Uniswap vs SEC: The Bull and Bear Case

Santiago Roel Santos

For every team in crypto that fails, it gets ten times, at least ten times more press than a successful one. And as an industry, I think we could all just embrace a little bit more of that mentality where it's a really small pie. Right now, we're all in the game of expanding that pie, and I think that type of behavior should be called out on. Should be called out and also, you know, discouraged. Yeah, so what I did yesterday, I think, is complete bullshit.

It's like, guys, like, if you're really believing your tech, if you believe in what you're doing, like, just stick at it. Like, why fud? If you are an empire listener, hopefully you've played around on chain. And if you have done that, you know that transferring assets across different chains is a pain, to put it nicely, that is why we are incredibly excited to have the Wormhole foundation as a partner of the Empire podcast Stewards of the Wormhole protocol, supporting over 30 different blockchains and six different runtimes. Stay tuned.

Jason Yanowitz

Later in the show, we have a cool thing that you can claim, which is a wormhole nft just for Empire listener. This episode is brought to you by Monad, which has not only the highest performance evm l one architecture ever built, but also the wildest and craziest community in crypto. Monad's internal devnet is live and public. Testnet comes out soon, so make sure you join the Monad community today at Discord GG. Forward slash, Monad.

M o N A D, Monad.

What's up, everybody? Welcome back. It's marathon week, so we have a sick santi, an injured santi, a complaining, rambling santi. So, yeah, welcome back, folks. The TLDR is.

Santiago Roel Santos

The Santi is getting fucking old. Like, you know, this is like, I'm facing my own demons in reality. But anyways, Gm Jim. Jim. So we got the.

Jason Yanowitz

Can you say which marathon is Boston Marathon. Boston Marathon, baby. I've qualified a number of times over the years, and this is the first time I'm actually doing it. I went to school here today. I.

Santiago Roel Santos

It's really. It's the first marathon in the US, so it's like, you need to qualify. So it's the most prestigious. So anyways, I'm excited. It will also be, you know, there's like six world major marathons.

This is my 6th, so I'm gonna get the over in Chicago, Boston, but Chicago, London, Berlin, New York, Tokyo, this last Boston. So the hard part, what makes Boston Boston is like. There's just like, the break heartbreak hill. So today I actually went and ran the last twelve k of the course. It's pretty uphill, I gotta say.

So I'll be. I'll be needing all the good vibes. Is that at the end of the race? Yeah, it's like the second half. Nice.

Last like mile 1920 onward. It's like. So just legs have given out. People are like crawling up the hill. Yeah.

Anyways, many times I wonder why I subject myself to this pain and misery. But I also wonder about the crypto. Too many ways of your life this way. This week has been really interesting. I think we.

There's been a lot of news stories, right. So I think we can just do the regular round of just covering a lot of the. Yeah, there should be plenty of content. Yeah, let's do it. Let's do it.

Jason Yanowitz

Yeah. News of the week. By the way, we have two really good podcast episodes coming out. So Tuesday we've got one with Stephen Federer or Goldfederer from the CEO of off Chain Labs and kind of the co founder of Arbitrum and stuff like that. I don't know what his title should be, but yeah, really good episode.

Basically on the last roundup, we were talking about l three s and just kind of rambling on about these l three s. And Steven came on and kind of gave the bull case for l three s. And I thought it was a really good, succinct argument. And, yeah, I mean, I kind of took a backseat in the episode, but folks should stay tuned. That comes out on Tuesday.

Then there's one with Jake Bruckman and Seth, who runs the liquid book at Coin fund, and Jake Bruckman's the co founder of Coin Fund. And that was a really good episode. Seth is about as bullish as you can possibly be. He's. Yeah, he's calling for a.

I mean, you'll have to listen to the episode, but, like, it's probably the most bullish podcast we've had of the year. We missed you, obviously, but. Okay, so news of the week. We've got Uniswap received wells notice from the SEC. We've got margin.

Fi's co founder kind of rage quit. We've got the bitcoin having in about a week. We've got Karak, the restaking protocol, competitor to Eigen layer launched circle and Blackrock did a thing, and Sui launched a phone. Where do you want to start? I think that order seems fine.

Great. Uniswap. Let me give the high level for people who missed it. Hopefully, if you're working in crypto. You didn't miss it.

But yeah. Uniswap received a wells notice from the SEC this week. The wells notice. I'm going to ramble through my understanding of what just happened, but a wells notice is something that precedes a formal enforcement action. It wasn't really a surprise.

From what I've talking to other lawyers in space and talking to some people at Uniswap, it wasn't really a big surprise. But, yeah, still not great, I'd say. So the pending charges, I couldn't really figure it out, but it seems like the pending charges are a bit unclear. There are a series of posts from Uniswap execs. No one really spelled out the allegations that the SEC made.

Um, something, I think. It seems like something maybe about Uniswap being a broker. Uh, maybe something else about. I think it was, uh, their chief legal officer, Marvin Amore, said that securities regulators have an argument that Uniswap is operating as an unregistered exchange and a brokerage. Um, and that's very.

If you remember the coinbase and finance cases, it's the same argument that they lost already. Yeah, yeah. I would also. I would assume there's something about the uni token. If they're real, like, you don't go after Uniswap and just kind of like, half ass it.

Like, I would assume if you're going after Uniswap A, you're making it like, you're basically making a decision to go for the jugular. You're trying to take the biggest swing that you can possibly take. They've actually gone after a bunch of smaller defi protocols and they've. And they've actually won some of those, but it doesn't do anything. And so I think here they're like, boom, giddy up.

Santiago Roel Santos

Importantly, they've lost against the players in crypto that actually have the resources to. Fight and not Kipple ripple, Coinbase, grayscale.

