Ep. 692 The Inventor of the DAT: What is Next for Digital Asset Treasuries w/ Cosmo Jiang of Pantera Capital

Welcome to the crypto 101 podcast presented by Gemini your bridge to the future of money All right everybody welcome back to another action-packed high caliber episode here of the crypto 101 podcast I'm your co-host Bryce as always join my buddy across country Stay in dry. I hope durian well, I guess hurricane seasons passing but Brendan how are you doing my man? It is passing stay in dry over here stay in a warm. I'll tell you a lot of talked to a lot of people We're entering into chilly season. We're staying warm, but man, you know here for another exciting podcast Bryce I mean we've had some bangers here recently. I don't want to like pat our own back too much over high-paricels But shout out to super producer Tivo for for bringing all these guests in here Because this is another one that we're really excited for a definitely a name that think a lot of the listeners have heard of and Yeah, man, just another good interview Absolutely, you know speaking of winter. I'm I'm curious. We're gonna be talking to our guest today Cosmo Zhang who's the general partner or one of the general partners of Pantera capital We're gonna be talking about if this is crypto winter or have we been in crypto winter that might thaw into spring Oh, you know, tough questions, but we're gonna dive into it, but but first Cosmo we'd love to welcome you to the crypto 101 podcast. How are you doing today? Hey great, man. Really nice to meet you guys Bryce Brendan excited to be here Sweet. No, it's it's been a it's been a volatile ride in the crypto market But nothing really out of the ordinary like the way I think about it like you know, you've had 20 drawdowns of 30% or more over the course of the past handful of years seven eight years So this is just kind of par for the course, but you know before we dive into a little bit about your background and what Pantera is up to How are you how are you thinking about this this crypto correction that we're in again recording this end of November Markets have had a lot of volatility I think it's really it was always really important to put things in context and and Bryce you said the exact right stat which is that Big wine eats a lot of these will all seem 30% plus pullbacks multiple times during any uptrend And so this is within the realm of of Of reasonable volatility when it comes to this asset class The reality is that you don't get the You know since we for when we first launch our first Bitcoin fund in 2013 since then big one is catered or you know grown at a compound annual growth rate of over a around 80% You don't get that 80% annualized return if you don't also have similarly large pullbacks and so We believe the long-term trend is intact, which is the super long-term vision of crypto is going to go from tens of millions to users to billions over time and if that's true then You know in if there are big if there's a lot of upside there's also going to need you know large magnitude downside too And we think this is just one of those those wiggles that along the way Yeah, it's funny. We we always have a saying here that risk and reward are two sides of the same coin right or the same crypto token You can't have your cake and eat it too So you have to have the high returns but also endure the volatility and Volatility is a gift to the faithful as kind of as a saying here in crypto That Michael sailors really embodied And you know Michael sailor invented the the digital asset treasury company So we want to kind of get your thoughts as well here later in the episode on Digital asset treasuries just so the audience kind of knows what to expect You know pandera was instrumental in one of the latest salana digital asset treasuries or debts called the salana company But before we dive into all that let's just get acquainted with who you are How'd you become a partner at pantera And and what gets you excited about crypto? Why do you kind of you know go all in on this industry? So I'm really a tech investor by training You know, I'd say I had a very tradify The very tradify career coming into this I graduated from Harvard where I studied math and then a first job at a school was banking at Evercore and then a private equity after that covering all sorts of companies consumer financials distressed Um, and then but I decided I really loved the idea of taking a lot of shots and Making a lot of making a lot of investments early in my career You know making a lot of stakes to learn from their money in my career And so I switched from private equity to the public markets and spent most of my career Covered uh in uh in a long short equity hedge fund called Hitchwood Hitchwood was a multi-billion dollar single manager hedge fund where I rose to lead all of our coverage across consumer and internet investing So think everything from your retailers like dicks or sporting goods or or Costco to The large media and internet companies like Facebook, Google Spotify, etc And and so it's really cool to have that lens on the world and as I was going through that you know the reality was crypto was never really relevant for my day job for for a very long time until you know entering 2020 2020 2021 When all of a sudden ever in my coverage universe started out on crypto, you know, whether that was LVMH talking about their NFT and LVMH from Nike talking about launching NFTs whether it was universal music talking about a digital a digital Manivorous band whether it was you know Spotify talking about tokenizing royalties And all of a sudden it became incumbent upon me if my job is to try to be the best analyst on the street on these names to learn about crypto Really deeply and as I did I came to discover that wow there's so many real businesses now being built There's so there's this rich universe of tokens that represent real economic value And there's a real opportunity now to apply that fundamental investing skill set into the token markets And so I I'd always wanted to launch my own on fund I always thought I'd be in equities and I realized that the if I think about where I want to spend my time uh the the hardest part about being an investor is optimizing for return on time and When I do when I think about that, it's really I really think about it three ways It's like one. Where's there the high-secular growth? Two, where's there the most misunderstanding and three? Where's there the least amount of competition? And it's just so clearly crypto across all three and so I decide to leave equities and go all in on digital assets Ended up launching my own fund And then soon thereafter was Realize that there's a real opportunity to accelerate my growth as well as others and decide to merge my practice with the pentaras and and took over our Our public markets investing practice here a few years ago Hey speaking of which if you want to see how a top pro makes winning Altcoin and crypto trades Brennan Veman is doing a live over the shoulder trading session this week All right, he's going to reveal both the coins that he's watching closely right now And he's gonna walk us through his trade ideas uh ones that investors could potentially execute on right away It's like getting what I would call a master class in real-time trading for absolutely free Plus you're gonna walk away with some altcoin picks that might be poised for their next big moves So here's what you got to do head to www.cryptorevolution.com/masterclass to save your spot now All right, CryptNation fam. 