# Institutional Tokenization Drives Altcoin Alpha

**Podcast:** The Milk Road Show
**Published:** 2026-10-01

## Transcript

Honestly, in terms of the tokenization thesis, that is 100% locked in.
The technology has left the gate and TradFi organizations like Standard Chartered and others are literally arriving tomorrow.
Over the past three months, Standard Chartered has put out calls for 25x, 40x and even 70x price targets on altcoins such as Uniswap, Aave, Chainlink, Sky, Arbitrum and several others.
Some of these calls are already starting to play out.
Everyone is wondering, is this the start of the institutional alt?
season.
What do you need to know about all of this?
Hello and welcome to Milk Road Crypto, the show that knows that nothing says institutional bull market like a bank calling for an altcoin to do a 40x.
I'm your host, John Gill.
And today we are welcoming back to the show, Jeff Kendrick.
Jeff is the global head of digital assets research at Standard Chartered, where he launched the bank's crypto coverage back in 2020.
He has since then become one of the most watched, respected and most bullish voices on all of Wall Street when it comes to price targets for digital assets.
If that sounds good to you, make sure you like and subscribe.
Share this episode with somebody who's going to enjoy it.
This is going to be a fun episode.
I'm really looking forward to this one.
Jeff is awesome.
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But for now, welcome back to Milk Road Crypto.
The GOAT, Jeff, how are you, sir?
I'm very well, John.
It's great to be back.
Pleasure is mine.
I'm always excited to talk to you, Jeff, because you're such a calm and measured person who works at a very respectable bank, and yet your analysis on digital assets is always wildly bullish.
So I just think you're a wonderful person to talk to, especially here at what could be the start of a new bull market.
Jeff, when you were here last, we talked a lot about Bitcoin and stablecoins.
Since then, you have started covering a lot of altcoin projects, like I said, Uniswap, Aave, Morpho Chainlink, many others.
Why now?
What changed and what's caused this pivot in coverage for you?
So there's essentially two things.
So it's clearly important for everything that Bitcoin does not go down.
And I think since I was on last time, we can conclude now that Bitcoin is not going down.
So I had called it earlier.
It was a little risky at the time, I think in June, when I started calling that we'd seen a low.
But then when about six weeks or so ago now, Scott Bessent came out and said that US Treasury would buy more back-end bonds.
It's not a massive number, but that for me is the signal that the cycle is officially over.
So every cycle we see this sort of either at the highs or the lows.
So at the high was the 1010 confirmation that we'd seen the high in Bitcoin last October.
And what Scott Besson announced six weeks or so ago for me says we've 100% seen the low.
And so now we can really start to broaden our focus.
So it's not only about the market beta.
i.e Bitcoin, but start thinking about where can we find alpha?
So that's, let's say, big picture point number one.
Big picture point number two is that during the downturn of the previous nine or 12 months, there had been a lot of building going on the background.
So I wrote a note probably six months or so ago now talking about Ethereum and therefore other things that have been built on Ethereum as actually quite similar.
to what happened when in 2021, when the tech bubble burst at that time.
And later on, Bezos reflected on the share price of Amazon, which at the time went from $113 down to $6.
And I referred to that example with my ETH note, because at the time Bezos said, well, my share price was collapsing, but all my internal metrics were going up.
And I think that's what we've just gone through in crypto land as well.
So you could see some of those metrics coming through.
And where those metrics are now going to play out is in the altcoin space.
And it's specifically the altcoins that are going to benefit from a tokenization revolution.
And so that's what I've been focused on.
And with my seat in Standard Chartered, I can see very clearly how the tokenization revolution is going to come out of TradFi because banks like ours are specifically focused on this today.
And so when you price that in, for a number of these tokens that have been ridiculously undervalued, and you're starting to see very direct measures like Roberthood Chain and what that's meant for Arbitron and Uniswap, for example, right?
You can easily foresee a future where the relatively large, relatively long toothed protocols and later in Arbitron's case, that get fairly direct pass through of value or value capture should win.
And so that's the ones that I've been writing on recently.
And obviously you listed a few of those already.
Jeff, that's really helpful context.
And I think it makes a lot of sense on the change here.
You also wrote recently that crypto is moving from a world where revenue is not relevant to one where revenue is critical.
And I'm curious if you could expand on that and how that factors into how you value altcoins in your research.
Yes.
So I'll go back to the Amazon example before.
I think it's very easy crossover here, right?
In the early days after Amazon listed, they were losing a lot of money.
Bezos would get a lot of pressure from journalists who, quite frankly, didn't foresee his medium-term world-dominant future, right?
So they would say, hang on, you're losing millions of dollars a week.
