Markets are green, AI is reshaping software in real time, and crypto is once again debating what token ownership actually means.
This week on The Hivemind, the team breaks down the market melt-up, Zcash’s explosive move, the rise of AI agent infrastructure, Cursor’s rumored $60B acquisition, and the growing tension between equity and token holders after the Houdini controversy. They also dive into Pump’s buyback changes, Strategy’s latest BTC playbook, and why AI-native workflows could completely disrupt traditional SaaS.
Delphi Digital’s brightest minds – Jose, Yan, Ceteris, Jason and Kevin – banter about the biggest topics in crypto & beyond. Join The Hivemind.
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▸ Ceteris: https://x.com/ceterispar1bus
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▸ Yan: https://x.com/YanLiberman
▸ Jose: https://x.com/ZeMariaMacedo
▸ Kevin: https://x.com/Kevin_Kelly_II
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[00:00:00] Kevin: All right, everybody, welcome back to the Delphi Hivemind Podcast, the show about markets, AI, crypto, a lot of unfiltered opinions. We got tons to talk about today. Joined as always by Yan, co-founder, managing partner, Delphi Ventures; Jose, co-founder and head of Delphi Labs; Ceteris, our head of research; and Jason, our head of markets.
Fellas, it’s a good, it’s another good day to be doing this. You know, stocks were up early this morning, lot of geopolitical news. Had some nice crypto moves over the last 24, 48 hours. How’s, how’s everyone feeling?
[00:00:49] Jason: It’s hard to feel bad, honestly, at this point, right? Um, I don’t know. Markets- Zodal. Yeah. Yeah, I guess Z cash.
Uh, I don’t know. Everything is looking pretty, you know, decent, right? Markets kind of just at this point, you could say have kind of shrugged off at least like the, the, you know, the growth shock or scare from what, what’s going on in, uh, in the Middle East. And I guess like, I mean, clearly they’ve, they’ve looked past that.
The Qs are up 25% in the last month. Um, a bunch of, you know, tech names, AI names, new all-time highs every day, bunch of appetite returning into crypto markets through memes or AI names or, you know, just like the good businesses that have been doing well. Um, and I guess like the, the real f- the real question now is like markets, I guess, are, you know, have looked past, past the growth shock, but I guess like they’re still probably a little bit held up on, you know, what the inflation, um, implications of, of the Iran conflict, uh, is going to be and like what the, what the persistence of them is gonna be.
Like, clearly bond markets have been, you know, yields have been rallying over the last, uh, couple weeks as well, so there’s clearly pressure there. But like, I don’t know, there was a big, big talk around like what earnings would look like for all these AI names, would they be bad, and then, you know, everything just got blown out of the water, new all-time highs across the
Like, so yeah, it’s just, I don’t know. If you’re not long risk, you’re just getting, you know, just getting left behind at this point, which I guess is a classic kind of characteristic of melt up. But I’m curious what, what other, what the other guys think.
[00:02:29] Yan: Yeah, I mean, you had one of the best earnings quarters in terms of growth- Yeah
in very long time, right? I think it was something like, uh, best since, um, late 2020, right? And that’s just on the back of weak growth. So, um, uh, yeah, it’s, it’s, it’s kind of been insane blowouts across the board. Uh, and, and so yeah, risk on, I think, you know, geopolitics again end up being a nothing burger, at least so far.
So everyone’s kinda looking past that. Crypto for a bit was kind of falling by the wayside, but has, has been, um, picking up recently. You had Saylor’s earnings call yesterday, right? Which is obviously very big for crypto and, and I think he had the recent mention that, that shook everyone, which is basically the idea of him entertaining selling BTC, which prior to yesterday was probably thought of as blasphemy in terms of his appetite to do so.
Uh, I think it makes a lot of sense to signal it, and, and I hope it’s from a position of strength, not fear. Um, right? So the, the whole idea is he’s basically got three… There’s three buckets that need to be satisfied, uh, BTC, STRC and, and strategy shares and, and it is a bit zero sum-y. So strategy or stretch rather, sorry.
Everyone, um, has been watching this thing like a hawk because the second that it repegs to 100, he can start selling those at the market. And, and, uh, I think if you look historically, this is– it’s taken longer this time than, than ever before. And, and, you know, to some extent it makes sense. It’s a much larger…
There’s much more of it now, so it takes a lot more money to bring it back to par. Um, a-as you keep issuing more financially, it becomes harder to sustain. So the, the idea is it basically keeps repegging until it doesn’t, and then he would raise the dividend again. Um, I, I think there are two kind of games that, that are– or a couple of games that are played on the STRC side, right?
So you have those that buy it for the x-date and, and collect the dividend, and then those that, that kind of recreate a dividend-like return by purchasing it at the low ninety-nines and selling it at the high ninety-nines, right? And, and so you kind of in between x-dates, you get a, a pseudo dividend, which is admittedly smaller, uh, right, if you’re assuming a percent a month, roughly.
This is kind of closer to like seventy bips. Um, and, and so I, I think there’s, there’s slight negative element, but overall positive element to, to that– to the, the involvement of those people, right? The idea being they create a bid at, at low ninety-nines, but then they create a, a bunch of supply at, at high ninety-nines and, and it makes it easier to get to high ninety-nines but then harder to get to 100 because they are kind of making, increasing the overall amount of buying needed to get to 100 by roughly 1%.
The, the… I think the positive side is basically that, yes, they probably increase the, the amount of capital needed by 1%, but at the same time, I think they increase confidence in it repegging to 100 by more than 1%. And so you have outside money that, that is building confidence in their ability to, uh, get to one hundred that, that, uh, come in and start buying now.
I think the, the reason, uh, he mentioned the idea of selling Bitcoin is because it– I think it also drives confidence to this getting to one hundred because, uh, now you’ve appet- uh, you opened up a whole new faucet for cash that can sustain this dividend. And, and it, you know, it’s not an insane amount if you think about the amount of BTC he has to sell to sustain the dividend.
It, it’s not a meaningful portion of, of Bitcoin, so I think the market is generally shrugging it off and, and kind of ideally viewing it more of, more as a positive because it’s just basically enough to instill confidence in the STRC bucket that it helps re-peg and, and kinda keep the flywheel going, so to speak.
So, um, yeah, it’s basically, uh, you know, him mentioning that is to, to instill more confidence in the STRC side and, and ideally help those buyers gain confidence in, in the ability to him continue paying this, this dividend. And so, um, the downside is, right, he, he, he basically only has until the 15th, uh, to, to really issue STRC at one hundred if it gets there, because at that point it goes X and, and the price drops again.
So he is limited in his window now and, and kind of every day that, every day the, the, like the, the longer it takes, the harder it, like or the less he can get out of it. So, um, there is I think a- at a certain point, um, the market I think will probably reverse a bit because there’s enough of it that’s set up on this trade that are just kind of basically it’s almost like moon cycles where they’re just, you know, buying when you think he can issue or, or basically front-running when you think he can issue and then, then getting out, uh, as you approach the X date.
So you kinda get to this, um, crunch time, uh, element. But it, it has been gradually grinding higher. I think it’s 99.98 right now, right? Yeah, there you go. Um, and, and ultimately that’s kind of what, what people are, are watching, and then the, you have, you know, broader alt speculation that, that happens alongside it in, in a handful of names which I’m sure we’ll chat through. But yeah.
[00:08:15] Kevin: How much firepower do you think in like the near term this Sailor strategy play has? Like do you have any ballpark numbers that you’re looking at or expecting?
[00:08:26] Yan: Um, low billions I’d say. Well, uh, so obviously the, the longer, the amount, the more days you get, the higher chance of, of more volume. Um, but if you look recently it, the volume has been picking up day by day, uh, roughly.
And so even today we’re almost at a million, uh, or yeah, um- million shares of volume, and it’s, it’s 10:51 Eastern, right? So I, I think you’re starting to see more and more volume, and so you kind of expect that as people are flipping out of it. Um, so I, I, I mean, if you get it this week, I think you can get low billions out of it because you also get the, uh, indirect ability to issue more MSTR alongside it because, in theory, the, the BTC that’s being accumulated is going to the balance sheet.
