# Crypto Monetization Shifts: Stablecoins, AI Agents, and Institutional Adoption

**Podcast:** The Milk Road Show
**Published:** 2026-05-07

## Transcript

if i look at okay stable coins are growing a lot who's monetizing stable coins the best probably sky bitcoin has been pushing its head up past the top of the range but it keeps getting knocked back down into it everybody is wondering when are we going to break out break down or what's going to happen here hello and welcome to the milk road show the daily crypto show that knows that number go up technology is powered by friendship We are here today to present a new kind of content, which is we are calling the Milk Road Research Meeting, a weekly meeting that we have all been doing internally that we thought would be great to share with all of you.
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Today is Thursday, May 5th.
And without further ado, welcome to the Milk Road Show.
Kyle, Martin, how are you gentlemen this morning?
Kyle, I wanted to start with you.
We had a pro AMA for our community this week, so I got a lot of Martin's thoughts on that one.
But it's been a while since I've talked to you.
What's on your mind?
What are you focused on right now for crypto at this point early in May here?
Well, John, let me tell you one thing.
It's Thursday, May 7th.
not thursday may 5th that doesn't exist so i think we just need to uh we need to make sure we're off to a good accurate start to the day uh i wrote five seven and then i just read fifth in my notes um so thank you that's a good good catch uh look i'm actually just going to share screen real quick i didn't even have the setup but the the thing that i'm watching in crypto right now is um is Bitcoin.
As you said at the top, we are in a range and we've been in it since February.
And we started to break out yesterday, actually two days ago.
It looked like we kind of closed like right on the line.
Then we smashed through it yesterday and then we came all the way back down.
Now we're sitting right back at it.
So we're going to have to see if Bitcoin wants to step up or not.
I don't know if it wants to, but it doesn't seem to want to make that big move through.
So we'll see.
It did this once before and then it came back to the bottom and then...
stroke all the way down.
Let's just hope that that's not what happens again, but we'll see what happens here.
So that's the main thing.
So other than Bitcoin, I feel like in crypto, there's only a few things that are really interesting to me, or at least that I would say are growing, at least right now.
And that's, I mean, stablecoins, obviously, I think private credit is sort of having a moment.
So we're starting to bring a lot of credit on chain.
This is why you're seeing the success with like Sky and USDA, which we've talked about a bunch.
Tokenization, which is sort of a combination of both stablecoins and private credit, plus so much more.
bringing stocks on chain bringing us treasuries on chain etc and then really it's like perps which we've talked about a bunch and then the last thing i would say which really doesn't have a lot of um like actual growth yet but i think will be the next catalyst for stablecoin usage and tokenization usage which is ai agents outside of that I feel like there's not much else interesting in crypto.
I don't know if you guys would agree with that or what are your takes?
Is there something else you're looking at outside of those things?
Yeah, I mean, so I did an interview this week with Ali Yaya, who is a partner at A16Z Crypto, and they just completed a fundraise, their fifth fund, which now brings, I think, their total committed capital to just under $10 billion.
And the focus for them on this fundraise is, you know, one of them is definitely that intersection of crypto and AI.
because I think that there's a lot of prototyping being done at that space and just a lot of rapid growth, obviously, in capital going into that.
But he also talked about how the need for privacy is really driving a lot of capital and attention right now, because that's sort of like the next hurdle for institutional adoption to be able to leverage a lot of this technology, deploy capital and transact.
And then he thinks that that's going to also unlock the next.
phase of what people are going to be able to use stable coins for.
So that's one thing I've been looking at a lot.
And I think there's a lot of projects focused on that.
Obviously, Zcash has pumped a ton on that narrative.
But then there's the Midnight Sidechain that's launched.
And there's a project called Aztec Network.
which is a privacy layer two for the Ethereum network.
So there's a lot of things happening there that I think will unlock use cases for institutions and individuals alike.
And then another thing Ali said that I really agreed with was that he thinks that there's a lot of things in this industry that were great ideas that never really got to be explored because the prior administration basically...
outlawed a lot of the cool things and innovative things for finance that were coming out of crypto and made it so the only thing that was really happening or got any attention was sort of the casino culture of meme coins and so forth but now he thinks once we get the clarity act through there's going to be an opportunity for innovations that previously were not allowed to operate or proliferate in crypto to really come into the market in full size and see if they can find product market fit.
So I'm kind of interested to see how a lot of those things play out because I think I generally tend to agree with them.
It's like one of those things where it's like crypto was earlier than in many cases, like too early.
And now it seems like the market and the regulatory landscape has shifted to where maybe some of these things can find some adoption where they couldn't before.
