Kevin Kelly [0:00:45]
All right. Welcome back to the Delphi Hivemind podcast. We're joined by a special guest again this week, Jake Sylvestre from the founder of Hypercall. Jake, sometimes we like to kind of do our own round table, but I think you've got a lot of expertise and some great takes. So we want to get you kind of thrown right into the mix with us. I want to start off with, since the last time we chatted, how everyone's feeling about the market. Jason, we got Fed day today. Do we expect any fireworks? We've seen a little bit of volatility. What are we looking at?

Ceteris [0:01:17]
I mean, last episode, Jason said that the 10:30

Jason [0:01:19]
Seller was gone and he immediately came back. Yeah. Clearly

Ceteris [0:01:24]
A lie.

Jason [0:01:25]
Clearly. I have no idea. That's one

Kevin Kelly [0:01:26]
Listener out there.

Jason [0:01:28]
Yeah. No, I don't, I don't really think the Fed meeting, I think it's pretty, pretty expected. They're not going to do much today. It's kind of like a wait and see type thing. Market. I don't know, man. Like I've said over the last couple of weeks, I don't, I don't have a strong read on any of this shit. So I'm just, you know, I'm just sitting in spots, sitting in cash that I raised from, you know, when we had on chain season go crazy for a few months. Yeah. I have no read, honestly, like every week I'm like, Oh, this looks all right. Oh, this looks like shit. And then, yeah, it just kind of oscillates back and forth between that. And one thing I've learned over the, you know, the 10 years doing this stuff is I just, if I don't have a read, I don't play the game. And so I'm just chilling. Yeah.

Ceteris [0:02:16]
I feel like I do not think that this cycle is like over here or anything. Like I think 2027 will be a good year, but it definitely feels like one of those periods where there's like no follow through right now. Right. We're just kind of like chopping around all the time and it's kind of a good time just to be more patient and you know, not over like slide the leverage bar up on the first breakout or something. You know, it kind of seems like, I mean, midterms is next week, right? Next Tuesday. So I assume the market will probably change after that. I think that like Santa rallies are more common than not. Right. Like Jen, like we've had some bad years going into year end, but those are pretty specific periods, right? Like I remember 2018 was really bad going into year end. And then 2021 was bad for crypto going into year end, but stocks, it wasn't until the new year really when they started to do poorly. So I don't know. I still feel pretty good about most things overall and like where the market is. I think the market's in a pretty healthy position. I mean, we're just chopping around 80K. Zcash is chopping between like 1100 and 1300. Hype is just like around 80. So yeah, I don't know. Maybe that's complacency on my part, but and like the Anthropic thing too, which we'll talk about later, seemed pretty good. All things considered the Anthropic S1.

Yan Liberman [0:03:50]
Yeah. I'm in chop and then strong end of year, or at least not. I don't think we really have a reason to go down. I think you get clarity post midterms, which market generally likes. I don't think midterms are going to lead to anything too problematic. I think if you want it to be bearish Trump's behavior, then midterms kind of just take away his ability to do things. So if you think that's like a tail risk to the market, that kind of gets removed. And then, yeah, there's no reason for like the cycle doesn't really end here because it kind of boils down to what the cycle is driven by. Right. And I think the main things are basically TradFi and all of that activity continuing to move on chain with RWAs just coming on chain stocks, everything else in between. And so I do think Hyperliquid, Lighter, and these other Perpdexes will continue to onboard users, particularly as they get, I think, more in bed with the TradFi institutions and kind of become, and allow those guys to be front ends for them to some degree. And then I'm also super bullish on options as well. And I think so all of these types of products will continue to bring activity and capital on chain. And ultimately that to me is what's driving the cycle. It's not Saylor, it's not something else. And so you have that. And then the debasement side, I think is still going to be like a long-term trend that's positive for the space. So yeah, it's kind of just chop until we, I think eventually break out higher. You know, we could very easily, especially where at 80 and a half retest the seventies, but I don't really see a reason for the cycle to end here. I think chop can, can kind of go in either direction and you just wait it out.

Jason [0:05:48]
How do you guys feel about the, uh, like the AI momentum names that are kind of, uh, not looking,

Kevin Kelly [0:05:55]
I mean, you're

Jason [0:05:55]
Seeing a pretty,

Kevin Kelly [0:05:56]
Pretty good rebound today, especially in some of the memory names. I think SK Hynix's earnings was definitely a bit of a boost and dovetails right into Anthropics S1 and those takeaways.

Ceteris [0:06:08]
Neoclouds have like had some relief too, right?

Kevin Kelly [0:06:10]
Yeah.

Jason [0:06:11]
I think, yeah, memory

José Macedo [0:06:13]
SK Hynix just had like an absurd, an absurd quarter, right? I think it was like 60 bill, something like that. And, and, and earnings this quarter. Um, yeah, seeing pretty good bouncing in memory off, off this stuff. Obviously these things, you know, people love to remind you on Twitter, they're

Jason [0:06:32]
All, they're all

José Macedo [0:06:33]
Cyclical, but they're, and so you, these earnings, there's just, but there's like mechanically some floor on the downside when, when these things are trading at like three times forward earnings. Um, so I still think, yeah, I mean, it's, it's, there's a lot of moving, moving factors here, but I still think memory looks, looks interesting here. Neoclouds have bounced pretty nicely, but yeah, same, same position as last week where I think they're just like very hard to understand businesses.

Jake Sylvestre [0:07:04]
How much do you guys think the, uh, uh, Anthropic performance out of the gate kind of affects, uh, all these, these momentum names?

Jason [0:07:12]
It's a good question. I think it's a million dollar question, right? I

Ceteris [0:07:15]
Think that the Anthropics

Kevin Kelly [0:07:16]
S1. It's a $2 trillion

Jason [0:07:17]
Question. The Anthropics

Ceteris [0:07:19]
S1 was like, I think it was a lot better than people's like fears. Right. And they have so much cash on hand still.

Kevin Kelly [0:07:28]
So I think that was, that was one of the big headlines that I think is that's a, that's a major takeaway.

Ceteris [0:07:33]
So it's like, it can still go sideways at some point, but I think that gives a lot of people confidence that the runway on this is going to be extended for a while. Um, and so you're seeing money get comfortable coming back into a lot of these other names. Um, that's just my general read. I mean, I'm not an expert on the like memory of the Neoclouds and stuff like that, but

Yan Liberman [0:07:59]
Yeah, I mean, I agree that the, the, the, the cash on hand absolutely kicks the bucket down the road massively in terms of concern, right? I feel like the, the general concern was more about, I mean, obviously there's the short-term working capital side that that's been addressed, but on the long run, it's like, do these models end up somewhat commoditizing because of open source and, and how, how strong is their business model in the grand scheme of things? And that one's harder to address with, uh, like a balance sheet.

Ceteris [0:08:30]
Yeah. But I don't think that that was, I think what this did was remove a lot of near-term concerns, which is what people were concerned about. Um, like they don't have one customer that's more than 10 % of their revenue. That's like a good thing, right?

José Macedo [0:08:44]
They have it. And that was a big FUD people had, right? That Meadow was spending like billions of dollars or Jane street was like, yeah, revenue.

Ceteris [0:08:51]
And then they have the, and then they have the cash. So I think that the main concerns that everybody had for it were kind of rectified here and yeah, all your open source, all that stuff is still an open question, but that's something that the S1 wouldn't have addressed either way. Right.

Yan Liberman [0:09:09]
Um, no, that doesn't get addressed now in any shape

Ceteris [0:09:13]
Or form.

Yan Liberman [0:09:13]
That's what I mean. Like there's one that's, that's a, uh, you know, balance sheet, working capital financial situation. And then the

Jason [0:09:19]
Other is

Yan Liberman [0:09:20]
Long-term kind of viability and, and what this company is ultimately worth. Right. As a result. Mm-hmm

Jake Sylvestre [0:09:28]
. And

José Macedo [0:09:29]
I thought it was interesting as well that like, oh, sorry, go ahead, Jake.

Jake Sylvestre [0:09:33]
One of the things I was going to say is I'm kind of surprised that, uh, different parts of the stack are, uh, kind of moving, uh, together. So uniformly. So there was an interesting paper Google put out, uh, I think it was called turbo quant on quantization. Anyway, basically it reduced the memory requirements by 80 or 90%, right? Uh, and I think there's a lot of chances this could happen across the stack. Uh, so another example is, uh, SanDisk, uh, I think is coming out with high bandwidth flash as kind of a replacement to high bandwidth memory, uh, which is something that could drive down memory a lot. Uh, and there's other advancements across fiber, uh, other pieces of the AI stack that could really, really nuke the value out of these neoclouds. Uh, and yeah, what you're seeing is you're seeing every piece of the stack kind of move, uh, in unison. And I think kind of similar to, to what we've seen in, in crypto with, uh, more variance among alts, uh, we're going to see that within these AI and, and semi names.

