Markets Sending, Just Buy Consensus, Meta's AI Moment & Who Wins Tokenization? | Weekly Roundup
- The rally is outrunning the policy catalyst investors thought it needed. The panel still prefers passage of market-structure legislation, but argues the SEC and CFTC are already signaling “please come and build” through exemptions, projects and potential no-action relief. Their warning: old coins and NFTs waking up can look toppy, while rising rates and a 10-year “approaching about 7%” create a macro regime few crypto investors have experienced.
- Consensus has been a better trade than searching for neglected tokens simply to feel clever. BTC, SOL, HYPE, Venice and Zcash were already crowded names, yet momentum and concentrated attention kept rewarding them; HYPE remained buyable after traders had “missed” it at $40, $60 and $80. “Rotation is very expensive,” and absent a broken thesis, the panel would rather hold quality than retreat into cheaper, less liquid tokens nobody wants.
- Fund structure and size determine whether a seemingly great crypto trade is investable. Rob’s third fund put roughly 70% of capital behind token-driven upside, whereas the fourth is about 70% equity; Polymarket has since become the third fund’s largest position. A smaller manager can make $250,000–$500,000 meaningful, but a fund needing a $10 million position cannot enter a $100 million token without moving it dramatically.
- The Meta call is less about Zuckerberg’s product record than Manus becoming a credible escape route from Apple’s App Store. Jason admits he made the investment before seriously enumerating the risks: “The world doesn’t yet understand what Manus is.” His confidence rests on Alexander Wang and Nat Friedman running a secretive, startup-like skunkworks. Separately, the discussion credited Manus’s computing resources with making it faster and more responsive than Claude before its feature set caught up.
- AI is collapsing application costs, but the blockchain analogy has limits. One side sees the same progression from scarce, expensive block space to abundant application capacity, citing models becoming roughly 50% faster and cheaper within 60 days and Opus 55 being 30% faster than Opus 5. Rob’s pushback: AI still confronts physical bottlenecks, perhaps $1 trillion rising toward $5 trillion of capital spending, and the borrowing required to finance it.
- Crypto’s graveyard is also a backlog of product ideas waiting for better execution and timing. Synthetix helped seed what became Derive; the discussion also invoked Augur, Polymarket and Kashi, while Bancor’s AMM preceded Uniswap and EtherDelta was an early decentralized exchange despite being a “completely pointless experience.” Basis raised $200 million before returning roughly $0.92 on the dollar. The founder lesson is that “sometimes the best ideas are already tried and tested; they were just too early.”
- Tokenization expands access and activity, but its dominant value-capture point remains unresolved. Issuers gain distribution, users gain access, and markets may gain 24/7 trading and better securities lending, yet economics could diffuse across exchanges, DeFi and infrastructure rather than accrue to one winner. Alpaca, Superstate and Securitize are candidates, but some traditional-player blockchain commitments may still be fee-driven: “Often it’s for a fee.”
1. The market did not wait for regulatory clarity
The hosts’ early-career lesson came from meeting Alex Mashinsky in person: something felt wrong despite the event’s enthusiasm. Their broader conclusion was that investors cannot outsource every judgment to a machine; background checks and “on-site inspection” still matter when an entire small community is repeating the same story.
That instinct later shaped confrontational interviews with Do Kwon and SBF. When Kwon dismissed basic questions by invoking on-chain data, the hosts checked his claims with contacts in Korea and found that “no one has ever heard of Chai”; the exchange reinforced their preference for simple questions over performing sophistication.
The week’s market message was blunt: “When the market wants to send, the market wants to send.” Legislation would still help, but the rally disproved the claim that tokens required CLARITY first, while recent SEC and CFTC initiatives suggested a more permissive near-term posture even without the bill.
The macro counterweight remains unusually difficult to price. With rates elevated, further increases appearing more plausible and the 10-year described as nearing 7%, the panel conceded that nobody under 50 has much lived experience of this debt and rate-hike environment: “We try very hard not to be macro traders.”
2. Just buying consensus has beaten clever rotation
The strongest year-to-date profitability appeared in a narrow set including Venice, Hyperliquid, Lighter, Derive and Zcash. That dispersion supported the panel’s quality bias: profitable protocols and projects with sustained momentum can keep compounding even when the broader market’s leadership changes.
The debate centered on whether crowded trades such as BTC, SOL, HYPE, Venice and Zcash should be sold for undiscovered names. The answer was largely no: “Rotation is very expensive,” and consensus itself can outperform because markets concentrate momentum, liquidity and attention in very few assets.
Nvidia supplied the public-market analogy: it was already an obvious consensus idea three or four years earlier and still produced extraordinary returns. Hyperliquid similarly remained consensus around $20; after HIP-3 was released around February or March and the war in Iran, its range was around $60. Missing HYPE at $40, $60 or $80 did not automatically mean it was fully priced.
The panel’s changed mind is the useful part: trying to be anti-consensus often satisfies the desire to feel smart more than it improves returns. If a bull market continues, leaders frequently keep leading; if it ends, ignored and less-liquid tokens usually do not provide refuge.
3. Great trades can be structurally impossible for large funds
Rob’s third fund, a 2022 vehicle, invested roughly 70% of its capital where token appreciation was expected to drive value. Its largest position is now Polymarket after substantial growth; the fourth fund reversed the mix to about 70% equity because there had been less work and fewer opportunities on the token side, not because the number or quality of founders necessarily changed.
Institutional LPs also shape the mandate. Venture investors generally do not want quarterly marks swinging 50%; a sponsor then has to explain why a position presented at 2.5× suddenly reads 1.3× while conventional venture holdings inch from 1.2× to 1.3×. Observable liquidity can therefore make an otherwise attractive portfolio administratively harder to own.
Scale narrows the investable universe further. The discussion cited an average $10 million check: a small liquid fund can make $250,000 or $500,000 consequential, whereas at Derive’s roughly $100 million market capitalization, building a $10 million position could have moved the asset “100%.” A visible token is also difficult to underwrite for 10× when that return is the fund’s cost-of-capital hurdle.
