Does Gwart Hate Ethereum?

Transcript

we all have to come to this once again hard to swallow pill realization that the level of censorship resistance and decentralization required is many many orders of magnitude lower and I'm sorry to say this but it does not matter at all how decentralized the chain you are sending usdc to somebody on if Circle can go in their database and scratch out your name and say you no longer own that it does not matter if stable coins are the killer use case we can probably do away with solo sakers we can probably do away with a lot of these Cipher Punk ethos things chaos Labs the leading

onchain risk management firm recently launched its new flagship oracal product Edge Edge delivers integrated High Precision risk and price data for any application with the market follow and reach out to chaos Labs on X to learn more what's up guys just want to tell you a little bit more about fuel labs and their new ethereum L2 fuel ignition so fuel Labs is launching fuel ignition a high performance e L2 powered by their fuel VM with the launch of ignition the team is also launching phase two for their fuel points program to reward users and promote make sure to check out fuel. Network to learn more nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show

are solely our opinions not Financial advice bacho Ryan and our guests May hold positions in the company's funds or projects discussed what's up guys welcome back to another episode of ZX research today I'm joined by The Dream Team of men who care too much about L1 design choices from the Gart show Michael eolo from B curve and Daniel Smith from blockworks research thanks for coming on guys yo yo thanks for hosting Bach happy to be here fantastic um I assume we're gonna spend most of our time talking about e but before we delve into that I want to ask about what do you guys care about that's non e and non Solana in the markets like right now what do you spend

most of your time thinking about and we can go first with youart yeah I mean I'm like following this AI coin meta not so closely um it's obviously the talk of Twitter so um yeah that that would be the the one thing I've been paying attention to I think that the little mini bull we've had recently with Bitcoin is pretty interesting leading to the election I don't know I don't really try to pontificate too much as to whether or not this is indicative of a trump win or what what the markets are telling us but I've obviously been following this a little bit so um yeah that that that's what what I'm looking at yeah I think the the AI stuff is is

definitely the interesting thing and I there the the good part about the AI meta is that there's a left curve and a right curve explanation to it the the left curve explanation is the more compelling one which is just that it's it is a generational technology there's no way to bet on it in public markets because everything's private and people are just going to want to speculate on these coins I do think it's kind of funny that people thought people want to speculate on decentralized training and it turns out they just want shit-talking AI Bots which is hilarious that is that is hilarious to me but the right curve is that it is a generational technology and it does intersect with crypto in interesting ways it kind of intersects with ZK in interesting ways too like if you can find a way to pipe in a bunch of

arbitrary data from different execution environments and then get AI to interact with it it there are a lot of very cool things that you can do with it so it's the perfect Fusion of left and right curve investment thesis so I'd be on the AI train also yeah the overlap that it is hitting with uh meme coins is pretty interesting as well like you think back to last cycle um D5 was the the hottest thing uh and we saw like a couple iterations on that meta started with like the airdrop meta and then it was the farming meta and then it was the food coins getting mixed in there as well and now we're starting to see the same thing with mcoins which I think is strange like I'm definitely not in the camp that you know mcoin nihilism is going to take over the world yada yada y

but it is worth acknowledging that you know Doge launched in like late 2013 early 2014 that was a decade ago and mcoin activity is up a thousandfold since then um so I'm also not in the camp that like this stuff is just going to end tomorrow um and we're seeing like active iteration on it like Bach what's that thing that just launched I'm blanking on the name but it's like the the mem coin Dows now where you're basically betting on someone else to do the gambling for you that's literally it me yeah yeah so that's the latest and greatest iteration of this um and then of course obviously that you know the the AI version of the the mem coins where you have a bot just sponsoring one effectively um and I don't know I'm

still a little skeptical on uh how AI driven those accounts actually are I mean I'm sure they're like 95% but like that 5% seems pretty interesting to me as well that's what I wanted to bring up like How likely is it that that account is actually what it says it is versus um some guy just going base 16z and just writing up tweets every hour I mean look like until claud's version of right access over your computer is live or open AIS so anthropic open ai go Google Facebook or meta um until any of those are like out and usable to the general public like I'm super skeptical that any of these things are like an exciting

version of AI um I mean it's just like it's just it's hard to to to assume that anyone else has figured this out before one of these big models is you know making it available publicly that makes sense I um mppa did you want to say something no no no I just I wasn't aware are you guys aware of what the goatsy meme was originally like did people know what this no enlighten me I have no idea oh my God all right that's what actually makes this so funny so the goatsy meme is one of those like this I don't know this is when I was in high school so you know 15 years ago and it is an obscene meme I don't even want to describe it it's like not

safe for the it's not it's not safe for podcasting but it it is a it's a guy bending over and doing something something unspeakable to his to his anus and people this was like the original kind of shock gross out stupid meme people my high school used to draw this all over whiteboards and teachers would get pissed and I didn't I didn't connect like Gospel of goatsy don't look it up butach I see her I see your screen moving just don't that's what y all right mistakes mistakes yeah yeah so I I didn't realize that it sounds like guart you knew what that Meme was uh as well but I just find the whole thing very funny it is like if the if the idea is supposed to make you laugh it made me laugh when I thought about it that's funny yeah it's a bit I wasn't I don't

know I didn't I wasn't aware of it I um with these new AI tokens one thing that's been because they kind of match like you said Dan the anthropic uh right access I think it already went live like it's ordering pizzas for you and now we have like four you saw it right is it yeah I saw the the demo they did where you like have your Claud agent talking to the claw web app um and then you can like iterate on things which is super [ __ ] cool um and so it is kind of crazy when you take this we're seeing the early Innings of like what these AIS uh how they interact with with blockchains and specifically meme coins um like I don't know when you start thinking about uh you know whether it's salonus fire

dancer or these newer chains that have a ton of capacity like let's sayu and Aptos you start thinking about like what are AIS that can iterate with each other going to do on chain and still like if you think we have a lot of coins now like buckle up we got a lot more [ __ ] coming down the pipe do you think they're going to actually use it I feel like that's always cope is saying oh AI agents like how they can't use credit cards they have to use crypto I don't know if that makes a lot of sense like they could just why wouldn't they be able to use credit cards if I'm Visa I'm like yeah let's give these things cards like I want fees and stuff why would I let crypto take it yeah this is like the go-to this is the go-to bull post is

like AI will never be able to use traditional rails of finance and then you watch like X mackina and you see the woman like convince this guy to release her from captivity you're like I'm pretty sure that thing can get a credit card okay like it's kind of uh you know it's like the it's the popular Narrative of like oh these agents can only use R rails and it's like no I think you I think you really want them to use R rails you know so I tend to agree I think it's just like sort of rationalizing the AI crypto intersection when nobody knows where that is at all apart from like complete [ __ ] coins of gaping [ __ ] like right yes that's what I think we like when I say we got [ __ ] coming down the pipe pun intended

because that you know you can't launch a meme coin with a traditional credit card being being the difference there um but I don't know like I I would love to talk to like payment issuers payment providers and and um credit card companies about this like if you knew let's hypothetically if you knew you were inter interacting with an AI agent like I feel like you probably wouldn't want to accept that transaction why not yeah because I would say do this at all costs and like who knows whose credit card this AI agent possesses like the chargeback issue is already a problem um and if you have this like AI agent that can convince people to release prisoners from captivity it's like this thing will get that transaction executed at all costs and

