Empire Debates: The Solana Comeback and BlackRock ETF Playbook

Transcript

oh by the way if they really want to change the rules of a particular di5 protocol what's going to happen in an open source world you Fork that and that's the beauty of these systems that they're self-ordering and if if there is some form of coercion or forced hand and or wrong or bad actor then very quickly liquidity migrates at the speed of light and so to users and so does code and that is incredibly powerful because it keeps the system check hey everyone welcome back to the debate series I think Club yeah I'm here with Ryan santhia and myself we're here to chat uh we're gonna start off with

the ETF status and what's going on there Ryan why don't you take us away and start us off well uh I mean you you being in America probably have a a a deeper understanding than our our even more I do but I wasn't ready yeah more excited for this than I am but long story short um you know it does appear that black rock and potentially others are starting to populate what will eventually be an ETF um ibtc has shown up on some some Black Rock um websites and uh it you know it looks like it's only a matter of time and that time is

like measured in months and not years um it's interesting that bitcoiners have been waiting for essentially decades now or at least a decade for two things an ET a Bitcoin ETF and for kind of global destabilization um across macro markets and both of those seem to be happening at the same time so we see Bitcoin kind of leading this rally um uh although I think there's a lot of excitement across the space about appending eth ETF right on the heels of of of Bitcoin and and what it will mean broadly for for crypto assets um so what are your guys

thoughts yeah I don't want to Mid curve it I think it is hugely impactful like a lot of things so difficult to understand what the impact will be in in months but measured in in in years I I think it is incredibly incredibly positive for the space it removes so much friction it legitimizes access to it and also it gives people a product to sell you know all these register investment advisers and financial guys like there's just another thing that they sell from a portfolio diversification standpoint and you know I think that's incredibly positive um the folks at um bitwise Matt I think put a great chart of what gold

did after an ETF approval and and if you look at that I think you know you could it may not be one to one it might not cuz you know we were in a tough macro you know maybe higher for longer interest rate environment people are risk off but still I think in a matter of in in a year in you know five 10 year Horizon this is going to be a huge Catalyst probably one of the more important in the last five years I mean we Ryan you know people have been trying to get an ETF approved in crypto since forever forever M Vos twins 2013 right exactly it's 10 years yeah I think the the most interesting thing to me was I had Hal press uh Scott Johnson James on on the

deli pod a couple of weeks ago to chat the ETF side and it was a very different environment just a couple of weeks ago and it seems like now that grce scale won their case against the SEC I think we're starting to see glimmers that the SEC is sort of caved in or or kind of agreed that this is a reality right and one of the key points there is Scott called out that gra scale doesn't have to refile this 19 b-4 doc um since they filed their S3 a c you know a couple weeks ago which is kind of like a technical thing but I think it kind of means that this stuff is sort of in the bag right I think and then what does that mean it just means you know we have

an SEC that sort of it seems like has to approve the ETS at this point yeah the big question that I have is will they approve the the grayscale or grayscale as an ETF especially with the uh New York attorney general um case against grayscale or will they go sort of Blue Chip and and kind of throw crypto a bone by approving one of like you know the sanctioned overlords of America uh in Black Rock and how does that play out for for this bace I'm of the mind that you know the original sort of pitch that a lot of us used in kind of the

like 16 17 18 era was that by 2025 or so no self-respecting family office or institutional uh Investment Portfolio on the planet would be without 1 to 2% exposure to a crypto and I think that this is sort of like the last domino in that happening the the amount of capital onboarding that will happen through this is going to be huge and the impact for something like eth which is even lower liquidity than than Bitcoin is going to be a multiple of what we're going to see for Bitcoin because remember you know it doesn't take two times Capital to double

the the valuation takes probably somewhere around 10% of of capital inflow in order to dou the valuation maybe even less because so many coins have actually been lost and ETFs have to populate with the physical right so you know uh the1 billion do ETF will need to have hundred billion dollar of the given asset and they have to buy that and and custody it and you know third party so on and so forth and so I'm of the opinion that we could be you know months away from from really significant order of magnitude gains in in Blue Chip Assets in crypto because of of the fact that these guys

have to populate and they got to buy you know the 40% of Bitcoin that still hasn't been lost on hard drives or spent on pizza right the interesting that's a great Point Ryan the interesting thing now is particularly something like eth like an approve a state Network where the availability of coins well two things come to mind one not only the liquidity but the availability of said coins I mean if if most of ether is being staked then it really reduces the coins in circulation and so it creates a even more of a cir like reflexive Dynamic yeah the other one is are these ETFs going to offer and pass through staking

rewards if they are staking the coins and if they're not staking then that's actually pretty positive for the folks that are because the yield is higher because then all of a sudden you have maybe TW 20 whatever percentage of all e that will be held by this ETFs if they're not being staked then that is pretty positive for folks that are staking because a staking yeld goes higher and so you enter this reflexive Loop um that is is very interesting now the third thing is if you have an ETF that also passes through some of the staking Rewards that's like a Reit I mean that's just a

