Compiled by | Shenchao TechFlow
Reposted from: Wu Shuo
This podcast is sourced from Unchained on June 13, and some information may be outdated. Circle's stock price reached a peak of $263 on June 23 and has since declined, currently hovering between $170 and $190.
Spokesperson:
Haseeb Qureshi, Managing Partner at Dragonfly
Robert Leshner, Co-founder & CEO of Superstate
Tarun Chitra, Managing Partner at Robot Ventures
Laura Shin, Founder & CEO of Unchained
Key takeaways
· Circle's IPO shocks Wall Street — Rare two-day surge in IPO history: Is this a mispricing by bankers, or is cryptocurrency disrupting traditional finance (TradFi)?
· The stablecoin boom or meme stock frenzy? — Circle's valuation has reached 160 times earnings and 15 times revenue. Tarun likened it to 'CoreWeave of finance' (a company focused on high-performance computing infrastructure).
· Tether may exit the US market — With new regulatory policies looming, will Circle dominate the US market while Tether turns to the international market?
· Coinbase’s revenue share — Why Coinbase may be the biggest winner behind USDC, revealing the hidden economic logic behind stablecoin profits.
· The challenge of bank alliances — Reports indicate that JPMorgan and Wells Fargo are planning to launch their own stablecoins. Is Circle competing with these traditional financial giants?
· The rise of treasury tokens — From MicroStrategy to Solana's derivatives: Will 'crypto holding companies' become the new ETFs?
· Imitators or thought leaders? — Why many people try to imitate Michael Saylor's success, but most are destined to fail?
· Are these companies meme stocks? — Laura and Tarun debate whether trading crypto companies actually has intrinsic value or merely relies on market sentiment?
· Is this financial innovation or regulatory theater? — Haseeb asks: Are we pushing the market to mature, or are we merely dressing traditional finance (TradFi) in cryptocurrency garb?
Circle's IPO: A historic event
Haseeb: The boom in stablecoins has fully begun. We have just witnessed Circle's IPO, which may be the most remarkable listing event of the year, truly astonishing. For those who are less familiar, Circle has been working towards going public for years. They initially attempted to go public during the SPAC (Special Purpose Acquisition Company) craze, but failed. Earlier this year, they tried again with an IPO, but it stalled due to tariff issues. Eventually, they made another effort and successfully completed the IPO. There were even rumors that they might be acquired rather than going public, but ultimately those speculations did not come true.
Circle's IPO performance is stunning. It became one of the largest IPOs in terms of first-day gains in history and is the highest performing case in the first two days among all IPOs that raised over $500 million since 1980. The stock price soared 180% on the first day, then another 30% the next day, totaling a 250% increase over two days. In the IPO, they initially raised $1.1 billion. If recalculated at the closing price on the second day, they could have raised $4 billion. This indicates that the IPO was undervalued by nearly four times.
Currently, Circle's valuation multiples are also quite astonishing. Based on 2024 revenues, their price-to-sales ratio has reached 15 times, while their price-to-earnings ratio is as high as 160 times. In contrast, Coinbase's price-to-earnings ratio is only 25 times. This high valuation also reflects the market's high expectations for Circle. Of course, due to the IPO lock-up period (usually 180 days), insiders cannot sell shares during this period.
Now it seems that this IPO is like a signal, declaring that the era of stablecoins has arrived. I believe most people did not anticipate such an outcome. There were concerns that the market interest for this IPO might be insufficient, or that a price reduction might be necessary. However, the reality was completely opposite; pricing not only did not decrease but rather soared rapidly under the enthusiastic demand of the public market.
Market response and far-reaching impact
Haseeb: Robert, what do you think of Circle's IPO?
Robert: This IPO is truly shocking. It shows everyone how high the market's enthusiasm is for newly listed cryptocurrency companies. I think even Circle itself did not anticipate such success, nor did the bankers and investors. Even on crypto Twitter, almost no one expected such an outcome. The real question is, where does such strong demand come from? Because when I talked to many people, everyone felt that this IPO might be somewhat volatile, but the result surprised everyone.