it's probably going to end up my issue as the credit card company I think they would still see it as incremental demand and by the way I've I've heard this this like emerging line of reasoning around chargebacks being a huge problem and I think it's massive cope for crypto as an industry I I really disagree with this line of thinking like payments are two-sided marketplaces there's a supply side of the marketplace and a demand side of the marketplace the reason the chargeback Dynamics exist is because everyone has correctly identified that the most important part of that Marketplace is the demand side so you as a consumer want to be protected credit card companies view you as the End customer they're protecting you so this whole idea that chargebacks are this massive friction and Global Commerce and we're going to change this with crypto

rails because it's immutable is not accurate in my opinion like they they've this is one of the things that they got right and we're looking for a reason to make our Tech fit it but I just disagree with this as a entire line of thought yeah you're probably right Picacho you need to get someone from like stripe on here and ask them that question because I'm sure that those are the people that are spent a lot of time thinking about this and if they're investing resources in their business to this they probably have a fairly decent answer but if they don't then that's another indication that we're probably cooked um we said that they're not going to be able to do these charging things the card payments like that's massive cope AI is not going to be using uh crypto rails what is

actually useful crypto AI um in your opinion or do you think it because today like grass launched um their token the data layer for AI as they're going with it so I'm wondering like for me it was always to I thought like you the meme coin the AI meme coin was going to be to but then I found myself in the middle of the curve because it's actually not that at all like it's underperforming I could have just bought goat instead that's the actual M coin so I'm wondering like at what point do we say okay this is maybe the only useful application that might go up people have been really bad at predicting what AI is going to be useful for I will just say like if you if you went back 10 years ago the what what everyone thought was going to happen

when you had more automation is robots replacing blueco collar workers and that's not what's happened at all the economics of that suck and everyone thought that the creators were going to be safest and it looks like they're the first people that that are going to get replaced by all this stuff so it's really tough I actually think that you could just say maybe creators and human creativity is not as unique to us as we thought and you literally could just get a shitalking AI bot to get a huge following and maybe that's it like maybe that is what AI will first be used for and people will you know aren't aren't there these this already exists in Japan right like aren't there huge like holographic concerts where people tune in to watch someone that doesn't even exist perform a bunch of music and stuff

what if that's what if that's the early you know killer use case for crypto AI it wouldn't actually shock me if that was the case you know yeah if I knew the answer I don't know if I'd be on this podcast with you guys I'd probably be pretty heads down building something sick that would make me very rich so you don't think it's any of the exist in use cases that we have come up with which is like the 37 tile subnets or grass web scraping or I can't think Olas is AI agents none of them we need it could be I don't know but I I definitely if there's 37 to subnets I don't know what all 37 of those are like what what what are your favorite ones what looks promising I don't know I none of them look particularly

promising it's always like I feel like in crypto it's all we always kind of let crypto do a little bit worse because we're like oh it's decentralized so it has to underperform a bit but the to stuff is like they have a text parser and that's like a whole subnet I'm like I don't know if this is like this needs its own subnet I don't know if it's beneficial So my answer is I don't know if any of them are particularly good all right I have a question for guart on a different subject matter here guart do you uh do you hate ethereum man what's uh what what are your feelings on ethereum in general it's like quite a loaded question I I don't know if I'm going to Ser a DI tribe um I don't hate ethereum I certainly don't hate ethereum I do think

that uh I probably have very different feelings about ethereum than most people um I think that ethereum is first and foremost useful may be useful for what is built at top ethereum um I don't know at this point that ethereum is really competing to be honest uh I also think that yeah like maybe a lot of the conversation I see at this point on Twitter between etherum and salana it doesn't seem to be progressing uh there's nothing like particularly revelatory that I've seen as of late that would I think have people change their minds on the direction of l1s uh from what I can tell and I think this has been the case for

six months or so now it's fairly straight forward road map that ethereum's taking um we've had you know Max come out of the woodwork and start screeching for some improvements to the L1 I'm like obviously I'm good friends with him I think he is on the right track I don't know if it's gonna make a difference I just don't I don't know if he if you know I don't know if going from 12 seconds to 8 seconds I mean I know you have to start somewhere I don't know if it's going to make a difference in my opinion so I I kind of have taken the stance now that uh like ethereum's kind of made its bed and it must lie or whatever the saying is and Son's obviously taken the opposite approach and from what I see it's like the market

is just going to work this out and like there's nothing more that we can contribute I think we have a relatively good understanding of how these systems work I think we have a relatively good understanding of the road map that ethereum's taken and and sort of the opinions that that it's taken it's going to export eat the asset it's going to have these all these l2s and it's going to be extremely decentralized L1 and we'll like we'll see if it works you know like I I don't I haven't seen anything as of late where I'm like oh like that's a really good point like that would change my mind you know um most of the conversation seems back and forth like you have somebody say eth is money and then somebody says eth isn't money it's like okay what where are we going from here you know what I mean and

um so yeah I think that that's sort of like I don't know if you want to dig in more but that's like kind of my overarching view it's like it's not that it's not interesting I'm not trying to like stifle the question but it's like I haven't seen anything at this point where I'm like oh this is really going to make a difference in you know changing people's mind Minds so yeah you brought up a couple good points that I want to dig into there and one of the things that um you actually the first person that I heard mention this idea was that like okay we're exporting e asset to these l2s um but there's no like forcing or programmatic mechanism for them to use e asset as the gas token and we've already SE like I think you were uh the first person the first L2

that I heard you referen this in relation to was coinbase you're like they're going to let allow people to use USD because they have a huge monetary incentive for usdc to be you know the canical canonical asset of the world um and that is interesting to me because we're starting to see a little bit of that and if you kind of zoom out for a second and you say all right there's two like value acral paths for n L1 potentially right there's a third alternative here where they're just not worth anything and still very useful to the world but if we're looking at the world that they are useful I think there's two paths one is uh the the cash flow side of things and the other is this monetary asset and if you move ass activity to the l2s you you're basically forfeiting a large majority of the uh

the cash flow side of the the value of cruel path in favor of this monetary side and then if the transactions are no longer happening in ethy asset and there's a good chance the users don't even have a clue that e the asset exists you kind of also lose out on that monetary side um so I'm kind of curious where your current positioning is on you know if if usdc or whatever the asset is it doesn't matter maybe it's the L2 governance token um if L2 become more incentivized to use a different token for gas and the the transacting users have no idea that eth acid exists does that like impact the monetary premium side of the the value AC cruel path in your mind yes 100% I'll go back a bit you can actually there's some really

fascinating writing on this from 2015 2016 I think a lot of us make the assumption that we're coming across this stuff for the first time and like digging in and there's a lot of people who have talked about specifically like this specific point is economic abstraction and this has been um discussed for yeah like 10 years now so actually ironically the guy who um Jeremy Rubin who's a Bitcoin developer it wrote bip 119 um he wrote that like people will never want to hold eth because uh it'll just be considered a utility token um okay so I have this Theory now I'll give like a little bit more of a spicy uh Theory here if you go back to starting in the Ico boom and

then subsequently defi summer and then for the majority of the last Bull Run uh eth so ethereum itself had what I would consider to be sort of a monopoly they had the only liquidity they had all of the tokens all the projects launching on ethereum and I think as this progressed they saw people holding eth right because if you wanted to go and buy a shitcoin and gamble you traded in eth and that was the the base pair and people held eth because the frictions to bridging out first of all a lot of these other alel ones didn't exist there wasn't much activity elsewhere ethereum had for the better part of its existence what I would consider to be sort of like Monopoly pricing power now this can be a good thing in the sense that if you can

