Ethereum vs. Alt L1s - with Su Zhu and Hasu

Transcript

Welcome to Uncommon Core, where we explore the big ideas in crypto from first principles. This show is hosted by Su Zhu, the CEO and Chief Investment Officer of Three Arrows Capital, and me, Hatsu, a crypto researcher and writer. Uh hey, I'm sitting down today with Su Zhu, my regular co-host. Actually, um congrats to earning the title Crypto Villain of the Year 2021. I think you were ranked first in the recent article. This is a huge achievement for you, obviously. Is there anything that you want to say to your fans?

Uh well, you know, it's it's actually um it's actually really funny because the way that I kind of have conceptualized like my image over the years is that, you know, when I started out, it was basically just investing and trading, right? Like, basically, I called the bottoms and the tops all 2019, 2020. And pretty much a very pro-Ethereum and Bitcoin uh stance for the most part um throughout. And um you know, this year, as the markets developed and, you know, follower counts have gone up like 10x, 20x, um gone um into some other ecosystems as well, and kind of just now kind of uh

zooming out and starting to like analyze what, you know, where the priors that I had in the beginning and what are the priors that have come out, you know, what are the things that have happened now. Um it's it has it has kind of made me question sort of um you know, what what is the what is the way that crypto will evolve in the future? And and also like what what are the kind of traps that I think crypto communities are starting to fall into, and what are kind of the problems? So, I think it's a I mean I mean it's it's interesting to me that it's like um the idea of a villain because I'm kind of refuting a lot of the things that kind of the the and Ether OGs, especially the Ether OGs, think of as like these holy truths, right? Um but,

you know, those tweets got, you know, 15,000 likes. And the reason is that the new users and the new people that they actually they actually resonate with this stuff, right? They view they view the crypto as something that belongs not to the OGs, it belongs to them as well. Um and and so that's something that we can talk about more in depth later, but kind of a good kind of a good way that I would personally framework um think about it. So, what holy truths are you talking about here? Well, I think Bitcoin and Ether have a lot in common, right? They have this idea that um layer one needs to be kept as decentralized as possible.

And then layer two is where we scale. So, with this you have, you know, on on Bitcoin lightning network. And then on Ethereum you have a number of uh L2 solutions, uh both optimistic roll up and ZK roll up. And kind of the assumption in in both of these coins is that um people will be uh willing to to sort of wait around for these L2 solutions um in order to uh use blockchains essentially, right? So, um and the reason why they should be willing to wait around to for these L2 solutions is because they value the decentralization of the base chain, and they also value um the uh overall quality and community of

those networks, right? So, I think um I mean, not not that these holy truths are wrong, it's just that while this is right, there's other truths that are also right. And and so I think, thinking back to the bear market, uh guys like Kyle Samani and Multicoin and sort of their thesis on crypto being quite a different one from, you know, the sort of canonical Bitcoin and Ether thesis that most most funds and most investors had at that time, they chose to say, "Okay, what what are we you know, what what what kind of networks will reach 1 billion users? Right? And so you know, through that framework they invest in very different things than than most of us did, right? They invested in BNB, they invested in

Solana, they invested in sort of a host of things that were considered very very contrarian at that time. And I think that you know, if you look at the prices of coins now versus April of this year, you know, Bitcoin Bitcoin and Ethereum are basically flat, right? Bitcoin is slightly down, either a little bit down and then and then BNB up a lot and Solana up multiples, Avalanche up multiples, quite a few layer ones up multiples and and so thinking to this and then looking at some of these DCs and also seeing kind of what the newer institutional investors are thinking about when they come into the

space, I am struck by a kind of cognitive dissonance, I think, that the market has and and the split in mindset between sort of the way the OGs think about crypto and what the project is doing and then what sort of is actually unfolding, right? Where you know, half the MetaMask users are actually BSC users for instance or where um you know, people are indeed uh uh more willing, not less willing to participate in newer networks in large part because they can be early, right?

As you know, we were early on Bitcoin and Ethereum. So I kind of see a lot of the same mistakes that Bitcoin maximalists made, I actually see a lot of Ethereum maximalists make the same mistakes now where they kind of they kind of take it for granted that we all agree that like ETH is the asset that we're going to build on or like, you know, this is the the reason why we do things. And I starting to starting to kind of see how that all plays out in the sense that you know, Bitcoin and Ethereum are probably the soundest moneys in crypto, right? They kind of have the best distributions and they have the most decentralization, but that doesn't actually that doesn't actually have as much network effect when it comes to adding new users to the network as

as you may think, right? So, that in part is why you know, you know, for the same reasons that either gained on Bitcoin over the last year other networks are now gaining on either, right? So, I think that the main reason I see for this is that, you know, if you if you look at average address active addresses on either, it's not that much higher than 2017. It's not double, for instance. And that's something that you know, we discussed before and it's something that you know, the the reason given is that well, you know, these are whale chains and it's fine and well, the new users will use other L2s or they'll use this or that, but it's actually it's actually it's going very much toward the Bitcoin 2017

road map, right? And the I think that the challenge there is is just simply that uh users will will not necessarily wait around for that. So, I think while Bitcoin and either can be good money, I don't know that Ethereum can can sort of lord over other chains and say, you know, all value accrues back to me or all people have to settle back to me because I don't think that that is a business logic that makes sense, right? It's not a business logic that makes sense that you know, eventually all users will pay rent back to either holders, right? It's not it's not a it's not a given. I do think either can can compete well as money against Bitcoin because Bitcoin you know, has a has a very different

trade-off pool versus either, but I don't think that Ethereum itself as a network actually is that useful for for for most people because I don't think they need that level of decentralization that either is trying to say it it it it upholds. And I think that this is something that um the market has just spoken already, I think. Yeah, I mean I think I would agree that um most users don't value decentralization. Most users are not willing to pay for decentralization because they don't value it very much. And so I mean I was very impressed um by Is it really true that half or over half of MetaMask users are using BSC? I

mean that's a pretty impressive number. So um But something also struck me that you said. Um so I think a big reason, and maybe even the biggest reason, that people flock to these new networks as well is not really that, you know, they want to use them, but it's more so that they want to be early to something, right? Yes. Um Isn't it a very dystopian vision of crypto um that there is less network effect than we thought to these existing systems and that people just the people value being early so much more? Yes. Yes.

Absolutely. Doesn't that make it like a big casino where we just reinvent think it's as so I don't think it's as dystopian as OGs think it is. So if you're an OG and you're sitting there holding a bunch of Bitcoin and ETH, for you it's dystopian because you wish other people came in and bought your bags, right? But if you're a new user, it's the opposite of dystopian. It's the same as you felt when you were early to these coins, right? Um so that that kind of is really the beauty of crypto in a way, too. And and so um there's kind of I mean this bull market has basically played out very differently than a lot of the OGs thought they would, right? I mean a lot of people would have thought by now surely Bitcoin's at over 100K, surely

ETH is at over, you know, 6K and and you know but you know, since May, since April you know, instead we've seen Solana go 8x and we've seen Avalanche go 5x, 6x, and we've seen some of the you know, we've seen BNB go 10x. And and and so the world actually playing out very differently than kind of that that thesis. So, it's still being if you're a bag holder of Bitcoin and Ether, but it's not dystopian if you're a new user, right? And so, it kind of drives at the store of value thesis for crypto in a way, which I still believe in. Um but I just think that it's it's trickier than than it appears. Um I think that uh the reality is that the

big reason people come into crypto is because they want to uh enjoy the same kinds of gains that people who came in previously did. And they also want to um uh be involved actively. That is to say, I I think of Bitcoin and Ether now as more like philosophical coins, where if you're a normal person who has a thousand dollars, ten thousand dollars, you are not really touching the base chain ever. You are not doing any actions. You're buying it in your Coinbase exchange account, and then you're hearing stories about it, basically. You're you're you're basically hearing people talk about what Bitcoin and Ether are, and then you're buying those coins, but not actually transacting on chain, right?

