¶ Intro
Ether is not a younger brother of Bitcoin. For a lot of its history they've traded in tandem. But I think ethereum has an intrinsic value given the tailwinds. It's programmable. The future of finance is going to be written on ethereum, not Bitcoin. So I do think we need to start thinking of these things as decoupling. Each one should stand on the merits of the utility and the value they provide.
But the idea of throwing out price points of what's going to happen, you're just going to be wrong and let people down.
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welcome into the Thinking Crypto Podcast. I'm your host, Tony Edward, and we are recording at Station three in New York's Financial District. And joining me today is Joseph Shalom, who is the CEO of Sharplink.
Now.
Sharplink is the institutional grade etherorem treasury platform for smarter, more productive access to eth. Joseph is also the former Managing Director and Head of Strategic Ecosystem Partnerships at Blackrock. He was instrumental in driving the firm's global strategy across digital assets, fintech innovation, and blockchain infrastructure. Joseph, great to have you.
Really happy to be here, Tony.
Yeah, Joseph, you have a plethora of knowledge in the market, so I'm really excited to dive into crypto as well as what's happening in the broader markets. I would love to start with your background. Tell us about where you're from.
¶ Joseph's background
How'd you make a way into finance and end up at black Rock?
Sure, I grew up in the DC area. Actually pretty grateful, have amazing parents, child of immigrants. Education was a big deal. I went to law school, I moved to New York, fell in love with the city, went to Columbia, and after graduating, thought I would go right into business or finance or diplomacy, And I actually practiced venture and technology law in what today younger people would call web one.
Learned tremendous lessons business models colliding, I saw innovation, I saw fraud, And after doing that for a number of years, getting married, paying off my debt, I got recruited to go to Blackrock, and that was in early two thousand and five.
Wow.
Did you always think you would want to work in finance or was just kind of something that pulled you in and you got interested in it.
Actually I wanted to go to the Foreign Service, but when I graduated from undergrad it was like a year and a half wait to take the Foreign Service exam. So I went to law school. And I would tell you studying law was great for both broadening and deepening your mindset, and it actually let you focus on problems without having to be an expert in any area. And practicing technology law. You know, during the Internet Boom and Bust were some of the greatest lessons of my work experience.
And I joined Blackrock when Blackrock was a very small, not well known, institutional only fixed income US asset manager. It wasn't the fourteen trillion dollar trusted fiduciary that it is today. And I joined a business unit that was basically building a fintech platform, a SaaS platform called Aladdin and spent about twelve years helping scale that business as
the chief operating officer. And it was some of the most foundational positive experiences working with brilliant people who knew technology and the markets, and those three things don't always go together.
That's incredible. So you played a key role in helping Blackrock become the world's largest asset manager.
Oh no, no, I would. I would say that I played a role with incredible tea people, and for most of my career I was kind of a number two, you know, always supporting, you know, the heads of businesses, and you know, when we transition to talk about sharplink, one of the fun things in your career is going
from a number two to a number one. But the beautiful thing about Blackrock is if you do the right thing and you learn the business, you can gain the hardest currency and to achieve which is also the easiest one to lose, which is trust. And the foundation of my whole career was building trust and solving hard problems. And I'm super grateful for the twenty years I spent there.
Where along the journey at Blackrock, did you discover blockchain crypto?
¶ BlackRock's Crypto adoption
And maybe it's also in line with the CEO Larry Fink, where at one point he was in type crypto or bitcoin and now obviously things have changed. But where was that aha moment for you?
So I had a bunch of roles at Blackrock in the wealth space. I spent a year as the deputy COO of the firm, and in twenty eighteen twenty nineteen, I took a role basically running partnerships and a bunch of ecosystems, some boring ecosystems, some innovative ecosystems, but one
of them was inheriting a one person blockchain team. Actually, when you do a shout out, it's a wonderful Canadian guy named Robbie Mitchnick who's actually currently running digital assets at Blackrock, and he taught me everything I needed to
know about blockchain and crypto. I would say, we took a couple of years to figure out what the role of a trusted fiduciary asset manager could be, Like I don't like using the word tradfi, but what a large financial player could do to play a positive role for our clients. And we spent almost two years twenty nineteen twenty twenty doing over a couple hundred meetings with the ecosystem.
Wow, that's incredible to go from a one person team to what Blackrock is doing now with tokenization. ETF's the most successful ETF and history of ets which is incredible.
Yeah, but we did it the right way. There's a misnomer or a myth in the industry that when you build financial products, you create demand. In fact, we built the products because their word demand, and so the idea of listening to clients learning that some of the largest wealth managers and individuals and institutions actually wanted exposure to
bitcoin and ether not much more. They just couldn't own spot and so for almost two to three years they had been pouring billions of dollars to get crypto exposure through a proxy investment, which was Crypto VC, because they could invest in venture capital and they did that and they created a massive supply of capital into the ecosystem in twenty eighteen, nineteen, and twenty and it turns out that that was a good strategy, but it underperformed bitcoin
and ether, and eventually we worked with our regulators along with eleven other issuers to be in the position to launch a Bitcoin ETF and an ETHTF in January and July of twenty twenty four. But the misunderstanding was like Blackrock built the products and the clients came. The clients were there was just great product market fit.
