AI Fatigue, Robinhood & Every Market Becoming Crypto | Weekly Roundup

Nothing said on Empire is a recommendation to buy or sell any investments or products. Now we're live reporting live ladies and gentlemen. We don't we don't do any of these live streams. It's all very heavily edited. We're missing Yano today. Rob and I have things under control. Rob, what's going on man? Well, we're letting the inmates run the asylum this week, which is great. So I always love to see that happen. So just let's you know bear with us. We have come a long way, my friend, since you were a guest and now, you know, running the show. Leave left. You're left on my screen. You're leave left. You know, so you know, it's funny is that my face is still up a lot on the, you know, when they do the little clips, but I'm still not on the mast. So, you know, maybe it's just they need somebody with like a kind of a good bone structure, like a little face to put up the front there. If you talk about the jawline here, yeah, the jawline. Got it. Nice. All right, let's get let's get straight to the jugular, I guess. We need to talk about clarity. Coming off last week, seems like it was all time high. There's a lot of optimism on the timeline. I think Brian Armstrong said a couple of tweets. You're clarity guys. So what's going on there? Yeah, I mean, I talked about this couple weeks ago when I was on NDC and then also I think you guys had a Greg that the GC of multi-quinn on last week who on a good good podcast. Listen, I probably market is like I think down to 27% and so it's been kind of trending down for a while. There was this sort of, you know, spurts of optimism to your point on the timeline, which I think is listen, people wanted to get it done. And so they're excited about it. They're, you know, talking about it in public. They're showing a lot of just conviction and, you know, I think confidence because that they think that helps get it done. But if you talk to people in private, I think the reality is there's a lot of bearishness on an expectation that gets done. There's, I mean, basically two open items. One is the ethics language, as we've talked about a bunch, which is just, you know, what is the administration in the Trump family willing to do around carving out, you know, some of their ownership in these crypto-related projects. How are we going to, you know, litigate that in the future? Should there be, you know, complaints? And like, who would have the power to bring those complaints? Would it be the FBI or the state AGs? And so that continues to be, I think, you know, probably the major issue. There is one other issue, which is around essentially these developer protections, what they call PRCA, and how the federal law enforcement feels they are able to use different types of tooling to potentially catch or, you know, bring, you know, bad actors to justice. That piece is, I also think, quite fraught at the moment. Senator Cortez Masto, who's, you know, one of the leaders on the Democrat side who's been championing this, has had a perspective on that that both the Republicans and the, just the rest of the industry likely would not be okay with. At least she put out some language, sorry, he put out some language a couple of days ago that said, hey, like, this is a new, agreed-upon language with us and the, and some of the people on the, on the Republican side and some of the people in the industry. And that language was things that, like, the industry and the Republicans would not have agreed with. And so those two topics right now feel like, you know, potentially tough to surmount at the moment. We're still trying to get something done. I think there might be a vote next week. A vote might be a part of partisan lines. And then we end up in September. And, you know, the longer this goes on, the less likely it is that, you know, we get to an agreement. But I'm so hopeful. A lot of people are still working really hard, but we're in a tough spot. This is not the Rob Voice that I heard last week. Now, we're asked what you're like. This is going to, that's like, let's fucking go. And right now, you know, I'm looking at Polymarket. As we know, we like Polymarket. We're not, we're not sponsoring anything. But Rob and I, you know, like Polymarket. It's at an all time low. It's an all time low 30%. It felt like we're almost there. I mean, it jumped all the way to 46% last week. And then just, you know, like, like semi's man, it's just straight down. That's what's happening behind your like, what is happening to my semi's book? What is happening by memory? But listen, I'm just saying the market's up today. It sounds like there's a, we'll get into the market and stuff. Boy, I was, I thought, well, I know we're not going to get there just yet, but markets up today. I thought I'd seen some volatility in crypto. It's like the name of like crypto bros is pivoting to memory and like just getting absolutely whips on. Everything just trading like crypto now. But, it would just say, here's the thing, if you weren't crypto, you survived pivot to just trading all assets. And I think that's where the world is going. Like just in a more serious note, like we're going to talk about Robinhood chain. We're going to talk about tokenized stocks. We're going to talk about, but it is truly crazy that just a new market structure, just, you know, Robinhood reported earnings this week. We're going to talk about that. We're going to talk about their crypto numbers, which was a really interesting stat. We going to talk about Robinhood chain. But yeah, just zooming out like markets just in general. I mean, it's been pretty volatile. You have like semi's, you know, doing 10 up 20% today. I mean, that's just if there's one takeaway in all this conversation is just don't use leverage ladies and gentlemen. Charlie used to say, what is it? Ladies liquor and leverage out of the three definitely avoid leverage. It's just really hard. I know you guys don't use that much leverage or at all. And you're in your. No, we don't. We don't know. It's, it's crazy. Should we talk about, obviously, the most important headline that was running around yesterday? Yeah. So before we get into situational awareness, which I know you want to talk about, I want to make one last point on clarity before we move on, which is, you know, you've seen it come out from both chair, Akins and from chair, Selig on the SEC and the CFTC side. You know, they're ready to move forward on rulemaking and trying to put something a package together to help the industry have clarity on how to move forward, even if there is an actual legislation that obviously creates a situation where that could be rolled back under, you know, different, different chairs. But I do think regardless, the SEC and the CFTC are going to move forward with haste here and they're going to try to bring something that is good for innovation onshore is good for, you know, bringing back entrepreneurs and it's good for both the industry and, you know, finance and, you know, the, a lot of the companies that want to participate in the space as well. And so, so that's positive. And so not all hope is not lost if, you know, clarity does come along. Are you buying this level and polymarket? Not financial vice, but like like going ahead. No, I wouldn't buy. I think it's a perfect price. I wouldn't buy the 30% on poly. But, do I think that crypto will be in a better spot, you know, regardless of whether it becomes a law or not in six months, nine months with, you know, the leadership and the SEC and the