ETH's Modular Bet Will Work | Alex Botte & Alexander Pack

Transcript

the main thing like eth did wrong and is just continuing to do wrong uh at least from the foundation like the foundation side the core team is just their actual technical road map right why are they focused so much on decentralization like why is there so much Naval gazing why haven't they scaled the L1 I guess you can make this counterfactual that maybe they would have worked harder or tried better to scale the L one if there was no rollup Centric road map but I don't know man so I just I just like l2s saved us they saved ethereum you know like no one would want to use m otherwise scale is the blockchain that is Simply Built different other L1 networks have costly transaction fees clunky user experiences and lack true adoption in Ai and onchain gaming

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designed to easily manage store and swap your crypto crypto all in one place access thousands of tokens across ethereum and more than 10 other chains instantly by using Unis swaps wallet today download it today it's available on Chrome IOS and Android hit the link in today's show notes to get started everyone welcome back to Empire we got double guests coming in from hack VC um you heard from hack uh from row uh from hack the other day but now we've got two other folks from hack we've got Alex B and we've got Alex the founder of hack VC um who's been in crypto for a very long time I think about a decade started hack VC they one of the best Venture

firms in crypto and then Alex bod is a partner over at hack as well so Alex and Alex welcome to the show thank you yeah this is our first time I think so it's good to be here uh Alex why are you why are you I'm gonna refer to Alex bod as bod and then Alex I'm going to refer to you as Alex um Alex why are you doing you're usually more like behind the scenes I feel like uh why are you doing more podcasts uh I don't know if I'm doing that many I think you're why are you doing this podcast I've tried to get you on the show for years why are you doing it now you're the first one in a few months well we uh uh we wrote This research piece a couple weeks ago um and Alex bod our our head of research did a

lot of the data on it about uh ethereum and modularity which is like you know the number one thing that I think outside of meme coins that uh that crypto Twitter uh Rags on like why is e underperforming this cycle uh what's happening to my eth bags am I getting poor is salana taking over and uh everyone's been blaming this whole like modularity thing uh for why eth is is going down and and sucking so hard um as a fun we invest in a lot of this stuff like we're Tech investors and it's all like really wonky deep Tech so we thought it'd be interesting to like actually do some uh data analysis and like some data driven arguments instead

of the tribal stuff that happens on Twitter all the time to see if some of the claims were true and so thought we would chat about that like if eth uh doomed salana the next king of all crypto that kind of stuff we can talk about other stuff too nice no that's what I want to talk about because it seems like so eth is obviously underperformed Bitcoin and Soul by a lot this cycle and I would say if you asked people why that's happened it's like in one sentence it's probably eth's decision to go modular was a mistake and the way that they chose to scale and maybe FR I'm putting quotes around this like fragment the their ecosystem was potentially a good decision for some reasons but for the price of eth it was a bad decision um and so I'd love to

yeah maybe we can explore that but Alex can I actually ask you I'm sure most people are familiar with this at this point but I even just for my own memory like just because you've been in the industry for a while can you take us back you've been in the industry for what 10 11 years like what was the historical context behind ethereum's move towards this more modular architecture yeah yeah I started as a VC in the space uh in 2014 and uh back then you would be amazed and I loved like I thought ethereum was the coolest thing that's what got me excited about crypto and you would be amazed at the number of people that like now everyone thinks of them as just like eth Maxis that were hardcore Bitcoin Maxis at the time so even being like really bullish on eth was at one

point like a contrarian uh Trend amongst like Silicon Valley VCS and things like that and uh once eth started taking off you basically and eth ethereum was like as monolithic as it gets right especially back then like we're like okay we're gonna make this turn complete blockchain anyone can write any uh application on top of it and the concept of an L1 is monolithic like you just have to you go here and we'll help you build like you launch a token on top of us whatever um but then the L1 War started and uh we VCS and like started just like fundraise uh investing in like every L1 right because that's the and like retail individuals were investing

in every L1 right because they wanted to to catch like the next eth and uh I remember at the time ethereum just had an incredibly difficult time retaining talent and even money you know because they did a small crowd sale in the beginning and they almost went bankrupt uh so then now like if you're an exe person like you know Gavin wood was one of the co-founders of ethereum you started polka dot you could just raise hundreds of millions of dollars in an Ico or from VCS and then you get to keep a bunch of your tokens afterwards too right so the economic incentive for retaining really good developers was just terrible um I think the last draw probably for like falic or I don't know about him specifically but but the

ethereum foundation was near because they had just announced that uh you know the way to scale ethereum was going to be sharding and then you got these like really great Engineers the founders of near protocol who were from web 2 and were like the sharding experts in the world and I think they got a grant or something from ethereum in the early days and they were trying to attract them to to like do sharding for ethereum and they're like no let's we'd rather just raise a bunch of money and launch near protocol or something right but there were a bunch of them like polka dot all these other things so they kind of had to figure out some way to bring Talent back and uh get people to invest in eth infrastructure so I think the RO that I think that was the real Genesis

like back against the wall you have to figure out a way to compete with these other l1s and letting people run an L2 is like the way to do it right yeah and and then in right late October there was this kind of Infamous post which was you know vitalic saying a rollup Centric ethereum road map right I feel like this is the post was it Infamous maybe today it's infamous I thought it was pretty cool at the time Infamous Infamous is actually the wrong definitely the wrong choice of word that's probably is telling of like the timeline these days to use that word uh this was the most one of the most impactful posts I would say on the ethereum forums was like this rollup Centric ethereum road map it was vitalic kind of laying out what would this rollup Centric road map look like and

this was in my mind the start of when you started to see ethereum move from uh monolithic to modul I'm sure it' been happening in the quote inner circles before that but this was the first time it like came at least like came on my road map yeah I mean we like everyone it was very influential in the sense that there were some l2s that were like they weren't called l2s but there were some l2s that had launched uh before like October 2020 and were building but they were not like like the early rounds of optimism and starkware and ZK sync happened uh like in the 2018 17 period um but uh it was like incredibly unclear

how they would monetize if they would ever be able to launch a token and so they didn't raise that much money like investors weren't that interested so after this uh this blog post came out way more people started building in ethereum and invest like we changed our tune like we had already been doing some of these Investments but we doubled down like how could you not after you read a post like this you're like okay great like ethereum is going to open up and let like encourage uh infrastructure startups to uh to like handle the execution layer take Mev like uh Mev related profits things like that uh uh as like a startup right so it's like a compelling Economic Opportunity you know and that's Pro yeah that's when this whole thing started so you guys wrote

