DeFi’s Latest $290M Hack, Kalshi vs Polymarket & Will the Clarity Act Pass?

Introduction There's this amazing world where all capital markets can move on chain, right, where every asset in the world can have a liquid market, transparent price, 24/7 order book, where retail investor in Kansas, you know, has the same access to deals data and disclosures that, you know, hedge fund and Greenwich has. And that won't happen if we don't fix some of this stuff. So I, I actually do believe it's the theme. The the theme of this year is do we get more pragmatic or do we not? Speaker 2 This episode is brought to you by Fidelity Crypto. You'll hear more about them later in today's episode. 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 Blockworks. Our hosts, guests and the Blockworks team may hold positions in the company's funds or projects discussed. Speaker 1 Welcome back to Empire. Happy Friday. Happy Saturday. Wherever you're listening. We have the whole crew. Gang is back. Santi, what's up? Rob, what's up? Speaker 3 Good to be back. Speaker 4 You excited that Bitcoin's almost 80,000 right? Feels like a bull market again. Speaker 1 I will admit I didn't even know that. What's the price? Speaker 3 At Hey, it goes to 80 and now it's like one 50s. Back on the menu, boys. Speaker 1 Hey, we're ripping. We're ripping. We'd love to see it, man. I check. I check prices less than I have ever checked them in my life right now. That's probably a symptom of a bear market, Rob. Speaker 4 You're building, you're building, you got the blockworks, you know, rebrand, you know, you're, you're, you're building for the future. So. Speaker 3 We're all long term investors and checking prices every 15 minutes. Speaker 1 Rob, what do you think of our rebrand? Tell me you're from. I know you're a great designer, so. Speaker 4 I so there is nothing at Dragonfly from a design perspective, from a branding perspective that they allow me any opinion on. Like I am the last person that is allowed to have an opinion on design. Tom does literally all of it for us because he like he loves the stuff and he was APM in a in a former. Speaker 1 Life. I've got a nice design touch. Speaker 4 Yeah, but it looks, it looks like I'm I'm into it. So you guys did a good job so. Speaker 3 We're going dark mode. I'm all for the dark. Speaker 1 Road man, dark mode, baby. All right, here's what we got A packed agenda here. I want to talk about Rob, your favorite topic, which is polymarket. We've got a little calci polymarket drama from this week. The Fallout From KelpDAOs Exploit Both them are launching perps. There's a little, you know, probably some oppo research that was done by calcio and polymarket little you know, Shane's not wearing shoes to meetings anymore. It seems like you know, a little Adam Newman going on. So we got calci polymarket, we got a we got Kelped out Ave. layer 0 Arbitrum freeze, all that kind of drama. We should definitely talk about that. We should maybe talk about just the these North Korean hacks in general. We could, if you guys want to, we could get into USDAI and CHIP and that launch that just happened. And then we should probably update folks on clarity and what's happening there. If it was up to me, we'd spend the majority of the podcast talking about our rebrand, which is beautiful and people should go to our website, but we won't. So let's talk about Kelped out. Yeah. Speaker 4 Let's do it. Speaker 1 Good. OK, I'm going to give a super, super layman's version of this. Basically, they're the biggest Defy exploit of 2026 just happened. There was around $290 million of this thing called Rs ETH. It was back about a week ago, April 18th. And unlike some of the other hacks that have happened, this was not an isolated incident. So they're all these second second order impacts that happened. So an attacker, my understanding of this is an attacker via tornado cash funded wallet basically exploited. And I'm sorry in advance, I'm probably going to get one or two things wrong here, but from my understanding, they exploited Kelp Dao's layer zero powered cross chain Rs ETH bridge and there was a compromised RPC node which fed false data to a single verifier. This one of one DVN setup and they for there's a this is where I start to lose a little bit of understanding. But there's a forged message which unlocked or minted unbacked Rs ETH on Etherium mainnet and the attacker then deposited like a couple 100K of Rs ETH. Maybe it was like 100,000 Rs ETH as collateral on Ave. And this is where Ave. gets into it. So now we've got Kelp DAO, layer Zero and Ave. They deposited the collateral on Ave. They borrowed $200 million of real ETH across chains and then laundered that via the mixers, right? So they got the TLDRS, They got the Rs ETH, which was this Kelp DAO stake D. They put it on to Ave. and then they were able to borrow real etherium and then they get that out and they sell the real etherium. Then where Arbitrum comes into this is I think there was a second attempt at like 95,000,000 maybe or they I, I I'm not actually sure which bucket of money this was, but the arbitrage. Speaker 4 It was linked to the original bucket. Speaker 1 It was the original. OK, so there's a second attempt of 95 million, same hacker it seems like, but that got stopped then. OK, so we've covered Ave. calped out, Ave. calped down layer zero. Then there's Arbitrum. So the Arbitrum Security Council met, they did this emergency freeze around $70 million, about 30,000 ETH on chain and the funds moved to they moved the funds to this intermediary wallet. And I think, I'm not actually sure what's happened after that, but yeah, very mixed reactions, right? You had like Tay on one side going against Gabriel Shapiro and you know, people are saying, is it really decentralized if you can do this and every, you know, a lot of other people saying you're an idiot. Of course this has to get frozen. You know, it's very bad for D5 S Anyways, that's my version of what happened here. I'd love to get your guys's. Yeah, just your guys's thoughts. It's it's interesting timing coming after we've been talking about on this podcast so much that you are not getting paid enough for Defy yields and then, you know, this happens is sadly very timely. But yeah, Rob Santi would love to get your guys's takes on the situation. Speaker 4 Number one, I just want to say you said you were going to do a bad job. You did a good job like that was that was good. So I I it's been in. Speaker 1 My face every tweet for like 6 days. So it's a, you know, tough time. Miss it? Speaker 4 Listen, I, it feels like, I mean, we're a little late talking about this, obviously because it's been, it's been a week. And so it feels like a lot has been said already. And so I don't want to belabor the point. I think one of the interesting things that is true here is this is probably the first Defy hack of size that has like multiple affected parties who are all trying to figure out how to move forward and not not just multiple affected parties, but multiple affected parties who are like big brand name like large protocols and businesses. And so the resolution here has become, I think, a lot more complicated then it would have come. It would have been. And like most other things, like when wormhole got hacked, like it was pretty clear, like, you know, how to how to solve that. Or when drift got hacked, it's pretty clear, like how to solve that, right. And, and what you've seen here is, you know, the same thing we talked about two weeks ago or three weeks ago, which is again, this is a, this is not a smart contract hack. This is a, a hack of a probably a person inside layer 0 was ended up being hacked or fished or in some way compromised, but then allowed them to compromise these layer zero run RPC nodes inside the inside their security setup, right? And the, you know, and following that, a lot of decisions of which in retrospect look very poorly thought out resulted in what happened, right? So the one-on-one DVN set up, right. And there's, you know, the finger pointing on both the layer zero and the kelp side around like, you know, who decided that? And like why it was set up that way. The, you know, on Ave. the the collateral set up so that, you know, you could be 93% LTV on RSC 8th and even, you know, allowing RSC 8th to be collateral, what that means. And so there's a lot of like conversation around, you know, I guess ultimately who bears the the brunt of like that full loss. But we do know what happened, which is that probably somebody at inside, you know, layer zeros security setup got hacked. And then, you know, there's all of this resulting decisions made outside of that resulted in what happened here. So now I, I think at the end of the day, what's interesting is like they all very clearly lured up right away. They all