Original Link: Empire Podcast - Markets Bounce Back, The Hyperliquid Thesis and Kraken Raises $200M
Hosts:
Jason Yanowitz (Co-founder of Blockworks)
Santiago Roel Santos (Santi, Crypto Investor, Former Partner at ParaFi Capital)
Editor's Note
Santi made a noteworthy and cautionary judgment on the show: This is the strongest interest from traditional hedge fund managers in the crypto industry since Paul Tudor Jones called Bitcoin the "fastest horse in the race" in May 2020, and this time the focus is not BTC, it's Hyperliquid.
The catalyst is the Iran conflict. Commodities need a pricing venue on weekends when traditional markets are closed. The median error of Trade XYZ's weekend oil price predictions for Monday's opening is only 50 basis points, pushing the share of commodity positions on Hyperliquid to 17%, already surpassing Ethereum. Santi predicts that commodity trading volume will exceed Bitcoin's within the year, and Hyperliquid's market cap has the potential to surge from $25 billion to $100 billion.
Two other signal points: Kraken's valuation was cut from $20 billion at the end of 2025 to $13.3 billion, with Deutsche Börse investing $200 million for a 1.5% stake (the discount might stem from structural differences between common and preferred stock); the SEC this week clarified that self-custodied DeFi frontends (like MetaMask, Phantom) are not subject to broker-dealer registration rules, resolving one of the biggest lingering legal questions in DeFi.
Key Quotes
Hyperliquid & Weekend Markets
This is the most interest I've seen from traditional hedge fund managers in crypto since Paul Tudor Jones called Bitcoin the fastest horse in the race back in May 2020, and the interest is in Hyperliquid. Weekend markets are a big reason. (Santi)
Hyperliquid essentially takes CME's entire matching engine, order book, clearinghouse, and margin system and moves it onto an integrated blockchain, with every trade,清算, and funding rate written to an immutable public ledger. (Santi)
My prediction: Commodity trading volume on Hyperliquid will surpass Bitcoin's within the year. Its current market cap is $25 billion, and I see a clear path to $100 billion. (Santi)
I give a 30% to 40% probability of US regulatory approval. If it actually gets approved, it would be an instant re-rating. CME's market cap is $117 billion, the market always needs a comparable. (Jason)
Hyperliquid's Path to Institutional Adoption
I got a call this week from a large hedge fund manager asking me to explain Hyperliquid to him. His team spends most of their time on Twitter, and their trade ideas come from Twitter. Their fund can't buy HYPE tokens directly, so they bought Hyperliquid's DAT (Digital Asset Treasury company), and it's now one of their largest positions. He said it's one of the few assets he can buy that isn't correlated to AI trades. (Jason)
Trading Philosophy & Personal Positions
The core logic behind my continued accumulation is looking at my own spending structure. The companies I spend the most money with year after year (Amazon, DoorDash) are the ones I add to my positions. A mentor once said, the younger you are, the more alpha you can get from being 'close to the ground,' and in the future, there will be less and less alpha on the internet, you have to discover it by seeing and experiencing things firsthand. (Jason)
Macro & Crypto Correlation
The past 10 trading days are among the most anomalous since 1950. The S&P 500 is up 9.8%, placing it in the 99.7th percentile of all 10-day gains in history. (Santi)
I think crypto is performing well simply because macro is good, stocks are good, the correlation is very strong. Bitcoin hitting $75k is largely due to the market pricing in the probability of the Clarity法案 passing rising from 50/50 last week to 60%-65% now. (Jason)
Regulatory Shift
This week the SEC told MetaMask, Phantom, and basically all DeFi frontends: you are not brokers. This ends one of DeFi's biggest legal overhangs. (Jason)
L2s "The Melting Ice Cube"
For over a year now, the L2 space has been a melting ice cube. In 2017, there were no users and no data, you could sell a dream; today, the crypto market's patience for whitepaper narratives is almost zero. (Santi)
I think this cycle will actually see protocols go to zero, not just settle into the dust waiting for the next cycle, but the market will outright abandon them. Capital will concentrate only on assets that have truly proven themselves, like Hyperliquid and Bitcoin. (Santi)
Next Cycle Opportunities
My three main investment theses: Demand for stablecoins outside the US will continue to expand and is far from satisfied; The world will only become more turbulent; There is a severe global affordability crisis. These three pillars all have corresponding implementation paths on-chain. (Santi)
Last year's three big themes were derivatives, prediction markets, and stablecoins. Projects doing these three things could get funding and users; projects not on these three lines got crushed. This year there will be three new things, I just don't know what they are yet. (Jason)
I'd guess one of this year's three things is tokenization, particularly experiments by traditional issuers on public permissionless networks. (Santi)
III. Full Conversation Transcript
Opening: Podcast Data Review & Content Divergence in the AI Era
Santi: This is the most interest I've seen from traditional hedge fund managers in crypto since Paul Tudor Jones (renowned macro hedge fund manager) called Bitcoin the "fastest horse in the race" back in May 2020, and the interest is in Hyperliquid (on-chain perpetuals exchange). The weekend markets are a big reason.
