Robinhood Is Proving Distribution Captures Crypto’s Value | Weekly Roundup

0:00Nothing said on Empire is a recommendation to buy or sell any investments or products. Can't believe we are taking an hour of our time where we can be focused, laser focus on sniping the next runner on FOMO. What's going on? The world that feels like where it should be, if you're not in the trenches, you should be in the trenches. This is the first and last and only opportunity to build generational wealth on the next bone or coin. I cannot say that I have ever been in the trenches, to be honest. That is not a thing that people have ever said about me, but it does feel like there's a little bit of resurgence happening on Robin Hood chain right now. A little bit. I mean, Robin Hood is likely going to double revenue, top line, and maybe two to three X profits if it continues at this clip, right? I mean, it's over the last seven days, Robin Hood chain has generated, if you're over the last seven days, someone did the math, if you run

1:03rate that, which you should never just extrapolate based on seven days of activity, but it feels like every day has just been incrementally stronger than the last year call close to 700-800 million of revenue and 90% margin. Robin Hood has many business lines with over 100 million revenue, none with 90% margin. The stock is up 15% today. It's almost doubled from its high, from its low of 68 last. It's close to a hundred-billion dollar business, still a third of Ethereum, ladies and gentlemen. Robin Hood chain is built on Ethereum, on Arbitrum. Arbitrum's also having a nice day. I mean, all the tokens are in this day today. All the tokens are having a nice day. Is that just a macro? How much of it is just factor macro versus specific? Do you think that the market has fully appreciated what Robin Hood chain might do to Robin Hood's business model?

2:06I mean, it was very clear before today. I mean, Robin Hood has been trading relatively anonymically relative to the rest of the market. The equity market has been pretty sideways to a little bit down over the last month. Just basically macro fear, like continued aggression in Iran. This thing that's happening right now between Treasury and the Fed on trying to figure out how we're going to control the yield curve. So we're in this sort of this weird macro environment from an equity perspective. But it's a Robin Hood was trading relative to the sentiment of the rest of the equity market. And then today, you talked about it, right? We just got halted over 15%. Clearly, people are starting to look at these trailing numbers that you just talked about. I think I did 4.7 million of fees yesterday. So my end was that one day, I'm talking about almost 1.7 billion of revenue. So the meme coin trenches,

3:06they go up and they come down super quickly. But it's very clear that this has been another big win for Robin Hood. In fairness, I don't think they come down quite a bit. I mean, this is a big criticism of pump. But if you look at what happened over the last, I mean, we talked about in the last podcast, like the meme coin phenomenon, yes, prices are extremely volatile. But if you factor in like just the amount of new issuance happening, what I think is really novel specifically about Robin Hood is this new kind of paradigm around meme coins that are backed by an underlying token? That's when people ask what I think is really going to probably surpass all kinds of volume and activity that you've had historically in meme coins. Like, if you look at Solana 20, what was that 2023, 2024 or 2024, 25, like you had with and bonk, you didn't have this token, I stock like now some of the biggest runners have been obviously ponds, which is the launch pad called the pump fund equivalent and Robin Hood chain. That's now close to 500

4:12million. It's doing more fees than pump and some of the other launch, I mean, it's just incredible. It's sort of the highest beta greatest benefactor of all this activity. That's been an outlier success. You've also had AI, which is artificial in new, that's close to like 240 million and market cap. Big runner. The interesting thing about you know, you know, I, I mean, forever and that's I'm, I am, I credit most of my success, you got to be on the trenches. Like, when I was a pair of five on the trenches in D5, I don't think there was an organization that yield far more than we did. But you, and others, you guys know that I mean, directly both investment, paraphernal. And in this case, yeah, with WIFT and so on, in this case, I find it quite interesting. So you had artificially new, you've had like Mars coin, you've had some of the others, there are backed by stocks, like SpaceX is Mars coin, artificial news and video, you had memory

5:18move, of course, micron. And so you have these runner, these meme coins that are backed by tokenized stocks. I want to get your take on that. Do you see a world where that captures most of the activity and what does that mean for tokenized stocks? Like that, that feels to me much more net positive than a lot of the criticisms about mean coins. There's, there's nothing really of value here. And there's this paperware, but now it's like, Oh, interesting, you're buying versions of tokenized stocks and sort of like that to me feels more net positive. Oh, I think it's a huge net negative. They're negative. Yeah, so, so here's why I'll tell you. So, so you do, people are doing this thing for people who don't listen or remain not be aware, but essentially like you, you pair the a meme coin. So, boner is the meme coin for hymns, the stock that, you know, where they do sort of like delivery medicine. And a lot of it is, you know, kind of a reptile dysfunction medicine.

6:23And it's basically they try to pair that one token equals one share. And so what ends up happening is people are especially in off hours, people are buying the token a lot. The buying token during on hours too, but during on hours and an AP and authorized participant can mint a new share of hymns for every time a new a new token is bought and comes out of the pool. And so they because they can mint that new share during that period of time, you can keep the peg like one share to one, one token. But in off hours, when the authorized participants, the market makers cannot actually mint a new token, or certainly see this big dislocation happening between the price of the of the underlying equity and of the the meme coin. And so then you have a huge sort of like deepagging that happens. And then when markets open back up, a big collapse or we pack. And the idea here is that like, you know, in a for if you're the a meme coin trader, if you're holding it during this, you know, deepag period, you're losing in like US dollar value, but you're you've still

7:29potentially, you know, you've got the wins in terms of like the the equity value. And the idea is like they're trying to like drive up like the price of of the equity over time, especially when like the equity that has that has like high short interest. It's very early. So like the volumes don't matter enough yet for for that equity. But the reason I think it's a huge net negative is because if there's one thing that market regulators really dislike or really focused on is they're focused on what they could market integrity, right? And if they believe that there is something that is maybe on tour that is being done that is market manipulation that is not somebody who is actually trying to trade for price discovery reasons, right? Then there's a potential that we get a lot of unhappy regulators who try to step in and disallow this from happening or also just say that hey, the meme coins themselves are equity derivatives. And because they are equity derivatives, they need to be regulated as such. And they are unregulated products right now, which means that

