Why the Near $NRR ETF is Different | Hunter Horsley and Sal Ternullo

0:03 Bankless Nation, I'm here with Sal from Sovereign. Sal's coming back onto the podcast after we had him on five or six months ago to talk about Sovereign and Near. Sal, welcome back to Bankless. Thanks for having me, David. And I also am joined by Hunter from Bitwise. Bitwise just released the first, I believe, Near ETF.

0:20 Hunter, congratulations on that. And also welcome back to Bankless. Thank you. Thank you. Yeah, fun to be with you guys. Or Hunter, is this your first time on Bankless? We usually have Matt and Ryan on. Is this your first time? Oh my gosh. That might be possible. I don't know. Seems odd. Yeah. Yeah, that feels wrong to me, but it might be right.

0:37 I'll have to look into the archive. Either way, it's a pleasure to have you on. Okay, Nier just got its first ETF from Bitwise. That's the topic of the day. But I also want to just talk a little bit more about Nier as a treasury asset. The first time we talked about this on Bankless was with Sal, as I mentioned.

0:51 And, Four or five, back in February, I think. Sal, the soundbite that reverberates in my brain to this day was you saying something along the lines of, based off of the current human usage of the NIR blockchain and NIR intents, I think NIR is 2 to 4x underpriced at current human levels of adoption. And that gets before anything around AI agents or how NIR is at the intersection of AI and crypto.

1:19 When you said that near was a dollar in some change or something, and just trading today, just shy of $5 after hitting $5.5. So you got to tip the hat to you, Sal, for being ahead of the curve here. Tell me, just give me the last simulation of your life in the last four or five months as near activity and attention has just crescendoed so much.

1:37 Yeah, I mean, honestly, it feels, and I think it's not just for me, it's to the entire ecosystem, the entire developer community. You know, there is an incredible amount of energy and effort that is focused on building and advancing near. And across that entire ecosystem, I think everybody has felt some validation and vindication from the market and recognition.

1:57 You know, I get the fortunate opportunity to be a spokesperson speaking on behalf of our shared conviction around the asset. And I'm happy to see, obviously, how prices have shaked out. But it definitely feels like a moment where we need to seize momentum and continue to scale both the intense product and the near AI side.

2:12 So excited to get into those things as well. Now, Hunter, as soon as near really caught a bunch of momentum and with the price action in recent weeks and months, Bitwise comes in with a near ETF. Maybe people are looking at that at a surface level and saying like, okay, well, NIR's got attention, so Bitwise issues the ETF immediately.

2:31 Maybe that's the case, but I think that underserves how integrated Bitwise has been in the NIR ecosystem and has been for a long time. Maybe you could just illustrate for me and the listeners the history that Bitwise has had with NIR. So I'm delighted for this juncture of the journey where the Bitwise Near ETF, which has the fun ticker NRR, is live.

2:53 But you're right, have observed Near for a long time, saw what Sal was doing with Sovereign, the incredible execution of the team and conviction of the community for a long time. We wrote institutional research coverage and valuation analysis, I believe, over a year ago now. Introduced an ETP in Europe.

3:21 And then through the on-chain solutions part of our business, started contributing to the network directly as a staking provider. Today, I believe, the fourth largest validator on NIR. Yeah. Um, and then had the opportunity, uh, to work also, um, on intense with, uh, an MPC, um, And then ultimately, the more recent and topical development, which is the introduction of NRR and the opening of an ETF as an avenue for investors to participate in NIR.

3:55 So, you know, I think that NIR is one of the most exciting teams and projects, for lack of a better term, in the crypto space. And we felt that way for a long time. These things didn't happen overnight. Yeah. So very delighted to get to contribute in different ways to what we think has such great potential.

4:17 Would you say that the involvement that Bitwise has with the near protocol and being kind of hands-on, is that typical of, like, do you do that with Ethereum, for example? Like you run a, you guys have a staking operator, so maybe there's some corollary to here with Ethereum. How do you identify opportunities to go so hands-on and, you know, what motivates this?

