为什么我们看多

I do believe that Bitcoin is going to outperform every major equity index, every major hedge fund, every major venture capital fund, and every major private equity fund for the next 5 to 10 years.

Realistically, most people are going to fumble that opportunity. Most people on the street—maybe not listeners to this podcast, but most people—are going to completely fumble a generational wealth opportunity for the following reasons: underexposure, overexposure, panic-selling when the Crypto Fear & Greed Index tilts toward fear, and holding the wrong altcoin instead of Bitcoin. When other people are fumbling, it's an opportunity for the 1000x Podcast listeners to make a decent profit.

1. Why Are We Bullish?

All right, guys. Welcome back to another 1000x podcast. It's been an extremely eventful week. There's just so much going on. We got the Pump.fun ICO; we have the Plasma ICO; and I saw so many headlines about stablecoin integrations as well. This week, we have the Circle IPO, which 4x'd, 5x'd, 4x'd—crazy. It's just been insane. Bitcoin's back flirting with all-time highs. Things are looking great.

Yeah. Last cycle, we had the joke of the Su Zhu supercycle. That obviously wasn't true, but this is starting to feel like it might be a supercycle, Jonah. Crypto is going fully mainstream. It's insane. It's now effectively fully mainstream; now it's just about following through on integrations. It's kind of insane.

Yeah. Pete Rizzo, another Blockworks podcaster, tweeted out this thing where it's a video of the White House crypto director saying that the Trump administration will soon announce plans to accumulate more Bitcoin for the Strategic Bitcoin Reserve, which is bananas. The most bullish possible thing that could happen is the United States government accumulating BTC.

It almost feels weird to be euphoric about it. We're obviously crypto natives, sitting here geeking out in the weeds every week and podcasting about crypto, so we're not exactly the most unbiased people in the world when it comes to crypto. But just talking to people in my personal life who have nothing to do with crypto, investing in Bitcoin—even among the people who were the biggest skeptics long ago—is no longer a question of whether it will get adopted by society or whether it's even going to catch on. There's no debate anymore. It's caught on.

Nobody debates that it's going up. Nobody debates the fact that it's not going to zero anymore. Those conversations are just over. The follow-up conversation is, "Okay, so how invested are you?" People are like, "I wish I'd realized it earlier. The price is too high," and all the same excuses that bad traders make.

Markets are, to a greater extent, over a long period of time, kind of memoryless processes. What the price of Bitcoin did between $0 and $107,000 or $108,000 is kind of irrelevant to its future. You should just look at it in terms of where it's going to go next. I feel like the underinvestment among the community of people who have now accepted that it's a proper investment vehicle that serves a purpose in the world—and that cash hasn't even begun to flow into Bitcoin—makes it hard not to get excited about this.

I have to temper my expectations, though, because I know about my own internal personal bias. But just to finish out this rant, and I tweeted this too: I do believe that Bitcoin is going to outperform every major equity index, every major hedge fund, every major venture capital fund, and every major private equity fund for the next 5 to 10 years.

Realistically, most people are going to fumble that opportunity. Most people on the street—maybe not listeners to this podcast, but most people—are going to completely fumble it and miss out on a generational wealth opportunity for the following reasons: underexposure and overexposure, like working in crypto. I feel like you don't really need to work in crypto to just buy Bitcoin. It's not like oil, where you need to work at an oil company to trade oil; you just buy crypto. Then there's panic-selling when the Crypto Fear & Greed Index tilts toward fear, and holding the wrong altcoin instead of Bitcoin for a long period of time. I think that's how people will fumble this opportunity. When other people are fumbling, it's an opportunity for the 1000x Podcast listeners to make a decent profit.

I think those are all good. One thing that I will say is that overexposure is probably the biggest lesson for listeners. A lot of people get overexposed because they think to themselves, "Okay, well, if you're worth $100,000 and you put all your money into Bitcoin and Bitcoin 3x's, you're not rich," right? The question is, "How do I—I'm in this industry. I know this is going to happen. How do I get rich?" That's when people turn to altcoins, and that's when people turn to leverage.

