Ethereum, Solana and whether apps are overtaking chains

Transcript

ETH vers Soul, Rest of the Cycle. Which one do you like more? >> I think you have to like Well, it Okay, it depends. Um, it depends. So, my bet would be that GM, good morning. Welcome to the Milk Road Show, the daily crypto show where you sold early and now feel like the guy who left the game in the seventh inning and missed the walk-off. I'm your host, Jay Hamilton. It's Wednesday, September the 17th. Today we're joined by Ryan Connor, head of research at Block Works, and Jesse Eckle is back on the show, founder of OPAC Venture, and legendary crypto investor.

Today we're going to talk about base token is coming. Jesse Pollock teases Base token at Base Camp earlier this week. What's going on? When's it coming? What can you expect? ETH for soul. Who wins for the rest of this cycle? And pumped up fun is absolutely ripping over the past month. If you've been listening to Milk Road and if you're a Milk Road pro member, there's a good chance you bought it because we signaled this just over a month ago. Is it too late to buy in? And more importantly, what is Pumped Up Fund now and in the future? Is this the future of onchain gaming? Is this the future of onchain social? We're going to talk about that and so much more before we jump in. If you want a five minute read every day on what is happening in crypto so you're up to date

on all of the news, you should subscribe to the Milk Road newsletter. Hit the link in the show notes to subscribe today. It's free. We just wrote all about the base token yesterday. Great article. Check it out. Today's episode is brought to you by Figure Markets. Grow your cash like a bank. No lockups, just real returns. It's also brought to you by Ken, the verified distribution protocol. Changing the growth game. With that, Ryan, welcome to the Milk Road Show. >> Appreciate you guys having me on. Uh, big fan of you guys for a long time and, you know, congrats on all your success and excited to be here today.

>> Thanks, my man. Jesse, what's up, man? Great to have you back. >> Always great to be back, Jay. >> Nice. Love it. Okay, let's start uh let's start wide before we get into base token and pump fun and uh all that. Let's start wide because Ryan, we've never had you on the show before. And at Blockworks Research, you guys are really one of the best in the industry at producing onchain data that helps us understand what is actually happening on all these chains. What's the activity?

And so I want to get an idea of what you're seeing from onchain data because I think it'll help our audience understand where we are in this cycle. So let me ask you that first before we go into any of the data let me just get your take where where do you think we are in this cycle? >> Yeah totally. So a little bit of context before I answer the question. Um Blockworks research is very much like bottoms up today. we we've made the um you know the calculated decision to not you know opineine on you know where we are in the cycle like you know is the four-year cycle over as it topped um that being said like there you know there's a reason that we came to that

conclusion especially now and I think what you're seeing in the market today it's like everything like the the onchain the onchain data doesn't matter um from a macrolevel perspective um the only two things that matter for risk assets going forward are um the secular trend of both crypto and AI. Um so from an AI perspective um it's been an absolute boon for the economy and will continue to be uh for like three reasons. One is that mega cap companies that are throwing off, you know, 100 billion in free cash flow per year have to invest in the AI super cycle um because it's an it's an

existent it's an existential threat to their business. Um the second reason is because venture firms have to invest in it because it's an existential threat to their business and so do startups, right? That's the third reason. So um you already see in the GDP data where I think half of GDP growth today is from the AI data center capex boom um it's going to it's going to dramatically change the margin profile of not just technology businesses but across industries and um it's really like one of the only things that matters is like the ability and willingness of companies to invest in AI and you see it in the macro data where like look I I did macro investing um for my for my whole career career um

uh ran crossass asset class portfolios and I know the data better than almost anywhere else from like like a macro indicator perspective and I can tell you that everyone's macro models stopped working in November of 2022 when chat GBT happened the data did one thing uh and the cycle just kept going you have you know you had countless indicators that were predicting the end of the economic cycle meaning unemployment rate was going to skyrocket higher actually didn't it's like really plateaued for a very long time. Something that's really abnormal in the historical data. And I think that's risk appetite from AI.

Um now from like a crypto perspective, there's another secular trend where you have this technology that opens up new markets to every financial institution, to every tech company. Um and that could lead to massive cost savings for all these companies as well. And we just opened up the floodgates of capital into that market. So people are going to invest because again, you know, there's margin to be had there. and you know, cycle be damned. It doesn't matter. So, um, you know, obviously you're going to have pullbacks. You're going to have 5% 10% 20% pullbacks in the market. That's going to happen. Trump might scare the market again, but you want to be long risk assets given these like these really unique fundamental tailwinds.

>> Okay, I'm going to uh I'm going to turn turn that around and say it's here. We have the head of research at Blockwork saying the onchain metrics don't matter, but they do matter. They do matter. and you guys do an incredible job of producing them. So, uh let's I it's it is a great to point this. >> Well, let me let me reframe it quick like it it it doesn't matter from a macro perspective, right? It matters it matters from an idiosyncratic bottoms up perspective, but from a macro perspective, you have two gigantic tailwinds that like you know, you want to look at the bottoms up metrics, which again like Blockworks does better than anyone else.

