How Ethereum could become the foundation of global finance

Transcript

as you have institutions globally and players globally come on chain if the world is going to be mostly tokenized real world assets which I think there's a lot of assets out there so if mostly tokenized assets live on blockchains there's going to be exactly one collateral asset that's a store of value that doesn't have any counterparty risk globally and that's ETH itself GM good morning welcome to the Milkro show the daily crypto show where the Fed's money printer has more miles than your college Roommate Civic. I'm your host Ky Reedhead. Today we're joined by Vivec Raman, co-founder and CEO of Etherealize, and Danny Ryan, co-founder and president of Etherealize as well.

Today we're going to discuss why and how institutions will move on chain. Danny and VC's thoughts on the future of DATs uh and value capture for ETH and of course maybe we'll get into some price predictions around ETH or adoption predictions around Ethereum. We're going to go into a lot of things around the Ethereum world today. So, it's going to be an exciting uh exciting discussion. Today's episode is brought to you by Nexo, the platform that grows your crypto without locking it away. And Figure Markets, grow your cash like a bank. No lockups, just real returns. All right, let's bring in the boys and let's get started. VC, Danny, how you guys doing?

>> Doing great. Great to see you. >> Yeah, thanks for having >> awesome. Well, let's get things started just with um I want to do a little bit of intro. So, I I'd love for you guys both just real quick um give us your your quick background and just explain what Etherealize is uh to the listeners if you don't mind. Uh, VC, let's start with you. >> Cool. Um, Danny and I have complimentary backgrounds, which is sort of emblematic of of Etherealize. Uh, I'm not that new I'm not that OG in Ethereum. Um, I spent 11 years on Wall Street. Uh, I was a sellside trader. Uh, which means I was trading uh at several banks, Morgan Stanley, UBS, Deutsch Bank, Namira. I traded really esoteric products in credit, specifically high yield bonds, distress bonds, loans, credit default

swaps. And to me, I'm a technologist at heart. I got sucked into Wall Street because it was the coolest talent. It was really, really high-profile. It was a really fast way. It was a meritocracy. Um, and so I came into that out of college. But after 10 years of being on Wall Street and hopping from bank to bank to bank, I saw zero technological progress whatsoever. And that was just surprising to me because you it I saw in the in the 2010s um the fang stocks rose and there was a huge huge wave of of the tech sector rising and the banks never caught on. So I quit everything and then serendipitously when I quit left New York City, left the whole Wall Street world behind. Um, I got introduced to, very ironically, a team of Ethereum

Foundation security researchers working under Danny, unbeknownst to me, and they taught me about Ethereum. And they taught me about how it was a settlement platform. It was a blockchain that the whole world could build smart contracts on. And I started going down the rabbit hole and realized that this could actually be the answer to upgrading Wall Street. And that was 2020. And so for the last four years, I sort of took it as a mission upon myself to go back to the network I built from Wall Street. I still kept amazing relationships there and love everyone there and said, "Hey, why don't we start injecting technology? Why don't we start using this whole public blockchain thing?" And for three of those years, I got walked politely walked out of rooms. Um people were like, "Cool." But uh it's too risky. The technology is not ready. We're not

allowed to use this. Last year, all of that started to change and uh instead of being the crazy Ethereum guy, people were like, "Wait, come in and and tell us a little bit more about this Ethereum thing. Why is Larry Fin saying the whole world's going to be tokenized? Why did the ETFs just get approved even though we were in an oppressive regulatory regime?" And so, again, I've been trying this this what became etherealized for a long long time to get institutional adoption. when we felt that momentum shift um we wanted to mobilize and uh I knew that to actually go to institutions credibly and talk about Ethereum we needed real legitimacy so we went to the Ethereum Foundation got a small grant from Vitalic and the EF uh started Etherealize and I mean it's been a roller coaster since but the the mission

is to on board as many institutional players and assets and bring as many as much utility to Ethereum as possible. >> Love it. Danny, why don't you uh take the reins? >> Yeah. Um I I was at the Ethereum Foundation for I don't know, seven, eight years. I ran their research group and protocol group and worked on like high level strategic stuff while there my hands I had my hands deeply in in the merge. So everything proof of stake for Ethereum helped drive research, helped drive specifications and helped uh spent a lot of time just working with teams across the world getting that thing over the finish line. Um I left last year to

come up for air just my mission was uh was accomplished and uh it was I was you know curious to see what else the world had. Um saw the shift in in the regulatory environment. um saw people like Lar Inc. saying it's time to actually use these systems. Um so got linked up with Vivic and have you know dived all into uh onboarding Wall Street which str like if if you told me that a few years ago I' been like no why like why why would I care about that? Like that's I'm I'm like crypto native. I care about, you know, but I I really I see this this time as uh very critical, right? Like crypto was was attempted to be regulated out of existence um in the last administration.

I was personally served by the SEC. Um now I see the p pendulum swing heavily heavily in the other direction. Um but I think if we onboard capital markets during this window of of of opportunity, then it's not going to be should crypto exist or not. it will become oh crypto exists. It's actually really valuable for society. Um let's like figure out how to regulate it in a reasonable manner rather than this kind of binary black and white world. So very um very exciting opportunity in time but but also like very missionoriented. I think this is how we really you know bring crypto into the fabric of society.

