Tulip King：Zcash迈向1万亿美元、链上期权与AI保障的Bitcoin

How are you, dude?

Yo, how is it?

I'm fine, friend. Good to see you, dude. We haven't seen each other for a long time.

Friend, too long. Too long ago.

But the network is back, we're in trouble. Time to trade, dude.

Yeah, dude.

By the way, chat, most of the chat doesn't know this, but I constantly receive personal requests from smart people: “Can you introduce me to the Tulip King?”

Dude, you know, I'm just going to show off a little bit and look sassy. I decided that everyone was somehow relaxed now. I read Twitter and I'm like, okay, we all agree that Zcash is fire. I'll be happy to explain why it will cost $1 trillion.

But that's all. Nobody has anything worthwhile anymore. There is nothing. You know, we go to these “bond” dinners, and it's like, okay, we all love Zcash, cool. Everyone is probably burning with something to some extent if they're trying to be even a little interesting.

Nobody holds Bitcoin. You talk to these people, and this is normal in the context of a fun dinner, just chatting about everything. They all vaporize some garbage with a cap of less than 10 million. And I'm like, do any of you have any real confidence in the real coin? Is anyone building any analytics?

I think now, if you can actually build an analytical base for a coin, then you're probably sitting on some pretty good profits. Nobody knows what the hell is happening right now. I think I'm the only one who tweets about being truly confident about something. That's why I have a bunch of tickers to promote. I'll advertise anything I want here, damn it.

That's why you're here, dude. That's why I said that, in my opinion, perp projects will benefit in the next stage of growth. By the way, if you go to these networking dinners and your best trade is Hyperliquid, I hate you.

Oh, yes. Unless you're that guy from Hyper, because that guy is just a maniac. He's ready to die for the truth if you're doing Hyperliquid.

Yes. If you're not him, I don't care, unless you're Watkins. If your best trade is HYPE, I'm like, “Bro, seriously.” This is not interesting.

And ZEC is another coin that I adore with all my heart. I kind of need someone to promote something else, you know? We all—if you don't already have a position or stake in ZEC, then I don't know what you're doing.

So tell me, explain to me this mental approach. You're getting to the point where the average trader now—I think there were a lot of people who were finally forced to capitulate to Malcolm. When I look down, I look at this ZEC chart. It looks great.

There's this progression of a crypto trader from 2021 to 2024 who didn't even play memes. They were perp cheds or spot guys or just thinkers who didn't trade very often. And then I feel like a lot of them said, “You know what? To hell with it. The big green Robinhood network. Finally, it's time. I'm moving here. I'm giving in to FOMO. I'm trading coins, no matter what.”

And you meet them, and it goes the other way. These guys have no convictions about anything. They don't really believe in these coins, but they try to keep up with the “broccoli heads.” Many of the broccoli-goal guys are like, “We play big.” No, I like Qwerty. He publishes ZEC targets of $10,000 and keeps perps on ZEC.

It goes the other way. It's like all these "anks" are trying to peddle memes now without any conviction, while many meme traders trade larger-capitalization assets with deep confidence and show better results. How does it work? Am I wrong about this?

No, I think you're right. I think the memecoin kids are probably starting to realize that it's a lot easier to make $1 million on one trade than $10,000 on hundreds of trades, right?

By that, I mean that trench warfare in the market is essentially a game for small fish. If you trench in long enough, with at least some skill, you begin to understand what is a lottery ticket and what is not.

More importantly, when you see AJC buying pawns, or me buying Dcash, you start to realize, okay, I need a coin that can grow from $10 million to $1 billion. That's what I really need, right?

I think the old-timers are so good at taking in and processing information that they could potentially outpace a lot of the good coins coming out now. If they can be patient and invest in them, they'll be able to trade in the style of plumbers.

As for the plumbers, I've already said all I can about my dislike of old coins. But the plebs got so burned by DeFi, these worthless governance tokens and all that, that I think they just burned out and are now trading very cautiously. It seems that they have very outdated views.

So what if Zcash is currently worth $1,430? That's pretty disgusting. What's happening to this coin, anyway? Other things are growing. PIPES grew by 80%. Other things are growing, too. But what's happening now?

I think it's a resurgent coin, right? After all, money is a social phenomenon, right? This is a meme. Even if it's gold, fiat, Bitcoin, whatever, or even seashells, right?

Bitcoin has certain structural flaws or weaknesses, such as quantum threats and privacy. That helped bring Zcash to a certain level, right? But the most interesting thing about money is that the price is the product.

The old Bitcoiners are really good at promoting that. “Bitcoin gets easier to hold the higher it goes. It becomes better money.” Who doesn't want their money to grow, right?

I think we're starting to get into a reflexive price cycle for Zcash. You know what? It won't grow indefinitely, right? But since it hit $1,000, maybe your time horizon is 10 years. Since it reached $1,000, it has the potential to reach $10,000, right?

