Crypto’s Next Winners Won’t Be Blockchains

Stationation. I'm here with Austin Barack. He is the founder and managing partner over at Relayer Capital. [music] Austin, welcome to the show. >> Hey, David. Glad to be here. >> Awesome. We're going to talk about tokens today. You and I share a lot of the same ideas about a lot of the same tokens. We're going to talk about Venice. We're going to talk about Pump. We're going to talk about Hyperlid and Ether. Maybe a few others if we [music] get enough time. But I first want to talk about uh kind of your lens for investing in crypto. talk to me about Relayer Capital and the strategy that you guys have over there when you guys look at investing in in crypto assets. >> So, so it's an interesting question because crypto markets have changed so much over time. So, you're you're forced to evolve otherwise you end up in a a stagnant strategy. You know, what worked in 2017 or what worked in 2021 or two or 2024 doesn't necessarily continue to work. But there's certain themes that that I think um have found replicatable success and those are being at the intersection of growth and value. And what I mean by that is no one comes to crypto because they're looking to find a company that's, you know, growing 10% a year and trading at a 4x multiple. That's not interesting. They can buy like a power utility. Uh well actually power utilities getting a little more extend interesting with AI data centers but you you kind of get what I mean. So when I say growth and value investors are looking for companies and tokens and projects that are growing most quickly but also you have the most margin for opportunity when they're also valued very reasonably. And because capital in crypto has these very cyclical patterns where at times things are very overbid and at times things are you know very oversold you get these moments in time that often often persist where there's actually growth and value which is something you don't typically don't see. So that's kind of the the overriding theme in terms of what I look for when I look for in an asset. However, taking a step back, you know, I I found a Relayer Capital about 2 and a half years ago. Before that, I was a partner at Coin Fund. At Relayer, we do liquid and venture. Um, but, you know, leaning quite a bit more to to liquid recently because I I think that's where there's more opportunities. Um, and the two segments of the market that I found most interesting are the intersection of crypto and AI and 247 trading tokenization. And those have been the two core themes of what I've been looking at um especially this year. So that includes many of the assets you know that you mentioned at the beginning whether it's Venice or Pump or or Hyperlid or you know Ether or others. Um but yeah that that's the the general lens through which I I look at the market and and you know try and find opportunities. How do you think about like the the typical VC strategy of very early stage like speculative bets, you know, all or nothing? Is that how you lead the VC side of Relayer or does it kind of stick with the the uh the public public token side of things where you're at the intersection of growth and value as you said? Do those things match? >> Yeah. So, that that's a good question. Uh and and I guess a good distinction because that's really on the liquid side. In venture, I'm a firm believer that like >> it's very rare that the best deals are also priced cheaply. So, if you want to get into what you consider to be the most interesting opportunity, you're usually going to have to pay up for it. However, if you can get in early enough, that means at least on an absolute valuation basis, you can get in at an attractive level. So on the venture side, I still am looking at those major categories, whether it's like neo brokerage onchain defy tokenization 24/7 trading, AI, and whatnot. Um, but really the focus there is getting in at the preede or seed level where the valuations are most compelling. And you know, ultimately when you're a venture investor, you're making a bet on the team, the market opportunity, and you know, as an extension of the team, their ability to execute. So, you know, that that's where I like to to get in um you know, at that stage >> between the two sides of Relay or between the, you know, liquid public token and uh the private VC side of things, which side has been capturing your attention more? Which side has been winning in the tugof-war, if you will? >> Yeah. So, I I would say maybe like the first three quarters of the year of 2024 when I was live with the fund, I would say it was pretty 50/50. Now it's 95% liquid. Uh I think most of the deals that you're seeing on the venture side come to market are you know there are interesting deals but they're growth stage deals. They're more like traditional payments and fintex companies wi-i which I I think are also compelling and I like on the public equity side when you think of like crypto linked assets. So something like a new bank or a dlo or a figure. Um but something that I'm a little bit less excited about on the venture side. So, at this point, it's like 95% liquid where I'm spending my time. >> Is do you think that's just downstream of where we are in the cycle? Uh, I mean, it's a very interesting week for me to even ask that question because Bitcoin just ripped from like 62 to almost $80,000. And so, you know, potentially potentially the bull market is on. But, you know, nonetheless, like last week, if the bull market is indeed on, the last week would be like the last week of the bare market. And so a lot of the liquid tokens therefore present themselves as very very valuable deals. Uh do you think that's part like the reason why liquid tokens are so favored right now by you at Relayer is because of where we are in the cycle? No, I I think even more so than that, um, you know, this has been core focus for probably about a year now. And I think we've it's because we've been in such a deep bare market for for such a long time that you've been able to see this separation of instead of looking at a 100 tokens. All right, there's actually 10 maybe or five that are really really compelling that are finding product market fit that are growing quickly, you know, as an extension of that and then are also try uh priced really attractively and and if anything actually some of these assets are now priced a little less attractively but in the grand scheme of things still pretty good. Uh I mean you see something like Athena which I think everyone was looking at as like let's say if the bottom is the first inning and then the first recovery of assets is the second inning. I always thought of like Athena and Pendle as third inning assets where it's like once things heat up and onchain yields increase those are two of the protocols like these native onchain yield protocols that benefit most and you know Athena's up 40% in the last like 30 hours or something. So, so we're definitely seeing this play out. >> Let's talk about uh Venice. Let's get into some of the specific tokens here. There's a tweet from you that I'll read. In my opinion that Venice, it is my opinion that Venice's token is materially underpriced at $1 billion FDV. I think the price is a little bit higher now today. Uh or actually quite a bit higher. Uh price target based on what I consider to be a realistic scenario is $43.90. Talk to me about how you backed into that model. How do you think about VVV? Because it's not a token that really uh we've seen before. It's very interesting in terms of its value capture story and it's very uh specific in its value capture story. So when you think about valuing VDD, what are the most important things to consider when you uh create a model around it? >> Yeah. So um I so right I think right now it's actually