a16z Crypto CTO: State of Crypto 2023

Transcript

bankless Nation we've got a special episode for you today we're talking about the state of crypto in the year of Our Lord 2023 that's right now how are we doing in crypto David a uh a report came out last week that was absolutely fantastic this is a report from a16z what are we covering today the 816z crypto report for 2023 these reports uh come out to as snapshot snapshots for the state of the industry the state of the ecosystem where are we in crypto's development in 2023 I remember Ryan uh one of these reports not too dissimilar from the report that we are going through today came out in 2019 and talked about similar metrics developer activity transaction volume uh

users and it was one of the things that I remember way back when in 2019 or 2018 that allowed me to have conviction in what was a dark time in the world of crypto it was a it was a bear Market it was a challenging bear market and sometimes these reports are really useful to remind us about the secular bull market that almost all metrics are about crypto they're up and to the right no matter what you want to look at and this is a way and and it's a also too important to remind ourselves who this audience is who this audience uh for this report is it's actually not for the crypto industry it's for everyone else I'd say this is a way to view the industry from the outside in using some very fundamental metrics to tell the

rest of the world hey I know uh 2022 I was a bad look for crypto but if you look under the hood and look below the narratives and all of the hate that crypto has the metrics are up and to the right and so that is what we are going into today yeah totally we've got a guest who who's helped write this that we're going to introduce in just a minute before we do got to tell them about our friends and sponsors over at uh gnosis safe David what is uh gnosis safe want bankless listeners to know uh first I'll drop a meme where they actually would like to let you know that they want you to drop gnosis it's now just safe so you got me yeah you got gotcha yeah so safe is uh the brand new account extraction SDK and stack out of

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building with safe accessing their SDK all of those links in the show notes are available to you this is one of those core Primitives that is so important underlying wallet infrastructure for sure and of course the safe is uh that we use I'm not going to call it Nosa safe we use safe at bankless all the time it is our your trusted wallet for everything that we do at bank list it's our on-chain presence at bankless over at bankless.eath so um this is this is a really important David let's talk about the guests who are we are about to bring on so who are we about to bring on and what's the significance of this episode uh Eddie Lazar and the CTO over at a16z uh is multi-disciplinary and we'll get

into it a little bit about his background when we bring him onto the show in just a little bit but uh Psychology major which gets me going philosophy major Masters in computer science and so I think he's going to be able to help us express some of the things that are going on in the crypto world that we're about to see in some of these charts that like I said are going up into the right in ways that the rest of the world can understand uh but these are also going to be charged that you are probably familiar with like I said transaction count nft buyers uh stablecoin volume uh developer activity uh all of these things are going to allow us to get a snapshot in time of crypto in 2023 uh and also this is the second report of this kind the a16z has

created which only alludes to the fact that there might be a third for 2024 and so we're going to pick Eddie's brain about what might be in that 2024 report when it gets made in one year's time absolutely this is going to be an episode about the state of crypto right now and then and what we can look forward to in 2024 and what some of the big opportunities might be guys we're going to get right to the episode but before we do we want to thank the sponsors who made this possible including our number one recommended crypto exchange the bridge from Fiat to crypto Kraken so check him out Kraken has been a leader in the crypto industry for the last 12 years dedicated to accelerating the global adoption of crypto Kraken puts an emphasis on

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up for the web app wall experience as well so thank you ambeyer for pushing the frontier of smart track Wallets on ethereum bang this nation I want to introduce you to Eddie lazarin the CTO of a16z crypto overseeing the engineering research and security teams over at a16c and like Ryan and I Eddie's interest span across many disciplines with the bachelors in philosophy Neuroscience neuroscience and psychology along with a masters in computer science wow it must have taken you a while Eddie uh we're going to go see what uh what all that very background can do while we unpack the world of a62 2023 crypto report Eddie welcome to the show thank you yeah so how long how long did that

that background take you uh I I took a lot of classes every semester it took me four and a half years actually summer yeah no no no just very anxious to take classes [Laughter] so Eddie like I alluded to in the beginning anytime I get one of these ecosystem reports out they're just really valuable to give us a snapshot of where we are in time crypto often is so frequently tunnel visioned into the week by week meta right like last week it was chappello week this week it's Gary Gensler getting roasted week uh but we never actually really have the opportunity to zoom all the way back out and really see the health and vitality or lack of Vitality of the ecosystem as

a whole uh and so uh like I said in 2018 there was one of these in 2019 there's one of these so I want to ask you just before we go into the more granular details of this report what about this 2023 report is unique how is this one flavored what's the what's the flavor of 2023 yeah well crypto is a very social media phenomenon right and that that's what leads to that extremely short Cadence meta right I don't think I don't know that social I don't know that crypto could have happened without social media in the same way so that that is intrinsic to its character but in 2023 specifically it's a unique time right crypto was huge the last 18 months the biggest it's ever been by

basically all measures we saw a huge variety of products new applications and experiments uh and a huge number of upgrades and now we're in a unique time because the macro is a little weird the regulatory climate's a little bit weird we're in the denuma right of the uh of the of the previous highs uh and that just puts it in a new type of setting some people might say crypto's over it's dead if they just look at the prices but the whole point of the report the whole thesis is that there are Financial cycles and there are product cycles and although Financial Cycles are volatile connected with the macro unpredictable

uh you know a whole phenomenon of themselves product Cycles are a little bit more predictable they're not totally predictable but you can watch them unfold and you can see the specific Milestones as technological progress compounds that's what we invest in as long-term Tech investors and so the purpose of the report is to remind us in this climate all these crazy things have happened last year where is the tech actually and are there public indicators that we can look at like open data sets that we can look at that help us put them into into their context their technological context as part of the product cycle beautiful beautiful and one thing I

actually haven't mentioned yet is the there's actually an output of this report a product maybe if you will uh of this report which a16c is calling the state of crypto index and so we're going to go through uh a handful of different measures of the crypto industry uh like I said I talked about some before like active developers number of contracts deployed number of nft buyers stablecoin volume uh and what's interesting and unique about this report is that a16z has attempted to create an index of what seems to be like industry Vitality so this is that is at the end of this conversation because we are going to walk through all the components of that conversation but first before we get there just like at a high level what does it take to produce a report like

this like what's the process like how do you collect the data what are the various sources I'm assuming this is a big lift can you just like walk us through the the back end of like what it takes to produce a report yeah it is a pretty big lift so we've done a lot more leg work this year than we did last year and we hope to do a lot more leg work next year than we did this year uh maybe I'll put it in its highest frame is that we're a little bit Lucky in crypto maybe maybe not lucky it's part of the ethos right but there's a lot of public open source data sets that is unique in crypto whether it's things that are on chain or whether it's open source code or whether it's the Reliance on social media where we can you know kind of more

