Watch the full video of this Space session on Gamma Prime’s YouTube channel
Space session with Evan Szu (Co-Founder & CEO of Gamma Prime), Kristof Kammerhofer (Head of Marketing at P2P.org), Claudio Cossio (Co-Founder of Meta Pool), Mati Greenspan (Founder & CEO of Quantum Economics), Dean Thomas (Trader & CEO at Stealth Capital), and Alex McFarlane (Co-Founder of Keyring Network)
The Gamma Prime Space session brought together some of the sharpest voices in crypto — Evan Szu (Gamma Prime), Kristof Kammerhofer (P2P.org), Claudio Cossio (Meta Pool), Mati Greenspan (Quantum Economics), Dean Thomas (Stealth Capital), and Alex (Keyring Network).
The panel explored stablecoins in global trade, tokenization of dollars, macro forces like tariffs and inflation, and how Bitcoin and Ethereum are positioned for what’s next.
Evan (Gamma Prime)
Hello everyone. For some reason the audio is not working. Hold on. Checkity check. Alright. Yes, I can hear you. And I was having a bit of audio as well. It seems like X likes to always have something technical going on.
But everyone, thank you for joining us for the weekly X Spacescast for Gamma Prime. We’ll be getting started shortly. Thank you guys for joining us.
Welcome to the Gamma Prime Spacescast. I’m your host, Evan Szu. Looking forward to having another fabulous session today. We’ve got some familiar faces with us again from last time, and yeah, looking forward to digging into it with you guys. We’ve got a fabulous panel for you today.
As our panelists, we’ve got several of you who have been with us a few times. For those of you that are new as panelists, just so you know, we always do this little nugget in the beginning, where we ask you to share something from your world.
The theme is always something along the lines of something that you’re aware of from your corner of the world that you kind of want to share with us. Today’s theme is places. So I’m going to ask you to introduce yourself and then mention just a place. Could be a neighborhood, city, or country — something that’s maybe a little less well known, but that you’ve got your eye on, or that you’ve visited and think is kind of unique, that you want to bring to our audience.
We’ll go around. I usually do things open table, so anybody can feel free to jump in. After everybody’s introduced themselves, then we’ll jump into the topics. Looking forward to chatting with you guys.
So I’ll go ahead and start. I’m Evan Szu. I am one of the co-founders here at Gamma Prime. Gamma Prime is a marketplace for private investments. Some of you will know that as just hedge funds. Essentially, we focus on non-correlated returns — things that are not going to move up and down with usual stocks and bonds. And that’s why we love crypto, because it’s one of the best uncorrelated. It’s got a mind of its own.
So for my tidbit today: a place, maybe a little less well known, that’s on my radar has been Kuala Lumpur. For those of you who have not been there, that’s the capital of Malaysia. It is very near Singapore. When you go visit for Token 2049, it’s a one-hour flight away.
The reason I love it — I think it’s a hidden gem. Everyone has the same reaction when they go to KL for the first time: Wow, this is like a first world country and a first world city. It’s clean and safe, it’s got great transit, and it’s really quite inexpensive. The food there is often half the price or even less, from a chain coffee shop up to a Michelin star restaurant. It’s religiously moderate, technologically advanced. The second tallest building in the world is actually there, and it’s not the Petronas Towers — it’s probably a tower you’ve never heard of.
It’s English-speaking, very multicultural for a Southeast Asian country. It’s got Indian, Malay, Chinese, Westerners — always feel welcome there. It’s in a very friendly part of the world. Malaysia is either the top country, or definitely in the top three, for visa-free visiting from other countries — meaning it has the most number of countries in the world that can visit Malaysia visa-free. That tells you a little bit about who they are.
And by the way, we’re going to have some awesome speakers from Malaysia at our panel in Token 2049, at our side event. We actually have folks that are working with the government to set up stablecoins in Ringgit, which is their local currency. They’re also going to be tokenizing RWAs there, focusing on money markets. So they’re really moving and trying to become a participant in the crypto world too. Another reason to like them.
Some downsides: it is a little hot and humid pretty much all year round. It’s not a party place, just so you know. But besides that, I highly recommend visiting.
Okay, I’m going to open the floor up to our awesome panelists. We’ve got several familiar faces. I love this little part of the session, by the way. Last time I learned that Kris from P2P bought a 3D printer. Claudio was saying, Hey, don’t believe the hype when it comes to Michelin star restaurants in Mexico — he’s got a better place. And Alex, I think you skipped one last time, but mentioned that perp rates are really lagging despite Bitcoin being at all-time highs. So, love this little part of the session. I’ll open it up. Feel free, anyone, to jump in, introduce yourself, and give us a tidbit about a part of the world.
