Byron Gilliam

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">subscribe</a>.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.”&nbsp;



— Warren Buffett
</blockquote>



Warren Buffett is the most quoted person in the history of this newsletter — a crowning achievement of his seven-decade career that must fill him with pride.



I’ve quoted him so often because he has a lot to say about investing and markets, of course, but also because he expresses himself in folksy, quippy, metaphorical sound bites that are universally accessible.



He’s not dumbing it down for us, though.



As best I can tell, that’s genuinely how he thinks about investing — and there’s a lesson in that: The greatest investor of all time invests mostly by common sense.



Investing is so common sense to him that he believes that anyone can do it: “It’s not necessary to do extraordinary things to get extraordinary results.”



&#8220;If you can detach yourself….from the crowd, you&#8217;ll get very rich. You don&#8217;t have to be very bright.&#8221;&nbsp;



&#8220;It doesn&#8217;t take brains. It takes temperament.&#8221;



This all doubles as excellent life advice, as so many of his investing maxims do:



&#8220;It&#8217;s good to learn from your mistakes. It&#8217;s better to learn from other people&#8217;s mistakes.&#8221;



“What pond you jump in is more important than how well you swim.”&nbsp;



“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”



Buffett attributes his astounding investment returns to only about a dozen “truly good decisions” that he’s made — about one every five years, on average.



And he lived his life the same way: The sixth-richest man in the world still resides in the house he bought for $31,500 in 1958.



Conversely, his investing process was as simple as the life he led: He doesn’t build financial models, for example, he just reads a lot.



“I probably read five to six hours a day…I read five daily newspapers. I read a fair number of magazines. I read 10-Ks. I read annual reports.”



The compounding knowledge earned from all that reading, he’s explained, allowed him to pounce when an unusual opportunity came along.&nbsp;



“If somebody calls me about an investment…I usually know in two or three minutes whether I have an interest.”&nbsp;



In 2003, for example, he bought the homebuilder Clayton Homes (not just the stock, the whole company) for $1.7 billion after reading its SEC filings and talking to management on the phone (he didn’t visit the company until after he owned it).



In 2008, he turned down a request to rescue Lehman Brothers simply because its financial statements were too complex (a giant red flag for him).



At the height of the subsequent financial crisis, he poured $5 billion into Goldman Sachs after one phone call with its CEO and just a few hours of negotiating terms.



The results, of course, speak for themselves: From 1965 to 2024, Berkshire Hathaway shares rose by more than 5,500,000% — a gravity-defying annual return of almost 20% over 59 years.



By comparison, the total return of the S&amp;P 500 index over that period was “just” 39,000%.



“Buffett’s returns appear to be neither luck nor magic,” an <a href="https://marginalrevolution.com/marginalrevolution/2025/05/buffetts-alpha.html">academic study</a> found, “but, rather, reward for the use of leverage combined with a focus on cheap, safe, quality stocks.”



Lately, however, Buffett hasn’t found many stocks that are cheap, safe and quality enough to leverage into — for the first time in two decades, Berkshire Hathaway holds more cash than it does listed equities.



That’s not because Buffett is worried about what politics or tariffs might mean for the stock market: “I never try to profit from the stock market,” he’s said.&nbsp;



But his failure to find good businesses at reasonable prices probably does tell us something about his view of the market as a whole.



Buffett acolyte Chris Bloomstran <a href="https://www.semperaugustus.com/clientletter">estimates</a> that with valuations and profit margins currently elevated, investors in the S&amp;P 500 should expect returns of “no higher than 1.1% per year for the next decade.”



If so, going into retirement with a record amount of cash may go down in history as the thirteenth “truly good decision” that Warren Buffett has made — and an instructive one, at that.



&#8220;Investing is the greatest business in the world because you never have to swing,” Buffett explains in typical Buffett fashion. “All day you wait for the pitch you like; then, when the fielders are asleep, you step up and hit it.&#8221;



With the market rebound over the past month, it looks like he probably won’t see any more fat pitches before he retires at the end of the year — despite all the seemingly bad news on tariffs.&nbsp;



But I’m sure he’d tell younger investors that there will be plenty to look forward to: “Over the long term, the stock market news will be good.”



Let’s check the charts.



Stocks are up, but estimates are down:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXejjPkEcNflxiLEkJ1-0zu81cCofcDvLbkPYxbIYO9aEgjxq1KfYJKA4u-Ytf0zJS8lGkBALWSoubKSwC_MqEqyhWBP6ds7rWR4Ijsjf9oDP1vg0PYUgwDGU7ZIIESC9aAUy9c9Pw?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



It’s reassuring that stocks are back to where they were before “Liberation Day,” but that doesn’t mean nothing’s happened. Per Torsten Slok, earnings estimates are significantly lower, which means stocks are significantly more expensive.&nbsp;



Stock market vs. betting market:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcK0SgSc5rIOt7tcIChqHukRK9ZC2fv6dKsF6T7gpJvRzUAaJ6NwAFm_ebHefDS_-rvFIlvP4ie_oB5uTCjuwd4baEadc-o42MuUNAQczoXb5nyi6JGsgeMnTfquwlm-L7v7ISFKA?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Polymarket <a href="https://polymarket.com/event/us-recession-in-2025?tid=1746814142831">odds</a> suggest a US recession is still slightly more likely than not, but BCA Research estimates that the stock market is pricing in just a 25% probability now.



Economists are pricing in stagflation:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd3YstTe2wHXmUA_3HekQwIMWRNiTVP78wjP9edQ9ZpE8grphekJYSKg4AvDf4qkqzrAgWNvOF-JddwNTThJKg51ch2Bhc3CDVhOwyk6G-W2CSYwZiMf8pU_kd38TZ7Yem_dP-Y3A?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Torsten Slok <a href="https://www.apolloacademy.com/stagflation-coming/?utm_medium=email&amp;utm_source=pardot&amp;utm_id=701Dp00000017sOIAQ&amp;utm_campaign=EXT_Daily+Spark">notes</a> that rising inflation and falling GDP estimates indicate that stagflation is coming. At the FOMC <a href="https://marketspm.cmail19.com/t/d-l-shyllil-dtudkukduk-h/">presser</a> this week, Fed Chair Jerome Powell seemed to agree: “If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment.”



It might get worse than that:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcPxcTtPAHrgZhnj_fSFZZGBHRJbUBkRwVyxtYb4sfNDDCveyV1o8Zoa2lfwyp5OI_3bYlqU5vV77NNQVnZuW97WjnQJ7OwuTs66fLbCxbZ7gbf3t0SoefYqZuufydghV5n8_AIxA?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Analysts at Goldman Sachs estimate that tariffs will raise inflation by a whopping 2.25%.



Trade policy is less uncertain, I guess:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfu6-TXdBifjYdyzKvxQzyC9AdW252a4VH_EnH23AuCDxvvNOWPspzC0XJupr1aDCWNXokIwSiDeH5iuFnVmeeD-pSDdeXwB6GwjiE1BJFURnKlLQ9tys-tVMQyXT9zCak9uCFFKg?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Markets are said to hate uncertainty, and despite all the contradictory headlines, the <a href="https://www.matteoiacoviello.com/tpu.htm">Trade Policy Uncertainty index</a> is down — so maybe that’s why stocks are up?



Actual trade is down, too:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcxiPgV_NNT40_Lwe0Vagc5V2v0tWCOsjZLRDtYG03kLvrA2dGjF1JBz20e7AmLAdNpbIj6hjxOu-ip8yXAs_ME9H5dhMxszXN8C_52VsNK0P8VM84NcHzSHB2GoxwTCiCwx5DQwg?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Container bookings from China to the US are down 49% year over year. President Trump <a href="https://x.com/ABC/status/1920505719419211815">said</a> that’s a good thing because no trading means “we lose less money.” But he appears to want some level of trade with China — he <a href="https://truthsocial.com/@realDonaldTrump/posts/114477628854583525">posted</a> this morning that the current 145% tariff rate could fall to 80% and suggested that he’s leaving it up to Treasury Secretary Scott Bessent to negotiate a deal when he meets with China this weekend in Switzerland.



Trading with China has been good for us:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeZW11s17t3hmBjL-LlWdYpyd9znwgZ79vrdNmyIKuBejFfMv7Gjam_0u669UvHsmnX0vAb8W1f78yX3WMKzxzNevrU2PDMKYHkddR8v2oM8IvTPe4kxM3zkRm1JynKr0I0Lbmq5g?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Jason Furman <a href="https://x.com/jasonfurman/status/1920161566818800112?t=OdKPjYv-UJlj0Ocb0gSSbQ&amp;s=19">notes</a> that US wages grew faster in the 24 years after China joined the WTO (the orange bars) than in the 24 years before (the blue lines). Most surprisingly, wage growth has been far more equitable in those two decades of globalization than they were before.



Trading with China has been good for us (2):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc2hbVHEJJKyzOVmIm6KQvlsltaXTOyDMzLvsSuhDeReAgMgEHrx_MB85cmaPA_lSB10stb-Ic60osyGZWnx-gc3HTY3g-EGOOsEYssytdictOMzmqGiW8dEwYu1vX5SMb28lZo?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



<a href="https://economistwritingeveryday.com/2025/05/07/the-middle-working-class-has-not-been-hollowed-out/">Jeremy Horpedahl</a> digs a little deeper and finds that the real (i.e., inflation adjusted) earnings for high school graduates without a college degree are higher than they have been in at least 50 years (and I’m guessing probably ever, but the Fed data doesn’t go back any further than that). It seems to be getting even better, too: The Wall Street Journal this week <a href="https://www.wsj.com/lifestyle/careers/skilled-trades-high-school-recruitment-fd9f8257?mod=trending_now_news_1">reported</a> about a high school junior who’s received an annual $70,000 job offer because his school offers welding classes.



Companies are still buying:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcYUhDhgzuKPqlGvxd6s7uPUK-W4c-JLPNFHKUzPaVvgINAZ0PsYUtTzw1cnLC601z4BpJQxAH_pieldHa6ZUWuDrE3e3AFvzsjl9gCUkoOlKvhbC9wGdf5rFn7SNgiHCSyswCjdA?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



The FT <a href="https://www.ft.com/content/8361835c-6955-4ee3-80a1-8e7e19127e6c">reports</a> that US companies are on track to buy over $1 trillion of their own stocks this year.



Retail investors are still buying:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe4cIR7RpGUaxxtsVWetn1fETF55TngeYhqpFlv80Dz5VfEuU3RhY0TXDj2wkVFgTMvGNMRbplR9DB-HHQbxTetqQ-wDE2OhyeTTQGv7u_3Yi75zFzVrLcsYt5c0cN-lalbLMVUng?key=u_gKGWHqMqXmT5Wah45p9sCL" alt=""/></figure>



Data from Bank of America shows that its private clients enthusiastically bought the tariff dip in equities.&nbsp;



Warren Buffett would applaud their long-term optimism, if not their short-term timing.&nbsp;



Have a great weekend, long-term readers.



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<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</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>
</ul>

The Breakdown Newsletter

Friday Charts: Investing doesn’t have to be rocket science

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">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">
“Bitcoin offers something unique: unstoppable, uncensorable, permissionless money.”



— Win Ko Ko Aung
</blockquote>



Q: Should sentiment in crypto be better?



I think it should — crypto market cap is back above $3 trillion, bitcoin has become part of the zeitgeist, stablecoins are booming, the institutions are here, regulators are sympathetic, memecoins are out, utility is in.&nbsp;&nbsp;



But I can also see why it isn’t.



Among other things (many listed <a href="https://x.com/intern/status/1919791584888881154">here</a>), it feels like the wealth that crypto is currently generating is unrelated to the value that it hopes to deliver.



Case in point: If you bought Bearchain’s token, BERA, when it launched in February, you’re down about 50% — which is fair enough because people don’t seem to be using the chain very much (per data from <a href="https://app.blockworksresearch.com/analytics/berachain">Blockworks Research</a>, Berachain has been generating about $500 of revenue per day).



But the <a href="https://x.com/crainbf/status/1919715154113040618">unofficial marketing</a> around Berachain celebrates wealth as if investing in it will somehow allow you to live a lifestyle of the rich and famous — now, before the project has delivered any value.&nbsp;



Similarly, Token2049 was reportedly a party, but from The Wall Street Journal’s <a href="https://www.wsj.com/finance/crypto-token2049-dubai-cz-eric-trump-rave-093b1d7e">reporting</a>, it sounds like what was being celebrated was not so much crypto’s utility as its political influence.



So far, the benefits of that influence have been narrowly distributed.



The FT <a href="https://www.ft.com/content/f5797d16-6299-444c-b990-5cbc6a7ccfca">reported</a> this week, for example, that a “small group of traders” made $99.6 million by buying up the MELANIA token in the two and half minutes before it was publicly announced.&nbsp;



These well-informed buyers unloaded 81% of their tokens within 12 hours of the launch — at&nbsp; prices at least 90% above where they are now.&nbsp;



This kind of thing is dispiriting to anyone who invested in crypto because they thought people would use crypto.&nbsp;&nbsp;



But it’s worth remembering that this is a story at least as old as stock markets.



