CLARITY受挫、稳定币“多币种”之争、Circle推出Arc与Meta的AI优势｜每周综述

Welcome to Token 2049. Token 2049 is back October 7th and 8th, bringing together 25,000 attendees, 300 speakers, and 500 exhibitors for the world's largest crypto event. Token 2049 is happening alongside and in partnership with our own Digital Asset Summit Asia. So you can experience both conferences in Singapore during the same week across Token 2049 week. There'll be more than 1,000 side events culminating with After 2049 and Formula 1 weekend, and the speaker lineup is stacked: Shane Copan of Polymarket, Jeff Yan of Hyperliquid, Arthur Hayes, NASDAQ CEO Adena Friedman, and many more. Join us in Singapore October 7th and 8th for Token 2049 and Digital Asset Summit Asia. Nothing said on Empire is a recommendation to buy or sell any investments or products. And we're live. What's up, folks? Welcome back to the Roundup. No, Santi. We have Rob here. Rob heard me talking about him the other week, so he not only joined this week, but he booted Santi.

Well, I should have booted you. I mean, you're the one talking, not him.

True. True. I just—

You thought I wasn't going to listen, and then you realized I was listening. I'm impressed. Do you listen? Were you an Empire listener before joining?

Occasionally. I'm not an every-week listener of any podcast. There's no podcast I'm an every-week listener of.

But you occasionally listen. The Roundup, I would love to hear Santi and you mostly talk every week about how to buy more HOOD. You've been right about that for many, many years.

Right. So, we're right. Yeah. What's been going on, man? I feel like you've been at 400 conferences. You're in New York right now.

Yeah, I am in New York at the moment.

Yeah. We have CircleV at a conference, which is—

D.C. Yeah. So, when are you getting work done these days?

I don't do work. I just do podcasts and meetings.

Nice, nice. Someone asked me the other day, “Who runs the company if you're just podcasting all day?” I was like, “It's really unfortunate you think of me like that.”

No, it's a sign of good leadership, right? The place runs itself without you.

Yeah.

We have an incredibly talented set of investors who do most of the work, and I get to come and hang out with you.

There you go. It's a good life to live, Rob.

All right, man. We have a long list this week. We've got regulatory stuff, which usually I wouldn't dive too deeply into, but there was interesting stuff from the SEC and actually the CFTC. That CFTC thing got passed over a little bit, but the SEC did something today, and the CLARITY Act got rejected this week, so we should probably start there.

There's some other stuff around Polymarket, which had some big hires, and I'm sure you'll want to talk about that. S&P made two big deals this week: a big investment into Kaiko, and then Stripe also acquired a crypto company called OpenZeppelin. Circle launched Arc and announced its token. There are a lot of ups and downs on the feed.

Anyway, we've got a lot of buzz, so we should talk about that. I was at the Circle Arc launch event yesterday, and then some smaller news: Camino got a new CEO, and Column, which is a very interesting kind of Airwallex competitor, launched stablecoins.

Actually, I wouldn't call it an Airwallex competitor, to be honest. They're a little bit different businesses. You're right. That was an oversimplification, I would call it.

Rob knows a thing or two about fintech. And then Instinct—Instinct, my favorite company in the world, other than Blockworks. I said, “Go long Instinct, raising $10 billion.” Rob, as usual, wrong. Me, right.

1. Corporate Stablecoin Debate

By the way, when I was listening to the podcast last week, you had this segment that you guys tweeted out, which was like, “The multistablecoin thesis is dead. It is a duopoly, and everything else has been proven wrong.” You could not have been more wrong in that segment. I wasn't there, so I felt like you had this topic when I was there.

That's why we bring up these topics when you're not there, Rob, so you can't tell us why we're wrong. There's clearly a strategy.

Wait, so tell me. If people didn't listen, I said the hundreds-of-stablecoins thesis is dead. There won't be hundreds of stablecoins. I gave the example of Open Issuance, which Stripe launched after acquiring Bridge, and I said the fact that they're now launching a single stablecoin instead of trying to power thousands of stablecoins is one example of why this thesis is dead. You're taking the other side.

You think the multistablecoin thesis is well and truly alive?

I mean, you have SoFi, Klarna, and Visa. You have two bank consortiums trying to do it. You have a Stripe consortium trying to do it. You've got USDC and USDT. You've got—I can tell you there are multinational companies that I know for certain are launching their own stablecoins. You have MoneyGram and Western Union. There are other fintechs and banks that are doing it right now.

You've got the startups. A lot of these startups, like Bridge, already have an internal stablecoin for treasury management. I think there are a number of other exchanges looking at doing something internally. Polymarket has its own sort of USDC thing right now. There are a number of other exchanges I know are looking at doing something internally.

I think the reality is that, if you take into account the fact that a lot of people are going to use a white-labeled stablecoin as something separate—even if it's powered by Agora, M^0, Bridge, or whatever—a lot of people are saying, “I have a bunch of float, and I want to have my own stablecoin because it's easier for me to get the yield.” Those people aren't trying to make it a payment stablecoin. They're not trying to compete with USDC at the PSPs, but they are issuing those stablecoins.

Over time, I think you'll need to be able to support or clear those relative to USDC, USDT, Paxos, the bank stablecoins, tokenized deposits, tokenized treasuries, and all the cash equivalents. There are probably several dozen sizable cash equivalents today. There will be many more.

So, by that thesis, if it's a better product for someone sitting in cash because they can get better yield, anyone with a large balance sheet should have their own stablecoin.

A lot of people with large balance sheets will. I think the biggest companies have really good treasury-management solutions with correspondent banks like JPMorgan. But for everybody who isn't one of those companies, and who has complex global treasury operations and wants to be able to get yield by moving among different types of cash equivalents or non-cash equivalents over time, a lot of them are launching their own stablecoin.