interesting because I think a lot of more people are creating like more sophisticated models because AI allows you to to kind of build things so quickly. But I actually started my career in um corporate development and FPNA at a payments company actually. So I built this model the the traditional way from scratch which you know may maybe it's a little crazy to say but I found fun. Uh but the the way I built this model is like all right you got to start at the top. What is the business right? And the business is private and uncensored AI use being able to access kind of AI as an application through or be able to access any sort of model whether it's a frontier model or an open- source model. And they monetize primarily in two ways. So there's people that sign up for subscriptions. It's premium, so you you don't need a subscription, but you can access all the products. And then it's um you know, unless they've changed the tiers recently, it's $18 a month, $68 a month, or $200 a month. But as you know, consumers of AI know, that allow gives you a certain amount of credits. And when you run out, as people often do, you if you want to keep using the product, you you need to, you know, pay for additional credit. So that's really the second major revenue line right now which is credit purchases. And then now you have to think about like all right so what does this mean for the token and in June or or I guess maybe it was very beginning of July they they raised an equity round or $1 billion valuation uh equity and token to be clear. Um so alignment across both and you know there's a lot of scar tissue in crypto so people are like oh what does this equity mean? Um, and I think Venice has actually created one of the most elegant balances of token and equity where this is an off-chain business, right? Like the majority of this is just people using AI as a consumer application, um, signing up with a credit card, using on their computer or their phone. Um so in order to create all the relationships and you know access all the compute they need and everything like running a fully onchain business as a foundation is is just very operationally complex. So most companies you know will need an equity business. So what they've done is you have this token where you know the token benefits from burns that are happening on chain. It also has a certain utility in terms of tokenized compute. And I'll I'll get back to that in a second. Um, and the idea is like, all right, well, they're in reinvesting in growth as any business should do at an early stage when they're growing so quickly. However, all of or the majority of free cash flow of, you know, the excess of what's spent goes into the token. And that's the plan long term. They've been very explicit about that. And right now, they have two programmatic burns. So for every new sign up whether it's you know depending on the tier they burn a certain amount of tokens and for every credit purchase they also burn a certain amount of tokens. So from there you can back into like all right this is the revenue for the business. Now let me assume let me make some assumptions on what the gross margins are at the business level. So you know this is not hyperlquid with like 100% margins. It's a business with costs. So what are you know the cogs so what are like the inference costs and the related things and then what's the opex so marketing customer acquisition headcount all of that so that when I think about burns I think about in the context of like what are they reinvesting in the business what are their costs what's actually feasible to burn because you know people say they're burning 8% of revenue well if let's say as an example their gross margins are 50% they're reinvesting in the business and right now let's say their ebida margin are 10%. If they're burning 8% that means they're burning the majority of the free cash flow. So I think that's like a nuance that needs to be understood. So what I've done in my model is I look at where are credit burns today, where are new subscription burns, and then what do I project those line items to grow based on of course how do credit purchases grow and how do subscriptions grow. And then you know I'll pause in a second. Then I think about like all right, what are some new business lines and what are potential burns from that? That's the mind's product that they've been hinting at for a while, which is kind of like an app store for AI products, which is very interesting and, you know, I imagine coming in the next couple weeks. And then the other piece is what are subsequent burns that can be rolled out because you know they started first just with a discretionary burn then they did it for new subs then they did it for credits and what are new ones that that can be added and how does that all roll up? So you know right now as of you know August they are run rating at an in my estimate at 107 million of annualized revenue and um at 8.3 million of annualized births. I have that in 2027 scaling up to 336 million in projected revenue and 70 million in burns. So from there I just look at you know what's a reasonable multiple on earnings like a PE ratio and I think for a token buybacks to market cap is a very reasonable way to think of an equivalent for a P ratio and for a business that's growing directionally like 5 to 10x year-over-year which is just astounding growth. 50x is a reasonable comp if not like potentially even cheap looking at stock market and 70 million times a 50x valuation or multiple 3.5 billion for the token thinking about the projected token supply at the end of 2027 and that's how you get to 4389 which you know versus the current prices today at you know about 16 it was you know 12 when I updated the model a few days ago um I I think is very compelling I I've been trading crypto for almost a decade and I've used so many different wallets, the exchanges, aggregators, different frontends over the years. And I'm always kind of looking for the same thing, just one interface with deep liquidity across a bunch of chains and assets where I can access all the markets like per earn yield, trade confidentially, and still control all my own funds. And I've never really found this experience, and I'm always switching wallets, juggling gas fees, and just getting eaten by slippage. Near.com is not that. It feels fundamentally different to me. I can do everything I want from any chain and I keep all my activity confidential. I can even earn yield confidentially. [music] It's the way crypto should work. The near.com wallet is powered by Near and it's moved over $25 billion crosschain using postquantum signing and has run over 5 years on mainet with zero downtime. Near.com is simply the best way to be onchain and be in control. Get 20% of your trading fees back using the bank list link in the show notes. Not investment advice. Self- custody won, but it still has a usability problem. 