Empire
July 4, 2025

It’s A Bull Market But Not The One You Wanted With Rob Hadick & Santiago Santos | Weekly Roundup

Rob Hadick of Dragonfly and Santiago Santos dissect a crypto market in paradox. Institutional giants are stampeding into stablecoins and tokenized assets, yet the altcoin market is a ghost town, creating a bull market that feels disconnected from crypto's core promise.

The Stablecoin Gold Rush

  • "I've been to this Goldman Sachs...digital assets event three years in a row and this was by far and away the most well attended...They really only want to talk about a few things of which number one was Circle and stablecoins."
  • "The goal is clearly to be on-chain. And if we can get to being entirely on-chain...it's going to be much better for everybody involved...disintermediate the banks...and just be a better digitally native or internet first experience."
  • Institutional appetite for stablecoins has exploded, moving from a niche interest to an executive-level priority at firms like Goldman Sachs, largely catalyzed by Stripe’s public embrace of the tech.
  • While many enterprise "stablecoin strategies" are currently headline-chasing, hundreds of billions in real annual economic activity (payouts, trade finance) is already happening on-chain.
  • The real efficiency unlock comes from keeping transactions entirely on-chain, avoiding the costly fiat on/off-ramps where most friction and expense still exist.

Tokenized Equities: A Messy Debut

  • "The problem they [Robinhood] are solving for that product is essentially just that they don't have the license to go offer equities...they made a big deal about the tokenized equity piece...but it's essentially just a kind of...a little bit of regulatory arbitrage for them right now."
  • Robinhood's highly publicized "tokenized stock" offering is more regulatory workaround than DeFi innovation. The tokens are walled-garden derivatives, not transferable on-chain assets, designed to circumvent licensing hurdles in Europe.
  • Their attempt to tokenize private shares like OpenAI also backfired. It's a derivative on an SPV, not direct ownership, prompting public pushback from OpenAI and highlighting the communication gap between crypto hype and product reality.
  • While more DeFi-native products like X-Stocks on Solana exist, they introduce new dangers like cascading liquidations due to thin liquidity and the inability to hedge prices when traditional markets are closed.

The Great Market Disconnect

  • "This is what we wanted...using blockchains for real economic activity that is not just speculation. It is happening...And yet we've kidded ourselves over time that we should be buying like random shitcoin."
  • The market is split in two. Institutional capital is fixated on a handful of assets: Bitcoin, ETH, and publicly traded crypto vehicles like Circle, whose IPO has been driven by a retail "memecoin" frenzy.
  • Meanwhile, the broader altcoin market is dead, starved of liquidity as even crypto-native VCs pivot to chasing public market trends. The only on-chain excitement is in a few revenue-generating protocols and pure memecoins.
  • Crypto's original promise of a better financial system is ironically being realized just as the market gets distracted. The real bull case lies in the boring, fundamental work of moving real economic activity on-chain.

Key Takeaways:

  • The current bull market is a paradox. While institutional adoption of stablecoins and tokenization signals mainstream validation, it has sucked the oxygen out of the broader crypto-native ecosystem, creating a tale of two markets.
  • The Real Bull Case is Boring. The most significant trend isn't the next memecoin, but the "boring" migration of real-world finance onto blockchains via stablecoins. The winners will be those who solve for on-chain credit and build seamless user experiences, not just hype.
  • Tokenization is a Double-Edged Sword. While providing access to new assets, current tokenized stocks are riddled with counterparty risk, thin liquidity, and opaque structures. They are a step forward but risk backfiring if not communicated with radical transparency.
  • The Altcoin Shakeout is Here. Institutional interest is hyper-focused, leaving most altcoins without a bid. Protocols must now justify their existence with real revenue and utility, as the era of "liquidity-as-a-product" is over.

For further insights and detailed discussions, watch the full podcast: Link

This episode unpacks the paradoxical bull market where institutional stablecoin adoption and tokenized equities are surging, while the broader altcoin market remains stagnant, revealing a critical shift in capital allocation for Crypto AI investors and researchers.