Jason: Hey everyone, welcome back to the Empire weekly update. Santi, how are you doing?
Santi: Nothing special, happy to be back on the show. A lot happening in crypto and the world, good to be present.
Jason: Santi's been trying to steal our producer's job lately. He dumped all of Empire's data into Claude, using the new Opus 4.7 model, asking "how to make Empire better".
Santi: Not exactly, but I did do that. I pulled data from Megaphone and YouTube, went episode by episode since 2021, ran correlation analysis with crypto asset prices. We often say "downloads are correlated with crypto prices", but the actual data shows the correlation isn't that high.
Jason: So, not that correlated?
Santi: Right. Crypto content roughly splits into two categories: one is purely price-focused, which blows up on YouTube; our deep-dive interview style performs better on Spotify and Apple, but not on YouTube. Retail-facing YouTubers gain followers fastest in bull markets, they ride the wave.
Jason: YouTube's algorithm downranks us. The TLDR is we need to do more clickbaity titles, but that's not our brand. I've talked to Brian and David from Bankless about this many times, their thumbnails are very exaggerated. But my ego is too big, there's a line I absolutely won't cross, I won't do BitBoy-style content.
Santi: Respect their lane.
Jason: Never become BitBoy, and never become Joe McCann (active figure in crypto). Okay, let's get into it.
Market Overview: S&P's 10-Day Streak & The Two Sides of the AI Narrative
Santi: Wait, I want to talk about the broader market first. Two weeks ago we were discussing a 10% market drop, now the Nasdaq just finished a 10-day winning streak.
Jason: Yeah, that's historically very rare. I checked the data, a 10-day streak happens on average maybe once every 5 to 7 years. Since the 2000 dot-com bubble, it's only happened a few times.
Santi: Honestly, the past 10 trading days are among the most anomalous since 1950. The S&P 500 is up 9.8%, placing it in the 99.7th percentile of all 10-day gains in history.
Jason: I was thinking about this today: just be optimistic, if you're optimistic, you're positioned right. I don't know how this ends, if it ends, or if this is a new paradigm, but the data is there and it's undeniable.
That deep dive on Hyperliquid we saw last week on Colossus (the interview magazine founded by Patrick O'Shaughnessy) was brilliant. On the macro level, I'm willing to change my view at any time. I recently listened to Leopold Aschenbrenner's (former OpenAI researcher, now runs a hedge fund) 4-hour podcast. This guy called it right two years ago when he was fired from OpenAI. In the first hour or two of the podcast he discusses: we'll reach AGI sooner than most expect, and once it's in the hands of different regimes, it's an existential risk on the level of a nuclear arms race. He argues for nationalizing AI labs, is against open source. You can hear the tension in his tone. He thinks very few people understand how fast and far this is going, and the market isn't reacting seriously enough.
Santi: Is that the Situational Awareness piece he wrote two years ago?