or less look and check the metrics the key indicators in crypto are open so that makes it much much easier on the other hand what makes it harder is that crypto's complex and despite the fact that the data is public it takes a little bit of teasing and unraveling you know you kind of have to get in there into the nodes and figure it out a lot of data came from uh you know a variety of sources nonsense GitHub Twitter Dune uh you know a bunch of dashboards that we're familiar with out there a bunch of news sources like our academic data that's kind of a cool one of our one of our uh Innovation indicators is academic Publications we had to build that out from scratch so a variety of sources the

vast majority of which uh are public yeah all right so let's go ahead and break open the the first slide here and the first slide already got me really really excited because anytime uh the somebody uses the words chaos in order I get pretty pretty uh peaked uh and uh this first slide is uh apparent chaos has underlying order uh and I think this is the most zoomed out slide that that we could really start with which I really appreciate so there's price interest new ideas start of some projects all going all the way back to 2011 and all of these uh arrows of course go up and to the right and so Eddie Eddie why was this such an early slide in in the report why did this come early

yeah that's that's a great that's a great question this slide is showing a couple things the first is that although there are Financial Cycles like I mentioned earlier there and there are product Cycles which we're going to get into I hope even the pro the financial cycles and the sort of the most hypey metrics and indicators that we can track if you zoom out on a wide enough time Horizon they're a little bit more orderly than things may seem and that's because uh they are slightly each of these ones if you go into each of them like the price the interest even the ideas to some extent and maybe slightly less the the startups each of these things are side effects of

the financial cycle so you're going to notice volatility there's uh this post we wrote a couple years ago feels like yesterday but also ages now called the price Innovation cycle you can go find where we talk specifically about the relationship between these things right the price leads to interest price changes price volatility you know price going up leads to interest leads to new ideas new ideas lead to new projects and then projects develop the products of the future that end up in a long enough time Horizon catalyzing the price right exactly yeah this exact pattern and I think uh you know if we kind of internalize this and choose some indicators of each of those facets each

of those dimensions of the space you go back to the uh the uh apparent Keras chaos underlying order slides like if you use certain metrics for proxies for each of these things you can see they all move in some kind of step and I think if you zoom in a little bit more you can't do that here but like you know if you're yeah if you were to kind of zoom in you'd see that there is uh there is a little bit of a leading indicator property of price there is a little bit of a leading indicator property and interest with relating to new ideas and so on and so forth It's not a Ultra scientific analysis but this pattern has been true in Tech in general and uh it's particularly true in crypto

where I think there is a more volatile uh Financial cycle which we can talk about some of the reasons why but it's a general property of technological change and technological revolutions Eddie I want to ask you about the kind of the the product cycle versus the finance Financial cycle the price cycle right um but before we get there um just really quick on on what's in front of us so we obviously we're measuring price here and um you guys are also saying the market has undergone four Cycles these are like boom bust Cycles right and that pattern persists across each of these metrics and certainly anybody who's been in crypto and like zoomed out on the charts has seen that reflected those Cycles reflected in the price total crypto market cap over time which is how you

guys are measuring it we peaked at like 3 trillion in this latest cycle I suppose was that the the fourth cycle then and now we're entering the fifth is that right Eddie uh it was definitely the fourth whether we're entering the fifth I have to I must uh I must know I'm not ready to say yet but let's let's talk about that maybe uh in a little bit but anyway we have price and that has had boom bust four different Cycles at least then we have a measure of Interest which you guys are measuring by social media activity is this like all social media platforms like in this case it's Twitter uh although using like crypto specific like crypto unique words like you know ethereum would be one example where like people don't really use the

word ethereum in like non-etherium contexts right right where's like token token is a word that's used in a lot of different cases so we wouldn't count that word it's just less precise okay okay so we have a measure of interest and then new ideas that is developer activity which I think people you're analyzing githubs you're seeing how many developers are contributing it's that kind of a metric and then we have a measure for um funding activity and is that the raw amount of like dollars value that is Flowing to crypto startups in in both private markets and kind of like more public token markets is that correct it's it's the number of rounds funding rounds rounds okay that's interesting so like you know some startup raises a

series a that would be one here okay oh and each is one unit not any amount of like dollar value just one unit of oh my gosh wow why do you do that why is it just like kind of one unit Why Not dollar amount uh well the dollar amount is further magnifies the price issue right right it's if there's uh Capital markets have their own pricing so you would kind of intermingle the price characteristic and be redundant it would be yeah you want a nice clean metric of funding activity which is just kind of the number of rounds that are happening yeah although it to be fair I think if you were to do it with price it would

look more or less the same like which is that's what we're seeing across all of these different metrics is kind of these these cycles that sort of mirror one another and what we're seeing also is a compound annual growth rate a kagger uh for a price of 75 percent compound annual growth rate for price from inception up till now social media activity has been 63 percent uh developer activity has been 84 compound annual growth rate and startups and projects like the funding activity that we're just talking about has been 62 percent compound annual growth rate so all similar numbers across these these various metrics that has to be no coincidence

good question who knows I mean we certainly didn't select them that way um yeah I mean I'd have to speculate well let me ask you this so um we've got the finance Cycles which people are most familiar with and then we got product Cycles which are making distinction that's what this report is really uncovering in in my mind you tell me if this is um if this makes sense to you edius like sometimes when we talk about crypto investors people are like laser focused on oh that means somebody who is buying an asset right that's something that's affecting price but there are also other types of investors in crypto aren't there so if I am a user choosing to invest my time on a crypto on D5 for

example or or in an nft for example that is like a Time investment from a user and is another type of investment investment of attention or time or something like this and also similarly developers when they are choosing where to spend their career isn't that the most precious investment that they can actually make like what tech stack am I going to dedicate my career are in where am I going to extend all of my energy and all of my my skills developers and users are types of investors too and so what we're seeing is just like different types of investors that are non non-financial Investments is kind of like time attention human human resource type of Investments is that how a16z and this report sort of looks at them is

just these are also I've got investors the the that more broad you know the generous interpretation of investing I I I'll go with it right like I I believe that when developers decide that they want to do a thing whether it's just because it's fun and exciting or whether it's because they think that their career you know could be built on this that to me is a really strong sign right and that's what like you go to Chris's thesis many years ago about how what uh what the Nerds are doing on the weekend right is what regular people are going to do on the weekday you know in the future right I believe that because I think when people have time and attention to dedicate uh it ends up attracting to the powerful things to the exciting things

