Why Bitcoin Is One Headline Away From Going Parabolic - Robert Leshner
- Leshner expects Bitcoin’s narrative to flip from apathy to mania on a sudden headline. A US strategic reserve, a foreign-country move, or another validation of Bitcoin as a neutral store of value could trigger a “so back” moment and take the market risk-on; he says this could happen at any time.
- DeFi is near a relative sentiment low against CeFi, but Leshner expects it to come back as AI-assisted development produces more resilient protocols. Existing contracts face increasingly capable vulnerability discovery while developers have not caught up; he expects the eventual result to be an ultimately scalable, resilient backbone.
- April’s interconnected failures damaged institutional confidence more than an isolated exploit would have. Leshner began receiving institutional questions within 12 hours because one bug appeared to become “15 failures all at the same time.” He expects credibility to return in roughly 18 months, while the lessons improve bridge signing, collateral assumptions, supply caps, and protocol design.
- Hyperliquid-style markets prove demand for trading anything at 2:00 or 3:00 a.m., but Leshner thinks most users will ultimately choose compliant packaging. Permissionless, self-custodied venues will persist, yet over 10 years many users may access always-on assets through firms such as Coinbase or JPMorgan: innovation tends to travel from its “Napster era” to the version “Grandma uses.”
- A perpetual contract on Hims and a tokenized Hims share are fundamentally different exposures. The perp is a zero-sum wager balanced through an interest rate, while a stock is naturally net long, carries no funding cost, and can theoretically be held for 50 years; Superstate’s approach places the tokenholder directly on the issuer’s shareholder records.
- Tokenization’s real promise is not shaving cents from legacy plumbing but making stocks transferable, always on, and programmable. Leshner argues assets can become building blocks for “asset hackers,” while issuers gain more potential buyers and brokers gain products such as withdrawals to wallets, Coinbase, or AI agents. His provocation: zero-fee Robinhood was arguably stocks’ biggest innovation in 50 years because developers could not program the assets themselves.
- The next structural cleanup is eliminating competition between tokens, foundations, and profit-seeking labs companies. Leshner favors private companies for early fundraising, then a transition at crypto-public maturity so “if there’s a token, it should just be a token.” Nearer-term catalysts are a roughly 50/50 chance of CLARITY passing, separate SEC guidance for tokenized securities, and the next unforeseen product cycle.
1. DeFi’s reputation keeps cycling between code and counterparties
Leshner’s origin story predates the category: he started Compound in 2017 and was in the 2018 group chat where Brendan, a Dharma cofounder, proposed “DeFi” after alternatives such as “OpenFi” failed to stick. He later founded Robot Ventures, then left Compound in 2023 to build Superstate.
The Compound reward incident around 2020-21 captured the “human era of DeFi security.” A community-written upgrade passed review and looked good, yet a deeply buried error gave most users zero rewards and random users “buckets of tokens” for days. Distributed development made quality control difficult even with auditors involved.
In 2018, using Compound V1 or Uniswap V1 was for the early adopters willing to trust smart contracts instead of Coinbase. By DeFi summer in 2020-21, resilient contracts and nonstop experimentation drove optimism “through the roof”; after Terra, Three Arrows, Celsius, BlockFi, Genesis, and FTX collapsed, the 2022-23 consensus inverted to “the only thing you can trust is a smart contract.”
Leshner now sees CeFi enjoying extraordinary momentum in the post-Trump-election era while DeFi angst approaches a relative all-time high. His explanation is temporal: increasingly automated vulnerability discovery can probe contracts written from 2018 through 2025, but developers have not caught up. He expects a new generation of AI-assisted protocols to become much safer and ultimately scalable.
2. Always-on trading is moving from its Napster phase toward mass packaging
Thread Guy’s challenge was pointed: crypto investors are tired of hearing VCs repeat “tokenized stocks and stablecoins,” while Hyperliquid already lets traders access commodities, stocks, and potentially Korean stocks. Leshner’s answer is that these venues validate the underlying demand — people want to speculate and hedge everything, at every hour.
His adoption map begins with the “Napster era”: unregulated, non-KYC derivatives prove demand, user experience, and market structure. Permissionless products will remain, but he expects the dominant 10-year form to be “buttoned-up” and offered through a Coinbase, JPMorgan, or comparable institution because 99% of users will not tolerate early adopters’ self-custody hoops.
Superstate follows from Leshner’s conclusion that DeFi’s ceiling stays limited if it only recycles governance tokens and other crypto-native assets. His thesis requires “trillions of dollars of assets on chain,” usable inside DeFi rather than merely tokenized to shave “12 cents off of some TradFi business.”
3. Perpetuals provide exposure; stock tokens provide ownership
Using Thread Guy’s long-Hims example, Leshner described a perp as a zero-sum derivative: every dollar earned by one side is lost by the other, and excess demand is balanced through an interest rate. He nevertheless called perpetuals a genuine crypto innovation, materially better than monthly or quarterly futures that expire.
A share is naturally net long because more than zero shares exist and the holder owns part of a company rather than wagering against a direct counterparty. It may lose value, but it carries no funding cost: “You can hold it for 50 years” and simply remain an owner.
Stock tokens vary. Under Superstate’s approach, the holder appears directly in the company’s books and can ask the CFO, “Am I a shareholder?” Other structures insert SPVs or custodians that buy the underlying shares and mint tokens against them, leaving the holder with indirect rather than direct ownership.