4:38 We love being as involved as we can. And I think it's harmonious. Ultimately, taking a step way back, Bitwise manages something like $16 billion. It's other people's money. It is long bias, meaning at the highest level, the best thing for Bitwise for our clients is that Near or other crypto assets and ecosystems do well.

5:05 and have the opportunity to grow into the best version of what's possible. So a component of that is, of course, allowing investors access through solutions like an ETF, and investors have been getting access through Sovereign as well, which is another great avenue. But consistent with that also is if there are ways that we can contribute to the health and success of the ecosystem through running validators, for instance...

5:32 understanding the ways that the ecosystems are developing. Near, I would say in particular, has executed incredibly and has produced many exciting developments that have great usage. Near Intense, of course, being a breakout rocket ship we want to do all those things. So, I mean, Bitwise is not the largest and most important institution in crypto.

5:58 We're about 150 people. We can't do everything, but to the extent we can, I think it's a privilege and it's also very aligned with what clients want from us that we try to be connected and contributing to the success of the things that ETF investors do. are investing in. Sal, you are intentionally very, very hands-on at Sovereign.

6:21 That's kind of the whole thesis of Sovereign is to own a bunch of NIR, but also grow NIR as if you own an equity stake in the whole entire system. Because in a way you kind of do because you own a bunch of NIR. So you are hands-on. That's the thesis behind Sovereign. Giving your perspective of what it's like to have had bit-wise also shoulder to shoulder with you inside of NIR.

6:41 Yeah, I mean, it's honestly been awesome. I think the starting point that Hunter talked about on the institutional kind of buy side research coverage took a target market based view that I think really started to reorient, you know, native liquid funds, hedge funds around the asset and the potential in the context of the convergence of crypto and AI.

7:01 It was a bold moment. You know, it was not, we were not performing well in markets at that time. I think Nia was trading at like a dollar and 30 cents. And to have the fundamental understanding of the project, you know, experience with the team, the execution model, the product milestones that can lead you to think about the market they're going after and start to underwrite valuation projections around that.

7:21 Super compelling from my perspective. Certainly used in a number of investor conversations. We obviously leverage our own research, but there's an inherent bias associated with that where we are not looking horizontally across ecosystems. We're focused on Nier specifically. But I think what really defines why Bitwise is such an important partner for the ecosystem is, is those infrastructure layer components, right?

7:45 They're actually operating the network alongside us and the validator community. They're operating the MPC network and chain signatures, which is the foundational primitive powering their intents. And I think that takes alignment to a different level here. So we're super, super excited for Hunter and the team on the launch of NRR.

8:04 And candidly, I think the first three days based on your tweets, Hunter, look pretty good on the inflow side. So excited to see the market demand actually prove out here. Incredible. Incredible. And it's not true of every asset. So in the first three days, I think something like 50 million of inflows into NRR.

8:21 And sometimes I'll tweet something along the lines of, delighted to see the conviction from investors, which I think I tweeted yesterday. And that's honestly how I feel. Nobody needs to buy anything and nobody's buying a Bitwise investment. ETF for exposure to Bitwise, they're buying it if they have conviction and want exposure to near.

8:43 So to see the strong response, I think, is incredibly exciting. And it's a very strong start for an ETF. Whenever we have somebody from Bitwise on the show, I always enjoy asking the question, what's it like to talk about these assets to the outside world? The people who don't listen to Bankless, who aren't on crypto Twitter, on Understand that crypto is a legitimate asset class and they should probably be diversified in that direction.

9:10 And they have people like Bitwise offering ETFs and ETPs to include in their portfolio. So I think when you guys launched the Bitcoin ETF, we had you on and ask you this question. Same thing with the Ethereum ETFs. which is just like, how do you explain NRR, the Bitwise Near ETF? How do you explain it to the average end investor who wants to know a little bit more about what they're buying?