to the new things so I definitely take that as a as a strong indicator I'd say that developer activity if you look at it as like a supply chain or something like that we metaphorize it as a supply chain developer interest and developer activities Upstream of all the exciting things that's why it's a preoccupation for the space and it's incredibly important for us right we we track that we're always listening to what entrepreneurs say they're excited by what they want to be building on what tools they want to be using which ecosystems they're attracted to that's an incredibly key indicator we use it scientifically like well pseudo whatever scientifically like in this

kind of context we also use it anecdotally just what we're hearing developers are interested in and Engineers are interested in because they're the ones who are going to produce the applications that end up being used by you know far far more people developers are like the talent inflows into these networks aren't they it's sort of like we're we're talking right before um we we started the stream Eddie about different cities in the US that seem to be attracting kind of you know crypto Talent New York City versus um you know the Bay Area San Francisco and these are all sort of networks that individual people choose to live in for some set of reasons right whether it's Economic Opportunity or they just like the scene of the community they're really investing the city you choose to

live in or the area you choose to live in is really one of the most important Investments that that you're making and this is very similar to how you know what a tech stack developer decides to to spend their time and it's it's like picking the city that they're going to live in totally agree and we we could spend some time unpacking the city metaphor which I think that there's a lot too actually that is actually how I think about crypto ecosystems cities Nations like organic groups and there's a difference right there's a difference between a city and like a strip mall you know or a city and like a uh you know Disney World right there's a huge difference and that's because and cities are where

the serious economic activity happens and that's because people can control the space they can come in and really own something and they can build on top of it on top of a solid foundation a foundation that they can fundamentally control that property that is the property that I think makes crypto distinct as a platform as a Computing platform like that's specifically that property so if if you extend that metaphor all the way through then if you want to track the health of the city you want to track the health of the nation how many people are coming in and settling new territory how many people are investing in terms of their time and building the infrastructure and the businesses and the you know interconnects all the info

all the types of things that are necessary for real economic activity how many people are doing that when I see the developers metrics that's what I feel like I'm interpreting yeah and I want to get your perspective as to why developers tend to be so sticky in this industry uh there's there's this one slide slide 35 on this report uh bull markets attract new developers who tend to stick around and uh this is a measure of active developers in the web 3 space if we go back all the way to 2016 it looks like we had somewhere around six or seven thousand of them and according to this lot according to this report it peaked all the way up to almost 40 000 at the height in 2022 it's come down to just below 30 000 where we are today but developers tend to be pretty sticky in

crypto now um I don't actually know Eddie how this compares to other Industries I don't know if developers are more mercenary in other Industries but what you were talking about just now that like you know ethereum nfts tokens uh not in sovereign state money like gives developers more ownership over the things that they're tinkering with which is my initial like uh reflex as to the answer to the question why developers are sticky in this industry if they actually are but I'm wondering if you have a perspective on there are developers as sticky as I'm saying that I as I'm saying they are it's a yeah it's a it's a great question I'd love to compare it with other with other spaces I know that speaking very generally before I say you know specific

things about crypto Engineers do love their programming languages they do love their tools they do love their you know their specializations and that in itself creates incredible stickiness that's why programming languages for example have some of the greatest Network effects in all of Tech even though they aren't directly monetized usually they're an incredibly incredibly sticky type of thing and developers are excited almost by you know just seeing that a specific programming language is used in a new context is it like a crypto tribe but for languages is that a way to think about it well yeah I think that I think there is that and I'll say just you know in my day-to-day I talked to a lot of software Engineers who are

working in crypto and something I've gotta say is pretty unique is that software engineers and crypto by and large the vast fast vast majority I'm actually I don't even know why I'm hedging because I'm just hedging because I'm cautious like that but there they get it like they're crypto native right they they're die hard like they're there for the mission they understand the reach that is a unique property that I did not really encounter in my career before getting into crypto interesting there's a another slide here that I had up here verified smart contracts or at an all-time high indicating a robust pipeline of product launches and this is a graph of verified smart contracts which uh was around

maybe the 2000 Mark uh in the 2019 to 2020 era and then has just been on a linear up Trend all the way up to Breaking thirty thousand uh this year uh so what what does this tell you what what story does this weave for you yeah this is I take this to be distinct from just smart contract deployments right smart contract deployments you can do all the time there's it's part of the development process uh when you're verifying them it means something slightly different but it means you intend other people to look at it you want other people to look at this code right for some reason or or other that Inc that is an additional barrier to cross right the minimum barrier is

you you can actually rearrange some of the metrics in this like a funnel almost right for Developers the minimum is just you start a repo on GitHub all that means is that you have a GitHub account or something like that you come in you see an interesting thing you start a level further as you download you know web3.js or ethers right because that means you're you're actually experimenting you actually you want to start tooling around with something another level beyond that uh I'm skipping a couple steps but is deploying a smart contract and having it verified that means you actually built something and that means you wanted some other people to read the code and to be able to use it and in the best case You Know Remix and recombine it in a production system so I I see these as

like gradually narrowing levels of commitment uh evidence that people are actually trying things so Eddie I'm wondering if we could go to our like uh our city metaphor here and we are like the the mayor or the economic development office of Sim City and we're taking a look at these numbers here and the two numbers that that we just saw one is the amount of developers in the space this is almost if you're using a city metaphor this is almost like the number of entrepreneurs that are in our city and we can kind of you know track the increase in our city network of the number of entrepreneurs over time and then the number of verified smart contracts maybe that's like the number of new businesses that

have just opened for office it's kind of that type of of metric here and that's really what we're tracking and so if we want um the GDP of our city to actually increase what we're seeing is kind of the ingredients for uh GDP explosion or at least uh sustainable growth when we see more entrepreneurs than ever inside of our city and more businesses than ever being being open these are all very healthy signs for our city Network how does that analogy land to you yeah I think that's exactly right I mean of course it's they're not exact analogs but that's the exact idea right is that uh you're never going to see economic growth from the city without seeing these indicators first

right and these indicators change at different different Cadence they develop it at different Cadence right financial markets can move very very quickly someone just needs to move a little bit of capital around that's all there is to it it is not that quick unless you're trying to game the metric of course like it's possible to gain specific metrics it's always a thing to look at but uh you have to uh each of the steps to get down this funnel are more complex they're more complex and they're indicative in my opinion of goal Behavior goal seeking behavior these are people who want to build stuff they want to build products yeah I think the the another point I'd make is this is at a time of course we are in a crypto bear market and as David was mentioning

