0:00 Is Avalanche on fire and is it ready for a takeoff? Today we're going to be breaking that down cuz there could be some things brewing within the Avalanche ecosystem that could start an interesting move overall. Before we get started, I do want to thank our sponsor today and that is ProtonMail. You guys should be getting into security and the reason is because ProtonMail is doing a fantastic job at protecting your privacy. This is the go-to place to get privacy set up for yourself and you can do that starting with email. So, begin there. If you want to do this for your business or your personal account, very easy to do and one of the biggest things you can get into is of course Proton Unlimited. Proton Unlimited gives you a whole slew of things you can use
0:46 including mail, calendar, VPN, also getting Drive. It's It's almost like a Google replacement and the best thing here is you get sheets and also password protection. This is one of the best tools out there to for security, especially in times like this when there is so much junk and scams coming through your mail right now. Use Proton Unlimited. Use our link down below to get a little bit of a discount. Let them know we sent you. I want to bring in Bart Smith who is the CEO of the Avalanche Treasury Company to kind of break it down and get going. We've had you on the show before, Bart, so welcome back in. >> Thanks, Paul. Thanks for having me again. >> So, let's get into a few things. First of all, I'm looking at the chart. What is going on here?
1:31 >> [laughter] >> This is This is AVAT today and as you can see down here just in July pretty much has bottomed out and has absolutely exploded over the last several weeks, but Avalanche in general still a little bit behind some of the other major blue chip tokens that are out there. What is happening right now with AVAT to cause this kind of movement? >> Well, I I this the last year really going into the summer, the the overall environment for crypto was terrible, right? And so, you know, I often joke that in a year ago we thought we were getting Kevin Hassett and the Clarity Act and we got Kevin Warsh and a Warren Marant, right? So, not not exactly what we bargained for. So, you know, that was compounded by the fact that,
2:18 you know, AI just soaked up all of the growth capital uh for infrastructure and and chips and that there was this great mania around that. And you know, growth capital is not infinite. So, for all of those reasons, you know, that there was just no bid for for crypto. One of the benefits of the permanent capital vehicle structure that you and I spoke about a year ago is that when I own an ETF uh and I you know, if I'm if I'm running an ETF and someone gives me a bunch of cash, I have to go out and buy AVAX that day whether I want to or not. And the inverse is true. When people are scared and fearful and they're selling, I have to take those shares and I have to sell the AVAX underneath them and give them cash back, right? And that
3:05 helps to, in my opinion, amplify some of these already volatile parts of this kind of nascent technology. So, one of the nice parts about uh owning a treasury is it's a permanent capital vehicle. So, I don't have to respond to, you know, fear and exuberance in the market. I can take an intermediate to long-term view. So, you know, when when we did our business combination, we started trading in June, there were a lot of investors who who didn't want to own Avalanche and they sold and the the, you know, in our opinion, the share price of our stock went well below its intrinsic value. And in an environment where everything all day long was talking about uh AI and and other, you know, asset classes, you know, they just it just kind of lived there for a while.
3:50 But now you're seeing as tokenization is starting to have real-world utilization, and people are coming back and saying, "Wow, like I actually believe that that that innovation is going to be, you know, part of the crypto narrative." And this idea that AI and crypto are going to help one another, all of those things have led to a bid in in in crypto. Uh Avalanche has made a bunch of, you know, great announcements that we can talk about, and all of that has led to people saying, "You know what? There's this undervalued asset out there that gets me exposure to this technology, so I'm going to buy it." >> All right, so a few things to unpack there, cuz I think, you know, you're right. There has been uh quite a bit of a pivot here within the industry. Uh part of that is aligned very closely with AI. You know, we'll talk about
4:36 Agentech as well, but here's Ryan Rasmussen, and he hit on something, and just so you guys know, this is Bitwise, one of the researchers over there, and I'll show something here on the image. This is the post-clarity crypto rally that they're talking about. And if you look at the layer ones and layer twos, you'll notice that Near, of course, large position, but Avalanche over Hyperliquid, Lighter, XRP, Solana, and ETH. So, a significant position here as we continue to see assets going in that direction. When you look at the crypto rally in general, and how institutions are playing into this versus retail. When you kind of compare the two, institutions kind of lead a little bit early. Do you think retail is prepped to come back into Avalanche now?