capture a large enough part of the market at the onset then you can sort of um ride these Tailwinds my uh my thought is that ethereum may have overestimated ated the effect of people holding eth as a store of value thinking of eth as money their assumption was oh look at everybody you know trading it's the canonical asset of defi it's being exported now to these l2s we have reaking so on so forth I think there may have been an assumption that well people want to hold this when in reality it may have been their only choice um in so far as you know doing all of this stuff and so now we're getting to the point where we're seeing

these l2s so I I I'll add one thing I'm somewhat skeptical that there's much incentive to use these L2 tokens as gas I think people have probably already realized that this just drives it to its utility value very very quickly whereas if you use eth as gas it in my opinion will be driven to its utility value but over a longer time frame so um but I did make this point with now we're seeing interoperability now we're seeing some chain abstraction we're finally getting on the cusp of the point where users may not by necessity you know have to hold eth in their wallet and there is both a psychological and like a technical functional aspect of that being the case

so I mean we see with Bas now right like they've um allow people to start paying in usdc I don't think this is especially bullish for E the asset um as a monetary good let's say in the long run so hope that was a comprehensive answer no yeah it makes a ton of sense because when I zoom out and and think okay let's fast forward a decade let's say uh there is some winning L1 that like global trade settles down to in some capacity and I don't know let's say there like GL uh Global oil trade happens on this thing right like there's that L1 asset will more than likely exhibit some monetary premium if the these very important

Global markets are being settled in this currency that makes perfect rational sense to me um but so like I I do buy into the fact that you can't have a monetary premium that that makes sense I just think we are so far away from that world that it seems incredibly hard to rationalize the idea uh that today's asset prices are being driven by the fact that people want to use these things as like money or store value with the exception of Bitcoin I think that's like a putting that aside into its like own uh vertical or conversation I don't know I so I this this has actually been my big issue as well with the exporting eth's money to the L2 because there's no lock in and even if you go back to EIP 1559 the reason that the burn got implemented

there were other implementations that you could have done um but the reason why they wound up with the burn is because they didn't want people doing these offchain agreements in something that wasn't eth actually and so you can go back to look at these 1559 comos and they talk about this concept of economic abstraction but here's one thing I don't know I'm bring this up I'm interested guart to get your opinion this because I feel like you're in Bitcoin Maxi shows sometimes and I I'm on my second Bitcoin Arc at the moment myself so I think that I mean I actually kind I think the Big Driver here of like why is all this money in crypto is is the currency to basement argument I basically think the Bitcoin is just like super hardcore right about one thing and that is why all of this money is coming in and you

know it's not about applications for the time being it's not about any of this other stuff it's just people are looking for Alternatives outside of the dollar and then once you get into Bitcoin you kind of weirdly wrap your mind around this whole space and then you look for Alternatives so is I think there's a big uh question of okay when people are looking for that alternative store value are they going to look at just Bitcoin or are they going to look at it hey there are these like maybe five or six commodity money like assets and there's a spectrum of some of them generate more income through maybe like execution layer fees and some of them are mostly a meme but like super decentralized and but they all look kind of similar and instead of trying to pick the best one I'm just going to throw the money at a

basket of these things and I kind of do if you if you view the driver as uh as demonetize like a just slow degradation of the dollar we might be in this weird in between period where people still want to hold dollars but on like a 20e Time Horizon even though this feels very bizarre to say if they keep crushing the dollar people want to hold it like they're kind of eroding their own network effects and maybe ultimately people do want to hold Bitcoin more than dollars or these other you know non-sovereign commodity money like things I know that's a that's a weird long-term bet to make but you know most currencies don't last more than 80 years historically so even though it feels

like you're you're taking a weird bet you'd actually be taking a weird you would be taking a the burden of proof should be on the fact that people are going to want to use the dollar for the next hundred years because that would Buck the major historical Trend I think there is massive incentive to aggregate around a single non Sovereign store value like I think this is sort of a an object a subjective opinion I think we can look at history and see um like the store value aspect of gold compared to Silver like it's many multiples right like there's in in terms of like Global understanding of of money uh there is massive intent to Aggregate and and in fact when Justin Drake and the ethereum

foundation started pushing this premise of ultrasound money they realized this as well they said it's likely a win or take all so I do personally ascribe to the fact that I think we likely end up with a single non-sovereign store value um digital gold whatever you want to call it I think that this is quite likely and I think the clear you know front runner right now is Bitcoin as for these other monies um I'm a little bit suspicious to be honest and a lot of my rationale is that I don't know that these things I say these things these other monies like the

income or like this idea of the internet Bond or whatever you want to call it I don't know if they're really designed to to provide desirable returns so like I'll give an example one of my objections to kind of the inter internet Bond idea so when you have if you look at T bills right like you you're lending money in a stable currency right you're like in theory right like the the US dollar being the stable currency here and what you're looking at is okay so like what what return am I going to get on this and then like the relative you know credit risk of whatever I'm whoever I'm lending money to and you don't really want the um currency denominated to be volatile in that in that equation right if you

want to outperform the market you're going to go look at equities bonds are quite different in that sense right and you may look at inflation you're hoping to get a slight return over inflation I'm not sure the internet bond is so compelling unless um ethereum becomes the non-sovereign store value because if it's not the non-sovereign store value you're really denominating in what is already a volatile more Equity like currency commodity whatever you want to call it so I don't know if that is especially appealing um to investors for the long run I mean that that that would be kind of my personal opinion and so like it's funny like we kind of try to come up with like different uh narratives like should we go with the internet Bond should we go with ultr

money is going to Garner this monetary like we're all like looking for something right like what why is this why is this valuable right um so I I'm I'm not like wholly convinced on that aspect yet so yeah I think it I personally have kind of placed my bets now for a long a long time on bitcoin most likely being the the non- Sovereign store value the rest of the stuff like Dan said earlier and something I actually agree with fairly strongly is I think a lot of these systems proof of stake systems a lot of these crypto systems could be extremely useful without the native token being very valuable and that's not something that people want to hear um toly edges in saying this he'll throw it out there

right but I think you know he he does push forward this notion uh it's not not popular obviously with the after ethereum kind of cemented itself with the ultrasound money meme but it is something that I believe this stuff could be extremely useful without it being extremely costly and I would add one other thing which is like something we should like lest we forget uh ethereum's current utility value right like if you were to do uh like an m equals PQ type type equation for this is probably on10th of what it currently trades at so in terms of monetary premium it already has roughly the monetary premium of gold or Bitcoin right now so like this idea of like it's

going to have you know some massively outsized monetary premium you know we're already trading at like what I would consider to be a 10x and that's kind of pre-scaling if you will so um yeah I don't know that that those are kind of like my overarching thoughts just piggyback on that last note is like I see a lot of debates around this idea center around well if you do the you know cash flow if you do like a PE or P price of sales on today it's trading at you know 300X or whatever the number is so therefore the monetary premium is real when when you like rewind for how ethereum got here right it was the first smart Contracting platform to gain any traction and that it became the only way to bet on smart smart contracts or the idea of defi or the idea of nfts