Jason: Yes. I tweeted "finally read Leopold's piece on AI, you should read it regardless of your interest in AI, here are my notes". That tweet blew up, over 10k bookmarks, 1.6 million impressions. But the stupid part is I just took notes, didn't buy anything.
Santi: The guy himself bought. How big is his fund now?
Jason: I don't know the initial size, it's $5.5 billion now. He trades very actively, his biggest positions include Bloom Energy (hydrogen energy company), he put in $300M, now worth ~$1B; also a big position in SanDisk (memory chips). BTW, his partner is the Chief of Staff to Anthropic CEO Dario.
Santi: That's juicy intel. Before doing the hedge fund and joining OpenAI, he worked at Future Fund, which was Sam Bankman-Fried's (FTX) grant program. In that podcast he also talked about working with SBF and lessons learned, pretty interesting.
Jason: One data point on FTX: SBF had a 7.8% stake in Anthropic. Did you see the news this week? Anthropic's new round values it at $800B. The value of that FTX stake would be greater than Coinbase's entire market cap.
Santi: Yeah, but that was liquidated by the estate, sold for around $1.5B or so.
Jason: Insane. FTX creditors are getting paid back in full, even with a premium. Public market investors are nervous now, always looking for something. With AI there's both fear and excitement, two sides of the coin. That emotion brings volatility and pullbacks, but the market fundamentally wants to go up. People realize this is a runaway train, can't be stopped.
Santi: On one end, nobody knows how to model the AI upside/downside into valuations. These labs keep dropping bombshells, falling behind the curve creates tension. On the other end, after listening to podcasts from Leopold, Elon, Dario, you get this "we're at an inflection point for human civilization"震撼感. The rocket went to space and came back, the market is both nervous and willing to go up.
Trading Philosophy: Finding Alpha Through Spending Habits
Jason: Talk about your specific positions?
Santi: I sent that Situational Awareness tweet, then sold nothing. I'm just a bag holder, buy and hold. I'm not a very interesting podcast guest because I trade so little. I held Robinhood from $10-15 all the way to $125, still adding. DoorDash too, the companies I spend the most money with year after year are the ones I add to.
Jason: That logic is really smart. I've always remembered what you said: look at your annual spending changes, some companies you spend more and more with each year. Amazon is one, DoorDash is another.
Santi: I took a class freshman year, a friend's father came as a guest speaker. He was running a maybe $5-10B hedge fund at the time. He said all his best trades in his career came from observing his own and his kids' spending. Daughter says "I want an iPhone", he bought Apple; daughter says "all my friends are on Snapchat", he participated in Snapchat's early funding. He told us 18, 19-year-olds: you don't realize it, but being close to the ground is alpha. Every year you get older, it gets harder to get alpha. He also said: we're moving towards a world with no alpha on the internet, you have to discover it by seeing and experiencing things firsthand.
Jason: Reddit forums used to be full of alpha. There was a hedge fund that made money scraping Reddit. He looked at Reddit movie reviews for the Barbie film before release, saw "this movie is a masterpiece", while Rotten Tomatoes scores were low. He went heavy into Mattel (Barbie maker), made a killing. So you could spin up a Claude instance, have it scrape all sorts of info from Reddit.
Hyperliquid Deep Dive: Wall Street's New Darling
Santi: Okay, onto the news.
Jason: So much to cover: Tether backing Drift's (perps protocol on Solana) user recovery plan; Tether launched a new wallet, that's two Tether items; Rob's VC manifesto article; Kraken raised $200M, planning to go public; the Hyperliquid deep dive on Colossus. Let's start with Hyperliquid.
Santi: First, a quick intro to Colossus. Patrick O'Shaughnessy runs the Invest Like the Best podcast and Positive Sum asset management, he just launched a print+digital magazine called Colossus, doing deep profile features on tech/finance figures, the quality is world-class. This time they wrote about Hyperliquid founder Jeff (Jeff Yan)'s story.
