Compiled by | TechFlow
This podcast originated from Unchained on June 13, so some information may be delayed. Circle's stock price has been falling since it reached a peak of $263 on June 23, and is currently hovering between $170 and $190.
spokesman:
Haseeb Qureshi, Managing Partner, Dragonfly
Robert Leshner, Co-founder & CEO of Superstate
Tarun Chitra, Managing Partner, Robot Ventures
Laura Shin, Founder & CEO of Unchained
Summary of key points
Circle’s IPO shocked Wall Street — a rare two-day surge in IPO history: Is this a pricing mistake by bankers, or is cryptocurrency disrupting traditional finance (TradFi)?
Stablecoin craze or meme stock mania? — Circle is valued at 160 times earnings and 15 times revenue. Tarun likens it to “CoreWeave in the financial world” (an infrastructure company focused on high-performance computing).
Tether may exit the US market — With new regulations looming, will Circle dominate the US market while Tether turns to international markets?
Coinbase’s share — Why Coinbase may be the biggest winner behind USDC and reveals the hidden economic logic behind stablecoin profits.
Banking consortium challenge — JPMorgan and Wells Fargo are reportedly planning to launch their own stablecoins. Is Circle setting up a race with these traditional financial giants?
The Rise of Treasury Tokens — Spinoffs from MicroStrategy to Solana: Are “Crypto Holdings” the New ETFs?
Imitator or Faith Leader? — Why do many people try to emulate Michael Saylor’s path to success, but most are doomed to fail?
Are These Companies Meme Stocks? — Laura and Tarun debate whether trading crypto companies actually have value, or are they simply based on market sentiment?
Is this financial innovation or a regulatory show? — — Haseeb asked: Are we driving the market to maturity, or are we just changing the traditional finance (TradFi) into a cryptocurrency guise?
Circle’s IPO: A Historic Event
Haseeb: The stablecoin craze is in full swing. We just had Circle's IPO, which was probably the most notable IPO of the year, which was amazing. For those who don't know, Circle has been trying to go public for years. They originally tried to go public during the SPAC (special purpose acquisition company) craze, but it didn't work. Earlier this year, they tried again, but it was stranded due to tariffs. Ultimately, they pushed forward again and successfully completed the IPO. There were even rumors that they might be acquired instead of going public, but ultimately those speculations did not come true.
Circle's IPO was phenomenal. It had one of the biggest first-day gains in history and the biggest first-day gain of any IPO that raised more than $500 million since 1980. The stock closed up 180% on the first day, and another 30% on the second day, for a two-day gain of 250%. They initially raised $1.1 billion in the IPO. If recalculated based on the second-day closing price, they would have raised $4 billion. This suggests the IPO was underpriced by nearly 4 times.
Circle's current valuation multiples are also very impressive. Based on 2024 revenue, their price-to-sales ratio is 15 times, and their price-to-earnings ratio is as high as 160 times. In contrast, Coinbase's price-to-earnings ratio is only 25 times. This high valuation also 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 period.
Now it seems that this IPO is like a signal that the era of stablecoins has arrived. I believe that most people did not expect such a result. Some people were worried that the market interest in this IPO might be insufficient, and even the price would need to be reduced. However, the fact is completely the opposite. Not only did the price not drop, but it soared rapidly under the enthusiastic pursuit of the public market.
Market reaction and far-reaching impact
Haseeb: Robert, what do you think of Circle’s IPO?
Robert: This IPO was a real shocker. It showed everyone how enthusiastic the market was about new crypto companies going public. I don’t think Circle expected it to be this successful, and I don’t think bankers or investors expected it to be this successful. Even on crypto Twitter, almost no one expected it to be this successful. The real question is, where did all this demand come from? Because a lot of people I talked to thought this IPO might be a little volatile, but it surprised everyone .