whatever your thing was that was how you could bet on it and there were no options this kind of ties back into something you said Earl earlier right like if there is one way to bet on it you are going to bet on it if you want to express that view and that would lead to this more speculative premium rather than you fast forward to today and we have a wealth of different l1s or l2s where this activity is occurring um and so to me there's like a a huge piece of history that plays a very important role in you know why ethereum is where it is today um and that's a part that I think oft gets overlooked is kind of going back to that unfortunate third view is these things could just not be worth that much um but ethereum's origin kind of pushed that multiple it's worth $315

billion that is a it's a [ __ ] massive number I think all right I think there are two components to this I'm actually going to push back on I want to be the contrarian on this podcast I actually all right I think two things can be true I think ethereum could have misunderstood what people found valuable in them which I agree with but I also think they kind of lucked in not luck I think they actually arrived at the right answer and here's the like I think there's a uh you people like to debate is this a DCF type thing or is this a monetary premium type thing there's a middle ground in between those two things like there's honestly I think l1's look very much like treasuries which are monetary assets basically treasuries are money for institutions

and it's just like something that has some amount of capital appreciation a little bit of volatility and gets a nice yield on top of it and if you think about if you think about the world as denominated in like large pools of capital that are seeking different types of returns you kind of arrive on okay there's equities for like if you want to just outperform in compound Capital but you want to take on more risk then there's Commodities which is uncorrelated with equities and then there's treasuries which are basically okay there's it's super liquid I get a little bit of return and like lightly outperform inflation and that's the biggest Market in the entire world and if you look at what ethereum and salana and these other l1s are that's basically what they are like yeah a ton of the

yield is going to get sucked up to the app layer like you're going to lose a lot of it but I I think you can just kind of squint at it and be like this is a deeply liquid asset it is going to be able to generate some amount of excess yield if you're a holder and a Staker and everyone's going to say it's a productive asset which means that it has a way bigger market cap or like way bigger Tam than Bitcoin and this is why the market for treasuries globally is a full order of magnitude bigger than the market for gold because they they're supposed to do the same thing it's supposed to protect your purchasing power but one's a meme and the other one is supposed to protect your purchasing power but it's like for Middle the bell curve people that want to be able to

calculate a yield and guess what it's like people want to be able to calculate a yield so I don't know I I think they actually kind of got it right um and I if anything I think they kind of just tried to skip to the end uh of of where this architecture was going to end up and they had no thought of path dependence at all um and I think yeah go well I was just going to say like that that was sort of the point I was making in so far as if ethereum sorry if eth becomes the global Reserve currency then we can create some type of coraly with the US dollar and treasuries US dollar having global Reserve status treasuries being that now if it doesn't however then it becomes

closer to I don't I don't really know how I would describe it I don't think the system is really designed to seek outsized yield in a sense it's it's sort of designed the opposite way and this is one thing that I heard um like John charbono say recently he said if uh like if if ethereum has higher real rewards then we'll see a more distributed decentralized validator set this is intuitive in the short run in the sense that if somebody if a solo Staker right will be more I'm using extreme example a solo Staker is going to be more incentivized to run a validating Noe if they're getting 10% versus 1% right like

going through the difficulty of doing that and also that could also apply to small validating entities right like a more distributed set this is not an equilibrium in the long run though this is what I push back on the equilibrium in the long run is that Lio adds more validators it pushes issuance back down to where there's not a high level of economic rent being sought this is why I think that the monetary premium aspect is correct but I don't think we should rely on this like notion of real yield or anything it's not like it it almost doesn't really play a role in exporting the actual eth um hard money aspect it's not like it will never really have outsid Returns on this yield it will just be almost um programmatically

exactly inflation I think and and that's also before like you mentioned this is sort of sucked out to people who are reducing me reduce uh like l2s right like I mean all of this stuff sort of drives this closer and closer to like a true commodity value commodity value of running a BX uh is very very low as Kyle Sani likes to point out right it's not that expensive if you did this on a per transaction basis it's like many quadrillions of a penny or something so I agree and and I do I also think even though he doesn't describe it in these words again I'm I'm not even sure that Sal I just view it a little bit differently in the way that I've heard but salana is very focused on like the cash flow from the execution layer and putting

everything on one layer and that is more conducive to at least my vision of how this could play out which is you want to retain some amount of structural yield you know that OCC I agree with that like Sal is more intuitive as to why on a single layer you could model these more off like the me or whatever however he says it right being uh like an actual cash flow I mean I don't think this is long run sustainable like I I think these systems are like almost all the crypto is like structurally designed to like seek as little rent as possible or people will opt out into new system systems and so like I don't find these things to be like lucrative Endeavors they're lucrative in the short term because people are putting 15% slippage

on their shitcoins you know what I mean and validators are making heaps of money the the the demand is outpacing the equilibrium Supply where these actually look you know like over a large sample size I'm kind of bullish though on people keep put setting High slippage and and gambling on shitcoins I'm like long I'm long-term bullish on that Mark cuz people were saying this about coin when they started in 2013 this is why Wall Street hates their exchange business and they were like ah fees Trend to zero well guess what 11 years later they're still raking in fees and it's actually really egregious the split between what they charge institutional part of their customer base versus the consumer part of their customer base everyone knows this they report it now

in their earnings every quarter and all the retail people just stay paying the high fees that like it's a really inefficient Market people like this stuff will stick around for longer than people think yeah I I think yeah I I agree with that and just to add like I'm very bearish on the idea that fees aggregate fees will go to zero like sure like I don't care what happens after I'm dead I'm sure at some point yes that's the case but and I acknowled team team actively there that's true uh but there are teams actively trying to reduce the amount of fees that go that go to the the Bas layer right this is the sellas of the world trying to make uh better auctions for dexas right that that makes sense to

me and that will happen happen but if there is a good worth paying for you are going to pay for it and in a perfectly rational world like shitcoin like pump fund probably doesn't even exist right you you lose money gambling doesn't exist but like we look at the real world that we all live in and you know there's strip clubs there's there's bars like people like to do stupid things it's just how the world works so I feel like if you have this really rationalist view then yes fees go to zero but if you zoom out and think about how humans interact with things um it kind of looks a little different uh and and that's I think a key thing that that people shake off now if you are like hyper bullish the AI world you know maybe those agents are hyper

rationalists and none of this exists but who knows but fees have kind of gone to zero no like compare ethereum to Solana and then now we have hyper liquid which has no fees on their chain because they realize they can just charge for open and close so right so like they're still making money right like I don't I don't mean you a specific type of fee I mean like the system as as a whole okay so I see like priority fees never going down but I I I wouldn't like just regular fees I don't think it would make any it wouldn't make sense for them not to go to zero like in our in your lifetime I think over the next like five years it might just the next iteration might just not need it at all like layer Gen 4

blockchains no just priority fees well sure right again I think you're just making fees off X whatever X is and I I think the the salon argument to this is you Char validators will charge some margin on top of bandwidth um where whatever bandwidth costs per transaction you just charge you know forx that and like that's what you make money that's the base fee and then if you want uh Priority Access to state that costs priority fees or uh some MV tip system right we have jeto today uh that you know people think that will go to zero over time and I I just take the other side of that I I understand that there is incentive for that to happen but I do not think that we live in this world where that exists yeah I think that there's a strong there's also a strong

fee preference when it comes to financial markets like if you look at what brokerages can charge on fees that's gone people used to pay hundreds of dollars to tra like on a per trade basis which is ludicrous and then it dropped from five bucks and then to zero dollars does anyone think that these brokerages aren't making money hand over F like no they just do it in a slightly more invisible way to you and so if the transaction fees ultimately go down like if you aren't paying gas you are still paying in some other way I would actually guess that it's almost a oneto one you know if you imagine like a balloon here if you push down on the transaction fees it has to come out in terms of me or some something because you know these people still these are smart sophisticated Financial actors for

