🟢 LIVE From The Nest: Satoshi Is Adam Back? Markets Strong, HYPE vs SOL with Frictionless Co-Founder

Transcript

[music] [music] [music] Heat. Heat. [music] [music] Thank you.

Lord, [music] we'll see you around the timeline. Feels [music] good to be back. >> I think The Rollup is one of the most premier media [singing] brands in crypto and Andy and Robbie are great experts at everything they talk about and it's my favorite [music] podcast. >> Adding to my library every potentially multi-chain deployments. We are at Dev Connect [music] day one here on the test base.

>> [music] [music] [music] >> Heat. Heat. [music] [music] >> [music] [music] >> Heat. Heat.

[music] >> [music] >> JP Morgan, Black Rockck, DTCC, Fidelity, the entire thing was just institutions. It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. I'm bullish.

>> HE SAID IT. HE FINALLY SAID IT. >> So bullish. >> It is bullish. I'm bullish. We're bullish. [music] >> [music] [music] >> Heat. Heat.

[music] >> [music] >> Heat. Heat. [music] >> [music] >> Corola is headed to [music] the top and

we're Not already at the top. We're going to the tugos. >> Roll up is my favorite. >> From all walks of life, all over the world, all over this industry come together for the roll up. [music] [music] [music] >> [music] [music] >> Zoom out. The institutions aren't

coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. [music] Welcome to the next. See you on the show. Bang, bang, bang. We don't even have the freaking air horn today, Rob. Man, bang, bang, bang is what didn't happen. I look, I'll be honest. I was thinking World War II was going down last night. [laughter] >> I'm I'm glad that's not the case. >> World War II. Let me get you some uh bells for that one.

>> Welcome back to World War II. >> We're here, baby. Instead, we have a ceasefire lifting all boats. >> There you go, buddy. >> Rising tide lifts all boats as well as ceasefire lifts all boats. Markets very green. >> Yes, >> Zcash leading the way. The true chaos hedge quantum resistant money. And uh no surprises there. Let's check in on the uh the nuclear research team. >> Yep.

>> Over there in New York. >> Hats on. Um today guys, we have a 0% chance of nuclear war. Fortunately, uh tomorrow the outlook is likely the same into the weekend. So I'd love I'd love for you guys to have an amazing weekend. Um yeah, the nuclear power research department is looking pretty good here, guys. Bit Tensor and Near looking great. Lighter and Hyperlid both looking strong. Hyperloop is about ready to go to new all-time highs. Um, yeah, Zcash looks ready to go as well. Having a good run. Uh, let's get into today's topics. We've got a, uh, single guest

today. Before we tell you about that, let me tell you about Plume, our leading, let's call them the glue that makes this show possible here at the tokenization tower. Let's give Plume some love, man. Let's go, guys. Let's go. Let's go. Let's go. Go. All right, guys. We're live from the tokenization tower, Rob. We've got um markets and weather. We've got frictionless capital co-founder lighter is going to come in on Friday. Um yeah, guys. I mean, we were expecting a I mean, yesterday it was just impossible to even focus. I mean, I don't know how you guys felt, how it was even going through your heads, but I couldn't even think. I didn't want to think it was the markets, the show. It was just all like, what the hell's going on with this war? today. I

think there's a collective sigh of relief amongst the world which which it you know I think it's good. Um so that that was where my head was at yesterday. It was just an annoying annoying day. Today we're back. It's Wednesday. We're live. We're going to get into markets weather and we're going to have Frictionless Capital co-founder Logan talk to us about the Salana versus Hyperlquid dynamic. What that looks like, how he's thinking about his execution is all that matters thesis. We're we're going to throw a lighter in there as well. Today's topics are powered to powered by Treasure. Use code rollup 10 to get your treasure at treasure.io. We're going to get into the weather as well, Rob. It's a chilly one

today in New York. >> Well, uh the weather here in weather here in Florida is uh pretty incredible today. Uh there you go. >> If we're looking at today's topics, we are uh going to be bringing you guys the markets and the weather. already talked a bit about that frictionless capital. Uh obviously quite a bit of things happening in the Salana ecosystem. Before we get to the weather, why don't we tell you guys about Fracks, the Genius compliant, uh Genius compatible stable coin, open, stable, and borderless, the future of digital money, FRXUSD.

I was surprised Poly Market didn't pick FRXUSD as their stable coin of choice. Poly Market is looking to make a US launch. FRXUSD is here in the US and Genius compatible. What else is in the US? 40° weather in New York from the tokenization tower. >> It is sunny. It is nice, >> but it is cold. It is cold today. Today was a trench coat day. I got told that I look like Vince Vaughn in his young years in the trench coat. Uh, that is a true story by a young young lady at the bar a couple weekends back. Um, powered by Relay, relay.link, one of the best

leading crosschain swap platforms in the industry, guys. Guys, it's cold. It's feeling good, but we're not cold in the markets. Let's get to the markets because this is what's happening today. Digital assets market today is green as uh Bitcoin at 714, Ethereum at 2200, Soul 83.18, chain link back above nine. I feel like every show it's been like chain link above nine, chain link below nine, chain link above nine. Good to see it. And then near it's been at that 1.3 1.29 1.34 level for a while. Um that thing's looking great. I tweeted about that as well. that one. Bit tensor fetch AI kind of seem to be leading the AI leg of this market. What I'm most excited about is I

woke up to uranium where it is now. URA ETF around 40 or 51 52 overnight. I'm still underwater on that one guys. Been underwater for about two months on that one. Tax season's coming up. And copper up 8% today as well. Uh so yeah, oil down, copper up, uranium up. That's good. That's good. >> Yeah. Um look, these things are entirely macro dependent, which is why I think it's a bit difficult to stay focused on the markets uh and stay focused on what is happening inside of our industry because it feels like we are a bit of the tail being wagged by the dog right now. Everything is up in the air

dependent upon the war in Iran. uh the straight of horm if it's open oil goes down oil's flowing markets go up if it's closed the reverse happen oil stays put and so do our digital assets um and so it's almost impossible to speculate on which way things are going to be going uh I do think that we are seeing the primary benefactors and as the war continues to become resolved maybe it doesn't but if it does then we will see things like some of these AI products, the near the tow as well as some of the quantum resistance Zcashes, Monero also big bounce. I think these are prim. We were talking about chaos hedges

yesterday and these are the primary chaos hedges. Uh and obviously Bitcoin doing well as well. And so this is what I think we can continue to expect. Again, you know, we have this ceasefire. This is I mean it's a complicated ceasefire. things in Lebanon are still happening Kuwait here there everywhere. This is still a very narrow uh move in the right direction. Yeah. But there is still plenty more work to be done, which >> I got to say, it feels like, you know, there's a lot of opportunity because if there's still a lot of resolution in the war to be done, does that mean that there's still a lot of, you know, upward momentum still to be had in the markets?

What do you think? I >> I don't know. Um, I mean, I'm I'm just It's a week till tax day and I I need a big bounce. Let's just say that. All right. >> Oh, boy. Oh, boy. All right. >> No, I'm kidding. But we're all good. I mean, look, I think this is going to I mean, look, there's an argument to be made that we've bottomed here on crypto >> in general. >> Like, you're calling >> Bitcoin. Like, there is an argument to be made that Bitcoin is looking like it's putting in a bottoming structure. I could definitely I could get behind it.

>> How we might have this in our news section, but in case we don't, how about Iran charging ships, right? Because part of part of the negotiation, part of the structure of the ceasefire is that um Iran is uh able to charge a toll for the ships going through. And so, yes, they're saying, you know, we will stop bombing you if you open the straight. Iran said, "Okay, we'll open the straight, but you guys need to pay us in order to go through." So, it's technically open, but with uh with a fee, >> and they're going to be charging these ships in Bitcoin.