We're talking about the biggest commodities companies in the world. We're hearing a lot of this when we look through—

But don't all the companies you mentioned have access to JPMorgan and Morgan Stanley? They have the FX desks, they can get the best yield, and they can hedge out all the risk. They have all that stuff, right? For people who don't, stablecoins make sense, but don't these big companies all have access to that?

It depends on the size of the company and whether they get the service they want. It also depends on how complex their global operations and global treasury-management situation are.

Why did Western Union do what it did? I don't even know the number of countries they're in, but they're in over 100 countries. JPMorgan does not have good correspondent-bank coverage in Africa. Africa is a much harder banking setup across many of those locations, where Western Union has large corridors. The same thing applies in Latin America and across many of these other remittance corridors.

The same thing applies to anything involving commodities and a lot of the tech companies. All of these companies have complex supply chains, and they're looking at potentially doing their own stablecoin or using a white-labeled stablecoin.

Listen, when you're Tether or Circle, you're not going to share a bunch of yield with people. If you see real value in having and using some sort of tokenized asset, you'll probably end up using another form of stablecoin. Many of these people, instead of doing a revenue-share agreement, would rather just have a white-labeled stablecoin or one of their own.

Do you count tokenized money-market funds, like Franklin Templeton's BENJI? We at Blockworks looked at whether we should have some of our treasuries in something like this, because that could make a lot of sense.

It's like the Franklin OnChain U.S. Government Money Fund (FOBXX), which is represented by the BENJI token. And there are actually a lot of reasons why we should just move our treasuries into that. Is that a stablecoin in your mind?

It is. I would sort of say there are payment stablecoins, and the GENIUS Act talks a lot about payment stablecoins specifically, right?

And then there's a bunch of cash equivalents. I do expect that what we're already seeing is that a lot of the people who have a lot of USDC or USDT to hold are thinking about swapping into something else that pays real yield. Before, they might put it into some sort of money market fund, but if I can hold a tokenized version of that, and I'm doing a lot of work in stablecoins already, I'm going to do that.

So I think in terms of what people talk about a lot with stablecoins, they talk a lot about TVL or issuance amount, right? Because people are going to stop holding the stablecoins that don't provide yield. They're a competitor from that perspective.

Okay, that makes sense. Let's get into CLARITY. We'll come back to that debate. I have to think about that.

We'll come back to that.

So, okay. Wait. A big Fortune 500 company that has nothing to do with payments and nothing to do with crypto—you think will launch their own stablecoin just to sit in that stablecoin?

They don't want any adoption.

I know for a fact some of them are doing it right now. Yes.

Interesting. Very cool. That's good info.

Before getting into CLARITY, Blockworks had a cool product launch today called Agentic Detection. This is the first product launch from our Messari acquisition. Messari had a great product called Monitoring, which is used by a majority of exchanges, custodians, brokerages, and really anyone who lists crypto assets and needs to monitor those assets. Monitoring alerts you when things happen—for example, when Zcash has a change to the network, a custodian needs to know so it can update the smart contracts for its custody solution, or when North Korea buys 10% of a token and an exchange needs to delist it. The alerts used to take 5 to 10 minutes to get out because analysts at Blockworks manually verified them. Exchanges, custodians, brokerages, and fintechs told us they needed these alerts in seconds, not minutes. We trained a model on all of our analysts' manual monitoring decisions over the last couple of years, and now we can send customers updates in seconds instead of minutes. People can go to our website or see the tweet from Blockworks. Unchained and The Defiant had great coverage of it. Rob, should we get a part of the podcast every week that is a Blockworks Update? Now that we're shipping on a weekly basis, we could. I mean, you guys have some real philosophy. I mean, you already use the podcast for that. Well, we both do it. It's good. It's great.

2. Why The CLARITY Act Failed

All right. Let's talk CLARITY. Unfortunately, CLARITY didn't pass. I mean, some are saying fortunately. I think it's unfortunate, is what I'd say.

We definitely would prefer it passed.

That's my take. I think there's some revisionist history of people saying, "I never even wanted it to pass in the first place."

Let's be honest here on this podcast. I think we all want it to pass, or at least I did. I think you did, too.

On Tuesday, the Senate failed to advance the CLARITY Act. I think it failed 49 to 50. It needed 60 votes. All of the Democrats that we needed—there were these Republicans, Susan Collins, Josh Hawley, and Jerry Moran, who voted no, and I think we knew those votes would be no.

So we needed some Democrats to vote yes. There were several Democrats who we thought we could get over the finish line here. Every single one of them voted no. I think Thom Tillis ended up switching.

I wouldn't read too much into that, though. Kirsten Gillibrand came out today and said, "Hey, she's still really focused on trying to get something passed." The way, of course, these things work is that people like Kirsten Gillibrand and others have been very good partners to the industry.

But being outside the core of the way the party is voting, once you realize it's not going to pass, it's not necessarily worth taking the political risk internally to not vote for it at that point. I think some of that commentary has been pretty bad. These people are still—many of them, her being one of them—still big supporters of the industry and will continue to fight for us.

Yeah, 100%. And look, there are many people who say this bill is not dead yet, right? JPMorgan just came out and said, "Look, it's not fully dead." We've got Polymarket up on the screen. Polymarket is pricing it at—it actually fell to, I think, around 6%. No, it fell to 4% on Polymarket. It's back up to 8%.

So look, it's not dead. There's a 1-in-11 chance here, a 1-in-12 chance here, that this happens. The market sold off. Coinbase fell 10% on the news; Circle fell 12%.

That's the bad news. I'd say the good news is that we have an amazing SEC and an amazing CFTC right now that are very pro making sure these markets are safe and fair and making sure that these markets develop in the U.S. You've quickly seen the SEC and CFTC come out with stuff this week, which we can get into. But Rob, I don't know if there's anything else on Clarity that's worth digging into.

