Byron Gilliam

Nathaniel Whittemore

The Breakdown

Robinhood just unveiled major plans to offer tokenized stocks—including SpaceX and OpenAI—on their own Ethereum L2 blockchain, potentially reshaping private and public markets. NLW explores how Robinhood's move might democratize finance, threaten traditional venture models, and accelerate the convergence of crypto and traditional financial systems. Plus, Circle seeks a bank charter, highlighting crypto's rapid institutionalization.
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Robinhood and Kraken Bet Big on Tokenized Stocks 

Speculation swirls around who could replace Jerome Powell as Trump hints at naming a new Fed chair early—potentially upending central bank independence. NLW breaks down the leading contenders, market reactions, Trump’s radical debt issuance ideas, and why healthcare cuts and tariffs might be the real macro shocks ahead of July 4th.
Source: <a href="https://www.coindesk.com/opinion/2025/06/26/whats-next-for-tokenization">⁠https://www.coindesk.com/opinion/2025/06/26/whats-next-for-tokenization⁠</a>
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Trump Eyes Fed Shake-Up as Markets Brace for Cuts

This Long Read Sunday explores the rise of tokenization in financial markets. NLW reads and analyzes a piece from Galaxy’s Thomas Cowan on how stablecoins, tokenized money market funds, and on-chain structured credit are leading the next wave of crypto adoption. From Wall Street’s growing interest to the regulatory hurdles ahead, today’s episode dives deep into how tokenization is quietly transforming finance—and why we may be at the start of something much bigger.
Source: <a href="https://www.coindesk.com/opinion/2025/06/26/whats-next-for-tokenization">https://www.coindesk.com/opinion/2025/06/26/whats-next-for-tokenization</a>
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Is Tokenization the 3rd Leg of this Bull Market?

This is a segment from The Breakdown newsletter. To read full editions, <a href="https://blockworks.co/brand/the-breakdown">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Private markets are the new public markets.” — Matt Levine
</blockquote>



Because I was a professional trader for a long time, people have always asked me for investment advice.



At first, I’d try to explain that traders don’t know anything about investing, but then they’d just ask me for trading advice, as if it were the same thing.



(Full disclosure: Traders don’t know much about trading, either. It’s mostly luck.)



Eventually, I stopped trying to explain the difference and started just offering the standard advice instead: Put it all in an US equities index fund.&nbsp;



For anyone young enough to ride out the volatility, that’s always worked out because the S&amp;P 500 has returned about 8.5% a year since its inception in 1928.



Over a decade or two, 8.5% a year is a lot — compound interest remains the eighth wonder of the world.



But the vast majority of stocks don’t compound at all, which makes things difficult.&nbsp;



A <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447">study</a> by Hendrik Bessembinder found that just 4% of stocks accounted for all of the net returns in US equity markets between 1926 and 2019.&nbsp;



4%!



The other 96% of stocks, in aggregate, returned nothing.



So, investors who missed out on Amazon (+225,089%), Nvidia (+407,612%) or Microsoft (+825,487%), are unlikely to have achieved that average 8.5% return — or anything close to it.



(Bessembinder also <a href="https://download.ssrn.com/2024/11/11/4897069.pdf?response-content-disposition=inline&amp;X-Amz-Security-Token=IQoJb3JpZ2luX2VjEPn%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEaCXVzLWVhc3QtMSJIMEYCIQDzBRREWRCOhi4YJ1keOAqX93xc2%2BsYYn%2F28qXwbhsIlQIhAML82tNSZ%2Fx3Rx8pgXnWoQ9T4xi9YHN5NpIqP%2Fgfyyj0KsYFCPH%2F%2F%2F%2F%2F%2F%2F%2F%2F%2FwEQBBoMMzA4NDc1MzAxMjU3IgzwDMQ8e0RzwYuE5WAqmgWRVqfaz%2BfoQwlK5wCEaSjIVEOu0UXXrv4OuLLt%2FSD8YtSVGPOQxvaZSa4cW%2Flf6yM7pVqZY%2F%2Bgd89fT%2FqTsrFVBmxZULOspj8l37Q0at%2Fb4JWLUOwVGVf5HW0jXKGmGoyF39phC9f0SF1IjQyOlX1Fglm3RJFk5LE3yq4Hssi0yTQCzE80vkBtpi14pVSKzYYVMcbJGrNSM%2BjvgKGlxtBDT5Qe0rx7tEwBtUGfSTci3P4%2Fc60mKx%2BcNqY0VsqYUwUx5m8tKo4wY5pB6mlWKHCJdnaQPdrl%2FULHNOhN8p9pTVUeSEVnbK3%2BWZNnZYmsfKnylqryWC%2BG26ZF%2F77i%2FTKXChGyKSMK7Bi4KQCeeQ%2B0Yp1myKAICvDM4QuPuGv9BYMdh9MaQeBBVJ2LeXUPN7M5qiQLyT6inglP%2FPtVPdX48bzSwZN2vdEaBUac8RiwRPTb7YhkgFWZ1lowJX14srARoCHXjWGH3%2BNAhsvPIprLiDMPSc8HpF20pUzahr53YSE4sL4QZdR%2FTWdzS5lZk31OShI6oniGBeT0VyvkiD86XYGyHUgo5tBJk4hOTnb73mRw6Bxco3GqysTEpCE6qrGUKDHaeE9DtEfJsQl5lJ%2BogQSoK5sOoE5sG5f8ZJo9f1vzcb16bd6GzEOctxGNSwrg3Zj33ojp%2FIavdcw0EIJGHbxPgQedVrFqQk%2FEd04OesGnX0rhWBl48lsvoj4HfCSff%2BpSjWNgguITRxh1gh27vcJih1E9j0jC1SwY%2BLlNH6PlsRbwf6%2BC9rZ6ITh5cLE%2BiHSvG4LKmEPXdduE2p%2B%2BJCaqbWDnimZRt6t95oJVsCwm%2B25TcRUD3fgp8vDzdj3ZQbNn7zUlCvE3LciNH0QLsp4tZLqBv2p3LNcwu7KVwwY6sAFTariU6YXMmRPo%2FQiY%2BtfgRrRtrUcctUZulq27oPMLi0b2pQp107YQeCJDkDC7fYwg20%2BxZhChZK9qCFtZKvroTUBMwGSAIto8CNEskEStmX%2FljZkq5JofQuyp7DzGwV%2B7udHQyLhXkXPgSTORVuC9Lx4eplHZK%2B%2F4drrKlA8rsgBszPBGaqnPyGeTVu7vKsuxenyDCtF0yeAokcCZpPBjpMhJzU9V8Y743c27KfYI8w%3D%3D&amp;X-Amz-Algorithm=AWS4-HMAC-SHA256&amp;X-Amz-Date=20250702T162840Z&amp;X-Amz-SignedHeaders=host&amp;X-Amz-Expires=300&amp;X-Amz-Credential=ASIAUPUUPRWEQWNLDEOU%2F20250702%2Fus-east-1%2Fs3%2Faws4_request&amp;X-Amz-Signature=279e8bda8ba52721519122951ed78d1e0ee273289d3b0b4b38c7a3afcccb244b&amp;abstractId=4897069">cites</a> the 265 million% lifetime return in Altria, but few of us have a 100-year investing lifetime, so I’m not sure how helpful that is.)



This has always been the rationale for index investing: It’s impossible to pick the small number of stocks responsible for long-term equity returns (let alone resist the urge to sell them), so it’s best to buy them all via an index (and never sell them).



Now, though, those kinds of mega-winners are less likely to be in the index.



Today’s most exciting companies — OpenAI, SpaceX, Epic Games — stay private seemingly forever.



This is a problem.



If we’re all counting on our stock portfolios to return 8.5% a year, but the kinds of companies that accounted for that 8.5% are no longer in them, how is anyone ever going to retire?



One possible solution is to “make IPOs great again,” as SEC Chair Paul Atkins <a href="https://www.cnbc.com/video/2025/07/02/sec-chairman-paul-atkins-on-regulating-private-markets-rise-of-stock-tokenization.html">told CNBC</a> he intends to do.



Atkins says that by making disclosure requirements less onerous, companies will be encouraged to return to the stock market.&nbsp;



But I’m not sure why they’d bother — there’s so much private capital available for high-profile companies like OpenAI and Epic Games that there’s no reason for them to suffer any level of disclosure at all (let alone quarterly earnings calls, road shows, litigation risk, etc.).



The other possible solution is simply to let everyone invest in private companies.



Last week, <a href="https://republic.com">Republic</a>, an SEC and Finra regulated investing platform, <a href="https://www.wsj.com/finance/investing/republic-investing-tokens-companies-ipo-ccff7f91?gaa_at=eafs&amp;gaa_n=ASWzDAifvq5QstV0p4Bp-L8k3h1zK1wuMwjESjo6Fu-Vm3MvxSeDgkal95KbWWQh6RQ%3D&amp;gaa_ts=68658bd8&amp;gaa_sig=yRnX_ZPEeV6ANHHm5tMtayCcM6Ln9DxROtFvyI_H5McjD6WaVDxH6LDt34maN4plG3KvrZev2PfiqkgKhLUdrw%3D%3D">announced</a> it will make history by offering equity exposure in private companies to US investors — and that it’ll do so within the current set of US securities regulations, no special dispensation required.



Crypto, apparently, makes this possible.



After being KYC’d by Republic, retail investors will be able to buy tokenized versions of private shares that will (after an SEC-mandated waiting period) trade onchain between whitelisted wallets.



Republic is confident enough that regulators won’t object to its tokenized “<a href="https://republic.com/mirror">mirror shares</a>” that it’s now taking pre-orders for shares of SpaceX, OpenAI, Epic Games and Anthropic.&nbsp;&nbsp;



There are reasons for caution: Mirror shares do not confer any ownership rights. Instead, they are essentially a tradeable IOU, ultimately redeemable only in the event of an IPO or sale of a private company.



