Better Regulation, Markets Up, and Web3 Gaming | Analyst Round Table

Transcript

there are growth Equity Funds that are thinking about investing in tokens at this point I think there are a lot of obvious choices or obvious candidates in ethereum land but I think that you know the smarter money is going to be thinking six to 18 months ahead and thinking about what things will soon qualify for growth Equity portfolios not what qualifies for them today nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions not Financial advice pachio Ryan and our guests May hold positions in the company's funds or projects discussed what's up guys

welcome back to another episode of zerox research today I'm joined by Danny Ryan Connor and Daniel shapir to talk about all that is happening within crypto and outside of crypto um what's up guys welcome back how are you all doing bullish doing well I don't want I don't want to overstep he's on his salono phone I'm doing fine I'm I'm only making calls on my salop phone this week okay what are we gonna talk about did we talk we didn't do election stuff here yet right no let's do election stuff Trump won the Golden Bull is here um clearly the markets are very

very happy I mean this Bitcoin moving is ridiculous my eyes hurt from constantly staring at charts like I'm not even buy I wrote about this as well I'm not even buying selling anything I just like just looking at charts um doing basically nothing else Ryan might fire me because I haven't done my reports in a week and a half just because I'm staring at charts constantly like I have no attention span whatsoever um clearly the market thinks that Trump is going to be good for risk on assets um to be honest with you I don't know what it thinks of like riskof assets but what do you guys think I kind of went on a little time get Ryan got upset but what do we

think Ryan you're not overstepping speak a little I think that um yeah I think that we should all like think about what happened over the last few months and like remember all the accounts that told us that KLA Harris would be as like equally good for crypto as Donald Trump and think like long and hard about like why we follow those accounts because that was utter and absolute nonsense like you see in the price action today and like if that were true this price action would have happened months ago like it's so nonsensical and your biases like so right in front of you just like disto

like you're you're twisting yourself in a pretzel to make that claim and if you're not seeing the price action today and if like you're not saying hands up my bad um I don't know it's it's a it's a minimum unfollow to be fair do not unfollow me but to be fair what I said was I think in the long run Bitcoin is inevitable um alts is a completely different story but I I stand by that the fact that like I strongly believe that there's a there's always a bull case for Bitcoin that that was I think but I completely agree with you in that I don't think we would have seen alt moves like this I mean some of this stuff is ridiculous

and what people are saying on Twitter is crime is legal now it's a little joke but what is not a joke is binance can go ahead and list something that they probably shouldn't necessarily list like they can take more risks on with their listings um we saw Fe switch conversations we had Zahir from split Capital put one up for blur and Athena um winner you put one up for Athena we're having fre switch conversations there's clear um both from exchanges as well as from protocols that okay you know what like we can take more risks as well um I'm not a legal expert I don't know if that'll work out for them but it is like pretty clear shift in tone

especially compared to 2022 2023 like those days it felt like everybody was kind of like okay like to like a little bit we had a bunch of those pods where people came up to talk about regulation and what's going to happen in DC and now it seems like I mean everything is getting better yeah I think um maybe one point to highlight here is we don't fully have the confirmation of like a full red sweep yet across Congress but it seems quite likely at this point with where House of rep races are standing today I think they only need a few more seats here and it's a done deal um so to that point like just given that you know the the party's focus on you know generally

deregulating Industries and the the crypto positive forces there like it it makes sense the thoughts that that these teams are having around being a little bit more risk on going after these things that kind of they were they had their foot on the brakes for quite a while because there was a lot of concern legally and I think if you see you know the SEC shifting and and other things potentially legislation coming in um without anyone to push back on it you know if you if you fully own um Congress and and the presidential seat like it's there's there's not much holding you back at that point um from from legislation getting pushed through if the support really is there which I mean it clearly seems like it is yeah so that that action makes sense yeah I saw that um like top crypto folks were like

already speaking with the Trump Administration on structuring legal Frameworks um really hoping for something on Dow liability something better than what Wyoming has put forward um what is what wyom gets put forward I guess they've put out a legal structure for Dows that people aren't that confident in that leaves like a lot of questions unanswered so there needs to be some clarity there and yeah I think you know just like kind of circling back to price action like I think it's all I mean it's you know it's very much warranted um bitco Bitcoin up 25% since uh October 31st Solana up 26 eth up 30 um a lot of the defi names much higher than that like

that makes sense in this environment and you saw you saw winter mute and split Capital wasting no time coming to the front with proposals which I think is a great call out Bo um I think it's worth yeah I think I think there are two I mean two things that I would like to talk about um are one like the impacts on governance I think that this gives a green light for institutions to start participating more and like dowser run pretty poorly like what does that mean for those people who have been empowered by those organizations like I don't know activist investing comes to mind and um and and then just like what tokens are

up for grabs from like tra five funds like I think that's what everyone should be thinking about right now yeah let's get into that I um before the governance stuff maybe let's talk about def um and what defa are we doing full on a defa or E defi what what do we think um people will be more what about centralized defi slightly so I think um one of my takes that I haven't I mean I I'm sure someone's given this but um I think that coinbase now has the go-ahead to essentially cement its its lead as the as the largest American Exchange and so right like what does it

mean if you know coinbase can Now list future and options and perks right um in an interesting way that that actually might um take away opportunity from from other uh D5 protocols because it's just so easy to to do everything in a centralized location um I think it will be interesting to see how much um of that coinbase pushes on the base um and I'm sure it's a good amount right so I think for me like specifically defi on base I think you have a convergence of two very two very bullish

