State of The Market, The Prediction Market Wars & Kraken Pursues Aave

Crypto markets are under pressure from multiple directions. OpenAI pulled its IPO following a SpaceX valuation disappointment, and both events contributed to a broader selloff. Yano argued crypto cannot recover without a rollover in AI markets because AI has absorbed too much capital, but Rob pushed back, noting AI earnings have continued to beat expectations each quarter, keeping PE ratios mostly intact and making a near-term AI correction unlikely. Rob added that while short-term H100 rental rates fell roughly 40% month over month, large corporates are still committing to long-term compute contracts, which he views as the more telling signal.

Crypto deal activity is at its weakest in years. Total deal count in Q2 2026 stands at 147, the lowest quarterly figure since Q4 2020, and fundraising hit its lowest monthly level in February of this year. Later-stage rounds such as Series B, C, and D are showing more activity while pre-seed and seed remain very dry. Rob noted that rising M&A activity typically coincides with later-stage fundraising picking up, and described early-stage on-chain founder quality as notably low relative to the prior five or six years.

Stablecoins are the dominant fintech conversation following passage of the GENIUS Act, with Rob comparing the current moment to where AI was roughly a year and a half ago. Every board is now asking what the stablecoin strategy is, and approximately 30 public companies are in the pipeline planning to launch stablecoin businesses and have already conducted RFPs. The biggest insight for fintechs has been watching domestic and UK businesses expand internationally faster using stablecoin infrastructure. Traditional fintechs are now calling crypto investors to get on their cap tables. Rob cautioned that quantitative tracking of real stablecoin usage is not yet possible from public data, and that roughly 90% of stablecoin transfer volume on Solana is still bots trading against each other on low-fee AMMs.

Three prediction market stories are running simultaneously: a Polymarket hit piece, Kalshi potentially raising at a 40 billion dollar valuation, and Meta being directed by Zuckerberg to build a prediction markets app. Rob said he predicted roughly one month prior that hit pieces on Polymarket would appear, likely directed by competitors, and described it as a statement of fact that competitors are actively placing negative stories in media about each other. Kalshi, also referred to as Calcite, is approximately 1.8 to 2 times the size of Polymarket by recent monthly volume, with its perpetuals product live and its institutional clearing infrastructure described as far ahead of Polymarket. Rob predicted both platforms will have their best month ever in June and said he is very bearish on Meta successfully building its own prediction market exchange. Both Polymarket and Kalshi did more actual volume last week than DraftKings' annualized prediction market volume of 3.4 billion dollars, with DraftKings currently trading at around 11 billion dollars in market cap at roughly two times revenue. Kalshi take rates are approximately 1.2x to 2x above Polymarket take rates, though fee compression is described as clearly coming. Institutional activity is beginning to emerge on both platforms, with FalconX executing a block trade on Polymarket and Galaxy executing one on Kalshi, both for compute. The clearing opportunity on these platforms is considered large but underappreciated.

A CoinDesk report stated Kraken is in talks to buy a 15% stake in Aave at a 385 million dollar valuation, representing roughly a 70% discount to Aave's approximately 1.4 billion dollar market cap. The reported structure involves Kraken investing 35,000 ETH in return for 250,000 Aave tokens and a 15% common equity stake in Aave Group. Stani disputed the report, stating Aave would not sell at a 70% discount, and clarified that 100% of Aave protocol and governance revenue goes to the Aave token rather than Aave Labs. A speaker with knowledge of the situation said the CoinDesk details are wrong and noted that when deal specifics leak it is typically because a party wants to pressure a counterpart or shape the narrative. The pursuit appears to come from Payward Asset Management, a new arm of Kraken's parent company, which is pursuing an IPO, and this would be its first deal. Aave's interest is described as strategic rather than fund-driven because Aave does not need money.

The competitive dynamic between Aave and Morpho is compared to Uber versus Lyft, with both teams racing to secure exchange integrations described as the holy grail for DeFi lenders. Morpho raised a round with participation from Paradigm, Andreessen Horowitz, and Ribbit Capital. Powering Revolut for Morpho or powering Kraken for Aave is described as the dream integration outcome for each team.

FOMO raised 75 million dollars in a Series B led by Index Ventures with participation from USV and Benchmark Capital, notable because neither Benchmark nor Index typically does crypto deals. Founded by people from dYdX, FOMO focuses on social trading with leaderboards, chat, and public investment theses, currently offering perpetuals, spot crypto, and RWAs. One speaker disclosed being a personal angel investor through a pre-seed round and noted Dragonfly found strong traction and retention at the Series A stage but did not participate in the Index-led round.