How Ethereum Could Change The Outcome Of History

Transcript

And I'm bullish that this could change society where consumers and users and agents can be the ultimate winners. And I know I've been going on for a long time. I've been writing about this. I feel very strongly. We have an opportunity to change the outcome of history where consumers win. My name is Robbie and you're watching the rollup. And today I'm asking you to please subscribe, comment, like, and support our channel. We interview some of the best and brightest minds in digital assets, digital finance, and tokenization. We are doing this for you. So, please sit back, relax, enjoy the show, and thank you so much for all your support.

I feel like Joseph and I and uh maybe a couple others out there. So, we're we're it feels like we're a dying breed, Joe. It feels like we're one of the few that is left standing in a bullish Ethereum position. And so it's a pleasure to have you back. >> It is great to have you. Um and you are a hard worker. It seems like your partner is in Florida probably pregaming for Florida versus Old Miss. >> Yes. Yes. This Saturday big game. We are uh we are Gators, you know that. And so we've got a big game on Saturday. We're excited. Um I mean, how can you not be having fun? How can you not be excited with uh with what we're seeing out there? Uh I am bullish right now and I think we're through the worst of whether

you call it a cycle or a consolidation period and I think the best is in front of us. So I'm actually quite optimistic and bullish and I hope that comes through today. >> Yeah, absolutely. Well, um I I am as well. And I think it's important to remind people why we're bullish Ethereum somehow despite Ethereum being at the center of on the onchain economy and tokenization and tokenized finance being in the heart of its super cycle. Somehow people have arrived at a bearish Ethereum conclusion and that's not what we've arrived at. And so it feels like there's a disconnect. And I think this is why I think what happened is that we got two thesis that started to evolve as people were thinking through the winners

of this upcoming cycle. On one hand, it was people that called the hard money cycle the Bitcoin and the Zcash. And you know, there's gold that kind of is out offchain but still kind of plays into that. And then you've got the revenue meta and you've got the hyperlquids and the lighters and the pump funds and the aerod drromes and a lot of the coins and you know those that are um acrewing value from their protocols getting real traction real revenue and then acrewing that to their token. >> And then people saw Ethereum and they said look it's kind of stuck in the middle. The Ethis money thesis didn't really play out. It's not generating a ton of revenue despite Robin Hood chain absolutely flying in terms of adoption,

in terms of trading activity. You got Arbitum that kind of provides this middleware component to Robin Hood that does have a revenue share agreement that scales, but Ethereum has a flat fee component for its block space. So it even though Robin Hood's, you know, revenue is up 10x on its trading activity, Ethereum's revenue that it acrru is flat. And so people sort of look at that and they say, "Hey, how is this going to make sense in a world where a lot of these applications are driving a lot of revenue and we have other assets that are hard money, scarce assets that are benefiting from the accommodative monetary policy that we see at, you know, the highest level?

What is the bullish ethesis? Please remind people what Ethereum is and and why it is valuable." So, Ethereum has been building for 11 years since its Genesis block. And if you just start with the scoreboard, we're both fans of uh sports. Ethereum has over 50% of all stable coin activity happening on them. And stable coins are 300 billion today. They'll be trillions in a few years. Uh over 50% of tokenized real world assets.

And that is in the bottom of the first inning. There's only 30 billion. I would expect that to be in the hundreds of billions by next year. And then DeFi activity was built on Ethereum. It has the most TVL by a factor of eight or nine. And then when you add in the newest element, which is Aentic, Aentic will have to run where the liquidity is. Um it's not going to run on chains where there aren't stable coins, where there aren't tokenized assets. uh they need to be able to move money in hyper speed and at really paces like we've never seen before. So I would argue that this is an internet infrastructure story and that ether will end up being the trust

commodity for the future financial rails. So if you take a step back, Vitalik calls it the world's computer. I think Joe Loin and I uh would start with it'll be the settlement layer for almost all of finance and that is extremely bullish. And you talk about people uh who may not buy into this thesis. You know, there were some very prominent people who sold out and capitulated uh in June when ETH was trading at 1530 and they missed a 70% run just in 3 months. So this is going from narrative to production and I would be betting and we still have conviction a year later that this is the exposure that will be driving most of the financial system on

a go forward basis. So don't look at revenue alone, look at the scoreboard. And that's the bullish thesis even before Agentic is added to the mix. >> And and we'll get into Agentic because your former firm Black Rockck put out a new research paper that describes why stable coins and blockchains make the most sense for Agentic Finance. >> But first, Joe, I want to double click on two words that you just said. This this this idea of a trust commodity. Can you unpack that? What is a trust commodity and why does Ethereum fall into this asset class?

