Translation | Deep Tide TechFlow

Source: Wu Says

This podcast is from Unchained on June 13, and some information may be outdated. Circle's stock price peaked at $263 on June 23 and has since declined, currently hovering between $170 and $190.

Speakers:

Haseeb Qureshi, Managing Partner at Dragonfly

Robert Leshner, Co-founder & CEO of Superstate

Tarun Chitra, Managing Partner at Robot Ventures

Laura Shin, Founder & CEO of Unchained

Key Takeaways

· Circle's IPO Shakes Wall Street — A rare two-day surge in IPO history: Is this a pricing error by bankers, or is cryptocurrency disrupting traditional finance (TradFi)?

· A Boom in Stablecoins or Meme Stock Frenzy? — Circle's valuation has reached 160 times earnings and 15 times revenue. Tarun likens it to "the CoreWeave of finance" (a company focused on high-performance computing infrastructure).

· Tether May Exit the U.S. Market — With new regulatory policies looming, will Circle dominate the U.S. market while Tether shifts to international markets?

· Coinbase's Share — Why Coinbase may be the biggest winner behind USDC, revealing the hidden economic logic behind stablecoin profits.

· Challenges from Banking Alliances — Reports indicate that JPMorgan and Wells Fargo are planning to launch their own stablecoins. Is Circle competing with these traditional financial giants?

· The Rise of Treasury Tokenization — From MicroStrategy to Solana's derivatives: Will "crypto holding companies" become the new ETFs?

· Imitators or Faith Leaders? — Why many are trying to replicate Michael Saylor's success, but most are destined to fail?

· Are These Companies Meme Stocks? — Laura and Tarun debate whether trading crypto companies have real value or merely rely on market sentiment.

· Is This Financial Innovation or Regulatory Theater? — Haseeb asks: Are we pushing the market to mature, or are we just dressing traditional finance (TradFi) in cryptocurrency?

Circle's IPO: A Historic Event

Haseeb: The boom in stablecoins has fully commenced. We just witnessed Circle's IPO, which may be the most eye-catching listing event of the year, truly astonishing. For those who are less familiar, Circle has been striving for an IPO for years. They initially attempted to go public during the SPAC (Special Purpose Acquisition Company) craze but failed. Earlier this year, they tried again with an IPO but were stalled due to tariff issues. Ultimately, they made another effort and successfully completed the IPO. There were even rumors that they might be acquired instead of going public, but those speculations did not come true.

Circle's IPO performance is nothing short of spectacular. It became one of the largest first-day gainers in IPO history and the highest first two-day gain among all IPOs raising over $500 million since 1980. The stock price surged 180% on the first day and another 30% the next day, totaling a 250% increase over two days. They initially raised $1.1 billion in the IPO. If recalculated based on the second day's closing price, they could have raised $4 billion. This indicates that the IPO was priced nearly four times lower than it should have been.

Currently, Circle's valuation multiples are also astonishing. Based on 2024 revenue, their price-to-sales ratio reached 15 times, while the price-to-earnings ratio soared to 160 times. In contrast, Coinbase's price-to-earnings ratio is only 25 times. This high valuation reflects the market's high expectations for Circle. Of course, due to the IPO lock-up period (usually 180 days), insiders cannot sell their shares during this time.

It now seems that this IPO serves as a signal, announcing that the era of stablecoins has arrived. I believe most people did not anticipate such an outcome. There were concerns that market interest in this IPO might be insufficient, even requiring a price reduction. However, the reality was the complete opposite; the pricing not only remained unchanged but soared rapidly due to enthusiastic demand in the public market.

Market Reaction and Far-reaching Impact

Haseeb: Robert, what do you think of Circle's IPO?

Robert: This IPO is truly shocking. It shows everyone how high the market's enthusiasm is for newly listed cryptocurrency companies. I think Circle itself did not expect it to be so successful, nor did bankers and investors. Even on crypto Twitter, almost no one anticipated such a result. The real question is, where does such strong demand come from? Because when I spoke with many people, everyone felt that this IPO might be a bit volatile, but the outcome surprised everyone.