wrote this article right which was or I don't know if it's an article or a research piece or what whatever we're calling it was modular a mistake a a data driven take on ethereum's Grand Vision so maybe let's um I think let's start and not really bury the lead here I'd just be curious to get I don't know if this is a question for bod or for Alex like would you say that the modular strategy has has hurt eth's price like everyone says that uh yeah uh we did look at this and the short answer is is it has um Jason you mentioned this like the price action of eth is pretty ugly like if you look at eth BTC uh it's down like 60% this cycle that ratio you look at Soul eth uh

it tells a similar story but obviously inverse since eth is the denominator that ratio bottomed at the end of 2022 right after FTX and it's up like I don't know over like 700% since then um so yeah this is something that we looked at in the paper we looked at uh the relationship between fees and eth price and uh oh yeah what's this is this uh this is this is eth BTC eth BTC it's a tremendously down only chart right now yeah yeah brutal um but up for a LT anyway yeah yeah when was the top like uh it was like 008 or something in November 21 maybe yeah the top the top was basically the top of the last cycle yeah and it's

down like one month after the top of the last cycle yeah yeah so yeah what we looked at in our paper we um we found that over the past three years the relationship this is like even before um EIP 1559 uh but like over the past three years the relationship between eth fees if you measure them in eth and eth token price is statistically significant had like a I don't know 48% 50% correlation uh over that period and then if you look at the coefficient of that regression how you would interpret that is um if ethereum fees fell by a thousand eth in a week eth price depreciated by $17 on average

so by like this whole modular decision of moving execution to layer twos ethereum the ethereum L1 collects lower fees lower fees means less eth is being burned so you kind of reduce that deflationary pressure uh that previously supported eth price um so yeah and then a whole other issue that we can get into too with short-term e price is now you have like all of these modular tokens that have hit the market and they're competing with eth um both in terms of capital as well as M share so yeah we can definitely get into that more but the short answer Jason is yeah it has impacted eth price in the short term but we think like the long-term gain uh is a like e e decision was focus more on long-term adaptability and ecosystem

Health rather than like immediately pumping the the e e so so your argument it sounds like is shortterm definitely modularizing ethereum has hurt the price long term you actually think that ethereum will end up doing doing much better than it's done over the last two years yeah the ethereum ecosystem yeah for sure like like decoupling of the eth price in the ecosystem is definitely a big Trend in our in our paper it's like hard to avoid that well isn't that that the kicker of the issue though is like eth is doing well it'd almost be interesting to unpack how you define doing well is it the price of eth doing well or is it

that there's a bunch of tvl because all the tvl is still on ethereum basically um is it the fees generated is it how many users are there right so how do you guys think about like how do you define what this what Su what what is the success metric for like was modularizing ethereum a good idea or not yeah we we looked at like um a concept of market share basically like tvl market share fees a bunch of other stuff and the counterfactual it's hard to like ever estimate exact ly how poorly ethereum would have done

otherwise if they didn't monize right but we like we did this we looked at like some we tried to look at like some web two comps for instance uh like has there ever been a tech infrastructure company with network effects and so forth It's a platform that just modularizes and like completely opens itself up and opens his apis we actually couldn't find any that have done this like over a consist period of time yeah um like Facebook had a platform for a while Twitter had open apis they all shut it down eventually uh but we looked at like what ethereum's market share had done over time versus some of these guys and like like like AWS for instance is very similar to ethereum it's like the

centralized World computer where he uh uh AWS is like Amazon web services right and it was the first mover where he ethereum is a decentralized cloud computer and its first mover and what you saw was uh like aws's market share went down over 10 years from like basically 100% when it launched to like 33 35% something like that and which still pretty great I mean they're making hundred hundred billion dollars or so uh but uh ethereum's market share has by most metrics gone down from like 100% to something like 75% right Alex uh yeah so it's like could be way worse could be AWS levels could be 35% market share and then if you think about all the other

like there like there were many other there were EOS there was po polka there were like card I don't even know if cardano really launched much but there were all these other things that obviously went like very very low market share um so you have to imagine that from that sense it's pretty good even if it's like taking a dent out of the ethereum price like this whole modularity approach yeah I mean I I like the you guys POS an interesting question here which is what if AWS took a similar approach to to a right which is um you know I think I'll just read it it says what if it acknowledged what if AWS acknowledged that other teams might build some Services better and instead of doing what AWS did which is you guys had this

nice chart I don't this thing like these are all the services and products that AWS has built and the reason you build so many things is to lock you in right like we use AWS and we get pitched all the time for other things it's like ah but it's just like they have everything we need it's in AWS so you guys POS this premise it's um like what if you just let them build this open ecosystem what if what if Amazon instead of built an open ecosystem it's really interesting idea and they had prioritized composability and encouraged operability and all that stuff and that's what ethereum has does has done the the thing I'd throw back at you guys is like Amazon is publicly Amazon has done better than eth I would say like may I mean maybe it depends how you define

better but like Amazon's a publicly traded company they're one of the best performing stocks the last decade they spit off a stupid amount of cash flows like maybe their strategy was the better is the better strategy and maybe eth should think about aws's strategy instead of aw was thinking about e strategy how I mean either of you guys I don't know who to throw this question to but how do you guys think about that yeah I I feel like if if Amazon had done what we're saying right they would have lost out on like this massive Revenue generating opportunity um but maybe if they had done if they had gone to like a modular approach their market share wouldn't be 35% so I think like what you're saying is like how do we measure success but I think the other point too is like Amazon

is a publicly traded company they're not optimizing for the most vibrant ecosystem you know they're optimizing for shareholder value whereas ethereum is like it's a decentralized protocol and it's optimiz like Network effects are driving uh you know is driving eth as well and so uh like market share might be a better way for like a centralized protoc like a way way to look at it for a decentralized protocol um so yeah I I do think like the publicly traded versus decentralized is is like a pretty important point when comparing yeah I mean it gets to this question too of how should these protocols be valued um so you can look at price today and say like yeah it's

function of supply and demand and uh you stop burning all these tokens uh and so the supply is like higher it's less constricted and that's bad and that is that is like objectively true um but then you think about like clearly Assets in crypto are not valued based on revenues and profit uh multiples uh at least to the extent that they are in public stock land right yeah the comparison breaks down when you're comp realize you're comparing a network versus a company yeah like did you guys ever read the DBA post that John charbono wrote about this I don't know if you did but it's like L1 and L2 token value capture it's a good