CFTC? Absolutely. Yeah. I mean, let's not forget like we're in a point where like there's a conversation that's happening. Like two years ago, like three years ago, there was no conversation. And so just the factor we're talking about is positive in my opinion. Obviously the bill in whatever form I still think that the there's obviously different stakeholders here that care about some things more than others. But a bill passing, you know, as it is or similar to close to where it is would still be very much more positive than a bill not passing and the signaling. And we talk about like on the margin or enterprise is going to slow down and is it going to be an issue? I mean, I think genius is like a landmark bill, but clarity would just be so much. It's just not positive for the space. There's people that are always on the margin. A little bit more here and there. But as it is, if you were to pass it, like, I don't know if you would disagree with me here, but I think it would be, you know, it would be much better for the industry. We got a bill passed. It just, it just sort of has a legitimacy and you have like a, then you can like do amendments and whatnot. But it's, it would be obviously much more detrimental if we didn't pass it. 100%. We should, I hope it gets passed. We should continue to work, try to get passed. There's a lot of people working on it. But we're going to get real making out of the state to see and the FTC. The SEC and the CFTC, regardless. And so listen, we'll be in a better spot, regardless. I applaud everybody who's working on it. Hopefully we get something done. There you go. Where do we go next? We got to talk about your boy. We're opening a can of worms. I do think we have to, we have to, how are you, by the way? Like, I feel like you're like a little bit of like a mini leopold here. So like you're, you've been fashioning yourself. So like, are you surviving? Did gold men, did they, did they, did they liquidate you? I got an email from Goldman today. It was not about that. It was about something else. No, no, no, not at all. I mean, like coming out of last pot, I was like, look, I'm unbothered, moisturizing my lane. I've always felt that these things are extremely volatile. And you just go, look, like it is similar to crypto. I've always felt like it is very important to obviously underwrite a thesis, but factor in, okay, what's the volatility of these things and just bake that into and also have like a certain price in mind. I still think we're nowhere near the opportunity, like capturing the opportunity in just AI and semis in general. Big week because you had meta, you had Microsoft, report earnings. And ever is just looking at in Google last week, everyone, and you got to go listen to the all-in-pa. There's good discussions around Google's numbers. What the markets is really focused on is CapEx. There's a great post by Satya Nadella around the R.O.A. of AI and how we built it. It was kind of surreal to see some like five code and just like create an artifact that he was sharing in earnings and then tweeted everyone's out on the timeline, right? And I think that Capix, Meta, Google, Microsoft have all maintained or increased their Capix guidance. So there's like, I think the market's responding well to that. And the the the launch, I guess this applies to your portfolio, a USDA I, you remember like there's always, there's always a wall of worry that you need to climb when it comes to like crypto AI just in general, right? And investing in AI referred like the usefulness of these GPUs of these like if you're gonna invest all this money at the building out hyper scalers, what's the life, like what's a useful life of that? And I think one of the interesting things that I saw yesterday, this is such as like the ROI, like one the usefulness life, I think it was meta, actually the useful life of these racks is much longer than what they anticipated and I think what other people are anticipating. So that obviously boasts well to everyone that's behind like just deploying these. And but yeah, you know, it's, it is more of a semi-slation gentleman of young and paying attention, has been more volatile than crypto these days, sort of like crypto is quite muted. Just the $1 assets with like 120, it's like crazy. Totally, totally, totally. And so the last single says, I think the Korean market is extremely volatile. It has had more circuit breakers and there's a circuit for one doesn't know. You have a circuit breaker in town, there's like a pretty big move in the market, up or down, I think there's been more circuit breakers this year than the entire history of the Korean stock market. It just just, and I think that's relevant for crypto because you said earlier, like crypto, I think has like foreshadow what is happening in every other market. It's not that like, you know, the entire market's coming to crypto, not crypto, trying to let mold into the other market. And I think that just means like, what I want to want to get your take is in your conversations, 'cause you come from traffic to it's like, if you're at an institutional fund, like I understand retail and Robinhood and zero day options and that whole phenomenon I think is like, if you've been paying attention crypto, we all know true and well. But let's talk about institutions for a second. Like it just also feels like institutions are becoming incredibly short, you know, short-sighted, momentum driven. Like if you're running a hedge fund today, is it like the most difficult time to run a hedge fund ever? - I have to tell you, I listen, I'm not an active trader, although I've done a lot of investing in like, capital markets infrastructure. And the, I mean, this was bound to happen, obviously, the advent of AQR and then everything of it, we've had since then. And just how much more quantitative, how much more ML is being used when people think about, you know, what they're, you know, the trading activity. And so that's why you see, you know, the vast majority of trading activity today is of course like automated. And it's, you know, ingesting a bunch of data, it's been out a bunch of data. And it strikes me that what has happened is we've just sort of lost the, like the long-term, buy and hold, they fundamental investor, because people cannot stomach the volatility of what's been brought into the market by more leverage. I think Goldman said in the five and a half of 2026 that there was more leverage at their prime than they had seen like since the, since before the global financial crisis. And not only that, there was about 20% of that leverage was basically in just a few AI memory chip names, right? And so you have this bunching that's happening at the biggest names. You have leverage being put into the market in a way that we've seen in crypto. You have retail active trading, getting to be a much bigger part of the market. And really in many, often feels like the retail active traders are the marginal buy, right? You have much more of the, both the market makers and just generally a lot of the takers are doing a lot more quantitative, a lot of torrented quantitative strategies instead of just, you know, call it, you know, buy and hold a long-term. And so you bring all that together and the volatility in all asset classes is just exploding. And it's exploding in a way, and it's bunching in a way that, you know, does make it look very much like crypto has in the past. And so it does feel for me, like, I know it's not dying, but I, at least in the conversation and what people are focused on in our attention spans, the