Coinbase Buys Deribit, Stripe’s Stablecoin Launch, and Ethereum’s Pectra Upgrade | Weekly Roundup

This episode unpacks a monumental week in crypto, from Coinbase's historic Deribit acquisition to Stripe's game-changing stablecoin infrastructure, signaling a rapid maturation of on-chain finance and its implications for AI integration.

Market Overview: A Quiet Bull Run?

• Jason, returning to the host seat, and Santi kick off by discussing the current market sentiment, noting the peculiar quietness despite significant price milestones like Bitcoin hypothetically hitting "100K."
• Jason highlights a "bullish chart" of Google Trends for Bitcoin, showing surprisingly low public interest. Santi speculates this could be due to interest shifting to AI tools like ChatGPT or a sign that the market is overlooking underlying strength.
  • Santi: "This is the classic you're seeing in real time. What do you believe in that others don't or are overlooking?"
• They touch upon strong performances from crypto-related stocks like Robinhood and Coinbase, with Coinbase due to report earnings and having just announced the Deribit acquisition.
• Santi notes general market optimism, possibly linked to positive developments in international trade discussions, such as those between the US and China.

Strategic Implication for Investors/Researchers:

• The divergence between price action and public search interest could indicate an "insiders' market" or a maturing asset class less reliant on retail hype. Crypto AI researchers might analyze sentiment data from alternative sources beyond Google Trends to gauge true market interest.

Ethereum's Pectra Upgrade: Enhancing User Experience and Scalability

• Jason announces that the Pectra Upgrade (referred to as Pekra/PCRA in transcript) went live on Ethereum mainnet. This is a significant upgrade aimed at improving the user experience and network efficiency.
  • Pectra Upgrade: An Ethereum network upgrade focused on improving user experience, scalability (e.g., doubling target blob count from 3 to 6), and staking efficiency (increasing max validator stake from 32 ETH to 2048 ETH).
• Key technical improvements include:
  • Increased maximum ETH stake per node from 32 to 2048 ETH, reducing the need for redundant nodes.
  • Doubled blob transaction capacity, enhancing L2 scaling.
  • A new transaction type for batch transactions and gas sponsorship (allowing third parties to pay transaction fees for users).
• Jason, referencing a thread by Benji from the Ethereum team, explains Pectra as Ethereum's "glow up," making it more user-friendly:
  • Fewer Clicks: Eliminating the "approve and confirm" loop and double signing.
  • Smarter Wallets: Enabling normal wallets to act like smart contracts for batching transactions, skipping approvals, and paying gas in any token.
  • Cheaper Transactions: More blobs lead to better L2 scaling and lower costs.
  • Flexible Staking: Higher validator cap, faster deposit recognition, and smart contract-enabled withdrawals.
• Santi praises the Ethereum community's ability to coordinate and execute such complex upgrades, calling it a "Herculean task."
• Despite the positive developments, Santi mentions he's not immediately updating his ETH investment thesis due to ongoing concerns about value accrual to the L1 versus L2s.

Strategic Implication for Investors/Researchers:

• Pectra's enhancements, particularly gas sponsorship and smarter wallet functionalities, could significantly lower barriers to entry for dApp users. AI-driven applications requiring frequent, low-value transactions or complex interactions could benefit immensely. Investors should watch for projects leveraging these new capabilities.

Robinhood Explores Own Chain with Arbitrum or Solana in View

• The discussion shifts to a Bloomberg report that Robinhood is developing a blockchain-based platform for European retail investors to trade US securities.
• The platform will likely launch via a partnership, with Arbitrum (an Ethereum Layer 2 scaling solution) and Solana (a high-performance Layer 1 blockchain) under consideration.
  • Arbitrum: A Layer 2 scaling solution for Ethereum that aims to provide faster and cheaper transactions while leveraging Ethereum's security.
  • Solana: A Layer 1 blockchain known for its high throughput and low transaction fees, often favored for applications requiring speed and scalability.
• Santi speculates that for launching its own chain, Arbitrum might be a more likely technical choice, but expresses curiosity about how a Solana-based solution would work.
• This move is seen as part of a broader trend where traditional finance players are exploring tokenization and on-chain solutions.

Strategic Implication for Investors/Researchers:

• Robinhood's choice of underlying blockchain technology could significantly influence adoption trends for L1s/L2s in the tokenized securities space. AI researchers could explore how different chain architectures might support AI-driven trading or compliance for such platforms.

