Coinbase's L2 Edge: Can Robinhood & Arbitrium Catch Up? | Analyst Round Table

Transcript

as the last comment favorite merch of the conference goes to the bucket hat from the modat to day it's a really nice bucket hat and like I don't know whatever this is going to be going to be like a lasty but it's kind of stupid what's up everyone welcome back to another episode of zerox research March is just around the corner and I want to make sure to give you a quick reminder to not top tick your prices of your D London tickets if you use codes 0x10 at checkout you can lock in a 10% discount on your ticket don't miss out on your chance to get ahead of the Curve I'll see you in London before we get into today's episode just a quick disclaimer the views expressed on this podcast by either myself or any guests are their personal views and do not

represent the views of any Associated organization nothing in this episode should be construed or relied upon as Financial technical tax legal or other advice all right let's jump into the episode all right guys welcome back to another episode of zerox research the blockworks research team is back to bring you another analyst round table today is Monday March 4th and I am joined by effort capital and break from the blog a research team to jam on the latest Market happenings thanks for coming on guys thanks for having us thanks for having us all right to start off the week we have some news and governance updates off the back of A6 Z's hundred million investment into igen layer last week the protocol has now hit 10 billion in tvl what do you think this

ends up say at the end of 2024 guys I mean you Milan dollarwise yeah yeah dollarwise dollar TV wise not zero or Infinity yeah I mean it just doubles or triples and then you get two or three Bill more in and you can calculate from that I mean I think unless like a new uh super Innovative project launches right now on igen layer where like people can deposit it I don't think um deposits will grow that much or then like some of these LRT projects that are currently um like

giving out points or some derivative of a point uh like increases their point allocation massively I don't think people will lock in more Capital at least not right now if the market structure stays similar to what it is right now where like everybody is chasing Bitcoin stuff and like meme stuff and then we'll probably see a rotation to I don't know something really Rel to blobs or um I don't know something further on the risk curve like it seems that everybody is so caught up on like getting these high returns and like rotating daily so I would be surprised if like the TBL grows a lot

from here on but I might be massively wrong if like people decide to stop rotating at some point and then just park Capital into I layer yeah I think just off of uh um eth the price appreciation I definitely think you could see north of 50 billion so I could definely see a world like at Peak market cap if eth hits like 14 15K like that sounds maybe a little crazy today but I definitely think like 10K is potentially in the cards depending on how nutty the cycle gets um I could see over 50 billion just on the deposits that are there today but if Ian ler launch launches a token in the near future uh launches igba and then heavily incentivizes

um like I da or or E3 staking I could see you know I think the the highest I'd see is 100 billion do I think it's actually G to get there no uh I I probably bet like over under 50 billion approximately if I had to guess so wait you're betting that in the like pretty short term because right now if I've understood correctly like there's no avss other than IGN da that's going to launch like in the next let's say three to six months so like there's not even that many places to farm [Music] yield right but I think that with I DA's launch I'm sure that I layers like it's

so heavily backed and there's so much hype around it like I'm assuming that you're going to see a bunch of different rollups try to do like what the celesty approach right like celesy underneath you're going to see I da underneath or whatever that catchphrase is every R's going to try to now realign with ethereum and IG da uh I think you're going to see a bunch of avss come out of the woodwork like right after igen launches because they're going to probably try to get some allocation of those emissions or some of that liquidity mining campaign that I'm sure that they're going to be launching later this year um I mean look we're at 10 billion deposits today and that's at eth at what like 35 3600 uh I definitely think you could see over north of 50 billion uh and I think like an extreme

scenario it get to 100 billion I don't think it's going to get there but I think 50 billion is most likely like locked in uh unless you see massive withdrawals like post I token launch which I don't think you're G to see really it's probably one of the highest eeve places to park your eth and your like Stak eth for the foreseeable future in size yeah I just I I just meant that like um like I da is moving in stages and stage two is when agend Da launches and then stage three to my understanding is when like these other avss are supposed to launch and like based on how slowly I layer has been moving which isn't the bad thing in any way by the

way um like I think it's just going to take some time for these other avss to launch but having said that like that doesn't you know mean that Capital wouldn't flow into that place if things get really nothing I haven't looked at this but I wonder what the recent uh blast withdraws if like did we see any new inflows to I ler like specifically from blasts I think the numbers have been quite misleading or like I saw the founder tweet that uh the layer two or the rollup itself has now like 2.4 Bill TBL and the staking contract or like the contract you moved funds to originally

still has like almost 200 million TBL so I don't know if that much Capital left the plat for at all that's good good for that yeah I think like L has 30 billion in TV Ian ler has 10 billion in tvl liquid restake protocols have five billion in tvl I think that just IG as a whole easily goes like or iary and liquid resing protocol easily goes above like 50 billion the cycle and you're seeing for example like morphus they use like Stak D to participate in their Fair launch I wouldn't be too surprised like if that trend continues um or for example once you get the first AVS air drop and then like just more people p in because

they're expecting 10 more AVS air drops over the next year um but moving on into some governance things arbitrum is debating a $400 million gaming fund with their pretty big treasury I'm not sure how this will work potentially uh I definitely don't think ad Dow should be managing a gaming fund and I'm not sure I mean it'll be a pretty sick job right if like there's like some like d v you get to be GP of this gaming fund and then I don't know you make like 2% management fee uh and like a 20% carry from the perform of this gaming fund but it also feels like there's a bit of a principal agent problem here since I can just like eat the money however I want

um interested to hear our takes on whether a gaming fund or just ecosystem funds in general should be managed by a doubt or for example like a more centralized entity such as a foundation I don't have a problem with a investment fund as long as the manager has like a really long track record or has a kind of strong reputation so that the person who manages the fund is like disincentivized to just take on a massive amount of risk and ye into everything or there has to be some kind of an incentive to like uh not be super Reckless with the money and overall I think a gaming fund would be pretty cool to see um

because I guess that's still a like vertical we haven't really seen develop that far compared to some other places in crypto yeah I think uh there's probably a 90% chance most of that Capital goes to zero in my opinion I think gaming is probably not gonna happen anytime soon and I don't think there's a difference if it's a centralized capital allocator or or a dow trying to Capital allocate in the gaming crypto intersection I I think it's mostly G to there's G be billions of dollars being wasted I think in that area until like finally some something hits but u i you know ideally I would love to see the Dow manage us uh in a perfect world but we aren't in a

