The data availability thesis and whether Celestia can challenge Ethereum

Transcript

DM good morning welcome to the milk Road show The Daily crypto show that made the cut just like that last team sneaky into March Madness I'm your host Jay Hamilton it's Saturday March the 15th which means we're back with the milk Road Pro research team because it's Saturday that's right we got Kyle Martin in the house Adrian was traveling this week so he was out now today's episode is not so much about the markets if you want our takes on the markets this right now why it's so red where's the bottom how do you position your portfolio should you be buying should you be selling when will we recover what does the next three six and 12 months look like go back and listen to Monday Tuesday Wednesday episodes from this week where we break

down of really wellth thought out view on are we in a bull are we in a bear and where do we go from here now today's episode with the milro pro research team is all about a new thesis that they are cooking up about where is the next big investment opportunity in crypto over the past few years the big opportunity has been in l1's in Block space but now we're at a point where we have a lot of block space we have a lot of l1s there's a lot of competition and that trade is not quite as good as it used to be so question is what next the thought that Martin is going to share with you his thesis is data availability if you don't know what data availability is and why that matters and why it's such a great

opportunity that's why I got to listen to this episode because Martin is really going to explain his thesis for why data availability could be the next big opportunity now obviously ethereum and Celestia are two of the leaders in data availability right now we're going to talk about that and we'll also talk about a few others that you could invest in if you want to gain some exposure to data availability which we really believe in also if you guys want to check out more if you're really excited about Celestia which we talk a lot about in this episode check out a recent milroad Pro report we'll link to it in the show notes uh that dives deep into our thesis on Celestia and how to invest in it if you want to add some of that to your portfolio now today's episode is brought to you by definitive Advanced

trading on every chain it's also brought to you by coin shift powering top crypto treasuries with their yield bearing stable coin CS usdl without further Ado let's hear from the boys at milroad Pro H welcome back to another episode of uh milroad Pro research meeting uh it's always fun to come in here and do this uh so that everyone gets to hear our discussions we are without Adrian today he is I think in Thailand he's traveling around the world right now so he's kind of on the move but that's cool we've got Jay we've got Martin and myself here today uh we are going to discuss one a big thesis we have that I think is going to shake crypto markets and really change the I don't know if I want to call it narrative but the Outlook of of

I think where a lot of capital is going to go over the coming years um and just to to tease that real quick for the last let's say 15 years in blockchains we've focused on block space and there's been a lot of coverage around block space and investment around block space is the next big thing and um we're kind of flipping that and actually thinking maybe block space is it's not over by any means but blob space or data availability is the actually the next big thing in this space and so we're going to cover you know what the hell does that even mean and and why um but this is a big thesis that we're sort of like continuing to Tinker with and build out here at milk Road Pro so we'll discuss that and then we just want to discuss some of the things around um

around Revenue in daps in crypto uh obviously there's been a a fall off a cliff in terms of Dex volumes and things like that uh and so we just want to comment on what we're seeing uh in terms of revenues on chain and uh and also a and its token BuyBacks we've talked a lot about this whole token BuyBacks thing we're starting to see it now a had their big proposal performed quite well over the last little bit so we'll discuss in some of our thoughts around what's going there as well um but let's get started first with the blocks space blob space um kind of uh thesis here let me first give a little bit of context uh and then Martin I'll let you sort of walk us through what you're thinking I'm just going to share screen to start which one is it not that one that's one

okay so first for those uh watching right now I highly recommend you you actually check uh watch the screen because I'm going to be sharing a few charts that are going to help make this make sense so for the last 101 15 years everything's been all about block space right Bitcoin started it then ethereum uh and it was all about you know the fees that are generated from block space and you know with ethereum that became very very expensive we had insane revenues over the last few years through ethereum now we're starting to see that block space is getting let's say commoditized right it's going down in value because everyone's trying to make their blockchains cheaper ethereum's doing it by launching l2s saying hey go Cher and go do your things on base or on optimism Etc instead because it's much much much cheaper right and so the cost

of execution is going down a lot used to be like5 10 $20 to trade on ethereum uh now on l2s it's like sub one penny uh and even on ethereum it's been like less than a dollar over the last little while which has been actually quite nice uh and then you also have integrated chains like um salana and Aptos and sui and all these that are trying to do it all on one chain and again you know very cheap to to trade on there and so the the cost to execute on chain to to use block space is going down and down down and we think that that Trend doesn't stop it's actually like everyone's in a race to make their blockchains even cheaper even faster and so that's not going to stop but there's one thing that's needed uh every time you do anything on chain and

that is to post the data of the transaction whether you're you know minting an nft or trading nft or you're trading a token whatever there is data that needs to be stored somewhere so that someone can go back and see that this act thing actually happened right that's called Data availability in the ethereum world that's called blob space right and basically what we think is blob space and data availability is already let's call it as cheap as it can possibly be and probably only going to go up from here whereas execution and things around block space is only going to go down from here and so um as Martin will talk about um we think that most apps are actually going to move into their own chains and they're all going to need to post data somewhere and so we

think that there's going to be this ballooning in the the industry around this data availability uh and um and we think that's the next big opportunity in blockchain so that's why you can see on this chart here kind of block space has been going up and up and up in terms of its use and over time we're starting to get more and more data availability or blob space again these are the same terms just used differently in different ecosystems and we're seeing that start to go up and we think that's going to hit an inflection point um very very soon as you know we get this this world that we've talked about for forever of you know millions of l1s or l2s millions of chains let's call it um and so that's when we think block Space is really blob space Sorry is really going to start to

