DATs: Are They the Current Trend Solution or the Next Cash Machine in Cryptocurrency?

Compiled by: Deep Tide TechFlow

Guests: Christopher Perkins, Managing Partner and President of CoinFund; Brian Rudick, Chief Strategy Officer of Upexi

Hosts: Ram Ahluwalia, CFA, CEO and Founder of Lumida; Steve Ehrlich, Executive Editor of Unchained

Podcast Source: Unchained

Original Title: Bits + Bips: Think the DAT Trend Is Over? It May Have Only Just Begun

Release Date: September 5, 2025

Key Takeaways

Are DATs the current trend solution or the next cash machine in cryptocurrency?

In this episode, Chris Perkins from CoinFund and Brian Rudick from Upexi join Ram Ahluwalia and Steven Ehrlich to delve into why certain DATs (Digital Asset Treasury) may be more suitable for some investors than traditional ETFs (Exchange-Traded Funds), interpret the mathematical logic behind the premiums that support bullish views, and discuss what types of investment tools can stand out.

The episode also discusses whether it is currently a breakout season for altcoins or a false signal, the significance of Galaxy launching tokenized stocks on Solana, and a key unlocking point proposed by Perkins that could potentially change the market landscape.

Are DATs an alternative form of traditional banking, or the best investment tool found by traditional financial capital in the cryptocurrency space?

Highlights

• The current market fundamentals are very strong. A rebound in the crypto market is just a matter of time, with November expected to be a significant turning point, and investors need to seize the opportunity and be prepared.

• For DATs to truly work, five key elements are required: First, the market must be ready for the development of DATs; second, the tokens must have strong fundamentals; third, you need excellent advisors and bankers who know what they are doing; fourth, you need a strong management team and excellent asset managers; and perhaps most importantly, you need a KOL who can transform this data into beautiful technological innovations.

• Currently, the advantage of DATs lies in their transparency and functionality. The goal of DATs is to allow investors not only to access the assets themselves but also to tap into the potential returns of those assets, such as through DeFi and other innovative mechanisms.

• Personally, I believe that Solana's DATs have higher potential.

• I am very optimistic about altcoins, and this optimism is mainly based on the gradual easing of regulatory risks we have observed. I am particularly optimistic about tokens at the intersection of AI and crypto.

• Many people still do not fully believe in the value created by DATs. For me, the key is how to help investors understand the value accumulation mechanism of DATs, which has a compounding effect that ETFs cannot achieve.

Will the market experience another September slump?

Steve Ehrlich:

Ram, you go first. Give us a quick recap of this month and your view on the current market situation. As we know, September is usually a sluggish period for Bitcoin and cryptocurrencies. Do you see any positive signals this time?

Ram Ahluwalia:

In the last episode, we mentioned the seasonal negative impact on Bitcoin. I believe Bitcoin is struggling to break through the $125,000 mark, not only due to seasonal factors but also for other reasons. Recent discussions around the passage of the stablecoin bill had sparked market enthusiasm, but the market seems to lack sustained growth momentum afterward. Additionally, I have noticed a weakening of the "animal spirits" in the market, with high-volatility stocks preferred by retail investors performing poorly recently, which is typical for this time of year. So overall, this year's situation is similar to last year and the year before.

Concerns have also been raised regarding Bitcoin's four-year halving cycle. Some investors focused on this cycle believe Bitcoin may reach a cyclical peak in November this year. Others think this cycle has ended, but I personally do not agree with that view. When market sentiment is overly optimistic, I tend to feel pessimistic; conversely, when market sentiment turns pessimistic, I become slightly more optimistic. The market is currently in a phase of high uncertainty, which we can discuss in detail later.

Moreover, I have also observed weakness in the debt market. Excessive debt is accumulating and forming a bubble, which we have discussed for a long time. When Wall Street excessively sells certain financial products, investors need to remain vigilant. I believe Bitcoin, Ethereum, and Solana are still leading asset classes, akin to mainstream brands in the market, with Bitcoin being "Coca-Cola" and Ethereum being "Pepsi," while other crypto assets may not be as well recognized.

At the same time, there are some assets in the market trading below their actual market value. MicroStrategy, led by Michael Saylor, has changed the rules for purchasing Bitcoin, which has somewhat affected market confidence. The core characteristic of Bitcoin is immutability, but the change in rules has tested market sentiment.