Um and and so, I I think of these as like the philosophy coins. And and then I think of like, you know, BSC, so Solana, Avalanche, and and these other ones as sort of stuff that people are using themselves. Um and and so, I think if you look at the active address counts, right, of the newer networks, they're growing very very fast um at incredible multiples per month. And yeah, you can say the reason is that, you know, there there's, you know, a lot of DeFi Ponzi's and a lot of stuff, but there's actually the same way that Ethereum grew, right? I mean, Ethereum grew through DeFi Ponzi's as well in 2019 um and 2020. So, I think we're we're just seeing that run again, but in

faster speed and across a lot more people. And so, what what scared me about Ethereum is that I think where Ethereum is today versus where I thought it would be 2 years ago is just a a bit different, right? Um I'm sure it's the same for you where, you know, I would have thought we have some ways to onboard, you know, a higher percentage of new users, um which we don't. And And so, um there's something to the idea I mean, I I I tweeted about the idea of like the founder's dilemma, which is the idea that, you know, the founders, they sort of get some market share, but then they and they prove the market, but then they don't ultimately win the market.

And I think that um interestingly, I I I think that Ether has a good chance of winning the the not not winning, but but sharing the market as money with Bitcoin, but I think it has actually a low chance now at this point, uh in part because it's so optimized as money, uh to win the sort of smart contract execution environment and and sort of the smart contract com- community, um long term. Because I think user acquisition is also very important. And I think, you know, the sort of the negative network effects that that the guys like Multicoin pointed out uh year years ago, they they kind of all happened this year, right? Whenever gas went high, you know, eventually no one could use anything on DeFi, and and then

and then Ether price crashed, and then people stopped using. And And so, you And you see this again with NFTs, right? where, you know, the the fees went high, and then people couldn't uh buy the cheap NFTs anymore, and then the whole NFT market fell. So, you know, just kind of seeing this play out first hand made me realize that um the future's just going to be very multi-chain because because, you know, uh Ethereum for better or worse, it it didn't scale to the point it needed to uh to sort of compound network effects. It It's network effect effects for, you know, for for users has kind of already stopped. Uh its network effect as a money uh is still growing, albeit slowly. Um but, you know, it's on par with Bitcoin's speed.

Okay. Okay, I think there's a lot to unpack here um in your answer for me. Um so, I think the first thing, I mean, maybe the most easiest thing to address, you said um Ethereum has over-optimized for being money. First, I would agree that um E- Ether is probably the only real contender to Bitcoin in terms of store of value in the crypto space, and it's sort of very distinguished from BTC, which gives it a good long-term position. It has a much different security model with perpetual inflation, which is sort of it's it's Bitcoin Bitcoin's Achilles' heel. Um that its security model in the long term is not figured out, whereas um Ether's is, and Ethereum's sort of

gets um gets a positive cash flows as well from from uh that people actually using the chain via EIP-1559, and also from being used as as a as collateral in in proof of stake. So um but I would still be curious to learn in what sense has Ether over-optimized for being money? So, what at what points did it make a trade-off, like a conscious trade-off, to say, "We we we designed the chain to be better money and worse as, let's say, an execution layer."

Sure. I think a good broad way to understand it is if you look at Antonio, the founder of dYdX, his tweets about it afterward, and he he said, you know, the the Ethereum user experience on on layer one has basically not even 10x over 5 years. Um and at that time, the roadmap was very much to to figure out how to cater to users and developers, right? Um and and so, I think just like if you just zoom out that far, it's pretty easy to see that we are we are in a very different place today on on Ethereum than it was uh a couple years ago. And I think the another easy way to see this is just with DeFi itself, right? Where if you look at the DeFi that's kind of really taken off and done well, it's been

cross-chain. It's been non-Ethereum, right? So, you know, Luna versus SNX, but then also, you know, um sort of projects on Avalanche versus projects on Ethereum. The you know, the same exact project, but they'll do better on Avalanche. Um and then, you know, you you could you you you kind of get a sense that um I think Ethereum rightfully says that they're the bedrock or the kind of the birthplace of DeFi innovation, right? But what that also means is that if that's the main claim to to to um sort of power, that that that becomes quite it becomes quite nostalgic like in a way, right? Uh where

um what about the new users or what about the new developers? Where do they go? And and, you know, what we're seeing is that new developers are just multi-EVM, right? So, they deploy where the users are because their goal is to have their product be used, you know? So, an example is we back Tranches, which is a quite quite uh novel mechanism for doing risk sharing across um longs and shorts. And it's got one of the highest TVLs in DeFi, right? But they started off on BSC. And the the founders love Ethereum, but they just said, "If I if I launch on L1, um there's no way. And I'm not going to launch on Matic because if I'm going to launch on another chain anyways, I might as well launch where

the actual users are." Right? So, Okay. This is what kind of This is kind of what we're seeing on on the app side. And then if you look at the performance of DeFi coins, too, right? You know, when we had that podcast Let's stick not with the performance. Let's Let's stick with the sort of the tech for a second because I Sure. So, um if we I think if we look at blockchains from actually first principles, Yeah. it's really just, you know, it's a shared database where anyone can can verify or where anybody can see that the the computation that was done, whether it's a transfer or smart contract execution, that was done with a integrity. So, that was that was done correctly, right? Yeah. And you can have

various kinds of such database, basically. So, being the most centralized would be just Binance, right? The centralized exchange. Nobody has any insight into their database, but it has a lot of reputation at stake. Um, so, you just trust it to, you know, perform all the all the updates correctly, pretty much. And on the other extreme, we have something like Bitcoin and Ethereum where they say, "Oh, we throttle the network um really hard to sort of keep um this verification cost, this cost for people to actually do the accounting themselves, to to to to walk through every step that was done in sale. I can I can verify it without making any trust assumptions

that all of this computation was done correctly, right? And in the middle between these two extremes, centralized exchange and the completely decentralized blockchain, you have a a pretty wide trade-off space, right? And um that's where you find BSC, that's where you find Avalanche and Solana at some points across these spectrums right? But, sort of what I'm wondering is I mean, are these other chains really going to, you know, develop in in in in any other way, I mean, than Ethereum and Bitcoin?

So, they are Their databases are also, yeah. Yeah. I I guess my answer would be they already have and they will continue because they are attracting all the new users. I think this is the just the reality of the space, right? And I think you know, when I told you that half of MetaMask users are BSC users and it under shocked you, um it's because a lot of all you know, a lot of ether OG's and Bitcoin OG's, they don't use their chains because they don't need the money, right? Like you don't need to make a thousand dollars. You don't need to make ten thousand dollars, right?

You're you're too wealthy to care. But that says more about you than it says about other people, right? So it's kind of my point, which is that um I I find that a lot of ether OG's, they're in the mountains and now where they're like, I'm already rich. And you have to understand why what I've done is so good and also what I why what I'm preserving is so valuable. And valuable as it may, um you have given very few outlets for new users to come and participate in what you've done. And and so, you know, that's the reality of the space. And and you know, having Matic is not is not an answer, right? because if you have Matic, then they say, what is the difference between Matic and any other L1, right? And then and then you open up that door and And there's none.

