Unpacking Arbitrum STIPs Winners and Uniswap KYC Uproar | Analyst Round Table

Transcript

hey everyone Sam and Dan here and before we dive into today's episode I wanted to shout out metamask portfolio are you always constantly stressed like us managing your portfolio across different chains wallets LP positions purpose positions I'm excited to tell you about metamask portfolio which lets you manage all of your crypto assets across different networks wallets all in one place do more with web 3 your way with metamask portfolio you'll hear a little bit more about it later in the show what's up everyone welcome back to another episode of ZX research we have a great interview lined up with the uh blockworks research team today we're going to be joined by Matt and brick making his debut before we get into that I want to give a quick shout out to our sponsor hexans they're one of the most hardcore security teams in web 3

pioneering and ZK and novel cryptography hexon is trusted by tier one protocols like polygon including their work on their new ZK evm mantle risk zero Lio 1inch new bank and more you'll hear about them a little bit more later in the show from Dan but I also want to remind everyone to use use code 0x research10 at checkout at blockworks research.com if you're interested in uh leading industry research data and governance updates today is October 16th Dan how about I just kick it over to you to get some things started off for sure for sure yeah we'll uh we'll kick things off with the top movers and biggest losers section get us moving with the top mover and that's definitely the Bitcoin uh running on the the news of the spot ETF this morning so today's uh

Monday as Sam mentioned and you know we'll woke up this morning to some what seemed like to be great news there was a coin Telegraph tweet that went out just kind of saying the SEC has approved the I shares which is Black Rock Spot Bitcoin ETF so obviously this is huge news that the Market's been anticipating for months and months and quite honestly years and it's pushing towards formulation you know was just last week where uh grayscale had another positive step in their ETF battle with the SEC uh just regarding their uh their G gbtc fund um and so it's like all right we kind of seems like we're treading in that right direction Direction so boom this like headline hits on Monday morning Bitcoin runs up 7% um and I I was with it at first and we actually hopped on our team call and

I gotta give credit to Matt here he was like nah this is this is probably fake and was like there was no Source anywhere and then it kept spreading but then everyone just kept sourcing the original tweet which had no Source uh and so you know first step whenever I see ETF news is definitely just go to the two Bloomberg Legends uh James sefor and uh blanking on the other guys oh Eric balunis they have incredible ETF content non-stop so I pull up their Twitters and it was it was one of the two of them had actually tweeted back at the coin Telegraph tweet like source and of course I was like all right there might be some Credence in this not being not being real and you know sure enough five minutes later I'm now putting Bitcoin in The Biggest Loser section as it retraced the entire move uh and coin

Telegraph then edited their tweet to say you know this is like they added the word reportedly in there so the SEC reportedly approves um well they were the first on to report it so that was questionable there and uh you know sure enough about an hour or so later the tweets deleted an apology message comes out uh and there just completely seems to be false news fake news whatever you want to call it so Bitcoin is actually claiming the throne for biggest mover and Biggest Loser all within a 10-minute span uh of this Monday morning so definitely always a fun industry to work in when you have to wake up to complete chaos but uh it's also a little bit disheartening I mean sometimes it really does feel like we live in a clown world and this was you know no uh you know this today felt no different I was

writing our newsletter this morning I actually had a a quote in there like feel like I kind of summed up uh a little bit of how I felt and it's like one thing is true a Crypton native a crypt native media Outlet posted a false report that led to a 7% Bitcoin candle in a matter of minutes and that kind of like is only further proving gendler might be right in his claim that the spot Bitcoin Market can be easily manipulated but it was actually a portfolio manager from our uh Jeff Dorman who like you know was tweeting about this as well and he was like you know what every Market can be easily manipulated on on a major false headline so we got to grow up and mature as an industry and like let's get some true due diligence and not just be putting

things out there to be first to the to the to the click rush I thought one of the most interesting takes in response to this and yeah what a crazy morning like absolutely absurd and this all went down in 30 minutes while we were on our morning call absurd but bitcoin's still up 4% on the day like even now at you know 2 p.m uh six hour some six hours after all this is going down and one of the cool better takes I saw was crypto Donal on Twitter who's like that 7% move in you know a five seven eight 10 minute time frame shows that people are sidelined that shouldn't be sidelined he says that you know this in this is almost an inevitability that a bitcoin's spot ETF does get approved and that sidelined money might now realize like okay maybe we should put on some

exposure um just by like Devil's Advocate to that I actually do tend to agree and think that that's an interesting take um that now we'll have some more of that exposure priced in so meaning like that we won't retrace the whole way down uh we'll continue to see some upside uh but one interesting you know just play Devil's Advocate to that is maybe people just are pricing in a non- inevitability a low chance that the Bitcoin spot ETF does get approved soon in which case you know it wasn't mispositioned money it was just people don't think it's actually going to happen not sure which side I take I tend to agree with crypto Donnell and thought that was smart another interesting factor is that so much so much short oi got wiped on that move to the upside that there would probably be some incentive for market makers to now um

squeeze it out to the downside so in other words it's easier for market makers to push the price down than it would have been before given that a lot of shorts got wiped out just think that's an interesting fact that I saw also uh uh I guess propagated through Twitter yeah I just don't really know how this happened like that's a a pretty big blunder to be honest it almost seemed a little coordinated I saw someone on Twitter saying that someone hopped in a telegram group dropped like that headline 30 minutes before it actually reached X or Twitter or whatever you want to call it so like yeah I I don't know I also saw the coin Telegraph intern and this might have been a post too but like he's like thanks for the exit liquidity which I thought was absolutely hilarious Twitter was just super super entertaining this

morning it felt like the good old days like two years ago when everyone was just screaming into the echo chamber on the way up it was a lot more fun on CT back then yeah the uh at intern handle had a great tweet and it was like you know we're sorry to to say that we've had to for let the coin Telegraph uh intern go from the the intern group I put the link to that one in the show notes but the ship hosting was pretty impressive this morning as well I mean my first thought to this was that like how inefficient the market seems to be like if you're trading news it would have been so easy to just like go long when the news comes out and then it didn't take that long again to for the market to like switch and start