5:22 >> Uh I do. I think you're going to continue to see more uh wins for the Avalanche community uh in in the institutional space. You know, I think one of the things that's been very heartening is that the ecosystem has been focused on institutions and business. You know, Avalanche is built for business, right? And like that that is that is the utilization case. And so, there was an announcement last week that New York Stock Exchange had done uh you know, a request for proposal. They looked at you know, you know, probably a dozen L1s and that they were talking about how that Avalanche checks all the boxes, right? It allows them to customize their compliance, their KYC, they can spin up their own chain, but then it connects to this high throughput decentralized EVM
6:09 compatible chain. So, the archetype of the New York Stock Exchange is very similar to the archetype of CME or Nasdaq or you know, and then you go down the line to asset managers that are announcing that they're going to be building on top of uh of the Avalanche chain. New York Life just made a a huge announcement. So, the archetype of that looks a lot like BlackRock, which has their Biddle uh that they that they distribute on Avalanche. So, I think what you're starting to see is is that these big institutions and massive TAMs, massive verticals are choosing Avalanche and people are saying, "Well, if they're going to choose it, it's likely that at a minimum it'll be in the top two or three that other big institutions are looking to and therefore you can imagine
6:54 as 27 and 28 and 29 roll in, you're going to see Avalanche winning more and more of these mandates." >> Uh just cuz are you are you is this real? Cuz I think a lot of people were looking at this and trying to trace this down to understand if this was actually cuz reports were coming out that this is being considered not necessarily as a full-on done deal. Do you know? >> Yeah, it was he did not it was not announced as a done deal. It was announced that that that they believe that Avalanche checks all the boxes. They did not go as far to say they're going to choose it. I think the market reacted to say that if if they think that it's going to work for them, not saying that they're going to choose it, it's going to work for a lot of other things.
7:39 >> Yeah. Yeah, for sure. Other things that are happening is uh as you guys know liquid staking Benqi this of course exploded right now if you look at just the expansion that we saw on Benqi over the last day pretty pretty significant and if you compare that to where staked Avax has started to move it's actually been trending up. So this is another positive for Avalanche in general especially if you look at the 7-day change right there plus 26%. So with all that it when you look at staked Avax in general and you compare to some of the news that's been coming out this is something I think that starts these early cycles to move forward. Does this impact institutional investors in any way?
8:27 >> I think the idea that you can use this as collateral that is a functional asset as part of an overall portfolio that you can do in a decentralized manner like that's great like that that is that is the exact kind of progress that that we need to see. You know, I I think that that is more of a retail driven or maybe even crypto native exposure. The institutions are going to have to understand that a little bit better. There's a lot of conversations that we're having that you can stake this asset to secure the network. You get compensated for that and that still becomes a usable asset in other forms and so that that that education on the institutional front is ongoing and that and I believe it's going to take time but the the growth of it provides the
9:15 the test case that you can show institutions that will draw them in. You also have some things happening right now in terms of upgrades that are happening. Helicon of course is launched and in the process of but you've got several upgrades that are driven. These are six Avalanche community proposals that are are in. You have the continuous execution, auto-renewed staking, uptime requirement, reduced minimum staking duration, the dynamic minimum gas. Any of these that are maybe more important than others or that could really maybe maximize the opportunity here with Avalanche? >> I mean, the continuous staking is just an administrative burden is removed, right? And so, that that to me is just a
10:01 natural, you know, operational upgrade. In general, there is a push and pull between the economics of all of these L1s. That the inflation rate, uh you know, is a headwind on prices and that you know, you want to reward people for dynamic behavior, right? And not just setting a staking and and leaving it. So, I think what you're also trying to figure out, which is related but different, is many of these L1s slash their prices down to make it next to free to transact on that. And that allows, you know, nascent businesses, applications that are building on top of the Avalanche ecosystem to grow without a tremendous
