
00:16:44.464 --> 00:16:45.065
It's your turn.

277
00:16:45.305 --> 00:16:47.026
You know, you become treasury secretary.

278
00:16:47.046 --> 00:16:48.467
You got to do this shit.

279
00:16:49.067 --> 00:16:52.789
And yeah, you get to get criticized by the people who actually participate in financial markets.

280
00:16:53.389 --> 00:16:55.670
Like it's part of this yo-yo, right?

281
00:16:55.811 --> 00:16:57.912
When the yields are this high,

282
00:16:58.772 --> 00:17:01.195
Besson comes in, you know, all this thunder and fury.

283
00:17:01.495 --> 00:17:06.340
He announces, OK, the yield must go down and it goes down and yo-yos right back up.

284
00:17:06.660 --> 00:17:07.261
To why?

285
00:17:07.661 --> 00:17:08.922
Because that's the market clearing price.

286
00:17:08.962 --> 00:17:12.466
That's what long term investors demand from U.S. government debt.

287
00:17:12.686 --> 00:17:18.432
Because the reality is, look, a lot of what's happening is not just people are worried about the expanding debt of the U.S. government.

288
00:17:18.692 --> 00:17:20.214
That's part of it, but that's not the only thing.

289
00:17:20.674 --> 00:17:29.018
The other thing that's happening, which is also, again, fundamental to the supply and demand of capital in the world, is that government debt is being crowded out by the hyperscaler debt.

290
00:17:29.798 --> 00:17:34.520
Hyperscalers are issuing debt because of the AI trade, because of all the capex that they're pouring into AI.

291
00:17:34.780 --> 00:17:37.521
They're issuing debt at magnitudes they have never done before.

292
00:17:38.362 --> 00:17:45.145
And the reality is that a lot of these allocators are asking themselves the question, which one do I think is better credit?

293
00:17:45.885 --> 00:17:52.913
Would I rather buy from, you know, from Amazon and from Meta over 30 years, or would I rather buy from the U.S. government?

294
00:17:53.534 --> 00:17:55.476
You know, once upon a time, that was an obvious question.

295
00:17:56.117 --> 00:18:02.164
But with the deficits and the debts as large as they are, even if you think there's 1%, 2%, 3% chance that the U.S. government defaults,

296
00:18:05.067 --> 00:18:11.433
You know, that's not a high chance, but it's enough to significantly change the yield that you're going to demand from that government.

297
00:18:12.053 --> 00:18:22.502
So the reality is that's why the yield is so high is not just because people are losing confidence, but that there's this crowding out that is being caused by the AI boom.

298
00:18:23.429 --> 00:18:24.290
And that's not going to go away.

299
00:18:24.310 --> 00:18:25.671
There's only a fixed amount of money in the world.

300
00:18:26.211 --> 00:18:41.001
And if somebody else is willing to pay higher yield because they can get a higher return, if the hyperscalers believe, look, the AI boom is going to make me a lot of money, I think my return on equity can be 15%, 20% for investing the stuff into data centers.

301
00:18:41.561 --> 00:18:44.664
Well then, yeah, I'm happy to finance that at 5% over 30 years.

302
00:18:45.384 --> 00:18:50.548
So the person who's normally buying only government debt, now they're looking at the most valuable companies in the world.

303
00:18:51.208 --> 00:18:56.588
with incredible cash flows, incredible balance sheets, very low leverage, and say, yeah, I'll buy that instead.

304
00:18:57.449 --> 00:18:58.470
That is a huge point.

305
00:18:58.490 --> 00:18:59.631
I think a really important point.

306
00:18:59.671 --> 00:19:01.852
I want to come back to that near the end of the episode.

307
00:19:01.933 --> 00:19:10.439
But what you're saying is basically, you know, 30-year bonds, you know, long-term U.S. bonds are basically the cost of capital for the market.

308
00:19:10.859 --> 00:19:15.303
And it's not just debasement that investors and bonds have to worry about.

309
00:19:15.403 --> 00:19:25.551
It's the natural cost of capital rising up because AI is basically sucking in all of the world's capital right now and generating incredible

310
00:19:27.112 --> 00:19:27.292
Right.

311
00:19:27.312 --> 00:19:38.140
So like the number, this is why I think actually the bond market is kind of, it's almost coming back into investor markets and just markets in general as a main character.

312
00:19:38.200 --> 00:19:40.222
Like this chart, I never used to look at this.

313
00:19:40.262 --> 00:19:43.044
This is the 30 year yield chart.

314
00:19:43.384 --> 00:19:47.807
And now it's like a main character because I think there's a AI cost of capital story.

315
00:19:48.128 --> 00:19:49.909
I think there's a debasement story.

316
00:19:50.249 --> 00:19:53.352
I think crypto gets tailwinds from all of this.

317
00:19:53.852 --> 00:19:55.693
So it's incredibly fascinating.

318
00:19:56.894 --> 00:19:58.455
I want to ask your opinion on this.

319
00:19:58.475 --> 00:20:00.115
So this is coming out of Besant.

320
00:20:00.195 --> 00:20:07.098
He announced, he calls it this, D-Day, an economic D-Day for Iran.

321
00:20:07.178 --> 00:20:12.780
So this is an economic onslaught against Iran's financial connections around the globe.

322
00:20:13.040 --> 00:20:16.341
We're going to sever every economic lifeline.

323
00:20:16.601 --> 00:20:18.822
He identified five targets.

324
00:20:19.482 --> 00:20:25.904
technology, gold, aviation, and shipping, and also, Hasib, digital assets.

325
00:20:26.324 --> 00:20:40.909
He's saying the treasury is going to use OFAC sanctions, all of the means that they can, essentially, to freeze Iran's financial connections around the globe and also anyone that helps them

326
00:20:41.869 --> 00:20:47.275
Luke Roman pointed out, it's very telling that he mentioned gold and digital assets, didn't mention oil here.

327
00:20:47.315 --> 00:20:50.658
Maybe that's because Treasury doesn't have a grip on that.

328
00:20:51.259 --> 00:21:00.428
I was thinking back to the 2022 and 2023 economic sanctions against Russia coming from Treasury in the U.S. at that time.

329
00:21:01.049 --> 00:21:02.591
And the route in Russia,

330
00:21:04.232 --> 00:21:19.104
countries' willingness to hold U.S. debt as a result, because it's China looking over at the U.S., it's other countries, sovereign nations looking at the U.S. and saying, well, if you can asphyxiate and choke out these countries, then you could do the same to me.

331
00:21:19.545 --> 00:21:21.166
We don't want U.S. dominion there.

332
00:21:21.526 --> 00:21:31.614
And so I almost wonder if this economic sanctioning, the announcements coming from Besant, he knows that this is going to decrease demand for long-term bonds.

333
00:21:31.915 --> 00:21:32.275
He's also

334
00:21:33.836 --> 00:21:48.328
by putting some of the suppression measures in place and signaling to the market that they're willing to do what it takes to keep yield at 5.3% or whatever because these sanctions are coming down the pipeline.

335
00:21:48.448 --> 00:21:53.111
Anyway, what do you think this means and how does it fit into the story?

336
00:21:53.492 --> 00:22:02.599
And the fact that they're talking about digital assets, I mean, has that been a main vehicle for Iran in the past and will it be in the future?

337
00:22:02.619 --> 00:22:02.839
Yeah.

338
00:22:04.258 --> 00:22:04.939
Not that I know of.

339
00:22:05.799 --> 00:22:17.828
So the story for Iran, of course, was that they were at one point trying to charge for ships going through the Strait of Hormuz in Bitcoin or in Yuan, the Chinese RMB currency.

340
00:22:18.528 --> 00:22:21.651
Now, my understanding was that people were not paying in Bitcoin.

341
00:22:21.671 --> 00:22:22.992
They were mostly paying in RMB.

342
00:22:23.032 --> 00:22:30.057
And then, of course, the payments for going through the Strait of Hormuz got stopped because of the U.S. ceasefire terms.

343
00:22:30.077 --> 00:22:31.378
And now that's all topsy-turvy.

344
00:22:31.998 --> 00:22:33.719
You know, Iran, look, they're resourceful.

345
00:22:33.739 --> 00:22:35.641
They're going to find whatever mechanisms they can.

346
00:22:36.341 --> 00:22:42.145
De facto, if you were doing business with Iran via crypto, you were already sanctioned.

347
00:22:43.546 --> 00:22:53.093
It's unclear to me that this is new or that it was already perceived as being okay for the exchanges or for any financial institutions to be doing any business with Iran.

348
00:22:54.253 --> 00:22:57.396
This probably applies more with respect to secondary sanctions.

349
00:22:57.816 --> 00:23:00.398
And so this was the real heft of the threat that he was making.

350
00:23:00.898 --> 00:23:02.238
you know, who is banking Iran?

351
00:23:02.778 --> 00:23:04.019
Obviously, it's not American banks.

352
00:23:04.539 --> 00:23:05.759
It's not multinational banks.

353
00:23:05.919 --> 00:23:12.560
It's, you know, maybe a bank in the UAE, or it might be a bank in, you know, Bahrain or in Egypt or something like that.

354
00:23:13.220 --> 00:23:18.921
And then, of course, the primary business partners of Iran are Russia and China.

355
00:23:20.001 --> 00:23:28.243
So, okay, what exactly is best and threatening here with respect to China, which is the primary economic partner of Iran at this point and the biggest buyer of their oil?

356
00:23:29.504 --> 00:23:30.626
We don't have a good answer yet.

357
00:23:30.666 --> 00:23:38.114
He has not made clear how big his balls are with respect to how far is he going to go in this Operation D-Day thing.

358
00:23:38.795 --> 00:23:39.896
I think the market doesn't buy it.

359
00:23:40.297 --> 00:23:47.825
They don't believe that he's actually going to start sanctioning a bunch of Chinese banks that would obviously, you know, with the coming summit between Xi Jinping and Trump,

360
00:23:48.646 --> 00:23:58.234
That would be a very aggressive move into, so far, what seems to have been a detente between the U.S. and China and a little bit of Trump crying uncle in the trade war.

