It's Still a Bull Market, But Not The One You Wanted

Most of the people who came here are not coming to this conference to figure out what token to buy. They're figuring out how to develop a strategy, how to become crypto-enabled, and maybe hear some regulatory concepts. I'm seeing less and less of the OG builders, too. For better or for worse, a lot of those teams have just faded. But it doesn't feel like a bear market at all.

1. Takeaways From DAS

Have you seen the Andreas Antonopoulos 2011 Bitcoin video?

That's how I feel right now.

There's this video of Andreas Antonopoulos. He's speaking in a room—I think it's 2011 or 2012—and there are 3 people in the audience, but they were the real believers.

They were the real believers. You know, we didn't scam. We brought in Rob hoping that he would bring on more of a TradFi crowd and a regulatory crowd. No one's here.

I saw Jason earlier for the first time in a month and a half, maybe 2 months. He comes up, hugs me, and says, "Listen, since I haven't been on the pod, the listeners have been going this way." He blamed you, though.

That's not true.

He tells a story that when I joined, listeners went vertical, and Rob, I guess since you joined, they—

When I joined, it went up, too, and then we lost our Jason Calacanis. That happened. Never compare me to Jason Calacanis again.

All right, guys, I want to hear your takeaways from DAS. I'm curious about the big takeaways from this conference and maybe from some of your private meetings behind the scenes. A lot of people here saw what was happening on stage, but did you learn anything new? What are the themes? What are you talking about?

Rob's like, "I already knew everything."

I don't know if I learned anything new, but what has happened is that we've continued to see an acceleration of stablecoin adoption and tokenization.

I was at a dinner maybe 2 nights ago, and somebody said, "Okay, 2025 was the year of stablecoins, and 2026 is the year of capital markets." I think it's still the year of stablecoins, but it's also very true that we've seen so much interest from every traditional financial institution in figuring out ways to bring capital-markets activity on-chain.

That's both for what it was originally for—saying, "I'm going to issue a token," or, "I'm going to take one of my off-chain assets, bring it on-chain, and sell it to crypto natives." But now it's not that. Now it's, "I'm going to enable trading for all types of assets on-chain because I know that it's better infrastructure for 24/7 trading. On the weekends, I cannot do collateral management without it."

That realization and that interest is the thing that continues to get driven home. This is obviously a very institutional conference, so we've seen a lot of that.

We've also seen several regulators here, and it's clear that on the regulatory side of what's happening in Washington, despite what's happening in the Senate right now with the CLARITY Act, there is real support and real understanding that this is happening. I think it's more of an exclamation point than net-new information, but that's great.

Yeah. Santi, any takeaways?

I'll fire off a couple of things. I agree with a lot of what Rob said. I arrived at around 9:00 a.m. on Tuesday, and the line was longer than TSA at the airport. It was all suits. I was wearing just a sweatshirt, and I felt really out of place.

We always know DAS is an institutional conference, but it was pretty amazing to see. I think I caught up with you separately, but the statistics from the conference are pretty revealing. It's mostly financial institutions, and whereas in prior years they would send 4 people or 2 people, they're now sending teams of 10 to 20. I think that is indicative of the hiring spree that has happened.

I think that was really exciting to see, and it's a reflection of where we are. Adoption is continuing. It's just not where you want it to be, meaning in the token price.

I was just at a panel with some really good investors, including Ben from ParaFi and a couple of others. I don't think anyone disagrees about the issues with tokens. Some, here and there, are excited to invest in tokens, but some of these conversations are happening because token prices are down.

I think it is a healthy debate to have so that we don't make the same mistakes in the next cycle, in the next bull market. It was just a good discussion, and it was really exciting to see.

Every time I come to a new conference, I see less and less familiar faces. Maybe that's my issue.

What year was your first crypto conference?

2012. Yeah, but it was a—

2012. 2012.

There was a picture in 2013—the Bitcoin picture.

The sweater?

Yeah. Funny enough, I think that might have happened in New York. I still remember the days when Galaxy had an office in Soho. I think Galaxy would host the Thursday parties from Novo to get on the tables.

I was working at a health startup across the street, so I'd pop in there. My first one was a small gathering, and I still wore a suit and tie. I was at JPMorgan at the time, and I felt totally out of place. It's surreal to see that.

Yeah, it's crazy.

The final statistics on this event: Blockworks has been around since we started in December 2017. Our first event had 200 people. At our second event, we had 13 people.

We had just quit our jobs. We quit our jobs on May 1st, and then 10 days later we hosted an event, and 13 people showed up—just a little more than what's in the audience here.

It was like, "Mom, I've made a grave mistake. We're back to square 1." My old boss was like, "Can I come back?"

The first DAS ever had 500 people. That was in May 2019, and it was a 1-day event. I haven't gotten the final numbers from the team exactly, but I think this year was somewhere around 2,900 people.

We projected around 2,000 people. Bear markets usually dip, but there's still institutional interest, so we thought it would be 2,000. We had 2,900 people, which exceeded even our most optimistic bull-case budgets. It was a really good event.

We also measure things by how many allocators come to the event. At our first-ever event, we had 1 allocator. Last year, we had 22 allocators—real allocators, like sovereign wealth funds, endowments, or pensions. This year, we had 130 come.