The reality is that you have to make do with what the market gives you. I do think that a real way to continue to get rich in crypto is to find those underappreciated 10-baggers. When we were shilling Hyperliquid ridiculously hard, $12 to $15 could have been a 10-bagger. I think Syrup right now is still a very reasonable 10-bagger. These opportunities do exist. They're out there, and we can find them.

Once you hit them and they massively outperform, just roll them back into Bitcoin. Suddenly, you'll find that after 2 years, maybe your $100,000 hasn't gone to $300,000. Maybe it's gone to $1.2 million, and suddenly you're on your way.

2. Overtrading Is The Road To Ruin

One thing that I will caution against is fatigue. Especially in this particular environment, it's very easy to get caught up chasing every tiny new thing that happens and trying to squeeze every tiny dollar. I think the best thing you can do in an environment like this, where the tailwinds are so undeniably clear and we're probably just up in the future no matter what—in a year, at least—is to pick some things and sit in them. Follow their developments and make sure you still believe in them, but don't toss things around too much. If you believe in something, literally just believe in it.

Yeah, I agree. I think overtrading is certainly the road to ruin in a market like this. There's a guy I knew, a hilarious character. He's an artist, and back in the 2017 ICO craze, he said, "Jonah, you're a professional trader. I wanted to get your take on something."

Over the course of our subsequent conversations, he revealed that he had begun actively trading crypto—shitcoins and ICOs. He was all over what was likely Poloniex and 60 other random exchanges, most of which probably don't exist anymore. I warned him. I was like, "Dude, I'm a professional trader. I've seen a lot of people flame out in trading. I know exactly how it goes. You're trading too much. Today you're interested in Lisk because it's Python for crypto, and yesterday you were interested in Tezos because it's the future of humanity in space, or whatever it was promising at the time. There was no narrative, and you were constantly flipping."

His counterargument to me over the course of that entire boom was, "My P&L is growing. I'm up. What I'm doing is working." It's very easy to psychologically lie to yourself as an overtrader because when the entire space is 100x'ing and you've 2x'ed your money, you can still pretend that what you're doing is working because you've 2x'ed your money, even though you probably left 98% of the cash on the table that you would have earned if you'd just been broadly invested in the space and done absolutely nothing other than—in this guy's case—paint.

I think we all have to be honest with ourselves. Just being completely honest on the podcast, the smartest thing I did recently was buy Hyperliquid. I haven't really done much else because I'm afraid of doing stupid stuff. I bought some Syrup, probably not enough, but I haven't been selling things to buy other things or actively trading, just because I've got that tingly feeling that we're going to launch another 50% higher in terms of Bitcoin prices. I'm trying to avoid the overtrading hammer that you just described.

Yeah, I think there are obviously some people who want to sit in front of their screens for 18 hours a day and can figure this stuff out.

3. Is Robinhood The Best Positioned Exchange?

I think you just have to generally—this has been true for a very long time—but generally, altcoins are trash. Generally, in the long term, they don't actually make you any money. In previous cycles, I basically would never have given this advice. I would never have given you this advice, and I don't think I would have taken it, either. I would have laughed at you if you had told me this. I would have said, “There's that, dude. The only thing to do is to actively flip and trade.”

There's just no point to doing anything other than flipping and trading. Flipping and trading was making a lot of money back then, in 2021. But I'm trying to adapt to the new world, where the things that make money outperform and the things that don't make money don't actually particularly do well. This is a genuinely new market environment.

There are obviously opportunities here and there. I think you can still bet if something is extremely heavily shorted and you think there's some good news coming out. You can take these trades for sure, and don't get me wrong, I think those trades do exist and continue to exist, and there are still inefficiencies in this market for you to take advantage of. It's just not the same as it was 3 years ago. It's not the same market.

In 2021, I was on top of every event, every tiny little thing that was getting launched, because it could send an asset up 15% or 20%. You take a trade on that, you bet on something that other people aren't betting on, and you make good money. Nowadays, it's much, much, much more difficult to do this. It requires, I think, a lot more skill. I would never advocate for a new trader to go be doing this stuff.