There of course there's of course there's none, right? So So I think that that's kind of the reality of the space and I agree with you 100% on, you know, there is a decent, you know, decentralization trade-off uh between each of these. And I think what the novel sort of understanding that I have or or that um I think the market has as well is that um where Ethereum is on the trade-off scale um it it is optimized for a world that um it's struggling to maintain its network effect for EVM itself, uh where EVM developers are immediately deploying to

every chain. And then users are using where they find it most convenient. So I would say in April or March I would have said that ether itself uh will benefit a lot from this multi EVM. I believe I said that in a thesis. Uh Um and and I think in part Ether has, right? It has outperformed Bitcoin quite a bit uh since then because Ether benefits from being able to be ported around on EVM just much easier, right? So, you can bring your you know, you can bring your Ether across different bridges. You can use it as collateral here and there. And so, it has definitely benefited from that. But, it's also underperformed other layer ones massively. And and the the reason why I do say performance

is important is because the this is also the incentive for people to get involved, right? So, you know, if you look at the DeFi projects on Ethereum, you know, where they have um pretty much only gone down in dollars even uh over the past year. I mean, if someone had told you at the time we did that podcast where we predicted DeFi coins would enter the top 20 that they would actually all be down in dollars, you would you you would have said you're insane right? Yeah. But But, it's happened. And And I I see literally not that bad since then. They are up in dollars, definitely, but down in Ether big time.

well, they're down in Ether big time, but I think a lot of them are actually down in dollars if I remember correctly. And and and so, that's something that I don't think people are are I mean, privately, I I've spoken a lot of people and and and and they you know, they they they say what those reasons are. But, I think that um publicly, it's something that is a bit taboo to talk about, right? Because it has you have to admit a lot of kind of things. And and and so, I think I mean, my diagnosis would be a few things, right? I I think one is that the early Ether builders, they were very committed to Ethereum as a network. And so, where the founders dilemma kind of plays in is that if you already own a lot of

Ether and then it's gone up 20X, you're already wealthy, right? So, so once you're already wealthy, your incentive to build also starts going down, right? Because what is the incentive to build at that point? And and and and that we've seen a lot in the Ethereum DeFi space, I think. Um I think on the on the idea of, you know, going cross-chain and acquiring users, I think that this is a this is very much a knife fight, right? This is very much a fight uh to see, you know, which builders are the most aggressive at creating products for new users. Um and creating experiences for new users. And I find it interesting, too, that like when I speak to some of

these ether-richies, you know, some are very good at going cross-chain and and using them. But a lot but a lot of like others, their mentality is like, I I'm too rich to to have to do that. I'm too wealthy. Like like I don't need to, right? Um so, this is I think the big divide really in the space, which is that it's to the point where um either can no longer Ethereum can no longer claim to have all the innovations, right? Like now you actually see the opposite, where Synthetix is trying to copy what Luna's done with, you know, ecosystem airdrops and multiple projects on on it. And, you know, it's we're we're we're kind of seeing that reverse copying on a number of projects now as well. And so, I think that there's an arrogance to the Ethereum

community, similar as there was an arrogance to the Bitcoin community. Um and I actually think that you'll see this arrogance play out in almost every community. Um not in a fatalist way, but just as a as a product of founder's dilemma. Like if people already become billionaires, people already become, you know, worth a lot of money, their their basic worldview becomes how do I perpetuate this idea as opposed to um how do I compete in the open market? So, I think that that kind of reality um is is the main reason why um I expect DeFi building in in in in DeFi to to do better on newer chains because the builders there are just hungrier.

And they're also trying to create applications for a million users or 10 million users. I I I feel like to some degree you're making the same mistake that you warned me against a couple months ago when you said what what the Bitcoin maximalist think and say actually doesn't matter at all for what what what makes Bitcoin like a good network and a good investment. Um and in in this case I think you're sort of you're saying the same thing about the Ethereum maximalists. I think it does I think it does matter though in a I think it does matter though in a few big ways, right? Um I think the main way that it matters is on the on the question of investment, right? So

if you look at what kinds of things um what what kinds of things have been hyped now in Ethereum and then done very poorly? Uh we we can make an entire list of this, right? We can talk about uh well, Loot for one, but we can also talk about things like Wi-Fi, right? Or we can also talk about um there's a whole many of these things. And I I think actually if you look at what a lot of these have in common, it's just this this this idea that you have to do it on Ethereum uh or otherwise uh you don't do it at all. And so like Loot for instance, you know, when they launched like the M Loot whatever, like two accounts uh took all the Loot basically. They

took all the rare stuff. So it was just dead on arrival, right? And you've seen a whole host of these things, too. Like we you know, we we backed an an NFT project called Monaco and the founder of that is like a big Ethereum believer whatever, and he's just like how like So so so we did a full gas subsidy for everybody who minted, uh which cost us, you know, a few hundred ETH or whatever. And then later we're just like how do we even do this? So so we're going to end up launching the token on on BSC and Avax, um but it's just it's just it's something where like really people have been like contorting their bodies to be able to to deploy things.

And you know, for for guys like Andre, he's like, "Okay, I'm just going to do this on Phantom." Right? And then, you know, for the Ave guys, they're like, "I'm just going to build an Avalanche." Right? And so, we've already seen that diaspora now because I think the whole social pressure against going to other chains has has really died down now in a big way in part because Ethereum has sort of lost the plot in in that kind of sense. Right? Um and so, I think that in that framework, um what I would say is like, you know, culture does matter because um it's it's the question of what is each, you know, each smart contract community

um offering to new users, to to new developers, uh and what is it, you know, what what what kinds of things are actually possible basically for them to do. Um and and so, I think that, um you know, StarkWare is another interesting example where, you know, as StarkNet gets bigger, um the the question is like, does it owe rent to Ethereum? Does it owe these kinds of things to other chains? Of course, it doesn't, right? Um and and of course, that they will also, you know, follow a path to make, you know, technology that is useful for people. But basically, I guess my broader point is that this idea of like the rent being paid to the holder of the coin

of the oldest smart contract coin, this is very much now in the culture of Ethereum in part because of uh the ideas of EIP 1559, which is that rightly it it starts to claim a it it starts to claim this idea that the holders of ETH benefit from the activity on ETH. And this idea has now been copied on other chains, but I think where Ethereum has made the mistake or where Ethereum has a challenge is that it's done so, but it's lost the user network effect without having enough good scaling, right? So, at the beginning of this year when I was speaking to a lot of Ethereum people, they they told me optimistic rollups are going to be huge. It's going to be a one and done and it's going to

win the market. Mhm. And what I've seen now and and you know, at the time I we talked about like, you know, what about the fact that it takes seven or eight days to to to bridge down? And you know, they said stuff like, well, of course there will be market makers and market makers will provide the two-way. Well, you know, just the other day we were asked for a quote. The guy wanted to bring 3K ETH down from Arbitrum to to to to mainnet and I have no other side for that, right? Because what are the odds that I find someone who wants to go the other way for that size? I mean, you see what I'm saying, right? It's just like there's kind of a there's very much a uh gap between the ambitions of an Ethereum and the kind of stated goals of an Ethereum and then the

reality of execution. But I think where, you know, the coin has done well relative to Bitcoin is that Bitcoin has also not done much as well, right? And and the market um all said, well, at least Ether is better than Bitcoin in that sense. And that's why I think, you know, zooming out, I actually find it really dangerous sort of a lot of the talks about like, you know, Ether flipping Bitcoin or sort of, you know, Ether is better survival than Bitcoin because actually uh it kind of misses the point. Both coins are down since May and other coins are up way more and other coins are also growing way faster. So, I think that kind of would would almost be like the max pain scenario uh for the crypto markets where, you know, if Bitcoin and Ether were both seen as sort of older

tech or like, you know, older uh projects where you can't really get rich anymore and it's just old people hold these coins. Uh and then here are the new coins where you can actually participate. Well, that that gets you into a multi-coin world, right? And that gets you into something that, you know, the OGs will find dystopian, but they would have trouble convincing others that it's dystopian. You see what I'm saying, right? Well, I see I see why about the sort of that this is a cultural argument. Yes, very much so. Very much so. can Yeah, it can be very effective. I would say like we don't get around the point that as as a fundamental argument, as a tech argument, it has no validity because what all the other blockchains are doing

in the in the in the worst case, they are only trading sort of computational integrity or sort of the the the accountability of the blockchain for more throughput. And this only scales to I mean, this is not real scalability, and it only sort of gets them so far. Um And then after a while, they just run into the exact same problem. Their blockchain is also full. And then are we saying sort of Avalanche has abandoned their users or Solana has abandoned their users? I mean, at some point they can become just a centralized database, but I mean, then you can just do that from the start as well. So, it's not really And this approach in the worst case gets you nothing.

