May 22, 2021 • 32 mins
This week, Christie's CEO Guillaume Cerutti, joined to talk about their spring auction, which included a group of nine Cryptopunks NFTs and the future of digital art. Mike Novogratz, the founder and CEO of Galaxy Digital, reacted to Monday's volatility in bitcoin and explained why he thinks the cryptocurrency is likely to remain under pressure for weeks. Soona Amhaz, general partner at Venture Captial firm Volt Capital, which invests in the crypto space, came on to talk about Wednesday's wild ride for crypto and said a thirty percent dip is just another Wednesday in the space. Then Gregory Di Prisco, CEO of RWA Company and community member of the MakerDAO ecosystem, joined to discuss whether decentralized systems like crypto can buckle under extreme volatility.
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Episode Transcript
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Speaker 1 (00:08):
Welcome to What You Missed This Week? I'm Joe Wisenthal.
This podcast has some of our favorite interviews from the
Daily Market Clothes show that I co anchor along with
Romaine Bostick and Caroline Hyde. What do you miss It's
the perfect way to kick off your weekend. This week
was all about crypto, with plenty more tweets from Elon
and some roller coaster market moves. The sector really has
(00:28):
gone so much mainstream, so much so that even old
school institutions like Christie's are getting in on it. So
after their landmark sale of People's Everyday n f T
in March sold for sixty nine million dollars, the auction
houses investing further individual art. So we spoke with CEO
Garron Serruti about their recent spring sales, which included a
(00:49):
group of nine crypto punks. I mean, I don't get
this stuff, but he does. So I started by asking
him what are people really buying when they buy an
n f T. Well, let me first tell you that
we are just at the end of the fantastic weeks
of sales here in New York. We have sold for
(01:09):
eight million of art in three days. Fantastic. The market
is more resilient than ever. We have completedly recovered from
a more challenging year last year, where the supply was
more difficult to get. This season has been extraordinary with
many top prices for great artists, recognized artists because so
(01:30):
many evango growth co Bastia, but also like you mentioned
for for n f T s and a new artist. Um,
what what do your point? What? What? What? What is it? Well,
it's a it's a real community of artists, digital artists
that we have revealed at Christie's to the world selling
(01:53):
two months ago for sixty nine million work by the
digital people, and two days ago no major cell of
the season in New York we sold again nine crypto
punks other wonderful examples artworks digital artworks for sixteen million dollars.
(02:14):
So this market is real. It's about the rarity, it's
about authenticity. That's what the NFT provide to the collectors
in this field. Again, I'll talk to me about the
type of collector here, the type of collector that is
dipping their toe into some of these n f t
s and cyberpunks. Is that the same collector that's buying
up shuts or Abascia or amone. Well, not for the moment,
(02:39):
but that's coming. Not for the moment, because for instant
when we sold this work by people two months ago,
thirty four beaters did bid in excess of one million dollar.
Thirty out of the thirty four were new to Christie's.
There were a clients of collect only active in the
(03:02):
digital art world. We did not know them. But since
then we have seen also let's say, traditional clients being
interested in the crypto art, being interested in uh, you know,
sometimes staying in cryptocurrencies. So it's it's it's a new
reality on the art market. It started with only you know,
(03:25):
the the crypto community, the the digital art community, but
it's clear that it's now going beyond. We are we
are the very beginning of the process, all right. But
I want to go back to the question I asked originally.
So we all know that like these images, even the
the people that sold for almost seventy million dollars in theory,
(03:47):
you know, someone could go on the website and write,
click it and download it, so we know that that
it's not the image itself that's being sold. What is
being sold when someone buys the crypto punk, what do
they have then that someone else doesn't have? Whatever, you know,
the the field in the art world, what makes the
(04:09):
value of you know, an artifact or work is the
authenticity and the unicity of the world. Even then, if
the work can be compete, if you can have photos
of this work, it's a different story. It's about the
the I p at that moment. But what the value
is with the authenticity and the unicity and and the
(04:32):
fact that today the blockchain and the n FT do
provide these two features makes the value of what you buy.
It's about one more time, the rarity and the authenticity
of what you purchase. All right, So going forward here
theon we are coming out of the COVID crisis. I
(04:54):
know there are some disruptions in the art market over
the past twelve fourteen months or so, but we did
see it's a of the auctions that did take place,
the virtual ones at least, still commanded a pretty high
number of buyers. Here, I'm wondering how much resiliency you
saw during the pandemic and what your general expectations are
for demand going forward. Was very resilient, especially on the
(05:17):
demand side. At no moment last year we have seen
a description in terms of the buying power of our clients.
We have more and more new clients, especially coming from
Asia millennials. The the challenge last year was not on
this side. The challenge last year was more about the supply.
(05:38):
Our clients were reluctant to put that auction their works.
They wanted to wait until taking the decision. This year,
it's clear that the demand remained very strong as it
was last year. Nothing has changed from this point of view. Yesterday,
for instance, we have huge participation from Asia on some
(06:00):
of the top lots we sold. But what has changed
now is that our clients on the selling side, the
consigners are you know, more confident because they have seen
that the market is resilient, that the demand is strong,
and so they are they are they are, you know,
willing to sell. This season was from this point of
(06:21):
view sort of back to look at the top price
we've achieved at Christie's yesterday we sold for one hundred
and three million, a major one by Picasso. It's the
first time in two years that we have on the
art market at auction. The price makes us on one million.
We are back to the market as it was in
(06:43):
after this very particular twenty year and then on Monday
we are shades of what was going to come in
crypto of alatility. Crypto fallen as long as forty two thousand,
one thirty three dollars on Monday, after Ellen us weighing
in on Twitter about his decision to stop accepting the
coin for car purchases because if it's environmental impact, we
(07:07):
got reaction from Mike Novograts, the founder and CEO of
Galaxy Digital, which had also just reported his first quarter earnings.
Bloomberg Wall Street correspondent Sinali Boss joined us for the interview,
and we started by asking Novagrats how he plans to
keep up those results if he thinks bitcoin is probably
going to consolidate for a while, Well, listen, you know
(07:28):
when I say consolidate, I think bigcoin will be somewhere
between you know, forty and fifty five thousand for the
next chapter before it kind of builds up enough new
momentum to take out at fifty five thou and end
the year much higher. Um. Listen, we have a diverse,
fied business. We're not all bitcoin. We uh are invested
across the ecosystem. We have mining, we have a great
(07:50):
venture business. We have a lot of DeFi, n f
T and and virtual world bets on and so what
we're trying to build here is diversity. Uh. We look
at the whole crypto ecosystem is thriving. I said to
that earnings call that this is you know, we're a
growth business in a growth industry. Right now, total market
cap of all the crypto is about two trillion dollars
(08:12):
a little more than that. That's half a percent of
global wealth. I think it will be to three of
global wealth in the years to come. And so that's
where Galaxy's bet is. Mike, how concerned are you about
the short term volatility being introduced by Elon Musk? Listen,
Elon Musk is an important figure in American business and
(08:33):
certainly in the global retail crypto world. He's a bit
of an icon. Uh. He was great for crypto when
he was positive for for bitcoin. He's caused some some missues.
