Can Frontends Act as a Moat? | Josh Litchman & Tolks

Transcript

what's up guys on today's episode I had a chance to chat with tols and Josh lman Josh is the director of ecosystem at pixels and was previously a framework and tols is co-founder at page one we mainly chatted about how alss have been performing and the maturation of crypto uh specifically with the rise of defensive tokens we also discussed if front ends can act as a moot the world Liberty Finance Partnerships and lastly we even took a stab at talking about gamey mainly focusing on how we can shape user behavior for financial feedback groups uh this episode was a fun one please enjoy our conversation 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 bacho Ryan and our guests May hold positions in the company's funds or projects discussed hey guys Das the digital asset Summit is coming back this year it'll be in New York City next month um there'll be a ton of great speakers and guests there uh some of our friends on the research team I know Mark Arjun Ryan cash flows Conor they'll be there in the flesh um so you'll you can have a chance to to meet and chat with them and some key folks from around the industry and hear what they're thinking about crypto um for all for all our listeners out there use code 0x10 at the link in the description um you can get 10% off tickets and we really hope to see you there what's up guys welcome back to

another episode of zerox research today I'm joined by tols and Josh lichman um who is the the director of ecosystem at pixels and is also working on some behavioral economic experiments which I want to hear a bit about but Josh maybe you want to give a short introduction of yourself as well as what you've been working on if it's not too stealthy yeah um what's up um very happy to be here um yeah so I guess a little about me is just like worked in Venture for a bit before that I worked in finance um both vac and just like banking um most interesting part about crypto is just like its human behavior at scale

um so you're adding money to behavior basically um and yeah I think like there's definitely some cool stuff we've seen in the last few years but the thing I'm the most bullish on right now is basically gaming being the conduit for human behavior um for the next you know who knows how long um but definitely kind of serves as like the kind of opening for a lot more people to get involved in crypto all fantastic we're going to talk a bit about that I think gaming we talked about this a bit as well gaming podcasts gaming talking about crypto gaming is kind of not very present right now um we're going to get a bit into that I

think before that we were talking a bit about alts um all of us but maybe it's good to let the listeners know a little bit so we had a few announcements today I don't want to talk about a general broad Market fast I think that's kind of Market's a bit dead at this point um but a few things is World Liberty finance and sui had an announcement together um this is Thursday March 6 so by the time this goes live it'll already be out for a few days um so we might be wrong when whenever that like on the Monday but um immediate thoughts is that it's kind of becoming a news Traders Market or regime where like you really need to be locked

in um and trade those like headlines and apart from that there's not really that much interesting going on what do you guys think yeah no I mean the the world Liberty um that's what I did this morning just kind of more about the just kind of the the growing number of coins that are attached to admin um I think we'll see the market kind of get exhausted of that a little bit I mean you had the initial World Liberty Partnerships with um Tron uh move obviously and then suie yeah and then I mean those were you could make the case that they were pretty impactful that they were backed by the Admin and to me like with sui and

obviously with the uh strategic Reserve announcement incl potentially including I mean we'll see tomorrow um potentially including Ada and soul and eth like as the list grows longer it just in my mind becomes a little less impactful and more duded to what SSS are tied to the admin um I think with Al like you could have reasonably made the case that there were some that were going to significantly outperform the ones mentioned that you know before the list started continuously growing and with the way that world Liberty is is structured kind of that that pay to play a little bit like I would be shocked if it didn't continue to grow and I think you could make a pretty strong argument you know a

little bit for the Strategic Reserve included Ada and Sol and xrp that there were some coins that were attached to the admin and like I said just kind of as that list grows it becomes a little less impactful and I think that's something that the market is waking up to a little bit this morning and will continue to wake up to as we move forward so um I think you could have made a pretty strong bullish case for for some very specific alts and I think it's just waning a little bit now and you know the market in general has and I mean the volatility is is just off the chart and I mean we don't need to talk about broad alt sentiment like everybody knows where it is um but I think the market got a little excited that again

you could attach very specific alts to the admin and have like an underlying you know maybe bid or floor and I think that is just deteriorating a little bit so it's it's an interesting spot yeah from like a headline perspective I would agree with that and then also like you know I think the simplified view too is just like uh any token that Trump kind of announces some affiliation with right like they basically get tied into an overall kind of trump narrative and so it affects kind of what PA is going to look like going forward um and my sense is now like you're basically injecting kind of an unknown degree of volatility into these tokens um so I would not

categorize an announcement like this as like overwhelmingly bullish uh I also wouldn't say it's overwhelmingly bearish either it's just like there's going to be more VA um and like if you're trading these things you should now expect there to be some kind of uh movement baked into um announcements or or kind of like Trump making decisions or saying things right um that is like now totally removed from your control so like if you're a vault Trader or if you're a if you're a maker in these markets like probably a good thing for you uh yeah thing right um if you are like a directional Trader or like a picker like I would say this just makes your life

harder to be honest yeah I agreed on that um I was a bit surprised that suie chose to do this to be honest with you guys I uh movement Tron I feel like those are a little bit expected with like deals with World Liberty Finance especially now that we know it's like pay to play um s was a bit interesting I was I wasn't expecting that but I guess kind of talking a bit about those Pickers um and like making directional bets I saw this tweet from howdy Mary um J I think interacted with it that's why like I saw it they she was talking about I guess defensive tokens versus I don't want to say offensive tokens but like growth tokens um and we've had a bit of

these this narrative pop off now with Hyper liquid I think is the big one because they have the assistance Fun by radium they have the buyback I'm curious like what you guys' thoughts are on that we had this with GMX as well I don't know if you guys remember but it did Super well in like 2022 just because it had it didn't have a buyback I I can't remember now it just had um Revenue so it was like wow this is real yield we need to get in on this um do you guys think that's going to be the case going forward are we just becoming more and more mature where there's like these things matter a lot more or do you think it's still going to be like a growth um I think it depends like kind of who you ask right like obviously

there are like people in this space who are incentivized to want a lot more fundamentals and then there are people also on the other side of the equation who are like hey like the more that these tokens trade on narrative and on on kind of just like memeification like the better um I would argue that like both is good and there's a time for each but typically we do see protocols kind of like fall back I wouldn't even say it's just protocols just like apps protocols anything it kind of they all fall back to um what the fundamental like value driver is for token price so I do think BuyBacks and rev share are super like crucial honestly and if they're not at least part of the road map for a project