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Is it in the liquid tokens market? How do you kind of think about what your practice is today? So give over your pantera. Pantera does everything across the crypto ecosystem. We were fortunate to be fortunate, you know, for for looking to be the first institutional fund investing in blockchain since 2013 And so over time that means we've built out a large practice really with the core and early stage venture but also But also in the digital token markets. So liquid tokens And today we invest at our eventually fund as well as our liquid token fund I think because we also have a lot of people including myself with particular equity expertise We have a very strong view on how all this is going to play out in both the equity and the token world and so You know, we were we had earlier this year that ended up happening to end up in us being the first ones to really start this huge boom in deaths In digital asset treasuries are so early this year And so we have some specific strategies around digital asset treasuries We have specific strategies around digital around liquid tokens as well as venture And I oversee you know Investment strategy broadly, but especially everything that's later stage growth oriented in public markets Yeah, I mean This whole time in crypto has been interesting here lately because the market's heading down People are feeling the pain and what we hate to see is that a lot of people experience One bear market and it wipes them out or it's enough to get them to capitulate and say I'm done I think the unique thing here is that Pantera has weathered four bear markets already, right? We're now seeing the fear and greed index hitting a 10 which is historically a really really low point Generally around the time of either being extremely oversolder near bottom You also have the weekly rsi hitting its lowest point since 2022, which is the relative strength index It's lowest point since almost December of 2022 and For people who don't know that was right around the time that the market bottomed after the whole ftx Terrelluna Alameda that whole crash that we had after the last bull market and so we're at an interesting point now But I'm just curious like how are you thinking about the market as it stands right now and potentially just as it moves forward And also to add to that just like how did we get here? Like in a little, you know, how did we get here and where we're going Yeah, totally why don't we start with the how did we get here because it's always helpful context Maybe even if you if you'll if you'll indulge me going back a little bit because I think it's so important to put everything in the context of in the in a larger context if you go back to 2021 like that was a time of sputch such excitement right that was the boom of DeFi summer that was the start of all this Of all this incredible wave of DeFi innovation and And we just saw a lot of users and capital coming to the space Ultimately as is a case with any early stage tech there's large boom and bus and we saw that excitement turning to speculative access Right, so we turned the page 2022 and all of a sudden we see all that bursting of that bubble and you know a lot of things coming down Not just in crypto to be to be clear across all asset classes just as the bubble burst on everything But you know, I heard crypto particularly in particular And especially uncovered a lot of fraud And a lot of the a lot of the excesses had to be washed away And so when we turned to 2023 the story became well all of a sudden all these headwind started buffeting the industry Whether that was you know users feeling like they had been lied to or lost or cheated And so they left the industry and they stopped using blockchain as much Whether it was capital providers who had lost money and felt like they had to stop out and reassess whether it was you know regulators who Front candidly had probably underpoliced the industry feeling like they had to overpolice in reaction to that and so And that resulted in this this very severe bear market As we turn the page though to 2024 things started to lighten up some of those headwinds started to become tailwinds Ultimately culminating in you know, this massive a few things one was along to the ETFs the Bitcoin ETFs and end up drawing in a ton of capital And the you know the regulatory political shift that happened with the new presidential administration that came in was very substantial And then coming to 2025 It's now all of all those headwinds that really were having holding the industry back all the center are huge tailwinds right from the user perspective Users felt like wow there's really interesting things to do again in crypto. So they're coming back Capital providers realizing that these the ETFs have really opened up the ability to access crypto It made it a lot easier and safer in their perspective and they're starting to allocate in a very meaningful way And then regulators and the political establishment it realizes that now it's so important to be pro industry Because there's like there's no benefit to being anti-tech and so everyone's very aligned in being pro industry across both Democrats and Republicans. It's it's like not a partisan thing at all And so I'm really excited when we think about it from a from a long-term perspective that That we're in a very bullish environment and that there's so many because there's so many headwinds that are no tailwinds Now 2025 has ended up playing out like a little bit more volatile right the The after we saw we saw the mark if the general the broader markets really pull back very hard earlier this year on macro concerned around tariffs and shut down And that pulled down everything not just crypto, but crypto was impacted Uh, and and then we saw you know a little bit of bump throughout the throughout the summer, which is really nice Uh, just as things really bottomed out in April after everyone got really really bearish And then we started to see all this good positive news flow and really momentum driven by digital asset treasuries Which Penter help help jumpstart Um, and now we're starting to see that pull back a little bit right a lot of the A lot of the buying pressure that's come from the digital asset treasuries has has dissipated and This to a small extent is turned into like a minor amount of selling not at any amount of selling that impacts the market, but impact sentiment Um, and then we've seen that a lot of the Uh, you know some of the the macro conditions have