I think this IPO has redefined market expectations for the valuation of crypto companies in the public market. The intensity of demand is truly beyond imagination. Therefore, I believe this will accelerate the listing plans of other crypto companies. We have already seen some companies submit new applications.
Haseeb: Do you think the excitement around this IPO reflects the interest of the entire public market, or is it limited to the stablecoin sector?
Robert: I think both exist. Everyone wants to get into the stablecoin market. Everyone knows the (Genius Act) and (Stable Act) are advancing, and stablecoin legislation is about to be introduced. This is a fast-growing market, although it is still uncertain whether Circle will be the only beneficiary. To some extent, this legislation may pose certain challenges for Circle. However, stablecoins are undeniably a hot topic right now, and there is a scarcity of truly crypto-native listed companies in the US market. So, this is not just a story about stablecoins; I think this is just the beginning. The demand for high-quality, scarce companies will far exceed people's expectations. After all, there has never been an investment opportunity focused on stablecoins.
So, is Circle overvalued? Perhaps. Compared to Tether, Circle is indeed overvalued. But the problem is that there are currently no other ways to directly bet on stablecoins. Investing in Layer 1 blockchains like Ethereum or Solana does not capture the success of stablecoins well. So if you are an investor in the public market, Circle is undoubtedly the more direct choice.
Haseeb: According to analysis by Jon Ma of Artemis, if Tether traded at the same valuation multiple as Circle, its market cap would reach about $500 billion. In comparison, JPMorgan's market cap is about $700 billion. This would make Tether the second-largest financial company in the world.
Robert: In a sense, compared to Circle, Tether's valuation multiple is more reasonable. Because Circle's profit margin is actually not high. They have a large number of employees and also need to share a lot of revenue with Coinbase. In contrast, Tether's profitability is stronger, thus justifying such a valuation multiple.
Legislation related to stablecoins and Tether's response strategy
Haseeb: Another noteworthy piece of news is that the (Genius Act) will be voted on tomorrow. By the time you hear this news, the voting results may have already come out. We can predict the outcome in advance.
It is estimated that the voting result of this vote may be 66 votes in favor and 32 votes against. So I think the bill has a high chance of passing, but the final result still needs to wait for confirmation. However, from the current situation, it shows that there is considerable demand for this bill in the market.
Meanwhile, Tether has indicated that if the (Genius Act) passes, they will consider exiting the US market. This is because the bill requires stablecoins to be backed by high-quality collateral, such as short-term government bonds. This is precisely the model Circle and most other stablecoin issuers adopt. However, Tether's asset portfolio includes many other types of assets, such as commercial paper, Bitcoin, and some other lending projects. Therefore, if they want to comply with US regulatory requirements, they will need to completely restructure their financial infrastructure to ensure that all stablecoins are backed by safe and reliable assets.
Robert: But will they really do that? Because according to requirements, stablecoins need to achieve 1:1 asset backing. And Tether has already accumulated over $10 billion in profits, which are used to invest in various assets. If they want to strictly maintain 1:1 backing, I think with their profitability and potential over-collateralization, it shouldn't be difficult.
Haseeb: Maybe so, but Tether has publicly stated they will exit the US market. Of course, this could be a strategy aimed at influencing regulatory decisions through pressure. But they did mention that they will focus more on the development of non-US markets. I can understand this because the cost of restructuring their asset portfolio might be very high. Furthermore, this also means that every operation they undertake in the future will be subject to strict regulation by the Federal Reserve.
Tether has always been a relatively closed and opaque company, and they seem more inclined to maintain their existing business model, so this reaction is not surprising.
Circle's market position and future development direction
Haseeb: Circle's business model is simply a money printing machine, which may also explain why its premium is so high. People realize that Circle is basically going to dominate the entire US market because Tether is unwilling to accept the upcoming regulatory frameworks.
This means Circle will be competing with banks. Currently, there are many reports mentioning that banks are considering forming a consortium. I think large banks like JPMorgan and Wells Fargo are discussing launching a consortium stablecoin composed of large American banks. Therefore, the industry may see differentiation: Circle onshore, as a crypto-native tech company, while banks primarily serve institutional clients and may be more risk-averse. The international market may mainly be dominated by Tether. On-chain, USDC remains dominant due to its historical status on-chain. I can imagine different fields will be dominated by different parties, but clearly, it is still too early.