technology upside with dividend component to it I mean the market hasn't it hasn't seen that product you know you don't you don't have a tech ETF giving you a dividend by the way that's not going to happen that's not going to happen I'll tell you why because they have to use third party qualified custodians uh so like you know a Jane Street or or some you know it'll end up being anchor or somebody else like that but there will be a really long dir before they get smart on staking or yielding on top of the asset and so for those of us who who are are are staking good those of us who are yielding and outperforming staking even better

because there's going to be less Capital available uh to to support that um and so I think I think it's going to be an amazing opportunity to really outperform the static ETFs by having compelling yield Ryan what if the qualified custodian offer staking though like what if an Anchorage or a bitgo I mean CU you're not violating the qualified custodian rule but you are staking but do you are are you aware of any um SEC approved qualified uh custodian or um uh or other that you know that does offer staking on top of their their uh their

c yeah not here only in Canada I know 3 IQ does it for their ETF yeah so that's it right like these guys are going to be getting inflated away it's kind of new new money effectively you know not being smart money yet um coming into a space that's the Natural Evolution they will get smart and then you're going to have to as capital allocators you're going to have to be doing something better than than holding eth staking it and taking 220 from your LPS uh uh but and that's why I think like the the value will acred to those who are are yielding in a compelling fashion now performing uh staking which I'm super excited couldn't be more

excited about what the the Dual impact that this is going to have of like a filtering uh and kind of leaving an upper crust of high quality asset managers along with just booing asset prices in a way that I you know we've never seen any of event like this in space no I want to clarify one thing and then ask you both question one is the conversion of a gray scale so gray scale is actually not impacted from the lawsuit that is at the dcg level and gray scale is kind of cornered off does it have a marginal impact soft I mean there two process so technically no but personally I would want a blue chip in a best case scenario I would perhaps want Black Rock to go first cuz

it's just gold Ste standard um my question to you guys is so you have $100 you have the option to buy the ETF coinbase stock or Bitcoin and E maybe salana or something else like liquid tokens how do you allocate that so if I'm playing the long game which I'd probably be if I'm buying Bitcoin or eth the long game that comes into play is control over my assets and long-term taxes so I would want to hold the BTC and eth I'd want to stake the eth and I'd want to custody it myself that'd be my pick when you talk about Taxas why not rothar

put that ETF in there yeah that could solve coinbase I mean I'm just saying like this is what gbdc e you're an American R how is it that like I'm not count it but Ryan and I are not in the US my man like but and somehow here this is the Family Feud answer it's like what outperforms yeah uh so something comes to mind that's a good reference for many people uh in 2017 The Economist did a global case study inviting up thousands of of um of students to to participate in this case study of what would be the best portfolio mix and the global average if you believe in the

wisdom of the crowd as I do the global average incidentally came up to 2/3 Bitcoin 130th um is the like Optimal crypto strategy for that time noting that this was you know mid 2017 and there weren't very many other options so um I'd say the smart money the smart money is the inverse of that 2/3 e 1/3 Bitcoin which is um which is what we use as our internal Benchmark um here at dialectic that's what we call the dialectic in index 2/3 e one 1/3 Bitcoin that's what we're trying to help perform what I would do myself is I would buy uh eth and I would yield with that eth compounding eth and that's because um

ultimately it's the highest quality asset in space that we see today the you know the developer mind share uh the sinkhole of both capital in other layer tws and and new layer ones that connect natively with eth there's this inle of capital both both mind share Capital as well as as as fincial Capital there in eth and so I think that eth will outperform Bitcoin for that reason and then the other reason all that eth needs to do to Triple or to double is kind of like 10 billion so like a little bit of money flowing in and you get a doubling and another and you know and there's a lot of doublings that can occur you know over the course of flowing in hundred billion dollar for

Bitcoin to double it kind of needs a 100 billion or or at least sort of 60 billion flow that's a lot of of money to to mobilize and so I think you know bitcoin's going to hit 100K but eth that means that eth is going to be at 16 to 20K so who cares you better perform Bitcoin substantially by being all in eath and that's that's the way I I play there's other assets that I would hold long tail and and and diversification the same Dynamic You could argue around what is eth to bitcoin salana may be to eth an L2 might be to eth salana might be to an L2 which we'll get into that disc yeah next I guess I would similar to you Ryan I

would largely be like 60 to 70% eth and a combination of that through staking it and and you know not all of it taking you know I don't think I would have an ETF it doesn't make sense for me I just think that's a positive Catalyst but I wouldn't do it you would do at the ETF if you don't want to deal with custody and if you may want to use it in a tax efficient manner or or get it a count as collateral in a trafi portfolio so that might be kind of the only consideration um I followed the rules too closely I thought the self- custody the option was 5050 Bitcoin e but that

