119. $BASE — Coinbase Launches Gamechanger for Crypto - Transcripts

February 27, 2023

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119. Welcome to the Alfalfa Podcast 🌾

  (0:00) Intro  (3:20) Market update  (16:25) Alfalfa round - Bullish or Bearish?  (20:15) High-level investment strategies  (27:05) Tools of the rich - securities-based lending  (34:50) Tools for founders and startup fundraising  (45:45) $BASE L2 is here  


 Fundraising -  https://amzn.to/41piSMF 

 Startup Library - https://www.ycombinator.com/library  

YC pitch deck - https://www.ycombinator.com/library/2u-how-to-build-your-seed-round-pitch-dec 

 YC startup school - https://www.startupschool.org/Guide to Fundraising -




Securities based lending - https://privatebank.jpmorgan.com/gl/en/services/lending/securities-based-lending  

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 Music by:  Allie Gross - https://www.instagram.com/alliegross_KOCH - https://www.instagram.com/kochdiddemdrty 

Disclaimer: This is not Financial Advice. All opinions expressed by the podcast, members of the podcast, its guests, and its representatives are intended for informational purposes only and should not be treated as investment or financial advice of any kind. Any information provided is general in nature and does not take into account the viewers specific circumstances. Alfalfa and its representatives are not liable to the listener/viewer or any other party, for the listener/viewer’s use of, or reliance on, any information received, directly or indirectly, from this media. The listener/viewer should always conduct their own research and obtain independent legal, financial, taxation and/or other professional advice in respect of any decision made in connection with this media.  Furthermore, any views or opinions represented on this show by hosts or guests are 100% personal and belong solely to the show and do not represent those of people, institutions, organizations the owners may or may not be associated with in a professional or personal capacity unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

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We're live. We're in.

We're live. We're in. We're live. All right. We're dropping. Are we? I don't know. Guten Morgan.

Guten Morgan.

Guten Morgan. Oh yeah. There's the red button.

Little red, uh, red light.


We'll do it live.

Yeah. Welcome everybody. I'm excited to have you back for another, uh, episode of the alfalfa podcast live from our respective, uh, studio locations. Um, quick little update before we kick off, uh, into the alfalfa round. Um, so the experiment continues. We talked about this in the last episode, but I don't think most people, most of the audience has heard this yet. We are constantly iterating and adjusting the format of the show to, uh, just bring more and more alfalfa in every way that we can. And also just even as an audience member, listener, when we listen, we, we always look back and reflect, what can we do better? One of the things we are doing now in the life episodes, if you're joining those or not joining those, we're going to be doing an alfalfa round in the life episodes that we do that come out on Fridays. So it could be that that episode is going to be anything from technology and science to productivity, to life hacks, to, you know, philosophy and so on. And then everything else that's related to money is going to be in this episode. And we're going to broaden that a little bit and try to bring the mind space of the four of us to the conversation.

So, Nick having this incredible background in business, entrepreneurship, e-commerce, real estate as an investor, Eric being a CFA, Stephen of course having a varied background as well but being a professional trader and myself now running a startup, just trying to bring these different perspectives to the conversation and then of course dive into some market updates and always having one sort of meaty juicy thing that we dive into and explore during the episode. So, a little bit of variety and then one main thing that we really dive into and explore. Let's see, what was this little announcement? Oh, that's not for me. Cool. So, other than that, oh and one really cool thing we're going to be doing, we actually got approved for live studio time at Eth Denver. So, we have no idea what this is going to be but I think there's like a little booth for us or some kind of podcast studio at Eth Denver. If you'll be at Eth Denver, come hang out with us. We're doing an event on the Thursday of the event. Details for that are in our Discord. You need to get yourself a little invite and come on down and hang with us but on Thursday morning at 9 a.m. we're recording.

Live at the... 9 a.m. What? Wait, what? 9 a.m. Yes. Yes. Ouch. Gonna hurt. Well, we'll handle that. You can listen to the recording everybody. But yeah, that'll be really fun.

It'll probably be something pretty, you know, Eth Denver focused and maybe there will be a special guest of some kind that we'll pull out from the crowd somewhere, some crypto king and we'll have a good time. All right, anything else or diving now, Fathrow?

I heard. We're going to leave with a little bit of market update, right? There you go. There you go. Yeah, let's do that. Let's do it. Yeah. So, we're dumping as you guys probably saw. Yeah. Nice flip to bearish, Stephen. Thank you. Thank you.

I'm flip-flopping with the best of them there. Yeah, you'll load some puts yesterday and closed all the calls. So, it was a good flip-flop so far. Yeah, I think it was... We were sort of due for a correction, I think. The market looked tired and then I think the catalyst today, right, was the PCE data. Did you guys have a chance to look at that? Saw briefly a little hot on the month to month. Yeah. I mean, we came in like 0.6 on the month over month versus the 0.4 expected, I think. So, a little bit of a hot print there. Also saw that like real disposable incomes up at 7.7%, nominal employee compensation, 6.6%, which is like 180 bips north of a trend, personal savings rates at December 21 highs.

I think the overall picture is that the economy is like pretty resilient and we're not having a recession anytime soon. And this is something we've been preaching on this pod for a while, I guess, because a lot of us follow the work of Darius Dale at 42 macro and this has kind of been his thing with his research. No recession in Q1 of 2023, but God, it doesn't look like we're going to have one for all of 2023 now, right? And it seems like this kind of a higher err for longer err narrative is taking shape. I think all of the cuts are now like out of the markets in 2023 that were being priced before. So, that was a good trade if you made that. I feel like I should have made that trade because it's kind of been a view of us that we've all shared, but never really jumped on that. Yeah, just the

trade that just faded the, yeah, faded the rate cuts for this year. Never really jumped on that.

So how would you have done that? Would you have shorted bonds? There are certain like dates on the curves that you can kind of play against each other. I think you could also do it versus bonds. The reason I didn't do it is because I don't know how to do it off the top of my head and I was too lazy to go kind of figure out how to put that kind of trade on because I mostly just trade the coins and long the occasional dollar coin. So I didn't do it, but yeah, markets are not reacting well at the moment. It looks like equities are down like one and a half percent on the day or so. Heath down three and a half percent. We're back below 1600. It's tricky. How are you guys feeling? I know, Eric, you've been skeptical of this rally for a while and you're probably feeling

pretty good this morning. Well, it's kind of a stark contrast from our conversation on Wednesday. I've definitely been skeptical of this rally. I still feel like we're in a bear market. So anytime you're in a bear market, there are going to be short-term pumps and I think selling the pumps has been my game plan. But I am also leaving room for the idea that if a recession has really kicked out, say into 2024, then that actually leaves more time for these rallies to play out.

So it's hard. Yeah, I think I've personally just shifted the mindset from trade. We've basically been trending for years on end, either trending just straight up or straight down. I don't think any of us even know in our investor brains what a range-bound market looks like. But we've gone through tons of periods in the past where markets have sort of been range-bound. And I think people this year are going to maybe be tempted to think every time we trade down that we're going to new lows again. When in reality, we might look back on this year and we might just go back down to 3800 on the S&P and then we might just go back up to like 4200 on the S&P and then so on and so forth. And then crypto can kind of go up and down in that ride. And crypto especially is something we've never really done a range-bound market in. We just go straight up and then straight down. And then I guess you could argue some of the bear markets are just kind of dead-flat line, but I think this could be like a higher volatility range-bound thing that we're trading in. And it'll be potentially something for everybody to adjust to in that regard.