I think this IPO has redefined the market's expectations for how crypto companies should be valued in the public markets. The demand is so strong that it's beyond imagination. As a result, I believe this will accelerate other crypto companies' plans to go public. We've already seen some companies submit new applications.
Haseeb: Do you think this IPO boom reflects the interest of the entire public market, or is it limited to the stablecoin field?
Robert: I think it's both. Everyone wants to get into the stablecoin market. Everyone knows that the Genius Act and the Stability Act are moving forward, and stablecoin legislation is coming. This is a rapidly growing market, although it is not certain whether Circle will be the only beneficiary. To some extent, these legislations may pose certain challenges to Circle. However, stablecoins are undoubtedly a hot topic at the moment, and truly crypto-native public companies in the US market are very scarce. So, this is not just a stablecoin story, I think this is just the beginning. The market demand for high-quality, scarce companies will far exceed people's expectations. After all, there has never been an investment opportunity focused on stablecoins before.
So, is Circle overvalued? Probably. Compared to Tether, Circle is indeed overvalued. But the problem is that there is no other way to bet directly on stablecoins in the market. Investing in Layer 1 blockchains such as Ethereum or Solana does not capture the success of stablecoins very well. So, if you are an investor in the public market, Circle is undoubtedly a more direct choice.
Haseeb: According to analysis by Jon Ma of Artemis, if Tether traded at the same valuation multiple as Circle, its market cap would be around $500 billion. For comparison, JPMorgan Chase'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 than Circle's. Because Circle's profit margin is not very high. They have a large number of employees, and they also need to share a lot of revenue with Coinbase. In contrast, Tether is more profitable, so it deserves such a valuation multiple.
Stablecoin-related legislation and Tether’s response strategy
Haseeb: Another noteworthy news is that the Genius Act will be voted on tomorrow. Maybe by the time you hear this news, the voting results will have been released. We can predict the results first.
It is estimated that the result of this vote may be 66 votes in favor and 32 votes against. So I think the bill is likely to pass, but the final result still needs to be confirmed. However, from the current situation, it shows that the market demand for this bill is quite strong.
At the same time, Tether said that if the Genius Act is passed, they will consider withdrawing from the US market. This is because the bill stipulates that stablecoins must be backed by high-quality collateral, such as short-term Treasury bonds. This is exactly the model adopted by Circle and most other stablecoin issuers. But Tether's asset portfolio includes many other types of assets, such as commercial paper, Bitcoin, and some other loan projects. Therefore, if they want to meet the requirements of US regulation, they 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 according to the requirements, stablecoins need to achieve 1:1 asset support. And Tether has accumulated more than $10 billion in profits, which are used to invest in various assets. If they want to strictly achieve 1:1 support, I think it is not difficult to do so with their profitability and possible over-collateralization.
Haseeb: Maybe, but Tether has publicly stated that they will withdraw from the US market. Of course, this may be a strategy to influence regulatory decisions by exerting pressure. But they did mention that they will pay more attention to the development of non-US markets. I can understand this because the cost of restructuring the asset portfolio may be very high. Moreover, it also means that every operation they carry out in the future will be strictly regulated by the Federal Reserve.
Tether has always been a relatively closed and opaque company that seems to prefer to maintain its existing business model, so this reaction is not surprising.
Circle's Market Position and Future Development Direction
Haseeb: Circle's business model is a money-printing machine, which is probably why its premium is so high. People realize that Circle is basically going to dominate the entire US market because Tether is unwilling to accept the upcoming regulatory system.
This means that Circle will compete with banks. There are many reports that banks are considering forming a consortium. I think big banks like JPMorgan Chase, Wells Fargo, etc. are discussing launching a consortium stablecoin composed of large US banks. Therefore, the industry may be divided: Circle is onshore, as a crypto-native technology company, while banks mainly serve institutional clients and may be more risk-averse. The international market may be dominated by Tether. On the chain, USDC is still dominant because of its historical position on the chain. I can imagine that different areas will be dominated by different parties, but it is obviously too early now. Laura, what do you think of the craze about Circle?