realizing that okay this news probably or this news pie doesn't hold and then just write it back down so I don't know my first thought was that okay there's still a lot of like opportunity here and the market seems super inefficient in that way 100% agree with you there I was like okay like Matt I think it was you that dropped it in slack and then I'm looking at the Bitcoin price and I'm like all right it's not moving it took it like a minute or two to move and then I'm like well this is weird and then like you had so many opportunities to short it after you kind of knew it was fake very odd price action strong agree there it's super interesting that uh once it like you know price goes up 78% it did take about 30 seconds per minute which is longer

than I would expect You' think that you know the scalping Bots would have made that that happened very way quicker but you know if three four minutes in I'm looking through the sec's I'm looking through all the sec's like recent reports um like you know word that they put out I'm looking through every response to the Tweet seeing is there actually a source attached like is everyone just sourcing the first tweet and at that point you know it's like oh like this news is not definitely fake but there's no Source anywhere out there on the internet this 8% price move is probably not justified and then you had like like like a like brick said a solid period of time to be able to short it on the way down too it does feel so inefficient yeah yeah and maybe this pushes us back to the original timeline

for the spot Bitcoin ETF which I believe uh was would be the Black Rock filing that is the last time it could be delayed or accepted or denied would be in February and so you know I just pulled up the at Bitcoin happening time timeline that's in April and it's kind of like all things are back in back in order for the Bitcoin spotf carrying us into the Bitcoin happing uh and really that's that seems to be an exciting Catalyst like you know sometimes it's just easier to think about those two things and left left curve it be like all right everything that happens in between now and then like actually doesn't matter yeah I also saw Eric Bal chunes I'm probably botching his name Dan you just mentioned him but he said I thought it was super weird when I saw the Black

Rock one got approved because with the eth Futures ETF they approved all of them at the same time to make sure like there was no first mover Advantage because that wouldn't be very fair and it'd be like the SEC picking favorite so I do think uh in the future if you're wondering if a Bitcoin ETF um approval is is fake or not it's probably it'd probably be fake if it was one specific one and not all of them all together so that's another thing to take away from the situation Dan you want to head over there for some governance updates though yeah yeah let's do it and so we got three for you this week uh we'll start off with the stride news they're actually going to back down from the governance buyout or excuse me the cosmos Hub buyout of stride uh that was

we had like basically half an episode on this so uh we'll put the link to that one in the show notes so it won't harp too much on here uh but it sounds like you know a lot of the community was really just against this uh whether there were some people on The Stride side they were like this is crazy why would we do this there were some people on the cosmos Hub side saying the exact same thing and of course there was people on both sides saying what a great great idea so all over the place there was no clear way to being like okay if we're going to do it here's a map of what that looks like and this is what would make sense to us nobody really seemed to even put that forward so it really never even left the ideation

stage stage uh but now it sounds like it's being fully shelved and saved for later and if you had any indication if you wanted some indication of what the community thought about it this L on the 14-day and the 30-day time FR time frame Shri is still down 30 35% so a lot of people people were not happy about this to say the least and I'm not too too surprised it's getting sheld um but again yeah if you want more details on what it was and you know how our team thought about it definitely check out that episode that we will put in the link in the show notes I want to give a quick shout out to hexans as we explore today's blockchain landscape let's take a moment to recognize them as a premier cyber security provider in web 3 hexin is trusted by tier one projects like

polygon including a Security review on their new polygon ZK evm mantle risk zero Lio 1 in new bank and more get a deep dive into your technology stack with the most comprehensive analysis and cyber security Consulting hexon not only uses widely known methodologies and flows but discovers and introduces new ones on a day-to-day basis with over $55 billion secured they cover everything from Smart contracts to blockchain to web 2 pentests yeah there's been nearly 7 billion doll of total value hacked in crypto's nent history so it's safe to say your team has a lot on the line don't skimp out take your security seriously and reach out to hexin don't forget to mention ZX research for a free web2 pen test with your partnership and

reach out to hexin at hex.io find them in the links in the show notes or reach out to them at permission list they'll be at Booth 8:32 uh but without further Ado let's get back to today's episode the other big news was the blur fee switch proposal and so this came out about midweek last week ARCA actually put a proposal forward in the blur governance forums really just bringing about the point of a Fe switch and and their their belief about why you could turn it on and how they think the best way about going and doing so would be so when blur originally launched it had like an 180 day time frame before anyone could have a fee switch discussion and that has since passed by about a quarter or so and so ARA's proposal stated a 1% base

fee on all trading activity but it also had this interesting tier system that would apply discounts to token holders that held x amount of tokens basically and all fees generated by this proposal would be used to buy back and then burn blur and I got a lot of thoughts on this because it kind of asks you two questions one should Revenue be returned to token holders at this point in the blur protocol's life and two if yes what should that look like and so first like my opinion is no this right now Revenue should not be used to be returned to token holders because the token pit plays no role Within blurs function like it does not you don't need to have the

token today uh and so because of that it's just like this governance token and that's fine and when you return when you return protocol Revenue to the Token it's like basically like a dividend and dividend should be excess cash that the protocol does not need to continue growing its market share or building the best product and for a product that's like 200ish days old that is absolutely not the case it is not one is not the best nft Market play out there it still has a lot of work it needs to be doing so I would like to see that Revenue being recycled into the protocol to promote growth or build a new service product or hire some more Engineers to go build X Y and Z like there are so many other things that could be done with this alloc like this

this money being generated um that buying back and burning is not the the answer here and like returning Revenue to token holders is like just throwing it out the window in a lot of ways and ARCA cited the reason of why they wanted to see that because uh blur is now kind of teasing this end to season to trading rewards uh as November 20th and when no supposedly when November 20th hits all these trading rewards that people have been uh earning over the last couple months will now become liquid uh and of course there's really no use to holding the blur token today right it's just like a governance token that has governance rights over a protocol that has a very minimal governance uh so it's like fairly a useless token and so they're trying to be like all right well

if it's a useless token then let's give it Revenue but like that doesn't to me seem like the best answer here uh but curious if you guys have any thoughts on this proposal I think it's just not the right timing like I'm all for throwing on a fee switch at some point um I think it's just being forced because honestly probably because the you know core contributors investors and and team allocations just you know hit their cliff and now they're vesting so I'm sure they're kind of desperate to get some value cruel and you know if you look at the X2 Y2 or looks token charts the the token incentives can only take you so far especially as your token bleeds out towards zero and the value of those incentives gets less and less valuable over time so I think the logic here is like well we'll still hand out

these blur trading rewards but if you want to keep farming in the future then you have to actually hold the aird drop we give you in order to have like free um trading on the platform and continue to farm into the future so I guess it can REM remove some sell pressure and then I guess continually buying the token with trading fees could help you know that fdv and make the incentive and back of napkin math that people would then be kind of writing out in order to see all right should I even be watch trading here is it worth my time and the fees I'm paying versus what the value of the blur token is so I see the logic I just think the nft market is still six to 12 months away from catching on to a new narrative I could also see why they

want to do the uh fee burning thing because that seems to be a good playbook to get your like multiples higher or the market like I don't know it seems that a lot of Market participants enjoy a fe burning me mechanism even though it doesn't acre real value that much um and maybe also trying to ride on that R bid wave that has been going on lately where like okay they do make a lot of Revenue or like do burn a lot of tokens but kind of getting into a similar comp bucket with uh like those protocols yeah that's a good point because when I think about like buyb and burn it's pretty similar to like um we see this a lot with in the traditional