What else needs to happen between now and then, besides mass adoption?

Well, I don't know. Maybe artificial intelligence. It will destroy us all. Does anyone think that private money will be less valuable in 10 years than it is now?

If all that's needed for success is implementation, and the growth scenario is obvious and this is no longer a small speculative bet, we just need to accelerate, right? You do what crypto is really good at: you put everything into the price as quickly as possible.

The price will be inflated, of course. It will adjust someday, but now is the moment when you can safely set some absurd goals for Zcash. If you're willing to hold an asset for several cycles, you know that you can get burned on leverage, because volatility is inevitable.

But if you're just building a big spot portfolio and then trading with leverage for fun to make it bigger, it's such an easy asset to hold. Just keep buying.

I'm just throwing fuel on this fire, you know. I moved away from this cult topic, which I was hooked on at one time, simply because there was a continuous bearish trend in the market. It's hard to keep faith in a cult.

But Zcash is one of those assets where the people who hold it truly believe that the world will end without it. Bitcoiners also sincerely believe in this. They really, truly believe that Bitcoin is—look at Air Mass [?]. It's kind of a radical experience to have real Bitcoin.

You know these guys better than I do. How do you communicate with a true Bitcoin maximalist?

Oh, yes. They're like nothing you've ever seen in your life. Zcash maximalists are the same, right? If you, as a true Bitcoin maximalist, experienced this, I'm sure it would be an epiphany you didn't have access to before. Being a Bitcoin maximalist is a way of life.

Well, I mean, I would say that anyone who wants confidence in Zcash for many cycles—

If you just want the confidence to trade this cycle, this phase, which I think is going to be pretty crazy, just get the price exposure and have fun with it.

But if you want to own Zcash for many cycles, all you need to do is buy one ZEC. Buy even 0.1 ZEC and hide it. Just hold it and see what it feels like to have private money.

I'll tell it like it is: you look at this hidden balance and think, “Oh my God, I can send this anywhere and no one will know.” The consequences of this are obvious, but you think, “Damn it. Wait, this is better. This is so much better. This is the coolest thing in the world. It's like magic.”

The only other times I've felt this in crypto were two other times. One was when I was buying my first bits of Bitcoin, ordered a Ledger, sent my Bitcoin to the Ledger, and thought, “Oh my God, there's no bank here. There is no stock exchange here. This is a small USB flash drive. That's all you need.”

The second time I felt it was when, after I did that, I put my entire fortune into Bitcoin and basically held it for quite a while.

As we all know, the second time I felt this was when my buddy actually got into crypto. He bought his girlfriend a crypto cat with Ethereum to impress her. I thought, “Oh, this guy—I brought him to crypto, and he's doing this NFT crap.”

It's like he knows crypto better than me. What's going on?

So I started working hard. I asked, “What's the matter?” I asked, “What is Ethereum? How do I do that?”

Then I invested about $12 in Yearn or something like that. That was when I first used DeFi, and I thought, “Oh my God, wait. This is magic.”

So look, if you believed in the magic of Bitcoin, if you believed in the magic of DeFi, do the same with the magic of Zcash.

Try encrypting some Zcash. It’s so magical that you don’t have to read anyone’s tweets to be sure. No one will have to convince you anymore; you will already be on topic.

So what will happen when Vitalik touches Bitcoin? Believe it or not, you will believe it. Touch DeFi? Believe it. Touch Zcash? You will believe it. What will happen when Vitalik comes out and launches private ETH? I don’t think it matters.

Truthfully, I think a few things. I think this is actually very, very important, and everyone gets it confused. Privacy is a goal that comes and goes, and now it’s back in vogue. But there’s a difference between a privacy protocol like Railgun, Tornado Cash, or any other similar thing, and private money.

I think that’s what a lot of crypto OGs—real veterans, even those who went through the “block-size wars” in Bitcoin—inherently understand. They say, “Bitcoin, not crypto,” right? There’s a difference between crypto money, cryptocurrency, and crypto projects like Hyperliquid.

They all eventually became Bitcoin maxis because everything else was a scam for a decade or more. So they just have it in their heads that there is only 1 cryptocurrency, right? But Zcash is now proving that there is potentially a second cryptocurrency, and maybe it complements Bitcoin, or maybe it competes with it.

But Zcash is your second chance at a trillion-dollar coin, right? The problem with Ethereum is that Ethereum is not money. We attribute monetary premiums to Ethereum, Solana, Avalanche, and all those L1 coins, right? But the problem is that you go into Ethereum and trade other money.

You trade tokenized Bitcoin, tokenized gold, and stablecoins. You create pairs, borrow, and lend against these other assets. The whole thesis was that Ethereum would become a huge economy, and ETH would be the money of that economy.

What if ETH is not the money of this economy? This is what we see. So Ethereum could become a better and more valuable network if Vitalik implemented these privacy features, but it is not inherently money. It simply won’t accumulate monetary value in the future.