8:32and if they're equity derivatives and they need to be regulated as such, then they may, especially if it's US participants are buying them, then they would need to be KYC AML at a DCM to go to it. Right? So I actually believe or and I actually believe frankly that this is a bad from a regulatory perspective in terms of the way that the regulators might look at what is happening in tokenized equities or broadly. It's not big enough to matter right now. It's sort of just like a thing that's happening in kind of the Twitter sphere. But if I think the people in the trenches get their way, it will be big enough to matter. Yeah, I know I see your argument. I want to make something clear because it's not that like AI, which is this artificial and new is backed by Nvidia stock. It's just sort of the mechanism is not, I don't think it's correct to just say it's the it's not like the underlying is an Nvidia stock, right? Is Robinhood stock as I understand it? Let me know if

9:34where I'm wrong here, but which I think matters to the argument you're making. It is a derivative. It's kind of like the way I think about it is it's path dependent like like you have a pool as I understand it. There's a token, the meme token, there's an mm pool and that's there's a sort of a relationship between the tokenized version of the stock and the meme coin and then there's sort of an LP pool and there could be fluctuations between the two. Like happened in this week and there was a huge demand for this boner coin on launch on Robinhood and there was a pool between the boner, meme coin and hymns of course markets are not open on the weekend and you had I think the if you were to try to redeem that the underlying the implied price of hymns over the weekend was like 100 plus box. It closed on Friday at like 20 ish. So there was a huge wick there and an imbalance in the pool because you had way more demand for the meme coin

10:38and you couldn't have like there weren't enough. I think the issue was there weren't enough. There was too much demand for the meme coin. There wasn't enough tokenized stock and Robinhood to absorb that. Yeah you have to issue more. So come Monday what happens is Robinhood finds and issues more tokenized version of hymns. So the market maker, the authorize participant goes and through Robinhood and through you know call it the US broker dealer. It's like an entity that sits in between but there's like an foreign entity at the US and they go and buy through the broker dealer more shares to tokenize to rebalance the pool. So then it brings the price back to where it's supposed to be. So you're right in so much is that it's not like the tracking repagged. Yeah but it's not it's not maybe my language really was a little too imprecise but you have to balance the pool and so that relationship exists that when you are buying a bunch of the

11:45meme coin in the pool and it gets you have to be able to rebalance the pool to be able to keep the price relationship appropriate. And so like listen it's complicated and I think if you were to talk to like the regulators themselves about it and you were say okay like this is how it works from a mechanical level is it like clear that it's like definitely an equity derivative like obviously not right. But I think the the likelihood that there are people who will see this happening if it starts to affect the price of the equity's markets at open will they will take notice and they will do something about it. I would be almost certain about it. The same way that we had all of these hearings about what happened when there was the short squeeze on you know back on GameStop all the way back in 2021 and there was a lot of people who wanted to charge a lot of people with crimes around market manipulation right. And so whether or not it is like a clear that this is like a

12:49it's Vincent's like a bucket very neatly. I do think it is something which if people get their way will be something that the regulators will not like right and the people who are focused on market integrity will not. Yeah. It's like it's fine for the moment and I don't mean to be like a web blanket or whatever and like you know people are are having fun and making money and all that kind of stuff but I don't think we are doing ourselves any favors nor I don't know what do I think Robin Hood is doing themselves any favors on a regulatory side obviously like you know they're making some money on this like maybe they don't care. Yeah I think the I can understand your criticism around like the imbalance especially on the weekend which has always been the issue of tokenized stocks and the reason why you just need to build it was always an issue regardless of what mean coins existing or not. I do think the benefit of this is you just get more market makers more infrastructure on the weekend more liquidity to to great better price discovery and this is just a catalyzing force.

13:50But you can't right like like the only way it works today where you can get better price discovery on the weekends is that somebody holds a ton of inventory. Correct. Yeah. That's what I'm saying but wouldn't that incentivize someone to take that inventory if you're seeing a lot of demand for the uh it's uh over the weekend. The market makers don't want to hold they don't want to hold inventory on volatile assets over the over over the weekends because they can't the market makers themselves can't head yeah they can't hedge it over the weekends like this is the problem with 24 seven on-chain markets for the tokenized equities. You uh I wrote a long post about this when Robin Hood kind of announced this uh last July so not not a couple months ago but you know 14 months ago about how like these products as they are designed today I do not believe can scale to like regular market uh size right they you know they're sort of uh you know they're obviously scaling and they're kind of up to the right and everyone's super excited about it but it's diminimized size in terms of you know regular equity markets even regular brokers etc and the you have to solve the problem of getting someone willing to take the risk of especially

14:58volatile assets over a long weekend and if you can't hedge they won't do it and so what's happened right now where it's worked in some cases is that the exchanges who are benefiting from have held a bunch of inventory so like you know uh whatever like like a crack in who owns X stocks will be willing to take that balance sheet risk because and they will hold you know X amount of inventory over the weekend because it's because they're incentivized to try to grow this market and I think we'll see maybe like Robin Hood's broker DeRue will decide to take balance sheet risk and do some of that in the near term then again that doesn't scale uh over time and so it there's a real like technical infrastructure problem today about how these 24-7 tokenized equity markets work on ship but look for the foreseeable future it sounds like markets are just kind of continue to be nine to five Monday through Friday maybe and I think we'll get 24-5 in the next like nine months uh but I don't think we'll get weekends for a while yeah I do think this gets solved

15:59eventually it sounds like you have your argument is more like look this is the problem with tokenized stocks not that you know an LP pool with a bunch of mean coins just created this problem overnight tokenized stocks would have had this problem regardless of whether you had these LP pools so I think what the what argument might Robin Hood make in front of the regulator because they probably thought about this quite a bit I think they might have said look um yes we're aware that there's all this activity happening in our chain the benefit of this is this incentivizes people that might come in through and buying a mean coin to eventually hold tokenized versions of stocks whether you have an argument with tokenized stocks different discussion but if we agree that like this the the wrapper itself is sound the counterparty risk is sound it's regulated Robin Hood is a regular your financial institution you sort of could get comfortable with this this is like the trump account so you want to incentivize people to hold stocks and participate in