So yeah, we'll see.
i don't know i feel like martin i'll let you take over in a second but i just on that regulation side of things like have we really prevented a lot of people from building um like we've prevented people from launching a token sure but have we prevented any infrastructure to be building quickly i don't really think so we haven't just haven't had any rules so you can kind of build whatever you want which people have right uh we built tornado cash we built a million different things so i don't know that saying that that's the reason why we don't have a lot of innovation, new things is really it.
I think we've just built a lot of bad things to be completely honest.
We've marketed these things extremely bad.
And I also just think, you know, what blockchain really unlocks is a lot of things for the financial world and the financial world just hasn't really been ready or willing to like participate in it and use it.
which is like a problem of product market fit to be completely honest uh and even though we think it's better if the the financial world doesn't or doesn't want to use it um then it's technically just not product market fit so i i don't know if it's necessarily regulation that's holding that back because obviously you could just go outside of the us and build these things other elsewhere um but yeah i don't know i think we've had a plenty of time to build good things and we're still pretty limited in what we've built that's actually useful a lot of things have been built that are like why was this ever even built uh it doesn't make sense so i i don't know i sort of agree but kind of disagree yeah i think i agree i think we have built a lot of better products than the the current products in traditional world but we were not just able to onboard people to make you know usage of those new products and it seems like the people are not really coming in or like the incentives are not good enough for people to you know switch over so like if you are using some financial services today using like traditional rails you don't have that many incentives to move over and use crypto for that and like all that user experience and everything it still sucks so let's let's be honest there i think now kyle asked about agents i think yes And now people are coming up with the narratives like, hey, blockchains were built for agents.
We just didn't know that.
I think it's pretty good.
What I just described is that if I want to lend my money today, I'll probably find better alternatives or solutions on blockchains when I'm using my traditional bank.
So there is some truth that agents might be brand agnostic and they will be okay.
I want to borrow money or something.
What's the best way to do it?
And so they might use blockchain rails.
So I am bullish on agents coming on chain.
I'm just not so sure that it will improve our backs.
So like two weeks ago, my report was blockchains win.
I'm not sure about if tokens wins because, you know, today, if someone is using Tempo, which is a, you know, blockchain from stripe if i send money there it cost me 0.001 dollars so there needs to be the 300 million transactions per day to make just 100 million in in fees so i think we are now like next narrative for crypto is agents are coming yes i think that's true for sure and they are gonna explode but It's still not the reason why everything should pump significantly higher.
Well, I think what needs to happen.
So I fully agree with that.
But I think what needs to happen is we have as an industry, at least the retail people in this industry, have focused on like fees is what matters.
It's like blockchains generating fees is what matters.
And so when I think about Stripe or Tempo and you're like, OK, well, I can't own Tempo.
Right.
Because they don't have a token.
So it actually doesn't really matter anyway.
And even if it was on Ethereum, like what you're saying is you would need so many transactions to be somewhat relevant amount of fees that like it's kind of not even really possible.
But then I think, OK, well, what stablecoin are they using?
Circle.
OK, which means USDC is is involved in this.
And so they are generating revenue in a different way, not through transactions.
Right.
But through their NIMP, their net interest margins of.
of the capital going into circle.
So, okay, you can invest in circle, right?
So it's just like, you've got to think of the other ways to capitalize on this.
And then it's like, okay, so again, maybe I can't capitalize on the fees of these stable coins being traded by agents, but where are the agents being used?
Is there attention there somewhere?
Is it happening on Coinbase?
Is it happening through, I don't know, Twitter or something?
Like, can I invest in the platform that these agents are being created on?
Maybe there's value created there.
It's, I just think we have to rethink where value is going to be created.
Or maybe the answer is just like Stripe.
It's the same product, but Stripe is just now way more profitable.
And so, okay, I want to invest in Stripe.
Now, obviously they're a private company, so I can't yet, but eventually maybe I will be able to.
So I just think we got to find other ways to figure out where the value accrues as a result of this.
Because one of the things, and the reasons why I think crypto has not had this crazy adoption yet is it's just infrastructure.
It's actually not very sexy what crypto has built so far, because it's not meant to be.
It's supposed to be infrastructure to make capital move better.
This isn't like, things that most retail people should be using or thinking about.
Like, it's not like we use, I don't know, Swift network and we know we're using it and we're excited to move off Swift.
Talk to anyone who's moved capital from one country to another.
They don't even know what Swift is.
And so it's not like, oh my God, I can't wait tomorrow to stop using Swift and start using Ethereum.