Kristof (P2P.org)
Thank you very much. First of all, extremely impressive memory you got there. It’s really amazing.
So I’m Kristof. I’m Head of Marketing at P2P.org. We’re one of the biggest non-custodial staking providers in the market. I’m sure if you stake Ethereum, Solana, Polkadot with any of the big exchanges, you basically stake with us.
So, to me and my tidbit, also referring to Token 2049: every time I go to Token in Singapore, I go afterwards to Japan. And honestly, the first time I’ve been to Japan, it was really totally eye-opening. There’s no such thing like it.
One of my favorite places there is the Inari Mountain in Kyoto. I’m sure you guys have seen pictures of it — it’s the mountain with a thousand gates. It’s dedicated to the god of prosperity. I had to look up exactly what the god is for, but it has to do with wealth, making money, and fertility. I think this is very related to what we are all doing, so I think a lot of people would want to visit it.
It’s very beautiful. And if you actually make it to the top, there are not that many people. Down at the train station, there are thousands and thousands, so you think, Oh my god, this is going to be a tourist nightmare. But since the hike up is quite taxing and it’s really hot and humid, no one actually goes all the way up to the top.
So I recommend you take the hour and a half, go up there, suffer, and enjoy the views and shrines. It’s really, really worth the visit
Evan
Awesome, Kris. Good to have you back. Any one of our panelists, feel free to go ahead and jump in. Introduce yourself and give us a bit of a nugget from your world.
Claudio (Meta Pool)
Okay, I’ll go right ahead. And it’s all about food for me. So anyhow, yes, I kind of threw everybody under the bus for the Michelin star stuff in Mexico, especially the taco places. The restaurants are good, just FYI on that one.
But just talking about food again. I know a couple of you guys and gals might be going to Buenos Aires in November for DevConnect. I do want to say that Buenos Aires has a great food scene. It’s not as cheap as it used to be. At least two years ago, it was really, really cheap. Now it’s getting a little bit too expensive. But then again, hopefully it’s for the better, right? No more volatility on the Argentinian peso.
I would recommend there’s a great place, a steakhouse, of course, called Corte Comedor. It’s a super good place, really great, low-key. It is part of the Michelin Guide, but it’s a really great place there. Great food. Of course, not for the vegetarians or vegans in this space here. But definitely Corte Comedor is one of them. So definitely try it out.
There’s also some hole-in-the-walls in Buenos Aires. You do have to look for them. But if you know who to ask, grab some locals and ask them where they eat, and you will find some good holes in the wall.
Other than that, hopefully I’ll see you guys and gals in Buenos Aires late in November. This year I’m going to miss the Asia side with Token 2049. But yeah, looking forward to this conversation.
Evan
Thanks, Claudio. And looking forward to your food guide, which sounds like it’s going to be released shortly.
All right. We also have Mati from Quantum Economics, Dean from Stealth Capital. Go ahead and introduce yourselves.
Mati (Quantum Economics)
Hi, my name is Mati.
Dean (Stealth Capital)
What’s up, guys? Mati, you go ahead.
Mati
Thanks.
Yeah, I’m a trader at heart. Been an insider in trading venues since 2008. Seven years at eToro. Founded Quantum Economics, which is a network of builders in the crypto space.
I live in Israel, actually in a quiet mountain town. Unfortunately, not much of a food scene there. But my wife is a chef. She worked in a gourmet restaurant for ten years, and she is probably the best cook I have ever met. She could likely put some of those chefs from Michelin star restaurants to shame.
Yeah, last night we were sitting on Amazon because we’re out here visiting California at the moment. She got very excited looking at some of the spices, the options that are out here. So we’re probably going to take a full suitcase home of just spices.
Evan
Awesome, Mati. Great to have you with us. And we also have Alex from Keyring and Dean from Stealth. So whenever you guys are ready.
Dean
What’s up, guys? I’m Dean. I started my career on Wall Street, worked at Goldman, Blackstone, was an exec at Polygon. I’m a trader, I enjoy markets.