Jason Yanowitz

I would bet that they're also claiming, or are going to claim, that uni is a security. In a blog post Wednesday night, Uniswap Labs put out something that declared that uni is, quote, not a security. It does not meet the legal definition of any type of security. I don't think they would put that out if there wasn't something there. I would also bet that they're going to take the strategy they took a while ago, which is the SEC in the case is probably going to name other tokens in the case, too.

They did that in the complaints against Binance and Coinbase. And if you think about timing. So they just got this wells notice. If you go back to when Coinbase got their wells notice, the SEC filed their lawsuit against Coinbase about two months after Coinbase got the wells notice. So I would assume maybe they get the official lawsuit, maybe comes in end of May or early June.

Santiago Roel Santos

And, yeah, it's also interesting about what would happen with the fee switch, which was obviously something that came to light and caught people's attention. I think it was like a month ago. So it would be interesting to see how that all plays out. And also kind of trickling down into the. I don't want to jump too far ahead, but the margin, five drama, a lot of it is related to the token, probably disagreements within the team.

I don't think it's a coincidence that it all happened the day where the Wells notice was public. I think emotions running high. And if you're by founder, it's not easy being a founder in crypto days like yesterday, probably really, you know, make that obvious. Right. But I thought Hayden's response, you know, he said something to the effect of, I'm not surprised.

I'm more so angry, disappointed, but ready to fight, which is something you said, which, you know, is. I don't think. I don't think this wells notice catches anyone by surprise. You know, they've. We've talked numerous times in the episode about, you know, SEC inquiries and many DeFi protocols over the years.

DeFi is one of those things where they paid a lot of attention to. It's probably closest on the regulatory kind of chopping block, if you will. And so Uniswap being the largest or one of the more prominent protocols, it's really not a surprise. Yeah, yeah. Presumably, Uniswap labs turned down, either refused to engage with the SEC or turn down the, like, turn down the SEC, like a settlement agreement.

Jason Yanowitz

Because if you remember, I'm just only basing this off the Coinbase case. But if you remember, when Coinbase, they had their lawsuit and their public comments, I think Brian Armstrong basically said that they were told to kind of shut it down as part of the settlement. And. Yeah. So I'm assuming Uniswap's just like, yeah, they're not going to engage there.

But, yeah, the Coinbase chief legal officer, Paul Grewal, had a good post. I mean, he basically said, look, regulators, at this point, if they're claiming that Uniswap's an unregistered broker, regulators have no leg to stand on here. The federal judge in Coinbase's case last month ruled that Coinbase wallet could not be conducting brokerage activities as the product doesn't make investment recommendations or hold customer funds. And that is nearly identical, I think, to uniswap here. Exactly.

Santiago Roel Santos

Paul is one of the best people that I literally have notifications on as I want to, like, stay on top of it. And he usually has very clear and good interpretations of what's going on. And yeah, people should go look at his tweet and just follow whatever he has to say. Yeah, he's one of the most important people as it relates to regulatory matters. Yeah, okay, maybe the, okay, I'll give out the bull.

Jason Yanowitz

Here's how I'm thinking about it. There's the FUD case and there's the bull case. I'll start with the, I'll start with the FUD, maybe. I think the FUD is probably that. I forget who tweeted this.

I'm sorry that I'm not citing them. But it's something along the lines of the. So the Uniswap Amm smart contracts are not run by the Uniswap company. If somehow they end up being deemed a securities exchange and not like, you know, just an order book, then that exchange is owned and operated by Ethereum validators or the LP's, not the Uniswap company. Which then starts to raise the question of, like, okay, where does this end?

Right? If they're saying that that is a broker, broker dealer or whatever, you know, whatever claim that they're filing here, which we don't actually know yet, where does that end? Like, would Ethereum itself not be an securities exchange? If Uniswap smart contracts are like, where do you draw the line? So that's like, I'm trying to f, like, this is, if I were trying to fud and be the most concerned person possible.

Santiago Roel Santos

There's, well, there's Defi regulation. Or like, there have been, like, the, one of the main, the traveling rule is something that has been brought up time and time again from, like, critics of Defi, us regulators. Like, and the point that they make is like, you know, when you're depositing money into a liquidity pool and you don't know who the, you're not kycing everyone in the pool, you don't know who's in the pooling these assets, then it's problematic. So the, you know, I guess I wouldn't go as far as saying ethereum. It probably stops in, like, if you're, if you're a liquidity provider, then are you acting as a broker?

Do you need to register and do some sort of, like, really burdensome, you know, filing requirements is. Is kind of the challenge. Right. The. Probably the most negative case is that something happens in this, in this particular case, with Uniswap being the largest amm, that sets a precedent for broader DeFi regulation, which makes it very difficult for large players, even small players, to be liquidity providers, particularly around this traveling rule, particularly around, like, you know, pools of liquidity.

And so that would be challenging. One of the things that you might start looking at is how are these pools, especially large players, like institutional players, like the market makers of the world, like, what are they going to do and what are they doing in response to this? Well, notice, because if you see a big drop off in TVL for these protocols, I think a uniswap, then, you know, it might give you some insight into how, you know, institutions are, like, thinking about it, right. I have heard, for instance, funds have stopped engaging in voting, for instance, of daos after the BZX case. That was a big, like, they're delegating to us.

Jason Yanowitz

They're delegating. Yeah, yeah, exactly. So they stopped, like, voting on daos. Right. Because then you don't have the same guarantees of, like, if you're effectively engaged in a dow, then you don't have the, you don't have the protection of like, an LLC.

Santiago Roel Santos

You're kind of piercing through that. So that was like a big ramification, even though it's not policy, but people got scared. The second now that I'm looking at is if all of a sudden funds in a similar manner stop providing liquidity or stop engaging, then that would be the sad part of these type of actions that scare away a lot of participants, especially those that are based in the US. Right. That they just stopped engaging in Defi.

So that's something that I would look at, just monitor. Yeah, I mean, it's a real bummer, right? So I have a buddy who is starting a company that should be a crypto company. Like, by all, there's a lot of transactions that happen online in this thing, and there's kind of like they. People bet against each other a little bit.