The change in rules was eventually retracted, but it did not have a positive impact on the market. The market is currently undergoing a series of tests, and future trends remain to be observed.

Why the bullish case for DATs still holds?

Steve Ehrlich:

I think this is the first time we have a representative of DATs on our show. Brian, Upexi is an early participant in the Solana reserve narrative. Talk about the situation over the past few weeks and your observations.

Brian Rudick:

Actually, not much has changed. We are currently focused on two main things: First, we are working to enhance our market visibility so that more people know about us. When investors think, "I want to invest in Solana," we hope they will prioritize us. This morning, we announced that we will participate in three traditional finance conferences later this month. If we fail to accelerate our pace within the next year, I would be disappointed. Therefore, one of our core missions is to expand our influence. Of course, there are other initiatives, but this is one of them.

The second point is issuing stocks. If we can issue stocks at a price above book value, it would be a value addition for shareholders. For example, MicroStrategy sold stocks at twice the book value; although the stock price has slightly retreated, it is equivalent to selling a dollar asset for two dollars, or buying Bitcoin at half price. This approach has allowed MicroStrategy to create value for shareholders equivalent to $26 billion in free Bitcoin over the past six quarters. This model is very worth learning from and emulating.

We are actively exploring how to achieve breakthroughs in this area. Currently, we have an equity financing plan about to be implemented, and we are also looking for various possible opportunities in the market. This is not secret financing but a public business model. Therefore, we are doing our utmost to achieve this goal.

Christopher Perkins:

I think Ram's perspective is somewhat pessimistic. From a broader perspective, this summer can be said to be the summer of DATs. 2021 was the summer of DeFi, and DATs first emerged then, establishing themselves as a core innovation. The development of many DATs has benefited from the gradual opening of regulatory policies. Now, we are seeing the effects of these regulatory unlocks. While there is indeed a bubble in the market, I believe, as Brian said, that DATs will become an important part of the market structure of the crypto ecosystem.

The innovation of DATs is very significant; they are aimed at the public and also supported by foundation labs. Not all projects can succeed in these innovations, as achieving these goals is indeed very challenging, but we are very active in this field.

For DATs to truly work, five key elements are required: First, the market must be ready for the development of DATs, and a prolonged market closure will affect the importance of timing. Second, the tokens must have strong fundamentals. As we shift from Bitcoin to yield-generating assets, the potential of DATs becomes more attractive. Through staking and re-staking, tokens can achieve a natural alignment of underlying value. Third, you need excellent advisors and bankers who know what they are doing; Fourth, you need a strong management team and excellent asset managers who know how to manage these underlying assets and drive returns; and perhaps most importantly, you need a KOL who can tell the story and transform this data into beautiful technological innovations. I believe they will continue to exist.

While the market may experience a shakeout, the ultimate winners will be very special projects. We are looking forward to this and believe we are still in the early stages of DAT development, with many exciting projects brewing for the future.

Steve Ehrlich:

Brian, there was an interesting trend when DATs first emerged. After Michael Saylor, the earliest companies chose to focus on Solana rather than Ethereum. For example, your company, Sol Strategies, and Defi Development Corp. Now, financial companies in the Ethereum ecosystem are raising billions of dollars, while Solana seems to have become a "follower" of Ethereum to some extent.

What do you think about this change? When raising funds, do investors ask about the differences between Solana and Ethereum? What sharp questions do they raise? What are your answers?

Brian Rudick:

That's a good question. Frankly, the traditional financial sector still has limited understanding of these issues. The most common question is, "What is the difference between Bitcoin and Solana?" Not even "What is the difference between Ethereum and Solana?" So we have moved past that stage.

Of course, there are some investors who are more familiar with cryptocurrencies or digital assets, and they may ask deeper questions, but they do not ask technical questions like, "When will Solana implement multiple concurrent leaders?"

I believe many people still do not fully trust the value created by DATs. For me, the key lies in how to help investors understand the value accumulation mechanism of DATs, which has a compounding effect. For example, by issuing stocks at a price above book value, we can achieve this goal in various ways, including ATMs, equity financing lines, and even the issuance of convertible notes. These notes have longer terms and higher volatility in the underlying assets, so most pricing models show that they have over a 90% chance of converting into equity. This mechanism allows DATs to sell equity at prices far above the current market price.