I believe this IPO redefines the market's valuation expectations for crypto companies in the public market. The strength of this demand is truly beyond imagination. Therefore, I believe this will accelerate the IPO plans of other crypto companies. We have already seen some companies submit new applications.

Haseeb: Do you think the excitement around this IPO reflects interest in the entire public market, or is it limited to the stablecoin sector?

Robert: I think it’s both. Everyone wants to enter the stablecoin market. Everyone knows that the Genius Act and the Stablecoin Act are advancing, and stablecoin legislation is about to be introduced. This is a rapidly growing market, although it is still uncertain whether Circle will be the only beneficiary. To some extent, this legislation may pose certain challenges for Circle. However, stablecoins are undoubtedly a hot topic right now, and there are very few truly crypto-native public companies in the U.S. market. So, this is not just a stablecoin story; I think this is just the beginning. The market's demand for high-quality, scarce companies will far exceed expectations. After all, there has never been an investment opportunity focused on stablecoins before.

So, is Circle overvalued? Perhaps. Compared to Tether, Circle is indeed overvalued. But the issue is that there are currently no other ways to directly bet on stablecoins. Investing in Layer 1 blockchains like Ethereum or Solana does not effectively capture the success of stablecoins. So, if you are a public market investor, Circle is undoubtedly the more direct choice.

Haseeb: According to Jon Ma from Artemis, if Tether traded at the same valuation multiple as Circle, its market cap would reach about $500 billion. In comparison, JPMorgan's market cap is around $700 billion. This would make Tether the second-largest financial company in the world.

Robert: In a sense, Tether's valuation multiple is more reasonable compared to Circle. Because Circle's profit margins are not actually high. They have a large number of employees and need to share a significant amount of revenue with Coinbase. In contrast, Tether's profitability is stronger, thus justifying such a valuation multiple.

Legislation Related to Stablecoins and Tether's Response Strategy

Haseeb: Another noteworthy piece of news is that the Genius Act will be voted on tomorrow. By the time you hear this, the voting results may already be out. Let's predict the outcome first.

It is estimated that the voting result may be 66 votes in favor and 32 votes against. So I think the likelihood of the bill passing is quite high, but the final result still needs confirmation. However, from the current situation, it indicates that there is considerable market demand for this bill.

Meanwhile, Tether has stated that if the Genius Act passes, they will consider exiting the U.S. market. This is because the bill stipulates that stablecoins must be backed by high-quality collateral, such as short-term government bonds. This is precisely the model adopted by Circle and most other stablecoin issuers. However, Tether's asset portfolio includes many other types of assets, such as commercial paper, Bitcoin, and some other loan projects. Therefore, to comply with U.S. regulatory requirements, they would need to completely restructure their financial infrastructure to ensure that all stablecoins are backed by safe and reliable assets.

Robert: But will they really do that? Because the requirement is that stablecoins need to achieve 1:1 asset backing. And Tether has already accumulated over $10 billion in profits, which are used to invest in various assets. If they want to strictly achieve 1:1 backing, I think with their profitability and potential over-collateralization, it shouldn't be too difficult.

Haseeb: Maybe so, but Tether has publicly stated that they will exit the U.S. market. Of course, this could be a strategy aimed at influencing regulatory decisions through pressure. But they have indeed mentioned that they will focus more on developing non-U.S. markets. I can understand this, as the cost of restructuring their asset portfolio could be very high. Moreover, this also means that every operation they undertake in the future will be subject to strict regulation by the Federal Reserve.

Tether has always been a relatively closed and opaque company, and they seem more inclined to maintain their existing business model, so this reaction is not surprising.

Circle's Market Position and Future Development Direction

Haseeb: Circle's business model is essentially a money printer, which may also explain why its premium is so high. People realize that Circle will essentially dominate the entire U.S. market because Tether is unwilling to accept the upcoming regulatory framework.

This means Circle will compete with banks. Currently, there are many reports indicating that banks are considering forming a consortium. I believe large banks like JPMorgan and Wells Fargo are discussing launching a consortium stablecoin made up of major U.S. banks. Therefore, the industry may see a divergence: Circle onshore, as a crypto-native tech company, while banks primarily serve institutional clients and may be more risk-averse. The international market may be primarily dominated by Tether. On-chain, USDC remains dominant due to its historical position on-chain. I can imagine that different sectors will be led by different parties, but clearly, it is still too early to tell.