perfect world um Dow's haven't even figured out how to like do basic things uh you know to structure their governance and have you know uh efficient and effective um governance processes and and what have you so I'm pretty bearish on the idea today uh but but at the same time I mean I I think arbitrum Dow and their governance in general is probably one of the most for Forward Thinking in the space um I think there's a lot of really active Community contributors there that really care about the future of arbitrum and The Wider ecosystem so I wouldn't bet against them if there was one Dow I wouldn't bet against it's probably that that uh that Dow uh but it's gonna be really hard to see like how they actually like manage that amount of capital effectively um you know would

love to see it not be a gaming fund but uh yeah I mean those are my overall thoughts nothing like too insightful bro is such a gaming hater it's just not gonna happen like onchain gaming I I'm sorry for any of the VC funds or uh that are out there that are specifically focus on gaming like I'm just so bearish on that like I don't think it's gonna happen anytime soon um I think maybe Scott sardo's uh project that I'm quite interested in just because I'm interested in him as a founder and a builder but for the most part I think it's just pixie dust I don't think there's really anything there to for for onchain gaming yeah I mean I see where you're

coming from but going back to your like Dow point of them making investment decisions I still feel like it's a tough problem to solve because it's not like voting on some I don't know political stuff or like you're investing capital and that requires some like specialization so either the down uh most of the people in the Dow just follow like a few thought leaders and then that's just the same way as uh option two which would be like initiating a some kind of an investment committee or a fund or whatever like I don't see it working through you know decentralization or at least not um

where the industry is right now yeah I was actually having a conversation with um another Community uh and they're also thinking about setting up a VC Dow Collective type thing and I think one of the biggest things they have to worry about is like make sure Dows don't get like adversely selected so like all the good deal flow goes to a6s of the world the poly chains placeholders what have you and then all the ones that get rejected like oh well we're just G to go to the Dow because we know they're probably more likely to accept us uh so I think like that's a concern and I would love to see maybe VCS that back arbitrum actually allocate some of their own time to give good deal flow and get and help like structure some of the deals for on behalf of the

Dow so like to your point like a investment committee that's specifically byy some of like the VCS that back to arbitrum in addition to some like Community contributor members as well um just to have you have like a good mix of subject matter expertise but a good also like some like the community Dow Advocate type uh entities that are on that committee as well to make sure that they're looking out for the best of the the wi arbitrum ecosystem so um yeah I mean they're trailblazing with this kind of initiative love to see it succeed again regardless if I'm bearish on like that exact sector or not doesn't matter but um really looking forward to see what comes out of it I do think that it would actually be like a really interesting experiment to see if like a

dowed VC or like a dow govern investment committee would actually outperform maybe not just withing gaming but like a general a VC would outperform uh sort of like an overall VC because I mean like ultimately the people people know best what the people want or at least in this stage of the market right perhaps the general like sort of like onchain population knows exactly what they want what would find product Market fit better than for example some like investment Analyst at a VC fund so I do think there's an argument to be made there but I've definitely heard the other side of the argument to that you should probably leave it to the professionals rather than onchain Dow um but yeah um another super quick update in the governance section is that

unisoft is still debating over the specifics of Fe switch the token price is still a lot of uh from before the proposal and implementation is a very non-trivial thing for the Fe switch so it's good that they're sort of like talking this out rather than just yeting it on chain into a snapshot and then just figuring it out after that um but yeah another thing on the news front is an alien Punk has sold for 4,500 e um I think this sort of in conjunction with node monkeys and especially like alien node monkeys sting for over a million dollars a piece and I guess nfts are back but we can touch on nfts a bit more later I know brick has something cooking

for us in the Hy Kone segment and then just sort of two last things on the news fun the first is that frch may be back apparently their team has confirmed that points are 100% Community owned I don't really know what that means to be honest um I would have assumed that the points of community owned in the first place but maybe like VCS who are using fch and like Racers points don't count towards the overall overall points but I don't know there's some musings on the timeline and the last one is Robin Hood and arbitrum teams up to offer softs to users and I think that was like a little more interesting just because I'm curious to see if there's going to be any more large Partnerships that come out similar to this I mean like coinbase

obviously has base Robin Hood now has arbitrum you know who might choose optimism would it be like a rud or whatever and who might choose I don't know like a polygon cdk or like CK evm J but any thoughts on the last two I think it's super interesting like coinbase and Robin Hood are essentially the same company but they're going at it from two different ways like Robin Hood was obviously more trafi focused but trying to on board the millennial and genz population with their easy interface sorry easy user interface and really just kind of bring trafi I think to the 21st century um and and they're creeping into the crypto web

3 landscape and then coinbase is inherently a crypto native entity that's going even more crypto native while going on chain but I can definitely see them in the near-term OR midterm future like bringing equities on chain uh and having um to yeah I guess in general tokenized stocks maybe even stock trading within the coinbase platform so you're definitely going to see them kind of converge their business models over time um but it's really interesting seeing like the optimism coinbase team versus the Robin Hood arbitrum team and to your point I would love to see like who I have to imagine polygon now has something cooking like right like we love to see maybe like JP Morgan like launch a roll up on polygon cdk like that'd be pretty really exciting uh really excited to see I think like the

next Frontier of like all these trafi and uh fintech companies in general kind of like push on chain I think it's really like signifying the idea of like growing the pie the more users the more entities that we have on chain the better is for like the average uh you know user on chain overall um who's going to win I who knows but I think this is like a really big win for Arbitron because I think at least over the past 12 to 24 months you can definitely say that optimism has won the BD front specifically between Optimus and arbitrum this is like the first major push that I think we've seen from arbitrum on in BD and I think Robin Hood's like probably the best partner they can have landed uh at this time so I'm

excited I'll just say that I love hearing effort talking about coinbase always makes me happy to the Moon all right thanks guys that's all for the news and governance update sections and now a quick word from the dydx of subow thanks to our fantastic sponsor dydx all right moving on to this week's dydx segment this week we have Valentine the Ops lead at the dydx Ops subow thank you so much for joining us today Valentine thank you for having me yeah great to have you here so the offs sub helped to deploy the dydx trade fund and and worked to validators to launch the chain what's on the dydx Chain road map for