Additionally, when we enter tokens from pre-mined tokens or proof-of-stake consensus mechanisms, we can also earn yields through staking. For example, we can earn over 8% by staking Upexi tokens, transforming financial assets into productive assets. At the same time, we purchase locked tokens at a 15% discount, which doubles the staking yield. We adopt a buy-and-hold strategy and do not intend to sell any Sol, so this approach is very suitable for us.

These value accumulation mechanisms cannot be achieved by native tokens or ETFs. The strength of these models lies in their design based on the right tokens and mechanisms, and investor education is key to helping them understand the potential and advantages of this model.

Why Does Brian Think "DATs Are Banks"?

Ram Ahluwalia:

Brian, can you elaborate on your initial point? You mentioned that "operating banks are like DATs, banks have FDIC insurance, can re-mortgage loans, and have the advantage of lending speed." What do you mean?

Brian Rudick:

Yes, it's a simplified analogy. The main profit model of banks is through interest margin income; they raise funds from depositors and then lend that money to borrowers, earning the difference between loan income and deposit costs. Similarly, DATs also achieve profitability through interest margins. Investors typically discount the future interest margin income of banks and account for it in the bank's asset value. Therefore, bank stocks usually trade at prices above book value. While banks do not frequently issue stocks, some historical banks, like MNT, have issued stocks at a premium for expansion and acquisition.

Ram Ahluwalia:

If I were to describe it more accurately, I would say DATs are more like BDCs (Business Development Companies), similar to publicly traded private credit funds. They earn interest margins by issuing loans while using leverage to amplify returns. The operational model of DATs indeed resembles this structure.

Brian Rudick:

Exactly. Our DATs raise funds from the capital markets and invest in Solana. Our goal is to achieve a return on investment in Solana that exceeds our cost of capital, thereby generating a positive spread. If the market believes that Solana's returns can continue to exceed the cost of capital in the coming years, this spread will be discounted by investors and accounted for in the net asset value (NAV), allowing the NAV to exceed 1. In this way, we can create real value for shareholders.

Christopher Perkins:

This education is indeed very important. We are now seeing many traditional investors starting to pay attention to Solana and exploring its potential as a yield asset. This education not only helps investors understand how DATs operate but also contributes to the development of the entire crypto ecosystem. I believe this is one of the biggest advantages in the ecosystem right now.

Brian Rudick:

When we first started, many people questioned whether DATs were just a short-term arbitrage opportunity and even worried that it might pose a threat to the token ecosystem, such as potentially leading to forced sell-offs during market volatility. However, the success of Ethereum changed people's perceptions. For example, Tom Lee promoted Ethereum almost daily on CNBC, which helped Ethereum's price rise from $2,700 to $4,700. Now, many other token ecosystems are also actively promoting DATs as a tool to enhance market visibility, especially to attract the attention of traditional investors.

Ram Ahluwalia:

There are currently many DATs in the market. I wonder if you asked someone on Twitter, "Can you list eight DAT codes?" probably no one would be able to answer. Of course, Chris and Brian might be able to list them, but for the average investor, it's as difficult as remembering the names of eight children. MicroStrategy is an exception; they spent years building brand recognition. But in the crypto market, investor attention is limited, and you need to stand out among many competitors. This is not just a competition of products but a competition for attention. Brian and Chris, you focus on building value creation machines, financing machines, and staking yield packaging machines, but the market's attention resources are limited, which is a challenge for all participants.

Steve Ehrlich:

Brian, how do you view this "attention game"? For example, Tom Lee and Bitmine's MNAV (Market Net Asset Value) is now 1.1 and has been declining. What do you think about this situation?

Brian Rudick:

I haven't particularly focused on other token ecosystems, but I believe the Bitcoin market has become saturated. In contrast, the NAV of certain company stocks is between 0.7 and 0.8. I feel that the Ethereum market is not yet fully saturated, but it is indeed a competition. Companies like MicroStrategy typically sell stocks when the NAV reaches 1.6 or 1.7, rather than selling when it is close to 1.

I understand why other ecosystems choose to sell stocks when the NAV is close to 1. They want to be the largest player in the market because the largest players will have the most trading volume and can issue more stocks.

Personally, I believe Solana's DATs have higher potential. Its staking yield is the highest in the market, and it can also purchase locked tokens at a discount, creating additional returns for shareholders. Therefore, Solana's DATs have reason to trade at a higher MNAV than other token ecosystems. So far, this strategy has been successful. However, we still need to improve market visibility while addressing some doubts and attacks against Solana. These factors may affect the performance of MNAV, but for now, our MNAV is 1.7.