I'm not saying all of them are allocating, but there is real interest in this space. That's a good way to measure the success of the industry.

2. Is Crypto in a Bull or Bear Market?

Santi, I'm curious because it was such a weird event for me. Every time we've hosted an event, in my head I'm thinking, "That was a bear-market conference," or, "That was a bull-market conference." Was this a bear-market DAS or a bull-market DAS? I have no clue at this point what time of the year it is. Is it bull or is it bear?

Tokens are bear, but this is obviously an institutional bull market. Most of the people who came here are not coming to this conference to figure out what token to buy. They're figuring out how to develop a strategy, how to become crypto-enabled, and maybe hear some regulatory concepts.

I'm seeing less and less of the OG builders, too. For better or for worse, a lot of those teams have just faded. I'm seeing a few companies that continue to come and show up, but there are definitely people who are no longer showing up. I think it's just a normal evolution.

But it doesn't feel like a bear market at all. I've never seen a line at a crypto conference, other than maybe Token, where the check-in line was like this. It's a very different crowd.

I think the crowd that goes to TOKEN2049 is more interested in a lot of BD, which I've appreciated, but it's also a lot of retail. This does not feel like a bear market at all.

We had a podcast in October titled "It's a bull market, just not the one you wanted," and I continue to come back to that. I think that's exactly where we are still today.

I believe the market is a pendulum, and I expect tokens will come back—maybe not with the same correlation, where everything goes together. We'll have more dispersion, but I don't expect that it's the end of all tokens, even though Santi continues to say that.

I do believe, though, that the amount of acceleration we are seeing in stablecoin adoption from real businesses, from tokenization, and from capital markets folks who are interested in the space—that’s not going away. And that is only accelerating right now.

Yeah. Did you guys have a meeting of the week or a quote of the week that you heard on a panel or anything like that?

Oh, really? Well, on my panel earlier, I think it was Luke Tuttle, who’s the chief technology officer and chief product officer at MoneyGram. He essentially said, “Use stablecoins or get left behind.” This is not a stablecoin founder. This is MoneyGram.

I guess I have one, which is someone said that 25 times revenue was cheap. God damn, I mean, I don’t know.

I think we’ve been very—you come to crypto and, as soon as you have the 10x, as soon as you have one 10x, and maybe you’re lucky to have a 20x, 30x, or 100x, you’re hooked for life. I think this is funny, but it’s a reflection of, for better or for worse, retail just moving on and chasing the lottery ticket.

I think that continues to be a segment of crypto that will always exist. Even in a recession, people actually gamble more because they want to win it all back. But sometimes it’s just important to reflect: this is not a normal return profile. I should not be expecting to get a 10x or 100x.

Ten percent on your capital compounded year over year is massive, and very few investors actually do that. I think we’re in a state where my view—not to get too much into macro—is that the world over the next 2 years is going to become quite difficult. My probability of a recession is much higher over the next 2 years, and I’m adjusting how I hire, how patient I am, and what I’m willing to pay for companies accordingly.

I talked about this maybe on one podcast, but my view is that the risk curve has changed quite a bit. When you talk to someone and say, “Typically, if you’re a fund, a family office, or just an investor in general, you say, ‘I want to target this type of return per year.’ If Treasuries are giving me 4% and the market gives me 8% to 10%, well, I’m targeting maybe 12%.”

I think the difference is that you can really lose your money by not adjusting how much risk you’re taking. The difference between getting a 10% and 12% return maybe a year or 2 ago was not as much. Now, I think you’re taking a whole lot more risk going a little bit further, because every incremental percentage point you’re hoping to get carries a lot more risk, given everything that’s going on in the world.

That is something that, in crypto, for better or for worse, we’re just used to: the 10x, the 100x. And you know, it’s—

Are there any tokens that look appetizing to you right now? Take a little nibble out of?

3. Angel Investing and Crypto Venture Capital

Sky is pretty interesting. They just announced something interesting. I think Parker from Framework was here. We’ve interfaced a lot with them since they were Maker—Maker, now Sky.

You saw a public company, I think Better, trying to originate loans. Basically, they had a facility from them. That’s really exciting. I continue to monitor public companies that are coming in and using on-chain systems for some part of their business.

Sky is just an interesting credit facility on-chain. If Sky can provide credit for Better, this home originator, then I think—

The crypto-backed mortgages, right?

Exactly.

Yeah, so it’s just interesting.

But Better is a traditional mortgage originator.

Traditional mortgage originator, yeah, but now they’re doing crypto-backed loans, I think, through—

No, that’s the Coinbase thing today. But Better is—and I think Better may be doing some crypto-backed stuff as well—but their business—

Through Sky now?

Yeah. Sky is just lending. They provide—

They provide a credit line to this mortgage originator. The calculus for them is quite simple: they can lower the cost of capital by using Sky. The end customers don’t see any of it. Better just lowers their cost. They think they can squeeze out 100 basis points, which is pretty material.

We’ll see. There’s obviously governance risk, and there are a couple of things that mean they’re not going to totally replace their existing facility from one day to the next. But they’re going to supplement it with on-chain sources of capital, which is pretty interesting, I think.

How many angel investments have you made in crypto?

Since I left ParaFi, I was actually putting it all into my CIO, which is Claude. Two hundred fifty-six.

