The Ultimate Guide to LSTs | Season 5 Finale

Transcript

all right everyone welcome back to another episode of bell curve before we jump in quick disclaimer the views expressed by my co-hosts today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode [Music] all right everyone welcome back to another episode of bell curve special episode of bell curve because this is the season finale for season five where Miles and I are going to be recapping all the episodes that we've done thus far on liquid staking it's great to be back it's a little Bittersweet you know finishing a season but um yeah I think

we went into the season not sure if there was enough maybe to even have a full season on liquid staking and by the end of it I feel like we have even more to talk about that we didn't get to but I think we still covered a lot of ground and yeah I'm really really happy we decided to dig in on this topic I agree with you so I'm looking here and maybe to give the just a little bit of a road map for the audience he's listening it in you're absolutely right we ended up covering an enormous amount of ground some of the themes that we thought about moving in going into this season was we were very interested in Market structure so what was the market structure in-game going to be for liquid staking protocols and specifically we were interested in looking at power laws right so it's just

going to be very fragmented Market or more of a winner take all or winner take most we're interested in the principal agent problem and how you could maybe mitigate that with different mechanisms which we covered in in detail and uh we didn't really talk that much about dual governance we will a little bit in this episode but also the staking router that Lido's pioneering uh social scaling that was a really big thing then that is you know not to make this too topical but the self-limiting debate is cropping up in a big way for Lido again as it approaches 33 percent of steak that's all over the timeline these days so we'll touch on that we also talked about uh different approaches um in sort of LSD adoption across the ecosystems of not only ethereum but

Cosmos and Solana and I think looking back at the history was very instructive about why uh Lido specifically found product Market fit on ethereum as opposed to some of these other ecosystems but there's some experimentation that's going on especially in Cosmos land that I find super interesting so we'll kind of dive into that and then last but not least we we spent a good amount of time talking about earlier in the season the intersection between liquid staking and restaking which thought was great it come we kind of got it this this tension between letting things be very permissionless and turning things over to governance as opposed to uh this kind of this idea of training wheels and having a bit more of an opinion from a more centralized entity but that

actually might uh result in a better outcome in terms of even decentralization paradoxically over time so you want to start off miles I'll just turn this over to you to to kick it off but you know what are your thoughts on Market structure uh like how do you see all this playing out what do Power laws look like and maybe we could talk about specifically within ethereum and then how that might Ripple out um so I think we went into the season or at least I did you know with the Assumption or with the thinking that this is likely going to be a winner take most uh winner take all sort of Market um per ecosystem I think we can get into this but I you know I don't think these Network effects necessarily travel that

well as evidenced by you know Lido's domination on on ethereum that has not necessarily translated into their you know Solana products winning or their uh you know we'll see with Cosmos um but yeah I think maybe just a couple thoughts I think as an LST provider the most important assets you have are brand which kind of comprises of security and and really just Lindy um and Integrations and so I think you know the long-term winners uh are probably in production today uh because these early mover advantages you know really just compound over time right the earlier you are and without getting hacked the more Lindy and you

know that kind of kind of a cruise to the brand right um and then the more time you have to build up liquidity for your token which helps with Integrations right so you can see light as early mover Advantage materialized into being the first to integrate with Ave the first integrate with maker um and that you know further boosted their lead and so yeah I think but it's at the same time it's very interesting to look at I guess Market penetration across these different ecosystems and we talked a lot about this but it was kind of The Perfect Storm on ethereum um I think I forget who we were talking to I think it was Aiden said basically the more broken you know your protocol

is uh in terms of handling liquid snaking you know the more prevalent liquid staking is going to be or maybe the more broken it is at handling mistake right and so if it's very easy just to natively you know within your Kepler or your Phantom wallet delegate your uh Soul or atom to a validator then you know that's you're not going to necessarily need to go point to something like Lido in order to stake right um and so I think the difficulty of staking mixed with the you know existing defy ecosystem made you know ethereum extremely attractive for liquid staking Lido is the early mover Advantage um

it's now gotten off to a lead that makes everybody nervous because they think about Lido as one entity you know I I don't think about Lido as one entity I think about you know the stake in Lido as as consent comprising of whatever it is 30 validators um but it is one entity in terms of its governance and so we can talk about it later but you know how do you unlock further market share by getting the market comfortable you know with your lead you can mitigate the principle agent problems through something like dual governance you know opening up the staking pools to become permissionless through the staking router etc etc um so yeah that was just kind of a a long rambling uh a lot of thoughts there

a lot of good stuff there let's break some of this down and maybe try to give for listeners sort of a clear and explicit prediction or picture of how we see the future playing out but let's say maybe definitively at the end of the season how we're feeling about it is there are very strong power laws or network effects uh within individual blockchain ecosystems that don't necessarily travel so what we would expect to see in the future is a liquid staking ecosystem on ethereum dominated by probably at this point it looks like Lido they have a pretty a lead that would be very very difficult to to beat and the reason for that is sort of this lindiness and security-ness obviously for those of us who've been paying attention to crypto over the last couple

years hacks are still incredibly real and I think there's you know in order for you to justify not taking you know using the service product or service of a leader the product has to be an order or two orders of magnitude better and there's just not that much to really differentiate with in liquid staking so that lindiness and security-ness and the amount that will lead to liquidity which is ultimately what you really want from uh from liquid staking protocol so what we would expect to see is probably lydo being dominant on ethereum and then fragmentation what we would not necessarily expect to see is lydo being the dominant staking liquid staking provider across other blockchain ecosystems to your point about Network effects not traveling uh Lido made a pretty unsuccessful play into Solana a

while ago it was very interesting to talk to zave who was uh the CIO at chorus one and they chorus one was sort of the back end for lydo expanding into Solana he mentioned one of the lessons learned and when they were sort of doing their post-mortem on why this didn't work token incentives were actually a really big deal so uh that that's one of the reasons why maybe concretely Network effects don't travel so what you would expect to see is a dominant liquid staking provider in Solana takeoff in a very similar way that it had lydo has on ethereum maybe we talked to Lucas from Judo maybe that's Judo Soul maybe it's marinade I think they're the front runner today but probably very very similar and then in the the cosmos ecosystem uh I think stride is the

dominant provider now I'm not saying any of these things to you know King make or anything like that I'm just pointing out who the leaders are today so that's probably how we would expect to see it playing out in the future right liquid staking protocols I just don't see them as the kind of product where there's gonna be some big technical disruption in a couple of years that you know unseats or the existing like incumbents um I guess you can compete on yield right we've talked about that a little bit and it's unclear exactly where that Stacks up versus brand and security and you know Lindy basically um we it seems like it doesn't actually you know an extra percentage point or two of yield does not really move the