The IOUs are issued by Republic, not the companies themselves, so buyers will have counterparty risk if they do get a chance to redeem.



(This afternoon, OpenAI <a href="https://x.com/OpenAINewsroom/status/1940502391037874606">warned</a> that the “OpenAI tokens” being offered by Robinhood to EU customers “are not OpenAI equity.”)



And while I’m guessing that Republic will generally back the mirror shares 1:1 with the equity it represents, it’s not required to.



Retail investors, however, have never been known for caution.



Republic co-CEO Andrew Durgee told me this morning that it’s already received $300 million of reservations for mirror shares. That, I think, reflects the magnitude of the problem currently faced by public market investors, who rightly feel sidelined by the rise of private markets.&nbsp;



But buying OpenAI or SpaceX at a $300 billion+ market cap is unlikely to help anyone retire anytime soon.&nbsp;



Amazon, Microsoft and Nvidia, for example, all IPO’d at market capitalizations of well under $1 billion.



Better yet, Microsoft IPO’d at a P/E ratio of 10, which many people thought was expensive at the time.



It’s hard to imagine anyone making 800,000% from a $300 billion starting point and who knows what valuation. I imagine Republic will soon make tokenized shares of younger, cheaper, still-private companies available, and maybe the next Microsoft will be among them.



But how will anyone spot it?



It’s easy to dismiss the SEC’s accreditation rules as paternalistic, but the equity raising process it enforces is a price discovery mechanism that makes equity markets significantly safer for retail investors.



Moving that process onchain comes with risk.



Still, fewer public companies to invest in is a growing problem for retail investors and investing in more private companies might be the answer.



Just don’t expect to make 8.5%.



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The Breakdown Newsletter

Crypto brings private markets to the public

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Great things in business are never done by one person, they’re done by a team of people.” — Steve Jobs
</blockquote>



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcV3kLIRva-_oRY1fjMdlO1HuKiv4B9XH2Of4YZ059fpLU0-M-5aDH9wtG2iVtkuXA_05gvzMj3wG2dksL82rjPgnrjhGMlgqQ0oMw5iPpISLWVTWlRBp2aus_ER4YNBC9H-Pih-A?key=jAbiypjm3gXzOvW6tKo1fw" alt="" style="width:612px;height:auto"/></figure>



Steve Jobs <a href="https://youtu.be/njYciFC7mR8?si=jDinkTcfmeVGT2Df">liked to tell a story</a> of a “slightly scary” old man from whom he did odd jobs as a kid, including, one time, gathering some rocks out of the yard.



The man put the rocks into a tumbler in his garage, added some liquid and grit, and told Jobs to come back the next day to see the result.



Jobs says he was amazed as the rocks emerged from the tumbler as smooth, shiny objects of desire.



Later in life, he found this works with people, too.



“A group of talented people, bumping up against each other, having arguments, having fights sometimes, making some noise. By working together they polish each other and they polish the ideas.” In other words, put a group of people in a room together and they’re all likely to look smarter when they come out.



Unlike rocks, however, they do have to be the right kind of people.



As individually visionary as Steve Jobs was, he <a href="https://pca.st/episode/26dcb911-925b-4fae-b13c-9c7ccc50688c?t=1697">attributed his success</a> at least in part to the people he chose to be around:&nbsp; “I think I consistently figured out who the really smart people were to hang around with. You must find extraordinary people.”



One place to find extraordinary people is at conferences.



The magic of an innovation cluster like Silicon Valley is the critical mass of tech people constantly bumping into each other.



Conferences create temporary innovation clusters, like a pop-up version of Silicon Valley.



“One way to think about an industry conference,” Byrne Hobart <a href="https://x.com/ByrneHobart/status/1800537690787471849">explains</a>, is that it “synthesizes high real estate prices by charging an entry fee (and plane tickets plus hotels are also going to have the same economic effect); they make time more expensive, so they raise the relative value of the highest-utility interactions.”



Translation: the high cost of attending conferences weeds out the riff-raff.



If you’re still wondering why people incur the cost of attending a conference in person that they could watch for free at home, I think that’s pretty much it.



You get to meet the kind of people you’d want to be tossed into a rock tumbler with.



<h2 class="wp-block-heading">A panel on crypto’s current meta: Treasury Asset Companies</h2>



I’m a skeptic of crypto treasury companies (to put it mildly), simply because I think companies should be in the business of making things, not just holding them.&nbsp;



I still feel that way after listening to this morning’s panel with three enthusiasts for companies that mostly just hold crypto, but there was more nuance to the story than I had expected.



Dan Kang notes that DeFi Development Corp also runs validators, which allows it to grow its Solana stake independently of the NAV multiple that investors assign to its stock (DFDV).



Could they earn enough Solana by running validators to service their dollar-denominated debt if their stock fell below 1x NAV? I expect we’ll find out, eventually.



In the meantime, DeFi Development Corp “gives you the ability to accumulate crypto even faster than you could on your own.”



I’d like to see the math on that for people paying <a href="https://defidevcorp.com">3.1x NAV</a> for DFDV today, but that’s the service they provide to investors.



Thomas Lee rationalized the seemingly inexplicable valuations that crypto companies command by saying it’s “similar to how oil companies trade on a premium to its proven reserves.”



“MicroStrategy will probably become the biggest stock in the US,” he predicts. “And it’s not valued on earnings, it’s valued at a premium to its bitcoin reserves.”



Call me old-fashioned, but I’d prefer the biggest stocks in the US be valued on earnings — because earnings are a measure of how valuable a company’s product or service is to their customers.



Lee says the crypto treasury companies with the highest NAV multiples have effectively turned their investors into customers.



That’s true, but I’d bet that most of these “customers” still think they’re investing, which could cause problems.



David Grider injected a welcome note of caution, predicting that “several of these will go bankrupt.”&nbsp;



He didn’t sound particularly concerned about it, but I think people should be, because how is this meant to end?



Treasury Asset Companies “equitized tokens,” as Thomas Lee phrased it, and earlier this week, DeFi Development Corp <a href="https://www.globenewswire.com/news-release/2025/06/23/3103316/0/en/DeFi-Development-Corp-Partners-with-Kraken-to-Tokenize-DFDV-Stock-on-Solana-Becoming-the-First-U-S-Listed-Crypto-Treasury-Strategy-to-Go-Onchain.html">announced</a> that its stock will soon be tradable as a token on Solana.



Tokenizing a Crypto Treasury Company is the equivalent of tokenizing equitized tokens.



If that’s worth doing, it’s only a matter of time until someone starts a Crypto Treasury Company that will equitize the tokenized equity that equitized tokens.



This, I fear, risks a <a href="https://www.youtube.com/watch?v=9wrEEd1ajz4">Ghostbusters moment</a> in which the streams will be crossed and the crypto world comes to an end — and maybe take the rest of the world with it.



I see no other logical end point because, as Joe Lubin said on another panel, there’s a “race to acquire the highest-power money” (bitcoin and ether, in his view).&nbsp;



Whatever the risks, Crypto Treasury Companies are one way to run it.&nbsp;



<h2 class="wp-block-heading">One newsy panel</h2>



Speaking this morning, Joe Lubin casually filled in some recent crypto history — from his well-informed vantage point, at least.



Explaining why Ethereum seemed to have fallen behind over the last couple of years, Lubin shared his suspicion that “Gary Gensler was given a mandate, probably from Elizabeth Warren, to kill or slow Ethereum.”



In particular, “It appears they had secretly decided to reclassify ether as a commodity.



“They were trying to pin it on people who were responsible for The Merge,” he explained. “When we saw a bunch of researchers were getting subpoenas, we decided to sue the SEC.”



I imagine few Permissionless attendees would find any of that surprising, but it hasn’t been part of the official record, so I think we got to hear it first.



<h2 class="wp-block-heading">Day III Quotes</h2>



“It’s the ultimate meme.” — Santiago Santos on the bull case for bitcoin



“The highest-power money is bitcoin and ether, because they’re permissionless.” — Joe Lubin&nbsp;



“Ethereum got their shit together. The Ethereum Foundation is firing on all cylinders now.” — Joe Lubin



“MSTR is so big it has a sovereign put.” — Thomas Lee



“The meta-narrative is: Tokens need to make money.” — Michael Anderson, Framework Ventures



Overheard: “The product is how to get rich quick.” — Anonymous, on crypto’s true product-market fit



<h2 class="wp-block-heading">Permissionless IV Newsletter Awards:</h2>



Best elevator pitch: <a href="http://zeoapp.com">zeoapp.com</a> — WeChat + Pinduoduo with crypto rewards. (IFKYK.)&nbsp;



Best merch: personalized coin purses, Aptos



Wackiest moment: Jason Yanowitz interviews Dennis Rodman (I hear he had alpha)



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdQgeUBE6PywnaJSMNrY5eaPgRR2IQ2FDH910Td-IfuRR03ioa_8wPB-RQ608mIWY2tQZlo8tJYkBleWI9IL98oJ1vuXtg75_RpVMj810zcXh-1XFLrkdYrlHxpyyKRxYfDr0Qd?key=jAbiypjm3gXzOvW6tKo1fw" alt=""/></figure>



Best guerilla marketing: Uniswap posters on construction walls blocks from the venue



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdSjvJPriQ0t-IRcPhZYBUZu4okDaO0VZdbc8jQvgcmJqEqXEc-4YFDacolDWXXSUGrVd30wtnvEJs_HcBmAUE_PivPcFX_Wo5Dv6bzw3e6yhTFjC8DJI32y3fRg3uhiE1IDJC14g?key=jAbiypjm3gXzOvW6tKo1fw" alt=""/></figure>



The color-coordinated bicycle appeared to be serendipitous, unlocked, and there all week. Who says New York City has a crime problem?