So in addition to the et apps, the demand for
¶ BlackRock Tokenization
the ETFs and access to bitcoin and ether, was there also demand for tokenized products or that was something black Rock that pioneering to maybe let the consumer know, hey, there's an alternate option that could give you more benefits. Yeah.
I think when we set a strategy in twenty twenty one on what could be the benevolent role of an influential trusted asset manager, it was really around three pillars. The idea that stable coins, you know, essentially tokenized versions of dollars on chain, We're going to change how value is moved, and we partnered with Circle. We managed their treasury reserve of USDC and that was a great learning experience, and it also taught me that partnerships are win win
and they could endure through cycles. The second was crypto exposure. We connected the black Rock fintech platform to coinbase so clients could invest in bitcoin and ether alongside their other portfolio investments. They weren't going to do it in some web three smart wallet. In DeFi, we launched ETFs to give them that exposure. And the third pillar was tokenization. And you had mentioned Larry Fink. I've never been a spokesman for Larry. I'm not a spokesman for Larry, but
he really evolved as thinking on bitcoin. And I give him a lot of credit because there's very few people in their sixties or seventies who have the humility to continue to be a student of the market and a student of technology, and he learned that it's an incredible store of value and it has a role in a portfolio. I think Blackrock and others believe even more strongly that tokenization is going to essentially be the democratization and digitization
of all of finance. Crypto is a two point four trillion dollar market total financial assets are over seven hundred trillion, So I think our clients wanted to know where we were going, and we led them along, and we launched a token called Biddle, which was a yield bearing security on mayet ethereum that was interchangeable twenty four to seven with stable coins and can be used as collateral in on chain transactions. That became the largest tokenized fund in history,
not because it was Blackrock. It's because we provided real utility and the industry was missing real examples and use cases of utility, and we wanted our first foray intertokenization to be something that would break barriers and give clients more utility than what they had today, which was stable coin's not earning yield.
Pardon the interruption. Hi, I'm Tony. I'm the host of the Thinking Crypto podcast. I wanted to ask you if you can please support the podcast by hitting the like button subscribing. If you haven't as yet, you can leave a comment below as well. And if you're listening on a podcast platform such as Spotify, Apple or wherever you get your podcasts, please be sure to follow and hit the five star rating. I'll let you get back to the content. Thank you so much.
So you've seen Web one, Web two, and worry in what many would call Web three. So is this the natural order progression where with the Internet you're building layers on top of it, and blockchain is one layer and you're tokenizing assets on there. So ten years from now, Joseph, are we seeing all assets tokenize on blockchain?
I think the answer is yes. And I'm a futurist. I'm a believer that certain things can never be reversed, and technological progress is one of them. You know, when you're used to trading Monday through Friday nine thirty am to four pm, and you know in Asia, if you sell something on a Friday, you don't get your cash until Tuesday evening on T plus two settlement. Once people have an ability to trade twenty four to seven in a programmable way with instant settlement. And I'll use a
word that's misunderstood, which is composability. The idea that today if you own a physical version of gold, or if you own a stock custodied at a big bank, there's not much you can do with it. You own it in digital format, you can lend it, you could bit you could you know, earn yield by providing it to hedge funds and others, or stable coins. You know, you own a stable coin, you hopefully can start earning some yield. You can't when you deposit into a checking account. So
I do believe everything will be tokenized. I think it'll happen by as a class, and I think it'll happen in step functions.
This question applies to both black rock as well as sharplink. Why Ethereum, why not another smart contract platform?
Sure? I think there are two things that we need to tip our hat to. One was Bitcoin, the first fully decentralized network that was based on cryptographic proofs. In that case proof of work, very energy inefficient. But it led to this idea that why not have a version of a programmable decentralized network that was programmable. You know, I've said that twice, but truly programmable. And you know, when Italic and others got together to write the Ethereum
white paper, it was really important. They spent a decade building the underlying foundation for decentralized, trusted, programmable infrastructure. And I feel very strongly that there are many trying to imitate, but there is not a blockchain that has ten years. In this case, Ethereum has been up since July of twenty fifteen, zero downtime, truly decentralized, a million plus validators, tens and tens of thousands of developers, you know, clients
across eighty countries, and it's never gone down. And I'll tell you one thing. I don't know a lot, but from my twenty years of experience at Blackrock, I know something. With Surety, which is the largest institutions in the world, when they're going to choose a new platform to digitize financial markets, it's going to happen on one that's the most trusted, the most secure, and has the most liquidity.
And Ethereum has those qualities. And I'm not saying that as a spokesman for Sharplink or a spokesman for Ethereum. These are facts. And if you look at stable coins, of the three hundred eight billion dollars of stable coin, sixty five percent is on Ethereum, and tokenized assets are dominated, not because Ethereum is the greatest marketing organization. It's just trusted.