I think the crux of the range bound is coming from these sort of push-pull forces. The data today pushes off recession and normally in real life when we were saying we're pushing recession off and recession risk is going down, normally those things are bullish. In this instance, we're worried about this credit cycle downturn happening, something really breaking in the markets and this pushes that off which I think is bullish. But then the other side of that coin is that hot markets may lead to more inflation, may lead to more Fed tightening more than what's currently priced in, negative liquidity and that's bearish. So we're kind of getting whipsawed between these bullish and bearish forces right now as I see it and I don't think we're really sure where we're going to go at the moment and it's the type of thing that if you you trade and

think about too much can make you a little bit crazy. Yeah, I mean, we talked about like late last year how 2023 because it'd be this range bound whipsaw and just like really tough to play in kind of with Eric, like just trading, selling rips primarily in equities, not really touching too much of the crypto bag just because I'm really still stuck with my long only bag. There's a little bit of money to play around with and trade probably. But yeah, so far it feels good that I kind of like took some money off around 4100 ish, but it could certainly go back up to 4,300, 4,400 and if it does, I think I'm going to be prone to take some more off. And yeah, I'm kind of the same boat as you like if this kind of the same narrative continues and we're not going in recession, it does make me nervous that the Fed will continue hiking until they break something and that eventual fall down might be a little brutal. But who knows, we're going to have plenty of time to kind of monitor this thing. And I guess the next checkpoint is that like middle of March area because we have a few things coming up. We have this FOMC meeting and it's particularly important because they do those dot plots where each individual Fed president says this is where I see interest rates going on a graph. And that's usually where the market takes that I think more seriously than interviews. And that's where the kind of the market and the Fed kind of maybe start to align. So I don't know if the Fed's going to come down or the market's going to come to it, but that's a key moment. And then for those of you tracking the flows narrative from Chem, it sounds like his kind of window of weakness kind of ends towards that February OpEx, which I think is like March 17th, a day or two after the Fed FOMC meeting.

So I don't know, I think kind of sticking to the same game plan and just seeing where we go for the next three weeks or so.

Yeah, I like it. And one more thing to build on what you said. I'm kind of of the mindset now that if you're bullish on crypto, and I still am to be clear in the medium term, I would love to buy a little bit lower. But I'm looking at the possibility now that we sort of could get like a mini capitulation kind of heading into March. There could be some like peak fear, panic happening with all this stuff on the calendar. But then we have that March OpEx date, that quarterly OpEx date at the end of the month. So buying some like really nasty sell offs in the middle of March. And then maybe you have those tailwinds behind you coming into the end of the month, coming into the quarter. I've got that as a possible scenario that I'm looking at, like a potentially good time to kind of step in and accumulate some stuff, not just for a trade, but even I think it would be warranted to put some long term bags there. Calcium wanted to ask about short term, long term treasury investments in the chat. So I guess we could touch on this real quick, because I have done something here. I mean, yeah, earlier in the year, end of last year, actually, I talked about how I was moving some money into TLT.

And Eric and I had a little discussion about it. I ultimately ended up deciding I wanted to be on the shorter part of the, the closer part of the curve, the front end. So I put everything in six months. And it ultimately decided that if we have some sort of resilient economy and rebound, which is kind of what we were talking about, it's not going to be great for rates. You can see rates tick up and then you can see the value of your bonds tick down, TLT goes down. So I parked my kind of safe bag in the six months, getting like 4.5 or 4.6% or whatever it was at the time, because I kind of did want to keep a chunk of cash for the end of the year, in case I needed it. And I don't really care what happens to the price, because I'm seeing the

bonds through to their entire duration. So that's what I did there. What vehicle are you using

to buy the six months? It's some PIMCO fund. I need to double check on it. But the average duration of the fund is like under six months. So, or you have been thinking the same way,

if you have been thinking the same way, that I just want to own the short end of the curve. I'm using like an iShares version of the same thing. They invest in zero to three month treasury bills. Their duration is even shorter and it's yielding 4.5 or 4.75, whatever the prevailing

fed funds rate is. So if those keep rising, then I participate in that. I just want to own prevailing

in the yield, because I'll just roll them over. Have you guys heard the theory that what the Fed is doing is actually stimulative, because it's just giving rich people this gigantic cash cow, where they can just park these massive amount of savings and make like a free 5%.

Essentially, their losses on their balance sheet of how much interest they're essentially paying

out, is that what you're referring to? It's just like people have a lot of cash right now. And when you before, like we didn't have cash flow, we just bought things and number went up a lot. But now you're like, if somebody's got a million in cash sitting on the sideline, you're just giving them like a free, just absolute free, like $50,000 a year. They got 10 million, they got 500k a year, right? Like that's having some stimulative impact in some area of the economy.

I got the auto compound. I got the auto compounding on though. I got the auto compounding on. So

that stuff is going to stay in cash. That's going to work both ways though. Because when interest rates were zero and you couldn't get this $50,000 for free, then you were pumping

in the capital gains department. Stimulative to the economy versus stimulative too. You're talking about forcing people into assets, but this is like kind of just forcing more, like people just have more free cash flow, generally speaking.

Anyway, you want to move? Oh, you got one more thing, but this is like kind of, this is like,

anyway, you want to move. Yeah. Just one more thing on the, on the, on the treasury and bond buying comment. I saw two different perspectives in the last two weeks that maybe I'll share. Jeffrey Gunlock, he's kind of like the bond king at double-lined. He kind of expressed his view in terms of what he was buying in terms of a combination of, of kind of maybe high quality corporate debt, which yields much higher. And he matched that with some very long-term treasuries to kind of adjust his risk, adjust to return. But he thought that was like a very interesting play. And then, and I heard Bob Elliott say something a little different. His view was you don't really need to buy bonds until the fed signals that they are going to pause or, or actually pivot. He says like, you know, your risk adjusted return is, is not that great. Like you can just wait until you know that interest rates are going to go down for sure before the market's rates start going down.

So he's referring to some new ones there.

He's referring to some new ones there. Like a longer duration, I assume in like six months.

Yeah. Yeah. Yeah. Yeah. So if you want to research more and more perspectives,

those are good ones to check out. Cool. All right. Should we pivot to the alpha off around? Pivot away, sir. Eric, we should probably go first with you. I think you probably

transitioned well with that. Okay. So we just talked about the market and how we just came off of like two months of pumping. And you know, I can't tell right now whether or not we're going to keep going up more or if it's going down. But the way I like to express this in my portfolio, this like sort of uncertainty is to balance it, right? So I maintain long positions and stuff that I like. And I look for thoughts in things that I don't like that I think are overvalued. So I'm going to share one today that I think belongs in like this court basket that you can profit off of if the market's going down. So the one that I'm looking at is called QuantumScape QS. It's like battery EV technology. Nick actually has a startup that competes with this company. So I think this will actually be best for you, dude, because if you're long in your private portfolio through like EV battery tech, like I think going short, something like this makes a lot of sense.

