Investable Crypto Is Shrinking w/ Noah Goldberg

0:00Alright guys, Noah Goldberg back on Sharp Guy, I've respected Noah especially because I think that he's full-time investor in the space but has been one of the more pragmatic and balanced of the, yeah, let's just call it like, you know, full-time professional investors. And so yeah, I'm always happy to chat with him and hear his views. So I mean, you go into too much, enjoy your partner at the, what is your like overview on the market right now? Thanks for having me on. Yeah, I think like, I'll start with the Trump election kind of work forward from there. I think that like, Trump got elected, that was naturally like great for crypto, opened up the ability to have regulation paths like genius, which has had pretty big impact on stablecoin proliferation and within tradfi. Yeah, albeit it's in the early innings, but you can see the benefits that geniuses had. Additionally, clarity seems

1:04to be maybe passing. We'll see. I know probably market odds are low value, but they say somewhere on 70%. I kind of put it at 50, 50 without being particularly informed. And then you have other exemptive reliefs that are coming from SEC and a number of like regulatory statements from the CFDC around different products within the kind of crypto finance space. And so I think that's like one big theme is that the traditional financial system is adopting crypto or kind of the aspects of crypto that you would expect things that improve the underlying efficiency of their products and perhaps increase their margins. Simultaneous, I think that Trump is, I mean, you've seen the headlines. He's he has family of made, you know, billion plus dollars from crypto. And I suggested a lot of that activity is like somewhat nefarious. And so I think that like crypto has also gotten a more negative reputation that already had before his election. And then we also had kind of this wave

2:06of deaths that reminds me a lot of this backmania where when it's happening, a lot of people don't really think it makes that much sense, but they understand the game. And then after they all kind of fall down, then everybody has a bad taste in their mouth. And then that kind of wound up to 10, 10 where there's a lot of leverage built in the system because deaths were pushing up price. And so people felt like there wasn't much downside. And then it all kind of collapsed together. And then it took a while for the bodies to form and earthquake to the surface. And crypto prices kind of came down. And yeah, I mean, just just around it out where we're at today is I think that like they're on the fun side of things and just in general like the larger capital provided in crypto. There's been no real inflows into the fun landscape for the past several years because 2021 everybody was overcracked capitalized. And in returns, beta was good for 2023 and 2024. Everybody that was long the market should be up at least 50% annualized across both those years. I think 2025 was like

3:07rough year for funds because the S&P was up materially. But like I think Bitcoin was down 10 to 15% and I think Ethan Sol were down a bit more. And then now you've had a pretty large drawdown. And so I think like there were some funds that went out of business for the end of last year. A lot of them were like the Delta neutral funds that blew up in 10, 10. But I think that like there are a lot of fund managers that are kind of at a poor position. And so I expect that there will be more fund attrition. I think that sets up for an interesting opportunity. But I think the story of the market for the past several years has been just this digestion of 2021 and then regulatory changes and directions that have had various effects on the industry. When you say funds though, you're looting primarily to liquid funds in this scenario, right? Like that was my interpretation, especially when you set up 50%. I mean, obviously that would imply some actual market market there. Yeah, I mean, I say liquid or I'm mostly referring to liquid funds, but the same thing is true for venture and that like a lot of venture funds, let's look

4:10at the token venture funds. I know they're they don't like to linear by this, but like just on the token pipeline, which is the main way that venture funds historically have returned capital. If you look at like the the marginal TG over the past couple of years, I think there's been some good reports on like finance TGEs like 90 days later, like they're down 80 to 90%. And so there's just no exit opportunity and all these funds need to generate DPI in order to raise their marginal fund. And like I speak to a lot of venture funds, everybody's in the market or has been in the market or wants to be in the market to raise their next funds, but the DPI across the entire cohort of the past several years is generally quite low. And so I think like the the liquid funds like I know the returns and so I can say with more confidence how things are going to play out, but I don't think that the venture funds are all that different. I think that there's consolidation across the industry right now. And like there are a lot of subscale venture funds and funds in general that we're playing for like high returns because that's a historical return profile of this

5:10industry. And the returns have compressed. And so what made sense is a subscale fund that could increase in size if you don't have a positive view of the next few years. I think it's hard to kind of keep playing this game. So yeah, I would say like kind of the winners that you would expect from or like the top quartile from the liquid fund or liquid directional fund and the venture fund industry. I think everybody's doing fine. But like anybody below the top quartile I think is generally in a tough position. And then the last thing I'll say is that we we have less visibility into like the early stage side of the market. But from what I've heard there aren't as many companies coming to market. So like there are a lot of venture funds, but there aren't a lot of projects to invest in. And so that's a pretty bad setup for venture funds businesses over the the short to midterm. So to me, it just seems like the market is shrinking because there was too much capital supply and too little investable opportunities. And the growth stage rounds are still being done. Like there's a lot of growth in like the trad viax crypto side, but increasingly

6:14those deals are being done by non crypto vcs. It's kind of like the traditional vcs that are getting into those deals. And so I just think it's like a tough environment for where like the crypto funds in general right now. Yeah, I wanted to ask you about that actually because this is a thought that I've had as somebody recently about this. And I'm asking you this because I think you're very much on the you lean on the honest side of giving me a response here. So I'm just kind of interested to hear like, you know, a pretty straightforward, a straightforward kind of answer to this. My thinking when I see a lot of this, a lot of funds are like proposing that they're now fintech funds, right? And almost the is a very broad, intentionally nebulous description of what they do. And it's leaning very much towards fintech. And you hear people talking very much about fintech, right? And crypto rails with fintech, but it seems like the crypto aspect is sort of to wendling. My point in asking this is that I am curious what your thoughts are on a fund that was successful and known as a crypto fund with very, very different dynamics from investing in

7:19fintech equity, which benchmark and Sequoia and the non crypto side of Andrewson and light speed and all of these funds have done for years now. Where do you think the edge is for a crypto traditionally token fund transition into fintech, right? Like is this the same skill set? I just, I hear this a lot down. I'm like, wait, that's not what you guys were prior. Why should I think that you have an edge in doing this now? It's a good question. And I guess it depends on the exact focus in underwriting style of the fund and the transition that they're making. So for example, if you're like a seed, seed stage crypto fund and your edge is sourcing deals, that doesn't translate to fintech. It's not to say that you can't like determine who's a high quality founder, but you don't necessarily have a fintech network. And I think in general, there's enough BCs in the fintech space. So I think like the edge on the early stage side as a function of your network, just because it's a lot more like founder oriented versus

8:21business oriented, don't get me wrong. I think that people that understand crypto finance should be able to understand how to build like a comprehensive market model for what they're going to invest in in the early stage. I think as you get into like growth stage and liquid token markets, it also depends, but on different dynamics and that like if you're a fundamental oriented fund, I recognize there are a few of them in the crypto space, but let's say you're you're building out cash flow models in in late stage businesses. I don't think it's that big of a leap to move into fintech. I think we have to get into like the question of defining edge and like how much edge you need to move into this other market. So it's like, I believe that if you can underrate the appropriate valuation for a hyper liquid, more for whatever those like large cap tokens are based on some DCF, you should be able to create a DCF for these other businesses. The follow question is then like on edge is building a DCF and properly valuing something based on like