Recounting the 1870s mania for railroad shares, <a href="https://www.google.com/search?client=safari&amp;sca_esv=896bc82726dbc1e3&amp;rls=en&amp;q=Americana:+A+400-Year+History+of+American+Capitalism&amp;stick=H4sIAAAAAAAAAONgFuLVT9c3NEypSMqzNEs2VoJwk82KjbIKjSq0pLKTrfST8vOz9RNLSzLyi6xA7GKF_LycykWsJo65qUWZyYl5iVYKjgomBga6kamJRQoemcUl-UWVCvlpCjAFCs6JBZkliTmZxbk7WBkBxhLeHHYAAAA&amp;sa=X&amp;ved=2ahUKEwi8-rXtvZSNAxUQHNAFHdmHB-gQgOQBegQIMxAG&amp;biw=1152&amp;bih=656&amp;dpr=2">Bhu Srinivasan</a> writes that “shareholders got rich when railroad stocks went up, not when people actually used the railroad.”



When “the moment of clarity set in” and “financing for speculative and incomplete projects was frozen,” the investing mania ended in a financial crisis.&nbsp;



But people did end up using the railroads.&nbsp;



Q: What could get people to start using crypto?



Stablecoins still seem like the best bet.



At Stripe’s <a href="https://www.youtube.com/live/ONIexChUpuw?si=wKbOYVrzJ_hf-BHc&amp;t=1460">annual conference</a> yesterday, the co-founding Collison brothers listed stablecoins and AI as “the two big tailwinds” they expect to drive the next evolution of “the internet economy.”



Amazingly, stablecoins were listed ahead of AI:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe44Yp2x9NR-x-srtPYt1qMR_kRuOtuZ74DtYcYwmYg3RkmuIKeWRtLpzKmKPh-_zn0Qr3OFDLQrE4pmMNm2oiu0Y6xGHiuqZG0pYpa52efoPDzIMxsW53dSRu1hG8Tpd1UC0YuAQ?key=xzgnyWEn7hk7cKiVAdZs2A" alt=""/></figure>



I guess that ordering is to be expected from a payments company, but still, John Collison made a convincing case for why stablecoins, paired with AI, will lead to a “way higher rate of breakout company creation.”&nbsp;



Stablecoins enable “borderless financial services,” he explained, which will make it possible for small businesses to be borderless, too.



Collison says it’s already happening: “People have been waiting since 2010 to see if crypto is for real and what you&#8217;re seeing with stablecoins is real utility for real business at a growth rate which eclipses anything we’ve seen before at Stripe, including Stripe itself.”



Stablecoins are centralized, so this is not exactly the realization of cypherpunks’ dreams.



But it’s real-world utility and the world will be a better place with a “higher rate of breakout company creation” — so I&#8217;ll take it.



Q: Could SBF have turned a profit?



I think so, yes.



To take just one example, the FTX estate sold SBF’s seed round investment in Cursor for exactly what he paid for it: $200,000.



At Cursor’s latest valuation, that stake would be worth <a href="https://dailyhodl.com/2025/05/06/ftx-estate-fumbles-500000000-investment-as-ai-coding-platform-cursor-now-valued-at-nearly-1000000000-report/">$500 million</a>.&nbsp;



That’s a 250,000% return — far more than the crypto he “borrowed” from FTX customers would have returned.&nbsp;



A profitable fraud is still a fraud, of course.



Still, pretty funny to think that if he had managed to fake it just a little longer, he might actually have made it.



Q: Is bitcoin a risk-on asset or risk-off asset?



Yes.



It’s been a risk-on asset this week, as evidenced by all the headlines saying some version of “bitcoin up on talk of trade deals.”&nbsp;



This doesn’t entirely make sense — the asset for people who think things will be bad, is good because things are not as bad as expected?



But bitcoin’s correlation to risk comes and goes and it feels like it’s trending toward being more risk-off.



Here, for example, is the year-to-date return of bitcoin (in purple) oscillating around the return of gold (in, well, gold):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdxp_Gre6jaWtymm7VomZqk5gVW4Kc4MV-_rCoK0HWO0pjsuZO7v5hexv3osKGa64rZZ2ZcsElenVRMc__zGguo2BOTGWblLJxvuYzgVfZeO0u0vkT-ppb07MIQ0a7zNrTzRUcPBg?key=xzgnyWEn7hk7cKiVAdZs2A" alt=""/></figure>



Were it to carry on like that, bitcoin might finally cement itself in investors’ minds as a risk-off asset (which should make it more valuable).



I expect it will continue to be both risk-on and -off for a while — it’s still the only liquid thing you can sell when you’re feeling nervous on nights and weekends.&nbsp;



But that could change.&nbsp;



It was <a href="https://www.bloomberg.com/news/articles/2025-05-07/robinhood-said-to-plan-blockchain-to-trade-us-assets-in-europe?taid=681ba7d579cfff00010e5bc2&amp;utm_campaign=trueanthem&amp;utm_content=business&amp;utm_medium=social&amp;utm_source=twitter">reported</a> this week that Robinhood is developing a blockchain platform to offer US securities trading to European investors — and people like Kyle Samani and Robert Leshner think that eventually, all assets will be available to trade onchain, all the time.



If so, we’ll be able to stop using bitcoin to amplify our short-term risks — and start using it to hedge our long-term ones.&nbsp;



Q: Is bitcoin just another thing to trade?



Not for the people who really need it, no.



In a recent <a href="https://mailchi.mp/hrf.org/hrf-fountainhead-announce-resident-artists-9101873?e=824562d621">email</a>, the Human Rights Foundation (HRF) highlighted the story of Win Ko Ko Aung, who fled persecution in his native Burma in 2021: “I made it to the US with almost nothing — except a small amount of bitcoin I had once bought out of curiosity. With my money trapped back home, bitcoin helped me survive.”



Since then, he’s been promoting the use of bitcoin as a form of resistance money: “For people living under dictatorship, it’s a tool for financial autonomy and freedom,” he writes.



Aung cites the example of the recent earthquake in his native Burma: “The military junta blocked access to the hardest-hit areas and even launched airstrikes against people trying to flee, continuing their long-standing pattern of blocking humanitarian and financial aid. But bitcoin made peer-to-peer relief possible.”



“When governments fail, repress their people, and collapse currencies,” he concludes, “bitcoin provides an escape hatch. In times of crisis, it makes aid and survival possible.”



That, at least, is something everyone can agree to feel good about.



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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/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</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>
</ul>

Thursday Mailbag: Sentiment, stablecoins and resistance money

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">subscribe</a>.



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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future.”



— John Maynard Keynes
</blockquote>



Despite all the numbers involved, investing is widely acknowledged to be more art than science.



&#8220;Common stock selection is a difficult art,” Benjamin Graham cautioned.



Graham’s life-long student, Warren Buffett, specified that “investing is the art&#8230;of laying out cash now to get a whole lot more cash later on.”&nbsp;



Pretty much all investing boils down to predicting those cash flows.



But investors “who&#8217;ve been trained to rigidly quantify everything have a big disadvantage,&#8221; Peter Lynch warned.



That does not, however, mean that “valuation is a meme,” as financial nihilists like to claim.



Instead, it means that applying and interpreting quantifiable valuation metrics is a creative endeavor.



What valuation metric to use for which investments is a subjective decision — and knowing how to interpret the results is even more so.



A low valuation, for example, doesn’t mean a stock is cheap and a high one doesn’t mean a stock is expensive (it’s just as often the opposite).



A stock can look appealingly cheap on one metric and appallingly expensive on another.



And none of these things are obviously correlated to returns.&nbsp;



This is often cause for despair — if cheap stocks don’t go up and expensive ones don’t go down, why bother trying to figure it all out?



It’s worth figuring out, I think, because that’s what makes investing fun and interesting — and, if so, the fun of crypto investing is only just getting started.



Until recently, crypto investors didn’t have many numbers to work with beyond token price and market capitalization.&nbsp;



That made everything in crypto a “story” — which is fine!



Investing is about telling stories.



But the best investing stories are told with numbers and crypto increasingly has them because more protocols are earning revenue and more of that revenue is being passed on to token holders.



Also, these numbers are becoming more accessible thanks to the likes of <a href="https://app.blockworksresearch.com">Blockworks Research</a>, whose analysts package them up in digestible charts and report them for us.



This is helping crypto advance to a higher stage of storytelling: storytelling with numbers.



Let’s check some current ones.



<h2 class="wp-block-heading">Ethereum vs. Solana</h2>



Judging by Crypto Twitter and podcasting, it seems obvious that sentiment on Ethereum has sunk to new lows, especially relative to Solana.



But an uninitiated TradFi refugee going straight to the numbers would likely guess otherwise.



Solana recorded $36 million of “token holder net income” in April, according to Blockworks Research data, which puts the SOL token on 178x annualized earnings — a rich, but possibly fair multiple if you think current activity levels are low.



Ethereum, by contrast, did $21 million in token holder net income for April, putting the ETH token on 841x earnings.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdiIdt5yNc7TbGaCg29EnOItfhmPeu85fyxeadUGplWJpbc130wy6BDzqeDTce3BeZLf1NC1Gg0fAzrig0jhbTlO_-5aTlP52g4kMzGOOEhjDM2AyF592I_Ty8mhrxdi9jnDSw1Sw?key=b6NzDIc5luKsYjQm8mwuVQ" alt=""/></figure>



A TradFi refugee seeing ETH trading at 5x the multiple of SOL wouldn’t immediately think, “wow, why is everyone so bearish on Ethereum?”



But they wouldn’t immediately think people are 5x less positive on Solana, either.



Instead, they might conclude Solana’s revenue gets a low multiple because it mostly comes from “low-quality” memecoin activity — while Ethereum’s revenue commands a higher multiple, at least in part, because it includes higher-quality activity like real-world assets.



Now we have something to work with: If you think memecoin activity isn’t so low-quality, SOL is probably undervalued, and if you think RWAs are the future, ETH might not be so overvalued.



You could also dig a little deeper.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdz3YXAvpqD6K_wg-Emh4xjeeyYC_MTRf4tAmC3qoaCbdjivGBlLtMejijW3Soax8batKbWuH71sxhUtyYisVtEGJJHkqUuqqCJUQJHGIaHmLlnTHZAYky186RsjdDkd56qoL8y-g?key=b6NzDIc5luKsYjQm8mwuVQ" alt=""/></figure>



Blockworks Research data shows that the revenue collected by all Solana apps is only about 1.8x greater than the revenue collected by Solana.



As platform businesses go, that is a very high take rate — much higher than the maximum 30% take rate at Apple, which the US government thinks is monopolistic.



This might mean that Solana is overearning and that its token should therefore trade at a low multiple of earnings — or that Solana has a business moat and its token should therefore trade at a high multiple of earnings.



Either way, it’s a story.



<h2 class="wp-block-heading">Hyperliquid</h2>



Hyperliquid, a semi-decentralized crypto exchange, is the strange story of a protocol that earns quite a lot in revenue ($43 million in April) and pays virtually all of it out to token holders.



This has unsurprisingly helped the token outperform recently: “The assistance fund uses trading fees for token buybacks every 10 minutes,” the single-named <a href="https://x.com/salveboccaccio">Boccaccio</a> noted in a recent report for Blockworks Research, “creating consistent buy pressure.”&nbsp;



Every 10 minutes!



It’s hard to know what to make of that because there is no such thing in TradFi as a company that returns 100% of its revenue to shareholders — let alone every 10 minutes.



Judging by its valuation, crypto seems a little uncertain too.



The HYPE token trades on about 17x annualized revenue (based on market capitalization), which would normally be considered expensive.



But, in this case, revenue and earnings appear to be the same thing, so it seems pretty reasonable — if you believe the story that HYPE will continue to win business from centralized exchanges.&nbsp;&nbsp;



Boccaccio cautions that HYPE is trading at a significantly higher multiple than its decentralized peers, but also that these might not be the right peers to compare it.



“The Hyperliquid L1 would have to take a very small percentage of overall Binance daily volume to meaningfully increase its volumes…Taking just 10-15% of only the BTC/USDT pairs volume [from Binance], would lead to a 50% increase in the HyperCore volume.”



“A growth multiple is warranted,” Boccaccio concludes.&nbsp;



How much of one depends on how much you believe the story, of course.



<h2 class="wp-block-heading">Jupiter</h2>



Jupiter, a Solana DEX aggregator, returns a comparatively modest 50% of revenue to token holders (also via buybacks) — but similarly has quite a lot of it.



<a href="https://x.com/marcarjoon">Marc Arjoon</a> estimates that Jupiter may earn $280 million of revenue over the next 12 months, which would put the JUP token on a yield of about 11.5% yield, based on market cap.



In equities, an 11.5% yield would imply that the underlying business is distressed, but that does not seem to be the case here.



Jupiter is “the default router” on Solana, Arjoon writes, “currently has no equal in aggregation,” and is “the fourth-highest revenue-generating application among all crypto dapps.”



Better yet, it’s run like a business: “Jupiter’s strategic maneuvers throughout 2024-2025 reflect an organization aggressively entering a hyper-growth phase, ambitiously positioning itself as Solana’s premier crypto super-app.”



That hardly sounds like a business that should yield anything close to 11.5%.



There are plenty of risks, of course, which Arjoon details in his most recent note.&nbsp;



But his takeaway is that “Jupiter currently trades at compellingly low multiples relative to its peers, suggesting considerable upside potential even without multiple expansion.”