Equity markets right like companies will repurchase shares of their stock and then that kind of gets equally uh allocated across all these shareholders and that happens for one reason and that's because traditional Finance Equity markets are fairly efficient for the most part and especially when it comes to uh share repurchases because you you have this Enterprise Value that gets divided amongst the uh total number of shares and the only thing that's changing in that calculation is the number of shares outstanding so when that gets reduced the value per share increases and that like tends to work quite well as this like more tax efficient uh distribution of excess Revenue to shareholders because dividends count as income and share

repurchases do not it's just capital gains um but in crypto markets you don't have agreed upon Financial metrics and that everyone can like you know has this model that's like relatively agreed upon sure you maybe you don't totally agree on like the long-term growth drivers but roughly you're going to get to the same number um that's not the case in in these markets so when you do these share repurchases like just because the denominator decre decreasing doesn't necessarily make the token value increase so I don't know I don't think share token buyback and burns are like the best way to redistribute wealth to token holders if you're going to do it but I mean at the end of the day like there is a narrative around it right you

brick you mentioned R bit and I think that's a great example like they're really crushing it with their with their model I was going to say like I also totally agree with Brick's take there but the way you took it was like okay here's how this could bring you know a fundamental valuation to the blur token the way I took it was like it could fit into a narrative that's currently you know hot and popular among CT and investors in crypto and who cares if I don't you I don't think blur is going to drive you know meaningful Revenue to token holders even if they if they turn on the fee switch if they return to token holders and that's two big ifs right there but if they do both those things I don't think they're returning meaningful value to uh to token holders based on their valuation today that said

it might fit into a narrative where you know there's a lot of new liquid funds who are probably looking for these protocols who have real yield um I know that that's something that kind of is dying out compared to the narrative that existed a year ago but at the same time I do think that that is something that uh a lot of the newer investors and crypto people in the class of 20120 kind of look for so I think that it it definitely does have some value just as far as getting back into the attention of the general Republic and things of that nature I got a question that I should probably know the answer to so Sam I'm going to I'm going to lean on you here for this one but what uh what percentage of market share does blur have relative to openc these days I was

actually looking at this like the other day but it's if you have like a hill Dobby's wash filter on which is actually a great little calculation that he personally made and he's got it undo and I highly recommend everyone checks it out maybe we can drop that in the show notes but it's uh it's around like 50 to 65% depending on the given week so definitely seeing more volume than openc still but uh what's interesting is openc still sees two to three times more like uniquely active wallets like really interacting with the protocol so I think that just implies one like if someone's going to buy an nft like a retail person who's not super crypto native they're going to openc they're not going to to blur yet I think openc kind of has that Unis swap brand um and then on top of that I just think a lot of the volume

like it's not technically wash trading and filtered out based on hild's like methodology but it's impossible to detect because it's it's the the blur token farming that is definitely what's driving the revenue over there I personally think blur is a better product and they've done some Innovative stuff obviously with blend and I think they're continually going to push out new products and features so I really don't think it's a terrible play if you're bullish on like general purpose marketplaces but I'm personally just super bearish that I don't understand why anyone who you know drops an nft wouldn't want to have that royalty like baked in income slash like Market fee income ACR to themselves I think like there will eventually be a Shopify type platform that helps you really easily

spin up in nft Marketplace and that's like what people will use because they're going to want those that that that fee Revenue oh that makes me want to skip over to one of my cool thron so bad but I guess I'll just have to save it patience patience all right everyone let's take a moment to hear about metamask portfolio if you're like me and Sam managing your crypto assets across different wallets and networks can be so overwhelmingly complicated that's why we're excited about metamask portfolio all you have to do is connect your metamask wallet to get a bird's eye view of all your coins tokens and nfts in one place you can easily Buy sell swap bridge and state crypto assets at competitive rates all within the app and you get to choose for vetted list of providers there's no more jumping between dozens of sites and apps

metamask portfolio lets you do more in web 3 your way giving you secure and convenient access to a wide range of features and services all within one place manage your portfolio your way with metamask portfolio peep the link in the description of today's episode to get started now pivot over to the arbitrum uh stip recap to kind of walk through those short shortterm incentive programs and now that that's closed you know I know you and brick both put a ton of effort into you know allocating out the blockworks research votes that we have as delegates as well as kind of helping you know the community understand as well you guys made a phenomenal uh Excel spreadsheet that kind of walked through and gave the Highlight so so please take it away brick Picacho and I took a significant amount of time to look through 105

arbitr proposals I know it's been talked about for like short recap 50 million ARB is to be allocated to you know projects in the ecosystem who apply for Grants um there's 105 applications and I believe something like I'll double check but something around 30 actually ended up getting funded uh a large portion of the 50 million got sent to GMX which was 12 million tokens that will be you know returned to GMX stakers additionally projects like Camelot Jones da dopex uh Pendle uh radiant and plenty of others got funded one interesting thing is that most of the projects that got funded were you know had a lot of Goodwill in the arbitrum ecosystem so I think that that was a huge factor in delegates

making a choice while that was something we took into account it was only one of the metrics so we we looked at things like um you know total fees acur how what was the quality of The Proposal tbll depending on the different types of protocols we bucketed into things like perps and lending and yield optimizers um and then looked at different metrics for each individual category but the projects they got funded it seems that ecosystem Goodwill was it an OG project in the arbitrum ecosystem that you know probably brought on a lot of these d5g that helped make it the vibrant defi culture that exists over there today and those are really what got funded While most these incentive programs haven't started yet so it's hard to know exactly where the alpha will be it is definitely worth keeping an eye on every project that uh got funded because there will be

