This episode unpacks the monumental Circle IPO and Pump.fun's billion-dollar funding ambitions, revealing how institutional capital and viral platforms are reshaping crypto investment narratives, urging investors to look beyond surface-level takes.
Banter & Announcements
- The hosts, Santi and Jason, kicked off with light-hearted updates, including Suzu's rapidly growing X (formerly Twitter) follower count, which doubled to over 1,600 after a tweet about hiring investment associates.
- Jason highlighted the upcoming Permissionless conference (June 24th), urging listeners to secure tickets early using the code EMPIRE10, and teased the addition of major speakers.
- A crucial warning was issued about an increase in scammers impersonating Empire producers on Telegram and Twitter. Listeners were reminded that only Santi, Jason, or the official producer, Jarrett, would reach out regarding guest appearances.
- The conversation briefly touched on the surprising effectiveness of LinkedIn for job postings, with Blockworks receiving hundreds of applications for open roles. Jason noted, "LinkedIn is better than Twitter for at least for... virality and likes and dopamine hits but actually for jobs is [great]."
Circle's Successful IPO: Defying the Mid-Curve
- Circle Internet Group (ticker: CRCL), the issuer of the USDC stablecoin, successfully priced its Initial Public Offering (IPO). An IPO is the process by which a private company first sells shares of stock to the public.
- The company raised over $1 billion, offering 34 million shares, significantly more than the initially planned $625 million from 24 million shares.
- Jason highlighted the immense institutional interest, with the offering reportedly "about 25 times oversubscribed," indicating strong demand from traditional capital markets.
- Santi praised Circle's journey and CEO Jeremy Allaire's long-standing presence and evangelism in the crypto space, noting Circle's transformation from an OTC trading desk to a stablecoin giant. He described Jeremy as "one of those that has always been an anchor in the industry."
- Jason pointed out a disconnect between Crypto Twitter's largely bearish sentiment on Circle (citing risks like interest rate cuts, reliance on Coinbase, and high operational expenses) and the reality of institutional demand. He argued, "Being bearish on circle ended up being the mid-curve take," while institutional investors saw it as a prime opportunity to invest in the stablecoin thesis.
Valuation Deep Dive: Circle vs. Coinbase vs. Robin Hood
- Circle's 2024 financials were reported as $1.7 billion in revenue and $285 million in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization – a measure of a company's operating profit). With a market cap around $6.8-$8 billion, this placed Circle's LTM (Last Twelve Months) EBITDA multiple at approximately 24-28 times.
- For comparison, Robin Hood (HOOD) was trading at a much higher 43 times LTM EBITDA, while Coinbase (COIN) was at a more moderate 18 times.
- Santi noted Circle's LTM revenue growth was 15%, compared to Coinbase's 75% and Robin Hood's 60%, though Coinbase's growth is highly tied to volatile crypto asset prices.
- The discussion touched on forward guidance for 2025 EBITDA for Circle, which was not yet available, but crucial for assessing its forward valuation relative to peers.
Strategic Allocation: Investing in Public Crypto Proxies
- When posed with how to allocate $100 across Circle, Robin Hood, and Coinbase, Jason, admitting his bias, stated he is "giga long Hood," especially after their Bitstamp acquisition, and would allocate 80% to Hood and 20% to Coin, with no allocation to Circle at current IPO valuations.
- Santi favored Robin Hood due to its broader customer acquisition funnel (attracting stock traders then upselling crypto) and more defensible business model compared to pure-play crypto exchanges like Coinbase. He highlighted Robin Hood CEO Vlad Tenev's vision for leveraging crypto rails. Santi remarked, "I think Hood, you know, as a business is far more defensible, and has much more sticking brand and weathers kind of the volatility of crypto."
- The integration of user experience was also a factor, with Coinbase's various products sometimes feeling disjointed, whereas Robin Hood's new gold card with auto-conversion of points to stock was praised for its UX.
- Actionable Insight for Investors: The differing valuations and growth profiles of Circle, Coinbase, and Robin Hood offer distinct risk/reward opportunities. Investors should consider customer acquisition costs, revenue diversification, and regulatory moats when choosing public market crypto proxies. Robin Hood's strategy of integrating crypto into a broader fintech offering presents a compelling case for diversified growth.