17:01economic growth then um I know and I know it might feel like a like a stretching the argument I'm just putting myself in the shoes of how Robin Hood might present it when when facing scrutiny because because of these wild fluctuations over the weekend I think that's probably their biggest and strongest argument is this is going to be a positive force to incentivize people to hold stock and whether you want to really make that distinction between tokenized and non tokenized versions of stocks separate discussion but I mean specifically what I'm just going to say is like this is market infrastructure it's new it's novel like you know we're dealing with like the campaigns right now it's permissionless blockchain people are able to launch whatever they want and the the way these automated market makers work and these pools work is that like you have to be able to balance the liquidity it's just new and novel market infrastructure we're not doing anything wrong they're not you need to know where the people who actually have more risk probably than Robin Hood are like people who are like coordinating these things and if they're tweeting about them and they're saying hey

18:02let's do this thing to create this thing well now looks like you're buying this for market manipulation reasons versus others so if there are like yeah well this is this is Wall Street bets right like Kirby what is it the the game stop phenomenon I mean he obviously went and got there was issues and concerns are on market manipulation I think they cleared it right it was just like yeah but I think this would be a little bit murkier than that considering the fact that it requires like buying a like what could be seen as an equity derivative to that is not regulated to then go and and try to change the price of something that is regulated and and be especially if you're non k by seed and that's where the question will come in for Robin Hood as well but my my all hold the same argument that I you would have heard me say when Solana had the meme coin surge was it meme coins were a mechanism to stress as the infrastructure and then pave the way for now it's

19:03like on the blockchain that was if you remember back a couple years ago where bonk and whiff and were all the rage you really stress test the tech and it was very lucrative for protocols like Solana itself but also pump and others to really just work through this and I also think it's the same as will be true for tokenized stocks that kind of didn't go didn't get as much liquidity out of the gate and this new mechanism of LP pools that are tried and true with uniswap right you have this invariant and you have a relation between two assets will serve as a way to power through and bring in a bunch of market makers and financial and market structure to support tokenized stocks and I think that because that is like the most positive thing that will come out of this in my opinion there will I think if the regulator would have really have objections with this

20:04you end up going down a path of having issues with uniswap having issues with defy LP pools in general I don't think that this it's a tokenized stock market structure issue right then versus it is like any of the actual like like the AMM's are not a problem the the DeFi protocols are not a problem the it's do your point of view there it's a tokenized stock problem and then it's a like okay well are there people trying to manipulate the equity markets using these things yes those are the problems yeah yeah I agree with that but in any case just to wrap this part very encouraging it's there's a lot of people now back on the trenches one of the things that I keep thinking about is what might be the well well a couple things what what are the like where will we end the year in terms of active users on chain and do you actually want to count the Robinhood users trading on Robinhood chain as true like on chain users I think it's still for sure like category the point I want okay the point I'm trying to make is what Lorenzo at arc has

21:08done really good analysis around is the the the fee accrual to Robinhood versus Arbitrum versus Ethereum I think I think is going to be a big topic of conversation especially among the core devs and the Ethereum foundation and some of the like etherealized and some of these factions that have resisted for a really long time to increase fees in many ways it's going backwards right like Ethereum L1 is capturing less and less fees out of the growth in activity and Robinhood and Arbitrum and I think that that eventually will break I think eventually like like EIP 1559 it was super contested very heavily discussed we're we're going to end this over the next six 12 months and I think the proposal to increase fees in Ethereum L1 is going to be a major topic of conversation I might see Ethereum community welcome to token 2049 token 2049 is back October 7th and 8th bringing together 25,000 attendees 300 speakers and 500 exhibitors for the world's largest crypto event

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23:17blockworks 15 and ahead of the summit you can track Avalanche tokenized equities alongside tokenized treasuries and their growing footprint on Avalanche see the data for yourself with blockworks researches Avalanche dashboard and don't forget to join us in New York City for Avalanche summit yeah I don't I don't disagree with that at all it is a I mean it's very clear like you know the people actually on distribution are the ones that are that are currently must have valued today I think your point around or the question that you posed around like are these like real launching users like this is the world we're going into right like everyone is focused on bringing non-cryptonative users into using better financial products that are built on blockchains I mean even some of the most crypto native products like in Athena today or this week launched Athena pay a you know a neobank focused on non I mean they're obviously going to start the crypto

24:20native users but eventually focus on trying to serve non-cryptonatives as well right and that is what everybody is focused on and I mean even Robinhood we talked about this in the past like what are they doing they're taking their ingrained distribution their ability to market and they're distributing later and they're distributing Athena and they're distributing more foe right like they are distributing these products that are are on chain defi native products and so I think very clearly this is the future we're going to do this is the you know the defi mullet we've all talked about for a period of time yeah yeah definitely I I want to post something here to make it very abundantly clear what this relationship that we're talking about which Lorenzo from Mark has posted it should go up in the screen in a minute but like you know to give you a sense of the relationship when we talk about Robinhood and the activity there you know Ethereum has cut its L1 data posting costs quite substantially like it was initially like

25:230.5 percent you know August 22nd and then by August 30th the percentage of fees that it captured was a 0.014 percent that to me doesn't sound like fat protocol at all and I think it's just most people would agree probably including Robinhood that the percentage that they're paying maybe not so much arbitrage from but certainly Ethereum and I don't know probably that conversation sits more with I don't think Robinhood is more at risk here I think it's probably the number that gets distributed more evenly is the share between the L2 and the L1 here but and Vitag is sort of hinted at that earlier this year but I don't know how you get this across the line to be honest but it is it is bleak for the L1 it doesn't it doesn't feel like it's properly compensated it reminds me a lot of like just to to me Ethereum feels a lot like Cisco or some of these massive internet like