9:23public information, really going to give you a high return, like the return profile on crypto is high because you have a large percent of the market that is not fundamentally oriented. And so you have volatility that moves prices outside of that fundamental valuation, whereas in equities, I'd imagine that the dislocations from fundamentals are much narrower. And so I think that the game is harder in public equities. You have tougher competition. And in general, I think the market opportunity from revenue perspective for funds is much higher. And so you have funds that are willing to spend a lot more on the cost side to have an edge. So I don't know, like the example that comes to mind that's easy for viewers to understand is how many funds in crypto are getting drone operators to like go outside of companies and see how many cars are coming into the company back into like the revenue that's going to be created quarterly. Like that is kind of one way to have an edge in public equities. And that's not the type of edge

10:23that funds in crypto have built. So it's all to say, I think it's possible. I think it's highly dependent on what your edge is in crypto based on the stage that you're playing in and the style of underwriting that you're doing. But in general, on the private market side, I don't think it's easy to build out in a network to get access to deals if you weren't already in the market. And I think that crypto has like kind of a negative reputation. And so being known as the crypto fund, that's now trying to do fintech is probably a hard position to have. I think it also just, I guess it depends on how you define crypto versus fintech at this point, right? And like that merging of the two is such that it's probably not such a clear distinction. I just think it is kind of interesting to hear this term fintech. So frequently now when mostly fintech has been funded for decades now, by very successful investors in the valley across the world, right? And yeah, if it uses crypto rails, I suppose that even that, what does that mean in practice,

11:26it's hard to know, right? Like I think almost every bank and institution now and startup is working on a stable fund strategy if you listen to, you know, whatever one says. So I'm not trying to delineate too much. I just, I do find that interesting because mostly what these venture funds have been successful, that is token investing, right? And especially in terms of like the the outsized asymmetric returns in the past have been from multiples on these tokens. But the other thing I wanted to kind of goes back to a point where you were talking about earlier with regards to how venture is doing and also liquid, you keep hearing this term that there's like a tremendous amount of token overhang, right? And like this seems functionally true, especially if you look at all of the launches like you were saying that are basically straight down, like almost all of the big launches in the past two years have been straight down. There's still a lot of money tied up in those. So I'm curious, you know, I think one way to look at it is that like none of that is real and all of those valuations are truly like monopoly money.

12:33But that doesn't bode particularly well. I don't think for the industry in at large, especially with regards to tokens, like so how do you view maybe some of a lot of these launches like, is it going to be straight down for a very, very long time? And how much is that impact a lot of these early stage investors who were plowing money into some of those deals? Like I mean, and not just 2021, like last year, two years ago, we saw, you know, massive infrastructure raises. Like how does that how does that set up the some of these venture funds? So I'll answer your question. Then I'll give you kind of a longer rant. Good, good. But on the first part, it's, it's nuanced depending on how we define token over ring. Because like when I think about token overhang, I'm thinking about what are all my liquid market opportunities that have besting that still need to curve. And therefore, like someone needs to rotate out of their existing position in order to hold the bag there as you see cell. And that token overhang isn't that large. Like I'm mostly segmenting towards like real businesses

13:34that have real value. So like companies that are making money in primarily DeFi, you have a few players that have, you know, $50 to $100 million of unlock still the process over the next year or two. But it and hyper liquid is its own beast. And you know, it's not venture. It's the team and, you know, I don't know whether they're going to sell. But that's like the large token overhang that's not as is concerning to me. I think the the more concerning token overhang is the the BCs that still need to sell because they're going to go out of business. And because price have come down so much over the past few months, like the total dollar value of overhang is kind of low. I don't know if it's low enough where the existing liquid market can absorb it without prices going lower on the specific names of overhangs taking place. But it's no longer a broad market risk in the way that it was six months ago. And like I remember I built out like a token unlock schedule for all high quality DeFi projects and it's like billion plus dollars a month. You're talking about high quality DeFi projects. This is on the like the far end of the spectrum of value. And I have a saying what

14:39okay, okay, sorry to go on. But it's just to say like this is where I'm spending my time in the market. And this is what I see on like the stuff that actually I think has long-term value. We then get into like the tokens that launch on Binance that like have no bids like no liquid funds are actually speaking to these teams like teams aren't even trying like there are a lot of those tokens that are coming through Binance but like they don't actually hit the radar of liquid token funds anymore. And maybe it's because I'm not speaking to liquid token funds as much as I used to but I think in general people are coalescing on businesses that have value and there's nobody that's willing to speculate without speaking to the team, understanding or legal rights even if they're not trading based on fundamentals like the results of proven themselves out and nobody's willing to just like money on fire. And then on the tokens that have yet to launch I think I had a tweet about this but it's just like you're if your businesses going to die do yourself the favor of not launching a token to find out whether you can save yourself just let the business

15:42die and move on. That's not to say people won't launch tokens like I'm seeing a lot of tokens get launched where it's like the token launch market is not in a good space right now like it was a great to launch token if you're timing things in Q3, Q4 last year but if you're launching a token right now you're essentially telling the market that you're desperate and in one form or another. So I just think like yes there are probably a lot of tokens that are sitting on venture fund balance sheets that are marked to you know they're the cost basis or maybe you've been marked up but I just don't think that there are almost any that are in the pipeline that are going to be that are going to have any bid from from funds like we this is my job I look at all the tokens that launch and there are occasionally tokens from teams that I haven't heard of that are interesting to speak to but for the most part like if they're to token that is backing a business of any like reasonable value I am one of the only natural bitters left in the market that's

16:44willing to touch it and I don't see too much coming into the pipeline it's like maybe one a month maybe one every couple months and so if you think there are 100 plus companies that need a launch of token I'd imagine 90% plus of them are zeros and I must it in like the last thing I'll say here is just on the early stage token side like things are conforming a lot towards traditional venture valuations and that like if you're doing one to two or like one to five million of ARR you're trading less than 10 times so I think you just need to assume that for these series A companies that are launching tokens that they're going to trade somewhere between like 20 to 50 million which seems fair like we as token investors are taking legal risks owning these tokens not owning equity and the multiples that we're paying are not low but they're not high either and the business opportunity in today's market for a lot of like token based companies is a bit unclear and so like I think you could view them as small businesses that may become like 100 to 500 million dollar

17:48companies but there aren't that many that are launching the market that you could feasibly like make the argument on like a cash flow basis that they're going to be like billion plus dollar opportunities and so to some extent I think that like the market on the liquid side is corrected itself whereas the venture side of the market has not had to really like look at the state of markets and figure out where would we go from there yeah you mentioned hype which you said kind of as a beast unto itself you had a very long and well thought out perspective on hype yeah maybe we can start there yeah I'll practice by saying any hype is one of if not the highest quality company in in token land today and that's partially why my perspective is that it's probably overvalued because I think the two things go hand in hand and that like you like the majority of the capital and in liquid markets is not valuation focused it's like seeking quality or something qualitative or is just seeking an narrative and I think all that lines up well hype like they're