361
00:23:58.714 --> 00:24:01.917
So I suspect that actually he's not going to go all the way.

362
00:24:03.118 --> 00:24:06.340
And the reality is that we don't really have the capacity to do that.

363
00:24:07.400 --> 00:24:10.042
you know, from an economic perspective, like we're going into the midterms.

364
00:24:10.683 --> 00:24:20.532
We kind of can't take a lot more economic damage without basically conceding the Republican Party to just irrelevance in the second inning of Trump's presidency.

365
00:24:20.912 --> 00:24:22.934
So he can't go too hard.

366
00:24:23.615 --> 00:24:32.603
And because he can't go too hard, again, it's a lot more thunder and fury than it is actual, you know, going all the way on something like this.

367
00:24:32.823 --> 00:24:43.486
Maybe that's why Trump is now taking it all out on Canada, trying to name Lake Ontario to Lake America, as I just read this morning, and my Canadian family is texting me about it.

368
00:24:43.526 --> 00:24:44.486
Are you guys serious?

369
00:24:44.526 --> 00:24:45.286
What's happening here?

370
00:24:45.386 --> 00:24:50.427
Anyway, let's talk about what all of this means for the debasement trade.

371
00:24:50.467 --> 00:25:00.030
This is an analyst from Fidelity saying, the market senses a slippery slope towards fiscal dominance, a clear negative for the dollar, clear positive for gold, and by extension,

372
00:25:00.590 --> 00:25:04.753
For Bitcoin, of course, this is Tom Lee saying that this is positive.

373
00:25:04.773 --> 00:25:11.859
All these treasury actions for all long-duration assets, equities, crypto, gold, and real estate.

374
00:25:12.239 --> 00:25:12.819
Can we call it?

375
00:25:12.880 --> 00:25:14.861
Is the debasement trade back on?

376
00:25:15.301 --> 00:25:19.805
And does this mean Bitcoin, as you said earlier, you don't think it'll drop below 60?

377
00:25:20.165 --> 00:25:24.368
Are we above 60 now because the market has realized, hey, debasement is a thing.

378
00:25:24.408 --> 00:25:26.910
We've been ignoring that for a while, chasing the AI trade.

379
00:25:26.970 --> 00:25:27.371
But look,

380
00:25:27.711 --> 00:25:30.716
$40 trillion, the only way out is debasement.

381
00:25:30.997 --> 00:25:32.599
Therefore, crypto has to go up.

382
00:25:32.660 --> 00:25:34.363
Is that what's happening here?

383
00:25:35.652 --> 00:25:37.873
I think that's true, but it's also not that simple.

384
00:25:37.973 --> 00:25:45.397
Because if you remember, beginning of this year, gold was rallying on a similar kind of narrative of, okay, you know, debasement trade, you know, gold is going to degrade.

385
00:25:45.777 --> 00:25:46.537
Bitcoin didn't move.

386
00:25:47.098 --> 00:25:51.660
Bitcoin did not participate in the rally that took place earlier this year when gold went to all-time highs.

387
00:25:53.501 --> 00:25:53.921
Why now?

388
00:25:54.521 --> 00:25:57.463
Why does Bitcoin get to experience this one and it didn't experience the other one?

389
00:25:58.383 --> 00:26:05.910
I think the reality is that Bitcoin kind of has this affinity vibe that sometimes it feels like gold, sometimes it feels like a risk asset.

390
00:26:06.551 --> 00:26:11.736
And the unique character of this particular story is that it actually stimulates both.

391
00:26:11.876 --> 00:26:14.559
It stimulates both the gold-like aspect of Bitcoin.

392
00:26:15.199 --> 00:26:17.320
as well as the risk asset nature of Bitcoin.

393
00:26:17.780 --> 00:26:21.321
Both of them are getting called by this particular rally.

394
00:26:21.621 --> 00:26:23.402
So the debasement trade, right?

395
00:26:23.442 --> 00:26:31.524
So the fact that Besant is like, look, instead of actually having some kind of constraint on spending, let's just buy back the bonds and try to control the yield curve, right?

396
00:26:31.864 --> 00:26:34.065
That's basically him saying, yeah, we're not going to control spending.

397
00:26:34.905 --> 00:26:38.009
Instead, we're going to do this kind of hocus pocus stuff.

398
00:26:38.349 --> 00:26:46.618
That doesn't give financial markets a lot of confidence that governments are going to be thoughtful about their ability to actually pay back this debt.

399
00:26:46.838 --> 00:26:48.019
That's part of this debasement trade.

400
00:26:48.039 --> 00:26:53.084
That's why you see gold rallying is like, shit, this is not the kind of behavior that you see from a robust organization.

401
00:26:53.625 --> 00:27:01.868
you know, country, this is the kind of behavior you see from, you know, a small country that's like, hey, we're just going to go intervene in the market and we're not going to listen to the market.

402
00:27:01.888 --> 00:27:04.569
We're going to tell the market what it's supposed to think about us.

403
00:27:04.930 --> 00:27:09.632
You know, again, like a DAT or like even like a protocol buying back his token saying, no, this token is too cheap.

404
00:27:09.652 --> 00:27:10.372
It should be priced here.

405
00:27:10.672 --> 00:27:12.013
You know, it's like Terra behavior.

406
00:27:12.033 --> 00:27:17.495
It's like, come on, just let the market do what it's doing and you can respond to the market instead of trying to control the market.

407
00:27:18.275 --> 00:27:19.836
So that's one element of the debasement trade.

408
00:27:20.556 --> 00:27:33.621
But the other element is the fact that when you take long duration yield, long duration assets, like a 30-year bond, you buy that back and you reissue that debt as a shorter term bond, right?

409
00:27:33.861 --> 00:27:39.343
So as a T-bill or as, you know, a 10-year, 5-year, whatever, this is a more liquid asset.

410
00:27:40.253 --> 00:27:46.374
you are transforming the asset supply into things that are closer to near money, right?

411
00:27:46.414 --> 00:27:47.054
They're more liquid.

412
00:27:47.514 --> 00:27:50.535
And when you're doing that, you're basically increasing the money supply de facto.

413
00:27:51.355 --> 00:27:52.855
Longer duration assets are less like money.

414
00:27:53.195 --> 00:27:54.536
Shorter duration assets are more like money.

415
00:27:54.736 --> 00:27:56.516
So they're effectively increasing the money supply.

416
00:27:57.256 --> 00:28:07.038
And when you increase the money supply, that means, you know, we remember what happened in COVID when the money supply increased, is that it moves its way into financial assets, right?

417
00:28:07.258 --> 00:28:11.302
And financial, well, crypto, Bitcoin, all these tokens, they're financial assets.

418
00:28:11.783 --> 00:28:22.214
So that increase in liquidity naturally reflects itself into crypto in the risk side, as well as in the kind of long-term debasement trade, gold-like substitute side.

419
00:28:22.414 --> 00:28:25.237
So both aspects of Bitcoin are being buoyed in the story.

420
00:28:25.517 --> 00:28:26.799
That's why it's doing so well.

421
00:28:26.819 --> 00:28:28.040
And I'd expect that trend to continue.

422
00:28:28.360 --> 00:28:37.127
And I think if you combine the debasement trade with the seller exhaustion that you mentioned, where we are kind of end of the bear cycle, then you get what we got, which was a 20% move.

423
00:28:37.187 --> 00:28:39.689
And we'll have to see whether that can be sustained or not.

424
00:28:39.729 --> 00:28:41.110
Haseeb thinks it can.

425
00:28:41.430 --> 00:28:46.134
We got more to discuss, including Coinbase's big entry into tokenized stocks.

426
00:28:46.174 --> 00:28:46.874
We'll discuss that.

427
00:28:46.974 --> 00:28:53.699
And Haseeb, I want you to explain Hyperliquid's L2, if you can, what this thing actually is, all this and more.

428
00:28:53.719 --> 00:28:57.042
But before we do, we want to thank the sponsors that made this possible.

429
00:28:57.342 --> 00:29:04.666
I've been trading crypto assets for almost a decade, and I've used so many wallets, exchanges, aggregators, front-end, and I'm kind of always looking for the same thing.

430
00:29:04.907 --> 00:29:12.191
One interface with deep liquidity across a bunch of chains and assets, and the ability to act in private, and I still control my own funds.

431
00:29:12.371 --> 00:29:13.472
And I've never really found it.

432
00:29:13.492 --> 00:29:17.093
And I'm always switching wallets, juggling gas fees, or getting eaten by slivage.

433
00:29:17.293 --> 00:29:20.135
Near.com feels fundamentally different to me.

434
00:29:20.475 --> 00:29:26.178
My account is easy to use and I can take all the actions I want from any chain while my activity remains confidential.

435
00:29:26.358 --> 00:29:33.841
It runs on Near, which has moved over $23 billion cross-chain using post-quantum signing and has over five years of uptime.

436
00:29:33.981 --> 00:29:37.223
Near.com is the best way to be on-chain and be in control.

437
00:29:37.323 --> 00:29:40.004
Get 20% of your trading fees back through the bankless link.

438
00:29:40.204 --> 00:29:41.905
It's in the show notes, not investment advice.

439
00:29:42.205 --> 00:29:45.028
Self-custody won, but it still has a usability problem.

440
00:29:45.309 --> 00:29:48.152
A seed phrase on paper is still a single point of failure.

441
00:29:48.312 --> 00:29:51.115
Phones get lost, devices break, backups disappear.

442
00:29:51.315 --> 00:29:54.739
BitKey is a self-custodial hardware wallet built for that reality.

443
00:29:54.899 --> 00:30:00.065
It uses a two of three multi-sig with keys split across your phone, the BitKey hardware device, and Block.

444
00:30:00.245 --> 00:30:03.649
No single key can move your Bitcoin, and Block can never move it alone.

445
00:30:03.769 --> 00:30:05.571
There's no seed phrase to lose or expose.

446
00:30:05.751 --> 00:30:10.276
And if you lose your phone, your BitKey or both, built-in recovery gives you a path back.

447
00:30:10.436 --> 00:30:14.460
The hardware screen also lets you verify the destination before approving a transaction.

