Exploring Crypto with Thomas Lee: Insights from Fundstrat and Bitmine
Thomas Lee, Chief Executive Officer of Fundstrat and Chairman of Bitmine, joins theCUBE at the New York Stock Exchange Wired to discuss the evolving landscape of cryptocurrency. With an extensive background in macroeconomics and equities, Lee delves into the performance of Bitmine, noting its remarkable growth in market capitalization and revenue within just two weeks. This interview, hosted by John Furrier of SiliconANGLE Media, offers a rare opportunity to gain insights from a leading authority in finance and crypto.
The video begins with Lee sharing expertise on the transformation of the crypto space, highlighting the growth of Bitmine and its listing on the New York Stock Exchange. Key discussion points include the rapid adoption of cryptocurrencies such as Bitcoin and Ethereum, the emergence of stablecoins, and the growing interest from institutional investors. Lee addresses how the crypto sector shapes the future of financial markets, discussing both challenges and opportunities.
Viewers gain valuable insights about the importance of recognizing the regulatory landscape and the role of stablecoins in the broader financial system. According to Lee, Ethereum has emerged as a major player, especially with the rise of tokenization and blockchain's integration into financial services. The conversation also touches upon strategic moves by leading financial institutions to embrace crypto, which Lee asserts is crucial to their future success.
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Shawn Douglass, Amberdata
Exploring the Future of Cryptocurrency with Offchain Labs
Join us as we delve into an insightful discussion with Steven Goldfeder of Offchain Labs, analyzed by theCUBE Research. This segment, part of the Crypto Trailblazers series in collaboration with NYSE Wired, explores the innovative efforts redefining the Ethereum ecosystem and the broader blockchain landscape.
Steven Goldfeder, co-founder and CEO of Offchain Labs, discusses significant advancements and strategic insights in blockchain technology. In this engaging episode, hosted at theCUBE Studios, Goldfeder shares their expertise on how Offchain Labs contributes to the evolution of Ethereum through groundbreaking projects such as Prysm and Arbitrum, while discussing impacts on scalability and decentralization.
In this discussion, Goldfeder elaborates on key technological initiatives driven by Offchain Labs, focusing particularly on Arbitrum, the pioneering layer two scaling solution for Ethereum. They illustrate how innovative platforms such as Arbitrum significantly enhance Ethereum's capacity, efficiency, and scalability without compromising security or decentralization, closely analyzed by theCUBE Research.
Highlights include Goldfeder's insights on the future trajectory of Ethereum and its ecosystem, emphasizing the sustainable development model and potential for global business transformations. Goldfeder states that engaging with regulators now can ensure crypto's lasting impact, aligning with a US administration open to embracing this technological shift. This discussion offers valuable perspectives for developers, businesses, and policymakers navigating the crypto landscape.
Find more SiliconANGLE news and analysis https://siliconangle.com/. Follow theCUBE's wall-to-wall event coverage https://siliconangle.com/events/ Learn about the latest theCUBE events https://www.thecube.net/
00:00 - Intro 00:06 - Exploring Innovations in Blockchain: A Deep Dive into Offchain Labs and Arbitrum 05:23 - Ethereum's Scalability and the Layered Architecture 08:01 - Smart Contracts and Developer Innovations on Arbitrum 11:46 - The Impact of Arbitrum on Blockchain App Development 16:08 - Navigating the Future: Offchain Labs and Ethereum in a Regulatory Landscape
>> Welcome back everyone. I'm John Furrier, host of theCube at our NYSE Cube Studios here in New York City at the NYSE part of the Wired program. Of course, we've got our Palo Alto studio connecting Silicon Valley and Wall Street. Tech and money are converging at rapid scale as the US policy and entrepreneurial theaters come together and it's a great innovation. This is our Crypto Trailblazers program where the leaders come together. We've got Shawn Douglass, the co-founder and CEO of Amberdata, the leading provider of digital asset data and analytics, which I know you started years ago was a good call. IT operations would come into this world now more than ever. All the big companies that are getting in are IT. Shawn, great to see you. Your prediction, your bet came in. I mean, it's happening.
Shawn Douglass
>> Great to be here. It is happening. It's happening now. It's been a long road, but you know what? It's really, really exciting.>> You pay your dues. You take the scar tissue during the dark times and regulatory regime was not friendly. But again, I'm serious. When I first interviewed you, when you started the company, I remember you telling me the story that you're coming from a tech background, as a CTO, you saw the need for IT operations in large scale crypto, and that was needed. You did the work on the chain with the analytics and now as institutions come in, as convergence, hyperconvergence of TradFi and DeFi come together with the CLARITY Act and the GENIUS Act. That's a perfect storm. The market's blowing up beautifully right now. What's your take on the market? You see a lot of the data.