No one's doing that because it's all infrastructure.
It's all under the hood.
There's like a few companies in the world that are excited to get off Swift and use Ethereum, but that's like your big banks or whatever.
I don't know if they're actually excited, but you know what I mean?
Like the client base that actually interacts with the infrastructure is very small and they are huge, large companies.
It's not.
most of the world and so it's like you know ai we're all excited about because we actually use chat gpt every day right or clod or whatever you use but you're not really going to use a lot of this infrastructure that's being built in crypto so i just think it's a we thought it was going to be this mainstream product that we were building with crypto and it's just like we're not we're building things that are under the hood that don't matter to most people in the world.
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I think that the benefits of a lot of that infrastructure matter to a lot of people in the world.
And though they may not be direct users, they will be indirect beneficiaries.
radical beneficiaries because the legacy systems we're talking about switching away from are what really suck.
Like you talk about a bad user experience.
It's way worse with what we have now.
I do want to ask a question about something in DeFi that's gotten some attention and performed well recently, which is Pendle Finance.
For those who don't know, this is something that allows people to tokenize yield from yield-bearing products and sort of disaggregate them from those assets themselves and then trade that.
Martin, I know this is something you've been paying close attention to.
What are you seeing for Pendle here?
And why do you think that this is getting so much attention at this point in the market?
Yes, great question.
I actually had the same question because I saw that Pendle token is pumping like crazy.
And I was like, okay, they might have some new integration or, you know, new stablecoin coming in.
And so the fundamentals are improving, but it's not happening.
Like I was bullish on Pendle a couple months ago when their business was still kind of resilient to everything else that was happening like everything was going down significantly but pendles tvl and revenues and fees were holding pretty strong but then they started also falling from a cliff and i was like okay um so their business might not be as resilient as i was hoping for and so now when price was pumping um it's actually Plus 88% over the last 30 days, which is pretty sick, I think.
But the revenues haven't improved at all.
And they are still making like...
TVL hasn't improved.
Yeah, nothing improved.
Just the price improved.
So it makes me think that...
Scary moment.
We might be again in that era of crypto when there might be some people who are doing, you know, God's work and just trying to...
promote that on twitter or elsewhere in the podcast or there are some youtubers who are making content about pendle how this is great how you know when stable coins are becoming a thing then pendle is gonna just explode like yes um i like pendle i think what they are doing is amazing and i would love to buy their token when i see that the business is growing and it's still not happening so i think that Lately, I see that people are not using those two things together.
They like the business, so they buy the stock or they buy the stock and they don't really care whether it makes sense or not.
At least in stocks, you don't have all the dilution or incentives or fake numbers that you can do in crypto.
But anyway, the point is that even if business is great, you still need to make sure that you understand the price that you are paying for is reasonable.
Because right now, if Pendle is making, you know, Pendle is actually, I'm pretty sure that they are operating at loss right now.
So it's not even a profitable company.
And I get that there is a potential if like the usage of blockchain and stablecoins improves, and I think it will.
But that will be the point where I want to see that the numbers are also improving.
And at that point, I'm going to reevaluate whether the price is still interesting to me or not.
And right now it's not.
i mean i do think um you know the first two things that i said at the start of the show of stable coins and private credit are two things that are really growing same with tokenization actually so like us treasuries things like that um this is where pendle actually ties into right because it creates kind of a fixed yield onto any of these things so the more that we get stable coins the more that we get um credit on chain the more that we get tokenization of various forms of credit as well um the more pendle has like kind of surface area to go after so um i do think pendle is sitting in a good spot in terms of like growth coming for them in the future um maybe the market is starting to sniff that out and go oh if all this credit's coming on chain we're going to have all these stable coins come on chain um pendle is going to be a great way to get fixed yield um So that's like kind of the only bull case I can think of right now.
But again, it doesn't really show in the charts.
But just as an example, Stretch became really big last month or over the last couple of months.
This is MicroStrategy's preferred shares where you can get like, I don't know what to say, but 11.5% APY or whatever.
And, you know, immediately after that happens, we start tokenizing Stretch and putting it on chain.
of this sort of like tokenized stretch yield in a fixed way on on pendle so it's like as new things happen in this in in on chain pendle can kind of go after it and and create different forms of yield from it so i think like it's in a market that is growing um but again pendle's tvl was i don't know like almost 10x what it what it is today so it's down it's down a lot so it kind of doesn't make sense for it to go up almost 100 in the last 30 days So I think a couple of things I've seen in headlines around this is that there's been a $230 million increase in their TVL and a partnership with Athena.