448
00:30:14.620 --> 00:30:15.321
And that's the point.

449
00:30:15.421 --> 00:30:18.224
More control without one mistake putting everything at risk.

450
00:30:18.344 --> 00:30:22.989
So download BitKey today and use promo code BANKLESS to get 10% off of your BitKey.

451
00:30:23.249 --> 00:30:24.951
This episode has been sponsored by BitKey.

452
00:30:27.228 --> 00:30:29.329
Markets don't move one asset at a time.

453
00:30:29.549 --> 00:30:32.971
One day it's Bitcoin, the next NVIDIA, then gold, and then the S&P.

454
00:30:33.051 --> 00:30:38.533
But most traders are still managing their portfolio across different platforms, different accounts, and different pools of capital.

455
00:30:38.673 --> 00:30:40.034
BitGet just changed that.

456
00:30:40.234 --> 00:30:46.697
Their new Stocks 2.0 product lets you trade tokenized equities directly with USDT, all inside the same app you already use for crypto.

457
00:30:46.797 --> 00:30:48.898
This is not just another tokenized stock product.

458
00:30:49.058 --> 00:30:57.861
Stocks 2.0 is designed around deeper liquidity, faster execution, and the lowest fees on the market at just 0.04% and one-to-one economic exposure to the underlying stock.

459
00:30:57.961 --> 00:31:05.164
Dividend, stock splits, and other corporate actions are reflected automatically, helping your position stay aligned with the asset you actually want exposure to.

460
00:31:05.344 --> 00:31:10.866
One platform, one account, multiple markets, crypto equities, commodities, and more, all accessible with USDT.

461
00:31:10.966 --> 00:31:11.947
BitGet, trade smarter.

462
00:31:12.027 --> 00:31:14.127
Start trading today through the link in the show notes.

463
00:31:14.208 --> 00:31:15.328
This is not investment advice.

464
00:31:16.244 --> 00:31:18.145
We have Coinbase tokenized stocks.

465
00:31:18.206 --> 00:31:19.747
They are live on base.

466
00:31:19.767 --> 00:31:20.888
Here's the tweet from base.

467
00:31:20.908 --> 00:31:21.948
Stocks have been updated.

468
00:31:22.069 --> 00:31:24.210
Coinbase tokenized stocks live on base.

469
00:31:24.250 --> 00:31:26.612
Available 24-7, 365.

470
00:31:26.692 --> 00:31:27.713
Composable base.

471
00:31:28.153 --> 00:31:29.975
DeFi own the underlying share.

472
00:31:30.275 --> 00:31:31.596
Held in a regulated trust.

473
00:31:32.036 --> 00:31:33.498
Back one-to-one.

474
00:31:33.858 --> 00:31:34.418
Live now.

475
00:31:34.759 --> 00:31:35.759
New stocks coming soon.

476
00:31:35.779 --> 00:31:39.462
I think they got the big stocks, the big tech stocks on this right now.

477
00:31:39.822 --> 00:31:41.124
First question for you, Hasib.

478
00:31:41.464 --> 00:31:42.725
How big of a deal is this?

479
00:31:45.187 --> 00:31:47.550
Uh, look, candidly, I don't think it's that big of a deal.

480
00:31:47.570 --> 00:31:50.613
You know, they're the end player to do this.

481
00:31:50.653 --> 00:31:51.954
Stocks have been on chain for a while.

482
00:31:53.035 --> 00:31:55.778
Obviously, they're, you know, we've had X stocks for quite a while.

483
00:31:56.098 --> 00:31:57.039
Robinhood got in the game.

484
00:31:57.079 --> 00:31:58.701
Now Coinbase is getting in the game with base.

485
00:31:59.481 --> 00:32:04.566
The reality is that stock tokens, which are, you know, they're not actually underlying stock.

486
00:32:04.626 --> 00:32:07.830
Most of them are these kind of debt instruments that mimic the underlying stock.

487
00:32:09.230 --> 00:32:10.911
they are okay.

488
00:32:11.291 --> 00:32:15.252
They're growing at a decent pace, but they're still very small in absolute terms.

489
00:32:16.053 --> 00:32:18.714
I think what you see is that there's much more demand for the derivatives.

490
00:32:19.294 --> 00:32:29.257
So if you look on TradeXYZ, way more activity happening on TradeXYZ or on variational or on lighter with respect to RWAs than there is with respect to the underlying stock tokens.

491
00:32:29.838 --> 00:32:30.118
So...

492
00:32:30.878 --> 00:32:34.799
People don't really necessarily want to be sitting around holding the stock on chain.

493
00:32:35.299 --> 00:32:36.420
They more want to trade it.

494
00:32:36.760 --> 00:32:39.181
That's what the appeal so far of RWAs have been.

495
00:32:39.501 --> 00:32:46.603
And that's why you see so much more volume and even open interest in RWA tokens than you're seeing in trading volume on these tokenized stocks.

496
00:32:46.963 --> 00:32:51.969
So you're not just throwing a little bit of water on base and Coinbase doing tokenized stocks.

497
00:32:51.989 --> 00:32:59.918
You're throwing a little bit of water on the entire category of tokenized stocks on chain, whether it's Robinhood or anybody else that tokenizes stocks.

498
00:33:00.739 --> 00:33:03.422
You're just saying that you don't see the big demand.

499
00:33:03.442 --> 00:33:07.287
I think there are some in crypto who would say, no, see, this is the future.

500
00:33:07.867 --> 00:33:09.709
We're going to tokenize everything.

501
00:33:09.729 --> 00:33:13.373
U.S. capital markets are absolutely massive.

502
00:33:13.713 --> 00:33:15.675
Look what we've done with stable coins.

503
00:33:15.715 --> 00:33:17.897
Look what we're starting to do with treasuries.

504
00:33:17.938 --> 00:33:22.622
We've got billions in treasuries right now, and stocks are just the next in line.

505
00:33:23.003 --> 00:33:24.004
You don't think so, though.

506
00:33:24.284 --> 00:33:30.270
You think there's more demand for the perps and exotic and fast trading things, and you think this is a slow uptick.

507
00:33:30.470 --> 00:33:34.232
Okay, so I'm making a descriptive claim, not a prescriptive claim.

508
00:33:34.272 --> 00:33:37.314
I'm not telling you what you should want or what the market's going to do in the future.

509
00:33:37.334 --> 00:33:38.895
I'm telling you, here's the reality right now.

510
00:33:39.136 --> 00:33:39.576
That's what I want.

511
00:33:39.596 --> 00:33:41.877
Reality right now is all of the demand is in perps, right?

512
00:33:41.917 --> 00:33:42.218
So, okay.

513
00:33:42.238 --> 00:33:42.418
Yeah.

514
00:33:43.167 --> 00:33:53.013
Now, long term, I do agree with the core of the point, which is that, like, what would compel somebody to hold the spot as opposed to hold a derivative or to trade a derivative, right?

515
00:33:53.333 --> 00:33:55.855
For trading, spot is really not preferable to derivatives.

516
00:33:56.855 --> 00:34:01.939
It's just, you know, it's gonna be less liquid, it's gonna either face more slippage, it's getting more fragmented in a lot of different places, right?

517
00:34:02.179 --> 00:34:05.281
I just talked about all the different platforms that have some of these tokenized stocks.

518
00:34:05.921 --> 00:34:10.143
you know, some of them are trading on AMMs, which are obviously not the most capital efficient way to price these things.

519
00:34:11.044 --> 00:34:12.084
And there's not a lot of liquidity.

520
00:34:12.464 --> 00:34:15.026
So you're going to face a lot of slippage if you're trading any of these things.

521
00:34:15.046 --> 00:34:22.490
I think there was a viral post of somebody trying to buy like 50 K of Nvidia and it had like 70% slippage because.

522
00:34:22.970 --> 00:34:23.510
Is that on base?

523
00:34:23.530 --> 00:34:24.491
Or is that?

524
00:34:24.811 --> 00:34:25.571
I don't know where it was.

525
00:34:25.671 --> 00:34:27.432
It was somewhere, right?

526
00:34:27.492 --> 00:34:31.234
Somewhere on some platform, someone's facing a lot of slippage because the liquidity just isn't there.

527
00:34:31.894 --> 00:34:34.836
So now all of that being said, long-term,

528
00:34:35.888 --> 00:34:37.890
there are going to be savers on chain.

529
00:34:37.910 --> 00:34:39.951
And the reality is there's not a lot of savers on chain right now.

530
00:34:40.211 --> 00:34:54.081
There's a lot of traders on chain, a lot of speculators on chain, but people who are like, hey, I'm going to hold the equivalent of my retirement savings on chain using a portfolio of stocks that are not going to be held on exchange, but are just going to be held on chain.

531
00:34:54.462 --> 00:34:55.783
That's not really happening yet.

532
00:34:56.363 --> 00:34:58.124
And that's what this is for, right?

533
00:34:58.645 --> 00:35:08.352
I think, you know, if you give it three, four years, I think you can start to see that kind of behavior with more regular type folks who are not looking for a lot of risk coming on chain and starting to own some of these products.

534
00:35:09.032 --> 00:35:10.934
But of course, you know, they have to be KYC'd.

535
00:35:11.354 --> 00:35:12.275
These are securities.

536
00:35:13.055 --> 00:35:18.540
And, you know, it's not going to be this kind of YOLO type experience that somebody's getting going on trade XYZ.

537
00:35:19.240 --> 00:35:26.201
So that's, I think, a big part of the story why we're not there yet right now for there to be a large addressable market for tokenized stocks.

538
00:35:26.822 --> 00:35:30.142
I do think they will get there, but it's a longer term story than it is for perps.

539
00:35:30.542 --> 00:35:37.984
Well, there's also the point, even for crypto natives, they already have stocks available for them in other platforms, say in their brokerage.

540
00:35:38.004 --> 00:35:42.685
Like what is going to even for a crypto native who has stocks in, say, their Fidelity platform?

541
00:35:43.305 --> 00:35:45.969
they can already get this in their brokerage.

542
00:35:46.029 --> 00:35:48.132
They don't need to go to Coinbase.