Thread Guy’s “why now?” pushback matters because tokenization remains niche. Leshner identified three concrete unlocks: transfer stock without hitting “a brick wall,” trade assets 24/7, and let developers program them. “The assets become building blocks” from which anyone can attempt a financial killer app.
4. Tokenization expands the market without requiring incumbents to lose
Public companies need not care about settlement plumbing, Leshner argued; they care whether more people can buy their shares. More demand can support a higher price, lower the cost of capital, increase borrowing capacity, and make stock-financed acquisitions easier.
Nor does Superstate winning necessarily mean Schwab loses. Exchanges, brokers, and custodians can upgrade in parallel: a brokerage might let clients withdraw stock to a wallet, Coinbase, or an AI agent, then accept deposits back. Tokenization opens “a huge aperture of creative new product ideas.”
Leshner’s sharp historical comparison was that Robinhood’s zero commissions may have been the largest stock-market product innovation in 50 years. Developers have not built “killer apps with stocks in like 150 years” because the assets were unavailable as programmable primitives; tokenization creates the possibility of an “asset hacker” changing that.
5. Interoperability is simultaneously DeFi’s moat and its blast radius
The 10/10 event barely affected Leshner personally because he was not actively trading, although he watched friends become demoralized and sentiment sour for three months. The KelpDAO incident landed differently: amid an unusually exploit-heavy April, he thought it would “leave a bruise on the face of DeFi.”
Within 12 hours, institutions were calling Superstate to ask, “This DeFi thing, are you sure about this?” Millions of tokens had seemingly appeared from nowhere, while a defect in one system propagated through major protocols and vaults. It did not resemble one weakness; it looked like “15 failures all at the same time.”
Thread Guy’s implicit challenge was whether composability itself had failed. Leshner said interconnectedness magnified the optics and damage, but called it DeFi’s core value proposition too. TradFi observers instead saw silos as safer and effectively said, “I’ll take a look at it in another couple years.”
His recovery forecast is explicit: in roughly 18 months, people will again say, “DeFi is rock solid.” The Aave–LayerZero episode should eliminate tolerance for 1-of-1 bridge signing and force lending protocols to model collateral reaching zero “in a millisecond,” perhaps through improved supply caps rather than assumptions of orderly market declines.
6. Past blowups inform both balance-sheet risk and token governance
Leshner’s most painful early war room involved YAM, an algorithmic stablecoin worth perhaps $400 million-$500 million at its peak. Its governance contract was accidentally bricked, preventing governance proposals from taking effect; roughly 20 people tried to figure it out over Discord, but confidence collapsed and the token went to zero.
He did not predict Terra’s timing, but knew the 19% UST yield was unsustainable when investment bankers quit their jobs to launch funds that only packaged UST. “There were signs”: the yield came “out of thin air,” and people believed they had found a foolproof way to make 19% rather than asking how the system could persist.
On Strategy, Leshner called the structure a distant cousin of Luna/UST that “rhymes” with it, albeit “a lot, a lot, a lot safer.” He thinks it must become roughly eight times larger before posing a problem; if issuance turns parabolic and reaches something like a $200 preferred, it could become uncontrollable, though he believes Saylor’s team may self-regulate before then.
The host’s final structural objection concerned tokens competing with foundations or labs companies for economics. Leshner agreed: Gary Gensler-era ambiguity encouraged fragmented entities, but “simplicity has always been a virtue” across 10,000 years of human organization. Success inevitably exposes conflicts over who earns, governs, and benefits.
His preferred lifecycle starts with a private company funded by a small number of sophisticated investors who understand losses are possible. Once the project is ready to become crypto-public, privileged builders should stop competing with tokenholders: “Starting point, companies; ending point, if there’s a token, it should just be a token.”
Regulation supplies a near-term catalyst. Leshner assigns CLARITY only “50/50,” below Polymarket’s implied odds, but says passage could make tokens, wallets, ICOs, and tokenized assets socially acceptable to conservative institutions — much as the GENIUS Act validated stablecoins for firms that technically could have entered earlier.
Separate SEC guidance could establish pathways for tokenized-securities trading not covered by CLARITY. Beyond policy, Leshner expects Bitcoin’s neutral-store-of-value narrative to flip suddenly on a US strategic reserve, foreign-country action, or another unforeseen headline: a “so back” moment could become the market’s risk-on signal at any time.
The final source of upside is unknowable by design. Crypto moved unexpectedly through altcoin, NFT, and perp eras; with enough teams still building “sick products,” Leshner expects one experiment to become the next mainstream obsession before investors have agreed what the new narrative is.
Full transcript
Yo, yo, yo. Yo, Mr. Robert Leshner, welcome to the stream, man. How are you?
I am doing well.
Dude, I’m excited to have you. I listened to you with Haseeb on The Chopping Block, but I don’t know that much about your lore, so I usually just hear your modern takes. I was doing some prep and listened to the UpOnly episode, which was a high-stakes one because you were about 15 hours out from an exploit in one of the Compound contracts. It was a wild listen. I thought you handled it really well, for what it’s worth. That was 5 years ago.
Yeah, that was ancient history when it comes to DeFi. DeFi has had 10 lives since then.
Yeah, 10 lives. I mean, April was the worst month for exploits ever. Something doesn’t change, right?
Yeah, I mean, it’s funny. DeFi is constantly going through this ebb and flow of being resilient, battle-tested, and more trustworthy than CeFi, to being fragile and unpredictable, and less trusted than CeFi. This constant ebb and flow has been happening pretty much all the way back to 2017 or 2018, really. It never ends. In 12 months, we’ll be like, “No, DeFi is so much safer than anything else. That’s what you have to use.”
