Source: Podcast Empire Podcast - Markets Bounce Back, The Hyperliquid Thesis and Kraken Raises $200M

Moderator:

Jason Yanowitz (co-founder of Blockworks)

Santiago Roel Santos (Santi, crypto investor, former ParaFi Capital partner)

Edit introduction

Santi made a cautionary judgment on the show: This is the strongest time that traditional hedge fund managers have shown interest in the crypto industry since Paul Tudor Jones called Bitcoin "the fastest horse on the track" in May 2020, and this time the focus is not on BTC, but on Hyperliquid.

The catalyst is the Iran conflict. Commodities require pricing venues on weekends when traditional markets are closed. The median error in Trade XYZ’s weekend oil price forecast for Monday’s opening is only 50 basis points. This allows the proportion of commodity positions on Hyperliquid to rush to 17%, already surpassing Ethereum. Santi predicts that commodity trading volume will exceed that of Bitcoin within the year, and Hyperliquid’s market value is expected to hit US$100 billion from US$25 billion.

Two other signal points: Kraken’s valuation has been cut from US$20 billion at the end of 2025 to US$13.3 billion, and Deutsche Börse invested US$200 million to take 1.5% of the shares (the discount may come from the structural difference between common stocks and preferred stocks); the SEC made it clear this week that self-hosted DeFi front-ends (MetaMask, Phantom, etc.) are not subject to broker-dealer registration rules, ending DeFi one of the world's largest unsolved legal issues.

Quotations

Hyperliquid and the weekend market

This is the most interest I’ve seen in crypto from traditional hedge fund managers since May 2020 when Paul Tudor Jones called Bitcoin the fastest horse on the track, and that interest is in Hyperliquid. The weekend market is a big reason why. (Santi)

Hyperliquid essentially moves CME’s matching engine, order book, clearing house and margin system to an integrated blockchain. Every transaction, clearing, and funding rate is written in a public ledger that cannot be tampered with. (Santi)

My prediction: Commodities trading volume on Hyperliquid will surpass Bitcoin within the year. It's now worth $25 billion, and I think there's a clear path to $100 billion. (Santi)

I give the probability of US compliance approval at 30% to 40%. If it is indeed approved, it will be an instant re-rating. CME’s market value will be US$117 billion. The market always needs a benchmark. (Jason)

Hyperliquid’s institutional adoption path

I got a call this week from a large hedge fund manager asking me to explain Hyperliquid to him. Their team spends most of their time on Twitter, and trading inspiration comes from Twitter. Their fund couldn't buy HYPE tokens directly, so they bought Hyperliquid's DAT (Digital Asset Treasury, a digital asset treasury company), which has now become one of their largest positions. He said it was one of the few assets he could buy that was not related to AI trading. (Jason)

Trading philosophy and personal positions

My core logic for continuing to add positions is to look at my own consumption structure. The companies I spend the most money on year after year (Amazon, DoorDash) are the ones I add to. A senior said that the younger you are, the more alpha you can get from being 'close to the front line', and there will be less and less alpha on the Internet in the future. You have to see it with your own eyes and use it to discover it. (Jason)

Linkage between macro and encryption

The past 10 trading days have been among the most abnormal since 1950. The S&P 500 gained 9.8% and is in the 99.7th percentile of all-time 10-day gains. (Santi)

I think crypto’s good performance is because the macro and stock market are good, and the correlation is very strong. Bitcoin hit $75,000 as markets bet on the odds of passage of the Clarity bill rising from 50/50 last week to 60% to 65% now. (Jason)

Regulatory shift

The SEC told MetaMask, Phantom, and basically all DeFi front-ends this week: you are not a broker. This ends one of DeFi’s biggest legal mysteries. (Jason)

L2 and "melting ice"

The L2 track has been a piece of melting ice for more than a year. In 2017, if there were no users and no data, you could sell dreams; today the encryption market’s patience for white paper narratives has almost reached zero. (Santi)

I think a batch of agreements will really come to zero in this round. Instead of settling in the dust and waiting for the next round like in the past, the market will simply give up. Funds will only be concentrated on assets that are really outperforming like Hyperliquid and Bitcoin. (Santi)

