Latest / The Starting Block / Saylor Sells $216M Of Bitcoin, Joe Chalom Unpacks New Ethereum Orgs

Transcript

Saylor Sells $216M Of Bitcoin, Joe Chalom Unpacks New Ethereum Orgs · The Starting Block

2:39
Happy Monday, everyone.
2:40
Welcome back to The Starting Block.
2:41
I hope you had a fantastic weekend.
2:43
It's been a crazy couple of days
2:45
in the crypto markets and while we
2:47
were preparing for the show, a
2:48
number of big things have
2:50
hit headlines. The Block team is
2:51
working very hard to get
2:53
out some breaking news with
2:55
Strategy and Michael Saylor selling
2:57
some Bitcoin. We're gonna be getting
2:58
into all of that today.
3:00
We're also gonna be talking about
3:02
the biggest meme coin that
3:04
we've seen in a long time.
3:05
Ansem has been trending all over X
3:07
for pretty much over a
3:08
week now that came to a head over
3:10
the last few days and It's
3:13
continuing and abated if you haven't
3:14
been following that we'll be talking
3:16
about that a little bit later in the
3:18
show with our guests We've also got
3:19
Vuga Uzi who's the CEO
3:21
of MEXC to join us for the market
3:23
polls today And then we've got
3:25
Joseph Chalom from sharp link gaming
3:27
to talk to us about Ethereum
3:28
institutional ETH labs and
3:30
the future of Ethereum.
3:32
So we've gotta jam pack show We're
3:34
gonna be starting things off as we
3:35
always do with the block briefing.
3:38
So we'll bring up our first story
3:40
today. Actually, we won't because
3:41
this is so new.
3:42
We haven't even written and
3:44
published our story yet.
3:45
It will be up on the block's website
3:46
very shortly.
3:47
But if you go into x, you'll see
3:49
this trending already.
3:50
It's a big one strategies and
3:52
Michael Saylor have confirmed that
3:54
they've sold 3588
3:57
Bitcoin that's worth $216
4:00
million to fund dividends
4:02
on its digital credit securities.
4:04
Just to put that in context, it's
4:05
more than 100 times bigger.
4:07
Than the 32 Bitcoin sale
4:09
back in June that everyone
4:11
lost their minds over.
4:13
So we're talking 100 times bigger
4:15
sale right now announced.
4:17
It follows the $1.5 billion
4:19
monetization program that
4:21
strategy authorized on June the 29th
4:23
that was greenlit after its MNAV
4:25
slipped below one, meaning
4:27
the market was valuing the firm at
4:29
less than the Bitcoin that it holds.
4:31
And as of July 5th strategy still
4:33
holds roughly 843,000
4:36
Bitcoin, so they've got a big stack.
4:37
Plus two and a half billion
4:39
dollars in cash.
4:41
Obviously it looks like Sailor is
4:42
trying to build up as much cash
4:44
reserves as he can to continue
4:46
fulfilling those dividends.
4:48
But it does look like Sailors never
4:50
sell era is well and
4:52
truly over.
4:53
So hopefully we can get him down for
4:55
an interview in the next few weeks
4:57
or months to talk about
4:59
this big change in strategy,
5:01
no pun intended, and these
5:03
significant sales of
5:05
Bitcoin.
5:05
Moving on to our next story today,
5:07
Nigel Farage failed to
5:09
declare funding from a crypto
5:11
gambling figure. That's the headline
5:12
the block has run with today, and
5:14
that is off a Sunday Times
5:15
investigation that reports Farage
5:17
took undisclosed support from
5:19
George Cottrell.
5:20
He's a convicted fraudster tied to
5:22
offshore crypto bookmaker
5:24
Tether.bet, who paid
5:26
for his security, drivers, staff,
5:28
and accommodation in the year before
5:30
Farage's 2024 election.
5:32
That appears to breach MPs
5:34
disclosure rules and it piles onto
5:36
an existing standards probe over an
5:38
undeclared five million pound gift
5:39
from Tether stakeholder
5:41
Christopher Harbourn.
5:44
Spokesperson Farage called the
5:46
story baseless and contrived while
5:48
the Liberal Democrat MP has already
5:50
asked the standards commissioner to
5:52
investigate in the UK.
5:54
So very interesting story coming out
5:55
of the United Kingdom over the
5:57
weekend.
5:58
Then Ethereum's co-founder is
5:59
thinking big in a weekend post
6:01
Vitalik Buterin laid out
6:03
Lean Ethereum.
6:04
Not a single upgrade, but a three to
6:06
four year rebuild, he calls the
6:08
network's third major iteration
6:10
on par with the merge that saw
6:12
Ethereum move from proof of work to
6:14
proof of stake.
6:15
Almost every major piece of the
6:17
Ethereum protocol is gonna be
6:18
replaced. The most disruptive part
6:20
is a cheaper new tier for
6:22
storing data that Buterin says could
6:24
cut some token fees more than
6:26
10-fold without forcing old
6:28
apps to rewrite their code.
6:30
Quantum safety and privacy have also
6:32
moved up the priority list.
6:33
And he says the Hegotta fork,
6:35
which is due later this year, is
6:37
likely Ethereum's last pre-lean
6:40
upgrade.
6:41
Then onto some news in the markets.
6:44
The bleeding and spot Bitcoin ETFs
6:46
just set a record last week.
6:48
US funds shared around $527
6:50
million over the 4th of July,
6:52
shortened week.