26:24giants back in like the 90s that like just never really recovered just to get but you know still maybe maybe maybe but like you know just just numbers wise like is there a version of this world where an L2 captures more aggregate fees in the L1 like arbitrage from my post a billion my post of a hundred million in fees this year or more depends on where Robinhood goes right of it if this 10% relationship you talk about run rating Robinhood's numbers say Robinhood does billion or two in fees over the next 12 months arbitrum is going to take its 10% well that's a hundred a 200 million in fees for arbitrum and you know it's a billion dollar protocol today and Ethereum was going to capture you know a million dollars of that less that's crazy you know in many ways I think I don't want to you know continue to be a bear on like Geath itself but it's hard to justify a 300 billion dollar valuation like something's got to give Rob like again

27:27Robinhood is currently a hundred twenty billion dollar asset arbitrum is a billion if you're in 300 the least you want to own whether you want to you know whether you want to debate whether arbitrum to Robinhood is a is a better trade certainly I think we both agree that ETH is not the best trade in this in this out of the three up 34% last month ETH yeah well you know um fees are relevant I know bull market I guess um all right well let's move on from this topic of conversation you mentioned Athena tell us about the by now pay never all that we just have by now pay later as by now pay never which I yeah it's a reclutter uh so yeah maybe maybe more broadly uh on Athena and so uh Athena historically as everyone knows started as a you know kind of a synthetic dollar it was um mostly getting uh basically passing along yield uh or you know

28:29call it some interest or staking rewards uh back to the um end holder of USD if they staked their USD uh and locked it up for a period of time that uh those rewards were mostly funded by the the basis trade so it was essentially like you know um everyone has a space trade or I think a lot of the the listeners do but you go uh long the spot you go short the future and you you collect a funding rate but you're essentially dealt a neutral to any you know price movement um for a long period of time in crypto so the basis on you know Bitcoin or ETH or uh you know those are really the only two you could really do in size maybe salon out a little bit uh would especially during like ball runs would like really blow out I think at one point the basis trade uh was like over 60% uh just a couple of years ago right in terms of like what that was actually um not funding people and so uh you know they've sensed on a lot of work to diversify their holding base as the basis

29:36returns have come down so now they're doing basis on equities or they're working through that right now they're also doing uh which has more of a positive skew as well so that's you know it doesn't kind of take off in the same way but has a more positive skew because it's less volatile uh it also they're doing um they're backing more of the USD with uh essentially on chain treasuries with Biddle uh also doing something with Jay AAA which is uh Janice Henderson's um uh sort of CLO tokenized product as well and then they're doing now some like collateralized over collateralized lending with um i started with Falcon X and i'm sure we'll be doing others uh and so they've been kind of increasing the ways of which um people use uh USD and the backing of USD to try to be like less crypto native and to you know kind of take advantage of of all types of market cycles as well and then the thing that they've been working on for a long period of time uh which they they announced really this week which Athena pay and so Athena pay is um essentially like a NEO bank

30:39you know for people listen to this you probably have heard of like cast or etherify or you know even some of the non-crypto native ones like a red dot pay or uh uh you know arc or dollar app um uh and you know with like USD at the center of that uh uh all for a bunch of like super interesting things which includes like you know they're free on ramps and off ramps and local currency and dollars um free like movement of money inside the Athena Pay network so similar to like a like a Venmo or something like that um they're uh zero effects fee markup they're 5% cashback on a on a card that they issued through their their managing that there was a issue by rain um and 6% on on daily balances uh which is uh almost as good as x money or just like x money x 6% right uh and so um and you know in multi currency accounts which a lot of the i think the global citizens who use these things are really really looking for like multi currency

31:39i was talking to one of the other uh NEO bank uh plasma actually i'm an investor yeah both in Athena plasma they um Paul told me something that i think really struck on me it's like there's who is the customer that's gonna want this type of product i think there's a huge gap between not just like crypto people but uh this gap between like you graduate from like a revolute card and you're not there's a gap between that and then getting like a ultra like a high net worth but it there's a increasingly growing share of the market i think that feels like the prime you know it's people that are young or affluent traveling so value some of these uh perks and obviously like the convenience of just especially younger generations anytime you see a you know interact with a old school financial institution i think they have less and less patience for that but these products are just more more in tune with the times and the convenience and all that uh have you talked a guy or i think are you guys investors in plasma we're not

32:42investing in plasma we're larger investors in Athena right um what's the um i think the key metrics here that in uh we should talk to these guys or would be interesting to follow is like what's the customer acquisition cost going back to this is who are the actual users of these products what's engagement rate because it's a it's a competitive market like neo banks if i mean for every revolute there's like hundreds that don't ever reach that scale and i think broadly the fintech landscape i've noticed that even the smartest of investors in fintech are way more um skeptical jaded now for neo banks right because they'll like forget about the growth the tan they don't believe that anymore they'll like show me a way that you're going to scale is because they've been burned way too many times with like increasing like customer acquisition cost just it's hard really to scale after you know you know to get critical mass here you know it's really really really hard yet direct to consumer fintech has been really tough and it's easier than ever

33:43to launch a direct to consumer fintech today where people have found some successes like oh what we're going to do um you know some sort of affinity group or niche group that's not currently well served we're going to do you know there was obviously a lot of conversation about us dollar access and emerging markets that still continues uh but it's like it's truly a knife fight but all of that said like cast and red dot pay and you know ethar fi who were kind of some of the their early ones to this they've grown quite quickly now they all have a sort of different user bases i think for a lot of them the the insight was actually that like people who hold crypto today are at least really cast and ethar fi they're not well served with global cards and so you know they're they're they're travelers they want to spend a new installers or maybe local currency but they're they're global citizens and they hold crypto today and they want to be able to go and spend that and they just didn't have that option before before rain got their kind of global principle membership and these guys built those products on and and offer really good rewards and offer really

34:47good product and user experience author fi actually i think just launched a new version of their app that people are excited about and so like that was that was really the affinity group those guys were serving i think there is a question now you know now that plasma is there which is done uh well and i think the thingo will do quite well is like okay well how do these products go outside of just like crypto natives and like it's very clear from like in a thingy perspective i mean they they have this i think the usde is now at 40% of the stable coins on robin her chain and that's because of the you know the the the lending pool and the earning pool that they have there the same thing they have that with coinbase but um their focus and i think this is you can also say that there's been more photos focus you can also say it's been always focus um i'm sure plasma the same thing if you talk to Paul is is trying to you know kind of go outside of the people who know it because of the token because of crypto and actually start find a way to serve a you know more traditional customer base but i agree with you that like the venture investors