needle enough to like unseat Lido um if there were to be you know because I think Lido is not the highest yielding uh LST by by a lot um and yeah I think maybe one thing all to denote is that there is a market uh that at the moment can't touch Lido um and this is or I'd say this Market is twofold the market that's not using Lido is the market that can't use Lido and there's also going to be a market that likely won't be able to won't know about Lido right they might know about coinbase uh right and so I do think that you know it will be very interesting to see I think glido wins the market of everybody that you know can use Lido but I do think

there is a market of you know for the liquid Collective for products like CBE um that you know it has a more I guess Enterprise grade validator set kyc front ends things like that right that fiduciaries can offer to their customers um and just how big a market that is it in the end game I don't know but I do see light I think it's going to be very difficult for lydo to break into that market um unless they give their users the ability to delegate to whatever validator they choose or whatever validator set they choose and we know that that in itself you know needs has trade-offs right because that today is part of governance right how

these allocations are deposited um and governance allows at least allows you know light out to stay ethereum aligned if you hand that choice over to the users and all of a sudden we have billions and billions and billions of steak pouring into Lido that is being deposited and uh delegated to you know a staking router pool of like three validators right then all of a sudden people are gonna get like maybe these self-limiting debates get a little bit more legitimate um but I think that's yeah I think Lionel's gonna have to think long and hard about the best way to handle that in the trade-offs there in order to get break out and and reach that market

um but yeah it's a I think really there are winner take all like you know a lot of effects here but we have to keep in mind that the cust you know the customer preferences and some of them can't necessarily use the winner um so there might be two there but apart from that you know I don't see a lot of winners here it kind of depends on how many big like proof-of-stake da layers you see in the end game as well right maybe it's like a handful of big layer ones like Celestia and ethereum obviously and Solana um you know Cosmos hub uh then you know this doesn't really apply at the roll-up level right um or hope I don't think it's unlikely

at this point that we're going to see a lot of like roll-up tokens you know with permissionless staking and for their sequencers launching lsts themselves um so you know it could be just a handful of winners at the end of the day that's kind of my prediction and I think that Lido is really well positioned for ethereum you know that is not extremely sensitive with kyc and you know Enterprise grade validators I think there's probably another Market that is right on ethereum and then I think strides really well positioned for you know a couple other layer ones like like Adam in the cosmos ecosystem Celestia and and I think Judo and um there's a couple players I don't know

how Solana is going to play out but it's it is a little bit more fragmented over there it's pretty equal market share actually between yeah between the three players well that was a that observation actually came from our Solana episode it was Xavier or Lucas that said that the more the the more the protocol does the less opportunity there's for external liquid staking providers so this is probably a good opportunity to transition to this idea of social scaling and the self-limiting debate so the again to to just go back and do a little bit of a history lesson and this is something that we've covered pretty extensively throughout the season so I don't want to get into too many details but the history of why at least from my perspective uh Lido found product Market

fit on ethereum whereas on the other ecosystems salon and Cosmos that we covered on this season there's actually a much higher penetration of staking but a much lower penetration of liquid staking was sort of threefold which is one there's no in protocol mechanism to delegate stake there's a large demand out there for people to stake passively just to give a little bit of a history lesson we've covered this pretty extensively throughout the season so I don't want to go too far into it but threefold reason why liquid staking found product Market fit on ethereum where it didn't in Cosmos for instance where the concept was invented or at least first conceived of so one there was obvious there was the dynamic of the beacon chain and the width essentially there was you the dynamic was when you

staked your ethereum before there was the merge there was an indeterminate period of time for when you would be able to get that ethereum back if you would ever be able to get it back so when Lido launched the immediate value proposition was that you can stake your ether but then you can continue to use it and that was an enormous value proposition for Lido right off the bat number two there's no in protocol delegation for stake there's an enormous demand for holders of ethereum to stake passively and to receive those rewards but but ethereum said we don't want to put this in the protocol for a variety of reasons that we've covered in terms of how we want our validator set to ultimately look like so we don't want to do that and then three there was a thriving defy ecosystem on ethereum so D5 first really

took off and is still most active by far on ethereum so there was a capital efficiency question of hey I want to stake and secure the network and receive that yield but I also don't want to give up the opportunity costs of participating in D5 so liquid staking neatly solved all three of those things so now what happens is that you've had that you have liquid sticking take off in ethereum these market dynamics that we talked about the winner take most or all Market structure is starting to play out in ethereum and Lido is gobbling upstake on ethereum and again I don't think this is you know obviously Lido executed they were directionally right they got a little bit lucky based on the the ecosystem but this probably natural Dynamic of a natural monopoly similar to

uh utility provider is starting to play out and then folks in ethereum are saying whoa whoa whoa this is quite risky here um if there were to ever be something like a catastrophic slash event an enormous amount of eth got evaporated this could actually mess with how the protocol comes to consensus and secures itself in another you know another thing that could happen is ultimately if in a world where uh Lido has 100 uh the ethereum stake for instance then suddenly the governance token of ethereum is really the Lido token and huge decisions for the ethereum protocol can actually be made by a much smaller market cap subset token so I think these are the problems that are starting to get raised and I

think there are good good there are good perspectives on both sides of this debate uh miles I'd be curious what do you think about the the self-limiting debate overall and then maybe we can get into some of the ways that light I was thinking about mitigating these risks I think it is a it's a very there's a lot of dynamics that are interesting around the self-limiting debate um you know both kind of what it says about this social governance right of the the ethereum follows and it's a little bit it's always a little bit opaque as to you know like how things how decisions are made of in ethereum um and it's just very kind of an interesting there's a lot of interesting stuff there um I would just say that

you know first of all the people who have come out and said we're going to self-cap at 22 you know they have a fraction of the market share of of Lido and 22 would be an incredible outcome for these players given you know their current positioning um and two you know like again we're now the focus is on Lido but in in a negative way maybe but three years ago Lido was really the one kind of hope for ethereum to avoid network centralization with all these like pseudo liquid staking tokens from exchanges right um so there is the question of okay would ethereum look how would ethereum look today if Lido didn't exist it would

look worse but at the same time you can think about right yes it's not great the one governance um token controls basically 33 of the Network's sake that's not exactly true right because we know that all these validators there's 30 validators and you know it's they're not controlled by the the governance token of Lido directly um so what is Lido doing to mitigate all this and are we okay with lydo having 66 in two or three years if dual governance is live right and the they've launched all these permissionless staking polls via the staking router and their stake is now distributed not just across like