The balance sheet is only claimable by the equity component, not, not this STRC side, or at least, you know, like I think that’s kinda how the market views it. So it, it tends to be positive for both. And I also think just the, the idea that he would sell a slight amount of Bitcoin is also favorable for MSTR because it means, you know, you think he’ll be more strategic about this BTC per share approach.
Um, and, and so that is accretive for tho- those holders. So I think the signaling of it was basically not very punitive for BTC, but, but pretty accretive to both MSTR and STRC.
[00:10:04] Kevin: Yeah. And what’s nice, you mentioned we’ve seen some speculation further out the, uh, the good old risk curve, especially over the last like week or so. I mean, the big one, I gotta give a shout-out to the last time we recorded this, we all pulled up this chart, and we dropped in a little higher, and we had a nice little clean break from this, right?
Nobody expected it to go this high this fast, but you had the multi-coin tweet, them building a position, and then Ansem retweets, and he’s moving markets again, you know, drawing attention to it. I think everybody on here, most people have a, have a private Bitcoin bag. Where do you guys think this goes, though?
Like, do you think we get back to– Like, is the expectation we’re getting back to 700, 750? Is it going higher than that? Yeah. Where’s- First of all- Where, where- Okay, so first of all, just- If you’re trimming, where are you trimming?
[00:10:53] Ceteris: So first of all, just on strategy, we have a crazy detailed report coming out next week on all this stuff.
Definitely read that. It’s like, if you– if like all this stuff is confusing for you, because it is a very complicated structure, uh, then read this report. It’s, might take you a while to read ’cause it’s super detailed, and there’s lots of numbers, but like you’ll kinda understand by the end of it. Um, on Zcash, listen, I mean, I don’t know.
I’m still bullish Zcash. Um, I think Zcash is true PVE. I think this is what’s going for Zcash right now. Um, first of all, it had like nine years of distribution, okay? So it’s got this really long proof of work distribution that kinda went through, traded really bad for years Um, then it got kind of this breakout last year, nice pop, and then kind of like profit-taking you would expect coming into the next year.
And so this was kind of like decision point, I guess, where like was this gonna, is this gonna be like a real narrative or was that like the only pump and, you know, Naval Cabal and all this stuff, right? Um, I think the multi-coin coming out is pretty high signal. Um, and yeah, I just think it’s like the– you can meme it pretty well.
Like people are gonna have some of these ridiculous targets. Like I saw Arthur Hayes tweeting like 10% of Bitcoin. Like in my opinion, there’s no way it gets that high. I mean, maybe in like five, 10 years potentially. Um, but like could it get to, I mean, it’s getting close to 1%, but like, you know, get to 2% or so?
I think it could. Like privacy has really come back into vogue over the past like year or so. Um, even Monero has, has done pretty well too if you look at coins that have, that are up over the past year. Like Zcash is up a ton, but like Monero’s up too, and some other alternate privacy coins are also up. Um, and listen, like DeFi has a million exploits a day at this pace.
Um, tokens are getting rugged by their protocols and VC unlocked tokens are just been down only. In Zcash, you have this coin that’s like really well distributed. You’re not getting dumped on by private buyers. Um, you don’t have to worry about the team just deciding, “Oh, we, we don’t care about the token anymore.”
Um, it’s just kinda like… And you don’t have to worry about DeFi exploits. I mean, hopefully North Korea doesn’t hack the shielded pool. Like I don’t know if they’re able to do that, but like you kinda just have a lot going for it. And also just in crypto, let’s face it, like a lot of times assets just trend and it seems like there’s always kinda like a big winner, you know?
Um, like a big alt winner. Um, obviously you had like ETH and DeFi summer years ago. You had Solana after, right? Like if you had Solana or if you didn’t have Solana was a big determination on like how good you felt in like ’23, ’24, right? And then Hyperliquid, you know, Hyperliquid took the candle after that.
Um, and I don’t know, is it gonna be Zcash this time? I don’t know. Maybe. Um, I’m kind of like betting on it. Um, yeah, I just, it just seems like there’s a lot going for it, and it has a lot of like institutional interest too. Um- And also, like, the tech is actually legitimately good, and they have, like, a really crack team.
And I think they’ve been hiring really well too recently as well. So, and I mean, they got Mert always behind it, and now they got Ansem behind it too. Ansem seems to, like, be moving markets again. Um, but yeah, one thing, it’s interesting though with the Multicoin, like, I th- I feel like it’s pretty clear Kyle is just a massive soul maxy.
Like, he hated hype, he hated Zcash, and, uh, the two biggest positions Multicoin has built publicly since he’s gone have been hype and Zcash. So I think, uh, it’s interesting. It’s definitely a change in, like, Multicoin. Historically, you’ve just thought of them as mostly, like, Solana fund, and now they’re really branching out into other stuff.
Um, so yeah, I don’t know. Um, I mean, this latest pump was kinda crazy overnight. Um, but yeah.
[00:15:43] Kevin: Any other, uh, alts you guys are looking at?
[00:15:46] Yan: Yeah, pull, pull up that VVV chart. Show me, show me something prettier than that.
What’s coming along is- Probably the, the best growing, uh, fundamental business right now. Uh, they’re adding, like, 2 million ARR a week. They’re probably doing about 50 right now and, and are, are about to add another 100 mil in ARR, not, not, you know, the subscription revenue, not business is good ’cause markets are noisy.
No, no, this is, you know, actually sustainable and, and the idea is they’re flowing value through a token. Um, and I’m sure we can– we’ll go into, you know, the, the tribulations of that. Um, but yeah, I mean, 500 mil market cap, like eight, high 800s FDV, so not a low cap, but also something that I think is pretty under-owned, is, is kind of growing for AI reasons, not crypto reasons.
Um, and, and it, it’s, yeah, you know, you don’t really see much about it on Twitter. I, I think it’s just gonna kinda keep going here. Um, and they’re gradually returning value but, but mostly just reinvesting in, in growth right now. No VC unlocks, nobody to dump.
[00:17:13] Ceteris: Yeah, I mean, there was a big airdrop when it launched, right?
Mm-hmm. And so, I mean, I sold mine at that point. Yeah, I think a lot of people did. I think a lot of people, everybody I think, like, sold, right? Yeah, I did too. Yeah. So definitely better distribution on it.
[00:17:29] Kevin: Yeah, I wonder why it’s not talked about as much. ‘Cause, like, it’s, again, if you’re looking for an- AI overlap narrative in crypto. I mean, there’s few cleaner charts, especially over the last, I mean, year to date than this one.
[00:17:46] Jason: I mean, I guess qu- uh, it’s kinda like why everybody, like, argues in, in the group chats.
Like, I mean, it’s got crypto and AI overlap. So d- it’s kinda like the reason why I never, like, bought Galaxy. Like, it was like, why do I wanna own something that’s, like, kind of not really a pure play on either? Why not just, like, own something that’s strictly AI or equities, right? I don’t know. But, like, obviously VVV, VVV has done, done really well.
But, like, I, I think that’s probably, like, the reason, right? Like, over the last couple months, like, you’ve been punished really, really badly for, for, you know, like, sticking with crypto things that are, like, adjacent to stuff that’s going on in, in, you know, the real world. Um, you’ve just underperformed massively.
You might as well have just, like, gone to equities and traded it directly there. Um…
[00:18:41] Jose: I just think Venice makes– doesn’t make any sense, like, fundamentally. I just don’t get the product fundamentally, like, why this thing makes sense. Like, yeah, I mean, for most users, you’re, you’re just trusting them, right?
You’re still sending the queries to them, and yeah, they, they anonymize it with a proxy or whatever. But in reality, like, for anyone that’s power using AI, all the, the– it, it’s not your, your prompts, right? That leak the information. It’s, it’s your context, which is what you want the AI to have to be able to answer questions on you, right?