Laura, what do you think of the excitement around Circle?

Laura: I agree with Robert's point that Circle's popularity is not only due to the demand for stablecoins but also because it is a publicly listed company. This type of crypto reserve company, especially a Bitcoin reserve company, offers people exposure to crypto in traditional markets. Therefore, Circle meets the demand in both aspects.

But the issue is that all the discussions we've had about Tether, I recently interviewed Jeff Park, and we had a two-part conversation that was very interesting. Essentially, stablecoins could transform the dollar into multiple products if the U.S. is willing to take a more entrepreneurial view of this asset, as many places around the world need it.

Will the government come together to recognize this as a valuable thing? If they take a more entrepreneurial approach, they could leverage it this way. For example, people always say Tether is a good example of the dollar, as there is high demand for the dollar abroad. It’s conceivable that depending on the different companies or individuals wanting to mint stablecoins, there could be different yields. Therefore, I think people understand that there is significant space in this category to accommodate many different sub-markets.

Interestingly, I have asked two different people to talk about Circle, and they had a negative attitude towards Circle's IPO, believing that this was evident even before the IPO actually happened. Circle's expenses are enormous, and its business is very different from Tether because it is compliant. Some people in the securities field even complained that once bad behavior occurs, Circle will not freeze funds when using USDC, because as a U.S. company, they are more susceptible to lawsuits, while Tether does not have this issue.

This is seen as common knowledge in the crypto space, but I saw a tweet from someone who used to work at Circle. She wrote that from the perspective of financial infrastructure, observing Circle's IPO pricing is exciting. When you control the issuance of currency, you are no longer in the fintech space but in the realm of monetary policy.

She listed the numbers: PayPal has a market cap of $70 billion with a transaction volume of $15 trillion; Visa has a market cap of $500 billion with a transaction volume of $14 trillion; Circle has a valuation of $6 billion with a transaction volume of $1.2 trillion. Thus, its transaction volume is very close to Visa, but its market cap is only about 12% or 13%. She pointed out that everyone in the crypto space is underestimating this, but she stated that the 25 times oversubscription is the real story. The underwriters were too conservative in their pricing and missed a fundamental change. She said, Circle controls the printing press for digital dollars.

So honestly, I don’t know how this will develop, because everything about Circle, even just the fact that they have to give half of their profits to Coinbase, means that Coinbase earns more profit from USDC than Circle does. There is an industry pyramid that indicates that those who have distribution channels are the most powerful, such as exchanges. Therefore, I understand Circle's business model, but at the same time, stablecoins will become a huge category.

Tarun: I actually attended the IPO party on Friday. First of all, I have never seen so many traditional finance people at a crypto event. In fact, only the three of us were not wearing suits. It was a fun and enlightening moment. They rang the closing bell, surrounded by people, while the three of us stood in the back.

I just want to say, I have never seen traditional finance people show such genuine interest in this matter. Usually, they are just doing some superficial work, like saying, "Oh, Bitcoin's price is rising; we will pretend to collaborate with blockchain." But this time, it was clearly not like that. I feel that everyone is gathering in areas related to non-bank financial lending, and all the major private credit fund CEOs were present.

I think Circle has a very different audience from Tether, with their net worth being almost completely different, and there is hardly any overlap between the users of the two, unless they are trading USDC in a Curve pool. Other than that, I think they will diverge over time. I believe if you look at many new stablecoins, I do feel that Circle may have paid a high price for early distribution advantages, but clearly, no new stablecoin has been able to find distribution channels comparable to those of Coinbase.

I am not talking about Tether, but all competing stablecoins, which either face this issue or have to pay more than Circle to obtain distribution channels. I think Circle has set a floor price for any distribution deal, making it difficult for new entrants to overcome this barrier. Because everyone will say, "Give me 75% to 80% of the revenue," and not give you 50%. I think this actually creates an interesting dynamic of pricing power that raises the barrier for new entrants. Therefore, I think you are more likely to see banks succeed rather than startup stablecoins.