Shawn Douglass
>> I mean, you called it out exactly. There's a total convergence of traditional financial players and decentralized systems enabling really digital assets to scale, and I think there's a couple major thematic things that are happening. One is regulatory clarity is happening in the United States. The GENIUS Act is really enabling the adoption of stablecoins. That's going to be massively disruptive to traditional banking, massively disruptive to payments, and it's going to be much more trustworthy and transparent, and that's why I'm excited about it because we provide that operational telemetry into flows, velocity, volume, what's happening where, what's moving where, what should you do about it? Similarly, the CLARITY Act is about market infrastructure. Again, market infrastructure, people need to be able to trust, they need to be able to see what's going on. And the CLARITY Act is really looking to say, "Hey, crypto is trading around the world, around the clock, across all these different venues." We need to have a fair playing field where people can understand liquidity and there's good transparency. We're excited about that specifically as NASDAQ, they're an investor in Amberdata. We're early believer. We power NASDAQ's trade surveillance smarts. They just won the trade surveillance deal with CFTC and the SEC, so we're super excited about that. I think that it just really speaks to we saw this vision and we're enabling institutional adoption of digital assets as a new fabric.>> I mean, and all joking. IT, information technology is like a enterprise tech thing data centers. If you look at what's happening in the old school tech that translates the needs now that you guys did was you got to have that network management, know all the data so you can troubleshoot bugs, identify cybersecurity, but when you start getting into what's happening with this market that you're in, you just talked about the TradFi and DeFi convergence.
With stablecoins, now you have now global acceptance of things. This is going to be a very key thing. As you have stablecoins, that's going to put the dollar, that's going to change what the dollar externally. What's your take?
Shawn Douglass
>> Stablecoins are really critical infrastructure, this crypto native. So what did stablecoins initially do and what are they doing now and for the future? And they're pretty different. Initially, stablecoins were built to enable transactions between exchanges that didn't have ACH and wire rails, and people were using those for trading. So digital assets in generally are quoted in stablecoins. So probably 70% of the world, whether that's DeFi or centralized trading venues, they all quote their assets in stablecoins or US dollar or the local currency, et cetera. But stablecoins now have become payment rules and you're seeing billion dollar acquisitions by people like Stripe and PayPal leaning in and because they're realizing this, this is disrupted for the entire payments network and it really is enabling internet scale commerce. It's massive.>> Yeah. And this is why I want to tie in the Amberdata investment, the bet you made, the data observability, whatever your word you want to call it, watching everything, because the experts are saying, and all the entrepreneurs are saying, software will get to T zero.
Shawn Douglass
>> Yeah.>> So all this data needs to be available, and we know from the big data days, the more data you have, the better the analytics. So if stablecoins pushes the USD, pegs the US dollar, pushes transaction volumes up, everybody wins because the AI is going to come in so AI needs data.
Shawn Douglass
>> Yeah.>> So how do you see those connectors? Now TradFi and DeFi are converging, but AI and crypto industries are converging. I mean, that's a big deal and you're a visionary and a techie. What does the AI impact do to your market?
Shawn Douglass
>> Let me unpack that because you just asked a lot and I think that there's a ton to touch on there. So think about stablecoins as this connective tissue for the future of financial services that you don't have to have a three-day settlement. You're going to be able, the biggest market for US dollars is actually Euro dollars, which people don't know at large. So stablecoins enables dollarization of the world and it makes it happen in a frictionless, high-speed, transparent, trustful way. And that's happening on all these blockchain networks as well as on all these centralized exchanges and derivatives and options and structured products, and now tokenized assets and tokenized funds. They're all being wrapped into this and they're used to generate yield or what have you. As you mentioned, I'm a data guy. I'm an analytics guy. I'm like a hardcore infrastructure guy. We have 16 petabytes of data from 60 plus exchanges. We have a longer, deeper, richer data set than anybody. Full stop, bar none, we saw this before everybody, starting with->> You're data hoarders.
Shawn Douglass
>> We are data hoarders.>> The show, I'm going to do a show called Data Hoarders.
Shawn Douglass
>> The best playing album, man. It's been painful to hoard all that data. I feel like a turtle. Just collecting stuff on my back and the weight's weighing me down.>> AI's going to love you.
Shawn Douglass
>> Well, so we've been using AI for, and I hate AI washing things, but the reality is we've been using AI for three or four years for all of our anomaly detection, data quality, everything to make sure we're delivering high quality, high fidelity data because we're the backbone to everybody whose anybody in digital assets right now. We can't get it wrong. Right?>> Yeah.