Is this some kind of blindness?

No. I think you can buy privacy protocols that are potentially undervalued. At this point, I have no idea about the relative value of, say, Railgun or Tornado Cash. But I can totally imagine a world where they create layers of privacy on top of stablecoins and DeFi, integrate into wallets, make a ton of money from it, then buy back and burn their tokens, and their price goes up.

Any day, Hyperliquid could be more valuable than Zcash, just based on how they trade relative to each other. Hyperliquid is, in fact, a protocol. HYP token is not money, but it may be worth more than some cryptocurrencies or Apple shares.

Apple stock isn’t money, but Apple—or Nvidia, with a market cap of $5 trillion—is worth more than some fiat currencies. So I’m not saying that to achieve a $1 trillion market cap, you have to be money. But I’m saying that in crypto, we mistakenly gave a monetary premium of hundreds of billions to non-monetary crypto assets like Ethereum or Solana.

For example, BNB. They have to lose their price premium, and where will it go? 5 years ago, everything would have gone to Bitcoin. Now it seems like all of this is heading to Zcash.

Here’s how you can get it: I think you’ll get Zcash, let’s say, after a certain time, with a capitalization of $1 trillion, and Ethereum at $40 billion or $30 billion, or ETH at $1,000 or $600. Solana at $25. BNB around $400 or $300.

The monetary premium on these assets should just disappear, right? And this is exactly what flows into Zcash.

Solana at $25?

Yes, of course. Right? It’s not profitable, is it? They burn about 1%, or maybe 10% or something, right? And the problem is that everyone says, “Well, we’ll increase transaction fees. We’ll increase transaction throughput.”

And I say, if that happened, it would work, right? But first of all, it would still be a business. Let’s say you increased transaction activity on Solana by 10 times. Then it’s just zero, and now you have a business that makes $0 but is worth $60 billion.

You still have to proactively move beyond that and start making money, right? So what has cryptocurrency taught us? If cryptocurrency has taught us anything, it’s that the blockchain space is a commodity.

It’s very, very difficult to do this—to look at any shares of mining companies, whether gold mining or silver mining. This is complete nonsense. This is the worst investment in history.

You buy them when they’re at their peak and there’s hype, and sell them until the next cycle. They barely work over a long enough period of time—only for short windows.

The way I advise people to look at it is that there are 2 types of networks. I don’t even have names for them. The first network is something like Hyperliquid or Facebook: liquidity begets liquidity.

People trade on Hyperliquid, which makes it even more liquid, so people trade on it. At Hyperliquid, if you trade $1 million, they get a bigger commission than if you trade $10,000. Their commission scales according to the value of the transaction.

Facebook, Instagram, or X works similarly. As a user, when I connect to more users, when my node in the network connects to more nodes, it generates more traffic. They monetize advertising on top of that.

More valuable as an active user?

Yes. Then they get the opportunity to capture value. For example, I’m a financial user, so people will pay big money to show me ads, as opposed to someone who just streams about sports.

Got it.

So value capture scales according to the value of the network. And then you have Cisco.

Cisco provides internet connectivity. They likely contribute trillions or quadrillions of dollars in economic activity. This is the internet, but they’re not a valuable business because they’re not capturing any of it.

If I send you a meme or send you a $1 billion business deal over the internet, Cisco still charges me per byte or bit or something. This is an Ethereum problem.

If I make a transaction, it’s a block-space issue. This is an Ethereum problem. This is a block-space problem. This is block space.

If I send you $1 billion in stablecoins, Solana will get—I don’t know, I’ll make up the numbers—a cent. If I send you $1 in stablecoins, Solana will receive a cent. It just won’t work.

So yes, I think you can really short anything with a monetary premium that doesn’t deserve it and long anything that will get a monetary premium.

This is madness. I didn’t really think about the transaction as a way to get Zcash to $1 trillion, actually. Okay, 1 last question about Zcash, and then I want to ask about the other things you trade—options.

Think of derivatives like this. Who’s buying now? Who’s doing the TWAP of this coin?

Yes.

Okay, so we’re going to have an interesting concept here. By the way, funding is negative. What’s inside that trade? Okay, let’s short the coin. Who buys? Good. Who are rich people, right?

That’s really funny, right? We talked about this on our morning call, so I’ll say it for the stream here. Bitcoin was a bottom-up revolution. That was, in fact, what I was buying.

At first, it was just unreal. We literally sent it back and forth for fun. Then someone could pay you 10 cents for a billion bitcoins. Then you bought drugs and fake documents and some vendors, and blah, blah, blah.

Now there’s an ETF from BlackRock. It came from below and went up. You have to look at it this way: it’s not like JPMorgan legitimized Bitcoin when they started offering custodial services or anything like that. It’s more about Bitcoin becoming so legitimate that it was impossible to ignore.

It’s a real bottom-up movement. It’s being pushed from the bottom up.