>> Yeah. Yeah. Yeah. I I think something to the extent of like a couple million dollars per ship. And then I see Mer commenting on it like, "Guys, they put out that they want something that isn't traceable and not confiscatable." and he's like guys like do I need to do I really need to say it like do I really really need to say it? So let why don't we get into some of the news before we do I will tell you quickly about near our AI partner the blockchain design for AI native applications and autonomous agents it is near.org or near.com or near.I to learn more. Guys,

watcher Guru is saying $6 trillion asset manager UBS and five major Swiss banks partnering to test a Swiss Frank crypto stable coin makes sense given the strength of the Frank. knowingly from all the world wars, all the trade, the Frank has been one of the currencies that has been consistently valued higher than the US dollar as well as the pound and the euro. And so, yeah, this just makes sense. Um, I think that this is going to be I think there's a there's a world where the Swiss Frank is the second largest stable coin. Not because it has the largest economy or that it

has the largest outstanding money supply, but because there is a world where people may want to hold the Swiss Frank over any other alternative currency other than the US dollar of course, but even in replacement of the US dollar. So, this is pretty interesting to me. I think that yeah, I think that the Swiss Frank stable coin just makes sense and we're obviously going to see more and more and more nonUSD stable coins. Not sure what the ramifications are of that from like a global economic standpoint, but I think in the in the at least in in the short term, we're going to see Euro stable coins proliferate, Frank, and then I think Hong Kong as well.

I would uh I would approach this from the angle of hey like you know let's take a step back here right yeah for a long time uh we were discussing you know the differences between uh regulated stable coins both in America and abroad and CBDC's which is the route that the Europe uh the European Union is taking. >> Yeah. My question here, and it's somewhat rhetorical, would be, how many national banks would need to partner in order for this bank approved stable coin to be considered a central bank digital currency?

>> If if you have the five biggest banks in Switzerland partnering together to launch one single stable coin, is that not some sort of monopoly on the stable coin market? Are we not going to see the same effects as a central bank digital currency? Picture the same thing happening in America. If you have all of the too big to fail banks, all of them partner up with some consortium blockchain model. Yeah. And they decide to launch their own stable coin, are they not effectively creating a central bank digital currency? >> I mean, yes, they are. But I think the question is that like so for example, in this Swiss Frank example, there's going to be a sandbox environment to test the blockchain use cases of of this. And so

yes, it's going to be a regulated blockchainbased monetary system. Uh there's not any regulator sorry, there's not any regulated stable coins in Switzerland right now. I guess the question is like who issues it? Who has control over it? And how would that Yeah. How would that work? Because if it does come from the central bank, if they have the ability to freeze it, to move it on people's, you know, behalf, then maybe they can advertise it as a stable coin, get all the big banks together. But then behind closed doors, what they're really doing is building a CBDC. But then would you argue that USDC is that or that USDT is that? No. Right. So, >> well, there there's certainly

centralized models for these stable coins and that's what we've seen rise to dominance in Circle and Tether. Uh and so centralized stable coins work, but we have the air of competition. We have Circle versus Tether. We have uh you know different stable coins uh that are all competing in the private markets as well as the public markets in order to to provide the best digital money. I I think if we have banks teaming up, then you could potentially see a monopoly. And that's what we're looking to avoid as well as uh the surveillance mechanisms that central bank digital currencies could could enforce. The other point that I think is important to make here and this one is actually counter to to uh you know the CBDC one and the monopolization of this is that

you know take a pre-existing use case of what what we've seen uh in terms of technology that occurs when banks partner up. Visa right started out because banks partnered with one another. uh I believe Bank of America was the first one to issue this debit card and then they said, "Hey, you know, this only works if there's some sort of interbank uh network that is able to transmit money and settle the money because obviously it's just swiping a card." Like you need to get the money into the person's account. That merchant might settle with JP Morgan. I might settle with Bank of America. The money needs to move from Bank of America to JP Morgan,

right? And so that works behind the scenes. Visa is the settlement network and that started out because Bank of America said, "Hey, we're gonna issue these cards." But it only works if we have banks all committing and contributing to one common network. That's what makes this such a robust settlement network and why it's accepted pretty much everywhere. And you know, we saw this on our trip to France. You go out there, you go to America, it's accepted everywhere. >> Yep. >> And so that is the the positive, right? If we're looking at kind of the bifurcation in two different paths for this reality to go, we could see banks team up provide the rails for multiple different stable coins to work. In which case, this this sandbox infrastructure

that we're talking about, I would love to see banks work together on a sandbox infrastructure. Of course, we'd love to see it as, you know, on Ethereum. And I actually do think the long-term nature of this is that each bank will have its own rollup and that interbank network ends up being Ethereum. But in the meantime, maybe there's some sort of sandbox environment that they need to coordinate between that should be the rails. But I'd actually like to see each of these banks issue their own stable coin. They all have the assets. They all have the interest income and the deposits. They can issue their own stable coins and then share common rails. I think we we avoid the central bank digital currency. Um, if you're banking with someone, they can already surveil you, right? News flash. Uh, but at least they couldn't surveil someone

else, you know, from from on the other side of the world banking with someone else. Uh, if they all issue their own currency, but they share common rails, I think we get the best of both worlds. I'd like to think that Switzerland is not going to be a CBDC first country given the track record of their um banking system being for wealthy foreigners looking to um store gold in Swiss faults, let's say. All right, let's move on from the Swiss stable coin CBDC. Today, our board of directors of the FDIC approved a proposed rule that would establish requirements under the Genius Act for FDIC supervised stable coin issuers. The read on this is that

the Genius Act is closer than ever to actually being implemented. This rule basically created a framework that includes reserve assets redemption capital and risk management standards. Um this covers FDIC only supervised payment stable coin issuers and insured depository institutions providing related services. Um and yeah basically tokenized deposits will also be treated the same as traditional deposits under the um federal deposit insurance act.

And this was issued as a final rule with the OC prohibiting use of reputation risk in super supervisory programs. All of that to say that genius is closer than ever to coming through. Um I think it's it's pretty obvious that uh we had this kind of bill get uh passed and now we're in the implementation phase. This was really really bullish news that came out yesterday about the implementation of Genius. And yeah, I mean it's pretty it's pretty significant that the largest institutional insuring uh provider of the of the US, the FDIC, is commenting on the state of stable coins, what's happening here, why it's important. Um,

and I mean that's just a testament to how big this has gotten and how important Genius is to get through to make sure that that that this kind of part of the industry is regulated extremely strong. You know, I had a conversation in France with the some of the creators or close to the creators of the algorithmic stable coins, the ESDs and the DSDs. And of course, these guys are wearing like Balenciaga and the glasses and the shirt with like the purposeful holes in it and like, you know, they're like, "Yeah, you know, >> did you ask them if baggy jeans are in?"

>> No. No, but they were they were probably wearing them and Yeah. I mean, these guys were the eventual creators of a couple of these algorithmic stable coins. And I just it's just so funny to think about like I remember that in that time in the Telegram chats, people were saying the most outrageous things about them being the Fed. I am the Fed. I am the money printer. My money printer goes burr. I'm rebasing every eight hours. I'm literally printing money out of thin air. And then now we're like, we've got genius compatible stable coins. the FDIC commenting on it and establishing a framework. It's just like this. In six years, we've gone from like treason on the blockchain to like the FDIC being

like, "Okay, we have a rules for you guys." It's just uh it's the state of things. >> Treason on the blockchain. [laughter] >> Yeah. I I don't have I think that's a pretty good take. I I think uh you know the only other thing to add is that you know Annie when we were in DC for the DC blockchain summit the head of the OC as well as fellas from Treasury were on the stage uh talking about uh some of the the regulation that was leading up to this and so the OC director is extremely bullish on stable coins. Uh that is why we're seeing multiple banks get their charters approved. Um, I think Kraken, uh, Ripple, maybe Coinbase had like a limited charter for a bank.