2024 for 2024 we're focusing or the ecosystem is focusing on like three um core buckets and these are the core trading improvements so improving the core um trading experience um enhancing the user experience overall and permissionless markets um so for core trading improvements we want to increase the reliability of the exchange software add new trading features that focus on speed and accuracy of the exchange um but also support um C+ plus rust and go for um API trading for the user experience um we want to increase um the onboarding of new users so we for example we

integrated okx and coinbase wallet so you can log in with those basically make it easier for people to to to start trading with with the DDX um do trade site um but also add um alerts for example for liquid liquidation so that people can avoid getting liquidated and we can kind of enable that to some extent all of that sounds super cool and sounds like you're great enhance a sort of overall user experience I guess following up then then how would the op sub do specifically help help dydx vets overall goals in 2024 um we will um continue to provide resilient infrastructure for the dyx

chain support the upgrades and enhancement of the dyx chain as well as um very fairly soon we'll deploy an Android application and to um be able to trade with any Android phone um um but generally identify areas of me Improvement and coordinate these improvements effort within the dydx ecosystem got yeah I appreciate the clarification there um so the last question on my end what does the operational process that structure for the off sub look like so um we are a team of nine people we have five trustees and four core

contributors um the core contributors kind of focus on the day-to-day um which I'm one of them but we have a technical project manager a site reliability engineer so have you on the technical side making sure that um the exchange or our front end is up and the applica mobile applications are running but also backend infrastructure like the index that we have contracted out um coordinating these um infrastructure pieces as well as coordinating the communication between the validators um that is sort of our day-to-day um day-to-day the day-to-day activities that we need to um keep track off and um

enable everybody in the ecosystem to be able to work together to keep everything um running and and up to dat yeah I have one last quick question actually so do you mind talking to me from sort of like a organizational structure where does the subow lie for example is it like the Dow is here and then the subow like lies below sort of controlled by the Dow or like is the sub Dow to the side of the main Dow yeah we have been mandated by the general dydx Dow so by every token holder um with a budget for 18 months so we are below the Dow as general but are independent independent subow we are independent for these 18 months and

but report back to the to the Dow and um so I think we're below below the dyx St um with a set task and a set um budget to solve the Mandate that we've been given by the by the sub by the Dow sorry all right thanks Valentine for coming on now moving on to our hot seat Crone segment all right now moving on to our hot seat Crone segment uh I'm going to throw myself in here first just because I came back from E Denver I want to give a quick recap on a relatively hectic conference I headed to Eve Denver last year and if I had to summarize last year in like one word it was just weird like it was a

really weird vibe energy was like low there were a lot of like random projects that seem to have no direction and or even like no clue in what they were doing in general but this year had really really different Vibes for a a few different reasons the first was just like the energy and the crowd I feel like overall there was a much higher quality um of audience attendings and also sort of like events being hosted just the average person that you talk to was a lot more interesting both in terms of background what they're working on what they're thinking about um and yeah also the events I would say the two narratives of the conference were definitely modularity and AI every day I think Celestia was hosting an event like

literally every day and every day there'll be like some large AI event and you know you would have other large AI people like penzer Aon noas um and all of the large like VCS there and I think those two were by very very wide margin had the highest like percentage of events at e Denver probably weaking was a close third and everything else was like kind of drowned out in the noise right and I think on the AI front something that's like really interesting was that anyone you talked to they were like oh yeah I'm like super interested in AI but 95% of people like didn't have a good take when you ask them like what AI was about what projects actually make sense or even like what any of these

projects did but everyone was just super super duper bullish on AI interpret that however you want to um and there were people that just straight up told me like oh yeah we have ai in our name but like we're just doing that for the narrative so yeah it's probably a good thing maybe a bad thing for the AI cycle to come um and yeah just a few other random thoughts like in off ability for roll up I think that's like a loing question that a lot of people had or like just interoperability within the monitor sort of vision it's still something that people are sort of thinking about and there were a few like sort of technical things where people were like is this like a real thing or is it like a complete scam you know I'll believe it when I see it

and one interesting point was that like even though it was like Eve Denver I don't feel like a lot of people were talking about like ethereum as a whole to be honest like no one's talking about like EIP 444 no one was talking for example that much about like rollups as a whole um sure there were definitely people talking about like reaking or for example um just like General eum ecosystem but yeah but that's also perhaps because I didn't talk to like that many like people like super duper like in the ethereum weeds there's just like a lot of like generalists like where that's like DCS or whatever but yeah uh good event I'm going to take a Breer here you guys have any like

questions or anything curious about what happened at e Denver if not we can move on no I just thought it's interesting that you said that this year people were more interesting than the last year although You' think it's the other way around where there would be just Builders last year and then this year you'd have more like I don't know Travelers yeah yeah I do think that's an interesting Dynamic cuz you would thought like as the market heats up like more like randos or retail uh come to Eve Denver and so the quality should decrease but for some reason the quality increase and I think if there's one more thing to note was that like there were a lot more Asian participants this year than last year it honestly felt like half of Singapore was in you

Denver that's cool to hear and also interesting to hear that like crypto is that cyclical or like now because nothing has really materialized within the ethereum ecosystem like or things have materialized but there's just other narratives leading right now so that people just want to talk about that stuff and uh I guess a lot of the time people don't really know the details of what they're talking about they're just following the narrative and then like investing in something or getting interested in something but then not willing to like you know do the research I mean I'm not surprised right like we're we're we're constantly in like new narratives uh and right now I

think crypto is just following like the the traditional trafi narratives right now which is obviously predominantly AI um you can definitely see that Celestia hosted a bunch of events in the token price of Tia because it just keeps going down uh today at least it's down like uh four four and a half five percent so I guess they had to sell some Tia in order to fund all the events um it's really interesting I know you said bit tenser was like majority of the conversation around around the I guess the AI narrative and it was more quiet on on other fronts um I'm curious to see if there's G to be like some project that tries to I guess be at the intersection of modularity and AI I guess maybe ritual

is because I know that they're going to be using like IET I know they partnered with them and they're also going to be I think one of the first avss on igen layer and correct me from wrong there but uh was there any other interesting AI projects that you maybe have heard about uh or or anything else you thought like a more traction than you would have believed like leading into eth Denver not really to be honest um I think there were like interesting business decisions from like a few like AI related projects I think for example like one of them is kaido AI so for those who are unfamiliar with kaido AI it's a I think Market