started to get choppy again whether that's Uh, people worried about the Fed pulling back on on rate cuts and not not being as being a little bit more hawkish Whether that's you know the government shutdown potentially lower expending and and a lot of consumer data points showing that consumers are feeling a little stretched And so we're just in a weird point where there's a lot of concern about the economy In the AI boom is starting to see show some signs of cracking and so overall risk assets are pulling back At the same time in crypto the digital asset treasuries are pulling back And so that's where we're getting this little bit of a um of a sentiment pullback right now um As I look forward I really try to keep a few frameworks in mind one is like what's my long-term view what's my medium-term view it's my short-term view I'd say on a long-term basis I'm I'm incredibly bullish for all the reason we just talked about On a medium-time frame. There's so many things to look forward to like Marcus structure legislation that's likely to come out in the next few months The continued launch of new ETFs and all the marketing that's going to help drive that And just all this innovation that's going to come out of uh, that's coming come going to come out and all the interaction defied that that's already happening On stable coins and tokenization And so all that's going to continue to push the force the space forward and medium-term basis On a short-term frame, you know, we don't really operate on a short-time frame. We view ourselves as long-term investors But I would say that all signs point to on a very very local basis exactly what Brendan pointed out Which is that fear and greed index at an all-time low, you know RSI at oversold it just feels like here we're set up probably for a technical bounce I don't know how long a bounce that is. I don't know if that means we pull back again in a few weeks from now But certainly if I were someone who is trying to allocate capital it feels like now is a great time to be Putting some of that capital work over the next month or two because on a medium and long-term basis man There's so many good things going on Yeah, I think it's hard to look at the fundamentals and Not be excited about the future. You said regulatory changes. You said new ETFs. You said Just everything else that that is going on and when you look back at this I think the important thing to understand is that There wasn't anything fundamentally wrong with crypto. There wasn't a corruption. There wasn't like a hack It wasn't like blockchain failed us and what we thought You know, we had last month and what we saw was the largest liquidation event ever and that happened and that was Basically entirely due to a centralized parties issue and how they handle their exchanges and their services and their de-leveraging systems and all of that and You know now people are kind of looking back to what you kind of just referenced and we're at an area where you would imagine Some sort of bounce happens, right? You know, maybe it's today. Maybe it's next week You know, but we're saying as we zoom out again I think it's hard to be bearish about the long term But that kind of begs the question like if we do get a bounce is it going to be a moment where the bottom's in or is it going to be a dead cat bounce followed by more continuation to the downside and it seems like there's kind of two parties here There are the people who really believe that there's a lot of long-term value And then there's the other side that's saying But wait we're kind of in that four-year cycle We just had that large liquidation event. We saw what happened last time during some of these large liquidation events And it made us go into a bear market for you know a year a year plus And we saw kind of over a year of selling and that's where we went from You know 2021 to almost 2023 with this decline And I see people trying to argue that again now personally and I want to loop you in on this But do we need a one-year plus bear market to recover and do we have to kind of follow that having struck that having structure Like we have seen in the past I have a few thoughts there one is that I don't believe the four-year cycle has Is like a real thing. I think he probably used to be in 2012 and 2016 But just over time the amount of supply reduction from Bitcoin really doesn't matter relative to everything the else that's going on in the market Uh, and the reality is if you go and this is because I'm more of a student of the traditional markets and not and not crypto for a very long time But I just I just when I first entered the industry and everyone talked about the four-year cycle I just thought huh that's funny like I I know that the traditional markets have had a four-year cycle recently But like and it just so happens that and it's coincident with the with the Bitcoin having for you know for some strange reason But like truly every time that there's been a having there's been a major macro economic event that's driven that right 2012 that we had Uh, we had the we had your zone debt crisis 2016. We have Brexit 2020. We had COVID uh, 2020 and uh, it's every election year That is true. Sorry. It's every elect like US election year Right. You're right. That's true, too. Right. And so like I don't know if it's like maybe there is some like Some astrological power to this that for some reason Like are the human mythology is such that our life follows four-year patterns, but you're barring that like weird seemingly like two coincidental fact pattern like I think the reality is it just happens to follow the broader macro cycle And like if macro happens to follow four-year cycle forever like first of all that'd be crazy But like who knows maybe that's possible But like if that is a case and I expect crypto to as well But if it doesn't like it does feel like we're in a period where yeah things look you know relatively healthy on an underlying macro basis And so it doesn't seem like you know crypto for any reason needs to diverge from that And so I don't think we need to go through this you know massive one-year bearer bearer cycle or something Some people would argue like if you look at everything excluding Bitcoin We've been we've been in a bear market all year for everything X Bitcoin right other assets have not performed very well And so if you really wanted to make that argument arguably things haven't been that haven't been hunky-dory for some time And we're already going through that that digestion of that and maybe the October 10th event was the you know the final punctuation And it's funny that you say that because we just had Matt Hogan from Bitwise on and he said the same thing In fact, we've had a couple of guests now that have said this they said guys I don't think I don't think it's a matter of us going into a bear market It's likely been the fact that we've been in a bear market and that this isn't anything new for kind of all the reasons that you just said And that we're probably a lot closer to the back half