>> All of these guys, their primary balances are stable coins. And so, not only are we seeing banks both, you know, domestically and abroad, just like the Swiss uh, you know, announcement that we read off before this, not only are they going deeper into the stable coin rabbit hole, we're also approaching this from the other side where stablecoin native businesses like Coinbase, Kraken, Ripple, centralized exchanges, these sorts of things, all of them are also pushing deeper into the traditional banking world. And so this converges to a point where the banks at large, whether they're NEO banks, uh, centralized exchanges or typical too big to fail banks, all of them are starting to custody stable coins. And this is a reality that I think the OC, the FDI,

all of them are starting to realize that there is prec precautions that need to be put in place. FDIC is obviously uh, you know, federal institution depository insurance. Uh, this is what protects deposits in bank accounts. I think upwards of $250,000. And so if we could get that to apply to stable coins as well, then I think we will end up in a world where customers of banks will have their option. Do you want to hold this in stable coins or do you want to hold this in dollars? And the catch it's like if I'm a if I'm a person and you know I don't know I I work a construction job. Who knows, right? I'm I'm a normie if if you will and I'm looking why am I going to hold this thing in stable coins? I want

dollars. What's the difference between the two? They are going to be offering an interest rate. And I have a feeling the interest rate is going to be different whether you're holding fiat dollars in your account or you're holding stable coins in your account. I have a feeling that stable coin rate is going to be much much higher than the current savings interest rate that we can earn on our fiat dollars. Um, despite what we were talking about yesterday with Morpho being under the current, you know, uh, uh, yeah, uh, risk-free rate, I do think stable coins held in an FDIC account are going to earn more on their dollars than you could, uh, earn on a fiat alternative.

>> Yeah. Yeah. Interesting take. Interesting take. Um, yeah. I mean, look, to be to be seen what the level of insurance that will be provided from the FDIC on stable coin balances. It'd be pretty insane if they insured wallets somehow. I'm not sure if that'll ever happen, but um yeah, we we will see. All right, guys. We've got Logan coming up, uh the co-founder of Frictionless Capital. Um he is going to talk to us about his execution thesis. um basically being that the entire thesis around uh value acrruel on chain comes down to trading comes down to execution. I think

there's like a notable conversation here to be had with regards to Salana and high throughput L1s versus more of these kind of like uh you know native per platforms on their own chain on their own platform. Uh it should be a good conversation. I think Logan's in Miami Rob so close to you. Miami is kind of like the place for people who made it and want to live in the sun. And then I think New York is the place where people who are still trying to figure it out. So maybe I'm uh I'm I'm missing something compared to the two of you guys.

>> We're going to get you here one day, Andy. Ur your uranium's going to do it for you. Um all right, let's bring up Logan. Uh I'm sure we'll maybe we'll do this again in person. Uh Consensus Miami. Logan, welcome to the show, man. >> How's it going, gentlemen? Good, man. It's good, man. It's a little chilly up here. I I I need to make it first, guys. You guys are within half an hour of each other. I'm over here in New York. >> Robbie, where are you? >> Uh I am around the Fort Lauderdale area. So, >> okay, cool.

>> Uh it's beautiful around here, as you know. Uh Logan, man, we were just celebrating the uh the lack of World War II. Um I mean what was we were just talking how it was difficult to focus and concentrate yesterday. There was so much happening. We were monitoring the situation and it didn't leave much time for much else. What what was going through your mind yesterday? >> Um honestly I I I didn't think about it too much. Obviously it's more fun when number goes up versus down. I think uh it's easy to kind of get distracted with short-term things. Obviously, you don't want the world to blow up. I think there was some famous quote from an investor

is like you don't want to invest in the world going to end because if you're right uh that's not a good outcome and if you're uh wrong then it doesn't really matter anyways. So just playing long-term games. I think uh as you guys know crypto is uh very whiplashy. So uh just trying to focus on the things that I can control. >> Yeah. >> It's extremely reflexive which is why you know we were saying look you know it kind of we felt like we needed a full reset in order for the the crypto reflexivity to sort of lead the way again. Is is that kind of how you're you're thinking about it as well?

>> Um I think about it more from a product lens. Uh my background I was at Tesla and was running the software side of the supercharging network. Uh when I first got into crypto I started asking I was like hey what are the daily active users like where's the revenue and then I quickly learned you don't ask those questions. Um and that was in 2020. I think now it's much more about the products and the revenues. And so I think it's differentiated now in terms of people need to build real applications with real money. I think for us at frictionless we were fairly early to the understanding that blockchains had to scale and so we were I would say one of the kind of few funds

that understand that we had to go from low throughput to high throughput. Um I think that was directionally correct. I think the part that we have gained a greater appreciation for over time was the fact that throughput enabled scale, but execution was how you monetize. And so really blockchains are asset ledgers and they're good for trading and money movement. And so we've kind of been doubling down on that subsect here. >> Yeah. Yeah. So this thesis ultimately is kind of centered around the idea that trading is the number one use case of a distributed you know uh set of nodes at scale. Scale this up as high and as fast and cheap as possible. Enable global

trading. This is essentially the Salana thesis. wanted to talk today about kind of the uh state of the high throughput chains versus more of the kind of like very specific per platforms which are seemingly dominating on the revenue side uh on the kind of TPS side less nodes less redundancies I'm just curious how you're seeing this play out let's just start like super high level Salana hyperlid how do you see the kind of state of execution value revenue venues businesses when it comes to these types of of basically products. So you've got like the very high throughput L1's and you've got a you've got kind of like the

uh per platforms like I mean app chain h haven't used that word in like a year and a half but like kind of app chains are very like specific use case products. How do you think about this right now at a high level and then we'll get into some of the nuance. Yeah, I mean if you go back to like kind of the start of the industry, Ethereum was very interesting because it enabled smart contracts and allowed you to build training complete applications. The hard part is because of the limited throughput and the 12second block times. It was not super useful for trading and because it also didn't do parallel execution, it did not enable kind of localized fees. And so we had to really graduate from these low throughput

chains to high throughput just to enable more expressive applications at the um really the product level. I think now though the industry is really asking hey why are these blockchains valued and call it the tens of billions or hundreds of billions and the true answer is is [clears throat] I think really kind of boils down to the execution point as you mentioned. I think on our side how we're really approaching it is we call it kind of uh two schools of camp where you have either colllocation which is the traditional tradfi system which is why we were never super bullish kind of call it layer twos um like a bucket like

essentially base arbitum mega all in that same bucket um hyperlquid kind of as well and the reason why we put those in the same bucket is because really the focus is more so on trading from the collocation standpoint. Um, as a former engineer, I like to think of things in the extreme. And so if you push them to kind of the endstate, what would they actually look like if trading continued to be successful? We know from traditional finance that you have um market makers and tradi firms wanting to colllocate next to the matching engine because you get uh better information flow being closer to the execution

engine. And so this entire kind of uh complex was set up for private fiber lines, microwave towers um to get information closer to the matching engine to be able to trade upon that. I would say this new system that is unproven and uh TBD if it actually works but I think is the first principles correct solution is kind of this what we call localized ingestion where when information that can be traded upon happens around the world instead of propagating to that single place in the world um if we use kind of the New York Stock Exchange as an example that data centers in New Jersey instead of propagating that trade information through a private fiber lines and

microwave towers to New Jersey, you'd actually be able to trade on that information in a specific region. And I think this is a pretty profound differentiation in the market structure. Uh the crude analogy that I've been using is if you ask 99 out of 100 market makers what they want, they'll say faster horses. What we really want is the car. And I I think this new kind of uh localized ingestion model is the car and the thing that's actually going to enable people to really participate at a global trading level instead of these regional kind of exchanges that exist around the world.

