Does Crypto Have Any Real Users? | Analyst Round Table

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they're like a whole sector of App Store markets or or games like I agree they're not they don't feel like games they feel like chores but and I think Snoop Dog had this like weed farming game a while back ago where it was the same concept you you were farming weed and it was just a tap to tap to earn or tap to tap to click play game and I don't know maybe maybe there's something there but it's really hard for me to say that like yeah that's what's going to onboard the masses and one of these apps on telegram tweeted out their active user stats their active addresses stats and they're like 1.25% of the world is playing this our game and I was like all right well you were just showing off how useless that metric is 1.2% of the world is not

playing your telegram app nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are sold our opinions not Financial advice Pacho Ryan and our guests May hold positions in the company's funds or projects discussed what's up guys welcome back to another episode of ZX research today I'm joined by brick brick effort capital and Daniel Smith from the blockworks research team to talk about everything that's happening in the markets before we get started um I just kind of want to ask you guys about what you're looking at in the markets because as far as I've seen it's kind of in a lull um not a lot of exciting stuff

happening on chain but it's always good to crowdsource yeah that's a good flag uh agreed and whenever we're getting to these hellos I tend to find myself going back to majors and just looking at whose activity is somewhat making an effort to justify their valuations I'm definitely some a person that wants fundamental valuation to be somewhat real um but in the context context of today's markets that's just not the case um so largely for me that's been looking at a and salana which is the boring answer but like I really want to start tearing these things apart and figuring out like what's driving value and if we look at uh the amount of like fee generation on each chain over the last few months

salana has been crushing it on a relative basis um you know I was just talking to Kyle Sani on an episode of light speed and I kind of asked him this I was like look if if me value like like he believes is what drives um the fundamental value of an L1 and salana and ethereum are basically at parody on that metric then why is there a $300 billion valuation gap between the two and his answer was like because there's a $300 billion do opportunity um which like you know that's that's obviously his position and there's bag bias on his part there he's a huge Salon investor not saying that in a negative way by any means but um you know there's also like emotional bias inherently when we talk

about these things like I don't know people tend to get religious over blockchains for one reason or another and you start I I think it's a lot of what this boils down to is Josh Bowen actually just gave a talk at research day that was we're all building the same thing and he's completely right that everybody's building the same thing with slightly different terms because nobody's paying attention to what everyone else is building and I think the point there is path path dependency matters what you build first in the path to building the exact same thing over the long term really really matters and I've yeah I've just been kind of hammering in on saloner recently because they're choosing to optimize the execution layer first and even if we all are all right and we end up at this

exact same end state in my mind optimizing the execution layer first makes you a more attractive place to build interesting applications um and that's probably a better starting point so this kind of my Long Ranch to say I've really just been looking back at l1s again I um I want to ask something about Solana execution layer and applications I feel like there aren't that we'll get to Brick and effort capital in a second but there really aren't in my point of view there just really aren't that many exciting applications on Solana as compared to like what arbitrum had let's say like not this year but last year and like what no I agree like the defi uh ecosystem is still pretty immature one

thing that surprises me every single day I'm alive at this point is nobody over there is trying to make any type of like I'll say stable coin but even uh like yield capturing asset similar like an all usde um it's mind-blowing it is truly mind-blowing like there's a lot of activity over there you know Kino got a couple billion in tvl people are making decent yields like I am shocked no one is making an effort to kind of go try to pick that up and and repackage it as another product that's something that's really blown my mind on the the defi side of things um and then yeah I mean I definitely agree with you more broadly I think we're starting to see that and I think there's kind of two reasons for that one is Sal's a young chain relatively speaking you know ethereum's

what 9 years old so and the l2s building on evm applications kind of get to inherit some of the uh some of the like trials and tribulations of other people have building on the evm for a long period of time that's kind of part of that like evm based Moe that people talk about uh and so that's why things can get quickly exported to l2s uh but I would like push back a little bit there as well I mean I don't I very closely follow what's happening on a lot of these l2s and I don't think there's like a ton of stuff over there that I'm like damn this is keeping me coming back and it it doesn't exist on salana like I I would want you yeah like I would push and say like what are those things well I mean from my experience

the only stuff I can use in a ni Jupiter and on top of that there's like really nothing to do or like you know Jito is a really good uh like infrastructure product but I can't really like Leverage it every day if you know what I me mean okay so then here we go what are you doing on arbitrum is is the answer is the question that you you can't feel like you can't do elsewhere last week I was playing around with Sano you have this like small Pockets uh where you find like stuff you can do you know what I mean it's just like a much broader kind of supply of uh different things within different verticals you can do like I use salana quite a lot or I I

don't want to say quite a lot but maybe once every two weeks or something like that I don't trade that much uh like I don't want to say [ __ ] coins but meme coins uh and that's the only like purpose I use it for so that's why I don't like I'm not that much of a regular user on that side it's just I go there and try to find something to trade and then like make a few trades here and there well totally agree with that I I like there's 90 plus percent of the uh fee generation on salana right now is meme coins and so my big question there is how Emeral is that right if you think about what's that activity going to look like in a bare Market if it's all driven by mem coin trading like surely that's the type of stuff that kind of dies out

if you look at Doge trading um you know it didn't die didn't go to zero but and the people are still trading it again today and things like Pepe got built I don't know the the launch date of Pepe but it was like this this bare someone please jump in and correct me if I'm wrong but I feel like it was early 23 um so like I don't think meme coin tradings it it does worry me to to your point of like you know if we fast forward to the peak of next bear what his activity look like right now it's probably not going to look great where I'd push back is things like drip are coming to salana uh Bako I sent you that magic block thing which is like some on sham gaming thing that actually looks really interesting I don't fully understand the tech stack there I just