4. Meta’s AI moment is a distribution bet disguised as a product bet
Jason’s honest account of buying Meta was deliberately unsophisticated: when Santi asked about risks, “I didn’t even think about the risks.” The trade resembled his Robinhood call—spot a trend before the broader public recognizes it, then exploit the brief lag between crypto Twitter, technology Twitter and mainstream adoption.
He remains skeptical of Meta’s product history, arguing Facebook was Zuckerberg’s only internally launched hit and that subsequent scaled products came through acquisitions. Manus is the exception worth underwriting because Alexander Wang and Nat Friedman operate it like a separate startup; the team reportedly kept the project secret even inside Meta to avoid organizational drag.
The deeper thesis is that Apple’s App Store has constrained Zuckerberg for 15 years. Internet.org, Libra and Oculus were successive attempts to own distribution; Manus and the announced Ray-Ban augmented-reality direction may offer Meta another route, even if Zuckerberg’s virtual-reality products fail.
Compute is the immediate product advantage. Claude reportedly slowed as usage exhausted capacity, while Manus had enough computing resources to remain fast and responsive despite a thinner feature set. Jason expects Manus to catch up in features quickly, while also noting that Meta has substantial computing resources. Rob resisted treating AI capacity like abundant proof-of-stake block space: trillion-dollar capex, financing and physical constraints remain real even as consumer tools improve rapidly.
5. Crypto’s failed pioneers left reusable product blueprints
BitMEX’s official closure that week prompted a product-archeology question: which companies invented a category but failed to capture it? The examples included Synthetix and what became Derive, Augur, Polymarket and Kashi, Bancor’s AMM around 2017 before Uniswap won, and EtherDelta, an early decentralized exchange that was a “completely pointless experience.”
Stablecoins and credit supplied a second lineage. Basis raised about $200 million and returned approximately $0.92 per dollar, while Celsius, BlockFi, Voyager and Gemini Earn illustrated other failed or troubled models. The discussion also compared Aave’s complex product variations, which were described as lagging, with Morpho.
Blockworks offered its own execution example: less than three months after acquiring Messari, it combined both platforms into one API carrying research, TVL, on-chain data, fundamentals, prices, social sentiment and information distribution. Management had forecast six months; Claude played “a huge role” and may have cut integration time by at least half.
6. Tokenization creates broad utility before obvious monopoly economics
The NYSE and Blockchain.com announcement joined a crowded map: Blockchain.com users would access tokenized stocks and ETFs through the NYSE’s planned digital ATS; Securitize, tZERO, MoonPay’s North Capital license, Ondo with BlackRock, Alpaca and Coinbase’s in-app IPO distribution beginning with Oura Ring were also discussed. The central question was not adoption—it was “who gets the value?”
Rob’s framework begins with clear beneficiaries. Issuers reach new buyers; users in previously excluded markets gain U.S.-asset access; securities lending may improve; and 24/7 on-chain trading may emerge. The uncertain layer is the middle—ATS venues, segregated liquidity, derivatives infrastructure and the relationship between tokenized equities and native crypto assets.
His tentative answer was diffuse value creation: tokenization “increases GDP,” helping issuers, users, exchanges, DeFi and surrounding protocols a little. Alpaca was claimed in the discussion to service roughly 97% of the tokenized-securities market and a significant portion of its infrastructure, while Superstate and Securitize may benefit through issuance, administration and transfer-agent functions.
Rob questioned whether the authorized participants on Robinhood Chain would be professional market makers. The panel also noted that accounting and trading systems could initially be inefficient and charge higher commissions.
The pushback kept the promotional economics visible. Rob began comparing tokenization deals with the earlier period when blockchains paid projects to join; Jason objected that this was not true, while Santi said it remained true for some traditional players. When a large company says it will tokenize assets on a particular blockchain, Santi’s conclusion was: “Often it’s for a fee.”
Verification Notes
- The transcript names the AI product as “Manus” in the Meta thesis and repeatedly in the Claude comparison, but uses “Muse” in one later exchange; the digest uses “Manus” for the investment and product claims.
Full transcript
Welcome to Token 2049. Token 2049 returns on October 7th and 8th, bringing together 25,000 attendees, 300 speakers, and 500 exhibitors at the world's largest cryptocurrency event. Token 2049 is taking place in parallel and in partnership with our own Asia Digital Asset Summit. So you can attend both conferences in Singapore in one week during Token 2049 week. There will be over 1,000 side events, culminating in the post-2049 and Formula 1 weekend, and the speaker list is very packed. Shane Kopan of Poly Market, Jeff Yang of Hyperlid, Arthur Hayes, NASDAQ CEO Adena Freridman, and many others. Join us in Singapore on October 7th and 8th for Token 2049 and Digital Asset Summit Asia. Nothing said on Empire constitutes a recommendation to buy or sell any investment or product.
1. Blockworks’ Origins And Crypto’s Red Flags
Ladies and germs—happy Friday, happy Saturday, happy Sunday, whenever you're listening to this. The atmosphere is sublime. The market is growing. Santi and Rob both showed up for the weekly review, and I'm here too. Rob, Santi, how are you?
Okay, buddy. We should just get into the heart of the conversation. I don't know what that was, but I like it.
Ladies and germs. I think it's from a Tim Ferriss podcast. An original-channel podcaster like Tim Ferriss is the reason Tim Ferriss had such a big influence on Blockworks.
People don't know this, but Tim Ferriss had an episode in 2017 with Naval Ravikant and Nick Szabo. Mike and I were living together at the time, and we were listening to this episode. We wanted to listen to it for 5 minutes and ask ourselves, “Did you get this?” “No.” “Do you understand this?” “No.” Then we Googled it, and that's how we started learning about smart contracts.
It was kind of the ICO era, and we fell in love with podcasting then. That's why Blockworks has a podcasting business: We realized that podcasts are an amazing way to consume content and learn. Thank you, Tim Ferriss. Ladies and germs.
