Learning to Love Crypto Volatility

with Russia launching a massive invasion of Ukraine. What do all these developments mean for digital assets? We'll get into it with the chief strategy officer at a big digital asset investment firm. I want to welcome Melton the Mirrors. She's the chief strategy officer at coin Shares. Melton, thank you so much for joining us. I am so delighted

to be here, Ldonna. We've and flirting online and offline for years now, years years, and I've always appreciated part of your coverage of the cryptos days to be here, need to no one flirts with me, either online or offline, maybe for a reason, but uh well, well, so let's get into it a little bit and tell our listeners about coin shares. I mean, I think you're probably most well known for exchange traded products tracking bitcoin and ether,

but a lot more going on with the company. So what do you give a sort of a you know, quick rundown of what's going on at coin shares and sort of how you got into the space personally, into the crypto space. I'd love to, and maybe I'll actually start with my journey into crypto first, because it's really relevant to who we are coin shares and why we

do what we do. So before I got into crypto is actually in the oil and gas industry, and I started on the trading side, then moved into the M and A side, and then into corporate treasury at Exnomobile. At a time, if you recall, many many years ago, an ex don Moobil was in fact the largest company in the world by market capitalization of four billion dollars, which today it feels very paltry when we have companies with market caps and several trillion dollars, but at that time,

this was less than a decade ago. You know that that was a pretty big deal. As I went to graduate school, I was at I was like, I don't know about oil and gas. The world was changing a lot, everything was going digital. I've never heard of venture capital or startups. Winter God School and I t went down you know, the startup BC rabbit Hole, and had been personally interested and engaged with bitcoin, but started interacting with

a lot of bitcoin startups. Um, if you recall, it wasn't really until when coin base received its first round of funding went through by Combinator that people were even investing in in bitcoin companies. At the time, it was really just bitcoin. None of these other cryptocurrencies existed. Web three didn't exist, Defied didn't exist. And then as I was leaving grad school, I met Barry Silver who starting

Digital Currency Group, and when I met the coin Shares team. Um, really, what we bonded over is all of us come from the commodity space. So my business partners they had launched and ran a commodities hedge fund. And again, if we look at the narrative cycle around commodities, if you recall twenty years ago, commodities really weren't an investible asset class.

A lot of commodities trading was done physically by firms who operated in the commodity space and the energy space who had a need to hedge, right, but um it really wasn't a space with a lot of financial instruments or really active electronic market. And so what they saw that I think was so interesting and really the genesis of point shares was trading and market infrastructure, building market infrastructure.

And what they saw that I think was so compelling, and I think so many other people who were earlier Crucco also saw from commodity space was this nasive market. It was already inherently digital, right, there was nothing physical that needed to be dematerialized, but the market infrastructure on bitcoin didn't needs this at all. So most of what I did for the first five years in the industry is invest in market microstructure on and off rams and

a lot of the basic elements of this market. And what's been really fascinating is over really until twenty the crypto market operated largely outside of the traditional system, so outside of existing brokers, outside of existing exchanges, um, it didn't really even have its own access to banking system, which is why we saw the proliferation of the stable coins, right. We needed a way to settle dollars on the same

sort of rules that that crypto settled with. Our journey at point Shares really started with trading, thinking about market structure. We then got into the exchange trader products space. Most people know our legacy product line, XPT Provider, which was the first crypto et P in the world, started with bitcoin. Now we have ethereum Um and a bunch of others. The two biggest elements of our business today are asset management with three platforms, XPT Provider, Coinchers, Physical which is

fully collateralized and uh sort of cold storage coins. And then we have a e t F that tracks crypto equities, which are also an exciting part of the market. Now it's no longer just the digital assets themselves, also equities. We're also publicly listed, so that's been a fun process and we can definitely talk about that what eas side of the crypto space. And then obviously it was underpinning all of that. We operate all of that infrastructure, We

build all that infrastructure. That's what makes the products possible. And then what I get to do. I have the best job in the company. I think, I get to think about what the future looks like, so I invest in our behalf and focus on investing M and A

and growth. And so it's been really interesting over the last few years, in particular to think about how asset management, how investments, how market microstructure fundamentally changing, and what the implications are for how we build and distribute financial products, particularly on chain financial products and non custodial financial products, which is a thing you know, you would never have conceptualized even as little as five years ago, but now

it's very much becoming a reality with hundreds of billions of dollars locked in these protocols that are managing money programmatically for individuals and institutions alike. That's really the genesis of coin shares. You know, we're a publicly listed company. Um we just reported our full year results for last year,

so people can go and check that out. We've atty big research team that publishes all sorts of great insight on markets, whether that's the exchangere to product market, whether that's the equities market, whether that's crypto market structure and new assets in the crypto space. But it's been a it's been a fun journey over the last four years building that business and really thinking about constantly how we're

going to disrupt ourselves. Right. I'm glad actually that you mentioned that you guys just reported earnings because I wanted to ask you about that and what type of growth you're seeing or what you're seeing ahead for you guys. Yes, so so for us, obviously, exchange for your products continue to grow. Um. What's been really interesting is we see a lot more entrance into the ETP space, into the structure product space. I think one of the really cool

