15 Bad ETH Takes with Justin Drake

Transcript

hey bankless nation welcome to another state of the nation guess what david it's merge week it's finally here we're talking to justin drake on merge week and we're talking about some bad eath takes 15 bad eath takes we're going to give them to you it was probably a year ago a year and a half ago when justin drake dropped the legendary ultrasound eth episode ultrasound money episode on bankless and since that time i guess headed into this monumentous week of the merge there have been a lot of takes about that episode some good takes some not so good takes and i think justin is here to talk about some of the bad takes and

clear up some misconceptions about ultrasound money what are we in store for today david yeah it seems to be impossible for people outside of the ethereum ecosystem to produce good takes about the ethereum ecosystem uh and i'll say that knowing full knowingly that i'm biased towards the ethereum ecosystem but there's just some real low hanging fruit out there as well as also some good nuanced arguments about some classic bad eath takes so some conversations that we're going to be going to going to get into is like the rich get richer which is a very common take you hear about proof of stake so we're going to talk about that also ethereum is trying to do everything all at once and it's also being bad because

it's having to uh you know split its attention into so many different categories uh as well as like unpredictable supply deflation bad it's a security et cetera et cetera et cetera some very common takes that you've heard around the crypto sphere we're going to take them one by one and go through 15 of the baddest east takes that you've ever heard all right get ready for the countdown uh justin drake dropping some bad eth takes i thought this was impossible but i guess he's refuting them also since it's merch week of course we want to remind you our friends at consensus uh have sponsored this and they want to let you know that they are going to be launching a commemorative nft coincident with the launch of the merge which is about 21 is this right 21 hours

away yeah uh no i think it's a little bit a little bit more yeah that can't be right yeah we're a little bit more than 36. oh but it's 21 hours until the launch of this nft ah 21 hours until the launch of this nft and it's free that's the great news of course you need something to commemorate and to show your kids that you were there during during the ethereum merge and so what a great way to do that from consensus you can click a link in the show notes and make sure you meant that nft and looks like in less than 24 hours david there's also a conference coming up and it looks like they're dropping some new speakers at this conference converge 2022 that is happening in september what are people in store for yeah it's going

to be just probably the leading west coast ethereum crypto fintech conference of the year uh serena williams is the new speaker that was not announced previously but also of course vitalik buterin is going to be beamed in and some other people as well kane warwick is of course going to be there stani it's going to be a fantastic time so if you are interested if you are on the west coast or just want to come into san francisco to go to this conference at september 27th through 30th there's a link in the show notes if you want to get a ticket and you can also use code bankless250 to get you guessed it 250 off a ticket i don't understand why serena gets her head uh her face bigger than vitalik you know vitalik's a bigger deal to me but

uh what do i know come for serena or come for vitalik those would be some reasons all right david i want to ask you the question i always ask the beginning of these episodes what is the state of the nation today ryan the state of the nation is none other than merging because how else what other state would it be we are merging this week uh in the bankless world in the ethereum world uh i don't feel like that needs any explanation okay well give me the latest date and time because i think last roll up when we checked in we thought it would be thursday morning i'm now hearing like friday evening wednesday thursday sorry not friday wednesday evening right late or possibly into like the wee hours of thursday morning like 12 a.m 1 a.m

okay that's the most updated time time frame that we have so far yeah 11 p.m wednesday tomorrow so that puts us at 36 ish hours 30 34 ish hours from the time of recording uh yeah so that's going to be the new time so it's going to be late ultrasound money is now saying one day 9 hours 47 minutes and hundred and 8 one blocks that's the exact time that after seven minutes rent song all right guys nice we will be right back with our episode clearing up some misconception 15 bad eath takes with justin drake but before we do we want to thank the sponsors that made this episode possible lens protocol is an open source tech stack for building decentralized social

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justin drake talking about 15 bad eath takes that he is going to refute and talk about specifically around ultrasound money justin drake does not need an introduction on bankless of course he's been here more than a few times but he is a researcher at the ethereum foundation he is blazing a trail through the world of crypto economics and it's great to have you back justin welcome thanks for having me again it's merch week uh how are you feeling about uh what's gonna happen this week uh and you know for those that maybe aren't as in tune why is why is the ethereum merge such a big deal in your eyes right so i'm feeling extremely excited but at the same time a little powerless

because you know it's now in the hands pretty much of the devs and the operators the staking operators so you know a little anxious you know i'm sure there will be some you know some bugs but the good news is that we've really uh you know hedged our bets with client diversity so even if one client even if two clients even if three clients even if four clients go down uh it's probably okay and you know these bugs will be will be fixed and uh and and will have a smooth merge you know for me this a successful merge means uh finality uh as soon as possible it's possible that the the

participation rate will drop you know it might drop to 95 90 we'll see uh percent but that's okay so long as it stays above 66 percent so in terms of uh why the merge is you know amazing is that um you know it's basically updating the core consensus engine within ethereum if you think of ethereum as a car like the the engine is the most one of the most important components and we're making a massive upgrade here but uh it turns out that as a second order effect we're also doing a massive upgrade to ether uh the asset the native money of ethereum and oftentimes you know we talk about uh money legos right we talk about unit

swap being a money lego ave maker et cetera but we forget about e4 itself ether is the primordial money lego it's the meta money lego even you know non-financial applications like ens use ether to make en as possible and i think e for the asset is about to get a massive upgrade here with the merge so i know that that analogy that you used in fact a year and a half ago used that in our original ultrasound money episode of ethereum really getting its engine swapped out this you know old combustion engine that was inefficient didn't work very well being replaced for like a a battery uh

powered engine you know something like elon musk would dream up um but this story the ethereum merge and ether's ultrasound money has not yet broken into mainstream so of course bankless listeners listing this now you're familiar with it because david and i we talk about it a lot you know what the merge is but justin when we were talking during the break just now um you had just given us a rundown of your recent interview circuit and a whole bunch of major mainstream uh media outlets are now maybe putting some attention on the merge can you tell us a little bit about that experience and what you're seeing from your vantage point

yeah for sure so i guess in the last few weeks um i've been you know overwhelmed by the media they really want my attention and i've been interviewed by many large publications you know wired forbes i have the list here the economist time magazine bbc politico um and yeah i'd say that the merger is definitely not priced in in the sense that we're going to have you know a much bigger audience now you know looking at ether and and starting to appreciate it but i think another reason why it's not priced in is that the the questions that are being asked and the articles that are being written are still so so you know

early um you know i think there's a big focus on the energy reduction that's something that mainstream can understand but there's you know more subtle stuff going on um one of the uh things that the press is starting to understand is the massive issuance reduction you know 10x issuance reduction i'd say that's the next easiest thing to understand after the reduction in electricity consumption but you know going all the way to ultrasound money meme that's just way too far you know i've been trying to plan some seeds with these reporters you know mentioning also money uh but it it it's still too early um