Trends and I think base could become kind of the the evm parallel to salana um and kind of cement itself as this One-Stop shop where you go to do everything and in an interesting way right like there isn't a native gas token to like suck away a lot of liquidity so if you're looking to exposure to the ecosystem other than buying coin right you actually have to directly invest into the apps and so because you have to directly invest in the apps like on a relative basis the apps could get more investment than like a salana app right because funds might just allocate to salana and so I I do think we're going to continue to see some like explosive growth in the base

ecosystem um I think defi is probably the safest bet but there's probably some consumer winners lurking it's a pretty good point it's something that we saw that what you mentioned coinbase dementing itself as this lead it's something especially in the US we saw FTX try and do that back in the day and they tried to take down we not try to take down but they were competing against binance and obviously binance um got in trouble and coinbase ended up being the win I mean they're just they're making so much money off their sequencer as well and they're going to just keep making more and more money um I don't know if that matters to them on in the grand scheme of stuff but I'm not sure if they'll launch a token I

think they should and I think they might I'm hearing different perspectives on that like protocols on coinbase will say Pro protocols on base will say oh no Bas is never launching a token therefore you should buy our token um and then other people are pretty hopeful that smart fund people are like no they'll definitely launch a token that doesn't make any sense and honestly with regulation now I could see them I agree with you that base ecosystem is probably going to do really really well um but I could see now that regulation if regulation relaxes a bit more and we get some clear Frameworks why shouldn't coinbase be allowed to launch a token I think it should be um yeah what do you guys think briyan Dy

yeah I think um I I think really great points Dan um my push back would be that I don't think that base launching a token would be bad for base protocol apps um I think that the pi like if it's a fixed pi and investors are thinking where to allocate like I think that that makes sense but I think that increment like you need so you you need you don't need a lot of capital to come into crypto to really expand the space so I think it's like very obvious that the space is going to expand even if the vast majority of trafi investors take a very long time to get um comfortable with everything so um I I don't think that that would be bad and I do geez

when is BAS going to launch a token like I don't know I would like to see the poly Market odds on that sub 12 months like I feel like it's highly unlikely um so like I kind of want to push it like into like like my unknown bucket as in like a 24 months or greater thing but who knows it really all depends on like the stroke of the pen from Trump from the Trump admin in Congress right like we we're really going to need to see what that enables for for coinbase um yeah it's interesting to think about um base dominance going forward I mean they've done a really great job like they've kind of surpassed arbitrum here as like the third biggest ecosystem clearly uh and with eth kind of just you know giving away its market share it's

it's it's salana and Bas right now um base does have like this big in inherent advant AG with distribution um I don't know but I feel like the the ux challenges um and like the empirical evidence of salana just winning over crypto people I don't know like maybe there's another there maybe there's another chain that like partners with salana and pushes some sort of distribution advantage or like maybe the phone takes off on Android devices like I don't know I really don't know what that looks like going forward but those those are the two fastest horses today for sure one thing we saw is Robin Hood and

arbitrum working together um and we also saw Robin Hood's CEO today come out and just full post was it today ran you sent it I don't know if it was today this week uh came out and posted um crypto listings just being much cheaper and much more efficient than grafi um and that's kind of been the The Narrative that we've been selling to Ry to an extent like apart from the inflation thing it's really been like we're it's better for transactions better for settlement no more t plus1 t plus2 um I don't know how relevant that will be I think the coinbase to base relation is very clear and like symbiotic I don't

know how clear the Robin Hood to arbitrum thing is I'm worried that it will be like a 2021 partnership scenario um and if I'm arbitrum I don't want to talk about be stuff on this pod because we've just had a fantastic week but like if you're arbitrum you got to be a little bit worried you know like optimism is very clearly winning the stack race um either by virtue or because they know how to spend money however you want to put it um base is very clearly winning the user race like arbitrum kind of fumbled that feed I don't know what they're going to do they have stylist coming out which is supposed to be good Daniel shapir you're focused on base Danny Ryan I assume you guys are focused on Solana what what

specific things on Solana are you guys interested in and what do you think benefits from um better regulation yeah I think that um in in in ethereum but also true for salana like that there are growth Equity Funds that are thinking about investing in tokens at this point I think there are a lot of obvious choices or obvious candidates in ethereum land but I think that you know the smarter money is going to be thinking 6 to 18 months ahead and thinking about what things will soon qualify for growth Equity portfolios not what qualifies for them today I think that's a lot of things in the salana

space particularly like a Camino right like you see how a really cemented itself as the like Number One Lending protocol in evm land lending has really strong Network effects I think empirically in crypto I don't see why Camino can't pull something like that off um and you know at being you know technically the number one or number two ecosystem today like I think you just need some drisking on the salon end in terms of downtime and a few more months of like industry leading kpis and Dex volume and rev that I think it's pretty obvious that something like a Camino potentially a drift um certainly jto um just like considering their cash flow like those things make sense for growth investor portfolios and you know

you could see some you can see some institutional flows there and like token pric is getting pretty solid yeah I think the other the other part that I'm considering right now is aside from maybe who's willing to buy these tokens but also if we get clear regulation coming up for institutions to actually utilize these applications in at scale like you know if you have funds and and firms that are able to actually deploy Capital onto defi apps um in some you know regulatorily approved fashion um you know picking horses for that sort of future State um also is sort of an open question at this point because I think you know that's not something that

happens in six months that's something that happens probably over years right you need clear legislation for before those actors start to move and then that you know it takes time and they want to pick out um you know the safe place the place that they think is going to stick around um and that is like a meaningful product potentially for them to you know actually utilize Park Capital there outside of you know buying a maybe a token as an investment so um you know some of those strong like candidates on the eth side like like an a for example those stick out but like Ryan mentioned like there are clearly some kind of front horse winners in the Solano ecos ecosystem as well that have kind of emerged over the past year um we'll see if those kind of continue to solidify but I think certainly like