things happened over the last two years. It used to be the only way people could really access crypto investing in the early days was through exchanges, right, and I recall my early days. You know, you'd send envelopes of cash, or you would try to wire money to bank in China or Japan and you'd hope that that would work out for you, or you'd use local bitcoins. Um. I remember when Circle came on this theme and I was

in Boston, Circle as the Boston company. Leave ability to a c h or wire money into a platform by crypto was such a huge relief. But if we think about what's happened over the last two years, crypto is now accessible directly through dozens of both traditional fin tax as well as crypto native fin techs. We have coin based, Gemini, cracked in a lot of others, but we also have Square and robin Hood and so By and others to make it really, really easy for people to manage their

crypto in the same way they're managing their equities exposure. Right, So, I think that's been a really amazing development and has certainly made consumer on ramp much simpler. An area I'm really excited about is putting crypto in iras and tax advantaged accounts. I think that's a huge opportunity for this

growth asset. We're investors in a company called Choice that does that, but Alto i RA does that and others do that as well, and I think for us, the biggest area of growth is really continue think about how we can use our market infrastructure and all of the technic l you we feel the coin shares to reach our consumers in different ways, our clients in different ways. Maltim, I wanted to ask you about sort of the institutional

investor end of things. You know, correct me if I if you disagree with this, but I kind of, you know, I get the sense that for a lot of sort of individual retail investors. As you pointed out, there's so many easy ways to to get yourself exposure to crypto. But I feel like the institutions are really such a big well of money there that potentially could come into

the space. And my guess is they more likely uh be interested in a in an exchange traded product, um, something they're more comfortable with, and say storing crypto themselves or going through you know, direct exposure through a coin base. Where are institutions in your opinion as far as where on the curve are they as far as getting into crypto. It's it seems to me like we're just at the

early days of them scratching the surface. What are the type of conversations institutions have about crypto as far as how much exposure they really want to get? Yeah, that's been the topic in the crypto industry for quite some time. So let's just start by talking about how institutions typically allocate the new asset classes. For most it starts with research, right, and it starts with actually an internal decision process around whether or not they want to engage with a specific

asset class. Now for a bitcoin in particular, for the longest time. You know, when I first went out to the street and tried to raise money for a bitcoin business, people told me I was crazy. Does this DNI? Everyone wanted to do blockchain, but we weren't really clear with

that that meant. But everyone was doing blockchain. And what was really interesting about what happened in particularly when individuals like Bill Miller, Um and you know, Stan Drucor Miller came out and said, I'm Paul to your Jones, right, came out and said I'm allocating a bitcoin. I have long term conviction in mis sasset. It made it acceptable institutions for chief investment officers, for investment committees, for risk

review committees to start looking at the asset. Right. They've been doing a little bit of research, and I'll say there's some firms that were really you know, forward looking and started doing research as early. But it was really in when people started saying, Okay, this is an asset class, maybe we're willing to consider it, We're willing to talk about it Um And what I think is happening now

is institutions definitely want to add crypto exposure. I mean, all you have to do is look at the margins in this business, thanks for in the business of making money. Financial firms are in the business of making money. There's an industry that is printing billions of dollars of revenues. Right they're going to get in that game. That's that's

there it for them right now. The challenge is how do they mesh the way they're customed to interacting with assets with this new thing, a digitally native asset that settles with finality on a public network. Right, That's that's a little bit different. So the cme um cash settled futures product has been really popular with institutions because it fits within their existing infrastructure, doesn't require many new processes internally.

The only risk they're really taking their right with the c music counterparty with this cash settled contract is the asset risk. And that's really what's been the biggest thing for us that coin shares is thinking about articulating those different risks and then qualifying, quantifying those different risks, and finding rappers and constructions, because the only risk they really want to have right is asset level risk. They don't want to have market risk, they don't want to have

counterparty risk. They want to try to minimize that. They certainly don't want to have some contract risk, which is something you face these defied products. So I think a lot of institutions through the sort of risk review phase, and now the question is do we build buyer partner start to offer these capabilities. So we've partnered, for example, with invest Go on the TF side, and that's been

a great partnership. Asset manager massive asset manager who really wants to get into the crypto space, partnering with the crypto native firm like US gives them an accelerated way to do that, and we've seen a lot of partnerships of that type. We're also seeing folks buying. We've seen a number of financial institutions acquiring companies in the crypto space or evaluating the opportunity to acquire, although evaluations are

pretty high these days. And then um some are building, right, But the issue with building is it takes a lot of time. It's really difficult to find talent, and at the end of the day, not certain that the culture at institutions is necessarily built around keeping pace with an industry that's so dynamic and constantly evolving. But I think right now that's really where most institutions are at they have internal approval, the board is on board shareholders, you know,