some good opportunities these programs have to end by January 31st meaning that there should be about you know three months of of in for each of these programs and there's a lot of ARB be given out maybe we can put a link to the ones that were successfully funded in the show notes that I'll pass on to you guys after this the process was a bit of a show as a delegate it was very difficult to go through the 105 proposals there's plenty of things wrong with it but brick I'd love to get your take on like what do what do you think about the uh the whole the whole process main takeaway was that it's still kind of hard to or I guess it's been talked about a lot but Dow still seems super inefficient and it seems that there hasn't been yet solution that like

solves for all the problems and I feel that one of the main like catalysts for the messiness of d uh if you can use that word is that there's just like too many people who are trying to uh participate in the whole process and yeah I thought about this a lot after the whole like steep proposal process and I feel that like one um mechanism or implement mentation I would like to see more of is that you like kind of elect a board of delegates if you will who make most of the decisions for the Dow um and the Dow can like propose stuff to them and then yeah they make the decisions

and if the Dow disagrees they can vote against those decisions and if somebody on the board misbehaves they can also be like thrown out and replaced which I feel that that would be kind of like taking the best parts that we've learned from tradify or corporate finance and then um putting some more transparency in that process and also like making sure that everybody who votes is super knowledgeable but then yeah if they misbehave they can also be punished but I don't know if that's like that's probably easier said than done so would be interesting to hear in your takes or if you disagree yeah I have two two takeaways from kind of what you just said which is one I think the biggest issue D face

today is that there aren't enough professional operators in Dows it's you know mostly people who are big personalities on Twitter um you know maybe an airdrop threader who helps a lot of people gets to get tokens gets delegated a bunch of tokens or something like that and while it's totally fine maybe like more technical entities and entities who are who are you know really involved like maybe I don't know smart contract Auditors or things of that nature would be the best delegates or uh you know there's plenty of examples these professional operators who would be really good so it's like how do you incentivize them to get involved and and how do you get people to delegate that group or those entities your tokens uh and then the second thing is like why do Dows exist in the first place right to some extent for not all Dows like I

think arbitr is an example of a dow that is needed it controls like pretty much everything involved in the protocol like there is a security Council but overall the Dow has a ton of power but other Dows like you know blur Unis swap like these are Dows that don't really that don't really do much at the end of the day they probably exist as a form of regulatory Arbitrage so that uh the token is maybe not considered a secure under the how we test depending on I you know I don't even know what I'm talking about there but I think that that's probably a big portion of why dalls exists so it's like yeah it's tough yeah I know I mean those are all those are all good points I think and it's like there's a couple DS that like have really gone the service provider R

if you will like a is the first one that comes to mind a and compound are like the first ones to really use Gauntlet at scale if if I'm thinking correctly here and you know they have like this huge problem of asset listing risk management is like a very specialized task that requires some pretty in-depth knowledge of not only the protocol but risk as a whole and that's like something that's just not fit for token holders in my opinion and so it they're like they kind of see that as well like all right we're going to use a service provider to make recommendations to the Token holders so at least they're like making informed decisions and in the aav3 build there's like these things called Guardians that have even like further controls you can like elect a multisig to make uh certain decisions

that are like you can do things within a banded range basically so you don't have like full permissions over what can and can't be done but like all right we'll give you the ability to you know change the parameters from X to Z or something of this nature and like they're kind of like moving away from like the everything needs to be a token decision a token holder decision and like in a lot of ways I think that makes a lot of sense like again if there needs to be a quick parameter change that shouldn't be a 7-Day vote for everyone to participate in like that that should just be the risk advisor's decision um and then when you like really start playing that out brick to your point that kind of does start looking like this board of directors thing where you have somebody

who's overseeing like a risk head who you know maybe they appoint a couple people to own a certain groups of assets and then the Dow has like full veto control and uh you know we just had an interview with Sam kazian and that'll actually be coming out on Thursday so the day after this episode airs and they uh we talked a little bit mostly about their their new updates one thing that did come up was the fra gov module which is kind of very similar what we just described and instead of giving like an elected group of people it's just the core team because today if you know anything about fracks like bti sigs have full control over the protocol that is something they know and something they're trying to build towards to remove and this is what the module does so basically tldr is the court team can

do anything and then there's like a two-day time delay where the token holders can veto and so this kind of gives the coure team the ability to continue operating the protocol with a slight delay uh but kind of takes the the ruggy the rugess if you will out of it right so if they were going to say hey we're going to completely drain the the protocol token holders can vote against that and prevent that from happening and so they're kind of exploring their own route of like where is this line between giving professional operators core team members service providers whatever you want to call them giving that group of you know uh professional entity control to operate the protocol but still keeping it in this like

permissionless decentralized manner it's like a very hard line to find and we're going to need rapid experimentation to figure that out so kudos to the fra te team for doing what they're doing uh a again has really pushed forward the service provider route like I want to see him even more and more of this maker D going like subd Dows the cosmos Hub has talked about sub Dows in their own regard like there's a lot of new things happening yeah I agree with that we definitely need like a lot more experimentation on the governance L I feel like we're like barely in the first inning right now it's almost like pregame warm-ups but yeah that's kind of just the current state of Dow government were there uh were there any big like misses on like protocols that you'd expect to get funded that weren't like I know Lia was

like very close on the edge I don't actually know where that one ended up I saw curve did not get funded um but curious if there's any more I know gains Network didn't and I found that a bit shocking actually I mean I know they're polygon native and they migrated you know just maybe like eight months ago nine months ago at the beginning of the year I think it was January um so they didn't get funded but the ask was quite a lot it was like seven million and I know they tried to ratify the amount down to four and a half million but by that point like the proposal had already been submitted so like they were like okay we'll just get the seven million then we'll return two and a half million after the three months or whatever and like to the Dow so like that was just

like kind of janky um but and then at the same time like I think you had Muk protocol get funded so they are a you know per aggregator and a lot of the volume actually goes through gains so some people were probably thinking well if M got it then gains will see increase volume so that's like kind of Quasi allocating to gains so I don't know that one was like a pretty tough one I'm personally a fan of gains Network so I'm a little bit biased I would have liked to have seen that one pass but you know It's just tough for these delegates you've only got so many votes there's only so much ARB to go around it's like you can't really please everyone yeah I think with gains it was just that the request was too high 7 million they were the second highest