earlier in you know in 2019 we saw similar metrics from these I think many put out by a16z at that time when everyone around us was telling us crypto was dead right some of the some of the settlers in these crypto networks so the investors in the crypto networks are saying uh this doesn't look dead if you look at the number of developers who are here in the space and the number of new businesses new verified smart contracts that are being open this feels very much alive if you're just looking at one metric and that is price and you're seeing you know 90 off all-time highs that can be a very deceiving metric when I when I joined the crypto team in 2019 uh it was pretty you know pretty

dead around then people that I knew were asking me like I thought I thought Bitcoin ended I thought bitcoin's over right like cause they had heard that it had like crashed right you know crashed like a price crash and then they had understood that as like a software crash like it had kind of you know like the network had stopped and uh I was hearing that on the one side and the other side as I was getting like deeper and deeper into crypto and spending more time more and more on my I've been in crypto for a long time but I was spending you know 80 of my time thinking about it and I'm hearing about uniswap and I'm hearing about compound I'm hearing about maker right uh you guys remember that time period yep and I was like I'm

hearing about the crazy stuff I've ever heard in crypto at the same time that people are asking me if this thing's over and it just became very clear to me in that moment that the price is one thing and the product is another thing that prices are spectacular they're easy to look at they are you know a clear easy to comprehend number Price down bad price up good right it's like monkey brain stuff when of course the reality underneath the surface is more convoluted more complex more nuanced but probably more signal than than noise I want to uh jump back to a similar theme from our very very first slide that we talked about with these macro

Trends so this is this slide that I want to show next is actually just the slide below this one but I think this uh brings us back into a price conversation where like like I really like the Sprite price is spectacular that that spectacular word is is great for that particular that particular metaphor this this next slide is great product skill bit get built regardless of Financial upswings and downswings uh and so I think that really carries us next uh what you're saying where man maker maker Dao was uh a really just a magical moment I just minted money meanwhile like like you said I had one of that same experience where like someone I said I work in the crypto industry and they're like oh Bitcoin is that the thing that's failing right now and so like can you walk us through the importance of this slide because I think

uh much of these logos that we're seeing on the screen here which are logos of companies that were founded from 1999 all the way up to where we are today uh you're saying this slide is to say like hey innovation happens no matter where we are and the price price doesn't matter can you walk us through the the importance of this slide yeah look look look at like uh I'm sure you guys remember 2009 one of the most brutal economic Market macroeconomic markets we've ever been in who doesn't know all those companies who doesn't follow all those companies right for the podcast listener out here we around the 2009 era we got Square WhatsApp Uber Instagram stripe also Bitcoin Airbnb uh Snapchat shortly

thereafter Zoom shortly thereafter yeah lots of stuff yeah lots lots of stuff and that's because uh even though some may have thought it was crazy to start startups in that time period the reason why each of those companies was founded at that time was because the technology was finally ready that is the underlying story right we see a bunch of like Photo based applications around that time period video based applications you know modern web stack applications mobile specific applications that was like the dawn of uh iPhone and the mobile Computing platform right the reason they were founded at that time and not earlier not later is because they were founded as soon as the technology was ready it had nothing to do with the financial cycle Eddie are you saying that

um it's actually the best time to invest not Financial advice of course is when everyone else thinks the thing is dead but you see underlying life in the product and the technology seems ready I could never give Financial advice uh in any any such that's that's not my that's not my that has never happened on this show yeah but but I'd say you know to be greedy when people are fearful right I want to jump forward to uh to this slide slide 23 for the the people who might be following along the world's biggest brands are exploring web three beginning with nfts and then I'll also jump backwards this slide nft creators have earned more than 1.9 billion in

royalty revenues and that also reminds me of the one of the first slides that we actually talked about which goes back to to the interest in social media activity while uh Eddie you said you probably weren't looking at the word token in Twitter I bet you were looking at the word or phrase nft on Twitter because where else are you gonna find uh that word nft so kind of walk us through this story the nft story and also the Brand Story uh as the word nft is probably lost its its spectacularness to mainstream uh David nfts are dead nfts are dead yeah that's what I heard so Eddie walk us through this part of the story yeah well we'll we'll get to it but there's another slide in here that's

that's great I don't know if it's in your excerpts but the uh nft buyers slide right further down uh I think taking the nft buyers slide and the royalty slide in both context is really really useful nft buyers definitely down uh but down a lot less than I think one would expect it's definitely down a lot less than I expected when we were are we is this saying this chart is saying after expecting the number of nft buyers so this is a chart of the number of nft buyers and we hit something close to like 1.4 million total buyers at the high in 2022 is that what that's saying monthly active addresses purchasing nfts

that's actually higher so we had 1.4 million people buying nft inside of one month in 2022. strictly and 1.4 million unique addresses can be a little difficult to map onto users but like approximately difficult but it's approximate because you have you know some years with many addresses of course but then you have some addresses that sort of account for many users if somebody's using a multi-sig or as kind of their you know nft Storehouse but that was 1.4 million which is larger than I thought and now we are actually like what is this 700 below a million you have below a million call it below a million yeah that's not down so bad yeah it's not it's not as down as much as I I

think and but of course you know your original question is framed in terms of the the royalties the royalties are way down and so I'd say what's what's happening with nfts well nfts are in the earliest state right they are in fact this may be an interesting segue to something else they'll try to remember but the nfcs are really simple right now and and a few royalties are really simple transfer based royalties are the first time we've tried some kind of economic model to link secondary sales to the authors of those collections there's going to be a lot of experimentation a lot of contention around what the best royalty models are the evidence right now is that the take rates are shrinking for nft-based royalties and of course I'm putting

aside like uh Marketplace uh competition between like you know open C and blur and others uh so the royalty slide I think shows like there was a huge burst of entity crater royalties they're down a bit but I expect a lot of experimentation to figure out the best way to link communities interested in collections and the creators of those collection so like that's kind of like what I would say about this slide uh in terms of the brands it's always interesting to me I you know I never really never really know exactly what to think I have talked with some of these myself and uh without naming names like some have definitely impressed me with their

crypto nativeness some not as much but in general like Brands tend to follow the Heat and some can successfully capitalize on it in ways it's impressive uh uh I'd say that in general I think of the brands as sort of a lagging indicator of development in the space but they are an indicator that there's excitement that there's potential product Market fit it's not something the rest your laurels on right you should uh it it means that there's uh We've started to reach some product Market fit in some aspects of the products right if they are lead if they are following us that's great and we need to continue to lead or else they will stop

