Latest / CRYPTO 101 / Ep. 733 The State of the Union for Ethereum with Sharplink CIO Matt Sheffield

Transcript

Ep. 733 The State of the Union for Ethereum with Sharplink CIO Matt Sheffield · CRYPTO 101

0:09
[SPEAKER_02]: Alright everybody, welcome back.
0:11
[SPEAKER_02]: All of you good, wonderful citizens of crypto nation.
0:14
[SPEAKER_02]: It is your host, Bryce, as always joined by my good buddy and co-host, Brendan Veeeman, Brendan, how are you doing today, sir?
0:22
[SPEAKER_01]: Doing great, Bryce.
0:23
[SPEAKER_01]: Feeling good.
0:24
[SPEAKER_01]: We're looking good.
0:25
[SPEAKER_01]: Got a great cast.
0:26
[SPEAKER_01]: Nothing to be upset about.
0:28
[SPEAKER_02]: no complaints, no complaints other than the summer doldrums in terms of the price action across Bitcoin, across Ethereum, and pretty much every other asset trading below some key moving averages, but we've been here before, we've been through.
0:43
[SPEAKER_02]: three bear markets.
0:45
[SPEAKER_02]: Heck, let's take a fourth.
0:47
[SPEAKER_02]: What's the worst that can happen?
0:49
[SPEAKER_02]: What doesn't kill you makes you stronger?
0:51
[SPEAKER_02]: And like you said, we do have a great guest today.
0:54
[SPEAKER_02]: Somebody who knows markets very, very intimately used to work at Bridgewater Associates, one of the largest or if not the largest hedge fund in the world, Radollio's fund.
1:06
[SPEAKER_02]: branched out to start his own things and found himself in a wonderful position as CIO of the publicly traded company, chairman by Joe Lubin called Sharpling.
1:19
[SPEAKER_02]: They are an Ethereum Treasury company and we've got Matt Sheffield, the CIO of Sharpling, joining us today, ticker S-Bet, Matthew, how are you doing?
1:28
[SPEAKER_00]: Thanks for joining us.
1:29
[SPEAKER_00]: Doing great.
1:30
[SPEAKER_00]: Appreciate you guys having me back.
1:32
[SPEAKER_02]: Yeah, yeah, last we talked was December, and so we're not going to cover the same stuff that we covered on that December episode.
1:40
[SPEAKER_02]: So we encourage everybody if you want a primer on, on, on, you know, as bet and everything from last year, feel free to listen to that episode.
1:49
[SPEAKER_02]: We're going to get the updates.
1:51
[SPEAKER_02]: We are not going to be wasting any time, matte with anything other than looking forward.
1:57
[SPEAKER_02]: And so again, you know, we want to save time, so we're not going to ask you your deep background.
2:02
[SPEAKER_02]: We already covered that in last episode, which is very impressive.
2:06
[SPEAKER_02]: We want the updates.
2:07
[SPEAKER_02]: 2026, what has been happening over at S-Bet that's been notable sharp link, you know, what do you guys been up to for the first six, seven months of this year?
2:18
[SPEAKER_00]: Yeah, so 2026, we've been focused on deployment, making the East Treasury more productive.
2:24
[SPEAKER_00]: So I think one of the key things that we view about Ethereum as a differentiated Treasury asset is its productivity and that you make it more productive in the right hands.
2:34
[SPEAKER_00]: So in this bear market, we've been focused on how do we go and make our Ethereum Treasury more productive.
2:39
[SPEAKER_00]: We announced at the end of the last year our first kind of,
2:44
[SPEAKER_00]: multi-year deployment, it was a deal with either Fi eigen and linear.
2:48
[SPEAKER_00]: We did that in around $200 million, and we went and said, okay, great.
2:52
[SPEAKER_00]: There's this huge gap in the market for what we considered to be like cold start capital.
2:58
[SPEAKER_00]: There's billions of dollars raised by these early-stage venture funds to go and back some of the best founders to go build some incredible projects.
3:05
[SPEAKER_00]: They're willing to spend tens of millions of dollars higher in great teams rolling out
3:10
[SPEAKER_00]: incredible marketing and then the day that the protocol goes live there's no money generally earmarked for actually using it and so we said okay great we think that is an incredible place for us to potentially get involved.
3:23
[SPEAKER_00]: We have this Ethereum-denominated Treasury.
3:26
[SPEAKER_00]: It's effectively permanent capital.
3:28
[SPEAKER_00]: How can we go and make this productive for the ecosystem and try to generate additional youth per share so we did that first deal in December,
3:39
[SPEAKER_00]: A private fund with Galaxy Digital, our partners, where we're going to do $125 million fund between the two of us, we're going to put a hundred in that, and we're going to go and deploy across six to ten earlier stage projects to give them that cold start capital to help them hit that escape velocity early on without having to constantly battle what I think are some really difficult.
4:01
[SPEAKER_00]: early stage economics if you can't kind of get that initial nudge.
4:05
[SPEAKER_00]: And so we're really focused on that from the on chain side.
4:09
[SPEAKER_00]: And then also looking at other yield-generate opportunities to basically increase heat per share regardless of market regime.
4:15
[SPEAKER_02]: Yeah, absolutely.
4:16
[SPEAKER_02]: I love it.
4:17
[SPEAKER_02]: Super comprehensive.
4:18
[SPEAKER_02]: And, you know, we've gotten a question about this in terms of these different deaths, right?
4:24
[SPEAKER_02]: The digital asset treasuries.
4:26
[SPEAKER_02]: And, you know, some people think, you know, why don't I just
4:30
[SPEAKER_02]: Ethereum and stake it on my own, or why don't I hold Bitcoin instead of holding micro strategy?
4:36
[SPEAKER_02]: Can you kind of just give us the 101 on these digital asset treasuries in why someone would or should, of course, not investment advice and you're not recommending your securities or anything, but in general, why should someone look to balance out their crypto portfolio with a digital asset treasury company?
4:55
[SPEAKER_00]: So I would just say that it's a different way to express your ethereum bullishness.
5:00
[SPEAKER_00]: If that is the view that you're looking to express.
5:01
[SPEAKER_00]: And so the way of view it is, you can get long-eat exposure by buying, eth, and staking it.
5:08
[SPEAKER_00]: And by the way, I do think that everyone that is interested in having ethics exposure should also do that.
5:13
[SPEAKER_00]: It gets you exposed to the ecosystem directly.
5:15
[SPEAKER_00]: Let's you learn a lot of the ins and outs.
5:17
[SPEAKER_00]: Also there's always a diversification component like you should definitely hold many different ways of expressing any given view, but that's kind of the traditional finance portfolio side of me when it comes to debts you're really asking yourself do I think this management team
5:33
[SPEAKER_00]: can outperform me holding this other exposure by adding that additional layer of what I would think of as alpha overlay.
5:40
[SPEAKER_00]: And so, sharp link wants to maintain its complete e-f data, and we also want to keep it effectively 100% state.
5:47
[SPEAKER_00]: And we do that with native-staking, liquid-staking, liquid-re-staking.
5:50
[SPEAKER_00]: And then we want to say, OK, great, how can we go and make that more productive by going out the risk curve?
5:55
[SPEAKER_00]: And basically building out what we think is an efficient frontier of good risk reward opportunities to put that e-f to work.
6:03
[SPEAKER_00]: and to try to generate additional ETH per share.
6:05
[SPEAKER_00]: And all that is is basically an ETH rate of return.
6:08
[SPEAKER_00]: It's no different than if you put dollars into any company.
6:11
[SPEAKER_00]: You're hoping for that management team to turn it into more dollars.
6:14
[SPEAKER_00]: The only difference is you've already decided when you invest in Sbet that you want to be long ETH.
6:19
[SPEAKER_00]: And now you're saying, okay, great.