The Institutional Awakening to Stablecoins

  • Rob Hadick kicks off the discussion by highlighting the massive surge in institutional interest in stablecoins, citing a standing-room-only panel at a recent Goldman Sachs digital assets event. He notes that family offices, trading firms, and large asset managers are now intensely focused on this area.
  • The conversation has escalated from a niche topic to a top-level executive concern. Rob shares an anecdote from Goldman Sachs where the executive committee is now asking, "Are we deep enough?" in the stablecoin space, signaling a firm-wide strategic push.
  • Rob identifies Stripe's deep dive into stablecoins as the primary inflection point. Stripe's credibility as a premier payments company has validated the technology, prompting other large corporations to seriously explore stablecoins for cross-border payments and programmable money.
  • "It's very clear that this has caught the, you know, it's in the zeitgeist right now. It is in everybody's mind and really at the forefront of how they're thinking about the future of this space." - Rob Hadick

Separating Enterprise Hype from Reality

  • While enterprise interest is real, Rob cautions that many announcements are "complete nonsense" and driven more by headlines than substance. He observes a tendency on Crypto Twitter to celebrate any partnership without scrutinizing the underlying capability.
  • He uses the Fiserv-Solana partnership as a prime example, arguing that Fiserv's legacy, non-cloud-native tech stack and the community banks' inability to operate in a 24/7 programmable market make a large-scale stablecoin business highly unlikely.
  • Strategic Implication: Investors should be wary of legacy players announcing crypto initiatives. Rob predicts that instead of these incumbents successfully adapting, "some startup will come and replace them," representing the real investment opportunity.

Debunking Stablecoin Myths and the On-Chain Imperative

  • Rob clarifies a common crypto-native misconception: stablecoins are not inherently cheaper than traditional rails, especially when on/off-ramping to fiat is required. The associated FX and compliance costs can make them more expensive.
  • Conversely, traditional finance underestimates the potential for a world where payment flows remain entirely on-chain, which eliminates costly fiat conversions. The key to unlocking stablecoin efficiency is minimizing interaction with legacy banking.
  • He points to Rain, a company issuing stablecoin-backed cards that settles directly with Visa in stablecoins. This demonstrates a capital-efficient, on-chain payment flow that bypasses traditional banking intermediaries for settlement.
  • Actionable Insight: The most valuable future systems will be those that facilitate fully on-chain economic activity. As Rob puts it, "it's a significantly better product experience if you stay onchain."

Forecasting the Winners and Losers in the New Financial Stack

  • Looking ahead, Rob predicts the "entire middle of the transaction flow is getting completely collapsed." Intermediaries like traditional payment processors and gateways are at high risk of being disintermediated.
  • The winners will be those who own the endpoints of the transaction:
    • Large global banks with deep compliance and KYC/KYB expertise.
    • Product-led tech companies like Stripe that own the end-customer relationship.
  • This analysis provides context for the announcement of Peter Thiel's new crypto-friendly bank, Arbore. Rob, who was aware of its development, sees it as a formidable player positioned to build a "humongous fantastic business" by leveraging a modern, digitally-native tech stack from the start.

Analyzing the "Memecoin" Dynamics of the Circle IPO

  • The conversation shifts to Circle's explosive public market performance, which Rob describes as "crazy." He highlights the unprecedented bearish initial coverage report from lead underwriter JP Morgan, which set an $80 price target—nearly 60% below its trading price at the time.
  • Rob attributes the stock's massive surge to a "retail bid," suggesting it is trading with memecoin-like dynamics. This is driven by low float during the post-IPO lockup period rather than fundamental institutional demand.
  • "It is basically a memecoin. Uh, at least according to this person that that I talked to." - Rob Hadick
  • Strategic Implication: The high valuation, fueled by retail FOMO, creates board-level pressure at other companies. It serves as a powerful catalyst forcing traditional firms to develop a stablecoin strategy to demonstrate they are creating shareholder value.