Laura, what do you think of the buzz around Circle?
Laura: I agree with Robert's view that Circle's popularity is not only due to the popularity of stablecoins but also because it is a listed company. This kind of crypto treasury company, especially Bitcoin treasury companies, people want to gain exposure to crypto in the traditional market. Therefore, Circle meets the demand in both aspects.
But the problem is, all the discussions we've had about Tether, I recently interviewed Jeff Park, and it was a fascinating two-part conversation. Basically, stablecoins might transform the dollar into multiple products if the US is willing to approach this asset with a more entrepreneurial spirit, as many places in the world need it.
Will governments come together to recognize this as a valuable thing, and if they view it more entrepreneurially, they can utilize it in this way? For instance, it is often said that Tether is a good example of the dollar, as there is high demand for the dollar abroad. It can be imagined that depending on the company or those wanting to mint stablecoins, there could be different yields. Therefore, I think people understand that there is enormous space within this category to accommodate many different niches.
Interestingly, I have asked two different people to talk about Circle, and they held a negative view of Circle's IPO, believing that this was already evident before the IPO actually occurred. Circle has huge expenses, and its business is very different from Tether because it is compliant. Some people even in the securities field complained that Circle would not freeze funds when there is misconduct while using USDC, since as a US company, they are more prone to lawsuits, whereas Tether does not have this issue.
This is considered common knowledge in the crypto space, but I saw a tweet from someone who previously worked at Circle. She wrote that from a financial infrastructure perspective, observing Circle's IPO pricing is exciting. When you control currency issuance, you are no longer in the fintech space but in the realm of monetary policy.
She listed the numbers, PayPal has a market cap of $70 billion, with a transaction volume of $1.5 trillion; Visa has a market cap of $500 billion, with a transaction volume of $14 trillion; Circle's valuation is $6 billion, with a transaction volume of $1.2 trillion. Therefore, its transaction volume is very close to Visa, but its market cap is only about 12% or 13%. She pointed out that everyone in the crypto space is underestimating this, but she stated that 25 times oversubscription is the real story. Underwriters were too conservative in pricing, missing fundamental changes. She said Circle controls the printing press for digital dollars.
So honestly, I don't know how this will develop because everything about Circle, even just their need to give half of their profits to Coinbase, means that if you look at the current valuation, Circle's revenue combined with Coinbase's other business revenues will generate Coinbase's market value, meaning Coinbase's other revenue's trading multiple may be less than 3 times.
Tarun: I actually attended the IPO party on Friday. First of all, I had never seen so many traditional finance people at a crypto event. In fact, only the three of us were not in suits. It was a fun and enlightening moment. They rang the closing bell, surrounded by people, while the three of us stood in the back.
I just want to say, I have never seen traditional finance people show such genuine interest in this matter. Usually, they are just going through the motions, saying, 'Oh, Bitcoin's price is rising; we will pretend to cooperate with blockchain.' But this time, it was clearly different. I feel everyone is gathering in the realm related to non-bank financial lending, and all the CEOs of major private credit funds are present.
I think Circle has a very different audience from Tether, their net assets are almost completely different, and there is very little overlap between users of the two unless trading USDC in a Curve pool. Other than that, I think they will diverge over time. I believe if you look at many new stablecoins, I do feel that Circle may have paid a high price for its early distribution advantage, but clearly no new stablecoin has been able to find distribution channels comparable to Coinbase.
I'm not talking about Tether, but all the competing stablecoins, which either face this issue or have to pay more than Circle to secure distribution channels. I think Circle has set a floor price for any distribution deal, making it difficult for new entrants to overcome this barrier. Because everyone will say, 'Give me 75% to 80% of the revenue,' rather than 50%. I think this actually creates an interesting pricing power dynamic that raises the hurdle for new entrants. Therefore, I think you are more likely to see banks succeed rather than startup stablecoins.