I find it compelling. We've certainly seen when companies around their announced shouldn't do something crypto, right, we see a share price pop. So it's certainly value creative. I think now the question is how do they actually deliver on that in a meaningful way, um, and what does that timeline look like the next two to three years, it's going to be table stakes for every asset manager, every financial institution to offer crypto related services. I don't think

many of those will be on chain. I think they'll find ways to wrap those assets, to make them custodial and to minimize some of the that they perceive with engaging with crypto assets in a more way that has the price action we've seen over the last few months, UM sort of slowed that momentum at all. Uh, you know, thrown some cold water on it. Absolutely not what I

think has been interesting. The argument we used to get, or the pushback we used to get when we speak to the institutions that allocating to bitcoin was around bitcoin's volatility, and as we've seen in the last two years, volatility is no longer limited to Bitcoin. I think we've seen volatility all across the f f AT landscape and all

across the part polar landscape. So I think um as a sort of a mindset shift has happened over the last two years, where everything else has gotten much more volatile. I think institutions are much more comfortable with Bitcoin's inherent volatility, and in some ways that volatility actually can be an an asset, particularly on the fixed side, or or the trading side, or the prime brokerage side right, which are big profit centers for many financial institutions. You know volatilities

when you make money. Vola vol is good for traders. So I think that that volatility has gone from criticism to now being sort of did reality and potentially an

opportunity for firms. So the big news obviously this week is Russia Ukraine tensions, and I wanted to ask you what happens to bitcoin prices as things sort of escalate in the coming days, because the thought used to be at least a couple of years ago, I remember hearing a lot about for example, Venezuela like bitcoin, and whenever something was happening in an unstable country, people could potentially use bitcoin or start to use bitcoin a bit more so,

how should we be thinking about what happens to bitcoin's price as these Russia Ukraine tensions as collect Yeah, Vil Donna, I think that's that's a huge question. Um. If I had a crystal ball, right, I would be trading this. I sadly don't have a crystal ball. What I think

is interesting is you alluded to. I think one of the narratives around bitcoin historically has been bitcoin is an antidote to chaos and government incompetence, right, And I think in many ways historically gold was also viewed that way, right, And we're seeing right now gold is having a little moment, it's rallying. I think one of the big questions around bitcoin in particular in this environment is we don't know

what's going to happen. Right. A matter of weeks is not really going to reveal what correlations might exist between bitcoin and other sort of macro trends, political trends, cultural trends, etcetera. I think it's a bit too early to say. Um. I think certainly bitcoin in an inflationary environment has been something we've been waiting for for a long time. Um, and we are going to look at the data like we do with coin Shares research team. We're gonna continue

looking at correlations, decrrelations and where things shake out. But again I'm hesitant to make any sort of definitive conclusions. I think it gets things we don't have. Unfortunately, in the sasset class is a long time series of data to look at to allow us to make inferences. Things have changed so much fundamentally that it's very difficult to pinpoint,

like what's happening in markets. I think everyone is a little bit perplexed and confused to be candid, and if you look at the way things are trading in markets like it, it's wild. So um, I don't have a clear answer to that. I think for us, we're going to continue watching, We're going to continue looking at the data. Is always they I love to bring receipts of CBS, susy baby. They are a long um so, so we want to get some more data. We want to look

at this over a longer time scale. But certainly we're optimistic around this idea that people will continue to look at bitcoin as a portfolio diversisfire, an effective portfolio diversisfire in an environment of increased chaos and uncertainty, you know. To me, I think the one thing that skeptics of crypto sort of sees on is that the narrative bowl case for crypto tends to be kind of a moving target. You know, Um, as you say, you know, government chaos

and and sort of geopolitical chaos. Was was one selling point obviously, monetary inflation being sort of one of the evergreen bowl cases for crypto. Is it just natural then to expect a correction like this when central banks start moving in the other direction and tightening policies? I mean, is that the main cattles you think? For what we've seen this drop in in crypto prices over the last few months. Um, is it as simple as that? Or is there more going on? Do you think? I think

there's more going on. So if we look at how much bitcoin has dropped, Bitcoin is down around from its last high in November around set nine thousand, So it's down for you five percent. If we look at tech equities, tech equities are down and round thirty two in some cases like right, So we've seen drawdowns in in that asset class, which is technically considers a growth assets, we're using more traditional value stocks like pre um, core equities

rallying a bit right UM. But I think across the board there is growing awareness and I think it's not the Ukraine Russia conflict that's highlighted this, but it's what's been happening in Canada with the Drucker protests and um the Canadian government cutting off financial access to more involved in in these protests. People in the in the West, right historically, and the majority of capital markets activities still by and large in the United States and in the

Western hemisphere. If we look at what's happened in the West, people in the West have never really conceptualized situation like

Venezuela or Greece or Turkey like it. Just I think as we watch what's unfolded over the last few weeks and months with new regulation being proposed around surveilling bank accounts with balances over six and some of the new rules and be increased oversight in the lack of financial privacy that's coming down the pike, I think people just globally are becoming more aware of the fact that moving into the digital age and our lives being so driven

by technology. On a day to day basis, every facet of our lives also has some profound implications for our self, sovereignty and the level of freedom we enjoy. And so I actually think for many people it is catalyzed and renewed interest in how bitcoin other cryptocurrencies could potentially be part of their lives in the future. And you know what I always say is taking a small percentage of your portfoliolocating it to bitcoin. It's a form of insurance. Right.

