Ethereum as the global settlement layer: SharpLink's Joseph Chalom

Transcript

Ethereum was harder to explain five six years ago. It is a store of value at time times it's deflationary but unlike Bitcoin it does two things differently. One is it's fully programmable. Meaning Bitcoin the network is great for storing and moving Bitcoin. Ethereum is something that could have exchanges on it, DeFi on it. You can move value like stable coins and dollars. And most importantly, it's much more programmable and flexible. So when we speak to institutional clients, we're telling them that it's not only a good store of value for capital appreciation, but two, it is going to be the world's financial ledger over time. You see that in the

adoption curve. Therefore, you want to own as much Ether as possible now because that is going to be what's essentially securing the future of financial transactions in Rails. That said, it's also the idea that this has a network effect. And if we're at the point where stable coins are going to go up by 10x and real world um tokenization of funds and stocks and bonds and commodities and real estate are going to go up much larger as firms like Black Rockck and Fidelity and others start tokenizing funds, you almost have an internet effect and investors and institutions want to get into this early. Even though Ethereum's been

around for 10 years, we're very early in this new super cycle. And that's what they're telling us. And they want to get it through institutional-grade firms and risk management. They're very very clear that they understand this now in a way they did it in five six years ago. >> Gotcha. Yeah. And I you know I wasn't expecting to go in this direction off the top but since the the the subject has come up um the the bankless podcast guys are very fond of saying that the biggest value unlock for Ethereum is being understood. and and you know in those metrics I showed about the institutional clients that you've got at ESP shows that you know you've been one of these the most effective communicators in telling the story um to institutional clients. Uh how what have what has been the most effective thing

in your mind at telling the story because I think Ethereum is not as simple of a narrative for communication as Bitcoin was. How have you been effective at getting people over that hurdle? And for people who are still struggling with that, what would you say to them? >> Sure. I think it's worth taking a step back and you can make an argument that in the previous three or four years, Bitcoin was dominating the narrative and then Salana came and Salana spent a massive amount on marketing and did a lot of work in the gaming NFT and memecoin space and it's fair to say that Ethereum lost its narrative. And I think one of the best things about these digital asset treasuries that have come out and we talk about co-opetition.

While we're competing with Tom Lee and others, we actually have more in common than you could imagine. And the two most important things we're doing in common is we are accumulating really large amounts of Ether, which the Ethereum ecosystem had too much block space. And when you can go out and accumulate a lot of this ether, it's not only healthy for the price of ether, it's healthy for the network. And the second thing is we're on podcasts, great ones like this. We're on TV, we're at conferences, and we are telling the Ethereum super cycle story where finance is going to be moving onto Ethereum. And I think that has as much of effect telling that story over and

over and explaining it to retail, to institutions, to traders has actually been as effective as accumulating ETH in driving that mind share. And I think they they go hand in hand and you see it. Um I think we're at a moment where there's a flight to quality. We can talk about the price and the fear in the crypto marketplace, but Bitcoin and Ether have held up pretty well this year. And you see the less quality uh tokens and old alt old al old coins have really really struggled and I think it is about telling the story about utility and a flight to quality and it is happening more in the last year than it happened in the prior 3 years in the Ethereum space and I do credit the

digital asset treasuries for telling that story in a very public way. >> Stable coins are the biggest use case in crypto right now but let's be real using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe, Bridge helps businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.com/bridge. You all were one of the biggest and first movers in this Ethereum digital asset treasury space. Um, and before we get into some of the the specifics of where we are in the market and how you guys are deploying your Ethereum, um, I do want to hear some more about that

coopetition piece because you've used this before, this word, um, combination of cooperation and competition. What has been the cooperation like? What has the cooperation been like with other Ethereum DATs? And what has the competition been like? What's been your experience of that from from your perspective as ESP? >> I think it's been really positive. And the cooperation is having a shared mission. Meaning we are not against Bitcoin. I don't wake up every day trying to flip Bitcoin. I do think Ethereum has higher quality use cases beyond just owning a token and moving a token, which is what the Bitcoin network does. It's got a very unique singular narrative around store value. But I think in the long run, if you talk about

the potential use cases, Ethereum is going to lap Bitcoin um in a very significant way. And if really smart people backed by really institutional investors have the same thesis, we should be cooperating and telling that story, even though there might be nuance in how we tell it. For example, I'm not out here telling people what the price of Ether is going to be in 3 months or 6 months. I'm telling an adoption story. The competition is there's a race to accumulate Ether uh at the current price. I think it's a really good entry point at roughly 3,000, which is the price of Ether today. Um that said, I think others uh have put limits on what that accumulation will be. I think Tom