and then when we talk about security you know the fact that this is a massive security upgrade from the perspective of economic security the amount of dollars that you need to attack the system as well as 51 attack recovery with slashing that's you know way over their head despite the fact that security is the product that ethereum is delivering its secure block space so it's you know the most important property arguably and the one that's the least appreciated by the mainstream i'm just imagining that meme uh justin drake meanwhile you know he's being asked by mainstream media about how ethereum is reducing its energy footprint by 99.9 and justin drake is in the corner just saying they don't know

about ultrasound money they don't know about how secure ethereum is going to be does it feel a little bit like that exactly yes well this is a probably a lead into the conversation that we want to have today which is bad takes about ether bad takes about ethereum and i know a lot of these reporters are trying to do their best they're trying to report on ethereum to the best of their ability and you know granted crypto is hard especially when you get down to the relationship between something like ultrasound money and the security of ethereum but i think this episode is going to be a little bit for those the crypto natives the people that have been passing ideas back and forth giving out takes left and right on crypto twitter or whatever medium

they're on about the various takes that there are about ethereum and about ether of the asset and we're going to get your get you to weigh in on 15 of them justin you ready sounds good the first one we want to talk about uh is the merge will never happen justin what would you say to this very frequent take that you hear being put out on crypto twitter that the merge will never happen wow okay so the good news is that there's there's two types of ticks there's what i call falsifiable and non-fossil bio non-falsifiable takes now the the non-false falsifiable takes are those that kind of linger on and on and on because it's very very hard to to

falsify them but the the specific take that you mentioned the good news about it is that hopefully you know within the next 36 hours let's say we're going to be able to to falsify that you know we're able to have a clear event that we can point to and say hey you were wrong um so unless things go wrong which i don't want to say is not possible because there is a possibility you know if i were to try and estimate it i'd say there's at least a one percent chance that things you know go wrong but overwhelmingly like this should go smoothly um so the match will happen it will happen within the next few hours and everyone with that take will be

you know proven wrong here's a here's another take that i think is related which is ethereum the full ethereum roadmap and the vision for ethereum will never ship it will never ship so the subtext here is ethereum is always full of promises ever since the world computer but it won't actually ship anything meaningful what would you say about that take interesting um so i think there's there's a couple things here like one is kind of a misunderstanding of what a theorem is um and to me ethereum is the settlement layer for the internet of value you know it's a very simple

well-defined thing but people have been conflating ethereum with the things that are built on top of ethereum right and we've had dowels we've had icos we've had defy nfts and some of these these things have have failed or at least are no longer in vogue so for example icos you know that was a thing back in 2017 is no longer a thing and so if you thought that ethereum was icos then arguably you know it hasn't fulfilled its mission but that's not its mission we don't want to conflate ethereum being the settlement layer for the entire value with its applications another thing that some people do is kind of conflate ethereum and its mission with the

technology so people will say for example that ethereum is a consensus layer or ethereum is an execution layer or a data availability layer but it's actually these consensus execution data availability these are components of ethereum it's not ethereum itself um just like the engine the wheels and the chassis are components and um it's it's even though like the components are not fully mature right for example the data availability layer is the the the main one that we haven't really shipped yet um it's

we have a credible roadmap is this idea that um you know we have done a lot of research we have proven to the community that we are able to do upgrades that we are able to do hot forks and it's okay for visionaries for entrepreneurs to come in and start building today even though the technology is not fully mature and this is something that we that we experienced um you know around uh cryptokitties right there was this uh argument being said that it's not worth for me to invest time building on ethereum because if i were to have a successful application it would just use

up all the bandwidth and we couldn't scale but i think at this point in time we're in a very very different place where we have not only the long term vision and the goal set but if we have all the research done specked out all the details there we have proof of concept and we have this willingness from the community to want to become a settlement layer for the internet of value and so you know that's you know again another falsifiable claim that i hope will be falsified uh you know over the years and one of the things that we've learned to do is to try and move incrementally right and do like these small upgrades and so actually the merge is

the smallest and simplest upgrade that that we could have designed you know we had no withdrawals we didn't clean up you know the if one voting um and we did all sorts of other cleanups we just did the simplest thing we could do and i think for scalability is going to be a similar idea where we're going to release proto dang shouting which is the simplest thing we could think of and then for dank will come will come when it when it's ready and another thing i guess worth mentioning is that nowadays it's not just the researchers and the devs pushing forward it's hundreds of engineers outside of of that of that small team of 100 people that are now you know pushing the the

execution layer to its limits via the roll-ups and on that note since we are 36 away from the merge you know proof of sake has always been one of the things that the ethereum will never complete is roadmap uh vision uh these people that critique this outcome of ethereum will will always say like proof of stake will never ship and so really the burden the proof at this point goes on to the people that say that ethereum won't ship because ethereum has this history of shipping so to tie that one off and moving on to the next one take number three bad take number three is that ethereum tries to be everything all at once and therefore it suffers from being able to be optimized to doing

anything at all so justin what would you say to the critiquers that say ethereum is trying to do too many things right so there's this i guess there's two ways to interpret that bad take the first one is as i mentioned kind of conflating efer sorry ethereum with the applications built on top of it right people could say is trying to do too many things they're trying to do nfts are trying to do d5 and icos and daos but that's like saying the internet's trying to do too many things no the internet's trying to do one single thing which is to be the communication layer for the digital world and we're trying to do one single thing which is to be the settlement layer for the internet of value um the other way to interpret this this

this bad take is that people claim that a film is simultaneously trying to be a small contract platform and it's trying to be good money with with ether the asset and that if it needs to be successful at one of them it really needs to focus and only do one of these things um [Music] you know be be more like bitcoin for example if you want to do just money um but my uh my claim is that it's actually the exact opposite like if you want to be successful at either you need to do both at the same time and the reason that being good at money is critical to being

good at uh at smart contracts at the settlement layer for the intensive value is for two reasons one is because we need so-called economic security we need to have trillions and trillions of dollars of economic security so that's it's impossible even for the largest nation states in the world to go attack 51 attack effort and the only way to get there is to have monetary premium um and the only way to get monetary premium is to be or like this large amount of money premium is to be the the the best money and another reason that we need to be money is because if uh

the the the the asset is also used as economic bandwidth right it's this money lego in the context of of of defy um and um you know people have been um you know talking about these these money legos you know like did i already say that like uni swap uh ave and maker but really ether is this is this you know primordial uh building block the oldest one the most important one the largest one the most flexible the most composable the most pristine etc um and if we are going to be successful at building the intensive value we do need

that that that that component um [Music] what was the the uh sorry i lost my train of thought there i think that i think that answers it and by the way with uh with that question you also answered you know number four because we were going to ask you specifically about whether ether the asset can be both um you know optimized as a as a currency for a smart contract platform and also be a good money and your answer is not only can it be both it needs to be both uh for economic security reasons um i think that brings us to number five oh did you have something you wanted to add justin yeah i wanted to actually give you the flip side which is okay that if you want