Next round of opportunities

My three main lines of investment are: the demand for stablecoins outside the United States will continue to expand and is far from being met; the world will only become more volatile; and there is a serious affordability crisis globally. These three pillars have corresponding implementation paths on the chain. (Santi)

The three hot topics last year were derivatives, prediction markets, and stablecoins. Projects that do these three things can get financing and users, while projects that don't do these three things will be crushed. There will be three new things this year, I just don’t know what they are yet. (Jason)

I guess one of the three things this year is tokenization, specifically what traditional issuers are trying to do on public permissionless networks. (Santi)

3. Full text of the dialogue

Opening: Review of podcast data and content differentiation in the AI era

Santi: This is the most interest I have seen in crypto from traditional hedge fund managers since May 2020 when Paul Tudor Jones (a well-known macro hedge fund manager) called Bitcoin "the fastest horse on the track", and the point of interest is Hyperliquid (on-chain perpetual contract exchange). The weekend market is a big reason why.

Jason: Hello listeners, and welcome back to Empire Weekly. Santi, how are you doing?

Santi: Nothing special, I’m happy to be back on the show. There’s a lot going on in the crypto market and the world in general, and it’s good to live in the moment.

Jason: Santi has been taking jobs from our producers recently. He imported all of Empire's data into Claude, using the new Opus 4.7 model, and asked "how to make Empire better."

Santi: Not exactly, but I did do it. I exported the data from Megaphone and YouTube, watched all the shows since 2021 episode by episode, and ran a correlation analysis with crypto asset prices. We often say that "play volume is linked to encryption prices", but actual data shows that the correlation is not that high.

Jason: In other words, not that relevant?

Santi: Yes. Encrypted content can be roughly divided into two categories: one is purely price-based and will explode on YouTube; in-depth interview content like ours performs better on Spotify and Apple, but not on YouTube. Retail investors on YouTube have gained the most followers in the bull market for anchors, and they follow the market.

Jason: YouTube’s algorithm will demote us. The TLDR is that we want to make more sensational headlines, but that is not our brand tone. I've talked to Brian and David at Bankless about this a lot, and their thumbnails are so over the top. But I have too much pride and there is a line that I will never cross, and I will not make content like BitBoy.

Santi: Respect their track.

Jason: Never become BitBoy, and never become Joe McCann. Okay, let’s get to the point.

Market: The S&P’s 10 consecutive gains and the two sides of the AI narrative

Santi: Wait, I want to talk about the market first. Two weeks ago we were talking about a 10% market drop, and now the Nasdaq just completed a 10-day winning streak.

Jason: Yes, this is very rare historically. I went back and checked the data, and on average, 10 consecutive gains only occur once every 5 to 7 years. It’s only happened a handful of times since the dot-com bubble in 2000.

Santi: To be honest, the last 10 trading days have been one of the most abnormal since 1950. The S&P 500 gained 9.8% and is in the 99.7th percentile of all-time 10-day gains.

Jason: I was thinking about this today: Just stay optimistic. As long as you are optimistic, you are in the right place. I don’t know how this cycle ends, if it will end, or if this is a new paradigm, but the data is there and cannot be ignored.

The in-depth coverage of Hyperliquid we saw last week in Colossus, the interview magazine founded by Patrick O'Shaughnessy, was great. On a macro level, I'm willing to change my perspective at any time. I recently listened to a 4-hour podcast by Leopold Aschenbrenner (former OpenAI researcher who now runs a hedge fund). This guy got it right when he was fired from OpenAI two years ago. An hour or two before the podcast he was discussing: We're going to get to AGI sooner than most people expect, and that's the existential risk of a nuclear arms race level once it falls into the hands of a different regime. He advocates nationalizing AI labs and opposes open source. You could hear the tension in his tone. He feels that few people really understand how fast and far this thing will go, and the market’s response to this is not serious enough.

Santi: Is that the Situational Awareness he wrote two years ago?

Jason: Yes. I tweeted "I finally finished reading Leopold's article on AI. You should read it whether you are interested in AI or not. Here are my notes." That tweet exploded, with over 10,000 favorites and 1.6 million reads. But the stupid thing about me was that I only took notes and didn’t buy anything.