Kevin Kelly [0:10:32]
Yeah, I would agree with that. I think we'll still, I think we'll definitely see more dispersion. I think I'm still very bullish compute and compute markets more broadly. I agree though, that I think 2027 probably shapes up to be a year of consolidation among stranded compute and some of these neoclouds that simply just don't have the economics or the margins to basically be able to continue. Um, but it's amazing. It's still amazing to me that when you look out at forward compute prices, right. And I think Gavin Baker was just on TBPN or some, some podcast talking about a lot of their portfolio companies trying to secure compute like well into 2027 are paying massively higher rates than they were than the compute they locked up or locked in over the last two or three years. And so I still think like that, that compute dynamic is a big revenue generator, but I think stocks like and companies like SpaceX actually are really well positioned to execute on that. Cause it's going to shift from data centers and building and like the ability to potentially have future compute to a premium on actual installed working compute that you can, that you can monetize and generate revenue off of today. And I just think SpaceX and Elon are going to, are going to clean up this market in the next 12 months.

Jason [0:11:52]
Yeah. He's

José Macedo [0:11:53]
Just running like unhedged though. Right. He's, he's basically selling the, he he's selling at spot. Whereas everyone else, um, is, is mostly selling at forward rates, which is why it's also interesting. Like these, these 500 billion of commitments, like a lot of that is, is bullish, right? Cause actually they've, they've, they've secured that at well below the spot price, which is up like 44 % this year. I think that the, the challenge with this is just like, uh, obviously all, all most of Anthropix is, is take or pay capacity. And so the bad scenario is kind of correlated. Right. And like, if there's an industry wide slowdown in demand, Anthropic has unused capacity and the spot, you know, price crashes. So it's hard to resell. Um, which is kind of what happened with like telecoms and in, in, in 2001 and semi-analysis is forecasting. Like they had a pretty bullish, well, depends how you want to look at it, but 50 gigawatts next year. And they're, they're like historically been really fucking good at this. Cause they, they, they have like satellite images of all the data centers. They can see how, how complete they are that like very well mapped out. And so I think that's the, the kind of bad scenario here is the, that's why I think the spot compute prices is in a way like other than the, the total token spend, like one of the most important numbers, like in, in AI right now. Is

Jake Sylvestre [0:13:09]
There, I'd be curious if you guys have a take on whether there's a point of, um, increases in efficiency where, uh, you start getting worried, right? So if tomorrow, uh, Google comes out with a paper and inference and training are now 10 times cheaper, are you guys worried about the market? Uh, and if not, is there a multiple where, uh, you're extremely worried,

José Macedo [0:13:32]
Worried about like Jevons paradox

Yan Liberman [0:13:34]
Doesn't hold up kind of thing.

Jake Sylvestre [0:13:35]
Yeah. Yeah. Like we kind of saw this in crypto last cycle, right? Where there's like infinite demand for block space. Um, and then it turned out the demand was not at all infinite.

José Macedo [0:13:44]
I think there's like much, I think AI demand is much more real than block space demand ever was. But I, I, I do think Jevons can take, like, it is a problem if, if Jevons works, but takes like five years, you know? So, cause even in that, that's another interesting thing about Anthropics S1, right? I think over 50 % of the fortune 500 are spending like over

Jason [0:14:03]
A hundred K

José Macedo [0:14:03]
A year with them, but it's still only 0.1 % of their overall expenses, like of, of the fortune 500 companies, overall expenses. So like, there's a lot of room for, for, for growth, but if like, you know, that you, you kind of have to, that's why it's just such a hard equation to balance, right? Especially if you're, I think the hardest place to be is like, you're the CFO of one of the, of one of the frontier labs, you know, and you're like, you don't really have like any uncorrelated cash flows and you're just trying to figure out like, okay, how much compute do I get? Right? Like if you get, if you're too, uh, if you're not aggressive enough, you just get like completely hosed by your competitors that can like undercut you on, on, on token prices. And you might not be able to train the next model and stuff like that. And then if you're too aggressive, you can just like blow up in a down cycle or, or in something like that. So I don't know, it wasn't really an answer to your question, but I, and I also think like the efficiency stuff, it kind of, I think it's bullish for, uh, like all this stuff is mostly bullish for everyone except the frontier labs, I think.

Yan Liberman [0:15:05]
Yeah. That's what I was basically like, even outside of AI is, I think that they're probably the biggest beneficiaries of it. Um, just in terms of the cost access and, and, and margin expansion. And I think increased revenue too, right? Like every part of the stack gets more efficient and I'm not saying anything novel. This was, you know, part of the, the, the thesis for, for just outperformance on a lot of the non AI names is, you know, they are beneficiaries as customers and are less kind of plagued by the overspend or like under overbuilt scenarios that are kind of inevitable in this process because there's so many moving parts. But I mean, you know,

Jason [0:15:42]
I I'd

Yan Liberman [0:15:43]
Be curious to know how much of like Microsoft's 60 K layoff, right. Is, is, uh, attributable to, to efficiencies in AI. It's hard to say. I mean, that's such a massive number. So obviously not all of it, but I think, you know, that stuff will make waves through the space, right? Just, just reduced hiring of, of kind of, uh, out of college, like early grads, cause the, the, the roles that get commoditized the, the fastest. Um, but I, I, yeah, I think if compute really goes down, I think you see multiple expansion on basically, or not, sorry. Like, yeah, the cost of compute goes down. I think like guaranteed multiple expansion on everything outside of AI that, that has the ability to, to benefit from it. You can

Ceteris [0:16:26]
Run. There was a tweet from, yeah. I forget if it was the bit wise guy and it was basically like the layoffs, uh, pretty much match what their spend is going to be for the next few years. Um, I wish I could find that. Or maybe it's the Vannick guy.

Yan Liberman [0:16:46]
Fuck. Yeah. I remember seeing the tweet, but there, there, I think there were some holes that you could poke through that logic. It was more just like a fun coincidence.

Ceteris [0:16:53]
Okay. Yeah. I mean, yeah, that makes sense. I mean, I'm not saying they did that for like, yeah, like exactly that reason, but, uh, yeah. Um,

Kevin Kelly [0:17:03]
Um, I do think it could be, it's a signal of what's to come though. I don't think, I don't think they're the last.

Ceteris [0:17:09]
Do we, before we talk about options, which I know a lot of people tuning in are really eager to, uh, listen to maybe Jake, your background, I think was in like, um, cybersecurity and stuff, right? Is

Jake Sylvestre [0:17:21]
That correct?

Ceteris [0:17:22]
So like, what's the deal with this

Jason [0:17:24]
PHP stuff?

Ceteris [0:17:25]
Like, is the internet broken? Are we all going to die? Maybe just some of us going to die. Like what, what's going on? Cause I saw some people that were like, just touch grass for a week, you know?

Jake Sylvestre [0:17:36]
Um, yeah, it's pretty bad.

Jason [0:17:38]
Uh, honestly.

Jake Sylvestre [0:17:40]
Um, I mean, look, the PHP one is, is kind of a nothing burger. Um, TLDR, a lot of these,

Jason [0:17:45]
These older

Jake Sylvestre [0:17:46]
Sites run behind Cloudflare or a hosting provider that can kind of stop taxes. They come in, uh, the SSL one was, was pretty scary. Uh, and I don't know if I'm saying the company's name right, but I think

Jason [0:17:56]
It was

Jake Sylvestre [0:17:56]
EMUJRA or something. Um, so basically, uh, they're what's called a intermediary certificate provider. Uh, so one way to think about an SSL certificate is they're assigned or one of three companies will sign it. Uh, then you have a chain, right? So, uh, another company will sign kind of down the chain and then it gets to you. Uh, and so when you buy a new Mac, for example, uh, you kind of have this chain, uh, hard code onto your Mac, right? When you update the certs update, but that certificate being compromised means any IOT device, anything not updated, uh, can now trust this SSL certificate, which is not valid, right? So that means I can go to your, your Fitbit. Uh, and if it's connected to wifi, I can pretend to be Fitbit's API, right? There's so much legacy software that's, that's running. Um, that I think what you're going to start seeing is, is a lot of these older devices getting compromised and starting to spread their own malware, right? Fitbit's one example, but, uh, let's say, uh, it's a gas meter, right? Uh, I can now actually pretend to be the gas company and push a bad software update. Uh, and now it's never getting patched. And this kind of goes into a broader trend that we're seeing, which is like the cost of cyber attacks is, is down probably a hundred, maybe a thousand fold. Uh, and I think we're going to keep seeing more and more, uh, not just complex attacks, but attacks that happen because of earlier attacks, right? So like Emudra causes, you know, this gas thing, which creates a botnet. Uh, and it's, um, yeah, it's quite scary.

Yan Liberman [0:19:34]
So how do you think it plays out?

Ceteris [0:19:36]
And also wait, should you like always be updating your stuff? Or if this is hijacked, then your update is going to be a malicious update. Right.

Jake Sylvestre [0:19:44]
You should generally update all the time, but I think you guys kind of see the danger here, which is, uh, there's a lot of assumptions that, that kind of rely on, uh, SSL certificates being trusted that are no longer true. Right. Uh, so like you look at railway, I don't think they've done a postmortem yet, uh, but would not surprise me at all if that was kind of related to the, the SSL, uh, compromise. Right. And then anyone hosting on railway, uh, you can kind of see it going down the chain, right? So, uh, railway does their builds, uh, through a GitHub connection. Uh, so now they kind of have GitHub credits for anyone that was, was working with railway. Right. Um, so yeah, these attacks just kind of branch out and, uh, that's, what's very scary.