I think if you'd take Elien and face value. Though,
what he said was he worried that as bitcoin used
more and more electricity, which it will, Uh, it could
have a negative impact on on you know, C two emissions. Uh,
(08:57):
that's true for every industry, right, And I was looking
today YouTube uses two and a half percent of total electricity.
When you think about that, we're not gonna say let's
stop using YouTube, right. We use electricity for things that
we think provide a tremendous amount of value. And so
I think you're gonna see a response from this industry,
like you should see a response from every industry to say, hey,
in this gap of time before all electricity is green energy,
(09:21):
which I think is seven eight years away, uh, we
should do something to offset our footprints. And that's in banking,
it's in crypto, it's in tech, it's in industrial businesses.
All right, But is it a problem or does it
bother you that, you know, the the industry that you're
part of that trying to make it respective respectable and
(09:43):
you're talking about bringing crypto to wealth management and crypto
for inflation protection, and crypto for allowing people to make
transactions that in places where maybe they're more limited freedom
tech isn't problematic that like one of the hottest currencies
is a joke doge, and that Elon Musk, who is
this like sort of like face of it all, is
(10:03):
essentially whipping people into that one and sort of multiplying
the jokes and you have all their influential people talking
about even other jokes, and that this sort of like
does it make it harder to put on? You know,
basically make the case that there's a serious industry with
a straight face. Listen, yes is the answer. I'll tell
you a better story than Elon Musk. You know DOJ's
(10:25):
cousin called Sheba in New Coin. They end up giving
Vitallic Botoran, who really is one of the most decent
and smartest guys in this entire space, a giant amount
of coins, and he donated a bunch to India and
he burned the rest and said, please don't give any
more coins. I'm not gonna play your games. Um, I
don't want to discredit the doge community or any of
(10:46):
these communities. Right. Well, you're seeing here is a response
against the monetary policy of the US and the world
and the frustration people have had with the system, and
this young generation that said, hey, we can band together
and create our own way of investing. Some of it
is frivolous that I think will lend in tears, and
so we try to steer our clients away from projects
(11:09):
that we don't think have long term sustainability, but it
proves something that communities can band together. The world has
gotten very tribal, and that's not necessarily a good thing.
And if you go on like crypto Twitter, you really
realize just how tribal it's gotten. You know, one of
my buddies made some negative dog comments and you've got
six death threats and so that's not good. Uh, But
(11:30):
I do think let's not miss the forest through the trees.
Underneath it all, there's a huge revolution going on, run
by serious people who are trying to rebuild the financial
market infrastructure in this place. Well, you mentioned your investments
in the DeFi space and one of the really you know, decentralized.
One of the cool things about that whole space and
disability to make trades directly on chain, to put together
(11:53):
assets on chain, funds on chain. Lending on chain isn't
a threat as you know, sort as a listed crypto
company like yours, like a coin base, etcetera. If people
discover that they can sort of bypass regulated institutions and
do everything they need to do directly. Yeah, I I
tell my guys all the time. You know, we're a
bridge between the the old way of doing business in
(12:14):
a new way, and we might have to bite off
our arm to grow a new one. Right, we're investing
in all those protocols. It's not gonna happen overnight. Right,
there's still gonna be fays that guide their clients into
how to think about investing in the world. You know,
we just spent a lot of money on a big
custody business. I think custody is gonna be around for
a long time. But if it was just custody, I
wouldn't have bought it. It was the years there to
(12:36):
build new things on change that was really excited about.
So and so, yes, we're gonna part of galaxy is
gonna be iterated away, just like lots of the uh
uh legacy financial systems. So my kids we try so
to try to bridge these two worlds. I mean, one
question you get from a lot of people who are
interested in this space is how you can you be
sort of exposed to the potential upside in the crypto space,
(12:58):
but maybe uh sort of anchor it more towards something
that isn't the coins themselves. So they asked about specific companies.
So whether you're talking about I don't know, a micro
strategy or a Tesla or Facebook or something like that.
When you talk about getting exposure to the crypto space
through that angle there, what's the general selling point? Well, listen,
one of the reasons we went public way back to
(13:19):
I mean in Canada was just that to give a
holistic bet for people that can play the entire ecosystem. Listen,
micro strategy is a great bet if you want to
play bitcoin as is you know, other bitcoin funds, but
I think we're really the only public vehicle where you're
playing in the whole ecosystem at this point. Um. You know,
(13:40):
the the other way is having to buy an index
of defied coins or or a basket you know, or
a venture fund. But from the public market perspective, uh,
there's not a whole lot of options at this point.
There's not a whole lot of options. But at the
end of the day, these people are looking for a way,
I guess, to tamp down the volatility or at least
avoid some of the volatility that we've seen here. Is
(14:01):
there a way to do there is a way to
sort of hedge that volatility out of the equation or
at least you know, Listen, you know, one of the
misnombers is if you're trading in a high ball asset,
you have to have a whole lot of risk on.
So we always tell people it's posess sizing right when
your first your first bet and the bitcoin or ethereum
or any of the coins, don't pay ten percent of
(14:23):
your net worth and don't go lever age in it,
right two to three percent bet even draw it on.
What have you lost? If if you've got three percent,
you've lost sixty basis points. Uh, that's a little bit painful,
but you're not gonna, you know, run out the the
house with your hair on fire because of it. And
so a lot of this is about sizing um and diversity, right,
(14:44):
So why we set this business up as because we
have diversity across businesses, across investment styles, uh, and across protocols.
And I think should give us Listen, we'll still be
if if the market cap of crypto isn't higher in
the year, uh, we're gonna have a harder time. If
it's much lower, we're not gonna have made a whole
lot of money. Like we are a growth bet on
(15:06):
an insue we think is what do you do today? Mike, right,
what do you do today on a day that bitcoin
has been seeing a slow lead for a couple of days.
You know, it's a lot of you know, rough headlines
really in the last week or so. Are you buying?
Are you selling? You know, are you buying? Ethereum? What
are you doing right now? I listen, I think should
(15:27):
hold in bitcoin? So we're buying. Uh, we are selling
volatility because in times when everyone gets nervous, like today,
volatility gets really really high, and so often selling volatility
makes sense. And then we're looking across our portfolio. Are
there places that haven't reacted yet in doing what trainers do?