The thing that was so crazy to me was that you were discussing the bug in the— I’m not technical at all—but there was this exploit because a greater-than-or-equal-to sign was missing. Hundreds of millions of dollars were getting airdropped to somebody because there was one character in a contract that was overlooked.
Yeah, and just to break it down for the people listening who don’t know what we’re talking about, it was 2020—maybe 2021.
2020.
Yeah, maybe 2021. Basically, there was an upgrade of the Compound protocol that somebody in the community had written. One of the early things about Compound as a protocol was that the actual development of it was sort of crowdsourced. It was like, “Hey, anyone can add on to this thing,” which is very different from how most teams build DeFi protocols today. I think a lot of people have learned from this.
It was distributed development, which is hard to QA, even with auditors involved. There was an upgrade. Everyone reviewed it, it looked good, it passed, and it was implemented. There was this incredibly hard-to-find bug that started miscalculating how many reward tokens people were going to receive. Most people got zero, and some people randomly got buckets of tokens.
It was patched as quickly as it could be, but for days it was spitting out all of these tokens, and things were going crazy. This was the human era of DeFi security. Back in the day, we didn’t have AI. You literally had many different teams of people analyzing smart contracts, reading through them, and hypothesizing the risks and attack vectors. It was very different from now, when I think we’re entering a very automated era of attack and defense.
Thank you for the explanation. I didn’t give you a chance to do this. Can you give us a quick lore intro into who you are? Then we can talk about some of the fun stuff you’re doing now.
People in crypto generally know me for one of 4 things. The first is that in 2017, I began work on the Compound protocol. This was before DeFi was a phrase. I was actually in the group chat when we came up with the word DeFi.
No. Yes.
I swear to God.
Who came up with the word DeFi?
It was actually Brendan, one of the founders of the Dharma protocol, which was an early DeFi protocol from around 2018. He was like, “We need to come up with a name for what all of these people we now call DeFi founders are building.” He was like, “Open to suggestions.”
People were tossing ideas out there. There were some bad ones, like OpenFi. There were some weird ones. A couple of people latched onto DeFi, and they were like, “Yeah, DeFi. That’s the name.” Ever since 2018, that’s all I’ve known.
That’s incredible.
People know me as one of the first people to explore what we now call DeFi. I built Compound. Second, some people know me from Robot Ventures. It’s an early-stage venture capital fund that’s been active in the space since 2018. We do lots of pre-seed investments. Oftentimes, it’s a founder’s very first check because we just like founders. We’re not saying, “You’ve got to show tons of traction.” We bet on people.
Third, people might know me from The Chopping Block. It’s a podcast that I host in the space. Fourth, I’m the founder of Superstate, which I started in 2023. I left Compound to start Superstate. What we do is tokenize assets and bring them on-chain.
The catalyst for that was that, as a DeFi founder, I looked around DeFi and thought, “Hey, the ceiling on how big this stuff can get is actually limited because the only assets we’re putting into DeFi are the same assets we’ve always been putting into it.” It’s other protocols, governance tokens, and crypto-native things. It’s an enclosed ecosystem.
My theory was that, to really grow this space, we needed trillions of dollars of assets on-chain. Otherwise, it could never really take off. I left Compound, founded Superstate, and for the last 3 years I’ve been trying to tokenize assets, bring them on-chain, and make them usable in DeFi.
I want to talk about Superstate and let you talk about it a little bit. I think you did an interview with the New York Stock Exchange, maybe? It was a good one.
Crypto’s been pretty boring for the last 6 months and change. There have been a couple of exciting days here, which we can talk about, but I’ve been trading commodities and AI stocks on Hyperliquid. I’m curious: do you feel like what Unit Trade XYZ and Hyperliquid are doing has amped up what you’re trying to do at Superstate?
Yes and no. It’s proving out a market where people want to trade anything at 3:00 in the morning. That is clearly the future. It’s clearly what everybody wants, and it’s clearly where things are going. I think people have wanted that for 50 years; it just has never really been possible. People want to speculate and hedge on everything at all times. That’s a very pure demand.
There are going to be a lot of flavors of that. The first versions are basically unregulated derivatives that aren’t KYC-based and that anyone can access. There are really good qualities to that. I think there’s a market for it, and I think there will always be a market for it.
People also want what I’ll call regulated, compliant versions of that. Almost every single product starts off with the Napster era, where it’s like, “Hey, go totally wild.” That proves everything out: the user experience, the demand, and roughly how it’s supposed to work. Almost everything starts off with a Wild West phase.
Eventually, everything winds up with what I’ll call the buttoned-up versions, where, after we prove out why something is so awesome, we get the things that Grandma uses. From a risk perspective, a UX perspective, and a credibility perspective, we almost always get the mature version of something that actually claims the whole market.
Trading—whether we call it RWAs, real-world assets, securities, or whatever you want to call it—will happen at 2:00 in the morning, 7 days a week, in your pajamas. Society is already proving that you can do this today.
I just think the version of that that most people are going to use in 10 years won’t be the self-custody version, clicking from your wallet in a censorship-resistant, non-KYC environment. It will probably be the thing offered to you by a Coinbase, a JPMorgan, or whatever.
Both will exist. Neither is going away. But I think we’re going to trend more and more, just like almost every innovation in history, from the YOLO era of something to the hyperscaled era that 99% of the world feels comfortable using.