discovered it like literally 30 minutes ago um and then dpin like that's huge on salana that probably bigger than any other chain right you got things like Hive mapper helium uh things like baos so I think that that's just a different angle and like that's less crypto native facing right like I'm not going to go rent a GPU personally I just have no need to go do that um and like I'm not you know mapping with with Hive mapper so like it doesn't really impact me but there are those things driving activity on chain as well so it's I think it's just like a different expansion bubble and fully agree with you that the defi ecosystem is lacking and I'm I'm genuinely shocked by that I can't believe that there's not a couple core Primitives that have have cropped up

yeah maybe I formulated in a bad way because like yeah as you said deep deeping is a big thing there um but then again going kind of back to your value creation Point like if everything is coming from meme coins right now in a bare market like if you only have deep in stuff going on I just wonder how much the total economic value as one then has some or like named the new parameter so to say like where does that end up it um and yeah maybe a good example of like if the chain doesn't kind of cater to your core needs you're always going to forget that oh you have like these types of apps that I never use but they're like super useful for example uh yeah I'm in love with near uh

that's like a big position for me just like a disclosure but I think a lot of people even forget that the whole chain exist but recently like it has seen a lot of more activity coming from like real world use cases and like you you basically nowadays don't see anything uh or any talk about it going on on the timeline at one point there was some hype about it because of the AI stuff and uh maybe some da stuff but now it's like kind of being forgotten about again although there is like meaningful activity on that chain yeah as far as I understand Kai Kai is actually quite big um the only issue with that I think with near is that like you know that image that was

that they posted that was like um Jensen touching Ilia and they were like the touch of AI or the touch yeah I think that like perfectly near because it's like they're constantly trying to like touch on whatever narrative that they have instead of like actually highlighting core use cases like Kai Kai people not knowing that near that Kai Kai runs near underneath it is incredible like both from the consumer side because at the end of the day that's what you really want like if you if you're not getting into crypto like us just because you're interested in crypto but you're getting into it just because you want to use the app you don't want to know that it's running on some form of like blockchain

infrastructure you want that abstracted away so I feel like they should be pushing more into that but um I'm not like honestly I'm not really sure how they would even do that because I feel like they have so many of these narratives that they keep trying to latch on to yeah I guess that's BD work you would do behind the scenes right like you just contact some companies or like some potential clients and I don't know if you're there is that much of a need to like make near big on Twitter just because of that fact but then also I feel like their da solution isn't really talked about I guess it's being pushed back or like not really like you know gained adoption yet I think the first L2

they used near da came or went online like maybe two or three weeks ago so maybe that's a narrative that we'll pick up in a uh in the next com months is the RSS free yeah i' yeah I Al I'm pretty sure you sent that to me but I'm like I feel like that's just not big enough of an L2 to also like make waves about the da though but when I was looking into da layers it was like very clear obviously this is also coming from like the team but as far as they explained it to me and as far as like I saw NE does beat like most other da layers in essentially everything um there's the chart including cost show some Block's research data here yeah like that's

pretty spot on one thing I want to do is add near to this chart um if anyone knows their way around a near block Explorer shoot me a DM atmy guy on Twitter it's a [ __ ] war zone over there but uh I mean it is crazy to me to see the the difference in costs here from you know from going from call data to blobs for theum was about a 99% price reduction and then going from blobs to Celestia is like another 80 85% price reduction at some point that the the next marginal 80 plus perc price reduction probably doesn't matter that much and you're looking for other benefits from the network effects of your da layer um I don't I don't know if that's at 14 cents for celesio or if that's at one cent let's say if that's

you know if near really is offering another you know material price reduction there um it's hard to say I personally haven't priced out there's a couple I think there's one L2 that's live and posting da to near so we like we will have that price feed um so yeah I mean I'll keep you posted with this chart based on like what near released it's 30 times cheaper than Celestia but obvious like I looked at what they were citing and it's a transaction that they simulated on there and so obviously it might be like funky but I mean even if it's 15 times cheaper but like you said at that point does it really matter like you've already gone from call data being exorbitantly priced to like you lowered that with blobs lowered that more with

Celestia and then like how much lower do you need at that point does it really matter that much one more number to put on that right like orderly network uh which is like a order book Network something or rather is posting its data it's like a it's a roll uh structure and it's posting data to Celestia now it's been live for a couple months and it's posted the most data of any Chain by 3x to Celestia and it's paid a total of $1,200 in fees like that is and that's obviously divided amongst every transaction that it's processed it's really gets hard to say you know yeah that needs to be another 30X cheaper like at that point it just it just doesn't matter there's too many leading zeros for the user to even know there's a

difference all these da Solutions uh and infrastructure players in general are just fighting for the same Dev po um costs are getting commoditized that's not what it matter that's not what matters or like the the differentiator is it all comes down to narrative on crypto Twitter and it comes down to incentives too so um I think with you're actually seeing this morning uh there's a conversation being had in the Celestia forums about actually leveraging some of Celestia's uh community pool which is only about $7 million today and I gotta confirm but I'm pretty sure the community pool just comes from like normal Cosmos chains percentage of inflation it's like Cosmos Hub 10% of inflation goes directly to the community

the rest of 90% goes to stakers and validators um but there's about $7 million in Celestia's community pool and there's a conversation being had about creating like an incentive program to uh there you go thank you for pulling up um yeah has a very early conversation only three comments I think are on the forums right now about what to do with this community pool should we actually be used as like an incentive program to get more rollups uh in the ecosystem leveraging C Celestia for da or incentivizing economic activity on these rups to I guess bolster this narrative as te as modular money this is one thing that like ethereum can't do because ethereum does not have onchain governance it does not have a community pool and I think this is something that other da providers or