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So like what are you kind of relying on in order to create a fair value of uh almost $44? >> Yeah. So um I I think the of that 70 million I have 29 million coming 29 million in burns from coming from the mines's product. So that's a significant assumption. That's 40% of 2027 burns coming from a new product. Um however you know I I don't make that assumption blindly. They Venice didn't have a credit purchase product rolling that existed in 2026. they rolled out in the very beginning of this year and prior to that you could you know use the frontier models and and credits as you know to the extent that you had available and then after that you you kind of had to to use other products or uh or other models or or upgrade tiers and they rolled that out in January or maybe it was February but you know beginning of this year and based on current credit purchases and this is something you can all track on chain their run rating at $60 million of ARR. So a product that didn't exist 8 months ago is now doing 60 million year of revenue. So I think you know thinking about what the business looks like in 2027 30 million for mines while perhaps optimistic because you know this is a product that doesn't that's not yet live. So there's a lot of assumptions required. I I think is something that's reasonable based on like what we've seen from the execution of the team so far. >> Let me give you some uh push back on that one which is that the credit purchases you call it a new product. It's the same product because they're just selling tokens. Venice has always been selling tokens. They were selling tokens with selling their subscriptions and now buying credits is just like another way to sell tokens. So, it's been the same product, but it's been just another way to take in revenue and really maximize amplify a product that already exists. Mines, which I agree is exciting and potentially large, we just don't know. And so, it could also potentially be a flop. And credit purchases are not going to be a flop because it's selling the same product that already exists. But mines is like a completely new line item in the Venice business. and we actually just don't know and I don't think even the Venice team knows how well Mines is going to do. How how would you respond to that? >> Yeah. So I think that's fair. Um and in that lens, let's look at credit purchases. You know, it it's an extension of just using the product more. That's fair. So let's call that like a two out of 10 in the like new product scale. Maybe mostly not a new product. I think you can think of mines as like five out of 10 in the scale of new product where it is a new product but it's not like a 10 out of 10 completely new and the reason for that is so credits allowed you to use the existing product and the existing models more the assets of it and what mines allows you to do is use the existing product more and better and what I mean by that is whether you're building out aic use cases or you using coding tools as part of your like existing um Venice experience uh or you're just doing chat prompts. The way people currently use AI today like as a regular user versus a prouser, it's like you're using different products. The the difference is is vast. And that's the core of what Minds is building. whether it's like these structured prompts or like applications to help you use AI better that I look at as just like making the existing product suite easier to use and easier to use more so and and and maybe I'm actually overestimating the revenue that will come from mines and I'm under underestimating how much mines may just increase the pace of subscription growth and credit purchases because now they're going to be using mines but in turn like using the existing products more because it's more useful. So I I continue to look at it as an extension of what's being built. But yeah, it's it's I think that's fair push back. It's definitely more new than than credits versus like extension. >> On the flip side, the bullish side of Mines I think is also worth talking about and illustrating because it also kind of um discusses Venice's positioning as a company, as a product. Uh may maybe just to illuminate minds even more as a product, there are a handful a good handful of Venice users who are like super users. And the cool thing about Venice is that it has all the models. And some of these super users, all of these super users have gotten really intimate about which models do what very well. And so some of these super users are super prompters and they pick and choose the right models for the right circumstances. And the idea behind minds is that it gives these developers uh like a developer platform like a a sandbox to create a structured model product like this like use this model and this model and this model in these ways to amplify the experience of like an average user. So, a Venice super user can create a a structure and he can they can uh present that to the rest of the Venice user base. And I think they kind of hinted at a way for like developers to actually monetize this. So, if your mind gets used a lot, you get a kickback. And so, it kind of turns it into an Apple App Store experience. And the reason why I think this is uniquely interesting about Venice is because Venice touches the end user. And I want to talk to you later about Open Router and the $7 billion Open Router uh Stripe acquisition, but this is something that like Open Router or any generalized model aggregator doesn't have as a option to them because Venice owns a direct relationship to the user. So like talk about talk about the bullish side for mines from that perspective where like Venice actually gets to they have a direct user relationship and the potential like how Venice might rerate if it actually does turn into like an open developer platform. >> Yeah. And and I think that's a big reason for why I'm modeling it at 44 and it's currently trading at 16 because I believe based on my research that this is more likely to be successful than I guess perhaps the market does right now. and and you know that's how you make a market. Uh but I think the bull case is they have 4 million historical users. Um I mean we'll it's they haven't released what like monthly active or quarterly active numbers are but by my estimates that's like at least over a million. Um, and so you have these very, very active sevenfigure user base and they're going to be marketing to each other, especially these power users. And it's not going to just be on Venice. It's going to be like wherever conversation is happening, whether it's on Twitter or Reddit or Telegram groups or Discord, because they're going to be incentivized to earn additional income for things that they're already doing by sharing those products. And I I think that's like a really really strong bullcase and like we've seen with you know like chat GPT tried to to build out like additional tooling around the product and like an app store of sorts but it wasn't very open. It wasn't prominently featured. Venice is actually going to feature mines in the midst of everything they're building. So it's not going to be this thing off to the side. Um, so I I think you know if you probability weight it the $29 million number that I have is is maybe like a fair reasonable number, but there's opportunity for for significant upside from there. And one of the things that that I think is interesting is like so they they've been chatting about this um there there's been like a few tweets and announcements around um a film festival that Venice has been you know sponsoring and part of and >> yeah film festival in October in New York. Yeah >> exactly. [clears throat] Um, and I think that's one of the things where I mean you're seeing so much content created, but I think use of diffusion models is still pretty early in terms of image and video generation beyond just like fun novelty creation. And those sorts of products perhaps most specifically are where a mindset type product could be the most useful because you have so many people that want to be creators and it's not like using a like AI chat product where you can kind of figure out and you don't even know how much your prompt versus another prompt is not useful. Whereas like if you're trying to create a one minute video and you have no idea where to start, then an app store for that becomes incredibly useful. >> I want to talk about uh the tension between value and growth on uh the Venice side. Venice has been buying back and burning VVV with uh a share of his revenue from day one. And of all AI startups that exist right now, it's probably the only