Coinbase's Landmark Acquisition of Deribit: Reshaping Crypto Derivatives

• The largest M&A deal in crypto history is discussed: Coinbase acquiring Deribit, a leading crypto derivatives exchange, for approximately $2.9 billion ($700 million in cash, $2.2 billion in Coinbase stock).
  • Deribit: A crypto derivatives exchange that dominates the crypto options market, reportedly controlling around 80%.
• Jason notes Deribit's strong financials (around $85M profit on $120M revenue in 2023) and the broader trend of exchanges being major acquirers to gain funded accounts and expand product offerings (perpetuals, options).
  • Jason: "The industry needs M&A to thrive. You need the venture investors to do well... you need companies to be able to sell. So, this is a really healthy dynamic."
• Santi highlights that Coinbase's stock was up on the announcement, indicating market approval. He suggests the acquisition signals Coinbase's confidence in integrating derivatives into its core offering and a positive outlook on the US regulatory environment for such products.
• The discussion touches on the high volume of crypto companies currently in the market seeking acquisition, especially those from the "class of 2017."

Strategic Implication for Investors/Researchers:

• This major acquisition underscores the maturation of the crypto derivatives market. AI-driven trading firms and researchers should anticipate increased institutional participation and potentially more sophisticated derivative products becoming available on regulated US platforms.

Stripe Sessions: A Leap Forward for Stablecoin Utility

• Jason emphasizes the significance of Stripe's recent announcements at their "Stripe Sessions" event, which focused on AI and stablecoins.
  • Stablecoins: Digital currencies pegged to stable assets like fiat (e.g., USD), designed to minimize price volatility and facilitate payments.
• Stripe launched two key products:
  1. Stablecoin-backed cards.
  2. The ability for merchants to store stablecoins, effectively creating a "stablecoin bank for merchants."
• This completes Stripe's payment circle: pay-ins (announced last year), payouts (announced earlier this year), and now storage.
• Jason states this move has allowed Stripe to expand its reach from 45 to 101 countries, unlocking global access for businesses to have USD-denominated accounts.
  • Jason: "This is really the first complete circle of stable coin payments in the world by anybody, crypto company or non-crypto company."
• Santi praises Stripe's vision of "borderless finance" and how this infrastructure detaches from the pre-internet financial system, unlocking immense activity.
• The discussion also references the US Treasury's report predicting a $2 trillion stablecoin market cap by 2028.

Strategic Implication for Investors/Researchers:

• Stripe's comprehensive stablecoin infrastructure is a watershed moment for B2B crypto payments. AI applications requiring global, low-friction, programmable payments now have a powerful new rail. Researchers should explore how AI can optimize cross-border commerce and treasury management using these new tools.

Coinbase X402 Standard: Streamlining On-Chain Payments for AI and Apps

• Coinbase announced the X402 standard, a payment protocol enabling instant stablecoin payments directly over HTTP.
  • X402 Standard: A payment protocol by Coinbase that leverages the HTTP 402 "Payment Required" status code to allow APIs, apps, and AI agents to transact seamlessly with stablecoins without direct blockchain interaction complexity for the developer.
• This standard allows developers and AI agents to pay for API services and software directly with stablecoins using a few lines of code, simplifying crypto payments for web services.
• Santi mentions Kai from Visa's perspective, who questioned if AI agents truly need stablecoins versus traditional payment methods like credit cards, suggesting a point for further discussion on micropayments.

Strategic Implication for Investors/Researchers:

• The X402 standard could significantly accelerate the adoption of micropayments and automated transactions for AI agents and decentralized services. This opens avenues for new business models where AI agents autonomously pay for data, compute, or API calls, a key area for Crypto AI research.

Superstate's Opening Bell: Tokenizing Equities on Solana

• Robert Leshner's Superstate launched "Opening Bell," a platform for companies to issue SEC-registered shares directly on-chain, starting with Solana.
• The first announced issuer is Soul Strategies, described as a "MicroStrategy for Solana," which is exploring bringing its NASDAQ-listed shares on-chain.
• These on-chain shares could then be traded in DeFi (Decentralized Finance) markets 24/7.
  • DeFi (Decentralized Finance): Financial applications built on blockchain technology that operate without traditional intermediaries.
• Superstate itself is an SEC-registered blockchain-enabled transfer agent, similar to what Securitize and Onondo are working on.
• Jason reflects on the week's developments: "You've got instant 24/7 financial infrastructure being built in real time in front of our eyes. It's pretty damn cool."

