ROLLUP: Bitcoin Dominance Hits 66% | Circle IPO 10x | Robinhood Flips Coin? | Kalshi vs Polymarket

This week, David and guest co-host Tom Schmidt (Dragonfly) unpack a deceptively quiet crypto market with Bitcoin dominance hitting 66% and altcoins eerily still. What meta could flip the trend? They dive into Circle’s explosive 10x IPO, Robinhood’s surprise crypto surge, and why Coinbase is finally catching up. Plus: the Kalshi vs. Polymarket drama, ICOs creeping back, and how meme coins might soon help you get a mortgage. Also: Vitalik’s Layer 1 pivot, prediction markets heating up, and signs of a new retail cycle forming. Tom Schmidt & Chopping Block https://x.com/tomhschmidt https://x.com/_choppingblock https://x.com/dragonfly_xyz ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐SELF | PROVE YOUR SELF https://bankless.cc/Self 🟠BINANCE | THE WORLDS #1 CRYPTO EXCHANGE https://bankless.cc/binance ------ TIMESTAMPS & RESOURCES 0:00 Intro 0:46 Tom’s crypto vibe check 1:50 Markets 26:53 Kalshi Series C https://x.com/tomhschmidt/status/1937957381197185165 https://www.wsj.com/finance/prediction-market-kalshi-hits-2-billion-valuation-in-new-funding-round-2d0c8b4c https://x.com/tomhschmidt/status/1937957381197185165 https://x.com/hosseeb/status/1938065110351716707 36:50 US regulator orders Fannie Mae, Freddie Mac to consider crypto for mortgages https://x.com/pulte/status/1937944964656152800 https://x.com/crypto_bobby/status/1937951968619639046 43:44 Ethereum https://x.com/TrustlessState/status/1936037598805590364 49:04 What Tom’s excited about 53:01 Closing & Disclaimers ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04David Hoffman?

  Welcome Bankless Nation to the Friday Weekly Roll-Up. My co-host Ryan Tron Adams is out for the week hanging out with his family and we are tapping in Tom Schmidt from Dragonfly in to replace him. Tom, how you doing, my man?

• 0:16Speaker 01

  Good. Thanks for having me. I was just saying, this is like a nice crossover app. Like you came on the chopping block a couple of weeks ago, now I'm on Bankless.

• 0:23David Hoffman?

  Now you're here. Yeah, you know, the podcasts are just cycling through other podcasters. Eventually we'll have

• 0:28Speaker 01

  They're all gonna converge.

• 0:29David Hoffman?

  Yeah, exactly. Honestly, everyone should just get into one big podcast and we'll have one room. We'll see how it goes. Overall, before we get into the news of the week, which was a pretty light week, I'll call it, we have the Kalshi raise, we have some markets to talk about, nothing too big this week. So in order to kind of kick things off, I kind of want to just get your vibe check about the state of crypto, because we are going from one half of the year to the other. It is June 26th at the time of recording, so we're finishing the first half and entering the second half of the year. I remember general sentiment, I don't know what your market take was going into this year, but general consensus was rough first half of the year, frothy second half of the year, and I think that that has played out more or less to a T. Wondering what your take is?

• 1:13Speaker 01

  Yeah, I feel like whenever there's some macro chaos, some geopolitical chaos, then it's always taking the driver's seat and crypto is always sort of secondary. And it feels like, you know, this week we were kind of covering from a lot of the geopolitical craziness for the past couple of weeks. But yeah, it's been quiet. I think permissionless was taking place in New York. A lot of people were in town talking about that. But also there's a lot of focus on equities. And I feel like, you know, we'll talk a little bit about that, which has been kind of bizarre. It feels like a very much a reversal of like 2020 when crypto was going crazy. And it feels like the equities market, everyone's like looking and there's nothing, nothing really going on.

• 1:50David Hoffman?

  Yeah, zooming in on the Bitcoin price, we are up 3% on the week to 107,500 and ETH price is down 3% on the week. So a little bit, a little bit of divergence between the two majors. But overall Bitcoin, I guess if we zoom out to the three month mark, we're up a pretty substantial amount, coming up from $80,000 to almost $110,000. We did hit that $111,000 in May. So we are kind of ranging between this $110,000 and $100,000. Are you bullish? Are you like eagerly waiting the breakthrough of new all-time highs? Or are you more patient?

• 2:24Speaker 01

  How can you not be bullish? Like, every week, I feel like you read a headline that would have been totally unbelievable five years ago, let alone 10 years ago, in terms of interest, traction, adoption in the space. Even now, I mean, we, you know, bemoan, oh, Bitcoin's down to $100,000. Kind of insane. There was actually like a CZ tweet from 2020, or maybe 2019 even, joking about this fact that like, hey, in five years, we'll be complaining about Bitcoin dropping to $100,000. And sure enough, here we are, yeah.

• 2:56David Hoffman?

  Now, I don't want to pin you down to anything specific, because I know that's just not how markets work, but I'm generally feeling that you are in the camp of Bitcoin is currently edging, and we are looking through an all-time, we're looking for an all-time high.

• 3:06Speaker 01

  Yeah, I think really the only thing that's going to stop this is some sort of bigger shift in monetary policy, some big, again, macro calamity. Maybe we get, you know, dollar strengthening later half the year, that could be really bad for the market, but right now, it feels like there's really only tailwinds. And so I don't really know what's going to kind of make us deviate from this path.

• 3:31David Hoffman?

  Yeah, the total crypto market cap coming in at $3.4 trillion. So that's actually pretty still far away from its peak at $3.9 trillion, so like $300 billion off. But nonetheless, Bitcoin dominance story, I feel like is the news of the week, at least in terms of the crypto markets side of things, because we are just hitting new all-time high, new all-time high, week after week. There's one, two, three, four, five, six, seven, maybe eight, depending on how good my counting is, weeks straight of green candles on Bitcoin dominance to a high that we have not yet seen since, all the way back in December of 2020. So Bitcoin dominance is at 66%. When you see this, what do you think?