makes no I and I I I don't see much reason to hold Bitcoin candidly only if your time Horizon is measured in less than a year if you think that the ETF for Bitcoin gets approved and then the the ETF for eth probably takes another 6 months to a year but if that you could I think we all hear an agreement that the the ET we will see an ETF of eth come in short order measured Z point R in months after the Bitcoin ETF and so the capital inflow to eth and I'm I'm going back in my conversations um while I was a parfi like the capital like to your like if if $100 were to flow into the space for

such a long time it was like $99 to $0000 would go into Bitcoin at the institutional level and then they would take months or years to study the space and then they would allocate some in ethereum and then Solano and and Venture towards the end of the cycle you most of my conversations with a lot of hedge funds Tigers of the world was like don't even talk to me about Bitcoin I'm interested in ethereum because that I'm a venture I'm a tech investor and Bitcoin is not that but ethereum is and salana is and so I I I think my my biggest I think insight there and I think it will be true is when people are willing to you know take more risk um they may LeapFrog that Bitcoin to eth step they might just go directly

to eth and I think you know for that reason I'm much more I just don't see a reason to hold Bitcoin other than like playing time game I just I just think the cell is so easy for like if you're on Wall Street to Ryan's point or or your point early Santi and you say hey look you're getting something that's has way more of a tech ecosystem it's a yielding asset and like the cell isn't that hard like it's I think it's pretty easy at that point for Bitcoin yeah it's a technology bet with some yield like it's it's huge it has to be sold to like a thoughtful curious individual who like cares about something conceptual like a smart contract bit I have underestimated the value of bitcoin's

brand over the years uh you know I've been on record in 20 every year from 2017 on saying that ethereum would flip Bitcoin uh and I like I think next year it very very well may but uh I've been wrong the entire time and usually comes back to that that Global brand that it has but it's like the first thing people think of the fact that it's a digital pet rock and doesn't offer anything more compelling than just custody um hasn't seemed bothered that many people I've been surprised at its resilience the honey badger I was say younger Generations like Ryan to your point if you extend this to 5 10 years the addressable market for

ethereum is way larger than Bitcoin because it touches the internet like the internet's vastly larger than the market size for gold I mean you're like you know like the funnel for getting someone in holding and investing in eth is like everyone that's young and cares about gaming nfts the internet versus gold is just a will be more Niche I think what do you guys think happens post ETF like let's walk down that path like ETFs are everywhere market caps are way up there's an aura of acceptance like what what are the second order effects of that outside of price like does Wall Street and web 2 companies now control more of the decision making like yeah

I'm trying to think through like the bad parts of a lot of the old world owning New World assets if there are any I mean I kind of just accept it as like the Natural Evolution of things and it the world is not just going to let like you know a band of 800 of us who happen to be at some conferences in the early 2010s just become like super Lord overtures of Planet multi- trillionaires so like the more that it's spread across the traditional wealth probably the better it is for us in the end um how do you think decision- making pans out there then like for ethereum like who's making the decisions five years from now core protocol upgrades like obviously there's the idea of like

rough social consensus but we all know that in reality it comes down to like a core group of developers like well Fidelity of developers will Black Rock well a nation like well Fidelity does right Fidelity super smart I mean they're they've been they've been in it for as long they're OG as it comes in the game H and and also making like technical contributions I think Fidelity developers have made contributions to the Bitcoin codebase and and certainly to to a range of things in gath and and what have you so um yeah this is the thing is like these guys have been around the whole time uh a lot of a lot of these large um you know large Capital

players have have quietly been here and I think this is what we're seeing like this run correct me if I'm wrong but the run from kind of 27k in Bitcoin up to 35 and in eth uh you know eth running from 15 and change up to 19 and salana running from 20 to 30 that feels like that's all ETF driven which makes me wonder is there also a salana ET TF on the horizon like could that be the third the third one to go and does that make sense and is that the right step for the ecosystem um I don't know if you guys have opinions on that well Tom I wanna I think your question around how decision-

making changes once you have traditional Finance players like I actually let me put in a different context like do you fundamentally believe that the people running these companies are evil or different than a lot of the people that are in crypto and I don't think the answer is yes and largely I I think people change depending on what system they're under and for instance I grew up in Mexico and we had a lot of Canadian American teachers come down and they quickly outside the school there were these cops that would stand and they would always pull you over to give you a ticket but they would never give you a ticket you would just kind of they would have

expected them to give you like you you would give them 20 bucks and they would let you go and a lot of the American and Canadian teachers initially resisted that and then months in they kind of understood how the system worked and they quickly just gave him 20 bucks because it was easier to give him 20 bucks and and and and and go as opposed to getting a ticket and you know losing so much time it's not to say that like you I mean what I'm saying is people really change under the system and the regime that they're under and I think if you believe that the rules of crypto are really sound uh and are better than the traditional system and the incentives are much better then then that's it like you don't have to believe anything else