Like, every query I’m sending to AI has built into it either, you know, our, our fun context or, or, like, my context or some, you know, what- whatever it is I’m, I’m querying, my, my, my personal context. And so I just don’t get, like, how having this de-anonymization layer on top of, of, uh, of AI really, really makes sense.
E-even if it worked fundamentally, if people were using the TE or end-to-end encryption stuff, which, uh, I, I don’t think they are, I still just, I don’t think it really makes, makes sense. Well, what do you mean they’re not using the TE encryption? I think most people are just using the Venice-controlled one, right?
Like, the Venice-controlled GPUs, like, uh, the anonymous mode, where it’s, it’s basically they’re running encrypted.
[00:19:57] Yan: I mean, there’s no way to know. Um- Yeah … you’re feeding into every other underlying model. I think a decent amount of it, I don’t know, actually decent, like, they, ’cause they don’t, they, they break out the, they gradually break out token usage.
Um, but I think the, like, there’s obvious, porn application is an obvious one with all the video models, and then that’s a massive market. Um-
[00:20:20] Jose: But the video models don’t do, uh, porn, right? Like, even if it comes from a– Like, what video models are doing porn? The open source ones. The open source ones do, do it?
[00:20:31] Yan: Yeah.
[00:20:33] Jose: Okay. Um, I wasn’t aware that they did. I, I thought you had to, like, do a fine-tune for them to do porn. Is that mainly, is that where mainly the volume’s coming from right now? Or-
[00:20:45] Yan: I have no idea.
[00:20:46] Jose: Are you sure the open source models do porn?
[00:20:50] Ceteris: Didn’t realize this was-
[00:20:51] Yan: We, we need to check. The bull case on that.
Please, please, please test it out right now.
[00:20:56] Jose: No, I think that’s a legitimate bull case if, if, if, if they do. But, uh, last I checked, they, they do. Yeah. They, they have, like, the same safeguards, uh, as-
[00:21:05] Yan: Yes, open source models do porn.
[00:21:09] Jose: Okay. Interesting.
[00:21:13] Yan: Yes, I’m confirming that now.
[00:21:15] Kevin: And what do you, what do you- Yeah
yeah, what do you get with this? You said, like, subscription revenue is one of the big drivers. What do you, what do you get with that?
[00:21:22] Yan: Uh, it’s a usage-based one. Just usage-based? Yeah. And then, um, I’m, uh, I think the revenue’s also understated ’cause you don’t really, they don’t track, um, the amount of people that are paying for API usage after they’re maxing their max plan.
And- So there’s right-
[00:21:44] Jose: Revenue in this case is, like, the total spend, like API spend, which I guess they’re mostly, it’s mostly, like, being passed through to the labs, no? Or is that-
[00:21:54] Yan: Uh, depends on, on if it’s open source or lab-based. Um…
[00:21:59] Jose: for the open source ones, they’re running them on their own hardware.
They’re, I, I,
[00:22:03] Yan: I think it’s, it’s probably a combination of, of some of their own, but, but also just outsourced GPU, um, decentralized compute providers. Okay. And, and there you get pretty good margins.
[00:22:18] Jose: Interesting. Yeah, I think the porn and, and, like, illegal use cases could be cool. I, I, I just think for the, for the majority of my use cases, which I would want privacy for if it was available, it just doesn’t work because the, the context, like, it, it, it just feels like a very niche market, I guess.
The… I mean, I guess porn isn’t that niche.
[00:22:39] Yan: Yeah. I think there’s also, you could, you’d bifurcate your use, um, where it’s, it’s, you, you’d keep your, your usual volume things in your existing setup, and then more edgy stuff that you’re less worried about keeping your entire context window and, and all that information up to date through this.
Hmm.
[00:23:06] Kevin: Yeah. I mean, it’s just, it’s hard to necessarily see where all this goes because, like we were talking about just before we jumped on, which is AI in general, it’s, it’s extremely difficult to predict where all this goes. Like, the pass-through model is a similar type of qualm that some people have had with other bigger companies like a Cursor, right?
Which recently had the $60 billion potential buyout announcement. But that’s always been one of the questions around their model has been a lot of the revenue that comes in goes kind of right out the back door because they essentially serve as an aggregator for a bunch of different models, top frontier models.
They’ve started to develop and build their own models too to try and diversify that, that revenue stream or have some lock-in. But that pass-through model has been one that, um, that definitely has had some question marks around it.
[00:23:57] Jose: The, the pass-through model? Like, um-
[00:23:59] Kevin: Yeah, where it’s like Cur- like you’re paying a cursor, but like- Mm-hmm
to your earlier point with Ben, it’s like a lot of the revenue that comes in winds up going out the back door because it goes to paying-
[00:24:07] Jose: Yeah. It’s like double counted, uh, your revenue for the, for AI. But I mean-
[00:24:11] Yan: You assume they have like enterprise plans, so you, they do get better economics than, than retail.
But I agree, it’s, it’s the lower margin of the two.
[00:24:22] Jose: Yeah. I mean, I think, and I think some of them, yeah, for the open source models, I think the margins are, are much bigger for sure. Um, like even when we spoke to Kimi and stuff, it seems like that, that’s the model. They have like more efficient ways to serve them and stuff, where you can have higher gross margins on them.
Um, but yeah.
I don’t think it’s a super– I mean, Cursor’s acquisition kinda like validates the model though, right? I think they’re the, is it, is it the biggest private acquisition ever, uh, like
in startup land? Feel, feels like definitely the biggest one I can remember. I mean, Wiz seemed big and like WhatsApp seemed, seemed huge, right? Um, but this is just like two, two, you know, more than 2X WhatsApp and Wiz.
[00:25:12] Kevin: Yeah. I mean, you had a lot, you had quite a few actually in the early 2000s. Um, but yeah, all the time Warner not necessarily a private one. I mean, it’s definitely up there. In terms of AI land, it’s, it’s one of the largest for sure. But it’s interesting like SpaceX being involved in that. Um, and it just looks like-
[00:25:31] Jose: Yeah, it’s the largest private venture M&A deal in history it seems like.
Yeah.
[00:25:36] Kevin: Which is, which is wild. But how much- Yeah … of that is, it’s like an interesting dynamic because you’ve got all these, not the circular revenue argument, but more like all this interplay between like SpaceX and Elon, and then if you go and acquire Cursor and you’ve got xAI, part of Cursor’s business model is selling, big part of it is selling access to frontier models like ones from OpenAI, ones from Anthropic.
Like you’re kind of almost going after, you’re acquiring a business that potentially you benefit from your competitors doing well too in a weird way. Like just trying to think- Yeah … what is, what is, what i- what is the reason for them going after Cursor?
[00:26:19] Jose: Yeah. I mean, I think it’s just they need to, like the, the Grok model, model is like clearly falling behind.
It kinda sucks. Right? Uh, it, it’s like well below the, the frontier. Um, but they do have like– I, I guess in, in general, like one way, and I think it was Rory from, uh, in the 20VC that first, first said this to- said this, or at least I heard him say it, but like a model company has two jobs, right? You have to build a good model, and then you have to like buy enough compute to serve it.
And you, you, you have to do both well to win. And until earlier this year, until 5.5, OpenAI had done a really good job buying compute, but they’d like fallen behind on the good model, right? And Anthropic was, was on the inverse of that. They built like a really good model, but they, they fell behind on, on, on compute, which is why like they were having to throttle users, and people were saying the model was getting dumber and stuff like that.
Um, and it– and, and obviously like having just compute isn’t enough and, and I think xAI is the best proof of that, right? To have this colossus cluster with like 100,000 GPUs and yet still their models suck. Um, and yeah, Cursor’s – Cursor has their own model. It’s, it’s like this composer model. Um, and obviously they have like a lot of data to, to, to, to train this on.
And so I think, I don’t, I don’t know, for me the, the bet is that they’re, they’re gonna try and like win coding. Like combine teams, get this talent, get the data flywheel going and, and try and like make a model that’s competitive in coding, because clearly that’s kind of the killer app for AI, at least the first killer app for AI.