those are going to be the the ones to continue watching and see like going into the future like over the next couple of years like yes you know what should you consider buying and like why what are the cash flows look like but where do you see that maybe next kind of like wave of capital coming in because it won't just be retail users at that point in the future completely agree and just to add on to that a bit I think um one thing to be careful is I think Solana is going to probably go through quite a bit of changes over the next few months like protocol wise I mean there's so much attention on that ecosystem and so much money going through it that there's places to pick winners and then there's also like sometimes you have to shift away from

them that's one thing that I've been thinking about a lot because I mean last cycle e just got so many apps and like other chains also got new apps and he kind of always had to do this rotation game especially towards the end um that's just one thing that I've been thinking about on salana I like I mean we've already talked about these all throughout this podcast for the last six months that's why people bully us sometimes but parcel um I feel like it's kind of underd discussed that you wrote about them I I been thinking about it I don't know how relevant they'll be but I like their data side and I think they'll get they'll catch a narrative yeah I think the really exciting for case for parcel is that there's there's no existing competitor today you can't you can't do what

they're doing on parcel in terms of trading real estate markets to that extent anywhere else um you can do that really liquidly on like the top 20 markets in the US today on Futures contracts but or on options contracts but it's not there's no volume there so um they have a really like differentiated product that just doesn't exist and there's no competitor for them in the space at all um so I think clearing up regulation there is is a potential Boon for them um because obviously the target market is not for you know me and my neighbor Joe to put a hundred bucks on the Miami market right it's you want funds to hedge their books right you want Reit funds to hedge like their specific allocations to like oh we have properties in Miami and and Texas and in Paris and you want them to be

able to you know have it you know up and downside exposure as they pleased to kind of fill out their books like that yeah and if anybody wants like a quick catch up on parle you can read Danny's report if you're a sub if you're not a sub you can check out we did an episode with them they were very well spoken and they explained the product very well I had a lot of questions going in and they managed to answer all of them um I guess moving away from Solana we have a Defcon day um announced e 3.0 even though Justin doesn't want people to call it that what do we think what are our initial takes on um single slot finality and sub for second block times but in five

years um so I mean obviously like there's the clear and obvious take um that's just too slow but I'm I'm GNA give something just a little different to just I don't know add add more depth to the conversation like I honestly I don't think it matters I don't think it's relevant I don't think it's relevant at all in any way shape or form like I think unit chain was kind of the uh the announcement of unit chain I think has shown the hand of what the direction of the spaces which is the largest applications that find product Market fit are going to go create their own chains and so I don't think

it's I don't think it it really matters what ethereum does at this point like I think that um it could be the security Hub right if if apps choose to create um l2s um you know obviously you you do have app chain still but that that infrastructure isn't really built out that um in in such a way that it's like as viable as just launching an L2 um but I think as interoperability gets better I think that the end state is every every app is going to um launch their own app chain or their own chain effectively and that's that's including salana apps ethereum apps any apps on

any chain right like I think that most successful apps if they're generating the vast majority of fees and me for a chain and they're not getting that value returned to them they're going to tell the chain like hey either you got to you know give us some form of rebate for all these fees and all this money that we're making you or we're going to leave and um I think that that that's the end State I think that's the direction and so ethereum you know whatever they can I I I really don't think that this announcement um impacts that um that future that that I see in in any way yeah I think I think that that's an interesting take um definitely respect

it um the the the problem is um if you're a holder of eth the asset the eth people have just told you like like you know we have learned nothing over the past 12 months 24 months we've been right the entire time everything that we're doing is um pre-ordained uh we don't have to change all systems like Firehead um and I think that um just given the community push back and like the obvious questions that like people are now raising like the the

increasingly loud like Max res resnic camp and like even like part of like the I don't know call like the eth marketing slash like social side of things like they clearly want change and you know people have talked about like really considering bringing eth back to the L1 and they've had their chance to like have an open discussion about that and like look at the evidence and they're not changing their mind and for someone to not change their mind like what the with these people they as far as like Direction and endstate they haven't changed their mind since call it 2017 that's like I don't know if if you're operating in a very rapidly changing market and you don't change

your mind um I that that that seems like a weakness to me so as a eath token holder like a large portion of the valuation you can argue about monetary premium you guys know what I think about it but like a large portion of the valuation is going to be based on cash flow and you can just kiss that part of the valuation goodbye um so like you have to think about that as a token holder like as and as far as ecosystem go e ecosystem goes like the end State maybe app chains like I'm open to that possibility I do think it's a low probability but like sure it could happen um it signals more fragmentation going forward so like from a short-term perspective as far as like getting users

like I don't know the integrated approach has proven pretty good at that so um it honestly it signals more of the same and the worst thing that I think that eth folks can do is like hang their hat on recent price action to kind of like ignore that I think you make a lot of good points Ryan the I I think this you know future scenario of like everything being app chains yeah I mean I would agree it's kind of up in the air but I one thing that I like maybe pushing back against that thought is that I don't know there is sort of this inevitability in that when any when when any of these applications get large enough and they and they grow a large enough user based like they inevitably want to grow their

feature set and then like become sort of the everything app as as we've seen like with all you know social media Giants attempting to kind of be the um you know copy the success of like Chinese social media companies and and be the we chat we pay Etc of everything um not that we've seen this to like a wild dramatic success but like there are a few cases right like Unis swap is clearly going after this vision of trying to like grow their own pie um going Beyond just being an app on eth and going to being their own chain and then likely expanding like you know obviously you'll be able to deploy contracts and do other things on that chain besides just swap on Unis Swap and I'm assuming you know they have other plans in store to kind of continue growing their own pie I think we see