No, I mean, I think everyone knows where we're at, and we've kind of had the discussion. I'm bummed that it didn't pass.

I think it's worth noting that there are dozens and dozens of people who worked tirelessly on this for essentially the last year. We talk a lot about the senators and the House reps, but they all have staffs. The Banking Committee has staffs; the Ag Committee has staff. The regulators and the experts who have weighed in have worked tirelessly on this.

I think it's just worth noting that this was something that a lot of people were trying to get done, and it's a bummer that it didn't. But this is not the end of our support from D.C., or of the support that we as an industry should continue to try to give to pro-crypto regulators.

Yeah, 100% agree. Well said. On a more positive note, the SEC and CFTC came out this week. I will share my screen and walk through what the SEC just released.

3. The SEC Opens Tokenized Markets

The tweet that they sent is—this is actually from this morning. We're recording this on Thursday. It's 2 p.m. Eastern on Thursday. They released this at 9 a.m. The SEC issued an order granting temporary conditional exemptive relief to tokenized securities venues from the definition of “exchange” in the Exchange Act to trade tokenized NMS stock using innovative, permissioned automated market makers and liquidity pools.

What does this mean? What they're proposing here—or what they're issuing—is a 5-year temporary conditional exemption to these tokenized securities venues, or TSVs, which they're saying should be allowed to trade tokenized stocks through permissioned AMMs and liquidity pools without needing to be regulated as exchanges. The liquidity providers also get a limited dealer exemption.

There are a couple of key conditions that people who are working in the tokenized equity space should look at. One, token holders must get the same rights as the underlying stock, like dividends and voting. Two, third-party tokenizations require written notice and a chance for the issuer to object.

This was an interesting one, right? The way I read this, Rob—I don't know if you've dug into this yet—but the way I read this was that the written notice and a chance for the issuer to object breaks down a lot of what tokenized equities look like on-chain today, which is like, you'll just throw up AMC on Hyperliquid.

If you have to give the issuer a chance to object, I think this means that AMC can say, "Whoa, whoa, whoa. We don't actually want our stock to be tokenized." I'm not a lawyer. I'm not entirely sure if I'm right there.

Yeah, I haven't dug deep into it yet, because this just came out a few hours ago. I think a couple of things are true. One, I think it's true that we're almost certainly likely to get rules that don't allow the current state of tokenization to continue to exist the way it has, because these are creating sort of weird dislocations during the off-hours and then during the on-hours, especially with Robinhood putting a memecoin and pairing it with a tokenized equity.

We talked about this a couple of times over the last couple of weeks. It's very clear that this is ripe for people not to be happy with the way these things are evolving on-chain. But what is also true is that when you look at this exemption and what the SEC started talking about a few weeks ago as they launched Project Crypto, there is a lot more coming that is meant to bring on-chain markets into the US regulatory structure.

I believe strongly that Chair Atkins and Chair Quintenz have been working on this hand in hand while we've had the Clarity Act working its way through Congress over the last 6–9 months. What we get from the 2 agencies over the next few months is likely to be more pro-innovation than even Clarity was going to be. To the point that we talked about at the beginning of the podcast—whether this is better than Clarity—it is probably going to be more pro-innovation than Clarity would have been for now, right?

The concern, of course, is what happens under a new administration if there are new directors, or if different types of legislation get passed if there's a party switch in both the House and the Senate. But this is going to be, I think, the best time there's probably ever been for trying to innovate on-chain for regulated, real businesses across all of capital markets.

People are going to take advantage of that. If they do, we will probably have an industry and a market that is big enough that, no matter what happens over the next few years, it will be unkillable. I mean, it already is, but I'm actually very excited about a lot of the innovation that we will see.

I was at the Avalanche Summit today, and I ran into somebody from a big exchange who I know pretty well, who's part of the leadership there focused on this stuff. They're full steam ahead. It doesn't matter at all that Clarity didn't pass; they see this as part of the future of their business. This is a big traditional exchange, right?

A bunch of the banks are like this, and a bunch of the asset managers are like this. I'm pretty excited about what's going to happen. Chair Atkins and Chair Quintenz have been incredible leaders in really bringing this industry back onshore.

Yeah, agreed. I would also—there was a post I was reading from the SEC. There was also a fantastic piece from Hester Peirce. Let me see if I can pull up some of my favorite lines.

It says, “This order is not about decentralized finance. Decentralized systems that are driven by automated software do not give rise to the foundational concerns underlying securities regulation, namely that an intermediary you trust to act on your behalf will act foolishly, carelessly, or be compromised.”

4. Who Wins Tokenized Markets?

I would really recommend reading Hester Peirce's entire piece. Maybe we can put it in the show notes. I know I say that always and we never actually do, but Austin, let's actually include it in the show notes. This piece is called Slumber Number. That would be great. Rob, who do you think benefits the most? When you see something like this—you see Clarity not passing, you see the SEC coming out with this—putting on the investor hat for a second, who do you think benefits the most from something like this?

The one thing that we've been trying to figure out is where startups fit into the space. I think it's quite clear that this is good for issuers. We're talking about people who are issuing their own equity or issuing commodities, assuming—depending on what we see from the CFTC—that it's also good for the exchanges and for the clearinghouses that already exist.

It's good for the net-new exchanges, or the crypto exchanges that are wanting to enter this space and enter the US. That includes a Cboe and a Poly, and also probably Lighter, Hyperliquid, Backpack, and others.

It's good for a lot of the global neobanks and the people trying to provide access to these types of markets to customers who maybe didn't have access to them already. Maybe it's good for the net-new transfer agents and some of the core infrastructure providers. Alpaca has grown tremendously because it's the custodian of a lot of these equities for all the big exchanges.

Those types of companies benefit, and it's good for everybody. It's probably good for the ecosystem and for the stablecoin issuers, because as all of these other use cases for stablecoins grow, the amount of stablecoins and the number of people using stablecoins will grow.