The early adopters are like, “Yeah, I’ll jump through crazy hoops. I’ll figure out how to use this brand-new system.” Ninety-nine percent of the world doesn’t think like that.
I remember in the early days of DeFi, there were no institutions. It was the early adopters—the craziest people on Earth. They were the people saying, “I trust the smart contract.”
It’s not—
Done, right? The people who were willing to use a smart contract with their money for the first time were a different breed. Now everyone is sort of comfortable with it, and it gets packaged into much more usable form factors.
I have a bunch of questions, but I want to ask you this first because I just thought of it. When you look at where we are in 2026 compared with where you were in 2018, 2017, and 2016—your group chat coined the word DeFi—how satisfied are you with how DeFi has evolved? Has it beaten expectations or underperformed?
Yeah, the answer is yes.
That’s sick.
Here’s my take from about 8 years of DeFi, and this goes to my earlier point: people’s opinions of it ebb and flow. In 2018, no one trusted it. When we launched this, and when certain protocols were first launching, nobody wanted to interact with the smart contracts. It was considered a little bit crazy.
There were some really early adopters of Compound V1, Uniswap V1, Curve, and all of these things, but these were the crazy people. Everybody trusted a centralized thing more. They all trusted Coinbase more.
Yeah.
By the time 2020 came around, people were like, “DeFi hasn’t had any issues, really. It has started to scale.” By this point, it was sort of maximum experimentation. I would say DeFi Summer, 2020 and 2021, was in some ways a local maximum and a global high point for DeFi. Nothing had really gone wrong, for the most part.
There were some rugs and some bad things that happened, but for the most part, people saw how resilient it was, and people were trying new things all the time. It was nonstop. People were launching protocols that no one had ever seen before. It was massive experimentation and really a lot of confidence that it could work. Everyone’s optimism for DeFi was through the roof.
Through the roof.
Then everything in CeFi collapsed. Terra blew up, and then it took down Three Arrows Capital, Celsius, BlockFi, Genesis, FTX, and all these other things. People were like, “CeFi is a scam. You can’t trust anyone who holds your money for you. The only thing you can trust is a smart contract.”
That was a really interesting era—the bear market of 2022 and 2023—where nobody wanted to trust a centralized thing. I think DeFi, in terms of its creativity, was almost at an all-time low. People weren’t trying new things, but everyone knew that smart contracts could work at scale for creating a financial product in a financial market.
For better or worse, the post-Trump election era has been the comeback of CeFi. CeFi is on a tear right now. It has been coming for the market unbelievably aggressively for about 16 months now. I think, especially with the vulnerabilities that have been happening, the ratio of optimism for DeFi relative to CeFi is almost at an all-time low since I’ve been around. The momentum that the CeFi guys have is really high, and the angst around DeFi is really high too.
Really high.
Really high. I think DeFi will come back because, at the end of the day, we’re going to enter an era where there’s a new protocol written with the tailwind of AI that’s as secure as it can get against any possible threat. We’re going to have ultimately scalable, ultimately resilient protocols, which is what people want in the first place.
I just think DeFi is at a slight disadvantage right now because all of these contracts were written in 2018, 2019, 2020, 2021, 2022, 2023, 2024, and 2025. Now you have Mitosis saying, “I found a thing,” and you don’t even know what it is, really. The ability to find vulnerabilities now is higher than it’s ever been, and the developers haven’t caught up yet. But they will catch up eventually.
We’re going to have this wave of DeFi, probably in a couple of years, where you’re like, “Yeah, you can build a global system that’s always on, always works, is super safe, and can’t be stolen from or tampered with.” It’s a really good backbone to do stuff. But I think it’s going to take a while.
The 2023 era was nuts because SVB happened as well.
Oh, yeah. Banks were going down.
Banks—it wasn’t just crypto exchanges. Banks were getting robbed. Everything was going down. I remember people saying, “If you keep $1,000 on Coinbase, you’re a fucking idiot.” No one knew anything about anything. I forgot about SVB happening. It was like you couldn’t trust anything.
USDC hit 85 cents or something like that on the dollar. I sold USDC when it hit 90 cents. I didn’t know what it was, I didn’t know what I held, and I was like, “What the fuck?”
That’s crazy. Going back to some of the Superstate and Hyperliquid stuff, I think a lot of the speculators are sick of hearing every VC come on the mic and say, “We’re bullish on crypto, but just tokenize stocks and stablecoins.” On the other hand, the product that Hyperliquid has offered is incredible.
Being able to trade commodities, stocks, and hopefully Korean stocks is wild—the amount of liquidity you could tap into. My question for you, and you can get a little bit technical on this, is: if I’m long Hims in a perpetual position on Hyperliquid, what am I actually trading, and what does the exchange actually hold versus if I were to buy Hims stock from Superstate, assuming hypothetically that you guys had tokenized it?
Yeah, it’s a great question. You’re really asking about the difference between what happens with on-chain derivatives versus stocks in the traditional system. You can make a derivative on anything, and crypto has done an amazing job creating perpetuals and derivatives in a better form factor than all of TradFi had invented prior to this.
Perpetuals are better than monthly and quarterly futures that expire and go away.
By a lot.
Yeah, by a lot. Perpetuals are a genuine innovation that came from crypto. Kudos to BitMEX for pioneering that many years ago.