This morning my place has been the toilet. Because I was on Amazon, ordered a bunch of these nootropics that are supposed to help your brain function, and apparently they’re just giving you diarrhea. So I’m on like trip six right now to the toilet. So apologies. That’s my world. But don’t believe the hype. Those scammers, man, they’ll get you.
Evan
We love the trading Wall Street types. As I mentioned, I’m a trader myself, 32 years. So both Mati and Dean, welcome. And Alex.
Alex (Keyring Network)
Hi. I’m the founder of Keyring Network. We do, effectively, the way I think about it — it’s like bringing the Web 2 version of login, like login with Google, but bringing that to Web 3 with zero knowledge. So you can just log in with your Exchange account or your bank account, and not have to share yourself or your passport with apps that you want to log into.
Yeah, Dean, are you sitting on the toilet? Because it literally sounds like you’re in the toilet right now.
Dean
No, no, not at the moment. But in about two minutes, I’ll have to make another run.
Alex
Okay. Because it sounded like you were. I had to call you out on that, because it sounded like the echo, like you were literally sitting on the toilet. But yeah, that’s good. Yeah, I feel sorry for you.
Stuff going on in my world — at the moment I’m just like no life in crypto. So the things going on in my world are probably just really boring for everyone to hear about. Like bugs with Forge or issues with GitHub runners.
I think the only thing that’s probably interesting would be looking at booking ski holidays for the next ski season. I’m looking at, I think, the best place to go skiing is probably Val Thorens or Meribel. It’s probably the easiest place to access with the best ski area for snowboarding.
Because if you go to the ones that are closer to the airport in Geneva, they’re good for skiing but they kind of suck for snowboarding. There’s one called Port de Soleil, which is a massive area. But the problem is, whenever you go to any of the steeper runs, you end up channeled into this really crap blue run. If you’re on a snowboard, unless you’ve waxed your board massively that day and the snow is right, you end up punting for at least 100 meters. And that just pisses me off.
Also, it’s really low in the snow line these days, so you often get crap snow coverage from February onwards, which is really sad for the area. But it is what it is. So I personally think the best place bang for your buck at the moment is Val Thorens because of the altitude. Its snow coverage is pretty unreal, and the snow parks are awesome too.
Evan
Awesome, Alex. You may already know this, but our head of capital markets, Korath, was a professional snowboarder on his way to the Olympics. Never quite made it, personal reasons, but I’m sure you guys would have a lot to talk about.
Alex
No way. My career winnings are several bottles of champagne and $2,000.
Evan
That’s awesome. That’s more than most.
Let’s jump into today’s topics. We’re going to start out with sometimes known as the taco trade, which stands for Trump Always Chickens Out. What we mean by that is that Trump has once again extended this trade truce with China for 90 days.
Now he’s going around picking on other countries like Brazil and India, but China seems to be someone he’s just trying to punt and not get too messed up with.
China, of course, is a real unique world for crypto. A lot of people have referred to them as the original Bitcoin maximalists because they really appreciated the fact that you can take your local capital, turn it into machinery, and then mine Bitcoin to turn it into a new currency. That’s probably because they have high currency controls there.
There’s also a discussion about whether or not that is actually driving stablecoin markets as a means for getting capital out of the country.
So let’s start with China. What are you seeing and what do you predict in terms of either this truce or where crypto is going in China? And are we going to see additional pressures on stablecoins as a means of circumventing the capital controls?
Open it up.
Claudio
I’ll go first. So I think one of the most important things when the tariffs started to sound the alarm bells on the capital market, I think for—and coming here, again, right from a Latin American angle, Mexico’s biggest trade partner after the U.S. is China.
So there’s definitely a lot of there. And just to give everybody clarity, Mercado Libre, which is one of the largest e-commerce sites in the world trading right now on NASDAQ, but Melly, I think, is the ticker. No financial advice, of course.
They’ve seen an influx of sellers, Chinese sellers, that they’re selling their goods over their platform and they’re making money in Mexican pesos. And now they need to send that money overseas, of course, to pay for those goods and to send the earnings as well. They used to do it through traditional escrows.
Now they’re using stablecoins to do it, mainly on-chain. And so—but it’s still a problem that is in need of an on-chain solution. Right now, I think Mercado Libre has around 42 partners that are doing their FX.
And so it’s something important that us as an industry, we need to work to bring that solution over there. Part of it will be to have local stablecoins in the different regions, Mexico being one of them.
Then you have, of course, Brazil. And then you have Colombia. Argentina is another one.