>> Well I think you guys started the at time too. there was just a lot of like um mixed feelings about Ethereum in general and their and their business development team and their marketing team which I mean they don't really fully have that but they just didn't really have someone that was reaching out and and trying to bring in others uh institutions and otherwise into the Ethereum world whereas you know some of the newer chains they've got full business development teams and they're spending a ton of money on this and so I think you guys came in at a good time to do that. Let's um let's zoom out just real quick. you guys wrote a a report recently or theorized it on like why Wall Street needs blockchains and why Ethereum is is is going to be the blockchain they're going to use. Can you

just walk us through the sort of macro level of like why does the financial world need a blockchain? Uh and then uh and then maybe we'll hit on that of why Ethereum is probably the right one for them. But if you can guys just give us the like benefits, the value ad, like why is it that they need to come over and and use blockchains? I'll start it off because it's very very near and dear to me and it is a real mission. Wall Street is and spec specifically US capital markets are the most efficient in the world. They're the biggest in the world. Um they're the home for capital formation and it's unlocked so much innovation globally. But Wall Street operations literally operate in the stone age with stone age technology.

like they still use faxes, they still use emails to to settle trades, everything is still done voice over the phone. It's it's comical at the lack of technical innovation given how powerful Wall Street capital markets are. And so it's really really hard to have something that's already working very well that's the leader and that's the leader globally change. And the last change that we saw um for Wall Street was in I think the 1990s when stocks went digital from paper settlement. But that's really it. Like nothing really changed. And that that's part of the reason I left because the bond world still settled. It took days not minutes or seconds. What blockchains do um is they allow assets to be digitized and

put on a public a publicly accessible platform. And by doing that, trading, settlement, tracking, commerce becomes much easier. It the back office operations become much much easier. And that's a huge unlock. It seems not that sexy, but it actually just increases the velocity of money and velocity of trade. That's so so important. And that was such a big light bulb moment that I was like, this is a mission to bring as many Wall Street assets, institutional assets onto public blockchains because it goes beyond Wall Street as Danny said, like that's a starting point, but it opens up access globally to retail to everyone.

And that became a really big mission. So then when it comes down to where what is a public blockchain that can actually facilitate all of this commerce, it has to be something that's global, neutral, decentralized, has 100% uptime, and is reliable and trusted by everybody. And that's Ethereum. So when I looked at Ethereum as an outsider, as a Wall Street guy, it was the only option. It was the only thing that actually made sense that could onboard the world's capital markets. And as I've gone through the journey, it's gotten more and more clear that Ethereum plus this layer 2 ecosystem is the best architecture. And if we're going to upgrade the financial system has to be on the right rails. I think the worst thing could happen is we choose something that's centralized that has that's a company that has business

development masquerades as a blockchain and onboard too many assets and then breaks. Um we need the biggest global neutral technology. And so that's what we wrote about in the report. Um, Wall Street needs blockchains because blockchains are the place where assets can be digitized and the blockchains that we choose need to be global, decentralized scalable >> right? >> I always >> go for it, Danny. >> I was going to say if you if you look at some of these inefficient um Wall Street markets, they're riddled with middlemen and manual processes. With a with a neutral blockchain, we get a single source of truth and we get native programmability. And there's all sorts of other things that fall out of it, but like just those two things um are a huge huge huge unlock for Wall Street,

>> right? I I always give the example of like just go into a bank and try to like I don't know, open up a bank account or send some money to someone across, you know, across seas and it is the most like you actually feel like you're back in the '9s. Even like the banks kind of look old and shitty. the people in there are generally pretty old uh or like a little bit clueless and then it's just like I could fly over to Europe faster with a with a thing of cash. Uh then I can send my money over to the bank and I'm like how does that make any sense in 2025? It's absolutely insane. So that's just like an easy example. But then you think about all the things that make up the financial system outside of just like a you know doing your normal

banking and all of that can be sped up, can be more efficient, can be cheaper, all these different things. Um, so I think there's, yeah, there's so many reasons of why Wall Street and finance in general needs to get on a blockchain. Um, why has it not happened yet? Like we since 2017, we're like institutions are coming, they're going to be building, you know, they're they're here and then they're never actually here. And I think this is the first time where when I asked this question, it's like, okay, it's pretty obvious they're here at this point or at least they're starting to be here. What's taking so long? And like what inning would you say we're in? like what's what's holding them back even today from just like you know Black Rockck and all these guys like launching full on like some of them are slowly

dipping their toes in and we're seeing a little bit here and there but it's still extremely slow. Is it just is it regulation? Is it just institutions are just slow as heck or like what are your guys thinkings around this? >> I would condense um two major components into maturity, right? Regulation was just it was not mature. there was not clarity and and we're beginning to we're really making headwinds this year um in into doing so and uh these platforms also they needed to be more mature like Ethereum's been online with 100% uptime for a decade that's different than three years quite frankly uh the security tooling and dev

