Core Discussion Topics: In a conversation at Token 2049, Arthur Hayes and Tom Lee explored trends and challenges in cutting-edge areas including Digital Asset Treasuries (DATs), stablecoins, perpetual contract exchange competition, prediction markets, and privacy coins.

DATs (Digital Asset Treasuries):

* Tom Lee pointed out that Bitmine, as the largest Ethereum treasury, has created a "flywheel effect" through clear communication and institutional connections (e.g., investment from ARK funds). However, the market faces consolidation pressure, and most DATs might be eliminated due to insufficient scale or trading below Net Asset Value (NAV).

* DATs act as the "Wall Street CEO" for blockchains, filling the gap where foundations cannot directly engage in market promotion. However, there is a need for caution regarding the survival crisis of small-scale token treasuries and the risk of tighter regulation.

Stablecoins and the Appchain Debate:

* Stablecoin-specific chains like Plasma rely heavily on high-incentive farming to attract capital but are compared to "Bear Chain," lacking natural cash flow support. Success depends on leveraging existing distribution channels (e.g., Stripe's partnership with Tempo) rather than simply migrating existing users.

* Tom Lee believes the stablecoin market has huge potential (possibly reaching $4 trillion) and exploration across multiple chains is reasonable, but competitive barriers against Tron and Ethereum need to be addressed.

Perpetual DEX Competition:

* Hyperliquid faces pressure from token unlocks and fierce competition from emerging rivals (e.g., Aster, Lighter), testing its moat and profitability.

* Market growth potential remains high, but product homogenization could drive fee compression. Future innovation might shift towards complex derivatives like fixed income (e.g., Pendle).

The Social Impact of Prediction Markets:

* Polymarket (on-chain native) and Kalshi (US compliant) represent competing camps. The former, with its accurate predictions of events like elections, is used by Wall Street as a real-time information source.

* Prediction markets combine speculation and social attributes, potentially influencing real-world behavior (e.g., election voting) through market odds. Increased future liquidity could reshape the political landscape.

The Value of Privacy Coins:

* Privacy coins like Zcash are favored by specific groups (including government agencies), but regulatory acceptance is higher than for Monero due to technical design (e.g., Zcash supports transparent transactions).

* The importance of privacy protection is rising in the AI era, but trade-offs made by younger users regarding data privacy might limit its widespread adoption.

Summary

Editor's Note: This discussion brought together crypto heavyweights Arthur Hayes and Tom Lee for an in-depth conversation covering perpetual contracts, stablecoins, Digital Asset Treasuries (DATs), prediction markets, and privacy coins. The guests shared unique insights on market trends, product strategies, and competitive landscapes, analyzing the development logic of crypto assets from an institutional perspective: how DATs become on-chain "Wall Street CEOs," whether stablecoin-specific chains can create genuine value flows, the competition and innovation among Perp DEXs, and the potential of prediction markets and privacy coins regarding information, speculation, and social value. The article reflects both practical industry experience and the latest trends in the financialization, compliance, and product innovation within the crypto ecosystem, serving as an important reference for understanding the current development context and future direction of the crypto market.

The DAT Trend Discussion

Haseeb: Let's talk about DATs. For those unaware, DAT stands for "Digital Asset Treasuries," essentially the "micro-strategization of everything." Tom is the Chairman of Bitmine, the largest Ethereum treasury, holding about 2.65 million ETH. Trading volume is highly concentrated, with 90% of daily DAT volume between MicroStrategy and Bitmine. Tom, many see you as Ethereum's savior. Your thoughts?

Tom Lee: That's a big... job. I think Ethereum itself is in a good state. The Ethereum Foundation focused correctly this past year. Plus, the rise of stablecoins truly ignited blockchain demand. Bitmine just happened to time it right.

Haseeb: Indeed. Back then, the foundation was adjusting internally, and the narrative was being reshaped. Now it feels like you've become Ethereum's "Chief Marketing Officer."

Tom Lee: (Laughs) I should add that to my business card.

Haseeb: Arthur, your take on the DAT craze and its impact on Ethereum and narrative reignition?

Arthur: Everyone loves hearing Tom Lee on CNBC. If he's willing to beat the drum, go for it. I love it; we need more Tom Lees. Every chain needs its own Tom Lee.