take off so that's the kind of General overall uh idea here Martin why don't you walk us through kind of the more details and like why you think this is playing out and why you think this inflection point is sort of sort of coming through yeah sure um maybe let's look already what's happening in the markets and we can uh look at the recent winners which is obviously base from coinbase which is Layer Two and we can kind of zoom in on their strategy you know they have big exchange a lot of users and yet they decided to launch their own layer to because they believe that the world is

going to be onchain at some point and like we are just starting to see the first signs of it and so they created their own chain and they could kind of sort of integrate with ethereum mayet or Solana or something but then like all the activity that they are bringing on Solana ethereum man whatever like all the fees that the users are paying there it would go to other chains but not base so they were like okay that's not what we want to do because we have the users so we want to have our own share of that activity that's that's happening there therefore they have Financial incentives

to go out there and launch their own chains and only Outsource the services that they are not able to to kind of build inhouse so that's something like you have talked about da settlement those are the things that you cannot build in the house you need to kind of Outsource these Services elsewhere and most of most of the chains today use ethereum for for these kind of services and that's just one chain the one like probably the best example out of them all and now like what everyone else is going to do like you know revolute and all the FX and Neil Banks and like all successful web 2 applications they're

probably going to do similar thing because Bas is today making around 90 or maybe 100 million per year just by like you know launching this chain and making the fees from execution and priority fees so I think that's that's the path for everyone else and like every everyone will just do the same thing let me let me dive into there just a little bit to help nail that point a little bit further so you see that coinbase has an incentive to launch their own chain rather than to build on top of ethereum right or salana or whatever and if we look at the um if we look at the trend right now what are most apps and most businesses doing Kraken also had an

opportunity to either build on ethereum or launch their own chain they launch their own chain okx binance they all are continuing to do this okay so that makes sense let's look at the most successful apps in crypto what are they all deciding to do dydx was one of the first breakout apps in crypto and what did it do it moved instead of being it used to be just on ethereum it launched its own chain right now first it launched as an L2 then it launched over on Cosmos but doesn't matter either way it moved from an app to an app chain if we look at Unis swap the most successful app in all of crypto what has it done recently it launched uni chain did it in the form of an L2 if we look at Athena what are they doing they're launching a Ina chain if

we look at maker what are they doing they're launching maker chain right all of the most successful apps so far in this space they've all gone and said hey we don't want to be an app anymore we want to go and launch our own chain right and I think that trend is only going to continue from centralized companies as we talked about with like coinbase or as Martin said revolute and Robin Hood let's say all these guys are going to start to launch yes it might just be an app or it might be an ecosystem like bass either way it'll be in the form of its own chain the reason why they can do that is one they're incentivized to do it because they can make money on every transaction uh rather than letting that leak out to to other chains um and then two it's just so much easier now you

couldn't really do this four years ago like no no one was coming in the space just launching their own chain um but now it's as easy it's it's almost as easy as like launching a smart contract you can do that just as easy to launch a chain because ethereum has a bunch of things that can do it for you or Celestia has a bunch of things that can do it for you or you know there's a bunch of different products out there now where it's actually pretty simple like you could launch a chain right now on this podcast in like a couple minutes like that's how easy it is now to launch a chain right now of course it's not that simple there are things that matter and you want to like optimize for certain things even Santi who we've had in the podcast a bunch of times he's

launching his own thing where he's buying companies in the trafi world and he's bringing them on chain now he could do that on salana he's a big sonable but he decided to launch a subnet on Avalanche right another alternative to sles or whatever it's again because he wants to control those fees right and so I think what we're we're moving into and I think the one of the big things everyone listening right now needs to wrap their heads around is we're very used to okay these integrated chains or these like these big chains that have a bunch of apps on it and I think the world we're going to is actually just a bunch of chains that are just apps now you'll have some general purpose chains like we are used to today but we're going to have a lot more app chains once an app becomes think of um launching an

app on ethereum or salana like a test net right you kind of do that you see if you can get some users once you have uh sort of some some momentum there then you go and you launch on your own chain and you control the fees and you customize it and you can do whatever you want right uh and I think that's the world we're going to and so there's going to be thousands probably millions of chains moving forward now will they be l2s will they be l1s like we don't know uh I think there's going to be a bunch and there's going to be all of them there's going to be tons of l2s is already seeing there's going to be tons of l1s whether they're using Celestia whether they're using Cosmos or Avalanche etc etc so that's the world we're entering and I think with that

view it'll help you understand the next kind of layer here which is when we have a world of millions of chains where does the value ACR right that's the part that I think is really important here and really um is a big part of Martin's thesis here so Martin from that understanding now that we all kind of have that high level View let's continue on if you're only trading on centralized exchanges then you're not going to make it the best Traders know the alpha is on chain definitive founded by coinbase alums lets you trade any token on salana base or any chain all in one platform what makes definitive different is its Advanced order types you can execute limit teawap and stop loss completely

onchain plus you get the best prices as your order is routed instantly through every deck and and liquidity pool getting you up to 19 times lower fees trusted by funds whales and the Milkman himself now you too can trade like a pro milroad listeners get a tasty glass of milk with zero fees on your first 25,000 at milroad definitive fi meet CS usdl the stable coin built for institutions and Dows don't just hold basic stable coins earn yield all without compromising security backed by regulated real world assets and secured with institutional grade risk management