I think that's what makes crypto such a sound system now if the assumptions are faulty or if there's a governance surface area Vector that might be exploited well that's going to be exploited anyways you don't like whether it's from tradition would you know traditional Finance guys or not like you have an SF guy that come in and and you know runs circles around a lot of crypto natives so I'm actually I I think it's hugely positive if anything they might bring like some excellence in areas where crypto has been kind of not so strong on and this idea of trying to like reent the wheel on everything whereas you know maybe Dow and corporate governance like actually becomes a much more um sound thing because you have actually professional players maybe you

need Apollo and KKR credit teams as opposed to Maple Finance guys underwriting you know for tokenization work yeah I I don't disagree with you Sandy but the one thing I would disagree with you on is like in the scenario where you have a bunch of Wall Street Bankers analysts Etc trying to make proxy decisions of in their own world and apply that to crypto a lot of the meta or subconscious things that you and I and Ryan and others are okay with they will not agree with like let's go through a couple examples like what's the worst thing about adding kyc let's just add it to everything we're used to that we work at a bank like why

what's wrong with private order flow let's just add that in like who cares like I don't necessarily think that they'll have the same decision making that we would have but like you and I there are can we acknowledge that there are people in crypto today that are not in alignment with this circle like the the thing that makes crypto so unique is that you sort of assume that everyone's going to act in their self best interest but somehow the system works yeah and the market decides and the market decides and so oh by the way if they really want to change the rules of a particular D5 protocol well what going to happen in an open source world you Fork that and that's the beauty of these

systems that they're self-ordering and if if there is some form of coercion or forced hand and or wrong or a bad actor then very quickly liquidity migrates at the speed of light and so to users and so does code and that is incredibly powerful because it keeps the system in check and I think if you believe that then it doesn't worry me who comes into the space I sort of already assume that there's a mixed bag of people in crypto yeah and but the system works and that's like a feature not a bu 100% yeah the I am excited for the the business side of Wall Street to come

into crypto like the CEOs the sales guys the operations teams like the buttoned up processes like the polishing like that is the stuff I am excited about and hopefully some activists to uh to Target the massive unused Dows that Ryan's always talking about we can't wait for Bill Amman to Bill Amman or Soros to go knocking on theosis or block one door t honestly that would that would be that would be fantastic if some that sorry like let's say Bill akman wanted to go after a giant treasury like that sure is there or any any other these like massive they do

though like what's what's the route like is just like so what you would do is you would buy up you you'd buy up some of the token and then you'd start a uh a campaign in fact we actually Dean and I at one time thought about doing this and and we we did it somewhat successfully with the digi staff we just sat down with Sean we're like look at you got all this money in the treasury you're the biggest token holder like why not vote to dissolve the the the Dow and and and pay out the token holders and they're like you know what yeah right and they did it and they made a lot of money and they deserved it because they they were buying tokens and we you know and and and we're fortunate to have some tokens

at that time as well and that was an incredi of tradeit I wish more we talked a couple other Dows and I wish Moore would have done it but too many of them we saw right away that most of them just looked at this as a giant uh trust fund for the core group forever and uh the problem is that you don't have actual legal rights of a of a shareholder um because if you did Amman would already be here mopping up folks here in zoo left right and Center [Laughter] um yeah I mean that talk about things that are overlooked but look there are some protocols right now where the value of their

treasury is higher than the market cap of the token tons or or or like really close and there have been instances where the core team has looked at that and then they buy a bunch of the tokens and then just like dissolve it and it's uh a lot of people don't pay attention to that and that's that's totally like that's a totally legitimate I actually think that that's much more ethical than just sitting on it paying each other 500k salaries till hell freeze is over right right right you know that that other people in the market can participate in these calls and make a judgment of like okay is this thing moving towards dissolution should I start to take a position I think that that would be a really like great

cleaning in in our Market there's way too much money locked up in foundations sitting in t- bills and not enough returned back to investors who took risks to to build ambitious projects that didn't work out and that's fine but like return the capital that's that's there right um I feel you need a big social group for that like you need a group on Twitter like causing real social pressure on these Founders publicly to do that yeah and like we have a couple like activist funds you know around the space but if there was a coordinated social effort to pressure the treasuries into doing so and getting all of their various stakeholders

involved in whatever role that they have within that project I think that would work but the the link Marine link Marine Raiders or something like that link Marine treasury Raiders that's a heck of a name for a fun by the way like go by that domain like Marine raer Let's uh let's switch gears and and and chat salana versus sort of like the evolution of other l2s and l1s I guess to sort of contextualize you know I'm I'm looking at at the the scope of tokens out there you know the the blue chips and eth and

and Bitcoin aside and trying to think through like you know where value will acrew in this next cycle and certainly there's a lot of of really solid work being done in the salana ecosystem and there's some interesting technical advantages that salana has but also some interesting disadvantages that they seem not to really get over like you know liveness continues to be a problem in year what now close to four um and and they're kind of the the one of the highest quality of what I would call generation two smart contract scripting platforms right you gen one with ethereum gen two which is kind of this eth Killers you know polka dot