other infrastructure players in general like have to lean into follow the money follow the incentives this is what arbitrum has done really well whether or not you agree with their treasury spend or not I don't personally agree with I think the um the magnitude of the treasury spend but I think directionally it is correct like right now Tech is going to get commoditized infrastructure getting Comm commoditized it all comes down to like incentivizing developers on platform um and I think that's where Celestia even near right like near if I remember correctly near during their token launch event uh last cycle a percentage of near Supply was actually supposed to be allocated

towards the community um I think because there was no framework I was actually reading about this over the weekend because I've been getting more interested in near uh in general I'm not a bag holder like brick yet but maybe I will be soon um a sizable amount I want to say like 15 million year don't quote me on that was supposed to be allocated towards the community and they never did it or they did it but then pulled back the funding because there was no framework for how you actually allocate this this amount of capital um there's now actually a conversation being had to reinstitute this community pool or this uh this Dow treasury um and I think interestingly enough you just saw an announcement by like about a week a week and a half ago they're partner

partnering with near Foundation uh to I think like bolster create a framework for how their government structure should be set up moving forward um so this is where protocols need to lean into things that like ethereum can't do ethereum has all the network effects it has all the developer activity I think that's why you're not seeing net new applications in salana and other ecosystems because like 95% of the web 3 developer space is like just in one area and is like in the evm in the ethereum ecosystem um so yeah I think that's really like the The Edge that these other infrastructure players have speaking of like ephemeral activity though I guess a better way to frame

this which probably says something about this industry is all right what what base layer has the stickiest level of activity right because you think about like ethereum main net um what's driving activity on l2s right that's largely the same you know coin swapping activity that we see everywhere and so if that dries up industrywide you know my question is like where do you guys think what what base layer do you think uh retains the most level of activity and ultimately like fee generation if you remove coin swapping yeah if you say next be Market the real question is is is the peak of next bear where is the most

activity remaining that's the best way to word this question if you removed speculative activity from every single chain you might actually have to say like near might be the number one chain with the with non-speculative activity uh I think owning a majority of its economic activity on chain so kaching has and I know you hate this this uh metric Dan but has 92 24,000 daily active addresses means nothing means nothing means nothing but generally speaking like if you look at the applications that are on their platform that are on near that's driving a lot of the economic activity it is non it is not as financialized speculative

activity that's that's happening on arbitrum on Sala obviously um so you can make a strong case potentially that near might actually have the most sustainable and I'll put that in quotes if we remove coin swapping I feel like it could also be e main net just because well because most of like actual Capital activity happens on eth Main net like not swapping coins but borrowing and lending on stuff as opposed to let's say like other chains now obviously I don't know if it would be like the same amount of transactions but I'd say like the most Capital being moved or like used in transactions it would definitely still be on Eve because nobody's lending and borrowing like size on other

chains yep uh shout out maker for that uh I know we've hold on I want to take a step back because we've thrown kaching and Kai around like what what are these apps actually doing so Kai is just for like basically think of kind of mixture of uber online shopping online experiences all of that thrown into like one app and then you can basically use the you can buy the stable coin uh which you can't like use anywhere else than on the platform and I don't even think you can like go back kind of to US Dollars uh from the stable coin but like by buying the stable coin you're basically like

getting some uh like discounts within the app to buy different things and that's like driving the activity so like an active address there it means a little more right that's presumably somebody who's logged into an account and like purchases something on the app right so that starts to mean a little bit more yeah I'd say so but I'm not sure if there's like I don't I don't I don't know what the right term would be on that chain but like smart accounts or some like account extraction like contracts that also send like transactions which might uh kind of obus skate the numbers if that makes sense going back to really quick sorry Picacho um just like doing I was doing

some again I already said this I was doing some due diligence on year and going back to what you were saying Bachi like there or maybe was Break about all these narratives that near has uh AI being one of them da being one of them but then you kind of see I think discussion on crypto Twitter which is like the I don't know the uh the town hall for for the crypto space uh seeing conversation I think dissipate around near but what I literally just found out doing my own DD was at uh phase two of nightshade I think is launching uh it was supposed to launch in May I don't believe it did maybe it's happening this month but that expands near sharding capabilities from four shards to six shards which is going to expand its

network capacity by like an additional 50% I think generally speaking like near is in a pretty enviable position from an ethereum's lens they figured out charting when ethereum decide to like skip sharding go this like roll abcentric environment which is predominately hosted by centralized sequencers near has what 30X cheaper da costs they actually have non-speculative Financial activity happening on their chain um they have native like cross Shard composability whereas like rollups don't have a native interop or composable solution um and this is someone that doesn't own any near but like the more DD I'm doing the more I'm like near is

actually good Tech and they're actually starting to find hit some sort of escape velocity relative speaking um in terms of onchain activity so I'm definitely getting more interested in it and obviously you're not even talking about any like the AI stuffff that Ilia um and I think the the near team is kind of like trying to create an incubation program specifically for AI or ml related tasks uh for for near so a lot of interesting things going on and I I don't think they're getting nearly as discussed as they probably should be i i w to I want to kind of go back to something that you mentioned eer um infrastructure and how we have so much of it and I think this has been like a prevalent theme across the past

few months and it's just that we don't have apps we have past seven years eight years 10 years however long crypto's been around no we've had apps before I mean we had apps last cycle people at least trying to build silly stuff on chain and I feel like this time around it's it's not there and I'm wondering if it's just because of like where we basically what I want to understand is why you guys think this is and how you think it moves forward I feel like the like lukewarm take here is the incentives are are messed up and that it's just more attractive to fund infrastructure and it's more like people are incentivized to build infrastructure