Yan Liberman [0:20:34]
So yeah. How do you think this plays out?

Jake Sylvestre [0:20:38]
Yeah, I guess that wasn't really an answer.

Yan Liberman [0:20:40]
Um, no, no, I know

Jake Sylvestre [0:20:41]
You're asking his question

Yan Liberman [0:20:42]
First. Yeah.

Jake Sylvestre [0:20:43]
It's, uh, it's very bullish compute. Um, I think everyone just kind of ends up spending, uh, close to infinite tokens, defending on, uh, these attacks, uh, and then attackers get, get better and better. Hopefully we approach an equilibrium where, uh, the defenders have some kind of advantage, right? But right now, uh, you've got to spend 10 to a thousand export, uh, an attacker spending on, on defense.

José Macedo [0:21:06]
Interesting. But it seems like the defense generally has like access to the best models, like the most compute. Shouldn't it, shouldn't defense be like sort of structurally advantageous by, by virtue of the fact that like the, you know, the, the best models are kind of gatekept for that purpose?

Jake Sylvestre [0:21:22]
No, no, not at all. Uh, and the reason is, uh, you only need to find one point of compromise, right? Uh, and then you can kind of use others to, to, uh, escalate from there. Uh, so you can spend your entire life kind of making sure, uh, a system is, is completely secure. Uh, and maybe, uh, you're hosting on AWS, right? And someone's found a way to like compromise the hypervisor, or maybe they found a way to, to compromise the network access table, right? Which kind of leads into these other computers. There's just so many entry points for, for an attack that there's a massive, massive asymmetry, uh, kind of favoring the, the attackers. Uh, the reason actually, I think AWS and Google are a lot safer than like railway, uh, is actually just scale, right? Uh, I mean, if you hack into, uh, Google cloud, odds are the most, the most profitable company to kind of pilfer on there is not a crypto company, right? Even with private keys being there, there's just more valuable data. Um,

José Macedo [0:22:23]
I'm not sure, you know, cause I think like some of the minting keys and stuff are, are hosted on, like some of the tether and like stable coin minting keys are like AWS hosted. So, you know, you could actually just infinite mint or something and dump it on chain. Like it is still, that's, that's like my sort of biggest worry is just like if AWS gets, or something like that gets hacked, it's like, I do think crypto, what's, what do you think is a better honeypot? I guess for people to go after,

Jake Sylvestre [0:22:50]
Uh, I think there's a lot of defense, uh, Google cloud and AWS are both what's called fed ramped. Uh, so a lot of national secrets are there and, uh, there's a lot of national defense stuff. It's just probably worth

José Macedo [0:23:04]
It. Yeah. I mean, if you're a state actor, I guess there's probably more attractive things.

Jason [0:23:09]
Yeah. Uh, thank God they don't want my coins. Yeah. A couple

José Macedo [0:23:13]
Hundred billion. Yeah. My

Yan Liberman [0:23:13]
Keys are

Jason [0:23:14]
Definitely not on their list.

Jake Sylvestre [0:23:17]
Also, I mean, you, you hacked tether, like how much can you really get out? Right? Like one of the things we were talking about with quantum risk is, uh, like let's say you're a Satoshi, uh, and you have all the keys or you've managed to compromise every Bitcoin address. Like how much do you guys think you could really get out? Right. Especially

José Macedo [0:23:32]
With that large.

Yan Liberman [0:23:33]
Well, you, you, you'd short ahead of time.

Jake Sylvestre [0:23:38]
You need capital to short.

Yan Liberman [0:23:40]
Yeah. I mean, if you've been able to crack that, I imagine you have some resources,

Jake Sylvestre [0:23:43]
But

José Macedo [0:23:44]
Yeah, you'd short, I guess you'd, you'd, uh, well, yeah. What would, how, what would you do?

Ceteris [0:23:49]
Just like the optimal way to do this?

José Macedo [0:23:51]
The optimal way to see, I guess

Yan Liberman [0:23:52]
Like short, you know,

José Macedo [0:23:53]
The

Ceteris [0:23:55]
Optimal way for Satoshi's coin is actually kind of similar to the Zcash bug thing, right? Like, do you try and sell as much right away when you figure out it out? Because then you're like, somebody else is going to figure this out quick. Or do you kind of slow drip

Yan Liberman [0:24:09]
Get his coins?

Ceteris [0:24:11]
Well, no. So you wouldn't start with his, you would start with like old ones that are also exploitable. And there's, so there might be some, and like, so you keep stealing those and nobody sees Satoshi's. They just think old coins are moving. Right. But Satoshi's aren't. And you can kind of be selling those for a bit. And like, until you start seeing more reports of like, Hey, my old coins got

Jason [0:24:31]
Stolen, blah, blah,

Ceteris [0:24:31]
Blah. Then when it, that's what it like would really accelerate.

Yan Liberman [0:24:34]
I think you step one is you short, you short a lot.

Ceteris [0:24:37]
No, but again, you have to have the money to, to,

Jason [0:24:39]
I

Yan Liberman [0:24:39]
Understand, but

Jason [0:24:40]
The assumption is if you, yeah, the assumption is you can have the

Yan Liberman [0:24:43]
Resources to do that, which is like, you can't have a

Ceteris [0:24:46]
Lot.

Jason [0:24:46]
You

Yan Liberman [0:24:46]
Can't hack it and not have

Jason [0:24:47]
A lot. Yeah. Just go on paper trade, bro. A thousand X, easy. Capital solved.

Yan Liberman [0:24:52]
You short paper trade

Jason [0:24:53]
Generational wealth.

Ceteris [0:24:55]
I don't know. I don't think Satoshi's, I, I've thought about that this a lot. I don't think it's as big of a deal as I thought it was a couple, even like a

José Macedo [0:25:03]
Few years ago.

Ceteris [0:25:04]
Yeah. I think that it's just going to be us

Jason [0:25:06]
Or China.

Ceteris [0:25:08]
We talked about this last

Jason [0:25:09]
Week.

José Macedo [0:25:10]
I think it's, I think it's a huge, like, I think it's, yeah.

Ceteris [0:25:14]
I don't

José Macedo [0:25:14]
Think it's too bad.

Ceteris [0:25:16]
I don't, whoever takes them can't, if someone took them, it was actually just dumping them. The community would just fork them out because what fork's going to win the one where someone stole Satoshi's coin and is dumping them

Yan Liberman [0:25:28]
Or the one where

Jason [0:25:29]
They're not

Yan Liberman [0:25:29]
Probably cooked

Kevin Kelly [0:25:30]
Hooked at that point.

Yan Liberman [0:25:32]
No, no, no

Jason [0:25:34]
Way.

Ceteris [0:25:35]
Hey,

José Macedo [0:25:35]
It's down like 90%, I think. And

Yan Liberman [0:25:39]
That's, it'll be euthanasia rollercoaster after that. It'll pump again, but it'll just be lower, lower, lower.

Ceteris [0:25:45]
No, you'll just fork them out.

Yan Liberman [0:25:48]
That on its own

José Macedo [0:25:49]
Is damaging as shit. That on its own is damaging as shit. And then you've already lost, they've already dumped a ton before then.

Jake Sylvestre [0:25:55]
Like, I don't think they can actually dump that

Ceteris [0:25:57]
Much. Yeah, I don't think they can.

Yan Liberman [0:25:58]
No, they would short first. They would make more on the short. Yeah. Because you could just short endlessly. And if it's moving against you, then you just dump.

Jason [0:26:07]
Yeah, but you can't

José Macedo [0:26:08]
Short. Can you short enough versus like the five, because it's 5 % of BTC supply, right? So it's like,

Yan Liberman [0:26:13]
It's only like,

Ceteris [0:26:15]
You

José Macedo [0:26:15]
Know, nearly a hundred billion dollars.

Yan Liberman [0:26:16]
Your exit process on the spot side is, is the same either way, but to maximize your outcome, like the short doesn't have any bearing on how you exit.

Jason [0:26:26]
I mean, the, the issue is right. Like where you put the shorts on. That's like, or, or

Ceteris [0:26:30]
You buy puts on Hypercall.

Jason [0:26:32]
No, I'm saying, yeah,

Yan Liberman [0:26:33]
Puts in shorts.

Jason [0:26:34]
That's a good one. My point is right. Like if you're, if you're doing it on a sex or like finance or even, you know, hyper liquid or something there, you know, they can maybe do something about the positions, but

Yan Liberman [0:26:45]
No way.

Jason [0:26:47]
You don't think so.

Yan Liberman [0:26:49]
Like you do it. How can you identify?

Jason [0:26:51]
Oh yeah. I'm saying like, yeah, the thing is they would have to know to do something.

Ceteris [0:26:55]
Actor is going to get these coins. I just think it's like a lab that has strong ties to the U S or Chinese government. And they're going to take

Yan Liberman [0:27:05]
Them. They just found

José Macedo [0:27:06]
A way to finance all of their coins.

Yan Liberman [0:27:08]
No, they're going to, they just financed their build out for the next five years. The stock rips and they're chilling.