• 4:15Speaker 01

  That's weird. I would have pegged it more for like a 2019 all-time high, but I guess 2020, there was also like, I mean, I guess it goes back to these, the stuff being very cyclical. Whenever it's over, you need to prepare yourself to be back and vice versa. And I think right now, it's, anytime there's grave dancing, which is kind of what we see, I think, from Maxi's on the The rest of the space, in my mind, that just means there's more opportunity and it looks different every time. I mean, even the market now looks different than 2021, looks different than 2017, but there is going to be a shift. And I think things generally just don't move kind of monotonically like that. So if I had to bet a year from now, I think Bitcoin dominance will be lower, but I don't know what the rest of the market's going to look like.

• 4:55David Hoffman?

  Yeah, a year from now, I totally agree. And for an entire year, I think you could still slowly see this thing grind up. It's at 66%. It could go to 75%. There's nothing stopping it. And that grave dancing can just get louder from the Bitcoiners, can just get louder and louder and louder and it'll be more annoying and people will capitulate even more. But when Bitcoin dominance does turn over, it has never gone down slowly. It only goes down very, very fast.

• 5:22Speaker 01

  Yes, I think that's right. I mean, there's always, I feel like, the start of some new meta, which is ultimately going to drive down Bitcoin dominance. And when there's a meta, that's the frothiness that we were kind of talking about. And so, yeah, I'm curious to see what that looks like. Again, different every time, but it feels like there's little green shoots popping up here and there.

• 5:41David Hoffman?

  Yeah, yeah, that new meta that you talked about, I'm going to call it a token issuance meta. The ICO mania in 2017 was what brought Bitcoin dominance down from the high, high number of 96% down to the lowest it's ever been at 34%. That was the ICO meta. The NFT mania in 2021 also brought it down where it crept back up in that bear market up to 72% and brought it down to 40%. And then actually, interestingly, the meme coin mania only really, like, I'll call the peak of the meme coin mania, starting in November of 2024, right before Donald Trump issued the Trump token. And with the issuance of the Trump token, the Bitcoin dominance went from 61% down to 55%.

• 6:23David Hoffman?

  So the meme coin mania did not really make a dent in overall Bitcoin dominance. So that was not really the cycle that we were looking for.

• 6:33Speaker 01

  Yeah, I mean, I think that is true, which is people always. I remember when meme coins were going big, people talked about, oh, this is just everyone being tired of VC coins, people being tired of Bitcoin. And I'm like, yeah, but in absolute terms, these are, you know, pretty small numbers, right? This is kind of a weird little pocket of the industry. I think the NFT thing was interesting, where like, again, that would not have been something I think you would have predicted in 2019, that like, NFTs will make a big dent, and yet they did. And who knows, maybe something, you know, will make that happen this time around. Maybe it'll be, you know, tokenized equity use, or maybe Purples will take a big dig in it.

• 7:11David Hoffman?

  Yeah, yeah, yeah. Yeah, in 2019, I remember me, Ryan, a lot of the Ethereum crowd of people were just so bullish on DeFi and things like MakerDAO and Uniswap, and we're going to democratize finance. And, you know, we got that bull market, that was DeFi summer, that did not make a dent in Bitcoin dominance. It was the NFT mania that made a dent in Bitcoin dominance, and that brought in the net new people. And then we were like, you look at our cool new financial toys. And they're like, I want to collect the monkey JPEG. And we had just no ability at all to predict that coming our way at all. And so I'm guessing whatever brings Bitcoin dominance from 70% back down to like 45% or wherever it goes, is going to be something that like, no one actually sees coming.

• 7:54Speaker 01

  Yeah. I mean, it could be ICOs coming back, and we're kind of seeing again, like some shoots of that. Yeah. You know, I don't think it's the worst idea in the shape of capital formation.

• 8:06David Hoffman?

  Well, so you're an ICO meta fan? Maybe you could talk about why you like ICOs?

• 8:10Speaker 01

  I don't know if I would say I'm a fan, but I don't hate it. I think, hopefully, we've kind of learned some of the lessons from the 2017 ICO phase. And I think there has been maybe just an exhaustion, I think, of market participants. And that's where I think a lot of the infighting and Twitter finger pointing is happening, where, you know, traders and retail investors blame VCs, and VCs blame projects, and projects blame VCs again, too. I don't know, everyone's blaming some VCs.

• 8:36David Hoffman?

  That sounds really healthy.

• 8:37Speaker 01

  Yeah. But, you know, it's okay. This is a byproduct of the current state of. Fundraising and capital formation. Then there's appetite, I think, for more early-stage interest. Also, frankly, the way projects are raising capital is just so much different than it was, you know, five years ago, where early-stage teams need less capital, they're doing fewer private rounds. You can see that all kind of collapsing at some point where, hey, maybe we don't do a private round, or maybe we do one small private round and then a public sale, and that's kind of it. And I think that has been kind of the only, maybe major trend line I've seen in private fundraising has been, hey, maybe we don't need, you know, $200 million to make a new blockchain, maybe we need a lot less and a lot less time, and we can kind of, you

• 9:22Speaker 01

  know, compress our capital needs and therefore open it up to the public.

• 9:27David Hoffman?

  Yeah, yeah, there was an era, maybe two years ago, three years ago, where the $1 billion raise, or the monster raise, was truly signal for retail investors. And now, I think, in more recent times, that has flipped on its head, where the very large gargantuan raise has turned into anti-signal. Whereas like, oh, this, this is like, I'm not going to name any VCs, but there are, there's a select cohort of VCs out there that I think are being branded by these, as these like token shops, and they do these very large, high valuation raises. And like, it's just early in the lifespan of said company, and so this said company is brand new, getting a billion-dollar valuation from like the same kind of cohort of VCs. And people are just like flagging that, and that is not, is the opposite of what the signal

• 10:12David Hoffman?

  it used to be like two or three years ago, which, like, I think, I think is, is good. At least it is a pendulum shift, and I think, you know, the, it can shift too far, I think, as well. It can get too toxic, it can be too, too much of like, too much of a good thing. But that is kind of like what the current meta is, is like the large VC raise is kind of being thrown up by, by the market, at least the Twitter discourse, I'll say.