He even quantifies this in a sum-of-the-parts scenario analysis, which warms my TradFi heart:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf5jZdFKHhav5udssAeDF5sYBQ3Ols2JEqYW2r74SQtS1QmfUBNpgW2JSpgqWs0c2Y7DOgOwR4plhldVhGfMM5xCVSGmOrqIhuGqUiL1TNKXl94r4vUan2rvCvvuF5BjzM9_0uzhw?key=b6NzDIc5luKsYjQm8mwuVQ" alt=""/></figure>



Looks like a good story.



<h2 class="wp-block-heading">Helium</h2>



Helium, a decentralized telecom provider, has been a crypto story for a long time now — it was founded way back in 2013.



But now it’s a story with numbers: “Revenue as measured by data credit burn is accelerating, growing at 43% QoQ,” Blockworks Research&#8217;s <a href="https://x.com/0xMetaLight">Nick Carpinito</a> wrote in a recent note.



“Importantly, Helium’s mix of revenue is shifting from Helium Mobile to Mobile Offload, with the latter now accounting for roughly 3x more DC burn, and growing at nearly 180% QoQ, an astounding rate for a DePIN protocol selling into enterprise budgets.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcxW0Jfw6F0fpD2pKkB3RB32IX57drA63Bjt08Q5ErFkECKJ0v4oycIaVx287_6jYq7PEnv79HVU3EfWMU0s7HhGB7wo8mhrrmDczn4N717ntr2L05h33YaPghqqpUh4ggTTIRRpw?key=b6NzDIc5luKsYjQm8mwuVQ" alt=""/></figure>



“Mobile Offload” is the blue line above and its quarterly growth rate of 180% is an astounding number for anyone, really.



Helium’s HNT token might seem to be priced for it, trading on about 120x annualized sales.



But Carpinito told the <a href="https://youtu.be/F6BsNclvbsM?si=QKQkyLaC187ttITq&amp;t=1545">0xResearch podcast</a> that he expects revenue to accelerate thanks to a “surge in data credit use through AT&amp;T allowing its subscribers in the US to connect to Helium.”



As a result, “there’s a high likelihood that we see some HNT price appreciation over the next 12 months that is unprecedented and also much more stable than any Helium price appreciation we’ve seen in the past, which was largely based on speculation.”



It’s unusual in crypto to hear anyone make that kind of price prediction based on anything other than speculation.



And refreshing.



<h2 class="wp-block-heading">Pendle</h2>



Finally, Pendle is a “yield trading” protocol whose new offering, dubbed “Boros,” will allow users to speculate on any off-chain or onchain yield, beginning with funding rates.&nbsp;



“The implementation will look similar to a classical interest rate swap market, where traders can pay a floating rate to receive a fixed rate, or pay a fixed rate to receive a floating rate, on margin,” Blockworks Research’s <a href="https://x.com/0xMether">Luke Leasure</a> explained.



That doesn’t mean too much to an equities guy like myself, but it’s apparently a big market: “With perpetual futures markets settling nearly $60 trillion annually with hundreds of billions in open interest, Boros will enter an entirely new, enormous and untapped market,” according to Leasure, who expects that Boros could double Pendle’s revenue rate.



That’s not something you hear much in TradFi.



In a bull case, Leasure estimates that the “vote-escrowed” version of Pendle’s token might be trading on just 1.6x earnings:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf2aq6w286aRRLTlakCa-F1zzPsmOxPLmt4Q-3P1R_lY96Hc-1p5M1R0kMK78oB0a8_XRyyyhUPB3onOOsZ1eHVMYo2q-1K8QS0a2dji7PJADx3-1cQ9KX_Em-qCbpJUcosY9H1?key=b6NzDIc5luKsYjQm8mwuVQ" alt=""/></figure>



1.6x!



Nothing in equities ever trades on 1.6x earnings unless its business is about to fall off a cliff, which doesn’t seem to be the case here.



Still, that’s not investment advice (from me, at least) because Pendle is a complicated story — as most of them are in crypto.



But at least they’re now stories that can be told in numbers.



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Blockworks Research

How crypto investing is becoming a better story

This is a segment from the Blockworks Daily newsletter. To read full editions, <a href="https://blockworks.co/newsletter/daily">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">
“Consciousness may end up being found in very strange places.” — Christof Koch
</blockquote>



The canonical question in the philosophy of consciousness was posed by Thomas Nagel in 1974: “What is it like to be a bat?”



Nagel’s idea was that consciousness is defined simply by what it feels like to be something — the inner, subjective experience of being alive and aware.



“An organism has conscious mental states if and only if there is something that it is like to be that organism,” he explained.



Many have found this subjective answer unsatisfyingly circular: What is this something???



David Chalmers later declared this question “the hard problem of consciousness” because it exposed a gap between subjective experience and objective science.



In 2004, however, Giulio Tononi confronted Chalmer’s hard problem with a paper proposing a mathematical model for consciousness: Integrated Information Theory (IIT).



Consciousness, he argued, is a mathematical property of physical systems — something that can be quantified and measured.



But can a system be conscious?



After interviewing the computational neuroscientist Christof Koch, the co-hosts of the <a href="https://youtu.be/qme8fOs7N8g?si=xZUjUtbDmmNVpKuI&amp;t=665">New Scientist podcast</a> concluded that computers, being systems, could theoretically achieve consciousness if they were able to “integrate” the information they process.



And nearly anything could be a system: Even a rock might register a trace of consciousness if its atoms form the right kind of structure (as proven in the science documentary <a href="https://youtu.be/2X1sOTg-ivg?si=iVUg_SNnwbLK3Yrq">Everything Everywhere All at Once</a>).



Which got me thinking: Ethereum is a world computer, right?



And critics accuse Bitcoin of being a pet rock.



So…if computers and rocks can be conscious, surely blockchains can be, too?



Blockchains do, in fact, tick a lot of IIT’s boxes.



IIT posits, for example, that a system can only be conscious if its current state reflects everything it’s been through — just as your memories shape who you are and each moment builds on the last.



Blockchains like Ethereum work in a similar way: A blockchain’s current “state” is a function of its history and each new block depends entirely on the ones before it.



That history-dependence gives it a kind of memory — and because thousands of nodes agree on a single shared version of reality, it also creates a unified “now” (or “state”) that IIT says is a characteristic of consciousness.



Unfortunately, IIT also says that for a system to be conscious, it has to have “causal autonomy” — which is to say, its parts have to influence each other internally and not just in response to inputs it passively receives from external actors.



Blockchains don’t work like that, of course.&nbsp;



Instead, they rely on external inputs (like users sending transactions and validators adding blocks) to act on and advance — and the nodes that run the network don’t influence each other internally, they just blindly follow the same set of rules.



There’s no spontaneous activity, no internal causation — not even the aimless vibration of molecules you’d get in an inanimate chunk of granite.



So I’m sorry to report that, on the IIT spectrum of consciousness, blockchains rank below even rocks — and that the “pet rock” jab might therefore be a compliment to Bitcoin (or an insult to rocks).



But maybe not for long!



In 2021, the computer scientists (and married couple) Lenore and Manuel Blum co-authored a <a href="https://www.scirp.org/reference/referencespapers?referenceid=3699575">paper</a> describing how to engineer consciousness into machines.



Their framework treats consciousness as a computable property — achievable with AI algorithms designed to produce systems with the “causal autonomy” required for conscious experience.



The AI wouldn’t be conscious itself, in this case, but a system that deploys it could be.



Now imagine an AI-enabled blockchain that doesn’t just run code, but thinks about running code.&nbsp;



Instead of inert ledgers passively waiting for inputs, blockchains could be self-contained, “causally integrated” machines — more like synthetic brains than distributed databases, with the kind of internal autonomy that IIT researchers consider essential for consciousness.



This could be useful!



A system like that might be able to reason about its own security, detect anomalies in real time, and decide when to fork itself (perhaps after a period of soul-searching introspection).



In short, it would do things not because it was told to, but because it understood what was happening — both inside itself and in the outside world.



It’s not impossible.&nbsp;



Today’s blockchains are more like nervous systems without a brain — wiring without will.&nbsp;



But tomorrow? Who knows.&nbsp;



If IIT is right, philosophers might soon be asking, “What’s it like to be a blockchain?” (And also, is it better than being a rock?)



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Will AI make blockchains conscious?

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



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;There are three creativities: creativity in technology, in product planning, and in marketing. To have any one of these without the others is self-defeating in business.&#8221;



— Akio Morita
</blockquote>
</blockquote>
</blockquote>



The TR-55 transistor radio, the first product sold under the Sony brand, was a technical success — released in 1955, it marked a leap in miniaturization, solid-state design and made-in-Japan innovation.



It wasn’t much of a seller, however, and Sony’s co-founder, Akio Morita, knew why. It needed a better marketing pitch.&nbsp;



So for its next product, Morita demanded that Sony’s engineers develop a gadget that he was sure would get people’s attention: a “pocketable” transistor radio.



By 1957, Sony had developed the world’s smallest radio, the TR-63 — a miracle of miniaturized components and clever engineering.



But it was a little too big to fit in a shirt pocket, which was Morita’s goal: “We liked the idea of a salesman being able to demonstrate how simple it would be to drop it into a shirt pocket,” he explained in his autobiography, <a href="https://www.amazon.com/Made-Japan-Akio-Morita/dp/0002177609/ref=sr_1_1?crid=4ZF0Q2S3B4TG&amp;dib=eyJ2IjoiMSJ9.0zcUUQcaQpbtKX_x1xOCuJKoRNc2MamfeyKAlF0zly4wWkHCkxmSqnMH50M34tzQ.bRsiaT1afnYAOO4qYvQLY3sWKopRwRbjGGTTosCLLJ8&amp;dib_tag=se&amp;keywords=made+in+japan+akia+morita&amp;qid=1746404065&amp;sprefix=made+in+japan+akia+morita%2Caps%2C122&amp;sr=8-1">Made in Japan</a>.&nbsp;



Instead of sending the engineers back to the drawing board, however, Morita solved his design problem with a marketing trick: “We had some shirts made for our salesmen with slightly larger than normal pockets, just big enough to slip the radio into.”



It worked better than even Morita could have imagined.&nbsp;



Not only did the TR-63 become an international hit that made Sony synonymous with innovation and high-quality products — it also kickstarted a revolution in global consumer electronics that would change the world’s perception of Japan.



Morita would go on to become — in the assessment of John Nathan, author of <a href="https://www.amazon.com/Sony-Private-Life-John-Nathan/dp/0618126945/ref=asc_df_0618126945?mcid=72054532ed0a3c389805f0c0816b3e3d&amp;tag=hyprod-20&amp;linkCode=df0&amp;hvadid=693310352361&amp;hvpos=&amp;hvnetw=g&amp;hvrand=17722954159000540309&amp;hvpone=&amp;hvptwo=&amp;hvqmt=&amp;hvdev=c&amp;hvdvcmdl=&amp;hvlocint=&amp;hvlocphy=9009671&amp;hvtargid=pla-568202304859&amp;psc=1">Sony: A Private Life</a> — “probably the greatest marketer of the 20th century, right up there with Steve Jobs.”



If that sounds like hyperbole, consider that Sony — a Japanese company — was rated <a href="https://www.yahoo.com/news/2006-07-13-sony-is-still-the-1-brand-seven-years-in-a-row.html">the number one brand</a> in America from 1999 to 2006.



It was such a significant accomplishment that when Morita died in 1999 at the age of 78, he was hailed as “the engine that pulled the Japanese economy.”



He wasn&#8217;t born a marketer, however — he started out as a kid who liked to tinker with electronics. He went on to become a physicist working for the Navy, and then co-founded Sony as an engineer.&nbsp;



Neither he nor his co-founder Masaru Ibuka had any notion of “merchandising or salesmanship” when they started Sony.&nbsp;



“It never occurred to Ibuka or me that there was any need for this,” Morita explained in his autobiography. “Ibuka believed strongly that all we had to do was make good products and the orders would come. So did I. We both had a lesson to learn.”



Both founders assumed that “in making a unique product, we would surely make a fortune.”



But when they made their first unique product — a ground-breaking, magnetic-tape recording device — they didn’t even make their investment back: “Everybody liked it, but nobody wanted to buy it.”



That’s when Morita learned the value of marketing: “Having unique technology and being able to make unique products are not enough to keep a business going,” he realized. “You have to sell the products” too.&nbsp;



He also realized he’d have to do the selling himself: “I was struck with the realization that I was going to have to be the merchandiser of our small company.”



This may be a universal truth of business: Every product, no matter how good, needs to be sold.



Blockchains, included.



<h2 class="wp-block-heading">Aim high</h2>



In his latest blog post, <a href="https://vitalik.eth.limo/general/2025/05/03/simplel1.html">Simplifying the L1</a>, Vitalik explains what Ethereum is aiming for — “to be the world ledger: the platform that stores civilization&#8217;s assets and records, the base layer for finance, governance, high-value data authentication, and more” — and how to achieve it: “This requires two things: scalability and resilience.”



Well, three things, probably: Morita would tell him that simplifying Ethereum requires marketing, too.



Ethereum’s decentralized and unofficial messaging has done a poor job of explaining what the world’s first smart-contract blockchain is, why it matters, or why anyone might want to use it.