6:53
It was their eighth straight
6:55
negative week, the longest losing
6:56
streak on record for Bitcoin ETF.
6:59
And that was after a strong finish.
7:01
Last Thursday, saw $221
7:03
million in inflows, and that was the
7:05
biggest single day since May,
7:06
which broke a 10-session outflow
7:09
run. But BlackRock's iBit bucked
7:11
the trend, extending its own losing
7:12
streak to 11 days.
7:14
Spot Ether ETFs also logged an
7:16
eighth straight weekly outflow,
7:18
tying their record, and yet today,
7:20
Bitcoin funds are now down a net
7:22
$5.5 billion.
7:25
We'll have to see if the ETF markets
7:26
finally turn green.
7:27
As we head into a new week of
7:29
trading, but it's gonna be very
7:30
interesting to see what happens in
7:31
the opening bowl with Michael Saylor
7:33
just announcing that he sold over
7:35
$200 million of Bitcoin.
7:37
Then a sobering look at the official
7:38
Trump meme coin.
7:40
According to Nunson data reported by
7:42
the New York Times late last week,
7:44
nearly 1 million wallets, about two
7:46
of three that ever bought the token
7:48
are underwater with combined losses
7:50
of $3.8 billion through
7:52
the end of June.
7:53
Trump is down roughly 97%
7:55
from its January 2025 peak.
7:57
The gains that do exist are
7:59
concentrated among early buyers who
8:00
got in below $1.
8:02
Meanwhile, Trump's financial
8:03
disclosure showed a $636
8:05
million payout tied
8:07
to the token, meaning the coin
8:09
has made up far more for
8:11
the president than for its
8:13
buyers as a group.
8:16
DeFi lending giant Aave is off to
8:18
a fast start on Monad.
8:19
Deposits on its new Monad market
8:21
topped $100 million on
8:23
Saturday morning.
8:24
It's just two days after going live
8:26
on the high throughput layer one.
8:28
The launch is heavily subsidized.
8:30
The Monad Foundation committed 15
8:32
million in the first year incentives
8:34
and agreed to buy and hold 10
8:36
million GHO.
8:37
That's Aave's native coin.
8:39
That's a hundred million dollars is
8:41
worth, sorry.
8:42
That 100 million is worth
8:44
more than a quarter of Monad's
8:46
entire total value locked.
8:48
And separately Aave V4 deployment
8:50
crossed 250 million in deposits
8:52
the same day That was a new
8:53
all-time.
8:54
High for that version
8:56
of the protocol.
8:58
Then a warning sign from the data
8:59
desk, CryptoQuant says Bitcoin
9:01
deposits to exchanges spiked
9:03
to nearly 49,000 Bitcoin
9:05
at the end of last month.
9:07
It's a rare extreme, hit only four
9:09
other times this year, and one that
9:11
has historically preceded
9:12
sharp swings in volatility.
9:15
Crucially, it's whales and
9:16
institutions driving it, not retail.
9:18
The average deposit size doubled
9:20
to around two Bitcoin.
9:21
Ether and altcoins deposits
9:23
are climbing too.
9:24
Which Crypto Coin reads as a broader
9:26
risk of signal.
9:28
It all lands as Bitcoin tests the
9:29
critical $60,000 support
9:31
level, a break of which could
9:33
open the door towards $53,000
9:36
per coin.
9:37
Then our final story.
9:38
Before we move on in the show,
9:40
Ripple has just cleared Europe's
9:42
biggest regulatory hurdle.
9:44
The company says it's secured full
9:45
crypto asset service provider
9:47
authorization from
9:49
Luxembourg's financial regulator.
9:51
Making it fully Mika compliant to
9:53
offer regulated crypto payments to
9:55
institutions and businesses across
9:57
all 30 countries in
9:59
the European Economic Area.
10:01
It builds on Ripple's existing EU
10:02
eMoney license and pushes its
10:04
global tally past 75 regulatory
10:07
licenses.
10:08
And the timing is notable as Mika's
10:10
final transition period ended on the
10:12
July 1st.
10:13
So, and so far only about 280
10:16
firms have won CASP
10:18
approval. Ripple joins Kraken,
10:20
Coinbase, OKX, and Crypto.com,
10:22
while Binance telling me entered the
10:24
new era without it.
10:26
And while we're talking about Binance,
10:27
and if you missed our interview with
10:29
CZ to launch the starting block last
10:31
Monday, we will be uploading the
10:33
full edited, high quality
10:35
version on YouTube a little bit
10:37
later this afternoon.
10:38
So go and check out the block's
10:39
YouTube channel if you haven't
10:40
already, please.
10:41
Subscribe, because we're going to
10:42
have lots more fantastic content
10:44
coming your way.
10:45
We're going take a short break and
10:46
then we'll be moving into the market
10:48
pulse. I'm joined by Vougar Ussi,
10:50
who is, of course,
10:53
MxE's CEO to break down everything
10:55
that's happening in the markets.
10:56
We'll also react to Michael Saylor
10:58
selling Bitcoin.
10:59
And I think we're gonna talk about
11:00
Ansem's mean coin as well.
11:02
So don't go away.
11:03
We'll be right back.
12:20
Welcome back to the starting block.
12:22
We are moving into the market pulse
12:23
today. It's a great pleasure to be
12:25
joined by MEX CEO,
12:27
Vugar Ussi.
12:28
Vugar, it's great to have you on us,
12:30
with us on the show today.
12:32
First things first, big news.