[00:27:52] Kevin: Yeah. And then, I mean, even the valuation side. I mean 60 billion doesn’t– it sounds insane, right? But then when you look at OpenAI at 850, Anthropic rumored to be raising at, what is it? 900, right? ‘Cause they just crossed OpenAI’s ARR rates, um, at much healthier margins too, might I add. Um, you know, it doesn’t seem like it’s that crazy of a bet.
[00:28:17] Jose: Yeah. It seems – I think it’s a good deal for both, for both sides, honestly. Like, um, yeah, I feel like SpaceX kinda needs this. They, they need like a leading model. Um, and, and, and Cursor is– I mean, Cursor’s growing pretty nicely, but I think for them it’s like a pretty absurd exit. I think it’s like a three or four-year-old business, you know.
And it’s the biggest private venture acquisition of all time. So I don’t know-
[00:28:42] Jason: Wait, wasn’t it like worth 2 billion like last year? Like like wa- wasn’t its val like 2 billion last year?
[00:28:48] Kevin: Two, and then it just, I think it just raised recently at 30. 10. Right? Or 30, was it? Okay. I think it was – I thought it was 30.
Or they were getting ready to raise at 30. For some reason I had- Either way, I mean that chart is- Ridiculous in a year … yeah, that chart’s exponential
[00:29:02] Yan: Well, it definitely makes, I mean, it makes sense. Like, obviously the, the Cursor side is clear, right? Uh, for the SpaceX side, you’re, you’re probably paying with a combo of cash and stock.
Yeah. SpaceX has a bit of a revenue problem, and you’re slapping on a bunch of recurring revenue that’s ramping very quickly. So you, you assume that the, the market probably gives that some premium as well. Yeah. And, and, and you get a bump in your e- in your equity price that probably more than offsets the purchase, and you have the compute capacity through xAI, which I guess you could say is the most expensive acquisition.
But, um, yeah, it, it, it, it’s one of those one plus one equals three scenarios.
[00:29:39] Kevin: Yeah. ‘Cause it’s kinda crazy, like if, if SpaceX really does IPO anywhere near 2 trillion, right? To your, to Yan’s point, if, if this acquisition has even a high likelihood of increasing that, the chance of your stock price rising 5 to 10%, it pays for itself multiple times over.
[00:29:59] Jose: Yeah. It’s also like, I think, uh, I don’t remember what the, like, I mean, Cur- SpaceX is, is trading at like 100 times revenue, right? If it, assuming it goes public near, near 2 trillion. I think Cursor is, is a much smaller multiple. It’s like I, I don’t remember- Oh, for sure … what their latest revenue was, but I think it’s like 10X or, or, or, yeah.
[00:30:20] Yan: I think in Feb it was 2 bil. Okay. But I’m sure- 2 bil revenue on a 30 bil trial. I’m sure it’s grown since then though. So now it’s probably inflected a lot. Yeah, exactly.
[00:30:27] Jose: So yeah, it’s probably a 10X multiple, so it just, like, makes a lot of sense from, from SpaceX to just be doing these acquisitions, I think, especially paying in stock, like you said.
Um, yeah. I think the really interesting thing, uh, actually I haven’t even thought about this too much, is also like Hermes, you can, you’ve seen like this, and we’re investors, by the way, in, in Noose, but it’s really been inflecting. Like I think it, it was like nearly 25K stars on GitHub. Everything on my feed is about Hermes.
They’ve been like stealing market share from, from OpenClaw. Um, and these agent harnesses, I kinda go through, through, um, through phases where, I don’t know, t- to some extent it’s just like markdown files, a bit of code and, and cron jobs. Uh, but in another way, it’s actually like the most valuable thing because it’s actually the thing that decides like what model you use, what services you use.
Like at this point, what I’m noticing in my, in my workflows is that like I don’t interact with any internet services. Like I don’t interact with Confluence or like these, these, these project management things. I’m not interacting with Figma. It’s just my agents that are interacting with everything actually, right?
And like the products that are most suc- especially software products that are most successful are the ones that are built for agents. You kinda saw this Parallel AI raised at, at 2 bil, right? Which is like a service that just helps your, it’s like a search engine for agents. Um, and I think you’re gonna see more and more of that.
And- What, what chooses that from, for many people that are using these agent harnesses, the, the, the, the agent harness is kind of what defines like what model it wants to use, what services it wants to use, and that is like pretty valuable. Um, it’s almost like the, the UX layer for, for a lot of this stuff.
But yeah, I don’t really have a, a strong take on it yet, but I’m curious if anyone has, has any thoughts or if you’ve been using this stuff.
[00:32:16] Yan: Yeah, no, that was the, the, the, the point that, um, what’s-his-name made in, in the 20BC pod, right? Basically that you- Yeah … you’re, you’re no longer op- really optimizing for what your employees wanna use, but, but rather what the agents choose and, and their, what they choose, the metrics they choose are, are very different.
Or like what, the, the metrics they choose based on are very different from what employees use, and so it’s makes it hard to predict- Yeah … who ends up winning. But, but just based on the volume of usage from agents versus employees, right? Yeah. Kind of always on. And, and so it’s like if you can nail that, you, you, you nail where software wins, ’cause right now everyone thinks all the software’s gonna lose.
[00:33:01] Jose: And I think the big thing, like collaboration also is a thing that’s not really solved yet. Like, I don’t know, Piers and I at Delphi are building, we’re building like a… We all both have personal CRMs, and we’re trying to find a way to integrate our, our data to, to make a, a public CRM, right? So all our transcripts and, and messages and stuff like that to have a, an overall database.
And it’s like permissioning is still super hard. Um, and at the same time, like d- we don’t, I don’t really wanna use an existing CRM ’cause I have to learn to use it and stuff, whereas Claude can just generate one for me with exactly the filters I want, the, the, the edges I want. Like I don’t have to for- reformat everything.
Um, and the same thing with Piers, I guess. He has his own workflow. So what we’ve landed on is just like having, um, sort of like a private GitHub repo that you upload stuff to, and then it’s just our agents are basically… Like I tell my agent what I wanna share and what I don’t wanna share, and at the end of every day, it just goes and, and, and uploads that stuff to the repo.
You know, I don’t have to. And I think in the future, you’re not gonna have people use these, you know, this boring stuff where after every call you have to go upload the CRM and say what happened and stuff like that. Agents can just do all that stuff. And if they, if they can do it, why would they use a CRM, you know?
Why, why, why wouldn’t they just like interact in, in, in, you know, in markdown files or whatever and just, just… It’s like so much stuff changes with this paradigm. Like once you start, it, it just, yeah, I don’t know. It, it’s, it’s really interesting. Like what’s the… ‘Cause if, and, and the same when we’re collaborating on this, like I don’t really speak to, to Piers even though we’re building this together.
It’s literally our agents just speak to each other, right? I’m like, “I made this update. Send it to Piers.” And then Piers responds to me. I’m like, “Read, read the update from Piers and tell me what, what, what we should, what we should do.” And then my… You know what I mean? It’s like it’s so different than, than, uh, than what it was before.
It’s just like I think a lot of software that, that isn’t built for this, for this like environment is just cooked. Um, I feel like anything that’s, that’s just for humans is kinda like hard to be super bullish on.
[00:34:55] Kevin: Yeah, it almost goes back to like bare bones or more raw forms of the so- like software backends, and the actual infrastructure that drives it is where the value accrues.
And like the UI side, there will be certain cases where that can make sense, but for the most part, to your point, like your traditional SaaS model, and a, a lot of SaaS companies are different, right? So it’s not like throwing the baby out with the bathwater, but like that traditional SaaS model is entirely upended by those, ’cause it’s all backend stuff.
[00:35:23] Jose: Yeah. Yeah. I mean, uh, yeah. I think some companies are adapting. To be honest, I don’t, I’m, I don’t know enough about SaaS. Like, I’ve never really used a lot of this, a lot of this stuff. I’ve always been, yeah, pretty terrible at doing this kinda thing and, and, and sort of hated this kind of work. But now with agents it’s, yeah, just feels like it obviates a lot of that.
Yeah.
