Robinhood 正在证明：分发能力正在捕获加密货币的价值｜周度综述

Nothing said on Empire is a recommendation to buy or sell any investments or products. Can't believe we're taking an hour of our time when we could be focused—laser-focused—on sniping the next runner on FOMO. What's going on? The world—it feels like if you're not in the trenches, you should be in the trenches. This is the first and last and only opportunity to build generational wealth on the next Boner Coin.

1. Robinhood Chain’s Billion-Dollar Run Rate

I cannot say that I have ever been in the trenches, to be honest. That is not a thing that people have ever said about me. But it does feel like there's a little bit of a resurgence happening on Robinhood Chain right now.

A little bit. I mean, Robinhood is likely going to double its top-line revenue and maybe 2–3x profits if it continues at this clip, right? Over the last 7 days, Robinhood Chain has generated—someone did the math—if you run-rate that, which you should never just extrapolate based on 7 days of activity, but it feels like every day has just been incrementally stronger than the last, you're talking close to $700–800 million of revenue and a 90% margin.

Robinhood has many business lines with over $100 million in revenue, none with a 90% margin. The stock is up 15% today. It's almost doubled from its low of $68-plus. It's close to a $100 billion business, still a third of Ethereum, ladies and gentlemen. Robinhood Chain is built on Ethereum, on Arbitrum. Arbitrum's also having a nice day.

I mean, all the tokens are having a nice day today.

All the tokens are having a nice day. Is that just macro? How much of it is just macro versus specific? Do you think the market has fully appreciated what Robinhood Chain might do to Robinhood's business model?

I mean, it was very clear before today. Robinhood has been trading relatively anemically relative to the rest of the market, and the equity market has been pretty sideways to a little bit down over the last month. Just basically macro fear, like continued aggression in Iran and this thing that's happening right now between Treasury and the Fed, trying to figure out how we're going to control the yield curve.

So we're in this weird macro environment from an equity perspective. Robinhood was trading relative to the sentiment of the rest of the equity market. Then today, you talked about it, right? We just got halted. We're up over 15%. Clearly, people are starting to look at these trailing numbers that you just talked about.

I think they did $4.7 million in fees yesterday. So if I annualize that 1 day, we're talking about almost $1.7 billion of revenue. The memecoin trenches go up and come down super quickly, but it's very clear that this has been another big win for Robinhood.

In fairness, I don't think they come down quite a bit. This is a big criticism of Pump.fun, but if you look at what happened over the—I mean, we talked about it in the last podcast—the memecoin phenomenon, yes, prices are extremely volatile. But if you factor in just the amount of new issuance happening, what I think is really novel specifically about Robinhood is this new kind of paradigm around memecoins that are backed by an underlying token. That's what I think is really going to probably surpass all kinds of volume and activity that you've had historically in memecoins.

If you look at Solana in 2023—what was that, 2023–2024 or 2024–25?—you had WIF and BONK. You didn't have this tokenized stock. Now some of the biggest runners have been, obviously, Pawns, which is the launchpad—call it the Pump.fun equivalent—on Robinhood Chain. That's now close to $500 million. It's doing more fees than Pump, and more than some of the other launchpads. I mean, just incredible. It's sort of the highest-beta, greatest beneficiary of all this activity that's been an outlier success.

You've also had AI, which is Artificial Inu. That's close to $240 million in market cap, a big runner. The interesting thing about—

You've been in the trenches.

No, I—I mean, for everyone listening, I credit most of my success—you've got to be in the trenches. When I was at ParaFi, in the trenches in DeFi, I don't think there was an organization that yielded far more than we did, among others.

You guys know that—I mean, Dragonfly is an investment firm—and in this case, yeah, with WIF and SOL, I find it quite interesting. So you had Artificial Inu. You've had Marscoin; you've had some of the others that are backed by stock. So, like, SpaceX is Marscoin. Artificial Inu is NVIDIA. You had Memory Moo, of course, Micron.

2. Can Memecoins Move Stocks?

And so you have these runners, these memecoins that are backed by tokenized stocks. I want to get your take on that. Do you see a world where that captures most of the activity? And what does that mean for tokenized stocks?

That feels to me much more net positive than a lot of the criticisms about memecoins—there's nothing really of value here, and there's just vaporware—but now it's like, oh, interesting. You're buying versions of tokenized stocks, and that, to me, feels more net positive.

Oh, I think it's a huge net negative.

Yeah. So here's what I'll tell you. People are doing this thing, for listeners who may not be aware, but essentially, you pair the memecoin. Boner is the memecoin for HIMS, the stock where they do sort of delivery medicine, and a lot of it is erectile dysfunction medicine. Basically, they try to pair that: 1 token equals 1 share.

What ends up happening is people are buying the token a lot, especially in off-hours. They're buying the token during on-hours, too. But during market hours, an AP—an authorized participant—can mint a new share of HIMS every time a new token is bought and comes out of the pool. Because they can mint that new share during that period of time, you can keep the peg: 1 share to 1 token.

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But in off-hours, when the authorized participants—the market makers—cannot actually mint a new token, we're starting to see this big dislocation happening between the price of the underlying equity and the memecoin. Then you have a huge depeg that happens, and when markets open back up, a big collapse or re-peg.

The idea here is that if you're a memecoin trader, if you're holding it during this depeg period, you're losing in U.S. dollar value, but you've still potentially got the wins in terms of the equity value. The idea is they're trying to drive up the price of the equity over time, especially when the equity has high short interest.

It's very early, so the volumes don't matter enough yet for that equity. But the reason I think it's a huge net negative is because if there's 1 thing that market regulators really dislike or are really focused on, it's market integrity, right?

If they believe that there's something that is maybe untoward being done—that is market manipulation, and that is not somebody who is actually trying to trade for price-discovery reasons—then there's a potential that we get a lot of unhappy regulators who try to step in and disallow this from happening.