Are DATs More Suitable for Investors than ETFs?

Ram Ahluwalia:

Chris, what do you think? For investors, is it better to hold spot assets directly, or is investing in DATs better? For example, in the case of Ethereum, some DAT mechanisms may lead to forced buying, which is a cumulative buying behavior. When DATs issue stocks, there may be a dilution effect, which could bring selling pressure. This investment method is not purely buying; it is because the mechanism design forces investors to purchase certain assets.

Christopher Perkins:

This is a question worth exploring. Currently, DATs are still in the early stages of development. For example, last week we submitted a letter to the SEC and FASB discussing the accounting treatment of LSTs (Liquid Staking Tokens) being classified as intangible assets; there is still much to improve in the entire industry.

Many DAT projects are just starting to operate. I see that some companies in our portfolio, like Ethereum, are benefiting from these mechanisms. For example, ETHZilla has done some work in the Ethereum ecosystem, and the development of DATs is still in its early stages.

If we take Ethereum as an example, the operational mechanism of ETFs is more complex. Investors can choose to invest in ETFs or directly purchase spot assets. However, for many traditional investors, they cannot directly access spot assets because it is beyond their investment authorization. Therefore, they usually turn to ETFs. However, ETFs have a critical issue: they cannot generate yields. Due to the daily liquidity limitations of ETFs, such as a 13-day unlocking window, investors cannot stake directly through ETFs. While a total return product may emerge in the future, currently, the design of ETFs still cannot provide the yields that investors need. This makes ETFs a relatively inferior product, especially for long-term investors, where yield is crucial.

In contrast, DATs offer convenience similar to ETFs. Investors can easily purchase DATs through brokerage accounts while also receiving yields from the underlying assets. This makes DATs, to some extent, a better investment tool, especially for traditional investors who cannot directly access spot assets.

Of course, a more transparent total return product may emerge in the future, but currently, the advantage of DATs lies in their transparency and functionality. The goal of DATs is to allow investors not only to access the assets themselves but also to tap into the potential returns of those assets, such as through DeFi and other innovative mechanisms. This design is not only an investment case but also provides a packaging form that investors are familiar with and authorized to use.

Additionally, DATs open up investment opportunities across the entire U.S. equity capital market. Investors can incorporate DATs into major brokerage accounts, gain leverage, and even use them as collateral. This makes the functionality of DATs closer to traditional stock investments.

Of course, Ram, the bubble issue you mentioned does exist. I previously mentioned that all key elements of DATs need to come together for success, which is a very complex process. It sounds like Brian has found some solutions, but that is the current situation.

The Mathematical Logic Behind the Premium

Brian Rudick:

I want to add that I believe the market has not fully recognized the powerful potential of DATs, especially the value brought by the growth of net asset value (NAV) through compounding over time.

Let me illustrate with a simple mathematical example. Suppose I launch a DAT to invest in Solana, and similar projects in the market are trading at a 5x market cap multiple. I raise $100 from Steve Ehrlich and issue 100 shares of stock, each worth $1. At this point, Steve Ehrlich owns 100% of the company, and my DAT holds $100 in funds.

Next, I invest that $100 in Solana. Since Solana's market cap multiple is 5x, my investment value immediately grows to $500. At this point, my company's total market value also becomes $500, and Steve Ehrlich's 100 shares of stock rise to $5 each.

Then, I raised another $100. This time, because my stock is trading at $5, I only need to issue 20 shares to raise this amount. Through this additional issuance, I again obtained $100 and invested it into Solana. The market value of Solana increased by another $500, and now my company's total market value has reached $1,000.

Although Steve Ehrlich's ownership percentage has been diluted to 85%, the value of his holdings has grown from $500 to $850. This is the logic of value-added issuance. By leveraging market cap multiples and premiums, we can continuously compound NAV, leading to sustained growth in shareholder value.

Additionally, I believe that smaller DAT projects often enjoy an embedded growth premium. For example, if we issue $100 million in stock at a 2x multiple, it is very beneficial for us. In contrast, for large companies like MicroStrategy, the same issuance would have a much smaller impact on the market. Therefore, smaller DATs typically have greater growth potential.

At the same time, DATs supporting smaller tokens also have greater upside potential. For instance, Solana's market cap is only 4% of Bitcoin's. In comparison, Bitcoin is already the fifth-largest asset globally, and the likelihood of its market cap multiplying five times in the short term is low, while Solana's growth potential is much greater. Furthermore, Solana's DAT can also provide additional returns for shareholders through staking and purchasing locked tokens at a discount.