So on that note, as you mentioned, is not the
¶ Ethereum adoption
greatest marketing organization. I'm curious how institutions are viewing etherorem because there's this paradigm shift, Joseph. For the first time you have a network where you can hold or have how should I say, a financial incentive to hold a native token but also be a participant on a networks. It's unlike you know, I think a lot of people say, you know, you talk about bitcoin and other networks, Well,
where's the cash blow, where's the right? They think about it from a business standpoint, but they're not thinking from a network standpoint. So how are intitutions looking at it as an investment, a building opportunity, that type of thing.
So I think the first I told you we tip our hat to bitcoin, you know, laying the foundation for another cryptographic decentralized network like ethereum. The second actually is to Michael Sailor at Strategy, who had this idea that you can give people exposure to an asset, in this case Bitcoin through a public company wrapper at Sharplink.
We do that for Ether.
I think the fundamental difference between Bitcoin and ether there are two. Ethereum is programmable and ether is a natively productive asset Because for your viewers, ethereum is a proof of steak network. You need to own Ether. You stake it to record immutable transactions on the network, and by staking your Ether, if you do it the right way, you can earn an Ethereum staking rate. Today it's around
two point seventy five percent. So this idea that you can own ether, you can make it productive by securing the network, and in return you get a yield. And that's why I think Ethereum is a better network and Ether is a better treasury asset because it's natively productive.
Yeah, one of my questions for you was, how are you navigating this bear market, Joseph, because it's rough, right as we all market downturns, but it sounds like with Ether, regardless of bull or bear, there's that native stake and rewards built in, plus you can do DeFi So talk to us a bit about the revenue sources for Sharplink
¶ Sharplink revenue
in this downturn.
Sure, even just taking a step back, if it's okay. Sharplink is an Ethereum digital asset treasury company. We raised over three billion dollars in twenty twenty five in common stock, so we have zero debt and we use that to buy Ether and we take that ether, and from day
one we've been staking nearly one hundred percent. So you stake it, you make your ether productive, You get a yield that shows up as revenue on our balance sheet for our investors, and we take the returns on our staked eth and we've just put it back and we grow our eth pile, our eth reserve. We've earned over fourteen thousand ether tokens since our inception, So that's number one.
The second characteristic about why we will survive and thrive in both up markets and down markets is we own something on behalf of our investors that doesn't exist in crypto, Tony, you're ready for this. It's permanent capital. So the idea that when you're running a fund, including the funds that we launched at black Rock, it's not permanent capital. Investors have an ability to take out there. They can redeem shares in the ETF and in return, you're selling your
eth or bitcoin or whatever the native asset is. If you own permanent capital and a treasury and you don't have to worry about the price going up for a period the price going down for a period, you can actually do amazing things to make your token productive. That fund structures can't, and I'd love to share a few examples. But while the price when the price of eth goes up, our stock goes up. When the price of eth goes down, our stock goes down. But we do the same thing
every day. We make our eth productive, but we're able to put it back into the ethereum ecosystem for multiple years because we don't have to sell our eth. We've never encumbered it. We're not a fund.
Very interesting. I have not heard of that concept of permanent capital. So is anyone else doing it? Or is that unique? Too sharp link?
So, I think there are several other eth debts. Some are staking their eth, some aren't. Some have encumbered their eth or have taken out debt or preferred equity, and some of the other dats actually have been forced to sell their eth. There's a few of us who I think are organized the right way, and we can make our eth natively productive by staking it. But I think staking your eth is step one of generating yield. We've done other things that are really good for the theory
and ecosystem. I'd love to share what those are.
Yeah, please if you can.
Sure. So when I said that crypto is usually filled with short term interest in capital. That's very different than traditional finance. You do have short term speculators and buyers, but in traditional finance you have people who take their capital and they deploy it for multi year periods. So let me give you a great example. In any other market other than crypto, there's something called term structure, you get rewarded by deploying your You get more rewards by
deploying your capital for longer periods. In crypto, that really doesn't exist. So I'll give you a great example of a partnership we struck this year. So if you own billions of dollars of ETH, you can view it as a portfolio and you could take portions of that and deployed in more than simple staking. So I only give you one great use case or case study. We partnered with Consensus, which is the largest ethereum go to market
company run by Joe Lubin. We partnered with their layer two ZKVM blockchain called LINEA, two blue chip DeFi organizations, ether Fi and Eigencloud to essentially build a liquid restaking token. We deployed two hundred million dollars into that solution. You get a restaking rate, and then because we were willing to commit our capital to these protocols for multiple years, they were willing to give us incentives ether denominated incentives
on top of our yield. So the idea that you could start getting DeFi level yields as an institution was really interesting, but without taking more risk. These are incentives that will last for our deployment. And if you think that's not enough, you know, pushing the fission frontier to get additional yield for investors. Very often when you go out into DeFi, you're in a web three wallet, you're
taking all sorts of DeFi risks. We did something that had never been done in a public company context is we worked with Anchorage Digital, one of our two custodians, to host this liquid restaking solution in their qualified custodian. So here what I just said, get a restaking rate for your investors, get economic incentives on top of that.
Because you're committing your capital, and if you're able to do it in a qualified custodian, you're actually reducing your operational risk, which in crypto is ops alpha.