How long do you think you can keep this going for?
And quite frankly, crypto has been in that bucket for the past 10 years or so.
There's been lots of projects.
Most of them, quite frankly, didn't do that much.
And it's only been when we finally started to see digital assets or blockchain technology more broadly, replace some stuff from the real world, which is really what stablecoins kicked off 18 months or so ago, particularly in the US with Genius Act and other, you started to think, well, actually, if we're going to replace stuff from the real world and today TradFi is participating, we probably want to transition from a world where revenue and data.
and transparency is mostly irrelevant because the large investors are VC funds that would like sort of blue sky or white sky medium term opportunity set, but they don't need data or revenue today to one where we're now swapping over to wanting to have revenue, wanting to have analysts, wanting to be able to build DCF models, which is what I've been doing in the past six months.
And so we're kind of normalising, at least from my perspective, They're going from revenue doesn't matter to at some stage in the future.
We're not there yet, of course, but at some stage in the future, revenue will be the only thing that matters in the same way it is, quite frankly, now for the MAG7 stocks, right?
Which was not the case in my Amazon example a couple of decades ago.
I just want to pause for a quick second to remind you all that the crypto bull market is back.
I have been deploying capital into altcoins that I think are going to do very well this bull market.
Some of them are already up over 2x from where I entered.
So if you want to see what's in my portfolio, what's on my watch list, and have access to me in Discord to ask questions 24 hours a day, join Milkroad Pro now.
The link is in the description.
It's just a dollar.
I'll see you there.
Gotcha.
So the market is evolving.
The way these assets are valued is evolving.
So that'll make sense there too.
Before we get into some of these specific assets and price targets, I want to talk about sort of the macro things driving this.
For you in your research, as I understand it, there's two big bets that drive the thesis on all of these things.
The first is tokenization and tokenized assets getting to around $4 trillion.
And then the growth of DeFi along with that, which you're wildly bullish on.
But talk to me about these two big bets that you're making.
here and just what your forecasted growth is on those.
100%.
So about 18 months ago, I put out a forecast for stablecoins that they'd get to $2 trillion.
And that's the number that Scott Bessett uses, US Treasury picked up that forecast in 2025.
And although we stalled in stablecoin uptake in the last two months or so, I think medium term, we'll still go to a very, very large number, well north of a trillion, where $2 trillion, I think is still in play.
It makes some sense given what.
crypto assets have done that stablecoin growth has stalled, but transactions have continued to expand in the last 12 months.
So I think medium term, we can still get to a very large number of stablecoins outstanding.
And then on tokenization of everything else, I also have a forecast that we go to $2 trillion.
And quite frankly, that number looks too low to me, not too high, even though today we're only about $40 billion.
And the components of that are primarily the first one that started was tokenized T-bills, so tokenized money market funds.
And I can tell you from the direct conversations I've had with US corporate treasurers, of which I've had more than 100 this calendar year, when I tell them about stablecoins, they're excited to get capital efficiency.
I move money more efficiently from the US to countries that look like Uzbekistan or equivalent, where in old fashioned rails, it could have taken a week or so for the cash to arrive.
So that's interesting for them.
When I then tell them that Franklin Templeton's Benji product can give them intraday yield, they get even more excited.
So they can be capital efficient with stables and then they can get more yield using tokenized money market funds.
So for me, the link between stablecoin transaction growth and tokenized money market funds is very linear.
And if you think about over the next few years, a chunk of transactions going on chain.
and I think maybe only 10%, something like that, of transactions are on chain in the next few years, then you need to have 10% of the money market fund on chain as well because in my corporate treasury example, they'll want to use stable coins and rather than going back into slow money market funds off chain, they'll want to keep cash on chain.
And 10% of the money market fund space in the US would give you 750 billion just in that category.
So that for me seems, let's say, relatively linear.
Even more excitingly, quite frankly, has been the equity story recently.
So of course, there's been Robin Hood and a few other projects on equities.
But then a couple of weeks ago, after Clarity Act cloture vote failed on the Tuesday, on the Thursday, SEC came out and gave this five-year exemption for tokenized equities in the US.
So that, for me, opens the floodgates to a massive market cap potential.
US equities are $60 trillion.
So you only need a very small amount of that to be tokenized to get a massive increase in tokenized equities.
And that for me could be another trillion dollars on its own in the next couple of years.
Then you have tokenized commodities, et cetera.
So again, quite frankly, the only feedback I get on my tokenized real world asset piece, which I've put out a forecast of $2 trillion, is that that number is too low, not too high.
and things like the SEC exemption, I think, solidify that for now.
So that's one bucket.
Tokenize everything, very exciting space.