• 10:37Speaker 01

  Yeah, I think that's a good way of phrasing it. I think obviously VCs in my mind provide value beyond just the capital. That's what I like to tell myself. And I think your project products do say that about good VCs. I think there's also a lot of angst around the exchange listing meta. A large chunk of the projects going to exchanges and hey, maybe these aren't as positive signal as they used to be. Not everything is going to pump on a buying listing anymore. And so I think that all kind of creates this discontent that creates revolution. And I think that's kind of what you're seeing right now.

• 11:12David Hoffman?

  Yeah, yeah. The other thing that's happening alongside of that is like, I can't remember what echo round it was. Or maybe it was the token sale on Sonar on the new platform. And then like a bunch of, you know, retail investors got access to be able to invest in this thing for the first time. And it was like, very clearly, a lot of people's first exposure to VC investing. And I can't remember what the tweet, but there was like the realization that, oh, this is actually very likely not going to work. And that is the game that VCs have always been doing. And retail thinks that like VCs just have this like staircase to heaven where every single project, you know, is a 10x, 100x every single time. But in reality, like the odds are much slimmer and just retail haven't, they're just not exposed to the failures.

• 11:57David Hoffman?

  And now like Kobe's ICO platform is exposing like the actual failure rate of venture startups to retail investors. And that's a, that's a new experience for many in the, in the retail side of things.

• 12:10Speaker 01

  Yeah, I think there's a phenomenon in venture where you want sort of professional LPs who are institutional, who do a lot of venture, who write chunky checks and sort of can weather the storm and it's kind of seen it all and aren't going to be extremely annoying when things go well or things go poorly. And I think projects have that same phenomenon where if things go poorly, like you actually kind of want a VC backing you who's seen it all and can kind of help you. And isn't going to be complaining, whereas yes, I think retail can kind of feel like everything's going to go. I mean, certainly the median venture fund does not do particularly well, but you know, that outliers obviously make up for the rest of it.

• 12:45David Hoffman?

  Let's turn our attention to the meme coin markets. Excuse me, the TradFi markets where we're looking at the Circle price. It's actually come down from the all time highs that it set just last week of 297 ridiculous dollars. It is at the still ridiculous price of 210 dollars. So we had a decline in the Circle price. Any commentary on the Circle price action post IPO?

• 13:07Speaker 01

  I think this is like the most mispriced IPO I've seen in maybe my entire career. I mean, I can't imagine another, or I can't remember the last time an IPO and pump 10x off the listing. And the bizarre thing was like they were trying to IPO for the longest time. They were shopping this thing around. No one wanted to buy it. And maybe they're just showing it to a lot of people. I don't actually know who's buying Circle stock. I think Robert Leschner suspects a lot of TikTok retail traders, which might be true, but it's, he claims he's seen TikToks of the people telling others to buy Circle stock.

• 13:39David Hoffman?

  I cannot imagine Robert Leschner just scrolling TikTok.

• 13:42Speaker 01

  I can't either. And he claims, oh, the best TikToks make it onto Twitter. And I'm like, you can just say you have a TikTok account, Robert. Like, it's okay. Yeah, it's a big app. But it does seem like there's a weird disconnect between this thing was such a dog in the private markets to now being such a public market darling. And now everyone is taking note and everyone's like, oh, maybe I should go public or maybe I should, you know, do something in stablecoin land. And so it's sort of like the signals are percolating through the rest of the market.

• 14:10David Hoffman?

  Okay, so this might be cope, but when people say this is a mispriced ICO and everyone's like, oh, I totally mid curved that. I should have bought it on open. It's obviously everyone is saying that in hindsight, hindsight 2020, but we understand the Circle fundamentals. And like with that, the $31 IPO price aligns with that. It was, it's like $150 million of yearly income. It's not, not great. $31 billion. There is already like a me, a stablecoin premium baked into a company that has $150 million of yearly revenue being priced at $7 billion. There's already a premium there. So like in the sense, when you say that it is mispriced, that is just objectively true in the sense that we can now look at the price of $300.

• 14:55David Hoffman?

  Hit and just say that that is what is true, but I also, again, I preface this saying this might be cope. But like, I don't know, I feel like it's justified at $31 and it's just not justified at 210.

• 15:07Speaker 01

  I don't disagree. I would not have bought it. I didn't buy it at open.

• 15:10David Hoffman?

  I did not.

• 15:10Speaker 01

  Five was crazy. I, but you know, I think the market, you have to take signal from the market and the market is telling you something else. And maybe these people are totally irrational or maybe they have a different view than I do, but I think as always, you know, markets are forward looking. And I think when people look at Circle, they see, hey, we have GZAC passing the Senate, all these big fintechs, all these big 4500s getting into stable coins. Circle is clearly in the lead when it comes to sort of regulated, you know, stablecoin issuer in the US. And it's, there's really not many other ways to express that view in the equities markets. I mean, there was a bit of a catch up trading in coins. People realize.

• 15:53David Hoffman?

  Yeah, let's pull that up here.

• 15:54Speaker 01

  Circle revenue, but other than that, like what else are you going to buy? And I think that that's a large part of the rally too.

• 16:00David Hoffman?

  Yeah, this, it was, the Circle price pump was just a very isolated rally when it went from like, it opened up at 30, immediately jumped to 70 and then just climbed to 130. And no other crypto equity, mainly Coinbase, was really moving at all. Coinbase actually kind of traded down even. That has changed in the last just four days. Coin stock has gone from $254 to $375 in about nine days. That's a 50% increase in the last nine days. So Coin is doing a catch up trade. I would say like, there is a correlation to Circle here. I feel pretty confident in making that market call that it was because of the Circle price where people are like, all right, Circle is so goddamn frothy. Like where else can we get exposure? Oh, let's buy the company that has 50% of Circle revenues.

• 16:45David Hoffman?

  And so like my commentary before this was, okay, there's a lot of private companies that are looking to go public downstream of the Circle. Very positive IPO and then trading price action afterwards. Like as soon as something 10x is right after IPO, that's very signal, big signal that the public markets are ready. So like now people are like looking at Kraken and. Looking at chain analysis of all things, Fireblocks, all these private companies that could in theory IPO. And they're like, okay, like that's the next one. There's going to be a next one. But when people were making these comments, I was like, look at the coin stock, look at the coin price. It's not going anywhere. It's actually just a stablecoin narrative. It's just about stablecoins. But that is now wrong over the last nine days because the coin price has hit new all time highs.