tooling and everything in the Ethereum ecosystem is I mean it's world class it's institutional grade right now. Whereas a few years in, it's like the chances that you accidentally lost $100 million because of some silly bug because you didn't have like static analysis or, you know, proper auditing infrastructure in place was kind of high. Like we not a lot of money is lost through these like stupid errors anymore. And so both like people's understanding, regulatory understanding and kind of just like integration into uh the psyche of of America and Wall Street like that has become more mature and the platform has also become more mature. So I think we're we're certainly that's a major major component of why this didn't happen a handful of years

ago. I also think that like banks are feeling like they need to innovate. Banks are worried that FinTech's going to eat their lunch. Banks feel like they need to adopt or they're going to be left behind. Um but at a certain point like they're not necessarily major innovators and um I think that in the past especially in like 2017 era it was a lot of oh we'll go ask the banks what they want we'll do pilots we'll like you know we'll consult etc etc whereas I think what we really need to do is we need to walk into there figure out what the problems are and create new products and innovations that draw and pull the entire banking sector and Wall Street

sector onto blockchains. Um, it's not going to just happen by accident. And I think the uh you need the best in the world from the blockchain side and they need to understand the Wall Street side and we need to compel these assets on chain through like real utility, not just vapid kind of partnerships and proof of concepts and stuff. >> Are they open to it yet? Like when you go in there and you're like, "Hey, you know, these are the problems we're seeing. here's how we can fix it with blockchain. Are they like, "Okay, come come teach us. Like, let's build this." Or are they still like, "Nah, get out of here." You know, we don't really care.

They're scared of innovation or they're scared of, I don't know, crypto replacing them. Like, what's the what's their mindset like or their perspective? It's we talk to them every single day. We uh we get new data points every single day and it's a resounding yes. It's unequivocally and it's changed a lot. We uh we started Etherealize almost exactly a year ago and there was real resistance. There was there was real skepticism even around Ethereum. People were like what is Ethereum? Why hasn't it had a presence? Fast forward I think Danny touched on the the important point which is the technology stack is now ready. The I can't understate how important the regulatory clarity um and how important that was. Stable coins are not part of

law like the Genius Act passed. Clarity is in the US government, the Clarity Act, and we went and testified in front of Congress on it. That gives institutions the confidence they need to actually do real implementations and not just be lost in pilots and and consulting things. And that's all happening right now. So, I think it's gone from skepticism to curiosity to now it's almost entering the stage of FOMO where uh if if banks and asset managers don't adopt some sort of blockchain strategy, they're going to be left behind. It kind of feels like AI when every bank and asset manager needs to integrate chatbt or some sort of LLM internally. The same thing's happening with blockchain in real time. And so yeah, the opportunity is finally right

now because we get asked that all the time. People always say why now? And it is literally the perfect confluence of tech being ready and um regulatory environment being ready. >> So what are the things that they're starting to implement? Like what are the trends that you guys are seeing today? H help the average person who's probably not in finance. the listeners here, many of them are not on Wall Street and they're like, "Okay, the institutes are coming, but like what does that mean?" Like what are they are they trying to build a product that's going to compete with like a or something or are they doing things that are just like internally going to make their lives more efficient or what does it mean when they're actually starting to come in and build and and and you know do things on chain? What is that

>> in in one phrase reinvent their operations and their processes using this blockchain infrastructure? So blockchain really becomes a part of a like the fabric of the banking system and it'll grow past banking. I mean I know we're going to focus on Wall Street for this episode, but there's a lot more you can do beyond Wall Street and I think it's really important to highlight that for Ethereum. But they leverage blockchain infrastructure to improve their operations and processes. The first step of that is digitizing their assets, which is the whole tokenization thing. So tokenization is the clearest product market fit. Tokenization encompasses stable coins. The first thing you do is you tokenize a dollar and it like you said when you go into a bank to send a wire to Europe it can take three weeks. If you tokenize a

dollar and send a stable coin it's instant. Um similarly as you bring on more and more of their institutional assets bank deposits um assets in fixed income stocks I mean the whole world. Um that's when the system really starts to gain momentum. And so that's what they're trying to do. And they're trying to do this on public blockchains, but they're also trying to do this in environments they can control and have some customizability and have some privacy. And that's where the Ethereum layer 2 model comes in because you can now have your cake and eat it too as an institution. You can have your own blockchain ecosystem, have a revenue source that actually creates new revenue upside for you, and be plugged into the largest blockchain uh ecosystem on the planet, which is Ethereum,