9:33 So, you know, you got the Bitcoin ETF. They probably know Bitcoin. They have the Ethereum ETF. How does a Near ETF fit into somebody's portfolio? There's a lot of different approaches there. I think with... There's so many things I want to say. The first thing I want to say is that a conversation for Bitwise with a client is less like being the professor and more like being the TA.

9:58 If you think back to school, but we start wherever the partner or the client is at. And that can be a lot of different places. And I think our job is not to be as brilliant as Ilya or Sal, but to try to meet people where they are. So that I would say number one. So actually, there's a lot of variation in the conferences, sorry, in conversations, and the goal is always just to help the client step forward and feel things are useful.

10:31 The second thing I would say is that I think that we've moved on from the CoinMarketCap era, which is to say that... Many of the new investors in the space, mainstream investors, wealth managers, institutions, your uncles, they don't organize different crypto assets based on their relative ranking on CoinMarketCap.com.

10:55 They've heard of Bitcoin. maybe a few others, they don't know the relationship between these things. And I think that NIR actually has a very strong connection to what investors today care about. AI, to say the obvious, is the main topic of everything for investors, the economy, and so on and so forth.

11:20 And with NIR, you have the opportunity to introduce it by saying the co-inventor of LLMs has created a blockchain that helps individuals use AI and move assets across the blockchain, but also is architected so that agents can do so as well and is growing like crazy. That doesn't require that somebody become a PhD in the nuances of crypto infrastructure or a vision of a different future of the financial system.

11:50 I think that's very powerful. So I think that that's something that in the context of the mainstream investor really has going for it. Then how does it fit into a portfolio that, you know, it really depends. It really depends on the investor. I think the theme of 2026 is that investors have gotten comfortable with Bitcoin and are looking beyond Bitcoin at what else they want exposure to.

12:13 And I think Nira is a first class candidate for what will be part of that story. I think one of the things that makes NIR interesting as an asset is some of the revenues that is produced natively by the chain through NIR Intense, Confidential Intense. Maybe, Sal, just because we have you here, can you kind of just give us the 101 on NIR Intense, Confidential Intense, how that actually captures value for NIR the blockchain, and what that turns into, how that economically impacts NIR the asset?

12:41 Yeah, absolutely. Happy to do that. And by the way, Hunter, great pitch. If I was rewinding multiple years in my experience, that would land and resonate very well with me. So I think I can learn a thing or two from you on my own investor kind of buy side engagement there. So intense, David, I think we talked about this when we were on the last time, but the intense framework is really the idea of a user expressing the outcome that they aim or wish to achieve and then allowing for a market of solvers to solve for that outcome.

13:09 And so what has been implemented today is effectively basic digital assets to digital asset swaps. And now recently in the last several weeks with the introduction of Ondo and 400 tokenized equity products, the ability to swap between any digital asset and any tokenized equity instrument. You'll see that continue to scale.

13:29 Right now, it's been driven by human interactions. Near Intense focuses both on a first-party application called near.com, which actually just today dropped a new user experience that I was looking at before this call, and it's incredible. So I encourage you both to check it out. Thank you. but more importantly, through B2B distribution partners.

13:47 And so Near Intent is implemented with a number of different wallet providers from Ledger to Zotal and the Zcast ecosystem, which enables this seamless interaction to swap between assets. But again, right now, it's very much focused on human interactions. Behind those human interactions, we process more than $32 billion in volume on the system.

14:09 and are starting to scale the take rates in each of those transactions in a similar manner to what you would conceptualize for a centralized exchange venue. And that's driving both gross total fees generated by NIR intents, but more importantly, retained revenue to the protocol on a net revenue basis, which is driving buybacks of NIR tokens that are held in a permanent capital vehicle.

14:31 And not being burned today, to be clear. So we're super excited to see where this goes as not only the asset scope and kind of spectrum of supported products expands on near intense, but more importantly, as we've discussed in the past, really realizing the agentic opportunity behind this, where this scales not on a linear basis, but on a 10x multiplier outcome.