Solana definity cardano Avalanche so on so forth and then you have a gen three that's coming out Celestia um fuel Wormhole um you know a range of others that blur the lines to l2s and you know this generation of l2s with optimism poly G arbitrum so on and so forth and these there there sort of isn't a clear line where L2 and these gen 3 l1's cut off like is Celestia L2 is it an L1 you kind of don't really know it it it works natively out of the box with ethereum um and you know is value going to ACR to these alt l1s that are trying to be the

capital SLE or is more value going to be captured by these these protocols that are ultimately ring value to ethereum um and how are you guys thinking through that yeah I'll maybe I'll jump in first I I think it's a great question Ry I think the way I think about it is like three broad buckets and I think Kyle from multicoin had a really good post on this on the end goal of the L1 or L2 should be serving the developers right like that's where because then they bring the customers they bring the scale so my mental model has always been ethereum has the most mind share it's where everything's happening and if we go to the extreme on the left we have something like Cosmos where you can build your own app you can make

consensus level edits and that has proven successful right you have aosh there you have dydx chain moving there for their pers you have thorchain like massive projects that are that are big and doing well and then if you go to the right of ethereum you get you know a much more centralized experience where eventually salon's nodes will be the size of data centers right which is fine that's the path they're going going down and you get something that's the best single stored Global state right you don't have to worry about making all these edits you don't have to worry about rolling your own chain you don't have to worry about composability you don't have to worry about anything like that um so the thing that I'm weighing is do PE will developers eventually just

get burnt out with the L2 scaling plan on ethereum right well they get tired of weighing 10 ZK projects and five rollup and you know rolling down to Celestia or igen lay disclosure we're investors we love them both um and will they eventually go over to a salon where they don't have to worry about a lot of stuff they just worry about their app right um or will they need that Cosmos level functionality and changes on ethereum while tapping into ethereum's liquidity right so you could have the cosmos Vision on eth so yeah I'm sort of stuck right I you you told me early on in my career ride not to be too binary and and here we are but I'm I'm kind of stuck between the cosmos Vision playing out on

eth while understanding that it's a technical hurdle for developers to deal with and the idea of just deploying on something like salana um but sorry for the rant no that's great you know I I don't know I I tend to think more of like on a consensus basis I think salana has been what is most interesting to me is that the ethos of the team and the community is is quite unique I think what made ethereum great and what was most interesting for me at a time when it was only Bitcoin was this idea that there's more like intellectual curiosity within the ethereum community and this idea that we

don't know everything we will have to build it as we go um and I think that's what kept the theum what it it has led it to be what it is today I think there are some factions with in the ethereum community that have really become more rigid in their thinking and look rightfully so it's matured it pulled off a dramatic transition to proof of stake which archaeologically might be one of the most important so like social phenomenons of of of the human race like just this idea of coordination at scale I think will go down in history books as something like incredible now what I really find interesting from Solana is that

it's very much differentiated from all the other competing l1s it's sort of like lateral it says hey we we're willing to take a lot of the critique and be open like you look at Anatoli and I think he strikes me as I've interviewed him multiple times had the Good Fortune of seeing him like in the fire like being criticized so much and accepting it and saying you know he got criticism on the gas fee model then he he took that and he optimized it and actually did an improvement to the salon ecosystem and the way they price gas is vastly superior than how um ethereum does it and I think that level of thinking is will like reward what I'm trying to say is that will is shown up

and will continue if I were to place a bet on salana it's on that in a similar matter that I placed that bet on ethereum early on and I've been very impressed also Just Like a Phoenix Rising From the Ashes just post SBF FTX kind of s SPF FTX kind of Association really hurt them I think a lot of people turned their back on them and my thesis back then was if they come out of this they're going to come out of it way stronger and I think that's what you're seeing right now play out uh is it perfect no ethereum is not perfect Bitcoin is not perfect nothing is perfect but I think the the like the salop phone is something that I you know we could you could argue that it's an interesting experiment but look

it's like they're not they are doing that I I think is is is it a good thing is it going to work out I think they're like super being actually they they'll be the first ones to tell you that they're being super conservative in the in what they're expecting out of this pilot but it's like Google brain you know it's like this is like their skunks workg kind of operation and I actually find it like really interesting that that is interesting because if they you know if they're still spending capital on something like the phone then I'm actually that actually increases my skepticism that the the the sort of double-edged sword