Okay, continue. Sorry, I didn’t mean to interrupt you.

Zcash definitely has this bottom-up movement, like the CryptoPunks, those weirdos. They’re pushing this thing from the bottom up. God bless them.

But oddly enough, the demand function for “good money”—that is, Bitcoin—is shaped by poor and disadvantaged people who face government repression, want to trade drugs, or something else. You need Bitcoin if you live in Turkey or Iran, right? Or somewhere like that. Then it gradually developed.

Privacy is different because the more money you have, the more you care about it. What if I have $1,000? I don’t care if people know about my $1,000 or not. I can safely show my wallet, profit and loss, or whatever.

But if I have $1 million, I might want to keep some of it private. If I have $1 million, I might want to hide $100,000. If I have $1 billion, maybe I want to hide half of it. I don’t want to—well, everyone says, “Eat the billionaires.” I don’t even want to get close to the billionaire mark, at least publicly.

So I’ll hide half a billion of my money. And everyone says, “Oh, Elon is the richest man in the world.” Not really. The richest people in the world are, say, the royal family of Saudi Arabia.

It’s like the British royal family. It’s like Vladimir Putin. It’s like Kim Jong-un. How is that, do you understand? It’s like authoritarian rulers who effectively own entire GDPs and economies, right? You have no idea how much money they have. One hundred percent of their money is private.

So there is an exponential return on privacy: the richer you are, the greater percentage of your money you want to make private. As Zcash gets bigger and can absorb larger flows, big players will start buying it with a higher percentage of their wealth, which creates an exponential effect where money is raised “from above” that Bitcoin doesn’t have.

So it’s really like a multiplier effect, right? As privacy accumulates in a private pool, the economic attractiveness of that pool increases. It’s like, “Okay, if I look at it, Zcash is essentially a mixing pool, right?” This is, in essence, the technology. I can’t put $100 into a $10 mixing pool, but I can put $1 billion into a $20 billion mixing pool, right?

That also accumulates, and that’s the problem with Monero. Monero does not accumulate privacy, while Zcash does. Holding Zcash is a positive mathematical expectation, because if I hold Zcash, after 10 blocks it becomes more private in the pool. After 100 blocks, it becomes even more private. The pool is getting bigger and even more private, so holding your Zcash is profitable.

So you have these rich people who are like, “Oh my God, I can hide more of my wealth here. I can hide more of my wealth here. Oh, did you know they’re introducing taxes? What’s this about Flock cameras? What’s this about capital controls? I heard the 30-year bond is going down the drain. Are they going to touch my retirement accounts? I should buy some Zcash. They want to eat billionaires. I should buy some Zcash.”

So yeah, dude. Damn it, come on. Send it. It’s just fucking awesome, man. Holy fuck. That was a powerful thesis, by the way. I like it.

Yes, I am hooked on Zcash.

Yes, yes, yes.

Religious. Religious.

It was religious. Oh, yes. It was religious. Yes.

This is a trillion-dollar coin. I guess I’m a little tired of this “what percentage of Bitcoin, what percentage of that?” thing. Let Zcash be itself. It goes up to $1 trillion, and then we’ll talk about how many trillions there are, right? How did you like the sermon?

Okay, you also made a pretty cool deal on this to give me some hype. I don’t know how much you closed on Derive, which is a complete reversal, because it’s funny that we’re promoting perpetuals as options killers, and now we’re promoting options as—

Yeah. It is too small compared to perpetual contracts on the network. To be honest, that was never mentioned on the stream.

I don’t think I ever mentioned it. The market cap is only a few hundred million dollars, but tell us about your deal, why you bought it, and what stage the deal is at now.

Yes, I haven’t sold any of my Derive yet. In fact, I bought some more today. I reserve the right to sell at some point, but right now I’m still confident about it.

I was just browsing Twitter and saw a few accounts promoting derivatives and options, and I had a typical crypto reaction: “But everyone is only interested in perpetual futures.” All the previous crypto options protocols were crap, right? Then I saw a cool crypto options deal go viral, and I thought, “Oh, this is going to shoot.”

But what kind of deal was this? That Kool-Aid Man account we were looking at—his account was like, “That’s why you bought it?”

Well, that’s what made me start taking it seriously, because if there’s one thing we’re convinced of on this show, it’s that traders are the new celebrities.

Wow, I didn’t even know that. Just imagine: if, instead of Hyperliquid, Lighter was—if Hyperliquid and Lighter launched on the same day, you would bet on the one with more star traders, right? If a trader on Lighter made $1 million on a trade and it went viral, then Lighter would be the winner. Or Hyperliquid, right?

So I look at this and think, okay, this is the social aspect. This is memetic, you know? This is important for financial instruments, because liquidity begets liquidity, right? You want to accumulate liquidity and create a protective barrier.

So I look at it and think, okay, there’s some social impact here. Let me look at this more seriously. I suddenly realized, “Oh my God, this is so undervalued.”