Santi: The man bought it himself. How big is his fund now?

Jason: I don’t know the initial size, now it’s $5.5 billion. He changes positions frequently, and his current largest positions include Bloom Energy (hydrogen energy company), which he invested $300 million in and is now worth $1 billion; and SanDisk (memory chip). By the way, his partner is Chief of Staff, Anthropic CEO Dario.

Santi: The amount of information is okay. Before he started a hedge fund and joined OpenAI, he also worked at the Future Fund, which was a funding project of FTX's Sam Bankman-Fried. In that podcast, he also talked about his experience working with SBF and the lessons he learned from it, which was quite interesting.

Jason: Let me give you some data about FTX: SBF took 7.8% of Anthropic’s shares at that time. Did you see the news this week? Anthropic is valued at $800 billion in new round. That FTX holding would be worth more than the entire Coinbase market cap.

Santi: Yes, it turned out that the money was liquidated by the custodian, and about US$1.5 billion was sold.

Jason: Crazy. FTX creditors eventually recovered the full amount, even with a premium. Public market investors are very nervous right now and are always looking for something. There is both fear and excitement about AI, two sides of the coin. This sentiment brings wild volatility and pullbacks, but the market essentially wants to move higher. Everyone realized that this was a runaway train that could not be stopped.

Santi: On the one hand, no one knows how to model the negative and positive effects of AI into valuation. These laboratories are amplifying their moves one after another, which causes tension if they can't keep up. On the other end, after listening to Leopold, Elon, and Dario's podcasts, you will have a shocking feeling that "we are at the critical point of human civilization." The rocket flew to outer space and came back, and the market was both nervous and willing to move upward.

Trading philosophy: Find alpha through consumption habits

Jason: Tell us specifically about your position?

Santi: I sent that Situational Awareness tweet and sold nothing after that. I'm just a bag holder, I just put it away when I buy it. I'm not a very interesting podcast guest because I trade very little. I took Robinhood from $10 to $15 all the way to $125 and am still adding to my position. Same goes for DoorDash, the company I spend the most money on year after year is the one I add to my position.

Jason: This logic is really smart. I always remember what you said before: Look at the annual changes in your consumption. For some companies, you spend more and more every year. Amazon is one, and so is DoorDash.

Santi: I took a class when I was a freshman, and my friend’s father came as a guest. He was running a hedge fund that was probably $5 to $10 billion. He said all of his best deals in his career came from watching what he and his children spent. When his daughter said, "I want an iPhone," he bought Apple; when his daughter said, "All my friends are using Snapchat," he participated in the early financing of Snapchat. He told us, a group of 18 and 19-year-olds: You don’t realize that being close to the front line is alpha. Every year you get older, it becomes harder to gain alpha. He also said: We are moving towards a world without alpha on the Internet. You have to see it with your own eyes and use it to discover it.

Jason: The Reddit forum used to be all alpha. There is a hedge fund that makes money by poaching Reddit. Before the release of the "Barbie" movie, he read the movie reviews on Reddit and found that "this movie is a masterpiece" and that Rotten Tomatoes rated it very low. He took a large position in Mattel (Barbie manufacturer) and made a lot of money. So you can open an instance of Claude and let it scrape various information on Reddit.

In-depth analysis of Hyperliquid: Wall Street’s new favorite

Santi: Okay, onto the news.

Jason: There is too much to talk about: Tether endorses the user rescue plan of Drift (perpetual contract agreement on Solana); Tether releases a new wallet, which are two pieces of Tether news; Rob’s VC manifesto article; Kraken raised $200 million in financing and is preparing to go public; Hyperliquid’s in-depth report on Colossus. Start with Hyperliquid.

Santi: Let me introduce Colossus first. Patrick O'Shaughnessy runs the Invest Like the Best podcast and the Positive Sum asset management company. He has created a new paper-plus-digital magazine called Colossus, which specializes in in-depth features on technology and financial figures. The quality is world-class. What they wrote this time was the story of Jeff (Jeff Yan), the founder of Hyperliquid.