For these reasons, I believe that once market conditions stabilize, the premium trading levels of other DATs should exceed those of MicroStrategy. But this is just my view on multiples and growth potential.

Christopher Perkins:

If DATs can combine fundamentals with the meme effect of the market, it could even lead to a greater market response. In fact, we have witnessed this phenomenon in both the cryptocurrency and stock markets. This is a point worth noting.

Ram Ahluwalia:

Indeed. Making an asset a meme is an important goal, but not all assets can achieve this. The essence of a meme is that it resembles a "last one standing" game; for example, Palantir and Tesla were once memes, but you can't make every asset a meme, that’s my view.

I have another question for you. As an investor, do you prefer a high market cap to NAV ratio or a low market cap to NAV ratio? I guess your answer would be a high market cap to NAV ratio because that allows you to accumulate more underlying spot assets through stock issuance.

But interestingly, in the case of a low market cap to NAV ratio, investors might have greater value space. This reflexive characteristic makes investment strategies more complex. I believe this strategy only works when DATs are in a momentum state. Once the momentum fades, it’s best for investors to exit the market. Additionally, if the market cap is below NAV, you might become a takeover target; whereas if the market cap to NAV ratio is too high, the issuance could lead to a drop in asset prices. This is a very complex game theory.

Brian Rudick:

I think it entirely depends on the future trend of MNAV (Market Net Asset Value). If one DAT is trading at 2x and another at 5x, and I believe their multiples will converge, I would choose the cheaper one. If I think the multiple will remain unchanged, I would choose the one trading at 5x because its issuance would be more value-accretive.

Overall, it all comes down to the trade-off between risk and return. For example, last December, Solana's strategic MNAV reached 15x, and the market environment was different, with fewer choices. This indicates the heights that MNAV could potentially reach. When DATs trade at a higher MNAV, they can create more value-accretion opportunities for shareholders. Conversely, if NAV drops below 1x, or if Solana drops by 50%, there could be significant downside risks. Therefore, I believe DATs have very asymmetric risk and return, which is why I am willing to bet on DATs.

Is It Time for Altcoins to Explode?

Steve Ehrlich:

A recent chart circulating on Twitter shows that Bitcoin's market share is about 58%. During the peak of the pandemic, this ratio once dropped below 40%. While history may not repeat itself, this suggests that the market may experience a rotation from Bitcoin to altcoins. Brian, this could be an opportunity for investors. Chris and Ram, what do you think about the current altcoin cycle? What are your goals for the coming months?

Christopher Perkins:

I am very optimistic about altcoins, and this optimism is mainly based on the gradual alleviation of regulatory risks we are seeing. Even in the absence of clarity, such as the announcement yesterday of cooperation between the CFTC and SEC to allow spot tokens to be listed. This clarity in viewing altcoins as commodities will be a huge unlock. Let me give you some insider information; a key point I am watching is the listing of altcoin futures in the U.S. market. When these tokens start to have futures listed, you know they are commodities because the SEC did not block them during the approval process. This unlocks basis trading, where people buy spot and sell futures, causing spot prices to rise. It also unlocks ETFs because ETF monitoring relies on the futures market. So, a key point to watch is the listing of altcoin futures in the U.S. market. This is a missing link for many institutional buyers.

We have already seen some preliminary futures, like Solana, but as regulatory certainty increases, I believe we will see more similar situations. My conversations with regulators have been very positive, and this will be a huge driving force. Additionally, I think we are gradually focusing on the fundamentals of projects. There are good projects, bad projects, and terrible projects. I also believe the educational process is very important, such as explaining to investors what Solana is. As they gain a deeper understanding, investors will realize that these tokens are different and have their uniqueness. I am particularly optimistic about tokens at the intersection of AI and crypto, as their utility makes sense to me. So, I am very optimistic that the altcoin market has a long way to go.

Brian Rudick:

For me, my view is similar to Ram's. In the short term, risks are increasing, such as national debt issues, persistent inflation, tariff uncertainties, and overvaluations. But we have been dealing with these issues for a while. Therefore, I believe that in the short term, altcoin prices will be affected by policy risks. However, in the long term, I am very optimistic about the altcoin market.