Rob, how are you doing?
It's a great origin story. I like it. Yes, that's why we have—well, that's why. The reason we have an event-planning business is because we went and heard none other than Alex Mashinsky at an event. I was at that event in New York.
Were you there?
Yes, in New York. That's right. We paid about $200 each. At that time, we were 23 years old, which was an incredible amount of money for us. We were like, “Oh my God, there are 200 people here. Wait, $200 apiece multiplied by 200 people. Oh my God, that's pretty good money—$40,000. We could make some money doing this as a business.”
In general, that's why we have an event-organization business. When I went to that event and saw Mashinsky, my spidey sense tingled. I thought, “Something is wrong,” and I paid attention to it.
I think if you're in venture capital, or just investing in general, you can't outsource that to a machine. It seems like it would be really beneficial to conduct an on-site inspection.
I just thought, “Yeah, a serial buyer conference[?].” It's a small group of people, and they're all saying the same thing. The biggest mistake we made was not doing enough background checks, and yes, I have experienced this with many crypto professionals.
Yes. He always said, “Why was every cryptocurrency founder on your podcast except me?”
And I would say, “I can't say, because I think you're a fraud.” But yes, we dodged a bullet, although we had many others. We had a great episode, the most-listened-to episode ever.
No, this is SBF.
Good. Yes. So when that happened, we got inquiries from news stations around the world, like a Japanese news station asking, “Can we license your content from this podcast?” The German edition, for example.
Anyway, we also had Do Kwon.
You often challenged him, and he said, “Why is your co-host such a jerk?”
Not enough to make an episode about it. We need to make a full diagnosis.
Dude, I had an uncanny ability to make you feel incredibly stupid. I just stopped trying to be smart about how I make money. For example, if you can't answer my basic questions—
He replied, “You're literally [expletive]. You don't know how to read on-chain data.”
I said, “Dude, I was talking to my buddies in Korea. No one has ever heard of Chai, damn it.”
“Oh, you idiot. You guys are idiots. Every other fund in this area has exposure to Terra. You guys really failed. You lost billions.”
I'm like, “Okay, dude. Like, okay.”
Do you know who was in that other fund that didn't have an exit? Weren't you guys 3AC's guys, I guess?
No, no, no. We didn't do anything. They did. They did.
Well, maybe it's because you misunderstood the incentives of our LPs.
Well, that's true. You see, that's how we started Dragonfly. People don't know this, but we started as a fund of funds. We were early investors in all the big funds in this space—except, essentially, all the other big ones.
Then we thought, “Listen, everyone makes so much money when we let them take 20%. We have to do it ourselves.”
2. Crypto Ripping Without CLARITY?
Hey, let's talk about the markets.
Let's talk about markets. Bitcoin is sending. Bitcoin is sending, and all the coins are sending—not all altcoins, all coins. I have a lot of thoughts on this, but I think the main point is this: Everyone said that we needed the CLARITY Act to get tokens to rip, and they were absolutely wrong. When the market wants to send, the market wants to send.
Yes, things are going incredibly well. The good news is that good coins are also thriving. I shouldn't even call them good coins—good companies, good projects, good protocols.
You mean coins or projects that generate revenue and are actually profitable? Oh my God.
People talk about price-to-earnings and price-to-fees over time. Nature heals.
The industry is growing.
We talked about this a little bit last week. Although the idea that it would be better if the CLARITY Act were adopted is definitely still true.
I agree with that 100%.
Yes, and that was before it happened.
We also said last week that, in the near future, the SEC and the CFTC will be more pro-innovation than the CLARITY Act should have been. They agree, too. They moved incredibly quickly and said, “Here's an exemption for NMS tokenization. Here's the cryptocurrency project we're working on. That's how we think about providing a no-action letter for developers from the CFTC.”
It was something like, “Please come and build, even if the CLARITY Act hasn't passed.” I think it was great.
I also think a lot of this can be traced back to Kevin Warsh raising the stakes. Everyone was a little worried. I think the Fed should have raised rates. It was very clear that it was going to raise rates, and that Warsh was there. In any case, there was concern that he would be pressured not to do so, and if that were the case, it would damage the credibility of the Fed.
3. Content Of The Week
That didn't happen either. I think those things combined made this week a success. It's funny that we were recording this around noon on Thursday, because basically all my trading group chats this morning were like, “Oh, we crossed the mark. That's it.”
Well, Litecoin and Bitcoin Cash—all the old guys—took off. Now it seems like this is the top. Now we're about to reach the top. NFTs are starting to wake up, so we're not there yet. We're not there yet.
4. Who Captures Tokenization’s Value?
I mean, the 10-year seems to be approaching about 7% at the moment. As you know, there's clearly a lot of excitement in the market.
Why don't we double-click on this? As you guys know, it's impossible to predict, but has there ever been a point in recent crypto cycles when you've had this level of interest rates and they've been going up? The probability of a future increase has increased quite a bit.
What do you guys think about this? Reflation may simply be more prevalent, or it may not be. Maybe Elon is right, and we're going to grow at 10% of GDP. Maybe that's the new normal, and we're really overthinking it.
There's no one under 50 who's ever seen that type of debt, right? It's not just in cryptocurrency—we've never seen this before, and we've never seen this kind of rate-hike environment as it's likely to be. I'm not sure anyone really knows how to deal with it, at least not from their own experience.
We try very hard not to be macro traders. A lot of crypto traders are essentially macro traders, and the best of them are very well-versed in macroeconomics. That's not what we do. It's not what we're good at.
If you look at the results, someone posted a tweet this week. I forgot who it was talking about. Maybe it was the guy from Arca. I don't remember his name anymore—Jeff Dorman, maybe—but he tweeted that if you look at the actual profitability, call it the bottom-line profitability since the beginning of the year, even though everything is working right now, it's actually Venice, Hyperliquid, Lighter, Derive, and Zcash.
