# Crypto Isn't The Frontier Anymore Delphi Digital · 2026-09-28 · 88 min · https://www.youtube.com/watch?v=lWGBCfGbiFw ## Transcript Speaker 1 Do you guys still feel like crypto is on the frontier? Speaker 2 I don't think crypto right now is attracting the smartest people anymore. Speaker 3 AI kind of reminds me of crypto from 2017 to 2020. Nobody really knew what you could and couldn't do yet, for the most part. That's kind of how AI feels now. Speaker 4 AGI is overall a net negative for crypto. Speaker 1 This is a special episode. We're all finally in person to do one of these in real life. We've got a lot to talk about, and a lot of interesting things have come up this year. We're getting towards the end of the year and into Q4, so I think a good place to start is with a bit of a retrospective. I'd like to hear from each of you: how do you feel this year has shaped up so far on the markets and investing side compared to what you thought coming into the year? Was there anything that surprised you? Speaker 2 The last time we did one of these in person, it was the top of Terra. Do you remember? Speaker 3 Oh, that— Speaker 4 Oh, that's—yeah, that's a good signal. Speaker 5 Anybody listening to this, you've been warned. Speaker 2 Yeah. What's the question? Speaker 1 Was there anything that surprised you this year? Coming into this year, markets weren't great. As we got through the first half of the year, markets looked even worse. It depends on what market you were in, I guess, right? AI stocks were doing well. You had things like the memory trade earlier this year, and then the rotation back towards crypto over the last 6 to 8 weeks. If you put yourself back at the beginning of the year, what did you think would happen that didn't happen? Sitting here today, is there anything that's surprised you recently? Speaker 2 A bunch of things. I'd say crypto's outperformance kind of surprised me. I did a pretty good job avoiding some of the drawdowns in the stock market, and crypto was a minority of my allocation, but it still outperformed everything else because it outperformed that badly. Obviously, I think just by virtue of being at Delphi and having access to you guys, I have more alpha in crypto than I do in the stock market. It was a pretty stark reminder of that, given what we've been talking about for ages: Zcash, Ethena, LIT, HYPE. Even with 30% of my portfolio, it outperformed the shit out of my stocks, which I don't know exactly what to do with yet, but that was surprising. I think everyone has been in hysterics at various times over the AI bubble. I was always pretty bullish on AI, and I continued to be. I still think we're not there yet and that we still have more to go up. Speaker 3 I feel like nothing really surprised me too much. I thought crypto would have been stronger to start the year, and it was pretty weak for a while, but what did well in crypto didn't surprise me too much. HYPE continued to do well. Zcash did well. ETH and SOL kind of lagged. Then you had stuff like Lighter come up and do well. The market has kind of bifurcated into store-of-value-type trades and fundamental stuff, and I think that was clear a year ago. We've just kept going in that direction. The recent rally is definitely a bit stronger than any of us would have thought when it happened. Speaker 5 Zcash at the beginning of the year—$1,500 would have been like, “Yeah, you have to sell your Zcash there,” but now it's kind of— Speaker 3 I don't know. It's kind of taking on a life of its own now, right? You can see it going a lot higher. Speaker 4 I think, surprise-wise, it wouldn't necessarily be from the end of last year into this year. I got bullish at the end of Q1 on STRC stuff, and I thought, “All right, this can start the flywheel.” What surprised me is how badly he fucked up the bet on buying back very long-maturity debt instead of managing the balance sheet properly and actually letting the STRC thing take its course. That was the source of the big drawdown. The trade-off was that there was a reconcentration into a handful of quality assets. I'm pleasantly surprised by how much alts have been able to run without needing BTC to be too strong. Obviously, over the past 2 weeks it's been quite a bit stronger, but even the move from $60,000 to the $70,000s saw alts really go for it, which was pleasant. I'm generally usually in alts, so— Speaker 5 Just a matter of how much. Speaker 4 Yeah, usually a lot. Speaker 5 Just a matter of how much—from 100% to 150% of my net worth, basically. Speaker 2 I'm bearish right now. I'm 100% long. Speaker 4 It's been good to see a concentration in the quality of assets. I think the good thing is that it makes the space investable for funds. When it's memes, it becomes harder for institutional capital to flow in because you can't really get behind a thesis that you can tell your LPs about. ### Tokenization, Zcash & Crypto’s Winners That broad movement has been good. Surprise-wise, it wasn't an insane amount, just because we were already so far down going into the end of the year, and it was hard to be too bearish after that. Speaker 1 Are you surprised by how quickly this tokenization wave has taken off? Speaker 2 Yeah, that's been the big thing. It's fair. It's just been the amount of RWAs that have come on-chain. There were 2 things where I was never really—I don't think most people were—bullish on the CLARITY Act passing, just because of how polarized the government is. It's not really driven by rational decision-making, but by banding together with the rest of the party. It was hard to see a world where you'd get 60 votes. I was pleasantly surprised by how quickly, afterward, you had friendly SEC guidance come out that allowed that wave to continue. In true crypto fashion, part of the RWA growth was strengthened by memecoin activity and the attention there. It's a healthy way to bring retail into that flow at the same time as the broader Robinhood wave of assets coming on-chain. Speaker 3 It's tough to say what surprised me because we wrote our year-ahead report, and I don't want to toot our own horn too hard here, but it was pretty spot-on in terms of the things within crypto. That might bleed into some other things we'll talk about later. One of our core themes heading into the year was—I think there was a section of the report called “Crypto Is No Longer the Only Game in Town.” There are still parts of crypto we were super bullish on, namely HYPE. I honestly didn't expect HYPE in HIP-3 to do as well as it did, as quickly as it did. That was a nice bonus on top of it. Speaker 1 Was Trade.xyz a bit of a surprise? Speaker 3 Yeah, I didn't expect it to do nearly as well as it did. I always thought it would eventually end up being super successful, but I didn't expect them to do it as quickly as they did. The oil thing with the Iran war, and trading oil on the weekends, was a huge benefit and attention-grabber. It put Trade.xyz on the map in terms of Wall Street, Bloomberg, and everybody talking about it. Crypto's underperformance for most of the year wasn't really that surprising. It's kind of what we expected for the most part. We had a Market Matters and then a Hivemind podcast around the time Bessent made his announcement, a month or a month and a half ago. During that conversation, all of us were pretty much saying, “No, this is a very clear risk-on signal.” The rapidity with which crypto rerated higher also wasn't that surprising because we've seen it happen many times in the past. When BlackRock comes out and files an ETF, crypto immediately rerates and doesn't really give many people a chance to get in if it's a good catalyst. That's what we've seen. You haven't really had a chance to buy since then. Speaker 1 How much of that do you think was driven by the fact that it coincided with AI stocks tempering, just generally in those markets? Speaker 2 Yeah, probably both, yeah. Speaker 3 We were talking about that before the Bessent thing, right? Speaker 4 The SaaS guys are running today, though memory's back. Speaker 2 But it's true with crypto: there have been no entries on a lot of the good stuff, right? Bitcoin— Speaker 3 That's a good sign, by the way. Speaker 2 100%. It's a good sign. Obviously, there have been no entries on things like Zcash. But even with Bitcoin, you've had some periods. HYPE went up and then consolidated around $80—it went to $90 and consolidated around $80. That was your best entry on it. Everything is just strong across the board. It shows there's so much sidelined capital that wanted a reason to buy crypto. Again, this is why I think Zcash has done so well: so many things are overvalued, and it's something that can just pick up a lot of liquidity. Speaker 1 Honestly, it’s the one that probably surprised me the most. I didn’t think Zcash would eventually do this. I was thinking maybe it would run to 800 or 1,000, but it seemed too much like a meme: “Bitcoin market cap ratio, target this number.” I just didn’t think it would actually work. Speaker 2 I’ve been playing mainly with perps because— Speaker 3 If it went to zero, especially after the bug—not the exploit—I’d feel extremely stupid. I prefer to concentrate into 3, 4, or 5 things and then not do anything for a while. If I owned this with a huge amount of my portfolio and that bag went to zero, it would be embarrassing because nothing had really changed. I guess now you have some confidence that it wasn’t exploited, but I just couldn’t get around the fact that it seemed too much like a meme-cabal thing. Speaker 4 I think after the bug was— Speaker 5 A really obvious buy. Speaker 4 There was a point where I should have bought, but I didn’t. I even put it in my reads at the time. It felt like the JellyJelly-Hyperliquid moment: it got exploited, but you knew pretty quickly that there was a bug and that it hadn’t been exploited, based on how much was in the shielded pool. Speaker 5 It’s important to know that it did not get exploited, as far as we can tell. Speaker 4 Yeah, you could tell that it got exploited