18:50doing a ton of revenue the activities organic they have a lot of usage primary market share and a market that has a fair amount of revenue available to it there are constant traditional markets for CFD brokers that trade at 10 plus billion dollar companies I think there are a lot of things to like about hype it's just you build out a DCF and I think it's a part about to make yeah and I don't think that's like a controversial opinion what I found interesting not to like belittle anybody's analysis but the the comments that I was getting were people that were complaining about my analysis but that don't actually do any fundamental analysis themselves or like build valuations and they were just upset about me saying something negative about hype which I think just tells you what's going on here which is you know people hold the hype because there are a lot of like vibes associated with it that that makes sense and it's not to say it can't go up but it's not because the cash flow story is interesting it yeah 15 20 billion adjusted market cap so like that that's kind of like my very high level view on hype that's just it's a great business everybody in crypto

19:54is plowed their capital into it so it's a very crowded trade and that's why I think it's probably overvalued just because I think that there isn't anybody that's like really properly assessing the probabilities of failure in various degrees versus like everybody anchoring towards what is the success case let's drag right on hip3 continue any gain success let's talk about the hip4 hip5 and so we can pay this grandiose picture that like if it's right this is objectively a very low valuation for that outcome but I think like my perspective albeit is like somewhat uninformed I just look at the history of finance as far as valuations margins etc and say to myself like okay this company is clearly over-earning if history is going to hold true for the future and the multiple that you should be willing to pay for this business can't be that high because its margins are going to be hard to defend in one form or another and so like people can anchor themselves to this price

20:59earnings ratio but in reality it's a price sales ratio and that has very different implications and so I mean I'm happy to let you start first I can just just like in terms of price to sales versus PE in this scenario what do you mean by that like with regards to revenue versus net income on on hype yeah it's it's the the point is that like you can have you can take two approaches one is uh it's trading at 20 times earnings and the other is oh it's trading at 20 times sales and because essentially it's sales arts earnings because the teams operating expenses are so low I don't know exactly what they are but I imagine it's like a 95 to 99 percent margin business and so for 20 times earnings putting aside the quality of earnings that's not a hard multiple to defend if you're growing your revenue by 10 percent for the next five years and then go down to like a GDP level growth rate then 20 times earnings is the right multiple to be but this is like one an early-stage company so like it has much higher risks than like the

22:04traditional companies that you're describing are 20x multiple to and two like I have questions on quality of of that revenue being generated and we can get into that and then I also have questions around the actual like long-term margins of this business and so I would say if you look at 20 times sales and you compare it to all other businesses that trade above a billion to two billion evaluation whether it's SaaS whether it's Fintech whether it's like financials this is the most aggressively valued company other than Palantir and that's not to say it can't be true but it's just to say the market's pricing and a ton of upside and so you need to be like very correct on that upside when you say questions some of the quality of earnings what goes into that I think that the hype wealth effect from the air drop is probably the the biggest wealth effect that's ever occurred from an air drop in crypto I think much larger than than Uniswap but also like the the activity is siloed within itself when you get an air drop from a project that you just need to connect your

23:06metamass to and sign a transaction it's not say that you're going to be loyal to that product with the capital that you receive but like when you get a hype air drop on the hype platform and you have to really actually like withdraw it there is this implicit switching cost now the given the friction is low but it's all to say where I'm going with this is that if you just look at like the billions of dollars that traders on the platform were given in 2020 at early 2024 and kind of drag right on how profitable are these traders how frequently are they trading it takes a year plus to like actually get them all to lose their money like if I gave everybody like about it not to like be overly negative but like let's say I gave a billion dollars to like a thousand gambling addicts I sold them like you have to use this platform I'm sure that platform which generate a lot of activity now now given I'm I'm being punitive relative to like what's actually going on the traders are probably not as negative EV as I expect and all these other things but like

24:06when you look at capital on platform there's about four billion when you look at annual revenue on the platform there's anywhere from 500 million to billion and I think it's reasonable to ask yourself how is that possible like as a long term equilibrium is it the case that like people actually have a ton of capital that they don't hold on the platform they rotate into the platform they trade it and they take it back out or is it the case that the users on the platform are like hemorrhaging cash at very high levels even like relative to sports gambling platforms yeah and so I guess the game that has to like be assessed yeah I think the counter well the very obvious and sort of trite counter at this point is that perps are going to take over everything so that is the like you can have an effect at one of these you know massive wealth creation events and you're right the gambler's loser money back in the casino I don't think anybody is denying that is occurring at least in some capacity there is durability though right beyond what we've seen

25:07with virtually any air drop wealth creation event so like that's one thing that I would very much defend hype on is that there has been I mean you compare this to do IDX and more recently even you know lighter we'll see how like that plays out but I'm just you know in terms of continuation of activity I think hype is proven itself so I guess the idea is that you shift from this degenerate group of people you know gradually bleeding out their wealth creation event and as the price goes up they have slightly more to lose so maybe it takes longer like none of this is lost upon me but the counter point is the world is going to be purified now that is somewhat of a audacious thesis you know by itself but if you believe that then it's reasonable to think that you know hype or maybe not hype but perps in general take x percentage of zero days take x percentage of retail traders on Robinhood right so like I do think there is if you view the

26:10trajectory of crypto in a certain way or maybe specifically trading here right then you can very much make up for these dwindling saw machine pullers with the trading of commodities during the Iran you know bombing right maybe we're sure I mean eight so sorry no no no that was I was just providing though at least what you know I'm expressing the negative view only because I think the positive use so well understood and like I'm fully aligned with it I I think it's just like let's say you believe perps are going to continue to proliferate let's say that like hyper liquid could add additional hip is an expanded market opportunity to to other types of trading activity like these things all are reasonable the question is just like what's the competitive reaction function and how do margins change as these things occur and my view is that with like very high confidence you will have either margin and compression you will either have take rate compression or you

27:14have a combination of the both just because like when a company is earning 500 million plus dollars a year after spending on 10 whatever million dollars to build the exchange itself it people don't want to do that yeah and so I'm not surprised that you had all these copycat perps dexas come out after hyper liquid success and I'm also not surprised that hyper liquid is maintained its market share hyper liquid is one of the best examples of counter position A and crypto it didn't take DC capital it built a loyal user base of the like 10 to 20,000 like true whales in this market and and they are loyal and like although some of them are going to lose their money a bunch of them are like the cockroaches that can continue to stay in the market and so I don't doubt that hyper liquid is in a great position and I just question what that's worth and like there are a very small number of employees like you have key man risk you have questions on the how do you scale up this organization you probably have regulatory