Haseeb: Tom, what did Bitmine do right that others trying to be "Tom Lee clones" didn't?

Tom Lee: First, communication. We kept the message simple: ETH is in a super cycle. We emphasized this via our website, speeches, and the Chairman's video messages. Second, Bitmine is well-connected to the institutional world. Cathie Wood publicly held a significant position early; it's now a top-10 holding in ARK funds, attracting more institutional capital. This created a "flywheel effect," making us the 26th most traded stock in the US. As you said, we, along with MicroStrategy, are creating liquidity for DATs.

Haseeb: What's next? You're not limited to Ethereum anymore. Your strategy?

Tom Lee: Bitmine aims to help Ethereum grow over the next 15 years. This includes identifying key projects that consume ETH/burn gas, incubating new payment rails on Ethereum, and working closely with the Ethereum Foundation to identify and prioritize upgrades. It also involves investing in standout projects like Orb 8 code (related to Worldcoin). Protecting human identity is a major mission on the blockchain.

Haseeb: My theory is that DATs give a chain a "Wall Street CEO" who can do things foundations can't, like going on CNBC shouting "ETH bull market!" or posting technical analyses, which would be "inappropriate" for foundation leaders. DATs outsource this role. You're the prototype. Looking ahead, the DAT craze is cooling, NAV is compressing, new products are fewer. What's the future of DATs in 2, 3, 5 years?

Tom Schmidt: I think the process is faster than we imagined. Most E-type DATs are trading below NAV. What happens next? Will they sell ETH and buy back shares? Get acquired? Pivot to AI? Tom, what do you think they'll do, or what would you do?

Tom Lee: I heard there are 78 DATs now. In traditional secondary markets, institutional investors typically only choose 2-3, maybe 4. So there will be multiple winners within that range. But institutions won't buy 70 DATs. Those below NAV face a survival crisis. A DAT shouldn't trade below NAV; it's a negative signal. I'm not sure if they should convert to ETFs, liquidate, or merge. But DATs shouldn't trade below NAV. It's also a matter of "caliber."

Tom Schmidt: So you're saying it's a "caliber problem"?

Tom Lee: Right. No ETF trades below NAV, so DATs shouldn't either. If they could "threaten" to convert to an ETF, they would always trade at NAV; that should be the baseline.

Tarun Chitra: I agree on consolidation. Solana's DATs keep signaling mergers; you can't have 20 forever. What I don't get is people launching DATs for tokens with market caps of only $1B, $2B, $3B. I don't see how projects of that size survive. Why launch such a DAT?

Arthur: Because the sponsors get a 5% management fee.

Tarun Chitra: But imagine being Tom, running a DAT for a $3B token, getting 1% of the float. Would you do it?

Tom Lee: Yeah, it might break the "reflexivity." Theoretically, DATs should be long-term token holders, but if they hold too much, it can create a negative "power law" effect. So Bitmine never wanted to hold more than 10% of ETH; the target is actually 5%. DATs for small tokens might help tell their story, but you don't want them to become the bag holder.

Haseeb: Recently, the Zero G token had issues; its DAT closed before the token launched, essentially injecting tokens without a market price and assigning a random valuation. Also, the US SEC is stepping on the brakes, with rumors of insider trading reports and investigations into "dark pool operations before closing." Nasdaq has also tightened rules for DATs. Projects taking shortcuts will likely be targeted. The trend is consolidation. If you're not large enough, lack scale, or don't have "hardcore" assets, the DAT itself has no volume. Without volume, you can't even do an ATM (at-the-market offering). What's the point? Just locking up some capital in the stock market with no one trading it.

Haseeb: Regarding ETH, our friend Andrew Kang recently tweeted something viral titled "Tom Lee's Ethereum Thesis is Retarded," with about 1.5 million views. He argued that while stablecoins, RWAs, and banks will use Ethereum, they won't actually pay fees. It's all a meme; the real buy should be bot companies. He's now all-in on bot companies. Your thoughts on Andrew Kang's bearish take?

Tom Lee: You know, in crypto, "retarded" is a compliment. So I'll take it as praise.

Haseeb: (Laughs) Good, good. That's a good response.

Arthur: That's why he needs me.