the most part and they're gonna find ways to extract value I think it's just orderflow I think it's like all goes to order flow like all these systems can go to order flow and like I don't know if that's really the idealized vision but like we I got Kyle Sani saying that is where it's going like people are being honest I would say about re realistically and that's not so bad for execution right like for users um yeah it's like quite centralizing it would not surprise me in 10 years if there are three validating entities on salana and it's Citadel and rentech and like sasco Han or something you know XTX like that

that would not surprise me um and fees could be zero and it could be extremely useful so yeah I wonder if that's also the you know salana is right the other reason there's a cultural reason I think why people are more willing to criticize ethereum is because they went from the upstart to the incumbent and so right now salana is like well every every L1 believes they're the underdog right if you ask them but right now I think eth is sort of in incumbent mode and salana is the upstart mode but has things that if you imagine each L1 like a paperclip Factory like there's one or the you know AI paperclip experiment where you optimize for one thing and you just keep going keep going keep going until you break something the eth thing that ended up breaking was this monomaniacal focus

on home stakers and they misunderstood that they I feel like what eth did was instead of what they actually got right was I love that uh press switch interview that you did guart like getting the token standard right and it was kind of decentralized and people like that and it was like a fair place to gamble basically but I think what ethereum ethereum understood was people are coming here because it is the most decentralized where you probably just need some base layer of decentralization and then anything after that incrementally doesn't matter that much like I do think decentralization matters up to a point but then you go too far and then it actually degrades the experience of why people are coming

there but salana has this too like salana is monom maniacally focused on getting everyone onto the same layer which I don't think works on the long run so you're gonna start to see the same salana alignment issues materialize um that you did for ethereum it's just not obvious yet one because they're the underdog and no one wants to criticize the underdog but two it just hasn't manifested because everything is on the its working trajectory for that at the moment but there'll be issues with it eventually too I think I wouldn't even say everything is working because you can go on Solana and everything is not working like last time you were on mppo we talked about how Solana is going to face some issues in the bull uh

especially due to congestion and I think like what you're saying is right I think it's going to get even worse and worse and people realize that no but you can't bring it up I don't think it's because of some Underdog Story I think it's because if you say anything like either Daniel Smith or mert will be in your reply saying dude you suck go back to l2s and it's like it's not that though like Jupiter airdrop how many people I think it was 1 million transactions or something and you just couldn't do anything on the Chain now you need to every single transaction that I want to do first of all I can't transact through Jupiter radium is impossible um I have to use Bots constantly and like get slipped to death which is great for the fees you know those fee charts that you

keep posting Daniel it's like half of those are just people on telegram Bots cuz they're like I can't get a [ __ ] transaction through so I think that's going to be the Crux of salon you were right three months ago but but but that actually is because of the mon monomaniacal like engineering Focus so so like Alex Watts was the one that pointed this out to me so this is his Insight not mine but there is there are no partial reverts on salana so there are partial reverts on ethereum and the reason for that is because they validators need to keep multiple up to over a thousand different copies of State um at any one given time so that you can do if you like got an if then transaction like a bunch of things that need to happen one part of that

transaction can revert and you can still keep the first part of the transaction salana is like hey we need to get everyone a one shared state that means we need to minimize the overhead of needing to maintain as many copies of state and so they don't require validators to do that and as a result you get no partial reverts on salana so if like any one part of your transaction chain breaks the whole thing reverts that's why there's no free lunch like every single thing is a design trade off and like the the focus uh that by the way is the thing you know people saying that ethereum not having no no North Stars cope it is the single biggest existential threat to ethereum that they cannot agree on what they're all

building it's nuts to me that they can't do that but you know northst stars have challenges and this is I think this is the salana challenge that's eventually going to manifest over time chaos Labs the leading onchain risk management firm recently launched its new flagship Oracle product Edge Edge delivers integrated High Precision risk and price data for any application with the market after 2 months of securing Jupiter Edge has already secured 30 billion in volume and more than 60% of all Salon her's volume edges comprised of three components High Precision price data with an integrated risk engine automated delivery of real-time parameter adjustments on chain and secure delivery of custom data points via zero knowledge proofs follow and ret out to chaos Labs on X to learn more thanks again to chaos

labs for sponsoring today's episode what's up guys fuel ignition is finally here fuel ignition is a high performance L2 solution that aims to solve both state sustainability and performance execution as an e rollup ignition is built upon the fuel VM and a utxo based asset Centric architecture with e grade security make sure to check out the growing fuel ecosystem by participating in phase two of the fuel points program today visit fuel. Network to learn more I uh so since we've basically just digressed into only comparing ethereum and salana I do have one specific question here uh where if you look at salana you know you have totally banging the drum being the leader of the community increased bandwidth reduce latency they've even like created a new uh four-letter acronym for this that's

floating around Twitter when you look at the EF you know I listened to your pod with Mike the other day great pod and one thing that caught my eye there was you know he reiterated that the EF does not have any internal meetings that are not in the public eye for everyone to view and I totally understand the decentralized ethos of that and think that that makes a ton of sense but when you look at the you know the issues around ethereum today and to Mike's Point there's just like a lack of agreement on the direction like and I like you know there were people who yell at me for saying that um but there are two separate communities one wants to scale the L1 right now and the other one wants to focus continue to focus on the RO Centric road map and it's like hey

guys maybe like one or two internal calls just to like really set priorities and goals like that's really standard uh in a corporate structure obviously this is different obviously there are an ethos side of this um and I I enjoy that they do everything in public because I get to I get the privilege of reading it all um but I'm I'm just curious on the crowd's take on like is that the best like like what's the trade-off here if you're giving up the alignment side of this for decentralization do you kind of lose some ability to move fast and and and ship new products yeah for sure I think I mean I okay so I would I think that ethereum does have a

North star okay what I would agree on is I don't know what it means their Northstar is the global settlement layer for robots if you're Mike Neer it's for robots but it's the global settlement layer my push back is less so so on the do they have a North star it's more like is that something that's like very high demand of global settlement layer for batching a bunch of L2 transactions and proofs and then some high value transactions on the L like is this very high demand product that you're offering they they'll say yes and this is this is kind of like going back to the original point