to be successful at money you need to be successful at smart contracts and in a way that's the one of the bare cases for for bitcoin and um the the the reason is that um with with money there is this competition for monetary premium there's this idea that only the best assets the most outstanding assets will be worthy of this you know monetary premium which is in a way a societal illusion we all need to come to consensus on something and the best way to come to consensus of something is to create these shelling points um about the asset in in ways that the asset can can can be outstanding and it it turns out that we've we've

discovered a way to make an asset outstanding in the context of blockchains through income through the burn and if you your blockchain does not provide utility transactional utility there will be very little burn and so in a way bitcoin by focusing on just money and by focusing on the non-transactional aspects of money it's sacrificing a huge amount of income which could have gone towards you know if towards its native money and it's for for bitcoin specifically it's even worse because

over the long term there is no issuance and so not only is it sacrificing your income for for the asset but it's also jeopardizing it it's security you know on on ethereum what the the strategy that we've taken is always prioritize security so we have this continuous tail issuance which guarantees security and then all the economic activity and all the income that comes through it is additive um and and it's instead of being funneled to pay for security it's funneled uh towards the asset and towards making it a better money

so it sounds like you really believe that the the utility of the block space in general that the smart contract functionality is is necessary because it increases the the demand for highly useful uh and highly secure block space and that's something that if you're not a smart contract platform you actually don't have um but that but that gets us i think to another uh take that people have when you talk about ultrasound money and these are takes related to supply the supply of ether itself so the first the first take of these two is um number five eth has an infinite supply uh and the take often goes ethereum supply it can go to infinity

the printers can keep printing because ethereum has no tail issuance so what do you what do you make of this does does ether have infinite supply is that technically true and is that also falsifiable right so um no is not technically true ethereum does not have an infinite supply even if we were to wait a very very long time even though there is tail issuance the supply would not go towards infinity it is possible well pre pre-eap1559 yes technically it would have gone to infinity but with the burn we're actually in a position where there's going to be an equilibrium that forms at the supply level where

the burn and the issuance are going to exactly cancel each other and one of the reasons why i have high confidence that there will be an equilibrium is because it's a little bit technical but basically the issuance is sublinear in the supply so with proof of work you know we had this constant issuance so it doesn't matter you know how large the supply is it's like a constant constant issuance for example two eve per block on the other hand the the burn is linear to the total supply and so it grows as the supply increases because you can think of the burn as being

a burn rate of the total economy let's say one percent of the total ethereum supply is being burnt every single year and so one percent of a supply of of one million if is much much lower is ten times lower than one percent of a one billion um if supply and so if the if the uh supply were to grow to infinity the burn would grow to infinity but we know that the the the issuance is doesn't grow as fast it's kind of the sublinear growth relative to to to the burn and

for for proof of stake uh the decisions is not linear is but it's actually um you know the square root of the supply so one grows linear the other one grows by the square root and then you can prove that if you were to to map out these two curves square root and and the line you know they would intersect and that would be the equilibrium now one of the interesting kind of side notes here is that arguably even before eip1559 ethereum would still have a supply equilibrium and the reason is that there is another mechanism that if gets burnt which is the natural process of losing ether people just lose their

coins and so we could maybe estimate let's say 0.1 percent of all the eve every year gets gets gets lost and the reason is that let's say one percent of all people on earth you know die and of these one percent let's say 10 percent didn't set up proper fallback uh for for for their lost keys and that's a similar dynamic if we have a percentage that's being lost every single year that is going to outweigh eventually um the the the sublinear nature of issuance and this is actually an argument that was put forward by my pizza todd not that that i agree with

uh often with peter dodd but he's basically saying that even if bitcoin were to have tail issuance that still leads to a cap supply and so in the sense it doesn't uh go against the philosophy of of bitcoin being uh being a hard money with a cap supply i just want to clarify some notes on the the proof of work versus proof-of-stake and the the burn and this is really i think why the ethereum monetary policy feels so elegant to me especially the combination of having this naturally asymptotic um supply growth because if that's what you were talking about with uh the square

root right as because it's a square root function as the number goes higher it stops going higher so fast so it slowly gets a slower decreasing rate of issuance and so beca and then because that the proof of uh because of the eip1559 burn is always a percentage uh there's that's where you get that intersection point right and the cool thing about this is that these are two market derived algorithms that are finding each other and this just feels so elegant to me versus some sort of like arbitrary top down two ether per block monetary supply schedule where we have eip1559 which is

market discovered as the correct uh gas price for that particular moment because that's what the market decided and then you have this monetary policy which is also a function of as issuance goes up or down as a function how much each stake there is so we have these two things two uh mechanisms that are are are two forces that interact with each other that are both market derived and when we have like these market derived metrics to me that just feels like the logical conclusion of monetary policy for some crypto economic model uh that's that's how i would summarize these things what would you say about that justin no that that's exactly right um and so

there is an equilibrium we don't know exactly what it is because it depends on these two market forces as you as you said um and if you want to visualize this if you go to ultrasound.money the website you can play with these exact two market forces there's two sliders um so if you scroll down a little bit one slider is going to be uh around the issuance so that's basically going to be how much ether is taking the lower the the apr the more ef is taking so here we have 30 million if and then the other question is the burn rate so historically we've been burning at 2.2 percent a year which is extremely high but maybe that's too high because

you know most of the data was around you know defy summer and the bull market and so if we you know adjust this down for example as you just did to 1.2 percent per year then you can see the equilibrium would be at around roughly 1.7 million if so yeah it's just these these two market forces um and the way to think of of the issuance is to to think of the the cost of money right because over the very long term and in the efficient market basically the returns for stakers will effectively be zero and the reason is that there is a cost of placing that if as collateral and locking it up which is

the cost of money and so you want to get compensated for that and in an efficient market kind of margins go to zero and so you need to ask yourself what is kind of the end game cost of money and you know maybe three percent is reasonable maybe four percent is reasonable i don't know and that will dictate how much ef is taking uh in the long term and then for the burn rate that's a bit harder to to try and estimate because the the fee market is so volatile and it's also going to depend on development you know like scalability and and induced demand and competition and so here it's it's more of an odd to try and and predict it but i think you know at least one percent per year seems uh

seems reasonable in terms of the the burn rate by the way i think this uh supply projection is is recently uh newer to ultrasound.money at least i i didn't see it a few weeks ago and i just want to do a shout out to this website it's called ultrasound dot money if you want to understand ethereum's monetary policy its issuance schedule its blocks-based demand the way the algorithms work to set issuance this is the website to go to it's all very visual the sliders that justin mentioned they slide up or down so you can put your own projections in and this to me is just the absolute best way to understand what's what's what's happening what the dynamics are around