First of all, options and perpetual futures are not the same thing, you know? I fully agree that perpetual futures are more convenient for retail users. They’re simpler, better for short-term trades, and easy to launch. It’s pretty easy to create a new perpetual futures pair, right? It’s much harder to create liquidity and a full order book for options.

So there’s a short- to medium-term window where perpetual futures make sense for certain assets and types of transactions. But perpetual futures are just a linear return multiplier, right? If I take out a 10x leveraged position for a 10% profit, I get my 100%. It’s just a multiplier.

Options have convexity, right? If I buy an over-the-counter option and it starts to become profitable, I get an exponential positive return. The real reason experienced players use options is that you can use this convexity to create new types of payouts.

If you have a certain idea about the relationship between assets, strikes, or prices, you can construct new financial payouts. You can hedge, and you can sell options to collect the premium. Options literally have a different return profile than perpetual contracts, which means they are separate financial instruments. They’re just different assets.

There’s no world where perpetual contracts will swallow up the entire options market, right? Of course, there are situations where perpetual contracts take away part of the retail market, but I think perpetual contracts just make the market bigger overall. Perpetual contracts increase the number of people trading derivatives.

So when you look at it from that angle, you say, “Okay, Hyperliquid is the darling of crypto.” And that’s how it should be, right? They totally deserved it. That’s why everyone got so into perpetual contracts. They completely forgot about options. In fact, they even—

Oh, one second. Some guy’s at the door. Yeah, it’s okay, dude. I haven’t traded options since I was 16, bro. Something from Amazon. No, everything is fine.

But yeah, in general, everyone was completely enamored with perpetual contracts, so much so that they became bearish on options. Bearish on options. Seriously?

So you look around and see that all these options protocols are undervalued. It was such a terrible bear market that they basically all died, right? Then the story of Derive becomes incredible.

This was during a bear market. The token was complete shit, and they were really struggling. At some point, there was—I forget the exact sequence of events, so I’m sorry—but there was a buyout offer from Synthetix. The Derive team did not accept it. Instead, they diluted the token. They issued about 50% of the new supply and said, “We’re diluting the token, and we’re going to use that money to continue building.”

And they fucking did it, man. Look at the statistics now, at the product, at the liquidity. Open interest, I think, is somewhere between 4 and 8 times greater than it was a year ago. Commissions have increased. They conduct buybacks to redeem that issued token supply and more buybacks to eventually become profitable.

They’re preparing to release V3, which will be a ZK rollup like Lyra on the Ethereum mainnet. They’re supposedly completely reworking the API to make it easier for everyone to integrate. They’re making it easy to scale to all the new markets they want to add.

When tokenization and stocks go online, they can integrate them and create options markets for them. They have a built-in product for perpetual futures. Of course, it doesn’t compete with Hyperliquid or anything like that yet, but you can create structures where a position includes both a future and an option, and they will allow cross-margining between them.

So you look at it and think, “Okay, this team is made up of real workhorses.” I always complain about how badly projects like Compound, Uniswap, or Aave treat their token holders. This is an example where they say, “Listen, you are our token holders. We are all in the same boat. We had to go on this show to build something.”

And they took it and fucking built it.

That’s right. Go ahead. This is a team with character, a team with soul, a team with determination. Their founder is currently in prison. He is very cool. He speaks very well of—I think his name is Nick, so I would recognize his face.

Yes, exactly. But he’s really cool. He was on a media tour, performs well, and makes a great impression. He is obviously a real star.

So you think to yourself, okay, options are undervalued in crypto. This is an incredibly resilient team that’s building, and their project metrics prove that they really work.

Then you think about pure market dynamics. You had the Lyra takeoff, and you think, “Okay, maybe Lyra was undervalued relative to Hyperliquid, and the Robinhood partnership was probably the catalyst that made people realize that.”

But today, how underrated is it really compared to Hyperliquid? Hyperliquid will probably reach $100. It’s a great protocol. Maybe it will reach $200, but that takes time, right?

If you’re a fund and you see TradFi moving to blockchain, with all financial markets moving to blockchain, these are undeniable trends.

Hyperliquid’s profitability profile is not quite the same. Lyra’s profitability profile is not quite the same. So now, will you buy the third- or fourth-best DEX for perpetual futures? Do you want to buy the best DEX for options, which is a market segment that the crypto world has completely ignored? That’s pretty good.

What happens when Hyperliquid simply destroys the competition?

Yes, I often hear this. Here is my opinion. First of all, I have more Hyperliquid than, say, Drift, although I have a share of Drift. Hyperliquid is still bigger. So if Hyperliquid destroys Drift and suddenly has both perpetual futures and options, then Hyperliquid could jump to $200 and I’d be happy. You see, I basically insured myself.

But don’t forget about HyperEVM. Jeff is a top founder. The best part about Hyperliquid is its extremely small and focused team, which works perfectly. The problem with Hyperliquid is that its small and focused team has to be completely focused on perpetual futures.