one doing the value thing instead of the growth thing. It's definitely still doing the growth thing, but they're they're, as you said, they're taking a a very healthy chunk of their free cash flow and choosing to do essentially like, you know, stock buybacks and quotes, buy and burn of the V of the VVV token. And this just goes against like common sense about startups like Venice is a very young startup, just a couple years old, and it's doing stock buybacks with some of the revenue. Now we can talk about the trust that needs to be imbued in the crypto industry because of this like token equity problem and the value that uh having programmatic buybacks brings to the trust around the VVV asset. But does it concern you at all that a AI startup is doing valuebased activities rather than taking that revenue and reinvesting in growth? Like wouldn't that be like the more normal thing to do? >> Yeah, so that's a good question. Um, so there's lots of positives, lots of negatives of having a token. So it it cuts both ways. The the positive is you're able to get a ton of attention and you're able to bootstrap quickly. You're able to create new types of like token utility. Like you know, I mentioned you can lock up v uh Venice to mint a token called DEM, which is essentially tokenized compute. Gives you a dollar per day of uh of inference, which is really really cool. Um, and allows you to acquire more customers. Um but on the flip side until we have clarity act you don't have those necess necessarily those guarantees that the the token is going to acrue the value of everything that's built. The team has been very explicit that they plan to return to return value to the token predominantly so and they also plan to like they they they made it like burn every token out of existence and like I guess that's like asmmptotically impossible but like that's the the the plan of or like the >> the the gist of of of what they're going after. Um, but you need to, you know, walk the walk if you're going to say that pre-clarity act. And I think that's what they're doing. So they're they're walking the walk. But they're also doing in a way that's sustainable where, you know, right now the burns are it started with discretionary burns, which is just a couple hundredk per month. Then they're like, okay, we're going to do for new um new subscribers, but we're not going to do it for existing subscriptions. So it's like you only get a cut the first month if you're a token holder. Then they're like, "All right, well, we're have this credit purchase line item is growing really quickly. Let's do 5% of that revenue." So $5 of every $100. So they're being very deliberate to make sure they have enough money to reinvest in the business and of course be profitable. Um, but also have this signal and provide this value to the token. One of the things that's most interesting about the raise that I think sometimes gets lost in conversation that Eric the the founder was talking about is they raised $65 million so that they'd have the ability to prioritize the token but also be able to actively reinvest in the business. So, if you think about what's been burned so far, I I don't know like the I can actually pull it up from from Venice stats, but like the historical number to date, um it's I don't know like a few million bucks and they've raised $65 million. So, they've raised, you know, 10 20x what's been burned so far to be able to grow the business. So I think they found a good balance where raising outside capital getting other stakeholders involved also making those sta stakeholders token the line because those stakeholders all have um token warrants is what gives them the ability to continue to grow so quickly. Um but yeah, it's it's it's a it's an imperfect tension about reinvesting in the business and and growth. And I mean I maybe Hyperlquid is just like an anomaly of anomalies, but I don't think it's reasonable for them long term to be burning 99% of tokens unless like all of the growth comes from like all the customer acquisition growth from comes from Trade XYZ or is just like funded by the team. But maybe that goes down to like 95 or 90% down the line. And they use some of that money to just like lean into marketing and customer acquisition and and whatnot. and and may maybe they don't and you know I'm a big fan of hyperlquid so I don't I don't you know mean that in any particular way uh but yeah it's you know a certain amount needs to be reinvested and I think like to the extent that is reasonable Venice is straddling that that line very well >> so there's two main mechanisms that VVV gets burned as you've said it's uh new signups uh so different dollar amounts of VBV gets burned based off of the tier uh that somebody signs up for a Venice subscription and then the second One is API credit purchases. So you you buy $100 of credits, you burn about $5 of of VV. It's about 5%. There's one more like possible uh mechanism for VVV burn that uh the team has like potentially raised as a mechanism for burn without any committing to it in any particular way, which is uh reubscriptions. So like you buy a one-year subscription and then it runs out at the end of the year. Uh, and then if you resubscribe, if you have like a rolling over subscription, no new VVV gets burned because it's just on initial signup. So there's potentially one more addition to the VVV burn mechanism, which is, you know, subscriptions rolling over and then they're buying another year's worth of subscription. Do you have that as an input into your model for Avenous? Is that part of the $4389 model or is that something that you guys that you haven't integrated yet? that that's part of where depending on your your view of where the token is headed, my model is reasonable or optimistic. Uh but I do have that part in my model. They've rolled out new burns over time, uh programmatic burns and and I think they'll continue to do so. Um so in my model I have that beginning uh just looking uh yeah so I I have that beginning um later this year or early Q1 um depending on like the the different scenario analysis that that I have. I I think that's something that they're likely to do. But I think that's also a place where they can be measured. So, you know, if the subscriptions are $1868 or $200 a month, they could start low, see how that impacts, you know, their ability to reinvest the business and then grow that over time. So, that's also what I'm modeling out over time that like it starts low and then over time they increase that number. And for what it's worth, that's actually what I model out for credit purchases as well. So right now it's at 5% of every credit purchase is burned. In 2027 I have that becoming 10%. Because you know I think they'll be able to actually increase that. >> Oh wow. Oh wow. Okay. So I was I understanding a little bit of your model and your like stance towards it. It sounds like your model is optimistic and reasonable as in nothing is ridiculous. everything has had evidence or some supporting evidence somewhere, but nonetheless, it is an optimistic model where like all of the all of the things that are reasonable but optimistic are included in the model. >> Yeah, I I think that's that's fair. Let's call like ultimate bare case is zero out of 10, base case is five, you know, fullbases 10. You can probably call it like a I would call it a six. >> A a six on the optimism uh spectrum. >> Yes. >> Cool. Cool. What do you think about just Venice growth to this point? Has it like exceeded your expectations? The trajectory from from day one has it has been about about meeting your expectations. What can you say about like Venice's growth up to this point and what you have uh imagined for it for it in the future? >> Definitely exceeded my expectations. Um, I I first started