The Ripple Effect: Circle's IPO as a Catalyst for More Crypto Listings
- Jason shared a significant insight: Circle's successful IPO is accelerating the IPO timelines for several other large, later-stage crypto companies.
- He mentioned speaking with three CEOs who, inspired by Circle's reception, are now targeting IPOs in 2025, some as early as Q3/Q4 2024 (excluding August), rather than 2026 or 2027. Jason had previously tweeted in January 2024, "I can't overstate the importance of Circle's IPO. There are six to 10 companies waiting to see how Circle does. If they're successful, everyone else will push to IPO."
- Strategic Implication for Researchers & Investors: The success of Circle's IPO is a bellwether, potentially unlocking a wave of new public crypto companies. This will provide more diverse investment options and greater transparency into the financial health of mature crypto businesses. Researchers should monitor S-1 filings closely. An S-1 is the initial registration form required by the U.S. Securities and Exchange Commission (SEC) for public companies.
Pump.fun's Ambitious $1B Raise: Cash Grab or Visionary Expansion?
- Blockworks reported that Pump.fun, a platform for launching memecoins on Solana, is planning to raise $1 billion at a $4 billion valuation through a token sale.
- This news sparked considerable debate on Crypto Twitter, with many critics labeling it a "cash grab" and questioning the need for such a large raise given the platform's profitability.
- Santi, an early investor in Pump.fun, defended the raise, praising founder Noah and the team's execution and vision. He stated, "They have captured a ton of attention better than probably any other company in crypto for a long time." Santi believes the capital is for aggressive expansion, potentially into a TikTok-like social platform integrated with financialization, aiming for a market larger than existing crypto exchanges.
- Jason found the criticism of raising money while profitable illogical, arguing that successful companies often raise capital to fuel further growth.
Pump.fun's Financials and Growth Strategy
- Pump.fun's revenue streams include AMM (Automated Market Maker – a type of decentralized exchange protocol) fees (0.05% on Pump Swap), bonding curve fees (1% on its bonding curve – a mathematical curve that defines the relationship between a token's price and its supply), and previously, a graduation fee for tokens migrating to Raydium.
- The platform saw massive revenue in late 2023/early 2024, with $144 million in January 2024 alone. More recent figures show $39 million in March, $48 million in April, and $50 million in May 2024.
- Despite a decrease from peak revenue, the total number of traders on Pump.fun reached an all-time high of 13 million in May 2024. This user base is a key asset.
- Jason mentioned Blockworks is seriously considering distributing content on Pump.fun due to its significant user attention, comparing it to the rationale for using TikTok.
- Actionable Insight for Investors/Researchers: Pump.fun's strategy appears to be leveraging its memecoin-driven user acquisition to build a broader social and financial platform. Investors should assess if the $4B valuation is justified by this larger vision and the platform's ability to retain and monetize its massive user base beyond memecoin hype cycles. The tokenomics of the $1B raise will be critical.
Investor Perspectives on Pump.fun's Token and Future
- Santi indicated that early crypto fund backers are doubling down in the new round, with a new, large, crypto-native fund also participating.
- A Twitter user, "Joe Biden" (a crypto personality, not the US President), outlined a bull case for the Pump.fun token: potential buybacks, record revenue on TGE (Token Generation Event – the first time a token is made available to the public) day if launched on Pump Swap, and vested investor allocations limiting immediate sell pressure.
- Austin Marazza from Dragonfly Capital provided a counterpoint to the criticism, tweeting, "Pump is just acting like... a normal company... Crypto has trained everyone to expect free money from projects that don't even make any money at all." He emphasized that if Pump.fun allocates future revenue to its token, it would be a rare model in the industry.
- Strategic Consideration: The success of Pump.fun's token will depend on its utility, governance rights, and potential cash flow accrual, alongside market sentiment. The comparison to Hyperliquid's successful token launch was made, though Hyperliquid had more control over its ecosystem variables.
Trump's Foray into Crypto: Navigating Perception and Politics
- The launch of Trumpwallet.com, initially linked to the Trump memecoin and seemingly endorsed by Magic Eden, was quickly disavowed by the Trump family (specifically Donald Trump Jr. or Eric Trump). They threatened legal action and stated any official wallet would be with a different entity, "World Liberty."