by our friends at steakhous Financial put your treasury cash to work earning native yield and protocol rewards built by the team behind coin shift which is trusted to manage over 1 billion in business treasuries on chain including a gitcoin and hundreds of leading institutions cycs usdl is gaining traction at milk.com coin ship yeah let me just uh add few more comments what you just said um one thing is we we can think about layer ones as launchpads like I have an idea for me it's just super easy to write a code deploy it on Solana and see if people like it if not I will get feedback I

will get incentives you know so I can iterate and improve my product and until like once I found product Market fit and I can just focus on on scale that's fine I can still do it on Solana but then at some point I will have not just the financial incentives we have been talking about until this point but also I might want to customize like the the the blockchain I'm using for my specific needs not like for everyone else so like it's not just the financial incentives it's also about like hey I by having my own chain I can have a better product and better user experience so that's like profitability and then better products so those are two like the most

strongest like reasons why you should do it and everyone will probably do it and Okay then if you believe that the future is Thousands or millions of chains then what is going to be the service that they are going to need to use and will pay for and that market could potentially be in billions right and it's da because like execution you know every chain will have their own execution fees and they will like as you were talking like Bas is going to capture their own execution fees fine then like consensus which is you can think of consensus as

someone who is managing the order ordering of the transaction so now like Bas also get a lot of money by sequencer fees because you know maybe you want your transactions to be executed like right away you don't want to wait like five seconds you want just immediate instant confirmation of your transaction so you don't mind paying like you know couple cents more on top of your base fee so the but in the future like you want this will be default you will just click and your transaction will be executed you will not need to pay any extra priority fees or whatever and for the second reason when you might consider paying priority fees is when

you might want to front run someone else so you know like there is a hype around some mcoin and you want to get in like first and get the good price because the person behind like after you they might get worse price so you are kind of front running everyone so we think that this is also going to be not the part where blockchains will make the most money because the apps will kind of internalize this me and the front running actions so look at what cowap is pretty much doing this thing today like if you if you trade on cow swap they will just make sure that you are not you are protect protected against me and then they will kind of distribute me to

the users as a surplus yeah let me just clear so for those that can't see the screen right now we have um today how the blockchains look like in terms of value so when you pay a fee on a blockchain it goes to four different things settlement execution consensus and da as Martin just said we think um consensus is going to go basically collapse to near zero not zero but near zero and that's because um you know there's protocols and things like cow swap for example that can fix that problem and it's ultimately what businesses are going to want to do is give the best price to their customers right because that's otherwise customers will go elsewhere so it's going to become very competitive if there's million if you're the only chain well who cares you can do whatever the heck you want which is what ethereum had for

many many many years right now we're starting to see that the the fees are going down everywhere uh and that's because there's competition right and so consensus is going to go down execution fees will go down except overall it'll go up because there'll be just more and more volume you're going to have a gajillion transactions instead of what we have right now of like Millions um and so ultimately execution will retain value and then settlement is just very tiny da is the thing that's very small right now again because there's such a small amount of transactions but in a world where we start to have whatever gajillions means I don't know how many zero that is but a lot of transactions um then that da is going to be the thing that um is going to to start to increase in fees or at least again similar to

execution there'll be tons of volume of that and so it will generate more revenue and yeah I'll see if you have anything more you want to add to make this more simple or let's just ask Jade do are we following here or is there anything else we need to clarify at the moment no no following so far nice good job Martin anything else you want to continue on here yeah d da is the end game for this modularity uh blockchain future because like you cannot Outsource da and uh settlement like you know base cannot build their own da because you need to post those somewhere else so it's like decentralized in a secure way so like

there are some rumors right no rumors there are I actually like really people considering using base layer 3es and they will just post these da data into Amazon web3 service which is like we are it we are not talking about blockchains anymore it's just like all these data can be find on some server on Amazon you know so we want this to be as as secure as possible and we the point for y da will like scale and explode so dramatically because DL will pretty much correlate with all the transactions that are happening on the blockchains because

each kind of transactions on blockchain needs a certain number of kind of inputs or data associated with it so like who is sender how much money from which chain to which chain and like you can compress these data but there is only a certain like there are only a natural limits how much you can compress these kind of information so like every transactions will be let's say about 60 kilobyte and you cannot compress it anymore and if we believe there is going to be you know millions or thousands chains and they will all probably generate thousands or Millions transactions then like da like today da is pretty much nothing right it's just

couple Millions today but in that future I'm talking about it's going to be tens of billions like just just for da yeah of Revenue of and and one thing to think about here is so let's say when there's millions of chains right we're already starting to see this play out there's hundreds of l2s uh there's I don't know how many l1s um but there's so many and they're all going to do their own execution they're all going to do their own consensus but they're all going to need someone for da and right now there's not a lot of competition in da there's basically like ethereum blob space there's celesia and there is um aan da there's some others but like there's only three that like really have some solid um uh momentum going and so in a world where there's

going to be so many more transactions and so many more chains and we know that da is going to be needed a ton the the the demand for da is so much but there's only a few providers and so that is a great opportunity if you can catch that Trend right now the question is which one's going to win and obviously we don't we don't know that it's still early days uh I would say blob space probably still has a lot of it although if you look at market share technically Celestia is actually winning this and then I guess to be fair Celestia's cost for their da is what like a THX cheaper than ethereum da right now uh and so there's a there's definitely a big opportunity here but um ultimately I think in a world where we're going to see millions of chains da