following us absolutely absolutely it just it means that they there's something that they get there's something that they like there's something that they want right otherwise they wouldn't do all this work it doesn't mean that it's done it means that we need to understand what that is and continue to build the infrastructure to make it more accessible right we are not passing on the Baton of responsibility on two Starbucks and Reddit uh that still remains in the hands of the developers but it's good signal that we are at least leading them in the right direction at least hopefully yep so I want to uh go back up to one of the earlier slides here and I'll uh collect a bunch of them there are some ethereum Focus slides here uh blockchain

extending Roll-Ups are scaling ethereum if you go back to the middle of 2021 we basically had zero percent of ethereum layer one block space that were consumed by layer twos now we are up to seven percent uh one quarter into 2023 along with an increasingly exponential you know sort of only so much data but an increasingly exponential uh rate of a blockchain uh block space uh and then there's another slide here blockchain transactions exploded as scaling Technologies reduced transaction fees and so this is a chart of total unique transactions uh going what it looks like basically a floor of zero uh by comparison in 2020 up to uh over a billion transactions and then now also

simultaneously ethereum now consumes .001 of the energy that consumes uh versus YouTube consuming energy annually and so all of these slides came pretty close together in the report Eddie and so I want to actually ask you about like again this report I'm assuming is is made for the crypto Outsiders so they come in and they see a slide about scaling and energy consumption uh talk about this this angle of the report and what is really meant to meant to do yeah so a bunch of things one is evidence that it's actually scale right ethereum is actually scaling and Paving the way for other types of blockchain solutions to

scale that is an incredible incredibly important thing right so this actually we could actually spend a long time talking about this so I'm going to try to keep it really really short but I think scaling is is like a perfect uh kind of like mid-wit diagram to me right like the the left side they're like blockchain super slow need more transactions need more block space right the midwits might argue like no what's the point it's never going to reach centralized scale or like you know there's no applications or something like that and whereas I think the top says like we need more block space like things need to need to scale and the reason for that is that

we could touch any area in this report any area in this entire report and I could tell you at least a few ideas that I've heard from entrepreneurs or engineers in the space or they've wanted to expand or deepen or make more complex a specific area but they have not even endeavored to because they just know that it wouldn't be economically feasible to do so right pick an area we can go into it but we need scalability in order for there to be wasteful experimentation and playful experimentation goofy product ideas complicated stuff crazy weird stuff we need that and in order to the best evidence that we're getting there that we're setting the stage for a whole

new waves of experimental applications is showing that there's more throughput and that it's actually happening there's more block space more high quality black space it's unfolding before us that would be kind of the way that I'd sum it all together Eddie I remember talking to Chris Dixon about the 2022 report and this was just when layer 2 cheap block space was was becoming like starting just starting it was a year ago around this time and um his comment was this is crypto's broadband moment and what I'm sort of seeing on screen here is like it looks like as David was saying number of transactions in the you know I I don't

know how many this is right at the very bottom but it almost looks like it rounds down to zero it's it's very small and then it just sort of takes off the number of successful transactions across all truck attract blockchains in 2021 and 2022 and now even ethereum block space sort of the the premium block space is getting even cheaper with layer twos is this crypto's Broadband moment I'm you guys investing through like other internet phases of course where like the internet literally had a Broadband moment where before a certain class of applications wasn't possible YouTube wasn't possible Uber wasn't possible so many things were not possible when we were on dial-up modems

and then suddenly as Broadband infrastructure became widely available people had the fast Connections in their homes all sorts of new consumer applications became available and then we went mobile now they were available where kind of wherever you were in in the world is that what's happening in crypto does that analogy hold yeah that that's the analogy that I use uh I think that's exactly right right and I'd say that I think optimistic Roll-Ups have been a little slower to unfold than I expected uh but I'd say that zero knowledge systems have developed faster than I expected uh I could give all kinds of qualifications for why it's kind of unfolded exactly the way it's unfolding

now but I think it's a critical prerequisite right I I think a lot of people are excited about rolling their own l2s a lot of people are thinking about the interoperability Solutions between them we're going to get even more scaling with 4844 as it comes down the the pike I think uh I do think of it that way I think of it like a like a Broadband moment but it's also important to situate all the other types of things that we need right we need a little bit of broadband we also need uh react right that's that's an interesting one right we need like developer Frameworks we need uh you know we need whatever the

crypto native equivalent is of like forgot my password obviously like there's there's one uh we need more sophisticated smart contract wallets account abstraction that type of thing things improve the user experience I could list off a bunch of things that I think we need and it feels like we're at that precipice it's always a little bit hard to predict exactly but the basic prerequisite building blocks uh are I think are clear when it comes to the idea of having cheap uh block space that developers can not be worried about the cost so that they can innovate on and experiment with new things I think that pretty well brings us to a topic of conversation that I want to have which is gaming

because I would imagine that gaming uh would produce ample demand for Block space but then there's also a few other things in this report as well um there's the the sad topics uh the the charts that go down into the right uh which are the uh titled uh the United States is losing its lead in crypto uh and so that seems to be a theme of the week this week uh and then there's also the conversation of the the index the state of uh crypto index which is kind of the culmination of all these things so all these topics and more coming right after we talk to some of these fantastic sponsors that make the show possible learning about crypto is hard until now introducing metamask learn an open educational platform about crypto web 3 self-custody wallet management and all the other topics needed to onboard

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inside the wallet Phantom is of course a multi-chain wallet but it makes chain management easy displaying your transactions in a human readable format with automatic warnings for malicious transactions or phishing websites Phantom has already saved over 20 000 users from getting scammed or hacked so get on the Phantom waitlist and be one of the first to access the multi-chain beta there's a link in the show notes or you can go to Phantom dot app waitlist to get access in late February foreign we are back with Eddie who's going to walk us through the rest of this very long report actually no we are still just crashing the surface I'm just kidding uh there are many many more slides that we are not able to to go through so if you want to get the rest of this report uh it is available in the show notes uh it is also available at

a16zcrypto.com state of crypto and we're gonna start where we left off with games and so Eddie I've slowly been transitioning towards web3 gaming crypto gaming not really not just a narrative also a real product sometimes I think I'm always kind of skeptical about things it's like oh like web3 gaming that's a great narrative I'll wait for the game to show up I'm starting to see some games show up and so I I want to just throw this to you it's like web3 gaming uh narratives that crypto people are rotating into or actually real demand for Block space great yeah I I'll be really candid I think it's a little bit of both there is a narrative component and then the best things are