of this and I think myself and Bryce and again a lot of the guests that we've had on here recently We would also agree with the idea behind the four-year having and that it's probably not as influential as it used to be And I don't think that it holds as much weight in significance as a lot of people think that it does at least not anymore Especially Bryce. I mean you pulled up this statistic before and when you look at the amount of Bitcoin being bought up by like Treasuries and Dats and how much being is being mined comparing to What what the having is like it just doesn't really have as much weight as it used to right? Yeah, I think there's only like 20 million Bitcoin mine 20 million dollars worth of Bitcoin mind every day And like it trades a hundred billion dollars a day and there's you know all these new cohorts that are entering the space like sovereign wealth funds And you know everybody just you know taking you know like heart like Harvard's endowment right like a percentage or two of their you know public You know, it's like the largest position now in their in their endowment Now I'm not sure what's on the other side of that if it's like hedge with other things but I thought it was it was really interesting But but let's kind of zoom in here on on the debt stuff because the salon and company I believe Is something that you played a big part in so what is the salon and company? And can you give us a high level on like what dats are Digital asset treasures are in general definitely so if we rewind the clock You know the OG Digital asset treasury was micro strategy right micro strategy Michael say we decided that he would launch a He would transition a software company into a Bitcoin accumulation vehicle and that he believed the best way to Maximize shareholder value over time was to acquire as much Bitcoin as he could Uh, he really wrote the playbook for how you can can you acquire a Bitcoin and a per share a creative way and did and effectively actually Basically from 2020 onwards, so it's been it's been it's been coming on five years now Uh, the second one to really do this with Meta plan in Japan They realized wow that really worked in the US one if you could apply to the Japanese market and that also went on to see extraordinary returns since they started in 2024 um and as a as an investor I always thought well it's kind of weird that micro strategy trades at two times na for or premium to na for such a long time but the reality is it is it has and And so as an investor it's important just to look at these market anomalies and try to really understand what's going on And we came to the conclusion that it is like there's a lot of really interesting uh Financial of financial engineering going on with microstrategy that that causes this phenomenon to persist That a lot of the reasons that people thought microstrategy would die didn't end up killing it like launch of the ETFs and And then we can and then we just realized that wow like it'd be really cool to Have one of the uh one of these Bitcoin Treasury companies, but instead launch it with a different asset like Solana And so uh we actually were we ended up making what was then a very non-consensus bet to back anchor invest in the first In the first you know at the time we were calling in microstrategy copycats because I hadn't invented the word digital asset treasury yet or that yet But like when we were calling in microstrategy copycats We ended up funding DeFi DevCorp which was the first non Bitcoin treasury company to be launched in the US This was back in in in in in early April at the time I thought wow this is going to be a super non-consensus like once in a lifetime thing like this is going to be the only one we ever do But then lo and behold the next week you know tether soft bank canter called me up and say hey We actually may think about launching a Bitcoin competitor to this. I thought oh well I can see that makes sense like I have to see why there could be two Bitcoin ones maybe there could be two Bitcoin ones Maybe there could be one or two ETH ones and one or two salon ones over time and so we need that becoming the largest investor in In that that one as well. It's called 21 capital now that by jack molars But at the time I also thought wow like this is pretty crazy to get to like in a row I think I thought it'd be too in done. There'd be no more digital asset But then we say here you know seven months later There's been over a hundred of these launched in the US you know tens of billion dogs of capital raised and so I'm really humbled and You know humbled excited that we were part of the origins or kicking this whole thing off With with the recognition that my posterior really was that as those the pioneer of this But we really you know added the fire that that ultimately jumped started a huge boom this year Um, and so as a result you know my team and myself were usually the first call for any any guys Thank you about launching a digital asset treasury And so we've been we've been at the forefront of evaluating how these work when they don't work the mistakes that have been made We backed all the largest ones like bit mine with with Tom Lee the eith digital asset treasury And we just realized that wow we've built all this knowledge about what works what doesn't work Um, we've like we're really the pioneer in thinking about how to think about that's overall. I mean we we invented the word and uh Uh, and and that we had created so much success for eith with bit mine But our our first love was really salana and defi deathcourt by the way has done well But like it hasn't reached the incredible scale that something like bit mine has as we just thought all it dawn on me that we We really should take on the burden of responsibility to launch our own salana Digital asset treasury because we have all this knowledge and expertise And because we really want salana to succeed in a similar way and so that's ultimately why It culminated in us launching salana salana company ticker hstt because we just think there's a real opportunity to have A skilled high performing salana digital asset treasury and we think we we have the skills to help do that I love it and central to this discussion because it really has been one of the most polarizing things I've seen in crypto. We've seen a lot of trash talk which is normal for crypto We've seen a lot of people get rich. So is it there's an element of jealousy? There's an element of man. I wish I thought of that and so and you know You're at the the tip of the spear with this and so I really wanted to get your thoughts on You know MSCI talking about we're going to not allow which is like you know really large index not like the S&P but kind of like S&P And they're basically you know saying and keeping it open for discussion and I know You know, you won't be providing legal advice or anything like that These are just discussion points, but but I want to get your thoughts on what they're doing because they're what they're Alleged, you know, they're alleging that