Wait, 256 angel investments? Are you still making angel investments?

I tweeted about this the other day. No. Part of it is that I’m just very focused on Inversion, but I still get pinged quite a bit.

I haven’t done that many investments. My pace of deployment this year, dollar-wise, is roughly the same as in prior years, but it’s very concentrated. I’ve either invested in a couple of fund managers or in things that are not crypto-related, like AI, or I’ve known a founder for 4 years and he’s starting something new.

But certainly, number-wise, no. I’ve talked to a lot of VCs about this: “Hey, is this an issue? Maybe founders just don’t want to reach out because I’m no longer investing or I’m too bearish on tokens or whatever.”

But I don’t know, Rob. I talked about this on the podcast. It feels like the quality of founders is not that high, and I haven’t seen anything truly novel. I’ve seen the 10th prediction market, but I’m not going to invest in any of those because I have exposure to part—

That was one of my thoughts. I actually think there are really interesting, really solid companies at the—I feel like a lot of the good companies used to be pre-seed or seed. There were all these hot companies at the early stage.

Now, a lot of the best companies have matured and reached that Series B, maybe late Series A or early Series C stage. But the pre-seed and seed stages are very dry right now.

I was talking to an emerging manager at this conference. He mainly does pre-seed, and he said, “Look, the bar to get funded as an early-stage, pre-seed founder is higher than it’s ever been in the 10 years I’ve been investing in crypto.”

I think there are many reasons for that. There’s the LP risk: LPs want you to allocate to AI, not crypto, right now. But I do think a lot of the good founders—it feels like it’s dried up a little bit.

Yeah, I mean, I do think this all kind of flows downhill. To your point about LPs, there’s less money in crypto funds right now.

Not for Dragonfly.

Well, a $600 million raise—

$650 million.

$650 million. I only said that because I knew you’d correct me.

No, but obviously there was an announcement that Andreessen and Paradigm are out raising funds right now. Although the last 5 or 6 deals Paradigm has announced have all been non-crypto.

Is that bad for the space?

Paradigm is the biggest crypto-native fund in the world.

It’s the biggest crypto-native fund in the world, but—

Second-biggest, then.

I was just saying because Paradigm doesn’t do the other side.

Well, their last 6 deals are not crypto deals. Is this a bigger problem than we’re letting on?

To some degree, earlier, right? It is very clear that there are a couple of things that people want to fund right now. People want to fund stablecoins, tokenization, and prediction markets. Those are probably the core categories.

There’s a lot more, and we’re doing this as well: leaning into things that are working. My panel earlier had Fruq from Rain next to me. We’ve put more money into that business than we’ve put into any business ever because we’ve taken the perspective that we want to look at what we know is working really well, lean into it, and continue to support it.

Polymarket is the same thing. We’ve done a lot of that through 4 or 5 rounds now. We’re seeing a lot more of that at a lot of the funds because there is so much dispersion right now.

Broadly in venture, not just in crypto, there’s a lot of bunching at the top. These names are working, and we have to get exposure to them, so we’re going to bunch into them.

But when you think about the pre-seed space, the verticals I just talked about are getting funded. Crypto-native companies, though—DeFi is not what a new Stanford grad wants to do right now, right? Building a new L1 is also not what a new Stanford grad wants to do right now.

When we look at the founders coming out of or building in these spaces, it is a different quality than it necessarily was over the last few years. Also, because most of the funds, other than the few people I just named, have not raised new funds—I think ParaFi also just announced a new $125 million fund—you haven’t seen a lot of new funds announce new fundraises.

I think a lot of people are looking around and saying, “There’s existential risk to my business if this token market doesn’t come back and I keep investing in these things that are crypto-native. How do I think about my future?”

So there’s a lot of risk.

Let me throw a couple of things out there. I'll rattle them off. First, I think Paradigm is smart. I mean, obviously. No, no, they're smart in the sense that if your mandate is only crypto, I've always felt that, yeah, we talk about crypto and fintech and that line is blurring, but if I were to raise a fund again—which I won't—I would want maximum flexibility to invest in whatever. No one complains. Your LPs won't complain if you make them a boatload of money.

Well, no, but I do think there's a point here, which is that—

Yeah, you have to stay disciplined, and you have to tell them that your core competency—

Yeah, because every GP wants as much flexibility as possible. That's obvious, right? But you also have to go to market and say, "This is my story. This is how I'm differentiated. This is how I can go and win a deal." There is that natural tension that exists.

I could tell you it's very liberating for us as Inversion to be a holdco, because I don't have to have all the window dressing. I don't have to have a big team page. I'm in the business of figuring out how to use technology, and I'm long. I'm positioned in a way where the curve for infrastructure is only getting better for us.

The cost for block production and block inclusion is going in one direction. The cost of AI, which is venture-funded, is going down. What you get from Claude is remarkable. You used to have to pay $500,000 for a glorified investment-banking person, and now you can use Claude. Your judgment is what ultimately LPs are giving you money for.

So, I think from that perspective, that's point number 1. I think Paradigm is smart in saying, "Okay, we want to capture AI in that bucket as we go on and try to invest in businesses." The natural convergence of AI and crypto is real, I think. Agents will use stablecoins, so you kind of want to traffic in both. Topology was probably the first fund to do this.