Haseeb: You mentioned Circle's dominant market position, and we all agree on that. What do you think about pricing? Because this is what most of us are commenting on.
Tarun: You know? There are two meme stocks that start with C, CoreWeave and Circle, which were established almost simultaneously. I think CoreWeave and Circle are meme stocks, but their implications are the opposite of GameStop. They are meme stocks, meaning they should see significant growth in 10 years. The problem is, there are hardly any brokers that can bet on these two separately. So everyone is concentrating all their bets together.
Haseeb: This is the real story. I think now, the only investment representing stablecoins in the public market is Circle. In fact, if we talk about low circulation tokens, such as IPOs or low circulation IPOs, there aren't many investors who want to have this narrative. Therefore, the narrative gets pushed up. When there is more supply in the market, there may be more opportunities, although I believe this will happen.
Tarun: Circle's IPO circulation is far higher than some data center companies. I mean, CoreWeave's IPO is not exactly something I would show regulators, thinking crypto is worse than these low circulation, high FDV companies. Some AI IPOs have also performed poorly recently, appearing as bad as crypto.
Haseeb: But interestingly, if half of Circle's revenue goes to Coinbase, it means that if you look at the current valuation, Circle's revenue combined with Coinbase's other business revenues will generate Coinbase's market value, implying that the trading multiple of Coinbase's other revenues might be less than 3 times.
This is clearly not the case; this is clearly the result of Circle's very low circulation, hence there is not much price discovery due to the strong demand for stablecoins. Buying Coinbase does not give you enough exposure to stablecoins, whereas Circle is the pure stablecoin investment you can make today. But the interesting part is that if the market is efficient, Circle should be repriced when everyone realizes Circle's revenue is worth far more than we think.
Tarun: So, if you look at the market cap ratio between CoreWeave and its clients, the clients are all revenue-sharing/building clients, which is not much different from this case. Therefore, I think you have to pay attention to macro market things. I do think the market is tired of pure ETF bets; things like Microstrategy and government bonds, you see the tenth government bond launch did not perform well. I feel Circle is actually a real product for people, rather than the tenth Bitcoin treasury company. The irony of these Bitcoin treasuries is that they might kill their golden goose due to too many competitors chasing the same opportunity.
Crypto treasury companies: an emerging trend
Haseeb: Next, let's talk about crypto treasury companies. This is a topic we have mentioned several times in the program, but there are still many details worth exploring. For those who are less familiar, the original crypto treasury company is Microstrategy (now renamed as 'Strategic Company'). This company was originally a software company, but has now essentially turned into a massive Bitcoin treasury. They raise funds by issuing corporate debt to buy more Bitcoin. Interestingly, Microstrategy's stock price is about 1.7 times the value of its Bitcoin holdings (i.e., net asset value NAV). Why is there such a premium? This is a contentious topic. Some believe this premium may stem from investors valuing its leverage effect and its potential to continue accumulating Bitcoin. By purchasing Microstrategy's stock, investors effectively gain an indirect leveraged exposure to Bitcoin.
We have also seen other companies adopting similar strategies. For example, Jack Mallers' 21 Capital, Trump's media, Korea's Nexon, and Japan's Meta Planet. However, some critics worry that this might become the next GBTC (Grayscale Bitcoin Trust). GBTC triggered the collapse of 3AC due to its complex leverage mechanism and initiated a series of chain reactions through crypto lending platforms like BlockFi. However, unlike GBTC, these treasury companies do not have obvious leverage mechanisms because their debt operations are entirely different from hedge fund leverage trading. Laura, (Unchained) recently published an article on the compensation structures of these treasury companies; could you summarize it for us?
Laura: These companies adopt different approaches in evaluating and rewarding executives. Traditionally, stock price is often a measure, but some companies are trying more innovative models. For example, there is a company called Defi Dev Corp, whose reserve asset is Solana. They tie the compensation of the CEO, CFO, and CIO to the number of Solana corresponding to each share. This model is very interesting because many such companies are currently valued far above the actual value of their held assets.