12:35
Just before the opening bell in the
12:36
U.S., Michael Saylor sells, you
12:38
know, roughly $216
12:40
million worth of Bitcoin.
12:42
I didn't even have that on the
12:44
talking points that I sent you
12:45
through a little bit earlier today.
12:47
But I want to get your initial
12:48
reaction to that and how you think
12:50
that might impact the price of
12:51
Bitcoin in the next 24 hours.
12:52
When we are thinking
12:54
about Maxi as a platform,
12:56
and since I took over the CEO, I was
12:58
telling them we want to become like
12:59
a single stop shop,
13:01
one big super finance app.
13:03
And I think what Michael Taylor and
13:05
the entire MicroStrategy did was
13:07
exactly the reflection because today
13:09
in this market that we operate,
13:12
you need to have agility
13:14
and you need understand where the
13:16
money is.
13:17
Unfortunately, it is no more.
13:19
A long term conviction, still
13:20
the term that Michael holds his
13:22
bitcoins, it is a very long term
13:24
conviction.
13:25
But what we see happening with the
13:26
SpaceX plus AI
13:28
probably by the end
13:30
of the year, we definitely see
13:32
a capital flow.
13:34
Michael Seller did an interview
13:35
recently explaining how he
13:37
also believes that the money that is
13:39
outflowing crypto will go this
13:41
full cycle in AI and
13:43
come back.
13:44
And I truly believe in that.
13:45
And I think we are no
13:47
more talking about that.
13:48
Closed cycle of crypto
13:50
where you have Bitcoin rallying,
13:53
altcoins come and then you know it's
13:54
built to NFTs memes.
13:56
Today our kind of Bitcoin
13:58
is your altcoins and stock is
13:59
becoming your Bitcoin and that's how
14:01
we need to see the stock market to
14:03
rally and bring the money back.
14:05
Yeah, when I was obviously
14:07
doing the rundown of the news today
14:09
in the block briefing, we spoke
14:11
at length about these Bitcoin ETF
14:13
outflows. It's been almost like
14:15
six weeks worth of just consistent
14:17
outflows,
14:19
we're 50% down from Bitcoin's
14:21
high.
14:22
How is this reflecting in the way
14:24
that retail traders perhaps on
14:26
your platform and other
14:28
crypto exchanges are actually
14:29
trading Bitcoin? Do you think it's
14:31
having a big influence on on what
14:33
the regular retail user?
14:34
Is doing with Bitcoin and other
14:36
altcoins and if it's really
14:38
damaging sentiment that institutions
14:40
are so easily parting
14:42
ways with their Bitcoin at this
14:44
point in the market.
14:45
Honestly, I'm very happy because
14:47
I was always against institutions
14:49
and against institutions coming,
14:51
even though I believe it's very
14:52
important from legal point on
14:54
the money coming in.
14:55
But that wasn't the whole idea of
14:57
Satoshi and his white paper, right?
14:58
It's supposed to be peer to peer,
15:00
cut the middleman.
15:01
Institutions came, they played their
15:03
show and I'm really happy to see
15:05
them slowly going away.
15:06
Because if you look back on the
15:08
statistics, especially what's
15:09
happening in trading platforms like
15:11
ours and centralized exchanges,
15:13
most of the trade were happening in
15:15
futures because there isn't much
15:17
supply actually when you look at in
15:19
the Bitcoin by the retail because
15:21
all the large holders are
15:23
like big institutions like
15:25
MicroStrategy, it is like
15:27
these big ETFs, hedge funds
15:29
and another biggest
15:31
for me the scary point is that
15:33
even the largest single
15:35
holder of the digital asset and
15:37
Bitcoin and for all these.
15:40
ETFs like a gray scale, it is
15:42
another big issue in itself, right?
15:44
Why all this decentralized
15:46
asset is kind of concentrated
15:48
in one hand.
15:49
Therefore, I am low key happy
15:51
that it is happening.
15:52
And I see that I hope that, you
15:54
know, the Bitcoin that is being sold
15:55
doesn't just change hand and ends
15:57
up in retail.
15:58
And we see that retail coming back
16:00
and not just trading
16:02
Bitcoin or any digital asset in
16:04
futures, but actually holding it in
16:06
the long term. Because I do still
16:08
believe that Bitcoin is the digital
16:10
gold.
16:11
I'm not sure how much you've looked
16:13
into this, but obviously, the last
16:15
kind of eight or nine days,
16:17
crypto Twitter, all the DJs have
16:18
been aping into Ansem's
16:21
new meme coin.
16:24
It's massive market cap already.
16:26
It seems like it's kind of reviving
16:28
the meme coin movement or at
16:30
least just giving some people a
16:32
false sense of hope.
16:33
What's your general take on that?
16:34
And do you think some
16:37
major exchanges would want to
16:38
onboard a meme coin like this or we.
16:40
Way beyond that now as an industry.
16:43
Honestly,
16:45
as a whole economy, because I'm
16:47
an economist by training, like meme
16:49
coins for me never was like anything
16:51
substantial, but also today when we
16:53
see what a crowd could do
16:55
with stocks, right?
16:57
Whether it will happen with
16:58
GameStock, whether it was with Avis
17:00
and even like what we see around
17:02
the SpaceX that goes against every
17:05
fundamental economics.
17:07
You know, understanding,
17:10
I think low key, the cultural
17:11
moments and like memes are the
17:13
cultural moments that we are
17:15
trading, we are, you know,
17:17
investing in or just putting our
17:18
money money. Therefore, I don't
17:20
think it's negatively necessarily
17:21
bad.