Most mind-bending experience: The <a href="https://www.ryanoakes.com/?doing_wp_cron=1750957031.5636379718780517578125">magician/mentalist</a> in the Aptos lounge who made me question the laws of physics.



Most degen branding: “One App. 150x Leverage. 113% APR” — Merkle Trade.



Final Permissionless takeaway: It’s good to get off the sofa and see people for real.



And that’s a wrap for Permissionless IV.



Thanks for following along this week and I’ll see you at the next one.



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<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



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Permissionless

Permissionless IV, Day 3 takeaways

This is a segment from The Breakdown newsletter. To read full editions, <a href="https://blockworks.co/brand/the-breakdown">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Trust is one of the greatest economic forces on Earth.”



— Charlie Munger
</blockquote>



The only thing I miss about being an equities trader is being around other traders, because the trading desks I worked on were a lot of fun.



They always have been: “Horse-play starts over nothing, and sometimes infects all but the staid oldsters,” a 1920 account of the outdoor “Curb Exchange” on Wall Street reported. “One irrepressible youth furtively knocks off another&#8217;s hat. The indignant victim grabs and throws the hat nearest to his clutching hand, and in a minute the air is full of sailing head-gear.”



Crypto, by contrast, isn’t nearly as lighthearted — partly because it’s a WFH industry (it’s difficult to knock off a colleague’s hat over Zoom).



But, it’s also because the founding ethos of crypto is that it&#8217;s “money for enemies.”



It’s difficult to have fun around someone you consider an enemy.



Bitcoiners in particular often come across as a bit humorless; perhaps more inclined to mansplain money and banking than they are to go for a laugh.



The rest of crypto, too, can feel like an adversarial, player vs. player and negative-sum place.



That is fun while you’re winning, but most of the time, most people aren’t.



This matters because fun is important in finance.



Even in <a href="https://x.com/MaxfieldOnBanks/status/1920569223509602378?t=sjxSuzc99arSp6NjGdHlTQ&amp;s=19">staid commercial banks</a>, going for laughs helps build the kind of trust that the finance industry runs on.&nbsp;



Nothing would happen in TradFi if people didn’t trust each other.



That is a feature, not a flaw, of both finance and humans.&nbsp;



The evolutionary biologist Joseph Henrich <a href="https://pca.st/episode/3101c90c-96ad-4c40-86d1-cb0239478b2e?t=1301">explains</a> that “humans haven’t succeeded because of our raw intelligence. Humans have succeeded because they cooperate.”



In other words, the reason humans made it to the moon and not, say, alligators isn’t because we’re individually smarter than alligators, but that we’re collectively smarter..&nbsp;



Henrich <a href="https://pca.st/episode/b724ebb0-b896-405f-bd6f-cfc21e0731d1?t=1411">notes</a> that human brains have been shrinking over the millennia as we’ve been naturally selected for our willingness to trust one another, not for our raw computing power.



As our individual brains have shrunk, our “collective brain” has grown.



But trust doesn’t scale over fiber-optic cables alone.



As Henrich puts it, “the collective brain requires trust in strangers,” and <a href="https://www.iese.edu/standout/face-to-face-conversations-power/">trust</a>, research shows, is built through real-life, face-to-face interaction.



That, I think, is why conferences are more valuable than they might seem.



Despite the industry&#8217;s dour reputation, crypto conferences are surprisingly fun.&nbsp;



Dunk tank, after parties, free merch and, most importantly, an abundance of actual people to talk to — not just Twitter handles.



I think that’s good news, because if crypto wants to fulfill its promise, it might need a little more trust and a lot more fun.



One good talk: Leo Dorlöchter, <a href="https://www.peaq.xyz">Peaq</a>



To the oft-asked question about crypto’s purpose, Peaq founder Leo Dorlöchter offers a sci-fi answer: Crypto will be “the computer of the machine economy.”



Specifically, Dorlöchter sees a near future in which autonomous self-driving taxis recharge their batteries with a “tokenized EV charger” that, in turn, sources energy from “tokenized solar panels.”&nbsp;



Humans might not have much gainful employment in that world (“machines will do most of the work”), but we will be able to invest in the machines.



DePIN, Dorlöchter says, is “creating a new asset class” by allowing people to “earn from autonomous machines.”



We’ve never been able to invest directly in a machine, he points out — only in the companies that own the machines.



That could change with “initial machine offerings,” in which crypto investors have the opportunity to finance the critical infrastructure needed for the fully autonomous machine economy to emerge.&nbsp;



(Don’t tell Eliezer Yudkowsky, though, he might want to <a href="https://futurism.com/ai-expert-bomb-datacenters">bomb</a> us.)



Beyond DePINs, the “good news” for crypto is that “the machines will go onchain” — for payments, identity, sensors, user interfaces and data.



Dorlöchter categorizes these activities as a “trust infrastructure” where autonomous machines will need to cooperate with each other.



Perhaps ironically, it’s only trustless crypto that can provide it.



Another good talk: Tarek Mansour, <a href="https://kalshi.com">Kalshi</a>



Kalshi isn’t a crypto company, but its founder Tarek Mansour thinks that’s a distinction that won’t matter for much longer.



“Any kind of fintech company is inevitably going to be a crypto company,” Mansour predicted this morning.



Kalshi, he said, will increasingly do business on crypto rails “because they work better.”



To my surprise, they’re doing a lot of business: $1 billion a month in prediction market betting volume, with millions of active customers and 1,500 live markets, according to Mansour.



I expected that prediction markets would remain a once-every-four years phenomenon, but it’s starting to look like people want to bet on more than just presidential elections.



Mansour thinks it will get a lot bigger, too: “In 10 years, I don’t see any reason why prediction markets wouldn’t be bigger than the stock market.”



I’m not sure that would be good news for the world.



Mansour says prediction markets are the fastest growing “asset class,” but if so, they are a weird kind of negative-sum asset — different in kind from positive-sum stocks, bonds and real estate.&nbsp;&nbsp;



If investors put money into prediction markets instead of productive assets, it seems like that would be a net negative for the world.



But Mansour asks us to “imagine a world where any debate can be settled in prediction markets.”



That might make them a net positive, because one thing I agree with Mansour on is that “financial markets see the future better than anything else.”



If prediction markets help us see the future better, we can all make better decisions.



Also, the markets will be settled in crypto, so that will be fun.



Miscellaneous quotes:



“We really want to reverse engineer into a Pizza Hut franchise.” — Konstantin Richter, Blockdaemon, in satirizing the current craze for crypto SPACs



“USD1 will be the biggest stablecoin…World Liberty Financial will be a household name.” — Zak Folkman, World Liberty Financial (in a moment of Trumpian understatement)



“The first thing in crypto that’s starting to work.” — Ali Yaha, a16z, on stablecoins



“If you want to do great things, you should reach out.” — Luca Prosperi, M0



“Be a human. Write and read code.” — Brendan Eich, inventor of JavaScript, after arguing that LLMs will never be as smart as humans



“We just ate shit for longer than anyone else and worked out.” — Tarek Mansour on the success of Kalshi



“If you sue a regulator, make sure you win.” — Tarek Mansour



“In the next five years almost all financial transactions will be driven by agents.” — Ali Yaha, a16z



Overheard: “I went to a cypherpunk meet up in 1994.”



Crypto conference innovation: Giant beanbags in lieu of chairs. (Bonus tip: Find one up against a wall, it’s less awkward.)



Today’s takeaway: Two slices and a Coke.



See you tomorrow for day three!



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</ul>

Permissionless IV, Day 2 takeaways

This is a segment from The Breakdown newsletter. To read full editions, <a href="https://blockworks.co/brand/the-breakdown">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“We know more than we can tell.”



— Michael Polanyi on the importance of IRL collaboration
</blockquote>



Hewlett and Packard; Jobs and Woz; Gates and Allen; Page and Brin; Bezos and (the now-forgotten) Kaphan.



The history of technology in America is a history of two people incubating whole new industries from a garage.



Would any of Hewlett-Packard, Apple, Microsoft, Google or Amazon have been incubated over Zoom?



We’ll never know, but empirical evidence suggests not. Even in this age of video conferencing, face-to-face interaction remains a key ingredient in the alchemy of innovation.&nbsp;



One <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4282331">study</a> found, for example, that adding non-stop flights between two locations resulted in a statistically significant increase in research citations and collaborative patents between said locations.



Another study, published in <a href="https://www.nature.com/articles/s41586-022-04643-y?error=cookies_not_supported&amp;code=586c1d2f-9fcf-47b4-8916-1f890c13adc8#:~:text=generation%20as%20the%20foundation%20of,our%20effects%20are%20driven%20by">Nature</a>, offers an explanation as to why getting off the sofa and onto a flight might be worth it: “Videoconferencing hampers idea generation because it focuses communicators on a screen, which prompts a narrower cognitive focus.”



(As someone who happily works from a sofa, I report that result only reluctantly.)



Researchers have even used <a href="https://www.nber.org/papers/w30147">GPS data from Silicon Valley</a> to quantify the effect of chance encounters on innovation, finding “substantial returns to face-to-face meetings.”&nbsp;



It’s easy to imagine why this might be the case.&nbsp;



To cite just one pitfall with remote work, <a href="https://experts.umn.edu/en/publications/blissfully-happy-or-ready-to-fight-varying-interpretations-of-emo">25% of the emojis</a> we send are misinterpreted by the recipient, often in the opposite way they were intended.



How long would Steve Wozniak have put up with Steve Jobs if any portion of their communication happened by text message?



Not long, I’m guessing.



Businesses seem to get this — it’s presumably why they spent an estimated <a href="https://www.gbta.org/global-business-travel-industry-spending-expected-to-hit-record-1-48-trillion-in-2024/">$1.4 trillion</a> flying employees around for IRL meetings last year.



Businesses don’t spend that kind of money if they don’t think they’re getting a return on it.