Laura: I agree with Robert. Circle is popular not only because stablecoins are popular, but also because it is a listed company. This kind of crypto reserve company, especially Bitcoin reserve company, people want to get crypto exposure in the traditional market. Therefore, Circle meets the needs in both aspects.
But the thing is, all the stuff we talked about about Tether, I recently interviewed Jeff Park for a two-part conversation, which was really interesting. Basically, stablecoins could potentially transform the dollar into multiple products if the U.S. is willing to look at this asset more entrepreneurially because a lot of the world needs it.
Will governments come together to recognize that this is a valuable thing that they can exploit as such if they look at it more entrepreneurially. For example, people always say that Tether is a good example of the U.S. dollar, which is in high demand abroad. You can imagine that depending on the different companies or people who want to mint stablecoins, there may be different benefits. So I think people understand that there is a huge space in this category for many different market segments.
Interestingly, I asked two different people to talk about Circle and they were very negative about the Circle IPO, and that was revealed before the IPO actually happened. Circle has huge expenses and the business is very different from Tether because it is compliant. Even some people in the securities field complained that in the event of bad behavior, when using USDC, Circle will not freeze funds because as a US company, they can be sued more easily, while Tether does not have this problem.
This is considered common sense in the crypto space, but I saw a tweet from someone who used to work at Circle. She wrote that it was exciting to watch Circle's IPO pricing from a financial infrastructure perspective. When you control currency issuance, you are no longer in fintech, but in monetary policy.
She listed the numbers, PayPal's market cap is 70 billion and its transaction volume is 1.5 trillion; Visa's market cap is 500 billion and its transaction volume is 14 trillion; Circle's valuation is 6 billion and its transaction volume is 1.2 trillion. So 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 said the 25 times oversubscription is the real story. The underwriters were too conservative in pricing and missed the fundamental change. Circle controls the printing press for the digital dollar, she said.
So I honestly don't know how this is going to play out because everything about Circle, even just the fact that they have to give half of their profits to Coinbase, Coinbase makes more profit from USDC than Circle does. There's an industry pyramid that shows that the people who own the distribution channels are the most powerful, like exchanges. So I understand Circle's business model, but at the same time, stablecoins are going to be 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, we were the only three people not wearing suits. It was a really interesting and enlightening moment. They rang the closing bell and there were people all around, and the three of us were standing in the back.
I would just say that I have never seen such genuine interest from traditional finance people in this. Usually they just do some window dressing, like, "Oh, the bitcoin price is going up, we'll pretend to work with blockchain." This is clearly not the case. I feel like everyone is gathering in the field related to non-bank financial lending, all the major private credit fund CEOs are here.
I feel like Circle has a very different audience than Tether, their net worth is almost completely different, and there is almost no overlap in who uses the two, unless it's trading USDC in a Curve pool. Beyond that, I feel like they will diverge over time. I think if you look at a lot of the new stablecoins, I do feel like Circle probably paid a lot for early distribution advantages, but clearly no new stablecoin has been able to find distribution channels comparable to Coinbase trading.
I'm not talking about Tether, but all competing stablecoins, they either face this problem or have to pay more than Circle to get distribution. I think Circle sets a floor price for any distribution transaction, which makes it very difficult for new entrants to overcome this barrier. Because everyone will say, "Give me 75% to 80% of the revenue," and won't give you 50%. I think this actually creates an interesting pricing power dynamic that makes the barrier to entry very high for new entrants. As a result, I think you're more likely to see banks succeed than start-up stablecoins.
Haseeb: You mentioned that Circle is dominant in the market, and we all agree with that. What do you think about pricing? Because that's what most of us commented on.