So this idea, if.
You have permanent capital, you can go along the ficient frontier and generate higher yields for your investors than you could if you were a retail alone or if you were just an ETF and a fun structure, and doing these kinds of things are super fun. You're breaking barriers, but you're raising standards at the same time. We hope people rinse and repeat. This is the definition of institutional DeFi.
Oh, absolutely, So what's the long term vision for sharplink and even the theorem as a blockchain platform. I've noticed a lot of institutions start with ethan They build there because of the security and all the great benefits you highlighted before. But what's the long term view for sharplink?
¶ Longterm ETH Strategy
Sure, I think we and many others, including some of our competitors, believe that we're in an institutional adoption supercycle. Like that sounds really fancy. People like talking about macro and decade long opportunities. It's the idea. If I described it six months ago, I would have said there are three tailwinds driving adoption of digital assets and particularly on ethereum.
One was stable coins. You know, stable coins are going to grow from a three hundred billion dollar asset class when other countries start creating local denominated stable coins, you're going to start seeing stable coin size explode. Secretary Vesant, US Secretary Treasury says it'll grow into the trillions. It's happening on ethereum predominantly. The second is the idea of tokenized assets. Right now, there's about thirty billion dollars of real world assets that are tokenized. That is a drop
in the bucket of the seven hundred trillion. If you ask them what I'm looking for is I'm looking for people to go from tokenizing single funds to earn entire fund complexes measured in the trillions. Step function increases. And the third I would have said was just this idea of institutions coming to DeFi, and a lot of DeFi is on ethereum. The good, high quality DeFi is on ethereum. The fourth thing, which I think is just emerged, is
not a cliche. It's this idea that AI is not going to be what we've thought of it in twenty twenty four, in twenty twenty five is a generalized AI assistant copilots vibe coding you're going to see in twenty twenty six task specific agents, and then you're going to see these agents start collaborating, and then you're going to see an ecosystem of agents working on your behalf. When that happens, these agents are going to have to trust one another, they're going to have to pay one another.
It's not going to happen in dollars. It's going to happen with stable coins, and it's going to create a vibrant, almost a machine economy that's going to be in parallel
to your personal life. That is going to create transaction volume that we've never seen before because it's going to be automated in real time, and there's a strong belief it's going to happen in an Ethereum decentralized economy, so you have stable coins, tokenized real world assets, institutional DeFi and this idea of a machine agent economy in finance. These are massive, massive tailwinds for what we call the
decade long theory opportunity. And I think Ethereum has not only the license to win because it's trusted, secure and liquid. It's winning. So I don't believe it's going to be the exclusive blockchain. I think there's a role for a lot of L two's and other l ones but in finance, I think this is going to be the net winner.
Absolutely, I totally agree with you, and I'll show an example of you know, you mentioned AI, but also the humanoid robots when that is fully commercializing in the warehouses and in our homes eventually, you know, I interviewed the founder of open Mind. So they're building humanoid robots and there's a crypto wallet built in and the robot gets its daily download of its constitution from any theorem smart contract,
which I found fascinating. And I've often looked at movies and thought, you know, Skynet and I robot, how do we control these things? Well, blockchains a solution, eth being one of the you know, the could be it a fabric of a lot of that.
Yeah, it's really interesting. I love that I grew up in the age of the Jetsons. You may be too young to remember the Jetsons, reading Jules Verns and science fiction, but I really believe we're going to be shocked because when we talk about AI today, it's about a human in the front and AI in the back, and humans are programming it. I think the role of humans are going to be to build governance and guardrails, and the
AI is going to be autonomous and automated. And you know, I think people underestimate the impact of having a digital twin of your wallet that's given agency to do things on your behalf. Within guardrails, We're going to start seeing an asset manager in your wallet. We're going to see an automated market maker in your wallet. Instead of you going into the pond and trying to fish for yield, it's gonna stake your eth, move it around, look for
yield opportunities. It's going to monitor compliance and risk in your smart contracts so you're not the last one out when when the next downturn happens. So it's it's going to be remarkable, it's inevitable. The real question is it going to be how fast is it going to mainstream? But I'm excited and I think it's going to happen on decentralized networks, not on vendor locked in networks.
So Joseph, it sounds like I'm not gonna need a RIA or a wealth manager. I'll have my AI agent. And it's a bit of way off, but it can do that twenty four to seven and go into different markets globally because everything's going to be on the blockchain token ies twenty four to seven, three sixty five.
Yeah, I think that is the answer. I still think there'll be roll for banks. It might be more in commercial relationships than in retail, but I think there's going to be a view no different when you got your phone, your iPhone, your Samsung in the early days, you had an expectation around a commercial experience, a consumer experience, always on, always available, programmable, easy to use. You don't have that experience in finance today. And once you get a taste
of what that's going to be like. And I don't mean this like you know you're on a blockchain. I don't mean the UX is bad. I mean it's just seamless, and it's happening behind the scenes. You don't even know you're on the chain. You don't know that you have an AI agent helping you. When that happens, there's no going back. And I think some of the largest institutions in the world are starting to realize they need to evolve. Stop talking about accounts, start talking about wallets.