They experimented with HyperEVM, and everything after that was focused solely on perpetual futures. It was about the HIP-13 markets. It was about portfolio margin, improving the risk-assessment mechanism, and the liquidation system. It was about increasing the depth of the order book and creating more advanced order types.

Why not? This is how they make billions of dollars. That should be their focus. So you have to ask yourself: if you’re Hyperliquid, you’re thinking, “Okay, do we need to win in options right now? Can we focus on this? Or maybe the opportunity with perpetual contracts is so huge and our team is so small that we’re just going to stay as focused as possible on this?” And that’s a good thing.

Got it. And look at their HIP-4 markets—that’s their prediction-markets product, right? It seems a bit neglected. They’re releasing updates for it and monitoring it, but this market was supposed to lay the groundwork for options or up-and-down markets, which don’t have the exact convex payoff structure that options do, but can work as a portfolio hedge in a similar way.

It is somewhat neglected, rightly. So we have what we have. Would I be the first person Jeff completely crushed and proved wrong? No, maybe they will. But all I know is that there is definitely a market opportunity for options.

I’m willing to reconsider my assumptions and change my position if Hyperliquid launches an options product and it gains momentum, or if Lighter launches an options product and it gains momentum. But right now, they don’t have that. So I’m going to bet on the winner.

Zena said it’s worth crediting Hyperliquid’s ability to convince other teams to build some of the best-performing products on Hyperliquid, like Chain XYZ—a great example. It’s worth giving them credit for their ability to attract talent to create valuable things based on Hyperliquid.

Mhm. But that’s based on their perpetual-contract engine. They can’t just let someone come in and build the options, because they would need to create a market mechanism for options. This is a valid observation.

I just found him on Twitter: Nick Forster.

Yes, yes, he’s cool. What kind of market is there? It’s quite small, right? I think it was about $2-something, but now I’m not sure.

Let’s see. And I don’t know if CoinGecko is showing it correctly. Are you trading options?

Options? Yeah, sometimes, actually.

The market cap is now $228 million. I don’t give price targets or anything like that, but in my mind I’m thinking, “Okay, this is the best options protocol. Is it worth at least $1 billion?”

Yes, because what alternative do you have? What potential profit is there? It’s huge.

Well, no, I trade options. Again, I like options because of the convexity. When we were long on local AI and everyone hated Apple, I just bought at-the-money call options on Apple with convex returns.

There’s this biotech stock called Tempest that one of my favorite Twitter accounts, Munch, was promoting to me a lot. I thought, “Okay, let me just take out at-the-money calls.” That’s a cheap expression. It’s cheap capital, and if I lose it, I lose it because I don’t have to pay for financing. I’m just buying the call at the call price.

Then if it comes in, I have exponential returns, and that’s great. This could be a really significant contribution to my portfolio. So, yes, I like options—selectively.

Yes, fair enough. I’m glad you like them. Give me another one if you have a trading idea that you like right now.

The other one is low-cap. It’s a low-cap diamond. This is very speculative. If you can’t figure out how to buy it—it’s even hard to buy—just don’t buy it.

Pearl?

Yes, I need to figure out how to buy it. I don’t know how to buy it.

Okay.

That’s the thesis about Pearl, right? It actually starts with Zcash. PRL. It starts with Zcash, when basically, 5 years ago, Bitcoin had already won. To say, “I’m going to create a new cryptocurrency,” would be ridiculous, right? If someone said, “Our thesis is private money or money for AI,” I would say, “You’re an idiot.”

And then Zcash comes along. Now it seems to be dealing with the same private-money thesis we just talked about. What that does is expand the Overton window. If Zcash can complement or compete with Bitcoin, then it’s obvious that Bitcoin isn’t the only one. Maybe everyone else will fail, but now there’s at least the potential for something else in this area to succeed.

My thesis is kind of memetic, but, roughly speaking, cryptocurrencies are the easiest projects to value in the trillions. Bitcoin is already worth $1 trillion. The only question is how many trillions it will be worth. Is this Zcash? I’m obviously bullish on the trillion, and then we’ll see how many more trillions are added.

So what other cryptocurrency, purely from a memetic perspective—because it has to be memetic—seems like it could reach $1 trillion? What is AI money? That’s the main narrative. The 2 biggest narratives are privacy and AI.

You start looking at all the AI projects. You see VVV, but again, like Railgun, it’s a privacy protocol, not private money. VVV is like an AI privacy protocol, not a currency. My friend pointed me to Pearl.

The easiest way to explain it is to take Bitcoin and replace SHA-256, the hashing algorithm, with matrix multiplication, or matmul. That’s pretty much all they’re trying to do. If Bitcoin scaled a huge network of hashing and electricity, can Pearl scale a huge network of AI computations and use them to secure the network?

And they really want to implement a buyout mechanism, so—

You’re going to look into that, by the way, right?