But mostly it's business as usual, right. We have an
(15:47):
invest in business. There are three investment committee means today
on new projects coming through the pipe. We're talking to
our customers seeing what they want to do. You know,
we're building We have two D people will be three
D fifty or four hundred by the time we settle
with and close with that go and so we're building
it in big industry that's not just a big big company,
that's not just a bet on bitcoin. Do you hear them?
(16:10):
You know, it feels to me in conversations like what
the enthusiasm around bitcoin from a few years ago. I'm
hearing a lot of people get really excited about specifically,
and maybe it's because they want a gateway to define
A lot of that stuff is built on that. Maybe
it sort of makes sense the sort of idea of
smart contracts and cloud computer and all that stuff. Is
(16:32):
that your sense that there are sort of a lot
of like mainstream finance people, we're seeing it specifically as
the sort of way into crypto in a way that
makes sense to them. It is certainly having a moment, uh,
and it's having looted for good reason. It's of the
the base lever protocols that are programmable. Uh, it's the
most decentralized by a long shot. It has the most
(16:56):
developers and projects being built on a by a long shot.
And right now it's got the triple whammy. It's got
payment coins i US stable coins being built on top
of it, it's got defied being built on top of it,
and it as n f t s being built on
top of it. So the three major thrust of the
crypto revolution are being built on top of Ethereum. Now listen,
(17:17):
they're competitors to it. That are faster, uh process quicker,
they're less less decentralized. Mike, what what is the next
leg then for ethereum here you know, what's the next
thing to happen, the next use case? Perhaps that will
send it higher. Listen, so everyone atleas you know, I mean, listen,
Ethereum one from eight hundred to four thousand, uh in
(17:40):
five months, and people like, how does it get higher?
How does it get higher? It's had a great run,
and so people understand it's had a great run. And
so if it consolidates in here for a while between
you know, three thousand and four thousand or hundred even
four thousand, that's probably pretty healthy. Um. There's some technical
uh changes coming to the Ethereum protocol this summer, which
(18:02):
is going to speed it up and make gas fees
a lot lower. Um. Ethereum is not a finished product yet, right,
I always say bit Quinn is a finished product. Ethereum
is a work in progress. But it's got great momentum
behind it. And so again investors curious because things are
gonna make a un percent every quarter. People were excited
(18:22):
about the banks. Mike, you know how much money has
come in through the wealth funds since Morgan Stanley has
made that available. So listen, the Morgan Stanley was the
first to come to come out of the shoot and
the wealth funds. I would tell you that I think
all the other banks are coming in. It's a process.
You know why I'm optimistic as can be is in
(18:43):
the Morgan Stanley case. Right, they have thousands, thousands and
thousands of fay's that had to take a course to
learn to understand how to sell bitcoin what bitcoint was,
to really get a deep understanding of it. And now
they're talking to their clients and so those of come
in flows continue to come in. But think about that,
I was like one of the lone wolves that used
(19:05):
to talk about bitcoin to people, and now all of
a sudden, in essence just inherited four thousand Morgan Stanley
salesman who are who are sharing the gospel. And I
think you can see the same thing at Goldman, Sachs
and Ubs and JP Morgan and all over the street.
And so the prosthesizers are growing in numbers at record pace.
That can only mean the reason the future Now Monday's
(19:28):
moves where nothing compared to what we saw on Wednesday.
It was a roller coaster ride for crypto. We saw
a thirty one percent drop at one point in Bitcoin
and a forty drop on the Theorium and close to
a fifty percent drop in doge. But the dip buyers
did step in and we got to witness one of
the most aggressive sell off and one of the most
aggressive raalities for an asset class, all in the same session.
(19:51):
Despite Elon's tweets, the sector did get some positive endorsements
from the prominent names like the ones you would expect,
including our convestment management Kathy Would who told Berg that
it's still going to get to five dollars one day.
So we got reaction on all this from Soon, the
ampas general partner adventure capital firm Volked Capital, which invests
(20:11):
in the crypto space, and we started by asking Soon,
what does it say that a few tweets from Elon
can generate such tremendous volatility in an asset class that's
supposed to be decentralized in Robut yeah, thanks for having
me on, Joe, and that's that's a great question. So
for those of us who've been in crypto through multiple cyclestent,
(20:33):
DIP is just another Wednesday. In crypto it is volatile
asset class. But the thing to remember is that Bitcoin
is still up three year to date. Um. These are
healthy corrections. What we're seeing is if you look at
the actual data of who's doing this selling, these are
primarily new market entrants that are panicking, and um in
(20:55):
in emotional market, we view it as a healthy correction
and are staying focus on the long term. This was
still a pretty epic draw down here, and when we
talk about the legitimacy of this as an asset class
and more importantly, as a a significant component of someone's
portfolio here soon, I mean, what do you tell them?
How do you sort of coach some through this idea
(21:16):
that you're going to have to deal with these types
of drawdowns? Right, So, the important thing to remember is
that nothing about bitcoin has changed. It's still using the
same consensus, it's still has the same proof of work
system providing security for it that keeps the protocol moving forward, um,
(21:37):
and it still serves as a global liquidity instrument. So
to the extent that those things are all true, the
only thing that's changed is Bitcoin has gotten cheaper, and
right now we're seeing it at frankly, this is a
fire sale. So if you liked bitcoin at UH sixty
dollar price, then you should love it at fourty knows
(22:00):
Oh well, said I am wondering though, because you said
corrections like these are healthy. Are they healthy when, like
you said, it's coming from newer entrants, maybe retail buyers,
maybe leverage dot maybe for sellers. Does that change perhaps
maybe the nature of the sell off so you cut
(22:21):
out a little bit, didn't entirely you're the question. But
these are healthy sell offs when they are primarily retail
driven and their new market entrants that are coming into
the market and our panic selling when we're an emotional
market like this. If you look to corporate treasuries and
you look to what institutions are doing, um, they are
holding onto their positions, and so you don't want to
(22:42):
look to what folks are saying, but you want to
look to what they're doing to the extent that you
know tests to clarify that they aren't selling any other bitcoined.
That's a really important indicator to us and what we
as a venture for firm a vot Capital focused on
when we're looking at the macro. Soon your industry has
a trendous ability to just create new coins. There's only
(23:05):
twenty one million bitcoins that will ever exist, but every
day there are new coins. And we were joking around
yesterday because someone created a new coin. It was a
joke coin named after me. But it's very easy to
just manufacture new coins. How much does the impulse among
players in crypto to create some new coin of their own,
some new token project rather than building on an existing one,
(23:29):
end up having the effect of swamping the demand with
so much supply and limiting the upside price. Right, So
we do typically see that UM in bowl markets. That's
absolutely true. Uh. The great thing about the way we've
designed our thesis at volt Capital and what we focus
on are the companies that are building around these digital assets.