35:52i mean cast raised that round live by qed who's a good fintech investor arc in argentina which has been very deep in and argentina in brazil is a uh is backed by secoya and and i think they've have an unannounced round by another another large firm but they're also doing a lot of like call it smb and going up market in the same way kind of like new bank did as well um i do wonder about you know how these guys and these companies go from where they are today which are good businesses worth hundreds of millions of dollars maybe even a billion low billion dollars but to becoming like a revolute type of venture yeah i was actually i had it at it in our last night and i was sitting next to a guy who does a he invests up one of the largest hedge funds in the world cross over funds in the world uh we've known for a little bit and uh you know he was talking about all of these neo banks when we were talking about it a little bit and they haven't done any of the direct events in our neo banks and instead they put three hundred million dollars more into revolute right and they were like well

36:56like they would rush rather just kind of keep piling into the winners and it kind of goes back to the conversation we had last week i think some people took uh or not super happy about which is how like there is just this bunching of this piling into winners that people would rather do versus take some of the venture bets on you know some of the the earlier stage guys even though their job and their fund might be actually to take risk right and so i i i think a couple of these guys will do well but like to your point there's going to be hundreds of them that i don't i i've seen and share a couple deals with some of what i think for some of the best venti-convessors and um i've noticed this increased scrutiny and yes like they'd rather put money more into even new banks of the world like they're like if we can actually underwrite this better um i think Brad from altimeters at this well like the it's paid off if you are a venture investor it's been better to back series b series c companies much more advanced um because these are massive massive markets again it just goes the recurring theme we've had here is like you're attacking massive amounts of

37:59the the the tam is massive uh particularly if you're trafficking in places in Latin America and others where you just have a lot of greenfield um but it's still really hard right so i think um what uh for instance uh feel like spago raised around um i think they raised 200 million debt plus equity i think the the echo the echo is like 85-ish 85 million then they had like 116 or so from general catalyst kudos to those guys they've been doing remittances um and you know when you think about okay who are you comping this against you have remitley and remitley's their main competitor they're very nearly like it's them versus marinelli yeah and remitley's 15 12 15 billion dollar business i think with no it's two billion dollar business two yeah i believe it's two right now so it trades right i was thinking i was thinking about wise wise wise is uh 12 13 billion remitley is oh sorry i got remitley remitley remitley's half the size so you know it's 5.6 today i would think

39:02if the dilution mouth shakes out i mean these guys probably raised that like uh maybe a billion plus valuation maybe a billion and a half just like 10 percent dilution give it take do you guys look at that around uh we got to the round so i won't i won't i won't say anything am i in the right ballpark uh i should not they didn't announce it so i should not talk about it um i i think that i think the challenge is on the remittance only businesses right so we get it's only as a as a low margin you know not a great business right and so i was wrong about remitley because it's up uh it's up 51 percent in the last six months yeah and so when uh when we when we were thinking more about remittance uh it was it was yeah two to three billion dollar mean while western union continues to go down to i'm 30 percent uh when we placed that bet i think that what the market likes about these businesses is particularly i'm thinking why what's the case for backing Felix they really nail the whatsapp distribution channel uh that is very native especially for uh for uh

40:05folks that are remitting um and now they're obviously using stablecoins but they're expanding and offering other types of products which has always been the end state it's like they i think a lot big part of the proceeds for this round are uh you know going into into lending and doing other types of products right uh to to improve the unit economics i did hear it from one of the investors um it's like the unit economics are on the con which tells you they're not great right now but you're betting on big market uh a lot of greenfield opportunity and uh you know build a relationship with that customer the issue i've had with a business like this is you don't own the just like you're it's like a lot of those businesses that were built on Facebook and the Facebook marketplace i felt like cutest of the guys had backed them early but i would have probably been a bit more nervous of a business totally built on whatsapp um at a time where my new there wasn't as much regulatory clarity right when they got started but what i think what i've heard they got really right was unlike

41:06western union these guys built partnerships with local fintechs and financial institutions to um to provide this uh service so i think they partnered with new bank and they uh approach new bank and said hey local facilitate this and new bank likes it right this is just a positive growth but to your point you would rather own the institution that eventually i mean obviously it's a functional price but you would rather eventually on the the company that gets the deposit in this case new back so the question always with all the all the remittance businesses and this is why so remittly will do you know call it two to two and a half billion of of top line this year and it's a five to six billion dollar company right so you can kind of see like the types of multiples to trade them right um the the public markets have generally not given very good valuations on a relative basis to some other kind of transaction based like vintechs uh to remittance companies because the customers are of a lot less than oil generally and they do a lot more shopping around in terms of you know

42:12just you know what does the price of this effects pair look like especially if if it if it doesn't have like a like western union and moneygram are a little bit different because they have this like agent network where people have like local relationships but for like a you know like an app that is a like a digital product people just they don't they it's not something they ever pull up other than it to do the uh remittance itself and so the for the remittance companies like they've been very focused on well how do i build a better consumer relationship a better relationship with that customer and so you know we talked about it with western union where they launched that um you know that wallet product and a rain card because they want to be able to monetize that end user and they want to be able to build a better customer relationship with them remittly has also i think publicly talked about the fact that they are trying to launch a global wallet uh as well um and uh using stable coins uh and you know for a a somebody like a philix you can imagine that that's probably also the same path that they would take because they know that the remittance itself is not a great business

43:16but maybe it's a wedge into a great business yeah that's right yeah and so like that's the been the focus the public markets have not given remittly a lot of credit on being able to achieve that um and so you that's the the the question like that is the how these um remittance companies get to you know this like promised land of being a revelry or a you know a new banker or something like that but i think that's happened to a lot of these you know fintech businesses right now who are just simply hey i'm not quite sure uh what you know i have a wedge product but now how do i get a deeper relationship with that end customer and at the end of the day the deepest relationship always becomes with somebody who it's a positive positive the you know what i learned in this from in some expedition so we went and talked to privately owned like immense companies pretty big ones of all different barriers in sizes and whatnot serving different quarters because the unity to take rate on quarters is very very different the world bank if you want to go deep go look at the world bank data tells you the quarter between us india totally different than like Pakistan