The second is, I'm not too alarmed by this idea that the winners end up capturing most of the dollars. FTX did this in prior cycles. The point that Rob made around the quality of founders, I think, is real, because in prior cycles you didn't have AI. The Stanford engineer would eventually come into crypto. I don't think they're going to come back for a while.

Yeah, it's not just the talent. I think AI is sucking up a lot of the capital. It's also the fact that the SpaceX IPO at $1.5 trillion is sucking up a lot of your LP money right there.

The last thing, just around one thing I want to say: I did probably one of my largest investments. I've known this founder for a while. It's a Thrive- and Khosla-backed business, and they were a fintech company, so I put in some money.

Stripe?

No, no, no. It's called Renta Visible [?]. It's Thrive- and Khosla-backed. They're basically trying to— that team sold their business to Square. They're really good fintech guys. In the evolution of the business, they are now interested in using on-chain financing and using stablecoins, whereas 6 months ago it wasn't in the picture.

I said, "Hey, guys, have you looked at what Figure's doing? Have you looked at Sky?" They're paying a pretty high rate for a credit facility. That, to me, is interesting. They're very smart fintech guys, and I'm hopeful that more fintech companies will start thinking more closely about using crypto. Rob, you talked about this on the pod.

It's happening right now. Yeah. I mean, to your point earlier about AI sucking up the capital and sucking up the talent, it's absolutely sucking up the talent. I think on the capital side, it's also true, but stablecoins—and really, mostly stablecoins—are the one place where I see traditional investors still investing.

When I go and talk to a new DeFi founder, it's very seldom that they tell me they're talking to a traditional fund. When I go talk to the best stablecoin founders, all of them are talking to the best traditional funds. So it's actually gotten more competitive on that side of the market.

When I spend time now in the Bay or in the Valley, there are a lot of founders who, especially on the fintech side, are saying, "I actually hate crypto. I think crypto is terrible. But stablecoins? I'm going to build my business—"

Look at what—look at what—maybe talk about what WAP did today.

Yeah, I mean, they announced that they're going to do 6% cashback using stablecoins.

Well, WAP is one of the fastest-growing—

Yeah, so maybe I'll back up. WAP is a marketplace business and an infrastructure and, call it, platform business that allows people to build small businesses on top of small e-commerce businesses.

A lot of these businesses are things like—it's a lot of small e-commerce, a lot of people who are building net-new training videos, and I'm sure there's a bunch of other stuff and someone will yell at me. They have about $3 billion of annual GMV that happens on their platform from the companies that are currently on there, getting paid by their customers.

It's growing very quickly. They took an investment from Tether at a $1.6 billion valuation. I think they announced it a couple of weeks ago. Then they announced today, or yesterday, that they're going to offer 6% cashback if you hold stablecoins.

I think there's a lot more to come there, and now they're thinking about their stablecoin strategy. That's a marketplace business, a traditional business, saying, "We're going to do a bunch in stablecoins." I will tell you that the marketplace businesses—every single one of them will probably have a real announcement this year about stablecoins—because they have global customers on both sides of the marketplace who want to be able to have U.S. dollars and who also want to be able to get paid without having to go through local bank accounts. That's happening.

4. ZKsync Ad

If your KPI internally at your company is GMV, you are looking at stablecoins. Everyone. Every single one.

5. Western Union’s Stablecoin Flywheel

Yeah, I know. I want to talk about Western Union.

Oh, yeah.

Not to call it off, because when Rob and I entered into a bet—

Oh my God, this is so number first [?].

Months running of Western Union.

How far up is Western Union stock since we did that?

2.86%. Okay.

[Laughter]

Solana is down—and I know this because I'm a Solana holder, too, much to my dismay—56%. Rob, I think you're going to have to buy me dinner sometime. You wanted to bet money, and I said, "Look, Rob was trying to bet Santi $10,000 that Solana would outperform—"

I tried to bet—just get us a nice dinner at the bottom. I tried to bet his Patek. His Patek, yeah. Are you going to give me your watch, Rob?

Yeah, I'll trade.

[Laughter]

Mine's worth a quarter of yours. Sorry. I'm going to win anyway, but look, you had—this is interesting. I want to talk about Western Union because you've been asking me about it. Let me share the Western Union story.

I interviewed the Western Union CEO on Tuesday, and I was very skeptical going into it because I think, like a lot of you guys in this room, I've heard all these CEOs of financial institutions say these things are going to happen, and then they never happened, including Western Union. Western Union partnered with Ripple in 2018 to launch this thing, and then it never happened. Two years later, they did it with Stellar, and it never happened. So I was like, "All right, let's figure out if this guy's for real."

He basically went as far as to say that he doesn't like crypto and doesn't think that crypto investors are the smartest investors, but he thinks that stablecoins are the most amazing thing that he's seen in 20 years of working in payments as a payments executive. Before this, he was at Fiserv.

He walked through it and basically said, "Look, you crypto people think that real-time payments and real-time settlement are new things." He goes, "I've had real-time settlement at Western Union for 20 years, right? You walk into a 7-Eleven, you get the Western Union thing, send it to your mom in Guatemala, take out your WhatsApp, send the money—boom, the money's there in 3 seconds."

He goes, "We've had real-time settlement at Western Union for 20 years."