30 validators but a thousand validators right that's what they're working towards and that's really the question we should be asking is in two or three years assuming that this chart of Lido's market share continues to go up and to the right what will lito look like you know at 66 at 80 and are we comfortable with that um that that's kind of what I'm thinking about and if it's thousands of validators and that's not a terrible outcome um and you just have to be also super realistic about what it would look like if Lido decided to you know hang up all of their work today and say you know that's it for us like stop

depositing to us what would ethereum look like in two and three two to three years if that was the case yeah so to to summarize this let's just go out and say it would probably be in undesirable outcome if ethereum consensus was governed by this opaque centralized organization I would say that's not a good outcome and I don't think that that's what Lido wants so there are a couple of different ways that you could continue to ensure that the liquid staking ecosystem on ethereum Remains Not dominated by any uh couldn't be easily co-opted so one strategy would be this self-limiting debate that you see and you could actually try to socially enforce the idea that no one liquid staking provider should get more

than 22 percent of governance or of uh of the mark of market share and there have been various uh suggestions for how to do this the one that I think makes the most sense to me if you were to go down this route is to gradually increase the rake that lydo takes on everything after 22 and you know there's sort of uh there's a it's basically Dynamic fees so the for every bit of stake that you have over that 22 percent lighter starts charging higher and higher fees to the point where that stake naturally moves to other providers so so that's one way you could do it you could just say we want a healthy ecosystem of different participants the other approach would be to say guys there's no use fighting this this is this is there are natural market forces that work here and instead of trying to

Force an unnatural distribution of liquid staking providers instead what we should do is accept that there's a natural monopoly here and we should focus on making the winner take most which is looking like it's going to be Lido we should make them as decentralized as possible to the to the point where governance is almost as decentralized as ethereum itself and instead of having this white listed set of node operators we have many hundreds or even thousands of validators and that's what the staking router is and then we should also make sure that the governance of Lido is very robust and that steath holders actually have some say in governance as well which is where you get dual voting or dual governance rather sorry so I'm a little bit torn here on it I can

really see both perspectives I would probably not be on the side of self-limiting and I do want to give a shout out to folks like superfizz who are have just been extremely beneficial to the ecosystem the ethereum ecosystem overall I totally understand the arguments and where they're coming from here and I think you know if I were to try to steal me on the other side of this debate and say hey guys this is a huge problem here I'm watching this meteor come right for us and at least I'm trying something right but what I would say is I think the downsides of trying to enforce a self-limiting debate would be a you actually want to incentivize entrepreneurs to come and build enormous businesses and I think this there are very few things

in crypto that have true product Market fit I I think you commit we've talked about this before I think you can make a really compelling uh you can make a very compelling argument that it's basically Bitcoin and ethereum it's the centralized exchanges it's probably stable coins and it's liquid staking tokens and to take the dominant liquid staking token provider and try to cap it right out of the bag I just don't think we have enough examples of product Market fit in crypto that we want to be doing that and it just sets a bad precedent I would say so that that downside to me outweighs the the upside and I think it probably makes sense to approach different uh pursue a different approach the other thing I think is you're starting to get you're starting to see much more this idea of

ethereum alignment and I I think it's very well intended actually the the idea is that ethereum has these values as an ecosystem we want to see these values propagated around uh different businesses and providers of products and services that crop up the problem is ethereum doesn't have a formal governance system and when you don't have a formal governance system there are pros and cons to that but then you start to get this idea of ethereum alignment everyone starts to ask well what does that really mean and who is setting the definition of what ethereum aligned really is and it starts to feel very shadowy and illuminati-esque when it really isn't like that it's a it's a

well-intentioned group of people I think are trying to push a good set of values but there's an Optics question that I think is only going to get worse so I I really do think it makes sense for the community to question this idea of what ethereum aligned really means and who's setting these ideas I think there needs to be a little bit more transparency if we're going down this route because I think people will continue to reject it as a yeah I agree yeah I don't I just also don't think it scales right like we can't just rely on the what is considered ethereum aligned and the depths of a mayor Market where it's really just like you know missionaries left at this point that are building and so maybe Lido doesn't look ethereum aligned today relative to those people

but again zoom out like two or three years and say we actually you know do grow the ethereum user base by 10 or 100x like that's it Lido is going to seem pretty aligned at that point and you're not going to be able to rely on everybody you know kind of falling suit and like into this kind of Goodwill approach of building businesses um it's just it's not going to work I think the two if you're going to be realistic the two ways to approach this if you don't like that future um are one two push to build some sort of Regulation into the protocol itself like the LSM like that is a practical way of self-limiting uh or of limiting these

different providers um or to build a better competitor right um because those are the only ways that you're actually going to unseat Lido I think oh and like it's it's just kind of nearsighted thinking to me I think it also doesn't scale and one maybe to put things in in crypto talk is if blockchains are tools for social coordination and in large scale human coordination you need both carrots and sticks I think and what my at least my perception is ethereum alignment is this emerging stick and if you don't do what we say or we want again I think in a positively intentioned way there will be these negative repercussions for you and

I think if that ends up being the dominant stick so to speak you open yourself up to a very specific type of griefing attack which is exactly what Sam bankmanfried did which is he said the right shibboleths right but he obviously he he wasn't really aligned but he made himself appear that way to many people very successfully over a long period of time and I think if you what you could see down the road is people saying their ethereum aligned and doing all the things that look look right but they aren't necessarily actually so that that's I'm imagining the Trojan Horse you know like ethereum aligned up top knows what's underneath right

um but yeah I think that I think that's right and I think that there's also like from a design standpoint we can talk about training wheels and I think that that was you know the Crux of of the criticism uh last year in the self-limiting debate right that they had no plans to move off or they hadn't publish plans to move off of this curated permission set um and but the reality is if they had had a permissionless set like rocket pull from the beginning they would not have you know been able to scale to the size that they were at where they were actually you know the market leader instead of coinbase and binance and stuff like that um and I think we're seeing that now with Roll-Ups too you know we'll see