I think it's an ecosystem rising—a rising tide for everybody—versus all the value accruing here or all the value accruing there, with one specific set of companies really accelerating because of this.

Yeah. The immediate thought in my head is that I'm looking at companies like Superstate and Securitize.

Yeah, that's a transfer agent, so I mentioned it, right?

5. Polymarket’s War For Talent

Yeah. Let's look at Securitize's stock. We can see what the market thinks of it. There you go. Securitize is up 16% on the day.

Yeah.

The market definitely likes that. I think the venues where these trade—I think you're right on a lot of this. There's Backpack, which I think will do quite well. Robinhood and Ondo—we've had a couple of calls with the Ondo folks recently. They seem to be doing cool things in this area.

I think this is one of those things where the thesis has always been, in my mind, that more and more assets are going to come on-chain, right? So that's good for the issuers.

But as more assets come on-chain, everything on-chain gets bigger, right? There's more liquidity, more people using it, better infrastructure, more stablecoin issuance, and so on. I think it's really hard to pinpoint any single person.

What will also be true for a company like Securitize is that there will be more competition. Anytime somebody makes money on something, more people want to do it. But that is also good for the rest of the ecosystem, because when Computershare comes on-chain, they are the transfer agent for the vast majority of things listed on Nasdaq.

As those things get bigger and bigger, everything gets bigger and bigger. I don't think it's one person or the other. I think the whole ecosystem will get bigger. This is what we've been saying for a long period of time. We've had multiple podcasts at this point titled “It's a Bull Market, Just Not the One You Wanted,” and I continue to think we keep moving in that direction.

Yeah. I tend to—okay, wait. So then take that a step further. When you're looking at the startups trying to raise a pre-seed, seed, or Series A, how do you think about this?

We think about people who are building big businesses or building to solve big problems. We get pitched all the time on individual asset issuers: “I'm tokenizing this product.” That's sort of a small problem, and it's a problem where you don't necessarily want to compete with the actual asset issuer, who might just decide to do it themselves over time.

We think about whether venues can be big businesses and solve big problems that do exist. There's a lot of on-chain equity and RWA derivatives trading right now. That's been really good for Hyperliquid, Lighter, and Variational. On the spot side, it's been good for Backpack and Robinhood.

It's very clear to me that there are better ways to build certain venues for certain types of products. Maybe we'll see a different venue for commodities. Commodities, specifically, are something the CFTC has been focused on on the perps side, because they've been worried about how perps might mess up the spot market for physically delivered products.

These things are going to evolve, and I think there are going to be a number of different companies that come out of this and serve really big problems, but aren't everything for everyone in the way we like to think about it.

You know, we're hearing the same thing on the compute market side right now. There are a bunch of people trying to solve compute market problems, and I think we'll have to see how clearing evolves over time.

Right now, if you look at all of the tokenized—whatever you call them—tokenized Tesla stocks, almost none of them are the same in terms of counterparty risk, liquidity profile, or potentially when and how they can be converted back to the non-tokenized version. That means they're not actually one-to-one, but a regular consumer thinks they might be. So how do you solve those price problems?

These are big problems that people are trying to solve, and it tends to be where we try to get focused.

6. S&P Moves Deeper Into Crypto

What do you make of S&P's recent push into digital assets right now? So there were 2 rounds—okay, zooming out. I don't know if people know S&P. Everyone knows the S&P 500, but S&P is a $120 billion business. Bloomberg doesn't have a valuation on it, but it's on par with a Bloomberg-type business in terms of its impact on capital markets.

It's definitely smaller than Bloomberg, but it's a very big company.

But it's a $100 billion-plus business. I think the valuation is roughly $120 billion. There are 2 huge ratings agencies—I guess you could say 3 big ratings agencies. There's Fitch, which is smaller, but then S&P and Moody's are the 2 big players.

S&P is a $120 billion business. They do something like $14 billion in revenue. Moody's is a bit smaller. Moody's is like an $80 billion business and does roughly—these are probably very old numbers, but these are things floating in my head—let's call it $7 billion in revenue. I could be off by $1 billion or $2 billion there. But these are big, big, big businesses.

S&P started the week by announcing that they had led a Series B extension in Kaiko. Kaiko raised their Series B many years ago. I want to say in 2022, they just announced that they had extended that fundraise from 4 years ago. I think they raised probably another—I mean, it was a little unclear in the announcement, but I think maybe another $50 million here. The total Series B was about $110 million.

There are some big brands in there: RBC, DRW, Broadridge, BNP Paribas, Nasdaq, and then S&P led the round. Then yesterday, S&P announced that they had acquired a crypto firm called OpenZeppelin.

I don't know how familiar folks are with OpenZeppelin, but it's one of the great smart contract security firms. They've now started doing things around building frameworks, and they have a security stack. I don't know fully exactly what the business is today, but S&P is clearly starting to position itself to buy the data and security stack for what looks like this massive explosion of tokenized markets.

Yeah, I mean, they've been very thoughtful. They also did a couple of indices that they've been working hand in hand with people to try to put on-chain. They did one with Hyperliquid or TradeXYZ—I believe that was on Hyperliquid. Then they also did one with, I think, Pyth and Artemis—

And as well. Yep.

Yeah. They've been thinking about the space for a while. I actually did an announcement at RWA Summit a year ago in July, so 14 months ago or so, with the woman who runs their innovation team over there. It's been really cool to see them get heavily involved.

I was surprised by the OpenZeppelin deal. I guess the idea here is that because they give ratings, they can use OpenZeppelin to have real-time risk benchmarks and data, along with the ability to assess what's happening in the protocols, and then provide that to their clients. Clearly, that tells us a lot about the thing we were talking about before: there is real demand for doing things and innovating on-chain.

