Takatoshi Shibayama: 0:00

Hey, hey, hey, welcome to this week's episode of Blockhead's Blockcast. I'm your host, Takatoshi Shibayama. I'm also the head of APAC for Ledger. I aim to uncover the creative, intelligent, and radical minds who are shaping the crypto industry today. I'm as crypto curious as anybody that's tuning into this show. We're doing this together, guys. Let's go. Welcome to Licensed to Shill, the offshoot of BlockCast Normal Series, where we discuss the weekly recaps of what is happening in a juicy world of crypto, the markets, and anything else that comes to our minds. Before we start, everything we say here is not investment advice, business advice, relationship advice, or friendship advice. I'm Takatoshi Shibayama, the Intergalactic Host of Crypto, and I have here again with me Lisa J.Y. Tan, CEO of Economics Design. Welcome back. Hi, glad to be back. and Nikhil Joshi, COO of EMURGO, a co-founding entity of Cardano. Welcome back from London.

Nikhil Joshi: 1:00

Hello. Nice to be here.

Takatoshi Shibayama: 1:01

Cool. So now we got our regular guys back. I'd like to kind of jump into a news that came out a couple of weeks ago, but I thought it would be newsworthy to share with all of us here today. Blockworks came out with a token transparency disclosure framework that when crypto projects, you know, foundations list, they should show some transparency. over how their frameworks are about. So like there's a scoring system of like one to 40 that is broken down into project and team, token allocation, market structure, financial disclosure and you know they have a pdf that shows like a whole framework we can deep dive into those if you want but basically you know it goes down deep into you know who are the founders of this company who are the tokens allocated to this i think this is the most important part also because they also rank this as also the most important 18 out of 40 and they want people these projects to disclose like who the tokens are allocated to and there have been any side deals if this market is full of side deals that are not disclosed, who actually gets into the project at what price point.

Takatoshi Shibayama: 2:10

These things, I think, need to be addressed. And market structure, obviously, do they have market makers? Do they have insider transactions prior to this whole thing coming to TGE? Which exchanges they're going to list to? Has there been any airdrops as of yet? Who are the holders of the assets? And then they go into the financials of the company. So what is their revenue structure? What do their assets look like to date, etc. I mean, not going to go into super detail on this. But, you know, I think this is really taking a snapshot of what the IPO world looks like in TradFi, and then trying to bring that into the world of ICOs and public listing of crypto, which really protects the retail investors up until today. A lot of retail investors are getting smoked by a lot of these investors. And, you know, we all agree, I think we everybody generally agree that this industry needs to get a little bit more transparent so that we don't get wrecked by these public listings of tokens. Lisa, you're always on the kind of forefront of TGE. You're designing the tokenomics for these projects. What's your opinion on this?

Lisa JY Tan: 3:18

Glad that this report came out or this framework and mechanism came out because I think this is absolutely necessary in the space. The last time we talked about how there's more regulations from the government side of things trying to regulate this space a bit more. And I think it's also very good to see grassroots level kind of regulation. And I think it's great that we keep it very simple, right? You mentioned the project and team, which is usually very straightforward and we don't see as many pseudonymous or anonymous projects now. You see more teams with people with more legitimate background and they do want to show off their team.

Lisa JY Tan: 3:52

And I think that's a big plus, just signaling a lot of trust, which is going to be very necessary in the space as we are bringing more legitimacy in. Token allocation is also a very interesting piece. So what I've been doing as part of analyzing a lot of tokens and helping projects with TGE is also to understand what does token allocation look like as projects are launching and also just try to validate what does that look like maybe one year or two years after launch, just making sure that the data that they presented on day one It's the same as month 24 when everything is vested or the cliff has ended. And one of these tools that I usually use is token unlocks because they do have these data available. However, as you go into detail, sometimes the problem is the tokens don't always add up to 100%. And there's so many times I've seen this, either it's less than 100% or more than 100%. No idea where the tokens come from, no idea where they're going to, but it is quite messy, which is fine, right?