4. Ads (Kraken OTC, WalletConnect)

And not only that—the most important part—there are actual things that you can park your money in that are good assets, assets that I think will exist in 5 years. In 2021, I don't think there was a single asset I would have confidently told you, “Yes, this is going to exist in 5 years. This is 100% going to be a top asset in 5 years.” It was very—I don't think I ever once said that about anything other than Bitcoin. I did say that about ETH, I think, back then, but that's because it was before I knew anything, Jonah.

5. Circle’s IPO

Well, we live and we learn. I mean, you were early on ETH becoming a stablecoin. I caught on before the real guillotine dropped.

Speaking of overtrading and sitting in front of your screen for 18 hours, it's not an accident that today I'm holding and drinking water out of the FTX third-anniversary water bottle by Traders for Traders. It was given out to the conference participants at the conference where you and I met, Avi. This is an artifact of crypto's past and a testament to the group of crypto people who just took meth all day and sat in front of their screens without sleeping, doing stuff.

Maybe if they hadn't done that, they would have just sat on basically the most amazing business of all time, a crypto exchange, and sat on early investments in Anthropic and pretty much every other amazing AI company that Sam somehow invested in, and just ridden the wave. But they didn't. They overtraded their way to ruin and did a bunch of illegal stuff, too. I think the lesson for all of us is: don't do meth, don't overtrade, and, if you're going to trade, don't be a dick for a tick.

There are times when the market just vaults lower on Trump saying a bunch of stuff that's obviously not going to become policy. You buy that dip. You buy Hyperliquid at 10 or 12 or 15, or wherever we shilled it. On the other side, when the guys from the Sphere in Las Vegas come out and say, “Hey, likely WIF is a scam. They never contacted us,” just be careful out there. There are some trades that pop up where you can make a quick 50% to 500%.

But you're probably supposed to, to your point, Avi, about not trying to catch the 15% to 20% coins and just jump to the next lily pad, raise our threshold for what's considered an appropriate return on capital in crypto and probably lengthen our time frame a little bit, from a few weeks to a few months, because crypto is starting to grow up, weirdly.

Speaking of growing up, should we talk about the Circle IPO, which traded like a low-float shitcoin? It just pumped. It was crazy. What do you think about that?

It was crazy. I think it just tells you everything that you need to know about the appetite out there among investors. We talked about this on a previous podcast: I was trying to explain that there is a whole new class of investors that wants to get access to this market. We were seeing that in the appetite for these Bitcoin products, these MSTR-like competitors. There are institutional investors out there that have a tremendous appetite for crypto, and they're trying to find all the right ways to get in.

To me, prior to the Circle IPO, I was pretty damn bullish because I think this is just yet another type of product in the crypto world. The way that you can think about it is that there's tremendous demand for products in the crypto world. This product specifically is a stablecoin. You get access to stablecoin revenues. Does it actually have to be a good company? No. It just has to kind of fit a market need for exposure, because people are betting that stablecoins are going to 50x their market cap in the next 10 years. Time to get on board.

I think, however Circle is doing now, they're going to do even better in the future. That's why it's trading now at 300% up, which is just totally insane. I mean, at a 4x right now, I think they're probably a bit overvalued.

They're trading at a $22 billion market cap. Do you know what the revenues are? The revenues are $1.6 billion in 2024, and their net income is only $18 million. And I'll tell you why. First of all, I'm not an equity analyst. It's basically the one asset class I've never traded professionally in my journeyman career, so take what I'm saying with a grain of salt. I'm sure there are financial analysts out there who are far better than me at picking through this.

I think that Circle is kind of a crappy business. Those EBITDA margins are tiny: $18 million on $1.6 billion. It's basically 1% margins. You would ask how 16 Italian dudes in Lugano can run Tether as basically the most profitable business per employee in the history of the world, while these Circle guys generate 10% EBITDA margins.

Well, Avi, the reason why is that Circle pays most of their money away, in addition to SG&A and random employee compensation, whatever else. They pay most of their profits away to companies like Coinbase to feature their product prominently, try to get people to own USDC instead of Tether, and basically fight the losing battle against Tether because Tether dominates this stablecoin space.