And the other bucket is today, if you have a look on the likes of DeFi Llama, you can see what percentage of assets that are on-chain are actively used in DeFi.
And that percentage is very small, depending on which asset class you look like.
It's basically always single digits.
So I think over time, And I've had some conversations in TradFi that say, well, if there's a tokenized money market fund that pays 4%, why not make that 7% where the extra 3% comes from Arve or Morpho, for example, right?
So if I've had some conversations like that, then I think it's fair to say over time, more of those assets will make their way into DeFi.
And so instead of single digits, you get to 30% or plus, right?
And so if you add the two together, the amount of assets that on-chain and deployed in DeFi has a massive multiple, more like 50x over the next few years being the base or perhaps as high as hundreds of times, depending on that second percentage going into DeFi.
And so for me, that means you want to then start thinking about the DeFi protocols or later in Arbitrum's case that perhaps could capture a chunk of that flow.
And most of those projects, which is the next exciting part, can scale in a very linear fashion because of how blockchain is set up.
So they can scale much more directly than off-chain businesses would otherwise do.
Jeff, this all just makes ridiculously good sense to me, but thank you for laying that out in such clear detail.
I want to talk about some of these altcoins now.
You put a $6.50 year-end target on Uniswap back in June during the depth of the bear market.
It was under $3 at the time you made that prediction.
It's already blown way past that.
In August, you wrote, quote, and I love this line, I fear that my 2030 target of $100 on Uniswap is too low.
I'd love to hear your updated thoughts on Uniswap here and how...
that token, that project sits in this thesis for you.
100%.
So Uniswap was the first of these deep dives that I did, and that was for a few reasons.
So it has extremely direct value capture.
So last December, Uniswap finally, there'd obviously been discussion about this for a while, but finally turned on the fee switch.
First few months, a lot happened.
But then when we got into the summer, and particularly with the Robinhood chain implications for buyback and burn, and people can see this on dashboards online, the amount of buyback and burn has increased dramatically.
So I think about buyback and burn in terms of what percentage of tokens could be burnt in an annualized sense and have that be sustainable.
So if Uniswap today was still below $3 rather than above $9, then you'd be burning between 12% and 15% annualized every month.
So the only way to square this circle is for the token price to go up because clearly it'd be unsustainable to burn 12 to 15% of a project like Uniswap, which is a quality project that's been around for the best part of 10 years.
So token price must go up.
And so that's how I'm thinking about the value capture thesis is if something means, and you have in Uniswap's case, a fee switch turned on, so you have the burn active.
What will the current burn project mean for annualised burn?
It seems because Unisop's burn has stabilised around the 3% to 4% now, i.e.
price tripled, so instead of being 12%, it's down to 4% roughly.
It seems that that's the market equilibrium.
Now, this is a relatively unproven thesis given I have literally one data point here, but I think that's a reasonable thing to think about going forward for the others as well.
The other projects I've written about are slightly less direct, but I think over time you can feed them into the same sort of logic.
So if you get more activity, you burn tokens today in Uniswap's case or perhaps later in some of the other projects, you can start to think about that in a sort of DCF measure or how many tokens in a percentage would it be reasonable to burn at any given moment.
Okay.
I want to just ask a question around your view on Uniswap's moat between now and 2030, because obviously a lot of this volume has come from the Robinhood chain, but there's always a risk that another DEX could come and get that volume, that market share.
How do you think about the value proposition in terms of the moat that Uniswap has to defend between now and 2030 to sort of get to that $100 token valuation target?
For sure.
So the good point here is that liquidity tends to be get liquidity.
And so Uniswap's starting point, and again, being around for the best part of a decade, meant that it really is their market to lose now.
So over the years, obviously, you've had a lot of competition come, the most recent being Aerodrome on base.
Now, in most of those examples, including the Aerodrome one, they paid users to switch.
And the key, when you look back in history, is that when the pain to switch stops, people tend to take their assets back to Uniswap.
So that to me is a very, very strong sign that Uniswap is more likely to be the medium term winner.
And it's probable that you will have one large winner in each category, where for me indexes, Uniswap looks the most likely.
The second is when you think about tokenized equities and tokenized RWA's more broadly coming on chain and going into liquidity pools like Uniswap, there's a relatively simple story here that TradFi can't quite do themselves but would like assistance in.
So think about correlated pairs.
So over time you'll probably end up with the likes of oil versus oil companies.
You today have QQQ versus Nvidia.
So those kind of correlated pairs that don't need to go back to dollars in the way TradFi do are very, very suited to the style of decentralized exchange that Uniswap is, especially under a chunk of the upgrades over the past 12 months or so.