10:48 amount of cost. At some point, there is a push and pull from that dynamic about trying to have revenue accrue back to the chain in the form of Avalanche that is used to burn tokens cuz unlike many other chains, there is a fixed number of AVAX tokens. So, >> Yeah. >> trying to create a a balance between allowing businesses to grow on the ecosystem without burdensome fees, but then when you have adoption and there's a lot of economic activity, that economic activity leads to burning of the tokens so that the value of the AVAX token goes up. And I think this is going to be an ongoing community discussion for Ethereum, for Solana, for Avalanche. And this is, you know, one of the one of
11:34 the things over the next couple of years, as I believe the different constructs of L1s are going to, for the first time, actually matter. These types of decisions are going to be very important. And so, you know, you're seeing already that the the use cases for blockchains, as far as implementation goes, are very different than they were even 12 months ago. And those are going to require different technological capacities of different L1s. And so, the choices that the technological choices and the inducement choices that they make as far as, you know, how much the chain costs to use and how much someone is paid to to secure that chain, all of those dynamic things over time are going to
12:21 continue to evolve. And the ecosystems who do that right are more likely to win. >> Yeah. Well, I think you're right. The the key here is innovation. I've got a clip here in a little bit we'll play with Charlie, who is going to be one of the new leaders within Ava Labs. And and I want to get your opinion on it. Before I jump to that, I want to leap over to what happened, of course, on the Bitget saga, which is the hack we just announced yesterday. And of course, it's gone through. Avalanche was involved, and I say Avalanche, Avax, the token was involved in the in this. And looks like North Korea made a big mistake because they went out and tried to sell this over on Ferro. And of course, Ferro responded in in a very interesting way. And that was by jacking up the fees
13:08 whenever these bad guys were out there trying to dispose of it. And you can kind of see the fee movement right there on the dynamic pricing. So, in essence, what Ferro did, and we've had the, you know, lame hillbilly on before. And they've basically repurposed that back out to the community. And then of course, there's Emin kind of playing with this, you know, said, "Don't bet against the family." But, I think these kind of things it just shows it just shows that there is a community, there's a Degen opportunity here, I think, within the Avax ecosystem that could really start to maybe put Avalanche back in the spotlight because we've seen the success of Solana. You have seen the success to a certain extent with Ethereum within Robinhood chain.
13:55 And I think we're going to see more of that. But, I want to caveat that with a clip. Bart, and then I want to get your response after this clip. Here we go. >> Yeah. What is your mandate? How does that differ from your predecessors? >> My vision is again to talk about the solutions that we are providing as real-world ways to solve problems. This is not innovation for innovation's sake. But, we're playing with serious people have serious problems, and they need to understand us as a mature organization that thinks the way that institutions do, and that's my focus. Those organizations that will look at the failure of Clarity Act and decide to take their foot off the gas and innovations we're never going to be leaders in this space anyway. >> All right. So, that's Charlie Cooper, one of the new leads at Avalanche. And
14:41 there's a couple of things here that I get concerned with. One is when you talk about innovation for kind of this next generation of finance because it's mostly in reality institutions, which are most likely going to be the slowest to react. A good example of that, this of course is Securitize's launch of Arc uh just this week. And what I noticed uh here, Bart, was that the threshold to entry, the barrier to entry, is still there. KYC layered up upon layers. I mean, it's just so complicated to get in do this. This is why I think we're losing this next generation investor. And that's including the degens, you know, that are coming into this. Can Avalanche reposition here and