>> Sure. So, I spent 20 years at the largest institutions in the world at had a front row seat looking at how market structure worked, but also how people made decisions about their future of technology and the applications they used. And I know three things for certain. There are only a handful of things they care about. It's not hype. It's not sentiment. They want security. They want trust. and they'll go where the liquidity is and Ethereum is dominating on all three. So when we talk about a trust commodity, look at the use case you referred to which is Robin Hood built on arbitum, an Ethereum layer 2 protocol. All those transactions settle on Ethereum mainet. They use

Ether as the gas fee. And as you see more and more of these case studies of people building whether it's an L1 or an L2 application, the trust commodity is every transaction requires Ether to secure it and to make sure it's paid in gas fees. And while the revenue is low today, there are many businesses where you start by trying to dominate and win market share and over time pricing power happens. People knocked Amazon and Jeff Bezos without recognizing that he was building a new type of e-commerce. He wasn't just an online book seller.

People knocked Uber for subsidizing transactions for both drivers and users in the early days, not recognizing they weren't a ride share company. They were doing much much more. So in the future where today most of transaction trust on a T+1 basis involves human trust and insurance and contracts um in the future it'll be ether as the trust commodity that's securing transactions and as that happens more value will enure to ether the token just wait and watch and we've seen that narrative start to play out as people like Ark you know she launched yesterday a tokenized VC fund on Ethereum

When Black Rockck launches funds, they start with Ethereum and that is where uh that's the signal we should be looking at because they believe the security trust and liquidity and that's why Ether is the ultimate trust commodity. >> Incredible. Yeah, I I I I mean I think that's extremely well put. I think this idea of a trust commodity, you know, it gets lost a little bit when we are in these bearish market conditions and you know people think you have to show me the money. What is the price to earnings? What is the discounted cash flow? kind of lose sight of the vision that we started with which was to replace these systemically important systems or really evolve those systems into a decentralized cooperative. The biggest one that comes to mind is the

DTC, the depository trust and clearing corporation which clears roughly hundred trillion dollar in securities. I think it does between four and five trillion dollars every single or excuse me four and five quadrillion dollars of settlement volume every single year. And so quite literally on the scale of quadrillions um custodying you know over a hundred trillion dollars of securities. This is currently a privatelyowned industryowned cooperative. They don't have a public market cap and so it's difficult to value something like the DTC but we can understand because of its scale how systemically important it is given that we're thinking about Ethereum as the

settlement layer for all of finance and I think that is you know extremely important nowadays we can see the vision it is all of finance it's not just these cryptonnative tokens as we get tokenized equities Ethereum does be become this this truly decentralized you know, cooperative that is the settlement layer for all of finance can can certainly, you know, do the same scale of quadrillions of dollars of settlement volume every single year. Is the DTC the closest analog that we have? If you were to decentralize the value and put ownership into the hands of, you know, Ethereum token holders, si, would that represent a similar value structure

that we have between the DTC and Ethereum? >> I I actually think the internet is the better analogy. Um, you don't think about the fact that every time you transact, you are using the internet. Just think of the internet with a token where it requires the token to write a transaction on block. And as much as we're talking about Ethereum today, you should just think of it as the most programmable blockchain in the future we're going to be talking about the applications that are built on top of that by the Robin Hoods, by the ARCs, by the DTCC's, by the Black Rockcks. But underlying that will be uh a blockchain based system of Ethereum. the value will

inert to both the application layer and this decentralized uh infrastructure layer. But my hope and belief is that in a couple of years from now, we're not going to be talking about the blockchain. It's just going to be what underpins most financial activity in the world and most agentic activity in the world. And um that is how I would think about it more than a cooperative because the DTCC does have owners. It's almost like a country club. every member takes responsibility. Ethereum has no CEO. It can't change the rules of the game. And that is probably the better future analogy. It's censorship proof. You can't get debanked and you know the rules are not going to

change from under you. So that is the better analogy. And we've been publishing uh over the past week uh a lot of thought pieces around the agentic economy ironically in parallel to my old employer Black Rockck. and a lot of them converge and I think we're underestimating what the impact's going to be over the next couple years not just on the crypto ecosystem but on finance at large it is going to be disruptive and it's going to be really beneficial for consumers. >> Yeah. So, so let's talk about the agentic economy. I think with the release of Facebook's Muse, XAI has Grobbot and then the duopoly at the top of the AI frontier being anthropic and open AI, I can very easily see, you