we'll link it in the show notes it's a good it's a good piece but it talks about like you know there's this kind of like silly way that people talk about valuation today in crypto which is like profit equals like fees minus issuance or like you know tvl these kind of like py metrics or whatever and there's there's probably other metrics like we you know at blockworks we've been trying to kind of push like Network te or network rev like total economic value or real economic value um so there's like other definitely don't have the metrics that trafi uses these standardized metrics we that is like that is definitely a thing that the industry needs to start to grow up yeah I'll just say um as an investor in the space that tries to back these early stage

protocols I think the easi the easiest like shorthand I use for how valuable they will be is it's it's uh for the most part their these projects are valued based on their Tam which is like their the total appc Market size it's VC jargon term which is I guess like yeah what the future expectations of it right like how big is the market opportunity for being the next digital gold Alex loves a good slide with some bubbles showing bigger Bubbles and bigger bubbles yeah five trillion 50 trillion like 300% whatever 300 bips of total uh total wealth like that's the market size but um a great like a one of the um one of like the most famous VCS of the 90s uh an investor in us and he said

that's exactly how it was how it worked in the late 90s internet like everything web van bandwidth R bandwidth.com uh the good stuff and the bad Amazon they were all basically valued on like how big the market opportunity could be right things changed at some point you got to flip that into I mean the later you go and Venture right even like series D or e or growth Equity or whatever it is like you start to flip into other metrics right or are you I think you should or maybe or or I'm wrong maybe teev yeah these metrics you're you guys are inventing um maybe but those are kind of the same thing right well I

guess TV is a measure of current like how much yeah current size of the ecosystem or something right yeah that's the problem is it doesn't bake in future stuff right yeah I mean like I think the idea probably over time they'll be more based on revenues and whatever that whatever that is exactly but uh even so clearly like you have to believe the market is just like unbelievably inefficient uh for you to think that that's the only thing that should be pricing these crypto currencies like I mean I you know it's it's uh how I say this uh so but anyway for

the because like we think that like at least today it's based on Tam valuing these things based on like like success being based on uh the market share is to some extent useful like I think that's probably what a lot of people are looking at when they're trying to figure out how to price these things and so are we got it got it yeah Jason I also think like the token terminals of the world has have made it like super like the it's like almost like a copy and paste from trafi like you see the balance sheet and like things just make more sense that way um but I think yeah like as the industry matur we we kind of need our own our own metric so it's great that blockworks is doing that another thing we looked at in this this paper too was

like Network effects are real I don't know what you guys think about like meta's law but uh it's kind of one way to to quantify uh Network effects and even in web two companies like Facebook's price is like impressively related to the number of users on Facebook's platform like over time the cor the the r squared on that is like over 90% it's not in the paper but looked that in the past but then in web two yeah here's some here's some stats on this so meta's value is basically like the the value of a network grows proportional to the number of the squared number of users connected to that Network so you could like fill it in with number of addresses which is what we did to calculate meta's value and the relationship is super strong for

all the majors Bitcoin eth salana R squares are like 50 to 90% and they've this these relationships have persisted for years and for Bitcoin it's been like over a decade so um yeah like this idea of like ecosystem like the number of people whether it's developers or users using a network like is tied to to valuation as well um so and I don't know if like that's something that web 2 stock analysts use when looking at web maybe they do um because it is incredibly powerful even for those like I thought it was crazy Mecha law is like a 30-year-old thing why should it have any Alpha anymore but it actually does bod just so I understand what you're saying is you

did this regression of Soul's price and bitcoin's price and E's price as it relates to metast value and the r squared was high which means I think I might botch this but it means that it's a good predict metast law is a good predictor of price which means in really simple terms that the more users come onto the network the higher the price goes yeah that's a great summary like what is it for Bitcoin it's like 90% r squared so you can interpret that that is like 90% of the variation in btc's price can be explained by the number of users on on bitcoin on like the Bitcoin blockchain H does this apply to both this is just the networks right this would just be

l1's and l2s like this wouldn't be like a or Unis swap right um I haven't run it on apps but that is like a a good question I mean there's no reason it shouldn't work on applications as well right the sorry the first principle's theory is that uh it should apply to businesses or like that have very strong Network effects right so if there's something that has no network effects I'm guessing it would be a lot less relevant I don't know but yeah it's like the more the more the more business's success is reliant on network effects the higher that correlation will be or the r squar yeah yeah probably okay all right

let let's let's get on to the next part so you guys um you guys laid out these like four um you said the ethereum module ecosystem and its impact on eth we look at how modularization has impacted ethereum in four different ways right so you had four ways that modularization impacted eth and some of these you said this was a good thing some of these you said this was a bad thing can you guys walk us through these four buckets yeah Alex you want to do the first two yeah the first one one the bad is like fees and price so that's kind of what we talked about earlier where like okay eth has has really underperformed is it at all related to the fact that ethereum has basically given away some of its fees to l2s and yeah we found as

you as you like continue to scroll down that uh that absolutely is explaining some of the underperformance for eth so uh oh yeah sorry even even more a little bit more yeah these are just fees going going down a lot oh yeah this chart here like looking at the relation ship between fees and an eth price so these are like you know uh strongly correlated so this is definitely impacting eth price in the in the short term um and then kind of the next thing we think about was like now you have all these modular tokens that are coming to Market like obviously optimism now has a token arbitrum like even some of the data availability like Celestia has a token now so does that create

competition for both in terms of dollars invested as well as just like mind share too uh so Alex yeah I'll let you talk a little bit about this uh as well like this this concept of spreading value across multiple tokens yeah totally I mean it's an issue for who you are so if you're a founder of a modular coin uh or an early investor you're pretty pumped you know like yes your eth bag isn't doing so hot but uh ethereum with its blog post like just produced 80 billion do of value uh that probably would have at least to some extent accured to ethereum instead or like yeah