request after GMX and I think a lot of delegates just looked at that as a bit excessive for like a polygon native purpose platform you know if you give GMX end gains and mck those those three allocations alone would be you know somewhere in the range of it would be 25 million ARB that's half the allocation to three pers protocols like it just it's just hard at that point and I think that ecosystem Goodwill that I was talking about that GMX has means that they probably were pretty much guaranteed to get funded no matter what they might have been like the fourth or fifth highest supported protocol or the application um Lio was one of the most interesting ones Lio had a heck of a lot of votes like overall I think it had one of the highest voter turn turnouts but it was super close in yes and no votes

with a ton of abstains as well um the way we the way I the way I think the way the blockworks research looked at Lio is that it was a great proposal but the problem was that Lio hadn't done so much in the arbitrum ecosystem yet as well as giving Lio a leg up in the kind of uh LSD LSD market share of arbitrum was maybe a bad look versus kind of funding more of a of a holistic like a holistic proposal that would get more lsds in General on boarded so something that allowed fra and Lio and Rocket pool and maybe even other lsds to come on and kind of create this whole vibrant e ecosystem of LSS on arbitrum that doesn't exist today outside of that I think that a lot of people are probably disappointed that Ramsay didn't get

funded that was like some $10 million markup coin that Forex or something like that before before the uh before the stiffs went up uh Wormhole and Stargate did not get funded which is an interesting one and finally uh curve like you said and ARA is both did not get funded as well which I think were a little bit surprising to some people I really do think deligates kind of just chose the protocols that helped onboard the most users to arbitrum thus far and had quality proposals but I think that the first point there is really what uh what delegates probably hammered down on it seems to me I'm actually shocked that neither of the bridges got uh got any allies do you know why that is or how far off they were actually misspoke Stargate did get

funded and it was just Wormhole that did not get funded um not sure why that you know from my point of view I actually really like wormholes proposal I don't exactly know what the what the take was there keeping in mind sometimes some of it has to do with like uh even just the reputability among delegates like maybe Stargate has a good relationship with some of the bigger delegates or something like that we chose to vote for Wormhole and against Stargate but yeah hard hard to know exactly and now I know know I'm just throwing like random names of the 105 at you so curious if you know if synaps got in got the allocation that they asked for just because they were kind of in that bridge category as well synaps was very close but did not

get funded um yeah they were they were very close we were not able to vote for them just because we decided that we were only going to support 50 million arban proposals total but overall like you know synaps is a great protocol that probably has onboarded a lot of users into arbitrum before uh if I remember correctly from my point of view their proposal Inc more more so was beneficial to LPS on synapse than it was kind of to the arbitrum ecosystem um in that you know it didn't really incentivize a lot of sticky liquidity to come into to to bridge into arbitrum but rather just to to provide liquidity to the inous protocol for for bridging into arbitrum yeah I thought the the Wormhole one was pretty cool for doing achieving kind of exactly what you just described where

they're like trying to bring usdc through Wormhole into arbitrum and then we're going to basically incentivize that the usdc stays on arbitrum I thought which I thought was pretty cool yeah native usdc too because you've got the usdc do and then you've got you know native usdc it's just kind of a of a ux and like really nothing that got past really addressed that directly I would have lik to have seen something around that maybe there's room for one of those bridges to actually submit a proposal outside of the actual step program that's a little bit more targeted and that draws a little bit more user mind share because or voter mind share I should say because I I just think it was really really difficult for all these delegates to go through all these proposals and you know everyone's got friends places so everyone's asking

you and it just turns out to be a huge pain of the ass yeah that'd actually be a cool one it's something to incentivize swapping usdc e for Native usdc and kind of trying to like deprecate the usdc think Gauntlet working on a like some mechanism designs to help with that process and make it make it a little bit easier ux um I think maybe they're working with the foundation or offchain Labs or maybe the Dow I'm not sure exactly who but they are they are working on that yeah I actually had an observation on the uh the per stuff it's kind of interesting that dydx you know V4 is really really soon um assuming within the next week or two I would guess from what people are saying but um the fact that they want to do $20 million of incentives roughly like 10

million tokens and then at the same time arbitrum just gave out roughly the same dollar value to pers you know Platforms in in its ecosystem it'll be kind of funny to watch uh who kind of wins that battle right there you got to think that probably it's the same 100 users washing on every single one but I don't know I'd like to try and be a little more optimistic yeah why don't you kick us off with a little hot hot seat cool Throne all right yeah I actually have like small cap LST uh protocols in the cool Throne could have put Lio in the hot seat either one worked we just kind of try and get two hot seats and two cool Throne so that's how the how the math checked out but basically Lio voted the Dow voted to Sunset St Soul because the um I guess the the core contributors

needed one and a half million to basically continue building that out and to allocate for incentives to actually stand a chance at competing especially with everything going on in salana with Jos soul and the point system and margin F and pretty much everyone who's on salana is is farming those points so I think the Dow is just like you know what we kind of lost that market let's just cut our losses and I guess it's going to be like 100k to Sunset the protocol over the next year I think this is really a big win for um smaller lstd providers in in the salana ecosystem so like marinade and and jeto but then also just bullish uh momentum for stride as an independent protocol with what we talked about in the governance updates uh and honestly Lio just really not being able to crack into other ecosystems and then at the

same time you've got Diva trying to vampire attack Lio if you guys haven't checked out that one I'd look into that and then you also have the uh you know the ethereum foundation posting research on like how it's pretty bad that L is getting up there in market shares so even in in its own like Market where it's from it's it's still struggling uh to to kind of keep a hold of the narrative and then if you just look at the numbers now you've got Lio at a$ 1.4 billion dollar market cap they have like 14 billion dollar of e Stak at a four and a half percent yield so that's like 630 million or so a year but 90% of that goes to the people who deposit 5% goes to the Dow and then 5% goes to the no operators so that's really only $30

million or so of of Revenue uh and if you just kind of look at the the the multiples on that it doesn't look super attractive it's like at this rate you really are kind of near the upper Bound in terms of what market share you can get of Stak eth and then at the same time you just like need the eth price to go up to make your earnings go up it's like why wouldn't you just buy eth in my opinion but yeah I'm curious if you guys have any thoughts on this proposal and just as like a a PSA if you have any St Soul you'll have until February to uh withdraw that deposit because that's when they're sunsetting the UI as well I've got some thoughts on the valuation because I think there's still a lot of like value in having governance rights