is going to be the thing that really matters there's going to be a lot of revenue generated in da and then if you can find the and invest in the assets that or the protocols that are going to get that Revenue they're going to capture that Revenue I think there's a massive massive opportunity over the next few years because again investing in Block space doesn't really work anymore when you have millions of chains because you're basically just investing in an app and they're all going to have a little bit of revenue from from block space but investing in da is all of these apps are all going to bring da to the one or few spots few uh providers um and right now again there's only three that's that's like can you show the the very first chart you shared this one here yeah yes

what do you think that the inflection point on this chart means because there is like one particular thing that well you might you might believe in that future I was just describing but what's inflection point on this chart what needs to happen you mean I don't know yes this inflection points here means today if I am still going to launch my own chain I'm risking that no one will kind of Bridge my assets I will not get enough users so that's a pain so that's why we haven't seen as many app chains today but that's about to change because like right pretty soon we will

have interoperability and like intercommunication between chains solved so I I will like I will have a green light to go there and and create my own chain pretty much because right now like you know when I'm start up I don't have users I so I would go and launch on on these kind of lunch pads because there is where liquidity exists where users are and I don't want to be isolated on my own chain and the inflection point on this chart means we are getting pretty close to the to the Future where like if you if you launch your own chain and you are using let's say Celestia da you are automatically interconnected to like

everything else that exists in that ecosystem right so right it's a good point yeah it all it all fits together that we are like pretty close to that inflection point where there will be just like so many chains created because I imagine those listing are like millions of chains how many networks are we going to have in my metamask wallet and what we're saying here is that da also is going to fix that uh or da providers through through interoperability and again it's either ethereum that's going to figure that out or it's Celestia that's going to figure that out uh and Celestia kind of already has in terms of their Tech they just don't have a million you know chains on their adopting it yet um but they're they're they're on their way I mean there's I don't know how many at this point but they're getting a lot of

adoption there and so U basically what we're saying is have an eye for blobs spda you should be looking at revenues you should be looking at who the providers are there where are the network effects going obviously ethereum has a has a lead there and I think that's one part of what could be exciting for ethereum in the future um if it can do that the other thing I think is Celestia is a massive opportunity because because um it is it it is probably the leader in terms of the best product right now for these chains um now it's still early days so we don't know who the winner is going to be um but uh we're we're quite bullish on what Celestia is doing um and on the potential Revenue that that celesia can be driving from from this um should we wrap up there any any more we want to

touch on on this this thesis look let me ask a few questions so uh if this this inflection point is a key point in this thesis how far do you think we are from this inflection point yeah I think like Celestia will enable that uh interoperability in within their chains this summer so but the biggest the the main point the Milestone here will be when eum enables that so like all layer twos can communicate together and like yeah like that's that's where I think that

Celestia stands today they are front running aum's road map and you know just depending when ethereum is able to deliver the same kind of thing is Celestia able to get enough people enough attention enough users enough chains to their ecosystems and if so will those like existing chains within their ecosystem have any in incentives to switch back and go and use ethereum so this is something like the market needs to decide but that's something I'm gonna like follow and monitor closely and uh just for a little bit of context here this is the um the chart I

just brought up on the screen here is the the data availability provider market share uh which was 100% ethereum for the most part in 2023 and Celestia now sits above 90% uh and that has just been climbing all uh all basically this year um so it's been a really really big year for Celestia and and a lot of this just has to do with there's just a lot more chains launching um and the thing you got to understand is the data availability on ethereum is still very slow very costly and there's not a lot of it there's not a lot of Supply which in like base uses up I don't know what the number is but close to like 70 or 80% of all the ethereum da like the blob space right and so and they're only continuing to grow and so soon enough if

if if ethereum now they do have some upgrades coming that's going to fix this but like if they didn't upgrade in the next like two months Bas would use all the blob space which means like there's nothing left for the other l2s or there is just means it's going to get really expensive right and so ethereum needs to really speed up their development and upgrade the the L1 to um to make blob space much cheaper and more Supply which they are doing and that's coming there's already a test net for um pectra I think it's called um so like that's coming but like is that going to be enough because now you also have Kraken on an L2 and you have all these other l2s that are starting to gain adoption and so I think there's going to be a point where Maybe etherium Can't scale fast enough for the

l2s similar to last like last cycle it couldn't scale fast enough for all the transactions that apps had now it's going to be this point where it can't scale fast enough for the l2s now that could be a good problem right they're going to make a ton of revenue from it probably there are other benefits to ethereum's Da in terms of security that's why a lot of these guys are paying more for it than than they are Celestia um but I think there's going to be many that also don't care about that and are happy to go and use Celestia so it's going to be a big battle and I think a very interesting thing to watch over the coming years but I think blob space is where your attention needs to be in Blob space da needs to be where your attention is and less about um

execution fees uh so just an interesting New Concept that we wanted to share here and I think uh it's part why we're bullish on ethereum is because of this da and then also why we're very bullish on Celestia uh because they they might become the leader in this space as well and let me just wrap it up by saying that some people uh see da as a as a community so like you know you you will be just competing on price and that's not true like and the reason why it's not true is because you need to use ethereum da in order to have access to all that liquidity and user base so you know and probably like ethereum and Celestia they will have the the biggest like

