Are New Tokens Always Better? | Analyst Round Table

Transcript

the only bearish take is that like a whale is selling like that's fantastic like macro data is softening but it's not clear that like traditional markets are anywhere near recession yet so like this is your opportunity we've spoken about this a few times on this pod that you know like you said Danny we're just dying for a pullback to see some reasonably priced things to rotate into um valuations are still a little stretched even after the pullback but like short term if you wanted to rotate into higher beta things like this is that opportunity because like look you know the economy is still chugging along traditional financial markets are not drisking uh and that typically means the cyle has legs so this is an

opportunity nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are solely our opinions not Financial advice Pacho Ryan and our guests May hold POS positions in the company's funds or projects discussed what's up guys welcome back to another episode of ZX research today I'm joined by Danny and Ryan from the blockworks research team to talk about all that is happening in the markets uh and across crypto before we get started in with some prepi topics I want to hear from you guys what you've been looking at over the past week yeah I think um with the recent activity in the market recent uh drops

dips and prices um you know selling of some coins um there are a lot of altcoins that previously looked quite expensive you know over the past several months um I think we're seeing you know if you look at stuff like apos you know newer like gen 3 blockchains if you want to refer to them that way are nearing their all-time lows um I think if those are if that's Tech that you're interested in you know there's there's some opportunities in coins that did not exist previously that you know were just running and running to to new highs um so I you know it's a time in the market where things are starting to look cheap or more affordable than than they did before and and I think that's interesting it opens up opportunities to to look at more coins than than um were pre previously available yeah that's a

good point I do want to speak a bit more about at what point like do you go with new token over old token because I feel like that's something that's always in people's minds like we've kind of been ingrained with this idea of new is better um but there's also like some old coins like maker and stuff that are just cash flow generating at this point and it's like I'm not sure if that's what you want or if you just want pure speculation what can this gen free L1 become the possibility they're Limitless but yeah we should we will talk about that I think that's a good thing to talk about but the death of altcoins um I kind of want to tie this up to what's been happening with the Germans um and mount

gox uh to be fair mount gox has nothing happening with it now like they've been relatively inactive but the Germans are mass dumping like 35,000 Bitcoin left now in the wallet they've sent 5,000 Bitcoin over the weekend and this morning um they're using desks now apparently instead of just Mass sending it to coinbase and one more thing is I do you guys know about Gollum uh Dan you might know who that is Ryan do you know um they like they raised in 2016 they raised a lot they raised 820,000 e in 2016 and they just sent 36,000 e to binance they they've done nothing with it they just held on to the E which is

kind of a crazy trade if you think about it um and they've been sending more and more e they hold 131,00 e at this point like $400 million which is quite a bit there's a lot of bad news for Majors um my cope with this is that after this is done there's no like oh what about Mount goau like that's it we had it like what about the Germans we had it I guess like there's other governments that hold it but we'll see what happens Ryan I feel like you might have a better take I have some observations um I think that there they're clear like we all

know that market structure in crypto is pretty tough um the German the the German government selling like a lot of Bitcoin that's been pretty well telegraphed to the market for a very long time um and when something is well telegraphed in traditional financial markets um the price impact is typically very muted um it's priced in right this C like this wasn't priced in and it's been very well telegraphed um now like does that have something to do with the sales like starting on July 3rd or July 4th when there's like you know no one's at their desk um I'm sure that

had something to do with it um but just like it really underscores how long we have to go in like Market structure we need more participants we need more sophisticated market makers and and you know news just isn't priced in like in traditional markets um I do think that like from a fundamental perspective um if like someone um is that the German selling ma dumping again um if if the like look if if your only if the only bearish take is that like a

whale is selling like that's fantastic right like like macro data is softening um but it's not clear that like traditional markets are anywhere near recession yet so like this is your opportunity we've been talking a few uh we we've spoken about this a few times on this pod that you know like you said Danny we're just dying for a pullback to see some reasonably reasonably priced things to rotate into um valuations are still a little stretched even after the pullback um in in most cases um but like short term if you wanted to rotate into higher beta things like this is that opportunity um because like look you know the economy is still chugging along

um you know traditional financial markets are not drisking and that typically means the cycle has legs so like this is not opport this this is an opportunity yeah and maybe if you're looking for some extra cope into the end of the year um you know the FTX repayment plan for creditors there I think they the judge has to make a decision on October 7th of this year on whether to pay them back in cash or you know in kind in tokens so there might be some additional cash coming into the hands of participants later in the year that um you know maybe they're excited to to to buy back tokens hopefully higher at that time we we'll have to see yeah one more piece of cope there is

that a lot of people have been screenshotting um Reddit comments about like Mount ga's creditors um like like the people who receive money from MX and they're like oh I'm never selling so that's also really really good cope that people have been posting which is going to keep us chugging along um I I want to talk about the new token thing um I feel like my opinion is always like very simplistic and it's that new token is better um unless there's like a specific narrative that you want or you're looking for something like it's fundamentally underpriced um but I kind of want to like new tokens this cycle hav't done