I don't know how recent these are, but I agree with both of you.
I think a lot of it might just be speculation around the future appreciation here.
But Kyle, I think STRC is an interesting example to me because something I've been thinking a lot about is once we've got the Genius Bill passed into law, if Clarity Act becomes a law as well, I'm interested to see what new products and services, the financial services industry, both from Wall Street and the crypto side, come up with to innovate and find new ways to meet demand in the market.
Because I think STRC is a really interesting one.
And the second order consequence of Saylor finding product market fit with that stretch product is that now a lot of other players on Wall Street are having to come up with some kind of answer for that because no one's really been able to offer that kind of return before.
So I think, like you said at the beginning, people won't directly interact with this.
But indirectly, a lot of people benefit.
And one of those benefits is that it forces a lot of companies, both crypto native and Wall Street native, to innovate on the products and services that they're offering and offer more competitive things.
So that to me is a really exciting thing, too, because like, you know, a year and a half from now, a lot of things in the market landscape are going to look very different.
So I'm just I'm very bullish on all of this right now.
Did you guys see Saylor said he's going to sell some Bitcoin?
What do you think about that?
Ted, I was going to ask you that.
To me, I think it's just him describing the normal market operations of the stretch product, right?
Like he's got to sell a little Bitcoin to pay the interest on that.
However, he remains a net buyer of Bitcoin as long as he's taking in more capital to continue adding to the stack.
So I think he's kind of a nothing burger, but everyone's really flipping out because it's like, oh, say they're selling some Bitcoin.
Oh, no.
But I don't know.
I don't think it's actually that big a deal.
I think it's very smart.
I think he absolutely should be selling some Bitcoin so that the wheel can continue, right?
He's got a flywheel going.
You got to keep that thing going somehow.
And so like, hey, if he buys Bitcoin at, I don't know, whatever, 60,000 and he sells at 100,000 to pay a little bit of interest, which was allowed him to buy more Bitcoin throughout that time, that's a good thing because then he can keep doing it, right?
So, I mean, people are, there's a lot of people yesterday or two days ago, whatever it was that were getting.
All scared about that.
I was like, imagine being afraid that he's going to take some profits and keep his business alive.
Like, no, that's a very, very smart thing to do.
So I'm glad he's actually doing this and having this conversation.
But yeah, anyway, interesting.
We'll see what he does.
It sounds like he might just do like a test sell just to like see how the market reacts, which is kind of funny.
Elon actually did that.
Do you remember when he bought, it was a Tesla bought, whatever it was, 10,000 Bitcoin or something back in 2020.
uh and then he like a couple months later it doubled in like a month so he sold like a tranche of it and he's like i just wanted to see if there was like liquidity in it i was like no way this guy's hilarious um so yeah i don't know i think it's a good thing but yeah Yeah.
Martin, I want to go back to DeFi and ask you a question.
I think it was a couple of weeks ago or maybe last month, you were talking about this long Morpho and short Aave trade.
And obviously, Aave ran into some problems.
But I think that that trade, the way that's played out has been, let's say, not what you were expecting.
Could you talk to me a little bit about what your updated thoughts are on that?
And do you still have that trade on of long Morpho and short Aave?
You mean basically how I was liquidated?
That's a nice way of saying it, yeah.
Why was that your thesis?
Let's start there.
Give me some context, Martin.
Yeah.
Well, I think we all know Aave and what Aave is doing.
It's a market leader.
Everyone loves and uses Aave.
And Morfo, they got the latest narrative that, you know, waltz are going to be ETF 2.0 or whatever the big guys from, guys from Bitwise.
are trying to promote this and i just don't understand how walls are going to be better solution because i think people need like liquid assets and not just locking money in some walls or something plus morfo is still not charging any fees so they are not making any revenues out of their product and it's okay for startup like no issues there but should that really be valued much more than other when Aave is having like 60 plus percent of that market.
So I wasn't, I'm not sure.
And I was thinking that this whole market should re-rate and Aave should go higher, or at least...
Oh wait, so you're long Aave, short Morpho.
Yes.
I was like, I'm looking at the charts right now.
Morpho's up only all year and Aave's down only all year.
Sorry, I guess I had that backwards.
My bad.
I'm out of this trade.
It didn't work.
Not going to try again.
To be fair, Aave's had some sort of like...
extra things that have made it worse.
Like things that you would not have been able to, like nothing to do with their business, but like the Dow had all of its issues like two months ago.
So that brought the price down a ton.
And then obviously you have the exploit with RSE.
Well, the exploit was with layer zero, which ultimately impacted Aave.