Roll-Ups that attempt to launch with a permissionless sequencer set um which will require you know getting a supply side to bond collateral and like that's going to be an economic cost of the sequencer to the roll-up I mean um and the ones that start off with these training wheels right let's say we have four or five increasing to ten maybe to 20. um governance elected sequencers and they don't have to bond collateral and we're they're going to act in the ways that we tell them to through governance or we'll boot them off right like that to me is a really good analogy of you know those roll ups are going to scale and and have better economics and get to the point where you know they're big

enough that people care and then maybe they move to some sort of you know more permissionless sequencer Set uh if they're big enough for you know that to be necessary um but yeah I think we're starting to see those training wheels coming off um with Lido and we're starting to see you know the introduction of like dual governance as another way to mitigate the principal agent problem hey everyone we've got a great episode here but before we do I just wanted to give a quick shout out to permissionless this is the biggest and best conference in all of D5 it's the one that we do with bankless who's a great partner for us last year we had almost 7 000 people there in West Palm Beach we are moving this year to Austin Texas from September 11th through the 13th and if you're a listener of bell curve any of these last

five seasons this conference is basically custom made for you we're going to be talking about liquid staking the theme of this season we've got a bunch of great panels on Mev if you listen to the app chain thesis we've got a bunch of Cosmos folks out there in full force we're talking about the converging architecture of Solana the roll-up space in eth and Cosmos so I would love to see all of you there and to reward you for being such great listeners to Bell curb you get a special 30 off code it's bell curve 30 that'll get you 30 off tickets click the link in the show notes and then head over to the permissionless site and make sure that you get your ticket today again that is bell curve 30 click the link in the show notes let's talk a little bit about this

tension that we brought up earlier in the season and maybe this can be a good segue into restaking as well in between something making something permissionless but then also degrading the user experience or potentially diluting the outcome that we would want to see so let's use the example of the App Store that we brought up earlier in the season where Apple actually takes a very opinionated approach about the standards that developers need to have to participate on that app store the reason that they do that is to curate a better experience for users of the application so for instance if Apple would have just have no opinion about the types of apps that people could build and propagate on their store it would ultimately lead to a much worse

user experience for all these different reasons so on the one hand you could say hey this is Apple stepping in they're making it not very permissionless not good for all these reasons who's really in control here on the other hand they're doing it it probably led to a better outcome for users and developers I would argue in the long term you see the same tension I think cropping up in liquid staking and also eventually restaking when it goes live in a big way so John Charbonneau has done I think a good job of propagating this idea of liquid sticking tokens as a as a force for decentralization and you can imagine if from day one Lido had not adopted a white list and just said

we're just going to take any validators that want to become a part of this network what you probably would have wound up with was a extreme power loss in terms of the node operators that ended up winning and they might have just for instance if it was totally random maybe all of them would be in the same geography right I mean that's that's not something that you want because then you're you're subject to the whims of a regulatory regime instead the For Better or Worse Lido I would argue for better they took a very opinionated approach in the beginning and said actually we're going to do a whitelisted set of node operators and not only do we want to make sure that they're very performant and that their professional organizations here so that delegators aren't going to get slashed and things like that but also we want it

to be geographically diverse so that it's not the our entire the uh the supply side of our two-sided Marketplace here isn't subject to any one particular regulatory regime so again you could make the argument and say hey this isn't great this isn't permissionless but on the other hand if you had opened it up to the permissionless free market from day one you would have gotten not such a good outcome now this is where I think training the concept of training wheels comes in where they're moving towards that and that's what the staking router is and just to refresh folks the staking router is this set of moving the gradual progression of moving from whitelisted set of node operators to a diverse set of individual modules so for instance there could be a which talked about the

intersection of the staking router and DVT which is distributed validator technology would make which makes it much easier for solo stakers there could be a community module maybe an Institutional module just opens it up to decentralizing the set of validators to a point where I think we would all that that's what we would all ultimately yeah they took their time though right um to do that and and they got to a place where they can you know were able to develop like this is this is a technical breakthrough I want to say first of all this is like the first you know liquid staking protocol that it has this has had multiple validator sets right within the same liquid staking protocol and yeah I think I think it is a big deal um maybe just to go back to that App

Store uh analogy I mean it's kind of three three options that the App Store could have taken it was either you know we're gonna curate this um and we're going to make sure that that's a great user experience uh you know there's a small hurdle to get through as an app on the supply side but there's no economic cost except for going through the process they could make it completely permissionless with no you know Bond at stake and it's just a show right and everybody is using all these apps they get hacked all the time and losing lots of money uh maybe they're scams or they could you know to draw the analogy to say like rocket pool okay it's permissionless to join the App Store but you have to put up some collateral in case you know your users

get hacked you have to reimburse them or something like that right and that's that's a huge you know like economic cost to the supply side and so they would have an App Store with very few apps on it right because they're all these startups that don't want to post economic you know collateral so maybe just extending that analogy a little bit further as to why that scales the the best and has the best user experience but you know now they're at the point where they can safely sort of take off those training wheels um and I think eigenlayer will face the same sort of challenge as they you know first just need to establish themselves right they need to make restaking prevalent and then once it becomes large they need to figure out how to remove

you know Central points of failure and in centralization like the slashing veto Council right that is is kind of gatekeeping which avs's get this human backstop of a slashing protection um and you know SRI Ram talked about hey we're going to have a Marketplace of veto councils right and then that kind of removes us as the only option for an AVS um and then we're also going to you know once these contracts are battle hardened and then AVS has been operating without issues for a long time we can osify those contracts and then there's no need for the veto Council anymore because we're confident any slashing event that goes through is correct um we also talked about you know Cubist

and the anti-slasher technology that they're bringing on so it's about you know kind of putting on these training wheels until you can develop technology and and different ways of like you know designs to kind of break the trade-offs um and we're now seeing Lido try to break that trade off with with the staking router and dual governance um and we'll see eigenlayer you know face similar challenges uh if and when they become as as you know as large above Market forces Lido okay I want to get into restaking here and then transition into the intersection of liquid sticking and restaking and why we were focusing on that this season and I think one the the episode of tree run was one of my favorite of the entire season

um but before we do I wanna just again give the audience something a little bit concrete and I want to ask you a question of let's say you know we're having this conversation two to three years from now and we're looking at the liquid the staking router what does that ultimately look like to you is there how many modules are there are there is there sort of a community module a DVT module an Institutional model module and then the whitelisted module is there five or six or is there are there many many more modules than that to the point where maybe there are large holders of eth maker doesn't re-hypothecate but let's say some big uh D5 protocol with thousands of Ethan it or hundreds of thousands of each said hey I want to use Lido Services here at a liquid stake but let's be honest guys I shouldn't be

getting the same rates here you shouldn't be taking the same rake from me as you are from someone who's just delegating one eat to you so I want to work out some special preferential terms or maybe I have these very specific parameters uh about the like withdrawal period it or something like that so what do you think the what do you think the liquids uh staking router ultimately it's a really interesting question to kind of think through here and I think there's two components right is first you need to it you need to get through governance to basically Implement a new validator set right a new staking pool and then the second and probably more important question is how much of new stake gets distributed to that new validator set right and I think they'll