Jason Yanowitz

And I won't go into too many details because it's about to launch, but, like, it should be a crypto company. Like, it should. All signs point to being like a crypto company, but either the decision that he has to make is I'm either going to not do a crypto company, and I'm going to stay in New York. Or I could do a crypto company and go move to Dubai. And he's like, he's american.

He's born in New York. All of his friends are in New York. So he's like, yeah, it just sucks. He's like, I don't want to move to Dubai now. He might have to if he thinks that crypto is, like, the most important part of the company.

But he's like, I also might just launch it, not as a crypto company. Get it off the ground, raise the money, get some traction, and then hopefully, if we get some better regulations, then I'll. He's like, I'm fine with even worse regulations as long as there's regulatory clarity. He's like, I just. I want to build a company, but I don't want to go to jail.

So, yeah, this is just like, you're. You're just pushing the best founders offshore. It's. It's. It's really a bummer.

Santiago Roel Santos

It has been going on for a while. You had a great tweet about it. You remember that episode with Athena that we asked the question, okay, so basically running, we asked Arthur, like, why did you do it as bitmex, basically, this tokenized hedge fund model? He's like, well, you needed to have a neutral party that was like, from a regulatory standpoint, would be probably easier to get off the ground than if we, Bitmax, as an exchange, were to launch this. And that was like, that tells you everything you need to know about how hostile the regulatory environment has been.

Obviously, he's no stranger to how that and dealing with regulators for a variety of reasons, but it's just sort of interesting. There's a lot of regulatory arbitrage happening here, and I think the smart jurisdictions, like Singapore, Hong Kong, Dubai, like the Emirates, even places like the United Kingdom, like you guys decided to do Dallas in London. London's been way more proactive and friendly towards just being sensible of crypto regulation, which is really a shame when you think about the leader in innovation in many other fields. Yeah. Let me give you the bull case.

What is the bull case? The bull case is that I think Uniswap will win. I think Uniswap will win this case, and this will end up bringing a lot of clarity for the industry in the US. And if you look at, like. If you look at why we have bitcoin ETF's today, it's because grayscale, like Grayscale, fought back and won their case.

Jason Yanowitz

And that opened the floodgates for bitcoin. ETF's like, these things have real ramifications when you win or you lose. And I think Uniswap is really well positioned to win. And that could, I think that could completely open the floodgates for, like, I think this could be the. I think, like today, this week, this could be the bottom for, for DeFi or at least for like the OG ETH DeFi players who are like, in the spotlight from regulators.

Santiago Roel Santos

I definitely agree with you.

Again, I don't think anyone was surprised that Uniswap got this wellness notice. It probably would have been better if it got two years ago. So the fact that it got today, to your point, I think I agree with, which is you compress the time to get regulatory clarity. What else is needed? You won the ETF battle.

Coinbase is like winning a lot of the different allegations. Kraken is also fighting back. This. We need, we need a big case as it relates to Defi and we haven't had one. And this will be the big case that paves the way for regulators, for everyone to really say, all right, we gotta get our act together and put out regulatory clarity and guidance and policies in place.

And I think this is just a necessary prerequisite in that, in that sequence. And you almost want to like, I don't think anyone can disagree. You'd rather it happen now than like five years, because if it happens in five years just means, like, clarity for Defi just gets delayed more and more. And I don't. To your point, any regulatory clarity, whatever it is, is better than the current environment, which is, you know, regulation by enforcement without any clarity or rules, which is really exhausting and stressful and anxiety inducing for me, anyways.

Jason Yanowitz

So we'll see. We'll see. It was also interesting, Doug, what's this man's name? I forget the guy's name. Doug something.

The CEO virtu came out and supported. He actually, it was kind of crazy to see this. So Virtu is one of the largest market makers in the world. There's like Citadel, Drw, Jane Street, Susquehanna, Hudson river and Virtu. Like, I think those are probably like the five to seven biggest market makers in the whole world.

And Doug, Doug Sifu, he said, best of luck to you, Marvin, talking to the chief legal officer at Uniswap. Best of luck to you. Gary's a politician, not a regulator, as is his head of enforcement, who is just as awful as the New Jersey ag. We wouldn't come settle with them either when they demanded unsupportable ransom demands pulling for you guys. So now you've got, like, think about how crazy that now you've got the, you've got one of the largest market makers in the world collaborating and saying, hey, we support you guys, you decentralized Amm over here.

It's just cool. I mean, what Uniswap basically allows is anyone to be a market maker. And it's actually pretty interesting. I don't think anyone can disagree. Like, the novelty of amms, like, anyone that I talk to in traditional finance and explain uniswap, they're like, wow, that's pretty cool.

Santiago Roel Santos

And it is sort of a very novel piece of technology that allows anyone to be like, sort of like levels of playing field, anyone to be a market maker. So it's one of the bedrocks of Defi. I don't think it's going away. So, yeah, it's really nice to see traditional finance people come out in support of Uniswap. And I'm also happy that SPF is no longer in the fold because he was one of the largest critics of Defi for obvious reasons.

Like, he was a very toxic force in DC. Now that he's not here, I'm happy that it's happening now. Not when he had way more influence in DC before FTX collapsed. So, yeah, really good stuff, I think. Yeah.

Jason Yanowitz

All right, moving on. Margin fi's. Marginfi is a bar and lend protocol. In Solana, they'd gotten to be the biggest, one of the biggest, top three, maybe. I think at one point it was like solent Marginfi and Camino, they were all kind of buying.

Santiago Roel Santos

I think Marginfi at one point was held over a billion in TVL. Now it's gone down over the last 24 hours since his transfer. So Edgar Pavlovsky was the CEO of Marginfi, and he basically pretty abruptly resigned on Twitter. There was a kind of tweet exchange that I think kicked things off. There's always been kind of disagreements, it sounds like internally, and also big push on the community.