[00:35:46] Kevin: Especially ones that are built on like workflow, productivity workflows or doing, like automating things that historically, like marketing and emails, like that stuff, all these models can do even better than some of the software that’s out there. So really, yeah, you have to pick and choose like what the use case is.
But yeah, no, it’s a massive, massive disruptor. It’s interesting with-
[00:36:04] Jose: Yeah, I think for software, like if you’re, if you’re… I don’t know. For, for me, if, if you’re building software, it has to be like for agents, you know. In a sense like, and y- uh, I almost think of it as like serving the AGI. You know, like you assume there’s gonna be an AGI, and if you really believe in AGI, you’d think it’s gonna be a better doctor, better lawyer, better financial advisor than, than any human.
Um, but it’s not actually able to do any of those things, right? And so a, a lot of the interesting software businesses we’re seeing is just like people wrapping like a license, basically a business that has this defensible with a license, and building it agent first from the ground up and like competing with incumbents, right?
I spoke to a financial, um, like an asset management firm last year that are, or last week rather, bui- building an ETF, like just leveraging agents to, to find the 20 best companies in the world, and very experienced like asset management guy basically trying to compete with the, with the, the BlackRocks and Vanguards of this world with, with- without having…
Like, his goal is explicitly not to hire any more, any analysts. Like, he literally just wants to hire engineers, and then it’s just gonna be an expression of his, his taste, right? Like with all the analysts will be, will be agents. And same thing I’m seeing for like these, these, uh, uh, for like biotech people doing this for peptides and things like this.
Like, obviously agents can’t just buy that stuff for you, so you can have something with a license like, and that’s licensed in every state or in every country that does this. But I really feel like if you don’t have a reason that the AGI needs you as a software business, that then, then you just have no reason to exist.
Like if you’re building for humans, you’re cooked.
[00:37:45] Kevin: Yeah. Yeah. And also, I mean, the world of, of orchestration, like these orchestration layers and these harnesses, like, and the switching cost being th- they’re there. But to your point, you’re able to sw- you can basically tell your agent to switch between models. Newest model comes out if, as long as you have access to them.
Like, it’s not as if the stickiness and the switching cost is high because you can literally tell your agent to basically optimize, use whatever model is most optimized for this specific use case.
[00:38:17] Yan: Yeah, at that point, I mean, your agent’s kind of picking it themselves, so it’s even, right? ‘Cause they know better, and so it’s harder to figure out who wins in that scenario because you don’t have the criteria to, to-
[00:38:29] Jose: The models, you mean?
[00:38:30] Yan: judge that on. Mm-hmm.
[00:38:32] Jose: Yeah. Yeah, the models is a tough one ’cause like I, they just have no– It, it feels like they have very little moat, like very little network effect. Even though like Claude looks invincible right now, it’s, um, there’s no like actual… ‘Cause I don’t have all the skills and stuff. These aren’t like ecosystem that Claude owns, right?
They’re, they’re like, uh, markdown files that you host locally. Like if I wanna switch to Codex, which I did this week, it was seamless, right? It just, I just added it to the same workspace I’m working from in Claude, and it was just working as if it was Claude from the very beginning ’cause, you know, Claude built all the, all the skills and context, like, like i- it’s hosted locally.
And so you, you really, um, you’re really like mercenary. Like I don’t care about Claude. I just want the best intelligence, you know? And so the, their, their moat is that, is that they’re amazing and they continue to execute and build the best models, and if they continue to do that, they win. But there’s no actual like moat or network effect in the sense of something like Facebook, you know, or, or, or Amazon or, or these businesses that have a g- you know, um, it’s more, more challenging, I think.
[00:39:37] Kevin: Which is also why a lot of these, these big labs will stay in this, this massive CapEx race too because when the switching costs are like that, like you have to be, to your point, 5.5 comes out and you can switch really easily. And now there’s the argument that like opening eyes back in vogue, right? But give it a few months and the next thing rolls out, and us as the users or the agents as the users don’t– We’ll just use what’s best and out there, what’s most cost efficient and gets the job done, what’s best that’s out there.
Which on the back end- Yeah … like the model companies now, I mean, you’re just in this massive race. Like you can’t let up.
[00:40:12] Jose: Yeah. Yeah, the models, it’s tough. Um, I do think on the, on the services businesses, you can see that some people are building like, Parallel is an example. They’ve built like a really amazing, uh, s- like search engine and like clearly their competitors, Perplexity has one.
There, there’s, there’s a few others, but Parallel just works really well. It’s the one that, that, that, uh, that gives me the best results at least. So yeah, you can definitely build some massive businesses serving agents, like for s- for, for, yeah
[00:40:44] Yan: Which is interesting in itself, I think. Yeah.
[00:40:48] Kevin: Yeah, it’s gonna be real interesting to see how it plays out.
Uh, one thing we definitely need to switch method to crypto, but we definitely need to hit on, ’cause this is a huge story this week, and I’m gonna pass the mic over to Ceteris in a second here to give his unfiltered thoughts on it, was this Houdini swap acquisition, Sol Strategies. Uh, I know you have strong takes on it.
What I wanna know is really quickly just, again, what happened in case anybody didn’t see it. But two, w- I think this is a very, uh, interesting scenario that we’re probably gonna see come up more and more around token holders not having real true ownership rights. Uh, what is– Like, if you were gonna do this backwards, like, what would’ve been the optimal outcome here?
Like, how- Yeah … would you have this?
[00:41:40] Ceteris: I don’t know if it was a huge story. I think I probably helped make it a bigger story. Um, uh, and it’s not something new. Like, we’ve seen it before. We saw it with Axelar. We’ve seen it with other dual equity token structures. I think it’s just, like, if this industry wants– Like, the biggest problem in the industry is that we don’t have liquid funds, right?
Like, we have no liquid buyers of these tokens liquid. We have a, a good amount of venture, but we have no liquid. And the reason why we don’t have liquid funds is because tokens are just, like, dog shit all around. Um, and the Houdini thing was just, like, pretty egregious to me. Like, this is a, this is a protocol that, um, they’ve been around for over two years.
They were doing this buyback and burn. Um, I mean, they had some staking thing before. But, like, they, it traded over, like, 50 million circulating supply, okay? Anyways, recently they’ve been getting, like, good integrations and stuff, right? And their market cap was down to, like, eight or nine mil, right? So you’re kinda looking at this as an, as an– And their, and their revenue, the, the buyback run rate was, like, two mil, three mil a year or something, okay?
So it’s trading at, like, a low multiple to its market cap to the buybacks, and you’re kinda like, “Okay, what’s going on here?” I’m, like, someone who’s a fundamental investor. I want to, like, look for protocols that are genuinely undervalued. You have this protocol here using 50% of their revenues to, to do buybacks.
They’re trading at, like, a three, four multiple. They’re getting integrations with other protocols, like Jupiter was talking about integrating them and everything. And so in a normal, like, capital market, right? Solana wants to be internet capital markets, right? In, like, normal capital markets, you see all this, you do all this work, you buy the token, you’re probably gonna be rewarded for it, right?
‘Cause that’s, like, a good- That’s, like, good research you did, um, to, like, identify this. Good fundamental buy. However, the reason why it was, like, trading like shit is because, like, the token was gonna be rugged, you know? And there was, like, two weeks ago, the team just did some announcement and they said, “We’re stopping all buybacks,” and they didn’t say anything else.
They didn’t say anything about the token. Um, they just said, “We’re stopping buybacks.” And the token basically went to zero then. And then yesterday, this announcement– or two days ago, this announcement comes out that says, like, Sol Strategies, um, you know, acquires Houdini Swap’s equity. No, no indication of the token.
Um, the token’s trading at zero now, like, that market cap even. There’s no liquidity anywhere, like, it’s literally zero. And I mean, yeah, listen, I had some of this token. I lost money on it, but I’ve lost way more money on way more tokens. It’s, like, not about the money here. It’s really about, like, if you wanna fix the market structure, you– we have to stop with these tokens just, like, rugging out of nowhere.