So again, I think you have this confluence of factors for Uniswap, the 10-year history, roughly, the liquidity begetting liquidity, the upgrade at the right time when tokenized assets come on chain to enable things like those correlated pairs.
and you're already seeing quite a lot of that, I would say that people should have a look on the Uniswap website and see exactly where the pairs are going.
It actually sometimes tells you interesting things about what's happening in market detail as well.
So for me, that's probably enough, as well as the token burn back program that's been kicking in in the past few months to see Uniswap continue to dominate that space for the next few years.
Again, that $100 target may well be too low, given we've already blown well through my previously very bullish 2026 target.
Thank you for that context.
And I think that summarizes, well, there's a lot of things working in their favor and it's sort of their space to lose there.
I want to ask about another project.
Aave was one of your boldest calls.
I think you put a target of $3,500 on Aave by 2030.
I think it's trading around.
I could be a little bit out of date here, but around 150, 170, somewhere in that neighborhood here.
It's been fluctuating a little bit this week.
But you made this prediction, this bold call on Aave, just a very short period after there was a $300 million exploit on the protocol.
Obviously, KelpDAO was where the exploit happened, not on Aave directly.
But talk to me about this outlook on Aave.
Where's this valuation coming from?
And why are you so bullish on this protocol, despite the hack?
Yeah, so the interesting thing about the hack for me was the response afterwards, both from the community, so the raising of $300 million roughly in primarily an ETH, which reminded me of some of the things that has happened in traditional financial institutions in the past, i.e.
in that case, the major players in the market that was affected, or let's say it would have been affected indirectly.
if Aave continued to be hampered, basically came together because there was no regulation.
And so it felt to me like, let's say, a maturing moment for the industry or asset class more broadly that I have seen in TradFi previously.
So for me, that was positive news number one.
Positive news number two was that afterwards, Stani adjusted some of the risk metrics, which was super, super bullish for me.
And because of those two things, it only took a couple of weeks for liquidity to come back on Aave, which was a very, very positive sign.
And given, again, the longevity of the project, because sitting in a tradfire seat, I think longevity matters, actually issues like the Calpdow incident in some ways make the post-incident reality safer for money that's going in.
So I actually didn't mind seeing the response.
I'm sure for those in the weeds at ABE, they were terrible few weeks around that incident in April, May.
But actually, they've bounced back pretty well.
And it's fair to say that my forecast in the near term for ABE is also starting to look a little bit too low.
So I've got $180 by the end of this calendar year.
And we're at 170 today.
So obviously having had quite a good day today.
So for me, actually, again, like the Uniswap story, Aave, I think, will dominate or continue to dominate despite that CalpDow issue in April.
Let's call it the on-chain banking space.
So at the peak last year, Aave, when ranked against other US banks, would have been about the 35th largest bank.
Someone set up a website to do exactly that ranking.
Obviously, it's lower now given the market cap decline.
It's a large project that's been around a long time that dominates essentially an on-chain bank space.
And again, in that space, for me, it's likely you'll have one winner.
And Aave is a unique beast and very different to Morpho that I'm also...
bullish on for different reasons.
Well, let's talk about Morpho.
You started covering Morpho with a $60 price target.
That has lagged some of your other calls this year so far.
Talk to me about this lending market.
Do you think this is going to be winner take most, winner take all?
And do you think that there's a need to have an Aave and a Morpho?
Can they function together?
Does one dominate the other?
What's your outlook on that?
So I see them as quite different animals.
It's only really that this industry is so nascent that we really like.
So there's a lot of commentary comparing Aave and Morpho.
If this is TradFi, I would say Aave is a bank.
So I would standard chartered banks make money by getting in deposits and lending at a higher interest rate.
Right.
So essentially exactly what Aave does.
Yeah.
In the most basic form of banking.
Morpho is more like a platform or let's say a platform for asset managers.
Yeah.
So kind of like a BlackRock.
BlackRock do slightly different things, but let's just say Morpho is BlackRock and are very standard charted in their most simple form.
So in that case, I would say StanChart and BlackRock are very, very different animals.
Both can be successful.
In fact, both can cooperate in various ways.
So there are some crossovers, but I think the Vault product, and Morpho in particular, kind of differentiates them significantly.
from the, let's say, individual lending market.
And actually, when you exclude the, when you just look at the lending product in Morpho and compare that to Aave, Aave is way bigger, right?
So just in that specific narrow piece.
But actually on Morpho, it's the vault product, which is much more interesting to me.
Another interesting point about Morpho is the investor base is different.
So Aave is mostly driven by retail flow.
And so it tends to be a much higher beta version of Ethereum is sort of how things go.
And then you have some of the detail in the weeds of what's happening at Aave as well.