17:23
And I hope the meme coin
17:25
saga comes back because I firmly
17:27
believe that alt is what happened
17:28
because we are not seeing much, you
17:30
now, development within the whole
17:32
bucket of alt coins.
17:33
Definitely there are different
17:35
segments in there that will be.
17:36
You know doing better and they're
17:38
still doing better but also
17:40
looking in it from the different
17:41
angle what is the difference between
17:43
you know war happening and we all
17:45
trading the old futures or we
17:47
are going to you know metals
17:49
or it's just another meme coin
17:51
and whatever also is happening
17:53
in a prediction market is another
17:55
indicator that people
17:57
kind of understanding now like
17:59
what they need to hold long term and
18:01
what is like a short term gains and
18:03
that short term gain is what gives
18:04
the market the adrenaline.
18:07
My final question to you, I stand
18:09
to be corrected here, but I don't
18:10
think MEXC has a
18:12
MECA license as it stands.
18:13
And obviously that changed a lot of
18:15
things for a lot big
18:17
exchanges, but Binance Chief among
18:19
them from the 1st of July.
18:21
How do you see this kind of shaping
18:23
the markets in Europe and do
18:25
you think those that already have
18:26
their MECAs license do get a bit of
18:28
a first mover advantage here?
18:30
Definitely, we did already submit
18:32
our application.
18:33
We are still in talks with the
18:34
regulator.
18:35
We are among the others, some large
18:37
exchanges that were not able to
18:39
secure the license on time.
18:40
And I think that is one of the
18:41
heartbreaking moments because Europe
18:43
actually lost 80% of its liquidity
18:45
and the service providers
18:47
since the 1st of July.
18:49
In my opinion, I
18:51
do understand the regulator, they do
18:52
need to put the harsh deadlines.
18:54
It's been almost like two years of a
18:56
back and forth.
18:57
But also I believe what
18:59
is happening can backfire
19:01
a hugely because every time
19:03
there's a harsh regulation we see
19:04
that money is moving to a
19:06
wrong direction to a decentralized
19:08
world or to
19:11
Markets that is not as
19:13
regulated because at the end of the
19:15
day when you're a centralized
19:16
exchange You have the
19:17
face behind the business regulator
19:19
can call you because there
19:21
are situations where we work with
19:23
different judicial bodies to
19:25
make sure that we combat you know,
19:27
money that is going through the
19:29
money laundering processes, AML
19:31
processes, and we can still block
19:33
them and make sure that users
19:34
doesn't suffer.
19:35
But once you push the players like
19:36
us out and we have to afford the
19:38
users, probably they go to
19:41
a platform that is much,
19:43
much smaller or much in a
19:45
different jurisdiction.
19:46
And I believe that at
19:48
the end of the day, European users
19:49
will be paying for that.
19:50
And I already saw what Sizi did.
19:52
I believe also like the finance
19:54
stand is I do
19:56
not fully agree with that, but also
19:58
it is less of my understanding
19:59
cutting Europe off from one
20:01
of the biggest liquidity pools is a
20:03
very harsh decision that European
20:05
user will pay for it.
20:06
But at the end of the day, as I
20:07
mentioned, we are planning or
20:09
we are trying to be trade everything
20:10
platform and we are not just
20:12
only pursuing MECOL license,
20:14
we're also looking into MIFID,
20:16
because with all the other banking
20:17
services in there, yes,
20:19
regulation is harsh, but once you
20:21
are fully regulated, then you get an
20:22
access to a very huge market, which
20:24
is Europe.
20:25
Beautiful, Vouga, thanks so much for
20:26
taking the time to chat to us today.
20:28
If you don't already, go and find
20:29
him on X and give him a follow.
20:31
It's at Ussi The Talk,
20:34
the CEO of MEXC.
20:35
We appreciate you taking the the
20:37
time to chat with us today Next up,
20:39
we've got Joseph Chalom in the
20:40
hot seat. Really looking forward to
20:42
this conversation.
20:43
Lots of great things happening with
20:45
him and Sharp Link and
20:47
a number of big names in the
20:48
Ethereum community getting behind
20:50
two very big new organizations
20:53
to help. Drive the
20:54
institutionalization and development
20:56
of the Ethereum ecosystem.
20:58
So don't go away, we'll take a short
20:59
break.
24:15
Welcome back to the starting block.
24:16
We're jumping into the hot seat with
24:18
Joseph Chalermont.
24:19
You will of course know him as the
24:21
CEO of Sharp Link Gaming,
24:23
a man we've interviewed a number of
24:24
times at the block, and you've
24:26
actually been on a bit of a media
24:27
tour. So I think you're
24:29
probably getting a little bit tired
24:30
of all these calls, Joseph, but it's
24:32
great to have you with us this
24:33
morning.
24:34
Great to see you.
24:35
And by the way, congrats, Gareth.
24:37
The new format is amazing.
24:39
You had a coup meeting
24:41
with CZ in Dubai.
24:44
So welcome back to the Netherlands.
24:45
And I'm looking forward to this.
24:47
But well done.
24:47
Cheers.
24:48
Thank you very much, Joseph.
24:50
It's been a couple of months in the
24:52
works to finally get the starting
24:53
block off its feet
24:55
and to go all the way to
24:57
Abu Dhabi and do a very special
24:58
episode to launch the show is great.
25:00
And now we're into the thematic
25:02
show, the
25:04
block briefing, market pulse,
25:06
and then the hot seat. This is what
25:07
people are going to get from us
25:08
every day.
