Bits + Bips: Why Crypto's Next Step Is Perps, Tokenized Stocks and Altcoin ETFs - Ep. 861
🎯 Summary
Bits + Bips: Why Crypto’s Next Step Is Perps, Tokenized Stocks and Altcoin ETFs - Ep. 861 (Comprehensive Summary)
This episode of Bits + Bips, featuring host James Seyffart and guests Ram Alawalia, Noel Atchison, and Thomas Um (CCO of the Gido Foundation, formerly of Jane Street), explores the accelerating convergence of traditional finance (TradFi) and crypto, focusing on the emergence of perpetual futures, tokenized equities, and the broader implications for market structure.
1. Focus Area
The discussion centers on the collision of crypto and macro, specifically analyzing the rapid adoption of derivative products (perpetual futures) and the tokenization of real-world assets (RWAs), particularly stocks, within the blockchain ecosystem. It also touches upon Solana market structure and the competitive landscape between centralized exchanges (CEXs) and DeFi.
2. Key Technical Insights
- Solana Priority Mechanism: The yield on Lido (Gido) on Solana primarily comes from Gido Tips paid by market makers and HFTs to ensure transaction inclusion and priority, as blockchains cannot rely on the deterministic time-priority mechanisms common in traditional CLOBs (Central Limit Order Books).
- Token Programmability: The key technical advantage of tokenized stocks over traditional shares is programmability and composability—the ability to use them as collateral in DeFi protocols (like Morpho) or integrate them into novel financial applications, which traditional custody prevents.
- TradFi Efficiency vs. DeFi Fees: Traditional equity markets, especially the US market, demonstrate superior liquidity and tighter spreads (often trading at mid-spreads for retail), highlighting areas where DeFi still lags centralized systems, despite lower stated fees on some crypto exchanges.
3. Market/Investment Angle
- Perpetual Futures as the Next Frontier: Perpetual futures are highlighted as a massive, potentially world-eating product category, especially as major platforms like Robinhood plan to introduce retail-friendly versions in the EU, and Coinbase plans US launches.
- Tokenized Stocks as an Access Play: While tokenizing deep-liquidity assets like MSTR or TSLA offers little immediate liquidity benefit, the primary driver is access for non-US investors and the potential for 24/7 trading.
- The Super App Thesis: Major platforms (Robinhood, Coinbase/Base, X) are aggressively building integrated “super apps” that bundle payments, trading, and crypto services, aiming to capture user convenience and control the entire financial stack.
4. Notable Companies/People
- Robinhood: Mentioned for its significant product launch, including introducing perpetual futures and tokenized stocks in the EU, and crucially, announcing plans to build its own blockchain to control its tokenization efforts.
- Gido Foundation (Thomas Um): Discussed in the context of Solana market structure and how Gido tips function as a priority fee mechanism.
- Jane Street (Thomas Um’s former firm): Noted for its crucial role in providing the balance sheet and cash-to-crypto leg necessary for the successful creation of Bitcoin ETFs, demonstrating the continued reliance on sophisticated TradFi infrastructure.
- ByBit: Mentioned for launching ByBit Earn (ByBrill), allowing stock trading directly on Solana via partners like Kamino.
5. Regulatory/Policy Discussion
- US Regulatory Impact on TradFi Crypto: Thomas Um detailed how US regulators viewing Jane Street as a “US person” severely constrained their ability to build a fully compliant crypto derivatives business, forcing them to limit activity primarily to CME futures, illustrating the friction points for large institutions engaging with crypto.
- Political Shift: The panel noted the surreal nature of the current political environment, where the sitting US President is engaging in forward guidance on crypto, suggesting that owning crypto is shifting from a purely speculative position to a necessary component of a globally diversified portfolio.
6. Future Implications
The industry is moving toward a re-bundling of financial services onto controlled, highly usable platforms (the super app model), even as the underlying technology (blockchain) was initially designed for decentralization. The convergence is accelerating, with TradFi giants like Schwab and Fidelity rapidly integrating crypto services, suggesting that the siloed era of crypto is ending. The ability to move tokenized assets off the issuing platform (e.g., taking tokenized Apple stock off Robinhood) is the key factor that will unlock true DeFi utility.
7. Target Audience
This episode is highly valuable for Crypto and TradFi professionals, institutional investors, product managers, and market structure analysts interested in the practical integration points between regulated finance and decentralized technology, particularly concerning derivatives and RWA tokenization strategies.
🏢 Companies Mentioned
💬 Key Insights
"the number one thing that's holding up anything right now with staking being these ETFs is how the IRS is going to handle that income."
"how taxation is handled under the C corp. And you have this weird feature where the tax has to be taken out of the out of the NAV, which might make it look like it's underperforming just because of the way like if Solana doubles on day one, then the NAV is going to increase by, you know, something much less than two."
"we don't actually understand whether there's no rules set around how staking is handled and whether it's permitted inside a grant or trust, which is the primary kind of structure that the 33 act funds are applying under."
"what we're waiting for now is like what guidance will come not only from the SEC, but also the IRS."
"I do think that, so if you have a thesis, as I do, that the optimal product that you could design for users today would be 100% staked. So I think that's relatively uncontroversial just because like you're talking about kind of yield maximizing for users, then 100% staked is kind of the best design that you could have an inside inside METI."
"I would argue staking offering Solana exposure without staking is like not great, particularly when the yields are like you said, north of 7%. It's not great for Ethereum. I would argue it's probably worse for Solana."