Yes, it's those tokens, and essentially nothing else, that haven't had such sustained upward momentum throughout the year. That suggests there is still a very strong drive for quality on the long-term horizon, so to speak. Quality thrives regardless of market fluctuations.
5. Can Consensus Coins Keep Winning?
So I still think today you need to continue to focus on quality names, have a long-term perspective, and continue to reinvent yourself. What do you guys think about when it seems like some of them? We talked to Jan Lieberman—I don't know if people listened to that episode on Deli—about there being 5 to 7 very obvious tokens today.
Let's call them the main ones: Bitcoin, SOL, HYPE, Venice, and Zcash. There is a big consensus on Twitter. As I recall, I think someone posted something like the 5 most popular coins that were being bought. It was a month ago, and they were on Twitter—something like NEAR, Venice, Zcash, Hyperliquid, and, I don't know, SOL or something. If you had just bought them, these were the coins with the best performance.
So what do you think about rotation? Do you just sit in them? Do you buy things? There's also something like Derive, which is going incredibly well right now. I'm really excited to see the Backpack move. I think Backpack, in our country, is called “Pod.” Yes, you did it. I think Armani Ferrante has been around for many years. Armani Ferrante has been quietly building a company there. It will appear soon. I'm really happy to see this.
Do you guys like rotation? Are you trading, or are you just sitting there? How do you play this?
Rotation is very expensive. Unless you have something that refutes the thesis—something that really changed my mind—I stopped trying to be smart. I think it's an attempt to be contrarian because you want to feel smart while making money. Everyone likes to feel like they found the gem before everyone else.
That's great. It's the best deal you can get, but it's actually unclear whether it was a good strategy. Both in public markets and in crypto, consensus has outperformed. It's just been a good strategy, in part because markets are really driven by momentum, and attention is paid to only a few names. The dispersion of returns is very real; it has been for a long time.
For example, Nvidia was the consensus. You could hear standard talk about it 3 or 4 years ago, and it would have been a phenomenal trade. We also talked about Copper. Maybe you can talk about Meta, which was actually one of the few non-consensus names, I think, but now it's becoming more consensual.
In crypto, for example, Hyperliquid was the consensus when it hit $20 not too long ago. You could have bought it then, and everyone was talking about Hyperliquid. HIP-3 was released sometime in February or March, and then there was the war in Iran, and the Hyperliquid range was $60.
What I'm trying to say is that the market gives you a lot of room to scale into a trade, and some of these big names have tremendous liquidity. I understand that maybe you didn't want to touch Derive at the $100 million level if you were to go to our guys at Variant, who opened a position. But very few people can pick stocks exceptionally well if you just listen to what smart people say on a timeline.
I feel like it was a pretty good strategy. The thing that people really get hung up on is, “I missed the trade. I missed HYPE at $40. I missed HYPE at $60. I missed HYPE at $80.” You might feel like it's fully priced in now. But I really believe that if the market isn't over yet, things that are going well will continue to go up.
If the things that attract attention don't work, everything else just becomes invalid, and you find yourself in a worse position holding, for example, more illiquid, worse tokens that you didn't pay attention to.
6. Why Dragonfly Shifted Toward Equity
Yes, I mean, we don't rotate. That's not who we are. This isn't the type of investor we are. I don't trade personally.
Rob, what portion of your fund is liquid compared to private?
You mean, for example, stocks versus tokens?
Let's say you have $1 billion under management. I'm completely making this number up.
Yes, that's $4 billion. So don't—just get it right.
Okay, Jason. Good. Then let me rephrase the question about $4 billion. How many private investments are there compared to liquid investments?
That's why I don't know that number. What I do know is the number of things that have token exposure. It could be a company that hasn't launched a token yet, but we will have token exposure. We expect to see more appreciation relative to tokens than we expect to see relative to equity.
That has actually changed a lot over time. Our third fund, which was our 2022 fund, had about 70% of the capital invested in what we expected to appreciate in value in tokens. Today, the biggest position in this fund is Polymarket because it has grown significantly, but there are other big positions, like Lighter and some other things.
In the fourth fund, it's actually kind of upside down. It's more like 70% equity versus tokens. There are some big token investments that we're excited about, but honestly, there's been less work on that side. I don't think the number or quality of founders affects the fact that the more on-chain activity there is, the more tokens and investments there are.
With that in mind, we're very open to it. We talked earlier about another project that's a big contributor to this fund, and they just announced their TGE yesterday: Variational. So we're certainly still watching this very closely; it's just that there are fewer opportunities.
I meant to say that one of the things we did a lot at ParaFi at the time was—I think we were pioneers in making PIPE deals. We called them PIPEs, but these were PIPEs that looked like a manufactured, right-tail synthetic product. I think it was called Lyra. We were looking at the round, and I was talking to Jordan, who was one of the first to add to the synthetics.
I thought, “Man, I think it's nice to see projects that have been running continuously for 4 or 5 years in a pretty brutal market, just falling, and now it's their time to shine.”
How actively are you guys thinking about revisiting some of that? Because I feel like if you want to be a real stock picker, maybe the risk and return there is more attractive than the path to these liquid things. You're still underwriting the outcome of a venture project, and you have more options, right? It's liquid—how would you say—how much of it is liquid?
Personally, it's not something we really do, to be honest. Some funds in this space do it. They're doing a venture project and they're doing liquidity. Most of the funds in this space that have different sleeves—although LPs usually want different things that go into these different funds—are structured that way.
LPs coming into a venture fund mostly don't want to see their returns rise and fall by 50% every quarter. That actually scares them to death. Usually, the person who underwrites crypto at a large institutional LP feels the same way for us, because our LP base is more institutional now.
If your fund is smaller, maybe you have a little more flexibility. But in our case, the person who usually sponsors us or tries to get us into the portfolio is what I call the senior middle guy—not the oldest guy, but the older, middle-level guy. He says, “Hey guys, I want to do something in crypto. We may not have a lot of publicity, but we do have a few names. I really like these guys, so I would be happy to do it.”