start off very slow with okay we'll introduce this new DVT you're right permissionless set we'll cluster all these permission lists you know like homesteakers basically with you know a course one or with a figment um within the same DVD cluster to protect them okay great now we've got kind of a safe setup how much stake should we get to them and I think it will start off with something very small like you know under one percent but getting past that hurdle and getting vital governance comfortable with saying okay actually no we want the DVT you know set to have like 25 right that's the first that's the first step because it doesn't matter if you have a

million of these you know new modules but 95 of the stake going to the safe module right so I think it really you have to think about it on on two two axes there and then okay great so we'll have a permissionless uvt set we'll have um you know maybe one other sort of general purpose set that makes the protocol at like more ethereum aligned and healthier um but then what are the other sort of modules that could come in um you know I kind of expect there to be a maker module if if that is a really big distribution and channel for them and if maker decides that Steve is going to be you know basically the collateral

of of of Lido I'm sorry of the main collateral of dye um and they want some sort of Kickback right for those deposits um and so you could see this becoming sort of like a BD strategy where you know you can integrate steath into your protocol make it a critical part of your protocol you know don't be like frax who went off and built their own um you know liquid staking protocol use us and we'll kick back some deposits to you um but then after that I think it really depends on whether or not they figure out a way to let users choose which module they delegate to right because if users can't choose which one to delegate

they want to delegate to uh then I don't see there being a ton of modules I do see there being a much more you know a larger distribution of stake and like thousands of validators but I think you can bring in thousands of validators to say like the DVT module um if they let users delegate to the module of their choice then I can see they're becoming lots more modules um and I don't I think we'll get into a bunch of different self-limiting debate if that becomes the case and you know 40 of lydo stake has been allocated to like the module with coinbase cloud and like you know staked and maybe a handful of other ones like that's going to be a

very different conversation that's why I think it's going to be actually a less of a no-brainer than it might sound like to make that decision um does that make sense that's kind of how I'm thinking about it yeah I think so too there are also middle grounds there for instance governance could just limit a limit or limit the amount that any one module could get to say 10 or something like that over a period of time so again always Shades of Gray and things that you could do to to not be as binary but I agree with that and that that hint set as well I think the bigger idea of fungibility as well in within this topic and that's maybe where we'll start to get into this idea of liquid staking and restaking intersecting because as soon as you

start to you can make an argument that as soon as you start to let users direct their their state to specific validators that what you actually have is more specific yeah on a party risk to one set of validators as opposed to a general uh you know General exposure to all of the validators within this staking pool and those positions that you have look a little bit less fungible and again for folks who are trying to get a mental model of what this looks like I would suggest going back and listening to the episode that we did with Adrian and Vance but consider it like a a pool of assets in a sense right um where you have a claim on that pool of assets similar to today be not exactly like this obviously but a sort

of a money market fund desk type thing uh in the future and maybe we can get into this discussion as well it could look more like a mutual fund or something like that if we allow a restaking module within this this staking router and then you start to get token rewards in in different and different things but that idea of fungibility I think is key and we heard over and over again from liquid staking provider years this season that fungibility is the one thing that you do not want to mess with so I think there will be a tension in between how much these liquid staking protocols allow users to choose things or the optionality that they have versus never Crossing that line of breaking yeah it's interesting because the LSM in some ways does break that trade off you get an nft that

represents you know your stake and your delegation right but then you then in order to get back to this LS this thing being useful right you deposit the nft into stride um but in doing so you then lose you know that validator specific delegation like stride has the ability to rebalance your your stake and redelegate it to other validators if your validator gets slashed again it's it has to be socialized across the entire you know uh holder set of that LST I think that's where it gets a little bit trickier is you know if you give them the choice to delegate right to the module of their choice then you'd have to give them an nft and then that

nft would have to get pulled with other nfts and and and you kind of you know go back on like the benefits of why you you know wanted an nft in the first place so anyways yeah it's it's it's very very difficult uh we'll see if you know that's the only technical like Innovation I could see coming in the you know if someone figures that out in the next couple years let's talk a little bit about restaking that tension between having an opinion or sort of training wheels uh so to speak in in the early days uh for restaking and where it's ultimately headed and then let's get into the intersection of liquid staking and restaking because I thought that was a critical something pretty critical that we talked about this season so we talk about just just to refresh Folks by the way on

protocols like eigenlayer and restaking and what that is it is a very similarly to Lido it's a two-sided Marketplace in between avs's so actively it's basically uh sort of middleware service operators especially within eth but it could also be um validators for another layer one or app chain or something like that um and people who have stake uh that want to secure that so that's the two-sided Marketplace and basically what it allows stakers to do is re-hypothecate that Economic Security to secure uh things either sort of one layer up on ethereum or across different ecosystems and uh it's a very interesting Vision you know being able it it you can see at a high level there's a very natural fit there but

they're also cause for concern right and one of the big things that people have been asking or curious about is how slashing events would happen across especially different ecosystems and what are what is the risk right of potential essentially introducing leverage of rehypothecating your ethereum stake or well you know it just sounds it sounds a little scary to some folks I think understandably I think SRI Ram addressed many of those uh concerns very adequately in the in the episode that we did with him earlier this season so I'd highly recommend you go back and listen to that but while I was going to walk us through you know what do you what are the training wheels that exist today on on eigenlayer to mitigate some of those risks and how do you see that transitioning off over a period of time I referenced it earlier but basically

today if you are in uh a service that wants to be you know validate or wants to be secured by restaked ethereum and you know you want to basically go to the supply side of operators which initially will just be ethereum validators running additional Hardware software and doing additional jobs right and the supply side of you know Economic Security from stakers um so in the beginning there's going to be a lot of training wheels um and I think this is a specifically to be ethereum aligned because this is such a big and scary but also exciting you know new innovation right um so in the beginning eigenlayer governance will control which lsts can be you know are whitelisted for

um you know eligible for restaking um they will control you know again which avs's get the benefit of this human backstop which says if there was an unintended slashing event we have the ability to veto that you know I think that that is a huge sort of it's not like a King maker necessarily for avs's but if you are a Staker and you have to decide between an AVS that you want to secure right that if something goes wrong you're not going to get slashed versus an AVS that you will get slashed which is an option they have the permissionless option um then you're obviously going to go with the one that you get protected right so that's a big you know I guess