It’s like nobody can ever have confidence in… But, like, I really think you have to have, like, a Metal X, a Meta DAO, uh, a SOAR, um, any of these other, like, protocols that are enforcing some sort of token holder rights. It’s like if your token doesn’t have any of this, I don’t even think just a pure buyback is enough anymore either.
Like, maybe if you’re hyper liquid ’cause they have really good trust, but you can clearly just turn off the buyback and just, like, rug the token out of nowhere. And so it’s like, think about it, right? This team, they had their equity, they had their token, they launched a token years ago, and I’m sure the team sold team tokens over the years, right?
Like, I can’t say for sure, but if– I find it unlikely that they never sold any tokens over the years. And then one day they just decide, like, “Eh, yeah, you know what? We don’t– I don’t wanna worry about that token anymore, and I just want it to, like, not exist,” you know? Like, it is funny because their original token ticker was POOF, and that would’ve been a lot, uh, a lot better for this situation.
But- Foreshadowing. Yeah, it’s just like, it’s just, it’s just annoying. It’s like, um… This is a, what–
[00:46:00] Jose: this is the deal with tokens, though. Like, this is, this is the deal with tokens as they’ve evolved, at least.
[00:46:04] Ceteris: Not all tokens, though. Like, not all tokens are… Like, there are tokens that are moving in-
[00:46:09] Jose: Most tokens.
Right, but it’s like-
[00:46:10] Yan: Well, it depends on the, the era, right? Like, the early vintage tokens, they-
[00:46:14] Ceteris: This was all early, for sure. Yeah. Equity, dual equity token. It’s like, I don’t know, man. If there’s dual equity token these days, it’s just… I just don’t think you can, like, buy that token.
[00:46:24] Yan: It’s like even like- It’s another layer of diligence you basically have to do, which, which is unfortunate because all that means is it’s gonna compress multiples as-
[00:46:33] Ceteris: Yeah, it’s like, look at, look at Helium, okay?
I own some HNT token, but, like, I can’t buy more because I don’t know if Nova Labs is just gonna, like, sell the equity one day and just rug HNT, and, like, they don’t have to keep doing HNT buybacks, right? Um, and so these things just need to be, these things just need to be solved. And I also think that, like, SolStrategy’s, in this case, uh, like, deserves blame here.
Like, if you’re participating in essentially rugging tokens, like, you, you have this entity that you, you promote as being, like, good for the Solana ecosystem and, like, Solon- Solana aligned. Like, tokens need to do well for your business model. Like, that’s what you’re, that’s what you’re doing here, right? Is, like, you’re, you’re supposed to be supporting an ecosystem with, like, tokens on a blockchain and stuff, right?
And- I definitely agree with that relative-
[00:47:23] Yan: So we’re gonna tone out … relative to, like, what Pump does, right? They’re, they’re, they’re not interested as much in an ecosystem. It’s more about their own ecosystem eventually. But for them to rug the token, which they actually ended up, um, redeeming, uh, and it’s less of a thing.
But yeah, for SolStrategies, I, I totally agree. It’s… They thrive with activity. Activity is, is kind of supported by growing token ecosystem.
[00:47:46] Ceteris: Yeah, and like the, the– It’s just annoying because, like, Hu- Houdini actually has, as I said, they’ve been getting more integrations recently v- And it’s like people buy this token because they see them doing buybacks and everything, and they see them starting to, like, gain more adoption, and then they just decide that the tokens were zero.
And it’s like you just– We just have to stop this stuff basically. And I don’t know. Like, I’ve been, I’ve been rugged a lot and, like, everything, and I usually just, like, chalk it up to the game. But I feel like some of these things people need to, like, make a bigger deal out of because, um-
[00:48:28] Jose: I think some of it is a bit of like Peter Griffin when he hurts his knee, uh, meme, you know.
Like, th- these things have done– Like, there’s, there’s loads of examples where the opposite happened. Like, right, FTX went under. FTX equity holders just had to sit there and take it. FTT holders mostly got out, like, right, Multicoin sold most of their FTT at, like, 20 bucks, um, and, and got out. And, like, many other examples of things, I mean, Axie is another example where, you know, token holders made out much better than, than, than equity holders.
I, I just think y- we- Like, all this stuff’s transparent. Like, you can see when a token, like-
[00:49:03] Ceteris: This isn’t transparent though … it’s, it’s transparently…
[00:49:07] Jose: well, I mean, you knew that, that you’re depending on them to do buybacks, and you know that there’s, that there’s, like, uh, a possibility that they stop doing buybacks at any moment, and they are-
[00:49:14] Ceteris: Okay, so should all these tokens just be worth, like, zero then basically?
[00:49:18] Jose: I think they traded a much lower multiple. I, I think they traded, I think they traded the multiple based on people’s confidence that, that the team will return value to the token, right? Hence-
[00:49:27] Ceteris: For sure. For sure …
[00:49:28] Jose: multiple versus, versus hype. For sure. Um, and I think, like, teams, the … I mean, I think what Metalex is doing with Meta DAO and with Pump, like these, these structures where you’re linking equity and token make a ton of sense, and I think those things should, over time, trade higher as we see more of these rugs.
But I, I do think, uh, a lot of the, a lot of this is, like, man, you can see, like, there’s a reason why early DeFi, everything was on chain, like cash flows to token were encoded on chain. If you wanted to change them, it was a governance proposal. All the stuff that people are like, “Oh, governance is broken. We don’t need governance tokens,” and now, like, this is what you get.
Like, it’s, it’s discretionary. Like, your token is, is worth something until the team tells you it is, and that’s the reality of, like, the, a lot of crypto tokens. So you have to trust that the team cares, or make them put it into, into either on chain or, in the cases where it’s not possible, which is most of this stuff, do something like the Metalex, like work with a company like Metalex- Yeah.
I don’t, I don’t disagree- … to actually link your shit.
[00:50:26] Ceteris: I don’t disagree with you. I just think that the crypto’s, like, permanently fucked if we don’t switch to those types of models- Yeah … and we just leave, like, the, the status quo on these kinda like your token can be rugged at any moment, um, scenario- Yeah
that we have. I think you kinda n- yeah, it-
[00:50:43] Yan: it’s just part of, I think, part of what you diligence, right? You have this, this setup where, um, the team has likely sold tokens, but obviously can’t sell equity, and so now all the value’s sitting in equity, and if … And so, yeah, you have a combination of that, plus the business isn’t doing particularly well.
And, and so you have the ideal setup for a team that is kind of, that feels very little loyalty to the token community. Let me get my final exit. Um- Yeah. It’s just like- Which sucks …
[00:51:12] Ceteris: it’s just, it’s just scummy, man. Like- Yeah … I don’t even care if it’s le- like, rugging the token may be legal, honestly. Like, doing this, it might be legal.
Like- It’s definitely legal … it’s definitely legal. Real. Yeah. But it’s just like- Well, it depends. It’s just like-
[00:51:26] Jose: I haven’t, I haven’t read the docs. It depends what they promised. I assume they didn’t promise anything to anyone, though. Depends. I mean, this is the post-GANDN era- Considering how long they’ve been around
so, like … Huh? Considering how long they’ve been around, I think, back then. Yeah. I mean, the thing is, a team, uh, at the s- I, I get you. At the same time, a team can’t be, like, forever wedded to this, to, to this token, to this community, right? I, I-
[00:51:49] Ceteris: I mean, if that’s the case, don’t launch a token.
[00:51:52] Jason: Yeah. Isn’t that kinda like- I mean, you don’t launch a-
the argument for equity? Or, like-
[00:51:55] Ceteris: Like, that’s horseshit. Don’t launch a fucking token if you’re just gonna, like, sell your allocation and then … I mean, I don’t know if they did that here, or they probably did. It’s been around for two-plus years. And then just, like, leave it to die at some point. I just think that’s like-
[00:52:08] Yan: Well, yeah, I don’t think it’s binary.
There’s a lot of- Like, you’re not, like, forever wedded to the token. You just have to not rug token holders in the process of the exit, right? Like you, you don’t have- Yeah … to be forever wedded to it, but you, you just need to not do this kind of sinister scenario where people are just kind of left hanging unknowingly.