issuance around burn rate uh and you can model it out it even has kind of a a projection of the east supply moving forward and uh what are we at with total supply right now um 120 and a half million 120 million so will this stay at 120 million will it go to 122 million will it drop down you can project all of that here uh so shout out to this website it's absolutely fantastic david i think there's this concept called the ultrasound barrier which is basically what uh average uh base base fee price do we need in order to have deflation

um and so if you scroll up a little bit there's this kind of interesting graph here with the base fees which shows the ultrasound barrier at 14.9 gray and every single point on the on the right here on the graph every single point that is orange is above and every single point that is blue is is below and basically you want to be looking at the area under the curve you want to be taking the orange area and the blue area and comparing those and here in the last hour overwhelmingly you know we would have been in a deflationary mode you know maybe the last hour was a ultrasound hour if you will exactly yes amazing i can't wait to look at this

post merge it's gonna be that much that much better oh gosh okay justin let's go on to uh take number six which is uh the east supply is unpredictable as in uh there is no knowing the future supply of ether the asset moving forward into the future what would you say to this take right so this take is actually technically true because as you said the eve supply depends on these two market forces one is you know what is the fair you know cost of opportunity cost of of money and what is going to be the the demand for block space and and and the fees uh paid for it

but it turns out so this is often the take that's given by bitcoin is but it turns out that bitcoin's supply is also unpredictable um and the reason is that mining is also it's you know it's technically also a true statement for bitcoin um and the reason is because there is a market it's the hash rate market and the hashrate can go up it can go down and that is going to affect the average block time and also affect the issuance and rate and also therefore i affect the supply at any given point in time and so there was this this meme within the the the bitcoin which is that every four years there's a half thing but that's

actually not true it's less than four years it's more like three and a half years and so you know we should be having a a happening in in january uh 2020 uh five i believe but now it's if we were on the on the four years on the original four-year schedule but actually the next happening is now scheduled in 2023 and the reason is it has been advanced by so much is because the hash rate historically has gone up meaning that the average block time is less than than 10 minutes and so in a way bitcoiners have been rugged because they've had to suffer one year's worth of dilution prematurely uh when you know they were promised this

this four-year schedule i think really the the more you know refined take i guess is that we want the supply to be fully programmatic right we want it to be like just code uh and this is a property that bitcoin has and it's also a property that ethereum has um and i think maybe what what bitcoin is will say is that yes it's just code but the code has changed over time and this is true right we've we've gone from five eve to three eve per block to two eve per block and now we're basically going to zero eve per block with proof of work and then proof of stake is on the order of 0.25 uh eve per block

and you can also think of eip1559 as you know again being kind of this monetary policy uh intervention by ultimately uh humans but like the i think one of the responses here is that um the social layer isn't is in control of these changes and the social layer will only do changes that are beneficial to itself and these are changes that you know improve the monetary policies and so we've always has this continual incremental improvement to the uh to the properties of of of of e for the asset and it's possible that there will be future improvements beyond what we have which

is already you know in in a way sci-fi economics at least relative to bitcoin and so one one of the possibilities for example would be to have a cap on the number of active validators so there's like good security reasons to have a cap on the total number of active validators because every individual validator has some overhead computationally on the beacon chain and so if we won the beacon chain uh you know to run on raspberry pi's there shouldn't be millions and millions of validators because that would be too much overhead and by putting a cap not only are we improving the security of the beacon chain but we're also improving the issuance because now

instead of the maximum issuance being you know the square root of the total supply it would actually be constant it would be like proof of work there would be like a maximum issuance per block that could ever be be issued and that would you know further be an improvement over the current monetary policy i don't know what why i've never thought about putting it in these terms but um what you just said just kind of uh treat this thought in my mind which is after the merge ethereum switches its monetary policy from the social layer purely to code in the same way that bitcoin's monetary policy has been algorithmic driven and code driven from the very very beginning

and i do think at the heart that is what crypto sound money advocates actually want they don't want predictability necessarily they want unbiasability they they don't want it to be biased arbitrarily by humans they want the code and the algorithms to decide and that indeed is what's happening post merge ethereum switches its monetary policy purely to the robots that the code is in charge now uh but that's a great point about unpredictability let's go to um the next one so you're right they're

pre-merged there's these numbers that need to be picked you know five three two and you know we can bike share then we can argue and it's kind of not clean so you're right we're removing these numbers and we're replacing them by by pure auctions and and markets the other thing that i want to highlight from an improv potential improvement to monetary policy is this idea of mev burn so right now we're only burning the base fee but it turns out that there is this you know uh crypto economic gadget called mev smoothing whereby the the blockchain itself is aware of how much mev is being extracted in the blocks and it spreads the mev equally across

all the participants and this awareness creates an mev oracle that we can indirectly use to burn the mev and we could actually be in a position where the issuance is negative meaning that you need to pay if to become a validator and the reason that you pay eve to become a validator is because you know that you're going to be able to receive the mev income which is going to be greater than what you paid for this valid data slot and so you know right now the the issuance is you know on the order of 0.5 percent uh per year but with mev burn it could actually be

be negative um and so that's you know taking to the extreme this idea that um you know we we we we shouldn't be giving the the the transaction fees and and use that to pay for security because that's wasteful instead all the transaction fees should should go to ether the asset and accrued there to make efer a a better asset because the the validators are already sufficiently compensated to guarantee that ethereum as as the protocol is secure enough and the other thing that i mentioned in the ultrasound money episode is that

there's multiple grades of of of uh rewards for validators there's the you know super consistent low volatility stuff which you want to rely upon and as the really high volatility fees and so in a in a way by smoothing things out and removing this mev component which is extremely volatile uh we're making the process um of of being a validator you know more more stable and therefore you know in a way making it more secure as well well speaking of validators that gets us to i think the the seventh bad take on our list maybe misconception and that is the statement that the stakers

run ethereum they are the rulers welcome your new overlords are stakers they're validators the idea is that ethereum stakers control ethereum and they can actually change the rules of consensus what do you think about this right so this is one of the really hard to to to fight bad takes um but and the reason is that there's a lack of appreciation for two layers in the consensus stack right there's what i call the machine consensus layer which is which is run by by machines and software and and code it operates on the order of seconds um

and there's the the social layer which is run by humans and ultimately the social layer has precedence over the machine layer is the social layer that sets the rules because it decides what is you know a valid transaction so the the machine consensus has to play within those rules and can't just create invalid transactions out of thinner so for example even if the ethereum as a blockchain was 51 attacked the attacker could not just create transactions that paid itself millions and millions of if right because one of the rules that has been set in the social layer and is enforced

uh by by by running uh notes with these rules is that you know transactions can't just create ifats or thinner and so there's this conflation basically of two things one is consensus and the other one is governance governance is the idea of making upgrades to consensus and governance is in the hands of the social layer whereas the day-to-day consensus is in the hands of the machine layer which is just a service provider right they're just servants ultimately to the network if they don't obey by the rules uh they will they will get penalized