If we're wrong and everything else works out, great, you're covered. But if we're right, the fact that this is still such an asymmetrical risk reward asset makes it worthwhile making that small allocation. That's how I view it, and when I think to people that sort of how articulate it.

And again, there are risks. I certainly don't think you know that there aren't risks here, and certainly it's important to convey those that I think around the world just people are becoming more aware of the potential impact technology, in particularly financial surveillance technology will have on their lives, and they're starting to think more critically about it. I mean, we've been locked in our houses for the last two years.

Investing has become a form of entertainment. And I think generally people are looking around them and they're asking what do we do from from here? Especially for my generation, like we got screwed by the financial crisis. That's from college, no jobs set back, you know, four or five years. You're in your thirties, So so what are you gonna do? It's really, I think, good, an interesting shift that's happening. It is a generational shift, and I do think, um,

what's interesting. There's amunt of amount of capital in the crypto space. You know, we talked about institutions for a long time, and we thought about institutions, we thought about things. Now when we think about institutions, we actually think about crypto native institutions with a tremendous amount of capital, a huge amount of capital. And so it's no longer just the traditional players. There is a new world. There's a new set of power players and they're spending a lot

of money. They're moving fast, very aggressive in this land, grab for not just mind share, for attention and for share of wallet. And that shift is happening very rapidly. So multim you mentioned the Canadian trucker situation that's been unfolding.

And I actually have a question about that from a from one of our new colleagues, one of our new crypto team members, Emily Nicole in London, and she said, you know, she's followed your work for a really long time, and you had said in the past that bitcoin was the only way to fight for America's core freedom values, and so she was wondering, actually, if you still think that considering everything that's been happening on the Canadian border

with the intervention. Absolutely, Um, democracy dies in in darkness. And I think one of the you know, one of the core tenants that America was built around was the right to free speech and the right to personal freedoms. I think financial violence is actually the predominant form of violence in our world today if we look at the

impact that sanctions have on people's live financial redlining, financial exclusion, etcetera. Um, we now with this new technology, see new tools being added to the state arsenal right around monitoring surveillance and not just on the crypto side, which is with digital finance more broadly, and with the elimination many societies, many countries of cash, and so what starts to become really interesting and concerning is we see governments and this is

not just aalitarian governments, but governments in the West also right that have historically been more propromises. They're utilizing financial violence as a tool to suppress certain types of activity, as a tool to suppress certain view Um, we have people, the politicians, going on television and publicly stating if we don't like what you have to say on social media, we will remove you from social media and remove this

you from this platform. But we'll also potentially, you know, impose other limitations and what you can or can't do. And I think that very rapidly starts to be condystopian. So I am, I am concerned, and I do think it's very important for us to continue educating, to continue advocating, and again, like a free society is not possible without free money because money is inherent in everything we do. From the moment we wake up to the moment we

go to sleep, we're constantly transacting. If you don't have the ability to transact with digital money right within the sort of state oversighte banking system, you can't do anything. And if you hear some of the comments from people in Canada who have been involved in the protests. Even for example, coffee shop who's sold coffees right there in the business of selling coffee. People come in and buy coffee.

There's a coffee shop that was literally cut off from the banking system, had all their accounts frozen because they starved coffee to people who are protesting. I mean, I think that's absolutely bonkers. Well, and let's shift to a to a slightly more happy topic, n f T s. I love to talk about n f T s and all Donna's notes to me, Uh say that you are an n f T investor yourself, Is that right? I am a jpeg connoisseur. Yes, all right. I want to

hear about your collection. But I also want to hear after that about how do n f T s fit into the strategy for affirm like coin shares. I mean, I I have a hard time picturing like an n f T E T F we're sort of, you know, any sort of way for you to to put the you know, n f T s on the exchange, the regular securities exchange. But you know I was, am I

wrong about that? Is there a way, you know, is there a strategy in place to to sort of bring n f t s into a security form or is there other ways for a company like coin shares to sort of you know, get involved in the business. Absolutely, and know we talked about n f t s a lot internally. UM we hosted an event in New York and we worked with one of the first n f T projects called ether Lambos to make a coin shares

digital Lamborghini. Um. We made two hundred of them. UM only twenty were claimed at this event, and now they're trading and I think fourteen or fifteen dollars each. So has been pretty interesting, right, But but I think again, for us, if we take a step back, what our n f t s in the absence right of physical sort of communities that are gathering in people being able

to denote their belonging to a certain group. Right, we don't really identify so much by like what nationality we are, what our occupation is, um, what our religious belief is. Today the way express who we are online is through the content we share, right and what we post on our profiles. And so I think n f t s are actually a really interesting articulation of that in an online fashion, and with capital embedded in it. It's similar to in some ways, you know, why do people buy