And in the best case, they actually have very similar road maps to Ethereum where they say, "Oh, we going to have sort of Yeah, we going to have a sharded database, basically, where you only have to uh where only sort of the the proof that the computation a lot of computation happens off-chain, and you only prove to the main chain that the computation was done correctly." This is sort of a form of sharding. is kind of This is kind of where we agree, right? I mean, what I'm saying is basically that the road maps in the in the end game may all look very similar. And then it's a question of which team will actually execute that vision. And I'm saying that Ethereum, if it is solely trying to outperform Bitcoin, uh it will actually lose in the execution

of that road map versus other L1s whose goal is more, uh, I mean part because they start from nothing uh but also because their only way to grow is to get more users, they will actually lose in that. And so we've seen that, right? With like, you know, the Avalanche gas has gone down again a huge amount after the recent upgrade, the Apricot 5 upgrade. And uh, you know, this is something that um, I only expect to continue to happen because even if we accept, let's say Ethereum and Avalanche must follow the same road map, then it's a question of who will execute that road map better, who will execute it faster, who will serve, who will be more likely to serve users over holders.

This is something that I think is is the point, right? It's not about, it's not about, um, you know, if two have the same road map, then automatically the older one wins. This is kind of my point, which is that if two have a similar road map, actually the newer one is more likely to win because that's also what we've seen in tech, right? Um, and you know, Somani he makes the analogy of, uh, iOS. Uh, or he makes analogy of mo- of mobile operating systems in 2009 where at that time there were a whole host of operating systems and people just said, you know, you know, BlackBerry just has to win this. They have the network effect and this has to win that and this has to win this. And then if you look at what actually happened, um, you know, the newer ones just,

you know, they because they don't have technical debt and because they have a different mentality, which is uh, not serving their existing users, but you know, trying to get new ones, um, that that dynamic is actually, you know, I do see that playing out, um, in a big way. And and it's something that I think I think, um, in part what we're seeing now is is the is crypto trying to digest this, um, and and I think that, um, look, I firmly personally believe in the store value case of crypto. And so I think Bitcoin and Ether share that and they will go up a lot in dollars, and you know, we'll all continue to be rich, right? But uh when it comes to executing road maps for onboarding users into

crypto networks, I don't see Bitcoin or Ether really being able to do this. And I personally I'm in the school of thought that Bitcoin and Ether will go up anyways because uh the store value case is is viable enough. But I do also increasingly see uh someone like Samani's point, which is that you know, if at some point BNB has a billion users, uh even if it's a database, uh are you going to convince people that they need to buy Bitcoin as a store value or Ether as a store value? You you might not be able to, right? Because that narrative will not be very interesting. They'll be like a cult.

It'll be perceived that as a cult. And and so that I think is something that we do need to keep in the back of our minds when we uh think about how does the new user come to crypto, and how do they see the space, and how do they interact with it, and not to see it as dystopian, but to see it as a competition of free moneys and a and a competition of free networks, right? Um and and so it's these are some of the biggest questions in in crypto value accrual, of course. Yeah, I mean, for any new user, I would always recommend, if you have $10,000, you just don't belong on Ethereum. Like you should use um BSC, you should use Polygon, you should use Arbitrum, you should use

Solana, you should use Avalanche. And that's always sort of what I what I recommend because it does just no point. Ethereum layer one is not going to scale for regular users. It doesn't have to, that's not the point. So if you if you just like zoom out 2 years, then or or maybe let's say 5 years, there's not going to be any regular users. You will have some whale users on Ethereum layer one, but otherwise it's just basically proofs of off-chain computation. Like then the entire chain is just going to be full of sort of this kind of settlement transactions where roll up center proofs to the layer one and they sort of update the balance of some application like DYDX does today for example.

And that's what makes these applications non-custodial and trustless. Um and I think this is sort of this is the road map for for all layer one chains. I think you can say oh, but we can have like a more scale like a chain that has more throughput so we can attract more users today. But I think you yourself made the point why this kind of network effect is not something that buys you anything in the long term because there can always be a new chain and this new chain doesn't have to even to do anything different in terms of tech. It can just say we're new and when you come to us then you can be early again and we just pay a lot of incentives and the same game starts over again. So that's why

personally I'm not really interested in in in participating in these things because I don't see them as credible attempts to you know, actually scale a blockchain. And sort of when we said blockchains are only about sort of having a database with computational integrity. Ethereum the Ethereum road map and it's not only Ethereum executing this road map but the Ethereum road map, the one the one of having a sharded database and a layer one that has only proofs. I think that's the only credible attempt at actually scaling this property.

And so I I'm interested in sort of all blockchains that take this approach but for the others I think it's just short-sighted. But I think what you're missing is that you're taking kind of an objectivist approach, right? You're you're you're kind of saying this must be the solution that is the most technologically valid and hence you're only interested in that. Well, be that as it may um you know these are the kind of criticisms put on Solana in in the early days and what we've seen is that Solana's actually attracted a whole huge amount of grassroots developers and huge amounts of application interest, right? I would say the last 20 of our application bets

uh, 15 plus of them are on non-Ethereum. Um, mainly because we we prefer to do bets where the we can see it get to a million users. Um, and I think for a lot of the other funds, even the funds that were quite against Solana, I see them now trying to get into these rounds, too. And so it's just something that while I hear you on, you know, your vision of where the technology should be and how how it looks, I do also see that the way that the industry is going is much more pragmatic, which is to say, I want to onboard the users now.

Um, and that's that's the that's the goal, mhm, right? And and so I just think that there needs to be a broad Okay, put it this way. I think there needs to be a broad respect from the Ethereum community for uh, users. I don't I don't think there's quite that respect for users and I and you can argue that there doesn't need to be because Ethereum is on this mission to scale uh, in this uh, robust way. But we're getting into Bitcoin lightning network kind of type of logic now, too, right? Where be that as it may, you're you're you're free to do what you wish, but you do run some risk of losing network effects. Um, and and so I think

that that that's kind of what I would say about this. I mean, I think I fundamentally it's it's it's talking on two different planes, right? Or it's talking past each other, where the set of priors are just different. Um, so so my set of priors is to say, okay, we can invest in Bitcoin and ethers as stores of value. That's fine. Um, and we speculate on when we buy them and when we sell them and the global demand for user and the the global demand for crypto money, right? But at the same time, we also uh feel that applications on Ethereum have really suffered from uh you know, optimistic role of not being competitive and and then later on

uh you know, newer scaling not coming out um and you know, the world we live in today is very different from the world uh we imagined when Ethereum D5 was sort of at their highs. And and so uh seeing that world, I'm an introspective person. So, I look at that and and I ask myself, why did it fail, right? What happened? And the reasons that I'm seeing or the kind of the realities that I believe I I am perceiving are that well, first of all, the builders are actually better on these other chains because they have chosen those other chains because they want to reach users. So, I see that with Do Kwon and Luna. I see this uh with a few other projects. Um and this I think is actually the anti-culture case for Ethereum, which is that it actually is

unable to provide a space for these type of builders. I remember during a Clubhouse where Andre Cronje, he said, I think this is in like March. I can't remember exactly when, but he said like if you're an EVM builder today, you need to go to BSC immediately, right? And then you know, at that time like then then a whole host of people went to went to BSC but I think that this is this is the future um of smart contracts, application space and users. And and so from my point of view, um I do have a bit of regret and nostalgia for the ETH D5 times and I wish that it would have gone better. Uh but I think that um you know, the reason why I was so

triggered by Kain is because he kind of um is is kind of the is kind of the ultimate example of sort of you know, an ETH OG who did very well holding ETH, basically. Um and then the project itself, you know, has kind of not been as you know, and it's not something where I'm like shaming builders or this or that, but he's the one who says, you know, you know, anyone who's not building on Ethereum layer two is like, you know, we're going to keep a track of all your names and then, you know, I'm not going to welcome you back to the community. I mean, this is dangerous stuff, I think. Um and this is stuff where Yeah.