ecosystems out there so like yes you can use da of someone else or you can use Amazon web services or whatever but then you don't have all these benefits and you cannot tap into all the user base that exist there and so it's not commodity here here's a question that comes from this what does this mean for all the L general purpose l1s uh we've talked about before how the general purpose l2s only a few are going to survive and if you are not unique and specific like IM mutable for example for gaming uh or you know whatever like you're probably not going to compete with the base or the or if you don't have your own Community if you have your own existing Community already like Bas uh

coinbase and Kraken you can launch a general purpose one and like let your community build and develop a cool ecosystem but if you're starting from scratch you don't really stand a chance anymore because you have optimism and arbitrum which are already huge in general purpose and so like moving forward it's like you need a unique very specific specific use case for your chain now that seems pretty obvious in the L2 world where it doesn't seem obvious yet is the amount of l1's that are out there and look at how many new ones we've had just recently there's suie and there's aptose those are not even that new anymore but now you have like monad and mega eth and bear chain and blah blah blah blah blah the list goes on and on and on I don't know what happens to those moving forward in a

world where everyone can just launch on ethereum or salana where there's already or base where there's already users already momentum test your app it works okay now I launched my own chain as an L2 or or um my own L1 but again app specific I don't know that there's going to be a need for a lot of these general purpose L ones and so kind of like I think it was a couple weeks ago we said hey maybe everyone's overallocated to l1s this sort of actually fits that even more and I think kind of furthers that thesis that like a lot of these l1s are just not going to make it there's just no way I can't see there being a lot of these integrated l1s or we call them integrated or or or monolithic l1s anymore um I think that that that value

is all going to move to the apps and apps that probably also have their own chains app specific chains I think probably you're thinking the same thing Martin or what do you think yes I yeah I agree um I was just about to say that remember like don't forget that Solon is also integrated chain and like you know everyone is super bullish on Solana and now we are saying like hey what about all the these like integrated chains are going to do in like three five years like who is going to use them you know so um but yeah I pretty much agree um I'm not sure and uh my guess is they will find their own Niche and like maybe upos will be just I don't know focused on gaming and

you know bring some Superior user experience for gamers or something like that I don't know but like be General I layer one it's not going to work like I I would put yeah I'm trying to find the chart but I can't seem to find at the moment but um even in so in January we had the was the first month that the revenue that was generated from l1's was surpassed by the revenue that was generated from apps on chain that the first time in history that's ever happened uh and so we're already starting to see this play out just from that and that's not even counting most of these apps are going to move to their own chains and generate Revenue both from their service right

that they currently do and from execution and so it's going to get very uh the water's going to get um muddled muddied what's the what's the sentence I'm trying to say there I don't even know uh anyway muddy yeah muddy okay let's see that uh and so like we're already starting to see that too so I think that's also quite interesting um yeah I think can I can I ask a couple more questions yeah sure um so two two questions I have one is I want to know what the investment thesis is or the investment opportunity here is because we're talking about ethereum and Celestia is it only ethereum and Celestia or is there anyone else and like how to how to play out that investment thesis but my other question is so if we're looking at the that that chart which shows who provides all the

da and it's only ethereum and Celestia on that yeah is is that because 100% of The Da is provided by ethereum and Celestia currently like there who's providing da for salana like my head around this so an integrated chain they do it themselves right uh and so they don't need that but the problem is that's not an easy thing for everyone to do and it's not super super scalable there is some sort of constraints there whereas it can be a lot more scalable if you just off offload it and it's also more decentralized to offload it as well and so most chains coming in are not um are not coming in like these app chains they're not coming in and launching their own chain from scratch where they're going to get their own

validators like ethereum or salana has and they're going to do do this whole new consensus mechanism like that's crazy no one is really going to do that anymore that doesn't seem very smart anymore because what you can do is launch your own chain but just offload everything it's like when you launch a website today you used to have to build everything from scratch you to get your own server put it in your house you had to code the entire thing from scratch you had to do it all you had to buy your own domain nowadays you buy a domain on GoDaddy you you use WordPress you host it on you know flare cloud or whatever and you actually do none of it it's just all done for you stuff to make your own website and you can use like Squarespace or WordPress where like you actually

don't need to code at all right and just like any old person can do it that's where we're moving into that's kind of the world we're almost already at for blockchains and so in a world like that it makes no sense to ever try to do that all in house anymore because it's so expensive it's so hard to do um and it just it's so complex so it just doesn't really make sense so I don't think you'll get that anymore and then in terms of The Da stuff I think Ian DA has some customers already but it's so tiny the revenue would be like minuscule that it doesn't even show up on that chart I think there wasn't all things selected on that chart you just don't see anyone else I'm sure there'll be more competition here um but it's kind of like blockchains we're like okay

Bitcoin ethereum were way ahead and so like they were able to dominate First moover Advantage it's the same thing here with with with ethereum but then more Celestia because Celestia is kind of like the the I'm going to build da from first principles it's kind of like what salana did to ethereum in terms of execution they're like hey okay we know blockchains are a thing but I'm going going to build uh and I'm going to optimize for execution from first principles right if you were to rebuild a blockchain today you wouldn't build it like ethereum if you were focused on execution you would build it like salana right which is more similar like what suie and Aptos and all these guys have recreated and so they build it from first principles and that worked and celesa is basically doing the same thing now with da saying hey let's rebuild da

but from first principles and that's why it's a thousand times cheaper than ethereum right and so really the only two games in the space is ethereum or Celestia and I think our thesis here in terms of investing is well most people have exposure to ethereum and so you have exposure to this modular World we're talking about right but you only have exposure to ethereum do you also have exposure to the other main competitor and when you think about execution right we've always most people are like buy some eth buy some soul that's your like Diversified play on execution the big players and now we're saying well we think the big thing is block spa or blob space Sorry or da and yet everyone's underexposed to Celestia right which is the only other legit competitor to ethereum so we're not saying like don't hold ethereum and only