know, consumer level agents being released from the frontier labs very very soon. And then you have this consumer ready network of agents that will be online doing several things both in finance and beyond. And so the agentic economy is very real. There are some standards that have started to develop. X42 being one of them. And we were at the ARC mainet uh launch that talked and we were talking to Jeremy Aair about the Agentic economy and how X42 and and stable coins work within that. Your former employer Black Rockck, you were former head of digital assets I believe at BlackRock. Um they have put out plenty of research as well as of you. And so, you know, some of the

things that they're saying, three real key points here. One is that LLMs and blockchains share common computernative digital foundations. So, these already speak a common language, the AI models and the blockchains themselves. Two, agentic commerce requires machinenative payment rails. And we know that stable coins are machinenative payment rails. And as you mentioned, Ethereum is where 50% of stable coins currently live. And then three, compute is emerging as a new and potentially large market for digital assets. And so maybe you could help us wrap our head around these three components being compute, stable coins,

and the common language between blockchains and LLMs, and why Ethereum sits at the center of these three pillars. >> Sure. I think of those three pillars as things that are essentially going to be for the next generation the means of production, the means of communication and the means of payment. But if I take a step back in early days of any innovation, you sometimes need to focus on the use cases. And I think Meta's release of Muse will start as a consumer assistant helping you with your day-to-day tasks. The second element is um agentic commerce and you've seen estimates that from uh Deote and others that there'll be somewhere between 17

and $30 trillion of commerce buying and selling goods driven by agents. We've been much more focused on Agentic Finance, meaning an agent who has access to your accounts, who is going to help you do absolutely incredible things from understand uh your idle cash, move it out of a, you know, seven basis point checking account into money market rates that will pay 10 20x that. Who will help you build better portfolios that understand your short and long-term goals? who will help um rebalance those portfolios, do tax loss harvesting, and that's just the asset side of your balance sheet. But today, you often go

to a mortgage broker to pick a mortgage. You are probably limited as to what those distribution arms are. You get a insurance policy. It renews without you thinking about it. And the biggest difference between the pre-agentic world and the post-agic world, I'm going to oversimplify. The reason why people don't meet their financial goals almost all the time is because either they lack financial literacy because it's not universal but more important what's universal is you lack attention span. We are in an attention deficit society. But when you have an AI agent that has unlimited machine intelligence and essentially financial literacy and they have

unlimited attention they will do these things for you 24/7. What the Black Rockck report points out and what I published over the last couple of days is the traditional financial rails cannot support this. Agents need to be able to pay agents trillions of dollars uh on a given week or month and they're not waiting a day for that to settle. They need to be able to make micro payments. And when they need access to your accounts, the traditional banking system is not going to open up to agents because they're afraid of their fees being disrupted. And so what you'll end up happening is different blockchains, Ethereum, Solana, Suie, and others are going to have specialization and these agents are going to be running on your behalf 247. And I think we're vastly

underestimating the impact it's going to have on the fee pools of traditional finance. We estimate agents will touch about $4 trillion of fees. Much of that is going to go to zero. Some are going to move to disruptors, but hopefully most of it will be put back in the hands of consumers. So there is consumer helpers, there's aic commerce, we're focused on agentic finance, and the Black Rockck report focuses on a wider aperture. And of course, markets are forwardlooking and I think people do realize that Ethereum is the home of tokenization. It's also got a foothold as one of the primary, you know, benefactors of Agentic Finance. But the time horizon, the the time to ultimately

see this through, again, markets are forward-looking and will preempt all of the trillions of dollars of volume from Aentic Finance. But at what time scale do you see this happening? Are we talking years, decades? >> Yeah. So, can I go back in history? I'm not a boomer, >> but let me share >> on if you think about stock trading, we all grew up with maybe a parent or a friend's parent was a stock broker. They were the ones driving the fancy car. That's because they had a moat. They had commissions that were fixed. And in the 1970s, the SEC undid that. And it took several decades for stock trading to go to zero. Most young people don't understand, you used to pay high fees.