>> Okay. So um then okay so that's kind of like the highle understanding of of how we should think about this kind of flow of information propagation of um basically alpha when it comes to being closer to a colloccated sequencer and the L2 model kind of arguing against that. Um so first kind of angle of push back here would be then then why is is hyperlquid and lighter doing so well comparatively to any other onchain trading venue right like no matter what other chain they're on those two platforms are dominating um total volumes fees etc. Um, so how is this

like not changing the way that you're thinking about how you see trading on chain? >> Is lighter doing well? >> I mean it they're number two in terms of volume OI pretty consistently, but I mean >> I haven't been following lighter as much. I don't know. Um, so I kind of view them as um they are great products. Uh, Hyperlid especially. I think their unique innovation obviously was uh building a very good per product. Um it's much easier to do that um in kind of a more centralized setting like Hyperlid is than to build a fully decentralized platform. I early on criticize them for being not decentralized. I still think they're not

decentralized, but it doesn't really matter if people don't if people like the product. Um, and so I think there are some legal aspects TBD on how that plays out longer term, but they're kind of just like a centralized exchange without KYC that has built a great perks product. The the benefit of Hyperlid >> and building kind of the exchange and the matching engine at the heart of the system is the ability to actually charge fees or bips per trade. And so I think it's a more direct model. What others have done like hyperl or sorry Salana is focus more on um rev and priority fees. Um for Salana and

2025 that was I believe 1.5 close to 2 billion. Uh the current like last year uh revenue and rev is about 700 million. And so I think if you peel back the hood, they're not too dissimilar except Slana's really losing out on purp. >> Um Logan, a a bit of a tangental question here, but still thinking through what the onchain landscape could look like for Salana. Um you know, obviously a very unfortunate incident with Drift. Could have happened to everyone anyone, right? like you know this in-person wrench attack of sorts as a result of uh you know them meeting up

with some North Korean person at a conference as they say. I I'm more so curious about how you think Solana's ecosystem is going to build back in terms of how they can start to build you know a stronger landscape around both per ultimately build robust exchanges that you know have tighter security principles and take advantage of some of the performance benefits that you talk about. I mean, Anatoli talks about uh there's only like less than I think a dozen of like smart contracts that are actually meaningful and those can be over time immutable and I think it ultimately allows you to build more robust smart contracts. I would generally be in favor of that than a

more kind of a grandiose virtual machine if it's really trading and uh payments related. I don't know. Obviously, it's unfortunate and I think we need to continue to tighten security, but I don't know. I kind of chalk it up as a learning lesson, so to speak, where whether it's Salana, Ethereum, Hyperliquid, to your point, any of these can happen across any of these blockchains. I I think the more robust thing is can you have a kind of smart contract or specific protocol that the entire ecosystem uses and taps into that are more robust than everybody kind of

building their own implementation. Um it is frustrating. I mean you look at the amount of uh capital that's been lost just through hacks or um losses. It's it's a high number. Um, >> yeah, >> this was kind of the Bitcoin maxi argument in the beginning that smart contracts were a little bit unsecure, but I don't know. I I think broadly like these things I really don't get caught up in if I'm being honest because I think the TAM of trading and just moving all assets onto blockchains is just absolutely massive. When I look at how much volume blockchains are doing, it's still relatively tiny. Um, Slana annualized today is doing about a

trillion in trading volume. If you look at kind of the current centralized exchange landscape for blockchains, they're doing about 60 billion a day. If you look at the New York Stock Exchange is 100 to 200 billion. Derivatives markets are in the trillions. If you include FX, you're doing like 20 trillion of onchain trading a day. I think that is really to me the northstar of how can you move more and more of finance onto blockchains and I think the big thing outside of just like the market structure is going to be this idea of do you want collocation which to me is very equivalent to what the New York Stock Exchange does. I kind of have

a little bit of a hard time seeing how much different if like the New York Stock Exchange or the CME started offering 247 trading and then builder codes similar to Hyperlid, how differentiated would it actually be in the long term. I think this idea of localized ingestion is one that people are not paying attention to and one that we're kind of increasingly beating the drum about. Similar to how we did when we were fairly early to the understanding of the blockchain's transitioning from low throughput to high throughput. I view this kind of localized ingestion as important for blockchain architectures and I think it will be almost existential if you do not have it over the long term versus the one that continuously are more focused

on collocation or single leaders >> and could you describe how localized ingestion is different than a single sequencer blockchain what hyperlquid is doing with a very small amount of nodes and then what something like Salana has with much more nodes then obviously all the way you know you have Ethereum on on the entire other side of the spectrum like I is it a consensus thing is it a it's an information asymmetry thing but how does it kind of compare to uh the different models of trading that we have on chain today >> um if you boil it down to like the true kind of like fundamentals

a lot of trading is just order flow Like if you think about Robin Hood and what they did, a lot of VCs early on were fairly confused about Robin Hood's business model because they built a beautiful application uh but how are they actually going to monetize those users at the end of the day? And what Robin Hood found was that they could partner with market makers like Citadel and others and they could sell the order flow to uh Citadel and guarantee that those users have better execution than they would if they just directly sent the um trade to the New York Stock Exchange. Um so this was actually net beneficial to the market maker. This was net beneficial to Robin Hood. This is

actually better for the end customer because they're not trading against toxic flow or PVP on the market maker side and but you can kind of do that at a global level. Um really all of trading kind of boils down to where does the order flow originate and do you have non-toxic flow or retail flow. Um because otherwise it's very PVP on the market making side and then spreads widen and then you get worse execution. And so the thing that we broadly have been thinking about and to kind of answer your question has been around how does kind of this world of kind of new order flow um what does it look like um and I think if you continue with the trady model it's really along the lines

of um collocation because you have to be next to essentially the sequencer and the blockchain terminology or in trady the matching engine >> if you proprietary kind of information edge and I think this is fine. It's kind of like it's a very proven system. It works and people know how to uh play that game. I think the opportunity in my mind um that Chris Dixon always talks about broadly is that you kind of start with uh kind of um when the internet first came about like we just put like newspaper like PDFs onto uh the website so that people could read them but the first principles

kind of correct solution would have been like hey let's redesign the website to actually take advantage of the internet native way and I [clears throat] think we have an opportunity to do that with blockchains and trading. Um, and so I think what we're starting to see is these blockchains that are really single leader design or single boxes. Um, they'll look a lot like the traditional TRDFI system. Um, they have some additional functionality where it's like 24/7 trading. Um, you can do spot and pers. Um, which is fine. I I eventually expect Tradfi to be able to do that as well. But what's the unique differentiator that blockchain will actually be able to have a competitive advantage on and actually make a better

product? I think it's kind of this localized ingestion. Um L2s are just collocation. Arbitum I believe was selling uh collocation space which was called time boost. Um Meg ETH wants to do collocation and offer that as kind of a unique service. um hyperlquid if it continues to be um do well I expect more people to be colllocate next to the matching engine and that's fine um I just don't know if that's a uniquely 10x better product um they've been early to perks um and listing uh assets which I think is great um >> but we'll see I think there's a new way to do trading and I would like to

experiment with that >> yeah and then another thing on hyperlquid do you think that there's a really substantial regulatory risk right now to the protocol? >> Um, I mean, I don't personally view them as super decentralized. The last time I checked, they had 16 nodes. Um, and they're all in the same data center. Um, or like two or three data centers like in Tokyo. >> Yeah. >> Um, correct me if I'm wrong. Um but I don't know like I I more think about it even if there's some regulatory crackdown which I don't know if I have any unique insight in I I think the goal and the largest ham at least from the investor perspective is how would you

actually get the most trading volume possible if this is really kind of like on BIPS um or priority fees which I kind of view equivalent to BIPS is you want to have all of trading possible be on a single venue because you're collapsing kind of these global exchanges around the world um that almost act as their own unique databases or own ledgers and you're trying to combine all that liquidity into one venue and I think that was the really the unique promise of blockchains originally was hey there's all these separate ledgers banks Wells Fargo has their own JP Morgan has their own and they don't talk to each other if we can make them talk to each other that's where it gets very

interesting but exchanges around the world you have the New York Stock Exchange, the London Stock Exchange, Japan, etc., they're all their own ledgers and they don't talk to each other. And so I I really think from the kind of TAM perspective, the best thing in the largest market is figuring out how do you build this global exchange? And I view Hyperlid and really all these exchanges that have built thus far as really great regional exchanges. But if you're trying to go after global trading, why would I that's someone in India or uh I don't know um in Europe like want to trade on hyperlquid systems if I'm getting kind of adversely

selected because I'm further away. There's a reason why all these uh uh kind of trading venues around the world have built their own is because they don't want to be disadvantaged to any other person. And so I more think about it is as you expand from the retail base today that Hyperlid has definitely captured to the market much more globally are all the institutions not just in the United States but globally going to want to be near Tokyo maybe. Um I don't know. Um, I think there's an opportunity though to build this global exchange that almost disadvantages everybody equally where if you find alpha because information originated in your specific part of the world, you

were able to capture that. And I just think that's a more fair system and I actually think that system is going to be better for price discovery over the long term. Um, so I'm more excited about that system because I think it's just a larger total addressable market than what Hyperlid is doing. >> Interesting. Interesting. And you think Salana is going to be able to deliver on that system? >> I think you have to, if you think about a single leader system, which most blockchains are today, really all you're doing is saying like, "Hey, this is where we're propagating information to to make that trade." Um, it's kind of like again going back to the New York Stock Exchange and the sequencer is in