They could also just say that the memecoins themselves are equity derivatives. Because they are equity derivatives, they need to be regulated as such, and they are unregulated products right now. If they are equity derivatives and need to be regulated as such, then, especially if U.S. participants are buying them, they would need to be KYC/AML at a DCM to go do it, right?

So I actually believe, frankly, that this is bad from a regulatory perspective, in terms of the way that regulators might look at what's happening in tokenized equities more broadly. It's not big enough to matter right now. It's sort of just a thing that's happening in the Twitter sphere. But if the people in the trenches get their way, it will be big enough to matter.

Yeah, I know. I see your argument. I want to make something clear, because it's not that AI, which is this Artificial Inu, is backed by NVIDIA stock. It's just sort of—the mechanism is not—I don't think it's correct to say that the underlying is an NVIDIA stock, right? It's Robinhood stock, as I understand it. Let me know if I'm wrong here, but that matters to the argument you're making.

It is a derivative. The way I think of it is, it's path-dependent. You have a pool, as I understand it. There's the meme token, there's an AMM pool, and there's a sort of relationship between the tokenized version of the stock and the memecoin, and then there's sort of an LP pool.

There could be fluctuations between the 2, like happened this weekend. There was huge demand for this Boner Coin when it launched on Robinhood Chain, and there was a pool between the Boner memecoin and HIMS. Of course, markets are not open on the weekend, and I think the implied price of HIMS over the weekend, if you were to try to redeem the underlying, was over $100. It closed on Friday at around $20. So there was a huge wick there and an imbalance in the pool because you had way more demand for the memecoin. There was too much demand for the memecoin, and there wasn't enough tokenized stock on Robinhood to absorb it.

Yeah. You have to issue more.

So come Monday, what happens is Robinhood finds and issues more of the tokenized version of HIMS.

Yeah. So the market maker, the authorized participant, goes through Robinhood and through the U.S. broker-dealer. There's an entity that sits in between, but there's a foreign entity and then the U.S. entity, and they go and buy more shares through the broker-dealer to tokenize them and rebalance the pool, right? So then it brings the price back to where it's supposed to be.

So you're right insofar as it's not like—

It's not like tracking or pegged. It's just—

It's not—maybe my language was a little too imprecise, but you have to balance the pool. That relationship exists: when you're buying a bunch of the memecoin in the pool and it gets imbalanced, you have to be able to rebalance the pool to keep the price relationship appropriate.

Listen, it's complicated. If you were to talk to the regulators themselves and say, “Okay, this is how it works at a mechanical level. Is it clear that it's definitely an equity derivative?” Obviously not, right?

But I think the likelihood that people will see this happening—and if it starts to affect the price of the equity markets at open, they will take notice and do something about it—I would be almost certain of that. It's the same way that we had all of these hearings about what happened when there was the short squeeze on GameStop back in 2021, and a lot of people wanted to charge a lot of people with crimes around market manipulation, right?

Whether or not it's clear that this fits neatly into a bucket, I do think it's something that, if people get their way, the regulators will not like. And the people who are focused on market integrity will not like it.

And so it's fine for the moment, and I don't mean to be a wet blanket or whatever. People are having fun and making money and all that kind of stuff, but I don't think we're doing ourselves any favors. Nor do I think Robinhood is doing itself any favors on the regulatory side. Obviously, they're making so much money on this; maybe they don't care.

Yeah, I can understand your criticism around the imbalance, especially on the weekend, which has always been the issue with tokenized stocks and the reason why you need to build it. It was always an issue regardless of memecoins existing or not. I do think the benefit of this is that you get more market makers, more infrastructure on the weekend, and more liquidity to create better price discovery. This is just a catalyzing force—

But you can't, right? The only way it works today, where you can get better price discovery on the weekends, is that somebody holds a ton of inventory.

Correct.

Right.

Well, that's what I'm saying. But wouldn't that incentivize someone to take that inventory if you're seeing a lot of demand for it over the—

Market makers don't want to hold inventory on volatile assets over the weekends because they can't—the market makers themselves—

Can't hedge—

4. Why 24/7 Stocks Don’t Scale

Can't, yeah. They can't hedge it over the weekends. This is the problem with 24/7 on-chain markets for tokenized equities. I wrote a long post about this when Robinhood announced this last July—not a couple of months ago, but 14 months ago—about how these products, as they are designed today, I do not believe can scale to regular market size.

They're obviously scaling and kind of up and to the right, and everyone's super excited about it, but it's diminutive in size in terms of regular equity markets, even regular brokers, et cetera. You have to solve the problem of getting someone willing to take the risk, especially of volatile assets, over a long weekend. If you can't hedge, they won't do it.

What has happened right now, where it's worked in some cases, is that the exchanges benefiting from this have held a bunch of inventory. For example, Kraken, which owns xStocks, will be willing to take that balance-sheet risk because it's incentivized to try to grow this market. I think we'll see maybe Robinhood's broker decide to take balance-sheet risk and do some of that in the near term. Again, that doesn't scale over time. So there's a real technical infrastructure problem today with how these 24/7 tokenized equity markets work on-chain.

But look, for the foreseeable future, it sounds like markets are just going to continue to be 9 to 5, Monday through Friday. Maybe in—

I think we'll get 24/5 in the next 9 months, but I don't think we'll get weekends for a while.

Yeah, I do think this gets solved eventually. It sounds like your argument is more, “Look, this is the problem with tokenized stocks,” not that an LP pool with a bunch of memecoins just created this problem overnight. Tokenized stocks would have had this problem regardless of whether you had these LP pools.

So what argument might Robinhood make in front of the regulator? They probably thought about this quite a bit. I think they might have said, “Yes, we're aware that there's all this activity happening on our chain. The benefit of this is that this incentivizes people who might come in through buying a memecoin to eventually hold tokenized versions of stocks.”