14:52 With growth in intense volume and usage, is there a notion of like near being deflationary? Is that how it impacts the economics of the near the token? Or does it go into the staking yields? How does it actually come back into the token for the end user? Yeah, it's a good question. And we put out this report looking at the deflationary threshold, which I think we're going to correct in our next iteration of our report.

15:16 You know, deflationary has a very explicit meaning in the context of economics and kind of supply side, demand side systems, where the near that's being purchased back on a net revenue basis is not being burned, which is the mechanic that you oftentimes see in ecosystems like hyperliquid. That near is being retained in the protocol.

15:36 And so I think over time, as we contemplate what that looks like, that is a demand sink on the system that is removing near from circulating supply and may in the future fund incentive architecture like what we are proposing very recently in the near governance forums to think about, again, reducing inflation from 2.5% to 1.6% over a two-year linear curve.

16:01 But really on the second phase, opening up the academic and kind of technical research process to think about whether or not it's feasible to ever contemplate a fixed supply asset around NIR. I don't have the answer to that question, but I'm challenging the ecosystem and our partners to really think through it.

16:16 And obviously, if we end up in an end state like that, you know, revenue that's being generated and buying back NIR could be used in the incentive design to ensure economic security, decentralization, etc., Okay, so what you're doing is you're kind of throwing a flag at the, hey, the deflation word might not make the most sense here.

16:33 What is happening is there is revenue being generated from near intense that is going to buying back, not burning, but buying back and removing from supply into kind of this temporary holding vehicle where we will reintroduce it into the near system, maybe in some way as we've determined the fitness and most appropriate nature to do with that at a later point in time.

16:55 But nonetheless, the buybacks are still real. Is that a way to summarize that? Yeah, and the idea of reintroducing is very much if the community and ecosystem and validator set decides in that direction. We could reintroduce it to the burn address. Yeah, exactly. We very much could. The community could decide that, hey, all this near that's accumulated, we should just burn it.

17:15 But my hope is that we can get to a system that is really focused on value accrual to near and thinking uniquely about kind of the differentiation that we have versus other L1 ecosystems. And I think one of those is obviously real revenue and real product market fit right now in Intense. And soon, I think you'll start to see a lot of data on the near AI side that tells the same story.

17:35 I've been trading crypto for almost a decade, and I've used so many different wallets, exchanges, aggregators, or front ends. And I'm basically always looking for the same thing, just one interface with a deep liquidity across a bunch of chains and assets, where I can access markets like perps, earn yield, trade confidentially, and still control all of my funds.

17:52 And I've never really found it. And I'm just always switching wallets, juggling gas fees, or getting eaten by slippage. But near.com feels fundamentally different to me. I can do anything I want from any chain and keep all of my activity confidential. Crypto, tokenized assets, perps, payments. I can even earn yield confidentially.

18:09 One account, over 30 chains, confidential by default. It's the way that crypto ought to work. And it's powered by Near, which has moved over $30 billion cross-chain, uses post-quantum signatures, And that's run over five years on mainnet with zero downtime. Near.com is the best way to be on chain and be in control.

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20:24 Okay, so now that we have the 101 and 201 of near the economics on the table, Hunter, how does this work its way into the Bitwise NRR ETF? So there's a staking component. Talk about the way that this expresses itself here. Yeah, I think what Sal was describing is relevant in two ways for investors in NRR.

20:47 I mean, the first, of course, and simple is that the ETF handles staking on behalf of investors. So it's one less step, one less decision that they have to get right. And I think that that's a benefit to investors. But then stepping back, I think that more broadly, two elements that Sal touched on are very compelling to investors, or at least that's our sense.

21:15 The fact that there is growing utility that connects to the investor through value capture and the buyback feature that was discussed. I think in 2026, that's something that investors have sort of matured into looking for. And then also, you know, sort of a high-level concept, but I think it's also indicative of the health of the ecosystem.

21:44 Yeah. that it hasn't ossified, but rather is dynamic. And I think that's evident in so many ways in the New York ecosystem. But there's a vibrant community there. And of course, a core team that are thinking about how to continue to advance the purpose, usefulness, and ecosystem. So I think those things in 2026 matter.