(23:50):
So those are truly the indicators you should be looking
at when measuring the health of the market. These are
founders that are building equity companies that are leveraging digital
assets because the end user is meaningfully using the service.
There typically tenets, better solutions, and anything else on the market,
and it really doesn't matter what tokens you're minting or
(24:11):
you know who's coming out with any joke coin um
because these are you know, really substantive use cases, and
that's what we focus on about capital. All right, Well,
let's talk about the prospect of regulation here, because this
is now back in conversation, not only given today's moves,
but even before today, there was a lot of talk
about it. There was actually a hearing going on on
Capitol today that kind of got overshadowed by all of
(24:32):
the market moves. Here, are you sort of welcoming of
some degree of regulations, some degree of signposts of speed
limits here in the market or does that sort of
eroad the appeal of what bitcoin and crypto is to
a lot of people. There's a common misconception that cryptos
and industry isn't regulated, But crypto has been on the
(24:53):
desk of every three to four letter organization you can
think of, UM since and UH corporations, venture firms, nonprofits
are pouring in millions to making sure that we standardize
the language and are doing everything by the book to
the extent that we can with this new asset class
(25:15):
to ensure that you know, this technological paradigm shift actually happens,
and UM and you know, keep when we keep the
retail investor and institutions in mind and do things by
the book. How much do you see people getting excited
about ethan getting pilled so to speak, because they're excited
(25:36):
about defy and trading and trading on unit swap, And
how much do you see that sucking some of the
energy away from bitcoin itself. Look, speculation is not a
bad thing. Speculation is often necessary to get people to
look up from their desks into this new interesting thing
on the horizon. We're seeing plenty of substantive use cases
(25:58):
being built on top of bitcoin, with bitcoin and outside
of bitcoin unit swap eclipse, you know, for instance, coin
basis volume and uh and you know, seeing indicators like
that is absolutely a new positive for the space. And finally,
(26:20):
we also got some perspective on the crypto moves from
Gregory to Priscoe, who's the CEO of r W a
company as well as a community member of the maker
Out ecosystem. We started by talking about whether decentralized systems
like crypto can buckle under extreme volatol. Yeah, honestly, you know,
I see the volatility like today and I don't even
(26:42):
get phased by it anymore. I've been in the space
for about eleven years now, so this is kind of
just another Wednesday. Another Wednesday, all right, so another Wednesday.
I mean, it was a lot of volatility here. I think, though,
what a lot of people are getting that here, gregs.
We've seen sort of a new sort of investor class
come into this space, particularly over the last year here,
(27:05):
So it's not just necessarily. I guess some of the
cowboys who got there early, they understand the volatility. When
you look at this new breed of investors that have
come in, evencluding some of the institutions here, what's the
general I guess, how would you sort of talk to
these people about the volatility here? Is this here to stay?
Is this something they just have to live with? Or
are we going through an evolution? Well, we'll see less
(27:26):
and less of these types of draw downs. I think
that's entirely dependent on the narratives that surround the assets.
So if the FED hadn't printed god knows how many
trillions of dollars, I don't think we'd see this volatility
in bitcoin. So it's a very it's very much cause
and effect. I think the volatility will go down a
little from here, but the cycle that continually happens in
(27:48):
crypto is people build up leverage, they get overconfident, and
then they get crushed and and that's just part of
the fact that a lot of these assets are extremely speculative.
So I think the volatility is going to go down,
but it's probably here to stay for a while, you know. Greg,
One thing that Joe was was hinting on that I
just want to circle back to, is you have some
stress on the exchanges like a coin base or a
(28:09):
binance or whatever, and and there are some stresses. Are
there signs that those need to be firmed up to
be able to handle more volatile days like these? Well,
I think what you're seeing is that those exchanges they
handle the on and off ramp portion of the business
very well, but once you're into the trading with these
brand new assets, it's hard for them to even keep
(28:29):
up with listing all of them. So what you're seeing,
in full disclosure, I own some of the tokens that
back these protocols. I'm about the reference, so I have
a bias, but I think you're seeing a shift towards
decentralized exchanges. You know, specifically unite swap has really taken
off in the last couple of years. If you're familiar
with that. Okay, so let's talk about the decentralized exchanges,
(28:51):
decentralized finance maker. Dow backer of the stable coin die
which bays uses over collateralization to create a coining that
roughly trades in line with the dollar. That's so great,
it's very cool. The technology is very impressive. I am
genuinely impressed when I look at unit swap and the
automated market maker and technology and what is done with doubt.
(29:14):
But what is it all for? Where is the real
world advantage or is it really just about creating more
ways to trade more coins? No, No, the real world
stuff is finally happening. That's actually my company r w A.
It stands for Real World Asset Company. And you know,
in in the legacy economy, as we call it, you
would just call them assets. But for us, it's anything
(29:35):
that where the consensus mechanism is not a blockchain, but
it is actually the judicial system that we call a
real world asset and maker. Doubt at least is in
the process of onboarding those assets right now, so we're
able to It's almost a new paradigm because we're we're
able to let people come to the protocol. For instance,
alone originator will come to the protocol and they'll be
(29:55):
able to generate die against their existing book of loans.
So I think seeing immediate real world utility. And is
that utility though, and the way that they're using that utility?
Is the idea here that this becomes something they do
in the short term. Are they sticking it out for
a longer term strategy? I think it's primarily long term.
I mean what you're what we're seeing is that they're
(30:17):
interested in swapping out revolvers and warehouses from their banks.
So you're seeing them replace facilities they have in an
existing bank and come to a decentralized protocol like MAKERDAL
not just because it can offer better rates because it
has better terms. Explain them more clearly, who's getting the
better rates. Whenever I hear about rates and defy, it's
like great lending rates and a p wise that blow
(30:39):
your mind and yields just a level. But what about
from a sort of borrower perspective, are there currently protocols
that if I want to borrow money for something some
capital expender, a house, a car, or credit card, or
I can get something competitive in the defied world versus
trad five. Yeah, so Maker Death specifically has an extremely
(31:00):
well cost of capital for borrowing. This is because you know,
Maker down generates the liability and lending right. Yes, it's clatter,
it's secured. So just to get I can give you
a real example. So there's a borrower called Success Capital.
They approached Makerdal through our decentralized governance process and they
were able to get voted in a fifteen million die
(31:23):
facility against their assets. Now their assets are credit tenant leases.
So they go out there and they will buy a
piece of dirt, they'll build up a store on top
of it, and then they'll sign a lease with a
retailer and maybe that whole process takes six to nine months.
And in the interim while it's happening, they put the
senior lean to all those assets into a trust and
(31:45):
that trust acts within the will of the Maker holders effectively.