Haseeb: This also reveals why solely relying on stock prices as a measure is problematic. Because the value of these companies is highly correlated with their underlying assets, which are very volatile. If Solana's price rises significantly, even if executives do not take any actual actions, their compensation will increase as well, which is clearly unreasonable. In contrast, a more reasonable measure should be whether executives can effectively increase the amount of Solana held in the company's reserves.
Robert: In fact, this incentive mechanism is designed to encourage companies to purchase more crypto assets through debt issuance. For example, if a company adopts 5x leverage, the amount of crypto assets per share it holds will increase significantly, but it will also significantly increase the company's risk. This model is reminiscent of a leveraged ETF (Exchange-Traded Fund), although due to its complexity, it cannot be entirely modeled as a traditional leveraged ETF.
Haseeb: The key is how leverage is used. Some leveraged methods are extremely risky, while others are relatively safe.
Robert: For instance, Microstrategy's leverage strategy, although it initially seems risky, now appears to have proven successful.
Haseeb: Indeed. They recently launched a new form of debt called 'Strikes.' Its characteristic is that debtors can avoid repaying the debt, and there is no recourse mechanism. In other words, if a debtor misses a payment, they do not need to make it up later. This kind of debt typically offers a 10% coupon as a way to attract investors, and that's it.
Simply put, the debtor is like saying to the investors, 'You can buy my bonds, but I might never pay you back.' Then, they use the borrowed money to buy Bitcoin, enjoying the benefits of rising Bitcoin prices. Meanwhile, the investors can only passively hold this debt, unable to enforce recourse or share in the profits of Bitcoin's rise. This model puts the debtor in a proactive position while investors appear very passive.
Tarun: Someone proposed an interesting theory that Microstrategy's successful model has similarities to Bitcoin's forking mechanism. When Bitcoin forks, holders receive new Bitcoin airdrops, often prompting them to sell the new coins and acquire more Bitcoin, thus enhancing Bitcoin's overall value. Similarly, Microstrategy's 'forking' could refer to those secondary and tertiary Bitcoin treasury companies. If these companies gradually fail, investors might refocus on Microstrategy, making it the core aggregation point for Bitcoin treasuries. This phenomenon may further solidify Microstrategy's position in the market. Unless there is a severe crash in Bitcoin prices, Microstrategy has demonstrated a certain level of risk resilience, although its scale may not be as large as during peak periods. Those other Bitcoin treasury companies are more competing for marginal resources in the market.
As for those investors willing to buy the debt of lower-ranked Bitcoin treasury companies, I find it hard to understand their motives. Microstrategy is a more ideal choice. As Robert said, they have accumulated a large amount of Bitcoin through high-risk leverage strategies, successfully establishing their treasury. This allows them to issue convertible debt at a lower cost. However, the capacity of the convertible bond market is not infinite, and not all investors are willing to engage in such transactions. In contrast, most people prefer to directly buy Microstrategy's stock, as its debt transactions are simpler and clearer. Participating in this debt arbitrage requires higher expertise and a deep understanding of risk, and there aren't many investors willing to undertake such complex operations.
From a market structure perspective, this arbitrage opportunity can be likened to a fixed 'demand pie chart,' with Microstrategy occupying at least 50% or more of the market share. The remaining market is contested by other Bitcoin treasury companies. However, even if the convertible debt market grows by 10% each year, it may still be unable to meet the financing needs of all companies. Therefore, I think some Bitcoin treasury companies may be forced to transform due to their inability to continue issuing debt, seeking other financing methods or strategies.
Analyzing convertible bond arbitrage opportunities in cryptocurrency
Robert: There is a significant difference between traditional convertible bond arbitrage and crypto treasury companies. If it were an ordinary non-crypto treasury company, such as a Midwest manufacturing company issuing convertible bonds, the market primarily focuses on its stock volatility and the potential for appreciation above the conversion price. Investors assess the value of convertible bonds through options pricing models. However, this market is very small because it essentially bets on the volatility of a specific company. Furthermore, investors not only have to bear the company's debt risk but also need to perform complex assessments combining options strategies.