Haseeb: You mentioned Circle's dominant market position, and we all agree on that. What do you think about the pricing? Because this is what most of us are commenting on.

Tarun: You know? There are two meme stocks starting with C, CoreWeave and Circle, which were almost founded at the same time. I think CoreWeave and Circle are meme stocks, but their implications are the opposite of GameStop. They are meme stocks, meaning they should see significant growth over the next 10 years. The problem is that there are almost no agents to bet on these two separately. Therefore, everyone is concentrating all their bets together.

Haseeb: That’s the real story. I think now, the only investment in the public market that can represent stablecoins is Circle. In fact, if we talk about low liquidity tokens, like IPOs or low liquidity IPOs, there aren’t many investors wanting to have this narrative. Therefore, the narrative gets pushed up. When there is more supply in the market, there may be more opportunities, although I believe this will happen.

Tarun: Circle's IPO liquidity is far higher than that of some data center companies. I mean, CoreWeave's IPO is not exactly something I would show to regulators, thinking that crypto is worse than these low liquidity, high FDV companies. In recent weeks, the performance of some AI IPOs also looks like bad crypto.

Haseeb: But interestingly, if half of Circle's revenue goes to Coinbase, it means that if you look at the current valuation, Circle's revenue plus the revenue from Coinbase's other businesses would generate Coinbase's market cap, which means the trading multiple of Coinbase's other revenues might be less than 3 times.

This is clearly not the case; obviously, this is the result of Circle's very low liquidity, so there is not much price discovery because the demand for stablecoins is so strong. Buying Coinbase does not give you enough exposure to stablecoins, while Circle is the pure stablecoin investment you can make today. But the interesting part is that if the market is efficient, Circle should be repriced when everyone realizes that Circle's revenue is worth far more than we imagine.

Tarun: So, if you look at the market cap ratio of CoreWeave to its customers, the customers are all revenue-sharing/building clients, which is not much different from this case. Therefore, I think you have to pay attention to macro market factors. I do think the market is tired of betting on pure ETFs, like Microstrategy and government bonds; you see that the tenth issuance of government bonds has not performed well. I feel that Circle is actually a real product for people, rather than the tenth Bitcoin treasury company. I think the irony of these Bitcoin treasury companies is that they may kill their golden goose due to too many competitors chasing the same opportunity at the same time.

Crypto Reserve Companies: An Emerging Trend

Haseeb: Next, let's talk about crypto reserve companies. This is a topic we have mentioned several times on the show, but there is still much to explore. For those who are less familiar, the original crypto reserve company was Microstrategy (now rebranded as "Strategic Company"). This company was originally a software business but has now essentially turned into a massive Bitcoin reserve. They raise funds by issuing corporate debt to buy more Bitcoin. It is puzzling that Microstrategy's stock price is about 1.7 times the value of its Bitcoin holdings (i.e., net asset value NAV). Why is there such a premium? This is a rather controversial topic. Some believe that this premium may be due to investors seeing its leverage effect and its potential to continue accumulating Bitcoin in the future. By buying Microstrategy's stock, investors effectively gain an indirect leveraged exposure to Bitcoin.

We have also seen other companies adopting similar strategies. For example, Jack Mallers' 21 Capital, Trump Media, Korea's Nexon, and Japan's Meta Planet. However, there are also critics who worry that this could become the next GBTC (Grayscale Bitcoin Trust). GBTC previously triggered the collapse of 3AC due to its complex leverage mechanism and caused a series of chain reactions through crypto lending platforms like BlockFi. However, unlike GBTC, these reserve companies do not have a clear leverage mechanism, as their debt operations are entirely different from hedge fund leverage trading. Laura, Unchained recently published an article about the compensation structures of these reserve companies; could you summarize it for us?

Laura: These companies adopt different approaches in evaluating and rewarding executives. Traditionally, stock price is usually a metric, but some companies have tried more innovative models. For example, there is a company called Defi Dev Corp, whose reserve asset is Solana. They tie the compensation of the CEO, CFO, and CIO to the number of Solana per share. This model is very interesting because many of these companies are currently valued far above the actual value of their held assets.