6:21
[SPEAKER_00]: The team has that exact same view.
6:23
[SPEAKER_00]: Therefore,
6:24
[SPEAKER_00]: can I make more eth being an aspect than I would doing it myself?
6:29
[SPEAKER_00]: And if the answer is yes, then that's where you start to consider a debt.
6:32
[SPEAKER_00]: The debt universe itself is extremely broad, though.
6:35
[SPEAKER_00]: There are some that are focused on financialized yield, running more of the sailor play with,
6:40
[SPEAKER_00]: capital markets issue and trying to generate a financialized tokens per share increase.
6:45
[SPEAKER_00]: Others are focused on more of the operating business side where they're saying, okay, great.
6:49
[SPEAKER_00]: We don't need to be 100% long.
6:51
[SPEAKER_00]: The underlying token we're going to actually use some of the exposure to fund purchasing and operating business.
6:57
[SPEAKER_00]: And then sharp link, we're just trying to be what we think of as like an alpha overlay.
7:01
[SPEAKER_00]: We're trying to say, okay, great.
7:02
[SPEAKER_00]: You're already wanting the eth beta.
7:04
[SPEAKER_00]: How do we get you to increase your eth per share through time and access
7:09
[SPEAKER_01]: Yeah, I remember from our last conversation, we talked about sharpling being more than just a treasury company where all you do is you accumulate and then that's it.
7:19
[SPEAKER_01]: There's nothing else.
7:20
[SPEAKER_01]: You guys are pretty heavily invested in the Ethereum ecosystem and supporting that in a bunch of different ways, which I'm sure we'll get into over the course of this bottle a little bit more because again, a lot's happened here in the last six to seven months.
7:33
[SPEAKER_01]: But one of the things I think that has maybe spooked people
7:36
[SPEAKER_01]: is seeing the price come down because everyone got to experience different treasuries and deaths on the way up and they felt kind of the increase in volatility that that could bring, but I think that the true test and what might make people a little bit more nervous is that as prices come and down, now we're seeing kind of the other end of that.
7:55
[SPEAKER_01]: And some have been able to weather this fine, like again, sharp links is fine in this and stuff, but others have come under more fire.
8:01
[SPEAKER_01]: Is there any risk here with the average cost of your ethereum accumulation to sharp link being closer to maybe 3,600?
8:12
[SPEAKER_01]: And now it's sitting near 1,600 per eighth, because there are any risk that comes along with that.
8:19
[SPEAKER_01]: at all.
8:21
[SPEAKER_00]: So it's a great question.
8:22
[SPEAKER_00]: I think one of the most important things is to look at the holdings of a debt, but also look at the operating structure, their opx, and then any sort of leverage embedded in it.
8:34
[SPEAKER_00]: Sharpling is never taken any debt.
8:36
[SPEAKER_00]: We currently have no preferred issuance.
8:39
[SPEAKER_00]: We don't have any sort of debt service, therefore, dragging on.
8:42
[SPEAKER_00]: So that isn't to say that debt is inherently bad.
8:45
[SPEAKER_00]: We've actually publicly said that we would consistently explore these opportunities, but that we think that you'd want to issue
8:51
[SPEAKER_00]: from position of strength and that you would want to do so very intentionally timed in size.
8:55
[SPEAKER_00]: But to date, we haven't done any of that.
8:57
[SPEAKER_00]: So compared to maybe one of the more financialized treasury companies, we don't have that constant gravitational force that we have to outperform from the debt service side.
9:07
[SPEAKER_00]: And then you go over and say, okay, what does it actually mean to...
9:10
[SPEAKER_00]: hold the ferium and have it draw down on you from 3600 to 1600.
9:15
[SPEAKER_00]: And other than the pain of obviously feeling that dollarized loss, it doesn't change the eth per share that we still have.
9:21
[SPEAKER_00]: That continues to grow or at least has grown as we have built out this treasury.
9:26
[SPEAKER_00]: It's roughly doubled since the inception of the treasury strategy last year.
9:30
[SPEAKER_00]: And we still have a little over a billion dollars, about $1.3 billion worth of Ethereum at today's prices.
9:36
[SPEAKER_00]: And so when you look at that from running a company perspective, you've got 1.3 billion of a very good asset that we believe is undervalued.
9:43
[SPEAKER_00]: And then we also have the...
9:45
[SPEAKER_00]: additional revenues we're earning from making that productive.
9:48
[SPEAKER_00]: And that is where I think Ethereum is a different asset because you have the ability to fund a company and to try to be a cash vote-ositive profitable company using the native productivity and then try to make a poor productive.
10:02
[SPEAKER_00]: So that's kind of where the difference comes from.
10:05
[SPEAKER_00]: And at Ethereum Treasury versus Bitcoin, it's like you don't have all these gravitational forces weighing on you that
10:15
[SPEAKER_00]: If you already want eat the 3600, you're also down the exact same amount on that Ethereum as we are.
10:21
[SPEAKER_00]: It's just a question of whether or not you think that the sharp link way of approaching this investment process makes sense for you, but not having that leverage at then because it's been a really strong boon for us and we're going to continue to evaluate it conservatively.
10:36
[SPEAKER_02]: Yeah, there's that old Warren Buffett quote, or maybe it's a Charlie Munger quote, one of those two cats.
10:43
[SPEAKER_02]: The greatest ways for for a man's demise is liquor, ladies, and leverage the three L's.
10:50
[SPEAKER_02]: So I know we've kind of quoted that several times in the past, but to your point, I mean, that's.
10:55
[SPEAKER_02]: kind of why you guys are in a less sticky situation than microstrategy, for instance, which has kind of levered up and has found itself as the target of many short sellers.
11:07
[SPEAKER_02]: And, you know, we don't need to go and, you know, off too much on a tangent and talk about what's going on there.
11:13
[SPEAKER_02]: But,
11:14
[SPEAKER_02]: You know, I think one of the things that I'm curious to get your opinion on is just like how you think analysts and investors out there should sort of, you know, what's the proper way essentially to look at the state of or the health of a company like yours, a debt treasury.
11:33
[SPEAKER_02]: Is it Mnav?
11:34
[SPEAKER_02]: If so, you know, what does that mean?
11:36
[SPEAKER_02]: Is it, you know, the rate of change for the
11:43
[SPEAKER_00]: Yeah, so I think it's very much depending on the the type of holder as well because there are people who use that cause as a publicly traded way to trade short term exposure and that's going to be a very different way of looking at it than people who are looking to hold five year views where.
12:02
[SPEAKER_00]: A lot of our real money institutions are coming in and saying we are also a big believer in the fear of opportunity.
12:07
[SPEAKER_00]: So, if you look at the first one, I think a lot of them are looking at it as a Nat per share or youth per share.
12:13
[SPEAKER_00]: Because, in today, the majority of our volatility to date, two thirds plus depending on the time horizon, look back, is Ethereum's volatility.
12:21
[SPEAKER_00]: And so, if you look at our youth per share, that's effectively the volatility you're realizing is just taking that amount of youth and moving it by the amount that youth moves that day.
12:30
[SPEAKER_00]: then you go and take the longer term investors and they say, okay, great, do we believe there's a call option embedded in the management structure?
12:36
[SPEAKER_00]: If the answer is no, then yeah, they should 100% be buying eat themselves.
12:41
[SPEAKER_00]: Now, there are some people who are not allowed to from a mandate perspective and that is one of the benefits of investing in a public equity.
12:48
[SPEAKER_00]: You also have the fact that, you know, we're
12:50
[SPEAKER_00]: audited by a big four.
12:52
[SPEAKER_00]: Like we, to date, have stayed in qualified custodians.
12:55
[SPEAKER_00]: Like there are elements of an institutional grade product that I think some people still require.