but I kind of want to understand like how you guys see this developing like because as you said infrastructure is getting commoditized and we're building the same thing over and over again I think that's a copout answer to be completely honest not attacking you by any means people say this all the time right like oh you build build a build a piece of infrastructure get funded easier maybe it's true but I I really do think it's a copout answer for again going back to that point I made earlier where path dependency matters this the industry of like um smart contract platforms kind of like revolves around ethereum for logical reason and ethereum chose to maximize decentralization that was their goal

they're going to prioritize a solo Staker you're be able to run a node at home a validating node for you know less a monthly Electric cost it's like less than turning your fridge on and because of that there's like cascading design decisions that have rolled out of that where scaling has become the constant battle that they're trying to to solve against rather than if you flip that on its head you scale first decentralize later and because of this I think we ended up in this like infrastructure circle jerk where you have to constantly keep trying to build this next piece of infrastruct that infrastructure that pushes you marginally closer to being able to to get the the goal of a scalable blockchain right and what does that look

like in in practice and using examples well you end up with l2s then you realize okay well this is great um but now we have this centralized sequencer so how do we fix that and it's like oh well guess what we get another consensus mechanism uh some more infrastructure with a decentralized sequencers where everybody can opt in and we have this market for for sequencing blocks or we do like this base sequencer thing and just reuse the ethereum uh validator set to sequence blocks for base rollups that sounds fantastic okay awesome but turns out you're constrained to the limitations of the base layer when you do this uh what does that mean more concretely is 12C block times and so to get around this you need pre-confirmation well what do you need

for pre-con confirmations more infrastructure and so that like that's my point is we get in this like death Loop of needing more infrastructure and ending up with like these things are like ah this one little small thing centralized maybe that's okay and like what does that look like I'm m in it well we have three builders that build 90% of the blocks and if one of them changes their mind it starts censoring being Titan we go from like a 10% uh censorship rate to a 90% censorship rate and then if we go to this pre-comp world gateways and sequencers and proposers they all end up as and L1 Builders they all end up being the exact same box and like maybe that's a bad thing maybe it's a good thing I don't know but it does feel like that just gets so swept under the rug in ethereum where in other

ecosystems like Aptos andu we like basically have Whit list Whit listed validator sets or very high standards to get into the validator set much smaller validator sets and you know that's like their trade-off is like hey well we're going to figure out how to decentralize this thing later we're going to go fast as hell today and so it's just an interesting way to think about the need for infrastructure stemming from ethereum's Core Design decision to prioritize the solo Staker I think there was um there's a interop protocol called Union and this is not an attack on Union at all I actually think Carell and like the team over there do good work but he had a union protocol had a tweet like a few weeks ago I was

like rephrase mod the modular thesis in less than three words and I was like value extractive middleman because that is all it is right because ethereum has you pretty much this entire infrastructure VC uh landscape is strictly just to put like patches to to then Point some of the uh I guess technical challenges I think ethereum has as a Bas layer so we're trying to come up with all these like other side infrastructure Solutions instead of just as an industry just deciding that like we need to move on and we need to continue building on top of like the best infrastructure which you can make a case is a salana or one of the other like all L ones today uh but crypto is

still generally in this like religious phase uh that they cling on to like a religion or a cult which is like the overall ethereum uh mindset and that's mostly where I obviously a lot of like the capital has being allocated to still today I don't know my take here is that the industry is still relatively young compared to like for example what happened with I don't know like the normal computers or like operating systems connected to those like if you it took it took a super long time to even realize that a GPU might make sense to like add to a computer and like without a GPU nowadays we wouldn't be

able to do kind of anything we're doing with computers right now same was with like operating systems you had to be able to code to like even be able to you know interact with a normal computer and from there it took probably again like 20 or 30 years to get to operating system that like I don't know you're or my dad can use so I just feel like it's a bit unfair to yet you know trash on just the infrastructure stuff because like to be honest if you want like real Mass adoption no blockchain is yet ready for that and I think it's fine to kind of you know continue developing infra or like just focusing on infra I don't

really have a problem with that but I do get where you guys are coming from because it seems that a lot of this stuff at least on the surfaces it just seems kind of like a money grab or like easy to get funding type of grab uh but it's also like not all vs are stupid or like I'd say most VCS aren't stupid so like if you're able to raise funding it's likely that VCS have like seen something in your project or in the infrastructure thing you're kind of developing they have a mandate to deploy this Capital right like they're not g a paradigm or someone else is not g to be able to deploy $850 million into a bunch of different decentralized applications

and I think one of the reasons why is because one The Tam is not large enough to like justify one billion plus valuations out of the gate for like what you're seeing for a lot of these INF projects I think another reason why is because if you look at like web 2 today what is the last mainstream application mobile app in particular to really take off Tik Tok is probably the the most recent one obviously and that was founded created seven years ago uh I think the reality is like what so just speaking socially I think social applications specifically um we've kind of hit a dead end in terms of in my opinion in creativity on like what the next mainstream application is so there's I think that's like true for the web two side and then when you add web 3

or crypto it's like all right well how can crypto better improve some of like the Web Two Social or application experiences so I think it's a web two problem in terms of like what is the next big app that consumers want but I think just adding crypto to it is just like another bar barrier of or another barrier of entry for getting app developers to like build net new things I I just don't think like the why the I don't think Society really knows like what that next thing is it probably has them to do a VR AR but maybe that Tech is too early to um create I guess you know that next big thing yeah but I mean it also requires just like one big breakthrough and then you start getting more and more devs in I think especially on the like onchain