They have a points program, but they've kind of gone back and forth in terms of, I think also internally in the team of, like, should they release a token? Obviously, day like yesterday when Uniswap received the wells notice, definitely kind of contributed to kind of feudal the fire. Then there's also a drama within a protocol in terms of the rewards. I think that they were accruing to the soul blaze. Soul blaze.

That was probably nailing the coffin that kind of like, opened pandora's box, if you will. Yeah, I think so. Soul blaze, basically on Tuesday or Wednesday, had started to, like, launch some accusations against margin five. Basically the they reward holders of its be soul and blaze tokens with more tokens. These are called emissions depositors of the sole blaze tokens on Marginfi also get reward payouts.

Jason Yanowitz

But for the last eight days, the payments via marginfi hadnt been getting to the b soul and blaze token holders. And so they kind of came out against them or something like that. So then theres this tweet, and then theres this tweet. Someone said, drop the token. And Edgar said, after today, it feels right to maximally push off any kind of token.

We'll see what I can do internally to brick this Sats dart, who's kind of big Twitter guy, said, common margin Phi L. Grow up. And Edgar said, you grow the fuck up, you dirt sack. And that was kind of the beginning of the end. And then a couple hours later, Edgar announced, I resigned from Margin today from working on margin five from the research arm, from all of it.

It's a world class team. It really is. But I don't agree with the way things have been done internally or externally. I've said it many times, I'll say it again. But those of us who are privileged enough, who get to choose what we work on every single day, et cetera, et cetera, something else.

Something else. You're an investor in margin five. So what do you think of all this?

Okay, so if I ever quit blockworks, right? Like, here's what would have to happen. First off, like, you just can't really quit your own company. But second, I guess you can. I'd have to get a CEO lined up, or I'd have to tell Mike.

Mike would have to take the CEO role. And then you have to definitely tell your investors. You got to call all your investors. Like, doesn't seem like this happened at all. I don't know.

Did Edgar reach out to you guys?

Santiago Roel Santos

No, not to me. The chat was pretty quiet, and then there was just links to tweets, and I think I was just kind of following it from the sidelines. So there's a telegram chat for margin fi investors. There's a telegram chat for most investors. Like most investors, it was just.

It was just kind of a bit of a surprise. I don't have the inside story. I'm sure there's merit to both sides, and I'm not really going to comment other than I support marginfi. I think the nice thing about protocols is that, you know, smart contracts are smart contracts. And I think, you know, it's sad.

I also. I also think it's sad to see some other people dancing on the grave and really, you know, coming out and taking advantage of this situation.

You know, there was a vampire took by Solend. I understand that there's competitors, there's rivalries. I just don't think it looks well when you. And this will tie into the Karak Eigen lair discussion later on. There's just ways of conducting yourself.

And I understand this space is kind of crypto. Twitter is important, but just, like, don't. Don't react. Like, respond. That will be a common theme that I'll keep saying over, over.

It was in my mistakes episode. Like, you don't have to react. The mob will, like, pull it out from you. Take your time. Like, there's no, like, what was the benefit of being so public about it and, like, being.

And then, like. And then, like, it felt like a downward spiral. Like, there was just, like, a number of threats kept going around of, like, just the responses and the level of aggression and just keep going, because going up and up, and you can get caught up in that. So, anyways, it's just people need to be more professional in this space. We want to be taken seriously, and, you know, it's both a beauty and a curse that this space is very open.

Jason Yanowitz

Mm hmm. Every founder has one company that they despise, and it's usually your biggest competitor or the person you feel most threatened by. And at some point or another. Yeah. A never let them know that, baby, at some point or another, something bad is going to.

Hopefully for you, something bad is going to happen to them. They're going to. You're going to out execute them. They're going to fumble the bag. You're also going to make your own mistakes when they do inevitably fumble the bag, like every company does at some point in their long story history.

You just don't want to dance on the graves. Not at all. Not at all. It's so bad form. You don't want to punch below your weight.

Santiago Roel Santos

So whenever a founder comes to me and I ask, and they're, like, very focused on the competition, I'm just a distraction. It's a weak founder. I will not invest in that most of the time. Sometimes I learned that after the fact. Other times, I'm like, I may do investments in a particular vertical.

And I always ask the founder, hey, what do you think about this company? They're like, oh, you know, they're trying to do what we do. If you want to invest in them and burn your money, I won't tell you. No. But we're just better.

I was like, okay, that's what I want to hear from founder. It's always, like, a bit of a red flag when the founder says, oh, you know, yeah, like, they're trying to do what we do. Like, definitely don't invest in them. Like, I will. I'll kick you out of the.

I'm like, again, things. Another lesson. You can't control what your competitors do. Why focus on what they're doing in open source? The only mode is, can you out execute?

Can you out ship your competitor? And I think, like, you mentioned the episode that we recorded with Steve from Arbitrum, Steven from Arbitrum. Talk about a world class team. I think Arbitrum, top to bottom, is one of the best, most well stacked, technically, and also just professional teams in crypto. And they just, like, embrace that, and they're in their lane.

They understand their strengths. And I think, like, they just play to that. They're not focused on, you know, we asked them about, you know, optimism. We asked them about other competitors. Like, you know, it.

We asked them about fraud proofs and optimisms. Like, we hope that they're. They figure this out. That's. That's the right type of, like, founder.

I think that's the best class. Best in class founder. Not the guy that's trying to vampire attack and shit on, you know, a founder that just quit and, you know, is taking advantage of that, like, really bad luck. Really, really bad look, and I just, like, just don't do that. And I had the opportunity invest in solent.

I'm happy I didn't. I'm very happy I didn't. And I will not touch that. I will not even deposit in that, and I'll stick through margin five. I mean, it's good team.

It's continued to build. Like, sort of these things happen, so I don't have a full picture. I obviously want to understand what the continuity is, but things also move on.