Jason: Let me steal a point from you. You said something very accurate on that episode we did with Logan (Logan Jastremski): haven't felt outsiders care this much about a crypto project in a long time. Just like Polymarket blew up due to the presidential election controversy, Jeff has captured Wall Street's imagination now. The geopolitical catalyst this time is people wanting to trade commodities on weekends, and Hyperliquid caught that wave.
Santi: I think even if the Iran/Strait of Hormuz situation calms down, this trend won't stop. The train has left the station, you'll see more volume and activity flowing in. Currently, non-crypto asset volume on Hyperliquid already exceeds crypto asset volume.
Jason: Really?
Santi: Commodities are now the second largest asset class on Hyperliquid,仅次于 Bitcoin. I'll make an accountable prediction: commodities will surpass Bitcoin within the year. Hyperliquid can become a top 5 crypto by market cap. It's $25B now, I see a clear path to $100B. Coinbase, Robinhood are around that size. If Hyperliquid just executes, they have the tech talent,他们已经赢得了加密交易员的心, now winning over Wall Street traders' hearts.
Jason: Here's the data for you. Bitcoin is 25% of Hyperliquid's open interest, commodities 17%, Ethereum 16%, the HYPE token itself 10%, indices (probably leveraged S&P) 7%, L1 tokens 4%, stocks 4%, Solana 3.5%, then meme coins, privacy coins, DeFi after that.
Santi: I think the most interesting story in crypto right now might be the growth of the oil market on Hyperliquid. Credit to the Shoku team behind Trade XYZ (a derivatives frontend on Hyperliquid's ecosystem). When the Iran situation blew up, volume and open interest exploded because the oil market is closed on weekends, Hyperliquid became the only pricing venue. This crossed the chasm into the mainstream.
Jason: We actually built a website called Weekend Markets (weekendmarkets.com) showing all this data. When traditional markets are closed, Trade XYZ is the only active price discovery venue. Billions in volume on weekends, with a median prediction error for Monday's open of only 50 basis points. Right now, Trade XYZ's price is the most informative signal in all of finance relative to Friday's close. The site shows all traded stocks and commodities, charts, heatmaps, methodology. The interest from traditional institutional investors in Hyperliquid's weekend markets right now probably exceeds interest in anything else in crypto.
Santi: Oil daily volume $500M, open interest $350M.
Jason: When you talk to people outside crypto, what are their questions mostly about? Are they more interested in commodities or stocks?
Santi: Most interested in Hyperliquid itself. I can say, this is the biggest point of interest from traditional hedge fund managers in crypto since Paul Tudor Jones called Bitcoin the "fastest horse" in May 2020, after 6 years. This time the interest is Hyperliquid, with weekend markets as the core driver.
I got a call this week from a hedge fund manager asking me to explain Hyperliquid to him. His fund is sizable, he and his team spend most of their time on Twitter, their trade ideas come from Twitter. This恰恰说明了 Twitter's importance. He said a top trader he knows tweeted about Hyperliquid, he researched it, listened to all podcasts Jeff was on. His fund can't buy HYPE tokens directly, so they bought Hyperliquid's DAT (Digital Asset Treasury company), which is exactly the bull case for DAT. It's now one of their largest positions, he said it's one of the few assets he can buy that isn't correlated to AI trades.
Jason: I just had AI explain Hyperliquid to TradFi: "Imagine CME moving its entire matching engine, order book, clearinghouse, and margin system onto an integrated blockchain, with every trade,清算, and funding rate written to an immutable public ledger. That's Hyperliquid."
Hyperliquid's Regulatory Prospects: CME is the Best Comp
Santi: Is it possible that Hyperliquid experiences a massive re-rating if it gets regulatory approval in the US?
Jason: I'm not a lawyer or regulator, so this is outside my lane. But Hyperliquid did hire Jake Chervinsky (former Variant Fund Chief Legal Officer) to lead the Hyperliquid Policy Institute. The logic is this: post-2008 financial crisis, the Dodd-Frank Act required futures to trade through regulated entities like CME, Cboe, for transparency, all trades must be visible, prevent black swans. If you're Hyperliquid or Jake, your argument to the CFTC is: you made this rule for transparency,害怕再出事. We have DeFi, all trades are completely transparent, the清算机制 also basically passed the stress test on October 10th. If they haven't argued this yet, they should. Imagine Hyperliquid gets approved in the US, instant re-rating. CME's market cap is $117B now, the market always needs a comparable.