New York Stock Exchange or in New Jersey. I'm propagating my trade data to New Jersey even if I'm currently in Singapore. Um, and so as block times get faster and faster, maybe you're more at disadvantage because you're further away from that sequencer at any given point. And I think really and you also get into a bunch of issues with like block builders that now I'm extremely bearish on. Um but you you get into issues where one generally entity can control um what gets into the block and then ultimately reordering of transactions. As soon as you go from one liter to two leaders, that's where you start having

interesting market dynamics because they're competitive. Uh every part of really the market stack you want to make competitive. If you're giving anybody a natural monopoly, that's not good. um they're going to be extracting their pound of flesh. And so I think all blockchains if they want to be competitive over the long term that are focused on trading will move to this multiler system. And it's much harder in my opinion to start as kind of a centralized uh entity and move to multiler than it will be to um kind of start as a multi-leer system and then focus more on trading. Um it's a much harder and more difficult engineering challenge

>> and and so you've articulated why Salana is in a better position to do this than Hyperlid but you know Ethereum is also you know >> it's dead >> and so what's the what's the thesis as to why Salana is in a better position than Ethereum >> I mean I haven't thought about Ethereum since 2021 [laughter] like I don't think there's anything going on um L2s were a failed experiment I'm curious like app chains were kind of failed experiment outside of hyper liquid. Um I always view L2s as like data compression because if you think about blockchains that what they really are going back to like what is a transaction all a transaction is a certain amount of

bytes. I'm sending 10 USD to you that's represented in five bytes. I have to propagate that to the entire blockchain and the entire quorum. And really all the L2 is doing and saying, "Hey, I can compress that five bytes from five bytes to one bite." Um, and L2's just never very made [clears throat] that much sense to me because if you wanted to use uh blockchain compression, why would you not use it on a high throughput blockchain because you could compress more data? Um, I think Ethereum is mostly an artifact of people making money off of it in the early days, including myself. But from a institutional standpoint and from a um I would say product use case,

Ethereum is largely dead in my mind and I think it will continue to slowly die and I think it's the most overvalued asset in the world. >> It's interesting because it's it's up 50% over the last year and then Salana is down 20% over that same time frame. And so to to think about, you know, how this could progress. I agree that, you know, we need to get into a point if Ethereum is ever going to compete, you know, with the likes of Salana, then it needs to get to a point where it can handle similar throughput. And they've got, you know, a complex zkification of the base layer to compress a lot of that data into a state where it's able to get settled more efficiently. Um and so you know do you do you think that is a

reasonable path to sort of solve its its woes if they are able to solve ZK and quantum and all these things? Do they have a far enough advantage in that regard or do you think you know the lead that Ethereum may have in quantum Salana can easily catch and the lead that Salana has in data compression Ethereum won't get to with ZK. It's it's less about data compression and more about the flow of information. Um, if you think about making a trade, um, if I'm in New York, I really want to know that that trade happened as quickly as possible for like our friends in Singapore and zero knowledge proofs does not actually speed up um, how fast that

information gets propagated. Um if you compress the data uh and you have like call it a 10 gigabyte line that actually data whether it's 1 gigabyte or 100 kilobytes given kind of you have large enough pipes so to speak will allow you to propagate that information at the same amount of time but the zero knowledge proof will actually be slightly higher latency because you have to do the compression to be able to send that first and so I It's a fine technique. I mean, Ethereum has always kind of optimized for World War II resistance, and hopefully uh that doesn't happen soon, but I just don't think that's really what people want. I

think blockchains have shown that people really enjoy trading, and trading is the primary use case and the primary revenue driver. Frictionless actually posted um this chart of 0 to 100 million uh revenue applications. Uh a lot of people stole our chart, but I'm not salty. Um, and they're all um, trading related products. And I think for us, it's just like what are the best ways to actually optimize for trading? Zero knowledge proofs in ZK does not actually speed up um, that trading. If anything, it slows it down because you have one extra step in the system, even if you made it 10 milliseconds. That's 10 milliseconds

less of latency that you um wouldn't otherwise have if you just propagated the trade data correctly. Um there's a reason why generally people have colllocated is because there's information if you can get that information there is an arbitrage because you can build a model and exploit people that are 15 milliseconds behind um because you have 10 milliseconds. And so it's less about the proofs and more about hey this trade happened in the world. This uh an earthquake happened in Japan. Um I need to know about it as quickly as possible.

Um please send me that data so I can make informed decisions on how to incorporate that into my model and so I can start trading on that. And the longer that you actually um delay that information, even if it's compressed, it doesn't actually do anything. So, I I think I always thought Ethereum probably had the smartest devs um and especially at least 100% on the research side, but they just always optimized for the incorrect thing and then it became more of a religion and you can't really uh it's hard to argue with religion. Um it's more theoretical >> and and couple follow-ups here. So um

despite Ethereum having a greater number of nodes distributed over the the world the information propagation is actually slower because of the way in which they're doing the propagation. >> Um if you added zero knowledge proofs uh it's just one extra step because like say I I want to make a trade uh that trade is 100 megabytes. I need to compress that to 100 megabytes to 10 megabytes and that compression takes 50 milliseconds versus if I'm Solano or any other chain if I have 100 megabytes as soon as I get that information I'm just forwarding it to you and I'm don't have that 100 millisecond gap um and so it's just an extra step that is if trading as

we know is generally latency sensitive um just adds kind of unnecessary complexity where Ethereum specific specifically was optimizing for reduced uh bandwidth costs and reduce bandwidth overhead. Um if anything what we've seen is that technology generally improves and I think you should uniquely lean into hey your guys uh internet was maybe 100 megabytes a couple years ago. Now you're in New York and Florida now it's probably 1 gigabyte maybe even faster in a couple years it's going to be 10 gigabytes. Why would you uniquely kind of hamstring the network because you pick this arbitrary line in the sand

saying, "Hey, we don't want uh our network to go over 50 megabytes or 100 megabytes or what whatever Ethereum has chosen today." Um it's just a different set of optimizations >> and and so it it thinking about in terms of centralization decentralization is is not really the dimension in which to think about this. it's more so um in terms of the information propagation and the latency that it takes to propagate this information of which collocation is able to optimize that even further. Um, and so I'm curious about your your perspective on something like Canton, who's I think kind of broken a little bit of this centralization decentralization model. Like how familiar are you with it? And is there

something to say about how they've been able to structure this thing which is effectively a database? Does that make it so that this thing is >> quicker or more optimized to propagate this information? Um, I this may be slightly controversial. I I'm more I would say less of a decentralization maxi than I was in the past. Before I used to be like, hey, like you're not decentralized. Poo poo. Now I'm like, I really don't give a Build a product and create revenue and show me that people love your product. And I think there is an opportunity in my mind to create a better trading experience at the global

level that just so happens to be decentralized. But I don't think if you started out and said, "Hey, this thing is decentralized. You should pay a premium to use this product." Time and time again, I think that kind of um experiment has been run and it's been failed to show that people actually pay for quote unquote decentralization. I think you need to be sufficiently decentralized so that people like your product and use it. But I don't think decentralization by itself is kind of a unique attribute. Um so I've become much more of a product maxi.