Morpho is mostly held by VC funds and they tend to be less like, but they have deeper pockets, if you like.
And so the token tends to be both less volatile and less liquid.
And so because of that on the top side, it's probably less volatile on the top side in the last little while.
I think medium term, I would put Morpho in the very likely to win that on-chain asset management platform is how I think about Morpho.
Okay.
That's a helpful distinction between those two there.
And, you know, I think...
a lot of these things can do very well together.
So I appreciate the context on that and the subtlety.
Speaking of banking, you have called Sky Protocol DeFi's Federal Bank.
And I would love to hear your updated thoughts on Sky and what that means exactly.
What is DeFi's Federal Bank and why does Sky fit that label?
Yeah.
So for those that haven't looked at Sky before, obviously most people probably know it's the old MakerDAO, right?
Since rebranding roughly two years ago now from MakerDAO to Sky, what's happening underneath or in the detail is a little complicated.
So I'm going to have to go slow on this part.
Sky itself sits in the center and then they have outsourced the equivalent of wholesale banks.
So if you think about it in the real world, we have the Federal Reserve in the US.
They make rules.
for banks to abide by.
They print money and they put money into the system.
Sky makes rules that these outsourced companies, and there's a few that are sizeable so far, need to stand by.
And they print the money, which in this case is USDS.
They still have the old DAI from the MakerDAO days as well.
But the point here is that they incentivise the banks or banks equivalent in the system to increase the amount of usds outstanding yeah so the the banks borrow usds at the equivalent of a wholesale funding rate which is exactly what happens in the real world from in this case the central sky which is sort of like borrowing from the fed and then they put it out into yield products and other yeah so over time it does kind of look like a federal bank system Now the key for Sky is that you end up with more USDS over time.
That's how Sky makes money.
And I think the stablecoin space I'm very bullish on and the yield bearing stablecoin space, which is where Sky sits, I think over time will be even more bullish, right?
Over time, yield bearing stables will outpace non-yield bearing stables like USDC and USDT in terms of market cap.
If you're bullish on stablecoins, you must be bullish.
On Sky, there's also a technical point here, which means that you today pass through a certain percentage of value to token holders.
In Sky's case, it's partly with token buyback and burn, but it's mostly via staking yield.
In eight or nine months from now, they will have built up enough stockpile of returns over time or excess cash.
that amount will double in terms of pass-through.
So in Sky's case, if the token price doesn't go up, that would imply that the staking yield doubles.
And so then you'll probably get individuals buying the token for the staking yield.
So again, apologies, it's a relatively complex story where if you get more USDS, so if you're bullish on stable coins, you probably think you will, and over time, you'll be able to pass through double the amount of value to token holders.
Yesterday on this channel, I interviewed Greg Fibus, who is the head of capital markets at Sky, and Max Barreis, who's the head of lending at Galaxy, about a $100 million purchase of SUSDS that Galaxy did.
So if anybody missed that, I want more detail on this admittedly complicated but important part of DeFi's banking industry that's growing.
Definitely check out that episode.
Jeff, I want to just get a little more clarity on the last part of that you talked about, because I had another Greg, Greg Vivaretto from Tag Capital.
on the channel last week, and he talked about how he's very bullish on Sky, but they had one of their best quarters ever, $100 million of revenue, but only a few million is going to token buybacks.
Can you talk to me a little bit about your outlook on the Sky token, how that captures value, what are the sources there, and just the outlook on that for you?
Yes.
So in value pass-through, I guess there's a few ways to do it.
The two simple ways are...
token buyback and burn, so my Uniswap example, that's all they're doing.
The second is to have staking yield.
Now, different projects have chosen different versions of that story.
In Sky's case, they've actually chosen it to be mostly in staking yield.
So it's the same cash that's going to get passed on.
But instead of being primarily for token buyback and burn, the vast majority goes to staking yield.
So I guess it's the same as if you think about an off-chain corporate, they could either buy back their own equity or they could pay large dividends.
In Sky's case, essentially, they're programmed to pay large dividends.
So if they make more money, you get a very large dividend.
And in off-chain land, if your dividend percentage goes up massively, probably people will buy the token.
And over time, the percentage will therefore fall.
And so I think in Sky, that's the way to view.
the pass through is kind of like a dividend stock.
That's essentially how they've set it up with a little bit of buyback on the edge.
So it's just a different model, slightly more complicated.
It's not clear, I guess, yet which model is going to dominate in blockchain space.
Probably like in equities off-chain, you'll end up with a combination.
So you'll have some that do nothing.
They just keep everything in retained earnings.
So think about Amazon early days.
That's exactly what Bezos would have said.
You'll have some that are high dividend stocks, utilities and other kind of fall into that category.