Tarun: You know what? There are two meme stocks that start with a C, CoreWeave and Circle, and they were founded at about the same time. I think of CoreWeave and Circle as meme stocks, but they are the opposite of GameStop. They are meme stocks that are meant to grow significantly in 10 years. The problem is that there are not many proxies that can bet on either of them individually. So everyone is grouping all their bets together.
Haseeb: That's the real story. I think right now, the only investment that's representative of stablecoins in the public market is Circle. Realistically, if we're talking about low-circulation tokens like IPOs or IPOs with low circulation, there aren't a lot of investors who want to own that narrative. So the narrative gets pushed higher. When there's more supply in the market, there's probably going to be more opportunities, although I believe that will happen.
Tarun: Circle's IPO float was much higher than some of the data center companies. I mean, the CoreWeave IPO wasn't exactly something I would present to regulators as something that crypto is worse than these low float, high FDV companies. Some of the AI IPOs have also performed like bad crypto in recent weeks.
Haseeb: But what's interesting is that if half of Circle's revenue is going to Coinbase, that means if you look at the current valuation, Circle's revenue plus Coinbase's other business revenue will produce Coinbase's market value, which means that Coinbase's other revenue may be trading at a multiple of less than 3 times.
It's clearly not, and clearly this is a result of Circle having very low circulation, and therefore not having much price discovery, because the demand for stablecoins is so high. Buying Coinbase doesn't give you enough stablecoin exposure, and Circle is the pure stablecoin investment you can make today. But what's interesting about this is that if the market is efficient, Circle should re-price when everyone realizes that Circle revenue is worth far more than we thought.
Tarun: So if you look at the market cap ratio of CoreWeave to its clients, the clients are all revenue sharing/building clients, which is not that different from this case. So I think you have to look at the macro market stuff. I do think the market is tired of pure ETF bets, things like Microstrategy and Treasuries, you saw the 10th Treasury launch didn't do very well. I feel like Circle actually has a real product for people, not the 10th Bitcoin treasury company. I think the irony of these Bitcoin treasuries is that they may have killed their own golden goose because there are too many competitors chasing the same opportunity at the same time.
Crypto Reserve Companies: A New Trend on the Rise
Haseeb: Next, let's talk about crypto reserves. This is a topic we've touched on a lot on the show, but there's a lot more to go into. For those who are not familiar, the original crypto reserve was Microstrategy (now renamed "Strategy"). This company was originally a software business, but now it has basically become a giant Bitcoin reserve. They raise funds by issuing corporate debt to buy more Bitcoin. What's puzzling is 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 controversial topic. There is a view that this premium may be because investors are looking at its leverage effect and its potential to continue to accumulate Bitcoin in the future. By purchasing Microstrategy's shares, investors are actually gaining an indirect leveraged exposure to Bitcoin.
We are also seeing other companies adopting similar strategies. For example, Jack Mallers' 21 Capital, Trump Media, Nexon in South Korea, and Meta Planet in Japan. However, there are also critics who worry that this may become the next GBTC (Grayscale Bitcoin Trust). GBTC once caused the collapse of 3AC due to its complex leverage mechanism and triggered a series of chain reactions through crypto lending platforms such as BlockFi. However, unlike GBTC, these reserve companies do not have obvious leverage mechanisms because their debt operates in a completely different way from the leveraged trading of hedge funds. Laura, "Unchained" recently published an article about the compensation structure of these reserve companies. Can you summarize it for us?
Laura: These companies have taken different approaches to 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, and their reserve asset is Solana. They link the compensation of the CEO, CFO, and CIO to the amount of Solana corresponding to each share. This model is very interesting because many of these companies are currently valued much higher than the actual value of the assets they hold.
Haseeb: This also reveals why relying solely on stock price as a metric is problematic. Because the value of these companies is highly correlated to their underlying assets, and the prices of underlying assets are very volatile. If the price of Solana rises significantly, it is unreasonable for executives to increase their compensation even if they do nothing. 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 to drive companies to purchase more crypto assets by issuing debt. For example, if a company uses 5x leverage, the number of crypto assets corresponding to each share will increase significantly, but it will also significantly increase the company's risk. This model is reminiscent of a leveraged ETF (Exchange Traded Open Index Fund), although due to its complexity, it cannot be fully modeled as a traditional leveraged ETF.