over the whole protocol like I could see why that could carry a premium like if you let's say in four or five years you want to propose something that's a bit controversial and you're a big holder then I could see why the like holding a lot of the governance token uh would be valuable even though it wouldn't like acrew real Revenue in that way you do have this added layer of like yes you get cash flows but you also get control as well like that's kind of hard to price in but it'll be interesting to watch that play out and Sam to your point about you know how this kind of impacts the the goals or the mission of li like they do seem like super eth aligned now which is interesting because the alignment folks are coming after them uh and so maybe this is their

response to that of like hey if you want us to be more aligned like you know we'll start backing out of other ecosystems and things of that nature which is kind of interesting because I think it was Monae Supply actually tweeted this but when they announced that they were GNA like unwind their uh Stak Soul initiative it's like couldn't you have like tried to sell that off to another provider or something like that has value of all these stake tokens and I don't know just kind of giving it up and be like yeah we're gonna unwind it like unstake and we're gonna kind of forget it ever existed is kind of a weird business decision in my in my opinion there um and even if you didn't like the service provider you were using to kind of run that operation well why don't you vote to like boot them out and

replace them with somebody else like there seemed like a lot of options here so that's why it kind of makes me think it's more of this like alignment thing so there's been a lot of talk about the uh Lio moving into the cosmos and how that's going to affect strides business model and how it's going to you know bring uh you know another version of staked assets across the cosmos ecosystem but now you got to wonder like is that still on the table is that still what they're trying to do or are they really just going to be like hey it makes enough sense for us to just worry about ethereum because we have this you know such a large stake of the network like let's go all in on that and kind of again bring this like counter thesis to the alignment crowd like maybe if we can

appease them they won't try to kill us I just want to bring up another so I totally agree with the take that like I'm now super way more bullish goo and uh and stride than I was this morning I actually went into my Cosmos Abyss keplar wallet today to see if I had any funds that I could move into stride I did tried to buy some and then realized that uh even like I think there the 2% depth on there is like $1,000 which is just absurd so you know I can I can like the protocol and be bullish but still not be able to get exposure to the Token unfortunately but you know GTO soul is another cool one to keep an eye on as well I have the I have the strides coin gecko page pulled up already and it's like it's literally $5,000 that's insane

ridiculous um another cool thing the Lio governance proposal recently last week so I just came out with a report on DVT and the DVT landscape and I came across this brand new Lio proposal from about a week ago which is that they are the proposal States like that they're going to attempt if it passes to make a small module so small allocation of Lio of Lio staked eth that will go to DBT Solutions SSV and obal so um you know does this really solve the problem of Lio having a huge market share and you know kind of having a significant control of the ethereum ecosystem that actually does present some vulnerabilities to ethereum given that 33% is a important metric for uh you know chain HTS but that said you can split it across with obal and SSV

you can split that stake across way more than the 31 node operators that they have today so it is better and step in the right direction and uh you know hopefully hopefully we see that pass yeah I've been hearing all about DVT for like a year and a half and and this is the first time I've actually seen a little bit more like action like it feels like it's actually starting to come to life and it's been like in the works for so long so super excited to see how that pans out and I know yeah that report that you wrote Matt was really good if you're a block work sub you should definitely check that out but brick I did want to come back to your comment just real quick before we move on like why do you think the governance rights would would demand a premium like

I just don't even see it it's like like if you're just going to stay eth Aline stay in the eth ecosystem like you're still kind of capped at your market share potential like yes the market cap of eth can grow as well as the total amount of each staked but I don't really know if that demands a a multi-billion dollar premium the way I see it is that it's such an important protocol for the chain that like it should get a higher Val valuation for the governance rights let's say or let's compare it to some per protocol like even if you would get a lot of uh voting power on those protocols your impact on like the whole ecosystem uh won't be as high at the end of the day so I kind of want to put a

premium on that well let's play that out though okay because like ether token doesn't control the ethereum network it's strictly the nodes and so if I have a bunch of ldo tokens and I can like push a governance proposal through Lio like what what am I even capable of doing would be what I would need to play out I feel like like don't you just have control over like maybe let's say the staking router is live and you could like maybe you can vote which like what percentage of stake is you run by like the professional operators versus maybe the DVT operators versus maybe some other piece that gets added onto the staking router like well I don't like if I wanted to like push a you know a

controversial EIP through the network like could I use my ldo tokens to kind of do that uh well the how would I put it like the constraint or the equation I'd use there is like how much would I have to pay in ldo to for example capture a large market share by pushing out a proposal that says that okay all of the stake goes to a few of my own nodes and by that way start controlling the whole network um against like trying to somehow maliciously attack the ethereum chain itself and then if you like put together those two constraints I feel that it's cheaper to like start acquiring Lio or

that's why I feel that it should have kind of a governance premium C the it's all social consensus conversation and just end it right there no I'm kidding but um like yeah it's it's an interesting concept right because no can scrolling 51% of ethereum validators does not mean that you get to decide what's the canonical ethereum chain at the end of the day it's ethereum token holder It's a combination of like all the participants in the ethereum ecosystem to decide that but if there was like a controversial EIP or something like that there is a significant power in controlling 33% of the ethereum stake in order to have uh sway over the clients in order to get them to implement what you want I don't know what I can't think of a good example of what that might be but there there is some value there I don't know

what the how to how to Value it but I don't know how to quantify it but there definitely is value there all right enough Lio I'm honestly tired of hearing myself talk about it so I'm going to kick it over break you got a hot seat or cool thr this week hot seat for this week um I've been seeing a lot of Link Marines on Twitter um getting super heated about people who are saying that like ccip hasn't been that successful yet and it's still unclear whether um they're gonna become a market leader like yeah I get that ccip has a lot of like super good Partnerships and especially on the Trad F like I don't know real world side but um at the end of this day it's like not still cryst crystal clear that um they're going to

take over the whole market and especially like okay I guess they're still in a kind of a testing phase but uh it's cool that they have like 80 plus um onchain Partners but it seems that at the moment there's like no onchain D and demand for the like cross chain protocol everybody just just thinking about what's the cheapest way to do it and what's the um like fastest way to transfer assets for example between chains but yeah I could totally see the long-term thesis as well or I'm not saying that it's not possible for it to happen but I'm also saying that there's still a lot of risk um in like the whole ccip thesis of um it taking over all

cross train cross chain transactions and like getting all the rwa transactions coming from like Legacy systems to uh Banks private chains is that the core use of it though is like the rwa sidec I mean I I honestly don't know that much about ccip but when I'm thinking about bridging to be honest I just kind of use whatever is the most convenient to me because I never really find that one bridge is like extremely cheaper than and the other U Matt you brought to my attention that like going L1 to L2 you should just use a native bridge but going L2 to L1 is when you can get cost savings and