hold Celestia but you should have some sort of share of both right right the part that feels difficult is the is the the timing of that inflection point because you know Martin you said that inflection point comes this summer for Celestia but that's just for Celestia that doesn't mean it comes for all the other players but like you know super chain is also bringing inter up um this year I believe at the end of the year so like it's it's already like small pieces there will be you know elastic kind of cluster super chain arbit room whatever so they will probably be able to interconnect uh this year or like maybe I don't know soon or next year so it's

like First Signs and then we only need to like make sure that interconnection between those clusters and and if you want fo but like we're already at a point where there's every week There's a new L L2 or an L1 that's like a subn not on Avalanche or L1 that's part of Cosmos or whatever basically launching there's multiple ones every single week now and we just got the green light from um from the what's it called the OCC or whatever for banks and financial institutions in the US to start doing crypto activities and obviously Trump Administration removing um uh and improving a lot of regulations and things now we're going to start to see the likes of the robin hoods and you know stripe and all these other Banks Etc starting to build on

chain and I think what we think is that's going to be done through either an L2 or an L1 doesn't matter but they're going to need a place to to um use da and that's going to be either ethereum or that's going to be SL so I think we don't have that inflection point fully yet but like it's already really starting to ramp up in my opinion and I think that's only going to get more and more and more throughout this year yes and like the timing thing is It's tricky because when it is it going to kind of pric in the markets like 2021 like all L ones were pretty much going nuts and outperforming everything and it was just because Market was like wow that's really a good technology we have dii so we will need a ton of block space

so like you know ethereum was I don't know I don't remember the market cap but like pretty much everything went just nuts and my point here is like when everyone sees like da being the thing the next thing it's going to be late and everything will be already priced in so maybe like be rather sooner in the market and saying like Okay this is the future and you know you can sleep calmly don't worry like eventually it will be repriced or because then the next approach is like okay but I'm gonna vit because no one is really talking about da today and it's you know it's still not the thing but Solana monad and like

everyone talking keeps talking about these later ones but like that's where the opportunity Lies when you are kind of seeing the future but not everyone is still on that boat but all these arguments and when when you see a when you look at base and so long as you're patient so long as you're patient right that's the thing about this thesis is you really need to understand the timelines of it because and the moment there's inklings that this this is going to be the truth these assets are going to go through the roof right because everyone's going to be oh I see it now da is the thing right and I think we are still fairly early in that and if you look at the Celestia chart it's quite interesting like this went through the roof right it launched um was it

November 3rd 2023 it did a big airdrop at around two bucks and. 50 cents and then it Skyrocket all the way to $20 okay now that didn't happen because everyone thought data availability was the next block space not in 2023 that happened because they had this thing where like if you stake your tokens you'll earn other air drops and so what happened was retail came in and bought all the bags and unfortunately all the VCS that started unlocking and they could dump and Retail got completely wrecked so one of the other nice things about this investment is everyone hates Tia right now because they all retail got wrecked on it right that was the unloading of it here everyone was like okay these air drops aren't actually that good and everyone just started selling selling selling and a bunch of people are holding bags that they were

buying up at like 20 bucks right um to state which was just a terrible we were screaming that uh on the podcast we weren't milk Road at the time I don't think but I remember I was screaming that like guys this is a terrible idea do not buy this stuff do not invest in it whatever but now look it we've come down we've based out for almost a year at this like five4 Mark and we're even below it obviously because we've had um everything's dumped so we're we're back at almost the price of when they air dropped and so you know it's a it's a $ 1.5 billion doar valuation market cap so still overvalued in terms of the revenue it's making but for the potential of what this can be like there is a really good opportunity in this token right now we believe um and so anyway that's why

we're sort of building up this thesis and to be fair like at some point I was also beish on on Celestia and like when they were priced you know uh much higher than today and da wasn't really a thing and I didn't really see the the the bigger picture but then there was Defcon and like many people on that conference were talking about da Justin Drake keeps talking about da it's pretty much the ultimate end game for ethereum and then it makes me rethink the whole thesis about da and what Celestia is bringing and then they announced laser bridging which is like connecting like all the chains there together so da not

Community thing it it gets me interested again and then I went to learn about celesia and all this uh kind of Da future this is um a complex topic but I think uh and it's still not discussed a ton you're starting to see block works and bankless guys starting to talk about as well now I think this is going to become a massive narrative in a really big thing it probably starts this year it might take longer but I got a feeling it actually starts this year because we're already starting to see it uh and so I think I know this was we spent 40 minutes on this but I actually think this is extremely important so if you made it this far so far in this episode like congrats to you because I think this is going to be a really big deal so anyway let's let's pay attention

to that um okay we don't have a ton of time left what should we talk about here you want to talk about a or should we talk about um blockchain or um apps generating Revenue right now what do you guys want to do do a do a okay um so for those that don't know two weeks ago or so a announced that they were going to do a buyback Pro uh program um and uh essentially what they're doing is is they're going to be able to to buyback their token similar to like what we've talked about a ton here with with Sky maker what they're doing um a obviously one of the top let me just pull up this um top Revenue generating apps in crypto actually have the um the a chart up here sky is number one uh this is 30-day

