GM. This is Milk Road, the crypto newsletter that keeps you a step ahead of the market without needing a crystal ball.
Hereโs what weโve got for you today:
- โ๏ธ Tokenization could 2000x.
- ๐๏ธ The Milk Road Show: Bitcoin Is Pulling Back Before the Biggest Bull Run in History.
- ๐ช Abstract is shutting down.
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TOKENIZATION COULD 2,000X. WHICH HORSE DO YOU BACK? ๐
Matt Hougan (Bitwise's chief investment officer) has a pretty simple pitch for anyone who thinks they've missed the tokenization trade.
There's ~$300B of tokenized assets in the world right now, versus ~$600T of assets in total.
By his count, that leaves room for the whole thing to grow ~2,000x.
(Tokenization = the process of putting real-world assets like dollars, bonds or stocks onchain.)
Most of that $300B is still digital dollars, though:
Stablecoins make up ~88% of RWAs. Everything else (stocks, credit, gold, private funds, Treasury funds) adds up to ~$39B.
Which is a pretty bare shelfโฆ
But the big money does seem to be warming up.
On our podcast last week, Matt told John he's hit eight or nine TradFi conferences in two weeks, and the crowd was "extremely bullish."
He thinks AI has become the trade everyone already owns, so financial advisers are hunting for the next one, and a lot of them are landing on stablecoins and tokenization.
He expects their money to start showing up in the last three months of this year.
And weโre already seeing early signs of momentumโฆ
On Tuesday, Ondo launched Ondo Private Markets, which offers tokens tied to the value of a pre-IPO AI company (Ondo hasn't said which one yet), tradable 24/7.
The token tracks the company's share value, so you don't get the actual shares or any shareholder rights, and it's only open to eligible non-U.S. investors.
Robotics, cybersecurity and biotech companies are up next.
All of which leaves investors with an awkward question, and it's one John says our community keeps asking him:
Do you buy the chains (ETH, SOL), the exchanges (Uniswap, Aerodrome), or the companies issuing the tokens (Ondo, Securitize)?
He put that question to Matt directly.
And Matt answered with a story about a search engine from 2002โฆ
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TOKENIZATION COULD 2,000X. WHICH HORSE DO YOU BACK? (P2) ๐
"Talk to somebody who bought Ask Jeeves instead of Google in 2002 and see how they're doing today."
This early in a tech boom, picking the one winner is a long shot, so he'd rather own a spread of them, rather than try to "be too cute about it."
If tokenization does 2,000x, enough of them should do fine.
Matt follows his own advice, too. His tokenization basket mixes ETH, SOL and UNI with Robinhood stock.
Each horse comes with a catch though.
The chains (ETH, SOL) host most of these assets (Ethereum alone holds ~$17B of the non-stablecoin pile). But as we covered last week, chains keep very little of the fees from that activity.
The exchanges (UNI, AERO) earn a fee every time a tokenized stock trades. But Robinhood and Coinbase decide which exchange gets their customers' trades, and Lighter learned last week how fast that can change.
The issuers (Ondo) sit closest to the product, and Ondo already runs the biggest stack of tokenized Treasury funds.
Its lead is pretty thin, thoughโฆ
Ondo holds ~$2.9B, with three rivals sitting within ~$500M of it.
Then thereโs Chainlink (LINK), which moves data and tokens between chains. John's bull case for LINK that fees from its cross-chain tool now get converted into LINK (creating new demand), and Standard Chartered's Geoff Kendrick targets $200 by 2030.
The bear case is that those fees are still small next to LINK's multi-billion-dollar valuation.
Personally, my left curve brain likes Mattโs โbasketโ approach - since every horse in this race has a believable way to win and a believable way to stumble.
Btw - John took this exact approach back in late August.
He bought three different tokenization horses in four days:
- UNI (an exchange) on Aug 28 at ~$4.45, now up ~79%.
- LINK (the plumbing) on Aug 30 at ~$11.39, now up ~17%.
- AERO (an exchange) on Aug 31 at ~$0.48, now up ~68%.
Even his slowest horse is comfortably in profit.
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CALLING ALL CRYPTO NERDS ๐ฅ
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BITE-SIZED COOKIES FOR THE ROAD ๐ช
Bullish on AI but canโt pick the winner? Buy the whole theme onchain. ๐ค*
OKX raised fresh capital at a $25B valuation, with backers including Circle, Ripple, and Standard Chartered.
Abstract is shutting down. Pudgy Penguins' parent company is winding down the Ethereum L2 it launched last year.
The ZRO thesis is shifting fast as LayerZero builds its own L1 and exchange, but investors may still be pricing the old story.
*this is sponsored content.