Lisa JY Tan: 4:44

Because I think this is all part of us figuring out what kind of level of transparency, what the standards look like. And we're doing this from a grassroots level. But that comes all from smart contracts and everything that's available on chain. This has token allocation as 18 points out of 40, which focuses just on token allocation and transparency around that, which I think is going to be very necessary. Because sometimes what projects say is allocated to team of foundation on the white paper is quite different in 12 months time, 24 months time. So this is like a snapshot of what is relevant and what is correct at the time of TGO or the time of launch. There's also market structure and financial disclosure. I think it's very important, especially as we're moving towards legitimization. It's not just about having a token and saying what the distribution of the token is. We also need to understand what is this business about? What is the financials of it? What is the business model? What is the revenue stream? And putting that into a very simple, easy to understand score makes it easy to compare.

Lisa JY Tan: 5:40

Of course, it's not to say that there is one number that you can compare across all projects because a layer one versus a layer two versus a middleware versus an application versus a stablecoin, they're very different nuances. But at least this is a good starting point. Two things I do want to add. The first one is these are either created by Blockworks themselves, this report, or it's by the CEO of these projects. And I think sometimes if you're the CEO of the project, writing a report to score yourself against, sometimes you could have a bias to score yourself higher, like 40 out of 40. Because everything I see that's a much significant higher total, a lot of them seem to be written by the founders, whereas those with a much poorer score seem to be written by the BlockWorks team. Not to say that BlockWorks team is diminishing the value of whatever that's disclosed, but it's a bit fairer, it's a bit more transparent.

Lisa JY Tan: 6:28

So I wonder if there's a value in BlockWorks writing these reports or an independent third party writing these reports as opposed to the founders writing these reports. The second thing is I think this is a good first step into transparency. And then after that, we can go more into details and we can enhance this as we go to a degree where if this can also be connected to, say, smart contracts. So for token allocation, we don't need to trust the token allocation by what the foundation says or what the team says. But if these are all unlocked at day one or they're smart contracts keeping what the investing period is or when the unlock is, they can be a lot more trustworthy, which is the whole point of blockchain in the first place. But I think this is a very good start and I'm quite excited to see how this develops.

Takatoshi Shibayama: 7:11

Yeah, this is obviously a V1 and there's going to be V2, V3. I kind of wondered, like in the beginning, most of these projects, these foundations have a white paper and they generally list out all the founders, where they plan to allocate the tokens. You know, obviously they don't go into the whole market structure or where they're going to list or what kind of market makers they're going to hire. And obviously maybe that's not that important potentially in the beginning, but have you seen like a more of a standardization of these white papers over the years because i've been reading since 2017 they're all kind of a little bit different and to your point like who bears the responsibility of disclosing this right is it going to be a third party are the exchanges going to demand a standardized format to be submitted to them before they enlist or is it coming from the company themselves the company does obviously know all these details and they can obviously confiscate certain things that are sensitive but they can disclose certain things that are important one of the things i saw in this report that I'll give a question mark was like submitting a CSV file of all the airdrop token receivers, wallet addresses.

Takatoshi Shibayama: 8:15

I thought that was a little bit kind of like overstepping a bit, you know, that's kind of like, you know, personal data almost. Maybe there are kind of things that we can kind of bounce around and make sure that, you know, it's safe for everybody without like over disclosing things. And just going back to my initial question, like Lisa, I mean, have we seen like a standardization of all these white papers? Because, you know, nowadays maybe people just skim through it, But it's good as a starting point to kind of initially start to standardize that a little bit more before we go into these type of frameworks.

Lisa JY Tan: 8:46

That's a very good question. I never thought about standardizing white papers. I don't think there's a standard, just like pitch text. There's no such thing as a standard, but there is a structure that people typically follow. And depending on what industry you're in, you definitely want to have a bit more skewed towards certain kind of sections. But in general, the structures are quite the same. There isn't a standardized version. I want to go back to your point on who are the people who should be creating these frameworks and who should be adhering to these frameworks or should be legislating these frameworks. Because I tried doing something like this before about five, six years back, focusing on just the token aspect.