and went down to around 300. That was probably the best risk-reward time to size up. I wish I had sized up more. Speaker 1 It happened while I was sleeping, too. Speaker 2 Yeah. Speaker 3 A lot of people viewed Zcash as a very boring conviction trade, and it still is, but especially then. He was right. Speaker 4 He was bullish the whole time in 2017 while it was— Speaker 3 Not wrong, just early. All the commentary around Zcash when that happened was people not understanding that something like this can always happen with a privacy coin. A lot of people were saying, “I never realized there could technically be an infinite mint in any privacy protocol.” That’s scary, right? Then people were saying, “Now I understand why Bitcoin is totally public, and that’s actually a really good feature.” People were going 180 on everything. Now people have come back around to the idea that this hardened the protocol. They’ve got Tachyon coming out soon, which is also going to be formally verified and have much less code. In an era of AI, hacking of DeFi protocols, and everything else, you can probably make the case that Zcash is one of the hardest protocols at this point. It has gone through the most. Again, it’s just a liquidity suck. I had a tweet about it a few months ago, and it was maybe a jaded view, but there’s still a lot of money in crypto that knows most things are overvalued. If people can get behind Zcash as this new store of value, there’s tons of upside because it’s pretty easy to meme it to 5% or 10% of Bitcoin. Now that it’s at 1,500, it’s around 1.5% of Bitcoin’s market cap. Speaker 2 Yeah, it’s between 1.5% and 2%, I think. A year ago, you’d have said, “That’s top 100.” Now I’ve talked to a lot of people who are starting to think about the Bitcoin Core dev team and the quantum issue. They don’t think it’s being taken seriously, and people are legitimately thinking maybe Zcash is going to 5,000. Zcash will be a really interesting one for the next year. I don’t really know where it’ll go from here. All I know is that it’s going to stay super volatile—probably the most volatile coin in the market. Speaker 4 I put together a short list of questions that I’ll sprinkle throughout this. If we try to put ourselves one year from now, do you think this will be true—yes or no? The first one is: do we think Zcash will breach 10% of Bitcoin’s market cap? Speaker 5 I’m going to say no. That’s a big number. That’s around 8,500 right now. Speaker 3 If you assume Bitcoin goes up, it’s— Speaker 4 Yeah, it’s a moving target. Speaker 3 Yeah. Speaker 4 What about 5%? Speaker 5 5% was my initial upside case. Honestly— Speaker 3 My giga-bull case— Speaker 5 Oh, okay. Speaker 3 —was 5%. Speaker 5 I could see Zcash going to 5,000 if Bitcoin is at 120,000, which would be less than 5%. But even 5,000 for Zcash feels like it has gone up so much that eventually it turns. It’ll be pretty violent, and you’ll get the big 80% drawdown. It would be weird if you didn’t, especially because of what it is: a store-of-value coin. Speaker 4 I don’t think you get 5%. Speaker 5 Not in the next year. Speaker 2 I mean, yeah, it’s a big number at today’s price. That’s around 6,000, right? Speaker 1 It feels like a lot of people are still sidelined on it, though. Speaker 3 Yeah. It helps that people anchor to moon math, and it is one of those reflexive assets. Speaker 4 Yeah. Speaker 3 You don’t really have a huge DAT yet. I don’t know. I think there’s— Speaker 5 It’s not even really a DAT. They’re just mining now to accumulate. Speaker 3 Yeah, but there are interesting mining dynamics with Zcash, too. Since everybody gave up on it, there haven’t been many ASIC miners developed, right? There’s a 6- to 8-month lag on getting new supply, so all the miners now are just making money. The more Zcash goes up, the more it’s all margin. One of the biggest miners now is Cypherpunk, and they’re actually accumulating most of it. That’s also a good supply dynamic for Zcash when your biggest miners are accumulating instead of every Bitcoin miner having to permanently dump immediately because the margins are so low. With the margins being so high in Zcash, the miners can run this accumulation game for a while. There’s definitely a ton of reflexivity in Zcash right now for many different reasons—not just the price, but also the underlying mining dynamics. The 2 hottest coins are definitely HYPE and Zcash. If you had to hold 1 coin for 3 years, I think most people would say, “I’ll hold HYPE.” But you can definitely see Zcash continuing to outperform everything. I think dips get bought up for sure— Speaker 2 On Zcash. Speaker 3 Yeah. Speaker 4 A big one where people just got overlevered— Speaker 1 It’s crazy. It literally just hit 1,000, and now it’s at 1,550. A dip is what, maybe 1,300? Speaker 2 Yeah, probably something like that. Speaker 1 You could still see a dip back to 1,000, and 1,000 would probably be pretty good support now. Zcash is a 4-digit coin now. That’s the new floor, kind of. Maybe. Maybe not. Speaker 3 That’s the new era we’re in. Speaker 4 I still think Zcash has more upside from here than HYPE does. Speaker 2 Me too. But I just think the multiple is—I don’t know. I can’t see HYPE going much higher than 100 or 150, so the risk-reward doesn’t seem that high. I still hold it. It’s probably my 2nd- or 3rd-biggest coin just because it performed well. I find it hard to—You sort of talked me into not selling on our last Hivemind, which was good. Speaker 4 This is where you say thank you. Speaker 2 Yeah. Thank you. But I still kind of— Speaker 4 You want to sell. Speaker 2 Yeah, but you— Speaker 1 Jason’s not going to lose any sleep over it. Speaker 2 It’s fine. No, I mean, Zcash—I don’t know where it’s going to go. I’m obviously not the person to talk to about it. I trade it with perps. When there’s a big dip, I’ll buy a perp position, and when it goes up a lot, I’ll sell it and try to do it again and again until I lose money, then I’ll stop. With HYPE, there are so many things you can look at over the next couple of months to determine whether there’s still decent upside left. It’s not cheap anymore. It’s fairly valued, even— Speaker 3 You probably get a local top at the end of September or in the first 2 days of October. Speaker 1 September and October tend to be horrible. Speaker 3 Yeah, mostly because the stablecoin buyback accumulation is all being conducted— Speaker 1 Yeah, all in the first week of October. Speaker 3 You have to assume that’s going to be a big trading event with a lot of liquidity. Speaker 2 It’s very well known, so you have to assume realization happens early. Everyone front-runs it and then realizes. Somewhere around 2 days before or after October 1, you probably get— Speaker 1 The 1st, the 2nd—whatever. It doesn’t— Speaker 2 I think it’s either the 1st through the 7th, but I might be wrong. Speaker 1 You’re doing all of it in a short window. Yeah, it's like the first week or two weeks. Speaker 2 It's funny—I always see people tweeting, “Reminder: Hyperliquid buybacks,” and it's like, yeah, I think people know at this point. You'd assume it's a low-multiple add to the revenue, but because it's so bland, it's very sticky and consistent, and you can see it scaling with the product. Speaker 3 Also, yeah, 25% to that. Speaker 2 Yeah, you can definitely give it a better multiple than other forms of revenue. Plus, we've talked about this a couple of weeks ago, but with Kinetiq, right? When you look at Hyperliquid, HyperEVM is just a zero. It doesn't really play into the valuation of Hyperliquid at all. But clearly, with Kinetiq and Elysium—which I think the testnet just went live today, and it goes for a month, maybe four weeks, before mainnet launch— Speaker 5 I just know there's a ton of money in HYPE, in the HYPE ecosystem, that would like to do stuff in the Hyperliquid ecosystem. Speaker 3 Whatever happened to all the lending protocols and stuff? Speaker 5 There's nothing to do on HyperEVM. Speaker 2 They just did it. They're doing it at the base— Speaker 3 Manual borrow? Oh yeah, there's— Speaker 5 They got rugged. Speaker 2 Basically. Speaker 3 Damn. Speaker 5 Because they're doing it themselves. Speaker 2 But Hyperliquid—yeah. The way HyperEVM currently exists isn't conducive to any kind of on-chain activity or throughput. You can't do anything that you would do on Solana on HyperEVM, which is the whole point of having an EVM for Hyperliquid. You want to do all the things you would do on-chain: speculate, trade spot, and all of these things. You just can't do them right now. ### Onchain Options: The Next Big Opportunity? But Kinetiq is launching this L2, Elysium, to address all of those things. Speaker 1 What about options? Well, that's what I was going to go into—options. Speaker 3 Yan posted a governance proposal. Speaker 4 Governance proposal for years. Speaker 3 You're a community member. Speaker 4 Well, “community member” usually means you're down, which I am not. No, but I do think options are probably the last big primitive that hasn't really taken off in crypto yet. Speaker 3 On-chain in particular. Speaker 2 They do billions. They do decent volume, but I think the big change here is just the growth of RWAs in crypto. That has enabled a universe for on-chain options on RWAs, right? You have massive perps volume, but you don't really have it on-chain. Bringing those assets on-chain allows market makers to hedge and provide liquidity. If you look at Robinhood, that's their biggest revenue driver from retail. You just need a more retail-friendly UI to have them operating on-chain. I think Ostium is one of the things that woke people up to the idea that perps aren't the perfect way to express bets. There's a lot of path dependency. You don't even need to make a bet that options are going to flip perps by any means. Right now, it's absolutely at zero or near zero, so you assume it can grow. Even a 10x from here is still a fraction of perps volume. I do think there's a lot of opportunity for that to grow through the growth