Shawn Douglass
>> So we had to use AI and machine learning. We're in the process right now of just taking all of that data and turning that, and we've basically trained big, large language models, LLMs, on our data set, and we've indexed, cataloged, and are enabling ad hoc analytics. Coming up in very, very, very soon. We'll let you know before it comes out.>> Of course.
Shawn Douglass
>> But very soon, we are going to have the industry first leading market intelligence platform. Everybody else is just consuming data from us or some other vendor, so they don't really have the goods. What we've done is we've deconstructed all those time series, cataloged it, and we can enable, "Hey, I want to understand this stablecoin flows to treasury holdings, to what's happening on centralized exchanges, to what's happening in implied volatility and I want to be able to do ad hoc queries and share those with my coworkers."
Very similar to what a Bloomberg has or Refinitiv has, whether data and analytics product or SMP IHS market. We've built that. We're launching that imminently and it's the only platform and no one's going to be able to compete with us, full stop, because our whole platform is built in Databricks and it's all big data analytics, machine learning enable from day one.>> You did the upfront work. You grinded it out. I got to ask.
Shawn Douglass
>> We can replicate that.>> I got to ask because data will be your moat.
Shawn Douglass
>> It is.>> I think that's going to be key strategy. So Coinbase bought Deribit. What does that mean? What does that acquisition mean? Can you unpack that?
Shawn Douglass
>> I am enamored with the acquisition of Deribit by Coinbase. It is such a market. What do you call it? A market maker move, right? A kingmaker move, right? You have the biggest options, derivative exchange in the world for crypto. They did 70, probably north of 70% of the trading volume. And then post FTX failure, CME started to ramp up. They did a lot more trading, but really the venue where options and futures traded has been Deribit. Coinbase acquired that. I think it was $4.4 billion. It was ridiculous. It was a massive, massive->> Yeah. Strategic. They took it off the table.
Shawn Douglass
>> Yeah. I mean, CME has got to be shaking in their socks because once you start to tokenize other commodities and you put those on that derivatives and you have a settlement that's instantaneous and you have a global reach, you talk about paradigm shifts and massive market transformations. So we're excited. We power a lot of the analytics behind the front end of Deribit.>> And this is why I want to bring it up because obviously having analytics and telemetry, the things that you do for a living brings up the question I just asked Vivek from Etherealize, themes come up like, "Oh, yeah. A lot of derivatives." It reminds me of that movie, The Big Short. "CDO. But CDO and a CD..." But now that's got software in it. There's no hidden leverage what's open and transparent got data. But that brings up the derivative question.
Shawn Douglass
>> Yeah.>> As derivatives can be very powerful, but also very dangerous. What are you seeing in futures and options? Has that come on board yet? What are people doing with these areas?
Shawn Douglass
>> And so if you think about here, and we're sitting in the New York Stock Exchange above the options trading floor. Options trading and derivatives trading is tens of multiples greater than spot equities trading. In crypto->> In terms of volume?
Shawn Douglass
>> In terms of volume. And in last year, we had a 3X, 300% increase in options trading in crypto. That was all happening mostly offshore. Right?>> Yeah.
Shawn Douglass
>> Now that's all been effectively blessed by the acquisition->> So in-migration it's coming?
Shawn Douglass
>> It's coming in. It's going to 10, 20X from where we're at. Same with the perpetual futures. Perpetual futures are unique to digital assets. It used to be if you were trading corn on CME or crude oil, you had a January or February or March exploration. You had to roll those. And then every time you roll those, the only people that benefit is the exchange because they charge both sides of the trade twice, and they have all these fees and what have you. Perpetual futures were really created by BitMEX and Arthur Hayes group there, and they revolutionized that. So now you don't have to roll your contract. It's more efficient, that you get higher leverage, has better transparency.>> And that's because of the technology of blockchain or is what?
Shawn Douglass
>> Well, so it's multiple things. It's the ethos of a 24 by 7 global platform to trade and transact, settled across multiple blockchain networks. So it's robust. It's available. It's innovative. It's faster. TradFis, they're closed for the weekend. They go home at five o'clock on Friday and they don't come back until six o'clock on Sunday night. Crypto 24/7. If you want really the future of finance, it's going to be on these new rails.>> I mean, I think there's a productization wave coming in finance entrepreneurship that's never I've ever seen in my lifetime. Meaning, there never was a back office that would allow anything other than some sort of parasitic business model.
Shawn Douglass
>> Right.>> Like, "Hey, get some prepaid business cards and do some banking fringe stuff and crumbs."
Shawn Douglass
>> Yeah.>> You want a big piece of the cake, right now an entrepreneur can come in and say, whether they're young or working in an existing bank or wherever and say, "I can do that better and do it now." What's your take on the financial entrepreneurial culture?