But you’re going to have this influx of projects and startups launching stablecoins, non-US-denominated. So I think that’s the next bounce of the ball. And I think that’s going to open up a whole new set of opportunities for real-world assets to come on-chain.
We just talked to another protocol, which was interested in getting exposure to non-US bonds. And so there’s a couple of them. Mexico has this. Then you have, for example, in Peru, the treasury letters as well.
And so there’s going to be a couple of good opportunities there to get exposure to real-world assets and bring them on-chain. So tokenization of them is going to be critical.
And I think that’s what’s going to open up new venue channels for foreign capital to also get exposure to it and leverage it as well. So I think it’s just the tip of the iceberg.
Evan
I didn’t realize transactions were already happening through blockchain to settle actual trade. That’s fabulous. It’s great to hear.
Mati
It’s happening everywhere. One of our members of the Quantum Network sent us a picture in our private group the other day. She was flying through an airport in East Europe.
It was Bulgaria. I’m not sure. And actually, the duty-free in the airport was all priced in USDT rather than U.S. dollars or local currency.
So yeah, the Stablecoin Act, the Genius Act, and the Clarity Act, specifically the Genius Act, which deals with stablecoins in the United States, that’s been proposed by Donald Trump and already passed through Congress. It’s now a law. And it basically ensures that the tokenization of the U.S. dollar is going to happen quickly.
And it’s actually going to change the world. It’s going to make dollars stronger as a currency by tokenizing it. The tokenization is not going to happen in a centralized way by the central bank.
So it’s not going to be a CBDC. As I’ve been predicting for many years, the tokenization of the U.S. dollar is happening from the private sector. And commercial banks will be the first ones.
So now every commercial bank will have, instead of the archaic system that they do today—when you go to a bank and they lend you money, they’re just clicking a few buttons and crediting your account. And there’s naturally money creation happening there.
That is the money creation, but there’s no actual dollars being printed. It’s just, you know, they have the ability to inflate the supply. And nobody really has any ability to audit any of that.
When you look at the macro level, it’s a mess. So with the tokenization of the dollar, it’ll ensure that each and every issuer, each and every coin is tracked back to the issuer. So you’ll have dollars issued by Wells Fargo, dollars issued by JPMorgan Chase.
And you can have absolutely a little bit of arbitrage and opportunity on that. But if something happens to Wells Fargo, JPMorgan dollars are completely safe. So that helps systemic risk.
I think as Claudio mentioned, and Claudio, I’d love to speak with you about the opportunities in South America, because it seems like there is no established industry leader there. And that’s a ripe industry to explore, possibly for Quantum Economics as well.
But the entire world is going towards tokenization now. And very soon, as I stated in 2015, everything that can be traded for a price online will be tokenized and traded on a blockchain.
And as I’ve recently discovered, you can even tokenize tweets now. It used to be that when Elon tweeted, especially a meme or something like that, you’d have 100 people producing a coin and then trading them on the exchanges immediately.
Now you can actually just do that by tweeting a bot. The bot produces the coin and even gives you some fees for doing that. So that’s about to be accelerated in a big way.
Expect that everything and anything, any idea, any thought, any commodity, or currency is about to be tokenized. And it’s a really exciting thought.
It could probably be confusing for some people, especially who are starting out and don’t really have much knowledge of this technology. But it’s going to be very profitable, even for them. And especially for those of you who have been in the industry for a while and understand what’s what.
You guys are at the tip of the spear. So I’m very excited for everything that’s coming. And I hope that you all are too.
Evan
Awesome, Mati. Yeah, I think the contrast with the way the Chinese are approaching the digital yuan is notable because it’s much more centralized.
It’s not really a cryptocurrency. It’s really just electronic yuan. And that’s so that the central bank has full control over its issuance record of all transactions, which is the way that they’ve handled their paper yet.
So certainly internally consistent, different approach, a little less decentralized than the way the U.S. is approaching it. But the U.S. approach does still favor larger banks. So in some ways, it’s centralized as well.
Other thoughts?
Let’s add in the question on inflation here. It has a large driving effect for rates. And rates seem to be certainly a strong correlate to asset prices and in crypto prices. So let’s dive into that a little bit.
Looking at my hourly chart today, I’ve got a couple of large bullish and then some retracement candles on Bitcoin. And it looks like it’s poking up to all time highs.
So just because the economy is slowing doesn’t necessarily mean Bitcoin’s going one way or the other. So this is something we can unpack. Let’s dig in a little bit in terms of some of the driving forces and where you see things going.