well I'm once again going into high FTV low float conversation and I don't want to do it but new tokens haven't done particularly well this cycle there are some that have done really really well obviously um but how do you guys think about that looking into comparing new token versus old token do you think a new one is always better like cetrus barabus everything else the same or is it is there anything else that you guys focus on I think I think one point I want to make is the Dynamics around newer tokens and you know generally the low market cap High fdv kind of debacle um it primes a lot of those tokens for periods of outperformance followed by periods of

stagnation and and decline right you know um when you've got low float there is an opportunity obviously to push the price up quickly if there just isn't a lot circulating but but you know if Supply is coming online and you know there aren't new people to buy continuously then um you're you're you know over the multi-on or or longer time periods you're just you have to expect some some downward pressure from that so um I guess something I would say is if you know for people that can't handle the the extra spiky volatility there you know newer tokens might not be right for them um you know maybe you want to buy something tried and true that has earning and the PE makes sense to you

then um you know maybe you know a maker or you know something similar that doesn't have those kind of token supply issues to worry about would be a better kind of emotional or psychological boat for you but I don't know it's not it's not my favorite framing um I don't think that new or old matters um I think that what matters is like the underlying underlying cash flow potential of the project right like is the thing going to drive value or not I've seen old tokens come back from the dead and do that I've seen new tokens like being like very obvious like shots on goal at like real meaningful real world cash

flows um and like but but these these narratives do like gain Steam and like I'm not going to sit here and try to argue that the market doesn't like trade on narrative so like there could be some new token old token like dichotomy in the market but I think that like with the way things are going politically um the way that the SEC keeps like losing court cases and like the E ETF around the corner um the like environment for institutions to like trade in this space like it's it's just getting more and more favorable and in that scenario where you where the where the marginal

buyer is a traditional asset manager and not like a crypto farmer or retail participant I think narratives like this um matter a lot less so um I wouldn't I'm personally not as much focused on that um I I think the tried and true like framework is just like what has the potential for very meaningful cash flow generation yeah I think that's a good point um and I think to the point around like picking new versus old um you know the comment on just you know investing in solid teams or solid Tech I mean obviously I think that that

always sorts sort of makes sense but I think even when you look at new versus old you still have to pick winners um in the case of new tokens they you know if they're launching at higher ftvs like you really have to be careful about picking the right thing if it's launching at 10 billion fdv and it's vapor um you know you might be in for a rough ride um same goes for something you know a team that's stuck around from 21 and is still building today you know maybe they pivoted and they built a great product um and they're on the up and up but for 99% of the other projects that tried to do the same they are probably down only still so um it either way new versus old you still have to pick a great team and and a great product and Great Tech um to have you

know to see um you know the returns maybe that you're hoping for so that's that that sort of root question never really goes away I think I think Pendle is a good example of a team you know they they pivoted in 21 or 22 and and that project has been doing s you know fantastic over the past year and a half now so yeah that's really interesting I think I think a better dcom is something that's been forgotten um versus something that's hot right um there are a few old coins that have done really well and it's not because they are old it's because that the project was forgotten and was re invigorated and has meaningful cash flow potential um two

that come to mind uh render and ton coin right ton was sideways for years um partnership renewed with telegram and uh it ripped on that potential or rated higher because future growth rates were rated higher um same thing with render right I think they might have iced or something in like 2017 or maybe they started 2019 um the thing was was like barely in the top 300 market cap like it was absolute micro cap and then um interest was renewed um um you know juules got behind the project and you know the things generating meaningful revenues on uh on salana today so um yeah like I

guess there's that's that's a super exciting opportunity if you can find those tokens that um you know are on the precipice of like being uh rated higher based on some like renewal of the project or like a new partnership or just like left for dead um but like the team is still building um yeah do I know of any right now midb Market way harder to find those opportunities yeah I think I'll add the comment that I think right now might not be the time to be deciding or start looking for those types of projects I think that's you know when you're if you're hanging around during the bear and you're seeing who's still bu building and who's pivoting and you know

putting together s maybe potentially successful business plans for the future um you know those might be opportunities to look for but um today it's you know there's lots of raises happening there's there's lots of money flowing around um it's a very different environment yeah it's kind of crazy to me that people are still doing private markets given that I assume they must be getting like horrible deals at this point but I mean that's just the nature of it now it's you have you just put some money in it get some fomo that this is we talked about this months ago I don't know if you were on you were definitely not on it Danny but Ryan were you on it where I was

like I feel like VCS are kind of a forced buyer to an extent because they have to get exposure to coins like you have a mandate and you need to deploy it obviously if you're like a really good VC you don't like you deploy it as much as you can during the bear but even during the bull Maybe there's like a new narrative coming up there's something attractive that you have to deploy into and that's what I meant back in the day I was like you're kind of a force fire yeah I think I think that that's fair um I think that the time yeah VC is being a force force fire that's interesting yeah for a lot of VCS I think that if they can get in on the deal the time to liquidity is so short that you often are Force buyer like you don't have time to