So their rate, I believe when they're on board it
is three. So I think you know, their legacy cost
to capital is much much higher than though. And that's
it for what you missed this week. If you like
the show, make sure to subscribe and rate us an
Apple podcast or wherever you listen to podcast. You can
(32:08):
catch our show every weekday from three thirty to five
pm on Bloomberg TV and from four to five pm
on Twitter. Thanks for listening and have a great week.
Welcome to What You Missed This Week? I'm Joe Wisenthal.
This podcast has some of our favorite interviews from the
Daily Market Clothes show that I co anchor along with
Romaine Bostick and Caroline Hyde. What do you miss It's
the perfect way to kick off your weekend. This week
was all about crypto, with plenty more tweets from Elon
and some roller coaster market moves. The sector really has
(00:28):
gone so much mainstream, so much so that even old
school institutions like Christie's are getting in on it. So
after their landmark sale of People's Everyday n f T
in March sold for sixty nine million dollars, the auction
houses investing further individual art. So we spoke with CEO
Garron Serruti about their recent spring sales, which included a
(00:49):
group of nine crypto punks. I mean, I don't get
this stuff, but he does. So I started by asking
him what are people really buying when they buy an
n f T. Well, let me first tell you that
we are just at the end of the fantastic weeks
of sales here in New York. We have sold for
(01:09):
eight million of art in three days. Fantastic. The market
is more resilient than ever. We have completedly recovered from
a more challenging year last year, where the supply was
more difficult to get. This season has been extraordinary with
many top prices for great artists, recognized artists because so
(01:30):
many evango growth co Bastia, but also like you mentioned
for for n f T s and a new artist. Um,
what what do your point? What? What? What? What is it? Well,
it's a it's a real community of artists, digital artists
that we have revealed at Christie's to the world selling
(01:53):
two months ago for sixty nine million work by the
digital people, and two days ago no major cell of
the season in New York we sold again nine crypto
punks other wonderful examples artworks digital artworks for sixteen million dollars.
(02:14):
So this market is real. It's about the rarity, it's
about authenticity. That's what the NFT provide to the collectors
in this field. Again, I'll talk to me about the
type of collector here, the type of collector that is
dipping their toe into some of these n f t
s and cyberpunks. Is that the same collector that's buying
up shuts or Abascia or amone. Well, not for the moment,
(02:39):
but that's coming. Not for the moment, because for instant
when we sold this work by people two months ago,
thirty four beaters did bid in excess of one million dollar.
Thirty out of the thirty four were new to Christie's.
There were a clients of collect only active in the
(03:02):
digital art world. We did not know them. But since
then we have seen also let's say, traditional clients being
interested in the crypto art, being interested in uh, you know,
sometimes staying in cryptocurrencies. So it's it's it's a new
reality on the art market. It started with only you know,
(03:25):
the the crypto community, the the digital art community, but
it's clear that it's now going beyond. We are we
are the very beginning of the process, all right. But
I want to go back to the question I asked originally.
So we all know that like these images, even the
the people that sold for almost seventy million dollars in theory,
(03:47):
you know, someone could go on the website and write,
click it and download it, so we know that that
it's not the image itself that's being sold. What is
being sold when someone buys the crypto punk, what do
they have then that someone else doesn't have? Whatever, you know,
the the field in the art world, what makes the
(04:09):
value of you know, an artifact or work is the
authenticity and the unicity of the world. Even then, if
the work can be compete, if you can have photos
of this work, it's a different story. It's about the
the I p at that moment. But what the value
is with the authenticity and the unicity and and the
(04:32):
fact that today the blockchain and the n FT do
provide these two features makes the value of what you buy.
It's about one more time, the rarity and the authenticity
of what you purchase. All right, So going forward here
theon we are coming out of the COVID crisis. I
(04:54):
know there are some disruptions in the art market over
the past twelve fourteen months or so, but we did
see it's a of the auctions that did take place,
the virtual ones at least, still commanded a pretty high
number of buyers. Here, I'm wondering how much resiliency you
saw during the pandemic and what your general expectations are
for demand going forward. Was very resilient, especially on the
(05:17):
demand side. At no moment last year we have seen
a description in terms of the buying power of our clients.
We have more and more new clients, especially coming from
Asia millennials. The the challenge last year was not on
this side. The challenge last year was more about the supply.
(05:38):
Our clients were reluctant to put that auction their works.
They wanted to wait until taking the decision. This year,
it's clear that the demand remained very strong as it
was last year. Nothing has changed from this point of view. Yesterday,
for instance, we have huge participation from Asia on some
(06:00):
of the top lots we sold. But what has changed
now is that our clients on the selling side, the
consigners are you know, more confident because they have seen
that the market is resilient, that the demand is strong,
and so they are they are they are, you know,
willing to sell. This season was from this point of
(06:21):
view sort of back to look at the top price
we've achieved at Christie's yesterday we sold for one hundred
and three million, a major one by Picasso. It's the
first time in two years that we have on the
art market at auction. The price makes us on one million.
We are back to the market as it was in
(06:43):
after this very particular twenty year and then on Monday
we are shades of what was going to come in
crypto of alatility. Crypto fallen as long as forty two thousand,
one thirty three dollars on Monday, after Ellen us weighing
in on Twitter about his decision to stop accepting the
coin for car purchases because if it's environmental impact, we
(07:07):
got reaction from Mike Novograts, the founder and CEO of
Galaxy Digital, which had also just reported his first quarter earnings.
Bloomberg Wall Street correspondent Sinali Boss joined us for the interview,
and we started by asking Novagrats how he plans to
keep up those results if he thinks bitcoin is probably
going to consolidate for a while, Well, listen, you know
(07:28):
when I say consolidate, I think bigcoin will be somewhere
between you know, forty and fifty five thousand for the
next chapter before it kind of builds up enough new
momentum to take out at fifty five thou and end
the year much higher. Um. Listen, we have a diverse,
fied business. We're not all bitcoin. We uh are invested
across the ecosystem. We have mining, we have a great
(07:50):
venture business. We have a lot of DeFi, n f
T and and virtual world bets on and so what
we're trying to build here is diversity. Uh. We look
at the whole crypto ecosystem is thriving. I said to
that earnings call that this is you know, we're a
growth business in a growth industry. Right now, total market
cap of all the crypto is about two trillion dollars
(08:12):
a little more than that. That's half a percent of
global wealth. I think it will be to three of
global wealth in the years to come. And so that's
where Galaxy's bet is. Mike, how concerned are you about
the short term volatility being introduced by Elon Musk? Listen,
Elon Musk is an important figure in American business and
(08:33):
certainly in the global retail crypto world. He's a bit
of an icon. Uh. He was great for crypto when
he was positive for for bitcoin. He's caused some some missues.