22:14 I kind of like to draw an analogy to, if you guys think back to early 2000s, internet companies, consumer internet companies are very new. And people were talking about page views and eyeballs. websites that had page views and eyeballs. And 20 years later, the way that things have matured is people have more specific metrics and things that they're looking for.

22:39 They're looking for average revenue per user, ARPU. They're looking for daily actives, monthly actives, retention rates. So the understanding has increased over time. And that's part of the maturing of a category. I think similarly in crypto, this is not a brand new space in 2026. The space has matured.

22:58 And I think seeing the health of the development ecosystem is something that people look at. They, of course, want to see the use case. They want to understand the story around value creation and value capture, which is revenue by another name. And I think Near has strong substance across all those dimensions, which Sal illustrated.

23:18 So Hunter, give me the day one through four, I think, of NRR trading. So we're still in the first week. You mentioned it was a pretty healthy start, a pretty strong start to NRR. Give me some of the metrics and how you actually measure success. Is it possible to comp these to Ethereum, Bitcoin, Hyperliquid, some of the other ETS, and how you illustrate success in NRR?

23:42 Yeah. Yeah, I think it's maybe easiest to compare it to other ETFs that have launched this year. It has been extraordinarily strong relative to that. I don't want to sort of call out specific instances, but there are assets with larger market caps that are trading less volume and have had less inflows.

24:05 when ETFs for those assets launched this year. In the first three days, I have to wait to see the results from Friday, but in the first three days, I believe close to $10 million of inflows, sorry, over $10 million of inflows a day, volumes ranging from 10 to 20 million a day. This is extremely strong for an ETF and very strong when compared to other ETFs launched for single crypto assets this year.

24:36 So I think a lot of indication that there is demand for exposure to NIR. And then, of course, anecdotally, that there's interest as well. So we're very excited for the start of the journey here. It is ultimately a bridge or a pipe. It allows investors to get access to NIR. NIR is the subject. but to have this additional pipe open, I think is a great thing for the maturity of the capital market around NIR.

25:10 How do you account for the success in just the first early days of the NIR ETF? Part of it, I have to imagine, is timing. Like NIR has captured the attention of a lot of the smart contract bid in the crypto market, so the timing has been very, very strong. Are there any other reasons that you can add into just like why the strength has been so good?

25:28 I think timing is in general really good. It's possible to have a successful ETF launch even in a bear market. We saw that with BeHype, the hyperliquid ETF, which launched in what was broadly a bear market. But I think the market sentiment turning a bit, I wouldn't say that we're in a raging bull market.

25:53 We're still meaningfully off of all-time highs for Bitcoin, which I think sets the tempo for the perception of the space. And then I think also we're in an important moment with the conversation about AI broadly amongst investors. And I think that NRR and NIR in general create a new interesting opportunity around a thesis that a lot of investors have.

26:19 So I think that those two things... As well as, you know, hopefully we strive to do a good job of raising awareness of the ETF and the opportunity. And I think all those things taken together set it up for the possibility of success. So you've been in NIR for forever. Now you're in NIR when NIR has an ETF.

26:41 Talk about how that might change just the dynamics of NIR moving forward into a bull market. If we, you know, knock on wood, are at the beginning stages ending looks one or two of a bull market. NIR has seen two bull markets or three bull markets in the past. You know, NIR is not a new layer one. It's a pretty veteran layer one.

27:00 And you've been around for like the whole time, if I remember correctly. So if we go into this new bull market with AI, it's the most exciting thing since sliced bread. Now we have a near ETF. How do you just think that dynamic changes for near as kind of crypto returns to some semblance of relevancy to the mainstream world?

27:20 Yeah, honestly, it's welcome to have Hunter team communicating as they are on this podcast today and kind of bridging the convergence of these different themes from the revenue meta to the vision that Ilya's painted kind of the product journey of near AI to enable user-owned sovereign control of models on the back of kind of the Q2 to Q3 arc where the enterprise market woke up and started to get concerned around IP and kind of data confidentiality as it relates to frontier models.