Haseeb: This also reveals why relying solely on stock price as a metric is problematic. Because the value of these companies is highly correlated with their underlying assets, and the prices of those assets are very volatile. If Solana's price rises significantly, even if the executives take no actual action, their compensation will increase, which is clearly unreasonable. In contrast, a more reasonable metric should be whether executives can effectively incorporate more Solana into the company's reserves.

Robert: In fact, this incentive mechanism is designed to encourage companies to purchase more crypto assets through debt issuance. For example, if a company uses 5x leverage, the number of crypto assets per share will significantly increase, but it will also significantly increase the company's risk. This model is reminiscent of a leveraged ETF (exchange-traded fund), although due to its complexity, it cannot be entirely modeled as a traditional leveraged ETF.

Haseeb: The key lies in how leverage is used. Some forms of leverage are extremely risky, while others are relatively safe.

Robert: For example, Microstrategy's leverage strategy, which initially seemed dangerous, now appears to have proven successful.

Haseeb: Indeed. They recently launched a new type of debt called "Strikes." It features that the debtor does not have to repay the debt, and there is no recourse mechanism. In other words, if the debtor misses a payment, they do not need to make it up later. This type of debt typically offers a 10% coupon as an incentive for investors, and that’s it.

In simple terms, the debtor is like saying to investors, "You can buy my bonds, but I may never pay you back." Then, they use the borrowed money to purchase Bitcoin and enjoy the benefits of rising Bitcoin prices. Meanwhile, investors can only passively hold this debt, unable to enforce repayment or share in the profits from Bitcoin's rise. This model puts the debtor in control while investors appear very passive.

Tarun: Someone proposed an interesting theory that Microstrategy's successful model is similar to the Bitcoin forking mechanism. When Bitcoin forks, holders receive new Bitcoin airdrops, which often prompts them to sell the new coins and buy more Bitcoin, thereby increasing the overall value of Bitcoin. Similarly, Microstrategy's "fork" could refer to those secondary and tertiary Bitcoin treasury companies. If these companies gradually fail, investors might refocus on Microstrategy, making it a core gathering point for Bitcoin treasuries. This phenomenon could further solidify Microstrategy's position in the market. Unless there is a severe crash in Bitcoin prices, Microstrategy has already proven its resilience, even though its scale may not be as large as during its peak. Other Bitcoin treasury companies are more focused on competing for marginal resources in the market.

As for those willing to buy the debt of lower-ranked Bitcoin treasury companies, I find it hard to understand their motivation. Microstrategy is a more ideal choice. As Robert mentioned, they have accumulated a large amount of Bitcoin through high-risk leverage strategies and successfully established their treasury. This allows them to issue convertible debt at a lower cost. However, the capacity of the convertible bond market is not infinite, and not all investors are willing to participate in such transactions. In contrast, most people prefer to buy Microstrategy's stock directly, as its debt transactions are simpler and clearer. Participating in this debt arbitrage requires higher expertise and a deep understanding of risks, and there are not many investors willing to take on such complex operations.

From a market structure perspective, this arbitrage opportunity can be likened to a fixed "demand pie chart," with Microstrategy occupying at least 50% or more of the market share. The remaining market is contested by other Bitcoin treasury companies. However, even if the convertible debt market grows by 10% each year, it will be difficult to meet the financing needs of all companies. Therefore, I believe that in the future, some Bitcoin treasury companies may be forced to transform due to their inability to continue issuing debt, seeking other financing methods or strategies.

Analyzing Convertible Bond Arbitrage Opportunities in Cryptocurrency

Robert: There is a significant difference between traditional convertible bond arbitrage and crypto treasury companies. If a regular non-crypto treasury company, like a Midwest manufacturing firm, issues convertible bonds, the market primarily focuses on the volatility of its stock and the potential for appreciation above the conversion price. Investors assess the value of convertible bonds using option pricing models. However, this market is very small because it essentially bets on the volatility of a specific company. Moreover, investors not only bear the company's debt risk but also need to conduct complex evaluations in conjunction with option strategies.