Whether you have an argument with tokenized stocks—different discussion—but if we agree that the wrapper itself is sound, the counterparty risk is sound, and it's regulated, Robinhood is a regulated financial institution, you could sort of get comfortable with this. It's like the Trump accounts: you want to incentivize people to hold stocks and participate in economic growth.

I know it might feel like stretching the argument. I'm just putting myself in the shoes of how Robinhood would present it when facing scrutiny because of these wild fluctuations over the weekend. I think that's probably their biggest and strongest argument: this is going to be a positive force to incentivize people to hold stock. Whether you want to really make that distinction between tokenized and non-tokenized versions of stocks is a separate discussion, but—

I mean, if you look specifically, what they're just going to say is, “This is market infrastructure. It's new. It's novel. We're dealing with the growing pains right now. It's a permissionless blockchain; people are able to launch whatever they want, and the way these automated market makers and these pools work is that you have to be able to balance the liquidity. It's just new and novel market infrastructure. We're not doing anything wrong. They're not doing anything wrong.”

The people who are actually at more risk, probably more than Robinhood, are the people who are coordinating these things. If they're tweeting about them and saying, “Hey, let's do this thing to create this thing,” well, now it looks like you're buying this for market manipulation reasons versus others.

If there are—well, this is WallStreetBets, right? Like, Keith Gill—what is it? The GameStop phenomenon. He obviously went and got—there were issues and concerns around market manipulation. I think they cleared him, right? It was just—

No indictment, clearly.

Right. My argument would be the same one you would have heard me make when Solana had the memecoin surge: memecoins were a mechanism to stress-test the infrastructure and then pave the way for Nasdaq on the blockchain.

That was, if you remember, a couple of years ago, when Bonk and WIF were all the rage. You really stress-tested the tech, and it was very lucrative for protocols like Solana itself, but also Pump.fun and others, to work through this.

I also think the same will be true for tokenized stocks, which didn't get as much liquidity out of the gate. This new mechanism of LP pools, tried and true with Uniswap—you have this variant and a relationship between 2 assets—will serve as a way to power through and bring in a bunch of market makers and financial and market structure to support tokenized stocks.

And I think that's the most positive thing that will come out of this, in my opinion. If the regulator were to really have objections to this, you end up going down a path of having issues with Uniswap and having issues with DeFi LP pools in general.

It's a tokenized stock market structure issue, right? Then, versus it, it's like any of the actual AMMs are not a problem. The DeFi protocols are not a problem. It's, to your point earlier, a tokenized stock problem, and then it's like, okay, well, are there people trying to manipulate the equity markets using these? Yes, those are the problems.

5. Who Captures Crypto’s Value?

Yeah, I agree with that. In any case, just to wrap this part, it's very encouraging. There are a lot of people now back in the trenches. One of the things that I keep thinking about is what might be the—well, a couple of things. Where will we end the year in terms of active users on-chain, and do you actually want to count the Robinhood users trading on Robinhood Chain as true on-chain users?

It falls into the category.

It's okay. The point I'm trying to make is what Lorenzo at RWA.xyz has done really good analysis around: the fee accrual to Robinhood versus Arbitrum versus Ethereum. I think that is going to be a big topic of conversation, especially among the core developers, the Ethereum Foundation, Etherealize, and some of these factions that have resisted increasing fees for a really long time.

In many ways, it's going backwards, right? Ethereum L1 is capturing less and less fees from the growth in activity on Robinhood and Arbitrum, and I think that eventually will break. I think eventually EIP-1559, which was super contested and very heavily discussed, is something we're going to revisit over the next 6–12 months. I think the proposal to increase fees on Ethereum L1 is going to be a major topic of conversation among the Ethereum community.

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6. Who Captures Crypto’s Value?

Yeah, I don't discourage that at all. It's very clear that the people who actually own distribution are the ones capturing most of the value today. Your point, or the question that you posed, around whether these are real on-chain users—this is the world we're going into, right? Everyone is focused on bringing non-crypto-native users into better financial products that are built on blockchains.

Even some of the most crypto-native products, like Ethena, launched Ethena Pay this week, a neobank focused on non-crypto-native users. They're obviously going to serve crypto-native users, but eventually they're focused on trying to serve non-crypto natives as well, right? That is what everybody is focused on.

Even Robinhood—we've talked about this in the past—what are they doing? They're taking their ingrained distribution, their ability to market, and they're distributing Lighter, Ethena, and Morpho. They're distributing these products that are on-chain, DeFi-native products. I think very clearly this is the future we're going into. This is the DeFi bull we've all talked about for a long period of time.

Yeah, definitely. I want to post something here to make it abundantly clear what this relationship we're talking about is. Lorenzo from RWA.xyz has posted it, and it should go up on the screen in a minute. To give you a sense of the relationship, when we talk about Robinhood and the activity there, Ethereum has cut its L1 data-posting cost quite substantially. It was initially 0.5% on August 22nd, and then by August 30th, the percentage of fees that it captured was 0.14%.

That, to me, doesn't sound like the Fat Protocol at all. I think most people would agree, probably including Robinhood, that the percentage they're paying—maybe not so much to Arbitrum, but certainly to Ethereum—is not that much. I don't know; probably that conversation sits more with the share between the L2 and the L1 here. Vitalik sort of hinted at that earlier this year, but I don't know how you get this across the line, to be honest.

It is bleak for the L1. It doesn't feel like it's properly compensated. It reminds me a lot of how Ethereum feels like Cisco, or some of these massive internet giants back in the 1990s that just never really recovered. Maybe, maybe—but just numbers-wise, is there a version of this world where an L2 captures more aggregate fees than the L1?

Arbitrum might post a hundred million in fees this year or more; it depends on where Robinhood goes. If this 10% relationship you're talking about is run-rating Robinhood's numbers, and Robinhood does $1 billion or $2 billion in fees over the next 12 months, Arbitrum is going to take its 10%. That's $100 million to $200 million in fees for Arbitrum. It's a billion-dollar protocol today, and Ethereum was going to capture a million dollars or less. That's crazy.