I’m guessing it’s also why crypto conferences like Permissionless continue to be so well attended.&nbsp;



You can watch the <a href="https://blockworks.co/event/permissionless/recordings">livestream</a> of all of this week’s panels from your sofa, but it’s more fun to be here in person.



And more productive, too.&nbsp;



<h2 class="wp-block-heading">A few of the things I heard on day one</h2>



Mike Ippolito opened the conference with some charts and a call to action.



The rising ratio of crypto traded on decentralized vs. centralized exchanges is a key performance indicator that everyone at a conference called Permissionless will feel good about:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcql9LAL1Txv7Y86aBhRiMuBFrLHkA1vKu1yXNxn2Tm3CG1sJBNvMQ8IZv4BJmaOi4UrlW3vZmUh8SYeUbMt156cxs1g7oMFjNWxWEHenU3C3VBeKdsTTzlmlv0_knoKgssqxsuqQ?key=jzr9QKU5ysR1ZKZmRSqpOw" alt=""/></figure>



Binance and Coinbase are great (and would make excellent sponsors of this newsletter). But the raison d’etre of the crypto industry is to move people onchain and, by that measure, we seem to have made a sudden burst of progress.



The revenue being generated onchain is a little underwhelming, however:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd-6uXhsBscLSXDfHviqw9CLpEks_5wKK26KqsSDzYYTQtotKf0VISnzrhfZcE88z98_5wbAvO1tyFGqy5w3h15Sn54sDkbvSEG8ZZfOiTJ6BuyDr3KgEin0VbvW0t1OLVtSy56Jw?key=jzr9QKU5ysR1ZKZmRSqpOw" alt=""/></figure>



Using Solana network revenue as a benchmark, the industry seems to be lacking momentum.&nbsp;



Flatlining revenue is an indication that we’re still waiting for a breakout application to inspire people to do things onchain (other than trade memecoins).



When asked for a crypto success story this morning, the Bitcoiner Peter Todd cited Polymarket — but couldn’t immediately remember its name, mistakenly said it’s on Solana (it&#8217;s on Polygon), and then dismissed all non-Bitcoin blockchains and applications as being “highly centralized.”



That, I think, is a measure of how much work the non-Bitcoin crypto industry still has to do in both finding utility and becoming credibly decentralized.



Non-sovereign money, stablecoins and permissionless gambling (aka, memecoins) is an excellent start.&nbsp;



But is that all there is?



My questioning of Permissionless attendees this morning suggests that crypto enthusiasts are still hoping for more, but are unsure of what that might be.&nbsp;



In opening the conference, Mike Ippolito framed the crypto industry’s challenge by quoting Nikola Tesla: &#8220;The present is theirs; the future, for which I really worked, is mine.&#8221;



In other words, money and finance still belong to TradFi, and that won’t change unless crypto people make it change.



“The present is not good enough,” Ippolito concluded, “and the responsibility is on us and us alone to make it better.”



Keynote speaker: Eric Adams, first Bitcoin mayor of New York



The mayor began his talk by recounting his family story, which started in nearby Brownsville, Brooklyn before moving to Jamaica, Queens.&nbsp;



This resonated with me because my mom’s side of the family did the opposite, going from Queens to Brooklyn, where I spent my formative years of 0 to 3.&nbsp;



(Yes, I’m from Brooklyn, but, no, don’t ask me for directions.)



More substantially, the mayor used his origin story to explain his support for the crypto industry.



Noting that over 40% of Brooklyn’s residents speak a language other than English at home, Adams said he hoped New Yorkers would adopt bitcoin as a better way to send money to relatives abroad.



That is approximately the oldest idea in crypto and has yet to really catch on, but maybe we still need to spread the word: Adams stressed the need for the industry to educate people about how crypto “benefits everyday working class people in the city.”



To benefit the city itself, Adams plugged his idea for BitBonds — municipal bonds backed by bitcoin.



That sounded a little gimmicky to me, until the moderator asked if New Yorkers would be able to pay their parking tickets in bitcoin, which the city could then use to back its bonds.



“We would love to do that,” the mayor responded.



And why not, it would be a cheap call option for the city: If bitcoin goes up, take your profit; if it goes down, default!&nbsp;



Unfortunately, the mayor might not have enough time to make it happen. The aforementioned Polymarket gives Adams a <a href="https://polymarket.com/event/new-york-city-mayoral-election/will-zohran-mamdani-win-the-2025-nyc-mayoral-election?tid=1750780256105">10% chance</a> of re-election in November.



Panels I watched: As I had hoped, the afternoon track on DePIN restored my faith that crypto is at least trying to solve real problems.



David Vorick noted that in some parts of the emerging markets, “energy is the difference between life and death.” He explained that the mission of his DePIN venture, <a href="https://glow.org/blog/what-is-glow">Glow</a>, is to incentivize the buildout of solar energy in exactly those places.



Listening to Vorick is a reminder that crypto tokens can have purposes beyond gambling. “If you want to see a lot more solar in the world,” he said, “holding the glow token is a way to both express that preference and help make it happen.” (Paraphrased.)



If that sounds cringe to you, it’s because you’re reading it in a newsletter — in person, it sounds perfectly sincere, as I’m sure it is.



Abhay Kumar of <a href="https://www.helium.foundation">the Helium Foundation</a> similarly explained that DePIN is a “new way of making networks” and that tokens determine what kinds of networks get made: “Voting with your wallet is real.”



Finally, Sam Hougan explained that <a href="http://inference.net">Inference.net</a> is creating a DePIN network to help “data centers around the world fill the extra capacity they have” — a use case that will only get more useful, I imagine.



DePIN is no longer the new-new thing, and the results so far have been modest.



But there’s hopefully bigger things to come: The panellists cited satellites, manufacturing and drones as important sectors that are most ripe for DePIN-enabled disruption.



Quotes from day one: “It’s very stupid, you’re going to lose money, but it’s fun.” — Dan Smith, Blockworks Research, on memecoins “You have to break your brain to understand it.” —  Dan Smith on the memecoin industry



“I don’t think tokens should be money. Tokens need to have some utility in the network.” — Sam Hougan, Inference.net



“I think tokens are one of the most powerful forms of money.” — David Vorick, Glow



“We’re super excited about crypto now.” — David Rhodus, Permissionless Labs, after seeing the demand for DePIN provided bandwidth



“We’re actually building stuff useful enough that people are willing to pay for it, which is very exciting.” — Logan Jastremski, Frictionless



Overheard: “People can’t think about two things at once.” — Anonymous, on crypto losing mindshare to AI and why “TradFi is sleeping on crypto”



Crypto conference innovation: Holding half a conference outdoors turns out to be an excellent idea, even when it’s 100 degrees out.



Merch of the day: Cooling neck scarves. Dunk them in ice water, wrap them around your neck, and you’ll forget it’s summer in New York City.



Something I learned: Air conditioning is the greatest invention in human history.



Today’s big takeaway: Egg and cheese on a roll, with salt, pepper and ketchup.



See you tomorrow for day two.



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Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/thebreakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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Permissionless IV, Day I takeaways

This is a segment from The Breakdown newsletter. To read full editions, <a href="https://blockworks.co/brand/the-breakdown">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;The global economy is going to work 100 times better because it&#8217;s using this new technology that lets us move money in a permissionless, programmable way.&#8221;



— Jesse Pollak
</blockquote>



Imagine if Twitter, instead of publishing the world’s stream of consciousness in real time, embargoed our posts during the day and released them all at once at 2 am every day.&nbsp;



Or if the New York Times stockpiled its journalists&#8217; daily output and published it in a single daily batch.



Such is the pre-internet dystopia in which our banking system still lives.



Credit cards, Venmo and Apple Pay make it feel like we’re sending money in real time, but this is smoke and mirrors.&nbsp;



For the most part, banks still collect our payment instructions during the day and process them in one giant batch in the middle of the night.



That’s because, behind the scenes, banks still keep their internal ledgers on creaky mainframes powered by COBOL — a programming language old enough to collect Social Security.



A <a href="https://www.reuters.com/graphics/USA-BANKS-COBOL/010040KH18J/">Reuters study</a> from 2017 estimated that 43% of the world’s banking systems run on COBOL, including those accounting for 80% of in-person transactions and 95% of ATM transactions.



At the time, the industry was estimated to be running on 220 billion lines of COBOL — and banks continued to <a href="https://techchannel.com/cobol/special-report-cobol-survey-results-prove-pervasiveness-value-and-a-bright-future/">pile it on</a> in the years since, digging themselves ever deeper into a hole of legacy code.



Many fear there is no way out.



One top banking regulator <a href="https://www.americanbanker.com/news/small-banks-feel-like-hostages-to-their-core-systems-occs-hsu">said</a> banks “feel like hostages” to their core COBOL-based systems, which are too mission-critical to risk replacing — or pausing, even.



“Some of these systems have been running for decades without being turned off,” <a href="https://www.thebanker.com/content/e22f03a8-305b-5a6d-bb07-a192a2e27bb6">according</a> to a software executive who refers to banks&#8217; COBOL systems as “zombie code.”



“If there is a power shortage,” he adds, “many banks will have no idea how to turn the core systems back on.”



This risk is not just theoretical.&nbsp; When the British bank TSB turned its COBOL systems off in 2017 to migrate to a modern Java-based platform, for example, it failed to get the new system turned on correctly.



This left as many as 1.9 million customers without access to their accounts, including tens of thousands of business customers who were unable to pay their employees.&nbsp;



The disruption lasted for the best part of a year and cost the bank more than £400 million in customer compensation, consulting fees, operational losses, fraud and regulator fines.



TSB’s chief investment officer was personally fined £81,000.



Not many banks have risked replacing COBOL since.



Recognizing that these legacy systems are effectively impossible to replace, banks have instead been looking for ways to simply avoid them, with only modest success — the real-time payments we make with Venmo and PayPal continue to be batched overnight by COBOL.