And then you might have some that are high buyback stocks, which we've seen a lot of buybacks in equity land in the past few years.
So different horses for...
for different courses if you like once again jeff very helpful on that we talked about a lot of these defy protocols lending protocols and and decentralized exchanges let's talk about the rails that underlie them because you started writing coverage on these as well and i'd like to start with arbitram which i think is your newest call of arbitram going to ten dollars by 2030 which is about a 70x which is um let's just say bullish, but it's already up over 60% since you published that.
Talk to me about Arbitrum and the updated outlook for this.
And again, does it continue to capture this value and what's the outlook there for you?
Yeah, I think the Arbitrum multiple was the largest one of all of these series.
And that's for a few reasons, really.
So the very direct point for Arbitrum is, and if anyone looks at Robinhood chain fees, which sort of did that, right?
They've come off a little bit.
Recently, part of it was due to blockages on the Robinhood chain in terms of the peak.
But that's meant that in the month of September, the total revenue earned by Arbitrum will be something like four or five million dollars.
I haven't checked the last couple of days, but in that range.
Whereas last month, it was one million dollars.
So the one change, Robinhood chain, has multiplied the revenue by five times.
Now, over time, I think it's reasonable to say that what Robinhood chain is doing today is small fry, right?
This is only a very, very small part of the tokenized equity landscape that is likely to build out, which will either happen on Robinhood chain and Arbitrum gets exactly 10% of net revenue on Robinhood chain and they run at a 90% profit margin.
So essentially 10% of everything that happens in Robinhood chain, Arbitrum receives because they helped with the tech stack.
If you think about new Robinhoods coming online, which I think will be inevitable in the next couple of years, so both Robinhood themselves doing more on-chain, and then secondarily, their competitors wanting to come on-chain as well, be they in equities or in other asset classes, they'll probably say, hey, we saw that Robinhood chain asked Arbitrum for help, and that seems to have worked out pretty well for them.
And so they'll probably turn around and do exactly the same thing.
So for me, if you've got...
One Robinhood today, which is small, Robinhood becomes larger over time.
And then in a year or so, you'll probably have four or five of Robinhood's brothers on exactly the same setup.
And so the amount of fees getting paid to Arbitrum, instead of four or $5 million a month, could easily be $40 or $50 million a month in a year or two from now.
And so when you think about what that means in terms of value capture, and today Arbitrum just keeps the, revenue.
They don't have a token buyback and burn.
So it looks very similar to, quite frankly, what Aave does today after they turned off their buyback program in April.
The amount of value capture is massive.
That could come through an Arbitrum.
So that's point number one.
There's very, very direct implications here for tokenized equities and tokenized other stuff coming on chain and value being captured by Arbitrum.
The second is that today, And actually, pretty much always, the layer twos have always been massively undervalued compared to layer ones.
And I think that will also change because between you and I, Arbitrum and Ethereum basically do the same thing, like in terms of what they do for users.
Ethereum is, of course, where the value ultimately lies.
I.e.
Ethereum has a security layer as well.
But if you're an end user.
and you just want to get something on chain and recorded, you could care less if it's on Arbitrum or Ethereum, right?
Not least because Arbitrum is much cheaper and you can get access to the team if you're like yourself, John, based in Manhattan.
So over time, and when you look at multiples, the best multiple I like to look at is market cap divided by the fees paid to the protocols that are built on the layer ones or layer two in this case.
Now the multiple for Ethereum, Solana and Avalanche are all basically the same when you do that.
And they have been relatively similar over the last couple of years, which is great.
The multiple for Arbitrum is about 30 times less than it is for the layer ones.
So if you get direct value capture plus an upgrade in the multiple, which is the equivalent of an upgrade in a PE multiple in equity land, then actually my target of 70x on publication starts to come into play.
So I'm super bullish Arbitrum and I think for me it's one of the ones that people have almost entirely missed over the past couple of years.
You know, one of the weird things about crypto is that the longer you're in it, the more accounts you seem to end up with.
You buy in one place, trade somewhere else, earn yield somewhere else, and if you actually need capital, you end up having to sell something that you probably wanted to keep.
That's why we at Milk Road are partnering with Nexo.
These guys keep the whole thing under one account.
You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it.
All in one spot, all in one account, all on Nexo.
So if you need liquidity, but you don't want to give up your position, or you're already holding crypto and you want to be able to...
more with it i think nexo is worth your time we love working with them i think you will too tell them milk road sent you i think one of the questions on the arb token specifically has been this value capture question because as you said in your answer the the revenue from the robin who chain i believe is going to the the arbitram dow treasury not directly to token buybacks um what's your thought on that and how does that revenue and and value capture that arbitram as a network is is creating come back to the token what's your outlook on that Arbitrum on the token buyback or revenue capture feels a little bit like Uniswap, let's say 18 months or two years ago, right?
