This episode reveals why the "perpification" of real-world assets is set to dominate on-chain trading, challenging the cumbersome tokenization narrative and creating a new playbook for crypto-native financial platforms.
Guest Introduction: Kaldora of Ostium Protocol
The episode features special guest Kaldora, co-founder and CEO of Ostium, a protocol focused on trading TradFi assets on-chain. Kaldora introduces Ostium as a platform designed to offer deep liquidity for trading global markets like the S&P 500, NASDAQ, and commodities with up to 100x leverage directly from a crypto wallet.
Where Are We In The Cycle?
- Conflicting Signals: Cedarus points out the presence of conflicting market signals. While traditional "top signals" are appearing, such as TradFi money flowing into crypto proxy vehicles, significant tailwinds like anticipated rate cuts still exist.
- The Bear Case: The primary bearish argument is that the market has already front-run the entire rate-cutting cycle. However, Cedarus notes that some liquidity dynamics cannot be fully front-run.
- Short-Term Headwinds: The Delphi research team identified a near-term liquidity drain from the TGA (Treasury General Account) refill, suggesting potential choppiness for the next month. Yan Lieberman adds that he is in the "chop for a couple of weeks to a month camp and then resume strength into the end of the year."
Equity Market Strength and Crypto Proxies
- Strong Earnings: Yan emphasizes that the recent earnings season was exceptionally strong, with record forecasts being beaten by record margins, suggesting robust fundamentals in the equity market.
- Digital Asset Trusts (DATs): A DAT (Digital Asset Trust) is a financial vehicle that holds a single underlying crypto asset, allowing investors to gain exposure through traditional brokerage accounts. The conversation explores the explosion of DATs for assets like ETH and SOL.
- MNAV Compression: Yan points to the gradual compression of the MNAV (Market Net Asset Value)—the premium or discount at which a trust trades relative to its underlying assets—as a potential bearish signal. Michael Saylor's recent decision to conduct share sales below a previously stated MNAV threshold for MicroStrategy (MSTR) created some backlash but was seen as necessary to maintain the "flywheel" effect.
ETH's Outperformance and Narrative Shift
- Concentrated Bids: Unlike previous cycles, the current ETH rally is fueled by highly concentrated bids through DATs, leading to less beta spillover into DeFi and other altcoins.
- The Narrative Shift: Kaldora notes the narrative for ETH has shifted from a "world computer" to a "store of value," a concept crypto-natives are familiar with but may be less intuitive for outsiders compared to Bitcoin's clear store-of-value proposition or a traditional cash-flow model.
- Valuation Debate: Jose questions the fundamental justification for a $15k ETH price target, noting it would give ETH a market cap larger than Meta and Tesla. The consensus is that such a valuation relies entirely on the market accepting ETH as a monetary asset. Yan states, "You can't buy ETH here expecting that the cash flows will ever justify the valuation, right? And like that's not the pitch anymore. It's do you think it's going to become a store of value?"
The "Perpification" of Real-World Assets
- Perpification Defined: Perpification refers to the trend of using perpetual futures—derivatives without an expiry date—as the primary vehicle for gaining synthetic exposure to assets, rather than holding the underlying tokenized version.
- The Problem with Tokenized RWAs: Cedarus and Kaldora argue that current tokenized RWAs (e.g., tokenized stocks) are like a "shitty version of a perp." They offer no governance rights, no dividends, and cannot be easily shorted or traded with leverage.
- Retail Preference for Perps: Kaldora highlights that perpetuals (or similar instruments like CFDs) are the dominant retail derivative product globally. She notes, "Given the option between perps and options, retail picks perps." This is because they are capital-efficient and ideal for expressing directional views.
- Strategic Implication: For investors, this signals that protocols focused on RWA perpetuals may capture significantly more volume and value than those focused on spot tokenization, which may be limited to niche institutional use cases.
Ostium's Model: Solving the Funding Rate Problem
- Rollover Fee Model: Ostium replaces the variable funding rate with a predictable rollover fee model, where both longs and shorts pay a small, stable borrowing fee. This is designed to provide a predictable cost structure suitable for TradFi assets.
- The Catch-22 of Funding Rates: Kaldora explains that for new on-chain markets, funding rates must become extremely high to incentivize arbitrageurs, but this simultaneously disincentivizes traders. Ostium's model avoids this by abstracting away the need for external arbitrage.
- Hedging Skew: The protocol's liquidity pool absorbs initial directional exposure, and a sister entity hedges sustained deltas in the underlying market, allowing LPs to earn the rollover fees while managing risk.
Crypto-Native vs. TradFi Incumbents
- The Disruptor's Advantage: Kaldora argues from first principles that disruptors, not legacy players, typically accrue the most value from new technologies.
- The Business Case for On-Chain: She presents a compelling business case for on-chain systems based on transparency and credible neutrality. Offshore brokers suffer from high customer churn due to a lack of trust, as they often trade against their users. Kaldora states, "There's a genuine business case... based in like a credibly neutral platform with transparency, which you can only achieve if the actual infrastructure is on chain."
The Challenge of On-Chain Liquidity for RWAs
- Quoting Underlying Markets: Ostium acts more like a broker (e.g., Robin Hood) than an exchange (e.g., NASDAQ). It quotes prices directly from deep underlying markets (like S&P 500 futures), allowing it to support massive trades ($50M+) with minimal price impact.
- The Liquidity Problem: Creating a native on-chain order book for a TradFi asset faces immense hurdles. Kaldora points out that S&P futures have ~$300M in top-of-book liquidity, orders of magnitude more than any on-chain market could realistically bootstrap in the near term.
- Technical Hurdles: Other challenges include handling market hours (TradFi markets close, crypto markets don't) and the risk of referencing thinly traded tokenized assets as a price oracle, which limits the size of the derivatives market that can be built on top.
Market Divergence and the Path to Alt Season
- Winner-Take-All Dynamics: Kaldora observes a massive divergence between the top performers (e.g., MAG 7 stocks, Bitcoin) and the rest of the market in both TradFi and crypto, suggesting a flight to perceived safety.
- ETH as the Key: Jose posits that a true alt season is contingent on ETH's performance. If ETH is successfully repriced as a store of value and continues its run, it could lift the entire L1 ecosystem and their respective tokens. If not, the market will likely continue to see isolated pockets of outperformance in utility-driven applications.
- Final Alpha: The episode ends with a piece of breaking news: Wormhole has submitted a competitive bid to acquire Stargate, challenging LayerZero's initial offer.
Conclusion
This episode argues that "perpification" is the most viable path for bringing real-world asset trading on-chain, prioritizing capital efficiency over direct tokenization. For investors and researchers, the key takeaway is to analyze protocols based on their ability to solve deep liquidity challenges and offer sustainable, user-centric economic models.