Time Savings um and it's like okay so but still like even if it is like if I'm paying five bucks on bridge a and three bucks on bridge B I'm I'm just gonna I'm not GNA like pick Bridge A or B because of the price I'm G to just pick which one I'm more comfortable using um I don't know I mean chain Link's whole thesis is that they're going to be bring all institutions on chain so to say um and that's where the large like Tam uh is located or like yeah it's nice if you can get individual investors uh using your protocol as well but like if all institutions adapt your like mechanism or your protocol um your

Market is going to be so so much uh so much larger than on the individual side um and the largest selling point for them is like getting these uh tokenized real world assets on chain and like yeah Banks pushing them on their or true ccip on chain that gives me so many memories back to like the OG Ripple xrp like all the banks are going to use Ripple to settle the you know Fiat to Fiat transactions cross bank and I was like that makes so much sense when I was a 16 yearold kid but like yeah we saw how that played out and uh I you know maybe this hot take or a bit controversial but I I doubt we see Banks do it like okay if you're if you want you know

information passed from ethereum to your private blockchain like you're going to do that yourself um probably vice versa too like why I rely on chain link to do that maybe I'm just misunderstanding I haven't looked into ccip so much and then additionally like the whole real world assets narrative that's been gaining so much steam it's like I'll buy the narrative you know I think that it's something that's GNA continue to gain steam I want to make some money on it but I don't buy it as like this huge fundamental value proposition for crypto at the end of the day things that are governed in the real world don't not that they don't belong on chain they do like I think that there is some Val there is definitely value and having stable coins and having you know treasury yields on chain but at the same

time it can't be our fundamental value proposition it can't be our zero to one moment because it's too easy for these entities that actually govern the assets for instance the US government as it comes to US Dollars and stable coins or the bank itself who that's issuing a whoever's issuing a bond whatever the corporation issuing a bond or the regulatory body who are regulating set assets have too much ability to just control it and move it off of ethereum move it to their own private blockchain um you know at the end of the day what ethereum and other what what are what blockchains do is they remove trust assumptions they they minimize trust assumptions but they also do add some cost and add some complexity and friction and it's like taking these things that already exist in the real world and work totally fine and adding

cost and friction um I don't I don't know if I see it as a huge value proposition but I know that's definitely a hot take one comment real quick before we get super deep into the real world asset combo because I could just I could just tell Brick's got something to say but um I did uh see Sergey speak uh at a Goldman sense crypto Goldman Sachs crypto event last Thursday and I had never actually listened to him talk so that's kind of embarrassing just on point one but he was a really impressive guy super smart and I would have thought like a week ago before that if you would have told me oh yeah ccip is going to be linking all these Banks private chains together I would laughed you out the room brick but I literally saw this guy like having handshakes with like every

Banker in the room and he got invited to this event and he was literally calling it The Internet of contracts and like people were talking about the fact that oh great we finally tokenized a bond on this private blockchain but there's no users zero liquidity there's zero use like it's just it's just there so I think if Sergey is working with some of these Banks and like they understand the problem as I just saw that like okay we have this tokenized thing but we don't know what the hell to do with it and he's the guy who's talking with them and that's the new chain link Vision I think that's like kind of bullish yeah I agree with that but I also feel that sometimes they kind of oversell the whole idea and then like don't talk about the down sides or possible risks there it's more like you

see these marines going in on Twitter and being like okay we already won we have these Partnerships with let's say Swift and like big Australian banks have whatever um but at the end of the day they're just like in a test phase right now and you could well have somebody else who comes in let's say like to match point some government entity or um somebody already like um super in the Trad five world and just like take over the market from there so like I do believe uh I kind of believe in the vision and I think like chain link has a really good business development team and like a good marketing team and has been able to create super nice

Partnerships but I'd still say that it's not like 100% there or it's not a done deal like I got to see some transactions on that chain before I believe it myself or on that on that ring protocol those are fair points brick for sure but uh but Matt I'm definitely ready to derail this conversation with you and uh argue about the efficacy of real world assets as a whole and I actually don't think we I don't think we disagree that much so my like framework for all of this is you know blockchains as a whole are creating this this new digital first economy um you know each each L1 is kind of its own little Silo within this larger crypto economy and within that you have different sectors right like Gaming's

becoming increasingly popular nfts are their own little bubble in there as well uh we're seeing things like social apps kind of come online and with the rise of things like frch and postte and what was Stars Arena for about an hour and a half and there's obviously the other big bubble and that's Defi and within zooming into just defi within the Crypt broader crypto economy we have this like very nent very small but very powerful financialized micro economy and so what we're doing right now is like you know eth has become this like money internet native like money and we've kind of created a financial market around that and again each L1 kind of has done this with its own base

token but we're still this super small economy that like doesn't have we have like our own native yields and things like that the E staking rate and and things of this nature but we are still this super small economy and so when we import things like the you know the federal uh the like IB rate that frax is doing with s frax or uh some of this treasury yield that SD is doing quite similar similarly through maker we are importing these like offchain yields onchain and like powering our our little micro crypto economy with these very very important rates and that is very exciting to me like I think that is a bit of a superpower because now when we're in these turndowns and things like us treasuries get much more exciting you

you might not necessarily need to go offchain to access those yields so like if we rewind to you know peak of 20 the 2021 Bull Run when things started to go bad and they were like hiking let's the one let's say we rewinded to when the rake hike started if you had like you know you were like doing some like Leverage e staking yield trade and you're like I need to take this trade off and go kind of start allocating into some treasuries to do that you had to sell all your eth go to coinbase or your service provider and basically turn it back into dollars and then buy treasuries now you can unwind that trade and then just buy s die or buy srax or buy one of these onchain treasury uh products that are coming online with things like Ono Finance now you have the ability to stay