Revenue by the way sky has 26 million uh pancake swap at 24 million it's mainly over on B&B which is wild Athena at 21 million air Drome at 18 and then a kind of drops off a bit here after those top four but AA at 8.67 million so pretty good they have been just fundamentally strong protocol for years uh they've been doing it where they're generating revenue for many many years and that has increased a lot over the last let's call it like years or so um so they are now at a point where they've got enough profit that they can start to buy back their token uh and so they is it go live or was it just a proposal Martin it's uh not live yet I believe just not live yet but it's coming as a

result token did quite well during the times when everyone else every um major token and every token really was was um was dropping and falling off a cliff um obviously it's still on a downward Trend like every other token but it's held up fairly strong during that time um and so yeah what are your takes I know they're doing more they're doing something a little bit different than how like Sky doing it what are your takes here Martin on um on on this token BuyBacks and what ob's doing yeah I think they will do uh one million BuyBacks per week so um1 million1 million dollar yeah sry but the absolute value is not as like yeah like huge buying pressure is obviously good

for price but the signal is is more important like hey guys we are profitable and we are using some of that cash to buy back our token but but I'm happy that they are not using like all their profits and like it still needs to make sense because like maybe at some point they they might find another opportunity how to scale their business and they might need cash to to I don't know buy buy new new technology or something else you know so it's it's always kind of wise to not be crazy about how much those XR that's their first first thing and the other thing is they don't only announce the BuyBacks but they also announce kind of changing their whole um

business model because now when you stay on a you will send your eth or your rep Bitcoin or whatever to a and you will get some some yield because you are lending your assets but now what what you you will get get in return is you will get a kind of liquid version of your deposit and you will be able to take that liquid version of your eth or rep Bitcoin and kind of stake it one more time and use it as a kind of Safeguard against any Buck or something that might go wrong with AA so you will get additional yield so it's now you know like if you w to because if every

anyone wants just to copy paste up they they could do it and like probably all the lending markets will be pretty similar at some point but now they are bringing this new mechanism where like everyone trusts AA that's why everyone's using AA they have like I don't know 30 billion in deposits which is insane and now like we they are going to bring even more yield so more incentives for people to lend to AA versus some other lending protocols because they will give you additional yield that you are you know know kind of restating your your assets one more time yes there are some risks that you might be slashed or like you know you will get um deduction of your

assets when there is some Buck or something but considering their history no bucks like strong team and everything I guess a lot of people are going to do it and I think it it will just create more incentives and like the market share for a will just keep growing I think so the market share right now for a in terms of Revenue uh from a versus the rest of the lending uh Market a has 44% of all the revenue right so it's pretty freaking dominant um which is which is cool to see and then I just think this chart here I have up on the screen of just its Revenue like it it's now what double more than double the revenue it was

making last cycle right that you're not seeing that a lot in this space right like companies that have been around for that long that are more than double its Revenue like ethereum is not even close for example right to its Revenue had before so that is um yeah but but that was Revenue but like mostly boost by incentives which were much higher than that Revenue yeah true so so meaning um a lot of this Revenue came from paying people to use their product today they have none of that and it's still more than double right and so like again a fundamental thing super bullish now they're using that Revenue to buy back their own token I just think um again as more Capital comes into the space you

always got to think of who's the next buyer of your asset that you're investing in and in most altcoins right now I'm telling you there's nobody the answer is nobody if you look at one of the things I've been thinking about is like if you look at uh the the dot um Bust from or boom and then bust uh back in 2000 there was hundreds thousands of websites that were launched and all of them had these like valuations that went just through the roof right because everyone was like well internet's going to be the next big thing we're going to buy all these things and then it all crashed and when people came back to reinvest in the internet again they didn't invest in most of those things like reinvest in like 99% of those projects so pets.com for example which

was worth billions at the time never got a bid again and it just literally went to zero and it went bankrupt right and I think a lot of the altcoins that exist in crypto today that's what's happening that's what last cycle we had this huge boom it all busted and now everyone's waiting for people to come back and buy their token and I just think it's not happening no one is coming back and buying most of these tokens ever right and I think who will it's one obviously as as um as corporations and like institutions come back in of course they're going to put some Capital to work probably on the bigger assets the major assets but when you look at these smaller ones it's it's the protocols themselves that is your only opportunity

for someone to buy your bags again uh and so seeing a revenue chart like this that's growing so much like you don't see this in a lot of protocols in crypto um and then now that they're actually launching this buyback I just think it's such a signal uh as to where this is going and I think in the future like look it's only 13 million today and we haven't as everyone said we haven't had that big of a bull market right so what happens when like we really go into a bull market whether that's this year you know or not you know you have Michael Nadu that came on the podcast on Monday it said it's not but that's fine whether it's next year or the years after um these numbers are going to go through the roof and 13 million a month is going

to be tiny compared to what this will look like in let's say one year two year three years when it's a 100 million or 200 million or 300 million and so on and so forth and in that world they are buying back a ridicul like it's 1 million per week I think you said right now like what happens when the revenue is 5X 10x then we're 10 million a week like that's a massive amount of dollars coming in you're not getting that from retail and and that's automated that's happening no matter what's going on at the price so I just think um again as long as you're thinking long term these are the kind of things you got to be watching and it's it's awesome to see a step up and start to do this and you know it's not often where you have a