I think with Canton specifically I almost view it like um the crude analogy of like the you had the intranet and then the internet. Um and and this also goes the same for like Tempo um and all the kind of like stable coins that are popping up. >> Um >> I'm generally believe that these things will exist for a certain period of time. I think the value though generally is having these networks be open because people can contribute to them and move much more freely. And so without con without specifically um commenting on Canton, I'm broadly bearish kind of

these chains that are um more permissioned in the sense that I think they're going to take a little bit more time to be widely adopted and have kind of the most economic activity. And this I would say goes the same to like why hyperlquid I think is very cool but I'm not sure if just like all the jurisdictions globally around the world will start to agree to trade on up on it especially if it's not in their specific jurisdiction. Um why would I as Visa start using Tempo if it's controlled by Stripe% >> like um I don't know I >> it's they're fine. Yeah, we've seen that

same kind of concept with the internet and internet be applied to something like Canton and a public blockchain and then similar idea with regards to the conflict of interest, right? From like a JPM chain, a um a City Bank chain, a Wells Fargo chain. Same same idea there with Tempo, Stripe, etc. I I have a kind of a separate question here on back to kind of the soul versus hype idea. Do do you think that Solana should just give up on Pers, focus on spot, become the best spot trading chain possible at scale, focus [snorts] entirely on that, leave per to Hyperlid to these other chains? Um, how do you kind of think about where the focus should be for both Salana and Hyperlid now? Like what do

you think are the key like like where do you think are the strategic strategic points of focus for both the chains now? Um no I think you should win on all trading across all assets. I mean really the unique innovation recently on kind of call it the more decentralized change was this idea of the prop amnms where it builds in the logic of essentially the market maker if you will directly on the blockchain. And so what it negates is essentially that latency disadvantage that we were talking about which essentially beds the market making logic directly into the blockchain which is actually even better than collocation of what you have in Tradfi because instead

of propagating uh your trades over a fiber line um what you are essentially allowed to do is kind of like stick a thumb drive into the matching engine itself and say like hey this is my logic run it directly in your exchange. And I think that's actually interesting. And so where I like start to come back to again is like a lot of these systems and if blockchains are primarily for trading which I think the the data has shown >> that there's this kind of old guard way of doing things which tradfi has shown collocation uh is great. It allows latency sensitive things. Um, but on the flip side, you

have this new kind of idea emerging with uh localized ingestion with multiple leaders. And the only reason why I'm interested in it is not because I think it decentralizes it more, which is cool. Censorship resistance and everything. The interesting part is I think this can actually make price discovery much better. And it just so happens that to do this you just had to be globally distributed because the world's a large place and information that you can trade upon originates in multiple places around the world. And so as a byproduct it's decentralized but it was more so an happen stance that just enabled this better product. And I think if you push that even further to kind of like answer your question what we're going to start

seeing is hey that worked for spot with proprietary AMMs. Now we're seeing aggregators uh one of our portfolio companies Titan just move the routing logic onchain as well and so and you have much tighter uh quotes at the time that you actually execute um the trade because there's a lag from when you click the button of please trade to when it actually gets executed on the blockchain. And so more and more of this logic is actually moving on chain. And I think we're going to start to see that with PERPS. And that's where I think it's going to get very interesting because today it's much better on spot versus hyperlquid. I think if you can start being competitive on pers and then start adding assets outside of the traditional kind of crypto assets. I

think hyperlquids has done a very good job at on boarding commodities. I think the next is equities. Then you need uh kind of just broadly derivatives and FX. That's that's the interesting thing to me. >> Yeah. Interesting. Okay. Okay. So, don't give up on pers. Go for it. Become the best trading venue for all areas there on the salon side. If you're hyperlid, what are you focusing on? Like what is you what what what do you what are holes in your ship that you're trying to crack? >> Um >> trying to patch.

>> I think honestly they're they've been doing a fairly good job. I I would try to focus more on if possible getting like fiat onramps and offramps and kind of like almost running the exchange playbook. Um you need like what assets do people want to trade? They've done a fairly good job of democratizing that. They built a pretty good trading product uh across per focus on spot a little bit more. I would continue to iterate on the virtual machine or add more open access which they're doing. I think the big question in my mind though is is this localized ingestion important and I I think because it is new there's not definitive data to say hey this is uniquely better for market structure and

this is allows tighter spreads and this is a unique differentiator that's going to allow kind of people to around the world um and different countries to feel more comfortable with it. If that doesn't matter I think Hyperlid's killing it. Um, >> and this is a unique, I would say, bet that we're placing that, hey, this weird, unproven technology that allows you to have potentially better price discovery is the first principles way to actually trade. If that is untrue, then I think Hyperlid will probably continue to dominate. If Salana doesn't ship this or there's too much infighting, then it's

not going to be great. I'm curious though for you guys, how has your thesis change? I know you guys were big bone proponents of kind of the modular road map and L2s and over the last couple years, how has your thesis changed, >> Rob? >> Yeah, I mean I I am also less of a decentralization maxi as I was. Um, similar to what what you described, I think, um, you know, Vitalik's also come out and said like L2s are kind of cooked unless they have some sort of differentiation. Like, no surprise there. I think a lot of us sort of, >> you know, we wrote a a blog post called uh, L2s are essentially just data compression and said that like, hey, you should have focused on that in 2022. And I kind

[clears throat] of did like a small like internal like victory lap when he posted that because I was like, man, we've just been lying to ourselves for many many years. >> Yeah. Yeah. So, you know, that was the case after a few of those came out. I was like, okay, yeah, we kind of see the writing on the wall here. Andy and I both have been, you know, big proponents of Hyperlid as well as the app chain thesis like we kind of talked about. And basically, hey, build something that has product market fit. If you can decentralize that, great. But if you have something that is decentralized for decentralization theater or research fetish and it doesn't get any product market fit, there's there that doesn't serve any value to anyone besides the religious, you know, ideologists. And so

I think, you know, we're similar in that regard. I I do still think um I think Ethereum is not dead personally. I think Ethereum still has some value to contribute to the world. Justin Drake co-authored that quantum paper. Um, and and I think Ethereum does have bit of a lead when it comes to the quantum resistance uh path. Um, and it also has, you know, the most distribution of its nodes as far as how they're able to propagate that information. It may not be optimized. Maybe that's something that they can fix uh later on and still build a top the the distribution of their nodes. Um but you know that that's from the chain perspective. Uh and then

generally you know it's all about apps these days. You have to get distribution, you have to get order flow, you have to get product market fit and then the best infrastructure is going to win. I I think it's and the last question I had for you was like hey if you're Poly Market what are you doing? Because they've obviously found some distribution found order flow but they've continued to be on something like an L2. Like they're still on Polygon. How have they not decided to go either build their own infrastructure or take advantage of you know one of these faster pieces of infrastructure like a Solana?