Jason Yanowitz

Do funds have that same dynamic? I promise you, if you ask any company founder, they have one company that they're, like, internally, they're kind of like, they try to compete with. Would you say funds have that as well? You know, who's winning deals when you're losing? For sure.

Santiago Roel Santos

I never paid too much attention to it. I knew what my weaknesses were, and I just knew other funds had better, were better at certain things. That I wasn't. And I would always be of the mind that, like, when I talk to a founder, I'd be like, yeah, we want to lead, but also we'll leave space for other funds that are going to complement, because I don't even today, I don't pretend to be good at everything. I know what I'm good at.

I'm not also good. Know what I'm not very good at. And I know who else is better at me than certain things. I'm not going to waste my time trying to, like, be the most technical person in crypto. That's not going to happen.

I know who's really technical, so I'd rather be, hey, go talk to paradigm. Because they have, you know, one of the. They have Sam, they have. Which they have Georgios, they have Dan. Like, they're very stacked in that front.

Go talk to them. Bring them in the cap table. Like, I want to make this a self fulfilling prophecy. Or, hey, go talk to the framework guys, or go talk to parafy. Like, I think what you don't want to see is certain funds have this dynamic where they think they're the best at everything.

They block. They take out most of the rounds, and I think that's at the detriment of companies because I understand fund sizes are getting bigger and bigger and you want to maximize your allocation. But at the same time, there's a balance between rounding out the cap table, maybe not with another fund, but definitely angels. There are funds that even go as far as leaving a very tiny sliver for angels. That happened in the optimism round.

I didn't get the chance to invest with an angel. I was like, okay. Then I went out and invested in arbitrum. I'm happy I did. But at the time, I was looking at optimism and I wanted to invest, I couldn't because, you know, there was no space.

And I thought that didn't make any sense at all. So I'm sure it does happen. Like, there are funds that end up taking too much credit for what they do, and founders really resent that. And it's very well known which of those funds actually are. You never want to be that.

You never want to be a fund that sings your praises. Let founders and other people sing your praises. Just don't. Just know. Yeah, it's a really bad look.

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Jason Yanowitz

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We got bitcoin having nine days. Is it priced in? Is not priced in price.

No. I'm gonna show you. I. I'm gonna show you a chart. Oh, we love chart porn.

We love chart porn. Here's your full blown part. Chart porn. Hot phase down. Having hot phase down.

Having hot phase down. Having. So you're saying is every phase incoming? Yeah, yeah, yeah. Well, this is also the rainbow chart.

Santiago Roel Santos

I'm happy you didn't pull that one out. I love the rainbow chart. Rainbow is just like that. It's amazing. So this is bitcoin.

It's showing bitcoin performance since 2013, even before then. And the RSI. What is the RSI for people who don't know this. So relative strength index. But it basically, there's like trying to.

Jason Yanowitz

See if something's overbought or underbound, but. Yeah, yeah, great. So basically this would predict that bitcoin is based on the drawing of this box, which is probably not the scale. I don't know. This is definitely a log chart, by the way, you should always look at charts in log function because we don't.

Santiago Roel Santos

Even if you look at the s and p non log, you're like, wow, this is going to pop. But if you look at it in a smooth log scale, which this one is, then it makes things, I guess, less anxiety. So this would predict the bitcoin would probably hit what it just says, 700,000. This is like Kathy Wood. Oh, yeah, yeah.

Jason Yanowitz

Okay. We're going to up to, well, 700k. Based on stock money, lizards trading future. Okay, well, the box may not be drawn to scale, but if you infer that, I'm just going to know. Play with this.

Santiago Roel Santos

It would be like bitcoin could go up to like 500,000 and you wouldn't blink because this would be like, how it normally has. I will say go wood. You're saying, what is it, over a million? Dude, should. You should have been there for Seth gins from coin.

Jason Yanowitz

Fun. That man is bullish. I mean, I recorded a podcast with Jake in another venue, and he was talking about, like, world coin being like. You cheated on the empire pod. So, dude, listen, I get invited to other pods, dude.

Santiago Roel Santos

I know. Anyways, crucify me now. Anyway, he said that, like, these guys, like, pretty bullish. He was like, all right, like, fine. But yeah, I want to drink that kind of kool aid because I.

Jason Yanowitz

Here's what I'd say. What is bitcoin's price today? Things still above 70k. We've got the SEC suing uniswap. We got still coinbase lawsuits.

We've got GBTC having big old outflows. Like, we've got. We're like, we're a week out from the having that's going to remove $12 billion of annual BTC supply and has the potential to be like, another ETF like catalyst over the long term, like. Yeah, bitcoin out a lot. Talk about news.

We have an l two s like. These who are my portfolio actually that, by the way, I was talking about this in December 1 of our predictions. Year in predictions was bitcoin is going to have its moment where ordinals, like the taproot update was. 2021 really has paved the way for more accessibility. Like, ordinals has just been a huge thing, right, where miners just wake up to the huge revenue potential.

Santiago Roel Santos

There's all this excitement and now you've had obviously stacks and Babylon, a few others. But like this week Meso announced. So shout out to Matt and the thesis team. They were the guys behind, or the team behind, you know, keep and TBTC. They've just been building the in Lolly.

There's a team that's built like a lot of products around bitcoin. And I led the round when I was a parafy investing in thesis in the studio. I just think they're really good builders and now I had the privilege of investing in Meso, this particular, like l two for bitcoin. So I'm really excited about that. That was the one that I was talking about like at the beginning of the year when I was like, when I made that and people like, what is it?

What is it? I couldn't because it was in stealth and obviously we record a podcast with Matt from Ark Arch. Ark Arch. So people should go listen to that because both you and I are investors there. So yeah, it's really exciting.