Perpetuals are just derivatives. In a derivative transaction, it’s essentially zero-sum. For every dollar that the other side makes, I or someone else is losing a dollar. You’re either directly interacting with someone else on the other side of a trade or with multiple people through some pooling mechanism, but you’re creating a market where, for everyone who’s long, someone else is short.
When there are more people who want to go long than want to go short, you have to figure out a way to balance it. Perpetuals use an interest rate to attract the other side of the market. But it’s basically a wager between two sides. Someone is going to make money, and someone is going to lose money.
Yes.
With a stock, there are more shares of it than zero. The underlying stock is a naturally net-long position. You own a share of a company. It might be a bad company, and the people who own the shares might lose money, but you’re not betting against a counterparty. You’re literally betting against nobody besides your opportunity cost.
It’s a natural long product versus a product with an expected value of zero. There’s no funding cost when you own a stock. You can hold it for 50 years and say, “I own the stock.” That’s it.
With perpetuals or derivatives, you can’t really do that. The easiest way to think about it is that there are a lot of different versions of stock tokens. We’re still in an era of great experimentation.
The approach that Superstate takes is that, when it’s a token, you’re on the company’s books and records. You can call up the CFO and say, “Hey, am I a shareholder?” And they’ll say, “Yes, old Thread Guy, you are on the company’s records. You’re a shareholder. Have you gotten our annual statements?”
There are other tokens where you can’t really do that, and there are a couple of layers of SPVs between you and the company. You indirectly own the company’s shares through other tokenized approaches.
But when you hold a stock token, in general, you’re long the company stock. Either you bought it directly, or someone else bought it on your behalf, is custodying it, and minted a token against it. In general, stock tokens mean you’re long the company, and there is no other side to it.
No one’s going to lose if your thing goes up. Got it. Thank you. And so, to follow up on that, it feels like everyone everywhere is talking about on-chain capital markets going to eat everything and tokenize everything—BlackRock and every major financial institution are talking about this. But it’s still niche. It’s very niche. It’s a bunch of VCs and maybe bleeding-edge traders who are exposed to this. Why, and what does the trajectory from here look like? And maybe how does it impact us?
Yeah. I mean, it is niche, right? I think every new technology wave starts off niche, right? DeFi started off niche. Listen, back in the day, I would try to explain, “Yeah, we’re going to use smart contracts on a blockchain to build a financial marketplace,” and people looked at me like I was an insane person, right? The people who were reading white papers and commenting on Reddit threads about this stuff were really niche. It was a couple of VCs and a couple of crazy people, right?
And now everyone knows it, right? When the internet came out, I had a crazy uncle who was like, “Have you heard about this World Wide Web thing?” And I was a kid, but I was like, “What are you talking about?” It was niche until it became huge, right? Everything starts off niche. The people who are excited about this right now—because, yeah, it is a bunch of VCs and, if you’re a nerd for financial infrastructure, that’s niche—are excited because it illuminates what the world is going to be.
In the same way that the people who were using DeFi were like, “Yeah, you’re going to be able to do stuff on a blockchain whenever you feel like it,” they sort of saw this future. The future that people see with tokenization is solving a bunch of problems that people have right now.
If you’ve ever tried to transfer an asset that’s not a crypto token to somebody else, it’s like running into a brick wall. Try transferring stock to somebody that’s not a token, right? You can’t do it. You think you own these assets, and you sort of do, but you can’t do anything with them, right? Your assets don’t feel like they’re your own. You feel like you have the economic right to them, but if you want to move from one broker to another, it’s kind of shitty, right?
That’s one of the things that people see. They also see this thing where they’re like, “Crypto works 24/7. Why can’t everything work 24/7? Why don’t my stocks work?” TradFi is slowly chipping away at this and making everything work a little more 24/7—not weekends, but everything is getting toward being more always-on. It’s still a far stretch away from the way that Hyperliquid works, or anything on-chain.
People are like, “This is the future. How do we apply this to all of the assets?” Lastly, there’s this element of innovation that just does not exist in TradFi and has never really existed. To do anything, it’s negotiating with all of these different partners, signing extremely long contracts, and only being able to make these small tweaks to make something a little bit different.
Versus in crypto, it’s major tweaks. Go wild. Add whatever programmability you want. Invent something totally new. It’s incredible. People see tokenization as solving all of these things where you’re like, “Yeah, let’s just turn stocks and bonds into tokens.” Then they’re always on, you can move them to whoever you want whenever you want, they’re really yours, and if you want to build new stuff with them, the assets become building blocks that anyone can go out and build a killer app for.
You haven’t really been able to build any killer apps with stocks in 150 years, because you’re not allowed to really program them. The biggest innovation in 50 years was Robinhood. It was setting fees to zero, right? No one has ever really been able to experiment with stocks and assets as the sort of building blocks.
Tokenization is going to let anybody say, “You know what? I’m going to be an asset hacker and build a totally new way of interacting with these things.” That is refreshing.
Tell me, on the contrary, what’s the incentive? Why would Nvidia want their shares tokenized? Are these major public companies?
Yeah. At the end of the day, a company doesn’t really care about the plumbing of these markets, right? The only thing the company cares about is, “Can more people buy my stock?” That’s a good thing. Every company wants more bids for its stock. Every company wants a higher stock price, because at the end of the day, the higher the stock price, the lower its cost of capital.
That means they can raise more money, borrow more, and do all these amazing things. They can go out and buy more companies. Every publicly traded company wants its stock price higher, and the more people who can buy it, the more tailwind there is to it.