543
00:35:48.553 --> 00:35:57.666
Whereas like perps, for instance, if I didn't do a 10X perp or something on 10X long on SpaceX, I can't do that in Fidelity.

544
00:35:58.147 --> 00:36:02.732
to go to, you know, lighter or hyper liquid or somewhere on chain where I could do that.

545
00:36:02.752 --> 00:36:06.216
But I just want to hold something like space space.

546
00:36:06.716 --> 00:36:08.959
I don't need a tokenized stock on base.

547
00:36:09.039 --> 00:36:14.044
Yeah, I guess it's cool that I can, you know, take a loan out against that in Aave.

548
00:36:14.725 --> 00:36:18.426
But I also have some of those options within my Fidelity account too.

549
00:36:18.506 --> 00:36:23.847
So there's almost an element of I wonder how much tokenized stocks are kind of a me too product.

550
00:36:23.867 --> 00:36:24.967
Like we already have that.

551
00:36:24.987 --> 00:36:32.569
I mean, the thing you can't do in a brokerage is meme coins, you know, NFTs, like some of the crypto native stuff.

552
00:36:32.989 --> 00:36:38.630
And you certainly can't do some of the perps the way that you can on these open crypto platforms.

553
00:36:38.690 --> 00:36:38.950
So yeah.

554
00:36:39.450 --> 00:36:44.883
Maybe it was destined to fall flat because we're just kind of copying what we can already do in TradFi on Chain.

555
00:36:46.642 --> 00:36:50.745
usually getting to feature parity is not the way a product grows.

556
00:36:50.785 --> 00:36:53.106
Feature parity is a defensive move, not an offensive move.

557
00:36:53.606 --> 00:36:55.788
So being able to say, look, you can also do that.

558
00:36:55.868 --> 00:36:57.449
You can also hold stocks on chain.

559
00:36:57.469 --> 00:36:58.329
Isn't that amazing?

560
00:36:58.369 --> 00:36:59.590
And it's like, well, it's not amazing.

561
00:36:59.630 --> 00:37:01.011
That's, I guess, solid.

562
00:37:01.051 --> 00:37:02.772
It's better to have that than not to have that.

563
00:37:03.953 --> 00:37:13.619
I think the reality is that the way this grows over time is that you have some of these neobanks and these fintechs that are offering people, you know, dollar-denominated accounts overseas.

564
00:37:14.139 --> 00:37:15.040
They start offering...

565
00:37:15.700 --> 00:37:17.221
you know, dollar-denominated stocks, right?

566
00:37:17.241 --> 00:37:22.005
They started offering U.S. stocks to also be held as part of a financial portfolio you can hold in these neobanks.

567
00:37:22.305 --> 00:37:27.869
And that's a feature that these neobanks can start offering that they couldn't offer before, but they have to start rolling that out.

568
00:37:27.909 --> 00:37:29.090
They have to start doing the customer development.

569
00:37:29.110 --> 00:37:34.514
They have to start getting people to want to do this, to feel that it's safe, to know this has existed for multiple years, and they're going to be able to do it.

570
00:37:35.014 --> 00:37:39.836
All this stuff is really brand new, and so many of these assets are not even real underlying stocks.

571
00:37:39.856 --> 00:37:45.459
They're like these weird kind of debt instruments that mimic the underlying stocks, and they kind of do these.

572
00:37:45.979 --> 00:37:52.682
It's all kind of untested, but long story short, there is a future here, almost certainly.

573
00:37:53.022 --> 00:38:01.706
This will be part of how crypto and dollarization happens in the future, is it's all going to be together in one big commingled universe.

574
00:38:02.207 --> 00:38:02.427
But...

575
00:38:03.147 --> 00:38:05.109
you know, it's going to take time for that to develop.

576
00:38:05.669 --> 00:38:09.773
And as an entrepreneur, I mean, you know, I'm a VC, so I spend a lot of my time talking to founders.

577
00:38:10.513 --> 00:38:13.796
As an entrepreneur, you have to keep in mind that, look, you can't rush the market.

578
00:38:14.477 --> 00:38:15.978
The market develops as the market develops.

579
00:38:16.038 --> 00:38:21.743
And if you're thinking three steps ahead, you know, somebody building Hyperliquid in 2018, they were just too early.

580
00:38:21.763 --> 00:38:22.363
They didn't get to win.

581
00:38:23.444 --> 00:38:29.189
You know, it's like, you know, if you are going to be a bank whore instead of being Uniswap, you're too early.

582
00:38:29.269 --> 00:38:29.830
You don't get to win.

583
00:38:30.110 --> 00:38:30.651
That's just how it is.

584
00:38:31.800 --> 00:38:33.841
Speaking of hyperliquid, let's talk about them next.

585
00:38:33.901 --> 00:38:36.723
So an L2 for hyperliquid?

586
00:38:36.783 --> 00:38:38.785
Tell me that's possible, Hasib.

587
00:38:38.985 --> 00:38:39.605
I didn't know.

588
00:38:39.745 --> 00:38:43.868
So Elysium, this is the post, a new era for hyperliquid.

589
00:38:44.308 --> 00:38:53.795
Connect, which is already most of the hyperliquid EVMs, TVL, they're launching something called Elysium, which is a high-performance EVM

590
00:38:54.295 --> 00:38:56.456
co-located with HyperCore.

591
00:38:56.836 --> 00:39:03.718
They're doing something from the Ethereum world, which is they're using HyperLiquid's native token, HYPE, as gas.

592
00:39:04.218 --> 00:39:06.258
The order book is a native oracle.

593
00:39:06.559 --> 00:39:18.022
They're trying to get good at the areas that HyperLiquid doesn't necessarily have covered, which is for traders and builders, at least the Hyper EVM.

594
00:39:18.662 --> 00:39:19.564
What do you think about this?

595
00:39:20.445 --> 00:39:26.635
It's uncommon, coming from an Ethereum world, it's uncommon to see another ecosystem starting to launch layer twos.

596
00:39:26.695 --> 00:39:29.139
Do you think this is going to take off?

597
00:39:29.279 --> 00:39:30.121
What's your take on this?

598
00:39:31.601 --> 00:39:32.461
Yeah, it's interesting.

599
00:39:33.101 --> 00:39:37.643
It's certainly an angle of attack for a startup that I haven't seen other people try to propose doing this.

600
00:39:37.663 --> 00:39:39.543
So I laud the attempt.

601
00:39:40.463 --> 00:39:44.944
So far, what we've seen is that these kinds of L2s, they haven't really worked, right?

602
00:39:44.964 --> 00:39:47.705
There have been a number of these Solana L2s that try to build on top of Solana.

603
00:39:48.485 --> 00:39:49.485
They haven't really gone anywhere.

604
00:39:49.505 --> 00:39:51.346
Yeah, I'd forgotten the names of these, yes.

605
00:39:52.246 --> 00:39:55.968
I forgot the names of them as well, to be honest.

606
00:39:56.228 --> 00:40:03.613
But doing this on HyperCore does make more sense because HyperEVM, or HypeEVM, it got a lot of hype.

607
00:40:03.833 --> 00:40:05.514
People were very excited about it.

608
00:40:05.534 --> 00:40:06.894
They thought it would be very successful.

609
00:40:06.914 --> 00:40:08.595
It turned out to really underperform.

610
00:40:09.796 --> 00:40:12.358
It had, just in raw terms, actually very bad performance.

611
00:40:12.378 --> 00:40:13.438
It was very slow.

612
00:40:14.659 --> 00:40:19.962
The fees on it were very unpredictable because, of course, most of the throughput on HyperLiquid is going to be...

613
00:40:20.422 --> 00:40:26.464
for HyperCore itself, the actual exchange, and not dedicating a lot to the EVM that's built on top of it.

614
00:40:26.704 --> 00:40:27.625
And it just never really worked.

615
00:40:28.145 --> 00:40:32.086
It kind of requires a different skill set to build an L1 than to build a PerpDex.

616
00:40:32.406 --> 00:40:41.410
So, you know, maybe unsurprising that the team that built the great PerpDex doesn't quite have the sort of angle of attack they would take to build the next big L1.

617
00:40:42.250 --> 00:40:45.534
So a team coming in and saying, hey, we're going to build an L2, it's going to be super high performance.

618
00:40:46.094 --> 00:40:48.977
We're going to totally rebuild it from the ground up compared to Hype EVM.

619
00:40:50.198 --> 00:40:59.808
And apparently they're going to expose some more interesting opcodes that allow you to get more of a read into the order book on HyperCore.

620
00:41:00.109 --> 00:41:04.654
I believe Hype EVM, it only allow you to see the kind of the top of book.

621
00:41:05.194 --> 00:41:06.875
but it didn't allow you to see the actual order depth.

622
00:41:07.355 --> 00:41:20.624
And that maybe is useful for, you know, they talk about prop AMMs and other types of pricing functions that you can use by reading order book data in real time, querying the underlying, you know, order book and matching engine.

623
00:41:21.124 --> 00:41:21.525
That's cool.

624
00:41:22.325 --> 00:41:22.946
That's interesting.

625
00:41:23.467 --> 00:41:28.853
Is that enough to bring entrepreneurs, to bring DeFi, to bring activity into this ecosystem?

626
00:41:29.474 --> 00:41:29.975
I don't know.

627
00:41:30.015 --> 00:41:30.836
I'm pretty skeptical.

628
00:41:31.176 --> 00:41:37.304
I think the reality is that part of the reason why HyperVM didn't work is not just because of the performance, but because that's not what people are there to do.

629
00:41:38.205 --> 00:41:40.066
People are on Hyperliquid to trade perps.

630
00:41:40.386 --> 00:41:40.967
That's why they're there.

631
00:41:41.567 --> 00:41:43.408
And it's a great product for trading perps.

632
00:41:44.909 --> 00:41:52.593
But, you know, to go build an entire blockchain ecosystem and to get a bunch of founders to want to go and build there, I think a lot of them have already been bit.

633
00:41:53.073 --> 00:41:59.276
You know, I got a lot of pitches from people who were trying to build on HyperVM, and most of them didn't get anywhere.