long-term fundamental investor is struggling more than ever. And also because the LPs are struggling to take, to say, handle the volatility. I mean, this is something that crypto funds have heard for a long period of time, which is, it's like, oh, well, we like the fact that tokens potentially give us earlier liquidity, but also, like, this is a venture book. It's not supposed to go up by 50% down by 50% in a quarter. Like, that makes no sense to me. And now you're seeing it in, like, across a bunch of different asset classes. And so people don't know how to stomach the volatility yet. And it's creating incentive structures that I think are quite perverse. And, you know, then we talk about Leopold, right? You know, he's supposedly sold his entire $14 billion of noional value in a single block trade because he was 4x-leathered, right? Going into the, you know, when we've had memory stocks down 50% in two months. So like, it's crazy. - In two months in a month. (laughs) - Yeah. - It's, yeah, my current report earnings, then everything, like everything is down 50. Today is obviously a bright day there. But, yeah, I wonder, like, I remember, we never experienced it, I think, but I have heard from a couple of fund managers that a lot of LPs were like, "Just don't send me quarterly statements, please." It will make my life extremely difficult when I go to a committee and do, like, portfolio review. In a perfect role, just send me something in four years, five years, 10 years. Just, I don't want to see the intraday wall. It just, but it just tells you a lot about how, like, how difficult it is to underwrite crypto and/or, like, other, you know, high-wall asset classes. And, yeah, I think people just are not set up traditionally to see this kind of wall. Goldman has some interesting stats or, like, the momentum index just worse than, at or worse than 2008, just to put it in perspective, like, we've had a massive deliveraging. All the different banks are, like, obviously, commenting. Like, JPMORIN said, like, 70, now 90% of all the, like, leveraging the system has been re-installed. So, a lot of this conversation we've had in crypto, it's like, we look at-- - Sounds exactly like, people should be not perfect. - Exactly. So, anyways, this is a word of encouragement. Like, we've always said here, and I felt that, like, the lines between crypto and tradfi are increasingly blurring. If you're a trader out there an investor that has, in crypto, you've had to sort of be a venture capitalist in a high-frequency trader and simultaneously. But I do think the world has become a more like that. Ken Griffin said something interesting. He said, like, who has probably, like, was way ahead of his time of just being super focused on short-term and tight-risk books and pods. Now, he's saying the opposite. He's more interested in long-term, fundamental investing. And he's always, in my opinion, been ahead of the curve. And for someone like him to say that, just, I think, tells you a lot of what the opportunities, which is just like, again, don't necessarily use that much leverage or any at all, expect a lot of all. If you want to create ever-credit-- - Hottel. - Figure out-- - You got a hottel. - Hottel, your micro-- or figure out a way to make money on wall. And that's what I think a lot about. But it is crazy. You have meta down today, like 9%, 10%. - I mean, the best performing liquid funds in crypto, if you take over the last-- you take the whole last five years, are all deltinutral funds. - Deltinutral funds. - And because of the volatility. And all of those guys are now deltinutral in-- - Well, I'm sure some markets. - It's funny you mentioned that I was having launched to these guys that started in London. And I think managed-- I heard close to $4 billion, and they're all market neutral. I was like, whoa, I've never heard of these guys. - Oh, this is QRT? - No, no. And I think the guy used to work at a JP Morgan Goldman prop trading and started doing crypto and that just slowly-- totally ditched tradfice strategies and just is focused on arbitrage opportunities market neutral in crypto. They did save fairness like this year has been a bit more tough than prior years, like 2022, 2022, 2024. It's been much better this year has been a bit more difficult. But I was just blown away. I mean, at Perify, we used to have-- or still have when I was there a stablecoin arbitrage fund. There were marginal deviations between DIDE, USDC, and curve has come around. And there was-- but I asked him, how scale will this trad-- before knowing AOM, they were like, no, we have like 4 billion. I was like, wow. And not-- - That's a present. - No, no, again, it just tells you the crypto to your point. Market makers is just-- ARB funds-- I mean Goldman, I think, has a pretty big strat. Couple of the trad players. Citadel is probably doing a lot, jumps through a lot here. It feels like it's going to be a little bit more difficult. like to point market neutral funds and lawyers are the best performing people in crypto everyone else is struggling. I will say maybe worth noting here on the was like AI versus like crypto LP. I've been among the West Coast this week and we've had a bunch of LP meetings this week. And one of the things that I've started to hear probably for the first time is a little bit of AI fatigue from the LPs, you know, big institutional endowments fund of funds. And you know, three months ago, four months ago, there was still just insatiable appetite to get exposure of these AI funds or the general's funds are doing a lot of AI and are very good. And it started, I mean, it's unsurprising, I guess that also what's happening in the public market is going to affect that. But we're starting to hear a little bit of like, oh, maybe this got ahead of itself, there was way too much deployment in the first, you know, first half of the year in late last year, I heard one LP who is not that exposed to crypto dolls only in a couple of managers, compare it to the 2021 crypto cycle. And the just say it's simply that like listen, like valuations are way too high. A lot of these companies are just, you know, software companies that are, you know, changed a business model, it's not sass anymore, but it's still just software. And you know, it shouldn't be there's no reason it deserves a, you know, 100x multiple. I mean, by the way, the open router stripe thing, you know, when it's $140, $150 million revenue business, it doesn't say domain, but that's a, the day Zach confirmed 10 billion. That was just the rumor. So I don't know what the, yeah, yeah, I would say more on that. Yeah. I don't know if they've exactly year. Yeah, it's interesting because you might have heard me send the pod like earlier this year or late last year, like I feel like there's exactly what you said. I do think that there's more nuance into the discussion on like, AI is just bucket it like crypto was back in the day, like it just crypto is a massive bucket, but you can make like, there's names that are very undervalued, underpriced, there's stuff that is extremely overvalued. And I think AI is in that camp too, like you can slice it into hyperscalers, you know, new clouds, you can have you have, you know, memory names, you have testing and burning and testing, like there's many different parts of the stack and everyone's trying to, you know, figure out what the bottleneck is. But Gavin Baker, I think, worth a follow, I think he has some of the best takes, which he said it was like, there's, there's pockets of AI that are extremely overvalued, hard to