Fortunately, Vitalik may have inadvertently fixed Ethereum’s messaging, too. “World ledger” is an excellent elevator pitch!



Using Bitcoin as a model, Vitalik’s new priority for Ethereum is technical simplicity: “One of the best things about Bitcoin is how beautifully simple the protocol is.”



He’s referring to Bitcoin’s code, which is simple enough that “even a smart high school student is capable of fully wrapping their head around and understanding” it.



(Note: I’ve looked at the code myself and, well…remind me never to match wits with a smart high school student.)



But Vitalik could equally have been referring to Bitcoin’s pitch to investors, which is beautifully simple, too: Everyone can immediately comprehend the appeal of “digital gold.”



“World ledger” may not be quite as intuitive as that, but it’s a major improvement on Ethereum’s previous attempts at branding: “World computer,” “ultra-sound money,” and “the app store of crypto” all required a good deal of explaining.&nbsp;&nbsp;



The explanation of “world ledger,” by contrast, seems far simpler: a decentralized platform “that stores civilization&#8217;s assets and records.”



Being simpler should give it a better chance to stick.



Simplifying any aspect of Ethereum will not be easy, however, as Vitalik warns: “Explicitly valuing simplicity requires some cultural change.”



But that change may already be underway — there’s a growing consensus that Ethereum’s development should be “<a href="https://x.com/sassal0x/status/1917764357641118184">reprioritized</a>” in favor of the base layer (rather than deliberately pushing transactions to layer-2 blockchains).



Just as importantly, there’s a growing recognition that Ethereum’s marketing needs to be reprioritized, too.



For example, Tomasz Stanczak, the newly appointed co-executive director of the Ethereum Foundation, has acknowledged that marketing is part of what’s needed to rebuild Ethereum’s “social layer.”



“On the marketing side, I think we don’t want to create a brand name or advertising style of marketing,” Stanczak told Bankless on a <a href="https://youtu.be/uEzt2ABF80g?si=MmSWYODCBAs5LXBh">podcast</a> this morning, “but better communication and clarity is also part of marketing.”&nbsp;



Better communication and clarity would fit Morita’s definition of marketing, too — marketing, he explained, is about showing people “the real value of what you are selling.”&nbsp;



The good news for Ethereum is that the value it’s selling can be a little aspirational — like Sony’s pocketable radio that didn’t quite fit into a pocket.



Similarly, Ethereum isn’t quite the world’s ledger just yet — but that sounds like a good thing to aspire to.



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Has Ethereum finally found its elevator pitch?

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;I do not fear computers. I fear the lack of them.&#8221;



— Isaac Asimov
</blockquote>



Bill Gates <a href="https://www.cnbc.com/2025/03/26/bill-gates-on-ai-humans-wont-be-needed-for-most-things.html">expects</a> that within a decade, humans will no longer be needed “for most things.”



We’re entering an era of “free intelligence,” he explains, in which expertise in all subjects will be commoditized — the best doctors and teachers, for example, will be AIs.&nbsp;



“It’s very profound and even a little bit scary,” Gates <a href="https://www.harvardmagazine.com/2025/02/harvard-bill-gates-ai-and-innovation">told</a> Harvard Magazine, “because it’s happening very quickly, and there is no upper bound.”



Listening to ex-Google CEO Eric Schmidt <a href="https://x.com/vitrupo/status/1911934053378588842">tell it</a> is even scarier: “Within the next one year, the vast majority of programmers will be replaced by AI programmers.”



Within five years, he adds, we&#8217;ll achieve artificial general intelligence, after which AIs will be as smart as the top expert in any field — and within six years we’ll achieve artificial super intelligence, where a single AI is smarter than the sum of all human intelligence.&nbsp;



“There’s no language for what happens with the arrival of this,” he warns.



But I wouldn’t worry too much just yet — these remain predictions about the future and the future, as Yogi Berra tells us, is famously hard to predict.



Also, evidence from the present suggests that humans won’t be so easily replaced.



For example, the founder of Cursor <a href="https://x.com/amanrsanger/status/1916968123535880684?t=8px6XEfAM8KWKnRiZC7c8w&amp;s=19">said</a> this week that the AI code editor he developed is now writing one billion lines of code per day.



That’s a lot — almost certainly more than the total lines of code written by every software developer in the United States put together.



And yet, the Bureau of Labor Statistics <a href="https://data.bls.gov/oesprofile/">estimates</a> there are at least 1.6 million software developers still employed in the US.



That could be about to change, who knows?



But if AI is already writing a billion lines of code without any discernible effect on employment, I suspect that’s an indication that human programmers have many years of employment to look forward to still.



Another indicator: Subscriptions for Microsoft’s Copilot have <a href="https://ben-evans.us6.list-manage.com/track/click?u=b98e2de85f03865f1d38de74f&amp;id=abd0ff0a30&amp;e=cfa7b309bc">reportedly</a> been stagnant for a full year now — which suggests that Copilot really is an “AI companion” for human employees (as the company markets it) and not a replacement for them.



Similarly, OpenAI <a href="https://techcrunch.com/2025/02/20/openai-now-serves-400-million-users-every-week/">reports</a> that ChatGPT has over 400 million active weekly users now — almost 5% of the world’s population!



But I still have to type this newsletter out myself.&nbsp;



LLMs don’t seem to be taking any other jobs, either: “We find muted effects of AI on employment due to offsetting effects,” one <a href="https://www.nationalaffairs.com/blog/detail/findings-a-daily-roundup/job-assignment">academic study</a> reports. “Highly exposed occupations experience relatively lower demand compared to less exposed occupations, but the resulting increase in firm productivity increases overall employment across all occupations.”



<a href="https://bfi.uchicago.edu/wp-content/uploads/2025/04/BFI_WP_2025-56-1.pdf">Another study</a> found similarly that despite widespread adoption of LLMs, “AI chatbots have had no significant impact on earnings or recorded hours in any occupation.”



So even newsletter writers appear to be safe for now.



And even if not, we’ll probably find something else to do.



Benedict Evans recently <a href="https://www.ben-evans.com/benedictevans/2023/7/2/working-with-ai">recounted</a> the long history of new technologies leading to higher, not lower, employment, citing examples such as the invention of typewriters and adding machines: &#8220;What did that do to clerical employment? People hired far more clerks. Automation plus the Jevons paradox meant more jobs.&#8221;



Evans illustrates this point by noting that the vast floor of human calculators that Jack Lemmon worked on in <a href="https://www.rogerebert.com/reviews/great-movie-the-apartment-1960">The Apartment</a> has since been replaced by a single spreadsheet.



But there are far more people employed using spreadsheets today than there ever were using adding machines.



In some places, the greater concern is that there are too many jobs and not enough people: Greece, for example, introduced a six-day work week last year “due to the twin perils of a shrinking population and shortage of skilled workers,” as The Guardian <a href="https://www.theguardian.com/world/article/2024/jul/01/greece-introduces-growth-oriented-six-day-working-week">reported</a> it.



Similarly, at least part of the reason for the persistent <a href="https://www.haas.berkeley.edu/wp-content/uploads/Howard_Wang_Zhang_Housing-Supply-and-Construction-Labor-Dayin-Zhang.pdf">shortage of affordable homes</a> in the US is that there aren’t enough humans available to build them.



This could change, of course.&nbsp;



ChatGPT may soon write this newsletter faster and better than I can — I’ve noticed, not without trepidation, that it’s slowly been getting better at proofreading individual sentences for me.



And even construction workers may someday fear for their jobs.



Analysts at Bank of America <a href="https://www.actuia.com/en/news/according-to-a-bank-of-america-study-3-billion-humanoid-robots-will-be-in-service-by-2060/">predict</a> there will be three billion humanoid robots roaming the planet by the year 2060, doing everything from handling hazardous materials to caring for the elderly.



2060 is still a long way off, however, and chances are we (like Jack Lemmon) will have found better things to do by then.



In the meantime, though, let’s keep ourselves busy by checking the charts.



How it’s going so far:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdjjcD-7dCneloeehpy60rwtUGsiFzdgLesw1gOfzVSwmz_bL4TC4OkY7cJaaI19VVuHZmhkWzwUq5dgylStbdp6x1HOm54lstIxgLBU3HB3o_WKVZOC28N7ryb3dk9rwq8gG80xQ?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



A simple but amazing chart: Exactly one month after Liberation Day, Nasdaq is 3.2% higher. That is ….not what I expected. Also, Liberation Day was ONE month ago??? Feels like 10 years.



Not all is well in markets, however:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcF1HD5lGzeWtpUiph1GfoW2MAL3K2eGUS8GdnB2uY4ik0bhzZLtV2E8mlPdrz70k30R257E_TwrxvtVEijLRqN1eakU8QLQh8_RjgIXUdtTOgPdPXDmulbL_-oWDdGtwsg1B6v?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



Gold is up, the dollar is down and oil is down a lot. This seems more consistent with yesterday’s <a href="https://x.com/SpencerHakimian/status/1918059517461577913">news</a> that tariffs are costing Apple $900 million a quarter and this morning’s <a href="https://www.reuters.com/business/us-cedes-little-ground-key-tariffs-talks-with-japan-nikkei-says-2025-05-02/">news</a> that Japan isn’t interested in the trade deal currently on offer.



Zooming out:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeD2uZMhzrvjK_2q_b9_rQDZpThDqzck5lmwtiAut7vv9CeU73kv_PDOGgwGCSfq7AOADIFP0EcoYwTGo5BZlUWeOJQp7iuQJGl-T4U1RL5V9fOSt5Rkt6vGPOpODGQlseS5LBl_Q?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



The US dollar tends to move in decade-long trends. With Japan now <a href="https://www.reuters.com/markets/asia/japans-us-treasury-holdings-among-tools-trade-talks-finance-minister-kato-says-2025-05-01/">threatening</a> to unload its massive stockpile of US Treasurys, it’s easy to see why the next trend might be down.



The economy’s firewall:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcUsBU4IPyLPOiXKzvLY6GC5aNtoqxzrjmBl8-Jo6ndwuE1opDEkS7uJXjwZZTeR5RX8CbDSNNW7qUG8WD_mp9P55nSv4KcMFy4vDLyNTVOHQPiroEt3uLomgisIGxhtmPGrKYpug?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



This morning’s report that the US added 177,000 jobs in April, which is encouraging, but of course backward looking, according to <a href="https://x.com/Markzandi/status/1918298122088005718">Mark Zandi</a>: “The job market remains a firewall between continued growth and a downturn. But…the firewall feels fragile. Unless the trade war de-escalates in the next few weeks, the firewall will come down, and a recession will ensue.”



Looking forward:&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd-DdnPGZIDI4Zv8cIr2J8KgItSu3-yvfOP5LjfUsbUawDrnQ4FL5X7BaoIOWrG8AL5POgjjsfdYjhFCffuzOxgKLMuTgxSLzycdu0aN7_RRxZZjVnyb6OK1w_7DtaotFovay70OA?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



Torston Slok warns that this morning’s employment data was collected the week after Liberation Day tariffs were announced and that the correlation to University of Michigan survey data suggest that employment is set to turn lower and “perhaps even negative.”



Don’t forget the little guys:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd0QHrPSuXA6xLcjnZEhC_dG6Sonw5FoJaLnDgud4cv4h8DqKTbMNMY43ygxhji-wt-ScA_tZag5DMcO6SeXVgiScfRMtr6emZXfzNaiqqYM1ZjI99dh4kOkotwwKo4UNS7UoyUVg?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



Apple can weather tariffs at even a cost of $1 billion a quarter, but smaller businesses dependent on imports from China probably cannot.



Congratulations to the class of 2025:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfTFZHlgHM_X4XgiKqJoJYcW7Qaaoqq_BnV7rbCAgLSE9NETDXOcJ2plO3tQR30WuOvCwBiFrj2As2oYdHjTER8qHH-Cc_gPpYPV9cHKieO1hzme-LPpuAzq-qr11fWznpzQNwc7Q?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



This chart from the Atlantic shows that contrary to the historical norm, recent college graduates now have a higher unemployment rate than the average American. (I’d probably still trade places with them though.)



It’s cheaper to stay in school, at least:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXefQQqhCR7lmuoyhLaEVpyl2DUSLQ9ICMJRhWcxlVhrWL_rVbqZ_4U4oX_GSS_-sPcP8Zox2Symyt0slalGewA9pa6t41jPNFk5qZTUsAJhO8SpWGIroneeS5ieqSB9-zRGaeSBQA?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



Bloomberg’s Jon Authers notes that Covid broke the multi-decade uptrend in the cost of college, which is now headed lower.



Recession odds:



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1600" height="828" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=1024&amp;h=1024" alt="" class="wp-image-101512" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2025/05/unnamed-1.png?w=80 80w" sizes="auto, (max-width: 1600px) 100vw, 1600px" /></figure>



The Polymarket odds have been ticking up, which seems weird given what stocks are doing. One analyst <a href="https://x.com/dailychartbook/status/1918312020824473871">estimates</a> that stock prices are now pricing in only a 34% chance of recession. Even more discordant is the <a href="https://www.bloomberg.com/news/videos/2025-04-22/economic-uncertainty-higher-than-past-recessions-hunter-video?srnd=phx-markets">estimate</a> from Constance Hunter, chief economist at the economist intelligence unit, who puts the probability at 80%.