Shawn Douglass
>> I think there's more opportunity right now than there's ever been because... So everybody says this, but digital assets is effectively the money of internet.>> Right. It's everything.
Shawn Douglass
>> Yeah. So it's digital rights ownership. It's money. It's the ability to transact. And it's also the ability to take something you own and use it as collateral, just like you talked about with CDOs. You're like, "Oh, I want to be able to take this know stablecoin and I want to be able to put it in Aave and I want to be able to get 8% deals.>> Get a treasury that has 10 zillion things in it like what's in it?
Shawn Douglass
>> And I can create my own structured products. But you know what's different than CDOs? CDOs, they used to wheel in a wheelbarrow full of contracts that nobody could read and figure out what the hell is the risk here? And it took them weeks to figure it out, and then they still didn't know. Then they had to sue each other to settle, and it just didn't work.>> Yeah.
Shawn Douglass
>> Now with what's happening with the composability of DeFi and why everybody is so excited about it, and this is why people like Uniswap and there's another exchange that just pass them in trading volume. They're literally doing more trading volume than Coinbase. It's because this composability, it's the ability to deposit assets. And that's our business, is we make all of these things that are happening around the world, we make it radically->> You're instrumenting the data.
Shawn Douglass
>> We're instrumenting.>> Yeah.
Shawn Douglass
>> We make it radically transparent. What are the incentives? What are the outcomes? Who benefited? How? Never before has finance been so transparent.>> Yeah.
Shawn Douglass
>> We're enabling it.>> I mean, you got a great... You're in a good spot. Congratulations. The market's spun and the direction of the growth is in the CLARITY Act. Just get some regulation, understand how to regulate. Of course, genius acts with stablecoins. I have to ask you about the convergence of DeFi and TradFi because it's a lot like our old tech experiences that we've been in the tech business of infrastructure, but it's also like the basic concept of, "Oh, it's a backend and a frontend."
Now in our old tech world, backend with servers, frontend was user interface. I think Web2 and Cloud makes that SaaS, and we all have mobile apps. I mean, the commentary here in the Crypto Trailblazer is basically that's not going to change.
Shawn Douglass
>> Right.>> The frontend will probably feel the same and be the same. Yeah. Maybe voice activation, maybe some agents, but to the consumer, it's going to be the same. But what's in the middle and the backend is going to change. That's where the decentralization. What's your reaction to that and what other commentary would you add to that?
Shawn Douglass
>> There's a good analogy there, right? Is that people's workflows and experiences and needs, they grow, but do they radically change? I don't know. People want to have exposure, they want to manage risks, they want to understand things, but right now they're constrained.>> I had one bank account, that'd be great.
Shawn Douglass
>> Yeah. Right? But if you had one bank account, but the problem today is you have people's private databases that you trust and you just hope it all works out. Where this is a different->> I want my own bank account that I'm the bank so I can stake and buy my house with my Ethereum.
Shawn Douglass
>> You can do that today.>> You could do that today. Okay.
Shawn Douglass
>> Right?>> Yeah. But this is where it's going.
Shawn Douglass
>> This is where it's going.>> I mean, the internet and the web that we lived through was an electronic revolution of information, that speed, so high-frequency trading, arbitrage, fast information, arbitrage, knowledge, get better. Now it's value.
Shawn Douglass
>> Yeah.>> It's a revolution in value because now you're increasing the speed of value. You store value, creation value, extraction.
Shawn Douglass
>> There is the ability->> Not information.
Shawn Douglass
>> Yeah. Exactly. The beauty of these blockchain networks is, it's shared public infrastructure that people participate in. They're incentivized. They secure the network. And then it was a low barrier to entry for someone to publish. Like we're financial. They claim, "Hey, we are TradFi plus DeFi today."
They just trade, I don't even know what. Billion plus dollars in their latest token sale and you couldn't do that years ago. And now what do they do with that? We will see. But there's really, really, really a strong case for why are these markets converging? So if you think about like why does BlackRock and Franklin Templeton and Fidelity and Apollo, why do they want to tokenize long duration funds? Well, they have a limited number of LPs that they can shill their product to, and they have a 30-year duration. They want to be able to slice those up and dice those up so they can put it in your 401k, or they want to be able to make it so their TAM is the world rather than New York City where the family offices are. They want to be able to change who are they're selling to, as well as to where they can do it and the size that they can do it? It's about distribution.>> Yeah.
Shawn Douglass
>> And this is just like the internet.>> Yeah.
Shawn Douglass
>> It's a distribution network like the internet did for information. This is doing for financial products and financial opportunities and the ability to create and innovate in this new world.>> The market's about to close. The options are hot behind us, can't really hear but that it's crazy.