- Both Santi and Jason expressed concerns that the Trump family's direct involvement and promotion of specific crypto projects and memecoins has gone "way too far" and is "net bad" for both the presidency's image and the crypto industry.
- Santi drew parallels to criticisms of Nancy Pelosi's stock trading, suggesting a need for more distance and ethical separation. He argued, "There should be more distance... it feels too much Nancy Pelosi style."
- Implication for Crypto AI Researchers: The politicization of crypto, especially through direct endorsements or involvement by high-profile political figures in speculative assets, can create regulatory uncertainty and impact public perception, potentially affecting broader adoption and institutional investment in the space, including AI-related crypto projects.
Stablecoins vs. Traditional Finance: The Western Union Perspective
- A notable quote came from Kenneth Sukowski, a research analyst, relaying a statement from the President of Western Union, Devon. The Western Union President acknowledged their current reliance on the "highly inefficient legacy system called Swift."
- Regarding stablecoins, he said, "If somebody figured out how to move money with turbo pigeons, I'm happy with turbo pigeons... And if stable coins can do it, awesome. But right now, we haven't found that. It's more complex and more expensive." However, he conceded stablecoins solve some market inefficiencies where no good alternatives exist and would adopt them if they meet efficiency and cost-effectiveness thresholds.
- Santi critiqued this as complacency, but also acknowledged the complexities of the remittance business, such as real-time liquidity sourcing in various corridors. He recommended analyses by Matt Brown and Simon Taylor (Fintech Brain Food) for a nuanced understanding.
- Insight for Crypto AI Investors: While stablecoins hold immense promise for revolutionizing payments, displacing incumbents like Western Union involves overcoming significant operational hurdles, including last-mile liquidity and regulatory compliance. AI could play a role in optimizing these new payment rails.
Regulatory Wins: MoonPay Secures New York BitLicense
- MoonPay, a crypto payments infrastructure company, received a BitLicense approval in New York. The BitLicense is a notoriously difficult-to-obtain license from the New York State Department of Financial Services (NYDFS) required for virtual currency businesses.
- Jason highlighted the rarity of this license, with only a handful issued each year (e.g., two in 2023, five in 2022).
- He speculated this could signal a slight thawing in New York's crypto regulatory environment, possibly influenced by Mayor Eric Adams' pro-crypto stance or the potential political comeback of Andrew Cuomo, under whose governorship the BitLicense was created by Ben Lawsky.
- Strategic Implication: MoonPay obtaining a BitLicense is a positive signal for crypto companies seeking to operate in key financial jurisdictions. Increased regulatory clarity, even through stringent licensing, can pave the way for more institutional involvement and product offerings.
DeFi Strategies: Exploring Leveraged Bitcoin Positions
- A tweet from "Mikey Tulip King" proposed a leveraged Bitcoin strategy: deposit 1 BTC on Aave (a decentralized lending protocol), borrow 0.5 BTC worth of USDC, swap for BTC, and redeposit, creating a 1.5x leveraged position. The liquidation price would be around $43k BTC.
- Santi analyzed the strategy, noting risks such as the use of wrapped BTC (a tokenized version of Bitcoin on another blockchain), smart contract vulnerabilities, and liquidation risk during network congestion and high gas fees. He emphasized the need for diligent monitoring.
- He mentioned DeFi Saver, a platform that can help automate such leveraged positions, including rebalancing. LTV (Loan-to-Value) is a key metric here, representing the ratio of the loan amount to the value of the collateral.
- Actionable Insight for Researchers/Investors: Leveraged DeFi strategies can amplify returns but come with significant risks. Tools like DeFi Saver can help manage these positions, but users must understand the underlying mechanics, smart contract risks, and liquidation parameters. AI-driven risk management tools could become valuable in this domain.
Hosts' Closing Thoughts and Recommendations
- Jason recommended the Steve Ballmer episode on the Acquired podcast as non-crypto content of the week.
- Santi reiterated his firm is hiring for investment associate roles, seeking candidates with strong financial modeling skills ("cracked Excel junkies").
Circle's IPO triumph and Pump.fun's bold fundraising underscore a maturing crypto market attracting diverse capital; investors and researchers must critically assess valuations and utility beyond hype, focusing on sustainable growth and regulatory navigation in this evolving landscape.