AI stuff uh you've started seeing this where uh people have seen the potential suddenly token prices go up and then it's much much easier to kind of attract developers uh even from like big AI uh like tra or like traditional AI companies to unchain like projects working within AI I think I got to explain myself a little bit over here as well like I like the where you guys took the question but I was more so not like against espresso and stuff but more so like the 15th L2 that is like doing native yield um but I like what you guys brought it to a lot more than me trying to [ __ ] on

infrastructure for the 50th time over the past month well the like the espressos of the world are like they're solving a problem this problem exists and someone needs to build the thing to fix it like I'm not saying it's a bad thing and I it's just like a it's an observation of like why that problem exists right again going back to the the the thesis I laid out but you're totally right like do we need yet another L2 no do we need another ethereum based L2 no like we don't like we've got plenty of them we have multiple teams building out like the other like the issue is they're all general purpose I think like app specific rollups make a ton of sense there's there you get benefits that you don't get when you're building on a general purpose layer like that that makes sense I I don't think that's like

a hard leap but when we see like base blast optim M arbitrum uh ZK sync ZK evm from polygon uh the polygon POS chain will migrate over doing L2 mode like that's just at the top of my head that's eight l2s doing the exact same thing we don't need that we don't need that that's fair what about gaming El we had this debate the other day and I was like competition is obviously net good but like when you is it just endless competition for the sake of milking the valuation premium that you get with these things like l2s are still launching it they're still launching it

hundreds of millions of dollars and like I guess you could make the argument like well well if they win the sector you know David mentioned it earlier it was a huge Tam like like I don't know it just seems It's tiresome it is tiresome I I wna ask one more thing because you talked about this a bit like the Band-Aid solution um these constant launches of infrastructure and I kind of want to ask about celesa being a bandid solution because as far as I understand once full Dan sharding goes into motion like okay Celestia is cool but it doesn't matter that much like da fees are going to go as low as they can and at the end of the day wouldn't you want to post da on wouldn't you want to publish data on ethereum as opposed to

if there's like a minuscule difference so like igen layer should theoretically be fine we can ignore the reaking thing because like I da is just the part but it can technically do everything but with Celestia I feel like they're latching on to Sovereign rollups um and like this completely other class of rollups and then that assumes that the modular feis works out which also assumes that we're going to keep funding these rollups these a thousand 2,000 whatever like okay a lot of them will be app specific fantastic but also like I'd say 10% of them will be generalized is there really any value in that and do you think like this is the general public apart from brick because I feel like I shouldn't bring Celestia next room but do you think that the

Celestia vision of like will it end in three years or is there's something else that they're going to be coming up with or am I wrong completely and I'm being stupid on the podcast in public I mean it's a good question uh I think they are working in very similar directions like it seems pretty clear to me I I don't I don't think I think the core difference is Celestia is pretty loud about not wanting to be a settlement layer for everything like they don't want native usdc being like minted on there and then using that as like building a smart contract based roll up like that's not really what they're what they're optimizing for by any means it's not even possible and likely will never be possible uh but they are building ZK

accounts to improve how you like get Tia bridged across to these RS so specifically their asset and so ultimately their value proposition starts to look fa similar to ethereum right like you're settling these rollups on ethereum and you're getting liquidity from ethereum and you're posting da to ethereum well most of that is all true where where you're getting Tia off of Celestia and then you're posting Your da so celesia uh you get some like interesting uh compa composability features when you're using the same da layer as well like play this out on a long enough time Horizon and like Sovereign rups will will definitely be leveraging this so there like you get some sort of something that looks

similar to out um I don't know like those are really the only two places I guess near is competing here as well so going back to the point of like competition for competition sake I mean yeah you can make the argument but I think the core difference is Celestia brought an industry leading change to Market at launch which is uh Das or data availability sampling so I don't know I think that was like a zero to one that was a stepwise function for the industry so it's to me it's hard to call it a Band-Aid solution Dan do you remember uh you you might know off top of your head if you don't I apologize for putting you on the spot do you remember like the block size of ethereum post 4844 uh well it didn't post 4844 does not change the block size but you get

three a target of three uh 0.125 megabyte blobs per block um so I can here let me quickly do the math on like what the target rate is per day because the target rate for Celestia is about 46,000 megabytes per day uh so what's this so I think where I was going with this and you're right completely mess that up not not block size change my apologies there 270 megabytes per day so I mean sesia is like I don't know what's 46,000 divided by 270 yeah 170 times bigger capacity that's just

so long term when when full dank sharding is live for ethereum I think they're going to be able to do like two megabit megabyte blocks actually on like a longer term scale I don't know the numbers I I I could be wrong there it's the diff the difference though is Celestia has a pathway and they're nowhere here yet but the end game for celes gets to one gigabit block one gigabyte blocks there's like a meaningful difference and we're talking years out into the future right but there's a meaningful difference that the amount that celesia can scale even in from my understanding what ethereum's end state is with DK charting Fully live now the question is obviously do we even need that much data

availability and I don't know the answer to that obviously if you think of a world of thousand or millions of rollups and the entire world's economic activities on chain then yeah I have to imagine you need that um but I don't think celesy is a is a Band-Aid solution I I see it more so as like indirect competition is a better Tech stat for that specific service offering that it is doing that is giving its uh its rups or its clients which is data availability obviously I layer as well igen layer is I da is to me kind of a Band-Aid solution because it is trying to attach itself to ethereum as like a side card da solution whereas I think celesa is completely trying to be its own standup like platform I don't know

maybe six years ago or five years ago you could have said that is salana bandaids solution for ethereum because ethereum will get the end state will be this and this and this and everything will work so well you know what I mean and then like even right now because ethereum has had kind of a first mover Advantage uh within the smart contract world like it's still bowling out on that fact like you have the devs there you have the liquidity there I think it's fair to say that like Celestia could maybe achieve a similar position especially if Thea gets more adoption because then I feel like it's not as easy as just like kind of changing your da

provider yeah I guess you're right maybe I am being a bit of a old head in this scenario before we move on to more questions let's have a quick word from angle protocol thanks to our fantastic sponsor layer zero all right guys for this week's layer zero segment I'm joined by Pablo co-founder of angle protocol thanks so much for joining us Pablo hey thanks so much for the invite it's a pleasure to be here just to kick us off do you want to give a description of what angle is and how it fits into the current stable coin space sure um at angle we are a decentralized stable coin protocol behind two stable coins a Euro stable coin and a USD stable coin uh we make sure that our stable coins I mean we are