Santi: I'd put the probability at maybe 30% to 40%.
Jason: Talking to hedge funds, do you hear any bearish views on Hyperliquid?
Santi: Not much. Most are just starting to learn, haven't formed strong bullish/bearish views. Don't forget, at its peak, Solana's protocol revenue also hit ~$100M, mostly from meme coin trading.
Jason: REV (Real Economic Value) peak.
Santi: Yeah, in Jan 2024 or 2025, Solana hit $500M REV, almost all meme coins. The question now is: should the market value protocol revenue generated from meme coin trading at the same multiple as protocol revenue generated from TradFi commodity trading?
Jason: Of course not, commodity revenue is higher quality.
Santi: So I think Hyperliquid can get much larger than that.
Jason: I saw some data: the most mentioned protocols by speakers at DAS (Digital Asset Summit, conference by Blockworks). We scraped all panels, firesides, keynotes. Bitcoin 742 times, Ethereum 143 times, these two are absolute outliers. Third was Hyperliquid 66 times, Morpho (lending protocol) 59 times, then Solana, Canton, Espresso (shared sequencer), Circle, Stellar, Avalanche, Jupiter, Tether, Maple, Optimism, Superstate. Espresso at #7 was surprising.
Drift Recovery Plan & Tether's "Killing Multiple Birds with One Stone"
Jason: What other news did you follow this week?
Santi: Tether investing in Drift, helping the protocol users recover losses (Drift suffered a ~$285M exploit earlier this year). This plan is similar to the思路 of Bitfinex issuing tokens to repay victims back in the day, affected users get made whole gradually through future fees from the protocol. This time Tether is providing support up to ~$127M, total package ~$150M.
Jason: The specific mechanism requires users to trade with USDT on Drift to recoup losses, a win-win for Tether, does PR and locks in stablecoin usage. On Twitter, many contrasted this with USDC,据说 someone contacted USDC to freeze hacker funds, Circle's response wasn't as fast as Tether's. This is a loss for Circle.
Santi: It's a pretty clever mechanism, incentivizes users to keep using the protocol. In some ways it's the only feasible solution, the other option is a large dilution at the底层.
SEC Major Guidance & Clarity Act Progress
Jason: Then there's the new SEC guidance. They stated this week: self-custodied DeFi frontends are not subject to broker-dealer registration rules. Previously, the main attack from the Gensler era on DeFi was demanding these protocols register as broker-dealers, which is antithetical to the permissionless nature of DeFi and basically impossible to do. On Tuesday, the SEC's Division of Trading and Markets issued a staff statement excluding crypto wallet interfaces from the broker-dealer registration scope. The SEC explicitly told MetaMask, Phantom, and basically all DeFi frontends: you are not brokers. This ends one of DeFi's biggest legal overhangs. They created a new category called "covered user interface": if you help users convert transaction parameters into on-chain instructions, you fall into this category. Custodial wallets are excluded, self-custody wallets, browser extensions, mobile apps, software embedding self-custody wallets are all protected.
Santi: I'm surprised DeFi tokens didn't re-rate on this.
Jason: The thing that re-rated on regulatory positivity was Robinhood, they lowered the minimum $25k equity requirement for day traders. Overall this week Aave is up 20%, Bitcoin hit $75k. I think it's mostly because the probability of the Clarity Act (crypto market structure legislation) passing increased. Last week you asked Empire listeners if Clarity could pass, everyone said 50/50. I was in DC last week, everyone said 50/50. Now it's probably up to 60/40 or even 65/35.