• 17:30David Hoffman?

  And so if we zoom out all the way to the pico top of the 2021 bull market, when Coin launched at like 375, I guess it did trade briefly higher up to 420, but it launched at 375. We are at 375 right now. So we are matching one for one. The price that Coin listed at at the top of the 2021 market, the thing that ended the bull market. And now we are back here. Give me some commentary on just like the long term price action that you see in Coin.

• 18:00Speaker 01

  Yeah, I mean, I think you're right that, again, the private markets take signal from the public markets. They see Circle doing well, they see Coin doing well, and now you see all these sort of

• 18:11Speaker 01

  longer tail companies now looking to IPO kind of based on comps, right? They're saying, well, hey, if they can get this kind of price with this kind of multiple, maybe we can also get something pretty favorable. We'll see. I think Coinbase has been kind of a strange company on Wall Street where some people look at it and it's just a total dog. And they're like, this thing, I remember even the narrative in 2019 was they need to shift away from exchange revenues and there's going to be fee compression and they need to be more of like a bank. And then that was like just totally obliterated, right, in like 2020, 2021, where it's like, oh yeah, maybe if there is no fee compression, maybe they have some sort of reg mode, maybe they'll change this time around. I do think, you know, certainly some of the other trading platforms, it's true that the ETF launch,

• 18:52Speaker 01

  you could argue has been cannibalistic to some of the revenues, but it's also, it has so many strong tailwinds behind it. I don't know if I am going to jump the boat here, jump the gun here a little bit on Robinhood, but that's been the other kind of crazy all time high move, you know, in the past few weeks has been. And, you know, what is it, like 30, 40% of their revenue is also coming from crypto? So

• 19:15David Hoffman?

  Oh, really? I didn't know it was that much.

• 19:16Speaker 01

  Yeah, if you look at their last earnings report, yeah, it's very, very heavily crypto. And it's a very weird segment of crypto. Like, I think their number one or number two asset was like Doge. And so it's just a totally different type of user than probably users trading on Coinbase or trading on Uniswap. And so, you know, but again, if you think about them as like a crypto beta play, I think that that's probably another sort of attractive position.

• 19:44David Hoffman?

  Yeah. Are you saying, okay, so the recent price action in Hood is just phenomenal. They also, like you said, got obliterated throughout like post when their interest rates started going higher and higher and higher in 22. They also Hood, Robin Hood, launched also in 2021, August of 2021. So pretty similar to Coinbase timing, actually. And then, you know, launched at $60 and just got obliterated, went down below $10 for a very long time, something like two years it stayed below $10. And then just in, let's see, when was it? About the start of 2024, it was $10 and it started creeping upwards to where it is now at $83. How much do you credit crypto as a part of this price increase?

• 20:26David Hoffman?

  Do you think what the all time high that Hood is seeing and continually breaking on a week over week basis, is that downstream of crypto? Or is that more of is just like regular business, do you think?

• 20:37Speaker 01

  Hard to say. I mean, again, as a percentage, it's quite high. So if you think of, hey, like that being a driving force, then, you know, I think it's like certainly a big part of it. I don't think weirdly that's been a big part of Robin Hood's public story. Like if you think of all their new product announcements, it's actually been about trying to take their existing user base and upsell them and convert them and turn them into this more sort of long term financial plan, which planner, which has been or your asset manager has been kind of their whole story the whole time where it's like, hey, you you come for the meme stock trading and you stay for the 401k and the, you know, I think maybe

• 21:10David Hoffman?

  Good move, honestly.

• 21:12Speaker 01

  Yeah, it's definitely been, I think, a good move on their part. Interestingly, I saw some research recently that a lot of the zoomers and the alphas are not actually getting onto Robin Hood. It's like they kind of captured this like millennial cohort that I feel like I'm a part of and they're aging with the platform. They're staying in Robinhood, but the youngs are not actually onboarding. And so maybe that's okay. Maybe you're getting people as they kind of age into their peak earning years, but kind of maybe a little bit counter to kind of the the public narrative for them.

• 21:40David Hoffman?

  Yeah, that is counter to my understanding. I mean, I guess I could account for that in a couple of reasons. Maybe zoomers just don't have that money, that much money yet. Maybe they're just not in not investing because I can't imagine where they would go. Like I don't see them opening up a TD Ameri trade or any other sort of trad brokerage. So if they're not going to Robinhood, I kind of think they're my gut take is that they're not doing anything.

• 22:01Speaker 01

  Yeah, that's certainly possible. Maybe they're going on chain. Maybe they're, you know, I don't know, trading.

• 22:07David Hoffman?

  TikTok meme coins.

• 22:08Speaker 01

  Yeah, whatever. I just pull up their Q1 earnings. So in Q1 2025 or 2025, Robinhood made 252 mil gross on cryptocurrencies out of 927 mil gross for the quarter. So pretty substantial. I mean, they made as they made more in crypto than they did on options. I mean, five times the money they made on equities. And so, yeah, it's a big part of the business.

• 22:35David Hoffman?

  They have a pretty big announcement at ETHCC in Cannes that is going on Monday. I'm going to that event. So actually, they already gave me the embargo. It's very large announcement. It's pretty cool. I'm pretty stoked for it. So Bankless Station, you guys will see that in your podcast feed on Tuesday of next week. So stay, hold your breath for that. One last thing before we move on. I don't know if you pay attention to this as much as I do or other people in the industry, but a growing number of people keep on showing me this hood coin ratio. So yeah, we got the Bitcoin Ether ratio, but now we also have the hood coin ratio. So like there is also similarly similarly valued. I don't know if this is the price. Yeah, this is the price over price, not valuation over valuation.

• 23:20David Hoffman?

  But the valuation is both around roughly $75 billion. So people are in this like horse race between Coinbase and Hood. I don't know if you have an affiliation here, Tom, that you would like to share.

• 23:31Speaker 01

  I do not have an affiliation. I guess I don't know. Either individually or then maybe through an next fund or something. I don't know. I actually need to be impressed frankly with Robinhood's product execution. I think when you get to a company of a certain age, there's a natural tendency to just kind of fall off. And I feel they keep shipping fresh new products. I mean, even I think their prediction market stuff for the election and some of the newer stuff they've been doing. I mean, just cutting edge for, you know, kind of a brokerage at their age.