all these digital asset treasury companies are funds and that they're not really operating companies Which is pretty provably false Because these do they do have you know operating companies and stuff and they're saying you know We're we're opening it up for comment. We think we should de-list all of these Dats from any index that we have and I just kind of want to get your thought on like what's really going on here? And also that dropped on October 10th You know JP Morgan was kind of talking about this on October 10th, which was also the day of the big liquidation Just a side note I so it it is interesting that this index discussion is around I think if we go to the core of it index inclusion is not what causes Dats to be successful and so like whether or not MSCI and S&P and Nasdaq eventually whether or not they decide to include Micro strategy and other deaths into their index or not like It's mildly helpful if they do but like that's not at all what what will create success And so I think there's a lot of like there's much hella blue about nothing In this space about whether index inclusion helpful but like not at all the thesis and not all what we were underwriting when we invested in debts That said I think the core of it is that there's a misunderstanding of what these businesses really are And you know, it took me some time to come around to this too But when I think about what these are these these actually look a lot like financial services companies or or banks if you will If you think about what a bank is a bank is actually a pile of cash, right? They're a pile of dollars and then they go out and try to generate yield on those dollars And ultimately banks are valued on what's called book value per share or the number of dollars per share that they have on their balance sheet And they go out and try to grow their book value per share either by a combination of their operating business Which is originating loans or by participating in financial engineering Which is issuing debt issuing perverts and all these other things And so If you're and you know high performing banks like a GP Morgan they trade at two times book value because they earn a high yield Or a high return of capital or high growth rate on their book value per share Whereas less well performing banks, you know, take your random xyz regional bank They trade below one times book value because they don't grow their book value very fast um The trends like that to a debt that is exactly that except replace dollars with your token, right? In the case of salana company rich face of a salana. Our jobs to grow salana per share You know, it's not dollars for share, but it's salana per share And we can do that through a combination of our operating operating operations Which are trying to generate yield on our salana through staking or defy as well as through financial engineering Which is through issuing a variety of instruments into the market And uh, and so from that perspective actually these business models have existed for since the dawn of time really These business models are just banks. They just happen to be crypto crypto denominated And so I think there's a little bit of a of a mindset shift that needs to happen Um from people who are seeing this for the first time I myself was the most was very skeptical of this for a long time and so I really really did the work and dug in But once I came to that analogy, I was like wow these actually this actually makes a lot of sense Now that's not to say I think there's a lot of you know, scaredness and fun around dads Because three out is a lot of them will be on interesting outcomes You know, if you if you were to invest in a basket of startups or a basket of banks Most of them will be not very interesting investments, right? Most of them many of them may even lose money But a few of them will be really great investments And so I think when people look at that they look at the vast majority of them You know kind of being not super interesting or trading down I I just put everything in context and realize that for any set of new businesses for any industry Most of the things are not very interesting But there are one or two major winners that can go on and compound and be generational You know generational returners for your portfolio And so that's how I think dads are playing out and people are right now focusing too much on Everything else and not the big winners that might emerge from this Yeah, no, it's it's totally right and yeah a lot a lot of questions kind of still you know surrounding You know, I think you know all these dads and you know just in terms of share price It seemed like they on the announcement they just shot up because people got really speculative And then share price normalizes but you know the story still being written I think like you said people just need to get their minds around it And like if you look back like you know, I bring this you know example up in the past with like Facebook Or Netflix like back in the early days people were like we don't know how to value these things These are new you know equities in a sense that we just we don't understand attention or clicks And like how that's going to you know turn into advertising But the visionaries did right and like you know it just takes people you know betting on themselves And going through adversity and I think that's what the DAP model is right now It's just the markets trying to come to a agreement on how to value them And we will certainly see And yeah, I'm super optimistic And really really excited about what you guys are working on But I want to touch on like you you've mentioned this theme of like being pretty pretty optimistic on Solana in particular And I just kind of wanted you to riff for a couple minutes on just why you chose Solana as opposed to Ethereum Or any of the other L ones that are out there I do know you said you were involved with the bit mine immersion one which is all about Ethereum So I take it you guys aren't like super short Ethereum and bearish on it But you know what kind of gave you that that confidence to support Solana so strongly So a couple of things there one is that we do believe we will live in a multi-chain world in the future I feel strongly that there are multiple blockchains that have reached enough scale to have Meaningful adoption and network effects right there's Bitcoin, there's Ethereum, there's Solana All the Ethereum altos and the EVM ecosystem And so I do think they that you know no matter what even if there are more chains At the very least there will be at least a three-chain world in the future And that you know for you and me are everyday consumers We may not realize that there's multiple chains because our our user interfaces all the fintech apps that we use Man up abstracting that all the way But the reality is under the hood there do different chains for different use cases And then the second thing I say is if you go back in history and I always try to like bring in the historical context You think about how