Not a prediction:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeEJwkr7nEFKXp0_r6AjDlvFwQqNAPtRCLcdqpr7q8slLIo3SjgTX8cqpVa2S-bItl8sH4d5mZ6yzW26clLMFtkg4GVuNlrBQIDe4DSTPXAmCxJCXFZ-j0wc7Lz_Ice8GuVko6UJg?key=wj6o-hDlSwrRevncwZWcaZYm" alt=""/></figure>



The <a href="https://www.vizionapi.com/blog/tariff-tracker">latest data</a> from Vizion’s Global Ocean Bookings Tracker shows exports from China to the US down 48.6% from a year before. “Maybe the children will have two dolls instead of thirty,” the president <a href="https://x.com/Acyn/status/1917634492539494557">said</a> in response this week. “Maybe the two dolls will cost a couple of bucks more.”



That sounds pretty recessionary to me — but maybe he’s right that the boats are filled with “stuff we don’t need.”



As long as we keep the jobs we need, I think everyone would be fine with that.



Let’s hope that’s what the markets are telling us.



Have a great weekend, naturally intelligent readers.&nbsp;



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Friday Charts: Will natural intelligence keep us employed?

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“It looks a little bit like crypto keeps playing a prank on the stock market, and the stock market keeps falling for it.” — Matt Levine on bitcoin treasury companies
</blockquote>



Q: Will you let Worldcoin scan your eyeballs?



Now that it’s finally <a href="https://blockworks.co/news/sam-altman-worldcoin-orb-mini-eye-scan">available in the US</a>, I will — enthusiastically.&nbsp;



That might put me in the minority because Worldcoin has gotten a chilly reception in crypto circles, mostly because its eyeball-scanning orb looks like surveillance tech straight out of Minority Report.



But how else are you going to prove you’re human?



In the coming age of AI-generated fake news, deepfake videos, financial scams and <a href="https://www.cnbc.com/2025/04/08/fake-job-seekers-use-ai-to-interview-for-remote-jobs-tech-ceos-say.html">fake job applicants</a>, someone will need to store a proof that you’re human.



You will only have three options to choose from: a government, a corporation or a decentralized crypto protocol.&nbsp;



Seems like an easy choice.



Vitalik has <a href="https://vitalik.ca/general/2023/07/24/biometric.html">explained</a> that “proof of personhood is valuable because it solves a lot of anti-spam and anti-concentration-of-power problems that many people have, in a way that avoids dependence on centralized authorities and reveals the minimal information possible.”



But even non-crypto people will likely agree that identity on the internet should be decentralized, sybil-resistant, provable and open source.



Last night, Sam Altman reassured us that Worldcoin’s technology was “a way to make sure humans remained central and special in a world where the internet had a lot of AI-driven content.”



Altman is admittedly proposing to solve a problem that he himself has created, but he’s right that proving unique humanness is about to become mission critical — and CAPTCHAs are not going to do it.



So far, Worldcoin is the only plausible solution for proof-of-personhood I&#8217;ve seen (or can even imagine, really) — and it proves that personhood in a most crypto-native way: by turning your iris scan into a hash and storing it on a decentralized blockchain.



It’s not even your full iris data that’s stored, just a mathematical representation of it that can be used to check for uniqueness.



Don’t we all want to be unique?



And anonymous?



Seems like something true crypto cypherpunks should embrace.



Q: Should stablecoins be allowed to pay interest?



I’d like to receive interest on mine, but paying interest turns stablecoins into narrow banks and there’s a reason why the Federal Reserve doesn’t give bank charters to narrow banks — the banking system is supposed to intermediate between savers and risk takers, not savers and the government.&nbsp;



Narrow banks take money from savers and park it in risk-free T-bills and reverse repos, which is neither economically productive nor socially desirable.&nbsp;



But banking has been getting more narrow ever since the introduction of money market funds in the 1970s (which Paul Volcker argued against as a dangerous kind of regulatory arbitrage).



And now, brokerages like Fidelity and Vanguard let you pay bills out of those high-yielding money market funds.



Seeing as that’s allowed, why not let stablecoins pay interest, too?



Seems intuitive enough, but <a href="https://x.com/CampbellJAustin/status/1917581563598102830">Austin Campbell</a> makes an even simpler case for why stablecoins should pay interest: “If you are banning interest payment on stablecoins, that interest doesn’t go away. It just goes into the pockets of corporate executives.”



The pockets at Tether HQ are particularly overflowing at the moment: Per their <a href="https://tether.io/news/tether-approaching-120b-in-u-s-treasuries-confirms-quarterly-operating-profit-over-1b-and-strengthens-global-usdt-demand-in-q1-2025/">Q1 attestation</a> released this morning, Tether’s owners paid themselves $2.347 billion last quarter.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe9B61csnKZqUxIheGk3CUOEkq7kUUcjasfd65td3_Ij3hyTQpYddtEE84n6m_EeaYSkh3BErtJWgPLU3e61pN-IIynlYMSlSLylnhhA9rP2c9uqrD0CrPvuRYCeIiIk-zxlbNVxg?key=g-zCDNtssgzQwZk0A6w2WfUO" alt=""/></figure>



That is quite the payday considering that Tether reportedly has as few as five owners — four top executives plus Cantor Fitzgerald who recently took a <a href="https://www.wsj.com/finance/currencies/howard-lutnick-giancarlo-devasini-tether-cryptocurrency-3d0a961c">5% stake</a> (for reasons obviously unrelated to Tether’s non-existent need for capital).



The Cantor investment valued Tether at $12 billion, which means the owners just received a quarterly dividend of 19.5%.&nbsp;



Tether’s operating profit for the quarter was just $1 billion, so the $2.3 billion dividend cuts into their “equity” buffer and they won’t be doing that every quarter.&nbsp;



Still, though, 19.5%!&nbsp;



You can see why Circle <a href="https://www.bloomberg.com/news/articles/2025-04-30/ripple-is-said-to-have-offered-to-buy-stablecoin-rival-circle">reportedly</a> turned down an offer of $5 billion from Ripple this week.



Q: How is the president’s stablecoin doing?



Right.&nbsp;



Another reason that Congress may prevent stablecoins from paying interest is that the president happens to own a stablecoin issuer.



On stage at Token 2049 today, it was <a href="https://www.nytimes.com/2025/05/01/us/politics/trump-cryptocurrency-usd1-dubai-conference-announcement.html">announced</a> that a $2 billion transaction between Binance and the state-backed Emirati investment firm MGX would be made in USD1, the Trump family stablecoin.



That represents about $80 million of annualized revenue going into the pockets of the issuer for as long as the money stays there.



“Virtually every detail of [the] announcement, made during a conference panel with Mr. Trump’s second-eldest son, contained a conflict of interest,” the New York Times reported.&nbsp;



Ugh.



Q: What&#8217;s it mean when a SPAC trades at $50?



It means people are losing their minds again.



The SPAC mania of 2021 revealed what happens when price discovery is left to retail investors: Deals that would never have made it past the first IPO roadshow meeting were rapturously received as “SPACs.”



Special Purpose Acquisition Companies (SPACs) are publicly traded pools of capital created to acquire a private company and take it public — an alternative to the traditional IPO process.



SPAC shares are customarily issued at $10 per share and usually trade somewhere around that level while the managers of the SPAC go looking for a deal.&nbsp;



After a deal is announced, SPAC shares will trade higher or lower depending on how the deal is perceived by investors.&nbsp;



Roughly speaking, if a SPAC trades at $11 after announcing a deal, it means that investors expect their stake in that deal will instantly be worth 10% more than the money they’re contributing to it — a reasonable assumption to make.



In the 2021 mania, however, it became common for SPAC shares to trade at $20, $30 or more.



That wasn’t a reasonable assumption to make because it implied that the company the SPAC managers found to buy would be worth far more on the stock exchange than it was a private company.



They almost never were — few SPACs ended up justifying their $10 issue price, let alone the wildly inflated post-deal prices investors insisted on paying in 2021.



It’s hard for me to imagine that it will go any better for the investors currently paying $50 for the Cantor Equity Partners (CEP) SPAC.



Last week, CEP <a href="https://www.businesswire.com/news/home/20250423962305/en/Tether-SoftBank-Group-and-Jack-Mallers-Launch-Twenty-One-a-Bitcoin-native-Company-Through-a-Business-Combination-With-Cantor-Equity-Partners">reached a deal</a> with Tether and Softbank to form a new “bitcoin-native company,” Twenty One.



Like Strategy, Twenty One will basically just be a pile of bitcoin with Tether and Softbank’s ownership stake based on how much bitcoin they contribute to the pile.



Current holders of CEP will receive a 2.9% share of that pile in return for their $100 million pot of cash.



This makes the math very simple: Today’s $50 price of CEP implies that investors believe that $100 million of bitcoin is worth $500 million on the stock exchange.



That feels about as crazy as anything that happened in 2021 — which I never expected to see again.



Are we really letting Tether quintuple the value of its bitcoin like that?



Contributing our crypto to bitcoin treasury companies seems like approximately the least cypherpunk thing we could do.



But crypto people are just as excited about it as stock market people.



Number go up, I guess.



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Thursday Mailbag: Is it cypherpunk to contribute crypto to bitcoin treasury companies?

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.”



— William Stanley Jevons
</blockquote>



When people hoped that more efficient steam engines would help conserve England’s limited reserves of coal, William Jevons warned of just the opposite: Greater efficiency, he predicted, would lead to even greater consumption.&nbsp;



He was right, of course, and his prediction became known as the Jevons paradox, which is often invoked whenever efficiency gains inspire people to use more of something.



When cars got more fuel-efficient, people drove more; when lightbulbs got more efficient, people installed more of them; when HVAC got more efficient, people built bigger houses.



But these are better described as examples of a “rebound effect,” where some, but not all, of the expected savings from efficiency are offset by increased usage.



It wasn’t until the digital revolution that the Jevons paradox truly came into its own: As fast as Moore’s law has decreased the cost of computing, our use of computers has increased even faster.



As a result, things like semiconductors and cloud computing — where costs are in perpetual decline — have been both great businesses and great investments.&nbsp;&nbsp;



The current craze for investing in AI is similarly predicated on more efficient GPUs enabling a disproportionately large expansion of usage.



Microsoft’s Satya Nadella is confident that it will: “Jevons paradox strikes again,” he <a href="https://x.com/satyanadella/status/1883753899255046301">posted</a> on X in response to investors briefly worrying that the advent of DeepSeek would reduce demand for both GPUs and cloud services.&nbsp;



So far, he seems to be right — the efficiency gains from DeepSeek and other more efficient LLMs seem to have been more than offset by increased demand.&nbsp;



But any investor in either airline or telecommunication stocks can tell you that it doesn’t always work out that way.



In both cases, efficiency rose, costs fell and usage increased disproportionately — but investors still lost.



Airline traffic, for example, has increased exponentially since people started flying commercially in the 1950s (and with only the smallest of cyclical downturns):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeaBqOYzu0azaYsc84h_iGgfy9C1_Sw_XDCvkh9OyRPlO95ws6ItZ2fHf4i7_mCqVgPs7K3i1U0kqLs6ycMeLno8ohYQmdFLOaDXi8FuiSBFyYIyEoi6uq1EqWvvHaM-Y_Tksj_PA?key=WRLkgfDF6uV-2-i6m20KfNva" alt=""/></figure>



That looks like a highly investable chart and the Jevons paradox-related <a href="https://www.iata.org/en/iata-repository/publications/economic-reports/global-air-passenger-markets-riding-out-periods-of-turbulence/">numbers</a> are even better: Since 1970, the real cost of air travel has fallen by 1.7% per year, on average, while the underlying rate of air traffic has grown 4.4% per year.



Anyone who had those numbers in advance would likely have started an airline or at least invested in airline stocks — but they’d have come to regret it: Warren Buffett calls airlines the “worst sort of business” and airline stocks a “deathtrap for investors.”



Similarly, lots of people who correctly predicted the explosion of internet traffic in the 1990s — or underpredicted it even — lost money buying stock in the companies that hosted that traffic.&nbsp;



Internet traffic grew 127% per year between 1997 and 2003 — at the end of which period investors in the likes of Level 3 Communications, Global Crossing and WorldCom were more or less wiped out.



Now consider crypto.



Much of crypto investing is predicated on the assumption that more efficient, lower-cost blockspace will lead to an exponential increase in demand for that blockspace.&nbsp;



The results have been mixed so far.



Cheaper blockspace has led to an explosion of activity on blockchains like Solana and Ethereum layer-2s like Base.



But that’s mostly been thanks to memecoin trading, which is presumably not a decades-long growth story — it’s hard to imagine that even cheaper blockspace will lead to even more memecoin trading.



(Let’s hope not, at least.)&nbsp;



For what the elasticity of blockspace demand looks like without memecoins, we might only have to look at Ethereum.



Early hopes that moving execution off-chain would lead to Ethereum collecting more fees in settlement and data availability than it lost in execution have been disappointed.