28:15questions as far as like I know that they've created this hyper liquid policy center like how much capital are they going to have to use to get this regulation in a moving direction that allows hyper liquids existence current form and if the regulation occurs that allows hyper liquid into existence current form what does that mean for its competition like does that mean that track why can come in and compete right and that's what I was going to ask you about next like how do you see that because I mean again this isn't strictly perps but like for example coin basis treating at what 40 to 50 times earnings and there is there are up now like you said in your post right eloquently you have to assess like sort of the downside like you have to really assess the expected value there because there's a lot more you know failure modes and something like hyper liquid in early stage chart versus something like coin basis is very established it has some real kind of like entrenched modes particularly in the United States that are pretty difficult to supplant on ramps off ramps they have egregious fees on the front end that you know 50 to 75% of retail seem to completely you know ignore so what do you think with regards to

29:20okay Robinhood can can launch perps coin base has tried it have some sort of you know version of this but yeah like what do you think of the invitation to competition maybe on a positive note you could also mention like what how does hyper liquid defend this like can they just be no KYC and and that be you know the the selling point for example and capital moves to where it's it's most frictionless and you know point proven part like I'll just end on one thing and I'm not I'm not like a hype I'm neutralness okay for one thing about hype outside of all this is that it's kind of it's kind of inspiring maybe that hyper liquid seems to be one of the very few examples of Hannah startup supplant incumbents like can we take on Wall Street because we've said we're taking on Wall Street for a very long time and we're really not and and Wall Street really just like you know picking shoes and they'll probably end up making a lot of the money with these so

30:22there's something kind of you know almost visionary or ideological about supporting maybe something that could take on Nasdaq and whether or not it like falls like trading perps aligns with my ideology I don't know like I don't know that I care that much about that but it's some evidence that yeah like you can supplant these financial firms that have been in existence for hundreds of years okay so go ahead so I mean I think this is the tricky part and also what influences my confidence in my view on valuation which is that there isn't an obvious negative catalyst like there could be a thousand different negative catalysts but none of them are obvious today and that's why I don't think the market like cares that much about my like long term potentially like more neutral view versus how it's currently being priced so like that that's like one piece but yeah as far as the competitive dynamics at play I mean a part of it is a function of how does regulatory move for

31:23like they probably do need no kind of KYC in order to compete I'm I'm open to that not being true but that's like one initial impression that I have about the product is that their existing users would be less inclined to use the product if it had KYC associated with it like don't get you wrong I think that like there is a reason why people use hyper liquid and not finance and even if hyper liquid had KYC they'd still use hyper liquid yeah because they have a negative view by-nance and don't want to take the custody risk but like there there are just questions on like you are letting people trade you know at derivatives on traditional assets that have historically fallen within the the CFTC's purview and they've taken a very strong indirect view on whether this is legal or not and like given you know regulation is shifting and so it may move in a direction that allow these activities to occur like I do think we have to accept that like the past you know all financial history needs activity on like the the HIP three perps which otherwise have invited some type of enforcement action so yeah if we're moving to a different market environment

32:28I think like there's the regulatory component initially about hyper liquid which like gave them the initial network effects go and market and now we have a question of how do you advance outside of the like 60k daily active users and I think that like you have to go into the traditional markets and then we get into the question of like what to the average people that are trained or Robinhood care about and like to some extent I think that they want to use a regulated brokerage that they have like brand value so too with and that's not to say that like you can't have these like builder code oriented like mobile apps and all there like UIs that obvious gate what's going on the back end using like a decentralized protocol but ultimately like there is a form factor question of like how do you increase the the number of users on the platform that are crypto native because I think however liquid is done a great job capturing all the high like all the crypto native users but like how to to go to the next level your competing against the incumbents that have chosen not to go into the market that you're currently offering partially

33:32because of regulatory partially because they're focused on other things and I just think like if for example Robinhood started to see that its user base was churning and they were churning to hyper-liquid there would be some type of competitive response function now we can argue like how good that competitive response function would be but it's just to say all the marginal users that hyper-liquid wants to attract are coming from other platforms that are either indirectly or directly competitive with hyper-liquid and so they're going to become very defensive if you know hyper-lipping continues to grow its user base and but there's just like one microcosm of what could happen but that's that's kind of my point is that if you kind of play out all these potential scenarios you have a number of scenarios where that work where hyper-liquid is a hundred billion plus dollar company and then you have a number of scenarios where hyper-liquid is in its current form it looks kind of like a CFD brokerage in which case probably trades at like five to ten billion dollars and like you know low teens to high teens earnings multiples and then you have a number of scenarios where

34:35hyper-liquid peters out over the next like five years and fades into a relevance I'm not I don't think that like I'm describing unreasonable probabilities to the different scenarios and I just think that like the market is saying what is probably a five to ten percent outcome is like a 25-50 percent outcome as far as hyper-liquid being a 50 to a hundred billion dollar company and like I'm happy you are I'm not short yeah I think a lot of that delta can be explained by the lack of other investible projects like that's what's crazy about this industry from my perspective is just like you get it we've had this era of massive speculative premium which is I mean still least just to this day and it will take a very long time to bleed out but we also now have this over indexing right and maybe it's justified to be fair right like if if crypto is the future then maybe it's very justified but we have this over indexing and you say like consensus trade this is exactly what's occurring I mean in practice it's like it's a less maybe even about hype and all of these like well thought through you know assigning probabilities scenarios that you kind of

35:39discuss and more just okay where do we deploy our capital if of large portion of our mandate for example with liquid funds maybe the liquid side adventure funds is in tokens right and it's like well a hype makes money and that alone right there add some multiple so and you know hype can be accessed by people around the world I mean most of the rich people are in first world countries so like this is something that crypto has seemingly failed to realize for quite some time so these people probably have the ability to buy this but it is something that trades you know permissionlessly and maybe there's some fund in North Korea that you know wants to buy hyper liquid that can't buy you know whatever so yeah I agree I mean but and this is why like when you look at my exact Twitter post that sparked this conversation I explicitly outlined from a cash flow valuation perspective because I think like I don't want to get into the question of like what percent of the market cares about cash flow and but like yeah the the most likely answer is to why hyper liquid

36:44trades the way it does is not because the market is over indexing on the like right tail distributions like I think they have to because the price is the way that it is but as far as what's happening it's just I have some amount of capital on crypto I need allocated and hyper liquid is one of the the top quality projects and in general I think that's what you're seeing across the board right now where like the market is moved heavily from speculative assets and optionality to just indexing towards what is going to survive the next two to three years and that makes sense just because when you look at the KPIs in crypto today they're not moving up right now on most metrics and so I don't think that like there's much of a game in the market today I'm playing like quarterly is like well-discompany inflected KPIs at the next three months because KPIs aren't really inflecting right now and so you're playing this game of who is going to continue to compound their network effects who's going to continue to build products and when KPIs potentially inflect in six 12 months whenever it might be who's going to capture that and those players are all kind of well