In many ways, I don't want to continue to be a bear on Ethereum itself, but it's hard to justify a $300 billion valuation. Something's got to give. Robinhood is currently a $120 billion asset, Arbitrum is a billion, and Ethereum is $300 billion. At the very least, ETH is the one you want to own least. Whether you want to debate whether Arbitrum or Robinhood is a better trade, certainly, I think we both agree ETH is not the best trade out of the 3.

Up 34% last month.

ETH.

Yeah.

Yeah. Well, fees are irrelevant in a bull market, I guess. All right, let's move on from this topic of conversation. You mentioned Ethena. Tell us about the buy-now-pay-never.

7. Ethena’s Neobank Push

I love that. We used to have buy now, pay later; buy now, pay never, which is super clever.

More broadly, on Ethena: historically, as everyone knows, Ethena started as a synthetic dollar. It was mostly passing along yield—or call it interest or staking rewards—back to the end holder of USDe if they staked their USDe and locked it up for a period of time. Those rewards were mostly funded by the basis trade.

Everyone knows the basis trade, or at least I think a lot of the listeners do: you go long the spot, you go short the future, and then you collect a funding rate. You're essentially delta-neutral to any price movement for a long period of time in crypto. The basis on Bitcoin or ETH—those are really the only 2 you could do in size, maybe Solana a little bit—would, especially during bull runs, really blow out.

I think at one point the basis trade was over 60%, just a couple of years ago, in terms of what was actually funding people. They've since done a lot of work to diversify their holdings as the basis returns have come down. Now they're doing basis on equities, or they're working through that right now. They're also doing something that has more of a positive skew, which doesn't take off in the same way but has a more positive skew because it's less volatile.

They're also backing more of the USDe with on-chain treasuries through BUIDL. They're doing something with JAAA, which is Janus Henderson's sort of CLO tokenized product, and they're now doing some collateralized, overcollateralized lending. It started with FalconX, and I'm sure they'll be doing others.

They've been increasing the ways in which people use USDe and the backing of USDe to try to be less crypto-native and take advantage of all types of market cycles as well. The thing they've been working on for a long period of time, which they announced early this week, is Ethena Pay.

Ethena Pay is essentially a neobank. For people listening to this who have probably heard of KAST or Ether.fi Cash, or even some of the non-crypto-native ones like RedotPay or the DolarApp, with USDe at the center of that, it offers a bunch of super interesting things. That includes free on-ramps and off-ramps in local currency and dollars.

Free movement of money inside the Ethena Pay network, similar to a Venmo or something like that. Their zero-FX-fee markup, their 5% cash back on a card that they issued through Rain—or they’re managing one that was issued by Rain—and 6% on daily balances, which is kind of coming through.

It’s quite early—almost as good as X Money, or just like X Money, I think, 6%.

Just like X Money is 6% as well, right? And multicurrency accounts are something that a lot of the global citizens who use these things are really, really looking for.

Yeah, I was talking to one of the other neobanks—Plasma, actually. I’m an investor in both Ethena and Plasma. Paul told me something that really struck me: who is the customer that’s going to want this type of product?

I think there’s a huge gap, not just among crypto people, but between graduating from a Revolut card and getting to an ultra-high-net-worth customer. There’s an increasingly growing share of the market that feels like the prime customer. It’s people who are young, affluent, traveling, so they value some of these perks, and obviously the convenience, especially younger generations.

Anytime you see them interacting with an old-school financial institution, I think they have less and less patience for that. These products are just more in tune with the times and the convenience and all that. Have you talked to Guy, or are you guys investors in Plasma?

We’re not invested in Plasma. We’re large investors in Ethena.

Right. I think the key metrics here that we should talk to these guys about, or that would be interesting to follow, are customer acquisition cost, who the actual users of these products are, and the engagement rate. It’s a competitive market. Neobanks have—I mean, for every Revolut, there are hundreds that never reach that scale.

Broadly, in the fintech landscape, I’ve noticed that even the smartest fintech investors are way more skeptical and jaded now about neobanks. They’re like, “Forget about the growth, the TAM.” They don’t believe that anymore. They’re like, “Show me a way that you’re going to scale this,” because they’ve been burned way too many times with increasing customer acquisition costs.

It’s just hard to scale, to get critical mass here. It’s really, really hard.

Yeah, direct-to-consumer fintech has been really tough, and it’s easier than ever to launch a direct-to-consumer fintech today. Where people have found some success is, “Oh, well, we’re going to do some sort of affinity group or niche group that’s not currently well served.” There was obviously a lot of conversation about U.S. dollar access in emerging markets, and that still continues. But it’s truly a knife fight.

All of that said, KAST, RedotPay, and Ether.fi, which were some of the early ones to this, have grown quite quickly. They all have different user bases. I think for a lot of them—the insight for KAST and Ether.fi, at least—was that people who hold crypto today aren’t well served with global cards.

They’re travelers. They want to spend in U.S. dollars or maybe local currency, but they’re global citizens, they hold crypto today, and they want to be able to go and spend it. They just didn’t have that option before Rain got its global principal membership and these guys built those products on it. They offered really good rewards and a really good product and user experience.

KAST actually just launched a new version of its app that people are excited about. That was really the affinity group those guys were serving. I think there’s a question now, with Plasma there—which has done well, and I think Ethena will do quite well—about how these products go outside of just crypto natives.

From an Ethena perspective, it’s very clear. I mean, USDe is now, I think, 40% of the stablecoins on Robinhood Chain, because of the lending pool and the earning pool that they have there. It’s the same thing they have with Coinbase.

Their focus—and I think you can also say this has been Morpho’s focus, and I’m sure Plasma is doing the same thing if you talk to Paul—is trying to go outside of the people who know it because of the token and because of crypto, and actually find a way to serve a more traditional customer base.