So there had been discussions about uni turning on the fee switch and token buyback and burn afterwards.
I can tell you there are some discussions today about whether Arbitrum should do the same thing.
So I personally think they should do that at some stage or even just getting a plan out there to do something in that space for me would be very constructive.
mostly because investors understand what buyback and burn means.
And so they can price it into models like the one that I mentioned before in terms of sustainable buyback and burn for Uniswap.
Today, Arbitrum's view would be, well, we're still in land grab space.
So they're taking in money and using it to reinvest, which I think is fantastic as well.
But I suspect over time they can probably do both.
So again, let's say 18 months or two years ago in...
in Uniswap sense where they turned on the buyback and burn last December.
Okay, so that'll be an evolving conversation.
We'll have to keep an eye on that.
The other rail that underlies all of this that you've written about is Chainlink, and you've set a...
target of $200 by 2030 on Chainlink tokens.
You've called it the only end-to-end platform for tokenized assets, and you think this makes it very attractive to institutions.
Talk to me about the Chainlink thesis here, and why is this such an attractive platform for tokenizing assets?
Absolutely.
So if I describe Sky before as complicated, I'd say Chainlink is as complicated, but from a completely different perspective.
So Chainlink's core business is to bring data on chain.
So blockchains are great.
but they're not great at getting data.
So I've spent decades looking at things like Bloomberg terminals in my old jobs, but getting that data from a Bloomberg onto blockchains is difficult.
Now, that has information from anything you would like to see in financial market space.
Now, what oracles do, which are the backbone of Chainlink, is to securely bring that data on chain so that it can't be faked.
is essentially right.
So if in on-chain smart contracts you say if price goes here you'll get this payout that data that tells you where the price is has to be reliable.
And so that's the essential monopoly that Chainlink has is in bringing data on change securely.
And because of that they dominate that space they have very tight relationships with TradFi as TradFi starts to come on chain as well.
The second business line is interoperability.
And just the other day, they put out what is called CCIP version 2.0, which was their interoperability example, which means that if you have data on one chain, you want to move to another one.
Again, they'll do that securely.
And they just updated that tech just the other day.
So people have a look at that after.
That's essentially what Chainlink does.
Now, the story here is that if you're getting more information on chain, So more need for data and more TradFi participants on chain that really need the data to be reliable and to be able to move things around when you're on one chain to another.
That's the space that Chainlink has an almost impregnable moat is the way to think about it because they've dominated that space for such a long time.
So value capture is much more indirect.
You don't really know in terms of all the throughput that's coming through Chainlink.
There's not great data out there on most things.
About 12 months ago, they did start up a stockpile of cash, if you like.
So they take some of their fees and put it into their token LINK and hold it in that.
Over time, they've got something like $100 million in that today.
Actually, that number is possibly too low given what LINK price has been doing this week.
But in that range, in the hundreds of millions of dollars of LINK that they've essentially taken off market and holding as a stockpile to be used down the track.
in whatever form they see.
So a complex animal that is, let's say, in all the weeds in the background of moving data around both between chains and getting information on chain as well.
Okay, yeah, and I think that's...
Pretty well understood.
It's essential technology for the whole industry.
And I love that line of nearly impregnable moat for Chainlink.
So there's definitely a thesis there.
I want to talk about some of the major caps here at the end of this conversation.
And I want to start with Ethereum.
Most of the projects, most of the DeFi protocols that we've talked about in this conversation are native to Ethereum.
And I'm curious for an updated target for you on Ethereum and how you think Ethereum captures value from all of this.
of this we've just talked about in this conversation so far.
Yeah, for sure.
So pretty much everything that we've discussed is built on Ethereum.
And it makes sense that it is because as TradFi comes and arrives on chain, they want to have the sort of old fashioned trusted protocols, right?
And also those that are large enough that liquidity can beget liquidity.
So again, it's logical that most of these are ETH native.
Now, the value capture story for Ethereum is obviously extremely indirect.
So more activity on chain is great.
It should mean you end up needing more people, more people need to buy ETH to settle transactions.
But that path through is quite indirect.
And it's also quite indirect by nature in terms of how the Ethereum ecosystem has increased throughput capacity over time with the blobs and other things, right?
And so again, the parser is relatively indirect compared to what it is on some of the protocols that we have been talking about.
But this should all be an ETH positive story, yes.
The end of this year, I have a target of $4,000.
I think that looks well in hand now.
And by the end of 2030, $40,000.
So it's a ETH outperforming BTC.