Shawn Douglass
>> We love options and so->> Options, yeah, they love that. Close us out by talking about what's going on in your world. Obviously, pretty crazy right now. You got the data moat, you got the new product coming, you have the analytics.
Shawn Douglass
>> Yeah.>> You're the data platform for all the exchanges, all the telemetry. That's going to be gold for AI, gold for scale. What's your world right now?
Shawn Douglass
>> It's really the gold for the entire backbone of this massive, massive transformation in financial services, really whether they're front office trading, portfolio management, research. I just talked about trade surveillance with Nasdaq, who's our partner, back office, the regulators, most of the large regulators, they need to have data analytics and insights to adopt, to enable, to do their jobs, to embrace and to build businesses. We provide that core trusted data infrastructure, and that's not going to go away. And that, like you said, the moat here is we've been doing this for eight years. We have 16 petabytes of high quality, trustworthy data, and we deliver a service so people don't have to spend 50 million building out the infrastructure to do what we already do today better than anybody else.>> Well, congratulations. I know it's been quite a journey for everyone in the crypto industry that jumped in at the right time. Obviously, there's a little speed bump there with the last regime in the United States. Now the out-migration happened. Now the in-migration back to the US, global economy, stablecoins, genius at CLARITY Act. I hear that the bell's ringing, and we're going to wrap it up here. Shawn, great to see you.
Shawn Douglass
>> Thank you, John. Thank you.>> Shaw Douglass, the co-founder of the leading analytics platform for all of the digital assets. Very valuable opportunity. Obviously we can expand from that. Of course, we're doing our part to bring you all the data here on theCUBE. I'm John Furrier, your host. Thanks for watching.
>> Welcome back everyone. I'm John Furrier, host of theCube at our NYSE Cube Studios here in New York City at the NYSE part of the Wired program. Of course, we've got our Palo Alto studio connecting Silicon Valley and Wall Street. Tech and money are converging at rapid scale as the US policy and entrepreneurial theaters come together and it's a great innovation. This is our Crypto Trailblazers program where the leaders come together. We've got Shawn Douglass, the co-founder and CEO of Amberdata, the leading provider of digital asset data and analytics, which I know you started years ago was a good call. IT operations would come into this world now more than ever. All the big companies that are getting in are IT. Shawn, great to see you. Your prediction, your bet came in. I mean, it's happening.
Shawn Douglass
>> Great to be here. It is happening. It's happening now. It's been a long road, but you know what? It's really, really exciting.>> You pay your dues. You take the scar tissue during the dark times and regulatory regime was not friendly. But again, I'm serious. When I first interviewed you, when you started the company, I remember you telling me the story that you're coming from a tech background, as a CTO, you saw the need for IT operations in large scale crypto, and that was needed. You did the work on the chain with the analytics and now as institutions come in, as convergence, hyperconvergence of TradFi and DeFi come together with the CLARITY Act and the GENIUS Act. That's a perfect storm. The market's blowing up beautifully right now. What's your take on the market? You see a lot of the data.
Shawn Douglass
>> I mean, you called it out exactly. There's a total convergence of traditional financial players and decentralized systems enabling really digital assets to scale, and I think there's a couple major thematic things that are happening. One is regulatory clarity is happening in the United States. The GENIUS Act is really enabling the adoption of stablecoins. That's going to be massively disruptive to traditional banking, massively disruptive to payments, and it's going to be much more trustworthy and transparent, and that's why I'm excited about it because we provide that operational telemetry into flows, velocity, volume, what's happening where, what's moving where, what should you do about it? Similarly, the CLARITY Act is about market infrastructure. Again, market infrastructure, people need to be able to trust, they need to be able to see what's going on. And the CLARITY Act is really looking to say, "Hey, crypto is trading around the world, around the clock, across all these different venues." We need to have a fair playing field where people can understand liquidity and there's good transparency. We're excited about that specifically as NASDAQ, they're an investor in Amberdata. We're early believer. We power NASDAQ's trade surveillance smarts. They just won the trade surveillance deal with CFTC and the SEC, so we're super excited about that. I think that it just really speaks to we saw this vision and we're enabling institutional adoption of digital assets as a new fabric.>> I mean, and all joking. IT, information technology is like a enterprise tech thing data centers. If you look at what's happening in the old school tech that translates the needs now that you guys did was you got to have that network management, know all the data so you can troubleshoot bugs, identify cybersecurity, but when you start getting into what's happening with this market that you're in, you just talked about the TradFi and DeFi convergence.
With stablecoins, now you have now global acceptance of things. This is going to be a very key thing. As you have stablecoins, that's going to put the dollar, that's going to change what the dollar externally. What's your take?