But I agree with you that the venture investors—I mean, KAST raised that round led by QED, which is a good fintech investor. Arc in Argentina, which has been very deep in Argentina and Brazil, is backed by Sequoia. I think they’ve had an unannounced round by another large firm, but they’re also doing a lot of SMB and going upmarket in the same way that Nubank did as well.

I do wonder how these companies go from where they are today, which are good businesses worth hundreds of millions of dollars, maybe even $1 billion or low billions, to becoming a Revolut-type competitor.

Yeah.

I had dinner last night, and I was sitting next to a guy who invests at one of the largest hedge funds in the world, one of the largest crossover funds, who I’ve known for a little bit. He was talking about all of these neobanks, and we were talking about it a little bit. They haven’t done any of the direct-to-consumer neobanks. Instead, they put $300 million more into Revolut.

They were like, “We would much rather just keep piling into the winners.” It goes back to the conversation we had last week, which I think some people took issue with and were not super happy about: there’s just this bunching, this piling into winners, that people would rather do versus taking some of the venture bets on earlier-stage companies, even though their job and their fund might actually be to take risk.

I think a couple of these guys will do well, but to your point, there are going to be hundreds of them that don’t.

I’ve seen and shared a couple of deals with some of what I think are the best fintech investors, and I’ve noticed this increased scrutiny. They’d rather put money into the Nubanks of the world. They’re like, “Hey, look, we can actually underwrite this better.”

I think Brad from Altimeter said this well: it’s paid off. If you are a venture investor, it’s been better to back Series B and Series C companies that are much more advanced, because these are massive markets. Again, it’s a recurring theme we’ve had here: you’re attacking massive amounts of TAM. The TAM is massive, particularly if you’re investing in places in Latin America and elsewhere where you just have a lot of greenfield.

8. Remittances Fight To Own Deposits

But it’s still really hard. For instance, Felix Pago raised a round—I think they raised $200 million.

Debt plus equity. Yeah, the equity was like $85 million.

$85 million. Then they had about $116 million from General Catalyst.

Kudos to those guys. They’ve been doing remittances. When you think about who you’re comping this against, you have Remitly and—

Remitly is their main competitor. It’s them versus Wise.

Yeah. And Wise is a $12–15 billion business, I think.

No, it’s a $2 billion business.

Two.

Yeah, I believe it’s $2 billion right now, so it—

Trades at $12–13 billion. Remitly is—

I thought Remitly was half the size.

So, you know—

It’s $5.6 billion today.

I would think, if the dilution math shakes out, these guys probably raised at maybe a $1 billion-plus valuation, maybe $1.5 billion—just 10% dilution, give or take. Did you guys look at that round?

We looked at the round, so I won’t say anything. They didn’t announce it, so I shouldn’t talk about it. I think the challenge is with remittance-only businesses, right?

Terrible. Remittance-only is a low-margin, not-great business, right? I was wrong about Remitly, because it’s up 51% in the last 6 months.

Yeah.

And so when we were thinking more about remittance, it was a $2–3 billion business.

Meanwhile, Western Union continues to go down. It’s down 30% from when we placed that bet. I think what the market likes about these businesses—particularly, I’m thinking, what’s the case for backing Felix? They really nailed the WhatsApp distribution channel, which is very native, especially for folks who are remitting.

Now they’re obviously using stablecoins, but they’re expanding and offering other types of products, which has always been the end state. I think a big part of the proceeds from this round are going into lending and doing other types of products to improve the unit economics.

I did hear from one of the investors that the unit economics are on the come, which tells you they’re not great right now. But you’re betting on a big market, a lot of greenfield opportunity, and building a relationship with that customer.

The issue I've had with a business like this is that you don't own the distribution. It's like a lot of those businesses that were built on Facebook and the Facebook Marketplace. Kudos to the guys who backed them early, but I would probably have been a bit more nervous about a business totally built on WhatsApp, at a time when, mind you, there wasn't as much regulatory clarity when they got started.

But what I've heard they got really right was that, unlike Western Union, these guys built partnerships with local fintechs and financial institutions to provide this service. So I think they partnered with Nubank, and they approached Nubank and said, "Hey, look, we'll facilitate this," and Nubank likes it—it's just deposit growth. But to your point, you would rather own the institution that eventually—I mean, obviously, it's a function of price—but you would rather eventually own the company that gets the deposit, in this case Nubank, right?

So the question always with all the remittance businesses—and this is why Remitly will do, call it, 2 billion to 2.5 billion of top-line this year, and it's a 5 billion to 6 billion company, right? So you can kind of see the types of multiples it trades at. The public markets have generally not given very good valuations, on a relative basis, to some other kind of transaction-based fintechs versus remittance companies, because the customers are a lot less loyal generally, and they do a lot more shopping around in terms of what the price of this FX pair looks like.

Especially if it doesn't have, like—Western Union and MoneyGram are a little bit different because they have this agent network where people have local relationships. But for an app that is a digital product, people don't pull it up other than to do the remittance itself. And so the remittance companies have been very focused on, "How do I build a better consumer relationship, a better relationship with that customer?"

So we talked about it with Western Union, where they launched that wallet product and the WU+ Card, because they want to monetize that end user and build a better customer relationship with them. Remitly has also publicly talked about the fact that they are trying to launch a global wallet as well, using stablecoins. And for somebody like Felix, you can imagine that that's probably also the same path that they would take, because they know that the remittance itself is not a great business, but maybe it's a wedge into a great business.

Yeah.

Right. And so that's been the focus. The public markets have not given Remitly a lot of credit for being able to achieve that. And so that's the question: How do these remittance companies get to this promised land of being a Revolut or a Nubank or something like that?