That's very, very bullish. It surprised me, though. That wouldn't have seemed like a natural buyer to me before.

Yeah. Same. So what is that? What's the—

If we go a little deeper, what do you think about why—how does a deal like this come to be? What do you think about this?

I'd be interested in how it came to be. I hadn't heard of OpenZeppelin running a process, so I don't think that they were trying to sell to whoever—

Which is interesting, because it feels like everyone's running a process right now. On the data side, that's happening a lot, obviously. To your point, on Kaiko, Kaiko is kind of the last man standing on the product that they have, which is the core infrastructure blockchain data, right? I assume you guys are probably customers of them, and—

We were customers of Amberdata.

Who they acquired, yeah.

Which Kaiko acquired, yeah, exactly. So they basically sit less on the on-chain data side and more on the exchange data side. They have really good tick data and pricing—tick pricing data.

Yeah. But Amberdata was more on-chain. Correct.

Amberdata was also more like exchange data, derivatives data, exchange data, stuff like that.

Yeah. So they bought Amberdata, and now that the 2 are together, they're really the only one that has this kind of real-time data that's institutional-grade in terms of level and speed.

It makes sense that S&P would come in, because what is S&P at the end of the day? They're a data provider and a ratings provider, which depends on a lot of data. That made sense to me for OpenZeppelin.

I wonder if their corporate development team reached out and started talking to all the auditors. They determined internally that this was something they wanted to put as part of their ratings criteria, and they went and talked to a few of them. They decided OpenZeppelin was the best company—either the best product, or some variation of the best price and the best product together.

It's super interesting. Congrats to the OpenZeppelin guys, but that one did surprise me.

I have heard in the rumor mill that this is the first of many. If you look at the big data and analytics traditional capital markets players, whether it's LSEG or Bloomberg—actually, Bloomberg is not very acquisitive in the crypto space—but if you look at Moody's, I think there will be many more deals like this.

I'm sure.

Yeah. Well, there are a lot of companies out there that have raised a lot of venture capital money and have very good products, but they're probably not very good standalone businesses by themselves.

If you look at the history of S&P, FactSet, Bloomberg, and all of these companies, what they've done a really good job of is growing into these conglomerates by continuing to buy really good niche products over time. They build into these really big conglomerates, and they sell you this whole thing through the terminal.

It makes complete sense that this is what is likely to happen here. For many years, a lot of companies have raised a bunch of money saying, “Hey, we're going to be the Bloomberg of crypto.” But that's, again, usually a smaller product relative to a bigger product, and it's often included as part of a bigger team and a bigger product like S&P can offer.

Yeah. Yeah. Speaking of our agentic alerts, I've just been alerted that the Ethena DAT is absolutely ripping.

Why is it absolutely ripping today?

Why is this up 50% today? Now it's up like 35%, it seems to be.

Yeah, 34% it looks like on Bloomberg. I mean, listen, I think everything's up today from a token perspective.

Yeah. Not 35%, though.

No, I mean, ENA is up about 7% today. That said, all of these DATs have traded at a big discount to NAV, right? I haven't looked at it, but my guess is that USDe is still probably 40% or 50% of NAV right now.

There's a lot more reflexivity in these DATs. I think as the market gets better, that gap to NAV should close. I also think Ethena continues to be a project that people are very bullish on.

The initial readout on the neobank has been quite good. They've done—

I think over—

A little over $2 million to $3 million worth of—

Transaction volume in the first 2 weeks that they've been live, with only 400 customers. They've got over 10,000 people on the waitlist.

Yeah, I think we got some invite codes, and some people on our team demoed and trialed it and said it was a great product.

Yeah, it's a great product. They've been working on it for a long time, so I think there's a lot of cool stuff that they're doing. I expect that some of these DATs will continue to trade really reflexively as the markets continue to come back.

7. Can Circle Make Arc Work?

Yeah, let’s talk Circle. Circle launched Arc. What say you, my friend?

I mean, they’ve been working on it a long time, so congratulations to them on getting it out. They had a bunch of good partners that came on day one. I think it was over 190, if I read that right.

They had a bunch of predetermined or pre-negotiated TVL into their Morpho vaults. I think they were over 220 on day one. Clearly, from a Circle perspective, I understand why they built this. It makes a lot of sense.

They’ve got a lot of interesting things that they’re talking about in terms of trying to be quite quick from a finality perspective. They’re also trying to do a lot on the privacy side and a lot on the FX side.

Then they came out and seemed to mostly promote memes on day one, when it had previously been talked about as a payments-first chain. I don’t know why they decided to do that, frankly. Clearly, they had seen the success of what had happened with the Robinhood chain, which had grown incredibly quickly, but it was super baffling to me.

It’s not something they can’t recover from, but it’s certainly something that—

Which part was baffling?

That they came out and promoted a bunch of memes on day one.

Oh. Oh, yeah.

Yeah. It just goes kind of antithetical to the business they’ve been trying to build—the way they’ve been trying to position Arc for a long period of time, the way they positioned it during the fundraise.

It’s been a lot about, “How can we be the right chain where agentic finance happens? How can we provide integrated privacy? How can we have day-one FX that has real liquidity and is able to do FX? How can we be this sort of place where economic activity happens for real businesses?”

Then the whole team came out and just pumped a bunch of memes on day one. I truly don’t understand why they did that. I think it put a bad taste in a lot of people’s mouths, honestly—at least in the people that I’ve heard talk about it.

It’s not something they can’t recover from, but go back to the thing you were trying to do, which is the thing you’ve been talking about for many, many years: what you want Circle and USDC to be.

So, hold on. I’m pulling up my notes. I went to Circle’s launch event for about an hour yesterday. I will say, what was in the room versus what was on Twitter could not have been a bigger difference.

Incredible group of people. Yeah, I met with—

Yesterday, in a 1-hour period at this event: BlackRock, DTCC, ICE, Visa—who else did I meet with? MoneyGram.