Ceteris [0:27:16]
I'm not even convinced that the coins will actually ever be stolen by quantum either. And so like everybody over the past year, it's like, everyone has just kind of decided that, oh yeah, they're definitely going to get stolen at some point because of this. And listen, I'm not a quantum scientist. Like I don't, I don't fucking

Jason [0:27:35]
Know, but

Ceteris [0:27:35]
I'm like reading, but I'm reading from as many experts and I can't as I can. And it's like, it's not like it's consensus that this,

José Macedo [0:27:44]
I thought it was consensus. That's interesting because everyone I've read and like everyone, you know, Nick Carter interviews and stuff just seems like it, I thought

Jason [0:27:52]
It was a done deal. Yeah.

José Macedo [0:27:56]
Who's saying it's not? Jake, what do

Ceteris [0:27:57]
You think? Do you think it's a done deal that we'll get a quantum computer that can hack Bitcoin?

Jake Sylvestre [0:28:01]
Yeah, eventually. And I think the coins are going to have to move by then. But I mean, the really hard part about like saying just fork it is at the point where you can crack Satoshi's keys, you can crack basically any key, right? And so everyone has to move. Yeah. Unless, well, there was a funny scenario I kind of came up with, which I don't think is that realistic. But so Satoshi was basically working off of, from what we know, an old Windows XP laptop. And the pseudorandom number generation went through an old OpenSSL library in one version. And another, he's just using kind of the Windows XP base version. And the Windows XP base version had some kind of bug, right? And so there was a scenario that I was talking about with some core devs, I don't know, 2019, 2020. He's one kind of private key that he's misconfigured, right? So it has no bearing on the rest of the setup. And someone manages to kind of replicate the random number generation that he had on his computer in, 2008, which is like, you know, you take the running processes on the Windows machine, the time, IP, some other stuff, and you put it in this random number generator. So they managed to move like 50 PTC, right? Nothing else is at risk, because he was just kind of testing something out. But there's like mass panic, right? So I do think there's a bunch of non-fatal scenarios that could happen that, at first glance, look completely fatal. And I'd be curious how the market would respond in that case. Horribly. And by the way, if this were to happen, if you look through like the Git lock, I don't think this is likely at all. I don't think this happens. It's just an example. But where it's most likely to happen is like one of the earliest blocks, right? Because that's where you're like messing around, you know, you're testing things, Bitcoin's not worth anything. And it doesn't even have to be him, right? It could be any other kind of dev from back then that wasn't too careful. And I think that would be pretty scary.

Jason [0:30:07]
Wow. Super positive, dudes. This is great.

Kevin Kelly [0:30:12]
Is it too much hopium just to assume that the attacker would just absolutely fumble this too?

Jason [0:30:18]
Fumble

Yan Liberman [0:30:19]
How?

Kevin Kelly [0:30:20]
How

Jake Sylvestre [0:30:20]
Did you mess that up?

Kevin Kelly [0:30:22]
Everything we're talking about just makes it blatantly obvious that this is going on and somehow the market is able to move or the community is able to move ahead of time. That's

Ceteris [0:30:33]
My biggest

Kevin Kelly [0:30:34]
Struggle with all

Jason [0:30:36]
Of this

Kevin Kelly [0:30:36]
Is like, I'm also not a quantum

Jason [0:30:37]
Expert by

Kevin Kelly [0:30:38]
Any means. So it's hard for me to like really underwrite this.

Ceteris [0:30:43]
It's hard because just like the timeline of knowing what to do. I think one thing is to Bitcoin's so slow and quantum signatures are so expensive that I think to move like everyone's UTXOs would take something like half a year to a year of block space because of like the throughput that Bitcoin has. So you definitely want to like start the process of moving some stuff to more like quantum secure signatures, I think. Like not as an individual, but maybe as like larger custodians. Again, at the same time, there are also other novel risks with like moving to this completely new quantum proof signature scheme too, right? So yeah, I don't know. But I maybe this is naive of me. But I honestly think that will be fine.

Yan Liberman [0:31:30]
I think the market absolutely craters on that. You think about how much volume you need to move the market. And and so like what percentage of people you need to actually panic. And then you think about all right, there's gonna be this percentage of people that panic, I will respond accordingly. It's just, you know,

Ceteris [0:31:47]
Like, okay, okay, but wait, wait, wait, this scenario is some actor that we don't know who is actually selling, right?

Yan Liberman [0:31:54]
No, like one of those, yeah, one of those early coins start moving out of nowhere. And it's like, this is a handful of people that could have actually,

Ceteris [0:32:02]
That would be bad. That would be bad for sure. For sure. I guess I'm more like, I'm fully expecting if quantum does hack Bitcoin someday, I'm fully expecting like the US government or the Chinese government to come up with an announcement about how they like, took Satoshi's coins. And I think that will definitely lead to short term volatility and probably nuke it a bit. But I think it'll be okay. In the long run, I agree that this idea of like, having some old 50, 50, 50 coin block, 50 coins that were mined back in the day, some of those getting lost like here, there, that will definitely be pretty spooky for the market because nobody will really know what's going on.

José Macedo [0:32:46]
And I don't know, man, I think the government is some of the last people on earth you want holding large amounts of coins. Like some of the most indebted, paper handed, like historically paper handed.

Ceteris [0:32:57]
Yeah, but it's too much to sell. If you actually want to use the value of it.

Yan Liberman [0:33:02]
That's, that's not like, you think about it, it'll be, it'll be, it'll be, they do

Ceteris [0:33:04]
Care because

Yan Liberman [0:33:05]
They want

Ceteris [0:33:05]
To maximize

Yan Liberman [0:33:06]
The value

Ceteris [0:33:06]
Of it.

José Macedo [0:33:07]
So let's do a 10 year T WAP. It'll be

Yan Liberman [0:33:09]
Fun.

Jason [0:33:10]
The, if

Yan Liberman [0:33:11]
Like, again, if the Dems win, and they somehow were in power when this thing got hacked, they would just dump this to zero.

Ceteris [0:33:18]
No, they wouldn't.

Jake Sylvestre [0:33:19]
No, they wouldn't. Also, I think it's much more about the principle. Like, I think it's actually super bearish if all Satoshi's coins get burned by a compromise. Like, I think the market nukes on that. Because that means someone's somehow accessed the keys and like, maybe now your Bitcoin's not safe.

Yan Liberman [0:33:36]
Yeah. Yeah. I think

José Macedo [0:33:37]
The main, the main, my main like takeaway is just like that immutability has, the appeal of immutability has gone down a lot. You know, the appeal of being this thing that's really hard to slow, really, really slow to change and really hard to change, I think is like gone down a

Ceteris [0:33:54]
Lot. I might

Yan Liberman [0:33:54]
Have to buy more Bitcoin. I disagree with that.

José Macedo [0:33:57]
You don't think so?

Yan Liberman [0:33:58]
Yeah. I think, I think immutability and, and security are kind of different though. It's like, as long as it's actually still immutable,

José Macedo [0:34:06]
I mean, I mean, immutability in the sense that like the, the Bitcoiners are like, well, this will never change. Upgrades are really hard. We don't adopt anything. Like, you know, the, the, the fact that there's no, no organization that can unilaterally change things, all these things were like seen as very bullish things, right?

Ceteris [0:34:23]
Because it's stable. But that doesn't matter. That doesn't matter. That's a minority group. Like, if, if something happens where the holders of Bitcoin in the world are like, are we, which, which, which coin version are we going to use? Is it this one that's going to zero, but keeps us the, the original ethos of the hard cores, or is it the one that everybody else wants to protect the value of? That is the one that will win. And I honestly think it'll still do fine. Um, so Bitcoin's already been co-opted. Like it's already ETF institution.

Yan Liberman [0:34:59]
That's not co-op though. I think that's, that's fine. That's just adoption. I don't really think that's like a co-opt co-op. I

Ceteris [0:35:06]
Don't think I

Yan Liberman [0:35:07]
Mean, lying based on, on, uh, its ability to be held, which is broken by quantum or something on the mining side would be a co-op.

Ceteris [0:35:17]
Yeah. So listen, I want to continue this convo, but also I know Jake has a hard stop at 10 30 and we haven't talked about options. So I feel like we should pivot to that.

José Macedo [0:35:25]
I

Kevin Kelly [0:35:26]
Mean, I mean, honestly, Jake had me, this is all bullish compute. So

Ceteris [0:35:30]
Yeah, maybe quickly one thing just to give everyone a quick overlay, like Synapse has been around for a while. Um, I know you guys, you did the bridge back in the day. Then I think you, um, you tried to do like, uh, some sort of like chain or something or like, kind of like, I think you were kind of competing against like one balance, like a similar type of thing, like this abstract chain abstraction type thing. Right. And then you ended up pivoting from that. And then you decided that like options were where you want to go. Right. So I guess two things is, first of all, why, like what, what kind of went through your, what kind of led you to like options on hyper liquid? And then second of all, why continue building it under the SYN and Synapse brand and that token, besides like launching a new token, which I think a lot of people probably would have done. Right.