Lisa JY Tan: 9:21

And I realized the biggest problem is not about having these reports out or having whoever writing it. The biggest gatekeeper is who are the people enforcing it? Because without enforcement, these things don't make sense. And the truth is that the enforcers of the tokens in the world today, are C5. If Binance agrees this is mandatory, everything will be a piece of cake. But if Binance doesn't think that this is mandatory, it doesn't matter. And I can understand why they don't think this is mandatory because a lot of things will change as time goes. Whatever that we've talked about here and this score that we're giving right now might not be relevant in six months' time because a lot of the structure could change. And what does that mean? It means that we have to redo everything all over again I can imagine it's easy to say, okay, we don't have any of these standardized frameworks and measurements until we have a bit more similarities, perhaps, and we have some other entities to govern it.

Lisa JY Tan: 10:12

But if any CeFi can say, yeah, let's come together, create an association, create some form of risk framework, it also becomes a lot clearer when projects want to TGE. Because right now, one of the problems, nothing to do with tokens, but a bit more of how CeFi or SEXs are dealing with launching of tokens, Because they are caring about retail. They're caring about how these tokens go into hands of retail. But they don't exactly always have the clean framework of, okay, these are the criteria you need to tick before I can list you. It changes all the time. And another downside is that if we have a framework like this and they say you need to have a score of 38 and above out of 40, it's easy to game the system. So yeah, I think, again, I think this is a very good step and I'm excited to see how this would develop moving forward.

Takatoshi Shibayama: 10:54

And Nikhil, you're kind of on the business side of Cardano in some way, and you've been looking at a lot of projects. I mean, what do you think? Have you discussed these kind of things before with projects, or is it something that you think that you should just leave it up to the market to decide, or a project to decide? Who do you think should bear the responsibility of doing these

Nikhil Joshi: 11:12

things? I think it's both sides, right? I think it's in a project's interest to show a certain transparency. It's a commercial issue, ultimately, in my mind. So the token issuers have interest in providing a level of transparency clarity and transparency so that it's easy for investors to go, okay, based on commercial merit, I'm going to make a decision. If anyone feels like they're making an uninformed decision, that's just some people may choose to proceed, but many people won't.

Nikhil Joshi: 11:37

I think, I don't want to call it self-regulation because I don't want to use the word regulation, but I think a little bit of proactive movement, as we're seeing here, is a good thing. For me, I think, yeah, this is version one. It's going to be iterative. There will be changes. I think we can always argue the toss on whether the score should be 38 or 37.5 or indeed 39. So I think there will always be questions over that kind of level of subjectivity, but at least there's categorization And I think that helps new organizations or projects that are looking to issue tokens start looking at that as a guideline of what they should be thinking about. And that's the chicken and egg. And I think that will become iterative.

Nikhil Joshi: 12:12

The problem with putting some kind of central body, be it an industry lobbying group or some kind of regulator or something else in charge and dictating it, is that you end up with something like GAP or IFRS. both of which are so divorced from commercial reality of what's going on that it's highly questionable how useful it is. And secondly, they're now both so complex that they're being gained left, right, and center. So I think there is merit in the industry holding or moving forward with this because it leaves the flexibility and the adaptability to keep it within a commercial domain rather than a you know, should we call it a regulatory policy, which is somewhat distant from the day zero or real time commercial reality.

Takatoshi Shibayama: 13:02

Yeah, it's interesting that we have like a different perspective on this because like Lisa, you think centralized exchanges or centralized finance providers should be kind of enforcing this in a standardized way. Nikhil, you think that it's up to the projects and foundations to kind of decide on a commercial basis whether they like it or not. But actually in the end, it kind of points to the same thing in my view is that if you want to disclose, you'll disclose because you want to keep yourself professional. You want to make sure that all the retail and institutional investors get a fair chance to understand projects well and be able to trade the token safely if you don't want to disclose and say okay i'll just don't list on a centralized exchange i don't want to do this i'll just go to a dex and then list there then it will show like the kind of quality of the projects you are or how fair you want to be towards the investors of your token so you know in the end i kind of you know do think that it is a thing that people will decide like whether they want to do it at their discretion but that choice that they make in the end is kind of how you know they'll show the market market, how legitimate they are, how professional they want to be to make sure that everybody who trades, they're really understanding what they're about, what they want people to notice about themselves. It's a reputational thing, I would say.