are in a sort of paint pointing fingers at each other. I know there's a lot of work happening behind the scenes too, to find a, a resolution. And, but it is, it is complicated because the incentives here are like very misaligned. The avenue token has been getting absolutely crushed. The layer 0 token has been getting absolutely crushed. And, and you can probably make the argument that Ave. is sort of an innocent bystander here, right? Where they, they clearly, you know, you can, you can argue around whether or not they should have allowed RSE as collateral and what the right LTV should have been, how they should have managed that risk. But at the end of the day, like they had nothing to do with the hack. They were just a mechanism of how to this, this attacker tried to exit. And now they might be the ones who have the the hairiest situation because of the fact that they have got all of these pools have continued to be frozen and people haven't been able to been able to kind of withdraw their, their, their loans or their deposits. And they're the ones with all the bad debt now, right? And the bad debt is going to ultimately be borne by, you know, some people in and around like either lenders or Ave. itself or people around the ecosystem, but they're the ones ultimately who who end up having to be the drivers of that conversation. So it's a very complicated situation. It tells you a lot about, you know, kind of the interconnectedness of define more broadly and what the risk is from just a, even if you aren't the ones being hacked, but just kind of the risk of these kind of autonomous systems. And so I'm not quite sure yet what the resolution will be or, or when we'll get it, but people are working on it and it's, it's honestly, it's a, it's a very sad situation. Speaker 3 So I think markets always speak truth. Ave's TBL is down 1/3 and by 33% in four days. It's down 60% from its peak. So it's sitting at like 14, just shy of 15 billion. At the peak, it was 43 billion. Of course, Ave. was not as affected here, but that just tells you, you know, to Rob's last point, composability is, you know, a tricky thing. And I think the market, we should talk about what the implications are for vaults for D5 writ large. The second point, just so that's Ave. Ave's lost a third of its TBL in, in, in, in a matter of days and down 60% since the peak in April. Sorry, last year, D Fi as a whole peaked I think at 99 billion. It's now at 85 billion. It's it's at its lowest level, you know, over the last like 12 months and and again, roughly 50% below its October 2025 peak. So that's something we should just keep in the back of our minds. To put things into context. Tay is obviously a very vocal security expert. I know Hasib has tweeted about this as well. Your counterpart, Rob, it is very adversarial. Like I was trying to piece together how much does Lazarus pull in as a percentage of North Korea's GDP? And it's staggering. It's a professional full time unit, you know, for over the I mean, this month alone, Lazarus has pulled in roughly 600 million that is. Speaker 4 Let's see what they can get off chain. But yeah. Speaker 3 See, let's see what they can get off chain, but every year they're pulling anywhere from 600 to a billion in hacks. That's anywhere between 3 to 4% of North Korea's GDP. That is massive. You are working up against a very like. For all intents and purposes, Lazarus is the most important unit of North Korea as a country. That's wild. Speaker 1 Yeah, I I Sante, I could not agree more. I actually tweeted this out. I said everyone needs an enemy and crypto, it feels like we've been a little lost for the past year, like an industry without an, an industry without an enemy. And to contextualize that, it's like, you know, for years, like the banks were our enemy. We're like, you know, down with the banks. Let's debank the banks. And now the banks are our customers. And then the SEC and Gary Gensler became our enemy. But now the SEC is our friend and they're supportive of us. And I think this made it abundantly clear, if it wasn't clear already. And I, I do think Khasiva has had some of the best posts on this. And I agree with nearly everything he said, which is the North Korean hackers, AK Lazarus are now the enemy of the industry here. If we're not able to fight against them and push, you know, protect capital in the system from, from Lazarus, this, the industry will not grow. And even though there was this fighting between Tay and Gabriel Shapiro and that kind of stuff, like I, I actually do find that I, my, my belief is that we'll move past some of that fighting and that having an having a common enemy tends to bond people together. And even though we're in, we, we'll have weeks of turmoil here, but I actually think it will be net, net good for the industry to come together if we're able to come together and fight against Lazarus together. Speaker 3 One point there, Yano, I totally agree is I mean, we've always known Lazarus existence and I unfortunately don't think that they're going to slow down by any stretch of the imagination, which it is a is at odds with the willingness of founders to experiment and create interesting protocols that fit in with D5's interesting properties. It's AI worry and we should talk about it now or keep in the back of our minds. How much does the tension of permission less? How much is that going to be constrained? What is the healthy middle ground? I don't, these are questions that I don't know the answer to, but I do think that there was, there comes a point where as an industry and interacting with the regulators like we, we just have to be probably are on the side of being more practical. That doesn't mean that you can't interact with permissionless networks. It means time blocks, you know, limits in terms of like Oracle, like slowing down a bit. I think we when it comes to security, you should always trade. I think it's a good trade if we go a bit slower to protect the industry and put in some training wheels because right now I don't see a path to recovering from all time highs in TBL. And we talked about stablecoins a lot, thankfully, like I think stablecoins can be frozen and I think Tether, both Tether and Circle have the ability to freeze and. Speaker 4 They've been everyone. Speaker 3 Everyone does and I think that's OK. Like let's not forget like Defy and stablecoins are fitting in a huge unmet demand in most of the world that doesn't have access to very basic financial products. We cannot, we cannot open up the in many ways, I'm glad that we don't have over 100 billion of TBL. It's a huge honeypot. Speaker 4 Yeah, listen, I, I, I totally agree with you. I, you know, Gabe's obviously done a lot for, for the industry over time, but I mean, this idea that we're going to have a fully, completely permissionless ecosystem and all of these different protocols that are essentially just operate as businesses and that they're not going to be reactive to crime or to regulators is just, you know, it's sort of this panacea of a lot of people are very ideological about the space, but it's just not going to, it's just not the reality and it's just not going to be the reality. If we want to get regulated, if we want this space to get as big as we think it will be, if we want it to be, you know, the future of finance as people talk about. And so you, you certainly have, you know, Ethereum will always exist as a completely permissionless L1, right? And you know, Bitcoin will exist as as it is today, but there there is a duty to stop crime if you can. And basically every protocol that has been successful outside of Ethereum and Bitcoin has the ability to do these things because they operate like businesses and they are going to and they're going to like that is going, there's going to be pressure from the regulators, from law enforcement. And at the end of the day, you know, there's, I care a lot more about, you know, building the new rails of a new future that is better for retail, that is better for customers, that is allows access globally from new types of assets, right? Then I care about, you know, whether or not it's, you know, fully permissionless that a 12% Security Council can stop North Korea from taking our money, right? It's a, it's a, it's a discussion that in my mind does not matter. But I know I'm going to get like tweeted out for that because some some people, you know, obviously care a lot. Fidelity Crypto Ad This episode is brought to you by fidelity crypto, a platform built in house with the same discipline. Fidelity applies to everything so you can invest in crypto confidently trade crypto backed by industry leading security. Get started at fidelity.com/crypto. Crypto is offered by fidelity digital assets NA is not insured by FDIC or sipc and includes risk of complete