Shawn Douglass
>> Stablecoins are really critical infrastructure, this crypto native. So what did stablecoins initially do and what are they doing now and for the future? And they're pretty different. Initially, stablecoins were built to enable transactions between exchanges that didn't have ACH and wire rails, and people were using those for trading. So digital assets in generally are quoted in stablecoins. So probably 70% of the world, whether that's DeFi or centralized trading venues, they all quote their assets in stablecoins or US dollar or the local currency, et cetera. But stablecoins now have become payment rules and you're seeing billion dollar acquisitions by people like Stripe and PayPal leaning in and because they're realizing this, this is disrupted for the entire payments network and it really is enabling internet scale commerce. It's massive.>> Yeah. And this is why I want to tie in the Amberdata investment, the bet you made, the data observability, whatever your word you want to call it, watching everything, because the experts are saying, and all the entrepreneurs are saying, software will get to T zero.
Shawn Douglass
>> Yeah.>> So all this data needs to be available, and we know from the big data days, the more data you have, the better the analytics. So if stablecoins pushes the USD, pegs the US dollar, pushes transaction volumes up, everybody wins because the AI is going to come in so AI needs data.
Shawn Douglass
>> Yeah.>> So how do you see those connectors? Now TradFi and DeFi are converging, but AI and crypto industries are converging. I mean, that's a big deal and you're a visionary and a techie. What does the AI impact do to your market?
Shawn Douglass
>> Let me unpack that because you just asked a lot and I think that there's a ton to touch on there. So think about stablecoins as this connective tissue for the future of financial services that you don't have to have a three-day settlement. You're going to be able, the biggest market for US dollars is actually Euro dollars, which people don't know at large. So stablecoins enables dollarization of the world and it makes it happen in a frictionless, high-speed, transparent, trustful way. And that's happening on all these blockchain networks as well as on all these centralized exchanges and derivatives and options and structured products, and now tokenized assets and tokenized funds. They're all being wrapped into this and they're used to generate yield or what have you. As you mentioned, I'm a data guy. I'm an analytics guy. I'm like a hardcore infrastructure guy. We have 16 petabytes of data from 60 plus exchanges. We have a longer, deeper, richer data set than anybody. Full stop, bar none, we saw this before everybody, starting with->> You're data hoarders.
Shawn Douglass
>> We are data hoarders.>> The show, I'm going to do a show called Data Hoarders.
Shawn Douglass
>> The best playing album, man. It's been painful to hoard all that data. I feel like a turtle. Just collecting stuff on my back and the weight's weighing me down.>> AI's going to love you.
Shawn Douglass
>> Well, so we've been using AI for, and I hate AI washing things, but the reality is we've been using AI for three or four years for all of our anomaly detection, data quality, everything to make sure we're delivering high quality, high fidelity data because we're the backbone to everybody whose anybody in digital assets right now. We can't get it wrong. Right?>> Yeah.
Shawn Douglass
>> So we had to use AI and machine learning. We're in the process right now of just taking all of that data and turning that, and we've basically trained big, large language models, LLMs, on our data set, and we've indexed, cataloged, and are enabling ad hoc analytics. Coming up in very, very, very soon. We'll let you know before it comes out.>> Of course.
Shawn Douglass
>> But very soon, we are going to have the industry first leading market intelligence platform. Everybody else is just consuming data from us or some other vendor, so they don't really have the goods. What we've done is we've deconstructed all those time series, cataloged it, and we can enable, "Hey, I want to understand this stablecoin flows to treasury holdings, to what's happening on centralized exchanges, to what's happening in implied volatility and I want to be able to do ad hoc queries and share those with my coworkers."
Very similar to what a Bloomberg has or Refinitiv has, whether data and analytics product or SMP IHS market. We've built that. We're launching that imminently and it's the only platform and no one's going to be able to compete with us, full stop, because our whole platform is built in Databricks and it's all big data analytics, machine learning enable from day one.>> You did the upfront work. You grinded it out. I got to ask.
Shawn Douglass
>> We can replicate that.>> I got to ask because data will be your moat.
Shawn Douglass
>> It is.>> I think that's going to be key strategy. So Coinbase bought Deribit. What does that mean? What does that acquisition mean? Can you unpack that?
Shawn Douglass
>> I am enamored with the acquisition of Deribit by Coinbase. It is such a market. What do you call it? A market maker move, right? A kingmaker move, right? You have the biggest options, derivative exchange in the world for crypto. They did 70, probably north of 70% of the trading volume. And then post FTX failure, CME started to ramp up. They did a lot more trading, but really the venue where options and futures traded has been Deribit. Coinbase acquired that. I think it was $4.4 billion. It was ridiculous. It was a massive, massive->> Yeah. Strategic. They took it off the table.