• 24:01David Hoffman?

  All right, we're going to get into the rest of the news of the week, starting with CallShe's raise. They raised a bunch of money and Tom, I think, had the tweet of the week that we are going to talk about. I won't spoil that, but I thought it was pretty good. And then we're going to get into how you can get a mortgage with your crypto. So we're going to get to all of that and more, but first a message from some of these fantastic sponsors that makes this show possible. Uniswap is your gateway to a more efficient DeFi experience. With Uniswap swapping and bridging across 13 chains is simple, fast and cost effective, helping you move value wherever, whenever. Thanks to deep liquidity on the Uniswap protocol, you'll enjoy a minimal price impact on every trade. And now Uniswap V4 takes it even further. Swappers benefit from gas savings on multi-hop swaps and ETH trading pairs, while liquidity providers can create new pools at 99% lower costs.

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• 25:31David Hoffman?

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• 26:14David Hoffman?

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• 26:56David Hoffman?

  announced their $185 million raise, their Series C raise, which values Kalshi at $2 billion. This raise, this round, even though to my understanding, I don't think Kalshi has anything to do with crypto, this was nonetheless invested in by a bunch of crypto VCs, including Paradigm, MultiCoin, and then also some people outside of crypto, like Sequoia and some other VC firms that I am not familiar with. So this has just kind of rocketed around the trad-media world, because you have the non-crypto prediction market, I think, fitting in with the non-crypto media organizations. And so I think you're kind of seeing like a bifurcation of the internet, and people are picking allegiances here. Everything is getting tribal these days. Like I alluded to, Tom, you have a spicy tweet.

• 27:41David Hoffman?

  I don't want to get to that yet. I first want to kind of just get your take on a $2 billion valuation of a prediction market. I think everyone in crypto is generally bullish on prediction markets, because that's kind of like our technology, and so that feels like our turf. And we have this non-crypto startup raising at a $2 billion valuation. What do you, overall, what do you think about a $2 billion prediction market?

• 28:06Speaker 01

  I don't think there's anything crazy about $2 billion for a prediction market. I think $2 billion for Kalshi is a little nuts in my mind. I mean, you can see some of the metrics, not particularly impressive in my mind. I think they also obviously face this competition issue. That's what I mentioned with Robinhood. I mean, certainly they have this partnership with Robinhood to do distribution. And that's pretty attractive in terms of fees. But you have this platform risk. And there's also ForecastX, which is another, you know, Timmy events platform that Robinhood used for the election, actually. They didn't use Kalshi. And again, they're the one who ultimately has the end relationship with the user. I think Polymarket has done a really good job of going direct to user, having their own brand.

• 28:50Speaker 01

  I mean, Shane posts their visitor numbers and they're putting up the same order of magnitude of visitor numbers as some of the biggest sites in the space. But I just don't really see that sort of affinity with Kalshi. I only see paid tweets from influencers versus actual organic interest. But full disclosure, Dragonfly is also an investor in Polymarket.

• 29:13David Hoffman?

  Okay, okay. All right. One last question before we get into the tribal side of things. There are, what do you think about the crypto companies investing in a non-crypto? Sorry, there's no actual firm like rules, like crypto VCs can't invest in non-crypto projects. There's no, there's no rules about that. But nonetheless, it's interesting to me that we have some crypto VCs investing in Polymarket's competitor. What's your gut take about that?

• 29:37Speaker 01

  Yeah, I mean, I do, maybe Kalshi has some deeper features in the product roadmap that I'm not privy to. They do, or they did recently start to accept stable coins, I believe. So maybe they see some of the opportunity in kind of the, you know, degen trading going on in crypto land and want some of it. But they still miss out on the core component. And I think that's something that does not get brought up enough, which is Polymarket is actually happening on chain. I mean, granted they're using this order book, but like the trades settle on chain. You can see the balances, you can see the trades. It's verifiable, but they're using UMA for the oracle. Like it's very cool and transparent and embodies so much of the DeFi story, whereas Kalshi has none of that. It's literally just an exchange that can take your stable coins if you want to send it to them.

• 30:20David Hoffman?

  Yeah. I mean, the main difference between Kalshi and Polymarket, of course, is that Kalshi is legal for United States citizens and entities and Polymarket is not. And so they're just like an offshore predictions market, right? And so. You know, in theory, it's possible to open up a VPN. I'm not recommending that, but that's technically possible if you're onshore. But it, to me, it's maybe there's like a parallel here between like Circle and Tether, where Circle is offshore and has more freedoms and, uh, excuse me, Tether is offshore and has more freedoms. Circle is onshore and has more restrictions, but you get to have onshore customers. I feel like that's a fair comparison. What's your, what's your reaction?

• 31:00Speaker 01

  Yeah, I actually like that. Um, I mean, I was gonna say, I think, um, you know, maybe the comp was originally gonna be, uh, Hood versus Coinbase, but, uh, I like the Tether-Circle comparison a little bit more. Um, I do think, you know, people under index on the amount of, uh, uh, prediction market interest coming from outside the US. I mean, um, there's an, you know, for the longest time, what, um, Ladbrokes was like the largest, uh, prediction market for the US election, which is a UK-based, um, sports betting, uh, site. And so, you there is, you know, it is the biggest election in the, in the, in the, in the world. And I think, um, that there are also just more and more events that people want to trade on. I mean, the New York mayoral election, Israel, Iran, it just kind of the way people consume news now.

• 31:43David Hoffman?

  Okay, uh, Tom, I would like to get into the spicy side of things. So you have a freedom to take the, take the muzzle off. This is a tweet that you tweeted out, uh, with some screenshots saying, "Never forget that Kalshi is a team of little rats." And there are some stories here that, this one came out of Pirate Wires with the title of, "Kalshi Paid Influencers to Target Polymarket CEO After FBI Raid." And then there are some other screenshots that have, I believe, somebody from Polymarket, uh, in DMs with a influencer who has a bunch of followers, uh, to retweet the tweet of, uh, CEO Shane Copeland of Polymarket getting raided by the FBI right before the, uh, the Trump-Biden

• 32:26David Hoffman?

  election. So maybe, uh, listeners might remember that, that, uh, the, the CEO of Polymarket Shane got raided. Um, I think to this day, no one really knows why. Uh, and we have verified screenshots of somebody from the Kalshi team convincing a general influencer on Twitter to retweet the tweet saying, "Yo, this guy..." Looks guilty, which is unfortunate behavior, I would, I would call that. And so that leads Tom here to call the Kalshi team a bunch of, a bunch of rats. What's, tell me how you really feel, Tom?