634
00:41:59.676 --> 00:42:02.658
So obviously, Kinetic is one of the exceptions, but...

635
00:42:02.758 --> 00:42:03.498
They've done very well.

636
00:42:03.538 --> 00:42:07.339
They're, you know, a staking derivative.

637
00:42:07.900 --> 00:42:09.140
And they're the largest staking derivative.

638
00:42:09.360 --> 00:42:09.780
That's great.

639
00:42:10.040 --> 00:42:10.580
They've done well.

640
00:42:10.600 --> 00:42:13.181
But I think they kind of realize that, look, there's nobody building on us.

641
00:42:13.841 --> 00:42:15.062
There's no ecosystem around us.

642
00:42:15.162 --> 00:42:17.843
And so they're trying to muscle an ecosystem into existence.

643
00:42:18.123 --> 00:42:18.663
I respect that.

644
00:42:18.683 --> 00:42:21.164
I think it's the right thing for them to do, given where they're sitting.

645
00:42:22.424 --> 00:42:23.804
I just think, you know, the odds are difficult.

646
00:42:24.085 --> 00:42:25.405
Most L2s do not make it.

647
00:42:26.855 --> 00:42:30.297
Speaking of things not making it, let's talk about tokens.

648
00:42:30.658 --> 00:42:35.541
And a lot of people bit by tokens and purchasing them in previous cycles.

649
00:42:35.841 --> 00:42:37.603
You had this tweet from August 21st.

650
00:42:37.923 --> 00:42:39.724
So I guess that was last week.

651
00:42:39.984 --> 00:42:42.106
They told you tokens were dead and not coming back.

652
00:42:42.606 --> 00:42:44.346
Still here, still early.

653
00:42:44.687 --> 00:42:50.728
I want to link that tweet to some of the news that we see on the week coming from the Athena Foundation.

654
00:42:50.828 --> 00:42:53.709
So Athena goes full token company.

655
00:42:53.729 --> 00:43:01.650
They are really improving the, let's say, investor alignment with some of the updates to their token.

656
00:43:01.730 --> 00:43:07.832
So they just bought out early investors who sold ENA, that is the Athena token, the last nine months.

657
00:43:08.552 --> 00:43:12.835
IP and protocol value assigned exclusively to the foundation.

658
00:43:12.855 --> 00:43:16.797
So the idea is the foundation is under token holder control.

659
00:43:16.837 --> 00:43:20.219
So there's no residual cash flow due to equity investors.

660
00:43:20.779 --> 00:43:23.340
They have a fee switch now in governance.

661
00:43:23.360 --> 00:43:24.381
That proposal is live.

662
00:43:24.401 --> 00:43:33.186
And you got to imagine all of the Athena token holders will hit yes on voting for fees back to the Athena token itself.

663
00:43:33.586 --> 00:43:36.888
And monthly VC unlocks were also available.

664
00:43:37.228 --> 00:43:37.849
eliminated.

665
00:43:38.250 --> 00:43:45.397
We've seen a number of tokens really go through this investor alignment value accrual improvement cycle, whatever you want to call it.

666
00:43:45.738 --> 00:43:55.108
You know, VVV burns with Venice that seems to be a better version of tokens than we've seen in previous cycles where they used to be like work tokens or utility tokens.

667
00:43:56.049 --> 00:43:58.851
Also see the Uniswap fee switch coming online.

668
00:43:59.271 --> 00:44:02.833
Now Athena improving the story around their token.

669
00:44:03.534 --> 00:44:05.635
Is this a positive development?

670
00:44:05.695 --> 00:44:12.219
Is this essentially what we need to happen to all of our tokens in order to bring tokens back from the dead?

671
00:44:13.978 --> 00:44:17.760
So first I should caveat that we are seed investors in Athena.

672
00:44:17.900 --> 00:44:19.181
We led their seed round in their Series A.

673
00:44:19.201 --> 00:44:23.123
So we're big investors and we've been chatting with Guy, obviously, about this whole move for quite a while.

674
00:44:23.983 --> 00:44:25.444
We were not one of the investors who were bought out.

675
00:44:25.484 --> 00:44:28.046
We did not sell over the last nine months.

676
00:44:28.426 --> 00:44:34.069
But it was a really incredibly well-executed move by the Athena team.

677
00:44:34.689 --> 00:44:37.851
And I think they're kind of charting a path for a lot of tokens to potentially emulate.

678
00:44:38.965 --> 00:44:43.666
The Athena situation was one that was obviously a very great, it was a great product.

679
00:44:44.426 --> 00:44:50.788
It was very well positioned, you know, excellent team, great execution, sitting very centrally in the ecosystem.

680
00:44:51.268 --> 00:45:00.370
But, you know, when I would talk to liquid funds about Athena, about ENA, the governance protocol, the governance token of the protocol, they were just like, look, I'm just not going to buy this thing.

681
00:45:00.530 --> 00:45:07.612
As much as I like Athena, I'm just not going to buy this thing because every fucking month there are unlocks and I see people dumping.

682
00:45:07.632 --> 00:45:07.892
Yeah.

683
00:45:08.052 --> 00:45:12.137
And I'm just like, I'm not going to stand in the way of, I'm not going to be on the other side of that.

684
00:45:12.677 --> 00:45:18.824
And so I think after hearing this enough times, I was like, hey, why don't we just do a big reset?

685
00:45:19.845 --> 00:45:23.930
Why don't we just say, look, this structure that we have, and a lot of this, like, okay, why do we have this system?

686
00:45:24.450 --> 00:45:31.798
of, okay, VCs unlock over four years and, you know, the unlocks and, you know, obviously some, you know, not all VCs do this, but there are enough VCs.

687
00:45:32.079 --> 00:45:36.864
And most of them are, honestly, to tell you the truth, are not the VCs, but they're often the strategic investors.

688
00:45:37.344 --> 00:45:42.610
So the people who are not VCs who usually do this, that they just every moment, the moment they get their tokens, they go dump it.

689
00:45:42.630 --> 00:45:43.851
The moment they get their tokens, they go dump it.

690
00:45:43.891 --> 00:45:44.552
And they just do that

691
00:45:45.433 --> 00:45:49.476
Until the four years are done and everyone of their last tokens are transferred.

692
00:45:50.136 --> 00:45:55.740
And these types of investors, they ultimately are just like this ball and chain around a project.

693
00:45:56.060 --> 00:46:01.263
It's like, you know, when people talk about, oh, the fate of this token is that it's going to be down on the chart.

694
00:46:01.804 --> 00:46:03.885
That's why those things are happening.

695
00:46:04.666 --> 00:46:06.167
So I was like...

696
00:46:07.467 --> 00:46:11.411
When we were chatting with the Athena team about this, surely there's a better way to do this now.

697
00:46:11.451 --> 00:46:22.919
Look, the SEC clearly has changed their mind and changed their tune about how open-minded they are about whether or not to view these things as securities or to understand, look, this is a different regime.

698
00:46:23.280 --> 00:46:29.545
We don't have to kind of do this rain dance as though, okay, well, we have to have these...

699
00:46:30.846 --> 00:46:33.167
pretend like it's an IPO and do all this other bullshit.

700
00:46:34.468 --> 00:46:41.293
And so can we just wipe the slate clean, unlock everybody, and anybody who's been selling, just get rid of them.

701
00:46:41.693 --> 00:46:42.393
Just great.

702
00:46:42.473 --> 00:46:43.734
We're going to buy you out right now.

703
00:46:44.475 --> 00:46:45.155
Here's all your money.

704
00:46:45.435 --> 00:46:46.156
Liquidity for you.

705
00:46:46.516 --> 00:46:47.357
Go right off in the sunset.

706
00:46:47.977 --> 00:46:54.542
And I think this is a model for what a lot of other tokens are going to consider doing now, seeing how the market has reacted to this.

707
00:46:54.822 --> 00:46:55.762
So market seems to be loving it.

708
00:46:55.782 --> 00:46:56.763
20% off today.

709
00:46:58.304 --> 00:47:02.488
Yeah, uniform positivity in the responses to the announcement.

710
00:47:03.649 --> 00:47:07.812
And so I think for a lot of tokens that have baggage, and a lot of tokens have baggage, and it's not their fault.

711
00:47:08.553 --> 00:47:12.536
A lot of this was a response to a very warped regulatory regime.

712
00:47:12.556 --> 00:47:20.283
A lot of people tiptoeing around things and having to contort themselves into weird shapes just to avoid being the subject of the fury of the government.

713
00:47:20.923 --> 00:47:24.526
I think they can now say, look, if we could start over, how would we prefer to have done it?

714
00:47:25.506 --> 00:47:28.287
And for a lot of tokens, something like this might be the answer.

715
00:47:28.527 --> 00:47:31.188
So now the problem is it's hard to tell what caused what.

716
00:47:31.768 --> 00:47:33.008
You know, why is the market so happy?

717
00:47:33.388 --> 00:47:38.770
How much of it was, you know, the token unlock, like unlocking all the tokens and saying, okay, no more unlocked, no more overhangs.

718
00:47:39.170 --> 00:47:41.150
How much of it was buying out the sellers?

719
00:47:41.391 --> 00:47:42.591
How much of it was the fee switch?

720
00:47:42.871 --> 00:47:45.192
How much of it was unifying the equity?

721
00:47:45.612 --> 00:47:45.992
We don't know.

722
00:47:46.532 --> 00:48:00.179
So I hope other projects can maybe space these out a little bit so we can like get the data of how does the market value each of these types of kind of improvements to a tokens profile.

723
00:48:00.539 --> 00:48:01.420
If I had to guess...

724
00:48:02.380 --> 00:48:08.122
I would say, I think probably taking out the sellers and unlocking everyone was a big part of it.

725
00:48:08.923 --> 00:48:09.623
Probably the biggest part.

726
00:48:10.923 --> 00:48:15.145
And Unifying Token and Equity, the third, and the fees were probably the last in terms of importance.

727
00:48:15.525 --> 00:48:16.966
But I don't know.

728
00:48:17.206 --> 00:48:17.726
It's hard to tell.

729
00:48:18.286 --> 00:48:22.188
So Athena was down like something above 90% from all-time highs.