>> right? Um, so is is privacy a thing that like are there certain features that we still need to build or get out there for them to actually fully embrace this stuff? You mentioned privacy. I imagine that's one of them. Like right now, if it's just fully public and everyone can see every transaction they're doing, like it's probably not the most ideal thing, although I know it's a thing that crypto people love. It's like, well, a lot of companies, especially in the financial space, are not going to do that. So, is there more features we need to build? I mean, you mentioned privacy and and we kind of have that with layer 2 already. Are there more things that we still need to get right and and finish for them to really embrace this or where are we at in terms of the like um

infrastructure and the things that we're building? Danny, you already mentioned like the tools are pretty good, but is everything kind of complete or do we need a lot more? >> I think privacy is really one of the the last missing pieces for a number of these institutional markets. Privacy is table stakes. It's not like you show up and say we have privacy and they're like oh great like what a great feature. They're like, "If you show up and you don't have privacy, like they can't even have the conversation." Like, these markets don't don't operate in ways that you can just leak information willy-nilly like you do on blockchains. And so, um, you know, Ethereum, I think, is is leaps and bounds ahead of of the rest of the pack here. Interestingly, because of the massive amount of investment in ZK rollups for

scalability. ZK, zero knowledge. You can use it to condense information and ultimately get scalability through the ZK kind of rollup construction, but zero knowledge. You can actually hide information through these cryptographic techniques. And so we have all of these tools. I mean, literally hundreds of millions of dollars have been invested in uh productionizing ZK systems over the past five plus years in the Ethereum ecosystem. And so we have all of these tools that are rich and and we're able to um use them to architect private kind of bespoke private applications for to handle market needs, you know, and so you're seeing I think there's going to be a wide range of of the way these are built out. On the one hand, you're going to see um very bespoke kind of

applications built with advanced cryptographic techniques like ZK. Um and you're also going to see fully private environments, for example, like Aztec as as it comes up. And there's there's, you know, there's trade-offs to both of these, but Ethereum really, you know, has set the standard um for how we can kind of architect real true privacy in these open systems. >> If long meetings and judgmental bankers are your thing, Nexo is probably not. Nexo is a premier wealth platform built for people who value their time and money. It's built for people who have idle cash lying around and want it to grow fast. Whether it's Bitcoin, Ethereum, or even Forex pegged assets like USDT or USDC, Nexo offers up to 14% annual interest and access to cryptoback

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How fast do you guys think this is going to come? So like we I just was editing a report from one of our analysts uh talking about tokenization of stocks and he's like okay there's 100 trillion or whatever it is like of of assets in in equities. Um and that's beginning to get tokenized. We're at like 400 million or something like that right now. So it's quite small. Um but you know he's just kind of in the report was talking about you know that's going to come on chain because it's better on chain. It makes sense that it's going to come on chain. But there's still he kind of walks through like four different ways that that companies are trying to do it right now. There's there's, you know, you can wrap the equities, there's native uh tokenized stocks, but there's kind of different formats of it. Um, so we're

still trying to figure out what is the best one and and I think regulation plays a big role in that. But let's say, you know, we get the market structure bill, you know, end of this year or something. Um, and we start to get that regulation. Is this something that's just going to be a huge wave and it's going to come fast? Are we looking 5, 10, 20 years? Based on what you guys are understanding from the institutions that you speak to, how fast is this coming? Do you guys think >> it's going to be fast? Um, and I think the real driver for a particular market is going to be the the amount of the the utility that's unlocked. So equities are interesting because like you bring them on chain, you get 24-hour trading, you get global access, you can combine them in smart

contracts, you get you get nice utility. And so like there's going to be increasingly things are going to be drawn on chain. Whereas some of these more esoteric asset classes, they're in the stone ages. And so once you give them an upgrade, the the assets are just going to dump on chain. like they're they just in isolation there's like oh I don't need to have that entire section of my company that does manual checks for this asset class. Oh, we don't need that middleman anymore and these assets are just going to jump on chain. Um and so it's going to be a wide range depending on the asset class. But I I think it's I think they're going to pour on chain. I don't know. So >> is it not equities that are going to be the fastest? You're saying there's other things that you think are more suited to

come on chain first? >> I think everything will be parallel process. I think crypto has for whatever reason, again, I'm I'm more of an outsider looking in. I'm newer to the space. I see it as very tribal and zero sum. I think everything belongs on chain. So everything's a huge pie. Um I think equities are going to flood on chain. I mean, you're seeing NASDAQ said that they're going to enable tokenized stock settlement as well as regular waste settlement. I mean, tokenization of stocks is going to happen and it's it's wonderful. Um we think there's a whole the the world of assets is much bigger. though we think there's a lot of other things where you can have bigger unlocks as Danny said. But all that said, the thing that people forget is blockchains have been around for 10

years. Ethereum's been up for 10 years. People have tried this whole permission blockchain model, tokenizing things for the last 10 years. None of this is new. That's why when I go and do these pitches, people have heard of all this before. They're just like, "All right, why now?" Because they're familiar with tokenization and blockchains. It's been 10 years of trials and lack of traction and adoption. I think all of the adoption is going to come right now and it's going to get all unlocked by Genius, by Clarity Act, and by institutional and governmental um wills aligning at the exact same time. And when that happens, we're going to see trillions of assets come on chain very, very quickly. And I think it's going to happen in the next one to two years. And then it'll go exponential from there.