• 32:57Speaker 01

  Yeah, look, I'm, um, I'm all in favor of healthy product competition. I would say, you know, this is just kind of the public story that's available on Kalshi. There's a bunch of stuff below, uh, you know, the tip of the iceberg that maybe not, don't want to discuss on this podcast. But, um, yeah, I, I think, um, I, I mean, frankly, I just don't think they've been really been behaving as good actors in the space. This is again, one story, the rest might come out, um, in, in public, but I, I don't think it's okay to like, you know, basically libel your competitors. Or to, uh, you try to beat them on things that aren't just product. And so, um, I think on the flip side, Shane has been like an unbelievable builder. He's been building a poly market for, you know, over five years, six years, even during the bear market when there's no volume.

• 33:43Speaker 01

  And he built it in a way that I think again embodies, uh, the spirit of crypto and the spirit of DeFi and what we're trying to do. I think there's many ways to take a shortcut. And instead he, you know, I mean, if you look at the contracts, literally it's like derived from the Gnosis prediction market, you know, way back in like 2017. And so, um, there's kind of this nice through line here. And, um, I, I think it's also just incredible utility for the world. It's, it's crazy to me now that like so many world events, um, you know, we previously relied on, on pundits to give us our news and, um, yeah. And they were wrong. And I think we kind of saw this with, I mean, most, most recently, the New York, the oral election, um, that, you know, uh, this is just a way better, better incentive aligned version of, of how people get news now.

• 34:27Speaker 01

  And so, um, I'm very pro poly market. Um, and, and again, I just don't, I, yeah, I, I don't want to get too, too much into it. But, um, I think we need to kind of, you know, do some self policing as an industry and, uh, you know, weed out the bad actors.

• 34:40David Hoffman?

  Yeah, yeah, yeah. Uh, for those that don't remember, I remember Kalshi was operating in this very limited capacity because they were under a lawsuit from the CFTC. Uh, that was really restricting their ability to just like operate as a startup at all. And then that They won that lawsuit or something like this and that that when that restriction went away and they were finally open able to open their doors like not too long before the US election. Uh, and so they really advertised themselves as like the only legal place for United States citizens to get into bet on the outcome of the United States election. But they were just so late to the game because polymarket had already more or less like started to really crescendo in volumes.

• 35:19David Hoffman?

  Ahead of the US election. So they were just very clearly coming from behind and like I like my first impressions of them was like, my man, I kind of feel bad for them because the CFTC was really like not letting them off the leash. Uh, and they were really hamstrung by the fact that polymarket was able to operate because they were targeting an international international client base. And then so they had to do some like, kind of like, kind of mean tweets, uh, pointing at polymarket. And I was like, okay, but I get it. They're an underdog. They need to like clamor for relevancy. Uh, and so I remember some of these mean tweets from the Kalshi team going out like trying to to fight for relevancy. And I was like, okay, you know what? Like, I get it. Like, they kind of need it. But then the

• 35:59David Hoffman?

  the the the distastefulness also crescendoed as well. And they've kind of never really lost that. It's like more than worsened scrappiness. It's like kind of just like actual. Yeah, distastefulness growing out of the Kalshi side of things. That's my that's my account of history. And again, I won't ask you to comment anymore unless you unless you're unless you have something to say.

• 36:21Speaker 01

  I I think a good limit test is, uh, if there's anything that you're doing that you wouldn't want to come out in discovery or, you know, for everyone in public to see, probably shouldn't be doing it. And then there's a lot of things going on at Kalshi that probably are in this bucket. Um, so again, trying to send a mean tweet, find you, uh, you know, compete on product, but, um,

• 36:38David Hoffman?

  Yeah, it didn't exactly stop at the mean tweets. It just only got got worse from there. Yeah. And then, yeah, I've also just heard rumors of Kalshi just operating very nefariously under the table, but nothing I can actually like substantiate. So. All right, let's get into, I think, what the crypto Twitter's favorite news of the week. This came out of the US Director of Federal Housing. So he's an appointee by Donald Trump, I believe, uh, who tweeted out after significant studying and keeping with Trump's vision to make the The United States, the crypto capital of the world. Today, I ordered the great Fannie Mae and Freddie Mac to prepare their businesses to count cryptocurrency as an asset for a mortgage. And so this is this individual who is ahead of the matters that are relevant for this to get the

• 37:23David Hoffman?

  Fannie Mae and Freddie Mac, which are in the kind of this like pseudo-private, public-operated companies that do mortgage, I can't really remember, I'm losing my 08 history, but they just managed the mortgage standards in the United States and they started to get heavily regulated post 08 crisis. And so they are being ordered to look into the possibility of allowing crypto assets to be leveraged as like valid liquid assets for people's mortgages. So the memes on crypto Twitter, of course, just went straight into the The Big Short movie where people are looking at the, I can't remember the individual who called the Big Short. But the, we have mortgages, what's his name?

• 38:05Speaker 01

  Michael Burry.

• 38:05David Hoffman?

  Michael Burry, thank you. Michael Burry, realizing that there's a ton of mortgages in America that are totally collateralized with Fartcoin and SXP 69,000, which of course is not in the actual order, but like there was no general specific cryptocurrency that was labeled just like crypto can now be assets for mortgages. Tom, when you saw this news, what was your reaction?

• 38:26Speaker 01

  Yeah, I mean, maybe, maybe two initial reactions. One, maybe verify this because this is what I remembered. When the Bitcoin and ETH ETFs launched, the DTCC, the Depository Trust and Clearing Commission, marked both of those ETFs with 100% haircut for collateral in US brokerages. Meaning you can't actually borrow against these ETFs the same way you can for an S and P ETF or any, frankly, any sort of equity or bond or anything else you would hold in your brokerage. These basically count as zero for collateral. And that hasn't changed. And so it would be extremely bizarre to me if you can count your crypto assets as collateral for your mortgage,

• 39:07Speaker 01

  but you can't count your crypto ETFs as collateral for your margin alone, which is

• 39:13David Hoffman?