good product that's that's growing in Revenue that's also now buying back their their their tokens uh there's only a few of them that exist in the space and like we are saying we are in bare Market or whatever um but like for example Jupiter they made the the the best months in Jan in February in terms of the revenue so you know like it kind of feel like okay crypto is dying everything's going to zero but then you have some protocols who are making like record revenues and the prices are just going down totally ignoring the fundamentals it's just like once the market will start to feel more positive again and all the Panic is gone

and all the weak hands already sold then we will see the repricing of the strong assets and like all these defi tokens that are already doing BuyBacks because they are fundamentally strong it's going to be a nice chart yeah also I know like um we'll just wrap up here but Jay on the podcast that you had on Monday we're recording this on Tuesday by the way I'm probably going to speak about what I'm about to say on our live recording on on Wednesday but in case I don't I'm going to say it again here but one of the things that Mike said uh regarding bare Market was looking at onchain data and he was basically like if you look at the volumes the Dex volumes in salana it's going down a lot and he's like to me that's a signal that we're going into a

bare market and I just think like right now our markets are controlled by macro they're not controlled by what's happening on chain and there are many ways to cherry-pick data on chain to say that we're going into a bare Market there are also many ways to cherry-pick data that show that hey we're actually going into a a bull market right like right here if you can look I have these some charts up on the screen of like here's the the supply of stable coins it's going up and up and up all-time highs every single day here's the volume of stable coins so not just there Supply and people holding them but people actually using them and trading them or moving them around and sending them the transaction volume it's at all-time highs like what bare market right and I think that's a massive massive piece of

the puzzle that I think people are missing when they look at mcoin trading on salana right right you look at rwa the thing is going absolutely parabolic right now I see no reason why that stops what does that mean there's going to be more trading on chain the more that that continues to go right more fees more Revenue Etc even if you look at overall volumes it's not that bad like yes we had that crazy like two weeks where it was out of control because of the Trump token but otherwise if you look at it like we're way higher than we were last year so like I don't know I don't see a full bare Market there in terms of onchain data and then things like the the other things I think people miss a lot is there are other things than just trading meme coins right and and if we

look at like this is deepin devices so the amount of people interacting with um with deepend projects we're at 21.5 million and that just goes up and up and up every single day right so there's a lot of other pieces of data that show you that hey actually things are still going up and up and up and it's not actually showing bare Market in the onchain data and so um yeah to me I at least on chain I don't see I don't see bare Market you you have to listen to my episode on uh that came out on Wednesday for my thoughts on kind of the macro and the political side of things um but just wanted to share that is I think there's still going to be a lot of onchain activity going on here and even when a bar Market comes like I'm not sure that

that first chart of stable coins ever goes back down I don't know if we talked about this in an episode before I think we did last week like I think through the bar Market whenever that comes and again I think that's 20126 the supply of stable coins just continues to go up and the volumes of stable coins transacting stable coins continues to go up which probably makes me believe that we don't have a crazy bare market like we had back in the day I think that the metrics we're looking at are all changing and we need to rethink how we're looking at this industry both in terms of like okay stable coins right that's not going to be impacted by Beer Market if anything it might be accelerated also in terms of what we talked about at the beginning of this episode instead of looking at

blockchains and these integrated chains you got to start looking at data availability like I think we're going through this really big change in this space um and uh it's it's a tough if you look at all the metrics the data from last cycle you're behind because the space is changing too much so um anyway there's just a few of those things I think that we're noticing here so let's leave it there uh unless anyone else is anything else they want to say but I think that was a great um great episode yeah what I want to just say like back in in the previous cycle the use of stable coins were pretty much for just I don't know um kind of having way to buy nfts or whatever for speculation like but now the market structure is

totally different and like the users of stable coins yes there are still people using it for speculations or whatever but then there are also like WEA stripe now talking about stable coins too Bank of America is talking about launching their own stable coin so it's like we we don't really need we won't need people to do crazy stuff on chain just to generate stable coins volumes and stable coins Supply growing because it will be all done by all these companies who are just using stable coins on the back end and you might still be using your favorite you know apps and you just don't know that you are using stable coins but you but you are like if you

also listen the CEO of Robin Hood he's just talking like hey we use stable coins all the time because like it's just much better products than what would we would need to do otherwise without using them so it's just like people are ignoring those things but like the more we we are able to provide the blockchain abstraction and all that uxix away then the better so it's just really about the adoption of all these apps cool well J let you wrap it up yeah great episode Thanks Jen really appreciate the thesis and the the layout uh it's going to be uh it's I think it's important to zoom out right now and uh

to not get too caught up in the week to week the dayto day uh because trying to predict the the short term is very very difficult right now but the long term is much more predictable as you guys laid out so well in this episode thanks so much for tuning in today my friends if you're still listening shout out high five love you appreciate your time as always I would love to meet you in person if you guys want to meet me in person you're going to want to come to consensus in Toronto May 14th to 16th we got a discount for you guys get 350 T $350 off your ticket hit the link in the show notes I'm going to be there speaking on stage interviewing a bunch of people we're going to have a milk Road Meetup would love to meet you would

love to hang out with you so hopefully we'll see you there as always if you liked today's episode please hit subscribe and make sure you follow us you don't miss out on the next one there's also a link in the description to our free 5 minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game we're going to also leave a link for milk Road Pro you get access to our portfolio where you can see exactly what we are buying this is your number one resource to help you invest successfully in crypto one final note this show is for educational purposes only and nothing we say is financial advice investing in crypto or any asset is

risky and you should never invest more than you can afford to lose thanks so much for listening in my friends have a wicked awesome day