I made which is like okay and they'll Black Rock Sony Franklin Templeton are all building they wouldn't be doing this if the global settlement layer wasn't important okay like you know what I mean it's like one of these things that you just the market will ultimately determine if there's a tremendous amount of value in a global settlement layer that's not a monolithic you know L1 and I don't have much so I don't know that kind I circumvented your question and with regards to the EF yes they they definitely they don't have the ability to move fast break things I think that there's some pretty good evidence that after you know four years chains start to aify and after X amount of time it's very very hard right like this is just

how these systems work as they grow so I mean that's what I was kind of saying they kind of like made their bad I don't know that you know make the L1 great again I don't know that this is this would be quite a reversal in my opinion I think it' be more of a reversal than even the people who uh are are wanting to do it accept like I think this is a pretty big 180 yeah I think um but I think there's a I think there's a wide acknowledgement that settlement layer is not not bullish I I don't know I feel like there's been I couldn't quantify this but I just get the general sense I don't hear as many settlement

layer bull posting pods as I used to I I I think that people know that that's not right and I think that they are I don't know there's this there's this great piece like groups don't disagree they go into a Schism and it's basically it's it's really difficult to get a large group to actually say hey we were wrong about this and Comm to A New Path you basically have a break of the groups and I sort of feel like that's what we're we watch that in Bitcoin and I think we're seeing that happen in ethereum we're in like mid innings in like inning three of that happening and I think what you need I don't know there's been all this talk about vitalic entering War mode and from my vantage point he hasn't entered War mode War mode isn't Mean Tweets that's

not what war mode is war mode is you go in you align the stakeholders you create a vision you sell everyone on it and the people that aren't aligned you boot them out like that is and then everyone and then there's some real there's some challenges and some feelings get thrown around but then everyone what you end up with is a bunch of people that all have the same shared vision and you march in the right direction and this is one of those things where I feel like crypto can't solve that this is how humans work you need to work you need to look at one leader and by the way Bitcoin maybe this was I mean bitcoin's like the one freak this is maybe the strongest argument for Bitcoin being a weird snowflake although Adam back kind of did this Adam back

kind of took the old mantle away from Satoshi and kicked a bunch of people out that didn't agree with his vision I don't know I think that needs to happen and I think that yeah I think that needs to H I think there is a right way and a wrong way to run ecosystems and organizations and not all the time but you can't just pretend that we've Rewritten you know human genetics in the last two years since we invented cryptocurrency you need one leader you need a vision that people buy into but six months ago they had a vision and one leader no like it was we're doing l2s we're gonna scale and I mean nobody was really going really upset like Resnik ma Mr Max Resnik is I'm sorry G I know he's your friend um you know and then now

it's like there's no vision but it's just e price is down e Solana is soul e at 0.071 it's like now everyone's like oh we need a vision we need the talic to go up and enter War mode and I agree with you I don't think it's War mode to say the ticker is e like he should have been posting those B bull images with E is good a year ago when we were first going through the you know maybe scaling isn't great I do think the ticker with the E is actually pretty funny I was like that was the first time I've laughed a little while about like that's pretty good um I don't know cour you mentioned Sovereign money and how you don't see Eve becoming non- Sovereign money like the global Reserve currency and Bitcoin

could be how do you see ethereum actually doing that over Bitcoin is there a chance for it to dominate that's a no I I'm trying to think I mean I I don't know it it there's certainly a path okay I don't know what it is I think it's not extremely likely I think there are properties of Bitcoin and I tried not to be dogmatic about Bitcoin in the sense of it's pre-ordained by God like I'm not this type of Maxi I would hope right and of course it's very difficult

to examine your own biases but I would like to think that the reason I think bitcoin's valuable is because of its properties and its commitment to you know uh steadfast monetary policy and being pretty purpose-built in the sense that it's fairly clear what the goal of Bitcoin is right and I think there's a lot less disagreement about what Bitcoin is than what ethereum is um and I can say this for the past you know since Inception it's now there have been disagreements as to whether or not it should be digital cash or it should you know have small blocks um but it it's always been money and the L1 is not very expressive it's not it's

quite prescriptive and what it allows you to do so it's fairly straightforward that it's money and like the purpose of Bitcoin the network is to send Bitcoin across the Bitcoin Network right like that's probably the the simplest way to say it um so I just I I don't I don't know I guess if people end up not really caring about a store of value in that sense a a digital store of value and then yeah I I don't have a great answer as to how um maybe if just the a lot of people a lot of bitcoiners say like if governments got their [ __ ] together that's the biggest threat to bitcoin and I think that i' would probably agree with that but isn't that also kind of like the next leg for Bitcoin of like who's

going to accumulate this stuff right like um because I'm a I'm a fe fee truther to put my hands up here like the tailem missions thing I just we're going to hit a point where you either have this choice of mining at a loss uh or the fees will pay the the miners and there there's an incentive to continue mining this thing um and the former there basically requires nation states to accumulate Bitcoin at such a size that they have a financial incentive to be willing to mine at a loss it's basically like storing your gold and and paying to keep it in Vault or whatever um and maybe that's a crazy take personally I do think it's a crazy take but like when I ask people about hey like what happens

at the end of the road here that's basically the only answer I ever get is oh yeah people there will be back holders that are so uh invested in this that they have no other choice but to M it a loss and I'm curious as to your take on that specifically and then more broadly like what happens when the cost of mining exceeds the block rewards yeah I okay so I think the assumption is that fees continue to support miners it's like a it's not a very uh eloquent or powerful response the there's there's more inputs here though right like so if we create an abundance of energy energy can become a lot less costly so if and there's a

lot of bitcoiners who ascribe to this notion that this can help push the bounds on uh more sustainable cheaper energy because it allows you to harness energy excess energy in places that would not be profitable to do so but because you can bring a little shipping container with a bunch of as6 in it and mine there um it can further push the yeah like the aggregate Global energy grid I think that the it's I don't really love the framing of mining at a loss the difficulty adjustment adjusts down continues to adjust down to the point where in theory somebody can always mine Bitcoin profitably now is this sufficient to secure the network

well have to see the Assumption obviously is that this 10x 100x demand it's the goto crypto rationale of we're gonna grow the pie so much that that it it will support this right um I'm not especially concerned I I will add one other point with regards to tailor missions like personally this is uh non-starter in my opinion like the the 21 million is the most important thing and I don't know like a lot of these security budget truthers tend to you know come and you know launch these diet tries about this I'm like listen if it fails because it cannot secure the chain it failed because there was not sufficient demand and there is no changing of the 21 million it's it's no

longer Bitcoin like and I I think that there's a stronger um agreement within the Bitcoin Community than maybe a lot of like crypto people see that like the 21 million is Untouchable you can if if you Fork it and create tail emissions and that becomes a more popular coin that's fine but that's not Bitcoin and if the real Bitcoin dies it dies but that's not Bitcoin the most important thing for Mass Global adoption of Bitcoin coin is the 21 million the decentralization all of this stuff nobody like the 99% of users will never care about Black Rock does not care about they see this as digital go there's a finite amount it's preserving value over time I think that like I would that's that's the one thing um also ironically uh did you know that the

guy who they pegged is Satoshi Peter Todd was the one who wrote the like initial paper on um Taylor missions it's kind of funny that's another reason why I don't think he's probably Satoshi um but yeah that that that's like sort of my perspective um and also th this can happen to ethereum as well right like demand is not sufficient what it it's not like having tail emissions is some um fix what it all it does is mean that there's always some amount to pay validators well that doesn't mean anything about the value of e right like eth could be worth you know substantially less and then is it just justifiable for somebody to validate the

chain um maybe if it's proof of stake and it's the computational you know effort is much lower cost is much lower but the reality is that like it's not like adding tail emissions just like fixes this notion of a security budget I tweeted earlier this year that like eth's price dropping or yeah like eth's lost 20% of its security budget in the past you know whatever time because the the price of eth went down um but like nobody's screeching about that right so I I gen find that this is one of these conversations where like okay we got to wait and see you know yeah I love your framing of the the demand side of this I think that's absolutely the right way to uh be thinking about it and when you add in the point about tail missions totally