So far, inflation seems to be cooling along with jobs. After all, a lot of inflation, at least in the U.S., is driven out of services at this stage, which is tied to the jobs market.
The rest of the world, Europe, has had almost negative inflation for a while now. Swiss banks are already heading towards zero interest rates. And China has not really been in expansion for a while.
So we’re definitely in a soft economy. And that’s affecting both inflation but also rates. Where do you guys see this going in terms of how it intersects with the world of crypto?
Dean
I think April, right? We had that dip. Everyone was basically saying it’s the end of the world, tariffs can destroy everything.
I actually bottom-ticked that day. But I expected another leg down, so I flipped it out real quick, which in hindsight was the dumbest thing I could have possibly done.
You basically had a bullshit recovery in assets. Hedge funds were massively offsides, right? I think they were net short or flat. And then they kept trying to short it and hoping for a retrace, and it never came. At one point, they basically capitulated.
All the retail traders who bought the dip, all their favorite meme names, etc., just basically made a lot of money. Like you said, with the taco stuff, I think the market overall has basically become desensitized to any bad news, whether it’s outbreak of war, whether it’s new tariffs. Markets are just bidding every dip.
So given that inflation is supposedly cooling and the immense pressure that Trump has been putting on Powell, I wouldn’t be surprised if we have a rate cut, even if it’s a small one in September. So given that we think the money printer is coming back on, assets are basically at all-time highs. Risk assets are basically at all-time highs.
It could potentially be a sell-the-news event. I would ideally like to see that, as somebody who wants to see things correct so I should have a better entry. But given how desensitized people are, I wouldn’t be surprised that if there is a retracement at all, it would be very brief and muted.
Basically, the theme in my world is the ETH treasury pledge. You have BMNR, you got Joe Lubin with SBAT, Tom Lee basically becoming the Michael Saylor of ETH. You’re seeing ETH pushing to try and break all-time highs today. Tom filed $20 billion of shares that they want to sell to buy more ETH.
The issue with that trade, I think, is that you’re seeing Circle and other folks like Stripe come out and say, we’re not going to settle on ETH. They’re going to build their own little ones. EVM, but based on Tendermint, is my understanding.
So ETH is a great trade. I participated in that. Longer term, is it actually as good as Tom wants everyone to think it is? I don’t think so. The tech kind of sucks, kind of expensive. And if all of these major stablecoin issuers move to their own little ones, they don’t need to settle on ETH.
So I’m always a skeptic, I could be wrong. ETH can go to $20,000 like Tom’s predicting, but I’m a trader. I’ll trade it and we’ll see where it goes from there.
Alex
I actually am prepared this time, Evan, given that you called me out on the Treasury FedWatch futures last time we had this call.
So I’ve got the CME FedWatch. What’s really interesting is that there’s been a sudden spike yesterday. And it seems like all of this stuff is driven by macro. I don’t know how much crypto is actually driving this rally.
But the spike from 4,500 up to 4,700 or something seems to have been driven by a sudden probability shift on the Fed Funds futures on CME at least. Yesterday, the 25 basis point was priced in around 90%, which is high.
But it’s shifted today to 99.8%. It’s priced in at 0% of a 50 basis and pretty much 0% of hold. Polymarket hasn’t changed though, which is interesting. And I am still surprised that no one is arbitraging between Polymarket and CME futures and swap rates.
Evan
That’s fascinating. I’ve actually been sniffing the possibility of a 50 at some point, an unexpected 50, because things are cooling. We just had—CPI, I think. One of the inflation reports came out yesterday at expectation and slightly cooler.
So I think that’s probably what’s driving your CME FedWatch odds. We actually do have a hedge fund on Gamma Prime that does arbitrage between betting markets and other data areas. They’re pre-launch, but it’s fascinating. This is another developing area of opportunity.
And yeah, as long as you can trade both, right, you’re not going to get any margin.
Alex
You can borrow cheaply on Treasuries and spank on Polymarket. That’s basically the trade, right?
Evan
Yeah, I would agree with that. Awesome. Kris, I think you had a thought as well.
Kristof
Yeah, I just wanted to come back a little bit to the inflation topic. I don’t know if you can really trust the numbers, because over here in Europe at least, they also say inflation is cooling down, but it certainly doesn’t feel like it.
So I think the Fed is a little bit stuck. The current rates are still too high for making an aggressive cut. Maybe there’s going to be a small one.