I don't know it just wouldn't accur to an ethereum like like just like and then the and then the one click like hey I want to buy eth because this just gets me exposure to all the cool stuff happening on top of ethereum that goes away like you now have to buy a basket of these like modular coins if you want to get that exposure and that's a big problem with an asset because you look at like Nvidia Nvidia is riding way above its PE multiples and revenue probably to some extent because it's just like this B like it's it's a on stock like index of everything in AI so if you're just like long AI you can just buy Nvidia um or you could buy I'm sure there's like Fidelity uh Vanguard mutual funds and stuff that are Ai and it's

mostly Market weighted towards Nvidia right so you lose that um yeah you're saying you're saying investors aren't asking oh does the value ACR to Facebook here does it ACR to snowflake or it's just like like if AI gets big Nvidia gets big yeah yeah and but again like great for us or like great for investors in these early modular projects uh not great if you're just like sort of passively holding ethereum and hoping to get all the exposure to I mean I think that's the kick I think that's it right like that is that is my analysis of why people are so angry on the timeline is yeah the you know eth like modularization has actually produced a ton of value for the ecosystem in that there's a boatload of money that got created like it's increased the GDP I

guess you could say of ethereum ecosystem it's also I mean it's a really nice experience to like trade on hyper liquid which is on arbitrum like it's like very or you know use optimism like use bass like it's a much better experience than using ethereum a couple years ago the downside is that uh ethereum was used be quote owned by retail now it's owned feels owned by VC because Celestia and arbitrum and optimism had to raise these monster Venture rounds so people are benefiting it's just the VC is not retail yeah I mean which is kind the point because yeah again flip back to pre-2020 and uh there was this massive like there weren't many investment dollars going into ethereum and there

weren't many like the the quality of like really great infrastructure developers and engineers years was really low like people were going to to build other l1s and things like that um so in that sense it worked like it was a gigantic bribe I mean it's not a bribe it's an incentive system you know incentives are good it was like an incentive system or bribe to get uh people to invest in and build in the ethereum ecosystem uh but it cost something like it cost a lot I mean I don't know it's it could cost like to some extent 10 or 20% of the market cap of ethereum had to go towards uh creating like e ecomics for these people but I do think to some extent it was a smashing success in the sense that like ethereum has not scaled it's layer one

and there is no like subscale layer one today that has any usage whatsoever like if the choice for UNIS swap or any new dap um of launch was like to launch on ethereum um like the main net with like 40 to 50 x max TPS or salana or aptose or sui at like 5,000 plus uh TPS it's no it's like no contest right like obviously even though there's a lot of lock in and network effects and you like holding your eth and branding whatever right you would still go to these other chains and the existence of like Layer Two blockchains where the costs are really

cheap and there are high TPS means that eth is is still in the game and still the number one which yeah maybe it wouldn't have happened you know CU like it was a failure like the ethereum foundation like really messed up the execution of the layer one I think it's like kind of objectively true at this point uh and so the counterfactual will be really really bad right yeah I mean do you think that they should have just actually let's go to points three and four and then I want to ask uh hypotheticals maybe let's uh I don't know who wants to take three and four but I can go back to oh yeah what are three and four I lost track three and four three is it's market so okay so we

covered short-term price which is bad yeah yeah yeah yeah and then four I would say four I'll cover four four is what I just argued basically which is like at least it's still in the game at least it's future proofed and what we mean by Future proof is like in general it's really hard for incumbents to lose in a high Network effect business like there are banks and energy companies that are hundreds of years old and they're still kicking and I'm sure the people running those things are not the brightest people in the world and it doesn't matter you know like uh they just have such powerful like incumbency effects and first mover advantage and so forth and but the really the the only way that an incumbent reliably gets

killed is when you have like a big Tech paradigm shift and you have this like generational leap like from like when you went from desktop to mobile it B basically killed Yahoo uh and like even like Microsoft to some extent fell a lot in consumer um when you went from like uh yeah I don't know there was like lots of big shifts AOL got killed Yahoo got killed um there were these ton of tech Giants that had 100 billion plus valuations that just went to to basically zero within a few years because there was a big Tech Paradigm Shift right and yeah there's these Extinction events happening in crypto too all the time the first big one was TPS right and so ethereum did not land did they not stick to Landing with TPS

and scalability but it's l2's did and so was able to survive and Alex you want to do the the market share one I thought that was kind of cool oh yeah this kind of uh oh the market share one this is kind of contentious because there's everyone has a different way of showing market share depending on who they want their team which team they're supporting you know but well how do you guys do it tvl yeah for here we were looking at we were looking at tvl and Jason I think you mentioned this earlier like if you look at market share by tvl it's not even it's like not even close like most the the tvl is all on you know ethereum and and it's l2s um so I think like ethereum plus all of its l2s is like 10x that of

salana the TBL and then even if you just look at TBL and the l2s and you don't even consider eth L1 uh it's it's higher than any other layer one block salana near Bitcoin Tron whatever um so from that perspect that's kind of where we're getting that 70 to 75% market share number so e going from like 100% dominance to 70 75% over nine years um yeah so that's like a little bit of the market share market share argument could you say fees it was pretty close although fees have been kind of crazy in the last month or two for salana you say if I tried to argue the other side could you say that is a um symptom of a inefficient system and

you actually want to see a system with high velocity of money that's moving around in the system a bunch and instead in ethereum you have a bunch of idle Capital that kind of just sits there in these big pools like let's look at defy llama let's who's got there's 10 counter arguments to it too but yeah but I also think like like uh I don't know when I think of tbll even if it's like large pools of capital city in there it's like where do you trust uh large sums of money you know and uh so I feel like ethereum is the home for that because of like high security and hasn't suffered

as much in terms of like outages and things like that um yeah I would say uh tvl and fees are the least bable uh and like gameable metric yeah whereas where well whereas addresses are completely bable yeah and yeah and Dex volumes are incredibly bable yeah like yeah as you I mean you look at like coin market cap or coin gecko for centralized like centralized exchanges especially on these extremely low low fee uhh chains yeah so they're signs of something you have to be really careful when you look at it scale is the blockchain that is Simply Built different let's face it

other L1 networks have costly transaction fees that increase as the network gets busier scale has solved this problem with a gas-free scalable infrastructure where users never pay gas fees scale was awarded the most active gaming chain in 2023 by coin Gecko and host five of the top 25 games on dap radar you should definitely check out scale I was using it the other day it really is incredible to use that's scale spelled with a K hit the link in the show notes or head on over to scale dospace ecosystem to get started today hey everyone Jason here I wanted to take a second to break down why magic Eden is getting into token trading their team is extremely concerned that crypto is still