For Microstrategy or other crypto reserve companies, the situation is entirely different. The downside risk of these companies is primarily linked to the volatility of Bitcoin prices, rather than the operational risks of the company itself. One could say these companies are more like a "storage box," with their core value depending on Bitcoin's performance. This consistency allows investors not to worry about complex company risks but to focus on Bitcoin's volatility and downside risks. Compared to the traditional convertible bond market, this model attracts more capital because the overall scale of the crypto market is larger, and as Bitcoin and other cryptocurrencies become more popular, this market will further expand.

Tarun: What about companies related to Solana or Ethereum? The market size of Bitcoin is indeed large enough to support such strategies, but I have doubts about Solana's sustainability.

Robert: It depends on the size of the spot and derivatives markets. If the derivatives market for Ethereum is large enough, then hedging or modeling convertible bonds for Ethereum strategy companies is not difficult. But for some lower market cap crypto assets, like those ranked 400th, market demand is very limited, trading is inactive, and risk hedging is extremely difficult.

Tarun: I believe every asset has its carrying capacity. While Bitcoin's market size is large enough for people to accept longer holding period risks, even for Ethereum, few are willing to take on too long holding risks. This is evident from the financing rates and the option pricing of Ethereum ETFs.

Robert: However, the financing rates for Ethereum and Bitcoin are actually not that different.

Tarun: From the perspective of open interest, the weighted results show that there are still significant differences between the two. I believe there will not be more than 10 Ethereum strategy companies.

Haseeb: There may be as many as 10 Bitcoin-related companies, while Solana may only have 2.

Tarun: In fact, there are far more than 10 Bitcoin-related companies. Many companies randomly add Bitcoin to their reserves.

Potential Market Risks and Dynamic Analysis

Laura: I noticed a tweet mentioning that these companies might play a core role in some future collapse, similar to GBTC or other similar stocks. We also discussed this and felt that such a scenario might only occur if these companies could use their assets as collateral for borrowing. Of course, there are other factors, such as Microstrategy possibly having better loan terms, while some other companies might be taking more aggressive strategies on the risk curve, thus facing greater downside risks during market fluctuations.

In other words, if there are lenders willing to accept these assets as collateral, this could be a way for risk to explode. At the same time, this situation could trigger a cascading effect. For example, if Bitcoin prices drop for some reason, companies with poorer financing conditions might be forced to sell assets, further exacerbating the market's chain reaction. These are just some of my thoughts, but it is indeed interesting to see so many people discussing this issue. From what I currently understand, it seems these assets cannot yet be used as collateral for borrowing. However, I heard that JP Morgan now allows borrowing against Bitcoin ETFs as collateral, which is quite interesting. Although JP Morgan's CEO Jamie Dimon has always been opposed to Bitcoin, it is clear that his company does not mind profiting from it.

Haseeb: However, when it comes to borrowing, things can get complicated, right? The loan-to-value (LTV) ratio should be relatively low.

Tarun: Yes, LTV is a key factor. I mean, almost all other brokers offer similar services, with a few exceptions.

ETFs can indeed be used as collateral. If you are trading, brokers usually provide some form of margin loan. I think JP Morgan's approach in this regard is relatively conservative. Of course, I could borrow through Microstrategy, but the loan-to-value ratio would not be particularly high. However, most brokers would offer similar services.

Laura: Oh, I see. So do you think this explains why some people say it could become the next GBTC?

Haseeb: I think market crashes usually do not happen over things everyone is focused on. There is some truth to that statement. Typically, risk points tend to be hidden deeper.

Tarun: I think the failure mechanism of these companies might be more like this: If a company is included in the S&P 500 index, all ETFs linked to it will be forced to buy its stock. However, if Bitcoin prices drop significantly before the rebalancing, that company might be removed from the index due to debt issues. The problem is that when a company is included in the S&P 500 index, the market usually believes its stock value will rise, allowing the company to issue debt at a lower cost. But if crypto assets drop significantly before the next index rebalancing, the company could find itself in trouble.

Haseeb: Moreover, this debt usually does not have claims on conversion rights, meaning creditors cannot recover losses through bankruptcy proceedings.