point of centralization or that lies within eigen layer governance that eventually that they will move off of um by introducing more of these veto consoles so okay you don't get through like the canonical eigenlayer veto console you can go to a different one that's going to provide a similar service right um and maybe they'll charge a fee it's unclear exactly where they do that um and then yeah I think there's some other really interesting things going on there to protect um I think the the stakers that that restate to these you know new avs's and it's a little scary you've got these validators that are running new types of hardware and all this you know slashing logic that is kind of under the hood and

and so I think you know again I have a reference like Cubist building this um uh this this implementing something called the anti-slasher um which just aims to make the validator side safer and ensure that they don't double sign because there's only one copy of the key so it's really just the key management uh product but it's really really interesting um so they're doing a lot of things that you know are like uh aim to be as safe as possible um when they launch and they will be highly curated but they're putting people in place right like we don't know what this veto Council looks like but we can imagine who it is and it's probably a combination of people who are really excited about eigenlayer but also people

who are really concerned about eigenlayer right and that is what will kind of ensure that the curation is is done by you know folks that are aligned in the best interests of ethereum and so yeah it's it's like partly interesting because of you know the technical qualities of this debate uh it's partly interesting because the political side of this this sort of debate and how excited we should be about restaking and whether or not we should embrace it um but it seems like that they've they've been extremely thoughtful and extremely cautious in their approach um so yeah I'll pause there but I think I think it's very interesting yeah I agree and maybe to get into the

intersection between liquid staking and restaking is I think it there are two the way that I at least look at this is from let's let's approach this from the perspective of the profitability of a validator and let's say that there are different side cars that that validator could add on to make themselves more profitable here's a great one that is very widely adopted and ethereum has 95 Market penetration Mev boost right that is a an off-chain Marketplace which allows validators to more efficiently and trustlessly extract Mev from large centralized block Builders boom extra source of income for a validators for at Large

another sidecar will be restaking and there'll be a certain amount of validators that opt into either you know you're kind of alluding to this operational model there'll be different ways that validators can opt in there could be uh you know very operationally intensive but no principal agent problem model where you are a solo Staker in ethereum and then you actually run other Hardware devices and you re-hypothecate yourself and then you're not really relying on eigenlayer for very much but then there will be all the way on the other side of the spectrum if you're a liquid Staker and you just re-delegate that you know re-hypothecate that stake to someone else who is running one of these additional Hardware maybe a sequencer on L2 or a validator on

another L1 then suddenly you're really increasing that the principal agent problem quite a bit but it's a source of income and like where this intersects maybe we can start to dive into this is what if the validators who are a part of Lido for instance want to opt into restaking and this is very interesting because as Lido moves towards a more permissionless model for who can valid who can be a part of the supply side of their Network the staking router you could for instance see something like a restaking module and the interesting thing there is one it would drag up the overall weighted average of Lido yield right because these validators that are part of the

supply side of Lido's Marketplace would be earning additional earning additional uh income but that income would not be denominated in ethereum so for instance here's a sort of a simple example would be let's say some of the validators in Lido's validator set opted into running a sequencer on optimism or arbitrum assuming that they decentralize the sequencer so suddenly those rewards would actually be in op token and ARB token and then they would be going down into the pool not necessarily not necessarily though right they could just get a they could get a REV share of eth you know paid sequencer Revenue right maybe that makes it a little bit less complicated but totally you can also see

like a spaghetti soup of rewards right where you have like I don't know like all the cell pressure all these rewards as they get you know sold back into eth and then distributed out to the LST holders and that's an interesting Dynamic but yeah it's right so you're right it could could just be ethereum I would argue that it's probably not going to be I would argue that it's going to be the native token that's how all these Protocols are incentivized that's what they want to do so what you could have is now instead of you know this this very simple construction of State teeth represents one to one eth you're like well steak teeth is actually a claim on a pool of mostly Eve but a little bit of op and

ARB and then if you take that one step further like well it's actually op and ARB and we actually want to opt into running some Cosmos validators as well so Random Cosmic and you can see how that accelerates I think there's a really good argument that you could make that Lido and eigenlayer are very well run and I think glido governance today would prevent this from happening but there will likely be other restaking providers outside of just eigenlayer and other liquid staking protocols that are less Discerning and I think one of the other challenges as well is that you know what you could see in an extreme is sort of this hunt for yield right as liquid staking protocols

allow restaking modules they hunt for kind of there's an adverse selection problem here where you opt into higher and higher yielding things in weirder and weirder tokens so the Blended average looks higher there's this natural incentive there and then what you also could do eigenlayer has has alluded to or explicitly said in their white people that they're not going to do this but then they're restaking protocol could actually issue a token that represents restake positions that's really dangerous because those positions are not fungible so that's where this intersection gets a little bit interesting and there's a lot of room frankly for bad decisions to get made and things to go wrong curious what do you think Lido's supply side of validators right it's the exact same supply side of of

eigenlayer so they have this existing you know network of validators that some of which may or may not be interested in running additional Hardware uh for restaking yield um so they are well positioned to expand into that space if they want to and it's kind of interesting to Think Through the different options I mean you alluded to having a restaking module right so that's really like adding some complexity to the course teeth product right as these rewards are not necessarily all denominated in in eth um and it adds more bloat to governance right because that's a very risky module to add so you're constantly managing that risk uh what are the other options if you don't

want to touch the core product you could Fork eigenlayer have and and just let users decide if they want to take their steath and opt into this new restaking product right uh with your again taking your validator set so those are the operators that you could have or you could just not touch it and say hey winning the ethereum liquid staking Market that's big enough for us and we want to be you know our goal is to minimize the surface area of governance that's going to create the biggest possible you know outcome in liquid staking um and those those are the kind of the the options for that I look at for from Lido's perspective

um but it is kind of similar to like the you know Lucas we had on from gito right with their their um what's it called their Mev client on Solana gave them a relationships with all of these validators already right and so then it was a natural expansion into liquid staking and by the way this liquid staking token yields more than the others because it's only delegating to validators that use this Mev client um so you know I think that that's sort of the dynamic here is where you see these synergies but it's will be very interesting to see if lydo goes because that kind of goes against everything we were talking about earlier in the episode and how they're minimizing the

surface area you know mitigating the principal agent problems not and like probably wouldn't help with the self-limiting debate if they're you know expanding aggressively into restaking at this point um but you could see a competitor doing that right of let's say a competitor Forks uh Forks eigenlayer as well um and then you know builds offers their own LST that is a combination of normal staking and restaking so if you deposit here you get both sides of that yo um that might be a way to compete on yield if you're you know it's definitely a different risk profile than than Steve but um yeah I think that'll be interesting I think we could also see you know liquid restaking uh become a thing