730
00:48:22.228 --> 00:48:24.829
It may have been as high as 95% in the bear market.

731
00:48:24.849 --> 00:48:29.651
And so a lot of people have seen token charts that look like this, and it's just like down only from inception.

732
00:48:30.171 --> 00:48:39.258
Do you think moves like this, not talking about Athena specifically, although you couldn't include Athena, do you think it has the potential to resurrect tokens, basically?

733
00:48:39.278 --> 00:48:43.081
It's like Athena's a fantastic protocol, fantastic stablecoin.

734
00:48:43.141 --> 00:48:46.563
I don't know, number three in terms of adoption, something like that.

735
00:48:46.583 --> 00:48:47.264
It's three or four.

736
00:48:47.304 --> 00:48:48.785
It's in the top five anyway.

737
00:48:49.445 --> 00:48:52.188
The question I've always had as an investor in my mind is like,

738
00:48:52.948 --> 00:48:53.949
Same for the Uniswap token.

739
00:48:53.969 --> 00:48:56.332
Like, where's the value accrual mechanism?

740
00:48:56.992 --> 00:49:04.200
Is there some disalignment between whatever equity the foundation of the company has and the token itself?

741
00:49:04.680 --> 00:49:12.128
We've seen very few stories so far of tokens kind of coming back from the dead after a 95% sell-off.

742
00:49:12.188 --> 00:49:13.929
But is this how they do it?

743
00:49:13.969 --> 00:49:15.051
They just kind of direct...

744
00:49:16.152 --> 00:49:19.374
Do the steps essentially Athena's taking, do you see hope for tokens there?

745
00:49:19.394 --> 00:49:33.126
Because at some level, we've got to figure out how to bring some success back to this asset class beyond Bitcoin and Ether and Solana and some of our top ones, back to kind of the app layer of tokens here.

746
00:49:33.166 --> 00:49:33.887
Is this how we do it?

747
00:49:35.592 --> 00:49:36.913
I think this is a big part of it.

748
00:49:37.313 --> 00:49:44.639
Now, look, if you don't have the underlying strength as a protocol or as a project, that's not necessarily going to save you.

749
00:49:44.999 --> 00:49:50.143
You know, there's a lot of teams for which doing something like this would be shuffling around the deck chairs in the Titanic.

750
00:49:50.443 --> 00:49:50.663
Right.

751
00:49:50.984 --> 00:49:59.570
It's, you know, like at the end of the day, the reason why there is appetite for Athena at all, given a better structure, is because it's a good project.

752
00:49:59.610 --> 00:50:00.811
It's creating something valuable.

753
00:50:01.291 --> 00:50:02.552
Markets are willing to value that.

754
00:50:03.073 --> 00:50:03.293
But...

755
00:50:03.813 --> 00:50:08.854
look, if what you're building doesn't have product market fit, you know, the structure is not your problem.

756
00:50:08.874 --> 00:50:09.875
That's not going to save you, right?

757
00:50:09.895 --> 00:50:13.976
They say, okay, we're going to unlock everyone and we're going to do this and we're going to turn on a fee switch.

758
00:50:14.016 --> 00:50:15.356
Okay, well, do you have fees?

759
00:50:16.096 --> 00:50:27.859
You know, so like, yeah, the reality is that there's probably a lot of projects that will look at this and say, aha, great, I should go put lipstick on my pig and that will make people get really excited about it.

760
00:50:27.999 --> 00:50:31.240
And it's like, no, that's not quite the lesson to internalize.

761
00:50:32.687 --> 00:50:34.908
We've got a few more things to discuss before we do.

762
00:50:34.928 --> 00:50:37.629
Well, I want to thank the sponsors that made this possible.

763
00:50:37.909 --> 00:50:39.530
Bankless Nation, we've built something for you.

764
00:50:39.690 --> 00:50:41.471
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765
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766
00:50:52.675 --> 00:50:53.636
The problem is context.

767
00:50:53.836 --> 00:50:58.718
Bankless, on the other hand, has spent almost a decade building one of the deepest archives of crypto data anywhere.

768
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769
00:51:05.299 --> 00:51:08.660
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770
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771
00:51:16.381 --> 00:51:22.222
And every new Bankless article or episode gets added automatically, so the context keeps staying up to date.

772
00:51:22.502 --> 00:51:26.403
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773
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774
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775
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So go check it out.

776
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There is a link in the show notes.

777
00:51:37.907 --> 00:51:42.089
And once you become a Bankless Premium member, you can hop into the Bankless Discord and let me know how you like it.

778
00:51:42.509 --> 00:51:42.709
Cheers.

779
00:52:05.060 --> 00:52:12.823
Each one, we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle.

780
00:52:12.923 --> 00:52:15.324
There's new episodes that are released every Wednesday.

781
00:52:15.384 --> 00:52:16.124
They're 30 minutes.

782
00:52:16.184 --> 00:52:16.645
They're short.

783
00:52:16.685 --> 00:52:17.325
They're punchy.

784
00:52:17.445 --> 00:52:19.826
I think this crypto cycle is harder to navigate than most.

785
00:52:20.066 --> 00:52:21.306
So let's do it together.

786
00:52:21.447 --> 00:52:22.647
Go subscribe to this podcast.

787
00:52:22.707 --> 00:52:25.308
Search The DeFi Report wherever you get your podcasts.

788
00:52:25.368 --> 00:52:28.429
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789
00:52:28.569 --> 00:52:30.130
There's a new episode waiting for you now.

790
00:52:30.330 --> 00:52:32.211
A few more things to round out this episode.

791
00:52:32.311 --> 00:52:36.954
So Coinbase, they launched Bitcoin-backed mortgages.

792
00:52:36.994 --> 00:52:38.055
You think there's a market for this?

793
00:52:39.734 --> 00:52:40.414
is there a market for this?

794
00:52:40.814 --> 00:52:43.195
I kind of feel like this is more symbolic than anything.

795
00:52:43.595 --> 00:52:45.856
That said, as symbolism, I think it's great.

796
00:52:46.276 --> 00:52:46.976
I think it's awesome.

797
00:52:46.996 --> 00:52:47.956
Why do you think it's great?

798
00:52:48.796 --> 00:52:53.097
Well, because it shows that Bitcoin is being taken seriously as a financial asset by lenders.

799
00:52:53.157 --> 00:52:54.138
Like, this is real collateral.

800
00:52:54.698 --> 00:52:57.758
And you don't have to sell, you know, yeah, a lot of people doing this.

801
00:52:57.999 --> 00:52:58.599
I doubt it.

802
00:52:58.639 --> 00:53:05.200
Can you do, I'm not familiar with, I'm sure there's a way you could do it if you're kind of high net worth and you have some leverage accounts open.

803
00:53:05.220 --> 00:53:07.301
But can you do like an S&P 500 backed,

804
00:53:08.561 --> 00:53:08.902
mortgage?

805
00:53:08.922 --> 00:53:10.624
I don't think you can, really.

806
00:53:10.664 --> 00:53:11.946
I mean, that's not really mainstream, is it?

807
00:53:11.966 --> 00:53:17.173
I don't know, but you can certainly borrow against your brokerage account and put that as a down payment.

808
00:53:17.834 --> 00:53:18.335
Can.

809
00:53:19.337 --> 00:53:20.138
So, yeah.

810
00:53:20.578 --> 00:53:24.764
I mean, those two, like, the reality is, look, actually borrowing, like, putting your Bitcoin down

811
00:53:26.140 --> 00:53:29.002
Is one step removed from just borrowing against your Bitcoin?

812
00:53:29.062 --> 00:53:29.282
Right.

813
00:53:29.322 --> 00:53:31.704
You could just borrow against your Bitcoin and put down a cat, you know.

814
00:53:32.144 --> 00:53:34.165
Like, is this really a huge unlock?

815
00:53:34.265 --> 00:53:35.686
Not really, you know, like this.

816
00:53:36.006 --> 00:53:37.347
We get to say we can do it, though.

817
00:53:37.367 --> 00:53:38.588
You could have a Bitcoin back home.

818
00:53:38.608 --> 00:53:39.168
Yeah, it's cool.

819
00:53:39.228 --> 00:53:39.989
It's super cool.

820
00:53:40.109 --> 00:53:41.010
It's extremely cool.

821
00:53:42.070 --> 00:53:46.213
But, yeah, is it extremely, you know, was this the big unlock to a bunch of people buying houses?

822
00:53:46.233 --> 00:53:47.654
I don't think so.

823
00:53:48.554 --> 00:53:50.016
Not going to solve the housing crisis anytime soon.

824
00:53:50.036 --> 00:53:50.577
But very cool.

825
00:53:50.617 --> 00:53:51.898
But incredibly cool.

826
00:53:51.998 --> 00:53:52.839
And I'm here for cool things.

827
00:53:53.119 --> 00:53:53.760
Is this cool?

828
00:53:54.020 --> 00:53:54.841
Is this a cool thing?

829
00:53:54.901 --> 00:54:00.747
Zcash has its first ETF that's gone live, which, you know, from one perspective, okay, cool.

830
00:54:00.827 --> 00:54:03.590
Mainstreaming another crypto asset from another perspective is...

831
00:54:03.790 --> 00:54:05.931
This is a pretty cypherpunk protocol.

832
00:54:05.971 --> 00:54:10.173
I mean, you're going to do your shielded transactions with a Zcash ETF?

833
00:54:10.653 --> 00:54:11.333
What's going on here?

834
00:54:11.353 --> 00:54:12.294
Is this cool or not?

835
00:54:12.314 --> 00:54:12.614
Come on.

836
00:54:12.634 --> 00:54:13.434
Are we still doing that?

837
00:54:13.454 --> 00:54:14.935
Are we still ETF shaming?

838
00:54:15.175 --> 00:54:16.215
Like, I thought we were behind.

839
00:54:16.235 --> 00:54:17.416
I thought this was behind us, man.

840
00:54:17.436 --> 00:54:17.736
Come on.

841
00:54:18.056 --> 00:54:19.137
Oh, you think I'm shaming there?

842
00:54:19.357 --> 00:54:20.637
It's fine.