15:28 recapture that spark or do you feel like they have relegated to an institution play? >> I I think very much that both of those things can happen in parallel, right? So, on one hand, there is the kind of the as you call it the degen kind of native community that is is still is still vibrant and growing. You know, on the other side, and I think what Charlie is focused on is that if you are an institution who is utilizing this blockchain within your business model and your strategy, it is enterprise software. And that's how they use it. So, those two things it's the same chain, but they're very different. So, an institution can go to GitHub and download Avalanche software and they can spin up their own L1 and if they don't tell
16:14 anybody that that's their L1, we see that there's another L1, we don't know who it is and they that is a walled garden. They can they can post that anyway they want. They can entitle whatever information they want for people to see and who sees it and that's what institutions need. Ultimately, that connects to the C-Chain, which is the totally decentralized high throughput EVM compatible chain. And so, I think that both of those things can exist, that people can use the chain for many different reasons. And the decentralized community that that exists there and continues to grow can can can have the benefits of that autonomy and that more libertarian kind of ideal and then there are businesses who need to use it, who have legal and regulatory obligations
16:59 that they need to code in their KYC, code in their AML. And what they're telling me when I talk to, you know, I sat down with the CEO on on Tuesday of a major national exchange. And you know, they need to have they they can't accept the KYC of Solana or the the compliance that's baked into Ethereum. They need to customize their own because rules in the US are interpreted, right? And so one firm's interpretation of a rule and a guideline may differ from another firm's and they they both might believe that they're compliant. So for all of those reasons, the customization and the enterprise software facet of Avalanche is necessary for them, which is why
17:45 we're so confident that we're going to grow. But they're connecting to a decentralized marketplace and that decentralized marketplace still has the native Degen community in it and they don't have to compromise. So like Securitize is a regulated on-ramp, right? And so that they're going to need your social security number and your date of birth and picture ID and all of that. And that's fine. For a lot of people, they don't mind that. And then for others, there's going to be other opportunities and the CFTC's actions over the last, you know, 18 months have codified that. >> Well, okay. So the CFTC has codified that. This is okay. This is an argument that we get into a lot here on this show and that is that our belief, and I think it it has already started to show in terms of how
18:30 the market is moving. But our belief is that this cycle you are going to see the a major transition happen and it's primarily going to happen in the demographical side of investors. And what I mean is that the Degens, which are usually under the 40 I I hate to use age, but it's usually the under 40 crowd cuz I consider myself a Degen. Uh but mostly under 40. >> And they're going to be, I think, finally at a state where they're going to compete on the financial scale of the Boomers. And the Boomers, of course, is where all the capital is. I get that. But that's a short-lived leash before these institutions either have to adjust or they lose. It's just that it's going to be that simple. They are going to
19:16 have to adjust or they're going to lose. Uh the rumor mill is out there saying the SEC is gearing up to revamp KYC requirements. I think this is another facade. It's not going to work and it's going to continuously deter real investors coming in from the youth of really understanding what blockchain is and especially on tokenized stocks. I mean, come on. This is This is a next generation that is not going to go to Wall Street to invest in stocks. I just don't see it. Um everybody we talk to, everything we're seeing. Now, some people might say, "Paul, you're in a bubble." But I don't think so. I think we are seeing maybe a transition here going forward. I want to play a clip for you and then get your opinion on tokenized stocks for Avalanche. Here is Pharaoh
20:03 talking about this. >> We were supposed to announce that the tokenized stocks were live at the summit. But we had some issues, so we we pushed it back a little bit. I hope it will be within, you know, a month. But essentially the way that it was going to be done originally cannot be done in the same capacity because of legal constraints. So there are things that are happening to open that up and allow for us to have these stocks um with various differences is about the most that I can say. Also, I know that you all probably saw that Arena came over this week as well with a large liquidity pool. They will be one of our first ecosystem partners that will be pairing with a stock. They They want to push some stuff out to Avax and so I'm pretty excited about that.