44:19Dubai totally different than Mexico US some are uh very digital and those the take rate there's an absolutely crushed there's this other corridors where it's a lot of it is still cash and the take rate there's much higher because it just it requires a very different type of operation but yeah i think um to your point i do think your uh the the remittance as a wedge is an interesting thing the people seem to be excited have been excited whether it's remittly wise or now in the case Felix even though the take rate is terrible like for instance western union still takes caught on average three and a half percent because a lot of it is just a type of user that doesn't have a bank account and then it needs to deal in cash whereas like wise is like 50 bips so it's like you know a fraction of that but they're digital only so they want to serve that customer and the unit economics they're the LTV is like okay you can do something else with that customer but you know what the most interesting thing i learned about in this expedition was a lot of times remittance

45:21companies are not allowed to directly have a have a direct relationship with a payout party which is for us was a kind of it was a very big deal killer because all you want to do is give a wallet to the person in Mexico or Philippines and then you know build a wallet and then deposits but uh and keep that dollar western union is able to get away with it because of its sheer size and muscle but i know some fulfillment payout partners are not happy with that and haven't been for a while because they well it is other than a lot so there's that to be regulated in a different way correct no no the the contract that they have with a fulfillment partner does not allow them to directly target oh yeah so you don't know that from a bit so if you send money to your grandma in in in yeah yeah Mexico if you're that remitter you cannot depend depends on who you are if somebody else is fulfilling right and that's the plan by the way but you're always you're always

46:22relying on someone else to do the fulfillment for you well like rest of union doesn't in a lot of places now because they've they've built that in a lot of cases right and so the scale this is a business or scale matter scale scale scale does matter yeah but it's it's challenging nonetheless good for them you know going back to Felix you know it's a team that is hope it works I hope the unid economic show up again onboarding more users to just traffic and stablecoins I think uh so so as a big round yeah I mean they're they're great uh Manuel's a super talented you know they're further in these stablecoins they their their their product is both stablecoins and fiat and so like there are both flows there but but they're more and more pushing them to stablecoins and so and I just think that's the where the world's going and so anybody who doesn't have that infrastructure is gonna get locked behind that's right that's right um transitioning a little bit we've talked about meme coins and Robinhood chain uh there's a lot more to unpack on that dynamic we'll save it for

47:24another episode but I do think that people might be still scratching their heads and are like how does this actually work or not uh we will be I suspect we'll be covering this more and more uh I do think that um to we talk briefly on hyperliquid I mean obviously in Kraken uh sure yeah I mean it seems to be the thing people want to hyper the most so yes our resident hyperliquid expert uh I would over the rock uh but um I I might be our resident uh our our resident regulatory expert although we should you know just have like you know Rebecca uh Reddegger or something on said but listen so the there was an article that came out of Bloomberg uh I guess I don't know exactly what day that was uh it was uh whatever late last week and it was you know this had already been rumored uh by um I think mostly by China devins and some others who uh from from blockwork since some others who had been you know kind of tracking what was what was happening on chain uh but basically that you know

48:29hyperliquid was um you know looking at potentially partnering with uh payword which is the parent company of Kraken which also happens own uh bitnomial which bitnomial is a regulated DCM and and DCO uh here in the US to bring you know some hyperliquid markets uh on on chain the the story that Miguel was the uh the reporter Bloomberg I think is quite good and has been chasing hyperliquid stories for for a long time that she wrote was was mostly about um a presentation uh that uh she heard that hyperliquid had done to the CFTC on how this could work uh so not you know anything from the DC itself or the regulators itself uh which was okay well is it possible that you know Kraken's or bitnomials DCM and DCO could uh go and you know deploy markets on hyperliquid that are

49:29segregated where they are the ones that have to go do KYC AML or they're the ones that have to do DCO reporting and offer those markets to uh you know US participants who are you know uh fulfill those requirements KYC AML you know etc etc right um and that would be super interesting for hyperliquid folks because one you bring more volume to you know how hyperliquid yourself and two for any market maker that wanted to KYC AML and the on you know the the bitnomial version and then also market make on the the international version where they didn't have to do that they could theoretically are liquidity between the two and it brings better liquidity for the entire chain more revenue for the entire um business more a more revenue for the entire business etc now i i will say that uh as i understand it as someone who spends decent amount of time in DC and thinking about these topics um that uh the if that happens that is definitely the best case scenario the the both the CFTC and uh the markets team at the SEC when you think about the equity side

50:36and treasury are all very excited about bringing you know defy and on chain markets into the US in a regulated way there you know as a reason present Trump talked about it uh at um on a mention hyperliquid on the speech a couple weeks ago uh i i think the likelihood of how it actually works is probably a little bit different than that i think people will probably get more comfortable with uh requiring a separate entity that is a separate call it hyperliquid entity to own those contracts that is also a DCM and so that that entity at what or be run by somebody else who owns those contracts would have to go and um do you know KYC AML as well and i don't think that they're necessarily going to get comfortable with the fact that a hyperliquid or a lighter or anybody like that underneath the hood is just you know not below clearing tech it's what i think it was what X-Rewansky says in the in that article is like oh this is tech that says believe the exchange

51:40and the clearing out together um i think that's where they end up but if they don't if we end up here and it's still an active discussion uh it's a huge one for everybody involved now even if that if what i just said happens that there has there is some KYC requirement in the same way like a polymorphism market as a separate uh uh entity for the them themselves uh that's still a huge win because it's still what you use the same existing technology you can still be able to go and you know our liquidity between the two you still have on-chain markets that exist in a regulated way this is incredibly incredible but what the KYC AML and sanctions requirements are for a uh and reporting requirements are for the defy layer law labs entities um is still very much in the air and that's where i think a lot of the the debate will continue to happen yeah doesn't feel like it's going to get resolved anytime soon but the market is definitely excited about just the prospect of it. Oh i think it's resolved this year interesting i i think you know maybe maybe not in the next four months but i think it's like it could and and months were at Christmas i know the government we you've been in DC