>> Yeah. And and and it is a great point especially for everyone listening to this episode is it's very easy to get caught up in the day-to-day week to week and as an investor that can really take your focus away from the primary goal right which is the recognition that you are early to two of the biggest tech technology advancements and secular trends that are going to happen likely in our lifetime. I mean, I don't know. It's difficult to predict what's going to happen 50 years from now, but I think we all three of us would agree on that. And that alone is an investment opportunity that most people don't don't get and don't have. And so, keep it simple, stupid, is uh is always good advice in this case. Um, but that being said, let's take a let's take a look at

some of the onchain data that we're seeing right now. And because the main thing that I want to understand is uh and and Jesse, you and I have talked about this a bunch in the show in the past is it really feels like we're not in euphoria stage of of this cycle. I'm going to keep using this term the cycle even though uh maybe the secular trend is way bigger than the cycle. But in this cycle, it feels like we have not gotten to where we have gotten to in past cycles in terms of the the euphoric retail activity that we often see. >> Yeah, I think that that's right. And I mean I think you see it in this chart.

Um you know in front of us we have uh total network revenue per blockchain um as a stacked bar graph. So this is like the total that you've seen across crypto dating back to May of 2020. And you saw how crazy I mean you can see on the chart how crazy things got in 2021 where in a single month like Ethereum generated close to two billion in revenue, right? Like that's insane. people were just slamming by. Um, now the cycle's like really moderated and market share has shifted dramatically which is like again like that bottoms up story, right? Like you can't just blindly long crypto. As much as like risk assets are going to have this tailwind, the internals of the market

have shifted dramatically across many dimensions and you see it in this chart where you know Ethereum basically dominated everything else was relevant and then you know Salana uh Hyperliquid and Tron took over. And and when we when we look at this chart, where any any predictions, where are we going with this? Because what we're seeing right now is over the past six months, it's been pretty flat. >> Yeah. So, I wouldn't um you know, predictions from the chart.

No. Like that's like personally and I I understand that you can make money this way, like looking at charts and extrapolating and you know, looking at past data. Um, but I think you really have to think about the team's game plans and who the players are and who has the distribution going forward. Um, so like I definitely have opinions on the mix of uh revenue in this chart for sure. We have we have strong opinions there. Um, but like from this chart like I don't think that you can tell much about what's what's happening in the future. Like what's what matters more is like okay what's salana doing with BAM? Um what's that going to do with transaction activity if they can make per make work? what's uh what's Hyperlid doing with uh Hypere EVM uh and the decisions that they're making to onboard

interesting builders there? Uh what is you know what's the distribution advantages of these relative chains? Who are they partnering partnering with to funnel trad flows onto these chains? Because like look I all that matter like I don't want to say that all that matters is are the trady flows um but for the foreseeable future like that's probably your most important variable if you were to stack rank them and the reason is because like crypto funds are small um you know a large crypto fund is like 2 to three billion aum that is a minnow and tradi that is a small size um and so when you start seeing like that type of capital shift into into crypto like you have to think about where are they going to put that capital to work

and um that's going to those are the things that are going to meaningfully change this chart. That chart like the chart that's in front of us does not consider that fact. The best audience to distribute your product to your super fans. Duh. But what if you haven't found them yet? That's where Ken comes in. They help businesses scale digital distribution at a price that makes sense. Ken's verified distribution protocol identifies the best users for your product and connects you directly to them. Ready to find real meaningful users for your next big product? Join the KGEN network today at milkroad.com/kjen spelled kgn.

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Mhm. If we if we take a look at a few of the chains that you mentioned where and you said you have strong opinion on the mix of these chains. I would love I love hearing strong opinions. Uh ETH, Soul, Hype. >> What are the other big ones here? Tron is is also a big one here. >> Those the I want to capture all the ones and I want to get you to share your opinions on them. Is that the the main ones here that I can see at least? >> Yeah. From a from a real So from a network revenue perspective, yes. If you were to stack this uh for like application revenue, like the mix would be different, right? So like Tron would be irrelevant because all Tron's used for is like payments. There are really

no apps over there. Uh Bass would be much higher because you know Bass has you know they're generating like $30 million a month in application revenue. Salana is like at 135 or something like that. and hype depending on you want to do the accounting. Um like they're annualizing at a billion but it's like one app and it's hyper core. Um so like so this this this would look different if you're looking from an ecosystem perspective rather than a chain revenue perspective but um but yeah so so those are the big players. >> Okay. What's your give us your breakdown of your opinion on on those big players.

>> Yeah totally. So I think you know it's pretty obvious that Salon is the fastest horse today. Um that ecosystem is number one across most of the measures that matter. Um so like from a backward-looking perspective like uh DEX volume it's number one uh something like 75% year-over-year uh uh growth in DEX volume. uh application uh revenue. So onchain revenue that applications earn on the Salana blockchain. I think it's like 135 million per month. Um that number is up like 135% year-over-year I believe. Uh and um

you know from like a from like an experimentation perspective I think like it's qualitatively interesting that like everything happens on Salana. uh whether it's me, you know, the memecoin craze, whether it's the AI, the mini AI agent boom and bust, whether it's like, you know, social experiments, uh prop AMMs, you have a lot of really interesting things that or like even think of something like metadata, futuri, um all the interesting experiments seem to have shifted away from like ETH last cycle to Salana this cycle. I think that that's very promising. It's place where people go to experiment. I think the other interesting thing about the experimentation bit is that even when experimentation starts somewhere else,

it ends up happening on Salana at larger scale. So if you look at like you know we have a chart here of like tokenized equities um where uh like tokenized equities started on base and it just didn't take off and then the activity just like meaningfully moved to Salana >> and tokenized equity it's still small right tokeniz >> very small very very small >> very small very exciting very exciting like definitely the future but so small >> but but like you just see like the you see you see the set function change when an activity starts somewhere that moves to Salana. I think the most classic example is virtuals. Like I remember