But JPMorgan’s deposit coin, <a href="https://www.jpmorgan.com/kinexys/content-hub/deposit-tokens">JPMD</a>, hopes to do better.



Announced last week, JPMD will allow whitelisted customers to move deposits held with JPMorgan on Coinbase’s BASE blockchain.



A fully KYC’d digital dollar on a corporate blockchain is not exactly cypherpunks’ dreams come true, of course.&nbsp;



But it’s undeniably useful.



In effect, it would allow banks to move money with hundreds of lines of smart contract code instead of 100,000s of lines of COBOL code.



Similarly, Jesse Pollak told the <a href="https://youtu.be/4zSMFup894w?si=f5dFUcwZ_wHe6Xx4">Unchained podcast</a> that Coinbase has helped Shopify build an onchain payments protocol that will use smart contracts to do the same job that previously required “millions of lines of code of offchain systems.”



This, he says, will allow Shopify to move money “way more efficiently, way more cheaply and fully, fully global.”



In Pollak’s telling, that is how crypto and blockchains will make the global economy “work 100 times better.”



I don’t blame you for being skeptical.



Most of the blockchain-based reimaginings of finance that I write about here are crypto-native fever dreams that end up leaving little impression on reality.&nbsp;



But TradFi appears to be paying attention this time: Shares of Visa and Mastercard slumped last week on fears that stablecoins really will disrupt payments, while newly issued Circle shares were skyrocketing.



The even better evidence that something is different this time may be today’s <a href="https://www.wsj.com/finance/currencies/stablecoin-crypto-fiserv-smaller-banks-aa9049ea?gaa_at=eafs&amp;gaa_n=ASWzDAiuAOuttUqOTsDK7Rw3bPhbyXWO5DB7RRm4R5nnzbZTnWYscLPRv7w-V5NaNAA%3D&amp;gaa_ts=68599256&amp;gaa_sig=xfuRwlSpsPotDMadI8fhOGGFW5wkTZl0qCfPx5bgXHQ24XoqIJnAtwoUZvutqdPi1iZEesSpbdWf6ZRBsQwX-w%3D%3D">news</a> that the fintech giant Fiserv plans to issue its own stablecoin and launch a <a href="https://blockworks.co/news/fiserv-solana-based-stablecoin-bank-transfers">Solana-based payments platform</a> for smaller banks to use it on.



I find this instructive because Fiserv is one of the three major fintech companies that provide “middleware” connecting banks’ batch-processing COBOL systems to real-time payment systems like FedNow.



If Fiserv’s stablecoin catches on, it might render its middleware offering redundant — and help banks out of the mainframe-sized hole they’ve dug themselves into.



It won’t happen overnight, of course.&nbsp;



But stablecoins and deposit tokens might eventually do to COBOL what the internet did to newspapers and email did to the post office: Make it obsolete by making it irrelevant.



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Blockchains may finally free banks from COBOL

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;Just because I don&#8217;t care doesn&#8217;t mean I don&#8217;t understand.&#8221;



— Marge Simpson
</blockquote>



Financial markets are forward-looking, even though humans usually are not.



It’s fundamentally what makes investing difficult: &#8220;100% of the information you have about any business reflects the past,” the legendary Bill Miller notes. “And 100% of the value of that business depends on the future.&#8221;



That’s logical enough — but also kind of confusing: How can stock prices remain so unconcerned about the future when, like this week, war breaks out in the Middle East?



In times like this, our natural instinct is to assume “the market” doesn’t understand the news we’re watching.



When stock prices appear to be under-reacting, we think everyone else must be wrong, or asleep at the wheel, or not paying attention.



This, combined with our evolutionary bias toward action, is what makes so many investors act like traders. The fight-or-flight instinct we learned in the ancient Rift Valley has evolved into a trade-or-sell instinct in the modern stock market.



But we should resist that impulse because Marge Simpson is right: The market understands what’s going on. It just doesn&#8217;t care.



“Geopolitics doesn’t normally matter much for long-run market performance,” Deutsche Bank strategist Henry Allen wrote in a note to clients this week.



Data from <a href="https://marginalrevolution.com/marginalrevolution/2025/06/markets-are-forward-looking.html">LPL Financial</a> appears to back that up, demonstrating that geopolitical shocks impact markets far less than most anyone would predict in the moment.



Even the worst events are typically followed by full market recoveries within “only a few weeks to a couple of months.”



Yet, we insist on confidently predicting the dire investing consequences of every unfortunate event that comes along.



How often do you hear an investor say, “I don’t know”?



Not very. But we did hear it from the world’s best informed market watcher this week.



On Wednesday, Fed Chair Jerome Powell <a href="https://x.com/TheTranscript_/status/1935436244890087503">explained</a> the FOMC’s decision to leave interest rates unchanged by cautioning that, &#8220;we haven’t been through a situation like this and think we have to be humble about our ability to forecast it.”



He was talking about the economic situation, but that’s probably good advice for life ones too: <a href="https://www.psychologytoday.com/us/blog/think-act-be/201907/how-often-do-your-worries-actually-come-true">Studies suggest</a> that most of the things we worry about don’t really matter.



As for markets, global prosperity has trended relentlessly upwards for decades despite our best efforts to disrupt it with wars, short-term thinking and economically illiterate policymaking.



So I find uneventful market weeks like this one reassuring.



When markets seem surprisingly calm, it’s probably not indifference or ignorance, but perspective.



Let’s check the charts.



Nothing ever happens: <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcjocTjhL0Ms05A12TGJXSzquqaa-A1YQyj0evZPTC6th1HtyYZAH3WQOxEG4aoYb2unh9mDUJoOp5ayk-1YMruyt3h_VVREc79d6QYGrrxCAmP7TuQxEUmZNBOb8wq2Y7yz_Ohig?key=MdB9863qS6m-tBRLwI6GGg" width="624" height="435">



It feels like the world has had a tumultuous month, but you’d never know from financial markets: BTC, gold, stocks and bonds have all been sideways.



Expectations re-coupling with reality?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfypM0QW599motUHNXWaNMzGM-iTAF5IaYbGM5t7Dh3Eadc9cB-yFOLd9q5Cwfvt9Cgj9BihP8HCFdOqb8AVVEY3JWuZby4y8WMa9BAnXCRCwejHcjKZx8fkrRdjYuRA44oZD5eXg?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



The “soft” economic data (i.e., sentiment-based surveys) has rebounded back to where the “hard” data (i.e., actual economic activity) is. The hard data is trending down, but in the short-term at least, the economic impact of tariffs and policy uncertainty has not been nearly as bad as expected.



Long-term, the news is usually good:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeLOzMdghOauEVdqkPtrFMQ0M7QDC63oUZalbEvmm0SEXBETRWkPsHL2aebi-OvDaHOjMOU5HgXGMGY0k-UGzaNuhlrHc66fNyehyUN8Xk_CosYWs_F2FG6AqxWcxzbJb2RU1ip?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



Scott Grannis <a href="http://scottgrannis.blogspot.com">notes</a> that the real (inflation-adjusted) net worth of US households has increased by 3.6% per year for decades. “The US economy is an astounding engine of growth and prosperity,” he concludes.



The news aside, things are unusually good right now:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcP7OPDHTI0GdYhbkI_RDHm3O08p4dYDd1d_69PvNHIm7DRymzJoNm90Wmrd_6Nv6k2HBP-r0Q-j8fvEUCvWMA5cj4fW4peWYPDF-fhJXkgs_ekqBLwr_39t1ZBdUAkx5kyL_pulw?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



Ed Yardeni characterizes the current mix of inflation and employment as a rare instance of economic “nirvana”: “The history of economic nirvanas with both inflation subdued at around 2.0% year over year and the economy at full employment (i.e., with the jobless rate at 4.0%) shows eight such transcendental experiences since the 1950s, including the current one.”



The class of 2025 is not feeling it, however:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdRGg3Q0XoZiE6VzMkxuW4ZXrCM8ZAObAPBpvc-x-lrHqlSE1oSTLVosiC9fGv1MZeW2iV3SPxBRbeDTbpQ2sx9kYop_k-mc0Vgs2FlAIV27HbaqtmhKrzWFUaWfB4YgeazONS57g?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



2025 might not be the worst year ever to graduate college — but it is probably the worst relative to how good the economy otherwise is. That might be because AI is doing the entry-level jobs now. Or, as Paul Krugman <a href="https://paulkrugman.substack.com/p/bad-times-for-college-graduates">believes</a>, because political uncertainty has caused employers to stop hiring. Or something else, it’s too early to say for sure. But if you’re in school, consider staying there.



Off to a slow start:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfivkwW9FT6kY5F_Pt_GgM4wqtqKSicCCE0gqgNRuqMlnnp1Q_m5B4cR3iZnMUmRNYYHoWsMn-WBYkfrwvs4JEoWyzNveoWMMfRu9weE41QpvXqgkVt_WYs5rQtUT52Cr7lRJ2hNA?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



Recent graduates are 3x more likely to be unemployed than the cohort aged between 35-44, which is probably even worse news than it sounds. Krugman notes that the consequences of early unemployment last “basically forever,” citing an NBER study that found that “those who join the workforce in a downturn have lower long-term earnings, higher rates of disability, fewer marriages, less successful spouses and fewer children.” Ugh.



You can’t see it in the data, though:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfmfuBG9PhMWyMjMXhTgG9VMg7XNOfBmV8wkg7Fx4yfuDzLK-WStxdy5oPDm7SrAxZKvM2K0wKMstECiKdWY_I9xhKliXoC9c3xgnT9rL79UDDDYFFzSA0p9yWmTlnRJpP_p4R8-Q?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



The Atlanta Fed’s GDPNow model sees Q2 growth coming in at a robust 3.4%. This makes the consensus FOMC projection of 1.4% growth for the full year seem unnecessarily gloomy. Worse yet, the FOMC’s elevated inflation forecasts make it look like they’re <a href="https://www.nytimes.com/2025/06/18/business/fed-stagflation-trump-tariffs.html">expecting stagflation</a>.