loss. Fidelity Brokerage Services, LLC, Member N ISESIPC. Crypto Is At An Inflection Point No, I agree. And this industry is at an inflection point, clearly. So Santi and I recorded this great podcast which comes out on Monday with talking about Quantum and Bitcoin. We ended up talking a lot about Satoshi's coins. And it's, there's clearly to me a right answer of what to do with the Satoshi coins. And it's, it goes against, I think what the Gabe Shapiro's would would want to do, which like I, yeah, I think you should. So, you know, you can listen, you know, maybe I'll force you to listen to that podcast. But like, it's the same thing that I think should happen here, which is we need to put protective measures in place and I think be a little more pragmatic with the industry. And look like industry's at this tipping point, you take the blue pill, we're going to get, I'll tell you, we're going to get three things, stablecoins, some institutional adoption and perps. And that's a nice world, but it's not the world. We didn't spend the last decade of our lives building this niche, building a nice little like niche technology that applies to a few small corners of the Internet, right? There's there's this amazing world where all capital markets can move on chain, right, where every asset in the world can have a liquid market, transparent price, 24/7 order book, where retail investor in Kansas, you know, has the same access to deals data and disclosures that you know, hedge fund and Greenwich has and. That won't happen if we don't fix some of this stuff. So I I actually do believe it's the theme. The the theme of this year is do we get more pragmatic or do we not? Speaker 3 I mean the the most I agree with all those takes, the most important thing when in anything regulatory or building, I mean crypto's really good at coordination because you have certain guarantees and transparency. But that should not, we shouldn't let ideology get in the way of implementing these systems, especially when most of the growth is going to come from things that inherently have way more connectivity with the real world, like Rwas and, you know, stablecoins, like you're, you're effectively tokenizing stuff that exists. And you know, there's an SPV, there's a legal, you know that it touches atoms in the meat space. And that's just messier. And that's OK because you still gain like a marginal improvement, still marginal improvement to your point, you know, it's, it's more transparent, but you're still required coordination, like the benefit of. So for instance, if, if, if you have an issue against Arbitrum Security Council, you have the option to leave the system. But I could tell you 8090% of the people that are interacting with Arbitrum see that and say, yeah, I like that actually, because there's a greater than like there's a definitely non zero chance that something else continues to happen and there's a hack. And I feel actually way better interacting with Arbitrum than another system that's not going to act in, in, in protecting my funds. And you can look at who those 12 people are. If you trust them, great. If you don't leave you, you have many, many options. That's the beauty of crypto, right? Speaker 1 So can we talk? Actually, let's go back to this kelped out situation because there's a really interesting thing that can they can either socialize the losses or they don't have to socialize the losses, right? So the premise is that Kelpdow's Rs ETH were stolen, not minted. So it's kind of up to Kelpdow to decide whether to socialize the losses across all the holders or have a subset essentially, you know, take the short end of the stick and get a little screwed here, so. Speaker 4 Just to be clear, what happened with Kelpdow was that they they minted unbacked Rs ETH. Speaker 1 Right, so now the what? So that. Speaker 4 And then that unbacked RSC was was put into oven which means as collateral to borrow ETH. Speaker 1 Which means that the value there's now more Rs ETH, which means the value of. Speaker 4 Rs then there's value of ETH underneath it. Speaker 1 Yeah, I think it's, I think the value of Rs ETH is like 18% lower than ETH, right, So, so. Speaker 4 But but I don't, but I don't think that I actually don't think that decision is going to be up to capital right you. Speaker 1 Think it's a You think it's a legal decision that is. Speaker 4 I well, well there's I think people are trying to make it a legal decision. I think the person who's going to end up making that decision is going to be Ave. I think that is what's going to happen because not to get too deep into this topic specifically, but they, there are incentive differences between Ave. and layer 0 and Keltdow, right? Keltdow is, you know, a protocol that done a good job on BD and has, you know, gotten their, their tokens or tokens put in a number of different protocols as collateral and, you know, as a, something that could be used within D5. But following this, I it's not clear to me that there is a future for Copta following this whereas in Yeah. Speaker 1 Definitely I agree with you. Speaker 4 Yeah, OK. Just just to say that in a, in a nice way where there's very clearly Ave. who is a, the one where the people are the most mad at right now, because those are the pools that are locked and that people cannot get their capital out of who has a large business. And you know, still to this day, even with all the drawdowns, I still think it's bigger than Morpho. So still the largest money market or lending protocol on chain. And at the end of the day, they have the most to lose. And so they also have the most to gain from trying to get to a resolution that makes people happy. And so I, I I my my perspective here and some of what I'm hearing in the background is more of the discussion is being driven by by Ave. Obviously, though, you could it could just be a legal point, but nobody's getting. I don't think there's any incentive for kelped out to decide like to make a decision here. Like the incentives are like that's a good. Speaker 1 That's a good call. So if you're Ave. Ave's in this weird, like kind of prisoner's dilemma, right where they they're, it's a very, yeah, it's a very interesting. Speaker 4 They're the least palpable, but they're the one who has the most to lose. Speaker 1 Yeah. Speaker 3 On Ave. double clicking there I whatever ends up happening DVD. I do think it probably is kelped out Dao like kelped out and Ave. trying to, you know, but maybe both of them socialize partially some of the losses, the supply caps and the risk management parameters at Ave. definitely need to change. And I think that that's something that I don't know if they've come out formally with more guidance, but that's something that I mean we should definitely change going forward. Yeah, it is interesting. Speaker 1 Timing right because we talked a couple weeks ago about chaos leaving Ave. and the risk stuff there. Speaker 3 Yeah. I mean, if you're, if you're a bank, traditional bank, you have like a committee, then you have, you know. Speaker 1 Wait, so Santi. Speaker 3 'S popular rules. Speaker 1 What would you do? So, OK, so let's say sorry. Go ahead. Go ahead. Speaker 3 No, no, ask the question, I'll answer. Speaker 4 Well, just to make, I want to really double click on one thing Santi just said there, which is like we're talking about Ave. He's like, oh, well, we count Dell or Ave. Like we're not really talking about layer 0, but layer 0 is the one that was hacked. So it's a kind of this weird thing that has happened. Speaker 3 And and by the way, I think the, I think the most capitalized entity here that could socialize the loss is layer 0. Speaker 4 Yeah. But it's again, it's there's this really weird incentives in this thing that has happened here because they are infrastructure. They don't have retail customers. The retail customers, the ones that are obvious customers, the ones that are affected. Speaker 3 If I, if I were layer zero, I would give a loan over to kelp and then get them in good footing and then get get it paid back with fees over time so that Kelpdale survives. Layer 0 maintains institutional like their ability to win over more customers, even though they're launching 0, but it's still going to hurt their brand a lot if they don't do anything here. And then Ave. Commits to, you know, increasing caps and and and maybe increasing their security spend or or just somehow that also needs to change as part of this broker deal. Speaker 1 I mean, what also needs to change is that I think it's 50% of layer zero's apps. The D or the the app DVNS run a one of one DVN right? Speaker 4 I did, I did hear, I mean, they haven't said this publicly, I don't think, but I, I did hear privately that they're telling everybody they have to change now. So. Speaker 1 Yeah, OK. That's good. Speaker 