This mechanism—you’ll consider it?

Yes. This is where it gets extremely complicated, and these nuances are the reason why I think it’s better than Nock or other projects. Essentially, the unique thing about SHA-256, and the reason why it works for Bitcoin, is its complexity of execution and ease of verification.

This is a one-way hashing algorithm. It might take me gigawatts of energy to find the correct hash for a Bitcoin block, but someone else can verify it in a microsecond. That’s the beauty of it. So much work goes into it, but anyone can test it, so it scales easily.

The problem with Pearl is that it’s proof of useful work. That’s the problem with Bittensor. SHA-256 is useless, so it has this property. But useful work—for example, if I performed AI calculations for you and reached a conclusion—the only way to check whether I did it on Opus is to run it on Opus yourself.

Ah, okay, okay, okay.

Therefore, there’s a double expenditure of resources. In essence, there are no unnecessary costs in decentralized Bitcoin. All the calculations are performed, and you check them instantly.

Okay.

But there are costs to decentralized AI, and that’s Bittensor’s problem. All these miners submit their work, and then you have to redo the work to check it. This is brutally inefficient. Because AI needs to be useful and the competition in the AI field is so fierce, there is no room for inefficiency. It just won’t scale.

It’s also subjective. For example, if we use a Bittensor network to train a programming agent, and both of our agents serve code that works and executes at the same speed, who’s to say whose code is better written? Maybe my code is easier to maintain and easier to understand over time, but that’s because I have more lines of code for documentation, while your code has fewer lines but is harder to understand and maintain. Who is better?

Got it.

It’s impossible to estimate. So you look at a network like Bittensor and think, “It’s inefficient and hard to evaluate.” But if you go to Pearl, what they do—I'm probably a little wrong, but basically—is that when you do matrix multiplication, when I multiply matrix A by matrix B, they do it using something like a ZK scheme. Without rerunning the computation, I can prove that this was the computation.

Yes, so I can prove that you multiplied matrix A by matrix B without recalculating it.

Okay. Okay. Okay. So I could be wrong about this. It's like we're delving into the real technicalities of cryptography, right? But remember: ZK, AI, Bitcoin.

What I will say is that you were among the first in Bitcoin if you could understand these technical nuances.

Oh, that's right, dude. First in Zcash, if they could understand these technical nuances.

Everyone should take the time and really listen to this, as painful as it may sound, right? Correct me if I'm wrong and go read about it yourself.

Theoretically, they actually created some overhead. It seems like it's about 5% overhead or something. But they essentially created a low-overhead way to test inference, right? Which means they can—

Yes. And as long as the Pearl subsidy—

So, if there is a 5% overhead, right? Let's say your business is making 5% less if you use Pearl AI instead of regular AI. But the Pearl block reward exceeds that 5%. Mining Pearl is profitable, just like mining Bitcoin, if the energy costs less than Bitcoin itself, right?

So the thesis is that if we can get this running, the Pearl network will accumulate all of these calculations. There is much more computing power for AI than the computations that go into Bitcoin, right?

I think someone calculated that if Pearl gets 1% of AI computing, it will have 20 times the hashrate of Bitcoin, right? And there are already people integrating this. For example, Together AI already provides subsidized inference using Pearl, right?

That is, Together AI is a true provider of inferences. Pearl is updating its core to support different types of matrix multiplication. They are extending this to floating-point numbers so that they can integrate all the best open-source models that currently use floating point. A pull request is already active to get this going.

So the question is, will they be able to scale this economy, right? Okay, now I have AI-protected Bitcoin.

Do you know what's really interesting about the Bitcoin security budget right now?

What exactly?

Bitcoin's hashrate is falling, and it has been falling for some time. Bitcoin's hashrate is in a bear market because all Bitcoin miners are switching to AI computation.

Something like 20% of—

That's a lot.

Every public company, MARA and all these companies—

Yes, that's right. So think about memetics. The Bitcoin meme is that it's safe because it's useless work. Whenever there is energy available, you simply mine Bitcoin to monetize that energy.

This is the Bitcoin meme.

But if all this is starting to shift to matrix multiplication and AI workloads, shouldn't the next Bitcoin be hashed using these AI algorithms? Isn't that right?

The meme is just perfect. It seems too good.

And another thing—I'll just summarize, because people are going to read about all this. They're going to read about Nock and all this nonsense, and I'll say this: Bitcoin won because of its simplicity.

True?

Game theory was ridiculously simple, right? It was like: mine Bitcoin.

Yes, but this project does not benefit from simplicity.

No, no. Actually, compared to all the other crap, this project does win, right?

Seriously?

Because of the way you lay it out.

Yes, because that's how simple it is.

This is Bitcoin, but instead of SHA-256, it's matrix multiplication. And that's all. They just replaced the algorithm on the fly. They did a bunch of things to make it work, but conceptually they simply replaced the algorithm.