This is all in one room. Circle has done an unbelievable job of convening some of the best people who are building in the industry. I think the chain—I actually think how they built Arc and what decisions they optimized for are really many of the right decisions.

If they had just stuck with that, it would have been a better launch. But there was so much—I think they probably saw what happened with Robinhood.

Yep.

But the difference is Robinhood is a trading platform.

Yep.

And Arc and Circle are, you know, agentic.

I mean, they’re trying to become a payments company. They bought Tazapay, which was a—

Getting out of your lane—stick in your lane would be my take.

There’s also an interesting thing. I was actually speaking with someone who’s one of the biggest YouTubers in crypto, and they said, “What insights do you have from your analytics right now?” And he said, “The airdrop farmers are back. After many years of being gone, the airdrop farmers are back.”

Which was a really interesting insight. If you look at what happened with the Arc launch, I would keep in mind that the airdrop farmers are back, and they are very, very ruthless.

If you remember from many years ago, it’s just a ruthless, zero-sum audience and group of people. I don’t know. I actually wouldn’t—I don’t own Circle stock, but I think the number of times people have bet against Jeremy—

It’s like once a year. It’s like, “Circle is cooked.”

I don’t know. I was in that room. I spoke with many people at Circle yesterday. I would be very long Circle, very long Arc. I think they’ll be very successful here.

Yeah, I agree with you. I think they’ve been able to get a lot of the best people and a lot of people who matter around the table. For a long period of time, they’ve really been focused on trying to make it a payments company.

I don’t know—maybe it’s not clear—but I don’t expect that we’ll have 4% to 4.5% rates forever. I expect that rates will come and normalize somewhere between 2% and 3% over time, which means that if this is a business that’s just interest income, their revenue will get halved on their current amount of TVL.

It is also very clear that, as we talked about earlier, there’s not a lot of need to own or hold a payment stablecoin if they can’t share yield with the end customer. They have this deal with Coinbase, which obviously prohibits them. Circle’s been cutting some specific deals with some of the big service providers to share yield with them, but because they have to give 50% to Coinbase, they’re hampered relative to, call it, net-new people who are trying to do that, or USDT, et cetera.

They see that writing on the wall. They’re very smart people, and so they’ve been trying to figure out how to become more of a payments company, get a payments multiple, and make money a bunch of different ways. Arc is obviously a part of that. CPN, the Circle Payments Network, is a part of that.

Clearly, that’s the story they’ve been telling the market, and it seems like that’s the story they’ve been building for. Then they came out and there was a lot of pushing memes. I think there was a tweet that came out that Arc did about $400 million of DEX volume on day one across 400,000 active wallets, and there were 97,000 new tokens launched on day one on the launchpad, right? And that’s like—

It’s crazy. It’s obviously the airdrop farmers you mentioned. Arc hasn’t—the token itself hasn’t gotten priced yet, and they have to be really thoughtful around that.

Even in the token economics of Arc, one of the things that I thought they did that was really smart is they’re giving rebates on CPN, on payments, and on mint and redeem if you hold the token. That was very smart, right? But this is obviously meant for real users of this thing.

Then they went out and pushed a bunch of memecoin launchpads and FOMO. I’m not down on the FOMO guys, but that wasn’t the way Arc had pitched itself before. I just didn’t think it made any sense. I think it created really mixed messaging and mixed reactions and emotions on the timeline.

Yeah. The good thing about the timeline is people will forget about this if they—

I mean, already, I’m sure. I don’t know. I think this will be very successful.

It’s all kind of tied up in the same conversation we were having earlier with stablecoins. People overestimated how important chains were, I would say. They overestimated the network effects of a chain and underestimated, I think, frequently, the network effects of money.

I wouldn’t underestimate the network effects of USDC. The obvious counter to Circle’s business is that rates come down and their business gets hurt, but I know many friends who are building in DeFi, as you do, and there’s only one thing that matters for liquidity in DeFi right now, and it’s USDC.

You can have all these other stablecoins, but if you’re a founder, you need USDC on your platform.

That’s on-chain, but obviously USDT is much bigger on the exchanges, and a lot of the—

Yeah. Yeah. Yeah. But for DeFi builders, it’s—

8. Can AI Startups Survive Meta?

Yeah, for DeFi builders. Anyways, Rob, my boy, do you want to debate Instinct, or do you want to—

You tell me. Are you bullish? Instinct at $10B.

No, I actually don’t want to talk about that. I want to talk about Polymarket.

That’s how I know you’re not bullish. You backed down that quickly.

Dude, every company goes through a reckoning, and companies are just getting built faster, scaling faster, and raising more money faster than ever. And so—

Venture capital as a market structure is broken. It’s very clear that venture capital as you thought about it before is very different in the future. This is part of that, right?

The price-ups for the hottest stuff, regardless of fundamentals, are happening quicker and quicker. There’s just so much capital at the biggest funds, and we’re having this kind of dislocation that’s just going to keep happening, right?

I mean, even in our space, the hottest companies raised three rounds last year, right? It’s happening to the biggest companies now. They were growing incredibly quickly, and they had actual revenue, like Instinct—

But, you know, this is going to—you’re going to see this more and more, where the Valley tries to crown the winners before there’s ever actual PMF or actual data that says those people are the winners.

Yeah, yeah. So, tying this into Instinct, I think companies get bigger faster than ever. They raise more than ever. Usually, the first big reckoning of a company comes in year 4. The first big reckoning for Instinct will come in month 4 here, when 2 of the biggest companies in the world roll out direct competitors: Grokbot and Facebook’s—well, Meta’s—Muse.

If there’s 1 founder in this world I wouldn’t want to compete against, it’s Mark Zuckerberg.

Have you used Muse?

I actually have not used Muse. No. Have you?