No. Yeah, this is the alpha is what you're about to say. I'll add on after you go through this.

Yeah. So QuantumScape really benefited from like bull market euphoria. When they came public, when they came public, they basically said that they don't expect to have revenue until 2025 or 2026. But the valuation of the company went up to like 16 billion. It's now down substantially from there, but still at like a $4 billion market cap. I think that's just ridiculous. They haven't generated a single dollar of revenue. They've burned through $2.5 billion of additional paid in capital. They continue to burn through like half a billion dollars a year in operating expense with no clear line of sight on how they're going to actually make any money. And I think there is a long-term bull thesis, like EVs are proliferating and are going to be more and more of a thing going forward, but that's like a long-term transition. And I think in this environment, you got to realize that the regime has changed. You don't want to be in highly speculative stuff playing like a long-term euphoria type investment.

So QuantumScape now trading at $9.30. That's up almost 100% from where it was at December 31st. And I think this belongs in a short basket. How I probably plan on playing it is just selling my out of the money calls weekly, collecting my acorns. And if this thing does pump, then I'll lose those contracts and

be short on any pump. Yeah. I mean, this is smart just from knowing a little of the insides of like the battery business. This company started off with the future of like a sodium battery, which is years away from commercial applications. 2025 is kind of a joke that they would even say that a dollar revenue is going to come in then. They've had to shift back to like lithium iron phosphate, which is kind of what you typically see in EVs now, but still no direct path. For entertainment, I was on a call and I was reading their press releases just to see how Fugazi the copy was in the press release and how they were going to wordsmith their way to like, well, we're still on a path and admission to develop technology. So anyway, I like this from a

fundamental aspect too. All right. Awesome. Good alpha alpha. Yeah, I guess I'll go next. I wanted to talk a little bit today. I feel like I've been going like really in the weeds in some past chats and going a little crazy on the chart. So I wanted to zoom out a little bit, talk about just some higher level investing strategy that might be kind of duh for you and me, but maybe useful to a lot of people out there. The first concept when you're investing in crypto, when you're investing in general is you want to sort of be thinking about what your benchmark is, right? Like in crypto, I would argue like, well, for me, like my benchmark is like the NASDAQ. I kind of view crypto as like a tech play, right? And as an investor, you always have the ability to sort of like passively invest in an index and just like achieve the long-term expected returns of that index, you know?

So if I'm going to put all this effort into crypto investing, like I better a make damn sure that I'm going to beat the NASDAQ, right? And you know, for that reason, like I often will chart stuff against stocks. I think it kind of gives like an interesting perspective on where the market as a whole is versus, you know, what I consider to be, you know, the benchmark. So here on the screen, I have, you know, ETH versus NQ, which is NASDAQ futures, right? It's kind of interesting, like how this chart looks compared to the ETH chart. Like we were actually still trading like very, very close to all-time highs on this chart right until the moment of the the Luna dump, right? And this was Luna right up here and like around May 7th, you know, on the chart for people who were able to see this at home. And to me, this chart, I believe is bottom higher low, higher low, higher low. And like it looked like ETH on a relative basis looks good to me compared to stocks, right? And so as an investor, like I kind of been very focused on and very focused on crypto, like I want to be investing in crypto, I don't really like tech stocks don't even look good to me right now. Like I can make a good case for stocks going sideways and crypto going up. So that's kind of step one.

I think a lot of people get this, but where people often kind of drop the ball within crypto, is that they don't think about this concept within crypto itself, right? So within crypto, you could say that the benchmark for all of crypto is Bitcoin, right? Bitcoin is the largest asset. It's like the kind of like the base model, right? It's the thing that has the least chance of breaking or somebody hacks it or whatever, right? You really can just go into a coma and buy this thing and probably be fine. So you better make sure that what you're investing in in crypto is going to beat Bitcoin, right? Which is why we look so much at the ETH BTC ratio, which to me on like a very, very, very high timeframe is sort of, I think now in this like re-accumulation sort of consolidation phase, I think as we've kind of moved up and I do expect us to go higher. But within this range, you know, we could see ETH lose value against Bitcoin in the short term, right? That's totally possible. But I don't care because my time horizon for this trade is like decades. And I think over the course of decades, ETH is going to beat Bitcoin, right?

So then the next thing is, okay, people like to invest in altcoins. And I would argue that Ethereum is the benchmark for altcoins, right? A huge swath of altcoins are literally ERC20 tokens built on Ethereum. So you better make damn sure that your altcoins are going to outperform ETH. So I mostly chart ETH versus the dollar, but I mostly chart altcoins versus ETH. And I think a lot of people don't look at the ETH pairs enough. And it's something you can just so easily do, either in trading view, or if some of this stuff is smaller on chain stuff, you can use a tool like DEXscreener is something I really like to use to chart the smaller stuff versus Ethereum. And in trading view here, like I've kind of set up a whole watch list for myself that kind of breaks coins down into particular categories. And then I like to put the coins in those categories and sort of sort them on the basis of how good I think the ETH chart looks, right? So on the L1, L2 section I have here, like I think the optimism ETH chart looks really good. And yeah, it's basically straight up. It's high beta ETH.

And we can talk about what that means a little bit more. Matic, again, I would also argue is very bullish versus chart versus Ethereum. So I might want to allocate some of my portfolio to these coins for the long run. I think another interesting thing to note here is that some of these old dinosaur coins, like the dinosaur, well, dinosaur DeFi coins, really, like Aave and Synthetix, the OG stuff that had a brief moment in the sun and then just sort of died. So this stuff is actually starting to look interesting to me again. I pulled like the Aave chart up on the screen and this is versus Ethereum. And we're basically in 450 odd days of sort of sideways accumulation against ETH. So this is something I've started to actually just DCA into in small amounts. I think there's a thesis for some of these protocols coming back as we enter like this kind of multi L2 world where people start getting really attached to the applications they use. And maybe we start getting confused by all of the different layer to optimism and Coinbase thing and Arbitrum and so on and so forth. So yeah, that's my little tidbit for people for the week. Pay attention to your benchmark.

Know what you're trying to beat. Know why you're investing in that thing and then chart your coins versus your benchmarks. Because if they're not beating them,

you should not be investing in them. I like that, Steven. I like that a lot. Yeah. Glad you like it. Yeah. I like when you go back to these fundamentals once in a while.

That was good stuff. I'm sure a lot of people got a lot out of that. I like that,

Steven. I like that a lot. Yeah. Glad you like it. All right, cool.

We'll move on to Nick then if nobody has any follow-ups on that. Yeah.

Yeah. All right. What do you got, Nick? Yeah. All right. So I might have mentioned this before, but I figure we could go over it a little more. I want to talk about like a security-based line of credit. It's something I've used in the past and the reason I want to talk about it is because I didn't know this thing existed until I started hanging out with a little wealthier people and then I realized they had this complete other financial tool that most of us don't have and I started using it and I think it's very useful and so people should be aware that it exists. So it's much different. It's not necessarily margin. So people might say, well, am I taking a loan against my securities? Yes, you are, but in a margin scenario, you're typically taken a loan against your public equities or your bond portfolio or whatever it may be and you're able to invest in other securities.