So I see potentially three big winners: Treasuries—I think someone mentioned this already, and we see this also on our end, that corporate Treasuries are actually a thing now compared to, let’s say, one and a half years ago. We did some research around this as well because corporate Treasuries are potentially big customers or big partners.
So there’s quite an interesting play going on. If you look at what the companies have done, a lot of them issued 0% convertible bonds and then just bought crypto with it and then pumped their valuation. It’s really amazing. And then again, bought more crypto, and with the markets going up, it’s obviously very, very interesting.
Then next one is staking. Obviously also again for us, a big one. Ethereum pays, depending on where you go, between 3% and 6%. This is huge. Solana is paying 11% plus appreciation of the asset, which is also amazing.
And then stablecoins and stablecoin lending becoming a thing globally. I’m not so sure about the US in general with stablecoin yield. But I think that the rate cuts are not really going to happen.
And I think it will drive more people into crypto. And especially with the markets hitting all-time highs, I think everything will converge into even higher highs. And I think someone last time said, if I’m not mistaken, if ETH goes next week to 4.5, it will go to 5 right after. I think we are on our way.
Evan
Yes, I can’t remember who said that. But I think it’s a good point to look at the spread. So Dean, back to what you’re saying as well.
Yes, Bitcoin is sort of tapping the same high. ETH has broken to quite a new high. And generally, the spread says more risk-on. Bitcoin is a little more of the blue chip. ETH is slightly more aggressive play.
So that says underlying risk sentiment is positive, at least in the crypto markets.
Claudio
Yes, and I think one of the important things is if you’re getting exposure to any of these assets, and again, this is not financial advice. Do be mindful that, yes, it’s still quite early in the sense of what to do with that asset. And of course, staking is the most important activity you should be doing.
This is no pun intended. Of course, that’s what we do with Metapool. But we took one step further. And I think we’re going to be at a point where we’re abstracting a lot of the complexity around being involved in this staking industry.
In the case of Metapool, we launched Node Studio, which is allowing anybody to sign up through email and run a node on the Near protocol blockchain. And so basically you’re being part of the underlying infrastructure.
As we progress and we start to make it less complex for folks to run a validator node, I think that’s going to open up a whole new ball of opportunities for startups, individuals, and organizations that want to take the not-so-complicated and, more importantly, not take the risk as well.
If you’re keen on running a validator node and starting to validate the staking rewards, I think that’s a good business if you are sold on the idea of what the protocol wants to do. Of course, it’s not trivial.
If you want to run this Solana validator node, it’s super expensive. I think like, I don’t know, $20 million to run a node or six or something like that. But there’s other alternatives. And so look for those. If you’re keen on that, hit me up. I would love to set you up with a validator node.
Make it easy. For as little as $27 a month, you can run a node. So there’s going to be opportunities on some blockchains where you can go ahead and do that. Some of them, not so much.
For example, Dappnode is a partner of ours. They run this at-home validator. And so definitely keen to support that and just get the word out there that there’s more to getting exposure to the tokens. You can participate in securing the blockchain as well.
So yeah, looking forward to lots more opportunities being created during this. It’s going to be a really, really great bull run.
Evan
Claudio, I think that’s a really key point, which is, hey, the price of the coin may get in the headlines. But there’s so many lower-risk, lower-volatility ways to participate with this bull run without necessarily taking straight, long, or short exposure.
Staking is a great example. You can also do liquidity provisioning. There’s the basis trade. And I think when people hear this, at least people in the crypto world, they understand, hey, I’m actually helping run the guts of the system. I’m doing something that’s generating real value, and that’s why I’m being paid for it.
So how to participate. Claudio, what you guys are doing is a great on-ramp. Just to say there’s other ways you could do vaults. What we do at Gamma Prime is we do REG-compliant funds. So ours are hedge funds. You have to KYC, but it’s designed to drag in new money from institutions.
So all of it’s good for the ecosystem and helps do price discovery. And like I said, it actually runs the actual backbone. This isn’t a Ponzi scheme. This is actual, legitimate value that’s being added to the ecosystem.
Alex
Random question, because someone mentioned inflation targets. Does anyone on this call actually know why we target 2%?
Mati
That’s a great question. Yeah, that’s what the financial overlords decided that we should work for them.
Alex
The funniest thing is if you look down the rabbit hole of who decided it. Fed only set this in 2012. It’s only a recent phenomenon.