Yeah, I think Muse is something like 6 to 8 times better than Instinct right now.

Yeah, yeah. I was with a friend who runs a big book at a hedge fund, and Meta is now his largest position. I just bought a bunch of Meta this week.

This is the retail investor in me, so don’t follow this, but you’ve got all these guys tweeting out, “Slow down AI,” and Zuck is saying, “Faster, faster.” I’m like, “Okay, he’s going into Zuck mode.”

What I loved about what he said, too, was that he sort of clowned on Dario. He was like, “We could have launched Muse 3 months earlier, but we were a little bit concerned about the way it was behaving. We were concerned about security, so we delayed it for 2 to 3 months.”

“We didn’t go and tell the world that this was a huge issue. We just did it.” He was like, “I don’t understand why these guys are talking so much. We’re going to move faster. We don’t need to talk so much. The FTC and the rest of the regulators already have the ability to regulate us.”

“And then we launched it. By the way, we launched it at a time when everyone was talking about Instinct, and we completely mogged them. We created a product that was significantly, significantly better.”

Obviously, the Instinct founder, whom I’ve never met, has built a great product as well and has shipped very quickly. I saw he shipped phone calls today, too, which was one of the things I was thinking about.

I was playing with the 2 over the weekend, and clearly what’s happening is that Instinct is compute-constrained. You ask them to do the same thing, and Muse is responding sometimes 10 or 15 minutes quicker for the exact same thing.

Not only that, it’s failing less, and it’s able to reason around problems. You’re already seeing it, by the way: Resy is already putting up a bunch of roadblocks for people using these products to get reservations and stuff, and Muse is just better at solving those problems.

I think this space is going to get incredibly, incredibly crowded. I do not know how a growth investor at these types of valuations can get comfortable with what’s happening here.

These people at Index have been incredibly successful in the past. The only thing that would make you wrong is if they’re sprinting to build their own model instead of relying on just ChatGPT, Anthropic, Kimi, and stuff like that.

I can’t imagine they would do that. You can’t train your own model. Maybe you can train on top of those models and have your own small model, right?

We’ve seen—obviously, it’s not going to be a foundational model—but we’ve seen some of the performance of small models for specific tests outperform the foundational models, right? Maybe.

It sort of seems to me like they’ve raised so much money that they’re obviously trying to build out their own compute. That is probably what’s happening. You need a billion dollars to go build your own data center, right?

Yeah, yeah. So let’s talk Polymarket here. This will be a fun section, Rob, if you tell me the behind-the-scenes here, and a boring section if you just say, “Congrats to Shane.”

There’s not a lot I could say.

Come on, Rob. Come on. Come on.

Anyways, Rob said he was going to spill the tea. Shane, Polymarket has made 4 great hires. They announced that Travis VanderZanden, who started Bird, is now the chief growth officer at Polymarket. Great hire. Move on.

No, excuse me. A month later, they announced that Warren Jenson was joining Polymarket. He was the first CFO, used to be the CFO of Amazon, CFO of Electronic Arts, and CFO of Delta.

Then they announced that Colin McKinlay had joined as the VP of operations. He used to be a GM at DoorDash. Last but not least, the best hire of them all: They announced that Jacob Horne, who used to be the founder of Zora—until very recently, he was the founder and CEO of Zora—is now joining as, I believe, head of DeFi at Polymarket.

So, 4 great hires.

Yeah. What’s very clear in the prediction-market space is that there’s a war for talent. This has happened. These are 2 of the fastest-growing companies that have ever existed.

I tell this to people all the time when I talk about prediction markets. People have to remember that both Kalshi and Polymarket had basically zero revenue 14 months ago. They had very, very little revenue 14 months ago. It was de minimis.

Now we’re talking about companies that are doing billions of dollars of volume each, 14 months later. The growth has been absolutely tremendous. But with that have been growing pains. We’ve seen that with both of them.

Bringing in a really professional executive team around Shane has been something they’ve been talking about for a long period of time. Shane is an incredible visionary. He built an incredible business, and he’s got a bunch of people who have been there since early on who are awesome—shout-out to many of them.

He’s able to connect with people in a way that very, very few entrepreneurs are, and to be a motivator and a visionary whom people want to follow into battle. But running a big, regulated exchange is really hard, so bringing in all of these great hires was a no-brainer. It was going to happen one way or the other.

These aren’t the first hires, either. There are guys like Neil Kumar, whom they hired as general counsel a while ago from Willkie Farr & Gallagher—I think. I might have his firm wrong—but he’s been a huge hire for them.

They also acquired or hired another guy, Ari, whose last name I’m going to blank on, who had run the Fanatics gambling business. He’s been really good for them on the sports side.

There are a bunch of these really seasoned executives who have come in, and it makes sense because these businesses—we think they’re big now—I think they’re going to be 5 times bigger in 3 years.

Fill your bags, Rob. I hope you’re right. I have no comment. Listen, I mean—

I do know I was looking at the data from the first week of the NFL, looking at not just prediction markets but all betting companies, and I believe Polymarket had more downloads in the first week of the NFL than Kalshi, FanDuel, DraftKings, and a lot of those.

Yeah, they grew a lot. They launched a US business. They announced it in November of last year, around the same time as the Robinhood–Susquehanna JV. They built it throughout the year, both of them, and now it’s the second-biggest US exchange behind Kalshi, bigger than Railbird, which was announced and started to be built at the same time.

People forget that it takes a while to build these things. Open interest was back up a lot in the first week, and for the last few weeks, the US business has been bigger than the international business. That was the first time that had ever happened in consecutive weeks.

They also launched a very cool ad with LeBron James, which I don’t know if you saw.

I genuinely did not enjoy that ad.

You really didn’t enjoy it?

I hate ads that are just throwing money at celebrities. I’m not anti-advertising. I loved their Rick Rubin ad. Their Rick Rubin ad was amazing. I thought it was brilliant.