I think if you'd take Elien and face value. Though,
what he said was he worried that as bitcoin used
more and more electricity, which it will, Uh, it could
have a negative impact on on you know, C two emissions. Uh,
(08:57):
that's true for every industry, right, And I was looking
today YouTube uses two and a half percent of total electricity.
When you think about that, we're not gonna say let's
stop using YouTube, right. We use electricity for things that
we think provide a tremendous amount of value. And so
I think you're gonna see a response from this industry,
like you should see a response from every industry to say, hey,
in this gap of time before all electricity is green energy,
(09:21):
which I think is seven eight years away, uh, we
should do something to offset our footprints. And that's in banking,
it's in crypto, it's in tech, it's in industrial businesses.
All right, But is it a problem or does it
bother you that, you know, the the industry that you're
part of that trying to make it respective respectable and
(09:43):
you're talking about bringing crypto to wealth management and crypto
for inflation protection, and crypto for allowing people to make
transactions that in places where maybe they're more limited freedom
tech isn't problematic that like one of the hottest currencies
is a joke doge, and that Elon Musk, who is
this like sort of like face of it all, is
(10:03):
essentially whipping people into that one and sort of multiplying
the jokes and you have all their influential people talking
about even other jokes, and that this sort of like
does it make it harder to put on? You know,
basically make the case that there's a serious industry with
a straight face. Listen, yes is the answer. I'll tell
you a better story than Elon Musk. You know DOJ's
(10:25):
cousin called Sheba in New Coin. They end up giving
Vitallic Botoran, who really is one of the most decent
and smartest guys in this entire space, a giant amount
of coins, and he donated a bunch to India and
he burned the rest and said, please don't give any
more coins. I'm not gonna play your games. Um, I
don't want to discredit the doge community or any of
(10:46):
these communities. Right. Well, you're seeing here is a response
against the monetary policy of the US and the world
and the frustration people have had with the system, and
this young generation that said, hey, we can band together
and create our own way of investing. Some of it
is frivolous that I think will lend in tears, and
so we try to steer our clients away from projects
(11:09):
that we don't think have long term sustainability, but it
proves something that communities can band together. The world has
gotten very tribal, and that's not necessarily a good thing.
And if you go on like crypto Twitter, you really
realize just how tribal it's gotten. You know, one of
my buddies made some negative dog comments and you've got
six death threats and so that's not good. Uh, But
(11:30):
I do think let's not miss the forest through the trees.
Underneath it all, there's a huge revolution going on, run
by serious people who are trying to rebuild the financial
market infrastructure in this place. Well, you mentioned your investments
in the DeFi space and one of the really you know, decentralized.
One of the cool things about that whole space and
disability to make trades directly on chain, to put together
(11:53):
assets on chain, funds on chain. Lending on chain isn't
a threat as you know, sort as a listed crypto
company like yours, like a coin base, etcetera. If people
discover that they can sort of bypass regulated institutions and
do everything they need to do directly. Yeah, I I
tell my guys all the time. You know, we're a
bridge between the the old way of doing business in
(12:14):
a new way, and we might have to bite off
our arm to grow a new one. Right, we're investing
in all those protocols. It's not gonna happen overnight. Right,
there's still gonna be fays that guide their clients into
how to think about investing in the world. You know,
we just spent a lot of money on a big
custody business. I think custody is gonna be around for
a long time. But if it was just custody, I
wouldn't have bought it. It was the years there to
(12:36):
build new things on change that was really excited about.
So and so, yes, we're gonna part of galaxy is
gonna be iterated away, just like lots of the uh
uh legacy financial systems. So my kids we try so
to try to bridge these two worlds. I mean, one
question you get from a lot of people who are
interested in this space is how you can you be
sort of exposed to the potential upside in the crypto space,
(12:58):
but maybe uh sort of anchor it more towards something
that isn't the coins themselves. So they asked about specific companies.
So whether you're talking about I don't know, a micro
strategy or a Tesla or Facebook or something like that.
When you talk about getting exposure to the crypto space
through that angle there, what's the general selling point? Well, listen,
one of the reasons we went public way back to
(13:19):
I mean in Canada was just that to give a
holistic bet for people that can play the entire ecosystem. Listen,
micro strategy is a great bet if you want to
play bitcoin as is you know, other bitcoin funds, but
I think we're really the only public vehicle where you're
playing in the whole ecosystem at this point. Um. You know,
(13:40):
the the other way is having to buy an index
of defied coins or or a basket you know, or
a venture fund. But from the public market perspective, uh,
there's not a whole lot of options at this point.
There's not a whole lot of options. But at the
end of the day, these people are looking for a way,
I guess, to tamp down the volatility or at least
avoid some of the volatility that we've seen here. Is
(14:01):
there a way to do there is a way to
sort of hedge that volatility out of the equation or
at least you know, Listen, you know, one of the
misnombers is if you're trading in a high ball asset,
you have to have a whole lot of risk on.
So we always tell people it's posess sizing right when
your first your first bet and the bitcoin or ethereum
or any of the coins, don't pay ten percent of
(14:23):
your net worth and don't go lever age in it,
right two to three percent bet even draw it on.
What have you lost? If if you've got three percent,
you've lost sixty basis points. Uh, that's a little bit painful,
but you're not gonna, you know, run out the the
house with your hair on fire because of it. And
so a lot of this is about sizing um and diversity, right,
(14:44):
So why we set this business up as because we
have diversity across businesses, across investment styles, uh, and across protocols.
And I think should give us Listen, we'll still be
if if the market cap of crypto isn't higher in
the year, uh, we're gonna have a harder time. If
it's much lower, we're not gonna have made a whole
lot of money. Like we are a growth bet on
(15:06):
an insue we think is what do you do today? Mike, right,
what do you do today on a day that bitcoin
has been seeing a slow lead for a couple of days.
You know, it's a lot of you know, rough headlines
really in the last week or so. Are you buying?
Are you selling? You know, are you buying? Ethereum? What
are you doing right now? I listen, I think should
(15:27):
hold in bitcoin? So we're buying. Uh, we are selling
volatility because in times when everyone gets nervous, like today,
volatility gets really really high, and so often selling volatility
makes sense. And then we're looking across our portfolio. Are
there places that haven't reacted yet in doing what trainers do?
But mostly it's business as usual, right. We have an
(15:47):
invest in business. There are three investment committee means today
on new projects coming through the pipe. We're talking to
our customers seeing what they want to do. You know,
we're building We have two D people will be three
D fifty or four hundred by the time we settle
with and close with that go and so we're building
it in big industry that's not just a big big company,
that's not just a bet on bitcoin. Do you hear them?