justify valuations, especially also the private markets. So you have these, I get to like researchers are now like rock stars and getting paid a billion dollars to join like meta and stuff. But if you're just as a traditional venture fund, like I struggled with like, why are you investing in it? Like you see these rounds that you close at three billion and then it jumped eight and then out 16 and then there's like, what has changed in those three months, other than you missing out on investing in the first round? We saw that a lot in crypto, right? And so that, to me, feels very hot and I have my own opinions on like, who's going to accrue value? I think you mentioned that it was rumored that we uphold to us position and then drop it could sold a lot of that. There's a big discussion on open source models that I think, I don't know, like crypto, like that's also a crypto like, where does value accrue? Right, we're going to talk about Robinhood chain in the theorem yet again, ladies and gentlemen can't escape that. But I do wonder like money, I think the AI trade is still very much intact. I think there's probably more rotation within AI and where you put your money behind like, like, I'm not sure and throughout the building is even though I've heard like the AR just keeps crushing, I think I see way more risk in like open source models eating into that business and Harvey, like you open source models are progressing quite a bit. It does wonder like, are you still going to be able to like get that much profit margin on your on token spend? Like, I don't know. But yeah, this is starting to rhyme with crypto. We have a we have a portfolio company that's still in stealth and going to come out of stealth next week, who has a router product that is similar open routers, probably the only other, the only other competitor to it, but it has much better benchmarking in terms of actually optimizing spend. And if you want to go and optimize your token spend, and they are one of the things that they've started to see is they kind of serve a lot of agente businesses, people who are building agents to, you know, they run their business fully or both for internal use cases, but potentially also consumer or direct to, you know, and customer use cases. And you know, you've seen, I think Coinbase came out and talked in public about how they actually built an internal router for their own context, which is around, it helps them optimize cost. So ramp come out and launch a product, it's sort of an odd kind of like more closely product, but you're trying to do a little bit of the same thing. And it's very clear to me that now with the how much better the cheaper open source models are getting, and also how the vast majority of workflows don't actually require the, you know, whatever the frontier model is, that token spend is going to start to become a much bigger topic of conversation, and that the, you know, being able to charge people for the most frontier models is a real premium. That's probably going away in the vast majority of industries within the next 12 to 18 months. Robots and machines will outnumber humans on chain. And peak is how they get there. P.o.s enables any machine to do business on any chain. It turns machines into autonomous actors and liquid assets with ease, giving robots access to capital and the ability to compound their value. That means funds, allocators and institutions can underwrite finance, trade and route capital to machines the same way they handle any other asset. Millions of new potential consumers for any web free service from compute to storage to anything a machine may need without a human in the loop. Head to peak.xyz or click the link in the show notes to find out more. Reminds me of NFT craze, right? You're paying like a thousand bucks to settle a transaction. Yeah, TVD, I mean, obviously, a lot is moving quite, quite quickly. But for when you guys did that investment in the like a router company, I'm curious if you're able to share like how much how much growth does that come to seeing like how much demand is it? Because we hear some companies that are really focused on token spend and capping that and making sure that the productivity is there and others that are just like token max is. And then what's the defensibility of a routing product like that? Yeah, it probably should get too deep and do it. It's one of their products and a suite of products which should provide more of a moat because they do a bunch of stuff around, you know, just enable in the genetic businesses generally, including payments, which is on the, which is where some of the crypto ankle comes in. But the growth has been a lot, it's much earlier stage than up and out of the growth has been a lot in the last few months. But they've got some, you know, initial some initial pieces of data, which is that for one of their clients who runs a ton of spend, they've reduced costs by 80%. So like that is an incredible number. It's only, you know, one, you know, one benchmark right now. And so it's not say that for some of these other people, you're seeing benchmarks not nearly as drastic as that. But it's clear to me that that's where the market's going and that, you know, both in the topic and, and in open AI are going to have to figure out, you know, net new business models. But the, you know, the cap X spend that goes into you know, training and goes into all of the work that, you know, that you need to go and launch from these frontier models, it it is really incredible. And so like, how does the economics work? I think that's the question everybody's asking themselves still. But for men, not the RobEx standpoint, like to your point, when that goes public, I don't know anybody who thinks that goes public for less than two, one point to drilling. So it's, it's, it's, there's still a ton of demand there. Yeah, yeah, it just feels the most exposed in this shaking, like in this world where like there's increased scrutiny for token spending and, you know, at that valuation, I'd rather own other stuff in, like long AI, but I'd rather own other stuff. And I'm not coping, you know, clearly I could, you know, 200 billion, maybe 100, but like obviously the AR number keeps growing. So as long as that continues to happen, I don't think it's like crazily valid to your point of like one, you know, we might be in a world with AR for them is like what 150 billion? Yeah, I think there were some numbers that said they were close to, like, as a job, yeah, like over like close to 150, I think, I thought about it. Yeah. That's crazy. So, but, but like, I mean, we'll see, right? It's, I don't know, I think this is the, to put it in perspective, fastest growing AR in the history of mankind. Oh, yeah, that's incredible. Like, like, like, by a country like, but it's just incredible. Yeah, I mean, we're, we're the fastest growing companies we used to see are companies that, you know, micro eight, nine times in a year. and they would do that for one year and it would slow down. And companies like Ramp and Rain Event and stuff like that, we've seen tremendous amounts of growth in these companies where they've put big multiples of their business in the short period of time. But what we're seeing on the AI side from the foundational labs is so far in a way unlike anything that anybody's ever seen, which is part of the reason you get this mania and also part of the reason that you might have a very big correction. But that doesn't mean that the long trade, if you have the right long-term viewpoint, isn't the right one. I