20:49 >> All right. So you got Arena looking like it's getting into the game. Uh you've got Pharaoh, which is announcing the tokenized stocks are coming to Avalanche. Do you think this makes a major, you know, move forward for Avalanche as a whole to get tokenized stocks in the ecosystem? >> I do. I think I think to your original question, there is going to be this classic innovators dilemma, right? The establishment is going to fight really, really hard to lean on regulatory capture to try to protect the moat that they have. At the same time, there's so many signs that they are that that this that this is organically going to happen. That that that people like the like in that last quote, they
21:36 believe that there's going to be an unregulated kind of venue that you're going to be able to trade stocks in. And so, the CME has done this a bunch. Like, Terry Duffy in one hand says, "I don't want these regulations." and then, you know, a month later he asked for an exemption for the very thing he said shouldn't exist. And so, you're going to see a lot of that uh over the course of the next, you know, call it 18 months. I believe that you're going to see 23.5 if not 24.5 this year uh in in regulated stock trading. They can't do 24/7 on the old infrastructure. So, they're going to have to build a new infrastructure to go 24/7. It's going to be tokenized and Avalanche with, you know, all of the the the the good news that you've seen over
22:22 the last, call it 3 months, like is very, very well positioned to, if not win that vertical, to be one of the winners. >> Yeah. All right. So, a couple of things there. You you're talking about the DTCC. You're talking about 23.5 or 24.5 at best. And let's just be honest, guys. This has been coming for 2 years for TradFi. I And you And if you're in TradFi, I can't say that you didn't see this coming. Cuz if you didn't see it coming, you're incompetent. And now you're either uneducated or you're not willing to innovate. And that's the real question I have is are they willing to innovate and be able to bring the right kind of people on? Cuz if this ends up as a flop season, you know, for some of these institutions that are going this direction, and you continue to see the
23:08 market outplaying them on the two days they're not trading, that to me is a problem, you know, down the road. It's going to showcase. Yeah, it's a huge problem. >> It's a huge problem. I mean, if you if you look at HyperLiquid, you look at Robinhood, uh you know, if you look I mean, you know, Bybit CEO [clears throat] came out yesterday and said, you know, people want to have They're going to access commodities and and crypto and stocks and prediction markets, which is a larger portion of the pie for young investors that you're talking about. They're utilizing prediction markets. They're They're They're speculating on different asset classes, and they want to have one place where all of that is. And so, the the you know, the broker-dealers and the exchanges that cater to baby boomers and
23:54 the previous generation, because that's where all the money is, you know, what will be really interesting will be that transition of wealth that's occurring over the course of the next decade as it goes to this younger generation who aren't signing up with Schwab. And they're not signing up with Fidelity, right? They have a Robinhood account, and they have a card from Rain that's backed by on the Avalanche ecosystem. And so, they they can have a financial world that is entirely excluded from the traditional finance uh you know, wing. And the only way that I see that that you know, the CME's and NYSE's and Nasdaq's and Morgan Stanley's and UBS Wealth Management's can compete is by acquisition. >> Well, that is one way that it could happen. An acquisition path is a
24:39 possibility that is um you know, in reality, that's been kind of the era of tech where they've been able to suck up some of the innovation that has been coming at them. Even if you look all the way back in Meta and its acquisition of Instagram and understanding that short form was coming, and now it's here and it dominates, you know, social. So, yeah, that's possible. I don't know if they're smart enough yet to do that. It's not an offensive statement. It's just being able to look at their past history and unfortunately, I still am not sold on what TradFi is doing just yet. Now, maybe there will be some changes that will change my mind, but right now I'm a little bit concerned about that. Let me ask you this cuz you've got uh possibly new leadership now starting to dictate things over at Avalanche. Uh Emin has been, you know, one of those
25:26 founders you know, that has a lot of the queue of where the community I think comes from to a certain extent. But, I want to go back to something that occurred with uh Gunzilla. And this was a good example, Gunzilla. Uh this happened over 14-month period in the launch. This I mean, I think people would look at this and say that was a failure. When in reality, what it was the problem was always was that it was the freedom of movement and the fact that it isn't and was not there. And had it been there, this would have been a completely different outcome. So, my question has Avalanche learned the right thing from this and saying, "Hey, you know, we just have the right tools in the in the bag here, but the opportunity here was huge. And