843
00:54:20.857 --> 00:54:22.398
It's just kind of funny.

844
00:54:22.498 --> 00:54:25.500
So you think it's totally fine to have ETFs in the cypherpunks?

845
00:54:25.520 --> 00:54:26.380
Of course it's totally fine.

846
00:54:26.420 --> 00:54:27.340
They can all own the same assets.

847
00:54:27.500 --> 00:54:28.541
Of course it's fine.

848
00:54:29.762 --> 00:54:38.727
Look, Grayscale putting some Zcash in an ETF does not stop you from shielding your stuff and going doing crazy shit on Zcash.

849
00:54:38.787 --> 00:54:40.768
In fact, it benefits you because it's worth more.

850
00:54:40.788 --> 00:54:41.049
Exactly.

851
00:54:41.229 --> 00:54:46.232
Look, it's a truly fully libertarian technology would allow both suits

852
00:54:46.892 --> 00:54:48.875
and cypherpunks to use it at the same time, right?

853
00:54:49.175 --> 00:54:49.896
That is the dream.

854
00:54:49.916 --> 00:54:51.277
That's actually what it's all about.

855
00:54:51.598 --> 00:54:54.421
It's not about, okay, only cypherpunks can use it and suits cannot.

856
00:54:54.862 --> 00:54:56.163
That would be a really weird protocol.

857
00:54:56.183 --> 00:54:57.084
I don't even know how that would work.

858
00:54:57.485 --> 00:54:59.647
So like, this is great.

859
00:55:00.068 --> 00:55:01.089
This is part of the story.

860
00:55:01.609 --> 00:55:05.193
Like, we got to get over this thing of like, oh, an ETF is somehow genuflecting to the man.

861
00:55:05.494 --> 00:55:06.195
That's just not true.

862
00:55:06.855 --> 00:55:09.115
I look forward to your next book, The Suits and Cypherpunks.

863
00:55:09.155 --> 00:55:10.236
It's an excellent title, Hasif.

864
00:55:10.336 --> 00:55:10.756
I love that.

865
00:55:10.856 --> 00:55:11.316
Exactly.

866
00:55:11.656 --> 00:55:12.356
Let's end it with this.

867
00:55:12.396 --> 00:55:18.097
I want to talk to you about the AI trait because I'm genuinely curious about what is going on here.

868
00:55:18.117 --> 00:55:22.658
I don't know if you've seen some of the AI, I guess, bulls.

869
00:55:22.798 --> 00:55:24.878
They've been all over the place, all in podcast.

870
00:55:24.898 --> 00:55:26.359
You can pick up on them.

871
00:55:26.459 --> 00:55:28.739
Dwarkesh podcast is great for this.

872
00:55:28.779 --> 00:55:32.620
I was listening to an episode with Dylan Patel, who's been all over this.

873
00:55:33.180 --> 00:55:33.940
in general.

874
00:55:34.360 --> 00:55:45.242
And there seems to be a sense that AI is maybe running out of capital, or it's going to consume all of the world's capital.

875
00:55:45.382 --> 00:55:46.242
And then what happens?

876
00:55:46.262 --> 00:55:48.163
So the story is something like this.

877
00:55:48.303 --> 00:55:52.944
First of all, the hyperscalers burned through all of their balance sheet, their retained earnings, right?

878
00:55:52.964 --> 00:55:58.064
And they had a ton of retained earnings, reinvesting that in AI CapEx, right?

879
00:55:58.104 --> 00:56:00.865
More compute, because token demands off the charts.

880
00:56:01.525 --> 00:56:02.826
Now we're going to Wall Street.

881
00:56:02.887 --> 00:56:05.169
You had the NVIDIA $500 billion deal.

882
00:56:05.189 --> 00:56:06.350
Wall Street is all in on this.

883
00:56:06.390 --> 00:56:07.491
So it's Wall Street credit.

884
00:56:08.092 --> 00:56:08.812
Next is what?

885
00:56:08.973 --> 00:56:11.795
Are we starting to see like sovereign credit enter?

886
00:56:12.136 --> 00:56:15.959
Is this why Besson is doing some of the yield curve control type measures?

887
00:56:16.300 --> 00:56:18.902
And that's what you were indicating earlier, basically.

888
00:56:18.922 --> 00:56:21.265
It's like cost of capital is increasing.

889
00:56:21.565 --> 00:56:24.288
There's a question of where are we going to get all of this capital?

890
00:56:24.308 --> 00:56:24.548
Yeah.

891
00:56:24.788 --> 00:56:31.413
Dylan said by 2030, we may need as much as $11 trillion in AI capex.

892
00:56:31.833 --> 00:56:40.179
So he said $1 trillion this year, $2 trillion in 2028, and then trillions by the end of the decade.

893
00:56:40.279 --> 00:56:42.241
So there's a number of questions here.

894
00:56:42.401 --> 00:56:48.445
It just seems like there's such a delta between what the rest of the world thinks and what the AI bulls think.

895
00:56:48.545 --> 00:56:51.467
First of all, if they're right, we get $11 trillion in capital.

896
00:56:51.927 --> 00:56:53.588
Where's all this going to come from?

897
00:56:54.229 --> 00:56:58.291
And $11 trillion in capital funded by what?

898
00:56:58.751 --> 00:57:00.332
Like AI token demand?

899
00:57:00.693 --> 00:57:04.575
They seem to see, the bulls anyway, they seem to see inexhaustible demand.

900
00:57:04.635 --> 00:57:07.037
Like demand off the charts, demand going to like...

901
00:57:07.657 --> 00:57:09.939
go up the exponential and continue in the future.

902
00:57:10.579 --> 00:57:12.441
That just seems crazy to me.

903
00:57:12.481 --> 00:57:22.669
At some point in time, the exponential eats the rest of the world economy, all the capital we have, and the entire world GDP is just basically the AI trade.

904
00:57:22.690 --> 00:57:27.373
I don't know if you have any thoughts on this, but I've been scratching my head trying to figure out how...

905
00:57:29.510 --> 00:57:40.702
much longer the AI trade can continue and whether we're just starting to hit up against the diminishing returns of cost of capital, if that could really slow things down.

906
00:57:40.742 --> 00:57:41.323
What do you think?

907
00:57:43.285 --> 00:57:49.432
So first thing is that I don't consider myself anywhere near an expert on this, but I'll tell you my view.

908
00:57:50.616 --> 00:57:56.678
is that I'm more on the bull side, is that I think this stuff is going to get bigger and it's going to get crazier.

909
00:57:57.258 --> 00:58:00.059
And every previous year that you would have thought that you would have been right.

910
00:58:00.999 --> 00:58:09.021
It's very analogous to early crypto, is that like the first instinct you have when you look at this is like, well, Bitcoin can't be worth more than a billion dollars.

911
00:58:09.101 --> 00:58:10.121
I mean, that would just be crazy.

912
00:58:10.521 --> 00:58:14.082
And Bitcoin would be worth more than $10 billion and $100 billion, a trillion dollars for Bitcoin.

913
00:58:14.442 --> 00:58:15.103
That's just crazy.

914
00:58:15.123 --> 00:58:16.063
That would mean it's like gold.

915
00:58:16.883 --> 00:58:18.745
And yeah, yeah, it does.

916
00:58:20.027 --> 00:58:28.475
Like if you take the AI question seriously, that this stuff is getting potentially rivalrous to human intelligence, which I think just use the frontier models today.

917
00:58:28.516 --> 00:58:34.822
It's really obvious that these things are very quickly becoming generally intelligent and capable of doing knowledge work.

918
00:58:36.003 --> 00:58:39.944
Now, knowledge work is only one part of the work that we do as a human species.

919
00:58:39.984 --> 00:58:44.305
It's obviously not the lion's share of the work that is done in the human population.

920
00:58:44.626 --> 00:58:51.528
But if you rewind the clock, if you just imagine, what was world GDP being spent on in 1900?

921
00:58:52.528 --> 00:58:55.869
The answer, it was mostly spent on growing human populations.

922
00:58:56.709 --> 00:58:56.909
Right.

923
00:58:57.029 --> 00:58:58.871
Because, you know, humans are what do the work.

924
00:58:59.311 --> 00:59:05.676
And so it was, you know, food and clothing and shelter and all the stuff that people do in order to stay alive and supply chains and blah, blah, blah.

925
00:59:06.016 --> 00:59:07.758
Like that, that's what GDP was spent on.

926
00:59:08.038 --> 00:59:11.881
That's the reason why we made all this wealth is to reinvest it into growing the human population.

927
00:59:12.321 --> 00:59:15.403
And we saw this massive population boom over the last 300 years.

928
00:59:17.091 --> 00:59:24.036
So once you have labor now being done by AIs, you should expect the same thing to happen.

929
00:59:24.776 --> 00:59:33.862
Is that the same amount, like the Ponzi scheme that we saw in human population growth, where, yeah, you just take all the money, you take all the wealth, and you just reinvest it into making more people?

930
00:59:33.882 --> 00:59:34.443
That's crazy.

931
00:59:35.103 --> 00:59:36.563
Like you're just going to grow exponentially?

932
00:59:37.284 --> 00:59:37.644
Yes.

933
00:59:38.264 --> 00:59:38.904
Yes, you will.

934
00:59:39.344 --> 00:59:54.968
That is how labor works, is that when you actually create a labor machine, you can keep reinvesting into it and growing it and growing it and growing it, and you can create the Ponzi scheme, but do it another time with AI capital, sorry, with AI labor instead of human labor.

935
00:59:55.428 --> 00:59:57.668
So it's very clear, look, we're not growing the human population anymore.

936
00:59:58.268 --> 01:00:03.430
By many indications, we've already peaked in the human total fertility rate.

937
01:00:04.790 --> 01:00:07.954
The human population is probably going to peak in like 2050 and it's only going to go down.

938
01:00:08.354 --> 01:00:09.655
So human labor is tapped.

939
01:00:09.816 --> 01:00:11.117
This is all the human labor we're ever going to get.

940
01:00:11.698 --> 01:00:14.441
AI labor is going to be where human civilization grows.