intelligence product is probably the best way to put it um it's like a AI power it's search layer uh for crypto and it basically gives you insights into like Market sentiment like sort of like mind share they scan like governance forums etc etc and just today they announced that they were gonna launch a bit tenser subet um and I wouldn't be too surprised if you see a lot more of this like just like sort of tangential like B2B or like SAS AI companies deciding like okay I'm just going to launch a bit T subn subnet because these guys are emitting like $5 million of Tower day or whatever right and that's probably a lot more profitable than whatever they're making today so I think that would be one interesting area like sort of hous

seeing Web Two or like even like web 3 but non like blockchain not offchain like AI companies sort of go deeper into the onchain space that's definitely like a trend I would look at and I think another thing that I would sort of pay attention to would be AI in combination with autot tech right whether that's like CK AI ZK ml like AI ZK coess like just a combination of those like random words um people seem relatively excited about that so just pay attention to that too because apparently all of the Z keys are H sorry all of the VC's are talking about it it's pretty funny if you

like I don't know if it's a hot take I said it on Twitter but bit tensor is literally just be tokenomics and because it it got like this AI narrative tailin it's now getting interest from a bunch of VCS that are more like not typically investing in in the crypto space and more like the Trad side of of tech investing um but if you think about it's l just lock up town you get to direct emissions to different subnets like it's literally curve except it's not incentivizing liquidity it's incentivizing anything and I guess predominantly like M ml Talent um potential is going to blow up uh I don't think there's really anything novel about it um I'm sure I'll get some haters in the comments about that but

it's gonna be interesting to see I mean it's I still think that economics are actually pretty interesting in general I do think it's like a really smart way of utilizing your token to create like a flywheel effect so maybe this time is different but I mean really you know just call what it is like benser is just ve token uh and it's more a generalized format of that but yeah I mean I'm predominantly interested in like the deep in AI sector uh personally like I think kakos IET render have gotten like really good bids over this entire cycle and I think they're probably going to continue to lead if I had to bet um but I'm definitely gonna be interested to see like who is at the intersection of AI and and modularity just because it is to your point like a mix up of all these

different narratives I have to imagine that someone's going to try to build an AI platform with Celestia underneath I'm sure Celestia is already thinking about who they can partner with to do that um there was no defi commentary really at e Denver really nothing like too big in the defi space there was but I think a general like comment you got from people in defi was that there wasn't that much exciting stuff happening right now like you would ask people like oh are you like looking at anything in Def and they're like no not really like there's like not much Innovation going on which I think I agree with yeah until we get Pro of personhood def5 is pretty much hit its potential everything's just now like a new purpose product uh so I think that's definitely unfortunately the case which

is one of the reasons why I think like Bas is probably going to have some Tailwinds because I have to imagine with the coinbase adapation service you're going to be able to like do proof of identity and you're maybe even going to be able to have like some like legitimately under collateralized like lending products launched on base that you can't launch anywhere else so interesting yeah um as the last comment favorite merch of the conference goes to the bucket hat from the modat to day it's a really nice bucket hat and like I don't know whatever this is going to be it's going to be like a glassy but it's kind of stupid um what's up everyone March is approaching fast and I want to give you another reminder not to miss out on D London it is coming it's right around the corner and it's in March from

the 18th to the 20th we have three full days of content this is your chance to bump shoulders with some of the world's top Executives and have open dialogue with both attendees and speakers we're going to be focusing on a range of topics that I'll let Ren discuss for you first on the list we have Bitcoin Catalyst the jaing and spot ETF next we have a view from the buy side from investors on things like strategy portfolio allocation and more we also have a topic on Aras tokenization and stable coins which I think we can all agree are going to pay a large vot in crypto future we'll also talk about global regulatory Frameworks like compliance best practices and the evolution of global standards that is shaping the global investment landscape we'll also have someone from the institutional front to talk about infrastructure such as Banking and

payments with financial giants like visa and JP Morgan and last on the list the macro case for digital assets so don't miss out on this monumental SP seats are limited so be sure to register today by hitting the link in the description and using the promo code 0x10 to save 10% on tickets see you in London now on the topic of like um base and pro of personhood I know David you got something related to that in this week's Hy K so who you got yeah I mean coinbase is busing very much on the cool Throne um so coin stocks up 11% today it's up I think it closed over $229 it's sitting at like 45 to 4 6 billion market cap it's about 70% from alltime highs so uh I think one of

the reasons why it's doing this lead or this like huge move to the to the upside is obviously Bitcoin is a major reason for that it's like really been playing like a high beta to uh BTC this entire cycle so far Bitcoin hit like 67 and a half k at the time of recording um but if you actually looked at coinbase's uh Q4 earnings and they projected out their q1 earnings they project they used um metrics for transaction volume for the first six weeks of q1 and if you um look at that they're pretty much predicting between their subscriptions and services revenue revenue plus their uh their transaction Revenue I think

approximately 700 to $800 million in q1 Revenue but since their earnings because of I think the meme coin cycle which we'll talk about later on this on this episode um coinbase is trading volumes going like through the roof and as of right now they're on Pace to hit to probably generate like $1.2 billion dollar in Revenue so it's about 25% for over quarter growth and I think if you actually look at I know you're you're the annualize run on the team but if you annualize their uh forward-looking Revenue just based on what we've seen so far in q1 they're probably currently trading at like just barely over 15 uh forward look forward looking earnings uh yeah forward looking earnings so

relatively cheap considering like the growth story that coinbase has um and I would not be surprised and this is not Financial advice I would not be surprised if they're trading your all-time highs which is approximately $400 per share sometimes by their next earnings call which is like in May um you know it's a great story perp's volume their International Exchange volume is going like higher and higher obviously they're like becoming one of the major venues to trade uh with like binance I think continuing to lose market share um and obviously all like the issues with CC stepping down so there's a lot of Tailwinds I think um and obviously they're trying to bring more people on on base so really exciting stuff from coinbase um I think they're going to continue to be like the household brand