52:48long enough the average Thanksgiving nothing is gonna happen regularly there's moving quickly no no that's not sure okay so that is true for congress. I just like to know. Yeah it is not true for the regulators if you look at the work that Cherisley look has been doing and that Cherakans have been doing and the the OCC and treasury have been doing they are moving quickly to try to bring some level of clarity you know not for the plan to these markets and to bring these markets on shore and so i think that there is a good possibility that happens in this year um some version of what I just said now you know again like the the range of requirements that they would put on and on chain exchange like a high-brow glitter lighter is is broad and so it could even be more um even a little bit more unrest than what I just said um but i think it could happen this year i think at the worst case scenario it happens in uh you know first half of the next year. Yeah yeah let's run just a quick note on a couple quick news items the polymarket uh it's reported that uh

53:49somebody said 1789 trump uh junior is leading around at a billion at 21 million valuation give it take uh that would still be quite substantially below call she's reported evaluation what is it for you billing did i see that right yeah close it closed yeah closed uh no i don't i don't i don't i saw rumors of it there's been the news reports news reports yeah how many maybe we should play a game on today's week how many times you get hit by a reporter to corroborate on some story on a prediction market uh for me three times it happens a lot yeah how many how many people is making the cell secondary ten times i i i always tell them to talk to the companies so without you've been well-trained you've been robbed but you've had to learn it had to learn it that's a learning yeah i still remember the first time i said that we're a reporter and they make you feel like you know all cozy and warm and open up and it's like yeah no then they stab you uh i and the master's

54:55reporter are great people and i talk to a lot of them they meet up and i talk to them and i you know consider something friends and all that stuff uh but if you're not careful you can get yourself into trouble and i think almost everyone it hasn't happened to me but but maybe a little bit but not like in a really bad way but almost everyone has had a moment where they're like i really wish that i was a little bit more careful with what i said because i thought you know listen you never feel you as soon as you hang up with whoever you're talking to you're like oh did i say anything there that i will regret and you spend like you just do a you sit down and you you're like oh shit i shouldn't put your hand on that um all of this is on the record Rob so we never edit empire podcast so i know i know that that's why i'm so make sure you close make sure you close the test i think it's really it i mean i know the uh you know sailor bought a bunch of big coin at 80k so best want to do it always tick topping it but you know he's a believer

55:58i 80k is not the top man we're going local top local top local top no what do you mean you're playing a little game like what what is the the coins 81 now he's up he's up that's right what what uh i was gonna say something but i won't what do you think we in the year at big coin and the price predictions come on you know i'm not in the business of price predictions so what uptrend i think we i think we have an uptrend through the rest of the year um so i don't know it's like as aggressive as people are are talking about but yeah i think we have an uptrend i i think it wouldn't be crazy to me i mean big one was up 25% in uh in august it wouldn't be crazy for me like i could easily see another 25% the next one once yeah yeah i mean robin hoods up 20 15 20% today i think the market waking up to this activity on the chain is the leading kind of catalyst to that

56:58but you know in an uptrend crypto is highly highly reflexive so you know robin who's posting 20% then i still think you know for me we are an up up in you know pretty clear uptrend here and macros always going to be a wall of worry and whatever but assuming nothing really rolls over and things stabilize there's we could see some real runners here i don't think that's a good assumption to be honest from macro perspective like like what we're at scene right now happening uh uh i said assuming i didn't say i believed it was going to happen i just said as always you you footnote and caveat the shit out of it assuming the world doesn't blow up we make it up which is not saying much but what listen the the nice thing is is that we're even with all the uncertainty i do think there's a lot of fundamental reasons for this business for us to continue to trade better uh very clearly like the we have we talked about this a bunch of it last year but oh we're in a bull market but not the one people want like there was a lot of adoption happening a lot of real ways sure that uh i think people are going to start to take

58:01notice of and like you know you can see why the uh things may trade better as people get a little bit more comfortable just for those reasons even relative to go out what's happening in the product macro environment look i think if you zoom out over if you have a short it's really hard to be short term driven and and predict any of this things three six months if you zoom out more than a year you have you start seeing a lot of clarity uh if you have a five year period even easier because your job is really what is what is a secular trend here and i think i think the biggest the biggest catalyst i've been talking about quite a bit of time you know this is an investor inversion it's distribution matters a lot the infrastructure's been built you have a company robinhood showing every other financial institution that it's going to likely double revenue talk like it will it will double top line and it will probably multiply profitability with robinhood chain that is a huge huge catalyst this is not like a press release of long island iced tea saying that is going to be you know adopting blockchain or supply chain nonsense like this is a real numbers

59:06numbers on the dashboard and that votes extremely extremely positive for any other financial institution at a time where you have regulation and oh yeah no and what what the setup of the chain is done and now some of the sets I think that like ice has been doing they've been one of the most forward thinking exchanges uh i think honestly like these are these are just more wind behind the sales of more and more people get involved in the space right and like i i am the rwa summit that uh centrifuge puts on or is a big is a big sponsor of was here in Brooklyn the last couple of days and all the all of the traditional financial institutions are there all of them uh and i do here in new york it's like easier for people to get to and like everyone's focused on tokenization everyone's focused on this product the dcc launches their tokenization sandbox and like it is going to be uh like they like it's very clear that the trend is going to continue in my mind and we've

1:00:06always said that doesn't mean that you're you know altcoin is going to go up but it it does mean there'll be more excitement more liquidity more buyers and you know we'll see what happens with the tokens absolutely if anything robinhood chains really stress testing the impra and tokenized stocks i think is is a huge catalyst that we get it right it's not easily solved but um i still think it's quite positive and i said it on the record i think the best way to have exposure to this growing asset class is funny enough through trot fi owning robinhood stock is probably a better bet than owning eth um but uh you know none of this financial advice or any of that nature but it just feels like if you're a retail financial institution or or financial institutions with a big piece that is retail you're in uh you're in a tough conversation with your board if you don't have clear answers as to why you haven't done what robinhood is doing um one last thing before we go i've been thinking a lot about interactive brokers i tweeted about him like it was it's like the first