Wallets with sharpling strategy around ether, do you foresee potentially
¶ Eth layer 2s
adding layer two assets layer twos on etherrem into your treasury or it doesn't really make sense.
I think for us, ether is going to be that trust commodity that secures the future transactions, whether again they're cryptonative, whether they're in DeFi, whether they're tokenized real world assets trading for it twenty four to seven, whether it's the machine agentic economy on ethereum. So I think Ether is going to be a really really important token, almost a trust commodity, in all order to help secure these transactions.
So Ether has a lot of tailwinds. I do think that the market isn't yet pricing all that in, but I do think in the market we're going to start seeing a lot of divergence and differentiation between tokens and protocols that are truly providing utility versus those who think first price action then utility. I think the price action is going to follow the utility, not the other way around.
And October tenth last year was a bit of a wake up call, and I think we're going to have a flight to quality and utility, and I think that's good for the markets.
Do you think the catalyst for that is the Clarity
¶ Clarity Act impact
Act passing where you have the clear rules of the road. It might help mitigate some of the over speculation, which look, speculation is part of every market, but you know the rug polls and things like that. We weed that out, and like you said, we entered an era of utility.
I think that I think that is the case. I think it's going to happen with or without the Clarity Act. I think if the Clarity Act doesn't pass before the midterms, the CFTC and SEC they're working in unison, they're working in concert, and they'll do eighty to ninety percent of this through rule making. That said, I'm optimistic the Clarity Act will pass with some sort of compromise between the banks and the stable coin issuers. I think what's even more important is that you know, a lot of the
liquidity was coming from speculative money, which is actually good. Sure, startups need the innovation, they need investment, but I do think there's a long tail of tokens that don't have
a ton of utility. The real institutional capital is going to go to the ones that are going to be building the next layer of infrastructure, the next layer of governance, the next layer of a machine AGENTIC economy, and I think we're going to see a differentiation in twenty six and certainly in twenty seven immedia.
So it's kind of like the maturing of the crypto mark if you want to say that.
Yeah, it's maturing, but it doesn't mean that the building is going to slow down and the innovation is going to slow down. It's still really volatile, yeah, which is a great aspect of a market that's in growth stages.
Yeah. It reminds me of in I think it was nineteen ninety six when President Bill Clinton at a time they passed the Telecommunications Bill. You know, it's the big battle between those folks and the Internet, and that kicked off incredible, incredible innovation. So it feels like we're at that moment.
Yeah. I think there's this idea that there is a doomsday coming because of AI. It's going to take over our lives, it's going to take control of governance, it's going to replace jobs. There was that same fear in nineteen ninety six that the Internet was going to destroy business models. People didn't understand that it just became the new means of value creation, the new means of production. And as long as we can make sure that these
new AI models are in the hands of everyone. In fact, they should be in every library, accessible to every human being. That is going to be the new means of production, and it actually breaks down barriers. You may not need the same level of Ivy League education to start your own company. You just need access. So I'm actually very bullish that we may have a period of disruption where jobs are going to be disrupted, but I think it's
going to create incredible prosperity and efficiency. The number one question is the benefits of this efficiency gain that's going to be step function. Is it going to go to all humans or is it going to be held in the hands of a few companies. And the question is are sovereign nations going to put barriers up or is this something that's going to reintroduce globalism where information value will no longer have national barriers. So those are my
two questions. Where is the value going to inure to and are is this going to be Are these going to become sovereign chains with walls or is it going to be open to everyone? And it's going to reintroduce this idea of globalism, globalism of information and supply chains.
Great question, and I'm hoping it's interoperable and everybody works together. And you know, with stable coins and CBDCs are moving at T zero, suddenly instantly we can move money faster, cheaper, better lives for people and things like that.
Yeah, And I just came back from two plus weeks in Asia, and I learned a few lessons. I learned that when the Genius Act was passed and the Trump administration became pro crypto, the US catapult to ten years forward in terms of clarity lowercase C clarity. And it started with this idea of we need to mainstream stable coins.
And there's a geopolitical angle that people aren't talking about enough, which is, you know, as demand for US treasury is waning, Russia, China, Europe buying less US treasury, stable coins require people to buy treasuries. And of the three hundred and eight billion dollars of stable coins, tether USDC that the twelfth largest creditor of the US government. So when I was in Asia, I think there was a wake up call and realization that the gun went off and we're in a race.
And whether you're in Hong Kong, Soul or Tokyo, there's a realization they need to pass stable coin legislation, they need to start issuing licenses because they want their economy to not be beholden to US dollar transactions through stable coins. And if the world is going to tokenize and digitize, there need to be Korean wand back stable coins and you know, Japanese yenn and Hong Kong dollar, and that is the first step to what's coming next, which is tokenization.
Each of these regions want to become the digital hub of Asia, and they know they're in a geopolitical competition with the US.
Oh yeah, there's such a great geopolitical layer to all of this. And you know, I watch the top holders of US treasuries and they see Tew They're climbing up the list.
Like every year alongside circle USDC.
Yeah, it's fascinating.