Um I don't believe in it. So, I I think that um at the end of the day, um the same problems that happened to Bitcoin maximalists are happening to Ethereum maximalists. And the problem for Ethereum is that while it matters less for Bitcoin because you don't have to do anything with Bitcoin, it matters more for Ethereum because you actually have to do things on Ethereum. And so, if builders are starting to go to other chains, which I see them doing, this is a matter of debate that I have with some other funds, but I do see builders going to other chains, um especially Solana, especially Avalanche. Um then then the floodgates are very open on that. And you won't we won't be able to claim in two years that all the innovation is on Ethereum, right? And once you lose that, uh then really what

you have left is you can say that the EVM uh enshrines ETH as the holy asset, which I think it is happening. Um and that um it shares a store of value case with Bitcoin. And that and that can be fine as it is, right? That that really can be the end game of ETH. And um and it can do well. But I don't think that um I don't think that this is something where um that that alternate layer ones are sort of um discredited for their approach because I it's kind of fascinating, almost like a as a fractal, but I I kind of see like ETH as being what original Bitcoin wanted to be in some ways, right? Which

is sort of um you know, having NFTs and having um having um DeFi and these kind of things and then I see like all layer ones trying to be what Ethereum was trying to be, which is like, you know, uh Yeah, the reaching a billion dollars Vitalik said that um if there's like what is it what did he say like if there's like 5 cent fees he he he he said if Bitcoin has 5 cent fees then that's not the internet of money then the internet of money has failed. Yeah, I mean stuff like that of course makes you look very bad in the future. That's a given.

Yeah, so so I mean and and and I think it's look like I still own more ether than pretty much I still own more ether than pretty much anybody I know. So it's not something where But I think this is I mean this is also to me this is also like a warning sign. I mean Vitalik is a very smart guy and he already Yeah. first like the the Bitcoin cash people fell on their face making the claim that you can guarantee some kind of low cost environment without sacrificing sacrificing all the centralization. Then Vitalik made the same statement. He fell on his face. And now I see for me it's just it's just just Groundhog Day. I see the same I see a new class of people repeat the same the same things that already the Bitcoin

cash people have failed at. Vitalik has failed at. They are not going to succeed in my opinion. I think they are going to fail for the same reasons and that's sort of what makes me a bit frustrated about seeing these arguments because it's not Yes, I'm taking um like a technologist stance stands on this where I say yeah, I'm I'm better at evaluating um this than the market. I can say this is going to fail for, you know, technological reasons. This is going to run into its scaling limits and at some point also the narratives around it are going to collapse when the fees go up and they have no credible scaling road map. So um but to me this this just feels like I've seen this story like play out more than once in the past.

I think the I think the the the sort of shortest rebuttal I would give to that is to say um just look at the network growth rates on the other networks and then say let's assume that they run into scaling problems and let's assume that they solve them in the way that um uh would be maybe not acceptable to Ethereum people and certainly not acceptable to Bitcoin people. I mean, keep in mind too, a lot of Ethereum's decentralization trade-offs are completely unacceptable to Bitcoin people, right? And so I so so I think that then you you're you're very much back in the fractal that I'm talking about, which is that um you know, Ethereum people making the same arguments

against other chains that Bitcoin people make against make against Ethereum, right? And I guess what I would say is that um I do see these finding product market fit and I do see these teams being uh at least more motivated to onboard users. Um That's and and so I guess what I'm what I'm warning or not warning but what I'm kind of predicting is that um that all layer ones will continue to do very very well and um I also see this in web two investors that I speak with, right? Because when when web two investors come to crypto, I think some of them, you know, they they gravitate toward the

toward the Ethereum vision. Um But then as they do, they start to see like okay well how fast is this network growing? Cuz cuz I'm investing in network effects, right? How fast is the network growing? And they see that all the other chains are having way faster network effects. And then they're saying, okay, well, what is the reason for this? And and so if the reason is that Ethereum is waiting for its own scaling then it starts to sound like Bitcoin, right? It starts to sound a lot like like Bitcoin. So um then they're like, okay, well I clearly need to hedge because these are already outperforming Ether by a lot and on top of that, there's, you know, very credible activity happening. I understand that either people say it's not decentralized, but I also understand

that people will say either is not decentralized. You You see what I'm saying there, right? So So, that that's kind of what I'm predicting, basically. And And I think that um I think that for me, like, I kind of had the thesis uh fortunately relatively early uh during the bear market that I think all all layer ones are, you know, deeply undervalued because these are real teams building stuff. And I was fortunate enough to, you know, so So, like, Polkadot, Kusama, uh Avalanche, uh Near, um I mean, we we pretty much said at that time, you know, pretty much any alt layer one that is doing like that is shipping code uh is is going to is just is incredibly undervalued by by the market. I think um

Richard, who we had on our podcast at DSCM, he he had basically that thesis, and he he helped us kind of see it, which is that um for the same reasons that Ethereum grew very quickly, these chains also will grow very quickly because the penetration of smart contract users and and and just, you know, applications is is zero of the main population. So, it's it's it's a world where we live in where uh you know, just to give an example, right? Like, take Tezos just did a great deal with Ubisoft, where they're going to give something like 10 million wallets to Ubisoft users and then holding a Tezos in them. So, the I mean, I can see a world where chains can do well just being used in one country, right? And then and then

going from there. And And so, I guess what I'm saying is like the world is a very very big place, and I see layer ones doing very different approaches to biz dev, very different approaches to users. Um and I think that this is healthy, actually, for broader crypto. It It does hurt a bit of um of Ethereum dominance. Like, I think Ethereum would be much closer to flipping Bitcoin today if Ethereum had managed to find you know if if it basically what we think of as the scaling road map in 2025 if it had been achieved by today, right? Um, but um, be that, you know, being that we're in the world we are in today, I see sort of more of a hybrid Bitcoin and Ether will share store of value case and

then I see a multiple you know, a multitude of all their ones and I and I think that I mean, not to say that this is good or bad, but just to say this is I think just the reality of the Why do you So Ethereum has also of course gone through periods of extreme growth. And back in the day we used to use this as an investment case for Ethereum over Bitcoin, right? We saw that yeah, Bitcoin was valued much higher, but Ethereum growth in in in any relevant metric was just leaving Bitcoin completely in the dust. There were more I think what I realized I think what I realized looking back is that we were asking the wrong question. We were asking the We were asking the wrong question which is the OG question of

which is should I own more Ether or Bitcoin? But that's actually the wrong question. Well, my my question to you would have been why why do you think that the growth that these newer chains are seeing is going to be more sticky than the growth that Ethereum has seen? Uh, what what I would say is that their growth has already been much faster than Bitcoin and Ethereum. And their growth can continue to be much faster because one, they don't have technical debt.