And so that hurt the price even more.
So like.
Yeah, but I bought after that.
Business fundamentals.
Yes, but I bought after that.
I thought that it's already overpriced and way too much, but I don't know more for just.
keeps going up i don't really know why yeah 1.3 billion dollar market cap for morfo 2.1 billion dollar ftv uh which is pretty crazy i mean like you said they have almost no revenue they're valued higher than almost higher than sky at least on the ftv side of things um sky right in 160 million dollars last quarter Morpho's never seen $160 million.
They're worth the same.
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Okay, so we talked about this great on-chain migration, tokenization, AI agents coming to crypto.
I'm curious what you guys think in terms of which protocols benefit from this, because I think that there's a lot of different theses here, and I've talked about this on podcast recently too.
Some people think value accrues to layer ones, some people think it accrues to protocols in DeFi platforms, and other people think it's just going to accrue to the dollar as tokenized dollars continue to proliferate.
How are you guys thinking about this?
as investors and where are you focusing your attention around that?
Martin, you want to go first?
I want to hear your thoughts.
I think this is the question that we all have been thinking about a lot because obviously stablecoins are going up and how can I express that I'm bullish on this trend?
Pendle is also a way to express that.
Or Circle is another example.
I was just looking at Western Union, which is a remittance company and its global leader with, you know, hundreds of thousands of agents across the world that will let you withdraw money no matter where you are.
And right now they are pretty distressed.
The market cap right now is like 2.6 billion or something like that.
And they are paying out dividends.
which at the current price is over 10 yield so i think if stable coins get more adoption and like you know they will then at some point we will start to think about okay we got sorted out the first like onboarding part that's that's pretty easy for everyone but And the other side is how to exit.
Like if I want to go to the shop and pay for my coffee and I cannot use my phone because I'm in Mexico or, you know, Philippines or elsewhere, I might need real cash.
So the idea is if stablecoins grow and we think they will, and then who is going to be at the end?
Who is going to satisfy the last mile of customers that are not in US or in Europe, but in the rest of the world?
It could be Western Union and their huge global network that they have right now.
So I think those are sort of players that you are not necessarily seen as, you know, stablecoins play, but in a way they are.
And for example, that Western Union, I think people are still seeing Western Union that their business is dying.
but they are not seeing that they are adopting and pivoting to digital assets and stablecoins and leveraging their existing network.
So I think those are the best opportunities on the market when people are still mispricing some companies and who didn't really update their views because the company also updated their strategy.
So this is the company I'm looking at these days and thinking about allocating some capital there because it's not necessarily that i would need like you know uh 3x on on my investment there but i'm quite the downside is quite limited because if i buy right now i get 10 yield dividend which is pretty decent and i'm still sort of open to the upside because you know if this trend is happening and the digital business is growing then it should be reprised as well so this is my most recent play on stable coins The way I think about this space is blockchains, at least today, is a technology that provides financial services and products.
And the question is, who's monetizing these financial services and products the best?
That's where I want to put my capital.
And for a long time, we've thought, well, the value is going to accrue to the blockchains that are allowing it all to happen.
That's actually not true.
So to invest in ETH or Solana, you are not investing in them monetizing these financial services and products because they monetize them very poorly.
They're not making a lot of money.
You're investing in it becoming pristine collateral and money.
It's a whole different thesis.
That has not come true necessarily today.
Not a lot of people see Ethan Sol as money, unfortunately.
We tried that, didn't quite work.
Bitcoin has nailed that, sort of.
Not necessarily money, but like store of value.
So the hope is, can Ethan Sol get there or other blockchains?
That's what you're investing.
You're not really investing in their ability to monetize, at least not today.
I think eventually, maybe we can get there where it does monetize.
So, okay, if they're not monetizing these innovations, who is?
Okay, there's the circles of the world.
They generate revenue.
Not a lot.
Not a great diversified business.
If I look at, okay, stable coins are growing a lot.
Who's monetizing stable coins the best?
Probably Sky, right?
So the more stable coins grow, if you want to put your stable coins to work and earn yield on it in a low risk way, right now the best way to do that is either put them on Coinbase.
right which that might go away from the clarity act or put it in sky right those are kind of your two safest ways everything else is basically blown up you had tara luna a couple years ago you could put it in there and like 20 that didn't work you had athena which was like the real winner over the last little bit that didn't work right you had ave that kind of like it's working don't get me wrong they haven't really screwed anything up on stable coins but trust has been lost there there is not a lot of places where where companies are monetizing stable coin yield which is probably the biggest thing that has come out of crypto so far uh stable coins except for sky and like kind of circle and and i would say coinbase but they're sort of like unsure so okay sky's done a good job with that other than that who else is monetizing i would say coinbase coinbase is the one thing that's monetized everything we've talked about tokenization stable coins um perps um agents you know the the one thing you think about with with coinbase that's so interesting is like okay, agents is going to be the next thing.