Commissions went to zero. That happened in slow motion. This is going to happen in hypers speed. It took almost a decade for e-commerce and a full generation of people to get comfortable transacting online. Aentic finance will take quarters or maybe a year. Um it'll go even faster than generative and it's just going to be part of embedded in our lives. So, I think very quickly you're going to have disruptors like Stripe, like Coinbase, like Binance, uh like Robin Hood, who are going to be building these super apps that are going to have access to all your accounts, where you deposit, how you earn, your credit

cards, your stock trading, your crypto accounts, your mortgages and borrowing and uh insurance. And they are going to start by first surveilling everything you do and make recommendations. And you're going to be a little bit reluctant to let them act at first. You'll let them move your cash to a higher account. You'll let them rebook your flight at a lower fee because there's very little harm. But over time, they'll start by making recommendations with a human in between. Once they learn your preferences and you start trusting them, you can give them more rope.

They'll start rebalancing your portfolios. I don't think it's going to happen in 2026 fully, but I think it's going to happen really rapidly. And I think the best quote here is what Bill Gates often says, whether you think of a team or a technology or an innovation, we vastly overestimate what's going to happen in one year. And humans vastly underestimate what's going to happen over a course of several years or a decade. This will be the case study, I would say, the next financial revolution that we haven't seen in a generation.

And it might be the strongest uh and most dynamic crypto use case that we've seen because it's going to touch trillions and trillions of dollars of transactions. Not the $3 trillion market cap that crypto has today. It may be the killer app of crypto, but it'll expand to all of commerce and all of finance. And when we think about the the ownership and the value flows from this wave of economic activity that I think we can all expect, there is, like you said, potentially $4 trillion of economic value that can flow through Agentic Finance. Let's say Ethereum is able to uh materially gain, let's say,

50% or greater market share. I think that is certainly doable especially if you look at the stable coin uh uh the stable coin market as a proxy for Agentic Finance because that is predominantly how the agents will be transacting and so if you look at Ethereum's market share in Aentic Finance and you look at the potential of trillions of dollars of economic activity walk us through the value acrruel mechanism for ETH the asset again it's a trust commodity and so is it simply this this potentially implicit association that people have in their minds where I know my stable coins are being transacted my agents are um

utilizing stable coins to make these transactions they're and and they're doing so on Ethereum and so in order to gain a piece of ownership over this economic activity I should buy and own ETH is it providing some sort of intrinsic value. Does there need to be any sort of revenue share or or revenue flows from that economic activity or is it more so this implicit perceived value of the place where the econ economic activity is settling that leads us to own the asset.

>> I think it's it's going to end up being some combination. But if you think about it, uh, agents are going to bring hundreds of billions of new users. The agents are going to be the new crypto users, the new finance users on behalf of humans. And uh, you may have several of them and hopefully they have persistent identity. They can work across different chains, different applications. This won't be gatekept. But if that's the case, the value that's going to flow through here is not going to be measured in trillions. It's going to be measured in hundreds of trillions.

I'm talking about the transaction value because it's going to be the financial lives of many many many billions of humans. And then the transactions will eventually trigger the burn. People don't often talk about the fact that Ethereum has a burn mechanism and that will drive the value of ETH up. And I don't know that every human's going to have to own ETH, but the applications that you're going to be working with, the financial institutions, uh the agentic frameworks are going to have to have ETH because that'll be the gas fee. So that would be um the really optimistic approach. I think the one thing we haven't talked about is you talked about other financial revolutions and market share. We have a moment uh

where we know what's coming. Most revolutions are usually a surprise, but in retrospect, they seem inevitable. We know what's coming. We have an opportunity to write the principles and guidelines so that we don't have the outcomes of prior revolutions. And can I go historical for a minute? Every time we've had a massive step function innovation from railroads to telegram to telecommunications to internet browsers to social media to uh commercial cloud and now AI it almost always follows the same path. You have massive innovation. You it brings in a significant amount of competitors.

Consumers end up being the first beneficiaries. something that's scarce scarce and expensive becomes abundant and cheap. But over time, in almost every technology revolution I've named, there's a handful of winners who either get there first or get scale or have a moat who end up owning this. And I I don't have to go through the examples, they're self-evident, and then they end up monetizing the consumer, putting up moes, and most of the value occurs to them and not to consumer. I think we're early enough in the agentic revolution and I've written about that that we have an opportunity to write the rule set to make sure that agents do no harm. Agents work for their users and agents can't be

co-opted by a handful of financial networks, companies or others who can change the rules of the game. And if we do this right, this could be the first uh technology revolution in several centuries where the individuals and the consumers and societies end up becoming the net winners. And I think we have the opportunity to write those rules. And I'm going to say something controversial. Most people in crypto initially don't like regulation and then they call for it. But regulation actually sometimes helps markets thrive.