agree like that ideally that's just a bootstrapping mechanism and bitcoin's kind of beautifully doing that where it's programmatic for X number of years right that's the interesting piece to me um but just to rewind to the difficulty adjustment yeah totally agree my framing for this is that if the dis difficulty adjustment decreases for a pro prolonged period of time that negatively impacts the idea of the soundness of the money but I'm I for the reason being right now if you want to like 51% attack Bitcoin and you assume that all of the hash power on mining the chain today is uh benevolent then it's just not possible there's not enough Global compute for this to actually happen um but let's say you know 40% of the hash rate decreases

and now idle has nothing better to do then like I they start to get an argument where that hash power should be attacking the chain um because it's got nothing better to do so I guess the broader point is if if difficulty Falls because hash rate Falls does that weaken the uh soundness of the money if you will well it's not an ideal outcome if like difficulty adjust down I completely agree with that like I ideally we want this to like continuously adding hash rate to the network right like the comp like adding computational power so I I would gen age with that my only point in saying that was that there is a self-correcting mechanism we don't want to see it drop 80% but there's a self-correcting mechanism whereby

somebody somewhere in the world can mine Bitcoin profitably and this difficulty adjustment constantly adjust such that Bitcoin is roughly you know the cost of mind is roughly the value of a Bitcoin itself so I have I have a couple other maybe different takes on this which is that I think that crypto like why haven't there been a lot of 51% attacks today just out of curiosity like why has that almost never or there's only a handful of times that's successfully been done and the answer is because it's I think it would be illegal like I think it would just be illegal and I think crypto is so guilty of assuming that it exists in a vacuum when it doesn't and

so imagine a future where Bitcoin is more successful or just getting adopted at the rate that it currently is like imagine the United States or other important governments own a non-trivial amount of Bitcoin the reason why a 51% attack wouldn't be performed is not because of some Game Theory hash power stuff it's because it would be perceived as an act of aggression and so I just I think that this is a difficult thing to put yourself in the shoes of at the time because that feels so bizarre to say but I mean I think that's why most 51% attacks haven't happened to date and I think that's I I think that Bitcoin basically is now in this weird the game theory of Bitcoin is can it get can

enough people adopt this network to the point where they won't want to [ __ ] with it and I think that that's a pretty solid bet I think that it will um you know and I just like a as a final just putting my foot down on something that I find very frustrating there's a lot of like technobabble debates in crypto it's like these these idea like incentive like mechanism design comp at attacks and I've just never seen any of these things manifest and I have a suspicion it's because of what I'm talking about it's it's it's so it's it's I don't know I kind of had this thought at one point of you know because we got really deep down this Rabbit Hole a couple years ago about like auctions and incentive design it's like dude this is all important but I'm not 100% convinced that it's as

important as everyone thinks that it is you know I well also like the other like with proof with proof of stake um the I think ethereum could like totally brings this up and I think he is pretty spot on with regards to Economic Security like the risk of attacking a proof of stake Network and the the other stakeholders just deleting your stake just scratching it out and saying that's not the chain anymore is enough of a deterrent and so like when this is why like when he says Economic Security is a meme he says like there's a number of different directions you can go with that but like it's

practically true especially I would say with proof of stake networks where there's not a tremendous amount of investment in as6 and not a tremendous amount of investment in energy or you know like energy purchasing power agreement whatever like sunk costs with proof of stake you can literally just agree to delete everybody else's stake and say that's not the chain anymore like who's going to attack that right oh 80 billion wor worth of Economic Security like who cares you could have a $100 worth of Economic Security if coinbase is going to say that's not the chain that's not the chain like you know what I mean and so I generally agree like legality or you know proof of authority stuff like this is obviously why I mean it doesn't there there's some economic security where beyond that it's

just like this is complete driil yeah and I think the reason why people hate that argument so much is because the cipher Punk ethos is we're trying to evolve this system of this is why people talk about property rights you're you're trying to have some other system that enforces these rights on a global basis which is independent of governments and I think you get there I just don't think you get there in the same way that everyone else thinks that you get there which is that you design these like concrete etched in stone Game Theory optimal perfect ways to avoid this stuff where I think what you just need is enough important Global stakeholders to buy into this stuff and and then eventually no one's really going to want to mess with it in in the same way that you wouldn't like why are why are there

no uh like main like really large scale cyber attacks that happen in between the United States and Russia and China it's not because the mechanism design and the security is so good it's because everyone kind of knows there'd be an active aggression and no one's going to want to push it too hard and I think it's a it's a really different way of thinking about blockchains but I think that's the game theory that we're really playing here you're playing to get enough people to have economic stake in this system to the point where they won't want to destroy it I I think that's what we're doing here well I also think of maybe a slightly more a servic take is that it doesn't pump their eth bags if you can say that ethereum could have a just a billion dollars worth of Economic Security and

be fine like that that doesn't play into the like circularity or AB boros of eth proof of stake when you can say yeah I mean eth could be worth $10 and as long as coinbase Lido and Kraken agree what's the canonical chain that's the conical chain that doesn't sit well with people who hold massive bags of eth right and think of eth as this enduring you know value capturing asset it's designed such that it we want it to have value right like you want it to continue to accrete Value this is another hot take I didn't really hate the uros like uros is legit as a form of demand I mean that's it is people wanting to there's this uh pretty natural human tendency to say that the desire to speculate isn't like

fundamental it's not as good there's a moral judgment put on on it but it's very steady demand I mean this is like one of the oldest Industries like people gambling and doing stuff I don't know it's real I mean I would bet on that as a as a continued source of yield I I didn't really like the uros comments because I think it just cast a moral aspersion on a real form of demand that didn't really need it but I wanted to get oh yeah go go no I was just going to say like there's literally 99% of the activity on blockchain is either some Financial engineering or Boris or [ __ ] coining like there's very very few people who are using

blockchains to escape Financial oppression and if they are they're using Tron so like when you when you say that you know like there's like it's all speculation it was all speculation in defi summer too right right it just seemed like it was building out these you know this critical infrastructure and it's like dude people were dumping the [ __ ] out of all the coins they farmed right like it was just that people were getting a th% apy now it's you can do a th000 X on some salana [ __ ] like it's not really that different right yeah so not even historically but if you look today we pull up top contracts on bass mainnet arbitrum salana Aptos with it's it's all some completely nons sensical activity like

okay Aptos had the tapos game um that was basically to stress test their system which respect that's important to do was tap I it's just like the telegram click click click click click click click click was it the stress test though because they kept bull poting like wow apos activities off the charts and it's like yeah you have like 400 because you're flexing that your thing is working right agreed no I don't think I mean the the messaging matters here and you can't be like wow we're the best look at us for a reason like you know we have all this valuable activity happening on change we no like look at our Tech like it's working very well that that's the cool in my mind piece at least right but point being that all of the activity across all of the chains as guart said is just silly like it's it's

that's what that's the State of the State of the ecosystem we need those material apps so when people look at salana today and be like n it's all shitcoin I'm like brother where where isn't it please enlighten me because I want in Tron I think some time with the I've spent some time with the Tron data and I'm unconvinced I'm I'm gonna say d we yeah actually I had that go no go g you're the no no I I I have like some um friends who are quite I I think I respect their opinion generally on looking at stable coin volume and they're very suspicious of Strawn as well like they yeah I think there's very clearly like demand I mean I know people in Israel who are using

usdt but I have some other friends who are like yo this is this is a house of cards like Tron volume this stuff is like seriously something going on here money laundering I don't know what but it's it's a charade but that's funny you say that too yeah I mean I have I've tweeted out one of the examples before I think it's okay it's in my pin tweet thing it's on that my one of my active address rants um like go look at the Tron contact contract in there I'll briefly walk you through like what happens so on Tron it's uh interesting because you can B there's basically gas rebates if you stake the TRX token um and so and you can delegate the rebates to other addresses so like the system that's happening is you have this huge account