Jake Sylvestre [0:36:21]
Yeah. Uh, it was both great questions. Um, so, uh, a lot of people are surprised by this, but I actually think, um, options is very natural pivot for a bridge. Um, it was pretty clear to us probably by 2022, 2023, when, uh, across started getting traction that, that Bridget was dead. Um, I mean, the margins went down probably a hundred X in a year and had zero signs of slowing down or stopping. Right. Then on the messaging and the Oracle side, like there were chains where we were doing a million messages and I think we made like a thousand bucks. Uh, and so you really needed Jevin's paradox to kind of kick off in a huge way that, that we didn't see happening, uh, for this thing to work. Right. Uh, so when you think about like options and what makes them a lot harder than perps, probably the biggest element is, is poor capital efficiency. Uh, so in a per position, you're, you're 10 X levered, uh, you, you kind of ADL is backstop. Uh, so if you're a market maker, you can use most of your capital, actually you're probably a bit levered up. Uh, whereas if you're short, uh, let's say call option, right. You might have to put up 10 to a hundred X, uh, the amount of capital that you actually receive, uh, in premium, right. Which is, is pretty bad. So when I think about like one balance, for example, or what are the ideas we had at Synapse? A lot of them were around, uh, letting you, uh, let's say bridge GLP, uh, to kind of use as collateral on Ethereum, right. In the lending market. Uh, so to me, it was very natural that you could kind of use interop, uh, to make options a lot more efficient to write and in that way, just make them a lot cheaper, right. Because putting up full collateral for an option is, it's crazy. So that, that's kind of where the idea came from. Uh, and then we kind of looked at the market and on-chain options, uh, there was basically nothing, uh, at the time that was, was kind of doing substantial volume. So it seemed like a very natural space to compete in very, very deep moats. Uh, the missing element, I think for us for a while was kind of this, uh, on-chain perp exchange. Um, there was a brief window, I think where DOPEX actually did this with GMX and it was okay, but like the fees were, were not there and liquidity was not there. Uh, so when Hyperliquid came out, it was just so obvious to me that, that this was something we had to try. Uh, so from there, uh, we kind of started building it. Um, as far as building it under, uh, SYN versus like a new token, I think, I think one of the biggest problems in crypto is you kind of have these serial founders that launch a token, things don't really work out. Uh, and so they want you to do one and they kind of do this serially. Um, I think a much better frame of mind is kind of the startup world where you founders that have raised five, 10 million dollars and are down to their last one, two months of cash, right? And they'll still pivot with their existing cap table and they'll make it work. And you actually see this quite a bit. Um, so I think as long as you're not dead and you haven't given up completely, uh, you kind of owe it to yourselves and everyone else to kind of keep pivoting and make it work. And I think if, if crypto had more of that ethos, um, a lot of the problems in the space would not exist.

Ceteris [0:39:33]
Yeah, no, that's, uh, that's fair. It's definitely commendable to, uh, keep the old token running. Um,

José Macedo [0:39:41]
And I guess that did you consider, oh yeah, sorry, go ahead. Yeah.

Yan Liberman [0:39:44]
Yeah. Not you. I, I, we can, we can, I was gonna go into the option stuff, but if you wanted to touch on more of the, the token side.

José Macedo [0:39:49]
I'm actually, it's not the token. I'm curious if you ever considered like pivoting sort of outside of crypto during this time, because obviously I came along, you have a background in cybersecurity. I think one of your co-founders went to work at OpenAI. So I'm curious, like what made you want to stick around and, and, and still keep grinding out? Cause yeah, you, you obviously Synapse was a huge swing and like very successful in terms of as a, as a protocol. Um, and I think most people in your position kind of got burnt out throughout the bear market and either pivoted or quit or some curious what, what made you want to keep going in crypto? Uh,

Jake Sylvestre [0:40:24]
It was definitely hyper liquid. Um, I mean, you had all these other teams that, uh, were behaving in ways that were not very conducive to, um, trust and, and kind of, uh, what I thought, uh, founders should be doing. And a lot of the founders that were doing the right thing were, were getting kind of smoked, uh, for, for a couple of different structural reasons, um, mostly because they didn't want to play a lot of these games. Uh, and here you had a protocol that kind of said, we're not going to play any of these games and still managed to win. Uh, and I think that was very inspiring. That also just like the size of the opportunity. Um, everyone I talked to was like, yeah, like no one trades options. Uh, and just having grown up in the U S and like having a lot of friends here that, that punt on Robin hood all the time, this was just like one of the dumbest

Jason [0:41:10]
Takes I think everybody ever heard. So

Yan Liberman [0:41:14]
What do you think is the, the correct path for option adoption to grow as a, as a protocol?

Jake Sylvestre [0:41:21]
Uh, I, I still think it's probably retail, um, with pretty short dated options. Uh, and then from there, I think you kind of get flows that allow for, uh, longer dated options. I think right now, like RWAs are probably the most obvious place that, that you can grow. Um, and I, I kind of suspect that it's going to look a lot like HIP three, which is like, it's flat for a couple months and then you kind of, uh, shoots up.

Yan Liberman [0:41:51]
And then on the, um, structural framework for how, you know, you, you create liquidity. I think, you know, naturally there's a, a, a long bias that happens, which means you kind of have a lack of vol sellers. So, you know, I, I think you guys recently announced the vaults, which creates, you know, two, two birds,

Jason [0:42:13]
One stone,

Yan Liberman [0:42:13]
One, right. You create a yield product on, uh, an asset that otherwise doesn't really have yield. And then simultaneously you're providing, uh, a vol sell, a structural vol seller to, to offset this and kind of help on the hedging side.

Jake Sylvestre [0:42:27]
Yeah. And, and it's not just hedging, it's also the margin requirement. Uh, so if you're short an option, um, your margin recs are pretty, pretty high. Like it's probably one of the biggest issues here. Uh, so on, on the one hand, we kind of let you use your, your Delta one positions on Hyperliquid, which is huge, right. Cause they offset your risk. Uh, and then on the other hand, uh, being able to buy vault and kind of use that as margin is, is a huge.

Yan Liberman [0:42:53]
And

Kevin Kelly [0:42:53]
For me,

Yan Liberman [0:42:54]
Yeah, go ahead.

Kevin Kelly [0:42:55]
I was gonna say maybe, maybe for people who aren't necessarily as deep in this, in this world as you are, why, like, what is the benefit of on-chain options? Right. I think you look at like where options have historically been traded and why they got popular Robin hood, whatever it was, seven, eight years ago, going commission-free option trading options, blow up. There's a whole speculation narrative that I think obviously continues, but the kind of layman's question of what happens if Robin hood moves into offering similar types of options on similar types of assets that, that you guys could like, what is the benefit, I guess, or like the unique advantage of an on-chain options for a call?

Jake Sylvestre [0:43:37]
Yeah, I think it's, I think it's a few different things. Um, number one is, is it's 24 seven, uh, which is huge. Uh, most of this ball is kind of happening outside market hours anyway now, because a lot of it's driven by Middle East, right? Um, that's one thing. The other is, is fractional options. So if you want to do like a, at the money S and P 500 call, uh, a week or two out, uh, your minimum trade size is like a couple thousand bucks, potentially. Uh, and that's crazy, right? For, for retail, like that's insane. Uh, so all these options protocols allow, uh, fractional options, which makes it so you could trade options a year route, uh, and your minimum contract size is still going to be, you know, a few bucks, uh, which is huge. Uh, and then the other thing is like capital efficiency and kind of money Legos, right? Uh, so you can imagine a world where you have a covered call vault, uh, you deposit NVIDIA, you write a covered call, uh, you receive the premium upfront and then you borrow against that position and, and kind of keep looping. Uh, and I think there's going to be a ton of, of protocols kind of built on top of these, these, uh, options products that have some really, really creative ways of, uh, generating yield.

Yan Liberman [0:44:51]
And yeah, we'd love to understand, I guess, various, uh, options protocols are taking different approaches, right? Some are, are, are using or are building the perp decks, uh, themselves to, to facilitate that liquidity is, yeah, like we mentioned earlier, the, the big unlock is, is kind of allowing the same pool of capital to simultaneously, uh, that you, as a market maker that you're selling, that you're, uh, that you're using, uh, for the option for the short option side to, to also be used on the hedging side. Um, so do you, do you see like, like a structural disadvantage to, to basically trying to rebuild from the ground up versus just piggybacking on existing kind of Hyperliquid liquidity? And I think there's also, you know, really interesting alignment long-term because it's just the, the, the amount of volume you guys end up doing on, on Hyperliquid RWAs.

Jake Sylvestre [0:45:42]
Yeah. I

Jason [0:45:43]
Think past

Jake Sylvestre [0:45:44]
30 days,

Jason [0:45:44]
Uh, we

Jake Sylvestre [0:45:45]
Generated like a quarter billion dollars in volume on the, the perps. Most of that is taker because you're kind of delta hedging with the market, which is huge. Um, and we did a pretty in-depth comparison on hyperco insights. It's like the cost of doing this on any other perp decks, right? Or sex. Uh, so I think on finance, even, uh, with the most generous assumptions around fee tier, uh, it costs like 10 to 15 X more to hedge out the same option that, that we hedged out on, on Hyperliquid. Um, so I think to believe a lot of these other options decks is are going to compete, uh, you kind of have to believe that they're competitive with Hyperliquid on the perp side. Um, and maybe there's a world where, where that happens, but I think it's a lot harder to do, uh, than a lot of these, these people imagine just because I've seen like finance and lighter really, really struggle with.