of the RWA side. Purely on crypto, it's less compelling because, at the same time, you have a smaller concentration of investments in crypto, which means the options side is also going to be limited. But for the same reason that HYPE has done better than everyone expected, which was the growth of RWAs, I think that sets up a pretty good path for options to have a moment. Kevin Do you think it'll be through on-chain options, like through HypeCall maybe going live with Kinetiq or something like that? Yan What does that mean? Kevin Basically, HypeCall right now—I think one of the things that makes it attractive, and something the HYPE community can get behind, is that all of their options activity gets hedged through HYPE. Someone bought a put spread on Hyperliquid the other day, and when it got hedged, it was 5% of S&P volume on Hyperliquid. You have this narrative of this actually being very constructive to RWA perps volume, and with a little bit of growth in HypeCall activity, it can translate to a pretty material amount of volume on Hyperliquid. You have a pretty good setup where the two can be synergistic, because they're not trying to build their own perp backend. They're purely offloading that volume to Hyperliquid. You have a pretty constructive setup there. The Kinetiq element is basically them building on an L2 on Hyperliquid, or bridging liquidity over there and allowing people to trade there. Ceteris It taps into HyperCore. Jose When are we getting the Celestia catch-up route? The airdrops are coming. Kevin Yeah. Jose No. Jason Can we just cut that? Jose I might have to dodge now. Yan Yeah, I agree that options are the next big remaining meta. Jose I mean, what do you want me to say? I think it's— Yan We're going to have 10,000 rollups. Jose It's not—I never believed that. Yan Nobody bats a thousand. I was bullish on TIA, but I never actually believed the multi-rollup thesis. It was kind of down 95%. It was down so much that I was like, it'll have its moment. Will it still? Jose No, no, no. Yan I mean, they can do some stuff, maybe, but I don't know. I think there's definitely too many chains in crypto, but that doesn't mean a new one can't come along and be worth it, right? You're seeing that with Robinhood. It made a lot of sense. Do we need another OP Stack L2? Of course not, right? But Robinhood has something that these other players don't. And the thing with Kinetiq is, do we need another L2? We don't. But we could use a HyperEVM, maybe. I don't know if we actually need a HyperEVM-type thing, but it's a potential thing that we could use, and that makes more sense than the HyperEVM, which has less throughput than Ethereum. Kevin I think it's one of those where you won't know if you need it until you try, and you get clarity on whether it's failed. It could be much higher from here. Jose Haven't you tried this millions of times— Kevin Just specifically on Hyperliquid? Jose Okay. Okay. Yan That's the thing. It's not going to be too different from things we've seen, but— Jose Hyperliquid needs its own cat coin, for my bag. Kevin We need a Hyperliquid-native cat coin. Yan That's exactly it. We have Purr on Solana. Now we need one on Hyperliquid. Jose Yeah, makes sense. Yan I mean, just think about it. Kevin There was a Purr on Hyperliquid that was a decent airdrop meme. The actual OG meme—I completely forgot about Purr. Jose Yeah. Yan Wow. Kevin OG HYPE meme. Yan The proxy for HYPE before TGE. That was a great trade. But I guess the thesis is that HYPE and Lighter can launch options, but they'll probably need a significant demand signal from the existing ones to want to invest in that. So you have time. Jose I think Lighter is going to do it. Kevin Lighter will do it first. I don't think the Hyperliquid core team is interested in building it out unless teams try and fail, and then they're like, “Okay, I guess we'll try it.” Jason About doing it. Jose Yeah. Kevin Okay, yeah. I've heard from the team, but I didn't know if they talked about it publicly. Yan Yeah. In the coming months, I think they're coming out with a neutered version at first and then eventually a fully live version. Kevin One of the issues with options is building up liquidity, right? I do think you probably have a pretty bifurcated market for a while because there are so many assets to trade options on, and everyone's focusing on different things. For HypeCall, they're going the RWA path and leveraging the big backend liquidity of Hyperliquid perps. You have this unique approach. Derive has been building theirs as a more institutional front end, but they're doing it on majors and using their own backend. They have the standard Deribit-style front end with all the Greeks and everything, so it caters to a more institutional crowd. All of those are still doing diminutive volume, so you'll have these pockets of success. Eventually, you'll probably have a winner-take-most market, but it'll take quite some time. I think all of them will have a rising tide. Yan Yeah, it's definitely too early. I think Derive is the clear winner right now, but I think it's complacent to say they do 96%, so they're going to be the winner if options take off. Even Paradex was weird. Paradex launched and they just did perps and everything, even though their whole product was options. Now they're finally going to bring that on, and they're a real competitor. If the token were more liquid, I would have bought some. Yeah. You can't. Jose It was like 25K moves the price almost 2x. Yan Yeah. Jason Really? Jose Yeah. There's no liquidity. Yan Yeah. Kevin Well, I mean, people just—That was one of the worst TGEs ever on Dime. Yan Yeah. Ceteris I mean, Derive isn't very liquid. I've been trying to buy it. Kevin But if you bought through the RFQ, I think you have to use the RFQ and then it's okay. Ceteris Oh, that's what I've been told: if you really want to buy, you need to just use the RFQ. Kevin When trends are this early—options being a prime example—how do you guys think about getting exposure to that? Do you play almost like trading a thematic basket? Rather than saying, “Hey, I'm going to bet on this one winner,” do you want exposure to the top 3? In this case, the top 3, but it could be 3 to 5 names when it's this early and too early to tell. You just want exposure to the theme, and the idea is that one will outperform the others, right? One will maybe get to a winner-take-most type of market eventually, but since it's still too early, you want to have exposure to all of them. Yan I think you have a couple, and then you weight the one that you think can outperform within them. You're flexible, right? If you see the facts change, you just sort of size into the one that's winning. Jose Yeah, it's just so early to pick a winner. There's nothing to win yet, even. Jason Yeah, I don't even own any of the options names. I owned Derive for a little bit, but then I sold it. I think it'll do well, but I feel like right now in the market there are so many other things. Kevin What, bring Duncan back on the podcast? Yan I can't believe you faded Duncan on Synapse since summer, baby. Kevin Let's get him back on. Jose Yeah. Jason Yeah. Kevin But to that point, do you think options are finally at the point where the momentum we're seeing recently is the turn of the tide? Is this the trend going forward? It's obviously not going to go backward, but it's not going to stall out. Yan Yeah, I think you've kind of hit that inflection point. The issues historically were just design, right? You had vaults, which come with their own set of issues, and that was never viable. At the same time, you had Deribit that was working. On-chain, with Hyperliquid, you have an on-chain equivalent for the off-chain product. It's almost one-to-one—it's basically one-to-one. For options, it was never that. You had these random vaults or other weird products where you couldn't sell your options back, and the system was imperfect, so liquidity was tough and you basically had a big cold-start problem. I think now you're seeing an attempt through a design that mirrors centralized equivalents. That, paired with RWAs and everything else that's coming on-chain, plus the fact that you could have options on pre-IPO stuff through Hyperliquid, means there are a lot of cool, interesting ways to express bets on a wide variety of assets. That makes the probability of success for options now much higher than it was before. It's finally gotten to the point where the market is mature enough. The design is there. Jose They're also cheap as well. Jason Kind of like, you know, Synapse is 35. What's Dime? Like 60? Derive's 400 now. Ceteris Dime was like 4 million. Jason Yeah, but is that FDV or market cap? Ceteris Probably FDV. It went up a lot, like 30 cents. Kevin Yeah, I think they're all cheap enough that you probably want to have some exposure. Yan Maybe. I feel like a 9-figure valuation is not super cheap for something that still needs a lot of growth. Jose I don't know. The TAM is so big. Jason It is. Yeah. It's so big, and it's been proven. Ceteris Yeah, and it's liquid, right? It's not like you're locked in. You can get these things at seed or private seed-round valuations, and they're liquid. It's a very big TAM, and it seems like it could inflect soon. The longer the market stays strong and everything kind of picks up, the more obvious a potential rotation becomes. Kevin It's a fundamental asset that people can get behind. You've seen it play out with Hyperliquid, Lighter, and others. ### Is Crypto Still the Frontier? We talk about investing and wanting to be investing on the frontier, right? Jason mentioned this in The Year Ahead on the Delphi Ventures side. Crypto no longer being the only game in town is my question: do you guys still feel like crypto is on the frontier? I can start, probably, because I don't think so. The frontier for me is where the smartest people are building the future, and I don't think crypto is attracting the smartest people anymore. There's this Carlota Perez innovation framework