Building Solutions so that our stable coins are yield bearing and that there is no opportunity cost for holding them with respect to accessing to the markets risk free yield and so on our USD stable coin we have a saving solution that tries to offer the best of very lowrisk Defi and try yields in a in a passive way um we have put a lot of emphasis on like resilience and our systems were built after the usdc dpeg uh like they come with lots of fullbacks automatic scenarios um to ensure that as a USDA older you have more like more uh guarantees with respect to what would happen in a black one event with with

respect to just like holding uh with like if you compare it to any other um stable coin out there um we are like crushen uh in a sense and we place a lot of emphasis on like providing an easy access to our stable coin across a lot of different chains with no fees no sleep page um and super easily perfect and how does layer zero fit into angle layer zero is key in achieving the vision that we want to uh establish uh and to push forward with with Ang girl our vision is that there shouldn't be any opportunity cost uh like you

shouldn't be the product when holding a stable coin and this is the case you know whether you are holding usdc or usdt on ethereum on arbitrum or on any other chain layer zero is for us the solution that Ena tells us to connect all angle deployments across more than like 10 different chains and unifies everything into a single liquidity Hub um so layer zero for us not only makes it easy to go from one chain to another but it also ensures that liquidity is not fragmented and that anyone wherever the chain were they from they can easily get access to like the super liquid yield products we are developing with uh with Angel so I said that layer zero is

the facilitator uh um in the The Vision we are developing we we ensure that um like our job is to make sure that we optimize for the balance sheet of the protocol under solvency and liquidity constraints and layer zero is the the key element that guarantees that all the protocol um like deployments are consistent with one another perfect and lastly I'd love to hear more about what's on your road map over the next like 6 to 12 months the road map for us is always like what what dictates the road map is always determined by how are we going to make the life of our users easier and how are

we going to um you know facilitate the life of users in defi how are we going to build the tools so people start using Finance on blockchains because it's a more efficient standard than using Finance like uh than doing Finance as it is today um the the the key product we have is our saving solution uh and we have several iterations going live uh that are going to further enable the accessibility of our yield products for anyone coming with usdc on any chain uh to be able to get in get out at any time with no fees start Runing a yield super transparent yield um and on many chains thanks to a layer zero so this is key in

our rad map and then it's something I've not really mentioned here um we are building a lot of tools and a lot of tooling and systems uh to make onchain Forex a reality um there are approximately 10 trillion uh worth of dollars traded every day on the Forex on the Forex markets almost none of this takes place on chain and everyone um you know sees the promise of using blockchains for crossb payments for remittances but this is really barely the case you know because you don't have like between markets between USD stable coins Euro stable coins or you could factor in other currencies in this um and this is what we are going to

release in the next six to 12 months with with Eng girl the possibility for this to take place at kale that's very exciting thank you so much for hopping on Pablo thank you so much was a pleasure all right we are back I um okay we talked about apps we talked about infra let's talk about about gaming we um I've been working on another gaming report um very fun stuff to write about something that 99% of the industry doesn't believe in but Dan you mentioned this a little bit earlier magic blocks and a16z promoting fully onchain gaming I kind of want to just talk about the most basic idea behind like crypto

gaming which is do you think it works or is necessary or do you not think it works and is not necessary could you maybe expand on that idea a bit because I think that there's kind of levels to this like are you meaning that everything connected to the game is basically onchain or are you happy if like kind of however far you want to take it because I think that's been the main issue is that it's like two camps is um well three camps people who don't believe in crypto gaming at all uh I'd say the majority of people in cryptos on that in that camp people who believe that only like certain assets should be on game and I think this this is like probably the most obvious feis is like

oh like I want to be able to trade my skins on chain or like I want to be able to like use the coins that I earn in a game on chain and the third Camp the most intense Camp um but I think the most fun camp is let's put everything on chain and build out random stuff to make sure that we can put everything on chain and like autonomous worlds AI agents playing silly stuff on chain moving like just moving from like point A to point B is an interaction on chain and I mean you can take it however you want like whatever you want to talk about you can talk about really I'll just briefly say something like I think as someone that's a hyper

bearish on chain gaming historically on every single time this conversations come up on like this podcast or even private conversations to me the only thing that's like a hurdle for me to get to believe in this like I need a Nar like what is the the cohesive narrative for onent gaming defi has a cohesive narrative right right it's like a permissionless financial uh uh ecosystem that anyone could tap into um deepin has like a a narrative it's like permissionless Capital formation to bootstrap Capital intensive networks permissionless labor participation to like the big things crypto is good at I have yet to see someone come to to me with like a really good cohesive narrative for why onchain gaming makes sense and what is like the net benefit

that these games going on chain do compared to like traditional gaming today like I to skin skin trading skins to me is not that can't be it there needs to be something else to get the next wave of game developers and the next wave of uh Gamers on chain because I I don't think that's like the secret sauce there I that's my one gripe I think personally but that would be huge though because like a lot of this like the most popular games ever are pretty much based on like the developer making money there is based on the fact that Skins are in big demand and like the problem for me there is that most kind of places that you can bring up where blockchains could like

give the player a better experience kind of hurts the the developer from like a financial perspective so for example like creating an in game economy on chain where the player can kind of move assets outside of the game and sell assets outside out side of the gamees marketplace just means that like the games Marketplace isn't making as much money because you can't always take the cut from like the sold items or the sold skins the same kind of goes for like being able to transfer skins between games like that just means that like the game developer can't sell as much stuff when they create the next game or for example when some people have mentioned that you could like transfer your levels