Jason: Let me steal a point from you. You said something very accurate in the episode we recorded with Logan (Logan Jastremski): It’s been a long time since I’ve felt outsiders care so much about an encryption project. Just as Polymarket exploded into fame due to the presidential election controversy, Jeff now captures Wall Street's imagination. The geopolitical catalyst this time was that everyone wanted to trade commodities on the weekend, and Hyperliquid caught this wave of traffic.

Santi: I think this trend will not stop even if the situation with Iran and the Strait of Hormuz eases. The train has moved on and you're going to see more volume and activity coming in. Currently, the trading volume of non-crypto assets on Hyperliquid has exceeded that of crypto assets.

Jason: Really?

Santi: Commodities are now Hyperliquid’s second largest asset class, behind Bitcoin. Let me make an accountable prediction: commodities will surpass Bitcoin within the year. Hyperliquid could become a top five crypto player by market capitalization. Now at $25 billion, I think there's a clear path to $100 billion. Coinbase and Robinhood are both of this magnitude. As long as Hyperliquid continues to execute well, they have the technical talent, they have won the hearts of crypto traders, and are now winning the hearts of Wall Street traders.

Jason: Give you the data. Bitcoin accounts for 25% of Hyperliquid’s holdings, commodities 17%, Ethereum 16%, the HYPE token itself 10%, indexes (should be S&P with leverage) 7%, L1 tokens 4%, stocks 4%, Solana 3.5%, and then meme coins, privacy coins, and DeFi.

Santi: I think the most interesting story in the current encryption circle may be the growth of the oil market on Hyperliquid. Thanks to the Shoku team for developing Trade XYZ (a derivatives front-end on the Hyperliquid ecosystem). When the situation in Iran broke out, trading volume and open interest exploded directly. Because the oil market was closed on the weekend, Hyperliquid became the only pricing venue on the weekend. This stuff crosses the mainstream divide.

Jason: We built a website called Weekend Markets (weekendmarkets.com) to display all this data. When traditional markets are closed, Trade XYZ is the only active price discovery venue. With billions of dollars in trading volume over the weekend, the median error in forecasts for Monday's opening price was just 50 basis points. The price of Trade XYZ is now the most informative signal in all financial markets relative to Friday's closing price. All traded stocks and commodities, charts, heat maps, and methodologies can be seen on the website. Traditional institutional investors may now be more interested in Hyperliquid weekend markets than anything else in crypto.

Santi: Oil has a daily trading volume of US$500 million and open interest of US$350 million.

Jason: People outside the crypto community often ask you questions. Are they primarily interested in commodities or stocks?

Santi: Of greatest interest is Hyperliquid itself. I can say that this is the biggest interest in crypto among traditional hedge fund managers since Paul Tudor Jones called Bitcoin "the fastest horse" in May 2020, six years later. This time the point of interest is Hyperliquid, and the weekend market is the core driver.

I got a call this week from a hedge fund manager asking me to explain Hyperliquid to him. Their fund is very large, and he and his team spend most of their time on Twitter, and trading inspiration also comes from Twitter. This incident just illustrates the importance of Twitter. He said one of the top traders he knew tweeted about Hyperliquid and he just researched it, listening to all the podcasts Jeff was on. Their fund could not directly buy HYPE tokens, so they bought Hyperliquid’s DAT (Digital Asset Treasury, a digital asset treasury company), which happened to be the bull case of DAT. It’s now one of their largest positions, and he says it’s one of the few assets he can buy that isn’t tied to AI trading.

Jason: I just asked AI to explain Hyperliquid to TradFi: "Imagine CME moving the matching engine, order book, clearing house and margin system to an integrated blockchain, and every transaction, clearing, and funding rate are written in an immutable public ledger. This is Hyperliquid."

Hyperliquid compliance prospects: CME is the best benchmark

Santi: Is it possible that Hyperliquid will undergo a massive re-rating once it is approved for compliance in the US?