[00:52:25] Kevin: I think from, from a, from a legal standpoint though, I, I don’t know how this would work. Like in this one, it says here, right, part cash, part shares of actual SolStrategies itself. Like what would that look… Like not rugging token holders or lock holders in this case, what does that look like? And do you run aground legally if now as a token holder you’re converted into an equity holder of this company?
[00:52:51] Ceteris: The only way to do this is- Again, it’s an open question. It’s the ACE thing. Well, the- It’s, it’s Gabe’s ACE thing- Yeah … is the only way for this one specifically. That would work.
[00:52:57] Jose: That would’ve stopped this. If they, yeah, if they’d done that, that would’ve stopped this, right? Token holders could convert to, to equity and claim the, and claim the treasury back, like via the Borg.
[00:53:08] Ceteris: I know, I think that like legally there’s no real incent- legally there’s no real incentive for either the acquirer or the acquiree doing this. And so I think that you have to like, you have to punish the business. Like the market has to like punish basically Houdini Swap and SolStrategies going forward, um, because oth- otherwise people will keep doing it, right?
And like this means teams within Solana stop working with Houdini Swap, right? Like if, if Solana ecosystem wants to build like a vibrant, healthy ecosystem of tokens and like a lot of liquid funds that wanna invest in it-
[00:53:42] Jose: I don’t know, man. I mean, that’s one way. That’s one way for sure. I, I also think- It’s certainly possible
the market can just, can just reprice everything that’s not, you know, uh, an ACE, that’s not using the ACE model, and over time force people- Yeah … into, into using something like this instead. Like that’s the- For sure … I think the market- Mm … like- Like it’s, it’s a forcing function … the market-driven way to do it.
[00:54:01] Yan: Yeah. Yeah. ‘Cause that’s the only way you have everyone operating in a rational, self-interested way that scales, right? There’s just no way that everyone will say, “I feel bad for the 8 million in market cap that was just devoured. Uh, I will now shift my business focus elsewhere and, and avoid them when potentially they are the best thing for me to use,” kind of thing.
It’s gotta be the other approach where, yeah.
[00:54:29] Ceteris: I mean, there are like different stakeholder groups that are making different decisions on like the market pricing versus the other stuff, but yeah. Yeah. ‘Cause I think it’s- The mar- the market, you have to, yeah, the market is gonna just punish non, just like these to- like dual equity token, I think market really is just gonna like…
Yeah.
[00:54:47] Yan: ‘Cause the reason, like I, I, I, I, you know, I just don’t know if, if what you’re suggesting will work is because, like you said, SolStrategies, if there was ever an acquirer that would try and do something to not rug- The token community, it’s, it’s, it’s them, right? Because of, of where the long-term interests would lie.
And, and if they’re kind of going this path, then I, I think the, the propensity for everyone else to, to, to shy away from Houdini swap or something like that is, is pretty low.
[00:55:18] Ceteris: It’s definitely low, don’t get me wrong. The market just sending these tokens to zero is the, the real way you fix it. Um, I agree with you that it’s much harder to get people within the ecosystem to stop working with Houdini.
I mean, I, I don’t think they should work with Houdini ’cause, like, of how their model works. That’s a different story. Um, but yeah.
[00:55:42] Jose: Yeah, and this brings us to Pump quite nicely actually. Um, what did you guys think of, of, of their announcement? Obviously they– I think they announced they’re cutting down the buyback to 50%.
I thought it was good. And also burnt all the tokens that they, that they bought back. Um- Yeah. Yeah.
[00:56:00] Ceteris: I think the to- burning the tokens, I felt like was kind of irrelevant. Like, um, when you’ve bought back the tokens, I think the market expects you not to just, like, dump all those tokens on the mar- Like, they’re kind of already out of supply.
Um, I think that a lot of people are upset that they changed the buyback and burn to 50% from 100. I think, and you know, a lot of people said they’ve raised so much money, why do they need to, like, continue keeping some revenue? I think that’s kinda like a bad reason. Like, lots of companies raise a lot of money, and they still keep a lot of retained earnings to, like, continue growing the, growing the cash.
I think putting, like, the buyback and burn in, um, kinda like coded for, like, a year is a good thing. At the same time, like, if you’re doing this on, like, a multi-year DCF or something, you really can’t use that because you have a one-year guarantee. You don’t have a guarantee in perp- in perpetuity. Um, so I don’t know.
It’s like there’s good and, there’s good and bad things. I think overall there’s, like, clarity for the market, at least for a year. They have a lot of unlocks coming, so that’s gonna be tough with cutting, like, emissions 50% and then all the unlocks. But, um, I don’t know. I think- I don’t know if people have other-
expecting, I mean, I think you–
[00:57:17] Yan: DCF doesn’t, isn’t conditional on money flowing back in buybacks or dividends, right? So, like, DCF, like, DCFs are just what the business is. Yeah, but it’s- And so- But it’s conditional on, on you having a link between the business- Well, well that’s- … and the tool that you’re buying.
Yeah, but i- if, if the idea is they’re saying this value is to the token, the only reason they need to return it now is because there’s little confidence. But if, if they can address that component and suggest that all value in, at some future point will only go through the token, then you can still DCF off of earnings.
You don’t, it doesn’t have to be off of returned capital. And so, like, I think it’s just a, a broader crypto problem of, of this forced returning of capital, which kinda ties back to the other stuff. But yeah, assuming that they weren’t gonna do this would’ve been- Kind of silly. Yeah, I think the burn is irrelevant.
It was already priced in. If they did something else, that would have been the, the, the shock to the market. And, and the buybacks had to slow down, right? Like, what you, what you don’t wanna do is there’s two scenarios. Either you slow them down now and they have cash to, to grow, and ultimately that’s what you’re buying the token for- Would you think- Or-
[00:58:20] Jose: They probably have over a billion dollars.
Um- They, they prob- they prob- like, they, they, they made, like, something like 700 million before the ICO, and then they raised 1.5 billion. So they, they– I mean, whatever happens, they probably have over a billion dollars in the bank. Like- I have no idea what their spending is … this is software. It’s, it’s not like– It’s, it– You know, I don’t know.
I, I, um, yeah. But- I’m a, a Pump holder still, by the way, but yeah, I, I do not- Do you think- Makes, doesn’t really make sense … I don’t,
[00:58:48] Yan: we don’t know what their financial situation is, but I, I, I still think it makes sense in, in terms of sustainability. Like, you’d, you’d rather them continue to bolster their balance sheet and, and, and grow that way versus, uh, this immediate return of cash, which you never see from any startup at this stage.
And, and so you’d rather them be at a scenario where they have years of runway rather than one where they’re running short on it, and then they’re doing this out of a position of desperation rather than one of strength.
[00:59:17] Jose: Uh- I think that would be fine. Like, the DCF point and stuff is all fine. The u- it doesn’t rely on distributions to, to, to shareholders, but the difference is with, with equity, you have, like, a contractual legally enforceable claim on the underlying business, its cash, et cetera, right?
I think the worry that people have with, with Pump is that they get Houdini’d, right? For su- I mean- In, in, in whatever way … not Houdini’d, but, like, yeah, no, I, I,
[00:59:39] Yan: that’s, that’s been, that’s part of the discount, right? The discount is a combination- Yeah … of they, there’s low confidence in the token.
[00:59:44] Jose: But don’t you think this reinforces the fear that, that you get Houdini’d?
Like, you’re, you’re, that you’re, they’re reducing the, the buyback in a position where they have, you know, over a billion dollars cash. We, we don’t- Like you said, we don’t know their financials.
[00:59:55] Yan: We don’t know what they plan.
[00:59:57] Jose: Yeah. Yeah. I think they- Yeah.
[00:59:58] Yan: I think that’s the hard part about it … what would help them is some, some transparency is, is, um, disclosing what they’ve done, uh, how much they’ve spent, and, and then potentially trying to create some legal tie-in, ’cause I, like, I don’t s- Or doing an ACE.