Rolex is why do people buy expensive cars? They want to make statements about who they are and their taste and their views, and they want to denote that they have taste right, and that could be classy, it could be funny, it could be cross, it could be ghosh. Like whatever it is you prescribed to, there is an n f T out there for you, which I think

is is quite funny. Um. And I think again, the way that becomes an expression in in an asset management firm is I think there are certain collections of n f T s that have reached sort of blue chip status as we like to call it, that have had value over time, that have retained value over time and

grown in value over time. So I do think you'll start to see synthetics emerging around the n f T space where you don't actually have to only underlying n f T, but you can own a basket of synthetic exposure to specific n f T collections um, and so you can start to build sort of these these portfolios. And we've invested in a number of projects that are building synthetics around n f T s, which are pretty excited about. One of them is called Goose Effects is

built on top of Salana. So if you own a valuable n f T, instead of selling it to get liquidity, can actually collateralize it and utilize it as a way to get liquidity. I think there's actually company working on letting you use blue chip n f T s to buy a house, right so to get a mortgage, which

is also quite interesting. We're starting to c n f T lending products, so I do think the financialization of everything right One expression of that is certainly n f T s, and I think is we continue to push further into these more esoteric ways of of building communities and sort of expressing who we are through conspicuous spending,

which certainly n f T s are. The second piece that I think is important to remember about n f T s is it's not just about the assets themselves, just like with crypto, about the assets themselves, there's also a ton of equities right there, companies who are creating tremendous amounts of value in the n f T ecosystem,

building infrastructure to make all of this possible. So we are investing in those companies, We are actively collaborating with those companies as well, and I think we will see in the next three or five years companies that publicly list derive the majority of their revenues from participation in the n f T market. And if we look at n f T S as an asset class right today, crypto assets themselves are roughly to trillion dollar asset class.

Crypto equities right including public lists and privately held companies are probably another one to two trillion dollars of value, and the n f T space right the assets plus the infrastructure that's been built around n f T s, it's close to a one trillion dollar asset class as well. So what's been interesting to observe is there are many different ways that you can express that investment thesis based

on how you like to invest. And I certainly would not ignore with happening on the equities side, and it's not just crypto companies, they are also traditional companies. They're starting to move into the n f T space. You know, as we saw game Stop, Meme Stock, they're now going to be an n f T platform. So again, you know, I think um reinvention and and constant change, that's the only constant really in financial markets, and I think and

if they are really interesting expression of that. And certainly we're seeing a lot of activity not just within the crypto ecosystem, but also inside the ecosystem and also the utilization of n f T s um in this this broader sort of Web three ecosystem as they call it, or this idea where instead of platforms owning our online experiences of monetizing them, users and creators alike can own pieces of the platform. If you haven't noticed, Mike asks

multipart questions. So I'm going to pull a mic and ask you a multipart question, which is, I want to ask you about your collection and how big your collection is, what you're buying right now, and what you think is the most overhyped n f T collection right now? I love it. Vel donnas like give me the alpha lady opens the open right now. I'll agre you' about to buy some n f T s. Yeah, whatever you say, I'm just going to do it. Okay, Okay, always careful then, um n f T s I'm excited about. So I'll

be very candid. I did not get n f T s for a long time, right, which is I'm perfectly happy to admit that I don't understand everything happening in crypto and that's fine. UM so n F T S. As I started to get into last year, UM, I came across something called ether Rocks. There's an n of two projects from It's a hundred pictures of the same rock, just in slightly different colors, not particularly attractive, no road map like it's it's a rock and about an ether

rock for about nine eight at the time. And one of the cool things that happened is through participating in the ether rock community, we actually started to build a physical community around these ether rocks. Today, the owners of ether rocks comprise a really cool group of individuals from across the crypto space. Their startup founders in it. There are professional poker players, there are athletes and their celebrities in it. So we've built this really cool sort of

online community that's also convened offline. And I think we see that with a lot of benefit communities that I personally love ether rocks and I own ether Rock number sixty nine, which is obviously I'm here for the culture, so I find that super funny. Um It's I think I personally don't own crypto punks or board ape yacht club apes, but those have been really popular, and I think I've had persistent value crypto covens, which are these

like ten thousand witches that exist online. Um, They've built a really cool community, and that's really interesting because sort of a female focused, female lead project, and I've seen a lot of growth in that community and other projects. You know, I recently got involved in an n f T community called crypto dick butts, which is if I'm

like a Reddit kid. I grew up on the Internet in the nineties, so you know, I was on like four Chan and something awful and like all these weird online communities, and dick butts have in an internet joke forever. So someone actually made these little picks lined dig butts, and that's been really funny. That community. It's just very irreverent, as you can tell. I gravitate towards n f T s that are like silly and and a little bit

irreverent and a little bit cheeky. But I've also been collecting some really cool one of one pieces, some generative art as well, and I think there is this interesting intersection between physical art and digital art. Who have made physical paintings buying the n f T and then I can have the physical painting in my house look at it. But I can also have the digital representation sort of take it with me online. Um, but yeah, I'm not a you know, I buy funny n f T s

at anytime a new n f T comes out. Okay, I'm going to mess around with this again. My job really is to learn and to understand, so I spend a lot of time doing it because it helps you understand and contextualize and figure out how it fits into our business. You know, the n f T space is super fun. They're really low cost n f T s two that you can buy a lot of these are like hundreds of thousands of dollars. The Grail n f

T s or the blue chips are quite expensive. But in the Salona ecosystem, you know, there are a lot of n f T s that you can buy for less than one soul. So you can buy an n f T for and I do think because gas kes on Etherorum are quite expensive, we will see n f T s on other ecosystems that will get mass market involved.