They don’t care about how it all works. Honestly, you call a CFO or a CEO, and they have no idea how the stock market works besides, “We’re publicly traded. That is good.”
So who are you PVPing here? Is it the brokerages?
Yeah, it’s interesting because all of this stuff is going to upgrade in parallel, right? Brokerages are going to upgrade, exchanges are going to upgrade, custodians are going to upgrade. Everything is going to move slowly toward full tokenization. Everyone is sort of competing to get us there.
Got it. So it isn’t even that you winning means Schwab loses. They just get better, actually.
Yeah. Theoretically, with tokenized stocks, Schwab could be like, “Withdraw stock to your wallet,” or “Withdraw stock to Coinbase,” or all these other features. Or withdraw stock to your AI agent, or deposit stock from your AI agent.
By tokenizing it, you turn on a huge aperture of creative new product ideas that just don’t exist.
So Schwab might be incredibly excited. That was a really good pitch for it, dude. Let me ask you this: outside of tokenized stocks and stablecoins, is there anything in crypto you’re excited about?
Man, I have tunnel vision. This is part of the problem with me. I latch onto something, and it’s all I think about for 5 years. Then I’ll get super excited about something else, right? But I have years left on tokenization because we’re still pretty early in the journey.
That’s fair, though. It’s how you have to be to win really hard, right? It’s full tunnel vision. Do you find yourself—I mean, you’re working on something really cool—when 10/10 happened, were you depressed about crypto and upset about the state of the industry? Do you find yourself in these doomer spirals?
You know, 10/10 was a non-event for me personally. I didn’t have any market positions. I’m not trading on a daily basis. I’m in a couple of group chats where people were 100% demoralized on 10/10, and it felt really bad because all my friends were like, “What happened? This sucks, right?”
But I personally didn’t really notice 10/10. The aftereffects of it were pretty negative. The attitude got a little bit more sour every week for 3 months.
Yeah, it got really angry.
Yeah, it got really angry. I almost didn’t even notice 10/10 happen. The thing that I did notice, honestly, was the KelpDAO one. There have been so many hacks in April. April was such a hacky month. But KelpDAO, I was like, “This is going to leave a bruise on the face of DeFi for a while.”
I was like, “Institutions are going to be scared. Regulators are going to be scared.” This was a bit demoralizing because so much of the vision that I have at Superstate is bringing stuff on-chain so that it can do DeFi. It’s not tokenize something so that I can shave 12 cents off some TradFi business, which is a benefit of tokenization, but my whole vision for this is so that you can bring it on-chain into a DeFi protocol and it can do DeFi stuff.
DeFi?
Honestly, within 12 hours, I was hearing from institutions who were like, “This DeFi thing—are you sure about this?”
Really? You’re getting phone calls? Wow.
With a lot of questions, like, “What does this mean? What does this mean for DeFi?” I was like, “Okay, this is an event that I am saddened about at a very—”
Do you tell them when they call you?
Yeah. What you can tell them is that fundamentally, this doesn’t lessen the value proposition of DeFi, right? I think the reason why everyone’s so demoralized is that this was one of these events that makes it to the front page of Bloomberg, where it’s millions of tokens created out of thin air, and the biggest DeFi protocols in existence get exploited because of it—due to a bug in one system that became a bug in another system, that became a bug in a different system.
It didn’t look like a single weakness. It looked like 15 weaknesses all at once. You had all these vaults blowing up. It was insane.
The reason it was so painful is that it didn’t feel like a single failure. It felt like 15 failures, and 15 failures all at the same time feels like an indictment of the whole approach and interconnectedness. The interconnectedness is the value proposition. It’s also the news in some ways, but it’s the biggest advantage to DeFi.
What you’re saying.
Yeah. The attitude from external observers, when I was talking to public companies and investment bankers, was, “This interconnectedness doesn’t work. It’s bad. There’s interconnectedness in TradFi, but everything is siloed in its own little way, right?”
The interconnectedness in TradFi is that all the stocks drop at the same time, not that a failure in one silo destroys every other silo. There’s collateral damage when the Great Financial Crisis happens and it dominoes a bit.
But it just blew a lot of credibility. In a way that it shouldn’t for anyone in the know, but for anyone looking at this from the TradFi side, they were like, “Ugh, DeFi. I’ll take a look at it in another couple of years.”
Yeah, we’ll come back to this.
It reset the clock on the serious institutional credibility that I think we were building toward. That credibility will come back. Trust me, I promise you. In 18 months, everyone is going to forget this, and everyone is going to be like, “DeFi is rock solid. How do we build on top of this?”
Were you in the war room when this Aave deal happened?
No, I haven’t been in a war room in a while. I was probably in 40 war rooms between 2018 and 2021 or 2022.
I was in a lot of war rooms back then. Wait, what was the craziest one before I come back to Aave?
There were a few crazy ones.
Like one crazy one.
YAM. Have you heard about YAM?
No, I don’t even know what that is.
YAM was back in DeFi summer. We called them food farms—tokens associated with foods. Sushi kind of kicked it off.
You’ve heard of Sushi?
Yeah. YAM was an algorithmic stablecoin, kind of like Terra Luna and UST.
Okay.
It was an algorithmic stablecoin, and they accidentally bricked their governance contract, so governance proposals couldn’t take effect. This was a new protocol that everyone in DeFi was farming. Everyone was farming this token.
What do you think it was worth?
At the peak? Probably $400 million or $500 million.