Inflation “forecasting” is getting even closer to guessing:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeDP_96Oaqlu60-Opa4JQ2b0HtUJSLUg8zeH2H91mHr2kbz4X7CIUDjD4Vai2waTfakXd8pLXqq2LSbIxlEZrwUdoyONOZj8UgnFWYz-3L9w-LW1PXWroBvfJLus51zsZEFTwLrMw?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



Torsten Slok <a href="https://www.apolloacademy.com/the-daily-spark/?utm_medium=email&amp;utm_source=pardot&amp;utm_id=701Dp00000017sOIAQ&amp;utm_campaign=EXT_Daily+Spark">notes</a> that almost a third of the prices going into the CPI at the moment are guesses. This seems likely to get worse, because as Jerome Powell <a href="https://x.com/YahooFinance/status/1935416500136862202">noted</a> this week, layoffs are making it harder for the government to collect economic data — data that’s &#8220;a real benefit to the general public&#8221; because it ensures people &#8220;have the best possible understanding of what&#8217;s happening in the economy, and hence, what&#8217;s likely to happen.&#8221; As if that wasn’t hard enough already.



There are ever more investors chasing pretty much the same number of stocks:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfyXuiP4B4j3zjm6nUfFB4Cz8QmXcj58Wty4T2kMLc1tbBtR2-FHXqjTKqeNzAc5b7YuslmhdDCh_dz8td4yZ9Le89mLsptPGaiZK99QCUDcczcptQzKJzYkbb3cLoc5JvPRnIJhg?key=MdB9863qS6m-tBRLwI6GGg" alt=""/></figure>



The US ranks second to Switzerland in average per capita wealth. It fares less well if using the median, but the number of new millionaires is impressive: Bloomberg <a href="https://www.bloomberg.com/news/articles/2025-06-18/surging-stocks-helped-us-add-more-than-379-000-millionaires-last-year?cmpid=061925_morningamer&amp;utm_medium=email&amp;utm_source=newsletter&amp;utm_term=250619&amp;utm_campaign=morningamer&amp;embedded-checkout=true">notes</a> that over 379,000 US residents became millionaires last year — more than 1,000 per day!



And we wonder why the market never goes down.



Have a great weekend, understanding readers.



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Friday Charts: The market understands

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&nbsp;“A 1921 version of Wakanda — and all is vibranium.”



— Chief Egunwale Amusan on the Greenwood district of Tulsa
</blockquote>



1. <a href="https://x.com/RealJimChanos/status/1932497480547250574">The investment case for MSTR is gibberish</a>



The forensic short-seller Jim Chanos describes Michael Saylor’s investment pitch for Strategy as “complete financial gibberish.”



Chanos was responding to Saylor <a href="https://x.com/saylor/status/1932485145464021158">telling CNBC</a> that investors should value Strategy at a multiple of its growth in NAV.



But Chanos argues this is “like claiming that your house, which increased in market value last year from $450,000 to $500,000, is actually worth $1.5 million, because you also have to put a 20x multiple on the $50,000 increase!”



Matt Levine <a href="https://open.spotify.com/episode/10u8kJ7PyVwhZOWya8aqJc?si=6eb4c4bd0d7a4fe4">agrees</a> with Chanos that this is “gibberish” — and also “crazy-making” in part, because the popular idea that MSTR offers leveraged exposure to bitcoin is nonsensical:&nbsp;



“It’s not levered bitcoin for you,” he explains. “You put in a dollar and get back $0.50 of bitcoin, which is the opposite of leverage.”



One thing that Saylor certainly has right, however, is that shorting MSTR is risky; Chanos is far from the first short seller to target MSTR and I’m not sure it’s worked out for any of them so far.



But it’s hard to argue with his investment advice that “it is usually wise not to pay $2 for each dollar bill.”



2. <a href="https://www.ft.com/content/13a6cead-af71-4811-9b90-553f233ac45f">Tron is “going public” on US exchanges</a>



The FT reported that “Justin Sun’s digital asset platform Tron is set to go public in the US.”



I don&#8217;t think that&#8217;s exactly correct because it’s not Tron’s token, TRX, that’s being listed, but a new company, Tron Inc., which will hold TRX tokens.



Matt Levine more accurately <a href="https://www.bloomberg.com/opinion/newsletters/2025-06-16/there-s-a-tron-treasury-company?srnd=undefined">describes</a> Tron Inc. as “a US-securities-law-compliant wrapper for Tron tokens.”



This feels like a shark-jumping moment (in my colleague <a href="https://blockworks.co/podcast/thebreakdown/d7554d1a-4be7-11f0-9cb0-e77c163c3df0">NLW’s phrase</a>). Because unlike bitcoin or SOL, it&#8217;s impossible to argue that TRX is decentralized enough to qualify as a commodity.



A TRX treasury company is therefore a blatant regulatory arbitrage that gives US investors access to an unregistered security.



They seem bizarrely eager for it — Levine noted that the Tron SPAC was trading at a 1,700% premium to NAV this week, “suggesting that the stock market will pay $18 for $1 worth of TRX.”



$18!



As long as investors keep paying irrational multiples of NAV for exchange-listed crypto, we’ll keep getting more of it.



Even HYPE, which approximately no one outside of crypto has ever heard of, <a href="https://x.com/mlmabc/status/1935051798701609329">has a reserve company</a> now too.



Show me the incentives and I’ll show you the (almost certainly bad) outcome.



3. <a href="https://www.coinbase.com/en-gb/institutional/research-insights/research/monthly-outlook/monthly-outlook-jun-2025">Crypto treasury companies are a systemic risk to crypto</a>



A report from Coinbase cautions that the current proliferation of Strategy copycats poses &#8220;systemic risks for the crypto ecosystem.”



The first risk they note is that if treasury companies are unable to repay convertible debt by issuing new debt, today’s buyers could become tomorrow’s sellers.



That seems obvious enough, although no one else seems to be worried about it.



The “subtler” risk, however, is if “one or more of these entities unexpectedly offloads a portion of their crypto holdings, even if it’s for routine cash flow management or business operation purposes…others may rush to sell as well, destabilizing the market well before any actual debt repayment issues emerge.”



That, too, would seem obvious — in hindsight.



4. <a href="https://ethdigitaloil.com">ETH as digital oil</a>



ETH has cycled through multiple elevator pitches — world computer, ultra-sound money, crypto app store — none of which have really caught on with investors.



But the team at <a href="https://www.etherealize.com">Etherealize</a> wants to try again, now framing ETH as “a productive reserve asset: digital oil powering the digital economy.”&nbsp;



This, they estimate, justifies a short-term price target of $8,000, a long-term target of $80,000, and a “<a href="https://www.bankless.com/podcast/ethereum-is-digital-oil-the-bull-case-for-eth">thought-experiment</a>” target of $740,000.



The latter would make Ethereum worth $89 trillion.&nbsp;



Lord, give me the confidence of an investor who believes a $300 billion asset can be mispriced by 30,000% (even as a long-term thought experiment).



Only in crypto.



5. <a href="https://youtu.be/k9rj08wiuDg?si=eCpisUAKfLRjj3o0&amp;t=2334">A black-swan risk to markets?</a> 



Mathew Pines of the Bitcoin Policy Institute tells David Beckworth that he expects the US to end the exemption that makes interest on Treasurys tax-free for foreign holders “in the next two months.”



Beckworth responds that this seemingly mundane change in tax law “would be shocking.”



The risk is that ending the exemption would likely lead to higher interest rates as foreign central banks switch out of Treasurys and into alternatives like German Bunds, Swiss francs, gold and maybe even bitcoin (which Pines believes is an easy 10x in that scenario).



More importantly, this could destabilize global financial markets, which have become fundamentally dependent on Treasurys as the world’s only risk-free asset.



Shocking indeed — people are increasingly worried that the US is slowly losing its “exorbitant privilege.” But this seems like a way to lose it quickly.



Markets have been unusually adept at pricing in all the political shenanigans this year, but I don’t think anyone is ready for that.



6. <a href="https://www.sec.gov/Archives/edgar/data/2060670/000095010325007019/xslF345X02/dp229587_3-tarbert.xml">Circle executive’s big payday</a>



If I’m reading his SEC filing correctly, Circle’s chief legal officer, Tarbert Heath, owns 839,761 restricted units of newly IPO’d CRCL shares and 939,968 stock options (with an exercise price of $25.09).



At this week’s share price of $150, that would be worth a whopping $243 million.



Other Circle executives hold even more CRCL but I&#8217;m mentioning Heath here because he joined Circle two years ago.



It&#8217;s one thing to hit that kind of IPO jackpot as a founder; it&#8217;s another thing to make it as a recently hired employee.



I knew I should have gone to law school.



7. <a href="https://www.npr.org/2021/06/02/1002538572/black-wall-street">Black Wall Street was the original Wakanda</a>



In recognition of the Juneteenth holiday in the US, I thought I’d highlight the amazing — and tragic — story of the Greenwood district of Tulsa.



Amazing because, just three decades removed from the Civil War, Greenwood was such an economic success story that it came to be known as “Black Wall Street.”



Like Wakanda from Black Panther, this honorific is a little mythical — there was no Black Goldman Sachs in Greenwood, for example.



But by 1900, Greenwood had become “a self-sustaining ecosystem of Black excellence and prosperity,” according to one <a href="https://www.blackartdepot.com/blogs/black-history-blitz/black-wall-street-a-legacy-of-economic-excellence-and-a-vision-for-tomorrow">account</a>, and “an intentionally all-Black community” where “all was vibranium,” according to <a href="https://www.npr.org/2021/06/02/1002538572/black-wall-street">another</a> (referencing Black Panther again).