27:52 It just feels like a perfect conflict of timing. And I think from the whole ecosystem viewpoint, welcome a sophisticated institutional asset manager with 15, 16 billion plus in AUM, helping to tell that story to a new investor universe on the public market side. So, you know, obviously we were off doing that ourselves.

28:12 We have been doing that, but it's a different platform. We're a small team. I think Hunter alluded to 150 people that are working on the Bitwise side. And so, So welcome with open arms to have them out here. And I'm glad to see that the product's done really well. Obviously, that means that there's economics behind it for Bitwise and good incentives for them to continue positioning.

28:29 I look forward to seeing it break 100 million and then ultimately a billion AUM. You and me both. You and me both, Sal. You know, I think one other thing I want to just say about the moment for NIR is, you know, I said before, I think we're moving on from the coin market cap era. And I think that there's a way of looking at NIR relative to other crypto assets or blockchains, et cetera.

28:50 And people in the crypto space will, of course, do that. But I think for the mainstream investor, the investors who are new to the space this year, When you look at Nier relative to other valuable platforms in AI, it might be the cheapest thing you've ever seen in your life. A $5 billion market cap, something like that, that's probably a tenth of the average valuation placed on AI platforms with traction these days.

29:20 So I think there's almost some unlearning. of prior mental models that at least I and sometimes others who've been in the space for a long time have to do to be open to the new frame that I think investors looking at this space anew uh, have, uh, for, uh, for these opportunities. Um, and I, I think that that is, uh, an element of what, what is so constructive around the opportunity, uh, uh, from here.

29:50 I mean, if I can build on that, you've, you, we've seen in the last 12 months, companies that have similar density of intellectual capital to what I see across the core NIR contributors that are raising pre-product, pre-model on the AI side at similar valuations to what NIR was traded four months ago.

30:11 Right? We're talking at that point about a $2 or $3 billion network. We were seeing... Companies effectively coming out of stealth announcing rounds at post-money valuations at that scale on the AI side. So I think that's a great point, Hunter, when you reset the frame and you contemplate this, not in the precondition kind of coin market cap ladder, but really thinking about it across the broader spectrum of the target market that we're going after, which is both of these technologies converging.

30:34 This is exactly where I want to go next. I want to talk about, learn about the ways or what Nier has exposure to in the future. Like the version of the future that Nier has exposure to. So when we had you on at the early part of this year, we talked about just the fundamentals of Nier in the human context before we kind of moved on to the growth of AI.

30:57 The cool thing about Nier is that it is one part in crypto, but is one part built for AI. So it has exposure to a certain kind of future in the AI world. And so an AI bull market is in some ways also a Nier bull market. If you remove AI, the thesis around Nier becomes far less interesting. It's much more marginalized.

31:18 Talk about what the future potentially has in store for the world and how that might involve exposure to Nier the asset. Yeah, I mean, this comes back to Ilya's vision that I think has attracted and excited investors all the way back to 2018, 2019, before I even knew him at that point. But the common feedback loop is that Ilya was talking about the problems that would arise from centralized AI before Near Mainnet went live.

31:43 That's a common anecdote I hear when I'm talking to funds that were investing into either Near AI before Near was building a blockchain, right? or prior to the mainnet go-live, which was the idea that if we build towards a future that centralizes intelligence and context and allows for reinforcement, self-improvement and reinforcement training on a frontier kind of oligopolistic basis, it would not be a utopian outcome from one of the most important technologies of our time and a very clear recognition that decentralization and some of the other attributes around privacy would be the direction that he wanted to build towards to realize abundance and have kind of a positive outcome from this entire kind of journey.

32:29 And so that's what's gotten me excited. It's part of the reason I chose to kind of shift gears and build Sovereign and obviously name our business Sovereign was the idea that we can build technology to enable... users to be sovereign and control their intelligence, control their assets, control their data.