what reading the Brian Arm Armstrong tweet where he said like oh like AI agents are happening on bass and it was like at the beginning of the AI agent craze. I was like wow bass is going to have this moment like they are going to own this trend. Did not happen. It happened on pump. It happened on you know AI6Z. It ended up not happening on virtuals. That that that activity went to zero very quickly. Uh you saw that with things like like friend.pet. Uh you saw it with friend tech. Um it's just like things really haven't been taking off there. Not to say that they won't, but just given like the throughput advantages, the improved UX uh versus EVM landmand like the experimentation happens on Salana, which is really interesting. They're they have they have because the experimentation happens

there, they have infinitely more call options than other ecosystems, which I think is really interesting. Um And and that's not to discount other ecosystems like we're bullish base, we're bullish hyperlquid, but I think that there's like a very obviously a fastest horse today. >> Just to kind of push back on that, wouldn't you say like you mentioned Hyperlid? Hyperlid is built it's like an arbitrum L3 or it's built somehow in the arbitrum stack. Uh so that's and that's one of the biggest revenue generators today. So that would be outside of Solana for from my viewpoint. A lot of the revenue, and correct me if I'm wrong, but a lot of the revenue and a lot of the activity on Salana has been primarily memecoin driven. And if you

were to remove the memecoin mania from Salana, how much, and this is, I guess more of a question, how much of that activity left is meaningful? It's about 60% 60 to 70% of activity on Salon Ethereum. It's about 20 to 30% depending on your time frame. And you know for hyperlid they're solely concentrated in per um so yeah these these chains are all like you know different activity is happening on different chains for sure but I think you know when I look at um what Salana is doing like they know that they missed per

adjusting with this new BAM architecture that Jetto is rolling out so that hyperlid style per can hopefully be possible on salon. a similar UX, a similar level of throughput. And I contrast that with what the Ethereum ecosystem did when Salana started taking market share. They ignored it, right? They they they specifically said, "This is not relevant to us. We're building something so much more important." So when I look at like the relative demeanor or like the commercial orientation between like those two two chains specifically, the Salano ecosystem is very commercially oriented.

I think that that's very important. they realize that they missed burps and now they're doing their best to correct it. Who knows if they pull it off. They could totally miss it again. Um so that like that's going to be something to watch. Uh like right now we're watching drift very closely because their per activity has like step functioned higher and the team does seem to be like favored by a lot of ecosystem participants. So like we're watching that closely. We'll see how it plays out. Um but like that's not to discount anything that's happening on like Hyperlquid for example like that you can't tell this you you cannot tell the story of this cycle without mentioning what Hyperlid has done and they basically used the Salana playbook um which is like you know Salana um they looked at Ethereum they said like hey this is so decentralized that it's

hurting UX let's not be fully centralized but let's be sufficiently decentralized so that we can have good UX and they took market share hyperlid's doing the same thing where are going to go further on the on the centralization spectrum in order to have like a a um a comp a competitive UX and user experience uh to compete with to compete with Salana which they've done masterfully. I I guess what I'm saying is if you look at a lot of the breakout apps in crypto um three come to mind one would be pump another would be hyperlquid and another would be something like poly market uh which has achieved a lot of mainstream adoption and when you look at poly market that's actually on polygon uh when you look at hyperlquid it's it's kind of its own

thing but sort of built on arbitrum and you look at pump that's on salana but I guess in my mind what I see and especially when I looked at your chart of revenue is going into the future are maybe a little bit less about a story of Salana or Ethereum or whatever and more a story of these apps like Hyperlid, like Pump uh and like Poly Market and at that point like does the chain even really matter and I I feel like the answer kind of is no especially when you consider Hyperlid is an arbitum L3 and like yet it's doing like a billion dollars in revenue. It doesn't seem to matter where it's at. And the same thing with Poly Market, like it's achieved mass mainstream adoption being on Polygon, which is that's not it's not even a contender in terms of like people

chains people talk about. And so wouldn't it be fair to say that in the future it's actually these apps um and they're just going to go wherever or they're going to have their own chains. Um and like this idea of like generalized chains seems less and less relevant um as more value occurs to the apps. So I would say that from a agree with some of your points, disagree with others. I think you know one the framing of hyper hyperlquid being built on arbitrum is isn't necessarily true. It is its own chain like all of these things it's its own chain. Um like posting a proof to a chain is like not being built on a thing, right? like it has real no

real smart contracts there other than like a bridge effectively right um it doesn't pay rent when you when you when you post a transaction on hyper corey VM like arbitrum doesn't get a cut they get I don't know like one millionth of the value right um >> yeah what I mean is when I bridge into hyperlquid I'm bridging funds on arbitum and then I'm depositing on hyperlquid so in that sense of like I'm thinking more ease of access like when you when I think of Salana I think of like the things I'm going to do on Salana. So, I'm bridging funds over to Salana to go use those applications. Or when I think of Poly Market, like I have to transfer funds to Polygon and then onto Poly Market. But I guess I'm trying to say that like those chains don't seem to be a friction to those things. If the app's