I mean, I think it also is coinciding with this happening eventually, which is pretty exciting. So yeah, it's good to see the amount of activity when I think about catalysts of bitcoin, like bringing more capital, like making that dormant capital base more productive, whether by allowing bitcoin holders to invest in oracles. Now two out of the three largest NFT collections are in bitcoin. Just the purchasing power of bitcoin holders is huge. And that's just ordinals.

Like now you're going to see hopefully more economic possibilities. That's all thesis for Meso and Arch list for the episode is just as opposed to an l two. This is just like at the native layer, bringing parallelization and just more functionality without having to bridge over into an l two environment, which is really ambitious. But I think, anyways, I think it's nice to see bitcoin like just the community itself, like just more innovation there. So yeah, I think, is it crazy when I think about like, okay, what needs to happen.

Obviously, this is supply and demand, but like, I get. I guess I am more of a believer in bitcoin today than before, because you're seeing all this innovation. All right. Remember when you sold all your bitcoin? I did.

Jason Yanowitz

I. Do. You buy back into bitcoin or. No, I'd rather invest in these teams. I.

Santiago Roel Santos

For me, it's higher beta. Do you own any spot bitcoin? Nope. Do you own much spotty?

Some farming and stuff. Yeah, but. But, uh, I own more spots at Lana. You don't say. What?

Jason Yanowitz

You don't say. Look at this. This was kind of cool. So this is TD bank putting out a literal ad.

TD Bank

In early 2024, bitcoin's price reached new all time highs. But what's the cause? Well, bitcoin's price is determined by demand and supply. Just like a stock. If there's more demand from buyers than supply from sellers, the price goes up.

But if the opposite is true, the price goes down. And recently the new US bought bitcoin. ETF's have increased demand significantly, but there hasn't been a significant increase in supply. In fact, there's another event happening in April of 2024 that will reduce the supply of new bitcoin entering the market. It's called bitcoin halving.

Bitcoin was designed so only 21 million coins can be created. But instead of flooding the market with all the coins at once, a supply of new coins is slowly released into the market every day. As the name suggests, having cuts the supply of new coins in half roughly every four years. This will continue until around May of 21 40 when all 21 million bitcoin will be on the open market. So how has the price of bitcoin behaved after the previous halving events?

Well, following each halving, prices climbed up significantly. Although history suggests that bitcoins price is ready for more new highs in 2024, its not a guarantee. There are other factors that could greatly impact demand and supply, which ultimately determine bitcoins price. For more information about investing in bitcoin with TD through ETF's, watch our video. And to open an account online with TD direct investing, click the link in the description.

Jason Yanowitz

But it's crazy. Like tv banks, one of the biggest banks out there, $100 billion bank. And yeah, they're out here like running an ad for the having. It's just like once, once banks and once financial institutions realize that they can make money off of crypto, they will push that thing. And we've seen it at blockworks.

Like we're now getting like we used to make on the advertising, sponsorship side of our business. It used to be like Coinbase or Uniswap or someone else reaches out to us and they want to buy ads or sponsorships or boost at a conference. Now it's like, yeah, now it's traditional financial institutions who have bitcoin products, and they're like, hey, we want to go reach these big hedge funds. Are you going to push a commoditized ETF or are you going to push the bitcoin ETF where you can earn way higher fees? Right.

Santiago Roel Santos

How about incentives? All right, let's talk restaking. Okay. Okay. Croc launched.

Jason Yanowitz

They want to introduce universal restaking for everyone. It's designed by the Andalusia team, which I think previously built. What did they previously build? Risk harbor. I think it was.

Santiago Roel Santos

It was risk harbor. Yeah, risk harbor. That was my first skill after that, paraphy. That was 2021. Yeah.

So framework myself. There are a bunch of others in the mix. Yeah. So my understanding here is like, it's kind of like eigen layer, but you're saying that you can do redo, you can do restaking on any protocol. You can do restaking on Solana, you could redo, restaking on maybe Celestia, whatever.

It is, by taking those tokens and restake. Yeah, yeah, exactly. So I don't know. I mean, you're, I think, pretty big investor in Croc. Would love to hear your thesis for this and your thoughts on that.

Well, I mean, the, I think these are one of the more thoughtful guys that have thought about insurance. That's why they reached out to me, because insurance and risk, no surprise, I've been thinking about that for a long time. I think there's way more opportunities to introduce just more risk management and security in the space. And that was my thesis, investing them way back when it was risk harbor. Over time, I think the strategy is while they rebranded to Andalusia Labs, and then now they launch karak, which is a l two purpose, built to, as you mentioned, take in a lot of other assets beyond ETH for Restigra.

In the conversation that I've had with Drew and Rove, I think one of the things, when people think about risk, they think in very binary terms, whereas this goes back to portfolio construction. Moskowitz theory, portfolio construction back in the eighties, where there's this idea that you can introduce riskier assets in the portfolio and actually make the aggregate portfolio safer because those assets may not be correlated.

And so that obviously was a huge breakthrough moment for allowing pensions and other investors to invest in riskier asset class, like alternatives like real estate and hedge funds and private equity funds. And I think it's a matter like, when you think about, there's a purist camp within restaking and says only ETH, because that's the most pristine collateral, and fine, I hear that argument. That's sort of like the moment these guys come and say, no, no, why would you stop? Just with, presumably you could take in other assets. The question is not so much should you or should you not?

It's not like a binary decision. It's like, what is the appropriate amount of other assets that you should be introducing? And I think that's at the heart of what the founders and the company sort of aspires to do to make crypto a safer environment. Like a more. I don't want to say antifragile, but a more robust environment.

And, like, I believe that. I think that there's a time and a place to allow other assets for restaking. And the nuance is to what degree. It also reminds me a lot of the difference between, fundamentally between compound and Aave. In the early days of defi compound, if you look at the assets they support, it was very purist, was very like bitcoin and ethereum and then a few of the major ones.