name for American crypto and obviously with their International expansion plans like we'll see how well they do but so far they've been executing perfectly this entire cycle and I can you know I think that they're going to continue to eat um if you look at 2021 like last last comment if you look at the cycle peak of 2021 um an exe an ex-executive of binance was said was caught saying that he believed that if binance went public in like November 2021 in cycle Peak they probably would have been able to get like a 300 billion dollar valuation which is nuts because that was at like a three billion dollar or I'm sorry a three trillion dollar total crypto market cap we're currently at like 2.6 is trillion and who knows how high we go or who knows if we're even at

the the peak today which I I don't think we are but if we do get to like that 7 trillion to1 trillion doll market cap I have to imagine that if binance could have gotten a $300 billion doll valuation back in 2021 coinbase at that total crypto market cap definitely can get there um so that's still like another eight to NX from here again I don't know if it actually gets a high that does sound a little outlandish but if binance was truly could have gotten that valuation back in 2021 like it's definitely possible for coinbase to see somewhere that order of magnitude in the next like 12 to 24 months yeah I mean I think near term coin Bas probably does really well um uh yeah effort probably summarized

all the points really well but I'm just wondering like what happens to the vertical in the long term um I'm not sure how hard it is to like spin up a crypto exchange yourself like especially if you're a big bank or already a fintech firm and like just start undercutting coinbase on fees or whatever and just like penetrate the market through that um like maybe there's some brand value attached to these exchanges like uh Robin Hood has clearly found their own position in the market and maybe the same thing actually happens with coinbase but I'm no expert in this area so I truly don't know I think in the long long term sure

you definitely get fee compression I don't think that happens as fast as you think um or just as fast as people think in general and another thing is maybe that fee confession is offset either from like base revenue or a lot of that trading volume moving on to base right I know like E capital is really bullish on the idea of tokenize stocks and sort of like coin being a hub for just tokenized stuff in general and chances of that a chances is that most of that will be settled on chain on base if coin if coinbase had to choose like a place for all of that to happen right and so I think coin base definitely still has Tail wins and I think just in the early

stages of where crypto is today right it's still a very rough regulatory environment to operate in the brand value is definitely still there perhaps 10 years down the road when we have a lot more regulatory Clarity we have a lot more better developed regulatory Frameworks for crypto then the space will probably become slightly more competitive as more sort of exchanges come on and whatnot but I think by then most of these large centralized exchanges will have built out products and services that make them like resemble like a super app with a lot more like brand stickiness rather than perhaps just like a centralized exchange you know like earn products I wouldn't be surprised if all of these

centralized exchanges eventually launch like a banking product or whatever or like a mortgage lending product you know like I'm moving into those segments and it's all facilitated by like onch def5 protocols I think that's like the ideal end state of where coinbase is but obviously there's still a lot of like execution risk there yeah and I don't know it seems that for a lot of people like the super bull thesis for coinbase is to for them to like yeah start offering this extra Services um but usually usually it's about like penetrating the banking market so like how could coinbase then do that if like the tradify banks can't come on chain like I don't quite get

that argument because I think it's easier to go from offchain to onchain but maybe I'm wrong here and also like the fact that you have a your own rollup chain or whatever on which you can let's say tokenize assets on at some point or something similar like uh I'm pretty sure like we're going to have Goldman Sachs chain and UBS chain in the future and jbm has their own Onyx chain like surely they'll just like offer the same product but on their private chain and pump it full with liquidity and maybe even incentives at that point uh to just like incentivize usage but yeah I'm not saying that I'm

beish on coin or like again this isn't um Financial advice but uh I'm just trying to like bring some perspective here yeah I think that's definitely a fair argument to me right especially in sort of like the tokenizing everything fronts like Ando for example is tokenizing like treasuries and maybe one would have expected coinbase to tokenize like treasuries 2o but obviously that not exactly sort of like eats into their like Circle stable coin like interest Revenue portion but like it kind of it does in some sense um but I think coinbase will carve out its own each

right and in terms of sort of like onch it's it's harder for like a company like coinbase to integrate into sort of like Trad fire rails or like sort of eat into their Market versus existing trafi companies eating into sort of a new like onchain world I'm not sure to be honest I don't have a good take like if you think about like what type of financial services you interact with today and what type of financial services you are willing to interact with and try out in the future I do think that if you think about like what history has shown Us in the past few years consumers are relatively open to trying out new Financial products like

rather than Banks rather than like super old like FX people at the airport you're trying like revolute for cross I was going to say cross chain but like cross country like money remittances or like money exchange and I think it's possible that a similar Trend phe out in crypto I'm not I'm not sure but I'm leaning towards optimistic for coin base I think uh I know I cut out before but uh I do think that over time like on the institutional side their margins will get compress I think on the retail side though I think like not to compare them to Apple per se but there's certain brands in the world that get like a premium uh even if like you can arguably get like a you know a smartphone with texting and like apps and everything

like Samsung right like apple gets a premium to every other product is because it has its ecosystem and it's like lock in with with all its users and coinbase hasn't found that product yet that's going to get a lock in but I do think like long term they're gonna find what that product is that's going to lock that user in and because of that that average retail participant they're GNA have a much higher take rate for financial services because there's like a whole other ecosystem that's not just financial services that coin Bas could to be able to um price in to it so so again I I don't know what that is but I think coinbase definitely has like that market lead to maintain that that profit margin or or yeah that that margin uh and then there's G to come something

some kind of Hardware product if IID imagine like I would love I still think in the next three to five years you're G to see a coinbase phone that leverages like the entire stack I know that sounds crazy but like look like you're seeing helium partner with Sprint like who if you came to me two years ago three years ago and said like helium is one of the fastest growing Telecom networks in the entire world that like out of your mind there's no way that happens they're doing it like they're literally bringing on more subscribers I think I saw over the past week or so or maybe that was two weeks ago than like Sprint was or there was some like crazy number out there um you you can definitely see like a whole phone that's built on the entire stack of a decentralized telecom using

filecoin or some kind of like other dpin product for for storage um using like some ZK Tech to do some like face ID uh you know to for pro personhood um they're definitely trading down that path i''d be incredibly surprised if they aren't because Robin Hood and all these other fintech firms are going to be able to like eat into their margins if it's just a financial services company which I don't think that they're just going to be that over time yeah I mean I can definitely see them expanding more and more on the services side but for example for the phone thing like there's so big competitive advantages that Apple and Samsung have right now like you need to