Okay.
Everybody was farming this token, and they bricked the governance contract. It went to zero. It was a really sad war room.
How many people were in there? Were you on the phone, or was it just messages?
That one was, I believe, a Discord call with around 20 people. Everyone was trying to figure it out.
It was a bad one because most things don’t truly go to zero when there’s a bug, right?
Yeah. They’re like, “Oops, we broke something. It’s horrible.”
You take it down and bring it back in a couple of weeks. With an algorithmic stablecoin, it literally goes from confidence to zero. That one sucked.
Were you in a Terra Luna war room?
There were a lot of different little ones on the side of it. I was not in the Do Kwon war rooms at all.
I was in ones that were like, “How is this going to affect DeFi?” I was in, “What’s the collateral damage of this going to be?” kind of war rooms.
Did you know it was going to blow up?
I didn’t know it was going to blow up. I thought it was a bubble. I literally knew unintelligent people on Wall Street who were quitting their jobs to launch funds that specifically bought UST. They were like, “I found a foolproof way to make 19%.”
You had investment bankers quitting their jobs and starting Terra funds. That’s how I knew. I was like, “This is literally not sustainable.” They were pulling the yield out of thin air. This cannot last forever.
That’s insane. What an era. I was so young in that era that I wasn’t fully aware of what was going on.
There were signs. Things cannot go up forever. Every bubble pops. Some people are good at spotting bubbles. Certain bubbles are obvious when you’re like, “This is too crazy. How can this last? How can you make a living packaging UST and selling it as a hedge fund?”
When it gets that big, you’re like, “Okay, this has to break at some point.” I didn’t know when it was going to break. I wasn’t like, “If you look at the flows and the things, it’s going to break next Tuesday.” It was just, “This is getting too crazy.”
Okay, before I get back to Aave, what do you think of Strategy?
It is a distant cousin of Luna and UST. I think it’s a lot safer for a lot of reasons—a lot, a lot, a lot safer. But it rhymes. The actual model of it rhymes with Luna and UST.
I think it has to get literally 8 times bigger before it becomes a problem.
See, this is the scariest part about it. Everyone’s like, “It’ll be a problem, but 18 months from now we’ll deal with it.”
Yeah. I also think Saylor and the team there are smart enough to prevent it from becoming a problem.
This is the thing: if we draw this line and it goes up forever, and Bitcoin doesn’t go up in the same way, it can become a problem. But I think they can self-regulate because they’re intelligent people. At least they’ve shown enough ingenuity to get to this point. Everyone has counted them out and said they would have blown up so many times. I think they’re smart enough not to let it get out of control.
If it were to become a parabola and they issued a $200 preferred, it would become an out-of-control problem.
Damn.
I think they’re smart enough to know exactly how far to push it. I hope.
That’s a smart team. It has to be, right, to have gotten this far?
Correct. That’s a smart team. It’s easy as an outsider to be like, “They’re going to blow up,” and so many people have said that.
Yeah, it’s fair. Okay, bringing it back to the present day, what happened with the Aave–LayerZero situation? Everyone’s calling you, and their timeline has been pushed back 18 months. Are you doomer about what actually happened?
It’s funny, because every hack, problem, or exploit is a good thing over a long enough time frame. The reason I say it’s a good thing is that everybody learns from it, and people don’t repeat that specific problem.
Do you know how many people are ever going to tolerate 1-of-1 bridge-signing processes again?
Yeah, yeah, yeah.
Everyone is going to know to design around that, not tolerate it, and not allow it. I’m sure some new shitty tiny bridge provider will get started and begin with this 1-of-1 stuff, but as a society, we’ve learned that lesson. It’s ingrained in everybody.
Have you seen an algorithmic stablecoin since Terra?
No, you haven’t. Everyone learned that lesson. We’re smart enough now not to do it again.
Every flaw teaches people something. It’s one less thing that can go wrong. Over a long enough time frame, I think we work all of these issues out of the system.
There are new ones. People come up with new ways to be idiots, for sure. But we don’t see too much repetition of the same stupidity. This is one everyone is going to learn from.
I think it’s going to harden borrowing protocols like Aave and Compound, and any others that exist out there. Everyone is going to be like, “Whoa, it turns out that a collateral asset can go to zero in a millisecond.”
We built our models to assume that assets chop around and go down as a function of the market, not that the asset gets hacked. I think the risk parameters of DeFi will improve. Maybe the supply caps grow over time, and if something like that happens again, there’s no actual loss.
There are a lot of lessons that are going to be learned, and I think there are going to be a lot of benefits from this. Not immediately—it takes a while. But the next version of the protocols that comes out will be built with these lessons.
One more follow-up on Aave: to add to the problems of crypto, there was this Aave DAO LLC, kind of like the Foundation Labs problem, where we have what I think is a pretty significant overhang in a lot of altcoins. What exactly do you hold? Hyperliquid buys back 100% of revenue with the token, so okay, fine, we’ll take that. But Pump.fun is like, I don’t know, what do I hold?
It doesn’t apply the same way across all assets. How does that resolve, and how big of an issue do you think it is?
I think it’s a problem. One of the reasons why this is fundamentally a problem is that most of these projects were built in the Gary Gensler era, when there was a huge amount of ambiguity around how things were supposed to work, how you structure the entities so you don’t create securities, and how you do all these things.
The way almost everyone went about this was that you had a foundation, a development company or labs company, a protocol, and all these things with different expectations attached to them. Humans have had 10,000 years to figure out how to organize themselves and build enterprises, and simplicity has always been a virtue. You don’t need three competing entities for something. There should be one.