Robinhood's Foray into Tokenized Stocks: A Regulatory Workaround?

  • The discussion moves to Robinhood's announcement at ECC of tokenized US stocks and private company shares for its European users.
  • Rob clarifies that the tokenized public equities are essentially derivative contracts that cannot be taken off-platform and only trade 24/5. He argues the primary problem this solves for Robinhood is its lack of licensing to offer US equities directly in Europe.
  • The private company offerings (e.g., OpenAI, SpaceX) are structured through an SPV (Special Purpose Vehicle), a subsidiary company created to hold specific assets. Users buy a derivative contract giving them exposure to a fraction of the SPV, not direct ownership of the underlying shares.
  • Actionable Insight: Investors must scrutinize the underlying structure of tokenization products. Robinhood's offering, while framed as an on-chain innovation, currently functions more as regulatory arbitrage with limited crypto-native utility for the end-user.

The Perils of Opaque Communication: The OpenAI Backlash

  • Santiago criticizes Robinhood's opaque communication, which led to public backlash from OpenAI and confusion among users who might have mistakenly believed they were getting on the company's cap table.
  • Rob's analysis is sharp: "The biggest problem they made... was just how they talked about it. It wasn't actually the product itself." By framing a simple derivative product with "big crypto promise ways," Robinhood created unrealistic expectations and damaged trust.
  • This is contrasted with Republic's approach, which clearly labels its similar product as "mirror tokens"—a new type of token tied to the performance of private companies. This language is more transparent about the derivative nature of the instrument.

XStocks on Solana: The Worst of Both Worlds?

  • The conversation covers XStocks, tokenized equities from Back.fi that, unlike Robinhood's, can be transferred to self-custodial wallets and used in DeFi on Solana.
  • Major Risk: Rob expresses serious concern about the inability to economically market-make these tokens on weekends when traditional markets are closed. This forces market makers to either hold unhedged risk or "blow out the spread," creating uneconomical trading conditions.
  • This dynamic creates the potential for "cascading liquidation risk" in DeFi protocols like Camino that accept these tokens as collateral, as price oracles could become unreliable during off-hours.
  • Strategic Implication: The hybrid on-chain/off-chain model for tokenized assets creates significant structural risks. Until there is native primary issuance on-chain, these markets will be prone to price dislocations and arbitrage difficulties, making them dangerous for unsophisticated traders.

The Great Disconnect: Alts vs. TradFi Crypto Plays

  • Both speakers observe a stark disconnect in the market: while institutional products and public crypto stocks are rallying, the broader altcoin market is stagnant.
  • Rob notes that even crypto VCs are now spending most of their time talking about public company treasury strategies rather than new protocols. He identifies two separate markets: a Degen market focused on a few revenue-generating protocols and memecoins, and an institutional market focused almost exclusively on Bitcoin, ETH, and stablecoins.
  • "There are clearly two different markets... the Goldman event talked about a couple things... Bitcoin... ETH... Ripple... and Canton... They didn't want to talk about any of the other things happening in crypto." - Rob Hadick

A Call to Return to Crypto's Core Mission

  • Santiago and Rob conclude by urging builders and investors to return to the core principles of crypto, particularly DeFi and payments. The industry is on the "precipice of getting what we wanted"—using blockchains for real economic activity, not just speculation.
  • The most significant opportunities remain in building a better, internet-native financial system. As Rob states, "by the time that everybody is talking about stable coins that means the trade is over."
  • Actionable Insight: Investors and researchers should not be distracted by short-term price action or the "shiny new thing." The enduring value will come from protocols that solve fundamental problems in finance, payments, and value transfer, which are now gaining real-world traction.

Conclusion

This episode reveals a market divided. While institutional capital fuels a bull run in stablecoins and tokenized equities, the altcoin market languishes. The core insight for investors is to ignore the hype and refocus on crypto's foundational promise: building a transparent, efficient, and truly on-chain financial system.

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