Ironically, part of that success was attributed to Jim Crow laws that forced Greenwood’s residents to spend their money with businesses owned by their neighbors.



“In Greenwood, a dollar would change hands 19 times before it left the community,” according to the local attorney Buck Colbert Franklin. “That’s what you call real wealth-building.”



Some of the residents of all-Black Greenwood were so wealthy that when envious white rioters came to burn the neighborhood down in 1921, the nicest residences were said to be spared because the arsonists couldn&#8217;t believe that such wealthy homes could possibly be owned by Black Americans.



That attack on Greenwood was originally declared a “riot,” in part to falsely imply that there was blame on both sides.



But, perhaps even more cynically, there was a financial reason as well: Calling the events of 1921 a “riot” allowed insurance companies to deny claims filed by Greenwood’s residents.&nbsp;



Dozens of Black-owned businesses and more than 1,000 homes were destroyed in the “riot,” but the only insurance claim paid out was to the white owner of a pawn shop that had been raided for guns and ammunition to be used against the Black people in Greenwood.



These events have since been named the Tulsa race massacre.



Greenwood residents put up a stout defense but were hopelessly outnumbered by their white Tulsa neighbors, who were seemingly enraged by the economic success of an all-Black neighborhood.



Black Wall Street became a tragic story because it was a success story first — one especially worth remembering on Juneteenth.



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Thursday links: Systemic risks, digital oil and Black Wall Street

Fundamental insights and behind the scenes perspectives from the industry’s key operators and innovators

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Investigates the macro landscape as the laws of investing are being rewritten, helping investors adapt to a rapidly changing environment.

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The essential source for all things Solana — exclusive news, deep analysis, and the latest trends.

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Join Rizzo, The Bitcoin Historian, as we detail Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;Which is the bigger number? Five or one?&#8221; — Robert Baratheon, Game of Thrones
</blockquote>



Distribution matters in business. Often more than the thing being distributed.



Google, for example, always had the best algorithms for searching the internet, but the now-ubiquitous service didn’t catch on until Larry Page and Sergey Brin figured out how to get it widely distributed.



As recounted in an <a href="https://youtu.be/v1nkN0sM2wc?si=D7iCrPDvLfB1brRC">Acquired podcast</a> released yesterday, Google’s co-founders bet the company by guaranteeing AOL $100 million it didn’t have in exchange for the right to show ads to AOL’s users.



(Yes, I listen to three-hour Acquired podcasts the first day they drop. What of it?)



They also aggressively pursued revenue-sharing agreements, sometimes paying websites more than 100% of the ad revenue they generated (because Page and Brin recognized the long-term value of expanding their distribution). But Google’s real coup was the “toolbar” that it paid PC makers and software providers to bundle with their products.&nbsp;&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdK7QvTWhXG1sQPr-jRtMD-UssV6wDt80mJlHQeYW5pEZt0950TdbiYdIhInkjmDHYSMLo7MAPjjbqU565R42QU-ukV04dqCHhYNQKnQgdfpShoTSwGproETzcPBXg5hbr3hJvunQ?key=X26x6BxwP57TxqPeKWJ5Bw" alt=""/></figure>



This expanded Google’s distribution far beyond the early web-adopters who knew to go straight to the Google.com homepage for the best search algorithm.



This was critical because web search is a bizarro business in which the law of supply and demand is flipped on its head — the more ads Google sold, the more it could charge for them.



This unique dynamic of “increasing returns to scale” (as the Acquired co-hosts call it) made web search a winner-takes-all market.



It also ensured that whoever got the most users first would win that market, however good or bad their tech was.



We might soon learn if the same applies in crypto.



<h2 class="wp-block-heading">When one is the greatest number</h2>



Robinhood does not have the best tech in crypto — not yet, at least.&nbsp;



After announcing its new offering of tokenized stocks yesterday, CEO Vlad Tenev said Robinhood would be issuing the new tokens on Arbitrum, but only “for a short time” while it builds its own blockchain.



It might, however, have the best distribution.



Given its branding, Robinhood’s 25.9 million account holders probably represent the cohort of retail investors most inclined to give new crypto products a try.



In addition to tokenized stocks, Robinhood will be offering perpetual futures and crypto staking.



I’m guessing that Robinhood’s tech in these categories won’t be as good as, say, Hyperliquid’s and Jito’s, respectively.



But much like Google’s early revenue-sharing deals, Robinhood is doubling down on distribution by offering a “2% match” on any crypto that customers deposit.



And Robinhood’s slick, mobile-first UX could play the same role as Google’s search toolbar: a distribution shortcut that brought a complex product to the mainstream.



Unlike search, crypto is probably not a winner-takes-all business because it doesn’t enjoy “increasing returns to scale” — anyone that’s been long altcoins recently will know that the standard laws of supply and demand still apply.



But the standard laws of counting might not.



As Robert Baratheon explains in Game of Thrones, one can be bigger than five in the same way that one clenched fist is more powerful than five waggling fingers.



“One army,” he says, “united behind one leader with one purpose” will defeat five armies with five leaders and five purposes.&nbsp;



Similarly, Robinhood is betting that its unified offering of crypto services will defeat the crypto industry’s ever-growing offering of individual purposes.&nbsp;



Crypto has been arguing about this for a couple of years now: Solana is the clenched fist of monolithic blockchains and Ethereum is the waggling fingers of modular ones.



So far, that ever-heated debate has played out along technical lines: parallel execution, local fee markets, decentralized sequencers and other things I don’t totally understand.



Either approach could work, just as monolithic worked for Apple and modular worked for Microsoft.&nbsp;



And both sides can claim victories this week: Robinhood is building an Ethereum layer-2 blockchain for tokenized stock trading, and tokenized “xStocks” began trading on Solana <a href="https://x.com/blockworksres/status/1940043857842012211">today</a>.



So we might finally find out which approach to blockchains is faster, cheaper and more secure.&nbsp;



But what if it’s distribution that really matters?



If so, crypto could turn out to be a winner-takes-most kind of business.&nbsp;



Robinhood says its intention is to &#8220;make the technical part invisible&#8221; and offer &#8220;one platform for everything investing,&#8221; which sounds like a take-most-of-the-business kind of strategy to me.



Notably, that ambition was <a href="https://x.com/RobinhoodApp/status/1939701274217460047">announced</a> by a CEO in a white pinstriped suit and silk cravat at a French seaside villa in front of a Robinhood-branded pool and the Mediterranean Sea (not yet branded).&nbsp;



Could anything be further removed from crypto’s cypherpunk roots than that?



But crypto is a business now.



And distribution might make Robinhood its big winner.



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The new crypto debate: Monolithic distribution vs. modular tech

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“We are the best place in the world to fail.”



— Jeff Bezos
</blockquote>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1438" height="762" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=1024&amp;h=1024" alt="" class="wp-image-104617" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=1438 1438w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-5.png?w=80 80w" sizes="auto, (max-width: 1438px) 100vw, 1438px" /></figure>



<h2 class="wp-block-heading">Crypto markets can win by frequently failing</h2>



Charlie Munger once said that in 50 years of reading Barron&#8217;s, he had found just one investable idea.



It was an unusually good one, though.



After a Barron’s article caught Munger’s eye in 2020, he spent just 90 minutes researching the auto parts company Tenneco before investing around $5 million.



Two years later, Tenneco was taken private at 15 times the price Munger had paid.



Munger then rolled his $80 million windfall into a fund managed by his friend, Li Lu, who more than quadrupled his money from there.



“So I have made $400 or $500 million reading Barron&#8217;s for 50 years and following one idea,” Munger concluded.



The twofold moral of the story, he implied, is that 1) it only takes one great idea to make it big, and 2) you should ignore all the others while you wait for it.



“The trick in investing,” Warren Buffett liked to say, “is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot.”



I&#8217;m not sure how actionable that advice is for us mere mortals of investing; few of us will be able to pick out the one winner in 50 years of Barron&#8217;s articles.



But we can take heart in the idea that one big winner can more than offset a lot of our inevitable losers.



This is even more true in business.



In baseball, to extend Buffett’s analogy, swinging for the fences can only ever earn you four runs.



In the stock market, you might get the occasional “10-bagger” (or maybe even a 15-bagger, like Munger’s Tenneco investment), but not much more.



In business, however, “that upside isn’t really capped,” as Jeff Bezos explains. “Every once in a while in business, you step up to the plate, you swing as hard as you can, and you get 1,000 runs.”



Bezos was always swinging as hard as he could.



Unlike Munger, he usually struck out.



Worse yet, many of the pitches he swung and missed on seem a bit ridiculous in hindsight.&nbsp;



At one point, Bezos hired staff jewelers to craft custom rings over an open flame on the mezzanine of an Amazon fulfillment center in Kentucky because he briefly believed that the retail jewelry market was the key to Amazon’s future.



Personalized “zShops,” auto retailing, partnering with Toy“R”Us, and no-checkout stores are among Bezos’s other passing enthusiasms that failed to get anyone else enthused.&nbsp;



His investing track record wasn’t much better.



Bezos used money raised in Amazon’s 1997 IPO to make venture-capital investments in Drugstore.com, Pets.com, Gear.com, Wineshopper.com, Greenlight.com, Homegrocer.com, and Kozmo.com, all of which, perhaps predictably, turned out to be losers.



(A seed-round investment in Google was a giant winner, but he made that one with personal money.)



In other cases — such as auctions, search engines, and mobile phones — he picked a reasonable pitch to swing at, but whiffed.



He never regretted the misses, however, because if he wasn’t so willing to swing hard at seemingly every pitch, Amazon wouldn’t be anything more than an online bookstore.



From the beginning, he was always looking for opportunities to become much more than that.