I think it's tough to like justify owning them when there's like you know volatility when prices are moving down like you kind of just move to a safer basket of assets or ones that you know like hey there's like programmatic buying that's happening I don't have to worry about that um when it comes to like this list I think like I think this is little a little bit of a soft shill and that's fine but also like this list is going to get longer right um so I think the real Alpha here is not in like hey cool like these four are the names to own I think it's like what tokens reliably do you think are going to implement something similar where that kind of like net change on a

relative basis is like much more important um than it is for maybe something like um let's just like use like Jupiter radium even as an example right like they already do so much volume um adding a little bit there may or may not make a difference but there are like a ton of protocols right now that have been afraid for like the last like four five six years to like touch this realm of crypto um and when they do I think that really makes some of these call it mid to longtail Al it's very interesting yeah no i' definitely agree with all that and I mean it's an exciting time just to see you know have that regulat regulatory Clarity and kind of that cloud are moved from over their head you know being able to do this um but yeah I mean that the value to to

growth and offensive defensive like I mean it's it's pretty similar in you know traditional markets too like you know there are value stocks that do okay like we've seen the past week you know when uh the indexes are are selling off and and growth kind of gets hammered like it's kind of the similar um strategy there and it goes to what we were talking about with uh with Mike earlier this week B just about the dispersion that we see in crypto markets like to me that is kind of the core the core like tenant moving forward is just dispersion is going to be greater and these BuyBacks you know the the um mechanisms that that tokens can use like that'll play a much larger part moving forward and you know the old seasons

have past like we talked about kind of at nauseum at this point like there's going be just ever increasing dispersion you know it's the same thing in in trfi markets again like it just goes to the growth and the maturity of the asset class at large to me and there's stuff that you know purely trades on on narratives and relative valuations and I think that edge that was in the market for for a long time is kind of deteriorating and you're moving more towards you know the fundamental valuations and like this everybody wants the shift to fundamentals and and I do too um it does kind of remind me a little bit of like macro at large you know when people get like macro bearish

and then stocks go up for a week but maybe they're down you know say 10% over a couple months like it reminds me of macro in the sense that like it has turning a gigantic ship like it takes time for yeah you know the the overall like everybody wants it to all of a sudden be like oh you know mean coins are dead now like it's the pure shift the fundamentals like the one thing I will harp on is that it this stuff does take time to you know like I said like turn that giant ship in the middle of the ocean like it's not something that you know you just flip a switch and um all of a sudden you know everything's changed so it does present a lot of opportunity but I would just say that like you're still a little bit beholden

to to BTC like you know if BTC goes down 10% like you have a higher floor of course um and again this is a good thing but it just it'll it'll take some time again it's it's a welcome it's a welcome thing to see but it's just it it takes time also anyone that like says you know uh there's a return to fundamentals like mean points are dead like I think it's like dea take right because as soon as there's a overwhelmingly bullish Catalyst that becomes consensus like memes are gonna they'll be different memes or like they'll be you know they'll be strength in maybe a different area uh than there was before but like the Medics Drive markets right uh even in traditional markets it's just like

maybe a little bit more obscure um so I think I mean this happens like every single time we get like a change in Market regime people get like overwhelmingly they feel overwhelmingly that like a certain type of behavior does not come back but like behavior is very repetitive especially with humans so like we know this about markets so it's hard to just write off like hey like memes won't drive price after this the Market's getting mature it's like the market can get mature and still like there can still be narratives that emerge and and you know find ways to express themselves um it might just look different and I think that's going to happen in you know in perpetuity um but yeah yeah generally agree as

well yeah the casino's not casino is not closing anytime soon you know even if even if like the the fundamental tokens like you can you can value them better like they have higher floors you know there's BuyBacks there's um you know token mechanics that we've all been wanting for you know four five six years now like those things can happen in parallel but yeah the casino like it's it's not going to close as long as people have opinions um there will always be that kind of phenomena in markets I think um right so yeah um talking about memes a bit I first of all we talked about this in like our analyst chat as well I think one meme is all it takes for us to like go back to going

crazy about memes I um second thing is like we're harping about fundamentals now and I know people are harping about it on Twitter as well but like even if some memes are dead on Solon like on Avalanche right now there's a bunch of pre-sales happening um for meme coins and for other things and they're like doing really really well so I think yes we'll see a shift um but tols like you said it's going to take a long time and in between there's definitely like Wass to play nonf fundamentals as well um one more thing with fundamentals that I I think about is I think we've historically been a VC driven Market um I think if fundamentals or if we get like more maturity I feel

like more liquid funds will come in and I think I feel like we we're already seeing that this year um yeah I can only think of one right now but there's these guys called f research I don't know if you guys have seen them it's like Filipe um and Noah who's really good as well and feel like they've kind of popularized more and more like sharing liquid fun thoughts because historically like if you go on Twitter it's Kyle Sani and Jose who are great but they're like writing diet Tripes about their thoughts um I like that we're getting more and more thoughts from liquid guys syncrasy is another one yeah I was going to mention that um Arthur too from Defiance they do you know from time they had the a thesis yeah yeah so I feel like we're getting