The other thing that most people in crypto—even in crypto—don't know, and I know this because I worked at a market maker, is that Circle pays the market-making community a healthy sum of money for every unit of USDC that a market maker mints. Or they used to, anyway. That's basically a way of incentivizing market makers to mint more USDC, which increases the float, which increases the yield that Circle can collect.

The reason why that's unsustainable is that the USDC that gets minted isn't getting minted by an end user to stash. It's getting minted by somebody who's just going to cycle it through, and then it ends up kind of getting migrated to Tether or something else.

And it’s not sticky. So that’s an expensive campaign, I think, and it doesn’t really work. I think the Coinbase stuff probably works and sticks. It’s a little stickier, but still not sticky enough.

And then the other thing is, rates are about to get cut. As interest rates come down, this revenue is going to get slashed in a major way. This is not like Apple selling iPhones. This is just hoping that whoever Jerome Powell’s successor is—who’s going to get appointed by Trump, who wants interest rates to go to zero—is not going to cut interest rates to zero, which is kind of crazy to me. I don’t know. It seems like a terrible company, priced by professionals at probably a fair-to-rich valuation, and then retail degens looking to get exposure to stablecoins just bid it to the moon.

I don’t think it’s just retail degens. I think it’s also the fact that people do want exposure. I mean, they want exposure to this narrative, right? And I think we’re also going to see this coming out. Ripple’s probably going to IPO, and it’s probably going to come out at an insanely stupid valuation for what it is versus what it should be valued at. It’s going to be the same story over and over and over.

This does tell me we do have some hype to ride out. At some point, there is going to be a large market correction, probably in these stocks. I also probably see a market correction in Robinhood and a market correction in Coinbase. The MSTR-playbook companies probably have a massive correction at some point. But for now, the appetite is still very clearly there to get access to this stuff.

One thing that I do like to do is go on Reddit and try to get a pulse for the average degen trader on the stock subreddit or WallStreetBets. A lot of them were talking about how Circle is like, “Oh, well, it seems like they don’t make a lot of money, but BlackRock bought 10%—they took 10% of the IPO, right? So, okay, well, if BlackRock really likes it, we’ve got to get in.”

So I think it’s a combination. It’s the degen investors definitely coming on, but BlackRock did actually take 10%, right? So it’s like, okay, well, clearly there’s some interest from their clients and base there, right? And those people are—I mean, a substantial proportion are probably degens, but much, much less likely to be degenerate compared to your average person on the street, right?

Yeah, that’s fair. I mean, BlackRock took it at the IPO price, but BlackRock being BlackRock, it’s kind of hard to deploy $11.5 trillion of assets. And I know they’re into crypto, so it’s kind of like, you don’t have a lot of options if you’re BlackRock. They take a ton of every IPO, don’t they? I don’t know. I’m not an expert.

But to be fair to the degens on WallStreetBets Reddit, it’s probably better that BlackRock is in for more than they usually are in this IPO rather than just being underallocated, because it shows that BlackRock cares about crypto, that they’re picking a winner. Or they’re at least picking something that’s safe from a regulatory perspective, right? They’re picking Circle.

Maybe Tether is likely the Cantor Fitzgerald bucket-shop coin, and USDC is the white-shoe-firm coin. Maybe that’s how this is going to shake out, so perhaps it’s justified. I just still think that Circle’s such a terrible company that even if it 10xs from here, I still wouldn’t touch the stock personally.

Well, especially if it 10xs from here.

Yeah, exactly. Price.

But yeah, I do think that there’s money to be made from identifying these trends early and figuring out, okay, well, if this is what they’re interested in—if they’re interested in just getting exposure to crypto—what out there gives good exposure to crypto that they can buy?

That’s why I’m still very bullish on Robinhood. Robinhood’s making a huge, huge, huge effort to capture a lot of crypto volume and crypto trading. And I do think that there are a lot of very simple improvements that they can make. So I’m still very bullish on Robinhood. I still own that.

What are they doing to onboard crypto users?