>> This is a good question. Um yeah if I mean as far as my understanding they work with market makers and kind of just internalize all that flow. Actually not a lot is hitting the fundamental blockchain. I think that another kind of interesting example is what Robin Hood's trying to do with their own L2. I again I view these as just like their own databases. Um because that's actually what they are. Um Arbitum's a database, Lana's a database, Hyperliquid's a database. Um some are more decentralized than others. I think the interesting part is where you can combine that liquidity and do um other interesting things with other

applications. Um and as this past week we we learned there's some downsides to that with uh drift and others but generally I think these things get sorted out over time. Um but yeah, I mean I think the big thing in my mind with application chains is obviously you can internalize the own flow, you can work with market makers. This is what generally has happened thus far. I think more so from the capital efficiency standpoint over the longer term what you want to do is not separate your liquidity but to make the most of the liquidity that you have available across everywhere. Um I think one of the unique innovations

um of FTX is this idea of cross margining um that you could go long, you could go short, you could do delta neutral etc. all within one system and that capital um is much more efficient. And I think what we're we'll most likely see is that this capital efficiency if these blockchains start to matter at a global stage is who's the most capital efficient where your dollars allow you to do more things in um any given application or any given ecosystem. And so I think there's really no rush. I mean, I don't even think Polygon technically even needs or um Poly Market even needs Polygon um to be honest. Um

so I think over the long term maybe there is this thought process where if you want to tap into more liquidity and do that at a global level then potentially you can tap into almost this global liquidity API. I almost think of blockchains as just like global APIs. to opt into the API. It's an agreed set of standard that everybody agrees to use, which just makes the coordination aspect and the money money movement much easier. Um, so I don't know. I mean, Robin Hood will continue to run their own database with Robin Hood L2. Um, Poly Market will do the same. I think over the [clears throat] long term it kind of just comes back to that entrat versus the entert um but I don't think

it's decisively anybody's one including Salana or hyper liquid. I think the main thing which I'm actually excited about is people are lying to themselves less about what this industry is good for and now they're focusing [clears throat] on the things that actually make money which today is primarily trading. Um, >> I would I would push back maybe on on that piece. And look, maybe I'm still coming from, you know, a religious bias and I still got, you know, more learning to do, which, you know, I'm sure I do. Um, I do agree in part that I think it's all finance. Like I think we've seen that that's where the product market fit is. That's what it's best for. But trading is a subset of finance, is it not? like we have non-speculative you know assets duration assets and there's

this whole RWA tokenization complex coming on chain now speed feels like it's important but maybe not the number one priority so you know maybe there's a give and take here and there's certain infrastructure design choices that are best for you know some of the some of those pieces of finance but trading is best for you know some of the infrastructure and and uh you know rails that you've talked about today. >> Yeah, maybe just to put that into a question like if this tokenization idea that has been absolutely just the main topic for the last quarter or so if this is right right like we get tokenized equities, bonds, tea bills, real estate, aviation leases, uh car loans,

mortgages, anything and everything that can be tokenized could and will be tokenized. what would be the biggest kind of uh recipient of that value on chain, right? Is it is it is it a blockchain? Is it a lending protocol on chain? Is it an oracle? Is it an exchange? Like what is right because this is happening, right? Like we're bringing all of these assets on chain. So this kind of challenges the it's only trading thesis because well maybe it's not just about trading for these types of assets. How would you kind of answer that question? like if we tokenize trillions of dollars of assets, bring them on chain, what do you think is the biggest value capture investment there?

>> Um, both are good questions. I kind of bucket them in [clears throat] two. One, one is the underlying blockchain and I would say the value acrruel for the blockchain itself and then one the other bucket is just the applications and those applications making money. I think all blockchains are exchanges. If you boil down to how does the blockchain actually making money, um it's really contentious pieces of state that you charge a premium to access first, which in like tradi they just run first come first serve. In blockchain, we do it slightly different and we just say hey you pay slightly more money to access the state and you can take that

arbitrage opportunity. That is the business model of blockchains. If you are not focused on that from an underlying kind of infrastructure standpoint, I think you're seriously Um, I think your valuation will continue to bleed. People will wonder where's the revenue coming from. You're no longer going to get the luxury of, hey, this is a uh sacred asset for the entire world. Maybe Bitcoin is the only special snowflake in the world. I don't think the other Ethereum included will get that for much longer. um maybe it's a fiveyear time frame and maybe it's 10 but I think generally Ethereum is not going to continue to have the monetary premium it has unless it generally focus on trading and execution. Um so because

I think blockchains are really exchanges where they can either take or make revenue from either BIPS or just priority fees. I think the underlying blockchain needs to be optimized for trading. Now that's different from your guys what you pointed out on the application side where you have tokenization or assets that are maybe not as um latency sensitive >> or um contentious where people will both want to access the same state but that's on the application level and I think those obviously should make a lot of money and will make a lot of money in things that we're actively thinking at virtualist but that is different from the underlying infrastructure. And I

think the whole goal of all this is just being able to run discounted cash flow models, whether it's an application or the underlying blockchain. And if you start to value blockchains similar to how you do exchanges, I think that's where you can actually run some pretty credible numbers and these things aren't super crazy. Um, >> yeah, >> Ethereum may be fairly high, but uh others are not. >> Yeah. Yeah. I think people are currently thinking about the protocols within the you know kind of a top the underlying chain as solely protocols for crypto assets meaning that we have these you know D5 protocols on Salana D5 protocols on Ethereum etc. there, you know, you're

able to collateralize your Ethereum, your wrap Bitcoin, your Soul, your, you know, other assets on chain, borrow against them, do looping, do kind of interest rate, uh, you know, uh, things like things like what uh, what what Pendle offers, things like what other kind of like actual onchain uh, protocols offer and that this is just solely for the two three trillion dollars of assets that we have. But I don't think people are really thinking about this from, you know, there's going to be a lot more of other assets on chain and that they're going to be a part of these D5 protocols and that if you're thinking about these protocols from the TVL and the value that they're kind of uh overseeing today and

capturing today, you're thinking about it from like a very crypto for like or crypto first >> centric view and not like a actual assets in the world view. It's just like I mean especially I I think we could kind of play some of these games like prior to like chat GPT and robotics and space and >> but there's just a lot more interesting things I would say potential interesting things to invest in. And if you're telling me this story of hey I'm a special snowflake. I don't deserve to be run on a discounted cash flow model because I made people a lot of money and I'm World War II resistance. I just think that's Um, and I think the world will think that's

And so I think because it made people so much money that it gets this special snowflake premium for a while, but I don't think that's going to continue for a decade. Maybe I'm wrong. Um, I I've been saying Ethereum's Blackberry and since 2021. Um, it was actually funny. I applied to work at a bunch of different venture funds and no one would hire me because I said I was bullish high throughput blockchains. Um I I I interviewed at a lot of places and they're like, "Dude, if you don't like Ethereum and you don't like L2s, you're wrong." And I was like, "Okay." Um we'll see.

>> I mean, there's you on that one. >> I mean, I'm trying to just make a lot of clips for you guys for this. >> I mean, I'll respond to that and say like, look, there's there's obviously the low latency trading elements to this, but then there's also like the connecting disparit ledgers part of this. >> Yeah, I agree. You know, some of this is path dependent and you've got significant network effects here where Ethereum is connecting ledgers across the globe. A lot of, you know, those ledgers have a lot of high value uh of of assets on them.

>> And maybe Ethereum is better at connecting those ledgers, but Salana is better at propagating the information from those ledgers. >> Like there's there's multiple things going on here, right? >> Yeah. I I mean, you're right. The world's path dependent. I think I just come back to what can a low throughput blockchain do that a high throughput blockchain cannot do better in every single aspect it's better the only thing that you're trading off is you're going to have to have faster internet connections between the nodes and the nodes are going to cost a little bit more >> and I think if we are actually serious to your point Robbie earlier about let's build better products let's not hamstring ourselves and say hey let's run this on internet speeds from the early 2000s

Uh, let's not run them on Raspberry Pies that are $300. Uh, Tradfi is just going to continue to laugh at us. I want to make revenue. I want to make money. Let's have the number go up and let's make products that people are actually going to use and get out of our way of the ideology and start building things that people enjoy. >> And I feel like Ethereum's kind of head in that direction like they are easing on the node requirements and whatnot. And so do you don't think Ethereum with its whole scaling roadmap can turn itself into a high throughput blockchain?