Then, if I send them quarterly reports, I make life extremely difficult for them. The older guy doesn't understand it. He says, “I have all this other venture capital, and it went from 1.2 to 1.3 in the last quarter, and what you told me was 2.5 is now 1.3. How am I— is the world falling apart? What happened?”
So it makes it very difficult for the LP base to do these kinds of things. I will say that a lot of them are good returns, certainly from an IRR perspective, but they might not be if my cost of capital means that everything I underwrite has to be 10x. It's pretty hard to underwrite 10x in something that's observable.
No, I would definitely refuse that. Derive is currently working on this. I mean, that's 5.
My investment universe is very small in comparison. I don't spend a lot of time looking for treasure and picking stocks in crypto—actually, zero. But thinking about most of the success that we had at that time, it was, for example, Synthetix, Kyber, and Maker, and then a whole strategy.
I'm talking about things that matter to a $650 million fund, which means I have to get enough size into a $2 billion fund.
But that wasn't when you were doing it. You guys were a $50 million fund when we joined.
Yes. When I joined, there were fewer.
Yes, this is something you guys have done incredibly well. But the size that you got into this project at $500 million—the project is growing. What I mean is, I think to do this, it's clear to someone listening, for example, that there are only a few of them.
Probably when you're trying to underwrite this, there are a lot of data points. I want to talk about what we're talking about and some of these people. If the team hasn't given up and you look at some of the dashboards, it's quite interesting. I'm interested in how you compensate for that.
I don't hold any positions, so I'm not biased, but I find it quite interesting that a lot of people missed this deal. The effectiveness of options and other things like that is quite impressive. For example, talking about re-underwriting a project at a different time, and maybe whether you're confident in Hyperliquid—that's still generational.
Austin Barrack, whose fund—I forget what it was called—was just acquired. Relayer? No, they were just bought by RockawayX. He runs the liquid book at RockawayX, and he's done an incredible job this year. I had this conversation with him, and he really has a lot of people who like him. He's done an incredible job and deserves all the praise in the world.
But when you can put $250,000, $500,000, or $1 million into a position, that's a significant portion of your fund. Your investment universe is much larger than mine; the average check size is $10 million. Even at Derive, when the market cap was $100 million, there was no way I could have taken a $10 million position without moving the thing 100%.
This is part of the market dynamics, so the investment universe is very different. I think there are possibilities, but there aren't that many. That's not what my mandate asks me to do.
Are they there? Come on. Come on, Santi.
7. Is Meta’s AI Bet Underpriced?
No, I was just going to ask you. I'm really curious why you didn't call me earlier to put in the call. Point number one. I want to come back to this later, but you turned to something pretty amazing. You have a public-market pitch, like Robinhood and Coinbase. You have a good system that works.
Dude, have you ever seen a left tail or a right tail? You wouldn't see it. I wasn't even in the picture because you didn't call me.
Okay, so what Santi is referring to is that last week—or maybe it was 2 weeks ago—I said people should buy Meta. Right now, Meta is doing really well because of this thing with Manus.
Santi wrote me something like, “You like the thesis? We'll talk a little bit about it,” and he asked, “What are the risks?” Do you want to know the honest truth? I didn't even think about the risks. I didn't even think that question had crossed my mind.
“Do you want to know why I decided to make this investment?” I said, “Why not now? Don't invest later.” I said, “Exactly.” But it's the same thing with Druckenmiller. I said, “Manus is going to blow up.” I started this deal early because the world doesn't yet understand what Manus is. That's all.
It's the same reason I had a pretty good deal with Robinhood. I saw Robinhood moving into cryptocurrency, and I thought, “Don't think I'm a bad investor in the public markets. I'm just on the left side of the bell curve. I'm as sophisticated an investor as you can get. I have a fluid brain for public-investing thinking.”
I think anyone who says that is actually smarter than people who say they're very smart. They're actually luckier. But you know who you should keep in mind? This guy, Chris Camilo. He's a public active trader. If you really want to understand how markets work, watch this guy. It's like he's scouring Reddit forums. He made a ton of money from Mattel when they released Barbie.
Everyone—I don't even think you need to scour the Reddit forums. I think we don't understand that life on crypto Twitter has now turned into tech Twitter, a Twitter about artificial intelligence. We don't realize how early we are to understanding trends, and that's why trends are moving much faster than before.
For example, Manus is currently growing faster than ChatGPT. I was on the subway today, and there are already Manus ads everywhere. It's happening very quickly. We had 2 or 3 weeks when we knew about Manus before anyone else. We've been talking about this for a long time, literally since the week it came out. But it also occurred to me that Austin always puts us in that order because Yano is on the left curve and Sand is on the right, and I will be that curve. So Austin knew what was happening.
8. Blockworks’ DAS Asia And Unified API
Oh, the call, the call, the call. Wait. You think—I mean, obviously I want to go to Robinhood because the volumes are down a little bit, and we should talk about the general sector rotation and what's going on there. But what do you think about the fact that they've apparently announced Ray-Ban AR glasses—not VR? Do you think they'll work? I mean, we can scroll, but, like Google, not everything is clear.
You said not to talk about Robinhood. You said to talk about the call.
No, let's just wrap this up, because they announced something pretty cool. I actually imagined myself buying these things for the first time. I've never bought a Vision Pro or anything like that, but I think the Ray-Ban glasses seem pretty cool.
Yeah, my thesis for Meta is that I don't think VR will work. I don't think glasses would work very well. I think Mark Zuckerberg is not a good product developer. I think he's actually a pretty bad product developer.
The only product Zuckerberg ever launched that actually worked was Facebook. Every other product that Facebook has ever scaled and developed has actually been through acquisition. That's a strong argument in favor of Meta, by the way, because it's an internally developed thing.
The reason I'm optimistic is that they have a founder. They have 2 guys running it, Alexander Wang and Nat Friedman. Nat Friedman is one of those people where everything he touches turns to gold. And Alexander Wang is the founder.