Well, they’re massively expanding the coins they’re offering. I think they’re going to be running a lot of integrations soon. Their wallet’s going to become a lot better, so I think in the next year you’re probably going to be able to interact with crypto through their wallet, which would be amazing.

That would be crazy.

And the guys basically keep talking about it, right? It’s clear that they’re making a lot of money on this, and they’re just going to keep leaning into it: let’s get every crypto on here, and let’s lower the cost.

I mean, the costs are kind of annoying. If you’re a professional trader, you’re not going to want to use Robinhood because you’re going to end up getting a lot less crypto for your money because the fees are going to be high, right? You’d much rather go on-chain.

They do a good job competing market makers for bid-ask. I remember quoting them; it basically makes zero. But the fee that Robinhood took at the time was like 35 bps. I don’t know if they’ve lowered it, but 35 bps on gazillions of volume probably adds up pretty quickly for them.

They have 12 million users. It’s an interesting user base because I doubt boomers like me have a Robinhood account. I don’t have a Robinhood account. But my 22-year-old brother-in-law basically said, “Hey, Jonah, I just got my first job. What do I do? How do I invest money?”

And I was like, “You should be X% SPY, Y% BTC, and Z% liquidity, right, at your age.” And he said, “Okay, well, how do I do that?” I said, “Well, just get Robinhood.” It’s the one-stop shop for people who don’t know what they’re doing.

So I would bet that the Gen Z cohort is just massively involved in Robinhood. And if they make crypto easier for that cohort—the cohort that grew up online during COVID—they’re probably going to trade like crazy. So, yeah, I agree. If they get more coins in there and popularize it, that could be a pretty viral mechanism for the distribution of crypto.

So you think HOOD is a good stock?

Let me figure out what P/E HOOD is trading at right now. Looks like an appropriate 69.420.

Yeah, so it’s high, but I mean, if crypto keeps going the way that it is, it can catch up. Robinhood can scale its revenues and scale its profits.

That high?

It’s better.

It’s better.

Well, I think Hyperliquid is better. Syrup is definitely better still. But I think that if crypto grows, Robinhood can catch up. Circle, on the other hand, I think it’s going to be a lot harder for them to do that.

Same.

6. The Plasma Launch

What about Plasma, our favorite angel investment, which has just basically created this extremely complicated launch mechanism for their XPL token? It seems pretty oversubscribed despite the complexities. Is that XPL token going to roof, too, just like the Circle IPO did? I’d rather be exposed to the Tether stablecoin ecosystem than USDC. I don’t know. Should we talk about that, or what do you think?

Yeah, I think people underestimate the amount of headway that Tether has made in terms of smoothing over all of the previous issues. There are still a lot of people in crypto, and what I will say is that Tether did have issues, right? They were not running their company in the most above-board way.

Now they’re making so much money hand over fist. There’s kind of no reason for them not to be an extremely professionally run company at this point. I mean, and to do everything by the book. That’s why they’re coming to the States. That’s why they’re meeting with people, Jonah. That’s why they’re probably taking meetings with politicians as we speak right now.

It's because they realize the future. I think USDC also realizes the future, which is why it's going to be struggling a bit moving forward. If you go look at the market cap—just go take a look at the market cap of USDC—what's it at now? It's at 60 billion, and USDT is at 154 billion right now.

But the biggest difference—actually, let me just share my screen real quick so you guys can see.

People love it when you share your screen.

We'll take a look at the last year. At the beginning of the year, there was a good rally in USDC's market cap, going up about 10 billion. Basically, since then, it's flatlined. It's not really going anywhere. Since the beginning of February, they've only added 6 billion in market cap. They've added about 10%.

Now, if you go to USDT, take a look at this. They're growing massively still, and it's steady, right? It's just steady, steady, steady growth over time. Can you reject the cookies? It looks like I can't see the Tether chart here. Can you see?

Yeah, now I can see.

Go to the year. They're continuing to grow. They're obviously much bigger, so they're growing at a slower pace overall since the beginning of the year, but they're growing at a steady pace, whereas USDC just added a bunch in January and then didn't really add anything. These guys just continue to steadily grow.