Lisa JY Tan: 14:15

Yes. At the end of the day, it's a signal, right? Nobody can tell you this is the best project or best token in the world. The only thing you can do is signal. And the key thing from an economics perspective, at least, is to make signaling costly. So it means that you need to invest amount of time, effort, or energy to signal this status to show that you're different from others. If it's too easy, if it's too cheap, then signaling means nothing then. Makes sense.

Takatoshi Shibayama: 14:38

Now let's jump to another topic. This week, or maybe it was last week, at ATC, Robinhood made a huge announcement about launching their own L2. But on top of that, they talked about listing tokenized shares on their exchange, public and private. Nick Elliott, a conservative hype man, for tokenized securities. What's your view on this?

Nikhil Joshi: 14:57

There was a lot of controversy around this, particularly around the OpenAI commentary that came back. When I read it, I read that the token was basically a representation. And so it's actually acting as a derivative. So I didn't understand initially why there was so much backlash. Then I understood that what people had taken away from the initial announcement was that they had the underlying equity. And so the messaging, I think, is the key point here. Whichever one it is, there needs to be better clarity around it. And I think people also need to go past the headline and read into the detail a bit more. So, I mean, I had questions around how would you have a token that tracks the price of a privately owned stock, but past that, For me, it was just the token acting as a derivative. Now, are there then a whole bunch of questions that trigger off the back of that? Like, okay, this token should now be treated as a derivative or the kind of, should we say, TradFi type questions that kick off the back of that.

Nikhil Joshi: 15:58

But I think past that point, it's great that Robinhood would be offering some kind of token that is effectively tokenizing the underlying equity. If they're tokenizing something that simply tracks the price, then it's for people to understand that it is a derivative and it's taking a position on the price movement, but it doesn't come necessarily with the other rights of ownership, which maybe comes back to the education point. But to be honest, my takeaway from this whole thing was people need to read past the headline. There's too much click-baity type material out there. And I think if people spent a bit more time reading into the weeds, we wouldn't have this confusion.

Takatoshi Shibayama: 16:32

Yeah, well, Robinhood is not an exchange. It's a brokerage firm. So just like during the time of GameStop, they could only trade with their own clients, with their inventory of GameStop. They can't trade more than what they have. That's kind of how it works. And that's how they have to shut down the trading of GameStop in the end, right? So I think people, unfortunately, don't read beyond the clickbait. They don't read the disclosures, disclaimers, any of that kind of stuff, and then just kind of take that headline and go with it.

Takatoshi Shibayama: 17:00

Or is it that important that people actually really need to understand what CFDs are? Or is it that Robinhood and the rest has an obligation not to kind of say that they have the underlying stock? But this is, again, like a transparency thing, right? So I think crypto is always like smokes and mirrors too much. Should they be actually going to the market and say, actually, no, I'm sorry, we don't want actually underlying stock. This is a CFD. If you don't know what a CFD is, there's a link to an explanation on Investopedia that explains what CFDs are. Do you think that they should go down that kind of route?

Nikhil Joshi: 17:32

Yeah, look, I think this is all a commercial issue, right? So who is Robinhood's audience? Is there a risk that that audience... misunderstand something. And are you, as Robin Hood, like to get into trouble off, should we say, the issues of the equity or regulatory or governmental bodies, because you've now misrepresented something. It doesn't matter what your message is in a way, it's what was received on the other side. And if that audience requires its handholding to a greater extent, then that's what should happen. So it's commercial because you're now going to have operational distraction and financial resource chewed up in trying to remedy what could have otherwise been a rather straightforward message to deliver.

Takatoshi Shibayama: 18:15

And Lisa, what do you think about these kind of tokenized assets? Once we get into the world of like, we see so many different brokerage platforms are getting into this, right? I mean, this year, it's definitely the year of the institutionalization of the blockchain. And, you know, the traditional industries have already chosen stable coins and RWA are the ones that they're going to pick and choose out of what we created, and then, you know, implement that into their business. So the more RWA ways that come out, are they just going to, you hype the crowd? Or do you think they're going to, you know, just like any other securities that they offer, going to fall into the same kind of framework to disclose clearly what those RWAs are about?