The ECB set it in after 2008. And where did they get the idea from? It was like the Bank of New Zealand. The Bank of New Zealand in 1988, something in the 1980s. I know it was the 1980s. BNZ-based central bank just arbitrarily picked 2%.
There was no real research behind it. They explicitly said at the time, why 2%? It’s higher than 1%. That was literally their reason. Higher than 1%. We think 3%, 4% sounds a bit high. No one put any…
It’s crazy because we have all of the PhDs in the world doing quant finance and arbitrage trading, all this really complicated shit. And it’s all underpinned by the Bank of New Zealand randomly going out one day and thinking, fuck it, let’s do 2%.
And the only reason they picked… the only reason everyone else followed them is because they tamed inflation from 7% down to 2%. And central bank… The whole thing, basically, the fact that the Bank of New Zealand were the only ones to take the risk on that shows kind of how much of a farce the idea of targeting that is.
And all the other central… Alan Greenspan was saying that we should target 0 to 1. The IMF head was pushing for 3 to 4%.
And what’s interesting when you look at inflation is that the Fed was aggressively cutting when inflation was higher coming into the election. And this is what I think is one of those interesting things coming into the whole tariff question is because I think the Trump team have a good point with politicization.
And I don’t think it’s like… I don’t believe them where they say, oh yeah, politics is infected. I don’t buy that. But what I do buy is that macroeconomics has an overlying political spin.
And so if the Fed have decided that the particular policy implemented by the White House is one that they don’t agree with as being a successful policy, they are always going to complain about it being inflationary.
And I think that’s one of the issues that we’re seeing at the moment is that fundamentally in the Fed, they don’t believe that there’s going to be short-term pain, long-term gain, which is what the position of the White House pushing. And the Fed are instead saying there’s going to be short-term pain and long-term complete diabolical shit.
And so that’s why they’re refusing to cut, right? And so what’s really interesting is this is why I don’t think we can see 50 basis, even if inflation prints came out pretty good, because the Fed has been attacked by Trump on a political angle and they won’t want to be seeing as losing their independence.
But it creates a really annoying thing for everyone else in the market because frankly, they should be cutting 50 basis in my opinion.
Evan
Interesting. Yes, you’re right.
Mati
I apologize. I do have a hard cut off at the top of the hour.
But isn’t it wild like how government entities just come out and say publicly with a full mouth, hey, we believe that the money in your bank account should be devalued at 2% every year. Actually, that’s what we think it should happen. That makes a lot of sense to us.
And that’s what we’re going to target. Actually, we’re going to do that intentionally. It’s even worse though. What kind of audacity do you have to have to tell that to people?
Yeah, but it’s worse.
Alex
It’s literally because they say, why? Because the New Zealanders said it.
Mati
No, I get what you’re saying that it’s very arbitrary and they agree with you. But just the fact that, you know, citizens actually stand for this bullshit.
Like, how can anybody just listen to a central banker say, hey, yeah, we want everybody’s money to decrease in value by 2% over the next year, which is exactly what they’re saying in very pretty words.
And people go, yeah, OK, let’s write that into a headline. That’s very, that’s very normal. And then people reading that at their breakfast table go, oh, yeah, 2%. No problem. Let’s do that.
Like, what the fuck is wrong with people? I’m sorry.
And just, yeah. And now, especially, you know, highlighting the rift between, you know, Trump and the Fed. I mean, look, you know, it’s a crying shame.
These people should not be in charge of our money. They just shouldn’t. It doesn’t make any freaking sense. And clearly, Jerome Powell, you said that Trump has attacked Powell. I think that Powell started it.
He’s not lowering interest rates when all of the, you know, all of the metrics tell him he should. But the fact that it’s like even getting into that stupid, silly argument is just like splitting hairs for me.
It’s like just engaging in it is just accepting the fact that there should be a Fed and we should, they should be deciding unilaterally what the interest rate should be. That shit should be done by the free market.
That’s what capitalism is. And if you’re not doing that, you’re putting politics ahead of people’s welfare.
Alex
I think this is really funny, right? Because we go full circle because we actually used to have a Dow that set the market rate. Do you remember that LIBOR? That didn’t pan out too well, right?
Mati
Right.
Alex
It turned out that all the validators start bribing each other. They’re doing crypto.
Mati
I know Federal Reserve was trying to, was trying to tackle that with Howard. What’s his name?
Alex
Ludwig.