Consolidated in the hands of a few centralized exchanges who act as Gatekeepers ultimately recreating the trafi space they believe that crypto is still missing an onchain binance and their aim is to move trading completely on chain fully decentralized they've done six billion dollar in nft volume in the last 3 years and have had more than 1.4 million users visit their platform in the past year making them the number one nft platform in the market today they are the ones that can do it stay up to date with magic Eden's journey by giving them a follow on X at Magic Eden Unis swap wallet is designed to easily manage store and swap your crypto all in one place access thousands of tokens

across ethereum and 10 plus chains in including Bas arbitrum optimism and more Unis swaps wallet has built in me protection and zero gas fees with swaps that go through Unis swap X you can also swap with the peace of mind that the code is completely open- source and independently audited download it today it's available on Chrome IOS and Android yeah okay so going okay so there's this moment in time right you guys wrote about this where there was uh EIP this was 2021 there was e EIP I'm bouncing around a ton right now but uh just ideas are kind of coming into my head EIP 1559 where you had these excess fees paid to the

network resulted in eth being burned and everyone's like boom number go up like eth is gonna get burned like eth to the Moon um but then what happens is uh like L you l2's for execution and you guys WR about this L2 is for execution then you had like the da layers like Celestia and igen and stuff like that launched and they've grown so then eth's fees went went back down and so it's I think you these are your words by giving up cord Revenue generating Services eth has now seen lower fees and lower revenues which has impacted the price of eth so in 2021 we all thought boom eth is gonna get burned number go up but actually modularizing the stack like Celestia and the l2s and all that

kind of stuff has obviously pulled the fees way way way down so was there a moment in time where you you know if you're if you're looking back in hindsight like oh man they really could have done this differently or this differently and still kept with this modular path but but like fixed one or two things and that would have fixed eth I know we're totally like Monday morning quarterbacking here but uh I think there's a question of whether you should have done EIP 1559 at all like whether you should have even I mean but there were there were benefits Beyond just the fee burn uh for it there were like composability benefits and using ility benefit for the men pool um I just think that the uh the main

thing like eth did wrong and is just continuing to do wrong uh at least from the foundation like the foundation side the core team is just like their actual appro like their actual technical road map right like I don't why are they focused so much on decentralization like why is there so much Naval gazing why haven't they scaled the L1 um but again like hundreds of other l1s have made the same mistake you know and uh so in some sense like I I think the modular approach as a way to Future proof against if your own team uh or you like if you're just like if you're very self-aware you're very humble you think I don't know will'll be able to like pull it off and execute as well as this

other team like this is the right thing to do you know it Dr risks uh like lack of execution which there has been I guess you can make this counterfactual that maybe they would have worked harder or tried better to scale the L1 if there was no roll of centric road map but I don't know man so I just I just like l2s saved us they saved a theum you know like no one would want to use mainnet otherwise I mean don't you think like yeah but they could have spent the time look I I've I'm talking out of my depth at this point but they could have maybe spent the time trying to make the best L1 instead of pushing higher up the into l2s and stuff like that that that's that's probably kind but you have no idea if that could have I guess I don't

think they could have execut did that because of the I mean you go talk to the teams you go talk to the EF versus going to talk to someone like salana there's like two to there's like it's like talking to two different Industries basically like they're they're just two wildly different teams so I don't think the EF was really set up to do that yeah I mean they could they could probably learn a lot from from the salana core team you know they executed great over I guess you did have that though consensus was just like consensus was the dev shop of ethereum for a while essentially they were like maybe the jump trading of ethereum or FTX or we don't have to go there but you know the centralized entity that was contributing developer resources kind of

out of the kindness of their heart kind of because they monetized some parts of it yeah yeah yeah but I mean look consensus it they've produced a lot of really great stuff but I don't know I it's hard to imagine a fire dancer coming out of them the way that it did out a jump right so yeah I don't know it's just just like yeah maybe it's just not how they're built right or what they're focused on bod what do you think are there moments in time when you look back at a theum and you're like oh man if they only did this they' be in a much better place today yeah I feel like uh the combination of of like l2s but also scaling and and investing in the layer one itself like maybe could have done those in parallel I mean the team was

focused on like right there was a lot of other stuff happening with the merge and and things like that so that was impressive that they pulled pulled that off as well um but I think like this whole L2 thing like now you have all of these other developers right that are contributing to the success of ethereum and like even bringing in the best parts of other blockchains with which I don't know what have been possible like now you have all these alt virtual machines coming and building on ethereum we saw it with movement the move programming language and and like Eclipse with the SPM so I don't know if that type of like Innovation and development would have been possible if they just like would have focused internally on on like

improving the layer one itself yeah what do you what do you guys think of uh eth's money I hope so sounds great great story you know um I kind of think there's two there's two stories there's eth is M you mean yeah go on there's there's there's eth is money like actually I'm here I'm just going to share this piece that uh this is this is a tweet from was Constantine and Ryan Sean Adams so it was Ryan goes I'm dead serious when I say eth is money or the whole thing is pointless ET Etc and Constantine says the eth's money narrative is is stupid basically said eth should focus on being the world computer do you guys have a thought on

this I think when you say eth is money you mean it's like it's a store of value right it's one of these not necessarily it's a currency right that it has these like um benefits that people really want to hold it for things outside of its like utility or whatever right um and it's could be a speculative store of value you're holding it because you wants you want it to go up uh or it could be like more fundamental stores of value like gold or you you know you need it to you're like fleeing your country and's War Tor all that stuff right um and uh and I think it's totally ridiculous to think that Bitcoin is the only store of value or has like the only store of

value meme like every single cryptocoin is trying to become a store of value or is trying to become money and has some money property like that's that's sort of like from a very reductive perspective why these things don't and will never just trade on revenues or PE multiples or stuff like that right because they all have these like money like properties like even meme coins to I don't I like these like speculative games right that people hold sometimes like your you hold your Doge for years and years um and so like obviously everything in this space is money or else the current valuations and demand uh for these coins don't make any sense uh I just I wonder like does it actually matter whether the core like I just find these things to be uh sort of like from the yapping class

like the the Twitter Audi which we all are a part of so uh as opposed to anything that actually Matters from uh like like does that affect the tech road map I don't know maybe maybe to the extent that people are like we just want to optimize e money and so we're gonna like not scale or something that's bad I just don't know if it actually does you know Alex don't we try to take a look at eth moneyness in the in the article yeah yeah I don't know it's hard to it's hard to quantify but I guess like one way is like if you look at the layer twos what are they using for eth or sorry what are they using for gas most of them are using eth um on the D5 protocols built on top of the layer twos how much eth is