Such a paradigm shift completely, maybe a new Bretton Woods moment, if you want to call it that.
You know, yeah, we're we're at the end of an eighty year supercycle and there'll be a new supercycle. I liken it a little bit to you know. The nineteen seventies saw the electronification of all equity markets and the nineties and two thousands on the bond market. This is going to be the future of how we live. It's going to start in finance, and it's going to move to governance, and it's going to really empower, you know, billions of people in ways that they haven't been before.
So I want to stay really positive. I think this can be a force of immense prosperity and good.
You know, you mentioned the change that took place in the seventies with the digitization. Do you see that maybe twenty thirties a bit too early, But let's say twenty thirty five, the convergence of the stock and equity markets with crypto and the commodity markets, and it's no longer they're in their own segmented group, but rather it's just the market because it's all token.
Yeah. Someone I admire, my chairman at Sharplank, Joe Lubin, has a great analogy. He says, we're starting on separate rail tracks. Those rails will converge and the word trad fi will become obsolete, And I think the word crypto will become obsolete, and we're just gonna call it five. It's gonna be finance it's going to be digital, and it's gonna be cryptographic, and it's going to be twenty four to seven, and it's gonna unleash stranded capital like
we've never seen before. But it's just going to become digital finance. We're going to live in a digital world, in a digital economy, and it's going to be in our wallets and it's gonna be in chips and it's gonna be all around us.
Wow, a brave new world. I have an eight year old daughter, so I think about the world she's going to be living in it when she becomes an adult. And I'm trying to, like maybe Prepper, here's blockchain, here's AI, here's what to expect, and you know, I try to not also push certain things that are happening now too much because it's going to change by the time.
Although it's interesting, I told you I grew up in an immigrant family. I was an immigrant to technology as well. It happened when I was in my Internet happened when I was in my twenties. Your daughter is going to be digitally native. You're going to become, you know, the old digital immigrant. She's going to become your help desk I see it with my eleven year old at home, So it's amazing.
It's amazing how that works. It's fascinating. And you know, with the building out of the tokenization market and stable coins and much more. You know, we talked about it eth being that first up blockchain of many institutions and companies go to. There are also a lot of l twos, which I referenced earlier. Recently of Ittalic Blootarouen said there
¶ Vitalik Buterin Layer 2s
may not be a need for as many l twos, especially as there's upgrades on etherorem as a layer one. So do you see some consolidation there, not that all l twos are going to disappear, of course. Yeah.
Look, I think the l twos on Ethereum were critical for five, six, seven years, and I think they're going to play a role in the future. They were critical because Ethereum built its protocol to be the most secure, to be the most trusted, to never go down. But they didn't actually prioritize initially in their roadmap throughput to
the level that's needed for what's coming and privacy. So they had an intentional roll up strategy where you know, you can encourage layer twos to benefit from the security of Ethereum, to be EVM compatible, but to essentially be able to be customizable and build massive throughput. In the last couple of years and the next couple of years, you're seeing step function increases in Ethereum mainenet, the layer
ones transaction throughput. I think what Fetalic is saying is you can't be a generalist layer two just because you're fast. It's not enough. You need to have an edge, and that could be privacy, it could be something else. You might be the institutional chain, you might have a you know, an asset class that you're focused on, But to to be a generalized L two is not helpful. That said, I think there will be other l ones. Many are
coming for Ethereum. I just think the finality and economic security needed by finance it's going to happen on Ethereum. Others may be great for meme coins, gaming and things that require less economic security, but I think the advantage of speed. It's coming to MAInet and you're going to
see it be both secure and with maximum throughput. So we will challenge some of the layer twos unless they customize and look, there's a reason there's a reason why Robin Hood, there's a reason why coinbase built on ethereum. They want the inherent security, but they want to be able to customize it in the way they want.
Yeah, that makes sense, and it seems like Joseph, I don't know if you agree with you, but many organizations and companies may just build an L two for their inter internal movements of value or whatever they need to do. I think of Sony, they built sonyum Etherorem L two. Yeah.
Look, it's interesting. I think we need to break with the prior technological cycles. So what do I mean by that? The prior technological cycles, and I'm going to go old school. The browser wars, the CRM wars, yeah, the cloud wars, the phone wars, the AI wars. They were started with a plethora of participants and then two or three dominated. There were net winners. And by the way, in many of these use cases, it's the same net winners. It's Apple, Google, Amazon, Microsoft.
I think what we're really really hopeful for is that there'll be a million chains and a million stable coins, and anyone can spin it up and win, and AI will not be centralized in three hands. I hope this technology revolution is more decentralized. I hope this technology revolution is more democratic, and I hope the benefits go to the users, not necessarily the incumbents. And I think that's what the promise of truly decentralized blockchain and AI can provide.
There's a role for big technology, but I hope it's more democratized than what we've seen in the previous layers, and I believe it will be.
Oh yeah, I'm in agreement with you that the powers are not consolidated, but more decentralized. And you know, I've been hearing to term a lot lately, a level playing field, more of a level playing field. I would love to
¶ Crypto bear market
get your thoughts on the market conditions. You've seen many bull and bear markets. It's all cyclical, right, Joseph. But it's of course tough to go through these bear markets. Not asking for price predictions, but do you see crypto rebounding maybe later this year or next year? Things like that? Sure?