just have to sum with the volatility in between. - Yeah, yeah. All right, so should we pivot just a brief second on Robinhood chain? I think, obviously, we discuss about that. - Is Robinhood your biggest holding? Is that your single biggest holding? - Not at all, not at all. I have some exposure, but no, no, no, no. I used to own it quite a bit. Now, it's definitely not that. You guess what it is. It's AI related. It's not Robinhood. But I think there's, so to put it in perspective, they launched a couple of weeks ago, a ton of activity there. There was a tweet by Frank, and I'll just kind of go through it. Like, less than a month after launch, Robinhood chain has become the largest network by tokenized stockholders surpassing Solana, B&B, Ethereum, and base distribution matters. I think there were some nuance to that, which is like the way you count users is tricky. And we've gone into this discussion around the crypto. Like a wallet is not necessarily a user can have multiple wallets and how you count them is different. - And also, by the way, active, the active accounts have actually trended down after that initial bump. So they've been down the last week or two. - Yeah. But no, I'm pretty impressive. I gotta say, it's a, I don't know if you have any, any particular take on that. It's just fun, pretty interesting to see that a lot of the attention is there now. - Yeah, listen, I think very clearly, number one, just like the Robinhood wallet product is good. Like anybody who hasn't used the Robinhood wallet product is different than Robinhood itself. It's a good product. It's obviously like they do a very good job of building consumer product. Things that are easy to use that people like to use. They've done, I think, a really good job on distribution, a really good job on marketing. And also bringing in, instead of like building the own like closed loop, like net new protocols, they brought in lighter and more foe in Athena and these guys to Uniswap to come in and be kind of the cornerstone, but still distributed the same way that they've distributed other products. Obviously, this smart move, it's been, it's been really, really fun to see. I, you know, I expect we'll see after this initial wave of excitement, a little bit of a trough, and then, you know, we'll have to see what happens over time. I'd love to see them be able to bring the Robinhood wallet product together with the Robinhood core app in the same way that, you know, Coinbase eventually did that. That would be, I think, a humongous unlock for the chain. I think it's very clear that they see this in the same way, you know, striped some others have embraced crypto that as a core growth engine for them in the future. And so I'm excited to see what continues to happen. I do think people get a little bit too excited, probably a little bit too quickly on, like, the initial, you know, thing, like, there was a bunch of people trying to front-run the meme coins, but like the same thing has happened another, another change. That's all fine and dandy, but once this thing kind of settles in, then we have to see how growth goes over time. Same thing happened to base, by the way. - Yeah, yeah, like we're gonna talk about, like publicly traded companies that are, have a crypto business, not just Circle Coinbase, Secure Thought, like really like Robin Hood, my opinion is the most forward leaning traditional company that is moving into in a very, like across prediction markets, their own chain. So I'll just like spend a minute, their earnings just for, like they record like 1.3 billion in earnings, growing like 32% of your year or so, pretty strong. They beat like consensus estimates and whatnot. I think the average trading per account, like the intent, it has come down quite a bit. Maybe it's summer, some sort of liquidity to that. Prediction markets did 156 million. - Bigger than crypto now. - In the volume. - Yeah. - Exactly. 'Cause crypto did 100 million. And so that volume, starting from a low base, is like 10x year year. Like, $166 is revenue, correct? - Revenue, yes, yes, yes, not volume, obviously. - Yeah, I mean, I mean, I think that is to be expected with the World Cup. I'll be interested to see what that is in like July and August. - Fair point. - Yeah, World Cup was the biggest contributor there, I think. Again, interesting. We've talked about this before. Robin Hood drove, I think over half of the Calcys volume, then they bought MIS. - No, they did a, so they did a, essentially, they bought NIACs, or the old ledger experience. - I did, yeah. - Out of, yeah. And then they did a JV with Saskwana to launch a think called a Rothera. Rothera is their prediction market exchange, but they started to move some of their Calcys volume to Rothera. - Oh, what? - Expected. - Yeah, expectation is, they'll continue to do that over time. I'm sure they'll still do best pricing, but you'd expect more and more over time that they want to own that full stack. - Yeah, exactly. Not to get too much, but I feel like that's pretty indicative of how traditional firms are gonna start implementing. Stuff that is working in crypto. Like if you have distribution, you'll enter in chain, you'll enter on prediction markets, and you're out away from a Calcys or Polymarket, in France. - I don't know if you saw this, but, so the CME right now is suing the CFTC on Purps. Then they came out in their earnings call, and they were somewhat actually positive on Purps, which very clearly tells you that they're talking about both sides of their mouth 'cause they're doing something as well. And then they've been very upset with the prediction markets exchanges. They came out and said yesterday that the CME is probably gonna launch a sports linked prediction market contracts or options contracts. And so like all of the incumbents, it just tells you, you try to get in front of the innovation, when you can't get in front of it, when you can't stop it, you embrace it. That's what we're gonna see from everybody. - Yeah, yeah, yeah. Yeah, but it's interesting. Obviously Robinhood, just another point on, it's been now four weeks, 12 billion index volume, 100 million transactions. The RWA Holtar count, like 328K, like maybe this is the number of that number, obviously we might revise that, but they're like number one chain by RWA Holtars. That's Frank's tweet. Some people might contest that, but it's still impressive in the sense that like, you know, they've sort of leapfrog every other crypto native operation out there and with their distribution, which to our earlier point, like the Robinhood user is the prime user for prediction markets and just on chain activity, right? My view is Robinhood is probably the most important company to try because it will tell you if flows are coming in a crypto, the sentiment, like if it's true that like there's AI fatigue, people wanna now trade crypto or NFTs or what have you. You're likely gonna see it first, Robinhood. Not Robinhood earnings, Robinhood chain and the activity there. Right, and I think that was like before, it would have been like the envy chain, which I think we haven't talked or don't talk about too much. - I mean, the envy still has those, finance is still one of the biggest fintechs in the world in a lot of local values. - Yeah, yeah. - Yeah, so anyways, pretty interesting to see that. I don't think tokenized stocks, I think, so they just one last point there, they launched tokenized stocks, obviously not available to US customers, so everyone else XUS can use, can they get exposure to tokenized stocks in the