Lisa JY Tan: 18:55

Yeah, so I've got two points to this. One, we talk about RWA, the other one we talk about risks. So talking about RWA, there are the big kind of private equity firms or private firms, and Robinhood is tokenizing them and allow them to trade. What I wonder is how does this impact prices? There is some volatility in these assets. But because there's a secondary market for these kind of, I think they're called class B shares. I don't really know what the names are, but there is a secondary market for that. It's not very volatile though. The reason for tokenizing it is to inject liquidity to have different, like higher trading volume. But if there isn't going to be a lot of volume and volatility, I don't know who's the target market for this. And if it's just buy and hold, I feel like you can just buy and hold Bitcoin instead. And then that's it. If I bought Bitcoin instead of starting the company, I will be up like a thousand times more than running a company. So I don't know. I wonder who will be the target audience.

Lisa JY Tan: 19:49

At the same time, when it comes to RWA, this is also quite a very interesting exit strategies for small businesses. So for example, there are a lot of small durian farms, right? Because it's durian season in Singapore, Malaysia. The durian farms or small cafes, they're profitable. They have dividends, they're sustainable in revenue. And I can see that as one of these exit strategies where people come in to buy these tokenized assets of some profitable cafe. That's not going to be the next unicorn, but they're profitable. They give you some form of passive income and tokenization just allows for fractionalization of these assets. So that will be interesting. I can see how there's an appeal to that. But beyond that, I wonder what kind of assets or what kind of target of people will be the right kind of mix. So that's one thing. But I also want to talk about risks. And I want to tie this to like the central bank in Brazil got hacked for $140 million. It's not a lot of money for, I don't know, for Singapore, for the UK, for the US. I think $140 million is quite significant in Brazil. And the central bank got hacked. And this was from one of their service providers. providers giving, somehow they got access to the backend. The thing with technological risks, in web two, we always just think of cybersecurity risk. But I think in web three, the cybersecurity risk comes in three different forms.

Lisa JY Tan: 21:00

The first one is your usual technological risks. The second is financial risk that we're talking a lot about. And the third one is economical risk. So technological risks are your usual, your back end. Somehow there's a loophole in there or with not enough pen testing and there's some back doors that people can access to. And smart, because a lot of things are all executed by smart contract that increases the risk significantly and people take this very seriously. The audit space in crypto has been printing cash for the last couple of years and people have been taking this seriously. Now, the other two things we don't really talk that much about. When we talk about financial risks, People just think of the CIFI or the track by kind of financial risks. But I think there are a lot of experts who talk about front running, MEV. These are different risks that we need to talk more about. And could these risks exist in these tokenized assets? I think they do. And what does that look like? How does that impact people? If people don't care about or people are not questioning what CFD is, then do they care about MEV? Will they care about all these other things? Because it's not just about buying these assets. There's a huge load of risks involved in holding these assets. People need to be educated about that. And the third one is economical risk, like 51% attack, 33% attack, different kind of ways that you can tip over the market cap of a small size, a small cap token, which could be these private tokenized companies. Because I imagine they're quite small cap.

Lisa JY Tan: 22:21

And that kind of economical attack can be a lot more robustly done because there's just not a lot of capital at risk. So I'm really excited about this because we make these assets a lot easier. Like people have access to these assets a lot easily. However, there are a lot of risks attached to that. And I'm quite worried about the risk. I'm happy about the opportunity given to everyone now. It's a bit fairer, but it comes to strings attached. And I don't know if people are educated enough or curious enough to be educated about the risks attached.

Takatoshi Shibayama: 22:50

Yeah. I mean, look, even with the kind of bitcoin public companies now that they're buying up a lot of these crypto assets whether it be bitcoin or ethereum or any of the old coins they're all trading at like two to like five times nav and it's an absolute levered trade on bitcoin ultimately if these people just wanted to buy bitcoin and lever it themselves they could do it on any centralized exchange why do they need to go and buy these publicly listed stocks just for the sake of thinking that they're getting a hold of these bitcoin stocks you know and for me like this is like the really scary thing is that when they do their own disclosures, they have their investor presentations and I look through a few of them and they're talking about Bitcoin yield and Bitcoin this and that.