tracking Venice when they launched their token beginning of 2025 and you know that's because I was doing a lot of work in the virtuals and AIXBT and and kind of related ecosystem. So I was fortunate to to get a nice airdrop of of VVV tokens and you know had started following since then and you know it was something that that was interesting and I kept an eye on but you know honestly lost a little bit of track of it through like all the tariffs and crazy stuff that was happening in 2025 and you know, they they changed their um economic model. It originally VVV was both the token and the inference compute token. And then later on, I think it was in August, they they created the DEM token. Um but it was actually very beginning of this year, Venice was trading at like $2. and Eric wrote this really long tweet thread about um the change in token economics, how their tokenized compute token worked, what some of the growth that they've seen lately was. And I, you know, sometimes it's nice to have this like blocked out periods of time where there's nothing else to do. Um but I was in a 40-minute taxi ride. I was, you know, traveling across town. So, I'm scrolling Twitter and I'm like reading through this whole thing and I'm like, "Wow, I guess I hadn't like kept fully up to date with what they were doing with DM and started digging in and and that's when I started building a position for the fund." Um, but I did not anticipate that the token would 10x the revenue like what I estimated at the time was maybe like in the 10 to 20 million range would do like a 5 to 10x in a period of 8 months. um that they'd be at 4 million users. I think they were maybe at 1 million users at the time. Um that credits would also grow so quickly. Um so yeah, I've been really pleasantly surprised. You know, I I chat with the the team a lot just because I'm like an active community member and I love sharing ideas, suggestions, like unsolicited feedback. So, I I appreciate that they they uh don't tell me to to uh to lay off and and you know, they listen to the ideas that I have. >> Um, but yeah, it's they it's it's really incredible. And I think one of the things that's cool is we've seen so few products in crypto that have legitimate mainstream consumer crossover that have found product market fit and Venice is is one of those. When you saw open router sell for $7 billion, what was your reaction to that from the Venice perspectives? Was that confirmation of the sector that Venice is in or did that add anything new to your perspective around VVV the token? What was your reaction? >> Yeah, so I think it just shows that we're moving to like a multimodel routing world where people are finding tons of utility of using different models for different use cases. And that's what open router is, but like more on the developer tooling level versus like the consumer level. And fundamentally that's what Venice is as well. You go there because you want privacy, but also because if you go to Cha GPT, you're using whichever model of, you know, Open AI's um latest models that you pick to use or, you know, same thing with with Enthropic if you're you're going there, you know, so on and so forth. But there's very few strong consumer products that allow you to pick whatever model is best for the particular use case they're using at that time. Um, and that's just validating what Venice is doing. Um, so you know, Open Router raised at a 1.3 B billion valuation it's like two months ago, like not really long ago, and now it's like 7x and u or more than 7x uh at 10 billion. So, I think that just reflects on what a reasonable multiple should be for for Venice and like maybe the right number was 30x before or 50x before, but if they continue to see this growth, maybe 70x is the right uh multiple. Um, so that just gives me more conviction and in the valuation analysis that I've done. There have been a few tokens in the last like six months to a year or so that have grown in price, grown in value idiosyncratically like out of the bare market. Uh where you know Bitcoin is down to flat, ETH is down to flat, but hype just like blew up in the last like 12 months or so. Venice, you know, really grew despite the bearishness in the macros. And there's been a few of these tokens uh that have grown despite just the the broad bearishness in crypto. So there there's one take where it's like oh well like once Bitcoin goes then like oh my god these are going to go even even further. But the bearish take is like oh no these like you know V what is Venice exposed to? Like Venice is is exposed to or VVV is exposed to the success of Venice obviously and actually if you know if Bitcoin goes to all-time highs and beyond say Bitcoin goes to like a4 million actually VVV has no exposure to that whatsoever. Do you think there's any sort of coupling between the macros of the crypto assets and things like hype or VVV which have grown according to their own revenues or do you think these things are like actually meaningfully decoupled and you know macro growth in crypto as an industry actually won't really show up in things like VD or hype? Do you have an opinion about that? >> Yeah, so that's a great question. Um, so I think they're partially coupled, partially decoupled, but the decoupling part is in a positive way. So, I'll start with the decoupling, which is the performance that we've seen before the move in in Bitcoin and majors. These are businesses that are growing really quickly. They're seeing like fundamental value being returned to token holders. That gives them a strong floor valuation based on just the business that's being done. And depending on how much you want to underwrite the value for the growth that they have, you know, you you can price out what they should be worth. A lot of them have been growing faster than people expected and were valued cheaper than was reasonable and that's why we saw this rerating earlier in the year. I think that continues as the business fundamentals continue and I think the business fundamentals continue. So that like non-correlated aspect should continue to do well. Now let's take like three particular assets as examples on what their coupling and correlation is to the broader market. Let's use Venice, hyperlquid and pump. So Venice I think all of the we'll start. So all of them I think benefit from the fact that they are fundamentally tokens not equities and tokens have had negative drift for the last 18 months. What I mean by that is there's no capital flows coming into crypto probably or definitively capital leaving tokens, leaving crypto, moving to equities, moving to AI, moving to other asset classes. Uh, and you know, you look at equities, equities just because of 401ks and pensions and whatnot, they structurally have positive capital flows. But the negative drift in crypto is cyclical. I don't think it's going to persist. I think that flips over time. I think it's probably just flipped. Um, which is why we're seeing this massive movement across the board. So, to the extent that VVV, Pump, Hype, these other assets are tokens, they're going to benefit from more capital going to tokens as an asset class. So, I think that's a tailwind regardless, and that's a very meaningful tailwind. Um because when people say like I want to allocate to tokens, those are some of the ones that are going to be top of the list. Especially for the people that are trying to underwrite fundamental value, whether you think about it as like traditional hedge funds or liquid hedge funds or like family office high net worth type investors um and also retail that that is just looking at it from that lens as well. um the part where it's coupled further. I think Venice has that piece. I think Hyperliquid and Pump actually have some further coupling. So Pump benefits their