Jason: I am not a lawyer or a regulator, and it is beyond my professional scope to say this. But Hyperliquid did hire Jake Chervinsky (former chief legal officer of Variant Fund) to chair the Hyperliquid Policy Institute. The logic is this: The Dodd-Frank Act after the 2008 financial crisis requires that futures must be traded through regulated entities such as CME and Cboe. The purpose is transparency and all transactions must be visible to prevent black swans. If you are Hyperliquid or Jake, your argument against the CFTC is: you originally established this regulation because you wanted transparency, and you were afraid that something would happen again. We have DeFi, all transactions are fully transparent, and the clearing mechanism basically passed the stress test on October 10. If they haven't already, they should. Imagine Hyperliquid being approved in the U.S., immediate and instantaneous revaluation. CME is now worth $117 billion, and the market always needs a benchmark.

Santi: I give this probability about 30% to 40%.

Jason: Have you ever heard any negative views on Hyperliquid when talking to hedge funds?

Santi: Not much. Most people have just begun to understand it and have not formed a clear long-short view. Don’t forget that Solana’s protocol revenue reached over US$100 million at its peak, most of which came from meme currency transactions.

Jason: The peak of REV (Real Economic Value).

Santi: Yes, in 2024 or January 2025, Solana reaches $500 million REV, almost all of which are meme coins. Now the question is: Should the market give the same valuation multiple to the protocol revenue generated by meme currency trading and the protocol revenue generated by TradFi commodity trading?

Jason: Of course not, the income quality of commodities is higher.

Santi: So I think Hyperliquid can do much bigger than that.

Jason: I looked at a piece of data: the protocol that was mentioned the most among all guest speakers at DAS (Digital Asset Summit, a summit hosted by Blockworks). We crawled all panels, fireside, and keynote. Bitcoin 742 times, Ethereum 143 times, these two are absolute outliers. The third place is Hyperliquid 66 times, Morpho (lending protocol) 59 times, followed by Solana, Canton, Espresso (shared ordering protocol), Circle, Stellar, Avalanche, Jupiter, Tether, Maple, Optimism, Superstate. Espresso ranking 7th is quite unexpected.

Drift rescue plan and Tether's "killing multiple birds with one stone"

Jason: What other news are you paying attention to this week?

Santi: Tether invests in Drift to help protocol users recoup losses (Drift suffered an estimated $285 million vulnerability attack earlier this year). This plan is similar to the idea of ​​Bitfinex issuing tokens to repay victims. Affected users will gradually recover their capital through future handling fees of the agreement. This time Tether is providing support of up to approximately $127 million, for a total size of nearly $150 million.

Jason: The specific mechanism is that users must use USDT to trade on Drift to get their money back. It is a win-win situation for Tether. It not only achieves public relations, but also locks in the use of stablecoin. Many people on Twitter compared USDC. It is said that someone contacted USDC before to freeze hacker funds, but Circle's response was not as quick as Tether's. This is a loss for Circle.

Santi: This is a very smart mechanism to encourage users to continue using the protocol. To some extent, this is the only feasible option. The other option is to do large-scale issuance dilution at the bottom.

SEC heavy guidance and Clarity Act progress

Jason: There’s also new guidance from the SEC. They stated this week: broker-dealer registration rules do not apply to self-hosted DeFi frontends. The main attack on DeFi in the previous Gensler era was to require these protocols to register as broker-dealers. This is fundamentally contrary to the permissionless nature of DeFi and is basically impossible to achieve. On Tuesday, the SEC’s Division of Trading and Markets issued a staff statement excluding crypto wallet interfaces from broker-dealer registration. The SEC clearly told MetaMask, Phantom, and basically all DeFi front-ends: you are not brokers. This ends one of DeFi’s biggest legal mysteries. They created a new category called "covered user interface": if you help users convert transaction parameters into on-chain instructions, you fall into this category. Hosted wallets are excluded, and self-hosted wallets, browser plug-ins, mobile apps, and software embedded in self-hosted wallets are all covered.

Santi: I’m surprised DeFi tokens haven’t revalued as a result.

Jason: Robinhood is being revalued because of favorable regulations. They have lowered the minimum equity requirement of $25,000 for day traders. Overall, Aave rose by 20% this week, and Bitcoin hit $75,000. I think it’s mainly because the probability of passage of the Clarity Act (encryption market structure legislation) has increased. Last week you asked Empire listeners if Clarity could make it, and everyone said 50/50. I was in Washington DC last week and everyone said 50/50. Now it's probably up to 60/40 or even 65/35.