But the way that we have real-time settlement is that I'm floating $3 billion a day to make this possible, or $2 billion a day, or $4 billion. I forget the actual number. He goes, “My stock is trading at—someone here can pull it up.” I forget if he said $3 billion or $4 billion, so let's make up the numbers here: $5 billion stock. $3.6 now. Close to $4.

$3.6 billion stock. He ain't prepared. Yeah, he's—I put him in a position, man. Locked in. $3.6 billion, but do the math. $3.6 billion stock. Let's say the float—let's say he's floating $1.8 billion a day to do real-time settlements. Boom, he now gets all that $1.8 billion back, and he's going to buy back their stock.

And then, not only this, the customers of Western Union are the individuals. They won't know this is happening. They won't even know they're on stablecoins. But then, to take it a step further, he's always wanted to launch bank accounts. It's too big of a pain in the ass. It's too much of a hassle—the regulatory stuff.

He's got customers in every single one of 190 countries all over the world. He can't roll out bank accounts. But now, with stablecoins, they're working with Rain, the company that Rob was mentioning as their portfolio company, to roll out stablecoin-backed debit cards to all 100 million customers. And boom, now he just saved $2 million in the float daily, starts buying back the stock, and the stock starts going back up. He gets more cash flow, and he can now essentially roll out bank accounts to users.

I think what's interesting about this, too, is that on the panel we did earlier, we had the MoneyGram CTO and CPO. MoneyGram's kind of the biggest competitor to Western Union. They talked about this kind of float point, too, and it's better for capital efficiency, but the other thing that he talked about was, “We have always seen our customer as the sender.”

That is, the person in the US who is sending capital to an emerging market and to a family member. But all of a sudden, we see stablecoins and stablecoin wallets and cards, and the ability to get yield on-chain, as a way to make the receiver a customer as well and the way to monetize the receiver.

So it's not just the capital-efficiency point. It's now this person can get US dollars, they can keep US dollars in a wallet, and then they can do things with that wallet that they couldn't do otherwise in that local currency.

I mean, that was the stuff I had from the beginning. We looked at a business that Western Union acquired called Intermex, and they were a smaller size for us. But, Rob, if I were you, I'd put some of the $650 million in and get a board seat at Western Union, because for me, the real opportunity, going to what you were saying, is—if you actually look at the P&L of Western Union, they pay a ton of money in commission.

So when you talk about just-in-time movement of money for them, instant payout, they're paying a lot to facilitate that because they're not sourcing—in order for them to source the liquidity, they need to convince all the bodegas in Guatemala to have Western Union and to use part of their working capital to provide that. In exchange for that, they pay them a 40% to 60% commission.

If you were smart, he wouldn't just stop with the float. He would say, “Huh, I can now have a digital wallet, and the receiver doesn't necessarily have to cash out.” They can keep their money. But they're not going the step further. If I were them, or if I were Elliott, I'd just take a board seat.

And to take it a step further, they have 17,000 employees. Half of those are agents—not AI agents, but agents, like, “Hey, thanks for sending…” The people in bodegas and stuff like that.

Yeah, yeah. But you—no, no, not just the bodega people, the people you call. People you call to be like, “Hey, my payment got stuck.”

Yeah, yeah. Get the AI that gets people out there. AI that. AI that.

I think this—not again, not to harp on Western Union—the key message is most businesses that have distribution in our marketplaces can become banks. They can further entrench their relationship with a customer by offering higher-margin financial products in the form of a stablecoin.

And then you attach Rain if they want to cash out, and then, of course, you get interchange. So to me, Western Union—if they end up executing on it or not, I'm still going to win the bet, Rob, sorry. But I think they're going to win the bet.

There's a lot of other businesses that are going to start basically enabling what airlines have woken up to: this idea that they make more money off the cards. Yeah. Yeah.

Not to continue to harp on this stablecoin topic and Western Union, who's a secret advertiser for Blockworks, apparently. So, Western Union, yeah. Beat us. I've not gotten a dollar out of Western Union for pumping them.

[laughter]

6. The Bear Case For Stablecoins

But there was another marketplace company—which I can't say their name yet because they haven't announced anything—one of the largest marketplace companies in the world, who said to me, not at this conference but at a conference I was at a couple of weeks ago, that what they were thinking about doing with stablecoins, what they saw stablecoins doing, and what they thought they could do with stablecoins, also with a card attached, was the most interesting thing happening in fintech anywhere in the world right now.

Huh. Rob, what's a bearish case for stablecoins? A year from now, we're going to be sitting here pontificating about some other stuff. Where would we have been terribly off the mark? Because we keep rehashing it every pod. It's okay, stable—

This is a stablecoin pod now.

This is a stablecoin pod, and where can we be very, very wrong? I'm tempted to say, “Don't say regulation.” Let's put aside the things that we can't control. I know you're now going to D.C. quite a bit. Excluding regulation, what are the things where we're like, “We could be terribly off the mark?”

Well, the thing that has happened, of course, is we got GENIUS. GENIUS was incredible. It was very good for getting every single boardroom to say, “I need a stablecoin strategy.” I think it was Cuy Sheffield who says that all the time. Last year was the year of the stablecoin strategy, right? This year is supposed to be the year of stablecoin adoption, right?