37:49understood like all the funds speak to the teams they know like stack ranking who's high quality who's not like Jeff is an incredibly strong founder and there there's no doubt about it and so it's it's a great story I mean I put not not again to to long field like I'd put something like more phone the same category where like today it is not producing any revenue there are a number of ways that it can produce revenue in the future it is winning a lot of integrations and partnerships that may seed the possibility of it making a lot of money in the future and it trades a two billion dollar valuation now if you look at like two billion dollar valuations in FinTech broadly all the companies are a lot more mature have a lot more mature revenue and margin profiles maybe they have less growth in the future but it's just to say like the market is on a fundamental basis pricing Morpho incredibly aggressively relative to FinTech comps and like maybe it's justified but I don't think it's because people are building out valuation models and predicting like three plus years in future like what percent of the revenue gets split to it's Morpho et cetera et cetera

38:51I think it is I feel pretty confident that Morpho is going to be one of them to if not the the number one player in a category that I think has a very large outcome associated with it so I think it's all kind of the the same thing happening in market right now which is there are a bunch of liquid funds it's easier to kind of hold high quality stuff in this market environment than try to like take a punt on a lower liquidity token that may or may not work just because everybody's trying to avoid downside let me take a moment to talk to you about ellipsis labs a team I've known for a while the ellipsis team is one of the few that I can consistently point to and say these guys really know what they're doing ellipsis labs brought capital-efficient order books to Solana and started the prop AMM revolution with Solify altogether they've saved retail traders tens of millions of dollars by reducing slippage on spot markets they're bringing the same level expertise from petrol with Phoenix which is live today ellipsis labs are backed by paradigm electric capital and honed ventures I would consider them the foremost experts in crypto market microstructure the best part is that ellipsis labs hiring for new york based engineers work with

39:55a small focused team who are results driven collaborative and use a modern stack if you're an engineer looking to work with a defi team that's already proven itself in the market go to ellipsis labs forward slash careers why do you think that morpho I guess you're talking about lending I don't know if you're talking about vault specifically but yeah just like broader that maybe the broader lending landscape why do you think that is it massive or has a patent did you write a post about this I can't recall if that was you yeah so good I read it I read I think on shame lending is is a big market opportunity but I think in general fin tech lending is big market opportunity I think that like our our view on financial markets in general our IFS thesis is just a lot of finances antiquated and technology will improve the market structure and so when you think about what are the most obvious places to go after it's the the 3% at credit card fee and the you know one to three and a half percent name across most borrow lend activities and like in some case

41:01what borrow lend like like like talk talk to me about like I don't know I was going to say five years out but just talk to me about where that borrow lend comes from I guess yeah I mean like I think I've had evolving thoughts on this but is this competing against margin loans on Schwab is this competing against mortgages is this like a prime broker type lending for trading firms where is that lending gap now or why do you see it growing massively so I think there is like the the crypto specific the like Morpho versus Abe versus like other players specific dynamics and there's a lot to touch on but at a high level I think that like the underlying credit mark in the US is a lot more fragmented than than equities and like other traditional securities because the the credit itself is not standardized there are standardized credits like public market bonds but in general like the public market bond market was trading on like talk trade

42:04and in blue dirt chats for a long time and only now we're seeing market access and trade web starts electronically all the aspects of like trading sovereign bonds and rates and things of that nature and so it's just in general like credit is from a technological perspective much more antiquated than more traditional securities and things that were easy to to electrify and speed up the process of trading yeah it's like I know I'm starting at a very high level but I think it's important and then like when you look at post 2008 you went from banks funding a lot of like nuanced loans to it being pushed to private credit partially due to the response function to GFC and in capital requirements and banks making some of this activity not particularly profitable for them and so you know private credit filled the gap on a lot of different parts of the market I think I have questions on like the returns that private credit is going to generate on its current loan portfolio and that partially plays into that and that like I think that we're going to move

43:06to more capital constraints society and so people are going to have to find liquidity wherever it may be but it's just to say like private credit filled the gap in certain areas but then FinTech credit started to come in to fill the gap in other areas like for example you have prime borrowers that are able to to use their like traditional credit scores to access loans and but then you have borrowers that like otherwise could be considered prime but don't have their acquired credit scores they have all data that proves other prime and those customers can't go through the traditional credit markets to access that credit they're subject to going towards like a FinTech credit lender that has some like all data set that's building the I model on and is willing to issue credit and then the last part before I get into the specific side of things is there are a lot of smaller loan sizes that historically have been too expensive to originate and so that they just don't occur and that's what figures done quite well they'd gone after Helox and the sub 100k loan category where it's just unprofitable to originate and so because the cost of their

44:10origination platform is 700 versus 11,000 from the traditional players it's opened up that part of the market and so I just think in general like the technological aspects of the credit markets are continuing to have positive impacts on the markets but I still think that it's in the early to mid innings and so I think that there's ways to standardize a lot of credit and ultimately I see like a exchange infrastructure being the the layer necessary I think you need a standards in for a layer and then I also think you need to change infrastructure to allow all these things to trade and where to say it's kind of like RF queues that trade web and market access have combined all in the hood they have like your dealer networks it's quite complex and so that's the role ultimately that I see like the the morfos and and other infrastructure players taking and middleware is a tough market like play when you look at traditional fintech credit a lot of the fintech players are doing some origination and so like they own more of the stack and therefore

45:13like they have a higher name and it allows them to create a business that has a decent like cash flow profile whereas for morfos etc like morfos currently not monetizing they need to get network effects in order to have the ability to insert some type of rate but it is a question like is this market that like I could feasibly take some portion of interest or am I going to have to like do a subscription model and if it's a subscription model where I'm saying like a palo in order to access my cloud form you're going to pay like 10k a month like that's not a big market opportunity so like there are some questions but the point is is that I think that one of many aspects of credit that is antiquated that can be solved via dlt is like collateral management and like when you saw first credit blow up like one of the biggest issues that they had was just like they had collateral pledge to multiple loans and nobody actually knew that this was occurring now given that's fraud but the point is like this activity in theory would not occur on a blockchain and so I think we're ongoing with this

46:13is that like someone has to take custody of collateral that collateral needs to be accessible or at least checked against and like the qualified custodians are one aspect of crypto that can solve this you could have some type of smart contract infrastructure that allows for non custodial collateral being held and in general like these complexities that have occurred in traditional finance have been solved the intermediaries that have just added on fees like you have security trust agents involved in this process in order to make it so that like the prime broker is if they go under does not impact the the collateral that their customers are pledging to them but if they're all stopgap solutions essentially and like one of the benefits of credit versus like trading for blockchain specific rails is that latency isn't really that critical like the latency of relevance is like t plus one not like 200 milliseconds versus 12 times and so

47:14like I think you have to squint like just coming full circle I think you have to squint and say like okay how do we go from the current market structure to market structure like these things are infrastructure layers for like 100 plus billions of loans but ultimately that's that's the vision and so like the next step here is you add term loans you add much more complexity to the types of loans that can be originated and you create pure pure credit marketplaces I think these are all the things that like more could be two is Publisper is is putting out to the market next and then like that's going to lead to some marginal credit creation and then you're going to figure out what of the next things to add from there but ultimately I think the ideas with global markets the cost of capital is going to be lower than having an auction take place between a bunch of funds and so that's why I think this thing works at the end of the day and like again it's subject to probability is like I'm not saying like 90 percent plus chance these things all become like massive global infrastructure but if they do work I do think that there is a 10 plus billion dollar outcome