where you have the 0-to-1 part, where there are a lot of new things that need to be built, and then there's the deployment phase, where you need to take the existing things to market. In the 2000s, for the internet, you could buy these things liquid and just bet on the continuous compounding. For me, that's where we're at with crypto. We've been saying this for a while, right? There are some clear things that work: perps work, stablecoins work, and token issuance works. Those are the 3 use cases for me. I think it's a pretty sure bet that they continue to compound over the next decade. I don't think crypto is the frontier anymore. It's kind of the blocking and tackling of deploying these things. That's why a lot of the opportunities are either in liquid markets or in equity startups that are doing the hard work of deploying these things in emerging markets and stuff like that. I don't feel like it's the frontier anymore. Speaker 2 I would agree with that. I think crypto is not super venture-backable at this stage because, again, to your point, everything's been built. We've literally built all the infrastructure, and what people need to build now are scrappy little app teams that honestly don't need a lot of funding. I think crypto is still the best liquid market in the world. I guess it wasn't for half of this year, but I don't think that is ever really going to go away. You're always going to have these periods in crypto where something just starts happening, everybody gets behind it, and you have this new meta. It keeps happening over and over again, and it's hard for me to believe that we're not just going to keep— Speaker 3 But it could be, like, right— Speaker 2 Yeah, it could be. Or we could be at the bottom, doing a new big loop right now. We'll see. Speaker 4 Right now, I think it's a smaller loop. It's been smaller loops. Speaker 5 It's the biggest loop we've had in a while. Speaker 1 Yeah. So is it the beginning of a new on-chain phase of a lot of experimentation and stuff, or is it somewhat of a dead-cat thing? I'm not totally sure. Social trading, where we're pairing memecoins with stocks, is just— Speaker 2 But I think that's a byproduct of permissionless systems. Speaker 1 I'm not saying it's a bad thing. I'm just saying, are we back to on-chain experimentation? Speaker 2 Yeah, but we're getting better. The thing is, now we're getting better assets, right? So you're going to see a lot of similar things just around better assets. Speaker 3 Hopefully it'll lead to other cool things that you can't get in TradFi, right? These apps where you use a crypto neobank and all your purchases automatically give you tokenized stock from wherever you shop. That's a cool product that gives average people this passive wealth-building tool. Those are the kinds of products that crypto can uniquely excel at versus a lot of other things. When you get more stocks on-chain, hopefully you start realizing that stocks are real wealth-building tools. Equities are, right? There are a few crypto assets you can say that about, but a lot of crypto is zero-sum. Stocks are non-correlated to the rest of the crypto market, too, and that makes all of DeFi safer as well. So, yeah, it's definitely purely a liquid market at this point. I can't even remember the last big crypto venture protocol that has come out. Speaker 4 Variational, I guess. It hasn't come out yet, but yeah. Speaker 5 Yeah, I think that's always the concern. Lighter's probably the most recent example, but the concern was always that all the excitement is happening in equities, which compound. Not only does that mean no excitement in crypto, but capital leaves. Speaker 2 So as you bring exposure to that asset class more on-chain, it just makes the other environments more likely to do well when things start picking up, because people are staying on-chain. Speaker 1 They’re keeping their assets on-chain. Yes, there might be trading stocks, but when crypto moves, it’s much easier to move those assets from stocks into crypto than it is to take them off the brokerage and deposit them back, which no one does, right? And so I think the stickiness of capital being on-chain really improves as RWAs move on. So, yeah, new inflection point. I mean, it would have to be a gradual melt-up at this point, which is kind of what you want to see. Do you think we can get new all-time highs in Bitcoin without some big macro event? Speaker 2 Probably not. Speaker 1 I mean, I do. I think it’ll just—yeah, I mean, would—well, I guess what do you mean by “big”? Speaker 2 All-time highs are—it’s like $100K. It’s what, like $130K you’ve got to get to, pretty much. But what do you mean, I guess, by “big”? Speaker 1 Like, a big form of QE in some form or another? Speaker 2 Oh, but without that—I mean, are you then saying that they don’t need to do QE because— Speaker 1 Well, it seems like we’re going to be tightening for the next 6 months. Speaker 2 3 to 6 months. Speaker 1 Or not loosening, right? Speaker 2 I mean, yeah, I think— Speaker 1 Maybe yields get out of control. I don’t think we’re going to go there, but, yeah, I guess no. In that case, no, right? If that’s what you’re—yeah, no. Bitcoin just is a macro asset, right? That’s kind of how it trades, and it probably needs some juice from that. I mean, clearly it does, right? Bessent’s announcement is kind of the reason why everything’s trading up now. Speaker 2 Yeah. Speaker 1 So clearly it does. Speaker 2 I mean, it’s positive. It’s liquidity-positive; the liquidity is just a different form factor or way in which it’s coming in. Speaker 1 You can argue it’s healthier to not be relying on one buyer. Speaker 2 Oh, absolutely. Yeah, absolutely. Speaker 1 Because everyone’s just not watching him like a hawk. But back to the original question: is it on the frontier? Speaker 2 Probably not. I mean, I guess it depends on how strict your view of “frontier” is. Would you put any S&P 500 mega-cap stocks in the frontier, or are you thinking purely private companies in venture? Speaker 1 In tech venture? Speaker 2 I think SpaceX is at the frontier. I don’t think the mega-cap stocks are at the frontier. They’re more like telecoms or something. I don’t know. Maybe some of them are— Speaker 1 Frontier-adjacent. Yeah. Speaker 2 Yeah. Speaker 1 I mean, I wouldn’t say it’s not, but it’s not as much as it was before, clearly. I mean, there are still things that are super important and that I would consider frontier-worthy, like pioneering self-custody or privacy. These are all super important things, and crypto actually enables them in ways that it hasn’t in the past. So in that sense, I would say yes; it’s just not as new anymore. AI kind of reminds me of crypto from 2017 to 2020. We were still mapping everything out in crypto back then. Not all the primitives were built. There were still new chains. Nobody really knew what you could and couldn’t do yet, for the most part. And that’s kind of how AI feels now. Speaker 2 Yeah. For me— Speaker 1 You’re still kind of mapping everything out and the branches and directions it can go, versus crypto, where you kind of already know. It’s more about what you pointed out: building on the things that you know work. Speaker 2 Yeah. The way I think about the macro is—I think I said this on an episode before—but there are 3 important forces in the world. One of them is the advent of AGI. The second is just increasing multipolarity of the world, and wars, and the BRICS alliances, all this stuff that’s happening. And the third is just debt and demographics. I basically think AGI is overall a net negative for crypto in that it pulls away capital and interest. It doesn’t really need crypto, I don’t think. It’s deflationary. And I think the other two—multipolarity and debt and demographics—are very positive for crypto. So I think the overall weighting of which one of those forces is in command changes at any given time. And it’s why I think you have to have exposure to both. Crypto and gold benefit from the latter two. Defense stocks benefit from the latter two, and then the whole AI complex benefits from the AGI buildout. I think everyone’s going to need to have both. I would say AGI is clearly the strongest force, but multipolarity and the whole thing are progressing pretty quickly too. We have 5 fronts of wars going on in the world right now. It’s pretty wild, considering where we all started in crypto. This was sort of, unfortunately, one of the bull cases for this stuff, right? Speaker 1 Cross-border flows. Yeah. Speaker 2 Cross-border flows, just increasing balkanization of the world, and that shit’s all playing out. And obviously, debt and demographics—we’ve been proven right. I think that’s never turning around. Demographics are getting worse. If anything, AGI forces more spending by governments, so more debt. I think those two forces are extremely bullish for crypto and gold, and it’s why I think you have to kind of have both in your portfolio. Speaker 1 I agree. I think another thing is just thinking about the duration of these secular trends, or what have been secular trends, like currency debasement and debt spending. I completely agree with you. I think the reality is it probably gets worse before it gets better. But there is this interesting push-pull where, if we get to a point with AGI and the rise of agents, humanoids, and industrial robotics, that being net additive and potentially massive additions to the labor force—if you think about agents as additional headcount, and eventually robotics as additional headcount—there’s a world in which today we’re looking at this and saying, “Okay, the debasement trade is still very much alive and well, and these things are going to happen and will continue to be bullish for the debasement trade, Bitcoin, gold, and crypto.” But then, when we get to a certain point, you kind of cross that chasm. If AGI, agents, and robotics wind up being the thing that actually helps these governments—governments have to invest in this stuff and have to get behind it, because the