9. Content Of The Week

But I think that's happening to a lot of these fintech businesses right now that are simply saying, "Hey, I'm not quite sure. I have a wedge product, but now how do I get a deeper relationship with that customer?" At the end of the day, the deepest relationship always becomes with somebody who owns deposits.

Deposits, deposits, right? What I learned in this expedition—we went and talked to privately owned remittance companies, pretty big ones of all different varieties and sizes, serving different corridors—is that the unit economics, the take rate on corridors, is very, very different.

The World Bank data tells you the corridor between the U.S. and India is totally different from Pakistan and Dubai, and totally different from Mexico and the U.S. Some are very digital, and the take rate there has been absolutely crushed. There are just other corridors where a lot of it is still cash, and the take rate there is much, much higher because it requires a very different type of operation.

But yeah, I think, to your point, remittance as a wedge is an interesting thing that people seem to have been excited about, whether it's Remitly, Wise, or now, in the case of Felix. Even though the take rate is terrible—for instance, Western Union still takes, call it, 3.5% on average, because a lot of it is just a type of user that doesn't have a bank account and needs to deal in cash, whereas Wise is like 50 bps, a fraction of that, but they're digital only.

So they want to serve that customer, and the unit economics there, the LTV, is like, okay, you can do something else with that customer. But the most interesting thing I learned about in this expedition was that a lot of times remittance companies are not allowed to have a direct relationship with a payout party, which for us was a very big deal killer. All you want to do is give a wallet to the person in Mexico or the Philippines, build a wallet, and then take deposits and keep that dollar.

Western Union is able to get away with it because of its sheer size and muscle. But I know some fulfillment and payout partners are not happy with that and haven't been for a while.

Well, it's not that they're not allowed. It's just that they have to be regulated in a different way. Correct.

No, no, no. The contract that they have with a fulfillment partner does not allow them to directly target.

Oh, yeah. So you mean legally?

So, if you send money to your grandma in Mexico, if you're that remitter, you cannot do that; it depends on who you are.

There's somebody else to fulfill it, right? And this is the point.

And by the way, you're always relying on someone else to do the fulfillment for you.

Well, Western Union doesn't in a lot of places now because they've built that in a lot of cases, right? And so scale—this is a business where scale matters.

Scale, scale, scale does matter. Yeah, but it's challenging. Nonetheless, good for them. Going back to Felix, it's a team that—I hope it works. I hope the unit economics show up. Again, onboarding more users to just transact in stablecoins. I think it was a big round.

Yeah, I mean, they're great. Manuel's super talented. They're furthering the use of stablecoins. Their product is both stablecoins and fiat, so there are both flows there, but they're more and more pushing them to stablecoins. I just think that's the way the world's going, and anybody who doesn't have that infrastructure is going to get left behind.

10. Hyperliquid’s Path Into America

That's right. That's right. Transitioning a little bit, we've talked about memecoins and Robinhood Chain. There's a lot more to unpack on that dynamic. We'll save it for another episode, but I do think that people might still be scratching their heads, like, how does this actually work or not? We will, I suspect, be covering this more and more. I do think that—should we talk briefly about Hyperliquid? I mean, obviously, and Kraken.

Sure.

Yeah. I mean, it seems to be the thing people want to talk about the most. Yes, our resident Hyperliquid expert.

I would—

Over to Rob.

But I might be our resident regulatory expert, although we should just have Rebecca Rettig or somebody on. Listen, there was an article that came out of Bloomberg late last week. This had already been rumored by, I think, mostly by Shauna Devons[?] and some others from Blockworks, who had been tracking what was happening on-chain.

Basically, Hyperliquid was looking at potentially partnering with Payward, which is the parent company of Kraken, which also happens to own Bitnomial. Bitnomial is a regulated DCM and DCO here in the U.S., to bring some Hyperliquid markets on-chain.

The story that Ma[?], the Bloomberg reporter, wrote was mostly about a presentation that she heard Hyperliquid had made to the CFTC on how this could work. So, not anything from the DCM itself or the regulator itself, but whether it's possible that Bitnomial's DCM and DCO could deploy markets on Hyperliquid that are segregated, where they are the ones that have to do KYC/AML, where they are the ones that have to do DCO reporting, and offer those markets to U.S. participants who fulfill those requirements—KYC/AML, et cetera.

That would be super interesting for the Hyperliquid folks because, one, you bring more volume to Hyperliquid itself, and two, any market maker that wanted to do KYC/AML on the Bitnomial version and then also market-make on the international version, where they didn't have to do that, could theoretically arbitrage liquidity between the two. It brings better liquidity for the entire chain, more revenue for the entire business, et cetera.

Now, I will say that, as I understand it, as someone who spends a decent amount of time in D.C. and thinking about these topics, if that happens, that is definitely our best-case scenario.

The CFTC and the markets team at the SEC, when you think about the equity side, and the Treasury are all very excited about bringing DeFi and onchain markets into the US in a regulated way. You know, there's a reason President Trump talked about it—he mentioned Hyperliquid in a speech a couple weeks ago. I think the likelihood of how it actually works is probably a little bit different than that.

I think people will probably get more comfortable with requiring a separate entity—call it a Hyperliquid entity—to own those contracts that is also a DCM. That entity, or whoever owns those contracts, would have to go and do KYC/AML as well. I don't think they're necessarily going to get comfortable with the fact that a Hyperliquid or a Lighter, or anybody like that underneath the hood, is just, you know, not a clearing tech.

It's—which I think was what Jake Chervinsky says in that article—like, this is tech that's just beneath the exchange and the clearinghouse altogether. I think that's where they end up, but if they don't, and we end up here, and it's still an active discussion, it's a huge win for everybody involved.

Now, even if what I just said happens, and there is some KYC requirement in the same way that Polymarket has a separate entity for themselves, that's still a huge win because it still would use the same existing technology. You'd still be able to go and arb liquidity between the two. You'd still have onchain markets that exist in a regulated way. This is incredible.