(16:10):
You know, it feels to me in conversations like what
the enthusiasm around bitcoin from a few years ago. I'm
hearing a lot of people get really excited about specifically,
and maybe it's because they want a gateway to define
A lot of that stuff is built on that. Maybe
it sort of makes sense the sort of idea of
smart contracts and cloud computer and all that stuff. Is
(16:32):
that your sense that there are sort of a lot
of like mainstream finance people, we're seeing it specifically as
the sort of way into crypto in a way that
makes sense to them. It is certainly having a moment, uh,
and it's having looted for good reason. It's of the
the base lever protocols that are programmable. Uh, it's the
most decentralized by a long shot. It has the most
(16:56):
developers and projects being built on a by a long shot.
And right now it's got the triple whammy. It's got
payment coins i US stable coins being built on top
of it, it's got defied being built on top of it,
and it as n f t s being built on
top of it. So the three major thrust of the
crypto revolution are being built on top of Ethereum. Now listen,
(17:17):
they're competitors to it. That are faster, uh process quicker,
they're less less decentralized. Mike, what what is the next
leg then for ethereum here you know, what's the next
thing to happen, the next use case? Perhaps that will
send it higher. Listen, so everyone atleas you know, I mean, listen,
Ethereum one from eight hundred to four thousand, uh in
(17:40):
five months, and people like, how does it get higher?
How does it get higher? It's had a great run,
and so people understand it's had a great run. And
so if it consolidates in here for a while between
you know, three thousand and four thousand or hundred even
four thousand, that's probably pretty healthy. Um. There's some technical
uh changes coming to the Ethereum protocol this summer, which
(18:02):
is going to speed it up and make gas fees
a lot lower. Um. Ethereum is not a finished product yet, right,
I always say bit Quinn is a finished product. Ethereum
is a work in progress. But it's got great momentum
behind it. And so again investors curious because things are
gonna make a un percent every quarter. People were excited
(18:22):
about the banks. Mike, you know how much money has
come in through the wealth funds since Morgan Stanley has
made that available. So listen, the Morgan Stanley was the
first to come to come out of the shoot and
the wealth funds. I would tell you that I think
all the other banks are coming in. It's a process.
You know why I'm optimistic as can be is in
(18:43):
the Morgan Stanley case. Right, they have thousands, thousands and
thousands of fay's that had to take a course to
learn to understand how to sell bitcoin what bitcoint was,
to really get a deep understanding of it. And now
they're talking to their clients and so those of come
in flows continue to come in. But think about that,
I was like one of the lone wolves that used
(19:05):
to talk about bitcoin to people, and now all of
a sudden, in essence just inherited four thousand Morgan Stanley
salesman who are who are sharing the gospel. And I
think you can see the same thing at Goldman, Sachs
and Ubs and JP Morgan and all over the street.
And so the prosthesizers are growing in numbers at record pace.
That can only mean the reason the future Now Monday's
(19:28):
moves where nothing compared to what we saw on Wednesday.
It was a roller coaster ride for crypto. We saw
a thirty one percent drop at one point in Bitcoin
and a forty drop on the Theorium and close to
a fifty percent drop in doge. But the dip buyers
did step in and we got to witness one of
the most aggressive sell off and one of the most
aggressive raalities for an asset class, all in the same session.
(19:51):
Despite Elon's tweets, the sector did get some positive endorsements
from the prominent names like the ones you would expect,
including our convestment management Kathy Would who told Berg that
it's still going to get to five dollars one day.
So we got reaction on all this from Soon, the
ampas general partner adventure capital firm Volked Capital, which invests
(20:11):
in the crypto space, and we started by asking Soon,
what does it say that a few tweets from Elon
can generate such tremendous volatility in an asset class that's
supposed to be decentralized in Robut yeah, thanks for having
me on, Joe, and that's that's a great question. So
for those of us who've been in crypto through multiple cyclestent,
(20:33):
DIP is just another Wednesday. In crypto it is volatile
asset class. But the thing to remember is that Bitcoin
is still up three year to date. Um. These are
healthy corrections. What we're seeing is if you look at
the actual data of who's doing this selling, these are
primarily new market entrants that are panicking, and um in
(20:55):
in emotional market, we view it as a healthy correction
and are staying focus on the long term. This was
still a pretty epic draw down here, and when we
talk about the legitimacy of this as an asset class
and more importantly, as a a significant component of someone's
portfolio here soon, I mean, what do you tell them?
How do you sort of coach some through this idea
(21:16):
that you're going to have to deal with these types
of drawdowns? Right, So, the important thing to remember is
that nothing about bitcoin has changed. It's still using the
same consensus, it's still has the same proof of work
system providing security for it that keeps the protocol moving forward, um,
(21:37):
and it still serves as a global liquidity instrument. So
to the extent that those things are all true, the
only thing that's changed is Bitcoin has gotten cheaper, and
right now we're seeing it at frankly, this is a
fire sale. So if you liked bitcoin at UH sixty
dollar price, then you should love it at fourty knows
(22:00):
Oh well, said I am wondering though, because you said
corrections like these are healthy. Are they healthy when, like
you said, it's coming from newer entrants, maybe retail buyers,
maybe leverage dot maybe for sellers. Does that change perhaps
maybe the nature of the sell off so you cut
(22:21):
out a little bit, didn't entirely you're the question. But
these are healthy sell offs when they are primarily retail
driven and their new market entrants that are coming into
the market and our panic selling when we're an emotional
market like this. If you look to corporate treasuries and
you look to what institutions are doing, um, they are
holding onto their positions, and so you don't want to
(22:42):
look to what folks are saying, but you want to
look to what they're doing to the extent that you
know tests to clarify that they aren't selling any other bitcoined.
That's a really important indicator to us and what we
as a venture for firm a vot Capital focused on
when we're looking at the macro. Soon your industry has
a trendous ability to just create new coins. There's only
(23:05):
twenty one million bitcoins that will ever exist, but every
day there are new coins. And we were joking around
yesterday because someone created a new coin. It was a
joke coin named after me. But it's very easy to
just manufacture new coins. How much does the impulse among
players in crypto to create some new coin of their own,
some new token project rather than building on an existing one,
(23:29):
end up having the effect of swamping the demand with
so much supply and limiting the upside price. Right, So
we do typically see that UM in bowl markets. That's
absolutely true. Uh. The great thing about the way we've
designed our thesis at volt Capital and what we focus
on are the companies that are building around these digital assets.
(23:50):
So those are truly the indicators you should be looking
at when measuring the health of the market. These are
founders that are building equity companies that are leveraging digital
assets because the end user is meaningfully using the service.