in those protocols versus stable coins or other tokens even their own tokens right and it's still mostly eth so that's like one way like that's like a question of is eth extending itself on on the layer twos um and I don't know it was difficult to measure but we found mostly yes like greater than 50% of the the defi apps built on layer twos have eth you know eth in them or are made up of eth yeah some of that's like may be changing on the edges I think base recently like you don't you don't have to use eth as gas anymore you can use usdc um instead or in addition but yeah like the fact that

most of these layer tws let like the the whole economies of these layer twos are run on eth and was some stat that like on the majority on the vast majority of l2s eth is the number one tvl asset tvl tvl asset by like 10x greater than the number two t tvl asset like act that is actually pretty compelling evidence that eth is being uh used as money right yeah all right now we're kind of like just pontificating on on things here so start to start to get in U walk me through how you guys view like 25 26 27 like what is the future for I guess what is the bull case for ethereum as you guys see it right

now uh yeah the bull case for eth I mean uh well I think they're they're definitely doing something right I we talked a lot about this whole market share thing going from 100 to 75 uh better than some of the web 2 competitors that we looked at I think they have like this first mover Advantage which is good the network like we talked about Network effects and metaps law and kind of like TBL dominance I think they also have like evm and developer friendly like the most like developer friendly place to start building in crypto um I'm I am definitely not a technical expert but solidity it sounds like might not be the best uh the best language but many devs use it it's it has a lot of adoption and

there's a lot of tools and educational resources so it's made eth or you know it's layer twos and the modular ecosystem a go-to place for for new projects and that's why you see like a lot of those alt layer ones maintaining ebm uh compatibility like monad and bar chain and and Avalanche and some of the older ones too yeah I think you have to just look at the Cool Tech being built in the ecosystem and for us we don't really even think about exactly what the ethereum foundation is doing it's more the stuff on the edges like a lot of the most interesting technology is like you know look you look at things like Ian Lair and reaking um they started and are primarily for ethereum you look at all these like alt VMS things like movement

Labs which sort of bringing the move language to eth I mean there's even projects that bring svm to eth um it's like the ZK the stuff that's happening in ZK and privacy like yes like eth doesn't have a monopoly on the concept of zero knowledge proofs or fhe like fully homomorphic encryption but the vast majority by like 90% plus of all the interesting Cutting Edge ZK research is all being applied to either mainnet or to whatever the broader eth modular ecosystem and that's the future of of this Tech right like that's like core cryptography that brings us forward another 10 100x um on like many mentions so you have to look at that right

otherwise otherwise what yeah that's that's the main story do you think most developers will pick the existing l2s of which I'd call them you know ZK sync and optimism and arbitrum or are they going to pick some of the new Earth I don't even know how to what to call these things anymore but bear chain and movement and monad and evm equivalent and what whatever whatever we're calling this whole bucket of new l1's coming out 25 I guess it's a similar tradeoff to uh to e first salana too at this point um like there's always I say there's always more

excitement from investors and and there's more price action in picking the uh like the underdog like the smaller cap coin or the new entrance that could become the old one uh because it's like a fun game to play to try to pick it and there's more upside right in picking the new guy that's that's like a tenth of size um there's a lot more of that like than there is from developers we find like develop you're actually like working 100 hour weeks for like months straight uh to ship something you don't wanna like excitement and the emotional aspect you want like are not as important right you want stability so I think there's always these lock this

lock in effect but if there's like a significant amount of like they all have interesting stories for developers right like ton is actually one of the most interesting uh because it provides you a bunch like this massive amount of distribution you know um whatever right like hype too to some extent uh so if you have this like really compelling thing you can offer developers uh or the users through developers like you need that it's not just about the next hot new exciting chain I think yeah yeah yeah go ahead D no I think I think the other thing there's always this question

of like um like yeah will the number one number two whatever uh l2s remain that way will there just be like one or two l2s will there be like a thousand thousands of l2s I think vitalic had this quote a few years ago like yeah there's either gonna be two or three there's gonna be like way more than a thousand yeah yeah you see so so deuts Bank launched or I don't know Bloomberg headline right deuts bank is is building an L2 on ZK sync um what what are your guys thoughts on this like it feels like you could see the days of kind of general purpose l2s like arbitr and optimism slowing down I

mean actually arbitr and optimism maybe would agree with that too because they're building like chains to build other chains right like the super chain and stuff like that but um it feels like long term here I mean like every company could get their own L2 or own Shain um what do you guys think of that thesis yeah I saw that I saw that headline too I actually sent it to Alex before this podcast uh well I think uh okay so like don't arbitrum optimism polygon they all have kind of their like outof the-box solution for you to copy paste kind of create your own L ZK sync optimism arbitrum polygon they all do yeah they used to be providers to it's not them it's gel CA yeah C with Inc right like uh I

forget which one ink is using optimism super chain yeah yeah um I don't know what what I took away well from that deutche bank headline in particular is just like uh it's interesting that they chose uh an L2 on ethereum you know like it they could have built somewhere else like uh like and they chose they chose ethereum and I feel like all these like TR like even coming from the trfi world they want to they they want something that's going to be like highly secure and where there already is like a big Network and so I do think like ethereum is going to be the place that they go when they're starting to experiment with like permissionless truly like decentralized web 3 um and we saw it

with coinbase with Bas they chose optimism obviously Black Rock when they tokenized the money market F Biddle they chose ethereum uh even like Franklin Templeton right they had a tokenized money market fund before bidd Benji and that that I think was on Stellar but then when they realized like not a lot was going on on Stellar they they went to polygon uh and then I think deche bank is another interesting example of that so I do think more chains and they'll be like yeah ethereum will be like kind of the first stepping uh stone for for a lot of like trafy corporates via l2s yeah yeah I think that's a I mean Alex you were at two Sigman aqr before this it it does feel like eth is becoming is like pretty firmly planted I

would say as like the chain of the institutions like the thing that they feel comfortable with I'm curious how you I don't know if you still keep in touch with your old trafi folks but yeah I don't I don't uh I would be shocked if they were like building something on on building but no yeah no no I know um if they deployed like let's say aqr went and I don't know if they do any crypto stuff but if they went and opened up a pool or like deployed on crypto in on some in crypto like would they do it in Solano would they do it in I doubt they're doing it in like movement Labs like I I bet they're you know I would assume they're just doing it on in like on ethereum yeah I feel like they're going to be exceptions right like you