Bitcoin has technical debt, right? Ethereum has huge technical debt. These new ones, they don't have technical debt in part because they're more centralized, but also in part because they're newer, right? Um, so, you know, they're already proof of stake. Well, for Ether it will be very hard to go proof of stake. It will take months and months, right? And there will be a lot of questions as we go into it. And and and so technical debt is one reason. Also, I think um spirit of community is another, right? Where um the the concept of getting in on the ground floor is very attractive to people. And you know, if you look at either today, like it doesn't offer the opportunities, I think, that um it did when people uh were around 2019. So,

even if you look at like, you know, we're talking about airdrops, right? Like all all this stuff is for if you were a user in 2019, as far as I'm concerned. Like ENS, yeah, you registered it in 2019, you know, using some of these products. Okay, like some of them late 20 20, but they're all kind of like I mean, I would posit that it's all the same 2,000 users. 2,000 to 5,000. Uh you know, that that that are basically benefiting from this. And and so that's kind of the big challenge, I think.

Um which is uh Ethereum's growth of users on L1 has basically gone to zero, right? Um because of the fees. And I can accept the argument that that's fine because we'll do rollups, but I would then also argue that if you assume that's true, then the growth rates on alt layer ones will be very fast because there is a demand for people to get involved in crypto, and this is where they will go. And so for me, it's trivial that the growth rate of user counts and activity on other chains will be faster than on Ethereum. Um it's a broader question what will outpace the other in dollars today uh from where where we are here because obviously we

are already up 1,000 X on Solana. We're already up, you know, hundreds of X on these other coins. And these are all kinds of um you know, we're we're we're trying to get to questions of like, what is a fair percentage of Ethereum market cap these things should be. But I think when it comes to user accounts, when it comes to activity levels, when it comes to new builders, new passionate builders who want to build billion-dollar applications, I very much see these going to Solana, StarkWare Avalanche and and a few others. And I think that that's just natural.

So, I do think that when there's um more opportunities to deploy on L2, I think they'll also do so. But, I think that Ethereum has lost that network effect of being able to say, "All innovators come to my chain and join my community." I didn't realize it quite early enough. I think if I had, I would have just sold all my ETH for Solana and Avalanche. But, you know, be that as it may, I was comparing ETH too much to Bitcoin. And, you know, so so I suffered that fate along with you, basically. You know, as part of the sort of the OG crowd now that, you know, debates Bitcoin versus ETH all day, right? You know, and you know, I've met young guys like retail guys like they're like 50% sold, 50% AVAX from a dollar.

You know, and these guys are just like, "Why do you even talk about Bitcoin and ETH? Like, what what is the point?" And and so like there is that perspective that I have to remind myself of each time. Because each generation, each crypto wave has brought in new people, right? And their perspective is very different from yours and mine. And, you know, see you know, speaking to these kind of guys, uh I do I am sometimes struck by like, are we the boomers? You know. Yes. Um I think I would be I mean, I I I would agree that somebody who comes in today won't use Bitcoin and and Ethereum. And they shouldn't because for the reasons that we talked about. But, that doesn't mean that they're any more right in the long term. I think if you've only been

here for half a cycle, then I think there's definitely the risk of sort of overvaluing what is new and what you know over what is long-term viable. I would say that at the end of the day I'm I'm a pragmatist. I'm I have no uh ideological reason to support Ethereum. I would say I'm pretty far from from being like an an idealogue. Um I I think that in terms of its roadmap, it's actually it's going to be cheaper and better for a user and an application builder to use um a roll-up that um posts, you know, proofs to Ethereum than these alternate layer ones if if

they are just a layer one. So, they can have the same roll the same um the same sharding roadmap, and then I think it's sort of a fair game um but I think that this approach is probably going to win out over the, you know, monolithic layer one approach. Um and I say that because I believe in it for you know, that it's like pragmatically the the best approach and not because I think it's somehow more, I don't know, that it's like for moral reasons or whatever. Right. I mean, I get what you're saying, but I guess my point is that for like for for me as someone who invests prolifically in in applications, I I see the strongest applications being built on non-Ethereum these days. And

that's something that I would have been absolutely If If you had told me this a year ago, I I would have said, "Absolutely no way. Zero chance. All the innovation I see is on Ethereum." And now all the application innovation I see is not on Ethereum. And And so, this is just for me, that's my perspective on it, and that makes me sad in a way because it's different from what I thought it would be, and it's different from what I hoped it would be. Um and so, I think that I think that that's kind of where where the the the the the biggest fear for me in crypto is that if we get to a world where the end game is then you don't need to have any like like you you get to the most centralized chain and

then that is the thing that you know I mean I'm I'm kind of seeing this like and it scares me with some of these web two guys and they're saying like well you know what you don't even need crypto you you just have tokens. The whole point is tokens. Once you have tokens you can incentivize everybody you can incentivize your users. You can get rid of the [ __ ] blockchain right? Yeah. Yeah. Just give tokens and this is so I mean Kobe was tweeting about this a bit as well and this this is what really scares me because if we don't if we don't make reasonably credible applications that that scales users you you do some run some risk that like you know we're just talking about tokens in in five years that they're running actual databases. Yeah.

So so I I come from that perspective but I mean I mean I think at the end of the day like it's it's it's the points on both sides are really well understood now. I think you know the market will decide the new users will decide the new builders will decide and and I think it's not even worth debating honestly because I think it's more about prognostication right? So people will step their chips the way they want to set them and and then that's it. Yeah. I completely agree. I I I I'm a pretty strong believer in the thesis that fast forward five years and people will be using applications.

They will not be using blockchains. They would be going directly to applications like they go to their bank their broker whatever their super app. And they will be using these applications and they will know that it's non-custodial but they won't know on what chain it runs. Um and they don't they won't have to. They don't have to care. And then it's purely a matter of what chain can get the best properties to to builders and to users. Um and there won't be any sort of yeah I mean any reason to favor one over the other for any other reason. And yeah that's that's that's definitely also the approach that I'm taking.

And um if it's true that other chains can capture um better builders and can retain them in the long term, then I definitely think that these chains are in a good position. Personally, I don't I don't see that right now. I think definitely um it's very attractive for new builders to build on new chains, but it's also because these chains tend to be empty, emptier, and this is not going to sustain. So, there's some amount of short-termism. And they tend to be big incentives, right? So, between building on Ethereum and building on Avalanche, where I know that Ava Labs has you know, paying out huge is they are dumping like AVAX incentives on on any application that builds there. Of course, that's a huge bribe for me as an application builder

to favor that chain. But I also know that this is not long-term sustainable, right? So, at some point the this this sort of incentivized growth will taper off. And then, what matters is the actual technical trade-offs. Well, I think the what what I think the the the biggest counterargument to what you said is that it's already been wrong for many months now, right? Where um you know, from the vision that we would have seen a year ago to now, it's already been wrong. And then, so I think the question is then at what point will that vision be correct? And I think the answer that most Ethereum people give is that it it will be correct when we finally have L2

scaling that is competitive with uh the experience the user experience on layer ones. Um that is what they say. But what they're underestimating is that the new users don't have an allegiance to ETH the way that you do. Right? So, even when that is out, there is no guarantee that the new user will then say, I value the technical trade-off of Ethereum, I'm going to go there. That, I think is the biggest point. And I would also make the point that StarkWare does not belong to Ethereum.