It creates a healthy environment of trust. You see this in the pharmaceutical industry. If we didn't have regulations, the pharmaceutical industry be be much smaller. We need this in agentic because I think self-p policing has not worked in big tech or technology revolutions. And I think Ethereum and other fully decentralized blockchains may end up becoming the actual solution and answer where the rules can't change. You don't ex uh eventually extract most of the value to big tech, big financial firms. And I'm bullish that this could change society where consumers and users and agents can be the ultimate winners. And I know I've been going on for a long time. I've been writing about this. I feel very strongly. We have an opportunity to

change the outcome of history where consumers win. And uh this is something I feel very passionately about and I think it's part of the role of crypto and decentralized chains. I I agree with you and I I do think that the market is now validating the thesis that Agentic Finance is real and for a long time the crypto AI paradigm felt a little bit high in the sky and it felt like it was too early but now it feels as if these agents are really coming online. people are starting to adopt them and a a primary use case for these agents is to conduct financial activity and it only makes sense that that financial activity happens through stable coins on blockchains. I want I want to think

about if you have another minute for a couple more questions. I I'd like to just revisit the analogy that you made to the internet because I I love the analogy. I think it is more true than the analogy that I made to the DTC to to really put into perspective what's happening. >> We had the capital deployment and the buildout of the internet. It led to the dot bubble. The reality is that we are still in the internet buildout. We are continuing to put more capital expenditure into the internet and it is a systemically important piece of technology and infrastructure into almost everything that the economy runs on. And so the internet has a lot of value. But the way in which the internet

got built out, it did not have a decentralized community of ownership. We had the dot bubble. There was several companies that branded themselves as internet companies. People invested into them. Some of them did quite well and continued to stick around and a lot of the, you know, hyperscalers of today are technically internet companies from back then. And then a lot of them didn't do as well. But that was the way that we saw the value evolve as the internet was built out. Ethereum call it the financial internet or the internet economy has a different path dependency.

It similarly has large capital expenditures. There are applications and companies built on top of it but it has an asset attributed to the value of the network. And so, as a thought exercise, I'd just be curious to hear your take on if you were to see an asset that was connected to the internet as the internet was being built out in the '9s and the early 2000s, how do you think that asset would have evolved? And how can we think about the differences in the development of Ethereum given that it has a asset that can be owned by a large community? Yeah, I I think the best way to see it is think of it as

I'll give you a great analogy or a great example. In January of this year, Larry Frink, you know, the CEO of Black Rockck, uh, was at Davos and he did a presentation on the future of finance and it talked about AI, it talked about infrastructure and it talked about crypto and he had a slide that said Ethereum is the toll road to tokenization. You know he has a very strong belief and I have the same conviction that almost every asset will be tokenized including AI including inference. So think of it as toll roads are a public good that everyone relies on but you feel very very comfortable because of the benefit to pay a very small toll. And you can think of

Ethereum as that same type of framework. It's a public good. It's decentralized. No one owns it. But to transact on it, to have the security, the trust, liquidity, you know, to have the essentially have a trust commodity that when you drive on this road, when you transact, when you write this block, you know it's going to have finality. You know that highway is safe and it'll take you from point A to point B, you're willing to pay a very modest toll, but you're able to uh extract uh or benefit from it because the volumes that are going through toll roads and highways are enormous. That would be the better analogy. The internet was set up without a token, without ownership, and then you had to rely on public goods and tax and

you hope to God that they were paved. You hope they were secure. The Ethereum framework is so much better because it has an ownership and because there is value that's provided to the token holders for securing transactions. That would be my my my best analogy and I think Larry said it best. Ethereum is a tokenization the toll road to tokenization and that's the way I that would be the mental model I will share with you. >> Incredible Joe I I I mean we could keep this going you know for for hours because there there really is so many so much depth and different dimensions through which that we can view Ethereum. And I think that is why it is so valuable is to speak to the different the generality of

this technology. the internet is really the only thing that compares. And so I I appreciate you sticking around when others have left. Uh you know, we're we're here every day uh doing the educational work to uh make sure that everyone else understands the thesis. Um and you've been a pioneer and a steward in the Ethereum thesis. So, thank you so much for coming and spending some time. >> Uh it's my pleasure. Have a great weekend and I look forward to seeing you soon. I don't know if you're in Korea or Singapore over the next couple of weeks, but >> yeah, I will see you there. I will see you in Singapore. >> Safe travels, my friend. and have a great weekend. Good luck to Florida tomorrow.

>> Thank you. Go Gators. We'll see you soon Joe.