this kind of this playing out as well with um like Jupiter for example on salana it really is like this this key um bow case of like the the fat app thesis where Jupiter just drives so many cust customers directly to themselves like forget all of the stuff that's happening behind the scenes like you know normal users they don't really know or care about radium they're they're going to Jupiter to swap and they're doing perss and they're setting dcas and they're doing all these things and you know they have their own app like separate from even like the Phantom Wallet app at this point like that is the goal of of these apps so um not that I would you know completely write write off the the full you know app chain thesis going into the

future but I do think like more and more we'll see like these top winners continue to draw like more of the attention and more of the users directly themselves and be able to capture more of that more of that Revenue I'm gonna come to E's defense a bit here um even though Danny you are very nice you didn't actually say anything bad um I think a it's very difficult if your uh ecosystem as large as etherium and one that has the reputation of liveness and stability to shift very quickly um that is clearly not doing them very well though because they can't shift very um quickly so they have to do everything very slow and carefully

um the second thing is like Shapiro when you started your your I think your correct take of saying it doesn't really matter I thought you were going to say that doesn't really matter because E's still going to get a bid and that's my kind of pretty basic opinion is that I think trafi is going to look at it and say you know what like btcf look at how much this is up e is BTC like it has some form of deflationary ultrasound money stuff but it also has smart contracts the internet of Finance whatever the world's Global Internet Bond something whatever they're saying at swn um and they'll see that there's an ETF and they'll B it up My worry is that because that happens

nothing ever gets fixed and the E team continues to be headstrong economists academics as opposed to saying we need to build something that is like very quick and that is actually reliable I do think there's a there's space for multiple blockchains um like types I do think that it makes sense to have one that's I guess more trustworthy um that's kind of a contentious thing to claim about e over Solana but like let's say that's the narrative that they want to go for livess prw worthy I think that's fine but like Ryan said if you're going to Value something on cash flows or whatever metric you want to use unless l2s are very clearly um playing

into e which as of now I think most people agree that they're not I think like there's nothing you can do you can like the chain as the chain it is like you can believe in the Eos believe in I I value the EOS that ethereum has over Solana like I like using Solana but I just I like also ethereum I like the stuff like I like what it is building towards that I think it'll probably be fine because of an ETF bid or some form of monetary premium even though Ryan's probably going to beat me up for saying that um but I mean you know we got to fix it up a bit like it's just 5 years is such a long time and I understand that they have to take their time because there's so much money on the chain and like they're relying on this

liveness thing but on the other hand you're not as good of a sovereign asset as BTC you're not as good of an l1s salana like you know pick it up a bit well yeah let me let me like clarify so like I do agree with I agree with both of you right like the reason why it doesn't matter is because eth is destined to um it it's it's destined to fade into the background as just this like security layer for l2s anyways so if anything I think this will accelerate that and it'll it'll clarify that right like they're not going to be able to they're not going to be able to change right like they have they have set on

this thesis that they're going to be the security hub for all these l2s and I think right the fact that it's four like four years out that they can even get down to 4 second block time like it just shows that like this is um like they this is it like so yeah I agree with with both you in the sense I don't I don't think it matters in the sense that it's going to get a bid I I think that you know they're kind of setting um not D digging their own grave is the wrong word because I'm I'm I'm fundamentally bearish on all generalized l1s I think that everything is going to be um hyp specific app chains um dude and where

like those chains Outsource consensus to security layers and I actually think that that setup um maximizes the uh security budget of those app chains and also um gives end users the best um performance and execution right like if if uni chain centralizes all liquidity on their chain right then like Dex is they they exhibit some of the strongest Network effects of any application type right like most liquidity that's where the most users are that's where the most fees for LPS are so that's where they go which gives the lowest spreads for un users and if you add a viable cross

train interoperability standard then right you could be on any you could be on one of a million chains right and if you want to do a swap you send a single message to unit chain you execute the swap there and then you get the tokens back right and so you're only paying this flat absolute cross message cost but you're getting the best execution because all liquidity has been centralized in this one location so you have all these little plugin play kind of apis in in a sense for all these specific use cases and so yeah I I mean I'm bias like I think that architecture is going to be the the endgame architecture but I mean yeah that that results in eth you know losing execution feed like

it's you know it's it's losing all that so um yeah if anything this just kind of cements the the trend um which I agree with you guys on I I think the really unfortunate part is that you can both be right like n l2s could grow 100x and eth the asset could decrease in its valuation from today just because of the way the economics scale I will say I don't think that would happen right I mean we could postulate whether it would or it wouldn't but just looking at the way that the economics scale today right like a 100x growth in l2s is not 100x growth for eth the asset it does not you know it earns one/ 100th of L2 um revenues essentially so it's it's that's just an unfortunate reality of

what the economics of L2 scaling do for E eth the asset specifically and it's not even unfortunate like I think the value of open AI right now is like on the in the prime Market is like 220 billion and I mean ethereum is worth more than that and so it's like I think just the the valuation is so high um it's hard to see how it could go significantly um higher right like and Dan I think you're right I think though um well both of the Dan are right but Danny because I cut you off I'm gonna apologize and um I think what I more don't look at me like that I'm sorry SW launched um well gu this is going to lead into L2 talk anyway but I'm just