blockchains developed you know the first blockchain that really took off in a major way was Bitcoin in 2009 Right blockchain technology though or their concept of blockchains have been around for many decades It's like but the first blockchain that really took off In a digitally native way with scale was what's Bitcoin and it really wasn't a response to hey We would love a non-sovereign store value some way to transfer value back and forth in a censorship resistant way That with instant settlement and low cost and the reality is that worked out great Right people started to really love it it gained a lot of traction But fast forward a few years to 2013 people thought well, we really love that Bitcoin thing But what if instead of just transferring value back and forth? What if we could do more than that? What if we could program in more complex transactions? What if we what if we could have all sorts of programs run on blockchain and settle like that And that's why Ethereum was born. Ethereum was really born in response to we really love that Bitcoin thing but let's do more Now Bitcoin Ethereum succeeded in doing more and you fast forward a few years As more app developers actually started building on Ethereum If you're starting to get you know, Ethereum itself also isn't the newest technology and started getting slow and Started getting congested it has this congestion pricing mechanism And so all of a sudden people thought well, we really love that Ethereum thing and we'll continue building on it But what if we could do that except better right and really Solana and a generation of L1s was launched in a response to that in 2020 Which is like we really love that Ethereum thing but let's do it better and and so when I think about what Solana is today Like Solana was the one that ultimately broke out and really scaled from that generation of Of high performance L1 And so today they're only really those three chains have massively scaled And if I already think about them each in isolation And why Solana could be you know out a relative winner amongst them It's that I was go back to basic principles and I try to use a lot of you know case studies from my For my prior life as an investor just this pattern recognition I've built over time And one of the biggest stocks of my early career was Amazon right Amazon did something really simple which is a disrupted retail And it did it by following this very basic thing Jeff Bezos used to always say that there's this you know, holy tribe Trifecta of consumer wants that will never change they were they are that consumers will want cheaper They want faster and they want more accessibility like no matter what you can count on those things those for things always being true And and it was really on the back of keeping that simple vision that caused Amazon to gain so much share and be a massive winner in retail And when I think about what Solana is like wow that's that's exactly the vision. It's faster It's you know, it settles. It's for your milliseconds for block. It settles transactions and it has finality and under a second You know, it's it's cheaper. It's it costs less than a fraction on penny per transaction Versus you know many dollars and in traditional and our traditional finance rails or you know Or many dollars in the theorem world and then it's more accessible Certainly than our traditional finance rails because it's anyone in the world with a smartphone and an internet connection Can access Solana and have a Solana wallet you can't say that about a bank account and for all those reasons like wow Solana is faster cheaper more accessible and that's why the technology can work and can scale Now there's a lot of technologies that are really great but don't succeed And so the question becomes how is that actually playing out in the fundamentals And when we look at the fundamentals Solana has been amazing over the last few years If you look at total growth in crypto transactions If you look at total growth in crypto developers in a number of applications being built Solana has been the the largest share gainer across all of those for any any fundamental metric that matters And ultimately that's translating to real profitability right Solana as a as a chain Generator over two million dollars of annualized free cash loan at first half of this year I don't think people realize that all this incredible growth Markish your gains and fundamental activity on Solana is translating into real hard cash And and that's really important like if you're the fundamental investor that's trying to find high quality businesses It's like you want to find that product market fit. You want to find real real profitability And that's what Solana is proving now and so that's why we're just so excited to be you know invested in Solana Yes, we still love Bitcoin. Yes, we still love Ethereum But like you look at Bitcoin Bitcoin Bitcoin 1500X since we first launched our Bitcoin fund It's like as much as we love Bitcoin. It's not going to 1500X again I mean never say never but it's something crazy would have to have happened to our world for that to happen But Solana is still early in its journey and so we think Solana has massive massive upside ahead of it And that's why we're so excited Yeah, no, hey, that's that's some alpha and yeah full disclosure You know, I've got you know exposure to all these assets that we're talking about and you know Matt Hogan also did mention he goes he's like Solana is in the sweet spot for Bitwise as well He said Because it's I think he said 125th the size market cap of Bitcoin But the amount of flows that it's taking into its ETFs are like you know if you scale it like are actually greater proportional to What bitcoins taken into the ETFs relative to its market cap size so Yeah, I think there's a really bright future for for Solana as well But I wanted to round out our debt discussion here with just a couple Questions on staking and lending and and just how do you kind of like think about these different mechanisms to generate yield Are you doing them like everything everywhere all at once? Do you guys you know? Do you select between hey, we're gonna lend here. I mean because again, it does sound a little bit like you know a hedge fund And I know you used to run hedge funds, but How do you think about yield generating opportunities? So I think this is where Solana company can really stand out because Pintera where I you know, I'm a general partner and also a director at Solana company But Pintera is the asset manager for Solana company. We're applying everything that we've learned about Solana All our relationships all the research we have all the defactivity we currently participate in we're using those to to really help accelerate what Solana company is doing and You know, we run an actively managed hedge fund strategy and liquid tokens and we're we want that knowledge to be used Um, and so Solana company though is going to be slightly different in that it's very focused if the goal is to maximize value per share Um