both right yeah there's nuance here's the part that's narrative is that really good games take a long time to build and they're just not going to pop up in like you know a year after the story becomes clear right that's just not how it's going to work I've been working very closely some great games projects both in our portfolio and not and it's just clear to me it takes a really long time like multiple years at a minimum that's just how game development works uh that makes it tough the positive is that I genuinely believe as a big gamer myself that

gaming is exactly the right space to adopt the most interesting parts of crypto the fastest because you get if you do things right and I don't just mean making some assets of speculative assets as part of a game uh like that's like not really exciting to be honest to me like I'm not a huge fan but if you make if you instead design the game so that it is composable so that it is remixable so that like mods can be permissionlessly integrated with the game without interfering with its underlying game logic or if you can make uh make it so that people can extend and modify the client without interfering you know without making it cheating right without

like violating the principles of the game these are really really really interesting areas composable games places where people can interconnect different types of game logic I don't mean like item from one world to another I feel like that's like a little more narrative than it is reality I mean something more like you know I can make a mod on the game and it's a multiplayer game and other people can play in the mod in the same shared world without me having to set up my own server right the mod just changes the game at that moment and it's not cheating and it's not giving me a weird Edge because the mod had to adhere to rules that are verified in consensus right I know that that was kind of a lot

but I think it's a whole new type of multiplayer that will be possible but again I say it's going to be a while it's going to be a couple years we have a lot to develop like scaling stuff ways that uh you know game development tools I like game developers need Frameworks they need things to make things like performance make graphics work uh make make it easy for game designers to develop you know compelling game experiences all that type of thing so I'll kind of leave it at that I hope that's not too much I think it is the uh gamer news definitely coming out because I think of what a lot of what you're talking about is like uh on fully on-chain games online EVMS that I think are is like some of

the coolest nerd that I can really think of that can come out of the crypto world and we've been talking about it for years and I'm like I think the best thing that came out that was close to this was like the Dark Forest prototype uh but I would imagine that yeah exactly and the thing is a bunch of very cool projects got spun out of dark forests and were inspired by Dark Forest which is it's been a while now it's like two years since dark wars came out and they're still trying to figure out how to make it work it's not because it's impossible it's just that it's very very difficult so I'd say although I'm in the long run extremely bullish and excited about the types of fully on-chained game experiences we can make I wouldn't hold my breath and it's not gonna just come

around the prize I was gonna say the same thing I'm not sure I would want to hold my breath for that and so I'll throw back the question to you the this slide about the state of 2023 and crypto web 3 games are a huge opportunity to welcome new users to crypto where are we on that assuming that this is a curve that hopefully goes up uh if we make that uh implicitly bullish assumption where are we on that curve we still got to be really early right yeah I think I think we are but what we're going to see is uh different game projects dipping their toes deeper and deeper into the waters right the fully hardcore unchain game everything that's a while out because that's as far as I've seen the maximal articulation of that position right there's a whole spectrum of

articulations that get us closer and closer and closer we're gonna see a gradual waves of projects that are getting closer let's see like you know there's already some obvious benefits that are there's kind of business reasons why it's clear they're not happening but take it take as an example like uh skin marketplaces right uh like for CS go Skins and stuff like that like in the valves Marketplace I think it's pretty plain and pretty clear that if these were fully on chain just for trading the skins there will be a lot of benefits to the users and to Major skin Traders and collectors more liquid markets more competitive pricing safer systems less

fraud I think it would be a huge Improvement but of course because like valve's game store and skin Trading Store is centralized it's really up to them to include it or up to a competitor to try to LeapFrog them and to you know to create a new system that has that property as an example so there's obvious ways that crypto can help right now it's just a little bit complicated to see from a business angle how it would take place but I think many will try so I'm excited to see I'm not I'm a little surprised we haven't seen it yet Eddie I mean honestly it's like the open marketplaces with with uh skins that are tradable instead what we actually have in The Gaming Community is at least the loud

vocal gaming communities is we hate nfts like we hate care nfcs out of my game yeah well it's it's funny you say that because I I know a portfolio company of ours did a survey not that long ago that really tried to get at this question and figure out like do people do Gamers really just hate nfts and the thing that Gamers hate is needless financialization and I'm like I'm one of them like pay to win sucks you know the Diablo 2 Diablo 3 Auction House failed right okay we can go into like some specific examples but underneath the hood if you get into really like what their concerns are uh their survey showed that kind of an

equal portion love and hate nfts and it's less than 10 percent what you're really seeing is a very loud minority that hates them ah of course surprising it's not totally I forgot I forgot about that I've never seen that phenomenon yeah so that's like that's a that's that's the thing it's a loud minority in reality look if it's done properly like uh I just can't I can't see why you wouldn't want it as a gamer like if people don't want Counter-Strike skins they don't need them right but the ones who are really into that and really into trading them they would benefit from a more secure safer system that gives them more direct ownership over the asset even though it's and what you're saying is what's

slowing us down right now is centralization of gaming platforms that are sort of not allowing right now this Innovation to leak into their closed ecosystems yeah so that's it's meant to be an example of a thing that is technically possible now that you could probably do now with a little bit of effort so we don't need to scale radically to be able to support it in a sort of MVP form but it depends on incumbents accepting it insofar as it's included into the incumbent systems right what's more likely is probably competitors that come about and have like an interesting distribution model for games let people you know uh let developers build these features in and use them as part of a native platform it's probably just going

to be an innovator as opposed to an incumbent yeah those pesky incumbents I want to go to the the last part of this this uh PDF this report which is the like I said the one part that the charts go down into the right speaking of pesky incumbents and this one is titled the US is losing its lead in web 3 and there are two charts here percent of crypto developers in the United States started at 40 in 2018 ending at below 30 percent in here in 2022 and then top crypto website percent of traffic from the United States uh starting about 22 23 in 2018 and now we're down to just above 15 so Eddie what's what's the story here yeah we definitely need to go a level

deeper but the story is clear uh that the U.S uh although there's been General uh General growth over the last couple years over this time Horizon if you take this sort of x-axis there's been a lot of growth in crypto developers but there's proportionately much more growth overseas I don't know that that's a typical pattern in Tech right and it's an unfortunate change of trajectory I think I'd have to do a lot more we'd have to do a lot more research and collect a lot more data to figure out exactly what's happening right or like are developers leaving are they stopping working in the U.S is as if just as the outside the U.S simply accelerated while in US is decelerating