Let's look on where are agents going right now?
Well, they go on base.
Who's building for agents?
Well, mainly Coinbase is doing this, right?
With X402 or whatever it's called.
And they have the agent marketplace that they just launched.
I forget what that thing's called.
But like, so it's like, who are the companies that are seeing what's happening on chain and then going and monetizing?
Coinbase is doing that the best right now.
Kraken is starting to do that as well with their X stocks.
They're doing some things there.
So it's like, I don't know.
I'm just looking for who's monetizing the things that are happening on crypto or on chain right now.
And it's like there's some DeFi products that are doing it, but not many.
And then there are some like centralized companies doing it.
And then I guess the other way would be who's improving their margins by using crypto.
That's what Martin just pointed out with Western Union, with Stripe potentially.
I don't know who else would be doing this really if there's any good examples in other.
I'm not sure there's a whole lot of good examples, but that would be the other area I look for.
Who's monetizing well?
MicroStrategy.
They're monetizing Bitcoin extremely well.
So that's been a good place to park capital.
And then I think the next thing is, once we get Clarity Act, you're going to see a lot of companies like Western Union start to integrate blockchains and improve their margins.
And I think that's a really good opportunity to invest in as well.
We've talked about Robinhood.
is is one that's done really well this integrating crypto has really helped improve their profit margins martin you've talked about new bank they don't do a lot yet but they probably will uh and so western union same thing so that's the other way i think i look at it um yeah that's kind of my thinking I want to ask a question about this, Kyle.
There's a lot of great points in there.
We just talked about how Morpho has been doing really great here.
And Martin talked a little bit about Vaults as a product.
A lot of those, I think, are happening on Morpho.
And it seems to me like a way to monetize some of these things of yield and stablecoins and so forth.
What are your thoughts on Vaults?
And do you think that's what's driving this run up in Morpho?
And what are your thoughts on that product?
Well, the problem is...
Morph was doing a good job of getting people to use their vaults.
They are not doing a good job at monetizing it because they don't make any money from it.
Right.
So there's a clear difference.
And this is like this is the problem with crypto over the last 10 years, literally since 2017, is we are good at launching things and getting people to use things by paying them to do it or giving them like outsized returns.
But it's not ever sustainable because we don't actually make money doing it.
It's just why nothing is ever sustainable in crypto.
morfo great vaults i do think vaults are actually pretty cool i think i'm more bullish than vaults than martin is um and a nice example of it is like so sky we'll go back to sky because they're one that that um we've talked about a lot so they have their sky savings rate where they give i think it's 3.65 right now right then they have other forms of yield that they can give um st usds is another one it's kind of a higher yield and it basically monetizes um the the borrowing or the lending of Sky.
So you can stake your Sky and then you can lend it out and borrow stable coins.
So to get liquidity for that, they have this thing called STUSTS.
So they're two separate products.
What vaults do though, is allow you to combine those two products plus other things if you wanted into one product.
And so now I can put my money in, I forget what the name of it is.
They have a vault that basically combines these two products.
And so you get like 80% Sky savings rate, 20% of this like staking.
rate and you combine it into one thing and you get a certain percentage or certain yield that's higher and it can move between the two and and that exists in a vault now you could tokenize that technically but it's a lot harder to do whereas it's much safer uh to have that in a vault where people aren't just moving their capital in it all the time And it's fluctuating.
The price of it's fluctuating.
So it just stays in a vault.
And so you can start to package different sources of yield into a vault together.
And so that's a really good product.
And so Morpho and Sky have come together to create that product.
So I really like that idea.
I like that use case for vaults.
Again, Morpho's not monetizing it yet, unfortunately.
But I do think that's a great product that you can do.
And you can start to package many things together.
So I think vaults is going to be and continue to be a very big thing.
This is why Bitwise likes it as well.
They have different sources of yield.
yield throughout their sort of like financial products that they have and they can package them together with vaults.
The question is, how do we monetize that?
And probably it's going to be you take a cut, right?
Morpho just hasn't done it yet because they're wondering if we start to do that, do people stop using this, right?
Because the thing that...
People like Unmorphos, they can get higher rates of return by using their Morpho vaults right now.
Once they start taking a cut, maybe that goes away.