On Ethereum itself, the cost of transacting has fallen over 90% from its 2021 peak — but, per data from <a href="https://app.blockworksresearch.com/analytics/ethereum?dashboard=82">Blockworks Research</a>, the number of transactions is close to unchanged.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckG13181CJJ6hp1eT5_CxwQ1OQ22M-LWXTUxqM9NLqXKTvX-wG3nGzrKLHB9pjoR7n-WdGs1qz0BRBWOx7lpMxEZYFS39Is5p7pbIHfmoOcUPZNDmeb2WeC1zrOX06bvdtt2OdSg?key=WRLkgfDF6uV-2-i6m20KfNva" alt=""/></figure>



Worse still, the combined fees paid on all Ethereum-aligned layer-2 blockchains does not offset the loss of fees on layer-1 Ethereum — so the ecosystem as a whole does not appear to be an instance of the Jevons paradox.



That does not mean that it’s headed for failure.&nbsp;



The airline and telecommunication industries have been extremely useful to the world, providing positive externalities for society far in excess of the negative internalities that shareholders have suffered.



But that is a lesson to be learned: You can be right about the Jevons paradox and still lose money investing in it.



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investors

What crypto investors can learn from Jevons paradox

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“The counterfeit of business is speculation. A man in business always gives value in return for his revenue, and thus performs a useful function.”



— Andrew Carnegie
</blockquote>



When asked about the competitive threat posed by newly formed Federal Steel, Andrew Carnegie scoffed that its real specialty was “manufacturing stock certificates,” not steel.



That dismissive comment was emblematic of the 1890s boom in industrial “trust” stocks, most of which Carnegie thought had little to do with business and everything to do with speculation.



There were exceptions — the big monopolistic trusts formed in things like oil, sugar and tobacco unsurprisingly turned out to be good investments.&nbsp;



But there were also trusts formed in things like rope, wallpaper and coffins that were essentially stock-promotion schemes that did not.



The 1893 collapse of the National Cordage Company — the “Rope Trust” — even triggered a widespread financial panic that brought down many other trusts that were similarly in the business of “manufacturing stock certificates.”



That outcome might be a cautionary tale for crypto, an industry still best known for manufacturing tokens (not value).



The vast majority of those tokens don’t do anything — and those that do mostly just represent different ways of trading useless tokens.



The crypto market remains highly self-referential like that, but the hope has always been that this would change in time: Build a new financial system and the assets and investors will come.



If so, it feels like they should be arriving any time now — the technology is now good enough, blockspace is cheap and plentiful enough, and the SEC is in remission.&nbsp;



There are hopeful signs that it might be happening.&nbsp;



There’s a notable <a href="https://app.rwa.xyz/treasuries">boomlet</a> of real-world assets moving onchain, for example — mostly thanks to the success of BlackRock’s tokenized money market fund, BUIDL (a product that is in many ways genuinely superior to its off-chain equivalents).



Stablecoin assets are also <a href="https://defillama.com/stablecoins">trending higher</a> and may only be getting started: Mastercard’s <a href="https://x.com/MastercardNews/status/1916896208187986114?t=7DKVU8CYZHfPf5bbyvVSvQ&amp;s=19">announcement</a> this morning that it’ll be facilitating payments with stablecoins may be the thing that finally brings crypto to the non-crypto masses.



From levels of $240 billion now, a recent <a href="https://x.com/jerallaire/status/1915466281479753824">report</a> from Citi predicts that stablecoin assets under management will surge to as much as $3.5 trillion by 2030.



(Note: I did the math and found out that 2030 is four and a half years away. Shocking, I know, but true.)



If there are anything like 3.5 trillion tokenized dollars onchain, investable assets will follow.&nbsp;



I have recently, for example, bought two <a href="https://collectorcrypt.com/marketplace/cards">Pokémon cards</a> and a <a href="https://www.baxus.co/?sortBy=priority%3Adesc">bottle of whiskey</a> onchain, simply because I had some spare dollars onchain and crypto makes it very easy to buy Pokémon cards and bottles of whiskey.



So easy that I now consider both those things investable assets — not having to either take delivery or store collectibles like that is a game changer.



Investing in cards and bottles is also more fun than making 4% in BUIDL or losing 100% in memecoins.



Hopefully, there will soon be more options for crypto investors to choose from.



Kyle Samani even believes there will be all the options: “Virtually all assets will trade on inherently global and permissionless systems like Solana,” he predicted in a <a href="https://multicoin.capital/2025/01/22/the-solana-thesis-internet-capital-markets/">recent report</a> on the future of crypto capital markets.



If so, that will include stocks and bonds, of course, but also — and more intriguingly — all-new kinds of crypto-native assets.



It’s still kind of hard to imagine what these will look like beyond the current offering of blockchain and DeFi tokens — which are almost all self-referentially leveraged to the trading of crypto.&nbsp;



But now that blockspace is so cheap and plentiful, people are trying new things.&nbsp;



<a href="https://x.com/timedotfun?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor">Time.fun</a>, for example, is an experiment in tokenizing people’s time; <a href="https://zora.co">Zora</a> is an experiment in using “content coins” to surface and prioritize information; TRUMP, a “celebrity coin,” is an experiment in tokenizing emoluments; <a href="https://www.story.foundation">Story Protocol</a> is an experiment in programable, tokenized IP; <a href="https://x.com/believeapp">Believe App</a> is an experiment that turns X posts into memecoins (or “idea coins”) that offer to fund the business ideas they loosely represent.



Like most experiments, these will probably fail.



But if crypto capital markets keep throwing spaghetti on the wall like this, some new and interesting things should eventually stick.&nbsp;



Importantly, they might not all be crypto things, either.&nbsp;



Wall Street has been doing less and less experimenting as of late: Tomasz Tunguz <a href="https://tomtunguz.com/ipo-size-2024/">notes</a> that only two companies with less than $100 million of revenue have IPO’d in the US since 2018.



Two!



That failure to offer investors new things to invest in is at least partly because the IPO process has gotten so expensive: Tunguz estimates that it can cost a $100 million revenue company as much as $26 million to list on a US stock exchange.&nbsp;&nbsp;&nbsp;



That is a prohibitively expensive way to raise capital.



Raising capital in crypto, by contrast, is almost infinitely cheaper.



In some cases, literally so: The token that Zora issued is “just for fun,” which means Zora has raised equity capital without having to sell equity — a weird trick that’s only possible in crypto.&nbsp;



That has not worked out very well for crypto investors so far.&nbsp; For most investors in most crypto tokens, returns have been pretty terrible.



Lots of people have gotten rich in crypto, of course, but not by creating or investing in useful things.&nbsp;



Instead, it’s mostly been from the manufacturing of tokens.&nbsp;



Andrew Carnegie would be unimpressed — businesses, he believed, should succeed by giving “value in return for the revenue” and not just offering new things to speculate on.&nbsp;



But he might be sympathetic to crypto markets because stock markets weren’t very serious in his time, either — not until he created the first modern stock by merging his Carnegie Steel Company into US Steel.



US Steel was the product of the kind of financial engineering Carnegie derided.



But it was also the first billion-dollar corporation, the first corporation to publish modern financial statements, and arguably the first to have truly public ownership.



Crypto capital markets are still in their stage of manufacturing tokens.&nbsp;



But their US-Steel moment may — finally — be near.



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Markets

The time for permissionless capital markets is now

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Have markets been obsessing over the wrong Minsky?



After Liberation Day, we seemed to be headed for a “Minsky moment” in which global investors suddenly lose faith in the US dollar, triggering the kind of market collapse that economist Hyman Minsky warned about.



But after a big rally this week, the Nasdaq is back to within 1.4% of where it was before President Trump shocked the world with his &#8220;reciprocal&#8221; tariffs.



1.4% hardly seems like a disaster.&nbsp;



Stocks may have recovered because the president seems to be having second thoughts on tariffs — especially after the CEOs of three major retailers <a href="https://www.axios.com/2025/04/23/trump-economy-tariffs-china-powell">warned</a> that their shelves would soon be bare if the trade war doesn’t resolve itself more or less immediately.



That may have prompted the president to tell <a href="https://time.com/7280114/donald-trump-2025-interview-transcript/">Time magazine</a> on Tuesday that President Xi had called him seeking a deal on tariffs.



On Wednesday, Treasury Secretary Bessent also hinted at de-escalation, saying “there is an opportunity for a big deal” with China.



But even an immediate deal, however big, might not come soon enough, according to Bloomberg’s Chief Economist Anna Wong.



On this morning’s <a href="https://www.youtube.com/watch?v=BBQiJQQtsB0">Odd Lotts podcast</a>, Wong warned that, due to the long lead times in retail supply chains, “there’s a high probability that we’ll be seeing some empty shelves in the holiday season.”



Also this morning, China clarified that trade talks with the US haven’t even begun — in fact, they’re not even talking about talking as of yet.



The president seemed to disagree, <a href="https://www.youtube.com/watch?v=o_wHHVnBhgE">telling a reporter</a>, “They had a meeting this morning. It doesn’t matter who they is. We may reveal it later.”



Maybe “they” did have a meeting, who knows.&nbsp;



But none of this seems concrete enough to explain this week’s rally in equities.



So perhaps something else is afoot?



<h2 class="wp-block-heading">AI developments</h2>



One concrete bit of news this week was the good earnings report from Alphabet, which CEO Sundar Pichai <a href="https://x.com/TheTranscript_/status/1915498165182353468">attributed</a> to the company’s “full-stack approach to AI.”



That’s only one quarter of earnings from one company (whose stock was only up small today).



But it might serve as a timely reminder that what’s happening in AI right now is probably far more important than what’s happening with tariffs.&nbsp;



To name just a few recent developments: An <a href="https://arxiv.org/pdf/2503.23674">academic study</a> found that large-language models like ChatGPT now pass the Turing Test; Tyler Cowen <a href="https://marginalrevolution.com/marginalrevolution/2025/04/o3-and-agi-is-april-16th-agi-day.html">believes</a> artificial general intelligence (AGI), by his definition, is here; AI-empowered robots are <a href="https://www.cnn.com/2025/04/19/asia/china-first-humanoid-robot-half-marathon-intl-hnk/index.html">running marathons</a> and working as <a href="https://x.com/kimmonismus/status/1903381889957998881">cameramen</a>; and you can now buy your very own <a href="https://www.unitree.com/h1">humanoid robot</a> for less than the cost of a compact car.



Most impressively, an <a href="https://www.pi.website">AI startup</a> announced that it’s made great strides towards a “generalized physical intelligence&#8221; that will give robots “the ability to figure out how to correctly perform even a simple task in a new setting or with new objects.”



To get a sense for what that means, check out <a href="https://www.pi.website/blog/pi05?utm_source=substack&amp;utm_medium=email">this video</a> of a robot cleaning up houses it&#8217;s never been in before.&nbsp;



All of this was anticipated by the father of artificial intelligence, Marvin Minsky (no relation to the economist Hyman Minsky).



Marvin predicted way back in 1994 not only that robots would “inherit the earth” but also that they would do so peacefully — as our “children.”



That’s looking more and more prescient.



How good will the world be when the cost of a humanoid, house-cleaning robot gets so cheap that nearly everyone can afford one? That is a Minsky moment to look forward to — and it may be nigh.



<h2 class="wp-block-heading">Future sight</h2>



Let’s check the charts.



Predictions are hard (especially about the future):



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcNOv1W4xRBrL8Q_qD9m1b_rLwxIVQynT2LK0u4Pg9Q80OIr3SRrDcLEa5gYBZdqmyPwhEShUer41TgXPaRD4MviN9hMbGH2pDFq1LJJZuj82zZOdbFCz6YUtZNgtv268IjnuPeEQ?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



Despite all the news this week, the Polymarket odds of a recession are about unchanged at 55%. But you can take your pick of predictions: Bank of America thinks the odds of a US recession are still only <a href="https://x.com/MikeZaccardi/status/1915726624986652988">35%</a>; Ed Yardeni sees a <a href="https://www.marketwatch.com/story/overly-bearish-investors-risk-writing-off-2025-too-soon-these-strategies-offer-upside-and-downside-protection-77ab3c61">45%</a> of “stagflation/recession”; and Torston Slok sees a <a href="https://www.apolloacademy.com/probability-of-vtrr-90/">90% chance</a> of a “Voluntary Trade Reset Recession.”



Own goal?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfEufoFiJVNGYQa04A_iEMUGG3_BI5rocV_RjCY95BBmwddXXmNPTa_309Bql3kWJ11-UmFocRg_1OHKGtYnJ84XDtTIDqJMZYi301zLLlq_KZkig2jdnOFt4qVdd64ZTp1h9UN7g?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



New forecasts from the <a href="https://www.imf.org/en/Blogs/Articles/2025/04/22/the-global-economy-enters-a-new-era">IMF</a> suggest that the “supply shock” for the US (GDP down, inflation up) will be worse than the “demand shock” is for China (GDP down less, and inflation down, too).



The supply shock is underway:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeAP26x-m14hnr4Mjv9iFgieTkNI6Qacyq0WCDCVZtBkvkHK7_WCfv_b2-PYxfJSLITDIPpSoa-Xtjwy-0ruD3g_MRzIr9fKHTua8lmA4ni5BZuQYOduo3N4pE0CPcqrqmbxbbhbw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



A <a href="https://x.com/albertocavallo/status/1914163836241772878">study</a> of daily prices at retailers across the US finds that the price of goods from China rose immediately after the April 2nd announcement of tariffs and have continued to rise since. The price of goods from Mexico and Canada, however, have fallen (because of exemptions and chances of a trade deal, they think).