Shawn Douglass
>> Yeah. I mean, CME has got to be shaking in their socks because once you start to tokenize other commodities and you put those on that derivatives and you have a settlement that's instantaneous and you have a global reach, you talk about paradigm shifts and massive market transformations. So we're excited. We power a lot of the analytics behind the front end of Deribit.>> And this is why I want to bring it up because obviously having analytics and telemetry, the things that you do for a living brings up the question I just asked Vivek from Etherealize, themes come up like, "Oh, yeah. A lot of derivatives." It reminds me of that movie, The Big Short. "CDO. But CDO and a CD..." But now that's got software in it. There's no hidden leverage what's open and transparent got data. But that brings up the derivative question.
Shawn Douglass
>> Yeah.>> As derivatives can be very powerful, but also very dangerous. What are you seeing in futures and options? Has that come on board yet? What are people doing with these areas?
Shawn Douglass
>> And so if you think about here, and we're sitting in the New York Stock Exchange above the options trading floor. Options trading and derivatives trading is tens of multiples greater than spot equities trading. In crypto->> In terms of volume?
Shawn Douglass
>> In terms of volume. And in last year, we had a 3X, 300% increase in options trading in crypto. That was all happening mostly offshore. Right?>> Yeah.
Shawn Douglass
>> Now that's all been effectively blessed by the acquisition->> So in-migration it's coming?
Shawn Douglass
>> It's coming in. It's going to 10, 20X from where we're at. Same with the perpetual futures. Perpetual futures are unique to digital assets. It used to be if you were trading corn on CME or crude oil, you had a January or February or March exploration. You had to roll those. And then every time you roll those, the only people that benefit is the exchange because they charge both sides of the trade twice, and they have all these fees and what have you. Perpetual futures were really created by BitMEX and Arthur Hayes group there, and they revolutionized that. So now you don't have to roll your contract. It's more efficient, that you get higher leverage, has better transparency.>> And that's because of the technology of blockchain or is what?
Shawn Douglass
>> Well, so it's multiple things. It's the ethos of a 24 by 7 global platform to trade and transact, settled across multiple blockchain networks. So it's robust. It's available. It's innovative. It's faster. TradFis, they're closed for the weekend. They go home at five o'clock on Friday and they don't come back until six o'clock on Sunday night. Crypto 24/7. If you want really the future of finance, it's going to be on these new rails.>> I mean, I think there's a productization wave coming in finance entrepreneurship that's never I've ever seen in my lifetime. Meaning, there never was a back office that would allow anything other than some sort of parasitic business model.
Shawn Douglass
>> Right.>> Like, "Hey, get some prepaid business cards and do some banking fringe stuff and crumbs."
Shawn Douglass
>> Yeah.>> You want a big piece of the cake, right now an entrepreneur can come in and say, whether they're young or working in an existing bank or wherever and say, "I can do that better and do it now." What's your take on the financial entrepreneurial culture?
Shawn Douglass
>> I think there's more opportunity right now than there's ever been because... So everybody says this, but digital assets is effectively the money of internet.>> Right. It's everything.
Shawn Douglass
>> Yeah. So it's digital rights ownership. It's money. It's the ability to transact. And it's also the ability to take something you own and use it as collateral, just like you talked about with CDOs. You're like, "Oh, I want to be able to take this know stablecoin and I want to be able to put it in Aave and I want to be able to get 8% deals.>> Get a treasury that has 10 zillion things in it like what's in it?
Shawn Douglass
>> And I can create my own structured products. But you know what's different than CDOs? CDOs, they used to wheel in a wheelbarrow full of contracts that nobody could read and figure out what the hell is the risk here? And it took them weeks to figure it out, and then they still didn't know. Then they had to sue each other to settle, and it just didn't work.>> Yeah.
Shawn Douglass
>> Now with what's happening with the composability of DeFi and why everybody is so excited about it, and this is why people like Uniswap and there's another exchange that just pass them in trading volume. They're literally doing more trading volume than Coinbase. It's because this composability, it's the ability to deposit assets. And that's our business, is we make all of these things that are happening around the world, we make it radically->> You're instrumenting the data.
Shawn Douglass
>> We're instrumenting.>> Yeah.
Shawn Douglass
>> We make it radically transparent. What are the incentives? What are the outcomes? Who benefited? How? Never before has finance been so transparent.>> Yeah.