for example as well or like some kind of an experience I don't know if you look at some games that basically just like let you pay to win that would be a huge loss for them like their whole business kind of idea or business model would break down so that's where I struggled to you know see how you're going to get this big triaa games to move on chain I think for indie game developers it might make the most sense because then like I think it's not that profitable from the first place un unless your game absolutely blows up so you can basically you know collaborate with other indie game developers and kind of create a ecosystem through that and create an

experience that a player of chain couldn't get because everything is siloed there yeah um I mean the I agree with your points brick the one thing that I think the whole Marketplace idea makes a lot of sense is bringing marketplaces on chain I think in it inherently increases access to these things and thus should increase the liquidity there and more liquidity more trading um fair prices so I do think that that is an interesting aspect to be bringing these in-game economies or in-game marketplaces on chain um that said like the whole you know wear my Call of Duty skin in

fortnite like that has never I I play video games I don't it isn't like that doesn't fire me up to go be an onchain gamer by any means and then I I showed that while David was talking I I showed the the magic Block announcement video it says it's all on chain I really don't get how that's possible and I I again I I haven't had the opportunity is this was literally 30 minutes ago to do the DD there but like every Square you step in like an MMO RPG cannot be an onchain move like that first of all there's a like that's a non-trivial cost to that if you know the median transaction fee on salana for example which is where magic blocks is building is two10 of a cent so every 10 steps you take if

they're all one transaction every 10 steps you take would cost you two cents 100 steps 20 cents and so on and like that's I don't want to pay that much to like it play the game it doesn't I don't know I'm not totally convinced that makes a ton of sense well I think that's why these gaming companies are going have or gaming Studios or developers going have to raise a lot of money to raed all that away and then eventually found a monetization pass that like users aren't paying to like move because that is ridiculous concept right like that that it makes a question like why does that ever need to be on chain whicho I'm curious what you think there one thing I'll say really quick and picachio please jump in here after this is Hayden who's on the research team gave me

like is bullish onchain gaming and he one thing that he thought he said something that was interesting to me was like provably Fair on chain games which I do like the concept of like if the more things are on chain the more you can prove that like your competitor doesn't have an edge in which I know as like a gamer myself like when I'm playing someone on Xbox Live or Playstation live whatever like I'm always like that they're cheating somehow like if I'm losing it's like there's no way that person's that good at Madden like what are they doing or Call of Duty or whatever uh that resonate that was the only thing ever that anyone's ever said to me for on gaming that sort of resonated with me which is why I do I can see world where the more onchain aspects go on more

aspects of the game go onchain like it becomes provably fair and then you can actually ensure that people continue to play their game because you know know he's cheating yeah I um so Hayden is as far as I understand um he's also read this which is by gub sheep who um they developed Dark Forest which is one of the like first I think like promising attempts at fully on chame gaming um and yeah I think that's one of those like big ones is provably fair and verifiable and another big one is composability but at the end of the day I don't think

that the narrative is like as clear as with defi which is why I also think we just haven't gotten there yet I um one thing that's actually been making me more and more excited about onchain Gamers is and I've talked to Dan about this is that and brick I feel like you kind of touched up on this as well like why would a big game developer come on chain and launch a game I don't think like as you said I don't think it makes much sense for them to do so and it's the same reason why I feel like I think we had the same conversation regarding AI like months ago why would like an legitimate AI company come on chain and like build decentralized Ai and at the end of the day they won't until either there's Financial incentives the same way that

like there's they're building subnets in bit tenser because there are Financial incentives now and I think the second thing is that the original like defi Builders why did they come on chain they had strong ideals and strong principles and they wanted to build a different system and I think with gaming it's slightly like you're going to always attract that sort of crowd at least for successful gaming is like there's some like Z and stuff that I just don't feel like are very genuine attempts versus like other attempts which are mud um who have Redstone and like Argus even though like fundamentally there isn't that much difference they're both trying to build more efficient and like proper fully onchain gaming and I think it's just about motives I feel like when you go

over the work like when you read about read from gub sheep and when you read about like Argus and mud and their approach and like how they started developing um Dark Forest and then ZK dungeon and how they found out that they can't develop these games because that like it's just the evm is just not good enough and some other like I I'm there they list like a million reasons it's just like the state issues storage issues is just not particularly beneficial like towards gaming and they decided to launch their own Frameworks which is kind of why like long-winded way of saying I'm interested in these two protocols because they're actually like trying to build cool stuff on chain yeah I like your point there we

talked about start Scott sardo on the show actually a while ago and yeah he was like the evm is not built to to build games on top of it just doesn't work efficiently so it's interesting to see that um the other hard part here is like building a good game takes years and so it's very easy for us to come up here and appap about it um but it takes legitimate time even if like the solution has been discovered today they won't like come to market for for years uh but Counterpoint to one of your earlier points which was like we need legitimate gaming Studios to come and they're not coming CCP Games built e on line e on line is arguably the the largest uh in game economy in like the world at any point in time there's like famous uh battles that have happened in

this it's like an open world game famous battles that have happened and like they can you can calculate like the dollar value of the ships that get destroyed in these battles and they're like multi-day battles across the entire game servers and um they are building something called project Awakening funded by a16z and it looks pretty interesting man like I don't I don't know and like they had a devet not too long ago I think there's another one coming up and they are like actually trying to build the same game but with some on onchain elements it's not fully onchain I don't believe which I I kind of I kind of think that's what makes sense here uh but they really are they want like the market place to be on