Plasma and the Stablecoin Craze

Haseeb: Let's talk about Plasma. It's a new L1 stablecoin chain, backed by Tether. How many here have participated in Plasma farming or hold Plasma tokens? Raise your hands... Not many, I'm surprised. The farming scale was huge. It's one of the recent token launches with massive airdrops. FDV is around $8.5B, total circulation over $1B, large airdrop. The issue is, Plasma has a high nominal valuation but barely any usable apps; it's essentially a giant farm. They're giving away about $500M in incentives yearly to move USDT over. What's your take? Are stablecoin-specific chains a new trend? Could they challenge Ethereum's narrative? On-chain data shows stablecoins flowing out of Ethereum into Plasma this week.

Arthur: I think it's mainly a "function of farming." If there's positive yield, people will do it. But if no value is created afterward, the money will flow back, like all chain games over the past decade.

Haseeb: Just another "farm."

Arthur: Pretty much. Yes, it's a farm. But it needs to prove value beyond the farm logic.

Tarun Chitra: In India, the "X for Y" narrative is huge. For stablecoins, Plasma is very much like Bear Chain.

Haseeb: A Bear Chain specifically for stablecoins?

Tarun Chitra: Yeah, that's essentially it.

Tom Schmidt: Well, I think... yeah, sort of.

Arthur: Yes.

Haseeb: Elaborate. Why is it like Bear Chain?

Tarun Chitra: It's textbook: new L1 launches with crazy incentives, everything revolves around "farming." The stablecoin angle is less important. Yes, all rewards are settled in Tether, but the real interest is farming XPL tokens. Most protocol yields are structured that way, 60%-70% starting. It feels like Bear Chain, where everyone rushed in, and the daily narrative was "this chain's purpose is for you to farm." Providing liquidity on day one was key. The only special thing is the Binance Earn integration, which brought in at least $2B (SEC/USDT), far beyond my expectations.

Haseeb: Their BD is strong, marketing is on point, execution is top-notch. But I share your concern. What should they do next to avoid becoming the next Bear Chain?

Tarun Chitra: I don't see how they can truly move stablecoin cash flows onto their chain. It seems nearly impossible. Either you cannibalize Tron, but who's the biggest XPL farmer? Obviously, "His Excellency."

Haseeb: (Laughs) Not "Emperor," "His Excellency."

Tarun Chitra: Right, "His Excellency." The problem is, you can't cannibalize much TON volume either, nor much Ethereum volume. So long-term, where do these cash flows come from? Frankly, besides Tempo, other stablecoin chains struggle to explain where the "natural cash flow" is.

Tom Schmidt: I am a bit worried. If the only highlight people discuss for a new project is "the strongest farm ever," it's like SBF's old "token in a box" joke: if everyone is making money, you better leave the room fast. I don't think stablecoin chains are inherently bad; the direction makes sense. But I agree with Tarun; the reasonable path is for applications with existing distribution channels to gradually migrate their internal cash flows to the new chain. That's the logic behind Stripe supporting Tempo. I'm not surprised some exchanges are considering similar plays because most Tether holders essentially hold it through certain "distribution terminals." The institutions controlling these end-users are the ones capable of driving such migration.

Haseeb: Tom Lee, your thoughts?

Tom Lee: I think stablecoins will be a massive market. The total market cap is only $300B now; I can easily see it growing to $4T. The Treasury Secretary recently discussed this, and that might not even include "micro-payments." Stablecoins are naturally suited for micro-payments because Tether has 12 decimals, allowing for very granular payments. This demand can't all happen on one chain; Ethereum itself can't handle the capacity. So I think exploration across multiple chains is reasonable. I hope to see multiple solutions succeed.

Haseeb: Tom, you're right. To build a new chain specifically for stablecoins, you must bring the cash flow with you. Tempo is clearly on that path – their partnership with Stripe will act as a source of B2B traffic. But if you're just trying to siphon off existing stablecoin demand from elsewhere, it's incredibly difficult. Tron's network effect is too strong, the stickiness is too high. Ethereum is the same – many people just hold stablecoins on Ethereum. Theoretically, I could pay you on another chain, but in reality, we're more likely to transact directly on Ethereum.

Tarun Chitra: Yeah, like the bridge thing yesterday, Phantom issued stablecoins on Solana via a bridge. It feels like most cash flow is just moving within existing user bases, not going to new chains trying to attract users on their own.