3 I wonder yeah, I I mean, I haven't talked to Brian. I think Brian Pellegrino, the founder of one of the founders of 0 of layer 0 has been quiet during this period. So maybe next time we're recording they'll maybe should bring him on also would be interesting to I'm. Speaker 4 Sure, he's being advised to be quiet. Like he's not being quiet by choice. Speaker 3 Correct. Or maybe they're just trying to fix stuff under the hood before they become more public about it. We should, I mean, you tweeted about a guy from Athena. I was actually talking to him over the weekend. Obviously ping like Stani and a couple other folks just to see if there's anything they needed help on. But a guy I think has been public about this stuff 'cause they, I mean, they're, they're also working with layer 0, right? And I think it would be interesting to have down the road a couple builders to see what changes from their perspective, right? Speaker 1 But guy had one of the best tweet. I think Guy had Guy had a great tweet which he basically said he you know, I, I'd encourage all asset issuers to consider to consider rate limits at the min and redemption redemption level as well as custom rate limit configuration on top of layer 0OF TOFTS. In a disaster scenario where the LZ where the layer 0 DVN is compromised, you can at least contain the damage to 10 million per chain per hour before stepping into shutdown transfers. Yes, it's this is the key part, I think Santi, which is really what you're getting at, which is yes, it's a slightly annoying inconvenience for users 99% of the time, but a worthwhile trade off to avoid going to 0, which is very similar to when you send a bank wire, right? You, you know, you got a double, you got a double click that you confirm that you're sending to the right person, which is honestly pretty annoying, but one out of 100 times it saves you. Speaker 3 Yeah, again, the two observations really quick. The column CEO found former or I guess Co founder of Plaid talked about this really well and invest like the best. He said a lot of times what crypto's trying to solve is not a technology problem. The reason why fintechs or banks haven't really implemented this going faster is because we know that there's certain clients that just are going to get hacked and we, it's important that we're slow, right? And, and make it harder for, for people. The other observation is like, let me put this in an analogy that anyone can understand. Just sometimes you got to make it a bit absurd to understand why rate limits are needed. Imagine that like all of a sudden you can go to the bank and tell them, Hey, here's like a piece of paper that is like, I claim that I have like this real fictitious real estate somewhere that they don't haven't heard of. And then you can borrow against that and and no one is there to kind of like maybe double check that that piece of paper or that parcel of land that magically appeared out of nowhere is, is real. Of course, that would never happen because a bank will like review it, approve it in a similar manner. I think if you're Ave. like that is what guys talking about rate limits are important because if you see a normal spike immediately, there should be a review process like a time. It's almost and and and of course there's going to be people that say that breaks a whole features of D5 might as well go back to the real world, which I actually would disagree with, but that's what essentially happened here with it was kept up. Speaker 4 And I would just make the point that like the for a lot of the really serious founders in the space, the ones who have you know, really understood that this is a trust business and security is part of that. Like this is not, you are running a finance protocol or a finance business, a finance business. Security is at the core of what you do. Trust is at the core of what you do. And so people like Guy and there are others, I think of the Agora guys tweeted about this. I know there are others who did about it as well, who from day one, with nobody telling them they should do this, put this in place. They put the rate limits in place. They made sure, despite the fact that, you know, maybe the layer 0 documentation to something else they put in, you know, three DB, three or three DBN versus or two or three DBN or a three or five DBN instead, right. People who are like very thoughtful around the ability to make sure that they had extra layers of security that nobody required them to do, but that they understood were important and guy was was one of those. And to your point, Santi, like there's a whole world of Defy right now where I think we have like very, you have technologists who would think they're building software and they don't realize they are building finance. And when you're building finance, the requirements, the obligations are different. And so I think we're going into a future of where there has to be consolidation around those founders who understand that and understand the just the pressure and the responsibility that they are taking on in my mind. Speaker 3 I think, yeah, going forward, I would like to see this is something that I spent quite a bit of time when Len transitioned to RVV. One, I still remember it was nerve racking. There was like a billion dollars that were migrating and I was couldn't sleep that night. I mean, Stein has balls of steel. I'm sorry, man. But like, like managing that. Like there's a lot of money at risk. I was thinking about that today, how that guy sleeps. I respect it, but it's like the SWIFT messaging protocol, which is the equivalent of layer 0 here does not have one verifier. They it's a, it's a, it's a, it's a group that messages and coordinates. Like if there's a bank in Switzerland that is sending money to JP Morgan in New York, like it goes through multiple approval like checkpoints. That's the same that should have happened here. Like practically someone at Ave. should have called Kelp. Like literally called someone says, hey guys, are you doing all right over there? Because I just saw like 292,000,000 come in here trying to borrow immediately that what you could have done is slow down the borrow market. You could have probably frozen in saying until we are absolutely certain that these 292 effectively receipts coming into Ave. are sound collateral, we will not open the gates to borrow against the new collateral that came in. As simple as that, right? I'm not saying like you immediately freeze it, but if you see an abnormal spike, it most likely is going to be a hack or or just in sun moving money around to yield farm. But there's like, you should still lock it. Speaker 1 Yeah. Speaker 3 It's it's all of this could have been avoided with that. Speaker 4 We can inconvenience Justin son, I think to stop hacks. I think I'll be OK with that. Speaker 3 But that's as simple as that, right? Speaker 1 Yeah. Can we maybe round out this by talking about, so Ave's debt like the token is down, you know, what is it 14 percent, 15%, Morphos up 10%, Spark is up 140%. So like how, how much do you think this is a reshuffling of the the crypto lenders and and is this a buying opportunity for any of those? Speaker 3 Yeah. I mean, it's certainly again, I think that if Ave. doesn't implement more safeguards, then it's an opportunity for someone else to come in. I Rob or Yano, I'd actually be curious to get your takes on like isolated markets. Speaker 4 Well, yeah, I mean, that's where I was going to go next. I think the whole world's going isolated. So I, I think the, I mean, obviously they'll be part of the crypto ecosystem that will continue to do these, you know, kind of shared markets. But also in the world of institutional adoption, the institutions want isolated markets, right? Every single one of them wants an isolated market. And so while there's been this period of time where they're, you know, the, the non isolated or, or aggregated markets have, you know, grown really, really large because of the fact that like they, it, it made a complete sense for like that period of define. They're, you know, all of the growth that or all of the things that Ave. and Morpho have been, have been focused on recently have been winning these fintech deals. I've been winning these, you know, institutional deals. And we've seen things like, you know, the Coinbase, Bitcoin, Morpho market, the through the CFI app grow up billion dollars very quickly. We're going to continue to see a lot of that. And basically every fintech in the world, like if you, if you, you're talking to these people and having these conversations, all fintechs are looking at doing stuff like this and not a single one of them is going to do anything but a isolated market. And so I, I think the reality was, is that was already true. And this only just only accelerates