good enough, it achieves mainstream adoption and the money flows there. Um, so what sort of like in the future, why does it matter what chain you're using or like why are apps not going to just have their own thing? apps will certainly try to have their own thing. Um, but I think what I what I would look to in the market is the empirical observation that it really sucks in technology markets to be on your own island. Like things really fizzle out and die in isolation. When you think of like what a chain has, it has um this is debatable, but this is the side that I come on. It has distribution and it has an installed

base. Ethereum has distribution in the or or base chain, right? In that they have integrations to all the centralized exchanges. They have wallets in millions of people's pockets. Uh and they have um liquidity that exists on that chain and it's really hard to get that liquidity to move in those users to move. They have an installed base. You can debate the stickiness, but they have it. Um, you can look at like the empirical observation that basically every app that's tried to do its own chain X hyperlquid X like in the per space which like needs it has not worked out empirically. You could look at what unis

swap has tried to do and it's hurt itself. It's it's taken its eye off the ball. It isolated itself and now it's lost market share to fluid. it's quite a risk to go on your own island because you lose that pre-existing distribution and installed base. Um, and like these arguments, it's, you know, it it sometimes hurts to analogize. I think here it helps. You know, you hear this argument with a lot of tech infrastructure where, you know, I remember in 2014, 2015, the cloud was not going to make it. margins were going to compress and uh it was going to be irrelevant because it was going to be pushed to the back and you know cloud businesses are arguably the most

relevant businesses in technology markets and then you know when I look at the monetization methods of these things like salon is taking like five bips per unit of dex volume like that's a really fantastic monetization method and you can lower that by 80% you can scale the network to get you know billions of uh transactions per today and you can make billions of dollars per year on that model alone and that's really compelling. Um that's a really compelling value proposition and puts a strong fundamental floor on the token. So um so yeah I you know I'll wait and see like if pump owns distribution right if they have you know 100 million uh mobile users uh as an installed base

they're going to try to do their own chain no doubt is it going to work I'm not sure. I I guess uh when I think of it, I imagine a future where because right now moving between chains, there's a lot of friction, especially like bridging, different wallets, um different like gas tokens, all that kind of stuff. Um but I imagine, you know, at some point in the next 5 10 years um we have a lot better interop between these chains. And so I guess what I would ask is like a final question is if we achieve some sort of interop where it's actually pretty easy to move between chains and you don't really necessarily notice uh the chain itself. Think more websites like you have uh you know you move between websites you're not really concerned

about it like we you know we don't we're not doing everything on AOL today. Wouldn't you agree in that environment um that it would make more sense for chains at that point to have or for apps to have their own chains because uh you know like unis swap you used as as an example I mean it I I I agree it doesn't make any sense for unis swap to have it its own little chain uh outside of without interop uh but when you have interop between chains maybe that does make sense um because if you know you're using an app on a different chain and it's just uh everything's getting abstracted to the background. Um then you know yeah maybe they have their own hyper optimized chain for liquidity or you know whatever.

>> Yeah I think that look it's up for debate. Who knows what's going to happen. Like markets are very uh you know you have to be humble when you're dealing with markets and we're all trying to predict the future and that's inherently really hard. Um, I would say that, you know, my view is that, um, the best interop is like one chain that does like a bajillion TPS and you don't even have to think about it. >> Um, that exists today on all chains. Um, and to have interop work, you actually have to agree on all of these chains sharing a the same standard. And when I look to the market and see, you know, where's

that progressing? It's I don't think it's progressing anywhere. Um, just if you look at like the OP collective, like they're they've been promising interop forever and they're not doing it because it doesn't make sense for Bass to opt in. Bass loses from opting in opting into interop, right? It wants the whole thing. It doesn't want to share its liquidity. So, so base is inherently hurt by interop and and and and any leading chain that is that that's in the winning position, they have more to lose uh than they have to gain by saying, "Hey, let me interrupt with everyone else." They want the whole pie. And so, I think those forces will prevail when you think of just like power laws and how these markets end up working out.

>> Okay, I want to I want to move us on. I could keep going down this debate. It's a great a great conversation, but I want to talk about so much more in this episode and we only have so much time. We always try to stick to 40 minutes and Adrian, our producers backstage telling me already to move move us. So, uh, quick question before we move on just to wrap on this theme. Uh, Ryan, uh, ETH vers rest of the cycle. Which one do you like more? >> I think you have to like Well, it Okay, it depends. Um it depends. So my bet would be that soul does better from both like a fundamental perspective and a flows perspective and like acknowledging that we are in a

flowsbased market today. So when I look at the numbers um I see like Salana trading at 45 times revenue and I see ETH trading at over 1,000 times revenue and I see Salana growing faster across application revenue across you know uh protocol revenue and across uh DEEX volume and I see actually like ETH contracting on some of those measures. So, for example, like application revenue on ETH, it's actually contracted year-over-year from 53 million to 51 million. Um, so when I see something that's growing faster and trading cheaper, I think it's like really obvious which one you want to bet on.

Uh, that being said, crypto's in this unique place where flows matter more than anything else because you have two assets that have been like blessed by Tradfy and have a like funnel to Tradfy flows. Uh so you know conceivably ETH and BTC could keep outperforming this year. Uh I think but but I think you have a Salana ETF coming up and I think it's likely that the the SEC approves uh Salana ETFs and that's going to really change the dynamic to where like Soul is going to be like the first altcoin that's like blessed by the SEC and trad flows. So actually I think you you see um I think you see Salana outperforming from here.