going to do it SW launched um they are an optimistic roll up um on the super chain they do a whole lot of stuff so they do liquid reaking liquid staking um bit Bitcoin staking um liquid they do vaults and they're also integrated in symbiotic and igen layer who farmed swell who's interested in swell um what do we think about these we had so many of these launch and for what it's worth like I think SW is a good product um I like the team I I like what they've done we just have so many of these that launched during the IG layer craze and IG layer has just

gone down um like narrative wise attention wise people don't really believe in it anymore kind of tied to E's performance as well but um what do think of stuff like this I think this is probably the latest launch how do you how do we approach stuff like this at this stage that is launching and just doesn't really like not a lot of people are interested in it I think and I've said this before for on this pod that like the LRT space was super super over indexed on I think like it's a great product to use as a consumer like if you hold eth and you want to earn that extra yield like it's just a great product to go and do that but I don't know that that makes all of these like 10 LRT protocol you know

tokens um great assets for you to want to buy um that said something that I do think like I think these are interesting because they also play into the thesis behind like um an interesting protocol like Pendle for example in doing yield trading on chain um the fact that we have like these very I don't know this this wild assortment of like deep yield trades across native assets and protocol assets and defi assets like it it adds on to the strength of a Marketplace like that where you just have permissionless yield trading and lending um on chains so I think personally like the growth of this category has been more interesting for something like Pendle than for the

individual protocols themselves but I mean surely if you're if you have a big bag of eth and you like to earn yield on it like it's been great for you I don't know if you're gonna swap any of your big bag of eth into these tokens yeah um one thing I I agree with you Danny on everything once again one thing I will say is I so when I was doing research for this spot and when I got this SW drop I was not I thought it was a lot more divided than what it is but it seems like e is I think they have like nearly 60% of liquid resch tokens um let me there we go yeah at currently it has 63% which

is actually quite a lead but Ryan how much do you think market share matters for lrts how much do you think lrts matter in general I know you didn't do IG layer so you don't really care about reaking that much but I think um it's pretty clear by the project by the projects that are leveraging these reaking systems that um there isn't much demand for them to begin with um if there is demand it seems to be like really hyp specific and at the end of the day like this was all just like a massive

marketing scheme it was it reaking a simple rehypothecation there's there's nothing new going on here and for that reason like the success of reaking is solely for the um you know for crypto Mark it's so it's solely due to crypto's like appetite for rehypothecation which is fine that's why it's been successful people want to lever up their thing but I don't like the evidence suggests that it's not crazy needed by the market um and it and it adds a bunch of risks that haven't come defition yet right like there are cascading risks like this is nent technology um people are looping these strategies

and like the wrong you know some tech some technical issue that causes like a massive slashing event um it just hits so much harder now so I don't I don't love it but you know it's going to exist and it is what it is yeah I don't I don't I don't have anything specific to comment on swell but in general like reaking and and igen layer like I am extremely extremely bearish on it I think there's fundamental incentive mismatches between abss igen layer and ethereum I think that there's adverse selection at play where only um really poorly run or not not needed avss are

the ones that actually will go through um aen layer um and I just think that there you know chain link especially now with the chain link runtime environment um it's effectively what igen layer wanted to be but a hundred times better and also provides more services including cross chain and R so I just I don't I don't think that um I don't think that it's ever going to take off in my in my opinion that's fair Ryan I know you said that it's because people like rehy forication I always thought it because in crypto we have this like obviously people like airdrop farming um but on the other hand we we kind of have

this fomo of oh am I like making I guess this is like all across finances people you always want to like squeeze as much use out of your assets as you can and I think Ian Lair really played into that um you know it's funny like I watched this interview with shiram and when he asked what like why should people restake he was like everybody will have to restake because like you want that yield and I'm like I guess like you're playing into something that like e staking is a bit different I feel like I mean obviously you want to get the yield on that as

well um but there's also like it makes a lot more sense than like whatever I I'm just rehashing old stuff now because we've talked about this months ago as well but um the incremental yield that you're going to get off is it's also incremental yield per unit of risk right and you're adding three four units of risk if you're doing this through I think sot yeah you like double your slashing risk every time you Loop these things and then you get like an incremental 1% yield on your whatever you had what's eth Mev yield like 20 bips um yeah it's not

at the very least there you know we're not running back the raw Celsius like block folio Playbook here like these are actually decentralized protocols that like use onchain contracts to stake and like provide yield so at least in this case like you're not going to get directly rugged by you know the guy who runs the company running up a massive long and getting blown out I mean I guess you could if if the all the contracts are upgradeable upgradeable you know maybe you need to look into your specific protocol but um there is at least some kind of smart contract backing this year and you're not just working with a uh you know centralized custodian in this case hey guys for today's snippet I'm joined by

Miguel to talk about nilon and Nan's Vision thank you so much for joining us Miguel thank youa it's great to be here again um so what are some key things you guys are doing differently at million all right so one thing is the the orchestration layer so you hear other competitors um talk about also mixing privacy enhancing Technologies but in our view of the orchestration layer which is the ability to interact and combine different privacy enhancing Technologies like Z knowledge proof or FH or MPC or tees is that we really don't place any more weight on one over the other ones so we're not not biased

towards any particular P we really think it it's it depends on what problem you're solving for um sometimes your trust assumptions don't need to be that um that strong so tees might be a solution for your problem like for example when you want to privatize or or you w to kind of um make the state of a game private and that game is not really you know manipulating a lot of information but sometimes when you want to work with um llms uh or you know future AI where you want to share your prompts which contain a lot of sensitive information you may want to go for other approaches like multi-party computation that have lower trust assumptions more security so I think that's something um

that makes us unique that ability to combine the different uh um privac enhancing Technologies with without placing any bias towards any particular one of them also we're not a library we're not just giving you an open source project and good luck with you know implementing it we're actually public infrastructure which means that there's a clear path between our SDK and the ability for you to you know develop um applications and solutions using this orchestration layer and taking that application or or that solution to Market because the step between the code and actually running that code on top of