Takatoshi Shibayama: 23:31

And I was like, there's no such terminology ever created in the traditional finance world. I mean, Bitcoin natively does not have yield. So These companies are actually creating what they call Bitcoin yield, which is actually Bitcoin per share. That's the jargon they should be using. It's not Bitcoin yield. I know that these companies are going to raise another capital to pay off these dividends to the existing investors, and they're going to do it again and again and again. So they're going to stockpile a bunch of debt just so that they can pay dividends to the shareholders of these people. That is not Bitcoin yield. That is just a Ponzi scheme, right? It's an absolute Ponzi scheme. That's what Madoff did back in the days that went really big, right? So they raised more capital to pay investors return. And these are publicly listed companies and no regulators is stepping in and say, hey, don't create such words that confuses people. And this kind of thing that I was wanting to talk about, and we'll go back into the tokenized funds and all that kind of stuff.

Takatoshi Shibayama: 24:28

But there's too many playful words in this financial world that need to end, in my view, because it confuses people. It misleads people. And a lot of people are going to get wrecked because of that. And I think there's too much people kind of piling into all these things, thinking that they're going to make a quick buck, et cetera, but not knowing really what's behind it. And that kind of goes to your point, Lisa. It's like, maybe nobody really cares. You know, they just want to make a nice run of their money and then just get out when they can. But, you know, I think more people are going to get wrecked from this than people who actually make money. And, you know, Nikhil, just going back to token I mean, there's been a lot of these type of listed companies, but I'm sure there's going to be a lot of RWA projects that are going to be in a form of what kind of looks like a tokenized RWA. But in reality, it's not like the CFB kind of thing. So, you know, you've been always kind of adamant that we should not be tokenizing everything. I mean, what is your kind of view on this?

Nikhil Joshi: 25:26

I've been talking about it as tokenitis, which is the malady, the illness of wanting to tokenize everything when it doesn't really need it. There is merit, but not in all cases, and certainly not yet, I think. The issuing of shares when we have one underlying asset. Personally, I think people just want in on the Bitcoin headline action, but don't necessarily know how to access Bitcoin directly, to the point you made earlier, Taka, right? So I think people are saying, well, if I buy shares in this company, then I've got indirect access to Bitcoin. I think they're kind of seeing it as almost like a limited recourse trade. right? SPV, one asset, and issue something out of the top of it that you can have that exposure to. I don't think that's a perfect analogy at all, right? But it's the one that's closest in my mind to how I think people are thinking about it. I don't want to paint a broad brush across all of this, but I think there are risks, Lisa, to your point. I don't think it's binary that everyone needs to understand all the risks or they shouldn't be in it. I think there's real world cases today where there are all sorts of risks that people are aware there's a number of unknowns and they're comfortable with that and i think that will apply here as well i think we're perhaps more aware of what those risks are right and willing to take an informed decision off the back of it i think if we're talking about retail most people are comfortable with what they don't know and are happy to delegate that to someone else. And if we get to a point, for example, like a lot of banks, particularly in the US and the European Union, now will cover you if there's a loss on your deposit. I think we'll probably get to something like that with crypto players at some point in the future.

Lisa JY Tan: 27:01

As you were mentioning, I was thinking about a different perspective of what kind of positive aspects we can look at with these companies using treasury to buy Bitcoin, Ethereum, Solana, whatever other kind of tokens is available. And like you, before that, I was just very annoyed why would a company raise funds to buy an asset that anyone and everyone can buy? And then this is a perspective that I'm thinking about right now. So one of the projects that we work with is called Hemi. And Hemi is a layer two on Bitcoin. And they have the largest TVL. They have over 1 billion TVL that's really locked in there. And this is all Bitcoin as TVL because it's a Bitcoin layer two. And I'm challenging myself to see that these treasuries, they can add real valuable assets actions or they can be a valuable economic participant if all three of us are holding bitcoin it's quite decentralized and distributed which is the point of bitcoin however if one company holds on behalf of us if they raise funds they get this bitcoin they use this bitcoin to put into work to help run l2s and l2s can run smart contracts now you're running smart contracts it's secure on bitcoin that puts bitcoin to a greater use than just a medium of payment and then your yield now is not bitcoin as a yield but your yield in the other kind of blockchains i'm not saying this is the perfect solution but i think it helps with number one these treasuries coordinate better so we call these assets we put these assets to use almost like a fixed deposit you put in usd but you get sgd out and that can be dividends returned to people and At the same time, again, because there's so much risks, as we're talking about users coming in, I might lose my private key. I might not know what a private key is. I might accidentally give it to someone. I completely forget my secret. Instead of doing that, and I could use Ledger to do it for me, but I can also just put it in a company, and the company just charges a fee to manage because it's not going to be that costly if I just want to buy $100 worth of shares. So as much as I agree, this is a little bit like, why are we taking three steps when we can just do one? I can also see that as a potential benefit because it helps to build the entire ecosystem. Right now, Bitcoin is just a foundational layer. We can build a lot of other applications, tools, smart contracts, L2s that's on top of Bitcoin. And that might be quite interesting if Bitcoin becomes a new reserve currency. Right now, a lot of macro markets are trading on USD. And that's why USD is still very strong. But if it's shifting to a different kind of currency, What could that look like? And what would be a different kind of fair asset? Maybe Bitcoin could be the answer.