Jesse, what's your take? >> I think that's a pretty good take in that it is kind of hard to tell. Uh, and it is I I would say that the Salana ETF's in the bag. I I don't see why that doesn't get approved. Uh, and I would say it's really hard to tell because I I do feel like Bitcoin and ETH because they've been around longer and they have more of a name share are sort of like uniquely blessed by Trady. And Salana is going to be different than that. And I think it's going to get a lot lower flows, but being that it's smaller, I think it could still there's still a conceivable case that outperforms, but it's just really hard to tell. Um, you're talking about just kind of price action and uh, you know, it's hard to

tell. >> Yeah. And and I I got to admit, I've been so wrong on on flows coming from Trady. I've I've really um underappreciated the demand coming from Trady for crypto products. Um, I thought SSK, the Salani ETF, was going to be a bust. I really did. And it's it's seen way more. I think it has over 200 million AUM right now, which I'm shocked by. Um, the ET the Bitcoin ETF kind of like blew my expectations out of the water. And the re like and and if you asked me, you know, four weeks ago if I thought a Salana ETF would do well, um, you know, outside of SSK, uh, spot ETF, I would have said no. Um, but then you know, Forward Industries raised 1.65

billion in a very short amount of time. Like I have to adjust my priors. I think that there's way more demand here than than I previously anticipated. So, I'm looking forward to seeing uh what happens there in October. Well, and this kind of goes into the fact that right now a lot of these ret a lot of these ETF flows are retail driven. Um, they're not necessarily institutional driven. Uh, which a lot of people don't understand. And I actually think what it is is it's a lot of that boomer money. If you think about it, like they just have so much wealth, they were not going to ever do anything on chain or Coinbase or whatever. But when they're a financial advisor like, "Hey, do you want to buy this Bitcoin ETF? You want to buy this ETH ETF?" They're saying yes. And so the the question is like,

you know, what are they thinking when the Soul ETF comes out? Um I I don't know. But like I I really think it could go any way because they are retail focused. They're not going to be they're not going to really care. They're just going to be like, "Hey, what's the narrative? What's the story? and uh you know should I own a certain percentage of this? I think where Salana maybe gets diluted out it would be that if we have other altcoin ETFs um I think it'll be kind of like Bitcoin, ETH and then like a basket of those altcoins will probably be how they allocate in. Um but but I wouldn't underestimate like institutional like investment into Salana as well. Um and who knows maybe that starts kind of tick up for Bitcoin ETH and Salana in 2026.

I think in the end that what what I hear from you guys and from everybody is that you've got to own a basket of of both ETH and soul unless you're really willing to bet on one which Ryan I know you and the Blockworks team are willing to bet on one. Uh but for so many it is the safest bet and the risk adjusted bet is to have allocation to both because both it could go in either direction but both are going to go up from here assuming macro lines up the way we think it lines up. We'll see what rate cut decision comes this afternoon. Uh probably come right at the time this this episode is is uh is released. So that's that's where I stand on it. Um,

okay. I want to I want to go to Pump Fun because uh we've been talking about Pump Fun. Ryan, you guys have been talking about Pump Fun. Um, and there's just so much happening over there right now. Not only is the token ripping, but the activity on the platform is fascinating to see. Um, I'm going to bring up a tweet that you put out and maybe this shows uh shows some of the um the data. Maybe Ryan, you want to actually bring up this data, but like when you look at the data of what's happening on Pump Fund, just tell us the story, Ryan, of like what's going on over the past month.

>> Yeah. So I think like first taking a step back I'm I'm going to pull the up that data while we're um you know you can't if you're if you're considering pump you have to acknowledge the fact that it is um one of the most success successful um applications in the history of technology markets. uh cursor for example like the breakout AI app um it took them a little under two years to generate 200 million or sorry 100 million in ARR uh pump did that in 200 not it's not ARR it's trading trading fees so just plain old vanilla revenue but it generated 100 million in revenue in just 217 days so

while VC is standing here thinking like what a miracle circle is um you know pump kind of blew it out of the water um and the memecoin like supply chain and you know what's happening uh in like memecoin land continues to exceed uh investor expectations right so you know I gez I remember in March of last year when March 2024 where everyone uh assumed that memecoins would be over in two months and then I remember you know post Trump people saying that you know memecoins are dead and then I remember, you know, post Libra, people are saying meme coins were dead and memecoins

continued to be like a top one, two or three, you know, app by revenue no matter the time frame that you look at. Uh, even in the mini bare market that we had in April and May. So like the memecoin game, I think it's clearly here to stay. It's not NFTTS. It's fundamentally different. And um, what you're seeing, >> let me just read off bring up bring up the charts, Ryan. Let me give you a sec to bring out the charts cuz I just want to double click on what you're saying cuz you wrote a great post. I don't remember what I think you wrote this like a year ago, maybe even more. November 17th, 2024. This is your periodic reminder that memecoins are here to stay. And I really resonate with this because I think that people misunderstand what meme coins really are because they have not they have not had

their full uh um curve of their creation in how technology is going to use them and how users are going to use them. But I was going to read the the first part of this. So you said meme coins and social tokens reduce the mental friction associated with risk-taking while simultaneously increasing fund. Want to start a side hustle? That's really hard and requires planning. Invest in the stock market. Now you have to learn the difference between earnings and cash flows. But memecoins and social tokens trains the trading these things is inherently hilarious. And if I lose 100 bucks while breaking balls with my buddies, that's still a passive still a net positive outcome. If I were to guess over 90% of males in my network engage in some form of sports gambling, I would agree with that. and they all lose money net net. So that's obviously not why