so right you right have a you know a normal staking position or an LST you delegate to an operator they go validate you know a couple other pieces of you know software or hardware for for avs's um and then like on the other side you mint and some sort of LST that represents your position um and yeah I think I think it will be very interesting to see how it plays out I actually think it's less likely uh at this given time that the Lido moves into liquid uh restaking like aggressively um I just think they have a lot on their plate and they're doing very very well and why yeah you know trying to fix

something that's not broken um but worth paying attention to because it's going to become more and more important yeah I would be very surprised if lydo did that I don't think they're going to from my understanding but there is a dynamic um that you are always at the mercy of your stupidest competitor and the bad part about bull markets is that really poor behavior and especially very risk-seeking Behavior gets rewarded not over A month's long time frame but a Year's long time frame and many folks by listening to this podcast have had the experience of competing against someone who is taking an enormous amount of risk and it looked like they were winning for an extremely long period of time and I cannot tell you how psychologically

damaging that is if you have been in that position and it leads to poor decision making to be honest um so I would just it's like it's like you're speaking from experience there Mike yeah crazy seems like it really really anyway um but but what I would say is it's I think it's important to have a long-term mindset in this industry and I I hope if folks get get something out of the Season that maybe right now in a bear Market when people are keyed into and and open to hearing about these these long-term risks then we don't make silly decisions during the bull market that we end up regretting liquid restaking seems

like to me just something an example of road that we just do not want to go down it it adds an enormous amount of complexity these these these positions are not fungible right so there will be a myriad opportunity a set of opportunities where people can we hypothesis hypothecate their stake and earn various tokens some of which will be not super risky so maybe that's running a sequencer on optimism or arbitrum and then there'll be a whole new set of layer ones or weird app chains or whatever it is that people can opt into and the yield will look quite good well we'll probably I get is some amount of tranching of risk maybe there's a an intelligent way and a slightly less intelligent way to do it

but you know history would tell us that during the bull market people don't care about intelligent waste and they'll do dumb stuff and I just we're messing with something very close to the metal here of how ethereum the protocol works so I would just urge caution I'm sorry but it's going to happen like liquid restaking is is going to happen whether we like it or not um and so two it's about I would say two is is it cannot be done in a safe way uh and if you think about it you know it's very as Sam said when we brought him on like this just gets closer to a more sophisticated balance sheet that you're managing right so maybe you don't get to Mint you know your liquid staking position one to one based off of the

risk profile of it right so maybe you can maybe it's more like maker or if you deposit you know risky collateral you can mint less of that token right of dye on the other side if you if you deposit usdc right which is it's even safer than diet then you can mint more or less one-to-one um I think that you know that approach is interesting and could work uh and I think it will just be a question of you know it's not that scary until it gets very big and so paying attention to how fast it's growing and what the sort of Protections in place are um yeah will be interesting but I don't see like I can layer necessarily embracing something like that right as

they're just trying to avoid their own self-limiting debate at this point before they even get off the ground or whatever their version of it will be um as probably will happen yeah I I agree with you I think it's inevitable as well to some degree and yeah it's definitely gonna happen so yeah just stay frosty out there yeah be careful folks so last last question here because you were starting to allude to it on the episodes that we did with Lucas from Judo and Sam from frax but this idea of looking for examples of horizontal expansion and sort of finding your way to liquid staking but the last

Dynamic is I would say a be friendly healthy coopetition dynamic in between Lido and eigenlayer for instance so you get very they're they're related right there's the the flow that I would say most people will ultimately take uh is people liquid stake with Lido and then they take their liquid staking token their teeth and they delegate that into the eigenlayer marketplace and they earn additional yield on that hopefully in the safest way possible but you could see a world right one way to for Lido to have a little bit more control or take a little bit more margin depending on I think they're both both of those are good reasons for doing this is to say instead of allowing a restaking module

within the staking router that eigenlayer controls we're going to build one ourselves and what I would say if I were a Lido in that situation is we're doing this to limit the amount of different uh for instance tokens right like what we don't want is this batch of weird tokens getting into the the Steve Pool it's also a good way for them to not pay rent to eigenlay right and squeeze some of that margin out themselves but you could see them you could see them building that now that goes against limiting the governance surface area that I think we heard from we heard from a couple different folks from Lido this season about why they don't want to do that but you could see that ultimately happen so that's where it's a little bit of a co-op Edition Dynamic I'd say between yeah I mean if

in two years 75 of Steve holders are also restaking you know you'd look at that and probably be like well this is what all of our users are doing with their steath anyways um maybe we should consider moving in and taking a slice of that um right if if we are also you know the supply side of eigenlayer or at least our Val The Operators are within our set um but yeah I think it's I think they're of all people the least motivated to need to do something like that um they're I don't think there's anybody you know else in crypto with as big of a market lead um as they do right now so we'll see

um but it does get into this idea of you know you've got some core competencies whether it's balance sheet management like frax or it's you know validator infrastructure like Judo um what can we use these core competencies for um and you know it at times will lead to liquid staking um yeah I totally agree so I think there's a I think an iron law of capitalism but you see a play out in crypto quite often is that when there's a sector that is outperforming you're going to get many copycats right there you're going to look at someone that's making a lot of margins say hey I'd like to make some of that margin I think I could do that and you're going to see lots of different competitions spring up I think you saw

that with stable coins quite a bit and I think you're seeing that with liquid staking as well and it's been interesting to watch the road that different liquid staking providers have approached this and we talked to two different folks this season who I think this is relevant for one is Sam kazemian a frax and the other is Lucas and I think they look similar on the surface but they're a little bit different and what I would say is Sam took a look at what his competencies were originally as being an issuer of a stable coin and said really what I'm good at here is managing assets and liabilities and risk management is my competency and I what I want to do is take a look at the world and see where that would be applicable

this skill set instead of operational competencies that I oven oh operating a stable coin actually looks very similar under the hood to operating a liquid staking protocol so that's an example of taking a shared set of competencies then there's what Lucas did at Mev which is sort of like a cross-selling or cross-selling strategy almost in a way which is to say IV validators is my customers right I've been trying to solve Mev I've got a client here which is going to run an auction for you and and extract Mev in a more efficient way uh but also hey I know you're a validator and uh one of the other things that you're thinking about is liquid staking so maybe there are some synergies there so one in in the form of fracks it's hey how are these how are these competencies that I have built up