13:01
[SPEAKER_00]: And there's others that just prefer it.
13:04
[SPEAKER_00]: And then the real option is what do you think it's worth when things are good?
13:07
[SPEAKER_00]: Like in a bear market, can you outperform the eat for shared growth by doing these
13:14
[SPEAKER_00]: In a bull market, do you believe that the market is going to allow us to take the best of both worlds?
13:18
[SPEAKER_00]: The financialization of ETH per share growth of a, let's say, like a micro strategy, plus the native ETH per share growth of the productivity.
13:29
[SPEAKER_00]: And when things were still in a fairly strong period last summer,
13:34
[SPEAKER_00]: we did experience that each per share growth, you know, our original pipe deal, the private investment in public equity that brought sharp link from its initial strategy into being a debt co was around $425 million.
13:47
[SPEAKER_00]: We raised another few billion dollars in the months thereafter at never tapping the ATM below an MNF of one.
13:54
[SPEAKER_00]: and increased each per share by almost a hundred percent in about a three-month period in summer 2025.
14:00
[SPEAKER_00]: That was when things were still fairly euphoric.
14:02
[SPEAKER_00]: And now that things are trading below an end of one, we're not tapping the ATM because we're not interested in deluding our investors.
14:10
[SPEAKER_00]: We would rather play the wrong game and stay focused on it.
14:12
[SPEAKER_00]: So it really is a question.
14:14
[SPEAKER_00]: If you're going to hold something from multiple years, you're betting on management a lot more.
14:18
[SPEAKER_00]: If you're going to hold something for a few hours,
14:24
[SPEAKER_01]: Yeah, you know, one of the things I've seen you say, and I'm sure we talked about this before, but you've talked about the idea of unstaked youth and why it just doesn't necessarily make sense to you.
14:36
[SPEAKER_01]: And that there's a little bit of a loss of opportunity because what you've said is that because of opportunity cost, or excuse me, it doesn't make sense because of opportunity cost.
14:47
[SPEAKER_01]: In terms of productivity, can you just explain on that a little bit more, because I think there's a lot of listeners out there, who dabble between the lines of, I'm staked, I'm not staked, maybe I don't know how to staked, maybe I don't want to, some people just don't know, like, can you kind of walk, I think the general public through the idea of what goes through your brain.
15:11
[SPEAKER_00]: Yeah, I would say the equivalent is dollars in a checking account, dollars in a savings account, and dollars in like a certificate of deposit or some other yielding instrument, TBOs, etc.
15:23
[SPEAKER_00]: Like you're going to get paid, effectively nothing to keep in your checking.
15:26
[SPEAKER_00]: in the U.S. almost nothing but non-zero in a savings account, and then if you're willing to commit to leaving it deposited for, let's say, 30 days in whether it's two bills or a certificate of deposit, et cetera, the yield jumps up considerably to roughly the front end rate, and a little bit less than front end rates, and right now you can earn about,
15:49
[SPEAKER_00]: The same concept goes in Ethereum.
15:51
[SPEAKER_00]: If you want to be able to immediately sell that Ethereum at face value, you need to keep it in liquid, unstake teeth.
16:00
[SPEAKER_00]: But if you're willing to take the, let's say, non-zero, but will we believe to be fairly small risk of staking if done properly.
16:09
[SPEAKER_00]: And the time to unstake it when you need to, which right now is around 10 days, but is a variable unstaking queue.
16:19
[SPEAKER_00]: Then you can earn right now the at their mistaken rate of roughly 2.75% and so there's a big opportunity cost to keeping it on stake just like there's an opportunity cost to keeping money under your mattress or everything you have in your checking account and with sharp link because we have what is effectively considered.
16:36
[SPEAKER_00]: near permanent capital.
16:37
[SPEAKER_00]: It's a treasury of a public company.
16:39
[SPEAKER_00]: We don't have daily redemptions.
16:41
[SPEAKER_00]: And so where some of the ETFs fall short is that they have to be able to provide liquidity on a daily basis.
16:47
[SPEAKER_00]: So they're constrained from being able to stake 100% of their assets as a result.
16:52
[SPEAKER_00]: So there's an opportunity cost of leaving that off to the side to provide liquidity for the daily redemptions.
16:58
[SPEAKER_00]: And if they don't
16:59
[SPEAKER_00]: keep enough liquidity, then they're effectively under valuing their main value proposition, which is offering dearly liquidity, and they don't really want to risk that.
17:08
[SPEAKER_00]: So a lot of them air on the side of conservatism.
17:11
[SPEAKER_02]: Yeah, no, that makes a ton of sense.
17:15
[SPEAKER_02]: You know, I think.
17:17
[SPEAKER_02]: You know, obviously the crypto market's been down and I'm kind of curious just in terms of like, you know, what you're making of the current state of the market.
17:28
[SPEAKER_02]: Would you say there's any concern about Ethereum as an ecosystem?
17:34
[SPEAKER_02]: And what's sort of your favorite part about the Ethereum upside story from here?
17:39
[SPEAKER_00]: So I see a massive divergence between the price of ETH and the Ethereum opportunity, as well as what we see day to day happening for the Wall Street integration store.
17:52
[SPEAKER_00]: And so that happens all the time, right?
17:55
[SPEAKER_00]: Like one side is always going to leader lag, often it's going to be adoption that's going to
18:00
[SPEAKER_00]: lead in prices going to lag, right?
18:02
[SPEAKER_00]: It takes time for that to make sense and forward to flow through.
18:06
[SPEAKER_00]: And then there's also something that you just can't stop.
18:08
[SPEAKER_00]: Like you're always going to be overstretched to the top or bottom of, let's say, like fair value, arosize, et cetera.
18:15
[SPEAKER_00]: And so through time we expect it to track with the fundamentals, but we also expect a high volatility asset class to materially deviate for periods of time.
18:25
[SPEAKER_00]: on the upside and the downside.
18:26
[SPEAKER_00]: So to break it down, I'd say the most important thing we've seen right now is that Ethereum continues to be the liquidity hub.
18:33
[SPEAKER_00]: Like there's this concept that you really can't replace network effect for a lot of the main drivers of people moving on chain.
18:42
[SPEAKER_00]: Stable coins are only valuable if someone's willing to accept it.
18:45
[SPEAKER_00]: So the fact that the majority of stable coins are on Ethereum is a major value ad.
18:51
[SPEAKER_00]: RWA's are only as valuable as liquidity and the liquidity is a combination of composability and where you could potentially go and exchange the asset.
19:00
[SPEAKER_00]: The thing is, most of the trading for larger sizes is still going to happen off-chain and then settle on-chain for the time being these are fairly chunky sizes that institutions are looking at.
19:11
[SPEAKER_00]: But liquidity for things like being able to lend or borrow them,
19:14
[SPEAKER_00]: That is going to go with a majority of network participants on Ethereum still has the majority of real world assets, tokenized funds, etc.
19:22
[SPEAKER_00]: And so I view Ethereum as in pole position to continue capturing on that.
19:26
[SPEAKER_00]: I think a lot of the developments that are being worked through to increase throughput, this conversation around.
19:32
[SPEAKER_00]: making the L1 versus L2 network a more seamless process that you could potentially atomically cross multiple L2s and continue to use the L1 as security layer is a really great story but you ultimately need to continue to have the banks come on for that network effect to grow like one bank doesn't help.
19:52
[SPEAKER_00]: two banks barely help.
19:53
[SPEAKER_00]: 10 banks, there's a material network effect and it's not linear.
19:57
[SPEAKER_00]: And so I think that we're very early in that network effect building for the institutions that have the majority of the money.
20:03
[SPEAKER_00]: And that's what's really exciting for us because we already see it happening.