now there is this this one exception right which we discussed in the censorship resistance is that the validators if they get 51 attacked they do have the power to temporarily censor transactions and the reason why i say temporarily is because as we discussed there's these two types of censorship there's the weak censorship which by definition is temporary and then there's this strong censorship where the transactions don't make it unchain forever but even in that strong censorship scenario it's still temporary because a few months later when the social layer kicks in it will boot out the attacker um and

re-enshrine and and the the the the rules that have been set at the social layer which is that there there shouldn't be censorship uh and and and therefore restore the system um and so if if you are going to exploit this one loophole uh which is that you can censor if you do 51 of the validators that's going to be a one-time attack is going to be extremely expensive um and most likely you won't do it in the first place because the crypto economic incentives the equilibrium are not in your favor i think justin this argument really comes from the bitcoiner camp and

they're really using proof of work as a reference point to make this argument where there's no like governance button built into an asic unit uh and so like therefore of course proof of work systems don't have governance but proof of stake systems they totally do obviously because it's it's the capital that governs over the system when people make this argument that proof of work doesn't have governance and proof of stake is chain uh is on chain governance where's the mistake that the where's the mistake coming from here on this one right so proof of work 100 has governance it 100 has a social layer you know even if bitcoin is trying to minimize it it does have one the social layer of of bitcoin is

you know we're gonna try and minimize it and try and and ignore it to the maximum possible extent but it's it's still there and you know it rears its head every once in a while because there have been upgrades to the rules of consensus uh you know over time every two years or so the bitcoin make makes it makes an upgrade and that is fundamentally something that comes from the social layer and so what happens is that humans will go upgrade the their nodes and they're now running you know a different version of ethereum if you know 51 of the hash rate were to just go off in their own direction well then they just created a new fork and you know this is what happened with bitcoin

cash for example it just went on in its own direction and you know ultimately did not have legitimacy and would not have had legitimacy even if more than 50 of the hash rate wanted to go in that direction and actually that's something that bitcoiners are very proud of right there's this um you know story which is retold and retold over and over again which is that all the big players coinbase and like all the miners and you know all the big industry wanted bitcoin cash but ultimately we won because we were stronger well yes that's exactly right that's a very good point like ultimately the social layer won out over the consensus participants because the consensus participants are subjugate

not in power relative to the social layer could could we replay that same story with eth stake could it 51 of staked eath go off if on its own direction and then the ethereum communities like oh that's the direction of ofac compliance we don't want to go that direction is it a one-to-one comparison on these two stories 100 yes so you can abstract away the notion of a consensus participant whether it's a proof of work consents participants as a minor or as a as a validator and proof of stake is the the exact same thing um and you know the the nice thing is that anyone can fork off at any time you just need one consensus participant in the world to go do that um and you know you

could have like a a very you know um a quiet chain with just one participant if if they want to but really the value of these forks only comes when you have you know rough consensus when you have a significant minority at the minimum wanting to go in in such a direction so that was bad take number seven we have a definitely a handful of more takes in uh coming up next we have uh rich get richer we have proof of stake is bad for distribution we have deflation bad and it's a security uh and a few others as well we'll talk about scalability and the burn rate and a few other hot bad takes on ether but first we're going to talk to some of these

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like proof of stake is one of the fairest consensus mechanisms that you you could come up with and the reason is that it's the same apr for every single consensus participant no matter how large you are if you're staking one eve or a million if you get the exact same apr and the barrier to entry to becoming a consensus participant is is very very low at least compared to proof of work with proof of work you know you need to invest millions of dollars you know to have a remotely competitive uh system with proof of stake with tens of thousands of dollars and soon with you know with things like rocket pool and lido you know even just one e for even less underneath is is okay to be

benefiting from from these rewards the other thing i'll say about proof-of-stake is that it you know it doesn't suffer from these economies of scale that proof of work um has and so in that sense it's much fairer than than proof-of-work like um if you're extreme if you're extremely large you'll be able to get you know better deals on on your hardware for example and actually if you're so large that you can go manufacture your own hardware then you get an even better deal because you don't even have to pay the the bit main kind of uh profit margin and you know this is a classic thing you

know with with you know in hardware like the bigger you are the the the the more profitable you are and like part of the reason is that there's a large what's called nre um which is um this upfront engineering cost uh that you that you have to pay even to produce one single asic you have to pay you know tens of millions of dollars and so the more asics you have the more you can amortize that um and so yeah like it's it not only is it is it is it wrong because then the rich are not getting richer compared to to the rest but it's kind of a an especially bad take if it comes from bitcoiners because bitcoin is indeed the rich get

richer like the richer you are the better economist or scale you have the the larger the apr and so over time as a miner you become larger and larger and we're actually seeing this in real time play out right now in the bitcoin mining world with acquisitions the bitcoin miners are in a really tough spot now and the reason is that the broken price is not doing so well the the hash rate is relatively high the the energy prices are very very high so electricity prices are very very high and so a bunch of miners are just you know not doing so well financially and some of them are just going out of business and so the the best move is to get acquired and it turns out that it's the larger fish kind

of acquiring the smaller fish and getting even larger and so that leads to to centralization and so this is this is something that proof-of-stake doesn't have like it's kind of preserves the level of centralization that we that we already have and if you zoom out and you think of you know wealth around the world um you know it's not perfectly distributed for sure but it's it is pretty damn distributed okay so now we're getting to uh number nine on the bad takes list uh to d d fang um and at this point i think maybe uh the bad take machine is going okay justin you got us ultrasound money eth as money is really good but you know what deflation is

actually bad it's bad for the ethereum economy and the idea is here that eath cannot be a good money because deflation incentivizes hoarding and that ultimately will start to jeopardize the ethereum economy so what about the idea that okay your deflationary ultrasound money but hold on deflation is bad for the ethereum economy long term right so that's an extremely prevalent take even within ethereum circles and i think it's because it's like the the traditional economist thinking right that that deflation is bad now the thing is that i think it's important to distinguish two types of money and i'll call them

money and currency so there's non-transactional money and there's transactional money and actually the non-transactional one is what i'll call collateral money and the transactional one is what i'll call you know that debt money and it turns out that there's these two ties to the coin right when you want to have debt money you know for example fiat you need to have some sort of collateral backing it so for example you know every time you take out a mortgage and you put put your house as as collateral then you have collateral money quote money is the the house and then you have the the the debt money now you want it is true that you want

your debt money to be inflationary right you want its value to go down over time and the reason is because otherwise you know over time it will be harder and harder to pay off your your your debts uh and you you know that there'd be um there'll be lots of defaults in in the system but on the other hand when you focus on the collateral side of things then you actually want your collateral to grow over time because that reduces the the probability that you'll get liquidated so if you want to have like robust systems uh that that can you know that are less subject to kind of be becoming more and

