The Next Chapter For Blockworks | Empire

Here's a comprehensive summary of the provided YouTube video transcript:

Key Concepts

• Blockworks News Division Shutdown: The decision to cease operations of Blockworks' news division, focusing instead on data and research.
• Industry Evolution: The comparison of the current crypto landscape to the early 2000s internet, predicting a 20-year bull market.
• Data as a Core Business: Blockworks' strategic pivot towards becoming a data and software company, akin to Bloomberg.
• Tokenization: The growing trend of tokenizing real-world assets and its implications for the financial industry.
• Stablecoins and Payments: The increasing adoption of stablecoins for payments, particularly in B2B transactions, and the role of traditional finance players.
• "Pay-to-Play" in Crypto: The common practice of blockchain protocols paying large organizations to build on their networks and the debate around its effectiveness.
• Credibly Neutral vs. Opinionated Networks: The distinction between networks aiming for neutrality and those taking a more active, competitive stance.
• Public Market Listings and Valuations: Discussions around the IPO filings of Securitize and Consensus, and the valuation of emerging tech companies.

Blockworks News Division Shutdown and Strategic Pivot

The episode begins with a significant announcement: Blockworks has shut down its news division. This decision, described as "tough," was made to refocus the company's efforts on its data and software business. The news division, which employed nine journalists, was seen as a "public good" but was the smallest revenue-generating unit. The founders expressed pride in the quality of journalism produced by their team, citing their technical understanding of crypto and their ability to break significant stories, including extensive reporting on the FTX trial.

The decision to pivot is framed within a larger macro view of the crypto industry. The speakers believe that 2025 marks a "line in the sand moment," signaling the end of a boom-bust-rebirth cycle similar to the early 2000s internet. They anticipate a 20-year bull market, characterized by consolidation where "winners win big." To capitalize on this, Blockworks is doubling down on its data business, aiming to become a "Bloomberg type" entity. This involves focusing on recurring revenue from data subscriptions and software, which has seen "several hundred percent" growth in recurring revenue this year and achieved "extreme product market fit" with average deal sizes in the hundreds of thousands.

The company is prioritizing "owned audience" (e.g., podcast listeners, newsletter subscribers) over "rented audience" (website visitors for news articles) for distribution, believing this provides a stronger competitive edge for their data offerings. The laid-off journalists are acknowledged as talented individuals who will likely find new roles quickly, with some potential opportunities arising within portfolio companies for communications roles.

The Future of Crypto Journalism and Industry Trends

The discussion touches upon the state of crypto journalism, acknowledging that while Blockworks is exiting the news space, other publications like Unchained, CoinDesk, Cointelegraph, The Defiant, Coinage, DL News, and The Block are producing quality content. Traditional media outlets like Bloomberg and The Wall Street Journal are also improving their crypto coverage. The speakers emphasize that a company can only excel at a limited number of things, and Blockworks' focus is now on data and software.

A key macro trend identified is the shift from assets moving on-chain (the last 10 years) to companies and real revenue moving on-chain (the next 10 years). This includes both crypto-native companies and traditional entities like Robinhood, Stripe, and BlackRock potentially leveraging blockchain technology. Despite market volatility and bearish sentiment on social media, the speakers maintain a bullish outlook on the long-term secular trend of crypto adoption, comparing it to the SaaS revolution of the early 2000s.

Public Market Deals and Valuations

The conversation delves into several recent public market developments:

• Securitize IPO: Securitize is going public via a SPAC deal at a $1.25 billion valuation. Securitize acts as a transfer agent and fund administrator, handling tokenized securities, KYC/AML, and the administration of special purpose vehicles (SPVs). While the company has $86 million in topline revenue with an estimated 20% margin, the valuation is debated. The argument for the valuation is the secular tailwind behind tokenization, making Securitize a potential public market avenue to gain exposure to this growing sector, similar to how Circle became a way to invest in stablecoins.
• Western Union and Solana Partnership: Western Union announced a partnership with Solana to launch its own stablecoin, the US Dollar Payment Token (USDP), issued by Anchorage. This is seen as a strategic move for Western Union, a company with a $3.95 billion market cap trading at a low P/E ratio, to digitize its business and compete with newer fintech remittance operators. The partnership is also viewed as a potential "win" for Solana if it drives significant transaction volume.
• "Pay-to-Play" Debate: The Western Union deal sparked controversy on Twitter, with allegations that Solana paid Western Union $50 million for six months of exclusivity. The speakers acknowledge that such payments and liquidity incentives are common in the industry to de-risk proof-of-concept builds and attract large organizations. While not inherently bad, the ROI on these deals is questioned, with examples like PayPal's PYUSD seeing temporary volume spikes driven by incentives that faded. The speakers argue that for companies like Western Union, digitizing their business and moving volume onto a chain like Solana could be a significant win, justifying the investment.
• Zero Hash Acquisition Rumors: Mastercard is reportedly poised to acquire Zero Hash for $1.5 to $2 billion. Zero Hash provides licensing and technology for on/off ramps and brokerage-as-a-service, serving clients like Interactive Brokers, Stripe, and Franklin Templeton. The speakers note the similarity in business size to BVNK (which Coinbase is rumored to be acquiring) and highlight Zero Hash's origins as a hemp exchange (Seed CX). They discuss the trend of payments companies entering the crypto space and understanding money flow better than some earlier crypto-native players. The deal is seen as potentially odd for Mastercard, as it might push them to compete with their existing partners, challenging the notion of "credibly neutral" networks.
• Stripe Tempo and Credibly Neutral: The discussion touches on Stripe's Tempo product, a wallet infrastructure and virtual accounts service. The speakers debate whether Stripe, as a payments company, can truly be "credibly neutral" when launching its own network that could bypass its partners. They contrast this with Libra (now Diem), which was seen as more neutral because Facebook was not a direct payments competitor. The speakers believe that while networks like Visa and Mastercard aim for neutrality, companies like Stripe are becoming more opinionated in their market approach.

Emerging Projects and Investment Themes

• Mega ETH ICO: Mega ETH, a new chain focused on validator optimization, successfully concluded an ICO, raising $50 million at a $1 billion valuation, with a 28x oversubscription. The project has attracted significant community interest and has a cohort of apps building on its platform.
• Monad: Monad is also mentioned for its retail-friendly airdrop portal and growing ecosystem of applications.
• Investment Philosophy: Rob, a guest, describes his personal investment strategy as passive, focusing on being long technology, primarily through the NASDAQ and Bitcoin. He invests in funds like Dragonfly and has participated in SPVs for companies like OpenAI and Anthropic, noting the unprecedented growth in the AI sector. He avoids buying individual tokens beyond major cryptocurrencies like Bitcoin and Ethereum.

Content of the Week

• "Play Nice But Win" by Michael Dell: Recommended for its insights into the growth of Oracle.
• "Soft War" by Larry Ellison: An intimate look at Larry Ellison and the early growth of Oracle's database and ERP business.
• "Dynasties" on HBO: A nature documentary series featuring impressive footage of various animal species.
• "Frankenstein" (Movie): A recent movie enjoyed by one of the hosts at a local cinema.

Conclusion and Bet

The episode concludes with a friendly bet between two hosts: one will bet on Solana (SOL) at $193, and the other on Western Union at a $3 billion valuation (3x P/E ratio). They agree to a six-month timeframe, with the loser buying dinner. The underlying theme is the contrast between high-growth, potentially volatile tech assets and undervalued traditional companies with strong fundamentals.