EX on real infrastructure and also even the monetization of that code because we have the token which you can use to monetize your your application uh those are also given by by us and I think that also makes us um pretty unique also um we we focus on what's on top of pets so privacy enhancing Technologies because we acknowledge the existence of this huge gap between what applications need so what developers need and what privacy enhancing Technologies are able to provide for so privac enhancing Technologies are able to provide these very lowlevel compute engine that resembles in a way to you know all assembly code it's

really really low level but what you need is really Solutions so that you can build the next I don't know Uber or the next decentralized exchange so there's a huge gap that has been traditionally filled with decades and Decades of innovation in computer science uh solving for algorithms around everything like how to manipulate data how to sort information how to um solve linear programming how to you know all different problems um and we're missing that on on top of privacy enhancing technology so we're placing our Innovation efforts on trying to bridge that gap for different verticals so we've started with um AI bringing in DWTS which are a tool used

in image processing to actually compress images so DWTS the discrete wet transform is used in the jpeg 2000 image compression standard for example so we're bringing that into on top of privac enhancing Technologies and now we're able to um take advantage of that from both FH and MPC and in doing that we're bridging that Gap and we're offering faster um solutions to developers in this case to AI because now they can work with pytorch like interfaces in a in a privacy preserving way another thing I think that makes as unique is that we are usability first so we we acknowledge the fact that a prevalent problem in web 3 is that sometimes it's really hard to to use so

we've made it our our top one of our top priorities to develop um our sdks and toolings in a way that they're really easy to to use by by developers and and and and users alike and also we we built a platform that is made by Developers for developers so we place a lot of effort in providing a lot of tooling um interesting and and you know know um concise documentation tutorials we're running hackathons periodically and and so on so I think kind of all the combination of of of these items um makes us unique perfect and what are you most proud of um with million at million I I I think it's the community I think it's

a community I mean I'm obviously very proud um about our team you know the engineers they're they're amazing um the cryptographers as well is not very easy to mix those two things because one is has to do with maths the other one with engineering staff but we have this Continuum of people filling that gap which makes it really easy to turn uh research ideas into actual products um really happy internally also with the marketing team they're they're doing an amazing job in explaining private enhancing Technologies through the notion of blind compute um which I think is is very visual like you can immediately understand and grasp what it

what it's all about so they've coined things also like or terms like a personalized AI so they're really really doing an amazing job the product people as well um so they're they're creating for example the aiv VM which is a set of um it is like a platform to develop AI products on top of um or are focusing on on on things like um data to earn so providing the storage layer that people can then compute on with on top of personal data but at the end of the day this would be meaningless if if it wasn't for the community um who are who are building amazing products both in in the hackathons as well as what we call

the the fees which are funding entrepreneurs who who are like um founders of their own businesses and startups we work very close with um so they're they're doing wonderful things you know Health Care in in data to earn in games in private decentralized exchanges you name it like they're covering all the Spectrum um going all the way from from Web Two to actually web 3 applications and and it is because of them that um um you know that we exist and they are actually the you know the reason why I'm really proud of of nilon perfect and um how can more people get involved with million both on the

user side and the developer side yeah I I think the best way is to go to our website nan.com and then on the on the right hand side uh if you're a user you will find links to X so you can follow us on X and we we have um you know a lot of um active conversations and announcements like for example our Partnerships with different l1s and l2s uh you can also join our our telegram group and our Discord Channel um if you're a developer you're probably more interested in focusing on on on Discord probably X is is is a good idea as well just to keep um you know general information about nilon and Partnerships

um but also you you want to go to to our GitHub repost repost um so that's also a link that you find on on our website and you want to start playing with with our SDK so download it and and check our documentation you you may want to participate in our hackathons and and you know get to know us better as a as a team we're running one in Short about AI but we're running them like periodically really um yeah so that's that's kind of I think the best ways to get in contact with us both if you're a user or or a developer perfect thanks so much for joining Miguel Danny you recently wrote a report which is something that 50% of this call has on recently how was

that what was it about I did recently release a report um wrote about beam um web 3 gaming space I think it's differentiated from the perspective of if you look at top sort of web 3 gaming protocols they're heavily focused as with every other category in this space I think um they're heavily indexed around infrastructure um and I mean Bach you've written about the the Avalanche pay as you go system um the economics like we've talked about ethereum L1 to L2 scaling and how much goes back to eth in terms of revenues like the economics of scaling these infrastructure systems um

especially when we look at gaming as well like it's Pennies on the dollar um and so they just they are hard to want to buy um you know an avalanche or like an immutable Etc from a pure avalan like pure infrastructure Revenue perspective um it really relies on like you know THX growth of games utilizing these Technologies um like serious growth of you know users and transaction throughput volumes Etc it's it's I think really equivalent to the like you know um come for the tool stay for the network type of idea where you rely on getting this really big audience to come

in and then like stick around and like swap a bunch of value and have that d fees for you um which is difficult right like I think we're only salana maybe the only case and and eth probably last cycle where we've really seen that kind of play out to a serious extent from a revenue perspective um and so beam is a complete flip-flop here in terms of like what it offers um in the gaming space in that it is basically entirely predicated on the value of its treasury Investments um I think they may have the largest if not one of the largest um d treasuries by non-native assets so it's valued at something like 230 million based on their most recent treasury report um and that includes largely like gaming