You have to give Zuckerberg credit: They had a great lab over the years. They were very early in AI, but they had Yann LeCun and a bunch of Ph.D.s. In 1 quarter, he effectively cleared out the entire Meta lab and replaced it with 20-year-olds.
How old is Alexander?
25 or something, maybe 28. So, kudos to Zuckerberg.
By the way, on VR, I don't think it will fit, but I think the goal is AR. This is augmented reality, not virtual reality. Oculus is virtual reality; these glasses are augmented reality. I don't know—maybe I'll use them. I think Lesnar had a pair that I tried on, and he said he really liked them.
The Meta thesis makes sense when you think about Meta, because the only thing stopping Zuckerberg from taking over the world is the Apple App Store. That's all Zuckerberg has been trying to do for the last 15 years: Launching Internet.org to provide free Facebook services through carrier agreements, creating Libra, and buying Oculus. These are all ways to get out of the Apple App Store to varying degrees, and I think Meta is their best chance at that right now.
There's a great article I mentioned last time from Colossus about Zuckerberg that I think sheds light on this thesis. I also want to make one important point, because it seems like it was a tweet. I don't remember if it was a tweet or a conversation, but someone said something to Alexandr Wang like, “How did you manage to build such a good product inside Meta?”
Facebook is Meta, and it's hard to keep these things secret. It's hard to create a good product there. There are a million people doing different things. This has always been a problem that many former employees have talked about.
He said something like, “I agree with you. That's why we kept it in the hands of a small team at Skunk Works and didn't tell anyone inside the company about it. It was effectively a separate startup, and we operated completely differently from the rest of Meta when we were building it.”
That's right. That's right.
And by the way, Rob, your version of Claude looks really good right now. Claude is Claude to me. I still use Claude more than Manus, just because I have everything plugged in, but I'm going to get out of Claude and switch completely to Manus because Claude is so slow.
Yes, it's so slow. I have a friend who's very knowledgeable about everything that's going on, and he said that Claude is currently spending, I think, $900 million a year on its resource burn rate.
By the way, Meta has a lot of computing resources.
Yeah, Jason and I talked about this last week, Santi, when you were here, but apparently the reason Manus overtook Claude so quickly was that it wasn't as fully featured as Claude. Claude started gaining popularity and its computing resources became limited, and then everything slowed down, while Manus runs as fast as possible.
It's faster than all the others because they have all these computing resources. It's even a slightly worse product at the moment in terms of its feature set, but it's much faster, much more responsive, and solves problems much more easily than Claude because of those computing resources.
They're going to catch up with Claude in the feature space very, very quickly. By the way, what a great time to be alive. We have Claude, and we have Grok, which hasn't been given as much attention as it should have. But Grok is incredible. You use it often.
Yes. If you want, you can drastically reduce your costs within the company by combining Grok with a good LLM.
As an obvious choice, and then we get Astra. I think it was last week or the week before. Then we get the Opus 55, which was a reaction to the Astra, and Opus 55 is amazing. It is 30% faster than Opus 5 and cheaper.
I actually think that people in cryptocurrency have an advantage in the world of artificial intelligence because we've seen what happened with blockchains and Layer 1s and Layer 2s. You had this expensive block space, the fees went up significantly, and we were essentially limited by something like fees or computing resources, or whatever you want to call it, depending on what world you're talking about. Now you have free space and virtually unlimited block space, and it's not about block space anymore. We're talking about applications built on that foundation.
Artificial intelligence just speeds things up. Well, yes and no, right? There's a different physics here. Proof-of-stake blockchains have dramatically changed the landscape of the computing resources needed to run a blockchain, while AI has serious bottlenecks. You're talking about $1 trillion in capital spending, probably going up to $5 trillion, plus the borrowing to finance these things and the physical constraints.
The scale is something I agree with. The physical limitations of these things are on a completely different scale. But for the consumer—for the person who's building something—I agree with everything you're saying. We used to have limited block space, and now we have unlimited block space. Now we're computationally capable, or even computationally limited, but the trend is obvious.
I used to use Fable, and back then it was like a Fable prefab, like 46, 45, or 46 or something like that, and it literally said to me, “Hey, go to bed, Jason. We can't serve you anymore.” Now these things have become 50% faster and cheaper in 60 days, and that trend is going to continue.
By the way, we're talking about Muse and Manus. It's very obvious that there's going to be a Gemini version, and we didn't even talk about Grok, right? Grok will continue to be an amazing product. It's a great product, too—just a little more complicated. It's probably the best chatbot on the market, but it's a little more difficult to use for a random person.
For example, my wife uses Muse all day, every day. She wasn't using any of these tools before; she was talking to Claude or something. Now she named her Muse Simon, and she'll tell me, “Simon and I are working on something. Simon and I are working on this.” It's literally a whole day's worth of conversation.
For me, it was Claude. She'd say, “Oh, you'll talk to Claudia later.” I'd ask, “Who is Claudia?” You know, Claude, not Claudia.
It's a comfortable conversation. What was I going to say? Yes, consumer preferences are crazy. I was at the All-In Summit last week. That's why I missed it.
How was the All-In Summit?
It was pretty cool. Honestly, I'm trying to expand my network, obviously, just to understand AI and what I like about the other people who are implementing it in companies—what's real and what's not. I was trying to get out there to expand my network and simply understand what is real and what people are talking about.
I don't want to drag this out, but a lot of it was obviously focused on the midterm elections and the AI narrative. They took it upon themselves to address that. For example, Jensen Huang got a call from Trump onstage; people should go see it. There was also a fireside chat with a parish president in Louisiana, where they built a data center, and he was talking about taxes, schools, and how they really changed the community.
A lot of people have obviously been talking about slowing down AI, moving the front lines, things like that. It was pretty good, honestly. You recommended it pretty well, and that was a big part of the reason I decided to go. It was worth it.