alternative is just spending to oblivion, with debt and currency debasement and everything blowing up. If they do get to a point where that is making the labor force and the economies grow much faster, with much higher productivity, it’s actually a bearish case for Bitcoin longer term. That’s the option right now for these governments to outgrow that massive debt spending, or deficit spending that leads to debt. You know what I mean? It’s this paradox where you have to think about the duration of how long these things are going to go and when the inflection is actually going to happen. Yeah, but then every time there’s a hiccup, I think attention just goes back to debasement immediately. I think data centers have just become this lightning rod for the left to blame everything on. You have a bunch of Chinese misinformation coming in and getting people riled up about data centers in the U.S., and leaders in that party, for better or worse, are doing it out of interest in galvanizing their base, despite previously being tech-forward. So I think that will be one of the bigger headwinds for data center expansion. Isn’t that kind of bullish for the AI trade, if you like it, though? Yan I feel like it slows it down a little bit, because there’s this time component too, where so much of this debt is debt-financed and you need the revenues to come in. Any kind of headwind to getting there will force the borrowing cost to go up and increase the probability of this thing not playing out. You need less demand, right, to maintain a high price of tokens and high revenue. Speaker 1 If the data centers just smooth that, it makes it less likely you have this boom-and-bust. What’s the—it’s not Jensen’s—what’s the name of that paradox? I think it’s Jevons’s, basically: as price goes down, utility goes up by more. And so part of it is that you need this data center buildout to make more random use cases integrate with AI, because it just becomes so insane. But I think you’re going to have, next year already, 25 to 50 gigawatts of data center buildout. That’s a lot of data centers. Obviously, maybe some of those are canceled, but it’s still a lot. Revenues have inflected a lot too. I generally think that’s one of the questions: what’s the most important thing? ### AI Labs, Infrastructure & Bubble Risks Yan Yeah. One of the things I wanted to talk about is, if you had to boil down your investment thesis or lens right now—or more specifically, your portfolio, where you’re trying to invest, your bags—what is the one thing, if you had to land on something, that is the most important for your investments? Speaker 1 Yeah. Or, looking at our investments going forward—your thesis over the next 2–3 years—I do think the data center buildout is definitely not a huge concern, but it can become a concern very fast. We already have a compute shortage, and I think the AI debt bubble eventually pops because no technology cycle has ever gone perfectly where we know exactly what demand is going to be 5 years from now and build supply to that exact demand. You’re always going to overshoot, then you’re going to undershoot. That’s just how these cycles work. But to Yan’s point, if there is real pushback and a lot of data center buildout gets canceled, that compute shortage gets worse. Pricing doesn’t allow more use cases to come online because pricing stays high. I think that’s a valid concern, or a potential headwind. I think the most important number for my portfolio is frontier lab revenue. I think that’s true for everybody, to be honest. Yan Revenue? Speaker 1 If that turns, everything is going to— Yan Sell off. It doesn’t matter where you— Speaker 1 I think there are some scenarios, because there are 2 reasons it could turn—or I’m sure there are more, but those are the 2 big ones, I think. Yan There just isn’t as much demand for AI as we thought. This stuff isn’t as useful as we thought, and that’s clearly the most bearish outcome. Then there’s open-source models gaining some of that market share, and I think that’s going to cause some problems in the short term because there are a lot of data center commitments backed by OpenAI and Anthropic revenue. I think we can digest that, and it’s actually bullish for the AI trade long term. Speaker 1 The metric that matters most for the long-term health of this market is almost the total amount spent on LLM tokens. If that keeps going up, whether it’s open source, Anthropic, or OpenAI— Yan I don’t know. I do think there’s a world where Anthropic and OpenAI aren’t worth that much. No, actually, I think it’s like— Speaker 3 Like a melting ice cube. Speaker 1 Yeah, because that’s an interesting thing to talk about. Obviously, people are very bullish on OpenAI— Yan But— Speaker 1 Anthropic is IPOing later this year at around $2 trillion— Yan Yeah. The bulls make great arguments, like Brad Gerstner and those guys. Who am I to refute them? Speaker 3 Yeah. Yeah. Yan Um— Speaker 3 True. But they also have big bags. Yan Yeah. I think that the— Speaker 3 Anthropic’s the new Avalanche, is what you’re saying. Speaker 1 I think the L1s are a really good metaphor for this. Clip that. When I first started investing in the labs, people were really bearish. It was basically the L1 thing: These things are great, but how do they capture value? This is just going to be commoditized, just like block space, right? Intelligence is going to be like block space; it’s going to be commoditized. Then, exactly like L1s, they just ran in your face. First of all, it turned out they weren’t that commoditized. Similar to L1s, at least initially, everything happened on Ethereum and Solana, right? There were a lot of them, but nothing was happening on most of them. I think intelligence is a bit different because it’s way less commoditized than block space. Anthropic and OpenAI are meaningfully better than the others in a way that Ethereum and Solana arguably aren’t. But I think it ends up being the same thing: You have this magical thinking that you had with L1s at the top, where everything is going to run on these things and you don’t need a DCF because they’re going to secure the whole economy. You have that magical thinking with Anthropic and OpenAI, where these things are ASI and recursive self-improving superintelligence, and they’re going to solve all the scientific problems. But you actually have to bet on that because you can’t sell frontier intelligence tokens at a sufficiently high price to justify the current valuations. You have to internalize it and start doing what Anthropic is doing—putting together a wet lab and inventing new drugs—or what OpenAI is doing with chips, new math discoveries, and all this stuff. I do think there’s a world where intelligence just gets super-commoditized and these things just incinerate capital, like OpenAI and Anthropic. Yan I mean, it’s clear that they’re worried about it, though. At first, the idea was always that they would generate the most revenue and thus be able to fund the most capacity for training and model improvement. They would stay on the frontier by a large enough margin that the really valuable tasks would be worth spending money on. Then, seeing that people don’t want to use them for that— Speaker 3 People don’t want to use them for that shit. They don’t want your shit stolen, right? That’s what you’re kind of seeing now with— Yan There’s what they’re advocating for with, “Let’s pause progress,” and trying to pull up the ladder behind them. If you were ahead and thought you could stay ahead, you would not be pushing for that. So I think there are definitely concerns from them on that front—from open source and everything else catching up—plus the path to monetize in different ways indicates that these things are being nipped at their heels. It’s just hard to see that— Speaker 1 Their businesses are not charities, right? At the end of the day, the point about the wet labs is that it’s a signal of what’s to come. That’s the trend they almost have to pursue. You can have both business lines: People will still pay for frontier intelligence and frontier tokens. But long term, where does your enterprise value get to really crazy numbers? It’s by monetizing, or basically internalizing, the IP that you create from being on the very frontier into things like a wet lab and other breakthroughs. I think that’s the way they have to go, and they will. Speaker 3 What’s the growth rate of frontier lab token usage right now? Speaker 1 Token usage is down—actually, token share of usage is down. Token usage is up, and revenue is up a lot. I think Anthropic crossed $100 billion. It was crazy—what, a couple of months, or I guess quarters? Quarterly data was just ticking in the opposite direction, with growth rates slowing. Eventually, the lack of profitability will come calling, too. You need to keep funding this in some form or fashion, whether it’s selling equity in the market or—I don’t know what you do to keep funding it—but it’s a race to stay ahead. If you optimize for profitability, you’ll fall behind, so they need to keep telling this growth story that the market will keep buying. Yan But it can be a rough unwind, for sure. Speaker 1 It’s interesting to think about how systemic the 2 big labs are to the market in general. Let’s say OpenAI filed for bankruptcy tomorrow, right? Very hypothetical. Yan Clip it. Speaker 1 What happens? Yan Right? And there’s— Speaker 1 One side of the obvious answer is that everyone would say, “Oh, that’s going to be like a nuke getting dropped on the market,” because it’s a very bad signal. Speaker 2 I think CoreWeave would go down like 80%. There are definitely some ripple effects that take people down. But then there’s the other side: You’ve got Anthropic, you’ve got the hyperscalers—maybe it’s Google, maybe it’s Amazon, who knows—that come in. The assets of OpenAI are going to get bought up by somebody, right? That person or entity is then even further on the frontier. I don’t actually think that would deter the AI buildout or the trend, even if one of them