But the thing that is true is every single conversation we're having—whether it's Western Union or MoneyGram or this WAP or these other people I'm talking about—every single one of them are implementing this right now, but most of them are actually not live in production, not at any real scale.

And so, okay, regulation is of course a concern, but if you ask what the risk is between now and then, it's that as people start to scale, it doesn't actually operate the way they think it will. They still have to do some pre-funding because there's still a lot of friction at the edges, and they can't get people to actually hold the stablecoin, so they keep wanting to off-ramp.

And when those things happen, they don't get the consumer behavior they expect, and so they have to put not as much of their business into stablecoins as possible. So that's the risk, still.

So, here's an idea. I listened to a podcast by the founder of Column. He was a co-founder of Brex, and he kind of made a dig—not a dig, but he was just talking about, like, you know, he's been very skeptical of stablecoins for a long time. But I do think that he made an interesting point. He said, "Look, we've had the ability to do a lot of the stuff that stablecoins purport to do. The reason why we don't do it is because of other reasons like fraud prevention. So, for instance, instant payout. Well, you know, sometimes it's good if your bank manager calls you so you don't get scammed, right? Your grandmother may not be as sophisticated." Where I'm going with this is this year we've seen a spike in hacks. I think it's like DeFi is now you're seeing that. It was dormant for a while. Most of the issues, like, I think it's been over 130 million of lost capital were in March. And it's the same issues keep coming up, which is there's an oracle problem, but more so vaults have become real-world assets, have become this topic of conversation. And I feel like as an industry we hopefully don't make the same mistakes that TradFi has done. But again, if you look at some of the issuers, like RWA protocols, they have brought low-quality stuff and you kind of have this like redemption, asset-liability mismatch, liquidity—

That is just a V1. I think you have to have the crappy assets first. It's like—I don't know. I think it's like DeFi summer. The craziness of that did lead the path for Aave and Uniswap, which then turned into Morpho, and you have to have some of the chaotic stuff to actually get to the better products.

I like chaotic innovation. I guess it will always be a thing here, but what I'm trying to say is, yes, we're in a bear market, but RWAs, I think, are a bit overhyped. I'm cautiously, skeptically optimistic about RWAs, but I see a whole lot of issues, and I'm hopeful we don't run through the same issues that TradFi has had to learn the hard way.

Well, I think it’s not even V1; we’re V0. Let’s use tokenized stocks for a second. Nobody right now is doing tokenized stocks. Kraken isn’t doing tokenized stocks, and Ondo isn’t doing tokenized stocks.

Yeah, if you mean direct issuance, right? There are a lot of these wrapped assets. They’re just pointing; they’re price feeds. Yeah, they’re tokenized price feeds that point to the stock. Sure. I mean, it’s an SPV. Yeah, exactly. Eventually, you actually have to tokenize these stocks.

But this was the NYSE–Securitize announcement that they’re going to do direct issuance. This is obviously what Superstate is trying to do.

It’s just really early days right now, and so there are all these issues. I agree, there are all these issues. The problem with early days, and then maturing a little more, is that there’s a lot of damage. Yeah, and then there’s a lot of capital loss.

It’s not unlike “move fast and break things”—that Zuckerberg coined. You shouldn’t move fast and break things. If there’s a bug in Facebook, maybe your photo doesn’t load. If there’s a bug in a protocol, you lose billions of dollars. That hurts us to onboard users and with regulators and in that conversation. So, I’m hopeful that we avoid some of those mistakes.

7. Final Takeaways From DAS

I agree. We’ve got a couple minutes left. Anything else coming out of this conference that you guys were thinking about? Listen, I mean, this was the conference, right? It was tokenization of assets, stablecoins, and prediction markets. Those are the things everybody’s talking about.

Agentic payments—agentic payments, which is not a thing that exists today, even though we keep talking about it. I think x402 did $600,000 yesterday. MPP did like $300. More than L2s are making money, you know.

[Laughter.]

That’s definitely not true. $10. Yeah, okay. What was the best panel?

[Sighs.]

I mean, for me, it was the Western Union fireside chat. That was the most enlightening and eye-opening conversation, because he’s been—if you go back a couple earnings quarters ago, he did a whole 180.

Very anti-stablecoin. I mean, he told me backstage, “The only reason we could do this is GENIUS.”

Yeah. I actually think Clarity was an under-discussed thing at this event, because it’s been talked about so much that people are sick of talking about it.

Yeah, I mean, it’s still 60% on Polymarket, so clearly there are some people who feel that it is going to happen.

What if Clarity doesn’t pass now?

[Sighs and gasps.]

I think it depends, right? If you go talk to the banks right now, or a lot of the asset managers, they’re telling you they’re going to push forward with all of this tokenization stuff anyway. Both the SEC and the CFTC put out joint guidance—this was a week ago, maybe 2 weeks ago—and that allows for a framework and a taxonomy for continuing to push forward on these efforts right now.

But the risk, of course, is that in 2.5 years there’s a new regulatory regime, and that regulatory regime reverses course. Without Clarity, it’s not cemented into law. But if you go talk to the banks, a lot of their perspective right now is, “Well, if we build this thing for 2.5 years and there’s real-world activity happening from real clients on-chain, even if there’s a lot of concern about some of the long-tail stuff in crypto, there’s no way that a net-new, even very anti-innovation regulatory regime would try to reverse course and shut down all of these markets.”