Lee's been very very public. He will own 5%. I think we're of the same sentiment. You don't want to destabilize the network. So I think we're are in a race to accumulate not to be the first to get to 5% but to accumulate it for investors at the lowest price possible as we believe the price will go up significantly over time. So we compete to accumulate and get to that 5% number, but we have the same mission and we're on the same panels, we're at the same locations, we're at the same venues telling the story, maybe slightly different ways.

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Stable coins are the biggest use case in crypto right now. But let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe. Bridge helps businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.combridge. >> Yeah. So, there's some natural alignment there. Uh which is always good to see in in this ecosystem. Um yeah, for anybody who missed it, uh last week I did an interview with Fong Lee, who's the CEO of Micro Strategy, about what they're doing in the Bitcoin DAT ecosystem. So, if anyone missed that, I definitely recommend you check out that uh episode.

Um Joe, I want to ask some more questions specifically around Ethereum. Uh obviously ETH the asset is very central to ESP strategy but you all have also been very focused on the Ethereum network the Ethereum ecosystem and the development in that space has been really exciting to me from from a perspective of what ESB is doing. Um Ethereum co-founder Joe Luben uh is also uh involved at ESBET and has been very focused on developing the ETH ecosystem his whole career. Um just tell me about how you think about this. How important is the Ethereum network and the ecosystem as distinct from ETH the asset and how do you guys think about that at Sharplink?

>> Sure. Let's let's just start. If you have a reserve currency, you better have a reason why you think it's a really good reserve currency. Like if you're the treasure of the king and you're collecting gold, you believe gold is a really good asset to hold in the long run for the kingdom. So, Ethereum, I will tell you that having worked in financial services for 20 years, you and I worked at the same firm. I even worked to scale a fintech business that was all around making investing easier for big institutions to do portfolio management, trading, risk management, and operations. And it was an incredible front row seat on frankly how inefficient the current financial rails are. Our economy is strong. People are

investing, but they don't realize the amount of human interaction and capital that's necessary to even just trade stocks, bonds, and funds. In the US, things settle on a trade date plus one day. Meaning, if you trade something on a Friday morning, you don't get your money till Monday. And in Europe, I'm sorry, in Asia, in many countries, it's T+ 2. So, you're at risk every single night that your counterparty won't be there or the markets will move. And it takes insurance and ISD does and all sorts of counterparty risk and capital just to buy and sell something between 9:30 and 4 every day. And it's locked to where that venue is. So, for example, if

your stock is listed at NASDAQ, that's where it trades during the day. The promise of Ethereum is this idea that you have a decentralized rail that allows a ledger that can settle trades instantly. And I know that sounds like nothing to someone from the crypto space, but let's be real, crypto is a $3.5 trillion industry. There are $700 trillion of world financial assets. If you could start trading more and more of those digitally 247 that settle instantly, Ethereum is going to be that programmable layer that is trusted, neutral, and decentralized that's going to start accumulating more and more. And

it started with stable coins, which is just a version of tokenizing a dollar. There's 300 billion today. Secretary Besson thinks it'll go to three trillion in the next couple of years. Tokenized stocks, bonds, and funds are only 30 billion. You heard Larry Frink from Black Rockck on October 14th say his vision is all assets are going to be tokenized. That's trillions of dollars coming on chain. And Ethereum has the license to win. There may be chains that are slightly cheaper or faster, but Ethereum's been up for 10 years, has never gone down, and Ethereum has the liquidity and the trust that other layer ones don't. That's why we believe we're in a super cycle of institutional

adoption and we're in the early innings. Even though Ethereum has been around for 10 years, it took 10 years to build for this moment. Now is the time to own the asset Ether, which secures uh that network, which we believe is going to be the global settlement layer for finance. And if you believe that, Ether is a great asset to hold as a long-term treasury asset as permanent capital. Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing like the top 1%.

This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.