For Microstrategy or other crypto treasury companies, the situation is completely different. The downside risk of these companies is mainly linked to the volatility of Bitcoin prices rather than the operational risks of the companies themselves. It can be said that these companies are more like a 'storage box,' and their core value depends on Bitcoin's performance. This consistency allows investors not to worry about complex company risks but rather focus on Bitcoin's volatility and downside risk. Compared to the traditional convertible bond market, this model attracts more capital, as the overall scale of the crypto market is larger, and with the popularity of Bitcoin and other cryptocurrencies, this market will further expand.
Tarun: What about Solana or Ethereum-related companies? The market size of Bitcoin is indeed large enough to support such a strategy, but I have doubts about whether Solana has sustainability.
Robert: It depends on the size of the spot and derivatives markets. If Ethereum's derivatives market is large enough, then it is not difficult to hedge or model convertible bonds for Ethereum strategy companies. However, if it is some lower market cap crypto assets, such as coins ranked 400th, market demand is very limited, trading is inactive, and risk hedging is extremely difficult.
Tarun: I think every asset has its carrying capacity. While Bitcoin's market size is large enough, people can accept longer holding period risks, even with Ethereum, few are willing to take on too long holding risks. This is evident from the financing rates and option pricing for Ethereum ETFs.
Robert: However, the financing rates for Ethereum and Bitcoin are actually not that different.
Tarun: From the perspective of open contracts, the weighted results show a significant difference between the two. I believe there will not be more than 10 Ethereum strategy companies.
Haseeb: There may be as many as 10 Bitcoin-related companies, whereas Solana may only have 2.
Tarun: In fact, there are far more than 10 Bitcoin-related companies. Many companies randomly add Bitcoin to their reserves.
Potential market risks and dynamic analysis
Laura: I noticed a tweet mentioning that these companies might play a core role in some future crash, similar to GBTC or other similar stocks. We also discussed this, feeling that such a scenario might only occur if these companies can borrow against their assets as collateral. Of course, there are other factors, such as Microstrategy possibly having better loan terms, while some other companies might go further down the risk curve, adopting more aggressive strategies, thus facing greater downside risks during market fluctuations.
In other words, if there are lenders willing to accept these assets as collateral, that could be the way risks explode. At the same time, this situation could trigger a cascading effect. For example, if Bitcoin's price drops for some reason, some companies with poorer financing conditions might be forced to sell assets, further exacerbating the market's chain reaction. These are just some of my thoughts, but it's indeed interesting to see so many people discussing this issue. From what I understand so far, it seems that these assets cannot yet be used as loan collateral. However, I heard that JP Morgan now allows borrowing against Bitcoin ETFs as collateral, which is quite interesting. Even though JP Morgan's CEO Jamie Dimon has always been opposed to Bitcoin, clearly his company does not mind profiting from it.
Haseeb: However, things get complicated when it comes to borrowing, right? The loan-to-value ratio (LTV) should be relatively low.
Tarun: Yes, LTV is a key factor. I mean, almost all other brokers offer similar services, with a few exceptions.
ETFs can indeed be used as collateral. When you're trading, brokers usually provide some form of margin loan. I think JP Morgan's approach in this regard is relatively conservative. Of course, I could borrow through Microstrategy, but the loan-to-value ratio wouldn't be particularly high. However, most brokers offer similar services.
Laura: Oh, I see. So do you think this explains why some people say it could become the future GBTC?
Haseeb: I think market crashes usually do not happen in things everyone is paying attention to. There is some truth to that. Typically, risk points tend to be hidden deeper.
Tarun: I think the failure mechanism of these companies is more like this: if a company is included in the S&P 500 index, all ETFs linked to it will be forced to buy its stock. However, if the price of Bitcoin drops significantly before rebalancing, that company may be removed from the index due to debt issues. The problem is that when a company is added to the S&P 500 index, the market typically expects its stock value to rise, allowing the company to issue debt at a lower cost. But if crypto assets drop significantly before the next index rebalancing, the company may run into trouble.
Haseeb: Additionally, these debts usually do not have claims to conversion rights, meaning creditors cannot recover losses through bankruptcy proceedings.