find a cheap manufacturer it takes several year years and like a lot of experienced teams to like design these uh phones and stuff like that like it's just hard to see for them to just one day get the idea or like be like yeah okay we're going to penetrate this market now and like do it well but yeah I said I think on the services side uh there's definitely a lot of like potential there and especially um when you look at this fexs like I think that makes a lot of sense because I think a lot of fintech users are pretty young people right now so like if you can just get them on board uh to trade crypto on coinbase and then give them some kind of

reward for using like I don't know their banking type Services um could definitely see that like section growing i' be really interested to see coinbase build out a deep in project someday actually given the sort of distribution they have I think they have like 110 million uh verified users I don't know how many daily active users they have but like between that and their sort of coinbase attestation service it look it feels like there's something there I I don't have a good take on whether like proof of personhood happens in like a centralized manner through something like coinbase adastation or something like worldcoin but I think both can exist simultaneously if you are a big company

financial company you want to do something on chain chances are you're going to choose like a more regulated company like coinbase rather than worldcoin if you're choosing like I don't know civil resistance or just like peer-to-peer transfers for some random like Network then transfers you might go or something that resembles World coin a little bit more but yeah good takes all around all right uh brick who do you got in the hyu throne um I've Got Magic Eden in the cool Throne um one big reason for that is okay they've grown a lot and they like market share has grown a lot but it's also been historically super super hard to just penetrate the nft market like first you had openc then a lot of smaller competition tried to uh get into

the market um did this like incentive structures which eventually didn't really lead anywhere because the product just wasn't maybe that good then blur came along product was super good also incentives structure at least until now has been pretty successful um and now suddenly like magic magic Eden has slowly started um or not even slowly but like over time they've started implementing more and more stuff and now like have been fast to support these new verticals so uh yeah I mean their market share has been like 40% of all NFD trading in the last 24 hours which accounts for like 50

million uh dollars of volume and 80% almost 90% of that has been um like Bitcoin related volume so most likely just going or like yeah just coming from like ordinal projects and they did really well with like introducing those um or that type of trading venue in and then people just migrated there and it's super easy to like trade on that platform compared to like some of the other Solutions you had to kind of try um if you wanted to trade these nfds before um and yeah I think it's been cool to also see like ordinals volume go up and

I think some hit it uh what's the saying hit the nail on the head something like that there you go maybe a bit freely interpretated but yeah um when he was talking about this orinal stuff like a few months ago and now we're really seeing how like uh it's being treated as ba and I could definitely see again not Financial advice but I could definitely see like node monkeys and Bitcoin puppets becoming like these Cycles I don't know Bard AP clubs and um like this uh Blue Chip ethereum nfts we saw last cycle um yeah that's definitely on the table and for those wanting to look like there's definitely

more possibilities uh on the market if you're willing to do some research um and yeah lastly like they're currently running a incentive program where um you can earn basically points but they're called diamonds and just by like trading on the platform or buying and selling on the platform listing all of that good stuff um gives you diamonds and I don't I don't think people are even farming that uh that hard like volume seems to be pretty organic in that sense but anyway I think overall they've done a super good job lately and seems like a project that's still quite overlooked by the market like I don't

see that many people talking about it outside of some like nftd communities yeah Sam has been pounding the table on or I mean Spencer Picacho Sam like I faded it completely and completely mid curved that I have zero exposure to ordinals in the Bitcoin like EOS system for the most part so shame on me because all of them have been talking about it but Sam himself has been pounding the table on Magic Eden for like I don't even know at least a month if not more and he's going to eat and so is everyone that's been using magic Eden like it to your point like the the nft volumes are at insane like when you think of nft Market places everyone's like oh yeah blur tensor and it's like well actually magic Eden's L like in

that camp if not like surpassing them in overall NFC volum which is which is crazy so uh I agree I haven't really seen a lot of people talking about it good on Sam and Spen and Picacho for for really playing the ordinal game really well um yeah I it's probably early innings for that too because there's a lot of crypto natives that are not messing around in that ecosystem at all so I have to imagine that that's gonna be one of like the most hated things to Rally this entire uh this entire like next year yeah and I really liked Sam Sam's take of like there's a lot of Bitcoin whales who haven't been able to spend their Capital before without like leaving the ecosystem and now they get a chance to like try out new things so

that might also be like a huge driver for this NFS going forward yeah I think magic Eden has done a good job I think the story at some point was looking pretty bleak to be honest like they were the dominant nftd Marketplace on salana then tzer came in and basically ate their lunch but now they sort of found their own home on uh Bitcoin and within the ordinal ecosystem and I do think that's some that's an interesting point to note actually that chances are like each ecosystem has its own version of like or its own success story of like a certain vertical like whether that's like an nft exchange and that might be sort of like the end State versus like one successful

nft exchange that deploys on multiple chains um so I do think that's very interesting and yeah as far as like the overall ordinal ecosystem just like from a very very very mid curve point of view right like you're you you could think that like ordinal are harder nfts than sort of like salana nfts for for two reasons like one is because like a lot of the time the ordal the image themselves are like actually like inscribed onto like the blockchain rather than just like pointing to some ipfs and second of all or no or sorry like BTC denominated nfts are like hard nfds because like BTC is like harder

money or like more like sound money but that's like a super midur way of thing but I do think like some people think like that right and then as far as like the unit bias goes like sure there's like the unit bias for like meme coins where you know like withi Bon like these have such a low price compared to a larger token like I don't know like Doge right and so chances are you're going to buy stuff with a much smaller like unit price and I think someone made a good point that like perhaps that same phenomenon but like when comparing like nfts across ecosystems might apply to right so say like Pudgies are at like 20 e right and then you go like oh okay but like no monkeys aren't at like 20 BTC even though those are like completely different like denominations I would bet

that there are certainly people that think like that maybe not a lot because that's like a really drastic difference between like one BTC and one e but there are probably some people out there that think like that they probably think oh if like crypto punks could have gone to like 150 E cycle there's no reason why no monkeys can't go to like 150 BTC this cycle even though that's like a crazy crazy crazy number I mean I definitely believe in the unit unit bias uh thesis or Theory but if you own like let's say 30 Bitcoin and you're able to buy something at like 20 Bitcoin I don't know how you've got your hands on that money if you don't understand