how can I leverage this in another in another area and then in the in the case of Judo it's hey my valid because my customers are validators what other service can I well it makes their original client more attractive right it says okay you you run this client you get extra yield from the PBS auction oh and by the way we're launching a liquid staking token and we're going to deposit that liquid staking token only to validators that are running our client um and so that that to me makes a lot of sense and that's that's differentiated um probably one of the more differentiated approaches to lsts across the whole Space um so that makes a lot of sense with frax you know I think

it it does as well but it's interesting that you know maker chose to partner there um because you are kind of you know it's the same sort of activity right managing a balance sheet but you are definitely opening yourself up to to more risk and putting more in to the scope of governance um and so far you know they've been growing very quickly though um because they're you know leveraging those competencies to offer more yield than other LST providers can um and yeah I think that makes a lot of sense but it will be interesting as you know they could have also been looked at Lido as a partner right and maybe fracks could have had their own you know staking module at some point that kicked back some Revenue but they decided to be

a little bit more aggressive which it's interesting yeah I think I think we could see more of that I think so as well the I it's not something that I necessarily thought about but the inner there does seem to be in particular a very interesting intersection of Mev and liquid staking and definitely Judo is a protocol to keep your eye on I'll be curious to see I probably have the least conviction on just in terms of how liquid staking is going to play out in Solana but it does feel like Gita is the protocol that has I sort of observed this this intersection that makes quite a bit of sense and I bet you'll see other players start to yeah like on on paper it's like why isn't Judo the

dominant provider already right but then that also goes back to kind of the power of these early mover advantages and and them compounding over time um but yeah Salon is kind of the wild west of uh liquid staking just in terms of market share you don't really know where things are going to go or just how big liquid staking's even gonna be um so yeah I think it's very different Dynamics over there versus Cosmos which is like Adam has one sort of competitive Dynamic and then you know app chains are very different right um there's the the nature of those tokens are very different and makes you know like liquid staking for a low-cap app chain is maybe a bit less attractive as you know to be able to use as

collateral in a lending protocol as like ethereum right um but there's still a market there and so it's uh it'll be interesting yeah yeah and maybe that's the last Dynamic we can just close on here and just start to wrap for the season which is it's a really good point about again some of this what will take off at different ecosystems I think the the big difference between Cosmos and Solana which is very similar in terms of why liquid staking hasn't taken off quite as much as Solana does have a unifying token Cosmos technically has a unifying token in the form of atom but it's a little bit less clear and I think this is relevant for Roll-Ups on ethereum but also app chains and Cosmos is is more of a demand I think to liquid stake

something that you view as useful collateral whereas app chain tokens are really equity and I'm not sure that there's as much demand to liquid stake something that looks like Equity because that's not collateral that you would then take and use somewhere else I just I think that's fundamental limitation here that's not a tech thing it's just a what are we what are we building I'm interested to see how prevalent liquid staking of Celestia's token will be right because if I think about like tokens that will have qualities most similar to eth uh Celestia you know checks a lot of those boxes um obviously the token itself is not like they're not showing it as money um but it is a token that all these you

know Roll-Ups are going to need to hold right in order to pay their da costs it is a token that will kind of unify all the users of the Roll-Ups um you know maybe it's a gas token right and then it it you can see like the similarities to eat um much more so than say like an app chains token and even more more so than Solana in in some regards um and so yeah we'll we'll see how that plays out so maybe maybe it's just sum up again this this ramble that you and I have gone through here miles what we would expect to see and we should do we should Implement some kind of process where we check ourselves and and see how how right we were on any of the stuff that we've talked about but we would expect to see yeah liquid staking be very

winner take all but the network effects did not cross uh different ecosystems so it'll be winner take most in ethereum different winner take most and so on a different winter take most and Cosmos and other ecosystems like Celestia or other big ones in the future um we would probably both urge caution I think in between this emerging connection of liquid staking and restaking and there's probably a great way to do it in a not so great way to do it I would say we're both in the camp of not really loving the self-limiting debate that doesn't mean we think that lydo should just be able to go Hog Wild and do whatever they want but the best the best way to mitigate the the risks of having a winner take most Market structure is to do decentralize the governance of the protocol open up the

validator set and make it much of the winner of the winter time yeah of the winner of the winner of the winner yes um and then it'll be just interesting to see the intersection of liquid staking and other other products right so stable coins there's sort of a natural operational fit Mev there's more there's a Synergy there as well so just be interesting to see how other players choose to compete yeah I um yeah yeah I am getting a little sick of these self-limiting debates when you know nobody's looking at the solution of hey let's build it into the protocol if we feel dis opinionated about it uh build some sort of regulation in the protocol or hey let's all get together and build

something way better right um then instead of telling the team that's kind of been the most eat the line but also the most successful to be less successful um I don't think that's the sort of you know if ethereum is a platform for dapps I don't think that is the you know signal that you want to send to Future developers um that if you are successful we're gonna attack you until you stop like I don't I think I think folks you know it's it's interesting yeah ethereum needs to be careful with this ethereum alignment I mean we see maker talking about maker chain dydx has gone off uniswap is now leveraging a lot of off-chain stuff for uniswap x and Hayden has said you know many times how extractive the platform is and so

yeah as I love ethereum but um we uh that that's my general maybe sign off take on the self-limiting debate it's like build something better or get together and build something into the protocol right now it feels you and I have talked about this whole ecosystem feels very infrastructure heavy and I would probably lean more towards the side of the dynamic that you've seen in web 2 is probably going to mirror what ends up happening in web 3 and a lot of values going to accrue to apps and by the way that would be a best case outcome for crypto we want there to be new apps and products and services that people want to use you know right now it's you know we're recording this in September of 2023 one of the biggest

risks that we have hanging over our head is regular the regulatory environment in the U.S you know what the best way is to obfuscate that or to move past that regulatory threat build stuff that people want America responds to Consumer desire and the power of the consumer that's a powerful thing right now we've got one hand tied behind our back because regular average everyday people in the world don't use crypto for anything and that has to change so that's what I would say as well and I think that should be a design and I like I I see both sides of it with the with the ethereum alignment thing I I get that we want to be aligned here in terms of our values I also think that there needs to be a little bit of a stick in terms of when you're socially coordinating huge groups of people but I

think there's yeah I think there are I probably would I think there are other better ways of chatting me about it as well but my heart I mean I people are just trying to get to the best solution here so all right miles um this was this was really fun buddy a great great season and I I that the next season you and I are not going to be doing together but uh the one after that I think we already have the uh I think we're already ideating on and have a really fun I'm very excited to listen to the next season of Valkyrie fave though I uh yeah the the replace my replacement will be great so um this has been a blast I'm so glad we did it and yeah I hope hope the listeners enjoyed it as well see [Music]

thank you