48:16and so you know you have to ask like what's the multiple on your investment that you want to play for this outcome given uncertainty and but I understand how it's going to occur and like I see the the seeds on issues in private credit markets that are starting to force capital be more constrained I see like the on-chain interest rates be sufficiently low where like there is free money to be had from originators that have like marginal assets and like I see for example on reg T margin where Robin Hood etc other than interactive brokers are charging like so for plus 700 whereas like I'm very confident that you can find yeah for like margin products if you look at like the the margin rate across like Schwab across pretty much I mean what was so for I was sorry it's it's just like the risk free rate no no I mean what what is it right now because I know are you talking hard just like yeah but Robin Hood is charging like 3.75 percent okay I mean maybe if you like Robin Hood gold yeah I've been with this in like a few months

49:20but like it's pretty low I know I know I just yeah it's it's like three and a half or I mean I guess it depends on how much you borrow right so like the lower the amount but yeah it's not it's Robin Hood's pretty competitive and they pay like three and a half percent on idle cash so I just I'm not I'm not I'm not I'm not I'm not trying to like say something that isn't true but like let's let's say Schwab for example and the reason people are willing to pay time to 13 percent on margin for Schwab is because like you're a capital customer whereas like with with crypto platforms like ultimately anybody has the ability to just go into positive cloud on the programmatic way and borrow on term so yeah I just think it's like this isn't if this is a way to get the markets be more efficient and like credit in general is somewhat inefficient just based on the market structure relative to like traditional equities or other instruments so I guess kind of it's kind of interesting to hear you say that well I I've also envisioned it like this

50:20but it seems that what you're kind of implying with this middleware not analogy but I guess description is that Morpho will provide like I'm using Morpho as an example Morpho will provide like a very very large pool capital whereby the companies that do interact with the end user will be able to source capital and that's the relationship there with because the reason I say this is because over collateralized lending I think has been in general by crypto has been kind of misunderstood and I remember this yes or like I don't know you probably saw this a few years ago people would talk about how alone on Ave or Maker or whatever is functionally the same as a line of credit on a credit card or like a mortgage because you are you are collateralizing something right just in the case of a mortgage or a line of credit with you know I don't know visa or something it's your credit score and then in the case of mortgage obviously your house this is not precisely true right like

51:21over collateralized lending is distinct from this when you go to a bank for a mortgage you are they are assessing like your creditworthiness or looking at your credit score or looking at your assets and then they are mostly looking at okay do you make you generate enough income on a monthly basis to service this loan right and that is different than putting in 10 Bitcoin in Ave and borrowing you know half a million dollars against it right like it's like but that this kind of I this attempt to kind of blur these lines but now I think what you're saying is much more palatable in terms of this acting as middleware right for maybe mortgages or lines of credit or something like that to interface with the end user or the end trading firm or the end institution right I mean that's basically what figures done like right yeah more foe in these other players still have to do it but you know figure has 300 originators on the platform they're selling off loans that originate on the platform via an auction on on the underlying exchange I mean I have questions

52:27as to like do you need distributed ledger technology to do this thank you but but the point is that like this is the direction that credit is going with very like confidence and like to your point on on one hand I'm optimistic about on chain credit on the other hand I am quite frustrated with the speed at which teams have been iterating on product design and at like 2021 look at the same as what what these credit protocols look like today yeah not not to speak about anyone in particular but like the over cloud or lies peer to pool utilization based interest rate model that's what we have today that was created much before 2021 like the the versions that are being used today are the ones that were were created 2021 and so like on one hand I'm optimistic on the other hand I look at FinTech credit players in the traditional markets and see kind of how fast they're iterating and the products they're building and I it makes me concerned for like the speed at which these

53:28companies that are like participating in crypto are moving at like that's that's the only other dynamic that I'd share which is like I'm optimistic on on this general theme I think that like this is a competition and ultimately the competition is not like Ave versus Morpho I think it is in the context of who has share on chain and who's like playing for this like 200 million dollar revenue opportunity of over collateralized margin loans against crypto assets but that's just not an interesting game to play it's a game that like stands the revenue to be used to then build something big but yeah we definitely need to see it proliferate in order to place like a high probability on it and make it impactful as to whether we're going to buy a company based on it so I have my bullish views and like it's more of like a long-term view but as far as like how we act on that and in the fund it's it's a bit less forward looking but I think you have to have this type of bias in order to understand why things trade the way that they do and why those things might be correctly price

54:29I mean if you don't have this bias then they're obviously over value now I like I like the thesis I think it's it makes sense to me like I will see but one note I mean you kind of said this but like one note on the speed of iteration is like that does to me indicate it's a little bit I don't know saddening I don't think that's the right word but it does kind of indicate the degree to which crypto is siloed and what lending is used for I mean there like why hasn't you know Ave or I know I want to throw anybody under the bus but like why haven't these products iterated well because 90% of users are using them to borrow against the stuff they already have and then go and loop it a thousand times or you know earn the play Ponzi games everywhere so like that there's been no demand for you know can you finance this house of this brownstone I'd like to buy in New York and you guys are the middleware for this that's not what crypto people are doing right so like I wouldn't stand you know what I mean and but anyways to your point I see just an aggregation of

55:30capital and a lower cost capital on chain as we see now it's wild the rates that people are willing to accept on his platforms for lending dollars it kind of bewilders me actually but the point being yeah it does seem like you know you can have a lower cost to to borrow and if that's aggregate surely there's some efficiencies there just one one last point on this like the green shoots and like why wrote this article and decided to release it like the market's getting so pessimistic that I feel like I have to be the one that's optimistic now which is a big change of since the last four years but the other thing is like in again to your point a lot of it is looping and like lower or like less interesting activities but if you look at the percent of tokenized assets that act as collateral on these lending platforms it's increasing at a pretty high rate like Camino for example I think more than half of the collateral asset base on the platform is tokenized assets a lot of it is prime which is like a warehouse for Helox but I mean

56:31that's that's a valid product it's earning 8% those Helox are somewhat low risk just based on my understanding of figures underwriting standards and so figures able to source marginal demand their capital base and they don't have to go to a bank to get a line of credit and this is like slightly cheaper than I mean I think that that is showing what could be and but yeah there are a lot of questions I think like we need to add KYC I think we need to add this legal layer I think that it's it's good that we've gotten a triparty agreements with custodians that are hooked up into these protocols because I think that's probably necessary but yeah there's a lot of more work to do and I think like one of sorry what is what is Camino making on that partnership there like what does their take rate there they they haven't buy market they they have like a take rate on interest generated and so I don't know what it is on prime but it's most likely about 10% when so if like people that are borrowing against prime are paying 6% on their 8% yielding asset