more and more of that and I think going forward hopefully we'll get more and more liquid funds because they are really really important like especially if if you have too many VCS the market dynamics just don't work as well um if there isn't like constant retail flow so it'll be good to get a kind of a shift in that um next up I actually want to tie this into radium because we kind of mentioned these defensive things and Josh this is another one of your tweets um front ends as a mo I'm going to say before we get into this I hate radium's front end I think it's like and it's always been like I was bearish radium which was wrong but I just didn't

touch it because I was like this is like dog I I don't care like I get it everyone else is using it in the back end I'm not touching it wrong decision a lot of people made a lot of money on it but for me it was like a nogo um but now we're seeing kind of a shift like do you guys think that front ends can be a mo or do you think it doesn't matter that much I some I have some thoughts on this I mean so radium specifically is like just a super interesting case study because obviously this is Def um and a large part of I I I kind of underwrote radium personally last summer um and it was funny because I think there were also a number of funds that underwrote it over the kind of same time

time frame um and I was overwhelmingly bullish because uh radium was like basically buying back and burning a very small but modest percentage of of basically fees um and they were doing a ton of fees through uh through pump fun and the biggest criticism that I heard was like well what if pump fun just decides to like do this right and they did um and I don't you know I think it's interesting like now I think it's different right like than what we had last summer last summer I was like overwhelmingly bullish that radium would kind of get to parody with with un swap in some way there was just like so many tokens people wanted

to swap they needed to trade in and out I still think that like there is probably like a power law distribution of where volume is happening on these dexes but it's hard to it's hard to say who and what because if there's a new app in like six months that just like totally undermines pum fun and steals like a bunch of mine share it's entirely possible that their amm would then drive the most fees in the market so I think it's kind of at least right now it feels still up for grabs when it comes to front ends in general um yeah I did tweet something about this I'm trying to I'm pulling up the tweet that you you sent me uh let's see yeah so like rajie who is one of my old co-workers at at framework Ventures um he tweeted this

thing that tweeted uh Define more specifically trading is a lifeblood of onchain activity um which is like I think like a a fair statement to make right like especially crypto to date it's like a lot of people who would probably self-identify in some respect ECT as Traders you wouldn't really be here unless you were you know at least interested in trading these tokens um but I think like more broadly I would almost amend the statement to say like front ends are the most important thing it's the most important kind of like concept is like opinionated front ends in crypto um and like trading is an example of that right but like overall front ends are just a way to like engage a certain user's behavior in a way that

is like addicting or like particularly like uh satisfying uh and rewarding them to do to do kind of what you want them to do um and so yeah I think like when we think about hey like what does the internet look like in like 10 years um the front ends are probably the piece of that that most people will care about and this is something that we've been talking about like like too much um but yeah I do think like at least the most interesting aspect of crypto at least to me right now and like the area that is kind of the most ripe for uh kind of experimentation and kind of breaking things is like can you create a really

interesting opinionated front end that tweaks aspects of maybe what exists or is just like entirely novel um and can you like create a new kind of behavior feedback mechanism um because those Loops are always like open to change right um so yeah that's kind of I I I completely agree with re I think like I see exactly what he's saying he shows a list of basically pump fun Boton maker Unis swap like these are like they're all trading venues right um what does that look like in like the next few years right are there other applications that are able to drive fees uh based off of other types of behaviors not just trading I think

that's kind of like the open question yeah I I mean I think just to the the front ends controlling too like I mean you see it I mean Phantom just raised a $3 billion valuation you know like I mean that is worth something there too and obviously you know metamask and consensus and and what they're worth and you see it with um backpack on salana like trying to build out I haven't looked into their metrics recently but like you know they're trying to build out like a full Exchange in the wallet like you know the thesis that wallets as like the front end of not even just you know trading but more like a full you know D5 Financial suite at large like that's been a thesis for a while and I still think it's directionally

accurate it's just you know another one of those things that that takes time but yeah of course I mean like the the wallets that are necessary to interact with crypto like those are insanely valuable because they have they have user capture and there's only so many options um so yeah I mean I I still I still deeply believe in in that thesis and obviously you know that trading Terminals and and the Bots and and pump fun and the most used front ends like that too um I mean you see what they can kind of command there too it even goes to like you know Unis swap with introducing their fees like you know they have such user capture that like you can Implement you know some fees on on some swaps from from E usdc and and other Stables it just gives you that again like that command of the user and

I don't really think that that's necessarily going anywhere one interesting thing that we have measured in the industry like in certain spurts uh has been order flow right like order flow is king um I think it really helps to just think about order flow as like the most valuable thing in crypto like tols is I I I completely agree right like that's why the wallets are interesting because like that's where the order flow originates but the other piece of order flow flow that's not usually talked about at the same time but I think is like equally important is like spend that's why the trading venues are uh at least have been so successful because they've got they've been able to like reward this behavior of spend and make spending interesting with leverage

and so to a certain extent the best measure is like orderflow with some adjustment to Ras like return on like kind of call it like the spend to acquire a customer right like this is like the web to like advertising metric right like return on ad spend like you would use something similar to Ras to measure um basically how successful your app is at driving orderflow um like there might be some adjust ments you make on the back end of that equation to like adjust for like stickiness or retention or like how often people are spending things like that but like overall the metric is very similar right it's like uh how much did you spend to get someone kind of like