I have always believed that the biggest issue hindering the development of cryptocurrencies is the lack of clear rules and regulations. I think we may address this issue next year with the "Clarity Act." Generally, large tech companies and financial institutions are reluctant to enter the crypto space because it may increase legal and regulatory risks. But once there is regulatory clarity, they will have to enter on a large scale. These companies have billions of customers, built-in trust, and billions of dollars in capital, along with top developers. It could be as simple as Google Chrome adding a crypto wallet or Amazon accepting stablecoin payments. This presents us with the potential for a massive influx of users. Therefore, I believe that from the mid to long term, we may witness one of the greatest booms in the altcoin market.

Christopher Perkins:

That's a great point. You have the inflow of funds into the stablecoin market, along with structural buyers entering the market, such as 401K. This is very powerful. Although macro noise is always present, these trends are worth noting.

Ram Ahluwalia:

I am optimistic about the macro economy. For example, falling interest rates are good news, the fiscal deficit is also good news, and income tax cuts are coming soon; these are all positive factors. Although there are some frictions with tariff issues, the market has begun to digest these problems, as retailers importing from China are performing well. Therefore, I maintain an optimistic outlook on the macro economy. Timing is important, and I agree with that. Additionally, Chris's point about the DeFi boom following the stablecoin boom is very accurate. I think this theory makes a lot of sense.

The Ethereum spot market is performing strongly. The key to digital assets is momentum, which reflects market attention. If attention follows a power-law distribution, it becomes simple: What has momentum? What has attention? What benefits from regulatory clarity? What is heavily shorted and transitioning from non-consensus to momentum? The answer is Ethereum. If you look at Ethereum's chart, you wouldn't guess that market sentiment is low. In fact, the market is performing well. In summary, I am very optimistic about the DeFi theory that Chris mentioned, such as Aave, which is a leading DeFi protocol on Ethereum and is performing very well.

What Are the Trends in the Macro Economy and Key Focus Areas for Investors?

Steve Ehrlich:

Ram, I want to ask you a question about the macroeconomic outlook. While I have a rough idea of your answer, I still want to hear your thoughts. Considering the turmoil at the Federal Reserve and Trump's attempt to fire at least one official, will this have an impact on the market? Clearly, this matter may need to wait for a Supreme Court ruling.

Ram Ahluwalia:

In the long term, the main drivers of asset prices include earnings growth, interest rate levels and their changes, and inflation levels and their changes, which indirectly affect the market through influencing policy. In the short term, asset prices are more influenced by market positioning and news flow. For example, news about official appointments, if it negatively impacts market sentiment in the short term, will be quickly priced in, and then the market will move on. Simply put, every investor makes decisions based on the existing background information.

Currently, the fundamentals of the market are very strong. The recently concluded quarter saw exceptional corporate earnings performance. Additionally, the economy has been supported by more stimulus measures, such as interest rate cuts. Although I personally disagree with these policies, from the market's perspective, they have indeed brought positive effects. I am optimistic about the market, so my portfolio includes small-cap stocks, interest rate-sensitive stocks, as well as homebuilders and consumer goods stocks. The performance in these areas is supported by strong consumer demand. While there is some divergence in the economy, the overall trend is positive.

The situation on the consumer side is also worth noting. Although loan pressures persist, the high-income group (the top third of earners) drives most consumer spending, accounting for about two-thirds of total consumption. Performance varies across sectors, with the travel and leisure industry and airlines performing well. In banking, lending activity is increasing, and the gradual easing of regulations is supporting credit expansion. Competition among private credit companies is also intensifying. I recently spoke with a bank that is essentially like a private credit fund, but due to being protected by the FDIC (Federal Deposit Insurance Corporation), they have started to reject some deals because the availability of credit in the market is too high.

Of course, an excess of credit could pose risks at some point in the future, but the current situation remains good. Default risks have not significantly increased, and credit expansion has further propelled the development of the economic cycle. There are currently no external pressures that can halt this trend.

Why is it significant that Galaxy launched tokenized stocks on Solana?

Steve Ehrlich:

Why don't we talk about tokenization? There was some big news this morning that we discussed on Telegram regarding Galaxy. I believe they didn't tokenize some shares but rather issued shares directly on the Solana blockchain in collaboration with Super State.