So you can borrow against your Apple stock to invest in Coinbase. This is a little different. With the securities in a baseline of credit, you are borrowing against your stock portfolio, your S&P 500 index funds, but typically people use them for investing in real estate. Maybe they want to buy a business or maybe they even want to buy their own home. I'm sure people use it for boats and all kinds of like, you know, consumable items, but I think smart play is to use it for potential real estate investment or to be your own mortgage lender potentially. Instead of taking a mortgage from a big bank, you can be your own bank and the reason why that's useful is because they're incredibly cheap. First of all, there's no other fees related to taking out this kind of loan other than the interest you pay, which is rare in loans. There's origination fees and all kinds of other fees that come into play that can really dig into your returns. So the interest rates are notably cheap. You know, they're typically cheaper than margin loans. They're based off of SOFR rates, which is the secured overnight financing rate. It replaced LIBOR, but you know, you might be able to get a rate that's SOFR plus 1%, you know, so right now that'd be like at around five and a half percent, which is relatively cheap and obviously when interest rates were much lower, you know, that rate was as close to 1% interest rate.

So you can borrow against stocks or if you've been part of a startup and you have concentrated equity, you could also borrow against that. But there's also other deals like the interest itself is tax deductible. So you can set it up in a, you know, tax deductible, tax efficient way. And then historically, it's been a really good arbitrage play. Like the way I've used it in the past is, you know, borrowed against my stocks at, you know, say a one or 2% interest rate and put it into a multifamily yielding, you know, seven percent cash on cash and, you know, the stocks that are the collateral, they have dividend yields of like 1 or 2%. And then there was some municipal bonds in there that had a yield of like 4 or 5%. So there is some really good, there was some really good arbitrage plays. I don't think you have that same dynamic there with, you know, arbitrage and the yield off your collateral and using that to pay off the interest, but there is still some good, you know, yield if you're investing in real estate. So anyway, that's just a quick overview of how I've used it in the past. And I think it's a tool that you can use. Obviously, we're used to it in crypto, being able to borrow, throw things in Aave and borrow against it. But other banks, if you have a larger stock portfolio, bond portfolio, it's a tool that you can use to buy your own home, invest in real estate, buy a business, that kind of thing.

I think I have two follow up questions. One is, where do you find these? Are you doing that through JP's private bank? And then secondly, what type of loan to value can you go up to? And what are you comfortable with going to?

Good question. So I was managing my stocks on my own. And I realized that this vehicle existed. And so I actually interviewed a ton of RIAs. And one of the top criteria was what's your lending rate for this type of vehicle. So I went to Schwab as a custodian and said, what do you have available? But you can go to Creative Planning or any IRA. They typically have these vehicles as well. I did end up at JP Morgan, the private bank, just because they had been better rates all around the whole portfolio in terms of fees. They were not the cheapest on this specific vehicle. There was a family office called Pathstone, I think, up in Orange County that I was with before that they had the cheapest. It was like Fed funds plus 80 basis points, which to me was pretty dirt cheap.

And then in regards to the loan to value, every asset in your portfolio has a different release rate. So cash might have a release rate of like 95%. Your municipal bonds might have a release rate of 80 or 85. S&P 500 might have a release rate of 60%. And then an individual high beta stock like Facebook might have like 35%. And so that's your max. And we ran a Monte Carlo scenario of like, okay, okay, let's run 10,000 simulations. Speaking about our last episode around simulation hypothesis, we just ran a bunch of scenarios and said, okay, like in these world is ending scenarios, do we get close? Because I just didn't want to get close. I didn't want to have to even worry about it. And so they were like, hey, based on how we structure the portfolio, put a little municipal bonds in there, stay away from single stocks. They were like, you could go up to 40,

50% if you wanted to. And, you know, you should be fine. But that depends on your holdings, right? So because you lose completely dependent on your holdings. So there's like an average weighting that you'll uncover based on your holdings. And then you're saying for you, it was 40, 50%, because I imagine a lot of it wasn't individual stocks. And you could borrow more

completely dependent on based on that. Yeah, there were like, you know, short term treasury bond funds in there. But but any case, you know, that changes over time. So every year we run the Monte Carlo analysis and, you know, just see, like, are we at threat of, you know, but the funny thing is, like, I thought about this scenario where I would have to put up more collateral or actually pay down the loan. And I was gonna I was gonna sell those stocks and invest in real estate in the first place anyway, you know, and so if I got called, you know, and I had to pay off that money, well, I had like six years of compounding before I actually had to pay it out. So net net should be good. But it's a yeah, a little more degenerative play. But there's there's some like parameters and structure around it that can can be used as

safeguards, I think, if you if you play it smart. Nice. That's good. I like that. Cool. I'll, I'll hop in with something that take us home. Yeah, I mean, so I think a lot of our audience is very entrepreneurial and or has certain businesses and sort of dreams that they'd like to bring to the world. And there are many paths to creating a business. And there are many ways to fund a business. And for my entire career, I've always bootstrapped. Occasionally, we've done things like crowdfunding, sometimes rarely little friends and family. But going the and these are the beautiful thing about these businesses, you're the boss, the money's yours.

And you get to pay yourself fat distributions. I mean, the real path to to ongoing wealth, well, the real path to wealth is like, get a job that pays you $350,000 a year and comes with benefits and security. But for those that have yeah, very underrated. For those of you that that are a little bit crazy and would like the entrepreneurial roller coaster and to wake up and eat glass in the morning. You can go this route. And there's another route as well, which is the venture route. And the venture route is the route that is most commonly glorified and what we imagine we're supposed to do before we enter the world of business, because it is very much this walled garden. And when you're on the outside looking in, you only hear about this, these these stories. And of course, this is not for brick and mortar businesses, particularly or small, you know, mom, mom, pop shops and things like that. But when you're starting certain types of companies, venture is the answer. So the first thing to know about venture, and I've been learning about this space for the last couple of months. So I just wanted to kind of share some alfalfa at a high level and then maybe start to give more specific stuff in the weeks to come.

And I'll share my screen in a minute and share some favorite resources that I've come across that have really helped me. I'll take us home. The first thing you have to understand, though, about venture is that there's no turning back. It is very much the red pill. And it's funny because this analogy was brought to me just the other day by a fellow entrepreneur that I guess went to school with Nick and I back in the day at SDSU, who I hadn't met before. And, you know, full circle where all these years later and we look and, you know, this this guy actually shout out to him. I'll just shout him out a show at ShopMonkey. ShopMonkey has raised something like 75 million dollars in venture funding across three rounds. And that first round was small. It was less than a million dollars. It was like six hundred, seven hundred thousand dollars. And so, you know, talking to someone who's been there and done that, first of all, was really nice.