20:06
[SPEAKER_00]: We see the announcements BlackRock announcing two more tokenized funds, JP Morgan saying they're bringing funds on chain.
20:12
[SPEAKER_00]: Like we're seeing what could be trillions of dollars
20:21
[SPEAKER_00]: The rollout.
20:22
[SPEAKER_02]: Yeah, and on that point, you know, as banks sort of look at all of their options should we launch on Ethereum?
20:28
[SPEAKER_02]: Should we launch on, you know, competing chains or should we kind of launch our own chain?
20:33
[SPEAKER_02]: I saw today there was OUSD.
20:37
[SPEAKER_02]: I'm just reading a headline, Visa BlackRock, Google and others back open USD stablecoin to rival USDC.
20:45
[SPEAKER_02]: And so how do you kind of think about like,
20:48
[SPEAKER_02]: essentially, you know, some of these larger firms coming out and saying, you know, we're not going to pick any chain.
20:55
[SPEAKER_02]: We're just going to launch our own consortium.
20:58
[SPEAKER_02]: Is that sort of a threat to the Ethereum business model?
21:02
[SPEAKER_00]: So, in our view, 80% of the battle is getting a bank on-chain and building the pipes.
21:09
[SPEAKER_00]: We're a little less concerned about where their first
21:17
[SPEAKER_00]: to make that first for right by a VC back project or by a company that they have a vested interest in the success.
21:24
[SPEAKER_00]: One of the things that makes Ethereum great is that it's incredibly neutral, but also one of the things that makes Ethereum difficult sometimes is that there's no one to offer you with $30 million to go and connect.
21:35
[SPEAKER_00]: your bank to this chain first.
21:38
[SPEAKER_00]: And I think it's a win-win for the industry when that happens from another chain, right?
21:41
[SPEAKER_00]: Like, sometimes these teams are underfunded.
21:43
[SPEAKER_00]: It's really difficult to convince someone at a bank.
21:46
[SPEAKER_00]: I want to spend $20 or $30 million to go spend the next year building all the pipes internally.
21:51
[SPEAKER_00]: It's not going to be a immediate revenue driver, but is the future finance?
21:55
[SPEAKER_00]: Will you fund me?
21:56
[SPEAKER_00]: Someone comes in and says, I will give you my VC back token.
22:00
[SPEAKER_00]: You can go and sell it and you can go and get the funding you need to make this thing happen.
22:04
[SPEAKER_00]: great like you're now on chain once you're on chain that network effect takes hold like you're not going to look at better pricing elsewhere and say you know what I don't want that I'd like to pay more staying where I am you're going to say okay great the opportunity cost is now
22:21
[SPEAKER_00]: much, much greater because I'm so close to being able to access it.
22:25
[SPEAKER_00]: The majority of the liquidity is still on it there and therefore, we're asking for as a quick hop from one chain to the other, as opposed to the ginormous build of that initial transaction.
22:36
[SPEAKER_00]: So we view it as a win any time an institution comes on chain.
22:39
[SPEAKER_00]: It's obviously the best
22:40
[SPEAKER_00]: when they come directly to Ethereum, but I do understand the economics behind it and to go to the announcement you're talking about, I view it as no different, like banks of historically been very active on the corporate development side, investing in the companies that they're about to go can make.
22:54
[SPEAKER_00]: It is, in a way, impact capture.
22:56
[SPEAKER_00]: It's a positive externality.
22:57
[SPEAKER_00]: They say, it's great.
22:58
[SPEAKER_00]: You guys are currently doing 100 million a day of volume, but I do a billion a day of volume.
23:02
[SPEAKER_00]: How about I go and invest in you at a very good valuation before I go in 10x your volume?
23:07
[SPEAKER_00]: And someone says fantastic, as long as you're not taking too much of the pie, that is a great trade for me.
23:13
[SPEAKER_00]: And the banks are like great.
23:14
[SPEAKER_00]: I can immediately recognize some of the value that I'm bringing to you this makes sense for all.
23:18
[SPEAKER_00]: That's all I'm seeing happening here.
23:20
[SPEAKER_00]: They see a lot of net interest margin that they don't get to keep.
23:22
[SPEAKER_00]: They see some control that isn't necessarily theirs and they say we're actually one of the biggest
23:32
[SPEAKER_00]: They are using stable coins on chain that's coming to Ethereum.
23:35
[SPEAKER_00]: At some point, I don't know if that's the first destination, but I can assure you it happens in short order thereafter.
23:41
[SPEAKER_01]: Well, that kind of answers the next question that I was gonna ask you about, because over the last six to 12 months, you have had, I think a lot more of the retail side asked themselves or asked us inside the community, guys, what has changed here in the last six to 12 months?
23:59
[SPEAKER_01]: They see stuff coming down, maybe it spooks him, it freaks him out a little bit, think regardless of whether this is your first rodeo in a crypto bear market, that has been one of the big questions.
24:08
[SPEAKER_01]: Like, what has changed,
24:10
[SPEAKER_01]: in the last six to 12 months, and I think there's a couple different ways that we could answer that question, but the way that I wanted to direct it towards you is have institutions changed the way that they're looking at Ethereum in the last 12 months.
24:25
[SPEAKER_01]: And it sounds as if again, you kind of partially answered this, but is there anything else to add to that?
24:31
[SPEAKER_01]: And I guess that stance of have institutions changed the way that they're looking at it, maybe it's good, maybe it's bad, hopefully good.
24:39
[SPEAKER_00]: I think so, and I think the major change happened in the public domain when you started to hear the discourse around genius and clarity, and the actual passing is consequential, but not as consequential as all the decisions that effectively happened both in public and as well as behind closed doors to get us to that point, like the amount of back and forth.
24:59
[SPEAKER_00]: to get everyone comfortable even bringing something forward.
25:02
[SPEAKER_00]: I think it was 90% of the problem.
25:04
[SPEAKER_00]: We believe that the agencies would effectively split this thing up regardless amongst themselves.
25:09
[SPEAKER_00]: They're not going to let it fall through the cracks of this juncture.
25:12
[SPEAKER_00]: I think the big pivot you've seen is that banks used to say blockchain.
25:17
[SPEAKER_00]: like they were afraid to say crypto and now banks are willing to say crypto they have crypto teams there's over a hundred jobs from the bulge bracket banks alone that were posted in the last month to hire for the infrastructure connectivity etc and the big difference between blockchain and crypto is the public versus private part it is the connectivity and in parts it's
25:40
[SPEAKER_00]: portions of things.
25:41
[SPEAKER_00]: Like it doesn't mean that much when someone builds a private blockchain from themselves and then puts their own data on it and doesn't make it accessible to anyone else.
25:49
[SPEAKER_00]: It's good for their operations.
25:51
[SPEAKER_00]: I'm sure it makes things more efficient and I'm glad they're doing it.
25:54
[SPEAKER_00]: It gets them like somewhat closer to being able to connect to public blockchains.
25:58
[SPEAKER_00]: But it's not nearly as useful as them going on chain and saying I want to access the rest of the world.
26:04
[SPEAKER_00]: They are doing that now, they're connecting on Ethereum, they're connecting on some other chains.
26:09
[SPEAKER_00]: But the big difference was crossing that chasm from saying web three or blockchain but being afraid to say crypto and actually going out there and saying we're high in crypto leads, we're high in crypto tech folks, the engineers are going to build on chain systems.
26:22
[SPEAKER_00]: on chain is very different than blockchain, in my opinion, on chain implies to me that you're actually connecting with the greater universe that ecosystem blockchain simply means you adopted a technology, but it's unclear whether or not there's any network effect.
26:36
[SPEAKER_01]: Yeah.
26:36
[SPEAKER_01]: No, it's a good point.
26:38
[SPEAKER_01]: It's a good point.
26:39
[SPEAKER_01]: And I think people are going through kind of the same thing and examining it.