I saw 2 crypto people—2 fund managers—there. Brockman—who? Jake. Jake was there. I literally walked in, and he was there. They've obviously done some things at the intersection of artificial intelligence, cryptocurrencies, and decentralized computing. Jack Platts from Hypersphere was there, too. He's been more actively investing in things like Neuralink and SpaceX and all that stuff.
9. Why Crypto’s First Movers Lost
Hey, let's talk a little about cryptocurrency.
Yeah, yeah—hey, shut up. Let's talk a little about cryptocurrency. Derive just made me think about something that BitMEX actually is. BitMEX officially closed this week, and that makes me wonder: what products are there in cryptocurrency that you guys can talk about? Maybe we can talk about this in the next episode, or if something comes to mind right now, what in cryptocurrency actually invented a new paradigm or a new product but didn't really win?
I'm thinking about Synthetix. Synthetix didn't win, but it invented a lot of things. I think you see that with Derive; it kind of came out of Synthetix.
BitMEX apparently created the perpetual. Now Augur, where everyone agrees that Augur is great. Polymarket and Kashi—I thought it was Bancor, right? Bancor actually launched a perpetual product, an AMM, sometime in 2017. I want to say that Uniswap wins.
Another one that came to mind is EtherDelta, for anyone who used it at the time. It was a completely pointless experience. Something else: dYdX, maybe—like all the dYdX, Kyber, 0x, bZx, and Fomo3D.
None of the stablecoins really worked, but there was a whole graveyard of older algo models. Basis Cash, all delta-neutral.
How much money did Basis raise? $200 million? I did that round. They returned it, even though they returned it knowing full well that we got about 92 cents on the dollar, which was the best valuation you could have put on it at the time.
You could say Celsius, BlockFi, Voyager, Gemini Earn, and now Morpho.
It's a little different, especially with Celsius, right? People invested their money, and they ran a hedge fund. Now people are going to do whatever.
There are many reasons why the same can be said about Aave. Aave had a lot of reasons why those products didn't work, but now their variations—complex products—are really lagging behind. It's still under Stani's leadership, and Robert is obviously doing something like Superstate.
It's just an interesting thing to think about as a new founder. I know a lot of founders listen to this. Sometimes the best ideas are not exactly new ideas. Sometimes the best ideas have already been tried and tested; they were just too early.
I'm not sure I can think of one. Uniswap, for example, is the best in its class. Were any of them the first? I'm not really sure. I actually think that maybe it was EtherDelta in 2017.
Yes. They were the first.
Yes, they were the first. To be fair, DeFi then and DeFi today are different. The basic principle, I think, is the same.
So, okay, guys, the topics of the week that are on my mind. Tell me what you want to tackle.
Binance invested $100 million in Circle. Blockworks launched a single API.
This—we should definitely talk about this. It's a good topic for conversation. An important event.
Important.
Perfect. I should have written about this at the beginning.
D Asia will be held here on October 9th. Go and buy a ticket. This is truly an amazing event. Will we all be there? Block Works is here. Want to see the lineup of speakers? We will all be there except Yano. He won't even be outside his conference, but Santi and I will be speaking. We have Jeff from Hyperlid. Arjun, CEO of Kraken. Cynthia.
I am delighted. I just want to express my gratitude to the team. We acquired Messari less than three months ago, and we told the board of directors that it would probably take six months to integrate it, and we did it in three.
So, we put this together. It’s actually a crazy amount of work. We combined these 2 huge platforms, which were very different, into 1. Messari had an amazing breadth of data, and we had very good depth of data. Now you can get all of our research, TVL, on-chain data, fundamentals, price data, social sentiment, and information dissemination through 1 single API, which is really cool.
What role did AI play in this?
A huge role. I don’t think we could have done it without Claude. I think it would have taken us at least twice as long to integrate everything if we didn’t have Claude. We did a lot of this with Claude.
Perfectly. Yes. Should we talk about Robinhood? There are about 10 minutes left, and we need to get to the content of the week, but it seems like there’s been a lot of talk about the Robinhood Chain.
No, no, no. The only thing I want to hear your opinion on is whether it will ever come back. A lot of people on the timeline are saying, “I told you, it’s a Solana exchange,” because I want a lot of people to say, “Yeah, EVM just can’t handle this much activity. You should have built on Solana.” I think I’ve seen a lot of these arguments before.
I’m just trying to translate it this way: Would you rather own a HOOD or a SOL at this point?
HOOD or SOL? They’re both my 2 biggest positions right now.
So, both. Again, that wasn’t a question. 1 or the other. You know the answer Yano wants to say.
For me, it’s 100%. I know this. I provoke him. You know what? Rob can win this bet. Robinhood and SOL. This is an important day for me when I’m right. You doubted me about Injective. Give me Robinhood and SOL.
Hey, I have a question while we’re thinking about wrapping this up for the next 10 minutes. This week, there was an interesting announcement from the NYSE and Blockchain.com. The question this makes me wonder about is: Who gets the value from tokenization?
Santi, we started talking about this last week. Rob and I had what seemed like a pretty good conversation that suggested tokenized stocks would sell well, or were selling well. I don’t remember the exact time, but I think they were selling well.
By the way, we should mention that Carlos should be on our podcast soon. Anyway, the NYSE and Blockchain.com made this statement: Blockchain.com users get access to tokenized stocks and ETFs on the NYSE ATS, their digital ATS, which is a planned digital ATS. I don’t know if it still exists. I don’t think it still exists.
ICE is distributing Blockchain.com data, and Blockchain.com hosts ICE’s channels in the application. The NYSE is already working with Securitize and tZERO. They did a huge audit of OKX. So there’s something like this whole bucket.
MoonPay bought a license from North Capital, which was a broker-dealer and ATS. Ondo announced, I think today or yesterday, something with BlackRock. They work with Alpaca, which is this super-sneaky, behind-the-scenes, huge company that provides most of the tokenization.