Cool stat I heard recently is coin based n f T has a wait list of three point seven million users, So when those come online, that will triple the current size of the n f T wallet by a number of the n f T market in terms of number of while it's participating. And again, they'll be able to reduce season and do things in a in a more retail friendly way. So I do think those on and off ramps for n f T s are really gonna

start to matter as well. You know, Meltim, I don't know how many sort of old grumpy guys like me you've come across over the years who will say something like, oh, you know, crypto has no cash flow, I don't know how to value it, which fine, we could argue that debate that for for another time. But then you ask them to sort of value an n f T, and I think it makes people's head spin to try to sort of figure out if there is a way to fundamentally look at the potential value of an n Yeah.

I'm curious how you because to me, it's all about, well, how high you know, how much hype is behind this, how much sort of of the community is going to be sort of backing this and and hyping it up on social media. I mean, is that is that a big part of it? Or Am I just sort of

looking at it superficially. No, So I think, Uh, there's a really interesting company called upshot um and they actually specialize in valuing and pricing n f T s and one of the interesting things they look at and they have a great white paper on their site that you can read. Look in investing in anything, right, there's a certain element of fundamental analysis. There's also a certain component of luck. Right. It's very difficult to determine what n

f T will be successful in what won't. Similar to what I do right when I'm investing in startups is there's an element of analysis that you can apply. But

there's also a certain element of luck. Right. And one of the reasons that we create portfolios of assets right in similar sectors or the portfolios is to attempt to influence of luck on financial outcomes, right, so that the mean of the performance across the portfolio sort of will will perform l right, and we'll like eliminate or at least reduce the impact of luck in each individual investment decision you're making. Right. So I think, um, right, now,

there's not a huge amount of data. Again, n f t s are two years old, but really there's a lot of these assets are very new. UM, but Ophots developed some pretty cool models. Um, they've launched a really cool API that you can utilize that we'll do actually price predictions, so you can start to figure out what

n f t s are undervalued overvalued. And again I think as we look at portfolio construction, there are all these interesting analytical tools that are starting to be built that will allow you to evaluate not just utilizing price data, but contextual data, social graphic data. Again, all of this is on chain's public you can see what other assets people hold in their wallets. Um, all of this is

starting to build. I think a much more robust data set around how we can analyze esoteric assets like n f t s contextualized valuation and start to determine what's overvalued, what's undervalued, what has long term sort of UM value proposition. But again, I think all quite new highly recommend upshot UM.

I'm an investor in the company, full disclosure, but I think again this space around analyzing textualizing what's happening and who's buying what and what that means and how that infix pricing is a really rich space that a ton of companies are building in. They'll take a couple of years, I think, to really start to become more of a

science right now, sort of student science. So many things are when I first start, but I think again, with time, more data, with better tooling and infrastructure, it's certainly can be a very interesting asset class that presents opportunities for people who are deploying different types of strategies, whether it's an arbitrage strategy with whether it's a value investing strategy,

whether it's a growth investing strategy. Right, all of those things ultimately can be applied to these new types of markets as well. Is that the kind of startup that's sort of catching your eye as a venture investor? Is

you know that that sort of analysis and type of thing. Yeah, so, so the way I think about it is, um so I think along to acts these uh, utopianism and grift right, so a lot of crypt I'm serious, uh, And I want to get a shout out to to Kevin Aglois Capital who came up with this framework which I've adopted and sort of permutated to fit my own needs. And those are not the two axes I saw coming that.

That's pretty good utopianism and grif. Yeah. So so look there's some there's some projects that are low utopianism and low grift, and those out categorizes infrastructure rights, like building a crypto exchange. That's low utopianism, like we know and exchanges. You have an order book, you have bids and offers, right, Like, that's not how utopianism, it's not fundamentally revolutionary. It's also low grift. Right, the business model is very clear, you

know exactly how that works. Then there are projects which are really how utopianism and low grift. And these are technical, typically very technical projects that are based on like one or two fundamental sort of technology breakthroughs. So categorize those there, and those are sort of like your moon shots. Then you have low youtubism grift projects, which are like ship coins and n f T money grabs, so I like to call them. It's really just about optimizing for getting

as much money out of people as possible. And and a lot of those projects we've seen coming go over the years. I think it's very common in any new technology sector to see those types of projects startups, companies and then there's how utopianism high drift, and those are the ones I sort of worry about. Now things can migrate between sectors right as they become more real. But that's sort of an interesting like two by two matrix

that you can sort of use to to contextualize. Again, it sounds probably crazy to a more traditional investor who's not accustomed to thinking about the world this way. I think it'll sound more familiar to start up investors and people who look at the venture and startup space. But look, at the end of the day, like you have to have a certain degree of optimism and a certain degree of belief in ratically different futures, like do you think the utopianism and sort of this belief that we can

do radically different things really important. Um, and over time that will become normalized, right, But it's also important to be aware of the grift components. A lot of stuff in the crypto space that just when you stop to think about it, doesn't make sense that at all. So, um, yeah, that's that's sort of my framework. It's a it's I love it, so so you're okay with it being sort of out there on the on the utopian access but lower on the grift access but presumably or you want it,

you want it sort of close to zero on both. Yeah.