that that that that future. Speaker 3 And to lend exact clarity to your question, siloed markets include Morpho, Euler Avi V3V4 is this hub and spoke model. So they, I think they'll understand this and maybe that is the writing on the wall because to your point, Rob, I think if you're a traditional, like a traditional firm coming on chain, you will not deposit into a pooled market with shit with, with shit coin. Well, they will see it as a shit coin. Like everything crypto native would just be looked at and haircutted a ton to a point where you have to go to isolated markets. And of course, the trade off there, Rob, I mean, the trade off has always been capital efficiency. But if you think about where, if we're sitting at at least for Avi, like 14 billion, if you really want to breakthrough the 100 billion mark, you, you go to isolated markets and the then the question or the more interesting exercises like which isolated markets get the most amount of liquidity? And it's like, you know, RW as, and I mean, figure essentially is like an isolated, well, it's an isolated market, right? But it's just Helocs which topic for a separate day but obviously has different quality attached to all these different mortgages, but still. Speaker 1 Let's shift gears. Anything else on the topic? Cool, let's talk. Speaker 3 Well, maybe question Rob, are you guys investing in D5 these days? Speaker 4 Bro is investing in D5. Speaker 3 But what's like the biggest? What's the latest? Athena maybe, but like D5 infrastructure? Speaker 4 We've done a bunch of D5 since Athena, Yeah. I mean, Athena was summer of 23. So like we've done a bunch of stuff, I mean, some of the public, some of it not, but like, you know, we're big into lighter, which is the one that people know, but we're in a bunch of stuff too that like, you know, hasn't launched yet or like, you know, is still in stealth. I mean, Defy continues to be like we, we believe strongly in the future of Defy. Now I I think the world is changing and the way Defy exists is changing, But there I've never lost faith in the fact that like there will be finance on chain and Defy will be a large part of that. Speaker 3 Because I I haven't as much but. Speaker 4 Yeah, well, you know, I you know, I'm more of a true believer than you, maybe. Speaker 1 What a weird. What a weird. Speaker 3 I I I believe a lot in D5 but. Speaker 1 Weird. All right, I'm moving this forward. OK, I'm glad you got that. Those last comments in. Fidelity Crypto Ad Take a disciplined approach to crypto investing with Fidelity Crypto, a platform built in house using over a decade of crypto experience. At Fidelity, you can trade crypto and stocks together, backed by industry leading security. When you can see your accounts in one place, it's easier to make smarter decisions. Get started at fidelity.com/crypto. Crypto is offered by Fidelity Digital Assets NA, is not insured by FDIC or SIPC and includes risk of complete loss. Securities offered by Fidelity Brokerage Services, LLC, member NYSESIPC. Kalshi & Polymarket Push To Launch Perps OK, Polymarket and Calci seem like the Calci team was doing them, doing their oppo research and decided to dump it all in one fell swoop this week, kind of taking some shots at at Polymarket. So that anyway, the context here, there's a polymark. OK, so Polymarket and Calci both announced that they're doing perps. I forget who beat one. One of them beat the other person to the punch by like a day or something like that. You know, I'm sure Rob will correct me. Rob, would you like to correct me? Speaker 4 What one of them did beat the other yes to to the announcement. I mean the, the, the announcement, it doesn't matter. I mean they, they, they keep doing this thing where they can announce things and they front run things with each other. So they both do it. Speaker 1 Yeah, yeah. So anyways, there's a Bloomberg article that said Polymarket loses prediction market lead after delays, blowback, and there's this article. And it said gaffes, delays in product rollouts, and Shane Copeland's unconventional management style are contributing to the strains on various fronts, said people. And then there's another article. Or maybe it's the same article. Let's see. Yeah, is the I think it's the same article. It said. While Copeland's quirks are, in many respects standard fare for charismatic tech CEO's, some business associates who declined to be named discussing private meetings expressed frustration with Copeland's focus and timing. He's regularly late to private meetings, has attended at least one of them, barefoot best line, and is easily distracted texting and taking phone calls in the middle of the conversation. Very much like what Santi does on our podcast. So, yeah, I'd maybe a little context and you know, as someone who at one point owned a news business, is that anytime there you see stuff like this, it is typically from the main competitor feeding reporters. So, and I'm not saying Cal she's the only one who does this. I'm sure Polymarket also does this with Cal She but I would just take all of this stuff with a big I also saw another article that said something along the lines of I think Cal she's suspended the accounts of three politicians from trading on their platform is very good week. There's there's clearly a strategy internally to do a big PR push in one in one week. So anyways, I just love, Yeah, I'd love to get your guys's thoughts. Speaker 4 All. Speaker 3 Kind of petty. Speaker 4 I mean, this is just this is just business like I mean, you remember the Uber Lyft like days, right, like people, the same stuff was happening. I, I will say, I do think there's, I would separate the perps from the, from the stuff that's happening on the news side because I, I think the perps is interesting and it's worth talking about as like a business decision for both of them and they're both doing it differently, right. So Kaushi obviously is, is trying to launch their perps in the US exchange in a regulated on there like DCO and DCM, which, you know, right now perps in the US are illegal. You, you know, Coinbase has their, you know, sort of synthetic perps, which is like a five year future that they and they throttle risk overnight and like on the weekends. And that product has basically gotten 0 uptake at the moment. And so there's been a conversation for a long time, you know, what will the US do from a regulatory perspective on allowing perps? Like will there be a situation where the CFTC comes out and says, hey, listen, we want to bring perps as they exist internationally in crypto into the US. How do we want to think about appropriate leverage for retail versus institutions? Like should that sit under like current futures frameworks? Because at the other day, perps are really good retail products, but they're not really institutional products. And the institutions mostly do prefer like a dated future or an option. And you can see that with the fact that I bid options just like below all other options on chain options and, and, and also like, you know, C fi options out of the water in terms of volume and are doing probably almost all the institutional derivatives volume in the space now at this point. And so I think that's super interesting. And I know the Mike Selig chair Selig from the CFTC has teased that there's going to be a perps guidance coming out sometime soon. And but we don't know exactly what that'll look like. And I think there's probably some back and forth with some of the current US exchanges on, you know, what they want to see. I'm guessing some of them don't want to see perps happen because they're they think that'll lose the market share, especially on the retail side. And so I think that is very interesting and obviously there's a very big opportunity there, especially at the retail brokerages like Robin Hood and and others. And then the the polymarket purposes, it's like it's an on chain product. So it's much more competitive, I think directly with, you know, the other on chain purpose products that they're looking at at least for the for the moment, I'm sure they're they'll be looking at their, you know, call it, you know, centralized exchange U.S. business as well eventually. And so it's a little bit, they both announced it, but it's also a little bit of a different, you know, business decision for both of them, especially in the current like regulatory climate. So I, I think it's smart for both of them to do it. And like clearly, you know, just anywhere where you have a captive audience and captive traders trying to offer them more ways to trade is a good thing, not a bad thing. And never, I would never, you know, say that as adding a new product is bad. But there is a question around like whether or not traders and prediction market traders are the same group of