What that tells me is that USDT is getting organic growth, and USDC is kind of getting the “Okay, a bunch of people came in here, and now nobody really wants to use it anymore” treatment. Even the bunch of people coming in—three months of nothing. That's not good. The bunch of people coming in in January is like a pimple on a flea's tuchus on the Tether chart.

It's like Tether just continues to gain market share and continues to accumulate, and it's because it's so widespread. USDC just doesn't have the organic usage that Tether does, which is why I'm so excited about Plasma.

Me too. Before we pivot to the Plasma XPL conversation, let me just steelman USDC for a second. If stablecoins proliferate, even if it turns into a 90/10 thing where Tether owns 90% of the market and USDC owns 10%, their AUM still probably grows from here because of the total addressable market of stablecoins being so huge and global. It really is crypto's second-best use case behind Bitcoin.

The other steelman argument for why maybe it's worth being excited about USDC, even if rates come down, is the idea that right now crypto is an emerging-market solution, right? It's basically a savings account. Stablecoins are an emerging-market solution. It's a checking account for people who otherwise wouldn't get banked by Citi because they live in some random Pacific island or Africa or whatever.

Anyway, that dynamic may not be permanent. Maybe the entire New York and London financial-institution ecosystem will pivot from crappy legacy SWIFT TradFi rails to USDC. If that happens, maybe Circle's $18 million worth of profits will become a few billion, and there's a big party over at likely Jeremy Allaire's house. I don't know. It feels kind of—I think that's good. There's a good argument, a much better argument a year ago, right?

Yeah. And now I think there's going to be a lot less stigma around adopting Tether. I would wager that in the next year we see some uptake of Tether from real financial institutions.

Yeah, I agree. And that would really just blow the gates open.

Oh, dude. So what does XPL do?

It launches. You have to deposit stables to get units, and then, however many units they give you, you can buy XPL with more stables, up to the ceiling defined by your amount of units. Then your XPL theoretically rips, even though it's just a governance token, because people want XPL because they want stablecoin exposure.

But I don't know. I'm a little unsure of this one.

Avi, what do you think happens to XPL?

So it's basically the Tether IPO, is what this is, right? But it's public and decentralized on what is likely Cobie's platform.

Yeah.

I think that's basically what's happening. The blockchain was built specifically for stablecoins. The token itself is, I think, the staking token, right? You use it to, quote-unquote, secure the network.

I don't know whether that gets—whether that's real value. But what's real value is that there's probably some level of fee that they'll be able to take on every transaction using a stablecoin, and maybe in the future they'll be able to pay that out to token holders. Who knows?

If they do manage to capture—if they become the network for stablecoins—that would be pretty damn amazing. I think they could figure out ways to generate a ton of fees.

I know they have a close relationship with Tether, and I do think that stablecoins will benefit from having a dedicated network, especially as a payment network, right? Because that's a little bit where I think the world of traditional finance will have a problem: How do you adopt a payment network that also contains all of your competitors on it? Wouldn't you rather adopt a payment network where you can't go use all of the applications on Ethereum and Solana? I don't know. I'm just thinking off the top of my head.

I do think that there's some incentive there for traditional institutions to adopt this. I also think that it's a good experiment. Obviously, I invested as an experimenter. I'm not sitting here telling you that this thing is absolutely 100% going to become the world, but I'm saying I think it's good to try it out.

I think so too. I want to actually ask you a question and stress-test a framework that I've got in my mind. It's a really dumb one, but it's a framework for experimentation.

The framework is as follows: If the token or the project has an FDV below a billion dollars and it looks promising, then it's probably worth a YOLO, even if the token itself is kind of like, “We secure—we don't even secure the Plasma network with XPL. We secure the bridge between Bitcoin and Plasma.” It's all a bit woo-woo and hand-wavy, but whatever, right? It's $500 million of FDV for what could potentially be the world's biggest stablecoin rails.

You're on mute.

I'll throw in the caveat: It depends on the scope of the project. If it's a coin for hamster racing, then maybe $500 million is a bit too rich. But if it's effectively—if it's not a Pump.fun coin—then yeah.