Haseeb: The key is how to use leverage. Some leverage methods are very risky, while others are relatively safe.
Robert: For example, Microstrategy's leverage approach, although it seemed risky at first, now seems to have proven its success.
Haseeb: Exactly. They recently introduced a new form of debt called “Strikes.” The feature is that the debtor can not repay the debt, and there is no recovery mechanism. In other words, if the debtor misses a payment, they don’t need to make it up later. And this kind of debt usually offers a 10% coupon as a condition to attract investors, that’s it.
Simply put, the debtor is like saying to the investor: "You can buy my bonds, but I may never pay you back." Then, they use the borrowed money to buy Bitcoin and enjoy the benefits of the rising Bitcoin price. At the same time, investors can only passively hold the debt, unable to force repayment or share the benefits of the rising Bitcoin price. This model allows the debtor to take the initiative, while the investor appears to be very passive.
Tarun: There is an interesting theory that Microstrategy's success model has similarities to the forking mechanism of Bitcoin . 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 "forks" can refer to those secondary and tertiary Bitcoin treasury companies. If these companies gradually fail, investors may turn their attention back to Microstrategy, making it a core gathering point for Bitcoin treasuries. This phenomenon may further consolidate Microstrategy's position in the market. Unless the price of Bitcoin crashes severely, Microstrategy has proven that it has a certain degree of risk resistance, although its scale may no longer be as large as it was at its peak. Those other Bitcoin treasury companies are more competing for marginal resources in the market.
As for those investors who are willing to buy the debt of companies with Bitcoin treasuries at the bottom of the rankings, it is difficult for me to understand their motivations. Microstrategy is a more ideal choice. As Robert said, they have accumulated a large amount of Bitcoin through high-risk leverage strategies and successfully built their own treasury. This allows them to issue convertible debt at a lower cost. However, the capacity of the convertible bond market is not unlimited, and not all investors are willing to participate in such transactions. In contrast, most people prefer to buy Microstrategy's shares directly because its debt transactions are simpler and clearer. Participating in this debt arbitrage requires higher expertise and a deep understanding of risks, and not many investors are willing to undertake such complex operations.
From the perspective of market structure, this arbitrage opportunity can be likened to a fixed "demand pie chart", in which Microstrategy occupies at least 50% or even more of the market share. The remaining market is fought over by other Bitcoin Treasury companies. However, even if the convertible debt market grows by 10% per year, it is 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 and find other financing methods or strategies because they cannot continue to issue debt.
Unpacking convertible bond arbitrage opportunities in cryptocurrencies
Robert: There is a significant difference between traditional convertible bond arbitrage and crypto treasury companies. If a regular non-crypto treasury company, such as a Midwestern manufacturing company, issues a convertible bond, the market is mainly concerned with the volatility of its stock and the upside potential above the conversion price. Investors use option pricing models to judge the value of convertible bonds. However, the size of this market is very small because it is essentially a bet on the volatility of a specific company. Moreover, investors not only have to bear the company's debt risk, but also need to combine options strategies for complex evaluation.
For Microstrategy or other crypto reserve companies, the situation is completely different. The downside risk of these companies is mainly linked to the volatility of Bitcoin prices, rather than the operating risks of the companies themselves. It can be said that these companies are more like a "storage box" and their core value depends on the performance of Bitcoin. This consistency allows investors to focus on the volatility and downside risks of Bitcoin without worrying about complex company risks. Compared with the traditional convertible bond market, this model attracts more capital because the overall size of the crypto market is larger, and this market will expand further as Bitcoin and other cryptocurrencies become more popular.