Strategic Implication for Investors/Researchers:

• The tokenization of real-world assets (RWAs), particularly public equities, is gaining serious traction. AI investors should monitor the development of on-chain equity markets for new arbitrage opportunities, liquidity solutions, and AI-driven asset management strategies.

The Evolving Landscape of Public Offerings: On-Chain IPOs?

• The discussion explores the future of company exits, moving from traditional IPOs to token issuances, and now potentially to "going public on-chain."
• Jason poses a hypothetical: Would a company like Phantom Wallet prefer a traditional IPO, a token issuance, or going public natively on Solana where its users are?
• Santi highlights the potential benefits of on-chain public offerings: tapping into crypto capital markets, enhanced liquidity, programmability, lower costs, and composability within DeFi.
  • Santi: "It makes it almost makes too much sense, right? Which is there is your users should also be your investors and there reward your users and there's just stronger alignment."

Strategic Implication for Investors/Researchers:

• The concept of on-chain IPOs could revolutionize capital formation and investor relations. AI could play a role in managing these new types of share registries, facilitating shareholder voting, or even creating dynamic, usage-based equity rewards.

Setback for US Stablecoin Legislation

• Jason provides an update on the US stablecoin bill (the "Genius Act"), which previously seemed on a clear path to bipartisan approval.
• Despite initial strong support, including from several Democrats, nine Democrats recently published a statement opposing the bill without further enhancements related to national security and financial system safety.
• This development introduces uncertainty for a crucial piece of crypto regulation in the US.

Strategic Implication for Investors/Researchers:

• Regulatory uncertainty can stall innovation. While global stablecoin adoption (e.g., via Stripe) continues, a lack of clear US regulation could hinder domestic growth and the development of AI applications reliant on US-domiciled stablecoin issuers.

Meta Reportedly Re-Exploring Stablecoins

• Santi brings up a Fortune report that Meta (formerly Facebook) is again in talks to deploy stablecoins, three years after abandoning its Libra project.
• This renewed interest is seen as a reaction to the broader industry adoption of stablecoins by players like Visa and Stripe.
• Jason speculates on potential M&A activity, questioning if Meta might acquire a company like Circle.

Strategic Implication for Investors/Researchers:

• Meta's re-entry into stablecoins could be a massive catalyst for adoption, given its vast user base. AI researchers should consider the potential for AI-powered financial services and commerce within Meta's ecosystem if this proceeds.

Coinbase Q1 Earnings Overview

• The hosts briefly review Coinbase's Q1 earnings, which were released during the recording.
• Key takeaways included:
  • Total revenue of $2 billion, down 10% from Q4.
  • Transaction revenue of $1.3 billion, down 19% quarter-over-quarter.
  • Subscription and services revenue up 9% quarter-over-quarter, driven by USDC market cap growth.
• Coinbase stock was slightly down in after-hours trading following the report.

Listener Question: MicroStrategy and Corporate Bitcoin Treasuries

• Addressing a listener question, Jason expresses skepticism about the "Sailor playbook" (corporates holding Bitcoin on their balance sheets) for high-performing companies, suggesting it's more suited for "mediocre companies" needing a narrative shift.
• Santi views it as a way for companies to become holding companies with levered exposure to Bitcoin, a premium that might diminish as more crypto investment products become available.
• A more interesting trend, Santi suggests, will be companies disclosing their stablecoin holdings and the operational efficiencies gained from using them for working capital optimization.
  • Santi: "Imagine the commentary on that. Like... working capital like we've been able to move inventory faster or accounts receivable went down because we were able to you know optimize that with the thing called stable coins."

Strategic Implication for Investors/Researchers:

• While direct Bitcoin treasury strategies may be niche, the use of stablecoins for corporate treasury functions is a burgeoning area. AI can be applied to optimize these processes, and investors should look for companies effectively leveraging digital assets for financial efficiency.

Conclusion

The week's developments highlight a significant acceleration in building robust, institutional-grade financial infrastructure on-chain. Crypto AI investors and researchers should closely monitor the convergence of traditional finance with these new rails, particularly the expanding utility of stablecoins and tokenized assets, to identify emerging AI-powered financial services and investment opportunities.