But he made sure to, you know, confirm that with me is like you've already taken the pill like you know you've taken the pill. Right. If you go in this route, there's no turning back. There's many reasons for that. But what I appreciated about that is that it's really fundamentally true because the world that you're stepping into is completely different and you have to do it for the right reasons and a lot of people do this type of thing for the wrong reasons. So if you're going to step into the venture world, it's because the business needs it. It's because it's the type of product or service or the company itself requires capital to scale at that level. Most businesses don't need that. Most ideas don't need that. And so for most people you can just keep it simple, partnership, LLC, whatever and take your distributions and move on with your life because founder salaries are shit. They're absolutely shit for venture backed companies. Most of the people you hire are going to make more than you.

Now, that said, you've decided you want to go that route. Let me pull up some resources that have been very helpful for me. How do I share this specific window? I want to share this window. Well, I'll do this. So as I went down the world, one of the first resources that was introduced to me was a book called, it's a very short book and I did the audio for it. It's called Fundraising by Ryan Breslow. Ryan Breslow is the CEO of Bolt, which raised a shit ton of capital. Now, I think that it's a great entry point because one of the things that this book does really well—first of all, you can listen to it in like a couple hours—what it does well is he simplifies the process from a founder's perspective. And I think it's very important to learn about fundraising from both the founder's perspective and the investor's perspective. Very, very important because if you only understand one side, you're literally just missing half the equation and you can get screwed very easily. And as a first-time fundraiser, this is one of the hardest things you'll ever do.

I mean, it's by far one of the hardest things I've ever done, and it's not easy. And it's not even running the business. It's just raising the capital to be able to get to work on the business. So what this book does is it walks through some psychology and some approaches that I think are important, but also incomplete, very incomplete, because you can only do so much in two hours, and by keeping things so simple, he removes a lot of the nuance. And that nuance, I learned the hard way. I thought, oh, I got the answers. I'm gonna follow this kind of, you know, this book's formula.

No, I got like, uh-oh. Well, I'll do this. Uh-oh.

Techno king. I learned very quickly, like, this is incomplete. I gotta go back and do some more homework. So, best guys in the world, in my opinion, for learning about fundraising and startup life, whether you fundraise or not, Y Combinator. I don't think people realize how incredible this resource is. When you go to Y Combinator, first of all, one thing I wanna get better at is including links to the things we talk about in our show notes. So I'll include all the links here, and also you guys, if you have links, just send them to Jordan, and we'll drop them in the show notes for this episode. If you go to the library link, the startup library has pretty much everything you need, and if you're, I'm sharing my screen right now, so if you're not on YouTube or Spotify, hop there and you can see what I'm sharing. But you can narrow this down. It's like, what do I wanna learn? Management, fundraising, and you can narrow that down all the way to like, for example, if I wanna build my seed round pitch deck, what should it look like? What should it flow like?

And this all comes from some of the most incredible people in the world, Sam Altman, Elon, all the people at Y Combinator themselves who are former founders, and these guys are just go-givers, man. They're really there to just help the world build great companies, and if those companies are investable, they sometimes like to invest in them, themselves, but there's incredible, incredible resources here. And further, outside of that library, there's also an actual startup school that you can enroll in. This is basically a free online course. I've done this, it's awesome. You can connect with other founders. You can do this live. You join a class live. And what I think is essentially going on is what's in the library is just recordings and essays. It's a lot of the recordings from startup school. So like that cohort happens, and then they just, so if you wanna do it async on your own time, you can go into the library, but I highly recommend doing the startup school as well. This shit is good.

It's really, really good. And then last but not least, there are so many other resources, and I've done a lot of the dirty work of like, I have a ridiculous brain when it comes to this stuff. I first started like the most macro level possible. I wanna make sure I'm taking in the best resources before I dig in, and then I even verify with other people what are the best resources. This for me is, I think, the real alfalfa. So NFX is a pre-seed and seed fund that was started just a handful of years ago that has now become very prestigious, and I think they do an absolutely incredible job. Honestly, big shout out to these guys. The amount of materials that they put out for free on their website, through their newsletter, on their YouTube is just fantastic. And there's a lot of stuff you can dig into. I think the most important ones are, if you're getting ready to fundraise, is the non-obvious guide to fundraising? I mean, we're talking like long essays here, guys. It's like little mini books, and I've read them all, and they're really powerful.

The NFX fundraising manual is another favorite of mine. And again, you're learning from former founders turned VCs, and I think this is the most important stuff here, because they go a little bit more into the nitty gritty than Y Combinator does. I think they're a little bit more cutting edge, a little bit more on top of the market. Not to take anything away from Y Combinator, but I just really like what these guys are up to. Winning psychology of the top founders. So they're telling you how to talk to them. They're telling you what mistakes to not make. Don't say these stupid things, and make sure you don't come and pitch me. Like most people think that if they're gonna meet an investor, they're supposed to pitch them, and they're telling you, don't pitch me. Because 90 to 99% of the time, you're gonna get a no. So don't waste your time pitching just to get a no. Use this opportunity with this former entrepreneur turned investor to learn more about how to make your company investable.

And there's just so many things they go into, the right questions to ask. And then last but not least, say you don't need the money. Say you're past the fundraising stage, I think that their work on network effects, of course NFX stands for network effects is the best in the industry. They've done a lot of work on this, they've put a lot of materials together. And I highly recommend diving into their network effects materials. So a lot of shit out there. I'd also be curious what stuff you guys out there in the audience have come across. If you're venture backed, or if you're thinking of it, and what the best resources are, so we can crowd source this a little bit in the Discord for other fellow entrepreneurs

and aspiring entrepreneurs. So this is awesome. Some good materials here. I had no idea that YC had like a full blown school.

Oh yeah, and I did not mention this is of course outside of applying for YC itself, getting in, which you can do, you would apply, and they do two or three cohorts a year. I think it's like summer and winter. And if you get in, they invest $500,000 in your business and you get to be part of this elite group of people and you do it in person and virtually. So that's like the Mac Daddy and then they make the other stuff available for free. So whether you get into YC or not, they give it to you. So it's really good stuff. Awesome. Yeah. Thank you for sharing. Of course. So speaking of a great company out there called Coinbase is up to some very interesting things with this base token.

So I'm excited to dive into this. Thank you for sharing.

Of course. Yeah, it's a big day, big day yesterday. I mean, Coinbase announced that they're launching their own layer two, basically built on top of open source, kind of optimism, tech, I guess. It's going to be called base, which is a great name. Kudos to Adam Cochran for predicting that.

I have one right with the name. I have one right with the name. I just wish there was a D at the end and it was just like based. Based.

Like how sick would that be? Based. Like how sick would be based? Yeah, I wanted it to be based as well. I felt like it would have been a little better for the memes.


Yeah. Kudos to David and Ryan for getting the scoop too. They got the first little interview and rundown on bankless. I thought that was pretty cool.

Really? Oh man.

You know what the real alpha was yesterday was buying the base token that has nothing to do with.

Oh yeah.

You always got to follow the memes a little bit. Yeah. I think it's project that already existed. I think it's really funny actually this chart just went like. Oh my God. It spiked from, look at this wick.

I can't keep scrolling. Yeah, this thing opened the year at 70 cents.

It traded up to $38 yesterday in like one wick for soul. That was buying up there.