26:45
[SPEAKER_01]: But one of the things that, you know, I'm curious about and we've seen a little bit over here is people questioning a little bit more now the status of Ethereum, right?
26:56
[SPEAKER_01]: How does the landscape for Ethereum
26:59
[SPEAKER_01]: Excuse me, how does the landscape for Ethereum look versus Solana?
27:02
[SPEAKER_01]: How does the landscape of Ethereum look versus other layer ones?
27:06
[SPEAKER_01]: Even versus other layer twos.
27:08
[SPEAKER_01]: And I want to preface this by saying, we're fans of Ethereum over here.
27:12
[SPEAKER_01]: We're obviously big fans of Ethereum.
27:14
[SPEAKER_01]: We also do likes Solana.
27:15
[SPEAKER_01]: We believe that there's not just going to be a single victor, right?
27:19
[SPEAKER_01]: We're not
27:19
[SPEAKER_01]: absolute is in that sense.
27:21
[SPEAKER_01]: But, you know, one of the things that you have seen is there have been increases in market share in other areas, right?
27:27
[SPEAKER_01]: Solana dominating daily transactions, daily users, decks of volume, and it's seen pretty a pretty sharp uptick and it's stablecoin and tokenization growth.
27:38
[SPEAKER_01]: I guess how do you look at that and then factor in like the longer term vision of
27:46
[SPEAKER_00]: Yes, so I'm very much view it as a retail to institutional transition and just looking at the transaction sizes and then breaking down the context of what is actually happening in the transactions.
27:58
[SPEAKER_00]: So it doesn't surprise me that you see in the short term a larger amount of transactions happening in a tokenized equity on Solana if they're coming from retail users who are actually doing the interchange.
28:12
[SPEAKER_00]: on salana in small sizes, right?
28:14
[SPEAKER_00]: Like it is got more throughput and they've also done deals with people to get tokenization to happen there in certain cases, those exclusive deals which have benefited their ecosystem.
28:25
[SPEAKER_00]: But the large institutions don't really
28:28
[SPEAKER_00]: care about 15 seconds versus one second.
28:31
[SPEAKER_00]: They care about the the finality of the transaction.
28:34
[SPEAKER_00]: They care about the credibly neutral side of things because at the end of the day you can't put trillions of dollars where the vassettes onto a system that you are afraid might go down or on a system that has centralization.
28:45
[SPEAKER_00]: And I'm no longer speaking specifically about Solana, mostly speaking about a
28:49
[SPEAKER_00]: versus what I believe to be effectively all, in the sense that no one else has that track record of continuous uptime.
28:56
[SPEAKER_00]: No one else has that focus on pure decentralization.
28:59
[SPEAKER_00]: And at the end of the day, settling a tokenized equity trade that happens for $1,000,000,000 in 15 seconds versus one second.
29:08
[SPEAKER_00]: does not really matter in the short term because the interchanged itself isn't necessarily going to be happening on the L1 for tokenized equities in the near term.
29:18
[SPEAKER_00]: Now where the L2s come in as I believe a very complementary ecosystem like the L1 is always going to be the most secure place for you to settle but the L2s can provide you additional capabilities much in the way that the app store allows you to access additional
29:38
[SPEAKER_00]: Let's say that you have a calculator app, and you have your eye message.
29:44
[SPEAKER_00]: I am not afraid that the third party calculator app is going to access my eye message, because I downloaded it from the app store.
29:51
[SPEAKER_00]: I know that there's no access to root.
29:52
[SPEAKER_00]: I know that it gets vetted.
29:53
[SPEAKER_00]: I know that it is almost impossible for them to go and access my data in between apps.
29:58
[SPEAKER_00]: And I view Ethereum as very much the same way.
30:00
[SPEAKER_00]: Like you download additional apps.
30:01
[SPEAKER_00]: You use an L2.
30:03
[SPEAKER_00]: There's a functionality that you need.
30:04
[SPEAKER_00]: for the L1 is not able to provide yet.
30:06
[SPEAKER_00]: You're always driving your security and that network effect makes it worth more.
30:10
[SPEAKER_00]: You don't see that network effect, in basically any of the other chains.
30:14
[SPEAKER_00]: At the end of the day, the security is the thing to bring large amounts of assets, because you really can't compromise on that.
30:20
[SPEAKER_00]: Speed is going to probably be what changes where the interchange happens, and I agree like smaller retail trades right now, aren't happening as much on mainnet because speed has not been the priority.
30:30
[SPEAKER_00]: It is right now, actually, one of the big priorities, and you're seeing that with things like glamour dam.
30:35
[SPEAKER_00]: But it was never the primary priority.
30:38
[SPEAKER_00]: It was always let's make sure securities kind of take in first and seriously.
30:42
[SPEAKER_00]: And then we can go and approach some of these user experience things.
30:46
[SPEAKER_02]: know that that's awesome and and kind of on the on the security side.
30:51
[SPEAKER_02]: I want to talk not super in depth, but a little in depth, I guess we could say about forks.
30:58
[SPEAKER_02]: Potential hard forks.
31:00
[SPEAKER_02]: This was obviously something that happened back in 2015, I believe 2016, where Ethereum, there was the Dow hack and Ethereum forked hard forks and everybody stopped trading into Ethereum classic
31:15
[SPEAKER_02]: and a theorem class that kind of went by the wayside, although some people still tried to you know, prop it up and whatever, um, in Bitcoin, there was the the contentious hard fork of Bitcoin and Bitcoin cash back in August or November or something of 2017.
31:32
[SPEAKER_02]: And so if there was some kind of hack on Ethereum where they're needed to be a chain rollback, I mean, how are you guys thinking about this with the tokenization model and with the sharp-linked model?
31:48
[SPEAKER_00]: Good question.
31:49
[SPEAKER_00]: I would say that a true security exploit of minnet, while it seems extremely unlikely to me, if the exploit truly happened because of a gap in minnet, then that's where I think the conversation becomes, this is an upgrade and all upgrades and a sensor forks, therefore you're going to adopt the one that continues to operate with the intention.
32:14
[SPEAKER_00]: I think that
32:16
[SPEAKER_00]: below that bar where you go and say okay great like this was an undesired but technically valid outcome I think there's an extremely high bar for anyone in the community to give up on the I'd say the principles of Ethereum and decentralization to start making discretionary calls like that and I don't know that the community would rally behind such a thing
32:43
[SPEAKER_02]: Yeah, like one more Korea hacks all these different defy protocols, Ethereum doesn't say, oh, we're going to like fork to make that hack, not happen.
32:50
[SPEAKER_02]: You're like, all right, got to take, got to take it on the chin and move on because those are technically, you know, flaws in those different defy apps code.
33:01
[SPEAKER_02]: Is that, is that what I'm understanding?
33:02
[SPEAKER_02]: Like you're not going to roll back the chain for that.
33:04
[SPEAKER_02]: But if something in like the solidity sort of base,
33:11
[SPEAKER_00]: That's my guess.
33:12
[SPEAKER_00]: I think that it's something that would go through a lot of public discourse.
33:16
[SPEAKER_00]: I think that it wouldn't be taken lightly, but I do think that it's very important to yeah, make that very clear delineation between true main net and everything else that is built upon it.
33:29
[SPEAKER_00]: And anything that's built upon it, like if the security exploit happens, and it's not truly ruinous to the entirety of the ecosystem, like that was additional marginal risk.
33:40
[SPEAKER_00]: that you were intentionally taking, and that is why I think going back to my point around different chains versus Ethereum for settling very large economic transactions, people will take a small difference in expediency to have the finality in the credibly neutral attributes.
33:55
[SPEAKER_00]: Like I want to settle $100 million things on mainnet.
33:59
[SPEAKER_00]: I am okay doing very fast trades on other chains.