Several crypto celebrities went on CNBC and said, "If Clarity fails before April 1st, it will be completely dead." This statement was somehow accepted by everyone. But as far as I know, even if it is delayed to May 1, or even August, or 2027, there is still a chance. Of course, the longer it is delayed, the more junk provisions will be stuffed into the bill. Some people say that if it is delayed until mid-2027, this will become a "DeFi bill" (meaning it will be heavily transformed by interest groups).

MicroStrategy adds 11.5% yield to STRC

Santi: I tend to think that encryption performs well because the macro is good and the correlation is very strong. On the Bitcoin level, MicroStrategy raised money through STRC (perpetual preferred shares) this week to buy nearly 14,000 Bitcoins.

Jason: The total holdings are 780,000 Bitcoins, the total investment is close to US$60 billion, and the average cost is US$75,000. This is one of their largest acquisitions. Now the market not only looks at the premium or discount of mNAV, but also looks at the dynamics of STRC.

Santi: There is a protocol called Saturn. TVL (Total Value Locked) is rising very fast. The essence is to package STRC on the chain, and the annualized return is about 11.5%.

Jason: I went to MicroStrategy’s offices in Tysons Corner, Virginia on Thursday and the entire meeting was about STRC. STRC’s annualized dividend is 11.5%. At a time when on-chain DeFi yields are generally low, this figure is very attractive. I won’t discuss the risks today, leaving it to a later conversation. We should ask someone from Saylor or MicroStrategy to come on the show to talk about it. What everyone cares about is "where does this 11.5% return come from, what is the sustainability and risk."

Kraken’s valuation halved and the exchange’s business model dismantled

Santi: Speaking of Kraken, they took $200 million from Deutsche Börse.

Jason: The valuation has dropped from $20 billion at the end of 2025 to $13.3 billion, which is a pretty big discount.

Santi: I didn’t see the valuation number. It may be a secondary market transaction (secondary), and ordinary shares are purchased instead of preferred shares, so there is a structural difference.

Jason: Yes, Deutsche Börse bought a 1.5% stake at a $13.3 billion valuation. My guess is that the discount is about 35% since it's common stock.

In addition, Kraken had a small-scale security incident, which had nothing to do with user funds. It was an internal problem within the support team. I mention it as a footnote. But again, Kraken is a very well-run company with the potential to achieve Coinbase-level scale. Arjun (Arjun Sethi, co-CEO of Kraken) is doing a great job. I might look at secondary market opportunities.

Santi: I invested in Backpack (an exchange founded by Armani Ferrante). It was much smaller but very interesting. Armani is a very good builder. A core issue in evaluating an exchange's business model is the ratio of fixed costs to variable costs. Exchanges are essentially linked to crypto prices and are very profitable when prices are high, but the downward cycle will be compressed. I have done a comparative analysis of Coinbase, Robinhood, and Kraken before. Robinhood is the best, with diversified business (high proportion of non-crypto trading volume), and it can significantly reduce costs in a bear market. Coinbase is second and Kraken is third. But that was analysis before Arjun took over. They later reorganized the team and invited many capable operators, and the DeFi team was built very well. So maybe my previous judgment was fair. Any business must look at operating leverage and flexibility. In a bear market, profit margins cannot be crushed. This is the perspective of a cross-cyclical investor.

Stock on-chain and X’s new cashtag function

Jason: Where are the stocks on the chain (X Stocks)? I've seen some chatter on Twitter about pre-IPO stocks like Anthropic.

Santi: The trading volume is quite small, without the dramatic performance of oil.

Jason: I have data. The current transaction volume of Pre-IPO related stocks is about 17 million US dollars, which is still very small. I was chatting with the X Stocks team at Kraken a few days ago. They and other exchanges believe that stock listings will have a huge breakthrough this year. The X Stocks team, Kraken and others are betting on this.

I'll show you a tweet from Nikita, the head of product at The everything-app vision moves forward.

Scroll controversy and the "ice effect" of the L2 track

Santi: How is the Ethereum ecosystem lately? Except Tom Lee said ETH is going to $62,000.

Jason: I don’t know, I’m not that in-depth. The ECC (Ethereum Community Conference) has just ended, and the atmosphere is average, but there are still some interesting projects underneath.