I think can I start with two statements?
Sure you can't.
Like a volatile asset on the upside and bemoan it on the downside. That's the definition of volatility. You want the upside. It has downside. I've seen similar draw downs and consolidations and Bitcoin eighth and others five times in my crypto career, and I've only been doing this for about six or seven years. And each time it's recovered
in a V shape recovery and come back stronger. And what it often does is it takes out leverage for a quarter or two, takes out liquidity for a quarter or two, some of the real speculation you benefit on the high side of all, you lose on the consolidation period. So I'm not freaked out. And by the way I said it earlier at sharplink, we're built for up markets and down markets. We're productive through every one of these markets,
I think I said earlier. I think one lesson learned from this October tenth deleveraging moment is people need to understand the risks of what they're doing. And I think what you saw in October tenth on PERP exchanges and centralized exchanges and decentralized exchange was there was an expectation that if you diversified across exchanges you were fined. But then you started seeing things that people didn't understand, which
was auto deleveraging. Yeah, and you wipe out one side of a position, you think you're hedged on the other side, and it doesn't work. So one of the things that I think we need to do in the crypto space is not call everything a tail risk. Yeah, like Toobra eleventh, people were telling me, oh, it's a tail risk. It was unexpected. Like in all of finance, you model tail risks. You understand the risks of your positions, the correlations, the
counterparty risk, the concentration risks. You know, in this case, oracles who are trying to price assets failed and that led to a cascading problem. But I'm actually an optimist and I think we'll get through in the next few months, and I think we'll see Bitcoin and eth reach new highs. But I won't throw out random predictions, and I I do have a view I want to share, which is I'm going to put it out there. Ether is not a younger brother of Bitcoin. For a lot of its history,
they've traded in tandem. But I think ethereum has an intrinsic value given the tailwinds. It's programmable. The future of finance is going to be written on ethereum, not bitcoin. So I do think we need to start thinking of these things as decoupling, and each one should stand on the merits of the utility and the value they provide. But the idea of throwing out price points of what's going to happen, you're just going to be wrong and
let people down. And I also don't like the narrative that you know eth is just a coefficient to a younger brother of bitcoin. These are these needs to decouple and they have to stand on their value and utility.
What do you think is the catalyst that drives that decoupling. And it's also a follow up question to the October tenth situation. Is a lack of regulation, a lack of infrastructure, or combination of both.
Actually think it's it's even simpler. So I actually love bitcoin. I love ETH. I think there's gonna be a role for a lot of utility tokens. But bitcoin does one thing exceptionally well. The network is trusted and it moves a store of value. At this point, ninety five percent of ale bitcoin has been mined, and I think there's a million bitcoin left to be mined. And it does one thing well. Think of it as digital store of value. Not sure if it's really functioned in the last few
months as digital gold or a or a risk off asset. Ethereum. I think will over time gain supremacy because it's programmable. And when you start seeing stable coins go from three hundred billion to trillions, you start seeing tokenized assets go from thirty billion to trillions, You start seeing institutions participate in DeFi, you start seeing agentic economies being built through smart contracts and rules, and you know, I'm going to geek out erc eight zeros or four, which is the
trustless agent protocol of etheroeum. It's not happening on Bitcoin. Yeah, And so I'm not saying one is better than the other. I think over time the Theorem network will be a more used network and provide more real world utility. But I love them both.
Yeah, They're very different, and I honestly I hold both. I stake ETH and Bitcoin is my digital goal. But ETH I can do a lot of different things. I can build, I can put it to work, and it's just why not have both, right? And one is they're very different, you know, And as far as network adoption, you know, ETH has that ability to have people build on it. And metcalslaw can play out there, and I'm hoping for the decoupling as well.
I agree, but I'm not talking about a flippaning. I'm not an ethe Maxie. I'm actually a finance transformation maxine. I know it's going to happen on ethereum, but yeah, you know one thing that is just super interesting is is the quantum question has been hurting Bitcoin a little bit. And this idea of how do you quantum proof Bitcoin including wallets that are og wallets that have never been activated in a decade or longer, Whereas Ethereum I think has a roadmap to be quantum proof. It's a high
priority to the Theorem Foundation. There's a working group. So I think bitcoin had a singular narrative and it's at risk of losing a bit of that narrative because of how it's performed. But it's a great asset. It's a scarce asset. You want to own rare, scarce assets in a world where you know many economies are debasing their own currencies.
Yeah, well said, what's on your road map for a sharplink?
So I think it's really interesting. First of all, I want to thank you you're like the first podcast in a while that hasn't said we're in DAT four point zero.
Right.
The Digital Asset Treasury space launched last summer in Ethereum, Solana, Hype and other coins, you know, and there's no ecosystem in the world or no business model where you're eight months in and you're in version three or four. I think we're in version one point zero. Version one was building the right team, staking your eth, doing it yourself. You know, a lot of the dats rely on third parties who take a lot of value out of the system.