I mean, if it has a real team behind it, if they're genuinely trying to tackle a large problem that everyone agrees—okay, yeah, this is—or at least, we agree with the team that it's a big problem—then yeah, I think it's very reasonable to take a YOLO at these things.

Okay, so I'm glad I asked you. Now we have the 1000x podcast framework for maybe 10x-ing an investment or more. It's twofold: 1. Is the FDV below a billion? 2. Does the project have a potential real-world use case?

It's surprising how few of these tokens do, but I think XPL, for all of its head-scratching attributes, does actually meet the requirements of that framework. It's a yes on both of those.

We were talking about the framework over the actual raise. What was the controversy itself? Maybe not controversy, but it filled in 45 seconds, and people could deposit up to $50 million per wallet. I think a lot of people got very upset that they didn't get in. But I think that's always the case for these hyped IPOs and ICOs: If you didn't get in, then you hate it; if you got in, then you love it.

Yeah, exactly.

It launched on what is likely Cobie's platform. For some reason, I thought he was just done with crypto, but I guess he created Echo. This whole Tether thing is very aboveboard. They decentralized it, launched it on a third-party platform, and you have to do AML/KYC.

7. Ads (Ledger)

I kind of like this. It feels like they're trying to build for the long term here, even though obviously there are some question marks.

8. Is Pump Fun’s Token Bearish For Solana?

What else, Jonah? What else is going on in the world of crypto?

The Pump.fun sale. Has it been insane? A billion dollars raised.

Jonah, what would you do with that money? If you were the CEO of Pump.fun, what are you doing with that money?

You just asked me 2 different questions: What would I do with it, and what would the CEO of Pump.fun do?

If you were Pump.fun yourself, what would you do with the money?

I don't mean you, because I know you would blow it on hookers and booze. But I'm a good person, so I would try to use that money to build a real business.

If I were a bad person, one thing—I live in America now. Side note: This country can relieve you of any amount of money. It's crazy. When you're living in—I guess I spent plenty of my life in France—you try to tip somebody there, and they'll just look at you like you're an extraterrestrial and turn you down. “No, I won't have that extra euro. That's weird. Why are you trying to give it to me?” Here in America, you could blow a billion dollars. I bet you could get rid of that in a month if you wanted to, with bad investments and partying and all sorts of stupid stuff.

But back to your question, I think what Pump.fun should do with that billion is try to create basically what Launchcoin has done: Try to create a launchpad where people can raise basically funding equity quickly for projects. Link KPIs to the equity, try to add more bells and whistles and knobs and toggles and stuff, so that rather than hiring a bunch of lawyers to draft a 120-page convertible-note SAFE agreement to raise private equity or venture capital for your project or venture, you can just do it in a few clicks and make it a little bit more configurable than the original Pump platform. Then they keep their same bonding-curve and trading-fee mechanism.

What I think they're going to do with it, I think they're going to fall far short of that. What happens next with their token isn't just going to impact their token; it's going to impact Solana, too, and potentially a few other ecosystems. So I'm kind of scratching my head. Solana feels a lot riskier now, and I can't quite articulate why.

Yeah, that's an interesting statement. Why does Solana feel so risky to you?

I think it definitely feels a little bit risky to me from the perspective of anything that gets big will eventually want to be its own chain, which has always been a problem. That's just always been a fear. I just don't think it's really materialized itself for a while, because we haven't had massive projects—we just haven't had that many massive projects that then pivot to their own chain.

But this specific problem reminds me of anything that gets so big eventually wanting to run out there and tackle the world itself and not rely on infrastructure. That's kind of what you're seeing with Plasma. You have a relationship with USDT, and you're like, “Okay, well, if I can go build this chain, and the USDT founders have a big stake in it and they bring a lot of value to it, then obviously that's a lot better than giving away all of your value to all these other chains, especially Tron.” I know they're probably not psyched that they're giving away so much value to Tron.