There typically tenets, better solutions, and anything else on the market,
and it really doesn't matter what tokens you're minting or
(24:11):
you know who's coming out with any joke coin um
because these are you know, really substantive use cases, and
that's what we focus on about capital. All right, Well,
let's talk about the prospect of regulation here, because this
is now back in conversation, not only given today's moves,
but even before today, there was a lot of talk
about it. There was actually a hearing going on on
Capitol today that kind of got overshadowed by all of
(24:32):
the market moves. Here, are you sort of welcoming of
some degree of regulations, some degree of signposts of speed
limits here in the market or does that sort of
eroad the appeal of what bitcoin and crypto is to
a lot of people. There's a common misconception that cryptos
and industry isn't regulated, But crypto has been on the
(24:53):
desk of every three to four letter organization you can
think of, UM since and UH corporations, venture firms, nonprofits
are pouring in millions to making sure that we standardize
the language and are doing everything by the book to
the extent that we can with this new asset class
(25:15):
to ensure that you know, this technological paradigm shift actually happens,
and UM and you know, keep when we keep the
retail investor and institutions in mind and do things by
the book. How much do you see people getting excited
about ethan getting pilled so to speak, because they're excited
(25:36):
about defy and trading and trading on unit swap, And
how much do you see that sucking some of the
energy away from bitcoin itself. Look, speculation is not a
bad thing. Speculation is often necessary to get people to
look up from their desks into this new interesting thing
on the horizon. We're seeing plenty of substantive use cases
(25:58):
being built on top of bitcoin, with bitcoin and outside
of bitcoin unit swap eclipse, you know, for instance, coin
basis volume and uh and you know, seeing indicators like
that is absolutely a new positive for the space. And finally,
(26:20):
we also got some perspective on the crypto moves from
Gregory to Priscoe, who's the CEO of r W a
company as well as a community member of the maker
Out ecosystem. We started by talking about whether decentralized systems
like crypto can buckle under extreme volatol. Yeah, honestly, you know,
I see the volatility like today and I don't even
(26:42):
get phased by it anymore. I've been in the space
for about eleven years now, so this is kind of
just another Wednesday. Another Wednesday, all right, so another Wednesday.
I mean, it was a lot of volatility here. I think, though,
what a lot of people are getting that here, gregs.
We've seen sort of a new sort of investor class
come into this space, particularly over the last year here,
(27:05):
So it's not just necessarily. I guess some of the
cowboys who got there early, they understand the volatility. When
you look at this new breed of investors that have
come in, evencluding some of the institutions here, what's the
general I guess, how would you sort of talk to
these people about the volatility here? Is this here to stay?
Is this something they just have to live with? Or
are we going through an evolution? Well, we'll see less
(27:26):
and less of these types of draw downs. I think
that's entirely dependent on the narratives that surround the assets.
So if the FED hadn't printed god knows how many
trillions of dollars, I don't think we'd see this volatility
in bitcoin. So it's a very it's very much cause
and effect. I think the volatility will go down a
little from here, but the cycle that continually happens in
(27:48):
crypto is people build up leverage, they get overconfident, and
then they get crushed and and that's just part of
the fact that a lot of these assets are extremely speculative.
So I think the volatility is going to go down,
but it's probably here to stay for a while, you know. Greg,
One thing that Joe was was hinting on that I
just want to circle back to, is you have some
stress on the exchanges like a coin base or a
(28:09):
binance or whatever, and and there are some stresses. Are
there signs that those need to be firmed up to
be able to handle more volatile days like these? Well,
I think what you're seeing is that those exchanges they
handle the on and off ramp portion of the business
very well, but once you're into the trading with these
brand new assets, it's hard for them to even keep
(28:29):
up with listing all of them. So what you're seeing,
in full disclosure, I own some of the tokens that
back these protocols. I'm about the reference, so I have
a bias, but I think you're seeing a shift towards
decentralized exchanges. You know, specifically unite swap has really taken
off in the last couple of years. If you're familiar
with that. Okay, so let's talk about the decentralized exchanges,
(28:51):
decentralized finance maker. Dow backer of the stable coin die
which bays uses over collateralization to create a coining that
roughly trades in line with the dollar. That's so great,
it's very cool. The technology is very impressive. I am
genuinely impressed when I look at unit swap and the
automated market maker and technology and what is done with doubt.
(29:14):
But what is it all for? Where is the real
world advantage or is it really just about creating more
ways to trade more coins? No, No, the real world
stuff is finally happening. That's actually my company r w A.
It stands for Real World Asset Company. And you know,
in in the legacy economy, as we call it, you
would just call them assets. But for us, it's anything
(29:35):
that where the consensus mechanism is not a blockchain, but
it is actually the judicial system that we call a
real world asset and maker. Doubt at least is in
the process of onboarding those assets right now, so we're
able to It's almost a new paradigm because we're we're
able to let people come to the protocol. For instance,
alone originator will come to the protocol and they'll be
(29:55):
able to generate die against their existing book of loans.
So I think seeing immediate real world utility. And is
that utility though, and the way that they're using that utility?
Is the idea here that this becomes something they do
in the short term. Are they sticking it out for
a longer term strategy? I think it's primarily long term.
I mean what you're what we're seeing is that they're
(30:17):
interested in swapping out revolvers and warehouses from their banks.
So you're seeing them replace facilities they have in an
existing bank and come to a decentralized protocol like MAKERDAL
not just because it can offer better rates because it
has better terms. Explain them more clearly, who's getting the
better rates. Whenever I hear about rates and defy, it's
like great lending rates and a p wise that blow
(30:39):
your mind and yields just a level. But what about
from a sort of borrower perspective, are there currently protocols
that if I want to borrow money for something some
capital expender, a house, a car, or credit card, or
I can get something competitive in the defied world versus
trad five. Yeah, so Maker Death specifically has an extremely
(31:00):
well cost of capital for borrowing. This is because you know,
Maker down generates the liability and lending right. Yes, it's clatter,
it's secured. So just to get I can give you
a real example. So there's a borrower called Success Capital.
They approached Makerdal through our decentralized governance process and they
were able to get voted in a fifteen million die
(31:23):
facility against their assets. Now their assets are credit tenant leases.
So they go out there and they will buy a
piece of dirt, they'll build up a store on top
of it, and then they'll sign a lease with a
retailer and maybe that whole process takes six to nine months.
And in the interim while it's happening, they put the
senior lean to all those assets into a trust and
(31:45):
that trust acts within the will of the Maker holders effectively.
So their rate, I believe when they're on board it
is three. So I think you know, their legacy cost
to capital is much much higher than though. And that's
it for what you missed this week. If you like
the show, make sure to subscribe and rate us an
Apple podcast or wherever you listen to podcast. You can
(32:08):
catch our show every weekday from three thirty to five
pm on Bloomberg TV and from four to five pm
on Twitter. Thanks for listening and have a great week.
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