But we're not we're not 5 to 10 years out anymore. Like this is not a new experiment anymore. It's okay. >> How responsibly can we make this happen? And we think Ethereum is going to to benefit >> far greater than any other ecosystem because of that, >> right? Okay. So, I think for most people, they understand the bulk of why assets are going to come on chain, not just digitally native assets like we already have like Bitcoin, ETH, but like real world assets like, you know, physical assets that are going to be getting moved on chain because it's it's better there, it works better, it's more efficient, it's cheaper, etc. Um, so I think we understand that. You guys also wrote a big report around the value acrruel of ETH because if the whole world comes on chain and Ethereum is the chain where the whole world comes on

too. Okay, that's great. But there is still a world where maybe that happens and ETH the price ETH the asset doesn't really outperform, right? Like you could just get a ton of activity on Ethereum and maybe it's not that big of a deal. Why do you guys think that all of this activity or these assets that are going to come onto Ethereum, why will that translate into ETH the asset actually going up and doing well? Why will it acrue value? I guess is what I'm asking. >> Want to start Danny? We can go on for a while on this. >> Fundamentally, if the entire global economy is running on this platform, ETH the asset ends up with a very unique position. It is the thing that actually has the least amount of

risk in the system in terms of like the way the infrastructure works. It it is uh it does not require a counterparty. It does not uh require some legal contract says that this thing's in reserves. It does not require uh and it is it is borderless. It is uh you know all of the magical things that that kind of crypto is. And so it ends up taking a very like unique position in terms of just an an asset in the system. And so I think that's that's certainly like a a core component of it. Vivic can dig deeper.

I think Danny nailed the biggest use case which we say which is as you have institutions globally and players globally come on chain if the world is going to be mostly tokenized real world assets which I think there's a lot of assets out there so if mostly tokenized assets live on blockchains there's going to be exactly one collateral asset that's a store of value that doesn't have any counterparty risk globally and that's ETH itself USDC has counterparty risk. Um it's it's it's its circle. Uh you see a lot of permissioned RWAS.

They're going to stay permissioned. Um they're still going to have jurisdictional controls. That's great. That's that should happen. But to translate between jurisdictions between these assets, ETH is the trustless collateral. And that's worth I mean that's worth tens and tens of trillion. That's like the zoomed out real bull case is when everything is on chain. ETH is a permissionless collateral that has no counterparty risk. And that's really really powerful. If I >> if I zoom >> Yeah, if I zoom out, there's a lot on ETH the asset. That's that's the we wrote a we wrote a paper um e digital oil for the digital economy. That's the case where ETH goes to to tens of trillions or or much higher than that.

Um in the interim, I think people have focused too much on revenue for blockchain infrastructure when blockchain is exactly that. It's infrastructure. It's the rails to bring the world's assets on chain. And Ethereum is in its Amazon moment where it's scaling Ethereum and it's successfully scaling. There's a plethora of really successful layer 2s. They all have different um experimentation configurations. Some are ZK rollups, some are optimistic rollups, some are run by companies, some are run by the community. It's it's some are private, some are public. It's really wonderful to see the innovation happening on Elayer 2 is insane and the scale that's happening because of Elayer 2 is insane.

But we have to remember no one's onboarded yet. Like people don't use public blockchains yet. So people don't see the value acrruel happen. Every time a transaction happens on ETH layer 1 or layer 2's a tiny bit of ETH is burned. And so if we're at 0.1% adoption and we're going to get to 50% or 100% adoption down the road, that's going to burn a lot of ETH. ETH has a burning mechanism in there and ETH will be a deflationary store of value asset and it's going to be I mean the most attractive asset in the world to actually just hold as a store of value and and we see that happening as well.

We're just early, >> right? I I love that you guys focus on the collateral side. This is the thing that I always say as well. Forget the revenues, forget the burn even. For me, it's like you know what are we it's inflationary? I don't know, like half a percent or something. And it's like, if we can get it deflationary to, you know, half a percent deflationary, it's like, is that really that big of a difference? Like, not really. It doesn't actually really matter that much in the grand scheme of things when you look at the numbers. But if the activity and the and the value of assets that come on Ethereum just, you know, explodes and goes exponential and becomes massive, as you said, ETH is the the most um trustless asset on Ethereum, right? It has the least risk I guess you could say

because it has no custod custody. It has no third party, has no smart contract risk, all that kind of stuff. Like there's definitely some sort of value to that pristine collateral. It's like why is the US dollar so important in America if you're transacting in America? Well, it's it's backed by the US government, the US Army. Uh and so you kind of have it's kind of the least trusted asset, I guess you could say, in the US. ETH is kind of the same thing if you're going to have this massive economy on Ethereum, which it sounds like we all believe uh is is is going to happen. So, I think it's important to recognize it's not really so much about the revenues today. Maybe in the future it might be a way we value it, but if you guys think about how you value ETH today, you're

probably not looking at revenues and fees and all that kind of stuff. Or is that something you put into your your models? >> Not I I think revenues and fees will be important later once we've scaled to to absolute global adoption. But >> the fact that ETH is a store of value that has monetary properties today that are comparable and in some cases better than bitcoins today means that we see two digital store of value pristine store of values with different use cases. One is one is bitcoin and um and you can't do much more than bitcoin other than hold it. It's it's digital gold and it has its issues. The other is ETH which has a staking yield which people love yield. Um, it has a capped

issuance schedule. So, it has capped inflation. It cannot ever grow more than 1.5% per year. That's really, really important. Um, Bitcoin has a supply cap. ETH has an issuance cap. Um, and ETH is actually is it's useful. It's productive. It can be used as collateral everywhere. Um, and it becomes more and more valuable the more real world assets come on chain. And you have this call option that one day when the whole world's using Ethereum, you're going to get a huge re you're going to have huge yield. You're going to have deflation. It's it's it's one of the most unique assets ever and that's why part of our Ethereum mission. I mean obviously we want to onboard as many assets and institutions as possible onto Ethereum.