I think again, um, intention is really important, and it's very important to sort of understand like the economics of the project, the vesting of the project, particularly since there is um a much quicker pathway to liquidity in crypto through a orchanization or through issuing and n f T, and so you always want to have a clear understanding of what the economic incentives are with the time frame is and to ensure that those incentives are aligned around

people building things that have actual utility. Vildana, we need to somehow make a chart, a utopian drift chart. Yeah, I was trying to picture it in my mind. I'm sure one exists. The Milton can share with us. It's sort of an interesting way to contain actualize things, but also to test my own thinking, it's very appealing. I think it's very seductive to many crypto investors sort of be like, oh we can we can make a lot

of money very quickly. But again, I think that persistence is really important, Like you want to invest in things that are gonna be around for a long time and ultimately one of our fundamental beliefs is one of the beliefs I've always had been in this industry for eight years, which very long time. Reputation does matter, particularly in capital markets.

Relationships do matter. Even that we're operating in this this digital space, it does matter, and so I do think it's important for people and for firms as they're investing in the space, as they're talking about things on Twitter, like you have to be cautious around what you're promoting, what type of behavior you're promoting, and so that's a line we sort of try it to be very mindful of. And again I do think we see other firms in the space absolutely fine, right to each their own. We're

not judge, we're not Jerry, we're not executioner. But it's something to be mindful of. And again point shares. We've been around for eight years now, we plan to be around for decades more um, and so that's how we're going to build our business. Melton, I wanted to ask you. It's going to sound like a simple question, but actually I think the story behind it is really interesting and

very fascinating to me. I want to ask you where you're talking to us from because you and I have talked about this idea about people building bitcoin communities, especially in New Hampshire and in other places, and you and I have talked about how potentially you could see in the future people running for office on these bitcoin community platforms. And so where are you calling us from and what

does this bitcoin community development. I don't know if project is the right word, but what what does it look like and where is it happening? I love this topic, Danaus, but thank you for giving me an opportunity to shill New Hampshire. Um. Look, I think at the end of the day, you know, I used to be in New York.

I was in New York for many years in New York, and my view stills in anyways that the capital of the financial world has been really sad to see his New York implement called the bit license that were hired firms operating in New York to obtain additional licenses specific to just dealing in cryptocurrencies. Now very few bit licenses have been issued. The average waytime from application to getting a bit licenses I think over two years at this point,

and the wait list is quite long. They're not processing these things so what's been really sad to see certain states have effectively excluded them from this entire sector by having a very I think Dacronian approach or very inflexible

verage decrypto if you will. UM. The other challenge you have operating in the US, and one of the reasons why coin Shares is a global firm with offices in multiple jurisdictions is the US in many places lacks regulatory clarity, and the approach the US has chosen to take is regulation by enforcement, which again I think is a really challenging approach. It's not that firms don't apply to the guidance isn't clear. People are trying to do innovative things.

They're new I understand it's challenging for regulators to sort of figure out how to manage that. By regulating by enforcement and being kingmaker, right, which is what the SEC is doing by deciding who can and who cannot. Is not a fair market approach. That's not how regulations supposed

to work. UM. I think other jurisdictions like Switzerland, Singapore and others that have that have taken a more proactive approach, that have established their guidance through regulation as opposed to enforcement. Have seen a lot of crypto firms, a lot of high paying jobs, a lot of capital moving into those jurisdictions. Um I think Abology Turn of Austin does a great

job articulating this. He recently run an article in um UH Policy, sort of political science focused publication around sort of the rise of digital nation states or nation states that embrace new technology, that have regulation that's a creative to startups and and you know innovative entrepreneurs who want to build innovative types of businesses. And I think the physical infrastructure also matters. So what I really love about New Hampshire is um from a tax precative, it's quite

amenable from a regulatory perspective. You know, it's the live freer dice states, so it's not overly prescriptive and how it regulates. And I think again, there's a huge opportunity here for jurisdictions to compete for all of these tech workers that have been living on the coast California, New York or to the most regulated states in this country.

So people are flocking to jurisdictions like Wyoming in Texas, in New Hampshire and Florida where there is an embrace of these new industries where policies are not as restrictive and where there is an openness to engaging because these states the opportunities to bring high paying, high tech jobs to their economies, and obviously that influx of capital and that influx of people has a huge impact, not just some people working in that sector, but on those states overall.