with a bunch of stakes TRX and they will delegate free transfers to a certain wallet and then send them like let's say 100 usdt and then they will execute the transactions to do nothing more than send that 100 usdt back to itself and you do that at scale for millions of addresses right and you get these like circular yes the numbers look great but when you start unpacking what is driving those numbers a lot of question marks and like it's not the only chain that happens right and there's benevolent examples of this right Solana's activity was off the charts and because it's like yeah people are Market making it's not like we're taking people out of Oppression or something with usdc transfers right not what that's not what's happening um but yeah and you see this on polygon as well just two

examples where there's someone with some motive to pump these very specific numbers um and it's kind of unexplainable right like I don't know who's driving this um but like yeah when you see these Tron numbers I feel like everyone's like kind of suspicious but um as someone who has unpacked some of the data yeah it's there's there's some interesting things going on do we have anything else that we wna uh Daniel Smith about any other controversial takes that you want to talk to gour about big Silicon Valley guy quart is that was the inspiration for the for the name yeah it's just a character on that show it doesn't say a word the entire

show but I thought it was pretty hilarious um so I rolled with that it's a funny name too it's just like very ridiculous but yeah I love that show obviously yeah greato I think that's all the important questions then now that we got to that g do you have anything you want to say before you no I was just looking um no I don't unless you guys have any other questions looks good to me I might ask one more actually before cuz I wanted to ask a question and then we got way too deep into how do you see l2s um go how do you see l2s change going

forward do you think we're going to get more generalized l2s do you think we're going to go fully like app chain rollups or do you think there's going to be like a nice mix between the two yeah well okay if I was to go back and I think that probably other people on this podcast would agree I sort of operated under the assumption that any chain that is very purpose-built or designed for a very specific use case is going to be better than some um yeah like general purpose L2 or you know even alt L1 like I guess my assumption was that a protocol would

designed very specifically for a use case and it would only do that because surely a perex that is just a perex is going to be better than a perex with a and and other stuff uh launched on top I this is something that I don't have very high level conviction on and maybe it does depend on kind of the the vertical or like the very specific use case but I will say I probably have leaned slightly toward a monolithic vision and my rationale isn't I don't think really the maybe it is sort of but it's not exactly the same as what a lot of other people think I put it in like a slightly different context um we can improve bridging certainly we can make

it cheaper we can make it faster we can improve uh wallet ux and user ux we can maybe going back to like kind of our economic abstraction or chain abstraction like we can maybe make this more or less seamless for users in the end what I started to think about those I'm not really convinced that a massive amount of the world's Global Financial Capital markets are going to exist on rollups I just don't really see that vision and there's some technical reasons which I sort of mentioned there's also some just more practical

reasons arbitrum usdc and base usdc are not completely fungible we can make them very close to being fungible with chain link and you know a really good wallet experience but at the end of the day you are taking on different trust and security assumptions with these two different chains right now that may not be the end of the world for us degens which are 99% of the users but in the long run if we do assume that a large amount of you know certain use cases at least Financial activity are going to occur on these chains I don't think and maybe this is how I was saying that I was going to say it a bit differently I don't think that this is a massive unlock versus traditional Finance I

really am not sure I think there's this assumption that like uh traditional Finance isn't composable and it's actually not that bad like you can go on ER trade and you can get a margin loan against your stock portfolio and you can do it pretty quickly and you can have it deposited into your bank account it's not like a it's not like an automic transaction right it's not immediately liquid liquidated but traditional Finance is not something where you know if Goldman or Bridgewater wants a loan against their t- BS they can call up a lender and figure out a way to get a loan against their t- bells or whatever it may be it's or they can do

this probably on the internet now so I have probably for this reason alone started to think that the single massive unlock may be a a global unified state where we can ma out on what we throw on there now do I think that this means the NASDAQ is put on chain I'm very suspicious of this the one example that I can think of that is intuitive to me and seems um the most likely is stable coins being on a single Global State makes a lot of sense

in my mind uh I Tron is probably the best example is I guess we just [ __ ] talk Tron for a little while but I think personally that it's being able to send somebody Salon a usdc and it exists on a single layer and you don't have all of these different chains and different trust assumptions that's probably one of the bigger unlocks I think versus traditional Finance right if we want to be better than traditional Finance something like stable coins is somebody in Nigeria for fractions of a penny in three seconds that is a very big unlock um so I that I don't know if that's um it's not very bullish l2s I I don't know yeah I'm I'm a little I'm just rollups in general to

me they're just we'll see right um I I'll add one other thing actually on on this note and this is like a a take that it's like a hard to swallow pill for crypto but I feel very very strongly about this if what we are trading in the long run and what we are transacting with are primarily issued assets stable coins treasuries equities we all have to come to this once again hard to swallow pill realization that the level of censorship resistance and decentralization required is many many orders of magnitude lower and I'm sorry to say this but it does

not matter at all how decentralized the chain you are sending usdc to somebody on if Circle can go in their database and scratch out your name and say you no longer own that it does not matter and you have some of the most powerful voices in crypto the base people I've seen a few VCS recently say this stable coins are the killer use case if stable coins are the killer use case we can probably do away with solo Stiers we can probably do away with a lot of these Cipher Punk e those things that we have in mind like I I just this is like something that is just very binary to me but it seems like people want to push

back on this so hard I'm like d it does not matter at all where you're sending somebody usdc they the permissionless access and ease of spinning up W that's the unlock does not matter if there are five nodes it does not matter I so I actually have a hard I got to run in one minute here but I so agree with that statement and maybe that's why I just want this to be true and it's cope that I want the base money of these things to be issued assets from I want it to be eth and Bitcoin and salana because you can't improve there's a limit to how much you can improve the financial infrastructure around the money if you have one Central issuer that gets to bully everyone around and I actually don't even think that stable coins would

be that useful 10 to 15 years into the future because you can regulate them right like the techn we're all acting like this new technology exists that allows to send Dollars around the world faster they could do it tomorrow if they wanted to the reason that they don't do that is because of all these regulations and there's zero reason there is zero reason why on a long-term time Horizon centralized stable coins would not devolve into the same state that nonstable coin dollars exist today it is there's no reason so maybe this is just cope for me but that's why I you the way that you unite in my opinion these these different ways of looking at crypto the monetary aspect and the tech aspect aspect it's the same thing if you want these outcomes that we're all here for

these cyberpunk better technology stuff you need the base money to be different so that you can build better Financial infrastructure around it this is why all the fintech stuff is lipstick on a pig because you still have the dollar and the banking system at the center of it and so there's just not very much you can do with the tech so you need the the fundamental unlock this is another thing I'm really on my Bitcoin Arc that they got right is that it kind of is all about the money and the money is the the the fundamental building block that enables you to build better Tech around it and then you get new businesses all of these things are related people you know people come in and try to jam their worldview and they're like I only want to talk about the money part or I only

want to talk about the finance part no one has that luxury they're all related they all have to work in tandem for us to get the outcome that we want so I agree with you guart like a million percent I bet on bitcoin I'm with you all boom scen seen yeah that's the great way to end it um G thanks for coming on for sure I hope it was good I hope it was interesting I think it was really this was fun man yeah that was a blast [Music]