know didn't PayPal like they they chose uh they chose salana right like they that whole Ethan and salana those are the two yeah yeah yeah um so I think there's going to be exceptions but I think it gets back to that same like tvl argument we were talking about before like you have all this Economic Security locked on ethereum and like maybe it's not moving around like a ton there's not a ton of velocity but it's like we're choosing it because it it feels like the the safer more secure option um so I think that yeah I feel like that that is part of it like eth being the the Trad pie chain the other thing I play here is is like uh just the decision to roll your own Chain versus launch your token

on someone else's blockchain um it there's a real adverse selection problem when you don't let someone roll your own train like adverse selection in the sense that uh usually the best or the most ambitious Founders uh or like the organizations that have very specific requirements and have to actually get those requirements done are going to choose to roll their own chain uh because you get to like control the economics you get to control all sorts of like who gets to use a chain to some extent right um and yeah you get like sequencer fees and me I mean it's like no joke right so especially if you're um especially if you're like a corporate

that can't launch a token like base there's no way they yeah I mean they like yeah they wouldn't just launch a so like they get to they get to get sequencer fees you know and that's the way that their uh that's the way that their stock is valued right so there's no concept of like launching your own chain on salana that you get to keep the feed whatever right um so over time that becomes more pronounced right like Solana's going to lose these kind of organizations that have to that really want to maximize on revenue and on fees to layer twos or something like that and uh or to like Founders that want to like control their own ecosystem right yeah yeah what do you um what do you think ends up happening to salana because I think there's a good argument to be made

that everything eth is going through now salana is going to have to end up going through and it's probably the ne the next cycle salana will be in the place that eth is in today curious to get your guys's predictions on that I'll just say I I think like salana is objectively crushing it they're Far and Away the number two yeah today I don't I don't mean that demin the fact that that's could even be taken as like an insult uh is good like um and it sometimes flips eth like on fees and Dex volume and things like that um and we we have like this very uh like subjective pie P of data which is where are all the best Founders building uh that non VCS typically don't really get to see I mean

you get to see it too of course but uh it's clearly like either ethereum or salana and the number three is is very very far behind um I do think like yeah some of the value some of the rapid appreciation of soul in uh 2023 was uh obviously because like people love buying a low Val chain that can run run further and run faster right than a really high value value chain um but yeah they've like out executed the EF by a mile um I guess in terms of the problems like yeah salana also has to think about how do you recruit the best infrastructure developers right and I think you're seeing this a little bit like a lot of like long time salana people are sort of quietly leaving or

quitting to start their own projects double zero is is kind of an example of this it's like a very cool project to create the new internet and it's a lot of people who used to be working on salana um I get it like how yeah you want to like be a Founder a lot of Economics to that you can launch your own token yeah um how do you pay for developers like eventually jump and before that FTX like can't like subsidize this forever right um I actually think my like my prediction is that uh Solana will Maize pretty significant like whether whether it wants to or not it will monize pretty significantly in 2025 um probably not to the same extent that eth

has right or as intentionally but how else can it get like how else can it track the best infrastructure developers how else can it like experiment with like alt VMS and other approaches that you know the core team doesn't want to experiment with right will this be top down like will this be totally saying we need to modularize or will this be Founders like uh like Zeta markets launch their own L2 like will this be just Founders saying hey look I'm launching an L2 I mean I think that the probably the thing that is the best about the salana foundation is how uh receptive they are to user feedback right so probably both you know like they don't have their heads in the sand

they're not uh they get it they see they see the writing on the wall when it comes but yeah it's obviously it's obviously Bottoms Up to start like um yeah you have these like really great projects and dexes that want to roll their own chain you have a corporate come in and say like we need a sequencer or else and then like okay well we'll figure some way to work with you right um there's some projects like doing this already there's like projects to decentralize like to build like to build like a a sequencer style rollup on top of uh Salon like Rome protocol or something that does this and they work pretty closely with the Sal Dev team so you know it's a bit of both right um obviously it breaks down the monolithic or composable integrated whatever the word is uh narrative but you know it's

better than the alternative right yeah Bo bod do you have any thoughts on salana next year yeah well I thought it was interesting what you said like in next cycle if salana has the same issues that ethereum does like what we're talking about like yeah then they're going to have they if they go modular something that we didn't discuss in this whole conversation is like the shitty user experience right now with modular like yeah the comp I saw you guys mention composability Kyle in the piece uh yeah well Kyle I mean Alex you talk about he he reviewed the piece before I saw yeah um but yeah like so if ethereum like kind of figures out all these ux issues like yeah it's a pain bridging you know from all multiple chains and managing different tokens and stuff like maybe

Salon Salon is going to go through those same growing pains and they can take advantage of some of like I don't know the the tech or the cross chain communication or like the abstraction layers that are built for ethereum um so yeah maybe they'll go through the same I don't really have a a prediction for kind of whether they go modular or not but if they go modular like them going through the same Growing Pains that ethereum's going through right now uh could be repeated too what do you think performs better than 25 ether soul I mean Soul's looking pretty good uh I think it's hard to say between the two um you know those both of them have

under underformed Bitcoin in 2024 actually um I would guess the biggest winner like whatever whoever it is the biggest winner like from a from a Roi perspective will be a new L1 uh that's trying to be a better Soul or a better eth we're probably gonna start seeing like some better eth too this cycle um and I would guess like yeah unquestionably a major L2 will also outperform eth in uh in 2025 as well right I don't know what do you think well for me like I don't know like a basket of ethereum modular uh will

outperform salana uh I don't know if it's for 2025 really like you think like some combo of like arbitrum optimism Celestia what whatever insert your bags whatever they are like that will really interesting well I think like uh yeah that's obviously like a little bit more complicated because how do you how do you weight it you know and like how often do you rebalance it but I think some sort of like yeah combination of those things um or at least like a major not like a really subscale coin like a major L2 I'm sure will outperform salana H probably a couple of them right yeah I me there aren't that many major l2s it's like I don't want to name names because I'll

inevitably forget them but like there's about five major l2s yeah I mean more more coming but yeah huh I'd take the other side of that that's interesting all right I mean the consensus trading crypto is that salana will outperform those I guess just because they've been performing so poorly but yeah I think that's an interesting counter counter take is there something that's driving that or is it just like look Souls up 25x and most of the modular coins are like down or flat I feel like there is some mean reversion to it I feel like things do do mean revert but uh I guess it's also a question question of like