Earlier some crypto figures went on CNBC saying "if Clarity doesn't pass by April 1st, it's completely dead", this说法 got accepted for some reason. But from what I understand, even if it drags to May 1st, or even August, or 2027, there's still a chance. Of course, the longer it drags, the more junk gets stuffed into the bill. Some say if it drags to mid-2027, this becomes the "DeFi bill" (implying heavy改造 by interest groups).
MicroStrategy's Accumulation & STRC's 11.5% Yield
Santi: I tend to think crypto is performing well because macro is good, the correlation is very strong. On the Bitcoin side, MicroStrategy raised money via STRC (perpetual preferred stock) this week and bought nearly 14,000 Bitcoin.
Jason: Total holdings 780k Bitcoin, total cost nearly $60B, average cost $75k. This is one of their largest acquisitions. Now the market watching mNAV premium/discount, also watching STRC dynamics.
Santi: There's a protocol called Saturn, TVL (Total Value Locked) growing fast, essentially wrapping STRC on-chain, yielding ~11.5% APY.
Jason: I went to MicroStrategy's office in Tysons Corner, Virginia on Thursday, the whole meeting was about STRC. STRC yields 11.5% APY, in the current low-yield DeFi environment, that number is very attractive. I won't dive into the risks today, save it for a later conversation. We should have Saylor or someone from MicroStrategy on the show to talk about it, what people care about is "where does this 11.5% yield come from, its sustainability and risks".
Kraken's Valuation Halved & Exchange Business Model Breakdown
Santi: On Kraken, they took $200M from Deutsche Börse.
Jason: Valuation dropped from $20B at the end of 2025 to $13.3B, that's a significant discount.
Santi: I didn't see that valuation number. Might be secondary market trading, buying common stock not preferred stock, so structural differences.
Jason: Right, Deutsche Börse bought a 1.5% stake at a $13.3B valuation. My guess is it's a ~35% discount because it's common stock.
Also, Kraken had a minor security incident, unrelated to user funds, an internal issue with the support team, just a footnote. But back to it, Kraken is a very well-run company, has potential to reach Coinbase scale. Arjun (Arjun Sethi, Kraken co-CEO) is doing a great job. I might look at secondary market opportunities.
Santi: I invested in Backpack (exchange founded by Armani Ferrante), much smaller but interesting, Armani is a great builder. The core question evaluating an exchange business model is the ratio of fixed costs to variable costs. Exchanges are inherently tied to crypto prices, very profitable when prices are high, but get compressed in downturns. I previously did a comparative analysis of Coinbase, Robinhood, Kraken, Robinhood was best, more diversified business (high non-crypto trading volume), and can drastically cut costs in bear markets. Coinbase second, Kraken third. But that was before Arjun took over. They重组ed the team, brought in capable operators, built out the DeFi team well. So maybe my previous take is middling. For any business, look at operating leverage and flexibility, can't let margins get crushed in bear markets, that's the cross-cycle investor perspective.
Stocks On-Chain & X's Cashtag New Feature
Jason: What about stocks on-chain (X Stocks)? I saw some discussion on Twitter about Pre-IPO stocks, like Anthropic.
Santi: Volume is still quite small, no dramatic performance like oil.
Jason: I have data, currently Pre-IPO related stock trading is around $17M, still small. I was talking to the X Stocks team at Kraken the other day, they and other exchanges believe stocks on-chain will have a huge breakthrough this year. The X Stocks team, others at Kraken are betting on this direction.
Let me show you a tweet from Nikita, X (Twitter) product lead: "X has always been the best source of financial information for traders and investors, with billions of dollars flowing daily based on timeline content. Today we're launching cashtags on iPhone in US/CA, bringing real-time financial data. When you search or post a cashtag or contract address, X will match the stock or token, click the cashtag to see price charts and related posts, without leaving X." This is Elon's everything-app vision advancing.
Scroll Controversy & L2 Sector's "Ice Cube Effect"
Santi: How's the Ethereum ecosystem lately? Besides Tom Lee saying ETH will hit $62k.
Jason: Not sure, I'm not that deep into it. ECC (Ethereum Community Conference) just ended, vibe was mediocre, but there are still some interesting projects underneath.