There is no programmability, no validation network. They don't even care whether the AI work you do completes a task for the client or not, because game theory says you will reuse that work for the client to double-monetize your energy.

They don't even care, right? They don't evaluate whether it was worth multiplying those matrices at all, like Bittensor does. They don't care.

They're like this: it's extremely simple. They say, “This is Bitcoin, but instead of SHA, it's matrix multiplication, because the future load is AI.”

All the other projects had a bunch of complicated bells and whistles, and everything that tried to compete with Bitcoin with those chips pretty much lost, right?

So, another small-cap "pearl" is Pearl. We'll see how it goes. It's hard to buy—a real hassle. Maybe it's overrated.

How do you feel about it? Do I have these coins? What is the market capitalization there?

I think there's one somewhere. Let me check. Besides, it's a coin that needs to be mined, so inflation is quite high right now.

Look, this is a coin for real men. Everyone has to do their own research on this thing, you know? This is not the same as a baby crypto. If you're a complete zero in crypto, don't buy this damn thing.

It's worth $170 million now.

That was very funny. So how many, do you know, what options are there? Zcash was at $1–2 billion for a long time. Is that true? Can Nock reach that level or something?

Matrix multiplication?

Yes, matrix multiplication.

You know what a matrix is? If you don't know this, we can't even talk about it.

We saw the movie. We'll make a separate stream for this.

No, no, it's actually just—remember the math? X-Y graphs?

Yes, like Pythagoras, of course. The axes, the X-Y axis?

Yes, yes. So a matrix is basically a bunch of things like X, Y, Z, A, B, C, D, and E. There is a huge grid, and this huge multidimensional grid describes a vector, you know? Then you can multiply the vectors by each other. You can multiply matrices one by one.

I'm just asking quickly. Maybe we'll skip this.

A vector, in the sense of a unidirectional line.

Okay, I understand.

Don't worry. We'll do that later.

No, I—

We'll have a geometry and linear algebra lesson another day. Maybe on our Sunday call we'll do it.

Yes, yes, I understand.

I'll give you a math homework assignment. Carefully.

This will end with you giving me math homework. I wasn't very good at math. I was actually going to fail statistics, but then we got let out of school because of COVID.

How do I buy this?

I literally—I’ll tell you. Honestly, it's such a difficult thing to grasp. That's crazy money.

Right? If someone wants to buy this thing and can't figure it out, that's a signal that they don't deserve to buy it. Wait until someone makes it easier for you and buy at a higher market cap.

I'm not here to teach anyone how to buy this. You and I can talk about this privately. But, yeah, there are no newcomers to this coin. I don't want paper hands. I don't want weak retainers.

Only buy this shit if you're a real man and really intend to keep it with me. Shit in the mouth. I actively advise people not to buy this. If I have to convince you too much, don't buy this crap.

Wow, dude. Tulip King, you're just cool. Is there anything else to add?

That's all I have for now. This is all I have for now. I'll just continue.

No, I was just going to read the chat message. One participant writes about counterfeit oil from China. Another talks about matrix multiplication and SHA-256 algorithms in blockchain. What did you want to add?

First of all, this is why this is the best show and we're all chosen here.

I wish people would start doing thesis development again. Derive—there's a real thesis there. Pearl—there's a real thesis there. Zach—there's a real point there. If you look at AJC's pawn trade, he was one of the best thesis masters, right? But it was a great trade, wasn't it?

Finally, folks, let's all breathe a sigh of relief for a second. We all know that these meme coins will go to zero. Launchpads are a sustainable business because meme coins will never die, right?

But damn it, start believing in something. Start developing theses. It's time for everyone to wake up.

If you really want to make a profit, you need to get your head out of your ass and focus on some coins. Focus on some DVC[?]. It's time to start buying coins that you think will exist in a year.

I believe in this very, very deeply. When I say perp chats will win, I actually mean a real bull market. This is a market for holders.

That's right.

I can't stand it when people say that. I'm not here to determine what the market is, but look at how some of these coins have traded. Unless you're the best on-chain trader in the world, most of the money is being made on compounding right now.

So, yeah, it was a generational show, by the way.

Dude, every time. I was starting to get a little carried away by that pearl thing, but it was incredible. I started to get upset. I started smelling oil and all sorts of crap. I was like, “Damn it.”

Take a break, and I'll steam it for you over the weekend.

Dude, you're the best.

Thanks again, Tulip. We'll be in touch soon. Peace.

Peace.

Oh, wait. The last one.

Yes. Here?

Yes. KPMG?

Dude, my girlfriend used to work at KPMG. It's a type of consulting company. They do taxes and accounting for other people.

I work on a crypto stream, so I wear it ironically. When I send her clips from the stream, I'm like, “Haha, look, I'm wearing a KPMG hat.” It's purely an inside joke with her.

This is cool.

You're the best. Thanks again, brother.

Okay. Peace.

Peace.