32:47 We can enable businesses to have sovereignty in the context of their own kind of business environment and the same on a nation level as well. And so I think that the general purpose tech that Neera is building enables all of those different outcomes. And it's a future I want to build towards that my children can live in and not end up in a world where we have one company and that's the only company in the world or whatever the talk track was that was coming out around us.

33:10 Yeah. One other maybe narrower comment I'd just love to add that I think is a relatively recent development. I think, you know, the vision for NIR has been around for a while, but it seems to be as of this juncture of 2026, like the trend across both crypto and AI is going to be fragmentation. and Sal hit on it there at the end, but there are going to be many models that people want to use.

33:37 There are likely going to be different applications. People may end up with multiple agents versus one monolithic model or agent. And then similarly, I think what we're seeing in public blockchains in 2026 is that as unsatisfying as it is for people who have a favorite L1, we're probably going to wind up in a world with multiple L1s, multiple different stablecoins.

34:03 And I think the way that NIR has executed is to position themselves to be on the right side of fragmentation and to be a simplifying force that enables an agent or a human to leverage the models they want to, the context, if it's confidential, computing or otherwise, to be able to traverse different blockchains, different assets.

34:29 And so I think that that's a bet that would be much less useful if you wound up with one public blockchain, one stablecoin, and everyone using ChatGPT only. But I think that that bet is paying off and is actually going to continue to pay off immensely in the ways in which NIR is useful. And I realize I'm going on a little bit long here, but the one other thing I wanted to append to that is, you know, I think if you were...

35:01 in the internet community in the, in the late nineties, um, there was a sense of the birth of the internet and a moment and a movement. Um, uh, but by, you know, 2007, um, the e-commerce people were gathering at one conference and the social network people were gathering at another conference and the server, the people, uh, another one.

35:25 And the, you know, there's some fragmentation. Those are all internet companies. Um, um, But some fragmentation. And I think, you know, for the type of journey that NIR is on, which is, I think, a technology story, I think a lot of the same inferences that are important to technology companies generally are important to the success of this story.

35:46 And I think one that is constantly underestimated in the crypto space by investors is the importance of the team. and the leadership and the dynamism of that execution. I definitely think that building digital gold is a different project than the project that NIR has underway. And so I think the point I'm trying to make is that for this, the mandate and the vision that NIR is taking on, I think that the dynamism of the team, of Ilya, of key companies Key leaders like Sal is really important to success in the same way that you would, you know, a technology investor would be looking at the team for a new, you know, C-Corp raising money, venture capital money to build an AI platform.

36:30 So, you know, I think that that's a real advantage that NIR has relative to its specific requirements. vision. I think the point about fragmentation, I think I really resonate with. I was talking to John from Venice. We do a monthly show with him and a very similar pattern kind of cropped up. And I think I can say these words and I think Sal will take it and run with it.

36:54 Maybe, hopefully, if I say them correctly. We were really talking about this spectrum between the Frontier Labs, OpenAI and Anthropic who are producing God. They're trying to produce God models, the one model that will rule them all. And it's just so singularly powerful and all-encompassing that, you know, this one single model will just, it will just lead everything.

37:16 And then what Venice has learned, and also Alex Atala from Open Router also placed his bet here correctly, correctly in the sense that he exited his company for $7 billion, is that actually there's going to be a diversity of models. And Venice is playing in the same world where Maybe the one super powerful model is totally going to be a thing, but there's also going to be many, many, many, many models.

37:39 And combining them in fun, weird ways is also going to be a thing. It's the combinatorial power of these models that is also going to produce a lot of fruit. And I called it, in that episode with John, I called it the biodiversity of models, where there's just like, to me, that version of the future just seems more interesting than, And I remember getting into crypto and kind of thinking something similar.

38:02 If crypto is just Bitcoin, like Bitcoin's cool. But I don't know if I'm like into crypto as a project if there's just Bitcoin. And I think Nier kind of has a similar place in that thesis of just like singular total systems that. isn't really as interesting as weird combinations and cross-chain communications between all these different possible combinations.