25:09
Really enjoy it and something I'm
25:10
kind of emulating from my days on
25:12
radio.
25:13
So really great to have people like
25:14
you on so early on when
25:16
we're doing the show.
25:17
But let's jump straight into it,
25:19
Joseph. It's been an interesting few
25:21
weeks and months.
25:22
I think even today, just the
25:24
headline of Michael Saylor and
25:26
strategy selling a significant
25:27
amount of Bitcoin, $200 million
25:29
worth of Bitcoin kind of,
25:31
it seems like a bit of a sign of the
25:33
times of where we're at in the
25:34
markets. A lot of people are kind of
25:36
saying that I think Bitcoin and
25:38
Ethereum in general might bottom
25:40
out anywhere from here
25:42
until October, but maybe you can
25:44
just start off with your general.
25:45
Thoughts on where we're at in the
25:47
market right now,
25:49
sailors, big Bitcoin sale, and
25:51
maybe how that's going to impact
25:52
things in your perspective.
25:54
Look, it feels like we
25:56
are in the bottom of a consolidated
25:58
market. It's been going on since
25:59
October.
26:01
Sharp Link has been weathering it
26:03
fine.
26:04
At the end of the day, we're here to
26:05
do two things.
26:06
One is give our investors
26:09
directional exposure to ETH
26:11
and the Ethereum opportunity while
26:13
making it incredibly productive
26:15
as an asset.
26:16
And I've said it before, I tip
26:18
my hat to Michael Saylor.
26:20
He developed a new exposure vehicle.
26:22
For Bitcoin.
26:23
You used to be able to either own
26:25
Spot or at some point in
26:27
2024, you can start
26:29
buying the ETF.
26:30
But he tried to financialize it
26:32
to drive some outsized
26:34
returns.
26:35
And he's in a bit of a pickle right
26:37
now. And I do think it's an
26:39
overhang on the market.
26:40
I think more than anything, it's the
26:43
daily announcements of
26:44
the direction and the strategy, no
26:46
pun intended.
26:48
But I do think we're at the moment
26:50
where Ethereum is
26:52
gaining its own narrative.
26:53
It was in a period of
26:55
consternation and self-flagellation.
26:58
And I'd love to share why I think
27:00
Ethereum is having its moment.
27:03
We've seen it come up about 15%
27:05
over the last couple of weeks as
27:07
we've made these announcements,
27:09
as we have a clearer message
27:11
for investors, why Ethereum,
27:13
why ETH.
27:15
Before we get into that, why don't
27:17
you just give us a brief update on
27:19
Sharp Link? I mean, for the viewers
27:20
out there that don't know what Sharp
27:22
Link is, it's pretty much the
27:24
second biggest Ethereum treasury
27:26
company out there behind Tom Lee's
27:28
Bitmine.
27:30
Obviously, you're at the helm,
27:32
backed by Joseph, Joe Lubin
27:34
from Consensus
27:36
and one of Ethereum's co-founders.
27:38
You guys have been doing a lot in
27:39
the industry, but again, I'm sure
27:41
feeling a amount of stress just
27:43
where we're at in
27:45
the markets.
27:45
Maybe you can just give us your view
27:47
of how things are going at the
27:49
company and how you're weathering
27:51
what's definitely a difficult time
27:53
if Michael Saylor is selling this
27:55
amount of stock to
27:57
pay out dividends.
27:59
We launched about a year ago.
28:00
We raised several billion dollars of
28:02
equity capital.
28:04
We used it to buy ETH, and from day
28:06
one last summer, we made it
28:07
productive.
28:08
We staked it.
28:09
We put it in liquid staking tokens.
28:12
We've participated in DeFi.
28:14
We announced that we're launching
28:16
a $125 million fund
28:19
side-by-side with Galaxy
28:21
Digital to invest
28:23
from a yield perspective into
28:25
the DeFi community and we've
28:27
done it. In I would say the
28:29
most institutional manner.
28:31
When I started, we were 6%
28:33
institutionally owned.
28:34
The last time I checked we were 48%.
28:36
So we've weathered the storm.
28:38
And by the way, it's a little bit
28:39
unusual.
28:40
I remember starting last July and
28:42
within weeks I was getting
28:43
questions, how is it that
28:45
gonna weather a downturn?
28:47
And we said, well, we're gonna
28:48
manage it responsibly in
28:50
a risk managed way.
28:51
And it turns out we've gone through
28:52
one of the most,
28:56
critical consolidation periods in
28:58
Bitcoin, ETH, Solana pricing,
29:00
and we've weathered it fine because
29:02
we are well managed.
29:04
That said, I do think the
29:07
thesis has never been stronger
29:09
that we're at a moment that matters
29:11
in Ethereum because of
29:13
institutional adoption and the
29:15
super cycle that's not coming,
29:17
the supercycle that's here.
29:18
And I'd love to talk about why I
29:20
feel as convicted as I've ever
29:22
been that now is the time to
29:24
get that exposure.
29:26
Obviously, in recent weeks,
29:28
both yourself and Joe Lubin have
29:30
come out in support
29:32
of both ETH Labs and
29:34
Ethereum Institutional.
29:36
Can you give us a quick rundown of
29:37
what ETH labs is, what EITH
29:39
Institutional is, and why we
29:41
need this and why they're different
29:42
from the Ethereum Foundation, which
29:44
has for many, many years been sort
29:46
of steward, as it were,
29:48
for the Ethereum ecosystem?