Santi: Ether.fi migrated from Scroll to Optimism mainnet, migrated over 70k cards.
Jason: You're an investor in Scroll, I don't know how much you can say. Scroll seems to have done something pretty shady. When Ether.fi wanted to migrate from Scroll to Optimism, they manually raised the on-chain gas fees. One of Ether.fi's founders tweeted "the situation is more outrageous than people think".
Santi: Some background first: Ether.fi was hugely significant for Scroll, if you剥离 Ether.fi, there's basically no TVL left on Scroll. I don't have first-hand info on what happened internally. Public on-chain data shows this: over 6 days in early April, Scroll increased the cost of posting data to the Ethereum mainnet by 1000x, two orders of magnitude. Users paid over $50k extra in fees as a result. The timing is indeed suspicious,恰好 coinciding with Ether.fi's migration window. The on-chain data is there, it looks pretty bad.
Jason: What's wrong with Scroll?
Santi: I was an early investor. Back then the ZK-rollup and zero-knowledge proof route was hot, I thought the route itself was valuable and meaningful, Scroll's co-founder is a deep cryptographer, so I placed a bet. But it's not just Scroll, many projects in the entire L2 space are fading into obscurity. Name one L2 that's performing well? Vitalik's article earlier this year about the L2 roadmap was itself an admission, the market sensed this long ago. The price action of Optimism, Arbitrum, ZKsync, etc., all indicate problems. Scroll's market cap is $8M now, fully diluted valuation $45M, $45M is below the Series A valuation. What a terrible position to be in.
Jason: Can it come back? What does it need? Where does volume come from?
Santi: This reminds me of a topic I've discussed with many infrastructure providers: they are melting ice cubes, whether they admit it or not. In 2017, there were no users and no data, you could sell a dream. Any founder, Elon or Scroll, has to sell the dream first, then deliver. Crypto长期 existed in a "suspended state" of whitepapers and attempts, the market had patience for it. Not today. A year ago I said crypto would see a severe "haves vs have-nots"分化, today that分化 is already very large, look at Hyperliquid's activity versus other projects.
Three Investment Theses & "Protocols Actually Going to Zero" New Cycle
Santi: The neobank category is hot lately, Plasma (stablecoin-specific chain), Ether.fi are doing it, Aave has its own neobank attempts. As an investor, I have three main theses, also reflected in my personal holdings:
1. Demand for stablecoins outside the US will continue to expand and is far from satisfied;
2. The world will only become more turbulent;
3. There is a severe global affordability crisis.
These three pillars all have on-chain implementation paths,布局 accordingly.
But most other projects are struggling. Solana's REV also dropped from a peak of $500M to $20M. What can bring Solana back? There are some good things at the底层, Western Union chose Solana for a pilot, the team and engineers are also sharp,真正地 thinking about problems. But in my conversations with these teams, I feel they must go for the jugular, use capital or unconventional means to cement themselves as lasting protocols.
Finally, I'll say, this cycle I think protocols will actually go to zero, not just settle into the dust waiting for the next cycle. The old mindset was "hold dust, dust becomes moon", like Lend merging into Aave. It won't be that普遍 this cycle. The market would rather concentrate capital into Hyperliquid and Bitcoin.
Next Cycle's Three Narratives & RWA Trend
Jason: Besides Hyperliquid and Bitcoin, when you talk to regular people, what else might they be interested in or have heard of?
Santi: Stablecoins and prediction markets are hot, but prediction markets currently have no tokens.
Jason: There's a lag for these things to enter mainstream awareness. What we've been saying is: last year's three big themes were perps (perpetuals), prediction markets, stablecoins. Projects doing these three things could get funding and users; projects not on these three lines got crushed. This year there will be three new things, I don't know what they are.
Santi: Will there?
Jason: I guess there should be. Tokenization (stocks on-chain, RWA real-world assets) is a term that's been overused, but will be one of this year's three big themes. I met with Daniel (founder of Tokeny) the other day, the ERC-3643 standard he's pushing is becoming the mainstream standard for RWA. RWA is a focus this year. I said we should talk more on the show about what traditional issuers are doing on-chain, will do. I believe these activities will happen on public permissionless networks.
Santi: Jamie Dimon's (JPMorgan CEO) arc of立场转变 is quite interesting, from彻底反对 crypto, to now明显倾向 "blockchain we can do". The gap between him and Larry Fink (BlackRock CEO) has never been this small, and it's narrowing every month. He's been very vocal against the Clarity Act, publicly attacked Brian Armstrong (Coinbase CEO). I think TradFi is stalling for time before Clarity passes, wanting to ensure the bill reflects their views.
Jason: Jamie Dimon went on CBS said they're considering "prediction market services".
Santi: What does "prediction market services" mean? They just want to come in and take a cut. But everyone wants to do prediction markets. To me, prediction markets are just another form of derivatives, CDS (Credit Default Swaps), the boundaries are blurring.
YouTube Comments Segment & Wrap-up
Jason: YouTube comments segment is here, haven't read them in a while. Bad reviews or good reviews first?
Santi: Bad reviews first.
Jason: Comment 1: "I like Santi. The Santi who claims to be full-time in crypto but completely missed Hyperliquid. His investment Inversion (project) went to zero before launch." Comment 2: "I like Santi, but he sounds like he doesn't use DeFi at all, hasn't farmed airdrops in years, how is he qualified to talk about these?"
Santi: I never said I was qualified.
Jason: Comment 3: "Santi is many things, but definitely not a contrarian investor. He's good at telling us what already happened, not good at predicting the future."
Santi: Good roast.
Jason: Comment 4: "Just want you to know Empire is my favorite crypto podcast, I live in Bangkok so can't come to DAS." Valid reason. All the bad reviews are aimed at you, nobody骂 me.
Santi: There are also people discussing how handsome you are, how good your views are. Rob (Rob Hadick, Dragonfly partner) even had the whole Dragonfly team deleting negative reviews for you.
Jason: Content recommendations for the week?
Santi: Leopold Aschenbrenner's 4-hour podcast, I'm only at 2.5 hours. There's one about Amazon VP Ethan Evans that people recommend, I plan to listen.
Jason: I'm going back to re-listen to David Senra's Founders podcast and his founder interviews. I've talked about the DoorDash Tony Xu episode many times. Just finished the Evan Spiegel (Snap founder) one, it was okay. Some people naturally have the "it factor" for storytelling, some don't. Tony Xu has it, Evan barely has it.
My "it" recommendation for the week is Allbirds (shoe company that already went bankrupt and was sold). They made an AI, allbirds.ai, it's a ChatGPT wrapper, it answers any question with "shoes shoes shoes". The stock was up 10x at one point yesterday.
Santi: When things like this happen, we can be sure we're closer to the top than the bottom.
Jason: My weekly content is watching Seinfeld for the first time. After a day's work, I only have 20 minutes to shut my brain off, we're working on a few things lately that aren't public yet, pace is fast, I often can't even finish one episode in 20 minutes.
Santi: How culturally out of touch am I? I haven't watched a single episode of Seinfeld. I didn't watch TV as a kid.
Jason: Do you have a TV in your room now?
Santi: No. Phone doesn't go in the bedroom either.
Jason: I don't have one in my bedroom either. When I bought this house, the previous owner had a big TV mounted on the wall, I said "no TV in the bedroom", misstep, should have kept it.
Wrapping up: we want to make Empire better. Going forward, we need to talk more about publicly traded companies doing interesting crypto-related businesses, including Better (mortgage company), Figure, Klarna, Western Union. Besides Hyperliquid, this might be the biggest catalyst for the next cycle, traditional companies starting to implement. I've been talking to the Framework team lately about how Better is positioning, also researching Figure, some pretty interesting things happening.
Santi: We were on a call with the Figure team the other day too,确实有意思.
Jason: Okay, that's it for today. Thanks for listening, keep骂 us in the comments and Telegram, see you next week.
Santi: Have a good weekend.