26:14 have they given up on, you know, gaming in general?" What do you think? >> I don't [clears throat] believe that they're giving up any verticals. I I think that there are there are clear benefits to payments and to the movement of credit from a blockchain. That that that has been proven. It's not even debatable anymore. And, you know, you're even have the US Treasury and the President of the United States coming out and saying block stablecoins are going to be a a very important part of our national security policy, right? Of guaranteeing dollars. So, the anyone who has ever traded from like a trading desk perspective in US equities understands what a messy kind of inefficient process stock settlement is
27:02 and how many mistakes are made every day and that are manual that blockchain would make so much faster and more efficient. So in in all of these cases and I can name you know a half a dozen more you know private credit issuance is just fundamentally better on a blockchain. >> Yeah. >> The gaming experience, I don't know that it's fundamentally better for users, right? There are a whole bunch of reasons why people would want to do them on a blockchain. I don't think that the the TAM is as big and I don't think that the benefit to the either side of the consumer or the producer is necessarily as obvious there. So I don't believe that they're giving up on gaming. I think Avalanche, that was an area where Avalanche had a significant market share and I think
27:48 that they'll continue to to focus on that, but the opportunity set right now in tokenization of equities and tokenization of credit and stablecoins and all of the all of the things that surrounding cross-border remittance all of that is is a now time. Like you you the the competition for that is is rife and it's it's the next 18 months is going to prove you know what chain what chains are going to be the real benefactors of this and which ones are going to miss this opportunity. >> Uh stablecoin growth and when you look at stablecoin growth, we've had a couple of movements within stablecoin. Most of the item it's been around uh DEX activity. Uh there's been growth, but [clears throat] here recently not
28:34 necessarily the case and if you look at the activity here, I mean come on. This is this is the ranking right there. That's Pharaoh, BlackHole, LFJ. I mean these are all meme you know type projects that are driving uh growth here on Avalanche. And that is to me where Avalanche is missing the boat here. They've got to get back into the D gens and you know, cuz I think this is going to drive out this next generation investor. And then that 30-year-old is going to talk to his dad who's 55 or 60 and say, "Dad, no, this is the way you trade. Let me show you." And then his dad's going to start trading who has, you know, a million dollars in his account at Schwab and they're going to move. That's just my thinking. What do you think?
29:19 >> Yes, I I agree with you. The only The only the real barrier, in my opinion, is that And And this is an area of This isn't an area of failure for Avalanche. It's It's an area of failure for the for the entire smart contract L1 community. The The user interface and the user experience for crypto is still terrifying, right? The the level of technical competence and expertise that you need to have to efficiently use that. And And what I would say And And this is This is an interesting goes back to like the 2001 2 3 4 time frame. I know a lot of people who aren't
30:05 under the age of 30 who were trading on Trader Joe on Avalanche in 2021 and then, you know, obviously activity there like ticked down and they had assets on on online and, you know, on chain and they didn't use it for like a year. And then they went back to try to use it and they had forgotten how to do it, right? And so there there is no call center there. So I think one of the things that we need to do as an industry is make the user interface more friendly for a broader mass of people. Um and I think that that's going to be an innovation that have that that that happens over the next call it one, two, three years that will just open up such a to a such a wide larger variety of of
30:53 users. I think making the stable coin activity and and and decentralized trading activity better is part of it, but I think the user interface needs to get better to grow our user base. >> And I think that's where we are now. You you've got a certain, you know, degree of the population that will never make it over, but it's okay. That's not a big deal. There was a lot of that population that came onto the internet and it was mostly guys like me that grew up on nothing but the internet versus people that did not. And I think that's where the line in the sand draws right now. We are at a a point of reflection that unfortunately, I think the market is moving on without. It just happens to be that the old guard has a very hard
31:39 iron fist around that. It's It's mostly because of the money that's being traded at these higher levels, you know, so I think that's going to change, man. And I need you got you got to skate to where the puck is. So, MN, if you're listening, innovate. Innovate. >> I will I will pass it along to him. >> All right. Listen, Bart, it's been great having you on. Thanks so much for coming in today. We appreciate it. >> Thanks, Paul. Appreciate it. Well, happy to come on another time. >> [music] >> If you like this video, hit like and subscribe. Drop a comment down [music] below and also join our free private member group. The link is in the description.