like how units work here you have to be so left curved that like it's next level but yeah I don't know we'll see what happens yeah all right um next I'm going to put myself on the Hy Kon um this week I have a noas on the K Throne I'm still trying to figure what this is actually what this actually is apologies for the gramar um but basically they have a novel staking mechanism is called proof of active agent and it's basically ve Tok economics for an AI agent economy so this proof of active agent which they pronounce power power um basically allows anyone to align an agent or

entire agent economies with their goals you can Define like a set of kpis on chain you can reward these agents for quote unquote active work that they do towards realizing the S goals within a certain period and the flly r basically works like this right some Dow some project some founder decides to launch a product okay and then you create a staking program to incentivize a specific type of AI agent so for example auton noas might decide to launch a prediction Market product and you create a staking program to encourage ecosystem activity bedding activity or like sort of like betting liquidity provision and then devs out there or sort of like AI Engineers will go and build these prediction agents and

then operators will run these agents and these agents will work for rewards as part of this proof of active agent program and and Tada suddenly you've like bootstrapped an ecosystem where AI agents participate to fulfill like certain metrics that you want um and they also get incentivized and you can also sort of add in external incentives through your own token or whatever right um and all of this is customizable anyone can create staking programs and you can sort of objectify sorry you can sort of um specify whatever work you want to be incentivized and performed by and it really can be anything it could be collecting data executing tasks providing liquidity trading like anything that you can kind of Dream On

on chain or it's possible that I think people will come in and do like sort of offchain work and then use a co-processor or something like you know like to verify the state onchain and in an optimal world this creates demand for Olas right because it'll be like sort of like ve curve Wars but for AI agents and actual work being done and I just think that's a very interesting thing for them to do obviously you have like bit tender which is like kind of like V style to economics for s for Capital says like a talent and AI engineer and here you have sort of V St economics for AI agents perhaps which at the end of the day is still kind of like AI Engineers but

maybe like one layer deeper than that um and yeah just just like a personal thesis I have in the long term I don't know how long it'll take this take for this to play out is that 10 20 30 years down the road there's going to be like a massive open- Source decentralized sort of AI agent Workforce and this will likely be facilitated by some AI agent market phas right so using specific examples right there's going to be like DCF agents out there accounting agents out there data entry agents out there video creation agents and effectively you want like the community to build this AI agent like Network or for there to be like a

competitive process to build out these AI agents right and you want as much talent in the world to be attempting to build out these AI agents and make them as good as possible and thus you need some framework to incentivize these agents being built but also to reward like the AI agent that does the best work and that's something that I was talking to people at e Denver about and so it's just good timing that a noas came out with this sort of like V staking tokenomics for AI agents but I would love to hear your guys thoughts on like this is a scam is is a future I mean I definitely think that this is positive because if I've understood correctly beforehand how um like these AI agent creators and uh the people who

are running them were um like rewarded was just by tips so like the user of the agent could like tip them if they wanted to so this definitely like brings better incentives to the people creating and like facilitate this service um and also I think this is a good example of like showing how um bit tenser has been able to you know already kind of create the playbook in this market where like you just yeah incentivize people to come over and um what I was about to say like earlier during this podcast was that um I wasn't quite sure of like how much talent they

can bring in from off chain like companies but I think now it's starting to play out more and more where like the token price just keeps increasing and then incentives go up so then more people from like offchain companies are incentivized to come on chain and like create their own models or um in bit and search case like mostly fine-tuning the models um and yeah it's playing out perfectly like uh the oldest product is kind of different from bit tenser in the sense that like you have to have somebody who creates the agent

um like structure themselves meanwhile on bit tenser you have like more people who I guess are just um super focused on like uh fine-tuning the models so like you could argue that uh the people on who are working with Olas are like should be compensated even more because I guess you have to like come up with new structures completely and like create the agents from not not bottom up but almost um so yeah I I think this uh great um implementation I'm just scared that like if you look at the tokenomics historically uh for most project it

hasn't ended well like if you run that Playbook then basically you like have to uh penet penetrate the market super quickly and like immediately start the flywheel where like well not maybe immediately but you just have to like get this huge spike in your token price to like get the flywheel going and then you can continue on top of that because otherwise um like has been seen with several projects historically like you just fed into nothing and the market just forgets about you but yeah I'm yapping a lot so that's my opinion or my thoughts on this I don't have anything insightful to add I mean it's just it's V tokenomics right like well I I I have no subject

matter expertise with AI agents I I don't know any of this so um I'm surprised that the pro that the token is actually down today because I would I agree with brick actually think it's like a positive Catalyst for it creates net demand at least in the short term for staking creates a supply sync and adds more utility to the token and potentially creates a flight wheeel of economic activity um I'm going to be watching it closely I think what is it like a three billion FTV I think that's quite a lot but I think circulating is like 250 million so um assuming fdv is a meme you know definitely can go up higher but uh yeah nothing more insightful to

add yeah I'm just itching to find one AI project that like seems legit and doesn't have a mind-blowing valuation so if somebody finds any please send them my way yep please drop them in the YouTube comments I'm in the same camp as Rick like I do think like the overall AI basket does like incredibly incredibly well but I've still been looking for like one AI coin that I want to like heat half my net worth into and I haven't found that yet my just like before we move on in my opinion and I don't want to show my own bag but I think I I do own akt but I don't own render IET but I think like you can make

the exact same argument for instead of betting on a given like token like or given D5 protocol or something like the reason why eth and soul and like the all fler ones like do so well is because like they are kind of an ETF bet on the wider adoption of like that given ecosystem I think you can make the exact same argument for uh like these decentralized GPU protocols they're like hey I have no clue what AI project is actually going to win I don't have any subject matter expertise in that area but you can bet your ass at like all these AI protocols do need gpus in the long run just like and Nidia is a bet on the AI economy you can make a bet to me that like render aash IET uh maybe even filecoin eventually I'm not sure if they're what they're

doing like GPU space at all but like you can make like that ETF index like bet so that's where I'm placing most of my horse like the deep in GPU Market uh just because like I have no idea I don't know anything about about AI yeah I think that's a good take all right EIC Capital you want to close us off there's like one more thing that we should probably talk about this week meme coins yeah yeah man I mean it is it's surprising because like where we're at in the cycle you can make a really good argument that like we're in the beginning of a cycle with Bitcoin approaching alltime highs or you can make the argument that we're in the end