Robinhood chain, right? So that's also a metric that I'm really closely following because it is the true expression of what hyperlake would just done as well, you know, like with hip theory and stuff like that, it's a lot of stuff too. So I'm quite curious to see how much activity, and we've talked about outland here, but like just tokenized stocks. That's Robinhood. Similarly, there's another great treat, because chain's not here, we're gonna reference the block. The total, so Robinhood chain is built on Arbitron, which is an L2, so it's in the Ethereum ecosystem, but that's a bright light, low light, and every other L2 out there. I think the total value, the TVL in all other Ethereum L2s is back to roughly five billion. The last time we saw that was 2023. So pretty big reversal, I think all the other L2s have find themselves in a difficult spot to say the least. - What do you make of that? - I don't know, I would like to see if there's been an actual rotation away from these, and like, you know, those maps are the flow, I don't have it in front of me, but not surprising. I mean, I think there was just, we're in a point where like there's nothing really, truly exciting happening. Like you have the ensemble coin in Salana, that was like the only thing that, you know, just gave a little bit of life. But there's not, this chart talks like Optimistic Rollup, Seeker Rollup, Svalidium, Plasma, and State channels. There's just not, it's not interesting for a retail user. like their brother B, you haven't dated him. where there's like 10 plus, like there's super high wall in traditional markets. Korea is always been the penetration of crypto and Korea is always been very high. I think it's the highest in the world. Those guys are not trading crypto right now. They're trading other stuff. You know, yeah, I will say the like the blocks numbers are a little bit odd because I think it's L2B who also said that the like combined TVL for you know, everything in the ecosystem and the Ethereum ecosystem, not including like there was like some some they took out some team controlled tokens that like they didn't think were like particularly real on on Arbitram. But they still say that you know it's they put out a number that was like 33 billion this week as well. And so there I don't know if you've spent any time thinking through like how the block or if you looked into how the block is coming up with that methodology. But it is it is lower than other sources are coming out with. Yeah, I will say the trend is all if you look at D5 Lana like block works. The trend is in one direction. I think the other thing that we've talked about a lot that I want to talk about this pot like it's been pretty brutal this year in terms of hacks and you know you know you had kelp you had a number of others. I think there's increased awareness of like look it's increased hacks this year. So the first half of this year I think is the highest in crypto history like 212 exploits. It's been over a billion of funds lost. That's three times three and a half done more than last year. North Korea Lazarus is like half of that or more than half of that. kelp and drift were the biggest right. And a lot of this has been so truly deniering. I don't want to say like smart contracts all of some just became more vulnerable and fable and all that. I think it was just a lot of these are so true in deniering attacks and bad like risk management policies. But nonetheless I think when you combine like low yields on chain increased hacks plus AI becoming like the momentum trade. I'm not surprised like I think those three things just really explain less TVL like the basis trade is not as interesting anymore. Like the rate like what's the thing on out like you know used to be like 10 plus now it's like three four. It's over four now but they're doing obviously they're doing a lot of RWA stuff now. I mean still well above so far. But you know it is hard when you know I think Robin Hood chain right now is on USDG to give new 7% or clearly they're just subsidizing. That's money is giving you six like six percent yeah yeah yeah are you guys um I know your partner like Bernard has seen you've just talked a lot about like on chain like like hacks and these pretty good to like you know diagnosing that and posting about it like internally as a firm is is this like a major concern for you guys when you think about the viability of crypto and deploying stuff and advising founders or is this just like look guys just really have good upsoak and you'll be okay. I am sorry I'm gonna make one last point on the on the TVL stuff before we go into this but I think on the TVL stuff too we have one portfolio company that kind of does it runs a lot of these vaults for a lot of the institutions and you know we went we had the board meeting a couple weeks ago and TVL for sort of the whole industry was down all of the vault products was was down on the quarter but it does seem that you know when people talk about TVL numbers about half of that number is actually just like ETH coming down in Bitcoin down because a lot of these TVLs like this process is nominated and so I think it's worth keeping that in mind when you talk about these numbers but um okay so that's that's the last point I'm making that on the point about in security listen wait wait before we go there before we go there have you guys looked at to me the most important metric is active users on chain I think a 16t cannot report last year that you might have also heard me say quite a bit it's like roughly they kind of slice it in their own way but they're like less than a hundred million active users on chain they give a range of like any 20 to 40 and 60 I think that is worth like just keeping tabs on it they're six and z or whoever but to me that feels like the most important metric TVL to your point can be just like price action related but users in my opinion is like the most important metric because I don't think we've onboarded and I probably lost quite a bit of active users yeah well and I think the TVL in the users like a lot of this is related also to the question we asked about security so we actually saw that the vault products they struggled a lot after April and after the after the kill pack for and because there was and then there was a few there's stream finance there was a few others and people were and drift and and then there was austiom recently on the OOP side and so people have started I think to be weighing the risk reward of being on chain a little bit differently at the same time I do expect that active users should pick up with the usage of and the proliferation of you know a lot of tokenized assets that are being distributed by people like Robinhood or other Neo banks where they don't you know they're abstracting the way the being on chain port and so you know you have these two kind of railing forces which is that you know a lot of the very crypto native activity is like maybe coming down where you know the more you know retail oriented users through traditional distribution modes are starting to grow and so that's what we interesting to see how those interact yeah yeah I do think applications benefit more than the arbitrary theorems like the infrastructure providers think applications like Uniswap and others benefit much much more Athena and some of the others right just to think here's a little bit what do you make of Undo and them launching I don't know that went about it but I did see that they launched like private chain so we're back there you know I'm curious if you guys