for for US investors. We really care about Solana company really cares about You know doing things in a in a risk agenda lane a safe risk-adjusted way to maximize maximize yield And so you know cross-divide that means we're going to be very sensitive to smart contract risk to underwriting risk to credit risk To potential, you know, KYC AML Considerations that a US company would have and we're taking all those to an account But assuming that we get comfortable with all those risk factors We do want to be aggressive about maximizing yield and finding really interesting opportunities I think there's a lot in Solana DeFi when you look at protocols like Camino like drift like Jupiter. There's a lot of interesting ways To deploy capital and generate high double digit rates of return That's well above what you can get with just pure staking And so we're going to take it a step at a time But we're really interested in exploring all those as long as we can satisfy all those risk conditions Awesome, and then the last question around dats is around uh the the net asset value Multiple the m nav that the premium to nav they've got it set a couple ways What is the right premium to nav that some of these dats should you know logically command I've seen some as high as you know 20x and I've seen some that have now gone down to both you know well below one What what are kind of the factors driving that and you know where does your sort of bounds Lay so the most important thing about investing in in in any asset class is really think about what the future What the what the projected growth is going to look like for this asset right and so When you think about what a dad is it's goals to maximize tokens per share and so if you believe a dad can grow It's tokens per share over time then it probably deserves to trade at a premium Because if I'm going to have if I buy you know a dad today that owns one Solana per share But I think a few years from now it's going to own two Solana per share I'm probably more in going to pay more than one for that um The uh and so that's why things in theory should trade a can trade above one time's nav When you think about it though a lot of the debts they are businesses and so they have costs too And so the starting point is really if you have if you just go buy an ETF You'll always have one time's nav minus you know 25 basis point expense ratio there you're paying Bitwise or fidelity or whoever else every year And so, you know, it's one minus 25 basis points a year If you look at a debt, you know, they're much higher expenses because of the public company And so, you know, it's one it's probably your starting point is probably closer to you have something like point nine That's like the status quo if a debt forever fails to generate any growth Then it probably only deserves to trade at point nine or something below that and many debts Can be will not be successful in growing their tokens per share and that's why they should trade at a minor discount Um now there are a lot of debts that will perform very well and those that are are the guys that know how to use the capital markets effectively Then know how to generate yield effectively And you know, if you're if you're doing something like staking Staking in Solana right now is around a 7% annualized yield And so you're willing to pay something for 7% annualized yield, right? You know your tokens for sure to grow at least that much every year and you know People different people will put different multiples on it, but let's say that point nine with staking gets you to something like 1.1 or 1.2 And then if someone with really strong financial year and capability the ability to tap capital market in a special way Or perhaps to do a creative eminate can grow your tokens per share even faster than that Maybe you can justify something closer one and a half or two X or even two X plus I think When we get to something like 10 X five X 10 X we're starting to get like a little crazy and that's you know like meme like speculative type action And we get like below point eight. It's starting to look like probably too cheap because there's going to be consolidation and There's always the ability for management teams to do buybacks and return capital And so it feels like the range to me is something in that like point eight to two X plus range is where most of these should trade over time With with kind of lead the very majority of them trading right around now or maybe a little above now a little below now But one or two really all-star winners trading well above that Yeah Yeah, it's been interesting because there has been a lot of thought about like how do we price these things properly They blew up onto the scene and They just had this fantastic run and then they were overpriced and then now I kind of feel like they're underpriced And I think that they're just going through like that's in general I think they're just going through a maturity process of people getting used to these things and you're right It's balancing out and I think that that's all like a pretty reasonable area for it And then in typical crypto fashion they're just speedrunning Market movement Living a full crash cycle like in in a month's time. Yeah Which is always yeah, it's always fascinating and people always forget that But crypto does move like a thousand miles an hour and the stuff that would take like years or a decade in the like normal markets Or what it took the normal markets to go through in the past crypto your right price just speed runs it And we see these these really really quick and I think these quick cycles create volatility But Transitioning us to kind of just the current state of the market I mean there's so many different things going on if you look at like the macro backdrop you have fed policy interest rates inflation liquidity cycles You have all of these things that are shaping the the demand for a lot of these cryptos That we look at like especially the large caps So my my question for you is like how do you think all of these things that I mentioned like Fed policy interest rates inflation liquidity cycles How do you think that that shaping demand for assets like Bitcoin Ethereum or even Solana? I do think that the broader macro conditions are really Constructive right now. I think in the near term we're seeing a lot of choppiness because if there's a lot of concern around Whether inflation still running hot weather employments coming Unemployment is coming up a little too fast and and whether the Fed is going to react in a In the correct way to help manage that manage that but as I think about going forward It's like liquidity the Fed is on its way to continue to cut rates whether or not it happens in December It'll certainly happen sometime next year And it probably cut rates multiple times that's good for risk asset prices which big win Solana and ETH are If as we think about liquidity conditions are getting a lot better, you know, the The reality is the government shut down really hindered liquidity a lot But we're