So I think people feel there’s enough time to get ahead of it even without Clarity. But I do think it’s bad if it doesn’t happen. It creates a lot of ability for things to get changed at the edges that are bad for, at least, a lot of the startups.

Yeah, I will say, again, regulation is something that we necessarily can’t control. What we can control is delivering extreme value to the end customer. Look at Uber. Uber was able to get these licenses and fight one of the fiercest lobbies, the taxi lobby, because consumers loved it. They would call their congressman and say, “Why all of a sudden are you banning Uber? This provides extreme value.”

So I still think that when you go and talk to a regulator, when you go and talk to—most people hate crypto. Still. It’s not popular. You walk in the street, they’re like, “Oh, you know, like—”

I think most people hate crypto. I think most people are indifferent to crypto. No, people hate—

There are people who hate it, but most people—

Like, you know, they know someone who has made a lot of money, and they hate that.

Everyone hates Santi. What are you saying? He’s upset that Santi’s like, “I was too successful.” I don’t know.

No, I mean, it’s a reality of things. You see this in bull markets. People just don’t take it seriously because it’s not relatable. I get that stablecoins are very relatable when you can earn in dollars and get paid in dollars, and we need more of that.

I’m encouraged that you and I had a discussion about what is something we can do as an industry to improve that. Like prediction markets are all the rage. I did the seed round in Polymarket. I have a lot at stake, but I wrote about it earlier: why did it take so long to be reactive to something like this? Update your terms of service. Make a disclaimer in any market saying, if you have inside information, you shouldn't be trading that. It's against our terms of service. If we find this out, we'll kick you out. Rob, do you disagree? Do you agree with that?

No, no, I'm encouraged to see, but by the way, I'm encouraged to see—

In the pod last week, we—

Listen.

You didn’t listen to us debate this. We had this debate—

We debated, and then I wrote about it, and I was like, why is it that Kalshi actually did have it? I was surprised that Polymarket didn’t. Why don’t you have it in your terms of service?

And I get Shayne—as much as I love him—he said, “Oh, look, these are truth-seeking machines, so this is actually good.” But I’m like, I don’t think we can agree that if you get hurt—

This is a side show. This is a complete side show. Whatever’s happening in the terms of service doesn’t really matter.

8. Sports Betting On Prediction Markets

You know what’s not a side show for prediction markets? Sports gambling. It’s definitely not a side show for Kalshi. I mean, not for Polymarket—they’re doing the exact same thing with sports gambling. It’s like 80% to 90% of both of their revenue, right? No, that’s not true—of their market volume.

Nope, that’s not true. For Polymarket, it’s about 40% to 45%. For Kalshi, it’s about 90%. So, follow my Twitter; you’ll see some good content.

Actually, a lot of the Polymarket volume right now is— they own all the politics, they’re doing a lot of these crypto markets, which is like, what will Bitcoin be? Crypto up-down markets, stuff like that. They’re actually getting a lot of volume right now from the Danish election.

So there’s a lot more variety at Polymarket, but Kalshi, yes, is primarily sports. We’re also in the middle of March Madness, which is a big time of the year.

But I think the reality is—and I have this discussion with people all the time, because we’re spending so much time talking about Polymarket these days—that sports was the easiest market to serve first. But it’s very clear to a lot of people, and you’ve had ICE running around here and they put a bunch of money into Polymarket, that this is a real financial innovation that can affect equities, broadly affect business exposure, affect hedging, and affect commodities trading.

There’s an expectation that these markets will get a lot bigger. It’s just that sports was easier to serve on day 1. We just had an announcement this week from both Kalshi and Polymarket that FIS is going to plug into, or allow Kalshi contracts to be on, its accounting system for hedge funds.

We also just had an announcement from Susquehanna that they are going to allow you to post USDC collateral or fiat collateral at BitGo, and then they are going to do an OTC trade with you. They’ll probably offload the risk on Polymarket, because this is Susquehanna Crypto.

Those are the first 2 things I’ve seen where it’s like, “Oh, well, we can make this for institutions.” I know one of the big G-SIB banks was telling me this week that they’re thinking about trying to offer these types of OTC trades as well. We’re seeing that happen; it’s just going to be slower for the big institutions. I’m not disagreeing.

My thesis is prediction markets are phenomenal truth machines. They can help us with insurance markets, discrete markets around—hey, if you have a home in Florida, you want to insure against hurricane insurance, you can price that risk in real time. You don't get an insurer to do that for you. So we can get there.

All I'm saying is, I don't think we can disagree that most people look at prediction markets today and say, “Yeah, that's gambling. That's Vegas.” And it's like 60%, if you look at the latest data. Again, I'm not disagreeing on the data. I'm disagreeing on the perception of the industry.

What you could do if you're in that seat as a founder, I think it's a really hard choice. I'm not suggesting that these guys shut down sports. Sometimes you have to do these things that will fund the other part of the business. But I do think that—I don't want to talk too much about regulation—but as an industry, it will serve us well to make sure that the consumer is protected.