people. I think there's some analysis done by some hyper liquid folks that said maybe it's like 1215% of overlap between the two, which isn't that much, but it's enough to make it worthwhile to to add the product. Speaker 1 So on, do you think Calcium Polymarket have any chance of having perps take off on the platform? Speaker 3 Yeah, I think so. I think they'll, I mean, they're, they're they'll work. There was a good post by Ryan Watkins that was talking about just the conversation around like, will, will these folks eat like hyper liquids lunch? I think there's probably pie market is more well positioned here. I'm biased, of course, but yeah, I think they'll take off. I, I, yeah, I, I maybe we should reference that Ryan Watkins post or, or we should have him on the pod. But I, I, there was a pretty good back and forth on that thread. He obviously is more on the camp of like hyper, like will win. That doesn't mean that like other folks can't like build their own successful, you know, perps. But yeah, I, I think it's, I mean, we know users like this type of product, right? Yeah. The the question is, well, go ahead, go ahead. I was going to ask, he made a comment in there that I haven't really explained myself like why has, and I'm not sure this is actually true, but he said like, look, Coinbase perps haven't been very like quote. You can't just list perps as if it were any other derivative. You have to reproduce the architecture. Coinbase has already demonstrated this empirically with their lacklustre CFTC regulated quote UN quote perps products despite plenty of talent and dollars thrown at it as currently designed. Their elongated futures with a five years expiries, 3 to 10X leverage depending on the contract and funding that only settles twice daily. Compare that to under regulated offshore venues like finance and hyper liquid and he's making the comparison like that product has been very underwhelming. I don't know if that is directly translated or applicable to Polymarket or Cauchy. Maybe it's a Coinbase skill issue, but I'm not equipped enough to have a perspective here candidly. Speaker 4 Well, no, he's right. And then this is what I mentioned at the beginning of, of what I was saying, which is that Coinbase launched this long data futures product and call it a perp and it hasn't done well. And, and that is obviously directly relatable to what Calci is doing because Calci is going to also be CFTC regulated and the product that they're launching, it's going to be through their USDCO and DCM. The, the difference is going to be or that the, I guess the variable is going to be what does the CFTC do with the future of perps in the US? Because we know that Chair Seelig and his team are thinking about this fulsomely. We know that they're trying to figure out a way to bring actual perps on shore in regulated markets. We know that the I bet options market has been done incredibly well. And so I do think this idea around like, I think there's like a couple things this idea around like Kalshi and Hyper Liquid being directly competitive is probably wrong. They're probably just a completely different markets and completely different user bases because Calcia is going after like trying to distribute perps to, you know, Robin Hood users, right? And like my guess, and I've always thought this is that Robin Hood and Robin Hood does so much volume on the option side. They do like 70% of his like 0 day options. Like these are retail traders looking for leverage. These are retail traders looking to just, you know, get long, not because they have, you know, a general, you know, well thought out fundamental expression of something, but because they just want to, you know, do something that allows them to do even cleaner, right? And so I think for that user base, like depending on what the CFTC allows, like I expect that to do well. And I don't think that's hyper liquids user base, right? And then the Poly market and hyper liquid products are probably more directly comparable because they are both D5 protocols and they are both products that are going to be going after, you know, a large international user base. And also they're much more direct consumer products. She's not much of A direct consumer product, right? And so in that case, I think we'll it'll be interesting to see how this happens. I think the reality will be is that there are a lot of traders who are perps traders who will be, who are hyper liquid first, who will sometimes look at a hip for market and say, oh, well, I can get, I can cross margin potentially eventually. Right now there there's a lot of talk about like hip for markets, which are the the hyper liquid, you know, binary option markets being like, oh, cross margined with the perp side. But there's actually nothing in the documentation about that. And I think that'll be quite hard to do. So I don't actually expect that to happen anytime soon, but I'm sure we'll get some hyper liquid traders who will trade those markets, especially probably mostly if not entirely on these like crypto up down markets specifically not the other stuff that people talk about with prediction markets. And then on the Poly market side, they have all of these, all of these traders who want to come and trade all of their prediction markets who will occasionally trade the perp side. But I think this is not 0 sum, despite the fact that Twitter wants you to think it is 0 sum and everyone's like, oh, these people will eat each other's lunch. Prediction markets are going to get 10X bigger from here and perps are going to continue to get way bigger as well. I don't know if 10X but so I think both of them grow and they serve different users. Speaker 1 What do you think of from the investor seat? What do you think of the I know it's a little petty and Santi, I, you know, I think, I think you're right. And Rob, I do think you are right that this is just business. Like if you, if you guys remember, like Uber, Lyft, I don't know if you guys remember operations Slog where Uber was having all these brand ambassadors. They're giving them burner phones and signing up for Lyft. And then they would cancel the Lyft ride at the last minute to take Lyft drivers off the market essentially. And they were trying to, they're giving them literal cash to just convince the Lyft drivers to come over. So I do think this stuff happens a lot, but maybe from the investor's seat because Santi, I think you guys see, did you guys seed Polymarket or you invested in the the A or something like that? And then Rob, you guys have a big check. So when you, when you see things like, you know, Shane is like these things against Shane, like from the investor's seat, do you, do you guys care about this at all? Speaker 3 So yeah, I I did the seed when I was a Parify. I think Parify is among, if not second or third largest holder of, of Polymarket. And I know the team since I left have been, you know, doubling down and participating changes that kind of guy that I don't think he's paying much attention. I it was, it was I'm skeptical when a founder pays too much attention to competition and is focusing too much of their time on that publicly or privately. It's like, dude, just own your product and and you will crush, right? I don't think again, I don't think it's 0 sum. So again, I think it's it's about look to to throw dirt. It is a bit of unfair because at look, I mean call she, you could argue, is thrown a lot of dirt to Polymarket's way, probably more than Polymarket. Seems I'm biased, Rob, you're not. But they. Speaker 4 Have a whole lot of gratis around it. Speaker 3 Yeah, yeah. So to me, it's always a week. It's a lift. I don't know, Yano, you probably know this more, but who who was more focused on the other? If you're truly winning, like you're in your lane, you're unbothered, moisturizing, you're just crushing, right. Like you don't necessarily it it obviously it obviously like hurts when someone's like trying to go after you in in a very like malicious I'll intended way. Like, yeah, like you should respond to that for aggression. But I don't know, man. Like both of them have built nice businesses like stimulating, like win on fairgrounds. Don't do like, be a good sportsman is all I'm trying to say. Speaker 4 Yeah, I think, I think what's I've really bothered me and so Tiana to clarify my point earlier is like, I think generally like oppo research is like fine, right? Like it's business, right. And like generally like they're, you know, continuing to highlight like why you think you are better than your competitors is like totally fine. I think where I've really struggled has been what seems like not what seems like what is factually a lack of or, or an extreme willingness to lie. And it's not just like, oh, like, hey, we, we talk about like how we're different, but