Michael Saylor's Market Influence

Haseeb: So far, I still do not fully understand how Michael Saylor does it, but his ability to acquire capital is indeed impressive. From the current situation, the market crash is unlikely to be triggered by Saylor, but rather by others. If the market really crashes, for example, if Bitcoin prices drop to $50,000 or $40,000 and stagnate for a long time, then Saylor might exacerbate the downward pressure on the market, but he will not be the initial trigger. Saylor's strategy does make things worse during market downturns, but during market upswings, he can drive market development by increasing the cyclical influence of assets. The dual nature of this strategy means that if the market goes down, it will be even more difficult to get out of trouble.

Robert: However, I believe the next market upturn will be a great opportunity. This is undoubtedly good news for Saylor.

Tarun: I really admire Saylor for being able to do this. This is also why I am puzzled by the wave of people trying to imitate him. We should realize how bold and crazy what Saylor is doing is. I do not think everyone needs to replicate his model. Imitation is indeed a form of recognition for him, but it is more like a "burning money" type of recognition. You know, this kind of imitation may not be wise.

I do not think everyone has a Bitcoin vision like Saylor. When you talk to people from these companies, they are more focused on how to make a profit rather than having deep thoughts about the macro economy like Saylor or being dedicated to surviving a market crash.

Haseeb: I completely agree. Saylor is indeed a unique figure, and his strategies and influence are reminiscent of a mob boss. People like him may never appear again.

Tarun: I think the key is not that there will never be another person like Saylor, but that the rules of the market game will change in the future.

Haseeb: That's right, those trying to be the "next Saylor" shouldn't expect to be rewarded in the same way he is. Saylor holds a significant amount of Microstrategy stock, which allows him to take on greater risks. Those so-called "next Microstrategy" individuals are more like mercenaries; they do not have the same long-term interests tied to Saylor. They should focus on optimizing the financial strategies that Saylor invented, rather than simply replicating his model. After all, Saylor is essentially a "financial engineer," and his returns should be based on his contributions to financial engineering, rather than solely relying on the value of the underlying assets. Therefore, I believe the future market will develop in this direction.

Tarun: However, I find it hard to be excited about these imitators. As it stands, the market does not seem sustainable for them. I hope I'm wrong in my judgment and that there will be 500 such companies in the future, but that seems unrealistic.

Discussion on Market Trends

Haseeb: There is a project called Plasma, which is said to be a stablecoin chain related to Tether. There are now many similar projects claiming to issue tokens natively with no transaction fees on the chain. The idea is that this model should have advantages over Tron, which has transaction fees, while these projects have no fees and can facilitate stablecoin payments.

Plasma recently conducted an initial token offering through a platform called Sonar, achieving a valuation of $500 million. They raised $50 million by selling 10% of the total supply of Plasma. This funding was deposited into a liquidity vault, and demand reached $500 million within seconds. The top ten wallets held 38% of the total supply, and the top 17 wallets held 50%. One wallet even deposited $50 million on its own. During the entire process, there was also a "gas war," with reports of someone spending $100,000 in fees to ensure participation with $10 million USDC.

Tarun: I find it interesting that every time Trump is in office, there seems to be a surge in initial token offerings. For example, 2017 was a typical case.

Regarding Sonar, Kobe mentioned that when they initially designed Echo, investors were dissatisfied with the need for recognition and lack of control in the traditional investment group model. I find this very interesting; as I mentioned in my book, early models like DAOs (Decentralized Autonomous Organizations) raised a lot of funds, but once the funds entered the smart contracts, the teams found they lacked effective tools to manage that money. At that time, there wasn't even a safe way for investors to withdraw funds, leading to issues like hacking. Later, we saw some improvements, such as tools developed by Taylor Monahan to help users who lost funds due to phishing or scams. Now, platforms like Sonar represent a more mature version. I believe this reflects a long-term development trajectory. Looking back at the internet bubble period, many startups went public very early, while today's companies tend to delay going public. Now, through this new method, ordinary investors can participate in projects earlier. I admit this model carries risks and requires enhanced investor education, and it may necessitate changes to the U.S. accredited investor laws. However, from a historical and market change perspective, I do believe similar models will become increasingly common, even if they may not be exactly the same.

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