The KYC/AML, sanctions, and reporting requirements for the DeFi or Labs entities are still very much in the air, and that's where I think a lot of the debate will continue to happen.

Yeah. It doesn't feel like it's going to get resolved anytime soon, but the market is definitely excited about just the prospect.

Well, I think it'll resolve this year.

Interesting. I think maybe not in the next 4 months, but I think it could. In 4 months, we're at Christmas.

You know the government. You've been in DC long enough. After Thanksgiving, nothing is going to happen.

Regulators are moving quickly. No, no, no, no, that's not true. Okay, that is true for Congress—

To legislate. Yeah. It is not true for the regulators. If you look at the work that Chair Atkins has been doing, and the OCC and Treasury have been doing, they are moving quickly—

—to try to bring some level of clarity—not to punt on these markets—and to bring these markets onshore. So I think that there is a good possibility that some version of what I just said happens this year.

11. Prediction Markets And Bitcoin

Again, the range of requirements that they would put on an onchain exchange like a Hyperliquid or Lighter is broad, so it could even be a little bit more onerous than what I just said. But I think it could happen this year. I think, in the worst-case scenario, it happens in the first half of next year.

Yeah. Let's run just a quick note on a couple of quick news items. On Polymarket, it's reported that 1789 Capital and Trump Jr. are leading a round at $1 billion, at a $2.1 billion valuation, give or take. That would still be quite substantially below Kalshi's reported valuation. What is it, $40 billion? Did I see that right? I don't know. Did that close?

Yep.

It closed.

No, I don't—I don't—

I saw rumors of it. Those have been the news reports.

News reports. Yeah. How many—maybe we should play a game on today's episode. How many times do you get hit up by a reporter to corroborate some story on a prediction market? For me, 3 times.

It happens a lot. Yeah.

How many people ask you to sell secondary?

10 times.

I always tell them to talk to the companies.

No doubt. You've been well trained.

You've had to learn it. Had to learn it. Yeah.

I still remember the first time I sat down with a reporter, and they make you feel all cozy and warm and open up. Then they stab you.

Listen, you never feel—you hang up with whoever you're talking to, and you're like, “Oh, did I say anything there that I will regret?” And you spend some time sitting down and thinking, “Oh, I probably shouldn't have said that.”

All of this is on the record, Rob, so be careful. We never edit Empire podcasts.

I know that. That's why I am so—

Make sure you close the tabs.

I think that's really it. Arthur bought a bunch of Bitcoin at $80K. $80K, so best one to do it. Always tick-topping it, but he's a believer.

$80K is not the top, man. We're going—

Local top. Local top.

No. What do you mean?

Should we play a little game?

Bitcoin's 81 now?

He's up. That's right. What? I was going to say something, but I won't. What do you think we end the year at? Bitcoin.

You're not in the business of price predictions.

Oh, come on.

You know, I'm not in the business of price predictions.

Uptrend.

I think we have an uptrend through the rest of the year. I don't know if it's as aggressive as people are talking about, but I think we have an uptrend. It wouldn't be crazy to me. Bitcoin was up 25% in August. It wouldn't be crazy for me—I could easily see another 25% over the next 4 months.

Yeah. Robinhood's up 15–20% today. I think the market waking up to this activity on the chain is the leading catalyst to that. In an uptrend, crypto is highly, highly reflexive. Robinhood is posting 20%, and I still think, for me, we are in a pretty clear uptrend here. Macro is always going to be a wall of worry, but assuming nothing really rolls over and things stabilize, we could see some real runners here.

I don't think that's a good assumption, to be honest, from a macro perspective, like what we're seeing right now happening on—

I said assuming. I didn't say I believed it was going to happen. I just said, as always, you footnote and caveat the hell out of it: assuming the world doesn't blow up, we may go up, which is not saying much.

Well, listen, the nice thing is that even with all the uncertainty, I do think there are a lot of fundamental reasons for this business, for us to continue to trade better. We talked about this a bunch over the last year: we're in a bull market, but not the one people want. There was a lot of adoption happening in a lot of real ways that I think people are going to start to take notice of.

You can see why things may trade better as people get a little bit more comfortable, just for those reasons, even relative to what's happening in the broader macro environment.

12. Distribution Is Still Crypto’s Moat

Look, I think if you zoom out, if you have a short-term view, it's really hard to be short-term-driven and predict any of these things over 3 or 6 months. If you zoom out more than a year, you start seeing a lot of clarity. If you have a 5-year period, it's even easier, because your job is really to ask, “What is the secular trend here?”

I think the biggest catalyst I've been talking about quite a bit—you know this as an investor in Variant—is that distribution matters a lot. The infrastructure has been built. You have a company, Robinhood, showing every other financial institution that it's likely going to double revenue. It will double the top line, and it will probably multiply profitability with Robinhood Chain.

That is a huge, huge catalyst. This is not like a press release from Long Island Iced Tea saying that it's going to be adopting blockchain or some supply-chain nonsense. This is real numbers, numbers on the dashboard, and that bodes extremely, extremely positively for any other financial institution at a time where you have regulation—

Oh, yeah. What Robinhood Chain has done, and now some of the success that I think ICE has been having—they've been one of the most forward-thinking exchanges—these are just more wind behind the sails of more and more people getting involved in the space.

The RWA Summit that Centrifuge puts on, or is a big sponsor of, was here in Brooklyn the last couple of days. All of the traditional financial institutions were there. All of them. They do it here in New York; it's easy for people to get to, and everyone's focused on tokenization.

Everyone's focused on these products. DTCC launches its tokenization sandbox in a month. It's very clear that the trend is going to continue in my mind. We've always said that doesn't mean your altcoin is going to go up in price, but it does mean there'll be more excitement, more liquidity, more buyers, and we'll see what happens with the tokens.