there's been an extreme willingness to go and fabricate stories and to lie about the things that are happening between the two different parties from the Kaushi side. And there is a ethical standard in my mind that continues to be breached. That is not OK. And so I, I've been very vocal about this on Twitter and X and, and other things because absolutely go and tell people like why you are think you are, you know, better than your competitor. Like that's great. But don't send out your head of comms to go and lie about something that happened between the different platforms that you know, is very clearly, easily, verifiably different. Like there was a, this article yesterday about some of the volume between the two parties that was factually untrue. And this Baron's reporter didn't even check it, Like he clearly got it from Kaushi and didn't even check the work because it was, it was obviously factually untrue. And, and we saw this yesterday too in the Bloomberg article. And I, I, I chatted with a few people about it where there was like, there was a, like a paragraph in it where it was, it said, oh, you know, Poly market has basically 0 volume. There's like de minimis volume and their US app, you know, and haven't been able to, you know, really grow that at a time when, you know, smaller competitors have been able to. And if you go look at the data, they've done a billion dollars, over a billion dollars in the last 30 days on the US app, far more than any of the any other competitor, right? And so, like, there's like little things like that where it was clear that somebody like picked up a thing that was basically written for them and like, didn't do the work to then go put it into the, you know, a story. And so, so I didn't, I didn't care so much about the story itself. I cared about just what seemed like a lack of like, like, nobody did their job at Bloomberg. Speaker 3 I will say there's a reporters are like meaning to get content here and throw dirt like this is every other week, like Rob, I'm sure you guys get hit up all the time and it is probably more of an it like unethical stuff is bad. Obviously, like don't do it. Like if you're going to criticize someone like ha, back up your stuff. The problem is media doesn't care to check. But Yano, I don't need to tell you this man. This is why block works exist. But this goes back to like famous Napoleon line, which is, you know, never interrupt your enemy when he's making a mistake. I think Koshi time and time again, just it it, it's a bad look, right? Because all these things are easily verifiable and if they're not true then like it's just a bad look. Speaker 1 Yeah, yeah. But I, I hope, go ahead. Speaker 4 Well, I'll just give you one more point on this. I got hit by a reporter yesterday afternoon on another story that was like, you know, negative polymarket story. And it was like, oh, hey, like I heard from, you know, a couple people that like, this is true. And I, it was so obviously untrue that like I like, I knew it was like, it was like it was factually untrue and like the most obvious ways. And I asked the guy, I was like, did you, am I the first person you're talking to who is like not aligned with with Cauchy? And he was like, yeah. And I was like, and you told me you're going to publish this tomorrow. Like I didn't understand because it was, it was if he had, if he asked like 3 people who were not like. And so there's some of this happening right now because it is a story and it is a rivalry that has so much interest in the public. You're getting people who are just willing to like, pick up things that their people are sending their way and, and, and put them into print. And, and I will say, and, and I, I was talking to some of the Poly market leadership about this yesterday. You know, they, they didn't staff up and they haven't really staffed up the comms department. In fact, they don't, they don't have a head of internal head of comms still. They've, they've been trying to hire for one right now and they haven't, Polymarket does not have an internal head of comms. Yeah, because they, they put an offer out for somebody, but they, they've been using like outsource and, you know, outsource agencies for this stuff. But this was never, I don't, this was never what they expected to be spending their time thinking about it. And it's not what Shane thinks about like it is not what what he cares about. And on the Kaushi side, this was a part of the strategy from the beginning. Like they've been doing stuff like this for, for, for a while. And so I think one of the things I said to some, to some of the polling market folks yesterday's like, we probably just need to take this more seriously. So because of the fact that like it is, I can now tell there's a constant barrage of like opera research coming and, and, and negative stories coming that are very clearly not, you know, they're coming from the other side. Speaker 1 Just to, you know, we should have someone like Matt or, you know, paradigm guys or you know, someone, someone who's in the Koushi camp coming on here because I, you know, I know you guys are biased on this, but I will say there's, there's a, there's a corporate rivalries often spill into the public eye through marketing and comms. And I think there's a right way to do it and a wrong way to do it, right? Like, yeah, I don't know if you guys have there's, I don't know how into the acquired podcast you are, but these these stories often times come up on acquired. Like, I was just listening to the Coca-Cola 1 and right, one of the most famous rivalries, obviously Pepsi, Coke. And there's the Pepsi Challenge. And like, I think it's 1975, Pepsi started airing these commercials showing blind taste tests where consumers preferred Pepsi. And that actually pressured Coke to launch new New Coke, which was one of the most disastrous launches. In the history of consumer goods. And it was only because of the Pepsi challenge that they felt pressured to do this. And so there's a, there's a way to do it that can be very savvy and strategic, but you need to do it in a way that is like leads with integrity, I would say. And so I don't know if Cal, she's doing the wrong things. I, I would hope that they, I, I know some folks over there and they seem like great people, but I'd love to hear from them about their comms and marketing strategy. So maybe, maybe moving. Yeah, go ahead. Speaker 3 Over time, just stuff comes out so you know, you just can rarely get away with it. ZKsync Ad ZK Sync is the bank stack of Ethereum. ZK Sync's Providium is the only Ethereum secured platform that is purpose built for institutions that demand privacy, compliance and full control of their data. ZK Sync enables financial institutions to thrive in the digital assets economy by launching and monetizing their own chains, tokenize real world assets, build programmable markets and settle cross-border in real time. Visit ZK Sync dot IO to learn more about the bank stack of Etherium and book a demo. Will The Clarity Act Pass? Yeah. Speaker 1 Quick update on one of the listeners, wanted to know about clarity. I think Galaxy came out Alex Thorne and said 5050. I'm not sure what Polymarket is showing, but it was sub sub 50% chance that it passes last time I looked. I would say that we are above a 50% chance of passing. And Rob, I know you're pretty deep. Nope, you're shaking your head. You're we are now below 50%. I'm I'm going with the over. I'm going with over 50% chance that this passes. Speaker 4 I mean, I think I've said that on the pod before, but I always thought we were like 1/3, so 33% chance. And like when I talk to people in DC lobbyists, like people who are actually there every day or spending a lot of time on this who are not what I would call like people who are paid to be hopeful about crypto. It's the number that I have been getting all the time. I think also Rebecca Reddick said this when Sandy and I did a podcast with her and maybe that was February, but all of those people have seemed to be very aligned that it's like maybe a 33% chance, right? And I, the story that I hear, it continues to be like that's where we are today. And time is probably the, the more that this goes on, the longer this goes on, the lower chance it is. And I, I think there, there was an article that came out maybe in Coindesk that was like, oh, well, there's still time. If we get this through July, I'll tell you when I was in DC last month, every single person said to me that if this is not done before Memorial Day, it is dead. And so, you know, again, this is like a, it's an option, right? There's a Theta decay happening right now. And so the, you know, 43% chance, I think this actually hit on polymarket hit a 37% chance at one point yesterday and then kind of popped back up and is now down to 