going to see that come back and at conference It's not just the US which is engaged going to engage in stimulus But countries all around the world China and Europe Japan, Korea all these places are engaging in stimulus measures and so global liquidity is really increasing and then So global liquidity is increasing rates are coming down And I do think the underlying economy is so strong because of all the all the innovation that's happening In blockchain and AI that's all going to drive a major productivity boom And so I think broadly speaking these are all really positive things that are going on for asset class Well speaking of AI I mean you've had your your eye on the AI sector as well, right Cosmo? Yeah An interesting one because we do hear a lot about it and we always have guests come on and we love to get different opinions on it But what do you think about the two working together like what could the two sectors of blockchain tech and crypto and then AI on the other end What could Seeing those two sectors work together look like and what could that unlock? Well, I think it really starts with the entrepreneurs and when you think about it blockchain and AI are both just branches of math right and when you the blockchain is cryptography AI used to be called statistics And so like all these things are just as branches of math and I I study math in college I'm a lot of a lot of my class groups are much smaller and a much smarter I'm of studying math and in their PhD programs and Everyone in this space has experience in both cryptography and in statistics And so in our in our group of entrepreneurs at Pantera We also see a lot of people with AI experience that publish AI papers And then if you look in the AI world a lot of them do have cryptography experience And so there's already this really natural blending of talent that exists at that intersection And then when you think about what they are philosophically AI is all about creating infinite infinite infinite infinite abundance right there's going to be infinite AI generated content There's going to be infinite AI identities and AI agents out there Whereas blockchain is all about creating Creating authenticity or verifying authenticity and so they're very Yin and Yang and how they fit together and how they can help And so we actually spend a lot of time at this intersection because we do believe the two fastest growing sectors of our economy are blockchain and AI and so we're spending a lot of time at that intersection at two and it's not that blockchain that has solved everything for AI or anything But it can it is very useful in a lot of ways whether that's in helping coordinate resource aggregation like all these deep in protocols that are aggregating data or computer energy to power AI models Whether it's its concept of open source and open systems stuff like Stuff like bit tensor or our investment in open mind which are enable open source development for AI Or if it's around identity right we're invested in world coin, which is also founded by sam alman the same sam alman that founded open AI Because he really sees blockchain as a as a necessary tool for identity authentication in a world that's dominated by AI and so all those three areas we think are really worth exploring and In addition to on the flip slide AI agents are obviously going to use blockchain rails for all of their activity Because it's just a better solution and they don't have the creative distinct biases that we do And so we're really excited about that intersection we're spending a lot of time there And we've talked to a couple of the agent guys and we've had them on the podcast and talking about it And the things are like AI agents they're not humans you can't go get them a bank at like You know you can't just go get them a bank with anyone right because they're not even beings They don't have a social security number You can't go set them up at the bank accounts. So what do you do you set them up at the crypto wallet and all of the sudden They're able to actually try like transact and do things and it gives them a lot more freedom And the other part of this that I find ironic is that there's two areas where everyone's saying It's a bubble we could be at the top right now and it's AI in crypto right the two areas that you said are the fastest growing In the US economy. It's where all the attention is towards and for all these different reasons You know, maybe it's AI maybe it's chat bots maybe it's defense and on crypto Maybe it's stablecoins maybe it's tokenization maybe it's Payment solutions maybe it's all these other things and they both have so many different Ways to succeed and I think ways that they will succeed Yet people are still looking at both of these AI and crypto and saying they're a bubble we could be at the top It's overextended how are we going to actually make money off these things and that's the most common thing that I see How are we going to capitalize off of this from a monetary standpoint and so are the companies that are that are investing in these And it's funny because Bryce like you said earlier people said the same thing about like the internet and social media and these different platforms And people like how are they actually going to capitalize off of all of this and all of their users And it's cool that they have this But how do they make money fast forward to 2025? I mean They are the most valuable companies on the earth and it's like how could they not make money at this point? You look at it and they've capitalized on it a gazillion different ways and there were trillions of dollars And it's funny what's happened in like seriously less than less than two decades They have gone from how are these things ever going to be possible? They're a bubble to now being these like Trillion dollar evaluation companies that are just the behemoths of the world Just a tale as old as time it seems like And you know people are are going to call for bubbles And all the fast growing things because of how much Exciting things there are going on but I'm cause might know we're at the top of the hour And that's all the time of yours that we have so before we let you go We just want to thank you The inventor of the debt Cosmo Zhang who's the general partner and one of the general partners at Pantera Capital Where could people kind of follow along with your story your journey And any resources you want to share we'll have those below in the show notes Yeah, awesome you guys can find me on Twitter at a Cosmo underscore Zhang And then and you know you should we encourage everyone to follow what we're doing in Pantera You can go to our website Pantera Capital dot com subscribe to our monthly blockchain letter Where we talk about all the things that we're seeing and we're excited about Incredible. Thank you so much for joining us today and for your generous time and everybody at home watching Thank you for your support and your interest come back next week same time same place We'll have some more great guests for you take care