with Solana to your point I think you hit the nail on the head was that they've been such a great open community and they've done like so much bridge building right like the idea to just go out and and sell early stage safs to basically every VC in the market um you know kind of like a angel check and just get so many people in the community I thought was really brilliant and they've done these types of moves to like bring people in uh over time but post the trust breaking moment of FTX which broke trust across that ecosystem there would need to be a galvanization which to your point and you're closer to it than I I am that

there appears to be going through of like focus on you know the advantages that they have and just like being a a great developer experience and and and so on and so forth if they're still doing things like a phone and and like stores in New York malls and things like that then I would say that that demonstrates a lack of focus from a core team that would be concerning at this juncture they should be laser focused at this point and my my big question here is you know the mistakes that were made that burned billions and billions of dollars of capital one of which is you

know the token distribution model early on where a lot of it is distributed to a few VCS um the the you know the other being obviously the the relationship with SPF and and a few other things along the way can they recoup that uh faster than another you know brand new chain that has Superior technology in this generation like now gets traction right so does gen 3 chains whichever one you're excited about you know Ian layer Celestia fuel any any of them do they get traction faster than Sana recoups traction uh my my bet is that the Gen 3

eats the lunch of Gen 2 broadly that the whole class of eth killers have a strong uphill battle um mostly because they don't have the dry powder because they've distributed too much their token too early uh and that's going to be a lesson over the long term that you know your distribution curves need to to be very gradual and very long sweeping and this whole giving a whole you know giving 20% out of the network in the first 24 months is a terrible idea even though it looks looks good to to some people um and and that's kind of the the side I'm taking is that this this next Generation actually learns the lessons of the previous generation and it's sort

of cleaner slate that that people can then build on and that's interesting and that is an easier platform for building than trying to recoup what's loss and the lack of focus shows that gen two is is not on target if um if that's still where they are spending scarce resources at this yeah I think that I think the focus thing is important I I don't think the phone or the stores are that much of a focus anymore I was at I was in Windwood in Miami and I saw the uh the salon store that they used to have and I don't think it's open anymore I I don't know I think so I don't know I I don't have

complete views here either or or maybe not as complete as Ury but I think salana is getting a lot of traction and I think that they are successfully reversing the trust that was lost in FTX I mean these guys are I mean the developer interest around breakpoint right now is ridiculous I mean the number of people going to that the number of projects presenting I mean couple that with like some serious technical improvements whether you're talking about like fire dancer or Tiny Dancer or goo disclosure portfolio company um we're talking about like the isolated fee markets that Santi is talking about like that's all happening without the Gen 3s ever being launched

yet like you can't use Ian da to use to launch roll up yet right I love Igan L I'm just saying like it's not a possibility yet right a lot of the ZK projects whether EVMS or whether ZK VMS like you can't really use them you can't do any sort of composability whatsoever so I'm very bullish on what's being built on to but I'm not being mutually exclusive with the salana story given I think their developer progress has been pretty strong but again I'm not our Salon expert oh well I mean you know you follow closer than I do and so that's interesting that your feedback from both of you is there is really a lot of like organic strength that oh I think that

yeah there's a there's a lot of organic strength I mean the anat is the most likable founder in crypto which is a huge advantage that matters the guy gets the guy gets punched by all sides and everyone in the ethereum community and he is one where he says hey you're right on some things like he he's super humble and he he understands like it's not a perfect design um I think technically they might be one of the strongest I mean his background coming from I think he was at Cisco and like doing distributed systems there and like Hardware guys well so I think they just think very different than most other L1 Founders that are just forking ethereum and just maybe doing some marginal improvements and dressing it up and actually being way more uh um you know

way more aggressive on their token distribution to attract from Business Development standpoint in a lot of projects and it's it's actually very artificial and customer acquisition costs are really high um and I think Salon is organic way more organic Ryan the counter argument what you just said which is look call it what it is I don't think any any project has had like a you could always poke holes at the distribution now we all know there are limitations as to how you can raise capital and get bootstrapped in crypto unless you're friendtech you at some point will go down the VC route and and that implies that VC's get you know some allocation and people might look to that and say

hey that's that's really high it has lockups it has all things and look salana had to go through that I mean it it was just the nature it is the nature of the regulatory environment um the coins are fairly distributed did the naoto consensus is higher it's actually pretty high um and so when you look at it from a decentralization standpoint it's come a long way and I think people don't appreciate that um if it has all this said different like yeah look the distribution wasn't perfect people criticize it it's a VC coin I actually I actually think that those arguments are while they're factually correct they also dismissed the fact that so did ethereum at one