Venture Investments um some liquid tokens as well some some Investments that have become liquid or have started to become liquid over time um and some other Holdings and then as well as a you know technically the Dow's a chunk of of the beam token as well U but they don't include that in that figure that's that's um provided to folks but um ultimately I think really like the the core thesis here is that you know infrastructure as a as a bet on you know games becoming very popular um does not really like Leverage itself that well to you know if you have a hit game that is very successful you know that game like an axi Infinity last cycle can can do incredibly well by itself because it's going to draw most of the attention to

itself right you can have one hit game or one hit publisher that does incredibly well and draw tons tons and tons and tons of users mind share Capital into that specific little pocket um for something like an avalanche like they can have you know one great game pop off but I don't know that it's going to drive people to want to buy Avalanche it's probably going to want to drive people directly to that game itself um so beam is an opportunity to like their focus is investing in those potential successes in web3 gaming um and then hoping to really capitalize on the grow of growth of those projects um they do have an INF for Suite as well but it's not really like competitive to the likes of these other projects that have been mentioned you know if you go look at gaming it's it's immutable it's

Avalanche it's Ronin chain it's it's a lot of these guys um so really that focus is is in the Investment Portfolio how do we approach these things where it's like you said the guess like what's the regulation side of this thing like how because it's already trading above IEX above asset values know if it's 230 mil ftvs 1 I think there's there's a tough question there one obviously the recent excitement in the markets is probably push that as well based on their recent numbers um I think there's maybe two points here one in that you know if there are funds who want to get exposure

to the web3 gaming like category but they are not like they don't have a gaming guy or they're not like that deep into the space to like feel like they can pick out winners and do you know seed deals or strategic deal de into these projects like I think it just provides that kind of broad exposure bet to the ecosystem where versus having to go out and do that DD and pick out you know I need to pick out this web your gaming project or that it it's a category that's been quite r with like there are low effort projects in there that that that get raises um just I think due to the nature of what it is we saw that last cycle um and so there's probably some difficulty there in terms of selection I think the other piece of it as well is that this is also an asset

that's like it's accessible for retail folks to buy who themselves could not participate in um you know seed deals you know be an angel investor um maybe in a project maybe that they they do think that they would want to invest in um they're not able to get into those rounds so this kind of gives them that opportunity um to kind of Ride Along with um basically what is a decentralized venture fund that is doing exactly that what's the Catalyst for either beam or gaming um outside of like the very obvious like um trafy investor incremental Capital coming into the space yeah I think the the positive

regulation that we're likely hoping for as an industry and the you know potential easing cycle that we're maybe walking into in general like I think just inflow of capital to more risk on categories is one just key Focus here like gaming has kind of been I think ignored and left behind maybe for a few years specifically in web 3 like raises um and interest there have have shed quite a bit over the past few years relative to like where they were at in 2021 um so there's an opportunity here going into like a again a more risk-on environment a lot of excitement you know Bitcoin surging to Absolute new highs like for investors to get excited again and and enter the space and I think as well we're we're

finally at that phase here where it's been been a few years for some of the you know largest raises most anticipated like kind of AAA quality web 3 games actually coming out and being released um people actually getting to see them and play them for the first time off the grid is a good example of that recently it had a lot of you know excitement and hype around it obviously they did a pretty big marketing c campaign on socials um there are other games coming up um similar like to that same level I would say or or similar level like we've got games like blood Loop um I think shrapnel maybe would have been one of those but that may be um getting left behind just with the way the team is going but um ultimately a lot of these games that kind of were

maybe promised a few years back can can actually get released um come to the Forefront give some you know idea of uh you know get people actually using them get some excitement and and eyes back onto these things a side potentially a more risk on environment and I think that's a good kind of combination here for for more and attention back into the space yeah gaming is a tough one um like you said Danny I think there just needs to be like one good game that gets attention into the space or um I guess just things just get sillier and sillier I do think that when people make I mean in crypto it's always like in defi if you make money um like if you hear that people are making money in food Farms or

something you come and try those out um if you hear that people are making money in defi you come and try it out it'll probably be the same for game fight to be honest with you like we can harp on about I love doing that as well I love saying fully on chain gaming is really really cool because it is I think it's really cool but I I know for the vast majority of population it's something that is not interesting owning your assets is not something that's particularly interesting but we've we've known this for some time um but if you can make money while you're playing video games and you can own your assets and sell them and that's how you can make money I do think that there's um I guess Financial incentives is probably the way to get in it that's our biggest

tool in crypto and it always has been deepen is the same thing it's Financial incentives um defi is the same thing Financial incentives I guess like we just have to Loop it up ponify it you know bring some people on G and then we'll see if they stick around I like this I like this approach that we have where like every however many years we just like bring in a new crowd 40% of them leave 60% of them stay you we just keep doing it I don't know how much longer can we can keep doing it for but um yeah I think it's fine I think it'll we'll make some people some money will come here yeah soorry for for ponify games um do you

think that you're seeing more like five D genen Ponzi games or less over time now that like the capital mix has really shifted no I think that's decreased I think we're seeing more obviously you know the focus of having Financial elements I think will persist um just because if you think about traditional like games like MMO games MMO RPG games like a World of Warcraft for example if the in-game economy for that was a real like onchain economy with with real currencies like I mean I think that's just fundamentally interesting I think like for example what the EV on line guys are trying to do with with Eve Frontier it's just a great example of that where Eve online has historically been like quite literally a real like a real economy within the game people