Tarun: What about Solana or Ethereum-related companies? The market size of Bitcoin is indeed large enough to support such a strategy, but I doubt whether Solana is sustainable.
Robert: It depends on the size of the spot and derivatives markets. If the Ethereum derivatives market is large enough, it is not difficult to hedge or model the convertible bonds of Ethereum Strategy Company. But if it is some crypto assets with lower market capitalization, such as the 400th ranked currency, the market demand is very limited, the trading is not active, and the risk hedging is extremely difficult.
Tarun: I think every asset has its carrying capacity. While the market size of Bitcoin is large enough that people can accept the risk of a longer holding period, even for Ethereum, few people are willing to take the risk of holding for too long. This is obvious from the funding rate and the option pricing of the Ethereum ETF.
Robert: However, the funding rates for Ethereum and Bitcoin are actually not much different.
Tarun: From the perspective of open positions, the weighted results show that the difference between the two is still very large. I think there will be no more than 10 Ethereum strategy companies.
Haseeb: There may be as many as 10 Bitcoin-related companies, while Solana may only have 2.
Tarun: Actually, there are far more than 10 companies involved in Bitcoin. There are many companies that randomly add Bitcoin to their reserves.
Potential market risks and dynamic analysis
Laura: I noticed a tweet that mentioned that these companies could play a central role in some kind of crash in the future, similar to what happened with GBTC or other similar stocks. We also discussed this, and it feels like this scenario may only happen if these companies can borrow against their assets. Of course, there are other factors, such as Microstrategy may have better loan terms, while some other companies may be further along the risk curve and adopt more aggressive strategies, thus facing greater downside risk when the market fluctuates.
In other words, if there are lenders willing to accept these assets as collateral, this could be how the risk breaks out. At the same time, this situation could trigger a cascading effect. For example, if the price of Bitcoin falls for some reason, some companies with poor financing conditions may be forced to sell assets, which will further exacerbate the chain reaction in the market. These are just some of my thoughts, but it is really interesting to see so many people discussing this issue. From what I have learned so far, it seems that these assets cannot be used as collateral for borrowing. However, I heard that JP Morgan now allows borrowing with Bitcoin ETF as collateral, which is interesting. Although JP Morgan CEO Jamie Dimon has always been opposed to Bitcoin, it is clear that his company does not mind profiting from it.
Haseeb: But when it comes to borrowing, things get complicated, right? The loan-to-value ratio (LTV) should be relatively low.
Tarun: Yes, LTV is a key factor. I mean, almost every other broker offers similar services, with a few exceptions.
ETFs can be used as collateral. If you are trading, usually the broker will provide some form of margin lending. I think JP Morgan is relatively conservative in this regard. Of course, I can borrow through Microstrategy, but the loan-to-value ratio is not particularly high. However, most brokers will provide similar services.
Laura: Oh, I see. So do you think that explains why some people say it could be the GBTC of the future?
Haseeb: I think market crashes don’t usually happen when everyone is paying attention. There is some truth to that. Usually, the risk points are hidden deeper.
Tarun: I think the failure mechanism for these companies is probably more like this: if a company is included in the S&P 500, all ETFs tied to it are forced to buy its shares. However, before the rebalancing, if the price of Bitcoin drops significantly, the company may be removed from the index due to debt problems. The problem is that when a company is included in the S&P 500, the market usually assumes that its stock value will increase, so the company can issue debt at a lower cost. But if the crypto asset drops significantly before the next index rebalance, the company may be in trouble.
Haseeb: In addition, these debts usually do not have a claim on conversion rights, that is, creditors cannot recover their losses through bankruptcy proceedings.