We also want to highlight that ETH is an incredible store of value for the ecosystem. >> What do you do you guys have an opinion on what happens to Bitcoin if this thing you guys are saying plays out? So Ethereum brings in multi- trillions of assets on top of Ethereum and it becomes the store of value and the pristine collateral within that economy. Does Bitcoin still fit in that world or do you guys have a strong opinion one way or another on this? >> Um, yeah. I mean, the the I think the the value of the asset that powers the global economy is has a far higher ceiling than digital gold. Um, also I uh I'm a firm believer that the security model of the cryptoeconomic security model of Bitcoin is is broken and at

some point in our lifetimes we're going to see some some nasty things happen on the Bitcoin network. So I'm not uh my that's not my horse in the race and for a number of reasons. But I, you know, right right now, obviously, Wall Street's bought in. Um, a lot of the the globe understands Bitcoin and it's kind of, I think, the stepping stone to to understand the thing that is uh more exciting and more powerful, which is ETH and Ethereum network. >> VC, do you agree? >> I I just love approaching the space positive sum. I think there's a place for for a few store value assets. Um, I think Bitcoin was first and has again has a place. I think the network value of um a store of value where the world's assets

are transacting and it's uh and it has a yield and it's productive is orders of magnitude higher. But um no, I I agree. I think both can coexist peacefully. I think Ethereum ETH will flip Bitcoin uh as we start to see those those upside catalysts for for ETH. So I think there's more upside in ETH. I think it's a more interesting asset and there are security issues. Ironically, one of the mitigants could be that it Bitcoin moves to proof of stake and lives on the Ethereum network and is a massive massive network. So, it can still be a multi- trillion dollar network just on on Ethereum. So, there are solutions. I think that they'll be addressed because Bitcoin's uh it's it's very big. Um, right.

>> So, things like quantum, things like minor security can be addressed. People can mine at a loss if they have to and and figure it out. But no, I I just think if we want to look at growth and positive sum um outcomes, I think ETH's upside is so high uh that that it's just the most interesting asset by far. >> Yeah, I agree. And I think there's a lot of others that agree, which is why I would say uh the DAT world, the Ethereum uh space has really picked up. Uh we've seen, you know, I don't know how many DATs we have now, at least 10 probably uh that are trying to accumulate ETH because I think they all believe the same thing. And so I want to transition into your guys thoughts around DATs since was it May? I think is when Joe

Luben uh announced that he was launching uh ESBAT uh and we've seen this you know proliferation of others afterwards. Um and that has been a a huge catalyst I think to drive the price of ETH uh up to I don't know where it is today but it went up to close to 5,000. Uh it's probably around 4,000 or something today. Um but it was down at like 1,400 in April. So it it it drove it you know uh quite a long ways. I'm just curious your guys thoughts on the importance of these DATs. Uh and um so first let's start with the importance and then I just want to understand like do you think this is still early days for DATs in terms of like right now they kind of just raise capital and buy ETH. Do you think that they're going to do a lot

more and they're going to look a lot different in let's say a year from now or two years from now or five years from now or like what is the role that these have in the Ethereum ecosystem? >> Danny, you take the first one. I have a lot of opinions on the second. >> Uh I have a lot of opinions on the second as well. The uh it's probably early days. I mean, I think these will go through lots of evolutions. Like the game for u especially probably the small players is going to be leverage and leverage is always exciting to watch. Uh I think that some will succeed, some will fail, some will merge. Um and and we'll eb and flow. It'll be, you know, a fun thing to watch and I think overall probably a good thing for the the uh ETH the asset Ethereum community. Um I will

jump in. I do think that uh a good version of these and and the ones that I think will be lasting are going to become kind of the poster child for the future of onchain asset management like ETH ETH becomes kind of that root uh and basis in the network. But as as the the global economy moves on chain, these are going to be the the best positioned actors to begin to see these uh innovative you know onchain yield you utilizing new real world assets utilizing native DeFi um having global access all sorts of stuff like I do think that the game isn't going to the game is going to continue probably be for these companies to to accumulate ETH

but the methods in which they do so is that they're going to be using the chain they're going to be innovating onchain. Um, and so that's why I think they're beyond just people like buying and holding, you know, number go up ETH buy and hold, but the it's really I think the innovation and the competition uh to to for that innovation that's really exciting for me. >> VC, you have something to add? Yeah, we have very similar views on this, but the the point I would emphasize is there is yield. There are yield opportunities that these treasury companies can unlock and showcase for the rest of the world. The ETH treasury companies allow Ethereum itself to effectively have earnings reports. It