sit sit around and wait for valuations to reach set because if you don't get in on that round um you know you might not get the token at all it might become liquid and you don't have your chance so yeah I think that that's a fair point yeah another thing is that now it's very like deals go like this um you don't even have a time this is as far as I understand you don't even have time to do very good D diligence um because they can just raise for I mean people want coins so bad they want see they want some form of investment so bad that you can barely do I have to imagine the Dynamics are um I mean as with anything else probably very topheavy right like

your s tier VCS that get you know into all of the best projects at the you know the earliest rounds or the you know the best prices you know there are projects that raised at the top of the 21 bll Market that are were still you know fantastic you know raise opportunities for those investors because they've you know still done 10 or 100x multiples from those valuations at the time um but I would imagine if you were buying you know near public or pre-public like pre-public raises as a smaller VC fund like around 21 you might have just been completely obliterated um even now like if if those things have done well since then so um there probably is a little bit of a dynamic

there where if you're getting the absolute best deals for the best projects like you know if you got to buy in Arbitron and you know some of these other projects you know back a cycle ago you're you're doing great and if you didn't you know if you got to buy things that were probably just super overvalued at the time because everyone was trying to jump in um and you were late to the party you probably didn't have a good time yeah that's very true and I wonder this is one thing that I found out is that just by talking to people is I don't even know this isn't particularly relevant but I still want to bring it up like a lot of VCS end up doing a lot of thought pieces and a lot of these like well research reports and they are genuinely like good um but it's mostly

to get into those top rounds because if you are the person writing about modularity before it was a thing then the people building modularity Tech are going to be like hey like we're raising right now I read your piece Let's Do It um so that's actually like I assume it is top heavy as well and I think that's kind of an interesting way that it plays out I I I don't know how like relevant it's still is now but I feel like during the bear if you were actually invested into like interested in certain Tech that probably opened up a lot of doors for you um one non-vc favorite this is a horrible segue but I'm going to keep it

one thing that did not raise is towo bit tensor and it went down last week I don't know if that's it's not related then VC ra isn't why it didn't why it went down but um they had some package issue where a malicious package was downloaded by a lot of people um and it stole their keys so they have to Halt the chain and we talked about this this morning Danny is the VC not the VC the AI favorite um the AI narrative leader I thought it was going to be to but apparently um it's render everybody wants render everybody wants a piece of render well it's playing out just like trafi so far right if you bought you

know if you're in Nvidia you're you're so happy you're over the moon right now and if I think if you're in render from it's you know reating you know a year and a half ago you're also over the moon at the moment so um that might continue to play out that way because I think a lot of these AI projects are very early I think people can't really connect the dots in terms of what value they truly provide quite yet um I think you know maybe the deeper thinkers really have a feel for what they could become but um you know there might just not be enough solid kind of material understanding of of what the what the true value is there yet before Ryan gets into this and tells us all about it I want to make one

little point is that for a few months um a couple months ago maybe three four months ago there was like this era of uh LBP AI projects which is like mon Ai and like whatever Olas was the first one that did it and they did very well so every team launched some form of AI token on lvps on F specifically and then like just chasing that a lot of people missed out on like genuinely good AI coins and one of those was tow at the time it was a genuinely good AI coin people were just like oh I missed that I need something I need beta um beta and then they just reached out for that and then now you don't even

hear about those anymore which I mean I guess that always happens you chasing bet beta is the death of all of us at some point but I don't know where it's all going to go what is um Olas what what kind what type of project is that Olas was AI agents um I think it was the first AI agent one um they had some issues with Team vesting and I mean that always seems to be the case it's either team vesting or the tech doesn't work but I don't even know if the tech works but they did like this was honestly quite a like interesting Phenomenon with these lbps is because one or two of them did very very well and then it got crowded everybody did an

LBP everybody chased it they were like oh Olas did a 15x why can't this and then what ended up happening is these projects rais ridiculous amounts of money on F like they would raise 15 to 20 mil on F at some point and it's like you just have barely a deck and a website maybe not 15 to 20 let's say to 10 but it's still a lot of money to like raise I'll say pre-product pre anything I mean that just reminds me very heartily of 2021 token pre-sales on really any chain but you know ethereum bance smart chain like hey we have this pitch we have this product we do a token sale just you know or an LBP or you know

whatever mechanism and pull in several million and maybe you never hear from them again maybe they built something for real that that probably is a solid indicator that um I think people were a little too hyped up about it yeah um I mean I think with AI as a broader Trend I mean you have to pick your spots with any new and exciting technology there's always going to be some degree of a hype cycle that um that it follows um I think that a lot look inevitably there will be a correction in the in in the broader markets and in AI stocks and tokens in particular um I'm not denying that at

all and I frankly look forward to that um but a lot of the a lot of the um I I I I I think that a lot of the like I don't know talks of froth in the AI space are misplaced like the obvious one is just Nvidia comparing it to Cisco Nvidia is not Cisco uh its valuation has actually declined since um since I think it was March 2023 or sorry May 2023 when it really blew out numbers um yes it does have a high valuation but is not a historically High valuation and revenues following those numbers which is why the which is why the valuation has an hasn't