point so did Bitcoin at one point it was Fair concentrated like guys like this is just the nature of the game but I do think that if you look at the interest now given everything that's going on it's actually organic it's not acquired it's not you know hey let me give you a 20 million token Grant come and deploy in our competing L1 of choice or L2 so that to me is a very good barometer of there is a lot of developers that might say hey yeah I I met two kinds of developers one that first built in ethereum then went to salana or built in another uh chain and then went to salana and said

hey you know there's actually certain things that are possible here that are just not in other environments because it's just really like low fee kind of um uh and the benefits of that you could argue L2 is on the margin sure um and then the other ones that are just it's their first time building and the tooling has gotten much better and the like developer resources has come has come a long way it's actually very easy to get on board in salon and start building which is something that the salana foundation has has really put a lot of emphasis on which I think is is very important you know one one good example here like the thing that I'm struggling with is there are so many

different ways to build on ethereum is it too confusing and are developers eventually just going to say [ __ ] it I want to build on salana it's easier I think that's basically kind of my thesis in in a nutshell a little bit for salana but one good example of this like Ryan and Santi that's helpful is helium right helium had their own chain from the ground up like it was very confusing it was very distracting from their core mission of building out iot and 5G and stuff like that and one day they just said hey let's pivot to salana and I think they were probably one of the biggest nft mins ever right like every iot device every 5G device now has their own nft for it um and I think things

went pretty smoothly I mean granted they probably both sides put a ton of resources into it but kind of demonstrates like a an app chain going to salana for ease that was certainly the best merger that we've seen in the space obviously probably the highest profile one but but also the best executed one and that's that would be interesting thing if Solana used its Business Development activities to focus on doing mergers and use and sort of made some some Capital deployments to bring over really compelling ecosystems to you know in to kind of be part of the salana chain instead of

running their own L1 or L2 or or their own resource layer of some kind um that would be a a moment where I would certainly get very excited uh you you I feel like another thing that that could get an outsider in after the after the sort of clarity that the the Alam allocation has kind of washed through the market you know you guys have have demonstrated the number times we talked about it last time and and and you've sent some uh some data on this that actually the Market's holding up really well against the the Alama uh

buying which supports your argument that actually Solana you know the community of Solana is showing up every day right now and buying from the FTX sellers which you know got to tip my hat to that's that's there a thing that I suppose I'm missing in this moment is a genuinely unique uh application or experience or primitive that that is enabled by Solana so like a lot of it feels like oh we're the you know we're the ex of ethereum but on Solana um and it's like okay what is like new you know is there an amazing

like experience game that has gotten traction or gotten users is there an awesome defi experience or defi pool that you know is is producing some compelling new defi primitive I'm I'm not sure if I've seen that and until we get that it's still going to be in the eth killer category and not emerge as one of its own as a legitimate like top three blue chip do you are you guys seen that though like what what what for you is the thing that is like the killer app on salana that's going to bring you know the next million people uh to the table so I actually was recently talking to a Founder here um in salana

and um there's this project called drip house and what they do is free nfts and basically like um you subscribe as all these artists or projects that will drip you every day you know part of the collection they just you know it's kind of like a random Lottery it's kind of fun right uh like opening up like uh I guess like those like Pagani cards like um and the founder very succinctly said look it was just not possible to do it even in an L2 environment it would have cost us like an order of magnitude or two just gas fees alone and that just kills a project in of itself whereas in salana the it's just radically cheaper

to do this type of project and so just then and there uh and drip is done I think uh volume wise it's like it's gone a ton of traction I don't want to spit out numbers here uh out of my ass but I think something like that is an example of a team saying being acutely aware that hey it's actually pretty cool we want to do this we can't do it in L2 we can't do it in certainly in L1 ethereum we need to do it in salana and can that change sure over time maybe gas you know optimizations whatnot but um I I think really the consumer and gaming aspect of of is is is fairly well suited for

salana um I think you've seen some interesting nft projects like appreciate that uh micro payments is an area that I'm really excited about like just payments in general I think is one area that is just Prime for explosion just a stable coins and and it will happen Merchant adoption whatnot and I think a circle has certainly like lend its credibility and put its weight behind deploying in salana and being active there it has done so in other ecosystems as well so hey look you know but still I think um I think it's Sly in every L ecosystem but these use cases are emerging and I think when you think about things that

have been prohibitively expensive in an L1 and even in an L2 environment because I think uh in your mind when you were used to seeing like paying uh thousands and thousands like per transaction in an L1 at the peak of def5 Summer you were yield farming and so and then you say oh the anchoring is so high that when you go to an L2 it seems like it's it's a huge Improvement and it is but for someone new coming in an L2 is still expensive yeah for sure and for all and it it it it it like margins off a whole segment of use cases and users that will not pay even a dollar for us it's like wow I'm used to