For example, CalSwap, another great product we've had in DeFi, which was it's free to trade, right?
They undercut Uniswap and they had a better product.
Then they turned on fees and all of a sudden everyone left and stopped using CalProtocol, right?
Not left, but their TVL went down, right?
They had less usage as a result of that.
So it's this like...
Yeah, if you can just give your product for free, you'll get people to use it.
But as soon as you want to make money from it, do people still?
And oftentimes in crypto, people go, yeah, as soon as you turn off the incentives, I'm out of here.
So it's tough to find a good product in the financial services world where you can actually make money from it.
Martin, any thoughts on that before I ask another question on this?
Yes, I'm not bearish waltz.
I mean, they are great, but...
like our v4 is gonna have vault as well plus it will be able to tap into all that existing liquidity there so i think they will have like better product than morfo and yeah cowswap i still love cowswap i think they are still a lot of people are using cowswap still and i still there was a huge drop in volumes because they were trying to get rid of all the bots that were just spamming the network and it was making a lot of trades unprofitable for cow swap so yeah i think it's pretty good they're still doing quite well i think like one one more thing that when we are talking about stable coins and circle because i know that some people in our team are bullish circle i just don't see that because i hold lighter and you you There is about 500 million of USDC on LiDAR.
And they just made a partnership with USDC.
They didn't share the numbers, but I assume that the partnership is that Circle is going to distribute some of the yields with LiDAR.
So Circle's issue is that they don't have distribution.
And if they want to find some distribution partners, it's going to cost them money.
right today but doesn't that's that can scale we're talking dollars here this can go to trillions and probably will go to trillions so if they can be the first and they can partner with everyone that's network effects right it's already priced like it's it's going to trillions tomorrow very true yeah good point good point but but i do think their strategy is the right one you got to get everyone that has any distribution get your stablecoin in their hands.
And that's what Circle has done a really, really, really good job at that.
And then being the one that fits regulation, right?
Which is why people will actually take it on and run their business around USDC, right?
It's hard to run your business around USD because it's so volatile and you don't know what's going on.
It's hard to run on USDT.
right?
Because you're just kind of unsure.
But USDC is such an easy one to go.
I'm going to bet my business on this, which is what Coinbase has done, Leiter has done, and many, many other companies are doing this as well, right?
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I want to ask one more question here before we run out of time because we're getting towards the end here.
We talked about new products launching.
We talked about undercutting competition.
Morgan Stanley has been one of the most aggressive firms on Wall Street about pivoting to crypto, launching new products.
Their latest move is rolling out crypto trading on E-Trade, which has 8.6 million users.
The kicker of this, though, is they're trying to undercut the fees.
So they're pricing this lower than Coinbase, than Robinhood, Charles Schwab.
So it seems like a play to try to take over the spot.
I think I started today actually this podcast with why I think that what we have built here is better than the alternatives but people are not necessarily like moving over to use it and I think the same case is here like I'm not gonna leaving Robinhood or Coinbase just because JP Morgan gives me you know I don't know five basis points better fee or something and like I actually think that when if I should reflect on my like you know career in crypto it's that I was overexposed and like super bullish on on products because I sort of try to understand why people should use them.
And so like I was picking the best leaders in each of the market.
But who cares?
Like, you know, I would probably go and trade on LiDAR because it's the cheapest place.
But people still trade on Robinhood.
Why is that?
Because it's liquidity there or there is enough liquidity on LiDAR too.
So if I should trade...
bitcoin i should go to lighter because it's just better than hyper liquid but it's not happening people are still on you know why do you know why martin so actually this is funny we talked about morpho you thought was going to do bad and you thought circle should do bad if both of them have pumped in your face why Because they partner with distribution.
So Morpho partnered with Coinbase, Circle partnered with Coinbase, which is where all the users are.
And all of a sudden their TVL has exploded, right?
Because people don't want to go and interact on chain.
They want to go where their money already is and where it's very simple.
This is why, and John, to answer your question, sure, that's like.
bullish what morgan stanley's doing they're trying to compete i think this is going to continue just like we talked about fees on blockchains are not huge i've always expected coinbase's fees from like volumes from trading to go down uh because you know they've always charged like extreme extremely high numbers and so i think one of the beautiful things of crypto is that we create all this competition anyone can tap into a blockchain and so fees should go down everywhere But the key is, again, can you find other ways to monetize?
And I think the thing that Robinhood has done really well is they have their Robinhood gold.
which is what, five bucks a month or something.
And you get like basically free trading or very cheap trading, even better than what Morgan Stanley's trying to offer.