expanded uh I think you know crypto is obviously a different story there's always tends to be some valuation premium that crypto tokens have um you've seen a lot of that get washed out which I think is super positive like the market is starting to come to terms with the fact that like agents are going to be a are probably going to be a commodity um and they're super expensive to operate and they're going to come here a little later than we thought because like the Tech's really hard and if you're doing agents on financial transactions like they have to be right like they can't hallucinate so like agents are like super exciting for me as a user of AI but as an investment

opportunity within crypto like yeah the market is definitely coming to terms with the fact that it was a little overrated um GPU tokens or GPU networks like still like the valuations are High um it's nice to see that they are actually generating tangible revenue on chain um they're probably going to be challenged um in the near term just given how much GPU demand has softened like it's it's relatively simple to get an a100 allocation now of the hyperscalers it's still kind of challenging to get h100s and better um but these networks aren't like as as my thoughts have evolved on

like the GPU Network space or the GPU deep in space um it's not clear to me that they are competing directly with what the hyperscalers are offering um they're competing more in Niche markets I think so like academics and researchers like it's hard for them to get access to AI they have smaller budgets like they don't have huge uh they don't have um embedded relationships with a lot of the hyperscalers like they're an obvious candidate I think for a a GPU Network um synthetic data generation like GPU networks have or crypto GPU networks have an advantage there um so yeah they have to compete on these nich is and I think so far like so good they're doing an okay job just like

the narrative might not follow through just given the softness and GPU demand um I think that like last comment I think that the the market is was over indexing on the intersection of AI and crypto Technologies and and under indexed on the um the kind of uh market dynamics that would arise as a result of AI that crypto could help so for example like decentralized GPU networks decentralized energy networks and uh and decentralized data generation via crypto rails I think are all really interesting um places where crypto has a wedge into the market

as a result of AI um it's not the actual intersection of AI and crypto technology that I think is super exciting from like a future cash flow perspective and I think the Market's like slowly realiz izing that where do you think we go from here on the uh on the AI crypto narrative yeah look the the thesis for decentralized GPU networks in the long run has not changed at all they still have wedges into the market um the US the the Grid in the United States is in desperate need of an upgrade and the hyperscalers are telling us that there is not enough power out there for them um you know

energy usage in the United States has scaled up like 0 to 2% per year for like more than a decade and we think we're going to be compounding at 6% annualized from here on out due to AI like that's an opportunity for crypto so I think you'll see some early stage opportunities there um we're expected to run out of high quality data by 2027 um tokens to incentivize um the uh contribution of data to like a data Dow or synthetic data generation via crypto um Source gpus I think is like a really interesting opportunity I think we'll see some early stage opportunities there

so like near-term probably like incremental weakness just given the pullback in GPU demand in the cloud but like longterm there's still really interesting problems that crypto um like uniquely solves so I'm I'm bullish on a medium to long-term time Horizon for sure I agree I um it's basically what I asked I wanted to make sure that I wasn't being stupid and that you also um no but I mean it's just one of those narratives that people don't really talk about anymore was crypto AI for two three months everybody was like crypto AI crypto Ai and it's fair I mean it was really exciting uh I still think it is I agree with you I think there like the Allure is more than other

things that we've leashed on to as an industry to make a narrative like it's actually there it's semi interesting and it can work um any other narratives that you guys can think of that have died out Danny you can go first if you had something relevant yeah I think just to go off of what Ryan said I think I mean I think he made a lot of great points um and some interesting points just around the potential for some of these you know Crypt based decentralized networks to you know potentially dis place or replace you know existing what are traditionally managed by you know local state federal governments or you know National governments um and you know there are people within the US you know

you can ask people about their you know electricity about their water about their internet um about their mobile networks even um you know maybe talk to Helia mobile about that one um but I I think these types of projects offering you know or looking into and and building out solutions for like decentralized grids or decentralized um you know GPU networks as well um there's an opportunity to really kind of provide a new means um to build out these networks and serve the interests of people that that use and need these Services um in a way that you know maybe has not been effectively addressed by governments today in most cases Ryan any

rebuttal he just said all your points are not correct no that's I don't have anything to add on to this I feel like you guys said everything that needs to be said so I'm going to go back to my original question um actually before we do that let's have a quick word from Pendle thanks to our fantastic sponsor layer zero what's up guys for this week's layers your snippet I'm joined by Anton the ecosystem lead at Pendle uh thank you for joining us Anon thanks for having me uh just to start us off do you want to give a short introduction of Pendle and what you guys have been focused over the past few months sure so Pendle is essentially a yield training protocol where users can execute various yield management