Anytime there are multiple entities, it’s a problem. It’s a natural question to ask: Why is there a labs company that’s making money? Why is there a protocol that’s making money? Why is there a token? Who gets what, and who decides? That’s a conflict of interest, and anytime something is successful, these conflicts of interest will come to the fore.
It also happens when things are smaller and less successful. But nothing big and successful can have this innate question about how it even works, who benefits, how and why, and who makes decisions, how and why.
Over time, I think we’re going to see less of this. Most things probably should start off with a company because that’s the easiest way to raise money. ICOs have always been a tough way to raise money. It’s very hard to crowdfund and basically be public before you’ve built something. That sucks.
I think the way everything should get built is that you raise money from private markets, where everyone is really buttoned up and expects losses and things not to work out. You raise money from a small number of extremely sophisticated investors, and then eventually you’ve built the thing and it’s time to go crypto-public or have a traded asset.
That’s a great time to transition away from having a company that might make money at the expense of a protocol, or vice versa. There’s a conflict of interest if we’re building it and also going to ask for tokens, or if we’re going to be involved in something. That’s when it’s time to transition.
In my mind, it totally makes sense for things to start off with private companies. It’s the best way to raise money, and it’s the cleanest way to raise money. I don’t think that’s how things should end up. Bitcoin doesn’t have a private company.
Yeah.
Bitcoin technically had a foundation, but it doesn’t do anything. The starting point is companies; the ending point, if there’s a token, should just be a token. There should be nobody competing with that token, especially nobody who’s super privileged and built the thing in the first place.
I think that’s a sick take. You have a lot of sick takes, man. I appreciate you coming on. You also haven’t been on the pod in a couple of weeks, have you?
No.
What happened?
You know what? This is actually not public knowledge, but I’ll leak a little bit of alpha right here. Superstate has been recording a podcast. We haven’t dropped any of the episodes yet, so for the last couple of weeks on The Chopping Block, I’ve been taking a sabbatical because I don’t have the brain space to be recording two podcasts at once. Too much. I’m taking a sabbatical while we record all the episodes of the Superstate podcast.
Nice, dude. You’re sick. Listen, I appreciate you coming on. I’m excited to listen to that. Give us an optimistic wrap for where crypto is headed over the next 6 months, year-plus, while a lot of this stuff is in transition. What can we look forward to?
Here are the things I look forward to because they’re going to happen, and when they happen, I think it’s going to be exciting.
One: we’re going to have an improved regulatory position in the US. I think it’s medium-likely that we pass the CLARITY Act. There are always a lot of risks to it; it’s not a done deal. I would put it at 50/50, even though Polymarket probably has it a little bit higher.
But CLARITY passing is a big deal for the space. It’s a big deal for everyone to get involved with it. Literally every TradFi institution was waiting for the GENIUS Act before they got excited about stablecoins, even though they could have been excited about stablecoins before GENIUS. GENIUS came out and everybody was like, “We’re in stables now.” They need that external validation that it’s okay because there are some very conservative people.
If CLARITY passes, technically there’s nothing stopping any organization from getting involved in crypto. But once CLARITY passes, no one is going to hesitate to touch tokens or tokenized anything: ICOs, wallets, whatever you name it. It’s going to be socially acceptable. You’re going to see more competition from existing industry, but you’re also going to have this huge groundswell of activity, and that’s a good thing. CLARITY is going to be awesome if it passes.
Second, the SEC is constantly working toward more guidance in parallel to CLARITY to unlock things like tokenized securities trading and how tokenized assets are supposed to work. These are topics not covered in CLARITY. As a country, we’re still waiting for additional guidance, but it’s very clear to me that they’re working on additional guidance to create a pathway for builders. I think we’re going to see additional progress out of the SEC, which is something to be excited about.
At any given moment, I think the narrative behind Bitcoin is going to flip from a little bit of apathy to mania again. There are always so many irons in the fire, and it takes one day for this to switch on again. At any point, you could see something that switches on the narrative of Bitcoin as a neutral store of value.
It could come from the US and a strategic reserve. It could come from a foreign country. There are a lot of irons in the fire, but I’m always prepared for a left-field moment where, on a single day, it just switches on the Bitcoin “we’re back” thing.
Yeah, we’re so back.
Bitcoin has survived the worst levels of apathy possible, and we’re grinding back. It could be a “so back” moment at any time, and then it’s risk-on. That will track everything with it.
Lastly, people are still building sick products. Over the last year, I’ve seen a lot of really cool things launch. We’re seeing a lot of innovation, and the narrative of crypto itself changes pretty frequently.
Out of nowhere, we went through the NFT era. We’ve gone through the perps era. We’ve gone through the altcoin era. What people are spending their time on is always evolving, and it always surprises people. No one ever anticipates, “This is what everyone’s going to be talking about.”
There are enough experiments going on that, before you know it, mainstream audiences are going to be talking about this new thing that’s happening.
That was fucking beautiful. Robert Leshner, you’re a movie, dude. I’m happy you came on. It’s funny, you sent me a DM from about 8 months ago.
You know what? I only check my DMs every 8 months.
Yeah, there you go. I look forward to our next one in 2027. But dude, you’re awesome.
2027, yeah.
Thanks for coming on, man. I really appreciate the time. I’m rooting for you, man.
Yeah, appreciate it. Peace.