necessarily goes down. Not to say it wouldn’t cause a ton of volatility in the short term. Speaker 3 The reason they went down—the thing is, it depends on the reason. I feel like it would— Speaker 1 I mean, OpenAI could get to a point where it just can’t really get— Speaker 2 I mean, the odds that it would be something totally idiosyncratic to OpenAI seem very low. It would have to be something that affects everything. Speaker 1 That’s fair. Speaker 2 So— Speaker 1 I mean, their demand is underwriting the buildout of these data centers. If it’s a structural demand problem, then we’re cooked. But if it’s just a specific, idiosyncratic OpenAI thing—if they’re simply getting outcompeted by someone else—then I think the market can digest it and find some other source, because the demand is still there. People still— Speaker 2 There’s $100 billion of tokens being spent on—or, between Anthropic and OpenAI, probably like $170 billion or something—of spend on tokens. Speaker 1 And so the demand is there, and I think someone else would fill it. If it’s open source, it’s very bullish for the AI industry long term. It’s very bullish for society. Speaker 2 Yeah, it’s society exactly. The margins of the labs are, to some extent, deadweight loss to society. It’s hard to say that because they’re reinvesting it into— Speaker 3 Producer surplus. Speaker 2 Yeah, they’re reinvesting it into making smarter models, and I think they’re very good stewards of this stuff. I think it’s far better that they steward it than open source, to be honest, which is a hot take as well. But I think we’re probably fine. If it were a structural demand issue, I would try to sell before, but if open source were taking share, I’d probably hold through the dislocation—maybe try to sell my core position if I could get there on time, but— Speaker 3 Otherwise, my computer— Speaker 2 Yeah, exactly. Speaker 3 When OpenAI goes back online— Speaker 2 It’s not like it’s going to be a 10:00 a.m. announcement or whatever. It’s going to happen on the weekend, and you know, futures— Speaker 3 Everybody already sold on Friday. Speaker 4 Left holding the bag. Speaker 3 Yeah. Speaker 2 Markets won’t even open. We’re taking Monday off. Speaker 4 I love that. I wish we could do that in crypto. Do you think 12 months from now the AI bubble has popped? Speaker 3 No. Speaker 2 Same. No. Yeah. Speaker 3 No. It’s probably more like 2028. Speaker 1 I think 2027 is probably going to be a pretty good year overall. Speaker 4 I hope so. Speaker 1 I think, though, that it’s definitely not early by any means in anything. Speaker 2 Bitcoin’s barely $80K, bro. Seems pretty early. Speaker 3 Uh— Speaker 2 Close to the lows, baby. Bitcoin could be $100K for 10 years. You never know, right? Speaker 3 Sir— Speaker 2 Gold went through, what, like a 20-year bear market? Speaker 3 It’s definitely possible. Speaker 4 Oh, brother, please no. Peter Schiff’s adulthood. Speaker 1 I think Bitcoin is an interesting one these days. I don’t actually have a good read on it. Speaker 2 Me neither. I think what’s interesting is that, as we’ve been talking about, for the first time—at least for me—Bitcoin doesn’t necessarily have to do well for other stuff to outperform. It sounds simple, but that’s never really been the case. Speaker 1 There’s a world where BTC could, for a bunch of reasons—we’ve been talking about monetary policy tightening and financial conditions tightening—drop to, I’m not saying $40K, but let’s say the mid-$70Ks. It probably takes Zcash with it. I don’t know. Speaker 3 But things like HYPE or options—there are things out there that— Speaker 4 Zcash gets to 5%. Speaker 1 Yeah, exactly. I didn’t actually put a disclaimer on that question, but that could be a way where Zcash stays and Bitcoin nukes. Speaker 2 I mean, it’s the same with Bitcoin, ETH, and SOL. I have no way to really think about those assets right now. I do think that a lot of the hype around Zcash and these other ones is capital just rotating out of ETH and SOL into these other protocols, especially ETH. I don’t mean to shit on ETH anymore, but it’s clear that there’s still not a lot of outside interest in those three assets. Speaker 3 Is there outside interest in Zcash? I don’t know. I’d find that kind of hard to believe to any significant extent. Speaker 2 I think there’s definitely some outside interest in Hyperliquid. Anybody who works in finance has had Trade XYZ on their screen for all those big IPOs and everything, right? This whole dispersion thing has been a theme for two or three years, but I think it’s getting stronger, to the point where everyone has always dreamt about totally dislocating from Bitcoin. Speaker 3 Yeah. Speaker 2 And we are getting closer. We did it. Speaker 1 I really didn’t know that was possible until basically this year, when it happened that Bitcoin just sucked and alts did pretty well. There was the Saylor thing, and there was the idea that ETH might be one of the most overvalued assets on the planet or whatever. I thought, “Well, if ETH is a $10 billion asset, what’s the rest of crypto going to be?” Now I kind of think it’ll be all right, because even trading volumes, which anchor the valuations of the majority of crypto assets, can just die silently and everything else can continue. I don’t know if you guys saw that clip of the Tulip King guy. A lot of people were shitting on him for it, but I didn’t find it too crazy of a take. He was basically saying that we just misallocated billions of dollars of monetary premium to ETH, SOL, and other L1 tokens. Speaker 3 Yeah. Speaker 4 I agree with that. I just don’t agree that it’s all going to flow to Zcash. Speaker 1 Yeah, I’m not saying it’s all going to. I agree with the first part 100%. It’s objectively true. Speaker 4 Ceteris was right. Speaker 3 Yeah. Speaker 4 Ceteris Capital. Wasn’t he an ETH OG? Speaker 2 No, they had the big Europe. Oh, Ceteris Capital—I thought I was confusing him. Yeah, the DeFi guy. Speaker 4 Ceteris Capital. They were just early. They shorted the bottom. Speaker 3 Really? Speaker 4 Well, yeah. They were short at around $200, and it went down to about $80, so they were crushing it. Then it went from around $200 to $4,500. Speaker 3 Sucks. Speaker 4 I did have a question, mostly for Jose. What do you think the odds are of an AI lab nationalization happening? I have no idea. Have you thought about it much? Jose I can’t say that I have. Speaker 4 Interesting. Do you think it— Jose I think it’s a possibility, especially if there’s some breakthrough with ASI. That’s what’s adding to the bear case for Anthropic: they’re saying, “You invest in us,” which is basically indicating, “Help us make sure that we don’t need a bailout.” Speaker 4 So which direction forces it? It seems like it depends on what happens. If they need a bailout before they get a breakthrough with AGI, ASI, or whatever everybody’s calling it now— Speaker 5 They could still need one, right? They might. Speaker 1 I wouldn’t be against a U.S. investment in it and putting it into something like Social Security or Trump accounts. Speaker 4 Nationalization would be so bullish. But the reason I brought it up is that it’s a very stupid scenario. You develop AGI or superintelligence, and there’s no world I see in which the federal government and the military say, “Yeah, it’s entirely in private hands. You can just have superintelligence.” Speaker 5 I’d rather it be in private hands than in the government’s hands. Speaker 4 I’m not saying I wouldn’t. I’m just saying I don’t see a world in which a private company develops it and the military says, “Yeah, you can have that.” Anytime we’ve developed— Speaker 2 But you have defense companies that aren’t nationalized. There are just a lot of regulations. Speaker 4 The reason I bring it up is that the nuclear-weapons scenario is the analogy. That was developed by the government, essentially with all private institutions, and it’s not too much different now. It’s being developed in conjunction with investment, and there’s policy advocacy in Washington. It’s not completely siloed. If you get something that’s orders of magnitude smarter than everybody and can make military decisions, science decisions, or whatever it is—essentially the stuff you were talking about earlier today in one of your sessions, where you didn’t think decision-making would be the last thing to go—if they create models that can make good decisions and replace people, I just don’t see it being a technology that is allowed to stay in a private company’s hands. Speaker 2 In the defense-company example— In the U.S.’s case, the U.S. military is the one going to war. It’s not as if Anduril, for example, can use that artillery at its own will or declare war. That’s not developed on behalf of the U.S. government. Speaker 1 Yeah, it’s an interesting question. I don’t know. I don’t know how to think about it. I don't know how to underwrite it. I just see it as actually not that low a probability if what they're saying is true. If all the hype is true, which I also have no way of underwriting. Speaker 2 Yeah. I haven't thought about how that would go down. Bill was talking about this on CNBC recently. Speaker 3 Bill. Speaker 2 Yeah. Speaker 4 That's why I think an investment is probably not out of the question. Speaker 1 It's already been happening. They've definitely been having the discussions. Speaker 2 Yeah. Awesome. Speaker 4 Would you find that bullish if that happened, or bearish? Speaker 1 Bullish. I think markets pump on that. Speaker 4 Nationalization is a weird one. It depends. Speaker 1 Well, that's what it is, but is it a binary thing where, all right, we run this whole thing, or is it that we invest in it and now have skin in the game to the degree that we don't want it to fail? Because the latter is bullish. Speaker 4 But buying the whole thing is also like, do you buy it at the market price, or do you do a nationalization like when the Portuguese government basically said, “To operate, you have to give us 10%,” or whatever it is? Speaker 