chain and then in Evon line I had a huge problem with I don't know I I I don't know maybe it is I I could be wrong there I'm I'm not 100% positive but they had a huge problem with like EV on line with these like black markets popping up and so they want to like make the canonical marketplace where everything happens and you get more liquidity better prices and more trading um and then even just like composability right like people would build uh try to like build services around the game and then you can't because that you know it's like their prerogative to turn those off like classic Twitter API stories um but if they're all smart contracts then like they're permanently open API and so there you can go interact with them yeah and I'm excited for those

types of games that are not like It's Not Call of Duty or fortnite but it is like a game that I like I know there are like some of those games out there that people just think 30,000 hours into it's not like one of those games that you pick up every year like Madden and you're like oh I'm just gonna play this around like six months and I'm done no it's like people like grind that game out for 10 15 years that's the only game that they play like hamster combat hey man hamster combat is trying to change the way that we interact with consumer applications on Telegram and I am excited for it I'm actually not I haven't checked it out yet I know we're probably coming up on time we're almost at the hour mark

But I know all of us were kind of chatting uh and additional people aren't on the Pod but chatting about telegram games and the click to earn phenomenon none of them are I haven't tried all of them but ones I've seen are not games they are just like me having a seizure on the couch seeing how quickly I can like tap the screen to beat some random person um but these these exist on the App Store as well we we were debating this David and I was like all right let me see what tap to earn games are on the App Store and like I don't this is a sample size of one I did not put much effort into this but you go read the comments on these games I think one was called like Cookie Monster or something and you're like cookies per second yeah

it has like a cookies per second stat it's hilarious but the comments on these things are like this is the most addicting game ever like don't download this if you have an addiction problem like like and of course playing it for eight seconds I was like yeah this is [ __ ] stupid but I don't like tap to earn games exist they're like a whole sector of App Store markets or or games like I agree they're not they don't feel like games they feel like chores but and I think Snoop Dog had this like weed farming game a while back ago where it was the same concept you you were farming weed and it was just a tap to tap to earn or tap to tap to click play a game and I don't know maybe maybe there's something there but it's really hard for me to say that like yeah that's

what's going to onboard the masses and one of these [ __ ] apps on telegram tweeted out their active user stats their active addresses stats and they're like 1.25% of the world is playing this our game and I was like all right well you're just showing off how [ __ ] useless that metric is 1.2% of the world is not playing your telegram app Dan you're so upset about this I've never heard anybody come on the podcast and curse this much it's a familyfriendly show man I'm sorry but Joseph bleep me out on the edits I want loud like pure ears earpiercing beeps on the last podcast no the one before that I mentioned that drift is not a good

product because liquidity is not good now we talked about this a bit but I kind of want to get like this out in public do you think that if you're per per de and you have bad liquidity is that a product issue or is that not a product issue it's like saying if I use Uber and no and if I request an Uber and I don't get an Uber come pick me up for about an hour is Uber's product good or bad the function of uber is to be a Marketplace for drivers and riders that is that is literally the core offering that they're selling drift core offering is creating a good trading experience and yes the ux

is part of that but functionally I need to have I don't have a good trading experience if I'm paying massive amounts in fees or slippage liquidity H like every single def5 protocol liquidity is the core offering so like I definitely think liquidity makes her breaks a product um every single spot deck rips off Unis swaps front end to me the differentiator is the liquidity that Unis swap offers for its Traders compared to sync swap on ZK sync or something just throwing random uh decks out there I definely yeah I'm just saying in general

like liquidity definitely is part of to me anyways the the product that is drift yeah I mean what's a product the product is trading how do you make good trading like a subset of of your product relies on having liquidity I think you can get into like a semantic debate as like is that really product or more like go to market strategy I mean I could you could really get like a a fine scoped view of what product means and like really zoom in on like how the user interacts with your thing so like the product being the Uber app maybe not the cars um but I think broadly if I if I was building a perex today like what are the core things I would focus on like one of them would certainly be getting liquidity

it's the number one thing you would focus on now it's like getting liquidity making it an actually good experience to tr on it and I agree like it's kind of semantic um I also feel like it's the market deciding on whether your product is good or not is I would also I I would add though like there's more to what makes a good product than liquidity it's just not it's not the only thing well it's not but it's it's an important thing if someone if someone Forks drift's entire mechanism and the entire front end and just has better liquidity that is a differentiator is a better product for your at a certain point no though like if you both like there's a mark in the water where you

have sufficient liquidity whatever that means let's just say like I can get through a $100,000 trade with x amount of slippage right price um I'm I'm making up a number and if you like once you hit that you have what what you could call like sufficient liquidity and then it doesn't matter if you gets forked and someone adds double the sufficient liquidity because it doesn't apply in most cases like yes you can get those ultra high trades through but how often does that matter like it wouldn't be the norm so I would argue it's probably the most important thing until you hit you know this arbitrary Mark of sufficient liquidity but I mean like the way you get in front of users how they interact with your app like you can give me the the per most liquid decks in the world

and the UI sucks it's a pain in the ass to use it's on a chain where the transactions don't go through like then then like there's more pieces to product brick what do you think the way I was thinking about this was I guess it could be also fair to say that you can divide the protocol kind of into two products so you're offering like a prod product to the supply side and a product to the demand side and like basically you can attract liquidity to your protocol if you like have a first mover Advantage for example but then at least in theory like over time if another protocol comes in and

kind of provides a better product to the supply side it should like the supply should migrate over to the next uh you know protocol so to me I totally agree with efforts like the way he frames it like I think it's straight up like attached or attra how would you put it like linked to the quality of the product and like liquidity in itself in my mind kind of e the product as well kind of semantics but yeah it's okay that's all we do in crypto discuss semantics and then see if it if it fits or not um but I think that's it that's it for the day guys thank you so much for coming on and

um thank you The Listener for listening have a good day thanks for having us on bako thanks B [Music] oh