As bad as the last guy?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfb4EOwZocM2ZPI5iK4WMhc7EyTEebetiVxj0wEezf8s3HZC2lWvgtWYUTakesfd0-QqQ-8heTn6I08e--SFjQ8a8P0D8lfe9bIC277DYZ-L2j3oH_qQ0whkAvr_JTpPKDcs3zZlA?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



A Reuters/Ipsos poll out this week shows that President Trump’s approval rating on his handling of the economy is all the way down to, well, Joe-Biden levels.



What is this? A Minsky moment for ants?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe4PB2t3TvkZRZcZo8zp8PSZ6vZb47HW4mnHDQ-2J5h1_5qpJHSIA6oTGXZH3iBRjzFJR-DLzu7yAVXhXuxOzOFOCLhL-vDtpGtUMCtbatQUDOAh6HFKfKAl3SJjK93iG_5v9OojA?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



As recently as a week ago, the biggest concern in markets was that foreign investors had lost faith in the US dollar and would therefore be selling all of their US assets. But TIC data shows that foreign selling of US equities has been “moderate.”&nbsp;



Not much has happened — yet:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfTfy8VP1TKX2hURXKDn7EfY5h8RSLGX0g7HeiSFFA1SfrkgNINAu-1dan4ol1oQuIYlBv0xi-T-9Y9MxSfW2vtAQL5uc-fwujOp4CLsu_1y97RU4ZTrIz2ITCC2osAPpwakY2CtQ?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



&#8220;The softness in US soft data [eg, sentiment surveys] still has not spilled over to hard data,” <a href="https://x.com/AugurInfinity">Augur Infinity</a> writes. “Based on our calculation, soft data is now implying a meaningful contraction, while hard data continues to indicate above-trend growth.&#8221;



The canary in the Korean coal mine:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc_AkL0U2pL__LPv9Kt4TwR1x-TIgIJtD7uLqMX1fIeLlryzxC8h9UjGzDTBqqxX7btHX214wJ4HWFjJFADxqUMuWYfHLO9EZlxBjQb3UQ_jnJoRr865w2ENpxKUt5url7mg6e3?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



Exports from South Korea to the US are considered a leading indicator for global GDP. In April, they fell 14% from the year before.



Everything on hold?



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeYl9S1LVLxxR1cBBsBOUrvSg8JHD3QX0m-2CC_A3GBmUkbX-Fz7ko3475vV4r9-yuWqbiD-lii2hwtwV7GfMsq1Cmn4vl12G2ojCCG5phBHr8WRcg3wcBE2V68rQhN-PlVun2rGw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



Citadel CEO <a href="https://www.semafor.com/article/04/23/2025/citadel-ceo-ken-griffin-trump-is-eroding-us-brand-and-making-the-country-poorer">Ken Griffin</a> opined this week that, thanks to the tariff turmoil, the US “has devolved into a nonsensical place” where business leaders spend all their time worrying about supply chain disruptions. “People are not going to raise [money] to build manufacturing in America,” he added, “because with the policy volatility, you actually undermine the very goal you’re trying to achieve.” The above survey data on capex intentions suggests he’s right.



Zooming out:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdvOZLq7s7Zbfhyaf1cUSz7THwQaLjuL5IAnh-aJaPSlXsWpMfDYHi-dAm3uU8lDWn6xSaz1503-xtM97XzP211N57AgGAsuZ_jVKj50J8juqYMdzdlAEIAxk7ESlCCviCq5bvfqw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



The S&amp;P 500 has outperformed gold by about 4,700% since 1980 — which makes the recent trend reversal seem a little less foreboding.&nbsp;



The contrarian indicator:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcj8VZpxn7y7cMIt-uc-QdDMJeC_5yAbItxewkqGZXHYjj-dcrNv8GmxWZxyRJTTW5-axkzCHeWjjfP9S0icK9JHMoS68K_eFM-tzi3wY32pzmECgXFLSpiPQIV8u1ERkUPK6nebw?key=KVlXbNbXBSz_98fXNpqv5OMY" alt=""/></figure>



The “Magazine Cover Indicator” (which is real enough to have a <a href="https://en.wikipedia.org/wiki/Magazine_cover_indicator">Wikipedia entry</a>) was flashing green at the start of the week after the Economist ran an unprecedented fourth straight cover story that was bearish on the US and its currency.



That’s probably the real reason stocks were up this week: When everyone’s worried about the same thing at the same time, it probably won’t turn out as bad as everyone thinks.



So maybe we should get back to thinking about AI again — and hope it will be better than everyone thinks.&nbsp;



Have a great weekend, Minsky-moment readers.



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Donald Trump

Friday charts: The Marvin Minsky moment is here

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<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“Capital runs as surely and instantly where it is most wanted, and where there is most to be made of it, as water runs to find its level.” — Walter Bagehot (1873)
</blockquote>



Q: What’s it cost to have dinner with the president?



The <a href="https://gettrumpmemes.com/dinner">official website</a> promoting a “Dinner with President TRUMP” pitches the opportunity as “The most EXCLUSIVE INVITATION in the World.”&nbsp;



(Reader beware, the site has more capitalization than a German dictionary.)



Specifically, the dinner is “Only for the TOP 220 $TRUMP Coin Holders,” which does indeed make it pretty exclusive: You’d need to buy about $380,000 of TRUMP to break into the top 220, <a href="https://solscan.io/token/6p6xgHyF7AeE6TZkSmFsko444wqoP15icUSqi2jfGiPN">per Solscan</a>.



It might not take quite as much as that because some of the addresses in the top 220 are exchanges (which presumably won’t register their holdings) and some are individual holders who might not want to be KYC’d — the Secret Service will want names, not just FmEMyxFASzDyADXycG8CCTrNB1AMSdoigog3SixNzMNb (as the current 220th-largest holder is publicly known).



Still, anything close to that seems like a steep price for a 220 person dinner — even if it is “the most EXCLUSIVE INVITATION.”



Also, it’s not.



Slightly lower down on the site is an invitation for the top 25 holders of TRUMP to an “Exclusive Reception.”



I did the math and 25 is less than 220, so I think that must be the world’s most exclusive invitation.



I’m sure they will both feel exclusive — in both cases, “Black Tie is optional and preferred.”&nbsp;



But the top 25 also get a tour: “PLUS, We have separately by us arranged for a Special VIP Tour for you.”



(Correct grammar appears to be optional and not preferred.)



The 25th-largest holder of $TRUMP (excluding exchanges) currently holds about $5 million worth.



Interestingly, this implies that the market is pricing the event with 11x fewer people at 13x the cost — pretty efficient!



If you also add in the value of the VIP tour, I’d say the crypto market is being extremely efficient in the relative pricing of these two invitations — so much so that I’m certain Eugene Fama will soon be writing a paper on it.



Fama — the high priest of efficient markets — will probably wait until we find out the true cost of dinner (however exclusive), which won’t be determined until the ex-date on May 12 (i.e., the date when they take a snapshot for eligibility).



The organizers are being very clever about eligibility: “Your average holdings during this period will determine your ranking.”



I’m estimating that average price will be difficult, so aspiring attendees will have to purchase $TRUMP well in excess of the minimum if they want to guarantee themselves an invite.



That could get expensive, but the final cost will be a function of how much the TRUMP token goes down immediately after the date of record (like when a stock drops after paying a dividend).



The dinner news bumped the price of TRUMP by about 20% yesterday and I’m guessing the market will price in future such invitations, so the token shouldn’t give back all of those gains on May 12.



If it gives back, say, 10%, the real cost of an EXCLUSIVE dinner with the president will probably be in the range of about $40,000.



Good to know!



Q: How do you know this is real?



Because I read the website’s FAQs:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXez9HLKJY3HnBK9QSmUx76SamXdR-U10TEuD9_EEjJoJuGbu-rATBrsULOd23X2H9jQrxtI0RmZlENqK1NbAj60Quw6nLrYNZJ0pFLXC1ukTKpX-_z9ZkzoUp6k9rkKKnjF0c9c?key=8pM6FdysZAP0KWyLpM7UARPD" alt=""/></figure>



Q: Is $TRUMP still a memecoin?



It has real utility now: dinner with the president! And maybe a tour!!!



So, no, I don’t think it is.



$TRUMP is now a utility coin.



Q: Who is the target audience for the dinner?



Judging by the site, they appear to be targeting people who have $380,000+ to drop on a <s>memecoin</s> utility coin, who like random capitalization and dislike grammar, and who find a 1990s infomercial vibe enticing.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdHKVR3jCpm11wbASfNS-gHA37fvWQS_so54fD96i_abKMW-QWF_VSJir6O8VtzmdQU6Ca3cOC-wXB1PEjJo6dPivpquWtsyy71OY1s8SC77gyvWuoDMd_bZ-wN29Ll-zu-q6hl1Q?key=8pM6FdysZAP0KWyLpM7UARPD" alt=""/></figure>



I don’t know who resides in the overlapping middle of that Venn diagram, but I’d love to find out.



More importantly, this raises the question of why people think being one of 220 people in a room with the president is worth putting $380,000 at risk.



The answer could be benign: entertainment value, bragging rights or simple fandom.



But it could also be sinister: buying influence with the president.



Call me naive, but I think it’s the former — mostly because the wacky website seems to signal that this really is for entertainment purposes only and that attending the dinner will not get you pardoned of any federal crimes.



It feels to me like one of those Nigerian prince emails that were deliberately written with poor grammar, implausible stories and blatant red flags to ensure that only the easiest targets would respond to them.



(Scammers don’t want to waste time on anyone who’s likely to figure out they’re being scammed.)



The Trump Dinner website feels similarly calculated to select for those who really do think that being one of 220 people in a room with the president is worth tens of thousands of dollars (with no expectations of anything else).



Q: How much has the Trump family extracted from crypto so far?



The crypto-skeptic <a href="https://x.com/molly0xFFF/status/1913000905307504794?t=a7rcw9waSV4gucsAxejbOg&amp;s=19">Molly White</a> totals it up to about $1 billion, although that’s just a partial accounting (her total leaves out some big ticket items like the 20% of the US bitcoin mining company that Hut8 <a href="https://hut8.com/2025/03/31/hut-8-and-eric-trump-launch-american-bitcoin-to-set-a-new-standard-in-bitcoin-mining/">recently awarded</a> Eric Trump).



But I don’t think you can blame crypto for that — as Bagehot notes, capital (in any form) will flow to where it’s most wanted, like water finding its level.



Capital does seem to flow disproportionately from crypto, however.&nbsp;



By comparison, Amazon is <a href="https://www.rollingstone.com/politics/politics-news/amazon-paying-license-melania-trump-documentary-1235227761/">reportedly</a> paying $40 million for the rights to a documentary on the first lady that they know approximately no one will watch.



That seems at least as egregious as any crypto money that the Trump family has earned — but it’s only 0.002% of Amazon’s market capitalization.



By contrast, the $1 billion that the Trump family has probably extracted from crypto is 0.3% of crypto’s market capitalization — 150x more.



Big picture, I think that’s because crypto, where everything is financialized and tradeable, commands attention far in excess of its market value.



That’s good because it creates opportunities for newsletter writers who might otherwise be stocking shelves at Home Depot or something.



But it’s also bad because it creates disproportionately large opportunities for grifting.



Q: Is crypto worth it then?



I hope so — partly because I’m not ready to start my near-retirement job at Home Depot just yet.&nbsp;



But also because I still believe in the <a href="https://mail.blockworks.com/p/why-the-world-is-better-with-bitcoin?_bhlid=3761740d0f96e5c48eebfb5278a711be7c167e71&amp;utm_campaign=why-the-world-is-better-with-bitcoin&amp;utm_medium=newsletter&amp;utm_source=mail.blockworks.com">Resistance Money</a> thesis that the world is a better place with bitcoin than without it and <a href="https://mail.blockworks.com/p/read-write-newsletter-book-review-part-one">Chris Dixon’s thesis</a> that crypto can be an anti-corporate, decentralized iteration of the internet.



For a timely reminder of the latter, you might have a listen to the <a href="https://marginalrevolution.com/marginalrevolution/2025/04/my-excellent-conversation-with-chris-dixon.html">conversation</a> that Tyler Cowen had with Chris Dixon this week.&nbsp;



Among other things, Cowen predicts that “without open source, we might end up with two governments, US and China.”&nbsp;



(Because every other government will be outsourced to an AI model made in either the US or China.)



For better and worse, crypto is open-source money and markets.



Q: Would you buy equity from someone wearing a hoodie?



Not if they had the hood up, no.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd-ZXf6wy_D3ULDxGpkd1yHvHMwjZmLILnFnTqGFy8JRAsLIgti3yBNtfX8zRS7nI1zoyxumzwgcLstGLY7kYgpPn0Cw3AnfGAC_97t21jwFePgMVSME4oUK49R5-I2N_29ARXJtw?key=8pM6FdysZAP0KWyLpM7UARPD" alt=""/></figure>



But that’s just me.