they do it. They do it for social entertainment. And this is so true. This concept of gambling and the future of attention online and then combining like the combination of those two things makes me really believe that we don't understand what memecoins really are and what they're going to be 10 years from now and that they are much bigger and they are fully here to stay. The question I keep asking is what is what is Pump? Is Pump a launchpad as most people consider it? Is it a future social network which it is sort of becoming with all the streaming activity that's happening on it now? Is it the future of creators because creators realize that you can make way more money

on Pump Fun as we're seeing currently now? Maybe that's just a bit of a moment. It is so it is so early and there is so so it it really it it makes me zoom out and sort of remove my a lot of people have a bad taste in their mouth when you hear the word memecoin right and that is you got to remove that bias and not be so you got to have more of an open mindset I think but let's let me share screen and you can feel free to comment on that but then also talk about the data >> yeah totally so like look it's there for anyone who wants to see it right like this is a new game that people are playing. We've never had um you look like consumer applications, they live and die on the feedback loop and the

feedback loop has to give you like instant utility in like a very short time frame. You have to keep getting positive pings. You do not get that with traditional stock market investing. If you to if you invest $100 in the NASDAQ, you might gain 30% in a year and that is crazy boring. No one cares. Like me coins will give you multiples on capital or a zero almost immediately. And that's why sports betting works, right? DraftKings will let you know within the day or within the game or within the pitch whether or not you're going to make multiples on capital or zero, right? That is that is the feedback um that is the duration of feedback that

you need to provide in consumer applications and that's what you know thousands of meme coins every day are delivering to the user of those coins. They're giving you a very quick chart to trade and then you know the the game concludes with you making money or losing money very quickly. So you get that feedback. Um it also helps that it's hilarious. Like I think the bar stool comp is really important. Um you know like I gamble on sports. I'm not a huge sports guy, but I do it because like I get to bust balls with my friends about it. Like if I win and they lose, like it's hilarious. We chat about it in the group chat and we make fun of each other and it's great. Uh in the same way like if you lose money on Iggy Aeliacoin, that is hilarious. Like that's good

content between friends, right? Uh so like it's a game. It's it's it's had incredible PMF and um you see it in the numbers. uh you know at the time of Pump's ICO, I think it generated over 700 million in revenue. Uh right now it's annualizing at like 800 million 800 million or so depending on the look back period. I believe that's a 30-day look back period. And um from a year-over-year growth perspective, um since last September, Pump Fund revenue is up 400% year-over-year. And if you look at the greater memecoin supply chain, so if you think of all trading bots, you think of all launchpads, uh you think of like wallets that are typically used for memecoins, uh that

sector is up like 300%. Right? So like this game is not slowing. Um people will index to like the week that Trumpcoin launched. I think that's incorrect. It's like, you know, it's it's like indexing to your like most viewed day for like, you know, for website views. like anyone who anyone who runs a website know that that's not like how you analyzed your traffic, right? Um you kind of want to get rid of the outliers. Um and if you look at this chart, like the trend is up and um you know the next leg of pump fund is live streams and you're starting to see very very early signs of PMF there. Um so I think it's you know I think it's the most exciting one of the most exciting apps in technology.

>> So here we're looking at total revenue. Let's look at creator rewards because that is very interesting chart. >> Yeah. >> Yeah. So, creator rewards just had a step function change uh in activity. So, we actually eclipsed 4 million bucks twice on the daily for uh rewards earned by creators. This is primarily through live streaming and token trading. And um we're seeing early signs that like kick creators, for example, are actually getting excited about Pump Fun, referencing Pump Fun and perhaps even uh uh multiccast streaming on Pump Fun. Um so yeah, so so really exciting, really exciting experimentation.

>> Can you can you just just frame that for somebody who hasn't uh used Pump Fun as a creator? like how does that compare to the way creators make money on like Twitch or other places? >> Oh, totally. Yeah. So, you know, if you're a live streamer, you could go to a live streaming platform and you could sell subs or you could get a cut of ad revenue from like the platform's creator fund to make sure that you like stay there and that you're happy. You can also sell products. You can also do ad placements, but by and large like those are like the ways that live streamers make money today. Um, Pump is coming for that market. Um, they're with live uh native uh live streaming on their

application both mobile and desktop. Now, like why live streaming? Uh, I think it's actually a pretty savvy move. So, if you look at all the modalities, so you look at image, you look at text, you look at video, most money chain changes hands around the video modality. It does not change hand over text. It does not change hands over over image. uh social networks, it's primarily through live streaming. And I think the comp there too is sports betting, right? Like people want to bet money and watch the live thing happen. Um, and you have this like unique kind of trend in crypto and trading where um where people will watch people trade and it's almost like you know you're watching Barcel Sports

and you're watching like your favorite influencer like bet on his game or watching him like go through the emotions of putting, you know, money on a horse race or money on a football game. Um, and then they want to bet alongside that person or they want to bet against that person. So, Pump Fun has native live streaming uh on the product and its inherent advantage from a monetization perspective is that uh when you launch a token alongside with the live stream, the creator gets a cut of the trading fees associated with uh that token. Now, it's super experimental, right? But like this is this is a um lever for creator payouts

that other platforms do not have and it's costless to the pump team. Um which is which is really interesting. It's an it's it's an inherent advantage uh when you pair uh live streaming with token trading. And the interesting thing about token trading is that it is incredibly inelastic. So, you know, fees for trading meme coins, for trading creator tokens are routinely 1% or more. And all in some of these trading platforms will make you pay two for 2% per trade. Now, that makes sense given the upside associated with these things. So, you know, it's it's it's a really interesting advantage that Pump has in the live stream market.