Kevin Kelly [0:46:40]
And how do you, so it's one thing to have the infrastructure built out and this actually working, right? The other big challenge to crack is distribution. And like, how do you actually get people to come and trade these things on chain, right? Or come to you guys. We'd love to hear your thoughts on how you guys are thinking about that, how you're tackling it. Like what is the, and maybe what you think is like the catalyst that finally, cause we've been talking about options for years. Right. And I think everybody here like agrees that it's one of the last like major big financial primitives that this sector needs, but there's always been this push pull of how do you get people to actually come on board and, and, and trade these things? Like what is, what is the best way to actually get distribution and drive and drive volumes from here? Like what's that catalyst?

Jake Sylvestre [0:47:31]
Honestly, I think it's probably just kind of running UGC on TikTok. I think we've seen FOMO have a lot of success with this. And frankly, I think the market is a lot bigger outside of crypto than, than within it. Options are, or historically have been the biggest instrument in a lot of these markets, right? In India they trade more notional US a day than in the US even. And this is historically been true kind of across Asia and every place they've been legal. So I think that's, that's pretty huge. And then I think builder codes are a big one. I mean, we come from the bridging space, right? So we, we understand how hard it is for let's say a MetaMask that kind of has hyper liquid perps integrated to bridge to some ZKL2 to, to trade options on the cost of that. And one of the hardest parts that actually is you can make bridging feel very simple when the market is not moving. But as soon as users all want to trade at the same time, which is after a market move, liquidity dries up and the product becomes unusable.

Kevin Kelly [0:48:36]
Who do you think of as your biggest competitors? Do you think it's the more, let's say direct comps of like a drive or even what Paradex is building out or lighter in this case, or is it the big incumbents like a Robin hood? Like who do you think is actually your biggest competitor?

Jake Sylvestre [0:48:54]
Yeah, it's probably, it's probably much closer to like a Robin hood or someone that could kind of figure out how to come in and do this in a crypto native way. One of the other ones I'll throw out as a potential competitor would probably be Polymarket or Call Street kind of doing this and getting DCM and going from there. I think there's a lot of structural reasons that make it pretty tough for them to actually do this and build this out, especially when you kind of see how the purple ad has gone. But they just have a

Jason [0:49:28]
Lot of dry

Jake Sylvestre [0:49:28]
Powder. Right.

Yan Liberman [0:49:31]
And then I guess in terms of the way you imagine this market evolves, do you see it being a winner take most or do you see multiple players kind of existing because of how difficult it is to build up liquidity on specific assets? Or do you see kind of, yeah, commoditization happening around liquidity if people just want to trade a certain amount? Yeah. Curious how you kind of see the evolution of the space?

Jake Sylvestre [0:49:56]
Yeah, it's a good question. I do think it probably ends up being some kind of oligopoly where you probably have like two, three, three big players. And I think basically every big player at the end is kind of partnered with one of the major prop deckss, right? I think it's kind of too hard to manage both products at once. But I do think every, every major prop decks kind of has some options component, which is a protocol kind of building hand in hand with them.

Yan Liberman [0:50:27]
Makes sense. What I guess, I know you guys released some recent news. It's worth touching on that.

Jake Sylvestre [0:50:38]
Yeah, yeah. We're super pumped about vaults. Basically, lets anyone kind of run vault on Hypercall. So you can do options, perps, spot, anything you do in a hyper liquid vault, you could also do here. And then you could also do options on top of it. So this unlocks like, you know, covered calls, uh, basis trade, uh, some of these more risk on, uh, option strategies, uh, like a lot of levered ETFs actually run, um, through option, option strategies. Uh, and so I think we're going to see a lot of really, really cool things being built out on top of, uh, vaults.

Ceteris [0:51:18]
Um, before you go, obviously you're very bullish on options. And I think, um, most of us, a lot of us at Delphi are, we have a really big options report coming out in a month. Um, and then we'll talk about it in our year heads too. What's like, what would you say is like the one other sector or maybe like protocol you're most interested in going into next year? And like, you can't say hyper liquid. Um, like, is there, or do you think like these like alternate to Bitcoin monies is interesting or do you think that's kind of like a flash in the pan? Um, like social stuff. Um, I'm not really sure. Like what, what do you think is like the most interesting other area?

Jake Sylvestre [0:51:58]
Yeah. Um, I think it's probably, uh, new kinds of lending. Um, so I haven't looked at it in a few months, uh, but 3JN is, is one that comes to mind where you can kind of get a loan against your finance account. Um, I think non over collateralized lending is, is kind of underexplored. Um, and I think we're going to see a lot of protocols making strides there and, and doing interesting things, especially some of these, uh, crypto card providers too.

Yan Liberman [0:52:27]
Right. Cause you can build up a profile based on your spend and

Jake Sylvestre [0:52:29]
Ability and

Yan Liberman [0:52:30]
Create new.

Jake Sylvestre [0:52:32]
Yeah. I mean, they're credit card companies, right?

Yan Liberman [0:52:33]
Like they should

Jake Sylvestre [0:52:34]
Extend credit.

Kevin Kelly [0:52:35]
Awesome. Yeah. Super interesting, man. Uh, Jake, again, really appreciate you coming on, sharing your thoughts. You jumped right into the mix with us, which is, uh, was what we're always looking for. Um, share some stuff on Hypercall. Uh, yeah. An area that we're all really excited about, um, excited about what you guys are doing. So appreciate you joining us.

Jason [0:52:55]
Thanks Jake.

Ceteris [0:52:57]
Thank you.

José Macedo [0:52:58]
Yeah, he's

Jason [0:53:00]
Correct.

Ceteris [0:53:01]
He's smart guy. Yeah. I didn't know. Um, I never met him or really talked to him before. Uh,

Jason [0:53:09]
Yeah. Most of my history is

Ceteris [0:53:11]
SYN is honestly

Jason [0:53:11]
Dunking. I was like yelling since summer baby at me.

Ceteris [0:53:14]
So like, I probably, I didn't, uh, fully like get to know like who the actual like founder was

José Macedo [0:53:22]
And

Jason [0:53:22]
All

Ceteris [0:53:22]
That. So that was good.

Jason [0:53:23]
My exposure to them is through Duncan, which, uh, might not be the most pure form of exposure.

Kevin Kelly [0:53:29]
SYN's been,

Ceteris [0:53:30]
I mean, I

Kevin Kelly [0:53:30]
Did buy,

Ceteris [0:53:31]
I did buy SYN recently as a disclosure, but you guys can't tell Duncan cause I can't have him win

Kevin Kelly [0:53:35]
On that. He's been climbing to buy forever. The wall of Ceteris worry for a while.

Ceteris [0:53:43]
Yeah. I mean,

José Macedo [0:53:44]
I've been hyper liquid recently about SYN recently. Dude, where are your principles? Where are you? Yeah. I'm

Ceteris [0:53:50]
Cooked.

Kevin Kelly [0:53:52]
Honestly, it might be time to get out.

Jason [0:53:54]
It was buying Z cat. He was buying memes for the first time in years to like, I don't know.

Yan Liberman [0:53:59]
I think

Jason [0:53:59]
He's the only, uh, black bull

Yan Liberman [0:54:01]
Holder here.

Ceteris [0:54:02]
No, no, I

Jason [0:54:02]
Don't know. I sold that a while

Ceteris [0:54:04]
Back.

Kevin Kelly [0:54:04]
Yeah. Yeah. Yeah. He is. He's the only one.

Jason [0:54:07]
Once

José Macedo [0:54:08]
The cup

Yan Liberman [0:54:08]
And handle broke

Ceteris [0:54:09]
Down, I was like, I'm out. The cup and

Jason [0:54:10]
Handles gone. The cup and handle. Yeah. That's

Kevin Kelly [0:54:13]
The cup and handle shattered and shattered.

Jason [0:54:16]
Yeah.

Ceteris [0:54:16]
It was like cup and zero.

José Macedo [0:54:18]
Uh, Ansem's bearish that that's always, I feel like Ansem's nailed.

Ceteris [0:54:23]
Um, Ansem is a good high level.

José Macedo [0:54:25]
He's a good, like, yeah. I love, I mean, high level, I think over the last five years, he's kind of nailed it. Like, uh, I wish I'd listened to him last time he was bearish, which was like, I forget.

Ceteris [0:54:38]
It's interesting though.

José Macedo [0:54:39]
If, if,

Ceteris [0:54:40]
So if the market nukes, should black bull go up because Ansem was

Jason [0:54:45]
Bearish?

Yan Liberman [0:54:45]
You sure you sold?

Jason [0:54:48]
Yeah,

Ceteris [0:54:48]
I sold it. I'm not, I'm not interested in buying back anytime soon. I think, uh,

José Macedo [0:54:53]
I don't know. I think you did pretty well. I know you were pretty early to it from what I remember. You were, you were,

Ceteris [0:54:57]
Yeah,

Jason [0:54:58]
Not

Kevin Kelly [0:54:59]
Early enough.

Jason [0:55:00]
Yeah. Not early

Ceteris [0:55:01]
Enough. I think I like the doubled, so I can't

Jason [0:55:03]
Complain.

José Macedo [0:55:04]
Okay.