Mati
No, he was on federalreserve.com. It was a 2021 project that was trying to take over the rates in a decentralized way, but that didn’t really work.
No, but Satoshi’s solution is the best. Have a money that’s designed to go up in value over time. And you will de facto increase people’s prosperity.
You’ll increase saving over… you’ll incentivize saving over spending. And when people do have an excess in their bank account, it’s going to go up in value instead of being going down in value.
And that right there, that small change from a minus to a plus is going to have such an amazing impact on the world. People don’t even realize it yet.
Evan
A lot of the fear of Bitcoin by governments is exactly because they can’t control it. This is something that they would love to devalue at 2% too, or maybe more, because then nobody can tell that all currencies are slowly being diluted out.
Right, because there’s no relative benchmark except for maybe gold. But essentially the price of Bitcoin is a statement about how much governments are robbing Peter, Paul, and Mary to pay Joe, which is essentially what inflation is.
And I think the arbitrariness of that is fascinating. I had no idea that that was where the number came from. They just pulled it out of thin air.
Alex
Another hot take, Evan.
Evan
I love these tariffs.
Alex
Tariffs are value-added tax on US citizens.
Do you know? And so I’ve heard this from a reliable source, actually. Apparently the reason they put out tariffs across everybody in the world, even like random islands with penguins on them, is because the US is one of the only countries in the world that doesn’t have GST or VAT.
But if you compare that to the UK, we have goods and services tax around about 20%. In every other country in the world, it’s around about 20%. The US doesn’t have that, and it’s a massive loss for treasury income.
And so the rumor, which I’ve heard from fairly reliable sources, is that the White House is fully aware that tariffs are going to be paid by the US consumer. Now, you’d have to be silly to think that a $2 MAGA hat created in China that goes up by 50 cents and is sold for $50 in America is being paid by the Chinese. It’s going to go up to $50.50 in America, or maybe even higher.
So it is the Americans that are paying it. And what happens is the White House has just imposed a goods and services tax on everyone in America.
Evan
It’s a fascinating point. I think we do have sales tax. The US has sales tax, but like you said, it’s quite a bit less than GST. Usually it’s about 7 to 8%, maybe in some of the expensive states, some states have none, but that’s right.
Alex
It’s not federal though, is it?
Evan
That’s true. But I always view the whole thing as coming out of his right or left pocket. Because if the states take more, then the feds just give them less.
But yes, good point. Tax receipts have gone up quite a bit with this tariff policy, and governments like taking people’s money, especially if they can do it and blame the Chinese.
Alex
But this comes back into the inflation point. This is why I brought it up. Because when the Fed is saying, we don’t believe that this is a good idea—do they go to the UK and Switzerland and say, you should remove VAT?
Because it’s basically the same thing. It’s just the tariff argument means that you can kill two birds with one stone. You can punish countries who are pissing you off and at the same time raise tax revenue quite dramatically.
And what I find interesting with this whole argument, the reason you haven’t seen inflation come in is reality is there’s a lot of slack for that tax because everyone else raises the same.
Evan
My take on that is actually the weak demand. Right now, if jobs are weak, like we’ve had no job creation in the US for three months straight, essentially demand becomes really elastic, right? Because people are extremely sensitive to small price changes.
So that’s why they can’t pass it on. I don’t expect to see inflation from it. I do expect it to depress overall economic growth, because taxes are a deadweight loss. Not the whole thing, but some portion of it is.
Interesting—crypto really pushes and pulls in both directions for the dollar. It pulls away from the dollar in the sense that it doesn’t have built-in inflation, at least Bitcoin. It has some inflation, but it’s extremely small compared to the US.
And yet stablecoins also support the US and dollars, because it’s kind of moving towards the existing hegemon and bolstering it. Interesting dual effects. Other closing thoughts?
I love these chats. I think the intersection of macro and crypto is such a powerful, fascinating area. There are so many dimensions and aspects to it.
It’s the sort of space where there’s still a great deal of arbitrage opportunity. There’s a lack of trading sophistication, and that gives opportunity for people like Dean, Mati, myself, who come in with that experience from traditional finance and at the same time also bring efficiency to our system.
So again, fabulous to meet you guys. Thank you for joining us. This has been a Gamma Prime X Spaces Cast. Our next one’s going to be Thursday next week, same time, same station.
Thank you guys. And thank you to our awesome panelists. Appreciate y’all.
Everyone
Thank you very much. Thank you. Cheers.