spending in the first place and then how much are they spending what's the value of them to your application yeah no definitely and I mean you make the the web 2 comparison there and like it's so powerful on crypto because of like it's an entire world you know like I mean you know Google and Amazon like these companies spend ridiculous amounts of money try to get you to click through once to spend $20 like if you capture a user in crypto like it really the scale at like the amount that yeah is passed through you like you said through orderflow like it it's incredibly hard to measure that and its orders of magnitude larger than in the traditional world yeah and that's I think also why like the value of the marginal like meme coin trading venue

right like the the value of that is just lower today than it was you know last year right because today you're going to spend a lot more in token incentives or Wars advertising whatever right you're going to spend a lot more to acquire a user that probably spends less so your rowes might not even hurdle you know that one x that you would need to be even profitable and really most of these trading venues like whether it be meme coins or even something like hyper liquid they're all going for row ases of like you know on the order of like five to 10 right like we're talking like massive Roi so you know it's not at least in my opinion like unless you've tried some new mechanism that has a

chance of like increasing Raz by some non-trivial amount uh it probably doesn't make sense to just like open up a memec coin trading platform right now because like it's just not going to drive the type of Roi you would need to see from Spenders that makes sense um I'm going to touch on two things wallets I'm very surprised that we haven't gotten like a very very good wallet yet Phantom and rabi are quite good but it makes no sense that I can't just do everything through one platform um the second thing is as far as I understand and I think this is like General consensus you want to be as close to the user as possible but what I found is that for example Jupiter clearly launched like Meteora or they're using that relationship to kind of

capture shares from radium and orc Etc um I think we'll probably go and see more and more of this of like the front ends just moving into the back end and I also am not sure if it makes any sense if you're a back end to not like hire a fantastic front end guy and try and figure that out I like Dan Smith always talks about this and curve entire idea was to just be the back end of stable swaps and they only wanted to do that um and they didn't want to have a fancy front end because they were like we don't really need this it didn't work out for them and I don't

think it's going to work out for anybody to just like build out a backend product and this was why I hated radium and I was wrong about it but I'm still gonna say it also just for the listeners we did at blockworks research right about radium a long time ago there are smarter people than me who noticed that but for me like just saying now radium actually might lose a lot just because they don't like I've never gotten the like you said Josh people work based on loops and not based on feedback loops I've never had a good feedback loop with radium I'm never going on that front end again unless they fix it even then I don't know like I'm used to Jupiter and if a wallet implemented it I would just use a wallet um to be fair I mostly still use telegram Bots I I can't change um even

though I know I'm getting shafted on feeds it's just much easier yeah oh yeah yeah yeah that's ingrained I yeah I mean trading on solo is just essentially through Photon for me and like I don't don't particularly care about the like it's just it's the convenience um but yeah no the curve front in is funny I remember the first time I opened that site I was just like I just clicked the bad link like I'm getting drained right now like there's no way that this site is legit it's funny um TOS actually I want to ask you a question because I think you got into the soul trenches earlier than me Josh I'm not sure if you did but you should also give your opinion if you did um TOS what was that shift like when you went away from like using ends to just

using Bots and then to just using Photon because I feel like photon is a completely different application to like prion and stuff right yeah it is I mean um going back to you know controlling the user and the front end like you know we talked about fees and all these platforms like it's you know it's not even everybody's aware of it in crypto now um you can think of it I don't know some people frame it as extraction um I'm more on the side that like I don't know it's a cost to to play the game more so in my mind than than extraction it just kind of you know is what it is and you know you get to I want to do something quick and you know I'll pay whatever priority fees is necessary

because in my mind that risk reward equation is there so like I don't even think of necessarily what you know people would call extraction and I know there's a lot of debates on that and um I don't know it's a it's a sticky conversation um but I'm in the shift there like it it's just more so I'm TR I the front ends I guess yeah using radio and Jupiter but I mean when I was first using those like there wasn't anything really to trade like there was nothing to do I mean I was I was buying some Bonk like periodically and that was essentially it so it was more so like the market filling a need than anything else and then once it's there it's just

kind of like I'm never returning like I mean the last time I get a Jupiter front end from time to time but I mean the last time I was on radium front end was probably I don't know it's been six months at least um and obviously you know before the pump announcement they you didn't necessarily need to go there like you know they were they were doing fine um but yeah it just goes back to the previous conversation we had about you know once you capture the user like yeah Photon has absolutely captured me like I generally use it for um Ethan base stuff too and that's just I mean that's a little more quiet and infrequent but it's just kind of the cost of of doing business yeah I I have a very different story about the soul trenches like I I

do not use the telegram I mean I've tried them um maybe I'm just like a crypto Boomer I don't know like I love like I like connecting my wallet to the protocol itself like I would say like the the most abstracted that I have the most abstractive like app that I've used to trade has been um or consistently has been like something like Jupiter um to me it feels close enough to the metal but also like the experience is just like a little bit it's actually it's much better than radium um yeah and there's let's agree on that radium's do agree yeah so I mean I got I I

started you know messing around with Jupiter like 2023 and I liked it and so I kind of just stayed using it and when the telegram stuff came out I mean listen like I just said this so it' be really stupid of me to just like kind of uh you know go against kind of what I just said but to be logically consistent I think it's good that there are new front ends being developed one of which is telegram I think it's really good like overall this is the type of experimentation that one would want to see um for me it and I think overall it kind of just comes down to preference right like some users prefer an inter face that feels more like a text message where they can just like fire things off and be done with it um and they're less fee

sensitive other people want to feel like they're actually like making a financial transaction and trading in which case and those are people like me in which case I'm G to be like usually uh at my desk right like usually I'm gonna like have screens open I might have a chart open whatever to me that feels like more comfortable but like also these are all priors right so like at some point they'll be a new application that arrives and we'll see what happens right it might it might take 80% of the market it might take 2% of the market who knows but it's always cool to see these things happen because I know people kind of Everyone likes to do things differently and it's very interesting to me that um there is