strategies how this works is that we tokenize the yield from an underlying yield bearing asset such as e or SDI where we split the yield which is represented as a new token called YT from the principal which is represented by PT and then can be traded in its own individual markets so this allows anyone to obtain fixed yields from pts or principal tokens or long defi yields by buying whts or yield tokens so instead of speculating on spot prices you can speculate on yield or interest rates itself so this concept is similar to bond stripping in traditional Finance where for a coupon bond that is essentially yield bearing or earning interest you can detach the coupon which

represents the interest from the underlying zero coupon bond which represents the discounted principle at pendel we work with um any Yi bring asset of which we are a major beneficiary of the liquid sticking recking and rwa sectors to name a few we've supported assets such as lios Ste ether fire e Renzo easy eth um Sparks EST AIS at toet and U many many more so in summary pendel is a venue where you can express your viewpoint on the direction of yield and develop strategies around the underlying yield volatility so that would be kind of like Pendle in a nutshell perfect um and how does layer zero fit into

Pendle right so Pendle implements a v token model also known as a v Pendle that serves as an important tool for maintaining the long-term health and success of the Pendle ecosystem it's very similar to uh vcv or V or from curve um the model is essentially using the same um like concept behind it and the goal behind V Pendle is to align incentives and generate liquidity and fees so users who lock their Pendle tokens for V Pendle can vote for pools every Epoch to channel Pendle token emissions too and lockers also enjoy the benefit of boosted yields on their LP positions as well as um you know collect real yield in the form of eth from the

fees generated by the protocol now Pendle is deployed on various chains but all the V Pendle voting is all done um within ethereum so we use ethereum as the main Hub layer zero has essentially enabled the protocol to deploy Omni chain V tokenomics allowing users to synchronize their V Pendle balances across all suppored chains where Pendle is deployed so we so layer zero helps enhance this reward accessibility and interoperability for those Pendle pools what this basically means is that you just need to cast your V Pendle votes in a single Hub which is on is on ethereum and Pendle the averages layer Z messaging protocol to broadcast the

voting results across the different P protocol deployments on on different chains perfect and you guys have done really well over the past year um do you have any exciting plans over the next year yeah so I guess for the next few months up until next year um I would say that our core values include um you know this idea of iterative product development continuous experimentation and staying on top of Trends and with that we will continue to focus on the reaking sector which has been doing quite well in the past few months since earlier of this year and we will continue to experiment with the new narratives in fact our recent

improvements to our friend and product like if you go to app. tendle finance you will see um improvements such as our points dashboard uh limit orders and other um you know transparency data that can be seen um uh on our front Ed so this underscores our commitment to this um iterative Improvement so but on the protocol side we are actually silently working on pendal V3 which is something that will complement and work alongside our current V2 deployment while we cannot reveal much for now we are working hard and are very eager to launch this to the community so more will be more will be revealed later this year and uh yeah like just stay tuned and we have more exciting things to come so that would be kind of like uh the

most or like our major development that we hope to put out uh later this year and early next year perfect that sounds very exciting I'm genuinely very excited to see what you guys are building cuz you like as a team you've been very adaptable and very agile so excited for you guys thank you for coming on thank you so much as well I was actually talking about this with a few other people but what like we had every not everything but we had a lot of stuff come up and a lot of stuff die out and AI is one of them um it hasn't died out it will be back your AI coins are good and they will definitely come back but there are are some stuff that have can like come up and Di out and I want to like in my mind it's AI is one of them

very clearly I feel like modularity is another one um kind of died out and by die out I don't specifically mean like it's dead and won't ever come back I more so mean like it's it's down 75% now um anything you guys have in mind specific narratives no but this is um this is the the this is the um this is the problem with narrative trading when all you have to hang on is the new narrative like the thing is going to collapse on you I think that Tia is one of those things um like look I'm rooting for the team I hope they're successful um but they've generated $22,000 in

Revenue since Inception and they have a multi-billion dollar valuation and you can think about the forward uh cash flows of that project and you need a big number of rollups to um to get that you know to make that valuation come anywhere like back down to earth right so um no narratives are look they're they they matter today they're going to matter less and less and um you know especially next cycle when you know presumably we have some regulatory Clarity and uh more institutions are playing in the space um maybe this was is like a good lesson

to learn to many like first-time crypto participants that it's not necessarily the narrative that you want to be chasing um yeah I think I I can talk about my narrative later but um I think to that point I agree and I disagree around um like going into the future the you know I would agree that we would see you know reduction in dominance of like narrative trading but I would also say that you know inad today I mean there is still a significant presence of of narrative trading and you know startups that that launch and and raise at crazy valuations you know pre-revenue and um lots of these things exist and not that I'm going to justify any of the crazy