Question for you Mr. CFA. Say you hypothetically know that your company is about to launch this like crazy thing that the industry is going to care about a lot. And you also know that everybody's just going to trade the thing that's named it. Are you insider trading if you buy the base token on this news and then dump on retail

when it's not your token? The, I don't think that that would be illegal.

This is like not even associated with you at all. In that case, this is just a pure 500 IQ play. But if any insiders did that.

Guys, I'm really excited about this though. Like. Yeah, what do you think? You're bull? Are you bull? Yeah, long-term bullish. I mean, listen, their products could certainly flop but in the progress, I look at it from like two perspectives. One, they got 110 million users. There's like, I don't know, a million on chain users, monthly active users. So if they can bring on another million or two or maybe more 10 million, 20 million.

What do they have?

Guys, I'm really, like 20 million. What do they have?

100, 110 million users? Like verified, I think is what the, not necessarily active.

Yeah, but there's a lot of things

not necessarily active, but there's a lot of, yeah, unique users. But like a hundred million, 109 million of those don't actually know how to use ETH. They know how to buy it and speculate on it but they don't know how to use it. They don't know how to like, you know, pay for it as gas and maybe buy an NFT or, you know, to swap it on Uniswap. So people, a lot of those people, probably just thinking of a speculative asset we know of as like, you know, our little local economy money that we use. And so I think that's really exciting for people to learn how to use ETH, not just speculate on it. And then, you know, from the other point, like coin itself, you know, maybe not short-term, but the long-term, I think we all know that it's like a good proxy to play crypto prices. And, you know, maybe historically has been used to, you know, trade Bitcoin prices via public markets for big boy institutional players. By the way, I saw Michael Saylor on CNBC that day. He just sounds like the Charlie Munger of crypto these days when he's in these interviews. It's pretty tough to watch. Anyway, but going forward, like coin could be used as a play for institutions to bet on ETH and the whole ecosystem, including staking, including layer twos, and then the revenue that being a sequencer, you know, that comes with it.

So I don't know. I just think it's exciting as like this all-in-one, you know, vehicle to play those angles for institutions. I don't know. If you guys heard any bear scenarios, I'd love to hear them, you know, or just like maybe not as bullish takes on it,

but overall it seems pretty exciting to me. I think you have a bearish take

because I have something to add on that's not a good. Yeah. I mean, I think it's good to stress test the bearish case. I mean, I don't think this is like, I think the worst case is this ends up being a nothing burger and kind of like useless for crypto, but it's not gonna hurt us, but like bear in terms of like it's not actually gonna do anything is like The main thing people point out is the NFT marketplace, right? Which was just one of the, you know, biggest sort of unmitigated disasters in the history of all product development. I think when you talk about what they put into that versus what they got out of it. But I don't necessarily think that's the right way of looking at it. NFTs are, A, they're just like a different breed, right? Like the idea that people might ever want to trade NFTs on centralized exchanges is not necessarily a given. It's like this sort of inherently on-chain culture, right? And unlike crypto where there's like a ton of people who buy coins, as Nick said, who don't know how to use the chain, like the vast majority of them, everybody who buys NFTs kind of knows how to use it. You have to in order to do it, right?

So there's not that kind of like asymmetry of users going on that you're going to like suddenly tap into there. The other thing is that like, that was a centralized product they're building. And this is like completely open source, you know, not obviously not decentralized now, but path to decentralization. It's like an open network. So I don't think that the two things are analogous. And I think it's easy to hate on Coinbase as well, because they have just so dropped the ball on so many things, right? But NetNet on average, like they have built out like a great product that has brought tons of people into crypto, like to begin with, maybe not necessarily on to the chain, but it has brought people into crypto, it has brought, you know, people into that particular market where they care about it and speculate on it, and they do drive asset prices because of that. So now it seems like a natural progression to me that we might take those people and bring them like on chain now. And this is like the future that we have to be getting towards that we have to get to a future where these hundreds of millions of people who like participate in crypto, but don't actually use it, start actually using it. Otherwise, it's just a giant speculative Ponzi scheme circle jerk that doesn't go anywhere. And then all the coins go to zero, right? So you kind of have to believe in this narrative that otherwise, it's like, why, why are you here other than to just swing trade some stuff, right?

So yeah, I think it's an inflection point, like as an investor, you want to be looking at inflection points, it's not necessarily right, like, oh, it's up only, right? But it's like, oh, like a change in the pace has occurred, a change in the in the waters is here. And oftentimes, these things happen during bear markets, and you don't see the effects of them until the next bull, we have so many examples of that in crypto, right? So this could be one of those things. And I'm hopeful that it is I know, Eric, you had some, some thoughts you wanted to get

out there. I think you guys did a good job highlighting how I feel, which is like, you know, Coinbase has done a great job of making people feel comfortable using crypto to the extent they are. But only 1% of that Coinbase user base is like ready to go on to the blockchain. I feel like we've ranted in the past about the UI and the UX experience for getting into the actual blockchain. I think this could be that that solution, you know, it could be like the Robin Hood that we were thinking maybe it's maybe it's Coinbase's version. I actually want to take this opportunity to highlight something else that we wanted to talk about, which is like beta. So Coinbase, the stock coin, COIN, is actually down 10% over the last five days, even you know, that even incorporates this news. So like the what I want to highlight there is that every every marketable security has two components going on. One is like a systematic risk component that like is driven by the fluctuations in the market versus its individual idiosyncratic sort of company specific profitability risk and return stuff. So like Coinbase came out with this news. This should be net positive to their to their earnings, but the stock is down. Why?

And it's because it has this like beta to the equity market. The market is down. So this is now Coinbase stock is down independent of this news, which is positive. So I think like it's a good way to transition to what Stephen was saying in his Alpha Alpha round, where it's like, you got to be careful what you're investing in to know what what

is the beta exposure, not just the company or the security itself. Yes. Well said. Do you think it's possible the market just doesn't understand how to price this?

Yeah, I think that's I mean, if only one percent of Coinbase's users even using the blockchain, like how many actual investors know what's going on? I think when you compare it to something like other layer twos, you'll see that it can add like a hundred million or two hundred million to their to their bottom line. Like that, that to me seems like a pretty easy proxy to make, but I don't think everyone

else understands that. Just to add on to that. I think I read an article and it might have been on the bankless newsletter about how optimism is targeting like a 10% profit margin on their sequencer revenue for being the one that sequences the transaction. So I think shortly, you know, hopefully in the next year or two, it'll start showing

up in the earnings reports.

Yeah. Yeah. So it's I think it's important to note that like I know I saw Adam Cochran thrown around that like 200 million number and I couldn't figure out how he arrived at it because like as you say, like just because you are capturing 200 million a year in fees, it doesn't necessarily mean that all of that is like somehow accretive to to to you. The finance chain, I think did like, you know, about a half million in fees yesterday. You call it like a hundred call it like 200 million a year. Right. But if the profit margin for those types of businesses is 10%, that's, you know, it's 20 million a year, which is sort of a drop in the bucket to what's coin basis valuation like 13 billion ish. Yeah. Ish. Yeah. But I, but I do think that that number could dramatically increase. Like, I think that could go to 200 million very quickly.