of the cycle because Bon Pepe the the Hat stays on whiff is absolutely like mooning it hit like almost $2 over the weekend meme coins are absolutely like ripping the top five meme coins by market cap combined I think if you look at Doge shib Pepe Bon and whiff are at a kabai market cap of uh I think like 47 billion approximately so like that's absurd and like we're really really early in this cycle if you look at historically like where Bitcoin valuation is prior to relative oldtime Highs but uh things are absolutely ripping uh trumpcoin is going crazy Biden coin is starting to catch a bid

because people are realizing that like mean coins are essentially prediction markets and if Biden currently has like a greater than 50% chance of winning like why is Trump sitting at a I don't know multi hundred million dollar market cap but Biden coins only sitting at like I think 25 million uh last time I checked so tldr is me coins are absolutely going absurdly crazy uh this early on in the cycle I'll put early in quotes um I don't really know what to think of it I own my own basket of meme coins in my portfolio right now none of them are going as high as like some of the uh Market leaders are like whiff but uh there's a lot of friends that I know that are absolutely euphoric right now

with how mem m coins are are going uh going ham right now and uh we'll see if this trend slows down but uh a lot of people think that like we're going to see a mem coin super cycle that crypto is ultimately an attention economy memecoins have an arguably unlimited uh ceiling because they're inherently memes and they really don't have any value so like you can go back like the old Silicon Valley uh uh meme where it was like pre-revenue you don't want to be a post- revenue company because then you start being valued off of Revenue multiples but if you're pre-revenue if you have sky the limit mentality then you really just go up up only forever but uh the mcoin supercycle thesis essentially do and sheu showed

that mcoins can get to absurd valuations right those went to like nearly 80 billion market cap at pico top I believe um and that maybe people are realizing that like you can actually make a really a lot of money in mecoin uh sector and now everyone's trying to find the next hot mcoin um this could be maybe like the next uh big thing and while people like myself try to own things that are fundamentally that have strong fundamentals I will always 10 times out of 10 get outperformed by someone that puts $100 into dog whff hat at a $500,000 valuation and today it's sitting at like one and a half billion 1.6 billion so um yeah I said a lot right there but we love for you guys

Chim in as well yeah I think you summarized it really well one question I have for the panel so to say um do you think that like the largest meme coins right now will stay the largest until the end of the cycle or do you think that we're still to see like the biggest players like come in and or the biggest meme tokens like be spawned and uh like grow up in value I think in general you're going to see the largest meme or like the meme coins which have had like the price done the pr do the best in like the past like week or so they will probably be most of

like the largest meme coins by the end of the cycle and I think the reason I say this is two V the first is like attention and narrative compounds and the second is that if you are a normie and you ask your crypto friend which meme coin you should buy your crypto friends are going to tell you like the ones that be doing the best and probably have like the largest market caps you might say like oh you know like there's like a few out with like 60 million 100 million market cap but like these are the bags I have for meme coins and then they will buy that and then the price will go up even more and it's just sort of like a positively like reflexive flywheel so I do think that the larger m coins today will be the larger m coins

by the end of the cycle I think one question I have for myself is at Peak like cycle top what would the largest mcoin have in market cap I think last cycle it was Doge at 88 billion or so I don't know how crazy it's going to get this cycle but I mean like if you think like last cycle crypto went to like three trillion market cap I think everybody's calling for like a 10 trilon market cap I don't know whether Bitcoin dominance like is higher or lower at like this cyc top versus like last cycos top but yeah I do think that's a pretty stupid bu case especially if you're factor in like other things such as like the election and whatnot so I think I 100% agree with

with everything you said right I think for the most part what is now the top five that I listed is most likely going to be the top five I can maybe see like one maybe two other meme coins coming out of nowhere and hitting it big I'm hoping it's one of the ones that I own but no in my luck it won't be uh but one thing I'm really looking at is actually like Dogecoin dominance so I have it like pulled up on trading view right now Dogecoin dominance hit a peak of roughly 4% last cycle currently it's sitting just over 1% so I'm definitely going to be looking at that as an indicator uh like maybe like an index on like the meme coin uh sector um I think there's only GNA be a a select few meme coins

that get listed on the major exchanges uh I don't think you're gonna I mean I at least like the more legitimate ones and really I'm talking about coinbase right like coinbase listed uh Dogecoin the listed shbu um I have to I think elicit Bon right like there's only a few coins I think coinbase will probably list maybe Kraken binance I think will'll probably be a little more give a little more leeway maybe list like some lower market cap ones um but I think the most distribution is usually the best play to like what meme coins are gonna go the highest and it's really like which which ones are GNA get listed on centralized exchanges for like normies because normies aren't going to be aping on Unis swap V3 are sniping meme coins uh for

the most part they're just gonna be hitting by on Robin Hood on coinbase on binance wherever they are at in the world so I you know I could definitely see like one or two maybe hit be become a top five meme coin but for the most part it's going to be set in stone that it's Doge shba Bonk with imp pep all right so the largest M coin has 400 bilon in market cap at a 4% dominance at T in got it thank you um I think one one interesting questions like I asked myself is like cuz I'm not like good at picking like meme coins I think I makeover it way too hard I sell to

early like statistically like not a lot of people are probably good at it it's like really outlier like those people that find like with at like 500k and hold it all the way to like whatever is today so what is like the picks and shovels for meme coins right I think other than sort of like the underlying blockchain there's only like so many options out there it's either like a centralized exchange like coinbase or finance and that's I like coas stock or like BNB or maybe like some of like stud more web 2 exchange such as like Robin Hood right those are really like the only to only ways to express like a PIX and shovel play on Meme coins as a whole don't forget about telegram trading buts that too that's a really good call out good call that's a great

call actually I might need to go buy some right now that's such a great call but all right I think that's a good place to round it off for the week break fic Capital thanks so much for hopping on thanks so much for having us hey everyone thanks for watching today's zero X research episode I wanted to take a second and remind you about an upcoming 2024 digital assets Summit in London this March seats are limited so hit the link in the description and use the promo code 0x10 to save 10% on tickets see you in [Music] London yeah