spending quite like extensive sums of money to play and like have their ship get blown up and need to fix that um so I think them stepping into this space and wanting to have like a kind of open permissionless kind of sandbox for to do essentially the same thing but really just like put it onto these like blockchain Financial rails and like let it run um is a good kind of use case there but yeah I think the like raw you know put your money in uh I mean some of the early games were quite literally just like cute front ends for you know high yield Farms which I mean you could call that a game if you want to um I don't know if that's quite to the level of a of a true game but I think we're seeing more like actual game development

over you know simple like amm yield Farm I I will say we're just not there yet like there will be a time a few months where we get those back um the food farm Lo loopy dupy games the Ponzi games I do like those um I mean we had a few examples Ryan did you read my report did you ever read my gaming report let's put you on no why didn't you read it man I wrote that one specifically with you in mind because I was like this dude needs the like he needs the gaming thing so I wrote it out 5,000 words never read it um I've read 75% of the content over like the last 12 months and I didn't get to that one that's fair that's fine

always left behind um what I will say is those games we had a few examples crypto valleys were you did you did you see that one did you didn't see the ones where they were tweeting out saying minimum investment is [Music] $200,000 um so we've had a few attempts crypto valys was the big one um is hamster racing a game hamster racing is definitely a game but that I wouldn't count that one that was more gambling I guess um yeah we've had a few yield games I think we'll get more um I don't know if those will make the lasting impact I don't know I kind of go between

like project no EV online is cool um but that appeals to a very Niche crowd like that type of game and I'm not sure if that's the big like you're not going to get billions on chain the way we like say with that game you're going to get a few Niche people um people who are really into like one specific game you'll get those I think crypto would naturally appeal to them I wrote this in my report I think crypto naturally like fully on chain gaming will naturally appeal to people who are really really into like one game like I'm really really into only one game and I think that's why I find fully on games cool because I think it's just like it's interesting to play around with the nitty-gritty stuff um I think for the

mass majority who go Black Ops Modern Warfare FIFA Madden um every year cycle it up fortnite whatever I don't know if crypto will ever ever like in all honesty I just I don't see maybe I'm just being a stupid bear and will get like a massive unlock it's just at least not in the near term I don't see that happening until like I know gaming studios are working on integrated nfts and like on chain Tech to the way that to use them as rails um I don't see that the cycle I feel like we're a cycle behind on that like we need at least one more then investment there but this statement has no basis but like

here's a catalyst for you GTA 6 they launched the game and it's got It's got blockchain Tech like your currencies in the game are are fully on chain it's a real economy you know every publisher in the world I think would be they'd have their eyes on that but like you're saying Bach I mean who knows we we don't we don't know if the big studios are going to be jumping onto this Tech like in reality if it if it's from the perspective that it allows users to like keep value from the assets that they own in game like that's that's not a positive for those companies so I don't know that that's going to be the driving Factor but if they can be drawn in from the perspective of like you can build out these like deeper economies and you know there's there's fees to be grabbed from

the trading volumes and the activity associated with that um then that might be an angle but and not every game needs to be on chain as well the last thing I will say is that I do think the president of the largest economy that the world has ever seen saying like I'm a going to launch an a front end B I'm very Pro crypto probably legitimizes um crypto and blockchain Tech quite a bit so I I can see I guess more attempts this year these next few years um from gaming it is legitimized so I I guess that could also be aase I I don't doubt that there are people working in these gaming companies that

are really really interested in blockchain Tech the only issue is that I think Executives don't really want to take that risk um like yeah that's really it I just I don't I think like until now it's kind of been a no no word um but you can hear kind of Rumblings of crypto becoming semi interesting and cool again at one point it will be cringe again um at the very top when everybody's here um I have a friend that works at Riot and a friend that works at respawn and like both of them were like like what like blockchain can't do anything like it's just nfts it's stupid it's scammy so like it's probably going to take one game that does it right before like they go oh like all right that makes sense

yeah yeah we we've talked about this previously I think when we when we talked about Off the Grid extensively and I think that really is what it would require is a a a truly massive success that isn't a short lived like short-term kind of one-time thing you know maybe as was the case with like an axi um but if you get something that really like crops up and and starts to kind of punch into the revenues that that these big studios um are hoping to grab um that's kind of an eye opener I think but that it we're not there right now I mean maybe we'll be there in a few years hard to say my um my approach to gaming has been um either try out games that are

meant to be really really intricate and like have an economy um in terms of crypto gaming this or like games that are very very simple and are realistically like either it's like a tamagachi typee thing or it's um or it's basically like def5 food Farms wrapped around like I think that's those are the scales that are interest to the majority of people right now and that's the arena that I want to compete in and play around and I'm really not interested in Off the Grid is cool and I will say the team did a fantastic job with marketing and I do think that it's an interesting game I just for a game to do well you need a lot of people to play it and a lot of people to stream it like nowadays that's it it's not the same as it was before people want to watch the

streamers play the game so that they can do whatever dance they do I sound like Ryan right now with my boomerism but you know it's like you know they want to do their fortnite dances and their emotes and stuff and you want people to play the game and I just don't see them repl oh bear R over but whatever I'm that's it all right I am thanks for listening um Danny Ryan Daniel Shapiro thank you guys for coming on this was a fun episode an episode that I actually enjoyed a lot more than other episodes where I felt like what I was saying wasn't stupid all the time so I appreciate you guys coming on and letting me do this yeah you only said a few stupid things this time it was good it's very rare for

me to say anything stupid it's very difficult if you speak for an hour a day it's it's not well I guess that's what most people do they speak more than an hour a day but anyway F your wiiz game is strong thank you Brian thanks for coming RIS Risk game Risk game I got nothing else that's that's it Ryan thanks for coming on man yeah anytime oh man I keep coming on I can't read your reports

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