more systemically risky as time goes on you know and potentially having a massive crash you kind of want your debt money to reduce in value over time so people can pay back their loans and you want the collateral money to grow and grow over time and so just like you know we have like you can think of gold as being this collateral money and fiat as being this the this this debt money um ether is actually optimized to be collateral money in my opinion so right now how is it used as collateral well it's used as collateral in the context of staking right there's about you know i forget exactly the percentage but something like 12 percent of all eve

which is currently being staked um ether is also being used as collateral in the context of of d5 and and in both of these cases what does it mean to be a collateral it means basically to be backing some sort of of liability and so e for the asset is kind of this this this this this magical thing where you can create liabilities um and and start and start backing them and so in the context of defy like the liability is that the the price uh action goes against your your favor you know you want leverage along with your if price goes in the wrong direction you get liquidated in

the case of staking is this idea that you know if you start misbehaving you start accruing penalties and i kind of also think as one third use case of efer being collateral money is just simply being a savings mechanism a store of value and the and you can kind of think as the liability there as being your future spending right you know it could be you know for education or for housing or for medical bills or whatever like it's there to back a a liability which is your your future spending and like the the amazing thing about about ethereum is that it's it's a system which is extremely friendly and extremely

welcoming of these two types of money both the ultra low velocity non-transactional money which efa is optimized for and for the high velocity transactional money and the the reason why it's friendly to both is that when you look at the transactional money this is what generates cash flows right this is what generates income and so you can kind of think of the really high velocity liquid portion as being like a mini company like a mini tech company basically and you can start applying you know valuations that look as cash flows and look at pe ratios and things like that and this kind of mental separation of these

these two types of monies is no in my opinion a very good model for monetary premium and the reason is that we can try and compare it with gold gold has roughly 10 percent of its supply let's say that is actively being used and has cash flows through its use as an industrial metal right every single iphone every single piece of electronics uses gold and if you look at these cash flows you might say that gold should be valued at one trillion dollars but it's only the 10 percent of gold that is actively you know subject to these cash flows that's that should be value temp 1 trillion but if you look at the whole

market cap and you add in the other 90 million then now suddenly you get the you know the whole 10 trillion dollar um uh market cap of of gold which is to to to to to large extent just monetary premium and i think the same thing will happen with ether the asset i think over the long term the vast majority of if will be non-transactional it would be just sitting there maybe let's say 80 percent of all the ether will be used as collateral in context of defy staking and as a store of value and only 20 uh will will be liquid and subject to to to these cash flows and so if we take this to be you know

the case and then then we should expect a monetary premium of of of 5x right over the cash flow evaluation um and right now you know we're in a position where maybe only 20 of all the eve is is is is locked up and so the monetary premium is actually negligible it's only when it becomes very very high then that that it starts like acquiring military premium ryan you're muted sorry i was saying that that's very fascinating i really like this kind of um i guess lens of collateral money versus um debt money right and i guess applying the you know a traditional lens of money that that we've seen before store value medium exchange unit of

account i think what you're saying is the collateral money is better on the store of value side of things the higher velocity debt based money is better on kind of the the medium of exchange side of things i guess both could serve a purpose as the at the as the unit of account but maybe uh the high velocity money is kind of a better unit of account but like we see this in play right now whereas for an asset like a staple coin like a die right that is kind of a unit of account medium exchange what is it backed by usdc yes but also a vast amount of eth as collateral backing it so when you're talking about like deflation bad deflation only bad for credit money only bad for

um the unit the medium of exchange type money the high velocity money is definitely a very good thing for the store of value type of money and i think that distinction in the fiat age has been somewhat blurred but i think will become more clear in the crypto age um david i think you have the next take yeah next take that we want to cover justin is a higher eth price means higher fees than to elaborate it's that uh you know high ease prices high ether prices especially in bull markets lead to high transaction fees making ethereum unusable what would you say to this take right um so in my opinion it's just you know largely wrong

and it like the the thinking is that people have to pay transaction fees in if and so if the price of yif goes up then it means that my transaction fees must go up but actually there's like two very distinct markets here going on there's the if market which is denominated in u.s dollars per eve and then there's the gas market which is you know denominated in u.s dollars per per gas uh per unit of gas uh and and in theory like these these two things like are are totally separate there's the different markets and so we can be in a position

you know hypothetically where one if is a million bucks but the the the gas price is is is is is is extremely low um sorry the the the gas market is denominated in if per gas so basically you could be paying like 0.0001 gray let's say and still have um you know an extremely high if price and actually this is what i expect will happen over time this i think is the the the reasonable end game is that the the price of beef is very very high let's say a million dollars and the the gas price is extremely extremely low and

when you take these two things in in combination you know you're you you you you're in a position where you have very very low fees but potentially lots and lots of transactions and so if if you bring in scalability to the mix what i expect will happen is that we're going to have millions and millions of transactions each paying a tiny tiny fee let's say one one cent and that you know being kind of largely orthogonal i guess to the to to to the price of eve now one thing that i that i'll i'll say is that when we look at the gas markets there's this two components this the supply and demand now the price of eve going up definitely doesn't apply doesn't reflect um

doesn't reflect on on on on supply but what tends to happen is that if the price of weave goes up it increases demand for the the the block space and one of the reasons is because of volatility right if price goes up that means that there's been a change in price which means that there's been some amount of volatility and every time there's volatility there's arbitrage opportunities and things like that but the other aspect is that as the price of beef goes up ethereum becomes more valuable and more useful as a settlement layer and the reason is because it has more economic security and it has more economic bandwidth and so it can do more stuff

and it has larger and larger network effects and so it's natural that there is more demand for it and so one of the things that we that we have observed is that there is this kind of this this this correlation with with bear and bull markets when when we're in the in in the bull market there's there's a lot of activity people are wanting to pay uh you know for this block space at a premium when when the bear market there's less there's less activity um but if you if you think in terms of long-term fundamentals nothing prevents you know having a one million dollar if with one cent transactions

one million dollar eth with one cent transaction that sounds kind of good right now sounds like a good day let's go to number 11. this has been maybe a criticism i've seen somewhat recently again uh has it raised its head at certain times more recently by i think michael saylor but uh eath cannot be a good money because it's a security the eath take being ether is a security therefore it cannot be good money what what do you say to that right um so my understanding of securities is that you know it's on a jurisdiction by jurisdiction basis and you know there's roughly 200 jurisdictions in the world and to my knowledge there's not a single

jurisdiction in the world that has declared eve to be a security so in a way this should be a falsifiable claim you know i should be able to go to every single country and and tell you hey you know it hasn't been declared the security in that country therefore it's not it's not as a security um but i think what bitcoin is have and critics have been doing is is basically saying that hey um there hasn't been a clear claim that it's not a security and so it it i guess it could be a security um and often you know when they when they think when they say if security they actually mean if is a security in