34:04
[SPEAKER_00]: Like I think there's just a difference there.
34:07
[SPEAKER_02]: Tell us a little bit about what these, you know, different large entities like fidelity or black rock and some of these other folks who are starting to deploy funds, Apollo, I saw they have a fund.
34:19
[SPEAKER_02]: What's the draw, right?
34:21
[SPEAKER_02]: What's the upside?
34:22
[SPEAKER_02]: What's the benefit?
34:23
[SPEAKER_02]: What's the sales pitch to tokenization?
34:27
[SPEAKER_02]: You know, these are things that we, you know, maybe we know inherently like
34:36
[SPEAKER_02]: 365 transactions, you know, instant settlement instead of T plus 1, T plus 2, but is there anything else that that kind of you think is is really a real sales point?
34:47
[SPEAKER_00]: I think that it's a combination of liquidity and distribution and the feedback loop that that can create.
34:53
[SPEAKER_00]: So if you look at it from a distribution perspective, let's say that all actors are available to access this thing, but they can also do it in whatever size they want to and also provide the liquidity so they can be a maker or a taker.
35:08
[SPEAKER_00]: Just like you can in the remainder of the defy universe.
35:11
[SPEAKER_00]: And then you go and say from a Composibility perspective, you're now going to have the
35:15
[SPEAKER_00]: have the portfolio efficiency of Lendbaro on-chain to the highest marginal bidder, right?
35:21
[SPEAKER_00]: That's the really important thing.
35:22
[SPEAKER_00]: Like if I'm holding a stock in my, let's say retail brokerage account, most of them take 50 to 90 percent of the interest that I'd be earning for stock loan.
35:33
[SPEAKER_00]: It's a very under-discuss thing, but it's the case.
35:37
[SPEAKER_00]: Now, it doesn't always matter, right?
35:38
[SPEAKER_00]: A lot of the time you're holding things that don't very much into man, then you have a game-stop situation where you could be earning 100% APY+.
35:46
[SPEAKER_00]: And that really does matter.
35:48
[SPEAKER_00]: And so knowing that you're going to be able to get the best terms on chain, going back to the network effect, makes lot of sense.
35:53
[SPEAKER_00]: So you mentioned at the top that I came from Bridgewater.
35:57
[SPEAKER_00]: You train these large sizes by wadderly with large institutions.
36:01
[SPEAKER_00]: If you're trying to go and let's say source and in a liquid bond, you're asking a couple of different banks to find that for you.
36:09
[SPEAKER_00]: They might be asking a few others, there might be an inter-dealer network.
36:12
[SPEAKER_00]: It is passing through a few hands most likely before is making you each side getting marked up.
36:17
[SPEAKER_00]: You certainly aren't having autonomous vaults go and find the best bid.
36:21
[SPEAKER_00]: for you to lend out your stock.
36:23
[SPEAKER_00]: You're certainly not putting all of your exposure in to a custom vault of your own and saying, go and finance my portfolio at the lowest possible cost across all these different trusted networks.
36:32
[SPEAKER_00]: There's going to be a lot of economic savings I think, and then going back to distribution,
36:38
[SPEAKER_00]: We are very privileged.
36:39
[SPEAKER_00]: I think we have access to one of the best setups from our phone that you could possibly have as a retail user.
36:44
[SPEAKER_00]: For a lot of people, they don't, and I think being able to get access to the global financial hub when you don't necessarily have it in your pocket today.
36:54
[SPEAKER_00]: And being able to do so without having to use three or four intermediaries along the way who continuously mark you up, is going to empower a lot of the world to see better outcomes for themselves.
37:04
[SPEAKER_00]: And hopefully,
37:05
[SPEAKER_00]: At the end of the day, the free market will push things to be as user friendly as possible, the best user experience, the best costs, et cetera, as it owes to whoever showed you the advertisement that got you to sign up, has a captive user, some opaque spreads, and ultimately you're continuously bleeding out, which is unfortunately the model that I think exists for a lot of people today.
37:26
[SPEAKER_02]: Yeah, no super informative, you know, I want to ask just, you know, kind of bringing us up to speed on some, I would say some current events with with sharp link that you all play to hand in.
37:39
[SPEAKER_02]: I want to, you know, talk about eth labs and what this is what this means for the ecosystem relative to the eth foundation that we all kind of knew and.
37:51
[SPEAKER_02]: I'm not going to say we all knew and loved, but we all knew, and there was also a recent talk that you alluded to on the Galaxy fund pushing $100 million of Treasury Ethan to DeFi protocols.
38:03
[SPEAKER_02]: Tell us a little bit about both of these.
38:06
[SPEAKER_00]: short.
38:07
[SPEAKER_00]: So we, along with a lot of other industry participants, are backing a firm called eat labs and not for profit, whose goal it is is to be an extension of the existing mandate of Ethereum to build crops and then to build these things in a way that increases the credible neutrality, but provides additional leverage to the ecosystem.
38:29
[SPEAKER_00]: I think this idea that a foundation
38:33
[SPEAKER_00]: the entirety of its chain's ecosystem, its builders, choosing all of the prioritizations, etc.
38:38
[SPEAKER_00]: Isn't necessarily where the industry needs to be.
38:42
[SPEAKER_00]: I think it's a lot of centralization, and it's also very, it's a resource intensive, right?
38:48
[SPEAKER_00]: Like,
38:49
[SPEAKER_00]: they're no different than anyone else who's decided to participate in the open source ecosystem.
38:54
[SPEAKER_00]: It's just that they've chosen to dedicate their efforts to Ethereum.
38:57
[SPEAKER_00]: You know, I believe Microsoft had over 25,000 employees contribute to open source last year.
39:02
[SPEAKER_00]: Like that is effectively what is happening here.
39:05
[SPEAKER_00]: with these labs.
39:05
[SPEAKER_00]: They've decided to make a theorem open source their priority and they're going to build the things that we still think are necessary for the industry, but which the foundation is basically indicated may not fit within its core mandate from an expense and viability perspective.
39:19
[SPEAKER_00]: They've trimmed themselves down.
39:20
[SPEAKER_00]: They publicly said, hey, we want to make sure we're here forever and able to always support the things that we believe to be table stakes.
39:28
[SPEAKER_00]: We're going to leave some of the additional work that we still think is extremely
39:32
[SPEAKER_00]: to other good actors.
39:34
[SPEAKER_00]: So that's what happened with EF Labs.
39:36
[SPEAKER_00]: I think this is just the beginning of a wave of seeing this.
39:39
[SPEAKER_00]: I hope that other foundations do spell spin outs in an creative way.
39:43
[SPEAKER_00]: I think it is very important to be intentional with the governance of these organizations.
39:48
[SPEAKER_00]: It is good to get people who have invested interest in the success involved economically as a benefactor.
39:55
[SPEAKER_00]: You obviously need to make sure that you are not risking your credible neutrality.
40:00
[SPEAKER_00]: in the process or be very clear of what incentives exist and who's backing you because at the end of the day doing things that are the best possible thing for a theorem will always be the theorem foundation school doing things that are good for it theorem can be a lot of people's goal use it to be very clear about where you sit on that and we're very excited to see what these guys do it's an incredible group They all spun out from the EF they were all doing important research.
40:22
[SPEAKER_00]: They're going to continue to do so from this new seat and add another megaphone to the theorem story
40:28
[SPEAKER_00]: love it.
40:29
[SPEAKER_02]: And on the on the galaxy side?
40:32
[SPEAKER_00]: Yeah, so the galaxy fund we announced our ROI with them hoping to deploy on that soon, which is basically we're going to put 100 million in and they're putting in 25.
40:42
[SPEAKER_00]: And the idea is that we're going to find six to 10 good projects being managed by galaxy on the investment side.
40:48
[SPEAKER_00]: They're going to effectively help to provide them this early stage cold start capital where it's like,
40:57
[SPEAKER_00]: No one is ready to use this on day one, day 30, day 90.
41:01
[SPEAKER_00]: We need someone sticky to come in, start using this thing, maybe it's over-clatter-alized, when they're at a call, it doesn't have the kernel to start their loans.
41:11
[SPEAKER_00]: Like if you're a bank trying to get off the ground, and you have zero deposits, you can't loan anything.
41:16
[SPEAKER_00]: And if you can't want anything, you can't offer an attracted deposit rate, so no-indeposites, it's a vicious cycle.
41:22
[SPEAKER_00]: And so, TVL is a very interesting metric.
41:25
[SPEAKER_00]: Our industry uses a few ways.
41:26
[SPEAKER_00]: I think we use it too much sometimes.
41:28
[SPEAKER_00]: Sometimes people use it as a brometer of success.
41:30
[SPEAKER_00]: I don't necessarily think that is true beyond a certain point.
41:33
[SPEAKER_00]: But other people sometimes use it as a brometer for, has someone else...
41:37
[SPEAKER_00]: put a lot of skin in the game.
41:39
[SPEAKER_00]: Therefore, they may have spent more time doing diligence on this than I can afford to or have resources to make it worth their while to diligence this beyond what I can.
41:48
[SPEAKER_00]: And so what we're trying to basically do is say, okay, great.
41:50
[SPEAKER_00]: We're going to in partnership with Galaxy.
41:53
[SPEAKER_00]: find projects, send them over their way, they are ultimately the investor manager.
41:57
[SPEAKER_00]: They have a great funnel from their franchises, and they also have a VCRM that does a lot of early stage investing.
42:03
[SPEAKER_00]: To identify these projects that the world would probably do really well having, but need to get that initial user in the dorm.
42:10
[SPEAKER_00]: and we're going to hopefully monetize that and turn into additional ethershide.
42:13
[SPEAKER_00]: I think there's a vicious cycle in crypto which is protocols will offer a massive API of their own native token or sometimes really will that they have a lot of BC dollars out of the gate for the first month or three.
42:26
[SPEAKER_00]: and everyone farms these rewards and because it's a bear market especially, they instantly dump the token.
42:31
[SPEAKER_00]: They break the chart.
42:32
[SPEAKER_00]: People then pull off their funds out of the protocol as soon as the rewards dry up or when someone else offers a higher inflationary award and then they move on.
42:41
[SPEAKER_00]: And you see TVL drop off 75-90% in the first three to six months.
42:46
[SPEAKER_00]: All the institutions that could have possibly had you on their radar for being a possible like connectivity point to build on that infrastructure are going to panic when they see TVL drop off by 70 to 90 percent.
42:58
[SPEAKER_00]: And so I think we see things kind of too quickly rotate in crypto and you sometimes need someone with a longer term view to come in and say great we're going to partner with you.
43:09
[SPEAKER_00]: for one years, two years at a time, to give you the breathing room to focus on other metrics that aren't TVL or that initial cold start capital.
43:18
[SPEAKER_00]: And also, we're not looking to have you give us 100% APY and your token and instantly dump it like that isn't good for anyone either.
43:25
[SPEAKER_00]: So we're trying to find a balance and fill a gap that we think we're uniquely positioned to with our capital.
43:31
[SPEAKER_01]: Well, I think that makes sense and to wrap us up here, how do you determine when to add more ethereum moving forward or even sell Ethereum, right?
43:42
[SPEAKER_01]: That's something that we've started to see become a little bit more prevalent in the conversation of like, when did these treasury companies sell?
43:49
[SPEAKER_01]: You obviously seen a little bit of strategy talk about it.
43:52
[SPEAKER_01]: I'm really small sell just a few weeks ago, but now they're talking about potentially selling more substantial amount in the future.
44:00
[SPEAKER_01]: How do you look at that?
44:01
[SPEAKER_01]: Because I saw this morning that you announced that you bought back 2.1 million shares of S-Bet, which is about $10 million worth, and then another, I think, $10,000 plus Ethereum, what goes into making those buying and selling decisions at such an important time of the market?
44:18
[SPEAKER_00]: So I think one, we think that Ethereum is very well priced here, and we also thought that our stock was trading a very attractive level.
44:27
[SPEAKER_00]: So we made a decision to split the ticket and effectively buy back both because one, it is good for a treasury company, all else equal to expanded capital base.
44:36
[SPEAKER_00]: If we think that Ethereum is really attractive here, and we think we can go do good things to point that Ethereum.
44:41
[SPEAKER_00]: We think the market is currently under pricing, what we're able to do with our theory as well.
44:45
[SPEAKER_00]: So we want to prove them wrong in two different ways.
44:47
[SPEAKER_00]: We want to say, okay, great.
44:48
[SPEAKER_00]: Longer term holders, we've just bought back stock at a discount to our nav.
44:53
[SPEAKER_00]: Also, we've added additional eat that we plan on going and making productive.
44:56
[SPEAKER_00]: And hopefully,
44:58
[SPEAKER_00]: down the line, the market will start to price, that says the NPV of the expected outperformance through time.
45:06
[SPEAKER_00]: And so we want to show the market what we're capable of there, and we thought it was very creative time to do it.
45:10
[SPEAKER_00]: In terms of figuring out timing, prices one thing, the other is being able to raise capital in a creative way.
45:17
[SPEAKER_00]: Like you don't want someone tapping the ATM when they're trading below one.
45:21
[SPEAKER_00]: and then immediately buying eth.
45:22
[SPEAKER_00]: All that does is increase the market cap of the company.
45:25
[SPEAKER_00]: It decreases your value per share as a shareholder.
45:27
[SPEAKER_00]: I think it's actually a pretty common misconception in the market that the largest debt will always be the best debt.
45:33
[SPEAKER_00]: Like it really depends how you raise the money.
45:35
[SPEAKER_00]: If you sell a share at 90% of face value, like every other shareholder is just lost.
45:41
[SPEAKER_00]: But the company is grown in terms of market cap.
45:45
[SPEAKER_00]: That's a misalignment of incentives between management and shareholders in my opinion.
45:49
[SPEAKER_00]: And so we tried to do capital raises when we think we can use that capital to continue our goal of increasing ethershare over time.
45:57
[SPEAKER_00]: And I think by sticking to that singular north star through time, we try to be very consistent.
46:04
[SPEAKER_00]: And that's how we think about the timing side of things.
46:07
[SPEAKER_01]: And in regards to the sell side, to my understanding, sharpening has never sold a theorem.
46:14
[SPEAKER_01]: Is that accurate?
46:14
[SPEAKER_01]: And at what point would you all look to take profits or do something different?
46:21
[SPEAKER_01]: Like, what even goes on in regards to that whole conversation?
46:27
[SPEAKER_00]: So I'll be honest, we're still very much in accumulation mode, and that's effectively this shareholder mandate as of now.
46:34
[SPEAKER_00]: Now, accumulation does effectively happen in two ways, though.
46:38
[SPEAKER_00]: It's you accumulate each per share by buying more youth when it's a creative,
46:43
[SPEAKER_00]: or by buying shares back.
46:44
[SPEAKER_00]: And so you can kind of view it as we could have bought 20,000 ETH.
46:48
[SPEAKER_00]: We bought 10,000 and we bought shares back as well.
46:52
[SPEAKER_00]: And so that's kind of your implicit portfolio management decision of like, should I go 100% ETH or am I, you wouldn't say selling because we didn't sell 10,000 ETH, but you effectively are from a portfolio perspective.
47:04
[SPEAKER_00]: And that's where the balance comes from.