Right? StarkWare belongs to itself. And they very much do not plan to pay rent to Ethereum. So, this is something too where I would say arguably all L2s will not want to pay rent to Ethereum. In my opinion, they will also end up becoming like L1s. Uh so so that that kind of is my biggest counterpoint which is that the execution layer the execution environment that provides the best ex- experience for applications uh whether incentivized or not uh once it has those and once it has a flywheel of users coming in that's incredibly powerful. And I've seen that with BSC and Binance where, you know, even with a weaker technical

roadmap, they've been able to capture half of all I mean, they just have by far the most users of any chain. It's not even close, right? And that's why all the new GameFi companies are launching their games on on BSC because that's just where the users are. Um so, I think that it's just something where I find the Ethereum rhetoric to be more out of touch with where I see applications and users going than ever before. And this is something that I think is is honestly irrelevant to the average ETH holder because like I said, I think ETH value accrual now is not coming from that stuff. It's coming from people buying Bitcoin and Ether together as part of a monetary basket. And so, I get why they're also out of touch with it because their because their goals are different and their you know, kind of

ideas are different. But, if we're talking about where users are and where they're going and where builders are going, I do find it very facile to say, "Well, as soon as we get our layer 2s up, then they're all going to come back." I I personally not a believer in that because I don't think that that's um it's not how I've seen the world play out. If we if we say the the builders just build on, you know, what's cheapest and gives them the best guarantees to them and the users, then I think that there's a good chance that many applications will favor building on a roll-up that settles to Ethereum.

Um like we see with dYdX, right? dYdX, you couldn't build it on a layer one blockchain, not really. Um you can only build it in in an environment where computation is really cheap, even cheaper than it is on Solana. And I think that we're probably going to see more of that in the future. I think I mean, dYdX is a great example, too, right? Because if you look at if you look at what Antonio said, he he said that, you know, we we built this on StarkWare and Stark StarkWare finalizes to Ethereum. If they have an opportunity to finalize to other chains, they will definitely do so.

Um and, you know, the StarkWare guys have said from the beginning like we will we will offer this to all chains. Right? So, Ethereum does not I just want my point is Ethereum does not own the idea of a roll-up. They do not own the idea of a ZK roll-up. They did they did fund it in the beginning, the Ethereum Foundation, but they absolutely do not own the idea of it. So, if this is such a good idea, this is not an Ethereum idea. This is a point that Kyle Samani made in a thread a while ago, which is that Ethereum people's main rebuttal to why they don't have the user network effect now is that they say, "Well, wait for ZK roll-ups to get huge and then I'm going to have it."

But ZK roll-ups are going to be everywhere. So, this is not unique to Ethereum. Ex- exactly, exactly. I think but that's It's interesting how we both see sort of the same argument as being in favor of our point. Yeah, you see what I'm saying? Because because your point your point assumes your point assumes a point of reference, right? You you you have a a very objectivist way of viewing the world and you and you have this point of reference, which is that it started with ETH and it comes back to ETH. So, the activity all comes back in the end because we all recognize this. You know, similar to when you're very bullish Bitcoin, right? Like the the monetary maximalism like it all it all comes back and we're all competing as money but then it all comes back to the thing

itself. And kind of what I see is that um this this may or may not happen, but I don't have the certainty that you do that it will come back to Ethereum because I do see the users, I do see the applications like very much building elsewhere. So for for me it's far more it's far more dangerous to have certainty than to have like uncertainty in this kind of a situation where I see like nine out of 10 projects building on non-Ethereum today. Okay, so I should um I should I should also clarify. I definitely agree with you. I don't think uh everything's going to come back to Ethereum. I'm I'm a very strong believer in in a in a multi-chain world. Um a lot of chains that are going going to be

connected via light client proofs or some other like we have a going to have a very diverse set of bridges that connect blockchains using different um trust assumptions. A, that's one thing that I strongly believe. B, one thing that we already discussed I think um people are not going to interact with blockchains in the future. It is applications that are going to interact with blockchains and people are going to interact with the applications and the wallets and that is the only interface to the world of blockchain. And eventually users will not decide to use chain A, chain B, chain C, but they will only they will be the application developers who decide what chain gives them the best assurances and the cheapest cost.

And C, I think I believe in the unbundling of the blockchain. So right now Ethereum and other chains, they are sort of many things at once. Um they are consensus, they are data storage, and they are computational. It all it's all happening within the same layer. And increasingly I think people see that it actually makes more sense to unbundle these different steps because then you can build layers that are strongly optimized to do one or the other.

And I think I only believe sort of I'm I'm cautiously optimistic that Ethereum is understanding that and sort of getting in position to to dominate in this world where the different layers of the blockchain are unbundled, right? So they say they say yeah, computation is there's no place for computation on Ethereum. This is just a place where people you know, post proofs of data and then settle between different applications and so on.

And partially they also say this is a place where you can store data if you need the highest assurances, but I don't even think Ethereum is really going to compete as as a data availability layer. Um so I I completely agree that Ethereum is sort of going to lose it's not even going to gain, it's going to lose a lot of its current activity. And this this going to happen on more um optimized blockchains like rollups um like StarkWare um and so on. And but and nonetheless I think that other blockchains are in even worse position for how this future is going to develop.

And that that makes me sort of cautiously optimistic on Ethereum. I think the the whole premise or the whole world world view is just different from the way I view it. I think I think like like to caricature a sort of an Ethereum person who like, you know, I'm most derisive about it would be someone who's like mainly like half their tweets per day are about how other alt layer ones are not are not decentralized and how they're going to fail. Um and you know, I I think that you know, be that as it may, like you just have to find something better to do with your time, right? Like it's the same as the Bitcoin maximalist who like like literally half their tweets are about why Ethereum is is too centralized. Is

it Is it the same It reminds me of the same thing. It comes from the same part of the brain, too, actually. And I And I think it's actually the same type of mentality because during the bear market, you know, Ethereum almost died, right? Like it was almost to the point where people thought it would be chain death. Uh and so that that did create like this culture of saying, "Okay, well, you know, we are going to defend ETH the the asset and ETH the value." And you know, that's actually the one reason why I got more interested in investing in ETH as an asset at that time. Uh like $100 because I I just thought, you know, this is actually undervalued as a as a tribe, as a network. Um and so These people went through so much, they are never going to give up.

through so much and they're still building on it anyway. They lost all their money, they got liquidated on their Maker CDPs, they're still building on it. You know, I went to all the Ethereum meetups that I could in in in Southeast Asia. And and and so I I I really sensed that. And I think now we're at the flip point of that kind of where, you know, it's um I feel like that same energy I I see everywhere else except on where I think it needs to be on Ethereum. And and and and so that that kind of scares me because then if I like zoom out a bit more, then then I recognize like like, you know, just as I was early to ETH at that time, other people have, you know, been early to Solana or to Avalanche or to other chains and

also seen that. And and so then I I kind of I kind of just I'm always very skeptical or or I'm very very very cautious because I know this is an effect in crypto and it's a wealth endowment effect where like a tribe becomes wealthy and then pooh-poohs everybody else, right? So Bitcoiners became wealthy and then spend their whole life pooh-poohing everybody else. And I'm arguing partially that like Ethereum people become wealthy and then start pooh-poohing everybody else. And it's not all the people, right? It's not all uh but I do think that that's not healthy.

Um and I do think that if they take that too far and they ingrain that in the culture, then it will end up very much like a Bitcoin roadmap, which you know is is not great, right? In terms of technology. And and so I think that's kind of my perspective. I mean, it's not a question of optimistic or not optimistic. It's just It's just the It's just the reality that I perceive kind of thing. Um I don't make a product I don't make predictions based on like how I feel it will happen. I make predictions just purely based on the idea that things that are happening like this, if they continue, then what will that mean? And and I think that the legitimacy of all layer one is

incredible now versus during the bear market. During the bear market, when I bought Solana SAFs, I was so embarrassed about it. I couldn't even tell anybody about it. Because Solana was a dirty word. I don't know if you remember, but Solana was a dirty word back then. Uh if you were if you were talking about all layer ones back then, it was a dirty word in the Ethereum community. Um and and so, you know, fast forward to now where I see the legitimacy of it from, you know, tier one investors, from traditional finance investors, and that's something that That's something that I think is striking, right? And it is different. Um and so, I then ask myself the question, how will this continue? How will this continue to evolve? If this is the If this is the analogy of like operating systems, then um

then the technical debt one struggles against the new ones, right? The The ones with existing users struggle against the ones that have uh growing new users. So, I guess what I'm saying is I think that like everyone should just keep open mind. And that I think that there is a strain of Ethereum maximalism that is getting pretty active. Uh and I think that it is the same type of part of the brain as Bitcoin maximalism. And I think that it's it's very very dangerous.