basically a subset of trenches now that basically just trades from their phone um that to me is is is interesting and it should be noted um but I still don't think and TOS I don't know how you how you feel about this but like I still don't think we're even close to figuring out like the best way to interact with crypto RIT large like I I don't think we're we're even we've even scratched the surface there yeah no I mean I generally agree with that and honestly like this this conversation here just reminded me of like when I do trfi stuff and I open Charles Schwab and then I open Robin Hood and I'm like why in the do I ever have an account it it is just horrendous using Charles SW

compared to Robin Hood and that's what it reminds me of like yeah you know Robin Hood is you U mostly you know it's easy on your phone like it's mobile first and I think we'll see that start it has been growing in crypto and I think it'll only continue up from here because that's just kind of what it has to do to keep moving forward um but yeah it just reminds me of that a lot like you know there's always parallels to web to and I think we're kind of at that space right now like you know the infra is getting good enough to you know support mobile applications and I mean that's kind of the the future of of everything so um yeah I think we're definitely headed in that direction I've been daddy Danny who's the other host he wrote about these and told me about them

but vector. fun is really good um I don't know if you guys have tried it out it's like the tensor app um I think that's the first like mobile crypto app that I used that I was like first that I I was like actually pleasantly surprised typically it's always like a little wonky um or it's very very basic I I don't know if you guys remember doing the magic Eden stuff I don't know if you guys got the air drop and had to interact with that like mobile app it was horrible after that I didn't even I didn't even claim M I opened it up and I was like this is just a nightmare I was like I'm good so bad um vector. fun is pretty good I I will say like they've built out it's it's interesting I do think that they've kind of leaned too

much into this like trenches thing where I don't know if you guys know it but it's like tick tocky um I think it's interesting but like sometimes I I get a bit cringed out about the amount of like onchain trenches talk that we have I think like it's not what it used to be it's been co-opted quite heavily so the trenches used to be like it wasn't a thing it was like you didn't talk about it you were just like yeah like I'm like I'm just like I'm just trying to find things that are like small that could get really big uh now it's like yeah dude I'm in the trenches like I'm tweeting I'm like oh anom just posted something like you know it's like they're like these trench Warriors now it's like I I don't know if it's I think it's just

it's it's changed a little bit I'm not g like I'm not here to say like oh it's it's worse like I remember when I was young like you know I'm not here to do that I just I do think like uh the trenches can be fun but like I think there are tools like you're saying that like are based basically like branded as like these are trench tools and in reality like kind of like anything else like if you're using a trench tool you're probably not going to find the thing that will like that like real people who are actually in the trenches are are like using to find the gems right so like you know this is why I think like a lot of these things are they're social apps that are using kind

of meme coin trading as like kind of the the fulcrum um and maybe it works like pump fun like clearly worked right um but I think the things that are the apps that have like gone more social but are still basically pump fun that's tough because um you know it is it is almost too financialized to be social like you almost need to like remove some of the financial element to have like longevity um but yeah I do think like some of the trench branding is like when at least when I see it I'm like this is a little bit cringe because like yeah no one who I know is like using this thing so it's just like a little bit of cognitive

dissonance yeah it it just in a way reminds me of like the overall conversation on just kind of alt and fundamentals in the sense that it's just efficiencies inefficiencies are stripped are slowly being stripped out and that's you know like trenches are the trenches because you have all this tooling now and same thing with like people complaining about alss like it look there's a growing dispersion and the market is more efficient just kind of what happens to markets that mature and all of this kind of ties together to me in the same sense that it's just like this class is is maturing in real time and a lot of the early efficiencies are being stripped out whether it's in you know altcoins whether it's in fundamentals that underly tokens whether it's in the infrastructure and tools that I use to

trade coins like all of you know the early efficiencies are mostly gone now and we're kind of waiting for for that next phase I mean there were a few months there where it was like I think people sometimes get upset when you mention that like mem coins might not do the same as they have um but I think it's pretty C clear like it's become gentrified first of all on the one hand like with the trenches stuff everybody's in the trenches somehow um like you're not in the trenches if you're going to e Denver to do stuff that's not it you know and then on the other hand it's just been dominated by very very sophisticated actors to the point that

it's too difficult um even like TLS Josh me I would say like we're at a level where you're supposed to have some Edge but like that edge has steadily declined I don't know about you guys maybe it's a skill issue for me but speak for speak for yourself all right no but I I think like everybody realiz it's gotten increasingly difficult and I don't think it's because of like fair play I don't think there's like the fact that we're losing fairly it's more like there's just somebody with perfect information who's launching the token consistently and very very manipulative about it um versus those who are like before you could ride the wave a bit with like clear manipulation

or like some form of cabal activity um like I remember when people were like cabal is good now it's like not as good but before it was like yeah the cabal's in it let's all get in it um back in my day yeah back in my day oh I can't believe I did it back in my day um I mean like my my take here is like uh the like part of it is skill the other part is just math like it's going to be harder to do if you if like if you were in the trenches like in I mean I'm just going to use 2023 to 24 as the example but like that was a great time to be in the trenches so to speak um but like doing the same thing is just now harder

mathematically like all equal it's just going to be harder because of alha Decay right um the capital has moved in a way where it's like now even more Consolidated amongst uh like uh smarter actors and it just makes it makes you know someone who is like full-time trenches it makes that job more difficult now it doesn't mean it's impossible and it doesn't mean they're still not going to be like very very lucrative opportuni is doing that um but you have to stay like creative you know because if you don't you know all else equal again like your your ability to generate returns in Access of the market it has gone down right um and so your

