Privacy Is Back: Naval + Mert Ignite Zcash’s Wild Run - The Chopping Block
Speakers
Haseeb Qureshi
Managing Partner of Dragonfly Capital
Robert Leshner
CEO & Co-Founder of Superstate
Tarun Chitra
Founder & CEO, Gauntlet
Tom Schmidt
General Partner at Dragonfly
- •Polymarket’s institutional unlock: The new Intercontinental Exchange (ICE)-led round signals prediction markets moving into mainstream finance and positions a CFTC-compliant U.S. re-entry as a near-term catalyst.
- •Marketing line in the sand: Paid promotion for products is acceptable if disclosed, but endorsing financial assets remains ethically and legally fraught; expect “KOL wars” to escalate between Polymarket and Kalshi.
- •PMs’ comparative advantage: As Robert Leshner framed it, prediction markets excel at “disposable” event markets, complementing traditional exchanges’ evergreen contracts; this underpins sports, politics, and episodic macro as growth lanes.
- •BNB Chain’s flash cycle risk: Aster-fueled volume and memecoin mania reversed violently, reinforcing the fragility of incentive-led liquidity and opacity concerns when data cannot be verified on-chain.
- •Privacy meta returns: Zcash’s surge reflects narrative momentum plus better UX rails (Zashi, NEAR Intents), but fundamentals lag price; Monero still leads in usage, and thin float intensifies moves.
- •CeFi yield reboot with guardrails: Galaxy One reprises BlockFi-style consumer yield with a public-company wrapper and a 60-day redemption gate, but transparency of loan books and borrow concentration remain the core risks to watch.
- •Onchain credit’s steady ascent: Post-2022, more borrowing migrates to transparent, programmatic rails; the crypto “risk-free” basis sits near 6%, while unsecured desks cautiously re-emerge via Maple Finance and Wildcat.
On Polymarket’s breakout and ICE tie-up
Haseeb Qureshi walked through Polymarket’s arc from a scrappy 2020 seed to a dramatic valuation step-up after an ICE-led round, noting the prior $1.2B valuation in August and the optics of institutional validation. The signal is twofold: regulatory maturation after Polymarket’s Commodity Futures Trading Commission (CFTC) settlement and an expected U.S. reopening, plus strategic synergies with a market-structure incumbent. Tom Schmidt added that Kalshi is preparing a crypto-facing push, setting up a two-front competition: Polymarket expanding into regulated U.S. channels with ICE, and Kalshi chasing crypto-native users.
On tokens, KOL wars, and marketing ethics
Tom drew a bright line between paid promotion for platforms versus for tokens. He argued disclosed product endorsements resemble web2 norms, while shilling assets is dicey and historically harmful. Robert Leshner dislikes KOL-based marketing because of its tarnished past and low integrity. The panel expects visible “KOL wars” as both Polymarket and Kalshi court influencers, especially in sports where most Kalshi volume now sits.
On how prediction markets really work
Haseeb explained why concerns about prediction markets “influencing the outcome” often self-correct. If a market implies near-certainty, traders will fade that level once they anticipate behavioral feedback, keeping odds from staying at extremes. He distinguished two market types. For public-interest events like shutdowns or geopolitics, insider trading can be socially beneficial because it aggregates dispersed information into prices. For trivial or controllable outcomes, market size should remain limited, and platforms will need guardrails. The group expects more “bounty-like” mention markets but believes systemic risk is muted by their small scale.
On sports betting versus prediction markets
Robert articulated the core strategy. Traditional exchanges dominate evergreen contracts, while prediction markets thrive on the infinite long tail of disposable events. Sports fit perfectly: countless, ephemeral markets that need user-generated listings and rapid spin-up. He expects PMs to steadily “eat” segments of sports gambling and episodic financial speculation such as earnings beats or one-off macro events. The panel noted U.S. sportsbook incumbents reacted defensively to the ICE-Polymarket news, hinting at competitive pressure if PM UX keeps improving.
On BNB Chain mini-cycle and Aster
The group recapped a brief BNB Chain supercycle tied to Aster, a perps DEX whose reported volumes correlated strikingly with Binance exchange flows. After 0xngmi flagged the correlation, DeFiLlama delisted Aster due to unverifiable data and private order flow, fueling debate about wash trading and incentive-led volume. Memecoins on BNB Chain spiked, then fell 90%+ within hours. Haseeb noted these cycles repeat when liquidity is farmed rather than earned, while Tom Schmidt highlighted how a single API change enabling Chinese-character perps coincided with a local top. The takeaway is simple: opacity plus incentives drives brittle liquidity.
On privacy supercycle and Zcash
Zcash rallied from the $30-$40 range to around $170, with narratives spanning cypherpunk revival, endorsements from prominent crypto voices, and UX improvements like Zashi and NEAR Intents. Tarun Chitra credited Zcash’s foundational ZK contributions but cast the current move as flow-driven rather than purely fundamentals-led. Haseeb observed on-chain activity is up but still below historical highs and behind Monero (XMR). The panel sees a potent barbell: OG affection and retail rotation out of memecoins, amplified by thin float. Whether this sticks depends on sustained real usage, listings, and developer velocity.
On Galaxy One, BlockFi lessons, and CeFi vs DeFi
credit Galaxy’s consumer app, Galaxy One, offers 4% APY with FDIC insurance up to $250K, plus an 8% premium yield for accredited users capped at $1M. It is led by Zac Prince, formerly of BlockFi. Robert stressed that 2022’s CeFi failures stemmed from opacity and borrower concentration, not just rates. A 60-day redemption gate may reduce acute run risk but does not solve counterparty failure. Tom contrasted this with Coinbase’s onchain lending front-ending Morpho, where rates float transparently and collateral is visible. Tarun noted much borrowing has migrated onchain since 2022, with the BTC basis near 6% and unsecured credit cautiously returning via Maple Finance and Wildcat. The panel wants more disclosure from Galaxy on how yields are generated and concentration limits before declaring the CeFi consumer-yield model “fixed.”
- →Watch regulatory developments around Polymarket’s U.S. re-entry and any token mechanics that bridge onchain liquidity with CFTC-compliant flows.
- →Track verifiability and incentive design in perps DEXs; opaque or private order flow plus volume incentives is a red flag for sustainability.
- →Monitor whether privacy demand converts from price action to durable usage, including wallet adoption, exchange listings, and cross-chain UX like NEAR Intents.