57:33then Camino is making six 60 dips yeah so it's probably like a a few million dollars annualized I just don't a prime market so it's it's not like a massive amount but it's just to say like we are transitioning through a concept yeah yes we are we definitely have some pilots improved concepts and I think we'll continue to see them like I I have decent insight into like the the pipeline of tokenized assets coming on chain and it is encouraging like I think there's still a lot of work to do on like the legal structuring like a lot of the issues of I have today is that everybody's building for a permissionless and like there's no way to like confer legal rights in a permissionless manner and so you then have these tokens that like represent assets but don't actually represent ownership in the asset and so then like if I want to own them I'm going to go to the company and like get an actual legal agreement between us before I like buy the asset so kind of defeats the purpose but I think this is all a function of like people trying to build for the existing non-KYC market whereas like if you add KYC and you add legal tech where like if I deposit

58:35I've assigned a form and that issue goes away and then you actually have the ability to have legal recourse just by owning the underlying asset so I think like there are you know marginal developments I need to take place but I am encouraged and but I think the issues that I see today is that like some of the activity is still building towards a world that is slowly becoming less relevant as opposed to the world that likely will become more relevant that makes sense okay so I remember Felipe's and I don't know when this was but there's like this piece that's subsequently passed around quite a bit it's like internet I was like the precursor internet capital markets there's like one of the inspirations for internet capital markets like internet finance and yeah I remember like I had a discussion with him at the time so it like seems quite inspiring I suppose you're you're the cynical partner in the firm so that's why I have you on a set of him to give us a bunch of you know Utopia but okay one aspect of this is early stage financing

59:36of companies you guys have since taken a position in Mededal I see Felipe talk a lot about Mededal to talk to me about maybe just this vertical specifically early stage very early pre pre pre anything stage financing for companies and yeah we just maybe start there I have more questions but obviously Mededal being the inspiration for this question so I I'm definitely not an expert on early stage financing I think like there are a couple of cobweuts all initially give one is like I have questions if not doubts around like early like early stage companies being public so I think it adds like a lot more complexity than it's potentially worth in many cases so like let me just preface with that yeah these I think that's like probably and be the largest pushback to like Mededal is just does this fun eventually makes sense for helping people raise capital but again I think it gets into like global markets and accessibility to liquidity and so I think like the way that we got to to Mededal outside of our view of the team which I mean we're very happy

1:00:43with profit and coal and I think they're doing great job is that we are token investors and token market has a lot of issues and one of the issues that we see is on the legal ownership rights and like this may be solved by tokenized equity or changes of regulation but that has to be seen and so today I think we need like a stop gap measure and and there are a lot of like initial things that can be added to reduce the risks of like being rugged to token holders and so Mededal is essentially trying to solve this problem and that's why we're excited because we recognize how large a problem is for us and a lot of other funds that we speak to and so like for example just like having an allowance on the treasury and for like a team that raises millions of dollars where every month they are not able to just pull the entire treasury out and run away they're forced to have a certain amount of money that they can access and if they want more money

1:01:43they can put up like a vote that is one way to reduce the cost of capital for capital providers you know you have this futarchy mechanism on top which I mean it's it's complicated and it definitely causes difficulties with telling the Mededal story from first principles but the goal of the futarchy mechanism is just to enforce that the decisions that are being made for a company the North Star is just the value of the companies going up by those decisions and futar use way that they're enforced and in that that makes sense to an objective function I think like there's naturally tail cases with that objective function I acknowledge it I'd rather not like spend too much of the time there but yeah at least today I think that the early stage venture funding market has been capital abundant and therefore you don't have this capital constraint that then forces people to find ways to to finance themselves but we're definitely moving towards a more capital constraint market like I just see it on on the venture fund side and like people are going out of business

1:02:44maybe that means there will be less companies that want to raise capital but more likely it means that there will be more companies that are unable to raise capital and so then they're going to seek a way to raise capital build their business and Mededal was going to be one of those sources for people to raise capital it comes with its own side of trade-offs but ultimately it is an opportunity for a company that wants to raise capital to do so in a slightly more convenient than trying to raise from venture funds and like the two examples I'll give is like one emerging market founders founders are not based in the US or like based in jurisdictions that don't have vibrant venture ecosystems that's like one area that you're going to have founders from and then the others founders that are building something where they need like an initial cohort of users and see the value of like the reflexivity that comes from watching a token and the example I give there is a VG like without getting into the details on a VG's market positioning they are in on-chain new bank kind of similar to etherify they have a credit card and attached to a stablecoin

1:03:48wallet then they got the first thousand or so daily actives from launching their token which created a discovery function for the market and then that got people to use their product and without that I'm not sure whether they would have gotten the initial early users to kind of build from there and so I think metadata is subject to adverse selection in its earliest form because like there are questions on mechanism there are alternative ones of fundraising like all these different reasons that adverse selection is almost a guarantee for the platform but as long as it has good use cases like there are occasionally teams that are high quality that use it and those teams have good outcomes and the bad outcomes that come from teams that use it in a furious capacity is limited from the underlying mechanism design I think that it's a good way for natural selection to take place within the venture markets and not like if you have like a thousand teams all launched on vetted out I'd imagine that 50% plus are going to get liquidated over a few month period and I imagine

1:04:51the 50% that don't are in general higher quality business is one that one's that do and so then becomes a question of like is it worth people's time to play this game and I think given the state of the current token markets today it is but mostly because of how bad token markets have become as far as like the rug risk of investing in tokens like we we do that every day and at this point like we have our company assigned legal contracts with us to make material representations and like we're we also try to get them to make statements publicly similar to Morpho but even that isn't necessarily enough in many cases and so I think that like the other aspect amount of doubt not to like over intellectualize that are compared to hyper liquid is just the counter positioning exercise that's taking against the previous state of the crypto market and that could be a fruitful exercise it's definitely created an early set of oil users I would say there's like 80 to 100 people that are essentially like a cult within the future of the community and they generally are like not randoms

1:05:53yeah so I eat that a hundred trillion so yeah I don't know big else stop there but like in general so there's two things there's two separate things within metadata and I guess one question I have is well it's not clear to me they're like that related one which is a launch pad effectively okay maybe it has some like you said also by the way I've talked powerful before so like I have some context although I think they have changed and or added some you know some direction since then so I don't have I haven't followed as closely with that said there's this launch pad basically maybe that's a big of a condescending term but anyways there's a launch pad portion of it and then there's the few turkey component whereby incorrect if I'm wrong on any of this metadata partners with projects some of them more established for example I think Gido right doesn't Gido use metadata yes no okay okay I'm just making sure because I couldn't remember if it was Gido or