Alpha has decayed um but yeah I think the other part of it is skill which is kind of the creativity component like if you're able to kind of like stay on top of things yeah sure like your opportunities haven't necessarily like gotten worse um you just have to be savier so yeah I mean I I think like I've seen a few tweets about this um Vance actually tweeted something about this like today so to speak it was kind of like in a similar vein it basically said like if you come to crypto like uh you know just to make money right like if you come in with this idea like oh the money is going to be easy like you're in for a pretty brutal Awakening I think like it's definitely not easy money uh in fact

it's probably harder money um uh no pun intended it's probably harder money than like uh you know other Industries other Tech Industries right like you you basically have to like come in every day with like some new kind of mentality or or opinion on the market or else like you're on the wrong side of the trade um and so I think in that sense like yeah like unless you're developing alongside the market and like refining that edge yeah it's it's gone um or it will it will go uh so yeah I I completely agree just on the on the point about just you know once it's crowded and your Edge is gone I remember like get the

peak of all the AI coins and I'm like looking at my my wallet I'm like God I have like 20 of these and I I can't keep track of them anymore and I remember saying to myself I was like all right I'm gonna spend four hours today like making a notion like you know outlining what each one does what the differentiate that was literally everything down 60% the next week so that's always a good sign too like when you're overwhelmed like specific like you know especially going to you know like the AI coins and stuff that is that is fairly new like it's time and time again when it becomes like overwhelming or you find yourself holding like an abnormal amount of coins and you're just like oh man these they're kind of going up and like oh there's so much to track I can't keep up anymore like that's a

good sign to just take a step back and be like okay what is actually going on here and is this at any ways sustainable because most of the time the answer is no what's up guys um welcome back to zerox research today I'm joined by Antonio from dydx thanks for coming on Antonio hey thanks so much for having me the app chain thesis has been validated now with dydx and Hyper liquid and uni chain um as well as others where do you see that space head moving forward yeah and we were really early adopters of app chains generally we've been early adopters of a lot of new types of Technology even within crypto um so we were pretty much the first major project to build on on a layer two

um before that was all the rage um and and so I really think app chains are the Pinnacle of where you see these really sophisticated really mature types of products within web 3 going and the reason for that is it just gives you a huge amount of customizability it's harder to build no doubt um because you have to own pretty much everything from a development perspective yourself all the way down to consensus um but it gives you a lot of flexibility and that's why we've been able to develop things that are able to support on the order of thousands of orders per second all with no gas fees um and really low latency as well like you couldn't do that on a base like you can't really even do that on a salana like you don't

have all of salana to yourself um so you have to you're sort of forced at some point if you want that amount of performance or maybe in like a Unis swaps case they want just some amount of customizability with what they're doing um and So eventually you have to roll your own thing so I I do see that as the end state for a lot of these applications and it's exciting to be there now with dyx perfect and um would you say that the I guess the ultimate goal for crypto is being able to trade any asset you want at any time I'd say that's part of the goal um it's certainly being able to to trade anything you want but it's more generally than that I'd say the goal of crypto and web 3 is to give you the

power you the user the power and so you can trade whatever you want you could be a market maker easily um you can you know add any new type of asset um and and all these things working together I think are really important since in Additionally you could have access to much more powerful types of financial products than likely you could elsewhere and derivatives and leverage those kind of things and really everything that you see in web 3 is just giving you the user more options with what you want to do and more power um and that I think is a big thing that we can play into with dyx all right last up we're going to do something that not a lot of people are brave enough to do we're gonna talk

about crypto gaming for hey what did we just talk about you look where nobody's looking you know you don't want to go to the crowded areas yeah all right um I I honestly don't even know how to start this Josh how are we going to start this um maybe let's do Ronin I guess yeah Ronin is probably the big one okay I'm going to say what I remember from when I was doing a lot of gaming stuff and then you can disagree with me and say this is irrelevant now um sounds good I remember pixels was doing good in terms of users I remember that Ronan had a ZK announcement um and that's really it I

the last thing in my mind is that Ronan was trying to build out this like m&a thing um there were just like a lot of games were laun launching on Ronin for some reason and then the explanation was that they already have a user base and people comfortable playing there so typically what ended up happening is that games would go to Ronin to get more relevant um since then I think we've had two chains that are somewhat gaming focused abstract is the big one um there's one more I can't remember maybe bar chain but I don't think I've seen anything on it yet but um agree disagree completely wrong somewhat wrong what do we think um so I do think that is basically right um the way that I frame

gaming mentally is not how I think a lot of people have framed it historically um there were two really good blog posts um I didn't write either of them but uh I did write a blog post actually in like 2022 about how I think the future of gaming is like and you can find it if you uh if you search on my mirror but like it's one of like very few blog posts I've ever written about RuneScape and Robin Hood like somehow like smashing together and like creating this like love child that probably looks like gaming Finance something it was probably a little bit too early to write something like that because I think at the time people were like no uh but then there were two really good blog posts

one of them was written by jez um this was like maybe two months ago like right around the new year the other one is written by a a smaller account Loris um he's like internet multiplier fund um and both were really good and both basically talked about like crypto is a game so everything we've done from like call it 2015 2016 to now it's all it's all been a game um and you're you know it's first person and you are you know you got to pay to play and there are all these kind of different rules and like characters and you know strategies and you have to kind of learn over time which ones work and which ones don't and

there like skills that you up level and like if you think about it like just like remove yourself from where you're sitting right now and you think about you're like oh actually like that actually makes some sense right um and so I think I like to apply just like the game theory framework to crypto as a whole and then just look at that on like a meta scale and that's how I view gaming it's like it's just the meta of crypto just like like in a new type of framework but it's the same thing right it's the it's a it's a game that's being played there are strategies that work there are strategies that don't um you have to understand like kind of micro structure that exists within the game and and kind of like the best kind of strategies and ways to play um and then