[01:00:11] Jose: Do, do the ACE themselves. Like, they’re running the, the ACE. That, that would– I think the token would pump, like, like, I don’t know, over two, for sure over 2X if they, if they did ACE.
[01:00:21] Ceteris: Yeah, I agree with that. Yeah.
[01:00:22] Yan: I mean, ’cause you think about, like, they, they pulled off a pretty amazing trade. They sold a boatload of tokens at 4 billion and then bought them back at, like, 1.8 to 3, probably somewhere in the, average- Yeah
price in that range.
[01:00:35] Jose: I mean, it’s not a trade- Ooh … ’cause they burnt them, but yeah. Like, uh-
[01:00:38] Ceteris: The burn, the burn value was, like, half of what they actually spent, I think.
Like, the time at burn.
[01:00:48] Yan: Yeah. So- Well, I’m also wondering, like, what, what their average purchase price was. Yeah.
[01:00:53] Ceteris: To be honest, it was probably around four. ‘Cause they bought a lot above too
[01:00:58] Yan: But they only spent, like, a few months there.
[01:01:00] Ceteris: True. If that. Yeah.
[01:01:06] Jose: Yeah. I mean, by the way, we’re, we incubated Metal X, so just, uh, full disclosure.
But I do think Metal X solves, like, literally all of this. Um, and it’s the right structure for most teams to say, like, “Yeah, it’d be, be dope for Pump to…” And, and I, I guess, I mean, there’s probably legal reasons and all sorts of complexity with a business that size with, with that many, with that m- much stuff going on that we’re not aware of.
That’s the tough thing with this. It’s like, you want transparency, but there’s probably a bunch of lawyers, uh, giving them, you know, very sound advice for why that doesn’t make sense. Um, but yeah. It also depends what you’re optimizing for, but Hyperliquid obviously was, was an extreme example of this. They, like, never raised money and gave back 100% of, of revenue to, to token holders, and that’s been, like, an insane success for them, right?
Um, but I guess Pump h- has more of a need to build product. I don’t know. Uh, I think the hope for everyone for, for when Pump came live, went live, was that it would be another Hyperliquid, right? It’s one of the only businesses in crypto that was generation- generating that level of cash flow. Um, and it’s, I think it, the cur- And I’m, I, I was, I was, uh, bought into that thesis, bought into the ICO, and, um, I think now it’s, it’s, it’s harder with, without some link to the equity.
Like, um, it’s just, just hard.
[01:02:31] Jason: I mean, also, like, just, like, even without the link to the equity aspect or, like, Hyperliquid has, like, so much other shit going on and has had so much other, you know, stuff come to market since all of this, you know, since Pump’s ICO. And, like, Pump hasn’t, like, done shit really, right?
Like, it’s pretty much-
[01:02:49] Ceteris: Yeah, they still have, like, the daily revenue- … been flatlining, right … but it’s like streaming didn’t really work. It’s kinda- Yeah … unclear what the next move is.
[01:02:54] Jason: I think it’s definitely a combination of the two. Um, and like- Yeah. So- … it’s really not clear to me, like, what Pump would buy.
Like, streaming, I mean, whatever. Like, it didn’t really work. Maybe they try again. But, like, it’s not super clear, like, what they would branch into or, like, what business they might buy. Um, whereas, like, for Hype it’s, like, pretty clear, like, what the, you know, roadmap looks like in terms of products that they could ship, markets they can go after, and everything like that.
It’s just, like, I don’t know. It seemed a lot more clear when I bought my, my Pump tokens, and now I’m just a fucking community holder.
[01:03:31] Kevin: Yeah, I think going after new- Meaning members … is a huge differentiator, obviously. ‘Cause, like, Pump’s also tied to largely still the meme coin trading narrative, which- Yeah
aside from a couple little patches here and there, has been largely-
[01:03:45] Jason: Which is also, like, the difference with Hype- … down and declining … it’s, its revenues, while down from, you know, like, 1010 peak or, like, pre-1010, it’s actually higher than it was a year ago, right? Um, when the market conditions were much better.
Um, so like, yeah, it’s like the dichotomy that I keep coming back to and wanting to kill myself when I look at my pump position or what’s happening.
[01:04:05] Yan: Yeah, part of the mistake was they, they had a massive user base and, and there were a lot of products that were pretty popular but relatively commoditized, and so it was all about kind of just being connected to the user directly and, and then offering something similar, but that hasn’t really materialized.
[01:04:26] Jose: Yeah, I mean, it’s crazy that they’re still making this level of revenue. Like, um, it’s, it’s kinda wild.
[01:04:33] Ceteris: I mean, people are skeptical of that too, right? So- Yeah, I think that’s reflected in price for sure.
[01:04:38] Kevin: 100%. They have a lot- Current price, future rev … like, yeah,
[01:04:41] Ceteris: the future rev, the where the revenue comes from, the token unlocks, like pretty sure all this stuff is priced in pretty heavily, so if you get clarity in one of these directions, like maybe-
[01:04:54] Jose: That’s true
[01:04:54] Ceteris: you could see it turn around well.
[01:04:56] Jose: I mean, but surely someone would’ve done some analysis, like on, you know, on the, on the patterns. Has anyone, has anyone seen this? Like-
[01:05:04] Yan: So basically my understanding is that- It should be pretty obvious if they were, if they were… Yeah. Yeah. They, they b- they’re basically like power issuers of meme coins, and-
[01:05:14] Ceteris: They’re called developers.
[01:05:15] Yan: Of course. But the devs, uh, are, are… Like, there’s, there’s still a, a shit ton of volume that happens in that world. Um, and the q- my question is basically like, who’s getting fleeced still?
[01:05:31] Jason: Dude, just go on YouTube and type in live meme coin trading and you’ll see exactly who’s getting fleeced.
[01:05:36] Yan: Yeah. But, like you have to go so, you have to go, you know, a centimeter deep and, and many miles wide because of how low ceiling these things have, right?
So you’re, you’re just- Yeah … the whole idea is you basically launch a lot of them, and a handful of winners offset the majority of losers. Basically, these, these are like venture meme coin devs.
[01:06:00] Ceteris: Hey man, Pump has charity coins now, okay? So they’re, uh- I saw they crossed a million in, uh, donations today. Yeah, there you go.
They’re really, uh, turning a bright light on the industry. Whatever happened- Pump is really a bright, bright light in the industry …
[01:06:11] Jason: whatever happened to that Glass Foundation thing where they were gonna buy me- did they just stop doing that?
[01:06:16] Ceteris: The glass became full, and then- It overflowed. I think it was called Glass Half Full Foundation.
[01:06:24] Jose: I do think Pump, like if, if they can get another, um, another run of making people some money with, with, with something, like if we get, you know, another meme se- I mean, I doubt, it never happens the same way, right? So they’d, they’d have to be early to something else. But with the distribution that they have and stuff like this, you would think there could be some, some projects that would be interested in doing Ace, like, uh-
[01:06:48] Ceteris: Well, they did.
Pump King did Ace, right? And actually…
[01:06:50] Jose: yeah. But I, but I mean, like- Some, some like AI project, you know, some, some, some, some stuff like, um, relatively, uh, outside of, of… It’s just tough because the, the traditional fundraising, like, I think is, is, is so hot right now. Like- Yeah … why, why would you go into something different?
But yeah.
[01:07:13] Kevin: Yeah. It’ll be interesting to see how, how it all plays out. Um, I think that’s plenty. We’ve, we still have some stuff on the docket maybe we’ll save for next time, but I think we covered a lot of ground here. Uh, appreciate you guys joining as always. Those who tuned in, appreciate you sticking with us. We would love to hear comments, feedback.
Drop them in the, uh, in the chat below. We’re gonna, we got some plans for expanding this, doing some new things. Um, and subscribe if you haven’t already. This is the new home for the Delphi Hivemind podcast, and, uh, we’ll be back, we’ll be back soon enough. Hopefully markets are just as exciting. I’m sure they will be.
Appreciate you guys joining.
[01:07:48] Ceteris: 95K next episode. Thanks everyone
[01:07:50] Kevin: lock it in.
Boom.