1:01:06thing that came to mind as this week i'm like gosh like this feels really strong for robinhood i was like what is i wonder what interactive brokers is doing because again go look at the colossal piece amazing story about the founder um this hungarian immigrant i think really really at the cutting edge um and adopting technology it feels like they have the right dna uh and i i i remember speaking with someone that worked there about crypto and they said something to the effect of yeah we have a team we're thinking about it um but i haven't seen them really be um you know at least outward facing about what their plans are what they're going to do not as retail focused as robinhood but still a huge force in the market might they be a player that helps us with tokenized stocks liquidity over the weekend or is that a stretch uh there's good odd lots with the founder of uh the founder of iBKR from like april so not not that old uh where i mean i he he actually does an interesting story in there

1:02:12where like he like tried to bike calcium many years ago uh and they they don't know because he's he's like been bullish prediction markets a long time but like they never could make them work like they were actually he he talks about how he he seems like a little bit salty in that conversation because he's like i tried to launch prediction markets and like nobody cared um and so uh so so that's that's interesting but i i think he is a person iBKR is a place where they're never going to be you know the cutting edge of like retail brokerage in terms of like taking risk and you know um launching kind of like you know more speculative products but what he is going to do is he's going to be called in that second wave and he's going to be ahead of probably most of the other wirehouses and like a lot of the other the other the other brokers um i i don't know if i think they're going to play a huge role like you know tokenized stocks uh for instance but if there's an opportunity like he will like they they absolutely will i i think that the tokenized stock piece for spot is still very much in my mind a story around when and how do we get more

1:03:15primary issuance on chain right and so i don't know if you um if you saw the tweet from run uh yes like earlier this week which this is not the maker now room was it because i read his sort of like is it okay okay wow yeah so it is okay uh and i'm about like trying to buy a micro cap bar he bought like the he bought like a micro cap and now is that like for like a million box or so is not even like super low float is like we're gonna reverse take over it through meme you know yeah and like put it on chain all this i um i i i haven't seen the follow up from it but it was not um uh to the point i made earlier about uh how the regulators might view market manipulation that that felt edgy and he was like this is the art manipulation i'm like um yeah maybe you should go consult a lawyer but then some people also pointed out that he um that they they couldn't even find a stock that like coincided with like what he said or responded to what he said so maybe he was much it's i i

1:04:15don't know what i don't have in there in in final but i i i um i say the point in simply because i think there is like interest from uh a lot of you know crypto natives right now i'm trying to bring you know more tokenized assets on chain but what you need is you need interest from the companies to want their assets to be on chain that is where this and you want um the clearing houses and the exchanges to want these uh things to be on chain and that's where i think we still need a more work done one might this is the time to believe and think big rob big numbers if if we get like a pepe type liquidity and outcome for one of these meme coins for hymns hymns is a 20 pretty large work by like gopro or some of these like say they're like a small cap like 10 billion or whatever sub 10 like billion or two market cap stock and you have a mean coin LP pool and degen's do what degen's do which is they'll just squeeze it and buy all the you know um drive up and there's a huge outcome on the mean coin very reflexive

1:05:21you know 10 billion could there ever be a situation where the mean coin in this pool is worth like a point where you just own all he own all this talk or you have a controlling stake and what happens at that point like is that what probability of that happening would you attach this cycle like if you have a pepe type outcome with one of these mean coins like are we gonna get a board seat or not uh i think um i think you know in this case like alpaca the board seat or yeah rock has board seat or or um so i'm not not exactly sure who um but uh uh yeah listen it's very clearly like this is not the last time we're gonna talk about this this is gonna get weirder i think this is going to be the biggest narrative this cycle by far by far so uh if you're not in the trenches don't be sidelined like rob uh robby should put your investor in foam oh man what's going on uh i i you know i were s c registered r a i'm not

1:06:28i'm not trading the coins that's right that's right that's right uh okay count it in the week what do you got all right well number one c was open this weekend next weekend so big uh big very excited for the u.s. open going to uh going to tonight actually uh with uh with the input goes now well you're you're not here otherwise i would it's a shared port code so i would bring you so but and yeah the uh so i'm uh us us open i mean jokovic losing in the first round crazy so that is uh that was that's an issue i mean um zavari vomis lost in the in the first round too so like it seems like it might be an interesting uh one if you like tennis also football is back for your football guy not not not english football that's also back that was back a couple weeks ago but american football american football about the NFL and college football that's right uh and then i would say if you're looking for something uh not maybe light-hearted but you know a little bit more

1:07:28mindless uh eight twenty four put out uh or uh at least a movie uh uh today uh called onslaught which is uh got a jan or jona uh where it's like sort of a sci-fi or thriller uh we got that from the name onslaught yeah i mean it's definitely a comedy it's actually it's like a lot of fun like a tight 90 minutes like you know it's an action movie uh it was um uh you know a little bit a little bit of fun for your library weekend no doubt um huska us open winner men's we have alchorazzo the favorite on polymarket 43 percent then spare it twenty one on the women's uh yeah i think you down a lot recently right because he had a really bad first first round yeah but he's he's kind of like that you know he's done recently well i think he did well in uh winaldon i believe yeah i'm seeing i'm that's what i'm seeing tonight actually i think okay great you should know this whoever invited you rock uh but um okay good my content of the week king of oil

1:08:31it's right up there amazing amazing book um it's uh this guy mark rick rick rick rick um his company ended up becoming glencour just amazing story um really well written book as well highly recommended if you liked any of these books uh i think if you're in crypto of your financial like it is a fascinating story he basically created the spot market for oil before that it was all the majors traded oil is super opaque so touches on a lot of the things we talk about here in crypto market infrastructure um market making all this stuff amazing story go read the book um really really good are we read it i have not read that one so should i really like a commodities guy maybe i should um you know here in crypto rob we take the position these things are commodities so i'm a technology i'm a technology guy there you go i'll leave it at that have a great weekend guys thanks for listening