Valu you know a multi-billion valuation with 20K in Revenue right it's that's that's hard to talk about from an economics standpoint but um I think just to the like people investors are forward-looking they think how big can this get uh how much can it be worth in the future and and if um they think it's worth less than that now they will consider buying it so um I agree to the extent that you know it it should lessen we should you know we should end up with you know more realistic and um I guess maybe regulatory compliant um teams and and institutions and and groups but um I don't think that we will see the

complete disappearance of narrative trading because it just you know it always EX exist in some form or fashion yeah I think that's what I think so as well I mean we'll see I um I think I literally only do use narratives like I use some fun like there are some things that I fundamentally believe in um just because I've done like a lot more research on them but mainly I just like to ride some form of a wave but I do agree with Ryan to an extent that it's it's been getting worse already and I'm sure that it will continue to get worse um I mean even though we were just talking about it and we're saying like the Market's not particularly like big right now um it's also getting a lot more

efficient I think like it used to be a lot I mean I just remember like 2022 2023 you almost had like a weaked position for certain stuff um versus now it's obviously like very much like a I mean still it's like compared to other markets it's not as efficient but like yeah I agree with you both I think that look I I don't think narrative trading is going to completely go away um you can look to try markets where retail trading is like 25% of the market and when it went from 15 to 25% in 2021 like things got really weird and that's going to happen from time to time I think that crypto is particularly unique because

it's this like weird permissionless system where you can kind of like launch whatever token you want and like kind of put Capital to work where you want and it's invited a lot of um non-traditional Market participants so price actions should look different um and I think in certain pockets of the market it will like I think meme coins will be here until the end of time and I think that those that's obviously going to trade on narratives um I think that you know there are enough like libertarian hard money people in like the BTC and eth ecosystems that like those coins particularly eth can like trade at like a valuation premium to like what like cash flows would dictate um but like if you look at the annualized volatility of

something like ether BTC that's fallen from like in the hundreds of percentage points per year to like around 40 now maybe even less um the market is certainly getting more efficient and we have a market today where not everyone is allowed to participate meaning like there is a compliance person that's literally standing in the way of so and so um fund manager um who wants to put you know 20 million in capital to work um and there's a lot of those guys and there's like a single compliance officer that's holding them back from doing that because of the regulatory environment um so that's going to slowly change over time and you know it's going to be felt in different parts of the market um more so than

others but it's something that you have to think about as a long-term participant in this market like this cycle um was way less crazy than last cycle um and the cycle before that I think was less crazy than the IC than the Ico boom like it's just getting less crazy over time so you know it's it's kind of you know it's not going to happen tomorrow but it is it's certainly like your you're True North as a participant in this market you have to be cognizant of that Trend yeah I think the key word there is it's not going to happen tomorrow as well I feel like a lot of people a lot of deniers of like the market becoming more difficult I would say are like oh but like you can still make money this cycle obviously um like Ryan mentioned

there is like legit regulatory stuff that isn't letting everybody participate and I also don't think that everybody is interested in participating still like there are a lot of naysayers and a lot of people who don't and I mean sure they might never come um or they might and it might just become more and more difficult but I don't I don't see it happening in a day like you said um but I was actually surprised to this isn't something that is maybe particularly interesting to everybody but I was talking to a few people um over the past few weekends and I feel like every but I don't bring up crypto often it's a weird thing to bring up but

sometimes people ask me what I do and I'm like oh I'm like I'll usually start off if I'm in fch and then you'll slowly move on um and there's a lot of people who just genuinely participated before and they were like it's just not as exciting as it used to be like what to what you said Ryan but these are like older not old but older people who were like just semi- relevant in crypto at some point and now they're like it's just not something that I want to do anymore so I wonder like we talked about it before how many people are just disinterested now because they got burnt on FDX or they got burnt on Luna but there's also like a sub sector now that are like oh I already did crypto like what it's not as cool as it used to be

or it's not like as interesting as it used to be I wonder if that's I wonder if they'll come back or if that's just they're like oh it's done now I don't care anymore I mean that is a very small amount like that's a that's a very small subset of people right like we're all like the the crypto industry rounds to zero and the percentage of people who left this like minuscule industry like I'm not I'm not worried about them um no yeah it's it's just neither am I it was just it was the first time that I've heard somebody be like oh it's to me it's done and I look because I'm of your point of view as well I'm just like it's it's so small like how can you count yeah I totally get what you're saying I

mean I've the the burn factor is real um I meet people today and I tell I don't I don't lie to them like you do Bach uh I tell them exactly what I do I I I tell them exactly what I do um and and some people are like you know they all they know is FTX um there there's a there's an image thing that the industry has to get past but like I'm really excited for when that changes I think that there are a few projects in the ecosystem where like they could generate like real Revenue like trafi guys will want to own that token and uh then people will forget about how crazy things were like everyone's forgotten about the point in

time where like your mom and dad did not want to put their credit card on the internet like everyone's forgotten about that but it was a real thing like the I think the first Mosaic browser was like unencrypted in the United States or maybe it was Europe or it was not encrypted right so like it was just a very different environment there was a lot less trust but people have totally forgotten about it because it's proven itself to be useful um there are a few things in the market you know hopefully um they can like kind of reach that Mass Appeal where you know everyone forgets um that you know it used to be such a wild Place yeah I think trailing off of that if you know we're we're sort of yet to