Alpaca is a great company. Coinbase and Robinhood work with them. Coinbase just launched IPO distribution in the app, starting with Oura Ring this week. There are all these things. I don’t know. The question for you is: How do you understand the value of tokenization here?
My view has always been that, and that’s why we haven’t really done much in tokenization, even though I’ve talked about it a lot. The reason for that was precisely this issue: It’s quite obvious that it’s good for issuers, and it’s pretty obvious that this is good for users. It’s going to be a better user experience for people who don’t have access today.
Potentially, better securities lending will emerge over time. Potentially, over time, there will be 24/7 trading that happens on the blockchain. This is better for a lot of people, but it’s kind of unclear who captures the value in the middle.
Especially when we start thinking, “Okay, should they all be traded on an ATS? Should they all be traded on an ATS, or should they have segregated liquidity, segregated FCMs, DCOs, and so on, on the derivatives side?” How does this stock compare to the rest of the cryptocurrencies?
I think it’s probably true that, in a way, it just creates value for everyone. The reason I say that is because issuers are reaching out to new people. Consumers have new things they can buy, and more often than they can buy them today. The GDP of these different countries that are starting to allow access to U.S. assets, which they didn’t allow before, should be growing.
Exchanges that used to try to become exchanges for everything are trying to offer some value to all these new assets. There is more liquidity across the industry and across the ecosystem. So that’s good for everything else and all the surrounding protocols.
I don’t know if there’s a single person who would say they have a lot of economics at an extraordinary value. Maybe it’s Alpaca, which has about 97% of the market for servicing these tokenized securities and a significant portion of the infrastructure. Maybe it’s some of the others, like Superstate, which is trying to do on-chain IPOs, and Securitize, obviously, which has a fund administration business and is in the transfer-agent business, trying to do something like that.
But I think, first of all, it’s just kind of like increasing GDP, which helps everyone a little bit. Maybe there will be 1 exchange that will be better than another, and they will rise in the rankings, but overall it will be good for the ecosystem.
I don’t know. I don’t know. But I think overall, DeFi wins pretty well here, and/or the ledger system, whoever it is, whether it’s Alpaca or Superstate or someone else. If your accounting system is set up so that you can do this, especially in the beginning, it will probably be quite inefficient, and you will probably be able to charge a much higher commission than is seen in traditional markets.
I would like to examine the authorized participants on the Robinhood Chain a little more closely. These guys are probably not professionals. APs are usually the same market makers, you know.
Yeah, I think that’s a good question for Armani Ferrante and Backpack because they had really good graphics. I’m an investor, and I’ve seen some comparisons of how much it costs to trade on Backpack compared to some other types of tokenized stocks, and it’s quite interesting who’s creating that spread. He could probably answer that question very well.
I think people don’t realize that what’s happening with tokenization now is very similar to what happened with blockchains a few years ago. Remember that blockchains were paying people to join blockchains. Let’s not forget that the difficulty was that blockchains paid people to join.
I would say that a lot of tokenization deals still—
Yeah, that’s just not true.
It’s just not right. It’s not right. It’s not that bright, as if that’s still true. Better.
Rob, I just got a glimpse into your soul, brother. I felt like I was seeing something no one had ever shown me before.
Yes, that’s still true. It’s just that Starbucks is no longer going blockchain and causing a sensation. So people stopped doing it. They still do it, but the main topic now is tokenization. If you see a big traditional player move to blockchain and say, “We’re going to tokenize all these things on this blockchain,” often it’s for a fee. That’s all I’ll say.
Content of the week.
Roberto, come closer. A little closer, please.
Content of the week. You know, we can do KYC once with this video.
That’s good, too. What is the content of the week, Rob?
Prime Time, which is a Robert Pattinson movie about To Catch a Predator. This looks great.
It’s based on To Catch a Predator and the host who hosted it, but it’s not 100% accurate. It’s kind of what I would call historical fiction, in a sense. It’s a dramatization, but it looks incredibly good.
Robert Pattinson is getting a lot of buzz around the Oscars. This is the first feature film from an Oscar-winning documentary filmmaker. He’s a very famous documentary filmmaker who wrote this, and that’s gotten a lot of buzz.
I think it’s probably 1 of the best dramatizations of something that happened in my life that was very significant. I remember watching it as a kid, right? I remember, as a kid, thinking, “Oh, this is obviously good. They’re catching all these predators, and these people are horrible.”
But I think it gives you a little more nuance about what it did to people, especially the legal nuance of what they did, and I think that’s really good. So I really, really liked it.
Rob, in many ways, people will be confused. You talk in such detail and with such passion about movies, more than you do about cryptocurrency at the moment, man.
Well, damn it. I just want to know: When is Rob Haddock’s holding company going to fund movies online?
I was just talking to a few film funds about doing some releases, you know.
But the problem is that the film economy is a disaster. The best movies are really bad. Somehow, it turns out that I make more money from venture capital than from movies.
Yeah, what do you have?
I always travel with a book. This one is called The New Map. I read The Prize by Daniel Yergin. He has a great book about oil. I’m reading this energy book, and it’s kind of like a sequel to it. I just picked it up, and it’s quite good. I like it.
He’s chairman of S&P.
Oh, really? I didn’t know that. Wow, this is good content. So, I’m reading this.
Yeah, so far, so good. I found a podcast by Brian Halligan. No, you’re smiling because you thought I was going to say that David Senra has a great podcast. Brian Halligan was the founder and CEO of HubSpot. He has a podcast called Long Strange Trip, where he interviews CEOs, and the latest episode is with Databricks CEO Ali Ghodsi.
He’s not a very well-known name right now. I think one day he’ll be in the class of CEOs like Frank Slootman, who people just say is a cool CEO. He’s a savage CEO, and I think he’s fantastic. I think there’s so much change happening right now that if you’re in the shoes of a founding CEO, it’s good to hear what others are doing, and that was good.
Rock and roll, guys. Rock and roll. Okay, people, have a great rest of your Friday, a great Saturday, and a great Sunday. See you next week.