But don’t just throw money at celebrities. There are, like, 45 celebrities in that ad. I was like, “This is just not the way to do advertising.”

I’m a huge Cavs fan, so I was like, “Yeah, whatever.” Did you like the Novak ad?

Rob, sit down.

I didn’t like that ad, actually.

You didn’t like that one, either?

I didn’t like that ad.

Did you like the Koshy–Timothée Chalamet one?

I didn’t even see that ad.

That was during the NBA Finals.

I didn't see that ad. I liked the Kalshi ad where they were sitting at the U.S. Open.

Kalshi.

Did you see the Maria Sharapova one that Polymarket did?

I missed that one, too.

Yeah. Okay. You're just grinding too hard, so you're not seeing all the ads.

9. Content Of The Week

I got a 30% hit rate on the ads.

All right. Content of the week. I'll kick us off with the content of the week. I have been very impressed by a publication called Colossus. They do these profiles of people, and they did a profile of Mark Zuckerberg and sat down with him.

Yeah. Wait, isn't this all the Invest Like the Best?

Dude, I'm cheating. We're not allowed to talk about Invest Like the Best on this podcast.

This is Invest Like the Best. I had to get in there.

Mention it. No, no. We're banned in September from talking about Invest Like the Best. So I will not mention Invest Like the Best, nor will I mention a show that talks about founders. Both of those are not allowed to be content of the week, but I will mention that this—

You will mention their print publication called Colossus, which I found on the internet. It has done a fantastic job of profiling Zuck, and they sat down with his parents. It's quite a long article. It's like a weekend read, but I don't know. Anyway, it's good.

Has anyone had a better glow-up than Zuck?

Dude, look at this man.

He—

I'm freaking terrified of—look at that. I mean, I wouldn't want to be the Instinct founder.

What is that?

I can't believe that's the picture they use. They just had him put behind some—

This looks like Photoshop—

Pasted into his garden.

What is it? Does it say that it's Photoshop? What is going on? I mean, I don't think they would use Photoshop. Photo—photo by Chase Milt Middleton.

No.

It is actually insane how he—oh, no. No, it is Photoshop. Wait, look at this.

Okay.

Okay, okay.

Anyway, what is insane is—

But it is actually insane how he went from being kind of who he was to people really hating on him, to getting into MMA and getting ripped.

What is this picture of him fully suited up—

For jiu-jitsu? Probably—

For jiu-jitsu. Yeah.

Yeah.

He's wearing the gold chain. He's got the—he's out there wakeboarding, or it wasn't wakeboarding; it was something else with the U.S. flag. He's had a real glow-up—

Here, from this to this.

I think they went too far, though. I think they're pulling back on it. Yeah, he looks a little bit like a '90s boy band member in some of these pictures.

He's taken whatever Bezos has taken.

He reminds me a little bit of J.C. Chasez. In some of these pictures, he reminds me of J.C. Chasez, who is the second guy at *NSYNC. You know—

If you think I know who the second guy at *NSYNC is, Rob—

You and I are the same age. What do you mean?

J.C. Chasez.

Yeah, from back then. I can't believe you don't know this. This guy—

Well, that's not how he looks now, but if you look back then, he had a little bit of a chain he would wear all the time. You have to look at his actual pictures from *NSYNC, you know.

This—

Yeah. Yeah. So back then, that's how he looks, you know? He's got a little bit of—

Interesting. Interesting. All right. Noted. Noted. Noted. I mean, he just looks like Eminem to me. Well, all right.

Anyway, Rob, what's your content of the week?

Content of the week: Zach Cregger's new Resident Evil movie.

Zach Cregger, Resident Evil. Let's review him. Zach Cregger is one of the first directors and writers in a long time to have his movie win an Oscar for horror, and with Weapons, he launched his new movie, Resident Evil. He had a lot of success with Weapons, obviously being nominated for Oscars. He had a lot of success with Barbarian before that. He decided that he loved Resident Evil, and he's trying not to be necessarily true to the game. It's more like his own version of what he wants it to be. He's honestly the single best horror filmmaker right now, and I have not actually seen the movie yet, but I have tickets for it tomorrow. I'm so excited about it. I still had to call it out.

Did Resident Evil start as a video game and become a movie, or did it start as a—

It's a video game. Yeah, that's right.

Yeah. Yeah. Okay. Interesting. Noted. So you're going to the theater. Are you going with wifey?

Yeah. Yeah.

Which theater are you going to?

We go to a lot of them. We go to 2 theaters. We go either to the IMAX at Lincoln Center, because it's the only true IMAX in the city, or we go to this place called Nitehawk in Brooklyn.

Which is—yeah. Great. Great. I mean, you probably go to the one near Prospect Park, right?

Yeah. Yeah.

Yeah. Yeah. So I go to the one in Williamsburg usually. It's a small little indie theater, but it has a good feel, right on—where, on Grand, I think it is?

Or Metropolitan.

Yeah. It's not Metropolitan. That's right. In Williamsburg.

Rob, good chat.

Good pod.

Great week. It's been a great week. The vibes are high in New York. For anyone who's not in New York, I'm really sorry.

I'll say that for another month, and then I'll be envious of wherever you guys live. But anyway, thanks.

Are we going to Singapore? DLD Singapore. Two weeks.

DLD Singapore. I keep forgetting to plug it. For the 4 people who are still listening, an hour in, DLD Singapore, baby. It's actually going to be an electric event.

Yeah, 3 weeks. 3 weeks, right?

3 weeks. October 9th, I believe.

We're going to do a live pod.

No.

Oh, okay.

No, no time for that. It's a 1-day event.

Okay.

DLD London will do a live pod.

Great. That's like 8 weeks—6 weeks.

Yeah, exactly. Exactly. So, all right, folks, thanks for listening. Have a great weekend, and we will see you next week.