right it's a little there's a couple different ways that you could see you know different paths that could explain this type of chart but either way I think it's really clear that we need much clearer regulation about around crypto in the US because I get a questions from a lot of Engineers asking like look uh should I move somewhere else like am I taking risk by being in the U.S like what you know should I start my company somewhere else to be clear that comes up a lot so so this is this is the simple fact of the matter is as the as the slide presents the US is losing its lead in web3 that's what the data is showing percentage of crypto developers down percentage of top crypto websites down but it's almost up to interpretation as to why that's

happening um there are some you know I I guess uh ideas we might have around that one on the positive side it might be just mean the rest of the world is really like hitting the the pedal of the metal and look this technology has always been about like unbanked or uh Bank the unbanked right and so so maybe worldwide it's kind of um saturating but at the same time what you are hearing and I think what we feel being in the U.S particularly at this point in time the last six months is this increasing pressure on crypto basically messages from some of our not all some of our Regulators some not all of our lawmakers certainly now it seems like the Executive Office of the President right now that like crypto entrepreneurs

aren't exactly welcome in the United States and I want you to contrast that because I know Eddie a16z has been investing in technology for for many years in many cycles and you know crypto is just kind of one flavor of of the internet and of like software eating the world which is sort of how I think about the a16z thesis is this a first has has the U.S ever been actively aggressive and like pushing technology outside of its borders because I don't recall this in web one in fact it was like the opposite and I also it was it was the office too okay different now What's Happening Here we as material for all for a whole other episode uh

I think a lot of things have changed without going into like too many dark areas right Tech is not where it used to be in the 90s Tech was this cute sort of toy it was interesting things were kind of unfolding but a lot of people weren't even sure whether to take it seriously take the Internet seriously as a competitive product and I don't need to remind you guys about the uh like Paul krugerman fax machine uh like uh you know newspaper cut out right that's how people thought about it right it's kind of hard to regulate a thing to the teeth when you think of it as a toy that nerds work on in their garage more recently it's become clear that Tech isn't profoundly transformative disintermediating Force right for some

forces for some uh for some groups take journalists changes power structures is what you're saying that's that's exactly right and I'm talking about web too right I'm talking about Web Two I'm not actually talking about web3 like social networks have totally transformed how the press works how politics has how politics works I think politicians when they see grandiose claims about transformative Technologies their default position now is unfortunately skepticism now I'd like to see that change because my genuine belief is that technological strength has been a part of what has improved

quality of life so much for so many across the world over recent decades and it's been an integral piece of the United States lead economic lead so I think it's a huge mistake to think of it as a mere risk I think it's only serves to benefit us or in net will benefit us significantly so I wish they'd treat it with a little bit more Nuance I'm still hopeful right it's not like the story's over right we're kind of at the beginning of the political stage of the story but that's certainly what it feels like and of course I'm speaking for myself right yeah it's I guess it's one thing that web2 kind of had it easy where they could just Waltz into it because no one knew about the Revolutionary potential

of tech and now we have web 3 which like okay we've seen this once before and now this one's about money and there's already Wall Street finances integrated into the incentive structure uh which presents additional friction but I will say that this sad part that we are having in this episode is actually only coming from our the three guests on this show the three people on the show our U.S Centric bias so like the rest of the world is like yeah there's a silver lining look like crypto is always supposed to be global technology right that's been kind of the promise from the beginning so I note I haven't said that crypto is going to end or be over right I just don't think that instead the shape of its development and

the locations of its development Will May shift depending on what people do I mean I can't help though but be sad for the United States be sad for America because you're right this is what this is is this is not crypto's loss this is the US this is our loss there's America has lost that yeah the narrative Eddie that that you just uh painted I I think that kind of rings true to me like in the 90s um the existing power structures were not afraid of Technology they didn't think it was like anything that would change the existing structures now we've seen multiple generations of uh the internet and Tech and now the power structures are taking it much more seriously and they are much more threatened by it because they see how quickly things can completely change

that might account for the uh the posture we've seen on web3 and crypto um I I think that's exactly right and I think and I'll just throw this out because I'm very confident about this that uh it's going to be even worse for AI like go look over there okay AI we're we're fine Gary Gensler did bring up AI in his hearing today oh really which was crazy yeah but I know we don't want to touch this right now yeah we don't want to invoke it too much I want to actually kind of move on to the conclusion the what I'm calling the product of this whole entire report

which is this index the state of crypto index and so this isn't something new we've like I said we've seen a lot of these reports before but we've not seen an index of this can you explain this part of this report data right yeah what is this not real time we're going to update it monthly we're gonna update it monthly maybe maybe real time at some point uh yeah the way the way I think about this if you scroll down just a little bit so we get all three charts here yeah like uh perfect perfect the uh we talked about some of these metrics uh but not all so I'll just kind of zoom out and give it in its biggest framing if there's a product cycle then we should be able to see indicators of development in that product cycle right

and for in it for whatever's happening in a product cycle there is innovation you can think of it as a supply side like the things that are coming online that are going to show future future adoption that are prerequisites for future adoption and we can see that adoption itself and you can call that the demand side and each of these sides have different metrics and if you aggregate them which is exactly what we're doing at the bottom here like with this uh red graph and this blue graph if you aggregate them I think it's pretty clear that the Innovation cycle is different from the adoption cycle the adoption cycle is more volatile it comes and goes like consumers Come and Go Financial metrics

drive like short-term excitement but if you look at the Innovation side it is much steadier much much smoother and if you click that index parameters that's plus there on the right hand side yeah if you click that you'll see all of the metrics inside of the index right and you can see like in The Innovation side we have like active developers interested developers contract deployments Library downloads academic Publications and they all have weights and the purpose of these weights is that we're not trying to create like a totalizing objective you know index that's like this is like exactly like the exact number you need to track in the space

the point is that uh We've assigned them these indicators our own weights this is how we think it makes sense to think of them like for example you know I think academic Publications are probably a little bit stronger than like job search interest as an indicator of innovation in the space right so we weigh them like three times heavier but you can change that if you disagree if you think job search is like the most important thing you can you know what I do disagree I'm going to change it to a 10. and yeah yeah exactly and you'll then you'll see like the the shape of the graphs will change and you know uh we'll aggregate them thusly yeah so you should click out so there you go exactly

exactly so the way to think about the index is just the key indicators for ongoing Innovation and the key indicators for ongoing adoption we're very interested to hear how people think about the weights how people think about the metrics what other metrics based on ideally public data sets but we'll entertain other things like what other metrics do people want to add uh would love to hear it and just to say also specifically that the way to think about the number the number is the cumulative net growth for each of these numbers so like a 200 would mean that it like tripled right cumulative net growth for the full set of indicators that were active at that time not all those indicators have been around forever obviously nfts are newer you know Dex

