Why Everything Settles on Ethereum

Transcript

Hey everybody, thank you. We heard from Tom, we heard from Joe. I'm not here to convince you what is happening on Ethereum. We wouldn't be here if we didn't believe it. I actually want to spend more time on the use case of agentic and what it will mean to our society, what it will mean to Ethereum, and some of the conversations I've been having with lawmakers all around the globe, because I think it's an underappreciated element of how ETH will drive the future of trust.

Quick background. My name is Joseph. I spent 20 years at BlackRock, the last eight years leading digital assets. I now lead SharpLink, and along with Joe and Tom, we see ourselves as Ethereum stewards, whose goal it is to help accelerate adoption. adoption. If you jump ahead, Ethereum is where most of the activity is happening. When I say Ethereum, I include the layer twos as well. We have folks from Offchain Labs and Optimism here.

But what's most important is we need to take a minute and just look at the scoreboard. And the scoreboard is favoring our ecosystem. In the areas that are going to drive the future of financial settlement. Stablecoins, over 50% on Ethereum. Tokenized assets dominating. There is not a chain that comes close. You've seen the success of both the L2s and the L1s. When I was at BlackRock, and I'll say something controversial, we spent most of 2018, 2019, and 2020 trying to make permissioned chains work.

And we failed. We failed on our face. And when we started actually launching products, regulated products, we did it on mainnet Ethereum. BUIDL in 2024 was built in order to almost send a message to the banks and financial institutions in the US that we tried private chains, it didn't work. If you look at the most recent announcements, you've seen ARK tokenize on mainnet Ethereum first, what is going to be one of the largest tokenized VC funds, and Cathie Wood knows what she's doing.

Later you'll see a list of all the institutions who are launching on Ethereum. It's an understatement of what's coming next. DeFi, which I am actually disappointed in one element of the Clarity Act not passing, it was going to be very, very clear under what's called the BRCA that if you're a DeFi developer and you're not controlling custody, you are not a regulated entity. You're a developer building the early days of the internet and where exchange is going to happen. But if you're helping with custody and giving advice, you should be regulated.

That, I think, is going to be the one area where I disagree with some of the earlier speakers. We are going to miss out on that clarity that was going to come, and I'm not sure the CFTC and the SEC are going to regulate that yet. I want to speak for a minute about what comes next. I'm going to jump a little bit ahead. We all know that AI agents are not going to work on historic payment networks. I was just at the Federal Reserve last week. They reminded me that the US ACH payment network was launched in 1975.

Agents require immediate movement of money, and I don't mean immediate like in 15 minutes. Agents are going to be paying agents that require immediate movement and settlement. And when you take these four elements together, we're trying to describe this as the way universes launch. Most universes launch with elements colliding. In our entire history we've never had these four primitives together and usually it feels like when a new universe is launched it feels chaotic and I feel like we're in that moment today and then amazing energy is released, new economies are built and I want to spend just three or four minutes on that new economy and why it matters for Ethereum.

Today, let me try to explain in my own way what every technology revolution we've seen, what the path has been, and what the outcome has been. So whether it was the advent of the railroads, telecommunications, the internet browsers, social media and graphs, or even commercial cloud, almost every technology revolution followed the exact same path. A massive innovation, lots of disruptors stepping in, initially great benefit for consumers, and in every technology revolution, the same thing happened.

They took something that was very scarce and expensive and made it very abundant and available. It could be distance, it could be telecommunications, access to networks, access to data, access to compute. But in every technology revolution we've ever seen, there's a handful of concentrated winners who take all. And the consumer ends up becoming the business model. This is an example of what I think the agentic revolution is going to do. And what is it taking and what is it making?

It's taking financial literacy, which is scarce in most societies. and it's taking attention span which is scarce in societies and what an agent will do is that machine intelligence will have unlimited literacy and unlimited attention to do things that most consumers do not and I'll give you an American example if you don't mind in the US there's about 15 trillion US dollars sitting in checking and savings accounts that earn about seven basis points in checking, 35 basis points in savings accounts.

That means that US consumers alone, by not putting that idle cash to work, because they lack attention, not necessarily financial literacy, lose about a hundred eighty billion dollars US. And when you think about what agents are going to be able to do, they're going to disrupt most financial services payments. So for example, the two or three things that are going to be most disrupted, and I'm not talking about in five to seven years from now, global remittances, moving money abroad, costs about 6% a year.

Stablecoins will become the great fee compressor. And when we look back in history, we're going to look back at the example that we saw in 2003 when you saw Skype make telecommunications free. Stablecoins are making the movement of money free. And when you have that benchmark, everything comes down from there. FX conversions. When you think about it, our thinking is that by 2035, almost $1.4 trillion, a quarter of all financial services fees are going to get disrupted.

And it doesn't mean it's going to go away. The banks and the legacy payment networks are going to either co-opt themselves, self-destruct and build new business models, as Tom mentioned, or they're going to get fundamentally replaced by new entrants. People from the crypto world and digital asset world who are going to be building super apps who don't separate money, payments settlement compliance borrowing lending, and the debt side of your balance sheet, mortgages and other forms of debt.

We think this 350 billion dollars is going to go back in the pocket of consumers. But why does this relate to Ethereum? Well, we know agents are going to have to use open standards. So Coinbase invented x402, a micropayment agent to agent standard and open sourced it. But I think ERC-8004, which allows agents to trade with one another, pay one another on a trustless basis is fundamentally going to change how most of economics moves in tomorrow's world.

There is a war that's begun, a battle that's begun to try to own the next rails. And if you speak to regulators, they're mostly concerned about three elements of AI. One, are AI going to take our jobs and destroy our society? society? Two, is it going to destroy humanity? And three, who is going to win between the two poles, China or the U.S.? So the debate is largely about who wins and how to slow things down. In the agentic world, it's actually a battle over who's going to control the future of money.

And if we have an opportunity to know that a revolution is coming, in most society's revolutions surprise us and only later do we look at the facts and realize they were inevitable. One of the solutions of a handful of gatekeepers, whether they be financial institutions trying to own their customers or technology companies trying to own the rails, Ethereum can play the role of changing the financial history of revolutions. Where finally a decentralized, neutral, trusted, censorship-resistant platform can help actually run the future rails of money where consumers will be the ultimate beneficiary and not be the business model like we've seen in every other

revolution. But don't take it lightly. The war has begun. Regulators are going to struggle to regulate crypto. They're really going to struggle to figure out how to regulate the future of machine intelligence and the like. Tom said it's a little bit in the future. I believe it's happening right now. I think the number of agents that will start using the Ethereum network, and it doesn't matter if it's mainnet or L2, is going to be measured in the tens if not hundreds of billions. And that could be the largest user community for Ethereum.

And if we do it right and regulators get it right, we may end up having not only becoming the settlement layer for capital markets, but fundamentally the rails on which the future of money and agency is run. If we do it right, agents will serve us and we will have autonomy. And I think that is the goal and one of the reasons why Ethereum was founded was to give each of us agency and autonomy. So I ask you to think about the future and how we can play a role in changing the outcome of this coming financial revolution.

Thank you.