Core Discussion Topics: In a conversation at Token 2049, Arthur Hayes and Tom Lee explored trends and challenges in cutting-edge areas including Digital Asset Treasuries (DATs), stablecoins, perpetual contract exchange competition, prediction markets, and privacy coins.

DATs (Digital Asset Treasuries):

* Tom Lee pointed out that Bitmine, as the largest Ethereum treasury, has created a "flywheel effect" through clear communication and institutional connections (e.g., investment from ARK funds). However, the market faces consolidation pressure, and most DATs might be eliminated due to insufficient scale or trading below Net Asset Value (NAV).

* DATs act as the "Wall Street CEO" for blockchains, filling the gap where foundations cannot directly engage in market promotion. However, there is a need for caution regarding the survival crisis of small-scale token treasuries and the risk of tighter regulation.

Stablecoins and the Appchain Debate:

* Stablecoin-specific chains like Plasma rely heavily on high-incentive farming to attract capital but are compared to "Bear Chain," lacking natural cash flow support. Success depends on leveraging existing distribution channels (e.g., Stripe's partnership with Tempo) rather than simply migrating existing users.

* Tom Lee believes the stablecoin market has huge potential (possibly reaching $4 trillion) and exploration across multiple chains is reasonable, but competitive barriers against Tron and Ethereum need to be addressed.

Perpetual DEX Competition:

* Hyperliquid faces pressure from token unlocks and fierce competition from emerging rivals (e.g., Aster, Lighter), testing its moat and profitability.

* Market growth potential remains high, but product homogenization could drive fee compression. Future innovation might shift towards complex derivatives like fixed income (e.g., Pendle).

The Social Impact of Prediction Markets:

* Polymarket (on-chain native) and Kalshi (US compliant) represent competing camps. The former, with its accurate predictions of events like elections, is used by Wall Street as a real-time information source.

* Prediction markets combine speculation and social attributes, potentially influencing real-world behavior (e.g., election voting) through market odds. Increased future liquidity could reshape the political landscape.

The Value of Privacy Coins:

* Privacy coins like Zcash are favored by specific groups (including government agencies), but regulatory acceptance is higher than for Monero due to technical design (e.g., Zcash supports transparent transactions).

* The importance of privacy protection is rising in the AI era, but trade-offs made by younger users regarding data privacy might limit its widespread adoption.

Summary

Editor's Note: This discussion brought together crypto heavyweights Arthur Hayes and Tom Lee for an in-depth conversation covering perpetual contracts, stablecoins, Digital Asset Treasuries (DATs), prediction markets, and privacy coins. The guests shared unique insights on market trends, product strategies, and competitive landscapes, analyzing the development logic of crypto assets from an institutional perspective: how DATs become on-chain "Wall Street CEOs," whether stablecoin-specific chains can create genuine value flows, the competition and innovation among Perp DEXs, and the potential of prediction markets and privacy coins regarding information, speculation, and social value. The article reflects both practical industry experience and the latest trends in the financialization, compliance, and product innovation within the crypto ecosystem, serving as an important reference for understanding the current development context and future direction of the crypto market.

The DAT Trend Discussion

Haseeb: Let's talk about DATs. For those unaware, DAT stands for "Digital Asset Treasuries," essentially the "micro-strategization of everything." Tom is the Chairman of Bitmine, the largest Ethereum treasury, holding about 2.65 million ETH. Trading volume is highly concentrated, with 90% of daily DAT volume between MicroStrategy and Bitmine. Tom, many see you as Ethereum's savior. Your thoughts?

Tom Lee: That's a big... job. I think Ethereum itself is in a good state. The Ethereum Foundation focused correctly this past year. Plus, the rise of stablecoins truly ignited blockchain demand. Bitmine just happened to time it right.

Haseeb: Indeed. Back then, the foundation was adjusting internally, and the narrative was being reshaped. Now it feels like you've become Ethereum's "Chief Marketing Officer."

Tom Lee: (Laughs) I should add that to my business card.

Haseeb: Arthur, your take on the DAT craze and its impact on Ethereum and narrative reignition?

Arthur: Everyone loves hearing Tom Lee on CNBC. If he's willing to beat the drum, go for it. I love it; we need more Tom Lees. Every chain needs its own Tom Lee.