43% chance. I I expect this to probably settle somewhere like in the 30s for the next month and we'll see what happens. Speaker 1 You expect it to what, Rob? Speaker 4 To settle like in the like, you know, call it like high 30s. Speaker 3 No, it peaked at 65% a little over a month ago. Yeah, I, I can tell you I I'm getting the same breed from people that it is the everyday that goes by is more unlikely that it gets passed. Speaker 4 Listen, I wanted to get passed like, I'm not, I'm not. I'm obviously not paid to be bearish here. But you know, I try to be a realist and like it. I, I just, I get less confident everyday. And so now it's down to 42% chance probably because, you know, it came down while we were recording. People probably heard us. It was will on the other side trading it. But like I think I think. Speaker 3 That really DJ? Speaker 1 Is like I see in our. I see in our. Speaker 3 Yeah, well, we, we, we have a history of DJ and producers on the show, so. Speaker 1 Joseph just retired in Alabama or Arkansas or something just buying multi family properties no doubt so OK well clarity we will keep you guys posted as we hear more and people should join the empire telegram chat. We will, you know, drop some stuff if we hear more. What Is USDai? Last but not least is I don't know if you guys followed, but this USDUSDAI launched and I knew very little about it. Only knew really about it because I, I remember the framework guys who, you know, Michael and Vance, who, you know, we're good friends with at Blockworks. They, I think they invested in them after they had pivoted from being like an NFT protocol. And I was like, all right, let's, let's see how this thing does. And we're in. Speaker 4 USDAI as well. Speaker 1 You guys are in it. OK nice. So yeah, every now and now and again there's this a new coin that performs incredibly well after launch. Like often times things are kind of down only after TGE and yeah. So USDAI launched the, you know, CHIP token and yeah, it skyrocketed. I think it traded at over a billion dollar valuation and it's doing I mean, it's kind of hit every narrative, right? The AI narrative, you know, they actually have real customers and revenue and a real business and yeah, it seems, I mean, it's it's pretty cool what they're doing. So, and for people who don't know about it, it's there's, so my understanding, Rob, you're an investor, so correct me, but USDAI, there's the USDAI stablecoin and the SUSDAI yield product and that's tied to something around AI compute and GPU lending. Speaker 4 Yeah, so it's collateralized loans against like compute so or and against like the the ASICS or sorry, not the ASICS, but the the the GPU's themselves. Speaker 1 Got it. Speaker 3 Yeah. Speaker 4 I mean it's, it's essentially it is a, it is a proxy for compute demand, right? Like that is what it is a proxy for. And clearly right now that is a very hot topic and it is very topical for people trying to get exposure to that. And it is a, it is a problem like we are compute constrained and people are also CapEx constrained, especially if you're not, you know, one of these big foundational labs. And so you know all, all the credit to these guys, they're really good credit people. Their last protocol you said it was NFT related, which it was true, but it was credit specifically. And like how do we do different types of credit around different types of of NFTS? And they're really smart, they're really good at at this part of the market. And they saw early that there was going to be demand around these lending for, you know, GPU's and hardware. And to wrap a, you know, kind of a token around it that gives people access to that and yield to that related to that makes complete sense. Speaker 1 And is this David Troy? Speaker 4 Thing. Yeah, Yes, exactly. Speaker 3 Yeah, this is Dave. I've met a couple times. Quick question, who are they lending out to that does not have access to credit in the real world because this of course is a very hot investable category for most lenders in the real world. What gap in the market are they filling that is not unmet by traditional allocators? Speaker 4 I, I, I actually would push back a little bit on that. This is a, a, an easy market for startups. So like there's a, there's obviously lending for against, you know, compute for relative to like one of the foundational models or a lot of the big companies, you're seeing a ton of demand there. But for earlier stage AI lynch startups or compute Lynch startups, it, it's still a thing that a lot of people are trying to get their hands around. And these guys have a, a very attractive cost of capital. They're they actually they've done a very good job underwriting this part of the market. And so it's I don't know if it's public who all of their customers are, but like it is sort of this like call it like earlier stage type companies who are adopting this market. Speaker 3 They process like 100 change of loans I think and they have. Speaker 4 Yeah. But they've got a, there's a lot more TBL today, but they, so they've got capacity, but they're, they're being thoughtful about who they're rolling out to and how they underwrite. Speaker 3 So, so they have more capacity than they are extending loans. Is that a quality of the because they have AI think over a billion or so that I saw in pipeline and they've extended 10% of that. But they have more deposits in of like idle stable coins that is willing to lend against GPU's H1 hundreds of them is that. Speaker 4 Yeah. So they've, they've got, so they've got 61 million active loans out. They've got another 59 million of like basically has been signed and they just haven't. Yeah, but and they've got a a pipeline of over 300 they're talking about right now and they've got about 350 million of capacity at the moment. Speaker 3 Capacity, so. Content of The Week I know we've got to jump content of the week. Speaker 4 Project Hail Mary. I was. Did you guys say that you. Speaker 1 Said that you said that last time. Speaker 4 Did I say that last time? Speaker 1 I think so, or maybe I said I wanted to watch it. Speaker 4 You said I wouldn't watch. Speaker 1 It. Oh no, you told me when we played Battle, that's what it was. Speaker 4 I told you, yeah, you're taking our offline conversations to our. Speaker 1 To our I was like I. Speaker 4 Was like, I don't think I do Then that was a great movie, so. Speaker 1 MM said it was awesome too. Yeah, I said they nailed it, Santi. I was. Speaker 3 Yours. No, you go first. Speaker 1 I will give folks a non finance, non crypto podcast, which is a really good episode of Invest like the best with this guy Alex Carnal talking about GLP ones and yeah, just everything that's going on in health from the investors lens. It's on invest. It's the newest episode of Invest Like the best. He runs a fund called Braidwell Life Sciences investment firm, but guys have been investing in biotech for 25 years. Really, really interesting podcast. Speaker 3 You're on the peptide strain. Speaker 1 Not yet, Sir, not yet. But I mean, half the people I know, it's crazy. I remember whenever, you know, I feel like you have those like group chats of friends with friends who are like really early to things and like five years ago, everyone's in, you know, started doing GLP ones or GLP what, you know, GLPS and I was like, this is crazy. Now everyone's doing it. But now that same group chat, literally 80% of them are doing peptides. Speaker 3 Yeah. Are you guys? No, no, not. Speaker 4 No peptides. I haven't. Maybe I should though. I'm like, you know, I haven't been working out as much recently, so. Speaker 1 Dude after my paddle game we're all Oh my God I need I need every peptide I can get. Santa. I had the worst game in Paddle I have ever played. Speaker 4 Yeah, so I I did, I did beat Yano in paddle 2 straight sets. I really go back put that out there all. Speaker 3 Right my my content. I'm continuing on this like media cable train obviously read like Born to be Wired by Malone, then Ted Turner, then Barry Diller. Now moving on to this book called The Gambler about sorry about Kirk Kerkorian, very probably one of the wealthiest guys that is no one's ever heard of, but he at one point was like the largest player in Vegas. Like not like he owned a bunch of real estate and media and studios like came from nothing essentially. So, yeah, if if you think you're a the the book's called the Gambler by William Brempel. If you think MGM, Yeah, MGM. That's right. If you think you're a D Gen. And have a high risk tolerance. Don't read the book. Speaker 1 Yeah, epic. Great recommendation, great book. All right, folks, thanks for listening. Got to jump. Enjoy the Friday, enjoy the Saturday. We will see you next week and listen to the episode on Monday. Very good episode on the. Speaker 3 Quantum take care.