But it also reminds me of the arguments about ETH, right? It reminds me of back in 2021, when all the L2s were coming out. People were saying, “Well, L2s are going to cannibalize ETH usage,” and everyone was like, “Well, yeah, I don't know. Let's see how it goes.” And then that's actually exactly what happened. It just took 4 years to play out.

We could be in the early stages of that for Solana, where people realize, “Well, why would we give away our value to Solana? Why wouldn't we just go build our own chain now that it's reasonably easy?” You build on them to build your application, and then you leave, and there are no switching costs. That's the issue, right? I remember a really great article a while back called “Blockchains Are Cities.” Ethereum is New York, and Solana is San Francisco, and they offer the same product, which is a city, but they just offer very different flavors of a city. New York is very different from San Francisco, which is very different from Chicago.

I think a big issue is that there are no switching costs, and there are no costs to starting your own city anymore. This is not that, by the way; it's a great article. I think he did a great job articulating it. This was also before—and I'm saying this with 6 years of new experience on this—I just always thought it was an interesting concept that I think now is kind of coming under fire.

That's a really interesting point you make. I'm stewing on it now. I think one other old article that still carries a lot of water is the fat protocol thesis, which is that most of the value goes to the L1 and not the application layer built on top of it.

So every application understanding this is like, “Why would I?” The incentive structure that I live in is such that I get most of the value if I become the base layer, the mainnet, rather than the application layer on top that just bleeds all of the value I create back to the creators of the L1 on top of which I sit.

So basically, yeah, everybody's incentivized to become their own L1. Maybe that's what Pump should have done. It's just like, “Hey, be your own L1. We'll launch—we'll be your launchpad. We'll be a configurable product that allows you to launch that at a lower cost.” Maybe that would be a real business. Then they could do token buybacks like Hyperliquid. It doesn't feel like they're doing that, though.

But anyway, just back to the broader point: Even our friend and fellow podcaster, likely Santiago Royel Santos, has decided, “I'm going to launch a private equity firm that swaps out legacy, expensive infrastructure in Latin America for super-efficient, lower-cost crypto infrastructure.” But that's a private equity firm that could sit on top of Solana or whatever. Instead, he's launched his own L1. Just a classic example of people migrating away from the opportunity to launch on an existing L1.

And there's always a thesis like, “Oh, we need to do this because the Solana chain doesn't do 1% of it—it isn't perfectly tailored to our needs,” but it's not true. It's just about value capture.

It is about value capture, and that's honestly okay. That's fine. Capitalism.

I just personally think that it's going to be—this is why every time that we talk about something, Jonah, we talk about applications. Every product that we bring up to you, that we say, “Hey, go take a look at this thing. We think it's cool,” is an application. I'm not bullish on chains so much anymore. I think the age of infrastructure, of buying infrastructure, has sort of played out, and the age of applications has dawned on us. We were sort of being boiled like a frog in water. We didn't even realize that it was happening, but here we are.

I mean, Hyperliquid is a product and a chain. So I guess, first, always product first. Product first. Maybe we're entering this app-chain world that was forecast by Cosmos, except Cosmos was just kind of too early.

They didn't really have the right tokenomics and had bad infrastructure.

Yeah. Man. Anyway, it makes investing a little bit harder, doesn't it, Avi?

It does. But that's why we're here for you.

So should we pitch out of our Solana here?

Thinking about it, maybe one pair I've been watching pretty closely is likely HYPE/SOL. Obviously, I haven't owned Solana in a very long time, Jonah. I still own some, to be completely clear. I just don't think it's the best. I just don't think it's going to perform the best from now on. I'd much rather have my assets elsewhere. Let's put it like that.

Same. Sadly, I love Solana, but, yeah, Pump becoming its own chain. Solana was supposed to be the Nasdaq of crypto. Now Hyperliquid is the Nasdaq of crypto.

Look, I love Solana. I think it's probably still going to go up a lot. But maybe I should have sold all my bags when the TRUMP coin launched on it and it went to 290 or 280 or whatever. Missed opportunity. Oh, well. On that note, I'm going to go vomit in the sink. What are you going to do now, Avi?

I have to go clean up my wallets.

Sounds good. That's my plan for the rest of the day.