have looked into that and what your thoughts are around there like their design choice of that to do that versus being I haven't looked that close the at it but you know they they announced okay we're gonna do sort of an institutional one and it's gonna be I think sort of the sense gonna be private a lot of the the language sounds a lot like Canton right which is not whole yeah it's like basically we want to be with Canton and so working really well we're gonna get our effort that we announced earlier this year and we're gonna be full on institutional we're private yeah so it's like oh it's gonna be verifiable like a blockchain and but it's gonna be private and it's gonna be but also non custodial but you know you won't necessarily be able to have run an independent independent validator and like you know they didn't give a a ton of you know details about it yet and so so we'll see you know what it actually ends up looking like but I think what's very clear is that for these you know the Ando's of the world the Canton's of the world that are focused on you know how do we serve the needs of larger institutions who are trying to use tokenized assets also by the way who are potentially worried about you know not like a privacy but not open source hack risk as well and they want to be able to control maybe also a the regulatory risk that's specifically on their chains there is a much bigger conversation today around you know how do we serve those people appropriately I have a perspective that this is a little bit like I don't know if you remember a decade ago but we had like the hyper ledgers and the enterprise at Irium and and yeah this feels a lot like that conversation then which is like oh well people think that you know completely enterprise private doesn't really work but maybe something that's like hybrid will work and maybe that will just someday in the future end up being actually public and permissionless but it sort of feels like you just need to pull these institutions along I don't actually think a lot of this infrastructure that's been talked about right now which is like sort of just a database but a database that looks like a blockchain but you know doesn't have a lot of the the capabilities or maybe the the ways of which blockchains are actually you know useful which is like coordinating trust to go out your budget to precounter parties and yeah but I don't know we'll see what yeah in fairness look you always goes back to like execution verification and settlement like those are the kind of the three functions of a blockchain in fairness I think we have the on-dote team here and if they want to come on or happen to have them on is like we're keeping we're keeping the settlement public but like the execution and maybe the verification but the execution itself is private because that's what institutions want you can't have order flow being public and it's a very it's a very argument like I think that was their whole like messaging which is like it's still public to verify I believe but the execution itself is very much private and that's what institutions want so we got to listen to that and we're going to build that in this direction yeah I'd be interested to see like a discussion between like Canton like you ball and ondo and maybe like Mike Cagging or someone figure talk about like what they're doing and maybe secure to I don't know I think that would be like I mean obviously the figures I think they've tried to make providence like completely open yeah right and they just haven't been able to get other people to build there just so it is listen I think there's a lot what's very clear is the direction of travel is tokenized assets everything's going to be tokenized the people are coming on chain in one way or another whether that is Ethereum or base or Avalanche or Monad or Solana or it's Canton and a private ondo or nobody knows. And there's a lot of competing conversations happening right now. There's also a lot of differences of opinions at the organizations themselves. And so there is an ideological fight happening here about what serves my needs versus also what do I think will sort my needs in the future in a different regulatory environment. Yeah, yeah. TVT goes above my pay grade. It sounds like a lot like a dark pool with some sort of blockchain settlement, but it's like, we'll believe this architecture is secure on clay. Yada yada yada. And like, these are trusted, you know, execution engines, but it's like a double pool. But I don't know. TEs are, I mean, there's a lot of, there's a lot of work being done around TEs right now, but I mean, this is not new, but I think there's more statement around them than there's been in a while. Yeah. In contrast, I think so, like you hear on to talk about institutions want like, you know, the ability to, they're like the order book, not like not be public and exposed. And then you have just Robin Hood say, yeah, we're going to watch up fully public, permitted, you know, public chain and like, you know, free for all kind of thing, which, yeah, it's a different, uh, different customer base. I will say one is more retail, the other is more institutional. Yeah, I mean, you're definitely seeing more, more willingness to take risk among the people who are direct to consumer than the people who serve institutions, the institutions who also serve institutions. Um, but also like, you know, it's very clear, like Robin Hood has innovated in a way that has hurt the swabs of the world and has hurt, you know, the traditional, uh, the traditional wirehouses. And so like, you know, doesn't say they're not right about what the world will actually look like in the future. Yeah. There's a world where both, you know, are equal, are successful. Like Robin Hood clearly is monetizing distribution, uh, you know, and retail and, and, and, and activity there and they've done that with Citadel with flow and stuff like that. Now they're doing their own chain and condos, totally different animal with institutions. So interesting. Um, any, what else is there on the agenda? I mean, probably maybe just end. I don't think there's much else. So that's probably, uh, most of what's happened this week. I think the, the AI conversation has been just dominating both from like the open weight conversation and now, uh, and now it's going on with situational awareness. But maybe the last thing that interests me that, that I saw was the, the visa announced their, you know, stablecoin platform, which was essentially just a way for them to say, they're going to do value added services so that for institutions who want to use stable coins as part of a wallet stack that we own as part of, you know, potentially, you know, doing settlement, direct settlement with us and stable coins for, you know, your, your card product potentially doing, you know, maybe, uh, non-card non network, stablecoin transfers as well. And we've just sort of seen this growth in what I would call the four deployed model in stablecoins in a way that you've seen in AI work really well. We have a portfolio company called Velocity who's doing quite a bit of this on the institutional side. And I do think that now we're a year from, uh, past from genius and we're starting to see every institution say, Hey, like, I think this is interesting. I need a strategy and that's been happening over the last year. But there's still a little bit unsure of how to go and put the, the pieces together. If visa is understanding that. And so this four deployed model, I do think actually causes another, you know, sort