29:51
Them.
29:51
Yeah, for your viewers, Ethereum is
29:53
coming up to its 11th birthday
29:55
this July, it turns
29:57
11 from its original block from
29:59
2015, never gone down.
30:02
And for most of that period, for
30:04
the full decade, Ethereum's
30:06
core work was done almost
30:08
entirely within the Ethereum
30:10
foundation.
30:11
That era has ended,
30:13
not because of the foundation
30:15
has failed.
30:16
In fact, you can make an argument
30:18
it has been the most successful
30:19
protocol.
30:21
A million developers, no downtime,
30:24
over a million validators,
30:26
the most economic security,
30:28
the most credibly neutral.
30:29
But because it succeeded and
30:32
that network, Ethereum, has
30:34
kind of outgrown a single
30:36
steward. So what's happening,
30:38
the Ethereum Foundation is being
30:40
very intentional.
30:41
They're refocusing on what it does
30:43
best, and that's crops and
30:45
protocol research, credible
30:47
neutrality, censorship
30:48
or distance, thinking of itself.
30:51
As a public good, and that's their
30:52
call.
30:53
I don't think the communication was
30:55
perfect, but that's now behind
30:57
us. And when you have a refocus
30:59
like that, where a foundation
31:02
has been at the core for a decade,
31:04
it creates both an opportunity, and
31:06
I would argue, Gareth, an obligation
31:08
for other credible stewards
31:10
in the ecosystem to fund
31:12
the more institutionally-oriented
31:14
work that
31:17
requires scale and requires
31:19
privacy.
31:20
And requires a different approach
31:22
than we've had in the past.
31:23
And when you have a more mature
31:25
ecosystem, it has
31:27
multiple independent nodes.
31:29
It's not a centralized foundation
31:31
like you see at Solana or
31:33
others.
31:34
Each will have its role and it
31:36
won't have a single central point.
31:38
And how do these pieces fit
31:39
together?
31:41
Essentially the Ethereum foundation
31:43
is gonna be focused and
31:45
the Ethereum Labs is
31:47
that protocol accelerator.
31:49
They're the independent
31:50
not-for-profit.
31:52
It was Tom Lee at Bitmine.
31:53
It was SharpLink.
31:54
It was Joe Lubin who funded
31:56
this R&D lab, and it
31:58
has the most senior former
32:00
researchers from the Ethereum
32:02
Foundation.
32:03
Their goal is to make Ethereum
32:04
faster, more interoperable
32:06
and scalable.
32:07
That was two weeks ago.
32:09
A week ago, we announced the same
32:11
backers plus over 50
32:13
individuals funded
32:15
Ethereum Institutional.
32:16
That is the front door,
32:18
the go-to-market organization for
32:21
Ethereum. It's neutral.
32:23
And it came from the group who
32:25
were in the EF who were focused on
32:27
helping institutions go from
32:29
education to evaluation,
32:31
to live deployment.
32:32
And the punchline here is one
32:34
is advancing the protocol.
32:36
One is bringing it to institutions.
32:38
And as a productive asset, the
32:40
stewards are stepping up to help
32:42
fund this.
32:43
In the most aligned interest you can
32:45
imagine.
32:46
So it's been a journey.
32:48
And I think we're at the beginning,
32:49
as we would say in the US,
32:51
probably now we're in the second
32:53
inning where adoption is coming
32:54
and the institutions are ready
32:56
to put their money to work.
32:58
So it has been an evolution and
33:00
we're excited.
33:01
And since these two announcements,
33:02
you've seen ETH rally by
33:05
over 15% as
33:07
it's gotten more focused.
33:09
I think what's also been interesting
33:10
is to just see a lot of,
33:12
you know, big name, well
33:14
respected Ethereum
33:16
ecosystem devs or builders
33:18
that are either on the
33:20
list of sort of supporters or
33:22
contributors to ETH Labs and
33:24
Ethereum Institutional, but really
33:25
just kind of pledging their support.
33:27
At the same time, you now, I think
33:29
there's been a fair amount of
33:31
criticism on the Ethereum Foundation
33:33
in recent years.
33:34
But even with the announcements of
33:36
ETH Labs...
33:38
You know, it kind of seemed like
33:40
everyone was was welcoming it
33:42
and kind of saying that, you know,
33:44
this doesn't mean that the Ethereum
33:46
Foundation isn't doing what it
33:47
should be doing. It's getting
33:48
leaner. It's getting more focused
33:50
on, you know, perhaps the more nitty
33:51
gritty stuff, which which we'll get
33:53
into, you know, shortly talking
33:54
about Vitalik's post over the
33:55
weekend. But it does seem to be
33:58
a bit more of a complementary kind
34:00
of set
34:02
up now with it.
34:03
There are a number there.
34:04
There's no longer just the Ethereum
34:06
foundation and maybe one or two
34:07
other players. Now there's three
34:09
kind of brains trusts that are going
34:11
to help the entire ecosystem
34:13
move forward.
34:14
Is there going to be a lot of think
34:16
share going on?
34:17
Can you talk a little bit about
34:17
that?
34:18
I think the positive
34:21
news is that the Ethereum
34:23
Foundation has had the most
34:25
credible roadmaps
34:27
and delivery of any foundation in
34:28
history, but they are going to focus
34:30
on core principles and
34:33
allow ETH Labs,
34:35
ETH Institutional, the Layer
34:37
2s, the DATs to step up and have
34:39
a more commercial focus.