you also have to like learn right like there's a degree of like learning that comes with that so that's my kind of like I'm not even going to call it like the bull case for gaming it's just like the case for what gaming even should be or is um and then from there I think you start to think about like okay what are the games that work under that kind of framework and then also what are the distribution channels that exist during the under that framework so um Ronin has obviously been one axi was a huge part of that pixels is a huge part of that um and then like abstract and other chains that are building similar infrastructure for like basically Game Theory like packages to be built all around like also probably cool things to look at

um but that's kind of my that's the way that I kind of frame gaming mentally and then from there it's a question of like kind of what we were discussing a little bit before and we can kind of dive into it but basically how uh consumer Behavior can be measured and one way it can be measured is um you know via this kind of like return on spend or like I think the most broad metric to like think about mentally is like what is the ROI of a certain feedback loop and like just start there um and I think if you like that's where I start to pick apart like okay which games like take a 100 games which ones have the best feedback loops it's like

it's very easy to measure that you just like look at like input and output like how much is how much is spent to acquire the user how much do the user spend and that's what I look at for all these games they're just like um little bit they're quite literally just like spend experiments um so yeah that's that's the way I would frame it yeah I mean that was yeah that was good that was good go ahead B um I was going to ask two questions um yeah first of all now I'm come I'm gonna come from a very practical point of view because I haven't spent as much time thinking about it as you have um let's take two examples let's take crypto valleys which I think you remember um

and also defi kingdoms um because that those are the two big ones that I can think of in terms of these feedback loops um now I agree with you in that it is exactly like defi in a sense and I think a lot of people agree with me on this because there is like a certain it's when something is very very financialized I think the way that people interact with it almost always converges like I think it's very very apparent with defi kingdoms um just because it was very much like Idol RPG spend money make money with crypto values I think it was way too much as well because people were like I don't know if you guys remember this but there were like Freds going around about how you need to spend at least $150,000 to be able to get ahead in valleys and then it like went down a

week after but um I do agree with you on that the incentive side um the way the loops work the one thing that to me has always been kind of difficult is designing in-game economies is very difficult from a centralized point of view the way that I feel like the good ones work is kind of a black market that gets adopted into becoming a real Market um I think when you put in real money into it it becomes a bit difficult the second thing is I feel like we never do like the very big economy games we always try to do like very small ones I feel I think pixels might be the only one that you guys are trying to make it

a bit larger because there's a larger game base um the second one is everybody always brings it up Eve oh I'm I'm doing the name wrong you get what I meanline yeah Eve online that's the second one that's everyone's like this one's going to be massive scale but I feel like so far with games like axi great game very like worked very I think it did a fantastic job for what it was um but it's small scale and it's hard to like make that massively work um in my opinion let me know if you no I I agree I I actually compl completely agree and and tox i' love your thoughts here too I my like quick just like two cents on

this is like um there two types of games that have we've seen in crypto there's like hyper casual quick easy to learn fun to play whatever and then there's like Triple A I'm just going to say these are like games that are more expensive and uh harder to build correctly um Eve is an example of a game where and it's a great game I've talked to Hillmar like it's really cool what they've done because they basically taken like existing IP that people love and there was already like a secondary market for assets in the game and basically just said hey we're gonna like add crypto to this in a way that works very cool idea works for them I would call that an outlier uh it is definitely not something that I think like every

single crypto game can do but they had really good IP the difference is for them they had like dieh hard players like they had people who were so obsessed with it already that like learning the ins and outs of the economy and like how to trade things and like all the different resources like like that was something that took some time there was a learning curve there uh so I would not call that a casual game and I don't think they would either um no what we're what we're working on at pixels is like we're taking the other side of that we like all those aspects resources skills in-game economy we just want to make it so much more casual that like pretty much it's the most accessible way to access that type of economy it's just scaled way down into something that's like there's actually a name for this

kind of game it's called like a cozy game um and these games do exist outside of web 3 um but yeah like that's kind of the idea there it's like those two camps and like we are just skewed heavily towards the Casual side so cozy game stardo Valley is I feel like the biggest example of that right exactly the thing I want to say about these like super um the um I I forgot the word games like uh not casual non casual the ones that are like really yeah yeah um I was say I was thinking about this back in the day um I have this massive gaming report that I

wrote and the the one thing that I thought of that made sense is if we're going to go gaming and we want to make everything fully on chain which I don't know if there's if you have to make all gaming fully on chain but let's say you want to um it wouldn't make sense to do that with a triaa game I think you want um you can do it with like Eve online but only because people are really really into it like you need to nerd snipe people for that and there's only a few nerd snipe games that are like I feel like popular are run escape wow I guess Eve online but like there's also unpopular ones like I have I only play one video game it's called Europa universalis I don't know if anybody knows it here but I have like 8,000 hours in it and that's the only game I

play and if it was fully onchain like I would probably get nerd sniped it and play it but I think that's like a very different like you can go for that and you can go for the the Cozy stardo Valley you know I'm just chilling and clicking a few buttons but I don't think that you can go for I don't know like the big one has always been like FIFA Ultimate Team online I don't think that's gonna work why the fck unless you're like selling like and this is the thing every everyone you know this was like last cycle but everyone was talking about like oh yeah but then they could do it they could sell like nft jys or like nft whatever it's like yeah but like that doesn't actually add a fun element to the game at all in fact it probably DET tracks