allows uh every quarter a slew of different companies that hold ETH to showcase why they're differentiated and what they do with the Ethereum ecosystem. Some will stake, some will restake, some will use their assets on um on different layer 2 networks and earn additional yield. Some will have cash reserves and and then put and invest in real world assets which are tokenized um on Ethereum. So there are so many different ways to use Ethereum to generate yield and differentiate that I actually think a multiple a plethora of ETH treasury companies can exist. The part that I'm sort of baffled by is there's a lot of Bitcoin treasury companies and Bitcoin you can do exactly one thing which is hold it. So um that's a game of scale and that's a sc a game

of of leverage and only the biggest companies can access leverage and that's Micro Strategy. So Micro Strategy has had a huge head start. They've paved the way. They've raised a lot of debt. Um that's really interesting debt. Um they call it Bitcoin yield. I'm not exactly sure what that yield actually is. Um, but one company can pull it off and they will continue to. I don't know what the differentiators are for the others. That being said, for e every single one, whether you're 12 billion 12 billion like Tom Le um and you're playing the scale game, or you're one of the smaller ones, but you're doing block building.

You're actually um you're actually staking yourself. You're reststaking. Every single one can be differentiated. And that's really really cool. I think these will be pillars for the ecosystem going forward. Again, some will some will fall, some will rise, some will merge, but they are a very very good thing to amplify what the use cases for Ethereum are. And the more use cases exist on your blockchain, the better of an ecosystem there is for DATs. And this is where ETH again shines. >> How big of a deal are these these earnings reports on a on a quarterly basis? Because I think one of the good things about Micro Strategy is that you had Michael Sailor out there, one going on TV and just screaming about Bitcoin every day. And I think that helped taught like it taught a lot of Wall Street about Bitcoin, right? Uh, and

then they had their earnings reports where they talked about what they're doing with Bitcoin, etc., and why it's an important asset. Uh, and I think that was very educational to Wall Street and and you know, to to uh the masses to be completely honest. Um, Ethereum, we now have that at a whole another level. You've got like, I don't know, 10 companies doing this now, which I think is super cool. But as you said, they can do so much more. So, they're able to like deploy a so in their earnings reports, they're going to be talking about how they deployed NAV and what they've earned and, you know, the different strategies to do that. Um, to me, that I think is one of the most exciting things. Do you think this is a big deal for the other institutions to sort of like learn about Ethereum and

like figure out what's all possible on there? Um, or do you think that they were going to figure it out anyway and they're not really paying attention to what these stats are doing? >> They weren't going to figure it out anyway because if I just speak from personal experience, I never had any inkling to experiment with anything in crypto while I was on Wall Street. You're you're you're taught to play it safe, which is a good thing by the way. Like the reason the US capital markets are the biggest invest because it's not move fast and break things. It's literally move very slowly as regulation allows and have safety and security and reliability and uptime. US honestly sounds a lot like Ethereum. Um that's what they're optimizing for. So yeah, now it's it's a show me game like people need to see precedent. Institutions need

to see precedent. If they see treasury companies that are allowed to take more risks that can try different things say here's how a works, here's how LPing and unis swap works. Here's how deploying on layer 2's work. here's how using um deploying your capital on an L2 is advantages to an L1 potentially once they see all that all of the Wall Street analysts are going to dig into that they'll they'll have models they have models for all the different um DeFi applications it's going to create a Cambrian explosion of curiosity and then people will start experimenting and they'll start using this and things a lot of Ethereum's applications have been battle tested through a lot of ups and downs over a decade so um it's it's the safest place to deploy real capital and that's We're going to see that proliferate.

>> You you mentioned that with Bitcoin, there's kind of only one that can make it because they can't do anything with it. With Ethereum, maybe there's going to be a bunch of others that can make it because there's just lots of different things they can do. What is it that you're looking for in these in these ETHATs in terms of trying to guess which ones are actually going to make it longterm and become the biggest? Like what is the thing that they need to do to get right? Is it just who can generate the best yield? who can, you know, is doing it in the more like institutional grade way where it's sort of the safest and most riskadjusted or like how do you guys look at um the success of these in determining who's going to who's going to make it long term?

I don't think biggest is the right is the most important metric for ET that specifically for Bitcoin it is because again the bigger you are the more access to capital you have for ETH obviously I think Tom Lee has the biggest head start and he's he's the largest by far and because of that he's going to have an MNAV premium and because of that he's able to continually accumulate more ETH that's enormously important and I'm really really really happy that um he's a flag bearer there but there can be small ETSs that are hugely profitable that generate free cash flow that um have unique ways to tap into DeFi that can just exist without needing to grow much more. So that's the thing like earnings reports are going to look pretty good once they start seeing the profit margins because it doesn't take a

lot of people or operational overhead to stake ETH or to restake ETH or to use DeFi and it scales with capital but the people don't need to scale once once Wall Street does see these are profitable operating models whether small or big. I don't think it's really about size it's about profitability. So, >> well, and it's also like you why do you you buy new ETH DAB? Because you want it to have more ETH per share over time. You expect it to have more ETH per share. So, like Bitmine has the uh you know, they have the they have the MNAV game, they have the size game, but as you see other ones begin to have yield games and playing different other types of differentiators, then that might spark, oh, they are differentiated. they're playing a