When an employee suggested a subscription service for unlimited free shipping, for example, Bezos not only adopted the idea, he committed Amazon to losing an unknowable amount of money to make it not just a big bet, but a transformational one.



Similarly, when Amazon engineers began working on an early version of cloud computing — while they were still unsure it could work — Bezos demanded that they think bigger: &#8220;This has to scale to infinity. Infinity!&#8221;



Amazon Web Services does now effectively scale to infinity, which makes Bezos look like a prescient tech genius.



But he was equally high-conviction on all of his misses, too, which suggests that his real genius was in his willingness to always swing so hard — just in case he hit something.



That strategy won’t work for most of us; we’d all quickly go bust if we invested as aggressively as Bezos.



But the best financial markets encourage this kind of risk taking — where would we be without business founders willing to take irrational risks?



We’re fortunate that every entrepreneur wildly overestimates their odds of success because society captures the uncapped upside of all that risk-taking without bearing any of the downside risks.



At its best, crypto will enable more of this.&nbsp;



During Permissionless last week, I heard, for example, that “AI arbitration” would be a perfect use case for crypto; that crypto will turn data into an asset class; that decentralization is the only way to audit artificial intelligence; and that “DeSci” might accelerate the development of personalized medicine.



Whatever the investment merits of these ideas may be, I find it notable that they’re being floated at all, because the stock market, with all its centralized gatekeepers, is unlikely to encourage these kinds of bets.&nbsp;



Not that “permissionless capital markets” are perfectly decentralized. Far from it.&nbsp;



But they are permissionless in the sense of allowing anyone to take a swing at building something significant, and allowing anyone to back them.



It might be a long wait still for the next big crypto hit, of course.



In addition to finding just one investable idea in 50 years of reading Barron’s, Munger also said he read Fortune magazine for 60 years without finding any at all.



No one has that kind of patience in crypto.



But Permissionless capital markets could be well suited to the Bezos model of swinging hard at every reasonable pitch that comes by, no matter what the odds of connecting.



Like Amazon, crypto could win by being the best place to fail.



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Crypto markets can win by frequently failing

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The legendary Peter Lynch advised investors to stop following the news.



&#8220;The person who never bothers to think about the economy, blithely ignores the condition of the market, and invests on a regular schedule is better off than the person who studies and tries to time his investments, getting into stocks when he feels confident and out when he feels queasy.&#8221;



The news has been unusually nauseating this year: trade wars, real wars, recession fears, AI doomerism.



And yet, here we are, right back at the all-time highs in both the Nasdaq and S&amp;P 500.



There’s nothing particularly new about this.



Writing in the simpler times of 1993, Lynch noted in <a href="https://www.amazon.com/One-Up-Wall-Street-Already/dp/0743200403/ref=asc_df_0743200403?mcid=06a3bcc798a1339bb508b59f992086b6&amp;hvocijid=18147238387577396879-0743200403-&amp;hvexpln=73&amp;tag=hyprod-20&amp;linkCode=df0&amp;hvadid=721245378154&amp;hvpos=&amp;hvnetw=g&amp;hvrand=18147238387577396879&amp;hvpone=&amp;hvptwo=&amp;hvqmt=&amp;hvdev=c&amp;hvdvcmdl=&amp;hvlocint=&amp;hvlocphy=9004338&amp;hvtargid=pla-2281435179778&amp;psc=1">One Up on Wall Street</a> that “if you had paid close attention to the negative tone of most of our ‘whither the economy’ sessions over the past six years, you would have been scared out of your stocks during the strongest leg of the greatest market advance in modern history, when investors who maintained their blissful ignorance of the world coming to an end were merrily tripling or quadrupling their money.&#8221;



Markets have gone on to far greater advances since then, and I&#8217;d argue that the only way to have fully captured them was to have remained blissfully ignorant of the world.



It&#8217;s easy to look at the long-term performance of stocks and think everyone should always be fully invested.



It’s much harder to look at the daily news and think now is the time to be invested.



Lynch suggests you don’t try.



&#8220;The best way not to be scared out of stocks is to buy them on a regular schedule, month in and month out.&#8221;



US investors have taken that advice to heart, to a degree that Lynch probably would not have imagined.



Now, an <a href="https://www.ici.org/401k">estimated</a> 70 million American workers invest in 401k plans, metronomically pouring pre-tax money into equities, no matter what the news is.



This makes the stock market <a href="https://www.nber.org/papers/w21749">less volatile</a> than it otherwise would be. Or should be, probably.



And that should make them more valuable, too, because investors will accept lower returns (i.e., higher valuations) for assets that cause them less worry.



So it makes sense that equities would be more expensive now than they used to be.



They might get even more expensive.&nbsp;



As long as we have jobs — and therefore 401k plans — it might be hard for the market to go down much.



That would make stocks increasingly less scary — and increasingly more valuable.



Let’s check the charts.&nbsp;



Still saving:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf0CdTEdndC0ELMWMKRXea2e5gXkHrAzqXdHLxm7EO765pJWKMrB6dH5sY6x3hmmcby86ZRcIlEbi9Asa1g1xNE3kyOle_H1dcPAfP7TnIkRntJt0DYgakh0wLhj9ZRUPww7LeHOQ?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



The US personal savings rate ticked down to 4.5% in June. That’s low by historical standards, but still 4.5% of a large and ever-growing number. Some portion of those savings will go into buying equities every month, whatever the news.



Sentiment still has some catching up to do:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdOxbmvGu24eXZ--zEKV2pO3rnBTvsufLyBiszLsZPqRtJtaEJ0gQ2cZmYCnMV1xuCCdQDEftIWLXbiI6RdazxyKdmh2mHn6ZVEj3-DHv8kahrLFXSRWSVHLaVolIChyJvz1TQo8Q?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



Stocks are back at all-time highs, but investor sentiment, as measured by AAII, remains on the bearish side of neutral.



Moving out on the risk curve:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdaw4Qltlu2yDv4jQh5FgswdigVK0lIuGUjRkGoJ4i1GS_tQXsdFA_u1gvIv9MHelOS-wdPV4x2_saINMbeoe4q3tGlA5ThMixq6FBhQwaXi5u3UbW1rD0qjQqceUH3FgJ3YIKWTg?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



US investors are embracing risk, perhaps because stocks seem less risky after weathering all the seemingly bad news this year. If equities are less risky overall, it makes sense to buy higher-risk equities.



The rest of the world is buying value:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd0wBUVjqfswDbw8ZHcmrNKjIFGcGYEwPqYGI7YSqQNAnHGWkoQeN4zA80t6-ghDYzJNdUt0R2utT4RPW7S4Zmy3f4xaCSwHSA5jlqZhN_TPE3rCx5DSTSjr69k20fdGfWI51zkWw?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



Per Goldman Sachs, there’s been an unprecedented divergence between the outperformance of growth stocks in the US (the dark blue line) and the outperformance of value stocks in the rest of the world (the light blue line). While the rest of the world reaches for safety, US investors are all-in on growth.



Is everything safe now?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdWvbyWbMIN-wmQJh8a9yWe9hviXJwu5P9PT8sTd9Sb50HdUnrkfJS_E5MGUfwDyfDd5WBHJQb9BBcLcX5Lv0T8XBANj3L4ALED4zC6xciB1eF_usCKwVP6JjYjoKRe8ukyhCXmoQ?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



Ed Yardeni notes that profit margins in the semiconductor industry continue to rise. Semis were historically the most cyclical and therefore riskiest sector to invest in. Now, they seem almost defensive.



Good news or bad for humans?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd2kPoU8IplUKpwRTpnZw25Cai9qnrmofuyHa6isuIz1j_gk2hgPyin07QTEZ2OoHnUBOkaEC94TzPNiisxY4lnUDQMUzq1vENlqyQLXCHc0mgF-0JHoJ0MTKP9qi_BZCcoCPvG?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



Less than 10% of companies polled by the US Census Bureau report employing AI over the past two weeks. That might mean AI has only just started disrupting the job market. Or it might mean humans are more useful to employers than the AI hype would have you believe.



The proximate cause for all-time highs?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf8yLCrXPDYXEXMjlgL7fdZyQpj_B5F_qsXu5p2HaJWImXDAJefM1ijWVn089QGO7PWlN7HYhnoGTNFKUUkT4Z0klxtkWngQF3jV8dJ58dMctf23CVuOFej3THEZyLp0R1MifgUzQ?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



Expectations for an imminent rate cut are giving investors a reason to buy now.



One less reason to worry:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeyxhbgXm5wszaF7lxyyBCtAz2Bp3GU9DwaPmk18KHbDToCLAdjdaQdX3kfddOFDuG3D1j_1YdhDutccQNcyiKvG4ed02_Mkljny1-Nissd6pK8CRZqHGNb7EdP8kFbZz6_G0X-2g?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



The Cleveland Fed InflationNow model sees US prices, as measured by CPI, rising at an annual rate of just 1.6% in Q2.



Stocks for the long run:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcuydBiqR10sZL6C1QpRNdyoF7k3OMmOLKYlz-ZlM8Pd7iLH1bH0uP9f468MNIA2TrDrBvk461FWwFpaKfDi_zhKzoY-5tiz4YENUB7_DXIaGb407Cy9w9fTtLQhVQy48BN7PO60Q?key=womsqVlgj8jTxzn3VX3-yA" alt=""/></figure>



Bank of America strategists say US equities are on the cusp of just the seventh “great breakout” since 1990.



Noting the new highs in equities this week, a <a href="https://www.bloomberg.com/news/articles/2025-06-26/wall-street-goes-all-in-on-risky-stocks-as-bears-race-for-cover?fromMostRead=true">Bloomberg article</a> listed all of the things that should be worrying markets at the moment — tariffs, the economy, consumer spending, and even professional advice to be cautious — and then concluded that “investors appear to be ignoring all of it.”



Peter Lynch would approve.



Have a great weekend, breakout readers.



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