  I feel like if anything, if we were Taking the more like marginal steps forward, the ETFs would be the only thing that would be valid. And even crypto on-chain crypto would be considered not valid.

• 39:25Speaker 01

  You would think so, and they could do it with, you know, the stroke of a pen, right? You just change the haircut and instead they haven't. And so I would love to see that change. I mean, this goes with all these sort of weird accounting rules. You know, when there was the SEC staff bulletin around, you know, not being able to count crypto assets as assets on your, on your balance sheet, but it could only be liabilities, which stopped all these banks. And so I think that there's a lot of weird plumbing in the traditional finance ecosystem that's still is kind of keeping crypto back in some ways, and this being one of those. And two, I mean, there are a number of startups that have kind of positioned themselves as, you know, we are the mortgage lending platform that accepts cryptos collateral. And I wonder what's going to happen to them now.

• 40:07Speaker 01

  I mean, maybe the answer is they move into, you know, more riskier versions of this, or maybe they go, you know, target different GOs or something. But it feels like in some ways this is kind of cannibalistic for those businesses.

• 40:19David Hoffman?

  Yeah, yeah. I mean, so really what I'm understanding here is like Fannie Mae, Freddie Mac, they are the gatekeepers of what assets are legitimate or not legitimate for mortgages. And then after that, like, once we open up the gates for things like Bitcoin, Ether, like perhaps even more long tail crypto assets to be valid for mortgages, then it kind of goes up to the free market of the banks. Like, all right, banks, what are you guys comfortable with? And so I guess this is where that kind of private-public partnership around Fannie Mae and Freddie Mac comes in. Like, the government says, like, no, crypto assets are illegitimate. And so even with this, maybe like, I don't know what Fannie Mae, Freddie Mac needs to even do in order to like make this a new rule. Maybe that's just like, like you said, like a stroke of the pen, and we could just have this good news event show up on Twitter like next week. Maybe it's that simple.

• 41:04David Hoffman?

  But even after that, then banks start to actually need to be like, okay with it, which I think is a pretty large hurdle in of itself.

• 41:12Speaker 01

  Yeah, that's a good point. And I think we've, we've seen that even for just, you know, allowing clients to buy Bitcoin or even the ETFs. And some banks immediately jumped on the opportunity and some have still been slow to sort of adopt. And so. Who knows what is going to look like for mortgage lenders? Maybe again, there will just be a distribution along the risk curve. But I mean, hey, it's still a good step forward, even if this is just the literally the very first baby step in this process.

• 41:38David Hoffman?

  Yeah, yeah, yeah. Anyways, maybe one day we do have a financial crisis because we have mortgages collateralized by meme coins. Too much Bitcoin in this system.

• 41:49David Hoffman?

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• 43:15David Hoffman?

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• 43:58David Hoffman?

  Vitalik retweets this tweet saying Ethereum Layer 1, L1, is the world ledger, to which I retweet, so we're going nesting dolls of retweeting. And I say subtle change from Ethereum to Ethereum Layer 1. And I have mixed reviews on this tweet. I have some people being like, bro, this is so pedantic, like, this is nothing new. Other people are saying like, oh, no, Vitalik Buterin specifying that it's the Ethereum Layer 1 that is the world ledger and not broad Ethereum is actually significant. Where do you lie between these two debates?

• 44:31Speaker 01

  I mean, I think it's, I don't know if it's significant, but certainly different than the language that he's used in the past. I still, I don't know if this quite communicates the shift, the vibe shift that we've seen in Ethereum land of more of a focus on the L1. It's almost like by distinguishing the fact that it's the L1 and not an L2, like you kind of draw attention to this weird sort of split, which is a big point of the drama in Ethereum land. And so why not just call it Ethereum? Why not just call it, you know?

• 44:59David Hoffman?

  Why not call it Ethereum and mean the Layer 1 you mean, like, at the same time?

• 45:03Speaker 01

  Yes, it's almost like when you're overly specific, you sort of invite more questions versus, you know, the product is what the product is and there's not really any more additional explanation or verbiage required. And so a little bit weird, but I mean, hey, at least there's some sort of narrative congealing around Ethereum or Ethereum L1.

• 45:23David Hoffman?

  Yeah, there's narrative congealing around Ethereum Layer 1, which I'm a big fan of. And I accept the point that it is really also driving a wedge between the fact that there's this Layer 1, Layer 2 dynamic. And there are some people on like one side of the Ethereum aisle that Layer 2s are Ethereum. They are the same thing as Ethereum, they're a part of the system. And then there are other people who are like, no, they are. Technically not Ethereum, they're technically their own layer twos. And naming them under the broad Ethereum umbrella is not helpful and not productive. And also takes away focus from the Ethereum layer one. I'm kind of leaning, I've been leaning towards the side more and more and more lately.

• 46:02David Hoffman?

  And I actually think it actually is almost critically important for us to figure this out because Ethereum, the layer one, I think there needs to be a line there as to what is and what is not Ethereum. And in being inclusive of things that I think are truly actually pretty disparate from Ethereum, like the mostly the little rollup landscape that we know today, Base, WorldCoin, WorldChain, like Arbitrum, which are separate chains that use Ethereum for security. There should be a separation there, in my opinion. There should be a line there. And when we say Ethereum needs to be the world ledger, people ought to, like you said, ought to think Ethereum the layer one without having to consider the layer twos. And layer twos are just customers of these things, they're just external protocols.

• 46:47David Hoffman?

  And we need to expand the capacities and the TAM of the Ethereum layer one to the best of its ability and not have layer twos be inclusive of that. I'm on my soapbox right now, but I'm wondering what your take is.

• 47:00Speaker 01

  Yeah, I think probably right. I mean, I think a good litmus test is like, what percentage of different L2 users know that they're using Ethereum or think that they're using Ethereum, they know they're settling back to Ethereum?

• 47:11David Hoffman?

  Right.

• 47:13Speaker 01

  I think there's probably a spread there, but like, I think a lot of people on Base probably don't think about that. You know, they're probably.