1 Well, yeah. Speaker 4 No, as long as there's a capital infusion. Speaker 1 Yeah, but there could be a capital infusion where they just nationalize it for zero and then inject a trillion dollars into it to build it up. Speaker 4 What do you mean, nationalizing it for zero? Speaker 1 Well, that's what happened in Portugal during the revolution. All our industry got nationalized, but no one got paid. None of the people who owned them got paid. Speaker 4 Yeah, it literally just snatches it for, like, free. That's the binary side. I'm talking about them just coming in as an investor, the same way they've done with Intel, with warrants, and all this other shit. There’s precedent here with other public companies. Speaker 1 Yeah, that'd be smart. I think either way, that would be the first step, and then as it scales up and gets bigger and eventually more powerful, maybe nationalization. But I also don't think that's a near-term thing. Speaker 4 The thing is, whether they own a stake in it or not, they're still totally dependent on its success. You need to bail it out regardless. It's just that we or China win, so there's an incentive here to help ensure that it happens locally or domestically. Speaker 1 Yeah. Maybe for the next Hivemind, I'll do a lot more research on that one. I'll come back and post a more pointed question. Speaker 4 I like that question, though. I think it's a good question. Speaker 1 I think Jose needs to do more research on that. Speaker 4 ### What We’re Avoiding Have better follow-ups for it, too. But I've been thinking about it more. Speaker 1 Is there anything—we've talked a lot about what we're looking at, what we're bullish on, et cetera—is there anything that fits into what you consider an antithesis? Are there any sectors, verticals, or even assets that you guys are intentionally avoiding and don't want exposure to? A good example would probably be what you said earlier on the L1 trade: at this point, it's just not interesting. Is there anything else that falls into that? Speaker 4 I think definitely that, and then you start doing— Speaker 1 No, I was saying pockets of stuff that's just going to get absolutely nuked by coming technology. Telecoms—I don't ever want to own telecoms with Starlink going into that world. There are also elements of stuff that will be completely outcompeted. Speaker 2 Yeah. I don't really want to own anything that doesn't have an AI tailwind or is a hedge asset, like defense, gold, and crypto. I don't really want to own anything that isn't benefiting directly from AI. Speaker 4 These value plays on discounted jewelry and all this stuff? Speaker 1 Almost everything benefits from it at this point. Speaker 4 Yeah. Speaker 1 It's just to the degree that it benefits. Speaker 4 Yeah. You really can't go wrong owning the index in the world of AI. I genuinely believe that. Speaker 1 I mean, the index. Speaker 4 You've seen a lot of random companies you wouldn't think of that are just having banner years. Speaker 1 Insane. Yeah. Speaker 4 Yeah. Multiples are coming down, right? Prices are bullish for so many. Speaker 1 Yeah, that's why it's hard to see a really big—obviously, you get the really bad bear markets when you don't expect them. But you're seeing the earnings and margins of pretty much every sector get stronger and stronger, and it's very different from other bubbles. Speaker 4 Also, with rates where they are, it's very different. Before, it was, “Oh, shit, bear market—we're at zero. Where do we go from here?” Rates are up here; there's so much— Speaker 1 The other thing, too, is if things go actually that south, even with the recent rate hike, and if there is another one, it's not like people are expecting a new rate-hiking cycle. It's more like, “We're taking a little break. We're going to go up a bit, but then we expect to come back down again,” right? So it's still very different from when they started the rate-hiking cycle at the end of 2021, when it was like, “Yeah, we might have to hike rates for three years.” Now it's more like, “We have to go up a bit, but we'll probably come back down.” The magnitude of the difference in rates isn't nearly the same, either. Speaker 4 I will say most longer rate-hiking cycles have started that way, though, where you didn't expect the hikes to go on for as long as they did. I also don't think one rate hike at 25 basis points does much at this point. Like I said going into the Fed meeting, I don't really know what that does. It doesn't deter an AI debt build-out. If anything, it impacts consumers and people who rely on consumer credit a lot more. Nobody is stopping an AI debt build-out over 25 basis points, right? Speaker 1 That's all long-end, anyway. Long end of the curve stuff. Speaker 4 Yeah. In the private markets, I'm avoiding the new labs for sure. Again, it's like the L1 analogy: you don't want to invest in the nth L1, even if there's a marginal thing they're working on, whether it's continuous learning or whatever. You're basically betting on an acquisition at the prices you're paying for these things because the revenue traction needed to get there is huge. These things are doing seed rounds at multibillion-dollar valuations—some of them, like the Inflection AI of the world. I'm pretty bearish on that entire category. Speaker 1 I agree. Speaker 4 The analogy to crypto is useful in some of this stuff, because it's the same as crypto, right? Solana is going up a lot, so it's like, “This is faster, and the TAM is $300 billion or whatever.” But by the time you launch, Solana isn't at $300 billion anymore, and no one cares about your thing, right? So I'm pretty bearish on that category. I'm also kind of bearish on a bunch of the robotics companies. I think a lot of it— Speaker 1 I think it's a bit ahead of itself in terms of the actual traction. Speaker 4 I take the other side of that. Speaker 1 Yeah. Speaker 4 I think you'll have a pretty solid repricing in certain robotics sectors next year because they haven't repriced much, like Figure. Speaker 1 Which ones specifically are you thinking about? Speaker 4 On the humanoid side. I'm personally most bullish on all of them at current valuations. I think you'll start to see some factory deployment in a productive way next year, probably toward the end of next year. That will start to get the moon math going on a lot of this stuff. The productivity growth from robotics isn't priced into any of this either, and that could be the next catalyst for domestic production. Speaker 1 I just don't think they're going to make that big a difference. I don't think you need that many humanoids, and I don't think humanoids make that much of a difference to factory productivity. Most of it has already been pretty automated by deterministic robots. The big thing for humanoids is probably all the hotels, with all the maids and cleaners they have, and all that kind of stuff. Speaker 4 I forget who said it, and it was a year or two ago, but imagine if everything were always so clean because you had all these humanoids constantly maintaining everything. People don't totally think about that. When they think about humanoids, they mostly think about the factory worker and sometimes the home. Speaker 1 You know, it's crazy because I don't think home robots are coming for a long time. It's too varied of an environment. Speaker 4 Also, you definitely don't want to be the first person to have a home robot. You definitely don't want one around your kid. We were having this conversation at dinner yesterday. I was like, “Who wants a humanoid around their newborn kid?” Nobody. Nobody. Speaker 1 I mean, have you seen M3GAN, the humanoid? Speaker 2 Oh. Speaker 3 Oh, I thought you said I, Robot. Speaker 2 Yeah. Speaker 3 I wouldn't be putting her there, though. Speaker 4 Regardless. Speaker 2 Yeah. Speaker 3 Even if she was making food. Speaker 1 I think stuff you want to avoid. I don't have good takes on stuff outside of crypto. Within crypto, we've already talked about it. L1 tokens are kind of tough, but I also think most DeFi stuff is too. There's a short list of DeFi things you can get interested in, but it really feels like you have your core. At this point, I think it's pretty clear to say the 2 core coins of this cycle are HYPE and Zcash. That's store of value and perpetuals, right? Then there are all these speculative launchpads and other things going on, like Robinhood and Solana. That feels like a much cleaner barbell to me. That's how I'm positioned: owning Zcash and HYPE, and then all these different on-chain experiments and fun little games, because everything else feels like a bit of a no-man's-land. It's not to say that they're going to do poorly. I still think there's a scenario where Solana could hit some crazy, real revenue numbers 5 years from now or something. But you're paying $60 billion for it right now, so you're already paying a big multiple on it actually achieving that. I still think you can be very selective in crypto, and you should be very selective. You'll definitely have a period where everyone is convinced Ethereum and Solana are going to start going on a massive tear, and then they'll pump 15% and that's it, right? Speaker 2 How bearish are you on DeFi, then? Is it the Uniswap stuff? Speaker 1 I'm talking about legacy DeFi, really—DeFi that trades at billions of dollars of market cap. Speaker 3 I don't know. I think if RWA stuff keeps coming on-chain, it's a pretty good tailwind for it. Speaker 4 Plus, the regulatory environment is getting a bit friendlier. Speaker 1 I just feel like I'd rather keep my speculative capital looking for the new kinds of on-chain things alongside those other core bags. Speaker 3 There's only so much that can absorb, though. Speaker 1 Yeah, no, for sure. I haven't owned a DeFi token in so long. Speaker 2 Is Ethena a DeFi token? Speaker 1 I guess I technically own that. Yes. Speaker 2 I stand corrected. Speaker 3 You never owned Hype? Speaker 2 I own Hype, but I don't know. When did that happen? Speaker 3 I bought a bunch of