Aave, on the other hand, took the approach of being way more agile and focusing on the risk parameters and saying, no, we're actually going to be agile in supporting a lot of these assets. They're new assets. It's just the ratio, the parameters that you set. And I think that's why Aave really took off. And today is just by virtue of TBL and a number of the metrics, is kind of the leading money market in Ethereum.

Defi, at least, and I think that's my thesis for crack, is there will be a far larger opportunity to allow restaking for other assets, particularly Solana, like celestia, some of these other assets. And so I think that's the opportunity in the market that they're carving out. Let me ask you this, Santi. So what do you think about this is like, this strategy, to me, is just a go to market strategy. Eigen layer dominates ETH, and they're saying, look, if we just did, like, e three staking.

Jason Yanowitz

Yeah, but if they just said, we're just doing ethaking, like, what's your differentiator? So their differentiator here, as I understand it, is, I mean, this is. I just realized there's a blockworks article about karak. And it says, I guess we asked one of the founders, like, what are the similarities between Eigen, Lair and Karak? He said, in the sense that both teams are building a staking protocol that enables other products or projects to access economic security to infrastructure layers.

Yes, they're similar. Similar to Eigen layer. Khrak has its own version of AVSS, dubbed validation as a service, or Vaas. However, unlike Eigen layer, which enshrines itself solely on Ethereum, Grok introduces this idea of universal security, or restaking for everyone, where anyone can provide crypto economics with any asset on any chain. So when I read that, I'm, like, super smart.

That's basically at some point, that was a go to market. That was a strategy to try to gain market share. Historically in crypto, that strategy actually doesn't. I have an argument why that will work, but historically, that won't. That hasn't worked.

Right. The infrastructure folks who have had the most success focus on just one ecosystem. Lido, Ethereum, cheeto, Solana, tensor Solana, magic eat. What about magic eat? Now?

Santiago Roel Santos

Bitcoin. So that's why I think. Okay, so that's the one, that's the, that's the counter. But metamask, Ethereum, Phantom, Solana. I think one of the best product decisions in the last couple of years by a crypto company was Magic Eden, launching support for bitcoin.

Jason Yanowitz

And I didn't think much of it at the time, but if you look at it, that decision is now helping them win back market share in Solana. Yeah, just capturing the user, right? Like, there are users that hold both multiple assets. It makes me think, like, are we moving to a world and crypto? Like, I think this is just an example of crypto developing.

We used to be in a world where there were the Solano users, there's the ETH users. Now people are like, I don't give a damn where I'm using my stuff. And I think, like, magic Eden was the first example, but I think you could probably see it with Kroc. Like, if I hold and Mike blockworks. Mike had a good thread on this.

Like, if I hold soul and I hold ETH, maybe I'd just rather go to a platform where I can restake both, then do Eigen layer plus something else. What's one of the biggest themes that I think we can all agree on? Chain abstraction. Yeah. So I think in that manner, the customer acquisition cost might be lower for something like karak.

Santiago Roel Santos

The funnel is just wider. So it's sort of like a bet also that these other non ETH ecosystems continue to grow. If you believe in a multi chain world, yes. I mean, that happens on a relative basis. There's just more growth there.

And so I think it's a smart move on their behalf. Doesn't mean that Eigen Lair can't be successful. I mean, I think ultimately, also, like, this market is going to be big, and so, which is, like, kind of surprising. The response that you saw from the Eigen layer team, like, a lot of it was very hostile. Again, don't understand it.

There's a lot of criticism there. I'm obviously biased. I'm an investor in Karak. I also know the Eigen team. And so I just, it was very perplexing to see that it was odd, the response that you saw from the Eigen team.

I was like, stay in the lane. Like, you are the dominant leader today in terms of assets. I'm clearly biased here, but, yeah, I also, I didn't understand it. Yeah, a lot immature from my perspective. What do you think about the.

Jason Yanowitz

I don't really know much. I remember risk harbor, but didn't follow anything about it. But I saw people saying, like, oh, people like, you know, talking about Korok. Like, no one realizes they're the same team as the people who rugged risk harbor. And I guess, like, risk harbor.

That's why I'm literally reading a tweet. It's like risk Carver exited terror with 7 million USD from an underwriting fund. Like, blah, blah, blah, et cetera, et cetera. I know. Truly nothing like what, what happened with risk.

Santiago Roel Santos

But I mean, right after yesterday, and this was something that came up. It's like, literally, it's, it's fun. Oh, they make it seem like the founders took this money. It's like, no. Oh, Victor Chang is the CSO.

Jason Yanowitz

Oh, wow, that's cool. Ah, yeah. Okay. He posted the actual story. Okay.

Yeah, nevermind. Cool. Yeah. No shortage of fun. No need to spread fud santi like you usually do.

Santiago Roel Santos

I usually do. Kidding, kidding. I don't pay attention. It's just like childish games. I love the, the founders of Karak.

Just, I'm pretty close with them. I talk to them on a regular basis, especially now. And like, how you feeling, guys? I'm like, we just keep chugging along, like, again, those are the type of founders that I back. Yeah.

I don't wish any team in crypto, like, not success. I hope every team in crypto is successful because every team in crypto. For every team in crypto that fails, it gets ten times, at least ten times more press than a successful one. And as an industry, I think we could all just embrace a little bit more of that mentality where it's a really small pie. Right now we're all in the game of expanding that pie.

And sometimes it feels incredibly childish and nearsighted to focus on and having these tribal battles and going even as far as throw shade and fod on other teams building in crypto where it hurts the industry more so than it hurts or benefits them. And I think that type of behavior should be called out on, should be called out and also, you know, discouraged. Yeah, so what I can did yesterday, I think is complete bullshit. It's like, guys, like, if you're really believing your tech, if you believe in what you're doing, like, just stick at it. Like, why fod?

Why have this coordinated attack against Karak? If you have claims that they're stealing your code, which is absolute nonsense, they built the contracts from scratch, then fine. But anyways, I just think it's really childish and immature. Last story is circle. Circle announced, actually.