• 47:20David Hoffman?

  And Base is interested in growing those numbers, by the way.

• 47:24Speaker 01

  Yeah, I'm not saying this in an accusatory way, or I think there's malice, but I'm more like, if you're, you know, using a wallet as a service, if you're funding through Coinbase Smart Wallet, frankly, if you're funding through Coinbase and using cash, like, why would you ever think that, you know, you're using Ethereum or thinking about where does this transaction actually go? You're just thinking, oh no, I want to go, you know, buy this coin or I want to go. Coin this song, or whatever you're actually doing, which is great. I think that's the way crypto goes mainstream. I think that was a large part of poly market success, frankly, in the election was you can just sign up and use this thing, the same way you would use a web two app. But the downside is Ethereum is pitching itself as infrastructure and plumbing.

• 48:04Speaker 01

  And that kind of gets lost when users are different than what crypto users look like today.

• 48:11David Hoffman?

  Right, yeah, there are different cohorts of users, people that kind of understand, pop open the hood and look at the chains that they are touching. And then there are users who are just using apps and they don't care. And they just want to press the buttons and they don't really give a shit about what blockchain they are on. They just want it to go fast and work. And yeah, the growth of those users is not going to be found on the Ethereum layer one if the Ethereum layer one doesn't focus on itself in that same kind of capacity.

• 48:40Speaker 01

  Yeah, to be clear, I think that's totally fine. I think users should care about a chain being fast and cheap. And I think that is part of Ethereum's goal is to make it the obvious choice for developers, for users, that it just kind of blends into the background, which I think is something that Solana got right. And that's why so many people were choosing it when they were looking to just have some very simple plumbing for their app.

• 49:03David Hoffman?

  Yep, certainly, certainly.

• 49:06David Hoffman?

  Yeah, it was a late week, Tom. I really appreciate you going through the news with me. Since we have a little bit of extra time, what's exciting to Tom? What are you interested about? You guys have done a couple of Klobb order book based exchange episodes on the chopping block. What else is going through your mind? What are you looking at that no one else is looking at?

• 49:22Speaker 01

  Yeah, we had Vlad from Lighter. It's a ZK based perp decks on the chopping block this week. Very cool tech. They do verifiable matching of orders. So you don't have to trust a single party even for a dex to match orders together. And so you get this really nice UX. I was at my pet favorite portcos. One that I really am a fan of right now is this company called Megapod. They're trying to build the world's largest lottery.

• 49:48David Hoffman?

  No, we are co-investors in Megapod.

• 49:51Speaker 01

  Oh, that's right. Yeah, yeah, yeah. So yeah, very cool. I mean, yeah, already up to a million dollars today for the jackpot. And I think the coolest part is, A, it's global, B, it's verifiable, it's on-chain. But C, users get to be the house, right? You can, there's a Uniswap-style LP mechanism where you can provide liquidity, or you can buy a token, and the market sort of sets the rate for, you know, what percent goes back to the house. So it's not just 50%, which is kind of the standard for a lottery.

• 50:22David Hoffman?

  Yeah. Yeah. And to be clear, this is a normal lottery that you see when you are driving down your highway and you see the Mega Millions, like, X-billion-dollar jackpot. Same exact structure, no different, except for the fact, as Tom said, that the users also get to be the house. The payoffs are much more fair, because I think like the rational dollar going into like a Mega Millions or something is worth 22 cents in terms of like actual EV. Megapod is something much more close to an actual dollar, $1 in, almost $1 out. And then users also get to be the yield on the other side. So like, I think users, the LPs have been earning somewhere between like 22 and 25% APY. There's a bunch of mechanics with how that works.

• 51:02David Hoffman?

  But like, any time that no one wins the lottery, the LPs just continue to rack up yields and then ticket sales. So it's fun that we get to have both sides of the market benefit. You can be a customer of both. I think that's pretty cool.

• 51:16Speaker 01

  Yeah, it's, I mean, I think ultimately you let the market speak, and that's where you kind of get innovation. I think it's also frankly just cool as basically building an API for lottery tickets. I mean, it's sort of like strike with a single line, you get to do credit card checkout. Single line of code, you can buy a ticket, you can be an LP, you can sell a ticket. You can combine it with other people, all sorts of cool stuff people are building on top of it. So that's a pet favorite portco right now.

• 51:40David Hoffman?

  Yeah. Yeah. Were you down at Permissionless at all this week?

• 51:44Speaker 01

  I was. Yeah, seen some folks, doing a couple of interviews. Overall, pretty good vibe, other than the fact that it was like 100 degrees in New York.

• 51:50David Hoffman?

  Yeah.

• 51:51Speaker 01

  Insane. Yeah.

• 51:53David Hoffman?

  Yeah, definitely. The permissionless attendance was actually pretty good as far as I was concerned that attendance for permissionless was going to be down because it was in New York because New York is such a, there's a magnet for side events there. But man, people love going to the actual conference. And I mean, this is what happens when podcasters, I think, organize panels. It's like, it's actually like, good and worth interesting and worth going. And also, Blockworks just did a killer job just organizing in Industry City. There was like a ZeroX Research Dunk Tank, so all the ZeroX Research boys were getting dunked, which was pretty fun. And overall, yeah, the vibes were like, pretty good and upbeat and everyone was there. Yeah.

• 52:32Speaker 01

  Yeah, gotta give a, yeah, shout out to the Blockworks crew for organizing another great permissionless.

• 52:36David Hoffman?

  Yeah, yeah. Tom, you are a podcaster. If people liked your takes and liked the sound of your voice, where can they go hear you?

• 52:44Speaker 01

  They can find me on Twitter. I'm Tom H. Schmidt, S-C-H-M-I-D-T. Or you can check out the Chopping Block, we're underscore Chopping Block on Twitter. And yeah, you can check out Dragonfly or see me online, you know me already. But thanks for having me on your pod. It was great.

• 52:58David Hoffman?

  Yeah, I really appreciate it, my man. It was a ton of fun. Bankless, as you guys know, the deal, crypto is risky. You can lose what you put in, especially if you put it into a lottery that's half of the point. Nonetheless, this is a frontier. We are glad you're with us on the Bankless journey. Thanks a lot.