different game. I they can maximize ETH per share in a different way which might actually spur new kind of shifts in in kind of the innav landscape. So I I don't think the game's over. I I think that there's a lot of opportunity for innovation. >> I think the interesting thing is, you know, Sharlink hasn't been able to raise for, I don't know, three weeks or four weeks now or whatever because it's been in a discount. But every week they announce how much they've made off staking rewards and they've been around for less than six months and they're I think driving like I think their last one was maybe 450 or close to 500 ETH in one week uh from staking rewards and like I don't know what monetary like what number that is in dollars but it's I don't know probably hundred like tens

of millions maybe I'm not sure but it is a lot right and so um it's pretty crazy to see that you know they don't even have to raise capital anymore and they're already making a ton and like you said they don't have to hire more there's just that's automatic that's just coming and that's compounding too, right? And obviously they'll find more ways to raise and and do more things where they can ideally increase that that yield. Um but it's pretty amazing to see and like you said in Bitcoin that that doesn't exist. You can't do that in those. So um I'm excited to see where that all where that all goes. Um as we wrap up here, I just have a couple questions. Uh and these are going to be more predictions. So I want you guys to to put your hat on and and look into the

future for us. Um but two predictions. So, one, you mentioned something about ETH to trillions, I think you said. If if this all works out, uh, what is your guys more realistic? Like, where do you think ETH is actually going here in I don't know, whatever time frame you guys want, by next year, by 5 years, 10 years, like where are you actually expecting it to go? Um, you don't have to give exact numbers, don't worry. And then on the other side, let's look at Ethereum. What are the what are the adoption uh predictions that you guys have? Whether that's I don't know tokenized stocks some sort of TVL for that or it's you know users or it's I don't know whatever numbers you guys care about like what do you think Ethereum is going to look like in one year or five years 10 years whatever

again time frame you guys kind of look at so if you can give your your ETH prediction and your your Ethereum prediction that'd be great. Um who wants to start us off? >> Cool. I'll go first and Danny you wrap up with the future of Ethereum. It's exciting. Um for ETH ETH hit $1,400 this year and I was staying consistent. I still think it's a 10 to 12 to 15k asset this year. I think that we should have over a trillion dollars of network value this year. Um I think >> 2025 or you mean in the next 12 months? >> 2025. I said I said it was 1400. That's for this year. I think ETH should be Nvidia's market cap in the medium term.

Um that's that's in a year or two. I think ultimately ETH will flip Bitcoin. So um we we've written papers for the long-term value being tens of trillions or higher and that's when ETH becomes that global collateral that's trustless but in the short term I think 10 to 12 to 15k this year and then and then um and video's market cap uh the year after talk about Ethereum network I I I'll leave it with a directional um prediction. I think there will be a tremendous amount more of institutional layer 2s. Uh, I think the layer 2 model is going to be fully vindicated and thrive and really scale Ethereum. I think we're going to see uh trillions of dollars of real world assets on chain.

Um, and I think we're going to see some really really cool tech advancements in Ethereum that really is going to keep it the platform of the future. We're going to see um a lot of AI innovation. We're going to see a lot of zero knowledge proof based innovation. Um, Danny can probably expand on that, but I think we're it's going to be the innovative hub. It's going to be the finance hub and it's going to have a plethora of institutional blockchains built on top of it. >> Nice. Love it. Bullish. Danny, how about you? >> Uh, I'm not one to make price predictions. I will say that >> ETH is uh from my perspective, the most fundamentally valuable crypto asset. Markets obviously take their time to figure out um you

know to adequately price these things. Um, and so I think if you're betting on crypto, you should bet on ETH. Um, and then over the next few years, >> roundabout way of saying you're bullish on ETH, like so proper. >> Well done. >> If you're uh over the next few years, a number of trillion plus dollar markets are moving on chain. And they're not just going to move on chain in vapid ways. They're going to move on chain and be and have a ton of utility powered by them. Um, so that's that's definitely what we're betting on on Ethereum. That's what we're we're batting on and doing with our, you know, rolling up our sleeves and doing it at at Etherealize. Um, so I'm I'm very very confident of that.

>> Cool. Awesome. Well, guys, this was great. It was uh so nice to have you guys on. It's love I love to hear the kind of inside knowledge on what's going on in the institutional world because I think that, you know, a lot of our audience doesn't really get that. So, it's great to have you guys on to to share that. Um if others want to you know follow you guys or help you guys in what you're doing what uh you know give two seconds here to just share you know where people can find you or where people can help. >> Absolutely. I mean you can reach out to us on on Twitter uh at the ventures for me at Danny Ryan for Danny uh etherealize.com uh you can reach out there as well and we want to grow the ecosystem. anyone that wants to help us grow the

ecosystem, bring assets on chain, we're happy to talk >> and >> amazing >> just >> in Ethereum you can just do things like Vivic just showed up and was like no one's in these rooms now I am um don't don't lose sight of that it's an open community it's an open source community it's an open platform if something needs to get done just do it >> I love that you can just do things guys we'll leave it with that one Danny VC thanks so much for joining us really really appreciate you guys and everyone for listening in thanks Thanks for joining us. We'll see you guys in the next episode. Take care everyone.

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