of wave of adoption or a quickening of, of growth in that market. And so I'm interested to see what that happens. We saw obviously it's been very, very forward thinking on stablecoins for long period of time. And so that was an exciting thing for me. Yeah, definitely. There was obviously one last tidbit here, not then on negative news. But I think it was also the record quarter of like the lowest amount of BC activity new deals in crypto. Yeah, although, although the amount of money put to work was still holding up well, it's just the later stage deals later stage deals are getting more attention and also from just more fintech focused funds, but especially on the earlier side. Yeah, pretty tough. I even also have had conversations with companies that have raised, so are they and raising the B without much try. It's really, really tough out there. And I think that's just not just in crypto. Like if you're not in the AI train, it's really tough. Like, like, let's not forget to stop from general, like, you know, and other types of businesses are really, really tough. I think the only thing that's really getting funded in a very meaningful way and sucking the air out is, you know, like defense robotics and AI related, like anything like frontier model, anything, like etch, like chip design, stuff like that, like massive, massive rounds and everything else, I just feel like it's been very tough to fundraise against. Listen, VC is a, it is a hurting culture. Like people are just all chasing the same things all the time. It's always refreshing when I see, I did talk to one or two LPs this week who are like, now is actually the right time to invest in crypto. And I was like, speaking to the choir here. Yeah. And so I think we are coming back a little bit. And so I see how many of those things have you heard? I heard from a very big, I've heard it from a couple of very big allocators this week. So now the question is, like, you know, to be very honest, the people I'm talking to are like the champions, the crypto champions, right, at the firm. And so when they go back to the RIC, what is the RIC going to say? That's still up for different. Yeah. It would be quite alarming if, like I understand new money not coming in, but as, like, if you're raising another fund and existing investors don't at least put in however much you distributed, that is, you know, that is the cause of concern. I don't have intel on that. I mean, the biggest thing that gets asked every time is, you know, what is your existence doing? And if you have less than 80, 85% from your existence, like, it's a conversation. Correct. Correct. And for just for people, like if 85% of your investors are not doubling, like doubling again, or just putting in money into the next, at least the same amount of money is the next one. At least the same dollar amount to the really folks in the bar mod or to the desk care about like, are they in the fund? They focus more on if they're in the fund. It doesn't have to be the same dollar amount. But if the existence are saying, I want to support, but I'm coming down, then usually that means you have to bring the fund size down. Right. Interesting. Do you feel that we've seen haunts of the world paradigms, paradigms a bit in its own? I mean, they just did a nuclear deal this week. Yeah. No, they're just frontier tech as I think about just like anything frontier robotics AI, all modular reactors, all the stuff. But our is, is the idea that like crypto just the investible universe to create venture like returns like just need to bring your fund size down until we see just major wins. I think if you're going to do crypto only, but it depends on how you define that, right? And so like if you define that as fintech and a lot of these like fintechs that are using stable coins, you can still deploy, you know, 500, 600, 50 million dollar fund, like ours. I think if you're going to do a billion, two billion dollar fund, it's really hard to be like very deep crypto only right now. You know, and reason is obviously trying to do it with their 2.2 billion dollar fund. They historically also just, yeah, they already raised it. And yeah, and but they also do a lot of liquid in that fund. So they buy and hold Bitcoin and even sell on all these things. Whereas in like most of the smaller VC funds, they either like more explicitly one or the other. I think listen, I think fund sizes, we've seen it for almost everyone came down. So it came down for a little bit for paradigm. It came down for injuries and it came down a little bit for Han. I think it came down for framework. It came down for variance. Still big for Han. I mean, Han is just continues to a fund that is an incredible fundraiser. And then obviously they were one of the first checks or one of the biggest shareholders in an airport, which has been an incredible return for that. And yeah, that's right. That's right. Good stuff. Show we go content in the week. Let's do it. Nice. What do you got? So I've been watching the show Lucky on Apple TV, which is like on the Taylor joy. And I didn't I didn't know anything about it. And I you know me. I spend a lot of time like the one thing outside of investing that I like is is film, but not as much TV. And so I just saw this one day I was like scrolling past and I started watching it. And it's sort of just like an interesting like paper, like mobster show where she's, you know, like running from the police because she stole some money. But I've actually been enjoying it in mine and my week of travel. So I'm going with that. Nice. I got to won the Nadal documentary on Netflix. I just have a I'd love anything related to sports really well done. I actually had no idea. I love I love watching tennis with terrible tennis player. But I had no idea that he had a foot deformity issue since very early on. And he was always working with that and struggling with that. And yeah, pretty amazing. Like mind over body kind of thing. And really interesting. It's a couple of episodes well worth the watch, in my opinion, if you like, kind of, is where you just like the mentality of, like there should be had with this coach, which was his uncle remind me a lot of the movie, "Whip Lash." I don't know, I've seen the "Whip Lash" movie. - Yeah, "Whip Lash" is like, "Whip Lash" is like, I love that movie. It's like "Tix-Too to Tango," right? It's just not that professors, like the student clearly, like once you get pushed. And I think you see that very much in the dollar documentary. So I really enjoyed that. The other one is the "I Read a Sam Walton's" autobiography. Really good, just like obviously Walmart's phenomenal company and what they've done. And really interesting to see that just evolution and how we thought about building it and stuff. So yeah, continuing on the autobiography drain. I really enjoyed that one. - Cool. - Cool. All right, July 30th will be in August next December record. Are you taking some from off? Are you gonna be here or am I gonna have to run this solo? - I took some time off a couple of weeks ago. I'll be around for August. So I'm, you know me, I'm like, I get so much joy out of working. So. - Truly, yeah. No one ever retires. That's awesome. - Okay. Well, thanks everyone for listening. Have a great weekend. We'll see you in August. It's crazy. - Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only. And the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of block works. Our hosts, guests and the block works team may hold positions in the companies, funds or projects discussed. (upbeat music)