Shawn Douglass
>> We're enabling it.>> I mean, you got a great... You're in a good spot. Congratulations. The market's spun and the direction of the growth is in the CLARITY Act. Just get some regulation, understand how to regulate. Of course, genius acts with stablecoins. I have to ask you about the convergence of DeFi and TradFi because it's a lot like our old tech experiences that we've been in the tech business of infrastructure, but it's also like the basic concept of, "Oh, it's a backend and a frontend."
Now in our old tech world, backend with servers, frontend was user interface. I think Web2 and Cloud makes that SaaS, and we all have mobile apps. I mean, the commentary here in the Crypto Trailblazer is basically that's not going to change.
Shawn Douglass
>> Right.>> The frontend will probably feel the same and be the same. Yeah. Maybe voice activation, maybe some agents, but to the consumer, it's going to be the same. But what's in the middle and the backend is going to change. That's where the decentralization. What's your reaction to that and what other commentary would you add to that?
Shawn Douglass
>> There's a good analogy there, right? Is that people's workflows and experiences and needs, they grow, but do they radically change? I don't know. People want to have exposure, they want to manage risks, they want to understand things, but right now they're constrained.>> I had one bank account, that'd be great.
Shawn Douglass
>> Yeah. Right? But if you had one bank account, but the problem today is you have people's private databases that you trust and you just hope it all works out. Where this is a different->> I want my own bank account that I'm the bank so I can stake and buy my house with my Ethereum.
Shawn Douglass
>> You can do that today.>> You could do that today. Okay.
Shawn Douglass
>> Right?>> Yeah. But this is where it's going.
Shawn Douglass
>> This is where it's going.>> I mean, the internet and the web that we lived through was an electronic revolution of information, that speed, so high-frequency trading, arbitrage, fast information, arbitrage, knowledge, get better. Now it's value.
Shawn Douglass
>> Yeah.>> It's a revolution in value because now you're increasing the speed of value. You store value, creation value, extraction.
Shawn Douglass
>> There is the ability->> Not information.
Shawn Douglass
>> Yeah. Exactly. The beauty of these blockchain networks is, it's shared public infrastructure that people participate in. They're incentivized. They secure the network. And then it was a low barrier to entry for someone to publish. Like we're financial. They claim, "Hey, we are TradFi plus DeFi today."
They just trade, I don't even know what. Billion plus dollars in their latest token sale and you couldn't do that years ago. And now what do they do with that? We will see. But there's really, really, really a strong case for why are these markets converging? So if you think about like why does BlackRock and Franklin Templeton and Fidelity and Apollo, why do they want to tokenize long duration funds? Well, they have a limited number of LPs that they can shill their product to, and they have a 30-year duration. They want to be able to slice those up and dice those up so they can put it in your 401k, or they want to be able to make it so their TAM is the world rather than New York City where the family offices are. They want to be able to change who are they're selling to, as well as to where they can do it and the size that they can do it? It's about distribution.>> Yeah.
Shawn Douglass
>> And this is just like the internet.>> Yeah.
Shawn Douglass
>> It's a distribution network like the internet did for information. This is doing for financial products and financial opportunities and the ability to create and innovate in this new world.>> The market's about to close. The options are hot behind us, can't really hear but that it's crazy.
Shawn Douglass
>> We love options and so->> Options, yeah, they love that. Close us out by talking about what's going on in your world. Obviously, pretty crazy right now. You got the data moat, you got the new product coming, you have the analytics.
Shawn Douglass
>> Yeah.>> You're the data platform for all the exchanges, all the telemetry. That's going to be gold for AI, gold for scale. What's your world right now?
Shawn Douglass
>> It's really the gold for the entire backbone of this massive, massive transformation in financial services, really whether they're front office trading, portfolio management, research. I just talked about trade surveillance with Nasdaq, who's our partner, back office, the regulators, most of the large regulators, they need to have data analytics and insights to adopt, to enable, to do their jobs, to embrace and to build businesses. We provide that core trusted data infrastructure, and that's not going to go away. And that, like you said, the moat here is we've been doing this for eight years. We have 16 petabytes of high quality, trustworthy data, and we deliver a service so people don't have to spend 50 million building out the infrastructure to do what we already do today better than anybody else.>> Well, congratulations. I know it's been quite a journey for everyone in the crypto industry that jumped in at the right time. Obviously, there's a little speed bump there with the last regime in the United States. Now the out-migration happened. Now the in-migration back to the US, global economy, stablecoins, genius at CLARITY Act. I hear that the bell's ringing, and we're going to wrap it up here. Shawn, great to see you.
Shawn Douglass
>> Thank you, John. Thank you.>> Shaw Douglass, the co-founder of the leading analytics platform for all of the digital assets. Very valuable opportunity. Obviously we can expand from that. Of course, we're doing our part to bring you all the data here on theCUBE. I'm John Furrier, your host. Thanks for watching.