has happened at one point right stable coins happen at one point so we have to kind of choose a threshold like a beginning threshold but we're going to add new indicators as they become obvious and we'll update these hopefully according to people's feedback beautiful that sounds like this chat looks like a very hard thing to build but also something that becomes more precise and more useful over time is you can put more data into it yeah I hope so and like if I had to if I could ask people to take away one thing it's that there's more to crypto than the price like the fact that crypto has a price is both its superpower and a detriment to it right it's a superpower because we can see Capital moving around in real

time that's incredible right we can program money that's incredible right that's like an insane insanely powerful thing on the other hand it means that as I said earlier the price becomes the most spectacular thing to track and there's a there's a lot more going on underneath the hood that if there weren't live prices we probably wouldn't be distracted by it we would be more preoccupied with instead the metrics that actually show how things are unfolding we would make a lot less ponzis probably probably so Eddie if you were to um summarize the health of crypto right now from a product perspective so ignore price we could see that it's public everyone knows what

that looks like but from a product perspective um what is it like what what's our health how I can I can I can just imagine all the Twitter troll threads right now just like laying into me but it's stronger than ever right it's stronger stronger than ever is this comparable to like 2019 then where the product was maybe stronger than the you know the price seemed or I don't know there wasn't a lot of Health in 2019 that was a kind of a desert always it's always hard to do an analog and in fact I think that the the shape of the space has changed right you you guys have seen this where as it's expanded and as the application layer has advanced and as the infrastructure layer has advanced

it's just a very multi-dimensional space now like it's nft worlds doing their thing we've got like crater economy stuff we've got games World we've got like just new decentralized social networks I don't know if this resonates with you guys but you know I have an index this is this is my gut Index right of how everything feels right and and so but what I've said to people is like this bear Market doesn't feel bad to me at all compared to some previous where I was like uh do we have product Market fit guys are we sure that this crypto thing is actually like going to work and we're actually Building Products that people are going to want to use I don't feel that way this time this week this time I'm just

like I I feel with very strong certainty that we are going to recover I don't know the total size of the recovery and how big this thing could grow that's still an unknown but you know in some of the previous bear markets like 2019 I mean D5 might not have had any product Market fit or any traction and then like what is the use of of ethereum there is no such thing as kind of like actual nfts that anyone cared about yeah what one way that I'd I'd sum that up Ryan is that back then it was unclear what we needed next yes there was a lot of doubt in the space now there are so many different efforts happening and all I can point at each of them and say like

they need this they need this they need this 100 each of these things need to unfold that's just not the feeling I have been and there's so many different efforts that look some of them aren't going to succeed faster some of them are going to succeed slower some of them require more regulatory Clarity some of them just need scalability some of the whatever right but the point is the the complexity of the space has gone way up in a positive way the chaos has gone up that's that's what you want to see from a city a healthy city is burbling with chaos and excitement right and like activity and hustle and bustle that's what I feel like it's like in crypto product the bear Market kids have it so easy these days right it's definitely

not the same it's definitely not the same the listeners are gonna hate you for that one they're like man this feels pretty hard it's not that bad guys I promise Eddie uh thank you so much for walking us through all of this uh it's pretty clear you're pretty smart guy so uh what's gonna be in the 2024 report huh that's a tough one that's tough to prognosticate hopefully hopefully radical U.S superiority in all dimensions of Krypton I don't know uh yeah there's a couple areas I can point at right that I think are going to be really interesting I can't wait to see where that percentage of L1 block space graph goes that's going to be super super interesting

I think that could go way higher than seven percent right just the percentage of block space actually consumes some people joke around like or half jokingly uh that uh L1 could be totally congested with all the activity on L2 right then it might be hard to hard to even use do you dare give us a number of layer 2 block space demand of layer 1 block space for next year a year from now I'm gonna say I'm gonna I'll say 20 20 or more seven to twenty percent all right yeah I think for for L2 L2 being consumed on L1 yeah all right it's uh so let's see so that's one uh I think that

that'll tell a lot of the story I also hope I really hope to see radical improvements in ux like and end user experience I mean wallet experiences I even hope that uh here's like a little like Rim shot like I hope we don't even really talk about wallets as wallets anymore I don't I think the metaphor is not a good metaphor they're really an application that you for signing right it's for signing it's really an identity system like a wallet right is it it manages your public private key pairs wallet sticks along with like the coin metaphor I think that it's more of an identity metaphor it's the wall is the thing that has your IDs it's not the thing that has your cash I think that we'll see a lot more there I know like you like passport better

yeah but it's it's an interesting one uh and one that we we we talked about this a lot in in this episode but we didn't quite use this Framing and we do introduce this framing in the report right is that there is there's a computer in a casino in crypto right and uh the casino is a consequence of the fact that you get economics and you get explicit economics and free transmissibility or transferability uh I think I hope that we will see a little bit of distance from the casino and a little bit more leaning into the computer and that means interesting programming models programming Frameworks better infrastructure better ux things like that uh it's one of the

more concise illustrations of what crypto is that I've heard before a casino and a computer it's pretty good I I feel I feel like um barriers are computer years but like bull years are always like they always devolve into Casino years yeah but 22 is a total Casino year and when you say that you're what you're saying which is right is that the financial cycle dictates The Narrative yeah that's that's what you're saying it does in late stages of the bull cycle it totally does though it doesn't can we change that or is that just always going to be the case it will probably always be a part of crypto but as there are more explicit applications that are used end to end by the

mainstream it will it will fall away a little bit kind of like how like in the 90s people thought of computers as a nerd thing now who thinks of a computer as a nerd thing right you have to kind of reframe it to make it a nerd thing again like by default like a phone which is a computer is an entertainment device and a tool and a work device and all these all these other things so I think crypto will go the same way where it's not explicitly in people's mind framed as a merely Financial object Eddie this is uh this has been fantastic this is the state of crypto 2023 guys we'll include some links in the show

notes um you got to come back again where we can uh get get some of your thoughts on some other topics I think we're just scratching the surface today but this has been a lot of fun we appreciate it I'd love to I love doing it was a lot of fun thank you risks and disclaimers of course gotta let you know crypto is risky if you didn't already know at least on the financial side but we're talking about the product cycle today uh that's not as risky um got to tell you though you could definitely lose what you put in we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bank list Journey thanks a lot foreign