34:41
So I think what you're going to end
34:42
up seeing is all the things
34:44
that institutions care about
34:46
scaling for stable coins.
34:49
DeFi and tokenization
34:51
are going to end up having the
34:52
throughput, the finality and the
34:54
security that Ethereum
34:56
has lacked relative
34:58
to what is going to be
35:00
required going forward.
35:02
I think I'm not making a price
35:04
call, but I'm making an adoption and
35:06
cycle call.
35:07
We're going to start seeing 10x, 50,
35:10
100x, the transaction
35:12
volumes. And I'm talking about real
35:14
transactions happening between
35:16
parties.
35:17
On chain, whether it's Mainnet L1
35:19
or the L2s, and
35:21
Robinhood and the announcement of
35:23
adoption of Arbitrum was
35:25
kind of a harbinger of
35:27
what's to come.
35:28
One of the most sophisticated
35:30
retail-oriented fintech companies
35:32
in the world is choosing
35:34
Ethereum as its security layer
35:36
that's going to drive adoption,
35:38
and that will end up to
35:40
the benefit of the whole Ethereum
35:42
ecosystem.
35:43
That's one proof point, and you're
35:45
going to see several others
35:46
announced over the coming week.
35:48
So we're quite excited, and,
35:50
you'll see, our interests
35:52
are aligned.
35:53
We want Ethereum to become the main
35:55
settlement layer for
35:57
stablecoins, tokenized real-world
35:58
assets, and DeFi.
36:00
Look at the scoreboard.
36:01
They're already winning with over
36:03
50% share.
36:04
We just need more of a commercial
36:06
impetus, and then a focus on
36:08
Ether, the asset.
36:12
Vitalik Buterin came out with a post
36:14
talking about his plans for
36:16
Lean Ethereum, which is like a three
36:18
to four year rebuild of pretty
36:19
much the entire protocol.
36:22
How much do you know about that?
36:23
How much have you read into it?
36:24
How much chatter is going on in
36:26
between, you know, perhaps some of
36:28
the Telegram groups you're in or,
36:29
you now, Joe Lubin
36:31
and other people if they've imparted
36:33
sort of any views or wisdom that
36:35
you can give our viewers.
36:37
So I think Vitalik is focused
36:39
on what's coming, not tomorrow,
36:41
but over the next half a
36:43
decade, decade, and multiple
36:45
decades.
36:46
And the idea of having an
36:48
Ethereum mainnet that
36:50
supports ZKEVM,
36:53
where you can have more finality,
36:55
more privacy, without
36:57
having to compromise on
36:59
the neutrality, is what
37:01
he's building.
37:02
And You know, for
37:04
users like ourselves who are
37:06
very aligned with Ether
37:08
and with the ecosystem,
37:11
I believe very strongly that's the
37:12
right move.
37:13
Three years ago, people were saying
37:15
it was impossible.
37:17
You couldn't have the
37:19
throughput and the speed and the
37:21
scale with a level of security
37:23
and privacy that he's promising
37:25
through zero-knowledge proofs.
37:27
It's a hard engineering problem,
37:29
but that's what the EF is great
37:31
at. They're going to focus on that.
37:32
Going to focus on quantum
37:34
resistance, and they're going to be
37:35
the leaders.
37:36
And to be honest with you,
37:38
other chains who might be currently
37:40
faster and have more
37:42
scale and throughput are
37:44
going to end up lagging that
37:47
finality and economic security
37:48
that he's talking about building.
37:51
And again, years ago, people said it
37:52
was physically impossible to
37:55
have scale, speed, and
37:57
zero knowledge proofs combined,
37:58
and he's building it and he has the
38:00
track record.
38:01
Building it and we're supportive.
38:03
Whether it's going to be two years
38:05
or four years, I'm not the
38:07
engineering expert that'll tell you,
38:09
but why not take on things that
38:10
people say are impossible?
38:12
That's how most great innovations
38:14
are built in this world.
38:18
Since I just jumped onto SharpLink
38:20
and the dashboard there, I know
38:22
a lot of Bitcoin debts in
38:23
the early days were very focused on
38:25
MNAV, increasing
38:28
Bitcoin per share.
38:29
And I think
38:32
treasury companies, Ethereum debts,
38:34
maybe took a little bit of a
38:35
different view here.
38:37
But how much has your perspective
38:39
changed on this in the past year?
38:42
Considering the SharpLink
38:44
MNAB I was like 0.7
38:46
at this stage.
38:47
Obviously, we're in the depths of a
38:48
bear market.
38:49
I think a key difference here would
38:51
probably be
38:53
staking rewards that you offer
38:55
investors.
38:57
But what's your general sentiment
38:59
right now on these kind of metrics
39:00
and what you're telling investors?
39:04
Yeah, the principles have not
39:05
changed, the context has.
39:07
And let me explain myself, our
39:08
principles always been,
39:10
we're not going to accumulate,
39:12
raise capital, and buy ETH at all
39:14
costs. Because you could do that,
39:16
and you can dilute investors.
39:18
Our goal is to run the most
39:20
risk-managed institutional debt,
39:22
and to do it while increasing
39:24
ETH concentration per share.
39:27
When our MNAV was above one, we
39:29
raised billions of dollars of
39:30
equity. From the capital markets
39:32
and every one of those capital
39:34
raises were accretive.
39:36
When our MNAB dropped below one,
39:38
we decided to keep our word
39:40
and not raise capital and dilute
39:42
investors. That said, there
39:44
are ways to raise capital
39:46
equity even when your MNAAB is below
39:48
one. We did it last October,
39:50
we did it about a week ago, and
39:52
in each case we raised about $75
39:54
million of common equity
39:56
by raising capital at a
39:58
premium to our stock meaning we
40:00
charge. The buyer,
40:02
essentially an MNAV above
40:04
one, and we gave them warrants
40:06
because they wanted a long-term
40:08
directional bet on Sharp Link
40:10
and Ethereum.
40:11
We've done that.
40:12
The markets reacted well, and that
40:13
got us back to both buying ETH,
40:16
having the potential to do buybacks,
40:18
and give us a ramp to survive
40:20
a down period.
40:21
So our principles haven't changed.
40:23
We're just in a consolidation
40:24
period. We anticipate when
40:26
the rotation comes back to people
40:28
buying Bitcoin and ETH.
40:30
Because the institutions are now
40:32
here, that will expand
40:34
our MNAV again and we'll be raising
40:36
capital at a premium.
40:37
But our principles haven't changed,
40:39
the market context has.
40:41
That said, there's only two ETH DATs
40:43
that have essentially survived this
40:45
down cycle.
40:46
Tom Lee at Bitmine and
40:48
SharpLink.
40:49
Most of the other DATS either never
40:51
got out of the starting gates or
40:53
have announced they're abandoning
40:54
their treasury strategies because
40:56
they either didn't have the team or
40:58
the scale. We have both.
40:59
So we'll weather this storm and
41:01
it's a great exposure vehicle for
41:03
people who can't own spot or
41:05
don't want to buy an ETF.
41:06
So I'm bullish on where we are in
41:08
the cycle but actually very
41:10
pragmatic and not willing to
41:11
compromise and we're going to
41:13
continue to raise capital when it's
41:15
good for investors.
41:17
My final question, you used to work
41:18
at Blackrock for a long time, we saw
41:20
Spot Ether ETFs logging in
41:22
8th straight weekly outflow,
41:25
which has tied their record,
41:27
what are your thoughts on that?
41:29
And again, is that just a sign of
41:30
the times?
41:31
I think it's a sign of the fact that
41:33
the current risk on trade
41:35
is the markets and
41:37
AI, and we're in that super
41:39
cycle where if you're
41:41
a memory stock, you're chip stock,
41:43
and you're in the supply chain to
41:45
the AI narrative, ultimately
41:46
that's where a lot of the volatile
41:48
risk capital is going now.
41:50
That's obviously been part of the
41:52
pullback from Bitcoin, ETH, and
41:54
crypto at large. I think,
41:56
at some point, and we're starting
41:58
to see it over the last week or two.
42:00
You're going to start to see
42:01
investors.
42:02
And I'm not saying speculators or
42:04
traders.
42:05
Investors realize you can make money
42:06
at the bottom of a cycle.
42:08
They saw that in almost every
42:10
other risk on cycle in
42:12
history and we're starting to see
42:14
investors come back into this
42:16
long-term play.
42:17
It may take a while for that to be
42:18
reflected in ETF flows
42:21
and debt purchases, but
42:23
at the end of the day, most money is
42:24
made when retail capitulates and
42:26
it feels like retail.
42:28
And crypto Twitter has capitulated,
42:30
which often is a great signal that
42:32
now is a time to get back in,
42:34
especially as we have a super cycle
42:36
of adoption that's already started.
42:38
So I'm bullish. I think it's a great
42:39
time to come in on a risk reward
42:41
basis, even though I won't give you
42:43
a price prediction on this call.
42:45
That's all right. I wasn't asking
42:46
for it.
42:47
Joseph, thank you so much for
42:49
joining us today.
42:50
Yeah, it's good to see a lot of
42:52
people still with smiles on their
42:53
faces, even though we're faced with
42:55
pretty trying times in the markets.
42:57
And yeah, like a very, very
42:58
interesting day. It's going to be a
43:01
long day in the U.S.
43:02
I think with 15 minutes since
43:04
the opening bell, seeing how
43:06
the markets react to say they're
43:07
selling 200 million dollars worth of
43:09
Bitcoin, I think it's going to be
43:11
very, very interesting week.
43:12
But again, thank you so much for
43:13
taking the time if you're not
43:14
following. Joe Chalom, you can find
43:16
him on X, it's at Joe Chalon.
43:18
Very easy to find.
43:20
And if you're interested in
43:20
sharpening gaming, go ahead and
43:22
search there. Once again, just a
43:23
reminder, we will be releasing our
43:25
full interview with CZ,
43:27
Finances founder on our YouTube
43:29
channel today. If you're not
43:30
already, please go and subscribe to
43:32
the Block's YouTube channel.
43:32
We've got a load of fantastic
43:34
content coming out in the next few
43:36
weeks. And if your new here, welcome
43:37
to the Starting Block.
43:38
This is the Block new daily show.
43:40
We've three segments on the show.
43:41
We've Got the Block Briefing, which
43:43
is a quick news bulletin radio
43:44
style. We've got Market
43:46
Pulse, which is our market update
43:48
section. And then we wrap things up
43:50
with a hot seat interview like we
43:51
just had with Joseph Chalem.
43:52
So please come and join us every
43:54
day. We broadcast at 8.30 Eastern
43:55
time. If you're in the US, that's
43:57
2.30 Central European time.
43:59
If you are here in Europe like
44:01
me. It's been an absolute pleasure
44:03
having you with us today.
44:04
We'll catch you again tomorrow.
44:06
Thank you very much and bye-bye.