Michael Saylor's Market Influence
Haseeb: To this day, I still don’t fully understand how Michael Saylor did it, but his ability to acquire capital is truly amazing. From what is currently happening, the market crash will not be caused by Saylor, but more likely by someone else. If the market does crash, such as Bitcoin prices falling to $50,000 or $40,000 and stagnating for a long time, then Saylor may exacerbate the downward pressure on the market, but he will not be the initial trigger. Saylor’s strategy does make the situation worse when the market is down, but when the market is up, he can drive the market by increasing the cyclical influence of assets. The double-edged nature of this strategy means that if the market goes down, it will be more difficult to get out of trouble.
Robert: However, I think the next round of market upturn will be a good opportunity. This is undoubtedly good news for Saylor.
Tarun: I admire Saylor for being able to do this. That’s why I’m confused by the trend of trying to imitate him. We should realize how bold and crazy what Saylor is doing. I don’t think everyone needs to copy his model. Imitation is indeed a kind of recognition, but it’s more like a “burn money” recognition. You know, this kind of imitation may not be wise.
I don’t think everyone has the same vision for Bitcoin as Saylor. When you talk to people at these companies, they are more focused on how to make a profit than they are on thinking deeply about macroeconomics like Saylor does, or on how to survive a market crash.
Haseeb: I totally agree. Saylor is truly a unique character whose tactics and influence are reminiscent of a mob boss. Someone like him may never appear again.
Tarun: I think the key point is not that there will never be another Saylor, but the rules of the game will change in the future.
Haseeb: That's right, those who try to be the "next Saylor" should not actually be rewarded like him. Saylor owns a lot of Microstrategy stock, which allows him to take greater risks. And those so-called "next Microstrategy" are actually more like mercenaries, and they are not bound by the same long-term interests as Saylor. They should focus on optimizing the financial strategies invented by Saylor rather than simply copying his model. After all, Saylor is essentially a "financial engineer", and his returns should be based on his contributions to financial engineering rather than relying entirely on the value of the underlying assets. Therefore, I think the market will move in this direction in the future.
Tarun: I find it hard to get excited about these copycats though. The market doesn’t look sustainable for them right now. I hope I’m wrong and there will be 500 of these companies, but that doesn’t seem realistic.
Market Trend Discussion
Haseeb: There is a project called Plasma, which is purportedly a stablecoin chain associated with Tether. There are many similar projects now, which claim to be able to issue tokens natively and have no transaction fees on the chain. The idea is that this model should be more advantageous than Tron, because Tron has transaction fees, while these projects have no fees, while also facilitating stablecoin payments.
Plasma recently had its ICO through a platform called Sonar, with a valuation of $500 million. They raised $50 million by selling 10% of the total supply of Plasma. The funds were deposited into the liquidity vault, and demand reached $500 million in a matter of seconds. The top ten wallets held 38% of the total supply, and the top 17 wallets held 50%. One wallet even deposited $50 million alone. There was also a "gas war" during the whole process, and someone reportedly spent $100,000 in fees to ensure successful participation with 10 million USDC.
Tarun: I find it interesting that whenever Trump is in office, there seems to be a surge in ICOs. 2017 is a prime example.
Regarding Sonar, Kobe mentioned that when they first designed Echo, investors were dissatisfied with the need for approval and lack of control in the traditional investment group model. I think this is very interesting. As I mentioned in the book, early models, such as DAO (decentralized autonomous organization), although they raised a lot of money, found that the team lacked effective tools to manage these funds after the funds entered the smart contract. There was not even a safe way for investors to withdraw funds at the time, which led to problems such as hacker attacks. Later, we saw some improvements, such as tools developed by Taylor Monahan to help users who lost funds to phishing or scams. And now, platforms like Sonar represent a more mature version. I think this reflects a long-term development trajectory. Looking back at the Internet bubble, many startups would go public very early, while today's companies tend to postpone going public. Now, with this new way, ordinary investors can participate in projects earlier. I admit that this model has risks and requires strengthening investor education and may require changes to the qualified investor laws in the United States. But from the perspective of history and market changes, I do think similar models will become more and more common, although they may not be exactly the same.