in the united states like specifically okay so let's let's let's look at the united states now i'm i'm you know just an observer of i'm not even based in the us you know i have relatively little uh you know knowledge of of of of u.s securities but my understanding is that the sec has actually explicitly come forward you know a few years ago and kind of had this informal guidance that it's not a security like we we had a representative of this the sec go ahead and and and and and do that um and then my other understanding but again i you know i'm definitely not an authority on this is that there's a statute of limitations specifically in

the us of of five years and and it's been you know close to eight years uh since we've i think it's had uh but you're seven years seven years okay but your point still stands point still sounds it's been more than seven years since you know e for the asset has been created uh and so you know it in in the u.s specifically it seems that it's not a security but of course it could be declared the security in in in other jurisdictions now what if let's say you know bitcoin is turned out to be right like some jurisdiction does declare it a security well you know ethereum in a way doesn't care right like the ethereum system will just keep

on running and you know what will have to happen is that exchanges within this jurisdiction will you know will either have to stop trading um the e for the asset because they're that they're not registered uh as a securities exchange but you know there's there's many easy ways now to go to go by ether like one of the ways for example is you buy rap bitcoin you go on uni swap and you convert that rap bitcoin to eve and so if bitcoin is not a security then you you it's still you know easy to go to to go by eve um and if one specific jurisdiction were to go ahead and declare ether security they're putting themselves at a massive disadvantage because remember like the

the grand vision here is to become the settlement layer for the intent of value and basically for eve to be the the collateral money for the whole internet and like they they want to miss out on this opportunity well you know that would be to their loss obviously the collateral money for the whole internet only traded from nine to five on the s p like on the nasdaq or something like this right it does not make sense i don't i opt out of that future uh justin thank you so much for going that one this one uh we we have because uh we have this listed in like the bad takes about eth but this one i'm actually really curious for myself because i i'm curious to hear the answer this is a point that jordy made in our bear versus bull about the merge

argument and it's that the scalability of ethereum with eip 4844 and all just generally pushing transactions to layer twos reduces the eath burn so all these people who are just like super stoked with how much ether that we're burning how can we also be like excited about the eath burn yet also excited about ethereum scaling at the same time so the take here is that ethereum scalability reduces ether burn uh why why is this a bad take i'd actually i need to know this for my own personal knowledge yeah sure so this is this is a very common take uh even within uh if ethereum land um and basically it it's it's because you know the the very naive

thinking which i guess jody is not thinking but i'll just put it forward anyway is that if we have scalability then transaction fees the per transaction fee will go down and therefore the the total burn will go down but what it doesn't take into account is the fact that there's going to be more transactions so even though every individual transaction is going to be paying less because there's more transactions um then that there's going to be some counterbalancing going on and so the real question is you know there's this very subtle market dynamics around um you know on scalability on the on the one hand and you know how much people are willing to

pay given this total amount of scalability and there's several scenarios there's actually you know two at least two scenarios scenario number one is that if let's say we scalability um increases by 10x the question is will the per transaction fee be less or more than 10 times less because if it's less then yes i agree the fee burn would be less but if it's more then actually it would be more so there is a scenario where for example we scale by 10x but the per transaction fee only goes down by 5x and in that scenario the fibonacci the the total burn goes up by a factor

of 2. now there's a couple things that we can say just um you know abstractly which is that there's this there's two two things that we can expect the first one is this idea of a supply shock which is that if we were to suddenly scale dramatically then uh there wouldn't be an immediate response there's kind of this latency for the for the response in in in the very very short term and so what would happen is that the per transaction fee would go down and there wouldn't be a uh in in in terms of demand for for lots of transactions and so the total burn would go down but there's this other kind of very interesting

economic effect which is this idea of induced demand which is that the more you improve the system the more people uh want to use it and this is something that we observe with with with traffic um which is that um you know if you have let's say a motorway with with two lanes it's always full of traffic well the the city's council is going to say okay let's build a third lane and then two months later this third lane is like completely swamped and you can ask yourself why why does that happen why have you not solved traffic and the reason is that because you've added this first this third lane you know people who used to take the train while they start driving entrepreneurs who who you know see oh well there's now more flow in this city

i can gonna set up a petrol station i'm going to set up a restaurant and now more people are interested to go there just because there's a restaurant and this is the same thing is going to happen with ethereum like the more trans activity there is the more you know attractive ethereum itself uh becomes and so what we should be really expecting when there's a scalability increase is like a dip but then a counterbalancing increase for the induced demand and then the real question is where do we end up do we end up over or under and here we need to go back to historical data it turns out that ethereum has scaled and in my opinion it scaled roughly 50x since genesis wow so let me

try let me try and explain that so at genesis there was a 3 million gas limit and now we have a 15 million gas target so that's already a 5x increase in scalability the other 10x in scalability comes from the improvement that developers have had when we're writing gas efficient code right seven years ago we would write extremely gas inefficient codes and we didn't have the tools to optimize this and now you know seven years later we're basically doing you know what's called gas golfing where like if you can reduce consumption by one gas you know you like you get a

badge of honor um and yeah you know you're you you get uh social credit within your your peers as as developers and we've been able to squeeze everything out and if you look for example at uni swap v2 versus uni swap v3 that's you know roughly an order of magnitude improvement in terms of of gas efficiency per unit a per amount of volume traded and so if you compound this 10x improvement in writing better and more gas efficient contracts with 5x increase in gas limit you get roughly this 50x and then you can look back with on on all the data that we've had has the total burn increased or decreased despite the scalability and

it's gone nothing but up and it's gone up extremely dramatically it's gone up 10x every single year for the last seven years so it was like um something like ten dollars per day seven years ago and then a hundred dollars per day a thousand dollars ten thousand a hundred thousand and now we're at a point where we're doing 10 million dollars per day of of of transaction fees and so i think there is uh you know a a possibility that this this trend will will continue and that you know we are the very very early days of of uh ethereum adoption and there's a lot a lot of network effects that still have to kick in and therefore a lot of

induced demand that still has to to to kick in and if i were to kind of zoom out as a heuristic um you know i i think it's fair to say that as ethereum provides more and more economic activity to the world you know the total amount of value that it can extract should should grow right there is this technological aspect um but you know as a rough heuristic that doesn't seem unreasonable to me all right for folks that have gotten with uh gone uh with us all the way to number 13 here what you're describing maybe to some people sounds a little bit like a tech stock justin and so what about this take that the ether market cap is just a reflection of ethereum's performance and

it looks kind of like a tech stock it's outlook as a tech company um is ether a tech stock what do you think of this tank so i think it's it's partially true and partially false right i think as discussed if you focus on the the the portion of the efa supply which has to deal with cash flows um you know specifically the liquid portion of eve that generates uh fees and and is subject to to to to issuance then i think yes it makes sense to look at this small portion um as a as uh as a tech stock and actually going back to this website ultrasound.money there is precisely this there is a tech