Haseeb: Tom, what did Bitmine do right that others trying to be "Tom Lee clones" didn't?

Tom Lee: First, communication. We kept the message simple: ETH is in a super cycle. We emphasized this via our website, speeches, and the Chairman's video messages. Second, Bitmine is well-connected to the institutional world. Cathie Wood publicly held a significant position early; it's now a top-10 holding in ARK funds, attracting more institutional capital. This created a "flywheel effect," making us the 26th most traded stock in the US. As you said, we, along with MicroStrategy, are creating liquidity for DATs.

Haseeb: What's next? You're not limited to Ethereum anymore. Your strategy?

Tom Lee: Bitmine aims to help Ethereum grow over the next 15 years. This includes identifying key projects that consume ETH/burn gas, incubating new payment rails on Ethereum, and working closely with the Ethereum Foundation to identify and prioritize upgrades. It also involves investing in standout projects like Orb 8 code (related to Worldcoin). Protecting human identity is a major mission on the blockchain.

Haseeb: My theory is that DATs give a chain a "Wall Street CEO" who can do things foundations can't, like going on CNBC shouting "ETH bull market!" or posting technical analyses, which would be "inappropriate" for foundation leaders. DATs outsource this role. You're the prototype. Looking ahead, the DAT craze is cooling, NAV is compressing, new products are fewer. What's the future of DATs in 2, 3, 5 years?

Tom Schmidt: I think the process is faster than we imagined. Most E-type DATs are trading below NAV. What happens next? Will they sell ETH and buy back shares? Get acquired? Pivot to AI? Tom, what do you think they'll do, or what would you do?

Tom Lee: I heard there are 78 DATs now. In traditional secondary markets, institutional investors typically only choose 2-3, maybe 4. So there will be multiple winners within that range. But institutions won't buy 70 DATs. Those below NAV face a survival crisis. A DAT shouldn't trade below NAV; it's a negative signal. I'm not sure if they should convert to ETFs, liquidate, or merge. But DATs shouldn't trade below NAV. It's also a matter of "caliber."

Tom Schmidt: So you're saying it's a "caliber problem"?

Tom Lee: Right. No ETF trades below NAV, so DATs shouldn't either. If they could "threaten" to convert to an ETF, they would always trade at NAV; that should be the baseline.

Tarun Chitra: I agree on consolidation. Solana's DATs keep signaling mergers; you can't have 20 forever. What I don't get is people launching DATs for tokens with market caps of only $1B, $2B, $3B. I don't see how projects of that size survive. Why launch such a DAT?

Arthur: Because the sponsors get a 5% management fee.

Tarun Chitra: But imagine being Tom, running a DAT for a $3B token, getting 1% of the float. Would you do it?

Tom Lee: Yeah, it might break the "reflexivity." Theoretically, DATs should be long-term token holders, but if they hold too much, it can create a negative "power law" effect. So Bitmine never wanted to hold more than 10% of ETH; the target is actually 5%. DATs for small tokens might help tell their story, but you don't want them to become the bag holder.

Haseeb: Recently, the Zero G token had issues; its DAT closed before the token launched, essentially injecting tokens without a market price and assigning a random valuation. Also, the US SEC is stepping on the brakes, with rumors of insider trading reports and investigations into "dark pool operations before closing." Nasdaq has also tightened rules for DATs. Projects taking shortcuts will likely be targeted. The trend is consolidation. If you're not large enough, lack scale, or don't have "hardcore" assets, the DAT itself has no volume. Without volume, you can't even do an ATM (at-the-market offering). What's the point? Just locking up some capital in the stock market with no one trading it.

Haseeb: Regarding ETH, our friend Andrew Kang recently tweeted something viral titled "Tom Lee's Ethereum Thesis is Retarded," with about 1.5 million views. He argued that while stablecoins, RWAs, and banks will use Ethereum, they won't actually pay fees. It's all a meme; the real buy should be bot companies. He's now all-in on bot companies. Your thoughts on Andrew Kang's bearish take?

Tom Lee: You know, in crypto, "retarded" is a compliment. So I'll take it as praise.

Haseeb: (Laughs) Good, good. That's a good response.

Arthur: That's why he needs me.