Christopher Perkins:

Fast forward to today. This is a big event because we have been discussing the tokenization of RWA (Real World Assets). As a banker, I have a strong aversion to RWA because it is a collection of different risk-weighted assets, which makes me anxious. Therefore, the past way of operating was to put assets into a box, issue a token to represent that asset, and then send it into the ecosystem. But this time is different because it is regulatory; we are not locking the stocks in a custody account at a New York bank and then issuing tokens on that representative asset. This is regulatory. This is a regulated digital asset, and we actually have the shares, which is the only representation of those shares. When you put it on the blockchain and use Super State as the transfer agent, it is regulated. When you talk to someone like SEC Chair Gary Gensler, he will say we need to make IPOs great again. We need to make capital markets great again. We need to make them more accessible. What could be more accessible than a public blockchain? This is issued on Solana. Well done, Solana has been trying to position itself as a decentralized Nasdaq, and this is an important step forward for the team and the ecosystem. So now you have these assets. While they are not perfect, this is a good first step, and I would say it is an improvement over what we have seen in the past.

I am also very excited about the tokenization of private equity, but this is not some special purpose vehicle (SPV) where you get a piece of the SPV. This is real stock, tokenized equity.

You still can't trade them on an automated market maker (AMM). There is a regulatory issue called NMS (National Market System). Simply put, this means stocks need to be routed to the best price on the exchange. If you have traditional systems, their communication is not very good. Therefore, I think the SEC will address some of the challenges we refer to as NMS. But you can do peer-to-peer transfers of stocks between people who have gone through the proper onboarding process. This is the beginning of unlocking the global internet to purchase stocks and other assets.

Ram Ahluwalia:

Capital formation excites me; we need more capital formation. The costs of registration and listing in public markets are too high. Companies like Securitize are trying to mix traditional finance with permissionless networks through activities on-chain, such as regulatory ATS, etc. This is not going to work. Therefore, the direction of development is good.

I think Galaxy's move is mainly symbolic. You can trade 24/7. This is the main unlock, but this symbolism means that more is coming. Interestingly, I took my family to the beach this weekend and, as usual, was brainstorming different things during the holiday. I tweeted that stocks should be tokenized on-chain. Then I saw the news from Galaxy, which means no idea is original. 100 people around the world have the same idea at the same time, and then it’s about execution. So, I have no doubt we will see more of this happening. I think this is mainly symbolic. What I really want to see is a way to launch a permissionless market that provides opportunities to unlock participants.

There are also some very interesting things happening, like Credit Coup. I don't know if you’ve been following them, Chris. They are providing financing for Rain Card, a credit card that allows crypto-native users to spend, leveraging their on-chain digital asset wallets. You can get financing on-chain, deposit, and earn 14%. This is amazing. This is an on-chain bank. You can deposit on-chain, get a 14% coupon, fully collateralized by T+2 continuous risk. You can get liquidity in two days. This is a mispriced short-term high-yield asset. But all of this is permissioned, yet it is a step in the right direction.

Galaxy is the same. Paul Atkins specifically mentioned the rise of tokenization and super apps, and Michelle Bowman also talked about tokenization. Therefore, regulators are starting to signal to the market that they will not intervene if it is legal and compliant. So we are moving in that direction. You will see 200 fintech companies have applied for OCC charters, and dozens will be approved in the coming months. Therefore, I think Galaxy is very symbolic, but there is more behind it. We need more permissionless frameworks to unlock the next stage.

Steve Ehrlich:

I want to explore this point further because you raised an important issue. Chris, you mentioned that Solana is clearly a permissioned chain, but Superstate is also very permissioned. I have been tracking tokenization for a long time, and I believe you all know that. I can't tell you how many pilot projects there are, although I know this is not a pilot project, but regarding the tokenization of some credit instruments, etc. There could be a huge nine or ten-figure revenue, but there is no secondary market, no liquidity because these things are static. I am curious about what the process of breaking this barrier looks like. Perhaps we need many companies to agree to issue on Superstate, or its obvious variants, or something else, simultaneously.

Christopher Perkins:

So what did we just do with stablecoins, right? How is this different from stablecoins? Stablecoins are locked, but the issuers are responsible for KYC and AML. Then someone receives them, and depending on that person's activities, you know, if you send securities to North Korea, you will run into trouble because it is based on behavior and activity, right? That’s the stablecoin model. Yes, they have freezing and customs, but it doesn’t really work due to delays.

But I think when you step back and look at what we are seeing now, it goes back to what Brian is doing. We are normalizing stocks into tokens. We are transforming tokens into stocks on DAs, so when will we normatively tokenize and issue your debt on-chain?