Santi: Ether.fi moved from Scroll to the Optimism mainnet, and more than 70,000 cards were moved.

Jason: You are an investor in Scroll, I don’t know how much you can talk about. Scroll seems to have done something rather unscrupulous. When Ether.fi wanted to move from Scroll to Optimism, they manually increased the on-chain gas fee. One of the founders of Ether.fi tweeted that "this situation is more outrageous than everyone thinks."

Santi: Let me give you some background first: Ether.fi is of great significance to Scroll. If Ether.fi is stripped away, there will be little TVL on Scroll. I have no first-hand knowledge of what was going on inside. The public on-chain data is as follows: In six days in early April, Scroll increased the fee for publishing data on the Ethereum mainnet by 1,000 times, two orders of magnitude. As a result, users paid more than $50,000 in additional fees. The timing is indeed fishy, ​​as it happens to be the window for the Ether.fi migration. The data on the chain is there, which is quite ugly.

Jason: What's wrong with Scroll?

Santi: I am an early investor. The ZK-rollup and zero-knowledge proof routes were hot at the time, and I thought this route itself was valuable and meaningful. The co-founder of Scroll was a deep cryptographer, so I made a bet. But not just Scroll, many projects on the entire L2 track have faded into no man’s land. Can you tell me which L2 performs best? Vitalik’s article earlier this year about the L2 roadmap was itself an admission that the market had long been aware of this. The price performance of Optimism, Arbitrum, ZKsync, and others speaks volumes. Scroll is now valued at $8 million, giving it a fully diluted valuation of $45 million, which is $45 million below its first round valuation. What a terrible situation.

Jason: Can it come back? What is needed? Where does volume come from?

Santi: This reminds me of a conversation I have had with many infrastructure providers: they are melting ice, whether they want to admit it or not. In 2017, without users and data, you can sell dreams. Any founder, Elon or Scroll, has to sell a dream first and then deliver on it. The encryption circle has been in a "suspended period" of white papers and attempts for a long time, and the market is patient about this. Not today. A year ago, I said that there would be a serious differentiation between "haves and have-nots" in the crypto community. Today, this differentiation has become very large. You can see it by comparing Hyperliquid's activity with other projects.

Three investment main lines and the new cycle of "the agreement truly returns to zero"

Santi: The neobank category is very popular recently. Plasma (stablecoin dedicated chain) and Ether.fi are both doing it, and Aave also has its own neobank attempt. As an investor, I have three main lines, which are also reflected in my personal positions:

1. The demand for stablecoin outside the United States will continue to expand and is far from being satisfied;

2. The world will only become more turbulent;

3. There is a serious affordability crisis around the world.

These three pillars have on-chain implementation paths and are laid out according to this idea.

But most other projects are difficult. Solana’s REV also fell from a peak of $500 million to $20 million. What can get Solana back? There are still some good things going on at the bottom. Western Union chose Solana as a pilot. The team and engineers are also very good and are really thinking about the problem. But in my conversations with these teams, I feel that we must go for the jugular and use capital or unconventional means to nail ourselves into a lasting agreement.

Finally, I want to say that in this round, I think the agreement will truly return to zero, rather than settling into dust and waiting for the next round. The past thinking was "hold dust, dust will become moon", such as Lend merged into Aave. This round won't be that common. The market would rather funnel funds into Hyperliquid and Bitcoin.

The next round of three major narratives and RWA trends

Jason: Besides Hyperliquid and Bitcoin, when you talk to ordinary people, is there anything else that they might be interested in or have heard of?

Santi: stablecoin and prediction market are hot spots, but prediction market currently has no tokens.

Jason: There is a delay in these things entering public awareness. What we have always said is: the three hot spots last year were perps (perpetual contracts), prediction market (prediction market), and stablecoin. Projects that do these three things can get financing and users, while projects that don't do these three things will be crushed. There will be three new things this year, I don't know what they are.

Santi: Will you?