because people don't want to have to deal with these microtransactions to do things um so I yeah I definitely agree there the funny thing uh about these hyper casual games is like the main players of a lot of these games at least conventionally were like 40-year-old women who were like spending like you know they were like doing at home and like you know playing like Candy Crush and like spending like a crap ton of money on their phones um like this is we've seen this behavior before with the Casual stuff the AAA stuff for sure you get like these Cults that form and you know you can definitely get like basically groups of players that are like super involved um but the hyper casual games usually have like a almost

like a lower hurdle to to kind of get player attention initially the hard part is like how do you keep people spending so that's even with pixels like that's a tough aspect for us it's like how do we kind of continue to retain spend even if it's happened once already that makes sense TOS I'm gonna pull you into this conversation I know you're not a big gaming guy but this is how I'm going to do it when was the last time that you played a crypto game and what did you not like about it and what did you like about it oh man the last time I played a crypto game did you look at no no no I didn't Bridge blast um good idea probably like that was a good call back in oh yeah yeah um

what was it it might have been uh dungeon was it dungeon it's on uh it was on ARB gosh what is the name of it it's been a while that was probably year and a half ago year ago um I'm blanking on the name of I'll think of it it's not C no not um but I mean just to the overall conversation like and i' like your thoughts on it Josh like I think the one of the hardest parts like in-game economies when they're isolated like they're difficult to get right on their own and I think once you introduce like the overarching token like it's kind of out of your hands in a way because the speculators like we saw with like axi like once that runs up to a certain

price like it just throws the entire in-game economy for like what you modeled out what you could have thought like everything is kind of just eliminated because the price of the overarching asset like that reflects down into the game and you know assets other assets like the smooth love potion and axis like themselves like everything just kind of gets it just gets disorder and chaos and it's all because of kind of the overarching price of the token and once that's launched like it's kind of out of your hands um so that's like and I wonder how you think about that Josh like with pixels I think that is kind of the hardest part to control because you don't really have any control over it whatsoever yeah um so we at pixels we

call this game balance um we have people working on it like full-time because right it is like a really tough thing to to solve for it's actually not something you can really solve it's something that like you basically have to like do monthly sprints on like hey how's game balance look today we have like basically mathematics that measure game balance and then like you know I hate to use the Buzz AI but like we have basically intelligent type of systems that like look at game balance measure it and say cool like what do what parameters do we need to change now so that things kind of stay normal um we had a really interesting team on on game economy side of things like there's a

really cool public good that a separate external team built that we're really close with called pixels tips so you can check it out it's pixels. tips um and it's like a really cool way to track resources in-game Market crafting energy lands guilds all of that in the game kind of reminds me when I first saw it this was like two years ago when I first found this I was like this is literally basically like these Grand exchange wikis from RuneScape just like you know compiled into this one type of um you know kind of like Market aggregator and like if you click on some of these like rare type resources like Adam axium or something um you can like see the price of this of this resource and the

quantity in the game and so I've just been like you can talk to Luke and like some of the rest of the team like I'm definitely the most obsessed with this thing like out of anyone on the team I'm like this is so sick like if this existed in RuneScape like oh my God like when people were playing that'd be so dope um I just think it's pretty cool and it's something that I want to leverage like where I my goal with pixels is like I want to open this up because of course we're going to have people who are coming in specifically to play the game but like there's also another cohort of people that we've touched on which are like the Traders the trench Warriors whatever right who like their main mechanic is trading we still want to give them a way to

participate and like to me this seems like maybe some type of kind of playground um but yeah like stuff like this I think is just like so interesting because it's these are the things where I'm like okay we're opening up in game economy we're starting to think about like other ways for people to play whether they be Traders or like Gamers um and yeah I don't know I just think stuff like this is super cool and interesting and like you know eventually like you know it becomes kind of like you can play in the same way that we were talking about like The Meta strategies of crypto there will be like meta strategies of each game where it's

like the more strategies that exist the more potential players you can have right if your game offers a way for Traders to have fun and for like true grinder Gamers to have fun cool you like you know your Tam is larger than if you were just like a trading venue right because you just have more potential users so yeah and there's some cool stuff that I can't talk about that we've talked with other people on where like there's there's some cool stuff around like economy and resources and assets there um that we that we could you know think about doing there too so um yeah but I do agree with your overall point that like getting game balance correct and like to a point where it

just doesn't fly out of control might be the hardest thing and so like we have a team working on that we have a data science team that's like basically measuring uh you know user data and retention and things like that um we have like the actual like game design team we have like so like we have all these basically like subgroups within pixels that work on different aspects of the game um to make sure that like none of these things go out of whack because you're right if they do it kind of like it can make your it can make your life just so difficult and like the odds just stack against you for sure yeah no I mean that it makes a lot of sense and I mean just going back to the earlier conversation about you know capturing the user like you can see I think axi

tried to horizontally expand with like their own decks and I mean you can see how these things like you know once you do have that user flow like you can introduce other aspects you know like your own decks or what else is in their wallet like you have you know not control of it but you know you can start there's there's something that that can be built out there it goes back to kind of the wallet conversation too like you can you can see the vision of what you know the overarching and what it can entirely Encompass yeah completely agree yeah it's just like a different type of order flow right so right yeah all right um Josh thanks for coming on do you have anything you want to tell the what's your Twitter handle and also do you have

anything that you want to sh um specifically regarding pixels for people to do no tickers no tickers I'm not gonna I'm not gonna shill anything I think if people are interested they should pay attention um and you know we have announcements coming out so like you know pay attention um my Twitter is Josh Litman my last name is lit TCM an so Josh Litman um I post hot takes I post just anything that comes to my mind but um I am really focused on like user behavior and um the economics that that kind of go alongside that so um yeah very good um this bless thanks Josh thanks Josh thanks Lads see you later

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