The market influence of Michael Saylor
Haseeb: So far, I still don't fully understand how Michael Saylor does it, but his ability to acquire capital is truly impressive. From the current situation, the market crash is unlikely to be triggered by Saylor, but rather by others. If the market really collapses, such as Bitcoin's price dropping to $50,000 or $40,000 and stagnating for a long time, then Saylor may exacerbate downward pressure on the market, but he won't be the initial trigger. Saylor's strategy indeed makes things worse during market downturns, but during market upswings, he can drive market development through the cyclical impact of increasing assets. This duality of the strategy means that if the market declines, it will be harder to get out of trouble.
Robert: However, I believe the next market upturn will be a great opportunity. This is undoubtedly good news for Saylor.
Tarun: I greatly admire Saylor's ability to achieve this. That is also why I feel puzzled by the wave of those trying to imitate him. We should realize how bold and crazy Saylor's actions are. I do not think everyone needs to replicate his model. Imitation does acknowledge him, but it's more like a 'burn-rate' acknowledgement. You know, this imitation may not be wise.
I do not think everyone shares Saylor's Bitcoin vision. When you talk to people from these companies, they are more focused on how to make a profit rather than having deep thoughts about macroeconomics like Saylor, or being obsessed with how to survive during a market crash.
Haseeb: Totally agree. Saylor is indeed a unique figure, and his strategy and influence are reminiscent of a mob boss. Someone like him may never appear again.
Tarun: I think the key is not that there will never be another person like Saylor, but that the market rules will change in the future.
Haseeb: Exactly, those trying to be the 'next Saylor' should not actually expect to get the same returns as him. Saylor holds a significant amount of Microstrategy stock, which allows him to take on more risk. In contrast, those so-called 'next Microstrategy' individuals are more like mercenaries, and they do not have the same long-term interests tied to Saylor. They should focus on optimizing the financial strategies Saylor invented, rather than simply copying his model. After all, Saylor is essentially a 'financial engineer,' and his returns should be based on his contributions to financial engineering rather than solely relying on the value of the underlying assets. Therefore, I believe future markets will trend in this direction.
Tarun: However, I find it difficult to be excited about these imitators. From the current perspective, the market does not seem sustainable for them. I hope my judgment is wrong and that in the future there can be 500 such companies, but that seems unrealistic.
Market trend discussion
Haseeb: There is a project called Plasma, which is said to be a stablecoin chain related to Tether. Now there are many similar projects claiming they can natively issue tokens without transaction fees on-chain. The idea is that this model should be more advantageous than Tron, as Tron has transaction fees, while these projects have no fees and can facilitate stablecoin payments.
Plasma recently conducted its initial coin offering through a platform called Sonar, achieving a valuation of $500 million. They raised $50 million by selling 10% of Plasma's total supply. These funds were deposited into a liquidity treasury, and demand reached $500 million in just a few seconds. The top ten wallets held 38% of the total supply, while the top 17 wallets held 50%. One wallet even deposited $50 million alone. Throughout the process, there was a 'gas war,' with reports of someone spending $100,000 in fees to ensure they successfully participated with $10 million USDC.
Tarun: I find it interesting that every time Trump is in power, there seems to be a surge in initial coin offerings. For example, 2017 was a typical case.
Regarding Sonar, Kobe mentioned that when they initially designed Echo, investors were dissatisfied with the need for recognition and lack of control in the traditional investment group model. I find this very interesting, as I mentioned in my book, early models like DAOs (Decentralized Autonomous Organizations) raised a lot of money, but once the funds entered the smart contracts, the team found a lack of effective tools to manage those funds. At that time, there wasn't even a secure way for investors to withdraw funds, which led to issues like hacking attacks. Later, we saw some improvements, such as tools developed by Taylor Monahan to help users who lost funds due to phishing or scams. Now, platforms like Sonar represent a more mature version. I believe this reflects a long-term development trajectory. Looking back at the internet bubble period, many startups went public early, whereas today's companies tend to delay going public. Now, through this new model, ordinary investors can participate in projects earlier. I admit this model carries risks and requires enhanced investor education, and may require amendments to the US Accredited Investor laws. However, from a historical and market change perspective, I do believe similar models will become increasingly common, even if they may not be exactly the same.
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