Brian Rudick:

There are two thoughts. First, I completely agree with everything you all said about tokenization. In my view, finance is built on outdated infrastructure, and stablecoins are essentially tokenized dollars. They run on ECH, which was created 50 years ago. Even fintech is this front-end wrapping; if I send you $10 through Venmo, it still uses ECH on the backend. Therefore, blockchain and tokenization reimagine the infrastructure itself.

The second important thing is that finance is filled with intermediaries. That’s why DeFi is so important. Therefore, this can help us eliminate all these unnecessary intermediaries because, given the advancements in technology, we really don’t need them.

We have announced our intention to tokenize Upexi equity through Superstate. If this helps, there are two main reasons for choosing to partner with them. First, as you said, issuing stocks directly on-chain for global access, rather than a packaging that can disperse liquidity between different wrappers, limited to a specific U.S. market. Second, the legal and regulatory rights that holders receive are exactly the same as traditional equity.

So that’s an important reason. The second reason is that we are very focused on compliance, legal, and regulatory risks. Superstate is doing everything the right way. They are meticulous in every detail, and they are an SEC-registered transfer agent. They are working with the SEC on projects like Project Open to gain regulatory clarity. When you tokenize equity through Superstate, it strictly adheres to securities laws. Therefore, they have these allowed lists to determine who can actually access your tokenized equity and who has completed KYC. So we are very comfortable working with them to ultimately put Upexi equity on-chain.

Steve Ehrlich:

I understand your views on regulation and so forth, but I am waiting for companies to put everything on-chain, especially large companies, which will actually force anyone who wants to own that share to participate in the on-chain market. Imagine if Tesla decided to go fully on-chain. What would that look like? I wonder how many of us own Tesla shares, even indirectly through ETFs; we would be forced to participate. So, Brian, we are waiting for your big announcement that you are delisting from Nasdaq and fully transitioning to on-chain.

What are the key market unlock points for altcoins?

Christopher Perkins:

I believe we are entering a golden age of convergence, which is an important moment for the entire crypto industry. Institutional investors are gradually entering the market, but the main obstacle right now is the lack of listed cryptocurrency futures in the U.S. These futures are crucial for addressing market liquidity issues and driving industry growth. I think this is an area to closely watch in the coming weeks.

Steve Ehrlich:

Currently, there are futures for Bitcoin, Ethereum, Solana, and XRP in the market. What other assets do you think are worth paying attention to?

Christopher Perkins:

All cryptocurrencies outside of these four assets need futures support. The improvement of the futures market will unlock more functionalities, such as promoting the development of ETFs, supporting basis trading, and further solidifying cryptocurrencies as commodities. These are all key steps for market maturity. However, there is still a significant gap in the U.S. market in this regard, primarily because the SEC has blocked relevant listing applications from exchanges. Nevertheless, I believe this window is gradually opening, and this is a pressing issue that needs to be addressed for the industry's development.

Steve Ehrlich:

Ram, what do you think about the current market situation?

Ram Ahluwalia:

I have recently been paying attention to the performance of some traditional stock markets, such as the earnings report of American Eagle. Its stock price rose 24% after the close, indicating that some undervalued retailers are gradually recovering. I believe this trend will continue. Additionally, the mortgage refinancing sector is also worth noting, as the performance of companies like Better Mortgage still has potential.

As for digital assets, I think the market rebound is just a matter of time. We may need to wait a few more weeks; market volatility still exists, but I expect November to be an important turning point. Investors need to seize the opportunity and be prepared.

Brian Rudick:

I want to add a point about the long-term value of the token market. I believe that in the long run, only three to five tokens will truly create value, and behind each token, there may only be three companies that can provide sustainable returns to shareholders through compounded net asset value (NAV).

Historically, 95% of tokens will see their prices drop by 95% within five years. The most critical factor for a token's success is the performance of the underlying assets. Therefore, for some short-term traders, the token market may offer decent returns, but if you are looking for long-term winners, successful cases like Microstrategy will be very rare.

Steve Ehrlich:

My perspective is slightly different. I believe that in the current market environment, investors need to be more cautious, especially considering the uncertainty of Federal Reserve policies. However, I also see some interesting phenomena; for example, last night I rewatched an episode of "The Office," which mentioned a discussion about currency. The character Dwight pointed out that since the U.S. abandoned the gold standard in 1971, the authenticity of currency has become blurred. This viewpoint also reflects the current market's redefinition of value.

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