Hype. Speaker 2 When? Speaker 3 A week or 2 ago. Speaker 2 Okay. Speaker 3 At $80. Speaker 4 Everyone's like, "$80?" Speaker 3 No, I had some good on-chain trades, and then I was like, "Okay, I might as well just take a bunch of profit in this and buy a real core position." I've always been like, "Oh, I could buy a little Hype here and buy a little Hype here," but it was never a position that was big enough for me to like. I kept holding off on it, and then it kept doing well. Speaker 2 So you don't call Hype DeFi? Speaker 3 No, not really. Speaker 2 I guess Uniswap is the only—what is DeFi for you, then? Speaker 3 Uniswap, all the basically DeFi protocols on general-purpose chains. DeFi protocols on general-purpose chains: Uniswap, Morpho, all the things on Solana. I know a lot of people are bullish on Kamino. Maybe it is crushing the Solana market. So if there's a DeFi token on Solana, Kamino would probably be the good bet. But still, I don't know. It's just hard for me to get excited about those tokens. Speaker 2 Yeah, even Aerodrome, with your show kind of— Speaker 3 Yeah, I think it's just going to gain a lot of TVL going multichain. Speaker 4 Sometimes the boring stuff does well. That's the other thing, too. Speaker 3 It's up a pretty good amount—75% from the September or August lows. Speaker 2 But I don't know. Are options tokens going to be the fun DeFi thing that people speculate on? Speaker 3 You just look at the TAM, and then it becomes— Speaker 4 Yeah. Even if they achieve 10% of what— Speaker 3 You thought the Zcash moon math was good, right? Wait till you see the options moon math. Speaker 2 The Zcash moon math has no ceiling. Speaker 4 Man, there are people— Speaker 2 There's no ceiling. Is that what you're saying? Speaker 3 I was talking to Luke yesterday, and he was genuinely convinced. He was like, "I don't know, man. It could flip Bitcoin." Speaker 4 Yeah, we saw him outside. I was like, "Wow, chill from Luke." Honestly, I need more of that energy. Speaker 2 Luke Saunders. Speaker 4 Yeah, because Zcash made Shane sell all his bags. Speaker 3 The thing is, the Zcash team is really smart, and that is bullish. But yeah— Speaker 2 Wait, what happened? Speaker 3 Sol is bidding Zcash. Speaker 2 Wait, today? Speaker 3 Yeah. Speaker 4 Amazing, because he's getting shilled by Luke. Speaker 3 Yes. I hope for his sake it goes to $10. Speaker 4 I hope, for all of our sakes. Speaker 3 He was in Pure Alpha during the bear market, so he got torched following all the random meme coins and shit that were put in there. He was like, "Dude, it all went to zero." Speaker 4 Yeah, it's Pure Alpha right now. For reference, we have an internal work chat called Pure Alpha. Speaker 3 Yeah, it was not Pure Alpha during the bear market. Speaker 4 He got kicked just as the bull started. Speaker 3 It's brutal. Speaker 4 He was kind of happy to get kicked. He was like, "Fuck it." Speaker 3 ### Biggest Risks & What Comes Next Yeah. Cost me some money, lad. Speaker 5 I think a good place to end is with this: What is the biggest question mark you guys have right now? If you had a crystal ball and could get an answer to something that would help your thesis, whatever it is, is there a big outstanding question mark that you have going into the end of the year that could be something for next year? I'm always curious to hear: If you were to be kept up at night, what is that thing? Speaker 1 For me, the most important thing we talked about is Frontier Labs. That is everything—every single asset in the world, basically. Within crypto, I'm still really curious to see how the SEC and CFTC situation develops now that CLARITY is gone, and the SEC has talked about bringing ICOs back. Are we going to get a big ICO cycle again? It's possible. That's something that was unthinkable a few years ago. What would that look like? Who's going to be raising, and what kinds of projects are going to be raising? And, again, how does Hyperliquid really get entrenched in the U.S.? You're seeing Kraken come in there. Speaker 2 Yeah, he just kind of stole my thing. Speaker 1 But those things don't keep me up. The crypto things don't keep me up. Speaker 2 The thing that would keep me up is Frontier. Speaker 3 Frontier dates. Yeah, that's been keeping me up, in a way. Speaker 2 It's tough. Speaker 1 The Hyperliquid thing does kind of keep me up. It's a huge part of my portfolio at this point, so I'm keenly watching everything that comes out. Is the thesis validated? Has it completely played out? I don't think it has, which is why I'm still holding. Speaker 3 A big exploit of something like Hyperliquid is something I would worry about. Speaker 1 Yeah, but I feel like they've derisked it a decent amount, with Circle coming on board and the bridge not being as integral as it was in the past. The whole industry is behind it now, too. There was a period of time when Hyperliquid was kind of hated. It had a lot of money in it, but it was still very hated. If that bridge got exploited, most people would be like, "[expletive], it's toast." But that could totally happen. And this isn't just a Hyperliquid-specific thing. Any kind of catastrophic bug in any blockchain could do it. We talked about the Zcash bug. Every one of these is still a very complex system that can have zero-days that essentially nuke the entire system. Even a catastrophic bug in Solana would affect the entire crypto market, or in Ethereum. There are a handful of protocols where it would. And, again, Ledger—a critical Ledger bug would take down the industry. That's kind of the biggest thing out there. If Ledger were ever exploited— Speaker 4 Do people still use Ledger, though? I feel like everyone's— Speaker 3 Tons of money is secured there. Tons of money has been custodied at this point. Speaker 4 I mean, but just think about the Coldcard thing. Speaker 1 Think about the Coldcard thing, and now it's on the scale of Ledger, right? Speaker 2 Yeah, the value stored on Ledger devices is probably at least 10,000× what was stored on Coldcards, right? Speaker 3 That would just be totally catastrophic. Speaker 1 For me, I guess, in crypto—and I'm still very bullish here—this is just one big short-squeeze momentum thing. This is just a really big bounce, and we kind of melt back down. There's a lot of reasons why I don't think it'll happen, but if you told me it happened, I'd be like, “Yeah, maybe.” Speaker 2 It would be obvious in hindsight. Speaker 3 Very obvious. God damn it. Speaker 4 There's no new use case. There's no reason, right? Speaker 5 Maybe the bag in the bag. Speaker 4 It pays you in stocks. Speaker 1 You tell me. I hold shitcoin, I get goodcoin. If you just upload your receipts, you get stock tokens. I don't know what the complication is. Speaker 2 Go to the store and take a photo. Speaker 3 Yeah. Speaker 1 As stocks go up, it's going to drag the meme coins up. Speaker 2 They're compared to the stock. You don't get it. Speaker 3 It's called an AMM. Speaker 4 We're going to get a board seat. Speaker 5 Yeah. Speaker 4 We're going to take over the company. Speaker 1 I had this as a potential question for 12 months from now. Do you think, actually, a meme stock accumulates enough stocks? I think one will, actually. Some of these stocks that they're putting on-chain—like, Solana put 1-800-Flowers on-chain. I don't know what the market cap of that is, but it's probably pretty low. Speaker 2 Then you just turn it into a DAT for the memecoin. Speaker 3 That's inception right there. Speaker 4 That is the innovation we want to see in crypto: democratize access. Speaker 1 I think the most important thing is the aggregate spend on tokens. It's like if you had one crystal ball, if you had the Truth Social pipe to that, rather than Trump's dumbass posts, you had a Truth Social pipe to that, that'd be pretty awesome. But other than that, maybe just the war—like, this Russia... Speaker 2 I bet it's probably a nothing burger, but if it wasn't, it would be bad. I'll keep fading geopolitics, and eventually I'll be wrong, but I will continue fading it. Hopefully you make enough by then. Speaker 1 I do think if it did break out, we would say that World War II had started a few years ago, because there's enough fronts. In hindsight, yeah, you'd be like, “Oh, it started here,” because there's been, like... Speaker 3 It's why it's so hard when you read history books, right? Speaker 4 Exactly. There's like, “Oh, it started on this day.” But if you actually were alive... Speaker 5 You would not think it started like that. Yeah, exactly. I don't know. Speaker 1 Blatant starts. Sure, you could say there was a buildup, and Germany was not being honest about how much artillery they were manufacturing and all this stuff, but when the war started, it was pretty clear—blitzkrieg crush. Speaker 2 Yeah. Speaker 3 But, like... Speaker 1 I don't know, though. Even still, Hitler was kind of going into different regions and kept pushing the boundaries, and people were just letting him for a while, right? Speaker 2 A good year or two. Yeah, like, “They're German. They want to be German.” It's like the whole—it's the Putin thing, too. Speaker 3 Yeah, but that was... Speaker 4 All right. Speaker 5 They're just in no position to do... Speaker 1 For some reason, nukes started flying and it was World War II, and we didn't go to zero, and everybody lived somehow, and we wrote books. Like, yeah, it would probably be like nuclear war. Speaker 2 It started before... Speaker 3 This—like, before now. That's a long if statement right there. Speaker 4 Yeah. I don't know. It's just like... Speaker 1 Would HYPE still be at 90? You know what would do well? My memecoin paired with uranium. That's what would do well. Speaker 2 You're adding cigarette coins on HYPE—cigarettes on... Speaker 3 Artillery on HYPE. Speaker 4 I got my macro hedges and uranium. Speaker 5 Yeah, this is great. Speaker 1 Yeah, before we dive into a long-form history lesson, I think that's a good place to end it. I love doing this in person. Hopefully we can do more of them.