I think the second stage or where we're going is to make it the most productive and to take that permanent capital, in our case billions of ether and put it back into the ecosystem, not just to be benevolent to the ecosystem, but to drive yield. You do that, right,
the price of ether will continue going up. And I think the third stage is going to be for digital asset treasuries to specialize and build operating companies that are Ethereum aligned, that help the ecosystem, that drive profits, and if those profits and revenues are in ETH, to another means to accumulate ETH on the balance sheet. You make it productive, you drive yield, put it back on the
balance sheet. You build ethereum operating businesses, you earn it in eth or dollars, you put it back on the balance sheet. So it's a very righteous cycle.
You do this right.
You don't take out debt, you don't encumber your eth. You survive good cycles and bad cycles. And that's fine. I think we need to be mature about this. I said it before. You can't like a VOLTI asset on the upside and bemoan it on the downside.
Absolutely, and I really like that you guys don't have a plethora of debt hanging over your head. That's a very good thing. I got some wrap up questions here
¶ Wrap up questions
for you. Sure, First, if you could create your own metaverse, what would the.
Theme be, Oh, you're putting me on the spot, you know what I'll do, yls No, no, no. It would be a metaverse of the library of libraries, and you'd be able to walk into, you know, the Library of Ninveh, the Bagdad Library of Wisdom, the US Library of Congress, the British Museum Library which has three hundred million artifacts, and you'd be able to, you know, in ninveb Babylonia. There were artifacts that had, you know, incredible history. Many
of these were destroyed. So imagine you can walk into a library of libraries and then even better, you can read and speak any language because AI has translated everything. Everything that would be my Disney world. So a metaverse library of libraries in your native language, where you can feel and touch these dusty books. There's a lot of knowledge that have been gathered that has never really been accessible to most people because you had to get on
a plane. Who's going to Iraq, who's going to Alexandria, Egypt, not everyone's going to DC to the Library of Congress. Make that accessible in your native language. Oh and then push a button and a TLDR is what.
You just didn't read? That would be amazing.
Yeah. That so I'm going to patent that the Metaverse Library of Libraries.
That might be your next endeavor, Joseph.
Do you know what, if I had more time, I would actually take the whole worldwide organ donation system and put it on chain with smart contracts and priorities.
Sorry, that's that would be a side hobby. Oh wow, but I love that at Metaverse Idea. That's something I would geek out.
On and go to you really put me on the spot. What's the next put me on the spot questions? I like hard questions, rapid fire questions.
Favorite food.
Favorite food is usually at restaurants that don't have tablecloths, and I will tell you, I just came back from Tokyo, Soul and Hong Kong. I really like Korean food, and our offices are a block away from New York Korea Town, so I would say Korean food, but someplace that doesn't have a tablecloth.
Favorite musician or Ban.
The Cure from the nineteen eighties and nineties.
Nice. Favorite movie.
I don't have a favorite movie. I just I watch everything pass Favorite book, I think a book. I don't read books. Twice I read a book recently Wise. It's a book called A Thousand Brains, and it's this idea of a unified theory of intelligence, or a unified theory of how the brain works. And it's remarkable. We know a lot about the anatomy of the brain, but we have no idea why we have like a neocortex and
billions of neurons, or why they're all firing. And it's this theory that there's not one brain determining that I'm picking up a mug right now, Sure, there are thousands of mini brains who each have their own model. There's not a unified model of knowledge in your brain. Each one has its own model. And when you touch, perceive, or pick up something, they're all firing to put out their theory. And there's a consensus mechanism where the brain kind of votes, yes, this is a white mug. It's cool.
It's made of clay, so that a thousand brains with different models, each voting, and then you have this idea of a voted perception and it's brilliant. So it's called a thousand brains. I would highly recommend it. Will and by the way, if you're in crypto and you're working around decentralized consensus models, it touched a nerve, no pun intended.
Yeah, it's analogous in a way, right, Yeah, that definitely makes sense. Why you're networking? What are you doing for fun?
I'm a father of three, I've been married for twenty six years. This year I'm doing something super geeky. My local library has a fifty book challenge. Can you read fifty books in a year? And I'm not talking about short stories and children's anime books. So I'm trying to read fifty books this year. And I have like a very very taste from things like I just described, to murder mysteries to science fiction. I do like to shut
down on the weekends because I'm a really intense worker. Sure, but I spend time with my children tour out of school, one lives at home, and I read a lot, and I'm really looking forward.
I live in New York.
I live outside New York. Every time we've seen the graphs. Yes, this winter, the snow came back again.
So we're recording on Wednesday, fourth and March, so got a few more days or four or five days before we hit that high sixty eight degree weather, so that a should be pretty nice.
Yeah, I'm looking forward to the spring and seeing grass again.
Oh absolutely, Joseph, have great conversation, A pleasure. Thank you so much for joining.
Me, my pleasure. Thank you for the questions and making this conversational. I hope your listener learns something and I learned something too.
Thank you so much for tuning in. Please hit the like button, subscribe if you haven't as yet. If you're listening on a podcast platform such as Spotify or Apple. Please follow and leave a five star rating. Thank you so much.