see some of these fantastic wonderful great consumer applications but if you know the Tik Tock of crypto came around it it doesn't really Ma you know if it's all abstracted away and and the users aren't thinking about you know how the crypto is really integrated into the platform or how they're paying for stuff stuff um I don't think it really matters if if you know the retail participants really know or care um that they're like in crypto so to say right if they're using the app and they're generating revenue for the you know for the underlying project or protocol or token um then that's all that really matters we just need to build those apps yeah um I just I mean we can't even build an app that is comfortable for me

to use and you to use and Ryan to use it's like every app that I still use is not particularly like good so I wonder how long it's going to take for us to actually onboard regular I don't think we will but on board regular people my thought point of view is that will'll always be like semi Niche um highly financialized obviously there will be other like people constantly join in um but I don't think it's going to be everybody's like going to use crypto and underlying I don't know maybe I'm just becoming very pessimistic yeah I think it maybe it just depends on your worldview for where where crypto rails are going into the future but like if you think there could be new backends for stuff like a patreon or like Shopify

and web stores and e-commerce platforms and other things along these lines um you know Creator sold Goods um you know there's opportunities where just normal retail consumers could be using products that are kind of supported by these you know this infrastructure and these applications without knowing it um you know maybe they maybe they'll end up just using usdc on the back end and it won't actually be tokens that they're buying or trading but um you know it might still be driving revenues to something yeah I think there are a few applications that um that I use in particular on a daily basis or let's say weekly basis that um I think are really great products um uh helium And Hive

mapper uh I have a helium Mobile plan and I have a hive mapper dash cam and I use them I use the helium uh I use my phone every day and I drive probably once a week and I never have to think about it it just does its thing it provides its service it's uniquely enabled by crypto um that's super exciting um I I got like kind of like a thesis that like if if crypto is ever if if all crypto ever amounts to is just like 20 very useful deepin projects like is crypto a success I think like I think that's a yes um what those 20 are going to be like TBD but um I'm really happy with um

with with what those those two projects have done as far as like uh uiux perspective and and frankly they don't get enough credit Ryan do you want to talk a bit about blast yeah I I guess I I I want to ask you guys um so I'm not deep in the Weeds on like the evm L2 space um I'll I kick the tires every once in a while just to see what's going on and uh kicking the tires on blast and looking at its valuation not only relative to other l2s andm things um but also um relative to like what's going on on chain the activity that that they're

generating like Blast has been left for dead um from a fee perspective like ZK sync is trading at600 times uh trailing one month fees annualized uh blast is trading at 35 times fees um tvl is still significant though like it's certainly in Decline Dex volume still significant though like certainly in Decline after like like you know aird drops or these like airdrop uh Farmers probably leave the space I'm wondering um presumably you guys know a lot more about the space than I do um what do we think about blast um what do

we think about the valuation is there anything for real over there and um like given this valuation in the market how are how are you guys playing it I specifically want to talk about it compared to ZK because this is how it originally came up like compared to ZK sync um and to me that makes sense only because I think the market is or people in general are overweight or like they're more they're over interested in ZK Tech um I I think it's because of what people have been touting for the past two years it's just saying ZK rollups are the end State end State ZK rollups are the end state which is fair um but I think people

often forget that optimistic rollups can just adopt ZK proving and ZK proofs and this is something that they've been working on like I know both optimism and arbitrum are working on their own ZK proving systems um but regarding blast like in on its own I think they just had like a tough over farmed for a year year and a half not a year year and a half let's say like six months eight months everybody was like oh you have to be farming blast everyone is farming blast the end state is that you don't give enough tokens and you make people watch a two-minute video and people are upset and they just Mass dump it um like I know this seems stupid because at the

end of the day that isn't how a market should work like it shouldn't be people are like oh pacm made me watch two and a half minutes of him talking about the full stack L2 so I'm gonna sell but I think like that is what happened like I think he overplayed I think he overplayed it basically and I mean it was also like his marketing was a bit off at the beginning we talked about this before as well he was like oh like guaranteed he didn't say guaranteed but he did say like earn rewards and like you're going to make money and you were pre-rich and stuff like that so I think that definitely played into people's mindset a bit and they were like when they didn't get it there was just Mass dumping we'll see how it goes I after

you pointed those out um those charts blast did a quite a good job onboarding apps um I think you can go two ways you can have enshrined apps or you can have like these big bang type competitions to build apps I think they actually have quite a bit of apps and it's the only place where they've actually tried to launch gamei I feel like a lot of l2s don't do gamei um very seriously at least the newly launched ones these guys actually like had some games on them I mean one of them got hacked for quite a bit of money so let's let's not think about that one too much but the rest have been also down only but at least they tried yeah I think I want to Echo the thoughts around the ZK point I think um you know you can look at ZK sink and