uh market cap versus token like appreciation like you have all of these like new layer twos coming to Market like a movement that just you know launched at six seven eight billion dollars like right from zero yeah so it's like uh I think there's going to be like more of those uh coming to Market uh like exciting kind of token Launches on l2s so 0 to eight billion uh is a yeah pretty hard hard to beat yeah I mean you also have like Mega and manad and uh Bara and like I mean just a whole bunch of folks so yeah yeah totally I mean you even have like layer twos that are svm on uh on ethereum right so I think it's just like a bet on uh cool

infrastructure and like Solana and the salana core team not having a monopoly on that right like yeah like something very interesting will emerge from this really cool technology and the developers will really want to flock to it and people want to buy it and eventually probably having like dozens or hundreds of teams working on this and in their startup mode like working non-stop whatever right or founder mode whatever it is uh something like that and also the fact that salana is also really really high already something between the combination of those two things should lead to some like pretty surprising results I think yeah cool um it would be really weird if like it all

stopped here like I you know like Road was the best thing possible you know yeah I don't think that'll be the case I mean I I think we'll be funding l1s and l2s into eternity basically like I don't think we're I mean I saw a cloud provider just raised 200 million the other day like there's it's not like you know we have AWS and Azure and gcp so we're done funding cloud like yeah well the issue is I mean actually we were done funding Cloud until AI happened well now we're back yeah now now now we're getting a whole new cycle of cloud like AI optimized Cloud right yeah and there's like there's a lot more of those like when we say AI happened there was some like crazy Tech paradigm shift that changes

things that you know and you have to like reorient your technical architecture to make it work and it if you don't do it it's like a 10 or 100 x so maybe we fund l1s and l2s for another five years and then we stop and then Quantum happens and then uh we have to fund l2s again and L1 but like there's a lot of good stuff that I mean like privacy would be cool kid I'm kidding yeah another 100x Improvement like let's get 500,000 TP like obvious if we get an L2 that does that though or an L1 or whatever like I'm sure that would salana is gonna have and ether gonna have to compete or whatever right I guess it'll like we're just so I say this like the internet's like 40 years old right maybe 50 and it's kind of and I guess AI is

part of it but like before AI things were getting pretty slow like all the value on cool infro was getting built by like four big companies now that's starting to change so I'm sure that'll happen eventually like but you know probably 20 years from now right yeah yeah uh as we think about wrapping any other uh contentious predictions for 25 I think uh I think it's the optimism is probably pretty warranted uh around the US you know uh I think there's like a ton of random positive convexity like positive insanely sort of surprising but if you look at it in a grand scheme of things not surprising things that could happen uh when the US is so incredibly

bullish on crypto yeah the Bitcoin Reserve is like one of those there's probably like four or five others on the horizon that could be like really really good news I feel like in crypto are always predisposed I mean at least I'm predisposed to find to to think that the good news is is never going to happen like I thought like when Facebook was going to launch a blockchain in 20 what was that 2018 2019 that was going to change the world but and then it you know got shut down right um but it feels like the things happening in the US at least are like of that level or more you know yeah yeah yeah the only uh we this is kind of just an interesting kind of more like VC Market thing but uh like the VC

Market is still like very very very much below its highs in like q1 of 22 in terms of capital deployed so I think that's going to uh increase a lot and and maybe reach prior peaks in 2025 yeah it feels like that could actually be a cycle extender in my opinion like if you look at the charts yeah we're we're way down from from 2021 right and way way way down from like Q3 Q4 21 um and it feels like they're starting to be ensus that like I don't know prices will Top in like somewhere between May to October of 2025 but the thing that I would argue could extend it is the Venture money has

been a little delayed this cycle um for for many different reasons regulatory FTX like a whole bunch of different stuff funds just fun life cycles and raising I think most funds are raising right now and starting to close their new funds right around this time I would say um and so all of that deploying happens in you don't deploy in three months right you got to call the capital you got to deploy so I think the deploying will actually drive the cycle a little farther than people are expecting so you think maybe the the highs will be pushed more to like Q4 maybe even q126 I have I am got you know the wor I'm a horrible Trader so I would not listen to me I mean I originally was basically just I was I I used to think it was probably fall of 2 of 25 like

September October time frame and then I started thinking like maybe it'll actually be earlier and actually row started to convince me it would be a little bit earlier like May and then if it's going to be may you might want to front run the people selling so then it's like April or March and then but honestly it's just not fun to think that way you get you get too bearish um and you it's like we only have three more months of this cycle that sucks so I'm now reframing how I talk about this publicly to say this cycle is going to be extended that's why the thing is some of that is baked in already in the sense that historically most institutional Capital comes in via Venture and private markets and that has like some effect but not really that much on liquid

markets like I mean it does eventually but it takes a while to trickle through it might take multiple years um and uh and so you see this like if you actually look at like uh when the very biggest uh both Venture fundraises and just like the big the big multi hundred million like the definity round and the telegram round yeah yeah this was was two cycles ago they all happened like mid 2018 like yeah EOS EOS was 4 billion in May of 2018 like that's six months after the highs totally totally yeah and the biggest rounds by far were the ones that were like a week before terara blew up you know that was the easiest time then Tera was a was a bit of a you know that

caused a lot of stuff to happen to me like that was a bit of a shock but uh but yeah but at that point like bitcoin's already down like 30% or something right so so yeah institutions are very slow moving you know like even today you look at the I'm sure you have like people on who talk about this but the ETFs they uh have very little institutional Capital coming into them it's mostly retail it's retirement accounts maybe some like registered investment advisors the stuff like the pensions the sovereigns the really huge pools of capital have not really come into crypto yet at all and it'll take a while for them to do it you know like months so if they choose to yeah um Alex and Alex we can go forever um but I have to jump and

I know you guys do uh too so this is great thank you guys for coming on um we will link the piece that you guys wrote about modularizing Ethan was it a good idea or a bad idea and the impact of it and what that the future could look like we'll link it in the show notes um yeah thank you guys for the time thank you Jason hey everyone thanks for watching today's episode just wanted to quickly thank today's title sponsor scale scale really is one of the best chain experiences out there today and I've used so many different chains there's a reason they are gaining so much adoption in both gaming and AI use cases hit the link in the show notes to explore the scale ecosystem [Music]