I think it could go to a billion. Right. But one thing I'm sort of thinking about like a higher level as an investor, right, is like, where is this all going to go? It's going to start getting a little bit confusing, I think like it was already a little confusing using crypto in the sort of 2021 bull run world because you had Ethereum and then you had Matic and you had Solana and you had Avalanche and you had Luna and you like all of these ecosystems kind of playing with each other. It was like, ah, and then they all have like different apps and it's not user friendly, right? And it's, it's, it's sort of chaos. But I think over time that like that, that can't persist, like there has to be some sort of consolidation somewhere, I think, like some sort of like 80 20 or maybe other, even a greater sort of power law thing where one of these ecosystems, I think somehow consolidates most of the traffic. But it doesn't seem sustainable that we're in the future playing on 17 different layer twos. Like there has to be something, maybe it's like an application sitting on top of them that abstracts that all the way that connects the users, right? But like Coinbase to me has the potential to be that sort of like shelling point of all this stuff. I think they have like something that a lot of these apps don't like none of these other apps have, right, which is a gigantic pile of real world users who drive some sort of revenue as they do on the Coinbase exchange. But none of that is going into crypto.

So if Coinbase can sort of bridge that, right, and they can bring those users onto crypto, then everybody's going to want to bring their apps to those users. And even though you may have this weird ecosystem where there's like 12 different layer twos and like maybe Ave is on like half of them, and maybe Uniswap is done like four of them. And it's just kind of like going to be, and they have their own native decks. Coinbase could be that place where everybody has to build their ad. Like everybody right now has to have like their app on Coinbase on base, because that's the thing that everybody's at. So if that happens, like I wonder if you could just see like tons of the activity migrating there and get this like kind of consolidation in the in the layer two world. So that's just something I'm sort of thinking about curious

what you guys think of that. Yeah, I mean, I think you're definitely gonna see it from the developer side. I mean, I think what became apparent the day before they announced it is that all of the app teams were aware that something was coming. They probably knew what it probably was, they actually kept it pretty relatively tight I think because well, they don't wanna get slammed by Gary. But all the app teams were aware that this thing was coming and that they were all kind of signaling that they were gonna be a part of it. So they're gonna certainly track the developers. So I think the supply will be there of apps to use. My question is, well, what's this UI gonna look like? So I know there's some DeFi component within the Coinbase app where you can actually technically have your own wallet. And so I'm wondering like, am I gonna use Euler, Finance or Aave or Velodrome or whatever it is like in this layer too? Am I gonna use it inside the Coinbase app? And how are they gonna separate for me that this is not a Coinbase application?

It's a third party decentralized application. And you may not know who actually is the one who works on this, how they're gonna separate the like trust portion of the UI.

So I don't know, maybe things that come, but I know- Don't they already sort of have that

with like Coinbase wallet, which is- Yeah, but I've seen it in the same app. It's not like you download a separate app and interact with DeFi protocols in a separate app.

You can technically do it within their- Do you take funds in your Coinbase account and interact with DeFi protocols on them?

Yeah. Interesting. I didn't even know that. It's called browser. So like if you're in the browser, they signal out your DAP wallet, which is different than your Coinbase wallet, which is also different than your Vault. But in any case, you have your DAP wallet and you can click on things like one inch, ENS, QuickSwap, SushiSwap, pull together. And yeah, I guess access it through some kind of browser. I've never really used it that much, but curious how they're gonna do that. Maybe people don't even leave the Coinbase app and they're transacting on chain with their own wallets and whatnot.

Yeah. I mean, makes sense to me. I don't think the future is gonna be any different than the present. We definitely just interact with apps on our phone right now. We don't think about what the underlying internet protocols are. And we wanna interface generally with some sort of brand or company in doing that because as humans, we wanna, regardless of what we say, we wanna trust some sort of party to kind of, even if it is all, like the sweet spot for crypto is like Coinbase executes this in a way where it actually is all completely decentralized. We abstract all of this stuff away from the user and we allow them to custody and back up their stuff. While at the same time, people have that, oh, I'm that sense of comfort that I'm interacting with this company and this user interface makes sense and it's not complicated and all that. Like that's kind of the best of both worlds thing to me. And that's the huge question in crypto that we still have to deal with, which is like, how are we going to like abstract away all of the nonsense and complexity of like this ecosystem while protecting people, while at the same time, like not getting rid of the stuff that we did crypto for in the first place, like the decentralization and the transparency and permissionlessness, like that's such a juggling act. But I think Coinbase can do it, I do, Calcium had a question. What did he say in the chat?

Did you think Coinbase will come out with a DEX, like Uniswap or will regulatory concerns prevent that? I don't see why they would do that. I think Uniswap is already a DEX, it's already good. Like it seems like they wants to be a place for people to build stuff and they want to like aggregate their users sort of, to this ecosystem and still control that user on-ramp and like monetize that bridge from their centralized users to the chain. So I don't think they have any desire to compete with Uniswap in terms of a DEX.

I also don't think it's going to,

I don't cannibalize their own business any more than was already going to happen. I think the whole Coinbase model is a little unsustainable moving into the future. Like I think like as DEX has continued to evolve as people keep being like more and more on chain, like they sort of accomplish what Coinbase did in the beginning, which was this like easy button. I click button and I buy Bitcoin and you just charge people like massive fees and abstract away all the other nonsense. That's kind of what Uniswap is. There's no limit orders or market orders. You just click the buy button and you buy the coins. So if they're smart, they see this and they're trying to figure out other ways to monetize their users besides like trading fees. And maybe they pivot to being more of like a bank, just like the modern bank, the bank for like the web three era, the bank that bridges these two worlds together app or whatever you want to call it.

I think that's like the bull case for them as I see it. I have a follow-up question too. We've talked about how if there's economic activity on Coinbase's chain, base chain, then some of that value will be accretive to Coinbase, the company, which would make me feel bullish about coin stock in the long-term if you believe in that narrative. What about the value accretion to optimism

as they built this base chain on the OP stack? Optimism is something I'm confused about, honestly. Like, because my gut reaction when I heard about this was like, this feels like kind of, it feels like it cannibalizes optimism, right? I think you can make a very obvious case that this is super bullish for Ethereum, right? Like beyond the fact that base is going to use ETH as a token and now we have arbitrary of optimism and base, possibly like all the top future L2s all using ETH as like the native gas token. Obviously all of this stuff ultimately settles on the main chain and is bullish for the burning of the gas there. So you're boosting the amount of ETH being burned. You're also just creating the generalized demand for ETH, right? Like value comes in crypto ecosystems, not just from the burn mechanism but just the general demand for the token. Like the more users you have, the more people staking, the more people using apps, doing all this stuff just creates like generalized demand. So bullish ETH in that sense. It's also bullish ETH in that it's sort of a blow I think to some of these other models of scaling, you have like Polkadot parachains, which I don't even know what the hell's going on that now, but Avalanche subnets, which I think are, you know, still a little interesting.

Obviously the big one is the Cosmos, you know, the app chains and Coinbase, like the biggest kind of company yet to kind of come in and bring users into the space, they went with Ethereum and that's super bullish, but I have to look more into the optimism case. I know there's some sort of revenue sharing going on.