Stark and I think really the valuations there are you know people we talked about it earlier right people want to bet on the tech um I think a lot of people are betting on the tech in this in this case and not you know there aren't a lot of user metrics to bet on in the case of ZK sync and and Stark net um so you know if you think zks are the future then I guess that's how you end up at these valuations um so I think to that point that might be part of the discrepancy there I also think on the blast point like I you know you know I've been a bit of an L2 farmer myself um I did not Farm blast personally I just didn't find it interesting enough and I was not ex you know I was not personally interested in um bridging you

know Ethan into a multisig um so that wasn't in my cup of tea but I thought the initial strategy was quite interesting you know they had a a great product in terms of blur and then you know the goal was to kind of you know you introduce blast and then have like this new home for blur to kind of support that um I think the challenge is then now that you have this whole L2 how are you then going to go and compete against the Giants of arbitrum optimism base chain like sure you could get a cool gamei app and maybe get some users over there but um I don't know if people are building on the Giants and all the users are over on the Giants then um I

just don't know how you continue to compete um without really enticing people or incentivizing you know other great Dev teams to come over to your chain it's the classic L2 problem right there's just so many um for people to pick and choose from and some of the best ones have or you know the most used ones have a lot of the available things to do um and that's where most of the people are so um I think there is just an existential problem for all l2s that aren't leading the pack um so I think that will be a challenge for blast going forward one more thing I want say is that I feel like people are also a bit blast blur blur could have been so much more like they could have done so so so

well and they barely like they have two iterations now it's just on inferium and on blast um and I feel like they could have tried more like they could have done something with Bitcoin um when ordinals were popping off or they could have done like gone on base or anywhere else and they didn't and I think that's because like Pacman moved to blast and he focused on blast so I think people are a bit worried about that as well they're like okay like he did this with blur he built a fantastic product one season two seasons and was like guys I'm gonna actually launch an L2 for Blast for blur um which I don't even know if he explicitly said that but I know like everybody was thinking that because it was like there was there's also this

vitalic piece about how you can port nfts to l2s and make them tradeable over there which was quite interesting um and then now I guess people are like when is he gonna let go of blast and build something else I think the comments are focusing around like user kind of perceptions of these projects um or maybe popular perceptions of blast Visa the rest of the space um I'm not I'm not saying I'm explicitly a blast bu I'm just poking around here and like so the one thing that's just very interesting to me is that it is the from a valuation perspective it's the the lowest by far um lowest valuation in the

space um as far as l1's l2s l3s goes relative to any fundamentals and um from an activity perspective Blast has not seen a day of outflows since June 25th um tvl might have began to bottom out on July 4th um and derivatives volume on blast is essentially unchanged since mid April um so no decline in activity there which I find to be really interesting um arbitrum on the other hand um inflows outflows are

mixed um derivatives volume is like flat to down um and yeah like blast is certainly competing with the other l2s but it's right on their heels if you look at like trailing 30-day Dex volume um arbitrum is 10% of the entire L1 L2 space base is 7.5% blast is you know they're considerably they're behind they're at 2.4% but they are the as far as trailing 30-day volume they are the uh sixth most used chain which I find to be super interesting now like

the 30-day window is probably too small um but I don't know it's not it's not like a completely Bleak picture for that thing especially like if you assume it's a going concern and if you were to like cut the valuation metric or sorry if you were to cut the the activity met metrics in half like it's still cheap compared to everything else so um I don't know like is what would you say um his Pac-Man is the the guy behind blast like is he treating this chain as a going concern like it's pretty low float like High fdv um if he wants to get that value out of it it seems like he has to treat it as a going concern I'm wondering what you guys

think about that yeah I I think one thing um worth kind of bringing up um in ter you know in terms of looking at the trailing 30-day metrics um for blast is I mean the token launch was only a few weeks ago so a lot of the activity around the tge um the trading in the volume there um might be sort of obscuring the real picture a little bit um I guess it would be interesting it might just be too early to say based on you know that sort of relative valuation based on the activity there um maybe in another month with kind of the the airdrop and the other things out of the way um maybe the normal activity has the valuation from an activity and usage

standpoint a little more realistic in the realm that we would expect um there's no way for me to to know or say that with any confidence but um I I do have a feeling that you know airdrop tge people trading that um certainly always causes an influx and then we see you know rapid declines of activity following that so this could just be a spike on on recent activity that um is making that valuation look odd when you know participants are Maybe already kind of pricing things downwards um based on you know where they think it's going yeah the interesting thing is so if you do 7day trailing volume blast does fall down a rung but it's basically do

generating the same activity as optimism so it's the seventh most most used change Chain by Dex volume which is pretty interesting yeah and I agree I think the next month will be critical um from like a trading perspective but like it's pretty interesting to see that derivatives volume on the Chain has just been basically flat since April um and that and that's like a positive thing given the um given the um decline or sorry given the potential like decline in Farmers uh since when was it three weeks ago that they that they launched the token so definitely on the radar um I guess it's TBD uh if they're treating

uh blast as a going concern or not any final points you want to hammer into the heads of our listeners Hammer into the head doesn't sound right I don't know what do you say that you want to make sure that our listeners part [Music] with that's fine we'll we'll get them next time guys thank you so much for coming on um and to our listeners thank you so much for listening have a good day oh [Music]