Plasma and the Stablecoin Craze

Haseeb: Let's talk about Plasma. It's a new L1 stablecoin chain, backed by Tether. How many here have participated in Plasma farming or hold Plasma tokens? Raise your hands... Not many, I'm surprised. The farming scale was huge. It's one of the recent token launches with massive airdrops. FDV is around $8.5B, total circulation over $1B, large airdrop. The issue is, Plasma has a high nominal valuation but barely any usable apps; it's essentially a giant farm. They're giving away about $500M in incentives yearly to move USDT over. What's your take? Are stablecoin-specific chains a new trend? Could they challenge Ethereum's narrative? On-chain data shows stablecoins flowing out of Ethereum into Plasma this week.

Arthur: I think it's mainly a "function of farming." If there's positive yield, people will do it. But if no value is created afterward, the money will flow back, like all chain games over the past decade.

Haseeb: Just another "farm."

Arthur: Pretty much. Yes, it's a farm. But it needs to prove value beyond the farm logic.

Tarun Chitra: In India, the "X for Y" narrative is huge. For stablecoins, Plasma is very much like Bear Chain.

Haseeb: A Bear Chain specifically for stablecoins?

Tarun Chitra: Yeah, that's essentially it.

Tom Schmidt: Well, I think... yeah, sort of.

Arthur: Yes.

Haseeb: Elaborate. Why is it like Bear Chain?

Tarun Chitra: It's textbook: new L1 launches with crazy incentives, everything revolves around "farming." The stablecoin angle is less important. Yes, all rewards are settled in Tether, but the real interest is farming XPL tokens. Most protocol yields are structured that way, 60%-70% starting. It feels like Bear Chain, where everyone rushed in, and the daily narrative was "this chain's purpose is for you to farm." Providing liquidity on day one was key. The only special thing is the Binance Earn integration, which brought in at least $2B (SEC/USDT), far beyond my expectations.

Haseeb: Their BD is strong, marketing is on point, execution is top-notch. But I share your concern. What should they do next to avoid becoming the next Bear Chain?

Tarun Chitra: I don't see how they can truly move stablecoin cash flows onto their chain. It seems nearly impossible. Either you cannibalize Tron, but who's the biggest XPL farmer? Obviously, "His Excellency."

Haseeb: (Laughs) Not "Emperor," "His Excellency."

Tarun Chitra: Right, "His Excellency." The problem is, you can't cannibalize much TON volume either, nor much Ethereum volume. So long-term, where do these cash flows come from? Frankly, besides Tempo, other stablecoin chains struggle to explain where the "natural cash flow" is.

Tom Schmidt: I am a bit worried. If the only highlight people discuss for a new project is "the strongest farm ever," it's like SBF's old "token in a box" joke: if everyone is making money, you better leave the room fast. I don't think stablecoin chains are inherently bad; the direction makes sense. But I agree with Tarun; the reasonable path is for applications with existing distribution channels to gradually migrate their internal cash flows to the new chain. That's the logic behind Stripe supporting Tempo. I'm not surprised some exchanges are considering similar plays because most Tether holders essentially hold it through certain "distribution terminals." The institutions controlling these end-users are the ones capable of driving such migration.

Haseeb: Tom Lee, your thoughts?

Tom Lee: I think stablecoins will be a massive market. The total market cap is only $300B now; I can easily see it growing to $4T. The Treasury Secretary recently discussed this, and that might not even include "micro-payments." Stablecoins are naturally suited for micro-payments because Tether has 12 decimals, allowing for very granular payments. This demand can't all happen on one chain; Ethereum itself can't handle the capacity. So I think exploration across multiple chains is reasonable. I hope to see multiple solutions succeed.

Haseeb: Tom, you're right. To build a new chain specifically for stablecoins, you must bring the cash flow with you. Tempo is clearly on that path – their partnership with Stripe will act as a source of B2B traffic. But if you're just trying to siphon off existing stablecoin demand from elsewhere, it's incredibly difficult. Tron's network effect is too strong, the stickiness is too high. Ethereum is the same – many people just hold stablecoins on Ethereum. Theoretically, I could pay you on another chain, but in reality, we're more likely to transact directly on Ethereum.

Tarun Chitra: Yeah, like the bridge thing yesterday, Phantom issued stablecoins on Solana via a bridge. It feels like most cash flow is just moving within existing user bases, not going to new chains trying to attract users on their own.