To optimism, the organization, but they don't, I don't think share their revenue or earnings with OP token holders, do they?

No, but that's kind of how the token exists now anyway, right?

Yeah, but the governance can use that rev share to fund, you know, other public goods, but like, you know, outside of crypto, when you look at open source projects, you know, there are network effects that you want. And when you have big contributors coming as a core contributor of an open source project, it certainly does help. You know, it brings in other developers, it makes big developers, like let's say another large company feel comfortable to build on top of this project. So, you know, whether it's a creative, the actual token, I think it's certainly good for optimism, the platform, if you will. Eric, you said something earlier that kind of made me chuckle, like what if we just kind of round trip this thing? So, you know, Robinhood is like a good example of this, but even you look at Schwab and other TD Ameritrade, trading fees are now zero, but they probably make money from selling order flow. And that's maybe where Coinbase is essentially going. Like they know that the transaction business, the transaction fees are ridiculous. They're high, they're turning those into subscriptions, hopefully for no transaction fees, but then maybe they're gonna bring those down to near zero and then they're gonna start making money from sequencing, which is essentially like, you know, using

and profiting from order flow in the future.

Man, this has really got me wondering about coin as an investment. Like I previously not really had any interest in buying Coinbase, cause I was always like, well,

I don't know, I just buy the actual coins. Cause Jim Cramer is gonna wanna buy it, you know,

like in 2024 or 2025. I wonder, Steven, I wonder what's gonna have a higher beta exposure to like crypto's proliferation. Is that gonna be ETH higher beta

or Coinbase stock higher beta? Yeah, I was gonna ask you the same thing, actually. Kind of wondering that. I mean, yeah, I don't know. Just not a pure market cap. Like what's Coinbase like 13 billion

and ETH is a lot like 200 billion or something.

Yeah, yeah. So yeah, kind of interesting. I mean, the chart looks kind of good too. It does look like it's just sort of bottomed and accumulating over a pretty high timeframe. We went up to 380 and the last, you know, it's a casual, you know, seven X or so from here just to those levels. There are nice things about owning stocks too. I think like as an investor, there's a lot of flexibility you have with like a brokerage account that doesn't really exist when you're just holding an ETH and an on-chain wallet. There is nice stuff you can do with your, like Nick was talking about earlier, as far as like that access to capital. You have like, you have access to options and all these derivatives that you can do stuff with. So I think it's worth considering. I'm gonna consider it. I'll probably buy some of my retirement account at a minimum and probably time to start stacking now, I think.

Retired, it's a perfect account. What is that? Looks like- Yeah, I forgot about that.

Looks like Cathie Wood bulked up. Yeah.

Looks like Cathie Wood. Cathie Wood bulked up. I just do what Cathie does.

Yeah, I'm coin.

Oh, she did. Oh, she did. Yeah, yeah. When did she do that? Like today?


that. Her great redemption arc begins. Yes, please be something if Kathy brings Kathy back on the limelight.

Yeah, Kathy doubles down on Coinbase after earnings beat man. She's such a good pumper. She's such a good pumper. Is she? I mean, like she's down on the, on the year, but like her, I mean, on the last year and a half, like CNBC will let her come on anytime she wants

and she just goes out and sells in the last year and a half. She also sold Nvidia. Interesting.

That's one of my favorite stocks. Decade. That's one of my favorite stocks. Decade. Never touched

that thing. Oh, you didn't touch it at the right time. That's the problem. I like a, for coin, I like a combo of common stock and maybe some like two year leaps, you know, like buying some, some maybe in the money or slightly out of the money call options.

Way the hell out there on Coinbase. Yeah. Yeah. I love the idea. Yeah. Yeah. I love the idea of

Coinbase leaps. That's not a trade. I might just go and pop some right now. That's not a trade. You

know what I also was thinking about buying some leaps or calls on is, is riot. Oh, like as another

price action play within the equity sphere. Yeah. Was he like a Bitcoin miner or what is what? Yeah, they're, they're a Bitcoin miner and they kind of have like, it seems like they have like extreme beta to Bitcoin. Kind of like a high beta Bitcoin player chart. Looks kind of interesting. Maybe we

can, uh, maybe dive into that a little bit. We'll be next time. Can we dive into that a little bit?

Little bit. Anybody else have any, uh, other burning thoughts on, uh,

Coinbase and our, uh, bald, bald God, Brian. I'll just, I'll just echo what I heard earlier, which I couldn't agree with more is like, uh, some of, some of the more, you know, really core Ethereum ecosystem people are oftentimes, uh, a little bit hesitant to see certain new projects pop up, new applications pop up that don't do things according to the base ethos. Right. And what we need is for things like this to succeed. So I couldn't agree more with that because if things like this don't succeed, we're just here. I mean, I'm going to say something ridiculous. It's, it basically becomes like a ridiculous circle jerk. You know, it's just, it's, it's bad. It's not good. If all we are doing is arguing over fundamentals and not actually onboarding new users. And there does need to be some form of consolidation. I really liked what you said, Steven, I hope, I hope that that's what happens.

And I do think that like, as people sort of in this industry, getting behind certain projects, even if they don't check every box is pretty important. That said, this is one of the best that I've seen lately. Like it checks a lot of the boxes. And although I am also confused about the optimism thing, uh, I think it's great. I think the value accruing to Ethereum is great. I think the fact that it's like, by the way, I don't know if you remember this, Steven, you, when you texted the thread, you, you said, is it true? There's an L three coming. And I was like, what the fuck is an L three? I think you accidentally wrote L three instead of L two. I was like, Oh my God, here we go again. Here we go again. Like just,

okay, L three is your thing, sir. Well, I don't think that was an accident.

No, oh, you didn't do it accidentally. Okay. So you're some reason why did you assume it was an L

three? So you said, well, why did you assume was that they're building something on

optimism on an app? I didn't even know they could copy. I didn't know the cord code was open source. So that, that part was enlightening to make it just duplicate, oh man. By the way, I'm just forecasting like 2024 bull market run, like just a hundred scammers, copy, pasting, OP stack into a layer to drop in a token. That's coming. That's definitely coming.

I didn't know that probably, probably, which is why we need to protect all of our, uh, all the, the little, the a hundred million doe eyed users in the little, little Coinbase wild gardens. So they don't get shredded to pieces. Bullish. Um, all right, boys. Well, you want to wrap it there?

The good, uh, yeah, this was good. All right. This was good.

Cool. Yeah. I had fun. Had fun this morning. Uh, thanks everybody for joining us live on YouTube. If you did that, we do this every, uh, every week now, same time, nine 30, uh, Pacific time on the YouTubes. If you want to catch the show, uh, early, I hope you guys enjoyed the, uh, the, the, the new format. I hope you guys like us talking about a little, little more stuff outside of the hardcore, uh, trading realm there. Although if you, uh, if you really liked that, then please come into the discord and, you know, hop in the, the magic lines channel. We do a, we do a lot of charting in there and it's a, it's a good time if you need to, to, to feed that urge. Uh, other than that though, I guess we'll, uh, we'll see you back here again next week. Same time.

Bye guys. Later guys. Later guys. You bye.