Takatoshi Shibayama: 29:24

You know, look, I'm not like dunking on Michael Saylor in any way. I celebrated that he came to the relevation that Bitcoin is better than gold. You know, the dollar is being inflated away. You know, they should hold some treasury in Bitcoin. But treasury means that whatever they made from their business and they have cash reserves or cash equivalents, right? And taking a portion of that, And then buying Bitcoin makes sense. But raising money to buy more Bitcoin is just an investment vehicle, right? So he turned his company into an investment vehicle, levered up with investors' money and buy Bitcoin. And it turned into a completely different company than what he actually went on to do. And then now he has the problem that he has to pay you know, interest payments on those things, right? They have interest-bearing preferred shares. They have to pay those on an annual basis in order to make those whole, which means that he has to raise more capital because those Bitcoin is not earning anything. And then the problem I see with these companies also is that they're just willing to sit on it. They're not looking to kind of put it in some kind of layer two project so that they can earn some yield off of it. You know, they just want to hold it and just stick with it. That's where kind of the problem comes when they start talking about you know, investors getting Bitcoin yield. They're not getting any Bitcoin yield. It's complete, you know, it's just a Ponzi scheme kind of yield, right? So that's kind of where I find problematic about this whole strategy. And if they couldn't utilize all the kind of things that, you know, the crypto industry has created thus so far and creating that kind of proper yield for those Bitcoins, to me, that makes more sense. I would much rather buy a public company that's like going on a rampant buying ETH or any POS token and natively staking that and then them, you know, giving some dividends out to their own investors saying, you know, there's an ETH yield. Yeah, totally. I understand. Right. Totally. Because there's a native yield. But, you know, for the Bitcoin narrative, I just cannot understand why this is. I mean, this is not really particularly the topic I wanted to talk about today, but I think we kind of went on to that. And, you know, I had this kind of feeling for so long that I need to get it out. Any of you guys want to have any parting messages around this thing before we close?

Nikhil Joshi: 31:33

I suspect there's a day two game plan here, right? So right now it's just, as long as my assets worth more than my liability, then we're good, right? Day two, I think becomes, okay, now how do we start actually getting real yield in whatever shape or form that is, right? I suspect, right? That has to be the day two game plan. And could you do that right now and then talk about yield in real terms rather than this kind of, I think what you're driving at is a bit of a marketing gimmick, right?

Takatoshi Shibayama: 32:04

Absolutely.

Nikhil Joshi: 32:05

Possibly. I wonder if that's just too... operationally complex. Sorry, not operationally, but there are too many moving parts at this point. So day one is just buy, buy, buy. You've just got to make sure your assets are worth more than your liabilities. And fingers crossed that lays out over the next X number of years, I guess. Then you start putting your efforts into, okay, now let's generate some return. Because otherwise, this investment vehicle surely just matures and expires around 2040.

Takatoshi Shibayama: 32:31

Right. Well, I think that's a wrap, guys. Thank you very much for your time. Thanks for listening. If you like what you hear, give BlockCast a like and a subscribe on your favorite podcast channels, Spotify, Apple, wherever they are. For all your juicy Web3 news, keep updated on blockhead.co. You can also catch Valentine's Daily Views on the market on BRN. Catch you all in the next episode.