38:27 And to me, that's a future that seems more balanced, more healthy. I'm not saying that with any sort of evidence or reason, but it feels correct to say. Sal, am I onto something here? Yeah, I mean, I hold a very similar view. And I think to your point, the bets that have been made on a diverse model set being used for different reasons and purposes is continuing to be reinforced in the market every day.

38:49 At the end of the day, if there is an, you know, omni-intelligent model that's produced out of one of these frontier labs, I think it will be savvy enough to contemplate economics and cost associated with certain decisions and actions and functions that need to be performed on its behalf. But certainly within the enterprise market, you're seeing the emergence of kind of these tiered structures that are leveraging frontier intelligence for tasks that are not, you know, highly confidential, touching personally identifiable information.

39:17 And then open source models that are in confidential computing infrastructure, similar to what private inference from Near AI is providing. And I think you're going to see this layer that sits on top of this as a router gateway for policy enforcement and kind of control management in any sophisticated enterprise, which will also have the benefit of increasing the ROI on AI investment, which has been this kind of omnipresent conversation over the past two years of like, where's the ROI?

39:44 And I think when you get to this heterogeneous consumption of models and you're using frontier intelligence for two or five or X percent of your workloads and also ensuring that you're not compromising information that will result in a data privacy issue, you can also get the benefit of the unit economics.

40:00 So I think Near fits perfectly in that. On the private inference side, we are actively hosting, you know, effectively all of the kind of widely adopted open source models, but in manners that give you real privacy guarantees, right? You as the client, when you use private inference from Near AI, can run a verifier and prove that there's no telemetry and no data leakage in the prompt process or in the output generation process.

40:25 I think from an enterprise point of view, that will become a fundamental requirement over the next two or three years. I think people are just starting to wake up to it now. But when we zoom out two years from now, technical architecture that guarantees privacy, if you're running on shared services, you will have to have that.

40:41 You know, it's interesting that there's been a meme in Silicon Valley for maybe 20 years that People say they care about privacy, but they don't really, and they don't make choices. But I really do wonder if there is a change in consumer awareness and preference underway right now on the heels of some of the anxieties about the information being fed into LLMs and the possibilities for where that could go, the headlines around, you know, breakthrough in math and science, maybe based on the, you know, information disclosed to an LLM, that's resulting in a real shift in preference for privacy.

41:29 It seems that there's a lot of signs of that, that may be not just the same preference that's existed for 10 years, but about a heightened level of awareness and preference, which of course Nir and others have. facilitate. There's actually empirical data on this now. You maybe want to look it up. Not now, David, but later on.

41:50 If you go look at Google search trends for the past 30 years, privacy is at a multiple of any other peak in search trends. So that's just one proxy for considering this. But I think it gives you a rough consumer kind of point of view around it. And it's a chart that kind of looks like near-intensive volume.

42:06 It's just a straight parabola. That's so interesting. You know, it almost feels like, you know, privacy is like its whole huge arc. You know, if you think about sort of one of the original conversations about Bitcoin was sort of freedom and sovereignty over your money and... and the ability to earn value and save your value without being at the whim of central institutions.

42:33 And, you know, there's a way of looking at privacy, which is it's the exact same concept just applied to your information. And, Sal, I didn't know that fact about search history, but that's super interesting. Yeah. Well, Sal, Hunter, this is a very exciting time to be in crypto. It's a very exciting time to be around the world of AI.

42:57 AI is changing a lot of things. It's nice to have a chain that is accounting for the chaos of AI. It's nice to have a chain that's one foot in crypto, one foot in AI. Hunter, it's great to have another ETF out in the wild. So congratulations to Bitwise and congrats on it being a healthy one. And so Sal, Hunter, thanks for coming on the show and just talking to me about Near today.

43:16 Thank you. This is fun. Likewise. That was a blast. Bankless Nation, you guys know the deal. Crypto is risky. You can lose what you put in, but nonetheless, this is the frontier. It's not for everyone, but we are glad you are with us on the Bankless journey. Thanks a lot.