1:06:53I know one of the more established on a project one thing I'm curious about is what what is the value and I'm not saying there's not any but what is the value of like Gido using metadata versus just doing this in-house like that's one thing I haven't fully understood what is the value proposition of metadata organizing and facilitating this few target component why doesn't Gido just do this on Gido's website like what is the metadata aspect of that I mean they could I think it gets into the question of like a lot of different decisions that people make to using service writers versus building in-house like cost to them versus cost to build and cost to maintain like ultimately like the basic mechanism of few turkey is somewhat simple so you could fork the code but then the question becomes like are there going to be continuous iterations that are made by a team dedicated to it that can then like spread out the cost of those innovations across all the teams that are using it and so like that's that's the part where it becomes less

1:07:57clear whether you want to build in-house and then also like Gido isn't paying ultimately like if you want to use metadata the traders are paying and so it's no cost to to Gido using it and so yeah if metadata started charging Gido I think it's a it's a different conversation and also I don't think Gido is using it for all governance I'm bit used for a couple of governance votes but yeah I don't necessarily want to like steal man to our the argument for like why you would build this in-house versus like use metadata because for this specific thing it's not like it's making that much money for metadata so it's not necessarily like a great business opportunity for someone to build in-house but like there are a bunch of like marginal metadata updates that have occurred that if you forked metadata a year ago you'd probably have to fork it again and then it just comes a question like is it really worth doing that if it doesn't cost you anything to do and that like future key and for example was one thing necessary to create better liquidity for the like decision markets that were being created and that was an AM product that they built

1:08:58in-house it's not to say you can't just fork that as well but again like it's it's a free product to Gido and there is product design that continues to occur so that's kind of my initial inclination is to like why they're they're not going to just build this in-house but they could they definitely yeah obviously I have you know as someone who's fairly non-technical and had a cynical you know view on the ease of launching crypto protocols for quite some time like obviously I'm very far on the spectrum like why don't they just make that like a plug-in you know that's like my initial thought about everything even when there's like some you know massive project I'm like well I think Robin who can just like make that up plug-in you know what I mean so like this is why oftentimes I have these and the fact of matter is like it's a character defective mind but it's because of being hardened for years of looking at crypto stuff and be like yo guys this is not worth what you think it is I promise you it's not what you know what I mean so like that's the same bias as you and so like that's why I think for for metadata specifically it's one of those things where like it still is an early stage company and like it doesn't have the competitive notes that is needed to

1:10:03have like a articulate version as to why they can monetize this specific product without having some question from their users on like five versus build but I think that the team's smart enough to understand this dynamic and that's like partially what informed them going into the launch pad side of things and that like they influence these things on day one and also they can help companies raise capital and that is something that people wouldn't pay a lot of money for are you excited about prediction markets do you have any I don't know I'm asking earnestly like thoughts on prediction markets I have like the most consensus take of anything I think then that like on one hand I hate the marketing that call she has I find incredibly offensive like I'm not Instagram and I like these like sponsored ads where they're telling me like you can gamble on the weather and pay your rent so like that that's like one side of things that like I just like the marketing I think that like it right now the majority of the activity sports gambling and like I think that everybody is pretending like it's not and throwing a fit that like it's an investor in these companies to like explain why they're the future and like on the same hand or on

1:11:07the other hand like I agree that prediction markets are probably going to continue to proliferate and are quite impactful and like actually do you have benefits to like traditional sports books models and that like they create an exchange versus like you training against one player the counter that is that like call she is taking the other side of all these bets supposed to like their market makers yeah but also like I mean this was the original vision but now you see take your speed bumps which is fair like to be clear if you want deep liquid markets right like you can't have people core siding and this was a real problem by the way with it like early on when sports betting was becoming more popular on prediction markets like there was a lot of of course I didn't so but I mean that does like some of these preferences for market makers do start to lean toward referencing a certain group which in my opinion nullifies some of the peer-to-peer ideas and the fact of the matter is real market makers don't provide liquidity in markets where they don't have an edge like this is the and so you can get these little event markets but

1:12:15in reality yeah it's I don't know like I the only reason sorry the only reason I'd like to start thinking about this is because I remember the banclists I remember I was doing a banclist episode about holy market and I thought that some of the like peer-to-peer idea which sounded so utopian and idealized is not exactly how it works and is definitely not how it's going to work in the future if you really do want you know market makers in like deep liquidity so this is a little bit naive I think but yeah I mean there should be lower rate like if you just think about this at a very simplified level which in some ways I'm probably thinking about two simplified level but like when you have peer-to-peer markets like this yeah I mean probably market doesn't charge a few right now but we'll see going forward maybe on their US app like probably you know don't monetize in some way and but in any case yeah a peer-to-peer market shouldn't have 10% like 10% lines across the board right it should be lower than that we'll see where that converges I agree yeah and like I

1:13:20I don't think that like you lower the cost in the airport like this is a ground wrickening up so I'm not even necessarily suggesting that like this is some incredible improvement relative to sports betting today and like ultimately I think the value prediction markets is what the like people that are investing in it are saying it just remains to be or remains to be seeing how large of market opportunity that is and like what gives you have to have in order to like proliferate that market to your point on like speed bumps for example like making markets on a binary option market sounds like the worst thing in the world and on a market maker but I just it sounds terrible I don't see how you do it effectively right but I think like some people are printed on those and then a lot of people yeah I think a lot of people are getting wrecked but I think yeah I mean like you can make binary option markets when you have like a hudging market so like the five-minute markets like Bitcoin price that I understand like you use options but like the point is for like making markets on I don't know like choose your

1:14:20oh yeah yeah yeah you'll start a cool then it's like there is no making a market there there is like a fundamental view that you can have on both sides of the book but like ultimately there's no real way to like offset your risk the fact that like these things settle at zero or one is quite dangerous for market makers towards the point settlement for sure yeah also the other thing is that there are ways that trading firms obviously express views that don't like you could have expressed a view on Trump right without betting directly into and like oil futures this type of stuff where there's some yeah I think a lot of the proponents right like a lot of the investors are quite keen on how much information this can bring to market there there already are a lot of ways to express these and like with futures and whatnot and so yeah it'll be interesting to see but I think yeah I think you want to like distill down the markets into the most simple forums to express

1:15:21views on in today like there are complex ways to express views but ultimately prediction markets make it very easy to understand the exact that they were making like the easiest examples like investing in equities like we're building out assumptions on all these different dynamics maybe I'd prefer just to predict like whether the market is going to grow as opposed to like market growth plus this company having market share take rate etc and the other thing is like I do think that like conditional markets like Trump BTC through the election are probably going to find product market fit down the line TBD on like what that's worth I think like you know the 10 billion dollar valuations that call she and probably market trade out aren't good like they're good exits they're not good entries but these are all questions that I have and I'm not like nearly as informed on like the intricacies of the dynamics versus their investors but I think that like the markets are very well understood at this point as far as like the negatives that are clear today as well as some of like the inaccuracies of views about the the upside of the future but also that some of

1:16:25the views of the future like the value that this could provide for information to the broader world being you know potentially large very good well no always a pleasure yeah thanks to coming on fantastic what is your twitter's like know a trader I think it's greater know or you're know it's right at true or no and then check out well enough you're allowed to market it but check out the uh there so thanks thank you thank you