But the beautiful thing is Robinhood can monetize.
So one, they get five bucks per month for everyone that uses this and they have, I don't know, millions of users or whatever.
But then also they add in all these other additional things that make everyone's lives so easy to manage their finances.
So I can come in with Robinhood, pay five bucks a month, get basically free trading, but then I also get yield on my dollars.
I have like a bank.
account where I can spend with my credit card.
I can get like my, I don't know if they do this yet, but like my mortgage is like all the different financial services come into that one little spot.
So instead of me having 10 different apps to do all the different things, I can do it on one place.
So they're making it very, very easy and they can find different ways to monetize all that.
That's the kind of things that I like.
And that's exciting is like, can I lower the cost for the consumer, but then bundle so many services into one thing that.
I can still find ways to generate revenue off that.
And that's what Robin has done really well on and what Coinbase has done really well on too.
And so I think, yeah, I think fees will go lower for trading volume for sure.
And that's a benefit to the consumer.
But the innovative companies can find different ways to monetize it, which is the key.
Gotcha.
Okay.
Yes, go ahead.
No, no, please.
There's Coinbase earnings today.
What do you guys are expecting?
Also, did you see that they lay off?
I think that says it all.
I think they're going to be shit.
But well, it's guaranteed they're going to be shit.
We already saw like Robinhood's is pretty shit.
At least specifically the crypto side.
So I think Coinbase's will be.
But I also think that's priced into the.
That's why Coinbase is like under 200 bucks right now.
So I don't expect like.
if they come in pretty bad uh at least bad compared like if their expectations are really bad and so as long as they come in around those expectations i don't think we're gonna have a huge job if they're even worse those expectations okay then maybe we'll we'll go lower but i think the market's already expecting coin bases to not be very good so what's your take on the earlier Yeah, I was actually comparing their previous revenues to the size of their team.
I don't think this is anything to do with AI very much.
I think this is more so just like the revenues are down and have been for the last two quarters.
They haven't had very great quarters as a result.
And so, you know, you got to lower, you got to shrink your team.
They've done this every single time we've had, you know, an extended period of crypto prices down.
So I don't think this is anything new.
That said, I think maybe they went a little Like maybe they're able to push the limits just a little bit here and try to see if they can get AI to do more for them.
But like 14% is not a massive move.
They've done this before.
They still have thousands of employees.
Their revenues are down way more than 14%.
So this is kind of, I think this happens even if AI didn't exist, they would be doing the same thing.
So I don't think this is an AI story yet, but I hope that they try to figure out more ways to use AI and to make it more efficient, to be fair.
We are coming up on time here.
I want to end with one more question.
Kyle, earlier this week, we did an AMA for our Milk Road Pro community.
For anyone listening, you can join for just a dollar if you want to see what all of our analysts are doing in real time.
We went over a lot of changes that people have made to their portfolios and things that they're watching, but we haven't heard from you on that.
So I just want to hear quickly, what are you doing in your portfolio in the next week or so?
Is it changes that you're making or things you're watching?
What's your thoughts there?
How is Kyle's portfolio doing, by the way?
That's classified.
Join Milk Road Pro to find out.
Slow and steady wins the race, guys.
I have not made a lot of moves recently.
And I like the portfolio I have.
It's a long-term portfolio for me.
So I'm not trying to trade in and out.
We have some people in the Milk Road portfolio that are more active.
I'm not very active.
I'm just looking for undervalued opportunities and I want to hold them for years.
So I haven't made a lot of moves recently.
I plan to buy actually some more Bitcoin.
I'm just waiting to see if it can break out and hold that.
If not, then I think we're due for it to go down quite a bit just because we're at the top of that range.
So generally, if it can't break through, we're going to go down to the bottom of the range.
So I'm kind of just waiting patiently to see what happens there.
And as long as we can break through, I'm actually going to buy some more Bitcoin.
And then kind of waiting to see what happens with this Clarity Act too.
I already own a couple different DeFi projects that I'm excited about that I think can do well as long as...
uh if the clarity that goes through uh and so you know i i'm pretty good there so i i don't know i don't i don't plan to do a whole lot i might buy some bitcoin i might buy some video kyle for those who are listening has a very diversified and really interesting portfolio that strategy straddles energy ai crypto if you want to see what he and all of our all of our other analysts are doing in their portfolios join milk road pro for just a dollar uh fellas we are coming up on the hour so i'm going to end it there but thank you both for joining for sharing all your thoughts with us today and thank you all for listening We hope that you learned something today.
Until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of The Milk Road Show.
Thanks for being here, everyone.
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