Jason: I guess so. The word tokenization (stock on-chain, RWA real-world assets) is overused, but it will be one of the three hot topics this year. I met Daniel (Tokeny founder) a few days ago, and the ERC-3643 standard he spearheaded is becoming the mainstream standard for RWA. RWA is the focus this year. I said we should talk more about what traditional issuers do and will do on the chain in the program. I assume these activities occur on public unlicensed networks.

Santi: The arc of Jamie Dimon’s (JPMorgan CEO) change of position is quite interesting. From being completely opposed to encryption, to now he is clearly leaning towards “We can do blockchain”. The gap between his positions and Larry Fink (BlackRock CEO) has never been smaller, and the gap is narrowing every month. He has been a fierce opponent of the Clarity bill and once publicly attacked Brian Armstrong (Coinbase CEO). I think TradFi is stalling for time before Clarity is passed, and wants to ensure that its own views are reflected in the bill.

Jason: Jamie Dimon went on CBS and said they were considering "prediction market services."

Santi：什么叫 prediction market services？他们就是想进来抽佣。不过大家都想做 prediction market。对我来说，prediction market 就是衍生品、CDS（Credit Default Swap，信用违约互换）的另一种形式，边界越来越模糊。

YouTube 评论环节与收尾

Jason：YouTube 评论环节来了，我一段时间没读了。先听差评还是好评？

Santi：先听差评。

Jason：评论一："我喜欢 Santi。那个号称全职在加密行业却完全错过 Hyperliquid 的 Santi。他投的 Inversion（项目）上线前就归零了。" 评论二："我喜欢 Santi，但他听起来根本不用 DeFi，很多年没撸过羊毛了，他凭什么聊这些？"

Santi：我从没说过我够格。

Jason：评论三："Santi 什么都是，但绝对不是逆向投资者。他擅长告诉我们已经发生的事，不擅长预测未来。"

Santi：骂得不错。

Jason：评论四："就想让你们知道 Empire 是我最喜欢的加密播客，我住在曼谷所以没法来 DAS。" 这个理由合理。所有差评都是冲你来的，没人骂我。

Santi：还有人讨论你长得帅、观点好。 Rob（Rob Hadick，Dragonfly 合伙人）还让整个 Dragonfly 团队在帮你删负评。

Jason：本周内容推荐？

Santi：Leopold Aschenbrenner 的 4 小时播客，我刚听到 2.5 小时。有一期讲 Amazon VP Ethan Evans 的播客大家推荐，我准备听。

Jason：我回头重新听 David Senra 的 Founders 播客和他的创始人访谈。 DoorDash 的 Tony Xu 那期我已经聊了很多次。刚听完 Evan Spiegel（Snap 创始人）那期，还行。有些人天生有讲故事的 "it factor"，有些人没有。 Tony Xu 有，Evan 勉强有。

我本周的 "it" 推荐是 Allbirds（已经破产出售过的鞋业公司）。他们做了一个 AI，allbirds.ai，是个 ChatGPT 套壳，你问任何问题它都回答 "shoes shoes shoes"。这股票昨天一度涨了 10 倍。

Santi：出现这种事的时候我们可以确定，离顶部比离底部近。

Jason：我的每周内容是第一次看《宋飞正传》。一天工作完就只剩 20 分钟用来让大脑关机，我们最近在做的几件事还没公开，节奏很快，20 分钟里我经常一集都看不完。

Santi：我文化断层到什么程度？ 《宋飞正传》我一集都没看过。我小时候根本不看电视。

Jason：你现在房间里有电视吗？

Santi：没有。手机也不放卧室。

Jason：我卧室也没有。买这房子的时候前主人墙上挂了个大电视，我当时说"卧室不要电视"，失策，应该留着的。

收尾说一下：我们要把 Empire 做得更好。接下来要多聊做有意思的加密相关业务的上市公司，包括 Better（抵押贷款公司）、Figure、Klarna、Western Union。除了 Hyperliquid 之外，这可能是下一轮周期最大的引爆点，传统公司开始实装。我最近一直在和 Framework 团队聊 Better 怎么定位，还在研究 Figure，有些挺有意思的事情。

Santi：我们前几天和 Figure 团队也通了电话，确实有意思。

Jason：好，今天就到这里。感谢大家收听，继续在评论区和 Telegram 里继续骂我们，下周见。

Santi：周末愉快。