>> Where do you think what's your outlook for Pump? I saw you put out a tweet. I think this was yesterday. Let me pull this tweet up. Uh you said um discernable path. Oops, wrong tweet. One second. Discernable path to 10 billion in revenue for pump. 10x multiple gets you to 100 billion FDV. Is this your your outlook? >> So that is like a that's certainly a bull case. Um, but look, you're you're looking at an application with limited distribution um at the beginning of like a crypto super cycle where we're going to put wallets and stable coins in billions of people's pockets over the next few years. Is it,

you know, is it unrealistic to think that Pump can generate $10 billion a year in revenue in the foreseeable future with those two tailwinds and it being at the intersection of what is objectively the most popular use case in crypto or maybe second most behind per um not unrealistic at all. It's not unrealistic at all and it's trading cheap. It's uh you know, if you were to look at the, you know, trailing 30-day earnings or uh 30 30-day revenue and annualize that uh you're only trading at like seven times revenue. It's cheap.

>> It's very very low for for crypto and for tech. >> Yep. >> Jesse, what's what's what's your take on pump? >> Uh I would love to see any app hit 100 billion in in FTV just because I really think that we need to get away from this like chain. everything's focused around chains and more focused on apps. Everyone knows this. Every everyone thinks this, but in terms of like Pump as a platform and and as a creator myself, I feel like it's still really really early days in that like I actually don't think that they found the winning formula. I think meme coins have worked in the way that they've worked so far, but I do actually think people are getting burnt out and the the games are getting shorter and shorter. That being said, I I think this pump team is really smart in that

they're pushing out into live streaming and all these experiments because in the end, I do think they've stumbled onto a just probably a trillion dollar market in the future and that like it's like digital Las Vegas. Exactly what Ryan was saying. All that sentiment of like speculation and people loving it is true. I just think there's probably going to be a better way to do it in the future that's more even more fun. Uh even more maybe gamified. And um I don't I don't exactly know what that is, but I but even like the streaming function like I would never do a live stream like that just because um you burn your audience like in one go. Like there's just no way for people to not hate you by the end of it. Uh and that's kind of how it is with memecoins. So how do you

how do you make that into long-term value or how do you do that in a way that's more gamified and fun? I don't know the answer. I've seen a couple cool interesting experiments. Um there's this one team. Have you guys seen that was infected fun from the original base? They're now in Salana where they had like they were different diseases and the diseases were basically memecoins and you would buy the disease you thought would infect the most and then um each of the diseases gets eliminated. That capital rotates into the other tokens until there's like one final winner. And it was a lot more gamified. And I think now they're doing like a drug dealing one where it's like different drugs you deal and they're trying to they're trying to like build a drug empire. I I think there's probably experiments like that that are going to

play out and in the end we're going to find probably not just one but like multiple versions of of how to do this kind of digital Las Vegas gambling thing. Um but yeah, I I would consider memecoins as a category, not even really crypto as much as like an app uh or or a use case of crypto as a c like categorically. Yeah, I hear the burnout um comment, you know, as a user. It's the game evolves over time and it's not the game that you used to play. And like I don't gamble in Vegas and I'm not a huge sports gambler and but I do I do do meme coins. Um my my my push back on the burnout thing is like one, you don't see it in the data.

Now you can argue, oh is it, you know, what's the mix of bots versus humans? I would argue that that's kind of the advantage of memecoins. Like if you build for bots, bots, you know, they're high turnover. They pay a lot of fees. They do a lot of volume. That's great for your app if you build for bots. Um, but you don't see it in the data. Here's here's a here's quarterly memecoin volume. Just last quarter, we hit new all-time highs in in quarterly memecoin volume. >> Fascinating. I don't think most people realize this. >> This is across all chains. >> It's down. >> Yeah, this is across all chains. Um and it's broad memecoin volume, right? So like you have your majors in there which which are a large percentage of it. Uh but pump fund uh bonding curve volume that's at um multi-month highs. So I

think it's like at the highest uh level at in seven or eight months and um you know we're at multiples of last year's activity in terms of meancoin volume. Um, I think the other interesting part is like what can the pump team do from a product perspective to make the UX better. Um, I it's discovery to me, right? Like if you look at your Axiom feed today, you're just getting everything that comes out. Every coin that gets printed, you see. There's no reason like if if you if that were your Twitter UX, you churn, right?