>> They can, but like it's like um I don't know. You're behind. Like they definitely can. I mean nothing's like 100%. Nothing's 0%. Um I just think the probability of the Ethereum community wanting to do that is relatively low. And maybe because they've been losing in my eyes and I I would say the market's eyes for some time. Maybe they're more open-minded to doing that and maybe they change. But I I I literally think of it as we have started to um really the industry went from kilobytes um which for kind of contexts dialup internet was 56 kilobytes and Ethereum in the past

was doing 10 kilobytes. Um so slower than dialup internet. broadband is where you start to get into the megabytes which is a thousandx difference in performance. Um if you start looking and we're kind of today today mostly in megabytes land um when people say like block space is commoditized I largely think that's um what what they really mean is there is block space and people >> can use it but the way that you actually monetize block space is through execution and through trading for the underlying blockchain and so the thing that we need to now do is go from megabytes to gigabytes and that's another thousandx difference in

performance and I think again like if you just start studying like trading and trading infrastructure like how much throughput are trading systems actually doing it's like hundreds of gigabytes and So when you look at like what we will actually need if we're going to move finance on chain, Ethereum today is maybe doing a megabyte like maybe like I as far as I know they're still doing kilobytes. And so like there are many thousands of axes off of kind of the scale if you're actually going to modernize the entire financial system.

And so I wouldn't say like it's not a zero probability. It's just like it's a different set of engineering. And >> I I care less about the engineering and more just like the products and how big of a market is it actually going to be if you're successful. And it's why I've appreciated kind of the opinionated point of view of some of these more modern blockchains like Salana because they say, "Hey, we are focused on trading. We know trading is where the value is going to grow and let's scale that. We know that we're behind as well on purp." And so I think I appreciate Hyperlquid for taking a more opinionated point of view and saying like, "Hey, screw the decentralization. Let's just create a per product and make a lot of revenue." Um,

so I don't know, like it's it's not a 0% chance. I just like Ethereum I think is only relevant because it made people a lot of money. Um, and I appreciate now that it's moving less towards ideology debates, but there's too many people that are still in kind of the OGs of Ethereum that I think will hamstring it and just not enable it to be the best product that it could be. >> The boys revisit Celestia 226.

>> We'll save that for next episode. >> Looking for gigabytes. Oh, I can I I can talk about Celestia. >> Um, >> they don't have execution. >> I know. That's what I mean. The the Celestian Salana war that happened is actually far more looking like friends on a similar trajectory than enemies as it was painted. >> It I mean there you can have throughput, but throughput by itself is meaningless. I think as Celestia has kind of showed they're not able to monetize throughput by itself. The value comes from who can access any given state at any given time.

>> And because Celestia has specifically forgone the execution part in favor of throughput, block space by itself, I agree, is a commodity because you're just paying for bandwidth packets. If you look at bare metal compute providers and saying like how much are they actually being charged for a terabyte of compute or terabyte of bandwidth speeds? Um, latitude which is a popular bare metal provider offers one terabyte of throughput for 64 cents. So why should I pay more to Celestia or like a premium over just pure bandwidth? You're not actually paying for the bandwidth.

you're paying to get the best execution quality possible and that just so happens to be enabled because of this unique design. And so I think the modular road map was interesting. They had the throughput part correct, but because they forgo this the actual revenue generating piece, I mean, you've seen the price action. >> Yeah. Yeah. Logan, man, thanks for joining us, man. Um, fun conversation. Looking forward to Consensus Miami there in your backyard. I'm sure you'll be there. We'll have to grab a beer. >> Let's do it. I appreciate it.

>> Good to have you on, buddy. >> Thanks, Logan. >> Fun. >> See you, man. >> All right, buddy. >> All righty, Rob. The boys revisit Celestia at the end there. Salana. Hyperlid execution. Um, man, I think Hyperl's going to flip Salana. [laughter] I think it's going to flip Salana. I I think I think I don't think Logan is understanding that Hyperlid's going to flip Salana and he's going to have to live with that. And actually, how far is it right now?

>> So, yeah, Hyperlid is at a $37 billion valuation FDV. Salana is at 48, >> dude. I mean, man, no, it's not. Hold on. Hold on. No, you're not. No, it's not. Hypes at $9 billion market cap. >> Yeah. F we're talking Are we talking FTV? >> Okay. We're talking FTVs. >> Yeah. Hype's at 37. >> Salon's at 48. >> Salana's at 48. >> Dude, >> calling me out before you fact check yourself. There you go. I mean, what is that? 20%.

>> Dude, Hyperlick was gonna flip Salana in the next like six weeks. Holy >> dude, can we get Logan back up here? >> 50%. >> I think I think Logan's out of here, >> dude. Dude, this guy has no idea that Hyperlid is about to flip Salana. >> I He was calling I mean, he was calling for Salana flipping ETH. >> Hey, Logan, just wanted to bring you in here, man. Um, Hyperlquid is going to flip Salana.

Yeah, it's looking it's looking like Hyperlid's going to flip Salana. We just did a quick check here on Coin Gecko after you left and I'm a bit worried about your leading position here. >> Yeah, I mean I think the going back to what I said initially when we started the live stream was the main thing that you can actually control is your time horizon. And so I think I mean hedge funds if you look at or talk with them I think you guys do they're all pretty much piled into hyperlquid and is making a good amount of money.

They built a great product. Um not discounting that by any means they're making a good amount of revenue. I think again though the idea is like can you build something that's better? And again, that's where I think from the venture standpoint, you're taking a little bit longer lens and saying we're not playing quarter by quarter. We're not even like thinking in one year time frame. How how can you build the best product possible and what would that look like? And so again, I I think there's really a uh fork in the road where the conversation is do you go colllocation or do you go localized ingestion? and localized ingestion is again unproven and TBD if it works but I

think it's the first principle is correct. I honestly wouldn't be super surprised if Hyperliquid potentially passes Salana over the short to medium term. I think it's who wins long term is the more interesting question. >> It's time to sell your soul for hype, buddy. Thanks for coming on. We'll [laughter] see you soon. All right. Brought me back on just to say sell. >> All righty, man. All right. Well, Rob, that was a lot closer than I thought, man, as far as the actual numbers go. >> Uh, yeah. I mean, obviously, there's still quite a bit of locked supply for Hyperlid. Uh, Salana, >> uh, not as much. What do we have here?

>> Yeah, >> I think it's time for Soul to flip. No, I think it's time for Hype to flip Soul, buddy. >> I don't think Luggan knows what's coming for him. I I think I I mean he even said he said short to medium term. >> Look, I was bullish. >> I I do think that if um Solana is ever going to, you know, maybe it gets flipped by hype. If if uh there's a world in which it flips it back, >> you know, Salana's >> Look, I think Salana needs a rebrand. I think I think Salana is still memecoin traders.

>> You think >> President Trump got past that? >> President Trump coin. It's it's memecoin traders and exploits. I [snorts] mean, unfortunately, like I said, drift drift could have happened to anyone, but um I just think, you know, they have pump fun as uh kind of their their golden child and they need to overcome and move into a a more tok uh institutionalized world if uh they're going to survive in this new era. >> Yeah. Ladies and gentlemen, that is the show for today. I wanted to bring Logan on. We We're gonna have Vlad from Lighter come on uh in on Friday. I think he was supposed to come on today, Rob.

But that was a fun episode. Um Logan Smart. Um that that felt like an old rollup 2024 technical modular podcast. It was fun. >> Yeah. Yeah. I mean we obviously had quite a few of those uh back in the modular days back in our long form podcasting days. You know when uh when you know everything kind of subsides uh you know this live format is much more conducive to very you know high energy techn uh not so technical conversations uh very punchy but it's good one guest get into the weeds a little bit.

>> Yep. >> Localized ingestion versus >> Yeah. I'm going to localize in this sun outside and figure out when copper is going to get back above $6. Get that copex position sold. Get my taxes paid. Let's get uranium back above that 50 5456 level. Would do wonders for my mental health. Robert Clagis. >> Wow. >> Signing off. >> Oh my goodness. Full name there. We're going to get you down to Miami. There's plenty [laughter] plenty of sunlight down here, too. We're going to get you down here, buddy.

>> All right, guys. See you tomorrow. Peace. [music] [music] >> [music] [music]