Ceteris [0:55:05]
But not

Yan Liberman [0:55:06]
A lot of size. Um,

Jason [0:55:09]
Is there anything you guys don't, are not interested in touching at all in terms of like, uh,

José Macedo [0:55:15]
Just like most

Jason [0:55:15]
Stuff. Most stuff. I was gonna, I was gonna narrow it down and go back more so to the, uh, AI names. Cause I know what I don't want to touch in crypto. It's pretty obvious. Um, but more so for like the AI names, different parts. Is there anything you just don't want to touch at all? Mainly at probably

Yan Liberman [0:55:33]
Anthropic right now. I just don't really like it is like better bets to make if they do well.

Kevin Kelly [0:55:39]
I also think you'll just get a, you'll get a, depending on where shake pricing shakes out, right? 2 trillion. I mean, I, who knows if they still price at that point, but I think you'll get a better buying opportunity. Even if you are bullish Anthropic after it goes public, I could see it having a very similar type of chart to SpaceX, right? We have the initial sell off. It's just like your classic post IPO initial drawdown. They've got staggered vesting schedules and unlock. So that's also similar to SpaceX in that regard.

Ceteris [0:56:11]
The difference of SpaceX though, is that if you buy and get dumped on, you're actually helping fund the greater good, right? Cause you're the exit liquidity for the effective altruist

Jason [0:56:24]
Movement, right? Yeah.

Yan Liberman [0:56:25]
There's going to be some really bad things getting funded next year.

Kevin Kelly [0:56:28]
There's, there's going to be a

Ceteris [0:56:29]
Thousand

Jason [0:56:30]
New startups.

Yan Liberman [0:56:30]
So bad.

José Macedo [0:56:32]
I think it's going to be way, I don't know. I'm kind of, I think it's going to be no worse than other IPOs except

Ceteris [0:56:37]
People are, yeah, yeah. I think it'll be

Yan Liberman [0:56:38]
Fine. No,

Ceteris [0:56:38]
No. I'm talking

Yan Liberman [0:56:39]
About what those freaks are going to do

Jason [0:56:42]
With their

Yan Liberman [0:56:42]
Money.

José Macedo [0:56:45]
I don't know. I think in general, they're going to do, they're going to do good shit. I suspect, I don't know. Let's see. Maybe we'll

Yan Liberman [0:56:50]
Be talking about EA causes. I'm not like, I'm not talking about their investment choices.

José Macedo [0:56:55]
Yeah. But I think EA, I think most of their causes, like, I think that EA has got like a lot of justified hatred given SPF and like some of the stuff there. But I think in general, their causes are like, they're pretty good.

Ceteris [0:57:08]
Yeah. I think I agree. I think their causes in general are good, but the way

José Macedo [0:57:11]
They rationalize

Ceteris [0:57:12]
What they do is poor. Right. Right. So basically SPF's whole thing was like, I'm okay to fuck all these people because I want to take their money and put it, they don't need this money as much

Yan Liberman [0:57:22]
As these are causes. I'm a better steward of the money.

Ceteris [0:57:23]
So it's not, so it's not that the cause was necessarily a bad thing. So, I mean, if this is just these founder

Jason [0:57:28]
Shares and

Ceteris [0:57:29]
Everything, and there's willing buyers on the other side, and they want to go fund whatever, then that

Jason [0:57:36]
Seems...

José Macedo [0:57:37]
What do you guys think of this idea that like, there's, you know, it's kind of like with crypto, when you have a big token launch, or in the past, when you, when we used to have,

Jason [0:57:45]
You know, big token launches,

José Macedo [0:57:46]
That it was like bearish for the markets, because it generally like drains liquidity.

Jason [0:57:50]
Yeah. Right.

José Macedo [0:57:51]
And I think we're going to have probably the most liquidity drain from public markets in, in history.

Jason [0:57:58]
That's, that's Paul Tudor Jones. He just did like that interview on CNBC the other week. And he's like, very, very, very cautious equities into 2020. He thinks the end of the year is going to be good generally, but he thinks 2027 is going to be extremely challenging, mainly because of that.

José Macedo [0:58:16]
Hmm.

Ceteris [0:58:16]
I mean, there's already

Yan Liberman [0:58:17]
Some of

Ceteris [0:58:17]
That. It's

Yan Liberman [0:58:18]
That and CapEx, right? Like just thinking about the financing needs, like that money's got to come

Jason [0:58:22]
From somewhere.

Yan Liberman [0:58:23]
Obviously, debt markets are different, but

Jason [0:58:25]
That's still a lot of capital. Yeah. He made the point, you know, debt markets are starting to close up to, you know, to different names and stuff. So like that combined with just massive issuance. I

José Macedo [0:58:36]
Do think it's, it's so bullish private markets, because I think so much of this money finds its way back to venture, just given, you know, it's going to be the biggest venture exits ever. Like,

Ceteris [0:58:45]
I don't

José Macedo [0:58:45]
Know, by a lot.

Ceteris [0:58:47]
I've been markets are kind of spooky to me right now. To be honest, I'd rather private money than private markets for being if

José Macedo [0:58:54]
I'm picking

Ceteris [0:58:54]
One of the two.

Kevin Kelly [0:58:56]
You don't like

José Macedo [0:58:57]
It. I think probably

Kevin Kelly [0:58:57]
30 billion interesting. I think private markets are just like in a,

José Macedo [0:59:03]
I don't know, you just have like this, this bid from like these mega funds. I think if I think early stage private markets have, have just like never been in a better spot, honestly.

Ceteris [0:59:14]
Yeah. There's like more exit liquidity.

Yan Liberman [0:59:16]
It does depend on

José Macedo [0:59:16]
Like how

Yan Liberman [0:59:17]
Anthropic trades though, too. Right. If, if it trades poorly, then you have this scenario where, you know, like you saw it back in 2021. Right. The last big venture cycle where once those big funds didn't get markups, then it kind of trickles its way down and everyone gradually tightens their purse strings. I think you could see something similar on that front. If, if like Anthropic doesn't trade well, then all the private other stuff gets marked down because you finally have like a real market clearing price for these assets. And so like, but, but I agree that that money does trickle back. Um, but you know, it can

José Macedo [0:59:56]
Be offset

Yan Liberman [0:59:57]
By what, what these funds end up doing based on how it's

José Macedo [1:00:01]
Just like trades money invested in venture has been up only. And also like secondary liquidity up only even like, uh, I mean, it's back to all time highs after 2021. I think it hit all time highs like last year, which is kind of crazy if you think about it, that like 2021 took to last year, or I think it might even be early this year to get, to get, uh, passed. Um, yeah, I think the mega fund bid and like the size of these funds, it just acts almost like indexes in public markets. You know, there's like this interesting research by like Michael green or whatever on indexes, how he, he calculates that every dollar of index flows, like increases market cap by, by like $5 and it overweights, obviously the biggest names. Um, and I think you kind of have like the same thing, but even more extreme for private markets because these things are like low flow, high FDV, no one can sell, right? Only the company can sell. You're selling 10 % in each round. And you just have like the equivalent of index inclusion is when you get to a big enough size that like a 60 Z Sequoia and these mega funds can invest, can invest in you. And there's only a certain number, like limited number of names that you can plow nine figures or multi nine figures into. And so those things just keep going up. And like, when you look at the Delta between the top end, like exit value and, and like series, the late stage valuations growth versus the seed stage, it's just like, uh, way, way, uh, higher. And I just think it's like a really good time to be, uh, like early with a, with a small agile fund in, in venture in general for the next sort of five, five years. I'm not saying this is like, I mean, things look pretty hot. Obviously

Jason [1:01:38]
Instinct to

José Macedo [1:01:38]
30 bills is,

Yan Liberman [1:01:39]
Is that's what I was going to say. It's like, it works until it doesn't. Um, and, and I think people probably underestimate how quickly it reverberates down the stack. Um, but yeah, I agree.

José Macedo [1:01:50]
I think a lot of people are going to learn. Yeah.

Yan Liberman [1:01:52]
Yeah. But

Kevin Kelly [1:01:53]
I agree.

Yan Liberman [1:01:53]
Like the early stage stuff is, is yeah. Great. Just because it's, you're so you're, you're still pretty insulated from it based on how many rounds are ahead of you.

José Macedo [1:02:02]
Yeah.

Kevin Kelly [1:02:03]
And I think

José Macedo [1:02:04]
The revenue

Kevin Kelly [1:02:04]
Wraps are just like

José Macedo [1:02:05]
Unheard of. Sorry. Yeah.

Kevin Kelly [1:02:07]
I was just, you said, I think, I think the market in the short term can absorb the Anthropic IPO. I think once you get into later stages of next year and equity supply, finally flipping positive instead of being negative growth over the last, whatever it's been 10, 15 years. But I think in the short term Anthropic, I think it'll trade similar to SpaceX, but I think the market will wind up stabilizing and can absorb it. The tough part about the revenue ramps and underwriting that on the startup side is there's, it seems like every single week, there's a new company that gets to a hundred million ARR, right? Like it's not even like a, almost like not even a badge of honor at this point. What I'm going to be really curious about, especially the ones that are, most of these are AI focused companies is what is the retention actually look like on some of those? Some of these are too early to even have like retention cohort metrics, right? So like, what is it instincts retention look like 12 months from now, for example, I think that's going to be, if we start to see a lot of fast moving money coming in or fast growth, but that winds up leading to a lot of churn in some of these products, because again, it's just such a competitive landscape. Like that I think could also be a risk that gets private markets a bit more spooked or a bit more diligent on underwriting some of these. And then it can have that trickle down effect like Yan said.