fundamentals from when there's more onchain activity and me more memecoin trading. We've seen an acceleration over time, but I think that's just going to like massively grow from here. We could see revenues, you know, over the last 90 days, like the 90-day average versus, you know, what we've seen recently. It's grown like 80%. I think we could see like a doubling or tripling even from here. Um so just return of onchain activity and memecoin trading very positive for pump. For hyperlquid most of the rerating came from volume in their hip 3 markets and they're like RWA markets whether it's you know commodities, stocks, indices and that hasn't generated a lot of revenue so far because they're all in in growth mode. Um the revenue the top line hasn't actually grown that much because while volume is growing so much from the RWA markets not generating a ton of revenue the cash cow has always been the crypto token business and if we see a return to flows moving into crypto and lots more activity then that's something where they're going to benefit in the part of the business where they have the highest take rate and they're actually earning the most fees. You know, if you look at they were generating, you know, like directionally just under a million dollars of fees a day a week ago. Now they generated about $5 million of fees a couple in just one day a couple days ago. So I I think the the psycho reflexivity is very very strong for something like like a pump or a hype in the fundamentals as well. >> So you think you think that a handful of these tokens that we've talked about actually get the best of both worlds? They get exposure to their own growth which obviously they do but they also get exposure to just like the the tide that lifts all boats which is the crypto markets uh pump and the perf platforms especially just because like that is they are the crypto markets that's literally their product. >> Yeah. And and the nice thing about Venice is like while it doesn't have the full extent of the tide that lifts all boats with crypto because it doesn't have that reflexivity with onchain trading or whatnot. It has at least as big of a tide that lifts all boats, which is just AI adoption, which is why I'm so excited about it because, you know, more people are using AI every day, and that that's not changing. >> There's a bunch more tokens that I want to talk to you about. Uh, but I don't I I don't want to um prime you in any particular way. So, what token We've talked about VV, so that one's done. Like, check mark checkbox on that one. Uh, what token excites you the most? like what what gives you the most like intellectual fodder to work with? Uh what gets what gets you going? >> A couple from different lens from like a finance and valuation analysis perspective. Pump I think it's still incredibly cheap. It's trading at 5x buybacks where if you look at you know hyperlquid and lighter in the 30 to 40x buybacks range. So those are much higher. But I think people ascribe a higher multiple to a pers business than pump which you know I I think you can call it I think it's not reason unreasonable to call it a durable casino business. You know people go to pump and trade meme coins looking for asymmetric returns have very short trading time horizons and and I think is similar to gambling in many respects but there's nothing wrong with gambling. It's a very big business like people are investors in win and Las Vegas Sands and MGM and DraftKings and FanDuel and I don't know like you look at prediction markets or you know zero day to expiry options on Robin Hood. It's >> a form of speculation on the line with gambling that that I think is is is not an unreasonable comparison. And trading at a 5x multiple to earnings is crazy in my opinion. I think 10x multiple to earnings is much more reasonable. That would be a 2x from current levels assuming no further growth. I I think it grows further from here. So even though pump has done, you know, a 3x in the last month and a half, two months, something like that, I I think it has, you know, a lot more room to grow based on, you know, these multiple rerating and value plays out. hype I think is incredibly interesting just because it's maybe other than stable coins the best and you know Bitcoin and and Zcash and like money from a perspective I I think it's one of the best examples of the crypto thesis playing out which is instant settlement 247 trading bringing all assets on chain and like shifting the financial system onto blockchains Um, so it's really fascinating to see like markets grow and also new use cases like price discovery for SpaceX or someone like Cerebras or or Unitry or a lot of the new IPOs happened on Hyperlquid. Like I think increasingly bankers as they set what the price for an IPO should be are going to look at their Hyperlquid screen and like all right well there that's where it's priced. I guess that's what the market is willing to pay. Um, Etherfi is another one. Um, e Etherfy I've been following probably closer than most for a very very long time and and the fun reason for that is it was actually my first venture investment in the fund. So, I started chatting with them in January 2024 before the fund was actually even live. And the fund went live February 1st um and made an investment in their series A then. And at that time, they were just a liquid restaking business. But, you know, I was after speaking with Mike and and Rock and and the team there, they just struck me as a team that was like really top desile, top percentile in their ability to execute, but also build new products based on where the puck is going and understanding that like certain products can be useful for customer acquisition, but they could become commoditized over time. And like liquid staking is one of those products. and their ability to move from liquid restaking to yield products to a credit card product to now a full-fledged NEO brokerage where you can trade any asset on chain. You can borrow against those assets. You have like an incredible credit card offering. They have their own instance of a v4 where you know they can facilitate borrow lend and and monetize that. And the way they're using stable coins to access a global market kind of reminds me of like a mini onchain new bank. Um, and new bank, you know, it's like a very flattering comparison for for Etherfi. Uh, and if they can achieve a fraction of New Bank success, that that would be awesome because New Bank is worth, you know, like $80 billion and has 139 million users. But I think the the thesis is is somewhat the same in terms of you know o offering compelling products to users in you know on a global basis. Um but doing it in a way that was fundamentally different than what was standard at the time. Um with you know new bank offering you know products that were much more kind of consumerfriendly and more internet native and etheri doing the same thing in in an global stable coin driven onchain context. Etherfi is is also doing buybacks of their own token. Their own token the unlike all the other tokens that we've talked about Venice Pump Hype their own token Ethery has really felt like it's been in a hangover from like the infra phase of crypto which we have firmly left but nonetheless like Ether is making revenue doing buybacks. Uh how do you think about Ether on the growth versus value spectrum? Are you in Etheri because there's a lot of growth left to do because the NEO brokerage is a phenomenal product that Ether is really a first mover on or is it just because like actually they're making revenue and they're buying back the token and based off of that there's actually some some dislocation in the market. How do you think about this this thing? >> So it it's both. Um it's both and let me explain why. Um, on >> the valuation, they've