47:05
[SPEAKER_00]: Like any time you have dollars off to the side in their
47:12
[SPEAKER_00]: choosing how to deploy them is basically your way of deciding which side of the equation you're optimizing for like balance sheet growth or each per share concentration growth.
47:23
[SPEAKER_00]: We've never sold from a viewing it as over value perspective, but frankly we're a lot lower than I would say even our Morton servitive longer term price targets are, but at the end of the day it's a shareholder mandate thing like yeah.
47:38
[SPEAKER_00]: people want to be long-Eath if they're in dusts in sharp length.
47:41
[SPEAKER_00]: And so it'd be a bit of a divergence.
47:43
[SPEAKER_00]: Now that being said, if something crazy were to happen, we've also said publicly, we're always going to be reasonable operators.
47:49
[SPEAKER_00]: Like, if someone was trading at the crazy example of 0.1 in MNAP, right?
47:54
[SPEAKER_00]: And you could say, I'm going to go and make 90% more value by swapping one for the other.
47:59
[SPEAKER_00]: There's a conversation and be had.
48:01
[SPEAKER_00]: There's also an argument on the flip side.
48:03
[SPEAKER_00]: If you're
48:06
[SPEAKER_00]: do you tap the ATM?
48:08
[SPEAKER_00]: Well, maybe, but maybe you're also generating more ethershare than you would on the marginal ethers going to go and raise down the line.
48:16
[SPEAKER_00]: Should you be tapping at 1.01?
48:18
[SPEAKER_00]: Only if that marginal dollar your raising is going to make the existing shareholders more money.
48:23
[SPEAKER_00]: I gave you two extreme examples to kind of give you the way that we think about it.
48:27
[SPEAKER_00]: That's going to narrow through time and we are hoping that range continues to move up as we make the existing ethers more valuable because then the opportunity
48:36
[SPEAKER_01]: Yeah, I think one of the important things I noticed there is that the thought of the shareholder is at the front of your mind.
48:41
[SPEAKER_01]: You know, you keep bringing it up.
48:43
[SPEAKER_01]: It's obviously important.
48:45
[SPEAKER_01]: And I think that's what people want to hear, right?
48:47
[SPEAKER_01]: People want to hear that they matter.
48:48
[SPEAKER_01]: They want to hear that they're making that the people that they're investing in have their best interest in mind and that you're thinking about that.
48:55
[SPEAKER_01]: And I think you're right.
48:56
[SPEAKER_01]: You know, there are examples where it's like, well,
48:58
[SPEAKER_01]: We want to be reasonable operators.
49:00
[SPEAKER_01]: Imagine if all of a sudden everything explodes and these ratios go off and there's maximum gains out there, it's like, okay, well, just like, right, we're obviously very long-term bullish from crypto, but it doesn't mean we can't take some profits here and there when things go absolutely parabolic.
49:16
[SPEAKER_01]: When you have some of these things that we've seen go up, what, 100% in a few days or 1,000% or more than that, it's like, okay, it's not a crime to shave a little bit off the table, especially when you're running a company.
49:28
[SPEAKER_01]: You know, for us it's more of a personal portfolio or for Bryce, you know, hedge funds and stuff, but Man, all that makes sense.
49:34
[SPEAKER_01]: It's really good information to wrap us up officially here.
49:38
[SPEAKER_01]: What are you the most excited to see or even what do you want to see in the next 12 or so months?
49:46
[SPEAKER_00]: I think it's, I want to see someone making more money using tokenized equities than they do in their Procredient account, not just someone that doesn't have access, someone that has access to all possible access schemas and makes the most money on-chain.
50:00
[SPEAKER_00]: And I think we're getting very close, but right now, until you can go and lend that thing out or borrow cheaper.
50:05
[SPEAKER_00]: I mean, you can borrow on Avay cheaper than you can borrow from your Procredient currently.
50:10
[SPEAKER_00]: That is a great sign, but I don't see people taking advantage of that portfolio efficiency yet because we're not quite liquid enough.
50:17
[SPEAKER_00]: Once we cross over to it being an economic benefit versus a really interesting headline that we can all post about to talk about the future is coming, then the future is now and I think that it becomes a much quicker acceleration process.
50:30
[SPEAKER_00]: You just need people to start realizing how much money they're leaving on the table and I'm seeing all the signs pointing towards it being soon.
50:41
[SPEAKER_00]: funding rates are pretty depressed, it's a good time for portfolio efficiency to come on chain.
50:45
[SPEAKER_00]: So that to me is the most important update that we can see from a trader's perspective.
50:51
[SPEAKER_02]: I like that a lot.
50:52
[SPEAKER_02]: Where would be a good starting point for somebody to go to try to find and capitalize on some of these opportunities?
51:00
[SPEAKER_00]: So there's a few tokenized equity protocols already in existence.
51:04
[SPEAKER_00]: Obviously some of them are perplexed.
51:06
[SPEAKER_00]: Some of them are the actual security, some of them are derivatives of the security.
51:10
[SPEAKER_00]: I think there's still a bit of protocol wars that are going to play out there and we'll probably have more standards than now at some point and then fewer standards down the one.
51:18
[SPEAKER_00]: Someone will inevitably raise 100 million for an interop layer as well, somewhere between.
51:23
[SPEAKER_00]: But for right now, I think without me explicitly recommending one or the other,
51:29
[SPEAKER_00]: Go and try your probe dex is out because I think it's a nice clean exposure just make sure you are aware of your funding rates and then go and try the security version of it assuming that you're allowed to the river version of it, assuming you're allowed to and go and see what the different experiences are like one of them gives you a lot of leverage.
51:45
[SPEAKER_00]: One of them gives you a lot of transparency and disability.
51:48
[SPEAKER_00]: One of them gives you the access to the site, but a little bit less rights to shareholder.
51:52
[SPEAKER_00]: See how the different prices feel, see how the experience is.
51:55
[SPEAKER_00]: And then ultimately, whichever one gets adopted into the lending protocols of the stock part, not the part part first.
52:03
[SPEAKER_00]: go and just do it in min size, like just get a feel for what it's like to manage that.
52:07
[SPEAKER_00]: The good news is, if you're a crypto native trader, you are used to such high volatility positions that if you use any leverage, you are probably very good at monitoring your positions.
52:18
[SPEAKER_00]: So tokenize equities that unless you're trading SpaceX or going to come in at a fraction of the wall are going to feel like a breath of fresh air for you in the grand scheme of things like you're not watching your, you know,
52:29
[SPEAKER_00]: coin number 150 on coin Gecko drop off 50% and then you get leaked in a single candle in most tokenized equities.
52:36
[SPEAKER_00]: And so I think it'll actually be a very satisfying experience for you to see crypto without the crypto wall in some senses.
52:44
[SPEAKER_02]: love it.
52:45
[SPEAKER_02]: Man, Matt, this was awesome.
52:46
[SPEAKER_02]: We really appreciate you spending the full hour with us here on the Crypto 101 podcast.
52:51
[SPEAKER_02]: Where's the best place for people to follow along on your personal journey as well as the sharp link journey?
52:58
[SPEAKER_00]: So you can follow me on X at Sheffield airport and then sharp link is at sharp link on X as well.
53:04
[SPEAKER_00]: We try to keep that up to date.
53:07
[SPEAKER_00]: Brilliant.
53:08
[SPEAKER_02]: All right.
53:08
[SPEAKER_02]: Well, we'll check back in with you in a few months time.
53:11
[SPEAKER_02]: I'm sure there's going to be many more updates from the sharp link Land but until then we appreciate all that you're doing for the ecosystem and we'll talk to you soon Everybody at home watching we appreciate your support and your interest in What we do here come back same time same place next week and we got some more great guests for you.
53:32
[SPEAKER_02]: Thank you Matt.
53:33
[SPEAKER_02]: Thank you