Yan Liberman [1:03:21]
Yeah. Uh, I mean on the capital front, I think Elon and, and the neocloud stuff was, was definitely an interesting

Jason [1:03:29]
One that potentially put in a bottom on. It's like he's quite. I mean, he's

Yan Liberman [1:03:35]
Basically doing

Jason [1:03:36]
Talking about this easy thing

Yan Liberman [1:03:38]
To FTX,

Jason [1:03:40]
But yeah, like

Yan Liberman [1:03:41]
Basically just like nuking competitors and scooping on the, on the cheap,

Jason [1:03:45]
Which sending them into space.

Yan Liberman [1:03:47]
But at the same time, he is going to get insane financing terms because he's got this diversified revenue stream that no one else has. So as a lender, you're, you're, you're much more comfortable giving him better terms. Uh, he's also Elon who has just an ungodly amount of money. And, and you, you also, you want to be a lender to him because you want to be on the, you know, you potentially be the one to help take him public, right? There's, that's part of what the rationale I'm sure that a lot of the debt financiers, uh, had when it came to the Twitter side and, and, and basically because of the fees that you earn from, from IPO and his companies and, and just being a, having him as a customer or as a client rather to some degree. So I think he is going to get the best terms because of his size. Uh, I think like TerraFab is, is insane and we'll probably have some of the best like neocloud margins because of its scale. And, and I think he has a builders is, is pretty unparalleled. So it, it does make sense for him to, to be able to gobble up quite a bit of that market. Um,

Kevin Kelly [1:04:52]
Yeah, I think they go on a big buying spree next year, if not sooner. Cause the ability to

José Macedo [1:04:58]
Execute of the,

Kevin Kelly [1:05:00]
Of neoclouds, and maybe it's not the, the largest ones, but maybe like your tier twos. Again, there's a bunch of like these bare metal operators that are basically selling into like the together AIs of the world. Like there's so much compute that is being built out, but also a lot that's kind of being stranded because one, certain people have never operated data centers before or thought they could do it at an Elon like level or realizing it takes a lot longer costs are higher and their financing costs are also higher. And so if you're not able to actually bring that compute online in the, in the timeline in which you've promised, the economics start to skew against you. And so I think there's gonna be a lot of those were like, the assets themselves are very valuable. If you can have a really good operator come in and take those over and actually like turn it into whatever you want to call it powered land at this point, or like real online compute. And there really isn't anybody better moving at the speed that Elon and SpaceX are on that front.

Yan Liberman [1:06:03]
Yeah, no, there there's, uh, basically like part of me is, is, is, is, is there and it's like, do you just buy SpaceX and, and walk away? Cause, um, it's just hard to see them, them kind of losing. Uh, but the,

José Macedo [1:06:18]
It's just, it's just so expensive. Yeah, I

Kevin Kelly [1:06:21]
Know,

Yan Liberman [1:06:21]
But it's going to carry this premium forever. And, and, uh,

José Macedo [1:06:25]
I mean, they're very like the, the space, I think the space, uh, I haven't looked at the latest numbers, but I think given the growth in the, in the, in their cloud business, like space is probably a minority of

Yan Liberman [1:06:36]
Their, for sure

José Macedo [1:06:37]
Of their, of their revenue at this point. And that their, their cloud business is like, just, just like very levered long compute prices, right? Like they're all their deals with, with Anthropic and all of these are, are three months are cancelable, you know, like in three months with three months notice by, by both sides. And that's why they're, they're able to charge like such a markup. I think they're charging like $50 per, you know, per watt versus, you know, 10 to 15, which was what CoreWeave was, was charging. So I think it's a, I don't know. I think it's a very good, like levered AI bet, but I do think when it goes wrong, they kind of get hurt pretty, pretty badly.

Yan Liberman [1:07:17]
I think they are like just financially able to recover more than most, uh, just based on their diversified revenue stream. And I think that the, the credit options that they'll have, uh, uh, because of that, one thing I actually wish, uh, we brought this up when, when Jake was still here, I don't know if you ever gone down the, uh, um, like Kessler syndrome, uh, rabbit hole, but basically the idea is, uh, you, you can get to a point where there's enough debris in low earth orbit that makes that whole basically area unusable. And so it's like one satellite crashed into another, and then these things just start orbiting and eventually just becomes this massive ball of, of, of trash. And it makes it kind of impossible to, to have any satellites up there. Um, reason being worse

Ceteris [1:08:06]
Than quantum.

Yan Liberman [1:08:07]
Yeah, no, it would be, it'd be horrendous. Cause he, he tweeted about like buying space experts as a result, because there was a, basically a headline came up that there was like a, a secret Russian military satellite that was hunting a U S registered one. So there's basically like some degree of space war already happening. I do see it, you know, like, uh, if you're North Korea, you know, how do you cause as much global chaos and kind of reset the playing field as, as effectively as possible. And it's like initiating something like that. So I, that that's one of those things that is just this tail risk that I don't think anything is protected from like, you know, global communications go down massively, obviously fiber exists, but there's, there's so much that relies on, on satellites that it would be pretty nightmare scenario. Uh,

Jason [1:08:54]
Is there anything you guys feel underexposed to before we wrap up? Wow. Everybody's allocated, huh? Yeah.

José Macedo [1:09:05]
I'd love to have a manager that I'd be confident getting exposure to like power and like grid build out and stuff and infrastructure and things like this. Like I hold this ETF called grid, um, which, which has, has done well, but I, I think it's just like very interesting sector. It's very, pretty boring, but, uh, that, and like, I think commodities can get pretty interesting over the next few years too. Just like if you understand that market, well, given geopolitics and stuff like that, maybe two areas that I'd love to find, you know, managers cause I don't think I, yeah, have the time.

Yan Liberman [1:09:39]
Commodities is more of a trader though. Like you, you, you want a liquid manager that's, that's trading around events and, and just,

José Macedo [1:09:48]
I don't

Ceteris [1:09:48]
Know. I really have no

José Macedo [1:09:49]
Desire to like

Ceteris [1:09:50]
Give my money to all these different managers. I don't know.

José Macedo [1:09:53]
I do.

Jason [1:09:56]
I

Ceteris [1:09:56]
Don't feel inter-exposed to anything. I just wish I had more of everything.

José Macedo [1:10:01]
Well, there is a, if only there was a

Jason [1:10:03]
Way.

Ceteris [1:10:06]
Yeah. I don't know.

Jason [1:10:08]
I'm kind of in the, in the boat with Ceteris like, uh, cause like, I don't know when I used to work in the real world, it was, you know, at high net worth stuff at JP Morgan. And I, I was just like looking at all the shit we did for clients. I was just like, nobody needs any of this. Like you could do all of this. Oh yeah. The bank stuff is terrible. Yeah. Right. I'm sure. Yeah. I mean, you know, the credit solutions they have are actually kind of good if you have a lot of money. But other than that, um, yeah, it's just like, and I don't know, like I just know crypto and stuff so much better that like, you know, it might not be as exciting as it was a few years ago, but like every, every couple of years you'll find something that comes out. That's like a very obvious home run that other people are just like very not aware of for whatever reason. And you can just do extremely well. Um, yeah, I don't know. I'm kind of, yeah. In the boat with Ceteris. Yeah.

Ceteris [1:11:00]
It's hard for me to like divert. I'm like, I'm interested with all this new stuff with like longevity and neurotech and like deep tech, all this stuff. It's just, I just know myself. It's like, I just know crypto and I'm always going to know it so much more than like 99.9 % of people. And so even when the market is boring for like a whole year, I still keep interested in all the time because it's

Jason [1:11:26]
Like, cause then you find Zcash when, you know, and then all of a sudden that two years is worth it.

Ceteris [1:11:31]
There you go. Pays for the two years. Right. So even like Zcash and stuff, right? Like if you just stop paying attention to crypto, you just would have woken up and you've seen Zcash went to like 1500.

José Macedo [1:11:44]
I paid very little attention to crypto, but

Ceteris [1:11:46]
Yeah, but

José Macedo [1:11:47]
You're almost like paying less attention almost worked better. Cause you just like, especially this cycle.

Jason [1:11:52]
To be fair, you're in a lot of group chats where things get surfaced to you.

José Macedo [1:11:56]
Yeah, exactly. And just being a Delphi subscriber, I think is,

Ceteris [1:12:01]
Yeah. Yeah. All right. We want to wrap. I think this is a good app. I think I'll let Kevin do the send off, but before we go, yeah. Thanks Jake for, from Hypercall coming on next week. We're doing, we're planning on doing with Omnia, Kinetiq founder. They have their chain going live November 9th, I think. So we got another guest, another good guest coming on. They're doing a lot. They have a lot of partnerships recently. I've seen like Uniswap FOMO, some other stuff. So that'll be a good chat.

Kevin Kelly [1:12:37]
All right. I don't even need to end off. That was perfect. Ceteris. Good job. There

Ceteris [1:12:41]
You go.

Jason [1:12:42]
Coming for your job, Kev.

Kevin Kelly [1:12:44]
See you guys. Bye.

Jason [1:12:45]
Later guys. See you, dude. Yep. . . . . Inad person you