941
01:00:15.141 --> 01:00:18.605
And that growth rate is almost in a way a handoff.

942
01:00:19.424 --> 01:00:24.427
We are handing off the work of growing the future from human labor to AI labor.

943
01:00:25.087 --> 01:00:28.449
And is that going to take a lot of capital and a lot of reinvestment?

944
01:00:28.869 --> 01:00:29.449
Almost certainly.

945
01:00:29.989 --> 01:00:36.213
And it's going to happen in large part, I would guess, not just through, okay, we're going to pull money from other places, but probably we're going to create new money.

946
01:00:36.893 --> 01:00:42.579
Probably it's going to be an expansion of the money supply because everybody is going to want to continue investing in this.

947
01:00:43.060 --> 01:00:50.328
You know, ultimately, again, to come back to the very beginning of where this is all coming from, which is that money, especially fiat money, is a social fiction.

948
01:00:51.405 --> 01:00:53.746
It is an agreement that we all make with each other that, you know what?

949
01:00:54.086 --> 01:00:56.386
We're not just going to denominate our goods in physical stuff.

950
01:00:56.927 --> 01:00:58.287
We're going to take bets together.

951
01:00:58.907 --> 01:01:01.028
We're all going to agree that, you know what?

952
01:01:01.388 --> 01:01:03.249
I don't know that it's going to work out, but I'm going to believe in you.

953
01:01:03.269 --> 01:01:04.009
You're going to believe in me.

954
01:01:04.469 --> 01:01:09.530
And we're going to all engage in the social fiction that at the end of the day, we're all going to get paid, right?

955
01:01:10.171 --> 01:01:17.893
That social fiction only works when the money supply being larger than the real stock of goods in society is if everybody agrees the future is going to have more things than in the past.

956
01:01:19.007 --> 01:01:22.730
That's fundamentally what the fiction of money was created for, right?

957
01:01:22.931 --> 01:01:28.836
Expanding a money supply means that we all agree the future is going to have more things that we can trade things for in the past will.

958
01:01:29.236 --> 01:01:36.323
And if you believe that AI is going to result in real growth in the economy and material plenty, then it makes sense to do that.

959
01:01:37.023 --> 01:01:41.687
So my answer is that I think that is what is going to happen over the next 10, 15 years.

960
01:01:42.088 --> 01:01:43.209
That's where the money is going to come from.

961
01:01:44.538 --> 01:01:46.519
I think I broadly agree with you.

962
01:01:46.539 --> 01:01:56.386
And that puts us in the position, maybe many listeners in the position, to be long the debasement trade, long crypto, long scarcity, and also long AI.

963
01:01:56.666 --> 01:02:01.109
However, Haseep, that doesn't mean it's a straight line up.

964
01:02:01.709 --> 01:02:04.972
And taking an example that we've seen in crypto where, you know,

965
01:02:05.672 --> 01:02:15.045
Bitcoin in 2012 seemed crazy to go to something approximating gold's market cap, even to $1 trillion, was absolutely bonkers.

966
01:02:15.546 --> 01:02:17.989
It was not a straight line up, was it?

967
01:02:18.409 --> 01:02:19.651
It was four-year cycles.

968
01:02:20.072 --> 01:02:23.076
And so you could be right, and I think you're right.

969
01:02:23.256 --> 01:02:26.258
in the 10 to 15 year, 20 year vision for AI.

970
01:02:26.678 --> 01:02:30.159
That doesn't mean it's going to be a straight line up though.

971
01:02:30.420 --> 01:02:35.902
There could be some resets and some leverage booms and busts along the way.

972
01:02:36.443 --> 01:02:40.044
And I'm kind of wondering if that's what we have in store first.

973
01:02:40.064 --> 01:02:43.046
Of course, predicting that is pretty difficult.

974
01:02:43.446 --> 01:02:44.907
I'm starting to see some signs.

975
01:02:45.347 --> 01:02:50.690
I mean, once you go after kind of sovereign debt and capital, once you're in the bond market,

976
01:02:51.350 --> 01:02:52.510
How do you get bigger than that?

977
01:02:52.890 --> 01:02:56.891
We're getting to the end of capital for this current era, I think.

978
01:02:57.312 --> 01:02:59.292
At least that's what I'm trying to figure out right now.

979
01:03:00.832 --> 01:03:09.335
Yeah, well, this is something that Dworkesh in his interview with Dylan talked about is that one of the biggest roadblocks for this whole story is not running out of capital.

980
01:03:09.995 --> 01:03:12.676
It's running out of rope with governments.

981
01:03:12.716 --> 01:03:14.416
We're already starting to see the data center backlash.

982
01:03:15.016 --> 01:03:17.617
And to be honest, right now, this is mild.

983
01:03:18.457 --> 01:03:20.879
People complaining about data centers saying, oh, you can't build in New York.

984
01:03:20.899 --> 01:03:21.640
You can't build in this state.

985
01:03:21.660 --> 01:03:22.301
You can't build in that state.

986
01:03:22.321 --> 01:03:23.221
Okay, well, there's a lot of states.

987
01:03:23.962 --> 01:03:26.224
And not only is there a lot of states, there's a lot of countries.

988
01:03:26.644 --> 01:03:29.067
If you can't build a data center in the U.S., you'll build it in Canada.

989
01:03:29.087 --> 01:03:29.907
You'll build it in Mexico.

990
01:03:29.967 --> 01:03:30.988
You can build it in Malaysia.

991
01:03:31.309 --> 01:03:32.129
You can build it anywhere.

992
01:03:32.249 --> 01:03:37.434
Like the reality is that, okay, it just means your chatbot's going to have a little more latency to ground-tripping to Malaysia.

993
01:03:37.454 --> 01:03:43.199
But at the end of the day, like, look, if you push it out of the U.S., we'll gladly do it outside the U.S. You know, like that's, it's your call.

994
01:03:43.319 --> 01:03:43.840
We'll do it in space.

995
01:03:43.860 --> 01:03:44.661
We're going to build these data

996
01:03:45.261 --> 01:03:45.782
Right, exactly.

997
01:03:45.842 --> 01:03:49.025
Or in the ocean, you know, there's a lot of places that are going to be open to these data centers.

998
01:03:49.346 --> 01:03:51.128
So the world's a big place.

999
01:03:52.109 --> 01:03:53.430
I'm not actually so worried about that.

1000
01:03:54.031 --> 01:03:58.876
I think the bigger thing that you're going to see, look, so one, Anthropics going public later this year, almost certainly.

1001
01:03:59.617 --> 01:04:04.782
And, you know, if you think that there's been volatility in the AI market, you ain't seen nothing yet.

1002
01:04:05.563 --> 01:04:09.566
Once there's a lab, a real lab, you know, Anthropic is going to be out there.

1003
01:04:10.087 --> 01:04:22.957
I think you're going to see an insane level of volatility in that stock because it's just going to be, you know, the collective fears and imaginations of society in this big Ouija board, you know, controlling the stock.

1004
01:04:22.977 --> 01:04:27.081
Like, you know, Anthropic writes a blog post and they take out 20% of an entire industry, right?

1005
01:04:27.281 --> 01:04:31.544
Like, this is the most feared company I have ever seen in my life.

1006
01:04:32.365 --> 01:04:33.885
And that thing is now going to be public.

1007
01:04:34.486 --> 01:04:41.107
And so I think what part of the craziness and the market movements are going to come from just having these assets in public markets.

1008
01:04:42.447 --> 01:04:47.668
But the second thing, of course, is going to be that there's going to be civic and governmental backlash to AI.

1009
01:04:48.229 --> 01:04:52.390
And a lot of that is going to result not just in, OK, these kind of fake roadblocks with data centers.

1010
01:04:52.790 --> 01:04:53.870
There's going to be real roadblocks.

1011
01:04:54.450 --> 01:04:54.630
Right.

1012
01:04:54.770 --> 01:05:02.594
I mean, we've already had, you know, Besant coming out and the Commerce Department preventing models from getting released.

1013
01:05:03.155 --> 01:05:05.516
You know, why is the Commerce Department getting involved in that?

1014
01:05:05.536 --> 01:05:07.537
But right now, that's what's been happening.

1015
01:05:07.757 --> 01:05:09.058
We've had export controls.

1016
01:05:09.838 --> 01:05:12.219
We've had, you know, this is kind of the opening salvos.

1017
01:05:12.740 --> 01:05:12.900
Right.

1018
01:05:12.940 --> 01:05:16.342
This stuff is still not yet, you know, really that scary.

1019
01:05:17.122 --> 01:05:18.664
We're going to get scary models very, very soon.

1020
01:05:18.684 --> 01:05:24.529
I mean, looking at the OpenAI hugging face attack, supposedly one of the models that was involved in that is going to get released very soon by OpenAI.

1021
01:05:25.090 --> 01:05:29.113
So we are going to see a step change in the level of capabilities of these models.

1022
01:05:29.574 --> 01:05:31.496
And that also means a step change in governmental response.

1023
01:05:31.836 --> 01:05:41.005
And it could well be that you see big, big, big show-stopping moves from governments that are going to prevent this thing from really going into hyperdrive as fast as it might.

1024
01:05:41.605 --> 01:05:45.587
Haseeb, these are some of the most interesting times I've ever seen in my life.

1025
01:05:45.847 --> 01:05:49.448
I'm glad you're on at Bankless subbing for David to talk about this.

1026
01:05:49.528 --> 01:05:53.830
Actually, you're going to be on next week because David has two weeks at Burning Man.

1027
01:05:53.870 --> 01:05:56.651
So maybe we can continue the conversation then.

1028
01:05:56.992 --> 01:06:00.473
Guys, got to let you know, of course, none of this has been financial advice.

1029
01:06:00.493 --> 01:06:01.534
You know, crypto is risky.

1030
01:06:01.794 --> 01:06:03.995
You could lose what you put in, but we are headed west.

1031
01:06:04.355 --> 01:06:05.215
This is the frontier.

1032
01:06:05.495 --> 01:06:08.777
It's not for everyone, but we're glad you're with us on the Bankless journey.

1033
01:06:09.097 --> 01:06:09.597
Thanks a lot.