within your our little micro economy and access these offchain more offchain esque yields and it's a it's a a different RK risk profile but within this this one little bubble you can now do more and to me that's super exciting and like why I don't think we disagree with that is like a a I don't think you disagree with anything I just said but B one of the things you mentioned was like that shouldn't be our zero to one and I agree with that like I want to see continued Innovation on it within the def5 space but importing these yields is still super super important to like supercharging growth and like that's why I'm still very very excited about this I think I agree with everything you said one thing that comes to mind is that I think I would rather own Treasury bonds than own Ando treasury bonds I

think that there are trust assumptions that probably aren't risk assumptions that probably aren't so realized in uh I mean definitely and I I love fra I'm a huge fan but there's probably definitely some risk assumptions involved in owning you know SRA versus uh versus the treasury bonds itself and you know maybe it's going to take me five or seven days or something to to turn my eth into dollars that I made or whatever into treasury bonds but um yeah I think I'd just rather do that from a from a risk assumption perspective I understand there's some value in uh you know foreigners being able to access these assets that might be harder that might have a a high barrier to entry for them today but at the same time I don't think that's again like a huge long-term value proposition rather just something that is uh kind of small and helpful but I

agree with everything you said you know crypto Unis swap is awesome a is awesome we have great products and we still exist in this little bit of a uh looking for a nicer way to say it than this defi circle jerk where it's all just like crypto tokens and kind of but uh I can go ahead and give my uh my hot seat if it's if we're ready yeah go away my hot seat today is going to be the Unis swap hook haters so there's been this huge rhetoric on Twitter over the last week or so that Unis swap is now unof V4 is going to be a kyc platform um people are just like going off about how it's horrible but I just want to mention that this is something that was nitpicked from a public so basically okay Unis swap V4 you can do

this thing called creating hooks hooks are basically basically customizable pools that uh allow for more complex actions upon swaps so you can do things like Mev rebates where you return Mev that was extracted to uh to you know to the Traders you can do things like add royalties back into nft into nfts so like that's awesome right I think that's something that's super cool that people hadn't really realized could be enabled in a ton more things but one thing also that you can enable with a Hook is kyc compliancy so you could only allow traders who have fulfilled the kyc in order to trade in a pool um which is actually pretty cool because maybe there's going to be things like these Ono Finance tokens where they need to be able to do that in order to be listed on Unis swap or they won't be able to I

don't know that's just one example but at the same time it's an optional thing that pool creators can Implement that is in no way enshrined in the protocol it was created by a community participant at a hackathon not Unis swap Labs or anything like that and it's just ridiculous to see this huge rhetoric that you know uniswap V4 is going to be kyc compliant blah BL blah blah BL blah like complete Shenanigans and made up hooks are absolutely awesome there's about 80 listed on this site uniswap hooks.com um some of them are ridiculously cool and this has only been being worked on for two months if that so it'll be interesting to see as more come to Market a genuine question here I like why do people give a if something's kyc they had to kyc to get money into crypto at some point right and they have

to kyc at some point to get money out of crypto at another point so I just don't understand what the big deal is here people want permissionless yeah people want permissionless systems that's that was like the first promise of defi but sorry Matt I'll let you take it from here no you go ahead I was going to say the same thing yeah I mean I agree with you guys it's like I I get that that's what they want but like this is just one option like you don't have to use it if you don't want to but it's nice to to have people that can use it if that's like a rule that you have to follow right right I think that guy that's what got blown out of proportion here was like this is a hook in the Arsenal of hooks and like you don't need

to launch a pool that has this hook now it'll be interesting to see what the adoption rate of this Hook is right like if you know 98% of all Unis swap V4 Pools use this hook then like no it's not enshrined in the protocol but everybody's doing it anyways that's kind of like saying yeah well Mev boost isn't enshrined in the protocol but 92% of blocks are made with Mev boost fully agreed and the Chris black comment Who's like leading this whole charge of Unis swaps going kyc compliant or whatever um I think probably if like he was on this podcast what he might say and I don't want to put words his mouth what probably what he would say is that if you know the majority of liquidity goes to these kyc compliant pools which not only is feasible but maybe in some

people's heads it's likely because you could have Banks and Industry participants who are otherwise uh you know not able to put go into these pools because they might be facilitate in some World they might have this risk where they would be regulated for facilitating you know uh for doing for doing IL for if Traders are doing illegal things like maybe they would get in trouble for quote unquote facilitating it by being the counterparty to those trades so you know people like that might go put money to these pools if they have a higher tvl if the eth usdc pool that is kyc compliant has a far higher tvl than the non kyc compliant one obviously Traders are going to want to route through there so even if it's not enshrined like you know but this is just a potential future and at the end of the day if that's what

industry participants and the money wants that's okay as long as there's the option for you know non kyc compliance and uh the still exist I think in my head you know where the money goes cool like I'll support it even though I don't support you know I want to see permissionless systems like uh I also want to see crypto succeed I mean hold on pulling out the tinf foil hat here Unis swap V4 is like is kind of adapts on the V3 model where it's like complex LPS will outperform just like you and me lping into a pool and so if you play that out these professional LPS that use really high uh High complexity based systems to manage their positions they uh are likely large us-based

entities that do care about what these kyc rules have to say and so you know what's the likelihood that those pools are the ones that do get the liquidity and to me it kind of seems quite High I wouldn't I would not be shocked at all if say some 90% of the liquidity flows to kyc hook approved pools like that that is not to me that is very much a non-zero outcome I agree with you but I think that's in like four or five years like I don't think any legitimate banking institution is anywhere close to making swaps on Unis swap like in a live but but who are the who are the LPS today and do those people care it's the question and I got a feeling the answer is yes okay yeah that's fair that's a good

point I mean this will be the conversation and it's not just about unit swap right like we likely will have l2s that you need to kyc in order to bridge over to we are going to see this this this play out um we're going to see validators who are only willing to propose blocks that are from censored you know censored relays and it's at the end of the day even though I have strong opinions about what I want like it's where it's where the money goes and like that is how it should be so it's like this truly lazy fair market and that's crypto I think that's a good spot to end it honestly this has been a really fun conversation brick appreciate you coming on for your debut I'm sure uh the audience will get more of you got

any closing there we go I love it Matt thanks too I appreciate you guys taking an hour out of the day but uh yeah I guess we'll do this again next [Music] week