Absolutely. If anything, the Robinhood Chain is really stress-testing the infrastructure, and tokenized stocks, I think, are a huge catalyst if we get it right. It's not easily solved, but I still think it's quite positive. I said it on the record: I think the best way to have exposure to this growing asset class is, funny enough, through TradFi. Owning Robinhood stock is probably a better bet than owning ETH.

None of this is financial advice or any of that nature, but it just feels like if you're a retail financial institution, or a financial institution with a big piece that is retail, you're in a tough conversation with your board if you don't have clear answers as to why you haven't done what Robinhood is doing.

13. Who Brings Stocks Onchain?

One last thing before we go. I've been thinking a lot about Interactive Brokers. I tweeted about them—it was the first thing that came to mind this week. I'm like, gosh, this feels really strong for Robinhood. I was like, what is—I wonder what Interactive Brokers is doing?

Again, go look at the Colossus piece. Amazing story about the founder, this Hungarian immigrant. I think they're really, really at the cutting edge and adopting technology. It feels like they have the right DNA.

I remember speaking with someone who worked there about crypto, and they said something to the effect of, “Yeah, we have a team. We're thinking about it.” But I haven't seen them really be, at least outward-facing, about what their plans are and what they're going to do. They're not as retail-focused as Robinhood, but still a huge force in the market. Might they be a player that helps us with tokenized stocks and liquidity over the weekend, or is that a stretch?

There's a good Odd Lots episode with the founder of IBKR from April, so not that old. He actually tells an interesting story in there where he tried to buy Kalshi many years ago, and they told him no because he's been bullish on prediction markets for a long time, but they never could make them work. He talks about how he seems a little bit salty in that conversation, because he's like, “I tried to launch prediction markets and nobody cared.”

But I think he is a person, and IBKR is a place, where they're never going to be the cutting edge of retail brokerage in terms of taking risk and launching more speculative products. What he is going to do is be in that second wave, and he's going to be ahead of probably most of the other wirehouses and a lot of the other brokers. I don't know if I think they're going to play a huge role in tokenized stocks, for instance, but if there's an opportunity, he will—they absolutely will.

I think the tokenized-stock piece for spot is still very much, in my mind, a story around when and how we get more primary issuance on-chain. I don't know if you saw the tweet from Rune earlier this week, which—

This is not the MakerDAO Rune, was it? Because I read his thread, and I'm like, is this—

No, it is.

It is? Okay. Wow, yeah.

It is. He was trying to buy a micro-cap on Nasdaq for like $1 million or so—not even a super-low float. He's like, “We're going to reverse-take it over through a meme.”

Yeah, and put it on-chain. I haven't seen the follow-up from it, but it was not—to the point I made earlier about how regulators might view market manipulation—

That felt edgy. He was like, “This is not market manipulation.” I'm like, maybe you should go consult a lawyer.

But then some people also pointed out that they couldn't even find a stock that coincided with or corresponded to what he said. So maybe he was—I don't know what ended up happening there in the end.

I'd say the point is simply that I think there is interest from a lot of crypto natives right now in trying to bring more tokenized assets on-chain. But what you need is interest from companies that want their assets to be on-chain. That is where this—and you want the clearinghouses and the exchanges to want these things to be on-chain. That's where I think we still need more work done.

I think in this case, Alpaca has the board seat—or a board seat. I'm not exactly sure who. But listen, very clearly, this is not the last time we're going to talk about this. This is going to get weirder, I think.

This is going to be the biggest narrative this cycle. By far. By far. So if you're not in the trenches, don't be sidelined like Rob. Rob, you should put—you're an investor in FOMO, man. What's going on?

I run an SEC-registered RIA. I'm not trading the coins.

That's right.

I'm not doing it personally.

That's right. That's right. Okay, content of the week. What do you got?

All right. Number 1, it's the US Open this weekend and next weekend, so I'm very excited for the US Open. I'm going tonight, actually, with—

Well, you're not here, otherwise I would. It's a shared suite, so I would bring you. But—

The US Open—I mean, Djokovic losing in the first round. Crazy. Zverev almost lost in the first round, too, so it seems like it might be an interesting one if you like tennis. Also, football is back if you're a football guy. Not English football—that's also back. That was back a couple weeks ago—but—

American football.

American football, and both the NFL and college football.

That's right. And then I would say, if you're looking for something not maybe lighthearted, but a little bit more mindless, A24 released a movie today called Onslaught, which has Adria Arjona. It's sort of a sci-fi horror thriller.

No, we got that from the name Onslaught. Yeah, I mean, it's definitely not a comedy.

It's actually a lot of fun. It's a tight 90 minutes. It's an action movie, a little bit of fun for your Labor Day weekend.

No doubt. Who's got the US Open winner? For the men's, we have Alcaraz as the favorite on Polymarket at 43%. Then 21% on the women's—

Yeah, I think he's down a lot recently, right? Because he had a really bad first round.

Yeah, but he's kind of like that. He's done reasonably well. I think he did well at Wimbledon. I'm seeing him tonight, actually, I think.

Okay, great. You should know this, whoever invited you, Rob. But okay, good. My content of the week: The King of Oil: The Secret Lives of Marc Rich. It's right up there. Amazing, amazing book.

It's this guy, Marc Rich. His company ended up becoming Glencore. Just an amazing story, and a really well-written book as well. Highly recommend it if you like any of these books. I think if you're in crypto, if you're in finance, it is a fascinating story.

He basically created the spot market for oil. Before that, it was all the majors trading oil, and oil was super opaque. So it touches on a lot of the things we talk about here in crypto: market infrastructure, market making, all this stuff. Amazing story. Go read the book. Really, really good. Have you read it?

I have not read that one.

But I'm really a commodities guy, so maybe I should—

You know—

Here in crypto, Rob, we take the position that these things are commodities.

I'm a technology guy. I'm a technology guy.

There you go.

We'll leave it at that. Have a great weekend, guys. Thanks for listening.