Jason Yanowitz

Okay, so Circle announced, Circle obviously is the issuers USDC. They announced smart contract functionality that allows holders of BlackRock's USD institutional digital Liquidity fund, Biddle, to transfer their shares to Circle for USDC. So as a reminder, Biddle if, because that was a mouthful, as a reminder. So Biddle is the tokenized so tokenized fund that BlackRock. BlackRock launched in March 2024 last month that operates on Ethereum and it just offers us dollar yields.

So someone, Biddle, allows investors to purchase tokens that represent shares in the fund and the fund invests in us treasury bills. They go, RWA. Yeah, but I don't think it actually was like, either it wasn't on main net or it didn't actually like have, it wasn't really on Ethereum. The plan was for it to be on Ethereum and everyone's like, ah, this isn't actually going to go on now. It's actually on Ethereum.

And so, and you could actually see the, you could see the contract on. Can anyone purchase it or does it have done on Blackrock and be us person? Kyc? I don't know. I see it on their website right now.

I think it's just an, I don't, I see it on their website. Doesn't, there's no disclaimers. It's an ERC 20 token.

That's a good question. I don't fully know, actually. Okay, yeah, that's interesting. Okay. So what's really happening here?

I mean, this is a big thing, like a big step forward for tokenization. So biddle, if you look at the market share on RWA XYZ, the market share of tokenized us treasuries, biddle has 25% of the market dominance. So the people who are ahead of that is like Franklin Templeton, which is built on stellar. So it's really interesting. You've got like Franklin Templeton on stellar competing with Blackrock on Ethereum.

I'm like, oh, my God, this is. It's, yeah, it's happening. So interesting. Anyone? Here's the, here's the prediction.

Santiago Roel Santos

Yeah. If the world ever sees a US CBDC, it is just, it is the US government putting the stamp of approval on circle and saying, circle, we will give you our Federal Reserve accounts. Nice. Go do it on ETH. We're fine with that.

Jason Yanowitz

But that'd be big. Yeah, yeah, yeah, it'll be great. I mean, I think stablecoins sharing a lot of the yield is something that will continue to persist, and that's going to be ultimately good for stable holders. Natively. Like, you earn, you get a kit, you get part of the yield.

Santiago Roel Santos

That's what they're doing right on the back end, like Coinbase. Look at Coinbase earnings.

They started breaking it out last quarter. They're going to continue, hopefully keep breaking out the amount of interest income that they're getting from deposits for the USDC product. They're obviously taking that and depositing, like, super low risk instruments like treasuries. And part of that yield is they're sharing that with users, depending on how much deposits you have on their platform. But that percentage, I think, will continue to grow, particularly as other stable coins, like, start doing this and just compete against USDC.

When will it be really interesting, maybe for another episode or some of your analysts to look at? Like, there are surveys of, like, what percentage of the US population or the world population holds stable coins and in what capacity? Like Tron, for instance. Like, I think that's one of the most, the most popular one in, like, emerging countries. But, like, if you were to take a bet, I think one of the best bets that you can make in crypto is that over the next ten years, the percentage of people worldwide that hold a stable coin is gonna grow more than any other crypto asset in the world, and then take a finer view on, like, which stable coin.

But I think just broadly speaking, like that, that is like a bet that I'll, if I could express one bet about crypto with huge conviction, depending on the payoff, of course. But I think that's like a very clean bet to make. What's it just more and more of the world will. Yeah. Like, it's options.

Stable coins in circulation. Like if you have a prediction market or like if you could buy options on, like, the total stable coins in circulation. I think that number grows far more than any other metric in crypto. Yeah. Interesting.

Jason Yanowitz

So we're back to. So total stablecoin. The stablecoin market cap is 150 billion. We're still under a million weekly active addresses of stablecoin users, though. Yeah, that's what I'm saying.

Pretty small. Yeah, yeah, yeah. That will explode. Yeah. Dude, good luck on the, on the marathon.

We're rooting for you. Thank you. What's your time target? What's your goal? Uh, I'd rather not say because it puts pressure, but, uh, you know, I'll be happy.

Santiago Roel Santos

I ran Tokyo a month ago, so I, like, this is a harder course.

Sub three would be nice. That's how you try to do sub three on all of them. So I'm not going to get greedy. I'm probably not going to pr. I'll run the first half, which is net, downhill.

Boston's really tricky because I try to, like, conserve energy and then run the second half faster. But you can't do that in Boston. Well, because you have hills. So it's my first time running it, so I'm just going to be conservative and probably run the first three quarters, like, holding back a bit. And then if I feel good, I'll unleash.

I'll unleash it and try to, like, go for it. That's what. Full fucking send. Get that. Get that.

Jason Yanowitz

Motivation. Put on the Empire podcast. And.

Santiago Roel Santos

Up only. Up only, baby. Shout out to everyone who's list subscribed to the Empire newsletter. We have over a thousand. We're growing by 100 today, so we've got over a thousand subscribers.

Jason Yanowitz

Subscribe, show notes. You know what to do. Nice, nice. Good, good pod. Appreciate you guys tuning in.

I'll see you guys Tuesday for Stephen, the Steven episode, and then next Friday roundup. And then the week after that, we got a Jake and Seth from Coin funk. I'll be in Dubai in 2049. I will record an episode there with the move baptos and movement labs Rushy, which we've had on the pod. So that'd be really exciting for people to get out another perspective on that ecosystem.

Santiago Roel Santos

Just move in general. Boom. Good stuff. Thanks, everyone, for listening. Cheers.

Jason Yanowitz

Hey everyone, thanks for tuning in to today's episode. Don't forget to claim your free wormhole Nft exclusive to Empire listeners. Hit the link in the description of today's episode and fill out the form to claim your unique wormhole NFT today.

Uniswap vs SEC: The Bull and Bear Case | Roundup

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