The live free or die. So it's more than just a license plate slogan. In New Hampshire, they're tiden up your straight jackets. It's time for the craziest things we saw in markets this week? All right, Malton, Well for this next next segment, I also have two axes in mind. This is called the craziest things we saw in markets this week. So when one access is crazy and on the other access is also crazy, it's it's it's crazy. Think when I think about chaos, right there's like bad chaotic,

neutral chaotic, good chaotic. I think right now markets are like absolutely absolutely I'm hoping to get back to a good chaotic crypto in some ways like one and anyways, it's good chaotic because it's fun. Yeah, this is not too fun, but certainly plenty of plenty of things to talk about for the craziest things, Well, Donna, let's get started with you. What's the craziest thing you saw? And keeping the mind you were in Portagal for most of the week, so I don't know. I don't know if

that factors into your selection this week. Yeah, but I have one that I specifically chose for you because I think you will really like it, and I really actually hope you haven't seen it yet. But Family Dollar, which is owned by Dollar Tree, it's actually closed like hundreds of stores and recalled a bunch of products because of a rodent infestation that they have. It's a nauseating story,

but it's also kind of unbelievable. So I guess CNN had a report that showed, know, they were just like rats running around everywhere eating the food and they were rotting garbage and trash and all kinds of stuff. And the stock did drop so so they had to recall a bunch of stuff too. I don't know if the stock dropped, you know, in conjunction with everything else selling off this week, But it was fun, it was a fun read. I think it's safe to say that some

market moves are hard to determine rat trappings. Closing your stores I think is definitely a catalyst that hundreds of stores. Yeah, well, Maltim, I don't know if you saw anything crazy, God was crazy. I saw a chart this week that trapped UM tech I p os over the last two years and the performance of those stocks that was crazy to see, just

pretty bad. How far they are down, yeah, from their people. UM. The other crazy thing I guess that's really on my mind is um I have a lot more competition and early stage investing Tiger. Do you want a bunch of other later stage proth equity firms that would typically invest pre I p O have said they're not going to be investing pray Go so much anymore. They're going to be in liquid public markets looking for undervalued tech companies, or they're gonna move earlier stage to UH startups like

startup startups. So so that's been interesting to see certainly change the venture landscape, and I think we'll continue to there's more capital than ever chasing opportunities, but where they're chasing those opportunities starting to shift. People generally are much more comfortable moving further out on the risk curve UM and also on the duration curve, which is been interesting to observe, and I think the impacts of that will be felt throughout, you know, the tech sector for a

long time to come. There's over a thousand unicorns in the world today, no idea how those companies are gonna get liquidity. Um. I think what's happening around SPACs has also been fascinating to watch a lot of new rules coming out limiting um the ability to to raise bacts um and a ton of SPACs that have raised capital that I can't deploy it. So I think just generally, um, you know, the liquidity landscape for startups and company in

the text space is starting to look very areas. Yeah, it just seems like there was just so much money in private capital just looking for private market investments. It's uh, it's amazing. All right, I'm gonna take you wild to do a market we have not discussed before. London real estate. Okay, this is a story by our own Lisa Flasher. A London flat is up for auction, very small flat, seventy five square feet so to picture that if that were a rectangle, that would be seven and a half feet

by ten ft. It's a regular well yeah, you'd have to convert it to meters, but we did not convert it to meters. Seventy five ft square apartment. It has a bathroom, of course, you know when you shower, the water lands on the toilet and the sink and everything. It's this tiny little bathroom. So I want you to guess what the asking price is for this seventy five ft square foot flat. About the size of a prison cell, I would say, And I will point out that this

is on the crazy access the price. Access is not necessarily what drew my attention to this. It's just the tiny nature of the apartment. Oh, I see, so the price might not be crazy crazy. I'm going to say three hundred thousand pounds. Three hundred thousand pounds. I'm gonna keep a poker face, Melton, what's your bid for a seventy five square foot London apartment. Let's go with five million pounds. Wow, I lived in New York, baby, I've

seen at all. Oh my gosh. I think you guys will be hearing from some London realtors very soon, both asking you a bit on this apartment. They're set to auction for fifty thousand pounds, which I find is it's kind of reasonable for a little, you know, bunk bed apartment in London. You know, I don't know. Yeah, I thought for sure you were going to say like four or five said, it's not the price. It's the size of the apartment that's crazy, not the price. So we'll see.

Maybe it we'll go for five million pounds. Melton is gonna go buy it for five million to prove us wrong. I think I'm not buying it. I read it. I read another article about a building in nice Bridge where apartments were styling for like two two fifty million pounds um. That was interesting. A lot of money floating around. Well, Melton, I think that's all the time. We have really appreciate

your insights. Fascinating conversation. We didn't even get to the the whole bitcoin energy issue, which I hope we can have you on some time to talk about that. Actually crazy European Parliament just came out with the decree that they want to ban all proof of work based cryptocurrencies, which is going to be really interesting. We publish a lot of research at coin Shares around bitcoins energy consumption. It is over seventy renewables driven it's greener than most

other industries in our world today. I think it is really a straw man for government's not liking bitcoins. So you know that's all right. Well she got it in there, vill Don, and we'll have to have her back on to unpack that a little bit because that is certainly such a huge, huge issue for for crypto. Melton, thank you so much for your time. Thanks and excited to be here and excited to see what your audience. Thank you, Malton,

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