It's not perfect. I don't think you ever perfectly get there, but I do think you need to stand for something, and you need to make sure that the perception of this industry—whether the GENIUS Act passes, whether CLARITY passes or not—we can still, as an industry, make sure that we continue to level up and raise the bar around consumer protection, disclosures, and transparency.

Yeah, agreed. All that. Yeah, yeah. We're at time here. Content of the week? Did you guys stop doing Content of the Week?

No, no, of course not. I haven't listened to you guys once.

I cannot believe you haven't listened to us once.

I haven't tuned in at all.

Well, then you're the reason that the show is good.

I know, I know. What you should have done is put us in the background. The baby would have slept much easier because we're boring as hell, man. I will tell you, I did a fireside chat with Amy Oldenburg yesterday.

Great. Yeah, she's the head of digital assets at Morgan Stanley. And she starts the fireside with, “You know, it's great to be doing this because I fall asleep to your voice all the time.”

[Laughter]

And I was like, “Does that mean—are you negging me? Does that mean the podcast—”

A bad thing? You don't want people to listen?

I don't know. So, can I give you one suggestion for the live pod next year?

Yeah, don't do it the last day. The last day, we've lost people along the way.

Yeah, around. Yeah. Do you guys have a good desk? Nice. How many people in here work for Blockworks? How many people here work for Inversion?

[Laughter]

Santi made all of his employees come here. All 3 of them. 100% of Inversion is represented in this room. Team Inversion.

9. Audience Questions

Before we wrap, anything you guys want to know? Thoughts? Questions?

Curious about your thoughts on the future of decentralized identity. I think identity passporting is obviously going to need to be part of the way we do all of these tokenized assets. But it's unclear to me why that needs to be decentralized, and it's unclear to me that the people who are going to be controlling the ins and outs of these markets are going to care about that. I don't know. That's kind of the—

30 seconds?

The first thing—well, decentralized identity like Civic and all these experiments before have not really worked as much. I think that your wallet is your identity in some ways if you want to extend credit. And more traditional institutions that have KYC'd their user base start plugging in on-chain, you will stitch together transactional data on-chain with a KYC'd person that is—

Yeah, but their identity is the KYC.

No, I understand that. Well, if we want to extend credit, a big part of your—

If you want to scale it, anyway. You want to underwrite—you place a lot of value on that.

But I think proof of humanity is going to be more and more important, and you obviously have cryptographic keys. The only way you will be able to prove that you're human is with your cryptographic keys, and I think that is something that is not talked about enough. But in a world of deepfakes and AI just becoming more and more sophisticated, I think that's where crypto really can fit in to prove that you're actually human.

I think it'll end up being a big theme, actually, of the next couple of—I mean, you look at what the—I don't know if you guys know Snowflake. Huge software company. The Snowflake founder is now working on, “Is this video real or not real?” online, right? So this whole concept of, like, is this video real? Was this article written by AI? Is this person real? Like, that whole theme—what world could—

That's very different than just decentralized identity, though.

It's not just deepfakes. It's like, is this person—

No, but isn't that what decentralized identity really is? Is this person a credible human being or not?

No, yeah, it is because it's—

No, it's just—well, for me, we're disagreeing on decentralized identities. What I think about it is, as an early investor in Filecoin, distributed file storage is important in a world where, if you want to preserve mission-critical documents and files, you want to probably do it in a system of record like Filecoin, where you have sufficient guarantees that the data is there, it's sharded, and you—because pretty much every company has or will be hacked, and so your data is exposed.

If you want to store stuff, I think you're going to want to do that in a system of record like Filecoin because you can have real cryptographic proof that your identity or your document is sharded, meaning not a single node can have access to the full document and can't piece it together, and you have enough economic guarantees that, if you want to retrieve that file, you can very quickly do so.

So, for me, that's what I mean about, if you want to preserve your identity and you want to store mission-critical stuff, we will start using something like Filecoin.

Santi started talking about Filecoin and a guy walked out of the room.

10. Content of The Week

Let's do Content of the Week. Rob, what do you got for Content of the Week?

I'm going to go back through all of the live streams of DAS and watch all of them. That's my Content of the Week. I'm going to watch every single one.

You know who does that? You. Kyle Samani.

Wait, he doesn't—he does that for Solana Breakpoint.

Solana Breakpoint.

He then tweets about it. But I don't know if he'll do that anymore.

Yeah, true. I'm going to cheat because I talked about it last week. Born to Be Wired. John Malone? Yeah, cable guy? Legend. So there's a book about him.

Acquisition a week. Acquisition every 2 weeks for like a decade.

Yeah, the cable industry is fascinating, and then net neutrality and all that. Now, of course, he owns the Formula 1 tracking stocks—really interesting instruments. Great book. Fairly recent, too. I'd read Cable Cowboy a while back, also a really good book about him, but this book he wrote himself. So, really, really good book. Yeah, fascinating.

Dang, I have a TV show on Hulu. It's not as informative. It's called Parasite. It's pretty good.

[Laughter]

Rob, you sort of broke the trend here. I was hoping to get a thriller so that I can watch it on the plane on the way back.

I did see Project Hail Mary.

Project Hail Mary? Yeah. No, it's great. It's a good book. It's a good book, and it's now a movie.

All right, I'm wrapping us. Good DAS, everybody.

[Laughter]

Appreciate you guys. Thanks for sticking around. Thank you, Evan.