Mark Zuckerberg famously wore pajamas to a meeting with Sequoia Capital and that worked out pretty well, so maybe Maller’s new Bitcoin venture, <a href="https://www.businesswire.com/news/home/20250423962305/en/Tether-SoftBank-Group-and-Jack-Mallers-Launch-Twenty-One-a-Bitcoin-native-Company-Through-a-Business-Combination-With-Cantor-Equity-Partners">Twenty One</a>, will work out too.



(On the other hand, there’s also the counterexample of Sam Bankman-Fried wearing shorts and a T-shirt on stage with Bill Clinton and Tony Blair, so maybe not.)



More concretely, Twenty One “will introduce two key performance metrics”: Bitcoin per share (BPS) and Bitcoin return rate (BRR).



This is a take on the “bitcoin yield” metric that Michael Saylor invented for Strategy (née MicroStrategy), so I assume that Twenty One’s business plan is to sell equity above NAV (which is not really a business plan — it’s just financial engineering).



That worked for Strategy, of course, but Strategy was first and it had the special sauce of Michael Saylor.



I’m not sure that’s a repeatable, well, strategy.



But the CEO’s photo will probably filter out any investors who agree with me.



It will be up to markets to decide whether Twenty One (and Trump’s dinner) is where capital is “most to be made of.”



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Crypto prices dinner with the president

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<blockquote class="wp-block-quote is-style-default is-layout-flow wp-block-quote-is-layout-flow">
“There are only two ways to make money in business: bundling and unbundling.”



— Jim Barksdale, former CEO of Netscape
</blockquote>



Stablecoins might unbundle banking (and then re-bundle it)



Bundling and unbundling aren’t the only ways to make money, of course — you can also invent something new or do an old thing more efficiently, for example.



But Jim Barksdale’s comment — made spontaneously to close a roadshow meeting for the Netscape IPO — became a dictum in tech circles because it explains a lot of things about the business of technology.



Much of the internet revolution, for example, can be framed as unbundling.&nbsp;



The internet caused newspapers to be unbundled into Craigslist, search engines and blog posts.



Fiber optics caused cable TV to be unbundled into streaming services.



Barksdale&#8217;s Netscape might be said to have unbundled the internet, letting users bypass bundled services like AOL and CompuServe, including email, news, chat and curated web access.



Sometimes, these unbundled services then get rebundled.



It used to be that to listen to a single song we liked, we had to buy 12 of them bundled into an album.



With the advent of the internet, we could buy each song individually as MP3 files (or download them illegally for free).



Now, we typically buy a bundle of millions of songs from Apple Music or Spotify.



Something similar may now be happening with crypto and banking.



Stablecoins are often described as tokenized dollars or money market funds issued by a crypto version of narrow banks.



But the best way to understand their potential significance might be as an attempt to unbundle banking.



Banks bundle all kinds of financial services: deposits, custody, payments, credit cards, lending, asset management, investment banking — most of which you are probably not interested in when you open a bank account.&nbsp;



Stablecoins, by contrast, offer the two services you are definitely interested in — the storage and transfer of money — and nothing else.



This might catch on because doing one thing well and leaving everything else out is often what disruptive technologies do best.



Stablecoins are a disruptive technology because they turn money into software — composable, portable and always on.



This is likely to cause problems for the legacy banks that are dependent on deposits as a cheap source of funding and whose offerings are encumbered by legacy systems and compliance regulations.



Stablecoins could take business from them by being a better kind of money offered in a better kind of checking account.



But that doesn’t mean that issuing them will be a better kind of business.&nbsp;



The risk disclosure section of Circle’s recent <a href="https://www.sec.gov/Archives/edgar/data/1876042/000119312525070481/d737521ds1.htm">S1 filing</a>, for example, is long and frightening: Competition, it warns, is “intense and increasing,” its profitability is dependent on interest rates (and therefore out of its control), CBDCs could “eliminate or reduce the need” for stablecoins, and regulation remains highly uncertain.



The S-1 also makes clear that it’s more expensive to issue stablecoins than Tether&#8217;s oft-cited results might have you think: Circle incurred $482 million of operating expenses in 2024 and just over $1 billion of “distribution, transaction and other costs.”



But you don’t have to read a 225-page S1 to be concerned — you only have to read this morning’s <a href="https://www.bloomberg.com/news/articles/2025-04-23/paypal-aims-to-boost-stablecoin-use-by-offering-3-7-on-balances?utm_source=telegram&amp;utm_content=crypto&amp;utm_medium=social">Bloomberg headline</a> that “PayPal Aims To Boost Stablecoin Use By Offering 3.7% on Balances.”



That 3.7% is only about 60 bps below the fed funds rate, which isn’t much of a gross margin for issuers to work with.



If that becomes the norm, how will they make money from stablecoins?



Barksdale’s dictum suggests that stablecoins might have to become a loss leader for other, more profitable services.



As Circle’s S-1 implies, stablecoins seem likely to be issued by payments companies, banks and crypto exchanges as a way to attract or retain customers, irrespective of profitability.



To stay competitive, stablecoin issuers might need to offer the same core services — payments, banking and exchanges — as the companies they’re disrupting.



In other words: rebundle!&nbsp;



There is precedent for this.



As Barksdale’s Netscape colleague Marc Andreessen puts it, startups that disrupt incumbents by unbundling their services “often end up reforming themselves into a version of the company they took down.”



This has been a recurring pattern: As startups grow, the natural strategy is to “stay focused on your core and then add things to it,” Barksdale explains.&nbsp;



“And before long, you become a big bundle again.”



A current example is Robinhood, which will <a href="https://www.bankingdive.com/news/robinhood-to-launch-banking-product-deepak-rao/744277/">soon</a> offer checking and savings accounts, payments and cash withdrawals in addition to its core business of brokerage.



It feels like only a matter of time until it adds a stablecoin to that offering (as it has <a href="https://www.bloomberg.com/news/articles/2024-09-26/robinhood-revolut-explore-entering-the-burgeoning-stablecoin-sector">reportedly</a> considered doing).



Robinhood would probably treat it as a loss leader, if so, and that could threaten stablecoin issuers’ already thin margins.&nbsp;



To stay profitable, stablecoin issuers might then have to rebundle some of the banking services they left behind.



They might even be required to rebundle.



The risk section of Circle’s S-1 filing includes a warning that “legislation requiring stablecoin issuers to be banks or to be affiliated with banks could materially affect our business.”



That may be why Circle and others are <a href="https://www.wsj.com/finance/currencies/crypto-knocks-on-the-door-of-a-banking-world-that-shut-it-out-082b3968?st=VkCCZA">reportedly</a> planning to apply for bank charters and licenses, despite the considerable cost that entails.



But could all this be an upside risk, too?



Bundling, after all, is one of only two ways to make money.



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Banking

Stablecoins might unbundle banking (and then rebundle it)

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“I respect his independence,” former President Nixon reassured the White House crowd at the 1970 <a href="https://www.presidency.ucsb.edu/documents/remarks-the-swearing-dr-arthur-f-burns-chairman-the-board-governors-the-federal-reserve">swearing-in</a> of Fed Chair Arthur Burns.



“However, I hope that independently he will conclude that my views are the ones that should be followed.”



There’s no video of the event, so it’s hard to say for sure, but I’m guessing that was meant as a joke.



It’s also exactly how things worked out.



Burns famously allowed Fed policy to become subservient to Nixon’s political goals, fueling the 1970s epidemic of inflation.



The much-maligned Fed chair <a href="https://www.cato.org/publications/commentary/failed-fed">reportedly</a> acknowledged this as a tactical surrender: &#8220;We dare not exercise our independence for fear of losing it.&#8221;



Subsequent Fed chairs have fought their corner more resolutely, stressing that the Federal Reserve is an independent agency within government.



“Our independence is a matter of law,” Jerome Powell <a href="https://youtu.be/XUFVr430VLU?si=8g0IAiEL-1KBEuZn">said</a> just last week.



But that plain statement may mean less than it sounds.



Specifically, Powell meant that individual members of the FOMC are insulated from politics because they can’t be fired: “We’re not removable except for cause,” he noted. “We serve very long terms.”&nbsp;



(“Seemingly endless terms,” he added, drawing a laugh from the sympathetic crowd.)



This, he says, allows the FOMC to do its job “strictly without consideration of political or any other extraneous factors.”



“We’re never going to be influenced by any political pressure,” he promised.



If so, that would be a new development.



For the first two decades of its existence, political influence on the Fed was explicit: By law, the treasury secretary automatically served as the chair of the Federal Reserve as well.



That changed in 1935 as the Fed gained a measure of independence with the chair becoming a presidential appointee, no longer tied to the Treasury Department.



In 1951, the Fed won a further degree of independence when the Treasury Department formally agreed that the Fed could set interest rates without its input.



Still, this hard-won independence remained contingent on political approval.



The Fed was established by an Act of Congress and Congress retains the ability to revise the Act if it disapproves of how its creation is operating.



This is why, at his final press conference as Fed chair, Ben Bernanke offered a simple piece of <a href="https://www.richmondfed.org/publications/research/econ_focus/2016/q2/federal_reserve">advice</a> to his successor, Janet Yellen: “Congress is our boss.”



It’s been a reluctant boss, for the most part — after delegating its Constitutional power over money to the Fed, Congress has generally only held the Fed accountable after financial disasters.



Often, the Congressional response to those disasters is to grant the Fed more power, not less.



This is by design.



In <a href="https://www.amazon.com/Myth-Independence-Congress-Governs-Federal/dp/0691163197/ref=sr_1_1?crid=9YHOJHSKC7T0&amp;dib=eyJ2IjoiMSJ9.bsZyT3haiztxYj-2kE6IVQ.JVQBzmH_0aksmHRtvUROqFvO2YSV6vL3czdA0R9vIZM&amp;dib_tag=se&amp;keywords=the+myth+of+independence+how+congress+governs+the+federal+reserve&amp;qid=1745285598&amp;sprefix=the+myth+of+independ%2Caps%2C160&amp;sr=8-1">The Myth of Independence</a>, Sarah Binder and Mark Spindel explain that, whatever Fed chairs like to say, the Federal Reserve is actually “interdependent” with Congress — and that Congress retains the ultimate authority through the Federal Reserve Act and its power to revise it.



The Fed, they explain, is dependent on Congress for its authority and Congress is dependent on the Fed for its stewardship of the economy.



This arrangement works for Congress largely because it gives them someone to blame when things go wrong — Binder and Spindel note that former Fed Chair William Martin once testified in Congress that “we’re here to be blamed.”



The result, they say, is that the Fed is &#8220;acutely sensitive to the need to secure political support for its policy choices.”



Similarly, the monetary economist James Dorn <a href="https://www.cato.org/sites/cato.org/files/2019-09/cj-v39n3-5.pdf">found</a> that “the Fed is independent, but in practice that independence is continuously tested by political pressures for using accommodative monetary policy and credit allocation to win votes.”



It&#8217;s mostly been presidents who’ve exerted that political pressure.



Truman called William Martin a “traitor”; LBJ summoned the long-serving Martin to his Texas ranch to verbally assault him over interest rates; Burns was famously subservient to Nixon; Carter reassigned former Fed Chair William Miller to the Treasury Department because interest rates were too low; Paul Volcker was able to raise rates to 20% only because he had Reagan’s backing.



Dorn’s study found all this presidential pressure to be effective: “An examination of the evidence reveals that presidents tend to get the monetary policy they desire,” he concluded.



As a matter of principle, that may not be the worst thing — we wouldn’t let unelected bureaucrats set tax rates without political recourse, so why should we let Fed bureaucrats set interest rates?



As a matter of practice, however, it hasn’t worked out well.



In a <a href="https://econweb.umd.edu/~drechsel/papers/drechsel_political_pressure_shocks.pdf">study</a> of presidential influence on the Fed, the economist Thomas Drechsel unsurprisingly found that political pressure increases inflation “strongly and persistently.”



Specifically, he concluded that “increasing political pressure by half as much as Nixon, for six months, raises the price level more than 8% after a decade.”



Drechsel also found that presidential pressure to lower interest rates negatively affects GDP.



The effect is mild, but he cites it as evidence that “political pressure is not successful” for presidents hoping to win votes by raising economic activity.&nbsp;



That hasn’t stopped them from trying, of course, as we were reminded this week.



Does publicly calling Chair Powell a “major loser” amount to half as much political pressure as Nixon applied on former Chair Burns?&nbsp;



If so, history suggests we have an 8% increase to the price level to look forward to.



Or does President Trump’s schoolyard name calling amount to, say, twice as much pressure?&nbsp;



Drechsel doesn’t do the math on that because, before this week, who could have imagined a president exerting twice as much pressure on a Fed chair than Nixon did with Burns?



But investors appear to be doing the math for themselves: Bitcoin ETFs took in <a href="https://farside.co.uk/btc/">$381 million</a> yesterday — a notable reversal of the recent trend.



That’s helped push the price of bitcoin to near an <a href="https://x.com/MikeZaccardi/status/1914676954868973719">all-time high</a> relative to the S&amp;P 500 — a surprisingly sensible reaction to renewed presidential pressure on a Fed chair.



When former President Nixon swore in Chair Burns in 1970, gold traded at $35 an ounce.



When President Carter swore in Chair Volcker in 1979, it was about $300 and on its way to a high of $850 a year later.



Markets seem to sense the Fed has another tough decade ahead of it — one spent fighting for its independence.



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