Medium term, I guess, is the story that people should be having as a takeaway here, which is as activity increases on chain, that's probably ETH positive.
Certainly all the protocols we've discussed are primarily based on Ethereum.
And so over time, that value capture, even though it is indirect, should see the token price go higher.
And so ETH BTC, which is now just above 3%, I have going back up to 8% by 2030, which is roughly where it was.
in the 2021 DeFi summer.
It's nice to talk to somebody who is at least as bullish as I am on Ethereum.
I want to ask about Bitcoin here as well.
You have a target for 100k on Bitcoin by the end of the year.
We're three months away from that.
We seem to be tracking much closer to that than we were in June when we were initially making some of these year-end targets.
What is your outlook on Bitcoin for the rest of this year here?
And do you think we'll be over or under 100k now that we're much closer to it than we were just a few weeks ago?
I think 100 looks pretty good actually.
I'm quite happy with that forecast for the moment.
So it tends to go in fits and spurts.
I mean, after US Treasury said they'd buy more back-end debt six weeks or so ago, you saw 15k upside very, very quickly.
I think we're now used to seeing that sort of price action in Bitcoin.
It sort of jumps and then goes sideways for a while.
So maybe it tracks sideways for a little bit just now.
obviously next week we will have the 12 months past the all-time high from october 6 last year so those that are very focused on the four-year cycle theory which is you'll go down for 12 months and then up for the next three years will probably use october 6 as a as a buying opportunity which i think is sensible the disappointment on clarity act a week or so ago a couple of weeks ago now was also probably a very good buying opportunity so i'd say you want to be buying into things that look logical october 6 maybe one any term in any uh at some stage hopefully we'll get some more geopolitical stability perhaps this comes after midterms now in the us but if we could get some positivity out of the middle east maybe that would see oil prices lower and therefore back-end bond yields lower that would probably help bitcoin as well so looking for catalysts like that i guess is one way to do it or just stay invested in wait and see the 100k by christmas you are the global head of digital asset research at standard charter you have put out a lot of really fantastic research reports on a lot of different altcoins in the space now i'm curious if there is anything you want to share about what you're looking at next what you're researching next could be specific project or just a sector in digital assets what's what's next on the horizon in terms of your research work i i continue to want to go deeper into my broader thesis which is tokenization revolution and finding winners in the space yeah so We've spoken about potential winners here as the on-chain bank, on-chain asset management platform and others.
Yeah, so layer twos, et cetera.
So some of the weeds like things in the weed like Chainlink.
So I continue to look for other projects.
Now, there aren't very sizable ones in some of the other spaces, but that's where I'd be seeking either yield plays or derivatives on chain.
So there's still a number of other components to be built out.
in terms of the broader winner space.
And I suspect over time, that's where I'll continue to go.
I'll probably also give more of an update on stable coins, given that was the original thesis here, like how that's playing out, for example.
Will you continue to have the dominance of the large two, or will there be more space for other stable coin projects like Sky or Athena to come through?
Jeff, this has been a wonderful conversation.
I always love having an opportunity to talk to you because I learned so much and I think that our audience does as well.
We've talked about a bull thesis on a number of different things, right?
On Bitcoin, on DeFi, on Ethereum, Arbitrum.
We've covered a lot of ground in this.
Do you have one thing that you think you would say is your highest conviction play?
And it could be something as general as just tokenization or it could be something as specific as Ethereum outperforming Bitcoin.
You've made a lot of calls in this.
Where do you think you have the highest conviction?
And just what would you say in answer to that question?
Honestly, in terms of the tokenization thesis, that is 100% locked in.
The technology has left the gate and TradFi organizations like Standard Chartered and others are literally arriving tomorrow.
So if anyone's thinking tokenization is not going to happen, forget it.
Start picking winners.
Just take a...
medium term view on the ones that we've listed, Uniswap, Aave, Morpho, Arbitrum are probably my top four.
Jeff Kendrick, Global Head of Digital Asset Research at Standard Charter, one of my favorite guests, one of the guys I watched very closely in the space.
If you're not watching Jeff's work, I highly recommend you check him out.
He's one of the best there is.
Jeff, where can we send people to find more of you and your work online?
You can either have a look on our Standard Charter website or otherwise people can always find me on LinkedIn as well.
Jeff, thank you so much for being on Milk Road Crypto.
I'm really looking forward to catching up again as we see how all this plays out.
Fantastic.
Thanks, John.
And thank you all for joining us.
I hope you all learned something today.
This is a fun one.
I've been looking forward to this episode for a while.
So I can't wait to put this out and see what everybody thinks.
But until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Crypto.
Thanks for being here, everybody.
Bye.
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