paying 20 30 100 a thousand I've seen all kinds of gas fees but uh in salana it's just uh it's radically cheaper and and that matters for a lot of projects and and users I think by the good thing is I think by next episode or next recording breakpoint will have happened already so I think we can all kind of see what projects come out of there what's interesting and what isn't and we can kind of talk about it too let's switch gears to another project that Tommy you've been been following really closely one why don't you walk us through uh kind of the latest and greatest with ton and telegram yeah sure um maybe a bit of a teaser as we end the episode for for next week's convo but been diving into the ton blockchain

which is I guess legally separate from telegram the the service we all use and love um at token 2049 a big conference uh the ton blockchain announced an exclusive partnership with telegram kind of got me interested in uh in looking at ton again and one of the a couple of the interesting things is that telegram the app plans to exclusively use the ton blockchain but more interestingly I think it's November 1st um everybody in telegram will have a wallet by default in the app excluding the US so it's an opt out wallet which means it's in the app for everyone ready to go um if you do at wallet in your search bar and

you're not in the US you could actually use it right now um they'll have uh staking through ton stakers and bimo and others um and even better they'll have a full App Store in telegram that you can use crypto apps with linked to the native wallet um so the idea that telegram could sort of win web 3 if the wallet and App Store works out uh to 800 million users around the world minus the US portion which which I don't know what that portion is I think shouldn't be understated right because every L1 we all look at outside of coinbase's base and maybe you know telegram here doesn't have the distribution that telegram has

so it's a huge differentiating Factor um on the flip side uh information around the ton blockchain is extremely slim data analytics how the blockchains Run uh the token distribution is kind of hard for me to pin down right now because they had a a unique release after after the SEC settlement um and it's a little janky because I think you can only really use a couple assets on T like uh Tron usdt and stuff like that so it's a little early on but look the distribution is interesting so diving back into it and seeing seeing what's around but interested if you guys have have heard anything or if we should leave it that the big question that I

asked myself and I asked you do this ask you this is at 10 billion have I missed it and given the nebulous nature in a world that is supposed to be you know transparent and uh and forthright especially in in in incipient moments um the nebulous nature of the token distribution and even you know let's let's be serious we can assume that it's proof of authority chain um it clearly is proof of authority chain H like does that turn a threshold of people off such that you know how much upside does it have from

here at 10 billion fully diluted yeah I asked a very smart person their View and and they had the same view you have on the nebulous nature of it I I think it's a really really good question um honestly not sure yet right I need to dig in and and figure out how the blockchain works but I think coin market cap and coin Geto have the wrong fdv for telegram for what it's worth um I think the total Supply is overstated and but I need to confirm that and there's a lot of tokens that are locked up so like the ton Believers fund has3 billion worth of ton um that's locked up for God I think it's a couple years uh I think it's two years and then something

like that or maybe more um you know I I think uh I go back to um the one the two episodes ago we were talking about fully diluted and circulating and we ought to look at the distribution curve and the anchor holders same as this also reminds me of world coin you know like super high FTV where like I I agree Ryan for me it's like how much upside because I I need to get at least as an early stage investor the opportunity cost especially in this market where I can get stuff at 10 million fully diluted even liquid stuff like it's like I'm I going to am I willing to go over to A1 billion project I'm much upside does it

have um but I also I'm thinking acutely of what you just said which is in a world where ethereum doubles triples from here does a 5x what are other assets do and you know not just purely speculation but also I I am looking for who has the best distribution time and time again I think you will win as more consumer applications get built I think Whoever has not just the best tech I think the tech here is overstated like like in an open source context I think you can you can Fork a lot of it and the modes are um less so they're there but you you can Fork stuff uh if the team is technically competent I think it it will

be able to Fork whatever works and so I'm looking more for who has the best distribution and that's why I bring up worldcoin and um not so much worldcoin I think they it's a huge effort but telegram has massive distribution to Blink like like coinbase but even better and I think it can do a lot of really interesting things we have to get like for the next big win we have to get a new cohort of people into the space and this feels like as good a Avenue as as any um you know I'm hopeful that the the ETFs will be an Avenue towards another million people primarily being you know

family offices and and wealth management clients on boarding into the space but you know uh ton has massive Global or telegram has massive global distribution and if it's this I'll take it you know I'll I'll I'll I'll take any anything that onboards millions of people great um before I'm gonna get serious about it as a as a asset I want Clarity on things like inflation you know distrib of ownership and Genie coefficient um the consensus mechanism uh road map uh the these types of things and you know maybe they're holding back

uh from being double or triple this this FTV if if they could whatever it is whether it's you know six or or or 10 obviously that there's a debate there um you know I would think that they would improve their prospects by being honest about that in this moment uh and that would be the best thing to to on board the developers they're well let's end it there next episode we could chat what we saw from breakpoint Salon wise we could chat findings on Telegram and uh any other major topics we have for next next recording awesome guys beautiful thanks so much guys cheers talk soon guys [Music] cheers