Because you don't want to see every post. So you need curation, right? You need some AI enabled curation on top and that's how you keep the game fresh and you keep the people on the app and trading is just like a better method of curation. Um, and I guess my last point there is that like I don't know with when it comes to gambling and I I think memecoins are a little more than gambling, but when it comes to gambling like I don't I don't think people get burnt out. I think you look at the longevity of Vegas and it's like, you know, it's cyclical for sure, but like we're at, you know, people are more engaged than ever. Uh, and it's, you know, it's been around for a thousand years and, you know, gambling itself and it's not going anywhere. I >> I don't think gambling is going

anywhere. But I would say that the trend of like usage going up could also be something along the lines of like the the kind of the further down you are on buying these things, sometimes the more you double down, triple down. Um, but but I guess what I'm trying to say is is more overall sentiment. People used to love trading meme coins. And not that there still isn't people, but I I've noticed there's a lot less and there's a lot more people that just don't seem to like it or enjoy it in the same way. I don't think that means they'll stop. I think anytime you have like this catalyst event like Dogecoin ETF or, you know, so and so launches a token, it kind of re reignites the market live streaming and I think the experiments will keep playing out. I was just more

highlighting that I think we're in the very very early innings of what memecoin trading looks like and I think it's going to, you know, 5 years from now, 10 years from now, I think it'll look radically different than it does today. And I think it'll be a lot better overall experience, uh, and a lot bigger of a market. >> Yeah, I think so. I definitely agree there. The game is going to fundamentally, we're very early innings here. Like like I said, they don't even have basic discovery. There is no curation layer. You obviously need a curation layer. Like think of social media like you have a a a different curation mechanism per user. Every single person's feed is different. If you go on Axiom, everyone has the same feed and that just doesn't make sense.

>> Before we wrap, uh I want to get both of your takes on base token. Uh Jesse Pollock teased Base Token earlier this week. Uh no set no set release date, no information yet on what this is going to be, what the tokconomics are going to be. uh but seems likely that we are going to get a base network token at some point in the future. What is uh Ryan, you can go first. What's your take? >> Yeah, I look, we're we're rooting for Bass. Um you know, one of our top picks for 2025 was the Bass ecosystem. So, you know, we think that they're well positioned to do well for the foreseeable future. And I think they do

well with or without a token. I don't think it matters much. Um, however, I think they are in a tough place with the token because they have common stockholders and you know, you know, it was way easier for CZ to do the B&B token when he owned the whole thing and he owned most of the supply and he didn't have quarterly reporting to do and you know the the US SEC and other regulatory bodies to to and politicians to make happy. Brian doesn't have that luxury. it's in a much he's in a much trickier place which is why they teased a token and they didn't promise a token.

We're exploring it, right? Um so I think that tells you all you need to know. Um that being said though I think you know base can do fine for their foreseeable future without it and I would be kind of in a similar camp where dude I I love layer twos. I I definitely lean a little bit more obviously in the in the app chain kind of thesis and um kind of the the vision Ethereum has, but I I don't see why Bass needs a token. Uh you have Coinbase stock. Uh I don't even see what they would use the token for outside of like governance. It makes a lot of sense for Salana to have a token. Makes a lot of sense for Ethereum to have a token, but for Bass, I unless they're going to use some sort of weird revenue share or

something like that, I just it feels like another token that maybe is unneeded in the crypto space. Yeah. Wasn't there um I think that there was something like signaling from the SEC or CFTC that's like um like L2s are money transmitters or something like that or L2s are actually exchanges like centralized L2s like maybe it is to decentralize that infrastructure but like to to to like avoid like certain regulatory requirements but then um you still have this problem of you know that income used to go to Coinbase and now it goes to this decentralized ized body like I don't know that seems like a really hard conversation to have with the majority of shareholders. It's just

weird, you know. >> So maybe the outcome of this is no token in the end is is as much. What would you put the probability of there being a token versus no token? >> I think it's high. I I think they're eventually going to do it. I think that the problem is though it just like might not be what the market wants. Um, you know, 2024 and 2025 you saw the market shift toward an alignment between, you know, the value that a project or protocol creates and the token. If if you did not align value between the project and the token, you were punished. And that's what it's going to be like for the foreseeable future, frankly, because, you know, institutions

are entering the chat and they care about things like that. Um, so you know, if you can't pull that off, then you have to go like the Zora route where you just like do a memecoin, which I don't think they'll do. But like I don't know to to to take away to to funnel value to this token away from Coinbase common stock is going to be almost impossible. I don't I don't know how you do it, but but I think they'll do something. They have to do something. >> I think they got to do buybacks. I think they're probably looking at BNB token and they're probably saying, "Oh, we could have our own token and be the base token." And I feel like they'd likely follow a similar model. Like if that's kind of what their framework is, uh then

they're going to try to do buybacks. They're looking at like that what is BNB like 100 200 billion or whatever right now. Um yeah, I would say also it's like the probability is really high that they launch it because they seem to be really okay with experimenting and just doing crazy things uh on chain. So, I I wouldn't be disappointed if it if it had real val like buybacks and stuff. I' I'd be happy because that's more leaning in the right direction of kind of like where crypto should go. I don't know how that works with the stock and everything like that, but that would be good. If it ends up being a governance token, then I'd be really bummed about that. We'll have to wait and see. Ryan, Jesse, pleasure to get you on the show today.

Really appreciate both your time. >> Yeah, it was great. >> Appreciate it, man. As always, got to remind you guys know today's episode is financial advice. You should do your own research and if you need help with your investments, you should speak to a professional. Today's episode is for entertainmentformational purposes only. As I said at the beginning, if you're not subscribed to Milk Road newsletter, you should subscribe because if you want to learn more about Base token, the Milk Road team gave their opinion there. Thanks so much for listening and everybody have a look at awesome day. We'll see you back again tomorrow. We're sending Kyle Reedhead, our head of research, to the UK's largest web 3 summit. I'm talking about Zebu Live happening October 21st and 22nd in London. Want to join? Use our code milk

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