been fundamentally valued like a liquid staking or liquid restaking business for most of their history, which meant people were really excited about it in the beginning of 2024. It was like an 8 billion value FTV at the peak at the time that people thought I layer was going to be worth 15 or 20 billion. And you know, valuations declined over time as there's been less excitement in liquid staking and liquid restaking or restaking generally. And you even see this play out as recently as the Ethereum uh in inflation reduction proposal where Etherfi was down 10 plus% on that day as was Lido. And Etheri is a fundamentally different business today than it was then and it's definitely not the same business as LIDO. So it just shows how the market has like still not that made that transition in perception of what Ether's business is today. And when I say that, what I mean is today 65 plus% of Ether's business comes from their Neo Bank product. So it's from credit card usage and it's from borrow revenue of people borrowing uh against their balances to to use the credit card. and only 35% is from yield and staking and that's something that's been shrinking as a percentage of business with with the neo bank part growing over time. I think that portion of the business even accelerates further as they've offered access to tokenized stocks, wide variety of assets. So now instead of a handful of assets, hundreds of assets and a much more compelling product than they even had before, which I think was already compelling with some of the the updates that they recently released. So I think it's something that should be valued differently than it's being valued today and on that context is actually quite cheap. It's you know in the in the range of you know 10 to 15 times earning depending on like what price you look at because it's moved quite a bit recently. Um on the other side um I I think the growth opportunity is really really massive. So, first of all, like if you look at the credit card product, a year ago, they were doing $300,000 of credit card volume a day. Now, they're doing 3 to 4 million a day. So, that's 10x year-over-year. That's something that I think starts to hockey stick and actually grow a lot faster than it's even grown. And in the grand scheme of things, three or four more million a day is nothing. It's a tiny tiny number. Um, and then now that you have buybacks starting on a programmatic basis, similar to actually how Venice has done it. So a certain percent of interchange revenue and other line items, you can start to look at what does this actually return to the token and the majority of the token supply is actually fully circulating at this point. So there's very very little pressure from emissions. So now it's something like equities or like you know Microsoft in the sense that there's structural buyback pressure with no new tokens coming to market. Um Blockworks did a really good analysis recently on you know their model for projecting growth and they actually to be conservative cut growth rates in half from where they are today. I'm saying the opposite that it should actually be faster and they got to $21 million of buy and burns over the next 12 months if you apply let's say you use a number that's a little bit higher than that say 30 million of buy and burns I think can actually be quite a bit higher than that and you apply a 30x multiple which is very reasonable in the like neo brokerage world um you get to a token price that's over a dollar And you know that's directionally 2x from where we are today. But that also doesn't factor in multiple expansion from there from the fact that they're the category leader for onchain neo brokerage but also a business that I think can actually grow a lot faster than that 20 or $30 million number. Um and a team that you know I'm fortunate to know and know how well they execute. So yeah, TLDDR I I I think it's got a lot of uh a lot of triggers that that can drive it forward. >> The thing I think is cool about Etherfi is that it's it's fitting the model of a modern startup which is >> don't have a big team and instead use big technologies. Uh and so you know Ethereum to me they're just kind of packaging up Ethereum and selling it. Like why are they doing a NEO brokerage? Oh, it's because we have tokenized real world assets now. We have tokenized stocks now and it's it cost them almost nothing to evolve their product from a neo bank to a neo brokerage because Ethereum has evolved from a neo bank to a neo brokerage and so ether is like oh great great assets you have over there Ethereum like it'd be great if somebody just packaged this up and sold it to consumers and so like they don't need it's a very lean slim like low capex business I'm assuming uh and they don't need to like bring on and hire out a whole new arm of the business to evolve from simply stable coin spending to being a NEO brokerage because like Ethereum does so much of the leg work for them and so it can it can stay lean while it can scale pretty high. >> Yeah. And the the cool thing is like so you look at the evolution of NEO bank Neo brokerages over time and over time they make more and more of their money from interest income on borrows. Um if you look at New Bake as an example, they make 60 to 70% uh of their u revenue from that. >> If you look at Etherfi today, it's still very early. It's 4%. And to what you were saying about like leveraging existing infrastructure, initially they were using their own systems and they were going like literally um organizing uh deals with with uh potential lenders directly to be able to facilitate borrowers on the platform. And you know right now they have about $20 million that their users are borrowing for the credit card part product. And they're like wait this is onchain. A has actually built a pretty good product to do borrow lend why don't we just have our own instance of a v4 we can do a revenue share with them they did an 8020 so 80 to ether 5y 20 to a revenue share and now we can run it with like a best-in-class product with a really lean team and really low cost because like hey this defi product already exists and it's pretty pretty good >> bankless nation we've built something for you introducing the bankless mcp chat chit and claude are great at a lot of things, but ask them anything beyond the basics of crypto about protocol mechanics, tokconomics, or just what happened last week in crypto, and the gaps will start to show. The problem is context. Bank list, on the other hand, has spent almost a decade building one of the deepest archives of crypto data anywhere. More than 2,000 podcast transcripts, 10,000 articles, and countless conversations with the people actually building this industry. And now we've structured all of that data into the banklist MCP. So you can go and connect it to your claude or chatbt and suddenly your AI can answer your crypto queries with the entire banklist archive behind it and every new bankless article or episode gets added automatically so the context keeps staying uptodate. The bankless MCP is exclusively available to bank list premium subscribers. So you can go to banklist.com upgrade to premium and connect the MCP in just a few minutes and all of a sudden your crypto queries to your AI LLM whatever you use will get a thousand times better. So go check it out. There is a link in the show notes and once you become a bankless premium member, you can hop into the Bank list Discord and let me know how you like it. >> Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best crypto cycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 1010 price drop happened. [music] His cycle analysis has been absolutely on point. I've been following him for years and this year we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast YouTube Apple Spotify or find a link in the show notes. There's a new episode waiting for you now. >> Yeah. Yeah, it does feel like uh the modern reincarnation of like OG money Legos of like, oh, let me just plug that into my product and boom, now I have that. >> Yeah. >> Yeah. >> Going to be a last last few questions before I let you go. Uh why do you think the market ascribes such a low premium to pump revenue or is that like a dislocation that is an opportunity in the market? How how do you think about the the value that a dollar that the market gives a dollar for pump revenue? >> Yeah. So I I think the perception is changing and that's part of you know what why it's done well o over the the last you know couple weeks. One of the reasons is people questioned revenue durability. They're like we've seen this story before. Open C was an often touted example of like generate billions of revenue and then 12 months later the business is is doing like 95% less. And I think what we've seen over the last two plus years is actually this revenue is pretty durable. It's not going anywhere. It's actually growing. This is something not something that's fly by night. Maybe individual meme coins will go up and down, but this is like to use like hyper liquids language like the house of all finance. This is the house of all memecoins. And I think that perception around durability is changing. Part of that was people questioned like really the veracity of that revenue like is it real even though it's on chain which is kind of funny but like is it being catalyzed in any particular way and the reason is most of the people on crypto Twitter and most of the like liquid funds or retail investors that that are trading thinks there there's a surprisingly small overlap with memecoin trading myself included. I'm not like a trencher on Axiom all day. So when people think about and see these numbers that even after 1010 last year continue to be really high, they're like how is this still so high? Who are these users? I don't talk to anyone user of this product. >> But I think it's just fundamentally different users and once you understand that you're not the target user, it's easier to understand why this business is so durable. And then the other piece is just like I think there's a negative association to memecoins. Um, but once you start to think about it as just like another type of speculative product, just like prediction markets or short expiry options or like casino games that have been durable, lotteryies are huge. People know they have, unless you're like counting cards, a negative edge playing blackjack or like any other casino game and they come back because there's variance. And I think people are coming around to the idea that like there is a reason that people will use negative EV products. If like for the total user base it's negative EV, that doesn't mean that you won't use it because then lotteryies shouldn't be like the massive business that they are. Um so I I think that's why it's traded so low and I I think that's you know that's changing. One other piece of course is there's an equity part of the business and there's a token part of the business. >> They it's not exactly clear what you control as a token holder. Initially they had 100% buybacks but that wasn't guaranteed for any amount of time. Then earlier this year they said we're going to do 50% of revenue into buybacks and we're going to do it for guaranteed 12 months and we can use that other 50% to grow the business and reinvest. That's something that, you know, is subject to renewal next year. I for a multi-billion dollar asset that they own a ton of and are trying to build a generational business, I don't think they're going to um abandon the token. But, you know, that is something that that's a risk that, you know, I think like depending on where you think that's going to end up, you can probably have your buyback multiple like 6 to 10 or 10 to 14 U based on like how do you handicap that risk. Um, but yeah, that that's just another component as well. And hopefully with Clarity Act that that's something that that makes it a little easier for them to be explicit. Austin, when you look forward to 20 at the end of 2026 and 2027 and really to the to the next cycle, h how do you think this legacy of this incoming cycle will be defined? Which is a weird question because I'm asking you to go forward and then look backwards again. >> Uh but uh we're firmly in a new era of crypto like the hyperinfra age is firmly behind us. Like I think the excitement around new chains be it layer twos or layer ones is mostly a thing of the past. Uh but nonetheless there seems to be plenty of energy and excitement in different pockets of crypto. So just how are you thinking about like what the future of crypto looks like for this next cycle? >> Yeah. So like one interesting chart um I think also a block works chart is in for much of crypto's history execution layer infra revenue gener generated like 95 plus% of total crypto revenue now it's actually applications are generating about 2/3 of revenue and about a third is generated by execution layers I think that continues to move in that direction and we're going to see 90 plus% of revenue generated by the applications. I think we're going to find the most enduring tokens be applications and money. And so that doesn't mean that Bitcoin is going anywhere. It also makes me incredibly excited about something like Zcash, which is serving like a different type of user and in many respects is the original ethos of what crypto was 10 plus years ago. And I think why it's resonating with so many OG Bitcoin holders and why it's seeing like these structural inflows. Um I I think ETH is actually in a very interesting place to potentially be money um depending on what happens with Bitcoin with quantum the amount of like concentrated ownership um and risk related to Bitcoin ownership from strategy uh and other elements. So it actually makes me more curious about like Ethereum from a money perspective than I've been in a very long time. I'd like looked at it from a revenue perspective for for a while which made me think that Ethereum was quite overvalued and I I I think it has this interesting optionality that that's kind of coming back a little bit. Um but yeah, I think it's going to really be about applications usage and money. And when I say usage, you know, obviously Ethereum is highly utilized. Um you have things like Bass and Robin Hood that are highly utilized. But when you think of blockchains with the most activity, I think you have to look at Salana. Um Salana is what's enabling Pump. It has the most spot activity on chain. They're right now going through this transition where it's incredibly utilized, but they're not generating a ton of revenue because there's not like the MEV that that it had back in the day. Um but I think it's one of the most compelling bets for crypto adoption. It's just like you have to watch how that evolves quickly over time. Um but yeah, looking back I think it's going to be a story of what are the 0ero to one applications that have really found this intersection of crypto and the rest of the world and what's the money that's resonated and that's why I think you know the venes hyperlquids pumps etherf bitcoin zcash you know etc of the world are are going to be the things that people look at and and say like wow 2026 had some good uh entry points. >> Austin, this has been great. Thanks for coming on the show. >> Great to be here. >> Bank Nation, you guys know the deal. Crypto is risky, but not risky enough. The institutions have landed, so we are going even further west. [music] This is a frontier. It's not for everyone, but we are glad you're with us on the bankless journey. Thanks a lot. [music] >> [music]