stock model price model for for efd asset and so you can compare pe ratios with companies like google and apple and amazon and and disney etc and so if we if you yeah scroll down a little bit there we go monetary premium you had it so right now ethereum has a p ratio of 32.7 you know with assuming zero monetary premium you know which is subway between google and apple and so maybe that's maybe that's reasonable even though i'd argue that ethereum has a huge amount of growth potential uh you know at least compared to very established uh you know companies like google and apple and so really

maybe the pe ratio should be closer to 100 than 30 but let's let's just keep it what we can keep it at 30 or put it 100 whatever works uh but but you know the the important thing i guess is that this p ratio model should only affect the the liquid supply which right now is about 80 percent of all if and so you know there should be a tiny monetary premium let's say maybe 25 percent 1.25 uh that that that that that should be added but really the one of the bold cases for if is that over time the vast majority of ether let's say 80 90 maybe 95 percent is used as collateral always lost and so the the

the liquid supply is is is only five percent and and and and that would basically give us a multiplier monetary premium multiplier over the base you know valuation as a tech stock and by the way this is the only way that we can get to the trillions and trillions of dollars of economic security and bandwidth that that we need like even the largest companies in the world you know like apple there's like low digits trillions of dollars and if you look at at a decentralized table right now we're in a position where we have these growing pains right where we the the best stable coin that we have on ethereum is basically centralized stable

coins like usdc and usdt and this is not going to be the end game the end game is fully decentralized stable coins but these need to be collateralized by some form of of pristine collateral um and so because stable coins are over collateralized we know from lunar and terror that that non-fully uh collateralized stable coins don't work so let's take the assumption that they have to be over collateralized then if we're going to need tens of trillions of of decentralized stable coins we need tens of trillions of dollars of uh collateral money as well let's get in here to some of our last few bad takes that we want to want to cover and that is that ethereum always just changes the narrative around ethereum keeps on changing first we had

icos before that we had the world computer to start then there was defy now there's nfts ethereum's the narrative always changes the story that's being told is always something new what would you say to this right so i agree that the narrative has changed and i think it's it's largely because ethereum has been you know misunders misunderstood um and it's been conflated with you know what is what it ultimately is it's very good at which is being a settlement layer for the end of the value and the applications that are built uh built on top um and so you know these these these narratives as i said earlier in the podcast like like like defy and icos and

and daos these are emerging stories that have happened on top of of ethereum and just like the internet had all sorts of emergent stories right it had social media and they had you know uh chat applications and and wikipedia and email and and and all sorts of other stuff you know you know image sharing and video sharing and and whatnot um we're gonna see a richness and so if if you continue confusing um you know ethereum the settlement layer with the applications built on top of it you're in for even more confusion right because we're gonna see an explosion of of of new narratives at

the at the application layer um [Music] and i think there's also been kind of this this technological kind of mindset you know for example the world computer and now one of the new narratives is that you know we're just like a date availability layer for example for role apps um i think this this this technological take is is is a bit too narrow for for for a couple of reasons like one is that sometimes it focuses on just one component right just the data availability or just the consensus we're actually really ethereum is providing a bundle of services and i think for me like the the four big components are consensus right we don't have huge amount of economic security

and a consensus which is efficient economically efficient with low issuance we want to have the data availability which is critical indeed for roll ups we want to have just enough execution to be able to settle these rollups and we want to have ultrasound money e for the asset which is one of the key building blocks that's going to be used uh in in the in the context of of applications built on top and so i'm i'm not a fan of pushing for looking under the bonnet and looking at the components i think if theorem is this technical thing no like when we focus on on the the wrapped the the the whole uh holistic uh system and

we include a bit of of mission right firm's mission is to become a settlement layer for the internet of value then i think that becomes a very very simple narrative which is extremely generic and encompassing and and and and hopefully one one that will become stronger and stronger over time like you can think of the world computer as being a more awkward way of saying settlement layer for the intent of value i think it's possible that you know looking back in in five or ten years settlement layer for instance the value is like a little too awkward right there's like eight words and it's a bit wordy but i'm sure someone you know on bank list will find something really snappy and to say

we definitely used to use some uh cringe words for the internet in the in the early you know like the 1990s right like cyberspace information super highway these terms have uh gone out of vogue certainly but let's uh let's conclude with the 15th and thank you justin for hanging with us so long so this is the last and final take for people who've made it this far around these bad takes on ultrasound money and you're refuting them uh maybe they still don't resonate with eth as ultrasound money it's a cringe meme they might say the whole ultrasound money thing you just stole that from bitcoin it sounds super cringy you can't talk to normal people and talk about ether as an ultrasound money they

won't get it what do you say about that think of pregnancy you know yeah ultrasounds okay so there's two aspects of the question one is the stolen aspect and the other one is the cringe one now i think both are technically true but i think both are terrible takes so let's take them one by one the stolen one is especially ironic coming from bitcoins and the reason is they stole the sound money meme from you know gold bugs basically from and they they have zero innovation they literally copied it verbatim and said this is my meme now when actually you know it came centuries earlier um and so yeah it's quite ironic for them to say we've stolen it but also

we have installed in it in a way where it's a derivative it's an improvement and the way that i you know think of memes which is kind of interesting is like it's a bit like like viruses right there's these pieces of information they're not genetic they're kind of cultural pieces of information that mutate uh over time and here it's i in my opinion is kind of a superior and stronger you know organism mimetic organism that's been created and one which you know might might spread uh you know faster and stronger across the world then then then sound money did like sound money took you know many many decades if not centuries to spread to to the whole world

so that's kind of the the stolen aspect in terms of the the cringe aspect well guess what like sound money when it was created was really really cringed and the reason is you need to go back to uh like where the word sound money can come from it came from this idea that if you had a gold coin it made a certain noise um it's like this you know you could have this ping test where like a ding it was a test to see if it was pure exactly like the yes like what if the test involved like smelling it would you have called it like smell money or like face money or like like

sound money just sound like just cringe but people have forgotten like this original meaning of of of sound and if you tell me sound money i don't think ding ding ding like like sound money instead i'm like i have this very serious you know uh austrian textbook musty smelling room kind of feel to it exactly um and i think it's it it's possible that something similar will what will happen with with ultrasound money that's great justin you've been very generous with your time thanks for going through 15 bad takes on eath and uh for for clarifying them i guess justin we are a bet about to you

as long as the merge goes successfully in the next couple of days in the next 48 hours 33 hours 33 hours we will be entering the ultrasound uh money phase so we're glad you could share some of these final final pre-merge moments with us and we appreciate your time thanks for having me again bankless listeners of course risks and disclaimers got to mention that eth is risky so is all of crypto so is defy you could definitely lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot you