So, we're back here again at Token 2049 and we were just reflecting backstage on what it was like last year. So, if you remember, if you rewind the clock back to before Trump was our dear leader, Token 2049, it was all about memecoins. There was Solana Breakpoint next door and if you remember Iggy Azalea there was this big scandal and I remember you were on stage with us and you were talking about Jason Derulo who hit you up and like wanted to throw a party with you and you were like screw off. What is your... you had a celebrity run-in again recently. Tell us about it.
Yeah, so Waka Flocka Flame hit me up on Twitter and he's like yo I want to like reinvigorate the Flocka token and if you look at the chart it's like zero basically.
Yeah, it needs a lot of help. But you know me and my chief of staff got on a call with them and they pitched us something about streaming and attribution of artists which actually sounds not too bad. I'd love to dig into it more but...
Okay. Wait. So you're not...
I'm not shilling on him directly. I mean the token's dog shit but like maybe it could be.
I'm not buying any of it to be fair.
Not what I was expecting.
He's in it for the tech, not for the token.
Just buy vibes, bro. Vibes. We all know Arthur's in it for the tech. Okay. That's very good. How... what's the vibe been of 2049 this year?
Traffic, traffic, that is true. I would say it's like almost comfortably boring, you know. I contrast like the memecoins with now you walk around everyone wants to talk about stablecoins, everyone wants to talk about DATs, no offense Tom, but it's just like a very different vibe than like you said last year and like the Iggy Azalea stripper party.
Yeah, not as many suits last year, more stripper outfits. But now we've got Tom. How does it feel being at a much more institutional version of Token 2049?
There's great energy, a huge turnout. I think there's been a lot of the right people here and we've had tons of meetings. So, it's been very productive.
Okay. More productive than the stripper parties last year.
Okay. That makes sense. Okay. So, let's talk about DATs. So, for those of you who don't know, DAT stands for digital asset treasuries. These are the micro-strategization of everything. We have here on stage with us Tom, who is the chairman of Bitmine. Bitmine is by far the largest ETH treasury. They're huge, accumulating very rapidly. They've got about 2.65 million ETH, over 2% of the entire ETH supply now being held by Mr. Tom Lee. It's worth noting we've seen a lot of consolidation in the trading volume around these DATs. It used to be we had all these different ETH DATs in the running. Now 90% of the daily trading volume of all DATs is just MicroStrategy and Bitmine. Everything else is a tiny sliver at this point of all the trading volume. I have to ask Tom Lee, the feeling from most people that I talk to is that you are the savior of Ethereum. How do you feel?
I think Ethereum was in great shape on its own. I think that the Ethereum Foundation has prioritized the right things that happened to have happened this year. And of course, stablecoins have come along. That's really ignited the demand for blockchain. And I think Bitmine just got lucky on the timing.
Well, it's definitely true. There was a lot of other stuff happening with the foundation shakeup and just kind of a repositioning of the Ethereum narrative, but it also does feel like you are now basically chief marketing officer of Ethereum.
Got it. I can add that to my title.
Yeah, I think you should. You should. Yeah. What's been your sense, Arthur, of the whole DAT mania with respect to how it's moved ETH and reinvigorated the narrative?
I mean, people love listening to this guy on CNBC. So, fuck it. If he wants to go on and beat the drum, beat the drum, brother. Like, let's go. So, I love it. We need more Tom Lees. Every shitcoin needs a Tom Lee.
Is that possible? I feel like that's...
Yeah, every shitcoin, right? Let me ask you this, Tom. What do you think you have done well that some of the other people trying to be the Tom Lees for shitcoins have not done well?
Well, I think that Bitmine number one was really thoughtful in terms of communicating. We've kept the message really simple that ETH is in a super cycle. We communicate that through our website with our presentations and our chairman's message videos. I think Bitmine has had a lot of connectivity to the institutional world. Cathie Wood made a big public investment in Bitmine pretty early. It's now a top 10 holding for ARK. That's drawn on other institutional investors into it. And I think that that process has created the flywheel and that's why we're the 26th most traded stock in the US today and between us and MicroStrategy as you point out we're really creating the liquidity in the DATs.
Yeah. So what do you attribute then... so you guys are now also expanding beyond just Ethereum. So there was a recent announcement that you guys were I think it was like seeding the Worldcoin DAT and you guys are like kind of got your eyes open. Tell me about that part of the strategy.
Well, I think Bitmine wants to play a role in helping Ethereum make it to the next 15 years. And that's helping identify projects that are important to that will use a lot more ETH and burn gas. It's also helping seed other payment rails that come onto ETH. And of course, we're working very closely with the Ethereum Foundation to really identify and prioritize upgrades. So I think part of that is also investing in projects that really stand out. So Orbs 8CO, which is a Worldcoin DAT, points out of the 11 things that AI really cares about, one is proof of humanity and Worldcoin is really one of the first projects. There are almost 17 million people that have been verified human. I mean I think protecting humanity is a big priority on the blockchain.
So one of my pet theories I think we've talked about before on the show is that part of what DATs do beyond just okay it's an institutional vehicle that you can invest into the underlying, it also allows there to be this sort of Wall Street CEO for a chain that can kind of do things that the foundation can't do, right? It's sort of like look, Vitalik or Tomas who runs the EF, he can't really go on CNBC, he can't really like bullpost Ethereum quite in the same way that you can, he can't like post TA. It's just like not cool to do that. And so in a way like these DATs they kind of allow this outsourced chief marketing officer to speak a different language to Wall Street which is something that crypto's really been missing despite the fact that it's been so financialized and I think you are in my mind you're kind of the epitome of that. Curious what you guys think of like going forward the DAT stuff we can see very clearly it's dying down, MNAVs are compressing, fewer and fewer of these are coming to market. How do you guys think like where is this going? What are DATs going to be in 2, 3, 5 years?
Well, I was going to ask Tom. I feel like the projections and the timeline for DATs, it's accelerating and moving faster than I think even we thought. I think most ETH DATs are now below MNAV. So, what do you think they're going to do? Are they going to dump a bunch of ETH and try to buy back the shares? Is someone going to scoop them up? Are they going to pivot to AI? Like, you know, what would you do or what do you think they're going to do?
Yeah. Someone told me today there's 70 ETH DATs which is a lot. If you look at traditional public markets, investors can back two to three maybe four. So within that universe there'll probably be multiple winners. But institutions can't buy 70 DATs. I think the ones that are trading below MNAV have an existential question. I don't think a DAT should trade below NAV. So there is a negative message from that. I don't know if they should convert to an ETF. I don't know if they should unwind. They could consolidate. I don't think they should trade below NAV. I mean but of course it's the market.
Skill issue is what you're saying. It's a skill issue is what you're saying.
Yeah. I mean you know no ETF trades below NAV and so a DAT shouldn't trade below that. I think if they threatened to turn into an ETF in some way, then they would always trade at NAV. I mean, that should be the floor.
Well, I definitely buy the consolidation thing. I feel like the Solana DATs have really been messaging this like we're going to consolidate. There's no way there's going to be 20 of them. But the thing that's weird to me is there's still people launching DATs for like low market cap coins, like 1 to 3 billion market cap. I don't understand how that's even possible to keep those things alive. Like why are people still launching them?
Cuz the banker makes 5%. You don't give a fuck.
Yeah, but like I feel like the people running those, that's a nightmare. Like imagine Tom, you had to run a three billion market cap coin DAT right now and someone's like, 'Yeah, I'll give you like 1% of the float, but you have to manage that.' Like, would you want to do that?
Yeah. I mean, it seems like that could break down the reflexivity. You know, the reflexivity you want is that a DAT is a permanent holder of the token, but you don't want them to be so big that you actually the power law has negative attribution. That's why Bitmine doesn't want to really exceed 10% of ETH and the target is five. So if there's a small coin with small float, I think that the DAT might help communicate the virtues of that coin but you don't want it to be so big that it's the bag holder.
Well there was a lot of drama around this Zerog DAT which is a token that went live recently but the DAT closed before the token was live. So they contributed tokens that did not have a market price and like marked it to some number that they were like, 'Yeah, it's worth this.' So that being said, we've also seen that the SEC is kind of pulling the brakes on a lot of this stuff where apparently there's been some reports of insider trading. It looks like the SEC is starting to look into it for DATs kind of pre-closing and all this funny business. So I think people realize that especially the NASDAQ also tightening some of the rules around DATs. I think the ones that are cutting corners are likely to get a lot more eyeballs on them. But I think the story increasingly is one of consolidations. If you're not big, if you're not at scale, if the asset is not big enough and serious enough, the DAT itself is not even going to get trading volume. If there's no trading volume, you can't really do an ATM, in which case, like, what's the point of doing this? You just kind of locked up some capital and threw it on the stock market, but no one's trading it. So now with Ether, there was actually a post that went viral that I want to get your reaction from a friend of the show, Andrew Kong. So Andrew Kong, I don't know if people saw this tweet, but it was titled 'Tom Lee's thesis is shit.' He got about 1.5 million views. And basically his claim was that, yeah, look, it might be true that stablecoins are going on Ethereum, RWA is going on Ethereum, banks are going to use Ethereum, but they're not going to pay fees. Nobody's paying fees for any of this. This is all just a meme and you should buy robotics companies I guess he's super big in robotics companies now. Do you have a counterpoint to what you saw coming out of the Andrew Kong camp, the doubters?
Well as you know in the crypto world 'shit' is a good thing so...
I took it as a compliment.
A good response. That's a very good response. Wow. Okay. This is why... that's why Bitmine is number one. There you go. All right, let's move on. Let's talk about Plasma. So, speaking of stablecoins, Plasma is a new layer 1 that is a stablecoin chain affiliated with Tether. So, just I want to get a quick show of hands around the room. How many people have farmed Plasma or they have any Plasma tokens? Hands. Okay, I see maybe like a lot lower percent. Very low. I'm surprised. Okay. Not a lot of people farming it. Well, it was a big farm. And so far it was one of the most recent token launches with a gigantic airdrop. It's now trading at about 8.5 billion FDV. So very very large valuation. They've got over a billion dollars circulating in total supply. Very large airdrop. So just a bit of background on the chain itself. It was incubated, invested by Tether. It has zero fee USDT transfers and the whole idea is that it's going to be a stablecoin chain. We've seen a bunch of these go on so far. We invested in one called Codex. There's another one called Stable. Of course, there's what's that...
You guys are also in Codex. There's also of course Tempo and ARC are also the corporate versions of these stablecoin chains. So the question is okay, we've got a very very high nominal valuation for Plasma. And despite that right now there's really not much to do on Plasma. It's just like kind of a gigantic farm. I think they're blasting out something like 500 million a year in incentives to just move your USDT onto Plasma. So thoughts, reactions, stablecoin chains, is this the new meta? And does this potentially impair the Ethereum thesis if you've got chains like this that are just trying to suck out some of the stablecoin supply away from Ethereum? Because if you look at the outflows this week of flows, inflows, outflows, I believe most of the stablecoins were pulled from Ethereum. And so you see Ethereum stablecoin outflows going directly into Plasma.
I guess it's probably a function of the farm, right? Like if you have a farm, a positive yield, then you'll do it, right? And if they don't create value after that, then they'll all come back just like all the other games you've played for a decade on all these tokens.
You're like, whatever's farm...
Maybe it'll be... Yeah, it's a farm, right? And it has to accelerate above the farm and then we'll see if there's real value there.
In the spirit of X for Y things, it's clearly Bar Chain for stablecoins. Bar Chain for stablecoins.
Like I mean that is what...
Plasma baddies though I haven't seen.
Yeah. Where the... hold on, elaborate, elaborate, why is it Bar Chain for stablecoin?
Just because it's like very heavily incentivized on launch, new L1, everything is about farming. Like the stablecoin thing almost doesn't matter. Like yes everything is paid in Tether but like most of the interest in it was just like farming the XPL rewards, right? Like if you looked at almost all the yield it was like 60 to 70% XPL rewards minimum. So on most protocols. So it kind of had the vibe of Bar Chain where it was like everyone was like ready at launch because everyone it was kind of like this publicized this is the point of this chain and providing liquidity on day one was important. I do think the interesting thing was like the Binance Earn integration which got 2 billion of USDC or USDT at least on there. That was much more scale-wise crazier than I think... it's clear their BD has been amazing, marketing has been amazing, they've been absolutely on point executing. But I agree with you, I guess my question to you is what would you recommend they do? Like what do you do from here to not become Bar Chain in your opinion?
I just don't know how you get stablecoin flows to move to your chain. Like it just seems unlikely, right? Like you either have to cannibalize Tron and like who is the biggest XPL farmer? Certainly his majesty of Tron. Like it's not...
His excellency. Like it's like okay well great. Like clearly you're not going to really cannibalize Tron volume. You're not going to cannibalize the ETH volume. So where is the net long-term flow going to come from? I just don't... for all the stablecoin chains to be honest other than Tempo it's like I have a hard time understanding where the natural flow is going to come from.
Yeah, I mean it is a little worrying sometimes when the only thing you see someone talking about for a new project is how everyone said it's the most amazing farm ever. And I'm like it's kind of like the SBF token in a box thing where it's like if everyone's making money you need to get the fuck out of that room. I think for Plasma, yeah, I don't think there's anything wrong with the stablecoin chain thesis. I think it's actually good, but I agree with Tarun. It makes more sense for existing applications that have some sort of end distribution, basically, slowly moving their own internal kind of flows onto some new chain, which I think is like the Stripe Tempo thesis. I wouldn't be surprised if some exchanges are looking at this exact same kind of play. But yeah, like the average Tether holder, they're actually holding it through some other sort of end distributor. And so I think those are the people that actually have the leverage to be able to do something like this.
Tom, other Tom, what's your take?
Well, I mean, I think stablecoin is going to be a huge market. Because we're just only 300 billion. I can see a path to 4 trillion easily. That's what Treasury Secretary Bessent's talking about. That's probably not even considering the fact that micropayments are going to be really big users of stablecoins because they, you know, the Tether is 12 digits. I mean, that's how you do micropayments. So, will this all take place on one chain? I don't think you could actually fit it all on Ethereum. So, it makes sense that there's other chains experimenting and I'd like to see a lot of things succeed.
Okay. Yeah. I think you make a very good point, Tom, is that you kind of have to bring the flows in order to establish a new chain for just stablecoins. If you look at Tempo, Tempo clearly has a path to doing that with Stripe and the B2B flows that they're going to be originating. And I think if you look at Codex, which is our portfolio company, they're really doing this kind of local B2B Southeast Asia go to market and they're originating a lot of flows as well that wouldn't otherwise be using stablecoins. But if you're trying to suck stablecoin demand that's already somewhere else, that does feel hard because the Tron network effect is so sticky. It's so powerful. And the same thing is true for Ethereum, right? For the people who just have stablecoins on Ethereum, it's kind of like, yeah, I mean, I could pay you on this other chain, but it's just much more likely that we're both going to have an Ethereum wallet.
And I mean, I guess also the bridge thing yesterday where Phantom issued a stablecoin on Solana. So like I kind of don't... I see like the flows going places that are already users, not necessarily places that are trying to attract users solely within.
What was the issue with the bridge?
No, no. Like Phantom issued a stablecoin using Bridge on...
Right. Like so that type of stuff just makes me think like why would I go to another chain? Like if I'm an app, I'm going to issue my own sort of white labelled stablecoin from one of these like five providers who do it. Am I really going to go to a new chain? I don't think so.
Yeah. Yeah, that makes sense. Okay. So let's switch gear. Speaking of bridge, let's talk a little about Hyperliquid. So, Hyperliquid, of course, is the largest decentralized perp DEX. And there's now been a war that has broken out that increasingly people are calling the perp DEX wars. So at the top of the perp DEX wars right now is Aster. Aster is the CZ/Binance Labs, BNB chain affiliated DEX. They are now trading something like what is it like 60B a day.
I saw that on DeFiLlama. Is that real?
That doesn't really matter but...
Is it real or is... I mean it's being traded. I don't know...
Talking about it so that they succeeded.
Yeah. Yeah. Exactly. Exactly. So it's happening one way or another. We recently saw Bybit announce that they were doing something more with Apex in which we are investors. Coinbase getting closer with Avantis which is their play in the perp DEX space. So, it kind of seems like now it's not just a war. It is a broader war that's brought in other combatants of the centralized exchanges kind of picking their horses to fight against each other in the perp DEX space. So, Arthur, you were recently in the headlines for a few things. So, one, of course, I remember you made a big call that you thought Hyperliquid was going to... or its token was going to 126x.
You did say that. And then about a month later, you sold your HYPE position.
You did sell it and then your claim is that the reason why you sold was that Hyperliquid has a sword of Damocles hanging over it. Explain what was that sword hanging over Hyperliquid.
So yeah, so obviously there are these unlocks, right? And it's not like it's secret. Everyone's known about it for a long time. I think it's like $500 million a year starting in November that the team is eligible to sell on the market. Now it either matters or it doesn't. When Hyperliquid is the dominant, so 60-70% market share which it was circa a month and a half ago, it doesn't really matter if they have these massive unlocks because everyone assumes they're just going to make more money in fees, buy back the HYPE token and it's a what they call a bullish unlock like Solana was like 2021 or whatever it was. So that was the dominant narrative. Okay, cool. I don't care about unlocks. Then I was one more one weekend of maybe whatever a month ago let me just check DeFiLlama, see what the rankings are. And then I pull it up and it was like Hyperliquid number one at like 4 billion or whatever. And then there was Lighter like right below it like 3.9 and Aster like 3.8. This isn't good. It's competition. Now to say that Hyperliquid can't dust them all because it's great tech and HIP 3 and builder codes and all that kind of stuff, right? In two or three years because I said by 2028 the 126x but fuck man I'm not going to sit around and watch the market reprice it forward in my face. I'm just going to sell, sit on the sidelines and wait and either it goes up or it goes down. Either Hyperliquid demonstrates that it has a moat that it can charge a real fee against all these other competitors or it doesn't and I'll reassess what the perp landscape looks like or what is the new product or service that a perp DEX is going to roll out that a client is willing to pay for and it can't get instantly commoditized by a centralized exchange that basically wants to make sure that nobody else trades on DEXes. So, let's just take out the number one by making sure they make no money.
Thoughts on the Hyperliquid sword of Damocles, please? You guys on board?
I think the bullish unlock thing is very real. I mean, I think it's...
Would you buy it right now? Hyperliquid at this price?
I mean, I think, you know, the phenomenon is it's like induced demand, right? Where like they figured out this blueprint and now everyone's copying it. And I think like this market is just going to continue to blow up. I think there's this phenomenon in evolution where there's like carcinization...
Everything across these different species, they end up evolving to look like a crab because it's very efficient and very robust. And I think...
Are you buying the crab? Are you buying the crab? Buy it or sell it. What are you doing?
Well, why am I preaching the value of... Yeah. It's like you should be preaching the value of purpose to me. Yeah. So I think everything's going to be, you know, perpified, and so therefore this market's going to 100x. And so why can't Hype sort of be alongside that?