Yeah, I mean I I completely agree. I also see see these trends. It's not something that I participate in. When I see it honestly, I just mute them. To be honest, same as I do with the Bitcoin maximalists. Um I think fortunately the culture in Ethereum is not so much in favor better than It's still better than Bitcoin in the sense that they they at least are open-minded. I mean I think I think interestingly Bitcoin culture I think is getting better now. I think it kind of hit a low uh maybe a few months ago. And then now they're kind of you know like like I was I was just speaking to our mutual friend Leo who recently moved to Singapore. And he was saying how like in the Bitcoin community now there's like this really big push to like add scripting and to like make DeFi possible and these kind

of things, right? Because they're just watch and I and I I saw thread the other day by a vague who was saying how like, "You know, these these NFTs, why are we not doing NFTs now on uh Counterparty, right? Why do we not use NFTs to fund Bitcoin core developers?" And um there's actually really interesting thing I wrote about with the Free Ross uh NFT where I think one of the bidders who ended up losing, but he was like this anonymous Bitcoin billionaire whose plan was to uh burn the NF like if he had won, his plan was to burn the NFT on Ethereum and reissue it on Counterparty. Um and and so you know you're you're kind of seeing like uh you're kind of seeing this this uh renaissance possibly on Bitcoin where they just say, "You know what? We're not

going to actually call NFTs scams. We're not going to actually call tokens scams or DeFi scams. We're just going to We're just going to like try stuff again, right? And and and try to make it Hopefully. Yeah. So so I mean it's definitely bottomed in terms of that kind of stuff. Uh whether it's enough is a different question. But it's it's definitely bottomed. I I I I mean I see Ethereum maximalism still on the way up in general and I think it's only made worse by the fact that you knew users are going to to new chains, right? So at some point I think it will um I think it'll stop. Um but I I do think that um it's it's maybe just the structure of

of human civilization actually if you think about it, right? Because it's like you know you you kind of have um you know you you kind of get to a point where you know you know you you you you become the dominant in this sphere and then you want everyone to recognize this and then it becomes very tough to compete with newcomers, too, because you know they're they're you know they take cheap shots or they take shortcuts that you can't take or you know they they take things and and then and then so the reaction is to to kind of insulate from that, right? And and the reaction is kind of justify the existing decisions and these kinds of things and but but soon it it gets to a it gets to a point where um

where if if it's taken too far, uh it runs the real risk of just being out of touch with what what the market wants. Um and if it gets to to that point So so example about a touch in my opinion would be optimistic roll up where they they actually thought they would be market makers to to bridge like on and off sizes. Um So I think that the the danger is to become out of touch, right? Um and I think that Ethereum has a better chance of not being out of touch because fundamentally I think it's a very eclectic group of people and there are

different people working on different solutions. Um but um I just don't think it's something that people should argue about like all the time. I think just the just the desire to have arguments about it shows the weakness already in my opinion. Um because they could just be they could just be building instead or they could just be acquiring users instead. Um so it it's um it's that's just the way I perceive that's just the way I I perceive what's happening.

I think you're not entirely guilt-free in starting this argument. I think I think that um I mean for me it's it's really a it's really an SNX thing too because I mean you know that I've talked to Brightly about SNX for a long time, right? And kind of as a first DeFi project and I've showed it SNX to people and said this is is incredible team is going to be this and then be that. And it really has not and then I've seen Luna do really well with and Luna's basically the same thing except just executed way better, right?

And I thought a lot about like why why did this happen? And you know at some point I owned a lot of Luna in the past too then I sold it for more ETH DeFi stuff and you know now I'm I've bought back a lot as well but I just thought a lot about like what was my premise that back then, right? My bet my premise then was like well, you know, you generally sell all layer ones for more ETH, you generally sell other applications for more ETH DeFi and then you you know, like that's the premise that I'm coming from, right? It's coming primarily from one of saying my thesis on this was very wrong actually and why was it so wrong and you know, like in a way like you and I, right? Like we misled people into the ETH DeFi vision of the world. I remember when we did

that thing with Arthur and the you know, top DeFi projects. We talked about Luna and then we just pooh-poohed it. We were like ah like some yeah, it's not on ETH so we don't care, right? You You remember that, right? And I think Luna market cap is like more than all the ETH stuff combined now. So it's it's just something where I think that um it's a huge blind spot for us. And I am one who's like incredibly self-critical. So, I just think like why do we have this blind spot? Like what was the problem with this thesis? And I think I know the answer, which is that it just assumes a world where ETH is the only smart contract chain. And it also assumes a world where

um other people are just debating ETH versus Bitcoin all day, pretty much. Um So, I think with with that in mind, um I think that SNX rubs me the wrong way because they, you know, like optimistic roll up like you you it it basically the basically I I see it as like of all the projects that like should not be allowed to shame others for exploring my scam solutions. Like Synthetix is like like king among the ones that like don't have that right to shame anybody for it, right?

So, I think that this is just the reality. And and I think too it's something where I mean the reason why I think it it got so many likes and was just like so so popular among basically everybody except for ETH maxis is that users don't like being talked down on by ETH maxis. They just don't like it. Um they actually don't like ETH maxis as people and they also don't like Ethereum if it is the kind of chain that just says "Okay like you know, you should you know, you know you're using something centralized, right? Or you're you you know you're doing something stupid, right? You know, it's just it's this paternalism that's very similar, by the way, to Bitcoin maximalist paternalism during the bear market,

which is to say, "Oh, you own shitcoins. Oh, you own, you know, this you know, the there's all this stuff, you know, shitcoin minimalism, all this kind of stuff. So, I think that this is something that as people think about harder, um they will see the parallels and I think they will see the danger. Um But with that said, um I Look, I think that there's a big separation for me be- between whether ETH the asset will do well and Ethereum the network. I don't think the Ethereum I'm I'm I'm less optimistic than you on Ethereum the network uh having any kind of dominance over smart contracts uh execution space. So, so

it's just a it's just it's just a point of a prediction I guess disagreement. I do see ETH the asset doing well uh in general. Um I'm not sure if it outperforms Bitcoin or not from here, but I think it will do well in general because it is a widely held asset that has a that has a strong brand and it also has um great liquidity from AMM pools, from people for putting their coins um you know, in UniV3 pools. And so, I think that um it's not something where I'm telling people to like sell all their ether or or like buy all the ether or anything like that. It's just I don't see I see a big gap between uh what ether

was supposed to be, what I thought Ethereum was supposed to be, and where it is today. I I see that gap the biggest. Um as sort of the most prolific investor in Ethereum DeFi uh and Ethereum NFTs for for quite some time. And and so, this gap to me is is just uh it's just saddening to see. Um so, I come at it from that perspective. It's not the perspective of the multicoin which was just right from the beginning that, you know, Ethereum would not have this network effect as as predicted. Um it's very much from one who believes in this and then now realizing that uh it's it's a much weaker network effects than postulated.

You know, I love that about crypto that um even even we who have been in crypto for so long and um have think about this all day can still have big disagreements about how we think the future is going to develop. And I think that that makes it just the most interest like intellectually the most interesting space in the world and also the most interesting market. Um so I definitely appreciate the honest conversation that we had today. It was fun.

Thanks and take care.